Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB, 14104-14109 [E7-5503]

Download as PDF 14104 Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / Notices encourage collaboration by providing examples and case studies that show how agencies have collaborated with other agencies and interested parties in the past and how agencies can better collaborate throughout a NEPA process. The handbook describes the context for when collaboration works well, provides a basic approach to designing a collaborative NEPA process, examines the various opportunities for collaboration throughout the NEPA process, and addresses challenges to collaboration during the NEPA process. In addition to examples of strategies for preventing conflict, the handbook provides examples of Memoranda of Understanding, case studies, and resources for practitioners. Public comments to the proposed handbook are requested by May 4, 2007. March 19, 2007. James L. Connaughton, Chairman, Council on Environmental Quality. [FR Doc. E7–5454 Filed 3–23–07; 8:45 am] BILLING CODE 3125–W7–P FEDERAL MARITIME COMMISSION Agency Information Collection Activities: Proposed Collection; Comment Request Federal Maritime Commission (FMC). ACTION: Notice and request for comments. cprice-sewell on PROD1PC66 with NOTICES AGENCY: SUMMARY: As part of our continuing effort to reduce paperwork and respondent burden, and as required by the Paperwork Reduction Act of 1995, the Federal Maritime Commission invites comments on the continuing information collection (extension with no changes) listed below in this notice. DATES: Comments must be submitted on or before May 25, 2007. ADDRESSES: You may send comments to: Derek O. Scarbrough, Chief Information Officer, Office of Administration, Federal Maritime Commission, 800 North Capitol Street, NW, Washington, DC 20573, (Telephone: (202) 523–5800), cio@fmc.gov. Please reference the information collection’s title and OMB number in your comments. FOR FURTHER INFORMATION CONTACT: To obtain additional information, copies of the information collection and instructions, or copies of any comments received, contact Jane Gregory, Management Analyst, Office of Administration, Federal Maritime Commission, 800 North Capitol Street, NW., Washington, DC 20573, VerDate Aug<31>2005 15:30 Mar 23, 2007 Jkt 211001 (Telephone: (202) 523–5800), jgregory@fmc.gov. SUPPLEMENTARY INFORMATION: Request for Comments The Federal Maritime Commission, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on the continuing information collection listed in this notice, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Comments submitted in response to this notice will be included or summarized in our request for Office of Management and Budget approval of the relevant information collection. All comments are part of the public record and subject to disclosure. Please do not include any confidential or inappropriate material in your comments. We invite comments on: (1) The necessity and utility of the proposed information collection for the proper performance of the agency’s functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden. An automated form for the license application, FMC–18, is currently in development. A rule will be published as soon as the automated form is available, for use at the option of the applicant. Information Collection Open for Comment Title: 46 CFR 515—Licensing, Financial Responsibility Requirements and General Duties for Ocean Transportation Intermediaries and Related Forms. OMB Approval Number: 3072–0018 (Expires July 31, 2007). Abstract: Section 19 of the Shipping Act of 1984 (the ‘‘Act’’), 46 U.S.C. 40101–41309 (2006), as modified by Pub. L. 105–258 (The Ocean Shipping Reform Act of 1998) and Section 424 of Pub. L. 105–383 (The Coast Guard Authorization Act of 1998), provides that no person in the United States may act as an ocean transportation intermediary (OTI) unless that person holds a license issued by the Commission. The Commission shall issue an OTI license to any person that the Commission determines to be qualified by experience and character to act as an OTI. Further, no person may act as an OTI unless that person furnishes a bond, proof of insurance or PO 00000 Frm 00033 Fmt 4703 Sfmt 4703 other surety in a form and amount determined by the Commission to ensure financial responsibility. The Commission has implemented the provisions of section 19 in regulations contained in 46 CFR 515, including financial responsibility forms FMC–48, FMC–67, FMC–68, and FMC–69, Optional Rider Forms FMC–48A and FMC–69A, and its related license application form, FMC–18. Current Actions: There are no changes to this information collection, and it is being submitted for extension purposes only. Type of Review: Extension. Needs and Uses: The Commission uses information obtained under this part and through Form FMC–18 to determine the qualifications of OTIs and their compliance with shipping statutes and regulations and to enable the Commission to discharge its duties under the Act by ensuring that OTIs maintain acceptable evidence of financial responsibility. If the collection of information were not conducted, there would be no basis upon which the Commission could determine if applicants are qualified for licensing. Frequency: This information is collected when applicants apply for a license or when existing licensees change certain information in their application forms. Type of Respondents: The types of respondents are persons desiring to obtain a license to act as an OTI. Under the Act, OTIs may be either an ocean freight forwarder, a non-vessel-operating common carrier, or both. Number of Annual Respondents: The Commission estimates a potential annual respondent universe of 4,765 entities. Estimated Time Per Response: The time per response for completing Application Form FMC–18 averages 2 hours. The time to complete a financial responsibility form averages 20 minutes. Total Annual Burden: The Commission estimates the total annual person-hour burden at 3,595 personhours. Bryant L. VanBrakle, Secretary. [FR Doc. E7–5483 Filed 3–23–07; 8:45 am] BILLING CODE 6730–01–P FEDERAL RESERVE SYSTEM Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB Board of Governors of the Federal Reserve System AGENCY: E:\FR\FM\26MRN1.SGM 26MRN1 Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / Notices Background. Notice is hereby given of the final approval of proposed information collection 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––Mark Menchik–– Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503, or e–mail to mmenchik@omb.eop.gov. cprice-sewell on PROD1PC66 with NOTICES SUMMARY: Final approval under OMB delegated authority the revision, without extension, of the following reports: 1. Report title: Consolidated Financial Statements for Bank Holding Companies. Agency form number: FR Y–9C. OMB control number: 7100–0128. Frequency: Quarterly. Reporters: Bank holding companies (BHCs). Annual reporting hours: 117,504 hours. Estimated average hours per response: 38.35 hours. Number of respondents: 766. General description of report: This information collection is mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely given to the data in this report. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to section (b)(4) of the Freedom of Information Act (5 U.S.C. 522(b)(4). Abstract: The FR Y–9 family of reports historically has been, and continues to be, the primary source of financial information on BHCs between on–site inspections. Financial VerDate Aug<31>2005 15:30 Mar 23, 2007 Jkt 211001 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’s Consolidated Reports of Condition and Income (Call Report) (FFIEC 031 & 041; OMB No. 7100–0036) filed by commercial banks. The FR Y–9C collects consolidated data from the BHC and is generally filed by top–tier BHCs with total consolidated assets of $500 million or more. Current actions: On January 11, 2007, the Federal Reserve published a notice in the Federal Register (72 FR 1325) requesting public comment for 60 days on the revision, without extension, of the Consolidated Financial Statements for Bank Holding Companies, effective with the March 31, 2007, report date. The comment period expired on March 12, 2007. The Federal Reserve did not receive any comment letters. However, five comments were received by the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (the banking agencies) on proposed revisions to the Call Reports that parallel the proposed revisions to the FR Y–9C, and were taken into consideration for this proposal. The comments are summarized and addressed below. Reporting on Fair Value Measurements and the Use of the Fair Value Option On September 15, 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 157, Fair Value Measurements (FAS 157), which is effective for banking institutions and other entities for fiscal years beginning after November 15, 2007. Earlier adoption of FAS 157 is permitted as of the beginning of an earlier fiscal year, provided the BHC has not yet issued a financial statement or filed a FR Y–9C report for any period of that fiscal year. Thus, a BHC with a calendar year fiscal year may voluntarily adopt FAS 157 as of January 1, 2007. The fair value measurements standard provides guidance on how to measure fair value and would require BHCs and other entities to disclose the inputs used to measure fair value based on a three– level hierarchy for all assets and PO 00000 Frm 00034 Fmt 4703 Sfmt 4703 14105 liabilities that are remeasured at fair value on a recurring basis.1 The FASB issued a final Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159), on February 15, 2007. This standard allows BHCs and other entities to report certain financial assets and liabilities at fair value with the changes in fair value included in earnings. The Federal Reserve anticipates that relatively few BHCs will elect to use the fair value option for a significant portion of their financial assets and liabilities. According to the FASB’s web site (www.fasb.org), the FASB Board has decided to require that the effective date of the final fair value option standard be the same as the effective date of FAS 157. Thus, the final fair value option standard should be effective for financial statements issued for fiscal years beginning after November 15, 2007. The FASB Board has also decided to permit an entity to early adopt the final fair value option standard provided that the entity also adopts all of the requirements (measurement and disclosure) of FAS 157 concurrent with or prior to the early adoption of the final fair value option standard. Furthermore, the FASB Board would permit early adoption of the final fair value option standard within 120 days of the beginning of the entity’s fiscal year, thereby making the fair value option election retroactive to the beginning of that fiscal year (or the date of initial recognition, if later) provided that the entity has not yet issued any interim financial statements for that fiscal year. Thus, a BHC with a calendar year fiscal year that voluntarily adopts FAS 157 as of January 1, 2007, would also be able to adopt the final fair value option standard as of that same date. The Federal Reserve proposed to clarify the FR Y–9C reporting instructions to explain where financial assets and liabilities measured under the fair value option should be reported in the existing line items of the FR Y– 9C. The Federal Reserve also proposed to add a new Schedule HC–Q to the FR Y–9C to collect data, by major asset and liability category, on the amount of 1 The FASB’s three–level fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting bank holding company has the ability to access at the measurement date (e.g., the FR Y–9C as–of date). Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. E:\FR\FM\26MRN1.SGM 26MRN1 cprice-sewell on PROD1PC66 with NOTICES 14106 Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / Notices assets and liabilities to which the fair value option has been applied along with separate disclosure of the amount of such assets and liabilities whose fair values were estimated under level two and under level three of the FASB’s fair value hierarchy. The categories are: • Securities held for purposes other than trading with changes in fair value reported in current earnings; • Loans and leases; • All other financial assets and servicing assets; • Deposit liabilities; • All other financial liabilities and servicing liabilities; and • Loan commitments (not accounted for as derivatives). In addition, the Federal Reserve proposed to collect data on trading assets and trading liabilities in the new schedule from those BHCs that complete Schedule HC–D, Trading Assets and Liabilities, i.e., BHCs that reported average trading assets of $2 million or more for any quarter of the preceding calendar year. In the proposed new schedule, such BHCs would report the carrying amount of trading assets and trading liabilities whose fair values were estimated under level two and under level three of the FASB’s fair value hierarchy. The FASB’s fair value measurements standard requires banking organizations and other entities to consider the effect of a change in their own creditworthiness when determining the fair value of a financial liability. The Federal Reserve proposed to add one new data item to Schedule HC–R, Regulatory Capital, for the cumulative change in the fair value of all financial liabilities accounted for under the fair value option that is attributable to changes in the BHC’s own creditworthiness. This amount would be excluded from the BHC’s retained earnings for purposes of determining Tier 1 capital under the Federal Reserve’s regulatory capital standards. Finally, the Federal Reserve proposed to clarify the instructions to Schedule HI for the treatment of interest income on financial assets and interest expense on financial liabilities measured under a fair value option. The instructions would be modified to instruct BHCs to separate the contractual year–to–date amount of interest earned on financial assets and interest incurred on financial liabilities that are reported under a fair value option from the overall year–to– date fair value adjustment and report these contractual amounts in the appropriate interest income or interest expense data items on Schedule HI. Only one commenter, a banking trade association, offered comments on fair VerDate Aug<31>2005 15:30 Mar 23, 2007 Jkt 211001 value option reporting in the Call Report, urging ‘‘the agencies to proceed cautiously with any major revisions to the Call Report or TFR prior to the official release of the Fair Value Option statement.’’ The trade association also requested that the agencies delay the March 31, 2007, effective date of the proposed reporting revisions related to the fair value option if the release of the FASB’s final fair value option standard is delayed beyond its expected issuance in the first quarter of 2007. The trade association did not address the proposed reporting revisions for the fair value option and fair value measurements themselves. The Federal Reserve agrees on the need for caution in implementing the proposed reporting revisions related to the fair value option and fair value measurements. Accordingly, only if BHCs adopt this standard in the first quarter of 2007 for other financial reporting purposes would the fair value option reporting requirements in the FR Y–9C take effect as of March 31, 2007. Otherwise, these reporting requirements would be delayed until BHCs elect the fair value option for other financial reporting purposes. Additionally, the Federal Reserve will proceed with the new Schedule HC–R data item for fair value changes included in retained earnings that are attributable to changes in a BHC’s own creditworthiness. Reporting of Certain Data on 1–4 Family Residential Mortgage Loans withTerms that Allow for Negative Amortization The Federal Reserve proposed to collect certain data items to monitor the extent of holdings of closed–end 1–4 family residential mortgage loan products whose terms allow for negative amortization. As proposed, all BHCs would report the total amount of their holdings of such closed–end mortgage loans in a new memorandum item in Schedule HC–C, Loans and Leases. The Federal Reserve also proposed to collect two additional memorandum items on Schedule HC–C and another new memorandum item on Schedule HI, Income Statement, from BHCs with a significant volume of negatively amortizing 1–4 family residential mortgage loans. The two additional Schedule HC–C memorandum items would be (1) the total maximum remaining amount of negative amortization contractually permitted on closed–end loans secured by 1–4 family residential properties and (2) the total amount of negative amortization on closed–end loans secured by 1–4 family residential properties that is included in the carrying amount of these loans. The Schedule HI memorandum item would PO 00000 Frm 00035 Fmt 4703 Sfmt 4703 be the year–to–date noncash income on closed–end loans with a negative amortization feature secured by 1–4 family residential properties. The Federal Reserve’s proposal stated that the threshold for identifying BHCs with a significant volume of negatively amortizing residential mortgage loans would be based on the aggregate amount of these loans being in excess of either a certain dollar amount, e.g., $100 million or $250 million, or a certain percentage of the total loans and leases (in domestic offices) reported on Schedule HC–C, e.g., 5 percent or 10 percent. For reporting during 2007, a BHC with negatively amortizing loans would determine whether it met the size threshold for reporting the three additional memorandum items using data reflected in its December 31, 2006, FR Y–9C report. For reporting in 2008 and subsequent years, the determination would be based on data from the previous year–end FR Y–9C. Thus, BHCs with negatively amortizing 1–4 family residential mortgage loans in excess of the reporting threshold as of the end of any particular calendar year would report these three data items for the next entire calendar year. The Federal Reserve requested comment on the specific dollar amount and percentage of loans that should be used in setting the size threshold for additional reporting on negatively amortizing loans. The comments received from a banking organization and a banking trade association addressed the comparable threshold proposed for the Call Report. In this regard, the banking organization recommended that the agencies base their reporting threshold only on a percentage of an institution’s total loans and leases and not also include a fixed dollar amount of negatively amortizing loans in the threshold test. The organization stated that using a percentage test ‘‘is more in line with the Agencies’ goals of ensuring the safety and soundness of institutions while minimizing the burden of information collection’’ because ‘‘safety and soundness concerns become more prominent only as an institution’s concentration in these loans increases relative to the rest of its portfolio.’’ In its comments, the banking trade association referred to the agencies’ Interagency Guidance on Nontraditional Mortgage Product Risks, which they published at the beginning of October 2006,2 noting that this guidance ‘‘specifically states that the agencies did not intend to establish concentration caps for institutions that underwrite’’ 2 See E:\FR\FM\26MRN1.SGM 71 FR 58609, October 4, 2006. 26MRN1 cprice-sewell on PROD1PC66 with NOTICES Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / Notices nontraditional mortgages, including the residential mortgages with negative amortization features on which data would be reported in the Call Report. The trade association expressed concern that the establishment of a reporting threshold for reporting certain data on these loans would be ‘‘a de facto concentration limit above which heightened regulatory scrutiny could be implied for such loans.’’ This ‘‘would be inconsistent with the Interagency Guidance.’’ As a consequence, the trade association suggested eliminating the entire proposed reporting requirement for negatively amortizing residential mortgage loans. Alternatively, if the proposed reporting requirement were to be retained, the trade association recommended eliminating the reporting threshold for the three additional data items and requiring all banks to report these data items. The Federal Reserve has considered these comments that focus on the reporting threshold. The intent of the proposal to establish a reporting threshold for certain additional data on negatively amortizing residential mortgage loans was not to establish concentration limits for these mortgage products. Rather, as noted in the proposal, the Federal Reserve currently ‘‘has no readily available means of identifying the industry’s exposure’’ to these products, which led to the proposal to collect certain data to assist the Federal Reserve in ‘‘monitor[ing] the extent of use of negatively amortizing residential mortgage loans in the industry.’’ Thus, the reporting of data on these mortgages is intended to support agency analysis at both the institution level and the industry level. The threshold for reporting additional data on negatively amortizing residential mortgage loans that are present at an institution in a significant volume was designed to limit the reporting burden on institutions, particularly small BHCs, with a nominal volume of these loans. A threshold based solely on a percentage of total loans and leases would not enable the Federal Reserve to gain an industry perspective on the amount of remaining contractually permitted negative amortization, capitalized negative amortization, and noncash income from negative amortization and how they relate to the amount of negatively amortizing residential mortgages. Therefore, the Federal Reserve is proceeding with a reporting threshold for the three additional data items that incorporates both a dollar amount test and a percentage test. More specifically, BHCs will report the three additional data VerDate Aug<31>2005 15:30 Mar 23, 2007 Jkt 211001 items pertaining to their negatively amortizing residential mortgages if the amount of these mortgages exceeds the lesser of $100 million or 5 percent of their total loans and leases (in domestic offices), both held for sale and held for investment. A data processing servicer commented on the proposed March 31, 2007, effective date for reporting this information. The servicer observed that the end of the proposal’s comment period is less than 90 days before this effective date, while it typically needs a minimum of 180 days to implement programming changes after requirements are finalized. As a consequence, the servicer stated that it would not be able to commit to completing the programming, testing, and implementation of changes to its mortgage software by March 31, 2007, to enable its client banks to report the proposed information on negatively amortizing residential mortgages. The Interagency Guidance on Nontraditional Mortgage Product Risks indicates that management information and reporting systems ‘‘should allow management to detect changes in the risk profile of its nontraditional mortgage loan portfolio. The structure and content should allow the isolation of key loan products, risk–layering loan features, and borrower characteristics.’’ The guidance further provides that ‘‘[a]t a minimum, information should be available by loan type,’’ such as for the closed–end residential mortgage loans with negative amortization features that are the subject of this proposal, and ‘‘by borrower performance (e.g., payment patterns, delinquencies, interest accruals, and negative amortization).’’ These risk management expectations for information systems were set forth approximately 180 days before the March 31, 2007, effective date of the proposed FR Y–9C items for negatively amortizing residential mortgages. In addition, for the March 31, 2007, report date, BHCs may provide reasonable estimates for these new FR Y–9C items if the requested information is not readily available. Reporting of Certain Brokered Time Deposit Information The banking agencies proposed to revise the reporting treatment of brokered time deposits on Call Report Schedule RC–E, Deposit Liabilities. Memorandum item 2.b, Total time deposits of less than $100,000, would be revised to include brokered time deposits issued in denominations of $100,000 or more that are participated out by the broker in shares of less than $100,000, as well as brokered PO 00000 Frm 00036 Fmt 4703 Sfmt 4703 14107 certificates of deposit issued in $1,000 amounts under a master certificate of deposit. Memorandum item 2.c, Total time deposits of $100,000 or more, would be revised to exclude such brokered deposits. The Federal Reserve proposed to make similar instructional changes to seven data items on Schedule HC–E, Deposit Liabilities, to retain consistent definitions with the Call Report and to accommodate the consolidation of subsidiary bank information into the FR Y–9C report. The Federal Reserve proposed to revise the instructions for data item 1.d, Time deposits of less than $100,000 held in domestic offices of commercial bank subsidiaries; data item 2.d, Time deposits of less than $100,000 held in domestic offices of other depository institution subsidiaries; Memorandum item 1, Brokered deposits less than $100,000 with a remaining maturity of one year or less; and Memorandum item 2, Brokered deposits less than $100,000 with a remaining maturity of more than one year, to include brokered time deposits issued in denominations of $100,000 or more that are participated out by the broker in shares of less than $100,000 and brokered certificates of deposit issued in $1,000 amounts under a master certificate of deposit. Data item 1.e, Time deposits of $100,000 or more held in domestic offices of commercial bank subsidiaries; data item 2.e, Time deposits of $100,000 or more held in domestic offices of other depository institution subsidiaries; and Memorandum item 3, Time deposits of $100,000 or more with a remaining maturity of one year or less, would be revised to exclude such brokered time deposits. The banking agencies received no comments on the proposed time deposit reporting changes, and the Federal Reserve is implementing the time deposit instructional changes as proposed. Instructional Clarifications Servicing of Loan Participations Bank holding companies report the outstanding principal balance of loans and other assets serviced for others in Memorandum items 2.a, 2.b, and 2.c of Schedule HC–S, Servicing, Securitization, and Asset Sale Activities. The instructions for these Memorandum items do not explicitly state whether a BHC that has sold a participation in a loan or other financial asset, which it continues to service, should include the servicing in Memorandum item 2.a, 2.b, or 2.c, as appropriate. Because the absence of E:\FR\FM\26MRN1.SGM 26MRN1 cprice-sewell on PROD1PC66 with NOTICES 14108 Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / Notices clear instructional guidance has resulted in questions from bankers and has produced diversity in practice among BHCs, the Federal Reserve proposed to clarify the instructions to these Schedule HC–S memorandum items to explicitly state that the amount of loan participations serviced for others should be included in these data items. The banking agencies received no comments specifically addressing this instructional clarification, and the Federal Reserve is implementing the clarification as proposed. 2. Report title: Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. Agency form number: FR Y–11. OMB control number: 7100–0244. Frequency: Quarterly and annually. Reporters: Bank holding companies (BHCs). Annual reporting hours: FR Y–11. (quarterly), 32,690 hours; FR Y–11. (annually), 1,911 hours. Estimated average hours per response: FR Y–11 (quarterly), 6.35 hours; FR Y– 11 (annually), 6.35 hours. Number of respondents: FR Y–11 (quarterly), 1,287; FR Y–11 (annually), 301. General description of report: This information collection is mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to section (b)(4) of the Freedom of Information Act [5 U.S.C. 522(b)(4)]. Abstract: The FR Y–11 reports collect financial information for individual U.S. nonbank subsidiaries of domestic BHCs. BHCs file the FR Y–11 on a quarterly or annual basis according to filing criteria. The FR Y–11 data are used with other BHC data to assess the condition of BHCs that are heavily engaged in nonbanking activities and to monitor the volume, nature, and condition of their nonbanking operations. Current actions: On January 11, 2007, the Federal Reserve published a notice in the Federal Register (72 FR 1325) requesting public comment for 60 days on the revision, without extension, of the Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. The comment period expired on March 12, 2007. The Federal Reserve did not receive any comment letters. All reporting changes will be implemented effective with the March 31, 2007, report date. Recently, the volume of 1–4 family residential mortgage loan products whose terms allow for negative VerDate Aug<31>2005 15:30 Mar 23, 2007 Jkt 211001 amortization and the number of institutions providing borrowers with such loans has increased significantly. Loans with this feature are structured in a manner that may result in an increase in the loan’s principal balance even when the borrower’s payments are technically current. When loans with negative amortization are not prudently underwritten and not properly monitored, they raise safety and soundness concerns. Currently, the Federal Reserve has no readily available means of identifying the industry’s exposure to such loans. Therefore, the Federal Reserve proposed to collect four data items at the nonbank subsidiary level to monitor the extension of negatively amortizing residential mortgage loans in the industry and to parallel the data items being proposed for inclusion on the FR Y–9C. The Federal Reserve proposed to collect one memorandum item from all nonbank subsidiaries on Schedule BS– A, Loan and Leases Financing Receivables, for the total amount of closed–end loans with negative amortization features secured by 1–4 family residential properties in order to obtain an overall measure of this potentially higher risk lending activity. In addition, the Federal Reserve proposed to collect two memorandum items on Schedule BS–A and one memorandum item on Schedule IS, Income Statement, from nonbank subsidiaries with a significant volume of negatively amortizing 1–4 family residential mortgage loans. The threshold for significant volume would be based on the aggregate carrying amount of negatively amortizing loans in excess of 5 percent of the total loans and leases reported on Schedule BS–A. A nonbank with negatively amortizing loans would determine whether it met the size threshold for reporting the three additional memorandum items based on data reported from the previous year– end FR Y–11. The Federal Reserve also proposed two additional Schedule BS–A memorandum items to collect (1) the total maximum remaining amount of negative amortization contractually permitted on closed–end loans secured by 1–4 family residential properties and (2) the total amount of negative amortization on closed–end loans secured by 1–4 family residential properties that is included in the carrying amount of these loans. The first memorandum item would provide a measure of the maximum exposure that could be incurred for negative amortization loans in the current 1–4 family residential property loan portfolio. The second memorandum PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 item would then identify what component of 1–4 family mortgage loans is comprised of negative amortization loans. The Schedule IS memorandum item is year–to–date non–cash income on closed–end loans with a negative amortization feature secured by 1–4 family residential properties. This memorandum item would identify the amount and extent of interest revenue accrued and uncollected to ascertain the degree this potentially higher risk lending activity supports the BHC’s overall net income. All nonbank subsidiaries with negatively amortizing 1–4 family residential loans in excess of the reporting threshold would report these data items for the entire calendar year following the end of any calendar year when the threshold was exceeded. 3. Report title: Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. Agency form number: FR 2314. OMB control number: 7100–0073. Frequency: Quarterly and annually. Reporters: Foreign subsidiaries of U.S. state member banks (SMBs), bank holding companies (BHCs), and Edge or agreement corporations. Annual reporting hours: FR 2314 (quarterly), 5,402 hours; FR 2314 (annually), 966 hours. Estimated average hours per response: FR 2314 (quarterly), 6.40 hours; FR 2314 (annually), 6.40 hours. Number of respondents: FR 2314 (quarterly), 211; FR 2314 (annually), 151. 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 section (b)(4) of the Freedom of Information Act [5 U.S.C. 522(b)(4)]. Abstract: The FR 2314 reports collect financial information for direct or indirect foreign subsidiaries of U.S. SMBs, Edge and agreement corporations, and BHCs. Parent organizations (SMBs, Edge and agreement corporations, or BHCs) file the FR 2314 on a quarterly or annual basis according to filing criteria. The FR 2314 data are used to identify current and potential problems at the foreign subsidiaries of U.S. parent companies, to monitor the activities of U.S. banking organizations in specific countries, and to develop a better understanding of activities within the industry, in general, and of individual institutions, in particular. E:\FR\FM\26MRN1.SGM 26MRN1 cprice-sewell on PROD1PC66 with NOTICES Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / Notices Current actions: On January 11, 2007, the Federal Reserve published a notice in the Federal Register (72 FR 1325) requesting public comment for 60 days on the revision, without extension, of the Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. The comment period expired on March 12, 2007. The Federal Reserve did not receive any comment letters. All reporting changes will be implemented effective with the March 31, 2007, report date. Recently, the volume of 1–4 family residential mortgage loan products whose terms allow for negative amortization and the number of institutions providing borrowers with such loans has increased significantly. Loans with this feature are structured in a manner that may result in an increase in the loan’s principal balance even when the borrower’s payments are technically current. When loans with negative amortization are not prudently underwritten and not properly monitored, they raise safety and soundness concerns. Currently the Federal Reserve has no readily available means of identifying the industry’s exposure to such loans. Therefore, the Federal Reserve proposed to collect four data items at the nonbank subsidiary level to monitor the extension of negatively amortizing residential mortgage loans in the industry and to parallel the data items being proposed for inclusion on the FR Y–9C. The Federal Reserve proposed to collect one memorandum item from all nonbank subsidiaries on Schedule BS– A, Loan and Leases Financing Receivables, for the total amount of closed–end loans with negative amortization features secured by 1–4 family residential properties in order to obtain an overall measure of this potentially higher risk lending activity. In addition, the Federal Reserve proposed to collect two memorandum items on Schedule BS–A and one memorandum item on Schedule IS, Income Statement, from nonbank subsidiaries with a significant volume of negatively amortizing 1–4 family residential mortgage loans. The threshold for significant volume would be based on the aggregate carrying amount of negatively amortizing loans in excess of 5 percent of the total loans and leases reported on Schedule BS–A. A nonbank with negatively amortizing loans would determine whether it met the size threshold for reporting the three additional memorandum items based on data reported from the previous year– end FR 2314. The Federal Reserve also proposed two additional Schedule BS–A VerDate Aug<31>2005 15:30 Mar 23, 2007 Jkt 211001 memorandum items to collect (1) the total maximum remaining amount of negative amortization contractually permitted on closed–end loans secured by 1–4 family residential properties and (2) the total amount of negative amortization on closed–end loans secured by 1–4 family residential properties that is included in the carrying amount of these loans. The first memorandum item would provide a measure of the maximum exposure that could be incurred for negative amortization loans in the current 1–4 family residential property loan portfolio. The second memorandum item would then identify what component of 1–4 family mortgage loans is comprised of negative amortization loans. The Schedule IS memorandum item is year–to–date non–cash income on closed–end loans with a negative amortization feature secured by 1–4 family residential properties. This memorandum item would identify the amount and extent of interest revenue accrued and uncollected to ascertain the degree this potentially higher risk lending activity supports the BHC’s overall net income. All nonbank subsidiaries with negatively amortizing 1–4 family residential loans in excess of the reporting threshold would report these data items for the entire calendar year following the end of any calendar year when the threshold was exceeded. The Federal Reserve proposed to add the section Notes to the Financial Statements to allow respondents the opportunity to provide, at their option, any material information included in specific data items on the financial statements that the parent U.S. banking organization wishes to explain. The addition of this section would enable the Federal Reserve to automate information that respondents may want to report as footnotes to various reported data items and provide for release of this information to the public. This section is currently included on the FR Y–11. Board of Governors of the Federal Reserve System, March 21, 2007. Jennifer J. Johnson, Secretary of the Board. [FR Doc. E7–5503 Filed 3–23–07; 8:45 am] BILLING CODE 6210–01–S FEDERAL RESERVE SYSTEM Change in Bank Control Notices; Acquisition of Shares of Bank or Bank Holding Companies The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 14109 § 225.41 of the Board’s Regulation Y (12 CFR 225.41) to acquire a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)). The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the office of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than April 10, 2007. A. Federal Reserve Bank of Kansas City (Donna J. Ward, Assistant Vice President) 925 Grand Avenue, Kansas City, Missouri 64198-0001: 1. William Scott Martin Trust and William S. Martin, Miami Beach, Florida, as trustee; to acquire control of Green Country Bancorporation, Inc., and thereby indirectly acquire control of The First State Bank, both in Ketchum, Oklahoma. Board of Governors of the Federal Reserve System, March 21, 2007. Robert deV. Frierson, Deputy Secretary of the Board. [FR Doc. E7–5437 Filed 3–23–07; 8:45 am] BILLING CODE 6210–01–S FEDERAL RESERVE SYSTEM Formations of, Acquisitions by, and Mergers of Bank Holding Companies The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) (BHC Act), Regulation Y (12 CFR part 225), and all other applicable statutes and regulations to become a bank holding company and/or to acquire the assets or the ownership of, control of, or the power to vote shares of a bank or bank holding company and all of the banks and nonbanking companies owned by the bank holding company, including the companies listed below. The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the E:\FR\FM\26MRN1.SGM 26MRN1

Agencies

[Federal Register Volume 72, Number 57 (Monday, March 26, 2007)]
[Notices]
[Pages 14104-14109]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5503]


=======================================================================
-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Announcement of Board 
Approval Under Delegated Authority and Submission to OMB

AGENCY: Board of Governors of the Federal Reserve System

[[Page 14105]]

SUMMARY: Background.
    Notice is hereby given of the final approval of proposed 
information collection 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--Mark Menchik--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, Washington, DC 20503, or e-mail to 
mmenchik@omb.eop.gov.

Final approval under OMB delegated authority the revision, without 
extension, of the following reports:

    1. Report title: Consolidated Financial Statements for Bank Holding 
Companies.
    Agency form number: FR Y-9C.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: Bank holding companies (BHCs).
    Annual reporting hours: 117,504 hours.
    Estimated average hours per response: 38.35 hours.
    Number of respondents: 766.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in this report. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to section 
(b)(4) of the Freedom of Information Act (5 U.S.C. 522(b)(4).
    Abstract: The FR Y-9 family of reports historically has been, and 
continues to be, the primary source of financial information on BHCs 
between on-site inspections. Financial information from these reports 
is used to detect emerging financial problems, to review performance 
and conduct pre-inspection analysis, to monitor and evaluate capital 
adequacy, to evaluate BHC mergers and acquisitions, and to analyze a 
BHC's overall financial condition to ensure safe and sound operations.
    The FR Y-9C consists of standardized financial statements similar 
to the Federal Financial Institutions Examination Council's 
Consolidated Reports of Condition and Income (Call Report) (FFIEC 031 & 
041; OMB No. 7100-0036) filed by commercial banks. The FR Y-9C collects 
consolidated data from the BHC and is generally filed by top-tier BHCs 
with total consolidated assets of $500 million or more.
    Current actions: On January 11, 2007, the Federal Reserve published 
a notice in the Federal Register (72 FR 1325) requesting public comment 
for 60 days on the revision, without extension, of the Consolidated 
Financial Statements for Bank Holding Companies, effective with the 
March 31, 2007, report date. The comment period expired on March 12, 
2007. The Federal Reserve did not receive any comment letters. However, 
five comments were received by the Federal Reserve, Federal Deposit 
Insurance Corporation, and Office of the Comptroller of the Currency 
(the banking agencies) on proposed revisions to the Call Reports that 
parallel the proposed revisions to the FR Y-9C, and were taken into 
consideration for this proposal. The comments are summarized and 
addressed below.

Reporting on Fair Value Measurements and the Use of the Fair Value 
Option

    On September 15, 2006, the Financial Accounting Standards Board 
(FASB) issued Statement No. 157, Fair Value Measurements (FAS 157), 
which is effective for banking institutions and other entities for 
fiscal years beginning after November 15, 2007. Earlier adoption of FAS 
157 is permitted as of the beginning of an earlier fiscal year, 
provided the BHC has not yet issued a financial statement or filed a FR 
Y-9C report for any period of that fiscal year. Thus, a BHC with a 
calendar year fiscal year may voluntarily adopt FAS 157 as of January 
1, 2007. The fair value measurements standard provides guidance on how 
to measure fair value and would require BHCs and other entities to 
disclose the inputs used to measure fair value based on a three-level 
hierarchy for all assets and liabilities that are remeasured at fair 
value on a recurring basis.\1\
---------------------------------------------------------------------------

    \1\ The FASB's three-level fair value hierarchy gives the 
highest priority to quoted prices in active markets for identical 
assets or liabilities (Level 1) and the lowest priority to 
unobservable inputs (Level 3). Level 1 inputs are quoted prices in 
active markets for identical assets or liabilities that the 
reporting bank holding company has the ability to access at the 
measurement date (e.g., the FR Y-9C as-of date). Level 2 inputs are 
inputs other than quoted prices included within Level 1 that are 
observable for the asset or liability, either directly or 
indirectly. Level 3 inputs are unobservable inputs for the asset or 
liability.
---------------------------------------------------------------------------

    The FASB issued a final Statement No. 159, The Fair Value Option 
for Financial Assets and Financial Liabilities (FAS 159), on February 
15, 2007. This standard allows BHCs and other entities to report 
certain financial assets and liabilities at fair value with the changes 
in fair value included in earnings. The Federal Reserve anticipates 
that relatively few BHCs will elect to use the fair value option for a 
significant portion of their financial assets and liabilities.
    According to the FASB's web site (www.fasb.org), the FASB Board has 
decided to require that the effective date of the final fair value 
option standard be the same as the effective date of FAS 157. Thus, the 
final fair value option standard should be effective for financial 
statements issued for fiscal years beginning after November 15, 2007. 
The FASB Board has also decided to permit an entity to early adopt the 
final fair value option standard provided that the entity also adopts 
all of the requirements (measurement and disclosure) of FAS 157 
concurrent with or prior to the early adoption of the final fair value 
option standard. Furthermore, the FASB Board would permit early 
adoption of the final fair value option standard within 120 days of the 
beginning of the entity's fiscal year, thereby making the fair value 
option election retroactive to the beginning of that fiscal year (or 
the date of initial recognition, if later) provided that the entity has 
not yet issued any interim financial statements for that fiscal year. 
Thus, a BHC with a calendar year fiscal year that voluntarily adopts 
FAS 157 as of January 1, 2007, would also be able to adopt the final 
fair value option standard as of that same date.
    The Federal Reserve proposed to clarify the FR Y-9C reporting 
instructions to explain where financial assets and liabilities measured 
under the fair value option should be reported in the existing line 
items of the FR Y-9C. The Federal Reserve also proposed to add a new 
Schedule HC-Q to the FR Y-9C to collect data, by major asset and 
liability category, on the amount of

[[Page 14106]]

assets and liabilities to which the fair value option has been applied 
along with separate disclosure of the amount of such assets and 
liabilities whose fair values were estimated under level two and under 
level three of the FASB's fair value hierarchy. The categories are:
     Securities held for purposes other than trading with 
changes in fair value reported in current earnings;
     Loans and leases;
     All other financial assets and servicing assets;
     Deposit liabilities;
     All other financial liabilities and servicing liabilities; 
and
     Loan commitments (not accounted for as derivatives).
    In addition, the Federal Reserve proposed to collect data on 
trading assets and trading liabilities in the new schedule from those 
BHCs that complete Schedule HC-D, Trading Assets and Liabilities, i.e., 
BHCs that reported average trading assets of $2 million or more for any 
quarter of the preceding calendar year. In the proposed new schedule, 
such BHCs would report the carrying amount of trading assets and 
trading liabilities whose fair values were estimated under level two 
and under level three of the FASB's fair value hierarchy.
    The FASB's fair value measurements standard requires banking 
organizations and other entities to consider the effect of a change in 
their own creditworthiness when determining the fair value of a 
financial liability. The Federal Reserve proposed to add one new data 
item to Schedule HC-R, Regulatory Capital, for the cumulative change in 
the fair value of all financial liabilities accounted for under the 
fair value option that is attributable to changes in the BHC's own 
creditworthiness. This amount would be excluded from the BHC's retained 
earnings for purposes of determining Tier 1 capital under the Federal 
Reserve's regulatory capital standards.
    Finally, the Federal Reserve proposed to clarify the instructions 
to Schedule HI for the treatment of interest income on financial assets 
and interest expense on financial liabilities measured under a fair 
value option. The instructions would be modified to instruct BHCs to 
separate the contractual year-to-date amount of interest earned on 
financial assets and interest incurred on financial liabilities that 
are reported under a fair value option from the overall year-to-date 
fair value adjustment and report these contractual amounts in the 
appropriate interest income or interest expense data items on Schedule 
HI.
    Only one commenter, a banking trade association, offered comments 
on fair value option reporting in the Call Report, urging ``the 
agencies to proceed cautiously with any major revisions to the Call 
Report or TFR prior to the official release of the Fair Value Option 
statement.'' The trade association also requested that the agencies 
delay the March 31, 2007, effective date of the proposed reporting 
revisions related to the fair value option if the release of the FASB's 
final fair value option standard is delayed beyond its expected 
issuance in the first quarter of 2007. The trade association did not 
address the proposed reporting revisions for the fair value option and 
fair value measurements themselves.
    The Federal Reserve agrees on the need for caution in implementing 
the proposed reporting revisions related to the fair value option and 
fair value measurements. Accordingly, only if BHCs adopt this standard 
in the first quarter of 2007 for other financial reporting purposes 
would the fair value option reporting requirements in the FR Y-9C take 
effect as of March 31, 2007. Otherwise, these reporting requirements 
would be delayed until BHCs elect the fair value option for other 
financial reporting purposes. Additionally, the Federal Reserve will 
proceed with the new Schedule HC-R data item for fair value changes 
included in retained earnings that are attributable to changes in a 
BHC's own creditworthiness.

Reporting of Certain Data on 1-4 Family Residential Mortgage Loans 
withTerms that Allow for Negative Amortization

    The Federal Reserve proposed to collect certain data items to 
monitor the extent of holdings of closed-end 1-4 family residential 
mortgage loan products whose terms allow for negative amortization. As 
proposed, all BHCs would report the total amount of their holdings of 
such closed-end mortgage loans in a new memorandum item in Schedule HC-
C, Loans and Leases. The Federal Reserve also proposed to collect two 
additional memorandum items on Schedule HC-C and another new memorandum 
item on Schedule HI, Income Statement, from BHCs with a significant 
volume of negatively amortizing 1-4 family residential mortgage loans. 
The two additional Schedule HC-C memorandum items would be (1) the 
total maximum remaining amount of negative amortization contractually 
permitted on closed-end loans secured by 1-4 family residential 
properties and (2) the total amount of negative amortization on closed-
end loans secured by 1-4 family residential properties that is included 
in the carrying amount of these loans. The Schedule HI memorandum item 
would be the year-to-date noncash income on closed-end loans with a 
negative amortization feature secured by 1-4 family residential 
properties.
    The Federal Reserve's proposal stated that the threshold for 
identifying BHCs with a significant volume of negatively amortizing 
residential mortgage loans would be based on the aggregate amount of 
these loans being in excess of either a certain dollar amount, e.g., 
$100 million or $250 million, or a certain percentage of the total 
loans and leases (in domestic offices) reported on Schedule HC-C, e.g., 
5 percent or 10 percent. For reporting during 2007, a BHC with 
negatively amortizing loans would determine whether it met the size 
threshold for reporting the three additional memorandum items using 
data reflected in its December 31, 2006, FR Y-9C report. For reporting 
in 2008 and subsequent years, the determination would be based on data 
from the previous year-end FR Y-9C. Thus, BHCs with negatively 
amortizing 1-4 family residential mortgage loans in excess of the 
reporting threshold as of the end of any particular calendar year would 
report these three data items for the next entire calendar year.
    The Federal Reserve requested comment on the specific dollar amount 
and percentage of loans that should be used in setting the size 
threshold for additional reporting on negatively amortizing loans. The 
comments received from a banking organization and a banking trade 
association addressed the comparable threshold proposed for the Call 
Report. In this regard, the banking organization recommended that the 
agencies base their reporting threshold only on a percentage of an 
institution's total loans and leases and not also include a fixed 
dollar amount of negatively amortizing loans in the threshold test. The 
organization stated that using a percentage test ``is more in line with 
the Agencies' goals of ensuring the safety and soundness of 
institutions while minimizing the burden of information collection'' 
because ``safety and soundness concerns become more prominent only as 
an institution's concentration in these loans increases relative to the 
rest of its portfolio.''
    In its comments, the banking trade association referred to the 
agencies' Interagency Guidance on Nontraditional Mortgage Product 
Risks, which they published at the beginning of October 2006,\2\ noting 
that this guidance ``specifically states that the agencies did not 
intend to establish concentration caps for institutions that 
underwrite''

[[Page 14107]]

nontraditional mortgages, including the residential mortgages with 
negative amortization features on which data would be reported in the 
Call Report. The trade association expressed concern that the 
establishment of a reporting threshold for reporting certain data on 
these loans would be ``a de facto concentration limit above which 
heightened regulatory scrutiny could be implied for such loans.'' This 
``would be inconsistent with the Interagency Guidance.'' As a 
consequence, the trade association suggested eliminating the entire 
proposed reporting requirement for negatively amortizing residential 
mortgage loans. Alternatively, if the proposed reporting requirement 
were to be retained, the trade association recommended eliminating the 
reporting threshold for the three additional data items and requiring 
all banks to report these data items.
---------------------------------------------------------------------------

    \2\ See 71 FR 58609, October 4, 2006.
---------------------------------------------------------------------------

    The Federal Reserve has considered these comments that focus on the 
reporting threshold. The intent of the proposal to establish a 
reporting threshold for certain additional data on negatively 
amortizing residential mortgage loans was not to establish 
concentration limits for these mortgage products. Rather, as noted in 
the proposal, the Federal Reserve currently ``has no readily available 
means of identifying the industry's exposure'' to these products, which 
led to the proposal to collect certain data to assist the Federal 
Reserve in ``monitor[ing] the extent of use of negatively amortizing 
residential mortgage loans in the industry.'' Thus, the reporting of 
data on these mortgages is intended to support agency analysis at both 
the institution level and the industry level. The threshold for 
reporting additional data on negatively amortizing residential mortgage 
loans that are present at an institution in a significant volume was 
designed to limit the reporting burden on institutions, particularly 
small BHCs, with a nominal volume of these loans. A threshold based 
solely on a percentage of total loans and leases would not enable the 
Federal Reserve to gain an industry perspective on the amount of 
remaining contractually permitted negative amortization, capitalized 
negative amortization, and noncash income from negative amortization 
and how they relate to the amount of negatively amortizing residential 
mortgages. Therefore, the Federal Reserve is proceeding with a 
reporting threshold for the three additional data items that 
incorporates both a dollar amount test and a percentage test. More 
specifically, BHCs will report the three additional data items 
pertaining to their negatively amortizing residential mortgages if the 
amount of these mortgages exceeds the lesser of $100 million or 5 
percent of their total loans and leases (in domestic offices), both 
held for sale and held for investment.
    A data processing servicer commented on the proposed March 31, 
2007, effective date for reporting this information. The servicer 
observed that the end of the proposal's comment period is less than 90 
days before this effective date, while it typically needs a minimum of 
180 days to implement programming changes after requirements are 
finalized. As a consequence, the servicer stated that it would not be 
able to commit to completing the programming, testing, and 
implementation of changes to its mortgage software by March 31, 2007, 
to enable its client banks to report the proposed information on 
negatively amortizing residential mortgages.
    The Interagency Guidance on Nontraditional Mortgage Product Risks 
indicates that management information and reporting systems ``should 
allow management to detect changes in the risk profile of its 
nontraditional mortgage loan portfolio. The structure and content 
should allow the isolation of key loan products, risk-layering loan 
features, and borrower characteristics.'' The guidance further provides 
that ``[a]t a minimum, information should be available by loan type,'' 
such as for the closed-end residential mortgage loans with negative 
amortization features that are the subject of this proposal, and ``by 
borrower performance (e.g., payment patterns, delinquencies, interest 
accruals, and negative amortization).'' These risk management 
expectations for information systems were set forth approximately 180 
days before the March 31, 2007, effective date of the proposed FR Y-9C 
items for negatively amortizing residential mortgages. In addition, for 
the March 31, 2007, report date, BHCs may provide reasonable estimates 
for these new FR Y-9C items if the requested information is not readily 
available.

Reporting of Certain Brokered Time Deposit Information

    The banking agencies proposed to revise the reporting treatment of 
brokered time deposits on Call Report Schedule RC-E, Deposit 
Liabilities. Memorandum item 2.b, Total time deposits of less than 
$100,000, would be revised to include brokered time deposits issued in 
denominations of $100,000 or more that are participated out by the 
broker in shares of less than $100,000, as well as brokered 
certificates of deposit issued in $1,000 amounts under a master 
certificate of deposit. Memorandum item 2.c, Total time deposits of 
$100,000 or more, would be revised to exclude such brokered deposits.
    The Federal Reserve proposed to make similar instructional changes 
to seven data items on Schedule HC-E, Deposit Liabilities, to retain 
consistent definitions with the Call Report and to accommodate the 
consolidation of subsidiary bank information into the FR Y-9C report. 
The Federal Reserve proposed to revise the instructions for data item 
1.d, Time deposits of less than $100,000 held in domestic offices of 
commercial bank subsidiaries; data item 2.d, Time deposits of less than 
$100,000 held in domestic offices of other depository institution 
subsidiaries; Memorandum item 1, Brokered deposits less than $100,000 
with a remaining maturity of one year or less; and Memorandum item 2, 
Brokered deposits less than $100,000 with a remaining maturity of more 
than one year, to include brokered time deposits issued in 
denominations of $100,000 or more that are participated out by the 
broker in shares of less than $100,000 and brokered certificates of 
deposit issued in $1,000 amounts under a master certificate of deposit. 
Data item 1.e, Time deposits of $100,000 or more held in domestic 
offices of commercial bank subsidiaries; data item 2.e, Time deposits 
of $100,000 or more held in domestic offices of other depository 
institution subsidiaries; and Memorandum item 3, Time deposits of 
$100,000 or more with a remaining maturity of one year or less, would 
be revised to exclude such brokered time deposits.
    The banking agencies received no comments on the proposed time 
deposit reporting changes, and the Federal Reserve is implementing the 
time deposit instructional changes as proposed.

Instructional Clarifications

Servicing of Loan Participations
    Bank holding companies report the outstanding principal balance of 
loans and other assets serviced for others in Memorandum items 2.a, 
2.b, and 2.c of Schedule HC-S, Servicing, Securitization, and Asset 
Sale Activities. The instructions for these Memorandum items do not 
explicitly state whether a BHC that has sold a participation in a loan 
or other financial asset, which it continues to service, should include 
the servicing in Memorandum item 2.a, 2.b, or 2.c, as appropriate. 
Because the absence of

[[Page 14108]]

clear instructional guidance has resulted in questions from bankers and 
has produced diversity in practice among BHCs, the Federal Reserve 
proposed to clarify the instructions to these Schedule HC-S memorandum 
items to explicitly state that the amount of loan participations 
serviced for others should be included in these data items. The banking 
agencies received no comments specifically addressing this 
instructional clarification, and the Federal Reserve is implementing 
the clarification as proposed.
    2. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
of U.S. Bank Holding Companies.
    Agency form number: FR Y-11.
    OMB control number: 7100-0244.
    Frequency: Quarterly and annually.
    Reporters: Bank holding companies (BHCs).
    Annual reporting hours: FR Y-11. (quarterly), 32,690 hours; FR Y-
11. (annually), 1,911 hours.
    Estimated average hours per response: FR Y-11 (quarterly), 6.35 
hours; FR Y-11 (annually), 6.35 hours.
    Number of respondents: FR Y-11 (quarterly), 1,287; FR Y-11 
(annually), 301.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in these reports. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to section 
(b)(4) of the Freedom of Information Act [5 U.S.C. 522(b)(4)].
    Abstract: The FR Y-11 reports collect financial information for 
individual U.S. nonbank subsidiaries of domestic BHCs. BHCs file the FR 
Y-11 on a quarterly or annual basis according to filing criteria. The 
FR Y-11 data are used with other BHC data to assess the condition of 
BHCs that are heavily engaged in nonbanking activities and to monitor 
the volume, nature, and condition of their nonbanking operations.
    Current actions: On January 11, 2007, the Federal Reserve published 
a notice in the Federal Register (72 FR 1325) requesting public comment 
for 60 days on the revision, without extension, of the Financial 
Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. 
The comment period expired on March 12, 2007. The Federal Reserve did 
not receive any comment letters. All reporting changes will be 
implemented effective with the March 31, 2007, report date.
    Recently, the volume of 1-4 family residential mortgage loan 
products whose terms allow for negative amortization and the number of 
institutions providing borrowers with such loans has increased 
significantly. Loans with this feature are structured in a manner that 
may result in an increase in the loan's principal balance even when the 
borrower's payments are technically current. When loans with negative 
amortization are not prudently underwritten and not properly monitored, 
they raise safety and soundness concerns. Currently, the Federal 
Reserve has no readily available means of identifying the industry's 
exposure to such loans. Therefore, the Federal Reserve proposed to 
collect four data items at the nonbank subsidiary level to monitor the 
extension of negatively amortizing residential mortgage loans in the 
industry and to parallel the data items being proposed for inclusion on 
the FR Y-9C.
    The Federal Reserve proposed to collect one memorandum item from 
all nonbank subsidiaries on Schedule BS-A, Loan and Leases Financing 
Receivables, for the total amount of closed-end loans with negative 
amortization features secured by 1-4 family residential properties in 
order to obtain an overall measure of this potentially higher risk 
lending activity. In addition, the Federal Reserve proposed to collect 
two memorandum items on Schedule BS-A and one memorandum item on 
Schedule IS, Income Statement, from nonbank subsidiaries with a 
significant volume of negatively amortizing 1-4 family residential 
mortgage loans. The threshold for significant volume would be based on 
the aggregate carrying amount of negatively amortizing loans in excess 
of 5 percent of the total loans and leases reported on Schedule BS-A. A 
nonbank with negatively amortizing loans would determine whether it met 
the size threshold for reporting the three additional memorandum items 
based on data reported from the previous year-end FR Y-11.
    The Federal Reserve also proposed two additional Schedule BS-A 
memorandum items to collect (1) the total maximum remaining amount of 
negative amortization contractually permitted on closed-end loans 
secured by 1-4 family residential properties and (2) the total amount 
of negative amortization on closed-end loans secured by 1-4 family 
residential properties that is included in the carrying amount of these 
loans. The first memorandum item would provide a measure of the maximum 
exposure that could be incurred for negative amortization loans in the 
current 1-4 family residential property loan portfolio. The second 
memorandum item would then identify what component of 1-4 family 
mortgage loans is comprised of negative amortization loans. The 
Schedule IS memorandum item is year-to-date non-cash income on closed-
end loans with a negative amortization feature secured by 1-4 family 
residential properties. This memorandum item would identify the amount 
and extent of interest revenue accrued and uncollected to ascertain the 
degree this potentially higher risk lending activity supports the BHC's 
overall net income. All nonbank subsidiaries with negatively amortizing 
1-4 family residential loans in excess of the reporting threshold would 
report these data items for the entire calendar year following the end 
of any calendar year when the threshold was exceeded.
    3. Report title: Financial Statements of Foreign Subsidiaries of 
U.S. Banking Organizations.
    Agency form number: FR 2314.
    OMB control number: 7100-0073.
    Frequency: Quarterly and annually.
    Reporters: Foreign subsidiaries of U.S. state member banks (SMBs), 
bank holding companies (BHCs), and Edge or agreement corporations.
    Annual reporting hours: FR 2314 (quarterly), 5,402 hours; FR 2314 
(annually), 966 hours.
    Estimated average hours per response: FR 2314 (quarterly), 6.40 
hours; FR 2314 (annually), 6.40 hours.
    Number of respondents: FR 2314 (quarterly), 211; FR 2314 
(annually), 151.
    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 section (b)(4) of the Freedom of Information Act [5 U.S.C. 
522(b)(4)].
    Abstract: The FR 2314 reports collect financial information for 
direct or indirect foreign subsidiaries of U.S. SMBs, Edge and 
agreement corporations, and BHCs. Parent organizations (SMBs, Edge and 
agreement corporations, or BHCs) file the FR 2314 on a quarterly or 
annual basis according to filing criteria. The FR 2314 data are used to 
identify current and potential problems at the foreign subsidiaries of 
U.S. parent companies, to monitor the activities of U.S. banking 
organizations in specific countries, and to develop a better 
understanding of activities within the industry, in general, and of 
individual institutions, in particular.

[[Page 14109]]

    Current actions: On January 11, 2007, the Federal Reserve published 
a notice in the Federal Register (72 FR 1325) requesting public comment 
for 60 days on the revision, without extension, of the Financial 
Statements of Foreign Subsidiaries of U.S. Banking Organizations. The 
comment period expired on March 12, 2007. The Federal Reserve did not 
receive any comment letters. All reporting changes will be implemented 
effective with the March 31, 2007, report date.
    Recently, the volume of 1-4 family residential mortgage loan 
products whose terms allow for negative amortization and the number of 
institutions providing borrowers with such loans has increased 
significantly. Loans with this feature are structured in a manner that 
may result in an increase in the loan's principal balance even when the 
borrower's payments are technically current. When loans with negative 
amortization are not prudently underwritten and not properly monitored, 
they raise safety and soundness concerns. Currently the Federal Reserve 
has no readily available means of identifying the industry's exposure 
to such loans. Therefore, the Federal Reserve proposed to collect four 
data items at the nonbank subsidiary level to monitor the extension of 
negatively amortizing residential mortgage loans in the industry and to 
parallel the data items being proposed for inclusion on the FR Y-9C.
    The Federal Reserve proposed to collect one memorandum item from 
all nonbank subsidiaries on Schedule BS-A, Loan and Leases Financing 
Receivables, for the total amount of closed-end loans with negative 
amortization features secured by 1-4 family residential properties in 
order to obtain an overall measure of this potentially higher risk 
lending activity. In addition, the Federal Reserve proposed to collect 
two memorandum items on Schedule BS-A and one memorandum item on 
Schedule IS, Income Statement, from nonbank subsidiaries with a 
significant volume of negatively amortizing 1-4 family residential 
mortgage loans. The threshold for significant volume would be based on 
the aggregate carrying amount of negatively amortizing loans in excess 
of 5 percent of the total loans and leases reported on Schedule BS-A. A 
nonbank with negatively amortizing loans would determine whether it met 
the size threshold for reporting the three additional memorandum items 
based on data reported from the previous year-end FR 2314.
    The Federal Reserve also proposed two additional Schedule BS-A 
memorandum items to collect (1) the total maximum remaining amount of 
negative amortization contractually permitted on closed-end loans 
secured by 1-4 family residential properties and (2) the total amount 
of negative amortization on closed-end loans secured by 1-4 family 
residential properties that is included in the carrying amount of these 
loans. The first memorandum item would provide a measure of the maximum 
exposure that could be incurred for negative amortization loans in the 
current 1-4 family residential property loan portfolio. The second 
memorandum item would then identify what component of 1-4 family 
mortgage loans is comprised of negative amortization loans. The 
Schedule IS memorandum item is year-to-date non-cash income on closed-
end loans with a negative amortization feature secured by 1-4 family 
residential properties. This memorandum item would identify the amount 
and extent of interest revenue accrued and uncollected to ascertain the 
degree this potentially higher risk lending activity supports the BHC's 
overall net income. All nonbank subsidiaries with negatively amortizing 
1-4 family residential loans in excess of the reporting threshold would 
report these data items for the entire calendar year following the end 
of any calendar year when the threshold was exceeded.
    The Federal Reserve proposed to add the section Notes to the 
Financial Statements to allow respondents the opportunity to provide, 
at their option, any material information included in specific data 
items on the financial statements that the parent U.S. banking 
organization wishes to explain. The addition of this section would 
enable the Federal Reserve to automate information that respondents may 
want to report as footnotes to various reported data items and provide 
for release of this information to the public. This section is 
currently included on the FR Y-11.
    Board of Governors of the Federal Reserve System, March 21, 2007.

Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7-5503 Filed 3-23-07; 8:45 am]
BILLING CODE 6210-01-S