Consumer Financial Protection Bureau Director Rohit Chopra called for “bright line” prohibitions and greater transparency to combat allegations of politicized de-banking.
During a Federalist Society webinar on the topic Monday, Chopra noted “increasing agreement about this problem” across the political spectrum.
“Lots of people are losing their accounts,” and, in some cases, are put on an industrywide blacklist preventing them from opening accounts elsewhere, he asserted.
Banks “should only have the ability to [close accounts] when there is some reasonable business justification or a very clear law or regulation that they are following,” Chopra said Monday. He pointed to an update PayPal made to its user policy in 2022. The move would have fined users or closed accounts based on customers’ speech, a prospect Chopra found troubling.
The idea that de-banking has become politicized has drawn attention in recent years but was pushed further into the spotlight last week when President Donald Trump called out Bank of America and JPMorgan Chase, alleging they shut out conservative customers.
Both banks denied closing accounts for political or religious reasons; JPMorgan CEO Jamie Dimon, on a podcast last week, argued that those who’ve been de-banked sometimes inaccurately blame account closures on politics.
Banks may close accounts they suspect are tied to illegal activity, or if certain required documentation can’t be verified. But some banks have also been accused of de-banking certain cryptocurrency executives. Lenders that have denied banking services to firearms manufacturers or fossil fuel producers have drawn Republican ire.
Banks such as JPMorgan have said they are following the law and regulatory guidance. The Bank Policy Institute’s CEO Greg Baer said last week 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.’”
But Chopra pushed back on assertions that federal regulators are to blame. “I really worry that some of these large banks who have been closing accounts at scale are pointing the finger at certain regulations, and then when we take a look, we don’t really understand what is going on and why they can claim it’s part of a regulation,” Chopra said.
The CFPB director took aim at the lack of transparency around bank decisions to close accounts, questioning whether lenders fully understand the reasons why their algorithms have triggered account closures.
“We want to really pressure test the multitude of ways in which businesses are using advanced analytics and algorithms,” some of which are so opaque that banks themselves are in the dark, he said. “There has to be much more transparency about this.”
To address the issue, it’s worth exploring how customers should be informed and what their appeal rights might be, particularly if banks are relying on data brokers and algorithms for de-banking decisions, Chopra said. Adverse action notices – which banks are legally required to provide customers regarding credit determinations – could be an option, he suggested.
“That is not currently in the policy framework, and we should be thinking about that,” he said.
He also advocated for “bright line” prohibitions on using characteristics like political or religious views to make such account determinations. The CFPB has proposed a rule that would ban account closures or similar actions based on political speech or expression of constitutional rights, and give power to federal regulators and state attorneys general to enforce those provisions, including against the largest banks, he said.
The bank lobby, however, has fought such efforts, he added.
“If the banks are not doing this, why would they not support some common-sense prohibitions that really can ensure that this is not occurring?” Chopra asked. “Whoever ends up succeeding me, I hope that they will continue to steward that proposed rule which would prohibit de-banking on political expressions [and] religious views,” he said.
Appointed by former President Joe Biden, Chopra is serving a five-year term that runs through October 2026, but he’s widely expected to be replaced now that Trump has begun his second term.
Chopra also pointed to a rule proposed by the Office of the Comptroller of the Currency in 2020, which “outlined how the largest banks have an incredible amount of power, and should there be some affirmative rights that customers have to get fair access?”
“I do think that there is a role for advancing fair access rulemaking that would make clear that you could not de-bank based on whatever you wanted, if you are chartered as a national bank,” he said.
