WASHINGTON—The House has passed a bill that would prevent regulators from requesting termination of certain accounts without a material reason.
The Financial Institution Consumer Protection Act (HR 2706) removes barriers keeping credit unions from more effectively serving their members, stated CUNA, which added that the legislation is consistent with its bipartisan, pro-consumer Campaign for Common-Sense Regulation.
“As member-owned financial institutions serving their communities, credit unions are in the best place to decide what members can be served, not a federal regulator,” said CUNA Chief Advocacy Officer Ryan Donovan. “This common-sense piece of legislation is a reasonable approach to prevent fraud and maintain financial integrity while allowing credit unions to fully serve their members without fear of regulatory overreach.”
Specifically, HR 2706 specifies that a federal banking agency may not request or order a depository institution to terminate a customer account unless:
- The agency has a material reason for doing so
- That reason is not based solely on reputation risk
The bill was originally focused on the Department of Justice’s Operation Choke Point, an initiative CUNA had concerns was leading to consumers being locked out of the financial system, the trade association stated. In August, the Department of Justice ended Operation Choke Point.