Foxhall Parker
Director, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce

Published

February 04, 2025

Share

What's Happening: On February 5th and 6th, the Senate Banking Committee and the House Financial Services Oversight and Investigations Subcommittee are holding hearings on “debanking,” a term that that has been used to describe a bank rejecting a potential customer or closing the account of an existing customer. 

Our View: As the world’s largest business federation, the Chamber is particularly sensitive to the financial services needs of businesses in every sector and every region across the country. We understand that access to affordable financial products is critical for the growth of individual businesses; and when these businesses and the banking sector are strong and vibrant, our nation’s economy is as well. We encourage policymakers to explore regulatory impediments that may prevent banks from opening accounts and providing other services to lawful businesses. The decision to whom to provide services to, within the bounds of the law, should be up to the market’s judgment, not the government’s judgment. 

Why Would a Bank Reject a Customer: The decision to deny services or close accounts is not one that banks take lightly. It's in the interest of banks to take on new customers from all corners of our economy; this is how they grow and compete. However, our nation’s banks are subject to a panoply of regulatory requirements designed to promote safety and soundness, and unlike in most other sectors, bank regulators oftentimes micro-manage decisions including who can be a customer.  

Dig Deeper: Banks must adhere to the Bank Secrecy Act and Anti-Money Laundering Act. For example, this law requires banks to file “Suspicious Activity Reports” (SARs) with regulators based on activities the government has deemed “risky.” The consequences of non-compliance with these laws are steep, resulting in fines, enforcement actions, and criminal charges, in addition to reputational risk and operational disruptions. Strict compliance programs required by regulators may in some circumstances lead banks to “over-correct” and close accounts of law-abiding customers who exhibit “risky” behavior. 

Why It Matters: Prescriptiveregulations and overzealous enforcement intended to protect against “risk” may prevent lawful consumers and businesses from accessing the banking system. This could make it more difficult for businesses to manage their finances, access credit, and take advantage of other services that banks provide to help their customers grow and compete.  

What's Next: We are encouraged by the work of Congress to review access to the banking system. The Chamber stands ready to support policymakers as they consider solutions that empower banks to provide services to more consumers and businesses, and increase the competitiveness of our banking system.  

About the authors

Foxhall Parker

Foxhall (Fox) Parker is the Director for the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce where he works on banking and insurance policy.