Alabama Joins 22-State Coalition To Support Sen. Britt’s FIRM Act

Alabama has joined 21 other States whose Attorneys General are supporting  the Financial Integrity and Regulation Management Act ("FIRM Act") in Congress, according to Alabama Attorney General Steve Marshall. The FIRM Act would  bar federal regulators for relying on the concept of “reputational risk,“ which has been used to pressure financial institutions into denying services to people based on their political views. The act is also intended to rain in the practice of “debanking.“

Debanking is “an attempt by major financial services corporations to close accounts of organizations or individuals with whom they disagree, whether politically or religiously.” Debanking frequently “aligns with the environmental, social, and governance (ESG) criteria used by many major financial services corporations,” and has often been used to target conservatives. In one report, 70% of banks allegedly targeted clients based on their conservative views and religious beliefs.

In a letter to U. S. Senator Tim Scott, Chairman of the Senate Committee on Banking, Housing and Urban Affairs, the Attorneys General wrote:

“We, the 22 undersigned Attorneys General, write to commend you for introducing legislation to curtail de-banking. We wholeheartedly agree with the proposed legislation’s finding that all “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.

“These de-banking practices are fundamentally un-American and offend core American values of freedom of speech and freedom of conscience. As we’ve explained, these practices may also be illegal under state laws.”

"Americans should never be cut off from the financial system because of their deeply held beliefs. That's not just wrong — it's dangerous. Our coalition has taken a firm stand against the growing radicalization of banking institutions that are using their power to silence free speech and punish ideological dissent. And the FIRM Act would make sure federal regulators aren't encouraging such efforts, which is a clear threat to constitutional rights. It's time for Congress to act to put strong, enforceable protections into federal law," stated Attorney General Marshall.

The Attorneys General warn that debanking efforts, once focused on firearms manufacturers and payday lenders, have expanded to include religious organizations, conservative tech leaders, and even President Donald Trump and the Trump Organization. The letter also criticizes proxy advisory firms for pressuring shareholders to oppose reforms that would eliminate politically driven banking discrimination. 

The South Carolina-led letter is also joined by Attorneys General from North Dakota, Georgia, Ohio, Florida, Montana, Louisiana, Texas, Idaho, Oklahoma, Arkansas, Nebraska, West Virginia, Tennessee, South Dakota, Utah, Virginia, Mississippi, Missouri, Kansas, and Pennsylvania. 

The FIRM Act was introduced in March by Senate Banking Committee Chairman Tim Scott (R-SC) and co-sponsored by Senator Katie Britt (R-AL).

“This discriminatory and un-American practice should concern everyone," Scott stated. "It's clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses."

Senator Britt echoed these sentiments, emphasizing the impact on individuals and businesses. "The practice of debanking is preventing people from accessing their American Dream," she said. "I'm proud to support legislation that would shield our banking system from subjective oversight and political agendas."

The FIRM Act has garnered support from various industry groups, including the American Bankers Association, the Bank Policy Institute, and the Blockchain Association. These organizations argue that the bill would restore fairness and objectivity in banking oversight.

The issue of "debanking" has been particularly prominent in the cryptocurrency sector. Anchorage Digital, a crypto-focused bank, testified before the Senate Banking Committee about challenges in securing banking services, with CEO Nathan McCauley noting that over 40 banks declined to work with them, often citing a no-crypto policy.

The FIRM Act proposes to:

- Eliminate all references to reputational risk in assessing the safety and soundness of regulated financial institutions.

- Prohibit federal banking agencies from issuing new rules or guidance that incorporate reputational risk.

- Require agencies to report to Congress on the removal of reputational risk considerations from their supervisory practices.

While the bill has strong backing from Republican senators and industry stakeholders, it remains to be seen how it will fare in the broader legislative process. 22 Attorneys General actively supporting the Act may help move the bill forward.

Image from Reason.com, How To Recover From Debanking, Rob Johnson, March 2025.