INTERAGENCY STATEMENT CLARIFYING THE ROLE OF SUPERVISORY GUIDANCE

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency (collectively the “agencies”) issued an Interagency Statement Clarifying the Role of Supervisory Guidance on September 11, 2018 to explain the role of supervisory guidance and to describe the agencies’ approach to supervisory guidance.

The statement explained the difference between a law or regulation and supervisory guidance by stressing that a law or regulation has the force and effect of law while supervisory guidance does not.  The agencies do not take enforcement action based on supervisory guidance but provide such guidance to outline the agencies’ supervisory expectations or priorities and articulate the agencies’ general views regarding appropriate practices for a given subject area.  Supervisory guidance often provides examples of practices that the agencies generally consider consistent with safety-and-soundness standards or other applicable laws and regulations, including those designed to protect consumers.

The agencies provided the following clarifications to policies and practices related to supervisory guidance:

• The agencies intend to limit the use of numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance.
• Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. Rather, any citations will be for violations of law, regulation, or non-compliance with enforcement orders or other enforceable conditions.
• The agencies also have at times sought, and may continue to seek, public comment on supervisory guidance. This does not mean that the guidance is intended to be a regulation or have the force and effect of law.
• The agencies will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances going forward.
• The agencies will continue efforts to make the role of supervisory guidance clear in their communications to examiners and to supervised financial institutions, and encourage supervised institutions with questions about this statement or any applicable supervisory guidance to discuss the questions with their appropriate agency contact.