FDIC and OCC Advance Rules to Narrow Supervision Regarding Material Financial Risks and Reputation Risk

US Banking Regulators Propose to Refocus Supervision on Material Risks and Eliminate Use of Reputation Risk

The proposals align with Trump administration policy by emphasizing supervision of material and quantifiable financial risks. By Betty M. Huber, Arthur S. Long, Parag Patel, Pia Naib, Austin J. Pierce, and Deric Behar On October 7, 2025, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) issued two joint Notices of Proposed Rulemaking (collectively, the Proposals)…

FDIC and OCC Advance Rules to Narrow Supervision Regarding Material Financial Risks and Reputation Risk

The FDIC and OCC recently released joint notices of proposed rulemaking setting forth two rules to focus supervision on material financial risks, and codify the elimination of reputation risk from supervisory standards. The first rule would define the previously undefined term, “unsafe or unsound practice,” to promote greater clarity regarding certain enforcement and supervision standards and to ensure bank supervisors prioritize concerns relate…