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Here’s what can be done about debanking, the un-American abuse of power by regulators

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Debanking. It’s been all the talk of Washington lately.

President Donald Trump last month accused some big banks of engaging in politically motivated debanking. Venture capitalist and tech entrepreneur Marc Andreessen described the debanking inflicted on the crypto industry during a recent Joe Rogan podcast.

And this week, both chambers of Congress held hearings investigating the matter.

The issue merits the attention it’s getting. As a former ranking member of the Senate Banking Committee, where I served for 12 years, and a former banker myself, I can confirm that debanking is real. But it is not driven by the banks themselves.

The banking business depends on scale, and banks compete ruthlessly for all the customers they can get. Debanking is almost entirely driven by vague and excessively broad regulation or downright regulatory malfeasance.

Through thousands of pages of “Know-Your Customer” (KYC) rules promulgated under the Anti-Money Laundering Act (AML), banks are required to verify the identity of their customer and collect extensive details about their business, the sources of customer’s funds and to assess potential risks the customer may have, or pose, to the bank. Banks are required to file “Suspicious Activity Reports” (SARs) for all cash deposits (whether truly suspicious or not) above a threshold that has not been raised in 50 years.

If the bank suspects that the customer may be engaging in illicit activities, it must report the customer to the Financial Crimes Enforcement Network (FinCEN), deny services and refrain from giving the debanked customer an explanation. A bank that erringly provides services to a customer who later is determined to be a criminal can be subject to enormous fines while its senior management can be subject to civil and criminal liability. Naturally, banks err on the side of caution.

The cases of rogue regulators are even worse – these are intentional. Congressional investigators found the hard evidence that Obama administration financial regulators were pressuring the banks they regulated to debank industries that were disfavored by the administration, especially small-dollar online lenders and the firearms industry.

In what became known as Operation Chokepoint, the regulators had no legal authority from Congress and went through no public rulemaking. They simply had animus toward certain legal businesses and used the enormous power they wield over banks to try to kill those businesses, often upending people’s lives in the process.

Operation Chokepoint came to an end with the start of the first Trump administration. But no regulators lost their jobs.

So, what happened in 2021? Under the Joe Biden administration, the very same regulatory agencies launched Operation Chokepoint 2.0. This time, the target was the crypto industry.

The Biden administration overwhelmingly populated its top financial regulatory positions with people hostile to crypto. Many were happy to use their authority over banks to stifle the emerging crypto ecosystem in its infancy.

In 2021, my office started hearing from crypto entrepreneurs that their company’s bank accounts had been closed. Banks they had been using could no longer process their payrolls or even accept deposits. Many employees of even well-established crypto companies were personally debanked. Some could not get a mortgage or a checking account.

This unauthorized, unaccountable abuse of power by financial regulators to force banks to debank whole industries is outrageous, undemocratic and un-American. It is exactly what the Congressional Financial Services Committees should be investigating – and now they are.

It is time to find out exactly who was responsible for the “privatized sanctions regime” banks were forced to implement, as Andreessen calls it. The recent release of internal documents by the new leadership of the FDIC appears to contain multiple smoking guns.

Congress and the Trump administration must act to ensure that financial regulators never weaponize America’s banks against legitimate businesses again. They should significantly enhance the accountability of banking regulators and supervisors by increasing transparency and modernizing archaic laws like the Anti-Money Laundering Act.

Banks are already required to treat customers fairly and prohibited from discrimination based on race, sex or national origin. They should not discriminate on the basis of religious or political affiliation either. That said, Congress and state governments should refrain from sweeping mandates on banks that would forbid banks’ necessary, sometimes subjective, judgments regarding matters that are not always quantifiable.

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Former U.S. Sen. Pat Toomey is an adviser for the Americans For Free Markets coalition.


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Legal pot popular, but still not enough to clear 60% hurdle

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The Florida Chamber of Commerce’s latest statewide poll finds broad support for adult-use cannabis, but with the effort still falling short of the 60% threshold needed to pass in a statewide referendum.

Overall, the poll found 53% of Floridians support for legal pot in Florida. While that represents a clear majority, it’s less than the 56% support the issue got at the ballot box in the 2024 General Election last November after a massive opposition campaign led by Gov. Ron DeSantis.

It’s the sixth consecutive poll from the Florida Chamber showing the measure failing to reach the high level of support required for passage.

The Chamber notes that the missed mark comes despite more than $150 million being spent over the course of the 2024 campaign supporting the measure, which was Amendment 3 on the 2024 ballot. Of the total spending in favor, $145 million came from Florida’s largest medical marijuana provider, Trulieve.

The Chamber poll found that the push to legalize cannabis for adult recreational use, without medical need, has actually become less popular the more voters learn about the issue.

The poll comes less than a month after the group behind the Amendment 3 campaign, Smart & Safe Florida, launched a new campaign to put the issue back on the ballot for voters in 2026.

The proposal, entitled “Adult Personal Use of Marijuana,” is the first ballot petition filed in 2025. It includes a ballot summary making clear that it only seeks to legalize adult use.

Last year, the Vote No on 3 campaign made an aggressive push against the measure, casting it as an overly broad measure that would harm children by making cannabis smoking part of the public domain — imagery featuring kids on playgrounds surrounded by clouds of weed smoke.

The push against Amendment 3 was led by Keep Florida Clean Inc., a political committee chaired by James Uthmeier, DeSantis’ Chief of Staff and soon-to-be Attorney General. The committee just through Halloween, just days before the election, had spent nearly $24 million on its own campaigning against Amendment 3. While that’s a lot of cash, it’s a mere fraction of what proponents dumped into supporting the measure.

With the Florida Chamber’s latest polling, it looks in these early days like the measure may again face a tough road.

The poll was taken Feb. 2-8 by Cherry Communications among 600 respondents. It has a margin of error of 4 percentage points.


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Voters support Gov. DeSantis’ effort to make it harder for special interests to put issues on the ballot

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A new statewide survey from the Florida Chamber of Commerce shows voters overwhelmingly support efforts to tighten the state’s process for putting constitutional amendments on the ballot.

The poll found more than three-quarters of voters (76%) would be more likely to support a lawmaker who voted to restrict the constitutional amendment process. That sentiment transcended party lines, with 78% of Republicans and no-party voters saying they would back lawmakers who vote in favor of tightening up the ballot initiative process, compared to 73% of Democrats.

The Chamber poll, released Thursday, did not include survey language, but its rundown of results suggests the failed effort to legalize cannabis for adult use (Amendment 3) is a driving factor. The polling memo specifically references “returning the process to the citizens and taking it out of the hands of special interests.”

“Out of state and special interest groups have attempted to circumvent the Florida Legislature by spending hundreds of millions of dollars pushing amendments to Florida’s Constitution,” Florida Chamber President and CEO Mark Wilson said. “Our poll shows Florida voters want Legislators to return the ballot initiative process to citizens initiatives and not those run by special interests.”

Gov. Ron DeSantis in January suggested changes to the constitutional amendment process as part of his call for a Special Session. In his comments, he pointed not to Amendment 3 and the $150 million spent to support the initiative, but to Amendment 4, the effort to enshrine abortion access into the state constitution.

“To have the amount of fraudulent petitions that were verified as fraudulent … that is a huge, huge problem,” he said at the time, according to Axios. That references DeSantis and his allies’ claims that at least some of the nearly 1 million petition signatures gathered to place the issue on the 2024 ballot were fraudulent.

DeSantis didn’t outline specifics for tightening the process, but it wouldn’t be the first time leaders in Tallahassee have sought to make it harder for anyone but the Legislature to put a question to voters.

The efforts date back to at least 2006 when lawmakers voted to put a referendum on the ballot increasing the threshold for constitutional amendment passage from 50% to 60%. Ironically, the referendum passed with less than the 60% threshold it sought to impose.

More recently, in 2020, lawmakers approved a measure that DeSantis approved to raise the threshold for citizen initiatives to trigger judicial review and prevented petition signatures gathered from being used in a future ballot. Critics at the time argued the measure would leave the process open only to wealthy individuals or deep pocketed special interests, with some nicknaming the measure a “ballot for billionaires.” That’s because it shortened the amount of time campaigns had to raise funds for the onerous petition gathering process.

The year prior, DeSantis led an effort cracking down on the petition gathering process by requiring petition gatherers to be paid by the hour, not by the petition. It also required petitions to include who was sponsoring them and how much was raised by in-state donors, with violations carrying steep fines.

The Chamber poll was taken Feb. 2-8 by Cherry Communications among 600 respondents. It has a margin of error of 4 percentage points.


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Major reform is needed at the Consumer Financial Protection Bureau

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For a decade, as a member of the Florida State Senate, I fought against overregulation.

After the passage of the REINS-style state law overhauling our state’s regulatory environment, I worked tirelessly to help usher in some of the major changes that have made our state a better place to live, work, and raise a family.

Now, as President Donald Trump begins his second term, I am proud to see a focus on overregulation take hold in Washington, D.C.

Shortly after the inauguration, Trump signed one of his most important executive orders: a regulatory freeze that halted further rulemaking pending an executive branch review. This was a key step in his deregulation agenda.

Included in the President’s regulatory freeze was a pause on any rulemaking currently underway at the Consumer Financial Protection Bureau (CFPB). This pause was especially necessary, because as other agencies had slowed down rulemaking at the end of the Joe Biden era, the CFPB sped up.

Originally formed in 2011, the CFPB has too often strayed from its stated mission of protecting consumers. Under the last administration, it served as a partisan rule-maker that functioned exclusively to help the Democrats. It opted to regulate by enforcement and exceeded its statutory authority, putting consumers and small businesses in harm’s way.

As the Biden administration prepared to leave office, the CFPB ignored the changing of the guard in pursuit of a left-wing agenda that was little more than an assault on small businesses and consumers.

Thankfully, Trump recognized the threat that former CFPB Director Rohit Chopra posed to the administration and fired him. Now, with new leadership in charge, it’s important that the lame-duck, partisan rulemaking be reviewed and repealed if necessary.  

Under the last administration, the CFPB changed the rules of the game when it came to regulating financial institutions. Instead of establishing clear guidelines everyone could follow, the CFPB made rules on the spot and expected companies to comply. The agency adopted a dangerous precedent of regulation by enforcement, punishing institutions for not abiding by rules that the CFPB made up on the spot.

The CFPB’s overreach has created regulatory uncertainty for the institutions it oversees, including banks. The consequences of this uncertainty have trickled down to consumers and small businesses who have paid the ultimate price for overregulation. When financial institutions do not have clear rules of the road, they cannot operate as freely as they would like. Access to capital becomes more difficult than necessary and costs increase.

While most federal agencies slowed down once Trump won in November, the CFPB sped up and attempted to cement its partisan agenda. As the Trump administration was preparing to take over, the CFPB ushered through new regulations on credit card late fees, medical debt, and payment app oversight. All of these issues are outside of its jurisdiction. The rules were nothing more than partisan power grabs in the waning days of the Biden term.

Effective regulation requires clarity, consistency, and most importantly, accountability. The Biden CFPB failed on all fronts. The agency has acted as judge, juror, and executioner on a myriad of cases and hurt the very consumers and small business owners they swore to protect.

The American people deserve better. The last-minute rulemaking and agency actions need to be put under a microscope. In many cases, these partisan rules need to be repealed before they do any further harm.

Change is needed now to correct the misdeeds of the last several years.

___

Former Senator Jeff Brandes is the founder and president of the Florida Policy Project.


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