Agencies remove additional references to reputation risk

Three federal bank regulatory agencies have removed references to 'reputation risk' from interagency documents, a move intended to prevent the misuse of supervisory power [1]. The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced the joint update on June 2, 2026 [1]. This action complements earlier steps to end the use of reputation risk in bank supervision [1]. The agencies stated that the subjective concept of reputation risk had been misused to pressure banks into denying services to individuals and businesses based on protected characteristics or lawful activities [1]. The Federal Reserve, created in 1913, is structured to be "independent within the government" [10] and its board members serve staggered 14-year terms [8]. Reputation is defined as an opinion about a social entity developed through social evaluation, acting as a fundamental instrument of social order [2]. The agencies aim to base supervisory decisions solely on material financial risks, increasing clarity and precision [1]. The changes are currently limited to removing the term from specific interagency documents, though a review of other supervisory materials is ongoing [1]. The Federal Reserve's broader duties include regulating banks and maintaining financial system stability [9].