Sen. Cynthia Lummis says her office has uncovered written evidence that the Federal Reserve instructed bank examiners to pressure banks into closing accounts for customers based on their political views — even as Fed leadership publicly denied doing so.
“We have written guidance from the Fed to their bank examiners that if they found someone who made a political statement, or that was banking an asset that they didn’t like, such as oil and gas or digital assets, that indeed the Fed, through its bank supervision division, was either ordering or strongly suggesting that a bank should close their accounts,” Lummis told Cowboy State Daily Wednesday.
The Wyoming Republican said the guidance specifically defined “reputational risk” to include “statements by their officers or boards of directors of a political nature.”
“Even though the leadership at the Fed was telling us, we don’t debank, we don’t inform banks that they should cut loose customers that have reputational risk — they, in fact, were doing that,” Lummis said.
Chokepoint 2.0
Lummis, who chairs the nation’s first Digital Asset Subcommittee, has dubbed the federal effort “Operation Chokepoint 2.0” — a reference to a similar Obama-era program that targeted legal but politically unpopular businesses like payday lenders and firearms dealers.
“We’ve been meeting with these banks. We’ve been meeting with their customers who have been debanked,” Lummis said. “So, we’re ready for hearings on the debanking that occurred during the Biden administration.”
“During the Biden era, we saw businesses and individuals debanked by financial institutions in this country based on what they were producing or selling, like oil, gas, firearms, coal,” Lummis said. “And we also saw digital asset companies getting debanked based on their business models.”
Because Wyoming created a legal framework to attract digital asset companies — the Special Purpose Depository Institution — Lummis said she became deeply interested in the debanking issue.
“I’ve been trying to help some of our businesses in Wyoming get what are called master accounts with the Federal Reserve,” she said. “And not only were they denied master accounts, to which they should have had statutory access — they were debanking some of the very same companies.”
Still Happening
Lummis said the practice hasn’t stopped, even with a new administration in Washington.
“The Trump family was debanked. Eric Trump was debanked. Donald Trump Jr. was debanked. Melania was debanked. Donald Trump, the president, was debanked,” Lummis said. “Digital asset firms all over the country were debanked.“
Lummis pointed to one example she said proves the problem is ongoing: Jack Mallers, CEO of Strike, had his accounts closed by JP Morgan Chase in September 2024.
Strike is a financial services company that uses the Bitcoin Lightning Network — a technology layer built on top of Bitcoin that enables faster, cheaper transactions by processing payments off the main blockchain. The Lightning Network is designed to make Bitcoin practical for everyday purchases and cross-border payments rather than just as a store of value.
“This is still going on,” she said. “This wasn’t just — it didn’t stop when President Trump was sworn in. This kind of garbage is still going on. And we need the banks to know that we’re going to take action.”
Wyoming Targets
Lummis pointed to specific Wyoming businesses that have been affected.
“One is Kraken. And Kraken’s there in Cheyenne,” Lummis said. “Another is Custodia.”
She also cited Bank of the West’s 2018 announcement that it would no longer do business with coal, oil and gas companies.
“That infuriated Governor Gordon, as it should have,” Lummis said, who is now co-sponsoring two bills aimed at ending governmental debanking.
The first is the Fair Access to Banking Act, sponsored by Sen. Kevin Cramer, R-North Dakota.
“That one would require banks over $10 billion in assets to provide written justification for denying financial services,” Lummis said. “And it also penalizes banks that refuse to do business with legally compliant, creditworthy people if that decision is based on political or reputational considerations.”
The Cramer bill includes stiff penalties, she said.
“It terminates status as an insured depository institution or credit union, which is a heavy, heavy penalty,” Lummis said. “Or it can impose a civil penalty of up to $10,000 per violation.”
The second bill is the FIRM Act, co-sponsored by Lummis and Senate Banking Committee Chairman Tim Scott, R-South Carolina.
“That legislation really cuts to the heart of the matter,” Lummis said. “It would permanently eliminate the term reputational risk as a tool to discriminate against federally legal businesses.”
It would require agencies to report to Congress on eliminating reputational risk from bank supervision.
“They got to come clean,” Lummis said. “They’ve got to be transparent.”
Critics Skeptical
Not everyone is convinced fair access legislation is the right approach.
Thomas Kingsley, director of financial services policy at the American Action Forum, a center-right policy institute, argues that while debanking is real, the proposed remedies punish the wrong party.
“If debanking exists — and the true scope of the issue may be overblown — it exists as a result of the direct interference of government,” Kingsley wrote in a 2025 analysis. “Making debanking illegal and punishing banks for simply following the heavy-handed ‘advice’ of supervisors, regulators, and administrations is farcical and mildly Orwellian.”
Kingsley noted that evidence of widespread debanking “remains largely anecdotal” and questioned whether “a significant enough population of the aggrieved exists to justify a legislative response.”
He also raised concerns about the severe penalties in the Fair Access to Banking Act.
“How odd that the bill sponsors believe the appropriate response to a bank debanking certain customers would be penalties leading to the likely shuttering of the entire bank, thus debanking all their customers,” Kingsley wrote.
“Government dictating with whom banks must engage is no different from dictating with whom they must not,” he added. “Governments cannot be in the business of picking regulatory winners or losers.”
Lummis said she anticipates pushback from bankers who will argue Congress is interfering with their business decisions.
“I want them to explain to me why we shouldn’t get involved when what they have done is debank businesses in this country simply because of their political views or the legal product or service they sell,” she said.
Asked about timing, Lummis said she hopes to move the legislation this year, possibly as part of a larger financial services package.
Expert Analysis
Julie Hill, dean and Wyoming Excellence Chair at the University of Wyoming College of Law, testified before the Senate Subcommittee on Financial Institutions and Consumer Protection on the same issue in December.
Hill is one of the nation’s leading experts on banking regulation, and her forthcoming paper “Governmental Debanking” will be published in the Texas A&M Law Review in 2026.
Hill told Cowboy State Daily that the term “debanking” has become muddied because people use it to mean different things.
“When some people say it, they just mean that a bank closed an account for somebody that wanted to keep it open,” Hill said. “But other people think of it even more broadly than that. So they say, well, that can also extend to people who applied for an account and just didn’t get one, or maybe even people who applied for a loan and didn’t get one.”
What concerns Hill most is what she calls governmental debanking.
“That’s the idea that the government might be pressuring banks to close accounts for lawful people and businesses just because they don’t like them for political reasons or discriminatory reasons or reasons that if we knew about, we think that the majority of people would be upset about,” she said.
Hill identified the same regulatory tool Lummis has targeted: reputation risk.
“So regulators would say to banks, look, you know, this customer is kind of controversial. It might be causing you reputation risk. You should think about not doing business with them,” Hill told Cowboy State Daily.
Her 2019 study found that regulators almost always use reputation risk alongside legitimate concerns — citing it after finding illegal activity like money laundering.
“So in those instances, reputation risk isn’t really doing anything,” Hill testified before the Senate subcommittee. “Reputation risk becomes troublesome when it acts all on its own. When you can’t point to a violation of the law or increased financial risk, that’s when regulators can use it just to punish people for political reasons.
“And in that case, it’s not doing anything to make the financial industry safer. It’s just politicizing the regulators.”
Hill cautioned that any reforms must be carefully crafted to avoid burdening Wyoming’s smaller financial institutions.
“You think you’ve come up with a good rule, but then, trying to make sure that that doesn’t destroy your smaller banks is hard and something that Wyoming should all care about,” she said.
She noted that compliance costs hit small banks harder than large ones.
“It’s one thing if you’ve got Wells Fargo and they’ve got millions and millions of employees — they got somebody who can figure this out,” Hill said. “You talk about the one- or two-branch community bank in Wyoming, they maybe don’t even have a full-time compliance person.”
Lummis said her motivation is straightforward and inspired by her desire to protect the interests of all kinds of business owners.
“The overall arching reason that I feel strongly about this is because every legal American business needs to get fair access to banking services,” she said. “I want to fight to ensure that Washington doesn’t have the power to randomly choose who’s going to have a bank account in this country and who’s not.”
David Madison can be reached at [email protected].
