At Senate Banking Hearing, Warren Calls on President Trump to Work with CFPB to Protect Americans Against Debanking
Warren released new analysis identifying thousands of debanking complaints with more than half against four big banks: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup
In letter to Trump, Warren urged him to lift his freeze on CFPB’s work, so the agency can finalize and enforce their existing debanking safeguards
Washington, DC – At the Senate Banking, Housing, and Urban Affairs hearing on debanking, Ranking Member Elizabeth Warren (D-Mass.) made the case for lifting the freeze on the Consumer Financial Protection Bureau (CFPB)—the one agency that is actively working to stop unfair de-banking—to finalize rules that would help prevent debanking by addressing some of the root causes, from overdraft fee practices to discrimination because of someone’s religious or political beliefs.
During the hearing, Senator Warren called out Treasury Secretary and Acting CFPB Director Scott Bessent for halting all CFPB rulemaking, enforcement investigations, and litigation against financial institutions that are breaking the law—including banks that are wrongfully debanking their customers. “The freeze Secretary Bessent has put on the CFPB means more Americans across the country will be unfairly de-banked, and they will lose the one agency working to help them,” said Senator Warren.
Nathan McCauley, CEO and Co-Founder of Anchorage Digital, claimed in his testimony that his company lost its bank account, and dozens of banks—including some of the biggest in the country—turned him down. During Senator Warren’s questioning, McCauley agreed with her that it would be useful to have more transparency into the problem like the CFPB’s consumer complaints database provides and agreed with her that people who are illegitimately debanked deserve some rules to protect them and an appeals process if they lose access to their accounts.
Transcript of Senator Warren’s opening remarks and questioning below:
Thank you, Mr. Chairman. Thank you for holding today’s hearing on de-banking. It is a real problem, and I hope it is something we can work on together.
People need access to a bank account in order to thrive in today’s economy. The same goes for businesses. Without a banking account, you really can't get along.
“De-banking” happens when a bank shuts down a customer’s bank account because they think that account poses a financial, legal, or reputational risk to the bank. Once the bank shuts someone out, they may share that information with companies that get paid to maintain a Do Not Bank list—with the result that the customer is blacklisted everywhere.
For me, this is straightforward. It doesn’t matter who you voted for, what you believe, or the origin of your last name—people shouldn’t be arbitrarily denied access to their banks, locked out of their accounts, or stripped of their banking privileges.
To help identify what is going on, my staff reviewed the Consumer Financial Protection Bureau complaint database, looking for cases where consumers reported that they were unable to open accounts or their accounts were wrongly closed—classic de-banking. Mr. Chairman, we put together a supplemental memo on this data that I’d like to make part of the Committee record.
My staff identified 11,955 complaints—and that’s only the people who took time to file complaints and only in the past three years.
They all reported common themes.
No warning.
No explanation.
No chance to dispute or appeal.
They described how one day, all of a sudden, they lost their place in the banking system.
We know from the consumer complaint hotline that millions of Americans—of all political stripes—have had the same experience.
Tens of millions of customers have been blacklisted by the banking industry because they overdrafted their account a few times.
Formerly incarcerated Americans have been de-banked because of their criminal history.
Some people have been de-banked for merely having the same name as someone who has a criminal history.
Muslim Americans and Armenian Americans have faced de-banking on account of their last names.
Non-profits and charities operating internationally have been de-banked through no fault of their own.
Lawful cannabis businesses have been unable to open accounts, and employees of those businesses have also been de-banked.
This shouldn’t be happening. So we need to figure out why, and who is responsible. My staff did some more work here as well. They found that just four big banks—Bank of America, JP Morgan, Wells Fargo, and Citibank—accounted for half of all the complaints filed at the CFPB.
Donald Trump was onto a real problem when he criticized Bank of America for its de-banking practices.
Banks may be taking shortcuts when it comes to assessing risks. Rather than investing time and resources to identify true criminal risks and shutting down those accounts, big banks are relying on black box algorithms and middle-men companies and shutting down accounts without doing careful due diligence.
We can prevent these abuses. I know that the Consumer Financial Protection Bureau is a favorite whipping boy of Republicans on this Committee, but the CFPB is the main agency in our government that is actively working to stop unfair de-banking.
Let me say that again: the CFPB is the one agency that is actively working to stop unfair de-banking. Right now, the agency has five different rules either in place or in progress that would help prevent de-banking by addressing some of the root causes, from overdraft fee practices to religious discrimination. And the CFPB is working to hold banks accountable when they close law-abiding citizens and businesses’ accounts for no good reason.
I sent a letter to President Trump today that walks through the CFPB’s work. I’d like to make that letter part of the Committee record. I said the CFPB is the one agency fighting back against de-banking, but that may be at risk.
Earlier this week, Treasury Secretary and Acting CFPB Director Scott Bessent halted all CFPB rulemaking, enforcement investigations, and litigation against financial institutions that are breaking the law—including the banks that are wrongfully de-banking their customers. The freeze Secretary Bessent has put on the CFPB means more Americans across the country will be unfairly de-banked, and they will lose the one agency that is working to help them.
There is additional work to be done by the Treasury Department, the Federal Reserve, the FDIC, and other regulators to issue clear Anti-Money Laundering rules and guidance for banks to follow, which would reduce the incentive to use de-banking as a form of risk management.
Mr. Chairman, I’ll say again: I appreciate your holding this hearing. De-banking is a real problem, and I’m eager to work with you and President Trump to support the CFPB’s efforts to make sure that banks treat all people fairly and that we put an end to this de-banking.
Transcript of Senator Warren’s questioning of witnesses Nathan McCauley, CEO and Co-Founder of Anchorage Digital and Mr. Aaron Klein, Senior Fellow in Economic Studies, Brookings Institution:
SENATOR WARREN: Debanking is a real problem and we need to work across the aisle to solve it. I have a stack of stories sent in by consumers and organizations that were debanked and I would like to submit them for the record. These stories are from Muslim Americans, from cannabis businesses, from formerly incarcerated individuals, all of whom lost their bank accounts for no apparent reason. I want to talk about what kind of recourse consumers have or don't have when they are debanked.
Mr. McCauley, you testified that your company lost its bank account, and when you tried to open a new one, dozens of banks—including some of the biggest in the country—turned you down. Which of the big banks refused to offer you an account?
MCCAULEY: I don't think it is productive to name individual banks. I believe the banks were the victims here.
SENATOR WARREN: Okay, I just want to get it into the record because we have recourse. Did you get an opportunity to appeal that decision?
MCCAULEY: No, Senator. There was no room for discussion with the banks.
SENATOR WARREN: So, no appeals. That’s unfortunate. The CFPB has accepted 11,955 complaints from consumers and organizations that were unable to open accounts or their accounts were wrongly closed, just in the last 3 years.
Do you agree that it’s useful to have a database for this information, so we can identify trends, both in the types of individuals that are being targeted and also the banks where this is happening?
MCCAULEY: Senator, more data and more transparency will help.
SENATOR WARREN: Okay. Good. I don't think for a second that you should be locked out of our banking system. In many cases, it is wrong for banks to close accounts and threaten your ability to make payroll or pay rent on time without providing an explanation, so long as you are following the law.
Mr. Mccauley, do you agree that people who are illegitimately debanked deserve rules to protect them and an appeals process if they lose their accounts?
MCCAULEY: Yes, Senator. Some things should be done to make sure regulators don't do this again.
SENATOR WARREN: Okay. And if banks are adopting policies that routinely debank people based on their beliefs or illegitimate reasons, that is wrong, it needs to be stopped.
Mr. McCauley, should consumers be protected from being debanked based on political or religious?
MCCAULEY: Yes, Senator. Many individuals within the crypto industry were debanked and I wished industries would help them.
SENATOR WARREN: And I presume you would carry that over to those debanked for other reasons as well—because of their beliefs?
MCCAULEY: Of course.
SENATOR WARREN: The CFPB has been on the front lines combating debanking for years. In 2022, they added debanking to the list of illegal practices that bank examiners should be on the lookout for. Last year they wrote rules to crack down on debanking by payment apps and the third-party data aggregators that the banks used to decide who to kick out of the financial system. Last month, they proposed a rule to stop companies like PayPal that considered fining users for certain types of speech on their platform.
Mr Klein, how will the CFPB’s rules help put a stop to unfair debanking?
KLEIN: Well, Senator, the CFPB is on the forefront of looking after consumers, making sure consumers have access to high-quality and fair banking practices As opposed to bank regulators who are too often focused on the bank.
I can think of five rules the bureau has: the contract rule, their UDAP, unfair discriminatory practices rule, and the larger participant rule which would give them authority over places like Venmo and Paypal, which you just described. Their data broker rule which includes credit reporting agencies like the ChexSystem, that maintained a defacto do not bank list. There is no economics to require those things to be accurate. It is simply a limited appeal process. And their overdraft rule.
When you ask people who have lost their bank account or are out of the banking system, why don't you have a bank account? The number one reason is it's too expensive, and their overdraft fees, which some estimates were up to $30 billion a year or more, are part of the large reason people leave. Those five rules that the bureau put out would all combat debanking in various ways.
SENATOR WARREN: Thank you. The CFPB is ready for this fight. Every day that the CFPB is locked out of doing its job people are getting debanked. If the president is serious about stopping debanking, he needs a strong CFPB as its partner to get this done. Thank you, Mr. Chairman.
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