SB372: SB372 Department of Banking and Finance; removal of references to reputational risk from any Department of Banking and Finance guidance, rule, examination manual, or similar document; provide

Currently, Georgia's Department of Banking and Finance can consider a financial institution's reputation, meaning public opinion or negative publicity about its business practices, as part of how it writes rules and supervises banks. This bill would end that practice. The bill adds a new section to Georgia law (O.C.G.A. § 7-1-80) defining 'reputational risk' and directing the department to erase any reference to it from its guidance, rules, examination manuals, or similar documents. It also bars the department from using reputational risk when writing rules, conducting exams, issuing findings, setting supervisory ratings, or taking enforcement action against a financial institution. The department would have to report to the General Assembly by January 1, 2026, describing any internal policy changes made because of this law. A related section updates a definitions list to cross-reference the new prohibition.

• Creates a new Georgia law (O.C.G.A. § 7-1-80) defining 'reputational risk' as harm to a financial institution from negative publicity or public opinion.
• Requires the Department of Banking and Finance to remove all references to reputational risk from its guidance, rules, examination manuals, and similar documents.
• Prohibits the department from using reputational risk when setting rules, conducting exams, issuing supervisory findings, assigning ratings, or taking enforcement action against a financial institution.
• Requires the department to submit a report to the General Assembly by January 1, 2026 describing any internal policy changes made because of the new rule.
• Updates a cross-reference list in the definitions section (O.C.G.A. § 7-1-4) to include the new reputational risk prohibition.

The Georgia Department of Banking and Finance, which must rewrite its internal guidance and change how it supervises institutions, and the banks, savings and loan associations, credit unions, and other financial institutions the department regulates, whose oversight would no longer factor in public reputation.

If enacted, state banking regulators would no longer be able to flag or penalize a Georgia financial institution based on its public image or negative press, only on measurable financial or legal factors, changing how examinations, ratings, and enforcement actions are conducted going forward.

• Section 1 revises the cross-reference list in the definitions section (O.C.G.A. § 7-1-4) to add the new reputational risk prohibition (new Code Section 7-1-80).
• Section 2 creates Code Section 7-1-80, defining 'reputational risk' in subsection (a) as harm to confidence, customer base, litigation costs, or revenue from negative publicity.
• Section 2(b) requires the department to purge reputational risk references from all guidance, rules, and examination manuals.
• Section 2(c) lists five specific supervisory activities, rulemaking, examinations, findings, ratings, and enforcement, where the department cannot consider reputational risk.
• Section 2(d) sets a January 1, 2026 deadline for the department to report policy changes to the General Assembly.
• Section 3 repeals any conflicting laws.

1. 2025-04-02Senate Read and Referred (Senate)
2. 2025-04-02Senate Hopper (Senate)

• Larry Walker (R, SD-020)Primary sponsor
• John Kennedy (R, SD-018)
• Carden Summers (R, SD-013)
• Mike Hodges (R, SD-003)
• Russ Goodman (R, SD-008)
• Max Burns (R, SD-023)

• banking regulation
• financial institutions
• state agencies
• reputational risk