Interpretive Letter

AAA

DEFINITION of 'Interpretive Letter'

A letter issued by banking regulators that interprets the banking law for a specific issue or party. Interpretive letters become effective immediately upon issuance. These letters are similar to IRS letter rulings that interpret the application of tax law. An example is the 1989 ruling that allowed banks to begin underwriting corporate bonds.

INVESTOPEDIA EXPLAINS 'Interpretive Letter'

Even though they don't technically have the force of law, banks pay close attention to interpretive letters for several reasons. They can illuminate new ways to market products and services, as well as provide approval for banks to increase their association with investment and insurance services.

RELATED TERMS
  1. Bank

    A financial institution licensed as a receiver of deposits. There ...
  2. Self-Regulatory Organization - ...

    A non-governmental organization that has the power to create ...
  3. Banking Department

    A state-specific regulatory body that oversees the operations ...
  4. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
  5. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  6. Billing Cycle

    The interval of time during which bills are prepared for goods ...
Related Articles
  1. Using Economic Capital To Determine ...
    Personal Finance

    Using Economic Capital To Determine ...

  2. Inside National Payment Systems
    Economics

    Inside National Payment Systems

  3. What Is The World Bank?
    Insurance

    What Is The World Bank?

  4. Texas Ratio Rounds Up Bank Failures
    Personal Finance

    Texas Ratio Rounds Up Bank Failures

comments powered by Disqus
Hot Definitions
  1. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
Trading Center