Federal Agencies Issue Joint Statement Clarifying Supervisory Guidance

Five federal agencies – The Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau – issued a joint statement Tuesday morning. The statement clarified that supervisory guidance “does not have the force and effect of law,” and that each of the respective agencies “do not take enforcement actions based on supervisory guidance.”

Supervisory guidance can include interagency statements, advisories, bulletins, or policy statements that generally reflect “the agencies’ general views regarding appropriate practices for a given subject area.” Still, agencies’ supervisory guidance should not be interpreted as a law or a regulation, according to the press release.

In addition, the statement outlined several ongoing efforts by each of the federal agencies regarding supervisory guidelines, including:

• Limiting numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance;
• Refraining from criticizing a supervised financial institution for a “violation” of
  supervisory guidance;
• Seeking public comment on supervisory guidance;
• Reducing the issuance of multiple supervisory guidance documents on the same topic; and
• Clarifying the role of supervisory guidance in their communications to examiners and to supervised financial institutions.

The joint statement follows a June letter to the federal agencies by Congressman Blaine Luetkemeyer (MO-03), a member of the House Financial Services Committee, requesting that the agencies “issue and publish a clear statement affirming that agency statements – for example, guidance documents, supervisory letters or examination manuals – that have not gone through notice and comment rulemaking do not establish binding legal standards…”

The joint statement issued earlier today not only satisfies the congressman’s request but also provides financial service providers much needed clarification on the role of supervisory guidance.