On September 25, the NCUA announced that reputation risk would no longer factor into its examinations and supervisory process, effective immediately. The announcement came in response to President Trump’s Executive Order 14331, Guaranteeing Fair Banking for All Americans (previously covered by InfoBytes here), which instructed federal banking regulators to, in part, remove reputation risk from all agency considerations and decisions. Consequently, the NCUA, as of September 25, will no longer base supervisory concerns on reputation risk and has ceased any discussion or consideration of reputation risk in its examinations and supervisory process of a credit union or a credit union service organization.

The NCUA also noted it would continue to review areas “historically classified under reputation risk,” including litigation exposure and insider abuse during examinations, even as references to reputation risk are removed. The agency stated it was updating its regulations and guidance to reflect this change and confirmed that the new policy would supersede prior instructions until those updates are finalized.