Attorney General Brenna Bird has joined a letter to the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) urging the elimination of “reputation risk” in banking supervisory programs. These banking regulators could use the threat of reputation risk to discourage banks from having clients that are unpopular with certain administrations, such as gun manufacturers.
Federal banking statutes should make sure banks are safe for their customers—not mandate clients based on public opinion or political sentiment. The concept of “reputation risk” is subjective, and regulators have applied it inconsistently. Most famously, regulators have used the excuse of reputation risk to “debank” religious groups, political organizations, and other lawful industries based on political affiliation.
“No one should lose their ability to do business with a bank because of their politics,” said Attorney General Bird. “I’m joining this coalition to ensure that banks govern their clients based on fiscal soundness and safety issues, not partisan issues.”
Iowa joined the West Virginia-led letter along with Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Missouri, Mississippi, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Wyoming.
Read the full letter here.
