[Federal Register: February 27, 2008 (Volume 73, Number 39)]
[Notices]
[Page 10442-10449]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27fe08-50]
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FEDERAL RESERVE SYSTEM
Agency Information Collection Activities: Announcement of Board
Approval Under Delegated Authority and Submission to OMB
Summary: Background.
Notice is hereby given of the final approval of proposed
information collections by the Board of Governors of the Federal
Reserve System (Board) under OMB delegated authority, as per 5 CFR
1320.16 (OMB Regulations on Controlling Paperwork Burdens on the
Public). 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
instrument(s) 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.
For Further Information Contact:
Federal Reserve Board Clearance Officer--Michelle Shore--Division of
Research and Statistics, Board of Governors of the Federal Reserve
System, Washington, DC 20551 (202-452-3829)
OMB Desk Officer--Alexander T. Hunt--Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 10235, Washington, DC 20503.
Final approval under OMB delegated authority of the extension for
three years, with revision, of the following reports:
1. Report title: Financial Statements for Bank Holding Companies.
Agency form number: FR Y-9C, FR Y-9LP, and FR Y-9SP.
OMB control number: 7100-0128.
Frequency: Quarterly and semiannually.
Reporters: Bank holding companies (BHCs).
Annual reporting hours: FR Y-9C: 160,056; FR Y-9LP: 25,662; FR Y-
9SP: 47,135.
Estimated average hours per response: FR Y-9C: 40.50; FR Y-9LP:
5.25; FR Y-9SP: 5.25.
Number of respondents: FR Y-9C: 988; FR Y-9LP: 1,222; FR Y-9SP:
4,489.
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 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 sections
(b)(4), (b)(6) and (b)(8) of the Freedom of Information Act (5 U.S.C.
522(b)(4), (b)(6) and (b)(8)).
Abstract: The FR Y-9C, FR Y-9LP, and FR Y-9SP are standardized
financial statements for the consolidated BHC and its parent. 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 Federal Financial Institutions Examination Council (FFIEC)
Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031
& 041; OMB No. 7100-0036) filed by commercial banks. The FR Y-9C
collects consolidated data from BHCs. The FR Y-9C is filed by top-tier
BHCs with total consolidated assets of $500 million or more. (Under
certain circumstances defined in the General Instructions, BHCs under
$500 million may be required to file the FR Y-9C.)
The FR Y-9LP includes standardized financial statements filed
quarterly on a parent company only basis from each BHC that files the
FR Y-9C. In addition, for tiered BHCs, a separate FR Y-9LP must be
filed for each lower tier BHC.
The FR Y-9SP is a parent company only financial statement filed by
smaller BHCs. Respondents include BHCs with total consolidated assets
of less than $500 million. This form is a simplified or abbreviated
version of the more extensive parent company only financial statement
for large BHCs (FR Y-9LP). This report is designed to obtain basic
balance sheet and income information for the parent company,
information on intangible assets, and information on intercompany
transactions.
Current Actions: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, with revision, of the
Financial Statements for Bank Holding Companies. The comment period
expired on January 8, 2008. The Federal Reserve received four comment
letters on proposed revisions to the FR Y-9C: Three from banking
organizations and one from a bankers' organization. The Federal Deposit
Insurance Corporation, the Office of the Comptroller of the Currency,
and the Board (the banking agencies) received five additional comment
letters on proposed changes to the Call Reports that parallel proposed
changes to the FR Y-9C: Four from banking organizations and one from a
government agency. No comments were received on proposed changes to the
FR Y-9LP or the FR Y-9SP.
No comments were received on (1) the proposed data items for
restructured troubled 1-4 family residential mortgages, (2) the fair
value and unpaid principal balance by loan category of loans held for
sale or investment that are measured at fair value, (3) the revised
reporting threshold for the trading assets and liabilities schedule,
(4) the revisions to the regulatory capital schedule and instructions
for credit derivatives, and (5) the conformity changes for brokered
deposits within the deposits schedule. Three banking organizations
commented on the proposed modification of the trading account
definition and expressed support for this definitional change. The
revisions discussed in this paragraph will be implemented March 31,
2008, as proposed.
With respect to the remaining proposed revisions, the Federal
Reserve approved certain modifications to them to address concerns
expressed by
[[Page 10443]]
commenters. The Federal Reserve will move forward with the modified
reporting changes on March 31, 2008, although the reporting of certain
proposed new items will be optional for this initial report date and
will be required beginning June 30, 2008. For the March 31, 2008,
report date, institutions may provide reasonable estimates for any new
or revised data item required to be reported as of that date for which
the requested information is not readily available. For the new data
items that are optional as of the March 31, 2008, report date, this
same policy on the use of reasonable estimates will apply to these new
items as of the June 30, 2008, report date.
The Federal Reserve's responses to the comments received and a
discussion of the related revisions are presented below.
Revisions Related to 1-4 Family Residential Mortgage Loans
1. Interest and Fee Income and Quarterly Average
Currently, BHCs report the total amount of interest and fee income
on their loans secured by real estate (in domestic offices) in the
income statement (Schedule HI, data item 1.a.(1), Interest and fee
income on loans: in domestic offices) and include the quarterly average
for these loans (in domestic offices) in the quarterly averages
schedule (Schedule HC-K, data item 3). The Federal Reserve proposed to
split these existing income statement and quarterly average data items
into separate data items for the interest and fee income on and the
quarterly averages of ``Loans secured by 1-4 family residential
properties,'' ``All other loans secured by real estate,'' and ``All
other loans in domestic offices.''
One banking organization commented on comparable additions to the
Call Report. This bank noted that these additions will require changes
to its loan processing and accounting systems, which will affect loan
personnel, but that it is possible to implement these changes. The
Federal Reserve will proceed to add these data items to the FR Y-9C as
proposed.
2. Mortgages in Foreclosure
The Federal Reserve proposed to add two new memoranda items for the
amount of 1-4 family residential mortgage loans owned by the BHC and
serviced by the BHC that are in foreclosure as of the quarter-end
report date. Mortgage loans in foreclosure will be those for which the
legal process of foreclosure has been initiated, but for which the
foreclosure process has not yet been resolved at quarter-end.\1\ These
memoranda items will be added to the loan schedule (Schedule HC-C) and
the servicing, securitization, and asset sale activities schedule
(Schedule HC-S), with the carrying amount (before any applicable
allowance for loan and leases losses) reported in the former memorandum
item and the outstanding principal amount reported in the latter
memorandum item. Reporting mortgage loans as being in process of
foreclosure will not exempt those loans owned by the BHC from being
reported as past due or nonaccrual, as appropriate, in Schedule HC-N,
and will not exempt those loans serviced by the BHC that are reported
in Schedule HC-S, data item 1, from being reported as past due, as
appropriate, in that schedule.
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\1\ For banks that participate in the Mortgage Bankers
Association's (MBA) National Delinquency Survey, the time at which
mortgage loans would become reportable as being in process of
foreclosure for FR Y-9C reporting purposes would be the same time at
which mortgage loans become reportable as being in ``foreclosure
inventory'' for MBA survey purposes (although the dollar amount of
such loans would be reported in the FR Y-9C while the number of such
loans are reported for MBA survey purposes).
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The bankers' organization provided comments on these proposed data
items and three banking organizations supported their comments. The
commenters did not object to reporting these data items but requested
that the data collection be delayed six months because the data are not
readily available. The Federal Reserve will go forward with collecting
the new data items as proposed because of the substantial increase in
the number of foreclosures reported by the industry and the potentially
higher number of foreclosures in the next couple of years. Given
current conditions in the residential mortgage market, the Federal
Reserve has a strong supervisory interest in being able to evaluate
foreclosure data and obtain data needed as the starting point for trend
analyses at the earliest possible date. As with all new FR Y-9C data
items, BHCs may report reasonable estimates for the amounts of loans in
foreclosure for the first reporting period (March 31, 2008) using the
best information available.
3. Open-End 1-4 Family Residential Mortgage Banking Activities
The Federal Reserve proposed to expand the scope of Schedule HC-P,
1-4 Family Residential Mortgage Banking Activities in Domestic Offices,
to include separate data items for originations, purchases, and sales
of open-end 1-4 family residential mortgages during the quarter; the
amount of such mortgages held for sale at quarter-end; and noninterest
income for the quarter from the sale, securitization, and servicing of
open-end residential mortgages. When reporting the originations,
purchases, sales, and mortgages held for sale, BHCs will report both
the total commitment under the line of credit and the principal amount
funded under the line. For BHCs with less than $1 billion in total
assets, the criteria used to determine whether Schedule HC-P must be
completed will be modified to include both closed-end and open-end 1-4
family residential mortgage banking activities.
One banking organization and the bankers' organization provided
comments on these proposed revisions and three other banking
organizations supported the latter's comments. The bankers'
organization did not object to reporting the new data items but
requested that the data collection be delayed six months because of the
time needed to identify and capture the unused commitment amounts and
outstanding principal balances. The Federal Reserve agrees not to
require the new open-end mortgage data to be reported until the June
30, 2008, FR Y-9C, with optional reporting of these data in the March
31, 2008, FR Y-9C, if the information is available.
The banking organization encouraged the Federal Reserve to clearly
define the terms ``total commitment under the lines of credit'' and the
``principal amount funded under the lines of credit'' as they relate to
originations of open-end 1-4 family residential mortgages during the
quarter because different interpretations could result in the absence
of clear instructions. The organization recommended that ``total
commitment'' be defined as the initial committed balance made to
customers on newly established open-end lines of credit and ``principal
amount funded'' be defined as initial fundings made to customers on
newly established lines. The Federal Reserve agrees on the necessity
for clear definitions of these terms. Thus, the instructions for
reporting the ``total commitment'' will define it as the total amount
of the lines of credit granted to customers at the time the open-end
credits were originated, which is consistent with the banking
organization's recommendation. For retail and wholesale originations of
such open-end loans, the instructions would define ``principal amount
funded'' as the initial fundings made to customers on newly established
lines of credit. In addition, for open-end loans purchased, sold, held
for sale, and (as discussed in the following section) repurchased or
[[Page 10444]]
indemnified, the ``principal amount funded'' will be defined as the
principal balance outstanding of loans extended under lines of credit
at the transaction date or at quarter-end, as appropriate.
4. Mortgage Repurchases and Indemnifications
The Federal Reserve proposed to add four new data items to Schedule
HC-P to collect data on mortgage loan repurchases and indemnifications
during the quarter. For both closed-end first lien and closed-end
junior lien 1-4 family residential mortgages, BHCs will report the
outstanding principal amount of mortgages repurchased or indemnified as
of the date of repurchase or indemnification. For open-end 1-4 family
residential mortgages, BHCs will report both the total commitment under
the line of credit and the principal amount funded under the line for
mortgages repurchased or indemnified.
One banking organization and the bankers' organization commented on
these comparable additions to the Call Report, with three other banking
organizations supporting the bankers' organization's comments. The
banking organization sought clarification as to the scope of
indemnifications, particularly with respect to whether indemnifications
that consisted of reimbursements of legal fees or administrative costs
were expected to be reported. The Federal Reserve will clarify the FR
Y-9C instructions to state that indemnifications are limited to
reimbursements for credit losses, including reimbursements for losses
arising from sales of real estate collateral. The bankers' organization
also requested a clarification involving terminology, questioning
whether, if there is a difference between the book value of a loan and
its principal balance, which amount banks are expected to report. The
amount to be reported for closed-end loans is the mortgages'
outstanding principal amount as of the date of repurchase or
indemnification, not the book value of these mortgages. For open-end
residential mortgage loans, the concept of principal amount funded is
discussed in the preceding section. Finally, the Federal Reserve will
not require that the new data items on repurchases and indemnifications
of open-end loans be reported until the June 30, 2008, report date,
with optional reporting of these data as of the March 31, 2008, report
date, if the information is available.
Trading Assets and Liabilities and Other Assets and Liabilities
Accounted for Under a Fair Value Option
1. Reporting of Assets and Liabilities Under the Fair Value Option as
Trading
On February 15, 2007, the Financial Accounting Standards Board
(FASB) issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (FAS 159), which is effective for
fiscal years beginning after November 15, 2007. Earlier adoption of FAS
159 was permitted as of the beginning of an earlier fiscal year,
provided the BHC (i) also adopts all of the requirements of FASB
Statement No. 157, Fair Value Measurements (FAS 157) at the early
adoption date of FAS 159; (ii) has not yet issued a financial statement
or submitted FR Y-9C data for any period of that fiscal year; and (iii)
satisfies certain other conditions. Thus, a BHC with a calendar year
fiscal year may have voluntarily adopted FAS 159 as of January 1, 2007.
Changes in the fair value of financial assets and liabilities to which
the fair value option is applied are reported in current earnings as is
currently the case for trading assets and liabilities. Since the fair
value option standard allows a BHC to elect fair value measurement
through earnings for financial assets and financial liabilities, the
Federal Reserve understands that some institutions would like to
reclassify certain loans elected to be accounted for under the fair
value option as trading assets. The FR Y-9C reporting instructions
currently do not allow loans held for sale to be reported as trading
assets.
Under FAS 159, all securities within the scope of FASB Statement
No. 115, Accounting for Certain Investments in Debt and Equity
Securities (FAS 115), that a BHC has elected to report at fair value
under a fair value option should be classified as trading securities.
Recognizing the provisions of FAS 159, the Federal Reserve proposed the
following clarification to the reporting instructions, including the
Glossary entry for Trading Account. BHCs may classify assets (other
than securities within the scope of FAS 115 for which a fair value
option is elected) and liabilities as trading if the BHC applies fair
value accounting, with changes in fair value reported in current
earnings, and manages these assets and liabilities as trading
positions, subject to the controls and applicable regulatory guidance
related to trading activities.
Three banking organizations provided comments in support of the
proposed expanded definition of the trading account to permit the
classification of certain loans as trading. The Federal Reserve will
proceed with the revised definition of trading account as proposed.
2. Revision of Certain Fair Value Measurement and Fair Value Option
Information
The Federal Reserve proposed to add two columns to Schedule HC-Q,
Financial Assets and Liabilities Measured at Fair Value, to allow BHCs
to report any netting adjustments and Level 1 fair value measurements
separately in a manner consistent with industry practice. The new
columns will be captioned as column B, Amounts Netted in the
Determination of Total Fair Value Reported on Schedule HC, and column
C, Level 1 Fair Value Measurements. Existing column B, Level 2 Fair
Value Measurements, and column C, Level 3 Fair Value Measurements, of
Schedule HC-Q will be recaptioned as columns D and E, respectively.
Column A will remain unchanged.
One commenter, a banking organization, offered comments on
comparable proposed changes to Schedule RC-Q of the Call Report. The
commenter supported the addition of the two new columns to the
schedule. The commenter also suggested amending the scope of Schedule
RC-Q to collect information on all assets and liabilities measured at
fair value pursuant to FAS 157 rather than the current scope, which
collects information primarily based on an organization's election to
measure assets at fair value under a fair value option and only
includes some of the assets and liabilities covered by FAS 157. The
Federal Reserve recognizes that a significant number of BHCs have only
recently adopted FAS 157 and are working through a number of
implementation issues. In addition, the FASB recently proposed a 1-year
delay in the effective date of FAS 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed
at fair value in the financial statements on a recurring basis. In
light of these factors, the Federal Reserve believes that it would not
be prudent, at this time, to modify the scope of the Schedule HC-Q to
include all assets and liabilities covered by FAS 157 as suggested by
the commenter, and will proceed with the addition of the two additional
columns to Schedule HC-Q as proposed.
The Federal Reserve also proposed to add data items to Schedule HC-
C, Loans and Leases, to collect data on the loans reported in this
schedule that are measured at fair value under a fair value option: (1)
The fair value of such loans
[[Page 10445]]
measured by major loan category, (2) the unpaid principal balance of
such loans by major loan category, and (3) the aggregate amount of the
difference between the fair value and the unpaid principal balance of
such loans that is attributable (a) to changes in the credit risk of
the loan since its origination and (b) to all other factors. Because
Schedule HC-C only provides data on loans held for investment and for
sale, the Federal Reserve proposed to add the same data items to
Schedule HC-D, Trading Assets and Liabilities, for loans measured at
fair value under a fair value option that are designated as held for
trading. The Federal Reserve also proposed to add a new data item to
Schedule HC-D for Other trading liabilities in recognition of a BHC's
ability to elect to measure certain liabilities at fair value in
accordance with FAS 159 and designate them as held for trading.
The Federal Reserve proposed to add two data items to Schedule HC-
N, Past Due and Nonaccrual Loans, Leases, and Other Assets, to collect
data on the fair value and unpaid principal balance of loans measured
at fair value under a fair value option that are past due or in
nonaccrual status. The data items will follow the existing three column
breakdown on Schedule HC-N that BHCs utilize to report all other past
due and nonaccrual loans. Since trading assets are not currently
reported on Schedule HC-N, the Federal Reserve proposed to add similar
data items to Schedule HC-D to collect the total fair value and unpaid
principal balance of loans ninety days or more past due that are
classified as trading. Finally, the Federal Reserve proposed to add
data items to Schedule HI, Income Statement, to collect information on:
(1) Net gains (losses) recognized in earnings on assets that are
reported at fair value under a fair value option, (2) estimated net
gains (losses) on loans attributable to changes in instrument-specific
credit risk, (3) net gains (losses) recognized in earnings on
liabilities that are reported at fair value under a fair value option,
(4) estimated net gains (losses) on liabilities attributable to changes
in the instrument-specific credit risk.
Two banking organizations and the bankers' organization provided
comments on the proposed changes. One banking organization opposed the
proposal to collect information on Schedules HC-C and HC-D on the
aggregate amount of the difference between the fair value and the
unpaid principal balance of loans measured at fair value under a fair
value option attributable to (a) changes in the credit risk of the loan
since its origination and (b) all other factors. The banking
organization indicated the proposed information may exist in theory but
that BHCs do not have the ability to readily and reliably produce this
information. The Federal Reserve reconsidered the proposal and concurs
with the commenter's assessment of BHCs' ability to readily and
reliably produce this information. As a result, the Federal Reserve
will not implement the proposed change.
One banking organization opposed the proposed breakouts on Schedule
HC-D of the fair value and the unpaid principal balance of loans
measured at fair value under a fair value option by major loan
category. The organization indicated that the information was excessive
and burdensome to collect for loans designated as trading and will
require changes to the BHC's trading systems. The safety and soundness
objective for collecting this information is to make comparisons among
entities that elect a fair value option for loans and those that do
not. This objective cannot be achieved if the information collected on
Schedules HC-C and HC-D is not comparable. Since BHCs have considerable
experience reporting information by major loan category as required by
Schedule HC-C and are only now able to report loans under a fair value
option on Schedule HC-D, the Federal Reserve believes it will be less
burdensome to adapt the proposed loan breakouts on Schedule HC-D to the
current breakouts on Schedule HC-C than to develop a unique format for
reporting loans under a fair value option in both Schedules HC-C and
HC-D as inferred by the commenter. The Federal Reserve will proceed
with the breakouts for loans reported under a fair value option on
Schedule HC-D as proposed.
The banking organization also questioned whether the Federal
Reserve should collect separate data items on Schedule HI for the net
gains (losses) recognized in earnings on assets that are reported at
fair value under a fair value option and the estimated net gains
(losses) on loans attributable to changes in instrument-specific credit
risk. Similarly, the commenter questioned whether the Federal Reserve
should collect separate data items on Schedule HI for the net gains
(losses) recognized in earnings on liabilities that are reported at
fair value under a fair value option and the estimated net gains
(losses) on liabilities attributable to changes in the instrument-
specific credit risk. The commenter suggested clarifying what changes,
other than credit risk, will be reported in net gains (losses) on
assets and liabilities reported at fair value under a fair value option
that will warrant a separate breakout for net gains (losses) on loans
and liabilities for instrument-specific credit risk. The content of the
proposed data items for Schedule HI are the same as those mandated by
the disclosure requirements of paragraphs 19(a), (c)(1), and (d)(1) of
FAS 159. However, to reduce burden, the Federal Reserve grouped the
requirements of paragraph (a) into net gains (losses) recognized in
earnings on assets that are reported at fair value under a fair value
option and net gains (losses) recognized in earnings on liabilities
that are reported at fair value under a fair value option rather than
requiring separate breakouts for the amount of gains and losses on fair
value option data items for each data item on a BHC's balance sheet as
required by paragraph 19(a). Thus, the rationale for collecting the
separate breakouts on Schedule HI is the same as FAS 159, to facilitate
comparisons between BHCs that adopt the fair value option and those
that do not. The Federal Reserve will proceed with the breakouts on
Schedule HI as proposed.
The bankers' organization recommended a six-month delay in the
effective date of the proposal to collect information on Schedule HC-N
on the fair value and unpaid principal balance of loans measured at
fair value under a fair value option that are past due or in nonaccrual
status and Schedule HC-D on the total fair value and unpaid principal
balance of loans ninety days or more past due. The commenter indicated
the delay would give BHCs sufficient time to make changes to their
systems to capture this information. The Federal Reserve agrees that a
delay is advisable and will delay the implementation date of the
proposed Schedule HC-N and HC-D data items to the June 30, 2008, report
date. However, BHCs have the option of submitting this information
effective for the March 31, 2008, report date, if the information is
available.
3. Other Revisions to Information on Trading Assets and Liabilities
The Federal Reserve proposed three revisions to Schedule HC-D to
enhance the Federal Reserve's ability to assess BHC exposures to
market, liquidity, credit, operational, and other risks posed by
trading assets and liabilities and to appropriately assess the safety
and soundness of BHCs with these exposures and BHCs with significant
concentrations in trading assets and liabilities. First, the Federal
Reserve proposed to eliminate the single data item for trading assets
in foreign offices and revise the schedule to include separate columns
for the consolidated bank holding company and for domestic
[[Page 10446]]
offices. Second, the Federal Reserve proposed to change the reporting
threshold for Schedule HC-D. As proposed, Schedule HC-D will be
completed for any quarter when the quarterly average for trading assets
in Schedule HC-K, data item 4.a, was $2 million or more in any of the
four preceding quarters. Third, the Federal Reserve proposed to require
BHCs with average trading assets of $1 billion or more in any of the
four preceding quarters to provide additional detail on trading assets
and liabilities currently included in certain trading asset and
liability categories. These BHCs will provide additional breakouts for
asset-backed securities by major category, collateralized debt
obligations (both synthetic and non-synthetic), retained interests in
securitizations, equity securities (both with and without readily
determinable fair values), and loans held pending securitization. In
addition, these BHCs will be required to provide a description of and
report the fair value of any type of trading asset or liability in the
Other trading assets and Other trading liabilities categories that is
greater than $25,000 and exceeds 25 percent of the amount reported in
that trading category.
One banking organization requested the Federal Reserve reconsider
the proposed expansion of information for BHCs with average trading
assets of $1 billion or more due to current systems limitations. The
Federal Reserve assessed the systems challenges resulting from other
regulatory initiatives at banking organizations with trading assets of
$1 billion or more and determined a delay in the implementation date
for these changes is reasonable. The Federal Reserve will delay the
implementation date of the proposed expanded information on Schedule
HC-D data items to the June 30, 2008, report date. However, BHCs will
be allowed the option of submitting this information effective for the
March 31, 2008 report date, if the information is available.
Reporting Credit Derivative Data for Risk-Based Capital Purposes
The Federal Reserve proposed to modify the FR Y-9C instructions for
Schedule HC-R to allow the reporting of the credit equivalent amount of
credit derivatives subject to the counterparty credit risk charge in
data item 54 of the schedule and to extend the existing 100 percent
risk weight column in Schedule HC-R to data item 54, Derivative
contracts. The Federal Reserve did not receive comments on the proposed
changes for credit derivatives in Schedule HC-R. However, upon further
consideration of the reporting of such derivatives in Schedule HC-R,
data item 54, the Federal Reserve concluded that extending the 100
percent risk weight column to this data item is not necessary. The
instructions will indicate that credit derivatives entered into for
trading purposes and subject to the market risk capital guidelines
should be reported in data item 54.
Revision of Reporting Threshold for Other Noninterest Income and Other
Noninterest Expense
The Federal Reserve proposed to change the threshold for reporting
detailed information on the components of other noninterest income and
other noninterest expense as reported on Schedule HI, Memoranda items 6
and 7. Specifically, the Federal Reserve proposed to change the
threshold to require BHCs to separately disclose the description and
amount of any data item included in Schedule HI, data item 5.l, Other
noninterest income that exceeds 3 percent of other noninterest income
and any data item included in Schedule HI, data item 7.d, Other
noninterest expense that exceeds 3 percent of other noninterest
expense.
In addition, the Federal Reserve proposed to add one preprinted
caption for other noninterest income and four preprinted captions for
other noninterest expense to help BHCs comply with the disclosure
requirements. As with the existing preprinted captions for other
noninterest income and other noninterest expense, BHCs are only
required to use these descriptions and provide the amounts for these
components when the amounts included in other noninterest income or
other noninterest expense exceed the reporting threshold. The new
preprinted other noninterest income caption is bank card/credit card
interchange fees. The new preprinted noninterest expense captions are
accounting and auditing expenses, consulting and advisory expenses,
automated teller machine (ATM) and interchange expenses, and
telecommunication expenses.
Two banking organizations and the government agency provided
comments on comparable changes proposed to the Call Report. The agency
supported the additional preprinted captions. One banking organization
indicated the application of the new thresholds to the smaller base of
other noninterest income or expense would result in their bank
reporting amounts as small as $1,000 in the other noninterest income
disclosures and $7,500 in the other noninterest expense disclosures.
The commenter recommended establishing a $50,000 floor to the reporting
threshold to eliminate the reporting of de minimis amounts. The Federal
Reserve recognizes the merit of this request and will implement
modified thresholds to require BHCs to separately disclose the
description and amount of any data item in other noninterest income
that is greater than $25,000 and exceeds 3 percent of other noninterest
income and any data item included in other noninterest expense that is
greater than $25,000 and exceeds 3 percent of other noninterest
expense. The $25,000 amount is consistent with the threshold floors
used on the Call Report for All other assets in Schedule RC-F, Other
Assets, and All other liabilities in Schedule RC-G, Other Liabilities.
Another banking organization also commented on these comparable
changes to the Call Report that they would have difficulty breaking out
expenses incurred for multiple services provided by a third party
vendor where separate charges for specific services would be burdensome
to identify. The commenter also suggested that a definition of
telecommunications expenses be provided. To reduce reporting burden,
the Federal Reserve will modify the instructions for Schedule HI,
Memoranda item 7, Other noninterest expense, to indicate that BHCs
should report expenses that reflect a single charge for grouped or
``bundled'' services in the data item that most closely describes the
predominant type of expense incurred, and that this categorization
should be used consistently over time. Regarding the definition of
telecommunications expenses, BHCs should include any expenses
associated with telephone, cable, and internet services (including web
page maintenance).
2. Report title: Financial Statements for Nonbank Subsidiaries of
U.S. Bank Holding Companies.
Agency form number: FR Y-11 and FR Y-11S.
OMB control number: 7100-0244.
Frequency: Quarterly and annually.
Reporters: Bank holding companies (BHCs).
Annual reporting hours: FR Y-11 (quarterly): 10,752; FR Y-11
(annual): 1,402; FR Y-11S (annual): 471.
Estimated average hours per response: FR Y-11 (quarterly): 6.40; FR
Y-11 (annual): 6.40; FR Y-11S (annual): 1.0.
Number of respondents: FR Y-11 (quarterly): 420; FR Y-11 (annual):
219; FR Y-11S (annual): 471.
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,
[[Page 10447]]
confidential treatment for the reporting information, in whole or in
part, can be requested in accordance with the instructions to the form,
pursuant to sections (b)(4), (b)(6) and (b)(8) of the Freedom of
Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)].
Abstract: The FR Y-11 reports collect financial information for
individual non-functionally regulated U.S. nonbank subsidiaries of
domestic BHCs. BHCs file the FR Y-11 on a quarterly or annual basis
according to filing criteria or file the FR Y-11S annually. 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: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, with revision, of the
Financial Statements for Nonbank Subsidiaries of U.S. Bank Holding
Companies. The comment period expired on January 8, 2008. The Federal
Reserve did not receive any comment letters. The Federal Reserve will
eliminate reporting by subsidiaries that were created for the purposes
of issuing trust preferred securities (trust preferred securities
subsidiaries) to substantially reduce burden on the industry and, in
this regard, make the report consistent with the revision to the other
nonbank subsidiary reports, the Financial and Abbreviated Financial
Statements of Foreign Subsidiaries of U.S. Banking Organizations (FR
2314/S; OMB No. 7100-0073) and the Financial and Abbreviated Financial
Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking
Organizations (FR Y-7N/NS; OMB No. 7100-0125). The Federal Reserve will
collect: (1) Certain data on the FR Y-11 from all institutions that
choose, under generally accepted accounting principles, to apply a fair
value option to one or more financial instruments and one or more
classes of servicing assets and liabilities and (2) a new data item on
the income statement to collect fees and commissions from annuity
sales. On the FR Y-11S, the Federal Reserve will add a question to
determine whether the subsidiary has adopted a fair value option.
Lastly, the Federal Reserve will add clarifying language to the
instructions for the reporting of trading revenue and noninterest
income from related organizations. All reporting changes will be
implemented effective with the March 31, 2008, report date.
3. Report title: Financial Statements of Foreign Subsidiaries of
U.S. Banking Organizations.
Agency form number: FR 2314 and FR 2314S.
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): 5,581; FR 2314
(annual): 1,075; FR 2314S (annual): 272.
Estimated average hours per response: FR 2314 (quarterly): 6.40; FR
2314 (annual): 6.40; FR 2314S (annual): 1.0.
Number of respondents: FR 2314 (quarterly): 218; FR 2314 (annual):
168; FR 2314S (annual): 272.
General description of report: This information collection is
mandatory (12 U.S.C. 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 sections (b)(4), (b)(6) and (b)(8) of the Freedom of
Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)].
Abstract: The FR 2314 reports collect financial information for
non-functionally regulated 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 or
file the FR 2314S annually. 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: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, with revision, of the
Financial Statements of Foreign Subsidiaries of U.S. Banking
Organizations. The comment period expired on January 8, 2008. The
Federal Reserve did not receive any comment letters. The Federal
Reserve will eliminate reporting by subsidiaries that were created for
the purposes of issuing trust preferred securities (trust preferred
securities subsidiaries) to substantially reduce burden on the industry
and, in this regard, make the report consistent with the revision to
the other nonbank subsidiary reports, the Financial and Abbreviated
Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding
Companies (FR Y-11/S; OMB No. 7100-0244) and the Financial and
Abbreviated Financial Statements of U.S. Nonbank Subsidiaries Held by
Foreign Banking Organizations (FR Y-7N/NS; OMB No. 7100-0125). The
Federal Reserve will collect: (1) Certain data on the FR 2314 from all
institutions that choose, under generally accepted accounting
principles, to apply a fair value option to one or more financial
instruments and one or more classes of servicing assets and liabilities
and (2) a new data item on the income statement to collect fees and
commissions from annuity sales. On the FR 2314S, the Federal Reserve
will add a question to determine whether the subsidiary has adopted a
fair value option. Lastly, the Federal Reserve will add clarifying
language to the instructions for the reporting of trading revenue and
noninterest income from related organizations. All reporting changes
will be implemented effective with the March 31, 2008, report date.
4. Report title: Financial Reports of Foreign Banking
Organizations.
Agency form number: FR Y-7N and FR Y-7NS.
OMB control number: 7100-0125.
Frequency: Quarterly and annually.
Reporters: Foreign banking organizations (FBOs).
Annual reporting hours: FR Y-7N (quarterly): 4,889; FR Y-7N
(annual): 1,065; FR Y-7NS: 229.
Estimated average hours per response: FR Y-7N (quarterly): 6.3; FR
Y-7N (annual): 6.3; FR Y-7NS.
Number of respondents: FR Y-7N (quarterly): 194; FR Y-7N (annual):
169; FR Y-7NS: 229.
General description of report: This information collection is
mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential
treatment is not routinely given to the data in these reports. However,
confidential treatment for information, in whole or in part, on any of
the reporting forms can be requested in accordance with the
instructions to the form, pursuant to sections (b)(4) and (b)(6) of the
Freedom of Information Act [5 U.S.C. 522(b)(4) and (b)(6)].
Abstract: The FR Y-7N and FR Y-7NS collect financial information
for non-functionally regulated U.S. nonbank subsidiaries held by FBOs
other than through a U.S. bank holding company, U.S. financial holding
company, or U.S. bank. FBOs file the FR Y-7N on a quarterly or annual
basis or the FR Y-7NS annually based on size thresholds.
[[Page 10448]]
Current actions: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, with revision, of the
Financial Reports of Foreign Banking Organizations. The comment period
expired on January 8, 2008. The Federal Reserve did not receive any
comment letters. The Federal Reserve will eliminate reporting by
subsidiaries that were created for the purposes of issuing trust
preferred securities (trust preferred securities subsidiaries) on the
FR Y-7N/NS to substantially reduce burden on the industry and, in this
regard, make the report consistent with the revision to the other
nonbank subsidiary reports, the Financial and Abbreviated Financial
Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies
(FR Y-11/S; OMB No. 7100-0244) and the Financial and Abbreviated
Financial Statements of Foreign Subsidiaries of U.S. Banking
Organizations (FR 2314/S; OMB No. 7100-0073). On the FR Y-7N, the
Federal Reserve will collect: (1) Certain data from all institutions
that choose, under general accounting principles, to apply a fair value
option to one or more financial instruments and one or more classes of
servicing assets and liabilities and (2) a new data item on the income
statement to collect fees and commissions from annuity sales. On the FR
Y-7NS, the Federal Reserve will add a question to determine whether the
nonbank subsidiary has adopted a fair value option.
The Federal Reserve will make the following changes to make the FR
Y-7N consistent with changes made previously to other nonbank
subsidiary reports: (1) Add one new equity capital component on the
balance sheet for reporting partnership interests and (2) add a new
section, Notes to the Financial Statements. The Federal Reserve will
also add clarifying language to the instructions for the reporting of
trading revenue and noninterest income from related organizations. All
reporting changes will be implemented effective with the March 31,
2008, report date.
5. Report title: Consolidated Report of Condition and Income for
Edge and Agreement Corporations.
Agency form number: FR 2886b.
OMB control number: 7100-0086.
Frequency: Quarterly.
Reporters: Edge and agreement corporations.
Annual reporting hours: 2,442.
Estimated average hours per response: 14.85 banking corporations,
8.65 investment corporations.
Number of respondents: 12 banking corporations, 50 investment
corporations.
General description of report: This information collection is
mandatory (12 U.S.C. 602 and 625). Schedules RC-M (except data item 3)
and RC-V are held as confidential pursuant to section (b)(4) of the
Freedom of Information Act (5 U.S.C. 552(b)(4)).
Abstract: The mandatory FR 2886b comprises a balance sheet, income
statement, two schedules reconciling changes in capital and reserve
accounts, and ten supporting schedules, and it parallels the
Consolidated Reports of Condition and Income (Call Report) (FFIEC 031
and FFIEC 041; OMB No. 7100-0036) that commercial banks file. The
Federal Reserve uses the data collected on the FR 2886b to supervise
Edge corporations, identify present and potential problems, and monitor
and develop a better understanding of activities within the industry.
Current actions: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, with revision, of the
Consolidated Report of Condition and Income for Edge and Agreement
Corporations. The comment period expired on January 8, 2008. The
Federal Reserve did not receive any comment letters. The Federal
Reserve will collect certain data from all organizations that choose,
under generally accepted accounting principles, to apply a fair value
option to one or more financial instruments and one or more classes of
servicing assets and liabilities. The Federal Reserve will revise the
instructions for information collected on restructured loans and leases
consistent with proposed changes to the Call Report. All reporting
changes will be implemented effective with the March 31, 2008, report
date.
Final approval under OMB delegated authority of the extension for
three years, without revision, of the following reports:
1. Report title: Financial Statements for Bank Holding Companies.
Agency form number: FR Y-9ES and FR Y-9CS.
OMB control number: 7100-0128.
Frequency: Quarterly and annually.
Reporters: Bank holding companies (BHCs).
Annual reporting hours: FR Y-9ES: 48; FR Y-9CS: 400.
Estimated average hours per response: FR Y-9ES: 30 minutes; FR Y-
9CS: 30 minutes.
Number of respondents: FR Y-9ES: 96; FR Y-9CS: 200.
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 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 sections
(b)(4), (b)(6)and (b)(8) of the Freedom of Information Act (5 U.S.C.
522(b)(4), (b)(6) and (b)(8)).
Abstract: The FR Y-9ES collects financial information from employee
stock ownership plans that are also BHCs on their benefit plan
activities. It consists of four schedules: Statement of Changes in Net
Assets Available for Benefits, Statement of Net Assets Available for
Benefits, Memoranda, and Notes to the Financial Statements. The FR Y-
9CS is a supplemental report that may be utilized to collect additional
information deemed to be critical and needed in an expedited manner
from BHCs. The items of information included on the supplement may
change as needed.
Current actions: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, without revision, of the FR Y-
9ES and FR Y-9CS. The comment period expired on January 8, 2008. The
Federal Reserve did not receive any comment letters.
2. Report title: Financial Reports of Foreign Banking
Organizations.
Agency form number: FR Y-7Q.
OMB control number: 7100-0125.
Frequency: Quarterly and annually.
Reporters: Foreign banking organizations (FBOs).
Annual reporting hours: FR Y-7Q (quarterly): 325; FR Y-7Q (annual):
118.
Estimated average hours per response: FR Y-7Q (quarterly): 1.25; FR
Y-7Q (annual): 1.0.
Number of respondents: FR Y-7Q (quarterly): 65; FR Y-7Q (annual):
118.
General description of report: This information collection is
mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential
treatment is not routinely given to the data in these reports. However,
confidential treatment for information, in whole or in part, on any of
the reporting forms can be requested in accordance with the
instructions to the form, pursuant to sections (b)(4) and (b)(6) of the
Freedom of Information Act [5 U.S.C. Sec. Sec. 522(b)(4) and (b)(6)].
Abstract: The FR Y-7Q collects consolidated regulatory capital
information from all FBOs either quarterly or annually. FBOs that have
effectively elected to become financial holding companies (FHCs) file
the FR
[[Page 10449]]
Y-7Q on a quarterly basis. All other FBOs (those that have not elected
to become FHCs) file the FR Y-7Q annually.
Current actions: On November 9, 2007, the Federal Reserve published
a notice in the Federal Register (72 FR 63580) requesting public
comment for sixty days on the extension, without revision, of the FR Y-
7Q. The comment period expired on January 8, 2008. The Federal Reserve
did not receive any comment letters.
Board of Governors of the Federal Reserve System, February 21,
2008.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E8-3646 Filed 2-26-08; 8:45 am]
BILLING CODE 6210-01-P