WASHINGTON – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, today joined Sen. Tim Scott (R-S.C.) and colleagues in introducing the Financial Integrity and Regulation Management (FIRM) Act to curb debanking by federal regulators. The bill would eliminate regulators’ ability to reference reputational risk when supervising financial institutions.

“Too often, financial regulators discriminate against customers and debank individuals because they disagree with their politics. I’m proud to help introduce the FIRM Act to protect law-abiding Americans from rogue regulators with a biased agenda,” said Kennedy.

“As Chairman of the Senate Banking Committee, I have made addressing debanking a top priority. This discriminatory and un-American practice should concern everyone, which is why I’ve led my colleagues in working to find tangible solutions. It’s clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses. This legislation, which eliminates all references to reputational risk in regulatory supervision, is the first step in ending debanking once and for all,” said Scott.

Reputational risk is a term that refers to negative public opinion about a financial institution. Federal banking agencies, such as the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration, consider reputational risk in order to prevent institutions from providing financial services to people and organizations that are involved in certain industries. 

The FIRM Act would protect Americans from the weaponization of federal regulation by:

• Eliminating all references to reputational risk as a measure to determine the safety and soundness of regulated depository institutions.

• Eliminating the Federal banking agencies’ ability to promulgate new rules or guidance that use reputational risk to supervise or regulate depository institutions. 

• Requiring the Federal banking agencies to report to Congress on their elimination of reputational risk as a component of the supervision of depository institutions. 

Sens. Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), Katie Britt (R-Ala.), Pete Ricketts (R-Neb.), Jim Banks (R-Ind.), Kevin Cramer (R-N.D.), Bernie Moreno (R-Ohio) and Dave McCormick (R-Pa.) also cosponsored the bill.

The full bill text is available here.