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