Two months ago, federal regulators erased the phrase “reputational risk” from the rulebook they use to supervise banks. Last Friday, Capital One told a federal judge it didn’t need that phrase to defend itself. Its account contract, the bank argued, already lets it close any account “at any time, for any or no reason and without notice.” That sentence, buried in a motion to dismiss the Trump Organization’s debanking lawsuit, is the most candid thing anyone in this fight has said all year. Washington changed its own supervisory manual. The banks changed nothing, because the manual was never the source of their power.
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