On January 19, 2021, several major federal financial regulators finalized rules clarifying the legal status of supervisory guidance.  As we described in a client alert late last year, a number of federal financial regulatory agencies—the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), the National Credit Union Administration (“NCUA”), and the Consumer Financial Protection Bureau (“Bureau”)—had been considering proposed rules that would largely codify the 2018 Interagency Statement Clarifying the Role of Supervisory Guidance (which we previously covered in this blog post).

The Statement and Proposed Rules sought to clarify that supervisory guidance does not establish rules having the force and effect of law, unlike rules adopted through a formal, notice-and-comment rulemaking process.  Rather, supervisory guidance is intended to clarify agency expectations and priorities, as well as provide examples considered acceptable under standards such as the safety and soundness standard.

In the supplementary information to the final rulemaking documents (See Bureau,  FDIC, and OCC), the agencies noted support for the rule from certain regulated entities and industry trade groups, and opposition from certain public interest advocacy groups.  Supporters of the new rule generally emphasized the clarity that it could bring to the regulatory process.  Opponents generally countered that the rule could limit the effectiveness of supervisory action and reduce the agencies’ supervisory discretion.  Ultimately, the agencies concluded that the rule would not impair their supervisory functions and adopted the rule largely as proposed.