Steve Happ (2:13)

Well, actually, I did think, am I a criminal? I felt like a criminal.

Ryan Knudsen (2:20)

Steve wanted answers, but he didn't get any. And so he was left to fill in the blanks himself. And he started to suspect that the bank was biased.

Steve Happ (2:30)

I can't think of any other logical reason, because the only way all three of these entities were connected was what we did.

Ryan Knudsen (2:39)

And to be clear, when you say it was because of what we did and what we do, we. What do you mean by that?

Steve Happ (2:47)

It's that we're a Christian organization and we are spreading the gospel of Jesus Christ. That's not popular these days. That's the only conclusion that would make any sense. What else could it be about?

Ryan Knudsen (3:02)

Steve's theory that his accounts were canceled because he and his organization are Christian caught fire in conservative circles. Bank of America did eventually give an explanation, but not before Steve's story turned into something much bigger, a story that would reach all the way to the White House. Welcome to the Journal, our show about money, business and power. I'm Ryan knudsen. It's Monday, October 20th. Coming up on the show, how one evangelical story became a rallying cry against banks.

Alexander Saidi (3:44)

Foreign.

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Ryan Knudsen (4:32)

Steve Hap's bank, Bank of America, shut down all of his accounts. No warning, no clear explanation. And there's a word for this.

Alexander Saidi (4:42)

The word is debanking. Debanking, debanking, debanking. Targeting debanking would be a good thing. Debanking of conservatives in America. It essentially refers to the act of losing access to a bank account. Banking services. You know, debanking broadly kind of captures all of these phenomena.

Ryan Knudsen (5:03)

That's our colleague Alexander Saidi recently. Debanking went from being a niche talking point to one of the most politically loaded words in his world.

Alexander Saidi (5:13)

It turned into this broader social crusade against the biggest banks in the country for alleged discrimination against Christians, conservatives. And if you weren't in these conservative circles, you might not have really been paying attention to this whole idea that banks were playing politics with access to the financial system.

Ryan Knudsen (5:39)

For as long as banks have existed, they've reserved the right to close accounts. Sometimes it's because of overdrive drafts or fraud or suspicious transfers. Sometimes it's just about risk.

Alexander Saidi (5:49)

Like if they have a customer that's risky, that poses like a threat to itself or to others, then they have the right not to bank that person. And obviously it's just like that person has done something that's wrong or dangerous or risky and they don't want to be affiliated with it. So for their perspective, what they're doing is risk management.

Ryan Knudsen (6:12)

Would it even be legal to debank someone because of their religious beliefs like Steve Happ is saying happened to him?

Alexander Saidi (6:20)

No, no, definitely not. It would violate civil rights, anti discrimination laws. Same for, you know, political beliefs. And then obviously, if a bank Closes the account of somebody who's stolen a lot of money or has gotten a lot of money through criminal activity. We wouldn't think of them as really like discriminating against them. Right.

Ryan Knudsen (6:44)

Big banks, including bank of America, have said they don't discriminate based on political or religious affiliation. But that's not how it looks to a lot of conservatives. Alex traces this whole thing back to the aftermath of the 2008 financial crisis. Back then, many Americans blamed banks for the recession. So a lot of banks started to try and improve their reputations.

Alexander Saidi (7:09)

I would say that after the 2008 financial crisis, banks writ large thought, okay, the financial crisis and our role in it made us appear like we are exploiting communities. So how can we take steps to appear like good corporate citizens?

Ryan Knudsen (7:28)

As part of this makeover, banks started taking a stand on social issues. Some stopped lending to coal companies. Some pulled out of the gun industry.

Alexander Saidi (7:37)

All of these decisions were taken in a way to sort of be like, look, just because we're financial institutions doesn't mean we have a lack of a social compass.

Ryan Knudsen (7:46)

Many of these stances were seen as left leaning. Critics called it woke capitalism. But banks were really under pressure. Post 2008, new regulation heightened scrutiny of banks. In some cases, big lenders justified pulling away from certain industries by framing the decisions in terms of risk. Risk of regulatory changes, risk of bad headlines, risk of breaking anti money laundering laws, and in the case of gun makers, the risk of lawsuits from families impacted by a shooting.

Alexander Saidi (8:15)

So as a bank, you could look at that company and say, this customer looks like they might cause problems for us and cost us more in compliance and legal fees than we'd ever make in money out of them. So actually, long term, they're not a good customer and we shouldn't do business with them.

Ryan Knudsen (8:35)

One customer. Banks also stopped wanting to do business with Donald Trump. After the January 6th attack on the Capitol, many banks cut ties with him. JPMorgan Chase closed the Trump Organization's business accounts and the family's personal ones too.

Alexander Saidi (8:50)

They told me, I'm sorry, sir, we can't have you. You have 20 days to get out. I said, you gotta be kidding. I've been with you.

Ryan Knudsen (8:58)

At the same time, Trump and his company were under civil investigation in New York for fraud.

Alexander Saidi (9:03)

In the bank's eye, President Trump was dealing with a New York probe of the Trump Organization and how it was reporting its financials from their view. Okay, if we choose to bank this company that's now accused of criminal activity, we run the risk of somehow being an accessory to the crime, it could cause us a lot of litigation costs. So our cost benefit analysis tells us we should actually end this relationship.

Ryan Knudsen (9:33)

But unlike President Trump, most people who've been debanked often don't have any idea why. And if banks wanted to shut down a customer's account, how would they usually communicate that to the customer?

Alexander Saidi (9:46)

They choose to not say much at all.

Ryan Knudsen (9:51)

Why would a bank choose not to explain why it was dropping a client?

Alexander Saidi (9:55)

The key reason there is because when a bank sees something that looks like it could be criminal or looks suspicious, banks will often just cut off the relationship. And they're required by law not to tell people if there's an investigation into anything they've done.

Ryan Knudsen (10:14)

They can't tell you that we're closing it because you're under investigation. But if they give a reason, always. But the only time they don't say the reason is is because you're under investigation, that might tip their hat in the same way.

Alexander Saidi (10:26)

That's right.

Ryan Knudsen (10:28)

But by not telling customers why they lost their accounts, many were left guessing.

Alexander Saidi (10:33)

And that's what happened in Steve Hap's case.

Steve Happ (10:40)

Well, I can't imagine they'd close the account because we're feeding orphans and we're rescuing trafficked girls.

Ryan Knudsen (10:49)

Did you wonder if it was because of your faith, your mission work, that you were being that your account was being closed?

Steve Happ (10:57)

Initially, no, that didn't enter my mind. That came up later.

Ryan Knudsen (11:03)

Later after he mentioned what happened to a well connected board member at his church.

Steve Happ (11:11)

And he was the one who said, oh my goodness, they are attacking you because of what we.

Ryan Knudsen (11:20)

Soon a powerful Christian law firm would hear about Steve's story.

Steve Happ (11:25)

And lo and behold, I'm the poster child for debanking.

Ryan Knudsen (11:33)

That's next.

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Ryan Knudsen (12:49)

Steve Happ was confused. Why didn't his bank want his business anymore? Still, he told our colleague Alexander Saidi that he was prepared to let the whole thing go until someone with a lot of pull reached out to him.

Alexander Saidi (13:02)

Through somebody who worked with him in his charity. He was connected with this group called the Alliance Defending Freedom.

Ryan Knudsen (13:11)

And tell me about this group, the Alliance Defending Freedom.

Alexander Saidi (13:14)

The Alliance Defending Freedom is definitely one of these right wing activist groups that very much believes that corporate America has been taken over by left wing ideology and that goes from big box retailers to large financial institutions. The lawsuit filed by Alliance Defending Freedom. The Alliance Defending Freedom. Alliance Defending Freedom filed a lawsuit in Texas. That's the nonprofit that won the Supreme Court case last year on behalf of that Colorado baker who didn't want to make a cake for a gay wedding. So that was.

Ryan Knudsen (13:44)

The group is backed by wealthy conservatives donors like Charles Koch and Leonard Leo of the Federalist Society. To conservatives, Steve's story looked like strong evidence that banks were targeting people for their beliefs.

Alexander Saidi (13:56)

Steve has never produced any smoking gun showing that somebody somewhere in the bank pushed the cancel button because of the Christian affiliation. But I think they saw a really compelling story that banks were being political and an anti conservative and anti Christian in how they were gatekeeping access to bank accounts. So after that Steve started to believe that maybe there really was a like an underlying anti Christian motive in bank of America's decision.

Ryan Knudsen (14:31)

And what did the Alliance Defending Freedom do to Steve's story?

Alexander Saidi (14:36)

Well, they told everyone about it.

Ryan Knudsen (14:39)

We are joined today by Steve Happ.

Alexander Saidi (14:41)

Founder of Indigenous Advanced Ministries. Steve's faith, they took his story, made it a sort of cautionary tale. They took his photo photos of him helping poor children in Uganda and put them on all these one pagers that they distributed in mostly Republican state houses around the country and said this is Steve, this is his story.

Sponsor/Advertisement Voice (15:04)

A Tennessee based Christian ministry serving impoverished children in Uganda now accusing bank of America of religious discrimination.

Ryan Knudsen (15:12)

After it completely, Steve became a conservative symbol. His story spread online and on cable news. And then more people came forward saying they or people they knew were also debanked for their politics.

Alexander Saidi (15:25)

I mean there was Marc Andreessen. He spoke on the Joe Rogan podcast. You get kicked out of your bank account, you get, you get kicked out of the, you can't do credit Card transactions. Eric Trump has been talking about it a lot more in public lately. Sam Brownback, the former Republican governor of Kansas, she's looking on the computer screen, says that account has been closed.

Ryan Knudsen (15:46)

It wasn't just conservatives. Progressives like Senator Elizabeth Warren have also taken on debanking. Warren accuses banks of denying service to low wage earners and locking people out for religious affiliation or political beliefs. Soon, the chorus included the biggest voice of all.

Alexander Saidi (16:05)

But I hope you start opening your.

Steve Happ (16:07)

Bank to conservatives because many conservatives complain.

Alexander Saidi (16:10)

That the banks are not allowing them.

Steve Happ (16:12)

To do business within the bank and.

Alexander Saidi (16:14)

That Trump turns it into a campaign trail issue in early 2024. But we're also going to place strong protections to stop banks and regulators from trying to debank you from your Trump says we're going to stop the banks from debanking you. And a lot of people had no idea what he was even talking about. I don't know what the hell d bank means, but he might have to take d ambulance to see the doctor.

Ryan Knudsen (16:45)

This August, President Trump signed an executive order accusing banks of debanking conservatives. The Alliance Defending Freedom helped write the executive order and Steve Hap's story was even referenced in a draft, though it was later taken out of the final version. The executive order demands investigations and threatens fines for refusing service based on political or religious reasons, which for banks is alarming because suddenly they could get punished for what used to be a routine business decision in private.

Alexander Saidi (17:15)

Executives are saying, you know, we're really worried that there's going to be a type of witch hunt scenario where these cases get fished out of obscurity and somebody whose bank accounts we closed for totally legitimate reasons is going to say, you debanked me because I'm a Baptist or because I'm a libertarian.

Ryan Knudsen (17:35)

Alex says that banks fear of investigations could make them more reluctant to cancel or reject accounts that they're worried about. And for the banks, why not in response to this, just say, okay, fine, we'll just bank everybody. We won't close accounts anymore.

Alexander Saidi (17:50)

They believe a cornerstone of how they make money is full discretion over who can and cannot be a customer in this new regime or whatever, where, you know, they might just have to bank everyone no matter what that could eat into their profits. So they're resisting this notion of broad fair access is what it's called where you kind of have to bank anyone. And if you're doing a kind of business they view risky, they would prefer to not have to bank you. But the way things are shaking out is that you Know, they, they may just have to. And, you know, they'll either pass that cost on to customers or they'll eat it themselves.

Ryan Knudsen (18:34)

As for Steve Happ, he was able to find a new bank, and he did go to Uganda as planned. But here's the thing. After Steve's story blew up, bank of America finally gave a reason for why it closed his accounts.

Alexander Saidi (18:49)

They started to say, we closed his accounts because he was operating a debt collection business in Uganda, which is a violation of our policies. We don't do small business banking for debt collectors in Africa.

Ryan Knudsen (19:02)

A website for a business entity Steve oversees includes a line that says, quote, our business is dedicated to pursuing the recovery of overdue invoices on behalf of clients. It also mentions that its customer center is in Africa. According to bank of America, it looked like two problems in one, a business operating outside the US which their policy for its small business line forbids, and a business and debt collection, a line of work that the bank deems risky. Since Steve's accounts were linked, the bank shut them all down. But it didn't explain this to the guy who needed to hear it most.

Alexander Saidi (19:37)

They never told Steve why they closed the accounts. But then when it became a story, they started to tell the press about it. But in the absence of information, he deduced that his Christian identity was the reason why bank of America was cutting off his accounts.

Ryan Knudsen (19:59)

Steve says his organization doesn't do debt collection, and two years after this whole debacle, he isn't buying bank of America's explanation.

Steve Happ (20:07)

That annoys me a bit. Right, because they're still sticking with the debt collection story, and that makes no sense to me.

Ryan Knudsen (20:17)

Do you still believe that the motive was religious discrimination?

Steve Happ (20:21)

I. I hesitate to be definitive because we don't know. But I don't know of any other reason. I can't think of any other reason.

Ryan Knudsen (20:31)

I asked Steve what he would have done if the bank had just told him the problem from the start. If you said, what's going on? And they said, oh, well, we flagged your account because it looks like it's tied to debt collection, you could have.

Steve Happ (20:44)

Been like, that would have been easy to explain.

Ryan Knudsen (20:48)

To Alex. That's the heart of the matter. The frustrating silence that allowed a story to take on a life of its own.

Alexander Saidi (20:55)

To me, it's that it's not the truth that really matters, it's how it is perceived. In Steve Happ's case, this has become a they said, they said situation. Yet his story has still become one of the most prominent examples of bank discrimination and has been, you know, effectively turned into this rallying cry. And that's even without a full accounting of what did or didn't happen. So to me, that sort of says a lot about our political culture these days, where it's not necessarily what is or isn't true that matters. It's how you feel about what may or may not be true.

Ryan Knudsen (21:53)

That's all for today. Monday, October 20th. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Dylan Tokar. Thanks for listening. See you tomorrow.