Today, the Consumer Financial Protection Bureau (CFPB) testified before the Senate Banking Committee. Chairman Rohit Chopra outlined his accomplishments while at the agency in his opening statement, mentioning that they are working on addressing the challenges of debanking.
Blocking people from the banking system has emerged as a nefarious activity most likely initiated by the federal government, which holds sway over sector participants. While Chopra said they are looking into the issue, he should have been doing more during the past four years.
Senator Tim Scott, Ranking Member of the Committee, slammed the rise of debanking – ostensibly to undermine individuals and firms pursuing ventures disfavored by the Biden Administration. Scott, in his opening statement, explained:
“Speaking of regulators abusing their authority, the longstanding issue of debanking and Operation Chokepoint have recently resurfaced. I have focused on this issue for years and the patent inequality it represents for our legal businesses. I have consistently called out our banking agencies for weaponizing their power, and private institutions for bending to the powerful here in Washington. No legal business should ever be debanked.
This message is something that Director Chopra has latched onto since the election, including direct references to debanking in his last two rulemakings. But make no mistake, the Director is not our ally in this fight, and the career bureaucrats at the CFPB are not either.
The Director’s recent actions are little more than an attempt to expand the CFPB’s jurisdiction and grant the agency more authority to pick winners and losers in the financial services system.”
Debanking is a disgusting abuse of power, and any bank or regulator that pursued debanking policies should be investigated and perhaps prosecuted. Whether on the right or the left, any individual or firm not breaking the law must have access to the banking system. The Biden Administration has disregarded this fact, taking an authoritarian approach to the federal government’s power. Noted VC Marc Andreessen recently stated that around 30 of their portfolio firms had run afoul of the debanking minions. This is one of the reasons he supported Donald Trump for President. Americans should be outraged by any debanking perpetrators.
While Chopra is on his way out, the next head of the CFPB, as well as the next Chairman of the Senate Banking Committee, should pursue this abuse of authority. The debanking perpetrators must be held accountable, regardless of their rank and position, to restore confidence in the banking system.
