Florida is widely viewed as the gold standard among states for its limited government, open and free markets, and business-friendly environment.
However, a proposed expansion of Florida’s “debanking” rules demonstrates how even well-intentioned regulations in otherwise free-market states can have the unintended consequence of disrupting commerce and limiting consumer choice. It would be better to allow Florida’s banks the freedom to focus on serving the needs of their customers and shareholders, rather than the short-term and reactive priorities of regulators and politicians.
Government-driven debanking occurs when a bank faces pressure to close the accounts of, or to avoid providing banking services to, particular clients or industries.
This type of debanking is not the result of fraud or illegal activity, but instead of politically vague regulations that have been weaponized, or of outdated policies that penalize banks when they have clients deemed “undesirable” or “high risk” by regulators.
This can cut off lawful businesses and organizations without explanation, eroding the financial freedom and free markets that benefit all Americans.
To address this, the Florida Office of Financial Regulation (OFR) proposed amendments to its existing rules under House Bill 989 to broaden its influence over financial institutions.
This proposed rule change would add several layers of unrealistic and harmful red tape to the financial industry in Florida, making it more difficult and expensive for banks to serve Floridians and imposing burdensome regulations and costs that many Florida banks cannot afford.
Furthermore, the proposed amendments could lead to an influx of frivolous or politically motivated complaints, overwhelming Florida’s financial institutions, especially smaller regional or community banks that don’t have the resources to keep up with these additional compliance burdens.
The expansion of the administrative state is antithetical to Florida’s values and sets Florida apart – but not in a good way. It disincentivized financial institutions from serving customers in the state and could limit access or increase costs for consumers, among other pitfalls.
Even if this measure is intended to help safeguard consumers, it misses the mark and could even have an adverse effect.
Further, it raises significant concerns about unnecessary government overreach, a problem President Trump has vowed to eradicate by rolling back burdensome regulations that have allowed unelected bureaucrats to meddle in private business.
The expansion goes far beyond what the original policy intended and sets a poor precedent for future decision-making in the state, on this and other issues.
As the America First Policy Institute wrote earlier this year, “It would be far preferable for states to support a fair and uniform federal standard that removes politics from the equation and enables banks to operate most efficiently.”
To preserve economic freedom and ensure fair access to financial services, national financial regulatory frameworks must remain consistent and predictable. A patchwork of state-level regulations threatens to undermine the principles that allow Florida markets and its banks to flourish.
The Florida OFR must do the right thing and pause this rule expansion immediately and take a step back to reconsider the path it would send the state on.
This way, we will continue to thrive and prosper — it’s our only option if we want to continue being the “Free State of Florida.”
___
David Ibsen is the executive director of Americans for Free Markets.