The Office of the Comptroller of the Currency today announced it will no longer examine banks for reputational risk and will remove references to such risk from its Comptroller’s Handbook booklets and guidance.
Some lawmakers have accused regulators of using reputational risk to pressure banks into denying services to certain customers, particularly digital asset customers. Senate Banking Committee Chairman Tim Scott (R-S.C.) has introduced legislation to prevent federal banking regulators from using reputational risk as a component in supervision. The American Bankers Association supports the bill.
In a statement, the OCC said the removal of reputational risk will advance its mission to ensure banks treat customers fairly and comply with applicable laws and regulations.
“The OCC’s examination process has always been rooted in ensuring appropriate risk management processes for bank activities, not casting judgment on how a particular activity may fare with public opinion,” Acting Comptroller of the Currency Rodney Hood said. “The OCC has never used reputation risk as a catch-all justification for supervisory action. Focusing future examination activities on more transparent risk areas improves public confidence in the OCC’s supervisory process and makes clear that the OCC has not and does not make business decisions for banks.”
The agency said its decision “does not alter the OCC’s expectation that banks remain diligent and adhere to prudent risk management practices across all other risk areas.”
In a statement, ABA President and CEO Rob Nichols said the OCC announcement helps make it clear that regulators should not be making business decisions for banks.
“This is an important step that will increase transparency and certainty in the supervisory process while ensuring banks have the flexibility they need to serve their customers, clients and communities,” Nichols said. “We look forward to working with the OCC and other stakeholders on these issues going forward.”
