Federal Reserve to Eliminate Reputation Risk in Bank Exams (1)

The Federal Reserve said Monday it will no longer consider reputation risk as part of its bank exams, following calls from some bank groups and Republican lawmakers to end a practice critics have viewed as unfair.

The central bank said that it has started the process of reviewing references to reputation risk in its supervisory materials and replacing them, when appropriate, with more specific discussions of financial risk.

“This change does not alter the Board’s expectation that banks maintain strong risk management to ensure safety and soundness,” the Fed said in a statement.

Fed Chair Jerome Powell in February pledged ...