[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