Last week, banks received a letter via ETRAN from the U.S. Small Business Administration (SBA) Office of General Counsel (OGC) notifying them of their obligation to comply with the August 7 Executive Order, entitled, “Guaranteeing Fair Banking for All Americans.”
“Until recently, most bank executives never exposed or attempted to stop the debanking of politically disfavored entities – choosing instead to ignore, yield or join federal regulators in the systemic effort to deny banking services to ideological opponents,” the letter said.
The letter goes on to state that “no financial institution participating in the agency’s loan guarantee programs unfairly targets any current or future customers on the basis of political, religious or ideological beliefs.” It further calls upon banks to perform the following actions by December 5:
- Identify any past or current formal or informal policies or practices that require, encourage or otherwise influence their institution to engage in politicized or unlawful debanking as specified by the executive order.
- Make reasonable efforts to identify and reinstate any previous clients denied service through a debanking action and send notice of the reinstatement to the injured party.
- Identify all potential clients denied access to financial or payment processing services through a debanking action and provide notice to each advising of the denied access and the renewed option to engage in such services previously denied.
The SBA directed lenders to submit a report by Jan. 5, 2026, addressing and evidencing compliance with these directives to [email protected]. Lenders that fail to comply with these directives will lose their good standing with the SBA and be subject to additional punitive measures.
IBAT and ICBA have been in contact with the SBA, seeking clarity on compliance and to minimize the reporting burden on community banks.
