[Federal Register Volume 75, Number 212 (Wednesday, November 3, 2010)]
[Notices]
[Pages 67721-67731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27698]
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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
(PRA), 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
Part 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 collection of information is 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 collection, 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 collection on
respondents, including through the use of automated collection
techniques or other forms of information technology.
DATES: Comments must be submitted on or before January 3, 2011.
ADDRESSES: You may submit comments, identified by FR Y-9C, FR Y-9LP, FR
Y-11, FR 2314, FR Y-7N, or FR 2886b, by any of the following methods:
Agency Web Site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include docket
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,
NW., 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 form in Room MP-
500 of the Board's Martin Building (20th and C Streets, NW.) between 9
a.m. and 5 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 PRA OMB submission,
including the proposed reporting form and instructions, supporting
statement, and other documentation will be placed into OMB's public
docket files, once approved. These documents will also be made
available on the Federal Reserve Board's public Web site at: http://www.federalreserve.gov/boarddocs/reportforms/review.cfm or may be
requested from the agency clearance officer, whose name appears below.
Cynthia Ayouch, Acting 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: Financial Statements for Bank Holding Companies.
Agency form number: FR Y-9C, FR Y-9LP.
OMB control number: 7100-0128.
Frequency: Quarterly.
Reporters: Bank holding companies.
Estimated annual reporting hours: FR Y-9C: 189,449; FR Y-9LP:
27,195.
Estimated average hours per response: FR Y-9C: 45.15; FR Y-9LP:
5.25.
Number of respondents: FR Y-9C: 1,049; FR Y-9LP: 1,295.
[[Page 67722]]
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) and (b)(6) of the Freedom of Information Act (5 U.S.C.
522(b)(4), (b)(6)).
Abstract: The FR Y-9C and the FR Y-9LP are standardized financial
statements for the consolidated bank holding company (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.
Current actions: The Federal Reserve proposes the following
revisions and clarifications to the FR Y-9C: (1) Break out by loan
category of other loans and leases that are troubled debt
restructurings for those that (a) are past due 30 days or more or in
nonaccrual status or (b) are in compliance with their modified terms
and clarify reporting of restructured troubled debt consumer loans, (2)
break out other consumer loans into automobile loans and all other
consumer loans in several schedules, (3) break out commercial mortgage-
backed securities issued or guaranteed by U.S. Government agencies and
sponsored agencies, (4) create a new Schedule HC-V, Variable Interest
Entities, for reporting major categories of assets and liabilities of
consolidated variable interest entities (VIEs), (5) break out loans and
other real estate owned (OREO) information covered by FDIC loss-sharing
agreements by loan and OREO category, (6) break out life insurance
assets into data items for general account and separate account life
insurance assets, (7) add new data items for the total assets of
captive insurance and reinsurance subsidiaries, (8) add new income
statement items for credit valuation adjustments and debit valuation
adjustments included in trading revenues (for BHCs with total assets of
$100 billion or more), (9) revise reporting instructions in the areas
of construction lending, 1-4 family residential mortgage banking
activities, and maturity and repricing data, and (10) collect expanded
information on the quarterly-averages schedule. The proposed changes
would be effective as of March 31, 2011.
The Federal Reserve proposes to revise the FR Y-9LP to modify a
data item collecting loans and leases of the parent restructured in
compliance with modified terms. This data item would be redefined to
exclude leases and to explicitly refer to restructured loans in this
data item as troubled debt restructurings. The proposed changes would
be effective as of March 31, 2011.
For the March 31, 2011, reporting date, BHCs may provide reasonable
estimates for any new or revised FR Y-9C or FR Y-9LP data item
initially required to be reported as of that date for which the
requested information is not readily available. The specific wording of
the captions for the new or revised FR Y-9C or FR Y-9LP data items
discussed in this proposal and the numbering of these data items should
be regarded as preliminary.
Proposed Revisions--FR Y-9C
A. Proposed Revisions Related to Call Report Revisions
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 to reduce reporting burden.
A.1 Troubled Debt Restructurings
The Federal Reserve proposes that BHCs report additional detail on
loans that have undergone troubled debt restructurings in Schedule HC-
C, Loans and Lease Financing Receivables, and Schedule HC-N, Past Due
and Nonaccrual Loans, Leases, and Other Assets. More specifically,
Schedule HC-C, Memorandum item 1.b, Other loans and all leases,
restructured and in compliance with modified terms, and Schedule HC-N,
Memorandum item 1.b, restructured, Other loans and all leases, included
in Schedule HC-N, would be broken out to provide information on
restructured troubled loans for many of the loan categories reported in
the bodies of Schedule HC-C and Schedule HC-N. The breakout would also
include Loans to individuals for household, family, and other personal
expenditures, whose terms have been modified in troubled debt
restructurings, which are currently excluded from the reporting of
troubled debt restructurings.
In the aggregate, troubled debt restructurings for all FR Y-9C
respondents have grown from $11.4 billion at year-end 2007 to $106.2
billion as of March 31, 2010. The proposed additional detail on
troubled debt restructurings in Schedules HC-C and HC-N would enable
the Federal Reserve to better understand the level of restructuring
activity at BHCs, the categories of loans involved in this activity,
and whether BHCs are working with their borrowers to modify and
restructure loans. In particular, to encourage banking organizations to
work constructively with their commercial borrowers, the banking
agencies recently issued guidance on commercial real estate loan
workouts and small business lending.\1\ While this guidance has
explained the agencies' expectations for prudent workouts, the Federal
Reserve and the industry would benefit from additional reliable data
outside of the examination process to assess restructuring activity at
BHCs for commercial real estate loans and commercial and industrial
loans. Further, it is important to separately identify commercial real
estate loan restructurings from commercial and industrial loan
restructurings given that the value of the real estate collateral is a
consideration in a BHC's decision to modify the terms of a commercial
real estate loan in a troubled debt restructuring, but such collateral
protection would normally be absent from commercial and industrial
loans for which a loan modification is being explored because of
borrowers' financial difficulties.
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\1\ Interagency Statement on Meeting the Credit Needs of
Creditworthy Small Business Borrowers, issued February 12, 2010, and
Policy Statement on Prudent Commercial Real Estate Loan Workouts,
issued October 30, 2009.
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It is also anticipated that other loan categories will experience
continued workout activity in the coming months given that most asset
classes have been
[[Page 67723]]
adversely affected by the recent recession. This affect is evidenced by
the increase in past due and nonaccrual assets across virtually all
asset classes over the past two to three years.
Currently, BHCs report loans and leases restructured and in
compliance with their modified terms (Schedule HC-C, Memorandum item
(1) with separate disclosure of (a) loans secured by 1-4 family
residential properties (in domestic offices) and (b) other loans and
all leases (excluding loans to individuals for household, family, and
other personal expenditures). This same breakout is reflected in
Schedule HC-N, Memorandum item 1, for past due and nonaccrual
restructured troubled loans. The broad category of other loans in
Schedule HC-C, Memorandum item 1.b, and Schedule HC-N, Memorandum item
1.b, does not permit an adequate analysis of troubled debt
restructurings. In addition, the disclosure requirements for troubled
debt restructurings under generally accepted accounting principles
(GAAP) do not exempt restructurings of loans to individuals for
household, family, and other personal expenditures. Therefore, if more
detail were to be added to match the reporting of loans in Schedule HC-
C and Schedule HC-N, the new data would provide the Federal Reserve
with the level of information necessary to assess BHCs' troubled debt
restructurings to the same extent that other loan quality and
performance indicators can be assessed. However, the Federal Reserve
notes that, under GAAP, troubled debt restructurings do not include
changes in lease agreements \2\ and therefore propose to exclude leases
from Schedule HC-C, Memorandum item 1, and from Schedule HC-N,
Memorandum item 1, and strike the phrase ``and all other leases'' from
the caption of these data items.
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\2\ Accounting Standards Codification paragraph 470-60-15-11.
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Thus, the proposed breakdowns of existing Memorandum item 1.b in
both Schedule HC-C and Schedule HC-N would create new Memorandum items
in both schedules covering troubled debt restructurings of 1-4 family
residential construction loans, Other construction loans and all land
development and other land loans, Loans secured by multifamily (5 or
more) residential properties, Loans secured by owner-occupied nonfarm
nonresidential properties, Loans secured by other nonfarm
nonresidential properties, Commercial and industrial loans, and All
other loans and all leases (including loans to individuals for
household, family, and other personal expenditures). \3\ If
restructured loans in any category of loans, as defined in Schedule HC-
C, included in restructured, All other loans, exceeds 10 percent of the
amount of restructured, All other loans, the amount of restructured
loans in this category or categories would be itemized and described.
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\3\ For BHCs with foreign offices, the Memorandum items for
restructured real estate loans would cover such loans in domestic
offices. In addition, BHCs would also provide a breakdown of
restructured commercial and industrial loans between U.S. and non-
U.S. addressees.
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Finally, Schedule HC-C, Memorandum item 1, and Schedule HC-N,
Memorandum item 1, are intended to capture data on loans that have
undergone troubled debt restructurings as that term is defined in GAAP.
However, the captions of these two Memorandum items include only the
term ``restructured'' rather than explicitly mentioning troubled debt
restructurings, which has led to questions about the scope of these
Memorandum items. Accordingly, the Federal Reserve proposes to revise
the captions so that they clearly indicate that the loans to be
reported in Schedule HC-C, Memorandum item 1, and Schedule HC-N,
Memorandum item 1, are troubled debt restructurings.
A.2 Auto Loans
The Federal Reserve proposes to add a breakdown of the other
consumer loans \4\ or all other loans loan categories contained in five
separate schedules in order to separately collect information on auto
loans. The affected schedules would be Schedule HC-C, Loans and Lease
Financing Receivables; Schedule HC-K, Quarterly Averages; Schedule HC-
N, Past Due and Nonaccrual Loans, Leases, and Other Assets; Schedule
HI, Income Statement; and Schedule HI-B, Part I, Charge-offs and
Recoveries on Loans and Leases. Auto loans would include loans arising
from retail sales of passenger cars and other vehicles such as
minivans, vans, sport-utility vehicles, pickup trucks, and similar
light trucks for personal use. This new loan category would exclude
loans to finance fleet sales, personal cash loans secured by
automobiles already paid for, loans to finance the purchase of
commercial vehicles and farm equipment, and lease financing.
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\4\ As described later in this notice, the other consumer loans
loan category is proposed to be added to Schedule HC-K beginning
March 31, 2011.
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Automobile loans are a significant consumer business for many large
BHCs. Because of the limited disclosure of auto lending on existing
regulatory reports, supervisory oversight of auto lending is presently
diminished by the need to rely on the examination process and public
information sources that provide overall market information but not
data on idiosyncratic risks.
Roughly 65 percent of new vehicle sales and 40 percent of used
vehicle sales are funded with auto loans. According to household
surveys and data on loan originations, commercial banks are an
important source of auto loans. In 2008, this sector originated
approximately one-third of all auto loans. Finance companies, both
independent and those affiliated with auto manufacturers, originated a
bit more than one-third, while credit unions originated a bit less than
one-quarter. In addition to originating auto loans, some banks purchase
auto loans originated by other entities, which suggests that commercial
banks could be the largest holder of auto loans.
Despite the importance of BHCs to the auto loan market, the Federal
Reserve knows less about BHCs' holdings of auto loans than is known
about finance company, credit union, and savings association holdings
of these loans. All nonbank depository institutions are required to
report auto loans on their respective regulatory reports, including
savings associations, which originate less than 5 percent of auto
loans. On their regulatory reports, credit unions must provide not only
the outstanding amount of new and used auto loans, but also the average
interest rate and the number of loans. In a monthly survey, the Federal
Reserve collects information on the amount of auto loans held by
finance companies. As a consequence, during the financial crisis when
funds were scarce for finance companies in general and the finance
companies affiliated with automakers in particular, a lack of data on
auto loans at banks hindered the Federal Reserve's ability to estimate
the extent to which BHCs were filling in the gap in auto lending left
by the finance companies.
Additional disclosure regarding consolidated auto loans on the FR
Y-9C is especially important with the implementation of the amendments
to Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topics 860, Transfers and Servicing, and 810,
Consolidations, resulting from Accounting Standards Update (ASU) No.
2009-16 \5\, and ASU No. 2009-17 \6\, respectively. Until 2010,
Schedule HC-
[[Page 67724]]
S, Servicing, Securitization, and Asset Sale Activities, had provided
the best supervisory information on auto lending because it included a
separate breakout of securitized auto loans outstanding as well as
securitized auto loan delinquencies and charge-offs. The accounting
changes brought about by the amendments to ASC Topics 860 and 810,
however, mean that if the auto loan securitization vehicle is now
required to be consolidated, securitized auto lending previously
reported on Schedule HC-S will be grouped as part of other consumer
loans or all other loans on Schedules HC-C, HC-K, HC-N, HI, and HI-B,
Part I, which diminishes supervisors' ability to assess auto loan
exposures and performance.
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\5\ Formerly Statement of Financial Accounting Standards (SFAS)
No. 166, Accounting for Transfers of Financial Assets (FAS 166).
\6\ Formerly SFAS No. 167, Amendments to FASB Interpretation No.
46(R) (FAS 167).
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Finally, separating auto lending from other consumer loans will
assist the Federal Reserve in understanding consumer lending activities
at individual institutions. When an institution holds both auto loans
and other types of consumer loans (other than credit cards, which are
currently reported separately), the current combined reporting of these
loans in the FR Y-9C tends to mask any significant differences that may
exist in the performance of these portfolios. For example, a BHC could
have a sizeable auto loan portfolio with low loan losses, but its other
consumer lending, which could consist primarily of unsecured loans,
could exhibit very high loss rates. The current blending of these
divergent portfolios into a single loan category makes it difficult to
adequately monitor consumer loan performance.
A.3 Commercial Mortgage Backed Securities Issued or Guaranteed by U.S.
Government Agencies and Sponsored Agencies
The Federal Reserve proposes to split the existing data items on
commercial mortgage-backed securities (CMBS) in Schedule HC-B,
Securities, and Schedule HC-D, Trading Assets and Liabilities, to
distinguish between CMBS issued or guaranteed by U.S. Government
agencies and sponsored agencies (collectively, U.S. Government
agencies) and those issued by others. Until June 2009, information
reported in the FR Y-9C on mortgage-backed securities (MBS) issued or
guaranteed by U.S. Government agencies included both residential MBS
and CMBS. However, in June 2009 when BHCs began to report information
on CMBS separately from residential MBS, data was collected only for
commercial mortgage pass-through securities and for other CMBS without
regard to issuer or guarantor. Thus, the Federal Reserve was no longer
able to identify all MBS issued or guaranteed by U.S. Government
agencies.
U.S. Government agencies issue or guarantee a significant volume of
CMBS that are backed by multifamily residential properties. In the
fourth quarter of 2009, out of a total of $854 billion in commercial
and multifamily loans that were securitized, loan pools issued or
guaranteed by U.S. Government agencies accounted for 19 percent or $164
billion. These pools present a substantially different risk profile
than privately issued CMBS, but current reporting does not allow for
the identification of bank holdings of CMBS issued or guaranteed by
U.S. Government agencies. In addition, because CMBS issued or
guaranteed by U.S. Government agencies are accorded lower risk weights
than CMBS issued by others, banks generally should have the information
necessary to separately report these two categories of CMBS in the
proposed new data items in Schedules HC-B and HC-D.
Thus, in Schedule HC-B, the Federal Reserve proposes to split both
data item 4.c.(1), Commercial mortgage pass-through securities, and
data item 4.c.(2), Other commercial MBS, into separate data items for
those issued or guaranteed by U.S. Government agencies (new data items
4.c.(1)(a) and 4.c.(2)(a)) and all other CMBS (new data items
4.c.(1)(b) and 4.c.(2)(b)). Similarly, in Schedule HC-D, existing data
item 4.d, Commercial MBS, would be split into separate data items for
CMBS issued or guaranteed by U.S. Government agencies (data item
4.d.(1)) and all other CMBS (data item 4.d.(2)).
A.4 Variable Interest Entities
In June 2009, the FASB issued accounting standards that have
changed the way entities account for securitizations and special
purpose entities. ASU No. 2009-16 (formerly FAS 166) revised ASC Topic
860, Transfers and Servicing, by eliminating the concept of a
qualifying special-purpose entity (QSPE) and changing the requirements
for derecognizing financial assets. ASU No. 2009-17 (formerly FAS 167)
revised ASC Topic 810, Consolidations, by changing how a banking
organization or other company determines when an entity that is
insufficiently capitalized or is not controlled through voting or
similar rights, for example a VIE, should be consolidated. For most
banking organizations, ASU Nos. 2009-16 and 2009-17 took effect January
1, 2010.
Under ASC Topic 810, as amended, determining whether a BHC is
required to consolidate a VIE depends on a qualitative analysis of
whether that BHC has a ``controlling financial interest'' in the VIE
and is therefore the primary beneficiary of the VIE. The analysis
focuses on the BHC's power over and interest in the VIE. With the
removal of the QSPE concept from GAAP that was brought about in amended
ASC Topic 860, a BHC that transferred financial assets to an SPE that
met the definition of a QSPE before the effective date of these amended
accounting standards was required to evaluate whether, pursuant to
amended ASC Topic 810, it must begin to consolidate the assets,
liabilities, and equity of the SPE as of that effective date. Thus,
when implementing amended ASC Topics 860 and 810 at the beginning of
2010, BHCs began to consolidate certain previously off-balance-sheet
securitization vehicles, asset-backed commercial paper conduits, and
other structures. Going forward, BHCs with variable interests in new
VIEs must evaluate whether they have a controlling financial interest
in these entities and, if so, consolidate them. In addition, BHCs must
continually reassess whether they are the primary beneficiary of VIEs
in which they have variable interests.
For those VIEs that banks must consolidate, the Federal Reserve's
FR Y-9C instructional guidance advises institutions to report the
assets and liabilities of these VIEs on the balance sheet (Schedule HC)
in the category appropriate to the asset or liability. However, ASC
paragraph 810-10-45-25 \7\ requires a reporting entity to present
``separately on the face of the statement of financial position: a.
Assets of a consolidated variable interest entity (VIE) that can be
used only to settle obligations of the consolidated VIE [and], b.
Liabilities of a consolidated VIE for which creditors (or beneficial
interest holders) do not have recourse to the general credit of the
primary beneficiary.'' This requirement has been interpreted to mean
that ``each line item of the consolidated balance sheet should
differentiate which portion of those amounts meet the separate
presentation conditions.'' \8\ In requiring separate presentation for
these assets and liabilities, the FASB agreed with commenters on its
proposed accounting standard on consolidation that ``separate
presentation * * * would provide transparent and useful information
about an enterprise's involvement and
[[Page 67725]]
associated risks in a variable interest entity.'' \9\ The Federal
Reserve concurs that separate presentation would provide similar
benefits to them and other FR Y-9C users, particularly since data on
securitized assets that are reconsolidated is no longer reported on
Schedule HC-S, Servicing, Securitization, and Asset Sale Activities.
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\7\ Formerly paragraph 22A of FIN 46(R), as amended by FAS 167.
\8\ Deloitte & Touche LLP, ``Back on-balance sheet: Observations
from the adoption of FAS 167,'' May 2010, page 4 (http://www.deloitte.com/view/en_US/us/Services/audit-enterprise-risk-services/Financial-Accounting-Reporting/f3a70ca28d9f8210VgnVCM200000bb42f00aRCRD.htm).
\9\ See paragraphs A80 and A81 of FAS 167.
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Consistent with the presentation requirements discussed above, the
Federal Reserve proposes to add a new Schedule HC-V, Variable Interest
Entities, to the FR Y-9C in which BHCs would report a breakdown of the
assets of consolidated VIEs that can be used only to settle obligations
of the consolidated VIEs and liabilities of consolidated VIEs for which
creditors do not have recourse to the general credit of the reporting
BHC. The following proposed categories for these assets and liabilities
would include some of the same categories presented on the balance
sheet (Schedule HC): (1) Cash and balances due from depository
institutions, (2) Held-to-maturity securities, (3) Available-for-sale
securities, (4) Securities purchased under agreements to resell, (5)
Loans and leases held for sale, (6) Loans and leases, net of unearned
income, (7) Less: Allowance for loan and lease losses, (8) Trading
assets (other than derivatives), (9) Derivative assets, (10) Other real
estate owned, (11) Other assets, (12) Securities sold under agreements
to repurchase, (13) Derivative liabilities, (14) Other borrowed money
(other than commercial paper), (15) Commercial paper, and (16) Other
liabilities. These assets and liabilities would be presented separately
for securitization trusts, asset-backed commercial paper conduits, and
other VIEs.
In addition, the Federal Reserve proposes to include two separate
data items in new Schedule HC-V in which BHCs would report the total
amounts of all other assets and all other liabilities of consolidated
VIEs (i.e., all assets of consolidated VIEs that are not dedicated
solely to settling obligations of the VIE and all liabilities of
consolidated VIEs for which creditors have recourse to the general
credit of the reporting BHC). The collection of this information would
help the Federal Reserve understand the total magnitude of consolidated
VIEs. These assets and liabilities would also be reported separately
for securitization trusts, asset-backed commercial paper conduits, and
other VIEs. The asset and liability information collected in Schedule
HC-V would represent amounts included in the reporting BHC's
consolidated assets and liabilities reported on Schedule HC, Balance
Sheet, i.e., after eliminating intercompany transactions.
A.5 Assets Covered by FDIC Loss-Sharing Agreements
In March 2010, the banking agencies added a four-way breakdown of
assets covered by loss-sharing agreements with the FDIC to Call Report
Schedule RC-M, Memoranda (and a comparable four-way breakdown was added
to FR Y-9C Schedule HC-M, Memoranda). FR Y-9C data items 6.a through
6.d collect data on covered loans and leases, other real estate owned,
debt securities, and other assets. In a January 22, 2010, comment
letter to the banking agencies on the agencies' submission for OMB
review of proposed Call Report revisions for implementation in 2010,
the American Bankers Association (ABA) stated that while the addition
of the covered asset data items to Schedule RC-M was:
A step in the right direction, ABA believes it would be
beneficial to regulators, reporting banks, investors, and the public
to have additional, more granular information about the various
categories of assets subject to the FDIC loss-sharing agreements.
While we recognize that this would result in additional reporting
burden on banks, on balance our members feel strongly that the
benefit of additional disclosure of loss-sharing data would outweigh
the burden of providing these detailed data. Thus, we urge the
Agencies and the FFIEC to further revise the collection of data from
banks on assets covered by FDIC loss-sharing agreements on the Call
Report to include the several changes suggested below. * * * We
believe these changes would provide a more precise and accurate
picture of a bank's asset quality.
The changes suggested by the ABA included revising Call Report
Schedule RC-M by replacing the two data items for covered loans and
leases and covered other real estate owned with separate breakdowns of
these assets by loan category and real estate category. The ABA also
suggested revising existing data items 10 and 10.a in Schedule RC-N,
Past Due and Nonaccrual Loans, Leases, and Other Assets, which collect
data on past due and nonaccrual loans and leases that are wholly or
partially guaranteed by the U.S. Government, including the FDIC. The
ABA recommended that the reporting of these past due and nonaccrual
loans and leases be segregated into separate data items for loans and
leases covered by FDIC loss-sharing agreements and loans and leases
with other U.S. Government guarantees.
After reviewing the ABA's recommendations, the Federal Reserve
proposes to make substantively similar revisions to the FR Y-9C. Thus,
the Federal Reserve proposes to create a breakdown of Schedule HC-M,
data item 6.a, covered Loans and leases, that would include each
category of Loans secured by real estate (in domestic offices) from
Schedule HC-C, Loans to finance agricultural production and other loans
to farmers, Commercial and industrial loans, Credit cards, Other
consumer loans, and All other loans and all leases. If any category of
loans or leases, as defined in Schedule HC-C, included in covered All
other loans and all leases exceeds 10 percent of total covered loans
and leases, the amount of covered loans or leases in that category or
categories must be itemized and described. Similarly, the Federal
Reserve proposes to create a breakdown of Schedule HC-M, data item 6.b,
covered Other real estate owned, into the following categories:
Construction, land development, and other land, Farmland, 1-4 family
residential properties, Multifamily (5 or more) residential properties,
and Nonfarm nonresidential properties. BHCs would also report the
guaranteed portion of the total amount of covered other real estate
owned. In Schedule HC-N, as suggested by the ABA for the Call Report,
the Federal Reserve proposes to remove loans and leases covered by FDIC
loss-sharing agreements from the scope of existing data items 11 and
11.a on past due and nonaccrual loans wholly or partially guaranteed by
the U.S. Government. Past due and nonaccrual covered loans and leases
would then be collected in new data item 12, which would include a
breakdown of these loans and leases using the same categories as in
proposed revised data item 6.a of Schedule HC-M.
A.6 Life Insurance Assets
BHCs purchase and hold bank-owned life insurance (BOLI) policies as
assets, the premiums for which may be used to acquire general account
or separate account life insurance policies. BHCs currently report the
aggregate amount of their life insurance assets in data item 5 of
Schedule HC-F, Other Assets, without regard to whether their holdings
are general account or separate account policies.
Many BHCs have BOLI assets, and the distinction between those life
insurance policies that represent general account products and those
that represent separate account products has meaning with respect to
the degree of credit risk involved as well as performance measures for
the life insurance assets in a volatile market environment. In a
general account policy, the general assets of the insurance company
issuing
[[Page 67726]]
the policy support the policy's cash surrender value. In a separate
account policy, the policyholder's cash surrender value is supported by
assets segregated from the general assets of the insurance carrier.
Under such an arrangement, the policyholder neither owns the underlying
separate account created by the insurance carrier on its behalf nor
controls investment decisions in the account. Nevertheless, the
policyholder assumes all investment and price risk.
A number of BHCs holding separate account life insurance policies
have recorded significant losses in recent years due to the volatility
in the markets and the vulnerability to market fluctuations of the
instruments that are investment options in separate account life
insurance policies. Information distinguishing between the cash
surrender values of general account and separate account life insurance
policies would allow the Federal Reserve to track BHCs' holdings of
both types of life insurance policies with their differing risk
characteristics and changes in their carrying amounts resulting from
their performance over time. Accordingly, the Federal Reserve proposes
to split data item 5 of Schedule HC-F into two data items: data item
5.a, General account life insurance assets, and data item 5.b, Separate
account life insurance assets.
A.7 Captive Insurance and Reinsurance Subsidiaries
Captive insurance companies are utilized by banking organizations
to ``self insure'' or reinsure their own risks pursuant to incidental
activities authority. A captive insurance company is a limited purpose
insurer that may be licensed as a direct writer of insurance or as a
reinsurer. Insurance premiums paid by a BHC to its captive insurer, and
claims paid back to the BHC by the captive, are transacted on an
intercompany basis, so there is no evidence of this type of self-
insurance activity when a BHC prepares consolidated financial
statements, including its FR Y-9C. The cash flows for a captive
reinsurer's transactions also are not transparent in a BHC's
consolidated financial statements.
A number of BHCs own captive insurers or reinsurers, several of
which were authorized to operate more than 10 years ago. Some of the
most common lines of business underwritten by BHC captive insurers are
credit life, accident and health, and disability insurance and employee
benefits coverage. Additionally, BHC captive reinsurance subsidiaries
may underwrite private mortgage guaranty reinsurance or terrorism risk
reinsurance.
As part of their supervisory processes, the Federal Reserve has
been following the proliferation of BHC captive insurers and reinsurers
and the performance trends of these captives for the past several
years. Collection of financial information regarding the total assets
of captive insurance and reinsurance subsidiaries would assist the
agencies in monitoring the insurance activities of banking
organizations as well as any safety and soundness risks posed to the
parent BHC from the activities of these subsidiaries.
The Federal Reserve proposes to collect two new data items in
Schedule HC-M, Memoranda, for captive insurance subsidiaries operated
by BHCs: Data item 7.a, Total assets of captive insurance subsidiaries,
and data item 7.b, Total assets of captive reinsurance subsidiaries.
These new data items are not expected to be applicable to the vast
majority of BHCs. When reporting the total assets of these captive
subsidiaries in the proposed new data items, BHCs should measure the
subsidiaries' total assets before eliminating intercompany transactions
between the consolidated subsidiary and other offices or subsidiaries
of the consolidated BHC.
A.8 Credit and Debit Valuation Adjustments Included in Trading Revenues
BHCs that reported average trading assets of $2 million or more for
any quarter of the preceding calendar year provide a breakdown of
trading revenue by type of exposure in Memorandum items 9.a through 9.e
of Schedule HI, Income Statement. These revenue data items are reported
net of credit adjustments made to the fair value of BHCs' derivative
assets and liabilities that are reported as trading assets and
liabilities.
There are two forms of credit adjustments that affect the valuation
of derivatives held for trading and trading revenue. The first is the
credit valuation adjustment (CVA), which is the discounted value of
expected losses on a BHC's derivative assets due to changes in the
creditworthiness of the BHC's derivative counterparties and future
exposures to those counterparties. In contrast, the debit valuation
adjustment (DVA) reflects the effect of changes in the BHC's own
creditworthiness on its derivative liabilities. During the financial
crisis, the recognition of both the CVA and the DVA had a material
affect on overall trading revenues. Because of their potential
materiality, information on these two adjustments is needed in order
for the Federal Reserve to better understand the level and trend of
BHCs' trading revenues.
The Federal Reserve therefore proposes to add two new Memorandum
items to the existing Schedule HI Memorandum items for trading revenue.
In new Memorandum item 9.f, BHCs would report the Impact on trading
revenue of changes in the creditworthiness of the bank holding
company's derivatives counterparties on the bank holding company's
derivative assets (included in Memorandum items 9.a through 9.e above).
In new Memorandum item 9.g., BHCs would report the Impact on trading
revenue of changes in the creditworthiness of the bank holding company
on the bank holding company's derivative liabilities (included in
Memorandum items 9.a through 9.e above). Because derivatives held for
trading are heavily concentrated in the very largest BHCs, these new
data items would be reported only by BHCs with $100 billion or more in
total assets.
A.9 Instructional Revisions
1. Construction Loans:
BHCs report the amount of their Construction, land development, and
other land loans in the appropriate loan subcategory of Schedule HC-C,
data item 1.a. Questions have arisen about the reporting treatment for
a Construction, land development, and other land loan that was not
originated as a ``combination construction-permanent loan,'' but was
originated with the expectation that repayment would come from the sale
of the real estate, when the BHC changes the loan's terms so that
principal amortization is required. This may occur after completion of
construction when the BHC renews or refinances the existing loan or
enters into a new real estate loan with the original borrower. The
Federal Reserve believes that as long as the repayment of a loan that
was originally categorized as a Construction, land development, and
other land loan remains dependent on the sale of the real property, the
loan should continue to be reported in the appropriate subcategory of
data item 1.a of Schedule HC-C because it continues to exhibit the risk
characteristics of a construction loan.
The instructions for Schedule HC-C, data item 1.a, state that:
Loans written as combination construction-permanent loans
secured by real estate should be reported in this item until
construction is completed or principal amortization payments begin,
whichever comes first. When the first of these events occurs, the
loans should begin to be reported
[[Page 67727]]
in the real estate loan category in Schedule HC-C, data item 1,
appropriate to the real estate collateral. All other construction
loans secured by real estate should continue to be reported in this
item after construction is completed unless and until (1) the loan
is refinanced into a new permanent loan by the reporting bank
holding company or is otherwise repaid, (2) the bank holding company
acquires or otherwise obtains physical possession of the underlying
collateral in full satisfaction of the debt, or (3) the loan is
charged off.
A combination construction-permanent loan results when the lender
enters into a contractual agreement with the original borrower at the
time the construction loan is originated to also provide the original
borrower with permanent financing that amortizes principal after
construction is completed and a certificate of occupancy is obtained
(if applicable). This construction-permanent loan structure is intended
to apply to situations where, at the time the construction loan is
originated, the original borrower:
Is expected to be the owner-occupant of the property upon
completion of construction and in receipt of a certificate of occupancy
(if applicable), for example, where the financing is being provided to
the original borrower for the construction and permanent financing of
the borrower's residence or place of business or
Is not expected to be the owner-occupant of the property,
but repayment of the permanent loan will be derived from rental income
associated with the property being constructed after receipt of a
certificate of occupancy (if applicable) rather than from the sale of
the property being constructed.
For a loan not written as a combination construction-permanent loan
at the time the construction loan was originated, the Federal Reserve
proposes to clarify the instructional language quoted above stating
that ``[a]ll other construction loans secured by real estate should
continue to be reported in this item after construction is completed
unless and until * * * the loan is refinanced into a new permanent loan
by the reporting bank holding company.'' This clarification is intended
to ensure the appropriate categorization of such a loan in Schedule HC-
C. Thus, the Federal Reserve proposes to revise the instructions for
Schedule HC-C, data item 1.a, to explain that the phrase ``the loan is
refinanced into a new permanent loan'' refers to:
An amortizing permanent loan to a new borrower (unrelated
to the original borrower) who has purchased the real property or
A prudently underwritten new amortizing permanent loan at
market terms to the original borrower--including an appropriate
interest rate, maturity, and loan-to-value ratio--that is no longer
dependent on the sale of the property for repayment. The loan should
have a clearly identified ongoing source of repayment sufficient to
service the required principal and interest payments over a reasonable
and customary period relative to the type of property securing the new
loan. A new loan to the original borrower not meeting these criteria
(including a new loan on interest-only terms or a new loan with a
short-term balloon maturity that is inconsistent with the ongoing
source of repayment criterion) should continue to be reported as a
``Construction, land development, and other land loan'' in the
appropriate subcategory of Schedule HC-C, data item 1.a.
2. Revisions Related to 1-4 Family Residential Mortgages Held for
Trading in Schedule HC-P
The Federal Reserve began collecting information in Schedule HC-P,
1-4 Family Residential Mortgage Banking Activities in Domestic Offices,
in September 2006. At that time, the instructions for Schedule HC-C,
Loans and Lease Financing Receivables, were written to indicate that
loans generally could not be classified as held for trading. Therefore,
all 1-4 family residential mortgage loans designated as held for sale
were reportable in Schedule HC-P. In March 2008, the Federal Reserve
provided instructional guidance establishing conditions under which
BHCs were permitted to classify certain assets (e.g., loans) as trading
and specified that loans classified as trading assets should be
excluded from Schedule HC-C, Loans and Lease Financing Receivables, and
reported instead in Schedule HC-D, Trading Assets and Liabilities (if
the reporting threshold for this schedule were met). However, the
Federal Reserve neglected to address the reporting treatment on
Schedule HC-P of 1-4 family residential loans that met the conditions
for classification as trading assets. Therefore, the Federal Reserve
proposes to correct this by providing explicit instructional guidance
that all 1-4 family residential mortgage banking activities, whether
held for sale or trading purposes, are reportable on Schedule HC-P.
3. Maturity and Repricing Data for Assets and Liabilities at
Contractual Ceilings and Floors
BHCs report maturity and repricing data for debt securities (not
held for trading) in Schedule HC-B, Securities. The Federal Reserve
uses these data to assess, at a broad level, a BHC's exposure to
interest rate risk. The instructions for reporting the maturity and
repricing data currently require that when the interest rate on a
floating rate instrument has reached a contractual floor or ceiling
level, which is a form of embedded option, the instrument is to be
treated as fixed rate rather than floating rate until the rate is again
free to float. As a result, a floating rate instrument whose interest
rate has fallen to its floor or risen to its ceiling is reported based
on the time remaining until its contractual maturity date rather than
the time remaining until the next interest rate adjustment date (or the
contractual maturity date, if earlier). This reporting treatment is
designed to capture the potential effect of the embedded option under
particular interest rate scenarios.
The ABA has requested that the Federal Reserve reconsider the
reporting treatment for floating rate instruments with contractual
floors and ceilings. More specifically, the ABA has recommended that
the instructions be revised so that floating rate instruments would
always be reporting based on the time remaining until the next interest
rate adjustment date without regard to whether the rate on the
instrument has reached a contractual floor or ceiling.
The Federal Reserve agrees that an instruction revision is
warranted, but the extent of the revision should be narrower than
recommended by the ABA. The Federal Reserve believes that when a
floating rate instrument is at its contractual floor or ceiling and the
embedded option has intrinsic value to the BHC, the floor or ceiling
should be ignored and the instrument should be treated as a floating
rate instrument. However, if the embedded option has intrinsic value to
the BHC's counterparty, the contractual floor or ceiling should
continue to be taken into account and the instrument should be treated
as a fixed rate instrument. For example, when the interest rate on a
floating rate loan reaches its contractual ceiling, the embedded option
represented by the ceiling has intrinsic value to the borrower and is a
detriment to the BHC because the loan's yield to the BHC is lower than
what it would have been without the ceiling. When the interest rate on
a floating rate loan reaches its contractual floor, the
[[Page 67728]]
embedded option represented by the floor has intrinsic value to the BHC
and is a benefit to the BHC because the loan's yield to the BHC is
higher than what it would have been without the floor.
Accordingly, the Federal Reserve proposes to revise the
instructions for reporting maturity and repricing data in Schedule HC-
B. As revised, the instructions would indicate that a floating rate
asset that has reached its contractual ceiling and a floating rate
liability that has reached its contractual floor would be treated as a
fixed rate instrument and reported based on the time remaining until
its contractual maturity date. In contrast, the instructions would
state that a floating rate asset that has reached its contractual floor
and a floating rate liability that has reached its contractual ceiling
would be treated as a floating rate instrument and reported based on
the time remaining until the next interest rate adjustment date (or the
contractual maturity date, if earlier).
B. Proposed Revisions Not Related to Call Report Revisions
The Federal Reserve proposes to make the following revisions to the
FR Y-9C effective as of March 31, 2011. These proposed revisions are
not related to the revisions proposed to the Call Report.
B.1 Expanding Information Collected on Schedule HC-K, Quarterly
Averages
The Federal Reserve proposes to expand the information collected on
Schedule HC-K, Quarterly Averages, to collect more detailed breakdowns
on securities and loan portfolios, consistent with information
currently reported by commercial banks on Call Report Schedule RC-K,
Quarterly Averages. Specifically, Schedule HC-K, data item 2,
Securities, would be broken out to provide information on (1) U.S.
Treasury securities and U.S. Government agency obligations (excluding
mortgage-backed securities), (2) Mortgage-backed securities, and (3)
All other securities. Also, new loan categories would be added to
Schedule HC-K, data item 6, Loans, to provide information on (1) Loans
to finance agricultural production and other loans to farmers, (2)
Commercial and industrial loans, and (3) Loans to individuals for
household, family, and other personal expenditures, with a breakdown of
(a) Credit cards, (b) Auto loans, and (c) Other.
A more granular breakdown on securities and loan portfolios would
facilitate analysis when the value or size of a firm's assets has
changed or fluctuated over a quarter, particularly when used to
calculate net charge-off, growth, and return on average asset rates.
Disclosure of this information would also be consistent with firms'
public Securities and Exchange Commission (SEC) filings, where net
charge-off rates by product type are calculated using quarterly average
balances.
Proposed Revisions--FR Y-9LP
The Federal Reserve proposes to make the following revision to the
FR Y-9LP effective as of March 31, 2011.
Troubled Debt Restructurings
To be consistent with revisions proposed for the FR Y-9C, the
Federal Reserve proposes to modify the instructions for Schedule PC-B--
Memoranda item 8, Loans and leases of the parent restructured in
compliance with modified terms, to clearly indicate that the loans to
be reported in this data item should be troubled debt restructurings
and to exclude leases. Also the phrase ``and leases'' would be stricken
from the caption of this data item. Under GAAP, troubled debt
restructurings do not include changes in lease agreements. Also
consistent with the proposed change to the FR Y-9C, the Federal Reserve
proposes to revise the instructions for this data item to include
(currently excluded) loans to individuals for household, family, and
other personal expenditures and all loans secured by 1-4 family
residential properties whose terms have been modified in troubled debt
restructurings.
2. Report title: Financial Statements for 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.
Annual reporting hours: FR Y-11 (quarterly): 15,966; FR Y-11
(annual): 2,768.
Estimated average hours per response: FR Y-11 (quarterly): 6.80; FR
Y-11 (annual): 6.80.
Number of respondents: FR Y-11 (quarterly): 587; FR Y-11 (annual):
407.
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-11 reports collect financial information for
individual non-functionally regulated U.S. nonbank subsidiaries of
domestic bank holding companies (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: The Federal Reserve proposes to revise the FR Y-11
reporting form and instructions to clarify the reporting of the net
change in fair values of financial instruments accounted for under a
fair value option. The Federal Reserve proposes to revise the item
caption for Schedule IS, Income Statement, Memorandum item 2, Net
change in fair values of financial instruments accounted for under a
fair value option, by adding the parenthetical (included in items
5.a.(3), 5.a.(6), 5.a.(10) and 5.b. above). Schedule IS, Memoranda item
2 instructions currently state that respondents only include net change
in fair value included in noninterest income from nonrelated
organizations. However, respondents should also include the net change
in fair value included in trading revenue, net servicing fees, and
other noninterest income from nonrelated and related organizations. The
Federal Reserve would also make the corresponding instructional
revision.
To be consistent with revisions proposed to the FR Y-9C, the
Federal Reserve also proposes to clarify the caption for Schedule BS-A,
Loans and Lease Financing Receivables, data item 7.d, Restructured
loans and leases, to clearly indicate that the loans to be reported in
this item should be troubled debt restructurings and to exclude leases.
Under generally accepted accounting principles, troubled debt
restructurings do not include changes in lease agreements. Also
consistent with the proposed change to the FR Y-9C, The Federal Reserve
proposes to revise the instructions for this item to include (currently
excluded) loans to individuals for household, family, and other
personal expenditures, and all loans secured by 1-4 family residential
properties whose terms have been modified in troubled debt
restructurings. These revisions would be effective as of March 31,
2011.
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.
[[Page 67729]]
Reporters: Foreign subsidiaries of U.S. state member banks, bank
holding companies, and Edge or agreement corporations.
Annual reporting hours: FR 2314 (quarterly): 16,394; FR 2314
(annual): 3,379.
Estimated average hours per response: FR 2314 (quarterly): 6.60; FR
2314 (annual): 6.60.
Number of respondents: FR 2314 (quarterly): 621; FR 2314 (annual):
512.
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. state member banks (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: The Federal Reserve proposes to revise the FR 2314
reporting form and instructions to clarify the reporting of the net
change in fair values of financial instruments accounted for under a
fair value option. The Federal Reserve proposes to revise the item
caption for Schedule IS, Income Statement, Memorandum item 2, Net
change in fair values of financial instruments accounted for under a
fair value option, by adding the parenthetical (included in items
5.a.(3), 5.a.(6), 5.a.(10) and 5.b. above). Schedule IS, Memoranda item
2 instructions currently state that respondents only include net change
in fair value included in noninterest income from nonrelated
organizations. However, respondents should also include the net change
in fair value included in trading revenue, net servicing fees, and
other noninterest income from nonrelated and related organizations. The
Federal Reserve would also make the corresponding instructional
revision.
To be consistent with revisions proposed to the FR Y-9C, the
Federal Reserve also proposes to clarify the caption for Schedule BS-A,
Loans and Lease Financing Receivables, data item 7.d, Restructured
loans and leases, to clearly indicate that the loans to be reported in
this item should be troubled debt restructurings and to exclude leases.
Under generally accepted accounting principles, troubled debt
restructurings do not include changes in lease agreements. Also
consistent with the proposed change to the FR Y-9C, The Federal Reserve
proposes to revise the instructions for this item to include (currently
excluded) loans to individuals for household, family, and other
personal expenditures, and all loans secured by 1-4 family residential
properties whose terms have been modified in troubled debt
restructurings. These revisions would be effective as of March 31,
2011.
4. Report title: Financial Statements of U.S. Nonbank Subsidiaries
Held by Foreign Banking Organizations.
Agency form number: FR Y-7N.
OMB control number: 7100-0125.
Frequency: Quarterly and annually.
Reporters: Foreign banking organizations (FBOs).
Annual reporting hours: FR Y-7N (quarterly): 4,978; FR Y-7N
(annual): 1,299.
Estimated average hours per response: FR Y-7N (quarterly): 6.80; FR
Y-7N (annual): 6.80.
Number of respondents: FR Y-7N (quarterly): 183; FR Y-7N (annual):
191.
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 collects financial information for non-
functionally regulated U.S. nonbank subsidiaries held by FBOs other
than through a U.S. bank holding company (BHC), U.S. financial holding
company (FHC) or U.S. bank. FBOs file the FR Y-7N on a quarterly or
annual basis.
Current actions: The Federal Reserve proposes to revise the FR Y-7N
reporting form and instructions to clarify the reporting of the net
change in fair values of financial instruments accounted for under a
fair value option. The Federal Reserve proposes to revise the item
caption for Schedule IS, Income Statement, Memoranda item 1, Net change
in fair values of financial instruments accounted for under a fair
value option, by adding the parenthetical (included in items 5.a.(3),
5.a.(6), 5.a.(10) and 5.b. above). Schedule IS, Memoranda item 1,
instructions currently state that respondents only include net change
in fair value included in noninterest income from nonrelated
organizations. However, respondents should include the net change in
fair value included in trading revenue, net servicing fees, and other
noninterest income from nonrelated and related organizations. The
Federal Reserve would also make the corresponding instructional
revision.
To be consistent with revisions proposed to the FR Y-9C, the
Federal Reserve also proposes to clarify the caption for Schedule BS-A,
Loans and Lease Financing Receivables, data item 7.d, Restructured
loans and leases, to clearly indicate that the loans to be reported in
this data item should be troubled debt restructurings and to exclude
leases. Under generally accepted accounting principles, troubled debt
restructurings do not include changes in lease agreements. Also
consistent with the proposed change to the FR Y-9C, The Federal Reserve
proposes to revise the instructions for this item to include (currently
excluded) loans to individuals for household, family, and other
personal expenditures, and all loans secured by 1-4 family residential
properties whose terms have been modified in troubled debt
restructurings. These revisions would be effective as of March 31,
2011.
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: 1,679.
Estimated average hours per response: 15.15 banking corporations,
9.60 investment corporations.
Number of respondents: 13 banking corporations, 42 investment
corporations.
General description of report: This information collection is
mandatory (12 U.S.C. 602 and 625). Schedules RC-M (with the exception
of 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
[[Page 67730]]
statement, two schedules reconciling changes in capital and reserve
accounts, and 11 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: The Federal Reserve proposes to revise the FR
2886b reporting form and instructions to clarify the reporting of the
net change in fair values of financial instruments accounted for under
a fair value option. The Federal Reserve proposes to revise the item
caption for Schedule RI, Income Statement, Memoranda item 1, Net change
in fair values of financial instruments accounted for under a fair
value option, by changing the parenthetical from (included in item
5.a.(6) above) to (included in items 5.a.(6) and 5.b. above). Schedule
RI, Memoranda item 1 currently states that respondents only include net
change in fair value included in noninterest income from nonrelated
organizations. However, respondents may elect to apply the fair value
option to instruments with nonrelated and related organizations. The
Federal Reserve would also make the corresponding instructional
revision.
To be consistent with revisions proposed for the FR Y-9C, the
Federal Reserve also proposes to revise the caption for Schedule RC-N,
Past Due and Nonaccrual Loans, Leases, and Other Assets, Memorandum
item 1, Restructured loans and leases, to clearly indicate that the
loans to be reported in this item should be troubled debt
restructurings and to exclude leases. Under generally accepted
accounting principles, troubled debt restructurings do not include
changes in lease agreements. Also consistent with the proposed change
to the FR Y-9C, the Federal Reserve proposes to revise the instructions
for this item to include (currently excluded) loans to individuals for
household, family, and other personal expenditures, and all loans
secured by 1-4 family residential properties whose terms have been
modified in troubled debt restructurings. These revisions would be
effective as of March 31, 2011.
Proposal to approve under OMB delegated authority 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-9SP, FR Y-9ES, and FR Y-9CS.
OMB control number: 7100-0128.
Frequency: Quarterly and annually.
Reporters: Bank holding companies.
Annual reporting hours: FR Y-9SP: 45,209; FR Y-9ES: 44; FR Y-9CS:
400.
Estimated average hours per response: FR Y-9SP: 5.40; FR Y-9ES: 30
minutes; FR Y-9CS: 30 minutes.
Number of respondents: FR Y-9SP: 4,186; FR Y-9ES: 87; 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) and (b)(6) of the Freedom of Information Act (5 U.S.C.
522(b)(4), (b)(6)).
Abstract: 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.
The FR Y-9ES collects financial information from ESOPs 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 information is used to
assess and monitor emerging issues related to BHCs. It is intended to
supplement the FR Y-9 reports, which are used to monitor BHCs between
on-site inspections. The data items of information included on the
supplement may change as needed.
2. Report title: Abbreviated Financial Statements of U.S. Nonbank
Subsidiaries of U.S. Bank Holding Companies.
Agency form number: FR Y-11S.
OMB control number: 7100-0244.
Frequency: Annually.
Reporters: Bank holding companies.
Annual reporting hours: 774.
Estimated average hours per response: 1.0.
Number of respondents: 774.
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)].
Abstract: The FR Y-11S is an abbreviated reporting form that
collects four data items: Net income, total assets, equity capital, and
total off-balance-sheet data items. The FR Y-11S is filed annually, as
of December 31, by top-tier BHCs for each individual nonbank subsidiary
(that does not meet the criteria for filing the detailed report) with
total assets of at least $50 million, but less than $250 million, or
with total assets greater than 1 percent of the total consolidated
assets of the top-tier organization.
3. Report title: Abbreviated Financial Statements of Foreign
Subsidiaries of U.S. Banking Organizations.
Agency form number: FR 2314S.
OMB control number: 7100-0073.
Frequency: Annually.
Reporters: U.S. state member banks, bank holding companies, and
Edge or agreement corporations.
Annual reporting hours: 787.
Estimated average hours per response: 1.0.
Number of respondents: 787.
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 2314S is an abbreviated reporting form that
collects four data items: Net income, total assets, equity capital, and
total off-balance-sheet data items. The FR 2314S is filed annually, as
of December 31, for each individual subsidiary (that does not meet the
criteria for filing the detailed report) with assets of at least $50
million but less than $250 million, or with total assets greater than 1
percent of the total consolidated assets of the top-tier organization.
4. Report title: Financial Reports of Foreign Banking
Organizations.
Agency form number: FR Y-7NS, FR Y-7Q.
OMB control number: 7100-0125.
Frequency: Annually and quarterly.
[[Page 67731]]
Reporters: Foreign banking organizations (FBOs).
Annual reporting hours: FR Y-7NS: 237; FR Y-7Q (quarterly): 340; FR
Y-7Q (annual): 111.
Estimated average hours per response: FR Y-7NS: 1.0; FR Y-7Q
(quarterly): 1.25; FR Y-7Q (annual): 1.0.
Number of respondents: FR Y-7NS: 237; FR Y-7Q (quarterly): 68; FR
Y-7Q (annual): 111.
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-7NS collect financial information for non-
functionally regulated U.S. nonbank subsidiaries held by foreign
banking organizations (FBOs) other than through a U.S. bank holding
company (BHC), U.S. financial holding company (FHC), or U.S. bank. The
FR Y-7NS is filed annually, as of December 31, by top-tier FBOs for
each individual nonbank subsidiary (that does not meet the filing
criteria for filing the detailed report) with total assets of at least
$50 million, but less than $250 million. The FR Y-7Q collects
consolidated regulatory capital information from all FBOs either
quarterly or annually. FBOs that have effectively elected to become
FHCs file the FR Y-7Q quarterly. All other FBOs (those that have not
elected to become FHCs) file the FR Y-7Q annually.
Board of Governors of the Federal Reserve System, October 29,
2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-27698 Filed 11-2-10; 8:45 am]
BILLING CODE 6210-01-P