Scott on the FIRM Act: “First Step in Ending Debanking”
Washington, D.C. – This week, Senate Banking Committee Chairman Tim Scott (R-S.C.) introduced the Financial Integrity and Regulation Management (FIRM) Act, his legislation to remove reputational risk as a component of federal supervision. The bill, which is the first step to address debanking, has the support of every Republican on the Senate Banking Committee. Key stakeholders in the financial services industry, as well as organizations representing industries that have been debanked, also endorsed the legislation.
Yesterday, Chairman Scott appeared on Mornings with Maria on Fox Business to highlight the importance of bill.
Click here or on the image above to watch the full interview.
On the importance of the legislation, Chairman Scott said, “Eliminating reputational risk is the way we allow our banks to make decisions on credit worthiness, not on fear of America’s regulators…what a regulator is able to do with reputational risk is to say that the institution may lose market cap because their banking industries that may cause reputation – loss of their positive reputation – in the marketplace. It’s just as we say in South Carolina, hogwash. It’s merely a weaponization of their rules.”
In case you missed it, below is additional coverage of the FIRM Act:
New GOP Bill Aims to End ‘Debanking’ of Crypto Companies and Conservatives
The Wall Street Journal: “The leader of the Senate Banking Committee wants regulators to stop worrying about customers causing reputational damage to banks. Sen. Tim Scott of South Carolina says that concern is fueling ‘debanking,’ where banks allegedly avoid certain businesses… Scott introduced a bill on Thursday that would end regulatory oversight of so-called reputational risks, calling the bill a first step toward ending discrimination against clients.”
Sen. Tim Scott proposes bill to eliminate reputational risk
American Banker: “The bill is narrowly tailored to remove subjective factors, Scott said, and would not affect quantitative supervisory measures such as concentration risk or liquidity risk… The bill, called the Financial Integrity and Regulation Management, or FIRM, Act, would prohibit the Federal Deposit Insurance Corp., the Federal Reserve, the National Credit Union Administration and the Office of the Comptroller of the Currency from using incorporated reputational risk as a component of supervisory ratings.”
Scott leads Senate debanking effort with legislation to remove reputational risk
Politico: “Debanking has been a top issue this Congress for both chambers, especially for Scott's committee agenda. Senate Banking's first hearing this session was on debanking. The ‘FIRM Act’ has the support of the Bank Policy Institute. The legislation is ‘an important step toward restoring fairness and integrity in how the regulators oversee the banking industry,’ said Greg Baer, BPI president and CEO.”
Tim Scott unveils bill targeting debanking
The Hill: “Republicans have long voiced concerns about debanking, going back to the Obama administration’s ‘Operation Choke Point.’ The controversial Justice Department initiative, which officially ended in 2017, discouraged banks from working with certain ‘high-risk’ businesses. Amid crypto’s rise in recent years, several individuals and firms associated with the industry say they’ve been debanked, a trend they’ve labeled ‘Operation Choke Point 2.0.’”
U.S. Senate's Banking Chair Pushes Debanking Bill After Crypto Uproar
CoinDesk: “The industry's ongoing campaign against the debanking of crypto businesses and leaders has secured a legislative push from a top U.S. senator, Tim Scott, who is championing a bill that would cut out federal banking regulators' ability to use "reputational risk" as a reason to steer banks away from customers. That practice had been cited by Republicans as a problem area in recent congressional hearings, which examined how digital assets businesses had been systematically cut out of U.S. banking relationships because of perceptions that the regulators — including the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — didn't want them there.”
State officials come out in favor of Senate debanking bill
Axios: “Within hours, a letter from 26 state finance officials from across the country released a letter expressing support for the bill. What they're saying: ‘This discriminatory and un-American practice should concern everyone,’ Scott said in a statement. ‘The historical record reveals a troubling pattern of regulators intentionally misusing their authority to restrict access to banking and financial services for lawful yet disfavored customers,’ the letter from state officials reads.”
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