Senate Committee Takes Aim at 'Reputational Risk' to Stop Debanking Practices

Federal agencies that oversee banks have begun eliminating "reputational risk" as a basis for supervisory criticism following a vote last week of the Senate Banking Committee.

Removing reputational risk, defined by the Federal Reserve as 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, has drawn bipartisan support as both sides work to end the practice of debanking.