South Carolina has built a reputation as a place where businesses can grow and families can thrive, thanks to its commitment to free market principles. However, the state’s Guarantee Banking Act, currently awaiting final approval by the State House, threatens this progress. The bill aims to prevent politicized debanking, but it would create new costs, litigation risk, and regulatory confusion.

Federal Approach is Correct

A federal approach is correct because financial institutions operate across state lines every day. Banks are already subject to extensive federal supervision, anti-money-laundering rules, and suspicious-activity reporting obligations. A patchwork of conflicting state laws would create confusion, compliance headaches, and additional costs that would burden businesses and ultimately be passed onto consumers.

Following President Trump’s executive order last summer, Washington has moved to eliminate the use of vague definitions of risk that enabled politically motivated debanking. Federal banking regulators, including the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and Federal Deposit Insurance Corporation (FDIC), have recently followed the president’s directive and removed these terms from their supervisory practices.

Lawmakers should recognize that creating state-level mandates on banking practices risks inviting future political interference from both sides of the aisle. Once government gains the authority to pressure or direct financial activity, that authority rarely remains limited for long.

South Carolina should not become known as the state where doing business becomes harder because lawmakers decided to pile on additional red tape. The state’s legislature should resist creating another layer of state bureaucracy for an issue that is already being addressed federally.

Original reporting: FITSNews — read the source article.