The Federal Reserve Board requested comment on a proposal to codify its removal of “reputation risk” from the supervision of banks and to reinforce a policy against using supervisory pressure to penalize or prohibit banks from serving customers engaged in lawful activity. The proposal builds on the Board’s June announcement that reputation risk would no longer be a component of examination programs, and is intended to anchor supervisory decisions in material financial risks while improving clarity and precision in supervision. In explaining the proposal, Vice Chair for Supervision Michelle W. Bowman pointed to cases of “debanking” tied to customers’ political views, religious beliefs, or involvement in disfavored but lawful businesses, and emphasized that discrimination on these bases is unlawful and outside the Federal Reserve’s supervisory framework. The Board also noted that the change does not alter expectations for strong bank risk management to support safety and soundness and compliance with laws and regulations. Comments are due within 60 days after publication in the Federal Register.
Federal Reserve Board 2026-02-23
Federal Reserve Board seeks comment on codifying removal of reputation risk from bank supervision
The Federal Reserve Board proposed removing "reputation risk" from bank supervision and reinforcing a policy against penalizing banks for serving lawful customers. This aims to focus on material financial risks and improve clarity, emphasizing that discrimination based on political views, religious beliefs, or lawful business activities is unlawful. The change does not affect expectations for robust bank risk management and compliance with laws.