Experts warn that recently adopted banking law will restrict the free market

In response to US Treasury Concerns that Florida HB989 “constitutes a threat to national security,” the attorney general said Ashley Moody delivered the letter accusing the Treasury of “falsely suggesting” that the bill “would prohibit financial institutions from considering whether a consumer is associated with designated terrorist groups.”

Commenting on the letter from the State Treasury and the implementation of the HB 989 bill, Americans for the free market Executive Director Jan Wittman said, “HB 989 establishes an entirely new regulatory regime that could undermine the safety, security and service Floridians have come to expect from the nation’s banking system — all in response to the false narrative that financial institutions deny customers access to financial services based on their personal beliefs. Lawmakers should instead promote free market principles and support prosperity.”

The law affects banks large and small, forcing institutions of all shapes and sizes to navigate the state’s new regulatory environment, which could be costly and potentially directly conflict with the existing federal regulatory system. Banks are already regulated by the Office of the Comptroller of the Currency (OCC), the Federal Reserve, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC) and the Treasury Department. As an economist and president of the Parkview Institute Jan Tamny To put it this way, the law “will unnecessarily burden banks with much more bureaucracy.”

Specifically Tamny explains“It introduces an entirely new regulatory regime that is at odds with existing federal regulations.” national banks. Failure to do so comes with a high price tag that could ultimately force a national bank to choose between the opposing laws it must obey, the laws of Florida, and the national laws under which national banks already operate.

The law is the latest example of politicians fighting a perceived “wokeness” in corporate America, with regulators and political pundits expressing concerns that the attempt to score political points will likely lead to negative consequences for people and businesses across the Sunshine State.

“The consequences of politicians’ eagerness to attack financial institutions are real,” said the president and CEO of the Hispanic Leadership Fund. Mario Lopez warnedThe law “threatens consumer protection and access and undermines the nation’s banking standards that have been the foundation of our financial stability and economic prosperity.” since 1863.”

In addition, it will be nearly impossible for banks to fend off accusations of political bias because of federal disclosure requirements that prohibit sharing account-closing information with state agencies. For any bank that is targeted, the fines could be enormous, with penalties ranging from $2,500 to $500,000 per day.

Banks are already subject to federal regulatory safety and soundness requirements, in addition to anti-discrimination laws. They are already required by law to treat customers and counterparties fairly — regardless of political or religious beliefs — and to make sound decisions based on factors such as legal, credit, market, reputational and regulatory risks — not political ones.

“The current regulations protect consumers. Banks have an obligation to make sound decisions based on legitimate factors such as risk assessment, legal considerations, credit assessment and reputational integrity” former senator Garrett Richter said and president of Florida Market First Foundation Bank when the bill was first considered in the House of Representatives. Richter continued, “Banks are in the business of opening accounts, not closing them, and closing accounts without proper justification is simply not in the best interest of a bank.”

POLITICO recently reported that while Florida was the first to pass such a law, it is not the only state. Tennessee this year passed a law requiring banks to provide specific reasons for closing or refusing to open an account. Tennessee’s law includes a private right of action against banks, which will create a cottage industry for greedy litigators looking to cash in on extortion lawsuits.

Arizona, Georgia, Iowa, Idaho and other states are also considering such actions, raising the risk of further erosion of national banking policy and a complicated maze of differing state regulations.

“States imposing their own regulations on national banks, no matter how well-intentioned, create a patchwork of different regulatory requirements across the country and undermine the long-standing effectiveness and economic benefits of the National Banking Act,” said American Bankers Association President and CEO Rob Nichols said.

As a result, some financial institutions may not offer services in states like Florida, where complex and conflicting regulations apply. Potential decisions to exit the market will limit access to and affordability of products and services that a national bank can provide, and may even affect the bank’s ability to keep Americans safe from crimes like human trafficking, terrorism, and more. Banks’ compliance with these regulations, such as not sharing account disclosures, can often play a valuable role in identifying and deterring those who abuse the U.S. financial system.

“History has shown that consumers benefit when national banks compete under uniform and consistent rules overseen by the federal government, while states oversee those institutions that choose to operate under state statutes,” Nichols added.

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