On Mar. 6, Senate bill to curtail weaponization of banking agencies.
Senate introduced bill S 875, Financial integrity and regulation management (FIRM) Act, end ability for regulators to use reputational risk as component of supervision.
Published one-page fact sheet on legislation, reported on trade association support.
Bill Provisions
FIRM act defined reputational risk as potential that negative publicity or negative public opinion regarding depository institution business practices, whether true or not.
Also that will cause decline in confidence in institution/customer base, costly litigation, or revenue reductions or otherwise adversely impact the depository institution.
Act will eliminate all references to reputational risk as measure, consideration in supervision of regulated depository institutions to determine safety and soundness.
Will eliminate the federal banking agencies’ ability to promulgate new rules or guidance that use reputational risk to supervise or regulate depository institutions.
Require the federal banking agencies to report to Congress on their elimination of reputational risk as a component of the supervision of depository institutions.
Legislation is narrowly tailored so that removal of this subjective factor does not affect quantitative supervisory measures (e.g. concentration risk, liquidity risk, etc.).
Legislative History
On Mar. 6, 2025, bill introduced in Senate, referred to banking, housing, urban affairs.
