WASHINGTON— The Small Business Administration has made what America’s Credit Unions is calling a significant “ask” of credit unions, requesting data tied to potential “debanking” practices. The trade group said it is now working with the SBA to help “tailor” those requests to avoid overburdening institutions as they attemt to respond.
The request stems from Executive Order 14331, signed by President Trump, which mandates an end to alleged politicized or unlawful banking practices and requires lenders to reinstate qualified customers or members who were “wrongfully denied access to financial services based on political, religious, or ideological beliefs.”
The administration has warned that punitive measures may be imposed on lenders that fail to comply.
What’s Required
The order mandates that within 60 days of its effective date, the SBA notify financial institutions under its jurisdiction to identify and reinstate clients previously denied services due to politicized debanking.
The SBA’s Aug. 26 letter directed lenders to complete several steps by Dec. 5, including:
- Identify debanking practices
- Reinstate wrongfully denied clients
- Notify affected potential clients
- Report compliance
Compliance Guidance
Law and compliance firms are recommending financial institutions review policies, procedures, practices, and records across all services—deposit accounts, payments, and consumer and business lending—to determine whether any activities could be considered debanking, and to make necessary adjustments.
Credit Union Response
Ann Petros, vice president of policy engagement and credit union operations at America’s Credit Unions, said the group has already heard from “a number of credit unions” that received the SBA letter and are worried about the scope of the request.
“There is already concern that the agency is requesting significant amounts of information for ‘unknown look back—potentially forever,’” Petros said.
She emphasized that America’s Credit Unions is gathering feedback to provide SBA with perspective on the potential operational burden, while also suggesting narrower ways to achieve compliance with the executive order.
In short, Petros said, the group wants SBA to be “cognizant of what the ask is here and what that’s going to mean for teams at credit unions to compile this sort of information.”
She added that America’s Credit Unions does not believe debanking has been occurring at credit unions.
