Chairman Tim Scott introduced new legislation aimed at eliminating reputational risk as a component of regulatory supervision. The Financial Integrity and Regulation Management Act seeks to prevent regulators from using reputational risk to discriminate against federally legal businesses, marking a step towards ending the practice known as debanking.
The bill has garnered support from various stakeholders, including the financial services industry and organizations representing industries that have experienced debanking. Among those endorsing the legislation are the American Bankers Association, the Bank Policy Institute, the Financial Services Forum, and the Blockchain Association. Additionally, organizations such as the ATM Industry Association, INFiN Alliance, National Pawnbrokers Association, and National Shooting Sports Foundation have expressed their support.
Rob Nichols, President and CEO of the American Bankers Association, stated: “America’s banks are in the business of providing financial services to as many individuals and businesses as possible. The FIRM Act restores banks’ freedom to make their own decisions about who they can and cannot bank by limiting regulators’ ability to use subjective concerns about ‘reputational risk’ to pressure financial institutions not to bank certain customers."
Greg Baer, President and CEO of the Bank Policy Institute, remarked: "BPI supports the FIRM Act as an important step toward restoring fairness and integrity in how the regulators oversee the banking industry."
Kevin Fromer, President and CEO of Financial Services Forum, commented: "We thank Chairman Scott for introducing the Financial Integrity and Regulation Management Act. This bill would provide needed clarity for a more predictable regulatory environment so that banks can best serve their customers in a safe and sound financial system."
Kristin Smith, CEO of Blockchain Association said: “Debanking lawful companies and individuals on the basis of the industry they work in is a pernicious practice Senator Scott is rightfully working to end."
A coalition of 26 state financial officers also voiced support: “As state financial officers, we believe that politicized debanking poses a serious threat not only to our nation’s economy... We support efforts that will bring us significantly closer to ending politicized debanking."
All Banking Committee Republicans joined Chairman Scott on this legislation.