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

25 LC 62 0186 Senate Bill 372 By: Senators Walker III of the 20th, Kennedy of the 18th, Summers of the 13th, Hodges of the 3rd, Goodman of the 8th and others A BILL TO BE ENTITLED AN ACT To amend Article 1 of Chapter 1 of Title 7 of the Official Code of Georgia Annotated,1 relating to Department of Banking and Finance and financial institutions generally, so as to2 provide for the removal of references to reputational risk from any Department of Banking3 and Finance guidance, rule, examination manual, or similar docu ment; to prohibit the4 department from considering reputational risk when regulating f inancial institutions; to5 provide for a report detailing any policy changes made by the department as a result of this6 Act; to provide for a definition; to provide for related matters; to repeal conflicting laws; and7 for other purposes.8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:9 SECTION 1.10 Article 1 of Chapter 1 of Title 7 the Official Code of Georgia Annotated, relating to11 Department of Banking and Finance and financial institutions ge nerally, is amended in12 Part 1, relating to purposes and preliminary matters, by revisi ng subparagraph (H) of13 paragraph (21) of Code Section 7-1-4, relating to definitions, as follows:14 "(H) In addition, as the context requires, a national bank, savings and loan association,15 or federal credit union for the purpose of the following provisions:16 S. B. 372 - 1 - 25 LC 62 0186 (i) Code Section 7-1-2, relating to findings of the General Assembly;17 (ii) Code Section 7-1-8, relating to supplementary principles of law;18 (iii) Code Section 7-1-37, relating to restrictions on officials and personnel;19 (iv) Code Section 7-1-70, relating to disclosure of information;20 (v) Code Section 7-1-80, relating to department taking reputat ional risk into21 consideration prohibited;22 (vi) Code Section 7-1-90, relating to judicial review of department actions;23 (vi)(vii) Code Sections 7-1-111 and 7-1-112, relating to emergency clos ings and24 business restrictions;25 (vii)(viii) Paragraph (3) of subsection (a) of Code Section 7-1-394, relating to criteria26 to be considered in approving new banks;27 (viii)(ix) Code Section 7-1-840, relating to criminal prosecutions; and28 (ix)(x) Code Section 7-1-841, relating to application of Title 16 provisions;"29 SECTION 2.30 Said article is further amended in Part 3, relating to operations of Department of Banking and31 Finance, by adding a new Code section to read as follows:32 "7-1-80.33 (a) As used in this Code section, the term 'reputational risk' means the potential that34 negative publicity or negative public opinion regarding a finan cial institution's business35 practices may cause a decline in confidence in such institution or a decline in the customer36 base, costly litigation, or revenue reductions or otherwise adv ersely impact the financial37 institution.38 (b) The department shall remove any reference to reputational risk from any guidance,39 rule, examination manual, or similar document established by th e department such that40 reputational risk is no longer taken into consideration by the department when examining41 and supervising a financial institution.42 S. B. 372 - 2 - 25 LC 62 0186 (c) The department shall not consider reputational risk when:43 (1) Establishing any rule, regulation, requirement, standard, or supervisory expectation44 related to the reputational risk of a financial institution;45 (2) Conducting any examination, assessment, data collection, o r other supervisory46 exercise concerning or related to reputational risk of a financial institution;47 (3) Issuing any finding, supervisory criticism, or other super visory communication48 related to reputational risk of a financial institution;49 (4) Making any supervisory ratings decision or determination that is based, in whole or50 in part, on any matter concerning reputational risk of a financial institution; and51 (5) Taking any formal or informal enforcement action that is based, in whole or in part,52 on any matter related to reputational risk of a financial institution.53 (d) The department shall submit a report to the General Assemb ly no later than54 January 1, 2026, describing any changes to internal policies made as a result of this Code55 section."56 SECTION 3.57 All laws and parts of laws in conflict with this Act are repealed.58 S. B. 372 - 3 -