To amend the Federal Reserve Act to prohibit certain financial service providers who deny fair access to financial services from using taxpayer funded discount window lending programs, and for other purposes.
IN THE SENATE OF THE UNITED STATES · February 4, 2025 · Sponsor: Mr. Cramer · Committee: Committee on Banking, Housing, and Urban Affairs
Congress finds that—
(1) article I of the Constitution of the United States guarantees the people of the United States the right to enact public policy through the free and fair election of representatives and through the actions of State legislatures and Congress;
(2) banks rightly objected to the Operation Choke Point initiative through which certain government agencies pressured banks to cut off access to financial services to lawful sectors of the economy;
(3) banks are now, however, increasingly employing subjective, category-based evaluations to deny certain persons access to financial services in response to pressure from advocates from across the political spectrum whose policy objectives are served when banks deny certain customers access to financial services;
(4) the privatization of the discriminatory practices underlying Operation Choke Point by banks represents as great a threat to the national economy, national security, and the soundness of banking and financial markets in the United States as Operation Choke Point itself;
(5) banks are supported by the United States taxpayers and enjoy significant privileges in the financial system of the United States and should not be permitted to act as de facto regulators or unelected legislators by withholding financial services to otherwise credit worthy businesses based on subjective political reasons, bias, or prejudices;
(6) banks are not well-equipped to balance risks unrelated to financial exposures and the operations required to deliver financial services;
(7) the United States taxpayers came to the aid for large banks during the Great Recession of 2008 because they were deemed too important to the national economy to be permitted to fail;
(8) when a bank predicates the access to financial services of a person on factors or information (such as the lawful products a customer manufactures or sells or the services the customer provides) other than quantitative, impartial risk-based standards, the bank has failed to act consistent with basic principles of sound risk management and failed to provide fair access to financial services;
(9) banks have a responsibility to make decisions about whether to provide a person with financial services on the basis of impartial criteria free from prejudice or favoritism;
(10) while fair access to financial services does not obligate a bank to offer any particular financial service to the public, to operate in any particular geographic area, or to provide a service the bank offers to any particular person, it is necessary that—
(A) the financial services a bank chooses to offer in the geographic areas in which the bank operates be made available to all customers based on the quantitative, impartial risk-based standards of the bank, and not based on whether the customer is in a particular category of customers;
(B) banks assess the risks posed by individual customers on a case-by-case basis, rather than category-based assessment; and
(C) banks implement controls to manage relationships commensurate with these risks associated with each customer, not a strategy of total avoidance of particular industries or categories of customers;
(11) banks are free to provide or deny financial services to any individual customer, but first, the banks must rely on empirical data that are evaluated consistent with the established, impartial risk-management standards of the bank; and
(12) anything less is not prudent risk management and may result in unsafe or unsound practices, denial of fair access to financial services, cancelling, or eliminating certain businesses in society, and have a deleterious effect on national security and the national economy.
The purposes of this Act are to—
(1) ensure fair access to financial services and fair treatment of customers by financial service providers, including national and State banks, Federal savings associations, and State and Federal credit unions;
(2) ensure banks conduct themselves in a safe and sound manner, comply with laws and regulations, treat their customers fairly, and provide fair access to financial services;
(3) protect against banks being able to impede otherwise lawful commerce and thereby achieving certain public policy goals;
(4) ensure that persons involved in politically unpopular businesses but that are lawful under Federal law receive fair access to financial services under the law; and
(5) ensure banks operate in a safe and sound manner by making judgments and decisions about whether to provide a customer with financial services on an impartial, individualized risk-based analysis using empirical data evaluated under quantifiable standards.
Section 10B of the Federal Reserve Act (12 U.S.C. 347b) is amended by adding at the end the following:
(c) Prohibition on use of discount window lending programs
No member bank with more than $10,000,000,000 in total consolidated assets, or subsidiary of the member bank, may use a discount window lending program if the member bank or subsidiary refuses to do business with any person who is in compliance with the law, including section 8 of the ..
Section 8(a)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1818(a)(2)(A)) is amended—
(1) in clause (ii), by striking "or" at the end;
(2) in clause (iii), by striking the comma at the end and inserting ; and
(3) by adding at the end the following:
(iv) an insured depository institution with more than $10,000,000,000 in total consolidated assets, or subsidiary of the insured depository institution, that refuses to do business with any person who is in compliance with the law, including section 8 of the ,.
In this section, the term payment card network has the meaning given the term in section 921(c) of the Electronic Fund Transfer Act (15 U.S.C. 1693o–2(c)).
No payment card network, including a subsidiary of a payment card network, may, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, prohibit or inhibit the ability of any person who is in compliance with the law, including section 8 of this Act, to obtain access to services or products of the payment card network because of political or reputational risk considerations.
Any payment card network that violates subsection (b) shall be assessed a civil penalty by the Comptroller of the Currency of not more than 10 percent of the value of the services or products described in that subsection, not to exceed $10,000 per violation.
In this section:
(1) The term covered credit union means—
(A) any insured credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or
(B) any credit union that is eligible to make application to become an insured credit union under section 201 of the Federal Credit Union Act (12 U.S.C. 1781).
(2) The term member bank has the meaning given the term in the third undesignated paragraph of the first section of the Federal Reserve Act (12 U.S.C. 221).
No covered credit union, member bank, or State-chartered non-member bank with more than $10,000,000,000 in total consolidated assets, or a subsidiary of the covered credit union, member bank, or State-chartered non-member bank, may use the Automated Clearing House Network if that member bank, credit union, or subsidiary of the member bank or credit union, refuses to do business with any person who is in compliance with the law, including section 8 of this Act.
In this section:
(1) The term — bank
(A) means an entity for which the Office of the Comptroller of the Currency is the appropriate Federal banking agency, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B) includes—
(i) member banks;
(ii) non-member banks;
(iii) covered credit unions;
(iv) State-chartered non-member banks; and
(v) trust companies.
(2) Covered bank
(A) The term covered bank means a bank that has the ability to—
(i) raise the price a person has to pay to obtain an offered financial service from the bank or from a competitor; or
(ii) significantly impede a person, or the business activities of a person, in favor of or to the advantage of another person.
(B) Presumption
(i) A bank shall not be presumed to be a covered bank if the bank has less than $10,000,000,000 in total assets.
(ii) Rebuttable presumption
(I) A bank is presumed to be a covered bank if the bank has $10,000,000,000 or more in total assets.
(II) A bank that meets the criteria under subclause (I) can seek to rebut this presumption by submitting to the Office of the Comptroller of the Currency written materials that, in the judgement of the agency, demonstrate the bank does not meet the definition of covered bank.
(3) The term covered credit union means—
(A) any insured credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or
(B) any credit union that is eligible to make application to become an insured credit union under section 201 of the Federal Credit Union Act (12 U.S.C. 1781).
(4) The term deny means to deny or refuse to enter into or terminate an existing financial services relationship with a person.
(5) The term fair access to financial services means persons engaged in activities lawful under Federal law are able to obtain financial services at banks without impediments caused by a prejudice against or dislike for a person or the business of the customer, products or services sold by the person, or favoritism for market alternatives to the business of the person.
(6) The term financial service means a financial product or service, including—
(A) commercial and merchant banking;
(B) lending;
(C) financing;
(D) leasing;
(E) cash, asset, and investment management and advisory services;
(F) credit card services;
(G) payment processing;
(H) security and foreign exchange trading and brokerage services; and
(I) insurance products.
(7) The term member bank has the meaning given the term in the third undesignated paragraph of the first section of the Federal Reserve Act (12 U.S.C. 221).
(8) The term — person
(A) means—
(i) any natural person; or
(ii) any partnership, corporation, or other business or legal entity; and
(B) includes a customer.
(1) To provide fair access to financial services, a covered bank, including a subsidiary of a covered bank, shall, except as necessary to comply with another provision of law—
(A) make each financial service the covered bank offers available to all persons in the geographic market served by the covered bank on proportionally equal terms;
(B) not deny any person a financial service the covered bank offers unless the denial is justified by such quantified and documented failure of the person to meet quantitative, impartial risk-based standards established in advance by the covered bank;
(C) not deny, in coordination with or at the request of others, any person a financial service the covered bank offers; and
(D) when denying any person financial services the covered bank offers, provide written justification to the person explaining the basis for the denial, including any specific laws or regulations the covered bank believes are being violated by the person or customer.
(2) A justification described in paragraph (1)(D) may not be based solely on the reputational risk to the covered bank.
(1) Notwithstanding any other provision of law, a person may commence a civil action in the appropriate district court of the United States against any covered bank or covered credit union that violates or fails to comply with the requirements under this section, for harm that person suffered as a result of such violation.
(2) It shall not be necessary for a person to exhaust its administrative remedies before commencing a civil action under this section.
(3) If a person prevails in a civil action under this section, a court shall award the person—
(A) reasonable attorney’s fees and costs; and
(B) treble damages.