A final rule to eliminate the use of reputation risk from programs for bank supervision was issued jointly Tuesday by two federal prudential banking regulators.
The Federal Deposit Insurance Corp. (FDIC) – which approved the rule during its open board meeting Tuesday – and Office of the Comptroller of the Currency (OCC) defines “reputation risk” and prohibits the agencies from criticizing or taking adverse action against an institution on the basis of reputation risk, the agencies said. The agencies also said the rule addresses Executive Order 14331, Guaranteeing Fair Banking for All Americans, a presidential executive order which targets so-called unlawful “debanking.”
In their joint release, the FDIC and OCC said they are prohibited under their final rule “from requiring, instructing, or encouraging an institution to close customer accounts or take other actions on the basis of a person or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk.’
The National Credit Union Administration (NCUA) Board issued a similar proposal in October.
Agencies Issue Final Rule to Prohibit Use of Reputation Risk by Regulators
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