Senate Banking Committee Chairman Tim Scott introduced the Financial Integrity and Regulation Management (FIRM) Act, legislation aimed at ending the use of reputational risk in federal prudential supervision as a first step to address “debanking”. The proposal would prohibit the Federal Deposit Insurance Corp., the Federal Reserve, the National Credit Union Administration and the Office of the Comptroller of the Currency from incorporating reputational risk as a component of supervisory ratings. Scott and coverage cited in the release describe the bill as removing subjective supervisory factors while not affecting quantitative measures such as concentration risk or liquidity risk; the release also notes support from every Republican on the Senate Banking Committee, endorsements from financial services stakeholders and groups representing industries that have been debanked, and a supportive letter from 26 state finance officials.
U.S. Senate Committee on Banking, Housing and Urban Affairs 2025-03-07
U.S. Senate Committee on Banking, Housing and Urban Affairs chair introduces FIRM Act to remove reputational risk from federal bank supervision
Senate Banking Committee Chairman Tim Scott introduced the FIRM Act to remove reputational risk from federal supervision. The bill prohibits agencies like the FDIC and Federal Reserve from using reputational risk in ratings, while maintaining quantitative measures like concentration and liquidity risks. The proposal is backed by all Republican Senate Banking Committee members, financial services stakeholders, and 26 state finance officials.