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Tackling the contentious issue of guidance vs. regulation

Joe Mont | September 12, 2018

Regulators this week waded into the increasingly controversial distinction—and often lack thereof—between supervisory guidance and the laws and regulations they support and clarify.

For months, one of the more contentious debates in compliance and legislative circles has been the role of regulatory guidance and a build-up of those documents derisively termed “regulatory dark matter” by critics.

In a standard world, the regulatory process unfolds as follows: a rule is proposed, public comments shape it in accordance with the Administrative Procedures Act, a final regulation is issued, and subsequent guidance helps define the parameters of that rule for those affected.

Critics, however, including Republican legislators and the Trump administration, lament that over time “guidance” has taken on a life of its own and either supplanted rulemaking or wedged resulting rules into previously unintended and unexpected matters.

On Sept. 11, federal banking...

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