Sign in Subscribe
Financial services

Tennessee Debanking Law: A Template for State-Based Fair Banking Initiatives

Strategic Insights

— 2 min read

The White House issued an Executive Order on August 7, 2025, aimed at addressing unfair discrimination in banking decisions by financial institutions driven by reputational, political, religious, and other criteria not based on risk-based analysis. This Executive Order does not directly apply to insurers, but some state legislatures have proposed laws based on similar principles. The Tennessee Debanking Law, enacted in 2024, is one such example, and its provisions serve as a potential template for future state-based endeavors.

Key Takeaways:

  • The Tennessee Debanking Law prohibits financial institutions from denying or canceling services based on certain criteria, including the person's political opinions, speech, or affiliations; religious beliefs or affiliations; and factors not related to risk-based standards.
  • The law specifically excludes insurers from its scope, but some state legislatures have proposed laws based on similar principles that could impact the insurance industry.
  • The insurance prohibition in the Tennessee Debanking Law makes it an unfair trade practice to refuse to insure or charge a different rate to a person solely on the basis of their political opinions, speech, or affiliations; or religious beliefs.
  • The law integrates the insurance prohibition into Tennessee's existing list of unfair trade practices in the business of insurance.
  • Other states may follow Tennessee's approach, potentially impacting current compliance functions for insurers and the insurance industry as a whole.
  • The Executive Order could increase the likelihood of similar laws passing, as it endorses actions limiting what the administration construes as politicized debanking.
  • The Executive Order does not directly apply to insurers, but its impact on state-based legislation proposing similar prohibitions on insurance coverage and rating decisions remains to be seen.

Statistics:

  • The Tennessee Debanking Law was enacted effective July 1, 2024.
  • The law prohibits financial institutions from using certain factors to determine eligibility for financial services, including the person's political opinions, speech, or affiliations.
  • The insurance prohibition in the Tennessee Debanking Law applies to refusal to insure or charging a different rate solely on the basis of the person's political opinions, speech, or affiliations; or religious beliefs.
  • Other states may follow Tennessee's approach, potentially impacting current compliance functions for insurers.
  • The Tennessee Debanking Law includes two main components: a banking prohibition and an insurance prohibition.
  • The banking prohibition is housed in Tennessee Statutes Section 45-1-128, while the insurance prohibition is housed in Tennessee Statutes Section 56-8-114.

Sources:

  • White House Executive Order: Guaranteeing Fair Banking for All Americans, August 7, 2025.
  • 2024 Tennessee Laws Pub. Ch. 746 (H.B. 2100).
  • T. C. A. § 56-8-104(23) referencing T. C. A. § 56-8-114.
  • https://www.foley.com/wp-content/uploads/2025/08/Redline-of-TN-Banking-vs-Insurance.pdf
  • Foley & Lardner LLP, "Tennessee Debanking Law" (2025).

Read more