Final Rule Prohibits Regulators from Using Reputation Risk in Bank Supervision
Summary
The Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation jointly issued a final rule codifying the elimination of reputation risk from their supervisory programs. The rule defines reputation risk and explicitly prohibits the agencies from criticizing, taking adverse action, or instructing banks to close customer accounts based on a person's political, social, cultural, religious views, constitutionally protected speech, or lawful business activities perceived as reputational risk.
What changed
The OCC and FDIC jointly issued a final rule defining 'reputation risk' and prohibiting these agencies from using it as a basis for supervisory criticism, adverse action, or requiring banks to close customer accounts. The rule specifically bans regulators from instructing financial institutions to take actions based on a person's or entity's political, social, cultural, religious views, constitutionally protected speech, or lawful business activities perceived as reputation risk.\n\nThis rule significantly impacts how federal bank regulators supervise institutions, particularly regarding politically sensitive customers or lawful but disfavored business activities. Banks should review their internal policies and account management practices to ensure compliance with the new supervisory framework, as regulators can no longer pressure institutions to terminate relationships based on reputational concerns.
What to do next
- Review internal policies for any practices that may have relied on reputational risk considerations
- Ensure no customer account closures based on political, religious, or social views
- Update compliance frameworks to align with the new supervisory standards
Source document (simplified)
News Release 2026-26 | April 7, 2026
Agencies Issue Final Rule to Prohibit Use of Reputation Risk by Regulators
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Joint Release
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
WASHINGTON–The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (the agencies) today jointly issued a final rule that codifies the elimination of reputation risk from their supervisory programs.
The rule defines “reputation risk” and prohibits the agencies from criticizing or taking adverse action against an institution on the basis of reputation risk. The rule also prohibits 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.
This rule also responds to concerns expressed in Executive Order 14331, Guaranteeing Fair Banking for All Americans, that the use of reputation risk can be a pretext for restricting law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities.
Related Link
- Federal Register (PDF)
Media Contacts
FDIC
Brian Sullivan
(202) 412-1436
OCC
Stephanie Collins
(202) 649-6870
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