NCUA Removes Reputation Risk from Banking Guidance

NCUA Letters to Credit Unions

Published September 25th, 2025

Detected March 13th, 2026

Summary

The National Credit Union Administration (NCUA) has removed reputation risk from its examination and supervisory guidance, effective September 25, 2025, in accordance with Executive Order 14331. This change directs NCUA employees to no longer base supervisory concerns on reputation risk when examining federally insured credit unions.

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What changed

The National Credit Union Administration (NCUA) has issued guidance removing the concept of "reputation risk" and equivalent terms from its examination and supervisory processes for federally insured credit unions. This action is a direct response to President Biden's Executive Order 14331, "Guaranteeing Fair Banking for All Americans," which mandates federal banking regulators to eliminate such concepts from their guidance and examination materials to prevent politicized or unlawful debanking. Effective September 25, 2025, NCUA employees are prohibited from using reputation risk as a basis for supervisory concerns or discussions during examinations.

While reputation risk is being removed, the NCUA will continue to review critical areas historically associated with it, such as financial liability from litigation and insider abuse, as necessary. Credit unions and Credit Union Service Organizations should be aware that NCUA is actively updating its internal manuals and training materials. Until these updates are complete, this letter serves as superseding guidance. Regulated entities should ensure their internal compliance frameworks reflect this removal of reputation risk as a supervisory concern, though core risk areas will still be assessed.

What to do next

Review internal policies and procedures to remove references to reputation risk.
Ensure examination staff are aware of the NCUA's updated stance on reputation risk.
Continue to monitor financial liability and insider abuse as part of risk assessments.

Source document (simplified)

Elimination of Reputation Risk

25-CU-05 / September 2025 Elimination of Reputation Risk To Federally Insured Credit Unions Subject Examination Program Status Active To Federally Insured Credit Unions Subj Elimination of Reputation Risk Dear Boards of Directors and Chief Executive Officers:

On August 7, 2025, the President issued Executive Order (EO) 14331, Guaranteeing Fair Banking for All Americans. EO 14331 states that “each appropriate Federal banking regulator shall, to the greatest extent permitted by law, remove the use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking … from their guidance documents, manuals, and other materials … used to regulate or examine financial institutions over which they have jurisdiction. The removal of such concepts shall be made clear by each appropriate Federal banking regulator through formal guidance to their examiners.”

Consistent with EO 14331, the NCUA has ceased using reputation risk and equivalent concepts in the examination and supervisory process. Effective September 25, 2025, NCUA employees will no longer base supervisory concerns on reputation risk, nor will they refer to or engage in discussions about reputation risk as a part of examinations and supervision contacts of a credit union or Credit Union Service Organization. 1 The NCUA has instructed examiners accordingly.

NCUA will continue to include key review areas historically classified under reputation risk, like financial liability associated with active litigation and insider abuse, as part of an examination as necessary. NCUA is currently reviewing and updating regulations, manuals, guidance, and training materials to remove references to reputation risk. Until these changes are made, this letter supersedes any prior direction or requirements related to reputation risk.

If you have questions, please contact your regional office.

Sincerely,

/s/

Kyle Hauptman
Chairman

1 The NCUA Examiner’s Guide provides information on risk categories such as reputation risk. Letter to Credit Unions 22-CU-05 CAMELS Rating System provides additional background on how the reputation risk category was historically used by NCUA.

Last modified on

09/26/25