The Fair Access to Banking Act aims to prevent financial institutions from denying services to individuals or businesses based on subjective or political reasons, ensuring fair and impartial access to financial services.
Kevin Cramer
Senator
ND
The Fair Access to Banking Act aims to ensure equal access to financial services by preventing banks and credit unions from denying services to individuals or entities engaged in lawful activities based on subjective or politically motivated reasons. It sets requirements for banks with over $10 billion in assets, prohibiting them from denying services based on reputational risk and requiring them to justify denials with documented, risk-based standards. The act also allows individuals to sue financial institutions that violate these requirements, with the potential for treble damages and attorney fees awarded to successful plaintiffs. Furthermore, it restricts access to Federal Reserve lending programs and the Automated Clearing House Network for institutions that fail to comply with the Act.
Big Banks Can't Cut You Off Anymore: New Bill Forces Fair Access, Ends 'Reputational Risk' Denials
The "Fair Access to Banking Act" aims to stop big banks and credit unions from shutting down accounts or denying services based on anything other than cold, hard numbers. No more "reputational risk" excuses—if you're playing by the rules, they have to serve you.
No More Banking Bias
The core of the bill is ensuring everyone gets a fair shake at financial services. It defines "Fair Access to Financial Services" (Sec. 8) and sets ground rules for "covered banks"—basically, any bank with $10 billion or more in assets. These big players must offer services to anyone in their area, as long as those individuals or businesses are meeting pre-set, impartial, risk-based standards. Think of it like this: a local bakery that meets all financial and legal requirements can't be denied a loan simply because the bank's CEO doesn't like their sourdough recipe. The bank has to show, in writing, how the bakery failed to meet specific, quantifiable standards—not vague feelings.
Show Me the Numbers
This isn't just about opening accounts. It covers everything from loans and mortgages to credit cards and payment processing (Sec. 8). The bill specifically targets "denials" based on "reputational risk" (Sec. 8). For example, a legal cannabis dispensary, fully compliant with state laws, can't be denied banking services just because a bank's board is uncomfortable with the industry. The bank needs to point to concrete, quantifiable risk factors, not just general concerns. This applies to payment card networks, too (Sec. 5) – they can't deny services based on political or reputational whims, and face fines up to $10,000 per violation.
Lawsuits and Triple Damages
Here's where the bill gets teeth. If a bank or credit union violates these rules, individuals or businesses can sue (Sec. 8). And they don't have to jump through administrative hoops first. If they win, they're entitled to attorney fees, court costs, and treble damages—triple the actual financial harm they suffered. This is a big deal. Imagine a small business owner denied a crucial loan because of a bank's bias. If they can prove it was unfair, they could get back three times the losses they incurred. This puts real pressure on banks to follow the rules.
What It Means for You and the System
This bill is directly tied to the findings in Sec. 2, which argues that banks supported by taxpayers should not act as regulators by withholding services based on political reasons or biases. The bill aims to ensure that banks stick to quantifiable, risk-based assessments, rather than subjective judgments. While the bill intends to prevent discrimination, there are potential challenges. The language around "reputational risk" could be a source of legal battles. Also, the threat of treble damages might make banks too cautious, potentially harming legitimate risk management. It's a balancing act between ensuring fair access and allowing banks to protect themselves from genuine financial threats.