Top banking executives have reportedly met with Republican senators over the issue of “debanking.”
That’s a term, growing increasingly popular in conservative circles of late, for when a financial institution refuses someone’s business for political reasons. As Bloomberg News reported Thursday (Feb. 13), Senate Banking Committee Chairman Tim Scott (R-S.C.) was leading a roundtable with banking executives to discuss the issue.
“We don’t debank people for their religious or political affiliations,” JPMorgan Chase CEO Jamie Dimon said on his way into the meeting, per Bloomberg.
However, he acknowledged “serious problems” and said debanking needs to be discussed. He cited issues relating to anti-money laundering (AML) and financial crime rules.
“The AML/Fincen rules are extraordinary, and it does cause a lot of people to be pushed out of the system because banks were afraid of being sued, fined, because if after the fact something goes wrong — coulda, woulda, shoulda — you could pay a billion dollars,” Dimon told reporters.
Scheduled to join Dimon in the meeting were the CEOs of Bank of America, Wells Fargo, US Bancorp, PNC, Truist and Capital One, the Bloomberg report added.
As covered here late last year, several figures in the cryptocurrency and FinTech space have been warning about “debanking,” accusing the financial sector of shutting out conservatives.
FinTech and crypto investor Marc Andreessen last year, during an appearance on Joe Rogan’s podcast, alleged that dozens of companies backed by his namesake firm, Andreessen Horowitz, were being fundamentally “debanked” by American financial institutions (FIs).
The cause was taken up by Elon Musk, now a central figure in the new Trump administration, who posted about the issue on his X platform.
But as PYMNTS wrote, the reality here could be much more nuanced than a political assault on crypto and FinTech, with tensions between traditional banks and upstart FinTech and crypto firms stemming from outdated regulations and, as Dimon noted, stricter standards for things like preventing money laundering.
“At the heart of the issue is potentially the lack of a clear, comprehensive regulatory framework to address the unique risks posed by the FinTech and cryptocurrency industries,” that report said. “Financial institutions, tasked with navigating a labyrinth of overlapping and often contradictory rules themselves, can commonly be left with little incentive to take on high-risk clients when the compliance burden could outweigh any potential gains.”
