FDIC and OCC issue final rule removing 'reputation risk' from supervision

The FDIC and OCC have issued a final rule removing reputation risk from bank supervision, completing a year-long rollback of the concept from regulatory practice.

In an April 7 filing, the FDIC said the agencies jointly issued the rule and that it prohibits examiners from criticizing or taking adverse action against a supervised institution based on reputation risk. The agency also said related references were removed from several FDIC manuals and documents.

The OCC had already begun stripping reputation-risk language from its guidance in March 2025 and later proposed the rule that is now final. The agencies’ action turns that earlier guidance and policy change into binding rule text.

FDIC Chairman Travis Hill said the final rule codifies the removal of reputation risk from the FDIC’s supervisory program and thanked staff for their work on the rulemaking.

The change matters because reputation risk had been a recurring point of tension between banks and supervisors. The new rule narrows the grounds on which regulators can challenge institutions, at least in the areas covered by the final text.

The next step is publication in the Federal Register, which will set the rule’s formal regulatory record.

The move is the latest in a broader shift by bank regulators toward tighter definitions of what examiners can and cannot use when assessing supervised firms.