The news: President Donald Trump is expected to sign an executive order against alleged “debanking,” claiming that JPMorgan Chase and Bank of America discriminated against him by rejecting his company's deposits, per The New York Times. 

The details: The executive order will reportedly:

• Instruct federal regulators to punish banks that illegally discriminate against customers based on political or religious beliefs, per Politico. 
• Task the Treasury Secretary with creating a strategy to combat debanking and eliminate reputational risk as a factor for regulators when evaluating financial institutions (FIs).
• Direct bank regulators to investigate potential violations of the Equal Credit Opportunity Act and other antitrust and consumer financial protection laws, per The Independent. 
• Criticize banks for their role in January 6 Capitol riot investigations.

The fallout: Some FIs may alter their risk management practices to avoid a personal vendetta.

But by mandating that banks cannot debank certain groups for fear of being accused of political bias, the order essentially limits their ability to manage risk. This could expose FIs to clients with legitimate compliance or reputational concerns. 

It also forces FIs to choose between political and financial blowback and carries a long-term risk of losing young, socially conscious customers. Gen Zers particularly care about banks’ actions when it comes to what they deem as moral issues, like the environment or DEI. Diverting from prior commitments young consumers supported could damage their loyalty.