Republican state senators voted Thursday to advance a bill that would expose banking institutions to lawsuits if they deny services to customers because of the way they exercised their rights under the first 10 amendments to the U.S. Constitution.
The measure applies to the purveyors of essential services, including utilities. But Sen. Blake Tillery, R-Vidalia, the chief sponsor of Senate Bill 57, said it should be called the “Georgia ban on de-banking act” rather than “The Freedom of Speech and Belief Act,” as it is formally titled.
The bill targets banks with $1 billion or more in assets that drop customers due to “cancel culture,” Tillery said at a hearing on the bill Thursday.
Tillery had the leader of Daniel Defense testifying for the measure alongside him.
The Georgia-based firearms manufacturer became a target of criticism after one of its rifles was used in the 2022 mass school shooting in Uvalde, Texas.
Founder and chairman Marty Daniel told the senators that two banks in a row dropped his company, forcing him to spend $1 million each time on lawyers and fees to find a new source of loans.
“This is about banks discriminating against legal businesses,” Daniel said.
Representatives of the banking and credit union industries testified against the measure, saying it would invite costly frivolous lawsuits.
Rhodes McLanahan, CEO of Athens-based First American Bank & Trust, said banks are prohibited by federal law from disclosing why they won’t engage with customers if it’s due to concerns like money laundering.
Thus, they would be unable to explain why they were refusing to do business with someone, opening the door to a lawsuit under SB 57, he said.
“We will get sued,” he said. “There’s no question.”
Tillery responded to the industry’s concerns by saying he is trying to address a clear and growing problem. To illustrate his point, he referred to an exchange last week between U.S. Sen. John Kennedy, a Louisianna Republican, and Jerome Powell, chairman of the Federal Reserve.
During Senate testimony, Kennedy asked Powell about “de-banking” due to reputational risk.
Powell acknowledged a possible trend and said he wanted to learn more about it.
“I, too, am troubled by the quantity of these reports,” he said.
During Thursday’s hearing, Democrats expressed concerns about SB 57, as did Georgia state Sen. John F. Kennedy, a Republican from Macon.
As Senate president pro tem, Kennedy is just below Lt. Gov. Burt Jones in the Senate hierarchy. The Senate leadership is backing a push by Gov. Brian Kemp, a fellow Republican, to limit payouts in lawsuits, Kennedy noted, adding that it was difficult to square SB 57 with that goal.
The bill would encourage lawsuits against banks, resulting in an “unfair windfall” for plaintiffs, he said.
Kennedy and at least one other Republican joined Democrats in voting against SB 57, but it still passed out of the committee on a 7-5 vote. It now heads to the Senate Rules Committee, which will decide whether to let it go to the full Senate.