US banks are freezing accounts and withdrawals in the latest scandal involving both checking and savings accounts.
CBS Los Angeles reports that a growing number of people say they are abruptly losing access to their entire bank accounts.
The report cites the sudden account closure of Elad Nehorai, who received an ominous alert while logging into his Bank of America account.
He then drove to a branch in West LA, where he was told his account had been shut down and access to his life savings was denied, says DH.
“Bank of America told me it was shut down. They refused to give me an explanation. They told me I would get my money after it was resolved.
All of a sudden I find out I’m broke. I can’t feed my family and I can’t pay any expenses,” reported Elad.
Banks typically shut down accounts over concerns of suspicious behavior, says DH.
But according to the Banking Policy Institute, only 4% of Suspicious Activity Reports (SARs) submitted by banks to law enforcement result in a follow-up, and a small fraction of the follow-ups result in arrests and convictions.
Nehorai says Bank of America, which has $1.4 trillion in assets under management, said it would take up to 20 days to review his account.
“It’s another one of those situations where you just – how do you deal with this massive bank, this massive power that you have no control over? I was shocked to find out that this is actually relatively common.”
When a CBS television crew showed up at the bank to film a report, Nehorai says the situation rapidly changed.
Although his account remained closed, he was granted permission to transfer his money out and send it somewhere else.
Bank of America told the news outlet that an FBI report triggered the shutdown of Nehorai’s account. Nehorai says he is the person who submitted that report to the FBI, to tell the agency that a scammer had impersonated him via email asking for money from one of his clients.
Earlier this month, thousands of customers who had their Coinbase accounts linked to Bank of America reported their accounts also being frozen or closed.
JPMorgan Freezing Bank Accounts Draws Scrutiny
In May, Republican attorneys general from 19 states said JPMorgan is “persistently” discriminating against its own clients and closing bank accounts without warning.
The law enforcement officials, led by Kentucky Attorney General Daniel Cameron, sent a letter to JPMorgan CEO Jamie Dimon stating that the banking giant’s practices go against the company’s own policies on equality, per Business Insider.
The letter, which has now been published by the Wall Street Journal, states that JPMorgan has repeatedly discriminated against customers based on their religious or political beliefs.
“It is clear that JPMorgan Chase & Co. (Chase) has persistently discriminated against certain customers due to their religious or political affiliation.
This discrimination is unacceptable.
Chase must stop such behavior and align its business practices with the anti-discrimination policies that Chase proclaims.”
The attorneys general cite the sudden account closure of a religious liberty organization as an example of the bank’s discriminatory practices.
In May 2022, Chase abruptly closed the National Committee for Religious Freedom’s (NCRF) checking account.
NCRF is a ‘nonpartisan, faith-based nonprofit organization dedicated to defending the right of everyone in America to live one’s faith freely.’
When NCRF inquired about the reason Chase closed the account, multiple bank employees stated that the decision came from the ‘corporate office.’ Specifically, NCRF’s executive director “was informed that a note in the file read that Chase employees were not permitted to provide any further clarifying information to the customer.’’
A JPMorgan representative told The Journal: “We have never and would never exit a client relationship due to their political or religious affiliation.”
NYC is Freezing New Bank Deposits at Capital One
During the second quarter this year, The New York City (NYC) Banking Commission began to freeze new bank deposits at Capital One (NYSE:COF) and KeyBank.
Following the first-ever public hearing held by the New York City Banking Commission on Thursday, all three members voted to freeze deposits at Capital One and KeyBank after the banks failed to submit required plans demonstrating their efforts to root out discrimination.
New York City Comptroller Brad Lander, one of three members of the Commission, also voted against designating three other banks to hold public funds: International Finance Bank, PNC Bank, and Wells Fargo, per New York City’s Comptroller press release.
“Banks seeking to do business with New York City must demonstrate that they will be responsible managers of public funds and responsible actors in our communities,” said Comptroller Brad Lander.
“Unfortunately, despite several opportunities to do so, five banks failed to comply with the New York City Banking Commission’s designation process – leaving us to conclude that they are not taking meaningful actions to combat discrimination in their operations and are not responsible stewards of public dollars.
I’m grateful to the Mayor, Finance Commissioner Niblack, Treasurer Jackman, Banking Commission Member Jenerette, and our partners at the Department of Finance for working with us to strengthen oversight over the banks that profit from public funds.”
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