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Fed to no longer police 'reputational risk' in banks

BY Reuters | ECONOMIC | 06/23/25 02:00 PM EDT

WASHINGTON, June 23 (Reuters) - The Federal Reserve announced on Monday it was directing its supervisors to no longer consider so-called "reputational risk" when examining banks, scrapping a metric that had been a focus of industry complaints.

The Fed said in a statement it was removing references to that risk in its supervisory manuals and other documents, and directing examiners to focus on specific financial risks. The Fed had defined reputational risk as the potential for negative publicity to hurt a bank's business or lead to costly litigation. (Reporting by Pete Schroeder; Editing by Chris Reese)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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