What is Debanking? Political and Religious Discrimination by Financial Institutions.

The National Committee for Religious Freedom (NCRF)’s checking account with JP Morgan Chase was suddenly closed with no explanation in the spring of 2022.

When the organization—led by a diverse board of Christians, Jews, Muslims, and Hindus dedicated to promoting religious freedom in America—inquired about the closure, they received a list of demands from the financial institution. They were told their account would be reinstated if they provided a list of their large donors, political candidates they support, and an explanation of how the NCRF determines what candidates they support.

This isn’t something out of a totalitarian country—this happened here in America.

What happened to NCRF is just one example of a disturbing new trend called debanking—political and religious discrimination by financial institutions. Banks are increasingly and sneakily trying to make political and religious views a primary condition of service. It’s a threat to free speech and free association, and it’s a growing concern for businesses, non-profits, and individuals across America.

Debanking is political and religious discrimination

Debanking is an attempt by major financial services corporations to close accounts of organizations or individuals with whom they disagree, whether politically or religiously. Debanking aligns with the environmental, social, and governance (ESG) criteria used by many major financial services corporations.

Financial advisors and institutions that use ESG criteria invest based on a social and political agenda, rather than their fiduciary duties. Most notably, companies that are using ESG criteria when making investment decisions have boycotted the fossil fuel industry even though it has negatively impacted the performance of investments. Similarly, debanking is when—whether by the coercion of activists or by internal decision-making—banks discriminate against individuals, industries, or groups because of their political views by closing their accounts.

It’s driven by political activism and coercion

Coercion by activists is one of the most disturbing causes of debanking. Take, for example, Fidelity Charitable: It manages a fund that allows account holders to make contributions to their favorite non-profit organizations. Unmasking Fidelity—a coalition of left-leaning organizations—issued Fidelity Charitable a list of demands in 2022 demanding that they “disclose five years’ worth of contributions to 10 targeted organizations (including Family Research Council, Turning Point USA, and Alliance Defending Freedom)… and also impose viewpoint-based litmus tests on the charities and causes that its account holders can support.”

Imagine that—non-profit organizations being threatened with the termination of services by their financial institutions because activists pressure that financial institution to blacklist them if they do not align with the viewpoints of a litmus test they created.

The large financial institutions in the examples above—those most frequently involved in debanking episodes—can hardly claim a “right of refusal” as a private business. These large national banks, as NCRF Chairman and former U.S. Ambassador Sam Brownback writes, “receive wide-reaching government benefits such as greater lending power, FDIC insurance rates, subsidies, bailouts, and an anticompetitive chartering system.” Because they are so closely entangled with the government and by extension, taxpayers, they have an obligation to “not discriminate based on viewpoints.”

It would be one thing if your local bank down the street, with just one brick-and-mortar location in the community, decides not to serve a customer. It’s entirely another when a bank as closely tied to the federal government does so—and it’s completely unacceptable.

Debanking is an issue of free speech

Debanking is a serious threat to free speech. JP Morgan Chase and Fidelity’s requests to relinquish the anonymity of donors are particularly egregious—donor privacy is an important part of free speech. Public donor information opens the door for donors of all political persuasions—not just the Right—to be “named and shamed” and harassed for their views. Privacy encourages charitable giving—if you knew you might be harassed for donating to a particular cause, you’d probably think twice about doing so. And the Supreme Court agrees: In NAACP v. Alabama, the court ruled against the state attempting to force disclosure of NAACP’s membership lists. And, in Thomas More Law Center v. Bonta, the court ruled against a state donor-disclosure regulation because it “violated the First Amendment rights of charities and their supporters.”

In addition, the practice is highly unfavorable among likely voters. The Center for Excellence in Polling recently found that nearly three-quarters of Republicans, Democrats, and Independents do not agree that banks should be allowed to deny services to customers based on the customer’s political, social, or religious views.

What states can do about debanking

In the marketplace of ideas—and in America, especially—coercion and threats and discrimination for political and religious views have absolutely no place. Thankfully, people are taking action to push back against efforts at debanking. Nineteen state attorneys general sent a letter to JP Morgan Chase CEO Jamie Dimon to stop discriminatory banking practices. Alliance Defending Freedom gathered signatures for a recent statement backed by investors and financial industry professionals asking Dimon and other financial industry CEOs to “respect free speech and religious liberty.”

States should respond quickly and unequivocally, sending a clear message that this kind of discrimination will not be tolerated. They, too, can call on banks and financial institutions to stop viewpoint discrimination and defend free speech and free association. They can also pass legislation to stop the debanking of ideologically disfavored individuals, industries, and groups.