Trump banking regulators issued a new rule Tuesday explicitly prohibiting federal financial regulators from pressuring banks to close accounts of politically disfavored customers. This action directly addresses a long-standing concern where regulators, tasked with supervising banks for safety and soundness, instead used their immense power to enforce 'reputational risk' standards. Congressional investigations dating back to the Obama era uncovered instances where examiners jaw-boned banks to deny services to customers like payday lenders, gun retailers, and cryptocurrency businesses.

The new rule aims to prevent this abuse, clarifying that regulators' authority is limited to managing financial risks, not penalizing customers based on political views or industry type. This development represents a significant shift in regulatory practice, aiming to protect financial institutions from unwarranted account closures and restore clearer boundaries between regulatory oversight and political influence.