US Fed proposes removing 'reputation risk' from bank supervision standards

The U.S. Federal Reserve announced a proposed rule on Feb. 23 to remove 'reputation risk' from its bank supervision standards and has begun soliciting public comment. The Fed stated that financial institutions should not de-bank customers for reasons such as political views, religious beliefs, or their engagement in legal but disfavored businesses, adding that such discrimination is inconsistent with its supervisory framework. In response, Wyoming Senator Cynthia Lummis said on X that she hopes this marks the end of "Operation Choke Point 2.0," a measure aimed at pressuring the crypto industry by restricting its access to banking. She added that she hopes the U.S. can become a hub for digital assets and that the Fed should not act as both judge and jury over digital asset companies.