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On Sept. 11, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Bureau of Consumer Financial Protection (CFPB) issued an interagency statement that seeks to clarify the role of supervisory guidance, which, in sum, states that supervisory guidance, unlike statutes and regulations, does not have the "force and effect of law."

Although the U.S. Supreme Court, citing the Administrative Procedures Act, addressed this issue in its unanimous 2015 Perez v. Mortgage Bankers Association decision, the interagency statement reflects an important recognition by the agencies that is consistent with the current administration's deregulatory agenda. Ultimately, the agencies' newly stated position may have little practical impact on how laws and regulations are enforced, but it does diminish the importance of agency guidance. The agencies have chosen to issue the new interagency statement as guidance, rather than through a notice-and-comment APA rulemaking.


The interagency statement is the embodiment of a years-long debate over the differences between laws and regulations and agency policies and interpretations, what weight is accorded to each, and whether an official agency statement should be promulgated as a regulation or issued as agency guidance. In Perez, the Supreme Court reiterated long-standing principles under the APA that "[r]ules issued through the notice-and-comment process … have the 'force and effect of law'" and "[i]nterpretive rules do not have the force and effect of law and are not accorded that weight in the adjudicatory process."1 Notwithstanding these principles, the banking industry has continued to wrestle with what weight should be given to agency guidance, whether it is subject to judicial review as final agency action, and the degree of deference that must be accorded to such guidance by a reviewing court.

Whether guidance is a "rule" instructs whether an agency statement is subject to the APA and, thus, required to be promulgated pursuant to the notice-and-comment rulemaking procedures and subjected to cost-benefit analyses under the APA, and whether it must be submitted to Congress for review under the Congressional Review Act before it can lawfully take effect.

Within the past year, two U.S. Government Accountability Office decisions were issued on whether particular instances of agency guidance qualified as a rule and were therefore required to be submitted to Congress for approval or disapproval under the CRA. The GAO found that both the Interagency Guidance on Leveraged Lending, issued jointly by the OCC, Federal Reserve and FDIC, and the CFPB's bulletin on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act were considered rules and, thus, subject to the CRA. Congress disapproved of the CFPB's bulletin in May and a decision on the guidance on leveraged lending is still outstanding.

Consistent with the current deregulatory agenda, the Treasury Department issued a report in June 2017 criticizing the CFPB's reliance on guidance documents in lieu of notice-and-comment rulemaking.[[N:A Financial System That Creates Economic Opportunities: Banks and Credit Unions, U.S. Department of Treasury, at 82.]] On Sept. 10, 2018, the FDIC requested comment on a proposal to retire 374 financial institution letters to inactive status.[[N:FIL-46-2018.]] Finally, on Sept. 13, 2018, U.S. Securities and Exchange Commission Chairman Jay Clayton delivered a similar message by issuing a statement addressing the SEC's "longstanding position [] that all staff statements are nonbinding and create no enforceable legal rights or obligations of the [SEC] or other parties."[[N:Statement Regarding SEC Staff Views, Chairman Jay Clayton (Sep. 13, 2018).]] Clayton added that he instructed the directors of the Division of Enforcement and the Office of Compliance Inspections and Examinations to further emphasize this distinction to their staff.

Summary of the Interagency Statement

First, the interagency statement explains the agencies' position on the difference between supervisory guidance and laws or regulations:

  • Laws have the force and effect of law, and regulations generally have the force and effect of law after the agency rulemaking process is completed, which includes notice and comment.
  • Supervisory guidance (i.e., interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions) does not have the force and effect of law and agencies are not to take enforcement actions based on such guidance. Instead, supervisory guidance outlines supervisory expectations or priorities, articulates an agency's views on appropriate practices and provides examples of practices that are consistent with safety-and-soundness standards.

Next, the agencies describe several efforts to clarify the role of supervisory guidance, including: (1) limiting the use of numerical thresholds or other "bright lines" in describing expectations; (2) not criticizing institutions for violations of supervisory guidance; (3) seeking public comment on supervisory guidance; (4) reducing multiple issuances of guidance on the same topic; and (5) clarifying the role of supervisory guidance to examiners and supervised institutions.


The interagency statement is the latest step toward fulfilling the current administration's deregulatory agenda. Moving forward, regulated institutions should expect that noncompliance with agency guidance, which discuss how the agencies interpret the requirements of a statute or rule, will not themselves be deficiencies cited in reports of examination. Instead, the interagency statement indicates that examination findings and violations will be more closely tied to failure to conform to laws and regulations. Agency guidance should, in theory, be of lesser consequence. However, regulated institutions should also be cognizant that although examination staff may no longer state a finding that a bank "violated" guidance or interpretive rule, they are not precluded from finding that a bank violated the governing statute or interpretive rule, and citing to the guidance to detail what the agency believes a statute or rule requires. Failure to follow agency guidance is not in and of itself a violation of law, but for an industry such as the banking industry, which is governed by amorphous "safety and soundness" obligations, departing from agency guidance may nevertheless pose a risk of being deemed an unsafe or unsound banking practice.

  1. Perez v. Mortg. Bankers Ass'n, 135 S. Ct. 1199, 1201 (2015).