JPMorgan shares fall 1% as Trump files $5bn lawsuit over 'debanking'
Bank denies political motives in account closures, says decisions based on regulatory risk considerations
JPMorgan Chase shares fell 1.1 percent on Wednesday after former President Donald Trump filed a $5 billion lawsuit against the bank and its chief executive, Jamie Dimon, alleging politically motivated account closures that the company has firmly denied.
The stock declined to approximately $305.20 in afternoon trading in New York, reversing earlier gains as investors assessed the potential legal and reputational implications for America's largest bank by assets. The lawsuit, filed in Miami-Dade County state court, accuses JPMorgan of abruptly closing multiple Trump business accounts in February 2021 with only 60 days' notice and no explanation.
Trump alleges the bank placed him, the Trump Organization, affiliated entities, and family members on a "blacklist" driven by "political and social motivations" and what his lawyers termed "unsubstantiated, 'woke' beliefs." The lawsuit claims the closures cut off access to millions of dollars and disrupted business operations, forcing Trump's companies to seek banking services elsewhere.
JPMorgan responded swiftly, with a spokesperson stating the lawsuit "has no merit." The bank denied closing accounts for political or religious reasons, clarifying that such decisions are made "because they create legal or regulatory risk for the company."
The $5 billion claim represents roughly 0.6 percent of JPMorgan's $824 billion market capitalization, suggesting limited direct financial exposure even in a worst-case scenario. However, analysts warned the lawsuit could contribute to broader systemic risks facing large banks, including increased compliance complexity and reputational vulnerabilities from political entanglements.
"Such lawsuits expose banks to systemic risks, including increased operational costs due to compliance complexity, damage to reputation from political entanglement, and heightened reputational vulnerabilities in navigating regulatory obligations versus accusations of political bias," according to recent analysis.
The legal action comes amid heightened political scrutiny of banking practices and the broader "debanking" debate. Trump has also accused Bank of America of rejecting his deposits following the January 6, 2021, Capitol insurrection, though both banks have denied those allegations.
Dimon, who spoke at the World Economic Forum in Davos this week, has publicly criticized some of Trump's economic proposals, including a proposed cap on credit card interest rates at 10 percent, which the JPMorgan chief called a potential "economic disaster." Dimon also defended Federal Reserve Chair Jerome Powell's independence, stating that anything that "chips away" at the central bank's autonomy is "not a good idea."
Despite the headline risk, JPMorgan's fundamentals remain robust. The bank closed Tuesday at $302.04, trading at 15.1 times trailing earnings with a 1.86 percent dividend yield. Analysts maintain a largely positive outlook, with 14 of 25 analysts rating the stock a buy or strong buy and a consensus target price of $342.13, suggesting potential upside of roughly 12 percent from current levels.
JPMorgan reported $168.2 billion in revenue over the past 12 months with a profit margin of 33.9 percent. The bank's shares have recovered significantly from their 52-week low of $199.32, though they remain below the annual high of $335.87 reached earlier in the year.
Legal experts note that proving political discrimination in banking relationships is exceptionally difficult, as banks retain broad discretion under federal law to terminate relationships for business or risk management reasons. The lawsuit's success may hinge on whether Trump's legal team can produce documentary evidence demonstrating explicit political motivations behind the account closures.
In its statement, JPMoran said it "agrees that no one's account should ever be closed because of political or religious beliefs" and expressed support for the administration's efforts to address political debanking, a carefully calibrated response that seeks to distance the bank from discrimination claims while maintaining its risk management prerogative.
The case is expected to draw attention to the increasingly politicized nature of banking services and could pressure regulators to provide clearer guidance on when account closures constitute legitimate risk management versus potential discrimination.