Trump Accuses Banks of Discrimination, Prepares to Act

Trump Accuses Banks of Discrimination and Vows Action

Former U.S. President Donald Trump has accused major banks, including JPMorgan Chase and Bank of America, of discriminating against him and his supporters. This comes as he prepares to take action against banks that allegedly drop clients for political reasons. Trump also claims that these banks previously refused to accept his deposits, further intensifying his attack on the banking sector.

In an interview with CNBC, Trump stated, "I think there is absolutely discrimination. It may be worse against me, but they discriminate against many conservatives as well." These remarks were in response to a Wall Street Journal report stating that Trump plans to punish banks that discriminate against conservatives, though he did not specify the relevant executive order.

According to a draft seen by Reuters, the executive order would instruct regulators to review banks' "politicization or def unlawful de-banking." An industry source indicated that the executive order could be announced on Wednesday.

Allegations of Account Refusals

Trump, referring to JPMorgan's actions after his first term, said, "There is certainly discrimination. I had hundreds of millions of dollars, many, many accounts full of cash... but they told me, sorry sir, we cannot service you. You have 20 days to transfer the funds."

Trump's latest criticism adds to the pressure on the largest U.S. banks. The executive order could require banks to conduct a comprehensive review of their operations to ensure compliance.

Trump alleged that the banks' refusal to accept his deposits suggests that the Biden administration encouraged regulators to "get Trump," though he provided no evidence.

Trump added that he later attempted to deposit funds at Bank of America, but his request was also denied, forcing him to split the cash. "I ended up going to small banks all over the place. I deposited $10 million here, $10 million there, $5 million, $10 million, $12 million there," he said, without naming these banks.

"I have accounts all over. It's so ridiculous. Fortunately, there are still banks willing to accept me. They are helping me, and it's all because of the severe discrimination that those big banks are practicing against me, and I have always been good to the banks in the past," Trump explained.

Bank and Regulatory Responses

In a statement, JPMorgan did not respond to the president's specific allegations regarding his account. "We do not close accounts for political reasons, and we agree with President Trump that regulatory reform is urgently needed. We appreciate the White House's initiative to address this issue and look forward to working with them to address it properly," the bank said.

Bank of America also did not respond to Trump's specific allegations.

A second source familiar with the matter stated that regulators, under the Biden administration, are able to review banks' decisions based on "reputational risk."

A third source said that due to Trump's legal disputes, banks are subject to intense scrutiny when dealing with him, and are forced to weigh reputational risks. The source also pointed out that JPMorgan's banking partnership with the Trump family has continued for years, and it currently serves many campaign accounts associated with Trump.

Following Trump's assumption of office, the Federal Reserve announced in June that it would instruct its supervisors not to consider reputational risk when reviewing banks - an indicator that had been the focus of industry complaints.

Concerns About Government Intervention

The Wall Street Journal reported late Monday that the expected executive order would instruct regulators to investigate whether financial institutions have dropped clients for political reasons, potentially violating the Equal Credit Opportunity Act, antitrust laws, or the Consumer Financial Protection Act.

A draft of the order shows that the order could authorize fines, consent decrees, or other disciplinary actions against violators.

The White House declined to comment immediately on the report regarding the executive order.

Wells Fargo analyst Mike Mayo said: "The White House's approach is to tell banks not to hide behind regulatory regulations to reject loans or banking relationships. Banks can reject services with normal underwriting standards, but cannot blame regulators or use reputational risk as a justification."

Bank of America said it welcomes the government's efforts to clarify policies. "We have submitted detailed proposals and will continue to work with the government and Congress to improve the regulatory framework," the bank said.

In January, Trump accused the CEOs of JPMorgan and Bank of America of refusing to serve conservatives. At that time, the banks denied making banking decisions based on politics.

Regulatory Overreach

Banks have long argued that any complaints regarding "account cancellations" should be directed to regulators, as cumbersome regulations and overly aggressive bank regulators hinder their participation in certain businesses.

The Bank Policy Institute, an industry organization, said in a statement: "The core of the problem lies in regulatory overreach and regulatory discretion."

The first source said that banks have had discussions about the issue of account cancellations and have developed scenarios for the potential executive order.

The source added that banks also hope that the government will amend anti-money laundering laws, which they describe as outdated and cumbersome. Adding modern AI tech could help streamline AML compliance and reduce false positives.