S.Amdt. 3931

SA 3931 is an amendment intended to stop the political weaponization of Federal banking agencies. It aims to do this by removing reputational risk as a deciding factor when agencies supervise depository institutions.

The amendment seeks to change the bill by adding the following requirements:

• Restrictions on Account Terminations: Federal banking agencies cannot require a bank to close specific accounts unless there is a valid reason, and they cannot use reputational risk as the deciding factor. Valid reasons include unsafe banking practices, law violations, or threats to national security and illicit finance.

• Notice and Documentation: Agencies must provide the bank with a written request and a documented valid reason for the termination. In most cases, the bank must also notify the customer in writing of the reason for the closure, unless doing so would interfere with national security, law enforcement, or disclose confidential reports.

• Accountability and Reporting:

  • Agencies must submit an annual report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services listing the number of accounts they requested to be terminated and the legal authority used.
  • The agency's Inspector General must review this activity before the report is submitted.
  • The FDIC and NCUA must conduct a survey every two years regarding how small and medium-sized businesses access deposit accounts and what barriers they face.

• Guidance on Banking Services: The amendment expresses that banking agencies should not use coercion to restrict financial services for lawful businesses and that banks should use a risk-based approach for individual customers rather than declining entire categories of customers.