Drop in Non-Citizen Engagement with U.S. Banking System
The involvement of non-citizens in the American banking system has significantly decreased, largely due to the stringent measures taken by the Trump administration against illegal immigration.
According to a Bloomberg report, many immigrants are choosing to close their bank accounts and instead keep their cash at home. This shift seems to reflect a growing wariness about the financial system.
Bloomberg also noted that migrants are applying for fewer loans. Specifically, consumer loans to undocumented individuals plunged by 70 percent since 2024, with lenders becoming increasingly hesitant to engage in these transactions.
Erica Serna, an advocate for Hispanic rights and associate director of financial empowerment for UnidosUS, mentioned, “We’ve seen a reduction overall in people who come for financial services, education services, workforce development.” She remarked that the current climate is “truly frightening for families.”
Her concerns resonate with the Biden administration’s actions in 2023 when they began pressuring banks to issue risky loans to illegal migrants, warning them that denying credit based on immigration status could violate federal law.
In contrast, the Trump administration has looked unfavorably on relaxed banking practices. Trump issued an executive order in May mandating that federal agencies ensure financial institutions closely scrutinize the immigration status of both potential and current clients.
Since Trump resumed office, over a million deportations have occurred, and various work permits have been revoked across the country, contributing to a confusing environment for banks dealing with undocumented individuals.
The Independent Community Bankers of America (ICBA), in response to the executive order, advised its members to avoid collecting information that could burden community banks and drive American citizens away from the regulated banking system.
Despite this pushback, the Treasury Department’s Financial Crimes Enforcement Network has cautioned banks to verify that clients are depositing funds from legal sources, which has inadvertently led to a steep decline in loan approvals for those lacking adequate credit scores.
Bloomberg reported that the percentage of loans granted to individuals without credit scores plummeted more than 70% from 2024 to 2025, with another 40% drop anticipated in 2026. Lending for auto loans and credit cards for those with poor or non-existent credit histories is projected to fall from about $37 billion in 2024 to around $7.2 billion in 2026.
While these statistics may not perfectly align with the illegal migrant population, they provide a telling representation of the situation.
Vadim Verkhoglyad, head of research at dv01, commented on the trends, stating, “It is the segment with the largest concentration of undocumented borrowers.” He suggested that the reduction in lending may correlate with shifts in the political and policy landscape.
Another activist, immigration lawyer Jennifer Oltarsh, expressed concern for her clients, who have become increasingly fearful. “They’re pulling their money out of banks and holding it in their mattresses,” she said.
