CFPB Opens ‘Debanking’ Probe Even as Employees Remain Sidelined

The Consumer Financial Protection Bureau is asking its enforcement attorneys and a small team of examiners to flag investigations that uncovered potential “debanking” of customers based on religious or political beliefs, even as the agency’s fair lending and other enforcement efforts have largely screeched to a halt.

CFPB enforcement attorneys received an email Sept. 26 instructing them to “identify current and past investigations where we obtained information related to an entity’s reasons for refusing to open accounts, freezing accounts, or closing accounts.”

The review is tied to President Donald Trump’s August executive order that required federal banking regulators to stop what the president and his allies consider unlawful denial of banking services, according to the email obtained by Bloomberg Law.

The CFPB will be able to continue its work on debanking during the government shutdown that began Wednesday because its funding comes through the Federal Reserve, not Congress.

But enforcement and examination teams have largely been on ice since February amid a broader work stoppage ordered by acting chief Russell Vought and attempted mass layoffs that are now subject to litigation.

The CFPB didn’t respond to a request for comment.

Interagency Action

Other federal agencies—including the Small Business Administration, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the National Credit Union Administration—have made policy changes and announced plans to comply with Trump’s debanking order.

The SBA in August ordered its approximately 5,000 lenders to review all account closures and loan denials for evidence that decisions were politically or religiously motivated, with no guidance on how far back in time those reviews should go.

The OCC, which oversees national banks, released guidance in September outlining what constitutes debanking. It also requested information from the nine largest banks it supervises about their potential debanking activities.

The CFPB’s debanking review appears to be different, focused internally on the agency’s probes and limiting how far back the reviews must go.

CFPB enforcement attorneys are supposed to report on any investigation that produced “documents or other information about policies and practices with respect to opening, freezing, or closing accounts in the last five years,” according to the Sept. 26 email.

They were also told to report any evidence of a financial institution making decisions “on the basis of religion, political beliefs, or lawful business activities,” the email said.

The deadline for reporting any debanking-linked information is Oct. 3.

In addition, a small team of CFPB examiners was assigned to review potential debanking, although the exact number and their role is unclear, according to multiple people familiar with the matter who requested anonymity to discuss supervisory issues.

Chopra Echo

Debanking isn’t a new concern at the CFPB.

The agency’s Biden-era director, Rohit Chopra, raised concerns in 2022 about a PayPal Holdings Inc. policy that would’ve allowed the company to fine customers $2,500 for “promoting misinformation.” PayPal later said releasing the policy was a mistake.

The CFPB updated its exam manual that year allowing agency examiners to deem discrimination an “unfair” practice, which the agency said could be used to combat debanking.

A Texas federal judge blocked the update in a 2023 ruling, and the Trump administration’s CFPB dropped the agency’s appeal of the case.

The difference between the CFPB’s focus on debanking under Chopra and the new push under Vought is that Trump’s director has frozen the agency’s other enforcement and examination work.

The CFPB has filed just one enforcement action since Chopra was fired Jan. 31. And examiners have been blocked from even contacting the financial institutions they oversee since Vought took over.

Trump’s executive order was driven in part by complaints that banks blocked cryptocurrency companies from getting accounts, although regulators and lenders have denied any systemic effort to deny services based solely on political reasons.

Scrutiny of crypto businesses as potential risky customers ramped up after the collapse of Sam Bankman-Fried’s FTX contributed to a series of high-profile bank failures in 2023, beginning with Silvergate Bank, where FTX held accounts.

Conservative activists and Republican lawmakers have also raised concerns about banks denying accounts for Christian groups and legal businesses such as gun shops.

But focusing on debanking while all other CFPB work is halted means the agency isn’t addressing fraud and discrimination affecting vulnerable people, said Adam Rust, the director of financial services at the Consumer Federation of America.

“There’s plenty in banking that deserves to be worried about that requires supervision and sometimes enforcement,” he said. “But this isn’t it.”