FIRM Act

This bill stops federal banking regulators from using “reputational risk” (how bad publicity might look) when they oversee depository institutions. Regulators must remove that factor from their rules and exam manuals, and they cannot use it to make rules, collect data, issue findings, set ratings, or take enforcement actions. The goal is to keep supervision focused on safety and soundness and to prevent unfair limits on access to banking for federally legal businesses and law‑abiding people, no matter their politics . The definition of “reputational risk” excludes situations where bad publicity is tied to unlawful transactions with state sponsors of terrorism or foreign terrorist organizations, so agencies can still act on illegal activity.

• Who is affected: Federal banking agencies and depository institutions (like banks), and customers seeking lawful financial services.
• What changes: Agencies must delete “reputational risk” from guidance and exams, and are barred from using it in any supervisory step, including ratings and enforcement.
• When: Within 180 days after the law takes effect, agencies must report that they’ve implemented it and explain policy changes.