Capital One closed the Trump Organization's accounts. Then told everyone it was because of anti-money laundering concerns. In that order.
Banks conduct due diligence before opening accounts. They monitor transactions while accounts are active. They file suspicious activity reports when patterns emerge. Capital One did all of this presumably. Then closed the accounts. Then announced the closure was related to money laundering concerns. This is the financial services equivalent of a doctor performing your surgery, sending you home, then calling six months later to say you might want to get that mole checked.
The disclosure marks the first time a bank formally tied money-laundering concerns to the Trump Organization. Historic stuff. Brave. Capital One waited until Donald Trump was President of the United States to make this call. Really went out on a limb there. Nothing says institutional courage like closing a former client's accounts and then immediately telling reporters why. The compliance department must have felt like Navy SEALs.
Retail traders saw this headline and immediately checked if $COF was a buy. Because nothing screams undervalued equity like your bank publicly stating it just severed ties with the sitting president over financial crime concerns. Strong fundamentals. Solid risk management. The kind of headline that makes you want to go all-in on margin.
The Trump Organization released a statement. Capital One released a statement. Everyone released statements. None of the statements contained new information. All of them used the word "relationship" as if banks and clients go to couples therapy before breaking up.
Capital One's stock moved zero percent on the news because investors already knew what the accounts receivable looked like and it wasn't good enough to matter either way.
Photo by Nick Fewings on Unsplash
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