Answer by John Burnett: Congress (or your state legislature) passes legislation or laws. Before it's passed, it's usually referred to as a "bill." Once it's passed and signed by the president or governor, it normally is called "This Act" or "That Act."
[Sometimes it gets a craftily thought-out title that will make a "catchy" acronym, like the USA PATRIOT Act or the CAN-SPAM Act.]
Some laws -- like the Fair Credit Reporting Act -- don't provide for regulations to be issued interpreting the law. (The recent amendments to FCRA will require regulations, however.) Others, like the Truth in Savings Act, require regulations to be issued in order to apply the general principles in the law to the real world. For banking regulations, it is often the Federal Reserve Board that gets tapped for writing the regulations. Thus we find the Board of Governors' regulatory alphabet. Sometimes, all of the regulators are required to collectively issue parallel rules/regulations (as with the Gramm-Leach-Bliley privacy rules, usually referred to as "Regulation P").
When there is a perceived discrepancy between the law and the implementing regulation, courts normally give the law control, unless it can be determined that the regulation better interprets the intent of the legislators.
[This illustrates one of the "checks and balances" in our government. The legislature creates the law; the executive branch issues an implementing regulation; the judicial branch decides on constitutionality and jurisdictional issues.]
So we see Regulation B implementing the Equal Credit Opportunity Act; Regulation Z implementing the Truth in Lending Act; and Regulation DD implementing the Truth in Savings Act.
[Hint: Click on the "Click to Read a Reg" link at the top of the Threads pages, and review the "Authority and Scope" or "Authority and Purpose" paragraph of a regulation to determine which law(s) it implements.]
Several of the regulations include a supplementary section called an "official staff commentary" that gets into some of the finer details of applying the regulation. You have to look here and in the regulation to get an adequate understanding of what the regulation requires.
Answer by Richard Insley: Excellent discussion, John. It's also worth mentioning that regs make it much easier to comply with laws and avoid penalties. "Regulation-less" laws (ESIGN, for example) are akin to Christmas toys requiring "some assembly" but lacking an instruction booklet.
Answer by Ken Golliher: My favorite analogy is that the statute is like a tree in the middle of winter; you can tell it's a tree and learn something from it. If you know a lot about trees, you might even be able to tell me what kind it is. However, when they issue the regulation, it's like putting the leaves on the tree, they give it form and definition, but mostly they fill in the blank spaces.
Thus, long-winded support for Richard's comment about the ambiguity of a statute without regulations.
Finally, a truism: compliance with the regulation or commentary is deemed to be compliance with the statute.
Answer by Mary Beth Guard: For further enlightenment on the issue, see our Banker Tool "A Guide to Bank Compliance Research".
First published on BankersOnline.com 04/5/04