The Scoop
President Donald Trump will sign a pair of executive orders Tuesday aimed at insulating the US’ financial system from undocumented immigrants and expanding fintech firms’ access to the Federal Reserve’s payment rails, a White House official told Semafor.
The first executive order is a meaningful step back from initial proposals, which were expected to direct financial institutions to collect proof of citizenship from customers. That drew widespread ire from the banking industry, which warned of implementation costs and potential liability.
In a win for Wall Street, the final version instead directs Treasury Secretary Scott Bessent to advise financial institutions on ways undocumented immigrants might open accounts or receive loans.
It will also direct Bessent and other federal regulators to propose changes to Bank Secrecy Act regulations that strengthen customer-due-diligence requirements and empower financial institutions to seek additional information when necessary, as well as to consider changes to BSA regulations that strengthen customer identification program requirements.
The Consumer Financial Protection Bureau will be asked to weigh modifying its rules to clarify that deportation and wage-loss might impact customers’ ability to repay loans.
In this article:
Know More
The second executive order aims to promote collaboration between fintech firms, financial institutions, and federal regulators, the White House official said.
Fintech firms have been lobbying for expanded access to the Fed’s payment rails, which they say would make transactions faster and cheaper. Banks, for their part, have raised concerns customers could be at risk. The president’s executive order directs regulators to review their policies for opportunities to update that might encourage innovation and increase competition while still maintaining safety — then take steps to do so.
Crucially, the executive order will direct the Fed to evaluate how it decides which uninsured depository institutions and non-bank financial companies can access its payment accounts and payment services — and report on its authority and options to expand access, as well as any potential impediments to doing so.
Eleanor’s view
Banks have been anxiously awaiting the citizenship executive order for months. The fact that it’s finally here — and nowhere near as bad as banks had feared — is a weight off the backs of financial institutions across Washington.
It’s also a testament to the sustained might of Wall Street’s allies within the administration, even when pitted against some of the White House’s loudest (if fading) voices on immigration.
But this is far from banks’ best case scenario, with several suggestions — like deportation as a potential factor in whether someone should receive a loan — raising serious red flags, not least because they would also affect immigrants who aren’t undocumented. Much will hinge on which changes Treasury and the regulators ultimately decide to implement — and how.
Room for Disagreement
Some administration officials had previously said they see merit in directing banks to collect citizenship information on their customers. Treasury Secretary Scott Bessent told Semafor last month that he doesn’t’ “think it’s unreasonable,” while Comptroller of the Currency Jonathan Gould told lawmakers in February that the burden on banks would be “minor.”