Capital Plans, 35351-35361 [2011-14831]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 76, Number 117 (Friday, June 17, 2011)]
[Proposed Rules]
[Pages 35351-35361]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14831]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 76, No. 117 / Friday, June 17, 2011 / 
Proposed Rules

[[Page 35351]]



FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Regulation Y; Docket No. R-1425]
RIN 7100-AD 77


Capital Plans

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Proposed rule.

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SUMMARY: The Board is proposing amendments to Regulation Y to require 
large bank holding companies to submit capital plans to the Federal 
Reserve on an annual basis and to require such bank holding companies 
to provide prior notice to the Federal Reserve under certain 
circumstances before making a capital distribution.

DATES: Comments must be received by August 5, 2011.

ADDRESSES: You may submit comments, identified by Docket No. R-1425 and 
RIN No. 7100 AD 77, by any of the following methods:
     Agency Web Site: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: regs.comments@federalreserve.gov. Include the 
docket number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Address to Jennifer J. Johnson, Secretary, Board of 
Governors of the Federal Reserve System, 20th Street and Constitution 
Avenue, NW., Washington, DC 20551.
    All public comments will be made available on the Board's Web site 
at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons. Accordingly, comments 
will not be edited to remove any identifying or contact information. 
Public comments may also be viewed electronically or in paper in Room 
MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 
9 a.m. and 5 p.m. on weekdays.

FOR FURTHER INFORMATION CONTACT: Benjamin W. McDonough, Counsel, (202) 
452-2036, April C. Snyder, Counsel, (202) 452-3099, or Christine E. 
Graham, Attorney, (202) 452-3005, Legal Division; Timothy P. Clark, 
Senior Advisor, (202) 452-5264, Michael Foley, Senior Associate 
Director, (202) 452-6420, or Thomas R. Boemio, Manager, (202) 452-2982, 
Division of Banking Supervision and Regulation, Board of Governors of 
the Federal Reserve System, 20th and C Streets, NW., Washington, DC 
20551.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Scope
III. Capital Plans
    A. Annual Capital Planning Requirement
    B. Mandatory Elements of a Capital Plan
    C. Federal Reserve's Review of Capital Plans
    D. Federal Reserve Action on a Capital Plan
    E. Re-Submission of a Capital Plan
IV. Prior Notice Requirements
V. Conforming Changes to Section 225.4(b) of Regulation Y
VI. Administrative Law Matters
    A. Regulatory Flexibility Act
    B. Paperwork Reduction Act
    C. Solicitation of Comments on Use of Plain Language

I. Background

    The Board is proposing amendments to Regulation Y (12 CFR part 225) 
to require large bank holding companies to submit capital plans to the 
Federal Reserve on an annual basis and to require such bank holding 
companies to provide prior notice to the Federal Reserve under certain 
circumstances before making a capital distribution (the proposal or 
proposed rule).\1\ During the years leading up to the recent financial 
crisis, many bank holding companies made significant distributions of 
capital, in the form of stock repurchases and dividends, without due 
consideration of the effects that a prolonged economic downturn could 
have on their capital adequacy and ability to continue to operate and 
remain credit intermediaries during times of economic and financial 
stress. The proposal is intended to address such practices, building 
upon the Federal Reserve's existing supervisory expectation that large 
bank holding companies have robust systems and processes that 
incorporate forward-looking projections of revenue and losses to 
monitor and maintain their internal capital adequacy.\2\
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    \1\ The proposed amendments to Regulation Y would be codified at 
12 CFR 225.8. As discussed in section V of this preamble, the 
proposal would also make conforming changes to section 225.4(b) of 
Regulation Y (12 CFR 225.4(b)).
    \2\ See SR letter 09-4 (Revised March 27, 2009), available at 
https://www.federalreserve.gov/boarddocs/srletters/2009/SR0904.htm; 
see also Revised Temporary Addendum to SR letter 09-4 (November 17, 
2010) (SR 09-04), available at https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20101117b1.pdf.
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    The Federal Reserve has long held the view that bank holding 
companies generally should operate with capital positions well above 
the minimum regulatory capital ratios, with the amount of capital held 
commensurate with the bank holding company's risk profile.\3\ Bank 
holding companies should have internal processes for assessing their 
capital adequacy that reflect a full understanding of their risks and 
ensure that they hold capital corresponding to those risks to maintain 
overall capital adequacy.\4\ Bank holding companies that are subject to 
the Board's advanced approaches risk-based capital requirements must 
satisfy specific requirements relating to their internal capital 
adequacy processes in order to use the advanced approaches to calculate 
their minimum risk-based capital requirements.\5\ Under section 165 of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
(Dodd-Frank Act), the Board is required to impose enhanced prudential 
standards on large bank holding companies, including stress testing 
requirements; enhanced capital, liquidity, and risk management 
requirements; and a requirement to

[[Page 35352]]

establish a risk committee.\6\ While the proposal is not mandated by 
the Dodd-Frank Act, the Board believes that it is appropriate to hold 
large bank holding companies to an elevated capital planning standard 
because of the elevated risk posed to the financial system by large 
bank holding companies and the importance of capital in mitigating 
these risks.
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    \3\ See 12 CFR part 225, Appendix A; see also SR letter 99-18 
(July 1, 1999), available at https://www.federalreserve.gov/boarddocs/srletters/1999/SR9918.HTM.
    \4\ See SR letter 09-4 (Revised March 27, 2009), available at 
https://www.federalreserve.gov/boarddocs/srletters/2009/SR0904.htm.
    \5\ See 12 CFR part 225, Appendix G, section 22(a); see also, 
Supervisory Guidance: Supervisory Review Process of Capital Adequacy 
(Pillar 2) Related to the Implementation of the Basel II Advanced 
Capital Framework, 73 FR 44620 (July 31, 2008).
    \6\ See generally section 165 of Public Law 111-203, 124 Stat. 
1376 (2010) (Dodd-Frank Act); 12 U.S.C. 5365.
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    As part of their fiduciary responsibilities to a bank holding 
company, the board of directors and senior management bear the primary 
responsibility for developing, implementing, and monitoring a bank 
holding company's capital planning strategies and internal capital 
adequacy processes. The proposal does not diminish that responsibility. 
Rather, the proposal is intended to (i) Establish minimum supervisory 
standards for such strategies and processes for certain large bank 
holding companies; (ii) describe how boards of directors and senior 
management of these bank holding companies should communicate the 
strategies and processes, including any material changes thereto, to 
the Federal Reserve; and (iii) provide the Federal Reserve with an 
opportunity to review bank holding companies' capital distributions 
under certain circumstances. The proposal is designed to be flexible 
enough to accommodate bank holding companies of varying degrees of 
complexity and to adjust to changing conditions over time.
    The proposal is also consistent with the Federal Reserve's recent 
supervisory practice of requiring capital plans from large, complex 
bank holding companies. In 2009, the Board conducted the Supervisory 
Capital Assessment Program (SCAP), a ``stress test'' of 19 large, 
domestic bank holding companies. The SCAP was focused on identifying 
whether large bank holding companies had capital sufficient to weather 
a more-adverse-than-anticipated economic environment while maintaining 
their capacity to lend. The Federal Reserve required firms identified 
as having capital shortfalls to raise specific dollar amounts of 
capital within six months of the release of the SCAP results. The 
Department of the Treasury established a government backstop available 
to firms unable to raise the required capital from private markets.\7\
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    \7\ See Board of Governors of the Federal Reserve System, The 
Supervisory Capital Assessment Program: Overview of Results (May 7, 
2009), available at https://www.federalreserve.gov/bankinforeg/bcreg20090507a1.pdf.
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    In 2011, the Federal Reserve continued its supervisory evaluation 
of the resiliency and capital adequacy processes of the same 19 bank 
holding companies through the Comprehensive Capital Analysis and Review 
(CCAR). CCAR involved the Federal Reserve's forward-looking evaluation 
of the internal capital planning processes of the bank holding 
companies and their anticipated capital actions in 2011, such as 
increasing dividend payments or repurchasing or redeeming stock.\8\ In 
CCAR, the Federal Reserve evaluated whether these bank holding 
companies had satisfactory processes for identifying capital needs and 
held adequate capital to maintain ready access to funding, continue 
operations and meet their obligations to creditors and counterparties, 
and continue to serve as credit intermediaries, even under stressful 
conditions.
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    \8\ See Board of Governors of the Federal Reserve System, 
Comprehensive Capital Analysis and Review: Objectives and Overview 
(March 18, 2010), available at https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110318a1.pdf.
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    As noted above, the Dodd-Frank Act imposes enhanced prudential 
standards, including stress testing requirements, on large bank holding 
companies.\9\ As the Board implements the Dodd-Frank Act, bank holding 
companies would be required to incorporate any related requirements 
into their capital planning strategies and internal capital adequacy 
processes, including the results of stress tests required by the Dodd-
Frank Act.
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    \9\ Through separate rulemaking or by order, it is expected that 
the proposal's requirements would be extended to apply to large 
savings and loan holding companies and nonbank financial companies 
supervised by the Board pursuant to section 113 of the Dodd-Frank 
Act.
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    The Dodd-Frank Act also requires the Board to impose early 
remediation requirements on large bank holding companies under which a 
large bank holding company experiencing financial distress must take 
specific remedial actions in order to minimize the probability that the 
company will become insolvent and minimize the potential harm of such 
insolvency to the United States.\10\ These early remediation 
requirements must impose limitations on capital distributions in the 
initial stages of financial decline and increase in stringency as the 
financial condition of the company declines.\11\ Depending on a bank 
holding company's financial condition, early remediation requirements 
imposed under the Dodd-Frank Act may result in additional limitations 
on a company's capital distributions than the prior notice requirements 
that would be imposed by the proposed rule.\12\
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    \10\ See section 166 of the Dodd-Frank Act; 12 U.S.C. 5366.
    \11\ Id.
    \12\ The Board notes that Basel III includes a capital 
conservation buffer designed to ensure that bank holding companies 
build up capital buffers outside periods of stress that can be drawn 
down as losses are incurred. Under Basel III, capital distribution 
constraints would be imposed on a bank holding company when capital 
levels fall within the capital conservation buffer. See Basel 
Committee on Banking Supervision, Basel III: A Global Framework for 
More Resilient Banks and Banking Systems (December 2010), available 
at https://www.bis.org/publ/bcbs189.pdf.
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II. Scope

    The proposed rule would apply to every top-tier bank holding 
company domiciled in the United States that has $50 billion or more in 
total consolidated assets (large U.S. bank holding companies).\13\ This 
amount would be measured as the average over the previous two calendar 
quarters, as reflected on the bank holding company's consolidated 
financial statement for bank holding companies (FR Y-9C). Consistent 
with the phase-in period for the imposition of minimum risk-based and 
leverage capital requirements established in section 171 of the Dodd-
Frank Act, until July 21, 2015, the proposed rule would not apply to 
any bank holding company subsidiary of a foreign banking organization 
that has relied on Supervision and Regulation Letter SR 01-01 issued by 
the Board of Governors (as in effect on May 19, 2010).\14\ The proposed 
rule also would apply to any institution that the Board has determined, 
by order, shall be subject in whole or in part to the proposed rule's 
requirements based on the institution's size, level of complexity, risk 
profile, scope of operations, or financial condition.
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    \13\ Thus, the proposal would not apply to a foreign bank or 
foreign banking organization that was itself a bank holding company 
or treated as a bank holding company pursuant to section 8(a) of the 
International Banking Act of 1978 (12 U.S.C. 3106(a)), but generally 
would apply to any U.S.-domiciled bank holding company subsidiary of 
the foreign bank or foreign banking organization that meets the 
proposal's size threshold.
    \14\ Under Supervision and Regulation Letter SR 01-01, as a 
general matter, a U.S. bank holding company that is owned and 
controlled by a foreign bank that is a financial holding company 
that the Board has determined to be well-capitalized and well-
managed is not required to comply with the Board's capital adequacy 
guidelines. See SR letter 01-01 (January 5, 2001), available at 
https://www.federalreserve.gov/boarddocs/srletters/2001/sr0101.htm.
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    As of March 31, 2011, there were approximately 35 large U.S. bank 
holding companies. The Board notes that the proposed asset threshold of 
$50 billion is consistent with the threshold established by section 165 
of the Dodd-

[[Page 35353]]

Frank Act relating to enhanced supervision and prudential standards for 
certain bank holding companies.\15\ The proposal generally would apply 
to large U.S. bank holding companies when any final rule becomes 
effective.
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    \15\ See section 165(a) of the Dodd-Frank Act; 12 U.S.C. 
5365(a). The Dodd-Frank Act provides that the Board may, upon the 
recommendation of the Financial Stability Oversight Council, 
increase the $50 billion asset threshold for the application of the 
resolution plan, concentration limit, and credit exposure report 
requirements. See 12 U.S.C. 5365(a)(2)(B).
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    The Board solicits comment on whether the capital planning and 
prior notice requirements in the proposed rule should apply, as 
proposed, to large U.S. bank holding companies. What other asset 
threshold(s) would be appropriate and why? Are there other measures 
other than total consolidated assets that should be considered?
    In addition, the Board solicits comment on whether the proposed 
rule should include a transitional period for institutions that did not 
participate in CCAR. For example, should such institutions have an 
additional year to come into compliance with the proposed capital 
planning and prior notice requirements?

III. Capital Plans

A. Annual Capital Planning Requirement

    The proposed rule would require a bank holding company to develop 
and maintain a capital plan. For purposes of the proposal, a capital 
plan is defined as a written presentation of a company's capital 
planning strategies and capital adequacy processes that includes (i) An 
assessment of the expected uses and sources of capital over a nine-
quarter forward-looking planning period (beginning with the quarter 
preceding the quarter in which the bank holding company submits its 
capital plan) that reflects the bank holding company's size, 
complexity, risk profile, and scope of operations, assuming both 
expected and stressful conditions, (ii) a detailed description of the 
bank holding company's processes for assessing capital adequacy, and 
(iii) an analysis of the effectiveness of these processes. As described 
below, the proposed rule specifies certain mandatory elements of a 
capital plan. The level of detail and analysis expected in a capital 
plan would vary based on the bank holding company's size, complexity, 
risk profile, and scope of operations. Thus, for example, a bank 
holding company with extensive credit exposures to commercial real 
estate, but very limited trading activities, would be expected to have 
robust systems in place to identify and monitor its commercial real 
estate exposures; its systems related to trading activities would not 
need to be as sophisticated or extensive. In contrast, a bank holding 
company with extensive exposure to a variety of risk exposures, 
including both retail and wholesale exposures, as well as significant 
trading activities and international operations, would be expected to 
have an integrated system for measuring all these risk exposures and 
the interactions among them.
    The bank holding company's board of directors or a designated 
committee thereof would be required at least annually to review the 
effectiveness of the holding company's processes for assessing capital 
adequacy, ensure that any deficiencies in the firm's processes for 
assessing capital adequacy are appropriately remediated, and approve 
the bank holding company's capital plan.\16\ After the capital plan is 
approved by the board of directors, the bank holding company would be 
required to submit its complete capital plan to the appropriate Reserve 
Bank and the Board by the 5th of January of each year, or such later 
date as directed by the appropriate Reserve Bank, after consultation 
with the Board. A later date may be appropriate if, for example, the 
bank holding company would need additional time to update its plan to 
reflect any scenarios that the Federal Reserve has required the bank 
holding company to evaluate and incorporate in its capital plan as part 
of its submission.
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    \16\ As part of this review the board of directors should be 
made aware of any remaining uncertainties, limitations, and 
assumptions associated with the bank holding company's capital 
adequacy processes.
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    A bank holding company would be required to update and resubmit its 
capital plan to the appropriate Reserve Bank and the Board within 30 
calendar days after the occurrence of one of the following events:
    (i) The bank holding company determines there has been or will be a 
material change in the bank holding company's risk profile (including a 
material change in its business strategy or any material risk 
exposures), financial conditions, or corporate structure since the bank 
holding company adopted the capital plan; \17\ or
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    \17\ For purposes of determining whether a change in its risk 
profile was material, a bank holding company would be required to 
consider a variety of risks, including credit, market, operational, 
liquidity, and interest rate risks.
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    (ii) The appropriate Reserve Bank, after consultation with the 
Board, directs the bank holding company to update its capital plan for 
reasons described in the proposal.
    The appropriate Reserve Bank, after consultation with the Board, 
could at its sole discretion extend this 30-day period for up to an 
additional 60 calendar days. Any updated capital plan would be required 
to satisfy all the requirements of the proposal as if it were the 
original submission, unless otherwise specified by the appropriate 
Reserve Bank, after consultation with the Board. However, to the extent 
that the analysis underlying an initial capital plan were still 
considered valid, the bank holding company would be able to continue to 
rely on this analysis for purposes of any revised or updated plan, 
provided that the analysis was accompanied by an explanation of how the 
analysis should be considered in the light of any new capital actions 
or changes in risk profile or strategy.

B. Mandatory Elements of a Capital Plan

    Every capital plan would be required to contain at least the 
following elements:
    (i) A discussion of how the bank holding company will, under 
stressful conditions, maintain capital commensurate with its risks, 
maintain capital above the minimum regulatory capital ratios, and serve 
as a source of strength to its depository institution subsidiaries;
    (ii) A discussion of how the bank holding company will, under 
stressful conditions, continue its operations by maintaining ready 
access to funding, meeting its obligations to creditors and other 
counterparties, and continuing to serve as a credit intermediary;
    (iii) A discussion of the bank holding company's sources and uses 
of capital over a minimum nine-quarter planning horizon reflecting the 
risk profile of the firm, including:
    (A) Estimates of projected revenues, losses, reserves, and pro 
forma capital levels, including any minimum regulatory capital ratios 
(for example, leverage, tier 1 risk-based, and total risk-based) and 
any additional capital measures deemed relevant by the bank holding 
company, over the planning horizon under expected conditions and under 
a range of stressed scenarios, including any scenarios provided by the 
Federal Reserve and at least one stressed scenario developed by the 
bank holding company appropriate to its business model and portfolios, 
and a probabilistic assessment of the likelihood of the bank holding 
company-developed scenario(s); \18\
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    \18\ With respect to this criterion, for any Federal Reserve-
provided stressed scenarios and any related data requests that would 
be required to be reflected in the bank holding company's annual 
capital plan, the Federal Reserve would provide such scenarios and 
data requests to bank holding companies several weeks before the 
capital plan due date of January 5. With respect to scenarios 
designed by the bank holding company, such an exercise will involve 
robust scenario design and effective translation of scenarios into 
measures of impact on capital positions. Selection of scenario 
variables is important for this purpose, as scenarios serve as the 
link between the overall narrative of the scenario and the tangible 
capital impact on the firm as a whole. For instance, in aiming to 
capture the combined capital impact of a severe recession and a 
financial market downturn, a firm may choose a set of variables that 
include changes in U.S. Gross Domestic Product, unemployment rate, 
interest rates, stock market levels, or home price levels.

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[[Page 35354]]

    (B) A discussion of the results of any stress test required by law 
or regulation, and an explanation of how the capital plan takes these 
results into account; and
    (C) A description of all planned capital actions over the planning 
horizon (for example, issuances of debt and equity capital instruments, 
distributions on capital instruments, and redemptions and repurchases 
of capital instruments);
    (iv) The bank holding company's capital policy;
    (v) A discussion of any expected changes to the bank holding 
company's business plan that are likely to have a material impact on 
the firm's capital adequacy or liquidity; and
    (vi) Until January 1, 2016, a calculation of the pro forma tier 1 
common ratio under expected and stressful conditions and discussion of 
how the company would maintain a pro forma tier 1 common ratio of 5 
percent under stressed scenarios.
    These proposed mandatory elements of a capital plan are consistent 
with the Federal Reserve's existing supervisory practice with respect 
to the information that it expects certain bank holding companies to 
include in a capital plan for internal planning purposes. As bank 
holding companies begin to conduct stress tests in accordance with 
rules to be issued by the Board pursuant to section 165(i)(2) of the 
Dodd-Frank Act, bank holding companies would be required to incorporate 
the results of these stress tests into their capital plans.\19\ A bank 
holding company should include in its capital plan other information 
that it determined was relevant to its capital planning strategies and 
internal capital adequacy processes.
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    \19\ At this time, the Board does not expect that the results of 
stress tests conducted under the Dodd-Frank Act alone will be 
sufficient to address all relevant adverse outcomes that should be 
covered in a satisfactory capital plan for purposes of this proposed 
rule.
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    For purposes of the proposal, a capital action would be defined as 
any issuance of a debt or equity capital instrument, capital 
distribution, and any similar action that the Federal Reserve 
determines could impact a bank holding company's consolidated capital. 
A capital distribution would be defined as a redemption or repurchase 
of any debt or equity capital instrument, a payment of common or 
preferred stock dividends, a payment that may be temporarily or 
permanently suspended by the issuer on any instrument that is eligible 
for inclusion in the numerator of any minimum regulatory capital ratio, 
and any similar transaction that the Federal Reserve determines to be 
in substance a distribution of capital.\20\
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    \20\ For example, this definition would include payments on 
trust preferred securities, but would not include payments on 
subordinated debt that could not be temporarily or permanently 
suspended by the issuer.
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    A capital policy would be defined as the bank holding company's 
written assessment of the principles and guidelines used for capital 
planning, capital issuance, usage and distributions, including internal 
capital goals; the quantitative or qualitative guidelines for dividend 
and stock repurchases; the strategies for addressing potential capital 
shortfalls; and the internal governance procedures around capital 
policy principles and guidelines. With respect to a bank holding 
company's internal capital goals, such goals should apply throughout 
the planning horizon in the form of capital levels or ratios. The bank 
holding company should be able to demonstrate that achieving its stated 
internal capital goals would allow it to continue its operations after 
the impact of the stressed scenarios included in its capital plan. As 
part of the continuation of a bank holding company's operations, the 
Federal Reserve would expect the bank holding company to maintain ready 
access to funding, meet its obligations to creditors and other 
counterparties, and continue to serve as a credit intermediary.\21\ 
Similarly, a bank holding company's capital policy should reflect 
strategies for addressing potential capital shortfalls, such as by 
reducing or eliminating capital distributions, raising additional 
capital, or preserving its existing capital, to support circumstances 
where the bank holding company has underestimated its risks or where 
its performance has not met its expectations.
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    \21\ In addition, each bank holding company would be required to 
ensure that its internal capital goals reflect any relevant minimum 
regulatory capital ratio levels, any higher levels of regulatory 
capital ratios (above regulatory minimums), and any additional 
capital measures that, when maintained, would allow the bank holding 
company to continue its operations.
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    As noted above, a bank holding company must include pro forma 
estimates of its minimum regulatory capital ratios in its capital plan. 
The proposal would define minimum regulatory capital ratios as any 
minimum regulatory capital ratio that the Federal Reserve may require 
of a bank holding company, by regulation or order, including the bank 
holding company's leverage ratio and tier 1 and total risk-based 
capital ratios as calculated under Appendices A, D, E, and G to this 
part 225 (12 CFR part 225 Appendices A, D, E, and G), or any successor 
regulation. If the Board were to adopt additional or different minimum 
regulatory capital ratios in the future, a bank holding company would 
be required to incorporate these minimum capital ratios into its 
capital plan as they come into effect and reflect them in its planning 
horizon.
    In addition to the requirements discussed above, until January 1, 
2016, a bank holding company would be required to calculate its pro 
forma tier 1 common ratio under expected and stressful conditions and 
discuss in its capital plan how the bank holding company would maintain 
a pro forma tier 1 common ratio of 5 percent under those conditions 
throughout the planning horizon. For purposes of this requirement, a 
bank holding company's tier 1 common ratio would mean the ratio of a 
bank holding company's tier 1 common capital to its total risk-weighted 
assets. Tier 1 common capital would be calculated as tier 1 capital 
less non-common elements in tier 1 capital, including perpetual 
preferred stock and related surplus, minority interest in subsidiaries, 
trust preferred securities and mandatory convertible preferred 
securities.\22\ Tier 1 capital would have the same meaning as under 
Appendix A to Regulation Y, or any successor regulation, and total 
risk-weighted assets would have the same meaning as under Appendices A, 
E, and G of Regulation Y, or any successor regulation.\23\
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    \22\ Specifically, non-common elements would include the 
following items captured in the FR Y-9C: Schedule HC, line item 23 
net of Schedule HC-R, line item 5; Schedule HC-R, line items 6a, 6b, 
and 6c; and Notes to the Balance Sheet--Other as captured in 
Schedule HC-R, line item 10.
    \23\ See 12 CFR part 225, Appendices A, E, and G.
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    This definition of tier 1 common capital is consistent with the 
definition that the Federal Reserve has used for supervisory purposes, 
including in CCAR. The Basel III framework proposed by the Basel 
Committee on Bank Supervision includes a different

[[Page 35355]]

definition of tier 1 common capital.\24\ In recognition of the fact 
that the Board and the other federal banking agencies continue to work 
on implementing Basel III in the United States, the Board is proposing 
to require a bank holding company to demonstrate until January 1, 2016 
how it would meet a minimum tier 1 common ratio of 5 percent under 
stressful conditions under the Board's existing supervisory definition 
of tier 1 common capital. This level reflects a supervisory assessment 
of the minimum capital needed to be a going concern on a post-stress 
basis, based on an analysis of the historical distribution of earnings 
by large banking organizations.\25\
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    \24\ See Basel Committee on Banking Supervision, Basel III: A 
global framework for more resilient banks and banking systems 
(December 2010), available at https://www.bis.org/publ/bcbs189.pdf.
    \25\ As indicated in footnote 21, a bank holding company's 
internal capital goals must reflect any relevant minimum regulatory 
capital ratio levels, any higher levels of regulatory capital ratios 
(above regulatory minimums), and any additional capital measures 
that, when maintained, would allow the bank holding company to 
continue its operations. See SR 09-04; see also Basel Committee on 
Banking Supervision, Calibrating regulatory minimum capital 
requirements and capital buffers: A top-down approach (October 
2010), available at https://www.bis.org/publ/bcbs180.htm.
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    In connection with its submissions of a capital plan to the Federal 
Reserve, a bank holding company would be required to provide certain 
data to the Federal Reserve. To the greatest extent possible, the data 
templates, and any other data requests, would be designed to minimize 
burden on the bank holding company and to avoid duplication, 
particularly in light of potential new reporting requirements arising 
from the Dodd-Frank Act. Data required by the Federal Reserve would 
include, but not be limited to, information regarding the bank holding 
company's financial condition, structure, assets, risk exposure, 
policies and procedures, liquidity, and management. For example, the 
Federal Reserve will require the bank holding company to complete data 
templates that describe in greater detail the bank holding company's 
assets and potential exposures, whether these reside on balance sheet 
or not. The frequency of the data collection will depend on the type of 
data being collected, and certain data may be collected on a quarterly, 
monthly, weekly, or daily basis. In some cases, the Federal Reserve may 
require this information to be reported on a loan-level basis.
    The Board solicits comment on the proposed mandatory elements of a 
capital plan. In particular, the Board solicits comment on the 
requirement that a bank holding company calculate its pro forma tier 1 
common ratio under expected and stressful conditions, and the manner in 
which a bank holding company should include internal capital goals as 
part of its capital policy.

C. Federal Reserve's Review of Capital Plans

    The proposal provides that the Federal Reserve would consider the 
following factors in reviewing a bank holding company's capital plan:
    (i) The reasonableness of the bank holding company's assumptions 
and analysis underlying the capital plan and its methodologies for 
reviewing the effectiveness of its capital adequacy processes;
    (ii) The comprehensiveness of the capital plan, including the 
company's capital policy; and
    (iii) The bank holding company's ability to maintain capital above 
each minimum regulatory capital ratio, and, until January 1, 2016, a 
tier 1 common ratio of 5 percent, on a pro forma basis under stressful 
conditions throughout the planning horizon.
    The Federal Reserve would also consider the following information 
in reviewing a bank holding company's capital plan:
    (i) Relevant supervisory information about the bank holding company 
and its subsidiaries;
    (ii) The bank holding company's regulatory and financial reports, 
as well as supporting data that would allow for an analysis of a bank 
holding company's loss, revenue, and reserve projections;
    (iii) As applicable, the Federal Reserve's own pro forma estimates 
of the firm's potential losses, revenues, reserves, and resulting 
capital adequacy under stressful conditions, as well as the results of 
any stress tests conducted by the bank holding company or the Federal 
Reserve; and
    (iv) Other information requested or required by the Federal 
Reserve, as well as any other information relevant, or related, to the 
bank holding company's capital adequacy.
    With respect to the third criterion, the Board expects that, as it 
develops and conducts supervisory stress testing requirements pursuant 
to section 165(i)(1) of the Dodd-Frank Act and reviews stress tests 
submitted by companies pursuant to section 165(i)(2) of the Dodd-Frank 
Act, the Federal Reserve would consider the results of such stress 
tests in its evaluation of bank holding companies' capital plans.\26\
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    \26\ See section 165(i)(1) and (2) of the Dodd-Frank Act; 12 
U.S.C. 5365(i)(1) and (2).
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D. Federal Reserve Action on a Capital Plan

    The proposed rule describes the timeframe under which the Federal 
Reserve would review and act on a bank holding company's capital plan. 
Generally, as described in more detail below, the Federal Reserve's 
review of a capital plan would not delay a bank holding's ability to 
make capital distributions. Under the proposed rule, a bank holding 
company would be required to submit a complete annual capital plan by 
January 5 with respect to that calendar year. The Federal Reserve would 
object by March 15 to the capital plan, in whole or in part, or provide 
the bank holding company with a notice of non-objection.
    This proposed timeframe is intended to balance the Federal 
Reserve's interest in having adequate time to review a capital plan 
with the bank holding company's interest in a process that does not 
unduly interfere with the ability of its board of directors and senior 
management to take appropriate capital actions. For example, if a firm 
submitted a complete annual plan to the Federal Reserve on January 5 of 
Year 1 with respect to its Year 1 capital plan, the Federal Reserve 
would provide a response by no later than March 15 of Year 1. The 
Federal Reserve expects that any non-objection to a capital plan would 
cover the subsequent four quarters (through the fourth quarter of Year 
1). If the firm discussed above submitted a complete capital plan by 
January 5 of Year 2 with respect to its Year 2 capital plan and had 
received the Federal Reserve's non-objection to the capital plan 
provided in Year 1, any fourth-quarter capital distributions in Year 1 
would have been covered by non-objection that the Federal Reserve 
provided in Year 1, and the firm would be notified by March 15 whether 
or not the Federal Reserve had any objection to dividend payments in 
the first quarter of Year 2. Thus, for this hypothetical firm, the 
Federal Reserve's review of its capital plan generally would not delay 
the bank holding company's ability to pay dividends or take other 
capital actions while awaiting a response from the Federal Reserve.
    In order to adhere to the schedule set forth in the proposed rule, 
the Federal Reserve would likely require bank holding companies to 
submit data templates and other required information several weeks 
before complete capital plans are due.
    The proposed rule provides that the Federal Reserve may object to a 
capital plan, in whole or in part, if (i) The Federal Reserve 
determines that the

[[Page 35356]]

bank holding company has material unresolved supervisory issues, 
including but not limited to issues associated with its capital 
adequacy processes; (ii) the assumptions and analysis underlying the 
bank holding company's capital plan, or the bank holding company's 
methodologies for reviewing the effectiveness of its capital adequacy 
processes, are not reasonable or appropriate; (iii) the bank holding 
company has not demonstrated an ability to maintain capital above each 
minimum regulatory capital ratio, or until January 1, 2016, a tier 1 
common ratio of 5 percent, on a pro forma basis under stressful 
conditions throughout the planning horizon; or (iv) the bank holding 
company's capital planning processes or proposed capital distributions 
constitute an unsafe or unsound practice, or would violate any law, 
regulation, Board order, directive, or any condition imposed by, or 
written agreement with, the Board.\27\
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    \27\ In determining whether a capital plan or proposed capital 
distributions would constitute an unsafe or unsound practice, the 
appropriate Reserve Bank would consider whether the bank holding 
company is and would remain in sound financial condition after 
giving effect to the capital plan and all proposed capital 
distributions.
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    With respect to the first criterion, material supervisory issues 
could include inadequate risk management processes, such as the 
inability to accurately identify and monitor credit risk, market risk, 
operational risk, liquidity risk or interest rate risk, and any other 
significant weaknesses in a bank holding company's ability to identify 
and measure its risk exposures or other potential and material 
vulnerabilities. The Federal Reserve generally would expect an 
institution to correct such deficiencies before making any significant 
capital distributions.
    The Federal Reserve would notify the bank holding company in 
writing of the reasons for a decision to object to a capital plan. 
Within 5 calendar days of receipt of a notice of objection, the bank 
holding company could submit a written request for reconsideration of 
the objection, including an explanation of why reconsideration should 
be granted. Within 10 calendar days of receipt of the bank holding 
company's request, the Board would notify the company of its decision 
to affirm or withdraw the objection to the bank holding company's 
capital plan.
    To the extent that Federal Reserve objected to a capital plan and 
to the capital actions described therein, and until such time as the 
Federal Reserve determined that the bank holding company's capital plan 
satisfies the factors provided in the proposal, the bank holding 
company generally would not be able to make a capital distribution 
without providing prior notice to the Federal Reserve under the 
procedures discussed in section IV of this preamble.
    As discussed below in section IV of this preamble, prior notice 
would not be required in circumstances where the Federal Reserve 
expressly did not object to specific capital distributions. For 
example, the Federal Reserve may object to a bank holding company's 
proposed payments of dividends on common stock, but expressly not 
object to payments on its preferred stock. In this situation, the bank 
holding company would not have to provide prior notice in order to make 
payments on its preferred stock in accordance with its capital plan.
    The Board solicits comment on the proposed rule's process for the 
Federal Reserve's review and action on a capital plan, including the 
proposed annual deadline for submission of the capital plan of January 
5 and the proposed date of March 15 by which the Federal Reserve would 
object or provide the bank holding company with a notice of non-
objection.

E. Resubmission of a Capital Plan

    Under the proposal, a bank holding company would be required to 
revise and resubmit its capital plan if the Federal Reserve objected to 
the capital plan or the Federal Reserve directed the bank holding 
company in writing to revise and resubmit its capital plan for any of 
the following reasons:
    (i) The capital plan is incomplete or the capital plan or the bank 
holding company's internal capital adequacy processes contain 
weaknesses;
    (ii) There has been or will likely be a material change in the bank 
holding company's risk profile (including a material change in its 
business strategy or any risk exposure), financial condition, or 
corporate structure;
    (iii) The bank holding company-developed stressed scenario(s) in 
the capital plan are not sufficiently stressed, or changes in the 
macro-economic outlook that could have a material impact on a bank 
holding company's risk profile require the use of updated scenarios; or
    (iv) The capital plan or the condition of the bank holding company 
raise any issues to which the Federal Reserve could object to in its 
review of a capital plan.

IV. Prior Notice Requirements

    The proposal would require a bank holding company to notify the 
Federal Reserve before making a capital distribution if the Federal 
Reserve had objected to the bank holding company's capital plan and 
that objection was still outstanding.\28\ Even if the Federal Reserve 
did not object to the bank holding company's capital plan, the bank 
holding company still would be required to provide prior notice to the 
Federal Reserve before making capital distributions if:
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    \28\ For purposes of the proposed prior notice requirements, the 
Federal Reserve would treat a bank holding company that became 
subject to the proposed rule after January 5 of a calendar year as 
if it had received the Federal Reserve's non-objection to its 
capital plan. Accordingly, it would not be subject to this aspect of 
the proposed prior notice requirements. See proposed sections 
225.8(f)(1)(i),(iv).
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    (i) After giving effect to the capital distribution, the bank 
holding company would not meet a minimum regulatory capital ratio or, 
until January 1, 2016, a tier 1 common ratio of 5 percent;
    (ii) The Federal Reserve determines that the capital distribution 
would result in a material adverse change to the organization's capital 
or liquidity structure or that earnings were materially underperforming 
projections; \29\
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    \29\ A bank holding company would be notified in advance if any 
of the circumstances in the second criterion applied or were likely 
to apply.
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    (iii) The dollar amount of the capital distribution would exceed 
the amount described in the capital plan approved by the Federal 
Reserve; or
    (iv) The capital distribution would occur during a period in which 
the appropriate Reserve Bank is reviewing the capital plan.
    With respect to the third criterion, the Board solicits comments on 
whether there should be a de minimis exception, and if so, how the 
Board should measure materiality. For example, should the Board exempt 
a capital distribution from the proposed prior notice requirements if 
the effect of the distribution, combined with all other capital 
distributions in the prior 12 months to which the Federal Reserve had 
not been given prior notice, would reduce the bank holding company's 
tier 1 risk-based capital ratio by 10 basis points or less?
    Under any of these circumstances, notwithstanding a notice of non-
objection on its capital plan from the Federal Reserve, the bank 
holding company would be required to provide the Federal Reserve with 
30 calendar days prior notice of the proposed capital distribution. A 
bank holding company would be required to file its notice of a proposed 
capital distribution with the appropriate Reserve Bank. Such a notice 
would be required to contain the following information:

[[Page 35357]]

    (i) The bank holding company's previously approved capital plan or 
an attestation that there have been no changes to its capital plan;
    (ii) The purpose of the transaction;
    (iii) A description of the capital distribution, including for 
redemptions or repurchases of securities, the gross consideration to be 
paid and the terms and sources of funding for the transaction, and for 
dividends, the amount of the dividend(s); and
    (iv) Any additional information requested by the appropriate 
Reserve Bank or Board.
    In most circumstances, within 15 calendar days of receipt of a 
notice, the appropriate Reserve Bank would either approve the proposed 
transaction or capital distribution or refer the notice to the Board 
for decision. If the notice were referred to the Board for decision, 
the Board would be required act on the notice within 30 calendar days 
after the Reserve Bank receives the notice. The appropriate Reserve 
Bank, after consultation with the Board, may, at its sole discretion, 
shorten the 30-day prior notice period.
    With respect to notices provided for capital distributions that 
would occur during the period that the appropriate Reserve Bank is 
reviewing the company's capital plan, a bank holding company would not 
be permitted to consummate the proposed capital distribution until the 
appropriate Reserve Bank provides the bank holding company with a 
notice of non-objection to the capital plan.
    The Board could deny the proposed capital distribution under 
circumstances that parallel those under which the Board may object to a 
bank holding company's capital plan.
    The proposal provides that the Board would notify the bank holding 
company in writing of the reasons for a decision to disapprove any 
proposed capital distribution. Within 10 calendar days of receipt of a 
notice of disapproval by the Board, the bank holding company could 
submit a written request for a hearing.
    If the bank holding company requested a hearing, the Board would 
order a hearing within 10 calendar days of receipt of the request if it 
finds that material facts are in dispute, or if it otherwise appears 
appropriate. Any hearing conducted would be held in accordance with the 
Board's Rules of Practice for Formal Hearings (12 CFR part 263). At the 
conclusion of any hearing, the Board would by order approve or 
disapprove the proposed capital action on the basis of the record of 
the hearing.
    The Board solicits comments on the proposed prior notice 
requirements. Are there any circumstances that may arise under which 
bank holding companies may need additional flexibility with respect to 
capital distributions? If so, please describe those circumstances and 
indicate how the Board could assure that any added flexibility would 
not be used to circumvent the proposal's prior notice requirements.

V. Conforming Amendments to Section 225.4(b) of Regulation Y

    In addition to the capital planning and prior notice requirements 
discussed above, the Board is proposing to make conforming changes to 
section 225.4(b) of Regulation Y, which currently requires prior notice 
to the Federal Reserve of certain purchases and redemptions of a bank 
holding company's equity securities.\30\ Because such prior notice 
would be separately required in the proposed rule at section 225.8 of 
Regulation Y, the Board is proposing an amendment to section 225.4(b) 
to provide that section 225.4(b) shall not apply to any bank holding 
company that is subject to section 225.8.
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    \30\ See 12 CFR 225.4(b).
---------------------------------------------------------------------------

    The Board solicits comments on this proposed amendment to section 
225.4(b) of Regulation Y and on all other aspects of the proposal.

VI. Administrative Law Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., 
generally requires that an agency prepare and make available for public 
comment an initial regulatory flexibility analysis in connection with a 
notice of proposed rulemaking. Under regulations issued by the Small 
Business Administration, a small entity includes a bank holding company 
with assets of $175 million or less (small bank holding company).\31\ 
As of December 31, 2010, there were approximately 4,493 small bank 
holding companies.
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    \31\ 13 CFR 121.201.
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    As discussed in the Supplementary Information, the proposed rule 
applies to every top-tier bank holding company domiciled in the United 
States with $50 billion or more in total consolidated assets. Bank 
holding companies that are subject to the proposed rule therefore 
substantially exceed the $175 million asset threshold at which a 
banking entity would qualify as a small bank holding company.
    Because the proposed rule is not likely to apply to any bank 
holding company with assets of $175 million or less, if adopted in 
final form, it is not expected to apply to any small bank holding 
company for purposes of the RFA. The Board does not believe that the 
proposed rule duplicates, overlaps, or conflicts with any other Federal 
rules. In light of the foregoing, the Board does not believe that the 
proposed rule, if adopted in final form, would have a significant 
economic impact on a substantial number of small entities. Nonetheless, 
the Board seeks comment on whether the proposed rule would impose undue 
burdens on, or have unintended consequences for, small organizations, 
and whether there are ways such potential burdens or consequences could 
be minimized in a manner consistent with the purpose of the proposed 
rule.

B. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (PRA) of 1995 (44 
U.S.C. 3506; 5 CFR part 1320, Appendix A.1), the Board reviewed the 
proposed rule under the authority delegated to the Board by Office of 
Management and Budget (OMB). The Board may not conduct or sponsor, and 
a respondent is not required to respond to, an information collection 
unless it displays a currently valid OMB control number. The OMB 
control number will be assigned.
    The proposed rule contains requirements subject to the PRA. The 
collection of information that would be required by this proposed rule 
is found in new section 225.8 of Regulation Y (12 CFR part 225). The 
Board is proposing to require certain bank holding companies to submit 
capital plans to the Federal Reserve on an annual basis and to require 
such holding companies to provide prior notice to the Federal Reserve 
under certain circumstances before making a capital distribution.
    Section 225.8(d)(1)(i) would require a bank holding company to 
develop and maintain an initial capital plan. The level of detail and 
analysis expected in a capital plan would vary based on the bank 
holding company's size, complexity, risk profile, scope of operations, 
and the effectiveness of its processes for assessing capital adequacy. 
Section 225.8(d)(2) provides a list of the mandatory elements to be 
included in the capital plan.
    Sections 225.8(d)(1)(ii) would require a bank holding company to 
submit its complete capital plan to the appropriate Reserve Bank and 
the Board each year by the 5th of January, or such later date as 
directed by the appropriate Reserve Bank after consultation with the 
Board.
    Section 225.8(d)(1)(iii) would require the bank holding company's 
board of directors or a designated committee to review and approve the 
bank holding company's capital plan prior to its

[[Page 35358]]

submission to the appropriate Federal Reserve Bank under section 
225.8(d)(1)(ii). In addition, section 225.8(d)(1)(iv) would require the 
bank holding company to update and re-submit its capital plan within 30 
days of the occurrence of certain events.
    Within 5 calendar days of receipt of a notice of objection by the 
Board of the bank holding company's capital plan, pursuant to section 
225.8(e)(3), the banking holding company may submit a written request 
for reconsideration.
    In certain circumstances, large bank holding companies would be 
required, pursuant to section 225.8(f)(1), to provide prior notice to 
the Federal Reserve before making capital distributions. As listed in 
section 225.8(f)(2), such a notice would be required to contain the 
following information: The bank holding company's current capital plan 
or an attestation that there have been no changes to its current 
capital plan; the purpose of the transaction; a description of the 
capital action, including for redemptions or repurchases of securities, 
the gross consideration to be paid, and for dividends, the amount of 
the dividend(s); the terms and sources of funding for the transaction; 
and any additional information requested by the appropriate Reserve 
Bank or Board.
    Under section 225.8(f)(8)(i), if the Federal Reserve disapproves of 
a bank holding company's capital plan, the bank holding company within 
10 calendar days of receipt of a notice of disapproval by the Board may 
submit a written request for a hearing.
    In connection with submissions of capital plans to the Federal 
Reserve, bank holding companies would be required pursuant to section 
225.8(d)(3) to provide certain data to the Federal Reserve. Data 
request templates, would be designed to minimize burden on the bank 
holding company and to avoid duplication. Data required by the Federal 
Reserve could include, but would not be limited to, information 
regarding the bank holding company's financial condition, structure, 
assets, risk exposure, policies and procedures, liquidity, and 
management.
    The proposed rule would apply to every top-tier bank holding 
company domiciled in the United States with $50 billion or more in 
average total consolidated assets. Currently, 35 bank holding companies 
would be required to comply with the proposed information collection.
    The Federal Reserve estimates that each of the bank holding 
companies would take, on average, 12,000 hours to comply with the 
section 225.8(d)(1)(i) recordkeeping requirement to develop and 
maintain the initial capital plan and with the section 225.8(d)(1)(ii) 
reporting requirement to submit the initial capital plan. The one-time 
implementation burden for these requirements is estimated to be 420,000 
hours.
    The Federal Reserve estimates that each of the bank holding 
companies would take, on average, 100 hours annually to comply with the 
section 225.8(d)(1)(iii) recordkeeping requirement to review and revise 
its capital plan. The annual burden for this recordkeeping requirement 
is estimated to be 3,500 hours.
    Upon written request from the Federal Reserve, each bank holding 
company would be required to revise and resubmit its capital plan to 
the Federal Reserve. It is estimated that 10 bank holding companies 
would be requested to provide revised capital plans. The Federal 
Reserve estimates that it would take this subset of bank holding 
companies, on average, 100 hours to comply with the section 
225.8(d)(1)(iv) recordkeeping requirement to revise and resubmit their 
capital plans.
    Of the 10 bank holding companies, it is estimated that 2 would 
provide written request for a hearing regarding the disapproval of its 
capital plan. These bank holding companies would take, on average, 16 
hours to comply with the section 225.8(e)(3) reporting requirement. The 
annual burden for these requirements is estimated to be 1,832 hours.
    The Federal Reserve estimates that approximately 10 bank holding 
companies would be required to provide prior notice before giving 
capital distributions. The 10 bank holding companies would take, on 
average, 16 hours to comply with the section 225.8(f)(1) reporting 
requirement. Of the 10 bank holding companies, it is estimated that 2 
would provide written request for a hearing regarding the disapproval 
of its prior notice. The 2 bank holding companies would take, on 
average, 16 hours to comply with the section 225.8(f)(8)(i) reporting 
requirement. The annual burden for these reporting requirements is 
estimated to be 192 hours.
    The Federal Reserve estimates that bank holding companies would 
take, on average, 1,042 hours monthly to comply with the section 
225.8(d)(3) reporting requirement to provide additional data to the 
Federal Reserve in connection with the submission of capital plans. The 
annual burden for this reporting requirement is estimated to be 437,640 
hours.
    The total annual burden for this proposed information collection is 
estimated to be 862,364 hours.
    Comments are invited on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the Board's 
functions; including whether the information has practical utility; (2) 
the accuracy of the Board's estimate of the burden of the proposed 
information collection, including the cost of compliance; (3) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (4) ways to minimize the burden of information 
collection on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Comments on the collection of information should be sent to Cynthia 
Ayouch, Acting Federal Reserve Clearance Officer, Division of Research 
and Statistics, Mail Stop 95-A, Board of Governors of the Federal 
Reserve System, Washington, DC 20551, with copies of such comments sent 
to the Office of Management and Budget, Paperwork Reduction Project 
(7100-to be assigned), Washington, DC 20503.

C. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 
requires the Federal banking agencies to use plain language in all 
proposed and final rules published after January 1, 2000. The Board 
invites comment on how to make the interim final rule easier to 
understand. For example:
     Have we organized the material to suit your needs? If not, 
how could the rule be more clearly stated?
     Are the requirements in the rule clearly stated? If not, 
how could the rule be more clearly stated?
     Do the re