Financial Integrity and Regulation Management Act or the FIRM Act
This bill prohibits the consideration of reputational risk by federal banking agencies when regulating, examining, or supervising a depository institution or credit union. The bill defines reputational risk as the potential for negative publicity or public attention to decrease confidence in the institution, lead to litigation, reduce revenues, or result in other adverse impacts to the institution.
Agencies must report on the implementation of this bill.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 875 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 875
To curtail the political weaponization of Federal banking agencies by
eliminating reputational risk as a component of the supervision of
depository institutions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 6, 2025
Mr. Scott of South Carolina (for himself, Mr. Crapo, Mr. Rounds, Mr.
Tillis, Mr. Kennedy, Mr. Hagerty, Ms. Lummis, Mrs. Britt, Mr. Ricketts,
Mr. Cramer, Mr. Moreno, Mr. McCormick, and Mr. Banks) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To curtail the political weaponization of Federal banking agencies by
eliminating reputational risk as a component of the supervision of
depository institutions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Integrity and Regulation
Management Act'' or the ``FIRM Act''.
SEC. 2. FINDINGS; PURPOSES.
(a) Findings.--Congress finds that--
(1) the primary objective of financial regulation and
supervision by the Federal banking agencies is to promote
safety and soundness of depository institutions;
(2) all federally legal businesses and law-abiding citizens
regardless of political ideology should have equal opportunity
to obtain financial services and should not face unlawful
discrimination in obtaining such services;
(3) financial service providers are private entities
entitled to provide services to whichever customers they so
choose, provided that those decisions do not violate the law;
(4) financial service providers should strive to ensure
that all business decisions are based on factors free from
unlawful prejudice or political influence;
(5) the use of reputational risk in supervisory frameworks
encourages Federal banking agencies to regulate depository
institutions based on the subjective view of negative publicity
and provides cover for the agencies to implement their own
political agenda unrelated to the safety and soundness of a
depository institution;
(6) Federal banking agencies have in fact used reputational
risk to limit access of federally legal businesses and law-
abiding citizens to financial services in 2018 when the Federal
Deposit Insurance Corporation acknowledged that the agency used
reputational risk reviews to limit access to financial services
by certain industries, commonly known as ``Operation Choke
Point''; and
(7) reputational risk does not appear in any statute and is
an unnecessary and improper use of supervisory authority that
does not contribute to the safety and soundness of the
financial system.
SEC. 3. DEFINITIONS.
In this Act:
(1) Depository institution.--The term ``depository
institution''--
(A) has the meaning given the term in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B) includes an insured credit union.
(2) Federal banking agency.--The term ``Federal banking
agency''--
(A) has the meaning given the term in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B) includes--
(i) the National Credit Union
Administration; and
(ii) the Bureau of Consumer Financial
Protection.
(3) Insured credit union.--The term ``insured credit
union'' has the meaning given the term in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752).
(4) Reputational risk.--The term ``reputational risk''
means the potential that negative publicity or negative public
opinion regarding an institution's business practices, whether
true or not, will cause a decline in confidence in the
institution or a decline in the customer base, costly
litigation, or revenue reductions or otherwise adversely impact
the depository institution.
SEC. 4. REMOVAL OF REPUTATIONAL RISK AS A CONSIDERATION IN THE
SUPERVISION OF DEPOSITORY INSTITUTIONS.
Each Federal banking agency shall remove from any guidance, rule,
examination manual, or similar document established by the agency any
reference to reputational risk, or any term substantially similar,
regarding the supervision of depository institutions such that
reputational risk, or any term substantially similar, is no longer
taken into consideration by the Federal banking agency when examining
and supervising a depository institution.
SEC. 5. PROHIBITION.
No Federal banking agency may engage in any activity concerning or
related to the regulation, supervision, or examination, of the
reputational risk, or any term substantially similar, or the management
thereof, of a depository institution, including--
(1) establishing any rule, regulation, requirement,
standard, or supervisory expectation concerning or related to
the reputational risk, or any term substantially similar, or
the management thereof, of a depository institution whether
binding or not;
(2) conducting any examination, assessment, data
collection, or other supervisory exercise concerning or related
to reputational risk, or any term substantially similar, or the
management thereof, of a depository institution;
(3) issuing any examination finding, supervisory criticism,
or other supervisory or examination communication concerning or
related to reputational risk, or any term substantially
similar, or the management thereof, of a depository
institution;
(4) making any supervisory ratings decision or
determination that is based, in whole or in part, on any matter
concerning or related to reputational risk, or any term
substantially similar, or the management thereof, of a
depository institution; and
(5) taking any formal or informal enforcement action that
is based, in whole or in part, on any matter concerning or
related to reputational risk, or any term substantially
similar, or the management thereof, of a depository
institution.
SEC. 6. REPORTS.
Not later than 180 days after the date of enactment of this Act,
each Federal banking agency shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that--
(1) confirms implementation of this Act; and
(2) describes any changes made to internal policies as a
result of this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.
Committee on Banking, Housing, and Urban Affairs. Reported by Senator Scott SC, under authority of the order of the Senate of 03/14/2025 with an amendment in the nature of a substitute. Without written report.
Committee on Banking, Housing, and Urban Affairs. Reported by Senator Scott SC, under authority of the order of the Senate of 03/14/2025 with an amendment in the nature of a substitute. Without written report.
Placed on Senate Legislative Calendar under General Orders. Calendar No. 32.
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