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Comment Period: Prohibition on Use of Reputation Risk by Regulators

AGENCY:

Office of the Comptroller of the Currency, Treasury, and Federal Deposit Insurance Corporation.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The agencies believe that banking regulators’ use of the concept of reputation risk as a basis for supervisory criticisms increases subjectivity in banking supervision without adding material value from a safety and soundness perspective. Although the agencies recognize the importance of a bank’s reputation, most activities that could negatively impact an institution’s reputation do so through traditional risk channels (e.g., credit risk, market risk, and operational risk, among others) on which supervisors already focus and already have sufficient authority to address. At the same time, supervising for reputation risk as a standalone risk adds substantial subjectivity to bank supervision and can be abused. It also diverts bank and agency resources from more salient risks without adding material value from a safety and soundness perspective. To improve the efficiency and effectiveness of their supervisory programs, the agencies have removed reputation risk from their supervisory frameworks and are proposing to codify this change in relevant regulations. The proposed rule would also prohibit the agencies 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 proposed rule would not impose requirements or obligations on supervised institutions.

DATES:

Comments must be received on or before December 29, 2025.

https://www.federalregister.gov/documents/2025/10/30/2025-19715/prohibition-on-use-of-reputation-risk-by-regulators

  • December 29, 2025
  • Time: All Day
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