The move follows the US Office of the Comptroller of the Currency ceasing examinations for reputational risk.
The US Federal Deposit Insurance Corporation, an independent agency of the federal government, is reportedly moving to stop using the “reputational risk” category as a way to supervise banks.
According to a letter sent by the agency’s acting chairman, Travis Hill, to Rep. Dan Meuser on March 24, banking regulators should not use “reputational risk” to scrutinize firms.
“While a bank’s reputation is critically important, most activities that could threaten a bank’s reputation do so through traditional risk channels (e.g., credit risk, market risk, etc.) that supervisors already focus on,” notes the letter, first reported by Politico.
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