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Political Debanking

Author(s):
Todd J. Zywicki
Posted:
03-2025
Law & Economics #:
25-04

ABSTRACT:

This article examines the escalating practice of “political debanking”—the involuntary termination of banking services to individuals and organizations based on their political or religious views—and its profound implications for free speech and democratic participation. Drawing on Milton Friedman’s insights about the interdependence of economic systems and free expression, the article argues that access to financial services is a prerequisite for exercising constitutional rights. It traces the rise of political debanking from the Obama Administration’s Operation Choke Point, which targeted disfavored industries under the guise of “reputation risk,” to its expansion under the Biden Administration, where individuals like Melania Trump and Michael Flynn faced account closures for their political stances. High-profile cases, including the cancellation of accounts tied to Donald Trump Jr.’s events and the National Committee for Religious Freedom, illustrate a growing weaponization of the financial system to suppress dissent.
The article distinguishes political debanking from other account closures (e.g., cryptocurrency or financial mismanagement) and critiques the regulatory framework that enables it, marked by opacity, discretion, and a lack of accountability. Despite Supreme Court rulings in NRA v. Vullo and Murthy v. Missouri, judicial remedies remain inadequate against subtle coercion in the modern regulatory state. With banks functioning as quasi-public entities due to extensive government privileges, the article proposes treating them as common carriers, mandating non-discriminatory access to services. It advocates for legislative and regulatory reforms, including reviving the Trump-era “Fair Access to Financial Services” rule, to safeguard free speech against future abuses, warning that without action, debanking will persist as a tool for silencing dissent.