Temporary Exclusion of U.S. Treasury Securities and Deposits at Federal Reserve Banks From the Supplementary Leverage Ratio, 20578-20586 [2020-07345]
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Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulations Q; Docket No. R–1707]
RIN 7100–AF81
Temporary Exclusion of U.S. Treasury
Securities and Deposits at Federal
Reserve Banks From the
Supplementary Leverage Ratio
Board of Governors of the
Federal Reserve System (Board).
ACTION: Interim final rule and request
for comment.
AGENCY:
In light of recent disruptions
in economic conditions caused by the
coronavirus disease 2019 (COVID–19)
and current strains in U.S. financial
markets, the Board is issuing an interim
final rule that revises, on a temporary
basis for bank holding companies,
savings and loan holding companies,
and U.S. intermediate holding
companies of foreign banking
organizations, the calculation of total
leverage exposure, the denominator of
the supplementary leverage ratio in the
Board’s capital rule, to exclude the onbalance sheet amounts of U.S. Treasury
securities and deposits at Federal
Reserve Banks. This exclusion has
immediate effect and will remain in
effect through March 31, 2021. The
Board is adopting this interim final rule
to allow bank holding companies,
savings and loan holding companies,
and intermediate holding companies
subject to the supplementary leverage
ratio increased flexibility to continue to
act as financial intermediaries. The tier
1 leverage ratio is not affected by this
rulemaking.
DATES: This rule is effective April 14,
2020. Comments on the interim final
rule must be received no later than May
29, 2020.
ADDRESSES: You may submit comments,
identified by Docket No. R–1707; RIN
7100–AF81, by any of the following
methods:
• Agency Website: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include docket and
RIN numbers in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
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SUMMARY:
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All public comments will be made
available on the Board’s website at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons or to remove personally
identifiable information at the
commenter’s request. Accordingly,
comments will not be edited to remove
any identifying or contact information.
Public comments may also be viewed
electronically or in paper in Room 146,
1709 New York Avenue NW,
Washington, DC 20006, between 9:00
a.m. and 5:00 p.m. on weekdays. For
security reasons, the Board requires that
visitors make an appointment to inspect
comments. You may do so by calling
(202) 452–3684.
FOR FURTHER INFORMATION CONTACT:
Anna Lee Hewko, Associate Director,
(202) 530–6360; Constance Horsley,
Deputy Associate Director, (202) 452–
5239; Elizabeth MacDonald, Manager,
(202) 475–6316; Sviatlana Phelan, Lead
Financial Institution Policy Analyst,
(202) 912–4306; or Christopher Appel,
Senior Financial Institution Policy
Analyst II, (202) 973–6862, Division of
Supervision and Regulation; Benjamin
McDonough, Assistant General Counsel,
(202) 452–2036; Mark Buresh, Senior
Counsel, (202) 452–5270; Andrew
Hartlage, Counsel, (202) 452–6483;
Jeffery Zhang, Attorney, (202) 736–1968;
or Jasmin Keskinen, Legal Assistant,
(202) 475–6650, Legal Division, Board of
Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue NW, Washington, DC 20551.
Users of Telecommunication Device for
Deaf (TDD) only, call (202) 263–4869.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Interim Final Rule
III. Impact Assessment
IV. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and
Regulatory Improvement Act of 1994
F. Use of Plain Language
I. Background
Recent events have significantly and
adversely impacted global financial
markets. The spread of the Coronavirus
Disease 2019 (COVID–19) has slowed
economic activity in many countries,
including the United States. In
particular, sudden disruptions in
financial markets have caused banking
organizations’ balance sheets to expand
due to customer draws on credit lines,
acquisition of significant amounts of
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U.S. Treasury securities (Treasuries), as
well as other financial intermediary
activities. As a result, banking
organizations have been making
substantial deposits in their accounts at
Federal Reserve Banks (deposits at
Federal Reserve Banks) and these trends
are expected to continue to increase
temporarily while banking organizations
respond to disruptions in the financial
markets.
For a bank holding company, savings
and loan holding company, or U.S.
intermediate holding company required
to be established or designated under
section 252.153 of the Board’s
Regulation YY (holding company) that
is a global systemically important bank
holding company (GSIB) or subject to
Category II or Category III capital
standards, the capital rule requires a
minimum supplementary leverage ratio
of 3 percent, measured as the ratio of a
banking organization’s tier 1 capital to
its total leverage exposure.1 Total
leverage exposure, the denominator of
the supplementary leverage ratio,
includes certain off-balance sheet
exposures in addition to on-balance
sheet assets.
GSIBs also are subject to enhanced
supplementary leverage ratio (eSLR)
standards.2 Under the eSLR, GSIB toptier bank holding companies must
maintain a supplementary leverage ratio
greater than 3 percent plus a leverage
buffer of 2 percent to avoid limitations
on the banking organization’s capital
distributions and certain discretionary
bonus payments.3
II. The Interim Final Rule
In contrast to the risk-based capital
requirements, a leverage ratio does not
differentiate the amount of capital
required by exposure type. Rather, a
leverage ratio puts a simple and
transparent lower bound on banking
organization leverage. A leverage ratio
1 See 84 FR 59230 (Nov. 1, 2019). Holding
companies that are subject to Category II standards
include those with: (1) At least $700 billion in total
consolidated assets or (2) at least $75 billion in
cross-jurisdictional activity and at least $100 billion
in total consolidated assets. Depository institution
holding companies that are subject to Category III
standards include those with: (1) At least $250
billion in average total consolidated assets or (2) at
least $100 billion in average total consolidated
assets and at least $75 billion in average total
nonbank assets, average weighted short-term
wholesale funding; or average off-balance sheet
exposure. See 12 CFR 217.2. Depository institutions
may also be subject to the supplementary leverage
ratio.
2 See 79 FR 24528 (May 1, 2014); 80 FR 49082
(August 14, 2015).
3 GSIB depository institution subsidiaries must
maintain a 6-percent supplementary leverage ratio
to be considered ‘‘well capitalized’’ under the
Board’s prompt corrective action (PCA) framework.
79 FR 24528.
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protects against underestimation of risk
both by banking organizations and by
risk-based capital requirements and
serves as a complement to risk-based
capital requirements. Under the
supplementary leverage ratio, banking
organizations include all their onbalance sheet assets, including
Treasuries and deposits at Federal
Reserve Banks, in total leverage
exposure.
The ability of institutions to hold
certain assets, most notably deposits
held at a Reserve Bank for a depository
institution and Treasury securities, is
essential to market functioning,
financial intermediation, and funding
market activity, particularly in periods
of financial uncertainty. In response to
volatility and market strains in recent
weeks, the Federal Reserve has taken
several actions to support market
functioning and the flow of credit to the
economy. The response to COVID–19
has notably increased the size of the
Federal Reserve’s balance sheet and
resulted in a large increase in the
amount of reserves in the banking
system. The Federal Reserve’s balance
sheet will continue to expand in the
near term, as asset purchases continue
and recently-announced facilities to
support the flow of credit to households
and business begin operations. In
addition, market participants have
liquidated a high volume of assets and
deposited the cash proceeds with
banking organizations in recent weeks,
further increasing the size of banking
organizations’ balance sheets.
Absent any adjustments, the resulting
increase in the size of banking
organizations’ balance sheets may cause
a sudden and significant increase in the
regulatory capital needed to meet a
holding company’s supplementary
leverage ratio requirement. This is
particularly the case for many holding
companies subject to the supplementary
leverage ratio, which are significant
participants in financial intermediation
services, including as primary dealers in
the open market operations of the
Federal Open Market Committee
(FOMC) and as major custodians of
securities.
The Federal Reserve’s role in
conducting monetary policy includes
achieving rate control through open
market operations of Treasury securities
and supporting Treasury market
functioning more broadly. A liquid and
smooth functioning of the Treasury
market is important to monetary policy
implementation and financial stability.
Open market operations have long been
used to supply reserves to the banking
system and to help control the federal
funds rate and keep it in the target range
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set by the FOMC. Part of the crisis
response in recent weeks has been a
substantial increase in the size and
frequency of open market operations.
In order to facilitate holding
companies’ significant increase in
reserve balances resulting from the
Federal Reserve’s asset purchases and
the establishment of various programs to
support the flow of credit to the
economy, as well as the need for these
institutions to continue to accept
exceptionally high levels of customer
deposits, the Board is issuing this
interim final rule to temporarily exclude
Treasuries and deposits at Federal
Reserve Banks from total leverage
exposure for these institutions through
March 31, 2021, as calculated under the
Board’s capital rule.4 For purposes of
reporting the supplementary leverage
ratio as of June 30, 2020, banking
organizations subject to this interim
final rule must reflect the exclusion of
Treasuries and deposits at Federal
Reserve Banks from total leverage
exposure, as if this interim final rule
had been in effect for the entire second
quarter of 2020. This will have the effect
of reducing any constraint imposed by
the supplementary leverage ratio on
these exposures as these banking
organizations respond to market
disruptions. The Board is providing the
temporary exclusion contained in the
interim final rule in order to allow
banking organizations to expand their
balance sheets as appropriate to
continue to serve as financial
intermediaries, rather than to allow
banking organizations to increase
capital distributions, and will
administer the interim final rule
accordingly. This interim final rule does
not affect the tier 1 leverage ratio, which
will continue to serve as a backstop for
all banking organizations subject to the
capital rule. 5
4 The Board, together with the Office of the
Comptroller of the Currency and the Federal
Deposit Insurance Corporation, recently issued a
final rule, effective April 1, 2020 (85 FR 4569 (Jan.
27, 2020)), which implements section 402 of the
Economic Growth, Regulatory Relief, and Consumer
Protection Act by amending the capital rule to
allow a banking organization that qualifies as a
custodial banking organization to exclude from total
leverage exposure deposits at qualifying central
banks, subject to limits (402 rule). The 402 rule
came into effect on April 1, 2020. Holding
companies will be able to exclude deposits at
Federal Reserve Banks from total leverage exposure
under this interim final rule and those that are also
custodial banking organizations will also be able to
exclude the lesser of deposits at foreign qualifying
central banks and amount of funds in deposit
accounts at the custodial banking organization that
are linked to fiduciary or custodial and safekeeping
accounts at the custodial banking organization.
5 The tier 1 leverage ratio measures the ratio of
tier 1 capital to average total consolidated assets.
Banking organizations subject to the capital rule
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The interim final rule revises the
measure of total leverage exposure on a
temporary basis for the limited purposes
of the Board’s capital rule and reporting
the supplementary leverage ratio on FR
Y–9C only.6 Currently, holding
companies report their supplementary
leverage ratios on Regulatory Capital
Reporting for Institutions Subject to the
Advanced Capital Adequacy Framework
(FFIEC 101), Schedule A; and the
Board’s FR Y–9C report, Schedule HC–
R.7 This rule does not affect the
reporting of the supplementary leverage
ratio on the interagency FFIEC reporting
schedules. The Board is making
conforming changes to the Board’s Y–9C
to reflect the interim final rule’s
revisions to the supplementary leverage
ratio. In addition, the interim final rule
provides for the necessary modifications
of the disclosure requirements of section
173 of the capital rule, as applicable to
holding companies, to reflect the
exclusion provided by the interim final
rule. The Board also is revising the FR
Y–15 to prevent the interim final rule’s
temporary exclusions from total
leverage exposure from impacting the
measurement of the size systemic
indicator. The changes to the Board’s
information collections are described in
the Paperwork Reduction Act
discussion below.
The Board seeks comment on all
aspects of this interim final rule.
Question 1: Discuss the advantages
and disadvantages of removing
Treasuries and deposits at Federal
Reserve Banks from total leverage
exposure. How does the interim final
rule support the objectives of facilitating
financial intermediation by banking
organizations? What other steps could
be taken to support this objective in the
current environment? How does the
interim final rule impact the concurrent
objective of safety and soundness? Is the
end date of March 31, 2021, for the
exclusion under the interim final rule
consistent with the objectives of the rule
or should an earlier or a later end date
be used instead, and, if so, why?
Question 2: What additional assets or
exposure types should the Board
must maintain a minimum tier 1 leverage ratio of
4 percent.
6 This interim final rule will also impact the
requirements of the Board’s total loss-absorbing
capacity rule. Specifically, the minimum total lossabsorbing capacity and long-term debt requirements
based on total leverage exposure will be impacted
by the interim final rule’s exclusion of assets from
total leverage exposure. See 12 CFR part 252,
subparts G and P.
7 Banking organizations that are required to
submit the FR Y–14A on April 6, 2020, have the
option to include these changes in their stress test
results, for purposes of their projections in the
second quarter of 2020 through the first quarter of
2021.
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consider to exclude temporarily from
total leverage exposure in order to
achieve the interim final rule’s
objectives? For example, should the
Board exclude deposits at certain
foreign central banks, foreign sovereign
debt instruments, or exposures
guaranteed by the U.S. federal
government and, if yes, why? Should
the Board exclude any specific repostyle transactions that would support
banking organizations’ role as financial
intermediaries, and, if yes, why?
Question 3: The interim final rule
modifies the supplementary leverage
ratio for purposes of the Board’s capital
rule and, indirectly, other rules
including the Board’s total lossabsorbing capacity rule, but includes
revisions to the Board’s FR Y–15 so that
the size systemic indicator is not
impacted by this interim final rule.
What would be the advantages and
disadvantages of the Board temporarily
excluding Treasuries and deposits at
Federal Reserve Banks from the size
systemic indicator on the FR Y–15?
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III. Impact Assessment
In the past, the supplementary
leverage ratio requirement has not
prevented banking organizations from
supporting the orderly functioning of
the Treasury market or serving as
financial intermediaries. However, as a
result of the ongoing COVID–19 crisis,
stress has materialized in numerous
financial markets. In particular,
liquidity conditions in the Treasury
market have deteriorated in past weeks,
evidenced by widening bid-ask spreads
that remain elevated despite increased
open market operations by the Federal
Reserve. Large holding companies have
cited balance sheet constraints for their
broker-dealer subsidiaries as an obstacle
to supporting the Treasury market.
Specifically, the supplementary leverage
ratio can limit holding companies’
ability to own Treasuries outright as
well as to increase deposits at the
Federal Reserve Banks.
Temporarily excluding Treasuries and
deposits at Federal Reserve Banks from
the denominator of the supplementary
leverage ratio increases leverage
exposure capacity of a banking
organizations. In particular, using data
from the fourth quarter of 2019, the
Board expects that the interim final rule
would temporarily decrease binding tier
1 capital requirements by around $17
billion for bank holding companies.8
This impact assessment does not take
8 The interim final rule would reduce the amount
of tier 1 capital required to meet the supplementary
leverage ratio requirements by around $76 billion
at holding companies.
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into account the exclusion of qualifying
central bank deposits for custodial
banking organizations as outlined in
Section 402 in EGRRCPA.9 Beginning
April 1, 2020, custodial banking
organizations will also be able to
exclude deposits with qualifying foreign
central banks subject to the limits in
Section 402, in addition to the
deductions under this rule. In light of
the proposed exclusions under this rule,
this temporary reduction in capital
requirements is expected to increase
leverage exposure capacity at holding
companies by around $1.6 trillion. In
particular, the Board expects that the
increase in leverage exposure capacity
will facilitate intermediation by brokerdealer subsidiaries of bank holding
companies and therefore increase
liquidity in stressed financial markets.
Similarly, the Board expects that the
increase in leverage exposure capacity
will facilitate increases in customer
deposits at banking organizations
subject to the interim final rule, and
therefore ensure that these banking
organizations remain able to fulfill this
important function.
Aside from increases in balance
sheets caused by the recent volatility in
Treasury markets, the balance sheets of
banking organizations also have
increased as households and businesses
draw down credit lines and customer
deposits increase. If holding companies
become constrained by supplementary
leverage ratio requirements, this could
adversely affect their ability to
intermediate financial markets and
hamper their ability to provide lines of
credit to households and businesses.
Therefore, the temporary increase in
leverage exposure capacity should have
countercyclical benefits as it supports
financial market liquidity and increases
these banking organizations’ lending
capacities in a time of unprecedented
economic distress.
Although a temporary increase in
leverage exposure capacity could lead to
an increase in overall leverage in the
banking system, the exclusion of
Treasuries and deposits at Federal
Reserve Banks will help alleviate
ongoing stresses on the financial system
and the real economy arising from
COVID–19. As Treasuries and deposits
at Federal Reserve banks are free of
credit risk, their exclusion will also not
incentivize risk-taking by banking
organizations. The Board will closely
monitor the balance sheets of banking
organizations subject to the interim final
rule in the coming months with a
particular view toward any resulting
increase in risks. In addition, the tier 1
9 85
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leverage ratio will continue to act as a
backstop for all bank holding companies
and savings and loan holding
companies subject to the capital rule.
IV. Administrative Law Matters
A. Administrative Procedure Act
The Board is issuing the interim final
rule without prior notice and the
opportunity for public comment and the
delayed effective date ordinarily
prescribed by the Administrative
Procedure Act (APA).10 Pursuant to
section 553(b)(3)(B) of the APA, general
notice and the opportunity for public
comment are not required with respect
to a rulemaking when an ‘‘agency for
good cause finds (and incorporates the
finding and a brief statement of reasons
therefor in the rules issued) that notice
and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest.’’ 11
The Board believes that the public
interest is best served by implementing
the interim final rule immediately upon
publication in the Federal Register. As
discussed above, the spread of COVID–
19 has slowed economic activity in
many countries, including the United
States. Specifically, the significant and
sudden disruptions in financial markets
have caused banking organizations to
receive inflows of deposits—
contributing to the increase of deposits
at Federal Reserve Banks—and to
acquire significant amounts of
Treasuries. These deposits at Federal
Reserve Banks and Treasuries are
essential to the normal functioning of
the financial sector, especially in times
of stress. If holding companies cannot
sustain the rapid increase in deposits at
Federal Reserve Banks and Treasuries,
the financial sector would experience a
marked decline in financial
intermediation and a further increase in
general market volatility. Because the
rule will mitigate these potential
negative effects, the Board finds that
there is good cause consistent with the
public interest to issue the rule without
advance notice and comment.12
The APA also requires a 30-day
delayed effective date, except for (1)
substantive rules which grant or
recognize an exemption or relieve a
restriction; (2) interpretative rules and
statements of policy; or (3) as otherwise
provided by the agency for good
cause.13 Because the rules relieve a
restriction, the interim final rule is
10 5
U.S.C. 553.
U.S.C. 553(b)(3)(B).
12 5 U.S.C. 553(b)(3)(B); 553(d)(3).
13 5 U.S.C. 553(d).
11 5
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exempt from the APA’s delayed
effective date requirement.14
While the Board believes that there is
good cause to issue the rule without
advance notice and comment and with
an immediate effective date, the Board
is interested in the views of the public
and requests comment on all aspects of
the interim final rule.
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B. Congressional Review Act
For purposes of Congressional Review
Act, the OMB makes a determination as
to whether a final rule constitutes a
‘‘major’’ rule.15 If a rule is deemed a
‘‘major rule’’ by the Office of
Management and Budget (OMB), the
Congressional Review Act generally
provides that the rule may not take
effect until at least 60 days following its
publication.16
The Congressional Review Act defines
a ‘‘major rule’’ as any rule that the
Administrator of the Office of
Information and Regulatory Affairs of
the OMB finds has resulted in or is
likely to result in (A) an annual effect
on the economy of $100,000,000 or
more; (B) a major increase in costs or
prices for consumers, individual
industries, Federal, State, or local
government agencies or geographic
regions, or (C) significant adverse effects
on competition, employment,
investment, productivity, innovation, or
on the ability of United States–based
enterprises to compete with foreignbased enterprises in domestic and
export markets.17
For the same reasons set forth above,
the Board is adopting the interim final
rule without the delayed effective date
generally prescribed under the
Congressional Review Act. The delayed
effective date required by the
Congressional Review Act does not
apply to any rule for which an agency
for good cause finds (and incorporates
the finding and a brief statement of
reasons therefor in the rule issued) that
notice and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest.18 In light of
current market uncertainty, the Board
believes that delaying the effective date
of the rule would be contrary to the
public interest.
As required by the Congressional
Review Act, the Board will submit the
final rule and other appropriate reports
to Congress and the Government
Accountability Office for review.
14 5
U.S.C. 553(d)(1).
U.S.C. 801 et seq.
16 5 U.S.C. 801(a)(3).
17 5 U.S.C. 804(2).
18 5 U.S.C. 808.
15 5
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C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3521) (PRA) states that
no agency may conduct or sponsor, nor
is the respondent required to respond
to, an information collection unless it
displays a currently valid OMB control
number. The Board has reviewed this
interim final rule pursuant to authority
delegated by the OMB.
The Board has temporarily revised
certain reporting forms to accurately
reflect various aspects of this interim
final rule. These reporting forms are the
Financial Statements for Holding
Companies (FR Y–9C; OMB No. 7100–
0128), the Capital Assessments and
Stress Testing reports (FR Y–14A/Q/M;
OMB No. 7100–0341), and the Banking
Organization Systemic Risk Report (FR
Y–15, OMB No. 7100–0352). The Board
also has temporarily revised the
Recordkeeping and Disclosure
Requirements Associated with
Regulation Q (FR Q; OMB No. 7100–
0313). On June 15, 1984, OMB delegated
to the Board authority under the PRA to
temporarily approve a revision to a
collection of information without
providing opportunity for public
comment if the Board determines that a
change in an existing collection must be
instituted quickly and that public
participation in the approval process
would defeat the purpose of the
collection or substantially interfere with
the Board’s ability to perform its
statutory obligation.
The Board’s delegated authority
requires that the Board, after
temporarily approving a collection,
solicit public comment to extend
information collections for a period not
to exceed three years. Therefore, the
Board is inviting comment to extend
each of these information collections for
three years, with the revisions discussed
below.
The Board invites public comment on
the following information collections,
which are being reviewed under
authority delegated by the OMB under
the PRA. Comments must be submitted
on or before June 15, 2020. Comments
are invited on the following:
a. Whether the collections of
information is necessary for the proper
performance of the Board’s functions,
including whether the information has
practical utility;
b. The accuracy of the Board’s
estimate of the burden of the
information collections, including the
validity of the methodology and
assumptions used;
c. Ways to enhance the quality,
utility, and clarity of the information to
be collected;
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d. Ways to minimize the burden of
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
e. Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
At the end of the comment period, the
comments and recommendations
received will be analyzed to determine
the extent to which the Board should
modify the collection.
Final Approval Under OMB Delegated
Authority of the Temporary Revision of,
and Proposal To Extend for Three Years,
With Revision, of the Following
Information Collections
Report Title: Financial Statements for
Holding Companies.
Agency form number: FR Y–9C, FR Y–
9LP, FR Y–9SP, FR Y–9ES, and FR Y–
9CS.
OMB control number: 7100–0128.
Effective Date: June 30, 2020.
Frequency: Quarterly, semiannually,
and annually.
Respondents: Bank holding
companies, savings and loan holding
companies, securities holding
companies, and U.S. intermediate
holding companies (collectively, HCs).
Estimated number of respondents: FR
Y–9C (non-advanced approaches HCs
with less than $5 billion in total assets):
155; FR Y–9C (non-advanced
approaches HCs with $5 billion or more
in total assets): 189; FR Y–9C (advanced
approaches HCs): 19; FR Y–9LP: 434; FR
Y–9SP: 3,960; FR Y–9ES: 83; FR Y–9CS:
236.
Estimated average hours per response:
Reporting
FR Y–9C (non-advanced approaches
HCs with less than $5 billion in total
assets): 40.48 hours; FR Y–9C (nonadvanced approaches HCs with $5
billion or more in total assets): 46.45
hours; FR Y–9C (advanced approaches
HCs): 48.59 hours; FR Y–9LP: 5.27
hours; FR Y–9SP: 5.40 hours; FR Y–9ES:
0.50 hours; FR Y–9CS: 0.50 hours.
Recordkeeping
FR Y–9C (non-advanced approaches
HCs with less than $5 billion in total
assets), FR Y–9C (non-advanced
approaches HCs with $5 billion or more
in total assets), FR Y–9C (advanced
approaches HCs), and FR Y–9LP: 1.00
hour; FR Y–9SP, FR Y–9ES, and FR Y–
9CS: 0.50 hours.
Estimated annual burden hours:
Reporting
FR Y–9C (non-advanced approaches
HCs with less than $5 billion in total
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assets): 25,098 hours; FR Y–9C (nonadvanced approaches HCs with $5
billion or more in total assets): 35,116
hours; FR Y–9C (advanced approaches
HCs): 3,693 hours; FR Y–9LP: 9,149
hours; FR Y–9SP: 42,768 hours; FR Y–
9ES: 42 hours; FR Y–9CS: 472 hours.
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Recordkeeping
FR Y–9C (non-advanced approaches
HCs with less than $5 billion in total
assets): 620 hours; FR Y–9C (nonadvanced approaches HCs with $5
billion or more in total assets): 756
hours; FR Y–9C (advanced approaches
HCs): 76 hours; FR Y–9LP: 1,736 hours;
FR Y–9SP: 3,960 hours; FR Y–9ES: 42
hours; FR Y–9CS: 472 hours.
General description of report:
The FR Y–9C consists of standardized
financial statements similar to the Call
Reports filed by commercial banks.19
The FR Y–9C collects consolidated data
from HCs and is filed quarterly by toptier HCs with total consolidated assets
of $3 billion or more.20
The FR Y–9LP, which collects parent
company only financial data, must be
submitted by each HC that files the FR
Y–9C, as well as by each of its
subsidiary HCs.21 The report consists of
standardized financial statements.
The FR Y–9SP is a parent company
only financial statement filed
semiannually by HCs with total
consolidated assets of less than $3
billion. In a banking organization with
total consolidated assets of less than $3
billion that has tiered HCs, each HC in
the organization must submit, or have
the top-tier HC submit on its behalf, a
separate FR Y–9SP. This report is
designed to obtain basic balance sheet
and income data for the parent
company, and data on its intangible
assets and intercompany transactions.
The FR Y–9ES is filed annually by
each employee stock ownership plan
(ESOP) that is also an HC. The report
collects financial data on the ESOP’s
benefit plan activities. The FR Y–9ES
consists of four schedules: A Statement
of Changes in Net Assets Available for
Benefits, a Statement of Net Assets
Available for Benefits, Memoranda, and
Notes to the Financial Statements.
19 The Call Reports consist of the Consolidated
Reports of Condition and Income for a Bank with
Domestic Offices Only and Total Assets Less Than
$5 Billion (FFIEC 051), the Consolidated Reports of
Condition and Income for a Bank with Domestic
Offices Only (FFIEC 041) and the Consolidated
Reports of Condition and Income for a Bank with
Domestic and Foreign Offices (FFIEC 031).
20 Under certain circumstances described in the
FR Y–9C’s General Instructions, HCs with assets
under $3 billion may be required to file the FR Y–
9C.
21 A top-tier HC may submit a separate FR Y–9LP
on behalf of each of its lower-tier HCs.
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The FR Y–9CS is a free-form
voluntary supplemental report that the
Board may utilize to collect critical
additional data deemed to be needed in
an expedited manner from HCs on a
voluntary basis. The data are used to
assess and monitor emerging issues
related to HCs, and the report is
intended to supplement the other FR Y–
9 reports. The data items included on
the FR Y–9CS may change as needed.
Legal authorization and
confidentiality: The Board has the
authority to impose the reporting and
recordkeeping requirements associated
with the Y–9 family of reports on bank
holding companies (‘‘BHCs’’) pursuant
to section 5 of the Bank Holding
Company Act (‘‘BHC Act’’) (12 U.S.C.
1844); on savings and loan holding
companies pursuant to section 10(b)(2)
and (3) of the Home Owners’ Loan Act
(12 U.S.C. 1467a(b)(2) and (3)); on U.S.
intermediate holding companies (‘‘U.S.
IHCs’’) pursuant to section 5 of the BHC
Act (12 U.S.C 1844), as well as pursuant
to sections 102(a)(1) and 165 of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (‘‘Dodd-Frank
Act’’) (12 U.S.C. 511(a)(1) and 5365);
and on securities holding companies
pursuant to section 618 of the DoddFrank Act (12 U.S.C. 1850a(c)(1)(A)).
The FR Y–9 series of reports, and the
recordkeeping requirements set forth in
the respective instructions to each
report, are mandatory, except for the FR
Y–9CS, which is voluntary.
With respect to the FR Y–9C,
Schedule HI’s memoranda item 7(g),
Schedule HC–P’s item 7(a), and
Schedule HC–P’s item 7(b) are
considered confidential commercial and
financial information under exemption
4 of the Freedom of Information Act
(‘‘FOIA’’) (5 U.S.C. 552(b)(4)), as is
Schedule HC’s memorandum item 2.b.
for both the FR Y–9C and FR Y–9SP
reports.
Aside from the data items described
above, the remaining data items on the
FR Y–9 reports are generally not
accorded confidential treatment. As
provided in the Board’s Rules Regarding
Availability of Information (12 CFR part
261), however, a respondent may
request confidential treatment for any
data items the respondent believes
should be withheld pursuant to a FOIA
exemption. The Board will review any
such request to determine if confidential
treatment is appropriate, and will
inform the respondent if the request for
confidential treatment has been denied.
To the extent that the instructions to
the FR Y–9C, FR Y–9LP, FR Y–9SP, and
FR Y–9ES reports each respectively
direct a financial institution to retain
the workpapers and related materials
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used in preparation of each report, such
material would only be obtained by the
Board as part of the examination or
supervision of the financial institution.
Accordingly, such information may be
considered confidential pursuant to
exemption 8 of the FOIA (5 U.S.C.
552(b)(8)). In addition, the financial
institution’s workpapers and related
materials may also be protected by
exemption 4 of the FOIA, to the extent
such financial information is treated as
confidential by the respondent (5 U.S.C.
552(b)(4)).
Current Actions: The Board has
temporarily revised the instructions to
FR Y–9C report to accurately reflect the
calculation of the supplementary
leverage ratio pursuant to this interim
final rule. Specifically, the Board has
revised the instructions for FR Y–9C,
Schedule HC–R, Line Item 45
(Advanced approaches holding
companies only: Supplementary
leverage ratio) to state that respondents
must report the supplementary leverage
ratio in a manner consistent with this
interim final rule.
The Board has determined that the
revisions to the FR Y–9 reports
described above must be instituted
quickly and that public participation in
the approval process would defeat the
purpose of the collection of information,
as delaying the revisions would result in
the collection of inaccurate information,
and would interfere with the Board’s
ability to perform its statutory duties.
The Board also invites comment to
extend the FR Y–9 reports for three
years, with the revisions described
above. These revisions would be
effective for FR Y–9 reports as of dates
up to and including March 31, 2021, the
date after which the exclusions in this
interim final rule will no longer be
effective.
(2) Report title: Capital Assessments
and Stress Testing Reports.
Agency form number: FR Y–14A/Q/
M.
OMB control number: 7100–0341.
Effective date: December 31, 2019.
Frequency: Annually, quarterly, and
monthly.
Respondents: These collections of
information are applicable to BHCs, U.S.
IHCs, and savings and loan holding
companies (SLHCs) 22 (collectively,
‘‘holding companies’’) with $100 billion
or more in total consolidated assets, as
based on: (i) The average of the firm’s
total consolidated assets in the four
most recent quarters as reported
22 SLHCs with $100 billion or more in total
consolidated assets become members of the FR Y–
14Q and FR Y–14M panels effective June 30, 2020,
and the FR Y–14A panel effective December 31,
2020. See 84 FR 59032 (November 1, 2019).
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quarterly on the firm’s Consolidated
Financial Statements for Holding
Companies (FR Y–9C); or (ii) if the firm
has not filed an FR Y–9C for each of the
most recent four quarters, then the
average of the firm’s total consolidated
assets in the most recent consecutive
quarters as reported quarterly on the
firm’s FR Y–9Cs. Reporting is required
as of the first day of the quarter
immediately following the quarter in
which the respondent meets this asset
threshold, unless otherwise directed by
the Board.
Estimated number of respondents: FR
Y–14A/Q: 36; FR Y–14M: 34.23
Estimated average hours per response:
FR Y–14A: 1,085 hours; FR Y–14Q:
1,920 hours; FR Y–14M: 1,072 hours; FR
Y–14 On-going Automation Revisions:
480 hours; FR Y–14 Attestation Ongoing Attestation: 2,560 hours.
Estimated annual burden hours: FR
Y–14A: 39,060 hours; FR Y–14Q:
276,480 hours; FR Y–14M: 437,376
hours; FR Y–14 On-going Automation
Revisions: 17,280 hours; FR Y–14
Attestation On-going Attestation: 33,280
hours.
General description of report: This
family of information collections is
composed of the following three reports:
The annual 24 FR Y–14A collects
quantitative projections of balance
sheet, income, losses, and capital across
a range of macroeconomic scenarios and
qualitative information on
methodologies used to develop internal
projections of capital across scenarios.25
The quarterly FR Y–14Q collects
granular data on various asset classes,
including loans, securities, trading
assets, and PPNR for the reporting
period.
23 The estimated number of respondents for the
FR Y–14M is lower than for the FR Y–14Q and FR
Y–14A because, in recent years, certain respondents
to the FR Y–14A and FR Y–14Q have not met the
materiality thresholds to report the FR Y–14M due
to their lack of mortgage and credit activities. The
Board expects this situation to continue for the
foreseeable future.
24 In certain circumstances, a BHC or IHC may be
required to re-submit its capital plan. See 12 CFR
225.8(e)(4). Firms that must re-submit their capital
plan generally also must provide a revised FR Y–
14A in connection with their resubmission.
25 On October 10, 2019, the Board issued a final
rule that eliminated the requirement for firms
subject to Category IV standards to conduct and
publicly disclose the results of a company-run
stress test. See 84 FR 59032 (Nov. 1, 2019). That
final rule maintained the existing FR Y–14
substantive reporting requirements for these firms
in order to provide the Board with the data it needs
to conduct supervisory stress testing and inform the
Board’s ongoing monitoring and supervision of its
supervised firms. However, as noted in the final
rule, the Board intends to provide greater flexibility
to banking organizations subject to Category IV
standards in developing their annual capital plans
and consider further change to the FR Y–14 forms
as part of a separate proposal. See 84 FR 59032,
59063.
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The monthly FR Y–14M is comprised
of three retail portfolio- and loan-level
schedules, and one detailed addressmatching schedule to supplement two
of the portfolio and loan-level
schedules.
The data collected through the FR Y–
14A/Q/M reports provide the Board
with the information needed to help
ensure that large firms have strong,
firm-wide risk measurement and
management processes supporting their
internal assessments of capital adequacy
and that their capital resources are
sufficient given their business focus,
activities, and resulting risk exposures.
The reports are used to support the
Board’s annual Comprehensive Capital
Analysis and Review (CCAR) and DoddFrank Act Stress Test (DFAST)
exercises, which complement other
Board supervisory efforts aimed at
enhancing the continued viability of
large firms, including continuous
monitoring of firms’ planning and
management of liquidity and funding
resources, as well as regular assessments
of credit, market and operational risks,
and associated risk management
practices. Information gathered in this
data collection is also used in the
supervision and regulation of
respondent financial institutions.
Compliance with the information
collection is mandatory.
Current actions: The Board has
temporarily revised the instructions to
FR Y–14A report to give each banking
organization that is required to submit
the FR Y–14A on April 6, 2020, and
April 5, 2021, the option to calculate the
supplementary leverage ratio in its
stress test results in accordance with
this interim final rule. Please note that
this revision does not require actual
changes to the current FR Y–14A form
and instructions.
The Board has determined that the
revision to the FR Y–14A/Q/M reports
described above must be instituted
quickly and that public participation in
the approval process would defeat the
purpose of the collection of information,
as delaying the revision would result in
the collection of inaccurate information,
and would interfere with the Board’s
ability to perform its statutory duties.
The Board also invites comment to
extend the FR Y–14A/Q/M for three
years, with the revision described
above. This revision would be effective
for FR Y–14A reports as of December 31,
2019, and as of December 31, 2020, after
which the exclusions in this interim
final rule will no longer be effective.
Legal authorization and
confidentiality: The Board has the
authority to require BHCs to file the FR
Y–14 reports pursuant to section 5(c) of
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20583
the BHC Act, 12 U.S.C. 1844(c), and
pursuant to section 165(i) of the DoddFrank Act, 12 U.S.C. 5365(i). The Board
has authority to require SLHCs to file
the FR Y–14 reports pursuant to section
10(b) of the Home Owners’ Loan Act (12
U.S.C. 1467a(b)). Lastly, the Board has
authority to require U.S. IHCs of FBOs
to file the FR Y–14 reports pursuant to
section 5 of the BHC Act, as well as
pursuant to sections 102(a)(1) and 165
of the Dodd-Frank Act, 12 U.S.C.
5311(a)(1) and 5365. In addition, section
401(g) of EGRRCPA, 12 U.S.C. 5365
note, provides that the Board has the
authority to establish enhanced
prudential standards for foreign banking
organizations with total consolidated
assets of $100 billion or more, and
clarifies that nothing in section 401
‘‘shall be construed to affect the legal
effect of the final rule of the Board...
entitled ‘Enhanced Prudential Standard
for [BHCs] and Foreign Banking
Organizations’ (79 FR 17240 (March 27,
2014)), as applied to foreign banking
organizations with total consolidated
assets equal to or greater than $100
million.’’ 26 The FR Y–14 reports are
mandatory. The information collected in
the FR Y–14 reports is collected as part
of the Board’s supervisory process, and
therefore, such information is afforded
confidential treatment pursuant to
exemption 8 of the Freedom of
Information Act (FOIA), 5 U.S.C.
552(b)(8). In addition, confidential
commercial or financial information,
which a submitter actually and
customarily treats as private, and which
has been provided pursuant to an
express assurance of confidentiality by
the Board, is considered exempt from
disclosure under exemption 4 of the
FOIA, 5 U.S.C. 552(b)(4).
(3) Report title: Banking Organization
Systemic Risk Report.
Agency form number: FR Y–15.
OMB control number: 7100–0352.
Effective Date: June 30, 2020.
Frequency: Quarterly.
Respondents: The FR Y–15 panel is
currently comprised of top-tier bank
holding companies (BHCs), covered
savings and loan holding companies
(SLHCs), and intermediate holding
companies (IHCs) with $50 billion or
more in total consolidated assets, and
any BHC designated as a global
systemically important bank holding
company (GSIB) 27 based on its method
1 score calculated as of December 31 of
the previous calendar year that does not
26 The Board’s Final Rule referenced in section
401(g) of EGRRCPA specifically stated that the
Board would require IHCs to file the FR Y–14
reports. See 79 FR 17240, 17304 (March 27, 2014).
27 See 12 CFR 217.402.
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otherwise meet the consolidated assets
threshold for BHCs.28 Pursuant to
separate revisions to the FR Y–15
recently made by the Board, the
reporting panel for the FR Y–15 will,
effective June 30, 2020, consist of U.S.
BHCs and SLHCs with $100 billion or
more in consolidated assets, foreign
banking organizations with $100 billion
or more in combined U.S. assets, and
any BHC designated as a GSIB.29
Estimated number of respondents: 43.
Estimated average hours per response:
Reporting—404, Recordkeeping—1.
Estimated annual burden hours:
Reporting—69,488, Recordkeeping—
172.
General description of report: Section
165 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) 30 directs the Board to
establish enhanced prudential
standards, including risk-based capital
requirements, for certain large financial
institutions. These standards must be
more stringent than the standards
applicable to other financial institutions
that do not present similar risks to U.S.
financial stability. Additionally, these
standards must increase in stringency
based on several factors, including the
size and risk characteristics of a
company subject to the rule, and the
Board must take into account the
differences among bank holding
companies and nonbank financial
companies.
Pursuant to the requirement to
establish enhanced risk-based capital
standards under section 165 of the
Dodd-Frank Act, the Board published a
final rule establishing a GSIB surcharge
on the largest, most interconnected U.S.
BHCs in August 2015.31 The GSIB
surcharge is calculated using an
indicator-based approach that focuses
on those aspects of a BHC’s operations
that are likely to generate negative
externalities in the case of its failure or
distress. The rule’s methodologies
assess six components of a BHC’s
systemic footprint: Size,
interconnectedness, substitutability,
complexity, cross-jurisdictional activity,
and reliance on short-term wholesale
funding. The indicators comprising
28 According to the Board’s statement issued in
July 2018, the Board will take no action to require
BHCs and covered SLHCs with less than $100
billion in total consolidated assets to file the FR Y–
15, pursuant to the Economic Growth, Regulatory
Relief, and Consumer Protection Act (EGRRCPA).
See https://www.federalreserve.gov/newsevents/
pressreleases/files/bcreg20180706b1.pdf.
29 See Prudential Standards for Large Bank
Holding Companies, Savings and Loan Holding
Companies, and Foreign Banking Organizations, 84
FR 59032 (Nov. 1, 2019).
30 Public Law 111–203 (2010); 12 U.S.C. 5365.
31 80 FR 49082 (August 14, 2015).
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these six components are reported on
the FR Y–15. More generally, the FR Y–
15 report is used to monitor the
systemic risk profile of the institutions
that are subject to enhanced prudential
standards under section 165.
Additionally, section 604 of the DoddFrank Act requires that the Board
consider the extent to which a proposal
would result in greater or more
concentrated risks to the stability of the
United States banking or financial
system as part of its review of certain
banking applications.32 The data
reported on the FR Y–15 are used by the
Board to analyze the systemic risk
implications of such applications.
The FR Y–15 consists of the following
schedules:
• Schedule A—Size Indicator
• Schedule B—Interconnectedness
Indicators
• Schedule C—Substitutability
Indicators
• Schedule D—Complexity Indicators
• Schedule E—Cross-Jurisdictional
Activity Indicators
• Schedule F—Ancillary Indicators
• Schedule G—Short-term Wholesale
Funding Indicator
Some of the reporting requirements
within the schedules overlap with data
already collected in the Consolidated
Financial Statements for Holding
Companies (FR Y–9C; OMB No. 7100–
0128), the Country Exposure Report
(FFIEC 009; OMB No. 7100–0035), and
the Regulatory Capital Reporting for
Institutions Subject to the Advanced
Capital Adequacy Framework (FFIEC
101; OMB No. 7100–0319). Where
relevant data are already collected by
those reports, the FR Y–15
automatically populates items based on
the source form so that the information
does not need to be reported twice.
Automatically retrieved items are listed
in the general instructions of the FR Y–
15, under section H, titled ‘‘Data Items
Automatically Retrieved from Other
Reports.’’
Legal authorization and
confidentiality: The Board has the
authority to require BHCs, SLHCs, FBOs
and IHCs, to file the FR Y–15 pursuant
to, respectively, section 5 of the BHC
Act (12 U.S.C. 1844), section 10(b) of the
Home Owners’ Loan Act (12 U.S.C.
1467a(b)), and section 5 of the BHC Act,
in conjunction with section 8 of the
International Banking Act (12 U.S.C.
3106). The FR Y–15 reports are
mandatory. The data collected on the FR
Y–15 are made public unless a specific
request for confidentiality is submitted
by the reporting entity, either on the FR
32 Public Law 111–203, 604(d), (f); 12 U.S.C.
1842(c)(7), 1843(j)(2)(A), and 1828(c)(5).
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Y–15 or on the form from which the
data item is obtained. Such information
will be accorded confidential treatment
under exemption 4 of the Freedom of
Information Act (FOIA) if the submitter
substantiates its assertion that
disclosure would likely cause
substantial competitive harm. A number
of the items in the FR Y–15 are retrieved
from the FR Y–9C, FFIEC 101, and
FFIEC 009. Confidential treatment also
will extend to any automatically
calculated items on the FR Y–15 that
have been derived from confidential
data items and that, if released, would
reveal the underlying confidential data.
To the extent confidential data collected
under the FR Y–15 will be used for
supervisory purposes, it may be exempt
from disclosure under Exemption 8 of
FOIA (5 U.S.C. 552(b)(8)).
Current actions: The Board has
temporarily revised the instructions to
the FR Y–15 to ensure that the FR Y–
15 is not impacted by the revised
calculation of the supplementary
leverage ratio pursuant to this interim
final rule. Specifically, the Board has
deleted from the FR Y–15 instructions a
statement indicating that Schedule A,
item 3(a), ‘‘Other on-balance sheet
assets’’ will be automatically populated
for banking organizations that file the
Regulatory Capital Reporting for
Institutions Subject to the Advanced
Capital Adequacy Framework (FFIEC
101; OMB No. 7100–0319) for the same
reporting period from FFIEC 101,
Schedule A, item 2.1. Instead, all FR Y–
15 respondents will be required to
report Schedule A, item 3(a) according
to the instructions for that item. The
purpose of this temporary revision is to
ensure that the systemic risk indicators
reported on the FR Y–15 are not affected
by the changes to the capital rule
included in this interim final rule,
regardless of whether conforming
revisions are subsequently made to the
FFIEC 101 report. This revision ensures
that the size indicator continues to
capture all on-balance sheet assets,
consistent with the intent of the
indicator.
The Board has determined that the
revisions to the FR Y–15 described
above must be instituted quickly and
that public participation in the approval
process would defeat the purpose of the
collection of information, as delaying
the revisions would result in the
collection of inaccurate information,
and would interfere with the Board’s
ability to perform its statutory duties.
The Board also invites comment to
extend the FR Y–15 for three years, with
the revisions described above.
(3) Title of Information Collection:
Recordkeeping and Disclosure
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Requirements Associated with
Regulation Q.
Agency form number: FR Q.
OMB control number: 7100–0313.
Frequency: Quarterly, annual.
Affected Public: Businesses or other
for-profit.
Respondents: State member banks
(SMBs), bank holding companies
(BHCs), U.S. intermediate holding
companies (IHCs), savings and loan
holding companies (SLHCs), and global
systemically important bank holding
companies (GSIBs).
Legal authorization and
confidentiality: This information
collection is authorized by section 38(o)
of the Federal Deposit Insurance Act (12
U.S.C. 1831o(c)), section 908 of the
International Lending Supervision Act
of 1983 (12 U.S.C. 3907(a)(1)), section
9(6) of the Federal Reserve Act (12
U.S.C. 324), and section 5(c) of the Bank
Holding Company Act (12 U.S.C.
1844(c)). The obligation to respond to
this information collection is
mandatory. If a respondent considers
the information to be trade secrets and/
or privileged such information could be
withheld from the public under the
authority of the Freedom of Information
Act (5 U.S.C. 552(b)(4)). Additionally, to
the extent that such information may be
contained in an examination report such
information could also be withheld from
the public (5 U.S.C. 552 (b)(8)).
Estimated number of respondents: 1,431
(of which 19 are advanced approaches
institutions).
Estimated average hours per response:
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Minimum Capital Ratios
Recordkeeping (Ongoing)—16.
Standardized Approach
Recordkeeping (Initial setup)—122.
Recordkeeping (Ongoing)—20.
Disclosure (Initial setup)—226.25.
Disclosure (Ongoing quarterly)—
131.25.
Advanced Approach
Recordkeeping (Initial setup)—460.
Recordkeeping (Ongoing)—540.77.
Recordkeeping (Ongoing quarterly)—
20.
Disclosure (Initial setup)—328.
Disclosure (Ongoing)—5.78.
Disclosure (Ongoing quarterly)—41.
Disclosure (Table 13 quarterly)—5.
Risk-based Capital Surcharge for
GSIBs
Recordkeeping (Ongoing)—0.5.
Total estimated annual burden: 1,136
hours initial setup, 80,173 hours for
ongoing.
Current actions: The Board has
temporarily revised the FR Q
information collection to reflect a
revision to the disclosure requirements
contained in the Board’s Regulation Q.
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Generally, section 217.173 of the
Board’s Regulation Q requires each
advanced approaches Board-regulated
institution and a Category III Boardregulated institution that is required to
publicly disclose its supplementary
leverage ratio pursuant to section
217.172(d) of Regulation Q to make
certain disclosures, which are listed in
Table 13 of section 217.173. Pursuant to
this interim final rule, a Board-regulated
institution that is required to make such
disclosures will be required exclude the
balance sheet carrying value of U.S.
Treasury securities funds on deposit at
a Federal Reserve Bank from its
disclosures under Table 13 of section
217.173.
The Board has determined that the
revision to the FR Q described above
must be instituted quickly and that
public participation in the approval
process would defeat the purpose of the
collection of information, as delaying
the revisions would result in the
collection of inaccurate information,
and would interfere with the Board’s
ability to perform its statutory duties.
The Board also invites comment to
extend the FR Y–Q for three years, with
the revision described above. This
revision would be effective for FR Q as
of dates up to and including March 31,
2021, the date after which the
exclusions in this interim final rule will
no longer be effective.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act
(RFA) 33 requires an agency to consider
whether the rules it proposes will have
a significant economic impact on a
substantial number of small entities.34
The RFA applies only to rules for which
an agency publishes a general notice of
proposed rulemaking pursuant to 5
U.S.C. 553(b). As discussed previously,
consistent with section 553(b)(3)(B) of
the APA, the Board has determined for
good cause that general notice and
opportunity for public comment is
unnecessary, and therefore the Board is
not issuing a notice of proposed
rulemaking. Accordingly, the Board has
concluded that the RFA’s requirements
relating to initial and final regulatory
flexibility analysis do not apply.
Nevertheless, the Board seeks
comment on whether, and the extent to
which, the interim final rule would
affect a significant number of small
entities.
33 5
U.S.C. 601 et seq.
regulations issued by the Small Business
Administration, a small entity includes a depository
institution, bank holding company, or savings and
loan holding company with total assets of $600
million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
34 Under
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20585
E. Riegle Community Development and
Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the
Riegle Community Development and
Regulatory Improvement Act
(RCDRIA),35 in determining the effective
date and administrative compliance
requirements for new regulations that
impose additional reporting, disclosure,
or other requirements on IDIs, each
Federal banking agency must consider,
consistent with the principle of safety
and soundness and the public interest,
any administrative burdens that such
regulations would place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such regulations. In addition,
section 302(b) of RCDRIA requires new
regulations and amendments to
regulations that impose additional
reporting, disclosures, or other new
requirements on IDIs generally to take
effect on the first day of a calendar
quarter that begins on or after the date
on which the regulations are published
in final form, with certain exceptions,
including for good cause.36 For the
reasons described above, the Board
finds good cause exists under section
302 of RCDRIA to publish this interim
final rule with an immediate effective
date.
As such, the final rule will be
effective on immediately. Nevertheless,
the Board seeks comment on RCDRIA.
F. Use of Plain Language
Section 722 of the Gramm-LeachBliley Act 37 requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
Board has sought to present the interim
final rule in a simple and
straightforward manner. The Board
invites comments on whether there are
additional steps it could take to make
the rule easier to understand. For
example:
• Have we organized the material to
suit your needs? If not, how could this
material be better organized?
• Are the requirements in the
regulation clearly stated? If not, how
could the regulation be more clearly
stated?
• Does the regulation contain
language or jargon that is not clear? If
so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the regulation
35 12
U.S.C. 4802(a).
U.S.C. 4802.
37 12 U.S.C. 4809.
36 12
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14APR1
20586
Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations
easier to understand? If so, what
changes to the format would make the
regulation easier to understand? What
else could we do to make the regulation
easier to understand?
List of Subjects
12 CFR Part 217
Administrative practice and
procedure, Banks, Banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements, Securities.
Authority and Issuance
For the reasons stated in the
preamble, the Board of Governors of the
Federal Reserve System amends 12 CFR
chapter II as follows:
PART 217—CAPITAL ADEQUACY OF
BANK HOLDING COMPANIES,
SAVINGS AND LOAN HOLDING
COMPANIES, AND STATE MEMBER
BANKS (REGULATION Q)
1. The authority citation for part 217
continues to read as follows:
■
By order of the Board of Governors of the
Federal Reserve System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2020–07345 Filed 4–13–20; 8:45 am]
BILLING CODE 6210–01–P
FARM CREDIT ADMINISTRATION
RIN 3052–AD17
Organization and Functions; Farm
Credit Administration Board Meetings
Farm Credit Administration.
ACTION: Notification of effective date.
The Farm Credit
Administration (FCA), on February 5,
2020, issued a final rule amending its
regulations to reflect changes in FCA’s
organizational structure and to correct
Subpart G—Transition Provisions
the mailing address for the McLean
■ 2. Add § 217.303 to read as follows:
office. In accordance the law, the
effective date of the rule is no earlier
§ 217.303 Temporary exclusions from total
than 30 days from the date of
leverage exposure.
publication in the Federal Register
(a) In general. Subject to the
during which either or both Houses of
limitations in paragraphs (b) and (c) of
Congress are in session.
this section and notwithstanding any
DATES
: The regulation amending 12 CFR
other requirement in this part, a Boardpart
600
and 604 published on February
regulated institution that is a depository
5, 2020 (85 FR 6421) is effective April
institution holding company or a U.S.
1, 2020.
intermediate holding company, when
calculating on-balance sheet assets as of FOR FURTHER INFORMATION CONTACT:
Technical information: Paul K. Gibbs,
each day of a reporting quarter for
Associate Director, Office of Regulatory
purposes of determining the BoardPolicy, (703) 883–4203, TTY (703) 883–
regulated institution’s total leverage
4056, gibbsp@fca.gov.
exposure under § 217.10(c)(4), must
Legal information: Autumn R. Agans,
exclude the balance sheet carrying value
Senior Attorney, Office of General
of the following items:
Counsel, (703) 883–4020, TTY (703)
(1) U.S. Treasury securities; and
883–4056, agansa@fca.gov.
(2) Funds on deposit at a Federal
SUPPLEMENTARY INFORMATION: On
Reserve Bank.
November 5, 2019, the FCA Board
(b) Termination of exclusions. The
approved an organizational chart that
exclusions required pursuant to
created the Office of Data Analytics and
paragraph (a) of this section terminate
Economics. Further, a street address has
after the calendar quarter ending on
been added to 12 CFR 604.425(a) and
March 31, 2021.
(c) Custodial banking organizations. A 604.440, which list the address of the
custodial banking organization that is a
FCA Board.
depository institution holding company
In accordance with 12 U.S.C.
or a U.S. intermediate holding company 2252(c)(1), the effective date of the rule
must reduce the amount in
is no earlier than 30 days from the date
§ 217.10(c)(4)(ii)(J)(1) (to no less than
of publication in the Federal Register
zero) by any amount excluded under
during which either or both Houses of
paragraph (a)(2) of this section.
Congress are in session. Based on the
VerDate Sep<11>2014
16:59 Apr 13, 2020
Jkt 250001
records of the sessions of Congress, the
effective date of the regulations is April
1, 2020.
Dated: April 2, 2020.
Dale Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2020–07321 Filed 4–13–20; 8:45 am]
BILLING CODE 6705–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0760; Project
Identifier 2019–NE–18–AD; Amendment 39–
21108; AD 2020–08–02]
RIN 2120–AA64
12 CFR Parts 600 and 604
AGENCY:
Authority: 12 U.S.C. 248(a), 321–338a,
481–486, 1462a, 1467a, 1818, 1828, 1831n,
1831o, 1831p–1, 1831w, 1835, 1844(b), 1851,
3904, 3906–3909, 4808, 5365, 5368, 5371 and
5371 note.
jbell on DSKJLSW7X2PROD with RULES
(d) Disclosure. Notwithstanding Table
13 to § 217.173, a Board-regulated
institution that is a depository
institution holding company or a U.S
intermediate holding company that is
required to make the disclosures
pursuant to § 217.173 must exclude the
items excluded pursuant to paragraph
(a) of this section from Table 13 to
§ 217.173.
SUMMARY:
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
Airworthiness Directives; Thales AVS
France SAS Global Positioning
System/Satellite Based Augmentation
System Receivers
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
The FAA is adopting a new
airworthiness directive (AD) for certain
Thales AVS France SAS (Thales) Global
Positioning System/Satellite Based
Augmentation System (GPS/SBAS)
receivers installed on airplanes and
helicopters. This AD was prompted by
reports that Thales GPS/SBAS receivers
provided, under certain conditions,
erroneous outputs on aircraft positions.
This AD requires the installation of a
software update to the aircraft
navigation database and insertion of a
change to the applicable airplane flight
manual (AFM). The FAA is issuing this
AD to address the unsafe condition on
these products.
DATES: This AD is effective May 19,
2020.
The Director of the Federal Register
approved the incorporation by reference
of certain publications listed in this AD
as of May 19, 2020.
ADDRESSES: For service information
identified in this final rule, contact
Sikorsky Aircraft Corporation, Customer
Service Engineering, 124 Quarry Road,
Trumbull, CT 06611; telephone 1–800Winged-S or 203–416–4299; email: wcs_
cust_service_eng.gr-sik@lmco.com;
Thales AVS France SAS, 75–77 Avenue
Marcel Dassault, 33700 Me´rignac—
France, Tel: +33 (0)5 24 44 77 40,
www.thalesgroup.com; or ATR–GIE
Avions de Transport Re´gional, 1, Alle´e
Pierre Nadot, 31712 Blagnac Cedex,
France; telephone +33 (0) 5 62 21 62 21;
fax +33 (0) 5 62 21 67 18; email
SUMMARY:
E:\FR\FM\14APR1.SGM
14APR1
]]>Agencies
[Federal Register Volume 85, Number 72 (Tuesday, April 14, 2020)]
[Rules and Regulations]
[Pages 20578-20586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07345]
[[Page 20578]]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulations Q; Docket No. R-1707]
RIN 7100-AF81
Temporary Exclusion of U.S. Treasury Securities and Deposits at
Federal Reserve Banks From the Supplementary Leverage Ratio
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Interim final rule and request for comment.
-----------------------------------------------------------------------
SUMMARY: In light of recent disruptions in economic conditions caused
by the coronavirus disease 2019 (COVID-19) and current strains in U.S.
financial markets, the Board is issuing an interim final rule that
revises, on a temporary basis for bank holding companies, savings and
loan holding companies, and U.S. intermediate holding companies of
foreign banking organizations, the calculation of total leverage
exposure, the denominator of the supplementary leverage ratio in the
Board's capital rule, to exclude the on-balance sheet amounts of U.S.
Treasury securities and deposits at Federal Reserve Banks. This
exclusion has immediate effect and will remain in effect through March
31, 2021. The Board is adopting this interim final rule to allow bank
holding companies, savings and loan holding companies, and intermediate
holding companies subject to the supplementary leverage ratio increased
flexibility to continue to act as financial intermediaries. The tier 1
leverage ratio is not affected by this rulemaking.
DATES: This rule is effective April 14, 2020. Comments on the interim
final rule must be received no later than May 29, 2020.
ADDRESSES: You may submit comments, identified by Docket No. R-1707;
RIN 7100-AF81, by any of the following methods:
Agency Website: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Email: [email protected]. Include docket
and RIN numbers in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments will be made available on the Board's website
at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons or to remove
personally identifiable information at the commenter's request.
Accordingly, comments will not be edited to remove any identifying or
contact information. Public comments may also be viewed electronically
or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the
Board requires that visitors make an appointment to inspect comments.
You may do so by calling (202) 452-3684.
FOR FURTHER INFORMATION CONTACT: Anna Lee Hewko, Associate Director,
(202) 530-6360; Constance Horsley, Deputy Associate Director, (202)
452-5239; Elizabeth MacDonald, Manager, (202) 475-6316; Sviatlana
Phelan, Lead Financial Institution Policy Analyst, (202) 912-4306; or
Christopher Appel, Senior Financial Institution Policy Analyst II,
(202) 973-6862, Division of Supervision and Regulation; Benjamin
McDonough, Assistant General Counsel, (202) 452-2036; Mark Buresh,
Senior Counsel, (202) 452-5270; Andrew Hartlage, Counsel, (202) 452-
6483; Jeffery Zhang, Attorney, (202) 736-1968; or Jasmin Keskinen,
Legal Assistant, (202) 475-6650, Legal Division, Board of Governors of
the Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551. Users of Telecommunication Device for Deaf (TDD)
only, call (202) 263-4869.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Interim Final Rule
III. Impact Assessment
IV. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and Regulatory Improvement Act
of 1994
F. Use of Plain Language
I. Background
Recent events have significantly and adversely impacted global
financial markets. The spread of the Coronavirus Disease 2019 (COVID-
19) has slowed economic activity in many countries, including the
United States. In particular, sudden disruptions in financial markets
have caused banking organizations' balance sheets to expand due to
customer draws on credit lines, acquisition of significant amounts of
U.S. Treasury securities (Treasuries), as well as other financial
intermediary activities. As a result, banking organizations have been
making substantial deposits in their accounts at Federal Reserve Banks
(deposits at Federal Reserve Banks) and these trends are expected to
continue to increase temporarily while banking organizations respond to
disruptions in the financial markets.
For a bank holding company, savings and loan holding company, or
U.S. intermediate holding company required to be established or
designated under section 252.153 of the Board's Regulation YY (holding
company) that is a global systemically important bank holding company
(GSIB) or subject to Category II or Category III capital standards, the
capital rule requires a minimum supplementary leverage ratio of 3
percent, measured as the ratio of a banking organization's tier 1
capital to its total leverage exposure.\1\ Total leverage exposure, the
denominator of the supplementary leverage ratio, includes certain off-
balance sheet exposures in addition to on-balance sheet assets.
---------------------------------------------------------------------------
\1\ See 84 FR 59230 (Nov. 1, 2019). Holding companies that are
subject to Category II standards include those with: (1) At least
$700 billion in total consolidated assets or (2) at least $75
billion in cross-jurisdictional activity and at least $100 billion
in total consolidated assets. Depository institution holding
companies that are subject to Category III standards include those
with: (1) At least $250 billion in average total consolidated assets
or (2) at least $100 billion in average total consolidated assets
and at least $75 billion in average total nonbank assets, average
weighted short-term wholesale funding; or average off-balance sheet
exposure. See 12 CFR 217.2. Depository institutions may also be
subject to the supplementary leverage ratio.
---------------------------------------------------------------------------
GSIBs also are subject to enhanced supplementary leverage ratio
(eSLR) standards.\2\ Under the eSLR, GSIB top-tier bank holding
companies must maintain a supplementary leverage ratio greater than 3
percent plus a leverage buffer of 2 percent to avoid limitations on the
banking organization's capital distributions and certain discretionary
bonus payments.\3\
---------------------------------------------------------------------------
\2\ See 79 FR 24528 (May 1, 2014); 80 FR 49082 (August 14,
2015).
\3\ GSIB depository institution subsidiaries must maintain a 6-
percent supplementary leverage ratio to be considered ``well
capitalized'' under the Board's prompt corrective action (PCA)
framework. 79 FR 24528.
---------------------------------------------------------------------------
II. The Interim Final Rule
In contrast to the risk-based capital requirements, a leverage
ratio does not differentiate the amount of capital required by exposure
type. Rather, a leverage ratio puts a simple and transparent lower
bound on banking organization leverage. A leverage ratio
[[Page 20579]]
protects against underestimation of risk both by banking organizations
and by risk-based capital requirements and serves as a complement to
risk-based capital requirements. Under the supplementary leverage
ratio, banking organizations include all their on-balance sheet assets,
including Treasuries and deposits at Federal Reserve Banks, in total
leverage exposure.
The ability of institutions to hold certain assets, most notably
deposits held at a Reserve Bank for a depository institution and
Treasury securities, is essential to market functioning, financial
intermediation, and funding market activity, particularly in periods of
financial uncertainty. In response to volatility and market strains in
recent weeks, the Federal Reserve has taken several actions to support
market functioning and the flow of credit to the economy. The response
to COVID-19 has notably increased the size of the Federal Reserve's
balance sheet and resulted in a large increase in the amount of
reserves in the banking system. The Federal Reserve's balance sheet
will continue to expand in the near term, as asset purchases continue
and recently-announced facilities to support the flow of credit to
households and business begin operations. In addition, market
participants have liquidated a high volume of assets and deposited the
cash proceeds with banking organizations in recent weeks, further
increasing the size of banking organizations' balance sheets.
Absent any adjustments, the resulting increase in the size of
banking organizations' balance sheets may cause a sudden and
significant increase in the regulatory capital needed to meet a holding
company's supplementary leverage ratio requirement. This is
particularly the case for many holding companies subject to the
supplementary leverage ratio, which are significant participants in
financial intermediation services, including as primary dealers in the
open market operations of the Federal Open Market Committee (FOMC) and
as major custodians of securities.
The Federal Reserve's role in conducting monetary policy includes
achieving rate control through open market operations of Treasury
securities and supporting Treasury market functioning more broadly. A
liquid and smooth functioning of the Treasury market is important to
monetary policy implementation and financial stability. Open market
operations have long been used to supply reserves to the banking system
and to help control the federal funds rate and keep it in the target
range set by the FOMC. Part of the crisis response in recent weeks has
been a substantial increase in the size and frequency of open market
operations.
In order to facilitate holding companies' significant increase in
reserve balances resulting from the Federal Reserve's asset purchases
and the establishment of various programs to support the flow of credit
to the economy, as well as the need for these institutions to continue
to accept exceptionally high levels of customer deposits, the Board is
issuing this interim final rule to temporarily exclude Treasuries and
deposits at Federal Reserve Banks from total leverage exposure for
these institutions through March 31, 2021, as calculated under the
Board's capital rule.\4\ For purposes of reporting the supplementary
leverage ratio as of June 30, 2020, banking organizations subject to
this interim final rule must reflect the exclusion of Treasuries and
deposits at Federal Reserve Banks from total leverage exposure, as if
this interim final rule had been in effect for the entire second
quarter of 2020. This will have the effect of reducing any constraint
imposed by the supplementary leverage ratio on these exposures as these
banking organizations respond to market disruptions. The Board is
providing the temporary exclusion contained in the interim final rule
in order to allow banking organizations to expand their balance sheets
as appropriate to continue to serve as financial intermediaries, rather
than to allow banking organizations to increase capital distributions,
and will administer the interim final rule accordingly. This interim
final rule does not affect the tier 1 leverage ratio, which will
continue to serve as a backstop for all banking organizations subject
to the capital rule. \5\
---------------------------------------------------------------------------
\4\ The Board, together with the Office of the Comptroller of
the Currency and the Federal Deposit Insurance Corporation, recently
issued a final rule, effective April 1, 2020 (85 FR 4569 (Jan. 27,
2020)), which implements section 402 of the Economic Growth,
Regulatory Relief, and Consumer Protection Act by amending the
capital rule to allow a banking organization that qualifies as a
custodial banking organization to exclude from total leverage
exposure deposits at qualifying central banks, subject to limits
(402 rule). The 402 rule came into effect on April 1, 2020. Holding
companies will be able to exclude deposits at Federal Reserve Banks
from total leverage exposure under this interim final rule and those
that are also custodial banking organizations will also be able to
exclude the lesser of deposits at foreign qualifying central banks
and amount of funds in deposit accounts at the custodial banking
organization that are linked to fiduciary or custodial and
safekeeping accounts at the custodial banking organization.
\5\ The tier 1 leverage ratio measures the ratio of tier 1
capital to average total consolidated assets. Banking organizations
subject to the capital rule must maintain a minimum tier 1 leverage
ratio of 4 percent.
---------------------------------------------------------------------------
The interim final rule revises the measure of total leverage
exposure on a temporary basis for the limited purposes of the Board's
capital rule and reporting the supplementary leverage ratio on FR Y-9C
only.\6\ Currently, holding companies report their supplementary
leverage ratios on Regulatory Capital Reporting for Institutions
Subject to the Advanced Capital Adequacy Framework (FFIEC 101),
Schedule A; and the Board's FR Y-9C report, Schedule HC-R.\7\ This rule
does not affect the reporting of the supplementary leverage ratio on
the interagency FFIEC reporting schedules. The Board is making
conforming changes to the Board's Y-9C to reflect the interim final
rule's revisions to the supplementary leverage ratio. In addition, the
interim final rule provides for the necessary modifications of the
disclosure requirements of section 173 of the capital rule, as
applicable to holding companies, to reflect the exclusion provided by
the interim final rule. The Board also is revising the FR Y-15 to
prevent the interim final rule's temporary exclusions from total
leverage exposure from impacting the measurement of the size systemic
indicator. The changes to the Board's information collections are
described in the Paperwork Reduction Act discussion below.
---------------------------------------------------------------------------
\6\ This interim final rule will also impact the requirements of
the Board's total loss-absorbing capacity rule. Specifically, the
minimum total loss-absorbing capacity and long-term debt
requirements based on total leverage exposure will be impacted by
the interim final rule's exclusion of assets from total leverage
exposure. See 12 CFR part 252, subparts G and P.
\7\ Banking organizations that are required to submit the FR Y-
14A on April 6, 2020, have the option to include these changes in
their stress test results, for purposes of their projections in the
second quarter of 2020 through the first quarter of 2021.
---------------------------------------------------------------------------
The Board seeks comment on all aspects of this interim final rule.
Question 1: Discuss the advantages and disadvantages of removing
Treasuries and deposits at Federal Reserve Banks from total leverage
exposure. How does the interim final rule support the objectives of
facilitating financial intermediation by banking organizations? What
other steps could be taken to support this objective in the current
environment? How does the interim final rule impact the concurrent
objective of safety and soundness? Is the end date of March 31, 2021,
for the exclusion under the interim final rule consistent with the
objectives of the rule or should an earlier or a later end date be used
instead, and, if so, why?
Question 2: What additional assets or exposure types should the
Board
[[Page 20580]]
consider to exclude temporarily from total leverage exposure in order
to achieve the interim final rule's objectives? For example, should the
Board exclude deposits at certain foreign central banks, foreign
sovereign debt instruments, or exposures guaranteed by the U.S. federal
government and, if yes, why? Should the Board exclude any specific
repo-style transactions that would support banking organizations' role
as financial intermediaries, and, if yes, why?
Question 3: The interim final rule modifies the supplementary
leverage ratio for purposes of the Board's capital rule and,
indirectly, other rules including the Board's total loss-absorbing
capacity rule, but includes revisions to the Board's FR Y-15 so that
the size systemic indicator is not impacted by this interim final rule.
What would be the advantages and disadvantages of the Board temporarily
excluding Treasuries and deposits at Federal Reserve Banks from the
size systemic indicator on the FR Y-15?
III. Impact Assessment
In the past, the supplementary leverage ratio requirement has not
prevented banking organizations from supporting the orderly functioning
of the Treasury market or serving as financial intermediaries. However,
as a result of the ongoing COVID-19 crisis, stress has materialized in
numerous financial markets. In particular, liquidity conditions in the
Treasury market have deteriorated in past weeks, evidenced by widening
bid-ask spreads that remain elevated despite increased open market
operations by the Federal Reserve. Large holding companies have cited
balance sheet constraints for their broker-dealer subsidiaries as an
obstacle to supporting the Treasury market. Specifically, the
supplementary leverage ratio can limit holding companies' ability to
own Treasuries outright as well as to increase deposits at the Federal
Reserve Banks.
Temporarily excluding Treasuries and deposits at Federal Reserve
Banks from the denominator of the supplementary leverage ratio
increases leverage exposure capacity of a banking organizations. In
particular, using data from the fourth quarter of 2019, the Board
expects that the interim final rule would temporarily decrease binding
tier 1 capital requirements by around $17 billion for bank holding
companies.\8\ This impact assessment does not take into account the
exclusion of qualifying central bank deposits for custodial banking
organizations as outlined in Section 402 in EGRRCPA.\9\ Beginning April
1, 2020, custodial banking organizations will also be able to exclude
deposits with qualifying foreign central banks subject to the limits in
Section 402, in addition to the deductions under this rule. In light of
the proposed exclusions under this rule, this temporary reduction in
capital requirements is expected to increase leverage exposure capacity
at holding companies by around $1.6 trillion. In particular, the Board
expects that the increase in leverage exposure capacity will facilitate
intermediation by broker-dealer subsidiaries of bank holding companies
and therefore increase liquidity in stressed financial markets.
Similarly, the Board expects that the increase in leverage exposure
capacity will facilitate increases in customer deposits at banking
organizations subject to the interim final rule, and therefore ensure
that these banking organizations remain able to fulfill this important
function.
---------------------------------------------------------------------------
\8\ The interim final rule would reduce the amount of tier 1
capital required to meet the supplementary leverage ratio
requirements by around $76 billion at holding companies.
\9\ 85 FR 4569 (January 27, 2020).
---------------------------------------------------------------------------
Aside from increases in balance sheets caused by the recent
volatility in Treasury markets, the balance sheets of banking
organizations also have increased as households and businesses draw
down credit lines and customer deposits increase. If holding companies
become constrained by supplementary leverage ratio requirements, this
could adversely affect their ability to intermediate financial markets
and hamper their ability to provide lines of credit to households and
businesses. Therefore, the temporary increase in leverage exposure
capacity should have countercyclical benefits as it supports financial
market liquidity and increases these banking organizations' lending
capacities in a time of unprecedented economic distress.
Although a temporary increase in leverage exposure capacity could
lead to an increase in overall leverage in the banking system, the
exclusion of Treasuries and deposits at Federal Reserve Banks will help
alleviate ongoing stresses on the financial system and the real economy
arising from COVID-19. As Treasuries and deposits at Federal Reserve
banks are free of credit risk, their exclusion will also not
incentivize risk-taking by banking organizations. The Board will
closely monitor the balance sheets of banking organizations subject to
the interim final rule in the coming months with a particular view
toward any resulting increase in risks. In addition, the tier 1
leverage ratio will continue to act as a backstop for all bank holding
companies and savings and loan holding companies subject to the capital
rule.
IV. Administrative Law Matters
A. Administrative Procedure Act
The Board is issuing the interim final rule without prior notice
and the opportunity for public comment and the delayed effective date
ordinarily prescribed by the Administrative Procedure Act (APA).\10\
Pursuant to section 553(b)(3)(B) of the APA, general notice and the
opportunity for public comment are not required with respect to a
rulemaking when an ``agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rules issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.'' \11\
---------------------------------------------------------------------------
\10\ 5 U.S.C. 553.
\11\ 5 U.S.C. 553(b)(3)(B).
---------------------------------------------------------------------------
The Board believes that the public interest is best served by
implementing the interim final rule immediately upon publication in the
Federal Register. As discussed above, the spread of COVID-19 has slowed
economic activity in many countries, including the United States.
Specifically, the significant and sudden disruptions in financial
markets have caused banking organizations to receive inflows of
deposits--contributing to the increase of deposits at Federal Reserve
Banks--and to acquire significant amounts of Treasuries. These deposits
at Federal Reserve Banks and Treasuries are essential to the normal
functioning of the financial sector, especially in times of stress. If
holding companies cannot sustain the rapid increase in deposits at
Federal Reserve Banks and Treasuries, the financial sector would
experience a marked decline in financial intermediation and a further
increase in general market volatility. Because the rule will mitigate
these potential negative effects, the Board finds that there is good
cause consistent with the public interest to issue the rule without
advance notice and comment.\12\
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\12\ 5 U.S.C. 553(b)(3)(B); 553(d)(3).
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The APA also requires a 30-day delayed effective date, except for
(1) substantive rules which grant or recognize an exemption or relieve
a restriction; (2) interpretative rules and statements of policy; or
(3) as otherwise provided by the agency for good cause.\13\ Because the
rules relieve a restriction, the interim final rule is
[[Page 20581]]
exempt from the APA's delayed effective date requirement.\14\
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\13\ 5 U.S.C. 553(d).
\14\ 5 U.S.C. 553(d)(1).
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While the Board believes that there is good cause to issue the rule
without advance notice and comment and with an immediate effective
date, the Board is interested in the views of the public and requests
comment on all aspects of the interim final rule.
B. Congressional Review Act
For purposes of Congressional Review Act, the OMB makes a
determination as to whether a final rule constitutes a ``major''
rule.\15\ If a rule is deemed a ``major rule'' by the Office of
Management and Budget (OMB), the Congressional Review Act generally
provides that the rule may not take effect until at least 60 days
following its publication.\16\
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\15\ 5 U.S.C. 801 et seq.
\16\ 5 U.S.C. 801(a)(3).
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The Congressional Review Act defines a ``major rule'' as any rule
that the Administrator of the Office of Information and Regulatory
Affairs of the OMB finds has resulted in or is likely to result in (A)
an annual effect on the economy of $100,000,000 or more; (B) a major
increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies or geographic regions, or
(C) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.\17\
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\17\ 5 U.S.C. 804(2).
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For the same reasons set forth above, the Board is adopting the
interim final rule without the delayed effective date generally
prescribed under the Congressional Review Act. The delayed effective
date required by the Congressional Review Act does not apply to any
rule for which an agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rule issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.\18\ In light of
current market uncertainty, the Board believes that delaying the
effective date of the rule would be contrary to the public interest.
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\18\ 5 U.S.C. 808.
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As required by the Congressional Review Act, the Board will submit
the final rule and other appropriate reports to Congress and the
Government Accountability Office for review.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA)
states that no agency may conduct or sponsor, nor is the respondent
required to respond to, an information collection unless it displays a
currently valid OMB control number. The Board has reviewed this interim
final rule pursuant to authority delegated by the OMB.
The Board has temporarily revised certain reporting forms to
accurately reflect various aspects of this interim final rule. These
reporting forms are the Financial Statements for Holding Companies (FR
Y-9C; OMB No. 7100-0128), the Capital Assessments and Stress Testing
reports (FR Y-14A/Q/M; OMB No. 7100-0341), and the Banking Organization
Systemic Risk Report (FR Y-15, OMB No. 7100-0352). The Board also has
temporarily revised the Recordkeeping and Disclosure Requirements
Associated with Regulation Q (FR Q; OMB No. 7100-0313). On June 15,
1984, OMB delegated to the Board authority under the PRA to temporarily
approve a revision to a collection of information without providing
opportunity for public comment if the Board determines that a change in
an existing collection must be instituted quickly and that public
participation in the approval process would defeat the purpose of the
collection or substantially interfere with the Board's ability to
perform its statutory obligation.
The Board's delegated authority requires that the Board, after
temporarily approving a collection, solicit public comment to extend
information collections for a period not to exceed three years.
Therefore, the Board is inviting comment to extend each of these
information collections for three years, with the revisions discussed
below.
The Board invites public comment on the following information
collections, which are being reviewed under authority delegated by the
OMB under the PRA. Comments must be submitted on or before June 15,
2020. Comments are invited on the following:
a. Whether the collections of information is necessary for the
proper performance of the Board's functions, including whether the
information has practical utility;
b. The accuracy of the Board's estimate of the burden of the
information collections, including the validity of the methodology and
assumptions used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
At the end of the comment period, the comments and recommendations
received will be analyzed to determine the extent to which the Board
should modify the collection.
Final Approval Under OMB Delegated Authority of the Temporary Revision
of, and Proposal To Extend for Three Years, With Revision, of the
Following Information Collections
Report Title: Financial Statements for Holding Companies.
Agency form number: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR
Y-9CS.
OMB control number: 7100-0128.
Effective Date: June 30, 2020.
Frequency: Quarterly, semiannually, and annually.
Respondents: Bank holding companies, savings and loan holding
companies, securities holding companies, and U.S. intermediate holding
companies (collectively, HCs).
Estimated number of respondents: FR Y-9C (non-advanced approaches
HCs with less than $5 billion in total assets): 155; FR Y-9C (non-
advanced approaches HCs with $5 billion or more in total assets): 189;
FR Y-9C (advanced approaches HCs): 19; FR Y-9LP: 434; FR Y-9SP: 3,960;
FR Y-9ES: 83; FR Y-9CS: 236.
Estimated average hours per response:
Reporting
FR Y-9C (non-advanced approaches HCs with less than $5 billion in
total assets): 40.48 hours; FR Y-9C (non-advanced approaches HCs with
$5 billion or more in total assets): 46.45 hours; FR Y-9C (advanced
approaches HCs): 48.59 hours; FR Y-9LP: 5.27 hours; FR Y-9SP: 5.40
hours; FR Y-9ES: 0.50 hours; FR Y-9CS: 0.50 hours.
Recordkeeping
FR Y-9C (non-advanced approaches HCs with less than $5 billion in
total assets), FR Y-9C (non-advanced approaches HCs with $5 billion or
more in total assets), FR Y-9C (advanced approaches HCs), and FR Y-9LP:
1.00 hour; FR Y-9SP, FR Y-9ES, and FR Y-9CS: 0.50 hours.
Estimated annual burden hours:
Reporting
FR Y-9C (non-advanced approaches HCs with less than $5 billion in
total
[[Page 20582]]
assets): 25,098 hours; FR Y-9C (non-advanced approaches HCs with $5
billion or more in total assets): 35,116 hours; FR Y-9C (advanced
approaches HCs): 3,693 hours; FR Y-9LP: 9,149 hours; FR Y-9SP: 42,768
hours; FR Y-9ES: 42 hours; FR Y-9CS: 472 hours.
Recordkeeping
FR Y-9C (non-advanced approaches HCs with less than $5 billion in
total assets): 620 hours; FR Y-9C (non-advanced approaches HCs with $5
billion or more in total assets): 756 hours; FR Y-9C (advanced
approaches HCs): 76 hours; FR Y-9LP: 1,736 hours; FR Y-9SP: 3,960
hours; FR Y-9ES: 42 hours; FR Y-9CS: 472 hours.
General description of report:
The FR Y-9C consists of standardized financial statements similar
to the Call Reports filed by commercial banks.\19\ The FR Y-9C collects
consolidated data from HCs and is filed quarterly by top-tier HCs with
total consolidated assets of $3 billion or more.\20\
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\19\ The Call Reports consist of the Consolidated Reports of
Condition and Income for a Bank with Domestic Offices Only and Total
Assets Less Than $5 Billion (FFIEC 051), the Consolidated Reports of
Condition and Income for a Bank with Domestic Offices Only (FFIEC
041) and the Consolidated Reports of Condition and Income for a Bank
with Domestic and Foreign Offices (FFIEC 031).
\20\ Under certain circumstances described in the FR Y-9C's
General Instructions, HCs with assets under $3 billion may be
required to file the FR Y-9C.
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The FR Y-9LP, which collects parent company only financial data,
must be submitted by each HC that files the FR Y-9C, as well as by each
of its subsidiary HCs.\21\ The report consists of standardized
financial statements.
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\21\ A top-tier HC may submit a separate FR Y-9LP on behalf of
each of its lower-tier HCs.
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The FR Y-9SP is a parent company only financial statement filed
semiannually by HCs with total consolidated assets of less than $3
billion. In a banking organization with total consolidated assets of
less than $3 billion that has tiered HCs, each HC in the organization
must submit, or have the top-tier HC submit on its behalf, a separate
FR Y-9SP. This report is designed to obtain basic balance sheet and
income data for the parent company, and data on its intangible assets
and intercompany transactions.
The FR Y-9ES is filed annually by each employee stock ownership
plan (ESOP) that is also an HC. The report collects financial data on
the ESOP's benefit plan activities. The FR Y-9ES consists of four
schedules: A Statement of Changes in Net Assets Available for Benefits,
a Statement of Net Assets Available for Benefits, Memoranda, and Notes
to the Financial Statements.
The FR Y-9CS is a free-form voluntary supplemental report that the
Board may utilize to collect critical additional data deemed to be
needed in an expedited manner from HCs on a voluntary basis. The data
are used to assess and monitor emerging issues related to HCs, and the
report is intended to supplement the other FR Y-9 reports. The data
items included on the FR Y-9CS may change as needed.
Legal authorization and confidentiality: The Board has the
authority to impose the reporting and recordkeeping requirements
associated with the Y-9 family of reports on bank holding companies
(``BHCs'') pursuant to section 5 of the Bank Holding Company Act (``BHC
Act'') (12 U.S.C. 1844); on savings and loan holding companies pursuant
to section 10(b)(2) and (3) of the Home Owners' Loan Act (12 U.S.C.
1467a(b)(2) and (3)); on U.S. intermediate holding companies (``U.S.
IHCs'') pursuant to section 5 of the BHC Act (12 U.S.C 1844), as well
as pursuant to sections 102(a)(1) and 165 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (``Dodd-Frank Act'') (12 U.S.C.
511(a)(1) and 5365); and on securities holding companies pursuant to
section 618 of the Dodd-Frank Act (12 U.S.C. 1850a(c)(1)(A)). The FR Y-
9 series of reports, and the recordkeeping requirements set forth in
the respective instructions to each report, are mandatory, except for
the FR Y-9CS, which is voluntary.
With respect to the FR Y-9C, Schedule HI's memoranda item 7(g),
Schedule HC-P's item 7(a), and Schedule HC-P's item 7(b) are considered
confidential commercial and financial information under exemption 4 of
the Freedom of Information Act (``FOIA'') (5 U.S.C. 552(b)(4)), as is
Schedule HC's memorandum item 2.b. for both the FR Y-9C and FR Y-9SP
reports.
Aside from the data items described above, the remaining data items
on the FR Y-9 reports are generally not accorded confidential
treatment. As provided in the Board's Rules Regarding Availability of
Information (12 CFR part 261), however, a respondent may request
confidential treatment for any data items the respondent believes
should be withheld pursuant to a FOIA exemption. The Board will review
any such request to determine if confidential treatment is appropriate,
and will inform the respondent if the request for confidential
treatment has been denied.
To the extent that the instructions to the FR Y-9C, FR Y-9LP, FR Y-
9SP, and FR Y-9ES reports each respectively direct a financial
institution to retain the workpapers and related materials used in
preparation of each report, such material would only be obtained by the
Board as part of the examination or supervision of the financial
institution. Accordingly, such information may be considered
confidential pursuant to exemption 8 of the FOIA (5 U.S.C. 552(b)(8)).
In addition, the financial institution's workpapers and related
materials may also be protected by exemption 4 of the FOIA, to the
extent such financial information is treated as confidential by the
respondent (5 U.S.C. 552(b)(4)).
Current Actions: The Board has temporarily revised the instructions
to FR Y-9C report to accurately reflect the calculation of the
supplementary leverage ratio pursuant to this interim final rule.
Specifically, the Board has revised the instructions for FR Y-9C,
Schedule HC-R, Line Item 45 (Advanced approaches holding companies
only: Supplementary leverage ratio) to state that respondents must
report the supplementary leverage ratio in a manner consistent with
this interim final rule.
The Board has determined that the revisions to the FR Y-9 reports
described above must be instituted quickly and that public
participation in the approval process would defeat the purpose of the
collection of information, as delaying the revisions would result in
the collection of inaccurate information, and would interfere with the
Board's ability to perform its statutory duties.
The Board also invites comment to extend the FR Y-9 reports for
three years, with the revisions described above. These revisions would
be effective for FR Y-9 reports as of dates up to and including March
31, 2021, the date after which the exclusions in this interim final
rule will no longer be effective.
(2) Report title: Capital Assessments and Stress Testing Reports.
Agency form number: FR Y-14A/Q/M.
OMB control number: 7100-0341.
Effective date: December 31, 2019.
Frequency: Annually, quarterly, and monthly.
Respondents: These collections of information are applicable to
BHCs, U.S. IHCs, and savings and loan holding companies (SLHCs) \22\
(collectively, ``holding companies'') with $100 billion or more in
total consolidated assets, as based on: (i) The average of the firm's
total consolidated assets in the four most recent quarters as reported
[[Page 20583]]
quarterly on the firm's Consolidated Financial Statements for Holding
Companies (FR Y-9C); or (ii) if the firm has not filed an FR Y-9C for
each of the most recent four quarters, then the average of the firm's
total consolidated assets in the most recent consecutive quarters as
reported quarterly on the firm's FR Y-9Cs. Reporting is required as of
the first day of the quarter immediately following the quarter in which
the respondent meets this asset threshold, unless otherwise directed by
the Board.
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\22\ SLHCs with $100 billion or more in total consolidated
assets become members of the FR Y-14Q and FR Y-14M panels effective
June 30, 2020, and the FR Y-14A panel effective December 31, 2020.
See 84 FR 59032 (November 1, 2019).
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Estimated number of respondents: FR Y-14A/Q: 36; FR Y-14M: 34.\23\
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\23\ The estimated number of respondents for the FR Y-14M is
lower than for the FR Y-14Q and FR Y-14A because, in recent years,
certain respondents to the FR Y-14A and FR Y-14Q have not met the
materiality thresholds to report the FR Y-14M due to their lack of
mortgage and credit activities. The Board expects this situation to
continue for the foreseeable future.
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Estimated average hours per response: FR Y-14A: 1,085 hours; FR Y-
14Q: 1,920 hours; FR Y-14M: 1,072 hours; FR Y-14 On-going Automation
Revisions: 480 hours; FR Y-14 Attestation On-going Attestation: 2,560
hours.
Estimated annual burden hours: FR Y-14A: 39,060 hours; FR Y-14Q:
276,480 hours; FR Y-14M: 437,376 hours; FR Y-14 On-going Automation
Revisions: 17,280 hours; FR Y-14 Attestation On-going Attestation:
33,280 hours.
General description of report: This family of information
collections is composed of the following three reports:
The annual \24\ FR Y-14A collects quantitative projections of
balance sheet, income, losses, and capital across a range of
macroeconomic scenarios and qualitative information on methodologies
used to develop internal projections of capital across scenarios.\25\
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\24\ In certain circumstances, a BHC or IHC may be required to
re-submit its capital plan. See 12 CFR 225.8(e)(4). Firms that must
re-submit their capital plan generally also must provide a revised
FR Y-14A in connection with their resubmission.
\25\ On October 10, 2019, the Board issued a final rule that
eliminated the requirement for firms subject to Category IV
standards to conduct and publicly disclose the results of a company-
run stress test. See 84 FR 59032 (Nov. 1, 2019). That final rule
maintained the existing FR Y-14 substantive reporting requirements
for these firms in order to provide the Board with the data it needs
to conduct supervisory stress testing and inform the Board's ongoing
monitoring and supervision of its supervised firms. However, as
noted in the final rule, the Board intends to provide greater
flexibility to banking organizations subject to Category IV
standards in developing their annual capital plans and consider
further change to the FR Y-14 forms as part of a separate proposal.
See 84 FR 59032, 59063.
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The quarterly FR Y-14Q collects granular data on various asset
classes, including loans, securities, trading assets, and PPNR for the
reporting period.
The monthly FR Y-14M is comprised of three retail portfolio- and
loan-level schedules, and one detailed address-matching schedule to
supplement two of the portfolio and loan-level schedules.
The data collected through the FR Y-14A/Q/M reports provide the
Board with the information needed to help ensure that large firms have
strong, firm[hyphen]wide risk measurement and management processes
supporting their internal assessments of capital adequacy and that
their capital resources are sufficient given their business focus,
activities, and resulting risk exposures. The reports are used to
support the Board's annual Comprehensive Capital Analysis and Review
(CCAR) and Dodd-Frank Act Stress Test (DFAST) exercises, which
complement other Board supervisory efforts aimed at enhancing the
continued viability of large firms, including continuous monitoring of
firms' planning and management of liquidity and funding resources, as
well as regular assessments of credit, market and operational risks,
and associated risk management practices. Information gathered in this
data collection is also used in the supervision and regulation of
respondent financial institutions. Compliance with the information
collection is mandatory.
Current actions: The Board has temporarily revised the instructions
to FR Y-14A report to give each banking organization that is required
to submit the FR Y-14A on April 6, 2020, and April 5, 2021, the option
to calculate the supplementary leverage ratio in its stress test
results in accordance with this interim final rule. Please note that
this revision does not require actual changes to the current FR Y-14A
form and instructions.
The Board has determined that the revision to the FR Y-14A/Q/M
reports described above must be instituted quickly and that public
participation in the approval process would defeat the purpose of the
collection of information, as delaying the revision would result in the
collection of inaccurate information, and would interfere with the
Board's ability to perform its statutory duties.
The Board also invites comment to extend the FR Y-14A/Q/M for three
years, with the revision described above. This revision would be
effective for FR Y-14A reports as of December 31, 2019, and as of
December 31, 2020, after which the exclusions in this interim final
rule will no longer be effective.
Legal authorization and confidentiality: The Board has the
authority to require BHCs to file the FR Y-14 reports pursuant to
section 5(c) of the BHC Act, 12 U.S.C. 1844(c), and pursuant to section
165(i) of the Dodd-Frank Act, 12 U.S.C. 5365(i). The Board has
authority to require SLHCs to file the FR Y-14 reports pursuant to
section 10(b) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)).
Lastly, the Board has authority to require U.S. IHCs of FBOs to file
the FR Y-14 reports pursuant to section 5 of the BHC Act, as well as
pursuant to sections 102(a)(1) and 165 of the Dodd-Frank Act, 12 U.S.C.
5311(a)(1) and 5365. In addition, section 401(g) of EGRRCPA, 12 U.S.C.
5365 note, provides that the Board has the authority to establish
enhanced prudential standards for foreign banking organizations with
total consolidated assets of $100 billion or more, and clarifies that
nothing in section 401 ``shall be construed to affect the legal effect
of the final rule of the Board... entitled `Enhanced Prudential
Standard for [BHCs] and Foreign Banking Organizations' (79 FR 17240
(March 27, 2014)), as applied to foreign banking organizations with
total consolidated assets equal to or greater than $100 million.'' \26\
The FR Y-14 reports are mandatory. The information collected in the FR
Y-14 reports is collected as part of the Board's supervisory process,
and therefore, such information is afforded confidential treatment
pursuant to exemption 8 of the Freedom of Information Act (FOIA), 5
U.S.C. 552(b)(8). In addition, confidential commercial or financial
information, which a submitter actually and customarily treats as
private, and which has been provided pursuant to an express assurance
of confidentiality by the Board, is considered exempt from disclosure
under exemption 4 of the FOIA, 5 U.S.C. 552(b)(4).
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\26\ The Board's Final Rule referenced in section 401(g) of
EGRRCPA specifically stated that the Board would require IHCs to
file the FR Y-14 reports. See 79 FR 17240, 17304 (March 27, 2014).
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(3) Report title: Banking Organization Systemic Risk Report.
Agency form number: FR Y-15.
OMB control number: 7100-0352.
Effective Date: June 30, 2020.
Frequency: Quarterly.
Respondents: The FR Y-15 panel is currently comprised of top-tier
bank holding companies (BHCs), covered savings and loan holding
companies (SLHCs), and intermediate holding companies (IHCs) with $50
billion or more in total consolidated assets, and any BHC designated as
a global systemically important bank holding company (GSIB) \27\ based
on its method 1 score calculated as of December 31 of the previous
calendar year that does not
[[Page 20584]]
otherwise meet the consolidated assets threshold for BHCs.\28\ Pursuant
to separate revisions to the FR Y-15 recently made by the Board, the
reporting panel for the FR Y-15 will, effective June 30, 2020, consist
of U.S. BHCs and SLHCs with $100 billion or more in consolidated
assets, foreign banking organizations with $100 billion or more in
combined U.S. assets, and any BHC designated as a GSIB.\29\
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\27\ See 12 CFR 217.402.
\28\ According to the Board's statement issued in July 2018, the
Board will take no action to require BHCs and covered SLHCs with
less than $100 billion in total consolidated assets to file the FR
Y-15, pursuant to the Economic Growth, Regulatory Relief, and
Consumer Protection Act (EGRRCPA). See https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20180706b1.pdf.
\29\ See Prudential Standards for Large Bank Holding Companies,
Savings and Loan Holding Companies, and Foreign Banking
Organizations, 84 FR 59032 (Nov. 1, 2019).
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Estimated number of respondents: 43.
Estimated average hours per response: Reporting--404,
Recordkeeping--1.
Estimated annual burden hours: Reporting--69,488, Recordkeeping--
172.
General description of report: Section 165 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act) \30\ directs
the Board to establish enhanced prudential standards, including risk-
based capital requirements, for certain large financial institutions.
These standards must be more stringent than the standards applicable to
other financial institutions that do not present similar risks to U.S.
financial stability. Additionally, these standards must increase in
stringency based on several factors, including the size and risk
characteristics of a company subject to the rule, and the Board must
take into account the differences among bank holding companies and
nonbank financial companies.
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\30\ Public Law 111-203 (2010); 12 U.S.C. 5365.
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Pursuant to the requirement to establish enhanced risk-based
capital standards under section 165 of the Dodd-Frank Act, the Board
published a final rule establishing a GSIB surcharge on the largest,
most interconnected U.S. BHCs in August 2015.\31\ The GSIB surcharge is
calculated using an indicator-based approach that focuses on those
aspects of a BHC's operations that are likely to generate negative
externalities in the case of its failure or distress. The rule's
methodologies assess six components of a BHC's systemic footprint:
Size, interconnectedness, substitutability, complexity, cross-
jurisdictional activity, and reliance on short-term wholesale funding.
The indicators comprising these six components are reported on the FR
Y-15. More generally, the FR Y-15 report is used to monitor the
systemic risk profile of the institutions that are subject to enhanced
prudential standards under section 165.
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\31\ 80 FR 49082 (August 14, 2015).
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Additionally, section 604 of the Dodd-Frank Act requires that the
Board consider the extent to which a proposal would result in greater
or more concentrated risks to the stability of the United States
banking or financial system as part of its review of certain banking
applications.\32\ The data reported on the FR Y-15 are used by the
Board to analyze the systemic risk implications of such applications.
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\32\ Public Law 111-203, 604(d), (f); 12 U.S.C. 1842(c)(7),
1843(j)(2)(A), and 1828(c)(5).
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The FR Y-15 consists of the following schedules:
Schedule A--Size Indicator
Schedule B--Interconnectedness Indicators
Schedule C--Substitutability Indicators
Schedule D--Complexity Indicators
Schedule E--Cross-Jurisdictional Activity Indicators
Schedule F--Ancillary Indicators
Schedule G--Short-term Wholesale Funding Indicator
Some of the reporting requirements within the schedules overlap
with data already collected in the Consolidated Financial Statements
for Holding Companies (FR Y-9C; OMB No. 7100-0128), the Country
Exposure Report (FFIEC 009; OMB No. 7100-0035), and the Regulatory
Capital Reporting for Institutions Subject to the Advanced Capital
Adequacy Framework (FFIEC 101; OMB No. 7100-0319). Where relevant data
are already collected by those reports, the FR Y-15 automatically
populates items based on the source form so that the information does
not need to be reported twice. Automatically retrieved items are listed
in the general instructions of the FR Y-15, under section H, titled
``Data Items Automatically Retrieved from Other Reports.''
Legal authorization and confidentiality: The Board has the
authority to require BHCs, SLHCs, FBOs and IHCs, to file the FR Y-15
pursuant to, respectively, section 5 of the BHC Act (12 U.S.C. 1844),
section 10(b) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)), and
section 5 of the BHC Act, in conjunction with section 8 of the
International Banking Act (12 U.S.C. 3106). The FR Y-15 reports are
mandatory. The data collected on the FR Y-15 are made public unless a
specific request for confidentiality is submitted by the reporting
entity, either on the FR Y-15 or on the form from which the data item
is obtained. Such information will be accorded confidential treatment
under exemption 4 of the Freedom of Information Act (FOIA) if the
submitter substantiates its assertion that disclosure would likely
cause substantial competitive harm. A number of the items in the FR Y-
15 are retrieved from the FR Y-9C, FFIEC 101, and FFIEC 009.
Confidential treatment also will extend to any automatically calculated
items on the FR Y-15 that have been derived from confidential data
items and that, if released, would reveal the underlying confidential
data. To the extent confidential data collected under the FR Y-15 will
be used for supervisory purposes, it may be exempt from disclosure
under Exemption 8 of FOIA (5 U.S.C. 552(b)(8)).
Current actions: The Board has temporarily revised the instructions
to the FR Y-15 to ensure that the FR Y-15 is not impacted by the
revised calculation of the supplementary leverage ratio pursuant to
this interim final rule. Specifically, the Board has deleted from the
FR Y-15 instructions a statement indicating that Schedule A, item 3(a),
``Other on-balance sheet assets'' will be automatically populated for
banking organizations that file the Regulatory Capital Reporting for
Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC
101; OMB No. 7100-0319) for the same reporting period from FFIEC 101,
Schedule A, item 2.1. Instead, all FR Y-15 respondents will be required
to report Schedule A, item 3(a) according to the instructions for that
item. The purpose of this temporary revision is to ensure that the
systemic risk indicators reported on the FR Y-15 are not affected by
the changes to the capital rule included in this interim final rule,
regardless of whether conforming revisions are subsequently made to the
FFIEC 101 report. This revision ensures that the size indicator
continues to capture all on-balance sheet assets, consistent with the
intent of the indicator.
The Board has determined that the revisions to the FR Y-15
described above must be instituted quickly and that public
participation in the approval process would defeat the purpose of the
collection of information, as delaying the revisions would result in
the collection of inaccurate information, and would interfere with the
Board's ability to perform its statutory duties.
The Board also invites comment to extend the FR Y-15 for three
years, with the revisions described above.
(3) Title of Information Collection: Recordkeeping and Disclosure
[[Page 20585]]
Requirements Associated with Regulation Q.
Agency form number: FR Q.
OMB control number: 7100-0313.
Frequency: Quarterly, annual.
Affected Public: Businesses or other for-profit.
Respondents: State member banks (SMBs), bank holding companies
(BHCs), U.S. intermediate holding companies (IHCs), savings and loan
holding companies (SLHCs), and global systemically important bank
holding companies (GSIBs).
Legal authorization and confidentiality: This information
collection is authorized by section 38(o) of the Federal Deposit
Insurance Act (12 U.S.C. 1831o(c)), section 908 of the International
Lending Supervision Act of 1983 (12 U.S.C. 3907(a)(1)), section 9(6) of
the Federal Reserve Act (12 U.S.C. 324), and section 5(c) of the Bank
Holding Company Act (12 U.S.C. 1844(c)). The obligation to respond to
this information collection is mandatory. If a respondent considers the
information to be trade secrets and/or privileged such information
could be withheld from the public under the authority of the Freedom of
Information Act (5 U.S.C. 552(b)(4)). Additionally, to the extent that
such information may be contained in an examination report such
information could also be withheld from the public (5 U.S.C. 552
(b)(8)). Estimated number of respondents: 1,431 (of which 19 are
advanced approaches institutions).
Estimated average hours per response:
Minimum Capital Ratios
Recordkeeping (Ongoing)--16.
Standardized Approach
Recordkeeping (Initial setup)--122.
Recordkeeping (Ongoing)--20.
Disclosure (Initial setup)--226.25.
Disclosure (Ongoing quarterly)--131.25.
Advanced Approach
Recordkeeping (Initial setup)--460.
Recordkeeping (Ongoing)--540.77.
Recordkeeping (Ongoing quarterly)--20.
Disclosure (Initial setup)--328.
Disclosure (Ongoing)--5.78.
Disclosure (Ongoing quarterly)--41.
Disclosure (Table 13 quarterly)--5.
Risk-based Capital Surcharge for GSIBs
Recordkeeping (Ongoing)--0.5.
Total estimated annual burden: 1,136 hours initial setup, 80,173
hours for ongoing.
Current actions: The Board has temporarily revised the FR Q
information collection to reflect a revision to the disclosure
requirements contained in the Board's Regulation Q. Generally, section
217.173 of the Board's Regulation Q requires each advanced approaches
Board-regulated institution and a Category III Board-regulated
institution that is required to publicly disclose its supplementary
leverage ratio pursuant to section 217.172(d) of Regulation Q to make
certain disclosures, which are listed in Table 13 of section 217.173.
Pursuant to this interim final rule, a Board-regulated institution that
is required to make such disclosures will be required exclude the
balance sheet carrying value of U.S. Treasury securities funds on
deposit at a Federal Reserve Bank from its disclosures under Table 13
of section 217.173.
The Board has determined that the revision to the FR Q described
above must be instituted quickly and that public participation in the
approval process would defeat the purpose of the collection of
information, as delaying the revisions would result in the collection
of inaccurate information, and would interfere with the Board's ability
to perform its statutory duties.
The Board also invites comment to extend the FR Y-Q for three
years, with the revision described above. This revision would be
effective for FR Q as of dates up to and including March 31, 2021, the
date after which the exclusions in this interim final rule will no
longer be effective.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \33\ requires an agency to
consider whether the rules it proposes will have a significant economic
impact on a substantial number of small entities.\34\ The RFA applies
only to rules for which an agency publishes a general notice of
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed
previously, consistent with section 553(b)(3)(B) of the APA, the Board
has determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the Board is not issuing a
notice of proposed rulemaking. Accordingly, the Board has concluded
that the RFA's requirements relating to initial and final regulatory
flexibility analysis do not apply.
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\33\ 5 U.S.C. 601 et seq.
\34\ Under regulations issued by the Small Business
Administration, a small entity includes a depository institution,
bank holding company, or savings and loan holding company with total
assets of $600 million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
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Nevertheless, the Board seeks comment on whether, and the extent to
which, the interim final rule would affect a significant number of
small entities.
E. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\35\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
IDIs, each Federal banking agency must consider, consistent with the
principle of safety and soundness and the public interest, any
administrative burdens that such regulations would place on depository
institutions, including small depository institutions, and customers of
depository institutions, as well as the benefits of such regulations.
In addition, section 302(b) of RCDRIA requires new regulations and
amendments to regulations that impose additional reporting,
disclosures, or other new requirements on IDIs generally to take effect
on the first day of a calendar quarter that begins on or after the date
on which the regulations are published in final form, with certain
exceptions, including for good cause.\36\ For the reasons described
above, the Board finds good cause exists under section 302 of RCDRIA to
publish this interim final rule with an immediate effective date.
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\35\ 12 U.S.C. 4802(a).
\36\ 12 U.S.C. 4802.
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As such, the final rule will be effective on immediately.
Nevertheless, the Board seeks comment on RCDRIA.
F. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act \37\ requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The Board has sought to present the
interim final rule in a simple and straightforward manner. The Board
invites comments on whether there are additional steps it could take to
make the rule easier to understand. For example:
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\37\ 12 U.S.C. 4809.
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Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the regulation clearly stated? If
not, how could the regulation be more clearly stated?
Does the regulation contain language or jargon that is not
clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation
[[Page 20586]]
easier to understand? If so, what changes to the format would make the
regulation easier to understand? What else could we do to make the
regulation easier to understand?
List of Subjects
12 CFR Part 217
Administrative practice and procedure, Banks, Banking, Federal
Reserve System, Holding companies, Reporting and recordkeeping
requirements, Securities.
Authority and Issuance
For the reasons stated in the preamble, the Board of Governors of
the Federal Reserve System amends 12 CFR chapter II as follows:
PART 217--CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND
LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q)
0
1. The authority citation for part 217 continues to read as follows:
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a,
1818, 1828, 1831n, 1831o, 1831p-1, 1831w, 1835, 1844(b), 1851, 3904,
3906-3909, 4808, 5365, 5368, 5371 and 5371 note.
Subpart G--Transition Provisions
0
2. Add Sec. 217.303 to read as follows:
Sec. 217.303 Temporary exclusions from total leverage exposure.
(a) In general. Subject to the limitations in paragraphs (b) and
(c) of this section and notwithstanding any other requirement in this
part, a Board-regulated institution that is a depository institution
holding company or a U.S. intermediate holding company, when
calculating on-balance sheet assets as of each day of a reporting
quarter for purposes of determining the Board-regulated institution's
total leverage exposure under Sec. 217.10(c)(4), must exclude the
balance sheet carrying value of the following items:
(1) U.S. Treasury securities; and
(2) Funds on deposit at a Federal Reserve Bank.
(b) Termination of exclusions. The exclusions required pursuant to
paragraph (a) of this section terminate after the calendar quarter
ending on March 31, 2021.
(c) Custodial banking organizations. A custodial banking
organization that is a depository institution holding company or a U.S.
intermediate holding company must reduce the amount in Sec.
217.10(c)(4)(ii)(J)(1) (to no less than zero) by any amount excluded
under paragraph (a)(2) of this section.
(d) Disclosure. Notwithstanding Table 13 to Sec. 217.173, a Board-
regulated institution that is a depository institution holding company
or a U.S intermediate holding company that is required to make the
disclosures pursuant to Sec. 217.173 must exclude the items excluded
pursuant to paragraph (a) of this section from Table 13 to Sec.
217.173.
By order of the Board of Governors of the Federal Reserve
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2020-07345 Filed 4-13-20; 8:45 am]
BILLING CODE 6210-01-P
