The Montana Chamber of Commerce opposed SB240 in the Senate Business and Labor Committee on Wednesday, February 19. The bill would create new headaches for lenders and provide trial lawyers with new opportunities to sue banks. Below is the testimony we provided to the committee and the full hearing is available to watch here.
There’s a lot of good strategies for building a successful business in Montana. And plenty of proven strategies for driving customers away. Bad food and high prices will do it every time. In the banking business, a good way to lose customers in droves is to deny loans or financial services to law-abiding credit-worthy applicants. Montanans hate that. And we should let the market punish banks and credit unions who deny services to law-abiding credit-worthy Montanans.
Because if there are banks or credit unions denying services to law-abiding credit-worthy Montanans, they deserve to lose business to their competitors down the street. There are plenty of bankers and credit union loan officers who would be happy to steal their business.
There’s no need to create new lawsuit threats for banks to ensure that law-abiding credit-worthy Montanans have access to financial services.
There’s a reason that all banks and credit unions in Montana, large and small, are opposing SB 240.
SB 240 is not about Montanans being denied loans because they’re not woke enough. That’s not happening.
But I’d like to talk about something that does happen in Montana, and it’s not all that uncommon: money laundering, drug running and human trafficking.
The real unintended consequences of SB 240 are to expose banks to lawsuits if they deny financial services based on criminal activity and refuse to reveal that to a customer to protect an investigation.
How would that play out? Let’s say a bank notices a customer, who doesn’t have a job or own a business, depositing $9800 in cash twice a week, it’s realistic for that bank to suspect the customer may be involved in criminal activity. SB 240 requires the bank to provide the customer, in this case a money launderer, a detailed explanation of exactly why he was terminated. And a bank shouldn’t have to tell a customer that it suspects criminal activity. All that does is give the criminal warning he is potentially under investigation and trains him what not to do that would raise red flags at the next financial institution he tries.
Those are the kinds of situations that really do occur. What’s not happening in Montana is banks are not denying loans because you have a Back the Blue sign in your yard or you go to the wrong church or you take a knee during the national anthem. That’s a no-win situation for banks and a no-win situation for Montana.
This is a solution in search of a problem, and we urge a no vote.
