The Federal Reserve made a significant announcement on June 23rd, officially removing “reputation risk” from its bank examination process. This decision follows considerable pressure from Republican lawmakers and the Trump administration, who argued that the consideration of reputation risk led to politically motivated financial discrimination, often manifesting as “debanking.”

The central bank’s statement clarifies that ongoing revisions to supervisory materials are underway. References to reputation risk are being systematically removed and replaced with more precise assessments of concrete financial risks. This shift aims to streamline the examination process and focus on quantifiable factors rather than subjective reputational concerns.

The Fed’s June 23rd announcement initiated this review process, signaling a commitment to a clearer, more objective approach to bank supervision. The long-term implications of this change remain to be seen, but it represents a notable shift in the regulatory landscape surrounding banking practices in the United States.