Mercado Noticias

The order directs bank regulators and government departments to look for signs that people without legal status are opening accounts or obtaining loans or credit cards. However, the order is less aggressive than banks had expected, as earlier reports suggested the White House was drafting an order that would make collecting customers’ citizenship information mandatory.

In the order, the White House framed the decision that banks would face credit risks if one of their customers were deported and any loans could no longer be repaid. The White House said it would not “permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and removable alien population.”

Since banks have never collected any information about their customers’ citizenship or immigration status, there are no reliable public figures on how much risk these customers pose to the financial system.

A study by the left-leaning Urban Institute estimated that between 5,000 and 6,000 mortgages were issued to customers with Individual Taxpayer Identification Numbers (ITINs). These ITINs are typically used by undocumented workers in place of a Social Security Number. The Urban Institute estimated that banks were highly reluctant to lend to individuals with ITINs. Fannie Mae and Freddie Mac are also generally reluctant to insure mortgages for borrowers with an ITIN, making it even less likely for ITIN holders to obtain a mortgage.

The White House has been signaling for weeks that it was planning some sort of executive order that would involve how banks handle their undocumented customers. Treasury Secretary Scott Bessent said last month that “there should be stricter rules” to open bank accounts.

“Why can the unknown foreign nationals come and open a bank account?” Bessent said.

Claiming bank executives were supposed to “know your customer,” he asked, "So how do you know your customer if you don’t know if they have legal or illegal status, whether a U.S. citizen or green card holder?”

In response, the banking industry had been aggressively lobbying for months to stop the White House from issuing an executive order that would have made collecting customers' citizenship status mandatory, arguing it would be expensive and require vast amounts of paperwork. Since the order only offers guidance to the banks instead of a mandate, it appears the banks were able to win over the White House.