The FDIC, Federal Reserve and Office of the Comptroller of the Currency said today they have jointly updated several interagency documents to remove reference to reputational risk as part of a broader push to prevent alleged debanking.
President Trump last year issued an executive order directing federal agencies to rescind rules and regulations that caused financial institutions to deny services to categories of customers, particularly rules related to reputational risk. Since then, regulators have taken several steps to comply with the order, with the banking agencies having previously removed the use of reputational risk from their bank examinations.
In a financial institution letter, the FDIC said the use of reputational risk in interagency documents “could be misused as a basis 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.
“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,” the agency added.
