Market Data 
U.S. senators are pushing to end politically motivated debanking, arguing regulators have misused their authority. The FIRM Act aims to ensure fair financial access.
US Senators Demand Action on Debanking—Is This the End of Political Banking?
The U.S. Senate Committee on Banking, Housing, and Urban Affairs announced on March 6 that Chairman Tim Scott (R-S.C.) is leading an effort to eliminate the use of reputational risk in banking regulations through the Financial Integrity and Regulation Management (FIRM) Act. The legislation, supported by all Republican members of the committee, aims to prevent federal banking agencies from using reputational risk as a supervisory factor when evaluating financial institutions.
Scott emphasized the urgency of addressing debanking, stating:
As Chairman of the Senate Banking Committee, I have made addressing debanking a top priority. This discriminatory and un-American practice should concern everyone … It’s clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses.
“This legislation, which eliminates all references to reputational risk in regulatory supervision, is the first step in ending debanking once and for all,” he added. Other committee Republicans, including Senators Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), and Thom Tillis (R-N.C.), echoed Scott’s concerns, arguing that regulators have misused their authority to unfairly deny financial services to lawful businesses.
Scott has made debanking a primary focus of his leadership, holding hearings and discussions to investigate cases where regulators pressured financial institutions to sever ties with certain clients. In a recent Senate Banking Committee hearing, Scott challenged Federal Reserve Chair Jerome Powell on the issue, leading Powell to commit to working with the committee to address it. The FIRM Act mandates the removal of reputational risk from regulatory supervision, prohibits federal agencies from implementing related policies, and requires agencies to report to Congress on compliance. Scott and his Republican colleagues argue that the bill is necessary to ensure financial regulators do not use their authority to enforce political agendas under the guise of regulatory oversight.
Several senators condemned what the lawmakers see as an abuse of regulatory power, particularly targeting industries or individuals based on political considerations. Senator Cynthia Lummis (R-Wyo.) strongly criticized financial regulators, stating: “Federal banking agencies have brazenly abused their power, strangling legitimate businesses through politically motivated ‘reputational risk’ designations while hiding behind a façade of independence. The FIRM Act strips away their ability to play politics with our financial system and finally holds these unelected bureaucrats accountable.” She added:
Americans deserve a transparent regulatory framework that fosters innovation in digital assets instead of smothering it with government overreach. We’re putting these rogue regulators on notice—their days of unchecked power are over.
Other senators, including Bill Hagerty (R-Tenn.) and Katie Britt (R-Ala.), argued that the legislation would restore fairness by ensuring regulators base decisions on objective financial risks rather than political preferences. Senator Tillis added that the FIRM Act would “stop this political weaponization and ensure regulators focus on real financial risks, not personal or political agendas.”
