Congress Tackles Regulatory Overreach that Has Spurred Concerns of ‘Debanking’ Customers
WASHINGTON, D.C. (Texas Insider Report) – During a recent markup by the U.S. House Financial Services Committee, members of Congress advanced several legislative proposals to improve banking supervision – including one bill that would rein in regulatory overreach that is at the heart of concerns around ‘debanking.’
This comes as the Trump Administration and Republicans in Congress have recently taken key steps to address ‘debanking.’
The bill — the Financial Integrity & Regulation Management (FIRM) Act sponsored by U.S. Representative Andy Barr (R-KY) – serves as companion legislation to a bill under the same name introduced by Senator Tim Scott (right, R-SC). The FIRM Act would help prevent regulators from exploiting vague rules to advance their own agendas.The approach has garnered support from state officials across the country.
In introducing the FIRM Act, Senator Tim Scott said:
“Regulators have seriously overreached on issues from Basel III to debanking, and Congress must work to rein in the Biden administration’s burdensome and arbitrary regulations. No regulator and no financial institution is above the principles of fairness and market access.”
Many groups have echoed Senator Tim Scott’s sentiment around unaccountable regulators using vague and confusing laws to stifle businesses and customers that they deem unfavorable and support the progress that Congress and the Trump administration are making to prevent ‘debanking.’
Many groups have echoed Senator Tim Scott’s sentiment around unaccountable regulators using vague and confusing laws to stifle businesses and customers that they deem unfavorable and support the progress that Congress and the Trump administration are making to prevent ‘debanking.’
Norbert Michel, a policy scholar with the Cato Institute, noted that “The federal regulatory framework gives regulators enormous discretion. They have so much discretion that they can warn banks about dealing with certain types of customers for almost any reason they choose to justify.”
Texas Association of Business President & CEO Glenn Hamer (right,) similarly supports the FIRM Act, stating that:
“Texas business owners, small and large, greatly appreciate the proposed legislation that Chairman Scott and Senate Banking Committee Republicans introduced to ensure a more fair, transparent and efficient financial regulatory system free from partisan interference," said Hamer.
"This is a significant win for businesses all over the country, removing unnecessary and biased government interference in the financial sector.”
"This is a significant win for businesses all over the country, removing unnecessary and biased government interference in the financial sector.” “This legislation – championed by Chairman Scott and Senate Banking Committee Republicans – represents a significant win for the free market system that has made our country great,” said North Texas Commission President and CEO Chris Wallace.
“By preventing unelected government regulators from weighing ‘reputational risk’ to assess a bank’s financial stability, Republican lawmakers are effectively removing partisan decision making from the financial system. This empowers businesses, consumers and the free market, and removes the threat of politically-driven attacks from financial regulators,” he continued.
Recognizing the importance of a federal solution, Texas State Senator Tan Parker (R-Flower Mound) introduced SCR 44 this session, urging Congress to pass laws like the FIRM Act and modernize banking laws to ensure innocent law-abiding customers are not ensnared by outdated and onerous directives from the federal government.
Genevieve Collins, Texas state director for Americans for Prosperity (AFP), applauded Senator Parker for the resolution, saying:
“Debanking is a national issue that requires a national solution.
"Texas needs to maintain its pro-business regulatory environment and should not undercut federal efforts with contradictory state laws.
"I'm glad to see Senator Parker introduce this resolution supporting a smart approach to ‘debanking’ that safeguards consumer rights and maintains the integrity of our financial system, ultimately ensuring all Americans have fair access to their essential banking services.”
"Texas needs to maintain its pro-business regulatory environment and should not undercut federal efforts with contradictory state laws.
"I'm glad to see Senator Parker introduce this resolution supporting a smart approach to ‘debanking’ that safeguards consumer rights and maintains the integrity of our financial system, ultimately ensuring all Americans have fair access to their essential banking services.”
Addressing ‘debanking’ remains a key policy priority for this Republican-led Congress and the Trump administration – and more legislative movement is expected.
