Red state AGs blast Secretary Yellen over alleged attempts to 'fearmonger' against de-banking bans

FIRST ON FOX: A group of 20 GOP state attorneys general are accusing the Treasury Department of a "disturbing trend" of skirting its responsibilities under the law to serve political ends after the department said state laws banning de-banking were a threat to national security. 

In a letter sent on Thursday, led by Florida Attorney General Ashley Moody and Iowa Attorney General Brenna Bird, the AGs accused the department of "fearmonger[ing]" and "sto[king] confusion" through a recent letter Undersecretary Brian Nelson sent to Florida opposing its law, and others like it, that are aimed at protecting the access conservative groups, gun manufacturers and other organizations have to the financial sector, who argue that they have had their accounts closed or frozen by banks. 

"State laws interfering with financial institutions’ ability to comply with national security requirements heighten the risk that international drug traffickers, transnational organized criminals, terrorists and corrupt foreign officials will use the U.S. financial system to launder money, evade sanctions and threaten our national security," Nelson said in a letter earlier this month.

However, Moody and her colleagues told Treasury Secretary Janet Yellen on Thursday the department has "forsaken its statutory role and instead chosen to intervene on behalf of activists seeking to hijack the financial system for their political ends."

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"It is even more disappointing that the Treasury Department would use ‘national security’ as cover for large banks’ abuse of power to achieve those ends," the letter states. 

Laws like Florida’s HB 989 purport to "protect both consumers from discrimination and entities like religious organizations, gun manufacturers, and those engaged in fossil fuel exploration from improper political pressure for their lawful and often constitutionally protected activities," the AGs wrote. 

"No consumer or business should be denied services based on political beliefs or religious views or because of some arbitrary social credit score derived from ideological agendas," they added. 

The department's letter criticizing the state laws like Florida's and others being considered, the AGs say, "deliberately misleads financial institutions about these state laws, for example, by falsely suggesting that laws such as Florida’s HB 989 would prohibit financial institutions from considering whether a consumer is associated with designated terrorist groups. On the contrary, laws like HB 989 ensure that financial institutions focus on true risk-based factors and stay out of the business of forcing radical social policies."

A spokesperson for the Treasury Department, in a statement to Fox News Digital said, "Treasury provided a response to a bipartisan letter from members of Congress who expressed concerns about State laws interfering with financial institutions’ ability to comply with national security requirements."

"The Department agrees with the bipartisan Members of Congress that it is imperative that state laws do not increase the risk that international drug traffickers, transnational organized criminals, terrorists, and corrupt foreign officials use the U.S. financial system to launder money, evade sanctions, and threaten our national security," the spokesperson said.

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The AGs' letter also points to the Treasury Department's previous policy positions, including a rule prohibiting banks from "deny[ing] any person a financial service… unless the denial is justified by such person’s quantified and documented failure to meet quantitative, impartial risk-based standards."

The AGs note that at that time "the Treasury Department’s Financial Crimes Enforcement Network did not pose any objections to that language as creating a national security risk."

"Such an omission from criticism reveals that the Department’s current criticisms are the product of political posturing rather than any genuine concern that prohibiting discrimination somehow endangers national security," they said. 

The AGs say that Nelson's letter is the latest in "a troubling pattern" under the Biden-Harris administration of "importing political activism into financial regulation."

"In 2021, you spoke in favor of the Financial Stability Oversight Council ‘recognizing that climate change is an emerging and increasing threat to U.S. financial stability.’ Yet the Federal Reserve’s own climate-scenario stress test shows that even the worst-case scenarios relating to global emissions and climate change do not create a material financial risk," they wrote. 

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"In September 2023, you also encouraged financial institutions to follow net zero recommendations that are promoted by the Glasgow Financial Alliance for Net Zero, which is chaired by political activist and mega-donor Michael Bloomberg," they continued. 

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"In sum, your recent actions show a disturbing trend of the Treasury Department skirting its responsibilities under the law to serve political ends," the AGs concluded, adding that they are "looking forward to the day when federal regulators will focus on their statutory duties, rather than on advancing radical political causes and stoking unfounded fear about state laws."