[Federal Register Volume 64, Number 182 (Tuesday, September 21, 1999)]
[Notices]
[Pages 51121-51123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24545]
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FEDERAL RESERVE SYSTEM
Agency Information Collection Activities: Proposed Collection;
Comment Request
AGENCY: Board of Governors of the Federal Reserve System
SUMMARY:
Background: On June 15, 1984, the Office of Management and Budget
(OMB) delegated to the Board of Governors of the Federal Reserve System
(Board) its approval authority under the Paperwork Reduction Act, as
per 5 CFR 1320.16, to approve of and assign OMB control numbers to
collection of information requests and requirements conducted or
sponsored by the Board under conditions set forth in 5 CFR 1320
Appendix A.1. Board-approved collections of information are
incorporated into the official OMB
[[Page 51122]]
inventory of currently approved collections of information. Copies of
the OMB 83-Is and supporting statements and approved collection of
information instruments are placed into OMB's public docket files. 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.
Request for comment on an information collection proposal.
The following information collection, which is being handled under
this delegated authority, has received initial Board approval and is
hereby published for comment. At the end of the comment period, the
proposed information collection, along with an analysis of comments and
recommendations received, will be submitted to the Board for final
approval under OMB delegated authority. Comments are invited on the
following:
a. whether the proposed collection of information is necessary for
the proper performance of the Federal Reserve's functions; including
whether the information has practical utility;
b. the accuracy of the Federal Reserve's estimate of the burden of
the proposed information collection, including the validity of the
methodology and assumptions used;
c. ways to enhance the quality, utility, and clarity of the
information to be collected; and
d. ways to minimize the burden of information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology.
In addition, the Federal Reserve invites comments on whether it
would be more efficient to collect the proposed information on the
commercial bank Consolidated Reports of Condition and Income (FFIEC
031-034).
DATES: Comments must be submitted on or before [insert date 60 days
from publication in the Federal Register].
ADDRESSES: Comments, which should refer to the OMB control number
or agency form number, should be addressed to Jennifer J. Johnson,
Secretary, Board of Governors of the Federal Reserve System, 20th and C
Streets, N.W., Washington, DC 20551, or delivered to the Board's mail
room between 8:45 a.m. and 5:15 p.m., and to the security control room
outside of those hours. Both the mail room and the security control
room are accessible from the courtyard entrance on 20th Street between
Constitution Avenue and C Street, N.W. Comments received may be
inspected in room M-P-500 between 9:00 a.m. and 5:00 p.m., except as
provided in section 261.14 of the Board's Rules Regarding Availability
of Information, 12 CFR 261.14(a).
A copy of the comments may also be submitted to the OMB desk
officer for the Board: Alexander T. Hunt, Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 3208, Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT: A copy of the proposed form and
instructions, the Paperwork Reduction Act Submission (OMB 83-I),
supporting statement, and other documents that will be placed into
OMB's public docket files once approved may be requested from the
agency clearance officer, whose name appears below.
Mary M. West, Chief, Financial Reports Section (202-452-3829),
Division of Research and Statistics, Board of Governors of the Federal
Reserve System, Washington, DC 20551. Telecommunications Device for the
Deaf (TDD) users may contact Diane Jenkins (202-452-3544), Board of
Governors of the Federal Reserve System, Washington, DC 20551.
Proposal to approve under OMB delegated authority the extension for
three years, with revision, of the following report:
1. Report title: The Bank Holding Company Report of Subsidiary
Banks' Section 23A Transactions with Affiliates.
Agency form number: FR Y-8.
OMB control number: 7100-0126.
Frequency: Quarterly.
Reporters: Bank holding companies.
Annual reporting hours: 73,282.
Estimated average hours per response: 3.6.
Number of respondents: 5089.
Small businesses are not affected.
General description of report: This information collection is
authorized by section 5 (c) of the Bank Holding Company Act (12 U.S.C.
1844 (c)) and section 225.5 (b) of Regulation Y (12 CFR 225.5 (b)) and
is given confidential treatment pursuant to the Freedom of Information
Act (5 U.S.C. 552 (b) (4) and (8)).
Abstract: The FR Y-8 collects information on the movement of funds
between a domestic bank holding company and its subsidiaries in order
to identify broad categories of intercompany transactions and balances
that may affect the financial condition of the subsidiary bank. The
report also collects information on income recognized by subsidiary
banks from other bank holding company members as well as information on
credit extended by subsidiary banks to other bank holding company
members. Domestic top-tier bank holding companies with assets of $300
million or more are required to file the FRY-8 on a semiannual basis
(June and December). Also, interim reporting is currently required
within ten calendar days of certain large asset transfers. The Federal
Reserve proposes to delete the current information on the FRY-8 and
collect only four items of information on Section 23A covered
transactions.
Current actions: The Federal Reserve proposes to completely revise
the FR Y-8 to collect information to enhance the Federal Reserve's
ability to monitor bank exposures to affiliates and to ensure
compliance with Section 23A of the Federal Reserve Act. The revisions
would include renaming the report, changing all of the reportable items
and revising the reporting panel and reporting frequency. The report
would be retitled, ``The Bank Holding Company Report of Subsidiary
Banks' Section 23A Transactions with Affiliates.'' Domestic financial
top-tier bank holding companies would be required to file the report
quarterly, providing the requested information on an individual bank-
basis for each of their subsidiary banks. For purposes of the FR Y-8,
banks are defined as insured depository institutions. The interim
report would be eliminated.
Section 23A of the Federal Reserve Act is one of the most important
statutes protecting the federal safety net by limiting exposure of
insured depository institutions to affiliates, defined as organizations
under common control with the insured depository institution. Section
23A contains restrictions to safeguard the resources of insured
depository institutions against misuse for the benefit of affiliates,
including the following:
(1) The statute limits ``covered transactions'' with any single
affiliate to no more than 10 percent of the depository institution's
capital stock and surplus, and limits aggregate covered transactions
with all affiliates to no more than 20 percent of the depository
institution's capital stock and surplus. Covered transactions are
specifically described in Section 23A and include extensions of credit
to an affiliate, the purchase of securities issued by an affiliate, the
purchase of assets from an affiliate, the acceptance of securities
issued by an affiliate as collateral for any loan, and the issuance of
a guarantee or letter of credit on behalf of an affiliate.
(2) The statute requires that all transactions between an insured
depository institution and its affiliates
[[Page 51123]]
be on terms and conditions consistent with safe and sound banking
practices.
(3) The statute prohibits an insured depository institution from
purchasing ``low-quality'' assets from affiliates. A ``low-quality''
asset is defined in the statute as an asset that falls in any one or
more of the following categories: (a) an asset classified as
``substandard,'' ``doubtful,'' or ``loss'' or treated as ``other loans
especially mentioned'' in the most recent report of examination or
inspection of an affiliate prepared by either a Federal or State
supervisory agency; (b) an asset in a nonaccrual status; (c) an asset
on which principal or interest payments are more than thirty days past
due; or (d) an asset whose terms has been renegotiated or compromised
due to the deteriorating financial condition of the obligor.
(4) The statute imposes collateral requirements when an insured
depository institution is lending to an affiliate or is issuing a
guarantee, acceptance, or letter of credit on behalf of an affiliate.
The collateral requirements, which vary based on the type of
collateral, are designed to reduce risk related to these exposures.
As the activities of nonbank subsidiaries of bank holding companies
have expanded, and as regulatory restrictions have been reduced or
eliminated to lessen the burden on the industry, the importance of the
limits imposed by Section 23A has increased. Yet, at present, there is
no uniform or regular reporting of bank transactions subject to Section
23A. The current bank holding company FR Y-8 report collects data on
intercompany transactions on a combined, aggregate basis for all
subsidiary banks of a bank holding company at the bank holding company
level; hence, Section 23A transactions cannot be identified from data
submitted in the current report. Additionally, while this information
may be reviewed in examinations, data on covered transactions are not
always contained in examination reports, or if contained in the
reports, the data are not presented in comparable detail or a uniform
format. Moreover, examinations for most insured depository institutions
occur infrequently, whereas compliance with Section 23A is required
continuously.
In order to identify and monitor for each individual institution,
potential Section 23A compliance issues, and to identify and monitor
industry-wide levels of activity and the effect on insured depository
institution risk exposure, the Federal Reserve proposes to revise the
FR Y-8 report to collect for each insured subsidiary only four items:
(1) For covered transactions subject to Section 23A's collateral
requirements, (a) the outstanding amount of such transactions as of the
report date and (b) the maximum amount of such transactions during the
calendar quarter ending with the report date.
(2) For covered transactions not subject to the collateral
requirements, (a) the outstanding amount of such transactions as of the
report date and (b) the maximum amount of such transactions during the
calendar quarter ending with the report date.
Transactions exempt from the quantitative limits of the statute
such as extensions of credit fully secured by the U.S. Government
securities or transactions with affiliated insured depository
institutions known as sister banks would be excluded from the report.
The proposed revised report distinguishes between covered
transactions that are subject to collateral requirements and those that
are not in order to distinguish, with the fewest possible report items,
between the various types of covered transactions that, collectively,
represent extensions of credit, and those that do not (e.g., purchases
of assets). The information requested should be available and not
significantly burdensome to report because insured depository
institutions already should, on an ongoing basis, be continually
monitoring their Section 23A covered transaction exposures to ensure
compliance with the statute on an ongoing basis. Also, bank holding
companies currently required to file the FR Y-8 must currently obtain
thirty items of data for each individual subsidiary bank in order to
provide aggregate data on the thirty items requested on the existing
report. The reduction in burden associated with reducing the number of
items reported on the current semiannual report from thirty items to
four items and discontinuing the FR Y-8 interim report, comprising
twenty items of aggregated data compiled from data from each insured
subsidiary bank, should offset any burden associated with the report.
The proposed revised report would become effective with the June
30, 2000, reporting date.
Board of Governors of the Federal Reserve System, September 15,
1999.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 99-24545 Filed 9-20-99; 8:45 am]
BILLING CODE 6210-01-F