Trump Executive Order Attacks "De-banking" Practices

On August 7, 2025, President Trump issued an executive order targeting the practice of de-banking--as described in the executive order, actions to “restrict law-abiding individuals' and business' access to financial services on the basis of political or religious beliefs or lawful business activities.”  The Trump Administration has objected to the efforts of banks to dissociate from those “participating in activities and causes commonly associated with conservatism and the political right following the events that occurred at or near the United States Capitol on January 6, 2021.”  In other words, the Trump Administration is seeking to counteract the efforts by private actors in the financial services industry to cease doing business with individuals and companies associated with right-wing causes, and threatening to impose government sanctions should they fail to comply. 

Specifically, the executive order states that “each appropriate Federal banking regulator shall . . . remove the use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking.”  This executive order could have a widespread impact beyond the immediate circumstances that apparently prompted its issuance--a number of financial institutions have refrained from engaging with entities deemed imprudent to interact with (e.g., gun manufacturers).  Based on this executive order, which tries to eliminate any consideration of “reputation risk,” financial institutions would have difficulties in distancing themselves from companies or individuals engaged in practices deemed unsavory or problematic--with potential consequences for their own reputations and business outlook.  Indeed, this executive order could be viewed as part of the Trump Administration's broader assault on ESG concerns, as such considerations often underpinned the debanking practices at issue here.