Plain Language Summary
# FIRM Act Summary **What the Bill Would Do** The FIRM Act would prevent federal banking regulators (like the Federal Reserve and the Office of the Comptroller of the Currency) from considering "reputational risk" when deciding whether to approve or regulate banks and credit unions. Reputational risk refers to concerns that negative publicity could harm a financial institution's public image, cause customers to withdraw funds, trigger lawsuits, or reduce its profits. The bill would also require agencies to report back to Congress on how they implement this change. **Who It Affects and Why It Matters** This bill primarily affects banks, credit unions, and the federal agencies that oversee them.
Supporters argue that regulators sometimes deny banking services to institutions based on reputational concerns rather than actual financial risk, which they say limits access to financial services. Critics worry that ignoring reputational risk could allow banks with questionable business practices to operate more freely. The measure is currently in committee and has not yet been voted on.
CRS Official Summary
Financial Integrity and Regulation Management Act or the FIRM ActThis bill prohibits the consideration of reputational risk by federal banking agencies when regulating, examining, or supervising a depository institution or credit union. The bill defines reputational risk as the potential for negative publicity or public attention to decrease confidence in the institution, lead to litigation, reduce revenues, or result in other adverse impacts to the institution. Agencies must report on the implementation of this bill.
Latest Action
Placed on Senate Legislative Calendar under General Orders. Calendar No. 32.