Tim Scott introduces Senate bill to address debanking over 'reputational risk'

New legislation in the Senate aims to address regulatory language that has prompted financial institutions to debank clients involved in certain industries.Senate Banking Committee Chairman Tim Scott, R-S.C., introduced a bill known as the Financial Integrity and Regulation Management (FIRM) Act, which would eliminate references to reputational risk as a measure used to determine the safety and soundness of a financial institution.It would also eliminate federal banking agencies' ability to move forward with new rules or guidance using reputational risk to regulate financial institutions, and require those agencies to report to Congress about their elimination of reputational risk in bank oversight."It's clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses," Scott said. "This legislation, which eliminates references to reputational risk in regulatory supervision, is the first step once and for all."SENATE BANKING PANEL HEARS DEBANKING TESTIMONY: 'EXTREMELY DISRUPTIVE'The bill is cosponsored by a dozen Republican senators who are members of the Senate Banking Committee and was introduced after the panel held a hearing on debanking in early February.Federal laws and financial regulations on the books require institutions in the banking industry to close accounts over concerns about things like money laundering or illicit financial activities, while reputational risk is also considered in those decisions. BIG BANK CEOS TO MEET WITH LAWMAKERS ON SOLUTIONS TO DEBANKINGUncertainty surrounding emerging industries that have unclear regulatory frameworks, such as digital assets like crypto or cannabis businesses in states with legal marijuana, have contributed to debanking. Concern over reputational risk or other regulatory considerations have also led to firearm makers and dealers being debanked.Scott said at the hearing that he is "committed to a bipartisan solution to stop this form of discrimination." Though his bill only has GOP support at this time, any debanking legislation will require bipartisan support to overcome the Senate's 60-vote threshold for the legislative filibuster.GET FOX BUSINESS ON THE GO BY CLICKING HEREScott also hosted a roundtable last month to discuss debanking issues with the leaders of large U.S. banks including JPMorgan Chase CEO Jamie Dimon, Bank of America CEO Brian Moynihan, Capital One CEO Richard Fairbank, Wells Fargo CEO Charles Scharf, U.S. Bank CEO Andrew Cecere, PNC CEO Bill Demchak and Truist CEO Bill Rogers.Weiter zum vollständigen Artikel bei FOX Business Weiter zum vollständigen Artikel bei FOX Business