H.R.987 - Fair Access to Banking Act (119th Congress)
Summary
H.R. 987, the "Fair Access to Banking Act," aims to prevent financial institutions from denying services to businesses based on subjective or political reasons. It amends banking laws to prohibit financial service providers who deny fair access to financial services from using taxpayer-funded discount window lending programs. The bill seeks to ensure that financial institutions make decisions based on impartial, risk-based standards, rather than prejudice or favoritism.
Expected Effects
The bill would likely lead to greater scrutiny of banks' lending practices, potentially opening up financial services to businesses previously denied access. This could reduce the ability of financial institutions to act as de facto regulators by withholding services based on political considerations. However, it may also increase compliance costs for banks and potentially increase their risk exposure.
Potential Benefits
- Prevents financial institutions from discriminating against lawful businesses based on political or reputational risk.
- Ensures fair access to financial services for businesses involved in politically unpopular but legal activities.
- Promotes impartial, individualized risk-based analysis in financial decision-making.
- Protects against financial institutions impeding otherwise lawful commerce.
- Could foster greater competition and innovation by allowing more businesses to access capital.
Potential Disadvantages
- May increase compliance costs for financial institutions due to increased scrutiny and documentation requirements.
- Could potentially increase risk exposure for banks if they are compelled to provide services to higher-risk businesses.
- May lead to legal challenges and uncertainty regarding the interpretation of "fair access" and "impartial risk-based standards."
- Could create a chilling effect on banks' willingness to deny services to businesses involved in activities that, while legal, may be considered socially undesirable.
- The bill's definition of 'covered bank' may be too broad, capturing institutions that do not have the power to significantly impede a person's business activities.
Constitutional Alignment
The bill aligns with constitutional principles by promoting equal opportunity and preventing discrimination, potentially supporting the Commerce Clause (Article I, Section 8) by ensuring fair access to financial services for lawful businesses. It also addresses concerns related to potential abuses of power by financial institutions, indirectly supporting principles of due process and equal protection. The bill's findings reference Article I of the Constitution, emphasizing the right to enact public policy through elected representatives.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).