FIRM Act Will Stop Regulators From Using Reputational Risk to Assess Bank Stability
Yesterday, Chairman Tim Scott (R-SC), along with all Republican members of the U.S. Senate Banking Committee, introduced the Financial Integrity and Regulation Management (FIRM) Act. The FIRM Act would prevent regulators from using reputational risk as a component of supervision to assess a bank’s financial stability, which can lead to banks potentially debanking customers or businesses as a result.
In response to the bill’s introduction, Americans for Free Markets (AFFM), coalition members, and allies issued the following statements:
AFFM Advisor and Former U.S. Senator Pat Toomey (R-PA): “Financial regulators—also known as unelected bureaucrats—have used their regulatory power to pressure banks to debank industries that are disfavored due to partisan factors. Chairman Scott’s bill will prevent this misguided regulatory framework and the weaponization of banks in pursuit of political goals.”
Brewster Bevis, President and CEO, Associated Industries of Florida: “Florida’s diverse business community applauds the legislation introduced by Chairman Tim Scott (R -South Carolina) and all Senate Banking Committee Republicans who stood up for free markets and against unelected government regulators interfering in business to push their own biased political beliefs. Our financial system will be much stronger as banks and their customers are able to follow well-defined regulations without worry of partisan blowback.”
Tim Doyle, Policy Advisor, Centerline Liberties: “Financial supervision should focus on safety, soundness, and risk-based oversight—not subjective reputational concerns that regulators embed into guidance and enforcement. By eliminating reputational risk as a consideration in banking oversight, the FIRM Act ensures that access to financial services is determined by clear, legal standards—not shifting public opinion or political influence.”
Glenn Hamer, President and CEO, Texas Association of Business: “Texas business owners, small and large, greatly appreciate the proposed legislation that Chairman Scott and Senate Banking Committee Republicans introduced to ensure a more fair, transparent and efficient financial regulatory system free from partisan interference. This is a significant win for businesses all over the country, removing unnecessary and biased government interference in the financial sector.”
Pete Sepp, President, National Taxpayers Union: “Chairman Scott and Senate Banking Committee Republicans are taking the much needed step to protect taxpayers by introducing legislation to depoliticize the financial regulatory process. For too long, taxpayers have been burdened twice over by poor financial policy—first by regulators focusing on extraneous matters instead of safety and soundness, and second by banks’ wasted compliance costs that could better be spent innovating and growing the private sector economy.This legislation gives clear guidance for financial institutions to follow while removing the ambiguous ‘reputational risk’ rules that have brought confusion to our financial system. Voters across the political spectrum want government officials to make decisions based on sound business factors, not politics.”
Mario H. Lopez, President, Hispanic Leadership Fund: “Forcing financial institutions to follow unclear and inconsistent regulations undermines the efficiency, fairness and accessibility of financial services that Americans depend on. Restricting the potential for bias in federal regulations will provide clarity for everyone and also prevent states from creating a patchwork of politically-motivated regulatory regimes across the country.”
Chris Wallace, President and CEO, North Texas Commission: “This legislation, championed by Chairman Scott and Senate Banking Committee Republicans, represents a significant win for the free market system that has made our country great. By preventing unelected government regulators from weighing ‘reputational risk’ to assess a bank’s financial stability, Republican lawmakers are effectively removing partisan decision making from the financial system. This empowers businesses, consumers and the free market, and removes the threat of politically-driven attacks from financial regulators.”
AFFM Executive Director John Wittman: “This legislation marks a significant step in protecting the free market by addressing regulatory overreach. By scrapping vague ‘reputational risk’ rules, it prevents federal banking regulators from pressuring banks to debank customers for political reasons. We applaud Chairman Scott and his committee for delivering clear and actionable guidelines that will ensure banks serve customers fairly.”
Read more about what other conservative voices are saying about debanking HERE.
Read more about what’s at stake on debanking HERE.
