Regulatory Capital Rule: Temporary Exclusion of U.S. Treasury Securities and Deposits at Federal Reserve Banks From the Supplementary Leverage Ratio for Depository Institutions, 32980-32990 [2020-10962]

Download as PDF jbell on DSKJLSW7X2PROD with RULES 32980 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations not deviations. Awards to foreign entities are not subject to this section. (2) A single-case deviation is a deviation which applies to one financial assistance transaction and one applicant, recipient, or subrecipient only. (3) A class deviation is a deviation which applies to more than one financial assistance transaction, applicant, recipient, or subrecipient. (b) Conditions for approval. The DOE/ NNSA officials specified in paragraph (c) of this section may authorize a deviation only upon a written determination that the deviation is— (1) Necessary to achieve program objectives; (2) Necessary to conserve public funds; (3) Otherwise essential to the public interest; or (4) Necessary to achieve equity. (c) Approval procedures. (1) A deviation request must be in writing and must be submitted to the responsible DOE/NNSA Contracting Officer. An applicant for a subaward or a subrecipient shall submit any such request through the recipient. (2) Except as provided in paragraph (c)(3) of this section— (i) A single-case deviation may be authorized by the responsible HCA. (ii) A class deviation may be authorized by the Director, Office of Acquisition Management, for DOE actions, and the Deputy Associate Administrator for the Office of Acquisition and Project Management for NNSA, for NNSA actions, or designee. (3) Whenever the approval of OMB, other Federal agency, or other DOE/ NNSA office is required to authorize a deviation, the proposed deviation must be submitted to the Director, Office of Acquisition Management, for DOE actions, and the Deputy Associate Administrator for the Office of Acquisition and Project Management for NNSA, for NNSA actions, or designee for concurrence prior to submission to the authorizing official. (d) Notice. Whenever a request for a class deviation is approved, DOE/NNSA will identify this class deviation (as applicable) in the Notice of Funding Opportunity(s) that may be affected. (e) Subawards. A recipient may use a deviation in a subaward only with the prior written approval of a DOE/NNSA Contracting Officer. [FR Doc. 2020–10577 Filed 5–29–20; 8:45 am] BILLING CODE 6450–01–P VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 DEPARTMENT OF TREASURY Office of the Comptroller of the Currency 12 CFR Parts 3 and 6 [Docket No. OCC–2020–0013] RIN 1557–AE85 FEDERAL RESERVE SYSTEM 12 CFR Parts 208 and 217 [Regulations H and Q; Docket No. R–1718] RIN 7100–AF91 FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 324 RIN 3064–AF44 Regulatory Capital Rule: Temporary Exclusion of U.S. Treasury Securities and Deposits at Federal Reserve Banks From the Supplementary Leverage Ratio for Depository Institutions Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC). ACTION: Interim final rule and request for comment. AGENCY: In light of recent disruptions in economic conditions caused by the coronavirus disease 2019 and strains in U.S. financial markets, the OCC, the Board, and the FDIC (together, the agencies) are issuing an interim final rule that temporarily revises the supplementary leverage ratio calculation for depository institutions. Under the interim final rule, any depository institution subsidiary of a U.S. global systemically important bank holding company or any depository institution subject to Category II or Category III capital standards may elect to exclude temporarily U.S. Treasury securities and deposits at Federal Reserve Banks from the supplementary leverage ratio denominator. Additionally, under this interim final rule, any depository institution making this election must request approval from its primary Federal banking regulator prior to making certain capital distributions so long as the exclusion is in effect. The interim final rule is effective as of the date of Federal Register publication and will remain in effect through March 31, 2021. The agencies are adopting this interim final rule to allow depository institutions that SUMMARY: PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 elect to opt into this treatment additional flexibility to act as financial intermediaries during this period of financial disruption. The tier 1 leverage ratio is not affected by this interim final rule. DATES: Effective date: This rule is effective on June 1, 2020. Comment date: Comments on the interim final rule must be received no later than July 16, 2020. ADDRESSES: OCC: Commenters are encouraged to submit comments through the Federal eRulemaking Portal or email, if possible. Please use the title ‘‘Regulatory Capital Rule: Temporary Exclusion of U.S. Treasury Securities and Deposits at Federal Reserve Banks from the Supplementary Leverage Ratio’’ to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: • Federal eRulemaking Portal— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2020–0013’’ in the Search Box and click ‘‘Search.’’ Click on ‘‘Comment Now’’ to submit public comments. For help with submitting effective comments please click on ‘‘View Commenter’s Checklist.’’ Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments. Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2020–0013’’ in the Search Box and click ‘‘Search.’’ Public comments can be submitted via the ‘‘Comment’’ box below the displayed document information or by clicking on the document title and then clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with submitting effective comments please click on ‘‘Commenter’s Checklist.’’ For assistance with the Regulations.gov Beta site, please call (877) 378–5457 (toll free) or (703) 454–9859 Monday–Friday, 9 a.m.–5 p.m. ET or email regulations@ erulemakinghelpdesk.com. • Email: regs.comments@ occ.treas.gov. • Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the Comptroller of the Currency, 400 7th Street SW, suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street, SW, suite 3E–218, Washington, DC 20219. E:\FR\FM\01JNR1.SGM 01JNR1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations • Fax: (571) 465–4326. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2020–0013’’ in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or personal information provided such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. You may review comments and other related materials that pertain to this rulemaking action by any of the following methods: • Viewing Comments Electronically— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2020–0013’’ in the Search box and click ‘‘Search.’’ Click on ‘‘Open Docket Folder’’ on the right side of the screen. Comments and supporting materials can be viewed and filtered by clicking on ‘‘View all documents and comments in this docket’’ and then using the filtering tools on the left side of the screen. Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov. The docket may be viewed after the close of the comment period in the same manner as during the comment period. Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2020–0013’’ in the Search Box and click ‘‘Search.’’ Click on the ‘‘Comments’’ tab. Comments can be viewed and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen. Supporting materials can be viewed by clicking on the ‘‘Documents’’ tab and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen.’’ For assistance with the Regulations.gov Beta site, please call (877) 378–5457 (toll free) or (703) 454– 9859 Monday–Friday, 9 a.m.–5 p.m. ET or email regulations@ erulemakinghelpdesk.com. The docket may be viewed after the close of the comment period in the same manner as during the comment period. VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 Board: You may submit comments, identified by Docket No. R–1718; RIN 7100–AF91, by any of the following methods: • Agency website: http:// www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/apps/ foia/proposedregs.aspx. • 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. 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. 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. FDIC: You may submit comments, identified by RIN 3064–AF44, by any of the following methods: • Agency website: https:// www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency website. • Email: Comments@FDIC.gov. Include ‘‘RIN 3064–AF44’’ on the subject line of the message. • Mail: Robert E. Feldman, Executive Secretary, Attention: Comments/RIN 3064–AF44, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. • Hand Delivery/Courier: Comments may be hand delivered to the guard station at the rear of the 550 17th Street building (located on F Street) on business days between 7 a.m. and 5 p.m. All comments received must include the agency name (FDIC) and RIN 3064– AF44 and will be posted without change to https://www.fdic.gov/regulations/ laws/federal, including any personal information provided. FOR FURTHER INFORMATION CONTACT: OCC: Margot Schwadron, Director, or Venus Fan, Risk Expert, Capital and Regulatory Policy, (202) 649–6370; or Carl Kaminski, Special Counsel, or Chris Rafferty, Senior Attorney, Chief PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 32981 Counsel’s Office, (202) 649–5490, for persons who are deaf or hearing impaired, TTY, (202) 649–5597, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. Board: 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; Jonah Kind, Senior Attorney, (202) 452–2045; 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. FDIC: Bobby R. Bean, Associate Director, bbean@fdic.gov; Benedetto Bosco, Chief, Capital Policy Section, bbosco@fdic.gov; Noah Cuttler, Senior Policy Analyst, ncuttler@fdic.gov; regulatorycapital@fdic.gov; Capital Markets Branch, Division of Risk Management Supervision, (202) 898– 6888; or Michael Phillips, Counsel, mphillips@fdic.gov; Catherine Wood, Counsel, cawood@fdic.gov; Francis Kuo, Counsel, fkuo@fdic.gov; Supervision and Legislation Branch, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. For the hearing impaired only, Telecommunication Device for the Deaf (TDD), (800) 925–4618. SUPPLEMENTARY INFORMATION: Table of Contents I. Background II. The Interim Final Rule III. Impact Assessment IV. Technical Amendments V. 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 G. Unfunded Mandates Act I. Background The spread of the coronavirus disease 2019 (COVID–19) has significantly and adversely affected global financial markets, including depository institutions’ role as financial intermediaries. In particular, E:\FR\FM\01JNR1.SGM 01JNR1 32982 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES disruptions in financial markets, and the resulting flight to liquid assets by market participants, have caused depository institutions’ balance sheets to expand to accommodate inflows of deposits. This balance sheet expansion has contributed to depository institutions making substantial deposits in their accounts at Federal Reserve Banks (deposits at Federal Reserve Banks). In addition, customer draws on credit lines and depository institutions’ holdings of significant amounts of U.S. Treasury securities (Treasuries) have contributed to balance sheet expansion. These trends are expected to continue temporarily while depository institutions and their customers respond to disruptions in the financial markets. For a depository institution subsidiary of a U.S. global systemically important bank holding company (GSIB), or a depository institution subject to the Category II or Category III capital standards, the agencies’ regulatory capital rule (capital rule) requires a minimum supplementary leverage ratio of 3 percent, measured as the ratio of a depository institution’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. GSIB depository institution subsidiaries also are subject to enhanced supplementary leverage ratio (eSLR) standards established by the agencies in 2014.2 Under the eSLR standards, GSIB depository institution subsidiaries must maintain a 6-percent supplementary leverage ratio to be considered ‘‘well capitalized’’ under the prompt 1 See 84 FR 59230 (Nov. 1, 2019). Banking organizations 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. Banking organizations 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. 2 See 79 FR 24528 (May 1, 2014). The eSLR standards, as adopted in 2014, applied to U.S. toptier bank holding companies with consolidated assets over $700 billion or more than $10 trillion in assets under custody, and depository institution subsidiaries of holding companies that meet those thresholds. The Board subsequently revised its capital rule so that the applicability of the eSLR standards is to bank holding companies identified as U.S. GSIBs and their depository institution subsidiaries. See 80 FR 49082 (August 14, 2015). The banking organizations currently subject to the eSLR standards are the same under either applicability standard. VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 corrective action (PCA) framework of each agency. In contrast to the risk-based capital requirements in the capital rule, a leverage ratio does not differentiate the amount of capital required by the type of exposure. Rather, a leverage ratio places an upper bound on depository institution leverage. A leverage ratio protects against underestimating risk and serves to complement the risk-based capital requirements. Under the supplementary leverage ratio, depository institutions include all onbalance sheet assets, including Treasuries and deposits at Federal Reserve Banks, in their total leverage exposure calculation.3 II. The Interim Final Rule The ability of depository institutions to hold certain assets, most notably deposits at a Federal Reserve Bank and Treasuries, is essential to market functioning, financial intermediation, and funding market activity, particularly in periods of financial uncertainty. In response to volatility and market strains, the Federal Reserve has taken a number of 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 agencies anticipate that the Federal Reserve’s balance sheet may continue to expand in the near term, as customer deposits continue to expand, and recently announced facilities to support the flow of credit to households and businesses begin or continue operations. In addition, market participants have liquidated a high volume of assets, and customers have drawn down credit lines and deposited the cash proceeds with depository institutions in recent weeks, further increasing the size of depository institutions’ balance sheets. Absent any adjustments to the supplementary leverage ratio, the resulting increase in the size of depository institutions’ balance sheets may cause a sudden and significant increase in the regulatory capital needed to meet a depository institution’s leverage ratio requirement.4 3 The agencies recently issued a final rule, effective April 1, 2020, which implements section 402 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), 12 U.S.C. 1831o note, 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). 85 FR 4569 (January 27, 2020). 4 The Board recently issued an interim final rule to revise, on a temporary basis for bank holding PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 This is particularly the case for many of the depository institutions subject to the supplementary leverage ratio, which are significant participants in financial intermediation services, including as clearing banks for dealers in the open market operations of the Federal Open Market Committee and as major custodians of securities. In order to facilitate depository institutions’ 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 to continue to accept exceptionally high levels of customer deposits, the agencies are issuing this interim final rule to provide depository institutions subject to the supplementary leverage ratio (qualifying depository institutions) the ability to exclude temporarily Treasuries and deposits at Federal Reserve Banks from total leverage exposure through March 31, 2021. For example, depository institutions would be able to exclude temporarily onbalance sheet Treasuries that they hold, including Treasuries that they have borrowed and re-pledged in a repo-style transaction, provided such Treasuries are included in the depository institution’s total leverage exposure prior to the effect of the exclusion.5 Under the interim final rule, a depository institution that opts into this treatment (electing depository institution) would be required to obtain prior approval of distributions from its primary Federal banking regulator. An electing depository institution must notify its primary Federal banking regulator of its election within 30 days after the interim final rule is effective.6 The primary Federal banking regulator will consider a notice received from a qualifying depository institution more than 30 days after the effective date of the interim final rule on a case-by-case basis. The election will not affect the electing depository institution’s ability to pay distributions already declared or to declare distributions for payment in the second quarter of 2020. The prior 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 Treasuries and deposits at Federal Reserve Banks. The exclusion will remain in effect until March 31, 2021. 85 FR 20578 (April 14, 2020). 5 This scope is consistent with the Board’s recent interim final rule to revise the supplementary leverage ratio. See supra note 4. 6 An FDIC supervised institution must provide this notice in writing to the appropriate FDIC regional director of the FDIC Division of Risk Management Supervision. E:\FR\FM\01JNR1.SGM 01JNR1 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES approval requirement applies to distributions to be paid beginning in the third quarter of 2020. The interim final rule will terminate after March 31, 2021. For purposes of reporting the supplementary leverage ratio as of June 30, 2020, an electing depository institution may 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. Because the supplementary leverage ratio is calculated as an average over the quarter, this will have the effect of maximizing the effect of the exclusion starting in the second quarter of 2020. The agencies are not making similar adjustments to risk-based capital ratios because Treasuries and deposits at Federal Reserve Banks are risk-weighted at zero percent. Under the interim final rule, beginning in the third quarter of 2020, an electing depository institution will be required to obtain approval from its primary Federal banking regulator before making a distribution 7 or creating an obligation to make such a distribution so long as the temporary exclusion is in effect. The primary Federal banking regulator will endeavor to respond within 14 days to the request with an approval, disapproval, or request for additional information. This prior-approval requirement will help support the objective of the interim final rule to strengthen the ability of electing depository institutions to continue taking deposits, lending, and conducting other financial intermediation activities during this period of stress. When evaluating any such request, the primary Federal banking regulator will consider all relevant factors, including whether any distribution would be contrary to safety and soundness and limitations on distributions in the existing rules applicable to the electing depository institution.8 Factors that the primary Federal banking regulator will take into account include the depository 7 See 12 CFR 3.2 (defining ‘‘distribution’’) (OCC); 12 CFR 217.2 (defining ‘‘distribution’’) (Board); 12 CFR 324.2 (defining ‘‘distribution’’) (FDIC). 8 Additional limitations on distributions may apply under 12 CFR part 3, subparts H and I; 12 CFR 5.46, 12 CFR part 5, subpart E; 12 CFR part 6; 12 CFR part 208, subparts A and D; 12 CFR part 303, subparts K and M. The restrictions set forth in this interim final rule are in addition to, and therefore do not supersede, any existing statutory or regulatory limitations on making capital distributions. For purposes of the FDIC’s PCA rules, regarding capital distribution restrictions for undercapitalized FDIC-supervised institutions, see 12 CFR 324.405. VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 institution’s current earnings and forecasts, the nature, purpose, and extent of the request, and the particular circumstances giving rise to the request.9 For example, the primary Federal banking regulator may consider the expected future capital needs of the depository institution and its ability to meet capital requirements after the temporary relief provided under this interim final rule expires. The requirement that a depository institution request approval for distributions is not intended to prohibit electing depository institutions from paying dividends in all cases. Rather, the primary Federal banking regulator will evaluate each request to ensure that the electing depository institution will be able to continue supporting the economy by lending and accepting deposits consistent with the goal of this interim final rule. The interim final rule revises the measure of total leverage exposure on a temporary basis for electing depository institutions for the limited purposes of the agencies’ capital rule. Depository institutions subject to supplementary leverage ratio requirements report their supplementary leverage ratios on the Consolidated Reports of Condition and Income (Call Reports), Schedule RC–R and Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101), Schedule A.10 The agencies expect in the near future to make all necessary revisions to the Call Reports and the FFIEC 101, Schedule A to implement the interim final rule’s revisions to the supplementary leverage ratio for electing depository institutions and to require such institutions to disclose the election publicly.11 In addition, the interim final rule provides for the necessary modifications of the 9 Holding companies use dividends from their subsidiaries for various purposes. For example, dividends to the holding company can support the efficient internal allocation of capital within a holding company, allowing excess capital from one subsidiary, such as the depository institution, to be redeployed to other subsidiaries. As such, an effective dividend strategy can both ensure the safety and soundness of the depository institution and promote the safety and soundness of the entire banking organization. 10 Depository institutions that are required to submit the OCC Reporting Form DFAST–14A on April 6, 2021, or the FDIC DFAST–14A, have the option to include these changes in their companyrun stress test results. 11 The instructions for Board’s FR Y–9C, Schedule HC–R, Line Item 45 (Advanced approaches holding companies only: Supplementary leverage ratio) state that respondents must report the supplementary leverage ratio from FFIEC 101 Schedule A, Table 2, Item 2.22. Therefore, revisions to the FFIEC 101 regarding how to report the supplementary leverage ratio would flow through to the FR Y–9C. The Board plans to amend the instructions for FR Y–9C as necessary. PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 32983 disclosure requirements of section 173 of the capital rule to reflect the optional temporary exclusion provided by the interim final rule. The agencies seek comment on all aspects of this interim final rule. Question 1: Discuss the advantages and disadvantages of removing temporarily Treasuries and deposits at Federal Reserve Banks from total leverage exposure for depository institutions. How does the interim final rule support the objectives of facilitating financial intermediation by depository institutions? How does the interim final rule affect the concurrent objective of safety and soundness? How would the end date of March 31, 2021, for the exclusion under the interim final rule be consistent with the objectives of the rule, or what earlier or later end date should be used instead? Question 2: What additional assets or exposure types should the agencies consider to exclude temporarily from total leverage exposure in order to achieve the interim final rule’s objectives? For example, what consideration should the agencies give to excluding deposits at certain foreign central banks, foreign sovereign debt instruments, or exposures guaranteed by the U.S. Federal Government and why? Which specific repo-style transactions that would support depository institutions’ role serving as financial intermediaries should the agencies exclude, if any, and why? III. Impact Assessment The supplementary leverage ratio requirement generally has not prevented depository institutions from accommodating customer deposit inflows or serving as financial intermediaries. However, as a result of the spread of COVID–19, stress has materialized in numerous financial markets. Disruptions in financial markets have resulted in expansion of depository institutions’ balance sheets to accommodate inflows of deposits. In particular, using data from the fourth quarter of 2019, the agencies expect that the interim final rule would temporarily decrease binding tier 1 capital requirements by approximately $55 billion for depository institutions if all depository institutions subject to the supplementary leverage ratio elect to opt in.12 In light of the exclusions under 12 This analysis takes into account the exclusion of qualifying central bank deposits for custodial banking organizations as provided under the capital rule. As of April 1, 2020, custodial banking organizations may exclude deposits with qualifying foreign central banks, in addition to the exclusions of deposits at Federal Reserve Banks provided E:\FR\FM\01JNR1.SGM Continued 01JNR1 32984 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES this interim final rule, this temporary reduction in capital requirements is expected to increase leverage exposure capacity at depository institutions by approximately $1.2 trillion. In particular, the agencies expect that the increase in leverage exposure capacity will strengthen the depository institutions’ ability to continue to accept customer deposits, and therefore ensure that depository institutions remain able to fulfill this important function. Depository institutions that opt into the temporary exclusion of Treasuries and deposits at Federal Reserve Banks from the denominator of the supplementary leverage ratio will likely incur some costs associated with making changes to internal systems or processes for managing supplementary leverage ratio compliance. However, these costs are likely to be very small. Aside from increases in balance sheets caused by increases in customer deposits, the balance sheets of depository institutions also have increased as households and businesses draw down credit lines. If depository institutions become constrained by supplementary leverage ratio requirements, this could adversely affect their ability to intermediate in financial markets and hamper their ability to provide credit to households and businesses. Therefore, the temporary increase in leverage exposure capacity could have countercyclical benefits as it supports financial market liquidity and increases depository institutions’ lending capacities in a time of economic stress. Although a temporary increase in leverage exposure capacity could lead to an increase in overall leverage in the banking system, the temporary 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. The agencies will closely monitor the balance sheets of electing depository institutions in the coming months while the exclusion is in effect with a particular view toward any resulting increase in risks in conjunction with this interim final rule. under this interim final rule. (See supra note 3.) In addition, the analysis in this interim final rule uses balances due from banks in foreign countries and foreign central banks, as reported under line item 3 of Schedule RC–A of the Call Report. Line item 3 of Schedule RC–A may slightly overstate amounts eligible for exclusion by custodial banking organizations because it includes balances due from banks in foreign countries and foreign central banks that are not eligible for exclusion under this interim final rule. VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 IV. Technical Amendments Finally, the agencies are making technical corrections and clarifications to the Prompt Corrective Action regulations. In their respective Prompt Corrective Action regulations, the agencies are correcting an unintentional omission of ‘‘Category III’’ to clarify that depository institutions subject to Category III standards must meet their minimum supplementary leverage ratio requirement of 3 percent in order to be considered ‘‘adequately capitalized.’’ 13 When the minimum supplementary leverage ratio requirement was initially added to the capital rule in 2013, the term ‘‘advanced approaches’’ banking organizations referred to all banking organizations that were subject to the supplementary leverage ratio.14 However, the tailoring rule that became effective on December 31, 2019, redefined ‘‘advanced approaches.’’ Under that rule, advanced approaches banking organizations now include a smaller group of banking organizations (i.e., banking organizations subject to Category I and II standards), while certain banking organizations are no longer defined as advanced approaches but remain subject to the supplementary leverage ratio requirements (i.e., banking organizations subject to Category III standards). The agencies did not intend to change the applicability of the minimum supplementary leverage ratio requirement in their respective Prompt Corrective Action regulations. Rather, the Prompt Corrective Action requirement should continue to apply to all banking organizations that are required to calculate the supplementary leverage ratio. Therefore, consistent with the capital rule, the agencies are now clarifying that the supplementary leverage ratio provisions in their respective Prompt Corrective Action regulations apply to all banking organizations subject to Category III standards, in addition to banking organizations subject to Category I and II standards. V. Administrative Law Matters A. Administrative Procedure Act The agencies are issuing the interim final rule and its accompanying technical edits without prior notice and the opportunity for public comment and the delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA).15 Pursuant to section 553(b)(B) of the APA, general 13 12 CFR 6.4(b) (OCC); 12 CFR 208.43(b) (Board); 12 CFR 324.403(b) (FDIC). 14 78 FR 62018 (Oct. 11, 2013). 15 5 U.S.C. 553. PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 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.’’ 16 The agencies believe 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 disruptions in financial markets have caused depository institutions to receive inflows of deposits—contributing to the increase of deposits at Federal Reserve Banks—and to hold significant amounts of Treasuries. Notably, these deposits at Federal Reserve Banks and holdings of Treasuries are essential to the normal functioning of the financial markets, especially in times of stress. If depository institutions cannot sustain the rapid increase in deposits at Federal Reserve Banks and holdings of Treasuries, the financial markets would experience a marked decline in financial intermediation and a further increase in general market volatility. Because the interim final rule will mitigate these potential negative effects, the agencies find that there is good cause consistent with the public interest to issue the rule without advance notice and comment.17 This final rule makes additional technical edits and corrections to more clearly articulate the scope of the supplementary leverage ratio requirements. Because the additional technical edits and corrections are not substantive, the agencies find there is good cause to issue the rule without advance notice and comment. 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.18 Because the interim final rule will provide temporary capital relief, the interim final rule is exempt from the APA’s delayed effective date requirement.19 Additionally, the agencies find good cause to publish the technical edits and corrections, which clarify the scope of the supplementary 16 5 U.S.C. 553(b)(B). U.S.C. 553(b)(B); 553(d)(3). 18 5 U.S.C. 553(d). 19 5 U.S.C. 553(d)(1). 17 5 E:\FR\FM\01JNR1.SGM 01JNR1 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES leverage ratio for purposes of the Prompt Corrective Action regulations, with an immediate effective date for the same reasons set forth above under the discussion of section 553(b)(B) of the APA. While the agencies believe that there is good cause to issue this interim final rule without advance notice and comment and with an immediate effective date, the agencies are interested in the views of the public and request 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.20 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.21 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.22 For the same reasons set forth above, the agencies are 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.23 In light of current market uncertainty, the agencies believe that delaying the effective date of the rule would be contrary to the public interest. As required by the Congressional Review Act, the agencies will submit 20 5 U.S.C. 801 et seq. U.S.C. 801(a)(3). 22 5 U.S.C. 804(2). 23 5 U.S.C. 808. 21 5 VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 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 interim final rule affects the agencies’ current information collections for the Call Reports (OCC OMB No. 1557–0081; Board OMB No. 7100–0036; and FDIC OMB No. 3064– 0052) and the Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101; OCC OMB No. 1557–0239; Board OMB No. 7100–0319; and FDIC OMB No. 3064–0159). The revisions to the Call Reports and the FFIEC 101 will be addressed in a separate Federal Register notice. The interim final rule also introduces a new notice opt-in requirement and a requirement for prior approval for distributions, which would affect the agencies’ capital rule information collections. The agencies believe that these new requirements will amount to 12 burden hours per respondent (two responses per respondent at six hours per response). OCC: Title of Information Collection: RiskBased Capital Standards: Advanced Capital Adequacy Framework. OMB Control No.: 1557–0318. Respondents for Interim Final Rule: 21. Responses per Respondent: 2. Burden per Response: 6 hours. Burden for Interim Final Rule: 252 hours. Total Burden for Collection: 66,333 hours. FDIC: Title of Information Collection: Regulatory Capital Rules. OMB Control No.: 3064–0153. Respondents for Interim Final Rule: 7. Responses per Respondent: 2. Burden per Response: 6 hours. Burden for Interim Final Rule: 84 hours. Total Burden for Collection: 128,140 burden hours. The agencies request comment on: a. Whether the collections of information are necessary for the proper performance of the agencies’ functions, including whether the information has practical utility; b. The accuracy of the agencies’ estimates of the burden of the information collections, including the validity of the methodology and assumptions used; PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 32985 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. The Board has temporarily revised the Financial Statements for Holding Companies (FR Y–9C; OMB No. 7100– 0128) and the Recordkeeping and Disclosure Requirements Associated with Regulation Q (FR Q; OMB No. 7100–0313) information collections to accurately reflect certain aspects of this and other interim final rules. 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 the FR Q information collection for three years, with the revisions discussed below. The Board is not inviting comment on the FR Y–9 information collection for the reasons discussed below. The Board invites public comment on the FR Q information collection, which is being reviewed under authority delegated by the OMB under the PRA. Comments must be submitted on or before July 31, 2020. Comments are invited on the following: a. Whether the collections of information are 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:\FR\FM\01JNR1.SGM 01JNR1 32986 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations 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 collections. Final Approval Under OMB Delegated Authority of the Temporary Revision of the Following Information Collection 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: March 31, 2020 Frequency: Quarterly, semiannually, and annually. Respondents: Bank holding companies, savings and loan holding companies,24 securities holding companies, and U.S. intermediate holding companies (collectively, HCs). Estimated number of respondents: FR Y–9C (non-advanced approaches CBLR HCs with less than $5 billion in total assets): 7; FR Y–9C (non-advanced approaches CBLR HCs with $5 billion or more in total assets): 35; FR Y–9C (nonadvanced approaches, non CBLR, HCs with less than $5 billion in total assets): 84; FR Y–9C (non-advanced approaches, non CBLR HCs, with $5 billion or more in total assets): 154; 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 jbell on DSKJLSW7X2PROD with RULES FR Y–9C (non-advanced approaches CBLR HCs with less than $5 billion in total assets): 29.14 hours; FR Y–9C (nonadvanced approaches CBLR HCs with $5 billion or more in total assets): 35.11; FR Y–9C (non-advanced approaches, non CBLR HCs, with less than $5 billion in total assets): 40.98; FR Y–9C (nonadvanced approaches, non CBLR, HCs with $5 billion or more in total assets): 46.95 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. 24 An SLHC must file one or more of the FR Y– 9 series of reports unless it is: (1) A grandfathered unitary SLHC with primarily commercial assets and thrifts that make up less than 5 percent of its consolidated assets; or (2) a SLHC that primarily holds insurance-related assets and does not otherwise submit financial reports with the SEC pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 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 CBLR HCs with less than $5 billion in total assets): 8,276 hours; FR Y–9C (nonadvanced approaches CBLR HCs with $5 billion or more in total assets): 4,915; FR Y–9C (non-advanced approaches non CBLR HCs with less than $5 billion in total assets): 13,769; FR Y–9C (nonadvanced approaches non CBLR HCs with $5 billion or more in total assets): 28,921 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 (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.25 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.26 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.27 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 25 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). 26 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. 27 A top-tier HC may submit a separate FR Y–9LP on behalf of each of its lower-tier HCs. PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 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 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 (‘‘DoddFrank 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. E:\FR\FM\01JNR1.SGM 01JNR1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations 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: On April 1, 2020, the Board announced that it had temporarily revised the instructions to the FR Y–9C to accurately reflect the calculation of the supplementary leverage ratio pursuant to the Board’s interim final rule (the ‘‘holding company SLR IFR’’) that revised, 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 Treasuries and deposits at Federal Reserve Banks.28 This temporary revision to the FR Y–9C was necessary because holding companies were previously instructed to report their supplementary leverage ratio as reported in the FFIEC 101; because the FFIEC 101 was not revised to account for the holding company SLR IFR, retaining these instructions would have resulted in inaccurate reporting by holding companies on the FR Y–9C. The agencies now intend to revise the FFIEC 101 to account for this interim final rule and the holding company SLR IFR. Following such revisions, holding companies would be able to report their 28 85 FR 20578 (April 14, 2020). VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 supplementary leverage ratio on the FR Y–9C using the data reported on the FFIEC 101, as they did previously. Therefore, the temporary revisions to the FR Y–9C to account for the holding company SLR IFR, announced by the Board on April 1, 2020, are no longer necessary, and the Board has retracted these revisions. The Board has determined that this revision to the FR Y–9C 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. Because these revisions result completely revert the temporary revisions made by the Board to the FR Y–9C in connection with the holding company SLR IFR, the resulting instructions regarding the supplementary leverage ratio are identical to those adopted following notice and comment. Therefore, the Board does not intend to request further comment in order to retain these instructions. Final Approval Under OMB Delegated Authority of the Temporary Revision of, and Solicitation of Comment To Extend for Three Years, With Revision, of the Following Information Collections Title of Information Collection: Recordkeeping and Disclosure 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 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 32987 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. Reporting (Twice)—6. Total estimated annual burden: 1,136 hours initial setup, 80,245 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, § 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 § 217.172(d) of Regulation Q to make certain disclosures, which are listed in Table 13 of § 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 and funds on deposit at a Federal Reserve Bank from its disclosures under Table 13 of § 217.173. The interim final rule also introduces a new notice opt-in requirement and a requirement for prior approval for distributions, which would affect the agencies’ capital rule information collections. The agencies believe that these new requirements will amount to 12 burden hours per respondent (two responses per respondent at six hours per response). Additionally, the Board has temporarily revised the FR Q information collection to include the notification that an electing depository E:\FR\FM\01JNR1.SGM 01JNR1 32988 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations institution must provide to its primary Federal banking regulator, as well as the request for approval that an electing depository institution must submit to its primary Federal banking regulator prior to making certain capital distributions. The Board has determined that these revisions 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 on a proposal to extend the FR Y–Q for three years, with the revision described above. This revision would be effective for FR Q through 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) 29 requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities.30 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)(B) of the APA, the agencies have determined for good cause that general notice and opportunity for public comment is unnecessary, and therefore the agencies are not issuing a notice of proposed rulemaking. Accordingly, the agencies have concluded that the RFA’s requirements relating to initial and final regulatory flexibility analysis do not apply. Nevertheless, the agencies seek 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),31 in determining the effective date and administrative compliance requirements for new regulations that jbell on DSKJLSW7X2PROD with RULES 29 5 U.S.C. 601 et seq. 30 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 average annual receipts of $41.5 million or less. See 13 CFR 121.201. 31 12 U.S.C. 4802(a). VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 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.32 For the reasons described above, the agencies find 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 agencies seek comment on RCDRIA. F. Use of Plain Language Section 722 of the Gramm-LeachBliley Act 33 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies have sought to present the interim final rule in a simple and straightforward manner. The agencies invite 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 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? G. Unfunded Mandates Reform Act of 1995 As a general matter, the Unfunded Mandates Reform Act of 1995 (UMRA), 32 12 33 12 PO 00000 Fmt 4700 List of Subjects 12 CFR Part 3 Administrative practice and procedure, Capital, Federal savings associations, National banks, Risk. 12 CFR Part 6 Federal savings associations, National banks, Prompt corrective action. 12 CFR Part 208 Accounting, Agriculture, Banks, banking, Confidential business information, Consumer protection, Crime, Currency, Federal Reserve System, Flood insurance, Insurance, Investments, Mortgages, Reporting and recordkeeping requirements, Securities. 12 CFR Part 217 Administrative practice and procedure, Banks, banking, Federal Reserve System, Holding companies, Reporting and recordkeeping requirements, Securities. 12 CFR Part 324 Administrative practice and procedure, Banks, banking, Reporting and recordkeeping requirements, Savings associations, State non-member banks. Authority and Issuance For the reasons stated in the joint preamble, the Office of the Comptroller of the Currency amends part 3 of chapter I of title 12, Code of Federal Regulations as follows: PART 3—CAPITAL ADEQUACY STANDARDS 1. The authority citation for part 3 continues to read as follows: ■ Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818, 1828(n), 1828 note, 1831n note, 1835, 3907, 3909, 5412(b)(2)(B), and Pub. L. 116–136, 134 Stat. 281. 2. Section 3.304 is added to read as follows: ■ U.S.C. 4802. U.S.C. 4809. Frm 00012 2 U.S.C. 1531 et seq., requires the preparation of a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. However, the UMRA does not apply to final rules for which a general notice of proposed rulemaking was not published. See 2 U.S.C. 1532(a). Therefore, because the OCC has found good cause to dispense with notice and comment for this interim final rule, the OCC has not prepared an economic analysis of the rule under the UMRA. Sfmt 4700 E:\FR\FM\01JNR1.SGM 01JNR1 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES § 3.304 Temporary exclusions from total leverage exposure. PART 6—PROMPT CORRECTIVE ACTION (a) In general. Subject to paragraphs (b) through (g) of this section, and notwithstanding any other requirement in this part, a national bank or Federal savings association, when calculating on-balance sheet assets as of each day of a reporting quarter for purposes of determining the national bank’s or Federal savings association’s total leverage exposure under § 3.10(c)(4), may 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) Opt-in period. Before applying the relief provided in paragraph (a) of this section, a national bank or Federal savings association must first notify the OCC before July 1, 2020. (c) Calculation of relief. When calculating on-balance sheet assets as of each day of a reporting quarter, the relief provided in paragraph (a) of this section applies from the beginning of the reporting quarter in which the national bank or Federal savings association filed an opt-in notice through the termination date specified in paragraph (d) of this section. (d) Termination of exclusions. This section shall cease to be effective after the reporting period that ends March 31, 2021. (e) Custody bank. A custody bank must reduce the amount in § 3.10(c)(4)(ii)(J)(1) (to no less than zero) by any amount excluded under paragraph (a)(2) of this section. (f) Disclosure. Notwithstanding Table 13 to § 3.173, a national bank or Federal savings association that is required to make the disclosures pursuant to § 3.173 must exclude the items excluded pursuant to paragraph (a) of this section from Table 13 to § 3.173. (g) OCC approval for distributions. During the calendar quarter beginning on July 1, 2020, and until March 31, 2021, no national bank or Federal savings association that has opted in to the relief provided under paragraph (a) of this section may make a distribution, or create an obligation to make such a distribution, without prior OCC approval. When reviewing a request under this paragraph (g), the OCC will consider all relevant factors, including whether the distribution would be contrary to the safety and soundness of the national bank or Federal savings association; the nature, purpose, and extent of the request; and the particular circumstances giving rise to the request. VerDate Sep<11>2014 16:09 May 29, 2020 Jkt 250001 3. The authority citation for part 6 continues to read as follows: ■ Authority: 12 U.S.C. 93a, 1831o, 5412(b)(2)(B). 4. Amend § 6.4 by revising paragraphs (b)(2)(iv)(B) and (b)(3)(iv)(B) to read as follows: ■ § 6.4 Capital measures and capital categories. * 32989 (2) * * * (iv) * * * (B) With respect to an advanced approaches bank or bank that is a Category III Board-regulated institution (as defined in § 217.2 of this chapter), the bank has a supplementary leverage ratio of 3.0 percent or greater; and * * * * * (3) * * * (iv) * * * (B) With respect to an advanced approaches bank or bank that is a Category III Board-regulated institution (as defined in § 217.2 of this chapter), the bank has a supplementary leverage ratio of less than 3.0 percent. * * * * * * * * * (b) * * * (2) * * * (iv) * * * (B) With respect to an advanced approaches or Category III national bank or advanced approaches or Category III Federal savings association, the national bank or Federal savings association has a supplementary leverage ratio of 3.0 percent or greater; and * * * * * (3) * * * (iv) * * * (B) With respect to an advanced approaches or Category III national bank or advanced approaches or Category III Federal savings association, on January 1, 2018, and thereafter, the national bank or Federal savings association has a supplementary leverage ratio of less than 3.0 percent. * * * * * ■ Authority and Issuance § 217.303 Temporary exclusions from total leverage exposure. For the reasons stated in the joint preamble, the Board of Governors of the Federal Reserve System amends 12 CFR chapter II as follows: (a) In general. Subject to paragraphs (b) through (g) of this section and notwithstanding any other requirement in this part, when calculating onbalance sheet assets as of each day of a reporting quarter for purposes of determining the Board-regulated institution’s total leverage exposure under § 217.10(c)(4), a Board-regulated institution that is a depository institution holding company or a U.S. intermediate holding company must, and a Board-regulated institution that is a state member bank may, 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) Opt-in period. Before applying the relief provided in paragraph (a) of this section, a state member bank must first notify the Board before July 1, 2020. (c) Calculation of relief. When calculating on-balance sheet assets as of each day of a reporting quarter, the relief provided in paragraph (a) of this section applies from the beginning of the reporting quarter in which the state member bank filed an opt-in notice PART 208—MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H) 5. The authority citation for part 208 continues to read as follows: ■ Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321–338a, 371d, 461, 481–486, 601, 611, 1814, 1816, 1817(a)(3), 1817(a)(12), 1818, 1820(d)(9), 1833(j), 1828(o), 1831, 1831o, 1831p–1, 1831r–1, 1831w, 1831x, 1835a, 1882, 2901–2907, 3105, 3310, 3331– 3351, 3905–3909, 5371, and 5371 note; 15 U.S.C. 78b, 78I(b), 78l(i), 780–4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801, and 6805; 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128. 6. Section 208.43(b)(2)(iv)(B) and (b)(3)(iv)(B) are revised to read as follows: ■ § 208.43 Capital measures and capital categories. * * * (b) * * * PO 00000 Frm 00013 * Fmt 4700 * Sfmt 4700 PART 217—CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q) 7. 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, 5371 note, and sec. 4012, Pub. L. 116–136, 134 Stat. 281. Subpart G—Transition Provisions ■ 8. Revise § 217.303 to read as follows: E:\FR\FM\01JNR1.SGM 01JNR1 32990 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations through the termination date specified in paragraph (d) of this section. (d) Termination of exclusions. This section shall cease to be effective after the reporting period that ends March 31, 2021. (e) Custodial banking organizations. A custodial banking organization must reduce the amount in § 217.10(c)(4)(ii)(J)(1) (to no less than zero) by any amount excluded under paragraph (a)(2) of this section. (f) Disclosure. Notwithstanding Table 13 to § 217.173, a Board-regulated institution 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. (g) Board approval for distributions. During the calendar quarter beginning on July 1, 2020, and until March 31, 2021, no state member bank that has opted in to the relief provided under paragraph (a) of this section may make a distribution, or create an obligation to make such a distribution, without prior Board approval. When reviewing a request under this paragraph (g), the Board will consider all relevant factors, including whether the distribution would be contrary to the safety and soundness of the state member bank; the nature, purpose, and extent of the request; and the particular circumstances giving rise to the request. Federal Deposit Insurance Corporation 12 CFR Chapter III Authority and Issuance For the reasons set forth in the joint preamble, the Federal Deposit Insurance Corporation amends chapter III of title 12 of the Code of Federal Regulations as follows: PART 324—CAPITAL ADEQUACY OF FDIC–SUPERVISED INSTITUTIONS 9. The authority citation for part 324 continues to read as follows: jbell on DSKJLSW7X2PROD with RULES ■ Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102–233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102–242, 105 Stat. 2236, 2355, as amended by Pub. L. 103–325, 108 Stat. 2160, 2233 (12 U.S.C. 1828 note); Pub. L. 102–242, 105 Stat. 2236, 2386, as amended by Pub. L. 102–550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note); VerDate Sep<11>2014 16:48 May 29, 2020 Jkt 250001 Pub. L. 111–203, 124 Stat. 1376, 1887 (15 U.S.C. 78o–7 note); Pub. L. 115–174; Pub. L. 116–136, 134 Stat. 281. Subpart G—Transition Provisions § 324.304 [Redesignated as § 324.305] 10. Redesignate § 324.304 as § 324.305. ■ 11. A new § 324.304 is added to read as follows: ■ § 324.304 Temporary exclusions from total leverage exposure. (a) In general. Subject to paragraphs (b) through (g) of this section, and notwithstanding any other requirement in this part, an FDIC-supervised institution, when calculating on-balance sheet assets as of each day of a reporting quarter for purposes of determining the FDIC-supervised institution’s total leverage exposure under § 324.10(c)(4), may 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) Opt-in period. Before applying the relief provided in paragraph (a) of this section, an FDIC-supervised institution must first notify the appropriate regional director of the FDIC Division of Risk Management Supervision before July 1, 2020. (c) Calculation of relief. When calculating on-balance sheet assets as of each day of a reporting quarter, the relief provided in paragraph (a) of this section applies from the beginning of the reporting quarter in which the FDICsupervised institution filed an opt-in notice through the termination date specified in paragraph (d) of this section. (d) Termination of exclusions. This section shall cease to be effective after the reporting period that ends March 31, 2021. (e) Custody bank. A custody bank must reduce the amount in § 324.10(c)(4)(ii)(J)(1) (to no less than zero) by any amount excluded under paragraph (a)(2) of this section. (f) Disclosure. Notwithstanding Table 13 to § 324.173, an FDIC-supervised institution that is required to make the disclosures pursuant to § 324.173 must exclude the items excluded pursuant to paragraph (a) of this section from Table 13 to § 324.173. (g) FDIC approval for distributions. During the calendar quarter beginning PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 on July 1, 2020, and until March 31, 2021, no FDIC-supervised institution that has opted in to the relief provided under paragraph (a) of this section may make a distribution, or create an obligation to make such a distribution, without prior FDIC approval. When reviewing a request under this paragraph (g), the FDIC will consider all relevant factors, including whether the distribution would be contrary to the safety and soundness of the FDICsupervised institution; the nature, purpose, and extent of the request; and the particular circumstances giving rise to the request. Subpart H—Prompt Corrective Action 12. Section 324.403(b)(2)(vi) and (b)(3)(v) are revised to read as follows: ■ § 324.403 Capital measures and capital categories definitions. * * * * * (b) * * * (2) * * * (vi) Beginning January 1, 2018, an advanced approaches or Category III FDIC–supervised institution will be deemed to be ‘‘adequately capitalized’’ if it satisfies paragraphs (b)(2)(i) through (v) of this section and has a supplementary leverage ratio of 3.0 percent or greater, as calculated in accordance with § 324.10. (3) * * * (v) Beginning January 1, 2018, an advanced approaches or Category III FDIC–supervised institution will be deemed to be ‘‘undercapitalized’’ if it has a supplementary leverage ratio of less than 3.0 percent, as calculated in accordance with § 324.10. * * * * * Brian P. Brooks, First Deputy Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on or about May 14, 2020. Robert E. Feldman, Executive Secretary. [FR Doc. 2020–10962 Filed 5–29–20; 8:45 am] BILLING CODE 4810–33–P E:\FR\FM\01JNR1.SGM 01JNR1

Agencies

[Federal Register Volume 85, Number 105 (Monday, June 1, 2020)]
[Rules and Regulations]
[Pages 32980-32990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10962]


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DEPARTMENT OF TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 3 and 6

[Docket No. OCC-2020-0013]
RIN 1557-AE85

FEDERAL RESERVE SYSTEM

12 CFR Parts 208 and 217

[Regulations H and Q; Docket No. R-1718]
RIN 7100-AF91

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 324

RIN 3064-AF44


Regulatory Capital Rule: Temporary Exclusion of U.S. Treasury 
Securities and Deposits at Federal Reserve Banks From the Supplementary 
Leverage Ratio for Depository Institutions

AGENCY: Office of the Comptroller of the Currency (OCC), Board of 
Governors of the Federal Reserve System (Board), and Federal Deposit 
Insurance Corporation (FDIC).

ACTION: Interim final rule and request for comment.

-----------------------------------------------------------------------

SUMMARY: In light of recent disruptions in economic conditions caused 
by the coronavirus disease 2019 and strains in U.S. financial markets, 
the OCC, the Board, and the FDIC (together, the agencies) are issuing 
an interim final rule that temporarily revises the supplementary 
leverage ratio calculation for depository institutions. Under the 
interim final rule, any depository institution subsidiary of a U.S. 
global systemically important bank holding company or any depository 
institution subject to Category II or Category III capital standards 
may elect to exclude temporarily U.S. Treasury securities and deposits 
at Federal Reserve Banks from the supplementary leverage ratio 
denominator. Additionally, under this interim final rule, any 
depository institution making this election must request approval from 
its primary Federal banking regulator prior to making certain capital 
distributions so long as the exclusion is in effect. The interim final 
rule is effective as of the date of Federal Register publication and 
will remain in effect through March 31, 2021. The agencies are adopting 
this interim final rule to allow depository institutions that elect to 
opt into this treatment additional flexibility to act as financial 
intermediaries during this period of financial disruption. The tier 1 
leverage ratio is not affected by this interim final rule.

DATES: 
    Effective date: This rule is effective on June 1, 2020.
    Comment date: Comments on the interim final rule must be received 
no later than July 16, 2020.

ADDRESSES: 
    OCC: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Regulatory Capital Rule: Temporary Exclusion of U.S. Treasury 
Securities and Deposits at Federal Reserve Banks from the Supplementary 
Leverage Ratio'' to facilitate the organization and distribution of the 
comments. You may submit comments by any of the following methods:
     Federal eRulemaking Portal--Regulations.gov Classic or 
Regulations.gov Beta:
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2020-0013'' in the Search Box and click ``Search.'' 
Click on ``Comment Now'' to submit public comments. For help with 
submitting effective comments please click on ``View Commenter's 
Checklist.'' Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov, including instructions for 
submitting public comments. Regulations.gov Beta: Go to https://beta.regulations.gov/ or click ``Visit New Regulations.gov Site'' from 
the Regulations.gov Classic homepage. Enter ``Docket ID OCC-2020-0013'' 
in the Search Box and click ``Search.'' Public comments can be 
submitted via the ``Comment'' box below the displayed document 
information or by clicking on the document title and then clicking the 
``Comment'' box on the top-left side of the screen. For help with 
submitting effective comments please click on ``Commenter's 
Checklist.'' For assistance with the Regulations.gov Beta site, please 
call (877) 378-5457 (toll free) or (703) 454-9859 Monday-Friday, 9 
a.m.-5 p.m. ET or email [email protected].
     Email: [email protected].
     Mail: Chief Counsel's Office, Attention: Comment 
Processing, Office of the Comptroller of the Currency, 400 7th Street 
SW, suite 3E-218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street, SW, suite 3E-218, 
Washington, DC 20219.

[[Page 32981]]

     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2020-0013'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information provided such as name and address information, 
email addresses, or phone numbers. Comments received, including 
attachments and other supporting materials, are part of the public 
record and subject to public disclosure. Do not include any information 
in your comment or supporting materials that you consider confidential 
or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
     Viewing Comments Electronically--Regulations.gov Classic 
or Regulations.gov Beta:
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2020-0013'' in the Search box and click ``Search.'' 
Click on ``Open Docket Folder'' on the right side of the screen. 
Comments and supporting materials can be viewed and filtered by 
clicking on ``View all documents and comments in this docket'' and then 
using the filtering tools on the left side of the screen. Click on the 
``Help'' tab on the Regulations.gov home page to get information on 
using Regulations.gov. The docket may be viewed after the close of the 
comment period in the same manner as during the comment period.
    Regulations.gov Beta: Go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov Classic 
homepage. Enter ``Docket ID OCC-2020-0013'' in the Search Box and click 
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and 
filtered by clicking on the ``Sort By'' drop-down on the right side of 
the screen or the ``Refine Results'' options on the left side of the 
screen. Supporting materials can be viewed by clicking on the 
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down 
on the right side of the screen or the ``Refine Results'' options on 
the left side of the screen.'' For assistance with the Regulations.gov 
Beta site, please call (877) 378-5457 (toll free) or (703) 454-9859 
Monday-Friday, 9 a.m.-5 p.m. ET or email 
[email protected].
    The docket may be viewed after the close of the comment period in 
the same manner as during the comment period.
    Board: You may submit comments, identified by Docket No. R-1718; 
RIN 7100-AF91, by any of the following methods:
     Agency website: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
     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. 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.
    FDIC: You may submit comments, identified by RIN 3064-AF44, by any 
of the following methods:
     Agency website: https://www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency 
website.
     Email: [email protected]. Include ``RIN 3064-AF44'' on the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments/RIN 3064-AF44, Federal Deposit Insurance Corporation, 550 17th 
Street NW, Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand delivered to 
the guard station at the rear of the 550 17th Street building (located 
on F Street) on business days between 7 a.m. and 5 p.m. All comments 
received must include the agency name (FDIC) and RIN 3064-AF44 and will 
be posted without change to https://www.fdic.gov/regulations/laws/federal, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: OCC: Margot Schwadron, Director, or 
Venus Fan, Risk Expert, Capital and Regulatory Policy, (202) 649-6370; 
or Carl Kaminski, Special Counsel, or Chris Rafferty, Senior Attorney, 
Chief Counsel's Office, (202) 649-5490, for persons who are deaf or 
hearing impaired, TTY, (202) 649-5597, Office of the Comptroller of the 
Currency, 400 7th Street SW, Washington, DC 20219.
    Board: 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; Jonah Kind, Senior 
Attorney, (202) 452-2045; 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.
    FDIC: Bobby R. Bean, Associate Director, [email protected]; Benedetto 
Bosco, Chief, Capital Policy Section, [email protected]c.gov; Noah Cuttler, 
Senior Policy Analyst, [email protected]; [email protected]; 
Capital Markets Branch, Division of Risk Management Supervision, (202) 
898-6888; or Michael Phillips, Counsel, [email protected]; Catherine 
Wood, Counsel, [email protected]; Francis Kuo, Counsel, [email protected]; 
Supervision and Legislation Branch, Legal Division, Federal Deposit 
Insurance Corporation, 550 17th Street NW, Washington, DC 20429. For 
the hearing impaired only, Telecommunication Device for the Deaf (TDD), 
(800) 925-4618.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. The Interim Final Rule
III. Impact Assessment
IV. Technical Amendments
V. 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
    G. Unfunded Mandates Act

I. Background

    The spread of the coronavirus disease 2019 (COVID-19) has 
significantly and adversely affected global financial markets, 
including depository institutions' role as financial intermediaries. In 
particular,

[[Page 32982]]

disruptions in financial markets, and the resulting flight to liquid 
assets by market participants, have caused depository institutions' 
balance sheets to expand to accommodate inflows of deposits. This 
balance sheet expansion has contributed to depository institutions 
making substantial deposits in their accounts at Federal Reserve Banks 
(deposits at Federal Reserve Banks). In addition, customer draws on 
credit lines and depository institutions' holdings of significant 
amounts of U.S. Treasury securities (Treasuries) have contributed to 
balance sheet expansion. These trends are expected to continue 
temporarily while depository institutions and their customers respond 
to disruptions in the financial markets.
    For a depository institution subsidiary of a U.S. global 
systemically important bank holding company (GSIB), or a depository 
institution subject to the Category II or Category III capital 
standards, the agencies' regulatory capital rule (capital rule) 
requires a minimum supplementary leverage ratio of 3 percent, measured 
as the ratio of a depository institution'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). Banking organizations 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. Banking organizations 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.
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    GSIB depository institution subsidiaries also are subject to 
enhanced supplementary leverage ratio (eSLR) standards established by 
the agencies in 2014.\2\ Under the eSLR standards, GSIB depository 
institution subsidiaries must maintain a 6-percent supplementary 
leverage ratio to be considered ``well capitalized'' under the prompt 
corrective action (PCA) framework of each agency.
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    \2\ See 79 FR 24528 (May 1, 2014). The eSLR standards, as 
adopted in 2014, applied to U.S. top-tier bank holding companies 
with consolidated assets over $700 billion or more than $10 trillion 
in assets under custody, and depository institution subsidiaries of 
holding companies that meet those thresholds. The Board subsequently 
revised its capital rule so that the applicability of the eSLR 
standards is to bank holding companies identified as U.S. GSIBs and 
their depository institution subsidiaries. See 80 FR 49082 (August 
14, 2015). The banking organizations currently subject to the eSLR 
standards are the same under either applicability standard.
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    In contrast to the risk-based capital requirements in the capital 
rule, a leverage ratio does not differentiate the amount of capital 
required by the type of exposure. Rather, a leverage ratio places an 
upper bound on depository institution leverage. A leverage ratio 
protects against underestimating risk and serves to complement the 
risk-based capital requirements. Under the supplementary leverage 
ratio, depository institutions include all on-balance sheet assets, 
including Treasuries and deposits at Federal Reserve Banks, in their 
total leverage exposure calculation.\3\
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    \3\ The agencies recently issued a final rule, effective April 
1, 2020, which implements section 402 of the Economic Growth, 
Regulatory Relief, and Consumer Protection Act (EGRRCPA), 12 U.S.C. 
1831o note, 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). 85 FR 4569 (January 27, 2020).
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II. The Interim Final Rule

    The ability of depository institutions to hold certain assets, most 
notably deposits at a Federal Reserve Bank and Treasuries, is essential 
to market functioning, financial intermediation, and funding market 
activity, particularly in periods of financial uncertainty. In response 
to volatility and market strains, the Federal Reserve has taken a 
number of 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 agencies 
anticipate that the Federal Reserve's balance sheet may continue to 
expand in the near term, as customer deposits continue to expand, and 
recently announced facilities to support the flow of credit to 
households and businesses begin or continue operations. In addition, 
market participants have liquidated a high volume of assets, and 
customers have drawn down credit lines and deposited the cash proceeds 
with depository institutions in recent weeks, further increasing the 
size of depository institutions' balance sheets. Absent any adjustments 
to the supplementary leverage ratio, the resulting increase in the size 
of depository institutions' balance sheets may cause a sudden and 
significant increase in the regulatory capital needed to meet a 
depository institution's leverage ratio requirement.\4\ This is 
particularly the case for many of the depository institutions subject 
to the supplementary leverage ratio, which are significant participants 
in financial intermediation services, including as clearing banks for 
dealers in the open market operations of the Federal Open Market 
Committee and as major custodians of securities.
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    \4\ The Board recently issued an interim final rule to revise, 
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 Treasuries and deposits at Federal 
Reserve Banks. The exclusion will remain in effect until March 31, 
2021. 85 FR 20578 (April 14, 2020).
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    In order to facilitate depository institutions' 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 to continue to accept 
exceptionally high levels of customer deposits, the agencies are 
issuing this interim final rule to provide depository institutions 
subject to the supplementary leverage ratio (qualifying depository 
institutions) the ability to exclude temporarily Treasuries and 
deposits at Federal Reserve Banks from total leverage exposure through 
March 31, 2021. For example, depository institutions would be able to 
exclude temporarily on-balance sheet Treasuries that they hold, 
including Treasuries that they have borrowed and re-pledged in a repo-
style transaction, provided such Treasuries are included in the 
depository institution's total leverage exposure prior to the effect of 
the exclusion.\5\
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    \5\ This scope is consistent with the Board's recent interim 
final rule to revise the supplementary leverage ratio. See supra 
note 4.
---------------------------------------------------------------------------

    Under the interim final rule, a depository institution that opts 
into this treatment (electing depository institution) would be required 
to obtain prior approval of distributions from its primary Federal 
banking regulator. An electing depository institution must notify its 
primary Federal banking regulator of its election within 30 days after 
the interim final rule is effective.\6\ The primary Federal banking 
regulator will consider a notice received from a qualifying depository 
institution more than 30 days after the effective date of the interim 
final rule on a case-by-case basis. The election will not affect the 
electing depository institution's ability to pay distributions already 
declared or to declare distributions for payment in the second quarter 
of 2020. The prior

[[Page 32983]]

approval requirement applies to distributions to be paid beginning in 
the third quarter of 2020. The interim final rule will terminate after 
March 31, 2021.
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    \6\ An FDIC supervised institution must provide this notice in 
writing to the appropriate FDIC regional director of the FDIC 
Division of Risk Management Supervision.
---------------------------------------------------------------------------

    For purposes of reporting the supplementary leverage ratio as of 
June 30, 2020, an electing depository institution may 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. Because the supplementary 
leverage ratio is calculated as an average over the quarter, this will 
have the effect of maximizing the effect of the exclusion starting in 
the second quarter of 2020. The agencies are not making similar 
adjustments to risk-based capital ratios because Treasuries and 
deposits at Federal Reserve Banks are risk-weighted at zero percent.
    Under the interim final rule, beginning in the third quarter of 
2020, an electing depository institution will be required to obtain 
approval from its primary Federal banking regulator before making a 
distribution \7\ or creating an obligation to make such a distribution 
so long as the temporary exclusion is in effect. The primary Federal 
banking regulator will endeavor to respond within 14 days to the 
request with an approval, disapproval, or request for additional 
information. This prior-approval requirement will help support the 
objective of the interim final rule to strengthen the ability of 
electing depository institutions to continue taking deposits, lending, 
and conducting other financial intermediation activities during this 
period of stress.
---------------------------------------------------------------------------

    \7\ See 12 CFR 3.2 (defining ``distribution'') (OCC); 12 CFR 
217.2 (defining ``distribution'') (Board); 12 CFR 324.2 (defining 
``distribution'') (FDIC).
---------------------------------------------------------------------------

    When evaluating any such request, the primary Federal banking 
regulator will consider all relevant factors, including whether any 
distribution would be contrary to safety and soundness and limitations 
on distributions in the existing rules applicable to the electing 
depository institution.\8\ Factors that the primary Federal banking 
regulator will take into account include the depository institution's 
current earnings and forecasts, the nature, purpose, and extent of the 
request, and the particular circumstances giving rise to the 
request.\9\ For example, the primary Federal banking regulator may 
consider the expected future capital needs of the depository 
institution and its ability to meet capital requirements after the 
temporary relief provided under this interim final rule expires. The 
requirement that a depository institution request approval for 
distributions is not intended to prohibit electing depository 
institutions from paying dividends in all cases. Rather, the primary 
Federal banking regulator will evaluate each request to ensure that the 
electing depository institution will be able to continue supporting the 
economy by lending and accepting deposits consistent with the goal of 
this interim final rule.
---------------------------------------------------------------------------

    \8\ Additional limitations on distributions may apply under 12 
CFR part 3, subparts H and I; 12 CFR 5.46, 12 CFR part 5, subpart E; 
12 CFR part 6; 12 CFR part 208, subparts A and D; 12 CFR part 303, 
subparts K and M. The restrictions set forth in this interim final 
rule are in addition to, and therefore do not supersede, any 
existing statutory or regulatory limitations on making capital 
distributions. For purposes of the FDIC's PCA rules, regarding 
capital distribution restrictions for undercapitalized FDIC-
supervised institutions, see 12 CFR 324.405.
    \9\ Holding companies use dividends from their subsidiaries for 
various purposes. For example, dividends to the holding company can 
support the efficient internal allocation of capital within a 
holding company, allowing excess capital from one subsidiary, such 
as the depository institution, to be redeployed to other 
subsidiaries. As such, an effective dividend strategy can both 
ensure the safety and soundness of the depository institution and 
promote the safety and soundness of the entire banking organization.
---------------------------------------------------------------------------

    The interim final rule revises the measure of total leverage 
exposure on a temporary basis for electing depository institutions for 
the limited purposes of the agencies' capital rule. Depository 
institutions subject to supplementary leverage ratio requirements 
report their supplementary leverage ratios on the Consolidated Reports 
of Condition and Income (Call Reports), Schedule RC-R and Regulatory 
Capital Reporting for Institutions Subject to the Advanced Capital 
Adequacy Framework (FFIEC 101), Schedule A.\10\ The agencies expect in 
the near future to make all necessary revisions to the Call Reports and 
the FFIEC 101, Schedule A to implement the interim final rule's 
revisions to the supplementary leverage ratio for electing depository 
institutions and to require such institutions to disclose the election 
publicly.\11\ In addition, the interim final rule provides for the 
necessary modifications of the disclosure requirements of section 173 
of the capital rule to reflect the optional temporary exclusion 
provided by the interim final rule.
---------------------------------------------------------------------------

    \10\ Depository institutions that are required to submit the OCC 
Reporting Form DFAST-14A on April 6, 2021, or the FDIC DFAST-14A, 
have the option to include these changes in their company-run stress 
test results.
    \11\ The instructions for Board's FR Y-9C, Schedule HC-R, Line 
Item 45 (Advanced approaches holding companies only: Supplementary 
leverage ratio) state that respondents must report the supplementary 
leverage ratio from FFIEC 101 Schedule A, Table 2, Item 2.22. 
Therefore, revisions to the FFIEC 101 regarding how to report the 
supplementary leverage ratio would flow through to the FR Y-9C. The 
Board plans to amend the instructions for FR Y-9C as necessary.
---------------------------------------------------------------------------

    The agencies seek comment on all aspects of this interim final 
rule.
    Question 1: Discuss the advantages and disadvantages of removing 
temporarily Treasuries and deposits at Federal Reserve Banks from total 
leverage exposure for depository institutions. How does the interim 
final rule support the objectives of facilitating financial 
intermediation by depository institutions? How does the interim final 
rule affect the concurrent objective of safety and soundness? How would 
the end date of March 31, 2021, for the exclusion under the interim 
final rule be consistent with the objectives of the rule, or what 
earlier or later end date should be used instead?
    Question 2: What additional assets or exposure types should the 
agencies consider to exclude temporarily from total leverage exposure 
in order to achieve the interim final rule's objectives? For example, 
what consideration should the agencies give to excluding deposits at 
certain foreign central banks, foreign sovereign debt instruments, or 
exposures guaranteed by the U.S. Federal Government and why? Which 
specific repo-style transactions that would support depository 
institutions' role serving as financial intermediaries should the 
agencies exclude, if any, and why?

III. Impact Assessment

    The supplementary leverage ratio requirement generally has not 
prevented depository institutions from accommodating customer deposit 
inflows or serving as financial intermediaries. However, as a result of 
the spread of COVID-19, stress has materialized in numerous financial 
markets. Disruptions in financial markets have resulted in expansion of 
depository institutions' balance sheets to accommodate inflows of 
deposits. In particular, using data from the fourth quarter of 2019, 
the agencies expect that the interim final rule would temporarily 
decrease binding tier 1 capital requirements by approximately $55 
billion for depository institutions if all depository institutions 
subject to the supplementary leverage ratio elect to opt in.\12\ In 
light of the exclusions under

[[Page 32984]]

this interim final rule, this temporary reduction in capital 
requirements is expected to increase leverage exposure capacity at 
depository institutions by approximately $1.2 trillion. In particular, 
the agencies expect that the increase in leverage exposure capacity 
will strengthen the depository institutions' ability to continue to 
accept customer deposits, and therefore ensure that depository 
institutions remain able to fulfill this important function.
---------------------------------------------------------------------------

    \12\ This analysis takes into account the exclusion of 
qualifying central bank deposits for custodial banking organizations 
as provided under the capital rule. As of April 1, 2020, custodial 
banking organizations may exclude deposits with qualifying foreign 
central banks, in addition to the exclusions of deposits at Federal 
Reserve Banks provided under this interim final rule. (See supra 
note 3.) In addition, the analysis in this interim final rule uses 
balances due from banks in foreign countries and foreign central 
banks, as reported under line item 3 of Schedule RC-A of the Call 
Report. Line item 3 of Schedule RC-A may slightly overstate amounts 
eligible for exclusion by custodial banking organizations because it 
includes balances due from banks in foreign countries and foreign 
central banks that are not eligible for exclusion under this interim 
final rule.
---------------------------------------------------------------------------

    Depository institutions that opt into the temporary exclusion of 
Treasuries and deposits at Federal Reserve Banks from the denominator 
of the supplementary leverage ratio will likely incur some costs 
associated with making changes to internal systems or processes for 
managing supplementary leverage ratio compliance. However, these costs 
are likely to be very small.
    Aside from increases in balance sheets caused by increases in 
customer deposits, the balance sheets of depository institutions also 
have increased as households and businesses draw down credit lines. If 
depository institutions become constrained by supplementary leverage 
ratio requirements, this could adversely affect their ability to 
intermediate in financial markets and hamper their ability to provide 
credit to households and businesses. Therefore, the temporary increase 
in leverage exposure capacity could have countercyclical benefits as it 
supports financial market liquidity and increases depository 
institutions' lending capacities in a time of economic stress.
    Although a temporary increase in leverage exposure capacity could 
lead to an increase in overall leverage in the banking system, the 
temporary 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. The agencies will closely monitor 
the balance sheets of electing depository institutions in the coming 
months while the exclusion is in effect with a particular view toward 
any resulting increase in risks in conjunction with this interim final 
rule.

IV. Technical Amendments

    Finally, the agencies are making technical corrections and 
clarifications to the Prompt Corrective Action regulations. In their 
respective Prompt Corrective Action regulations, the agencies are 
correcting an unintentional omission of ``Category III'' to clarify 
that depository institutions subject to Category III standards must 
meet their minimum supplementary leverage ratio requirement of 3 
percent in order to be considered ``adequately capitalized.'' \13\ When 
the minimum supplementary leverage ratio requirement was initially 
added to the capital rule in 2013, the term ``advanced approaches'' 
banking organizations referred to all banking organizations that were 
subject to the supplementary leverage ratio.\14\ However, the tailoring 
rule that became effective on December 31, 2019, redefined ``advanced 
approaches.'' Under that rule, advanced approaches banking 
organizations now include a smaller group of banking organizations 
(i.e., banking organizations subject to Category I and II standards), 
while certain banking organizations are no longer defined as advanced 
approaches but remain subject to the supplementary leverage ratio 
requirements (i.e., banking organizations subject to Category III 
standards). The agencies did not intend to change the applicability of 
the minimum supplementary leverage ratio requirement in their 
respective Prompt Corrective Action regulations. Rather, the Prompt 
Corrective Action requirement should continue to apply to all banking 
organizations that are required to calculate the supplementary leverage 
ratio. Therefore, consistent with the capital rule, the agencies are 
now clarifying that the supplementary leverage ratio provisions in 
their respective Prompt Corrective Action regulations apply to all 
banking organizations subject to Category III standards, in addition to 
banking organizations subject to Category I and II standards.
---------------------------------------------------------------------------

    \13\ 12 CFR 6.4(b) (OCC); 12 CFR 208.43(b) (Board); 12 CFR 
324.403(b) (FDIC).
    \14\ 78 FR 62018 (Oct. 11, 2013).
---------------------------------------------------------------------------

V. Administrative Law Matters

A. Administrative Procedure Act

    The agencies are issuing the interim final rule and its 
accompanying technical edits without prior notice and the opportunity 
for public comment and the delayed effective date ordinarily prescribed 
by the Administrative Procedure Act (APA).\15\ Pursuant to section 
553(b)(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.'' \16\
---------------------------------------------------------------------------

    \15\ 5 U.S.C. 553.
    \16\ 5 U.S.C. 553(b)(B).
---------------------------------------------------------------------------

    The agencies believe 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 disruptions in financial markets have caused 
depository institutions to receive inflows of deposits--contributing to 
the increase of deposits at Federal Reserve Banks--and to hold 
significant amounts of Treasuries. Notably, these deposits at Federal 
Reserve Banks and holdings of Treasuries are essential to the normal 
functioning of the financial markets, especially in times of stress. If 
depository institutions cannot sustain the rapid increase in deposits 
at Federal Reserve Banks and holdings of Treasuries, the financial 
markets would experience a marked decline in financial intermediation 
and a further increase in general market volatility. Because the 
interim final rule will mitigate these potential negative effects, the 
agencies find that there is good cause consistent with the public 
interest to issue the rule without advance notice and comment.\17\ This 
final rule makes additional technical edits and corrections to more 
clearly articulate the scope of the supplementary leverage ratio 
requirements. Because the additional technical edits and corrections 
are not substantive, the agencies find there is good cause to issue the 
rule without advance notice and comment.
---------------------------------------------------------------------------

    \17\ 5 U.S.C. 553(b)(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.\18\ Because the 
interim final rule will provide temporary capital relief, the interim 
final rule is exempt from the APA's delayed effective date 
requirement.\19\ Additionally, the agencies find good cause to publish 
the technical edits and corrections, which clarify the scope of the 
supplementary

[[Page 32985]]

leverage ratio for purposes of the Prompt Corrective Action 
regulations, with an immediate effective date for the same reasons set 
forth above under the discussion of section 553(b)(B) of the APA.
---------------------------------------------------------------------------

    \18\ 5 U.S.C. 553(d).
    \19\ 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------

    While the agencies believe that there is good cause to issue this 
interim final rule without advance notice and comment and with an 
immediate effective date, the agencies are interested in the views of 
the public and request 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.\20\ 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.\21\
---------------------------------------------------------------------------

    \20\ 5 U.S.C. 801 et seq.
    \21\ 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.\22\
---------------------------------------------------------------------------

    \22\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    For the same reasons set forth above, the agencies are 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.\23\ In light of 
current market uncertainty, the agencies believe that delaying the 
effective date of the rule would be contrary to the public interest.
---------------------------------------------------------------------------

    \23\ 5 U.S.C. 808.
---------------------------------------------------------------------------

    As required by the Congressional Review Act, the agencies 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 interim final rule affects the 
agencies' current information collections for the Call Reports (OCC OMB 
No. 1557-0081; Board OMB No. 7100-0036; and FDIC OMB No. 3064-0052) and 
the Regulatory Capital Reporting for Institutions Subject to the 
Advanced Capital Adequacy Framework (FFIEC 101; OCC OMB No. 1557-0239; 
Board OMB No. 7100-0319; and FDIC OMB No. 3064-0159). The revisions to 
the Call Reports and the FFIEC 101 will be addressed in a separate 
Federal Register notice.
    The interim final rule also introduces a new notice opt-in 
requirement and a requirement for prior approval for distributions, 
which would affect the agencies' capital rule information collections. 
The agencies believe that these new requirements will amount to 12 
burden hours per respondent (two responses per respondent at six hours 
per response).
    OCC:
    Title of Information Collection: Risk-Based Capital Standards: 
Advanced Capital Adequacy Framework.
    OMB Control No.: 1557-0318.
    Respondents for Interim Final Rule: 21.
    Responses per Respondent: 2.
    Burden per Response: 6 hours.
    Burden for Interim Final Rule: 252 hours.
    Total Burden for Collection: 66,333 hours.
    FDIC:
    Title of Information Collection: Regulatory Capital Rules.
    OMB Control No.: 3064-0153.
    Respondents for Interim Final Rule: 7.
    Responses per Respondent: 2.
    Burden per Response: 6 hours.
    Burden for Interim Final Rule: 84 hours.
    Total Burden for Collection: 128,140 burden hours.
    The agencies request comment on:
    a. Whether the collections of information are necessary for the 
proper performance of the agencies' functions, including whether the 
information has practical utility;
    b. The accuracy of the agencies' estimates of the burden of the 
information collections, 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.
    The Board has temporarily revised the Financial Statements for 
Holding Companies (FR Y-9C; OMB No. 7100-0128) and the Recordkeeping 
and Disclosure Requirements Associated with Regulation Q (FR Q; OMB No. 
7100-0313) information collections to accurately reflect certain 
aspects of this and other interim final rules. 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 the FR Q 
information collection for three years, with the revisions discussed 
below. The Board is not inviting comment on the FR Y-9 information 
collection for the reasons discussed below.
    The Board invites public comment on the FR Q information 
collection, which is being reviewed under authority delegated by the 
OMB under the PRA. Comments must be submitted on or before July 31, 
2020. Comments are invited on the following:

    a. Whether the collections of information are 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

[[Page 32986]]

    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 collections.
Final Approval Under OMB Delegated Authority of the Temporary Revision 
of the Following Information Collection
    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: March 31, 2020
    Frequency: Quarterly, semiannually, and annually.
    Respondents: Bank holding companies, savings and loan holding 
companies,\24\ securities holding companies, and U.S. intermediate 
holding companies (collectively, HCs).
---------------------------------------------------------------------------

    \24\ An SLHC must file one or more of the FR Y-9 series of 
reports unless it is: (1) A grandfathered unitary SLHC with 
primarily commercial assets and thrifts that make up less than 5 
percent of its consolidated assets; or (2) a SLHC that primarily 
holds insurance-related assets and does not otherwise submit 
financial reports with the SEC pursuant to section 13 or 15(d) of 
the Securities Exchange Act of 1934.
---------------------------------------------------------------------------

    Estimated number of respondents: FR Y-9C (non-advanced approaches 
CBLR HCs with less than $5 billion in total assets): 7; FR Y-9C (non-
advanced approaches CBLR HCs with $5 billion or more in total assets): 
35; FR Y-9C (non-advanced approaches, non CBLR, HCs with less than $5 
billion in total assets): 84; FR Y-9C (non-advanced approaches, non 
CBLR HCs, with $5 billion or more in total assets): 154; 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 CBLR HCs with less than $5 billion 
in total assets): 29.14 hours; FR Y-9C (non-advanced approaches CBLR 
HCs with $5 billion or more in total assets): 35.11; FR Y-9C (non-
advanced approaches, non CBLR HCs, with less than $5 billion in total 
assets): 40.98; FR Y-9C (non-advanced approaches, non CBLR, HCs with $5 
billion or more in total assets): 46.95 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 CBLR HCs with less than $5 billion 
in total assets): 8,276 hours; FR Y-9C (non-advanced approaches CBLR 
HCs with $5 billion or more in total assets): 4,915; FR Y-9C (non-
advanced approaches non CBLR HCs with less than $5 billion in total 
assets): 13,769; FR Y-9C (non-advanced approaches non CBLR HCs with $5 
billion or more in total assets): 28,921 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.\25\ 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.\26\
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    \25\ 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).
    \26\ 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.\27\ The report consists of standardized 
financial statements.
---------------------------------------------------------------------------

    \27\ 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 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.

[[Page 32987]]

    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: On April 1, 2020, the Board announced that it had 
temporarily revised the instructions to the FR Y-9C to accurately 
reflect the calculation of the supplementary leverage ratio pursuant to 
the Board's interim final rule (the ``holding company SLR IFR'') that 
revised, 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 
Treasuries and deposits at Federal Reserve Banks.\28\ This temporary 
revision to the FR Y-9C was necessary because holding companies were 
previously instructed to report their supplementary leverage ratio as 
reported in the FFIEC 101; because the FFIEC 101 was not revised to 
account for the holding company SLR IFR, retaining these instructions 
would have resulted in inaccurate reporting by holding companies on the 
FR Y-9C.
---------------------------------------------------------------------------

    \28\ 85 FR 20578 (April 14, 2020).
---------------------------------------------------------------------------

    The agencies now intend to revise the FFIEC 101 to account for this 
interim final rule and the holding company SLR IFR. Following such 
revisions, holding companies would be able to report their 
supplementary leverage ratio on the FR Y-9C using the data reported on 
the FFIEC 101, as they did previously. Therefore, the temporary 
revisions to the FR Y-9C to account for the holding company SLR IFR, 
announced by the Board on April 1, 2020, are no longer necessary, and 
the Board has retracted these revisions. The Board has determined that 
this revision to the FR Y-9C 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.
    Because these revisions result completely revert the temporary 
revisions made by the Board to the FR Y-9C in connection with the 
holding company SLR IFR, the resulting instructions regarding the 
supplementary leverage ratio are identical to those adopted following 
notice and comment. Therefore, the Board does not intend to request 
further comment in order to retain these instructions.
Final Approval Under OMB Delegated Authority of the Temporary Revision 
of, and Solicitation of Comment To Extend for Three Years, With 
Revision, of the Following Information Collections
    Title of Information Collection: Recordkeeping and Disclosure 
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.
Reporting (Twice)--6.

    Total estimated annual burden: 1,136 hours initial setup, 80,245 
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, Sec.  
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 Sec.  217.172(d) of Regulation Q to make 
certain disclosures, which are listed in Table 13 of Sec.  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 and funds on 
deposit at a Federal Reserve Bank from its disclosures under Table 13 
of Sec.  217.173. The interim final rule also introduces a new notice 
opt-in requirement and a requirement for prior approval for 
distributions, which would affect the agencies' capital rule 
information collections. The agencies believe that these new 
requirements will amount to 12 burden hours per respondent (two 
responses per respondent at six hours per response).
    Additionally, the Board has temporarily revised the FR Q 
information collection to include the notification that an electing 
depository

[[Page 32988]]

institution must provide to its primary Federal banking regulator, as 
well as the request for approval that an electing depository 
institution must submit to its primary Federal banking regulator prior 
to making certain capital distributions.
    The Board has determined that these revisions 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 on a proposal to extend the FR Y-Q 
for three years, with the revision described above. This revision would 
be effective for FR Q through 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) \29\ requires an agency to 
consider whether the rules it proposes will have a significant economic 
impact on a substantial number of small entities.\30\ 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)(B) of the APA, the agencies 
have determined for good cause that general notice and opportunity for 
public comment is unnecessary, and therefore the agencies are not 
issuing a notice of proposed rulemaking. Accordingly, the agencies have 
concluded that the RFA's requirements relating to initial and final 
regulatory flexibility analysis do not apply.
---------------------------------------------------------------------------

    \29\ 5 U.S.C. 601 et seq.
    \30\ 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 
average annual receipts of $41.5 million or less. See 13 CFR 
121.201.
---------------------------------------------------------------------------

    Nevertheless, the agencies seek 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),\31\ 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.\32\ For the reasons described 
above, the agencies find good cause exists under section 302 of RCDRIA 
to publish this interim final rule with an immediate effective date.
---------------------------------------------------------------------------

    \31\ 12 U.S.C. 4802(a).
    \32\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

    As such, the final rule will be effective on immediately. 
Nevertheless, the agencies seek comment on RCDRIA.

F. Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \33\ requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The agencies have sought to present 
the interim final rule in a simple and straightforward manner. The 
agencies invite comments on whether there are additional steps it could 
take to make the rule easier to understand. For example:
---------------------------------------------------------------------------

    \33\ 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 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?

G. Unfunded Mandates Reform Act of 1995

    As a general matter, the Unfunded Mandates Reform Act of 1995 
(UMRA), 2 U.S.C. 1531 et seq., requires the preparation of a budgetary 
impact statement before promulgating a rule that includes a Federal 
mandate that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. However, the UMRA does not apply to 
final rules for which a general notice of proposed rulemaking was not 
published. See 2 U.S.C. 1532(a). Therefore, because the OCC has found 
good cause to dispense with notice and comment for this interim final 
rule, the OCC has not prepared an economic analysis of the rule under 
the UMRA.

List of Subjects

12 CFR Part 3

    Administrative practice and procedure, Capital, Federal savings 
associations, National banks, Risk.

12 CFR Part 6

    Federal savings associations, National banks, Prompt corrective 
action.

12 CFR Part 208

    Accounting, Agriculture, Banks, banking, Confidential business 
information, Consumer protection, Crime, Currency, Federal Reserve 
System, Flood insurance, Insurance, Investments, Mortgages, Reporting 
and recordkeeping requirements, Securities.

12 CFR Part 217

    Administrative practice and procedure, Banks, banking, Federal 
Reserve System, Holding companies, Reporting and recordkeeping 
requirements, Securities.

12 CFR Part 324

    Administrative practice and procedure, Banks, banking, Reporting 
and recordkeeping requirements, Savings associations, State non-member 
banks.

Authority and Issuance

    For the reasons stated in the joint preamble, the Office of the 
Comptroller of the Currency amends part 3 of chapter I of title 12, 
Code of Federal Regulations as follows:

PART 3--CAPITAL ADEQUACY STANDARDS

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818, 
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, 5412(b)(2)(B), and 
Pub. L. 116-136, 134 Stat. 281.


0
2. Section 3.304 is added to read as follows:

[[Page 32989]]

Sec.  3.304   Temporary exclusions from total leverage exposure.

    (a) In general. Subject to paragraphs (b) through (g) of this 
section, and notwithstanding any other requirement in this part, a 
national bank or Federal savings association, when calculating on-
balance sheet assets as of each day of a reporting quarter for purposes 
of determining the national bank's or Federal savings association's 
total leverage exposure under Sec.  3.10(c)(4), may 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) Opt-in period. Before applying the relief provided in paragraph 
(a) of this section, a national bank or Federal savings association 
must first notify the OCC before July 1, 2020.
    (c) Calculation of relief. When calculating on-balance sheet assets 
as of each day of a reporting quarter, the relief provided in paragraph 
(a) of this section applies from the beginning of the reporting quarter 
in which the national bank or Federal savings association filed an opt-
in notice through the termination date specified in paragraph (d) of 
this section.
    (d) Termination of exclusions. This section shall cease to be 
effective after the reporting period that ends March 31, 2021.
    (e) Custody bank. A custody bank must reduce the amount in Sec.  
3.10(c)(4)(ii)(J)(1) (to no less than zero) by any amount excluded 
under paragraph (a)(2) of this section.
    (f) Disclosure. Notwithstanding Table 13 to Sec.  3.173, a national 
bank or Federal savings association that is required to make the 
disclosures pursuant to Sec.  3.173 must exclude the items excluded 
pursuant to paragraph (a) of this section from Table 13 to Sec.  3.173.
    (g) OCC approval for distributions. During the calendar quarter 
beginning on July 1, 2020, and until March 31, 2021, no national bank 
or Federal savings association that has opted in to the relief provided 
under paragraph (a) of this section may make a distribution, or create 
an obligation to make such a distribution, without prior OCC approval. 
When reviewing a request under this paragraph (g), the OCC will 
consider all relevant factors, including whether the distribution would 
be contrary to the safety and soundness of the national bank or Federal 
savings association; the nature, purpose, and extent of the request; 
and the particular circumstances giving rise to the request.

PART 6--PROMPT CORRECTIVE ACTION

0
 3. The authority citation for part 6 continues to read as follows:

    Authority: 12 U.S.C. 93a, 1831o, 5412(b)(2)(B).


0
4. Amend Sec.  6.4 by revising paragraphs (b)(2)(iv)(B) and 
(b)(3)(iv)(B) to read as follows:


Sec.  6.4  Capital measures and capital categories.

* * * * *
    (b) * * *
    (2) * * *
    (iv) * * *
    (B) With respect to an advanced approaches or Category III national 
bank or advanced approaches or Category III Federal savings 
association, the national bank or Federal savings association has a 
supplementary leverage ratio of 3.0 percent or greater; and
* * * * *
    (3) * * *
    (iv) * * *
    (B) With respect to an advanced approaches or Category III national 
bank or advanced approaches or Category III Federal savings 
association, on January 1, 2018, and thereafter, the national bank or 
Federal savings association has a supplementary leverage ratio of less 
than 3.0 percent.
* * * * *

Authority and Issuance

    For the reasons stated in the joint preamble, the Board of 
Governors of the Federal Reserve System amends 12 CFR chapter II as 
follows:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

0
5. The authority citation for part 208 continues to read as follows:

    Authority:  12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-
338a, 371d, 461, 481-486, 601, 611, 1814, 1816, 1817(a)(3), 
1817(a)(12), 1818, 1820(d)(9), 1833(j), 1828(o), 1831, 1831o, 1831p-
1, 1831r-1, 1831w, 1831x, 1835a, 1882, 2901-2907, 3105, 3310, 3331-
3351, 3905-3909, 5371, and 5371 note; 15 U.S.C. 78b, 78I(b), 78l(i), 
780-4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801, and 6805; 31 
U.S.C. 5318; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.


0
6. Section 208.43(b)(2)(iv)(B) and (b)(3)(iv)(B) are revised to read as 
follows:


Sec.  208.43   Capital measures and capital categories.

* * * * *
    (b) * * *
    (2) * * *
    (iv) * * *
    (B) With respect to an advanced approaches bank or bank that is a 
Category III Board-regulated institution (as defined in Sec.  217.2 of 
this chapter), the bank has a supplementary leverage ratio of 3.0 
percent or greater; and
* * * * *
    (3) * * *
    (iv) * * *
    (B) With respect to an advanced approaches bank or bank that is a 
Category III Board-regulated institution (as defined in Sec.  217.2 of 
this chapter), the bank has a supplementary leverage ratio of less than 
3.0 percent.
* * * * *

PART 217--CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND 
LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q)

0
7. 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, 5371 note, and sec. 4012, Pub. L. 
116-136, 134 Stat. 281.

Subpart G--Transition Provisions

0
8. Revise Sec.  217.303 to read as follows:


Sec.  217.303  Temporary exclusions from total leverage exposure.

    (a) In general. Subject to paragraphs (b) through (g) of this 
section and notwithstanding any other requirement in this part, 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), a Board-regulated 
institution that is a depository institution holding company or a U.S. 
intermediate holding company must, and a Board-regulated institution 
that is a state member bank may, 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) Opt-in period. Before applying the relief provided in paragraph 
(a) of this section, a state member bank must first notify the Board 
before July 1, 2020.
    (c) Calculation of relief. When calculating on-balance sheet assets 
as of each day of a reporting quarter, the relief provided in paragraph 
(a) of this section applies from the beginning of the reporting quarter 
in which the state member bank filed an opt-in notice

[[Page 32990]]

through the termination date specified in paragraph (d) of this 
section.
    (d) Termination of exclusions. This section shall cease to be 
effective after the reporting period that ends March 31, 2021.
    (e) Custodial banking organizations. A custodial banking 
organization 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.
    (f) Disclosure. Notwithstanding Table 13 to Sec.  217.173, a Board-
regulated institution 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.
    (g) Board approval for distributions. During the calendar quarter 
beginning on July 1, 2020, and until March 31, 2021, no state member 
bank that has opted in to the relief provided under paragraph (a) of 
this section may make a distribution, or create an obligation to make 
such a distribution, without prior Board approval. When reviewing a 
request under this paragraph (g), the Board will consider all relevant 
factors, including whether the distribution would be contrary to the 
safety and soundness of the state member bank; the nature, purpose, and 
extent of the request; and the particular circumstances giving rise to 
the request.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the joint preamble, the Federal 
Deposit Insurance Corporation amends chapter III of title 12 of the 
Code of Federal Regulations as follows:

PART 324--CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS

0
 9. The authority citation for part 324 continues to read as follows:

    Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 
1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233, 
105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 
105 Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160, 
2233 (12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386, 
as amended by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 
note); Pub. L. 111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note); 
Pub. L. 115-174; Pub. L. 116-136, 134 Stat. 281.

Subpart G--Transition Provisions


Sec.  324.304  [Redesignated as Sec.  324.305]

0
10. Redesignate Sec.  324.304 as Sec.  324.305.

0
11. A new Sec.  324.304 is added to read as follows:


Sec.  324.304  Temporary exclusions from total leverage exposure.

    (a) In general. Subject to paragraphs (b) through (g) of this 
section, and notwithstanding any other requirement in this part, an 
FDIC-supervised institution, when calculating on-balance sheet assets 
as of each day of a reporting quarter for purposes of determining the 
FDIC-supervised institution's total leverage exposure under Sec.  
324.10(c)(4), may 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) Opt-in period. Before applying the relief provided in paragraph 
(a) of this section, an FDIC-supervised institution must first notify 
the appropriate regional director of the FDIC Division of Risk 
Management Supervision before July 1, 2020.
    (c) Calculation of relief. When calculating on-balance sheet assets 
as of each day of a reporting quarter, the relief provided in paragraph 
(a) of this section applies from the beginning of the reporting quarter 
in which the FDIC-supervised institution filed an opt-in notice through 
the termination date specified in paragraph (d) of this section.
    (d) Termination of exclusions. This section shall cease to be 
effective after the reporting period that ends March 31, 2021.
    (e) Custody bank. A custody bank must reduce the amount in Sec.  
324.10(c)(4)(ii)(J)(1) (to no less than zero) by any amount excluded 
under paragraph (a)(2) of this section.
    (f) Disclosure. Notwithstanding Table 13 to Sec.  324.173, an FDIC-
supervised institution that is required to make the disclosures 
pursuant to Sec.  324.173 must exclude the items excluded pursuant to 
paragraph (a) of this section from Table 13 to Sec.  324.173.
    (g) FDIC approval for distributions. During the calendar quarter 
beginning on July 1, 2020, and until March 31, 2021, no FDIC-supervised 
institution that has opted in to the relief provided under paragraph 
(a) of this section may make a distribution, or create an obligation to 
make such a distribution, without prior FDIC approval. When reviewing a 
request under this paragraph (g), the FDIC will consider all relevant 
factors, including whether the distribution would be contrary to the 
safety and soundness of the FDIC-supervised institution; the nature, 
purpose, and extent of the request; and the particular circumstances 
giving rise to the request.

Subpart H--Prompt Corrective Action

0
12. Section 324.403(b)(2)(vi) and (b)(3)(v) are revised to read as 
follows:


Sec.  324.403  Capital measures and capital categories definitions.

* * * * *
    (b) * * *
    (2) * * *
    (vi) Beginning January 1, 2018, an advanced approaches or Category 
III FDIC-supervised institution will be deemed to be ``adequately 
capitalized'' if it satisfies paragraphs (b)(2)(i) through (v) of this 
section and has a supplementary leverage ratio of 3.0 percent or 
greater, as calculated in accordance with Sec.  324.10.
    (3) * * *
    (v) Beginning January 1, 2018, an advanced approaches or Category 
III FDIC-supervised institution will be deemed to be 
``undercapitalized'' if it has a supplementary leverage ratio of less 
than 3.0 percent, as calculated in accordance with Sec.  324.10.
* * * * *

Brian P. Brooks,
First Deputy Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on or about May 14, 2020.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2020-10962 Filed 5-29-20; 8:45 am]
BILLING CODE 4810-33-P