Debanking Is Just a Tax on Dissent

Sam Brownback has held many positions over the years—senator, governor, ambassador-at-large—but there is one that continues to elude him: Chase Bank customer.

After serving as U.S. ambassador-at-large for worldwide religious freedom during the Trump administration, the former Kansas governor turned his attention to religious liberty at home and launched the National Committee for Religious Freedom, a nonprofit group, and opened an account at Chase. Not long after doing so, he went into a Chase branch to make a deposit and was told that his account had been closed. The local banker was able to tell him only three things: that the decision had come from the main corporate office, that it was irrevocable, and that staff had been instructed not to talk about it.

“We still don’t know what happened to us,” Brownback said in a recent discussion of religious liberty and “debanking” sponsored by the Federalist Society. Banking, he said, is a “black box,” where decision-making is opaque and, apparently, arbitrary. It wasn’t that Brownback couldn’t get answers—he got lots of them. They were just incoherent and inconsistent.

At one point, Chase told him that the bank would be happy to serve him, on one condition: that he provide lists of donors and intended recipients of any political spending in the next election cycle. “Chase assured us they always ask for donors lists,” he said, incredulously. Later, he was told that something he had said “triggered looking into our account for money-laundering and domestic terrorism. I asked what it was. They didn’t respond.” Later, he was given yet another explanation: that he was a “politically exposed person.” As Brownback points out, that is nonsense. In banking regulation, “politically exposed person” is a technical term denoting a foreign elected official. As the Federal Financial Institutions Examination Council puts it: “The term … is used in the financial industry to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as to their immediate family members and close associates.” Kansas, whatever you may have heard, is part of the United States, and Brownback holds no public office.

Scores of other organizations have experienced the same thing. Some of them are firms in industries disliked by progressives. Ruger, the firearms manufacturer, has been debanked twice; Indigenous Advance Ministries, a Christian charity serving widows and orphans in Uganda, was debanked, as was Timothy Two Project International, which trains local pastors in places such as Pakistan and Zimbabwe; the Arkansas Family Council, which does anti-abortion and educational work, had the same experience; the Defense of Liberty PAC had an event canceled after Chase blocked its payment processing for violating its policy against trafficking in “hate, violence, racial intolerance, terrorism, the financial exploitation of a crime, or items or activities that encourage, promote, facilitate, or instruct others regarding the same.” The event was a talk by Donald Trump Jr.

Perhaps you do not think very much of Donald Trump Jr., or of his father. And there is much to criticize in the political résumé of Sam Brownback, too. But the notion that they should be denied banking services—or insurance services, or other ordinary business services—because they are engaged in something akin to terrorism or racial violence is preposterous. But the nearly infinite plasticity of terms such as “hate” and “intolerance” are the point.

“Vague and subjective policies pervade the financial industry,” Jeremy Tedesco told the Federalist Society group. He is the general counsel at Alliance Defending Freedom, which has itself been labeled an “extremist group” by the Southern Poverty Law Center. (ADF once was the institutional home of famously intolerant extremist David French.) “They’ll never tell the customer the real reason they are being debanked. Companies hide behind vague standards, just like government would do if it were regulating speech.”

Tedesco sees the issue as being essentially one of collusion: heavily regulated industries doing the dirty work of government officials who cannot engage in censorship themselves but who can lean on banks and insurance companies and make their lives miserable if they choose. The Supreme Court has fired some warning shots about that, as in NRA v. Vullo, in which the NRA successfully argued that the chief financial-services regulator in New York had violated the First Amendment by coercing companies under her supervision to dump the NRA in retaliation for its political advocacy. But the harassment persists.

Some states, notably Florida, have enacted laws purporting to stop banks from sanctioning organizations over their political speech or activism, but professor Peter Conti-Brown of the Wharton School at Penn told the panel he thought such laws were unlikely to survive court challenges, given that interstate-commerce consideration effectively forecloses the possibility of state-by-state regulation. Republican Sen. Kevin Cramer of North Dakota, who sits on the Senate Banking Committee, said that any legislative fix will necessarily be federal in character. He has been pushing his Fair Access to Banking Act for years—he has 38 Republican co-sponsors and no Democrats—but, so far, the measure has not been taken up. His bill would, in effect, use the banks’ own strategy against them, using their access to such federal facilities as the Fed discount window and the Automated Clearinghouse Network—and, most prominently, federal deposit insurance—as a warrant to use federal power to bring them to heel.

(Cramer self-deprecatingly notes that he did not have much background in banking before joining the committee. “Sonny Bono was on Judiciary,” he says. “So, anything’s possible.”)

It is a testament to the cultural confidence of American progressives that they feel at ease recruiting banks and other corporations to act as instruments of political discipline. Once a political tendency that thought of itself as championing the powerless, progressivism has grown very comfortable with power—not only in the bureaucracies, the unions, and the faculty lounges, but also in the boardrooms. Like social policies that effectively raise the cost of capital for politically targeted organizations and individuals, political debanking is simply a way of imposing a tax on dissent. Progressives ought to think about the precedent they are setting. On Wall Street, as in Washington, things change.

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