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.

BREAKING DOWN '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. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a ...
  2. Bank Confirmation Letter - BCL

    A letter confirming that a line of credit has been secured from ...
  3. Shareholder Letter

    A shareholder letter is a letter written by a firm's top executives ...
  4. Transferable Letter Of Credit

    A letter of credit that permits the beneficiary of the letter ...
  5. Sight Letter Of Credit

    A letter of credit that is payable once it is presented along ...
  6. Red Clause Letter Of Credit

    A specific type of letter of credit in which a buyer extends ...
Related Articles
  1. Investing

    Financial Analyst Cover Letters That Get You Hired

    Crafting a strong cover letter for a job can increase your chances of standing out from the crowd and landing an interview. Some techniques that help.
  2. Managing Wealth

    Letter Of Instruction - Don't Leave Life Without It

    This simple document can take the guesswork and headache out of settling your estate.
  3. Small Business

    Letter of Credit

    A letter of credit is a document from a bank promising to pay the holder a certain amount if the holder fulfills certain obligations. Sellers in commercial transactions often require buyers to ...
  4. Investing

    Are Hedge Fund Letters More Valuable Than 13Fs?

    13F filings can be a useful way to track hedge fund investment strategies, but sometimes it pays to go directly to the fund leaders themselves.
  5. Financial Advisor

    Your Advisor and Myths of International Investing

    Wall Street touts diversification and improving portfolios via investing in international equities. But do we know the whole story they're selling?
  6. Investing

    7 Tips for Writing a Homebuyer’s Letter to a Seller

    To win a real estate bidding war, use these 7 tips for writing a homebuyer’s letter to a seller that’s engaging and personal.
  7. Investing

    The Dow Jones Industrial Average

    Learn how this price-weighted index performs and the ways to interpret its movements.
  8. Personal Finance

    7 Cover Letter Blunders

    Your resume might be stellar, but if your cover letter is a mess, that resume is likely to go straight into the trash unread.
  9. Personal Finance

    Volcker Rule Under Threat by Trump Presidency

    The Volcker Rule is likely to be threatened by the new administration appointed by Donald Trump, who campaigned on promises to dismantle Dodd-Frank.
RELATED FAQS
  1. When is it necessary to get a letter of credit?

    Capitalize on assets and negate risks by using a letter of credit. Letters of credit are often requested for buying, selling ... Read Answer >>
  2. What are the different types of letters of credit?

    Learn more about the different types of letters of credit that are used to facilitate exchanges between parties that might ... Read Answer >>
  3. When are you legally required to get a letter of credit?

    Learn how exporters or importers who deal in international trade use letters of credit to ensure that transactions are safe, ... Read Answer >>
  4. What is a bank's legal liability when issuing a letter of credit?

    Learn the responsibility of banks that issue letters of credit Letters of credits ensure payment on transactions between ... Read Answer >>
  5. When do I need a letter of credit?

    Learn more about the function of a letter of credit for both the buyer and the seller, and get some examples showing when ... Read Answer >>
  6. What's the difference between a bank guarantee and a letter of credit?

    Letters of credit ensure that a transaction proceeds as planned, while bank guarantees reduce the loss if the transaction ... Read Answer >>
Hot Definitions
  1. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  2. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
  3. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly AIMR) that measures the competence and integrity of financial ...
  4. Initial Coin Offering (ICO)

    An Initial Coin Offering (ICO) is an unregulated means by which funds are raised for a new cryptocurrency venture.
  5. The Bernie Madoff Story

    Bernie Madoff ran a multibillion-dollar Ponzi scheme that is considered the largest financial fraud of all time.
  6. Pyramid Scheme

    An illegal investment scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, ...
Trading Center