U.S. Reps. Andy Barr (R-KY) and Ritchie Torres (D-NY) introduced legislation that would prohibit federal banking regulators from using “reputational risk” as a justification to deny financial services to lawful businesses or individuals.
The Financial Integrity and Regulation Management (FIRM) Act directly addresses the regulatory abuses that occurred under initiatives like Operation Choke Point, where agencies pressured banks to cut off services to legally operating businesses based on political or social factors. The FIRM Act seeks to ensure that banking supervision remains focused on legitimate financial risks, not political agendas.
“For too long, unelected regulators have used the vague and subjective concept of reputational risk to push political ideology under the guise of bank supervision,” Barr said. “The FIRM Act restores neutrality and integrity to our financial regulatory system and protects the right of all Americans to access banking services without fear of unlawful discrimination.”
Specifically, the bill would mandate that all federal banking agencies eliminate reputational risk as a consideration as it relates to guidance, rules, and enforcement actions. Further, agencies will be required to report to Congress within 180 days confirming compliance and detailing internal policy changes resulting from the law.
“The FIRM Act is about restoring fairness and objectivity to our financial system,” Torres said. “No lawful business should be denied banking services based on subjective intent or shifting political winds. Financial regulation should be grounded in objective risk, not politicized judgments about reputational harm. I’m proud to co-lead this bipartisan legislation to ensure access to banking is determined by sound business practices — not partisan pressure.”
Sen. Tim Scott (R-SC) introduced companion legislation in the U.S. Senate.