Headlines
- Federal Reserve Joins OCC and FDIC in Eliminating Reputation Risk from Bank Exams
- FinCEN Grants Exemption Allowing Banks to Collect TIN Information from Third Parties
- OCC Rejects Request from State Regulators to Rescind Federal Preemption Regulations
- CFPB Announces New Extension of Compliance Deadlines for Small Business Lending Rule
- Other Developments: Payments Fraud and Supplementary Leverage Ratio
1. Federal Reserve Joins OCC and FDIC in Eliminating Reputation Risk from Bank Exams
The Federal Reserve has announced that the agency will no longer assess reputational risk when examining banks’ risk management processes. According to the June 23 announcement, the Federal Reserve has already begun reviewing its supervisory materials, including examination manuals, and removing references to reputation and reputational risk. For example, the Federal Reserve has updated its published guidance on rating the adequacy of risk management processes and internal controls, contained in Supervision and Regulation Letter SR 95-51 (SUP), to remove references to reputational risk. The Federal Reserve also plans to provide additional training to examiners to ensure that this supervisory policy change is implemented consistently across banks supervised by the agency. The Federal Reserve emphasized that this supervisory policy change is intended to impact whether and how Federal Reserve-supervised banks use the concept of reputational risk in their own risk management practices. Click for a copy of the announcement.
Nutter Notes: This move by the Federal Reserve aligns the agency with the FDIC and OCC, which announced earlier this year that they also would stop examining banks for reputational risk. The OCC began to remove references to national banks’ and federal savings associations’ reputation risk from the Comptroller’s Handbook and related published guidance in March. The FDIC is working on a proposed rule that would prohibit its examiners from criticizing or taking adverse action against banks on the basis of reputational risk. According to FDIC Acting Chairman Travis Hill, the proposed rule also would prohibit FDIC examiners from requiring, instructing, or encouraging banks to close, modify, or refrain from offering accounts on the basis of political, social, cultural, or religious views. The bank reputation risk supervisory policy changes follow a February 20, 2025, letter by several Congressional leaders, including Congressman Dan Meuser, Chairman of House Subcommittee on Oversight and Investigations, to Acting Chairman Hill expressing concern about debanking digital asset firms.
2. FinCEN Grants Exemption Allowing Banks to Collect TIN Information from Third Parties
The federal banking agencies along with the NCUA have coordinated with FinCEN to issue an order permitting banks to collect Tax Identification Number (TIN) information from a third party rather than directly from the bank’s customer. The order issued on June 27 grants an exemption from a TIN collection requirement under the FinCEN Customer Identification Program (CIP) Rule. The order permits banks to use an alternative collection method to obtain TIN information from a third party rather than from the customer, provided that the bank otherwise complies with the CIP Rule. The exemption is a result of a process FinCEN began last year soliciting public input on the potential risks and benefits, as well as safeguards that could be established, if banks were permitted to obtain part or all of a customer’s TIN information from a third-party source prior to opening an account rather than from the customer. Click to access the order permitting banks to use an alternative collection method to obtain TIN information.
Nutter Notes: The CIP Rule, which implements section 326 of the USA PATRIOT Act, requires a bank to adopt written procedures that enable the bank to obtain TIN information prior to opening an account, are based on the bank’s assessment of the relevant risks, and are risk-based for the purpose of verifying the identity of each customer to the extent reasonable and practicable, enabling the bank to form a reasonable belief that it knows the true identity of each customer. The use of the exemption by banks is optional, and they are not required to use an alternative collection method for TIN information. The decision to issue the exemption was supported in part by FinCEN’s experience with a provision in the CIP Rule that has permitted banks for over 20 years to obtain the identifying information required by the CIP Rule from a third-party source when a customer is opening a credit card account.
3. OCC Rejects Request from State Regulators to Rescind Federal Preemption Regulations
Acting Comptroller of the Currency Rodney Hood has released a letter reaffirming the OCC’s support and defense of federal preemption “as a cornerstone of the dual banking system that is fundamental to the operation of the federal banking system.” Acting Comptroller Hood’s June 9 correspondence responds to a May 8, 2025 letter submitted by the Conference of State Bank Supervisors (CSBS) requesting the OCC rescind its preemption regulations in consideration of two executive orders issued by President Trump: Executive Order 14219—Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, and Executive Order 14267—Reducing Anti-Competitive Regulatory Barriers. The CSBS argued that the OCC’s preemption regulations are unlawful, inconsistent with Supreme Court rulings, and contrary to the public interest. Click for a copy of Acting Comptroller Hood’s letter and the CSBS’s letter.
Nutter Notes: In his response to the CSBS’s request, Acting Comptroller Hood rejected the CSBS’s assertion that the OCC’s preemption regulations are inconsistent with the best reading of the Dodd–Frank Wall Street Reform and Consumer Protection (Dodd–Frank) Act and Supreme Court. Acting Comptroller Hood pointed out that the OCC reviewed its preemption regulations following the enactment of the Dodd–Frank Act. After considering relevant statutory language, legislative history, and precedential court rulings, the OCC concluded that the Dodd–Frank Act codified the conflict preemption standard in the 1996 U.S. Supreme Court’s decision in Barnett Bank of Marion County, N.A. v. Nelson. Acting Comptroller Hood also pointed out that the Supreme Court’s 2024 decision in Cantero v. Bank of America, N.A., which rejects arguments that the Dodd–Frank Act created a new preemption standard, notes that the Dodd–Frank Act adopted Barnett and that Barnett “was also the governing preemption standard before” the Dodd–Frank Act was enacted. The OCC applied the Barnett standard when it identified certain preempted and non-preempted state laws in its regulations in 2004 and when it reviewed the preemption regulations in 2011.
4. CFPB Announces New Extension of Compliance Deadlines for Small Business Lending Rule
The CFPB has announced that it will amend Regulation B, which implements the federal Equal Credit Opportunity Act, to extend the compliance dates set forth in the agency’s 2023 small business lending data collection rule. The extensions released on June 18 will give small business lenders, including banks, about one more year before they must report the demographics of small business borrowers, depending on a lender’s volume of covered originations. According to the CFPB, the extensions are being granted in consideration of “court orders in ongoing litigation.” Under the 2023 small business lending rule, banks and other lenders will be required to collect and report data on applications for credit for small businesses, including those that are owned by women or minorities. A covered origination generally includes any extension of credit under Regulation B to a small business according to the rule. Click for a copy of the notice of the extensions.
Nutter Notes: The CFPB issued its final rule amending Regulation B to implement Section 1071 of the Dodd-Frank Act on March 30, 2023. Compliance by the highest volume lenders—those that originated at least 2,500 covered originations annually—will now begin on July 1, 2026. Lenders in the next tier—those with volumes of at least 500 but less than 2,500 covered originations—will have had until June 1, 2028, to begin complying with the rule. Those with volumes of at least 100 but less than 500 covered originations also will have until June 1, 2028. The CFPB has not yet announced whether it will adjust the compliance dates following the outcome of the Supreme Court’s decision. Lower federal courts had previously granted injunctions delaying the implementation compliance dates for the small business lending rule until the Supreme Court decided on May 16, 2024, that the CFPB’s funding structure was constitutional. Industry groups continue to challenge the rule in court, and the Fifth Circuit Court of Appeals granted a stay in February that blocks the implementation of the rule for many lenders.
5. Other Developments: Payments Fraud and Supplementary Leverage Ratio
- Federal Banking Agencies Request Information About Preventing Payments Fraud
The federal banking agencies on June 16 have requested input from the public on potential actions that may help banks, consumers, and businesses mitigate risk of payments fraud, and check fraud in particular. For example, the agencies would like to know what potential changes to Federal Reserve Regulation CC, governing availability of funds and collection of checks, would support timely access to funds from check deposits while providing banks with sufficient time to identify suspected payments fraud. Comments will be due within 90 days after the request for information is published in the Federal Register, which is expected shortly.
Nutter Notes: According to the announcement, the federal banking agencies also are looking for opportunities to collaborate across state and federal agencies on this issue. Click for a copy of the information request.
- Federal Banking Agencies Considering Changes to Enhanced Supplementary Leverage Ratio Standards
The federal banking agencies on June 27 requested public comments on a proposal to modify the enhanced supplementary leverage ratio standards, which apply to the largest and most systemically important banking organizations in the United States. According to the agencies, the proposed modifications would help ensure that the enhanced supplementary leverage ratio standards will reduce potential disincentives for global systemically important bank holding companies (GSIBs) and their bank subsidiaries to participate in low-risk, low-return businesses. Comments on the proposal are due by August 26, 2025.
Nutter Notes: The proposal also would modify the enhanced supplementary leverage ratio standard for bank subsidiaries of GSIBs to have the same form as the GSIB parent-level standard. Click for a copy of the proposed rule.
