Fed’s Michelle Bowman Calls Debanking A Problem After Trump’s Executive Order Barred It

Federal Reserve Governor Michelle Bowman on Tuesday reportedly called debanking a problem in the U.S. banking system.

In an interview with Bloomberg, Bowman said the first thing she did after President Donald Trump signed an executive order earlier this month barring debanking was to rescind the Fed’s guidance and material on reputational risk.

Debanking is a practice wherein lenders deny services to customers by closing their bank accounts due to perceived risks to the institution.

Bowman added that the discontinuation of the material and guidance on reputational risk was to ensure banks can have anyone as their customers who are engaged in legal activities, and that these institutions cannot discriminate against these customers based on their business model, their political views, or otherwise.

“All of that happens under the cloak of confidential supervisory information. But as long as our examination teams and our policy makers are focusing on ensuring that reputational risk and debanking is not a part of the banking system going forward, then I think that’s the way that will work,” she said in the interview.

Meanwhile, U.S. equities traded lower on Tuesday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.44%, while the Invesco QQQ Trust (QQQ) fell 1.06%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.

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