Fed removes "reputational risk" from its bank exam rules, allowing banks to work with crypto
The post Fed removes "reputational risk" from its bank exam rules, allowing banks to work with crypto appeared on BitcoinEthereumNews.com. The Federal Reserve has scrapped “reputational risk” from its bank examination criteria, a decision announced on Monday in Washington. Supervisors will no longer use this vague metric to judge financial institutions, ending a policy that banks say let regulators overstep by blocking legal but controversial services, especially anything involving crypto. Instead, the central bank says it wants examiners focused on clear-cut financial risks, like liquidity, credit exposure, and operational systems. The Fed’s official statement confirmed that all references to reputational risk will be deleted from its supervision manuals and guidance documents. That means banks will no longer be penalized based on how bad something looks, even if it’s legal and profitable. The change comes after years of complaints from banking executives, who argued that reputational reviews gave examiners room to kill deals based on personal bias or political pressure. Most of that criticism centered around crypto, where partnerships were often shut down simply because regulators didn’t like the optics. Supervisors drop metric as Trump pressures Powell over rates The Fed is now aligned with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, who already moved away from the reputational test earlier. The announcement clarified that banks are still expected to maintain strong internal controls, but can choose on their own whether public perception matters in specific business deals. In other words, the Fed is done babysitting them over headlines. This decision is happening at the same time the central bank is under heavy political pressure. President Donald Trump, back in the White House, is escalating his public attacks on the Federal Reserve and Chair Jerome Powell, calling him a “Total and Complete Moron” in a Friday post on social media. The insults followed a private Oval Office meeting last month between the two men.…
The post Fed removes "reputational risk" from its bank exam rules, allowing banks to work with crypto appeared on BitcoinEthereumNews.com.
The Federal Reserve has scrapped “reputational risk” from its bank examination criteria, a decision announced on Monday in Washington. Supervisors will no longer use this vague metric to judge financial institutions, ending a policy that banks say let regulators overstep by blocking legal but controversial services, especially anything involving crypto. Instead, the central bank says it wants examiners focused on clear-cut financial risks, like liquidity, credit exposure, and operational systems. The Fed’s official statement confirmed that all references to reputational risk will be deleted from its supervision manuals and guidance documents. That means banks will no longer be penalized based on how bad something looks, even if it’s legal and profitable. The change comes after years of complaints from banking executives, who argued that reputational reviews gave examiners room to kill deals based on personal bias or political pressure. Most of that criticism centered around crypto, where partnerships were often shut down simply because regulators didn’t like the optics. Supervisors drop metric as Trump pressures Powell over rates The Fed is now aligned with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, who already moved away from the reputational test earlier. The announcement clarified that banks are still expected to maintain strong internal controls, but can choose on their own whether public perception matters in specific business deals. In other words, the Fed is done babysitting them over headlines. This decision is happening at the same time the central bank is under heavy political pressure. President Donald Trump, back in the White House, is escalating his public attacks on the Federal Reserve and Chair Jerome Powell, calling him a “Total and Complete Moron” in a Friday post on social media. The insults followed a private Oval Office meeting last month between the two men.…
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