§ 791.22 Prohibitions.
(a) The NCUA will not criticize, formally or informally, or take adverse action against an institution on the basis of reputation risk.
(b) The NCUA will not require, instruct, or encourage an institution, or any employee of an institution, to:
(1) Refrain from contracting or doing business with a third party, including an institution-affiliated party, on the basis of reputation risk;
(2) Terminate a contract or discontinue doing business with a third party, including an institution-affiliated party, on the basis of reputation risk;
(3) Sign a contract or initiate doing business with a third party, including an institution-affiliated party, on the basis of reputation risk; or
(4) Modify the terms or conditions under which it contracts or does business with a third party, including an institution-affiliated party, on the basis of reputation risk.
(c) The NCUA will not require, instruct, or encourage an institution, or any employee of an institution, to terminate a contract with, discontinue doing business with, sign a contract with, initiate doing business with, modify the terms under which it will do business with a person or entity, or take any action or refrain from taking any action on the basis of the person's or entity's political, social, cultural, or religious views or beliefs, constitutionally protected speech, or on the basis of the person or entity's involvement in politically disfavored but lawful business activities based on reputation risk.
(d) The prohibitions in paragraphs (a) through (c) of this section apply only to actions taken on the bases described in paragraphs (a) through (c), and the prohibition in paragraph (c) shall not apply with respect to persons, entities, or jurisdictions sanctioned by the Office of Foreign Assets Control.
(e) The prohibitions in paragraphs (a) through (c) of this section apply only to actions taken on the bases described in paragraphs (a) through (c), and the prohibition in paragraph (c) shall not apply with respect to actions taken to comply with statutory or regulatory field of membership requirements, administration of Community Development Revolving Loan Fund activities, or any other application or decision where Federal law mandates the NCUA to consider criteria such as character and fitness or integrity.
(f) Nothing in this section shall restrict the NCUA's authority to implement, administer, and enforce the provisions of subchapter II of chapter 53 of title 31, United States Code.
(g) The NCUA will not take any supervisory action or other adverse action against an institution, a group of institutions, or the institution-affiliated parties of any institution that is designed to punish, discourage, or encourage an individual or group from engaging in any lawful political, social, cultural, or religious activities or lawful business activities, constitutionally protected speech, or, for political reasons, lawful business activities that are disfavored by the agency or any of its personnel.
(h) The following definitions apply to this section:
(1) Adverse action includes:
(i) Any negative feedback delivered by or on behalf of the NCUA to an institution, including in an NCUA-issued report of examination or a formal or informal enforcement action;
(ii) A downgrade, or contribution to a downgrade, of any supervisory rating, including, but not limited to:
(A) Any NCUA rating under the CAMELS ratings system; and
(B) Any NCUA rating under any other rating system;
(iii) A denial of a filing under any of the NCUA's regulations in this chapter;
(iv) Inclusion of a condition on a share insurance application or other approval;
(v) Imposition of additional approval requirements;
(vi) Any other heightened requirements on an activity or change;
(vii) Any reclassification of a well-capitalized federally insured credit union or imposition of a discretionary supervisory action under NCUA's prompt corrective action rules (12 CFR part 702); and
(viii) Any action that negatively impacts the institution, or an institution-affiliated party, or treats the institution differently than similarly situated peers.
(2) Doing business with means an institution:
(i) Providing any product or service, including account services;
(ii) Contracting with a third party for the third party to provide a product or service;
(iii) Providing discounted or free products or services to customers or third parties, including charitable activities;
(iv) Entering into, maintaining, modifying, or terminating an employment relationship; or
(v) Any other similar business activity that involves an institution's member or accountholder or a third party.
(3) Institution-affiliated party means the same as in section 206 of the Federal Credit Union Act (12 U.S.C. 1786(r)).
(4) Institution means an entity for which the NCUA makes or will make supervisory determinations or other decisions, either solely or jointly.
(5) Reputation risk means any risk, regardless of how the risk is labeled by the credit union or regulators, that an action or activity, or combination of actions or activities, or lack of actions or activities, of a credit union could negatively impact public perception of the credit union for reasons not clearly and directly related to the financial or operational condition of the institution.