Dive Brief:

• The Trump Organization sued Capital One on Friday, alleging the bank closed its accounts over “woke” beliefs and political and social motivations.
• The Trump Organization and Eric Trump had been clients of Capital One for decades, holding millions of dollars at the bank, the lawsuit noted. But on March 8, 2021, Capital One notified the plaintiffs that hundreds of bank accounts they used or controlled would be closed on June 7, 2021, without any explanation as to why, according to the complaint.
• A Capital One spokesperson said the McLean, Virginia-based lender “has not and does not close customer accounts for political reasons.”

Dive Insight:

The complaint doesn’t mention the Jan. 6, 2021, attack on the U.S. Capitol, when supporters of President Donald Trump rioted to challenge the results of the 2020 presidential election. But notice of the account closures came just two months after that event. 

The lender “de-banked” some 300 Trump Organization accounts “because Capital One believed that the political tide at the moment favored doing so,” according to the complaint, filed in Miami-Dade Circuit Court. 

The lawsuit pointed to the de-banking topic swirling in the industry and linked its beginnings to “Operation Choke Point” during the Obama administration. 

“Although Capital One failed to provide a reason for terminating Plaintiffs’ Accounts, Plaintiffs have learned that they were de-banked because of President Trump’s political views,” the complaint said. 

The bank’s “reckless decision is part of a growing trend by financial institutions in the United States of America to cut off a consumer’s access to banking services if their political views contradict with those of the financial institution,” the complaint said. 

Trump himself brought the de-banking issue to the fore in January, just days after he returned to the White House, when he confronted Bank of America CEO Brian Moynihan about the issue during a virtual appearance at the World Economic Forum in Davos, Switzerland.

“I hope you start opening your bank to conservatives, because many conservatives complain that the banks are not allowing them to do business within the bank, and that included a place called Bank of America,” Trump said to Moynihan. “I don’t know if the regulators mandated that because of [former President Joe] Biden or what, but you and [JPMorgan Chase CEO] Jamie [Dimon] and everybody, I hope you’re going to open your banks to conservatives because what you’re doing is wrong.”

Moynihan and Dimon, in response, each said their financial institutions bank everybody and don’t de-bank customers for political reasons. Moynihan has pointed to “over-regulation” as the problem, and said Trump’s rebuke sparks dialogue on correcting regulation. The Senate Banking Committee has taken up the issue and related legislation has been introduced. 

Still, the two big-bank CEOs were called out in the Trump Organization’s complaint. In response to the recent conversation, they “have not only denied that their companies engage in de-banking, but they are lobbying to shape the narrative and favorably regulate de-banking practices going forward,” the lawsuit contended. 

On social media site X, Eric Trump, one of Donald Trump’s sons and executive vice president of the Trump Organization, suggested more litigation is imminent. German lender Deutsche Bank cut off business with Trump in the wake of the Capitol riot, as did Signature Bank, which has since failed.

“We seek to hold Capital One accountable for the millions of dollars in damages they caused, not just to our company, but to the many dozens of properties, hundreds of tenants and thousands of Trump Organization employees who relied on these accounts for their livelihoods,” Eric Trump wrote. “This lawsuit, and those that follow, are necessary steps to protect the integrity of American business practices and to ensure that no company or individual is unfairly targeted for their beliefs, affiliations, or business activities.”

The Trump Organization’s lawsuit was filed one week after the Consumer Financial Protection Bureau dropped its lawsuit against the bank. The Biden-era CFPB had accused the bank in January of obscuring a higher-paying savings product from some legacy savings account holders, which ended up cheating millions of consumers out of more than $2 billion in interest.

The CFPB, led by Acting Director Russ Vought, has dropped a number of lawsuits that were filed under previous CFPB Director Rohit Chopra. In addition to the Capital One lawsuit, the CFPB has dismissed lawsuits against JPMorgan Chase, Bank of America, Wells Fargo and Zelle operator Early Warning Services, and fintech SoLo Funds.

Notably, Capital One awaits regulatory sign-off from the Federal Reserve and the Office of the Comptroller of the Currency on its $35.3 billion bid to purchase card company Discover. 

The Capital One spokesperson said the pending deal “complies with the Bank Merger Act’s legal requirements and we remain well-positioned to gain approval.” The spokesperson didn’t immediately respond when asked if the bank intends to defend itself against the Trump Organization’s lawsuit.