WASHINGTON–NCUA has finalized its rule eliminating reputation risk from its supervisory framework, which takes effect July 27.
In its latest Final Rule Summary, America’s Credit Unions said it is offering an examination of the rule in detail. The rule prohibits the NCUA from criticizing or taking adverse actions against a federally insured credit union on the basis of reputation risk.
As America’s Credit Unions noted, the rule:
- Makes clear that supervisory decisions must be based on objective factors (e.g., law, safety, soundness, compliance, risk management) and not based on personal preferences (e.g., political, social, cultural, religious) of anyone working at the NCUA; and
- Adds the term “operational” to the definition of “reputation risk” to distinguish operational issues from reputation concerns so that operational concerns remain subject to supervision even though reputation risk itself is prohibited as a supervisory factor.
