The federal credit union regulator said it is no longer using reputation risk “and equivalent concepts” in its examination and supervisory process.
The action by the National Credit Union Administration (NCUA), announced Thursday, follows similar steps taken by federal banking regulators and is in accordance with a Trump administration executive order in August that targets “politicized or unlawful debanking activities.”
While NCUA employees will no longer focus on reputation risk in supervising and examining credit unions, the agency said it will “continue to include key review areas historically classified under reputation risk, like financial liability associated with active litigation and insider abuse, as part of an examination as necessary.”
The agency issued Letter to Credit Unions 25-CU-05 to communicate this change to credit unions. It said the letter supersedes any prior direction on reputation risk on other NCUA manuals or guidance as updates to those and other materials are made to remove references to reputation risk.
NCUA Eliminates Use of Reputational Risk
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