Are Conservatives Being 'Debanked'?

0:05Steve Happ is a grandfather and a Christian. He founded an evangelical business and nonprofit in Africa. The big challenge always when going off to Uganda is how to fit everything in the allotted suitcase. It is a mind game and a physical Tetris. Steve takes regular mission trips to Uganda. And in the spring of 2023, he was packing for another one. I brought baby clothes for some of the orphans that we support. I bring my own breakfast food because I don't really care for their breakfast, so I bring granola for myself. Steve was ready to go. Everything was in order until he checked the mail. They're identical letters, but they are all referencing a different bank account or a credit card.

0:58Five letters, one for each of his accounts with Bank of America. And the letter says, we've made the decision to restrict your deposit account in the next 21 days and close it in 30 days from the date of this letter. And what was your reaction? Of course, I panicked. My first thought was, wait, this has got to be an error. A week before his Uganda trip, he found out that all of his accounts, including his church's account, his charity's account, and credit cards, were going to be closed. More than$270 ,000. He had bills due, employees to pay, money that was supposed to go towards his missionary work.

1:40But when Steve showed the letters to his local branch manager... It was so odd, because she came back and she said, I'm sorry, I can't discuss this with you. And so that's basically been the way it's been all along.

1:56His only clue was a single line, that Steve's organization was a business type that the bank had chosen not to service. And my immediate question was, so what type of business do you think we are? Did you think that, oh, they think that we're like a criminal organization or something? Well, actually, I did think, am I a criminal? I felt like a criminal. Steve wanted answers, but he didn't get any. And so, he was left to fill in the blanks himself. And he started to suspect that the bank was biased. I can't think of any other logical reason. Because the only way all three of these entities were connected was what we did.

2:42And to be clear, when you say it was because of what we did and what we do, what do you mean by that? It's that we're a Christian organization and we are spreading the gospel of Jesus Christ. That's not popular these days. That's the only conclusion that would make any sense. What else could it be about? Steve's theory, that his accounts were canceled because he and his organization are Christian, caught fire in conservative circles. Bank of America did eventually give an explanation, but not before Steve's story turned into something much bigger. A story that would reach all the way to the White House.

3:25Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Monday, October 20th.

3:38Coming up on the show, how one evangelical story became a rallying cry against banks.

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4:53Steve Happ's bank, Bank of America, shut down all of his accounts. No warning. No clear explanation. And there's a word for this. The word is debanking. Debanking. Debanking. Debanking. Targeting debanking would be a good thing. Debanking of conservatives in America. It essentially refers to the act of losing access to a bank account, banking services, you know, debanking broadly kind of captures all of these phenomena. That's our colleague Alexander Saidi. Recently, debanking went from being a niche talking point to one of the most politically loaded words in his world. It turned into this broader social crusade against the biggest banks in the country for alleged discrimination against Christians, conservatives.

5:45And if you weren't in these conservative circles, you might not have really been paying attention to this whole idea that banks were playing politics with access to the financial system. For as long as banks have existed, they've reserved the right to close accounts. Sometimes it's because of overdrafts or fraud or suspicious transfers. Sometimes it's just about risk. Like if they have a customer that's risky, that poses like a threat to itself or to others, then they have the right not to bank that person. And obviously, it's just like that person has done something that's wrong or dangerous or risky, and they don't want to be affiliated with it.

6:29So for their perspective, what they're doing is risk management. Would it even be legal to debank someone because of their religious beliefs, like Steve Happ is saying happened to him? No. No, definitely not. It would violate civil rights, anti-discrimination laws. Same for, you know, political beliefs. And then obviously, if a bank closes the account of somebody who's stolen a lot of money or has gotten a lot of money through criminal activity, we wouldn't think of them as really, like, discriminating against them, right? Big banks, including Bank of America, have said they don't discriminate based on political or religious affiliation.

7:14But that's not how it looks to a lot of conservatives. Alex traces this whole thing back to the aftermath of the 2008 financial crisis. Back then, many Americans blamed banks for the recession. So a lot of banks started to try and improve their reputations. I would say that after the 2008 financial crisis, banks writ large thought, okay, you know, the financial crisis and our role in it made us appear like we are exploiting communities. So how can we take steps to appear like good corporate citizens? As part of this makeover, banks started taking a stand on social issues. Some stopped lending to coal companies.

7:55Some pulled out of the gun industry. All of these decisions were taken in a way to sort of be like, look, just because we're financial institutions doesn't mean we have a lack of a social compass. Many of these stances were seen as left-leaning. Critics called it woke capitalism. But banks were really under pressure. Post-2008, new regulation heightened scrutiny of banks. In some cases, big lenders justified pulling away from certain industries by framing the decisions in terms of risk. Risk of regulatory changes, risk of bad headlines, risk of breaking anti-money laundering laws, and in the case of gun makers, the risk of lawsuits from families impacted by a shooting.

8:35So as a bank, you could look at that company and say, this customer looks like they might cause problems for us and cost us more in compliance and legal fees than we'd ever make in money out of them. So actually, long-term, they're not a good customer, and we shouldn't do business with them. One customer banks also stopped wanting to do business with, Donald Trump. After the January 6th attack on the Capitol, many banks cut ties with him. JPMorgan Chase closed the Trump Organization's business accounts, and the family's personal ones, too. They told me, I'm sorry, sir, we can't have you. You have 20 days to get out.

9:16They said, you gotta be kidding. I've been with you. At the same time, Trump and his company were under civil investigation in New York for fraud. In the bank's eye, President Trump was dealing with a New York probe of the Trump organization and how it was like reporting its financials. From their view, okay, you know, if we choose to bank this company that's now accused of criminal activity, we run the risk of somehow being an accessory to the crime. It could cause us a lot of litigation costs. So our cost-benefit analysis tells us we should actually end this relationship. But unlike President Trump, most people who've been debanked often don't have any idea why.

10:00And if banks wanted to shut down a customer's account, how would they usually communicate that to their customer? They choose to not say much at all. Why would a bank choose not to explain why it was dropping a client? The key reason there is because when a bank sees something that looks like it could be criminal or looks suspicious, banks will often just cut off the relationship. And they're required by law not to tell people if there's an investigation into anything they've done. They can't tell you that we're closing it because you're under investigation. But if they give a reason always, but the only time they don't say the reason is because you're under investigation, that might tip their hat in the same way.

10:47That's right. But by not telling customers why they lost their accounts, many were left guessing. And that's what happened in Steve Happ's case. Well, I can't imagine they'd closed the account because we're feeding orphans and we're rescuing trafficked girls. Did you wonder if it was because of your faith, your mission work, that you were being, that your account was being closed? Initially, no. That didn't enter my mind. That came up later. Later, after he mentioned what happened to a well-connected board member at his church. And he was the one who said, oh my goodness, they are attacking you because of what we do.

11:41Soon, a powerful Christian law firm would hear about Steve's story. And lo and behold, I'm the poster child. 3D Banking.

11:54That's next.

12:10Steve Happ was confused. Why didn't his bank want his business anymore? Still, he told our colleague Alexander Saidi that he was prepared to let the whole thing go until someone with a lot of pull reached out to him. through somebody who worked with him in his charity. He was connected with this group called the Alliance Defending Freedom. And tell me about this group, the Alliance Defending Freedom. The Alliance Defending Freedom is definitely one of these right-wing activist groups that very much believes that corporate America has been taken over by left-wing ideology. And that goes from big box retailers to large financial institutions.

12:49The lawsuit filed by Alliance Defending Freedom. The Alliance Defending Freedom filed a lawsuit in Texas. That's the nonprofit that won the Supreme Court case last year on behalf of that Colorado baker who didn't want to make a cake for a gay wedding. The group is backed by wealthy conservatives, donors like Charles Koch and Leonard Leo of the Federalist Society. To conservatives, Steve's story looked like strong evidence that banks were targeting people for their beliefs. Steve has never produced any smoking gun showing that somebody somewhere in the bank pushed the cancel button because of the Christian affiliation.

13:27But I think they saw a really compelling story that banks were being political and anti-conservative and anti-Christian in how they were gatekeeping access to bank accounts. So after that, Steve started to believe that maybe there really was an underlying anti-Christian motive in Bank of America's decision. And what did the Alliance Defending Freedom do to Steve's story? Well, they told everyone about it. We are joined today by Steve Happ, founder of Indigenous Advanced Ministries. They took his story, made it a sort of cautionary tale. They took his photo, photos of him helping poor children in Uganda and put them on all these one pagers that they distributed in mostly Republican state houses around the country and said, this is Steve.

14:24This is his story. A Tennessee based Christian ministry serving impoverished children in Uganda now accusing Bank of America of religious discrimination. Steve became a conservative symbol. His story spread online and on cable news. And then more people came forward, saying they, or people they knew, were also debanked for their politics. I mean, there was Mark Andreessen. He spoke on the Joe Rogan podcast. You get kicked out of your bank account. You get kicked out of the—you can't do credit card transactions. Eric Trump has been talking about it a lot more in public lately. Sam Brownback, the former Republican governor of Kansas.

15:02She's looking on the computer screen, says that account has been closed. It wasn't just conservatives. Progressives like Senator Elizabeth Warren have also taken on debanking. Warren accuses banks of denying service to low-wage earners and locking people out for religious affiliation or political beliefs.

15:23Soon, the chorus included the biggest voice of all. But I hope you start opening your bank to conservatives because many conservatives complain that the banks are not allowing them to do business within the bank. Trump turns it into a campaign trail issue in early 2024. But we're also going to place strong protections to stop banks and regulators from trying to debank you from your... Trump says we're going to stop the banks from debanking you. And a lot of people had no idea what he was even talking about. I don't know what the hell debank means, but he might have to take deambulance to see the doctor.

16:05This August, President Trump signed an executive order accusing banks of debanking conservatives. The Alliance Defending Freedom helped write the executive order, and Steve Happ's story was even referenced in a draft, though it was later taken out of the final version. The executive order demands investigations and threatens fines for refusing service based on political or religious reasons, which, for banks, is alarming, because suddenly they could get punished for what used to be a routine business decision. In private, executives are saying, you know, we're really worried that there's going to be a type of witch hunt scenario where these cases get fished out of obscurity and somebody whose bank accounts we closed for totally legitimate reasons is going to say, you debanked me because I'm a Baptist or because I'm a libertarian.

16:56Alex says that banks' fear of investigations could make them more reluctant to cancel or reject accounts that they're worried about. And for the banks, why not, in response to this, just say, okay, fine, we'll just bank everybody. We won't close accounts anymore. they believe a cornerstone of how they make money is full discretion over who can and cannot be a customer. In this new regime or whatever, where, you know, they might just have to bank everyone no matter what, that could eat into their profits. So they're resisting this notion of broad fair access is what it's called, where you kind of have to bank anyone.

17:38And if you're doing a kind of business they view risky, they would prefer to not have to bank you, but the way things are shaking out is that, you know, they may just have to. And, you know, they'll either pass that cost on to customers or they'll eat it themselves. As for Steve Happ, he was able to find a new bank. And he did go to Uganda as planned. But here's the thing. After Steve's story blew up, Bank of America finally gave a reason for why it closed its accounts. They started to say we closed his accounts because he was operating a debt collection business in Uganda, which is a violation of our policies.

18:19We don't do small business banking for debt collectors in Africa. A website for a business entity Steve oversees includes a line that says, quote, Our business is dedicated to pursuing the recovery of overdue invoices on behalf of clients. It also mentions that its customer center is in Africa. According to Bank of America, it looked like two problems in one. A business operating outside the U.S., which their policy for its small business line forbids, and a business and debt collection, a line of work that the bank deems risky. Bank of America also said that they provide banking and investment services to 120 ,000 faith-based organizations around the country.

18:58Since Steve's accounts were linked, the bank shut them all down. But it didn't explain this to the guy who needed to hear it most. They never told Steve why they closed the accounts, but then when it became a story, they started to tell the press about it. But in the absence of information, he deduced that his Christian identity was the reason why Bank of America was cutting off his accounts.

19:26Steve says his organization doesn't do debt collection. And two years after this whole debacle, he isn't buying Bank of America's explanation. That annoys me a bit, right? Because they're still sticking with the debt collection story. And that makes no sense to me. Do you still believe that the motive was religious discrimination? I hesitate to be definitive because we don't know. But I don't know of any other reason. I can't think of any other reason. I asked Steve what he would have done if the bank had just told him the problem from the start. If you said, what's going on? And they said, oh, well, we flagged your account because it looks like it's tied to debt collection.

20:10You could have been like... That would have been easy to explain. To Alex, that's the heart of the matter. The frustrating silence that allowed a story to take on a life of its own. To me, it's that it's not the truth that really matters. It's how it is perceived. In Steve Happ's case, this has become a they said, they said situation, yet his story has still become one of the most prominent examples of bank discrimination and has been, you know, effectively turned into this rallying cry. And that's even without a full accounting of what did or didn't happen. So to me, that sort of says a lot about our political culture these days, where it's not necessarily what is or isn't true that matters.

21:05It's how you feel about what may or may not be true.

21:14This episode has been updated. A previous version said Steve Happ's bank accounts were frozen. The money was never frozen. The accounts were going to be closed. We also added context around other faith-based organizations' Bank of America services.

21:34That's all for today, Monday, October 20th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Dylan Tokar.

21:47Thanks for listening. See you tomorrow. Thank you.