FIRM Act

Bill Number: H.R. 2702
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Finance and Financial Sector
Status: Introduced
Latest Action: 2025-06-20: Placed on the Union Calendar, Calendar No. 131.
Last Updated: 2026-05-02T19:06:20Z

AI-Generated Summary

Purpose of the Legislation

The Financial Integrity and Regulation Management Act (FIRM Act), H.R. 2702, aims to prevent the misuse of federal banking oversight for political purposes. It seeks to ensure that supervision of banks and credit unions focuses solely on financial safety and stability, by removing "reputational risk" (the potential harm to a bank's image from negative publicity) as a factor in regulatory reviews. The bill emphasizes equal access to financial services for legal businesses and individuals, regardless of public opinion or political views, while allowing exceptions for activities linked to terrorism.

Key Provisions

Findings Section: Outlines Congress's view that banking regulation should prioritize safety and soundness, not subjective factors like publicity. It criticizes past uses of reputational risk (e.g., "Operation Choke Point" in 2018, where regulators pressured banks to cut services to certain legal industries) as enabling political bias without legal basis.
Definitions:
Depository institution: Banks insured by the federal government and insured credit unions.
Federal banking agency: Includes key regulators like the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Federal Reserve, National Credit Union Administration (NCUA), and Consumer Financial Protection Bureau (CFPB).
Reputational risk: Negative publicity or public opinion that could harm a bank's confidence, customers, or revenue; excludes cases involving illegal dealings with state sponsors of terrorism or foreign terrorist groups (as designated by the U.S. State Department).
State sponsors of terrorism and foreign terrorist organization: Defined by existing U.S. laws on export controls, foreign aid, and immigration.
Removal of Reputational Risk (Section 4): Regulators must eliminate all mentions of reputational risk (or similar terms) from their guidelines, rules, examination manuals, and other documents used to oversee banks and credit unions.
Prohibition on Related Activities (Section 5): Bans regulators from:
Creating any rules, standards, or expectations about managing reputational risk.
Conducting exams, collecting data, or issuing findings related to it.
Basing ratings, criticisms, or enforcement actions (formal or informal) on reputational risk.
Reporting Requirement (Section 6): Within 180 days of enactment, each regulator must report to Senate and House committees on how they've implemented the law and any internal policy changes.

Significant Changes to Existing Law

This bill introduces new statutory limits on regulators, as reputational risk is not mentioned in any current federal banking laws—it's a non-binding concept developed by agencies themselves.
It overrides agency practices by mandating the removal of reputational risk from all supervisory tools, shifting focus exclusively to objective financial risks like safety and soundness.
Exceptions preserve regulators' authority over terrorism-related activities, aligning with anti-terrorism laws without altering them.

Potential Impacts

On Government Agencies: Regulators (e.g., FDIC, CFPB) will have narrower supervisory powers, potentially reducing their ability to address public perception issues indirectly tied to financial stability. This could streamline operations but limit tools for broader consumer protection.
On Citizens and Businesses: Legal businesses and individuals (especially in politically sensitive but lawful industries, like firearms or cannabis) may face less regulatory pressure to be denied banking services based on public backlash. This promotes fairer access to loans, accounts, and payments without discrimination based on ideology.
On International Relations: Minimal direct impact, though the bill reinforces U.S. sanctions by explicitly allowing scrutiny of ties to state sponsors of terrorism or foreign terrorist groups, supporting existing foreign policy tools.

Main Stakeholders Affected

Federal Banking Agencies: Directly constrained in their oversight methods; must revise documents and processes.
Depository Institutions: Banks and credit unions benefit from clearer, less subjective supervision, potentially reducing compliance burdens related to public image.
Businesses and Citizens: Law-abiding customers and companies gain protections against de-banking due to reputational concerns, fostering equal access to financial services.
Congressional Committees: Receive reports to monitor compliance, influencing future oversight of banking regulators.

Notable Legal, Constitutional, or Political Implications

Legal Implications: Strengthens statutory boundaries on agency discretion by codifying limits on non-statutory concepts, potentially reducing lawsuits over perceived regulatory overreach. It does not affect core safety mandates but could invite challenges if agencies argue it weakens financial stability tools.
Constitutional Implications: Supports equal protection principles by aiming to prevent discrimination in financial access based on political views, without infringing on private banks' rights to choose customers (as long as decisions are lawful).
Political Implications: Addresses concerns about "weaponization" of regulation (e.g., past efforts to limit services to specific industries), promoting neutrality in oversight. This could shift power dynamics, limiting executive branch influence through agencies while empowering Congress via reporting requirements.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Barr, Andy [R-KY-6]

Cosponsors (19)

Rep. Torres, Ritchie [D-NY-15], Rep. McClain, Lisa C. [R-MI-9], Rep. Lucas, Frank D. [R-OK-3], Rep. Loudermilk, Barry [R-GA-11], Rep. Rose, John W. [R-TN-6], Rep. Wagner, Ann [R-MO-2], Rep. Stutzman, Marlin A. [R-IN-3], Rep. Timmons, William R. [R-SC-4], Rep. Fitzgerald, Scott [R-WI-5], Rep. Moore, Tim [R-NC-14], Rep. Messmer, Mark [R-IN-8], Rep. Ogles, Andrew [R-TN-5], Rep. Downing, Troy [R-MT-2], Rep. Sessions, Pete [R-TX-17], Rep. LaMalfa, Doug [R-CA-1], Rep. Grothman, Glenn [R-WI-6], Rep. Williams, Roger [R-TX-25], Rep. Schmidt, Derek [R-KS-2], Rep. Garbarino, Andrew R. [R-NY-2]

Recent Actions

2025-06-20: Placed on the Union Calendar, Calendar No. 131.
2025-06-20: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-164.
2025-06-20: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-164.
2025-05-21: Ordered to be Reported (Amended) by the Yeas and Nays: 33 - 19.
2025-05-21: Committee Consideration and Mark-up Session Held
2025-04-08: Referred to the House Committee on Financial Services.
2025-04-08: Introduced in House
2025-04-08: Introduced in House

Bill Versions

Financial Integrity and Regulation Management Act — issued 2025-04-08 — PDF (6 pages)
Financial Integrity and Regulation Management Act — issued 2025-06-20 — PDF (10 pages)