119-hr2702

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2702 Reported in House

    (RH) ]

<DOC>

 Union Calendar No. 131
119th CONGRESS
 1st Session
 H. R. 2702

 [Report No. 119-164]

 To curtail the political weaponization of Federal banking agencies by 
 eliminating reputational risk as a component of the supervision of 
 depository institutions.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 April 8, 2025

Mr. Barr (for himself, Mr. Torres of New York, Mrs. McClain, Mr. Lucas, 
 Mr. Loudermilk, Mr. Rose, Mrs. Wagner, Mr. Stutzman, Mr. Timmons, Mr. 
 Fitzgerald, Mr. Moore of North Carolina, Mr. Messmer, Mr. Ogles, Mr. 
 Downing, Mr. Sessions, Mr. LaMalfa, and Mr. Grothman) introduced the 
 following bill; which was referred to the Committee on Financial 
 Services

 June 20, 2025

 Additional sponsors: Mr. Williams of Texas, Mr. Schmidt, and Mr. 
 Garbarino

 June 20, 2025

 Reported with an amendment, committed to the Committee of the Whole 
 House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
 in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
 8, 2025]

_______________________________________________________________________

 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.

 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, as such term 
 is defined in 

section 101 of the Federal Credit Union 
 Act (12 U.S.C. 1752).

    (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) Foreign terrorist organization.--The term ``foreign 
 terrorist organization'' means a foreign organization that is 
 designated by the Secretary of State in accordance with 

section 219 of the Immigration and Nationality Act (8 U.S.C. 1189).

    (4) Reputational risk.--The term ``reputational risk'' 
 means the potential that negative publicity or negative public 
 opinion regarding a depository 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. The previous 
 sentence does not apply to negative publicity or negative 
 public opinion regarding an institution's business practices 
 where such practices involve unlawful transactions in 
 connection with state sponsors of terrorism or foreign 
 terrorist organizations.

    (5) State sponsors of terrorism.--The term ``state sponsors 
 of terrorism'' means a country, the government of which has 
 been determined by the Secretary of State to have repeatedly 
 provided support for acts of international terrorism, for 
 purposes of--
        (A) section 1754
            (c) (1)
        (A)
            (i) of the Export Control 
 Reform Act of 2018 (50 U.S.C. 4813
            (c) (1)
        (A)
            (i) );
        (B) section 620A of the Foreign Assistance Act of 
 1961 (22 U.S.C. 2371);
            (C) section 40
            (d) of the Arms Export Control Act 
 (22 U.S.C. 2780
            (d) ); or
            (D) any other provision of law.

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.
 Union Calendar No. 131

119th CONGRESS

 1st Session

 H. R. 2702

 [Report No. 119-164]

_______________________________________________________________________

 A BILL

 To curtail the political weaponization of Federal banking agencies by 
 eliminating reputational risk as a component of the supervision of 
 depository institutions.

_______________________________________________________________________

 June 20, 2025

 Reported with an amendment, committed to the Committee of the Whole 
 House on the State of the Union, and ordered to be printed