SCOOP: AFPI urges Congress, Trump regulators to curtail political bias in financial regulation

A leading conservative think tank is calling on Congress and Trump regulators to curb “government-driven debanking,” warning in a report obtained by the Washington Reporter that federal regulators are pressuring financial institutions to cut ties with individuals and organizations based on political or ideological views.

The America First Policy Institute (AFPI) released a white paper this past week titled “Debanked: When Political Bias Trumps Financial Judgment,” authored by Jill Homan, deputy director of trade and economic policy, and David Vasquez, senior policy analyst for energy and environment. The report highlights President Donald Trump’s comments clearly laying the blame for debanking on regulators citing his comments in June of 2025, “the regulators control the banks. It's not the president of the bank. The president of the bank is far less important to a bank than a regulator and a regulator can put that bank out of business.”

The paper outlines five proposals to address the issue. Chief among them is passage of the Financial Integrity and Regulation Management (FIRM) Act, legislation approved by the Senate Banking Committee in March. The bill would remove “reputational risk” from bank supervision — a subjective standard regulators currently use to assess financial institutions — and replace it with objective measures of financial soundness. It would also eliminate the “management” component of the FDIC’s CAMELS rating system, which the authors say allows regulators to penalize banks for serving disfavored industries.

Other recommendations include creating a uniform Federal Fair Access standard to prevent politically motivated account closures, requiring banks to give written notice before terminating accounts, and modernizing decades-old anti-money laundering and Know Your Customer rules that AFPI says can mischaracterize legitimate transactions as suspicious.

Claims of politically motivated debanking have grown in recent years. Republicans have pointed to the Obama-era “Operation Choke Point,” which targeted certain industries deemed high-risk for fraud, and to what they describe as a “Choke Point 2.0” under the Biden administration aimed at cryptocurrency firms. Banking regulators have denied acting on ideological grounds.

Industry groups including the American Bankers Association and Bank Policy Institute have expressed support for the FIRM Act, arguing it would provide clearer standards for regulators and banks alike.

“Whether the result of politically driven regulators abusing their authority or flawed policies, this administration and Congress have an opportunity to dramatically curb government-driven debanking,” the AFPI report concludes.