Federal Reserve governors unanimously vote to remove asset cap on Wells Fargo addressing reputational risks.

By Pete Schroeder WASHINGTON (Reuters) -The Federal Reserve announced on Monday it was directing its supervisors to no longer consider "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. Banks had complained that policing that sort of risk can lead to examiners dinging banks for matters that may be legal and not financially risky, and can lead to subjective judgments by supervisors on what bank activities are suitable. The Fed clarified in its statement that it still expects banks to have robust risk management. It also said the announcement does not preclude banks from considering reputational risk themselves when making decisions.

The bill would strike "reputational risk" from the toolkit of U.S. regulators considering vulnerabilities at financial institutions.