The Bank Policy Institute (BPI) and American Bankers Association (ABA) are asking federal banking agencies and the Consumer Financial Protection Bureau (CFPB) to set formal rules on the use of supervisory guidance.
Recently, bank regulators and the CFPB issued a statement confirming that supervisory guidance does not have the force of law, and that bank examiners should not take enforcement actions based on supervisory guidance.
BPI and ABA call this a promising step forward as it reaffirms the status of guidance under existing law. However, they question how it changes regulatory practice. To promote its observance by examiners, BPI and ABA are asking for regulators to formalize the statement in the form of a binding regulation so it endures and is followed consistently across the country.
“We commend your agency for issuing the Interagency Statement, which is an important step forward in ensuring that agency guidance is issued and applied in a manner consistent with the APA and the Congressional Review Act and, more broadly, that formal examination criticisms focus on matters material to the financial condition of a bank. Despite the helpful text of the Interagency Statement, we are concerned that it may nevertheless leave room for examiners to continue to base examination criticisms on matters not based in law,” the Bank Policy Institute and American Bankers Association wrote in a letter to banking agencies and the CFPB.
The banking organizations say a formal rulemaking would be an explicit recognition by the agencies that this statement will bind current and future examiners. This is important, they said, because failure to comply with guidance has too often resulted in the issuance of Matters Requiring Attention (MRA) — a quasi-enforcement action. Further, the current statement includes unclear language regarding how guidance could be used.