Agency Information Collection Activities: Submission for OMB Review; Joint Comment Request, 77315-77325 [2011-31888]
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Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
OMB Number: 1505–0024.
Type of Review: Revision of a
currently approved collection.
Title: Treasury International Capital
(TIC) Form CQ–1 ‘‘Report of Financial
Liabilities to, and Financial Claims on,
Foreign Residents’’ and Form CQ–2
‘‘Report of Commercial Liabilities to,
and Commercial Claims on, Unaffiliated
Foreign-Residents’’.
Abstract: Forms CQ–1 and CQ–2 are
required by law to collect timely
information on international portfolio
capital movements, including data on
financial and commercial liabilities to,
and claims on, unaffiliated foreigners
and certain affiliated foreigners held by
non-banking enterprises in the U.S. This
information is necessary in the
computation of the U.S. balance of
payments accounts and the U.S.
international investment position, and
in the formulation of U.S. international
financial and monetary policies.
Affected Public: Private Sector:
Businesses or other for-profits.
Estimated Total Annual Burden
Hours: 5,616.
OMB Number: 1505–0149.
Type of Review: Revision of a
currently approved collection.
Title: 31 CFR Part 128, Reporting of
International Capital and Foreign
Currency Transactions and Positions.
Abstract: Title 31 CFR Part 128
establishes general guidelines for
reporting on U.S. claims on, and
liabilities to foreigners; on transactions
in securities with foreigners; and on
monetary reserve of the U.S. It also
establishes guidelines for reporting on
the foreign currency of U.S. persons. It
includes a recordkeeping requirement in
section 128.5.
Affected Public: Private Sector:
Businesses or other for-profits.
Estimated Total Annual Burden
Hours: 5,683.
Dawn D. Wolfgang,
Treasury PRA Clearance Officer.
[FR Doc. 2011–31711 Filed 12–9–11; 8:45 am]
BILLING CODE 4810–25–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
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Federal Reserve System
Federal Deposit Insurance Corporation
Agency Information Collection
Activities: Submission for OMB
Review; Joint Comment Request
AGENCIES: Office of the Comptroller of
the Currency (OCC), Treasury; Board of
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Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Notice of information collection
to be submitted to OMB for review and
approval under the Paperwork
Reduction Act of 1995.
SUMMARY: In accordance with the
requirements of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C.
chapter 35), the OCC, the Board, and the
FDIC (the ‘‘agencies’’) may not conduct
or sponsor, and the respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
(OMB) control number. On June 17,
2011, OMB approved the agencies’
emergency clearance requests to
implement assessment-related reporting
revisions to the Consolidated Reports of
Condition and Income (Call Report) for
banks, the Thrift Financial Report (TFR)
for savings associations, the Report of
Assets and Liabilities of U.S. Branches
and Agencies of Foreign Banks (FFIEC
002), and the Report of Assets and
Liabilities of a Non-U.S. Branch that is
Managed or Controlled by a U.S. Branch
or Agency of a Foreign (Non-U.S.) Bank
(FFIEC 002S), all of which currently are
approved collections of information,
effective as of the June 30, 2011, report
date. OMB’s emergency approval of the
assessment-related reporting revisions
extends through the December 31, 2011,
report date. (As separately approved by
OMB, December 31, 2011, is also the
final report date as of which the TFR
will be collected; savings associations
will begin to file the Call Report as of
the March 31, 2012, report date (76 FR
39986)).
Because of the limited approval
period associated with OMB’s
emergency clearance, the agencies,
under the auspices of the Federal
Financial Institutions Examination
Council (FFIEC), requested public
comment for 60 days on July 27, 2011,
on the assessment-related reporting
revisions to which the emergency
approval pertained (76 FR 44987). After
considering the comments received on
these revisions, the transition guidance
for the reporting of subprime and
leveraged loans and securities by large
and highly complex institutions that
was adopted by the agencies in
connection with their emergency
clearance request to OMB has been
extended to April 1, 2012. Furthermore,
the FDIC has decided to review the
subprime and leveraged loan definitions
in its February 2011 final rule on
assessments (76 FR 10672) to determine
whether changes to these definitions
could alleviate concerns expressed by
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bankers without sacrificing accuracy in
risk differentiation for deposit insurance
pricing purposes. The instructions for
reporting subprime and leveraged loans
and securities for assessment purposes
in the agencies’ regulatory reports will
be conformed to any revised definitions
of these terms in the FDIC’s assessment
regulations that may result from the
FDIC’s review process, including any
necessary rulemaking. In addition, the
agencies have made certain other
modifications to the assessment-related
reporting revisions covered by OMB’s
emergency approval in response to
comments received.
DATES: Comments must be submitted on
or before January 11, 2012.
ADDRESSES: Interested parties are
invited to submit written comments to
any or all of the agencies. All comments,
which should refer to the OMB control
number(s), will be shared among the
agencies.
OCC: You should direct all written
comments to: Communications
Division, Office of the Comptroller of
the Currency, Mailstop 2–3, Attention:
1557–0081, 250 E Street SW.,
Washington, DC 20219. In addition,
comments may be sent by fax to (202)
874–5274, or by electronic mail to
regs.comments@occ.treas.gov. You may
personally inspect and photocopy
comments at the OCC, 250 E Street SW.,
Washington, DC 20219. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
(202) 874–4700. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and to submit to security screening in
order to inspect and photocopy
comments.
Board: You may submit comments,
which should refer to ‘‘Consolidated
Reports of Condition and Income (FFIEC
031 and 041)’’ or ‘‘Report of Assets and
Liabilities of U.S. Branches and
Agencies of Foreign Banks (FFIEC 002)
and Report of Assets and Liabilities of
a Non-U.S. Branch that is Managed or
Controlled by a U.S. Branch or Agency
of a Foreign (Non-U.S.) Bank (FFIEC
002S),’’ 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.
• Email:
regs.comments@federalreserve.gov.
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Include reporting form number in the
subject line of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments are available from
the Board’s Web site at
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper 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.
FDIC: You may submit comments,
which should refer to ‘‘Consolidated
Reports of Condition and Income, 3064–
0052,’’ by any of the following methods:
• Agency Web Site: https://
www.fdic.gov/regulations/laws/federal/
propose.html. Follow the instructions
for submitting comments on the FDIC
Web site.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: comments@FDIC.gov.
Include ‘‘Consolidated Reports of
Condition and Income, 3064–0052’’ in
the subject line of the message.
• Mail: Gary A. Kuiper, (202) 898–
3877, Counsel, Attn: Comments, Room
F–1086, Federal Deposit Insurance
Corporation, 550 17th Street NW.,
Washington, DC 20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7 a.m. and 5 p.m.
Public Inspection: All comments
received will be posted without change
to https://www.fdic.gov/regulations/laws/
federal/propose.html including any
personal information provided.
Comments may be inspected at the FDIC
Public Information Center, Room E–
1002, 3501 Fairfax Drive, Arlington, VA
22226, between 9 a.m. and 5 p.m. on
business days.
Additionally, commenters may send a
copy of their comments to the OMB
desk officer for the agencies by mail to
the Office of Information and Regulatory
Affairs, U.S. Office of Management and
Budget, New Executive Office Building,
Room 10235, 725 17th Street NW.,
Washington, DC 20503, or by fax to
(202) 395–6974.
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FOR FURTHER INFORMATION CONTACT: For
further information about the revisions
discussed in this notice, please contact
any of the agency clearance officers
whose names appear below. In addition,
copies of the Call Report, FFIEC 002,
and FFIEC 002S forms can be obtained
at the FFIEC’s Web site (https://
www.ffiec.gov/ffiec_report_forms.htm).1
OCC: Ira Mills and Mary Gottlieb,
OCC Clearance Officers, (202) 874–6055
and (202) 874–5090, Legislative and
Regulatory Activities Division, Office of
the Comptroller of the Currency, 250 E
Street SW., Washington, DC 20219.
Board: Cynthia Ayouch, Federal
Reserve Board Clearance Officer, (202)
452–3829, Division of Research and
Statistics, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551.
Telecommunications Device for the Deaf
(TDD) users may call (202) 263–4869.
FDIC: Gary A. Kuiper, Counsel, (202)
898–3877, Legal Division, Federal
Deposit Insurance Corporation, 550 17th
Street NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION: The
agencies are proposing to revise and
extend for three years the Call Report,
the FFIEC 002, and the FFIEC 002S,
which currently are approved
collections of information.2 3
1. Report Title: Consolidated Reports
of Condition and Income (Call Report).
Form Number: Call Report: FFIEC 031
(for banks with domestic and foreign
offices) and FFIEC 041 (for banks with
domestic offices only).
Frequency of Response: Quarterly.
Affected Public: Business or other forprofit.
1 Copies of the TFR, the collection of which will
be discontinued after the filing of the reports for
December 31, 2011, can be obtained at https://
www.ots.treas.gov/?p=ThriftFinancialReports.
2 The assessment-related changes to the Call
Report and the FFIEC 002/002S that are the subject
of this notice were approved by OMB on an
emergency clearance basis and took effect June 30,
2011. OMB’s emergency approval for these reports
expires December 31, 2011. OMB’s emergency
approval also applies to the TFR, the collection of
which will be discontinued after the reports for
December 31, 2011, are filed. As separately
approved by OMB, savings associations currently
filing the TFR will convert to filing the Call Report
beginning as of the March 31, 2012, report date (76
FR 39981, July 7, 2011).
3 The agencies have also proposed to implement
other revisions to the Call Report in 2012 (76 FR
72035, November 21, 2011). The new data items are
proposed to be added to the Call Report as of the
June 30, 2012, report date, except for two proposed
revisions that would take effect March 31, 2012, in
connection with the initial filing of Call Reports by
savings associations. Proposed revisions to certain
Call Report instructions would take effect March 31,
2012. In addition, the Board, on behalf of the
agencies, has proposed certain revisions to the
FFIEC 002 report effective June 30, 2012 (76 FR
72410, November 23, 2011).
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OCC
OMB Number: 1557–0081.
Estimated Number of Respondents:
2,035 (1,399 national banks and 636
federal savings associations).
Estimated Time per Response:
National banks: 53.97 burden hours per
quarter to file. Federal savings
associations: 54.48 burden hours per
quarter to file and 188 burden hours for
the first year to convert systems and
conduct training.
Estimated Total Annual Burden:
National banks: 302,016 burden hours
to file. Federal savings associations:
138,597 burden hours to file plus
119,568 burden hours for the first year
to convert systems and conduct training.
Total: 560,181 burden hours.
Board
OMB Number: 7100–0036.
Estimated Number of Respondents:
826 state member banks.
Estimated Time per Response: 55.48
burden hours per quarter to file.
Estimated Total Annual Burden:
183,306 burden hours.
FDIC
OMB Number: 3064–0052.
Estimated Number of Respondents:
4,747 (4,687 insured state nonmember
banks and 60 state savings associations).
Estimated Time per Response: State
nonmember banks: 40.47 burden hours
per quarter to file. State savings
associations: 40.47 burden hours per
quarter to file and 188 burden hours for
the first year to convert systems and
conduct training.
Estimated Total Annual Burden: State
nonmember banks: 758,732 burden
hours to file. State savings associations:
9,713 burden hours to file plus 11,280
burden hours for the first year to convert
systems and conduct training. Total:
779,725 burden hours.
The estimated times per response
shown above for the Call Report
represent the estimated ongoing
reporting burden associated with the
preparation of this report after
institutions make the necessary
recordkeeping and systems changes to
enable them to generate the data
required to be reported in the
assessment-related data items that are
the subject of this proposal. The
estimated time per response is an
average that varies by agency because of
differences in the composition of the
institutions under each agency’s
supervision (e.g., size distribution of
institutions, types of activities in which
they are engaged, and existence of
foreign offices). These factors determine
the specific Call Report data items in
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which an individual institution will
have data it must report. The average
ongoing reporting burden for the Call
Report (including the additional
revisions proposed for implementation
in 2012 referred to in footnote 3) is
estimated to range from 17 to 715 hours
per quarter, depending on an individual
institution’s circumstances.
2. Report Titles: Report of Assets and
Liabilities of U.S. Branches and
Agencies of Foreign Banks; Report of
Assets and Liabilities of a Non-U.S.
Branch that is Managed or Controlled by
a U.S. Branch or Agency of a Foreign
(Non-U.S.) Bank.
Form Numbers: FFIEC 002; FFIEC
002S.
Board
OMB Number: 7100–0032.
Frequency of Response: Quarterly.
Affected Public: U.S. branches and
agencies of foreign banks.
Estimated Number of Respondents:
FFIEC 002—236; FFIEC 002S—57.
Estimated Time per Response: FFIEC
002—25.43 hours; FFIEC 002S—6
hours.
Estimated Total Annual Burden:
FFIEC 002—24,006 hours; FFIEC 002S—
1,368 hours.
As previously stated with respect to
the Call Report, the burden estimates
shown above are for the quarterly filings
of the Call Report and the FFIEC 002/
002S reports. The initial burden arising
from implementing recordkeeping and
systems changes to enable insured
depository institutions to report the
applicable assessment-related data items
that have been added to these regulatory
reports will vary significantly. For the
vast majority of the nearly 7,600 insured
depository institutions, including the
smallest institutions, this initial burden
will be nominal because only three of
the new data items will be relevant to
them and the amounts to be reported
can be carried over from amounts
reported elsewhere in the report.
At the other end of the spectrum,
many of the new data items are
applicable only to about 110 large and
highly complex institutions (as defined
in the FDIC’s assessment regulations).
To achieve consistency in reporting
across this group of institutions, the
instructions for these new data items,
which are drawn directly from
definitions contained in the FDIC’s
assessment regulations (as amended in
February 2011), are prescriptive.
Transition guidance has been provided
for the two categories of higher-risk
assets (subprime and leveraged loans)
for which large and highly complex
institutions have indicated that their
data systems do not currently enable
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them to identify individual assets
meeting the FDIC’s definitions that will
be used for assessment purposes only.
The transition guidance provides time
for large and highly complex
institutions to revise their data systems
to support the identification and
reporting of assets in these two
categories on a going-forward basis. The
guidance also permits these institutions
to use existing internal methodologies
developed for supervisory purposes to
identify existing assets (and, in general,
assets acquired during the transition
period, which currently extends until
April 1, 2012) that would be reportable
in these higher-risk asset categories on
an ongoing basis.
Before the agencies submitted
emergency clearance requests to OMB
for approval of the assessment-related
reporting revisions that are the subject
of this notice, the agencies had
published an initial PRA notice on
March 16, 2011, requesting comment on
these revisions (76 FR 14460).
Comments submitted in response to the
agencies’ initial PRA notice that
addressed the initial burden that large
and highly complex institutions would
incur to identify assets meeting the
definitions of subprime and leveraged
loans in the FDIC’s assessment
regulations were written in the context
of applying these definitions to all
existing loans. The transition guidance
created for these loans is intended to
mitigate the initial data capture and
systems burden that institutions would
otherwise incur. Thus, the initial
burden associated with implementing
the recordkeeping and systems changes
necessary to identify assets reportable in
these two higher-risk asset categories
will be significant for the approximately
110 large and highly complex
institutions, but the agencies are
currently unable to estimate the amount
of this initial burden. Large and highly
complex institutions will also
experience additional initial burden in
connection with implementing systems
changes to support their ability to report
the other new assessment-related items
applicable to such institutions.
However, given their focus on subprime
and leveraged loans, respondents to the
agencies’ initial PRA notice offered
limited comments about the burden of
the other new items for large and highly
complex institutions.
General Description of Reports
These information collections are
mandatory: 12 U.S.C. 161 (for national
banks), 12 U.S.C. 324 (for state member
banks), 12 U.S.C. 1817 (for insured state
nonmember commercial and savings
banks), 12 U.S.C. 1464 (for savings
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77317
associations), and 12 U.S.C. 3105(c)(2),
1817(a), and 3102(b) (for U.S. branches
and agencies of foreign banks). Except
for selected data items, including
several of the data items for large and
highly complex institutions that are part
of this proposal, the Call Report and the
FFIEC 002 are not given confidential
treatment. The FFIEC 002S is given
confidential treatment [5 U.S.C.
552(b)(4)].
Abstracts
Call Report: Institutions submit Call
Report data to the agencies each quarter
for the agencies’ use in monitoring the
condition, performance, and risk profile
of individual institutions and the
industry as a whole. Call Report data
provide the most current statistical data
available for evaluating institutions’
corporate applications, identifying areas
of focus for both on-site and off-site
examinations, and monetary and other
public policy purposes. The agencies
use Call Report data in evaluating
interstate merger and acquisition
applications to determine, as required
by law, whether the resulting institution
would control more than ten percent of
the total amount of deposits of insured
depository institutions in the United
States. Call Report data also are used to
calculate all institutions’ deposit
insurance and Financing Corporation
assessments, and assessment fees for
national banks and federal savings
associations.
FFIEC 002 and FFIEC 002S: On a
quarterly basis, all U.S. branches and
agencies of foreign banks are required to
file the FFIEC 002, which is a detailed
report of condition with a variety of
supporting schedules. This information
is used to fulfill the supervisory and
regulatory requirements of the
International Banking Act of 1978. The
data also are used to augment the bank
credit, loan, and deposit information
needed for monetary policy and other
public policy purposes. The FFIEC 002S
is a supplement to the FFIEC 002 that
collects information on assets and
liabilities of any non-U.S. branch that is
managed or controlled by a U.S. branch
or agency of the foreign bank. Managed
or controlled means that a majority of
the responsibility for business decisions
(including, but not limited to, decisions
with regard to lending or asset
management or funding or liability
management) or the responsibility for
recordkeeping in respect of assets or
liabilities for that foreign branch resides
at the U.S. branch or agency. A separate
FFIEC 002S must be completed for each
managed or controlled non-U.S. branch.
The FFIEC 002S must be filed quarterly
along with the U.S. branch or agency’s
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FFIEC 002. The data from both reports
are used for: (1) Monitoring deposit and
credit transactions of U.S. residents; (2)
monitoring the impact of policy
changes; (3) analyzing structural issues
concerning foreign bank activity in U.S.
markets; (4) understanding flows of
banking funds and indebtedness of
developing countries in connection with
data collected by the International
Monetary Fund and the Bank for
International Settlements that are used
in economic analysis; and (5) assisting
in the supervision of U.S. offices of
foreign banks. The Federal Reserve
System collects and processes these
reports on behalf of the OCC, the Board,
and the FDIC.
Type of Review: Revision and
extension of currently approved
collections of information.
Current Actions
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I. Background
Section 331(b) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (the Dodd-Frank Act)
(Pub. L. 111–203, July 21, 2010)
required the FDIC to amend its
regulations to redefine the assessment
base used for calculating deposit
insurance assessments as average
consolidated total assets minus average
tangible equity. Under prior law, the
assessment base has been defined as
domestic deposits minus certain
allowable exclusions, such as passthrough reserve balances. In general, the
intent of Congress in changing the
assessment base was to shift a greater
percentage of overall total assessments
away from community banks and
toward the largest institutions, which
rely less on domestic deposits for their
funding than do smaller institutions.
In May 2010, prior to the enactment
of the Dodd-Frank Act, the FDIC
published a Notice of Proposed
Rulemaking (NPR) to revise the
assessment system applicable to large
insured depository institutions.4 The
proposed amendments to the FDIC’s
assessment regulations (12 CFR part
327) were designed to better
differentiate large institutions by taking
a more forward-looking view of risk and
better take into account the losses that
the FDIC will incur if an institution
fails. The comment period for the May
2010 NPR ended July 2, 2010, and most
commenters requested that the FDIC
delay the implementation of the
rulemaking until the effects of the then
4 See 75 FR 23516, May 3, 2010, at https://
www.fdic.gov/regulations/laws/federal/2010/
10proposead57.pdf.
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pending Dodd-Frank legislation were
known.
On November 9, 2010, the FDIC Board
approved the publication of two NPRs,
one that proposed to redefine the
assessment base as prescribed by the
Dodd-Frank Act 5 and another that
proposed revisions to the large
institution assessment system while also
factoring in the proposed redefinition of
the assessment base as well as
comments received on the May 2010
NPR.6 After revising the proposals
where appropriate in response to the
comments received on the two
November 2010 NPRs, the FDIC Board
adopted a final rule on February 7,
2011, amending the FDIC’s assessment
regulations to redefine the assessment
base used for calculating deposit
insurance assessments for all 7,500
insured depository institutions and
revise the assessment system for
approximately 110 large institutions.7
This final rule took effect for the quarter
beginning April 1, 2011, and was
reflected for the first time in the
invoices for deposit insurance
assessments due September 30, 2011,
using data reported in the Call Reports,
the TFRs, and the FFIEC 002/002S
reports for June 30, 2011.
The FDIC further notes that the
definitions of subprime loans, leveraged
loans, and nontraditional mortgage
loans in its February 2011 final rule (the
FDIC assessment definitions) are
applicable only for purposes of deposit
insurance assessments. The FDIC
assessment definitions are not identical
to the definitions included in existing
supervisory guidance pertaining to these
types of loans.8 Rather, the FDIC
assessment definitions are more
prescriptive and less subjective than
those contained in the applicable
supervisory guidance. The final rule
includes prescriptive definitions to
ensure that large and highly complex
institutions apply a uniform and
consistent approach to the identification
of loans to be reported as higher-risk
5 See 75 FR 72582, November 24, 2010, at
https://www.fdic.gov/regulations/laws/federal/2010/
10proposeAD66.pdf.
6 See 75 FR 72612, November 24, 2010, at
https://www.fdic.gov/regulations/laws/federal/2010/
10proposeAD66LargeBank.pdf.
7 See 76 FR 10672, February 25, 2011, at https://
www.fdic.gov/regulations/laws/federal/2011/
11FinalFeb25.pdf.
8 Interagency Expanded Guidance for Subprime
Lending Programs, issued in January 2001 (https://
www.fdic.gov/news/news/press/2001/
pr0901a.html); Comptroller’s Handbook: Leveraged
Loans, issued in February 2008 (https://
www.occ.gov/static/publications/handbook/
leveragedlending.pdf); and Interagency Guidance on
Nontraditional Mortgage Product Risks, issued in
October 2006 (https://www.fdic.gov/regulations/
laws/federal/2006/06NoticeFINAL.html).
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assets for assessment purposes and to be
used as inputs to the scorecards that
determine these institutions’ initial base
assessment rates.
Given the specific and limited
purpose for which the definitions of
subprime loans, leveraged loans, and
nontraditional mortgage loans in the
FDIC’s final rule on assessments will be
used, these definitions will not be
applied for supervisory purposes.
Therefore, the definitions of these three
types of loans in the FDIC’s final rule on
assessments do not override or
supersede any existing interagency or
individual agency guidance and
interpretations pertaining to subprime
lending, leveraged loans, and
nontraditional mortgage loans that have
been issued for supervisory purposes or
for any other purpose other than deposit
insurance assessments. In this regard,
the addition of data items to the Call
Report and TFR deposit insurance
assessment schedules for these three
higher-risk asset categories, the
definitions for which are taken directly
from the FDIC’s final rule (subject to the
transition guidance discussed below),
represents the outcome of decisions by
the FDIC in its assessment rulemaking
process rather than a collective decision
of the agencies through interagency
supervisory policy development
activities.
On March 16, 2011, the agencies
published an initial PRA Federal
Register notice under normal PRA
clearance procedures in which they
requested comment on proposed
revisions to the Call Report, the TFR,
and the FFIEC 002/002S reports that
would provide the data needed by the
FDIC to implement the provisions of its
February 2011 final rule beginning with
the June 30, 2011, report date.9 Thus,
the assessment-related reporting
changes were designed to enable the
FDIC to calculate (1) The assessment
bases for insured depository institutions
as redefined in accordance with section
331(b) of the Dodd-Frank Act and the
FDIC’s final rule, and (2) the assessment
rates for ‘‘large institutions’’ and ‘‘highly
complex institutions’’ using a scorecard
set forth in the final rule that combines
CAMELS ratings and certain forwardlooking financial measures to assess the
risk such institutions pose to the
Deposit Insurance Fund (DIF). The new
data items proposed in the March 2011
initial PRA notice were linked to
specific requirements in the FDIC’s
assessment regulations as amended by
the final rule. The draft instructions for
9 See 76 FR 14460, March 16, 2011, at https://
www.fdic.gov/regulations/laws/federal/2011/
11noticeMar16.pdf.
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these proposed new items incorporated
the definitions in, and other provisions
of, the FDIC’s amended assessment
regulations. For a detailed discussion of
the proposed reporting revisions
associated with the redefined deposit
insurance assessment base, see pages
14463–14465 of the agencies’ March
2011 initial PRA notice.10 For a detailed
discussion of the proposed reporting
revisions associated with the revised
large institutions assessment system, see
pages 14466–14470 of the agencies’
March 2011 initial PRA notice.11
The FDIC did not anticipate receiving
material comments on the reporting
changes proposed in the March 2011
initial PRA notice because the FDIC’s
February 2011 final rule on assessments
had taken into account the comments
received on the two November 2010
NPRs as well as the earlier May 2010
NPR. Thus, the agencies expected to
continue following normal PRA
clearance procedures and publish a final
PRA Federal Register notice for the
proposed reporting changes and submit
these changes to OMB for review soon
after the close of the comment period for
the initial PRA notice on May 16, 2011.
The agencies collectively received
comments from 19 respondents on their
initial PRA notice on the proposed
assessment-related reporting changes
published on March 16, 2011.
Comments were received from fourteen
depository institutions, four bankers’
organizations, and one government
agency. Three of the bankers’
organizations commented on certain
aspects of the proposed reporting
requirements associated with the
redefined assessment base, with one of
these organizations welcoming the
proposed reporting changes and
deeming them ‘‘reasonable and
practical.’’ Seventeen of the 19
respondents (all of the depository
institutions and three of the bankers’
organizations) addressed the reporting
requirements proposed for large
institutions, with specific concerns
raised by all 17 about the definitions of
subprime consumer loans and leveraged
loans in the FDIC’s final rule, which
were carried directly into the draft
reporting instructions for these two
proposed data items.12 Concerns were
also expressed regarding large
institutions’ ability to report the amount
of subprime consumer loans and
10 See
76 FR 14463–14465, March 16, 2011, at
https://www.fdic.gov/regulations/laws/federal/2011/
11noticeMar16.pdf.
11 See 76 FR 14466–14470, March 16, 2011, at
https://www.fdic.gov/regulations/laws/federal/2011/
11noticeMar16.pdf.
12 In contrast, only four respondents commented
on other aspects of the overall reporting proposal.
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leveraged loans in accordance with the
final rule’s definitions, particularly
beginning as of the June 30, 2011, report
date. More specifically, these
commenters stated that institutions
generally do not maintain data on these
loans in the manner in which these two
loan categories are defined for
assessment purposes in the FDIC’s final
rule or do not have the ability to capture
the prescribed data to enable them to
identify these loans in time to file their
regulatory reports for the June 30, 2011,
report date. These data availability
concerns, particularly as they related to
institutions’ existing loan portfolios,
had not been raised as an issue during
the rulemaking process for the revised
large institution assessment system,
which included the FDIC’s publication
of two NPRs in 2010.13 Nevertheless, a
number of respondents expressed
support for the concept of applying riskbased evaluation tools in the
determination of deposit insurance
assessments, which is an objective of
the large institution assessment system
under the FDIC’s final rule.
For a detailed discussion of the
comments received on the reporting
revisions associated with the redefined
deposit insurance assessment base
proposed in the agencies’ March 2011
initial PRA notice, the agencies’
evaluation of these comments, and the
modifications that the agencies made to
the March 2011 reporting proposal in
response to these comments, see pages
44994–44996 of the agencies’ second
initial PRA notice for the assessmentrelated reporting changes, which was
published on July 27, 2011.14 For a
detailed discussion of the comments
received on the reporting revisions
13 In response to the November 2010 NPR on the
revised large institution assessment system, the
FDIC received a number of comments
recommending changes to the definitions of
subprime and leveraged loans, which the FDIC
addressed in its February 2011 final rule amending
its assessment regulations. For example, several
commenters on the November 2010 NPR indicated
that regular (quarterly) updating of data to evaluate
loans for subprime or leveraged status would be
burdensome and costly and, for certain types of
retail loans, would not be possible because existing
loan agreements do not require borrowers to
routinely provide updated financial information. In
response to these comments, the FDIC’s February
2011 final rule stated that large institutions should
evaluate loans for subprime or leveraged status
upon origination, refinance, or renewal. However,
no comments were received on the November 2010
NPR indicating that large institutions would not be
able to identify and report subprime or leveraged
loans in accordance with the definitions proposed
for assessment purposes in their Call Reports and
TFRs beginning as of June 30, 2011. These data
availability concerns were first expressed in
comments on the March 2011 initial PRA notice.
14 See 76 FR 44994–44996, July 27, 2011, at
https://www.fdic.gov/regulations/laws/federal/2011/
11noticejuly27no3.pdf.
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associated with the revised large
institutions assessment system proposed
in the agencies’ March 2011 initial PRA
notice, the agencies’ evaluation of these
comments, and the modifications that
the agencies made to the March 2011
reporting proposal in response to these
comments, see pages 44998–45003 of
the agencies’ second initial PRA notice
for the assessment-related reporting
changes, which was published on July
27, 2011.15
The unanticipated outcome of the
public comment process for the
agencies’ March 2011 initial PRA notice
required the FDIC to consider possible
reporting approaches that would
address institutions’ concerns about
their ability to identify loans meeting
the subprime and leveraged loan
definitions in the FDIC’s assessments
final rule while also meeting the
objectives of the revised large institution
assessment system. Accordingly, in
recognition of these concerns, the
agencies decided to provide transition
guidance for reporting subprime
consumer and leveraged loans
originated or purchased prior to October
1, 2011, and securities where the
underlying loans were originated
predominantly prior to October 1, 2011.
However, as a consequence of the
unexpected need to develop and reach
agreement on a workable transition
approach for loans that are to be
reported as subprime or leveraged for
assessment purposes,16 the agencies
concluded that they should follow
emergency rather than normal PRA
clearance procedures to request
approval from OMB for the assessmentrelated reporting changes to the Call
Report, the TFR, and the FFIEC 002/
002S reports. The use of emergency
clearance procedures was intended to
provide certainty to institutions on a
timely basis concerning the initial
collection of the new assessment data
items as of the June 30, 2011, report date
as called for under the FDIC’s final rule.
The transition guidance for reporting
subprime and leveraged loans was an
integral part of the agencies’ emergency
clearance requests that were submitted
to OMB on June 16, 2011. This
guidance, as originally promulgated in
June 2011, provides that for pre-October
1, 2011, loans and securities, if a large
or highly complex institution does not
15 See 76 FR 44998–45003, July 27, 2011, at
https://www.fdic.gov/regulations/laws/federal/2011/
11noticejuly27no3.pdf.
16 The FDIC presented this transition approach to
large institutions during a conference call on June
7, 2011, that all large institutions had been invited
to attend. Several institutions offered favorable
comments about the transition approach during this
call.
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have within its data systems the
information necessary to determine
subprime consumer or leveraged loan
status in accordance with the
definitions of these two higher-risk asset
categories set forth in the FDIC’s final
rule, the institution may use its existing
internal methodology for identifying
subprime consumer or leveraged loans
and securities as the basis for reporting
these assets for deposit insurance
assessment purposes in its Call Reports
or TFRs. Institutions that do not have an
existing internal methodology in place
to identify subprime consumer or
leveraged loans 17 may, as an alternative
to applying the definitions in the FDIC’s
final rule to pre-October 1, 2011, loans
and securities, apply existing guidance
provided by their primary federal
regulator, the agencies’ 2001 Expanded
Guidance for Subprime Lending
Programs,18 or the February 2008
Comptroller’s Handbook on Leveraged
Lending 19 for identification purposes.
Under the agencies’ transition guidance
as originally issued in June 2011, all
loans originated on or after October 1,
2011, and all securities where the
underlying loans were originated
predominantly on or after October 1,
2011, were to be reported as subprime
consumer or leveraged loans and
securities according to the definitions of
these higher-risk asset categories set
forth in the FDIC’s final rule.20
On June 17, 2011, OMB approved the
agencies’ emergency clearance requests
to implement the assessment-related
reporting revisions to the Call Report,
the TFR, and the FFIEC 002/002S
reports effective as of the June 30, 2011,
report date. OMB’s emergency approval
extends through the December 31, 2011,
report date. Because the assessmentrelated reporting revisions need to
remain in effect beyond the limited
approval period associated with an
emergency clearance request, the
agencies, under the auspices of the
17 A large or highly complex institution may not
have an existing internal methodology in place
because it is not required to report on these
exposures to its primary federal regulator for
examination or other supervisory purposes or did
not measure and monitor loans and securities with
these characteristics for internal risk management
purposes.
18 https://www.fdic.gov/news/news/press/2001/
pr0901a.html.
19 https://www.occ.gov/static/publications/
handbook/LeveragedLending.pdf.
20 For loans purchased on or after October 1,
2011, large and highly complex institutions may
apply the transition guidance to loans originated
prior to that date. Loans purchased on or after
October 1, 2011, that also were originated on or
after that date must be reported as subprime or
leveraged according to the definitions of these
higher-risk asset categories set forth in the FDIC’s
final rule.
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FFIEC, began normal PRA clearance
procedures anew with the publication of
a second initial PRA Federal Register
notice on July 27, 2011 (76 FR 44987).
This second initial notice requested
public comment on the assessmentrelated reporting revisions to the Call
Report, the TFR, and the FFIEC 002/
002S reports that had taken effect June
30, 2011, under OMB’s emergency
approval, including the transition
guidance and the other modifications
the agencies had made in response to
the comments received on the revisions
first proposed in March 2011.
After the publication of the agencies’
second initial PRA notice on July 27,
2011, OMB approved the agencies’
separate requests that savings
associations begin to file the Call Report
beginning with the reports for March 31,
2012. As a result, December 31, 2011, is
the final report date as of which the TFR
will be collected from savings
associations. Because OMB’s emergency
approval of the assessment-related
reporting revisions that were
implemented as of the June 30, 2011,
report date extends through the
December 31, 2011, report date (after
which the TFR will no longer be
collected), this notice and the agencies’
related submissions to OMB requesting
approval to revise and extend for three
years the Call Report and the FFIEC
002/002S report do not request this
same approval for the TFR. For
information on the conversion by
savings associations from filing the TFR
to filing the Call Report, see the
agencies’ final PRA notice published
July 7, 2011.21
II. Comments Received on the July 2011
Second Initial PRA Federal Register
Notice and the Agencies’ Response to
the Comments
The agencies collectively received
comments from eight respondents on
their July 27, 2011, second initial PRA
notice on the assessment-related
reporting revisions to the Call Report,
the TFR, and the FFIEC 002/002S
reports that had taken effect June 30,
2011, under OMB’s emergency
approval. Comments were received from
four depository institutions, all of which
are ‘‘large institutions’’ for deposit
insurance assessment purposes, and
four bankers’ organizations, three of
which submitted a joint comment
letter.22 The jointly commenting
21 See 76 FR 39981, July 7, 2011, https://
www.fdic.gov/regulations/laws/federal/2011/
11noticejuly07.pdf.
22 The American Bankers Association (ABA), The
Clearing House, and the Financial Services
Roundtable jointly commented. The Risk
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bankers’ organizations stated they
‘‘collectively represent all of the banks
that are affected or may be affected by’’
the revised assessment system for ‘‘large
institutions’’ and ‘‘highly complex
institutions’’ in the FDIC’s February
2011 final rule on assessments. Six of
the eight respondents on the second
initial PRA notice focused their
comments on the definitions of
subprime consumer and leveraged loans
in the FDIC’s assessments final rule,
which (subject to the transition
guidance for reporting such assets
described above) are the basis for the
regulatory reporting instructions for
reporting the amounts of these two
categories of higher-risk assets for
assessment purposes in the Call Report
and (through the December 31, 2011,
report date) the TFR. In addition, as
noted in the public comment file for the
second initial PRA notice,
representatives of the four commenting
bankers’ organizations and certain large
and highly complex institutions met
twice with FDIC staff prior to the close
of the comment period for the notice to
explain their concerns about the
definitions of, and the availability of the
information necessary to report,
subprime and leveraged loans by such
institutions.
Comments also were received on the
definition of nontraditional 1–4 family
residential mortgage loans, the reporting
of counterparty exposures by highly
complex institutions, the frequency of
loan loss provision and deferred tax
calculations for reporting average
tangible equity, the treatment of prepaid
deposit insurance assessments in the
measurement of average total assets for
assessment base purposes, and the
reporting of certain troubled debt
restructurings that are guaranteed or
insured by the U.S. Government. In
addition, during the initial reporting of
the revised assessment-related data
items as of June 30, 2011, questions
arose about which data items should be
reported on a consolidated or an
unconsolidated single FDIC certificate
number basis by institutions that own
another insured institution as a
subsidiary because of the way in which
these data are used in the FDIC’s riskbased deposit insurance system.
These issues are discussed in Sections
II.A through II.G below.
A. Definitions of Subprime and
Leveraged Loans and Securities—Two
new data items for subprime consumer
and leveraged loans and securities were
among the assessment-related reporting
revisions applicable to large and highly
Management Association submitted a separate
comment letter.
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complex institutions that were included
in OMB’s approval of the agencies’
emergency clearance requests and
implemented in the Call Report and the
TFR as of the June 30, 2011, report date.
These two data items are used as inputs
to the scorecard measures for large and
highly complex institutions in the
revised risk-based assessment system for
such institutions brought about by the
FDIC’s February 2011 assessments final
rule.
In their comments on the agencies’
second initial PRA notice, the four
bankers’ organizations and two
institutions requested that the
definitions of subprime and leveraged
loans in the FDIC’s assessments final
rule be revised, asserting that the
definitions do not effectively capture
the risk that the FDIC desires or needs
for its large bank deposit insurance
pricing model. Rather, these
commenters stated that the final rule’s
current definitions would capture loans
that are not subprime or leveraged (i.e.,
are not higher-risk), would entail
excessive reporting that would often be
inconsistent across institutions, would
greatly overstate institutions’ actual risk
exposures, and would produce a biased
representation of relative risk (resulting
in institutions with less risky portfolios
being treated the same as institutions
with more risky portfolios). The
bankers’ organizations, in their two
comment letters, proposed ‘‘consensus
solutions’’ for modifying the definitions
of subprime and leveraged loans that
would better correspond to industry
standards and practices for such loans,
better differentiate risk among large
institutions, and thereby simplify and
reduce the cost of the regulatory
reporting process for such loans. The
two institutions that addressed these
definitions offered similar
recommendations.
The three jointly commenting
bankers’ organizations stated that
having the ‘‘right definitions’’ is so
important that it is imperative for the
FDIC to revise its assessments final
rule,23 but they also observed that
revising the rule ‘‘cannot be done
instantaneously.’’ Accordingly, these
organizations as well as one institution
recommended extending the transition
approach for reporting subprime and
leveraged loans and securities (which
was summarized above and was
scheduled to end on October 1, 2011)
until more workable and accurate
definitions are developed. The same
commenters also noted that if the FDIC
23 The other bankers’ organization requested that
the FDIC reopen discussions on the subprime and
leveraged loan definitions.
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decides not to make changes to the
assessments final rule’s definitions of
subprime and leveraged loans and
securities, large and highly complex
institutions will need until at least the
second quarter of 2012 to build reliable
systems for identifying such loans and
securities and to train staff to input
reliable data. According to these
commenters, the additional preparation
time that institutions would need if the
definitions are not revised would also
justify an extension of the transition
reporting approach.
The FDIC has decided to review the
definitions of subprime and leveraged
loans and securities in the February
2011 assessments final rule to determine
whether changes to the definitions
could alleviate industry concerns
without sacrificing accuracy in risk
differentiation for deposit insurance
pricing purposes. To allow sufficient
time for the FDIC to undertake this
review, and—in the event that the FDIC
does not propose to alter the definitions
in the February 2011 assessments final
rule following this review—to give large
and highly complex institutions
additional time to adapt reporting
systems to the definitions in the rule,
the FDIC has also decided to allow such
institutions to continue to follow the
transition approach under which they
may use either their existing internal
methodologies or existing supervisory
guidance to identify and report, for
assessment purposes, subprime and
leveraged loans originated or purchased
prior to April 1, 2012. Thus, by
extending the previous transition
guidance for these two loan categories,
the February 2011 assessment
definitions—if left unaltered—would
begin to apply to loans originated on or
after April 1, 2012.
Any revised definitions of subprime
and leveraged loans for assessment
purposes would require approval by the
FDIC Board of Directors through the
notice and comment rulemaking
process. The effective date for applying
any revised definitions would be
communicated through the rulemaking
process and would be subject to
comment by the industry.
The FDIC communicated these
decisions in an email it sent to all large
and highly complex institutions on
September 28, 2011. In addition, the
Call Report and TFR instructions were
updated as of September 30, 2011, to
reflect the extension of the transition
guidance for reporting subprime and
leveraged loans and securities from
October 1, 2011, to April 1, 2012.
At present, the instructions for
reporting subprime and leveraged loans
and securities in the Call Report and the
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TFR (until the collection of the TFR is
discontinued after the filing of the yearend 2011 reports) specifically reference
the definitions of these high-risk asset
categories that are contained in the
FDIC’s assessment regulations (12 CFR
part 327) as amended by the FDIC’s
February 2011 final rule and then
incorporate the text of these definitions
from the final rule (as well as the
previously mentioned transition
guidance). Accordingly, if and when
one or both of these two definitions—as
used for assessment purposes—are
revised through FDIC rulemaking, the
definitions of these asset categories in
the agencies’ regulatory reporting
instructions will be revised in the same
manner to maintain conformity with the
assessment regulations.
B. Nontraditional 1–4 Family
Residential Mortgage Loans—The
assessment-related reporting revisions
applicable to large and highly complex
institutions that were included in
OMB’s approval of the agencies’
emergency clearance requests and
implemented as of June 30, 2011, also
included a new data item for
nontraditional 1–4 family residential
mortgage loans and certain
securitizations of such loans. Like the
new data items for subprime and
leveraged loans, the new nontraditional
mortgage loan data item is an input to
the scorecard measures for large and
highly complex institutions in the
FDIC’s revised risk-based assessment
system for such institutions.
The three jointly commenting
bankers’ organizations stated that the
reporting of nontraditional residential
mortgage loans based on the definition
in the FDIC’s assessments final rule
‘‘does not distinguish risk between
banks or within the population being
reported.’’ These bankers’ organizations
recommended that their proposed
consensus solution for identifying
which consumer loans should be
reported as subprime loans also be
applied to nontraditional residential
mortgage loans.24 According to these
organizations, taking this approach
would enable the agencies to eliminate
the separate data item for nontraditional
residential mortgage loans because those
mortgage loans meeting the criteria in
the organizations’ recommended
consensus solution could be reported
24 Although the comment letter from the other
bankers’ organization did not specifically discuss
nontraditional residential mortgage loans, the
agencies note that the demonstration matrix
provided in support of the organization’s
recommended consensus solution for identifying
subprime loans included a column for
nontraditional mortgages.
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with the consumer loans being reported
as subprime.
The agencies note that the nature,
extent, and level of concern about the
definitions of subprime and leveraged
loans and related data availability issues
that bankers and bankers’ organizations
cited in their comments on the agencies’
March 2011 first initial PRA notice,
which led the FDIC to devise transition
guidance for the reporting of these two
categories of higher-risk assets, were not
also expressed with respect to the
definition and reporting on
nontraditional mortgage loans.25 As a
consequence, the reporting of the new
data item for nontraditional mortgage
loans using the definition in the FDIC’s
assessments final rule was not subject to
the transition guidance provided for
subprime and leveraged loans.
Therefore, after considering the bankers’
organizations comments about
nontraditional residential mortgage
loans, the definition of this high-risk
asset category will remain as defined in
the FDIC’s assessments final rule unless
the results of the FDIC’s review of the
subprime and leveraged loan definitions
(discussed above) also indicate that it
would be appropriate for the FDIC to
amend the definition of nontraditional
residential mortgage loans through
rulemaking. Should that occur, the
definition of high risk residential
mortgage loans in the agencies’
regulatory reporting instructions will be
revised in the same manner to maintain
conformity with the FDIC’s assessment
regulations.
C. Counterparty Exposures—The
assessment-related reporting revisions
that took effect June 30, 2011, pursuant
to OMB’s approval of the agencies’
emergency clearance request included
two new Call Report data items
applicable only to highly complex
institutions for the total amount of an
institution’s 20 largest counterparty
exposures and the amount of the
institution’s largest counterparty
exposure. As with the other new data
items that are inputs to the revised
assessment system for large and highly
complex institutions, the Call Report
instructions explaining the scope and
25 However, commenters on the agencies’ March
2011 first initial PRA notice did request certain
clarifications of the scope of the nontraditional
mortgage loan data item. As mentioned in the
agencies’ July 2011 second initial PRA notice, in
response to these comments, the agencies agreed
that certain clarifications of the final rule’s
nontraditional mortgage loan definition would be
appropriate to assist institutions in properly
reporting the amount of such loans in the Call
Report and TFR. These clarifications were
incorporated into the instructions for reporting
nontraditional mortgage loans that were issued and
took effect for the June 30, 2011, report date.
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measurement of the two counterparty
exposure items are drawn from the
definitional guidance on counterparty
exposures in the FDIC’s February 2011
assessments final rule.
The final rule’s definition of
counterparty exposure states that
exposure should be measured for each
counterparty or borrower at the
consolidated entity level. The three
jointly commenting bankers’
organizations recommended that the
term ‘‘legal consolidated entity,’’ as
used in this definition in relation to a
counterparty, should be clarified, but
they also noted that an outstanding
Office of Financial Research proposal is
considering the creation of unique
identifiers for derivative counterparties,
thereby ‘‘demonstrating regulatory
recognition of unanswered questions on
consolidating counterparty exposures.’’
Given the absence of an industry
standard for recognizing connections
between counterparties and the
regulatory uncertainty in this area, the
three bankers’ organizations asserted
that this reporting requirement is not
appropriate at present.
The three jointly commenting
bankers’ organizations also stated that
there is an inconsistency between the
counterparty credit risk data the FDIC
used to calibrate the assessment pricing
model for highly complex institutions in
its final rule and the counterparty
exposure data these institutions are
required to report in the Call Report.
The organizations stated that the model
was calibrated using Exposure at Default
(EAD) data reported in the FFIEC 101
reports 26 of institutions going through
their Basel II parallel runs as opposed to
the data that highly complex
institutions are asked to submit on their
Call Reports for deposit insurance
assessment pricing purposes. The
organizations recommended that the
FDIC review the counterparty credit
exposure that highly complex
institutions report in their Call Reports
in accordance with the guidance
provided in the assessments final rule,
compare this to the counterparty credit
exposure the institutions report in their
FFIEC 101 reports, and then consider
whether the pricing model should be
recalibrated based upon the FDIC’s
findings. These commenters further
requested that the FDIC accept the
results of a highly complex institution’s
Internal Models Methodology (IMM) for
deposit insurance assessment pricing
purposes only, prior to its exit from its
26 Risk-Based Capital Reporting for Institutions
Subject to the Advanced Capital Adequacy
Framework, OMB Nos.: Board, 7100–0319; FDIC,
3064–0159; and OCC, 1557–0239.
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parallel run, provided the IMM models
are acceptable. Finally, these
commenters recommended that once an
institution’s IMM model is approved,
the institution should be allowed to
amend the amounts previously reported
on its Call Reports for counterparty
EADs and the FDIC should use these
amended amounts to retroactively
adjust the institution’s assessments for
those previous periods.
The FDIC continues to believe that,
for the purposes of calculating deposit
insurance premiums, highly complex
institutions should report counterparty
credit exposure on a consolidated entity
basis (legal consolidated entity). The
FDIC believes that highly complex
institutions should have the ability to
aggregate exposures arising from
financial contracts with entities within
a legal consolidated entity and report
the exposure as outlined in the final
rule. Although the Office of Financial
Research’s November 2010 Statement on
Legal Entity Identification for Financial
Contracts addresses the establishment of
a system to uniquely identify all market
participants, which would enable
institutions to better aggregate
counterparty exposures, the main goal
of the proposal is to standardize the
system and allow for better oversight,
tracking, monitoring, and enforcement.
The absence of such a system does not
preclude institutions from internally
aggregating their exposures to entities
within a legal consolidated entity.
The FDIC is reviewing the claim that
there is an inconsistency between the
counterparty credit risk data used to
calibrate the model and the data
required to be provided in the Call
Report under the final rule. The FDIC
has asked highly complex institutions to
voluntarily submit counterparty credit
risk data to the FDIC that has been
measured under the institutions’ IMMs
for comparison with the data reported in
the Call Report. The FDIC will review
these data and consider the need for
appropriate changes to the pricing
model to ensure that it differentiates
risk, including consideration of the
effect on prior periods. In the interim,
institutions should continue to report
counterparty exposures in the Call
Report using the final rule’s existing
definition. Additionally, the FDIC
continues to believe that it is not
appropriate for pricing purposes to use
data calculated via an institution’s IMM
model before the IMM model has been
approved and the bank has exited its
parallel run period. To adopt the IMM
to calculate EADs for purposes of the
risk-based capital requirements under
the Advanced Capital Adequacy
Framework, institutions must first
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receive approval from their primary
federal regulator to exit the parallel run
period. Institutions also must receive
approval from their primary federal
regulator to use their IMMs. Once an
institution has conducted a satisfactory
parallel run and satisfied the approval
requirements for the IMM, the IMM
results should be used to report
counterparty exposure data in the Call
Report for deposit insurance pricing
purposes.
D. Frequency of Loan Loss Provision
and Deferred Tax Calculations for
Reporting Average Tangible Equity—As
required by section 331(b) of the DoddFrank Act, the FDIC’s assessments final
rule redefines the deposit insurance
assessment base as average consolidated
total assets minus average tangible
equity. Under the final rule, tangible
equity is defined as Tier 1 capital.27 As
one of the assessment-related reporting
revisions applicable to all institutions
that was included in OMB’s approval of
the agencies’ emergency clearance
requests and implemented in the Call
Report, the TFR, and the FFIEC 002
report as of June 30, 2011, the agencies
added a new data item for average
tangible equity. The final rule requires
average tangible equity to be calculated
on a monthly average basis by
institutions with $1 billion or more in
total assets, all newly insured
institutions, and institutions with less
than $1 billion in total assets that elect
to do so. For all other institutions,
‘‘average’’ tangible equity is based on
quarter-end Tier 1 capital.
The three jointly commenting
bankers’ organizations and one
institution stated that the requirement
for certain institutions to estimate
month-end Tier 1 capital numbers prior
to quarter-end is problematic because
they do not calculate their provision for
loan and lease losses expense and
deferred taxes on a monthly basis,
which are two potentially significant
drivers of Tier 1 capital. These
commenters recommended that, for
purposes of measuring average tangible
equity on a monthly average basis,
institutions that do not perform monthly
loan loss provision or deferred tax
calculations be allowed to use a ‘‘prorated, one-third estimate of the quarterend reported’’ provision and deferred
tax amounts for months other than
quarter-end. These commenters argued
that institutions are not required to
27 For an insured branch, tangible equity would
be defined as eligible assets (determined in
accordance with section 347.210 of the FDIC’s
regulations) less the book value of liabilities
(exclusive of liabilities due to the foreign bank’s
head office, other branches, agencies, offices, or
wholly owned subsidiaries).
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update these calculations monthly in
accordance with generally accepted
accounting principles for external
reporting purposes and the cost of doing
so would outweigh the benefits.
The agencies believe the commenters’
suggested approach has merit as a
means to reduce institutions’
compliance costs. Accordingly, for
institutions required or electing to
report average tangible equity on a
monthly average basis that do not
perform monthly loan loss provision or
deferred tax calculations, the agencies
will permit such institutions to use one
third of the amount of provision for loan
and lease losses and deferred tax
expense (benefit) reported for the
quarterly regulatory reporting period for
purposes of estimating the retained
earnings component of Tier 1 capital in
each of the first two months of the
quarter. As suggested by the institution
commenting on this issue, the agencies
will revise the instructions for the data
item for average tangible equity to
describe this permissible approach.
For example, if the reported amount
of the provision expense for the
quarterly reporting period for an
institution applying this approach is $3
million, then the institution would
include a $1 million provision expense
as an adjustment to its earnings when
measuring its tangible equity for
assessment purposes in each of the first
two months of the quarter. Similarly, if
the reported amount of the institution’s
deferred tax expense (benefit) for the
quarterly reporting period is a benefit of
$900,000, then the institution would
include a $300,000 deferred tax benefit
as an earnings adjustment for
assessment purposes in each of the first
two months of the quarter. By making
these adjustments, the institution’s
retained earnings component of Tier 1
capital for monthly average tangible
equity calculation purposes would be
$700,000 and $1.4 million less than its
internally reported retained earnings at
the end of the first and second months
of the quarterly reporting period,
respectively. In addition, the agencies
remind institutions that the
measurement of Tier 1 capital includes
a limit on deferred tax assets, with the
amount in excess of the limit deducted
from Tier 1 capital. Thus, the monthend pro-rated amounts of an
institution’s reported amount of
deferred tax expense (benefit) for the
quarterly reporting period also should
be taken into account when determining
the amount of the institution’s deferred
tax assets (liabilities) and, hence, the
amount of disallowed deferred tax
assets, if any, at the end of each of the
first two months of the quarter for
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monthly average tangible equity
calculation purposes.
E. Prepaid Deposit Insurance
Assessments—The three jointly
commenting bankers’ organizations
requested that prepaid deposit
insurance assessments, which
institutions include in the total assets
reported on their balance sheets, should
not be included in the redefined
assessment base. These commenters
argued that there is no justification for
charging deposit insurance premiums
on funds that institutions were forced to
give the FDIC as interest-free loans.
These commenters recommended that if
the FDIC believes it is required by law
to include prepaid assessments in the
assessment base, then ‘‘this asset should
be allowed a zero risk-weighting in the
risk-based premiums formula.’’
Section 331(b) of the Dodd-Frank Act
explicitly states that an institution’s
assessment base is average consolidated
total assets minus average tangible
equity. Because prepaid assessments are
included in the assets of an institution,
this asset amount must be included in
the assessment base. In addition, the
risk-weightings that apply to assets for
risk-based capital purposes under the
agencies’ regulatory capital standards
are not used when calculating the
assessment base for deposit insurance
assessment purposes.
F. Troubled Debt Restructurings
Guaranteed or Insured by the U.S.
Government—Under the FDIC’s
February 2011 final rule, assessment
rates for large and highly complex
institutions are calculated using
scorecards that combine CAMELS
ratings and certain forward-looking
financial measures to assess the risk
such an institution poses to the Deposit
Insurance Fund. The Credit Quality
Measure for large and highly complex
institutions includes a score for
‘‘Underperforming Assets/Tier 1 Capital
and Reserves.’’ For purposes of this
score, ‘‘Underperforming Assets’’
includes:
loans that are 30 days or more past due and
still accruing interest, nonaccrual loans,
restructured loans (including restructured 1–
4 family loans), and ORE, excluding the
maximum amount recoverable from the U.S.
Government, its agencies, or governmentsponsored agencies, under guarantee or
insurance provisions.’’ 28
Two institutions commented that the
Call Report and TFR do not collect all
of the data necessary to correctly
measure ‘‘Underperforming Assets.’’
28 See Appendix A to Subpart A of part 327—
Description of Scorecard Measures in the FDIC’s
assessments final rule, 76 FR 10721, at https://
www.fdic.gov/regulations/laws/federal/2011/
11FinalFeb25.pdf.
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More specifically, although institutions
report the amount of loans restructured
in troubled debt restructurings that are
in compliance with their modified terms
(i.e., restructured loans other than those
that are 30 days or more past due and
still accruing interest or that are in
nonaccrual status), the amount of such
restructured loans that is recoverable
from the U.S. government, including its
agencies and its government-sponsored
agencies, under guarantee or insurance
provisions is not reported. Thus, these
institutions stated that the agencies
should begin to collect data on
recoverable restructured loans so that
the underperforming assets ratio can be
properly calculated.
The agencies agree that the collection
of this information is necessary to
accurately calculate a large or highly
complex institution’s underperforming
assets ratio, as defined in the FDIC’s
assessments final rule, and its total
score within the scorecard. Accordingly,
the agencies propose to include a new
Memorandum item 16 to Call Report
Schedule RC–O beginning with the June
30, 2012, report date in which large and
highly complex institutions would
report the ‘‘Portion of loans restructured
in troubled debt restructurings that are
in compliance with their modified terms
and are guaranteed or insured by the
U.S. government (including the FDIC).’’
For quarter-end report dates after the
effective date of the FDIC’s assessments
final rule but prior to the effective date
of this Call Report change (i.e., June 30,
2011, through March 31, 2012), large
and highly complex institutions that
have such restructured loans may
choose to, but are not required to,
provide this information to the FDIC on
a voluntary basis. Large and highly
complex institutions interested in
submitting this restructured loan
information to the FDIC for scorecard
purposes for quarter-end dates before
the information begins to be collected in
the Call Report should send an email to
RRPSAdministrator@FDIC.gov notifying
the FDIC of their interest. The FDIC will
provide the institution with an Excel
worksheet and instructions that will
enable the institution to submit the data
to the FDIC in a specific format via
FDICConnect. For an institution that
chooses to submit this prior period
information, the FDIC will adjust the
institution’s total score and
corresponding assessments for the
affected periods as applicable.
G. Consolidated or Unconsolidated
Single FDIC Certificate Number
Reporting—Before the assessmentrelated reporting revisions took effect
June 30, 2011, the information that
institutions reported for assessment
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purposes generally consisted of deposit
data. Because deposit insurance
premiums are assessed separately
against each individual insured
depository institution, the instructions
for reporting assessment data before
June 30, 2011, advised institutions to
report these data on an unconsolidated
single FDIC certificate number basis. If
an institution owns another insured
institution as a subsidiary, this means
that the parent institution must
complete the assessment data items by
accounting for this subsidiary under the
equity method of accounting rather than
consolidating the subsidiary. With
limited exceptions, all other data items
reported in the Call Report and the TFR
are reported on a consolidated basis. For
the vast majority of institutions that do
not own another insured institution as
a subsidiary, there is no difference
between reporting on a consolidated
basis or on unconsolidated single FDIC
certificate number basis.
The assessment-related reporting
revisions that took effect June 30, 2011,
included several new data items
applicable to large and highly complex
institutions that serve as inputs to the
scorecards used to determine the initial
base assessment rate for each large
institution and highly complex
institution under their revised riskbased assessment system. The ratios in
these scorecards are calculated on a
fully consolidated basis. In addition, for
certain small institutions, the initial
base assessment rate is determined
using the financial ratios method. Like
the scorecard ratios, the financial ratios
method employs fully consolidated
data. Most of the data items used as
inputs to the scorecards and financial
ratios are collected in other schedules of
the Call Report and the TFR on a fully
consolidated basis. However, five
assessment data items that were
collected from all institutions before
June 30, 2011, on an unconsolidated
single FDIC certificate number basis and
continue to be collected also serve as
either scorecard or financial ratio
inputs.
As a result, during the initial
reporting of the revised assessmentrelated data as of June 30, 2011,
questions were raised as to whether the
new data items for large and highly
complex institutions as well as the five
existing, but retained, assessment data
items should be reported on a
consolidated or an unconsolidated
single FDIC certificate number basis. For
the large and highly complex institution
data items,29 consolidated reporting is
29 For example, Memorandum items 6 through 15
on Call Report Schedule RC–O.
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appropriate and the reporting
instructions will be clarified
accordingly.
On the other hand, for the five
existing assessment data items reported
on a single FDIC certificate number
basis, among the purposes for which the
FDIC has used and continues to use
them is to perform industry analyses of
the Deposit Insurance Fund, which rely
on unconsolidated single FDIC
certificate number data consistent with
how institutions are insured. However,
because these existing items now also
enter into scorecard and financial ratio
calculations, these five data items are
also needed on a consolidated basis
from institutions that own another
insured depository institution.
Therefore, to resolve this issue for these
parent institutions given the inquiries
about the appropriate basis of reporting,
the agencies will add five items to Call
Report Schedule RC–O effective June
30, 2012, one of which would be
applicable to all institutions that own
another institution while the other four
would be completed only by the large
and highly complex institutions that
own another insured depository
institution. More specifically, in new
item 9.a of Schedule RC–O, the five
institutions that own another institution
and have reciprocal brokered deposits
would report the fully consolidated
amount of reciprocal brokered deposits.
In new Memorandum items 17.a
through 17.d of Schedule RC–O, the
three large and highly complex
institutions that own another insured
depository institution would report total
deposit liabilities before exclusions,
total allowable exclusions, unsecured
other borrowings with a remaining
maturity of one year or less, and
estimated amount of uninsured deposits
on a fully consolidated basis. For
quarter-end report dates after the
effective date of the FDIC’s assessments
final rule but prior to the effective date
of these Call Report changes (i.e., June
30, 2011, through March 31, 2012),
institutions that own another insured
depository institution may choose to,
but are not required to, provide the
applicable additional fully consolidated
information to the FDIC on a voluntary
basis. Institutions that own another
insured institution and are interested in
submitting the applicable additional
fully consolidated information to the
FDIC for scorecard or financial ratio
purposes for quarter-end dates before
the information begins to be collected in
the Call Report should send an email to
RRPSAdministrator@FDIC.gov notifying
the FDIC of their interest. The FDIC will
provide the institution with an Excel
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worksheet and instructions that will
enable the institution to submit the data
to the FDIC in a specific format via
FDICConnect. For an institution that
chooses to submit this prior period
information, the FDIC will adjust the
institution’s scorecard or financial ratios
and corresponding assessments for the
affected periods as applicable.
Request for Comment
Public comment is requested on all
aspects of this joint notice. Comments
are invited on:
(a) Whether the proposed revisions to
the collections of information that are
the subject of this notice are necessary
for the proper performance of the
agencies’ functions, including whether
the information has practical utility;
(b) The accuracy of the agencies’
estimates of the burden of the
information collections as they are
proposed to be revised, including the
validity of the methodology and
assumptions used;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(d) Ways to minimize the burden of
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
(e) Estimates of capital or start up
costs and costs of operation,
maintenance, and purchase of services
to provide information.
Comments submitted in response to
this joint notice will be shared among
the agencies. All comments will become
a matter of public record.
Dated: December 5, 2011.
Michele Meyer,
Assistant Director, Legislative and Regulatory
Activities Division, Office of the Comptroller
of the Currency.
Board of Governors of the Federal Reserve
System, December 6, 2011.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 6th day of
December, 2011.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2011–31888 Filed 12–9–11; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P
jlentini on DSK4TPTVN1PROD with NOTICES
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Proposed Collection; Comment
Request for Regulation Project
AGENCY: Internal Revenue Service (IRS),
Treasury.
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Jkt 226001
ACTION: Notice and request for
comments.
SUMMARY: The Department of the
Treasury, as part of its continuing effort
to reduce paperwork and respondent
burden, invites the general public and
other Federal agencies to take this
opportunity to comment on proposed
and/or continuing information
collections, as required by the
Paperwork Reduction Act of 1995,
Public Law 104–13 (44 U.S.C.
3506(c)(2)(A)). Currently, the IRS is
soliciting comments concerning
miscellaneous sections affected by the
Taxpayer Bill of Rights 2 and the
Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
DATES: Written comments should be
received on or before February 10, 2012
to be assured of consideration.
ADDRESSES: Direct all written comments
to Yvette Lawrence, Internal Revenue
Service, Room 6129, 1111 Constitution
Avenue NW., Washington, DC 20224.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the regulation should be
directed to Allan Hopkins (202) 622–
6665, Internal Revenue Service, Room
6129, 1111 Constitution Avenue NW.,
Washington, DC 20224 or through the
Internet at Allan.M.Hopkins@irs.gov.
SUPPLEMENTARY INFORMATION:
Title: Miscellaneous Sections Affected
by the Taxpayer Bill of Rights 2 and the
Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
OMB Number: 1545–1356.
Regulation Project Number: REG–
248770–96.
Abstract: Under Internal Revenue
Code section 7430 a prevailing party
may recover the reasonable
administrative or litigation costs
incurred in an administrative or civil
proceeding that relates to the
determination, collection, or refund of
any tax, interest, or penalty. Section
301.7430–2(c) of the regulation provides
that the IRS will not award
administrative costs under section 7430
unless the taxpayer files a written
request in accordance with the
requirements of the regulation.
Current Actions: There is no change to
this existing regulation.
Type of Review: Extension of a
currently approved collection.
Affected Public: Individuals or
households, and business or other forprofit organizations, not-for-profit
institutions, farms, and the Federal
government.
Estimated Number of Respondents:
38.
Estimated Time per Respondent: 2
hours, 16 minutes.
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Estimated Total Annual Burden
Hours: 86.
The following paragraph applies to all
of the collections of information covered
by this notice:
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid OMB control number.
Books or records relating to a collection
of information must be retained as long
as their contents may become material
in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential,
as required by 26 U.S.C. 6103.
Request for Comments: Comments
submitted in response to this notice will
be summarized and/or included in the
request for OMB approval. All
comments will become a matter of
public record. Comments are invited on:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology; and (e) estimates of capital
or start-up costs and costs of operation,
maintenance, and purchase of services
to provide information.
Approved: December 2, 2011.
Yvette Lawrence,
IRS Reports Clearance Officer.
[FR Doc. 2011–31704 Filed 12–9–11; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Proposed Collection; Comment
Request for Form 13997
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Notice and request for
comments.
SUMMARY: The Department of the
Treasury, as part of its continuing effort
to reduce paperwork and respondent
burden, invites the general public and
other Federal agencies to take this
opportunity to comment on proposed
and/or continuing information
collections, as required by the
Paperwork Reduction Act of 1995,
E:\FR\FM\12DEN1.SGM
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Agencies
[Federal Register Volume 76, Number 238 (Monday, December 12, 2011)]
[Notices]
[Pages 77315-77325]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31888]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
Federal Reserve System
Federal Deposit Insurance Corporation
Agency Information Collection Activities: Submission for OMB
Review; Joint Comment Request
AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); and Federal
Deposit Insurance Corporation (FDIC).
ACTION: Notice of information collection to be submitted to OMB for
review and approval under the Paperwork Reduction Act of 1995.
-----------------------------------------------------------------------
SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act (PRA) of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the
FDIC (the ``agencies'') may not conduct or sponsor, and the respondent
is not required to respond to, an information collection unless it
displays a currently valid Office of Management and Budget (OMB)
control number. On June 17, 2011, OMB approved the agencies' emergency
clearance requests to implement assessment-related reporting revisions
to the Consolidated Reports of Condition and Income (Call Report) for
banks, the Thrift Financial Report (TFR) for savings associations, the
Report of Assets and Liabilities of U.S. Branches and Agencies of
Foreign Banks (FFIEC 002), and the Report of Assets and Liabilities of
a Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or
Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S), all of which
currently are approved collections of information, effective as of the
June 30, 2011, report date. OMB's emergency approval of the assessment-
related reporting revisions extends through the December 31, 2011,
report date. (As separately approved by OMB, December 31, 2011, is also
the final report date as of which the TFR will be collected; savings
associations will begin to file the Call Report as of the March 31,
2012, report date (76 FR 39986)).
Because of the limited approval period associated with OMB's
emergency clearance, the agencies, under the auspices of the Federal
Financial Institutions Examination Council (FFIEC), requested public
comment for 60 days on July 27, 2011, on the assessment-related
reporting revisions to which the emergency approval pertained (76 FR
44987). After considering the comments received on these revisions, the
transition guidance for the reporting of subprime and leveraged loans
and securities by large and highly complex institutions that was
adopted by the agencies in connection with their emergency clearance
request to OMB has been extended to April 1, 2012. Furthermore, the
FDIC has decided to review the subprime and leveraged loan definitions
in its February 2011 final rule on assessments (76 FR 10672) to
determine whether changes to these definitions could alleviate concerns
expressed by bankers without sacrificing accuracy in risk
differentiation for deposit insurance pricing purposes. The
instructions for reporting subprime and leveraged loans and securities
for assessment purposes in the agencies' regulatory reports will be
conformed to any revised definitions of these terms in the FDIC's
assessment regulations that may result from the FDIC's review process,
including any necessary rulemaking. In addition, the agencies have made
certain other modifications to the assessment-related reporting
revisions covered by OMB's emergency approval in response to comments
received.
DATES: Comments must be submitted on or before January 11, 2012.
ADDRESSES: Interested parties are invited to submit written comments to
any or all of the agencies. All comments, which should refer to the OMB
control number(s), will be shared among the agencies.
OCC: You should direct all written comments to: Communications
Division, Office of the Comptroller of the Currency, Mailstop 2-3,
Attention: 1557-0081, 250 E Street SW., Washington, DC 20219. In
addition, comments may be sent by fax to (202) 874-5274, or by
electronic mail to regs.comments@occ.treas.gov. You may personally
inspect and photocopy comments at the OCC, 250 E Street SW.,
Washington, DC 20219. For security reasons, the OCC requires that
visitors make an appointment to inspect comments. You may do so by
calling (202) 874-4700. Upon arrival, visitors will be required to
present valid government-issued photo identification and to submit to
security screening in order to inspect and photocopy comments.
Board: You may submit comments, which should refer to
``Consolidated Reports of Condition and Income (FFIEC 031 and 041)'' or
``Report of Assets and Liabilities of U.S. Branches and Agencies of
Foreign Banks (FFIEC 002) and Report of Assets and Liabilities of a
Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or
Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S),'' 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.
Email: regs.comments@federalreserve.gov.
[[Page 77316]]
Include reporting form number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW.,
Washington, DC 20551.
All public comments are available from the Board's Web site at
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information. Public
comments may also be viewed electronically or in paper 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.
FDIC: You may submit comments, which should refer to ``Consolidated
Reports of Condition and Income, 3064-0052,'' by any of the following
methods:
Agency Web Site: https://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments
on the FDIC Web site.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: comments@FDIC.gov. Include ``Consolidated Reports
of Condition and Income, 3064-0052'' in the subject line of the
message.
Mail: Gary A. Kuiper, (202) 898-3877, Counsel, Attn:
Comments, Room F-1086, Federal Deposit Insurance Corporation, 550 17th
Street NW., Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7 a.m. and 5 p.m.
Public Inspection: All comments received will be posted without
change to https://www.fdic.gov/regulations/laws/federal/propose.html
including any personal information provided. Comments may be inspected
at the FDIC Public Information Center, Room E-1002, 3501 Fairfax Drive,
Arlington, VA 22226, between 9 a.m. and 5 p.m. on business days.
Additionally, commenters may send a copy of their comments to the
OMB desk officer for the agencies by mail to the Office of Information
and Regulatory Affairs, U.S. Office of Management and Budget, New
Executive Office Building, Room 10235, 725 17th Street NW., Washington,
DC 20503, or by fax to (202) 395-6974.
FOR FURTHER INFORMATION CONTACT: For further information about the
revisions discussed in this notice, please contact any of the agency
clearance officers whose names appear below. In addition, copies of the
Call Report, FFIEC 002, and FFIEC 002S forms can be obtained at the
FFIEC's Web site (https://www.ffiec.gov/ffiec_report_forms.htm).\1\
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\1\ Copies of the TFR, the collection of which will be
discontinued after the filing of the reports for December 31, 2011,
can be obtained at https://www.ots.treas.gov/?p=ThriftFinancialReports.
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OCC: Ira Mills and Mary Gottlieb, OCC Clearance Officers, (202)
874-6055 and (202) 874-5090, Legislative and Regulatory Activities
Division, Office of the Comptroller of the Currency, 250 E Street SW.,
Washington, DC 20219.
Board: Cynthia Ayouch, Federal Reserve Board Clearance Officer,
(202) 452-3829, Division of Research and Statistics, Board of Governors
of the Federal Reserve System, 20th and C Streets NW., Washington, DC
20551. Telecommunications Device for the Deaf (TDD) users may call
(202) 263-4869.
FDIC: Gary A. Kuiper, Counsel, (202) 898-3877, Legal Division,
Federal Deposit Insurance Corporation, 550 17th Street NW., Washington,
DC 20429.
SUPPLEMENTARY INFORMATION: The agencies are proposing to revise and
extend for three years the Call Report, the FFIEC 002, and the FFIEC
002S, which currently are approved collections of
information.2 3
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\2\ The assessment-related changes to the Call Report and the
FFIEC 002/002S that are the subject of this notice were approved by
OMB on an emergency clearance basis and took effect June 30, 2011.
OMB's emergency approval for these reports expires December 31,
2011. OMB's emergency approval also applies to the TFR, the
collection of which will be discontinued after the reports for
December 31, 2011, are filed. As separately approved by OMB, savings
associations currently filing the TFR will convert to filing the
Call Report beginning as of the March 31, 2012, report date (76 FR
39981, July 7, 2011).
\3\ The agencies have also proposed to implement other revisions
to the Call Report in 2012 (76 FR 72035, November 21, 2011). The new
data items are proposed to be added to the Call Report as of the
June 30, 2012, report date, except for two proposed revisions that
would take effect March 31, 2012, in connection with the initial
filing of Call Reports by savings associations. Proposed revisions
to certain Call Report instructions would take effect March 31,
2012. In addition, the Board, on behalf of the agencies, has
proposed certain revisions to the FFIEC 002 report effective June
30, 2012 (76 FR 72410, November 23, 2011).
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1. Report Title: Consolidated Reports of Condition and Income (Call
Report).
Form Number: Call Report: FFIEC 031 (for banks with domestic and
foreign offices) and FFIEC 041 (for banks with domestic offices only).
Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
OCC
OMB Number: 1557-0081.
Estimated Number of Respondents: 2,035 (1,399 national banks and
636 federal savings associations).
Estimated Time per Response: National banks: 53.97 burden hours per
quarter to file. Federal savings associations: 54.48 burden hours per
quarter to file and 188 burden hours for the first year to convert
systems and conduct training.
Estimated Total Annual Burden: National banks: 302,016 burden hours
to file. Federal savings associations: 138,597 burden hours to file
plus 119,568 burden hours for the first year to convert systems and
conduct training. Total: 560,181 burden hours.
Board
OMB Number: 7100-0036.
Estimated Number of Respondents: 826 state member banks.
Estimated Time per Response: 55.48 burden hours per quarter to
file.
Estimated Total Annual Burden: 183,306 burden hours.
FDIC
OMB Number: 3064-0052.
Estimated Number of Respondents: 4,747 (4,687 insured state
nonmember banks and 60 state savings associations).
Estimated Time per Response: State nonmember banks: 40.47 burden
hours per quarter to file. State savings associations: 40.47 burden
hours per quarter to file and 188 burden hours for the first year to
convert systems and conduct training.
Estimated Total Annual Burden: State nonmember banks: 758,732
burden hours to file. State savings associations: 9,713 burden hours to
file plus 11,280 burden hours for the first year to convert systems and
conduct training. Total: 779,725 burden hours.
The estimated times per response shown above for the Call Report
represent the estimated ongoing reporting burden associated with the
preparation of this report after institutions make the necessary
recordkeeping and systems changes to enable them to generate the data
required to be reported in the assessment-related data items that are
the subject of this proposal. The estimated time per response is an
average that varies by agency because of differences in the composition
of the institutions under each agency's supervision (e.g., size
distribution of institutions, types of activities in which they are
engaged, and existence of foreign offices). These factors determine the
specific Call Report data items in
[[Page 77317]]
which an individual institution will have data it must report. The
average ongoing reporting burden for the Call Report (including the
additional revisions proposed for implementation in 2012 referred to in
footnote 3) is estimated to range from 17 to 715 hours per quarter,
depending on an individual institution's circumstances.
2. Report Titles: Report of Assets and Liabilities of U.S. Branches
and Agencies of Foreign Banks; Report of Assets and Liabilities of a
Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or
Agency of a Foreign (Non-U.S.) Bank.
Form Numbers: FFIEC 002; FFIEC 002S.
Board
OMB Number: 7100-0032.
Frequency of Response: Quarterly.
Affected Public: U.S. branches and agencies of foreign banks.
Estimated Number of Respondents: FFIEC 002--236; FFIEC 002S--57.
Estimated Time per Response: FFIEC 002--25.43 hours; FFIEC 002S--6
hours.
Estimated Total Annual Burden: FFIEC 002--24,006 hours; FFIEC
002S--1,368 hours.
As previously stated with respect to the Call Report, the burden
estimates shown above are for the quarterly filings of the Call Report
and the FFIEC 002/002S reports. The initial burden arising from
implementing recordkeeping and systems changes to enable insured
depository institutions to report the applicable assessment-related
data items that have been added to these regulatory reports will vary
significantly. For the vast majority of the nearly 7,600 insured
depository institutions, including the smallest institutions, this
initial burden will be nominal because only three of the new data items
will be relevant to them and the amounts to be reported can be carried
over from amounts reported elsewhere in the report.
At the other end of the spectrum, many of the new data items are
applicable only to about 110 large and highly complex institutions (as
defined in the FDIC's assessment regulations). To achieve consistency
in reporting across this group of institutions, the instructions for
these new data items, which are drawn directly from definitions
contained in the FDIC's assessment regulations (as amended in February
2011), are prescriptive. Transition guidance has been provided for the
two categories of higher-risk assets (subprime and leveraged loans) for
which large and highly complex institutions have indicated that their
data systems do not currently enable them to identify individual assets
meeting the FDIC's definitions that will be used for assessment
purposes only. The transition guidance provides time for large and
highly complex institutions to revise their data systems to support the
identification and reporting of assets in these two categories on a
going-forward basis. The guidance also permits these institutions to
use existing internal methodologies developed for supervisory purposes
to identify existing assets (and, in general, assets acquired during
the transition period, which currently extends until April 1, 2012)
that would be reportable in these higher-risk asset categories on an
ongoing basis.
Before the agencies submitted emergency clearance requests to OMB
for approval of the assessment-related reporting revisions that are the
subject of this notice, the agencies had published an initial PRA
notice on March 16, 2011, requesting comment on these revisions (76 FR
14460). Comments submitted in response to the agencies' initial PRA
notice that addressed the initial burden that large and highly complex
institutions would incur to identify assets meeting the definitions of
subprime and leveraged loans in the FDIC's assessment regulations were
written in the context of applying these definitions to all existing
loans. The transition guidance created for these loans is intended to
mitigate the initial data capture and systems burden that institutions
would otherwise incur. Thus, the initial burden associated with
implementing the recordkeeping and systems changes necessary to
identify assets reportable in these two higher-risk asset categories
will be significant for the approximately 110 large and highly complex
institutions, but the agencies are currently unable to estimate the
amount of this initial burden. Large and highly complex institutions
will also experience additional initial burden in connection with
implementing systems changes to support their ability to report the
other new assessment-related items applicable to such institutions.
However, given their focus on subprime and leveraged loans, respondents
to the agencies' initial PRA notice offered limited comments about the
burden of the other new items for large and highly complex
institutions.
General Description of Reports
These information collections are mandatory: 12 U.S.C. 161 (for
national banks), 12 U.S.C. 324 (for state member banks), 12 U.S.C. 1817
(for insured state nonmember commercial and savings banks), 12 U.S.C.
1464 (for savings associations), and 12 U.S.C. 3105(c)(2), 1817(a), and
3102(b) (for U.S. branches and agencies of foreign banks). Except for
selected data items, including several of the data items for large and
highly complex institutions that are part of this proposal, the Call
Report and the FFIEC 002 are not given confidential treatment. The
FFIEC 002S is given confidential treatment [5 U.S.C. 552(b)(4)].
Abstracts
Call Report: Institutions submit Call Report data to the agencies
each quarter for the agencies' use in monitoring the condition,
performance, and risk profile of individual institutions and the
industry as a whole. Call Report data provide the most current
statistical data available for evaluating institutions' corporate
applications, identifying areas of focus for both on-site and off-site
examinations, and monetary and other public policy purposes. The
agencies use Call Report data in evaluating interstate merger and
acquisition applications to determine, as required by law, whether the
resulting institution would control more than ten percent of the total
amount of deposits of insured depository institutions in the United
States. Call Report data also are used to calculate all institutions'
deposit insurance and Financing Corporation assessments, and assessment
fees for national banks and federal savings associations.
FFIEC 002 and FFIEC 002S: On a quarterly basis, all U.S. branches
and agencies of foreign banks are required to file the FFIEC 002, which
is a detailed report of condition with a variety of supporting
schedules. This information is used to fulfill the supervisory and
regulatory requirements of the International Banking Act of 1978. The
data also are used to augment the bank credit, loan, and deposit
information needed for monetary policy and other public policy
purposes. The FFIEC 002S is a supplement to the FFIEC 002 that collects
information on assets and liabilities of any non-U.S. branch that is
managed or controlled by a U.S. branch or agency of the foreign bank.
Managed or controlled means that a majority of the responsibility for
business decisions (including, but not limited to, decisions with
regard to lending or asset management or funding or liability
management) or the responsibility for recordkeeping in respect of
assets or liabilities for that foreign branch resides at the U.S.
branch or agency. A separate FFIEC 002S must be completed for each
managed or controlled non-U.S. branch. The FFIEC 002S must be filed
quarterly along with the U.S. branch or agency's
[[Page 77318]]
FFIEC 002. The data from both reports are used for: (1) Monitoring
deposit and credit transactions of U.S. residents; (2) monitoring the
impact of policy changes; (3) analyzing structural issues concerning
foreign bank activity in U.S. markets; (4) understanding flows of
banking funds and indebtedness of developing countries in connection
with data collected by the International Monetary Fund and the Bank for
International Settlements that are used in economic analysis; and (5)
assisting in the supervision of U.S. offices of foreign banks. The
Federal Reserve System collects and processes these reports on behalf
of the OCC, the Board, and the FDIC.
Type of Review: Revision and extension of currently approved
collections of information.
Current Actions
I. Background
Section 331(b) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Dodd-Frank Act) (Pub. L. 111-203, July 21, 2010)
required the FDIC to amend its regulations to redefine the assessment
base used for calculating deposit insurance assessments as average
consolidated total assets minus average tangible equity. Under prior
law, the assessment base has been defined as domestic deposits minus
certain allowable exclusions, such as pass-through reserve balances. In
general, the intent of Congress in changing the assessment base was to
shift a greater percentage of overall total assessments away from
community banks and toward the largest institutions, which rely less on
domestic deposits for their funding than do smaller institutions.
In May 2010, prior to the enactment of the Dodd-Frank Act, the FDIC
published a Notice of Proposed Rulemaking (NPR) to revise the
assessment system applicable to large insured depository
institutions.\4\ The proposed amendments to the FDIC's assessment
regulations (12 CFR part 327) were designed to better differentiate
large institutions by taking a more forward-looking view of risk and
better take into account the losses that the FDIC will incur if an
institution fails. The comment period for the May 2010 NPR ended July
2, 2010, and most commenters requested that the FDIC delay the
implementation of the rulemaking until the effects of the then pending
Dodd-Frank legislation were known.
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\4\ See 75 FR 23516, May 3, 2010, at https://www.fdic.gov/regulations/laws/federal/2010/10proposead57.pdf.
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On November 9, 2010, the FDIC Board approved the publication of two
NPRs, one that proposed to redefine the assessment base as prescribed
by the Dodd-Frank Act \5\ and another that proposed revisions to the
large institution assessment system while also factoring in the
proposed redefinition of the assessment base as well as comments
received on the May 2010 NPR.\6\ After revising the proposals where
appropriate in response to the comments received on the two November
2010 NPRs, the FDIC Board adopted a final rule on February 7, 2011,
amending the FDIC's assessment regulations to redefine the assessment
base used for calculating deposit insurance assessments for all 7,500
insured depository institutions and revise the assessment system for
approximately 110 large institutions.\7\ This final rule took effect
for the quarter beginning April 1, 2011, and was reflected for the
first time in the invoices for deposit insurance assessments due
September 30, 2011, using data reported in the Call Reports, the TFRs,
and the FFIEC 002/002S reports for June 30, 2011.
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\5\ See 75 FR 72582, November 24, 2010, at https://www.fdic.gov/regulations/laws/federal/2010/10proposeAD66.pdf.
\6\ See 75 FR 72612, November 24, 2010, at https://www.fdic.gov/regulations/laws/federal/2010/10proposeAD66LargeBank.pdf.
\7\ See 76 FR 10672, February 25, 2011, at https://www.fdic.gov/regulations/laws/federal/2011/11FinalFeb25.pdf.
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The FDIC further notes that the definitions of subprime loans,
leveraged loans, and nontraditional mortgage loans in its February 2011
final rule (the FDIC assessment definitions) are applicable only for
purposes of deposit insurance assessments. The FDIC assessment
definitions are not identical to the definitions included in existing
supervisory guidance pertaining to these types of loans.\8\ Rather, the
FDIC assessment definitions are more prescriptive and less subjective
than those contained in the applicable supervisory guidance. The final
rule includes prescriptive definitions to ensure that large and highly
complex institutions apply a uniform and consistent approach to the
identification of loans to be reported as higher-risk assets for
assessment purposes and to be used as inputs to the scorecards that
determine these institutions' initial base assessment rates.
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\8\ Interagency Expanded Guidance for Subprime Lending Programs,
issued in January 2001 (https://www.fdic.gov/news/news/press/2001/pr0901a.html); Comptroller's Handbook: Leveraged Loans, issued in
February 2008 (https://www.occ.gov/static/publications/handbook/leveragedlending.pdf); and Interagency Guidance on Nontraditional
Mortgage Product Risks, issued in October 2006 (https://www.fdic.gov/regulations/laws/federal/2006/06NoticeFINAL.html).
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Given the specific and limited purpose for which the definitions of
subprime loans, leveraged loans, and nontraditional mortgage loans in
the FDIC's final rule on assessments will be used, these definitions
will not be applied for supervisory purposes. Therefore, the
definitions of these three types of loans in the FDIC's final rule on
assessments do not override or supersede any existing interagency or
individual agency guidance and interpretations pertaining to subprime
lending, leveraged loans, and nontraditional mortgage loans that have
been issued for supervisory purposes or for any other purpose other
than deposit insurance assessments. In this regard, the addition of
data items to the Call Report and TFR deposit insurance assessment
schedules for these three higher-risk asset categories, the definitions
for which are taken directly from the FDIC's final rule (subject to the
transition guidance discussed below), represents the outcome of
decisions by the FDIC in its assessment rulemaking process rather than
a collective decision of the agencies through interagency supervisory
policy development activities.
On March 16, 2011, the agencies published an initial PRA Federal
Register notice under normal PRA clearance procedures in which they
requested comment on proposed revisions to the Call Report, the TFR,
and the FFIEC 002/002S reports that would provide the data needed by
the FDIC to implement the provisions of its February 2011 final rule
beginning with the June 30, 2011, report date.\9\ Thus, the assessment-
related reporting changes were designed to enable the FDIC to calculate
(1) The assessment bases for insured depository institutions as
redefined in accordance with section 331(b) of the Dodd-Frank Act and
the FDIC's final rule, and (2) the assessment rates for ``large
institutions'' and ``highly complex institutions'' using a scorecard
set forth in the final rule that combines CAMELS ratings and certain
forward-looking financial measures to assess the risk such institutions
pose to the Deposit Insurance Fund (DIF). The new data items proposed
in the March 2011 initial PRA notice were linked to specific
requirements in the FDIC's assessment regulations as amended by the
final rule. The draft instructions for
[[Page 77319]]
these proposed new items incorporated the definitions in, and other
provisions of, the FDIC's amended assessment regulations. For a
detailed discussion of the proposed reporting revisions associated with
the redefined deposit insurance assessment base, see pages 14463-14465
of the agencies' March 2011 initial PRA notice.\10\ For a detailed
discussion of the proposed reporting revisions associated with the
revised large institutions assessment system, see pages 14466-14470 of
the agencies' March 2011 initial PRA notice.\11\
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\9\ See 76 FR 14460, March 16, 2011, at https://www.fdic.gov/regulations/laws/federal/2011/11noticeMar16.pdf.
\10\ See 76 FR 14463-14465, March 16, 2011, at https://www.fdic.gov/regulations/laws/federal/2011/11noticeMar16.pdf.
\11\ See 76 FR 14466-14470, March 16, 2011, at https://www.fdic.gov/regulations/laws/federal/2011/11noticeMar16.pdf.
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The FDIC did not anticipate receiving material comments on the
reporting changes proposed in the March 2011 initial PRA notice because
the FDIC's February 2011 final rule on assessments had taken into
account the comments received on the two November 2010 NPRs as well as
the earlier May 2010 NPR. Thus, the agencies expected to continue
following normal PRA clearance procedures and publish a final PRA
Federal Register notice for the proposed reporting changes and submit
these changes to OMB for review soon after the close of the comment
period for the initial PRA notice on May 16, 2011.
The agencies collectively received comments from 19 respondents on
their initial PRA notice on the proposed assessment-related reporting
changes published on March 16, 2011. Comments were received from
fourteen depository institutions, four bankers' organizations, and one
government agency. Three of the bankers' organizations commented on
certain aspects of the proposed reporting requirements associated with
the redefined assessment base, with one of these organizations
welcoming the proposed reporting changes and deeming them ``reasonable
and practical.'' Seventeen of the 19 respondents (all of the depository
institutions and three of the bankers' organizations) addressed the
reporting requirements proposed for large institutions, with specific
concerns raised by all 17 about the definitions of subprime consumer
loans and leveraged loans in the FDIC's final rule, which were carried
directly into the draft reporting instructions for these two proposed
data items.\12\ Concerns were also expressed regarding large
institutions' ability to report the amount of subprime consumer loans
and leveraged loans in accordance with the final rule's definitions,
particularly beginning as of the June 30, 2011, report date. More
specifically, these commenters stated that institutions generally do
not maintain data on these loans in the manner in which these two loan
categories are defined for assessment purposes in the FDIC's final rule
or do not have the ability to capture the prescribed data to enable
them to identify these loans in time to file their regulatory reports
for the June 30, 2011, report date. These data availability concerns,
particularly as they related to institutions' existing loan portfolios,
had not been raised as an issue during the rulemaking process for the
revised large institution assessment system, which included the FDIC's
publication of two NPRs in 2010.\13\ Nevertheless, a number of
respondents expressed support for the concept of applying risk-based
evaluation tools in the determination of deposit insurance assessments,
which is an objective of the large institution assessment system under
the FDIC's final rule.
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\12\ In contrast, only four respondents commented on other
aspects of the overall reporting proposal.
\13\ In response to the November 2010 NPR on the revised large
institution assessment system, the FDIC received a number of
comments recommending changes to the definitions of subprime and
leveraged loans, which the FDIC addressed in its February 2011 final
rule amending its assessment regulations. For example, several
commenters on the November 2010 NPR indicated that regular
(quarterly) updating of data to evaluate loans for subprime or
leveraged status would be burdensome and costly and, for certain
types of retail loans, would not be possible because existing loan
agreements do not require borrowers to routinely provide updated
financial information. In response to these comments, the FDIC's
February 2011 final rule stated that large institutions should
evaluate loans for subprime or leveraged status upon origination,
refinance, or renewal. However, no comments were received on the
November 2010 NPR indicating that large institutions would not be
able to identify and report subprime or leveraged loans in
accordance with the definitions proposed for assessment purposes in
their Call Reports and TFRs beginning as of June 30, 2011. These
data availability concerns were first expressed in comments on the
March 2011 initial PRA notice.
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For a detailed discussion of the comments received on the reporting
revisions associated with the redefined deposit insurance assessment
base proposed in the agencies' March 2011 initial PRA notice, the
agencies' evaluation of these comments, and the modifications that the
agencies made to the March 2011 reporting proposal in response to these
comments, see pages 44994-44996 of the agencies' second initial PRA
notice for the assessment-related reporting changes, which was
published on July 27, 2011.\14\ For a detailed discussion of the
comments received on the reporting revisions associated with the
revised large institutions assessment system proposed in the agencies'
March 2011 initial PRA notice, the agencies' evaluation of these
comments, and the modifications that the agencies made to the March
2011 reporting proposal in response to these comments, see pages 44998-
45003 of the agencies' second initial PRA notice for the assessment-
related reporting changes, which was published on July 27, 2011.\15\
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\14\ See 76 FR 44994-44996, July 27, 2011, at https://www.fdic.gov/regulations/laws/federal/2011/11noticejuly27no3.pdf.
\15\ See 76 FR 44998-45003, July 27, 2011, at https://www.fdic.gov/regulations/laws/federal/2011/11noticejuly27no3.pdf.
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The unanticipated outcome of the public comment process for the
agencies' March 2011 initial PRA notice required the FDIC to consider
possible reporting approaches that would address institutions' concerns
about their ability to identify loans meeting the subprime and
leveraged loan definitions in the FDIC's assessments final rule while
also meeting the objectives of the revised large institution assessment
system. Accordingly, in recognition of these concerns, the agencies
decided to provide transition guidance for reporting subprime consumer
and leveraged loans originated or purchased prior to October 1, 2011,
and securities where the underlying loans were originated predominantly
prior to October 1, 2011. However, as a consequence of the unexpected
need to develop and reach agreement on a workable transition approach
for loans that are to be reported as subprime or leveraged for
assessment purposes,\16\ the agencies concluded that they should follow
emergency rather than normal PRA clearance procedures to request
approval from OMB for the assessment-related reporting changes to the
Call Report, the TFR, and the FFIEC 002/002S reports. The use of
emergency clearance procedures was intended to provide certainty to
institutions on a timely basis concerning the initial collection of the
new assessment data items as of the June 30, 2011, report date as
called for under the FDIC's final rule.
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\16\ The FDIC presented this transition approach to large
institutions during a conference call on June 7, 2011, that all
large institutions had been invited to attend. Several institutions
offered favorable comments about the transition approach during this
call.
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The transition guidance for reporting subprime and leveraged loans
was an integral part of the agencies' emergency clearance requests that
were submitted to OMB on June 16, 2011. This guidance, as originally
promulgated in June 2011, provides that for pre-October 1, 2011, loans
and securities, if a large or highly complex institution does not
[[Page 77320]]
have within its data systems the information necessary to determine
subprime consumer or leveraged loan status in accordance with the
definitions of these two higher-risk asset categories set forth in the
FDIC's final rule, the institution may use its existing internal
methodology for identifying subprime consumer or leveraged loans and
securities as the basis for reporting these assets for deposit
insurance assessment purposes in its Call Reports or TFRs. Institutions
that do not have an existing internal methodology in place to identify
subprime consumer or leveraged loans \17\ may, as an alternative to
applying the definitions in the FDIC's final rule to pre-October 1,
2011, loans and securities, apply existing guidance provided by their
primary federal regulator, the agencies' 2001 Expanded Guidance for
Subprime Lending Programs,\18\ or the February 2008 Comptroller's
Handbook on Leveraged Lending \19\ for identification purposes. Under
the agencies' transition guidance as originally issued in June 2011,
all loans originated on or after October 1, 2011, and all securities
where the underlying loans were originated predominantly on or after
October 1, 2011, were to be reported as subprime consumer or leveraged
loans and securities according to the definitions of these higher-risk
asset categories set forth in the FDIC's final rule.\20\
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\17\ A large or highly complex institution may not have an
existing internal methodology in place because it is not required to
report on these exposures to its primary federal regulator for
examination or other supervisory purposes or did not measure and
monitor loans and securities with these characteristics for internal
risk management purposes.
\18\ https://www.fdic.gov/news/news/press/2001/pr0901a.html.
\19\ https://www.occ.gov/static/publications/handbook/
LeveragedLending.pdf.
\20\ For loans purchased on or after October 1, 2011, large and
highly complex institutions may apply the transition guidance to
loans originated prior to that date. Loans purchased on or after
October 1, 2011, that also were originated on or after that date
must be reported as subprime or leveraged according to the
definitions of these higher-risk asset categories set forth in the
FDIC's final rule.
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On June 17, 2011, OMB approved the agencies' emergency clearance
requests to implement the assessment-related reporting revisions to the
Call Report, the TFR, and the FFIEC 002/002S reports effective as of
the June 30, 2011, report date. OMB's emergency approval extends
through the December 31, 2011, report date. Because the assessment-
related reporting revisions need to remain in effect beyond the limited
approval period associated with an emergency clearance request, the
agencies, under the auspices of the FFIEC, began normal PRA clearance
procedures anew with the publication of a second initial PRA Federal
Register notice on July 27, 2011 (76 FR 44987). This second initial
notice requested public comment on the assessment-related reporting
revisions to the Call Report, the TFR, and the FFIEC 002/002S reports
that had taken effect June 30, 2011, under OMB's emergency approval,
including the transition guidance and the other modifications the
agencies had made in response to the comments received on the revisions
first proposed in March 2011.
After the publication of the agencies' second initial PRA notice on
July 27, 2011, OMB approved the agencies' separate requests that
savings associations begin to file the Call Report beginning with the
reports for March 31, 2012. As a result, December 31, 2011, is the
final report date as of which the TFR will be collected from savings
associations. Because OMB's emergency approval of the assessment-
related reporting revisions that were implemented as of the June 30,
2011, report date extends through the December 31, 2011, report date
(after which the TFR will no longer be collected), this notice and the
agencies' related submissions to OMB requesting approval to revise and
extend for three years the Call Report and the FFIEC 002/002S report do
not request this same approval for the TFR. For information on the
conversion by savings associations from filing the TFR to filing the
Call Report, see the agencies' final PRA notice published July 7,
2011.\21\
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\21\ See 76 FR 39981, July 7, 2011, https://www.fdic.gov/regulations/laws/federal/2011/11noticejuly07.pdf.
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II. Comments Received on the July 2011 Second Initial PRA Federal
Register Notice and the Agencies' Response to the Comments
The agencies collectively received comments from eight respondents
on their July 27, 2011, second initial PRA notice on the assessment-
related reporting revisions to the Call Report, the TFR, and the FFIEC
002/002S reports that had taken effect June 30, 2011, under OMB's
emergency approval. Comments were received from four depository
institutions, all of which are ``large institutions'' for deposit
insurance assessment purposes, and four bankers' organizations, three
of which submitted a joint comment letter.\22\ The jointly commenting
bankers' organizations stated they ``collectively represent all of the
banks that are affected or may be affected by'' the revised assessment
system for ``large institutions'' and ``highly complex institutions''
in the FDIC's February 2011 final rule on assessments. Six of the eight
respondents on the second initial PRA notice focused their comments on
the definitions of subprime consumer and leveraged loans in the FDIC's
assessments final rule, which (subject to the transition guidance for
reporting such assets described above) are the basis for the regulatory
reporting instructions for reporting the amounts of these two
categories of higher-risk assets for assessment purposes in the Call
Report and (through the December 31, 2011, report date) the TFR. In
addition, as noted in the public comment file for the second initial
PRA notice, representatives of the four commenting bankers'
organizations and certain large and highly complex institutions met
twice with FDIC staff prior to the close of the comment period for the
notice to explain their concerns about the definitions of, and the
availability of the information necessary to report, subprime and
leveraged loans by such institutions.
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\22\ The American Bankers Association (ABA), The Clearing House,
and the Financial Services Roundtable jointly commented. The Risk
Management Association submitted a separate comment letter.
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Comments also were received on the definition of nontraditional 1-4
family residential mortgage loans, the reporting of counterparty
exposures by highly complex institutions, the frequency of loan loss
provision and deferred tax calculations for reporting average tangible
equity, the treatment of prepaid deposit insurance assessments in the
measurement of average total assets for assessment base purposes, and
the reporting of certain troubled debt restructurings that are
guaranteed or insured by the U.S. Government. In addition, during the
initial reporting of the revised assessment-related data items as of
June 30, 2011, questions arose about which data items should be
reported on a consolidated or an unconsolidated single FDIC certificate
number basis by institutions that own another insured institution as a
subsidiary because of the way in which these data are used in the
FDIC's risk-based deposit insurance system.
These issues are discussed in Sections II.A through II.G below.
A. Definitions of Subprime and Leveraged Loans and Securities--Two
new data items for subprime consumer and leveraged loans and securities
were among the assessment-related reporting revisions applicable to
large and highly
[[Page 77321]]
complex institutions that were included in OMB's approval of the
agencies' emergency clearance requests and implemented in the Call
Report and the TFR as of the June 30, 2011, report date. These two data
items are used as inputs to the scorecard measures for large and highly
complex institutions in the revised risk-based assessment system for
such institutions brought about by the FDIC's February 2011 assessments
final rule.
In their comments on the agencies' second initial PRA notice, the
four bankers' organizations and two institutions requested that the
definitions of subprime and leveraged loans in the FDIC's assessments
final rule be revised, asserting that the definitions do not
effectively capture the risk that the FDIC desires or needs for its
large bank deposit insurance pricing model. Rather, these commenters
stated that the final rule's current definitions would capture loans
that are not subprime or leveraged (i.e., are not higher-risk), would
entail excessive reporting that would often be inconsistent across
institutions, would greatly overstate institutions' actual risk
exposures, and would produce a biased representation of relative risk
(resulting in institutions with less risky portfolios being treated the
same as institutions with more risky portfolios). The bankers'
organizations, in their two comment letters, proposed ``consensus
solutions'' for modifying the definitions of subprime and leveraged
loans that would better correspond to industry standards and practices
for such loans, better differentiate risk among large institutions, and
thereby simplify and reduce the cost of the regulatory reporting
process for such loans. The two institutions that addressed these
definitions offered similar recommendations.
The three jointly commenting bankers' organizations stated that
having the ``right definitions'' is so important that it is imperative
for the FDIC to revise its assessments final rule,\23\ but they also
observed that revising the rule ``cannot be done instantaneously.''
Accordingly, these organizations as well as one institution recommended
extending the transition approach for reporting subprime and leveraged
loans and securities (which was summarized above and was scheduled to
end on October 1, 2011) until more workable and accurate definitions
are developed. The same commenters also noted that if the FDIC decides
not to make changes to the assessments final rule's definitions of
subprime and leveraged loans and securities, large and highly complex
institutions will need until at least the second quarter of 2012 to
build reliable systems for identifying such loans and securities and to
train staff to input reliable data. According to these commenters, the
additional preparation time that institutions would need if the
definitions are not revised would also justify an extension of the
transition reporting approach.
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\23\ The other bankers' organization requested that the FDIC
reopen discussions on the subprime and leveraged loan definitions.
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The FDIC has decided to review the definitions of subprime and
leveraged loans and securities in the February 2011 assessments final
rule to determine whether changes to the definitions could alleviate
industry concerns without sacrificing accuracy in risk differentiation
for deposit insurance pricing purposes. To allow sufficient time for
the FDIC to undertake this review, and--in the event that the FDIC does
not propose to alter the definitions in the February 2011 assessments
final rule following this review--to give large and highly complex
institutions additional time to adapt reporting systems to the
definitions in the rule, the FDIC has also decided to allow such
institutions to continue to follow the transition approach under which
they may use either their existing internal methodologies or existing
supervisory guidance to identify and report, for assessment purposes,
subprime and leveraged loans originated or purchased prior to April 1,
2012. Thus, by extending the previous transition guidance for these two
loan categories, the February 2011 assessment definitions--if left
unaltered--would begin to apply to loans originated on or after April
1, 2012.
Any revised definitions of subprime and leveraged loans for
assessment purposes would require approval by the FDIC Board of
Directors through the notice and comment rulemaking process. The
effective date for applying any revised definitions would be
communicated through the rulemaking process and would be subject to
comment by the industry.
The FDIC communicated these decisions in an email it sent to all
large and highly complex institutions on September 28, 2011. In
addition, the Call Report and TFR instructions were updated as of
September 30, 2011, to reflect the extension of the transition guidance
for reporting subprime and leveraged loans and securities from October
1, 2011, to April 1, 2012.
At present, the instructions for reporting subprime and leveraged
loans and securities in the Call Report and the TFR (until the
collection of the TFR is discontinued after the filing of the year-end
2011 reports) specifically reference the definitions of these high-risk
asset categories that are contained in the FDIC's assessment
regulations (12 CFR part 327) as amended by the FDIC's February 2011
final rule and then incorporate the text of these definitions from the
final rule (as well as the previously mentioned transition guidance).
Accordingly, if and when one or both of these two definitions--as used
for assessment purposes--are revised through FDIC rulemaking, the
definitions of these asset categories in the agencies' regulatory
reporting instructions will be revised in the same manner to maintain
conformity with the assessment regulations.
B. Nontraditional 1-4 Family Residential Mortgage Loans--The
assessment-related reporting revisions applicable to large and highly
complex institutions that were included in OMB's approval of the
agencies' emergency clearance requests and implemented as of June 30,
2011, also included a new data item for nontraditional 1-4 family
residential mortgage loans and certain securitizations of such loans.
Like the new data items for subprime and leveraged loans, the new
nontraditional mortgage loan data item is an input to the scorecard
measures for large and highly complex institutions in the FDIC's
revised risk-based assessment system for such institutions.
The three jointly commenting bankers' organizations stated that the
reporting of nontraditional residential mortgage loans based on the
definition in the FDIC's assessments final rule ``does not distinguish
risk between banks or within the population being reported.'' These
bankers' organizations recommended that their proposed consensus
solution for identifying which consumer loans should be reported as
subprime loans also be applied to nontraditional residential mortgage
loans.\24\ According to these organizations, taking this approach would
enable the agencies to eliminate the separate data item for
nontraditional residential mortgage loans because those mortgage loans
meeting the criteria in the organizations' recommended consensus
solution could be reported
[[Page 77322]]
with the consumer loans being reported as subprime.
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\24\ Although the comment letter from the other bankers'
organization did not specifically discuss nontraditional residential
mortgage loans, the agencies note that the demonstration matrix
provided in support of the organization's recommended consensus
solution for identifying subprime loans included a column for
nontraditional mortgages.
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The agencies note that the nature, extent, and level of concern
about the definitions of subprime and leveraged loans and related data
availability issues that bankers and bankers' organizations cited in
their comments on the agencies' March 2011 first initial PRA notice,
which led the FDIC to devise transition guidance for the reporting of
these two categories of higher-risk assets, were not also expressed
with respect to the definition and reporting on nontraditional mortgage
loans.\25\ As a consequence, the reporting of the new data item for
nontraditional mortgage loans using the definition in the FDIC's
assessments final rule was not subject to the transition guidance
provided for subprime and leveraged loans. Therefore, after considering
the bankers' organizations comments about nontraditional residential
mortgage loans, the definition of this high-risk asset category will
remain as defined in the FDIC's assessments final rule unless the
results of the FDIC's review of the subprime and leveraged loan
definitions (discussed above) also indicate that it would be
appropriate for the FDIC to amend the definition of nontraditional
residential mortgage loans through rulemaking. Should that occur, the
definition of high risk residential mortgage loans in the agencies'
regulatory reporting instructions will be revised in the same manner to
maintain conformity with the FDIC's assessment regulations.
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\25\ However, commenters on the agencies' March 2011 first
initial PRA notice did request certain clarifications of the scope
of the nontraditional mortgage loan data item. As mentioned in the
agencies' July 2011 second initial PRA notice, in response to these
comments, the agencies agreed that certain clarifications of the
final rule's nontraditional mortgage loan definition would be
appropriate to assist institutions in properly reporting the amount
of such loans in the Call Report and TFR. These clarifications were
incorporated into the instructions for reporting nontraditional
mortgage loans that were issued and took effect for the June 30,
2011, report date.
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C. Counterparty Exposures--The assessment-related reporting
revisions that took effect June 30, 2011, pursuant to OMB's approval of
the agencies' emergency clearance request included two new Call Report
data items applicable only to highly complex institutions for the total
amount of an institution's 20 largest counterparty exposures and the
amount of the institution's largest counterparty exposure. As with the
other new data items that are inputs to the revised assessment system
for large and highly complex institutions, the Call Report instructions
explaining the scope and measurement of the two counterparty exposure
items are drawn from the definitional guidance on counterparty
exposures in the FDIC's February 2011 assessments final rule.
The final rule's definition of counterparty exposure states that
exposure should be measured for each counterparty or borrower at the
consolidated entity level. The three jointly commenting bankers'
organizations recommended that the term ``legal consolidated entity,''
as used in this definition in relation to a counterparty, should be
clarified, but they also noted that an outstanding Office of Financial
Research proposal is considering the creation of unique identifiers for
derivative counterparties, thereby ``demonstrating regulatory
recognition of unanswered questions on consolidating counterparty
exposures.'' Given the absence of an industry standard for recognizing
connections between counterparties and the regulatory uncertainty in
this area, the three bankers' organizations asserted that this
reporting requirement is not appropriate at present.
The three jointly commenting bankers' organizations also stated
that there is an inconsistency between the counterparty credit risk
data the FDIC used to calibrate the assessment pricing model for highly
complex institutions in its final rule and the counterparty exposure
data these institutions are required to report in the Call Report. The
organizations stated that the model was calibrated using Exposure at
Default (EAD) data reported in the FFIEC 101 reports \26\ of
institutions going through their Basel II parallel runs as opposed to
the data that highly complex institutions are asked to submit on their
Call Reports for deposit insurance assessment pricing purposes. The
organizations recommended that the FDIC review the counterparty credit
exposure that highly complex institutions report in their Call Reports
in accordance with the guidance provided in the assessments final rule,
compare this to the counterparty credit exposure the institutions
report in their FFIEC 101 reports, and then consider whether the
pricing model should be recalibrated based upon the FDIC's findings.
These commenters further requested that the FDIC accept the results of
a highly complex institution's Internal Models Methodology (IMM) for
deposit insurance assessment pricing purposes only, prior to its exit
from its parallel run, provided the IMM models are acceptable. Finally,
these commenters recommended that once an institution's IMM model is
approved, the institution should be allowed to amend the amounts
previously reported on its Call Reports for counterparty EADs and the
FDIC should use these amended amounts to retroactively adjust the
institution's assessments for those previous periods.
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\26\ Risk-Based Capital Reporting for Institutions Subject to
the Advanced Capital Adequacy Framework, OMB Nos.: Board, 7100-0319;
FDIC, 3064-0159; and OCC, 1557-0239.
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The FDIC continues to believe that, for the purposes of calculating
deposit insurance premiums, highly complex institutions should report
counterparty credit exposure on a consolidated entity basis (legal
consolidated entity). The FDIC believes that highly complex
institutions should have the ability to aggregate exposures arising
from financial contracts with entities within a legal consolidated
entity and report the exposure as outlined in the final rule. Although
the Office of Financial Research's November 2010 Statement on Legal
Entity Identification for Financial Contracts addresses the
establishment of a system to uniquely identify all market participants,
which would enable institutions to better aggregate counterparty
exposures, the main goal of the proposal is to standardize the system
and allow for better oversight, tracking, monitoring, and enforcement.
The absence of such a system does not preclude institutions from
internally aggregating their exposures to entities within a legal
consolidated entity.
The FDIC is reviewing the claim that there is an inconsistency
between the counterparty credit risk data used to calibrate the model
and the data required to be provided in the Call Report under the final
rule. The FDIC has asked highly complex institutions to voluntarily
submit counterparty credit risk data to the FDIC that has been measured
under the institutions' IMMs for comparison with the data reported in
the Call Report. The FDIC will review these data and consider the need
for appropriate changes to the pricing model to ensure that it
differentiates risk, including consideration of the effect on prior
periods. In the interim, institutions should continue to report
counterparty exposures in the Call Report using the final rule's
existing definition. Additionally, the FDIC continues to believe that
it is not appropriate for pricing purposes to use data calculated via
an institution's IMM model before the IMM model has been approved and
the bank has exited its parallel run period. To adopt the IMM to
calculate EADs for purposes of the risk-based capital requirements
under the Advanced Capital Adequacy Framework, institutions must first
[[Page 77323]]
receive approval from their primary federal regulator to exit the
parallel run period. Institutions also must receive approval from their
primary federal regulator to use their IMMs. Once an institution has
conducted a satisfactory parallel run and satisfied the approval
requirements for the IMM, the IMM results should be used to report
counterparty exposure data in the Call Report for deposit insurance
pricing purposes.
D. Frequency of Loan Loss Provision and Deferred Tax Calculations
for Reporting Average Tangible Equity--As required by section 331(b) of
the Dodd-Frank Act, the FDIC's assessments final rule redefines the
deposit insurance assessment base as average consolidated total assets
minus average tangible equity. Under the final rule, tangible equity is
defined as Tier 1 capital.\27\ As one of the assessment-related
rep