Big US banks eye up to US$200 billion in capital relief as Trump’s lawsuits escalate legal risk
A sitting US president is suing the country’s largest bank for “debanking” him at the same time his regulators prepare to hand big lenders major capital relief — a mix that leaves political and regulatory risk front and centre for financial institutions and investors.
According to Reuters, US President Donald Trump has filed a US$5bn lawsuit against JPMorgan Chase and CEO Jamie Dimon, alleging they closed several of his and his companies’ accounts on political grounds.
JPMorgan said the suit “has no merit” and stated that it does not close accounts “for political or religious reasons.”
Bloomberg reports that JPMorgan ended its relationship with Trump about seven weeks after the January 6, 2021 Capitol riot, and that Trump and his entities accuse the bank and Dimon of closing his accounts on political grounds.
Trump sued Capital One earlier, alleging it shut Trump Organization accounts for “political and social motivations.”
Reuters said Trump has publicly criticized Bank of America CEO Brian Moynihan over debanking and attacked Goldman Sachs CEO David Solomon for the bank’s bearish stance on tariffs.
Debanking — abruptly revoking banking services — has become a political flashpoint, Bloomberg explains.
Conservative critics say banks unfairly close accounts or deny services on the basis of political beliefs, while banks argue they are responding to regulatory expectations around financial crime and to “reputational risk,” a long‑standing tool that lets supervisors pressure banks over controversial clients or sectors rather than their political views.
At the same time, Trump’s own regulators are preparing to make life easier for large institutions.
Reuters reports that Trump administration regulators are set to grant big banks capital relief that could free up as much as US$200bn, alongside changes to supervision and support for large mergers.
Bank executives gathered at a recent JPMorgan event were optimistic that these moves would boost profits and keep bank stocks attractive, even as they navigate an unpredictable policy backdrop.
That backdrop has included surprise moves squarely aimed at retail and credit markets.
Reuters said Trump threatened to cap consumer credit card interest rates at 10 percent, a step Dimon warned would be an “economic disaster” that blindsided banks.
Bloomberg reports that Trump also used social media to pledge a halt to institutional buying of single‑family homes and then demanded banks cap credit card rates at 10 percent for a year, hitting shares of lenders including JPMorgan, Citigroup and Capital One.
Regulators have also taken up Trump’s anti‑debanking push.
The Office of the Comptroller of the Currency vowed to “eliminate politicized or unlawful debanking.”
In a review of the nine largest US banks, it found “inappropriate distinctions” among consumers and instances where banks denied services to sectors such as oil and gas, firearms, private prisons, tobacco, adult entertainment and digital assets.
The OCC and the Federal Deposit Insurance Corp. have proposed stripping “reputational risk” out of core supervisory assessments and banning regulators from directing banks to close accounts for political, social, cultural or religious reasons, or due to lawful but politically disfavoured activities.
The message from sources quoted by Reuters is that the sector still expects to secure capital relief and enjoys a more “rational” approach to supervision on big issues, but faces a growing overlay of legal and political risk.
A Columbia University senior fellow told Reuters that the industry is “losing as many battles as it wins” and that constant, sometimes random pressure is taking a toll.
A policy analyst at the Cato Institute said banks will likely become more cautious now that they face not only regulatory retaliation but also lawsuits.
Bloomberg reports that some global banks and asset owners are already reacting more quietly to US policy shifts by tightening communications, self‑censoring research and, in some cases, gradually diversifying away from US government bonds.
One European strategist described a “culture of fear,” while a US investment firm CEO told Bloomberg she is hearing from asset owners who are “looking to diversify away from US assets” in what she called a “quiet‑quitting of US bonds.”
