ALEXANDRIA, Va.—During a special open board meeting, the NCUA board voted 3-0 to approve a proposed interagency rule on the role of supervisory guidance.
The proposed rule was informally issued earlier this month by federal financial regulators.
Board Chairman Rodney Hood said the proposed rule addresses distinctions between regulations and guidance.
“It makes clear that citations will be for violations of law, regulation, or noncompliance with other enforceable conditions,” Hood stated. “Most importantly, the proposal clarifies that supervisory guidance alone is not enforceable, and does not carry the same weight as regulations or law.”
Scott Neat, associate director of NCUA's Office of Examination and Insurance, told the board the proposal will not present any burdens on federally insured credit unions and would simply “codify and reinforce our long-standing internal policies.”
‘Well-Established Law’
Board Member Todd Harper said the proposed rule is intended to confirm the agencies—the OCC, Federal Reserve Board, FDIC, CFPB and NCUA—will “continue to follow and respect” the limits of administrative law in carrying out their respective 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,” Harper said. “The NCUA has long had a policy in place requiring examiners to tie documents of resolution to specific regulatory and statutory citations, and this regulatory codification will not substantively change the NCUA's existing examination program. We will continue to follow this practice if this rule is finalized as proposed.”
Being Transparent
Board Member Mark McWatters emphasized NCUA should always operate in a "transparent and fully accountable manner” regarding its rules and regulations.
“While administrative guidance is certainly helpful to agency staff and the credit union community, it does not represent agency regulation, or carry the force of law, as it has not run the necessary gauntlet of the Administrative Procedures Act, where interested parties are afforded the opportunity to offer their comments, criticisms, and suggestions for improvement. We should never operate by conducting our examination and supervision oversight as a game of ‘got you’ by relying solely upon administrative guidance. Instead, we should in all instances tie our administrative actions, in an objective and fair-minded manner, to specific provisions of the Federal Credit Union Act, final agency regulation, or judicial holdings.”
During its Oct. 15 open meeting, the NCUA board voted to remove a request for information on the agency's supervisory guidance and communication improvements from the agenda. In July, the NCUA released a revised version of its 2020 supervisory priorities to reflect economic conditions as a result of the pandemic, as well as statutory and regulatory changes that have occurred in recent months.