FDIC, OCC Final Rule Bars Reputational Risk Criticism

April 16, 2026

FDIC, OCC adopt debanking final rule

Richard Andreano Jr., Scott Coleman, John Culhane Jr. Ballard Spahr LLP + Follow Contact LinkedIn Facebook X ;) Embed

The FDIC and the OCC have adopted a joint final rule that will prohibit the agencies from criticizing or taking adverse action against a financial institution based on reputation risk.  The rule is effective June 6.

The rule will 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,” according to a statement from the agencies.

The rule forbids the agencies from “taking any supervisory action or other adverse action against an institution, a group of institutions, or the institution-affiliated parties of any institution that is designed to punish or discourage an individual or group from engaging in any lawful political, social, cultural, or religious activities, constitutionally protected speech, or, for political reasons, lawful business activities that the agencies or its personnel disagree with or disfavor,” according to a summary of the rule.

“While a bank’s reputation is critically important, and many financial institutions over the years have failed due to a loss of confidence, supervisory focus on ‘reputation risk’ outside of traditional risk channels (such as credit risk or market risk) adds little value to promoting safety and soundness,” FDIC Chairman Travis Hill said. “On the other hand, an explicit or implicit focus on ’reputation risk’ untethered from other risk channels can pressure banks into debanking law-abiding customers who are viewed unfavorably by supervisors.”

Comptroller of the Currency Jonathan V. Gould agreed that reputation risk is not a sound basis for supervision. “Regulators and banks have too often used it as a pretext for decisions that have nothing to do with safety and soundness, financial risk, or even BSA/AML compliance,” he said. “The result, in too many cases, has been lawful businesses and individuals denied access to banking services. Supervisory action should be grounded in less subjective measures.”

The actions follow an Executive Order that President Trump signed on August 7. That order, “Guaranteeing Fair Banking for All Americans,” prohibits financial institutions of any size from denying services to individuals or businesses based on political or religious prohibits financial institutions of any size from denying services to individuals or businesses based on political or religious beliefs, orientation, or lawful industry involvement.”

The Executive Order directed banking agencies to adopt policies to ensure that financial institutions do not use reputational risk as a basis for restricting access to banking services.

Several financial regulators have taken action to delete reputational risk from their policies. The Federal Reserve Board announced last year that it would eliminate reputational risk as a component of examination programs in its supervision of banks.  It has subsequently requested comments on a proposed rule that would codify the removal of reputational risk from all of its supervisory programs.

The NCUA has also issued a Notice of Proposed Rulemaking (NPRM) to codify the elimination of reputational risk from its supervisory program, becoming the latest federal financial regulator to do so.

In March 2025 the OCC began removing references to reputation risk from its handbooks and guidance documents. The agency said at the time that it also was developing a rule that will delete reputational risk references from its regulations. It has now done so, along with the FDIC.

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