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Fed ends use of 'reputational risk' in exams and signals warmer tone on bank crypto engagement
Summary
The Federal Reserve, at Vice Chair Mickey Bowman's leadership, has moved to remove 'reputational risk' as a component of bank examinations. Chairman Powell told the House committee the change addresses concerns about politicized supervisory pressure that deterred banks from serving certain customers and that the Fed is open to banks providing
Lawmakers and Fed officials announced a change in supervisory practice: the Federal Reserve has removed "reputational risk" as an exam factor and is narrowing prior guidance that discouraged bank involvement in crypto-related activities.
Representative Stile (chair of the subcommittee on digital assets, financial technology, and artificial intelligence) described reputational risk as a catch-all that had the effect of politicizing exams and discouraging banks from serving lawful customers and…
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