JPMorgan hasn’t clarified why it cut ties with Donald Trump, but the questionable circumstances from five years ago suggest a need for new laws to prevent this from recurring.
Recently, Trump filed a lawsuit against JPMorgan and CEO Jamie Dimon after the bank closed around 50 of his accounts in February 2021, just weeks after his presidency concluded. In court documents, JPMorgan admitted that it had instructed Trump to “find a more appropriate entity to conduct the transaction.”
The catch? They haven’t specified why a billionaire like Trump, who ran a vast business empire, suddenly became unsuitable post-presidency. Dimon avoided addressing this directly in a comment to Fox News, only stating that JPM doesn’t “discredit people based on their religious or political affiliation.”
What Dimon overlooks is that, while JPMorgan may not cancel accounts based on political views, bank regulators—now under the Biden administration—stepped in after the Capitol riot. They argued that financial institutions should reconsider dealings with Trump and his organization due to “reputational risk.”
This is a rather dubious stance, especially since it was implemented so hastily. From the outside, it appeared easier for them to sideline Trump than to uphold their responsibilities as a bank.
Trump wasn’t the only casualty; the same reasoning affected cryptocurrencies and even gun-related businesses. Following the January 6 events, various banks—including Bank of America—followed JPM’s lead in cutting ties with Trump.
Of course, we don’t want banks inadvertently supporting illegal activities, but they’ve historically overlooked issues when dealing with individuals like Jeffrey Epstein, who was involved in serious legal troubles.
It’s a bit puzzling; while the events of January 6 were concerning, Trump did urge protesters to remain peaceful. So, will this trend to exclude the Trump Organization from banking continue? And if cryptocurrency is deemed risky, does that really justify limiting its owners’ access to banking services? There are many who oppose gun ownership, yet the Second Amendment exists for a reason.
It’s odd that Dimon won’t admit that Trump’s ouster likely stemmed from government pressure. Meanwhile, JPMorgan hasn’t faced repercussions for its actions. Thankfully, there are indications that regulators are reconsidering the “reputational risk” criterion, with the Federal Reserve contemplating a formal repeal of this approach.
Legislation is crucial to address the core issues around debanking. Senator Tim Scott (R-South Carolina) has proposed a bill aimed at this very matter. He’s scheduled to meet with banking regulators this week to discuss his legislation, known as the FIRM Act.
The final version of the bill currently awaits action on Senate Majority Leader John Thune’s desk, and it hasn’t yet been presented to the full Senate for consideration. There’s clearly a need to address this debanking issue before it becomes widespread again.
A representative for Thune was not immediately available for comment.
