Letter reinforces statement on ‘supervisory guidance’ but provides insight as to use of the direction

A letter reinforcing a joint agency statement issued last week on “supervisory guidance” – as well as providing further insight as to what “supervisory guidance” actually constitutes – was sent by the federal insurer of bank deposits to insured institutions Monday.

In its Financial Institution Letter (FIL) 49-2018, the Federal Deposit Insurance Corp. (FDIC) noted that the purpose of supervisory guidance is to articulate an agency’s views about appropriate actions for a given subject area. In fact, the agency noted, various types of guidance are issued to respective supervised institutions. Those types include: interagency statements, advisories, bulletins policy statements, questions and answers and frequently asked questions.

“Supervised institutions at times request supervisory guidance, and such guidance is important to provide insight to the industry, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach,” the FDIC letter points out.

Like the joint statement issued last week (by the FDIC with the Federal Reserve, Bureau of Consumer Financial Protection [BCFP, formerly known as the CFPB], the National Credit Union Administration [NCUA], and the Office of the Comptroller of the Currency [OCC]), the letter is clear that unlike a statute or regulation, supervisory guidance does not have the force and effect of law. “The agencies do not take enforcement actions based on supervisory guidance,” the letter states.

The letter also reiterates the five policies and practices related to supervisory guidance issued in the Sept. 11 joint statement, meant to clarify use of the guidance:

  • The agencies intend to limit the use of numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance.
  • Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance.
  • Agencies may continue to seek, as at times in the past, public comment on supervisory guidance.
  • The agencies will aim to reduce the issuance of multiple supervisory guidance documents on the same topic.
  • The agencies will continue efforts to make the role of supervisory guidance clear.

FIL-49-2018 Interagency Statement Clarifying the Role of Supervisory Guidance