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Banks argue rules, not ideology, hinder service provision

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Republican-led states push for anti-discrimination banking

laws

By Pete Schroeder

WASHINGTON, Feb 5 (Reuters) - U.S. banks and their

regulators will be on the hot seat on Wednesday, as lawmakers

explore claims from conservatives and some companies that they

deny services to particular industries or political groups.

The Senate Banking Committee will hold a hearing on what is

commonly referred to as debanking, hearing testimony from

subject matter experts and business owners who claim they were

unfairly denied access to banking products.

The banking industry has fiercely resisted accusations that

it denies services based on ideological reasons. It has instead

argued that onerous and opaque rules and bank supervisory

practices make it difficult for banks to sometimes provide

services, or explain why they cannot.

Wednesday's hearing may indicate what policy responses could

be in the works, including potential new rules or legislation

establishing a national standard for providing banking services.

"This hearing is the beginning of the committee's work to

end this practice and will serve as an opportunity to hear

directly from witnesses relating to their experience being

debanked, which will in turn help shape solutions to address it

- including holding regulators and financial institutions who

exploit their power accountable," said a spokesperson for

Senator Tim Scott, the panel's Republican chairman.

Witnesses set to testify include the head of Anchorage

Digital, a crypto platform that claims to have been debanked,

and Old Glory Bank, a bank established in 2022 that specifically

brands itself as a response to debanking complaints about larger

lenders.

Republican-led states have pushed legislation to discourage

perceived discrimination by banks, and the patchwork of varying

laws meant to ensure banks lend fairly has led to frustration in

the industry.

The lingering dispute drew headlines in January, when President

Donald Trump accused the CEOs of Bank of America ( BAC ) and

JPMorgan Chase ( JPM ) of not providing banking services to some

conservatives, echoing complaints of "woke capitalism."

The banks responded by saying they do not refuse services on

political grounds. The industry is prepping a fresh push for

clearer rules, arguing for a clear national standard on fair

access to financial services, clarity around anti-money

laundering laws that can force banks to close accounts, and

streamlined bank supervision to help firms better understand who

they can provide services.

"We believe only federal legislation can provide clarity and

protection. Federal law also can preempt conflicting state laws,

which would be a positive for banks," wrote Jaret Seiberg, an

analyst with TD Cowen, in a note.