On November 5, 2020, the joint agencies (FRB, OCC, FDIC, NCUA and CFPB) (collectively, the Agencies) issued a Notice of Proposed Rulemaking (NPRM) to confirm the Agencies’ use of supervisory guidance for regulated institutions. The proposal codifies the statement, as amended, the Agencies issued in September 2018, the Interagency Statement Clarifying the Role of Supervisory Guidance (2018 Statement). The 2018 Statement advised that supervisory guidance — such as interagency statements, bulletins, frequently asked questions, among others — does not create binding or enforceable legal obligations, in contrast with regulations or legislative rules issued by the Agencies to implement acts of Congress.

The NPRM, which contains clarifying amendments to the 2018 Statement, would make the substance of the 2018 Statement binding on the Agencies. It would also codify the principle that supervisory guidance does not have the force and effect of law, and that the Agencies will not take enforcement actions based on supervisory guidance. Also included in the NPRM are clarifications of several policies and practices related to supervisory guidance, including the Agencies’ intention to limit the use of numerical thresholds in outlining expectations in supervisory guidance, refrain from issuing an enforcement action on the basis of a violation of or noncompliance with supervisory guidance, and reduce the issuance of multiple supervisory guidance documents on the same topic and in general, among other policies and practices.

The formalization of the 2018 Statement is important to ensure that Agencies do not adopt what essentially amounts to regula- tions by issuing guidance not subject to the requirements of notice and comment. The rule text would provide that the proposed statement is binding on each respective agency.


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