Wall Street reveals Trump executive order has significantly reduced federal regulatory pressure

• Bank of America has implemented new policies to communicate account closure reasons to clients and reaffirms it never closed accounts based on political affiliation, though regulatory pressure from previous administrations did exist
• The Financial Crimes Enforcement Network (FinCEN) issued updated Suspicious Activity Report (SAR) requirements in October, reducing paperwork burdens that banks previously faced under strict regulatory scrutiny
• The FIRM Act, which would permanently codify protections against political de-banking and cannot be undone by future administrations without Congress, has passed the Senate Banking Committee and awaits a floor vote

Summary

Key Development:

Wall Street sources report that President Trump's executive order addressing "de-banking" has significantly reduced federal regulatory pressure on major U.S. banks, with effects being felt months after implementation.

Main Impact:

The order dissolved the "reputational risk" standard that previously allowed regulators to pressure banks into closing accounts for political reasons. Banks now expect fewer account closures, reduced paperwork requirements, and the ability to focus on genuinely high-risk activities rather than political considerations.

Companies Mentioned:

Bank of America has implemented new policies to enhance transparency around account closures and confirmed it never closed accounts based on political affiliation, though acknowledging regulatory pressure existed under previous administrations.

Historical Context:

The regulatory framework originated from Operation Choke Point under the Obama administration's Department of Justice, which permitted regulators to target accounts based on loosely defined "reputational risk." First Lady Melania Trump disclosed in her memoir that her account was closed and son Barron was prevented from opening an account following January 6, 2021.

Legislative Action:

Senate Banking Chairman Tim Scott is pushing the Financial Integrity and Regulation Management (FIRM) Act to codify these protections into law, preventing future administrations from reversing the executive order. The bill has passed the Senate Banking Committee and awaits a Senate floor vote.

Market Implications:

The regulatory relief allows financial institutions to implement balanced, apolitical internal policies with greater freedom, potentially reducing compliance costs and operational constraints while ensuring broader access to banking services for lawful businesses and individuals.