Role of Supervisory Guidance, 12079-12086 [2021-01537]

Download as PDF 12079 Rules and Regulations Federal Register Vol. 86, No. 39 Tuesday, March 2, 2021 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 302 RIN 3064–AF32 Role of Supervisory Guidance Federal Deposit Insurance Corporation (FDIC). ACTION: Final rule. AGENCY: The FDIC is adopting a final rule that codifies the Interagency Statement Clarifying the Role of Supervisory Guidance, issued by the FDIC, Board of Governors of the Federal Reserve System (Board), Office of the Comptroller of the Currency, Treasury (OCC), National Credit Union Administration (NCUA), and Bureau of Consumer Financial Protection (Bureau) (collectively, the agencies) on September 11, 2018 (2018 Statement). By codifying the 2018 Statement, with amendments, the final rule confirms that the FDIC will continue to follow and respect the limits of administrative law in carrying out its 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. As such, supervisory guidance does not create binding legal obligations for the public. Because it is incorporated into the final rule, the 2018 Statement, as amended, is binding on the FDIC. The final rule adopts the rule as proposed without substantive changes. DATES: The final rule is effective on April 1, 2021. FOR FURTHER INFORMATION CONTACT: RaeAnn Miller, Senior Deputy Director, (202) 898–3898; Karen Jones Currie, Senior Examination Specialist, (202) 898–3981; Supervisory Examinations Branch, Division of Risk Management and Supervision; Luke H. Brown, Associate Director, (202) 898–3842; David Friedman, Senior Policy Analyst, (202) 898–7168, Supervisory Policy, jbell on DSKJLSW7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 Division of Depositor and Consumer Protection; William Piervincenzi, Supervisory Counsel, (202) 898–6957; Kathryn J. Marks, Counsel, (202) 898– 3896; Jennifer M. Jones, Counsel, (202) 898–6768, jennjones@fdic.gov, Supervision and Legislation Branch, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. For the hearing impaired only, Telecommunication Device for the Deaf (TDD), (800) 925–4618. SUPPLEMENTARY INFORMATION: I. Background The FDIC recognizes the important distinction between issuances that serve to implement acts of Congress (known as ‘‘regulations’’ or ‘‘legislative rules’’) and non-binding supervisory guidance documents.1 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.2 In recognition of the important distinction between rules and guidance, on September 11, 2018, the agencies issued the Interagency Statement Clarifying the Role of Supervisory Guidance (2018 Statement) to explain the role of supervisory guidance and describe the agencies’ approach to supervisory guidance.3 As noted in the 2018 Statement, the agencies issue various types of supervisory guidance to their respective supervised institutions, including, but not limited to, interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions. Supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding practices for a given subject area. Supervisory guidance often provides 1 Regulations are commonly referred to as legislative rules because regulations have the ‘‘force and effect of law.’’ Perez v. Mortgage Bankers Association, 575 U.S. 92, 96 (2015) (citations omitted). 2 See Chrysler v. Brown, 441 U.S. 281, 302 (1979) (quoting the Attorney General’s Manual on the Administrative Procedure Act at 30 n.3 (1947) (Attorney General’s Manual) and discussing the distinctions between regulations and general statements of policy, of which supervisory guidance is one form). 3 See https://www.fdic.gov/news/financialinstitution-letters/2018/fil18049.html. PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 examples of practices that mitigate risks, or that the agencies generally consider to be consistent with safety-andsoundness standards or other applicable laws and regulations, including those designed to protect consumers.4 The agencies noted in the 2018 Statement that supervised institutions at times request supervisory guidance and that guidance is important to provide clarity to these institutions, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach.5 The 2018 Statement restated existing law and reaffirmed the agencies’ understanding that supervisory guidance does not create binding, enforceable legal obligations. The 2018 Statement reaffirmed that the agencies do not issue supervisory criticisms for ‘‘violations’’ of supervisory guidance and described the appropriate use of supervisory guidance by the agencies. In the 2018 Statement, the agencies also expressed their intention to (1) limit the use of numerical thresholds in guidance; (2) reduce the issuance of multiple supervisory guidance documents on the same topic; (3) continue efforts to make the role of supervisory guidance clear in communications to examiners and supervised institutions; and (4) encourage supervised institutions to discuss their concerns about 4 While supervisory guidance offers guidance to the public on the FDIC’s approach to supervision under statutes and regulations and safe and sound practices, the issuance of guidance is discretionary and is not a prerequisite to the FDIC’s exercise of its statutory and regulatory authorities. This point reflects the fact that statutes and legislative rules, not statements of policy, set legal requirements. 5 The Administrative Conference of the United States (ACUS) has recognized the important role of guidance documents and has stated that guidance can ‘‘make agency decision-making more predictable and uniform and shield regulated parties from unequal treatment, unnecessary costs, and unnecessary risk, while promoting compliance with the law.’’ ACUS, Recommendation 2017–5, Agency Guidance Through Policy Statements at 2 (adopted December 14, 2017), available at https:// www.acus.gov/recommendation/agency-guidancethrough-policy-statements. ACUS also suggests that ‘‘policy statements are generally better [than legislative rules] for dealing with conditions of uncertainty and often for making agency policy accessible.’’ Id. ACUS’s reference to ‘‘policy statements’’ refers to the statutory text of the APA, which provides that notice and comment is not required for ‘‘general statements of policy.’’ The phrase ‘‘general statements of policy’’ has commonly been viewed by courts, agencies, and administrative law commentators as including a wide range of agency issuances, including guidance documents. E:\FR\FM\02MRR1.SGM 02MRR1 12080 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations supervisory guidance with their agency contact. On November 5, 2018, the OCC, Board, FDIC, and Bureau each received a petition for a rulemaking (Petition), as permitted under the Administrative Procedure Act (APA),6 requesting that the agencies codify the 2018 Statement.7 The Petition argued that a rule on guidance is necessary to bind future agency leadership and staff to the 2018 Statement’s terms. The Petition also suggested there are ambiguities in the 2018 Statement concerning how supervisory guidance is used in connection with matters requiring attention, matters requiring immediate attention (collectively, MRAs), as well as in connection with other supervisory actions that should be clarified through a rulemaking. Finally, the Petition called for the rulemaking to implement changes in the agencies’ standards for issuing MRAs. Specifically, the Petition requested that the agencies limit the role of MRAs to addressing circumstances in which there is a violation of a statute, regulation, or order, or demonstrably unsafe or unsound practices. II. The Proposed Rule and Comments Received On November 5, 2020, the agencies issued a proposed rule (Proposed Rule or Proposal) that would have codified the 2018 Statement, with clarifying changes, as an appendix to proposed rule text.8 The Proposed Rule would have superseded the 2018 Statement. The rule text would have provided that an amended version of the 2018 Statement is binding on each respective agency. Clarification of the 2018 Statement The Petition expressed support for the 2018 Statement and acknowledged that it addresses many issues of concern for the Petitioners relating to the use of supervisory guidance. The Petition expressed concern, however, that the 2018 Statement’s reference to not basing ‘‘criticisms’’ on violations of supervisory guidance has led to confusion about whether MRAs are covered by the 2018 Statement. Accordingly, the agencies proposed to clarify in the Proposed Rule that the term ‘‘criticize’’ includes the issuance of 65 U.S.C. 553(e). Petition for Rulemaking on the Role of Supervisory Guidance, available at https://bpi.com/ wp-content/uploads/2018/11/BPI_PFR_on_Role_of_ Supervisory_Guidance_Federal_Reserve.pdf. The Petitioners did not submit a petition to the NCUA, which has no supervisory authority over the financial institutions that are represented by Petitioners. The NCUA chose to join the Proposed Rule on its own initiative. 8 85 FR 70512 (November 5, 2020). jbell on DSKJLSW7X2PROD with RULES 7 See VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 MRAs and other supervisory criticisms, including those communicated through matters requiring board attention, documents of resolution, and supervisory recommendations (collectively, supervisory criticisms).9 As such, the agencies reiterated that examiners will not base supervisory criticisms on a ‘‘violation’’ of or ‘‘noncompliance’’ with supervisory guidance.10 The agencies noted that, in some situations, examiners may reference (including in writing) supervisory guidance to provide examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations. The agencies also reiterated that they will not issue an enforcement action on the basis of a ‘‘violation’’ of or ‘‘non-compliance’’ with supervisory guidance. The Proposed Rule reflected these clarifications.11 The Petition requested further that these supervisory criticisms should not include ‘‘generic’’ or ‘‘conclusory’’ references to safety and soundness. The agencies agreed that supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, 9 The agencies use different terms to refer to supervisory actions that are similar to MRAs and Matters Requiring Immediate Attention (MRIAs), including matters requiring board attention (MRBAs), documents of resolution, and supervisory recommendations. 10 For the sake of clarification, one source of law among many that can serve as a basis for a supervisory criticism is the Interagency Guidelines Establishing Standards for Safety and Soundness, see 12 CFR part 30, appendix A, 12 CFR part. 208, appendix D–1, and 12 CFR part 364, appendix A. These Interagency Guidelines were issued using notice and comment and pursuant to express statutory authority in 12 U.S.C. 1831p–1(d)(1) to adopt safety and soundness standards either by ‘‘regulation or guideline.’’ 11 The 2018 Statement contains the following sentence: ‘‘Examiners will not criticize a supervised financial institution for a ‘violation’ of supervisory guidance.’’ 2018 Statement at 2. As revised in the Proposed Rule, this sentence read as follows: ‘‘Examiners will not criticize (including through the issuance of matters requiring attention, matters requiring immediate attention, matters requiring board attention, documents of resolution, and supervisory recommendations) a supervised financial institution for, and agencies will not issue an enforcement action on the basis of, a ‘violation’ of or ‘non-compliance’ with supervisory guidance.’’ Proposed Rule (emphasis added). As discussed infra in footnote 13, the Proposed Rule also removed the sentences in the 2018 Statement that referred to ‘‘citation,’’ which the Petition suggested had been confusing. These sentences were also removed to clarify that the focus of the Proposed Rule related to the use of guidance, not the standards for MRAs. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 final agency orders, or other legally enforceable conditions. Accordingly, the agencies included language reflecting this practice in the Proposed Rule. The Petition also suggested that MRAs, as well as memoranda of understanding, examination downgrades, and any other formal examination mandate or sanction, should be based only on a violation of a statute, regulation, or order, including a ‘‘demonstrably unsafe or unsound practice.’’ 12 As noted in the Proposed Rule, examiners all take steps to identify deficient practices before they rise to violations of law or regulation or before they constitute unsafe or unsound banking practices. The agencies stated that they continue to believe that early identification of deficient practices serves the interest of the public and of supervised institutions. Early identification protects the safety and soundness of banks, promotes consumer protection, and reduces the costs and risk of deterioration of financial condition from deficient practices resulting in violations of laws or regulations, unsafe or unsound conditions, or unsafe or unsound banking practices. The Proposed Rule also noted that the agencies have different supervisory processes, including for issuing supervisory criticisms. For these reasons, the agencies did not propose revisions to their respective supervisory practices relating to supervisory criticisms. The agencies also noted that the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. To address any confusion concerning the scope of the 2018 Statement, the Proposed Rule removed two sentences from the 2018 Statement concerning grounds for ‘‘citations’’ and the handling of deficiencies that do not constitute violations of law.13 12 The Petition asserted that the federal banking agencies rely on 12 U.S.C. 1818(b)(1) when issuing MRAs based on safety-and-soundness matters. Through statutory examination and reporting authorities, Congress has conferred upon the agencies the authority to exercise visitorial powers with respect to supervised institutions. The Supreme Court has indicated support for a broad reading of the agencies’ visitorial powers. See, e.g., Cuomo v. Clearing House Assn L.L.C., 557 U.S. 519 (2009); United States v. Gaubert, 499 U.S. 315 (1991); and United States v. Philadelphia Nat. Bank, 374 U.S. 321 (1963). The visitorial powers facilitate early identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound banking practice, or breach of fiduciary duty under 12 U.S.C. 1818. 13 The following sentences from the 2018 Statement were not present in the Proposed Rule: ‘‘Rather, any citations will be for violations of law, regulation, or non-compliance with enforcement orders or other enforceable conditions. During E:\FR\FM\02MRR1.SGM 02MRR1 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations Comments on the Proposed Rule jbell on DSKJLSW7X2PROD with RULES A. Overview The five agencies received approximately 30 unique comments concerning the Proposed Rule.14 The FDIC discusses below those comments that are potentially relevant to the FDIC.15 Commenters representing trade associations for banking institutions and other businesses, state bankers’ associations, individual financial institutions, and one member of Congress expressed general support for the proposed rule. These commenters supported codification of the 2018 Statement and the reiteration by the agencies that guidance does not have the force of law and cannot give rise to binding, enforceable legal obligations. One of these commenters stated that the Proposal would serve the interests of consumers and competition by clarifying the law for institutions and potentially removing ambiguities that could deter the development of innovative products that serve consumers and business clients, without uncertainty regarding potential regulatory consequences. These commenters expressed strong support as well for the clarification in the Proposed Rule that the agencies will not criticize, including through the issuance of ‘‘matters requiring attention,’’ a supervised financial institution for a ‘‘violation’’ of, or ‘‘non-compliance’’ with, supervisory guidance. One commenter agreed with the agencies that supervisory criticisms should not be limited to violation of statutes, regulations, or orders, including a ‘‘demonstrable unsafe or unsound practice’’ and that supervisory guidance remains a beneficial tool to communicate supervisory expectations to the industry. The commenter stated that the proactive identification of supervisory criticism or deficiencies that do not constitute violations of law facilitates forward-looking supervision, which helps address problems before examinations and other supervisory activities, examiners may identify unsafe or unsound practices or other deficiencies in risk management, including compliance risk management, or other areas that do not constitute violations of law or regulation.’’ 2018 Statement at 2. The agencies did not intend these deletions to indicate a change in supervisory policy. 14 Of the comments received, some comments were not submitted to all agencies, and some comments were identical. Note that this total excludes comments that were directed at an unrelated rulemaking by the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN). This final rule does not specifically discuss those comments that are only potentially relevant to other agencies. 15 This final rule does not specifically discuss those comments that are only potentially relevant to other agencies. VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 they warrant a formal enforcement action. The commenter noted as well that supervisory guidance provides important insight to the industry and ensures consistency in the supervisory approach and that supervised institutions frequently request supervisory guidance. The commenter observed that the COVID–19 pandemic has amplified the requests for supervisory guidance and interpretation and that it is apparent institutions want clarity and guidance from regulators. Two commenters, both public interest advocacy groups, opposed the proposed rule, suggesting that codifying the 2018 Statement may undermine the important role that supervisory guidance can play by informing supervisory criticism, rather than merely clarifying that it will not serve as the basis for enforcement actions. One commenter stated that it is essential for agencies to have the prophylactic authority to base criticisms on imprudent bank practices that may not yet have ripened into violations of law or significant safety and soundness concerns. The commenter stated that this is particularly important with respect to large banks, where delay in addressing concerns could lead to a broader crisis. One commenter stated that the agencies have not explained the benefits that would result from the rule or demonstrated how the rule will promote safety and soundness or consumer protection. The commenter argued that supervision is different from other forms of regulation and requires supervisory discretion, which could be constrained by the rule. One of these commenters argued that the Proposal would send a signal that banking institutions have wider discretion to ignore supervisory guidance. B. Scope of Rule Several industry commenters requested that the Proposed Rule cover interpretive rules and clarify that interpretive rules do not have the force and effect of law. One commenter stated that the agencies should clarify whether they believe that interpretive rules can be binding. The commenter argued that, under established legal principles, interpretive rules can be binding on the agency that issues them but not on the public. Some commenters suggested that the agencies follow ACUS recommendations for issuing interpretive rules and that the agencies should clarify when particular guidance documents are (or are not) interpretive rules and allow the public to petition to change an interpretation. A number of commenters requested that the agencies expand the statement to address the PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 12081 standards that apply to MRAs and other supervisory criticisms, a suggestion made in the Petition. C. Role of Guidance Documents Several commenters recommended that the agencies clarify that the practices described in supervisory guidance are merely examples of conduct that may be consistent with statutory and regulatory compliance, not expectations that may form the basis for supervisory criticism. One commenter suggested that the agencies state that when agencies offer examples of safe and sound conduct, compliance with consumer protection standards, appropriate risk management practices, or acceptable practices through supervisory guidance or interpretive rules, the agencies will treat adherence to practices outlined in that supervisory guidance or interpretive rule as a safe harbor from supervisory criticism. One commenter also requested that the agencies make clear that guidance that goes through public comment, as well as any examples used in guidance, is not binding. The commenter also requested that the agencies affirm that they will apply statutory factors while processing applications. One commenter argued that guidance provides valuable information to supervisors about how their discretion should be exercised and therefore plays an important role in supervision. As an example, according to this commenter, 12 U.S.C. 1831p–1 and 12 U.S.C. 1818 recognize the discretionary power conferred on the Federal banking agencies 16 which is separate from the power to issue regulations. The commenter noted that, pursuant to these statutes, regulators may issue cease and desist orders based on reasonable cause to believe that an institution has engaged, is engaging, or is about to engage in an unsafe and unsound practice, separately and apart from whether the institution has technically violated a law or regulation. The commenter added that Congress entrusted the Federal banking agencies with the power to determine whether practices are unsafe and unsound and attempt to halt such practices through supervision, even if a specific case may not constitute a violation of a written law or regulation. D. Supervisory Criticisms Several commenters addressed supervisory criticisms and how they relate to guidance. These commenters suggested that supervisory criticisms 16 The Federal banking agencies are the OCC, Board, and FDIC. 12 U.S.C. 1813. E:\FR\FM\02MRR1.SGM 02MRR1 jbell on DSKJLSW7X2PROD with RULES 12082 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations should be specific as to practices, operations, financial conditions, or other matters that could have a negative effect. These commenters also suggested that MRAs, memoranda of understanding, and any other formal written mandates or sanctions should be based only on a violation of a statute or regulation. Similarly, these commenters argued that there should be no references to guidance in written formal actions and that banking institutions should be reassured that they will not be criticized or cited for a violation of guidance when no law or regulation is cited. One commenter suggested that it would instead be appropriate to discuss supervisory guidance privately, rather than publicly, potentially during the pre-exam meetings or during examination exit meetings. Another commenter suggested that, while referencing guidance in supervisory criticism may be useful at times, agencies should provide safeguards to prevent such references from becoming the de facto basis for supervisory criticisms. One commenter stated that examiners also should not criticize community banks in their final written examination reports for not complying with ‘‘best practices’’ unless the criticism involves a violation of bank policy or regulation. The commenter added that industry best practices should be transparent enough and sufficiently known throughout the industry before being cited in an examination report. One commenter requested that examiners should not apply large bank practices to community banks that have a different, less complex and more conservative business model. One commenter asserted that MRAs should not be based on ‘‘reputational risk,’’ but rather on the underlying conduct giving rise to concerns and asked the agencies to address this in the final rule. Commenters that opposed the Proposal did not support restricting supervisory criticism or sanctions to explicit violations of law or regulation. One commenter expressed concern that requiring supervisors to wait for an explicit violation of law before issuing criticism would effectively erase the line between supervision and enforcement. According to the commenter, it would eliminate the space for supervision as an intermediate practice of oversight and cooperative problem-solving between banks and the regulators who support and manage the banking system and would also clearly violate the intent of the law in 12 U.S.C. 1818(b). One commenter emphasized the importance of bank supervisors VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 basing their criticisms on imprudent bank practices that may not yet have ripened into violations of laws or rules but could undermine safety and soundness or pose harm to consumers if left unaddressed. One commenter argued that the agencies should state clearly that guidance can and will be used by supervisors to inform their assessments of banks’ practices; and that it may be cited as, and serve as the basis for, criticisms. According to the commenter, even under the legal principles described in the Proposal, it is permissible for guidance to be used as a set of standards that may inform a criticism, provided that application of the guidance is used for corrective purposes, if not to support an enforcement action. According to one commenter, the Proposal makes fine conceptual distinctions between, for example, issuing supervisory criticisms ‘‘on the basis of’’ guidance and issuing supervisory criticisms that make ‘‘reference’’ to supervisory guidance. The commenter suggested that is a distinction that it may be difficult for ‘‘human beings to parse in practice.’’ According to the commenter, a rule that makes such a distinction is likely to have a chilling effect on supervisors attempting to implement policy in the field. According to another commenter, the language allowing examiners to reference supervisory guidance to provide examples is too vague and threatens to marginalize the role of guidance and significantly reduce its usefulness in the process of issuing criticisms designed to correct deficient bank practices. E. Legal Authority and Visitorial Powers One commenter questioned the Federal banking agencies’ reference in the Proposal to visitorial powers as an additional authority for early identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound banking practice, or breach of fiduciary duty under 12 U.S.C. 1818. F. Issuance and Management of Supervisory Guidance Several commenters made suggestions about how the agencies should issue and manage supervisory guidance. Some commenters suggested that the agencies should delineate clearly between regulations and supervisory guidance. Commenters encouraged the agencies to regularly review, update, and potentially rescind outstanding guidance. One commenter suggested that the agencies rescind outstanding PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 guidance that functions as rule, but has not gone through notice and comment. One commenter suggested that the agencies memorialize their intent to revisit and potentially rescind existing guidance, as well as limit multiple guidance documents on the same topic. Commenters suggested that supervisory guidance should be easy to find, readily available, online, and in a format that is user-friendly and searchable. One commenter encouraged the agencies to issue principles-based guidance that avoids the kind of granularity that could be misconstrued as binding expectations. According to this commenter, the agencies can issue separate frequently asked questions with more detailed information, but should clearly identify these as nonbinding illustrations. This commenter also encouraged the agencies to publish proposed guidance for comment when circumstances allow. Another commenter requested that the agencies issue all ‘‘rules’’ as defined by the APA through the notice-and-comment process. One commenter expressed concern that the agencies will aim to reduce the issuance of multiple supervisory guidance documents and will thereby reduce the availability of guidance in circumstances where guidance would be valuable. Responses to Comments As stated in the Proposed Rule, the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. The standards for issuing MRAs or other supervisory actions were, therefore, outside the scope of this rulemaking. For this reason, and for reasons discussed earlier, the final rule does not address the standards for MRAs and other supervisory actions. Similarly, because the FDIC is not addressing its approach to supervisory criticism in the final rule, including any criticism related to reputation risk, the final rule does not address supervisory criticisms relating to ‘‘reputation risk.’’ Nonetheless, the FDIC affirms that it does not issue supervisory recommendations, including MRBAs 17 solely based on reputation risk. 17 The FDIC does not issue MRAs or MRIAs. Rather, the FDIC issues MRBAs, which are a subset of supervisory recommendations. See Statement of the FDIC Board of Directors on the Development and Communication of Supervisory Recommendations available at https:// www.fdic.gov/about/governance/ recommendations.html. E:\FR\FM\02MRR1.SGM 02MRR1 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations With respect to the comments on coverage of interpretive rules, the FDIC agrees with the commenter that interpretive rules do not, alone, ‘‘have the force and effect of law’’ and must be rooted in, and derived from, a statute or regulation.18 While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA and its jurisprudence and are generally issued for different purposes.19 Interpretive rules are typically issued by an agency to advise the public of the agency’s construction of the statutes and rules that it administers,20 whereas general statements of policy, such as supervisory guidance, advise the public of how an agency intends to exercise its discretionary powers.21 To this end, guidance generally reflects an agency’s policy views, for example, on safe and sound risk management practices. On the other hand, interpretive rules generally resolve ambiguities regarding requirements imposed by statutes and regulations. Because supervisory guidance and interpretive rules have different characteristics and serve different purposes, the FDIC has decided that the final rule will continue to cover supervisory guidance only. With respect to the question of whether to adopt ACUS’s procedures for allowing the public to request reconsideration or revision of an 18 See Mortgage Bankers Association, 575 U.S. at jbell on DSKJLSW7X2PROD with RULES 96. 19 Questions concerning the legal and supervisory nature of interpretive rules are case-specific and have engendered debate among courts and administrative law commentators. The FDIC takes no position in this rulemaking on those specific debates. See, e.g., R. Levin, Rulemaking and the Guidance Exemption, 70 Admin. L. Rev. 263 (2018) (discussing the doctrinal differences concerning the status of interpretive rules under the APA); see also Nicholas R. Parillo, Federal Agency Guidance and the Powder to Bind: An Empirical Study of Agencies and Industries, 36 Yale J. Reg 165, 168 n.6 (2019) (‘‘[w]hether interpretive rules are supposed to be nonbinding is a question subject to much confusion that is not fully settled’’); see also ACUS, Recommendation 2019–1, Agency Guidance Through Interpretive Rules (Adopted June 13, 2019), available at https://www.acus.gov/ recommendation/agency-guidance-throughinterpretive-rules (noting that courts and commentators have different views on whether interpretive rules bind an agency and effectively bind the public through the deference given to agencies’ interpretations of their own rules under Auer v. Robbins, 519 U.S. 452 (1997)). 20 Mortgage Bankers Association, 575 U.S. at 97 (citing Shalala v. Guernsey Memorial Hospital, 514 U.S. 87, 99 (1995)); accord Attorney General’s Manual at 30 n.3. 21 See Chrysler v. Brown, 441 U.S. at 302 n.31 (quoting Attorney General’s Manual at 30 n.3); see also, e.g., American Mining Congress v. Mine Safety & Health Administration, 995 F.2d 1106, 1112 (D.C. Cir. 1993) (outlining tests in the D.C. Circuit for assessing whether an agency issuance is an interpretive rule). VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 interpretive rule, this rulemaking, again, does not address interpretive rules. As such, the FDIC is not adding procedures for challenges to interpretive rules through this rulemaking. In response to the comment that the agencies treat examples in guidance as ‘‘safe harbors’’ from supervisory criticism, the FDIC agrees that examples offered in supervisory guidance can provide insight about practices that, in general, may lead to safe and sound operation and compliance with regulations and statutes. The examples in guidance, however, are generalized. When an institution implements examples, examiners must consider the facts and circumstances of that institution in assessing the application of those examples. In addition, the underlying legal principle of supervisory guidance is that it does not create binding legal obligation for either the public or an agency. As such, the FDIC does not deem examples used in supervisory guidance to categorically establish safe harbors from supervisory criticism. In response to the comments that the Proposal may undermine the important role that supervisory guidance can play in informing supervisory criticism and by serving to address conditions before those conditions lead to enforcement actions, the FDIC agrees that the appropriate use of supervisory guidance generates a more collaborative and constructive regulatory process that supports the safety and soundness and compliance of institutions, thereby diminishing the need for enforcement actions. As noted by ACUS, guidance can make agency decision-making more predictable and uniform and shield regulated parties from unequal treatment, unnecessary costs, and unnecessary risk, while promoting compliance with the law. The FDIC intends, therefore, to continue using guidance as part of the supervisory process. The FDIC does not view the final rule as weakening the role of guidance in the supervisory process and the FDIC will continue to use guidance to support the safety and soundness of banks and promote compliance with consumer protection laws and regulations. Further, the FDIC does not agree with one commenter’s assertion that the Proposal made an unclear distinction between, on the one hand, inappropriate supervisory criticism for a ‘‘violation’’ of or ‘‘non-compliance’’ with supervisory guidance, and, on the other hand, FDIC examiners’ use of supervisory guidance to reference examples of safe and sound conduct, appropriate consumer protection and PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 12083 risk management practices, and other actions for addressing compliance with laws or regulations. This approach appropriately implements the principle that institutions are not required to follow supervisory guidance in itself but may find such guidance useful. With respect to the comment that visitorial powers do not provide the Federal banking agencies with authority to issue MRAs or other supervisory criticisms, the FDIC disagrees. The FDIC’s visitorial powers are wellestablished. The Supreme Court’s decision in Cuomo v. Clearing House Assn L.L.C. explained that the visitation included the ‘‘exercise of supervisory power.’’ 22 The Court ruled that the ‘‘power to enforce the law exists separate and apart from the power of visitation.’’ 23 While the Cuomo decision involved the question of which powers may be exercised by state governments (and ruled that states could exercise law enforcement powers, but could not exercise visitorial powers), the decision did not dispute that the Federal banking agencies possess both these powers. The Court in Cuomo explained that visitorial powers entailed ‘‘oversight and supervision,’’ while the Court’s earlier decision in Watters v. Wachovia Bank, N.A. explained that visitorial powers entailed ‘‘general supervision and control.’’ 24 Accordingly, visitorial powers include the power to issue supervisory criticisms independent of the agencies’ authority to enforce applicable laws or ensure safety and soundness. For these reasons, the FDIC reaffirms the statement in the preamble to the Proposed Rule that such visitorial powers have been conferred through statutory examination and reporting authorities, which facilitate the FDIC’s identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound practice, or breach of fiduciary duty under 12 U.S.C. 1818. These statutory examination and reporting authorities pre-existed 12 U.S.C. 1818, which neither superseded nor replaced such authorities. The FDIC has been vested with statutory examination and reporting authorities with respect to banks under its supervision.25 23 Cuomo v. Clearing House Assn L.L.C., 557 U.S. 519,536 (2009). 23 Id. at 533. 24 Watters v. Wachovia Bank, N.A., 550 U.S. 1, 127 (2007). 25 The commenter’s reading of the agencies’ examination and reporting authorities would assert that the agencies may examine supervised institutions and require reports, but not make findings based on such examinations and reporting, E:\FR\FM\02MRR1.SGM Continued 02MRR1 12084 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES In response to comments regarding the role of public comment for supervisory guidance, the FDIC notes that it has made clear through the 2018 Statement and in this final rule that supervisory guidance (including guidance that goes through public comment) does not create binding, enforceable legal obligations. Rather, the FDIC in some instances issues supervisory guidance for comment in order to improve its understanding of an issue, gather information, or seek ways to achieve a supervisory objective most effectively. Similarly, examples that are included in supervisory guidance (including guidance that goes through public comment) are not binding on institutions. Rather, these examples are intended to be illustrative of ways a supervised institution may implement safe and sound practices, appropriate consumer protection, prudent risk management, or other actions in furtherance of compliance with laws or regulations. Relatedly, the FDIC does not agree with one comment that it should use notice-and-comment procedures, without exception, to issue all ‘‘rules’’ as defined by the APA, which would include supervisory guidance. Congress has established longstanding exceptions in the APA from the notice and comment process for certain ‘‘rules,’’ including for general statements of policy like supervisory guidance and for interpretive rules. As one court has explained, Congress intended to ‘‘accommodate situations where the policies promoted by public participation in rulemaking are outweighed by the countervailing considerations of effectiveness, efficiency, expedition and reduction in expense.’’ 26 With respect to the commenter’s request that the agencies affirm that they will apply statutory factors while processing applications, the FDIC affirms that the agency will continue to consider and apply all applicable statutory factors when processing applications. In response to the question raised by some commenters concerning potential confusion between supervisory guidance and interpretive rules, the FDIC notes that interpretive rules are outside the scope of the rulemaking. In addition, as stated earlier, interpretive unless the finding is sufficient to warrant a formal enforcement action under the standard set out in 12 U.S.C. 1818. This reading is inconsistent with the history of federal banking supervision, including as described in the cases cited in the Proposed Rule. 26 Am. Hosp. Ass’n v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987). The specific contours of these exceptions are the subject of an extensive body of case law. VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 rules do not, alone, ‘‘have the force and effect of law’’ and must be rooted in, and derived from, a statute or regulation. While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA and its jurisprudence and are generally issued for different purposes. The FDIC believes that when it issues an interpretive rule, the fact that it is an interpretive rule is generally clear. In addition, these comments relate to clarity in drafting, rather than a matter that seems suitable for rulemaking. In response to the two commenters opposing the Proposal, this final rule does not undermine any of the FDIC’s safety and soundness or other authorities. Indeed, the final rule is designed to support the FDIC’s ability to supervise banks effectively. In addition, the FDIC notes the question of the role of guidance has been one of interest to regulated parties and other stakeholders over the past few years. The Petition and the number of comments on the Proposal are a sign of this interest. As such, the FDIC believes it will serve the public interest to reaffirm the appropriate role of supervisory guidance. There are inherent benefits to the supervisory process whenever institutions and examiners have a clear understanding of their roles, including how supervisory guidance can be used effectively within legal limits. Therefore, the FDIC is proceeding with the rule as proposed. In response to the commenter expressing concern that language in the Statement on reducing multiple supervisory guidance documents on the same topic will limit the FDIC’s ability to provide valuable guidance, the FDIC assures the commenter that this language will not inhibit the FDIC from issuing new supervisory guidance when appropriate. Finally, the FDIC appreciates the other comments related to other aspects of guidance or the supervisory process, but the FDIC does not believe that they are best addressed in this rulemaking. III. The Final Rule For the reasons discussed above, the final rule adopts the Proposed Rule without substantive changes. However, the FDIC has decided to issue a final rule that is specifically addressed to the FDIC and FDIC-supervised institutions, rather than the joint version that the five agencies included in their joint Proposal. Although many of the comments were applicable to all of the agencies, some comments were specific to particular agencies or to groups of PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 agencies. Having separate final rules has enabled agencies to better focus on explaining any agency-specific issues to their respective audiences of supervised institutions and agency employees. IV. Administrative Law Matters A. Paperwork Reduction Act The Paperwork Reduction Act of 1995 27 (PRA) states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The FDIC has reviewed this final rule and determined that it does not contain any information collection requirements subject to the PRA. Accordingly, no submissions to OMB will be made with respect to this final rule. B. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) generally requires that, in connection with a final rulemaking, an agency prepare and make available for public comment a final regulatory flexibility analysis describing the impact of the final rule on small entities.28 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.29 The Small Business Administration (SBA) has defined ‘‘small entities’’ to include banking organizations with total assets of less than or equal to $600 million that are independently owned and operated or owned by a holding company with less than or equal to $600 million in total assets.30 Generally, the FDIC considers a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of these thresholds typically represent significant effects for FDIC-supervised institutions. As of September 30, 2020, the FDIC supervised 3,245 institutions, of which 27 44 U.S.C. 3501–3521. U.S.C. 601 et seq. 29 5 U.S.C. 605(b). 30 The SBA defines a small banking organization as having $600 million or less in assets, where an organization’s ‘‘assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.’’ See 13 CFR 121.201 (as amended by 84 FR 34261, effective August 19, 2019). In its determination, the ‘‘SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates.’’ See 13 CFR 121.103. Following these regulations, the FDIC uses a covered entity’s affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the covered entity is ‘‘small’’ for the purposes of RFA. 28 5 E:\FR\FM\02MRR1.SGM 02MRR1 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations 2,434 were considered small for purposes of RFA.31 This final rule does not impose any obligations on FDICsupervised entities, and FDICsupervised entities do not need to take any action in response to this rule. For these reasons, and under section 605(b) of the RFA, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small FDIC-supervised institutions. C. Plain Language Section 722 of the Gramm-LeachBliley Act 32 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The FDIC has sought to present the final rule in a simple and straightforward manner and did not receive any comments on the use of plain language in the Proposed Rule. D. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),33 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.34 The FDIC has determined that the final rule will not impose additional reporting, disclosure, or other requirements on IDIs; therefore, the requirements of the RCDRIA do not apply. jbell on DSKJLSW7X2PROD with RULES E. Congressional Review Act For purposes of Congressional Review Act, the OMB makes a determination as 31 FDIC Consolidated Reports of Condition and Income Data, September 30, 2020. 32 Public Law 106–102, section 722, 113 Stat. 1338, 1471 (1999), 12 U.S.C. 4809. 33 12 U.S.C. 4802(a). 34 12 U.S.C. 4802. VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 to whether a final rule constitutes a ‘‘major’’ rule.35 If a rule is deemed a ‘‘major rule’’ by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.36 The Congressional Review Act defines a ‘‘major rule’’ as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets.37 As required by the Congressional Review Act, the FDIC will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review. List of Subjects in 12 CFR Part 302 Administrative practice and procedure, Banks, banking. FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Chapter III Authority and Issuance For the reasons set forth in the preamble, the FDIC adds part 302 to 12 CFR chapter III, subchapter A, to read as follows: ■ PART 302—USE OF SUPERVISORY GUIDANCE Sec. 302.1 Purpose. 302.2 Implementation of the Statement Clarifying the Role of Supervisory Guidance. 302.3 Rule of construction. Appendix A to Part 302—Statement Clarifying the Role of Supervisory Guidance Authority: 5 U.S.C. 552; 12 U.S.C. 1818, 1819(a) (Seventh and Tenth), 1831p–1. § 302.1 Purpose. The FDIC issues regulations and guidance as part of its supervisory function. This subpart reiterates the distinctions between regulations and guidance, as stated in the Statement Clarifying the Role of Supervisory 35 5 U.S.C. 801 et seq. U.S.C. 801(a)(3). 37 5 U.S.C. 804(2). 36 5 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 12085 Guidance (appendix A to this part) (Statement). § 302.2 Implementation of the Statement Clarifying the Role of Supervisory Guidance. The Statement describes the official policy of the FDIC with respect to the use of supervisory guidance in the supervisory process. The Statement is binding on the FDIC. § 302.3 Rule of construction. This subpart does not alter the legal status of guidelines authorized by statute, including but not limited to, 12 U.S.C. 1831p–1, to create binding legal obligations. Appendix A to Part 302—Statement Clarifying the Role of Supervisory Guidance Statement Clarifying the Role of Supervisory Guidance The FDIC is issuing this statement to explain the role of supervisory guidance and to describe the FDIC’s approach to supervisory guidance. Difference Between Supervisory Guidance and Laws or Regulations The FDIC issues various types of supervisory guidance, including interagency statements, advisories, policy statements, questions and answers, and frequently asked questions, to its supervised institutions. A law or regulation has the force and effect of law.1 Unlike a law or regulation, supervisory guidance does not have the force and effect of law, and the FDIC does not take enforcement actions based on supervisory guidance. Rather, supervisory guidance outlines the FDIC’s supervisory expectations or priorities and articulates the FDIC’s general views regarding appropriate practices for a given subject area. Supervisory guidance often provides examples of practices that the FDIC generally considers consistent with safety-and-soundness standards or other applicable laws and regulations, including those designed to protect consumers. Supervised institutions at times request supervisory guidance, and such guidance is important to provide insight to industry, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach. Ongoing Efforts To Clarify the Role of Supervisory Guidance The FDIC is clarifying the following policies and practices related to supervisory guidance: • The FDIC intends to limit the use of numerical thresholds or other ‘‘bright-lines’’ in describing expectations in supervisory guidance. Where numerical thresholds are used, the FDIC intends to clarify that the 1 Government agencies issue regulations that generally have the force and effect of law. Such regulations generally take effect only after the agency proposes the regulation to the public and responds to comments on the proposal in a final rulemaking document. E:\FR\FM\02MRR1.SGM 02MRR1 12086 Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules and Regulations thresholds are exemplary only and not suggestive of requirements. The FDIC will continue to use numerical thresholds to tailor, and otherwise make clear, the applicability of supervisory guidance or programs to supervised institutions, and as required by statute. • Examiners will not criticize through supervisory recommendations (including matters requiring board attention) a supervised financial institution for, and the FDIC will not issue an enforcement action on the basis of, a ‘‘violation’’ of or ‘‘noncompliance’’ with supervisory guidance. In some situations, examiners may reference (including in writing) supervisory guidance to provide examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations. • Supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions. • The FDIC also has at times sought, and may continue to seek, public comment on supervisory guidance. Seeking public comment on supervisory guidance does not mean that the guidance is intended to be a regulation or have the force and effect of law. The comment process helps the FDIC to improve its understanding of an issue, to gather information on institutions’ risk management practices, or to seek ways to achieve a supervisory objective most effectively and with the least burden on institutions. • The FDIC will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances going forward. The FDIC will continue efforts to make the role of supervisory guidance clear in communications to examiners and to supervised financial institutions and encourage supervised institutions with questions about this statement or any applicable supervisory guidance to discuss the questions with their appropriate agency contact. jbell on DSKJLSW7X2PROD with RULES Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on January 19, 2021. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2021–01537 Filed 3–1–21; 8:45 am] BILLING CODE 6714–01–P VerDate Sep<11>2014 16:15 Mar 01, 2021 Jkt 253001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2020–0905; Project Identifier 2019–SW–102–AD; Amendment 39–21384; AD 2021–02–01] RIN 2120–AA64 Airworthiness Directives; Airbus Helicopters Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. AGENCY: The FAA is superseding Airworthiness Directive (AD) 2015–26– 01, which applied to certain Airbus Helicopters Model AS332C1, AS332L1, AS332L2, EC225LP, AS–365N2, AS 365 N3, EC 155B, and EC155B1 helicopters with an energy-absorbing seat. AD 2015–26–01 required inspecting for the presence of labels (placards) that prohibit stowing anything under the seat, and if a label (placard) is missing or not clearly visible to each occupant, installing a label (placard). This AD retains all of the requirements of AD 2015–26–01, and also adds helicopters to the applicability and requires a modification (installing new labels (placards)). This AD was prompted by the determination that additional helicopters are affected by the unsafe condition, and that new labels (placards) are required for all affected helicopters. The FAA is issuing this AD to address the unsafe condition on these products. DATES: This AD is effective April 6, 2021. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of April 6, 2021. The Director of the Federal Register approved the incorporation by reference of certain other publications listed in this AD as of January 26, 2016 (80 FR 79466, December 22, 2015). ADDRESSES: For service information identified in this final rule, contact Airbus Helicopters, 2701 N Forum Drive, Grand Prairie, TX 75052; phone: 972–641–0000 or 800–232–0323; fax: 972–641–3775; or at https:// www.airbus.com/helicopters/services/ support.html. You may view this referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N–321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, SUMMARY: PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 call 817–222–5110. It is also available on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0905. Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0905; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, any comments received, and other information. The address for Docket Operations is U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Kathleen Arrigotti, Aviation Safety Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; phone and fax: 206–231–3218; email: kathleen.arrigotti@faa.gov. SUPPLEMENTARY INFORMATION: Discussion The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2015–26–01, Amendment 39–18349 (80 FR 79466, December 22, 2015) (AD 2015–26–01). AD 2015–26–01 applied to certain Airbus Helicopters Model AS332C1, AS332L1, AS332L2, EC225LP, AS– 365N2, AS 365 N3, EC 155B, and EC155B1 helicopters with an energyabsorbing seat. The NPRM published in the Federal Register on October 7, 2020 (85 FR 63240). The NPRM was prompted by the discovery that required labels (placards) prohibiting stowage of any object under an energy-absorbing seat had not been systematically installed and the determination that additional helicopters are affected by the unsafe condition, and that new labels (placards) are required for all affected helicopters. The NPRM proposed to continue to require inspecting for the presence of labels (placards) that prohibit stowing anything under the seat, and if a label (placard) is missing or not clearly visible to each occupant, installing a label (placard), and also proposed to add helicopters to the applicability and require a modification (installing new labels (placards)). The FAA is issuing this AD to address any object stowed under an energy-absorbing seat, which could reduce the efficiency of the energy-absorbing function of the seat, E:\FR\FM\02MRR1.SGM 02MRR1

Agencies

[Federal Register Volume 86, Number 39 (Tuesday, March 2, 2021)]
[Rules and Regulations]
[Pages 12079-12086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-01537]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Rules 
and Regulations

[[Page 12079]]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 302

RIN 3064-AF32


Role of Supervisory Guidance

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is adopting a final rule that codifies the 
Interagency Statement Clarifying the Role of Supervisory Guidance, 
issued by the FDIC, Board of Governors of the Federal Reserve System 
(Board), Office of the Comptroller of the Currency, Treasury (OCC), 
National Credit Union Administration (NCUA), and Bureau of Consumer 
Financial Protection (Bureau) (collectively, the agencies) on September 
11, 2018 (2018 Statement). By codifying the 2018 Statement, with 
amendments, the final rule confirms that the FDIC will continue to 
follow and respect the limits of administrative law in carrying out its 
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. As 
such, supervisory guidance does not create binding legal obligations 
for the public. Because it is incorporated into the final rule, the 
2018 Statement, as amended, is binding on the FDIC. The final rule 
adopts the rule as proposed without substantive changes.

DATES: The final rule is effective on April 1, 2021.

FOR FURTHER INFORMATION CONTACT: Rae-Ann Miller, Senior Deputy 
Director, (202) 898-3898; Karen Jones Currie, Senior Examination 
Specialist, (202) 898-3981; Supervisory Examinations Branch, Division 
of Risk Management and Supervision; Luke H. Brown, Associate Director, 
(202) 898-3842; David Friedman, Senior Policy Analyst, (202) 898-7168, 
Supervisory Policy, Division of Depositor and Consumer Protection; 
William Piervincenzi, Supervisory Counsel, (202) 898-6957; Kathryn J. 
Marks, Counsel, (202) 898-3896; Jennifer M. Jones, Counsel, (202) 898-
6768, [email protected], Supervision and Legislation Branch, Legal 
Division, Federal Deposit Insurance Corporation, 550 17th Street NW, 
Washington, DC 20429. For the hearing impaired only, Telecommunication 
Device for the Deaf (TDD), (800) 925-4618.

SUPPLEMENTARY INFORMATION:

I. Background

    The FDIC recognizes the important distinction between issuances 
that serve to implement acts of Congress (known as ``regulations'' or 
``legislative rules'') and non-binding supervisory guidance 
documents.\1\ 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.\2\
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    \1\ Regulations are commonly referred to as legislative rules 
because regulations have the ``force and effect of law.'' Perez v. 
Mortgage Bankers Association, 575 U.S. 92, 96 (2015) (citations 
omitted).
    \2\ See Chrysler v. Brown, 441 U.S. 281, 302 (1979) (quoting the 
Attorney General's Manual on the Administrative Procedure Act at 30 
n.3 (1947) (Attorney General's Manual) and discussing the 
distinctions between regulations and general statements of policy, 
of which supervisory guidance is one form).
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    In recognition of the important distinction between rules and 
guidance, on September 11, 2018, the agencies issued the Interagency 
Statement Clarifying the Role of Supervisory Guidance (2018 Statement) 
to explain the role of supervisory guidance and describe the agencies' 
approach to supervisory guidance.\3\ As noted in the 2018 Statement, 
the agencies issue various types of supervisory guidance to their 
respective supervised institutions, including, but not limited to, 
interagency statements, advisories, bulletins, policy statements, 
questions and answers, and frequently asked questions. Supervisory 
guidance outlines the agencies' supervisory expectations or priorities 
and articulates the agencies' general views regarding practices for a 
given subject area. Supervisory guidance often provides examples of 
practices that mitigate risks, or that the agencies generally consider 
to be consistent with safety-and-soundness standards or other 
applicable laws and regulations, including those designed to protect 
consumers.\4\ The agencies noted in the 2018 Statement that supervised 
institutions at times request supervisory guidance and that guidance is 
important to provide clarity to these institutions, as well as 
supervisory staff, in a transparent way that helps to ensure 
consistency in the supervisory approach.\5\
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    \3\ See https://www.fdic.gov/news/financial-institution-letters/2018/fil18049.html.
    \4\ While supervisory guidance offers guidance to the public on 
the FDIC's approach to supervision under statutes and regulations 
and safe and sound practices, the issuance of guidance is 
discretionary and is not a prerequisite to the FDIC's exercise of 
its statutory and regulatory authorities. This point reflects the 
fact that statutes and legislative rules, not statements of policy, 
set legal requirements.
    \5\ The Administrative Conference of the United States (ACUS) 
has recognized the important role of guidance documents and has 
stated that guidance can ``make agency decision-making more 
predictable and uniform and shield regulated parties from unequal 
treatment, unnecessary costs, and unnecessary risk, while promoting 
compliance with the law.'' ACUS, Recommendation 2017-5, Agency 
Guidance Through Policy Statements at 2 (adopted December 14, 2017), 
available at https://www.acus.gov/recommendation/agency-guidance-through-policy-statements. ACUS also suggests that ``policy 
statements are generally better [than legislative rules] for dealing 
with conditions of uncertainty and often for making agency policy 
accessible.'' Id. ACUS's reference to ``policy statements'' refers 
to the statutory text of the APA, which provides that notice and 
comment is not required for ``general statements of policy.'' The 
phrase ``general statements of policy'' has commonly been viewed by 
courts, agencies, and administrative law commentators as including a 
wide range of agency issuances, including guidance documents.
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    The 2018 Statement restated existing law and reaffirmed the 
agencies' understanding that supervisory guidance does not create 
binding, enforceable legal obligations. The 2018 Statement reaffirmed 
that the agencies do not issue supervisory criticisms for 
``violations'' of supervisory guidance and described the appropriate 
use of supervisory guidance by the agencies. In the 2018 Statement, the 
agencies also expressed their intention to (1) limit the use of 
numerical thresholds in guidance; (2) reduce the issuance of multiple 
supervisory guidance documents on the same topic; (3) continue efforts 
to make the role of supervisory guidance clear in communications to 
examiners and supervised institutions; and (4) encourage supervised 
institutions to discuss their concerns about

[[Page 12080]]

supervisory guidance with their agency contact.
    On November 5, 2018, the OCC, Board, FDIC, and Bureau each received 
a petition for a rulemaking (Petition), as permitted under the 
Administrative Procedure Act (APA),\6\ requesting that the agencies 
codify the 2018 Statement.\7\ The Petition argued that a rule on 
guidance is necessary to bind future agency leadership and staff to the 
2018 Statement's terms. The Petition also suggested there are 
ambiguities in the 2018 Statement concerning how supervisory guidance 
is used in connection with matters requiring attention, matters 
requiring immediate attention (collectively, MRAs), as well as in 
connection with other supervisory actions that should be clarified 
through a rulemaking. Finally, the Petition called for the rulemaking 
to implement changes in the agencies' standards for issuing MRAs. 
Specifically, the Petition requested that the agencies limit the role 
of MRAs to addressing circumstances in which there is a violation of a 
statute, regulation, or order, or demonstrably unsafe or unsound 
practices.
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    \6\ 5 U.S.C. 553(e).
    \7\ See Petition for Rulemaking on the Role of Supervisory 
Guidance, available at https://bpi.com/wp-content/uploads/2018/11/BPI_PFR_on_Role_of_Supervisory_Guidance_Federal_Reserve.pdf. The 
Petitioners did not submit a petition to the NCUA, which has no 
supervisory authority over the financial institutions that are 
represented by Petitioners. The NCUA chose to join the Proposed Rule 
on its own initiative.
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II. The Proposed Rule and Comments Received

    On November 5, 2020, the agencies issued a proposed rule (Proposed 
Rule or Proposal) that would have codified the 2018 Statement, with 
clarifying changes, as an appendix to proposed rule text.\8\ The 
Proposed Rule would have superseded the 2018 Statement. The rule text 
would have provided that an amended version of the 2018 Statement is 
binding on each respective agency.
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    \8\ 85 FR 70512 (November 5, 2020).
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Clarification of the 2018 Statement

    The Petition expressed support for the 2018 Statement and 
acknowledged that it addresses many issues of concern for the 
Petitioners relating to the use of supervisory guidance. The Petition 
expressed concern, however, that the 2018 Statement's reference to not 
basing ``criticisms'' on violations of supervisory guidance has led to 
confusion about whether MRAs are covered by the 2018 Statement. 
Accordingly, the agencies proposed to clarify in the Proposed Rule that 
the term ``criticize'' includes the issuance of MRAs and other 
supervisory criticisms, including those communicated through matters 
requiring board attention, documents of resolution, and supervisory 
recommendations (collectively, supervisory criticisms).\9\ As such, the 
agencies reiterated that examiners will not base supervisory criticisms 
on a ``violation'' of or ``non-compliance'' with supervisory 
guidance.\10\ The agencies noted that, in some situations, examiners 
may reference (including in writing) supervisory guidance to provide 
examples of safe and sound conduct, appropriate consumer protection and 
risk management practices, and other actions for addressing compliance 
with laws or regulations. The agencies also reiterated that they will 
not issue an enforcement action on the basis of a ``violation'' of or 
``non-compliance'' with supervisory guidance. The Proposed Rule 
reflected these clarifications.\11\
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    \9\ The agencies use different terms to refer to supervisory 
actions that are similar to MRAs and Matters Requiring Immediate 
Attention (MRIAs), including matters requiring board attention 
(MRBAs), documents of resolution, and supervisory recommendations.
    \10\ For the sake of clarification, one source of law among many 
that can serve as a basis for a supervisory criticism is the 
Interagency Guidelines Establishing Standards for Safety and 
Soundness, see 12 CFR part 30, appendix A, 12 CFR part. 208, 
appendix D-1, and 12 CFR part 364, appendix A. These Interagency 
Guidelines were issued using notice and comment and pursuant to 
express statutory authority in 12 U.S.C. 1831p-1(d)(1) to adopt 
safety and soundness standards either by ``regulation or 
guideline.''
    \11\ The 2018 Statement contains the following sentence: 
``Examiners will not criticize a supervised financial institution 
for a `violation' of supervisory guidance.'' 2018 Statement at 2. As 
revised in the Proposed Rule, this sentence read as follows: 
``Examiners will not criticize (including through the issuance of 
matters requiring attention, matters requiring immediate attention, 
matters requiring board attention, documents of resolution, and 
supervisory recommendations) a supervised financial institution for, 
and agencies will not issue an enforcement action on the basis of, a 
`violation' of or `non-compliance' with supervisory guidance.'' 
Proposed Rule (emphasis added). As discussed infra in footnote 13, 
the Proposed Rule also removed the sentences in the 2018 Statement 
that referred to ``citation,'' which the Petition suggested had been 
confusing. These sentences were also removed to clarify that the 
focus of the Proposed Rule related to the use of guidance, not the 
standards for MRAs.
---------------------------------------------------------------------------

    The Petition requested further that these supervisory criticisms 
should not include ``generic'' or ``conclusory'' references to safety 
and soundness. The agencies agreed that supervisory criticisms should 
continue to be specific as to practices, operations, financial 
conditions, or other matters that could have a negative effect on the 
safety and soundness of the financial institution, could cause consumer 
harm, or could cause violations of laws, regulations, final agency 
orders, or other legally enforceable conditions. Accordingly, the 
agencies included language reflecting this practice in the Proposed 
Rule.
    The Petition also suggested that MRAs, as well as memoranda of 
understanding, examination downgrades, and any other formal examination 
mandate or sanction, should be based only on a violation of a statute, 
regulation, or order, including a ``demonstrably unsafe or unsound 
practice.'' \12\ As noted in the Proposed Rule, examiners all take 
steps to identify deficient practices before they rise to violations of 
law or regulation or before they constitute unsafe or unsound banking 
practices. The agencies stated that they continue to believe that early 
identification of deficient practices serves the interest of the public 
and of supervised institutions. Early identification protects the 
safety and soundness of banks, promotes consumer protection, and 
reduces the costs and risk of deterioration of financial condition from 
deficient practices resulting in violations of laws or regulations, 
unsafe or unsound conditions, or unsafe or unsound banking practices. 
The Proposed Rule also noted that the agencies have different 
supervisory processes, including for issuing supervisory criticisms. 
For these reasons, the agencies did not propose revisions to their 
respective supervisory practices relating to supervisory criticisms.
---------------------------------------------------------------------------

    \12\ The Petition asserted that the federal banking agencies 
rely on 12 U.S.C. 1818(b)(1) when issuing MRAs based on safety-and-
soundness matters. Through statutory examination and reporting 
authorities, Congress has conferred upon the agencies the authority 
to exercise visitorial powers with respect to supervised 
institutions. The Supreme Court has indicated support for a broad 
reading of the agencies' visitorial powers. See, e.g., Cuomo v. 
Clearing House Assn L.L.C., 557 U.S. 519 (2009); United States v. 
Gaubert, 499 U.S. 315 (1991); and United States v. Philadelphia Nat. 
Bank, 374 U.S. 321 (1963). The visitorial powers facilitate early 
identification of supervisory concerns that may not rise to a 
violation of law, unsafe or unsound banking practice, or breach of 
fiduciary duty under 12 U.S.C. 1818.
---------------------------------------------------------------------------

    The agencies also noted that the 2018 Statement was intended to 
focus on the appropriate use of supervisory guidance in the supervisory 
process, rather than the standards for supervisory criticisms. To 
address any confusion concerning the scope of the 2018 Statement, the 
Proposed Rule removed two sentences from the 2018 Statement concerning 
grounds for ``citations'' and the handling of deficiencies that do not 
constitute violations of law.\13\
---------------------------------------------------------------------------

    \13\ The following sentences from the 2018 Statement were not 
present in the Proposed Rule: ``Rather, any citations will be for 
violations of law, regulation, or non-compliance with enforcement 
orders or other enforceable conditions. During examinations and 
other supervisory activities, examiners may identify unsafe or 
unsound practices or other deficiencies in risk management, 
including compliance risk management, or other areas that do not 
constitute violations of law or regulation.'' 2018 Statement at 2. 
The agencies did not intend these deletions to indicate a change in 
supervisory policy.

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[[Page 12081]]

Comments on the Proposed Rule

A. Overview

    The five agencies received approximately 30 unique comments 
concerning the Proposed Rule.\14\ The FDIC discusses below those 
comments that are potentially relevant to the FDIC.\15\ Commenters 
representing trade associations for banking institutions and other 
businesses, state bankers' associations, individual financial 
institutions, and one member of Congress expressed general support for 
the proposed rule. These commenters supported codification of the 2018 
Statement and the reiteration by the agencies that guidance does not 
have the force of law and cannot give rise to binding, enforceable 
legal obligations. One of these commenters stated that the Proposal 
would serve the interests of consumers and competition by clarifying 
the law for institutions and potentially removing ambiguities that 
could deter the development of innovative products that serve consumers 
and business clients, without uncertainty regarding potential 
regulatory consequences. These commenters expressed strong support as 
well for the clarification in the Proposed Rule that the agencies will 
not criticize, including through the issuance of ``matters requiring 
attention,'' a supervised financial institution for a ``violation'' of, 
or ``non-compliance'' with, supervisory guidance.
---------------------------------------------------------------------------

    \14\ Of the comments received, some comments were not submitted 
to all agencies, and some comments were identical. Note that this 
total excludes comments that were directed at an unrelated 
rulemaking by the Financial Crimes Enforcement Network of the 
Department of the Treasury (FinCEN). This final rule does not 
specifically discuss those comments that are only potentially 
relevant to other agencies.
    \15\ This final rule does not specifically discuss those 
comments that are only potentially relevant to other agencies.
---------------------------------------------------------------------------

    One commenter agreed with the agencies that supervisory criticisms 
should not be limited to violation of statutes, regulations, or orders, 
including a ``demonstrable unsafe or unsound practice'' and that 
supervisory guidance remains a beneficial tool to communicate 
supervisory expectations to the industry. The commenter stated that the 
proactive identification of supervisory criticism or deficiencies that 
do not constitute violations of law facilitates forward-looking 
supervision, which helps address problems before they warrant a formal 
enforcement action. The commenter noted as well that supervisory 
guidance provides important insight to the industry and ensures 
consistency in the supervisory approach and that supervised 
institutions frequently request supervisory guidance. The commenter 
observed that the COVID-19 pandemic has amplified the requests for 
supervisory guidance and interpretation and that it is apparent 
institutions want clarity and guidance from regulators.
    Two commenters, both public interest advocacy groups, opposed the 
proposed rule, suggesting that codifying the 2018 Statement may 
undermine the important role that supervisory guidance can play by 
informing supervisory criticism, rather than merely clarifying that it 
will not serve as the basis for enforcement actions. One commenter 
stated that it is essential for agencies to have the prophylactic 
authority to base criticisms on imprudent bank practices that may not 
yet have ripened into violations of law or significant safety and 
soundness concerns. The commenter stated that this is particularly 
important with respect to large banks, where delay in addressing 
concerns could lead to a broader crisis. One commenter stated that the 
agencies have not explained the benefits that would result from the 
rule or demonstrated how the rule will promote safety and soundness or 
consumer protection. The commenter argued that supervision is different 
from other forms of regulation and requires supervisory discretion, 
which could be constrained by the rule. One of these commenters argued 
that the Proposal would send a signal that banking institutions have 
wider discretion to ignore supervisory guidance.

B. Scope of Rule

    Several industry commenters requested that the Proposed Rule cover 
interpretive rules and clarify that interpretive rules do not have the 
force and effect of law. One commenter stated that the agencies should 
clarify whether they believe that interpretive rules can be binding. 
The commenter argued that, under established legal principles, 
interpretive rules can be binding on the agency that issues them but 
not on the public. Some commenters suggested that the agencies follow 
ACUS recommendations for issuing interpretive rules and that the 
agencies should clarify when particular guidance documents are (or are 
not) interpretive rules and allow the public to petition to change an 
interpretation. A number of commenters requested that the agencies 
expand the statement to address the standards that apply to MRAs and 
other supervisory criticisms, a suggestion made in the Petition.

C. Role of Guidance Documents

    Several commenters recommended that the agencies clarify that the 
practices described in supervisory guidance are merely examples of 
conduct that may be consistent with statutory and regulatory 
compliance, not expectations that may form the basis for supervisory 
criticism. One commenter suggested that the agencies state that when 
agencies offer examples of safe and sound conduct, compliance with 
consumer protection standards, appropriate risk management practices, 
or acceptable practices through supervisory guidance or interpretive 
rules, the agencies will treat adherence to practices outlined in that 
supervisory guidance or interpretive rule as a safe harbor from 
supervisory criticism. One commenter also requested that the agencies 
make clear that guidance that goes through public comment, as well as 
any examples used in guidance, is not binding. The commenter also 
requested that the agencies affirm that they will apply statutory 
factors while processing applications.
    One commenter argued that guidance provides valuable information to 
supervisors about how their discretion should be exercised and 
therefore plays an important role in supervision. As an example, 
according to this commenter, 12 U.S.C. 1831p-1 and 12 U.S.C. 1818 
recognize the discretionary power conferred on the Federal banking 
agencies \16\ which is separate from the power to issue regulations. 
The commenter noted that, pursuant to these statutes, regulators may 
issue cease and desist orders based on reasonable cause to believe that 
an institution has engaged, is engaging, or is about to engage in an 
unsafe and unsound practice, separately and apart from whether the 
institution has technically violated a law or regulation. The commenter 
added that Congress entrusted the Federal banking agencies with the 
power to determine whether practices are unsafe and unsound and attempt 
to halt such practices through supervision, even if a specific case may 
not constitute a violation of a written law or regulation.
---------------------------------------------------------------------------

    \16\ The Federal banking agencies are the OCC, Board, and FDIC. 
12 U.S.C. 1813.
---------------------------------------------------------------------------

D. Supervisory Criticisms

    Several commenters addressed supervisory criticisms and how they 
relate to guidance. These commenters suggested that supervisory 
criticisms

[[Page 12082]]

should be specific as to practices, operations, financial conditions, 
or other matters that could have a negative effect. These commenters 
also suggested that MRAs, memoranda of understanding, and any other 
formal written mandates or sanctions should be based only on a 
violation of a statute or regulation. Similarly, these commenters 
argued that there should be no references to guidance in written formal 
actions and that banking institutions should be reassured that they 
will not be criticized or cited for a violation of guidance when no law 
or regulation is cited. One commenter suggested that it would instead 
be appropriate to discuss supervisory guidance privately, rather than 
publicly, potentially during the pre-exam meetings or during 
examination exit meetings. Another commenter suggested that, while 
referencing guidance in supervisory criticism may be useful at times, 
agencies should provide safeguards to prevent such references from 
becoming the de facto basis for supervisory criticisms. One commenter 
stated that examiners also should not criticize community banks in 
their final written examination reports for not complying with ``best 
practices'' unless the criticism involves a violation of bank policy or 
regulation. The commenter added that industry best practices should be 
transparent enough and sufficiently known throughout the industry 
before being cited in an examination report. One commenter requested 
that examiners should not apply large bank practices to community banks 
that have a different, less complex and more conservative business 
model. One commenter asserted that MRAs should not be based on 
``reputational risk,'' but rather on the underlying conduct giving rise 
to concerns and asked the agencies to address this in the final rule.
    Commenters that opposed the Proposal did not support restricting 
supervisory criticism or sanctions to explicit violations of law or 
regulation. One commenter expressed concern that requiring supervisors 
to wait for an explicit violation of law before issuing criticism would 
effectively erase the line between supervision and enforcement. 
According to the commenter, it would eliminate the space for 
supervision as an intermediate practice of oversight and cooperative 
problem-solving between banks and the regulators who support and manage 
the banking system and would also clearly violate the intent of the law 
in 12 U.S.C. 1818(b). One commenter emphasized the importance of bank 
supervisors basing their criticisms on imprudent bank practices that 
may not yet have ripened into violations of laws or rules but could 
undermine safety and soundness or pose harm to consumers if left 
unaddressed.
    One commenter argued that the agencies should state clearly that 
guidance can and will be used by supervisors to inform their 
assessments of banks' practices; and that it may be cited as, and serve 
as the basis for, criticisms. According to the commenter, even under 
the legal principles described in the Proposal, it is permissible for 
guidance to be used as a set of standards that may inform a criticism, 
provided that application of the guidance is used for corrective 
purposes, if not to support an enforcement action.
    According to one commenter, the Proposal makes fine conceptual 
distinctions between, for example, issuing supervisory criticisms ``on 
the basis of'' guidance and issuing supervisory criticisms that make 
``reference'' to supervisory guidance. The commenter suggested that is 
a distinction that it may be difficult for ``human beings to parse in 
practice.'' According to the commenter, a rule that makes such a 
distinction is likely to have a chilling effect on supervisors 
attempting to implement policy in the field. According to another 
commenter, the language allowing examiners to reference supervisory 
guidance to provide examples is too vague and threatens to marginalize 
the role of guidance and significantly reduce its usefulness in the 
process of issuing criticisms designed to correct deficient bank 
practices.

E. Legal Authority and Visitorial Powers

    One commenter questioned the Federal banking agencies' reference in 
the Proposal to visitorial powers as an additional authority for early 
identification of supervisory concerns that may not rise to a violation 
of law, unsafe or unsound banking practice, or breach of fiduciary duty 
under 12 U.S.C. 1818.

F. Issuance and Management of Supervisory Guidance

    Several commenters made suggestions about how the agencies should 
issue and manage supervisory guidance. Some commenters suggested that 
the agencies should delineate clearly between regulations and 
supervisory guidance. Commenters encouraged the agencies to regularly 
review, update, and potentially rescind outstanding guidance. One 
commenter suggested that the agencies rescind outstanding guidance that 
functions as rule, but has not gone through notice and comment. One 
commenter suggested that the agencies memorialize their intent to 
revisit and potentially rescind existing guidance, as well as limit 
multiple guidance documents on the same topic. Commenters suggested 
that supervisory guidance should be easy to find, readily available, 
online, and in a format that is user-friendly and searchable.
    One commenter encouraged the agencies to issue principles-based 
guidance that avoids the kind of granularity that could be misconstrued 
as binding expectations. According to this commenter, the agencies can 
issue separate frequently asked questions with more detailed 
information, but should clearly identify these as non-binding 
illustrations. This commenter also encouraged the agencies to publish 
proposed guidance for comment when circumstances allow. Another 
commenter requested that the agencies issue all ``rules'' as defined by 
the APA through the notice-and-comment process.
    One commenter expressed concern that the agencies will aim to 
reduce the issuance of multiple supervisory guidance documents and will 
thereby reduce the availability of guidance in circumstances where 
guidance would be valuable.

Responses to Comments

    As stated in the Proposed Rule, the 2018 Statement was intended to 
focus on the appropriate use of supervisory guidance in the supervisory 
process, rather than the standards for supervisory criticisms. The 
standards for issuing MRAs or other supervisory actions were, 
therefore, outside the scope of this rulemaking. For this reason, and 
for reasons discussed earlier, the final rule does not address the 
standards for MRAs and other supervisory actions. Similarly, because 
the FDIC is not addressing its approach to supervisory criticism in the 
final rule, including any criticism related to reputation risk, the 
final rule does not address supervisory criticisms relating to 
``reputation risk.'' Nonetheless, the FDIC affirms that it does not 
issue supervisory recommendations, including MRBAs \17\ solely based on 
reputation risk.
---------------------------------------------------------------------------

    \17\ The FDIC does not issue MRAs or MRIAs. Rather, the FDIC 
issues MRBAs, which are a subset of supervisory recommendations. See 
Statement of the FDIC Board of Directors on the Development and 
Communication of Supervisory Recommendations available at https://www.fdic.gov/about/governance/recommendations.html.

---------------------------------------------------------------------------

[[Page 12083]]

    With respect to the comments on coverage of interpretive rules, the 
FDIC agrees with the commenter that interpretive rules do not, alone, 
``have the force and effect of law'' and must be rooted in, and derived 
from, a statute or regulation.\18\ While interpretive rules and 
supervisory guidance are similar in lacking the force and effect of 
law, interpretive rules and supervisory guidance are distinct under the 
APA and its jurisprudence and are generally issued for different 
purposes.\19\ Interpretive rules are typically issued by an agency to 
advise the public of the agency's construction of the statutes and 
rules that it administers,\20\ whereas general statements of policy, 
such as supervisory guidance, advise the public of how an agency 
intends to exercise its discretionary powers.\21\ To this end, guidance 
generally reflects an agency's policy views, for example, on safe and 
sound risk management practices. On the other hand, interpretive rules 
generally resolve ambiguities regarding requirements imposed by 
statutes and regulations. Because supervisory guidance and interpretive 
rules have different characteristics and serve different purposes, the 
FDIC has decided that the final rule will continue to cover supervisory 
guidance only.
---------------------------------------------------------------------------

    \18\ See Mortgage Bankers Association, 575 U.S. at 96.
    \19\ Questions concerning the legal and supervisory nature of 
interpretive rules are case-specific and have engendered debate 
among courts and administrative law commentators. The FDIC takes no 
position in this rulemaking on those specific debates. See, e.g., R. 
Levin, Rulemaking and the Guidance Exemption, 70 Admin. L. Rev. 263 
(2018) (discussing the doctrinal differences concerning the status 
of interpretive rules under the APA); see also Nicholas R. Parillo, 
Federal Agency Guidance and the Powder to Bind: An Empirical Study 
of Agencies and Industries, 36 Yale J. Reg 165, 168 n.6 (2019) 
(``[w]hether interpretive rules are supposed to be nonbinding is a 
question subject to much confusion that is not fully settled''); see 
also ACUS, Recommendation 2019-1, Agency Guidance Through 
Interpretive Rules (Adopted June 13, 2019), available at https://www.acus.gov/recommendation/agency-guidance-through-interpretive-rules (noting that courts and commentators have different views on 
whether interpretive rules bind an agency and effectively bind the 
public through the deference given to agencies' interpretations of 
their own rules under Auer v. Robbins, 519 U.S. 452 (1997)).
    \20\ Mortgage Bankers Association, 575 U.S. at 97 (citing 
Shalala v. Guernsey Memorial Hospital, 514 U.S. 87, 99 (1995)); 
accord Attorney General's Manual at 30 n.3.
    \21\ See Chrysler v. Brown, 441 U.S. at 302 n.31 (quoting 
Attorney General's Manual at 30 n.3); see also, e.g., American 
Mining Congress v. Mine Safety & Health Administration, 995 F.2d 
1106, 1112 (D.C. Cir. 1993) (outlining tests in the D.C. Circuit for 
assessing whether an agency issuance is an interpretive rule).
---------------------------------------------------------------------------

    With respect to the question of whether to adopt ACUS's procedures 
for allowing the public to request reconsideration or revision of an 
interpretive rule, this rulemaking, again, does not address 
interpretive rules. As such, the FDIC is not adding procedures for 
challenges to interpretive rules through this rulemaking.
    In response to the comment that the agencies treat examples in 
guidance as ``safe harbors'' from supervisory criticism, the FDIC 
agrees that examples offered in supervisory guidance can provide 
insight about practices that, in general, may lead to safe and sound 
operation and compliance with regulations and statutes. The examples in 
guidance, however, are generalized. When an institution implements 
examples, examiners must consider the facts and circumstances of that 
institution in assessing the application of those examples. In 
addition, the underlying legal principle of supervisory guidance is 
that it does not create binding legal obligation for either the public 
or an agency. As such, the FDIC does not deem examples used in 
supervisory guidance to categorically establish safe harbors from 
supervisory criticism.
    In response to the comments that the Proposal may undermine the 
important role that supervisory guidance can play in informing 
supervisory criticism and by serving to address conditions before those 
conditions lead to enforcement actions, the FDIC agrees that the 
appropriate use of supervisory guidance generates a more collaborative 
and constructive regulatory process that supports the safety and 
soundness and compliance of institutions, thereby diminishing the need 
for enforcement actions. As noted by ACUS, guidance can make agency 
decision-making more predictable and uniform and shield regulated 
parties from unequal treatment, unnecessary costs, and unnecessary 
risk, while promoting compliance with the law. The FDIC intends, 
therefore, to continue using guidance as part of the supervisory 
process. The FDIC does not view the final rule as weakening the role of 
guidance in the supervisory process and the FDIC will continue to use 
guidance to support the safety and soundness of banks and promote 
compliance with consumer protection laws and regulations.
    Further, the FDIC does not agree with one commenter's assertion 
that the Proposal made an unclear distinction between, on the one hand, 
inappropriate supervisory criticism for a ``violation'' of or ``non-
compliance'' with supervisory guidance, and, on the other hand, FDIC 
examiners' use of supervisory guidance to reference examples of safe 
and sound conduct, appropriate consumer protection and risk management 
practices, and other actions for addressing compliance with laws or 
regulations. This approach appropriately implements the principle that 
institutions are not required to follow supervisory guidance in itself 
but may find such guidance useful.
    With respect to the comment that visitorial powers do not provide 
the Federal banking agencies with authority to issue MRAs or other 
supervisory criticisms, the FDIC disagrees. The FDIC's visitorial 
powers are well-established. The Supreme Court's decision in Cuomo v. 
Clearing House Assn L.L.C. explained that the visitation included the 
``exercise of supervisory power.'' \22\ The Court ruled that the 
``power to enforce the law exists separate and apart from the power of 
visitation.'' \23\ While the Cuomo decision involved the question of 
which powers may be exercised by state governments (and ruled that 
states could exercise law enforcement powers, but could not exercise 
visitorial powers), the decision did not dispute that the Federal 
banking agencies possess both these powers. The Court in Cuomo 
explained that visitorial powers entailed ``oversight and 
supervision,'' while the Court's earlier decision in Watters v. 
Wachovia Bank, N.A. explained that visitorial powers entailed ``general 
supervision and control.'' \24\ Accordingly, visitorial powers include 
the power to issue supervisory criticisms independent of the agencies' 
authority to enforce applicable laws or ensure safety and soundness. 
For these reasons, the FDIC reaffirms the statement in the preamble to 
the Proposed Rule that such visitorial powers have been conferred 
through statutory examination and reporting authorities, which 
facilitate the FDIC's identification of supervisory concerns that may 
not rise to a violation of law, unsafe or unsound practice, or breach 
of fiduciary duty under 12 U.S.C. 1818. These statutory examination and 
reporting authorities pre-existed 12 U.S.C. 1818, which neither 
superseded nor replaced such authorities. The FDIC has been vested with 
statutory examination and reporting authorities with respect to banks 
under its supervision.\25\
---------------------------------------------------------------------------

    \23\ Cuomo v. Clearing House Assn L.L.C., 557 U.S. 519,536 
(2009).
    \23\ Id. at 533.
    \24\ Watters v. Wachovia Bank, N.A., 550 U.S. 1, 127 (2007).
    \25\ The commenter's reading of the agencies' examination and 
reporting authorities would assert that the agencies may examine 
supervised institutions and require reports, but not make findings 
based on such examinations and reporting, unless the finding is 
sufficient to warrant a formal enforcement action under the standard 
set out in 12 U.S.C. 1818. This reading is inconsistent with the 
history of federal banking supervision, including as described in 
the cases cited in the Proposed Rule.

---------------------------------------------------------------------------

[[Page 12084]]

    In response to comments regarding the role of public comment for 
supervisory guidance, the FDIC notes that it has made clear through the 
2018 Statement and in this final rule that supervisory guidance 
(including guidance that goes through public comment) does not create 
binding, enforceable legal obligations. Rather, the FDIC in some 
instances issues supervisory guidance for comment in order to improve 
its understanding of an issue, gather information, or seek ways to 
achieve a supervisory objective most effectively. Similarly, examples 
that are included in supervisory guidance (including guidance that goes 
through public comment) are not binding on institutions. Rather, these 
examples are intended to be illustrative of ways a supervised 
institution may implement safe and sound practices, appropriate 
consumer protection, prudent risk management, or other actions in 
furtherance of compliance with laws or regulations. Relatedly, the FDIC 
does not agree with one comment that it should use notice-and-comment 
procedures, without exception, to issue all ``rules'' as defined by the 
APA, which would include supervisory guidance. Congress has established 
longstanding exceptions in the APA from the notice and comment process 
for certain ``rules,'' including for general statements of policy like 
supervisory guidance and for interpretive rules. As one court has 
explained, Congress intended to ``accommodate situations where the 
policies promoted by public participation in rulemaking are outweighed 
by the countervailing considerations of effectiveness, efficiency, 
expedition and reduction in expense.'' \26\
---------------------------------------------------------------------------

    \26\ Am. Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 
1987). The specific contours of these exceptions are the subject of 
an extensive body of case law.
---------------------------------------------------------------------------

    With respect to the commenter's request that the agencies affirm 
that they will apply statutory factors while processing applications, 
the FDIC affirms that the agency will continue to consider and apply 
all applicable statutory factors when processing applications.
    In response to the question raised by some commenters concerning 
potential confusion between supervisory guidance and interpretive 
rules, the FDIC notes that interpretive rules are outside the scope of 
the rulemaking. In addition, as stated earlier, interpretive rules do 
not, alone, ``have the force and effect of law'' and must be rooted in, 
and derived from, a statute or regulation. While interpretive rules and 
supervisory guidance are similar in lacking the force and effect of 
law, interpretive rules and supervisory guidance are distinct under the 
APA and its jurisprudence and are generally issued for different 
purposes. The FDIC believes that when it issues an interpretive rule, 
the fact that it is an interpretive rule is generally clear. In 
addition, these comments relate to clarity in drafting, rather than a 
matter that seems suitable for rulemaking.
    In response to the two commenters opposing the Proposal, this final 
rule does not undermine any of the FDIC's safety and soundness or other 
authorities. Indeed, the final rule is designed to support the FDIC's 
ability to supervise banks effectively. In addition, the FDIC notes the 
question of the role of guidance has been one of interest to regulated 
parties and other stakeholders over the past few years. The Petition 
and the number of comments on the Proposal are a sign of this interest. 
As such, the FDIC believes it will serve the public interest to 
reaffirm the appropriate role of supervisory guidance. There are 
inherent benefits to the supervisory process whenever institutions and 
examiners have a clear understanding of their roles, including how 
supervisory guidance can be used effectively within legal limits. 
Therefore, the FDIC is proceeding with the rule as proposed.
    In response to the commenter expressing concern that language in 
the Statement on reducing multiple supervisory guidance documents on 
the same topic will limit the FDIC's ability to provide valuable 
guidance, the FDIC assures the commenter that this language will not 
inhibit the FDIC from issuing new supervisory guidance when 
appropriate.
    Finally, the FDIC appreciates the other comments related to other 
aspects of guidance or the supervisory process, but the FDIC does not 
believe that they are best addressed in this rulemaking.

III. The Final Rule

    For the reasons discussed above, the final rule adopts the Proposed 
Rule without substantive changes. However, the FDIC has decided to 
issue a final rule that is specifically addressed to the FDIC and FDIC-
supervised institutions, rather than the joint version that the five 
agencies included in their joint Proposal. Although many of the 
comments were applicable to all of the agencies, some comments were 
specific to particular agencies or to groups of agencies. Having 
separate final rules has enabled agencies to better focus on explaining 
any agency-specific issues to their respective audiences of supervised 
institutions and agency employees.

IV. Administrative Law Matters

A. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 \27\ (PRA) states that no 
agency may conduct or sponsor, nor is the respondent required to 
respond to, an information collection unless it displays a currently 
valid Office of Management and Budget (OMB) control number. The FDIC 
has reviewed this final rule and determined that it does not contain 
any information collection requirements subject to the PRA. 
Accordingly, no submissions to OMB will be made with respect to this 
final rule.
---------------------------------------------------------------------------

    \27\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires that, in 
connection with a final rulemaking, an agency prepare and make 
available for public comment a final regulatory flexibility analysis 
describing the impact of the final rule on small entities.\28\ However, 
a regulatory flexibility analysis is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities.\29\ The Small Business 
Administration (SBA) has defined ``small entities'' to include banking 
organizations with total assets of less than or equal to $600 million 
that are independently owned and operated or owned by a holding company 
with less than or equal to $600 million in total assets.\30\ Generally, 
the FDIC considers a significant effect to be a quantified effect in 
excess of 5 percent of total annual salaries and benefits per 
institution, or 2.5 percent of total non-interest expenses. The FDIC 
believes that effects in excess of these thresholds typically represent 
significant effects for FDIC-supervised institutions.
---------------------------------------------------------------------------

    \28\ 5 U.S.C. 601 et seq.
    \29\ 5 U.S.C. 605(b).
    \30\ The SBA defines a small banking organization as having $600 
million or less in assets, where an organization's ``assets are 
determined by averaging the assets reported on its four quarterly 
financial statements for the preceding year.'' See 13 CFR 121.201 
(as amended by 84 FR 34261, effective August 19, 2019). In its 
determination, the ``SBA counts the receipts, employees, or other 
measure of size of the concern whose size is at issue and all of its 
domestic and foreign affiliates.'' See 13 CFR 121.103. Following 
these regulations, the FDIC uses a covered entity's affiliated and 
acquired assets, averaged over the preceding four quarters, to 
determine whether the covered entity is ``small'' for the purposes 
of RFA.
---------------------------------------------------------------------------

    As of September 30, 2020, the FDIC supervised 3,245 institutions, 
of which

[[Page 12085]]

2,434 were considered small for purposes of RFA.\31\ This final rule 
does not impose any obligations on FDIC-supervised entities, and FDIC-
supervised entities do not need to take any action in response to this 
rule. For these reasons, and under section 605(b) of the RFA, the FDIC 
certifies that the final rule will not have a significant economic 
impact on a substantial number of small FDIC-supervised institutions.
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    \31\ FDIC Consolidated Reports of Condition and Income Data, 
September 30, 2020.
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C. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \32\ requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The FDIC has sought to present the 
final rule in a simple and straightforward manner and did not receive 
any comments on the use of plain language in the Proposed Rule.
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    \32\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999), 12 U.S.C. 4809.
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D. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\33\ in determining the effective 
date and administrative compliance requirements for new regulations 
that impose additional reporting, disclosure, or other requirements on 
insured depository institutions (IDIs), each Federal banking agency 
must consider, consistent with principles of safety and soundness and 
the public interest, any administrative burdens that such regulations 
would place on depository institutions, including small depository 
institutions, and customers of depository institutions, as well as the 
benefits of such regulations. In addition, section 302(b) of RCDRIA 
requires new regulations and amendments to regulations that impose 
additional reporting, disclosures, or other new requirements on IDIs 
generally to take effect on the first day of a calendar quarter that 
begins on or after the date on which the regulations are published in 
final form.\34\ The FDIC has determined that the final rule will not 
impose additional reporting, disclosure, or other requirements on IDIs; 
therefore, the requirements of the RCDRIA do not apply.
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    \33\ 12 U.S.C. 4802(a).
    \34\ 12 U.S.C. 4802.
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E. Congressional Review Act

    For purposes of Congressional Review Act, the OMB makes a 
determination as to whether a final rule constitutes a ``major'' 
rule.\35\ If a rule is deemed a ``major rule'' by the OMB, the 
Congressional Review Act generally provides that the rule may not take 
effect until at least 60 days following its publication.\36\
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    \35\ 5 U.S.C. 801 et seq.
    \36\ 5 U.S.C. 801(a)(3).
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    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in (A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions, or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\37\ As required by the Congressional Review Act, the 
FDIC will submit the final rule and other appropriate reports to 
Congress and the Government Accountability Office for review.
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    \37\ 5 U.S.C. 804(2).
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List of Subjects in 12 CFR Part 302

    Administrative practice and procedure, Banks, banking.

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Chapter III

Authority and Issuance

0
For the reasons set forth in the preamble, the FDIC adds part 302 to 12 
CFR chapter III, subchapter A, to read as follows:

PART 302--USE OF SUPERVISORY GUIDANCE

Sec.
302.1 Purpose.
302.2 Implementation of the Statement Clarifying the Role of 
Supervisory Guidance.
302.3 Rule of construction.
Appendix A to Part 302--Statement Clarifying the Role of Supervisory 
Guidance

    Authority:  5 U.S.C. 552; 12 U.S.C. 1818, 1819(a) (Seventh and 
Tenth), 1831p-1.


Sec.  302.1  Purpose.

    The FDIC issues regulations and guidance as part of its supervisory 
function. This subpart reiterates the distinctions between regulations 
and guidance, as stated in the Statement Clarifying the Role of 
Supervisory Guidance (appendix A to this part) (Statement).


Sec.  302.2  Implementation of the Statement Clarifying the Role of 
Supervisory Guidance.

    The Statement describes the official policy of the FDIC with 
respect to the use of supervisory guidance in the supervisory process. 
The Statement is binding on the FDIC.


Sec.  302.3  Rule of construction.

    This subpart does not alter the legal status of guidelines 
authorized by statute, including but not limited to, 12 U.S.C. 1831p-1, 
to create binding legal obligations.

Appendix A to Part 302--Statement Clarifying the Role of Supervisory 
Guidance

Statement Clarifying the Role of Supervisory Guidance

    The FDIC is issuing this statement to explain the role of 
supervisory guidance and to describe the FDIC's approach to 
supervisory guidance.

Difference Between Supervisory Guidance and Laws or Regulations

    The FDIC issues various types of supervisory guidance, including 
interagency statements, advisories, policy statements, questions and 
answers, and frequently asked questions, to its supervised 
institutions. A law or regulation has the force and effect of 
law.\1\ Unlike a law or regulation, supervisory guidance does not 
have the force and effect of law, and the FDIC does not take 
enforcement actions based on supervisory guidance. Rather, 
supervisory guidance outlines the FDIC's supervisory expectations or 
priorities and articulates the FDIC's general views regarding 
appropriate practices for a given subject area. Supervisory guidance 
often provides examples of practices that the FDIC generally 
considers consistent with safety-and-soundness standards or other 
applicable laws and regulations, including those designed to protect 
consumers. Supervised institutions at times request supervisory 
guidance, and such guidance is important to provide insight to 
industry, as well as supervisory staff, in a transparent way that 
helps to ensure consistency in the supervisory approach.
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    \1\ Government agencies issue regulations that generally have 
the force and effect of law. Such regulations generally take effect 
only after the agency proposes the regulation to the public and 
responds to comments on the proposal in a final rulemaking document.
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Ongoing Efforts To Clarify the Role of Supervisory Guidance

    The FDIC is clarifying the following policies and practices 
related to supervisory guidance:
     The FDIC intends to limit the use of numerical 
thresholds or other ``bright-lines'' in describing expectations in 
supervisory guidance. Where numerical thresholds are used, the FDIC 
intends to clarify that the

[[Page 12086]]

thresholds are exemplary only and not suggestive of requirements. 
The FDIC will continue to use numerical thresholds to tailor, and 
otherwise make clear, the applicability of supervisory guidance or 
programs to supervised institutions, and as required by statute.
     Examiners will not criticize through supervisory 
recommendations (including matters requiring board attention) a 
supervised financial institution for, and the FDIC will not issue an 
enforcement action on the basis of, a ``violation'' of or ``non-
compliance'' with supervisory guidance. In some situations, 
examiners may reference (including in writing) supervisory guidance 
to provide examples of safe and sound conduct, appropriate consumer 
protection and risk management practices, and other actions for 
addressing compliance with laws or regulations.
     Supervisory criticisms should continue to be specific 
as to practices, operations, financial conditions, or other matters 
that could have a negative effect on the safety and soundness of the 
financial institution, could cause consumer harm, or could cause 
violations of laws, regulations, final agency orders, or other 
legally enforceable conditions.
     The FDIC also has at times sought, and may continue to 
seek, public comment on supervisory guidance. Seeking public comment 
on supervisory guidance does not mean that the guidance is intended 
to be a regulation or have the force and effect of law. The comment 
process helps the FDIC to improve its understanding of an issue, to 
gather information on institutions' risk management practices, or to 
seek ways to achieve a supervisory objective most effectively and 
with the least burden on institutions.
     The FDIC will aim to reduce the issuance of multiple 
supervisory guidance documents on the same topic and will generally 
limit such multiple issuances going forward.
    The FDIC will continue efforts to make the role of supervisory 
guidance clear in communications to examiners and to supervised 
financial institutions and encourage supervised institutions with 
questions about this statement or any applicable supervisory 
guidance to discuss the questions with their appropriate agency 
contact.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on January 19, 2021.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2021-01537 Filed 3-1-21; 8:45 am]
BILLING CODE 6714-01-P