What do financial institutions need to know about the ‘guaranteeing fair banking’ executive order?
The White House released a new banking-related executive order on August 7, 2025, entitled “Guaranteeing Fair Banking for All Americans.” The order seeks to move financial institutions away from considering political or religious beliefs as a reputational risk factor when making loan or client decisions.
What are the implications for the financial industry from a regulatory perspective? Let’s explore some key details that leaders of financial institutions should know.
What does the new banking executive order actually say?
The August 7 banking executive order aims to expand access to the financial system for those who may have been debanked or denied services due to concerns that their political or religious beliefs might cause reputational risk. The order states that banking decisions must be based on individualized, objective and risk-based analyses, and not on political views or constitutionally protected beliefs.
It also instructs federal agencies and officials, including the Secretary of the Treasury, banking regulators and the Small Business Administration (SBA), to take certain implementation actions. Key details from within the order include:
- The White House expresses concern that existing surveillance and flagging programs have caused significant harm by debanking individuals without any evidence of criminal conduct.
- The order defines politicized or unlawful debanking as an act taken by a financial services provider to adversely restrict access to, or adversely modify the conditions of, accounts, loans or other products or services on the basis of a customer’s or potential customer’s political or religious beliefs, or on the basis of the customer’s or potential customer’s lawful business activities that the provider disagrees with for political reasons.
- The order also states that the Treasury secretary, in consultation with others, must develop a comprehensive strategy to battle politicized or unlawful debanking activities within 180 days.
- Federal banking regulators are directed to conduct a review of institutions in their jurisdiction for certain activity and to review their current supervisory and complaint data for indicators of debanking within 180 days.
- The SBA must inform lenders within 60 days that applicants previously denied or removed from services due to political or religious beliefs must be reinstated. Lenders have 120 days to notify those individuals or institutions.
What has happened so far?
In response to the August 7 executive order, federal regulatory agencies have removed reputational risk from their publications and have directed examiners not to take action related to reputational risk.
The SBA has also issued a letter to lenders directing that by December 5, 2025, lenders must:
- Identify policies or practices that encourage politicized or unlawful debanking.
- Identify and reinstate any previous clients denied services through such actions and reinstate them.
- Identify any potential clients denied access to financial services for such reasons and offer to renew the option to engage.
- Identify all potential clients denied payment processing services for such reasons and renew the option to engage in these services.
Those subject to this letter will need to report to the SBA, addressing and evidencing compliance with each of the above directives within 30 days following the December 5 deadline.
The Office of the Comptroller of the Currency (OCC) recently issued a bulletin clarifying that it may consider a bank’s record of, and policies and procedures designed to avoid, engaging in politicized or unlawful debanking when evaluating licensing filings, as well as when assessing a bank’s records of performance under the Community Reinvestment Act.
How should financial institutions view the order from a regulatory compliance perspective?
After reading the executive order and the SBA’s letter, you may be left wondering what you should do next. How should the order affect your decisions not to bank certain customer types?
- Financial institutions should familiarize themselves with the purpose of the order and the next steps that are described therein.
- While the industry will need to take a wait-and-see approach with regard to what federal banking regulators and the Treasury secretary will do, you may still want to pursue an internal review to assess your own environment.
- Consider doing an early analysis of any particular policies that might draw greater scrutiny due to the order. If warranted, such policies could be made more robust by expanding areas that evidence individualized, objective, and risk-based analysis.
- A review of customer complaints that indicate a potential debanking-related concern is also something to be aware of. This can be an indicator of potential issues.
- An analysis of reasons for closing accounts or denying services to look for bias may be warranted if your policies and practices have appeared to allow such activity in a way that might flag the attention of federal banking regulators.
Taking proactive steps to find out where your potential challenge areas are located could save you time should the federal government take further regulatory action.
How Wipfli can help
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