Fed officially nixes reputation risk from exam practices

The Federal Reserve has officially started scrubbing “reputational risk” from its supervisory policies and practices. 

The central bank announced Monday that it is removing all mentions of reputation and reputational risk from its exam manuals and supervisory materials. In some cases, the agency is replacing those references with discussions of specific financial risks.

To ensure these changes go into effect evenly across the bank holding companies and state member banks they supervise, the Federal Reserve Board will retrain examiners on how to operate under the revised standards. 

The Fed’s move follows similar moves by the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, both of which began removing reputational risk considerations in March. In…