References to “reputation risk” have been expunged from interagency documents used by federal banking agencies, the agencies said in a release issued jointly Tuesday.
The agencies – Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC) – said this action complements 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,” they said in a joint statement. “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.”
They said the updates only remove references to reputation risk. And they may not be the last, as the agencies added they “continue to review their supervisory materials and may update additional documents as appropriate.”
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