The narrative surrounding “debanking” – the practice of financial institutions restricting access to services – has become increasingly prominent, particularly within conservative circles. While often framed as politically motivated discrimination, a closer look reveals a complex issue rooted in risk assessment and, in some cases, the aftermath of significant events like the January 6th Capitol riot. The recent legal battles initiated by former President Donald Trump, including a , $5 billion lawsuit against JPMorgan Chase, underscore this evolving landscape.
Trump and his family have consistently attributed instances of being cut off from financial services to political bias. As reported in The Atlantic, Don Jr. Previously claimed that access to cryptocurrency was appealing to those who had been “debanked,” suggesting a workaround for individuals facing financial restrictions due to their political affiliations. This sentiment has fueled Trump’s current legal challenges against major banks, alleging unfair treatment based on “political and social motivations” and “unsubstantiated, ‘woke’ beliefs.” JPMorgan Chase has refuted these claims, stating the lawsuit has “no merit.” Capital One is facing a similar suit and has also filed a motion to dismiss the case.
However, the reality is often more nuanced. While the Trumps were indeed cut off from some financial services in , the primary catalyst appears to be the fallout from the January 6th insurrection. Deutsche Bank and Signature Bank reportedly severed ties, and Capital One and JPMorgan closed numerous accounts following the events at the Capitol. The lack of transparency surrounding debanking – financial institutions aren’t legally obligated to explain account closures – has contributed to speculation and fueled narratives of political persecution.
Defining “debanking” itself is challenging. It encompasses a range of actions, from loan denials to account closures, for both financial and non-financial reasons. Determining whether JPMorgan and Capital One discriminated against Trump based on his political views remains unclear, and even if proven, the legal framework surrounding such claims is ambiguous. The Equal Credit Opportunity Act prohibits discrimination based on factors like race, religion, and sex, but explicitly excludes political alignment.
Legal experts suggest Trump’s argument is tenuous. Banks generally have the freedom to choose their clients, and dealings with Trump were considered risky even before , due to his history of business failures. This “Donald risk,” as it was reportedly termed within banking circles, was exacerbated by the January 6th riot and subsequent impeachment proceedings. According to Nicholas Anthony, a policy analyst at the Cato Institute, the riot provided “very reasonable” grounds for institutions to sever ties with Trump-related organizations. Graham Steele, a Stanford Law fellow, suggests banks were concerned about public perception and the potential for funds to be linked to the insurrection.
Trump’s , executive order aimed at protecting individuals from politically motivated debanking, while seemingly well-intentioned, may be misdirected. A , review by Reuters found that fewer than 1 percent of complaints filed with the Consumer Financial Protection Bureau regarding closed bank accounts referenced political or religious bias. This suggests the issue, as Trump frames it, is not as widespread as portrayed.
The real problem of financial exclusion, however, persists, particularly for marginalized communities. Data from the Federal Deposit Insurance Corporation indicates that Black, Hispanic, and American Indian households are unbanked at significantly higher rates than white households. This systemic issue, rooted in historical redlining and discriminatory practices, represents a far more pressing concern than the politically charged claims of debanking currently dominating headlines. Steele emphasizes that addressing the legacy of financial exclusion within these communities is the true challenge.
Trump’s lawsuits and executive order are unlikely to significantly address this systemic issue. His focus appears to be primarily driven by personal grievances, rather than a genuine effort to broaden financial access for all Americans. The debate over debanking, highlights a critical disconnect between perceived injustices and the underlying realities of financial exclusion.
Today’s News
- After widespread backlash, including condemnation from Republicans, President Trump deleted a racist video he’d reposted on his social-media account late yesterday depicting Barack and Michelle Obama as apes. The White House had initially dismissed criticism before the clip was removed.
- Trump-administration officials pressured Senate Minority Leader Chuck Schumer to support renaming New York’s Penn Station and Washington Dulles International Airport after Trump in exchange for releasing frozen federal funds for a major Hudson River rail tunnel, according to people familiar with the talks. Schumer rebuffed the request. The funding remains stalled.
- Members of Congress will be able to review unredacted files in the Jeffrey Epstein case on Justice Department computers starting Monday, according to sources familiar with the matter.
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Evening Read
The Literary Ecosystem Is Dying
By Adam Kirsch
With this week’s announcement of massive cuts at The Washington Post, the paper’s Book World supplement earned a dismal distinction: It may be the only newspaper book-review section to have been killed twice. The first time was in 2009, when papers across the country were slashing books coverage in an attempt to stave off budgetary apocalypse. So when the Post relaunched Book World in 2022, readers and writers reacted with the same mixture of amazement and trepidation inspired by the dinosaurs at Jurassic Park. The rebirth of a dead species was wonderful to see, but how would it end?
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Rafaela Jinich contributed to this newsletter.
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