The agencies said the changes align with earlier steps ending use of reputational risk in supervision and are intended to focus oversight on material financial risks.
U.S. federal bank regulatory agencies jointly updated certain interagency documents to remove references to reputational risk, extending earlier actions that ended the use of the concept in supervision. The agencies said reputational risk could be misused by supervisors to encourage or pressure banks to restrict access to financial services for individuals and lawful businesses based on constitutionally protected political or religious beliefs, speech, conduct, or lawful business activities. They said the revisions are intended to ensure supervisory decisions are based on material financial risks, while improving clarity and precision in oversight. The changes are limited to removing references to reputational risk, and the agencies said they will continue reviewing supervisory materials and may revise additional documents. The move is significant for sectors such as digital assets, where supervisory language can influence how banks assess relationships with businesses seen as complex or sensitive.