During the 2024 Legislative Session, Florida enacted a measure, HB 989, aimed at ending politically motivated debanking. Now, Florida’s Office of Financial Regulation (OFR) is doubling down: proposing an expansion of this rule, which could undermine banks’ ability to manage risk, thereby threatening stability and imposing costs on the free-market system.
Two former comptrollers of the currency previously described the harms of state interference on the issue, saying: “Under Florida law HB 989, national banks lost discretion to make day-to-day lending and other risk management decisions free from state interference and scrutiny.”
President Donald Trump issued an executive order aimed at ending regulatory abuse of the financial system and updating outdated laws that have led to unnecessary or wrongful account closures at the federal level earlier this year, making state action like this unnecessary. His order removed the use of “reputational risk” by regulators and empowered federal agencies and the U.S. Treasury to develop a comprehensive pathway to end politicized or unlawful debanking.
The America First Policy Institute praised the President’s executive order, stating: “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.”
Conversely, the proposed rule expansion could lead to an increase in investigations and litigation, creating additional compliance costs for banks, particularly smaller institutions that play an important role in Florida’s communities. In turn, these burdens would ultimately harm consumers through reduced access to banking services and higher fees.
Free market advocates are expressing concern.
“The proposed rule (Rule 69U-100.3231) would make a bad law worse. The Florida state government should not micromanage how banks and other financial institutions conduct their business. The rule shows how once governments grab a little bit of power, they often quickly grab more,” continued Nicholas Anthony, a policy analyst for the Cato Institute’s Center for Monetary and Financial Alternatives.
David Ibsen, Executive Director of Americans for Free Markets said, “The proposed rule expands the administrative state. It would create an excessive burden on financial institutions at a time when consumer access to financial services is critical.”
Other red states like Texas and Louisiana have passed or introduced resolutions expressing support for President Trump and his efforts to address debanking.
In recent decades, Florida has been known for its pro-business climate. The Sunshine State attracted businesses and significant investments during COVID when other states were losing residents. “We’re hopeful that Florida will get on board with the Trump agenda for smart banking reform,” Ibsen added.
