Tuesday, April 21, 2026
South Carolina House Speaker G. Murrell Smith
South Carolina House Labor, Commerce and Industry Committee
South Carolina House of Representatives
1105 Pendleton Street
Columbia, SC 29201
Dear Speaker Smith, Members of the Committee, and Honorable Legislators:
Access to basic banking services is essential for individuals, nonprofits, churches, and civic organizations to function in today’s economy, and lawful customers should not be denied services because of their views. For most South Carolinians, this is as simple as depositing a paycheck, paying bills, or running a small business.
As a taxpayer advocate and small business owner, I am writing to express serious concerns with H. 5538 and respectfully urge you to reconsider the current approach. The goal of preventing political or religiously motivated denial of financial services is understandable and widely shared. Access to basic banking services is essential for individuals, nonprofits, churches, and civic organizations to function in today’s economy.
There are legitimate concerns about viewpoint-based debanking, and those concerns deserve to be addressed. However, the structure of this bill risks worsening the very problem it seeks to solve. It creates a new set of risks that could undermine South Carolina’s financial system and the businesses that depend on it. In other words, it attempts to fix a real problem, but does so in a way that could make everyday banking harder, not easier for the very people it aims to protect.
The core issue is not the intent, but the execution. H. 5538 introduces sweeping and imprecise standards that would govern how financial institutions make routine account and risk management decisions. Key terms such as “adverse action” and “lawful activity” are drafted so broadly that they invite inconsistent interpretation. In practice, this means nearly any decision, including closing an account, adjusting terms, or declining a customer, could be challenged as unlawful even when driven by legitimate financial, fraud, or regulatory concerns.
Critically, the bill shifts the focus from what a bank does to why it did it. That opens the door to second-guessing ordinary business decisions based on perceived intent, rather than clear, objective standards.
That level of ambiguity is a liability minefield. By layering in private rights of action and significant penalties tied to vague standards, the bill effectively guarantees costly and time-consuming litigation. Banks and payment processors will be forced to defend ordinary business decisions in court, without clear statutory guidance. That uncertainty does not stay in the courtroom; it shows up in higher costs, fewer service options, and tighter access to credit for South Carolina families and small businesses.
Larger institutions may be able to absorb this risk. Community banks and credit unions—which serve as the backbone of South Carolina’s local economies—may instead respond by reducing services or exiting higher-risk relationships altogether.
When legal uncertainty increases, access does not expand; it contracts.
Equally problematic is the conflict this creates with federal oversight. Financial institutions already operate within a complex federal framework that requires them to evaluate risk, monitor activity, and comply with federal directives. H. 5538 would place those same institutions in a no-win situation: follow federal expectations and risk state-level penalties, or comply with this bill and risk running afoul of federal regulators. That is not a workable policy. It is a recipe for confusion, higher compliance costs, and reduced service availability. No business can realistically operate when the rules point in two different directions at the same time.
South Carolina’s economy depends on institutions that can operate across state lines with consistency and predictability. Introducing a state-specific liability scope disrupts that balance, making it more difficult for businesses to access reliable financial services. For small businesses, that can mean delays in payroll, difficulty securing loans, or fewer banking partners willing to take on perceived risk.
There is a better path forward. Rather than creating a new, expansive litigation framework at the state level, South Carolina can take a more targeted and effective approach by addressing the underlying drivers of this issue at the federal level, where banking policy has historically been shaped. A formal resolution urging Congress to ensure decisions are grounded in objective financial criteria would be a more effective and durable solution.
Recent federal activity has already begun to move in this direction, with the Trump Administration and Congress taking steps to promote fair access to banking services while maintaining necessary safeguards. Aligning with those efforts allows South Carolina to lead constructively without creating conflicting requirements that put local institutions at a disadvantage.
South Carolinians are right to expect fair access to financial services. However, achieving that goal requires regulatory clarity and stability. H. 5538, as written, creates overlapping enforcement mechanisms that will increase uncertainty and may ultimately reduce the availability of banking services across the state. Policies that increase legal uncertainty do not expand access—they restrict it.
For these reasons, I respectfully urge you to oppose the bill in its current form and instead pursue an approach that addresses the root of the issue without destabilizing South Carolina’s financial system.
Thank you for your time and consideration.
Sincerely,
Jessica Ward
Senior Director of State Affairs
National Taxpayers Union
jward@ntu.org