The Office of the Comptroller of the Currency (OCC) announced that it will no longer examine its regulated institutions for “reputation risk” and is removing references to reputation risk from its Comptroller’s Handbook booklets and guidance issuances.
These actions reportedly aim to support the OCC’s mission and its supervisory objectives to ensure that banking institutions have “appropriate and strong risk management processes for their business activities, treat customers fairly, and comply with applicable laws and regulations.”
Acting Comptroller of the Currency Rodney E. Hood said:
“The OCC’s examination process has always been rooted in ensuring appropriate risk management processes for bank activities, not casting judgment on how a particular activity may fare with public opinion. The OCC has never used reputation risk as a catch-all justification for supervisory action. Focusing future examination activities 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.”
As clarified in the update, the removal of references to reputation risk from OCC handbooks and guidance issuances does “not alter the OCC’s expectation that banks remain diligent and adhere to prudent risk management practices across all other risk areas.”
The OCC expects to complete its efforts “to update its public documents in the coming weeks.”
As covered recently, the OCC took action in order to affirm that a range os cryptocurrency activities are permissible in the federal banking system.
The previous administration had sought to deter regulated banks to participate in crypto affiliated activities.
The OCC published Interpretive Letter 1183 in order to confirm that crypto-asset custody, certain stablecoin activities, and “participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations.”
The letter also rescinds the requirement for OCC-supervised institutions to receive “supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.”
Acting Comptroller of the Currency Rodney E. Hood said:
“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones. Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology. I will continue to work diligently to ensure regulations are effective and not excessive, while maintaining a strong federal banking system.”