Vol. XLIII, No. 10

Vol. XLIII, No. 10
June 26, 2026

Prohibition on the Use of Reputation Risk by Regulators

I. Introduction
​The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have adopted a final rule to codify the elimination of reputational risk from their supervisory programs. The rule prohibits the agencies from criticizing or taking adverse action against an institution on the basis of reputational risk. The rule also prohibits the agencies from requiring, instructing, or encouraging an institution to close an account, to refrain from providing an account, product, or service, or to modify or terminate any product or service on the basis of a person or entity's political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk. The rule further forbids the agencies from taking any supervisory action or other adverse action against an institution, a group of institutions, or the institution-affiliated parties of any institution that is designed to punish or discourage an individual or group from engaging in any lawful political, social, cultural, or religious activities, connotationally protected speech, or, for political reasons, lawful business activities that the agencies or its personnel disagree with or disfavor.

For the purposes of the final rule, adverse action means:

1. Any negative feedback delivered by or on behalf of the OCC or FDIC to the supervised institution, including in a report of examination or a formal or informal enforcement action;
2. A downgrade, or contribution to a downgrade, of any supervisory rating, including, but not limited to:
   a. Any rating under the Uniform Financial Institutions Rating System (or any comparable rating system);
   b. Any rating under the Uniform Interagency Consumer Compliance Rating System;
   c. Any rating under the Uniform Rating System for Information Technology; and
   d. Any rating under any other rating system;
   
3. A denial of a licensing application;
4. Inclusion of a condition on any licensing application or other approval;
5. Imposition of additional approval requiements;
6. Any other heightened requirements on an activity or change;
7. Any adjustment of the institution's capital requirement; and
8. Any action that negatively impacts the institution, or an institution-affiliated party, or treats the institution differently than similarly situated peers.

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The foregoing Compliance Update is for informational purposes only and does not constitute legal advice. As a reminder, the NBA general counsel is the attorney for the Nebraska Bankers Association, not its member banks. The general counsel is available to assist members with finding resources to help answer their questions. However, for specific legal advice about specific situations, members must consult and retain their own attorney.