Temporary Exclusion of U.S. Treasury Securities and Deposits at Federal Reserve Banks From the Supplementary Leverage Ratio, 20578-20586 [2020-07345]

Download as PDF 20578 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: http:// www.federalreserve.gov. Follow the instructions for submitting comments at http://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. jbell on DSKJLSW7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 All public comments will be made available on the Board’s website at http://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 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 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. E:\FR\FM\14APR1.SGM 14APR1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations 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 VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 20579 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. E:\FR\FM\14APR1.SGM 14APR1 20580 Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations 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? jbell on DSKJLSW7X2PROD with RULES 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. VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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 PO 00000 FR 4569 (January 27, 2020). Frm 00006 Fmt 4700 Sfmt 4700 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 E:\FR\FM\14APR1.SGM 14APR1 Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations 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. jbell on DSKJLSW7X2PROD with RULES 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 VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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; PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 20581 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 E:\FR\FM\14APR1.SGM 14APR1 20582 Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations 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. jbell on DSKJLSW7X2PROD with RULES 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. VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 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). E:\FR\FM\14APR1.SGM 14APR1 Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES 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. VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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 PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 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. E:\FR\FM\14APR1.SGM 14APR1 20584 Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES 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). VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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). PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 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 E:\FR\FM\14APR1.SGM 14APR1 Federal Register / Vol. 85, No. 72 / Tuesday, April 14, 2020 / Rules and Regulations 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: jbell on DSKJLSW7X2PROD with RULES 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. VerDate Sep<11>2014 16:06 Apr 13, 2020 Jkt 250001 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 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 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 E:\FR\FM\14APR1.SGM 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]]

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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.

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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: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://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 http://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.
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    \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.
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    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\
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    \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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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\
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    \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\
---------------------------------------------------------------------------

    \12\ 5 U.S.C. 553(b)(3)(B); 553(d)(3).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \13\ 5 U.S.C. 553(d).
    \14\ 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \15\ 5 U.S.C. 801 et seq.
    \16\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \17\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \18\ 5 U.S.C. 808.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \21\ A top-tier HC may submit a separate FR Y-9LP on behalf of 
each of its lower-tier HCs.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \30\ Public Law 111-203 (2010); 12 U.S.C. 5365.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    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:
---------------------------------------------------------------------------

    \37\ 12 U.S.C. 4809.
---------------------------------------------------------------------------

     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