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Senators press Fed on 'debanking' and Powell agrees to review supervisory guidance
Summary
Committee members raised repeated concerns about banks cutting services to lawful customers for reputational and political reasons. Fed Chair Jerome H. Powell said he would take a fresh look and committed to working with the committee on the issue.
Senators from both parties told Federal Reserve Chair Jerome H. Powell that reports of banks terminating relationships with lawful businesses and customers for reputational reasons — often described in the hearing as "debanking" — are a bipartisan concern.
Sen. Tim Scott, the committee chairman, asked Powell to "commit to working with this committee to end debanking, including working with the new vice chair of supervision once appointed to revise the federal reserve supervision manuals to remove reputational risk as a tool." Powell agreed: "I'm happy to make that commitment. Thank you, sir." Later he added that the issue "needs a fresh look" and said the Fed was removing the concept from the manual used for account access and master accounts.
Senators described anecdotal reports from banks and community leaders that reputational risk concerns had been used to encourage banks to cut services to digital‑asset firms, political figures and others. Powell said the Fed does not intentionally seek those outcomes but acknowledged regulators should examine how supervisory language affects banks' behavior.
Senators signaled they will continue oversight, including inviting bank CEOs to appear, and pressed the Fed for clearer accountability and transparent supervisory practices to ensure lawful businesses have access to banking services.
