ICYMI: Alliance for Market Integrity Panel Discusses Next Steps for Reputation Risk Removal from Supervisory Process

In case you missed it, Americans for Free Markets (AFFM) Executive Director David Ibsen joined a panel discussion hosted by the Alliance for Market Integrity on July 22. The event, “Beyond Reputation: Refocusing Bank Supervision on Real Risk,” which took place in Washington, D.C. and was moderated by Centerline Liberties Senior Policy Advisor Tim Doyle, featured a robust discussion on how vague definitions of reputation risk were used by federal regulators during the Obama and Biden administrations to pressure banks into denying financial services to legal entities and individuals they didn’t agree with on ideological grounds.   

Congressman Shares Personal Experience with Debanking

The discussion began with a fireside chat featuring Rep. Bill Huizenga (R-MI-04), who spoke about how his own family business experienced debanking. He highlighted the recent bipartisan U.S. House passage of the Main Street Capital Access Act, which included legislation prohibiting the use of “reputation risk” from regulators’ supervisory standards, otherwise known as the FIRM Act.

Voters & Policy Experts Agree on the Need to End Government-Driven Debanking

Ibsen then kicked off the panel by referencing the AFFM national survey results showing Americans oppose government-driven debanking and overreaching regulators, but they do support a national framework that upholds the freedom of private business. On the root of the problem, Ibsen said President Trump “got it right” when he said the power in banks is with the regulators who make the rules.

National Taxpayers Union (NTU) Vice President of Federal Affairs Thomas Aiello broke the issue down into two parts: 1) Americans are concerned that debanking could impact them personally and 2) the government shouldn’t have the power to decide which lawful citizens, businesses and interest groups are allowed access to banking services in the first place. He cited the Bank Secrecy Act’s (BSA) outdated provisions as a factor that has led to government-driven debanking.

Outdated BSA Provisions Contribute to Debanking

Taxpayers Protection Alliance (TPA) Executive Director Ross Marchand pointed out that BSA laws, first implemented in the 1970s, and have grown into an asymmetric regulatory enforcement environment. Banks are forced to over-report activity that could potentially be flagged as suspicious because the fines for underreporting are so severe. This leads to a broken system where banks, erring on the side of caution, are pressured to deny services to customers they would otherwise serve.

Positive Momentum; More Congressional Action Needed

The conversation concluded that the passage of the FIRM Act through the House is a welcomed, but initial step. Panelists noted there is still work to be done, including both U.S. Senate passage of the FIRM Act and reforms to the BSA, starting with updating the unnecessary thresholds on bank transaction reporting.