FIRM Act

Key Points

• The FIRM Act stops federal agencies like the FDIC and the CFPB from using a bank's reputation as a reason to punish them. Currently, regulators can flag a bank for reputational risk if they believe the bank's customers or business choices might cause negative public opinion.
• Supporters of the bill argue that regulators have used reputation rules to pressure banks into dropping legal businesses they dislike, such as gun shops or energy companies. This bill aims to ensure that any law-abiding citizen or legal business can get a bank account regardless of political views.
• Under this policy, federal regulators would be forced to focus only on a bank's actual financial health and safety. They would be prohibited from using negative news or public opinion to lower a bank's official rating or take enforcement actions against them.
• The bill includes a specific exception for security. Regulators can still monitor and take action if a bank is involved in illegal transactions with known terrorist groups or countries that the government has labeled as sponsors of terrorism.
• If this bill becomes law, federal banking agencies would have 180 days to scrub their rulebooks and manuals of any mention of reputational risk. They would also have to send a report to Congress proving they made these changes.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.