[Federal Register: January 11, 2007 (Volume 72, Number 7)]
[Notices]
[Page 1325-1331]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja07-44]
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FEDERAL RESERVE SYSTEM
Proposed Agency Information Collection Activities; Comment
Request
AGENCY: Board of Governors of the Federal Reserve System
SUMMARY: Background
On June 15, 1984, the Office of Management and Budget (OMB)
delegated to the Board of Governors of the Federal Reserve System
(Board) its approval authority under the Paperwork Reduction Act, as
per 5 CFR 1320.16, to approve of and assign OMB control numbers to
collection of information requests and requirements conducted or
sponsored by the Board under conditions set forth in 5 CFR 1320
Appendix A.1. Board-approved collections of information are
incorporated into the official OMB inventory of currently approved
collections of information. Copies of the Paperwork Reduction Act
Submission, supporting statements and approved collection of
information instruments are placed into OMB's public docket files. The
Federal Reserve may not conduct or sponsor, and the respondent is not
required to respond to, an information collection that has been
extended, revised, or implemented on or after October 1, 1995, unless
it displays a currently valid OMB control number.
Request for comment on information collection proposals
The following information collections, which are being handled
under this delegated authority, have received initial Board approval
and are hereby published for comment. At the end of the comment period,
the proposed information collections, along with an analysis of
comments and recommendations received, will be submitted to the Board
for final approval under OMB delegated authority. Comments are invited
on the following:
a. Whether the proposed collections of information are necessary
for the proper performance of the Federal Reserve's functions;
including whether the information has practical utility;
b. The accuracy of the Federal Reserve's estimate of the burden of
the proposed information collections,
[[Page 1326]]
including the validity of the methodology and assumptions used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected; and
d. Ways to minimize the burden of information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology.
DATES: Comments must be submitted on or before March 12, 2007.
ADDRESSES: You may submit comments, identified by FR 2069 (OMB No.
7100-0030), FR 2416 and FR 2644 (OMB No. 7100-0075), FR Y-9C (OMB No.
7100-0128), FR Y-11 (OMB No. 7100-0244), FR 2314 (OMB No. 7100-0073),
or FR 3036 (OMB No. 7100-0285) by any of the following methods:
Agency Web Site: http://www.federalreserve.gov Follow the instructions for submitting comments at http://www.federalreserve.gov/.
.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: regs.comments#64;federalreserve.gov. Include the
OMB control number in the subject line of the message.
FAX: 202-452-3819 or 202-452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
N.W., Washington, DC 20551.
All public comments are available from the Board's web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information. Public
comments may also be viewed electronically or in paper in Room MP-500
of the Board's Martin Building (20th and C Streets, N.W.) between 9:00
a.m. and 5:00 p.m. on weekdays.
Additionally, commenters should send a copy of their comments to
the OMB Desk Officer by mail to the Office of Information and
Regulatory Affairs, U.S. Office of Management and Budget, New Executive
Office Building, Room 10235, 725 17th Street, NW., Washington, DC 20503
or by fax to 202-395-6974.
FOR FURTHER INFORMATION CONTACT: A copy of the proposed form and
instructions, the Paperwork Reduction Act Submission, supporting
statement, and other documents that will be placed into OMB's public
docket files once approved may be requested from the agency clearance
officer, whose name appears below.
Michelle Shore, Federal Reserve Board Clearance Officer (202-452-
3829), Division of Research and Statistics, Board of Governors of the
Federal Reserve System, Washington, DC 20551. Telecommunications Device
for the Deaf (TDD) users may contact (202-263-4869), Board of Governors
of the Federal Reserve System, Washington, DC 20551.
Proposal to approve under OMB delegated authority the extension for
three years, with revision, of the following reports:
1. Report title: Weekly Report of Assets and Liabilities for Large
Banks and Weekly Report of Selected Assets
Agency form numbers: FR 2416 and FR 2644
OMB control number: 7100-0075
Frequency: Weekly
Reporters: U.S.-chartered commercial banks
Annual reporting hours: FR 2416: 22,386 hours; FR 2644: 80,652
hours
Estimated average hours per response: FR 2416: 8.61 hours; FR 2644:
1.41 hours
Number of respondents: FR 2416: 50; FR 2644: 1,100
General description of reports: These information collections are
voluntary (12 U.S.C. Sec. 225(a) and 248(a)(2)). Individual respondent
data are regarded as confidential under the Freedom of Information Act
(5 U.S.C. Sec. 552(b)(4)).
Abstract: The FR 2416, FR 2644, and the Weekly Report of Assets and
Liabilities for Large U.S. Branches and Agencies of Foreign Banks (FR
2069; OMB No. 7100-0030) are referred to collectively as the bank
credit reports. The FR 2416 is a detailed balance sheet that covers
domestic offices of large U.S.-chartered commercial banks. The FR 2644
collects less-detailed information on investments, loans, total assets,
and several memoranda items, covering domestic offices of small U.S.-
chartered commercial banks. The bank credit reports are collected as of
each Wednesday.
These three voluntary reports are mainstays of the Federal
Reserve's reporting system from which data for analysis of current
banking developments are derived. The FR 2416 is used on a stand-alone
basis as the large domestic bank series. The FR 2644 collects sample
data, which are used to estimate universe levels using data from the
quarterly commercial bank Consolidated Reports of Condition and Income
(FFIEC 031 and 041; OMB No. 7100-0036) (Call Report). Data from the
bank credit reports, together with data from other sources, are used
for constructing weekly estimates of bank credit, of sources and uses
of bank funds, and of a balance sheet for the banking system as a
whole.
The Federal Reserve publishes the data in aggregate form in the
weekly H.8 statistical release, Assets and Liabilities of Commercial
Banks in the United States, which is followed closely by other
government agencies, the banking industry, the financial press, and
other users. This release provides a balance sheet for the banking
industry as a whole and data disaggregated by its large domestic, small
domestic, and foreign-related components.
Current actions: The Federal Reserve proposes to reduce reporting
burden by eliminating data items that are no longer useful beyond data
already available from Call Reports, to collect information on real
estate loan securitization activity, and to improve the detailed
information associated with data on security loans. The Federal Reserve
proposes to make the following modifications to the FR 2416: (1) delete
data item 5.d, Loans to finance agricultural production and other loans
to farmers; (2) delete data item 5.h, Loans to states and political
subdivisions in the U.S.; (3) delete memorandum item M.8, Commercial
and industrial loans: Outstanding principal balance of assets sold and
securitized; (4) add a memorandum item, Real estate loans: Outstanding
principal balance of assets sold and securitized; and (5) rename
memoranda items M.1 and M.5 on revaluation gains and losses,
respectively. The Federal Reserve proposes to make the following
modifications to the FR 2644: (1) add a memorandum item, Real estate
loans: Outstanding principal balance of assets sold and securitized,
(the same data item proposed for the FR 2416 reporting form) and (2)
renumber memoranda items M.4 and M.5 on net due from and net due to,
respectively, to allow for the addition of the new data item on
securitized real estate loans. The proposed revisions discussed above
would be implemented as of June 2007. The Federal Reserve would like to
reevaluate the bank credit data in coming quarters to determine whether
changes consistent with the proposed March 2007 Call Report revisions
would be necessary for the bank credit series. Therefore, another
proposal to revise the reporting forms may be presented for review
before the three-year extension expires.
2. Report title: Weekly Report of Assets and Liabilities for Large
U.S. Branches and Agencies of Foreign Banks
Agency form number: FR 2069
[[Page 1327]]
OMB control number: 7100-0030
Frequency: Weekly
Reporters: U.S. branches and agencies of foreign banks
Annual reporting hours: 14,560 hours
Estimated average hours per response: 4.00 hours
Number of respondents: 70
General description of report: This information collection is
voluntary (12 U.S.C. Sec. 248(a)(2) and 3105(a)(2)). Individual
respondent data are regarded as confidential under the Freedom of
Information Act (5 U.S.C. Sec. 552(b)(4)).
Abstract: The FR 2069 is a detailed balance sheet that covers large
U.S. branches and agencies of foreign banks. This report, along with
the FR 2416 and FR 2644, is collected as of each Wednesday.
These three voluntary reports are mainstays of the Federal
Reserve's reporting system from which data for analysis of current
banking developments are derived. The FR2069 collects sample data,
which are used to estimate universe levels using data from the
quarterly Report of Assets and Liabilities of U.S. Branches and
Agencies of Foreign Banks (FFIEC 002; OMB No. 7100-0032). Data from the
bank credit reports, together with data from other sources, are used
for constructing weekly estimates of bank credit, of sources and uses
of bank funds, and of a balance sheet for the banking system as a
whole.
The Federal Reserve publishes the data in aggregate form in the
weekly H.8 statistical release, Assets and Liabilities of Commercial
Banks in the United States, which is followed closely by other
government agencies, the banking industry, the financial press, and
other users. This release provides a balance sheet for the banking
industry as a whole and data disaggregated by its large domestic, small
domestic, and foreign-related components.
Current actions: The Federal Reserve proposes to make the following
modifications to the FR 2069: (1) split data item 4.b, Federal funds
sold and securities purchased under agreements to resell: With others,
into two data items; (2) delete memorandum item M.3, Commercial and
industrial loans: Outstanding principal balance of assets sold and
securitized; and (3) rename memoranda items M.1 and M.2 on revaluation
gains and losses, respectively. The proposed revisions discussed above
would be implemented as of June 2007. The Federal Reserve would like to
reevaluate the bank credit data in coming quarters to determine whether
changes consistent with the proposed March 2007 Call Report revisions
would be necessary for the bank credit series. Therefore, another
proposal to revise the reporting forms may be presented for review
before the three-year extension expires.
Proposal to approve under OMB delegated authority the revision, without
extension, of the following reports:
1. Report title: Consolidated Financial Statements for Bank Holding
Companies.
Agency form number: FR Y-9C.
OMB control number: 7100-0128.
Frequency: Quarterly.
Reporters: Bank holding companies (BHCs).
Annual reporting hours: 117,504
Estimated average hours per response: 38.35
Number of respondents: 766
General description of report: This information collection is
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely
given to the data in this report. However, confidential treatment for
the reporting information, in whole or in part, can be requested in
accordance with the instructions to the form, pursuant to section
(b)(4) of the Freedom of Information Act (5 U.S.C. Sec. Sec. 522(b)(4).
Abstract: The FR Y-9 family of reports historically has been, and
continues to be, the primary source of financial information on BHCs
between on-site inspections. Financial information from these reports
is used to detect emerging financial problems, to review performance
and conduct pre-inspection analysis, to monitor and evaluate capital
adequacy, to evaluate BHC mergers and acquisitions, and to analyze a
BHC's overall financial condition to ensure safe and sound operations.
The FR Y-9C consists of standardized financial statements similar
to the Consolidated Reports of Condition and Income (Call Report)
(FFIEC 031 & 041; OMB No. 7100-0036) filed by commercial banks. The FR
Y-9C collects consolidated data from the BHC and is generally filed by
top-tier BHCs with total consolidated assets of $500 million or more.
Current actions: The Federal Reserve proposes to make the following
revisions to the FR Y-9C to parallel proposed changes to the Call
Report. BHCs have commented that changes should be made to the FR Y-9C
in a manner consistent with changes to the Call Report. Comments
received on the Call Report proposal will also be taken into
consideration for this proposal.
Reporting on Fair Value Measurements and the Use of the Fair Value
Option
On September 15, 2006, the Financial Accounting Standards Board
(FASB) issued Statement No. 157, Fair Value Measurements (FAS 157),
which is effective for BHCs and other entities for fiscal years
beginning after November 15, 2007. Earlier adoption of FAS 157 is
permitted as of the beginning of an earlier fiscal year, provided the
BHC has not yet issued a financial statement or submitted FR Y-9C data
for any period of that fiscal year. Thus, a BHC with a calendar year
fiscal year may voluntarily adopt FAS 157 as of January 1, 2007. The
fair value measurements standard provides guidance on how to measure
fair value and would require BHCs and other entities to disclose the
inputs used to measure fair value based on a three-level hierarchy for
all assets and liabilities that are re-measured at fair value on a
recurring basis.\1\
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\1\ The FASB's three-level fair value hierarchy gives the
highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). Level 1 inputs are quoted prices in
active markets for identical assets or liabilities that the
reporting BHC has the ability to access at the measurement date
(e.g., the FR Y-9C reporting date). Level 2 inputs are inputs other
than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Level 3
inputs are unobservable inputs for the asset or liability.
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The FASB plans to issue a final standard, The Fair Value Option for
Financial Assets and Financial Liabilitiesduring the first quarter of
2007, which would be effective for BHCs and other entities for fiscal
years beginning after December 15, 2006. The FASB's Fair Value Option
standard would allow BHCs and other entities to report certain
financial assets and liabilities at fair value with the changes in fair
value included in earnings. The Federal Reserve anticipates that
relatively few BHCs will elect to use the fair value option for a
significant portion of their financial assets and liabilities.
The Federal Reserve proposes to add a new Schedule HC-Q to the FR
Y-9C to collect data, by major asset and liability category, on the
amount of assets and liabilities to which the fair value option has
been applied along with separate disclosure of the amount of such
assets and liabilities whose fair values were estimated under level two
and under level three of the FASB's fair value hierarchy. The
categories are:
Securities held for purposes other than trading with
changes in fair value reported in current earnings,
Loans and leases,
[[Page 1328]]
All other financial assets and servicing assets,
Deposit liabilities,
All other financial liabilities and servicing liabilities,
and
Loan commitments (not accounted for as derivatives).
In addition, the Federal Reserve proposes to collect data on
trading assets and trading liabilities in the new schedule from those
BHCs that complete Schedule HC-D, Trading Assets and Liabilities, that
is, BHCs that reported average trading assets of $2 million or more for
any quarter of the preceding calendar year. In the proposed new
schedule, such BHCs would report the carrying amount of trading assets
and trading liabilities whose fair values were estimated under level
two and under level three of the FASB's fair value hierarchy. Trading
assets and trading liabilities are required to be reported at fair
value and thus are not covered under the fair value option.
The Federal Reserve anticipates using this fair value information
to make appropriate risk assessments for on-site examinations and off-
site surveillance. The addition of these data items should result in
minimal additional reporting burden for BHCs because FAS 157 requires
disclosure of amounts under all three levels of the fair value
hierarchy on a quarterly and annual basis in financial statements.
The FASB's fair value measurements standard requires BHCs and other
entities to consider the effect of a change in their own
creditworthiness when determining the fair value of a financial
liability. The Federal Reserve proposes to add one new data item to
Schedule HC-R, Regulatory Capital, for the cumulative change in the
fair value of all financial liabilities accounted for under the fair
value option that is attributable to changes in the BHC's own
creditworthiness. This amount would be excluded from the BHC's retained
earnings for purposes of determining Tier 1 capital under the Federal
Reserve's regulatory capital standards.
The Federal Reserve plans to clarify the instructions to Schedule
HI for the treatment of interest income on financial assets and
interest expense on financial liabilities measured under a fair value
option. The instructions would be modified to instruct BHCs to separate
the contractual year-to-date amount of interest earned on financial
assets and interest incurred on financial liabilities that are reported
under a fair value option from the overall year-to-date fair value
adjustment and report these contractual amounts in the appropriate
interest income or interest expense items on Schedule HI. In addition,
the Federal Reserve proposes to modify memoranda item 6, Other
noninterest income, by adding data item 6.i, Net change in the fair
values of financial instruments accounted for under a fair value
option.
Reporting of Certain Data on 1-4 Family Residential Mortgage Loans
withTermsthat Allow for Negative Amortization
Recently, the volume of 1-4 family residential mortgage loan
products whose terms allow for negative amortization and the number of
institutions providing borrowers with such loans has increased
significantly. Loans with this feature are structured in a manner that
may result in an increase in the loan's principal balance even when the
borrower's payments are technically current. When loans with negative
amortization are not prudently underwritten and not properly monitored,
they raise safety and soundness concerns. However, due to the
classification of these loans with all other 1-4 family residential
mortgage loans in the FR Y-9C, the Federal Reserve has no readily
available means of identifying the industry's exposure to such loans.
Therefore, the Federal Reserve proposes to collect four data items to
monitor the extension of negatively amortizing residential mortgage
loans in the industry.
The Federal Reserve proposes to collect one memorandum item from
all BHCs on Schedule HC-C, Loans and Leases, for the total amount of
closed-end loans with negative amortization features secured by 1-4
family residential properties in order to obtain an overall measure of
this potentially higher risk lending activity. In addition, the Federal
Reserve proposes to collect two memoranda items on Schedule HC-C and
one memorandum item on Schedule HI, Income Statement, from BHCs with a
significant volume of negatively amortizing 1-4 family residential
mortgage loans. The determination of the threshold for significant
volume would be based on the aggregate carrying amount of negatively
amortizing loans in excess of a certain dollar amount, for example,
$100 million or $250 million, or in excess of a certain percentage of
the total loans and leases (in domestic offices) reported on Schedule
HC-C, for example, 5 percent or 10 percent. A BHC with negatively
amortizing loans would determine whether it met the size threshold for
reporting the three additional memoranda items based on data reported
from the previous year-end FR Y-9C report. The Federal Reserve requests
public comment on the specific dollar amount and percentage of loans
that should be used in setting the size threshold for additional
reporting on negatively amortizing loans.
The two additional Schedule HC-C memoranda items are (1) the total
maximum remaining amount of negative amortization contractually
permitted on closed-end loans secured by 1-4 family residential
properties and (2) the total amount of negative amortization on closed-
end loans secured by 1-4 family residential properties that is included
in the carrying amount of these loans. The first memorandum item would
provide a measure of the maximum exposure that could be incurred for
negative amortization loans in the current 1-4 family residential
property loan portfolio. The second memorandum item would then identify
what component of 1-4 family mortgage loans is comprised of negative
amortization loans. The Schedule HI memorandum item is year-to-date
non-cash income on closed-end loans with a negative amortization
feature secured by 1-4 family residential properties. This memorandum
item would identify the amount and extent of interest revenue accrued
and uncollected to ascertain the degree this potentially higher risk
lending activity supports the BHC's overall net income. BHCs with
negatively amortizing 1-4 family residential loans in excess of the
reporting threshold for these data items would report these three data
items for the entire calendar year following the end of any calendar
year when this threshold was exceeded.
Reporting of Certain Brokered Time Deposit Information
The FFIEC is proposing to revise the reporting treatment of
brokered time deposits on Call Report Schedule RC-E, Deposit
Liabilities. Memorandum item 2.b, Total time deposits of less than
$100,000, would be revised to include brokered time deposits issued in
denominations of $100,000 or more that are participated out by the
broker in shares of less than $100,000, as well as brokered
certificates of deposit issued in $1,000 amounts under a master
certificate of deposit. Memorandum item 2.c, Total time deposits of
$100,000 or more, would be revised to exclude such brokered deposits.
The Federal Reserve proposes to make similar instructional changes
to seven data items on Schedule HC-E, Deposit Liabilities, to retain
consistent definitions with the Call Report and to accommodate the
consolidation of subsidiary bank information into the FR
[[Page 1329]]
Y-9C report. The Federal Reserve proposes to revise the instructions
for data item 1.d, Time deposits of less than $100,000 held in domestic
offices of commercial bank subsidiaries; data item 2.d, Time deposits
of less than $100,000 held in domestic offices of other depository
institution subsidiaries; Memorandum item 1, Brokered deposits less
than $100,000 with a remaining maturity of one year or less; and
Memorandum item 2, Brokered deposits less than $100,000 with a
remaining maturity of more than one year, to include brokered time
deposits issued in denominations of $100,000 or more that are
participated out by the broker in shares of less than $100,000 and
brokered certificates of deposit issued in $1,000 amounts under a
master certificate of deposit. Data item 1.e, Time deposits of $100,000
or more held in domestic offices of commercial bank subsidiaries; data
item 2.e, Time deposits of $100,000 or more held in domestic offices of
other depository institution subsidiaries; and Memorandum item 3, Time
deposits of $100,000 or more with a remaining maturity of one year or
less, would be revised to exclude such brokered time deposits.
Instructional Clarifications
Servicing of Loan Participations
BHCs report the outstanding principal balance of assets serviced
for others in Memorandum item 2 of Schedule HC-S, Servicing,
Securitization, and Asset Sale Activities. In Memoranda items 2.a and
2.b, BHCs report the amounts of 1-4 family residential mortgages
serviced with recourse and without recourse, respectively. Memorandum
item 2.c covers all other loans and financial assets serviced for
others, but BHCs are required to report the amount of such servicing
only if the servicing volume is more than $10 million. The instructions
for Memorandum item 2 do not explicitly state whether a bank holding
company that has sold a participation in a 1-4 family residential
mortgage or other loan or financial asset, which it continues to
service, should include the servicing in Memorandum item 2.a, 2.b, or
2.c, as appropriate. The absence of clear instructional guidance has
resulted in questions from banking institutions and has produced
diversity in practice among BHCs.
Subject to the reporting threshold that applies to Memorandum item
2.c, Memorandum item 2 was intended to cover the entire volume of loans
and other financial assets for which BHCs perform the servicing
function, regardless of whether the servicing involves whole loans and
other financial assets or only portions thereof, as is typically the
case with loan participations. The risks and responsibilities inherent
in servicing are present whether all or part of a loan or financial
asset is serviced for the benefit of another party. Accordingly, the
Federal Reserve proposes to clarify the instructions to Memorandum item
2 of Schedule HC-S to explicitly state that the amount of loan
participations serviced for others should be included in this data
item.
2. Report title: Financial Statements of U.S. Nonbank Subsidiaries
of U.S. Bank Holding Companies.
Agency form number: FR Y-11.
OMB control number: 7100-0244.
Frequency: Quarterly and annually.
Reporters: Bank holding companies (BHCs).
Annual reporting hours: FR Y-11 (quarterly): 32,690; FR Y-11
(annually): 1,911.
Estimated average hours per response: FR Y-11 (quarterly): 6.35; FR
Y-11 (annually): 6.35.
Number of respondents: FR Y-11 (quarterly): 1,287; FR Y-11
(annually): 301.
General description of report: This information collection is
mandatory (12 U.S.C. Sec. Sec. 1844(c)). Confidential treatment is not
routinely given to the data in these reports. However, confidential
treatment for the reporting information, in whole or in part, can be
requested in accordance with the instructions to the form, pursuant to
section (b)(4) of the Freedom of Information Act [5 U.S.C.
Sec. Sec. 522(b)(4)].
Abstract: The FR Y-11 reports collect financial information for
individual U.S. nonbank subsidiaries of domestic BHCs. BHCs file the FR
Y-11 on a quarterly or annual basis according to filing criteria. The
FR Y-11 data are used with other BHC data to assess the condition of
BHCs that are heavily engaged in nonbanking activities and to monitor
the volume, nature, and condition of their nonbanking operations.
Current actions: Recently, the volume of 1-4 family residential
mortgage loan products whose terms allow for negative amortization and
the number of institutions providing borrowers with such loans has
increased significantly. Loans with this feature are structured in a
manner that may result in an increase in the loan's principal balance
even when the borrower's payments are technically current. When loans
with negative amortization are not prudently underwritten and not
properly monitored, they raise safety and soundness concerns. Currently
the Federal Reserve has no readily available means of identifying the
industry's exposure to such loans. Therefore, the Federal Reserve
proposes to collect four data items at the nonbank subsidiary level to
monitor the extension of negatively amortizing residential mortgage
loans in the industry and to parallel the data items being proposed for
inclusion on the FR Y-9C.
The Federal Reserve proposes to collect one memorandum item from
all nonbank subsidiaries on Schedule BS-A, Loan and Leases Financing
Receivables, for the total amount of closed-end loans with negative
amortization features secured by 1-4 family residential properties in
order to obtain an overall measure of this potentially higher risk
lending activity. In addition, the Federal Reserve proposes to collect
two memorandum items on Schedule BS-A and one memorandum item on
Schedule IS, Income Statement, from nonbank subsidiaries with a
significant volume of negatively amortizing 1-4 family residential
mortgage loans. The Federal Reserve's determination of the threshold
for significant volume would be based on the aggregate carrying amount
of negatively amortizing loans in excess of a certain percentage of the
total loans and leases reported on Schedule BS-A, for example, 5
percent or 10 percent. A nonbank with negatively amortizing loans would
determine whether it met the size threshold for reporting the three
additional memorandum items based on data reported from the previous
year-end FR Y-11. The Federal Reserve requests public comment on the
percentage of loans that should be used in setting the size threshold
for additional reporting on negatively amortizing loans. In addition,
the Federal Reserve seeks comment as to whether the percentage
threshold established for the nonbank subsidiary reports should be
consistent with or differ from the percentage threshold established for
the FR Y-9C.
The Federal Reserve also proposes two additional Schedule BS-A
memorandum items to collect (1) the total maximum remaining amount of
negative amortization contractually permitted on closed-end loans
secured by 1-4 family residential properties and (2) the total amount
of negative amortization on closed-end loans secured by 1-4 family
residential properties that is included in the carrying amount of these
loans. The first memorandum item would provide a measure of the maximum
exposure that could be incurred for negative amortization loans in the
current 1-4 family residential property loan portfolio. The second
memorandum item would then identify what
[[Page 1330]]
component of 1-4 family mortgage loans is comprised of negative
amortization loans. The Schedule IS memorandum item is year-to-date
non-cash income on closed-end loans with a negative amortization
feature secured by 1-4 family residential properties. This memorandum
item would identify the amount and extent of interest revenue accrued
and uncollected to ascertain the degree this potentially higher risk
lending activity supports the BHC's overall net income. All nonbank
subsidiaries with negatively amortizing 1-4 family residential loans in
excess of the reporting threshold would report these data items for the
entire calendar year following the end of any calendar year when the
threshold was exceeded.
3. Report title: Financial Statements of Foreign Subsidiaries of
U.S. Banking Organizations.
Agency form number: FR 2314.
OMB control number: 7100-0073.
Frequency: Quarterly and annually.
Reporters: Foreign subsidiaries of U.S. state member banks (SMBs),
bank holding companies (BHCs), and Edge or agreement corporations.
Annual reporting hours: FR 2314 (quarterly): 5,402; FR 2314
(annually): 966.
Estimated average hours per response: FR 2314 (quarterly): 6.40; FR
2314 (annually): 6.40.
Number of respondents: FR 2314 (quarterly): 211; FR 2314
(annually): 151.
General description of report: This information collection is
mandatory (12 U.S.C. Sec. Sec. 324, 602, 625, and 1844(c). Confidential
treatment is not routinely given to the data in these reports. However,
confidential treatment for the reporting information, in whole or in
part, can be requested in accordance with the instructions to the form,
pursuant to section (b)(4) of the Freedom of Information Act [5 U.S.C.
Sec. Sec. 522(b)(4)].
Abstract: The FR 2314 reports collect financial information for
direct or indirect foreign subsidiaries of U.S. SMBs, Edge and
agreement corporations, and BHCs. Parent organizations (SMBs, Edge and
agreement corporations, or BHCs) file the FR 2314 on a quarterly or
annual basis according to filing criteria. The FR 2314 data are used to
identify current and potential problems at the foreign subsidiaries of
U.S. parent companies, to monitor the activities of U.S. banking
organizations in specific countries, and to develop a better
understanding of activities within the industry, in general, and of
individual institutions, in particular.
Current actions: Recently, the volume of 1-4 family residential
mortgage loan products whose terms allow for negative amortization and
the number of institutions providing borrowers with such loans has
increased significantly. Loans with this feature are structured in a
manner that may result in an increase in the loan's principal balance
even when the borrower's payments are technically current. When loans
with negative amortization are not prudently underwritten and not
properly monitored, they raise safety and soundness concerns. Currently
the Federal Reserve has no readily available means of identifying the
industry's exposure to such loans. Therefore, the Federal Reserve
proposes to collect four data items at the nonbank subsidiary level to
monitor the extension of negatively amortizing residential mortgage
loans in the industry and to parallel the data items being proposed for
inclusion on the FR Y-9C.
The Federal Reserve proposes to collect one memorandum item from
all nonbank subsidiaries on Schedule BS-A, Loan and Leases Financing
Receivables, for the total amount of closed-end loans with negative
amortization features secured by 1-4 family residential properties in
order to obtain an overall measure of this potentially higher risk
lending activity. In addition, the Federal Reserve proposes to collect
two memorandum items on Schedule BS-A and one memorandum item on
Schedule IS, Income Statement, from nonbank subsidiaries with a
significant volume of negatively amortizing 1-4 family residential
mortgage loans. The Federal Reserve's determination of the threshold
for significant volume would be based on the aggregate carrying amount
of negatively amortizing loans in excess of a certain percentage of the
total loans and leases reported on Schedule BS-A, for example, 5
percent or 10 percent. A nonbank with negatively amortizing loans would
determine whether it met the size threshold for reporting the three
additional memorandum items based on data reported from the previous
year-end FR 2314. The Federal Reserve requests public comment on the
percentage of loans that should be used in setting the size threshold
for additional reporting on negatively amortizing loans. In addition,
the Federal Reserve seeks comment as to whether the percentage
threshold established for the nonbank subsidiary reports should be
consistent with or differ from the percentage threshold established for
the FR Y-9C.
The Federal Reserve also proposes two additional Schedule BS-A
memorandum items to collect (1) the total maximum remaining amount of
negative amortization contractually permitted on closed-end loans
secured by 1-4 family residential properties and (2) the total amount
of negative amortization on closed-end loans secured by 1-4 family
residential properties that is included in the carrying amount of these
loans. The first memorandum item would provide a measure of the maximum
exposure that could be incurred for negative amortization loans in the
current 1-4 family residential property loan portfolio. The second
memorandum item would then identify what component of 1-4 family
mortgage loans is comprised of negative amortization loans. The
Schedule IS memorandum item is year-to-date non-cash income on closed-
end loans with a negative amortization feature secured by 1-4 family
residential properties. This memorandum item would identify the amount
and extent of interest revenue accrued and uncollected to ascertain the
degree this potentially higher risk lending activity supports the BHC's
overall net income. All nonbank subsidiaries with negatively amortizing
1-4 family residential loans in excess of the reporting threshold would
report these data items for the entire calendar year following the end
of any calendar year when the threshold was exceeded.
The Federal Reserve proposes to add the section Notes to the
Financial Statements to allow respondents the opportunity to provide,
at their option, any material information included in specific data
items on the financial statements that the parent U.S. banking
organization wishes to explain. The addition of this section would
enable the Federal Reserve to automate information that respondents may
want to report as footnotes to various reported data items and provide
for release of this information to the public. This section is
currently included on the FR Y-11.
Proposal to approve under OMB delegated authority the implementation of
the following survey:
Report title: Central Bank Survey of Foreign Exchange and
Derivatives Market Activity
Agency form number: FR 3036
OMB control number: 7100-0285
Frequency: One-time
Reporters: Financial institutions that serve as intermediaries in
the wholesale foreign exchange and derivatives market and dealers.
Annual reporting hours: 3,150
[[Page 1331]]
Estimated average hours per response: Turnover survey: 51 hours;
outstandings survey: 60 hours
Number of respondents: 60
General description of report: This information collection is
voluntary (12 U.S.C. 225a, 248(a)(2), 358, and 3105(c)) and is given
confidential treatment (5 U.S.C. '552(b)(4)).
Abstract: The FR 3036 is the U.S. part of a global data collection
that is conducted by central banks every three years. More than fifty
central banks plan to conduct the survey in 2007. The Bank for
International Settlements compiles national data from each central bank
to produce global market statistics.
The Federal Reserve System and other government agencies use the
survey to monitor activity in the foreign exchange and derivatives
markets. Respondents use the published data to gauge their market
share.
Current actions: The proposed survey would collect information on
the size and structure of the foreign exchange and over-the-counter
derivatives markets. The survey would cover the turnover in the foreign
exchange spot market, the foreign exchange derivatives market, and
interest rate derivatives markets (forwards, swaps, and options). In
addition, the survey would gather data on the notional amounts and
gross positive and negative market values of outstanding derivatives
contracts for over-the-counter foreign exchange, interest rates,
equities, and commodities.
To reduce reporting burden, the Derivatives Outstanding part of the
survey is coordinated with the Semiannual Report of Derivatives
Activity (FR 2436; OMB No. 7100-0286). Those firms that submit FR 2436
data would not complete the Derivatives Outstanding part of the survey.
Differences between the proposed survey and the 2004 survey are as
follows:
1. The abbreviated report for FR 2436 reporters has been eliminated
from the Outstanding survey. Data on credit derivatives are now
submitted on the FR 2436.
2. Data items to capture credit default swaps have been added to
the Outstanding survey to be consistent with the FR 2436. Given the
growth in the credit derivative market, these data are important
component of understanding the structure and activity of the overall
over-the-counter derivatives market.
3. Additional currencies have been identified in tables on interest
rate derivatives and on foreign exchange transactions on both the
Outstanding and Turnover surveys. This change will facilitate reporting
and ensure comprehensive identification of turnover in all
participating countries' currencies. Reporting central banks will
retain discretion to customize this list.
4. The section on electronic trading and identification of
execution method has been simplified and adjusted in order to better
distinguish between categories on the Turnover survey.
5. The definition of internal and related party trades has been
clarified on the Turnover survey in order to improve consistency of
data reporting.
6. The two data items in the memorandum section concerning trading
activity trends on the Turnover survey have been split into four data
items to provide detail on derivative contracts markets since these
markets behave very differently.
Board of Governors of the Federal Reserve System, January 8,
2007.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7-246 Filed 1-10-07; 8:45 am]
BILLING CODE 6210-01-S