NCUA Pressed to Issue Rule Clarifying Difference Between Regs & Guidance
Rep. Blaine Luetkemeyer is calling on FI regulatory agencies to enact policy statements as formal rules to clear up any misunderstandings.
A key House Republican is requesting financial regulators, including the NCUA, to codify their policies stating the difference between agency guidance and formal rules.
In letter to the regulators, Rep. Blaine Luetkemeyer (R-Mo.), ranking Republican on the House Consumer Protection and Financial Institutions Subcommittee, said that a joint statement issued by the regulators last year did not go far enough.
The regulators issued a statement in September attempting to make clear the difference between rules and guidance. That follows a January 2017 Justice Department memo stating that failure to follow agency guidance will not result in an enforcement action.
“Unlike a law or regulation, supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the five prudential agencies, including the NCUA, said in the statement issued.
However, in his letter to regulators this month, Luetkemeyer said he is concerned that agency examiners continue to issue warning known as “Matters Requiring Attention” based on guidance documents. He also said that he is concerned that some previous warnings that were based on guidance have not been rescinded.
And he called on the agencies to enact the policy statement as formal rules.
“As part of that rulemaking process, you should make clear that any enforcement action or MRA must be based on violation of a statute, regulation or order,” he wrote.
Luetkemeyer said that such rules would ensure that agency enforcement is consistent.
In one celebrated case, the CFPB under former Director Richard Cordray issued auto sales guidance, which the Government Accountability Office said, in an opinion requested by Sen. Pat Toomey (R-Pa.), should have gone through the regulatory process. That process gives stakeholders the opportunity to comment on proposals before they become final.
Congress rescinded the rules last year using the Congressional Review Act, which allows Congress to examine rules before they go into effect.
When he was Acting Director of the CFPB, Mick Mulvaney pledged to rein in “regulation by enforcement.” And new CFPB Director Kathy Kraninger said that “regulation by enforcement” pushes the envelope.