Trump Signs Order to Address Banking Discriminations

Last week, US President Donald Trump signed an executive order aimed at stopping banks from discriminating against clients for engaging in “legal business activities” like political affiliations, religious beliefs, or ownership of cryptocurrency. In an interview with CNBC, he expressed that he feels he’s been discriminated against seriously by banks, despite his favorable banking history.

This kind of complaint isn’t exactly rare. Conservatives argue that regulators appointed by President Joe Biden have targeted Trump’s political rivals by restricting access to banks. Mark Andreessen, a tech investor and adviser to Trump, commented that about 30 founders from tech start-ups have faced banking problems. He labeled the initiative “operation choke point 2.0.” This narrative seems to resonate widely.

In light of increasing federal scrutiny, many banks have ramped up their lobbying efforts. They’ve revised their policies to clarify that they do not discriminate based on political beliefs or religion. Still, scrutiny from regulators remains a concern for these financial institutions.

Although this is an American move, Canadian banks will also feel the ramifications because of their significant operations in the US. The five largest companies in Canada are all banks based in Toronto, with substantial assets in the US.

It’s a bit hard to fathom a coordinated effort to exclude clients purely for political reasons. But, given the deep divisions in American society, especially with local banks, it’s not entirely unexpected.

Moreover, as noted by the Washington Post, the restrictions on financial and tech start-ups are understandable. This follows the collapse of two banks, Silvergate and Signature, in 2023 due to mismanaged risks, according to Steven Kelly, a former associate director at Yale’s financial stability research center.

Amid the controversies with Trump’s own banking pursuits, particularly in the crypto sector, the situation becomes more political. Trump aims to position the US as the leading country for cryptocurrency, and he has a burgeoning crypto business valued in the billions. Meanwhile, Canadian banks appear hesitant about cryptocurrency, although US regulations might compel them to engage more with crypto start-ups.

Conversely, Canada’s restrictions on foreign ownership could create significant challenges for both the government and major banks. Trump has criticized these barriers, arguing that they prevent American banks from entering the Canadian market, despite Canadian banks heavily participating in the US market. In a social media post in March, he remarked, “Canada doesn’t allow American banks to operate, but their banks are flooded with the American market.”

However, it should be noted that there are actually 16 US-based bank subsidiaries in Canada with considerable assets. The Canadian Bankers Association points out that while American banks face strict regulation, they are indeed operational, albeit with some limitations in consumer services.

Trump’s goal seems to be to remove these barriers entirely, allowing US banks to compete directly with local ones in Canada. Yet, one can’t help but wonder if his policies might overlook certain facts in favor of an agenda.