A broad coalition of Republican groups called on congressional leaders on Tuesday to junk banking legislation that would expand the reach and powers of federal regulators who view terms such as “Trump” and “MAGA” and customers of outdoors stores such as Cabela’s as extremist.
Led by the Competitive Enterprise Institute, the coalition said the proposed regulations sold as the best way to police failing banks go too far and would give federal officials the power to fire Republican executives and track spending by people on guns, ammo, and Bibles.
“Giving bureaucrats a trove of data on people’s private purchases and speech could enable dossiers and profiles of law-abiding Americans that bureaucrats believe have the ‘wrong’ pursuits and thoughts,” noted the brief letter signed by 36 groups and people, including Americans for Tax Reform, Log Cabin Republicans, FreedomWorks, and Gun Owners of America.
Their target is the Senate Banking Committee-passed Recovering Executive Compensation from Unaccountable Practices Act, or RECOUP, of 2023. It passed 21-2 in the committee last June but has been stalled in the House.
Some in Congress, the coalition warned, are hopeful of speeding passage by adding it to the “must-pass appropriations bill” before the House and Senate this week.
The legislation has won favorable headlines because it would allow regulators to “recoup” or “claw back” money from highly paid bank executives if their institutions fail. It would also let regulators fire executives they feel are underperforming, even in successful banks.
The bill was prompted by the 2023 failure of Silicon Valley Bank and Signature Bank.
However, some industry officials have raised concerns about letting federal regulators oversee senior bank executives.
The coalition had similar concerns and warned that left-leaning regulators might force banks to favor progressive businesses, such as green energy, instead of coal operations.
“The bill’s language is written so broadly that it may allow bank regulators to take over banks on the basis of policy judgments about certain industries with which the banks do business. It has been postulated, for instance, that executives of banks lending to oil and gas producers could be subject to the bill’s removal provisions for failing to implement adequate ‘climate risk’ reporting or controls,” noted the letter to House Speaker Mike Johnson (R-LA), House Minority Leader Hakeem Jeffries (D-NY), Senate Majority Leader Chuck Schumer (D-NY), and Senate Minority Leader Mitch McConnell (R-KY).
The 36 also cited recent efforts by financial regulators to target credit firms that do business with outdoors companies that sell guns and ammo, especially to those who might support former President Donald Trump.
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“The House Judiciary Committee revealed that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) instructed banks to send the government random info about purchases at outdoor sporting stores and use of the terms ‘Trump’ and ‘MAGA’ in payment app messages, because FinCEN claimed that these mere purchases and word usage could be indicators of ‘extremism,’” the coalition said.
The coalition letter concluded, “The RECOUP Act is flawed under any circumstances, but its boosting of the powers of financial regulatory agencies before these troubling issues are resolved would almost certainly lead to new abuses of power. We are also particularly concerned about provisions of the RECOUP Act being added to a must-pass appropriations bill. This approach would deny members of Congress the opportunity for basic debate of the far-reaching impactful provisions of the legislation. For these reasons, we urge you to reject the RECOUP Act as a stand-alone bill or if added to other legislation.”
