Regulators Forbidden from Shutting Bank Accounts Over Politics
Published Date: 10/30/2025
Proposed Rule
Summary
The OCC and FDIC want to stop using 'reputation risk' as a reason to punish banks or make them change their services. This means banks can’t be pressured to close accounts or drop customers just because of political or social views, or lawful but unpopular business activities. The rule is open for public comments until December 29, 2025, and aims to keep banking fair and free from biased actions.
Analyzed Economic Effects
5 provisions identified: 4 benefits, 1 costs, 0 mixed.
Banks protected from 'reputation risk' actions
The OCC and FDIC propose to forbid regulators from criticizing or taking adverse action against a bank on the basis of "reputation risk." The proposal would bar agency actions such as negative feedback in an exam, a memorandum of understanding, supervisory downgrades, denials of filings, or imposing heightened approval requirements when those actions are taken because of reputation concerns.
Customers less likely to lose bank services for beliefs
The proposed rule would prohibit the agencies from requiring, instructing, or encouraging banks to close accounts or refuse services because of a person's political, social, cultural, or religious views, constitutionally protected speech, or lawful but politically disfavored business activities. If finalized, this aims to reduce cases where banks are pressured to terminate or avoid customers for those reasons.
Potential compliance cost savings for OCC banks
The OCC estimates the proposed rule would reduce regulatory compliance burden for the 1,017 institutions it supervises and notes that 12.42 percent of Matters Requiring Attention (MRAs) in 2024 mentioned "reputation." The OCC says eliminating reputation-risk examinations could produce non-trivial cost savings for institutions that previously prepared for such reviews.
Fewer reputation-based hurdles for approvals and hires
Under the proposal, agencies could not disapprove board members, deny waivers (e.g., director citizenship or residency), or disapprove change-of-control notices solely to address reputation risk. The rule gives examples such as preventing a disapproval based on an unsubstantiated pretense where the true reason is reputation risk.
Sanctions and anti‑money‑laundering rules unchanged
The proposal explicitly does not affect requirements to prohibit or reject transactions or accounts involving Office of Foreign Assets Control (OFAC)-sanctioned persons, entities, or jurisdictions. The agencies also state supervisors may continue BSA/anti‑money‑laundering (AML) supervision and enforcement, and the rule would bar using BSA/AML or sanctions as a pretext to pursue reputation risk.
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Key Dates
Department and Agencies
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