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Congress·Reported·S. 875

Senate Committee Advances FIRM Act to Ban "Reputational Risk" from Bank Exams

FIRM Act

about 1 year ago·View on Congress.gov
⏸

Stalled

No legislative action in over 90 days.

Legislative Progress

Senate
House
President
Law

Key Points

  • Congress would ban federal bank regulators from using “reputational risk” (fear of bad press) when supervising banks and credit unions.
  • Regulators would have to delete “reputational risk” from their guidance, exam manuals, and similar documents, and stop using it in ratings or enforcement actions.
  • The bill would require regulators to tailor new rules to different types of banks based on their risk and business model, and explain that tailoring in proposed and final rules.
  • It also orders a review of certain past regulations and gives agencies up to 3 years after the law takes effect to revise rules they decide need tailoring.
  • Community banks that qualify for a simpler capital measure would get reduced reporting for the first and third quarterly reports each year, and regulators must report progress to Congress.
EconomyConsumer ProtectionSmall Business

Impact Analysis

Personal Impact

How this policy affects specific groups of people

Mixed Impacts(5)
Housing Assistance
Neutral
Chronic Illness
Neutral
Homeowner
Neutral
Renter
Neutral
Federal Employee
Neutral
Positive Impacts(3)
Small Business Owner
Helps
Gig Worker
Helps
Farmer Rancher
Helps

Milestones

4 milestones5 actions
Mar 18, 2025Senate

Placed on Senate Legislative Calendar under General Orders. Calendar No. 32.

Mar 18, 2025Senate

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.

Mar 13, 2025Senate

Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.

Mar 6, 2025Senate

Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Mar 6, 2025

Introduced in Senate

What Happens Next

Projected impacts based on AI analysis

Soon after the law is enacted

Bank regulators remove “reputational risk” from exam guidance and manuals

Banks and credit unions may see exams focus more on measurable financial risks and less on concerns about bad publicity or public pressure.

Immediately after enactment for new exams and actions

Regulators stop using “reputational risk” in ratings, exam findings, or enforcement actions

A bank is less likely to be downgraded or pushed into corrective action because it serves a customer that draws controversy, as long as other safety rules are met.

By 180 days after enactment

Each federal banking agency sends an implementation report to Congress (within 180 days)

Congress and the public get a checkpoint showing whether agencies actually changed guidance and internal policies as required.

For new rules after enactment

Agencies begin documenting “tailoring” in every proposed and final major rule they issue

When new bank rules are proposed, the agency would have to explain how it considered different bank sizes and business models and tried to limit unnecessary burden.

Starts after enactment; revisions due within 3 years

Agencies review certain past regulations and decide whether to revise them under the new tailoring requirement

Some existing rules could be rewritten to be less burdensome for lower-risk institutions, which could affect how community banks operate.

First report due 1 year after enactment, then every year

Annual tailoring reports to Congress begin (first due within 1 year)

Regular reporting could pressure agencies to keep simplifying rules for lower-risk banks—or at least to justify why they can’t.

By 18 months after enactment

Modernization of supervision report is delivered (within 18 months)

Could lead to future changes in how exams are done (training, technology, communication), which may affect how banks and credit unions experience supervision.

Related Bills

2 bills
H.R. 6955Related bill

Main Street Capital Access Act

Mar 4 — Ordered to be Reported by the Yeas and Nays: 26 - 16.

H.R. 2702Identical bill

FIRM Act

Jun 20 — Placed on the Union Calendar, Calendar No. 131.

Source Information

Document Type

Congressional Bill

Official Title

FIRM Act

Bill NumberS 875
Congress119th Congress
ChamberSenate
Latest ActionPlaced on Senate Legislative Calendar under General Orders. Calendar No. 32.

Sponsor

Cosponsors

(12)
R: 12

Analysis generated by AI. Always verify with official sources.