The OCC Armed Dropped Industries Against Their Banks

The OCC just gave dropped industries a federal lawsuit against their banks.

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. issued a final rule on June 9 eliminating “reputational risk” from bank supervision. The rule, announced in April, did not end the supervisory practice. It exposed five years of board-level decisions—the period the OCC’s December preliminary finding covered—to litigation by the customers those boards dropped.

That is the substantive move. The doctrinal work follows.

The OCC’s stated reasoning: For two decades, bank examiners used “reputational risk” as discretionary cover to pressure banks into dropping industries the examiners disfavored. Operation Choke Point (2013) was the named episode; the IRS’s targeting of tea-party nonprofit applicants (2010–12), confirmed by the Treasury Inspector General in 2013, was the parallel. Different examiners, same mechanism. The new rule ends the discretionary cover and forces banks to make account-closure decisions on documented, individualized risk.

The OCC’s December preliminary finding supports the reading. It identified nine sectors subjected to restricted access at the nine largest banks between 2020 and 2023: oil and gas, coal, firearms, private prisons, payday and payroll lending, tobacco, adult entertainment, political-action committees, and digital assets. Comptroller Jonathan Gould called the banks’ debanking policies an “unfortunate” misuse of their government-granted charter. The agency is reviewing “nearly 100,000” consumer complaints to identify further instances of political or religious debanking.

That finding is the audit record the rule opens to litigation.

The rule does what its proponents claim. It also does what its proponents do not say. By eliminating reputational risk as a supervisory category, the OCC has converted a supervisory gray area into a litigation trap. A bank board that closed an account under the prior framework—on examiner pressure, on its own political preference, on a documented fraud risk, or on some combination of all three—now faces a duty-of-care claim from the dropped customer. The theory is novel. The cases testing it are not yet decided.

National Rifle Association of America v. Vullo (2024) held unanimously that a regulator’s threat against insurers and banks, used to pressure them into dropping disfavored customers, can state a First Amendment claim. The opinion is narrow: it reached the coercion theory on a specific fact pattern and remanded for further proceedings. On remand, the Second U.S. Circuit Court of Appeals still shielded the regulator. Vullo supplies a doctrinal foothold. It does not supply a victory.

The duty-of-care theory is the lever the rule makes available. A board that adopted a compliance posture without independently documenting the underlying risk—on the examiner-pressure theory that justified the closure—has now lost the supervisory cover that justified the posture. ACEJ Holdings d/b/a United Gun Shop is suing Capital One and its payment vendor Melio Payments on this theory. Owner Jonathan Bennett told the Daily Wire that Capital One froze the shop’s payments in 2025 over a “prohibited industry” designation; the company puts the damage at $75,000. The next front is a shareholder suit against the board itself.

The Fifth Amendment takings question is genuinely open. The Trump family has twice sued for debanking—a Florida state-court suit against Capital One dismissed in 2025, and a $5 billion suit against JPMorgan Chase and CEO Jamie Dimon on state-law claims. No federal court has ruled on whether coordinated government pressure to exclude an entire industry that is legal to begin with amounts to a taking without compensation. That question will be litigated. The new rule supplies the ground on which the litigation will proceed.

The day after the rule took effect, the U.S. Attorney’s Office in the District of Columbia subpoenaed JPMorgan Chase, Bank of America, and Wells Fargo over whether their account closings violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and related laws. The DOJ’s entry into the field is not a prediction. It is the operational fact.

The substantive move is a deregulatory apparatus that uses rulemaking to create a litigation market for politically-connected industries. The OCC’s December finding is the evidence base. The duty-of-care theory is the lever. The Fifth Amendment question is the long front. The agency’s review of nearly 100,000 complaints is the queue.

The next front is a federal courtroom. And when the duty-of-care theory meets the takings question, the Supreme Court will have the final word.