Banks, Regulators and ‘Reputational Risk’

A new Trump rule would bar debanking for political reasons

WSJ editorial. Excerpts:

"Regulators are supposed to supervise banks for safety and soundness. That means their management of financial risks. But Congressional investigations dating to the Obama years have found cases of examiners jaw-boning banks to deny services to customers that allegedly pose a “reputational risk,” such as payday lenders, gun retailers and crypto."

"What is a reputational risk? Regulators have never clearly defined the term"

It has "proven nearly impossible to assess or quantify with accuracy"

"Banks say . . . they have felt pressure by regulators to close accounts tagged as reputational risks."