FIRM Act

The FIRM Act (HR 2702) prohibits federal banking agencies from considering "reputational risk" in supervising banks and credit unions. It requires agencies to remove all references to reputational risk - defined as concerns about negative publicity affecting an institution's reputation - from regulations, examinations, and enforcement actions. The bill directly affects depository institutions (banks and credit unions) and federal regulators like the FDIC and CFPB, banning them from using reputational risk as a basis for supervision or enforcement. This policy change aims to limit regulatory actions based on subjective public opinion rather than financial safety and soundness.