FIRM Act

The FIRM Act (Financial Integrity and Regulation Management Act) would change how federal banking agencies regulate depository institutions like banks and credit unions. If enacted, the bill would prohibit the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Federal Reserve from considering reputational risk as a factor in their supervision, examination, or regulation of financial institutions. This includes eliminating reputational risk from rule-making, assessments, enforcement actions, and supervisory communications.

Proponents argue that removing reputational risk considerations would prevent subjective decision-making and ensure regulators focus on tangible safety and soundness issues. The bill has passed the House Financial Services Committee and is eligible for a floor vote. If enacted, federal banking agencies would have 180 days to report to Congress on how they implemented the changes and modified their internal policies accordingly. The Congressional Budget Office estimates the administrative costs would be insignificant.