Press Release: Agencies Remove Additional References to Reputation Risk

Removing the concept of reputation risk from supervisory materials is an operational directive, not an enforcement action. The governance failure lies upstream: examiners who pressured banks to terminate lawful customers based on reputational concerns were making discretionary decisions without producing contemporaneous records of the owner, the material-risk rationale, or the escalation path. Those missing decision artifacts—supervisor override logs, risk-assessment memos, approval chains—are what turned subjective judgment into unaccountable pressure. The policy reversal is welcome, but it leaves unaddressed the structural absence of decision records that would have made the original practice auditable and limited its misuse.