S. 401 — Fair Access to Banking Act

This section states 12 congressional findings concerning banks' obligations to provide fair access to financial services based on quantitative, impartial, risk-based standards assessed case-by-case, rather than subjective, category-based, or politically motivated denials (including practices likened to a privatized version of Operation Choke Point). (Thus, such denials are deemed inconsistent with sound risk management and potentially harmful to the national economy and security.)

This section sets forth the purposes of the Act, which are (1) to ensure fair access to financial services and fair treatment of customers by financial service providers, including national and state banks, federal savings associations, and state and federal credit unions; (2) to ensure banks operate safely and soundly, comply with laws and regulations, treat customers fairly, and provide fair access to financial services; (3) to protect against banks impeding otherwise lawful commerce to achieve certain public policy goals; (4) to ensure persons involved in politically unpopular but federally lawful businesses receive fair access to financial services; and (5) to ensure banks make impartial, individualized, risk-based decisions on providing financial services using empirical data evaluated under quantifiable standards.

This section amends the Federal Reserve Act and Federal Deposit Insurance Act to restrict access to Federal Reserve lending and FDIC insurance for depository institutions with more than $10 billion in total consolidated assets (or their subsidiaries) that refuse to do business with any person in compliance with applicable law, including section 8 of the Fair Access to Banking Act, as follows: (1) prohibits such member banks from using discount window lending programs under section 10B; (2) adds such refusal by insured depository institutions as a ground for involuntary termination of deposit insurance under section 8(a)(2)(A)(iv); and (3) prohibits such nonmember banks, trust companies, or other depository institutions from refusing to do business in connection with Federal Reserve advances under section 13. (As background, discount window lending and section 13 advances provide short-term liquidity to eligible institutions facing temporary funding shortages; section 8 of the Fair Access to Banking Act generally requires insured depository institutions to make services available to all lawful customers without discrimination based on specified factors such as lawful political activity.)

This section prohibits payment card networks (i.e., entities such as Visa or Mastercard, as defined in section 921(c) of the Electronic Fund Transfer Act) from restricting any law-compliant person's access to network services or products due to political or reputational risk considerations. It authorizes the Comptroller of the Currency to assess civil penalties against violating networks of up to 10% of the value of the restricted services or products, not to exceed $10,000 per violation.

This section expands the conditions under which the National Credit Union Administration (NCUA) may issue a notice requiring an insured credit union to correct unsafe or unsound practices, conditions, or violations—within 120 days or a shorter period of at least 20 days—by adding as a trigger the credit union's or a subsidiary's refusal to do business with any person in compliance with the law, including section 8 of the Fair Access to Banking Act. (Thus, failure to correct such refusal may lead to further NCUA proceedings, including potential termination of federal deposit insurance.)

This section prohibits covered credit unions (i.e., insured credit unions or those eligible for federal insurance), Federal Reserve member banks, and State-chartered non-member banks with more than $10 billion in total consolidated assets (and their subsidiaries) from using the Automated Clearing House Network if any such entity refuses to do business with persons in compliance with the law, including section 8 of this Act. (Thus, the provision effectively bars "debanking" of law-abiding customers by ACH participants.)

This section establishes requirements for fair access to financial services—defined as enabling persons engaged in lawful activities to obtain such services without impediments from prejudice, dislike of their business, or favoritism toward competitors—for covered banks (generally those able to raise prices or impede competitors, with a rebuttable presumption for banks with $10 billion or more in total assets) and covered credit unions (any insured credit union, as defined in 12 U.S.C. 1752, or any eligible to apply for insurance under the Federal Credit Union Act). Covered banks, including subsidiaries, must (1) offer each financial service (e.g., lending, payment processing, insurance products) proportionally equally to all persons in their geographic market, except as required by other law; (2) deny services only based on the person's quantified, documented failure to meet the bank's pre-established, impartial, risk-based standards; (3) refrain from denying services in coordination with or at others' request; and (4) provide written denial justifications (not based solely on reputational risk), citing any specific laws or regulations violated. This section creates a private right of action in federal district court against covered banks or covered credit unions for violations, without requiring exhaustion of administrative remedies, and authorizes prevailing plaintiffs to recover treble damages and reasonable attorney fees and costs.