Supervision and Regulation Assessments for Bank Holding Companies and Savings and Loan Holding Companies With Total Consolidated Assets of $50 Billion or More and Nonbank Financial Companies Supervised by the Federal Reserve, 52391-52405 [2013-20306]
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Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations
L. Congressional Notification
As required by 5 U.S.C. 801, DOE will
submit to Congress a report regarding
the issuance of today’s final rule. The
report will state that it has been
determined that the rule is not a ‘‘major
rule’’ as defined by 5 U.S.C. 804(2).
M. Approval by the Office of the
Secretary of Energy
The Office of the Secretary of Energy
has approved the issuance of this final
rule.
List of Subjects
10 CFR Part 708
Administrative practice and
procedure, Government contracts,
Whistleblowing.
(or successor orders); E.O. 12968, 3 CFR 1995
Comp., p. 391.
§§ 710.5, 710.21, 710.22, 710.25, 710.26,
710.27, 710.28, 710.29, 710.30, 710.32,
710.34, and 710.35 [Amended]
4. Sections 710.5(a); 710.21(b)(3)(ii)
and (6) through (8); 710.22(a)(1) through
(3); 710.25 section heading and (b)
through (f); 710.26(a) through (k), (l)
introductory text, (l)(2)(ii), and (p);
710.27; 710.28 section heading, (a)(1)
and (4), (b) introductory text, (b)(3), and
(c) introductory text; 710.29(i);
710.30(b)(1) and (2); 710.32(a) and (b)
introductory text; 710.34; and 710.35 are
amended by removing the words
‘‘Hearing Officer’’ and adding, in their
place, the words ‘‘Administrative
Judge’’.
■
10 CFR Part 710
Administrative practice and
procedure, Classified information,
Government contracts, Government
employees, Nuclear materials.
[FR Doc. 2013–20597 Filed 8–22–13; 8:45 am]
Issued in Washington, DC, on August 19,
2013.
Poli A. Marmolejos,
Director, Office of Hearings and Appeals.
12 CFR Part 246
For the reasons stated in the
preamble, DOE amends parts 708 and
710 of chapter III, title 10, Code of
Federal Regulations, as set forth below:
Supervision and Regulation
Assessments for Bank Holding
Companies and Savings and Loan
Holding Companies With Total
Consolidated Assets of $50 Billion or
More and Nonbank Financial
Companies Supervised by the Federal
Reserve
BILLING CODE 6450–01–P
FEDERAL RESERVE SYSTEM
PART 708—DOE CONTRACTOR
EMPLOYEE PROTECTION PROGRAM
1. The authority citation for part 708
continues to read as follows:
■
§§ 708.2, 708.24, 708.25, 708.26, 708.27,
708.28, 708.30, 708.31, and 708.32
[Amended]
2. Sections 708.2 (definition);
708.24(b); 708.25; 708.26; 708.27;
708.28(b); 708.30; 708.31; and 708.32(a)
and (c) are amended by removing the
words ‘‘Hearing Officer’’ and adding in
their place the words ‘‘Administrative
Judge’’.
■
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PART 710—CRITERIA AND
PROCEDURES FOR DETERMINING
ELIGIBILTY FOR ACCESS TO
CLASSIFIED MATTER OR SPECIAL
NUCLEAR MATERIAL
3. The authority citation for part 710
continues to read as follows:
■
Authority: 42 U.S.C. 2165, 2201, 5815,
7101, et seq., 7383h–l; 50 U.S.C. 2401 et seq.;
E.O. 10450, 3 CFR 1949–1953 comp., p. 936,
as amended; E.O. 10865, 3 CFR 1959–1963
comp., p. 398, as amended, 3 CFR Chap. IV;
E.O. 13526, 3 CFR 2010 Comp., pp. 298–327
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RIN 7100–AD–95
Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
AGENCY:
Authority: 42 U.S.C. 2201(b), 2201(c),
2201(l), and 2201(p); 42 U.S.C. 5814 and
5815; 42 U.S.C. 7251, 7254, 7255, and 7256;
and 5 U.S.C. Appendix 3.
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[Regulation TT; Docket No. R–1457]
The Board of Governors of the
Federal Reserve System (Board) is
adopting a final rule to implement
section 318 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (Dodd-Frank Act). Section 318
directs the Board to collect assessments,
fees, or other charges equal to the total
expenses the Board estimates are
necessary or appropriate to carry out the
supervisory and regulatory
responsibilities of the Board for bank
holding companies and savings and
loan holding companies with total
consolidated assets of $50 billion or
more and nonbank financial companies
designated for Board supervision by the
Financial Stability Oversight Council.
DATES: Effective date: The final rule is
effective October 25, 2013.
FOR FURTHER INFORMATION CONTACT:
Mark Greiner, Senior Supervisory
Financial Analyst (202–452–5290),
Nancy Perkins, Assistant Director (202–
973–5006), or William Spaniel, Senior
SUMMARY:
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Associate Director (202–452–3469),
Division of Banking Supervision and
Regulation; Laurie Schaffer, Associate
General Counsel (202–452–2272), or
Michelle Moss Kidd, Attorney (202–
736–5554), Legal Division; Board of
Governors of the Federal Reserve
System, 20th and C Streets NW.,
Washington, DC 20551. Users of
Telecommunication Device for the Deaf
(TTD) only, contact (202) 263–4869.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Description of the Final Rule
A. Key Definitions
1. Assessed Companies
2. Total Assessable Assets
3. Assessment Periods
4. Assessment Basis
B. Apportioning the Assessment Basis to
Assessed Companies
1. Apportionment Based on Size
2. Assessment Formula
C. Collection Procedures
1. Notice of Assessment and Appeal
Procedure
2. Collection of Assessments
D. Revisions to the FR Y–7Q
III. Administrative Law Matters
A. Solicitation of Comments and Use of
Plain Language
B. Paperwork Reduction Act Analysis
C. Regulatory Flexibility Act Analysis
I. Introduction
On April 18, 2013, the Board
published in the Federal Register a
notice of proposed rulemaking (the NPR
or the proposal) seeking public
comment on the Board’s proposal to
implement section 318 of the DoddFrank Act.1 Section 318 directs the
Board to collect assessments, fees, or
other charges (assessments) from bank
holding companies (BHCs) and savings
and loan holding companies (SLHCs)
with $50 billion or more in total
consolidated assets, and from nonbank
financial companies designated by the
Financial Stability Oversight Council
(Council) pursuant to section 113 of the
Dodd-Frank Act for supervision by the
Board (Board-supervised nonbank
financial companies), (collectively,
assessed companies), equal to the
expenses the Board estimates are
necessary or appropriate to carry out its
supervision and regulation of those
companies. The proposed rule outlined
the Board’s assessment program,
including how the Board would: (a)
Determine which companies are
assessed companies for each calendaryear assessment period, (b) estimate the
total expenses that are necessary or
appropriate to carry out the supervisory
and regulatory responsibilities to be
1 78
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covered by the assessment, (c)
determine the assessment for each
assessed company, and (d) bill for and
collect the assessment from the assessed
companies.
The proposal provided that each
calendar year would be an assessment
period (assessment period) and that a
BHC or SLHC would be an assessed
company for that assessment period if
the company’s average total
consolidated assets over the assessment
period met or exceeded $50 billion, and
a nonbank financial company would be
an assessed company if it was a Boardsupervised nonbank financial company
on December 31 of the assessment
period. The Board proposed to notify
assessed companies of the amount of
their assessment no later than July 15 of
the year following each assessment
period. After an opportunity for appeal,
each assessed company would have
been required to pay its assessment by
September 30 of the year following the
assessment period. The Board proposed
to collect assessments beginning with
the 2012 assessment period.
The Board received 16 comments on
the NPR from industry associations,
companies, individuals, and members of
the U.S. Congress. Certain commenters
expressed concerns with the Board’s
methodology for allocating its expenses
among assessed companies, as well as
with the Board’s determination of its
assessment basis. Commenters also
criticized the Board’s methodology for
assessing Board-supervised nonbank
financial companies and SLHCs that are
predominantly insurance companies. A
more detailed discussion of the
comments on particular aspects of the
proposal is provided in the remainder of
this preamble.
II. Description of the Final Rule
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A. Key Definitions
1. Assessed Companies
The proposed rule would have
defined assessed companies to be BHCs
and SLHCs with total consolidated
assets of $50 billion or more and Boardsupervised nonbank financial
companies. In particular, for each
assessment period, assessed companies
were defined as:
• A company that, on December 31 of
the assessment period, is a top-tier BHC,
as defined in section 2 of the Bank
Holding Company Act,2 other than a
foreign BHC, that has total consolidated
assets of $50 billion or more as
determined based on the average of the
BHC’s total consolidated assets reported
for the assessment period on its
2 12
U.S.C. 1841(a).
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Schedule HC—Consolidated Balance
Sheet of the BHC’s Consolidated
Financial Statements for Bank Holding
Companies (FR Y–9C);
• A company that, on December 31 of
the assessment period, is a top-tier
SLHC, as defined in section 10 of the
Home Owners’ Loan Act,3 other than a
foreign SLHC, that has total
consolidated assets of $50 billion or
more as determined based on the
average of the SLHC’s total consolidated
assets reported for the assessment
period on the SLHC’s FR Y–9C, or on
the SLHC’s Quarterly Savings and Loan
Holding Company Report (FR 2320), as
applicable 4;
• A foreign company that, on
December 31 of the assessment period,
is a top-tier BHC that has total
consolidated assets of $50 billion or
more as determined based on the
average of the foreign banking
organization’s total consolidated assets
reported for the assessment period on
the Capital and Asset Report for Foreign
Banking Organizations (FR Y–7Q)
submissions 5;
• A foreign company that, on
December 31 of the assessment period,
is a top-tier SLHC that has total
consolidated assets of $50 billion or
more as determined based on the
average of the foreign SLHC’s total
consolidated assets reported for the
assessment period on regulatory reports
required for the foreign SLHC 6; and
3 12
U.S.C. 1467.
FR 2320 form is filed by top-tier savings and
loan holding companies exempt from filing Federal
Reserve regulatory reports, which include the Y–9C
form submitted by BHCs and SLHCs with total
consolidated assets of $500 million or more. Under
the proposal, for multi-tiered BHCs and multi-tiered
SLHCs in which a holding company owns or
controls, or is owned or controlled by, other
holding companies, the assessed company would be
the top-tier, regulated holding company. In
situations where two or more unaffiliated
companies control the same U.S. bank or savings
association and each company has average total
consolidated assets of $50 billion or more, each of
the unaffiliated companies would be designated an
assessed company. Generally, a company has
control over a bank, savings association, or
company if the company has (a) ownership, control,
or power to vote 25 percent or more of the
outstanding shares of any class of voting securities
of the bank, savings association, or company,
directly or indirectly or acting through one or more
other persons; (b) control in any manner over the
election of a majority of the directors or trustees of
the bank, savings association, or company; or (c) the
Board determines the company exercises, directly
or indirectly, a controlling influence over the
management or policies of the bank, savings
association, or company. See 12 U.S.C. 1841(a)(2)
(BHCs) and 12 U.S.C. 1467a(a)(2) (SLHCs).
5 For annual filers of the FR Y–7Q, the proposal
provided that total consolidated assets would be
determined from the foreign banking organization’s
FR Y–7Q annual submission for the calendar year
of the assessment period.
6 At present, there are no foreign savings and loan
holding companies.
4 The
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• A company that is a Boardsupervised nonbank financial company
on December 31 of the assessment
period.
In the proposal, the Board stated that
it believed that relying on the average of
assets reported in the financial reports
submitted over the entire yearly
assessment period, where available,
would reduce volatility in an assessed
company’s assets over the year and
avoid overreliance on any particular
quarter.7
The Board received comments
regarding this aspect of the proposal.
Several comments related to the Board’s
use of generally accepted accounting
principles (GAAP) in determining
whether a company is an assessed
company, noting that state insurance
law and regulations require U.S.
insurance companies to prepare their
financial statements in accordance with
statutory accounting principles (SAP)
and that some of those companies do
not prepare GAAP-based financial
statements in addition to their SAP
statements. Commenters asserted that
the Board should use financial
statements prepared in accordance with
SAP to determine whether a company is
an assessed company so that an assessed
company would not have to expend
significant financial and other resources
in order to provide GAAP financial
statements. In the final rule, for an
assessed company that reports its
consolidated assets under GAAP, the
Board is retaining the requirement that
the determination of that company’s
total consolidated assets will be based
on GAAP accounting requirements.
There are, however, a small number of
companies that only file financial
statements in accordance with SAP and
do not report consolidated financial
statements under GAAP. In response to
the comments received, to avoid
requiring companies that only file
financial statements in accordance with
SAP to undertake the full burden of
preparing GAAP financial statements,
such a company may request that the
Board permit the company to file
quarterly an estimate of its total
consolidated assets, which the Board
will consider. If a U.S.-domiciled
company does not report total
7 A four-quarter average of a company’s total
consolidated assets has also been used in the
definition of a covered company in the notice of
proposed rulemaking establishing enhanced
prudential standards and early remediation
requirements for covered companies, published in
the Federal Register, 77 FR 594 (January 5, 2012),
and the final rulemaking establishing the
supervisory and company-run stress test
requirements for covered companies, published in
the Federal Register, 77 FR 62378 (October 12,
2012).
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consolidated assets in its public reports
or uses a financial reporting
methodology other than GAAP, the
Board may use, at its discretion, any
comparable financial information that
the Board may require from the
company for the determination of
whether the company is an assessed
company.
One commenter stated that the Board
should detail the manner in which
information regarding nonpublic
companies would need to be reported to
the Board for purposes of the
assessment and that, to the extent such
information related to the assessment
process is non-public and exempt from
public disclosure, the Board should
make reference to the rules and
regulations regarding the confidential
treatment of such information. The
Board notes that the information used
for purposes of the assessment, in
general, is the type of information that
is already being provided to the Board.
Moreover, the FR Y–9C, FR Y–7Q, and
FR 2320 reporting forms each provide
that a reporting company may request
confidential treatment if the company
believes that disclosure of specific
commercial or financial information in
the report would likely result in
substantial harm to its competitive
position or that disclosure of the
submitted information would result in
unwarranted invasion of personal
privacy.
A few commenters argued that, when
determining which foreign companies
are subject to assessments, the Board
should not use a foreign company’s
worldwide assets but should instead
only consider the assets associated with
the company’s U.S. operations because
the Board is not the primary supervisor
of foreign companies. Another
commenter asserted that using a foreign
BHC’s worldwide assets to determine
whether it is an assessed company
exposes the company to double
assessment by the Board and the home
country supervisor. Another commenter
recommended that grandfathered
unitary SLHCs should be designated as
assessed companies only if the assets
associated with the savings association
and other financial activities were
greater than $50 billion, and another
asserted that separate accounts held at
insurance companies should be
excluded from total consolidated assets
for purposes of determining whether a
company should be an assessed
company. One commenter argued that
total consolidated assets should not
include foreign affiliates that are
consolidated for accounting and public
reporting purposes.
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Section 318 of the Dodd-Frank Act
requires the Board to use total
consolidated assets for BHCs and SLHCs
to determine whether a company should
be an assessed company. In determining
whether a BHC or SLHC meets the $50
billion threshold, section 318 does not
provide a basis for treating foreign
companies that are BHCs or SLHCs
differently from domestic companies or
excluding specific types of assets from
the determination of a company’s total
consolidated assets. The statute states
that BHCs and SLHCs with total
consolidated assets of $50 billion or
greater will be subject to an assessment.
Therefore, the Board is not modifying its
definition of total consolidated assets in
response to these comments.
One commenter asserted that the
proposal does not account for foreign
BHCs that file on an annual basis on
form FR Y–7Q. Expressing concern that
this approach might overstate variations
in asset size, the commenter
recommended that, to treat foreign
BHCs that report total consolidated
assets annually in a similar manner to
assessed companies that report
quarterly, the foreign BHC’s total
consolidated assets should be based on
the average of its total consolidated
assets as reported in the FR Y–7Q for
the assessment period and the year
immediately preceding the assessment
period. In response to this comment, for
a foreign BHC that files annually, the
Board will average its total consolidated
assets from the FR Y–7Q from the
assessment period and from the FR Y–
7Q filed for the prior year to determine
whether the foreign BHC is an assessed
company. The Board notes that after the
proposed revisions to the FR Y–7Q
become effective, foreign BHCs that are
assessed companies will file on a
quarterly basis and both foreign and
domestic assessed companies will
generally be determined to be assessed
companies on the basis of a four-quarter
average of total consolidated assets.
Another commenter requested that
the Board index the $50 billion
threshold to inflation; however, section
318 of the Dodd-Frank Act requires the
Board to use a $50 billion threshold and
does not provide for the threshold to be
indexed.
The proposal provided that the
organizational structure and financial
information that the Board will use for
the purpose of determining whether a
company is an assessed company,
including information with respect to
whether a company has control over a
U.S. bank or savings association, will be
that information which the Board has
received on or before June 30 of the year
following that the applicable assessment
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period. Because the Board is changing
the date on which it will notify assessed
companies of the assessment to June 30
from July 15, described further below,
the Board is clarifying that all
organizational structure and financial
information must be received by the
Board no later than June 15 to be
consistent with the revised date.
In the final rule, the Board also has
amended the proposal to reserve the
authority to avoid an inequitable or
inconsistent application of the rule.
Other than as noted above, the final rule
adopts the proposed definition of
assessed company without change.
2. Total Assessable Assets
The proposed rule defined the term
‘‘total assessable assets’’ as the amount
of assets that would be used to calculate
an assessed company’s assessment. In
order to collect assessments that reflect
the expenses of the Board in performing
its role as the consolidated supervisor of
assessed companies, total assessable
assets included total assets for all
activities subject to the Board’s
supervisory authority as the
consolidated supervisor. For a U.S.domiciled assessed company, the
proposal provided that total assessable
assets would be the company’s total
consolidated assets of its entire
worldwide operations, determined by
using an average of the total
consolidated asset amounts reported in
applicable regulatory reports for the
assessment period.8 For a Boardsupervised nonbank financial company,
the proposal provided that total
assessable assets would be the average
of the nonbank financial company’s
total consolidated assets as reported
during the assessment period on such
regulatory or other reports as would be
determined by the Board.9 At such time
as a foreign SLHC would become an
assessed company, the proposal
provided that total assessable assets
would be the average of the foreign
SLHC’s total combined assets of U.S.
operations as reported during the
assessment period by the foreign SLHC.
For a foreign BHC, the proposal
provided that the total assessable assets
8 For assessed companies that are grandfathered
unitary savings and loan holding companies, the
proposal included only assets associated with its
savings association subsidiary and its other
financial activities in total assessable assets.
9 If the Board-supervised nonbank financial
company is a foreign company, the proposal
provided that its assessable assets would be the
average of the company’s U.S. assets as reported
during the assessment period. The Board may
evaluate its methodology for determining total
assessable assets for nonbank financial companies
as the Board gains experience supervising nonbank
financial companies.
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would be equal to the company’s total
combined assets of U.S. operations,10
including U.S. branches and agencies,
as the Board is the consolidated
supervisor for the company’s U.S.
activities. Foreign BHCs do not
currently submit a single regulatory
reporting form that reports the total
combined assets of their U.S. operations
for which the Board has supervisory and
regulatory authority.11 In order to
determine a foreign BHC’s total
assessable assets for the 2012 and 2013
assessment periods, the proposal
provided that a foreign BHC’s total
assessable assets would be the average
of the total combined assets of U.S.
operations, net of U.S. intercompany
balances and transactions (as
allowed),12 from the regulatory reports
for, specifically:
• Top-tier, U.S.-domiciled BHCs and
SLHCs 13;
• U.S. branches and agencies 14;
10 The proposal provided that a foreign BHC’s
total assessable assets does not include the assets
of section 2(h)(2) companies as defined in section
2(h)(2) of the Bank Holding Company Act (12 U.S.C.
1841(h)(2)).
11 Currently, foreign BHCs, as foreign banking
organizations, report total consolidated assets of
worldwide operations on the FR Y–7Q. As
described further below, the proposal provided that
the FR Y–7Q would be amended to require a foreign
banking organization to report its total combined
assets of U.S. operations, in addition to its total
consolidated assets of worldwide operations.
12 The proposal provided that net intercompany
balances and transactions between a U.S. entity and
a foreign affiliate are not eliminated when
determining total assessable assets, as such balances
and transactions do not result in double counting
of assets on a U.S.-combined basis. Further, only
intercompany balances and transactions between
U.S.-domiciled affiliates, branches or agencies that
are itemized on a standalone regulatory report may
be eliminated in the calculation of total assessable
assets. For regulatory reports that do not distinguish
between (i) balances and transactions between U.S.
affiliates, and (ii) balances and transactions between
a U.S affiliate and a foreign affiliate, the proposal
provided that the Board will not eliminate any such
balances or transactions between affiliates reported
on the form because it would be impossible to
distinguish between assets that would result in
double counting and assets that would not result in
double counting.
13 The proposal provided that total assets for each
U.S.-domiciled, top-tier BHC or SLHC would be the
company’s total assets as reported on line item 12,
Schedule HC of the FR Y–9C, or as reported on line
item 1, column B, of the FR 2320, as applicable.
14 The proposal provided that total assets for each
branch or agency would be calculated as total
claims on nonrelated parties (line item 1.i from
column A on Schedule RAL) plus due from related
institutions in foreign countries (line items 2.a,
2.b(1), 2.b(2), and 2.c from column A, part 1 on
Schedule M), as reported on the Report of Assets
and Liabilities of U.S. Branches and Agencies of
Foreign Banks (FFIEC 002). Note that due from head
office of parent bank (line item 2.a, column A, part
1 on Schedule M) would be included net of due to
head office of parent bank (line item 2.a, column
B, part 1 on Schedule M) when there is a net due
from position reported for line item 2.a. A net due
to position for line item 2.a would result in no
addition to total assets with respect to line item 2.a,
part 1 on Schedule M.
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• U.S.-domiciled nonbank
subsidiaries 15;
• Edge Act and Agreement
Corporations 16;
• U.S. banks and U.S. savings
associations 17; and
• Broker-dealers that are not reflected
in the assets of a U.S. domiciled parent’s
regulatory reporting form submission.18
Some commenters requested that the
Board refine its methodology for
calculating total combined assets of a
foreign assessed company prior to the
effective date of the modified FR Y–7Q
by excluding intercompany balances
reported in Form FFIEC 002, Schedule
M, amounts outstanding from related
nondepository majority-owned
subsidiaries in the U.S. The final rule
reflects this comment.19
15 Under the proposal, for quarterly Financial
Statements of U.S. Nonbank Subsidiaries Held by
Foreign Banking Organizations (FR Y–N) filers, total
assets for each nonbank subsidiary would have
been calculated as total assets (line item 10,
Schedule BS), minus gross balances due from
related institutions located in the United States
(line item 4.a of Schedule BS–M) as reported on the
FR Y–7N. For annual Abbreviated Financial
Statements of U.S. Nonbank Subsidiaries Held by
Foreign Banking Organizations (FR Y–NS) filers,
total assets for each nonbank subsidiary are as
reported on line item 2 of the FR Y–7NS. Until
foreign assessed companies report on the revised
form FR Y–7Q described in this rule, the Board will
only include the assets of affiliates for which the
foreign assessed company is the majority owner, as
the Board would not have sufficient information to
accurately account for non-majority-owned
affiliates.
16 Under the proposal, total assets for each Edge
Act or agreement corporation would have been the
sum of claims on nonrelated organizations (line
item 9, ‘‘consolidated total’’ column on Schedule
RC of the Consolidated Report of Condition and
Income for Edge Act and agreement corporations
(FR 2886b)), and claims on related organizations
domiciled outside the United States (line items 2.a
and 2.b, column A on Schedule RC–M), as reported
on FR 2886b.
17 Under the proposal, total assets for each bank
or savings association that is not a subsidiary of a
U.S.-domiciled bank holding company or savings
and loan holding company would have been the
bank’s or savings association’s total assets as
reported on line item 12, Schedule RC of the
Balance Sheet of the Consolidated Reports of
Condition and Income (FFIEC 031 or FFIEC 041, as
applicable).
18 Under the proposal, total assets for each brokerdealer would have been the broker-dealer’s total
assets as reported on the statement of financial
condition of the SEC’s FOCUS Report, Part II (Form
X–17A–5), FOCUS Report, Part IIa (Form X–17A–
5), or FOCUS Report, Part II CSE (Form X–17A–5).
19 Under the final rule, total assets for each U.S.
branch or agency will be calculated as total claims
on nonrelated parties (line item 1.i from column A
on Schedule RAL) plus net due from related
institutions in foreign countries (line items 2.a,
2.b(1), 2.b(2), and 2.c from column A, minus line
items 2.a, 2.b(1), 2.b(2) and 2.c from column B, part
1 on Schedule M), minus transactions with related
nondepository majority-owned subsidiaries in the
U.S. (line item 1 from column A, part 3 on Schedule
M), as reported on the Report of Assets and
Liabilities of U.S. Branches and Agencies of Foreign
Banks (FFIEC 002). Further, under the final rule, net
due from related institutions in foreign countries
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As described above, there are a small
number of companies that only file
financial statements in accordance with
SAP and do not report consolidated
financial statements under GAAP. In
response to comments that urge the
Board to avoid requiring companies that
only file financial statements in
accordance with SAP to also provide
GAAP financial statements, such a
company may request the Board to
permit the company to file quarterly an
estimate of its total assessable assets,
which the Board will consider.
The final rule otherwise adopts the
methodology for calculating total
assessable assets for a foreign assessed
company for the 2012 and 2013
assessment periods as proposed. As
provided in the proposal, beginning
with the 2014 assessment periods, the
Board will modify the FR Y–7Q by
adding a line item for an FBO to report
the total combined assets of a foreign
banking organization’s U.S. operations
and base the determination of a foreign
BHC’s assessable assets on that line
item.
A number of commenters criticized
how the Board proposed to calculate
total assessable assets. Several of these
commenters asserted that the final rule
should exclude an insurance company’s
separate accounts from the calculation
of total assessable assets, arguing that
separate account assets are not
indicative of insurer risk, and thus are
not the focus of consolidated Board
supervision and regulation. One
commenter argued that when the
Council assesses the systemic risk posed
by nonbank financial companies, the
Council excludes separate account
assets from the calculation of ‘‘total
consolidated assets’’ for purposes of the
leverage ratio and short-term debt ratio
Stage 1 designation criteria, and
therefore such assets should be
excluded from total assessable assets.
The Board notes that the designation
criteria cited by the commenters are
screening thresholds only for the
purpose of determining whether to
subject a company to further review
under the Council’s interpretive
guidance, and, furthermore, the Council
does not exclude separate accounts from
the total consolidated assets Stage 1
designation criterion.20
(line items 2.a, 2.b(1), 2.b(2), and 2.c from column
A, minus line items 2.a, 2.b(1), 2.b(2) and 2.c from
column B, part 1 on Schedule M) are added to total
assets only when there is a net due from position.
A net due to related institutions in foreign countries
results in no reduction to total assets.
20 See 77 FR 21637 (April 11, 2012). The Council
approved a rule and interpretive guidance on the
‘‘Authority To Require Supervision and Regulation
of Certain Nonbank Financial Companies’’ in April
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The Board believes that separate
accounts are appropriately included in
the calculation of total assessable assets.
The Board is the consolidated
supervisor of an assessed company that
is an insurance company or has one or
more subsidiaries that are insurance
companies that engages in the activities
that result in separate accounts.
Accordingly, the activities involving
separate accounts contribute to the cost
of the Board’s supervision for that
assessed company.
Some commenters also asserted that
the Board should exclude assets
attributable to nonfinancial activities of
an assessed company. One commenter
stated that the Board should resolve this
issue by promulgating an intermediate
holding company rule. As stated in the
proposal, and under the final rule, total
assessable assets for an assessed
company, including Board-supervised
nonbank financial company will be the
total consolidated assets of that
company because the Board would be
the consolidated supervisor for the
Board-supervised nonbank financial
company. The Board may evaluate its
methodology for determining total
assessable assets for such companies as
the Board gains experience supervising
nonbank financial companies. Thus, the
Board is adopting this aspect of the
proposal without change.
3. Assessment Periods
The proposal established each
calendar year as an assessment period.
For each assessment period, the Board
proposed to make a determination as to
whether an entity is an assessed
company for that assessment period.
The Board proposed to determine
whether a company, as of December 31
of the assessment period, is (i) a BHC or
SLHC with average total consolidated
assets equal to or exceeding the $50
billion threshold, as reported on the
relevant reporting form(s) or based on
such other information as the Board
might consider or (ii) a Boardsupervised nonbank financial company.
The Board is adopting this aspect of the
proposal without change.
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4. Assessment Basis
The proposal defined the assessment
basis as the applicable estimated
expenses of the Board and the Reserve
Banks (to which the Board has delegated
2012. The interpretive guidance establishes six
thresholds that the Council uses to identify
nonbank financial companies for further evaluation.
The first threshold is $50 billion in total
consolidated assets, with no exclusion of separate
accounts. The fifth and sixth thresholds are the
leverage ratio and the short-term debt ratio
described by the commenter, both of which exclude
separate accounts.
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supervisory responsibility) relating to
acting as the consolidated supervisor of
assessed companies. Under the
proposal, expenses are all operating
expenses, including support, overhead,
and pension expenses associated with
the consolidated supervision and
regulation of assessed companies. In
order to determine the annual
assessment basis, the proposal provided
that the Board would estimate its
aggregate expenses for activities related
to the supervision and regulation of all
assessed companies. These expenses
included: conducting onsite and offsite
examinations, inspections, visitations
and reviews; providing ongoing
supervision; meeting and corresponding
with assessed companies regarding
supervision matters; conducting stress
tests; assessing resolution plans;
developing, administering, interpreting
and explaining regulations, laws, and
supervisory guidance adopted by the
Board; engaging in enforcement actions;
processing and analyzing applications
and notices, including conducting
competitive analyses and financial
stability analyses of proposed bank and
BHC mergers, acquisitions, and other
similar transactions; processing
consumer complaints; and
implementing a macro-prudential
supervisory approach.21
In addition, the proposal provided
that the estimated expenses in the
assessment basis would include a
proportion of expenses associated with
activities that are integral to carrying out
the supervisory and regulatory
responsibilities of the Board as
consolidated supervisor for assessed
companies, although those expenses are
not directly attributable to specific
companies. These activities include: (i)
The Shared National Credit Program,
which the Board and the other federal
banking agencies established in 1977 to
promote the efficient and consistent
review and classification of shared
national credits; (ii) the training of staff
in the supervision function; (iii)
research and analysis, which includes
library and subscription services, and
development of supervisory and
regulatory policies, procedures, and
products of the Board; (iv) collecting,
receiving, and processing regulatory
21 Under the proposal, the Board’s expenses with
respect to its direct supervision of state member
banks and branches and agencies of foreign banking
organizations are excluded from the assessment
basis because such expenses are not attributable to
the Board’s role as the consolidated supervisor of
the assessed company, which is the unique
supervisory role the Board serves among all federal
banking supervisors. Therefore, it is the expenses
associated with the Board’s consolidated
supervision and regulation of assessed companies
that provide the basis for the Board’s assessments.
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52395
reports received from institutions
supervised and regulated by the Board;
and (v) supervision and regulation
automation (e.g., information
technology) services. For these
activities, the Board noted in the
proposal that it would calculate the
relative proportion of its supervision
expenses that are attributable to
assessed companies divided by
expenses for those activities that are
attributable to all companies supervised
by the Board, and include that
proportion of expenses associated with
activities that are integral to carrying out
the Board’s supervisory and regulatory
responsibilities in the assessment basis.
Several commenters expressed
concern with the proposal’s description
of the Board’s procedures, accounting,
and methodology for arriving at the
assessment basis and asserted that the
Board had not provided sufficient detail
to assess whether the Board had met the
‘‘necessary or appropriate’’ standard
established by section 318 of the DoddFrank Act. Other commenters argued
that the proposal did not distinguish
between the supervision and regulation
of assessed companies and the large
number of other institutions subject to
Board oversight. Some commenters
recommended that the Board publish a
report itemizing the expenses for each
assessment period by the type of
expenses. A few commenters asserted
that the Board should clarify and
publish for further comment the
methodology it plans to use to identify
and measure both those expenses that
are directly related to its consolidated
oversight of assessed companies, and
those expenses that are not directly
related to its consolidated oversight of
assessed companies but are included in
the assessment basis.
With respect to the comments that the
Board publish for comment more detail
with respect to the assessment basis, the
Board believes that the proposal
provided meaningful opportunity for
public comment. The proposal provided
a description of expenses related to
supervising and regulating assessed
companies and described how the Board
would also apply a proportion of
expenses related to activities that are
integral to carry out the supervisory and
regulatory responsibilities of the Board.
Nonetheless, the Board is clarifying for
commenters the manner in which it will
compute and apportion the assessment
basis.
The Board’s operating expenses are
published annually in the Board of
Governors’ Annual Report: Budget
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emcdonald on DSK67QTVN1PROD with RULES
Review.22 For 2012, supervision and
regulation operating expenses at the
Board and the Reserve Banks totaled
$1,172 million, comprised of $1,057
million in supervision and regulation
operating expenses for the Federal
Reserve Banks (Reserve Banks) 23 and
$115 million in supervision and
regulation operating expenses for the
Board.24
The Reserve Banks’ operating
expenses are determined through a cost
accounting system that provides
uniform methods of accounting for
expenses, allowing each Reserve Bank
to determine the full cost of its and all
Reserve Bank services. The activities
involved in the supervision and
regulation of assessed companies are
used to identify the relevant expenses
for the assessment basis. For example:
employee-time data are analyzed to
determine the amount of time
employees spend supervising assessed
companies, and this analysis along with
other, similar analyses are used to
allocate salaries and other personnel
expenses.
Operating expenses for the assessment
basis include all expenses associated
with the supervision and regulation of
assessed companies, which are
comprised primarily of personnel
expenses, as well as those expenses for
related administrative processes,
support operations, and travel. Certain
expenses associated with activities that
cannot be directly attributed to assessed
companies, but are integral to carrying
out the supervisory responsibilities of
the Reserve Banks, are added to the
assessment basis on a proportional
basis. For these expenses, the Board
22 See https://www.federalreserve.gov/
publications/budget-review/default.htm.
23 Refer to 2012 actual expenses in Table C.3.
Operating Expenses of the Federal Reserve Banks,
Federal Reserve Information Technology (FRIT),
and Office of Employee Benefits (OEB) by
operational area, as reported in the Board’s 2013
Annual Report: Budget Review. Reserve Bank
operating expenses include an allocation of all
direct, support, and overhead expenses.
24 Refer to 2012 actual expenses in Table B.1.
Operating expenses of the Board of Governors, by
division, office or special accounts as reported in
the Board’s 2013 Annual Report: Budget Review.
The Board’s total operating expenses for 2012 was
$497 million. The Board’s supervision and
regulation operating expenses reflect the expenses
of the Division of Banking Supervision and
Regulation ($93 million) and the Division of
Consumer and Community Affairs ($22 million).
The total of $115 million for 2012, however, does
not include the contribution of expenses from other
divisions at the Board that also perform supervision
and regulation activities, including the Legal
Division and to some extent the divisions of
Research and Statistics, International Finance,
Monetary Affairs, and Office of Financial Stability
Policy and Research. The method for estimating the
Board’s expenses associated with the supervision
and regulation of assessed companies is described
below.
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determines the proportion of expenses
directly attributable to the supervision
of those companies subject to
assessment, relative to the expenses
directly attributable to the supervision
of all financial institutions supervised
by the Board. This proportion is then
applied to the expenses for the activities
integral to carrying out the supervisory
responsibilities of the Reserve Banks 25
and the resulting proportion of expenses
is included in the assessment basis. For
2012, the Reserve Banks’ proportion of
expenses directly attributable to the
supervision of assessed companies was
about 34 percent of the $742 million
directly attributable to the Board’s cost
of supervising all financial institutions.
Since publishing the proposed rule,
the Board has revised its calculation of
the assessment basis for 2012 to
incorporate actual, rather than
budgeted, expenses for the assessment
year, and to adjust the assessment basis
in accordance with a change made to
the final rule.26 The 2012 expenses
associated with activities directly
attributable to the supervision of
assessed companies contribute about
$256 million to the assessment basis,
and the proportion of expenses (about
34 percent) for activities integral to
carrying out the supervisory
responsibilities of the Reserve Banks (a
total of about $240 million) adds about
$82 million. In addition, the Board
assigned to the assessment basis a
proportional share of pension expenses
of about $56 million. Thus, the total
estimated Reserve Bank operating
expenses (direct, related, and pension
expenses) attributed to the supervision
and regulation of assessed companies
for 2012 is about $394 million.
With respect to the operating
expenses of the Board, the Board groups
all divisions into one of two categories
for the purpose of determining the
contribution to the assessment basis—
those that perform supervision- and
regulation-related activities with respect
to assessed companies (direct) and those
that provide support to supervision and
regulation related activities (indirect).
Divisions that are categorized as direct
are Banking Supervision and
Regulation, Consumer and Community
Affairs, Research and Statistics,
International Finance, Monetary Affairs,
Office of Financial Stability Policy and
Research, and Legal. The remaining
divisions are classified as indirect based
25 Activities integral to carry out the supervisory
responsibilities of the Reserve Banks include staff
training and education, supervision policy and
projects, regulatory reports processing, and
supervision and regulation automation services.
26 This change, relating to the Shared National
Credit Program, is described below.
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on the support they provide to the direct
divisions, necessary for the continuation
of normal operations.27
Similar to the employee time data the
Reserve Banks use to estimate operating
expenses attributable to the supervision
and regulation of assessed companies,
the Board uses annual time surveys
from employees in the direct divisions
to determine the estimated proportion of
time attributable to the supervision and
regulation of assessed companies. For
2012, operating expenses of the direct
divisions totaled $246 million, of which
$29 million is directly attributable to the
cost of supervising and regulating
assessed companies. These totals are
comprised of (i) the Division of Banking
Supervision and Regulation, with total
operating expenses of $93 million, of
which about $22 million is directly
attributable to the supervision and
regulation of assessed companies; (ii)
the Division of Consumer and
Community Affairs with total operating
expenses of $22 million, of which about
$1 million is directly attributable to the
supervision and regulation of assessed
companies; (iii) the Legal Division with
total operating expenses of $20 million,
of which about $4 million is directly
attributable to the supervision and
regulation of assessed companies; and
(iv) the divisions of Research and
Statistics, International Finance,
Monetary Affairs and the Office of
Financial Stability Policy and Research
with total operating expenses of $111
million, of which about $2 million is
directly attributable to the supervision
and regulation of assessed companies.
The employee-time survey data are also
used to estimate the proportion of each
direct division’s non-personnel
expenses, such as travel expenses, that
is attributable to the supervision and
regulation of assessed companies.
To determine the proportion of the
indirect divisions’ expenses included in
the assessment basis, the Board
calculates the proportion of employee
time in the direct divisions attributable
to the supervision and regulation of
assessed companies relative to the total
employee time at the Board, which is
then applied to the total expenses of the
indirect divisions, and this proportion
of indirect division expenses is added to
the assessment basis. For the 2012
assessment period, the indirect
divisions’ expenses totaled $252
million, of which about 5 percent ($13
million) was added to the assessment
27 The indirect divisions include the Office of
Board Members, Office of the Secretary, Division of
Financial Management, Information Technology,
Office of the Chief Operating Officer, Office of the
Chief Data Officer, the Management Division, and
Reserve Bank Operations and Payment Systems.
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Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations
basis. The Board also includes in the
assessment basis a similarly calculated
proportion of the Board’s pension
expenses, which for 2012 was $4
million. Thus, the total estimated Board
operating expenses (direct, indirect and
pension expenses) attributed to the
supervision and regulation of assessed
companies for 2012 is about $46
million.
In total, the Board estimates that the
total expenses necessary or appropriate
to carry out its supervision and
regulation of assessed companies in
2012 is $440 million. The Board does
not anticipate changes to this estimate
before publishing the assessment basis
upon the effective date of this rule.
Should any changes become necessary,
the Board will provide explanation of
the changes within the publication of
the assessment basis and assessment
rate for the 2012 assessment.
In response to commenters’ requests
that the Board provide a detailed report
of its costs related to supervising and
regulating assessed companies for a
given assessment period, the Board will
provide, on the Board’s Web site each
year by June 30, a report similar to the
description contained in this preamble
containing the operating expenses,
together with the amount of those
expenses that the Board estimates are
attributable to supervision and
regulation of assessed companies.
One commenter asserted that some
Reserve Banks do not supervise or
regulate any assessed companies and,
therefore, the assessment basis should
not include the cost of support and
overhead for those offices. Although
certain Reserve Banks do not supervise
assessed companies, they may provide
support associated with the Board’s and
other Reserve Banks’ supervision and
regulation of assessed companies, such
as staff training and automation
services. In determining the assessment
basis, the Board includes only the
supervision and regulation expenses
attributable to the supervision and
regulation of assessed companies, as
described above. The Board does not
include support and overhead expenses
of any portion of the Reserve Banks’
operations that are not attributable to
the supervision and regulation of
assessed companies.
Some commenters asserted that costs
associated with functionally-regulated
subsidiaries of BHCs or SLHCs, such as
national banks and state non-member
banks, should not be included in the
assessment basis. As the consolidated
supervisor, the Board is charged with
the supervision and regulation of the
holding company parent, including its
capital, leverage, liquidity, and
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enterprise-wide compliance risk
management, which are affected by and
may affect functionally regulated
subsidiaries. In fulfilling its role, the
Board relies to the fullest extent
possible on the supervisory activities
and reports of functional regulators.
Thus, the Board does incur some
expenses related to functionally
regulated entities, including working
with functional regulators to understand
the consolidated risk profile of the firm.
The Board believes it is appropriate to
include those expenses in the
assessment basis.
A few commenters asserted that the
Board’s cost of development of the
infrastructure for the supervision and
regulation of Board-supervised nonbank
financial companies should be excluded
from the assessment basis applicable to
BHCs and SLHCs. Some commenters
requested that costs associated with
investigations and enforcement actions
against BHCs should not be charged to
SLHCs or Board-supervised nonbank
financial companies. The Board,
however, believes that a simple
standard for apportioning all costs
across all assessed companies is the
most objective and transparent way to
allocate the costs of supervision and
regulation of assessed companies.
Therefore, all of the Board’s estimated
expenses that are necessary and
appropriate to carry out the supervisory
and regulatory responsibilities of the
Board with respect to assessed
companies are being apportioned across
all assessed companies.
Commenters also urged the Board to
exclude the cost of the Shared National
Credit Program from the assessment
basis. Upon consideration, the Board
agrees with commenters that it should
remove the proportion of expenses
related to the Shared National Credit
Program, which was approximately $6
million, from the assessment basis.
Some commenters asked whether
certain expenses included in the
assessment basis can be classified
properly as supervisory and regulatory,
such as the processing of applications,
competitive analyses, and the
processing of consumer complaints.
With respect to these commenters’
views, the Board reviewed its
determination that these expenses were
necessary or appropriate to be included
in the assessment basis. The Board is
clarifying that, while the processing of
consumer complaints is not included in
the assessment basis, the Board does
supervise and regulate an assessed
company’s enterprise-wide compliance
risk management. The Board’s
processing of applications and
competitive analyses are included as
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52397
part of the Board’s costs relating to its
supervision and regulation of assessed
companies because those activities are
required under the Bank Holding
Company Act and the Home Owners
Loan Act and are therefore part of the
Board’s role as consolidated supervisor
of assessed companies.
The Board also received comments
that supported the assessment basis as
reasonable given the intricacies
involved in monitoring, analyzing, and
ensuring the safety and soundness of
complex institutions. Other commenters
asserted that the methodology
appropriately recognizes the distinctive
nature of the different types of
companies subject to the assessment.
The proposal also provided that the
estimate of the Board’s expenses would
be based on an average of estimated
expenses over the current and prior two
assessment periods, with a transition
period for 2012, 2013, and 2014 during
which the Board would use the
assessment basis for the 2012
assessment period, with the effect of
using the same assessment rate for each
of those years. Thereafter, to mitigate
volatility in assessments and provide a
more stable basis from year to year, the
Board would calculate a three-year
rolling average of its estimated
expenses, and would determine
assessments for each year based on that
three-year average. The proposal also
noted that the Board expects to evaluate
the volatility in assessment fees
resulting from its methodology for
determining the assessment basis on an
ongoing basis and may refine its
methodology as appropriate through the
rulemaking process. The Board is
finalizing this portion of the
methodology for determining the
assessment basis without change.
B. Apportioning the Assessment Basis to
Assessed Companies
1. Apportionment Based on Size
As discussed in the proposal, total
expenses relating to the supervision of
a company generally are a function of
the size and associated complexity of
the company. Larger companies are
often more complex companies, with
associated risks that play a large role in
determining the supervisory resources
necessary in relation to that company.
The largest companies, because of their
increased complexity, risk, and
geographic footprints, usually receive
more supervisory attention.28
28 See, e.g., ‘‘Capital Plans,’’ final rule published
in the Federal Register, 76 FR 231 (Dec. 1, 2011),
and ‘‘Enhanced Prudential Standards and Early
Remediation Requirements for Covered
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allocating assessments based on asset
size.
In the proposal, the Board stated that
it believes that apportioning the
assessment basis based on the total
assessable asset size of assessed
companies is generally reflective of the
amount of supervisory and regulatory
expenses associated with a particular
company, and is an approach based on
information that is well understood,
objective, transparent, readily available,
and comparable among all types of
assessed companies. The Board is
concerned that the alternatives
suggested by commenters could result
in assessment fees based upon
subjective, non-transparent criteria, and
would not provide assessed companies
with a means for evaluating whether the
Board is consistently or appropriately
allocating the assessment basis among
assessed companies. Moreover, the
Board is concerned that, if an assessed
company publicly reported the amount
of its assessment, a system of allocating
the assessment basis that is not
relatively straightforward and objective
could cause market participants and
counterparties to draw incorrect
inferences about one or more assessed
companies, to the potential detriment of
assessed companies and the efficient
functioning of markets.
Some commenters asserted that
apportioning the assessment basis using
size alone would result in SLHCs,
which are not subject to section 165 of
the Dodd-Frank Act (enhanced
prudential standards), having to
subsidize the Board’s cost of carrying
out enhanced prudential standards over
other assessed companies. The Board
notes that all assessed companies
present unique supervisory concerns
that require significant supervisory
attention, including SLHCs. In fact,
assessed companies that are SLHCs may
present supervisory concerns that are
not present for BHCs subject to
enhanced prudential standards. As
stated above, the Board believes that
size is a reasonable proxy for estimating
the amount of the Board’s costs for
regulating and supervising assessed
companies. The Board is finalizing this
aspect of the proposal without change.
The proposal would have determined
the assessment rate by dividing the
assessment basis (minus the base dollar
amount covering nominal expenses
times the number of assessed
companies) by the total assessable assets
of all assessed companies to determine
a ratio of Board expenses to total assets
for each assessment period, and then
would have multiplied an assessed
company’s total assessable assets by the
resulting assessment rate. Thus, under
the proposal, a company with higher
total assessable assets would have been
charged a higher assessment than a
company with lower total assessable
assets, which generally reflects the
greater supervisory and regulatory
attention and associated workloads and
expenses associated with larger
companies.
Some commenters suggested that an
assessed company should be assessed
on a pro-rata basis for the time within
the year that the company becomes one
of the types of companies listed in
section 318 (i.e., a BHC, SLHC or Boardsupervised nonbank financial company)
and falls under the Board’s supervisory
authority. In response to that comment,
the Board has determined that when a
company becomes a BHC, SLHC or
Board-supervised nonbank financial
company for the first time and it is also
an assessed company, its assessment
will be pro-rated based on the quarter in
which it became an assessed company.
For example, if, on August 30 of an
assessment period, a foreign banking
organization (that is not a BHC) with
greater than $50 billion in total
consolidated assets buys a U.S. bank
and becomes a BHC and an assessed
company for the first time, its
assessment will be pro-rated at 50
2. Assessment Formula
The proposal would have apportioned
the assessment basis among assessed
companies by means of an assessment
formula that used the total assessable
assets of each assessed company. For
each assessment period, the assessment
formula applied to the assessed
companies was proposed to be:
Assessment = $50,000 + (Assessed
Company’s Total Assessable Assets
× Assessment Rate).
Under the proposal, each company’s
assessment would have been computed
using a base amount of $50,000 for each
assessed company. The Board stated in
its proposal that including this base
amount in each assessment would be
appropriate to ensure that the nominal
expenses related to the Board’s
supervision and regulation of such
companies are covered, particularly for
those companies that are near the $50
billion threshold. The proposal would
have determined the ‘‘assessment rate’’
for each assessment period according to
the following formula:
Companies,’’ proposal published in the Federal
Register, 77 FR 594 (January 5, 2012).
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Many commenters asserted that asset
size should not be used as a proxy for
the cost of supervision. For example,
some commenters argued that the rule
should provide for tailoring the
assessments based on complexity,
capital structure, risk, and
interconnectedness and less on asset
size. Some commenters asserted that an
asset size measure may not provide
adequate sensitivity for the types of
risks to which a company might be
exposed, and could result in lesscomplex companies, which the
commenters asserted included smaller
assessed companies or SLHCs,
subsidizing the supervisory expenses for
more complex institutions. Some of
these commenters requested that the
Board allocate higher costs to the
nonbank operations of assessed
companies, since those operations
would not be subject to comprehensive
prudential regulation similar to banking
regulation. Some commenters urged the
Board to adopt a methodology for
apportioning expenses associated with
the supervision and regulation of
assessed companies on a companyspecific basis. A few commenters
suggested a tiered approach in which
the assessment basis would be
apportioned among assessed companies
based on the number of supervisory
activities to which the assessed
company is subject, with each
supervisory activity weighted based on
the expense or percentage of time the
Board devotes to that supervisory
activity. Some commenters, however,
supported the Board’s approach to
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percent to reflect the fact that the
foreign BHC was an assessed company
for two quarters. Additionally, if a
nonbank company is designated by the
Council for supervision by the Board on
April 30 of an assessment period, its
assessment will be pro-rated at 75
percent to reflect the fact that the Boardsupervised nonbank financial company
was an assessed company for three
quarters.
The proposal provided that over the
first three years of the program, the
assessment rate would be fixed, using
the 2012 assessment rate for calculating
the assessment for the following two
assessment periods, ending with the
assessments for 2014. Thereafter, for
each assessment period, the proposal
provided that the Board would calculate
an assessment rate by averaging the
Board’s relevant expenses for the past
three years in order to reduce year-toyear fluctuations in assessments (i.e., for
the 2015 assessment period, the Board
would average the expenses for the
2013, 2014, and 2015 assessment
periods).
Some commenters requested that
Board-supervised nonbank financial
companies not be required to pay an
assessment until the first assessment
period following designation as a Boardsupervised company to allow such
companies to prepare and budget
accordingly. Considering that
assessments are collected the year
following an assessment period (for
example, assessments for the 2013
assessment period will be collected in
2014), the Board believes that a Boardsupervised nonbank financial company
will have sufficient time to prepare and
budget for its assessment.
Collection Procedures
emcdonald on DSK67QTVN1PROD with RULES
1. Notice of Assessment and Appeal
Procedure
The proposal provided that the Board
would send a notice of assessment no
later than July 15 of the year following
the assessment period to each assessed
company stating: (1) That the Board had
determined the company to be an
assessed company, (2) the amount of the
company’s total assessable assets, and
(3) the amount the assessed company
must pay by September 30. The
proposal also provided that the Board
would, no later than July 15, publish on
its public Web site the assessment rate
for that assessment period.
Under the proposal, companies
identified as assessed companies would
have 30 calendar days from July 15 to
appeal the Board’s determination that
the company is an assessed company or
the company’s total assessable assets.
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Companies choosing to appeal would
have been required to submit a request
for redetermination in writing and
include all the pertinent facts that the
company believed would be relevant for
the Board to consider. Grounds for
appeal would have been limited to (i)
that the assessed company is not an
assessed company (i.e., it is not a BHC
or SLHC with $50 billion in total
consolidated assets, or a Boardsupervised nonbank financial company
as of December 31 of the assessment
period), or (ii) review of the Board’s
determination of the assessed
company’s total assessable assets. The
proposal provided that the Board would
consider the company’s appeal and
respond within 15 calendar days after
the end of the appeal period with the
results of its review. A successful appeal
would not change the assessment for
any other company.
Several commenters recommended
that the Board send the notices no later
than June 30 rather than July 15 so that
the assessed companies would have
sufficient time to review and potentially
appeal the assessment before they might
be required to disclose the assessment
publicly under the securities laws or
respond to an investor question during
an earnings call. They also expressed an
interest in being able to incorporate the
assessment into second quarter
disclosures. In the final rule, in
response to commenters, the Board is
changing the date by which it will send
the notice of assessments from July 15
to June 30. In addition, consistent with
the amendment to the notification date
(from July 15 to June 30 in the final
rule), the Board will also adjust the date
by which it must receive payment from
September 30 to September 15. The
Board will publish on its public Web
site the assessment rate for that
assessment period and the description
of how the Board determined the
assessment basis no later than June 30.
In response to the proposal’s
notification and appeal procedure, some
commenters requested that the Board
informally communicate with assessed
companies before sending assessment
notices, or explain any variation in its
calculation of total assessable assets for
a foreign assessed company, and that
the Board notify assessed companies of
any material changes to the composition
of the assessment basis and provide
them a reasonable opportunity to
comment. One commenter suggested
that the Board deliver the notice of
assessment confidentially to each
assessed company and itemize the
Board’s expenses. The Board notes that
the rule as proposed provides the
assessed companies with a process for
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appeal during which they may
communicate with the Board about the
assessment and that the assessment
would be based on an assessed
company’s asset size, not an itemized
list of expenses.
One commenter recommended that
the Board provide foreign assessed
companies with a detailed explanation
of the calculation of the foreign assessed
company’s total assessable assets during
the transition period. The Board notes
that the final rule provides the line
items from which the Board will
calculate a foreign assessed company’s
total assessable assets during the
transition period, and the Board will
follow that methodology each year
during the transition period.29 In
addition, the Board notes that the rule
as proposed provides the assessed
companies with a process for appeal
during which they may communicate
with the Board about the assessment.
Thus, the final rule adopts the appeal
procedure as proposed.
In addition, in the final rule, the
Board is amending the dates on which
it will notify assessed companies of, and
collect the 2012 assessment period. For
the 2012 assessment period only, the
Board will provide the date by which an
assessed company must pay it
assessment in the 2012 notice of
assessments, which the Board
anticipates will be sent out shortly after
the effective date of this rule. The Board
anticipates that the date by which an
assessed company must pay its
assessment will be sometime in
December and, in any event, will be no
later than December 15, 2013.
Thereafter, the Board will notify
assessed companies of their assessments
and collect the assessments according to
the dates set forth in the final rule.
2. Collection of Assessments
Under the proposal, each assessed
company would have been required to
pay its assessments using the Fedwire
Funds Service (Fedwire) to the Federal
Reserve Bank of Richmond. The
proposal provided that the assessments
would then be transferred to the U.S.
Treasury’s General Account. The
proposal provided that the assessments
would need to be credited to the Board
by September 30 of the year following
the assessment period. The proposal
provided that in the event that the
Board did not receive the full amount of
an assessed company’s assessment by
the payment date for any reason that is
not attributable to an action of the
Board, the assessment would have been
considered delinquent and the Board
29 See
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would have charged interest on the
delinquent assessment until the
assessment and interest, calculated
daily from the collection date and based
on the U.S. Treasury Department’s
current value of funds rate percentage,30
were paid.
Several commenters asked the Board
to postpone the commencement of its
assessment program until 2014,
asserting that assessed companies
would need time to budget for the
expenses. Other commenters asked the
Board to charge the assessment
prospectively. The Board provided
notice of the assessment through its
publication of the notice of proposed
rulemaking on April 18, 2013. The
proposal provided adequate notice of
the Board’s intent to collect assessments
in 2013. Therefore, the Board believes
that the notice provided adequate time
for assessed companies to prepare for
expenses payable in the second half of
2013. The Board is otherwise adopting
this aspect of the proposal without
change.
Revisions to the FR Y–7Q
emcdonald on DSK67QTVN1PROD with RULES
The FR Y–7Q requires each top-tier
foreign banking organization to file asset
and capital information. Currently, Part
1 of the report requires the filing of
capital and asset information for the
top-tier foreign banking organization,31
while Part 2 requires capital and asset
information for lower-tier foreign
banking organizations operating a U.S.
branch or an agency, or owning an Edge
Act or agreement corporation, a
commercial lending company, or a
commercial bank domiciled in the
United States.32 As explained in the
reporting instructions for the FR Y–7Q,
both Part 1 and Part 2 of the reporting
form collect capital and asset
information with respect to the foreign
banking organization’s worldwide
operations. However, neither Part 1 nor
Part 2 collects capital and asset
information with respect to only the
30 The current value of funds rate percentage is
issued under the Treasury Fiscal Requirements
Manual and published quarterly in the Federal
Register.
31 This form is reported annually by each top-tier
foreign banking organization if it or any foreign
banking organization in its tiered structure has not
elected to be a financial holding company, and is
reported quarterly by each top-tier foreign banking
organization if it or any foreign banking
organization in its tiered structure has elected to be
a financial holding company.
32 Reported quarterly by each lower-tier foreign
banking organization (where applicable) operating a
branch or an agency, or owning an Edge Act or
Agreement corporation, a commercial lending
company, or a commercial bank domiciled in the
United States, if it or any foreign banking
organization in its tiered structure has financial
holding company status.
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foreign banking organization’s U.S.
operations.
For the purpose of determining a
foreign assessed company’s total
assessable assets, the Board noted in the
proposal that combining the assets of
the foreign assessed company’s U.S.
branches and agencies with the total
assets of all U.S.-domiciled affiliates
reported on other regulatory reports
would likely not yield a result that is
comparable to the consolidated
approach required of U.S.-domiciled
assessed companies, which report total
consolidated assets on Schedule HC of
FR Y–9C according to standard rules of
consolidation. That is, not all reports
itemize separately the intercompany
balances and transactions between only
U.S. affiliates that would be netted out
on a U.S.-consolidated basis. Therefore,
in order to improve parity among all
assessed companies with respect to the
determination of total assessable assets
as set forth in the proposal, the Board
proposed to revise Part 1 of the FR Y–
7Q to collect the top-tier foreign banking
organization’s total combined assets of
U.S. operations,33 net of intercompany
balances and transactions between U.S.
domiciled affiliates, branches and
agencies.34 The amended instructions
for the amended FR Y–7Q would have
closely paralleled, to all practicable
extents, the instructions for the FR Y–
9C for consolidating assets of U.S.
operations, including with respect to
accounting for less-than-majority-owned
affiliates.
One commenter asserted that in
determining total assessable assets for
domestic BHCs, the Board should use
Schedule HC–K of the FR Y–9C, which
provides quarterly average numbers,
rather than quarter-end asset numbers.
To ensure consistency in reporting,
however, the Board believes that the
determination of total assessable assets
should rely on quarter-end asset
numbers so that the methodology used
should be consistent with that used for
other assessed companies 35 and for
33 For purposes of the amended FR Y–7Q, total
combined assets do not include the assets of section
2(h)(2) companies as defined in section 2(h)(2) of
the Bank Holding Company Act (12 U.S.C.
1841(h)(2)).
34 For purposes of FR Y–7Q reporting, U.S.domiciled affiliates are defined as subsidiaries,
associated companies, and entities treated as
associated companies (e.g., corporate joint ventures)
as defined in the FR Y–9C.
35 The Board notes that regulatory reporting forms
used for determining the total assessable assets of
foreign-owned assessed companies do not
universally report quarterly averages, as reported on
Schedule HC–K of the FR Y–9C. Moreover, those
forms that do, such as the FFIEC 002, do not report
quarterly averages in a manner that is consistent
with the exclusion of intercompany balances
between only U.S.-domiciled affiliates.
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similar rulemakings.36 The Board
intends to implement the reporting
requirements as proposed.
The Board also proposed to revise
Part 1 of the FR Y–7Q to collect
information about certain foreign
banking organizations more frequently.
As mentioned above, only top-tier
foreign banking organizations with
financial holding company status file
Part 1 of the FR Y–7Q quarterly, while
a top-tier foreign banking organization
would report annually if the foreign
banking organization, or any foreign
banking organization in its tiered
structure, has not effectively elected to
be a financial holding company.
Accordingly, for purposes of
determining whether a foreign banking
organization is an assessed company
and the amount of a foreign assessed
company’s total assessable assets more
frequent than annually, the Board
proposed to revise the FR Y–7Q
quarterly reporting requirements for Part
1 to include all top-tier foreign banking
organizations, regardless of financial
holding company designation, with total
consolidated worldwide assets of $50
billion or more as reported on Part 1 of
the FR Y–7Q. Once a foreign banking
organization has total consolidated
assets of $50 billion or more and begins
to report quarterly, the foreign banking
organization must continue to report
Part 1 quarterly unless and until the
foreign banking organization has
reported total consolidated assets of less
than $50 billion for each quarter in a
full calendar year. Thereafter, the
foreign banking organization may revert
to annual reporting, in accordance with
the FR Y–7Q reporting form’s
instructions for annual reporting of Part
1. If at any time, after reverting to
annual reporting, a foreign banking
organization has total consolidated
assets of $50 billion or more, the
Foreign Banking Organization (FBO)
must return to quarterly reporting of
Part 1. Regardless of size, all top-tier
foreign banking organizations that have
elected to be financial holding
companies at the foreign banking
organization’s top tier or tiered structure
would continue to report quarterly.
One commenter asserted that it was
unnecessary to expand the FR Y–7Q to
require quarterly filing from all top-tier
foreign banking organizations that are
not financial holding companies, or to
require all top-tier reporting entities to
report total combined U.S. assets.
However, the Board believes that
36 See, e.g., the final rulemaking establishing the
supervisory and company-run stress test
requirements for covered companies, published in
the Federal Register 77 FR 62378 (October 12,
2012).
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collecting comparable, more frequent
information from foreign assessed
companies will allow it to implement
the assessment program more equitably
among foreign and domestic assessed
companies. Quarterly filing from all
foreign banking organizations with more
than $50 billion in total consolidated
assets will provide the data necessary
for consistent determinations of whether
a potential assessed company should be
included in a given assessment period
and such company’s total assessable
assets, and will also provide for
consistent treatment between foreign
and domestic banking organizations.
Another commenter asked the Board
to clarify the effective date of the
revised FR Y–7Q. Companies required
to file on the FR Y–7Q will be required
to file on the amended form for the
reporting periods ending on or after
March 31, 2014. Finally, another
commenter asked the Board to replace
the ‘‘Examples of who must report’’
section of the reporting form. However,
in the Board’s experience, filers did not
find the examples helpful, and the
Board does not intend to replace them
in the instructions to the reporting
requirements for the amended FR Y–7Q.
The Board intends to implement the
reporting requirements as proposed.
III. Administrative Law Matters
A. Solicitation of Comments and Use of
Plain Language
Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat.
1338, 1471, 12 U.S.C. 4809) requires the
Federal banking agencies to use plain
language in all proposed and final rules
published after January 1, 2000. The
Board sought to present the proposed
rule in a simple and straightforward
manner and did not receive any
comments on the use of plain language.
emcdonald on DSK67QTVN1PROD with RULES
B. Paperwork Reduction Act Analysis
In accordance with the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C.
3506; 5 CFR Part 1320 Appendix A.1),
the Board reviewed the final rule under
the authority delegated to the Board by
Office of Management and Budget
(OMB). The Board may not conduct or
sponsor, and a respondent is not
required to respond to, an information
collection unless it displays a currently
valid OMB control number. The final
rule contains reporting requirements
that are found in §§ 246.3(e)(3) and
246.5(b). The OMB control numbers for
these requirements are described below.
As discussed above, on April 18, 2013,
the Board published in the Federal
Register a notice of proposed
rulemaking seeking public comment on
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its proposal to implement section 318 of
the Dodd-Frank Act.
Reporting Requirements in 246.3(e)(3)
Section 318 of the Dodd-Frank Act
directs the Board to collect assessments,
fees, or other charges from assessed
companies equal to the expenses the
Board estimates would be necessary and
appropriate to carry out its supervision
and regulation of those companies. An
assessed company is any company that,
on December 31 of the assessment
period, is: (1) A BHC (other than a
foreign BHC) with $50 billion or more
in total consolidated assets as
determined based on the average of the
BHC’s total consolidated assets reported
for the assessment period on the BHC’s
Consolidated Financial Statements for
Holding Companies (FR Y–9C) (OMB
No. 7100–0128) forms; (2) an SLHC
(other than a foreign SLHC) with $50
billion or more in total consolidated
assets, as determined based on the
average of the SLHC’s total consolidated
assets as reported for the assessment
period on the FR Y–9C, on column B of
the Quarterly Savings and Loan Holding
Company Report (FR 2320; OMB No.
7100–0345), or based on an estimate
agreed to by the Board, (3) a top-tier
foreign company that is a BHC or SLHC
on December 31 of the assessment
period, with $50 billion or more in total
consolidated assets determined based
on the average of the foreign company’s
total consolidated assets reported during
the assessment period on the Capital
and Asset Report for Foreign Banking
Organizations (FR Y–7Q; OMB No.
7100–0125), or, for annual filers of the
FR Y–7Q, the average of the company’s
total consolidated assets for the
assessment period and the year
preceding the assessment period, and
(4) a Board-supervised nonbank
financial company designated by the
Council pursuant to section 113 of the
Dodd-Frank Act, for supervision by the
Board. In order to improve parity among
all assessed companies with respect to
the determination of total assessable
assets, as set forth in the final rule, the
Board would revise Part 1 of the FR Y–
7Q to collect a new data item from toptier FBO’s—Total combined assets of
U.S. operations, net of intercompany
balances and transactions between U.S.
domiciled affiliates, branches and
agencies.
In addition, the Board would revise
the reporting panel for Part 1 of the FR
Y–7Q to collect information about
certain FBOs more frequently (from
annual reporting to quarterly reporting)
for purposes of determining whether a
FBO is an assessed company. All toptier FBOs, regardless of financial
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52401
holding company designation, with total
consolidated worldwide assets of $50
billion or more, as reported on Part 1 of
the FR Y–7Q, would be required to
submit data quarterly.
The Board estimates that 71 FBOs
would initially be required to change
from annual reporting to quarterly
reporting.37 The Board estimates that,
upon implementation of the new data
item, 109 FBOs would initially submit
the FR Y–7Q on a quarterly basis. In
addition, the Board estimates that 43
FBOs would initially submit the FR Y–
7Q on an annual basis upon
implementation of the new data item. In
the proposed rule, the Board estimated
that respondents affected by reporting
requirements would take, on average, 15
minutes to submit the new data item on
the FR Y–7Q. Upon a review of all these
matters, including the comment
received, described below, the annual
reporting burden associated with the FR
Y–7Q is estimated to be 404 hours.38
The Board received one comment
from an industry association in response
to the PRA estimate in the proposed
rule. The commenter asserted that the
Board’s PRA estimate to comply with
the new reporting requirement
contained in § 246.3(e)(3) appears to be
understated; however, the commenter
did not provide an alternative estimates.
In response, the Board recognizes that
the amount of time required of any
institution to comply with the reporting
requirement may vary; however, the
Board believes that estimates provided
are reasonable averages.
Reporting Requirements in § 246.5(b)
Under § 246.5(b) upon the Board
issuing the notice of assessment to each
assessed company, the company would
have 30 calendar days from June 30, or,
for the 2012 assessment period, 30
calendar day from the Board’s issuance
of a notice of assessment for that
assessment period, to submit a written
statement to appeal the Board’s
determination (i) that the company is an
assessed company; or (ii) of the
company’s total assessable assets. This
new collection would be titled the
Dodd-Frank Act Assessment Fees
Request for Redetermination (FR 4030;
OMB No. 7100—to be assigned).
The Board estimates that 7 assessed
companies would submit a written
37 Once an FBO reports total consolidated assets
of $50 billion or more and begins to report
quarterly, the FBO must continue to report Part 1
quarterly unless and until the FBO has reported
total consolidated assets of less than $50 billion for
each of all four quarters in a full calendar year.
Thereafter, the FBO may revert to annual reporting.
38 The burden estimate associated with 7100–
0125 does not include the current burden.
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request for appeal annually. The Board
estimates that these assessed companies
would take, on average, 40 hours (one
business week) to write and submit the
written request. The total annual PRA
burden for the new FR 4030 information
collection is estimated to be 280 hours.
The Board has a continuing interest in
the public’s opinions of our collections
of information. At any time, comments
regarding the burden estimate, or any
other aspect of this collection of
information, including suggestions for
reducing the burden, may be sent to:
Secretary, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551;
and to the Office of Management and
Budget, Paperwork Reduction Project
(7100—to-be-assigned), Washington, DC
20503.
emcdonald on DSK67QTVN1PROD with RULES
C. Regulatory Flexibility Act
In accordance with Section 4(a) of the
Regulatory Flexibility Act, 5 U.S.C. 604
(‘‘RFA’’), the Board is publishing a final
regulatory flexibility analysis for this
rulemaking. The RFA requires an
agency either to provide a regulatory
flexibility analysis with the final rule or
to certify that the final rule will not
have a significant economic impact on
a substantial number of small entities.
Based on its analysis and for the
reasons stated below, the Board believes
that this final rule would not have a
significant economic impact on a
substantial number of small entities.
Nevertheless, the Board is publishing a
final regulatory flexibility analysis.
As required by section 318 of the
Dodd-Frank Act, the Board is finalizing
a rule to assess BHCs and SLHCs with
assets of equal to or greater than $50
billion and nonbank financial
companies supervised by the Board for
the total expenses the Board estimates
are necessary or appropriate to carry out
the supervisory and regulatory
responsibilities of the Board with
respect to such companies. The Board
received no comments relating to its
regulatory flexibility analysis
Under regulations issued by the Small
Business Administration, a ‘‘small
entity’’ includes those firms within the
‘‘Finance and Insurance’’ sector with
asset sizes that vary from $35 million or
less to $500 million or less.39 The final
rule, by definition, will affect BHCs and
SLHCs with assets of equal to or greater
than $50 billion. The final rule also will
affect nonbank financial companies
supervised by the Board under section
113 of the Dodd-Frank Act but it is
unlikely that such an institution would
39 13
CFR 121.201.
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be considered ‘‘small’’ by the Small
Business Administration.
The Board’s final rule is unlikely to
impose any new recordkeeping,
reporting, or compliance requirements
or otherwise affect a small banking
entity.
The Board has not identified any
Federal rules that duplicate, overlap, or
conflict with the revisions of the final
rule.
The Board believes that no
alternatives to the final rule are
available for consideration.
List of Subjects in 12 CFR Part 246
Administrative practice and
procedure, Assessments, Banks,
Banking, Holding companies, Nonbank
financial companies, Reporting and
recordkeeping requirements.
For the reasons stated in the
preamble, the Board amends 12 CFR
Chapter II by adding part 246 to read as
follows:
PART 246—SUPERVISION AND
REGULATION ASSESSMENTS OF
FEES (REGULATION TT)
Sec.
246.1 Authority, purpose and scope.
246.2 Definitions.
246.3 Assessed companies.
246.4 Assessments.
246.5 Notice of assessment and appeal.
246.6 Collection of assessments; payment of
interest.
Authority: Pub. L. 111–203, 124 Stat.
1376, 1526, and section 11(s) of the Federal
Reserve Act (12 U.S.C. 248(s)).
§ 246.1
Authority, purpose and scope.
(a) Authority. This part (Regulation
TT) is issued by the Board of Governors
of the Federal Reserve System (Board)
under section 318 of Title III of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (the DoddFrank Act) (Pub. L. 111–203, 124 Stat.
1376, 1423–32, 12 U.S.C. 5365 and
5366) and section 11(s) of the Federal
Reserve Act (12 U.S.C. 248(s)).
(b) Scope. This part applies to:
(1) Any bank holding company having
total consolidated assets of $50 billion
or more, as defined below;
(2) Any savings and loan holding
company having total consolidated
assets of $50 billion or more, as defined
below; and
(3) Any nonbank financial company
supervised by the Board, as defined
below.
(c) Purpose. This part implements
provisions of section 318 of the DoddFrank Act that direct the Board to
collect assessments, fees, or other
charges from companies identified in
paragraph (b) of this section that are
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equal to the total expenses the Board
estimates are necessary or appropriate to
carry out the supervisory and regulatory
responsibilities of the Board with
respect to these assessed companies.
(d)(1) Reservation of authority. In
exceptional circumstances, for the
purpose of avoiding inequitable or
inconsistent application of the rule, the
Board may require an assessed company
to pay a lesser amount of assessments
than would otherwise be provided for
under this Part.
(2) Use of comparable financial
information. The Board may use, at its
discretion, any comparable financial
information that the Board may require
from a company in considering whether
the company must pay to the Board an
assessment and the amount of such
assessment, pursuant to section 318 of
the Dodd-Frank Act.
§ 246.2
Definitions.
As used in this part:
(a) Assessment period means January
1 through December 31 of each calendar
year.
(b) Bank means an insured depository
institution as defined in section 3 of the
Federal Deposit Insurance Act (12
U.S.C. 1813).
(c) Bank holding company is defined
as in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841),
and the Board’s Regulation Y (12 CFR
part 225).
(d) Company means a corporation,
partnership, limited liability company,
depository institution, business trust,
special purpose entity, association, or
similar organization.
(e) Council means the Financial
Stability Oversight Council established
by section 111 of the Dodd-Frank Act
(12 U.S.C. 5321).
(f) Foreign bank holding company
means a foreign bank that is a bank
holding company and any foreign
company that owns such foreign bank.
(g) Foreign savings and loan holding
company means a foreign bank or
foreign company that is a savings and
loan holding company.
(h) GAAP means generally accepted
accounting principles, as used in the
United States.
(i) Grandfathered unitary savings and
loan holding company means a savings
and loan holding company described in
section 10(c)(9)(C) of the Home Owners’
Loan Act (‘‘HOLA’’) (12 U.S.C.
1467a(c)(9)(C)).
(j) Nonbank financial company
supervised by the Board means a
company that the Council has
determined pursuant to section 113 of
the Dodd-Frank Act shall be supervised
by the Board and for which such
determination is in effect.
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Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations
(k) Notice of assessment means the
notice in which the Board informs a
company that it is an assessed company
and states the assessed company’s total
assessable assets and the amount of its
assessment.
(l) Savings and loan holding company
is defined as in section 10 of HOLA (12
U.S.C. 1467a).
(m) Savings association is defined as
in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
§ 246.3
Assessed companies.
An assessed company is any company
that:
(a) Is a top-tier company that, on
December 31 of the assessment period:
(1) Is a bank holding company, other
than a foreign bank holding company,
with $50 billion or more in total
consolidated assets, as determined
based on the average of the bank
holding company’s total consolidated
assets reported for the assessment
period on the Federal Reserve’s Form
FR Y–9C (‘‘FR Y–9C’’),
(2)(i) Is a savings and loan holding
company, other than a foreign savings
and loan holding company, with $50
billion or more in total consolidated
assets, as determined, except as
provided in paragraph (a)(2)(ii) of this
section, based on the average of the
savings and loan holding company’s
total consolidated assets as reported for
the assessment period on the FR Y–9C
or on the Quarterly Savings and Loan
Holding Company Report (FR 2320), as
applicable.
(ii) If a company does not calculate its
total consolidated assets under GAAP
for any regulatory purpose (including
compliance with applicable securities
laws), the company may request that the
Board permit the company to file a
quarterly estimate of its total
consolidated assets. The Board may, in
its discretion and subject to Board
review and adjustment, permit the
company to provide estimated total
consolidated assets on a quarterly basis.
For purposes of this part, the company’s
total consolidated assets will be the
average of the estimated total
consolidated assets provided for the
assessment period.
(b) Is a top-tier foreign bank holding
company on December 31 of the
assessment period, with $50 billion or
more in total consolidated assets, as
determined based on the average of the
foreign bank holding company’s total
consolidated assets reported for the
assessment period on the Federal
Reserve’s Form FR Y–7Q (‘‘FR Y–7Q’’),
provided, however, that if any such
company has filed only one FR Y–7Q
during the assessment period, the Board
shall use an average of the foreign bank
holding company’s total consolidated
assets reported on that FR Y–7Q and on
Column A
Base Amount ($50,000)
Column B
+
the FR Y–7Q for the corresponding
period in the year prior to the
assessment period.
(c) Is a top-tier foreign savings and
loan holding company on December 31
of the assessment period, with $50
billion or more in total consolidated
assets, as determined based on the
average of the foreign savings and loan
holding company’s total consolidated
assets reported for the assessment
period on the reporting forms applicable
during the assessment period, provided,
however, that if any such company has
filed only one reporting form during the
assessment period, the Board shall use
an average of the foreign savings and
loan holding company’s total
consolidated assets reported on that
reporting form and on the reporting
form for the corresponding period in the
year prior to the assessment period, or
(d) Is a nonbank financial company
supervised by the Board.
§ 246.4
Assessments.
(a) Assessment. Each assessed
company shall pay to the Board an
assessment for any assessment period
for which the Board determines the
company to be an assessed company.
(b)(1) Assessment formula. Except as
provided in paragraph (b)(2) of this
section, the assessment will be
calculated according to the Assessment
Formula, as follows:
Column C
×
(Total Assessable Assets
Assessment Rate)
Column D
=
Assessment
company. For a nonbank financial
company supervised by the Board, for
the assessment period that the company
is designated for Board supervision,
Board shall pro-rate that company’s
assessment for that assessment period
based on the number of quarters the
company has been a nonbank financial
company supervised by the Board.
(c) Assessment rate. Assessment rate
means, with regard to a given
assessment period, the rate published by
the Board on its Web site for the
calculation of assessments for that
period.
(1) The assessment rate will be
calculated according to this formula:
(2) For the calculation set forth in
paragraph (c)(1) of this section, the
number of assessed companies and the
total assessable assets of all assessed
companies will each be that of the
relevant assessment period, provided,
however, that for the assessment periods
corresponding to 2012, 2013 and 2014,
the Board shall use the number of
assessed companies and the total
assessable assets of the 2012 assessment
period to calculate the assessment rate.
(d) Assessment basis.
(1) For the 2012, 2013, and 2014
assessment periods, the assessment
basis is the amount of total expenses the
Board estimates is necessary or
appropriate to carry out the supervisory
and regulatory responsibilities of the
Board with respect to assessed
companies for 2012.1
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16:22 Aug 22, 2013
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1 The categories of operating expenses that the
Board believes are necessary or appropriate include
but are not limited to (1) direct operating expenses
for supervising and regulating assessed companies
such as conducting examinations, conducting stress
tests, communicating with the company regarding
supervisory matters and laws and regulations, etc.;
E:\FR\FM\23AUR1.SGM
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ER23AU13.003</GPH>
emcdonald on DSK67QTVN1PROD with RULES
(2) In any assessment period, if, at the
time a company becomes a bank holding
company or savings and loan holding
company, it also becomes an assessed
company, as defined in § 246.3, the
Board shall pro-rate that company’s
assessment for that assessment period
based on the number of quarters in
which such company is an assessed
52404
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emcdonald on DSK67QTVN1PROD with RULES
(2) For the 2015 assessment period
and for each assessment period
thereafter, the assessment basis is the
average of the amount of total expenses
the Board estimates is necessary or
appropriate to carry out the supervisory
and regulatory responsibilities of the
Board with respect to assessed
companies for that assessment period
and the two prior assessment periods.2
(e) Total assessable assets. Except as
provided in paragraph (f) of this section,
total assessable assets are calculated as
follows:
(1) Bank holding companies. For any
bank holding company, other than a
foreign bank holding company, total
assessable assets will be the average of
the bank holding company’s total
consolidated assets as reported for the
assessment period on the bank holding
company’s FR Y–9C or such other
reports as determined by the Board as
applicable to the bank holding
company,
(2) Foreign bank holding companies
and foreign savings and loan holding
companies.
(i) In general. For any foreign bank
holding company or any foreign savings
and loan holding company, with the
exception of the 2012 and 2013
assessment periods, total assessable
assets will be the average of the foreign
bank holding company’s or foreign
savings and loan holding company’s
total combined assets of its U.S.
operations, net of intercompany
balances and transactions between U.S.
domiciled affiliates, branches and
agencies, as reported for the assessment
period on the Part 1 of the FR Y–7Q or
such other reports as determined by the
Board as applicable to the foreign bank
holding company or foreign savings and
loan holding company,
(ii) 2012 and 2013 assessment
periods. For the 2012 and 2013
and (2) operating expenses for activities integral to
carrying out supervisory and regulatory
responsibilities such as training staff in the
supervisory function, research and analysis
functions including library subscription services,
collecting and processing regulatory reports filed by
supervised institutions, etc. All operating expenses
include applicable support, overhead, and pension
expenses.
2 The categories of operating expenses that the
Board believes are necessary or appropriate include
but are not limited to (1) direct operating expenses
for supervising and regulating assessed companies
such as conducting examinations, conducting stress
tests, communicating with the company regarding
supervisory matters and laws and regulations, etc.;
and (2) operating expenses for activities integral to
carrying out supervisory and regulatory
responsibilities such as training staff in the
supervisory function, research and analysis
functions including library subscription services,
collecting and processing regulatory reports filed by
supervised institutions, etc. All operating expenses
include applicable support, overhead, and pension
expenses.
VerDate Mar<15>2010
16:22 Aug 22, 2013
Jkt 229001
assessment periods, for any foreign bank
holding company, total assessable assets
will be the average of the sum of the line
items set forth in this section reported
quarterly, plus any line items set forth
in this section reported annually for the
assessment period on an applicable
regulatory reporting form for the
assessment period for all of the foreign
bank holding company’s majorityowned:
(A) Top-tier, U.S.-domiciled bank
holding companies and savings and
loan holding companies, calculated as:
(1) Total assets (line item 12) as
reported on Schedule HC of the FR Y–
9C and, as applicable;
(2) Total assets (line item 1, column
B) as reported on FR 2320;
(B) Related branches and agencies of
Foreign Banks in the United States,
calculated as: total claims on nonrelated
parties (line item 1.i from column A on
Schedule RAL) plus net due from
related institutions in foreign countries
(line items 2.a, 2.b(1), 2.b(2), and 2.c
from column A, minus line items 2.a,
2.b(1), 2.b(2) and 2.c from column B,
part 1 on Schedule M), minus
transactions with related nondepository
majority-owned subsidiaries in the U.S.
(line item 1 from column A, part 3 on
Schedule M), as reported on the Report
of Assets and Liabilities of U.S.
Branches and Agencies of Foreign Banks
(FFIEC 002);
(C) U.S.-domiciled nonbank
subsidiaries, calculated as:
(1) For FR Y–7N filers: total assets
(line item 10) as reported for each
nonbank subsidiary reported on
Schedule BS—Balance Sheet of the
Financial Statements of U.S. Nonbank
Subsidiaries Held by Foreign Banking
Organizations (FR Y–7N); minus
balances due from related institutions
located in the United States, gross (line
item 4.a), as reported on Schedule BS–
M—Memoranda, and, as applicable;
(2) For FR Y–7NS (annual) filers: total
assets (line item 2) as reported for each
nonbank subsidiary reported on
abbreviated financial statements (page
3) of the Abbreviated Financial
Statements of U.S. Nonbank
Subsidiaries Held by Foreign Banking
Organizations (FR Y–7NS);
(D) Edge Act and agreement
corporations that are not reflected in the
assets of a U.S.-domiciled parent’s
regulatory reporting form submission,
calculated as claims on nonrelated
organizations (line item 9,
‘‘consolidated total’’ column on
Schedule RC of the Consolidated Report
of Condition and Income for Edge and
Agreement Corporations (FR 2886b)),
plus claims on related organizations
domiciled outside the United States
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
(line items 2.a and 2.b, column A on
Schedule RC–M), as reported on FR
2886b;
(E) Banks and savings associations
that are not reflected in the assets of a
U.S.-domiciled parent’s regulatory
reporting form submission, calculated
as: total assets (line item 12) as reported
on Schedule RC—Balance Sheet of the
Consolidated Reports of Condition and
Income for a Bank with Domestic and
Foreign Offices (FFIEC 031), or total
assets (line item 12) as reported on
Schedule RC—Balance Sheet of the
Consolidated Reports of Condition and
Income for a Bank with Domestic
Offices Only (FFIEC 041), as applicable;
and
(F) Broker-dealers that are not
reflected in the assets of a U.S.domiciled parent’s regulatory reporting
form submission, calculated as: total
assets as reported on statement of
financial condition of the Securities and
Exchange Commission’s Form X–17A–5
(FOCUS REPORT), Part II line item 16,
Part IIa, line item 12, or Part II CSE, line
item 18, as applicable.
(3)(i) Savings and loan holding
companies. For any savings and loan
holding company, other than a foreign
savings and loan holding company, total
assessable assets will be, except as
provided in paragraph (e)(3)(ii) of this
section, the average of the savings and
loan holding company’s total
consolidated assets as reported for the
assessment period on the regulatory
reports on the savings and loan holding
company’s Form FR Y–9C, column B of
the Quarterly Savings and Loan Holding
Company Report (FR 2320), or other
reports as determined by the Board as
applicable to the savings and loan
holding company. If the savings and
loan holding company is a
grandfathered unitary savings and loan
holding company, total assessable assets
will only include the assets associated
with its savings association subsidiary
and its other financial activities.
(ii) If a company does not calculate its
total consolidated assets under GAAP
for any regulatory purpose (including
compliance with applicable securities
laws), the company may request that the
Board permit the company to file a
quarterly estimate of its total
consolidated assets. The Board may, in
its discretion and subject to Board
review and adjustment, permit the
company to provide estimated total
consolidated assets on a quarterly basis.
The company’s total assessable assets
will be the average of the estimated total
consolidated assets provided for the
assessment period.
(4) Nonbank financial companies
supervised by the Board. For a nonbank
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Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations
financial company supervised by the
Board, if the company is a U.S.
company, this amount will be the
average of the nonbank financial
company’s total consolidated assets as
reported for the assessment period on
such regulatory or other reports as are
applicable to the nonbank financial
company determined by the Board; if
the company is a foreign company, this
amount will be the average of the
nonbank financial company’s total
combined assets of U.S. operations, net
of intercompany balances and
transactions between U.S. domiciled
affiliates, branches and agencies, as
reported for the assessment period on
such regulatory or other reports as
determined by the Board as applicable
to the nonbank financial company.
§ 246.5
Notice of assessment and appeal.
(a) Notice of Assessment. The Board
shall issue a notice of assessment to
each assessed company no later than
June 30 of each calendar year following
the assessment period, provided,
however, that for the 2012 assessment
period, the Board shall issue a notice of
assessment as soon as reasonably
practical after publication of the final
rule in the Federal Register.
(b) Appeal Period.
(1) Each assessed company will have
thirty calendar days from June 30, or, for
the 2012 assessment period, thirty
calendar days from the Board’s issuance
of a notice of assessment for that
assessment period, to submit a written
statement to appeal the Board’s
determination:
(i) That the company is an assessed
company; or
(ii) Of the company’s total assessable
assets.
(2) The Board will respond with the
results of its consideration to an
assessed company that has submitted a
written appeal within 15 calendar days
from the end of the appeal period in
paragraph (b)(1) of this section.
emcdonald on DSK67QTVN1PROD with RULES
§ 246.6 Collection of assessments;
payment of interest.
(a) Collection date. Each assessed
company shall remit to the Federal
Reserve the amount of its assessment
using the Fedwire Funds Service by
September 15 of the calendar year
following the assessment period, or, for
the 2012 assessment period, by a date
specified in the notice of assessment for
that assessment period.
(b) Payment of interest.
(1) If the Board does not receive the
total amount of an assessed company’s
assessment by the collection date for
any reason not attributable to the Board,
the assessment will be delinquent and
VerDate Mar<15>2010
17:05 Aug 22, 2013
Jkt 229001
the assessed company shall pay to the
Board interest on any sum owed to the
Board according to this rule (delinquent
payments).
(2) Interest on delinquent payments
will be assessed beginning on the first
calendar day after the collection date,
and on each calendar day thereafter up
to and including the day payment is
received. Interest will be simple
interest, calculated for each day
payment is delinquent by multiplying
the daily equivalent of the applicable
interest rate by the amount delinquent.
The rate of interest will be the United
States Treasury Department’s current
value of funds rate (the ‘‘CVFR
percentage’’); issued under the Treasury
Fiscal Requirements Manual and
published quarterly in the Federal
Register. Each delinquent payment will
be charged interest based on the CVFR
percentage applicable to the quarter in
which all or part of the assessment goes
unpaid.
By order of the Board of Governors of the
Federal Reserve System, August 15, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013–20306 Filed 8–22–13; 8:45 am]
BILLING CODE P
52405
eligible credit reserves, which must be
deducted from tier 2 capital.
*
*
*
*
*
28 Net
unsecured credit exposure is the
credit exposure after considering the benefits
from legally enforceable netting agreements
and collateral arrangements, without taking
into account haircuts for price volatility,
liquidity, etc.
29 This may include interest rate derivative
contracts, foreign exchange derivative
contracts, equity derivative contracts, credit
derivatives, commodity or other derivative
contracts, repo-style transactions, and
eligible margin loans.
30 At a minimum, a State savings
association must provide the disclosures in
Table 11.7 in relation to credit risk mitigation
that has been recognized for the purposes of
reducing capital requirements under this
appendix. Where relevant, State savings
associations are encouraged to give further
information about mitigants that have not
been recognized for that purpose.
31 Credit derivatives that are treated, for the
purposes of this appendix, as synthetic
securitization exposures should be excluded
from the credit risk mitigation disclosures
and included within those relating to
securitization.
32 Counterparty credit risk-related
exposures disclosed pursuant to Table 11.6
should be excluded from the credit risk
mitigation disclosures in Table 11.7.
*
*
*
*
*
[FR Doc. 2013–20707 Filed 8–22–13; 8:45 am]
FEDERAL DEPOSIT INSURANCE
CORPORATION
BILLING CODE 1505–01–D
12 CFR Part 390
DEPARTMENT OF TRANSPORTATION
Regulations Transferred From the
Office of Thrift Supervision
Federal Aviation Administration
CFR Correction
In Title 12 of the Code of Federal
Regulations, Parts 300 to 499, revised as
of January 1, 2013, in Appendix A to
Subpart Z of Part 390, at the bottom of
page 1015, reinstate footnotes 10
through 12, and at the bottom of page
1019, reinstate footnotes 28 through 32,
to read as follows:
■
Appendix A to Subpart Z to Part 390—
Risk-Based Capital Requirements—
Internal-Ratings-Based and Advanced
Measurement Approaches
*
*
*
*
*
10 Entities include securities, insurance
and other financial subsidiaries, commercial
subsidiaries (where permitted), and
significant minority equity investments in
insurance, financial and commercial entities.
11 Representing 50 percent of the amount,
if any, by which total expected credit losses
as calculated within the IRB approach exceed
eligible credit reserves, which must be
deducted from tier 1 capital.
12 Including 50 percent of the amount, if
any, by which total expected credit losses as
calculated within the IRB approach exceed
PO 00000
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14 CFR Part 39
[Docket No. FAA–2013–0335; Directorate
Identifier 2012–NM–187–AD; Amendment
39–17549; AD 2013–16–11]
RIN 2120–AA64
Airworthiness Directives; Airbus
Airplanes
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
AGENCY:
We are adopting a new
airworthiness directive (AD) for certain
Airbus Model A330–300, A340–200,
and A340–300 series airplanes. This AD
was prompted by a determination that
ballscrew rupture could occur on
certain trimmable horizontal stabilizer
actuators (THSAs). This AD requires
repetitive THSA ballscrew shaft
integrity tests, and replacement if
necessary. We are issuing this AD to
detect and correct ballscrew rupture,
which, along with corrosion on the
ballscrew lower splines, may lead to
SUMMARY:
E:\FR\FM\23AUR1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 164 (Friday, August 23, 2013)]
[Rules and Regulations]
[Pages 52391-52405]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20306]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 246
[Regulation TT; Docket No. R-1457]
RIN 7100-AD-95
Supervision and Regulation Assessments for Bank Holding Companies
and Savings and Loan Holding Companies With Total Consolidated Assets
of $50 Billion or More and Nonbank Financial Companies Supervised by
the Federal Reserve
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board of Governors of the Federal Reserve System (Board)
is adopting a final rule to implement section 318 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
Section 318 directs the Board to collect assessments, fees, or other
charges equal to the total expenses the Board estimates are necessary
or appropriate to carry out the supervisory and regulatory
responsibilities of the Board for bank holding companies and savings
and loan holding companies with total consolidated assets of $50
billion or more and nonbank financial companies designated for Board
supervision by the Financial Stability Oversight Council.
DATES: Effective date: The final rule is effective October 25, 2013.
FOR FURTHER INFORMATION CONTACT: Mark Greiner, Senior Supervisory
Financial Analyst (202-452-5290), Nancy Perkins, Assistant Director
(202-973-5006), or William Spaniel, Senior Associate Director (202-452-
3469), Division of Banking Supervision and Regulation; Laurie Schaffer,
Associate General Counsel (202-452-2272), or Michelle Moss Kidd,
Attorney (202-736-5554), Legal Division; Board of Governors of the
Federal Reserve System, 20th and C Streets NW., Washington, DC 20551.
Users of Telecommunication Device for the Deaf (TTD) only, contact
(202) 263-4869.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Description of the Final Rule
A. Key Definitions
1. Assessed Companies
2. Total Assessable Assets
3. Assessment Periods
4. Assessment Basis
B. Apportioning the Assessment Basis to Assessed Companies
1. Apportionment Based on Size
2. Assessment Formula
C. Collection Procedures
1. Notice of Assessment and Appeal Procedure
2. Collection of Assessments
D. Revisions to the FR Y-7Q
III. Administrative Law Matters
A. Solicitation of Comments and Use of Plain Language
B. Paperwork Reduction Act Analysis
C. Regulatory Flexibility Act Analysis
I. Introduction
On April 18, 2013, the Board published in the Federal Register a
notice of proposed rulemaking (the NPR or the proposal) seeking public
comment on the Board's proposal to implement section 318 of the Dodd-
Frank Act.\1\ Section 318 directs the Board to collect assessments,
fees, or other charges (assessments) from bank holding companies (BHCs)
and savings and loan holding companies (SLHCs) with $50 billion or more
in total consolidated assets, and from nonbank financial companies
designated by the Financial Stability Oversight Council (Council)
pursuant to section 113 of the Dodd-Frank Act for supervision by the
Board (Board-supervised nonbank financial companies), (collectively,
assessed companies), equal to the expenses the Board estimates are
necessary or appropriate to carry out its supervision and regulation of
those companies. The proposed rule outlined the Board's assessment
program, including how the Board would: (a) Determine which companies
are assessed companies for each calendar-year assessment period, (b)
estimate the total expenses that are necessary or appropriate to carry
out the supervisory and regulatory responsibilities to be
[[Page 52392]]
covered by the assessment, (c) determine the assessment for each
assessed company, and (d) bill for and collect the assessment from the
assessed companies.
---------------------------------------------------------------------------
\1\ 78 FR 23162 (April 18, 2013).
---------------------------------------------------------------------------
The proposal provided that each calendar year would be an
assessment period (assessment period) and that a BHC or SLHC would be
an assessed company for that assessment period if the company's average
total consolidated assets over the assessment period met or exceeded
$50 billion, and a nonbank financial company would be an assessed
company if it was a Board-supervised nonbank financial company on
December 31 of the assessment period. The Board proposed to notify
assessed companies of the amount of their assessment no later than July
15 of the year following each assessment period. After an opportunity
for appeal, each assessed company would have been required to pay its
assessment by September 30 of the year following the assessment period.
The Board proposed to collect assessments beginning with the 2012
assessment period.
The Board received 16 comments on the NPR from industry
associations, companies, individuals, and members of the U.S. Congress.
Certain commenters expressed concerns with the Board's methodology for
allocating its expenses among assessed companies, as well as with the
Board's determination of its assessment basis. Commenters also
criticized the Board's methodology for assessing Board-supervised
nonbank financial companies and SLHCs that are predominantly insurance
companies. A more detailed discussion of the comments on particular
aspects of the proposal is provided in the remainder of this preamble.
II. Description of the Final Rule
A. Key Definitions
1. Assessed Companies
The proposed rule would have defined assessed companies to be BHCs
and SLHCs with total consolidated assets of $50 billion or more and
Board-supervised nonbank financial companies. In particular, for each
assessment period, assessed companies were defined as:
A company that, on December 31 of the assessment period,
is a top-tier BHC, as defined in section 2 of the Bank Holding Company
Act,\2\ other than a foreign BHC, that has total consolidated assets of
$50 billion or more as determined based on the average of the BHC's
total consolidated assets reported for the assessment period on its
Schedule HC--Consolidated Balance Sheet of the BHC's Consolidated
Financial Statements for Bank Holding Companies (FR Y-9C);
---------------------------------------------------------------------------
\2\ 12 U.S.C. 1841(a).
---------------------------------------------------------------------------
A company that, on December 31 of the assessment period,
is a top-tier SLHC, as defined in section 10 of the Home Owners' Loan
Act,\3\ other than a foreign SLHC, that has total consolidated assets
of $50 billion or more as determined based on the average of the SLHC's
total consolidated assets reported for the assessment period on the
SLHC's FR Y-9C, or on the SLHC's Quarterly Savings and Loan Holding
Company Report (FR 2320), as applicable \4\;
---------------------------------------------------------------------------
\3\ 12 U.S.C. 1467.
\4\ The FR 2320 form is filed by top-tier savings and loan
holding companies exempt from filing Federal Reserve regulatory
reports, which include the Y-9C form submitted by BHCs and SLHCs
with total consolidated assets of $500 million or more. Under the
proposal, for multi-tiered BHCs and multi-tiered SLHCs in which a
holding company owns or controls, or is owned or controlled by,
other holding companies, the assessed company would be the top-tier,
regulated holding company. In situations where two or more
unaffiliated companies control the same U.S. bank or savings
association and each company has average total consolidated assets
of $50 billion or more, each of the unaffiliated companies would be
designated an assessed company. Generally, a company has control
over a bank, savings association, or company if the company has (a)
ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of voting securities of the bank,
savings association, or company, directly or indirectly or acting
through one or more other persons; (b) control in any manner over
the election of a majority of the directors or trustees of the bank,
savings association, or company; or (c) the Board determines the
company exercises, directly or indirectly, a controlling influence
over the management or policies of the bank, savings association, or
company. See 12 U.S.C. 1841(a)(2) (BHCs) and 12 U.S.C. 1467a(a)(2)
(SLHCs).
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A foreign company that, on December 31 of the assessment
period, is a top-tier BHC that has total consolidated assets of $50
billion or more as determined based on the average of the foreign
banking organization's total consolidated assets reported for the
assessment period on the Capital and Asset Report for Foreign Banking
Organizations (FR Y-7Q) submissions \5\;
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\5\ For annual filers of the FR Y-7Q, the proposal provided that
total consolidated assets would be determined from the foreign
banking organization's FR Y-7Q annual submission for the calendar
year of the assessment period.
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A foreign company that, on December 31 of the assessment
period, is a top-tier SLHC that has total consolidated assets of $50
billion or more as determined based on the average of the foreign
SLHC's total consolidated assets reported for the assessment period on
regulatory reports required for the foreign SLHC \6\; and
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\6\ At present, there are no foreign savings and loan holding
companies.
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A company that is a Board-supervised nonbank financial
company on December 31 of the assessment period.
In the proposal, the Board stated that it believed that relying on
the average of assets reported in the financial reports submitted over
the entire yearly assessment period, where available, would reduce
volatility in an assessed company's assets over the year and avoid
overreliance on any particular quarter.\7\
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\7\ A four-quarter average of a company's total consolidated
assets has also been used in the definition of a covered company in
the notice of proposed rulemaking establishing enhanced prudential
standards and early remediation requirements for covered companies,
published in the Federal Register, 77 FR 594 (January 5, 2012), and
the final rulemaking establishing the supervisory and company-run
stress test requirements for covered companies, published in the
Federal Register, 77 FR 62378 (October 12, 2012).
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The Board received comments regarding this aspect of the proposal.
Several comments related to the Board's use of generally accepted
accounting principles (GAAP) in determining whether a company is an
assessed company, noting that state insurance law and regulations
require U.S. insurance companies to prepare their financial statements
in accordance with statutory accounting principles (SAP) and that some
of those companies do not prepare GAAP-based financial statements in
addition to their SAP statements. Commenters asserted that the Board
should use financial statements prepared in accordance with SAP to
determine whether a company is an assessed company so that an assessed
company would not have to expend significant financial and other
resources in order to provide GAAP financial statements. In the final
rule, for an assessed company that reports its consolidated assets
under GAAP, the Board is retaining the requirement that the
determination of that company's total consolidated assets will be based
on GAAP accounting requirements. There are, however, a small number of
companies that only file financial statements in accordance with SAP
and do not report consolidated financial statements under GAAP. In
response to the comments received, to avoid requiring companies that
only file financial statements in accordance with SAP to undertake the
full burden of preparing GAAP financial statements, such a company may
request that the Board permit the company to file quarterly an estimate
of its total consolidated assets, which the Board will consider. If a
U.S.-domiciled company does not report total
[[Page 52393]]
consolidated assets in its public reports or uses a financial reporting
methodology other than GAAP, the Board may use, at its discretion, any
comparable financial information that the Board may require from the
company for the determination of whether the company is an assessed
company.
One commenter stated that the Board should detail the manner in
which information regarding nonpublic companies would need to be
reported to the Board for purposes of the assessment and that, to the
extent such information related to the assessment process is non-public
and exempt from public disclosure, the Board should make reference to
the rules and regulations regarding the confidential treatment of such
information. The Board notes that the information used for purposes of
the assessment, in general, is the type of information that is already
being provided to the Board. Moreover, the FR Y-9C, FR Y-7Q, and FR
2320 reporting forms each provide that a reporting company may request
confidential treatment if the company believes that disclosure of
specific commercial or financial information in the report would likely
result in substantial harm to its competitive position or that
disclosure of the submitted information would result in unwarranted
invasion of personal privacy.
A few commenters argued that, when determining which foreign
companies are subject to assessments, the Board should not use a
foreign company's worldwide assets but should instead only consider the
assets associated with the company's U.S. operations because the Board
is not the primary supervisor of foreign companies. Another commenter
asserted that using a foreign BHC's worldwide assets to determine
whether it is an assessed company exposes the company to double
assessment by the Board and the home country supervisor. Another
commenter recommended that grandfathered unitary SLHCs should be
designated as assessed companies only if the assets associated with the
savings association and other financial activities were greater than
$50 billion, and another asserted that separate accounts held at
insurance companies should be excluded from total consolidated assets
for purposes of determining whether a company should be an assessed
company. One commenter argued that total consolidated assets should not
include foreign affiliates that are consolidated for accounting and
public reporting purposes.
Section 318 of the Dodd-Frank Act requires the Board to use total
consolidated assets for BHCs and SLHCs to determine whether a company
should be an assessed company. In determining whether a BHC or SLHC
meets the $50 billion threshold, section 318 does not provide a basis
for treating foreign companies that are BHCs or SLHCs differently from
domestic companies or excluding specific types of assets from the
determination of a company's total consolidated assets. The statute
states that BHCs and SLHCs with total consolidated assets of $50
billion or greater will be subject to an assessment. Therefore, the
Board is not modifying its definition of total consolidated assets in
response to these comments.
One commenter asserted that the proposal does not account for
foreign BHCs that file on an annual basis on form FR Y-7Q. Expressing
concern that this approach might overstate variations in asset size,
the commenter recommended that, to treat foreign BHCs that report total
consolidated assets annually in a similar manner to assessed companies
that report quarterly, the foreign BHC's total consolidated assets
should be based on the average of its total consolidated assets as
reported in the FR Y-7Q for the assessment period and the year
immediately preceding the assessment period. In response to this
comment, for a foreign BHC that files annually, the Board will average
its total consolidated assets from the FR Y-7Q from the assessment
period and from the FR Y-7Q filed for the prior year to determine
whether the foreign BHC is an assessed company. The Board notes that
after the proposed revisions to the FR Y-7Q become effective, foreign
BHCs that are assessed companies will file on a quarterly basis and
both foreign and domestic assessed companies will generally be
determined to be assessed companies on the basis of a four-quarter
average of total consolidated assets.
Another commenter requested that the Board index the $50 billion
threshold to inflation; however, section 318 of the Dodd-Frank Act
requires the Board to use a $50 billion threshold and does not provide
for the threshold to be indexed.
The proposal provided that the organizational structure and
financial information that the Board will use for the purpose of
determining whether a company is an assessed company, including
information with respect to whether a company has control over a U.S.
bank or savings association, will be that information which the Board
has received on or before June 30 of the year following that the
applicable assessment period. Because the Board is changing the date on
which it will notify assessed companies of the assessment to June 30
from July 15, described further below, the Board is clarifying that all
organizational structure and financial information must be received by
the Board no later than June 15 to be consistent with the revised date.
In the final rule, the Board also has amended the proposal to
reserve the authority to avoid an inequitable or inconsistent
application of the rule. Other than as noted above, the final rule
adopts the proposed definition of assessed company without change.
2. Total Assessable Assets
The proposed rule defined the term ``total assessable assets'' as
the amount of assets that would be used to calculate an assessed
company's assessment. In order to collect assessments that reflect the
expenses of the Board in performing its role as the consolidated
supervisor of assessed companies, total assessable assets included
total assets for all activities subject to the Board's supervisory
authority as the consolidated supervisor. For a U.S.-domiciled assessed
company, the proposal provided that total assessable assets would be
the company's total consolidated assets of its entire worldwide
operations, determined by using an average of the total consolidated
asset amounts reported in applicable regulatory reports for the
assessment period.\8\ For a Board-supervised nonbank financial company,
the proposal provided that total assessable assets would be the average
of the nonbank financial company's total consolidated assets as
reported during the assessment period on such regulatory or other
reports as would be determined by the Board.\9\ At such time as a
foreign SLHC would become an assessed company, the proposal provided
that total assessable assets would be the average of the foreign SLHC's
total combined assets of U.S. operations as reported during the
assessment period by the foreign SLHC.
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\8\ For assessed companies that are grandfathered unitary
savings and loan holding companies, the proposal included only
assets associated with its savings association subsidiary and its
other financial activities in total assessable assets.
\9\ If the Board-supervised nonbank financial company is a
foreign company, the proposal provided that its assessable assets
would be the average of the company's U.S. assets as reported during
the assessment period. The Board may evaluate its methodology for
determining total assessable assets for nonbank financial companies
as the Board gains experience supervising nonbank financial
companies.
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For a foreign BHC, the proposal provided that the total assessable
assets
[[Page 52394]]
would be equal to the company's total combined assets of U.S.
operations,\10\ including U.S. branches and agencies, as the Board is
the consolidated supervisor for the company's U.S. activities. Foreign
BHCs do not currently submit a single regulatory reporting form that
reports the total combined assets of their U.S. operations for which
the Board has supervisory and regulatory authority.\11\ In order to
determine a foreign BHC's total assessable assets for the 2012 and 2013
assessment periods, the proposal provided that a foreign BHC's total
assessable assets would be the average of the total combined assets of
U.S. operations, net of U.S. intercompany balances and transactions (as
allowed),\12\ from the regulatory reports for, specifically:
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\10\ The proposal provided that a foreign BHC's total assessable
assets does not include the assets of section 2(h)(2) companies as
defined in section 2(h)(2) of the Bank Holding Company Act (12
U.S.C. 1841(h)(2)).
\11\ Currently, foreign BHCs, as foreign banking organizations,
report total consolidated assets of worldwide operations on the FR
Y-7Q. As described further below, the proposal provided that the FR
Y-7Q would be amended to require a foreign banking organization to
report its total combined assets of U.S. operations, in addition to
its total consolidated assets of worldwide operations.
\12\ The proposal provided that net intercompany balances and
transactions between a U.S. entity and a foreign affiliate are not
eliminated when determining total assessable assets, as such
balances and transactions do not result in double counting of assets
on a U.S.-combined basis. Further, only intercompany balances and
transactions between U.S.-domiciled affiliates, branches or agencies
that are itemized on a standalone regulatory report may be
eliminated in the calculation of total assessable assets. For
regulatory reports that do not distinguish between (i) balances and
transactions between U.S. affiliates, and (ii) balances and
transactions between a U.S affiliate and a foreign affiliate, the
proposal provided that the Board will not eliminate any such
balances or transactions between affiliates reported on the form
because it would be impossible to distinguish between assets that
would result in double counting and assets that would not result in
double counting.
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Top-tier, U.S.-domiciled BHCs and SLHCs \13\;
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\13\ The proposal provided that total assets for each U.S.-
domiciled, top-tier BHC or SLHC would be the company's total assets
as reported on line item 12, Schedule HC of the FR Y-9C, or as
reported on line item 1, column B, of the FR 2320, as applicable.
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U.S. branches and agencies \14\;
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\14\ The proposal provided that total assets for each branch or
agency would be calculated as total claims on nonrelated parties
(line item 1.i from column A on Schedule RAL) plus due from related
institutions in foreign countries (line items 2.a, 2.b(1), 2.b(2),
and 2.c from column A, part 1 on Schedule M), as reported on the
Report of Assets and Liabilities of U.S. Branches and Agencies of
Foreign Banks (FFIEC 002). Note that due from head office of parent
bank (line item 2.a, column A, part 1 on Schedule M) would be
included net of due to head office of parent bank (line item 2.a,
column B, part 1 on Schedule M) when there is a net due from
position reported for line item 2.a. A net due to position for line
item 2.a would result in no addition to total assets with respect to
line item 2.a, part 1 on Schedule M.
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U.S.-domiciled nonbank subsidiaries \15\;
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\15\ Under the proposal, for quarterly Financial Statements of
U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations (FR
Y-N) filers, total assets for each nonbank subsidiary would have
been calculated as total assets (line item 10, Schedule BS), minus
gross balances due from related institutions located in the United
States (line item 4.a of Schedule BS-M) as reported on the FR Y-7N.
For annual Abbreviated Financial Statements of U.S. Nonbank
Subsidiaries Held by Foreign Banking Organizations (FR Y-NS) filers,
total assets for each nonbank subsidiary are as reported on line
item 2 of the FR Y-7NS. Until foreign assessed companies report on
the revised form FR Y-7Q described in this rule, the Board will only
include the assets of affiliates for which the foreign assessed
company is the majority owner, as the Board would not have
sufficient information to accurately account for non-majority-owned
affiliates.
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Edge Act and Agreement Corporations \16\;
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\16\ Under the proposal, total assets for each Edge Act or
agreement corporation would have been the sum of claims on
nonrelated organizations (line item 9, ``consolidated total'' column
on Schedule RC of the Consolidated Report of Condition and Income
for Edge Act and agreement corporations (FR 2886b)), and claims on
related organizations domiciled outside the United States (line
items 2.a and 2.b, column A on Schedule RC-M), as reported on FR
2886b.
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U.S. banks and U.S. savings associations \17\; and
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\17\ Under the proposal, total assets for each bank or savings
association that is not a subsidiary of a U.S.-domiciled bank
holding company or savings and loan holding company would have been
the bank's or savings association's total assets as reported on line
item 12, Schedule RC of the Balance Sheet of the Consolidated
Reports of Condition and Income (FFIEC 031 or FFIEC 041, as
applicable).
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Broker-dealers that are not reflected in the assets of a
U.S. domiciled parent's regulatory reporting form submission.\18\
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\18\ Under the proposal, total assets for each broker-dealer
would have been the broker-dealer's total assets as reported on the
statement of financial condition of the SEC's FOCUS Report, Part II
(Form X-17A-5), FOCUS Report, Part IIa (Form X-17A-5), or FOCUS
Report, Part II CSE (Form X-17A-5).
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Some commenters requested that the Board refine its methodology for
calculating total combined assets of a foreign assessed company prior
to the effective date of the modified FR Y-7Q by excluding intercompany
balances reported in Form FFIEC 002, Schedule M, amounts outstanding
from related nondepository majority-owned subsidiaries in the U.S. The
final rule reflects this comment.\19\
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\19\ Under the final rule, total assets for each U.S. branch or
agency will be calculated as total claims on nonrelated parties
(line item 1.i from column A on Schedule RAL) plus net due from
related institutions in foreign countries (line items 2.a, 2.b(1),
2.b(2), and 2.c from column A, minus line items 2.a, 2.b(1), 2.b(2)
and 2.c from column B, part 1 on Schedule M), minus transactions
with related nondepository majority-owned subsidiaries in the U.S.
(line item 1 from column A, part 3 on Schedule M), as reported on
the Report of Assets and Liabilities of U.S. Branches and Agencies
of Foreign Banks (FFIEC 002). Further, under the final rule, net due
from related institutions in foreign countries (line items 2.a,
2.b(1), 2.b(2), and 2.c from column A, minus line items 2.a, 2.b(1),
2.b(2) and 2.c from column B, part 1 on Schedule M) are added to
total assets only when there is a net due from position. A net due
to related institutions in foreign countries results in no reduction
to total assets.
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As described above, there are a small number of companies that only
file financial statements in accordance with SAP and do not report
consolidated financial statements under GAAP. In response to comments
that urge the Board to avoid requiring companies that only file
financial statements in accordance with SAP to also provide GAAP
financial statements, such a company may request the Board to permit
the company to file quarterly an estimate of its total assessable
assets, which the Board will consider.
The final rule otherwise adopts the methodology for calculating
total assessable assets for a foreign assessed company for the 2012 and
2013 assessment periods as proposed. As provided in the proposal,
beginning with the 2014 assessment periods, the Board will modify the
FR Y-7Q by adding a line item for an FBO to report the total combined
assets of a foreign banking organization's U.S. operations and base the
determination of a foreign BHC's assessable assets on that line item.
A number of commenters criticized how the Board proposed to
calculate total assessable assets. Several of these commenters asserted
that the final rule should exclude an insurance company's separate
accounts from the calculation of total assessable assets, arguing that
separate account assets are not indicative of insurer risk, and thus
are not the focus of consolidated Board supervision and regulation. One
commenter argued that when the Council assesses the systemic risk posed
by nonbank financial companies, the Council excludes separate account
assets from the calculation of ``total consolidated assets'' for
purposes of the leverage ratio and short-term debt ratio Stage 1
designation criteria, and therefore such assets should be excluded from
total assessable assets. The Board notes that the designation criteria
cited by the commenters are screening thresholds only for the purpose
of determining whether to subject a company to further review under the
Council's interpretive guidance, and, furthermore, the Council does not
exclude separate accounts from the total consolidated assets Stage 1
designation criterion.\20\
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\20\ See 77 FR 21637 (April 11, 2012). The Council approved a
rule and interpretive guidance on the ``Authority To Require
Supervision and Regulation of Certain Nonbank Financial Companies''
in April 2012. The interpretive guidance establishes six thresholds
that the Council uses to identify nonbank financial companies for
further evaluation. The first threshold is $50 billion in total
consolidated assets, with no exclusion of separate accounts. The
fifth and sixth thresholds are the leverage ratio and the short-term
debt ratio described by the commenter, both of which exclude
separate accounts.
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[[Page 52395]]
The Board believes that separate accounts are appropriately
included in the calculation of total assessable assets. The Board is
the consolidated supervisor of an assessed company that is an insurance
company or has one or more subsidiaries that are insurance companies
that engages in the activities that result in separate accounts.
Accordingly, the activities involving separate accounts contribute to
the cost of the Board's supervision for that assessed company.
Some commenters also asserted that the Board should exclude assets
attributable to nonfinancial activities of an assessed company. One
commenter stated that the Board should resolve this issue by
promulgating an intermediate holding company rule. As stated in the
proposal, and under the final rule, total assessable assets for an
assessed company, including Board-supervised nonbank financial company
will be the total consolidated assets of that company because the Board
would be the consolidated supervisor for the Board-supervised nonbank
financial company. The Board may evaluate its methodology for
determining total assessable assets for such companies as the Board
gains experience supervising nonbank financial companies. Thus, the
Board is adopting this aspect of the proposal without change.
3. Assessment Periods
The proposal established each calendar year as an assessment
period. For each assessment period, the Board proposed to make a
determination as to whether an entity is an assessed company for that
assessment period. The Board proposed to determine whether a company,
as of December 31 of the assessment period, is (i) a BHC or SLHC with
average total consolidated assets equal to or exceeding the $50 billion
threshold, as reported on the relevant reporting form(s) or based on
such other information as the Board might consider or (ii) a Board-
supervised nonbank financial company. The Board is adopting this aspect
of the proposal without change.
4. Assessment Basis
The proposal defined the assessment basis as the applicable
estimated expenses of the Board and the Reserve Banks (to which the
Board has delegated supervisory responsibility) relating to acting as
the consolidated supervisor of assessed companies. Under the proposal,
expenses are all operating expenses, including support, overhead, and
pension expenses associated with the consolidated supervision and
regulation of assessed companies. In order to determine the annual
assessment basis, the proposal provided that the Board would estimate
its aggregate expenses for activities related to the supervision and
regulation of all assessed companies. These expenses included:
conducting onsite and offsite examinations, inspections, visitations
and reviews; providing ongoing supervision; meeting and corresponding
with assessed companies regarding supervision matters; conducting
stress tests; assessing resolution plans; developing, administering,
interpreting and explaining regulations, laws, and supervisory guidance
adopted by the Board; engaging in enforcement actions; processing and
analyzing applications and notices, including conducting competitive
analyses and financial stability analyses of proposed bank and BHC
mergers, acquisitions, and other similar transactions; processing
consumer complaints; and implementing a macro-prudential supervisory
approach.\21\
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\21\ Under the proposal, the Board's expenses with respect to
its direct supervision of state member banks and branches and
agencies of foreign banking organizations are excluded from the
assessment basis because such expenses are not attributable to the
Board's role as the consolidated supervisor of the assessed company,
which is the unique supervisory role the Board serves among all
federal banking supervisors. Therefore, it is the expenses
associated with the Board's consolidated supervision and regulation
of assessed companies that provide the basis for the Board's
assessments.
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In addition, the proposal provided that the estimated expenses in
the assessment basis would include a proportion of expenses associated
with activities that are integral to carrying out the supervisory and
regulatory responsibilities of the Board as consolidated supervisor for
assessed companies, although those expenses are not directly
attributable to specific companies. These activities include: (i) The
Shared National Credit Program, which the Board and the other federal
banking agencies established in 1977 to promote the efficient and
consistent review and classification of shared national credits; (ii)
the training of staff in the supervision function; (iii) research and
analysis, which includes library and subscription services, and
development of supervisory and regulatory policies, procedures, and
products of the Board; (iv) collecting, receiving, and processing
regulatory reports received from institutions supervised and regulated
by the Board; and (v) supervision and regulation automation (e.g.,
information technology) services. For these activities, the Board noted
in the proposal that it would calculate the relative proportion of its
supervision expenses that are attributable to assessed companies
divided by expenses for those activities that are attributable to all
companies supervised by the Board, and include that proportion of
expenses associated with activities that are integral to carrying out
the Board's supervisory and regulatory responsibilities in the
assessment basis.
Several commenters expressed concern with the proposal's
description of the Board's procedures, accounting, and methodology for
arriving at the assessment basis and asserted that the Board had not
provided sufficient detail to assess whether the Board had met the
``necessary or appropriate'' standard established by section 318 of the
Dodd-Frank Act. Other commenters argued that the proposal did not
distinguish between the supervision and regulation of assessed
companies and the large number of other institutions subject to Board
oversight. Some commenters recommended that the Board publish a report
itemizing the expenses for each assessment period by the type of
expenses. A few commenters asserted that the Board should clarify and
publish for further comment the methodology it plans to use to identify
and measure both those expenses that are directly related to its
consolidated oversight of assessed companies, and those expenses that
are not directly related to its consolidated oversight of assessed
companies but are included in the assessment basis.
With respect to the comments that the Board publish for comment
more detail with respect to the assessment basis, the Board believes
that the proposal provided meaningful opportunity for public comment.
The proposal provided a description of expenses related to supervising
and regulating assessed companies and described how the Board would
also apply a proportion of expenses related to activities that are
integral to carry out the supervisory and regulatory responsibilities
of the Board. Nonetheless, the Board is clarifying for commenters the
manner in which it will compute and apportion the assessment basis.
The Board's operating expenses are published annually in the Board
of Governors' Annual Report: Budget
[[Page 52396]]
Review.\22\ For 2012, supervision and regulation operating expenses at
the Board and the Reserve Banks totaled $1,172 million, comprised of
$1,057 million in supervision and regulation operating expenses for the
Federal Reserve Banks (Reserve Banks) \23\ and $115 million in
supervision and regulation operating expenses for the Board.\24\
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\22\ See https://www.federalreserve.gov/publications/budget-review/default.htm.
\23\ Refer to 2012 actual expenses in Table C.3. Operating
Expenses of the Federal Reserve Banks, Federal Reserve Information
Technology (FRIT), and Office of Employee Benefits (OEB) by
operational area, as reported in the Board's 2013 Annual Report:
Budget Review. Reserve Bank operating expenses include an allocation
of all direct, support, and overhead expenses.
\24\ Refer to 2012 actual expenses in Table B.1. Operating
expenses of the Board of Governors, by division, office or special
accounts as reported in the Board's 2013 Annual Report: Budget
Review. The Board's total operating expenses for 2012 was $497
million. The Board's supervision and regulation operating expenses
reflect the expenses of the Division of Banking Supervision and
Regulation ($93 million) and the Division of Consumer and Community
Affairs ($22 million). The total of $115 million for 2012, however,
does not include the contribution of expenses from other divisions
at the Board that also perform supervision and regulation
activities, including the Legal Division and to some extent the
divisions of Research and Statistics, International Finance,
Monetary Affairs, and Office of Financial Stability Policy and
Research. The method for estimating the Board's expenses associated
with the supervision and regulation of assessed companies is
described below.
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The Reserve Banks' operating expenses are determined through a cost
accounting system that provides uniform methods of accounting for
expenses, allowing each Reserve Bank to determine the full cost of its
and all Reserve Bank services. The activities involved in the
supervision and regulation of assessed companies are used to identify
the relevant expenses for the assessment basis. For example: employee-
time data are analyzed to determine the amount of time employees spend
supervising assessed companies, and this analysis along with other,
similar analyses are used to allocate salaries and other personnel
expenses.
Operating expenses for the assessment basis include all expenses
associated with the supervision and regulation of assessed companies,
which are comprised primarily of personnel expenses, as well as those
expenses for related administrative processes, support operations, and
travel. Certain expenses associated with activities that cannot be
directly attributed to assessed companies, but are integral to carrying
out the supervisory responsibilities of the Reserve Banks, are added to
the assessment basis on a proportional basis. For these expenses, the
Board determines the proportion of expenses directly attributable to
the supervision of those companies subject to assessment, relative to
the expenses directly attributable to the supervision of all financial
institutions supervised by the Board. This proportion is then applied
to the expenses for the activities integral to carrying out the
supervisory responsibilities of the Reserve Banks \25\ and the
resulting proportion of expenses is included in the assessment basis.
For 2012, the Reserve Banks' proportion of expenses directly
attributable to the supervision of assessed companies was about 34
percent of the $742 million directly attributable to the Board's cost
of supervising all financial institutions.
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\25\ Activities integral to carry out the supervisory
responsibilities of the Reserve Banks include staff training and
education, supervision policy and projects, regulatory reports
processing, and supervision and regulation automation services.
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Since publishing the proposed rule, the Board has revised its
calculation of the assessment basis for 2012 to incorporate actual,
rather than budgeted, expenses for the assessment year, and to adjust
the assessment basis in accordance with a change made to the final
rule.\26\ The 2012 expenses associated with activities directly
attributable to the supervision of assessed companies contribute about
$256 million to the assessment basis, and the proportion of expenses
(about 34 percent) for activities integral to carrying out the
supervisory responsibilities of the Reserve Banks (a total of about
$240 million) adds about $82 million. In addition, the Board assigned
to the assessment basis a proportional share of pension expenses of
about $56 million. Thus, the total estimated Reserve Bank operating
expenses (direct, related, and pension expenses) attributed to the
supervision and regulation of assessed companies for 2012 is about $394
million.
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\26\ This change, relating to the Shared National Credit
Program, is described below.
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With respect to the operating expenses of the Board, the Board
groups all divisions into one of two categories for the purpose of
determining the contribution to the assessment basis--those that
perform supervision- and regulation-related activities with respect to
assessed companies (direct) and those that provide support to
supervision and regulation related activities (indirect). Divisions
that are categorized as direct are Banking Supervision and Regulation,
Consumer and Community Affairs, Research and Statistics, International
Finance, Monetary Affairs, Office of Financial Stability Policy and
Research, and Legal. The remaining divisions are classified as indirect
based on the support they provide to the direct divisions, necessary
for the continuation of normal operations.\27\
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\27\ The indirect divisions include the Office of Board Members,
Office of the Secretary, Division of Financial Management,
Information Technology, Office of the Chief Operating Officer,
Office of the Chief Data Officer, the Management Division, and
Reserve Bank Operations and Payment Systems.
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Similar to the employee time data the Reserve Banks use to estimate
operating expenses attributable to the supervision and regulation of
assessed companies, the Board uses annual time surveys from employees
in the direct divisions to determine the estimated proportion of time
attributable to the supervision and regulation of assessed companies.
For 2012, operating expenses of the direct divisions totaled $246
million, of which $29 million is directly attributable to the cost of
supervising and regulating assessed companies. These totals are
comprised of (i) the Division of Banking Supervision and Regulation,
with total operating expenses of $93 million, of which about $22
million is directly attributable to the supervision and regulation of
assessed companies; (ii) the Division of Consumer and Community Affairs
with total operating expenses of $22 million, of which about $1 million
is directly attributable to the supervision and regulation of assessed
companies; (iii) the Legal Division with total operating expenses of
$20 million, of which about $4 million is directly attributable to the
supervision and regulation of assessed companies; and (iv) the
divisions of Research and Statistics, International Finance, Monetary
Affairs and the Office of Financial Stability Policy and Research with
total operating expenses of $111 million, of which about $2 million is
directly attributable to the supervision and regulation of assessed
companies. The employee-time survey data are also used to estimate the
proportion of each direct division's non-personnel expenses, such as
travel expenses, that is attributable to the supervision and regulation
of assessed companies.
To determine the proportion of the indirect divisions' expenses
included in the assessment basis, the Board calculates the proportion
of employee time in the direct divisions attributable to the
supervision and regulation of assessed companies relative to the total
employee time at the Board, which is then applied to the total expenses
of the indirect divisions, and this proportion of indirect division
expenses is added to the assessment basis. For the 2012 assessment
period, the indirect divisions' expenses totaled $252 million, of which
about 5 percent ($13 million) was added to the assessment
[[Page 52397]]
basis. The Board also includes in the assessment basis a similarly
calculated proportion of the Board's pension expenses, which for 2012
was $4 million. Thus, the total estimated Board operating expenses
(direct, indirect and pension expenses) attributed to the supervision
and regulation of assessed companies for 2012 is about $46 million.
In total, the Board estimates that the total expenses necessary or
appropriate to carry out its supervision and regulation of assessed
companies in 2012 is $440 million. The Board does not anticipate
changes to this estimate before publishing the assessment basis upon
the effective date of this rule. Should any changes become necessary,
the Board will provide explanation of the changes within the
publication of the assessment basis and assessment rate for the 2012
assessment.
In response to commenters' requests that the Board provide a
detailed report of its costs related to supervising and regulating
assessed companies for a given assessment period, the Board will
provide, on the Board's Web site each year by June 30, a report similar
to the description contained in this preamble containing the operating
expenses, together with the amount of those expenses that the Board
estimates are attributable to supervision and regulation of assessed
companies.
One commenter asserted that some Reserve Banks do not supervise or
regulate any assessed companies and, therefore, the assessment basis
should not include the cost of support and overhead for those offices.
Although certain Reserve Banks do not supervise assessed companies,
they may provide support associated with the Board's and other Reserve
Banks' supervision and regulation of assessed companies, such as staff
training and automation services. In determining the assessment basis,
the Board includes only the supervision and regulation expenses
attributable to the supervision and regulation of assessed companies,
as described above. The Board does not include support and overhead
expenses of any portion of the Reserve Banks' operations that are not
attributable to the supervision and regulation of assessed companies.
Some commenters asserted that costs associated with functionally-
regulated subsidiaries of BHCs or SLHCs, such as national banks and
state non-member banks, should not be included in the assessment basis.
As the consolidated supervisor, the Board is charged with the
supervision and regulation of the holding company parent, including its
capital, leverage, liquidity, and enterprise-wide compliance risk
management, which are affected by and may affect functionally regulated
subsidiaries. In fulfilling its role, the Board relies to the fullest
extent possible on the supervisory activities and reports of functional
regulators. Thus, the Board does incur some expenses related to
functionally regulated entities, including working with functional
regulators to understand the consolidated risk profile of the firm. The
Board believes it is appropriate to include those expenses in the
assessment basis.
A few commenters asserted that the Board's cost of development of
the infrastructure for the supervision and regulation of Board-
supervised nonbank financial companies should be excluded from the
assessment basis applicable to BHCs and SLHCs. Some commenters
requested that costs associated with investigations and enforcement
actions against BHCs should not be charged to SLHCs or Board-supervised
nonbank financial companies. The Board, however, believes that a simple
standard for apportioning all costs across all assessed companies is
the most objective and transparent way to allocate the costs of
supervision and regulation of assessed companies. Therefore, all of the
Board's estimated expenses that are necessary and appropriate to carry
out the supervisory and regulatory responsibilities of the Board with
respect to assessed companies are being apportioned across all assessed
companies.
Commenters also urged the Board to exclude the cost of the Shared
National Credit Program from the assessment basis. Upon consideration,
the Board agrees with commenters that it should remove the proportion
of expenses related to the Shared National Credit Program, which was
approximately $6 million, from the assessment basis.
Some commenters asked whether certain expenses included in the
assessment basis can be classified properly as supervisory and
regulatory, such as the processing of applications, competitive
analyses, and the processing of consumer complaints. With respect to
these commenters' views, the Board reviewed its determination that
these expenses were necessary or appropriate to be included in the
assessment basis. The Board is clarifying that, while the processing of
consumer complaints is not included in the assessment basis, the Board
does supervise and regulate an assessed company's enterprise-wide
compliance risk management. The Board's processing of applications and
competitive analyses are included as part of the Board's costs relating
to its supervision and regulation of assessed companies because those
activities are required under the Bank Holding Company Act and the Home
Owners Loan Act and are therefore part of the Board's role as
consolidated supervisor of assessed companies.
The Board also received comments that supported the assessment
basis as reasonable given the intricacies involved in monitoring,
analyzing, and ensuring the safety and soundness of complex
institutions. Other commenters asserted that the methodology
appropriately recognizes the distinctive nature of the different types
of companies subject to the assessment.
The proposal also provided that the estimate of the Board's
expenses would be based on an average of estimated expenses over the
current and prior two assessment periods, with a transition period for
2012, 2013, and 2014 during which the Board would use the assessment
basis for the 2012 assessment period, with the effect of using the same
assessment rate for each of those years. Thereafter, to mitigate
volatility in assessments and provide a more stable basis from year to
year, the Board would calculate a three-year rolling average of its
estimated expenses, and would determine assessments for each year based
on that three-year average. The proposal also noted that the Board
expects to evaluate the volatility in assessment fees resulting from
its methodology for determining the assessment basis on an ongoing
basis and may refine its methodology as appropriate through the
rulemaking process. The Board is finalizing this portion of the
methodology for determining the assessment basis without change.
B. Apportioning the Assessment Basis to Assessed Companies
1. Apportionment Based on Size
As discussed in the proposal, total expenses relating to the
supervision of a company generally are a function of the size and
associated complexity of the company. Larger companies are often more
complex companies, with associated risks that play a large role in
determining the supervisory resources necessary in relation to that
company. The largest companies, because of their increased complexity,
risk, and geographic footprints, usually receive more supervisory
attention.\28\
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\28\ See, e.g., ``Capital Plans,'' final rule published in the
Federal Register, 76 FR 231 (Dec. 1, 2011), and ``Enhanced
Prudential Standards and Early Remediation Requirements for Covered
Companies,'' proposal published in the Federal Register, 77 FR 594
(January 5, 2012).
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[[Page 52398]]
Many commenters asserted that asset size should not be used as a
proxy for the cost of supervision. For example, some commenters argued
that the rule should provide for tailoring the assessments based on
complexity, capital structure, risk, and interconnectedness and less on
asset size. Some commenters asserted that an asset size measure may not
provide adequate sensitivity for the types of risks to which a company
might be exposed, and could result in less-complex companies, which the
commenters asserted included smaller assessed companies or SLHCs,
subsidizing the supervisory expenses for more complex institutions.
Some of these commenters requested that the Board allocate higher costs
to the nonbank operations of assessed companies, since those operations
would not be subject to comprehensive prudential regulation similar to
banking regulation. Some commenters urged the Board to adopt a
methodology for apportioning expenses associated with the supervision
and regulation of assessed companies on a company-specific basis. A few
commenters suggested a tiered approach in which the assessment basis
would be apportioned among assessed companies based on the number of
supervisory activities to which the assessed company is subject, with
each supervisory activity weighted based on the expense or percentage
of time the Board devotes to that supervisory activity. Some
commenters, however, supported the Board's approach to allocating
assessments based on asset size.
In the proposal, the Board stated that it believes that
apportioning the assessment basis based on the total assessable asset
size of assessed companies is generally reflective of the amount of
supervisory and regulatory expenses associated with a particular
company, and is an approach based on information that is well
understood, objective, transparent, readily available, and comparable
among all types of assessed companies. The Board is concerned that the
alternatives suggested by commenters could result in assessment fees
based upon subjective, non-transparent criteria, and would not provide
assessed companies with a means for evaluating whether the Board is
consistently or appropriately allocating the assessment basis among
assessed companies. Moreover, the Board is concerned that, if an
assessed company publicly reported the amount of its assessment, a
system of allocating the assessment basis that is not relatively
straightforward and objective could cause market participants and
counterparties to draw incorrect inferences about one or more assessed
companies, to the potential detriment of assessed companies and the
efficient functioning of markets.
Some commenters asserted that apportioning the assessment basis
using size alone would result in SLHCs, which are not subject to
section 165 of the Dodd-Frank Act (enhanced prudential standards),
having to subsidize the Board's cost of carrying out enhanced
prudential standards over other assessed companies. The Board notes
that all assessed companies present unique supervisory concerns that
require significant supervisory attention, including SLHCs. In fact,
assessed companies that are SLHCs may present supervisory concerns that
are not present for BHCs subject to enhanced prudential standards. As
stated above, the Board believes that size is a reasonable proxy for
estimating the amount of the Board's costs for regulating and
supervising assessed companies. The Board is finalizing this aspect of
the proposal without change.
2. Assessment Formula
The proposal would have apportioned the assessment basis among
assessed companies by means of an assessment formula that used the
total assessable assets of each assessed company. For each assessment
period, the assessment formula applied to the assessed companies was
proposed to be:
Assessment = $50,000 + (Assessed Company's Total Assessable Assets x
Assessment Rate).
Under the proposal, each company's assessment would have been
computed using a base amount of $50,000 for each assessed company. The
Board stated in its proposal that including this base amount in each
assessment would be appropriate to ensure that the nominal expenses
related to the Board's supervision and regulation of such companies are
covered, particularly for those companies that are near the $50 billion
threshold. The proposal would have determined the ``assessment rate''
for each assessment period according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR23AU13.002
The proposal would have determined the assessment rate by dividing
the assessment basis (minus the base dollar amount covering nominal
expenses times the number of assessed companies) by the total
assessable assets of all assessed companies to determine a ratio of
Board expenses to total assets for each assessment period, and then
would have multiplied an assessed company's total assessable assets by
the resulting assessment rate. Thus, under the proposal, a company with
higher total assessable assets would have been charged a higher
assessment than a company with lower total assessable assets, which
generally reflects the greater supervisory and regulatory attention and
associated workloads and expenses associated with larger companies.
Some commenters suggested that an assessed company should be
assessed on a pro-rata basis for the time within the year that the
company becomes one of the types of companies listed in section 318
(i.e., a BHC, SLHC or Board-supervised nonbank financial company) and
falls under the Board's supervisory authority. In response to that
comment, the Board has determined that when a company becomes a BHC,
SLHC or Board-supervised nonbank financial company for the first time
and it is also an assessed company, its assessment will be pro-rated
based on the quarter in which it became an assessed company. For
example, if, on August 30 of an assessment period, a foreign banking
organization (that is not a BHC) with greater than $50 billion in total
consolidated assets buys a U.S. bank and becomes a BHC and an assessed
company for the first time, its assessment will be pro-rated at 50
[[Page 52399]]
percent to reflect the fact that the foreign BHC was an assessed
company for two quarters. Additionally, if a nonbank company is
designated by the Council for supervision by the Board on April 30 of
an assessment period, its assessment will be pro-rated at 75 percent to
reflect the fact that the Board-supervised nonbank financial company
was an assessed company for three quarters.
The proposal provided that over the first three years of the
program, the assessment rate would be fixed, using the 2012 assessment
rate for calculating the assessment for the following two assessment
periods, ending with the assessments for 2014. Thereafter, for each
assessment period, the proposal provided that the Board would calculate
an assessment rate by averaging the Board's relevant expenses for the
past three years in order to reduce year-to-year fluctuations in
assessments (i.e., for the 2015 assessment period, the Board would
average the expenses for the 2013, 2014, and 2015 assessment periods).
Some commenters requested that Board-supervised nonbank financial
companies not be required to pay an assessment until the first
assessment period following designation as a Board-supervised company
to allow such companies to prepare and budget accordingly. Considering
that assessments are collected the year following an assessment period
(for example, assessments for the 2013 assessment period will be
collected in 2014), the Board believes that a Board-supervised nonbank
financial company will have sufficient time to prepare and budget for
its assessment.
Collection Procedures
1. Notice of Assessment and Appeal Procedure
The proposal provided that the Board would send a notice of
assessment no later than July 15 of the year following the assessment
period to each assessed company stating: (1) That the Board had
determined the company to be an assessed company, (2) the amount of the
company's total assessable assets, and (3) the amount the assessed
company must pay by September 30. The proposal also provided that the
Board would, no later than July 15, publish on its public Web site the
assessment rate for that assessment period.
Under the proposal, companies identified as assessed companies
would have 30 calendar days from July 15 to appeal the Board's
determination that the company is an assessed company or the company's
total assessable assets. Companies choosing to appeal would have been
required to submit a request for redetermination in writing and include
all the pertinent facts that the company believed would be relevant for
the Board to consider. Grounds for appeal would have been limited to
(i) that the assessed company is not an assessed company (i.e., it is
not a BHC or SLHC with $50 billion in total consolidated assets, or a
Board-supervised nonbank financial company as of December 31 of the
assessment period), or (ii) review of the Board's determination of the
assessed company's total assessable assets. The proposal provided that
the Board would consider the company's appeal and respond within 15
calendar days after the end of the appeal period with the results of
its review. A successful appeal would not change the assessment for any
other company.
Several commenters recommended that the Board send the notices no
later than June 30 rather than July 15 so that the assessed companies
would have sufficient time to review and potentially appeal the
assessment before they might be required to disclose the assessment
publicly under the securities laws or respond to an investor question
during an earnings call. They also expressed an interest in being able
to incorporate the assessment into second quarter disclosures. In the
final rule, in response to commenters, the Board is changing the date
by which it will send the notice of assessments from July 15 to June
30. In addition, consistent with the amendment to the notification date
(from July 15 to June 30 in the final rule), the Board will also adjust
the date by which it must receive payment from September 30 to
September 15. The Board will publish on its public Web site the
assessment rate for that assessment period and the description of how
the Board determined the assessment basis no later than June 30.
In response to the proposal's notification and appeal procedure,
some commenters requested that the Board informally communicate with
assessed companies before sending assessment notices, or explain any
variation in its calculation of total assessable assets for a foreign
assessed company, and that the Board notify assessed companies of any
material changes to the composition of the assessment basis and provide
them a reasonable opportunity to comment. One commenter suggested that
the Board deliver the notice of assessment confidentially to each
assessed company and itemize the Board's expenses. The Board notes that
the rule as proposed provides the assessed companies with a process for
appeal during which they may communicate with the Board about the
assessment and that the assessment would be based on an assessed
company's asset size, not an itemized list of expenses.
One commenter recommended that the Board provide foreign assessed
companies with a detailed explanation of the calculation of the foreign
assessed company's total assessable assets during the transition
period. The Board notes that the final rule provides the line items
from which the Board will calculate a foreign assessed company's total
assessable assets during the transition period, and the Board will
follow that methodology each year during the transition period.\29\ In
addition, the Board notes that the rule as proposed provides the
assessed companies with a process for appeal during which they may
communicate with the Board about the assessment. Thus, the final rule
adopts the appeal procedure as proposed.
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\29\ See also discussion of changes to the FR Y-7Q.
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In addition, in the final rule, the Board is amending the dates on
which it will notify assessed companies of, and collect the 2012
assessment period. For the 2012 assessment period only, the Board will
provide the date by which an assessed company must pay it assessment in
the 2012 notice of assessments, which the Board anticipates will be
sent out shortly after the effective date of this rule. The Board
anticipates that the date by which an assessed company must pay its
assessment will be sometime in December and, in any event, will be no
later than December 15, 2013. Thereafter, the Board will notify
assessed companies of their assessments and collect the assessments
according to the dates set forth in the final rule.
2. Collection of Assessments
Under the proposal, each assessed company would have been required
to pay its assessments using the Fedwire Funds Service (Fedwire) to the
Federal Reserve Bank of Richmond. The proposal provided that the
assessments would then be transferred to the U.S. Treasury's General
Account. The proposal provided that the assessments would need to be
credited to the Board by September 30 of the year following the
assessment period. The proposal provided that in the event that the
Board did not receive the full amount of an assessed company's
assessment by the payment date for any reason that is not attributable
to an action of the Board, the assessment would have been considered
delinquent and the Board
[[Page 52400]]
would have charged interest on the delinquent assessment until the
assessment and interest, calculated daily from the collection date and
based on the U.S. Treasury Department's current value of funds rate
percentage,\30\ were paid.
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\30\ The current value of funds rate percentage is issued under
the Treasury Fiscal Requirements Manual and published quarterly in
the Federal Register.
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Several commenters asked the Board to postpone the commencement of
its assessment program until 2014, asserting that assessed companies
would need time to budget for the expenses. Other commenters asked the
Board to charge the assessment prospectively. The Board provided notice
of the assessment through its publication of the notice of proposed
rulemaking on April 18, 2013. The proposal provided adequate notice of
the Board's intent to collect assessments in 2013. Therefore, the Board
believes that the notice provided adequate time for assessed companies
to prepare for expenses payable in the second half of 2013. The Board
is otherwise adopting this aspect of the proposal without change.
Revisions to the FR Y-7Q
The FR Y-7Q requires each top-tier foreign banking organization to
file asset and capital information. Currently, Part 1 of the report
requires the filing of capital and asset information for the top-tier
foreign banking organization,\31\ while Part 2 requires capital and
asset information for lower-tier foreign banking organizations
operating a U.S. branch or an agency, or owning an Edge Act or
agreement corporation, a commercial lending company, or a commercial
bank domiciled in the United States.\32\ As explained in the reporting
instructions for the FR Y-7Q, both Part 1 and Part 2 of the reporting
form collect capital and asset information with respect to the foreign
banking organization's worldwide operations. However, neither Part 1
nor Part 2 collects capital and asset information with respect to only
the foreign banking organization's U.S. operations.
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\31\ This form is reported annually by each top-tier foreign
banking organization if it or any foreign banking organization in
its tiered structure has not elected to be a financial holding
company, and is reported quarterly by each top-tier foreign banking
organization if it or any foreign banking organization in its tiered
structure has elected to be a financial holding company.
\32\ Reported quarterly by each lower-tier foreign banking
organization (where applicable) operating a branch or an agency, or
owning an Edge Act or Agreement corporation, a commercial lending
company, or a commercial bank domiciled in the United States, if it
or any foreign banking organization in its tiered structure has
financial holding company status.
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For the purpose of determining a foreign assessed company's total
assessable assets, the Board noted in the proposal that combining the
assets of the foreign assessed company's U.S. branches and agencies
with the total assets of all U.S.-domiciled affiliates reported on
other regulatory reports would likely not yield a result that is
comparable to the consolidated approach required of U.S.-domiciled
assessed companies, which report total consolidated assets on Schedule
HC of FR Y-9C according to standard rules of consolidation. That is,
not all reports itemize separately the intercompany balances and
transactions between only U.S. affiliates that would be netted out on a
U.S.-consolidated basis. Therefore, in order to improve parity among
all assessed companies with respect to the determination of total
assessable assets as set forth in the proposal, the Board proposed to
revise Part 1 of the FR Y-7Q to collect the top-tier foreign banking
organization's total combined assets of U.S. operations,\33\ net of
intercompany balances and transactions between U.S. domiciled
affiliates, branches and agencies.\34\ The amended instructions for the
amended FR Y-7Q would have closely paralleled, to all practicable
extents, the instructions for the FR Y-9C for consolidating assets of
U.S. operations, including with respect to accounting for less-than-
majority-owned affiliates.
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\33\ For purposes of the amended FR Y-7Q, total combined assets
do not include the assets of section 2(h)(2) companies as defined in
section 2(h)(2) of the Bank Holding Company Act (12 U.S.C.
1841(h)(2)).
\34\ For purposes of FR Y-7Q reporting, U.S.-domiciled
affiliates are defined as subsidiaries, associated companies, and
entities treated as associated companies (e.g., corporate joint
ventures) as defined in the FR Y-9C.
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One commenter asserted that in determining total assessable assets
for domestic BHCs, the Board should use Schedule HC-K of the FR Y-9C,
which provides quarterly average numbers, rather than quarter-end asset
numbers. To ensure consistency in reporting, however, the Board
believes that the determination of total assessable assets should rely
on quarter-end asset numbers so that the methodology used should be
consistent with that used for other assessed companies \35\ and for
similar rulemakings.\36\ The Board intends to implement the reporting
requirements as proposed.
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\35\ The Board notes that regulatory reporting forms used for
determining the total assessable assets of foreign-owned assessed
companies do not universally report quarterly averages, as reported
on Schedule HC-K of the FR Y-9C. Moreover, those forms that do, such
as the FFIEC 002, do not report quarterly averages in a manner that
is consistent with the exclusion of intercompany balances between
only U.S.-domiciled affiliates.
\36\ See, e.g., the final rulemaking establishing the
supervisory and company-run stress test requirements for covered
companies, published in the Federal Register 77 FR 62378 (October
12, 2012).
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The Board also proposed to revise Part 1 of the FR Y-7Q to collect
information about certain foreign banking organizations more
frequently. As mentioned above, only top-tier foreign banking
organizations with financial holding company status file Part 1 of the
FR Y-7Q quarterly, while a top-tier foreign banking organization would
report annually if the foreign banking organization, or any foreign
banking organization in its tiered structure, has not effectively
elected to be a financial holding company. Accordingly, for purposes of
determining whether a foreign banking organization is an assessed
company and the amount of a foreign assessed company's total assessable
assets more frequent than annually, the Board proposed to revise the FR
Y-7Q quarterly reporting requirements for Part 1 to include all top-
tier foreign banking organizations, regardless of financial holding
company designation, with total consolidated worldwide assets of $50
billion or more as reported on Part 1 of the FR Y-7Q. Once a foreign
banking organization has total consolidated assets of $50 billion or
more and begins to report quarterly, the foreign banking organization
must continue to report Part 1 quarterly unless and until the foreign
banking organization has reported total consolidated assets of less
than $50 billion for each quarter in a full calendar year. Thereafter,
the foreign banking organization may revert to annual reporting, in
accordance with the FR Y-7Q reporting form's instructions for annual
reporting of Part 1. If at any time, after reverting to annual
reporting, a foreign banking organization has total consolidated assets
of $50 billion or more, the Foreign Banking Organization (FBO) must
return to quarterly reporting of Part 1. Regardless of size, all top-
tier foreign banking organizations that have elected to be financial
holding companies at the foreign banking organization's top tier or
tiered structure would continue to report quarterly.
One commenter asserted that it was unnecessary to expand the FR Y-
7Q to require quarterly filing from all top-tier foreign banking
organizations that are not financial holding companies, or to require
all top-tier reporting entities to report total combined U.S. assets.
However, the Board believes that
[[Page 52401]]
collecting comparable, more frequent information from foreign assessed
companies will allow it to implement the assessment program more
equitably among foreign and domestic assessed companies. Quarterly
filing from all foreign banking organizations with more than $50
billion in total consolidated assets will provide the data necessary
for consistent determinations of whether a potential assessed company
should be included in a given assessment period and such company's
total assessable assets, and will also provide for consistent treatment
between foreign and domestic banking organizations.
Another commenter asked the Board to clarify the effective date of
the revised FR Y-7Q. Companies required to file on the FR Y-7Q will be
required to file on the amended form for the reporting periods ending
on or after March 31, 2014. Finally, another commenter asked the Board
to replace the ``Examples of who must report'' section of the reporting
form. However, in the Board's experience, filers did not find the
examples helpful, and the Board does not intend to replace them in the
instructions to the reporting requirements for the amended FR Y-7Q. The
Board intends to implement the reporting requirements as proposed.
III. Administrative Law Matters
A. Solicitation of Comments and Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471, 12 U.S.C. 4809) requires the Federal banking agencies
to use plain language in all proposed and final rules published after
January 1, 2000. The Board sought to present the proposed rule in a
simple and straightforward manner and did not receive any comments on
the use of plain language.
B. Paperwork Reduction Act Analysis
In accordance with the Paperwork Reduction Act of 1995 (PRA) (44
U.S.C. 3506; 5 CFR Part 1320 Appendix A.1), the Board reviewed the
final rule under the authority delegated to the Board by Office of
Management and Budget (OMB). The Board may not conduct or sponsor, and
a respondent is not required to respond to, an information collection
unless it displays a currently valid OMB control number. The final rule
contains reporting requirements that are found in Sec. Sec.
246.3(e)(3) and 246.5(b). The OMB control numbers for these
requirements are described below. As discussed above, on April 18,
2013, the Board published in the Federal Register a notice of proposed
rulemaking seeking public comment on its proposal to implement section
318 of the Dodd-Frank Act.
Reporting Requirements in 246.3(e)(3)
Section 318 of the Dodd-Frank Act directs the Board to collect
assessments, fees, or other charges from assessed companies equal to
the expenses the Board estimates would be necessary and appropriate to
carry out its supervision and regulation of those companies. An
assessed company is any company that, on December 31 of the assessment
period, is: (1) A BHC (other than a foreign BHC) with $50 billion or
more in total consolidated assets as determined based on the average of
the BHC's total consolidated assets reported for the assessment period
on the BHC's Consolidated Financial Statements for Holding Companies
(FR Y-9C) (OMB No. 7100-0128) forms; (2) an SLHC (other than a foreign
SLHC) with $50 billion or more in total consolidated assets, as
determined based on the average of the SLHC's total consolidated assets
as reported for the assessment period on the FR Y-9C, on column B of
the Quarterly Savings and Loan Holding Company Report (FR 2320; OMB No.
7100-0345), or based on an estimate agreed to by the Board, (3) a top-
tier foreign company that is a BHC or SLHC on December 31 of the
assessment period, with $50 billion or more in total consolidated
assets determined based on the average of the foreign company's total
consolidated assets reported during the assessment period on the
Capital and Asset Report for Foreign Banking Organizations (FR Y-7Q;
OMB No. 7100-0125), or, for annual filers of the FR Y-7Q, the average
of the company's total consolidated assets for the assessment period
and the year preceding the assessment period, and (4) a Board-
supervised nonbank financial company designated by the Council pursuant
to section 113 of the Dodd-Frank Act, for supervision by the Board. In
order to improve parity among all assessed companies with respect to
the determination of total assessable assets, as set forth in the final
rule, the Board would revise Part 1 of the FR Y-7Q to collect a new
data item from top-tier FBO's--Total combined assets of U.S.
operations, net of intercompany balances and transactions between U.S.
domiciled affiliates, branches and agencies.
In addition, the Board would revise the reporting panel for Part 1
of the FR Y-7Q to collect information about certain FBOs more
frequently (from annual reporting to quarterly reporting) for purposes
of determining whether a FBO is an assessed company. All top-tier FBOs,
regardless of financial holding company designation, with total
consolidated worldwide assets of $50 billion or more, as reported on
Part 1 of the FR Y-7Q, would be required to submit data quarterly.
The Board estimates that 71 FBOs would initially be required to
change from annual reporting to quarterly reporting.\37\ The Board
estimates that, upon implementation of the new data item, 109 FBOs
would initially submit the FR Y-7Q on a quarterly basis. In addition,
the Board estimates that 43 FBOs would initially submit the FR Y-7Q on
an annual basis upon implementation of the new data item. In the
proposed rule, the Board estimated that respondents affected by
reporting requirements would take, on average, 15 minutes to submit the
new data item on the FR Y-7Q. Upon a review of all these matters,
including the comment received, described below, the annual reporting
burden associated with the FR Y-7Q is estimated to be 404 hours.\38\
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\37\ Once an FBO reports total consolidated assets of $50
billion or more and begins to report quarterly, the FBO must
continue to report Part 1 quarterly unless and until the FBO has
reported total consolidated assets of less than $50 billion for each
of all four quarters in a full calendar year. Thereafter, the FBO
may revert to annual reporting.
\38\ The burden estimate associated with 7100-0125 does not
include the current burden.
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The Board received one comment from an industry association in
response to the PRA estimate in the proposed rule. The commenter
asserted that the Board's PRA estimate to comply with the new reporting
requirement contained in Sec. 246.3(e)(3) appears to be understated;
however, the commenter did not provide an alternative estimates. In
response, the Board recognizes that the amount of time required of any
institution to comply with the reporting requirement may vary; however,
the Board believes that estimates provided are reasonable averages.
Reporting Requirements in Sec. 246.5(b)
Under Sec. 246.5(b) upon the Board issuing the notice of
assessment to each assessed company, the company would have 30 calendar
days from June 30, or, for the 2012 assessment period, 30 calendar day
from the Board's issuance of a notice of assessment for that assessment
period, to submit a written statement to appeal the Board's
determination (i) that the company is an assessed company; or (ii) of
the company's total assessable assets. This new collection would be
titled the Dodd-Frank Act Assessment Fees Request for Redetermination
(FR 4030; OMB No. 7100--to be assigned).
The Board estimates that 7 assessed companies would submit a
written
[[Page 52402]]
request for appeal annually. The Board estimates that these assessed
companies would take, on average, 40 hours (one business week) to write
and submit the written request. The total annual PRA burden for the new
FR 4030 information collection is estimated to be 280 hours.
The Board has a continuing interest in the public's opinions of our
collections of information. At any time, comments regarding the burden
estimate, or any other aspect of this collection of information,
including suggestions for reducing the burden, may be sent to:
Secretary, Board of Governors of the Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551; and to the Office of Management and
Budget, Paperwork Reduction Project (7100--to-be-assigned), Washington,
DC 20503.
C. Regulatory Flexibility Act
In accordance with Section 4(a) of the Regulatory Flexibility Act,
5 U.S.C. 604 (``RFA''), the Board is publishing a final regulatory
flexibility analysis for this rulemaking. The RFA requires an agency
either to provide a regulatory flexibility analysis with the final rule
or to certify that the final rule will not have a significant economic
impact on a substantial number of small entities.
Based on its analysis and for the reasons stated below, the Board
believes that this final rule would not have a significant economic
impact on a substantial number of small entities. Nevertheless, the
Board is publishing a final regulatory flexibility analysis.
As required by section 318 of the Dodd-Frank Act, the Board is
finalizing a rule to assess BHCs and SLHCs with assets of equal to or
greater than $50 billion and nonbank financial companies supervised by
the Board for the total expenses the Board estimates are necessary or
appropriate to carry out the supervisory and regulatory
responsibilities of the Board with respect to such companies. The Board
received no comments relating to its regulatory flexibility analysis
Under regulations issued by the Small Business Administration, a
``small entity'' includes those firms within the ``Finance and
Insurance'' sector with asset sizes that vary from $35 million or less
to $500 million or less.\39\ The final rule, by definition, will affect
BHCs and SLHCs with assets of equal to or greater than $50 billion. The
final rule also will affect nonbank financial companies supervised by
the Board under section 113 of the Dodd-Frank Act but it is unlikely
that such an institution would be considered ``small'' by the Small
Business Administration.
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\39\ 13 CFR 121.201.
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The Board's final rule is unlikely to impose any new recordkeeping,
reporting, or compliance requirements or otherwise affect a small
banking entity.
The Board has not identified any Federal rules that duplicate,
overlap, or conflict with the revisions of the final rule.
The Board believes that no alternatives to the final rule are
available for consideration.
List of Subjects in 12 CFR Part 246
Administrative practice and procedure, Assessments, Banks, Banking,
Holding companies, Nonbank financial companies, Reporting and
recordkeeping requirements.
For the reasons stated in the preamble, the Board amends 12 CFR
Chapter II by adding part 246 to read as follows:
PART 246--SUPERVISION AND REGULATION ASSESSMENTS OF FEES
(REGULATION TT)
Sec.
246.1 Authority, purpose and scope.
246.2 Definitions.
246.3 Assessed companies.
246.4 Assessments.
246.5 Notice of assessment and appeal.
246.6 Collection of assessments; payment of interest.
Authority: Pub. L. 111-203, 124 Stat. 1376, 1526, and section
11(s) of the Federal Reserve Act (12 U.S.C. 248(s)).
Sec. 246.1 Authority, purpose and scope.
(a) Authority. This part (Regulation TT) is issued by the Board of
Governors of the Federal Reserve System (Board) under section 318 of
Title III of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376, 1423-32, 12
U.S.C. 5365 and 5366) and section 11(s) of the Federal Reserve Act (12
U.S.C. 248(s)).
(b) Scope. This part applies to:
(1) Any bank holding company having total consolidated assets of
$50 billion or more, as defined below;
(2) Any savings and loan holding company having total consolidated
assets of $50 billion or more, as defined below; and
(3) Any nonbank financial company supervised by the Board, as
defined below.
(c) Purpose. This part implements provisions of section 318 of the
Dodd-Frank Act that direct the Board to collect assessments, fees, or
other charges from companies identified in paragraph (b) of this
section that are equal to the total expenses the Board estimates are
necessary or appropriate to carry out the supervisory and regulatory
responsibilities of the Board with respect to these assessed companies.
(d)(1) Reservation of authority. In exceptional circumstances, for
the purpose of avoiding inequitable or inconsistent application of the
rule, the Board may require an assessed company to pay a lesser amount
of assessments than would otherwise be provided for under this Part.
(2) Use of comparable financial information. The Board may use, at
its discretion, any comparable financial information that the Board may
require from a company in considering whether the company must pay to
the Board an assessment and the amount of such assessment, pursuant to
section 318 of the Dodd-Frank Act.
Sec. 246.2 Definitions.
As used in this part:
(a) Assessment period means January 1 through December 31 of each
calendar year.
(b) Bank means an insured depository institution as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
(c) Bank holding company is defined as in section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841), and the Board's
Regulation Y (12 CFR part 225).
(d) Company means a corporation, partnership, limited liability
company, depository institution, business trust, special purpose
entity, association, or similar organization.
(e) Council means the Financial Stability Oversight Council
established by section 111 of the Dodd-Frank Act (12 U.S.C. 5321).
(f) Foreign bank holding company means a foreign bank that is a
bank holding company and any foreign company that owns such foreign
bank.
(g) Foreign savings and loan holding company means a foreign bank
or foreign company that is a savings and loan holding company.
(h) GAAP means generally accepted accounting principles, as used in
the United States.
(i) Grandfathered unitary savings and loan holding company means a
savings and loan holding company described in section 10(c)(9)(C) of
the Home Owners' Loan Act (``HOLA'') (12 U.S.C. 1467a(c)(9)(C)).
(j) Nonbank financial company supervised by the Board means a
company that the Council has determined pursuant to section 113 of the
Dodd-Frank Act shall be supervised by the Board and for which such
determination is in effect.
[[Page 52403]]
(k) Notice of assessment means the notice in which the Board
informs a company that it is an assessed company and states the
assessed company's total assessable assets and the amount of its
assessment.
(l) Savings and loan holding company is defined as in section 10 of
HOLA (12 U.S.C. 1467a).
(m) Savings association is defined as in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813).
Sec. 246.3 Assessed companies.
An assessed company is any company that:
(a) Is a top-tier company that, on December 31 of the assessment
period:
(1) Is a bank holding company, other than a foreign bank holding
company, with $50 billion or more in total consolidated assets, as
determined based on the average of the bank holding company's total
consolidated assets reported for the assessment period on the Federal
Reserve's Form FR Y-9C (``FR Y-9C''),
(2)(i) Is a savings and loan holding company, other than a foreign
savings and loan holding company, with $50 billion or more in total
consolidated assets, as determined, except as provided in paragraph
(a)(2)(ii) of this section, based on the average of the savings and
loan holding company's total consolidated assets as reported for the
assessment period on the FR Y-9C or on the Quarterly Savings and Loan
Holding Company Report (FR 2320), as applicable.
(ii) If a company does not calculate its total consolidated assets
under GAAP for any regulatory purpose (including compliance with
applicable securities laws), the company may request that the Board
permit the company to file a quarterly estimate of its total
consolidated assets. The Board may, in its discretion and subject to
Board review and adjustment, permit the company to provide estimated
total consolidated assets on a quarterly basis. For purposes of this
part, the company's total consolidated assets will be the average of
the estimated total consolidated assets provided for the assessment
period.
(b) Is a top-tier foreign bank holding company on December 31 of
the assessment period, with $50 billion or more in total consolidated
assets, as determined based on the average of the foreign bank holding
company's total consolidated assets reported for the assessment period
on the Federal Reserve's Form FR Y-7Q (``FR Y-7Q''), provided, however,
that if any such company has filed only one FR Y-7Q during the
assessment period, the Board shall use an average of the foreign bank
holding company's total consolidated assets reported on that FR Y-7Q
and on the FR Y-7Q for the corresponding period in the year prior to
the assessment period.
(c) Is a top-tier foreign savings and loan holding company on
December 31 of the assessment period, with $50 billion or more in total
consolidated assets, as determined based on the average of the foreign
savings and loan holding company's total consolidated assets reported
for the assessment period on the reporting forms applicable during the
assessment period, provided, however, that if any such company has
filed only one reporting form during the assessment period, the Board
shall use an average of the foreign savings and loan holding company's
total consolidated assets reported on that reporting form and on the
reporting form for the corresponding period in the year prior to the
assessment period, or
(d) Is a nonbank financial company supervised by the Board.
Sec. 246.4 Assessments.
(a) Assessment. Each assessed company shall pay to the Board an
assessment for any assessment period for which the Board determines the
company to be an assessed company.
(b)(1) Assessment formula. Except as provided in paragraph (b)(2)
of this section, the assessment will be calculated according to the
Assessment Formula, as follows:
----------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D
----------------------------------------------------------------------------------------------------------------
Base Amount ($50,000) + (Total Assessable x Assessment Rate) = Assessment
Assets
----------------------------------------------------------------------------------------------------------------
(2) In any assessment period, if, at the time a company becomes a
bank holding company or savings and loan holding company, it also
becomes an assessed company, as defined in Sec. 246.3, the Board shall
pro-rate that company's assessment for that assessment period based on
the number of quarters in which such company is an assessed company.
For a nonbank financial company supervised by the Board, for the
assessment period that the company is designated for Board supervision,
Board shall pro-rate that company's assessment for that assessment
period based on the number of quarters the company has been a nonbank
financial company supervised by the Board.
(c) Assessment rate. Assessment rate means, with regard to a given
assessment period, the rate published by the Board on its Web site for
the calculation of assessments for that period.
(1) The assessment rate will be calculated according to this
formula:
[GRAPHIC] [TIFF OMITTED] TR23AU13.003
(2) For the calculation set forth in paragraph (c)(1) of this
section, the number of assessed companies and the total assessable
assets of all assessed companies will each be that of the relevant
assessment period, provided, however, that for the assessment periods
corresponding to 2012, 2013 and 2014, the Board shall use the number of
assessed companies and the total assessable assets of the 2012
assessment period to calculate the assessment rate.
(d) Assessment basis.
(1) For the 2012, 2013, and 2014 assessment periods, the assessment
basis is the amount of total expenses the Board estimates is necessary
or appropriate to carry out the supervisory and regulatory
responsibilities of the Board with respect to assessed companies for
2012.\1\
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\1\ The categories of operating expenses that the Board believes
are necessary or appropriate include but are not limited to (1)
direct operating expenses for supervising and regulating assessed
companies such as conducting examinations, conducting stress tests,
communicating with the company regarding supervisory matters and
laws and regulations, etc.; and (2) operating expenses for
activities integral to carrying out supervisory and regulatory
responsibilities such as training staff in the supervisory function,
research and analysis functions including library subscription
services, collecting and processing regulatory reports filed by
supervised institutions, etc. All operating expenses include
applicable support, overhead, and pension expenses.
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[[Page 52404]]
(2) For the 2015 assessment period and for each assessment period
thereafter, the assessment basis is the average of the amount of total
expenses the Board estimates is necessary or appropriate to carry out
the supervisory and regulatory responsibilities of the Board with
respect to assessed companies for that assessment period and the two
prior assessment periods.\2\
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\2\ The categories of operating expenses that the Board believes
are necessary or appropriate include but are not limited to (1)
direct operating expenses for supervising and regulating assessed
companies such as conducting examinations, conducting stress tests,
communicating with the company regarding supervisory matters and
laws and regulations, etc.; and (2) operating expenses for
activities integral to carrying out supervisory and regulatory
responsibilities such as training staff in the supervisory function,
research and analysis functions including library subscription
services, collecting and processing regulatory reports filed by
supervised institutions, etc. All operating expenses include
applicable support, overhead, and pension expenses.
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(e) Total assessable assets. Except as provided in paragraph (f) of
this section, total assessable assets are calculated as follows:
(1) Bank holding companies. For any bank holding company, other
than a foreign bank holding company, total assessable assets will be
the average of the bank holding company's total consolidated assets as
reported for the assessment period on the bank holding company's FR Y-
9C or such other reports as determined by the Board as applicable to
the bank holding company,
(2) Foreign bank holding companies and foreign savings and loan
holding companies.
(i) In general. For any foreign bank holding company or any foreign
savings and loan holding company, with the exception of the 2012 and
2013 assessment periods, total assessable assets will be the average of
the foreign bank holding company's or foreign savings and loan holding
company's total combined assets of its U.S. operations, net of
intercompany balances and transactions between U.S. domiciled
affiliates, branches and agencies, as reported for the assessment
period on the Part 1 of the FR Y-7Q or such other reports as determined
by the Board as applicable to the foreign bank holding company or
foreign savings and loan holding company,
(ii) 2012 and 2013 assessment periods. For the 2012 and 2013
assessment periods, for any foreign bank holding company, total
assessable assets will be the average of the sum of the line items set
forth in this section reported quarterly, plus any line items set forth
in this section reported annually for the assessment period on an
applicable regulatory reporting form for the assessment period for all
of the foreign bank holding company's majority-owned:
(A) Top-tier, U.S.-domiciled bank holding companies and savings and
loan holding companies, calculated as:
(1) Total assets (line item 12) as reported on Schedule HC of the
FR Y-9C and, as applicable;
(2) Total assets (line item 1, column B) as reported on FR 2320;
(B) Related branches and agencies of Foreign Banks in the United
States, calculated as: total claims on nonrelated parties (line item
1.i from column A on Schedule RAL) plus net due from related
institutions in foreign countries (line items 2.a, 2.b(1), 2.b(2), and
2.c from column A, minus line items 2.a, 2.b(1), 2.b(2) and 2.c from
column B, part 1 on Schedule M), minus transactions with related
nondepository majority-owned subsidiaries in the U.S. (line item 1 from
column A, part 3 on Schedule M), as reported on the Report of Assets
and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC
002);
(C) U.S.-domiciled nonbank subsidiaries, calculated as:
(1) For FR Y-7N filers: total assets (line item 10) as reported for
each nonbank subsidiary reported on Schedule BS--Balance Sheet of the
Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign
Banking Organizations (FR Y-7N); minus balances due from related
institutions located in the United States, gross (line item 4.a), as
reported on Schedule BS-M--Memoranda, and, as applicable;
(2) For FR Y-7NS (annual) filers: total assets (line item 2) as
reported for each nonbank subsidiary reported on abbreviated financial
statements (page 3) of the Abbreviated Financial Statements of U.S.
Nonbank Subsidiaries Held by Foreign Banking Organizations (FR Y-7NS);
(D) Edge Act and agreement corporations that are not reflected in
the assets of a U.S.-domiciled parent's regulatory reporting form
submission, calculated as claims on nonrelated organizations (line item
9, ``consolidated total'' column on Schedule RC of the Consolidated
Report of Condition and Income for Edge and Agreement Corporations (FR
2886b)), plus claims on related organizations domiciled outside the
United States (line items 2.a and 2.b, column A on Schedule RC-M), as
reported on FR 2886b;
(E) Banks and savings associations that are not reflected in the
assets of a U.S.-domiciled parent's regulatory reporting form
submission, calculated as: total assets (line item 12) as reported on
Schedule RC--Balance Sheet of the Consolidated Reports of Condition and
Income for a Bank with Domestic and Foreign Offices (FFIEC 031), or
total assets (line item 12) as reported on Schedule RC--Balance Sheet
of the Consolidated Reports of Condition and Income for a Bank with
Domestic Offices Only (FFIEC 041), as applicable; and
(F) Broker-dealers that are not reflected in the assets of a U.S.-
domiciled parent's regulatory reporting form submission, calculated as:
total assets as reported on statement of financial condition of the
Securities and Exchange Commission's Form X-17A-5 (FOCUS REPORT), Part
II line item 16, Part IIa, line item 12, or Part II CSE, line item 18,
as applicable.
(3)(i) Savings and loan holding companies. For any savings and loan
holding company, other than a foreign savings and loan holding company,
total assessable assets will be, except as provided in paragraph
(e)(3)(ii) of this section, the average of the savings and loan holding
company's total consolidated assets as reported for the assessment
period on the regulatory reports on the savings and loan holding
company's Form FR Y-9C, column B of the Quarterly Savings and Loan
Holding Company Report (FR 2320), or other reports as determined by the
Board as applicable to the savings and loan holding company. If the
savings and loan holding company is a grandfathered unitary savings and
loan holding company, total assessable assets will only include the
assets associated with its savings association subsidiary and its other
financial activities.
(ii) If a company does not calculate its total consolidated assets
under GAAP for any regulatory purpose (including compliance with
applicable securities laws), the company may request that the Board
permit the company to file a quarterly estimate of its total
consolidated assets. The Board may, in its discretion and subject to
Board review and adjustment, permit the company to provide estimated
total consolidated assets on a quarterly basis. The company's total
assessable assets will be the average of the estimated total
consolidated assets provided for the assessment period.
(4) Nonbank financial companies supervised by the Board. For a
nonbank
[[Page 52405]]
financial company supervised by the Board, if the company is a U.S.
company, this amount will be the average of the nonbank financial
company's total consolidated assets as reported for the assessment
period on such regulatory or other reports as are applicable to the
nonbank financial company determined by the Board; if the company is a
foreign company, this amount will be the average of the nonbank
financial company's total combined assets of U.S. operations, net of
intercompany balances and transactions between U.S. domiciled
affiliates, branches and agencies, as reported for the assessment
period on such regulatory or other reports as determined by the Board
as applicable to the nonbank financial company.
Sec. 246.5 Notice of assessment and appeal.
(a) Notice of Assessment. The Board shall issue a notice of
assessment to each assessed company no later than June 30 of each
calendar year following the assessment period, provided, however, that
for the 2012 assessment period, the Board shall issue a notice of
assessment as soon as reasonably practical after publication of the
final rule in the Federal Register.
(b) Appeal Period.
(1) Each assessed company will have thirty calendar days from June
30, or, for the 2012 assessment period, thirty calendar days from the
Board's issuance of a notice of assessment for that assessment period,
to submit a written statement to appeal the Board's determination:
(i) That the company is an assessed company; or
(ii) Of the company's total assessable assets.
(2) The Board will respond with the results of its consideration to
an assessed company that has submitted a written appeal within 15
calendar days from the end of the appeal period in paragraph (b)(1) of
this section.
Sec. 246.6 Collection of assessments; payment of interest.
(a) Collection date. Each assessed company shall remit to the
Federal Reserve the amount of its assessment using the Fedwire Funds
Service by September 15 of the calendar year following the assessment
period, or, for the 2012 assessment period, by a date specified in the
notice of assessment for that assessment period.
(b) Payment of interest.
(1) If the Board does not receive the total amount of an assessed
company's assessment by the collection date for any reason not
attributable to the Board, the assessment will be delinquent and the
assessed company shall pay to the Board interest on any sum owed to the
Board according to this rule (delinquent payments).
(2) Interest on delinquent payments will be assessed beginning on
the first calendar day after the collection date, and on each calendar
day thereafter up to and including the day payment is received.
Interest will be simple interest, calculated for each day payment is
delinquent by multiplying the daily equivalent of the applicable
interest rate by the amount delinquent. The rate of interest will be
the United States Treasury Department's current value of funds rate
(the ``CVFR percentage''); issued under the Treasury Fiscal
Requirements Manual and published quarterly in the Federal Register.
Each delinquent payment will be charged interest based on the CVFR
percentage applicable to the quarter in which all or part of the
assessment goes unpaid.
By order of the Board of Governors of the Federal Reserve
System, August 15, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013-20306 Filed 8-22-13; 8:45 am]
BILLING CODE P
