The Office of the Comptroller of the Currency (OCC) will no longer examine its regulated institutions for reputation risk and have removed references to reputation risk from its handbooks and guidance issuances.
The move supports its supervisory objectives to ensure that banks have appropriate and strong risk management processes for their business activities.
“The OCC’s examination process has always been rooted in ensuring appropriate risk management processes for bank activities, not casting judgment on how a particular activity may fare with public opinion,” Acting Comptroller of the Currency Rodney Hood said. “The OCC has never used reputation risk as a catch-all justification for supervisory action. Focusing future examination activities on more transparent risk areas improves public confidence in the OCC’s supervisory process and makes clear that the OCC has not and does not make business decisions for banks.”
The American Bankers Association supports the decision.
“We applaud the OCC’s announcement that it will cease examining banks for reputation risk, which helps make it clear that regulators should not be making business decisions for banks,” the association said. “This is an important step that will increase transparency and certainty in the supervisory process while ensuring banks have the flexibility they need to serve their customers, clients and communities.”