Senate Banking Committee Chairman Tim Scott has a new tag team partner in his efforts to combat the inappropriate debanking of conservatives: Senator Thom Tillis of North Carolina. Tillis has introduced a comprehensive bill that includes and expands on Scott's proposed legislation to end debanking based on so-called reputational risk. The committee may soon hold hearings on the issue, and both senators deserve credit for taking on the thorny problem of political interference in financial access.
Tillis's "Ensuring Fair Access to Banking Act" broadens the conversation on how to protect Americans from viewpoint-based discrimination in the banking system, raising the question of how best to ensure that major banks cannot deny services – such as opening a checking account – solely due to government pressure tied to someone’s political beliefs or perceived reputational risks.
The need to address the debanking problem is underscored by former President Obama’s Operation Choke Point. Under this initiative, the Department of Justice (DOJ) and federal banking regulators sought to block access to financial services for industries they found politically undesirable – such as firearms dealers, short-term lenders, and tobacco businesses. Under the Biden administration's sequel, digital assets were systematically targeted. Individuals across the political spectrum have seen their accounts closed without warning or meaningful explanation.
Tillis's legislation first tackles this problem through federal preemption. This would prevent states from imposing their own political or ideological litmus tests on the flow of capital, creating a more uniform regulatory environment across all fifty states.
Next, the bill modernizes one of the most outdated financial regulations: the suspicious currency transaction threshold. Banks currently face additional reporting requirements on transactions above $10,000 – a trigger set in 1970, when gas was 40 cents a gallon. This antiquated threshold has quietly criminalized ordinary commerce ever since. Tillis's bill raises the amount to $45,000 and adjusts it annually for inflation. This simple act of common sense will ease burdens on consumers, small businesses, and banks alike.
An ideal debanking framework would prohibit the government from dictating who private actors must or must not do business with and provisions of the Tillis proposal that limit government power meet that test. Unfortunately, the bill also creates a new mandate actively prohibiting banks from exercising their own judgment of who they want to do business with. That violates the principle of free association and conservatives who are tempted to endorse this approach should keep in mind that if a government mandate to accept all customers is acceptable, it would logically include forcing a baker to bake a cake with a message they don’t agree with.
One other area for improvement is the addition of new enforcement authority for state attorneys general (AGs), which somewhat complicates the bill’s preemption objective. AGs have too often used their offices for political crusades and granting them expanded power could unintentionally recreate the very patchwork of politically motivated enforcement the bill aims to eliminate.
The lowest hanging fruit for debanking is Chairman Scott's FIRM Act, which would statutorily prohibit federal regulators from referencing or using "reputational risk" in any guidance, examination manual, rule, or supervision. Some version of that, either by itself or in a larger package like the Tillis bill, must be enacted in this Congress.
Senators Scott and Tillis deserve credit for engaging seriously with a very complex financial services challenge. With thoughtful refinement, Congress can build on this momentum to ensure every American can bank without bias and without government tipping the scales in either direction.
