[Federal Register Volume 61, Number 146 (Monday, July 29, 1996)]
[Notices]
[Pages 39456-39461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19164]
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FEDERAL RESERVE SYSTEM
Agency Information Collection Activities: Submission to OMB Under
Delegated Authority
Background
Notice is hereby given of the final approval of proposed
information collections by the Board of Governors of the Federal
Reserve System (Board) under OMB delegated authority, as per 5 CFR
1320.16 (OMB Regulations on Controlling Paperwork Burden on the
Public). The Federal Reserve may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
that has been extended, revised, or implemented on or after October 1,
1995, unless it displays a currently valid OMB control number.
[[Page 39457]]
FOR FURTHER INFORMATION CONTACT: Federal Reserve Board--Mary M.
McLaughlin, Chief, Financial Reports Section, Division of Research and
Statistics, Board of Governors of the Federal Reserve System,
Washington, DC 20551 (202-452-3829). Telecommunications Device for the
Deaf (TDD) users may contact Dorothea Thompson (202-452-3544), Board of
Governors of the Federal Reserve System, Washington, DC 20551.
OMB Desk Officer--Alexander T. Hunt, Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 3208, Washington, DC 20503 (202-395-7860).
SUPPLEMENTARY INFORMATION:
General Information and Public Comment
On April 1, 1996, the Board announced for public comment a proposal
for a three-year extension, with revisions, of three reports commonly
referred to as the ``weekly condition/bank credit'' reports: (1) the
``Weekly Report of Assets and Liabilities for Large Banks'' (FR 2416;
OMB No. 7100-0075), (2) the ``Weekly Report of Selected Assets'' (FR
2644; OMB No. 7100-0075), and (3) the ``Weekly Report of Assets and
Liabilities for Large U.S. Branches and Agencies of Foreign Banks'' (FR
2069; OMB No. 7100-0030). The comment period expired on May 31, 1996.
The Board received two comment letters, both from bank holding
companies, one addressing both the FR 2416 and FR 2644 and the other
addressing only the FR 2416. An overview of the three reports and of
the revisions initially proposed for each is provided below, followed
by a discussion of the comments that were received and final Board
action on each.
Final approval under OMB delegated authority of the revision of the
following reports:
1. Report Title: Weekly Report of Assets and Liabilities for Large
Banks.
Agency Form Number: FR 2416
OMB Control Number: 7100-0075.
Frequency: Weekly.
Reporters: Large U.S. chartered commercial banks.
Annual Reporting Hours: 46,592.
Estimated Average Hours Per Response: Range: 1 to 40. Mean: 7.00.
Median: 4.00.
Number of Respondents: 128.
Small businesses are not affected.
General Description of Report: This information collection is
voluntary (12 U.S.C. Secs. 225(a) and 248(a)(2)) and is given
confidential treatment (5 U.S.C. Sec. 552(b)(4)).
Effective Date: Data as of Wednesday, October 2, 1996.
2. Report title: Weekly Report of Selected Assets.
Agency Form Number: FR 2644.
OMB Control Number: 7100-0075.
Frequency: Weekly.
Reporters: U.S. chartered commercial banks.
Annual Reporting Hours: 47,476.
Estimated Average Hours Per Response: Range: 0.125 to 3. Mean:
0.83. Median: 0.75.
Number of Respondents: 1,100.
Small businesses are affected.
General Description of Report: This information collection is
voluntary (12 U.S.C. Secs. 225(a) and 248(a)(2)) and is given
confidential treatment (5 U.S.C. Sec. 552(b)(4)).
Effective Date: Data as of Wednesday, October 2, 1996.
3. Report Title: Weekly Report of Assets and Liabilities for Large
U.S. Branches and Agencies of Foreign Banks.
Agency Form Number: FR 2069.
OMB Control Number: 7100-0030.
Frequency: Weekly.
Reporters: U.S. branches and agencies of foreign (non-U.S.) banks.
Annual Reporting Hours: 27,269.
Estimated Average Hours Per Response: Range: 4 to 8. Mean: 5.70.
Median: 5.00.
Number of Respondents: 92.
Small businesses are not affected.
General Description of Report: This information collection is
voluntary (12 U.S.C. Sec. 3105(b)(2)) and is given confidential
treatment (5 U.S.C. Sec. 552(b)(4)).
Effective Date: Data as of Wednesday, October 2, 1996.
Overview
The ``Weekly Report of Assets and Liabilities for Large Banks'' (FR
2416) is a detailed balance sheet report that is collected as of each
Wednesday from about 160 large U.S. commercial banks. The ``Weekly
Report of Selected Assets'' (FR 2644) is a considerably less detailed
report that is collected as of each Wednesday from a stratified sample
of about 1,100 smaller U.S. commercial banks. The ``Weekly Report of
Assets and Liabilities for Large U.S. Branches and Agencies of Foreign
Banks'' (FR 2069) is a balance sheet report that is collected as of
each Wednesday from a sample of about 68 institutions.
These three reports are mainstays of the Federal Reserve's
reporting system from which data for analysis of current banking
developments are derived. The FR 2416 is used on a stand-alone basis as
the ``large domestic bank series.'' All three reports, together with
data from other sources, are used for constructing weekly estimates of
bank credit, of sources and uses of bank funds, and of a balance sheet
for the banking system as a whole. These series are used in estimating
the banking sector of the Flow of Funds Accounts and bank components of
domestic nonfinancial debt, a variable monitored by the Federal Open
Market Committee (FOMC).
The Federal Reserve publishes the data in aggregate form in two
statistical releases that are followed closely by other government
agencies, the banking industry, the financial press, and other users.
These are the weekly H.8, ``Assets and Liabilities of Commercial Banks
in the United States'' (which provides a balance sheet for the banking
industry as a whole), and the H.4.2, ``Weekly Consolidated Condition
Report of Large Commercial Banks in the United States'' (which provides
aggregates both for large commercial banks and for large U.S. branches
and agencies of foreign banks).
Revisions to FR 2416 Under Initial Proposal
Item set. A substantial reduction was proposed in the number of
items collected on the FR 2416, eighteen items on a gross basis and
nine items on a net basis. The proposed reduction in items reflected an
earlier reassessment, carried out in connection with a consolidation of
three published bank credit releases into one, about the degree of
balance sheet detail necessary to understand key developments in bank
credit and bank funding activities. The proposed reduction in items
also reflected the Federal Reserve's judgment that some of the deposit
ownership detail collected, in part for purposes of constructing the
monetary aggregates, could be adequately replaced with information
available on the quarterly Report of Condition (Call Report) (FFIEC
031-034; OMB No. 7100-0036). Three items proposed to be added to the FR
2416 resulted from two changes to regulatory reporting, beginning with
the March 1994 Call Report, each of which was made to comply with new
accounting standards. The first caused a substantial part of bank
securities holdings outside trading accounts to be marked to market,
and the second resulted in banks reporting separate values for
revaluation gains and losses on off-balance-sheet contracts, rather
than a single net figure. Another item, trading liabilities, also was
added to maintain consistency with the Call Report, to which this item
was added since the last time the FR 2416 went through the clearance
process. Items also were
[[Page 39458]]
proposed to monitor banks' activities in the mortgage-backed securities
and commercial real estate markets and to measure more accurately their
nondeposit funding activities. A new item on large time deposits held
as assets by the reporting bank was proposed as an aid in the
construction of the monetary aggregates.
Reporting panel. Under the initial proposal, FR 2416 panel
revisions would continue to be guided by the ``flexible'' approach
developed in 1988 in order to avoid widespread disruptions. A general
cutoff applied to total domestic assets would continue to be used for
panel selection in order to provide coverage of a little more than 50
percent of total assets in U.S. offices of U.S.-chartered commercial
banks. Taking into account growth in the banking system as well as
other factors, the current cutoff of $3.5 billion, which was
established in 1990, would be raised to $6.0 billion. However, only
those nonreporters whose growth places them well above the new cutoff
would be added. Conversely, some current respondents slightly below the
new cutoff would be retained, in some cases to provide adequate
regional coverage and in other cases to minimize the disruptions caused
by dropping and then reinstating respondents (those with assets near
the cutoff) from one panel revision to the next. Under this approach,
118 existing reporters would be retained, 21 would be dropped, and 10
new reporters would be added, for a net reduction of 7 in the actual
panel size.
Proposed Revisions to FR 2644
The proposal increased the item count for the FR 2644 by two,
allowing the collection of additional information from smaller banks on
their presence in the mortgage securities market and on their
nondeposit funding activities, consistent with two of the proposed
changes for the FR 2416. Also, a minor definitional change was proposed
to two items to bring them into line with the FR 2416 and the Call
Report. Proposed panel changes reflected switches between the FR 2416
and FR 2644 panels based on changes in relative size since the last
report renewal.
Proposed Revisions to FR 2069
Consistent with the approach taken for the FR 2416, some asset and
deposit liability items collected on the FR 2069 were proposed to be
consolidated, resulting in a gross reduction of five items. At the same
time, six additional items were proposed, resulting in an overall net
addition of one item. Two of the new items were necessitated by the
addition to the branch and agency Call Report (FFIEC 002; OMB No. 7100-
0032) of a separate item for trading account securities and need to
continue classifying banks' securities holdings between U.S. Government
and other. As with the FR 2416, an item for trading liabilities also
was added in order to be consistent with the branch and agency Call
Report. Again consistent with the FR 2416, the proposal added items to
measure gross revaluation gains and gross revaluation losses on off-
balance-sheet contracts. The sixth new item, which also paralleled the
treatment of the FR 2416, added an item on large time deposits held as
assets by the reporting bank, as an aid in the construction of the
monetary aggregates.
To strengthen the weekly estimates of balance sheet data for
branches and agencies, it was proposed that the existing panel of 67
reporters be expanded to add 24 institutions having mainly European
parent banks. Branches and agencies having European parents are
significantly underrepresented in the current sample.
Implementation Date
It was proposed that the revised series be implemented as of
October 2, 1996, the first Wednesday after the September Call Report
date (September 30, 1996).
Public Comments
Two comment letters were received, one addressing both the FR 2416
and FR 2644 and the other addressing only the FR 2416. No comments were
received on the FR 2069.
Loan Schedule
The commentator addressing both the FR 2416 and FR 2644 noted that
the difficulty in preparing both these reports results from reporting
detailed loan data according to regulatory classifications, which
differ significantly from SEC classifications and from banks' own
internal reporting classifications. The commentator suggests that
reporting burden could be reduced substantially if detailed loan data
could be reported on both the FR 2416 and the FR 2644 according to SEC
Guide 3 classifications or to banks' own internal reporting
classifications.
With respect to banks' own individual internal classifications, the
Federal Reserve needs data reported under standard definitions by all
banks in order to construct meaningful aggregates. It would be
difficult, if not impossible, to construct meaningful aggregates from
individual bank data reported according to what likely would be a
variety of definitions and classifications.
With respect to SEC loan classifications, these are broader than
what is now collected on the FR 2416. For example, domestic commercial
and industrial loans, loans to financial institutions, and agricultural
loans are included in a single loan category. Such a broad aggregation
on the FR 2416 would make it impossible to track borrowing by the
commercial and industrial sector and the agricultural sector
separately. It would also make it impossible to construct estimates of
lending by the banking system to nonbanks, since interbank lending
would be unobservable.
In the longer run, however, the Federal Reserve will continue to
explore possible changes to the loan schedule that could reduce
respondent burden and yet still meet the Federal Reserve's data needs.
This commentator noted that other than the loan detail, all other
items reported on the FR 2416 and FR 2644 are readily available and
cause no significant reporting burden.
The second commentator made a number of suggestions regarding the
FR 2416, some of a more general nature and others addressing specific
data items.
Elimination of the FR 2416
The commentator recommended elimination of the FR 2416, noting that
filing this report is a significant reporting burden and places
reporting banks at a disadvantage compared to nonbank competitors. In
light of this competitive disadvantage, the commentator urged the Board
to consider elimination of this report, or, at a minimum, reduce the
level of data captured and the frequency of reporting.
Given the uses cited above, the Federal Reserve believes that the
FR 2416 should continue to be collected, and at the current weekly
frequency. Because commercial banks play a pivotal role in the
transmission of monetary policy, the Federal Reserve System requires
high-frequency data from which a balance sheet for the whole banking
system can be constructed. The FR 2416 provides these data for large
domestically chartered commercial banks. Sufficient detail must be
available to track the major components of bank credit and the broad
outlines of bank funding.
At the same time, in response to this commentator, in addition to
the 18 existing items already proposed for deletion, two of the
proposed items will be dropped: ``Loans to other nonbank financial
institutions'' and ``large time deposits held as assets.'' (Detailed
discussion is provided below.)
[[Page 39459]]
RAP/GAAP Differences
This commentator also noted that the federal banking agencies are
in the process of implementing changes to adopt generally accepted
accounting principles (GAAP) for the Call Report. The commentator
further states that the proposed changes to the FR 2416 ``would
maintain GAAP/RAP reporting differences and would require additional
information that differs from GAAP, from current RAP reporting
requirements (in some cases) and from the information used to manage
[the bank's] business.''
The Federal Reserve points out that, under current practice, the FR
2416 is tied directly to the Call Report. Indeed, a number of changes
proposed for the FR 2416 were made in response to changes already made
to the Call Report. When GAAP is adopted for the Call Report, currently
scheduled for March 1997, corresponding changes will be made as
appropriate to the FR 2416.
Interstate Banking
The commentator believes the Board should consider the impact of
interstate banking in developing reporting requirements. The commenting
bank manages its business by line of business rather than by legal
entity, and thus uses information internally by line of business.
The Federal Reserve has a number of efforts underway to develop
plans for account structures and other operational processes in a full
interstate banking environment. Reporting requirements also are being
studied. These efforts will continue as experience is gained with
developments in a full interstate banking environment.
Revaluation Gains and Losses
In response to a decision by the Financial Accounting Standards
Board, since 1994 banks have included revaluation gains and losses on
off-balance-sheet derivative positions on the asset and liability sides
of their balance sheets, respectively. Prior to 1994, only the net of
these positions--a much smaller number--was reported on banks' balance
sheets. As a result of the 1994 change, the item on the FR 2416 that
includes revaluation gains, ``other trading account assets`` (new Item
2.b), has become much more volatile. Since this volatility is unrelated
to banks' extension of credit, its presence distorts the bank credit
data as well as banks' apparent funding needs. For this reason, the
initial proposal called for banks to report the revaluation gains
component of ``other trading account assets'' as a memo item (new Item
M.2). Similarly, the value for revaluation losses already included in
``trading liabilities'' would be reported as new Item M.6.
The commentator has suggested that reporting revaluation gains and
losses only for the domestic side of the bank would be misleading
because the bank's off-balance-sheet position is best understood for
the entire bank. The commentator also indicated that reported measures
of revaluation gains and losses could not be given the same attention
on a weekly basis as they are for purposes of completing the quarterly
Call Report. Regarding the first point, the Federal Reserve had
proposed collecting these items not to monitor the off-balance-sheet
activities of respondent banks, but in order to adjust their reported
domestic balance sheets for the impact of revaluation gains and losses.
Concerning the second point, the Federal Reserve recognizes that
different respondent banks will mark to market their off-balance-sheet
positions at different frequencies, perhaps less often than weekly.
Indeed, the initial proposal document and the draft reporting
instructions both stated that banks that revalue less frequently than
weekly would report each week the most recent value for net unrealized
gains or losses. When a new value becomes available, that value would
then be reported. As noted above, the Board's purpose for collecting
these memo items is to adjust the balance sheet for their values
already reported on it. This purpose is fully served even if the values
contained in Items M.2 and M.6, and on the balance sheet itself, are
marked to market less than weekly. The Federal Reserve believes that
the bank credit and bank balance sheet data can be much better
understood if this information on banks' off-balance-sheet activities
is reported separately as initially proposed. To highlight that
revaluation at a frequency less than weekly is fully acceptable for
Items M.2 and M.6 (and also for Item M.7), a note will be added to the
FR 2416 reporting form itself. A similar note will be added to the FR
2069 form, which also collects revaluation gains and losses.
Federal Funds Sold and Securities Purchased Under Agreements to
Resell
Under the initial proposal, the reporting of ``federal funds sold
and securities purchased under agreements to resell'' (FF/RPs) would
continue to be disaggregated into the three current customer groups:
(1) Other banks, (2) nonbank brokers and dealers in securities, and (3)
other. The commentator noted that information about counterparties is
not used internally for any other purpose. This commentator also noted
that these positions would be reported on a net basis [if certain
conditions are met] under GAAP, but that they must be reported gross on
the FR 2416 because it is governed by RAP.
Regarding the first point, the Federal Reserve has collected the
current disaggregation of FF/RPs since 1969. This disaggregation
continues to be necessary to isolate FF/RP loans to banks in order to
measure the amount of credit banks are providing to nonbanks. (Other
interbank loans are broken out for the same reason.) FF/RP loans to
nonbank securities dealers are combined with other loans to nonbank
security dealers to provide a measure of credit supplied by banks to
this important sector of the financial economy. Lending to nonbank
brokers and dealers is substantial and volatile.
As for the second point, as noted earlier, the FR 2416 follows the
Call Report with respect to RAP as opposed to GAAP reporting. When GAAP
is adopted for the Call Report, it also will be adopted for the FR
2416.
Loans Secured by Commercial Real Estate
Under the initial proposal, loans secured by commercial real estate
would be collected separately from other loans that are secured by real
estate. Commercial real estate loans are also collected separately on
the Call Report, albeit in more disaggregated form than proposed for
the FR 2416. The commentator has objected that this FR 2416 proposal
could provide a misleading picture of the bank's exposure within the
real estate loan market.
However, the Federal Reserve's purpose of collecting this
information on the weekly FR 2416 is not to assess a particular bank's
exposure to any market. Rather, this item is sought in order to have
available a timely measure of the banking system's lending to the
commercial real estate sector. From time to time--the early 1990s
provide a prime example--the commercial real estate market and the
credit provided to it become a matter of intense interest to policy
makers, one that has been impossible to meet satisfactorily only with
quarterly Call Report data. For these reasons, loans secured by
commercial real estate will be collected separately as originally
proposed.
[[Page 39460]]
Loans to Nonbank Depository Institutions and Other Financial
Institutions
The current version of the FR 2416 collects an item on ``loans to
nonbank depository institutions and other financial institutions''
(these are mainly thrift institutions, mortgage companies, life
insurance companies, and finance companies). Under the initial
proposal, this item was retained (Item 5.b.(2) on the revised form).
This item is one of very few on the FR 2416 that differs from the Call
Report, which contains a separate item for loans to thrift institutions
but places loans to other nonbank financial institutions in the ``all
other'' loan category. The commentator noted that this difference in
reporting treatment between the FR 2416 and the Call Report is quite
burdensome.
This difference between the Call Report and the FR 2416 began in
1984 as a result of changes at that time to the Call Report that
grouped loans to all nonbank financial institutions--other than
thrifts--with ``all other'' loans. At that time, total loans to all
nonbank financial institutions was deemed to be a useful component for
analysis of bank credit, and such a total was retained on the FR 2416.
The Federal Reserve has found the information contained in this
category useful. For example, it was the only timely indication of bank
lending to this sector in the early 1990s when many nonbank financial
institutions were undergoing financial stress. More recently, however,
these loans have been of less interest, and, in these circumstances,
they do not seem to merit an exception to the Federal Reserve's
principle that the FR 2416 be, as far as possible, in conformity with
the Call Report. Therefore, the item ``loans to other nonbank financial
institutions'' will be dropped as a separate item and instead will be
included in the ``all other'' loan category.
The same change would be made to the FR 2069. Item 5.c, ``Loans to
other depository institutions in the U.S. and to other financial
institutions'' will be dropped as a separate item and instead will be
included in the ``all other loan'' category.
Large Time Deposits Held as Assets
Under the initial proposal, an item was added to the FR 2416 to
measure banks' holdings of other banks' large time deposits. The
commentator noted that this information is not requested by any other
internal or external party and that the information is not readily
available and, consequently, would have to be developed with a separate
reporting mechanism. The item was proposed to be added to the FR 2416
because it would aid in the construction of the monetary aggregate M3.
M3 includes all bank deposit liabilities other than those due to other
banks and the U.S. government. Because large time deposits may be
negotiable, netting of bank holdings of large time deposits is better
done with asset rather than liability measures. Currently, this is done
using data from the Call Report. The purpose of the proposed addition
of large time deposit assets to the FR 2416 was to get more timely
measures of this item for purposes of constructing weekly estimates of
M3. However, although the availability of weekly data would improve
weekly estimates of M3, given the substantial additional reporting
burden this item apparently would put on respondents, the Federal
Reserve now believes that the cost of collecting this item likely would
exceed its benefit. Therefore, this item will not be added to the FR
2416. For these reasons, the proposal to add large time deposit assets
to the FR 2069 also would be dropped. Instead, the required netting
will continue to be done using Call Report data.
Borrowings Breakdowns
The initial proposal disaggregated the borrowings item on the FR
2416 into two components: (1) Borrowings from commercial banks in the
United States and (2) borrowings from all others. The commentator has
noted that this information is not used internally and is not requested
for any other purpose. The commentator also noted that the bank's
nonbank competitors are not required to monitor and maintain this type
of information. This commentator noted as well that the information
requested is similar to that currently reported on the FR 2415,
``Report of Selected Borrowings.''
The Federal Reserve had proposed this breakdown on the FR 2416 to
improve its estimates of bank financing from outside the banking
system. The Board staff currently uses the FR 2415 for this purpose,
but has found it inadequate to accurately measure bank versus nonbank
borrowing because the FR 2415 deals with only a part of borrowing. In
view of the need to properly analyze bank funding patterns, an exercise
that is part of efforts to explain bank deposit and, therefore, money
supply behavior, the Federal Reserve continues to believe that the
requested split in borrowings is merited.
Estimates of Respondent Burden
Burden estimates are based on information obtained by the Reserve
Banks from samples of respondents as well as on information from the
two public commentators. The following table summarizes individual
respondent information on the number of hours needed to prepare both
the current version and the initially proposed revised version of these
reports each week.
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[GRAPHIC] [TIFF OMITTED] TN29JY96.000
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Even though the initial proposal resulted in a net reduction in the
number of data items for the FR 2416 and a net addition of only one
item for the FR 2069, a number of respondents believed that burden
associated with the proposed additional items more than outweighed
burden reductions accruing from the item deletions. The average burden
associated with the final versions of the two reports should be
somewhat less than shown above, however, since two of the more
burdensome items initially proposed (one existing and one new) have now
been deleted. Nevertheless, the mean values from the above table were
used for the ``estimated average hours per response'' shown earlier in
this document.
Board of Governors of the Federal Reserve System, July 23, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-19164 Filed 7-26-96; 8:45am]
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