U.S. Senator Katie Britt (R-Ala.) and Senate Banking Committee Chairman Tim Scott (R-S.C.), joined by all Republican members of the committee, have introduced the Financial Integrity and Regulation Management (FIRM) Act, a bill aimed at curbing the practice of debanking by removing “reputational risk” from federal banking oversight.
The FIRM Act seeks to eliminate all references to reputational risk as a criterion for assessing the safety and soundness of financial institutions.
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It would also bar federal banking agencies from issuing new rules or guidance based on this subjective measure and mandates that these agencies report to Congress on how they are phasing it out of their supervisory processes.
“The practice of debanking is preventing people from accessing their American Dream,” Senator Britt said. “I’m proud to support legislation that would shield our banking system from subjective oversight and political agendas. Along with my colleagues, we will end this financial exploitation and ensure law-abiding citizens and businesses have access to financial services.”
Chairman Scott, who has prioritized tackling debanking, emphasized the bill’s significance. “This discriminatory and un-American practice should concern everyone,” he said. “It’s clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses. This legislation is the first step in ending debanking once and for all.”
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Debanking—when banks deny services to individuals or businesses based on perceived reputational risks—has drawn scrutiny for targeting lawful industries and conservative-aligned groups.
The FIRM Act has garnered broad support from organizations like the American Bankers Association, Bank Policy Institute, Financial Services Forum, Blockchain Association, and Online Lenders Alliance, signaling strong backing from the financial sector.
During a recent Senate Banking Committee session, Senator Britt criticized the politicization of financial regulators.
“It is no secret that our financial regulators have become increasingly politicized over the last four years,” she said. “When you’re prioritizing a social or political agenda instead of ensuring access to the American Dream, we’ve got to call that out. Our large institutions play a vital role, but they need to stick to banking, not politics.”
Britt, who also cosponsors Senator Kevin Cramer’s (R-N.D.) Fair Access to Banking Act, vowed to investigate the roots of debanking. “We need to understand what spurred this, why certain industries and conservative groups have been targeted, and how we can prevent it moving forward,” she said.
The FIRM Act marks a significant push by Senate Republicans to refocus banking regulation on objective financial risks, aiming to protect fair access to services for all Americans.
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