U.S. Senator Tim Scott Introduces Bill to Prevent Regulatory Action Against Banks Based on "Reputation Risk"

On March 6th, as per the report in The Block, Tim Scott, the chairperson of the U.S. Senate Banking Committee, introduced a bill intended to prohibit regulatory agencies from regulating banks based on "reputational risk." This action is a response to the accusation from the crypto industry that U.S. government agencies have excluded it from the financial system. This Republican senator from South Carolina submitted the bill on Thursday and stated in a press release that the legislation would "restrict the weaponization of federal banking agencies and take away the power of regulatory agencies to utilize 'reputational risk' in the regulatory process." The Fed defines "reputational risk" as: "The risk that emerges from negative public opinion regarding an institution's business practices (whether real or not) and can lead to customer attrition, costly litigation, or revenue loss."