Nigel Farage Shows What Happens When Good Banks Go Woke

It’s the biggest financial scandal you’ve barely heard about in the U.S.: Two British bank executives have lost their jobs and others may follow in an uproar over politicized decisions to close customer accounts. This is a cautionary tale for Americans about what happens when good banks go woke.

The mess engulfing Coutts & Co. started in late June when Nigel Farage said the exclusive private bank was closing his accounts. Mr. Farage is a prominent politician on the British right, having been the prime mover behind the 2016 Brexit referendum and expressing economically and socially conservative views before and since.

Mr. Farage asserted he was being de-banked for political reasons, a claim the bank initially denied. Alison Rose, CEO of Coutts’ parent company NatWest, told a BBC journalist that Mr. Farage had fallen below Coutts’ hefty minimum-balance requirements.

It turns out Mr. Farage was right. He obtained a copy of a 40-page record of the bank’s internal discussions about his accounts. Coutts staff concluded that continuing to bank Mr. Farage would create “significant reputational risks” for Coutts owing to his sometimes inflammatory opinions on issues such as race relations, Russia and climate policy. The dossier records employees conceding there were commercial grounds for keeping Mr. Farage’s accounts open otherwise.

Ms. Rose was forced to resign after she admitted she was the source for the BBC story, which originally attributed the leak to an anonymous source. Coutts CEO Peter Flavel followed days later as part of the bank’s attempt to recover from the scandal. Prime Minister Rishi Sunak is considering new regulations that would prevent banks from shutting out customers for their political views.

This story is more than a British business kerfuffle, because what happened to Mr. Farage at Coutts could happen in America. The U.S. is embroiled in its own scandal about social-media censorship regarding the Covid pandemic as new evidence emerges of close ties between the Biden Administration and tech companies to suppress politically unpopular views. Executives know politicians and regulators wield enormous power over their businesses, increasing the incentive to go along with censorship.

Financial institutions on both sides of the Atlantic play up their liberal cultural convictions for similar reasons, and part of Coutts’ rationale for closing Mr. Farage’s accounts was that serving him would be “at odds with our position as an inclusive organisation,” according to the dossier.

Banks are so heavily regulated that they can’t help but be mindful of politics in business decisions. NatWest is still 39% owned by British taxpayers following a bailout in 2008, and the left-wing Labour Party is widely expected to win an election next year. Nowhere in the dossier did Coutts employees openly consider that they might soon be regulated by politicians opposed to Mr. Farage, but it’s hard to imagine the thought didn’t cross someone’s mind.

This danger will grow as politicians lean more heavily on banks to implement their policies. Would a bank maintain accounts for a critic of net-zero climate policies if the bank is under pressure from Washington to advance the climate agenda?

Normal businesses can choose their customers, but it’s a long time since a bank was a normal business. The left in particular treats banks as utilities. The Farage affair exposes how dangerous this is, and not only in Britain.