Federal Reserve Seeks to Codify the Removal of “Reputational Risk” from its Supervisory Framework

On February 23, 2026, the Federal Reserve Board issued a formal request for comment on a proposal to codify the removal of reputational risk from its bank examination programs. This follows the Board’s June 2025 announcement stating that reputational risk  will no longer be a component of examination programs for supervised banks.

Reputational risk, as outlined in the Commercial Bank Examination Manual, is the potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation or revenue reductions.  Federal Reserve Vice Chair for Supervision Michelle W. Bowman emphasized that the elimination of reputational risk from the Federal Reserve’s examination programs is a direct response to instances where supervisory pressure was reportedly used to target legal businesses based on political or religious affiliations. 

The deadline for submitting comments to the proposal is April 27, 2026.