March 06, 2025

Scott’s Reputational Risk Legislation Receives Widespread Support

Washington, D.C. – Today, Chairman Tim Scott (R-S.C.) introduced legislation to eliminate reputational risk as a component of regulatory supervision. By preventing regulators from being able to use reputational risk as a tool to discriminate against federally legal businesses, Chairman Scott is taking the first step in ending the practice of debanking. The Financial Integrity and Regulation Management Act has received support from a wide range of stakeholders, including from the financial services industry and from organizations representing industries that have been debanked.

The American Bankers Association, the Bank Policy Institute, the Financial Services Forum, the Blockchain Association, and the Online Lenders Alliance have all endorsed the bill. Organizations representing industries that have been debanked, including the ATM Industry Association, the INFiN Alliance, the National Pawnbrokers Association, and the National Shooting Sports Foundation, as well as a coalition of 26 state financial officers, also voiced their support.

Here is what they are saying about the legislation:

“America’s banks are in the business of providing financial services to as many individuals and businesses as possible. The FIRM Act restores banks’ freedom to make their own decisions about who they can and cannot bank by limiting regulators’ ability to use subjective concerns about ‘reputational risk’ to pressure financial institutions not to bank certain customers.  We thank Chairman Scott for his leadership in advancing this commonsense legislation reinforcing that access to banking services should be determined by prudent risk management at banks and not the personal perspective of regulators,” said Rob Nichols, President and CEO, American Bankers Association.

"BPI supports the FIRM Act as an important step toward restoring fairness and integrity in how the regulators oversee the banking industry. This legislation would refocus regulators on examining banks’ financial condition and legal compliance and stop them from policing day-to-day business judgments," said Greg Baer, President and CEO, Bank Policy Institute.

"We thank Chairman Scott for introducing the Financial Integrity and Regulation Management Act. This bill would provide needed clarity for a more predictable regulatory environment so that banks can best serve their customers in a safe and sound financial system. Any initiative to ground supervision on objective measures of financial and material risk is a step in the right direction,” said Kevin Fromer, President and CEO, Financial Services Forum.

“Debanking lawful companies and individuals on the basis of the industry they work in is a pernicious practice Senator Scott is rightfully working to end. The FIRM Act seeks to eliminate the ability of regulators to use “reputational risk” as a metric for regulating banking services. Companies and individuals in digital assets have endured targeted debanking for too long – we’re grateful for Senator Scott’s focus on this important issue and introduction of the FIRM Act,” said Kristin Smith, CEO, Blockchain Association.

“As state financial officers, we believe that politicized debanking poses a serious threat not only to our nation’s economy and Americans seeking a fair and competitive financial system, but also to the financial health and reputation of the financial institutions engaging in this practice. We support efforts that will bring us significantly closer to ending politicized debanking. As such, we enthusiastically support the reforms contained in the FIRM ACT,” a coalition of 26 state financial officers said in a letter.

All Banking Committee Republicans, including Senators Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), Thom Tillis (R-N.C.), John Kennedy (R-La.), 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.), joined the Chairman on the legislation.

For a one-pager on the bill, click here. For bill text, click here.

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