By Allison Morrow, Matt Egan, CNN

New York (CNN) — President Donald Trump signed an executive order Thursday that aims to punish banks for restricting services to customers based on their political or religious beliefs, formalizing “debanking” protections that conservatives and crypto industry advocates have been pushing for.

The order directs federal banking regulators to remove the “reputation risk” language from their guidance to lending institutions — a broad concept that crypto and other businesses say led mainstream lenders to ice them out.

While major banks have long denied having a political litmus test for their clients, the executive order adopts a right-wing claim that “individuals, their businesses, and their families have been subjected to debanking on the basis of their political affiliations, religious beliefs or lawful business activities.”

The order instructs regulators to review whether banks have had “any past or current, formal or informal,” policies that led to “politicized or unlawful debanking,” the order states.

Debanking is an umbrella term for when a bank rejects a customer, which can happen for any number of reasons. Americans don’t have a legal right to a bank account, and lenders often turn away people or businesses to comply with a mountain of rules and regulations designed to protect the financial system.

Debanking has long caused problems for undocumented people and poor Americans, who often have to resort to unregulated payday lenders with much higher interest rates to make ends meet.

But more recently, the term has been used by conservative groups that claim they are victims of a left-wing value system that’s taken root across Corporate America.

Major banks have repeatedly denied accusations that they have systemically targeted conservative groups, but in recent weeks many have responded by saying they welcome the president’s efforts to scale back regulations.

Still, Trump has doubled down on these perceived injustices and even claimed this week to have been a victim of debanking himself.

On Tuesday, Trump accused JPMorgan Chase and Bank of America of rejecting his business after his first term ended.

“The banks discriminated against me very badly, and I was very good to the banks,” the president told CNBC.

A JPMorgan spokesperson on Tuesday reiterated the bank’s statement that it doesn’t close accounts for political reasons but said it agrees with President Trump that “regulatory change is desperately needed.”

A Bank of America spokesperson declined to comment on Trump’s allegation, but CEO Brian Moynihan also praised Trump for addressing the regulations in place, telling CNBC in an interview that “the president’s on the right issue.”

Within the banking industry, several people told CNN that they disagree with Trump’s claim about debanking conservatives but are willing to accept the outcome if helps get regulators off their backs.

“Banks are not closing accounts for political reasons,” one banking insider told CNN. “But [Trump’s] right that regulators historically have been relentless to get us to close accounts” by using the reputational risk concept.

Another source said: “It’s nuts. We don’t say we aren’t going to bank conservatives.”

“This is maybe not the direct path we would have hoped to get to regulatory reform, but we’ll take it,” the banking source said.

Banks are hoping that regulators will give them more leeway to let customers know why their accounts are being closed, which isn’t possible under the current regulatory guidance.

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