Regulatory Alerts2026-02-23
Proposal to Prohibit the Use of Reputation Risk or Other Supervisory Tools to Encourage or Compel Banking Organizations to Engage in Politicized or Unlawful Discrimination
The Board of Governors of the Federal Reserve System proposes a binding regulation to codify the removal of reputation risk from its supervisory programs and explicitly prohibit supervised banking organizations from denying or conditioning financial products based on constitutionally protected political, religious, or speech-related factors. This rule ensures that supervisory decisions prioritize core financial risks over subjective reputational concerns, thereby increasing clarity and precision in examination processes. The Board invites public comment on the draft notice of proposed rulemaking while retaining authority to make technical adjustments prior to its publication in the Federal Register.
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