Fed is Seeking Feedback on Proposal to Remove Reputation Risk from Banking
The Federal Reserve is seeking public feedback on a proposal to legally remove "reputation risk" from banking supervision, addressing concerns over politically motivated debanking.Summary
The US Federal Reserve announced it is seeking 60 days of public feedback on a proposal to formalize a rule that eliminates "reputation risk" as a basis for banking supervision. This move follows earlier directives in June to stop pressuring banks to terminate client accounts based on reputation risk, insisting decisions should only stem from financial risk management. Vice Chair for Supervision Michelle Bowman stated that supervisors using reputation risk concerns to pressure institutions based on political views, religious beliefs, or involvement in lawful but disfavored businesses is unlawful discrimination. Industry figures, including Senator Cynthia Lummis, praised the action, viewing it as putting "Operation Chokepoint 2.0" to rest. Operation Chokepoint 2.0 is a term used by the crypto industry to describe an alleged coordinated effort by the government and banks to cut off crypto firms from traditional banking services.
(Source：Cointelegraph)