December 10, 2019
U.S. Senators Ben Sasse (R-NE) and Ted Cruz (R-TX), along with Senators Mike Braun (R-IN), John Cornyn (R-TX), Mike Crapo (R-ID), Cindy Hyde-Smith (R-MS), Jim Inhofe (R-OK), John Kennedy (R-LA), Mike Lee (R-UT), and Thom Tillis (R-NC), today reintroduced the Financial Institution Customer Protection Act (S. 3003). This bill prohibits federal regulators from arbitrarily forcing banking institutions to terminate their relationships with legal businesses solely because the operations of the businesses are not in line with the views of the contemporaneous administration.
“We’re a nation of laws,” said Sen. Sasse, “and that means that Washington’s bureaucracy can’t put a wall between American businesses and their banks just because their private views aren’t popular with powerful politicians. Back in 2013, President Obama’s regulators went after law-abiding firearms businesses and we have to make sure that never happens again. That’s exactly what this common-sense legislation would do.”
“Under the previous administration, government officials at agencies such as the Department of Justice and the Federal Deposit Insurance Corporation abused their power to become a partisan arm of the administration,” Sen. Cruz said. “This bill safeguards the American people and small businesses from being unconstitutionally cut off from their financial institutions for not falling in line with the political whims and leanings of whoever is in control of the executive branch.”
The full text of the bill may be viewed here. A summary is below:
Financial Institution Customer Protection Act Summary
This bill prohibits a federal banking agency from formally or informally suggesting, requesting, or ordering a depository institution to terminate either a specific customer account, or group of customer accounts, or otherwise restrict or discourage it from entering into or maintaining a banking relationship with a specific customer or group of customers, unless:
- The agency has a material reason to do so, and
- The reason is not based solely on reputation risk to the institution.
Unless the appropriate agency determines that the customer or group of customers has used due diligence to avoid doing business with any entity described below, the bill deems the criteria addressing "material reason" to be met if the agency believes a customer or group of customers is, or is acting as, a conduit for an entity which:
- poses a threat to national security;
- is involved in terrorist financing;
- is an agency of the government of Iran, North Korea, Syria, or any country listed from time to time on the state sponsor of terrorism list;
- is either located in, or subject to the jurisdiction of, any of such countries; or
- does business with any entity located in such countries.
If an appropriate federal banking agency orders a depository institution to terminate a specific customer account or a group of customer accounts, the depository institution shall inform the customer or customers of the justification for the termination.
No notice may be given to the customer, however, if the agency requests or orders a depository institution to terminate a customer account (or a group of customer accounts) based upon a belief that customer or those customers pose a threat to national security or are otherwise described above.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 is amended to revise requirements for summoning witnesses and requiring production of books or other records the Attorney General deems relevant or material to a civil investigation in contemplation of a civil proceeding which may result in civil penalties for specified violations.