Yesterday, September 11, 2018, five federal agencies – the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Bureau of Consumer Financial Protection – issued a two-page, joint statement on the role of supervisory guidance for regulated institutions. Although brief, the joint statement is significant.

Too often since the financial crisis, the distinction between regulatory requirements and supervisory guidance has been blurred. The joint statement emphasizes that supervisory guidance “does not have the force and effect of law,” and that “the agencies do not take enforcement actions based on supervisory guidance.” Instead, the role of supervisory guidance is to outline the agencies’ supervisory expectations or priorities or to articulate the agencies’ general views regarding appropriate practices in a given subject area, including in response to industry requests for such guidance. Supervisory guidance may also provide “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 contrast supervisory guidance with regulations “that generally have the force and effect of law [and that] generally take effect only after the agency proposes the regulation to the public and responds to comments on the proposal in a final rulemaking document.”