Federal Reserve Board – Agencies remove additional references to reputation risk

The federal bank regulatory agencies today jointly updated certain interagency documents to remove references to reputation risk.

The agencies are taking this action to complement their earlier actions that ended the use of reputation risk in supervision. As the agencies have previously noted, reputation risk can be misused by supervisors as a basis to encourage or pressure a bank to restrict individuals’ and legal businesses’ access to financial services due to their constitutionally protected political or religious beliefs, speech, or conduct or lawful business activities. These updates help ensure supervisory decisions are based on material financial risks, as well as increase clarity and facilitate greater precision in supervisory decision making. The updates to interagency documents are limited to removing references to reputation risk.

The agencies continue to review their supervisory materials and may update additional documents as appropriate.