Supervision and Regulation Assessments of Fees for Bank Holding Companies and Savings and Loan Holding Companies With Total Consolidated Assets of $100 Billion or More, 78949-78954 [2020-25623]
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78949
Rules and Regulations
Federal Register
Vol. 85, No. 236
Tuesday, December 8, 2020
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
FEDERAL RESERVE SYSTEM
Table of Contents
12 CFR Part 246
[Regulation TT; Docket No. R–1683]
RIN 7100–AF63
Supervision and Regulation
Assessments of Fees for Bank Holding
Companies and Savings and Loan
Holding Companies With Total
Consolidated Assets of $100 Billion or
More
Board of Governors of the
Federal Reserve System (Board).
ACTION: Final rule.
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AGENCY:
SUMMARY: The Board of Governors of the
Federal Reserve System (Board) is
adopting a final rule (final rule) to
amend the Board’s assessment rule,
Regulation TT, pursuant to Section 318
of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the
Dodd-Frank Act), to address
amendments made by section 401 of the
Economic Growth, Regulatory Relief,
and Consumer Protection Act
(EGRRCPA). The final rule raises the
minimum threshold for being
considered an assessed company from
$50 billion to $100 billion in total
consolidated assets for bank holding
companies and savings and loan
holding companies and adjusts the
amount charged to assessed companies
with total consolidated assets between
$100 billion and $250 billion to reflect
changes in supervisory and regulatory
responsibilities resulting from
EGRRCPA.
DATES: The final rule is effective January
7, 2021.
FOR FURTHER INFORMATION CONTACT: Juan
Climent, Assistant Director, (202) 872–
7526, Teresa Scott, Manager, (202) 973–
6114, Naima Jefferson, Lead Financial
Institution Policy Analyst, (202) 912–
4613, Kelsi Wilken, Lead Business
Analyst, (202) 530–6287, Division of
Supervision and Regulation; Laurie
Schaffer, Deputy General Counsel (202)
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452–2272, Daniel Hickman, Senior
Counsel, (202) 973–7432, Nathaniel
Balk, Attorney (202) 872–7517, Legal
Division, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551. For
the hearing impaired only,
Telecommunication Device for the Deaf
(TTD), (202) 263–4869.
SUPPLEMENTARY INFORMATION:
I. Introduction
II. Overview of the Assessment Framework
III. Description of the Final Rule
A. Identification of Assessed Companies
B. Apportioning the Assessment Basis to
Assessed Companies
C. Assessment Rate
IV. Impact Analysis
V. Administrative Law Matters
A. Paperwork Reduction Act Analysis
B. Regulatory Flexibility Act Analysis
C. Use of Plain Language
I. Introduction
On November 12, 2019, the Board
published in the Federal Register a
notice of proposed rulemaking (the
proposed rule or proposal) seeking
public comment on the Board’s proposal
to amend Regulation TT (12 CFR part
246) to reflect changes made by the
Economic Growth, Regulatory Relief,
and Consumer Protection Act
(EGRRCPA) to Section 318 of the DoddFrank Act.1 Section 318 of the DoddFrank Act,2 as enacted, directed the
Board to collect assessments, fees, or
other charges (assessments), from
certain large bank holding companies
and savings and loan holding
companies and nonbank financial
companies designated by the Financial
Stability Oversight Council (Council) for
supervision by the Board (collectively,
assessed companies), equal to the
expenses the Board estimates are
necessary or appropriate to carry out its
supervision and regulation of those
companies. The Board transfers the
assessment proceeds to the U.S.
Treasury’s General Account.
EGRRCPA 3 amended several
provisions of the Dodd Frank Act,
which resulted in various changes to the
regulatory framework such as tailoring
the application of certain prudential
1 84
FR 60944 (November 12, 2019).
Law 111–203, 124 Stat. 1376 (2010),
section 318, codified at section 11 of the Federal
Reserve Act, 12 U.S.C. 248(s).
3 Public Law 115–174, 132 Stat. 1296 (2018).
2 Public
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standards for large banking
organizations,4 tailoring and revising
the Board’s company-run and
supervisory stress test requirements,
amending resolution planning
requirements, and modifying Section
318 of the Dodd-Frank Act. Specifically,
section 401 of EGRRCPA raised the
minimum size threshold for bank
holding companies and savings and
loan holding companies to be
considered assessed companies from
$50 billion to $100 billion in total
consolidated assets. In addition, section
401 of EGRRCPA directed the Board to
adjust the amount charged to assessed
companies with total consolidated
assets between $100 billion and $250
billion to reflect any changes in
supervisory and regulatory
responsibilities resulting from
EGRRCPA.5
The proposed rule was intended to
address amendments to the Dodd-Frank
Act made by EGRRCPA by: (a) Revising
the minimum threshold for assessed
bank holding companies and savings
and loan holding companies from $50
billion or more in total consolidated
assets to $100 billion or more in total
consolidated assets, (b) adjusting the
amount charged to assessed companies
with between $100 billion and $250
billion in total consolidated assets to
reflect changes in supervisory and
regulatory responsibilities resulting
from EGRRCPA, and (c) aligning
assessments with the Board’s
application of prudential standards
based on banking organizations’ risk
profiles.
The Board received one comment on
the proposed rule from an individual
supporting the proposal. The Board is
now finalizing the proposed rule with
one minor clarification regarding the
use of the risk-based categories for
tailoring standards applied to foreign
4 EGRRCPA raised the $50 billion minimum asset
threshold for general application of enhanced
prudential standards to bank holding companies
with $250 billion, and provided the Board with
discretion to apply prudential standards to bank
holding companies with total consolidated assets of
between $100 billion and $250 billion.
5 In addition, EGRRCPA provided that any bank
holding company, regardless of asset size, that has
been identified as a global systemically important
bank holding company under § 217.402 of title 12,
Code of Federal Regulations, shall be considered a
bank holding company with total consolidated
assets equal to or greater than $250 billion for
purposes of the assessments standards and
requirements. Public Law 115–174, 132 Stat. 1296
(2018), 401(f).
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rule adopts the proposed change to the
asset threshold for identification of
assessed companies without change.
bank holding companies, as described
below.
II. Overview of the Assessment
Framework
In August 2013, the Board adopted a
final rule to implement section 318 of
the Dodd-Frank Act, Regulation TT,6
which became effective on October 25,
2013. Regulation TT details how the
Board: (a) Determines whether a
company is an assessed company for
each assessment period,7 (b) estimates
the total expenses that are necessary or
appropriate to carry out the supervisory
and regulatory responsibilities to be
covered by the assessment, (c)
determines the assessment amount for
each assessed company, and (d) bills for
and collects the assessment from the
assessed companies (collectively, the
assessment framework). Since 2013, the
Board has annually provided notice of
the supervision and regulation
assessment on the Board’s public
website.8
III. Description of the Final Rule
A. Identification of Assessed Companies
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EGRRCPA raised the asset threshold
for bank holding companies and savings
and loan holding companies to be
considered assessed companies from
$50 billion or more in total consolidated
assets to $100 billion or more in total
consolidated assets.9 The proposed rule
would have revised the asset threshold
for bank holding companies and savings
and loan holding companies in the
definition of an assessed company in
Regulation TT to reflect this change. All
nonbank financial companies
designated by the Council for
supervision by the Board would
continue to be assessed companies. The
Board would continue to make the
determination of whether a company is
an assessed company for each
assessment period, based on
information reported by the company on
regulatory or other reports as
determined by the Board.10 The final
6 78 FR 52402 (August 23, 2013), codified at 12
CFR part 246.
7 Assessment period means January 1 through
December 31 of each calendar year.
8 https://www.federalreserve.gov/supervisionreg/
supervisory-assessment-fees.htm.
9 In accordance with EGRRCPA, bank holding
companies and savings and loan holding companies
with total consolidated assets between $50 billion
and $100 billion were not assessed for the 2018 and
2019 assessment periods.
10 All organizational structure and financial
information that the Board would use for the
purpose of determining whether a company is an
assessed company, including information with
respect to whether a company has control over a
U.S. bank or savings association, must have been
received by the Board on or before June 15
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B. Apportioning the Assessment Basis to
Assessed Companies
Section 401 of EGRRCPA directs the
Board to adjust the amount charged to
assessed companies with between $100
billion and $250 billion in total
consolidated assets to reflect any
changes in supervisory and regulatory
responsibilities resulting from
EGRRCPA. Consistent with section 401
of EGRRCPA, the Board issued a final
rule that establishes four categories for
the application of enhanced prudential
standards based on certain indicators
designed to measure the risk profile of
a banking organization (the tailoring
rule).11 In addition, concurrently with
the tailoring rule, the Board, with the
Office of the Comptroller of the
Currency (OCC) and the Federal Deposit
Insurance Corporation (FDIC),
separately finalized amendments to the
capital and liquidity requirements of the
agencies to introduce the same riskbased categories for tailoring
standards.12 The Board and the FDIC
also finalized changes to the resolution
planning requirements (the resolution
planning rule) to align with the tailoring
rule’s risk-based categories and account
for changes to the enhanced prudential
standards requirements made by
EGRRCPA.13 Collectively, these
tailoring, capital and liquidity, and
resolution planning requirements result
in changes to the Board’s supervisory
and regulatory responsibilities with
respect to certain companies, including
modification of enhanced prudential
standards relating to capital, stress
testing, and resolution planning.
The tailoring rule established the
following risk-based categories for the
application of prudential standards:
• Category I:
following that assessment period and must reflect
events that were effective on or before December 31
of the assessment period.
11 See Prudential Standards for Large Bank
Holding Companies and Savings and Loan Holding
Companies 84 FR 59032 (November 1, 2019); see
also Prudential Standards for Large Bank Holding
Companies and Savings and Loan Holding
Companies, 83 FR 61408 (November 29, 2018);
Prudential Standards for Large Foreign Banking
Organizations; Revisions to Proposed Prudential
Standards for Large Domestic Bank Holding
Companies and Savings and Loan Holding
Companies, 84 FR 21988 (May 15, 2019).
12 See Changes to Applicability Thresholds for
Regulatory Capital and Liquidity Requirements 84
FR 59230 (November 1, 2019); see also Proposed
Changes to Applicability Thresholds for Regulatory
Capital and Liquidity Requirements, 83 FR 66024
(December 21, 2018).
13 See Resolution Plans Required 84 FR 59194
(November 1, 2019); see also Resolution Plans
Required 84 FR 21600 (May 14, 2019).
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Æ U.S. global systemically important
bank holding companies (U.S. GSIBs).
• Category II:
Æ U.S. firms that are not subject to
Category I standards with (a) $700
billion or more in average total
consolidated assets, or (b) $100 billion
or more in average total consolidated
assets that have $75 billion or more in
average cross-jurisdictional activity, and
Æ Foreign banking organizations with
(a) $700 billion or more in average
combined U.S. assets,14 or (b) $100
billion or more in average combined
U.S. assets that have $75 billion or more
in average cross-jurisdictional activity
measured based on the foreign banking
organization’s combined U.S.
operations.15
• Category III:
Æ U.S. firms that are not subject to
Category I or Category II standards with
(a) $250 billion or more in average total
consolidated assets, or (b) $100 billion
or more in average total consolidated
assets that have $75 billion or more in
any of the following risk-based
indicators: Average total nonbank
assets, average weighted short-term
wholesale funding, or average offbalance sheet exposure, and
Æ Foreign banking organizations that
are not subject to Category II standards
with (a) $250 billion or more in average
combined U.S. assets, or (b) $100 billion
or more in average combined U.S. assets
that have $75 billion or more in any of
the following risk-based indicators
measured based on the combined U.S.
operations: Average total nonbank
assets, average weighted short-term
wholesale funding, or average offbalance sheet exposure.
• Category IV:
Æ U.S. firms with $100 billion or
more in average total consolidated
assets that do not meet any of the
thresholds specified for Categories I
through III, and
Æ Foreign banking organizations with
$100 billion or more in average
14 Combined U.S. assets means the sum of the
consolidated assets of each top-tier U.S. subsidiary
of the foreign banking organization (excluding any
section 2(h)(2) company as defined in section
2(h)(2) of the Bank Holding Company Act (12 U.S.C.
1841(h)(2)), if applicable) and the total assets of
each U.S. branch and U.S. agency of the foreign
banking organization, as reported by the foreign
banking organization on the FR Y–7Q.
15 The combined U.S. operations of a foreign
banking organization include any U.S. subsidiaries
(including any U.S. intermediate holding company),
U.S. branches, and U.S. agencies. In addition, for
a foreign banking organization that is not required
to form a U.S. intermediate holding company,
combined U.S. operations refer to its U.S. branch
and agency network and the U.S. subsidiaries of the
foreign banking organization (excluding any section
2(h)(2) company as defined in section 2(h)(2) of the
Bank Holding Company Act (12 U.S.C. 1841(h)(2),
if applicable) and any subsidiaries of such U.S.
subsidiaries.
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78951
combined U.S. assets that do not meet
any of the thresholds specified for
Categories II or III.16
The proposed rule would have
modified Regulation TT to incorporate
the tailoring rule’s risk-based categories
for purposes of adjusting the amount
charged to assessed companies with
between $100 billion and $250 billion
in total consolidated assets. This would
align the Board’s assessment rule with
its enhanced prudential standards
framework for large banking
organizations and EGRRCPA-related
changes to the Board’s supervision and
regulation of those companies. As
described in the proposed rule, because
these categories were designed to tailor
supervisory and regulatory requirements
to the level of risk associated with
specific firms, the categories provide a
consistent basis for adjusting the
assessments for assessed companies
with between $100 billion and $250
billion in total consolidated assets.17
The proposal provided that assessed
companies subject to Category IV
standards pursuant to the tailoring rule
(Category IV firms), would receive an
adjusted assessment rate, to reflect the
impact of tailoring and other EGRRCPArelated changes to the supervision and
regulation of these companies. In
addition, the proposal provided that any
assessed companies that are not subject
to enhanced prudential standards
outlined for firms subject to Categories
I through IV standards pursuant to the
tailoring rule (‘‘other’’ firms),18 would
also receive the adjusted assessment rate
because the Board does not incur the
supervisory and regulatory costs
associated with such standards for those
firms. Under the proposal, and
consistent with EGRRCPA and the
requirements in the tailoring rule, firms
with between $100 and $250 billion in
total consolidated assets that are subject
to Category I, II, or III standards would
not be eligible for the adjusted
assessment rate.
Consistent with Regulation TT’s
methodology for determining whether a
company is an assessed company, the
determination of whether a company is
eligible for the adjusted assessment rate
would be based on the assessed
company’s status with respect to the
four categories of prudential standards
in the tailoring rule as of December 31
of the assessment period. The final rule
adopts the proposed methodology for
determining the eligibility for the
adjusted assessment rate.
For foreign banking organizations,
size and risk-based indicators are
calculated separately for combined U.S.
operations and intermediate holding
companies (if applicable).19 As such,
foreign banking organizations with
intermediate holding companies may be
subject to different categories of
standards at the intermediate holding
company and the combined U.S.
operations levels of the organization. In
light of this distinction, the Board is
clarifying that foreign banking
organizations that are assessed
companies should look to the
categorization of the combined U.S.
operations of the foreign banking
organization, as determined by the
Board’s tailoring framework, 20 to
determine eligibility for the adjusted
assessment rate. With this minor
clarification, the Board is adopting the
rule as proposed without change.
C. Assessment Rate
The tailoring rule and resolution
planning rule modify the application of
certain enhanced prudential standards
and supervisory and regulatory
programs for Category IV firms relating
to capital stress testing; risk
management; liquidity risk
management, stress testing, and buffer
requirements; single-counterparty credit
limits; and resolution planning
programs.21 In addition, the Board has
issued a proposal that would align
capital planning requirements with the
two-year supervisory stress testing cycle
and provide greater flexibility for
Category IV firms.22
As described in the proposed rule, as
a result of these changes, the Board
expects the share of its expenses
incurred in the supervision and
regulation of Category IV and ‘‘other’’
firms to decline relative to the share of
expenses incurred in the supervision
and regulation of assessed companies
subject to Categories I, II, and III
standards (Category I, II, and III firms).23
The expenses associated with these
programs for Category IV and ‘‘other’’
firms were estimated to be
approximately 10 percent of the Board’s
total estimated expenses for assessed
companies in 2018.24 Accordingly, the
proposal provided that the Board adjust
the amount charged to assessed
companies with total consolidated
assets between $100 billion and $250
billion to reflect EGRRCPA-related
changes by reducing Category IV and
‘‘other’’ firms’ share of the net
assessment basis 25 by 10 percent. The
Board provided this estimate of costs
based, in part, on proposed
modifications to the supervisory and
regulatory framework for large banking
organizations. To the extent that the
modifications of the relevant
supervisory and regulatory programs
differ from the basis for the underlying
estimate of costs, the final rule may be
revised to reflect these changes.
Under the proposal the assessment
rate for Category IV and ‘‘other’’ firms
would have been determined according
to the following formula, where the
estimated share of total program costs
attributable to EGRRCPA-related
supervisory and regulatory changes for
Category IV and ‘‘other’’ firms is
represented by the variable S:
16 See Prudential Standards for Large Bank
Holding Companies and Savings and Loan Holding
Companies 84 FR 59032 (November 1, 2019).
17 EGRRCPA acknowledges that eligibility for the
adjustment can be affected by the risk-based
category of supervision and regulation of an
assessed company. Under section 401(f) of
EGRRCPA, all U.S. GSIBs (i.e., companies subject to
Category I standards), regardless of asset size, are
considered to have total consolidated assets equal
to or greater than $250 billion for purposes of the
assessments standards and requirements. Public
Law 115–174, 132 Stat. 1296 (2018), section 401(f).
18 For example, insurance savings and loan
holding companies and foreign bank holding
companies with a small U.S. presence.
19 12 CFR 252.5(a)(2)–(3).
20 12 CFR part 252.
21 See Prudential Standards for Large Bank
Holding Companies and Savings and Loan Holding
Companies 84 FR 59032 (November 1, 2019);
Changes to Applicability Thresholds for Regulatory
Capital and Liquidity Requirements 84 FR 59230
(November 1, 2019); Resolution Plans Required 84
FR 59194 (November 1, 2019).
22 See Amendments to Capital Planning and
Stress Testing Requirements for Large Bank Holding
Companies, Intermediate Holding Companies and
Savings and Loan Holding Companies 85 FR 63222
(October 7, 2020). The Board previously provided
relief to less-complex firms from stress testing
requirements and CCAR by effectively moving the
firms to an extended stress test cycle for 2019. See
Press Release, Federal Reserve Board releases
scenarios for 2019 Comprehensive Capital Analysis
and Review (CCAR) and Dodd-Frank Act stress test
exercises, dated February 5, 2019, available at
https://www.federalreserve.gov/newsevents/
pressreleases/bcreg20190205b.htm.
23 Category I, II, and III firms that are assessed
companies would continue to bear their share of the
assessable cost basis.
24 The Board and Reserve Banks generally do not
account for expenses on a firm-by-firm or programby-program basis; therefore, the share of EGRRCPArelated program costs represents an estimate based
on analysis of system-wide accounting data and
time surveys.
25 The assessment basis is the average of the
amount of total expenses the Board estimates is
necessary or appropriate to carry out the
supervisory and regulatory responsibilities for
assessed companies. 12 CFR 246.4(d). The net
assessment basis is the assessment basis net of the
total $50,000 base amount charged to all assessed
companies (i.e., net assessment basis = assessment
basis—(# of assessed companies × $50,000)).
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Assessment rate for Category IV and ‘‘other’’ firms = [(Net assessment basis × Category IV and ‘‘other’’ firms’ share of the total assessable
assets of all assessed companies) × (1—S)]
Category IV firms and ‘‘other’’ firms’ total assessable assets
Thus, under the proposal, the
assessment rate for Category IV and
‘‘other’’ firms would have been
determined by multiplying the net
assessment basis by these firms’ share of
the total assessable assets of all assessed
companies multiplied by 0.9 (i.e., 1—S,
or 1—0.1), the product of which is then
divided by the total assessable assets of
Category IV and ‘‘other’’ firms.
In the proposal, the assessment rate
for Category I, II, and III firms would
have been determined according to the
following formula:
Assessment rate for Category I, II and III firms = [(Net assessment basis × Category I, II, and III firms’ share of the total assessable assets of
all assessed companies) + (Net assessment basis × Category IV and ‘‘other’’ firms’ share of total assessable assets × S)]
Category I, II, and III firms’ total assessable assets
In the proposal, the assessment rate
for Category I, II, and III firms would
have been determined by multiplying
the net assessment basis by these firms’
share of the total assessable assets of all
assessed companies, plus the sum of the
net assessment basis multiplied by the
Category IV and ‘‘other’’ firms share of
the total assessable assets multiplied by
0.1 (i.e., S), the sum of which is then
divided by the total assessable assets of
Category I, II, and III firms.
The final rule adopts the proposed
methodology for calculating the
applicable assessment rate. As described
above, the EGRRCPA-related
supervisory and regulatory changes that
are the basis for the estimated reduction
in program costs for Category IV and
‘‘other’’ firms began occurring in 2020.
Accordingly, the proposal provided that
the revised assessment rates would
apply beginning with the 2020
assessment period. Consistent with the
existing assessment framework, assessed
companies would receive a notice of
assessment for the 2020 assessment
period, using the revised assessment
rates, no later than June 30, 2021.
Assessed companies would continue to
have 30 calendar days from June 30 to
appeal the Board’s determination (a)
that the company is an assessed
company or (b) of the company’s total
assessable assets. The final rule adopts
the proposed effectiveness date for the
revised assessment rates.
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IV. Impact Analysis
Using data from the 2018 assessment
period, the change in the minimum
threshold of total consolidated assets
from $50 billion to $100 billion
decreased the number of assessed
companies from 64 to 56. These
companies would have been charged an
aggregate amount of $10.1 million, or
approximately 1.7 percent of the
estimated assessment basis.
As of December 31, 2018, firms with
between $100 billion and $250 billion
in total consolidated assets accounted
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for 6.8 percent of total consolidated
assets for assessed companies. In 2018,
an assessed Category IV firm with $100
billion in total consolidated assets
would have been charged $3.1 million.
Under the final rule, an assessed
Category IV firm with $100 billion in
total consolidated assets would be
charged $2.9 million.
V. Administrative Law Matters
A. Paperwork Reduction Act Analysis
Regulation TT contains a ‘‘collection
of information’’ within the meaning of
the Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3501–3521) that would
be affected by the final rule.
Specifically, under the final rule, bank
holding companies and savings and
loan holding companies with total
consolidated assets of between $50
billion and $100 billion would no
longer be assessed companies, and
therefore would no longer be
respondents for the reporting provision
located at section 246.5(b) of Regulation
TT, which permits assessed companies
to submit a written statement to appeal
the Board’s determination that the
company is an assessed company or its
determination of the company’s total
assessable assets.
In accordance with the requirements
of the PRA, the Board may not conduct
or sponsor, and a respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
(OMB) control number. Under the
authority delegated to the Board by
OMB, the Board recently approved a
revision to the collection of information
pursuant to Regulation TT to account
for the changes described above (OMB
Control Number 7100–0369).26
B. Regulatory Flexibility Act Analysis
An initial regulatory flexibility
analysis (IRFA) was included in the
proposal in accordance with section
603(a) of the Regulatory Flexibility Act
(RFA), 5 U.S.C. 601 et seq. In the IRFA,
the Board requested comment on the
effect of the proposed rule on small
entities and on any significant
alternatives that would reduce the
regulatory burden on small entities. The
Board did not receive any comments on
the IRFA. The RFA requires an agency
to prepare a final regulatory flexibility
analysis unless the agency certifies that
a rule will not, if promulgated, have a
significant economic impact on a
substantial number of small entities.
Based on its analysis, and for the
reasons stated below, the Board certifies
that the final rule will not have a
significant economic impact on a
substantial number of small entities.27
Under regulations issued by the Small
Business Administration (SBA), a small
entity includes a bank, bank holding
company, or savings and loan holding
company with assets of $600 million or
less and trust companies with total
assets of $41.5 million or less.28
This final rule is being issued because
section 401 of EGRRCPA raised the
minimum threshold for being
considered an assessed holding
company from $50 billion to $100
billion in total consolidated assets and
directed the Board to adjust the amount
charged to assessed companies with
between $100 billion and $250 billion
in total consolidated assets. As
discussed in the Supplementary
Information section, the objective of the
final rule is to update Regulation TT to
reflect the new minimum threshold for
being considered an assessed company
and to revise the assessment rate
calculation to account for EGRRCPArelated changes in the Board’s
supervisory and regulatory
responsibilities. The Board is required
by section 318 of the Dodd-Frank Act to
collect assessments equal to the total
27 5
U.S.C. 605(b).
13 CFR 121.201; 84 FR 34261 (July 18,
28 See
26 84
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2019).
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expenses the Board estimates are
necessary or appropriate to carry out
supervisory and regulatory
responsibilities with respect to assessed
companies. Section 401 of EGRRCPA
directs to Board to revise the assessment
framework by raising the minimum
threshold for being considered an
assessed holding company to $100
billion in total consolidated assets and
adjusting the amount charged to
assessed companies with between $100
billion and $250 billion in total
consolidated assets.
The final rule applies to assessed
companies, which includes bank
holding companies and savings and
loan holding companies with $100
billion or more in total consolidated
assets, foreign banking organizations
that are bank holding companies and
savings and loan holding companies
with $100 billion or more in total global
consolidated assets, and nonbank
financial companies that the Council
has determined must be supervised by
the Board. These companies are well
above the $600 million asset threshold
at which a banking organization is
considered a ‘‘small entity’’ under SBA
regulations.29 For this reason, the Board
certifies that the final rule will not have
a significant economic impact on a
substantial number of small entities.
C. Use of Plain Language
Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat.
1338, 1471, 12 U.S.C. 4809) requires the
Federal banking agencies to use plain
language in all proposed and final rules
published after January 1, 2000. The
Board sought to present the proposed
rule in a simple and straightforward
manner and did not receive any
comments on the use of plain language.
List of Subjects in 12 CFR Part 246
Administrative practice and
procedure, Banks, banking, Holding
companies, Reporting and
recordkeeping requirements, Savings
associations.
Authority and Issuance
For the reasons set forth in the
preamble, the Board amends 12 CFR
part 246 as follows:
jbell on DSKJLSW7X2PROD with RULES
1. The authority citation for Part 246
is revised to read as follows:
29 It is unlikely that nonbank financial companies
designated by the Council would have less than
$600 million in consolidated assets.
Jkt 253001
§ 246.1
Authority, purpose and scope.
(a) Authority. This part (Regulation
TT) is issued by the Board of Governors
of the Federal Reserve System (Board)
under section 318 of Title III of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (the DoddFrank Act) (Pub. L. 111–203, 124 Stat.
1376, 1423–32, 12 U.S.C. 5365 and
5366), section 401 of the Economic
Growth, Regulatory Relief, and
Consumer Protection Act (EGRRCPA)
(Pub. L. 115–174, 132 Stat. 1296), and
section 11(s) of the Federal Reserve Act
(12 U.S.C. 248(s)).
(b) Scope. This part applies to:
(1) Any bank holding company having
total consolidated assets of $100 billion
or more, as defined in this section;
(2) Any savings and loan holding
company having total consolidated
assets of $100 billion or more, as
defined below; and
(3) Any nonbank financial company
supervised by the Board, as defined
§ 246.2.
(c) Purpose. This part implements
provisions of section 318 of the DoddFrank Act and section 401 of EGRRCPA
that direct the Board to collect
assessments, fees, or other charges from
companies identified in subsection (b)
that are equal to the total expenses the
Board estimates are necessary or
appropriate to carry out the supervisory
and regulatory responsibilities of the
Board with respect to these assessed
companies and to adjust the amount
charged to assessed companies with
total consolidated assets between $100
billion and $250 billion to reflect any
changes in supervisory and regulatory
responsibilities resulting from
EGRRCPA.
*
*
*
*
*
■ 3. Section 246.2 is revised by adding
paragraphs (n) through (p) to read as
follows:
Definitions.
*
■
16:00 Dec 07, 2020
2. In § 246.1, paragraphs (a) through
(c) are revised to read as follows:
■
§ 246.2
PART 246—SUPERVISION AND
REGULATION ASSESSMENTS OF
FEES (REGULATION TT)
VerDate Sep<11>2014
Authority: Pub. L. 111–203, 124 Stat. 1376,
1526 (2010), Pub. L. 115–174, 132 Stat. 1296
(2018), and section 11(s) of the Federal
Reserve Act (12 U.S.C. 248(s)).
*
*
*
*
(n) Category I, II, and III firms are
assessed companies subject to Category
I, II, or III standards as defined and
determined under 12 CFR parts 238 and
252 as of December 31 of the assessment
period.
(o) Category IV firms are assessed
companies subject to Category IV
standards as defined and determined
under 12 CFR parts 238 and 252 as of
December 31 of the assessment period.
PO 00000
Frm 00005
Fmt 4700
Sfmt 4700
78953
(p) ‘‘Other’’ firms are assessed
companies not subject to the Category I,
II, III, or IV standards as defined and
determined under 12 CFR parts 238 and
252 as of December 31 of the assessment
period.
■ 4. Section 246.3 is revised to read as
follows:
§ 246.3.
Assessed companies.
An assessed company is any company
that:
(a) Is a top-tier company that, on
December 31 of the assessment period:
(1) Is a bank holding company, other
than a foreign bank holding company,
with $100 billion or more in total
consolidated assets, as determined
based on the average of the bank
holding company’s total consolidated
assets reported for the assessment
period on the Federal Reserve’s Form
FR Y–9C (‘‘FR Y–9C’’),
(2)(i) Is a savings and loan holding
company, other than a foreign savings
and loan holding company, with $100
billion or more in total consolidated
assets, as determined, except as
provided in paragraph (a)(2)(ii) of this
section, based on the average of the
savings and loan holding company’s
total consolidated assets as reported for
the assessment period on the FR Y–9C
or on the Quarterly Savings and Loan
Holding Company Report (FR 2320), as
applicable.
(ii) If a company does not calculate its
total consolidated assets under GAAP
for any regulatory purpose (including
compliance with applicable securities
laws), the company may request that the
Board permit the company to file a
quarterly estimate of its total
consolidated assets. The Board may, in
its discretion and subject to Board
review and adjustment, permit the
company to provide estimated total
consolidated assets on a quarterly basis.
For purposes of this part, the company’s
total consolidated assets will be the
average of the estimated total
consolidated assets provided for the
assessment period.
(b) Is a top-tier foreign bank holding
company on December 31 of the
assessment period, with $100 billion or
more in total consolidated assets, as
determined based on the average of the
foreign bank holding company’s total
consolidated assets reported for the
assessment period on the Federal
Reserve’s Form FR Y–7Q (‘‘FR Y–7Q’’),
provided, however, that if any such
company has filed only one FR Y–7Q
during the assessment period, the Board
shall use an average of the foreign bank
holding company’s total consolidated
assets reported on that FR Y–7Q and on
the FR Y–7Q for the corresponding
E:\FR\FM\08DER1.SGM
08DER1
78954
Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Rules and Regulations
period in the year prior to the
assessment period.
(c) Is a top-tier foreign savings and
loan holding company on December 31
of the assessment period, with $100
billion or more in total consolidated
assets, as determined based on the
average of the foreign savings and loan
holding company’s total consolidated
assets reported for the assessment
period on the reporting forms applicable
during the assessment period, provided,
however, that if any such company has
filed only one reporting form during the
assessment period, the Board shall use
an average of the foreign savings and
loan holding company’s total
consolidated assets reported on that
reporting form and on the reporting
form for the corresponding period in the
year prior to the assessment period, or
(d) Is a nonbank financial company
supervised by the Board. 5. Section
246.4 is amended by revising paragraph
(c)(1) and by adding new paragraphs
(d)(3) and (4) to read as follows:
§ 246.4
Assessments.
*
*
*
*
*
(c) Assessment rates. Assessment
rates means, with regard to a given
assessment period, the two rates
published by the Board for the
calculation of assessments for Category
IV and ‘‘other’’ firms and for Category I,
II, and III firms.
(1)(i) The assessment rate for Category
IV and ‘‘other’’ firms will be calculated
according to this formula:
Assessment rate = [(Net Assessment Basis × Category IV and ‘‘other’’ firms’ share of total assessable assets of all assessed companies) × (1¥S)]
Category IV and ‘‘other’’ firms’ total assessable assets
(ii) The assessment rate for Category
I, II, and III firms will be calculated
according to this formula:
Assessment rate = [(Net Assessment Basis × Category I, II, and III firms’ share of total assessable assets of all assessed companies) + (Net Assessment Basis ×
Category IV and ‘‘other’’ firms’ share of total assessable assets × S)]
Category I, II, and III firms’ total assessable assets
*
*
*
*
*
(d) * * *
(3) Net Assessment Basis is the
assessment basis, as defined by
paragraph (d)(2), net of the total $50,000
base amount charged to all assessed
companies. Net Assessment Basis =
assessment basis¥(number of assessed
companies × $50,000).
(4) The variable S represents the
estimated share of total costs
attributable to changes in supervisory
and regulatory responsibilities resulting
from EGRRCPA for Category IV and
‘‘other’’ firms. S = 0.1 (10 percent).
*
*
*
*
*
SUMMARY: The FAA is superseding
Airworthiness Directive (AD) 2018–26–
02 for Airbus Helicopters (previously
Eurocopter France) Model AS350B3,
EC130B4, and EC130T2 helicopters. AD
2018–26–02 required inspecting the
pilot’s and co-pilot’s throttle twist for
proper operation. This new AD retains
the requirements of AD 2018–26–02 and
adds calendar time compliance times for
the required actions. This AD was
prompted by a public comment that
prompted additional review. The
actions of this AD are intended to
address an unsafe condition on these
products.
By order of the Board of Governors of the
Federal Reserve System.
Ann Misback,
Secretary of the Board.
DATES:
[FR Doc. 2020–25623 Filed 12–7–20; 8:45 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2020–0570; Product
Identifier 2019–SW–121–AD; Amendment
39–21337; AD 2020–24–07]
jbell on DSKJLSW7X2PROD with RULES
RIN 2120–AA64
Airworthiness Directives; Airbus
Helicopters
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
VerDate Sep<11>2014
16:00 Dec 07, 2020
Jkt 253001
This AD is effective January 12,
2021.
The Director of the Federal Register
approved the incorporation by reference
of certain publications listed in this AD
as of February 2, 2017 (81 FR 95854,
December 29, 2016), and January 30,
2019 (83 FR 66093, December 26, 2018).
For service information
identified in this final rule, contact
Airbus Helicopters, 2701 N Forum
Drive, Grand Prairie, TX 75052;
telephone 972–641–0000 or 800–232–
0323; fax 972–641–3775; or at https://
www.airbus.com/helicopters/services/
technical-support.html. You may the
view this referenced service information
at the FAA, Office of the Regional
Counsel, Southwest Region, 10101
Hillwood Pkwy., Room 6N–321, Fort
Worth, TX 76177. It is also available on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2020–
0570.
ADDRESSES:
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov in Docket No.
FAA–2020–0570; or in person at Docket
Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal
holidays. The AD docket contains this
AD, the European Aviation Safety
Agency (now European Union Aviation
Safety Agency) (EASA) AD, any service
information that is incorporated by
reference, any comments received, and
other information. The street address for
Docket Operations is U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT:
George Schwab, Aviation Safety
Engineer, Safety Management Section,
Rotorcraft Standards Branch, FAA,
10101 Hillwood Pkwy., Fort Worth, TX
76177; telephone 817–222–5110; email
george.schwab@faa.gov.
SUPPLEMENTARY INFORMATION:
Discussion
The FAA issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 to remove AD 2018–26–02,
Amendment 39–19532 (83 FR 66093,
December 26, 2018) (AD 2018–26–02),
and add a new AD. AD 2018–26–02
applied to Airbus Helicopters Model
AS350B3 and EC130B4 helicopters with
an ARRIEL 2B1 engine with the twochannel Full Authority Digital Engine
Control (FADEC) and with new twist
grip modification (MOD) 073254 (for
Model AS350B3 helicopters) or MOD
E:\FR\FM\08DER1.SGM
08DER1
]]>Agencies
[Federal Register Volume 85, Number 236 (Tuesday, December 8, 2020)]
[Rules and Regulations]
[Pages 78949-78954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25623]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 /
Rules and Regulations
[[Page 78949]]
FEDERAL RESERVE SYSTEM
12 CFR Part 246
[Regulation TT; Docket No. R-1683]
RIN 7100-AF63
Supervision and Regulation Assessments of Fees for Bank Holding
Companies and Savings and Loan Holding Companies With Total
Consolidated Assets of $100 Billion or More
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board of Governors of the Federal Reserve System (Board)
is adopting a final rule (final rule) to amend the Board's assessment
rule, Regulation TT, pursuant to Section 318 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (the Dodd-Frank Act), to
address amendments made by section 401 of the Economic Growth,
Regulatory Relief, and Consumer Protection Act (EGRRCPA). The final
rule raises the minimum threshold for being considered an assessed
company from $50 billion to $100 billion in total consolidated assets
for bank holding companies and savings and loan holding companies and
adjusts the amount charged to assessed companies with total
consolidated assets between $100 billion and $250 billion to reflect
changes in supervisory and regulatory responsibilities resulting from
EGRRCPA.
DATES: The final rule is effective January 7, 2021.
FOR FURTHER INFORMATION CONTACT: Juan Climent, Assistant Director,
(202) 872-7526, Teresa Scott, Manager, (202) 973-6114, Naima Jefferson,
Lead Financial Institution Policy Analyst, (202) 912-4613, Kelsi
Wilken, Lead Business Analyst, (202) 530-6287, Division of Supervision
and Regulation; Laurie Schaffer, Deputy General Counsel (202) 452-2272,
Daniel Hickman, Senior Counsel, (202) 973-7432, Nathaniel Balk,
Attorney (202) 872-7517, Legal Division, Board of Governors of the
Federal Reserve System, 20th and C Streets NW, Washington, DC 20551.
For the hearing impaired only, Telecommunication Device for the Deaf
(TTD), (202) 263-4869.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Overview of the Assessment Framework
III. Description of the Final Rule
A. Identification of Assessed Companies
B. Apportioning the Assessment Basis to Assessed Companies
C. Assessment Rate
IV. Impact Analysis
V. Administrative Law Matters
A. Paperwork Reduction Act Analysis
B. Regulatory Flexibility Act Analysis
C. Use of Plain Language
I. Introduction
On November 12, 2019, the Board published in the Federal Register a
notice of proposed rulemaking (the proposed rule or proposal) seeking
public comment on the Board's proposal to amend Regulation TT (12 CFR
part 246) to reflect changes made by the Economic Growth, Regulatory
Relief, and Consumer Protection Act (EGRRCPA) to Section 318 of the
Dodd-Frank Act.\1\ Section 318 of the Dodd-Frank Act,\2\ as enacted,
directed the Board to collect assessments, fees, or other charges
(assessments), from certain large bank holding companies and savings
and loan holding companies and nonbank financial companies designated
by the Financial Stability Oversight Council (Council) for supervision
by the Board (collectively, assessed companies), equal to the expenses
the Board estimates are necessary or appropriate to carry out its
supervision and regulation of those companies. The Board transfers the
assessment proceeds to the U.S. Treasury's General Account.
---------------------------------------------------------------------------
\1\ 84 FR 60944 (November 12, 2019).
\2\ Public Law 111-203, 124 Stat. 1376 (2010), section 318,
codified at section 11 of the Federal Reserve Act, 12 U.S.C. 248(s).
---------------------------------------------------------------------------
EGRRCPA \3\ amended several provisions of the Dodd Frank Act, which
resulted in various changes to the regulatory framework such as
tailoring the application of certain prudential standards for large
banking organizations,\4\ tailoring and revising the Board's company-
run and supervisory stress test requirements, amending resolution
planning requirements, and modifying Section 318 of the Dodd-Frank Act.
Specifically, section 401 of EGRRCPA raised the minimum size threshold
for bank holding companies and savings and loan holding companies to be
considered assessed companies from $50 billion to $100 billion in total
consolidated assets. In addition, section 401 of EGRRCPA directed the
Board to adjust the amount charged to assessed companies with total
consolidated assets between $100 billion and $250 billion to reflect
any changes in supervisory and regulatory responsibilities resulting
from EGRRCPA.\5\
---------------------------------------------------------------------------
\3\ Public Law 115-174, 132 Stat. 1296 (2018).
\4\ EGRRCPA raised the $50 billion minimum asset threshold for
general application of enhanced prudential standards to bank holding
companies with $250 billion, and provided the Board with discretion
to apply prudential standards to bank holding companies with total
consolidated assets of between $100 billion and $250 billion.
\5\ In addition, EGRRCPA provided that any bank holding company,
regardless of asset size, that has been identified as a global
systemically important bank holding company under Sec. 217.402 of
title 12, Code of Federal Regulations, shall be considered a bank
holding company with total consolidated assets equal to or greater
than $250 billion for purposes of the assessments standards and
requirements. Public Law 115-174, 132 Stat. 1296 (2018), 401(f).
---------------------------------------------------------------------------
The proposed rule was intended to address amendments to the Dodd-
Frank Act made by EGRRCPA by: (a) Revising the minimum threshold for
assessed bank holding companies and savings and loan holding companies
from $50 billion or more in total consolidated assets to $100 billion
or more in total consolidated assets, (b) adjusting the amount charged
to assessed companies with between $100 billion and $250 billion in
total consolidated assets to reflect changes in supervisory and
regulatory responsibilities resulting from EGRRCPA, and (c) aligning
assessments with the Board's application of prudential standards based
on banking organizations' risk profiles.
The Board received one comment on the proposed rule from an
individual supporting the proposal. The Board is now finalizing the
proposed rule with one minor clarification regarding the use of the
risk-based categories for tailoring standards applied to foreign
[[Page 78950]]
bank holding companies, as described below.
II. Overview of the Assessment Framework
In August 2013, the Board adopted a final rule to implement section
318 of the Dodd-Frank Act, Regulation TT,\6\ which became effective on
October 25, 2013. Regulation TT details how the Board: (a) Determines
whether a company is an assessed company for each assessment period,\7\
(b) estimates the total expenses that are necessary or appropriate to
carry out the supervisory and regulatory responsibilities to be covered
by the assessment, (c) determines the assessment amount for each
assessed company, and (d) bills for and collects the assessment from
the assessed companies (collectively, the assessment framework). Since
2013, the Board has annually provided notice of the supervision and
regulation assessment on the Board's public website.\8\
---------------------------------------------------------------------------
\6\ 78 FR 52402 (August 23, 2013), codified at 12 CFR part 246.
\7\ Assessment period means January 1 through December 31 of
each calendar year.
\8\ https://www.federalreserve.gov/supervisionreg/supervisory-assessment-fees.htm.
---------------------------------------------------------------------------
III. Description of the Final Rule
A. Identification of Assessed Companies
EGRRCPA raised the asset threshold for bank holding companies and
savings and loan holding companies to be considered assessed companies
from $50 billion or more in total consolidated assets to $100 billion
or more in total consolidated assets.\9\ The proposed rule would have
revised the asset threshold for bank holding companies and savings and
loan holding companies in the definition of an assessed company in
Regulation TT to reflect this change. All nonbank financial companies
designated by the Council for supervision by the Board would continue
to be assessed companies. The Board would continue to make the
determination of whether a company is an assessed company for each
assessment period, based on information reported by the company on
regulatory or other reports as determined by the Board.\10\ The final
rule adopts the proposed change to the asset threshold for
identification of assessed companies without change.
---------------------------------------------------------------------------
\9\ In accordance with EGRRCPA, bank holding companies and
savings and loan holding companies with total consolidated assets
between $50 billion and $100 billion were not assessed for the 2018
and 2019 assessment periods.
\10\ All organizational structure and financial information that
the Board would use for the purpose of determining whether a company
is an assessed company, including information with respect to
whether a company has control over a U.S. bank or savings
association, must have been received by the Board on or before June
15 following that assessment period and must reflect events that
were effective on or before December 31 of the assessment period.
---------------------------------------------------------------------------
B. Apportioning the Assessment Basis to Assessed Companies
Section 401 of EGRRCPA directs the Board to adjust the amount
charged to assessed companies with between $100 billion and $250
billion in total consolidated assets to reflect any changes in
supervisory and regulatory responsibilities resulting from EGRRCPA.
Consistent with section 401 of EGRRCPA, the Board issued a final rule
that establishes four categories for the application of enhanced
prudential standards based on certain indicators designed to measure
the risk profile of a banking organization (the tailoring rule).\11\ In
addition, concurrently with the tailoring rule, the Board, with the
Office of the Comptroller of the Currency (OCC) and the Federal Deposit
Insurance Corporation (FDIC), separately finalized amendments to the
capital and liquidity requirements of the agencies to introduce the
same risk-based categories for tailoring standards.\12\ The Board and
the FDIC also finalized changes to the resolution planning requirements
(the resolution planning rule) to align with the tailoring rule's risk-
based categories and account for changes to the enhanced prudential
standards requirements made by EGRRCPA.\13\ Collectively, these
tailoring, capital and liquidity, and resolution planning requirements
result in changes to the Board's supervisory and regulatory
responsibilities with respect to certain companies, including
modification of enhanced prudential standards relating to capital,
stress testing, and resolution planning.
---------------------------------------------------------------------------
\11\ See Prudential Standards for Large Bank Holding Companies
and Savings and Loan Holding Companies 84 FR 59032 (November 1,
2019); see also Prudential Standards for Large Bank Holding
Companies and Savings and Loan Holding Companies, 83 FR 61408
(November 29, 2018); Prudential Standards for Large Foreign Banking
Organizations; Revisions to Proposed Prudential Standards for Large
Domestic Bank Holding Companies and Savings and Loan Holding
Companies, 84 FR 21988 (May 15, 2019).
\12\ See Changes to Applicability Thresholds for Regulatory
Capital and Liquidity Requirements 84 FR 59230 (November 1, 2019);
see also Proposed Changes to Applicability Thresholds for Regulatory
Capital and Liquidity Requirements, 83 FR 66024 (December 21, 2018).
\13\ See Resolution Plans Required 84 FR 59194 (November 1,
2019); see also Resolution Plans Required 84 FR 21600 (May 14,
2019).
---------------------------------------------------------------------------
The tailoring rule established the following risk-based categories
for the application of prudential standards:
Category I:
[cir] U.S. global systemically important bank holding companies
(U.S. GSIBs).
Category II:
[cir] U.S. firms that are not subject to Category I standards with
(a) $700 billion or more in average total consolidated assets, or (b)
$100 billion or more in average total consolidated assets that have $75
billion or more in average cross-jurisdictional activity, and
[cir] Foreign banking organizations with (a) $700 billion or more
in average combined U.S. assets,\14\ or (b) $100 billion or more in
average combined U.S. assets that have $75 billion or more in average
cross-jurisdictional activity measured based on the foreign banking
organization's combined U.S. operations.\15\
---------------------------------------------------------------------------
\14\ Combined U.S. assets means the sum of the consolidated
assets of each top-tier U.S. subsidiary of the foreign banking
organization (excluding any section 2(h)(2) company as defined in
section 2(h)(2) of the Bank Holding Company Act (12 U.S.C.
1841(h)(2)), if applicable) and the total assets of each U.S. branch
and U.S. agency of the foreign banking organization, as reported by
the foreign banking organization on the FR Y-7Q.
\15\ The combined U.S. operations of a foreign banking
organization include any U.S. subsidiaries (including any U.S.
intermediate holding company), U.S. branches, and U.S. agencies. In
addition, for a foreign banking organization that is not required to
form a U.S. intermediate holding company, combined U.S. operations
refer to its U.S. branch and agency network and the U.S.
subsidiaries of the foreign banking organization (excluding any
section 2(h)(2) company as defined in section 2(h)(2) of the Bank
Holding Company Act (12 U.S.C. 1841(h)(2), if applicable) and any
subsidiaries of such U.S. subsidiaries.
---------------------------------------------------------------------------
Category III:
[cir] U.S. firms that are not subject to Category I or Category II
standards with (a) $250 billion or more in average total consolidated
assets, or (b) $100 billion or more in average total consolidated
assets that have $75 billion or more in any of the following risk-based
indicators: Average total nonbank assets, average weighted short-term
wholesale funding, or average off-balance sheet exposure, and
[cir] Foreign banking organizations that are not subject to
Category II standards with (a) $250 billion or more in average combined
U.S. assets, or (b) $100 billion or more in average combined U.S.
assets that have $75 billion or more in any of the following risk-based
indicators measured based on the combined U.S. operations: Average
total nonbank assets, average weighted short-term wholesale funding, or
average off-balance sheet exposure.
Category IV:
[cir] U.S. firms with $100 billion or more in average total
consolidated assets that do not meet any of the thresholds specified
for Categories I through III, and
[cir] Foreign banking organizations with $100 billion or more in
average
[[Page 78951]]
combined U.S. assets that do not meet any of the thresholds specified
for Categories II or III.\16\
---------------------------------------------------------------------------
\16\ See Prudential Standards for Large Bank Holding Companies
and Savings and Loan Holding Companies 84 FR 59032 (November 1,
2019).
---------------------------------------------------------------------------
The proposed rule would have modified Regulation TT to incorporate
the tailoring rule's risk-based categories for purposes of adjusting
the amount charged to assessed companies with between $100 billion and
$250 billion in total consolidated assets. This would align the Board's
assessment rule with its enhanced prudential standards framework for
large banking organizations and EGRRCPA-related changes to the Board's
supervision and regulation of those companies. As described in the
proposed rule, because these categories were designed to tailor
supervisory and regulatory requirements to the level of risk associated
with specific firms, the categories provide a consistent basis for
adjusting the assessments for assessed companies with between $100
billion and $250 billion in total consolidated assets.\17\
---------------------------------------------------------------------------
\17\ EGRRCPA acknowledges that eligibility for the adjustment
can be affected by the risk-based category of supervision and
regulation of an assessed company. Under section 401(f) of EGRRCPA,
all U.S. GSIBs (i.e., companies subject to Category I standards),
regardless of asset size, are considered to have total consolidated
assets equal to or greater than $250 billion for purposes of the
assessments standards and requirements. Public Law 115-174, 132
Stat. 1296 (2018), section 401(f).
---------------------------------------------------------------------------
The proposal provided that assessed companies subject to Category
IV standards pursuant to the tailoring rule (Category IV firms), would
receive an adjusted assessment rate, to reflect the impact of tailoring
and other EGRRCPA-related changes to the supervision and regulation of
these companies. In addition, the proposal provided that any assessed
companies that are not subject to enhanced prudential standards
outlined for firms subject to Categories I through IV standards
pursuant to the tailoring rule (``other'' firms),\18\ would also
receive the adjusted assessment rate because the Board does not incur
the supervisory and regulatory costs associated with such standards for
those firms. Under the proposal, and consistent with EGRRCPA and the
requirements in the tailoring rule, firms with between $100 and $250
billion in total consolidated assets that are subject to Category I,
II, or III standards would not be eligible for the adjusted assessment
rate.
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\18\ For example, insurance savings and loan holding companies
and foreign bank holding companies with a small U.S. presence.
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Consistent with Regulation TT's methodology for determining whether
a company is an assessed company, the determination of whether a
company is eligible for the adjusted assessment rate would be based on
the assessed company's status with respect to the four categories of
prudential standards in the tailoring rule as of December 31 of the
assessment period. The final rule adopts the proposed methodology for
determining the eligibility for the adjusted assessment rate.
For foreign banking organizations, size and risk-based indicators
are calculated separately for combined U.S. operations and intermediate
holding companies (if applicable).\19\ As such, foreign banking
organizations with intermediate holding companies may be subject to
different categories of standards at the intermediate holding company
and the combined U.S. operations levels of the organization. In light
of this distinction, the Board is clarifying that foreign banking
organizations that are assessed companies should look to the
categorization of the combined U.S. operations of the foreign banking
organization, as determined by the Board's tailoring framework, \20\ to
determine eligibility for the adjusted assessment rate. With this minor
clarification, the Board is adopting the rule as proposed without
change.
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\19\ 12 CFR 252.5(a)(2)-(3).
\20\ 12 CFR part 252.
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C. Assessment Rate
The tailoring rule and resolution planning rule modify the
application of certain enhanced prudential standards and supervisory
and regulatory programs for Category IV firms relating to capital
stress testing; risk management; liquidity risk management, stress
testing, and buffer requirements; single-counterparty credit limits;
and resolution planning programs.\21\ In addition, the Board has issued
a proposal that would align capital planning requirements with the two-
year supervisory stress testing cycle and provide greater flexibility
for Category IV firms.\22\
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\21\ See Prudential Standards for Large Bank Holding Companies
and Savings and Loan Holding Companies 84 FR 59032 (November 1,
2019); Changes to Applicability Thresholds for Regulatory Capital
and Liquidity Requirements 84 FR 59230 (November 1, 2019);
Resolution Plans Required 84 FR 59194 (November 1, 2019).
\22\ See Amendments to Capital Planning and Stress Testing
Requirements for Large Bank Holding Companies, Intermediate Holding
Companies and Savings and Loan Holding Companies 85 FR 63222
(October 7, 2020). The Board previously provided relief to less-
complex firms from stress testing requirements and CCAR by
effectively moving the firms to an extended stress test cycle for
2019. See Press Release, Federal Reserve Board releases scenarios
for 2019 Comprehensive Capital Analysis and Review (CCAR) and Dodd-
Frank Act stress test exercises, dated February 5, 2019, available
at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20190205b.htm.
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As described in the proposed rule, as a result of these changes,
the Board expects the share of its expenses incurred in the supervision
and regulation of Category IV and ``other'' firms to decline relative
to the share of expenses incurred in the supervision and regulation of
assessed companies subject to Categories I, II, and III standards
(Category I, II, and III firms).\23\ The expenses associated with these
programs for Category IV and ``other'' firms were estimated to be
approximately 10 percent of the Board's total estimated expenses for
assessed companies in 2018.\24\ Accordingly, the proposal provided that
the Board adjust the amount charged to assessed companies with total
consolidated assets between $100 billion and $250 billion to reflect
EGRRCPA-related changes by reducing Category IV and ``other'' firms'
share of the net assessment basis \25\ by 10 percent. The Board
provided this estimate of costs based, in part, on proposed
modifications to the supervisory and regulatory framework for large
banking organizations. To the extent that the modifications of the
relevant supervisory and regulatory programs differ from the basis for
the underlying estimate of costs, the final rule may be revised to
reflect these changes.
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\23\ Category I, II, and III firms that are assessed companies
would continue to bear their share of the assessable cost basis.
\24\ The Board and Reserve Banks generally do not account for
expenses on a firm-by-firm or program-by-program basis; therefore,
the share of EGRRCPA-related program costs represents an estimate
based on analysis of system-wide accounting data and time surveys.
\25\ The assessment basis is the average of the amount of total
expenses the Board estimates is necessary or appropriate to carry
out the supervisory and regulatory responsibilities for assessed
companies. 12 CFR 246.4(d). The net assessment basis is the
assessment basis net of the total $50,000 base amount charged to all
assessed companies (i.e., net assessment basis = assessment basis--
(# of assessed companies x $50,000)).
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Under the proposal the assessment rate for Category IV and
``other'' firms would have been determined according to the following
formula, where the estimated share of total program costs attributable
to EGRRCPA-related supervisory and regulatory changes for Category IV
and ``other'' firms is represented by the variable S:
[[Page 78952]]
Assessment rate for Category IV and ``other'' firms = [(Net assessment
basis x Category IV and ``other'' firms' share of the total assessable
assets of all assessed companies) x (1--S)]
------------------------------------------------------------------------
Category IV firms and ``other'' firms' total assessable assets
------------------------------------------------------------------------
Thus, under the proposal, the assessment rate for Category IV and
``other'' firms would have been determined by multiplying the net
assessment basis by these firms' share of the total assessable assets
of all assessed companies multiplied by 0.9 (i.e., 1--S, or 1--0.1),
the product of which is then divided by the total assessable assets of
Category IV and ``other'' firms.
In the proposal, the assessment rate for Category I, II, and III
firms would have been determined according to the following formula:
Assessment rate for Category I, II and III firms = [(Net assessment
basis x Category I, II, and III firms' share of the total assessable
assets of all assessed companies) + (Net assessment basis x Category IV
and ``other'' firms' share of total assessable assets x S)]
Category I, II, and III firms' total assessable assets
In the proposal, the assessment rate for Category I, II, and III
firms would have been determined by multiplying the net assessment
basis by these firms' share of the total assessable assets of all
assessed companies, plus the sum of the net assessment basis multiplied
by the Category IV and ``other'' firms share of the total assessable
assets multiplied by 0.1 (i.e., S), the sum of which is then divided by
the total assessable assets of Category I, II, and III firms.
The final rule adopts the proposed methodology for calculating the
applicable assessment rate. As described above, the EGRRCPA-related
supervisory and regulatory changes that are the basis for the estimated
reduction in program costs for Category IV and ``other'' firms began
occurring in 2020. Accordingly, the proposal provided that the revised
assessment rates would apply beginning with the 2020 assessment period.
Consistent with the existing assessment framework, assessed companies
would receive a notice of assessment for the 2020 assessment period,
using the revised assessment rates, no later than June 30, 2021.
Assessed companies would continue to have 30 calendar days from June 30
to appeal the Board's determination (a) that the company is an assessed
company or (b) of the company's total assessable assets. The final rule
adopts the proposed effectiveness date for the revised assessment
rates.
IV. Impact Analysis
Using data from the 2018 assessment period, the change in the
minimum threshold of total consolidated assets from $50 billion to $100
billion decreased the number of assessed companies from 64 to 56. These
companies would have been charged an aggregate amount of $10.1 million,
or approximately 1.7 percent of the estimated assessment basis.
As of December 31, 2018, firms with between $100 billion and $250
billion in total consolidated assets accounted for 6.8 percent of total
consolidated assets for assessed companies. In 2018, an assessed
Category IV firm with $100 billion in total consolidated assets would
have been charged $3.1 million. Under the final rule, an assessed
Category IV firm with $100 billion in total consolidated assets would
be charged $2.9 million.
V. Administrative Law Matters
A. Paperwork Reduction Act Analysis
Regulation TT contains a ``collection of information'' within the
meaning of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-
3521) that would be affected by the final rule. Specifically, under the
final rule, bank holding companies and savings and loan holding
companies with total consolidated assets of between $50 billion and
$100 billion would no longer be assessed companies, and therefore would
no longer be respondents for the reporting provision located at section
246.5(b) of Regulation TT, which permits assessed companies to submit a
written statement to appeal the Board's determination that the company
is an assessed company or its determination of the company's total
assessable assets.
In accordance with the requirements of the PRA, the Board may not
conduct or sponsor, and a respondent is not required to respond to, an
information collection unless it displays a currently valid Office of
Management and Budget (OMB) control number. Under the authority
delegated to the Board by OMB, the Board recently approved a revision
to the collection of information pursuant to Regulation TT to account
for the changes described above (OMB Control Number 7100-0369).\26\
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\26\ 84 FR 39847 (August 12, 2019).
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B. Regulatory Flexibility Act Analysis
An initial regulatory flexibility analysis (IRFA) was included in
the proposal in accordance with section 603(a) of the Regulatory
Flexibility Act (RFA), 5 U.S.C. 601 et seq. In the IRFA, the Board
requested comment on the effect of the proposed rule on small entities
and on any significant alternatives that would reduce the regulatory
burden on small entities. The Board did not receive any comments on the
IRFA. The RFA requires an agency to prepare a final regulatory
flexibility analysis unless the agency certifies that a rule will not,
if promulgated, have a significant economic impact on a substantial
number of small entities. Based on its analysis, and for the reasons
stated below, the Board certifies that the final rule will not have a
significant economic impact on a substantial number of small
entities.\27\ Under regulations issued by the Small Business
Administration (SBA), a small entity includes a bank, bank holding
company, or savings and loan holding company with assets of $600
million or less and trust companies with total assets of $41.5 million
or less.\28\
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\27\ 5 U.S.C. 605(b).
\28\ See 13 CFR 121.201; 84 FR 34261 (July 18, 2019).
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This final rule is being issued because section 401 of EGRRCPA
raised the minimum threshold for being considered an assessed holding
company from $50 billion to $100 billion in total consolidated assets
and directed the Board to adjust the amount charged to assessed
companies with between $100 billion and $250 billion in total
consolidated assets. As discussed in the Supplementary Information
section, the objective of the final rule is to update Regulation TT to
reflect the new minimum threshold for being considered an assessed
company and to revise the assessment rate calculation to account for
EGRRCPA-related changes in the Board's supervisory and regulatory
responsibilities. The Board is required by section 318 of the Dodd-
Frank Act to collect assessments equal to the total
[[Page 78953]]
expenses the Board estimates are necessary or appropriate to carry out
supervisory and regulatory responsibilities with respect to assessed
companies. Section 401 of EGRRCPA directs to Board to revise the
assessment framework by raising the minimum threshold for being
considered an assessed holding company to $100 billion in total
consolidated assets and adjusting the amount charged to assessed
companies with between $100 billion and $250 billion in total
consolidated assets.
The final rule applies to assessed companies, which includes bank
holding companies and savings and loan holding companies with $100
billion or more in total consolidated assets, foreign banking
organizations that are bank holding companies and savings and loan
holding companies with $100 billion or more in total global
consolidated assets, and nonbank financial companies that the Council
has determined must be supervised by the Board. These companies are
well above the $600 million asset threshold at which a banking
organization is considered a ``small entity'' under SBA
regulations.\29\ For this reason, the Board certifies that the final
rule will not have a significant economic impact on a substantial
number of small entities.
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\29\ It is unlikely that nonbank financial companies designated
by the Council would have less than $600 million in consolidated
assets.
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C. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471, 12 U.S.C. 4809) requires the Federal banking agencies
to use plain language in all proposed and final rules published after
January 1, 2000. The Board sought to present the proposed rule in a
simple and straightforward manner and did not receive any comments on
the use of plain language.
List of Subjects in 12 CFR Part 246
Administrative practice and procedure, Banks, banking, Holding
companies, Reporting and recordkeeping requirements, Savings
associations.
Authority and Issuance
For the reasons set forth in the preamble, the Board amends 12 CFR
part 246 as follows:
PART 246--SUPERVISION AND REGULATION ASSESSMENTS OF FEES
(REGULATION TT)
0
1. The authority citation for Part 246 is revised to read as follows:
Authority: Pub. L. 111-203, 124 Stat. 1376, 1526 (2010), Pub. L.
115-174, 132 Stat. 1296 (2018), and section 11(s) of the Federal
Reserve Act (12 U.S.C. 248(s)).
0
2. In Sec. 246.1, paragraphs (a) through (c) are revised to read as
follows:
Sec. 246.1 Authority, purpose and scope.
(a) Authority. This part (Regulation TT) is issued by the Board of
Governors of the Federal Reserve System (Board) under section 318 of
Title III of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376, 1423-32, 12
U.S.C. 5365 and 5366), section 401 of the Economic Growth, Regulatory
Relief, and Consumer Protection Act (EGRRCPA) (Pub. L. 115-174, 132
Stat. 1296), and section 11(s) of the Federal Reserve Act (12 U.S.C.
248(s)).
(b) Scope. This part applies to:
(1) Any bank holding company having total consolidated assets of
$100 billion or more, as defined in this section;
(2) Any savings and loan holding company having total consolidated
assets of $100 billion or more, as defined below; and
(3) Any nonbank financial company supervised by the Board, as
defined Sec. 246.2.
(c) Purpose. This part implements provisions of section 318 of the
Dodd-Frank Act and section 401 of EGRRCPA that direct the Board to
collect assessments, fees, or other charges from companies identified
in subsection (b) that are equal to the total expenses the Board
estimates are necessary or appropriate to carry out the supervisory and
regulatory responsibilities of the Board with respect to these assessed
companies and to adjust the amount charged to assessed companies with
total consolidated assets between $100 billion and $250 billion to
reflect any changes in supervisory and regulatory responsibilities
resulting from EGRRCPA.
* * * * *
0
3. Section 246.2 is revised by adding paragraphs (n) through (p) to
read as follows:
Sec. 246.2 Definitions.
* * * * *
(n) Category I, II, and III firms are assessed companies subject to
Category I, II, or III standards as defined and determined under 12 CFR
parts 238 and 252 as of December 31 of the assessment period.
(o) Category IV firms are assessed companies subject to Category IV
standards as defined and determined under 12 CFR parts 238 and 252 as
of December 31 of the assessment period.
(p) ``Other'' firms are assessed companies not subject to the
Category I, II, III, or IV standards as defined and determined under 12
CFR parts 238 and 252 as of December 31 of the assessment period.
0
4. Section 246.3 is revised to read as follows:
Sec. 246.3. Assessed companies.
An assessed company is any company that:
(a) Is a top-tier company that, on December 31 of the assessment
period:
(1) Is a bank holding company, other than a foreign bank holding
company, with $100 billion or more in total consolidated assets, as
determined based on the average of the bank holding company's total
consolidated assets reported for the assessment period on the Federal
Reserve's Form FR Y-9C (``FR Y-9C''),
(2)(i) Is a savings and loan holding company, other than a foreign
savings and loan holding company, with $100 billion or more in total
consolidated assets, as determined, except as provided in paragraph
(a)(2)(ii) of this section, based on the average of the savings and
loan holding company's total consolidated assets as reported for the
assessment period on the FR Y-9C or on the Quarterly Savings and Loan
Holding Company Report (FR 2320), as applicable.
(ii) If a company does not calculate its total consolidated assets
under GAAP for any regulatory purpose (including compliance with
applicable securities laws), the company may request that the Board
permit the company to file a quarterly estimate of its total
consolidated assets. The Board may, in its discretion and subject to
Board review and adjustment, permit the company to provide estimated
total consolidated assets on a quarterly basis. For purposes of this
part, the company's total consolidated assets will be the average of
the estimated total consolidated assets provided for the assessment
period.
(b) Is a top-tier foreign bank holding company on December 31 of
the assessment period, with $100 billion or more in total consolidated
assets, as determined based on the average of the foreign bank holding
company's total consolidated assets reported for the assessment period
on the Federal Reserve's Form FR Y-7Q (``FR Y-7Q''), provided, however,
that if any such company has filed only one FR Y-7Q during the
assessment period, the Board shall use an average of the foreign bank
holding company's total consolidated assets reported on that FR Y-7Q
and on the FR Y-7Q for the corresponding
[[Page 78954]]
period in the year prior to the assessment period.
(c) Is a top-tier foreign savings and loan holding company on
December 31 of the assessment period, with $100 billion or more in
total consolidated assets, as determined based on the average of the
foreign savings and loan holding company's total consolidated assets
reported for the assessment period on the reporting forms applicable
during the assessment period, provided, however, that if any such
company has filed only one reporting form during the assessment period,
the Board shall use an average of the foreign savings and loan holding
company's total consolidated assets reported on that reporting form and
on the reporting form for the corresponding period in the year prior to
the assessment period, or
(d) Is a nonbank financial company supervised by the Board. 5.
Section 246.4 is amended by revising paragraph (c)(1) and by adding new
paragraphs (d)(3) and (4) to read as follows:
Sec. 246.4 Assessments.
* * * * *
(c) Assessment rates. Assessment rates means, with regard to a
given assessment period, the two rates published by the Board for the
calculation of assessments for Category IV and ``other'' firms and for
Category I, II, and III firms.
(1)(i) The assessment rate for Category IV and ``other'' firms will
be calculated according to this formula:
Assessment rate = [(Net Assessment Basis x Category IV and ``other''
firms' share of total assessable assets of all assessed companies) x (1-
S)]
------------------------------------------------------------------------
Category IV and ``other'' firms' total assessable assets
(ii) The assessment rate for Category I, II, and III firms will be
calculated according to this formula:
Assessment rate = [(Net Assessment Basis x Category I, II, and III
firms' share of total assessable assets of all assessed companies) +
(Net Assessment Basis x Category IV and ``other'' firms' share of total
assessable assets x S)]
------------------------------------------------------------------------
Category I, II, and III firms' total assessable assets
* * * * *
(d) * * *
(3) Net Assessment Basis is the assessment basis, as defined by
paragraph (d)(2), net of the total $50,000 base amount charged to all
assessed companies. Net Assessment Basis = assessment basis-(number of
assessed companies x $50,000).
(4) The variable S represents the estimated share of total costs
attributable to changes in supervisory and regulatory responsibilities
resulting from EGRRCPA for Category IV and ``other'' firms. S = 0.1 (10
percent).
* * * * *
By order of the Board of Governors of the Federal Reserve
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2020-25623 Filed 12-7-20; 8:45 am]
BILLING CODE P
