Federal scrutiny of alleged “debanking” practices is accelerating, with subpoenas targeting major banks and potentially broader regulatory enforcement ahead. The implications extend well beyond compliance, raising material legal, financial, and reputational risks.
As investigations continue, banks and their leadership teams should act quickly to assess exposure, preserve insurance rights, and prepare for potential follow-on claims before early missteps limit their ability to respond effectively.
Growing scrutiny of banks’ account decisions
On June 10, The Wall Street Journal reported that the U.S. attorney’s office in Washington, D.C., has sent “far-ranging subpoenas to several of America’s largest banks… requesting information about whether they ‘debanked’ clients (opens a new window), or improperly closed customer accounts for political reasons.”
The subpoenas represent the latest developments in the Trump administration’s efforts to crack down on what it has characterized as a concerted effort by the banking industry to deny services to politically conservative individuals and organizations with activity on the political right.
In August 2025, the president issued an executive order aimed at curbing alleged “debanking” practices (opens a new window) and ensuring Americans are not denied financial services based on political or religious beliefs or lawful business activities. The order directs federal banking regulators to eliminate reliance on “reputational risk,” review past banking practices, and take corrective actions against institutions that engaged in discriminatory account closures. The order also instructs agencies to reinstate affected customers, develop anti-debanking strategies, and refer unlawful cases to the Department of Justice (DOJ) for possible investigation.
“Financial institutions have engaged in unacceptable practices to restrict law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities,” the president said in the order. The order emphasizes the administration’s view that banking decisions should be based on objective, risk-based criteria rather than subjective or politically influenced judgments.
Importantly, banks are generally permitted to decline or terminate customer relationships under their account agreements and applicable banking regulations. However, regulators have consistently emphasized that such decisions should be based on objective, risk-based factors rather than political, religious, or other subjective considerations. Common reasons banks may choose to exit a customer relationship include:
Anti-money laundering concerns.
Sanctions risks.
Fraud concerns.
The inability to satisfy know-your-customer requirements.
Safety and soundness concerns.
A customer’s refusal to provide information required for regulatory compliance.
Building on OCC action
While the executive order directs action by several banking regulators, including the Small Business Administration, Federal Deposit Insurance Corporation, and Federal Reserve, much of the activity in response to the order — prior to the recent issuance of subpoenas — has been carried out by the Department of Treasury’s Office of the Comptroller of the Currency (OCC).
In September 2025, the OCC issued two bulletins directing banks to align policies with the executive order (opens a new window). The OCC also said it had “requested information from its nine largest regulated institutions regarding their debanking activities.”
In December 2025, the OCC released preliminary findings from a supervisory review of those nine institutions (opens a new window). The banks “made inappropriate distinctions among customers in the provision of financial services on the basis of their lawful business activities by maintaining policies restricting access to banking services or requiring escalated reviews and approvals before providing certain customers access to financial services,” the OCC said in announcing the findings.
The OCC said it “identified instances where at least one bank imposed restrictions on certain industry sectors because they engaged in ‘activities that, while not illegal, are contrary to [the bank’s] values.’” The OCC’s report linked many of the banks’ actions to industry support for environmental, social, and governance principles that the administration has consistently said are anticompetitive and detrimental to the economy.
Adding to banks’ complex regulatory frameworks
Regulators generally expect banks to maintain policies and procedures governing customer onboarding and account closures, apply those policies consistently, document the basis for decisions, and demonstrate that similarly situated customers are treated similarly. They should also ensure that any debanking decisions are risk-based and well documented.
As scrutiny surrounding debanking practices increases, institutions should anticipate greater focus on governance, oversight, and documentation supporting these decisions.
The administration’s efforts to date regarding debanking have focused primarily on the very largest U.S.-based banks, each of which have $200 billion or more in total assets. Regulators, however, may ultimately expand their scope to include midsize and small institutions and potentially foreign banks.
This development is also a reminder of the increasingly complex regulatory environment facing banks and the broader financial services industry. Regulatory subpoenas, examinations, investigations, and enforcement inquiries often serve as the starting point for a much broader series of events that can include follow-on regulatory actions, shareholder litigation, customer lawsuits, derivative actions, and reputational damage.
While the ultimate outcome of the current debanking inquiries remains uncertain, the situation highlights the importance of maintaining robust compliance programs, strong regulatory relations functions, effective governance frameworks, and enterprise risk management practices capable of identifying, escalating, and managing emerging regulatory risks.
This means that banks and their senior leaders cannot be complacent about potential risks. It also underscores the need to ensure they have robust insurance coverage in place.
Making effective use of insurance
As a first step, risk professionals should work with their insurance brokers to review relevant insurance coverages, including directors and officers liability (D&O) and banking professional liability (BPL) policies. Risk professionals should pay specific attention to definitions under these policies — including for “claim,” “investigation,” “loss,” and “defense costs” — and evaluate whether subpoenas themselves trigger coverage.
If there is any uncertainty about the applicability of coverage, organizations should strongly consider submitting notices of circumstances to their insurers. Notices should be coordinated across potentially responsive towers, including D&O policies; Side A-only D&O policies, which protect directors and officers personally when organizations cannot or will not indemnify them for covered claims; and BPL policies.
For most banks, insurance discussions should begin immediately upon receipt of any subpoenas, even before an institution determines whether the underlying allegations have merit. Preserving coverage rights early is often the difference between recovering millions in defense costs and facing a coverage dispute years later. Risk professionals should review consent to incur cost provisions, after which they should engage claims counsel and their brokers’ claims teams to maximize coverage preservation.
Working with their insurance and legal advisors, organizations should also:
Determine whether directors and officers have been individually identified.
Analyze potential follow-on exposures, including shareholder, customer, derivative, and regulatory actions.
Maintain detailed chronologies of communications with regulators and insurers to avoid late-notice or consent disputes.
Strong compliance, governance, and risk management functions have long been important considerations for insurance underwriters and are likely to receive even greater attention as regulators continue to examine these issues. While we do not currently expect insurers to introduce broad coverage restrictions or exclusions specifically in response to the recent debanking subpoenas, banks should anticipate increased scrutiny during upcoming renewals.
Underwriters are likely to seek additional information regarding any subpoenas, regulatory inquiries, examinations, or investigations received by institutions along with banks’ overall compliance frameworks and customer account management practices. In particular, insurers may focus on:
How account closure decisions are governed, documented, escalated, and reviewed.
The involvement of legal and compliance personnel.
Interactions with regulators.
Whether institutions have experienced prior complaints, investigations, or litigation related to alleged debanking practices.
Regardless of whether the current subpoenas ultimately result in enforcement actions, they underscore a broader reality for financial institutions: Regulatory scrutiny can quickly evolve into multidimensional legal, reputational, operational, and insurance challenges. That makes proactive risk management and governance more important than ever.
For more information or insights, please visit our insurance for banks webpage here, (opens a new window) or contact a member of your Lockton Professional & Executive Risk team.
