GOP senators weigh penalties, fault for debanking

• Key insight: Republican lawmakers mostly took aim at banking regulators for debanking, but did call out what they see as banks' role. 
• What's at stake: The discussion draft of the bill would let banking regulators bring enforcement actions and seek restitution for debanking.
• Forward look: The main sponsor of the fair access bill, Sen. Thom Tillis, R-N.C., is out of Congress after 2026, but the issue remains a live one into the next year.

WASHINGTON — Republican lawmakers considered the role that banks themselves play in debanking, and even wondered to what extent they should be penalized for it. 
At a Senate Banking subcommittee hearing, lawmakers discussed a discussion draft from the panel's Chairman Thom Tillis, R-N.C., that would guarantee fair access to banking services. Specifically, the bill would prohibit banks over $100 billion in assets from denying banking services to any person or business, especially for actions protected by free speech or for company type, except mostly for business-related reasons. 

Throughout the hearing, Tillis and Sen. Kevin Cramer, R-N.D., who has introduced fair access legislation in the past, balanced placing the blame for debanking on both the regulators and banks themselves. While much of the Republican anger over debanking has been pointed at regulators, whom they accuse of using reputational risk to cut certain companies like crypto firms out of the banking system, lawmakers have also been unequivocable that they see fault in the banks as well. 

"One of the things that I've said, if you want to charter a bank to serve, you know, I'm not going to list the topic, but it's an unseemly market, that happens to be a legal market, and that's all you want to focus on, I have no problem at all with this,' Tillis said. "The problem that I've had, I've had a number of the GSIBs, the bigger banks, in my office, and I've told them all the same thing, if you start acting like a politician, expect to be treated like one." 

The discussion bill also says that bank regulators should bring enforcement actions against banks and seek relief for consumers if there is a violation of the fair access rule. 

"I just think that, penalize is a hard word, but I think you have to have a penalty, if you will, for denying services on anything other than empirical data that's consistent with banks' traditions and establishing partial risk," Cramer said. "Because if you don't, then you are just subject to political whims." 

Tillis, a key player in the debanking narrative on Capitol Hill as chairman of the Senate Banking subcommittee on financial institutions, although he'll be gone in a year as he won't seek reelection in 2026, said he's mostly concerned about regulators, and activist investors who he said have pushed banks out of financing some oil and gas activity. That said, activist investors exist on both sides of the ideological spectrum, and the banks have played their own role. 

"We have seen in red states and blue states, what I think are debanking activities that are driven purely from an ideological perspective," Tillis said. "And I think that that's a mistake." 

Fair access rules have, in the past, been opposed by banking groups because they've said it impedes their discretion and ability to exercise business judgement in making decisions. But the proposals this time around are different and banking groups have been more supportive. Because of the national attention to the issue, they hold a more immediate possibility to trickle into law or regulation in the next couple of years. 

This time the directive to consider debanking comes from the White House and President Donald Trump.he public response from banking groups has been to mostly praise the provisions that prohibit regulators from using reputational risk, and to forgo commenting on the fair access provisions on banks themselves. 

"Access to banking products and services should not be influenced by politics," the Bank Policy Institute said in a statement alongside Tillis' discussion draft. "Unfortunately, regulatory overreach, supervisory discretion and a maze of overlapping rules have forced banks to choose between legal compliance and reaching more customers."  

What exactly a fair access law or regulation looks like is still up in the air. With Tillis out of Congress after 2026, his proposal isn't likely the final word on the subject. 

"Does prohibiting de-banking imply a mandate to bank?" Cramer asked during the hearing. "Banks are awfully subject to federal oversight, and some, in many cases, federal support."