Dear Boards of Directors and Chief Executive Officers:
On August 7, 2025, the President issued Executive Order (EO) 14331, Guaranteeing Fair Banking for All Americans. EO 14331 states 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 … from their guidance documents, manuals, and other materials … used to regulate or examine financial institutions over which they have jurisdiction. The removal of such concepts shall be made clear by each appropriate Federal banking regulator through formal guidance to their examiners.”
Consistent with EO 14331, the NCUA has ceased using reputation risk and equivalent concepts in the examination and supervisory process. Effective September 25, 2025, NCUA employees will no longer base supervisory concerns on reputation risk, nor will they refer to or engage in discussions about reputation risk as a part of examinations and supervision contacts of a credit union or Credit Union Service Organization. 1 The NCUA has instructed examiners accordingly.
NCUA will 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.
If you have questions, please contact your regional office.
Sincerely,
/s/
Kyle Hauptman
Chairman
Footnotes
1 The NCUA Examiner’s Guide provides information on risk categories such as reputation risk. Letter to Credit Unions 22-CU-05 CAMELS Rating System provides additional background on how the reputation risk category was historically used by NCUA.