President Trump’s lawsuit against Capital One is shining a spotlight on the broad discretion banks have to close customer accounts, as policymakers, regulators and courts continue to grapple with concerns over so-called “debanking.” The case underscores the tension between financial institutions’ compliance obligations and growing scrutiny of account closures that customers believe are unjustified or politically motivated.
“Banks are always going to tilt toward conservative compliance because there are few, if any, customers that would warrant a risk tolerance that could put the financial institution under the scrutiny of the United States government or other foreign governments that regulate the same area,” Bracewell’s Seth DuCharme told Law360.
“Fundamentally, nobody has the right to be banked,” he added. “It’s a competitive environment.”
