Chairman Tim Scott of South Carolina is spearheading a legislative effort to address the issue of debanking by introducing the Financial Integrity and Regulation Management Act. This bill aims to eliminate reputational risk as a factor in determining the safety and soundness of regulated financial institutions. All Republican members of the Banking Committee, including Senators Mike Crapo, Mike Rounds, Thom Tillis, John Kennedy, Bill Hagerty, Cynthia Lummis, Katie Britt, Pete Ricketts, Jim Banks, Kevin Cramer, Bernie Moreno, and Dave McCormick are supporting this initiative.
Chairman Scott emphasized his commitment to addressing debanking: “As Chairman of the Senate Banking Committee, I have made addressing debanking a top priority. This discriminatory and un-American practice should concern everyone." He criticized federal regulators for allegedly using reputational risk to further political agendas against legally operating businesses.
Senator Crapo echoed these sentiments by stating that reputational risk has been used as "another creative method for federal financial regulators to weaponize their power against politically disfavored groups."
Senator Rounds added that regulators have targeted individuals and organizations they deem unbankable: “This is an abuse of federal power to divert services from those with which they may not agree.”
Senator Tillis described the use of reputational risk as targeting people and businesses based on subjective criteria: “The FIRM Act stops this political weaponization and ensures regulators focus on real financial risks.”
Senator Kennedy highlighted concerns about discrimination by financial regulators: “Too often, financial regulators discriminate against customers and debank individuals because they disagree with their politics.”
Senator Lummis criticized what she sees as politically motivated actions by federal agencies: "Federal banking agencies have brazenly abused their power."
Other senators such as Britt, Ricketts, Moreno, and McCormick also expressed support for eliminating reputational risk considerations in regulatory practices.
The bill proposes several measures including removing references to reputational risk in regulatory supervision and requiring federal banking agencies to report to Congress on their elimination efforts. Chairman Scott previously hosted hearings where witnesses shared experiences of being debanked and pledged continued efforts to find solutions.
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