Banking regulators under the Trump administration have postponed, scaled back or canceled exams on environmental, social and governance (ESG) issues emphasized during the Biden administration, Reuters reported on Tuesday.
In recent months, the Office of the Comptroller of the Currency (OCC), the Federal Reserve and the Consumer Financial Protection Bureau (CFPB) have reduced scrutiny of areas such as reputational risk, climate change risk and diversity, equity and inclusion (DEI), industry executives told Reuters. The changes are part of the Trump administration’s broader efforts to curb regulatory practices it says are unrelated to the stability of the financial system.
“Thankfully, it appears that President Trump’s effort to strip political ideology from the banking industry is working,” OJ Oleka, CEO of the State Financial Officers Foundation, told the Daily Caller News Foundation. “Climate activism, DEI, and other left-wing fixations should have no place in bank exams or in the way that banks do business.”
“The OCC is reexamining its supervisory approach to ensure it conforms to its statutory mission and reflects a risk tolerance enabling banks to support economic growth,” the office said in a statement to Reuters, adding that it “focuses on material financial risks.”
The CFPB, Federal Reserve and OCC did not respond to the DCNF’s request for comment.
Critics have argued that regulatory oversight has become overly subjective and hostile, with supervisors often spending more time policing political priorities, such as ESG, than identifying genuine vulnerabilities in the financial system.
“Americans and their hard-earned savings are entirely better off when our financial system focuses on its core functions and rejects outdated woke politics,” Oleka said.
Moreover, rather than routinely issuing formal “matters requiring attention” (MRA) letters — which banks have criticized as excessive — examiners are now opting for less formal conversations to guide management, according to Reuters. Republican lawmakers in the Senate Banking, Housing and Urban Affairs Committee in August called on banking regulators to review the MRA process, which they described as “opaque, ineffective, and inconsistent.”
Since taking office, the Trump administration has also moved to address regulatory overreach, including scaling back the CFPB’s staff and budget, while closing out nearly all pending regulatory issues flagged by the agency.
Federal Reserve Vice Chair for Supervision Michelle Bowman, a Trump appointee, signaled the shift in regulatory priorities earlier in June, promising a “more sensible” approach to supervisory ratings. The Federal Reserve also announced in June that it would no longer consider “reputational risk” when examining banks, a move welcomed by industry groups such as the American Bankers Association.
President Donald Trump signed an executive order in August directing officials to investigate whether any banks have canceled accounts of conservative customers based on their political views and targeting regulations that encouraged such discrimination.
“Bank regulators have used supervisory scrutiny and other influence over regulated banks to direct or otherwise encourage politicized or unlawful debanking activities,” Trump wrote in the executive order. “Such practices are incompatible with a free society and the principle that the provision of banking services should be based on material, measurable, and justifiable risks.”
Will Hild, executive director of Consumers’ Research, applauded the Trump administration’s crack down on “woke” banking policies and regulations.
“The Trump Administration’s decisive action to end the political weaponization of our nation’s financial system by big banks is a win for consumers,” Hild told the DCNF. “For too long, major banks such as JPMorgan Chase have used their influence to push radical net zero climate policies and discriminatory practices. JPMorgan has also used so-called reputational risks to debank conservatives, gun manufacturers, and even President Trump himself.”
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