Dear Friends,
Recently, my office has taken several concerned phone calls from Idaho residents who are worried about the new trend playing out in the financial sectors of our economy – “debanking,” where a large banking institution quietly closes your account because your business isn’t meeting their social goals, like climate change or Diversity, Equity, and Inclusion (DEI) standards.
Last week, I sent a letter to the CEO of Wells Fargo, joined by 15 of my fellow attorneys general around the country, pushing back against this practice of debanking and demanding answers for which businesses and industries will be targeted, and why. We are gravely concerned this practice won’t be limited to just banks, but will extend to insurance companies, ratings agencies, investment firms and other entities that businesses rely on.
Running a small gun store? That just doesn’t fit the new preferred profile of a socially woke Wells Fargo customer, like Wex Gun Works in Delray Beach, Florida, which was a Wells Fargo customer for 25 years. Perhaps you are looking for a business loan but haven’t embraced DEI and find yourself denied access to capital – not because of financial risk – but instead for social compliance. Or maybe you are a large corporation that isn’t meeting targets for carbon reductions in alignment with the Paris climate agreement and the net-zero economy goals that Wells Fargo openly supports. Suddenly you find yourself shopping for a new bank.
As a fiscal conservative and someone who believes firmly in the power of the free market, I’m supportive of companies having the freedom to make mistakes, especially since customers can take their business elsewhere and vote with their pocketbooks. That’s how competition and the free market works. Look at what happened with Bud Light and Sports Illustrated. They took a gamble, epically misjudged their consumer base, and lost big. The market, when left alone, usually corrects itself.
But big banks are different. Not that there aren’t smaller banks and credit unions that would happily use and invest the deposits of those who are “debanked” by Wells Fargo and other behemoth financial institutions. But remember, these large banks are propped up by the federal government – and they know it. Remember “Too Big to Fail?” We now have massive banks colluding with the government to make these social justice determinations outside of the legislative process. They know full well that any risk they encounter from bad business decisions will be carried by the taxpayers. Once again, taxpayers pay the price.
When a large bank, insulated from competition and consequence by the federal government, starts forcing social change on their customers, we are stepping right into the crosshairs of a centrally planned economy.
I, and the other attorneys general stated in the letter to Wells Fargo:
“Wells Fargo’s conduct and commitments may implicate state unfair and deceptive acts and practices (UDAP) laws or civil rights laws. Additionally, if banks like Wells Fargo are restricting access to financial services to act as pseudo-governmental gatekeepers, then states need to revisit the current division of supervision power between state and federal regulators for the largest banks.”
I will always work to protect Idaho’s consumers, whether that’s fraudulent scams, bad actors in the business community, or keeping an eye on large mergers between companies that could affect Idaho citizens.
