The U.S. Federal Reserve has initiated a 60-day public comment period to formalize the removal of “reputation risk” from its bank supervision framework, following a shift that began in June 2025. This move aims to refocus supervision on measurable threats tied directly to safety and soundness.

Vice Chair for Supervision Michelle Bowman stated that the change addresses concerns about the vague and subjective nature of reputation risk, which can lead to debanking.

Historically, reputation risk has been challenging to quantify compared to other financial risks. The Fed’s proposal aims to prevent examiners from using reputation risk as a supervisory tool and ensure concerns are framed through established lenses.

The Federal Reserve’s proposal aligns with actions by the FDIC and OCC to prohibit the use of reputation risk in supervision. The OCC’s efforts aim to shield lawful activities from adverse action based on political or religious views, constitutionally protected speech, or being politically disfavored.

The proposal’s 60-day public comment period will begin after publication in the Federal Register. The Fed may finalize, modify, or clarify the rule based on feedback. The impact on examiner behavior will depend on implementation, but it aims to reduce ambiguity in supervisory practices amid ongoing banking access debates.

Read more at Yahoo Finance: Fed Seeks Public Feedback on Proposal To Drop “Reputation Risk” From Bank Supervision