Overview
On March 20, 2025, the Office of the Comptroller of the Currency (OCC) announced that it will no longer examine financial institutions it supervises for reputational risk.1 The OCC will remove all references to reputational risk from the Comptroller's Handbook series, which provides guidance to OCC examiners, and all guidance issuances.2 In the accompanying news release, Acting Comptroller of the Currency Rodney E. Hood stated that OCC examinations are not rooted in "casting judgment on how a particular activity may fare with public opinion" and that "focusing future examination on more transparent risk areas improves public confidence in the OCC's supervisory process and makes clear that the OCC has not and does not make business decisions for banks."3
Previously, the Comptroller's Handbook on Corporate and Risk Governance listed reputational risk as one of the eight categories of risk for bank supervision, alongside credit, interest rate, liquidity, price, operational, compliance, and strategic risk.4 It was defined as "the risk to current or projected financial condition and resilience arising from negative opinion."5 OCC examiners were directed to review a financial institution's reputational risk across a number of factors, a number of factors, the quantity of risk, quality of risk management, aggregate level of risk, and direction of risk, during any examination of corporate and risk governance.6 After this action, OCC examiners will no longer take reputational risk into account when examining or supervising financial institutions.
This action comes as the Trump Administration and key allies on the Hill begin to debate and take measures against perceived "debanking." Two days prior to the OCC’s announcement, Acting Comptroller Hood spoke at the LIVE 2025 conference hosted by the Consumer Bankers Association on March 18, 2025, where he described debanking as "repugnant and odious" and stated that "fair access is something that he takes very seriously."7 In particular, he stressed his focus on ensuring fair access for digital assets customers.8 This is in line with an OCC interpretive letter issued earlier this month that made it easier for banks to engage in cryptocurrency activities.9 Steptoe previously published a blog post covering the OCC interpretive letter in more detail here.10
Earlier in March, the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs (Senate Banking Committee), Senator Tim Scott of North Carolina, introduced the Financial Integrity and Regulation Management Act (the Firm Act).11 The FIRM Act would prohibit federal banking agencies from considering reputational risk when examining and supervising a depository institution and remove any reference to reputational risk from any guidance, rule, examination document, or similar document established by a federal banking agency.12 These are likely only the beginning of the Trump administration's attacks on perceived debanking, especially against digital assets customers, and more legislative and regulatory action may follow on this front.
1 Office of the Comptroller of the Currency, News Release 2025-21, OCC Ceases Examinations for Reputational Risk (Mar. 20, 2025), https://www.occ.treas.gov/news-issuances/news-releases/2025/nr-occ-2025-21.html.
2 Office of the Comptroller of the Currency, OCC Bulletin 2025-4, Bank Supervision: Removing References to Reputation Risk (Mar. 20, 2025), https://www.occ.treas.gov/news-issuances/bulletins/2025/bulletin-2025-4.html.
3 Supra n.1.
4 Office of the Comptroller of the Currency, Comptroller’s Handbook: Corporate and Risk Governance, 3 (July 2019), https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/corporate-risk-governance/pub-ch-corporate-risk.pdf.
5 Id. at 4.
6 Id. at 89.
7 Jon Hill, OCC's Hood Says He Won't Tolerate 'Odious' Debanking, LAW360 (Mar. 18, 2025), https://www.law360.com/articles/2312476/occ-s-hood-says-he-won-t-tolerate-odious-debanking.
8 Id.
9 Office of the Comptroller of the Currency, Interpretive Letter 1183, OCC Letter Addressing Certain Crypto-Asset Activities (Mar. 7, 2025) https://occ.gov/news-issuances/news-releases/2025/nr-occ-2025-16.html.
10 OCC Smooths Path for Banks to Take Advantage of Crypto Technology, Steptoe LLP (Mar. 14, 2025), https://www.steptoe.com/en/news-publications/blockchain-blog/occ-smooths-path-for-banks-to-take-advantage-of-crypto-technology.html.
11 Scott Leads Effort to Combat Debanking, United States Senate Committee on Banking, Housing, and Urban Affairs (Mar. 6, 2025), https://www.banking.senate.gov/newsroom/majority/scott-leads-effort-to-combat-debanking.
12 Id.
