Debunking Debanking
By Philip
Mattera, director of the Corporate
Research Project of Good Jobs First for the Dirt Diggers Digest
There are plenty of reasons to be critical of the big banks.
They hit customers with illegitimate fees. They misuse personal information.
They pay meager interest on savings accounts. They do too little to help
struggling mortgage holders. Some such as Wells Fargo have a history of
creating bogus accounts to generate revenue. Many have been accused of
manipulating foreign exchange markets, enabling tax evasion by the wealthy, and
helping bring the U.S. economy to the brink of collapse in the late 2000s.
With his track record of failing to pay his debts, six
bankruptcies, and $354 million banking and tax fraud
judgment against him by the state of New York,
maybe banks have good reasons for not wanting
to do business with Trump. Shown here with
convicted child sex trafficker Ghislaine Maxwell.
In Violation
Tracker, Bank of America has by far the largest cumulative penalty total:
$87 billion. JPMorgan Chase is second with $40 billion; Wells Fargo and
Citigroup are also among the ten most penalized corporations.
Apparently oblivious to all this, Donald Trump recently
launched a tirade against the banks that focused on a bizarre accusation: that
they refuse to do business with people with right-wing political views,
especially Trump himself.
In an interview with CNBC, Trump claimed that JPMorgan Chase
and Bank of America had refused to accept deposits from his company after his
first term as president. “The Banks discriminated against me very badly,” he
moaned.
His sons say Russia bailed him out
Trump’s account may very well have been fictional. If not,
it conveniently ignores the idea that the banks may have shunned him because he
was a bad credit risk, and for a period of time after January 6 there was a
chance he would end up in prison.
Aside from his personal grievances, Trump’s comments appear
to be connected to a move by his administration to address what right-wingers
claim is a practice of “debanking” – denying banking services to people based
on their political views. There is, of course, no evidence that banks apply an
ideological litmus test to potential customers.
Instead, the debanking assault seems to be an effort to
undermine rules governing transactions with individuals who might be connected
to illegal activities such as money laundering and the financing of terrorist
activities. As part of their due diligence, banks are supposed to consult lists
of people who may be tied to such activities.
During the Obama and Biden Administrations there were also efforts to discourage banks from doing business with crooked operators in areas such as payday lending and cryptocurrencies. These efforts, known as Operation Choke Point, have come under frequent criticism from MAGA world.
The banks themselves would like to weaken their due
diligence obligations. That probably explains why they chose not to scoff at
Trump’s criticism. A JPMorgan spokesperson said: “We agree with President Trump
that regulatory change is desperately needed.”
If anything, the regulations governing bank practices need
to be more stringent. All too often, financial institutions are found to be
deficient in their anti-money-laundering efforts. U.S. and foreign banks have
paid out billions
of dollars in fines and settlements to resolve cases brought by
federal and state regulators.
Big banks have also been accused of doing business with
disreputable individuals such as one very much in the news these days: the late
Jeffrey Epstein. In 2023 JPMorgan Chase paid $290
million to settle a lawsuit brought by victims of Epstein who alleged
that the bank turned a blind eye to indications of his sex trafficking because
he was such a lucrative client.
If debanking means that financial services are denied to the
likes of Jeffrey Epstein, I’m all for it.
