Donald Trump and De Gop have a surprising new ally in their push to clamp on “Debanking”: Elizabeth Warren.
The Democratic Senator from Massachusetts outlined her support for the issue known during a hearing of the Senate Bank Committee on Wednesday when she praised the president for the confrontation of Brian Moynihan, last month, CEO of Bank of America (BAC).
“Donald Trump was on a real problem when he criticized Bank of America because of her Debanking practices,” Warren said in her opening comments.
The confrontation that Warren referred to, came to the World Economic Forum in Davos, Switzerland, where Trump Moynihan told that “I hope you open your banks for conservatives because what you do is wrong.”
Large banks, Warren added Wednesday, “can take shortcuts when it comes to assessing risks instead of the time and the means to identify real criminal risks and to conclude those bills,” she added .
The claim that large banks have discriminated against certain customers gets new visibility, because the GOP presses for legislation that could better determine when banks can reject the service. The Crypto industry has joined the call for changes after he claimed that digital activa companies have refused unfair bank services in recent years.
Bank of America as well as JPMorgan Chase (JPM), including the CEO Jamie Dimon, have denied that they are debit customers based on their personal or political views.
What Dimon and other bankers have argued instead is that American rules such as the Bank Secrecy Act bank banks discourage customers who are considered a high risk and that there must be clearer regulations in that area.
According to the Bank Secrecy Act and related anti-money laundering laws, American banks are obliged to control and report customer transactions to the government to prevent money laundering, fraud and other financial crimes.
In practice, this means that large banks submit tens of thousands of suspicious activity reports about customers to the government every quarter. Because it could hinder the law enforcement if something illegal happens, banks are specifically not allowed to warn customers when they submit one of these reports.
When a lender is not a customer with a high risk and an illegal activity takes place, banks are confronted with heavy fines through fines and a potential downgrade in their supervisory ratings score.
“We agree with President Trump’s diagnosis that a lot of debt occurs as a result of an anti-money laundering practices and ‘reputational risk’ regime managed by the federal banking agencies where certain types of customers are referred to as ‘high risk’,” “Greg Baer , CEO of Bank Lobbying Group Bank Policy Institute said in a statement last month.