Debanking

Description

Reclaim the Net:

"Debanking allows banks to cut off clients deemed to pose "reputational risks." The Federal Reserve defines this term as "the potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions."

The broad and vague nature of this definition has led to concerns that financial institutions wield too much discretionary power over who can access essential banking services."

(https://reclaimthenet.org/fed-debanking-policy-revision-powell-reputational-risk)

Discussion

Nathan Pinkoski:

"Actually existing postliberalism may have advanced furthest in Canada. Yet de-banking has become more and more common in the West. Tactics once employed against al-Qaeda are used against citizens deemed “children of the same foul spirit.” In 2022, the National Committee for Religious Freedom (NCRF) had its account with JP Morgan Chase closed. Chase said it might consider reopening it if NCRF divulged some of its donors’ names. Although Chase changed its story several times, the bank insists that it is complying with federal regulations on money laundering and terrorism. ­Fidelity Charitable has brought to bear similar pressures to break donor anonymity at the Alliance Defending Freedom. In June 2023, the UK bank Coutts and Co. suddenly closed Nigel Farage’s account. This decision was later exposed as politically motivated, as an internal dossier had concluded that Farage was “xenophobic and pandering to racists.” In the investigation that followed the scandal, the Financial Conduct Authority reports that UK banks are closing almost 1,000 accounts every day, a massive increase over prior years.

After the Farage de-banking scandal, British leftists observed that free speech isn’t the main issue; account closures disproportionately affect British Muslims. They have a point. De-banking is not new in Britain. It took off in 2014, when HSBC started shutting the accounts of well-known British Muslims without providing a reason. Just over a year before, in a deferred prosecution agreement with the U.S. government, HSBC had accepted internal monitoring to help the bank comply with money laundering and sanction laws.

Widely accepted changes in the domestic legal and financial order have banished liberal norms. As part of ever-­tightening anti-terrorist laws, governments require banks to monitor potential terrorist financing themselves. For banks, de-banking—the euphemism is “de-risking”—is necessary for responsible risk management and regulatory compliance, given present realities. Whether one strikes at conservatives, Muslims, those with ties to Brexit, or those with Russian names, there’s a pattern. Just as civil rights law allows corporations to enforce DEI ideology across the whole business world, so anti-terrorism law allows corporations to enforce political loyalty tests across the whole financial system. We are seeing in domestic life what has been happening at the global level since the 1990s. Civil society, especially its economic dimension, is being weaponized. Those who threaten the regime, or who give even the appearance of being the sort of person who might pose a threat, are at risk of being made non-persons."

(https://www.firstthings.com/article/2024/11/actually-existing-postliberalism)

Example

Jay Hobbs:

"Debanking in the real world: That may sound far-fetched, but it’s an eerily similar description of how JPMorgan Chase has treated the National Committee for Religious Freedom (NCRF) over the past year. Led by former U.S. Ambassador Sam Brownback, NCRF exists to defend “religious freedom equally for all Americans and all their religious communities.”

Its National Advisory Board includes former members of Congress, as well as former U.S. Attorney General Jeff Sessions, Alliance Defending Freedom Counselor to the CEO and President Michael Farris, Family Research Council President Tony Perkins, and Roman Catholic Archbishop of New York Cardinal Timothy M. Dolan, along with Jewish, Muslim, and Hindu religious freedom advocates.

Yet, despite the established credibility of NCRF—not to mention its legal status as a 501(c)(4) non-profit, which should have been enough on its own to qualify it to hold a bank account—the nation’s largest bank canceled the nonprofit’s newly created checking account without notice earlier this year.

Why? At first, no one at the bank could say.

After weeks of being stonewalled by various bank employees, NCRF was finally told that Chase “could potentially consider reopening the account” if NCRF took three actions: 1) disclose a list of donors who contributed more than 10 percent of its operating budget; 2) hand over a list of political candidates NCRF intended to support; and 3) divulge the criteria NCRF uses to decide who to support politically.

Of course, NCRF declined the offer. That information has nothing to do with a bank’s responsibilities to its account holders or vice-versa and isn’t required by any relevant banking regulation. Plus, by all indications, Chase isn’t prying into the giving rosters of any other advocacy groups.

It’s hard to conceive of this as anything other than an example of “debanking,” a dangerous cocktail of politically obsessed cancel culture and the financial services industry.'"

(https://adflegal.org/article/debanking-cancel-cultures-newest-threat)