Proposed Collection; Comment Request, 19424-19425 [2012-7603]
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Federal Register / Vol. 77, No. 62 / Friday, March 30, 2012 / Notices
quantifiable objectives and measureable time
frames. Actions may include working with
the borrower for an orderly resolution while
preserving the institution’s interests, sale of
the credit in the secondary market, or
liquidation. Problem credits should be
reviewed regularly for risk rating accuracy,
accrual status, recognition of impairment
through specific allocations, and charge-offs.
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Deal Sponsors
Institutions should develop guidelines for
evaluating the qualifications of financial
sponsors and implement a process to
regularly monitor performance. Deal
sponsors may provide valuable support to
borrowers such as strategic planning,
management, and other tangible and
intangible benefits. Sponsors may also
provide a source of financial support for a
borrower that fails to achieve projections.
Institutions generally rate borrowers based on
their analysis of the borrowers’ standalone
financial condition. However, lending
institutions may consider support from a
sponsor in assigning an internal risk rating
when the institution can document the
sponsor’s history of demonstrated support as
well as the economic incentive, capacity, and
stated intent to continue to support the
transaction. However, even with documented
capacity and a history of support, a sponsor’s
potential contributions may not mitigate
examiner criticism absent a documented
commitment of continued support. An
evaluation of a sponsor’s financial support
should include the following:
• Sponsor’s historical performance in
supporting its investments, financially and
otherwise.
• Sponsor’s economic incentive to
support, including the nature and amount of
capital contributed at inception.
• Documentation of degree of support (e.g.,
guarantee, comfort letter, verbal assurance).
• Consideration of the sponsor’s
contractual investment limitations.
• To the extent feasible, a periodic review
of the sponsor’s financial statements and
trends, and an analysis of its liquidity,
including the ability to fund multiple deals.
• Consideration of the sponsor’s dividend
and capital contribution practices.
• Likelihood of supporting the borrower
compared to other deals in the sponsor’s
portfolio.
• Guidelines for evaluating the
qualifications of financial sponsors and a
process to regularly monitor performance.
Credit Review
Institutions should have a strong and
independent credit review function with a
demonstrated ability to identify portfolio
risks and documented authority to escalate
inappropriate risks and other findings to
senior management. Due to the elevated risk
inherent in leveraged finance, and depending
on the relative size of an institution’s
leveraged finance business, it may be prudent
for the institution’s credit review function to
examine the leveraged portfolio more
frequently than other segments, go into
greater depth, and be more selective in
identifying personnel to assess the
underlying transactions. Portfolio reviews
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should generally be conducted at least
annually. For many institutions, the risk
characteristics of the leveraged portfolio,
such as high reliance on enterprise value,
concentrations, adverse risk rating trends, or
portfolio performance, may dictate more
frequent reviews.
Institutions should staff their internal
credit review function appropriately and
ensure that it has sufficient resources to
ensure timely, independent, and accurate
assessments of leveraged finance
transactions. Reviews should evaluate the
level of risk and risk rating integrity,
valuation methodologies, and the quality of
risk management. Internal credit reviews also
should encompass a review of the
institution’s leveraged finance practices,
policies and procedures to ensure that they
are consistent with regulatory guidance.
Conflicts of Interest
Institutions should develop appropriate
policies to address and prevent potential
conflicts of interest. For example, a lender
may be reluctant to use an aggressive
collection strategy with a problem borrower
because of the potential impact on the value
of the lender’s equity interest. A lender may
receive pressure to provide financial or other
privileged client information that could
benefit an affiliated equity investor. Such
conflicts also may occur where the
underwriting bank serves as financial advisor
to the seller and simultaneously offers
financing to multiple buyers (i.e., stapled
financing). Similarly, there may be
conflicting interests between the different
lines of business or between the institution
and its affiliates. These and other situations
may arise that create conflicts of interest
between the institution and its customers.
Policies should clearly define potential
conflicts of interest, identify appropriate risk
management controls and procedures, enable
employees to report potential conflicts of
interest to management for action without
fear of retribution, and ensure compliance
with applicable law. Further, management
should establish responsibility for training
employees on how to avoid conflicts of
interest, as well as provide for reporting,
tracking, and resolution of any conflicts of
interest that occur.
Anti-Tying Regulations
Because leveraged finance transactions
often involve a number of types of debt and
several bank products, institutions should
ensure that their policies incorporate
safeguards to prevent violations of anti-tying
regulations. Section 106(b) of the BHC Act
Amendments of 1970 prohibits certain forms
of product tying by banks and their affiliates.
The intent behind section 106(b) is to prevent
institutions from using their market power
over certain products to obtain an unfair
competitive advantage in other products.
Reputational Risk
Leveraged finance transactions are often
syndicated through the bank and
institutional markets. An institution’s
apparent failure to meet its legal or fiduciary
responsibilities in underwriting and
distributing transactions can damage its
reputation and impair its ability to compete.
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Similarly, institutions distributing
transactions that over time have significantly
higher default or loss rates and performance
issues may also see their reputation damaged
in the markets.
Securities Laws
Equity interests and certain debt
instruments used in leveraged finance
transactions may constitute ‘‘securities’’ for
the purposes of federal securities laws. When
securities are involved, institutions should
ensure compliance with applicable securities
laws, including disclosure and other
regulatory requirements. Institutions should
also establish procedures to appropriately
manage the internal dissemination of
material nonpublic information about
transactions in which it plays a role.
Compliance Function
The legal and regulatory issues raised by
leveraged transactions are numerous and
complex. To ensure that potential conflicts
are avoided and laws and regulations are
adhered to, an independent compliance
function should periodically review an
institution’s leveraged finance activity.
Additional information is available in the
Agencies’ existing guidance on compliance
with laws and regulations.
Conclusion
Leveraged finance is an important type of
financing for the economy, and the banking
industry plays an integral role in making
credit available and syndicating that credit to
investors. Institutions should ensure they do
not heighten risks by originating poorly
underwritten deals that find their way into a
wide variety of investment instruments.
Therefore, it is important this financing be
provided to creditworthy borrowers in a safe
and sound manner that is consistent with
this guidance.
Dated: March 19, 2012.
John Walsh,
Acting Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, March 22, 2012.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 26th Day of
March 2012.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. 2012–7620 Filed 3–29–12; 8:45 am]
BILLING CODE 4810–33– 6210–01– 6714–01–P
DEPARTMENT OF THE TREASURY
Bureau of the Public Debt
Proposed Collection; Comment
Request
Notice and request for
comments.
ACTION:
The Department of the
Treasury, as part of its continuing effort
SUMMARY:
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Federal Register / Vol. 77, No. 62 / Friday, March 30, 2012 / Notices
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 Bureau of
the Public Debt within the Department
of the Treasury is soliciting comments
concerning the Application For
Disposition Of Retirement Plan and/or
Individual Retirement Bonds Without
Administration Of Deceased Owner’s
Estate.
DATES: Written comments should be
received on or before May 30, 2012 to
be assured of consideration.
ADDRESSES: Direct all written comments
to Bureau of the Public Debt, Bruce A.
Sharp, 200 Third Street A4–A,
Parkersburg, WV 26106–1328, or
bruce.sharp@bpd.treas.gov. The
opportunity to make comments online is
also available at www.pracomment.gov.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies should be directed to Bruce A.
Sharp, Bureau of the Public Debt, 200
Third Street A4–A, Parkersburg, WV
26106–1328, (304) 480–8150.
SUPPLEMENTARY INFORMATION:
Title: Application For Disposition Of
Retirement Plan and/or Individual
Retirement Bonds Without
Administration Of Deceased Owner’s
Estate.
OMB Number: 1535–0032.
Form Number: PD F 3565.
Abstract: The information is used to
support a request for disposition by the
heirs of deceased owners or Retirement
Plan and/or Individual Retirement
bonds.
Current Actions: None.
Type of Review: Extension.
Affected Public: Individuals or
Households.
Estimated Number of Respondents:
350.
Estimated Time Per Respondent: 20
minutes.
Estimated Total Annual Burden
Hours: 117.
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
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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.
Dated: March 26, 2012.
Bruce A. Sharp,
Bureau Clearance Officer.
[FR Doc. 2012–7603 Filed 3–29–12; 8:45 am]
BILLING CODE 4810–39–P
DEPARTMENT OF VETERANS
AFFAIRS
Prescription Drugs Not Administered
During Treatment; Update to
Administrative Cost for Calendar Year
2012
Department of Veterans Affairs.
Notice.
AGENCY:
ACTION:
This Department of Veterans
Affairs (VA) notice informs the public of
the updated ‘‘National Average
Administrative Costs’’ for purposes of
calculating VA’s charges for
prescription drugs that were not
administered during treatment but were
provided or furnished by VA to a
veteran for: A nonservice-connected
disability for which the veteran is
entitled to care (or the payment of
expenses of care) under a health plan
contract; a nonservice-connected
disability incurred incident to the
veteran’s employment and covered
under a worker’s compensation law or
plan that provides reimbursement or
indemnification for such care and
services; or a nonservice-connected
disability incurred as a result of a motor
vehicle accident in a State that requires
automobile accident reparations
insurance. This updated administrative
cost charge was effective on January 1,
2012, for Calendar Year 2012.
FOR FURTHER INFORMATION CONTACT:
Romona Greene, Chief Business Office
(10NB1A), Veterans Health
Administration, Department of Veterans
Affairs, 810 Vermont Avenue NW.,
Washington, DC 20420, (202) 461–1595.
This is not a toll free number.
SUPPLEMENTARY INFORMATION: Section
17.101 of title 38, Code of Federal
Regulations, sets forth VA’s medical
regulations concerning the collection or
recovery by VA for medical care or
services provided or furnished to a
veteran for a nonservice-connected
SUMMARY:
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19425
disability. As provided in 38 CFR
17.101(m), when VA provides or
furnishes prescription drugs not
administered during treatment for: (1) A
nonservice-connected disability for
which the veteran is entitled to care (or
the payment of expenses of care) under
a health plan contract; (2) a nonserviceconnected disability incurred incident
to the veteran’s employment and
covered under a worker’s compensation
law or plan that provides
reimbursement or indemnification for
such care and services; or (3) a
nonservice-connected disability
incurred as a result of a motor vehicle
accident in a State that requires
automobile accident reparations
insurance, ‘‘charges billed separately for
such prescription drugs will consist of
the amount that equals the total of the
actual cost to VA for the drugs and the
national average of VA administrative
costs associated with dispensing the
drugs for each prescription.’’
Section 17.101(m) includes the
methodology for calculating the national
average administrative cost for
prescription drug charges not
administered during treatment. The
administrative cost is determined
annually using VA’s managerial cost
accounting system. Under this
accounting system, the national average
administrative cost is determined by
adding the total VA national drug
general overhead costs (such as costs of
buildings and maintenance, utilities,
billing, and collections) to the total VA
national drug dispensing costs (such as
costs of the labor of the pharmacy
department, packaging, and mailing)
with the sum divided by the actual
number of VA prescriptions filled
nationally. The labor cost also includes
cost for the professional activity of
reviewing and dispensing a
prescription.
Based on this accounting system, VA
will determine the amount of the
national average administrative cost
annually for the prior fiscal year
(October through September) and then
apply the charge at the start of the next
calendar year. The national average
administrative cost for calendar year
2012 is $12.39 and was effective on
January 1, 2012.
This notice will be posted at https://
www1.va.gov/CBO/apps/rates/index.asp
under the heading ‘‘Federal Registers,
Rules, and Notices’’ and identified as
‘‘Administrative Charge Federal
Register Notice, CY 2012.’’ Following
this Federal Register notice, all
subsequent Federal Register notices
providing updates on the administrative
charge will be published in conjunction
with the Federal Register notices
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]]>Agencies
[Federal Register Volume 77, Number 62 (Friday, March 30, 2012)]
[Notices]
[Pages 19424-19425]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7603]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Bureau of the Public Debt
Proposed Collection; Comment Request
ACTION: Notice and request for comments.
-----------------------------------------------------------------------
SUMMARY: The Department of the Treasury, as part of its continuing
effort
[[Page 19425]]
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 Bureau of the Public Debt within the
Department of the Treasury is soliciting comments concerning the
Application For Disposition Of Retirement Plan and/or Individual
Retirement Bonds Without Administration Of Deceased Owner's Estate.
DATES: Written comments should be received on or before May 30, 2012 to
be assured of consideration.
ADDRESSES: Direct all written comments to Bureau of the Public Debt,
Bruce A. Sharp, 200 Third Street A4-A, Parkersburg, WV 26106-1328, or
bruce.sharp@bpd.treas.gov. The opportunity to make comments online is
also available at www.pracomment.gov.
FOR FURTHER INFORMATION CONTACT: Requests for additional information or
copies should be directed to Bruce A. Sharp, Bureau of the Public Debt,
200 Third Street A4-A, Parkersburg, WV 26106-1328, (304) 480-8150.
SUPPLEMENTARY INFORMATION:
Title: Application For Disposition Of Retirement Plan and/or
Individual Retirement Bonds Without Administration Of Deceased Owner's
Estate.
OMB Number: 1535-0032.
Form Number: PD F 3565.
Abstract: The information is used to support a request for
disposition by the heirs of deceased owners or Retirement Plan and/or
Individual Retirement bonds.
Current Actions: None.
Type of Review: Extension.
Affected Public: Individuals or Households.
Estimated Number of Respondents: 350.
Estimated Time Per Respondent: 20 minutes.
Estimated Total Annual Burden Hours: 117.
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.
Dated: March 26, 2012.
Bruce A. Sharp,
Bureau Clearance Officer.
[FR Doc. 2012-7603 Filed 3-29-12; 8:45 am]
BILLING CODE 4810-39-P
