Three federal bank regulators issued joint guidance Monday telling lenders to treat a borrower's deportation as a repayment risk they must underwrite against [1]. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration framed the move as a reminder of existing know-your-customer duties, not a new rule.

The operative sentence is narrow. Banks should "identify, measure, monitor, and control these risks through safe and sound underwriting practices that assess a borrower's willingness and capacity to repay according to the terms of the credit obligation," the agencies said in a news release [1]. The concern the guidance names: a customer not authorized to work in the United States "may not be able to repay a loan because of deportation" [1].

The guidance traces to an executive order President Donald Trump signed in May directing banks to scrutinize customers' citizenship and directing regulators to look for people without legal status opening accounts or obtaining loans and credit cards [1].

Here is where the framing splits. Cast as prudential risk control, this is routine safety-and-soundness language. Cast as immigration enforcement, it hands every loan officer a regulator-blessed reason to deny credit by status. The three agencies stopped short of ordering banks to close accounts or refuse loans [1]. How many borrowers get turned away, at which banks, and on what terms remains uncounted.

-- THEO KAPLAN, San Francisco