Bank limits are signed into law
In what backers say is a firstin-the nation measure, Tennessee will restrict big banks and insurers from refusing service to any client on the basis of a “social credit score” or for other religious or environmental reasons, under a measure Gov. Bill Lee signed into law Monday.
Critics have said the measure seeks to address a nonexistent problem and will create significant legal and regulatory risks for banks in Tennessee and force them to work with unsavory clients.
Other critics say that while religious discrimination should indeed be restricted if and where it actually occurs, banks should be able to factor in environmental and social matters in determining how they want to do business.
The measure was backed by Alliance Defending Freedom, an influential national conservative Christian legal group. In a statement Tuesday, its senior legal counsel, Matt Sharp, said Lee and state lawmakers have taken an important step in protecting the fundamental freedoms of Tennesseans of every political and religious stripe.
“This is a win for everyone,” the statement said. “No one should be denied access to basic financial services because of their political or religious beliefs. Banks that are too big to fail are too big for bias. It’s the government’s duty to
protect the fundamental freedoms of its citizens. That’s why Tennessee has done the right thing here and charted the course for other states to follow.”
Lee’s spokesperson did not respond to an email Tuesday asking him why he supported the measure.
The Tennessee Bankers Association said the law will pose an unnecessary regulatory burden and interferes with the free market.
“The legislation is broad in its scope but was passed under the guise of prohibiting discrimination against religious organizations, which is not being done today and already prohibited under federal law,” the association’s general counsel, Amy Heaslet, wrote in an email Tuesday. “Banks, along with their regulators, are in the best position to establish and conduct their own customer due diligence without the state dictating the terms.”
Conservatives accuse financial institutions, among others in corporate America, of taking liberal stances on political and cultural issues — and have organized boycotts, lawsuits or legislation in opposition.
Recently, such activists have sounded the alarm about what they call debanking — a practice in which they say banks refuse to work with a client because of that client’s religious beliefs. Sharp compared the practice to redlining, a reference to how some banks used to demarcate predominantly Black neighborhoods within which they would not issue loans.
“The legislation is broad in its scope but was passed under the guise of prohibiting discrimination against religious organizations, which is not being done today and already prohibited under federal law.”
— AMY HEASLET, GENERAL COUNSEL OF THE TENNESSEE BANKERS ASSOCIATION
That history of discrimination is now acknowledged across the political spectrum. But whether banks are today actively discriminating against people for religious reasons remains a matter of dispute.
After months of study, the bill’s House sponsor, state Rep. Jason Zachary, R-Knoxville, said he found no examples of Tennesseebased banks canceling or denying services based on a client’s religious beliefs.
And the larger national banks targeted by the legislation as it was ultimately amended said they don’t engage in religious discrimination and proudly serve tens of thousands of religious clients.
As the bill made its way through the Tennessee General Assembly, backers cited the case of a Memphis-based ministry that alleged Bank of America stopped working with it for religious reasons — just a suspicion, a ministry leader acknowledged, which he formed when the bank did not disclose why it abruptly shuttered the ministry’s checking accounts.
A Bank of America spokesperson has told the Chattanooga Times Free Press that religious beliefs don’t factor into account-closing decisions and described alternative reasons the bank may close accounts. These reasons applied to the ministry in question.
The new measure lists numerous rationales banks will be prohibited from using when deciding not to open or continue holding an account with a client. That list includes: A client’s religion, a client’s political opinions or affiliations and a client’s lawful participation in the firearms industry or fossil fuel industry.
The bill also explicitly prohibits banks from refusing to service a client based on a “social credit score” based in part on “environmental standards,” “social government standards” or “corporate board or company employment composition standards.”
On the state House floor April 1, Zachary, the sponsor, denied his bill mentioned environmental, social or governance standards, even though it does.