New state laws in Florida and Tennessee took effect this week targeting big banks over what conservatives say is political and religious discrimination. The laws are the latest front in a broader battle playing out in states over what Republicans deride as “woke” banking. They echo related efforts in recent years by GOP officials to go after big banks and asset managers over how they approach climate and social concerns in investing. The laws that went live in the two states on July 1 expanded state consumer protection and banking laws to prohibit so-called de-banking. They respond to allegations — broadly denied by banks — that financial institutions are closing accounts of conservatives based on their political or religious views. The conservative push appears to be gaining momentum — winning support from former President Donald Trump, who has accused big banks of discriminating against conservatives. Trump vowed at a rally earlier this year that if elected he will “place strong protections to stop banks and regulators from trying to de-bank you from your political beliefs.” In Florida, the new law extends to all national banks a prohibition on canceling financial services to a customer based on their political opinions or religious beliefs. (A previous law in 2023 applied more narrowly to state-chartered banks). The new law also sets up a customer complaint process that triggers an investigation into the bank by state regulators. Lawmakers debated but dropped a provision allowing customers to bring suit themselves. Tennessee’s law applies to banks with assets of more than $100 billion. In addition to barring political and religious discrimination, it requires banks to provide an explanation, with specific reasons, for closing or denying an account. Aggrieved customers also have a new private right of action to sue banks for violations of the law. “We're hopeful more states will look at this issue and follow Tennessee's lead on it,” said Matt Sharp, senior counsel at the Alliance Defending Freedom, one of the conservative groups that helped pass the legislation in that state. He said the laws are aimed at addressing “the real harms that come when these banks — without any transparency, without any accountability — shut down an account and the damage it can do.” Other states — including Arizona, Georgia, Iowa and Idaho — have also considered similar laws. Bank trade groups have pushed back in state legislatures over the bills, calling them unnecessary and rejecting the premise that banks are trying to get rid of customers over political or religious views. Industry groups are also raising concerns that the new state laws are preempted for national banks by federal law. They’re also pointing to potential major conflicts with federal requirements, especially the array of obligations that banks have under federal anti-money laundering laws and other statutes to prevent terrorist and other illicit financing in the U.S. financial system. IT’S WEDNESDAY. We’re off for the rest of this week for the Independence Day holiday. See you back here on Monday.
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