The federal bank regulatory agencies, including the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve Board, today jointly updated interagency documents to eliminate references to "reputation risk." This action complements previous efforts to cease the use of reputation risk in bank supervision.
The agencies explained that reputation risk has been susceptible to misuse by supervisors, potentially leading to pressure on banks to restrict access to financial services for individuals and legal businesses based on their constitutionally protected political or religious beliefs, speech, conduct, or lawful activities.
These updates aim to ensure that supervisory decisions are grounded in material financial risks, thereby enhancing clarity and precision in the decision-making process. The agencies confirmed that these changes are specifically limited to removing reputation risk references, with ongoing reviews of supervisory materials for further updates.