Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB, 11474-11482 [2011-4568]

Download as PDF 11474 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices By Order of the Federal Maritime Commission. Dated: February 25, 2011. Karen V. Gregory, Secretary. [FR Doc. 2011–4666 Filed 3–1–11; 8:45 am] BILLING CODE 6730–01–P FEDERAL RESERVE SYSTEM emcdonald on DSK2BSOYB1PROD with NOTICES Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB SUMMARY: Background. Notice is hereby given of the final approval of proposed information collections by the Board of Governors of the Federal Reserve System (Board) under OMB delegated authority, as per 5 CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the Public). Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. Copies of the Paperwork Reduction Act Submission, supporting statements and approved collection of information instrument(s) are placed into OMB’s public docket files. The Federal Reserve may not conduct or sponsor, and the respondent is not required to respond to, an information collection that has been extended, revised, or implemented on or after October 1, 1995, unless it displays a currently valid OMB control number. FOR FURTHER INFORMATION CONTACT: Cynthia Ayouch, Acting Federal Reserve Board Clearance Officer (202–452– 3829), Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, DC 20551. Telecommunications Device for the Deaf (TDD) users may contact (202–263–4869), Board of Governors of the Federal Reserve System, Washington, DC 20551. OMB Desk Officer—Shagufta Ahmed —Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503. Final approval under OMB delegated authority of the extension for three years, with revision of the following reports: 1. Report title: Financial Statements for Bank Holding Companies. Agency form number: FR Y–9C, FR Y– 9LP. OMB control number: 7100–0128. Effective Date: March 31, 2011. Frequency: Quarterly. Reporters: Bank holding companies. Estimated annual reporting hours: FR Y–9C: 188,820; FR Y–9LP: 27,195. VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 Estimated average hours per response: FR Y–9C: 45.0; FR Y–9LP: 5.25. Number of respondents: FR Y–9C: 1,049; FR Y–9LP: 1,295. General description of report: This information collection is mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to sections (b)(4) and (b)(6) of the Freedom of Information Act (5 U.S.C. 522(b)(4), (b)(6)). Abstract: The FR Y–9C and the FR Y– 9LP are standardized financial statements for the consolidated bank holding company (BHC) and its parent. The FR Y–9 family of reports historically has been, and continues to be, the primary source of financial information on BHCs between on-site inspections. Financial information from these reports is used to detect emerging financial problems, to review performance and conduct preinspection analysis, to monitor and evaluate capital adequacy, to evaluate BHC mergers and acquisitions, and to analyze a BHC’s overall financial condition to ensure safe and sound operations. The FR Y–9C consists of standardized financial statements similar to the Federal Financial Institutions Examination Council (FFIEC) Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031 & 041; OMB No. 7100–0036) filed by commercial banks. The FR Y–9C collects consolidated data from BHCs. The FR Y–9C is filed by top-tier BHCs with total consolidated assets of $500 million or more. (Under certain circumstances defined in the General Instructions, BHCs under $500 million may be required to file the FR Y–9C). The FR Y–9LP includes standardized financial statements filed quarterly on a parent company only basis from each BHC that files the FR Y–9C. In addition, for tiered BHCs, a separate FR Y–9LP must be filed for each lower tier BHC. Current Actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements for Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve received two comment letters from bankers’ organizations on proposed revisions to the FR Y–9C and FR Y–9LP. In addition, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (the PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 banking agencies) received nine comment letters on proposed revisions to the Call Reports, which parallel proposed revisions to the FR Y–9C, from three banks, three bankers’ organizations, two bank insurance consultants, and an insurance company. No comments were received on the following revisions that were proposed to take effect as of March 31, 2011, and therefore the Federal Reserve will implement these revisions as proposed: (1) The break out of commercial mortgage-backed securities issued or guaranteed by U.S. Government agencies and sponsored agencies, (2) the break out of loans and other real estate owned (OREO) information covered by FDIC loss-sharing agreements by loan and OREO category, (3) the addition of new data items for the total assets of captive insurance and reinsurance subsidiaries, (4) the addition of new income statement items for credit valuation adjustments and debit valuation adjustments included in trading revenues (for BHCs with total assets of $100 billion or more), (5) the revision of reporting instructions for construction lending, and (6) the collection of expanded information on the quarterly-averages schedule. The following section of this notice describes the remaining proposed FR Y– 9C and FR Y–9LP report changes and discusses the Federal Reserve’s evaluation of the comments received on the proposed changes. After considering the comments, the Federal Reserve will move forward in 2011 with the proposed reporting changes after making certain modifications in response to the comments. The Federal Reserve recognizes institutions’ need for lead time to prepare for reporting changes. Thus, consistent with longstanding practice, for the March 31, 2011, report date, BHCs may provide reasonable estimates for any new or revised FR Y–9C data item initially required to be reported as of that date for which the requested information is not readily available. Furthermore, the specific wording of the captions for the new or revised FR Y– 9C data items discussed in this notice and the numbering of these data items should be regarded as preliminary. Revisions—FR Y–9C Revisions Related to Call Report Revisions The Federal Reserve proposed to make the following revisions to the FR Y–9C to parallel proposed changes to the Call Report. BHCs have commented that changes should be made to the FR Y–9C in a manner consistent with E:\FR\FM\02MRN1.SGM 02MRN1 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices emcdonald on DSK2BSOYB1PROD with NOTICES changes to the Call Report to reduce reporting burden. 1. Troubled Debt Restructurings The Federal Reserve proposed that BHCs report additional detail on loans that have undergone troubled debt restructurings in Schedule HC–C, Loans and Lease Financing Receivables, and Schedule HC–N, Past Due and Nonaccrual Loans, Leases, and Other Assets. More specifically, Schedule HC– C, Memorandum item 1.b, Other loans and all leases, restructured and in compliance with modified terms, and Schedule HC–N, Memorandum item 1.b, restructured, Other loans and all leases, included in Schedule HC–N, would be broken out to provide information on restructured troubled loans for many of the loan categories reported in the bodies of Schedule HC–C and Schedule HC–N. The breakout would also include Loans to individuals for household, family, and other personal expenditures, whose terms have been modified in troubled debt restructurings, which are currently excluded from the reporting of troubled debt restructurings. In the aggregate, troubled debt restructurings for all FR Y–9C respondents have grown from $11.4 billion at year-end 2007 to $106.2 billion as of March 31, 2010. The proposed additional detail on troubled debt restructurings in Schedules HC–C and HC–N would enable the Federal Reserve to better understand the level of restructuring activity at BHCs, the categories of loans involved in this activity, and whether BHCs are working with their borrowers to modify and restructure loans. In particular, to encourage banking organizations to work constructively with their commercial borrowers, the banking agencies recently 1 issued guidance on commercial real estate loan workouts and small business lending. While this guidance has explained the agencies’ expectations for prudent workouts, the Federal Reserve and the industry would benefit from additional reliable data outside of the examination process to assess restructuring activity at BHCs for commercial real estate loans and commercial and industrial loans. Further, it is important to separately identify commercial real estate loan restructurings from commercial and industrial loan restructurings given that the value of the real estate collateral is a consideration in a BHC’s decision to modify the terms of a commercial real 1 Interagency Statement on Meeting the Credit Needs of Creditworthy Small Business Borrowers, issued February 12, 2010, and Policy Statement on Prudent Commercial Real Estate Loan Workouts, issued October 30, 2009. VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 estate loan in a troubled debt restructuring, but such collateral protection would normally be absent from commercial and industrial loans for which a loan modification is being explored because of borrowers’ financial difficulties. It is also anticipated that other loan categories will experience continued workout activity in the coming months given that most asset classes have been adversely affected by the recent recession. This effect is evidenced by the increase in past due and nonaccrual assets across virtually all asset classes over the past two to three years. Currently, BHCs report loans and leases restructured and in compliance with their modified terms (Schedule HC–C, Memorandum item 1) with separate disclosure of (a) loans secured by 1–4 family residential properties (in domestic offices) and (b) other loans and all leases (excluding loans to individuals for household, family, and other personal expenditures). This same breakout is reflected in Schedule HC–N, Memorandum item 1, for past due and nonaccrual restructured troubled loans. The broad category of other loans in Schedule HC–C, Memorandum item 1.b, and Schedule HC–N, Memorandum item 1.b, does not permit an adequate analysis of troubled debt restructurings. In addition, the disclosure requirements for troubled debt restructurings under generally accepted accounting principles (GAAP) do not exempt restructurings of loans to individuals for household, family, and other personal expenditures. Therefore, if more detail were to be added to match the reporting of loans in Schedule HC–C and Schedule HC–N, the new data would provide the Federal Reserve with the level of information necessary to assess BHCs’ troubled debt restructurings to the same extent that other loan quality and performance indicators can be assessed. However, the Federal Reserve notes that, under GAAP, troubled debt restructurings do not include changes in lease agreements 2 and therefore propose to exclude leases from Schedule HC–C, Memorandum item 1, and from Schedule HC–N, Memorandum item 1, and strike the phrase ‘‘and all other leases’’ from the caption of these data items. Thus, the proposed breakdowns of existing Memorandum item 1.b in both Schedule HC–C and Schedule HC–N would create new Memorandum items in both schedules covering troubled debt restructurings of 1–4 family residential construction loans, Other 2 Accounting Standards Codification paragraph 470–60–15–11. PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 11475 construction loans and all land development and other land loans, Loans secured by multifamily (5 or more) residential properties, Loans secured by owner-occupied nonfarm nonresidential properties, Loans secured by other nonfarm nonresidential properties, Commercial and industrial loans, and All other loans and all leases (including loans to individuals for household, family, and other personal expenditures).3 If restructured loans in any category of loans, as defined in Schedule HC–C, included in restructured, All other loans, exceeds 10 percent of the amount of restructured, All other loans, the amount of restructured loans in this category or categories would be itemized and described. Finally, Schedule HC–C, Memorandum item 1, and Schedule HC–N, Memorandum item 1, are intended to capture data on loans that have undergone troubled debt restructurings as that term is defined in GAAP. However, the captions of these two Memorandum items include only the term ‘‘restructured’’ rather than explicitly mentioning troubled debt restructurings, which has led to questions about the scope of these Memorandum items. Accordingly, the Federal Reserve proposed to revise the captions so that they clearly indicate that the loans to be reported in Schedule HC–C, Memorandum item 1, and Schedule HC–N, Memorandum item 1, are troubled debt restructurings. The banking agencies received comments from three bankers’ associations on the proposed additional detail in the Call Report on loans that have undergone troubled debt restructurings, comparable to the proposed changes to the FR Y–9C described above. Two of the commenters recommended the banking agencies defer the proposed troubled debt restructuring revisions, including the new breakdowns by loan category, until the Financial Accounting Standards Board (FASB) finalizes proposed clarifications to the accounting for troubled debt restructurings by creditors.4 In addition, two of the bankers’ associations recommended retaining the term ‘‘restructured’’ in the caption titles 3 For BHCs with foreign offices, the Memorandum items for restructured real estate loans would cover such loans in domestic offices. In addition, BHCs would also provide a breakdown of restructured commercial and industrial loans between U.S. and non-U.S. addressees. 4 FASB Proposed Accounting Standards Update (ASU): Receivables (Topic 310), Clarifications to Accounting for Troubled Debt Restructurings by Creditors. E:\FR\FM\02MRN1.SGM 02MRN1 emcdonald on DSK2BSOYB1PROD with NOTICES 11476 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices instead of changing to the term ‘‘troubled debt restructurings,’’ stating that changing this term would result in the collection of only a subset of total restructurings and would misrepresent banks’ efforts to work with their customers. As noted above, BHCs currently report loans and leases restructured and in compliance with their modified terms in Schedule HC–C, Memorandum item 1, and report past due and nonaccrual restructured loans in Schedule HC–N, Memorandum item 1. Although the captions for these line items do not use the term ‘‘troubled debt restructurings,’’ the line item instructions generally characterize loans reported in these items as troubled debt restructurings and direct the reader to the Glossary entry for ‘‘troubled debt restructurings’’ for further information. Furthermore, the Glossary entry states that ‘‘all loans that have undergone troubled debt restructurings and that are in compliance with their modified terms must be reported as restructured loans in Schedule HC–C, Memorandum item 1.’’ Therefore, the Federal Reserve’s longstanding intent has been to collect information on troubled debt restructurings in these line items, and these items were not designed to include loan modifications and restructurings that do not constitute troubled debt restructurings (e.g., where a BHC grants a concession to a borrower who is not experiencing financial difficulties). The accounting standards for troubled debt restructurings are set forth in Accounting Standards Codification (ASC) Subtopic 310–40, Receivables— Troubled Debt Restructurings by Creditors (formerly FASB Statement No. 15, ‘‘Accounting by Debtors and Creditors for Troubled Debt Restructurings,’’ as amended by FASB Statement No. 114, ‘‘Accounting by Creditors for Impairment of a Loan’’). This is the accounting basis for the current reporting of restructured troubled loans in existing Schedule HC– C, Memorandum item 1, and Schedule HC–N, Memorandum item 1. The proposed breakdown of the total amount of restructured ‘‘other loans’’ in existing Memorandum item 1.b in both schedules would result in additional detail on loans already within the scope of ASC Subtopic 310–40. To the extent the clarifications emanating from the FASB proposed accounting standards update may result in BHCs having to report certain loans as troubled debt restructurings that had not previously been identified as such, this accounting outcome will arise irrespective of the proposed breakdown of the ‘‘other VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 loans’’ category in Schedule HC–C, Memorandum item 1, and Schedule HC–N, Memorandum item 1. Therefore, the Federal Reserve will implement the new breakdown for the reporting of troubled debt restructurings as proposed. 2. Auto Loans The Federal Reserve proposed to add a breakdown of the other consumer loans 5 or all other loans loan categories contained in several schedules in order to separately collect information on auto loans. The affected schedules would be Schedule HC–C, Loans and Lease Financing Receivables; Schedule HC–D, Trading Assets and Liabilities; Schedule HC–K, Quarterly Averages; Schedule HC–N, Past Due and Nonaccrual Loans, Leases, and Other Assets; Schedule HI, Income Statement; and Schedule HI–B, Part I, Charge-offs and Recoveries on Loans and Leases. Auto loans would include loans arising from retail sales of passenger cars and other vehicles such as minivans, vans, sport-utility vehicles, pickup trucks, and similar light trucks for personal use. This new loan category would exclude loans to finance fleet sales, personal cash loans secured by automobiles already paid for, loans to finance the purchase of commercial vehicles and farm equipment, and lease financing. Automobile loans are a significant consumer business for many large BHCs. Because of the limited disclosure of auto lending on existing regulatory reports, supervisory oversight of auto lending is presently diminished by the need to rely on the examination process and public information sources that provide overall market information but not data on idiosyncratic risks. Roughly 65 percent of new vehicle sales and 40 percent of used vehicle sales are funded with auto loans. According to household surveys and data on loan originations, commercial banks are an important source of auto loans. In 2008, this sector originated approximately one-third of all auto loans. Finance companies, both independent and those affiliated with auto manufacturers, originated a bit more than one-third, while credit unions originated a bit less than onequarter. In addition to originating auto loans, some banks purchase auto loans originated by other entities, which suggests that commercial banks could be the largest holder of auto loans. Despite the importance of BHCs to the auto loan market, the Federal Reserve 5 As described later in this notice, the other consumer loans loan category was proposed to be added to Schedule HC–K beginning March 31, 2011. PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 knows less about BHCs’ holdings of auto loans than is known about finance company, credit union, and savings association holdings of these loans. All nonbank depository institutions are required to report auto loans on their respective regulatory reports, including savings associations, which originate less than 5 percent of auto loans. On their regulatory reports, credit unions must provide not only the outstanding amount of new and used auto loans, but also the average interest rate and the number of loans. In a monthly survey, the Federal Reserve collects information on the amount of auto loans held by finance companies. As a consequence, during the financial crisis when funds were scarce for finance companies in general and the finance companies affiliated with automakers in particular, a lack of data on auto loans at banks hindered the Federal Reserve’s ability to estimate the extent to which BHCs were filling in the gap in auto lending left by the finance companies. Additional disclosure regarding consolidated auto loans on the FR Y–9C is especially important with the implementation of the amendments to FASBASC Topics 860, Transfers and Servicing, and 810, Consolidations, resulting from ASU No. 2009–16,6 and ASU No. 2009–17,7 respectively. Until 2010, Schedule HC–S, Servicing, Securitization, and Asset Sale Activities, had provided the best supervisory information on auto lending because it included a separate breakout of securitized auto loans outstanding as well as securitized auto loan delinquencies and charge-offs. The accounting changes brought about by the amendments to ASC Topics 860 and 810, however, mean that if the auto loan securitization vehicle is now required to be consolidated, securitized auto lending previously reported on Schedule HC–S will be grouped as part of other consumer loans or all other loans on Schedules HC–C, HC–K, HC– N, HI, and HI–B, Part I, which diminishes supervisors’ ability to assess auto loan exposures and performance. Finally, separating auto lending from other consumer loans will assist the Federal Reserve in understanding consumer lending activities at individual institutions. When an institution holds both auto loans and other types of consumer loans (other than credit cards, which are currently reported separately), the current 6 Formerly Statement of Financial Accounting Standards (SFAS) No. 166, Accounting for Transfers of Financial Assets (FAS 166). 7 Formerly SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (FAS 167). E:\FR\FM\02MRN1.SGM 02MRN1 emcdonald on DSK2BSOYB1PROD with NOTICES Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices combined reporting of these loans in the FR Y–9C tends to mask any significant differences that may exist in the performance of these portfolios. For example, a BHC could have a sizeable auto loan portfolio with low loan losses, but its other consumer lending, which could consist primarily of unsecured loans, could exhibit very high loss rates. The current blending of these divergent portfolios into a single loan category makes it difficult to adequately monitor consumer loan performance. The banking agencies received three comments from banks and one comment from a bankers’ association on the proposal to separately collect information on automobile loans in the Call Report schedules containing loan category data, comparable to the proposed changes to the FR Y–9C described above. The three banks requested an exemption from the proposed reporting requirements for smaller banks, with one of the banks seeking the exemption only for reporting auto loan interest income and quarterly averages. The bankers’ association stated that this revision should not create a significant burden for future loans because core data processors generally have the ability to break out loan types, but it also asked for clarification on the reporting for situations in which auto loans are extended for multiple purposes. In addition, the bankers’ association observed that some community banks do not have data readily available on the types or purposes of existing consumer loans, which would prevent them from determining the purpose of loans collateralized by autos, i.e., for the purchase of the auto or for some other purpose, without searching paper loan files. After considering these comments, the Federal Reserve continues to believe the reporting of information on auto loans from all respondent BHCs is necessary for the Federal Reserve to carry out its supervisory and regulatory responsibilities and meet other public policy purposes. However, the Federal Reserve agrees that the reporting of interest income and quarterly averages for auto loans may be particularly burdensome for BHCs to report. Therefore, the Federal Reserve will not implement the proposed collection of auto loan data on Schedule HI, Income Statement, or Schedule HC–K, Quarterly Averages, in 2011. Instead, the Federal Reserve will evaluate the auto loan data that will begin to be collected in the other FR Y–9C schedules in March 2011 and reconsider whether to collect data on interest income and quarterly averages for auto loans. A decision to VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 propose to collect auto loan interest income and quarterly averages would be subject to notice and comment. Regarding the request for clarification of the reporting treatment for auto loans extended for multiple purposes and existing consumer loans with autos as collateral, the Federal Reserve has concluded that, to reduce burden, all consumer loans originated or purchased before April 1, 2011, that are collateralized by automobiles, regardless of the purpose of the loan, should be classified as auto loans and included in the new FR Y–9C items for auto loans. For consumer loans originated or purchased on or after April 1, 2011, BHCs should exclude from auto loans any personal cash loans secured by automobiles already paid for and consumer loans where some of the proceeds are used to purchase an auto and the remainder of the proceeds are used for other purposes. 3. Variable Interest Entities In June 2009, the FASB issued accounting standards that have changed the way entities account for securitizations and special purpose entities (SPE). ASU No. 2009–16 (formerly FAS 166) revised ASC Topic 860, Transfers and Servicing, by eliminating the concept of a qualifying special-purpose entity (QSPE) and changing the requirements for derecognizing financial assets. ASU No. 2009–17 (formerly FAS 167) revised ASC Topic 810, Consolidations, by changing how a banking organization or other company determines when an entity that is insufficiently capitalized or is not controlled through voting or similar rights, for example a Variable Interest Entity (VIE), should be consolidated. For most banking organizations, ASU Nos. 2009–16 and 2009–17 took effect January 1, 2010. Under ASC Topic 810, as amended, determining whether a BHC is required to consolidate a VIE depends on a qualitative analysis of whether that BHC has a ‘‘controlling financial interest’’ in the VIE and is therefore the primary beneficiary of the VIE. The analysis focuses on the BHC’s power over and interest in the VIE. With the removal of the QSPE concept from GAAP that was brought about in amended ASC Topic 860, a BHC that transferred financial assets to an SPE that met the definition of a QSPE before the effective date of these amended accounting standards was required to evaluate whether, pursuant to amended ASC Topic 810, it must begin to consolidate the assets, liabilities, and equity of the SPE as of that effective date. Thus, when implementing amended ASC Topics 860 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 11477 and 810 at the beginning of 2010, BHCs began to consolidate certain previously off-balance-sheet securitization vehicles, asset-backed commercial paper conduits, and other structures. Going forward, BHCs with variable interests in new VIEs must evaluate whether they have a controlling financial interest in these entities and, if so, consolidate them. In addition, BHCs must continually reassess whether they are the primary beneficiary of VIEs in which they have variable interests. For those VIEs that banks must consolidate, the Federal Reserve’s FR Y– 9C instructional guidance advises institutions to report the assets and liabilities of these VIEs on the balance sheet (Schedule HC) in the category appropriate to the asset or liability. However, ASC paragraph 810–10–45– 25 8 requires a reporting entity to present ‘‘separately on the face of the statement of financial position: a. Assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE [and] b. Liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary.’’ This requirement has been interpreted to mean that ‘‘each line item of the consolidated balance sheet should differentiate which portion of those amounts meet the separate presentation conditions.’’ 9 In requiring separate presentation for these assets and liabilities, the FASB agreed with commenters on its proposed accounting standard on consolidation that ‘‘separate presentation * * * would provide transparent and useful information about an enterprise’s involvement and associated risks in a variable interest entity.’’ 10 The Federal Reserve concurs that separate presentation would provide similar benefits to them and other FR Y–9C users, particularly since data on securitized assets that are reconsolidated is no longer reported on Schedule HC–S, Servicing, Securitization, and Asset Sale Activities. Consistent with the presentation requirements discussed above, the Federal Reserve proposed to add a new Schedule HC–V, Variable Interest Entities, to the FR Y–9C in which BHCs would report a breakdown of the assets of consolidated VIEs that can be used 8 Formerly paragraph 22A of FIN 46(R), as amended by FAS 167. 9 Deloitte & Touche LLP, ‘‘Back on-balance sheet: Observations from the adoption of FAS 167,’’ May 2010, page 4 (http://www.deloitte.com/view/en_US/ us/Services/audit-enterprise-risk-services/Financial -Accounting-Reporting/f3a70ca28d9f8210 VgnVCM200000bb42f00aRCRD.htm). 10 See paragraphs A80 and A81 of FAS 167. E:\FR\FM\02MRN1.SGM 02MRN1 emcdonald on DSK2BSOYB1PROD with NOTICES 11478 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices only to settle obligations of the consolidated VIEs and liabilities of consolidated VIEs for which creditors do not have recourse to the general credit of the reporting BHC. The following proposed categories for these assets and liabilities would include some of the same categories presented on the balance sheet (Schedule HC): (1) Cash and balances due from depository institutions, (2) Held-to-maturity securities, (3) Available-for-sale securities, (4) Securities purchased under agreements to resell, (5) Loans and leases held for sale, (6) Loans and leases, net of unearned income, (7) Less: Allowance for loan and lease losses, (8) Trading assets (other than derivatives), (9) Derivative assets, (10) Other real estate owned, (11) Other assets, (12) Securities sold under agreements to repurchase, (13) Derivative liabilities, (14) Other borrowed money (other than commercial paper), (15) Commercial paper, and (16) Other liabilities. These assets and liabilities would be presented separately for securitization trusts, asset-backed commercial paper conduits, and other VIEs. In addition, the Federal Reserve proposed to include two separate data items in new Schedule HC–V in which BHCs would report the total amounts of all other assets and all other liabilities of consolidated VIEs (i.e., all assets of consolidated VIEs that are not dedicated solely to settling obligations of the VIE and all liabilities of consolidated VIEs for which creditors have recourse to the general credit of the reporting BHC). The collection of this information would help the Federal Reserve understand the total magnitude of consolidated VIEs. These assets and liabilities would also be reported separately for securitization trusts, asset-backed commercial paper conduits, and other VIEs. The asset and liability information collected in Schedule HC–V would represent amounts included in the reporting BHC’s consolidated assets and liabilities reported on Schedule HC, Balance Sheet, i.e., after eliminating intercompany transactions. The banking agencies received one comment from a bankers’ association that addressed proposed Call Report Schedule RC–V, which is comparable to proposed FR Y–9C Schedule HC–V. The bankers’ association recommended a delayed effective date to allow sufficient time for systems modifications. Because the FR Y–9C balance sheet is completed on a consolidated basis, the VIE amounts that BHCs would report in new Schedule HC–V are amounts that, through the consolidation process, already must be reported in the VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 appropriate balance sheet asset and liability categories. These balance sheet categories, by and large, have been carried over into Schedule HC–V. Schedule HC–V distinguishes between assets of consolidated VIEs that can be used only to settle obligations of the consolidated VIEs and assets not meeting this condition as well as liabilities of consolidated VIEs for which creditors do not have recourse to the general credit of the reporting BHC and liabilities not meeting this condition. This distinction is based on existing disclosure requirements applicable to financial statements prepared in accordance with U.S. GAAP, to which the BHCs likely to have material amounts of consolidated VIE assets and liabilities to report have been subject for one year. Thus, these BHCs should have a process in place, even if manual, for segregating VIE assets and liabilities based on this distinction. The Federal Reserve recognizes that the proposed separate reporting of consolidated VIE assets and liabilities by the type of VIE activity, i.e., securitization vehicles, asset-backed commercial paper conduits, and other VIEs, goes beyond the disclosure requirements in U.S. GAAP. Otherwise, the proposed data requirements for Schedule HC–V have been based purposely on the GAAP framework. Thus, the Federal Reserve has concluded that it is appropriate to proceed with the addition of new Schedule HC–V in March 2011, as proposed. BHCs are reminded that, as mentioned above, they may provide reasonable estimates in their March 31, 2011, FR Y–9C report for any new or revised item initially required to be reported as of that date for which the requested information is not readily available. 4. Life Insurance Assets BHCs purchase and hold bank-owned life insurance (BOLI) policies as assets, the premiums for which may be used to acquire general account or separate account life insurance policies. BHCs currently report the aggregate amount of their life insurance assets in data item 5 of Schedule HC–F, Other Assets, without regard to the type of policies they hold. Many BHCs have BOLI assets, and the distinction between those life insurance policies that represent general account products and those that represent separate account products has meaning with respect to the degree of credit risk involved as well as performance measures for the life insurance assets in a volatile market environment. In a general account policy, the general PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 assets of the insurance company issuing the policy support the policy’s cash surrender value. In a separate account policy, the policy’s cash surrender value is supported by assets segregated from the general assets of the insurance carrier. Under such an arrangement, the policyholder neither owns the underlying separate account created by the insurance carrier on its behalf nor controls investment decisions in the account. Nevertheless, the policyholder assumes all investment and price risk. A number of BHCs holding separate account life insurance policies have recorded significant losses in recent years due to the volatility in the markets and the vulnerability to market fluctuations of the instruments that are investment options in separate account life insurance policies. Information distinguishing between the cash surrender values of general account and separate account life insurance policies would allow the Federal Reserve to track BHCs’ holdings of both types of life insurance policies with their differing risk characteristics and changes in their carrying amounts resulting from their performance over time. Accordingly, the Federal Reserve proposed to split data item 5 of Schedule HC–F into two data items: Data item 5.a, General account life insurance assets, and data item 5.b, Separate account life insurance assets. The banking agencies received comments from two insurance consultants and an insurance company supporting the proposed revision to provide a breakdown of life insurance assets by type of policy on the Call Report, comparable to the proposed changes to the FR Y–9C described above. However, all three commenters noted that the evolution of life insurance products in recent years has led to a third type of policy becoming more prevalent in the banking industry: Hybrid accounts. Such accounts combine features of general and separate account products by providing the additional asset protection offered by separate accounts while also providing a guaranteed minimum interestcrediting rate, which is common to general accounts. They recommended that the proposal be revised from a twoway to a three-way breakdown of life insurance assets or, although not the preferable approach, advise banking institutions with hybrid account life insurance assets to report them together with general account life insurance assets because they have more general account characteristics. Because of the Federal Reserve’s interest in being better able to understand the risk characteristics of E:\FR\FM\02MRN1.SGM 02MRN1 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices emcdonald on DSK2BSOYB1PROD with NOTICES BHCs’ holdings of life insurance assets, the Federal Reserve will implement the three-way breakdown of these assets consistent with the commenters’ recommendation. 5. Instructional Revisions A. Reporting of 1–4 Family Residential Mortgages Held for Trading in Schedule HC–P The Federal Reserve began collecting information in Schedule HC–P, 1–4 Family Residential Mortgage Banking Activities in Domestic Offices, in September 2006. At that time, the instructions for Schedule HC–C, Loans and Lease Financing Receivables, were written to indicate that loans generally could not be classified as held for trading. Therefore, all 1–4 family residential mortgage loans designated as held for sale were reportable in Schedule HC–P. In March 2008, the Federal Reserve provided instructional guidance establishing conditions under which BHCs were permitted to classify certain assets (e.g., loans) as trading and specified that loans classified as trading assets should be excluded from Schedule HC–C, Loans and Lease Financing Receivables, and reported instead in Schedule HC–D, Trading Assets and Liabilities (if the reporting threshold for this schedule were met). However, the Federal Reserve neglected to address the reporting treatment on Schedule HC–P of 1–4 family residential loans that met the conditions for classification as trading assets. Therefore, the Federal Reserve proposed to correct this by providing explicit instructional guidance that all 1–4 family residential mortgage banking activities, whether held for sale or trading purposes, are reportable on Schedule HC–P. The banking agencies received one comment from a bankers’ association on the proposed guidance on the reporting of 1–4 family residential mortgages held for trading in Call Report Schedule RC– P, comparable to the proposed guidance to the FR Y–9C described above. The commenter supported the proposed clarification and requested further clarification on the reporting of repurchases and indemnifications in this schedule. The commenter suggested separate reporting of loan repurchases from indemnifications for all subitems of Call Report Schedule RC–P, item 6, ‘‘Repurchases and indemnifications of 1–4 family residential mortgage loans during the quarter.’’ In December 2010, the Federal Reserve clarified the FR Y–9C reporting instructions for Schedule HC–P, item 6, to explain which repurchases of 1–4 family residential mortgage loans are VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 reportable in this item. Specifically, instructional guidance was provided stating that BHCs should exclude 1–4 family residential mortgage loans that have been repurchased solely at the discretion of the BHC from item 6. The Federal Reserve does not believe there is a supervisory need to separate the reporting of loan repurchases from indemnifications in Schedule HC–P, item 6. B. Maturity and Repricing Data for Assets and Liabilities at Contractual Ceilings and Floors BHCs report maturity and repricing data for debt securities (not held for trading) in Schedule HC–B, Securities. The Federal Reserve uses these data to assess, at a broad level, a BHC’s exposure to interest rate risk. The instructions for reporting the maturity and repricing data currently require that when the interest rate on a floating rate instrument has reached a contractual floor or ceiling level, which is a form of embedded option, the instrument is to be treated as ‘‘fixed rate’’ rather than ‘‘floating rate’’ until the rate is again free to float. As a result, a floating rate instrument whose interest rate has fallen to its floor or risen to its ceiling is reported based on the time remaining until its contractual maturity date rather than the time remaining until the next interest rate adjustment date (or the contractual maturity date, if earlier). This reporting treatment is designed to capture the potential effect of the embedded option under particular interest rate scenarios. The American Bankers Association (ABA) requested that the Federal Reserve reconsider the reporting treatment for floating rate instruments with contractual floors and ceilings. More specifically, the ABA recommended revising the reporting instructions so that floating rate instruments would always be reported based on the time remaining until the next interest rate adjustment date without regard to whether the rate on the instrument has reached a contractual floor or ceiling. The Federal Reserve concluded that an instructional revision was warranted, but the extent of the revision should be narrower than recommended by the ABA. The Federal Reserve concluded that when a floating rate instrument is at its contractual floor or ceiling and the embedded option has intrinsic value to the BHC, the floor or ceiling should be ignored and the instrument should be treated as a floating rate instrument. However, if the embedded option has intrinsic value to the BHC’s counterparty, the contractual floor or PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 11479 ceiling should continue to be taken into account and the instrument should be treated as a fixed rate instrument. For example, when the interest rate on a floating rate loan reaches its contractual ceiling, the embedded option represented by the ceiling has intrinsic value to the borrower and is a detriment to the BHC because the loan’s yield to the BHC is lower than what it would have been without the ceiling. When the interest rate on a floating rate loan reaches its contractual floor, the embedded option represented by the floor has intrinsic value to the BHC and is a benefit to the BHC because the loan’s yield to the BHC is higher than what it would have been without the floor. Accordingly, the Federal Reserve proposed to revise the instructions for reporting maturity and repricing data in Schedule HC–B. As proposed, the instructions would indicate that a floating rate asset that has reached its contractual ceiling and a floating rate liability that has reached its contractual floor would be treated as a fixed rate instrument and reported based on the time remaining until its contractual maturity date. In contrast, the instructions would state that a floating rate asset that has reached its contractual floor and a floating rate liability that has reached its contractual ceiling would be treated as a floating rate instrument and reported based on the time remaining until the next interest rate adjustment date (or the contractual maturity date, if earlier). The banking agencies received comments from two bankers’ associations on this proposed instructional change. One bankers’ association recommended the banking agencies adopt their proposed approach only for floating rate loans reported in Schedule RC–C, part I. This bankers’ association opposed extending the same proposed approach to the other three Call Report schedules in which repricing data are reported for certain other floating rate instruments because its ‘‘members believe that not enough research has been completed’’ to understand the effect of the proposed instructional change on how these other instruments would be reported. The other bankers’ association recommended against proceeding with the proposed instructional change because of the implementation burden associated with the multiple systems that would need to be revised. This association also observed that the revised information for floating rate instruments at contractual ceilings and floors would be commingled with the maturity and repricing information for E:\FR\FM\02MRN1.SGM 02MRN1 11480 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices all of the other instruments in the same asset or liability category. After considering the comments received, the banking agencies have decided not to change the instructions for reporting repricing information for floating rate instruments at contractual ceilings and floors. Such floating rate instruments should continue to be reported in accordance with the longstanding requirement that the instruments be treated as ‘‘fixed rate’’ rather than ‘‘floating rate’’ until their rate is again free to float. To maintain consistency between the Call Report and FR Y–9C reporting instructions, the Federal Reserve will retain the current instructions for reporting maturity and repricing information on FR Y–9C Schedule HC–B. emcdonald on DSK2BSOYB1PROD with NOTICES Revisions—FR Y–9LP The Federal Reserve proposed to make the following revision to the FR Y–9LP effective as of March 31, 2011. Troubled Debt Restructurings To be consistent with revisions proposed for the FR Y–9C, the Federal Reserve proposed to modify the instructions for Schedule PC–B— Memoranda item 8, Loans and leases of the parent restructured in compliance with modified terms, to clearly indicate that the loans to be reported in this data item should be troubled debt restructurings and to exclude leases. Also the phrase ‘‘and leases’’ would be stricken from the caption of this data item. Under GAAP, troubled debt restructurings do not include changes in lease agreements. Also consistent with the proposed change to the FR Y–9C, the Federal Reserve proposed to revise the instructions for this data item to include (currently excluded) loans to individuals for household, family, and other personal expenditures and all loans secured by 1–4 family residential properties whose terms have been modified in troubled debt restructurings. Like their comments to proposed revisions to the FR Y–9C, two bankers’ associations commented that the Federal Reserve should defer proposed FR Y–9LP instructional modifications until the FASB finalizes proposed clarifications to the accounting for troubled debt restructurings by creditors. As discussed above, ASC Subtopic 310–40 provides the accounting basis for the current reporting of restructured troubled loan information on the FR Y–9LP. To the extent the clarifications emanating from the FASB proposed accounting standards update may result in BHCs having to report certain loans as VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 troubled debt restructurings that had not previously been identified as such, this accounting outcome will arise irrespective of the proposed instructional modifications to the FR Y– 9LP. Therefore, the Federal Reserve will implement the instructional modifications for the reporting of troubled debt restructurings 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. Effective Date: March 31, 2011. Frequency: Quarterly and annually. Reporters: Bank holding companies. Annual reporting hours: FR Y–11 (quarterly): 15,966; FR Y–11 (annual): 2,768. Estimated average hours per response: FR Y–11 (quarterly): 6.80; FR Y–11 (annual): 6.80. Number of respondents: FR Y–11 (quarterly): 587; FR Y–11 (annual): 407. General description of report: This information collection is mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to sections (b)(4), (b)(6) and (b)(8) of the Freedom of Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)]. Abstract: The FR Y–11 reports collect financial information for individual non-functionally regulated U.S. nonbank subsidiaries of domestic 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 November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve received one comment from a bankers’ association recommending that the FR Y–11 and the FR 2314 be combined into a single form to enable the use of vendor software and electronic submission. The commenter stated that such functionalities are available on the FR Y–11 but are not available on the FR 2314. The Federal Reserve has offered BHCs the option of submitting their FR 2314 PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 reports electronically for several years. Any BHC interested in submitting their reports electronically should contact their Reserve Bank concerning procedures for electronic submission. Therefore, the Federal Reserve will not merge the reporting forms. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed. 3. Report title: Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. Agency form number: FR 2314. OMB control number: 7100–0073. Effective Date: March 31, 2011. Frequency: Quarterly and annually. Reporters: Foreign subsidiaries of U.S. state member banks, BHCs, and Edge or agreement corporations. Annual reporting hours: FR 2314 (quarterly): 16,394; FR 2314 (annual): 3,379. Estimated average hours per response: FR 2314 (quarterly): 6.60; FR 2314 (annual): 6.60. Number of respondents: FR 2314 (quarterly): 621; FR 2314 (annual): 512. General description of report: This information collection is mandatory (12 U.S.C. 324, 602, 625, and 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to sections (b)(4), (b)(6) and (b)(8) of the Freedom of Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)]. Abstract: The FR 2314 reports collect financial information for nonfunctionally regulated direct or indirect foreign subsidiaries of U.S. state member banks (SMBs), Edge and agreement corporations, and BHCs. Parent organizations (SMBs, Edge and agreement corporations, or BHCs) file the FR 2314 on a quarterly or annual basis according to filing criteria. The FR 2314 data are used to identify current and potential problems at the foreign subsidiaries of U.S. parent companies, to monitor the activities of U.S. banking organizations in specific countries, and to develop a better understanding of activities within the industry, in general, and of individual institutions, in particular. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. The comment period expired on January 3, 2011. The Federal E:\FR\FM\02MRN1.SGM 02MRN1 emcdonald on DSK2BSOYB1PROD with NOTICES Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices Reserve received one comment from a bankers’ association recommending that the FR Y–11 and the FR 2314 be combined into a single form to enable the use of vendor software and electronic submission. The commenter stated that such functionalities are available on the FR Y–11 but are not available on the FR 2314. The Federal Reserve has offered BHCs the option of submitting their FR 2314 reports electronically for several years. Any BHC interested in submitting their reports electronically should contact their Reserve Bank concerning procedures for electronic submission. Therefore, the Federal Reserve will not merge the reporting forms. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed. 4. Report title: Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations. Agency form number FR Y–7N. OMB control number: 7100–0125. Effective Date: March 31, 2011. Frequency: Quarterly and annually. Reporters: Foreign banking organizations. Annual reporting hours: FR Y–7N (quarterly): 4,978; FR Y–7N (annual): 1,299. Estimated average hours per response: FR Y–7N (quarterly): 6.80; FR Y–7N (annual): 6.80. Number of respondents: FR Y–7N (quarterly): 183; FR Y–7N (annual): 191. General description of report: This information collection is mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for information, in whole or in part, on any of the reporting forms can be requested in accordance with the instructions to the form, pursuant to sections (b)(4) and (b)(6) of the Freedom of Information Act [5 U.S.C. 522(b)(4) and (b)(6)]. Abstract: The FR Y–7N collects financial information for nonfunctionally regulated U.S. nonbank subsidiaries held by foreign banking organizations (FBOs) other than through a U.S. BHC, U.S. financial holding company (FHC) or U.S. bank. FBOs file the FR Y–7N on a quarterly or annual basis. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations. The comment period expired on January 3, 2011. As VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed. 5. Report title: Consolidated Report of Condition and Income for Edge and Agreement Corporations. Agency form number: FR 2886b. OMB control number: 7100–0086. Effective Date: March 31, 2011. Frequency: Quarterly. Reporters: Edge and agreement corporations. Annual reporting hours: 1,679. Estimated average hours per response: 15.15 banking corporations, 9.60 investment corporations. Number of respondents: 13 banking corporations, 42 investment corporations. General description of report: This information collection is mandatory (12 U.S.C. 602 and 625). Schedules RC–M (with the exception of item 3) and RC– V are held as confidential pursuant to section (b)(4) of the Freedom of Information Act (5 U.S.C. 552(b)(4)). Abstract: The mandatory FR 2886b comprises a balance sheet, income statement, two schedules reconciling changes in capital and reserve accounts, and 11 supporting schedules and it parallels the Call Report that commercial banks file. The Federal Reserve uses the data collected on the FR 2886b to supervise Edge corporations, identify present and potential problems, and monitor and develop a better understanding of activities within the industry. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Consolidated Report of Condition and Income for Edge and Agreement Corporations. The comment period expired on January 3, 2011. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed. Final approval under OMB delegated authority of the extension for three years, without revision of the following reports: 1. Report title: Financial Statements for Bank Holding Companies. Agency form number: FR Y–9SP, FR Y–9ES, and FR Y–9CS. OMB control number: 7100–0128. Frequency: Quarterly and annually. Reporters: Bank holding companies. Annual reporting hours: FR Y–9SP: 45,209; FR Y–9ES: 44; FR Y–9CS: 400. Estimated average hours per response: FR Y–9SP: 5.40; FR Y–9ES: 30 minutes; FR Y–9CS: 30 minutes. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 11481 Number of respondents: FR Y–9SP: 4,186; FR Y–9ES: 87; FR Y–9CS: 200. General description of report: This information collection is mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to sections (b)(4) and (b)(6) of the Freedom of Information Act (5 U.S.C. 522(b)(4), (b)(6)). Abstract: The FR Y–9SP is a parent company only financial statement filed by smaller BHCs. Respondents include BHCs with total consolidated assets of less than $500 million. This form is a simplified or abbreviated version of the more extensive parent company only financial statement for large BHCs (FR Y–9LP). This report is designed to obtain basic balance sheet and income information for the parent company, information on intangible assets, and information on intercompany transactions. The FR Y–9ES collects financial information from ESOPs that are also BHCs on their benefit plan activities. It consists of four schedules: Statement of Changes in Net Assets Available for Benefits, Statement of Net Assets Available for Benefits, Memoranda, and Notes to the Financial Statements. The FR Y–9CS is a supplemental report that may be utilized to collect additional information deemed to be critical and needed in an expedited manner from BHCs. The information is used to assess and monitor emerging issues related to BHCs. It is intended to supplement the FR Y–9 reports, which are used to monitor BHCs between on-site inspections. The data items of information included on the supplement may change as needed. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Financial Statements for Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters. 2. Report title: Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. Agency form number: FR Y–11S. OMB control number: 7100–0244. Frequency: Annually. Reporters: Bank holding companies. Annual reporting hours: 774. Estimated average hours per response: 1.0. Number of respondents: 774. E:\FR\FM\02MRN1.SGM 02MRN1 emcdonald on DSK2BSOYB1PROD with NOTICES 11482 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Notices General description of report: This information collection is mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to sections (b)(4), (b)(6), and (b)(8) of the Freedom of Information Act [5 U.S.C. 522(b)(4)]. Abstract: The FR Y–11S is an abbreviated reporting form that collects four data items: Net income, total assets, equity capital, and total off-balancesheet data items. The FR Y–11S is filed annually, as of December 31, by top-tier BHCs for each individual nonbank subsidiary (that does not meet the criteria for filing the detailed report) with total assets of at least $50 million, but less than $250 million, or with total assets greater than 1 percent of the total consolidated assets of the top-tier organization. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters. 3. Report title: Abbreviated Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. Agency form number: FR 2314S. OMB control number: 7100–0073. Frequency: Annually. Reporters: U.S. state member banks, BHCs, and Edge or agreement corporations. Annual reporting hours: 787. Estimated average hours per response: 1.0. Number of respondents: 787. General description of report: This information collection is mandatory (12 U.S.C. 324, 602, 625, and 1844(c)). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for the reporting information, in whole or in part, can be requested in accordance with the instructions to the form, pursuant to sections (b)(4), (b)(6) and (b)(8) of the Freedom of Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)]. Abstract: The FR 2314S is an abbreviated reporting form that collects four data items: Net income, total assets, equity capital, and total off-balancesheet data items. The FR 2314S is filed annually, as of December 31, for each individual subsidiary (that does not VerDate Mar<15>2010 16:34 Mar 01, 2011 Jkt 223001 meet the criteria for filing the detailed report) with assets of at least $50 million but less than $250 million, or with total assets greater than 1 percent of the total consolidated assets of the top-tier organization. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Abbreviated Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters. 4. Report title: Financial Reports of Foreign Banking Organizations. Agency form number: FR Y–7NS, FR Y–7Q. OMB control number: 7100–0125. Frequency: Annually and quarterly. Reporters: Foreign banking organizations. Annual reporting hours: FR Y–7NS: 237; FR Y–7Q (quarterly): 340; FR Y–7Q (annual): 111. Estimated average hours per response: FR Y–7NS: 1.0; FR Y–7Q (quarterly): 1.25; FR Y–7Q (annual): 1.0. Number of respondents: FR Y–7NS: 237; FR Y–7Q (quarterly): 68; FR Y–7Q (annual): 111. General description of report: This information collection is mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential treatment is not routinely given to the data in these reports. However, confidential treatment for information, in whole or in part, on any of the reporting forms can be requested in accordance with the instructions to the form, pursuant to sections (b)(4) and (b)(6) of the Freedom of Information Act [5 U.S.C. 522(b)(4) and (b)(6)]. Abstract: The FR Y–7NS collect financial information for nonfunctionally regulated U.S. nonbank subsidiaries held by FBOs other than through a U.S. BHC, U.S. FHC, or U.S. bank. The FR Y–7NS is filed annually, as of December 31, by top-tier FBOs for each individual nonbank subsidiary (that does not meet the filing criteria for filing the detailed report) with total assets of at least $50 million, but less than $250 million. The FR Y–7Q collects consolidated regulatory capital information from all FBOs either quarterly or annually. FBOs that have effectively elected to become FHCs file the FR Y–7Q quarterly. All other FBOs (those that have not elected to become FHCs) file the FR Y–7Q annually. Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 60 days on the extension, without revision, of the Financial Reports of Foreign Banking Organizations. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters. Board of Governors of the Federal Reserve System, February 24, 2011. Jennifer J. Johnson, Secretary of the Board. [FR Doc. 2011–4568 Filed 3–1–11; 8:45 am] BILLING CODE 6210–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Request for Comments on Human Subjects Protections in Scientific Studies The Presidential Commission for the Study of Bioethical Issues, Office of the Secretary, Department of Health and Human Services. ACTION: Notice. AGENCY: The Presidential Commission for the Study of Bioethical Issues is requesting public comment on the Federal and international standards for protecting the health and well-being of participants in scientific studies supported by the Federal Government. DATES: To assure consideration, comments must be received by May 2, 2011. ADDRESSES: Individuals, groups, and organizations interested in commenting on this topic may submit comments by e-mail to info@bioethics.gov or by mail to the following address: Public Commentary, The Presidential Commission for the Study of Bioethical Issues, 1425 New York Ave. NW., Suite C–100, Washington, DC 20005. FOR FURTHER INFORMATION CONTACT: Hillary Wicai Viers, Communications Director, The Presidential Commission for the Study of Bioethical Issues, 1425 New York Avenue, NW., Suite C–100, Washington, DC 20005. Telephone: 202–233–3963. E-mail: Hillary.Viers@bioethics.gov. Additional information may be obtained at http:// www.bioethics.gov. SUPPLEMENTARY INFORMATION: On November 24, 2009, the President established the Presidential Commission for the Study of Bioethical Issues (Commission) to advise him on bioethical issues generated by novel and emerging research in biomedicine and related areas of science and technology. The Commission is charged to identify and promote policies and practices that assure ethically responsible conduct of scientific research, healthcare delivery, SUMMARY: E:\FR\FM\02MRN1.SGM 02MRN1

Agencies

[Federal Register Volume 76, Number 41 (Wednesday, March 2, 2011)]
[Notices]
[Pages 11474-11482]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-4568]


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FEDERAL RESERVE SYSTEM


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

SUMMARY: Background. Notice is hereby given of the final approval of 
proposed information collections by the Board of Governors of the 
Federal Reserve System (Board) under OMB delegated authority, as per 5 
CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the 
Public). Board-approved collections of information are incorporated 
into the official OMB inventory of currently approved collections of 
information. Copies of the Paperwork Reduction Act Submission, 
supporting statements and approved collection of information 
instrument(s) are placed into OMB's public docket files. The Federal 
Reserve may not conduct or sponsor, and the respondent is not required 
to respond to, an information collection that has been extended, 
revised, or implemented on or after October 1, 1995, unless it displays 
a currently valid OMB control number.

FOR FURTHER INFORMATION CONTACT: Cynthia Ayouch, Acting Federal Reserve 
Board Clearance Officer (202-452-3829), Division of Research and 
Statistics, Board of Governors of the Federal Reserve System, 
Washington, DC 20551. Telecommunications Device for the Deaf (TDD) 
users may contact (202-263-4869), Board of Governors of the Federal 
Reserve System, Washington, DC 20551.
    OMB Desk Officer--Shagufta Ahmed --Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, Washington, DC 20503.
    Final approval under OMB delegated authority of the extension for 
three years, with revision of the following reports:
    1. Report title: Financial Statements for Bank Holding Companies.
    Agency form number: FR Y-9C, FR Y-9LP.
    OMB control number: 7100-0128.
    Effective Date: March 31, 2011.
    Frequency: Quarterly.
    Reporters: Bank holding companies.
    Estimated annual reporting hours: FR Y-9C: 188,820; FR Y-9LP: 
27,195.
    Estimated average hours per response: FR Y-9C: 45.0; FR Y-9LP: 
5.25.
    Number of respondents: FR Y-9C: 1,049; FR Y-9LP: 1,295.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in these reports. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to sections 
(b)(4) and (b)(6) of the Freedom of Information Act (5 U.S.C. 
522(b)(4), (b)(6)).
    Abstract: The FR Y-9C and the FR Y-9LP are standardized financial 
statements for the consolidated bank holding company (BHC) and its 
parent. The FR Y-9 family of reports historically has been, and 
continues to be, the primary source of financial information on BHCs 
between on-site inspections. Financial information from these reports 
is used to detect emerging financial problems, to review performance 
and conduct pre-inspection analysis, to monitor and evaluate capital 
adequacy, to evaluate BHC mergers and acquisitions, and to analyze a 
BHC's overall financial condition to ensure safe and sound operations.
    The FR Y-9C consists of standardized financial statements similar 
to the Federal Financial Institutions Examination Council (FFIEC) 
Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031 
& 041; OMB No. 7100-0036) filed by commercial banks. The FR Y-9C 
collects consolidated data from BHCs. The FR Y-9C is filed by top-tier 
BHCs with total consolidated assets of $500 million or more. (Under 
certain circumstances defined in the General Instructions, BHCs under 
$500 million may be required to file the FR Y-9C).
    The FR Y-9LP includes standardized financial statements filed 
quarterly on a parent company only basis from each BHC that files the 
FR Y-9C. In addition, for tiered BHCs, a separate FR Y-9LP must be 
filed for each lower tier BHC.
    Current Actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, with revision, of the Financial 
Statements for Bank Holding Companies. The comment period expired on 
January 3, 2011. The Federal Reserve received two comment letters from 
bankers' organizations on proposed revisions to the FR Y-9C and FR Y-
9LP. In addition, the Federal Reserve, Federal Deposit Insurance 
Corporation (FDIC), and the Office of the Comptroller of the Currency 
(the banking agencies) received nine comment letters on proposed 
revisions to the Call Reports, which parallel proposed revisions to the 
FR Y-9C, from three banks, three bankers' organizations, two bank 
insurance consultants, and an insurance company.
    No comments were received on the following revisions that were 
proposed to take effect as of March 31, 2011, and therefore the Federal 
Reserve will implement these revisions as proposed: (1) The break out 
of commercial mortgage-backed securities issued or guaranteed by U.S. 
Government agencies and sponsored agencies, (2) the break out of loans 
and other real estate owned (OREO) information covered by FDIC loss-
sharing agreements by loan and OREO category, (3) the addition of new 
data items for the total assets of captive insurance and reinsurance 
subsidiaries, (4) the addition of new income statement items for credit 
valuation adjustments and debit valuation adjustments included in 
trading revenues (for BHCs with total assets of $100 billion or more), 
(5) the revision of reporting instructions for construction lending, 
and (6) the collection of expanded information on the quarterly-
averages schedule.
    The following section of this notice describes the remaining 
proposed FR Y-9C and FR Y-9LP report changes and discusses the Federal 
Reserve's evaluation of the comments received on the proposed changes. 
After considering the comments, the Federal Reserve will move forward 
in 2011 with the proposed reporting changes after making certain 
modifications in response to the comments.
    The Federal Reserve recognizes institutions' need for lead time to 
prepare for reporting changes. Thus, consistent with longstanding 
practice, for the March 31, 2011, report date, BHCs may provide 
reasonable estimates for any new or revised FR Y-9C data item initially 
required to be reported as of that date for which the requested 
information is not readily available. Furthermore, the specific wording 
of the captions for the new or revised FR Y-9C data items discussed in 
this notice and the numbering of these data items should be regarded as 
preliminary.

Revisions--FR Y-9C

Revisions Related to Call Report Revisions

    The Federal Reserve proposed to make the following revisions to the 
FR Y-9C to parallel proposed changes to the Call Report. BHCs have 
commented that changes should be made to the FR Y-9C in a manner 
consistent with

[[Page 11475]]

changes to the Call Report to reduce reporting burden.
1. Troubled Debt Restructurings
    The Federal Reserve proposed that BHCs report additional detail on 
loans that have undergone troubled debt restructurings in Schedule HC-
C, Loans and Lease Financing Receivables, and Schedule HC-N, Past Due 
and Nonaccrual Loans, Leases, and Other Assets. More specifically, 
Schedule HC-C, Memorandum item 1.b, Other loans and all leases, 
restructured and in compliance with modified terms, and Schedule HC-N, 
Memorandum item 1.b, restructured, Other loans and all leases, included 
in Schedule HC-N, would be broken out to provide information on 
restructured troubled loans for many of the loan categories reported in 
the bodies of Schedule HC-C and Schedule HC-N. The breakout would also 
include Loans to individuals for household, family, and other personal 
expenditures, whose terms have been modified in troubled debt 
restructurings, which are currently excluded from the reporting of 
troubled debt restructurings.
    In the aggregate, troubled debt restructurings for all FR Y-9C 
respondents have grown from $11.4 billion at year-end 2007 to $106.2 
billion as of March 31, 2010. The proposed additional detail on 
troubled debt restructurings in Schedules HC-C and HC-N would enable 
the Federal Reserve to better understand the level of restructuring 
activity at BHCs, the categories of loans involved in this activity, 
and whether BHCs are working with their borrowers to modify and 
restructure loans. In particular, to encourage banking organizations to 
work constructively with their commercial borrowers, the banking 
agencies recently \1\ issued guidance on commercial real estate loan 
workouts and small business lending. While this guidance has explained 
the agencies' expectations for prudent workouts, the Federal Reserve 
and the industry would benefit from additional reliable data outside of 
the examination process to assess restructuring activity at BHCs for 
commercial real estate loans and commercial and industrial loans. 
Further, it is important to separately identify commercial real estate 
loan restructurings from commercial and industrial loan restructurings 
given that the value of the real estate collateral is a consideration 
in a BHC's decision to modify the terms of a commercial real estate 
loan in a troubled debt restructuring, but such collateral protection 
would normally be absent from commercial and industrial loans for which 
a loan modification is being explored because of borrowers' financial 
difficulties.
---------------------------------------------------------------------------

    \1\ Interagency Statement on Meeting the Credit Needs of 
Creditworthy Small Business Borrowers, issued February 12, 2010, and 
Policy Statement on Prudent Commercial Real Estate Loan Workouts, 
issued October 30, 2009.
---------------------------------------------------------------------------

    It is also anticipated that other loan categories will experience 
continued workout activity in the coming months given that most asset 
classes have been adversely affected by the recent recession. This 
effect is evidenced by the increase in past due and nonaccrual assets 
across virtually all asset classes over the past two to three years.
    Currently, BHCs report loans and leases restructured and in 
compliance with their modified terms (Schedule HC-C, Memorandum item 1) 
with separate disclosure of (a) loans secured by 1-4 family residential 
properties (in domestic offices) and (b) other loans and all leases 
(excluding loans to individuals for household, family, and other 
personal expenditures). This same breakout is reflected in Schedule HC-
N, Memorandum item 1, for past due and nonaccrual restructured troubled 
loans. The broad category of other loans in Schedule HC-C, Memorandum 
item 1.b, and Schedule HC-N, Memorandum item 1.b, does not permit an 
adequate analysis of troubled debt restructurings. In addition, the 
disclosure requirements for troubled debt restructurings under 
generally accepted accounting principles (GAAP) do not exempt 
restructurings of loans to individuals for household, family, and other 
personal expenditures. Therefore, if more detail were to be added to 
match the reporting of loans in Schedule HC-C and Schedule HC-N, the 
new data would provide the Federal Reserve with the level of 
information necessary to assess BHCs' troubled debt restructurings to 
the same extent that other loan quality and performance indicators can 
be assessed. However, the Federal Reserve notes that, under GAAP, 
troubled debt restructurings do not include changes in lease agreements 
\2\ and therefore propose to exclude leases from Schedule HC-C, 
Memorandum item 1, and from Schedule HC-N, Memorandum item 1, and 
strike the phrase ``and all other leases'' from the caption of these 
data items.
---------------------------------------------------------------------------

    \2\ Accounting Standards Codification paragraph 470-60-15-11.
---------------------------------------------------------------------------

    Thus, the proposed breakdowns of existing Memorandum item 1.b in 
both Schedule HC-C and Schedule HC-N would create new Memorandum items 
in both schedules covering troubled debt restructurings of 1-4 family 
residential construction loans, Other construction loans and all land 
development and other land loans, Loans secured by multifamily (5 or 
more) residential properties, Loans secured by owner-occupied nonfarm 
nonresidential properties, Loans secured by other nonfarm 
nonresidential properties, Commercial and industrial loans, and All 
other loans and all leases (including loans to individuals for 
household, family, and other personal expenditures).\3\ If restructured 
loans in any category of loans, as defined in Schedule HC-C, included 
in restructured, All other loans, exceeds 10 percent of the amount of 
restructured, All other loans, the amount of restructured loans in this 
category or categories would be itemized and described.
---------------------------------------------------------------------------

    \3\ For BHCs with foreign offices, the Memorandum items for 
restructured real estate loans would cover such loans in domestic 
offices. In addition, BHCs would also provide a breakdown of 
restructured commercial and industrial loans between U.S. and non-
U.S. addressees.
---------------------------------------------------------------------------

    Finally, Schedule HC-C, Memorandum item 1, and Schedule HC-N, 
Memorandum item 1, are intended to capture data on loans that have 
undergone troubled debt restructurings as that term is defined in GAAP. 
However, the captions of these two Memorandum items include only the 
term ``restructured'' rather than explicitly mentioning troubled debt 
restructurings, which has led to questions about the scope of these 
Memorandum items. Accordingly, the Federal Reserve proposed to revise 
the captions so that they clearly indicate that the loans to be 
reported in Schedule HC-C, Memorandum item 1, and Schedule HC-N, 
Memorandum item 1, are troubled debt restructurings.
    The banking agencies received comments from three bankers' 
associations on the proposed additional detail in the Call Report on 
loans that have undergone troubled debt restructurings, comparable to 
the proposed changes to the FR Y-9C described above. Two of the 
commenters recommended the banking agencies defer the proposed troubled 
debt restructuring revisions, including the new breakdowns by loan 
category, until the Financial Accounting Standards Board (FASB) 
finalizes proposed clarifications to the accounting for troubled debt 
restructurings by creditors.\4\ In addition, two of the bankers' 
associations recommended retaining the term ``restructured'' in the 
caption titles

[[Page 11476]]

instead of changing to the term ``troubled debt restructurings,'' 
stating that changing this term would result in the collection of only 
a subset of total restructurings and would misrepresent banks' efforts 
to work with their customers.
---------------------------------------------------------------------------

    \4\ FASB Proposed Accounting Standards Update (ASU): Receivables 
(Topic 310), Clarifications to Accounting for Troubled Debt 
Restructurings by Creditors.
---------------------------------------------------------------------------

    As noted above, BHCs currently report loans and leases restructured 
and in compliance with their modified terms in Schedule HC-C, 
Memorandum item 1, and report past due and nonaccrual restructured 
loans in Schedule HC-N, Memorandum item 1. Although the captions for 
these line items do not use the term ``troubled debt restructurings,'' 
the line item instructions generally characterize loans reported in 
these items as troubled debt restructurings and direct the reader to 
the Glossary entry for ``troubled debt restructurings'' for further 
information. Furthermore, the Glossary entry states that ``all loans 
that have undergone troubled debt restructurings and that are in 
compliance with their modified terms must be reported as restructured 
loans in Schedule HC-C, Memorandum item 1.'' Therefore, the Federal 
Reserve's longstanding intent has been to collect information on 
troubled debt restructurings in these line items, and these items were 
not designed to include loan modifications and restructurings that do 
not constitute troubled debt restructurings (e.g., where a BHC grants a 
concession to a borrower who is not experiencing financial 
difficulties).
    The accounting standards for troubled debt restructurings are set 
forth in Accounting Standards Codification (ASC) Subtopic 310-40, 
Receivables--Troubled Debt Restructurings by Creditors (formerly FASB 
Statement No. 15, ``Accounting by Debtors and Creditors for Troubled 
Debt Restructurings,'' as amended by FASB Statement No. 114, 
``Accounting by Creditors for Impairment of a Loan''). This is the 
accounting basis for the current reporting of restructured troubled 
loans in existing Schedule HC-C, Memorandum item 1, and Schedule HC-N, 
Memorandum item 1. The proposed breakdown of the total amount of 
restructured ``other loans'' in existing Memorandum item 1.b in both 
schedules would result in additional detail on loans already within the 
scope of ASC Subtopic 310-40. To the extent the clarifications 
emanating from the FASB proposed accounting standards update may result 
in BHCs having to report certain loans as troubled debt restructurings 
that had not previously been identified as such, this accounting 
outcome will arise irrespective of the proposed breakdown of the 
``other loans'' category in Schedule HC-C, Memorandum item 1, and 
Schedule HC-N, Memorandum item 1. Therefore, the Federal Reserve will 
implement the new breakdown for the reporting of troubled debt 
restructurings as proposed.
2. Auto Loans
    The Federal Reserve proposed to add a breakdown of the other 
consumer loans \5\ or all other loans loan categories contained in 
several schedules in order to separately collect information on auto 
loans. The affected schedules would be Schedule HC-C, Loans and Lease 
Financing Receivables; Schedule HC-D, Trading Assets and Liabilities; 
Schedule HC-K, Quarterly Averages; Schedule HC-N, Past Due and 
Nonaccrual Loans, Leases, and Other Assets; Schedule HI, Income 
Statement; and Schedule HI-B, Part I, Charge-offs and Recoveries on 
Loans and Leases. Auto loans would include loans arising from retail 
sales of passenger cars and other vehicles such as minivans, vans, 
sport-utility vehicles, pickup trucks, and similar light trucks for 
personal use. This new loan category would exclude loans to finance 
fleet sales, personal cash loans secured by automobiles already paid 
for, loans to finance the purchase of commercial vehicles and farm 
equipment, and lease financing.
---------------------------------------------------------------------------

    \5\ As described later in this notice, the other consumer loans 
loan category was proposed to be added to Schedule HC-K beginning 
March 31, 2011.
---------------------------------------------------------------------------

    Automobile loans are a significant consumer business for many large 
BHCs. Because of the limited disclosure of auto lending on existing 
regulatory reports, supervisory oversight of auto lending is presently 
diminished by the need to rely on the examination process and public 
information sources that provide overall market information but not 
data on idiosyncratic risks.
    Roughly 65 percent of new vehicle sales and 40 percent of used 
vehicle sales are funded with auto loans. According to household 
surveys and data on loan originations, commercial banks are an 
important source of auto loans. In 2008, this sector originated 
approximately one-third of all auto loans. Finance companies, both 
independent and those affiliated with auto manufacturers, originated a 
bit more than one-third, while credit unions originated a bit less than 
one-quarter. In addition to originating auto loans, some banks purchase 
auto loans originated by other entities, which suggests that commercial 
banks could be the largest holder of auto loans.
    Despite the importance of BHCs to the auto loan market, the Federal 
Reserve knows less about BHCs' holdings of auto loans than is known 
about finance company, credit union, and savings association holdings 
of these loans. All nonbank depository institutions are required to 
report auto loans on their respective regulatory reports, including 
savings associations, which originate less than 5 percent of auto 
loans. On their regulatory reports, credit unions must provide not only 
the outstanding amount of new and used auto loans, but also the average 
interest rate and the number of loans. In a monthly survey, the Federal 
Reserve collects information on the amount of auto loans held by 
finance companies. As a consequence, during the financial crisis when 
funds were scarce for finance companies in general and the finance 
companies affiliated with automakers in particular, a lack of data on 
auto loans at banks hindered the Federal Reserve's ability to estimate 
the extent to which BHCs were filling in the gap in auto lending left 
by the finance companies.
    Additional disclosure regarding consolidated auto loans on the FR 
Y-9C is especially important with the implementation of the amendments 
to FASBASC Topics 860, Transfers and Servicing, and 810, 
Consolidations, resulting from ASU No. 2009-16,\6\ and ASU No. 2009-
17,\7\ respectively. Until 2010, Schedule HC-S, Servicing, 
Securitization, and Asset Sale Activities, had provided the best 
supervisory information on auto lending because it included a separate 
breakout of securitized auto loans outstanding as well as securitized 
auto loan delinquencies and charge-offs. The accounting changes brought 
about by the amendments to ASC Topics 860 and 810, however, mean that 
if the auto loan securitization vehicle is now required to be 
consolidated, securitized auto lending previously reported on Schedule 
HC-S will be grouped as part of other consumer loans or all other loans 
on Schedules HC-C, HC-K, HC-N, HI, and HI-B, Part I, which diminishes 
supervisors' ability to assess auto loan exposures and performance.
---------------------------------------------------------------------------

    \6\ Formerly Statement of Financial Accounting Standards (SFAS) 
No. 166, Accounting for Transfers of Financial Assets (FAS 166).
    \7\ Formerly SFAS No. 167, Amendments to FASB Interpretation No. 
46(R) (FAS 167).
---------------------------------------------------------------------------

    Finally, separating auto lending from other consumer loans will 
assist the Federal Reserve in understanding consumer lending activities 
at individual institutions. When an institution holds both auto loans 
and other types of consumer loans (other than credit cards, which are 
currently reported separately), the current

[[Page 11477]]

combined reporting of these loans in the FR Y-9C tends to mask any 
significant differences that may exist in the performance of these 
portfolios. For example, a BHC could have a sizeable auto loan 
portfolio with low loan losses, but its other consumer lending, which 
could consist primarily of unsecured loans, could exhibit very high 
loss rates. The current blending of these divergent portfolios into a 
single loan category makes it difficult to adequately monitor consumer 
loan performance.
    The banking agencies received three comments from banks and one 
comment from a bankers' association on the proposal to separately 
collect information on automobile loans in the Call Report schedules 
containing loan category data, comparable to the proposed changes to 
the FR Y-9C described above. The three banks requested an exemption 
from the proposed reporting requirements for smaller banks, with one of 
the banks seeking the exemption only for reporting auto loan interest 
income and quarterly averages. The bankers' association stated that 
this revision should not create a significant burden for future loans 
because core data processors generally have the ability to break out 
loan types, but it also asked for clarification on the reporting for 
situations in which auto loans are extended for multiple purposes. In 
addition, the bankers' association observed that some community banks 
do not have data readily available on the types or purposes of existing 
consumer loans, which would prevent them from determining the purpose 
of loans collateralized by autos, i.e., for the purchase of the auto or 
for some other purpose, without searching paper loan files.
    After considering these comments, the Federal Reserve continues to 
believe the reporting of information on auto loans from all respondent 
BHCs is necessary for the Federal Reserve to carry out its supervisory 
and regulatory responsibilities and meet other public policy purposes. 
However, the Federal Reserve agrees that the reporting of interest 
income and quarterly averages for auto loans may be particularly 
burdensome for BHCs to report. Therefore, the Federal Reserve will not 
implement the proposed collection of auto loan data on Schedule HI, 
Income Statement, or Schedule HC-K, Quarterly Averages, in 2011. 
Instead, the Federal Reserve will evaluate the auto loan data that will 
begin to be collected in the other FR Y-9C schedules in March 2011 and 
reconsider whether to collect data on interest income and quarterly 
averages for auto loans. A decision to propose to collect auto loan 
interest income and quarterly averages would be subject to notice and 
comment.
    Regarding the request for clarification of the reporting treatment 
for auto loans extended for multiple purposes and existing consumer 
loans with autos as collateral, the Federal Reserve has concluded that, 
to reduce burden, all consumer loans originated or purchased before 
April 1, 2011, that are collateralized by automobiles, regardless of 
the purpose of the loan, should be classified as auto loans and 
included in the new FR Y-9C items for auto loans. For consumer loans 
originated or purchased on or after April 1, 2011, BHCs should exclude 
from auto loans any personal cash loans secured by automobiles already 
paid for and consumer loans where some of the proceeds are used to 
purchase an auto and the remainder of the proceeds are used for other 
purposes.
3. Variable Interest Entities
    In June 2009, the FASB issued accounting standards that have 
changed the way entities account for securitizations and special 
purpose entities (SPE). ASU No. 2009-16 (formerly FAS 166) revised ASC 
Topic 860, Transfers and Servicing, by eliminating the concept of a 
qualifying special-purpose entity (QSPE) and changing the requirements 
for derecognizing financial assets. ASU No. 2009-17 (formerly FAS 167) 
revised ASC Topic 810, Consolidations, by changing how a banking 
organization or other company determines when an entity that is 
insufficiently capitalized or is not controlled through voting or 
similar rights, for example a Variable Interest Entity (VIE), should be 
consolidated. For most banking organizations, ASU Nos. 2009-16 and 
2009-17 took effect January 1, 2010.
    Under ASC Topic 810, as amended, determining whether a BHC is 
required to consolidate a VIE depends on a qualitative analysis of 
whether that BHC has a ``controlling financial interest'' in the VIE 
and is therefore the primary beneficiary of the VIE. The analysis 
focuses on the BHC's power over and interest in the VIE. With the 
removal of the QSPE concept from GAAP that was brought about in amended 
ASC Topic 860, a BHC that transferred financial assets to an SPE that 
met the definition of a QSPE before the effective date of these amended 
accounting standards was required to evaluate whether, pursuant to 
amended ASC Topic 810, it must begin to consolidate the assets, 
liabilities, and equity of the SPE as of that effective date. Thus, 
when implementing amended ASC Topics 860 and 810 at the beginning of 
2010, BHCs began to consolidate certain previously off-balance-sheet 
securitization vehicles, asset-backed commercial paper conduits, and 
other structures. Going forward, BHCs with variable interests in new 
VIEs must evaluate whether they have a controlling financial interest 
in these entities and, if so, consolidate them. In addition, BHCs must 
continually reassess whether they are the primary beneficiary of VIEs 
in which they have variable interests.
    For those VIEs that banks must consolidate, the Federal Reserve's 
FR Y-9C instructional guidance advises institutions to report the 
assets and liabilities of these VIEs on the balance sheet (Schedule HC) 
in the category appropriate to the asset or liability. However, ASC 
paragraph 810-10-45-25 \8\ requires a reporting entity to present 
``separately on the face of the statement of financial position: a. 
Assets of a consolidated VIE that can be used only to settle 
obligations of the consolidated VIE [and] b. Liabilities of a 
consolidated VIE for which creditors (or beneficial interest holders) 
do not have recourse to the general credit of the primary 
beneficiary.'' This requirement has been interpreted to mean that 
``each line item of the consolidated balance sheet should differentiate 
which portion of those amounts meet the separate presentation 
conditions.'' \9\ In requiring separate presentation for these assets 
and liabilities, the FASB agreed with commenters on its proposed 
accounting standard on consolidation that ``separate presentation * * * 
would provide transparent and useful information about an enterprise's 
involvement and associated risks in a variable interest entity.'' \10\ 
The Federal Reserve concurs that separate presentation would provide 
similar benefits to them and other FR Y-9C users, particularly since 
data on securitized assets that are reconsolidated is no longer 
reported on Schedule HC-S, Servicing, Securitization, and Asset Sale 
Activities.
---------------------------------------------------------------------------

    \8\ Formerly paragraph 22A of FIN 46(R), as amended by FAS 167.
    \9\ Deloitte & Touche LLP, ``Back on-balance sheet: Observations 
from the adoption of FAS 167,'' May 2010, page 4 (http://www.deloitte.com/view/en_US/us/Services/audit-enterprise-risk-services/Financial-Accounting-Reporting/f3a70ca28d9f8210VgnVCM200000bb42f00aRCRD.htm).
    \10\ See paragraphs A80 and A81 of FAS 167.
---------------------------------------------------------------------------

    Consistent with the presentation requirements discussed above, the 
Federal Reserve proposed to add a new Schedule HC-V, Variable Interest 
Entities, to the FR Y-9C in which BHCs would report a breakdown of the 
assets of consolidated VIEs that can be used

[[Page 11478]]

only to settle obligations of the consolidated VIEs and liabilities of 
consolidated VIEs for which creditors do not have recourse to the 
general credit of the reporting BHC. The following proposed categories 
for these assets and liabilities would include some of the same 
categories presented on the balance sheet (Schedule HC): (1) Cash and 
balances due from depository institutions, (2) Held-to-maturity 
securities, (3) Available-for-sale securities, (4) Securities purchased 
under agreements to resell, (5) Loans and leases held for sale, (6) 
Loans and leases, net of unearned income, (7) Less: Allowance for loan 
and lease losses, (8) Trading assets (other than derivatives), (9) 
Derivative assets, (10) Other real estate owned, (11) Other assets, 
(12) Securities sold under agreements to repurchase, (13) Derivative 
liabilities, (14) Other borrowed money (other than commercial paper), 
(15) Commercial paper, and (16) Other liabilities. These assets and 
liabilities would be presented separately for securitization trusts, 
asset-backed commercial paper conduits, and other VIEs.
    In addition, the Federal Reserve proposed to include two separate 
data items in new Schedule HC-V in which BHCs would report the total 
amounts of all other assets and all other liabilities of consolidated 
VIEs (i.e., all assets of consolidated VIEs that are not dedicated 
solely to settling obligations of the VIE and all liabilities of 
consolidated VIEs for which creditors have recourse to the general 
credit of the reporting BHC). The collection of this information would 
help the Federal Reserve understand the total magnitude of consolidated 
VIEs. These assets and liabilities would also be reported separately 
for securitization trusts, asset-backed commercial paper conduits, and 
other VIEs. The asset and liability information collected in Schedule 
HC-V would represent amounts included in the reporting BHC's 
consolidated assets and liabilities reported on Schedule HC, Balance 
Sheet, i.e., after eliminating intercompany transactions.
    The banking agencies received one comment from a bankers' 
association that addressed proposed Call Report Schedule RC-V, which is 
comparable to proposed FR Y-9C Schedule HC-V. The bankers' association 
recommended a delayed effective date to allow sufficient time for 
systems modifications.
    Because the FR Y-9C balance sheet is completed on a consolidated 
basis, the VIE amounts that BHCs would report in new Schedule HC-V are 
amounts that, through the consolidation process, already must be 
reported in the appropriate balance sheet asset and liability 
categories. These balance sheet categories, by and large, have been 
carried over into Schedule HC-V. Schedule HC-V distinguishes between 
assets of consolidated VIEs that can be used only to settle obligations 
of the consolidated VIEs and assets not meeting this condition as well 
as liabilities of consolidated VIEs for which creditors do not have 
recourse to the general credit of the reporting BHC and liabilities not 
meeting this condition. This distinction is based on existing 
disclosure requirements applicable to financial statements prepared in 
accordance with U.S. GAAP, to which the BHCs likely to have material 
amounts of consolidated VIE assets and liabilities to report have been 
subject for one year. Thus, these BHCs should have a process in place, 
even if manual, for segregating VIE assets and liabilities based on 
this distinction.
    The Federal Reserve recognizes that the proposed separate reporting 
of consolidated VIE assets and liabilities by the type of VIE activity, 
i.e., securitization vehicles, asset-backed commercial paper conduits, 
and other VIEs, goes beyond the disclosure requirements in U.S. GAAP. 
Otherwise, the proposed data requirements for Schedule HC-V have been 
based purposely on the GAAP framework. Thus, the Federal Reserve has 
concluded that it is appropriate to proceed with the addition of new 
Schedule HC-V in March 2011, as proposed. BHCs are reminded that, as 
mentioned above, they may provide reasonable estimates in their March 
31, 2011, FR Y-9C report for any new or revised item initially required 
to be reported as of that date for which the requested information is 
not readily available.
4. Life Insurance Assets
    BHCs purchase and hold bank-owned life insurance (BOLI) policies as 
assets, the premiums for which may be used to acquire general account 
or separate account life insurance policies. BHCs currently report the 
aggregate amount of their life insurance assets in data item 5 of 
Schedule HC-F, Other Assets, without regard to the type of policies 
they hold.
    Many BHCs have BOLI assets, and the distinction between those life 
insurance policies that represent general account products and those 
that represent separate account products has meaning with respect to 
the degree of credit risk involved as well as performance measures for 
the life insurance assets in a volatile market environment. In a 
general account policy, the general assets of the insurance company 
issuing the policy support the policy's cash surrender value. In a 
separate account policy, the policy's cash surrender value is supported 
by assets segregated from the general assets of the insurance carrier. 
Under such an arrangement, the policyholder neither owns the underlying 
separate account created by the insurance carrier on its behalf nor 
controls investment decisions in the account. Nevertheless, the 
policyholder assumes all investment and price risk.
    A number of BHCs holding separate account life insurance policies 
have recorded significant losses in recent years due to the volatility 
in the markets and the vulnerability to market fluctuations of the 
instruments that are investment options in separate account life 
insurance policies. Information distinguishing between the cash 
surrender values of general account and separate account life insurance 
policies would allow the Federal Reserve to track BHCs' holdings of 
both types of life insurance policies with their differing risk 
characteristics and changes in their carrying amounts resulting from 
their performance over time. Accordingly, the Federal Reserve proposed 
to split data item 5 of Schedule HC-F into two data items: Data item 
5.a, General account life insurance assets, and data item 5.b, Separate 
account life insurance assets.
    The banking agencies received comments from two insurance 
consultants and an insurance company supporting the proposed revision 
to provide a breakdown of life insurance assets by type of policy on 
the Call Report, comparable to the proposed changes to the FR Y-9C 
described above. However, all three commenters noted that the evolution 
of life insurance products in recent years has led to a third type of 
policy becoming more prevalent in the banking industry: Hybrid 
accounts. Such accounts combine features of general and separate 
account products by providing the additional asset protection offered 
by separate accounts while also providing a guaranteed minimum 
interest-crediting rate, which is common to general accounts. They 
recommended that the proposal be revised from a two-way to a three-way 
breakdown of life insurance assets or, although not the preferable 
approach, advise banking institutions with hybrid account life 
insurance assets to report them together with general account life 
insurance assets because they have more general account 
characteristics.
    Because of the Federal Reserve's interest in being better able to 
understand the risk characteristics of

[[Page 11479]]

BHCs' holdings of life insurance assets, the Federal Reserve will 
implement the three-way breakdown of these assets consistent with the 
commenters' recommendation.
5. Instructional Revisions
    A. Reporting of 1-4 Family Residential Mortgages Held for Trading 
in Schedule HC-P
    The Federal Reserve began collecting information in Schedule HC-P, 
1-4 Family Residential Mortgage Banking Activities in Domestic Offices, 
in September 2006. At that time, the instructions for Schedule HC-C, 
Loans and Lease Financing Receivables, were written to indicate that 
loans generally could not be classified as held for trading. Therefore, 
all 1-4 family residential mortgage loans designated as held for sale 
were reportable in Schedule HC-P. In March 2008, the Federal Reserve 
provided instructional guidance establishing conditions under which 
BHCs were permitted to classify certain assets (e.g., loans) as trading 
and specified that loans classified as trading assets should be 
excluded from Schedule HC-C, Loans and Lease Financing Receivables, and 
reported instead in Schedule HC-D, Trading Assets and Liabilities (if 
the reporting threshold for this schedule were met). However, the 
Federal Reserve neglected to address the reporting treatment on 
Schedule HC-P of 1-4 family residential loans that met the conditions 
for classification as trading assets. Therefore, the Federal Reserve 
proposed to correct this by providing explicit instructional guidance 
that all 1-4 family residential mortgage banking activities, whether 
held for sale or trading purposes, are reportable on Schedule HC-P.
    The banking agencies received one comment from a bankers' 
association on the proposed guidance on the reporting of 1-4 family 
residential mortgages held for trading in Call Report Schedule RC-P, 
comparable to the proposed guidance to the FR Y-9C described above. The 
commenter supported the proposed clarification and requested further 
clarification on the reporting of repurchases and indemnifications in 
this schedule. The commenter suggested separate reporting of loan 
repurchases from indemnifications for all subitems of Call Report 
Schedule RC-P, item 6, ``Repurchases and indemnifications of 1-4 family 
residential mortgage loans during the quarter.''
    In December 2010, the Federal Reserve clarified the FR Y-9C 
reporting instructions for Schedule HC-P, item 6, to explain which 
repurchases of 1-4 family residential mortgage loans are reportable in 
this item. Specifically, instructional guidance was provided stating 
that BHCs should exclude 1-4 family residential mortgage loans that 
have been repurchased solely at the discretion of the BHC from item 6. 
The Federal Reserve does not believe there is a supervisory need to 
separate the reporting of loan repurchases from indemnifications in 
Schedule HC-P, item 6.
B. Maturity and Repricing Data for Assets and Liabilities at 
Contractual Ceilings and Floors
    BHCs report maturity and repricing data for debt securities (not 
held for trading) in Schedule HC-B, Securities. The Federal Reserve 
uses these data to assess, at a broad level, a BHC's exposure to 
interest rate risk. The instructions for reporting the maturity and 
repricing data currently require that when the interest rate on a 
floating rate instrument has reached a contractual floor or ceiling 
level, which is a form of embedded option, the instrument is to be 
treated as ``fixed rate'' rather than ``floating rate'' until the rate 
is again free to float. As a result, a floating rate instrument whose 
interest rate has fallen to its floor or risen to its ceiling is 
reported based on the time remaining until its contractual maturity 
date rather than the time remaining until the next interest rate 
adjustment date (or the contractual maturity date, if earlier). This 
reporting treatment is designed to capture the potential effect of the 
embedded option under particular interest rate scenarios.
    The American Bankers Association (ABA) requested that the Federal 
Reserve reconsider the reporting treatment for floating rate 
instruments with contractual floors and ceilings. More specifically, 
the ABA recommended revising the reporting instructions so that 
floating rate instruments would always be reported based on the time 
remaining until the next interest rate adjustment date without regard 
to whether the rate on the instrument has reached a contractual floor 
or ceiling.
    The Federal Reserve concluded that an instructional revision was 
warranted, but the extent of the revision should be narrower than 
recommended by the ABA. The Federal Reserve concluded that when a 
floating rate instrument is at its contractual floor or ceiling and the 
embedded option has intrinsic value to the BHC, the floor or ceiling 
should be ignored and the instrument should be treated as a floating 
rate instrument. However, if the embedded option has intrinsic value to 
the BHC's counterparty, the contractual floor or ceiling should 
continue to be taken into account and the instrument should be treated 
as a fixed rate instrument. For example, when the interest rate on a 
floating rate loan reaches its contractual ceiling, the embedded option 
represented by the ceiling has intrinsic value to the borrower and is a 
detriment to the BHC because the loan's yield to the BHC is lower than 
what it would have been without the ceiling. When the interest rate on 
a floating rate loan reaches its contractual floor, the embedded option 
represented by the floor has intrinsic value to the BHC and is a 
benefit to the BHC because the loan's yield to the BHC is higher than 
what it would have been without the floor.
    Accordingly, the Federal Reserve proposed to revise the 
instructions for reporting maturity and repricing data in Schedule HC-
B. As proposed, the instructions would indicate that a floating rate 
asset that has reached its contractual ceiling and a floating rate 
liability that has reached its contractual floor would be treated as a 
fixed rate instrument and reported based on the time remaining until 
its contractual maturity date. In contrast, the instructions would 
state that a floating rate asset that has reached its contractual floor 
and a floating rate liability that has reached its contractual ceiling 
would be treated as a floating rate instrument and reported based on 
the time remaining until the next interest rate adjustment date (or the 
contractual maturity date, if earlier).
    The banking agencies received comments from two bankers' 
associations on this proposed instructional change. One bankers' 
association recommended the banking agencies adopt their proposed 
approach only for floating rate loans reported in Schedule RC-C, part 
I. This bankers' association opposed extending the same proposed 
approach to the other three Call Report schedules in which repricing 
data are reported for certain other floating rate instruments because 
its ``members believe that not enough research has been completed'' to 
understand the effect of the proposed instructional change on how these 
other instruments would be reported. The other bankers' association 
recommended against proceeding with the proposed instructional change 
because of the implementation burden associated with the multiple 
systems that would need to be revised. This association also observed 
that the revised information for floating rate instruments at 
contractual ceilings and floors would be commingled with the maturity 
and repricing information for

[[Page 11480]]

all of the other instruments in the same asset or liability category.
    After considering the comments received, the banking agencies have 
decided not to change the instructions for reporting repricing 
information for floating rate instruments at contractual ceilings and 
floors. Such floating rate instruments should continue to be reported 
in accordance with the longstanding requirement that the instruments be 
treated as ``fixed rate'' rather than ``floating rate'' until their 
rate is again free to float. To maintain consistency between the Call 
Report and FR Y-9C reporting instructions, the Federal Reserve will 
retain the current instructions for reporting maturity and repricing 
information on FR Y-9C Schedule HC-B.

Revisions--FR Y-9LP

    The Federal Reserve proposed to make the following revision to the 
FR Y-9LP effective as of March 31, 2011.

Troubled Debt Restructurings

    To be consistent with revisions proposed for the FR Y-9C, the 
Federal Reserve proposed to modify the instructions for Schedule PC-B--
Memoranda item 8, Loans and leases of the parent restructured in 
compliance with modified terms, to clearly indicate that the loans to 
be reported in this data item should be troubled debt restructurings 
and to exclude leases. Also the phrase ``and leases'' would be stricken 
from the caption of this data item. Under GAAP, troubled debt 
restructurings do not include changes in lease agreements. Also 
consistent with the proposed change to the FR Y-9C, the Federal Reserve 
proposed to revise the instructions for this data item to include 
(currently excluded) loans to individuals for household, family, and 
other personal expenditures and all loans secured by 1-4 family 
residential properties whose terms have been modified in troubled debt 
restructurings.
    Like their comments to proposed revisions to the FR Y-9C, two 
bankers' associations commented that the Federal Reserve should defer 
proposed FR Y-9LP instructional modifications until the FASB finalizes 
proposed clarifications to the accounting for troubled debt 
restructurings by creditors. As discussed above, ASC Subtopic 310-40 
provides the accounting basis for the current reporting of restructured 
troubled loan information on the FR Y-9LP. To the extent the 
clarifications emanating from the FASB proposed accounting standards 
update may result in BHCs having to report certain loans as troubled 
debt restructurings that had not previously been identified as such, 
this accounting outcome will arise irrespective of the proposed 
instructional modifications to the FR Y-9LP. Therefore, the Federal 
Reserve will implement the instructional modifications for the 
reporting of troubled debt restructurings 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.
    Effective Date: March 31, 2011.
    Frequency: Quarterly and annually.
    Reporters: Bank holding companies.
    Annual reporting hours: FR Y-11 (quarterly): 15,966; FR Y-11 
(annual): 2,768.
    Estimated average hours per response: FR Y-11 (quarterly): 6.80; FR 
Y-11 (annual): 6.80.
    Number of respondents: FR Y-11 (quarterly): 587; FR Y-11 (annual): 
407.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in these reports. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to sections 
(b)(4), (b)(6) and (b)(8) of the Freedom of Information Act [5 U.S.C. 
522(b)(4), (b)(6) and (b)(8)].
    Abstract: The FR Y-11 reports collect financial information for 
individual non-functionally regulated U.S. nonbank subsidiaries of 
domestic 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 November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, with revision, of the Financial 
Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. 
The comment period expired on January 3, 2011. The Federal Reserve 
received one comment from a bankers' association recommending that the 
FR Y-11 and the FR 2314 be combined into a single form to enable the 
use of vendor software and electronic submission. The commenter stated 
that such functionalities are available on the FR Y-11 but are not 
available on the FR 2314.
    The Federal Reserve has offered BHCs the option of submitting their 
FR 2314 reports electronically for several years. Any BHC interested in 
submitting their reports electronically should contact their Reserve 
Bank concerning procedures for electronic submission. Therefore, the 
Federal Reserve will not merge the reporting forms. As no comments were 
received on the proposed changes, the Federal Reserve will implement 
the changes as initially proposed.
    3. Report title: Financial Statements of Foreign Subsidiaries of 
U.S. Banking Organizations.
    Agency form number: FR 2314.
    OMB control number: 7100-0073.
    Effective Date: March 31, 2011.
    Frequency: Quarterly and annually.
    Reporters: Foreign subsidiaries of U.S. state member banks, BHCs, 
and Edge or agreement corporations.
    Annual reporting hours: FR 2314 (quarterly): 16,394; FR 2314 
(annual): 3,379.
    Estimated average hours per response: FR 2314 (quarterly): 6.60; FR 
2314 (annual): 6.60.
    Number of respondents: FR 2314 (quarterly): 621; FR 2314 (annual): 
512.
    General description of report: This information collection is 
mandatory (12 U.S.C. 324, 602, 625, and 1844(c)). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for the reporting information, in whole or in 
part, can be requested in accordance with the instructions to the form, 
pursuant to sections (b)(4), (b)(6) and (b)(8) of the Freedom of 
Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)].
    Abstract: The FR 2314 reports collect financial information for 
non-functionally regulated direct or indirect foreign subsidiaries of 
U.S. state member banks (SMBs), Edge and agreement corporations, and 
BHCs. Parent organizations (SMBs, Edge and agreement corporations, or 
BHCs) file the FR 2314 on a quarterly or annual basis according to 
filing criteria. The FR 2314 data are used to identify current and 
potential problems at the foreign subsidiaries of U.S. parent 
companies, to monitor the activities of U.S. banking organizations in 
specific countries, and to develop a better understanding of activities 
within the industry, in general, and of individual institutions, in 
particular.
    Current actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, with revision, of the Financial 
Statements of Foreign Subsidiaries of U.S. Banking Organizations. The 
comment period expired on January 3, 2011. The Federal

[[Page 11481]]

Reserve received one comment from a bankers' association recommending 
that the FR Y-11 and the FR 2314 be combined into a single form to 
enable the use of vendor software and electronic submission. The 
commenter stated that such functionalities are available on the FR Y-11 
but are not available on the FR 2314.
    The Federal Reserve has offered BHCs the option of submitting their 
FR 2314 reports electronically for several years. Any BHC interested in 
submitting their reports electronically should contact their Reserve 
Bank concerning procedures for electronic submission. Therefore, the 
Federal Reserve will not merge the reporting forms. As no comments were 
received on the proposed changes, the Federal Reserve will implement 
the changes as initially proposed.
    4. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
Held by Foreign Banking Organizations.
    Agency form number FR Y-7N.
    OMB control number: 7100-0125.
    Effective Date: March 31, 2011.
    Frequency: Quarterly and annually.
    Reporters: Foreign banking organizations.
    Annual reporting hours: FR Y-7N (quarterly): 4,978; FR Y-7N 
(annual): 1,299.
    Estimated average hours per response: FR Y-7N (quarterly): 6.80; FR 
Y-7N (annual): 6.80.
    Number of respondents: FR Y-7N (quarterly): 183; FR Y-7N (annual): 
191.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for information, in whole or in part, on any of 
the reporting forms can be requested in accordance with the 
instructions to the form, pursuant to sections (b)(4) and (b)(6) of the 
Freedom of Information Act [5 U.S.C. 522(b)(4) and (b)(6)].
    Abstract: The FR Y-7N collects financial information for non-
functionally regulated U.S. nonbank subsidiaries held by foreign 
banking organizations (FBOs) other than through a U.S. BHC, U.S. 
financial holding company (FHC) or U.S. bank. FBOs file the FR Y-7N on 
a quarterly or annual basis.
    Current actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, with revision, of the Financial 
Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking 
Organizations. The comment period expired on January 3, 2011. As no 
comments were received on the proposed changes, the Federal Reserve 
will implement the changes as initially proposed.
    5. Report title: Consolidated Report of Condition and Income for 
Edge and Agreement Corporations.
    Agency form number: FR 2886b.
    OMB control number: 7100-0086.
    Effective Date: March 31, 2011.
    Frequency: Quarterly.
    Reporters: Edge and agreement corporations.
    Annual reporting hours: 1,679.
    Estimated average hours per response: 15.15 banking corporations, 
9.60 investment corporations.
    Number of respondents: 13 banking corporations, 42 investment 
corporations.
    General description of report: This information collection is 
mandatory (12 U.S.C. 602 and 625). Schedules RC-M (with the exception 
of item 3) and RC-V are held as confidential pursuant to section (b)(4) 
of the Freedom of Information Act (5 U.S.C. 552(b)(4)).
    Abstract: The mandatory FR 2886b comprises a balance sheet, income 
statement, two schedules reconciling changes in capital and reserve 
accounts, and 11 supporting schedules and it parallels the Call Report 
that commercial banks file. The Federal Reserve uses the data collected 
on the FR 2886b to supervise Edge corporations, identify present and 
potential problems, and monitor and develop a better understanding of 
activities within the industry.
    Current actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, with revision, of the 
Consolidated Report of Condition and Income for Edge and Agreement 
Corporations. The comment period expired on January 3, 2011. As no 
comments were received on the proposed changes, the Federal Reserve 
will implement the changes as initially proposed.
    Final approval under OMB delegated authority of the extension for 
three years, without revision of the following reports:
    1. Report title: Financial Statements for Bank Holding Companies.
    Agency form number: FR Y-9SP, FR Y-9ES, and FR Y-9CS.
    OMB control number: 7100-0128.
    Frequency: Quarterly and annually.
    Reporters: Bank holding companies.
    Annual reporting hours: FR Y-9SP: 45,209; FR Y-9ES: 44; FR Y-9CS: 
400.
    Estimated average hours per response: FR Y-9SP: 5.40; FR Y-9ES: 30 
minutes; FR Y-9CS: 30 minutes.
    Number of respondents: FR Y-9SP: 4,186; FR Y-9ES: 87; FR Y-9CS: 
200.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in these reports. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to sections 
(b)(4) and (b)(6) of the Freedom of Information Act (5 U.S.C. 
522(b)(4), (b)(6)).
    Abstract: The FR Y-9SP is a parent company only financial statement 
filed by smaller BHCs. Respondents include BHCs with total consolidated 
assets of less than $500 million. This form is a simplified or 
abbreviated version of the more extensive parent company only financial 
statement for large BHCs (FR Y-9LP). This report is designed to obtain 
basic balance sheet and income information for the parent company, 
information on intangible assets, and information on intercompany 
transactions.
    The FR Y-9ES collects financial information from ESOPs that are 
also BHCs on their benefit plan activities. It consists of four 
schedules: Statement of Changes in Net Assets Available for Benefits, 
Statement of Net Assets Available for Benefits, Memoranda, and Notes to 
the Financial Statements. The FR Y-9CS is a supplemental report that 
may be utilized to collect additional information deemed to be critical 
and needed in an expedited manner from BHCs. The information is used to 
assess and monitor emerging issues related to BHCs. It is intended to 
supplement the FR Y-9 reports, which are used to monitor BHCs between 
on-site inspections. The data items of information included on the 
supplement may change as needed.
    Current actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, without revision, of the 
Financial Statements for Bank Holding Companies. The comment period 
expired on January 3, 2011. The Federal Reserve did not receive any 
comment letters.
    2. Report title: Abbreviated Financial Statements of U.S. Nonbank 
Subsidiaries of U.S. Bank Holding Companies.
    Agency form number: FR Y-11S.
    OMB control number: 7100-0244.
    Frequency: Annually.
    Reporters: Bank holding companies.
    Annual reporting hours: 774.
    Estimated average hours per response: 1.0.
    Number of respondents: 774.

[[Page 11482]]

    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in these reports. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to sections 
(b)(4), (b)(6), and (b)(8) of the Freedom of Information Act [5 U.S.C. 
522(b)(4)].
    Abstract: The FR Y-11S is an abbreviated reporting form that 
collects four data items: Net income, total assets, equity capital, and 
total off-balance-sheet data items. The FR Y-11S is filed annually, as 
of December 31, by top-tier BHCs for each individual nonbank subsidiary 
(that does not meet the criteria for filing the detailed report) with 
total assets of at least $50 million, but less than $250 million, or 
with total assets greater than 1 percent of the total consolidated 
assets of the top-tier organization.
    Current actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, without revision, of the 
Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. 
Bank Holding Companies. The comment period expired on January 3, 2011. 
The Federal Reserve did not receive any comment letters.
    3. Report title: Abbreviated Financial Statements of Foreign 
Subsidiaries of U.S. Banking Organizations.
    Agency form number: FR 2314S.
    OMB control number: 7100-0073.
    Frequency: Annually.
    Reporters: U.S. state member banks, BHCs, and Edge or agreement 
corporations.
    Annual reporting hours: 787.
    Estimated average hours per response: 1.0.
    Number of respondents: 787.
    General description of report: This information collection is 
mandatory (12 U.S.C. 324, 602, 625, and 1844(c)). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for the reporting information, in whole or in 
part, can be requested in accordance with the instructions to the form, 
pursuant to sections (b)(4), (b)(6) and (b)(8) of the Freedom of 
Information Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)].
    Abstract: The FR 2314S is an abbreviated reporting form that 
collects four data items: Net income, total assets, equity capital, and 
total off-balance-sheet data items. The FR 2314S is filed annually, as 
of December 31, for each individual subsidiary (that does not meet the 
criteria for filing the detailed report) with assets of at least $50 
million but less than $250 million, or with total assets greater than 1 
percent of the total consolidated assets of the top-tier organization.
    Current actions: On November 3, 2010, the Federal Reserve published 
a notice in the Federal Register (75 FR 67721) requesting public 
comment for 60 days on the extension, without revision, of the 
Abbreviated Financial Statements of Foreign Subsidiaries of U.S. 
Banking Organizations. The comment period expired on January 3, 2011. 
The Federal Reserve did not receive any comment letters.
    4. Report title: Financial Reports of Foreign Banking 
Organizations.
    Agency form number: FR Y-7NS, FR Y-7Q.
    OMB control number: 7100-0125.
    Frequency: Annually and quarterly.
    Reporters: Foreign banking organizations.
    Annual reporting hours: FR Y-7NS: 237; FR Y-7Q (quarterly): 340; FR 
Y-7Q (annual): 111.
    Estimated average hours per response: FR Y-7NS: 1.0; FR Y-7Q 
(quarterly): 1.25; FR Y-7Q (annual): 1.0.
    Number of respondents: FR Y-7NS: 237; FR Y-7Q (quarterly): 68; FR 
Y-7Q (annual): 111.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential 
treatment is not