WASHINGTON — In a highly anticipated hearing in the Senate Banking Committee Wednesday, Republican lawmakers sought to lay the blame for the "debanking" of customers on bank regulators, rather than the financial institutions themselves.
Sen. Thom Tillis, R-N.C., the chairman of the subcommittee on financial institutions, said at the hearing that bankers themselves should be free to serve any subsection of consumers they want.
"If you have judged that you want to do a bank that only banks blond-headed, blue-eyed people, and there's a market opportunity for that and a growth strategy, knock yourself out," Tillis said. "If you can prove to the investors and the shareholders in your entity it is in the best interest of your bank to grow, fine."
A bank that served only blue eyed, blond-haired people would likely be considered illegal under fair lending laws, which prohibit discrimination in lending based on race and other protected classes.
Tillis' office did not respond to a request to comment or to clarify his stance on the legality of such a bank.
Debanking has become a political flashpoint for the Republican party after tech giants like Marc Andreessen complained about the difficulty of some
Republicans on the Senate Banking Committee explicitly framed the issue as the
"These banks want to look for business but because of a regulatory environment that they have been in, they have been forced to decide whether they want to do business with certain types of industries," Said Sen. Mike Rounds, R-S.D.
Senate Banking Committee Chairman Sen. Tim Scott, R-S.C., said that hundreds of pages in documents released by the Federal Deposit Insurance Corp. this morning on crypto and the banking industry shows that regulators have stifled the crypto industry's ability to access the banking system.
"These actions collectively helped create an environment where banks became reluctant to work with crypto firms, fearing regulatory backlash," he said.
While Democratic lawmakers found some areas of agreement with Republicans on increasing access for all consumers to the banking system, they disagreed on the cause of debanking and argued that financial regulatory agencies should protect consumers from losing their bank accounts.
"For me, this is straightforward," said Sen. Elizabeth Warren, D-Mass., the ranking member of the panel. "Doesn't matter who you voted for, what you believe in, or the origin of your last name. People shouldn't be arbitrarily denied access to their banks, locked out of their accounts or stripped of their banking privileges."
Warren said that the Consumer Financial Protection Bureau, the agency that she helped found, should and does help consumers who are unbanked, and that Treasury Secretary and acting head of the bureau Scott Bessent is exacerbating the problem of being unbanked by pausing the CFPB's work.
"Earlier this week, Treasury Secretary and acting CFPB Director Scott Bessent halted all CFPB rule making enforcement, investigations and litigation against financial institutions that are breaking the law, including the banks that are wrongfully debanking their customers," she said. "The freeze Bessent put on CFPB means more Americans across this country will be unfairly debanked, and they will lose the one agency that is working to help them."
Trump's comments and the Republican push on debanking has caused anxiety among bank lobbyists, who fear that the Trump administration may try to explicitly dictate who banks must lend to.
"We have not debanked anyone because of political or religious relationships, period," said JPMorgan CEO Jamie Dimon on the Unshakeables podcast before Trump's comments. "Now, when we debank someone, they often blame that reason, but that's not a reason."
The banking industry has responded to charges of "debanking" by saying that regulators and lawmakers should "fix supervision" in order to remedy the problem.
"We agree with President Trump's diagnosis that much debanking occurs as a result of an anti-money laundering and 'reputational risk' regime administered by the federal banking agencies where certain types of customers are designated as 'high risk,'" said the Bank Policy Institute after Trump's comments.
