FR 2021-01499

The document from the Federal Register outlines a rule finalized by the Office of the Comptroller of the Currency (OCC), which emphasizes the role of supervisory guidance in the regulatory framework. This rule aims to clarify that supervisory guidance, unlike laws or regulations, does not carry the force of law and doesn't impose legally binding obligations on the public. This distinction plays a crucial role in ensuring that the OCC and similar agencies honor the principles of administrative law in their supervisory functions.

General Summary

The final rule discussed in the document seeks to solidify the 2018 Interagency Statement regarding supervisory guidance. The rule clarifies that while guidance documents help outline the expectations and views of regulatory agencies like the OCC, they are not legally enforceable in the same manner as laws or regulations. Despite being binding on the OCC, such guidance primarily serves as a tool for clarity and consistency in supervision. The rule, effective from March 15, 2021, ensures continuity in the use of guidance, supporting the banks under the OCC's supervision without imposing new enforceable mandates.

Significant Issues and Concerns

A major concern arising from the document is the complexity of its language, which could be difficult for readers without a legal background to fully understand. Terms like ‘supervisory guidance’ and ‘regulations,’ along with references to numerous laws and statutes, may not be sufficiently clear to a general audience. Furthermore, the document does not extensively address how interpretive rules might be binding, leading to potential ambiguity. An additional issue lies in the differentiation between supervisory criticisms and formal enforcement actions, which needs clearer articulation.

Impact on the Public

For the general public, this rule ensures that agencies like the OCC use guidance in a transparent and consistent manner, providing clarity to banks and consumers alike. However, due to the inherent complexity and legal jargon, individuals who interact with or are impacted by these regulations might find it challenging to understand their rights and responsibilities fully. This could lead to misunderstandings about the non-binding nature of such guidance compared to laws that carry enforceable legal obligations.

Impact on Specific Stakeholders

For banks and financial institutions supervised by the OCC, the codification of this rule serves as a reassuring confirmation that supervisory guidance will not be used as a basis for enforcement actions. This could encourage them to engage more openly with regulatory guidance, knowing that it outlines best practices rather than legal mandates. On the other hand, public interest advocacy groups express concerns that this approach might weaken the capacity for early intervention in unsafe practices and could lessen banks' urgency in addressing guidance shortcomings.

Commenters have also raised concerns about the potential for reduced issuance of guidance on relevant topics, which might limit access to useful regulatory insights. Moreover, the decision not to revise standards for supervisory criticisms leaves certain ambiguities unaddressed, potentially affecting how institutions respond to them.

Overall, while the final rule aims to affirm the OCC's commitment to transparency and clarity in using supervisory guidance, several underlying concerns indicate a need for ongoing dialogue and refinement to balance the rule's positive intent with its practical implications for both regulators and the entities they oversee.

The document revolves around the final rule issued by the Office of the Comptroller of the Currency (OCC), which clarifies the role of supervisory guidance in the banking industry. Various financial aspects are mentioned throughout the document, primarily in relation to the potential costs and impacts of the rule.

Financial Impact and Assessments

The primary financial reference concerns the analysis conducted under the Unfunded Mandates Reform Act of 1995 (UMRA). This analysis was undertaken to determine if the final rule would result in significant expenditures by state, local, and tribal governments, or the private sector, amounting to $100 million or more in any one year. The OCC concludes that the rule will not lead to such significant costs. This conclusion is reiterated under the Congressional Review Act, where the OCC also determines that the rule does not qualify as a “major rule,” which would have significant economic implications.

These financial assessments ensure that the rule is not expected to impose new mandates on the banking industry that would require substantial financial outlays. As such, state or local governments and the private sector are not obligated to make high expenditures to comply with the rule.

Relation to Identified Issues

The financial references intersect with the issues identified in the document, particularly regarding the potential limitations or impacts of supervisory guidance. While concerns were raised by commenters about limiting the role of supervisory guidance, the financial analyses suggest that these changes will not impose onerous financial burdens. This is particularly relevant when considering that the rule aims to codify that supervisory guidance does not carry the force of law, potentially reducing the burden on institutions to adhere to non-binding guidance.

Furthermore, the financial references address concerns over clarity. Even though the document acknowledges ambiguities and potential negative impacts raised by commenters, the financial assessments provide reassurance that the rule is financially neutral, not leading to significant financial impacts for small banking entities or other stakeholders.

In summary, while the document addresses complex legal concepts and the functional role of supervisory guidance, the financial implications are carefully considered to ensure no substantial financial burden is imposed on affected entities. This aspect provides a degree of transparency and reassurance regarding the economic impact of the finalized rule.