Federal Banking Regulators Invite Public Comment on Proposed Rule Clarifying the Role of Supervisory Guidance in Enforcement

23 October 2020
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Key takeaways:
  • On October 20, 2020, the Federal Deposit Insurance Corporation approved a notice of proposed rulemaking (“NPR”) to be jointly issued by the FDIC, the Federal Reserve Board, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Bureau of Consumer Financial Protection (collectively, the “Agencies”) that would revise and codify the Agencies’ 2018 statement clarifying the appropriate role of supervisory guidance (the “2018 Statement”).
  • Like the 2018 Statement, the revised statement (the “Proposed Statement”) would clarify that supervisory guidance does not create binding, enforceable legal obligations and that the Agencies will not issue supervisory criticisms (including matters requiring attention) or enforcement actions based on a violation or non-compliance with supervisory guidance. The Proposed Statement adds that supervisory criticisms must be specific—general or conclusory statements referencing safety and soundness concerns would not appear to be sufficient.
  • The NPR also signals meaningful potential limits to the Proposed Statement, including that many agency statements may not be within its scope. The NPR also does not appear to provide a meaningful threshold regarding the significance of the risk that can give rise to a supervisory criticism; any practice that could potentially pose a safety and soundness concern (or other enumerated concern) may become a supervisory criticism if the examiner can state the concern with some degree of specificity.