Credit Union Trades Support NCUA Guidance Proposal

The two national credit union trade groups have endorsed the NCUA’s proposal to make it clear that supervisory guidance does not carry the force of law.

“Regulations create binding legal obligations,” Luke Martone, CUNA’s senior director of advocacy and counsel, wrote in a letter to the NCUA. “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.”

The NCUA and banking regulators have proposed codifying a 2018 policy statement that attempted to clarify the use of guidance. Republican members of Congress and the credit union trade groups have said that examiners have blurred the line between regulations and guidance and have occasionally taken action based on guidance.

“NAFCU supports the proposal and urges the NCUA to ensure that examiners apply this position consistently so that supervisory guidance is not relied upon as de facto regulation,” Kaley Schafer, NAFCU’s senior regulatory counsel, wrote in a letter to the NCUA.

Supervisory guidance plays an important role in helping credit unions set policies, Schafer wrote, adding that it must be easily accessible to alleviate exam inconsistencies. She said, however, that there is a risk of “regulation by examination” if the line between guidance and regulations is blurred.

Examiners should not base an enforcement action on supervisory guidance, she said.

Martone said that regulations make binding legal obligations, while guidance does not.