Key Takeaways:
U.S. Attorney Jeanine Pirro subpoenaed JPMorgan Chase and Bank of America as part of a probe into whether the banks illegally "debanked" customers for political reasons, the Wall Street Journal reported Wednesday.
The investigation follows one of President Donald Trump's central grievances after his 2020 election loss — that financial institutions cut off services to conservatives and Trump-associated entities. Pirro, the top federal prosecutor in the District of Columbia appointed by Trump, is seeking internal records on account closures and denials of service, according to people familiar with the matter.
"Debanking has become a flashpoint in the broader debate over financial access and political speech," said James Okafor, macro analyst at Edgen. "The subpoenas signal that the DOJ is treating this as a potential civil rights or anti-discrimination issue, which could force banks to overhaul their risk-assessment frameworks."
JPMorgan Chase, the largest U.S. bank by assets with $3.9 trillion, and Bank of America, the second-largest with $3.2 trillion, both confirmed they received subpoenas and said they are cooperating. The banks declined to comment on the specific accounts or customers under review. Shares of JPMorgan fell 1.8% in afternoon trading Wednesday, while Bank of America dropped 2.1%, underperforming the broader S&P 500's 0.3% decline.
The probe marks the most aggressive federal action yet on debanking, a practice where financial institutions close or deny accounts to individuals or businesses based on perceived reputational, regulatory or political risk. During Trump's post-presidency, several entities linked to his business and political operations reported being dropped by banks, including the Trump Organization's primary lender and his social media venture's financial partners.
The subpoenas request documents dating back to 2020, when a wave of bank account closures followed the Jan. 6 Capitol riot. Banks face a legal bind: federal anti-money laundering rules require them to monitor customer risk, but critics argue those same rules have been used as cover for political discrimination. The Office of the Comptroller of the Currency has said it does not direct banks on which customers to serve, leaving the legal line unclear.
If the investigation finds systematic political discrimination, banks could face fines under the Equal Credit Opportunity Act or state-level consumer protection laws. Legal costs alone could run into the hundreds of millions for the industry, based on prior DOJ enforcement actions against large banks. The probe also raises the prospect of new federal rules defining when a bank can deny service — a regulatory outcome that would reshape compliance practices across the sector.
This article is for informational purposes only and does not constitute investment advice.
