Today, CUNA filed a comment letter in support of an interagency proposal to codify a 2018 Statement on the role of supervisory guidance. By codifying the Statement, the proposed rule is intended to confirm that the federal financial regulatory agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities. The 2018 Statement reiterated well-established law by stating that, unlike a law or regulation, supervisory guidance does not have the force and effect of law. 

We believe it is critical that the NCUA appreciate the significant differences between regulation and guidance. Regulations create binding legal obligations. Supervisory guidance is issued by an agency to “advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power” and does not create binding legal obligations.

It is important that the NCUA refrain from using supervisory guidance as a basis for an adverse finding during an examination. Examiners must clearly identify where a requirement or prohibition is in an established law or regulation. With that said, we urge the NCUA to continue examiner engagement in productive discussions with credit union staff regarding supervisory guidance.