Public Comment Submitted by the Christian Employers Alliance (CEA)
The Christian Employers Alliance (CEA) respectfully submits this comment in strong support of the Board of Governors of the Federal Reserve System’s proposed rule to remove “reputation risk” from its supervisory framework and to prohibit its use as a basis for denying or conditioning access to financial services.
CEA is a national association representing faith-driven businesses and organizations committed to operating in accordance with deeply held religious convictions. Our members span industries and states, employing thousands of Americans and contributing meaningfully to their communities and the broader economy. Access to fair and nondiscriminatory financial services is essential for these organizations to function, grow, and serve.
1. The Problem with “Reputation Risk” as a Supervisory Tool
The concept of “reputation risk,” as historically applied, is inherently subjective, undefined, and vulnerable to ideological bias. Unlike traditional safety and soundness metrics such as credit risk, liquidity risk, or operational risk, “reputation risk” lacks objective standards and measurable criteria. This ambiguity has allowed it, in practice, to become a vehicle for viewpoint discrimination.
CEA members and similarly situated organizations have faced increasing concern that lawful, constitutionally protected activities — particularly those rooted in religious belief or moral conviction — may be labeled as “controversial” or “high risk” from a reputational standpoint. This creates a chilling effect, not only on business operations but on the free exercise of religion and free speech.
2. Protection of Constitutional Freedoms
The proposed rule appropriately recognizes that financial regulators must not play a role in suppressing or indirectly penalizing constitutionally protected beliefs, associations, or speech.
CEA strongly affirms that:
- Religious belief and expression must not be treated as risk factors in financial supervision.
- Lawful business activities, even if politically disfavored, must not be penalized through regulatory pressure.
- Financial institutions should make decisions based on objective financial criteria, not ideological alignment.
3. Ensuring Regulatory Neutrality and Market Integrity
The proposed rule promotes regulatory neutrality by refocusing supervisory efforts on legitimate financial risks. This strengthens, rather than weakens, the integrity of the financial system. When regulators adhere to clear, objective standards, they foster consistency, predictability, and trust.
4. Recommendations for Implementation
CEA supports the proposal and offers the following recommendations to ensure its effective implementation:
- Clear Guidance: The Board should provide explicit supervisory guidance clarifying that examiners may not consider political, religious, or ideological factors in evaluating risk.
- Training and Oversight: Supervisory personnel should receive training to ensure consistent application of the rule.
- Transparency and Accountability: Mechanisms should be established for reporting and addressing instances where banking services are denied based on impermissible factors.
- Coordination Across Agencies: The Board should work with other federal banking regulators to promote uniform adoption of these principles.
5. Conclusion
The proposed rule is a critical step toward protecting constitutional freedoms, ensuring fair access to financial services, and restoring objectivity in bank supervision. By removing “reputation risk” as a supervisory factor, the Board affirms that regulatory authority must not be used — directly or indirectly — to marginalize lawful beliefs or activities.
The Christian Employers Alliance strongly supports this rulemaking and urges its prompt adoption.
Respectfully submitted,
Margaret Iuculano, President Christian Employers Alliance (CEA)
Media inquiries: media@christianemployersalliance.org