Last week, the NCUA announced it would no longer consider reputational risk as a factor in the examination and supervisory process. This decision comes following months of advocacy work from America’s Credit Unions, who wrote to the agency back in June, urging the organization to consider this step.
Additionally, this removal was seconded in the Executive Order 14331 of August 7, 2025, titled “Guaranteeing Fair Banking for All Americans.” It required that “each appropriate Federal banking regulator shall, to the greatest extent permitted by law, remove the use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking, as well as any other considerations that could be used to engage in such debanking, from their guidance documents, manuals, and other materials (other than existing regulations or other materials requiring notice-and-comment rulemaking) used to regulate or examine financial institutions over which they have jurisdiction.”
In response to the announcement, Jim Nussle, President and CEO of America’s Credit Unions, issued a statement thanking the NCUA for the move.
“America’s Credit Unions appreciates the NCUA heeding our call to eliminate reputational risk as a component of its exams and supervision. As we previously shared, this component invited subjective interpretations and raised concerns about potential abuse,” said Nussle. “Credit union exams must focus on actual and measurable risks to financial condition. We thank Chairman Hauptman for listening to the industry and addressing this issue. We will continue to work with the agency to ensure exams remain focused on the safety and soundness of credit unions.”
In a letter to credit unions, NCUA Chairman Kyle Hauptman confirmed that the change would take effect on September 25th of this year, but that post that date, the organization would “continue to include key review areas historically classified under reputation risk, like financial liability associated with active litigation and insider abuse, as part of an examination as necessary. NCUA is currently reviewing and updating regulations, manuals, guidance, and training materials to remove references to reputation risk. Until these changes are made, this letter supersedes any prior direction or requirements related to reputation risk.”
The Federal regulators were given 180 days from the date the Executive Order was issued to do so, meaning the NCUA officially has until February 3rd, 2026, to complete this change.
