[Federal Register Volume 69, Number 17 (Tuesday, January 27, 2004)]
[Notices]
[Pages 3995-4001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1729]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

FEDERAL RESERVE SYSTEM FEDERAL DEPOSIT INSURANCE CORPORATION


Agency Information Collection Activities: Submission for OMB 
Review; Comment Request

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

ACTION: Notice of information collection to be submitted to OMB for 
review and approval under the Paperwork Reduction Act of 1995.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction 
Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the FDIC 
(the ``agencies'') may not conduct or sponsor, and the respondent is 
not required to respond to, an information collection unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. On November 8, 2002, the agencies requested public 
comment for 60 days on proposed

[[Page 3996]]

revisions to the Consolidated Reports of Condition and Income (Call 
Report), which are currently approved collections of information. After 
making certain modifications, some of these proposed revisions were 
adopted by the Federal Financial Institutions Examination Council 
(FFIEC), of which the agencies are members, approved by OMB, and took 
effect March 31, 2003. After considering the comments the agencies 
received on the other proposed revisions from the November 2002 
proposal, the FFIEC has adopted these remaining revisions with certain 
changes and the agencies are submitting them to OMB for review and 
approval.

DATES: Comments must be submitted on or before February 26, 2004.

ADDRESSES: Interested parties are invited to submit written comments to 
any or all of the agencies. All comments, which should refer to the OMB 
control number(s), will be shared among the agencies.
    OCC: Comments should be sent to the Public Information Room, Office 
of the Comptroller of the Currency, Mailstop 1-5, Attention: 1557-0081, 
250 E Street, SW., Washington, DC 20219. Due to delays in paper mail 
delivery in the Washington area, commenters are encouraged to submit 
comments by fax or e-mail. Comments may be sent by fax to (202) 874-
4448, or by e-mail to [email protected]. You can inspect and 
photocopy the comments at the OCC's Public Information Room, 250 E 
Street, SW., Washington, DC 20219. You can make an appointment to 
inspect the comments by calling (202) 874-5043.
    Board: Written comments, which should refer to ``Consolidated 
Reports of Condition and Income, 7100-0036,'' may be mailed to Ms. 
Jennifer J. Johnson, Secretary, Board of Governors of the Federal 
Reserve System, 20th and C Streets, NW., Washington, DC 20551. Due to 
temporary disruptions in the Board's mail service, commenters are 
encouraged to submit comments by electronic mail to 
[email protected], or by fax to the Office of the 
Secretary at 202-452-3819 or 202-452-3102. Comments addressed to Ms. 
Johnson also may be delivered to the Board's mailroom between 8:45 a.m. 
and 5:15 p.m. weekdays, and to the security control room outside of 
those hours. Both the mailroom and the security control room are 
accessible from the Eccles Building courtyard entrance on 20th Street 
between Constitution Avenue and C Street, NW. Comments received may be 
inspected in room M-P-500 between 9 a.m. and 5 p.m. on weekdays 
pursuant to sections 261.12 and 261.14 of the Board's Rules Regarding 
Availability of Information, 12 CFR 261.12 and 261.14.
    FDIC: Written comments should be addressed to Steven F. Hanft, 
Paperwork Clearance Officer, Room MB-3964, Federal Deposit Insurance 
Corporation, 550 17th Street, NW., Washington, DC 20429. All comments 
should refer to ``Consolidated Reports of Condition and Income, 3064-
0052.'' Commenters are encouraged to submit comments by electronic mail 
to [email protected] or by fax to (202) 898-3838. Comments also may be 
hand-delivered to the guard station at the rear of the 550 17th Street 
Building (located on F Street) on business days between 7 a.m. and 5 
p.m.
    A copy of the comments may also be submitted to the OMB desk 
officer for the agencies: Joseph F. Lackey, Jr., Office of Information 
and Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, Washington, DC 20503 or electronic mail to 
[email protected].

FOR FURTHER INFORMATION CONTACT: For further information about the 
revisions discussed in this notice, please contact any of the agency 
clearance officers whose names appear below. In addition, sample copies 
of Call Report forms can be obtained at the FFIEC's Web site (http://www.ffiec.gov).
    OCC: John Ference, Acting OCC Clearance Officer, or Camille Dixon, 
(202) 874-5090, Legislative and Regulatory Activities Division, Office 
of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 
20219.
    Board: Cynthia M. Ayouch, Board Clearance Officer, (202) 452-3829, 
Division of Research and Statistics, Board of Governors of the Federal 
Reserve System, 20th and C Streets, NW., Washington, DC 20551. 
Telecommunications Device for the Deaf (TDD) users may call (202) 263-
4869.
    FDIC: Steven F. Hanft, Paperwork Clearance Officer, (202) 898-3907, 
Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, 
NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: Request for OMB approval to extend, with 
revision, the following currently approved collections of information:
    Report Title: Consolidated Reports of Condition and Income.
    Form Number: FFIEC 031 (for banks with domestic and foreign 
offices) and FFIEC 041 (for banks with domestic offices only).
    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.
    For OCC:
    OMB Number: 1557-0081.
    Estimated Number of Respondents: 2,126 national banks.
    Estimated Time per Response: 42.30 burden hours.
    Estimated Total Annual Burden: 359,719 burden hours.
    For Board:
    OMB Number: 7100-0036.
    Estimated Number of Respondents: 952 state member banks.
    Estimated Time per Response: 48.35 burden hours.
    Estimated Total Annual Burden: 184,117 burden hours.
    For FDIC:
    OMB Number: 3064-0052.
    Estimated Number of Respondents: 5,332 insured state nonmember 
banks.
    Estimated Time per Response: 32.95 burden hours.
    Estimated Total Annual Burden: 702,758 burden hours.
    The estimated time per response for the Call Report is an average, 
which varies by agency because of differences in the composition of the 
banks under each agency's supervision (e.g., size distribution of 
institutions, types of activities in which they are engaged, and number 
of banks with foreign offices). For the Call Report as it would be 
revised, the time per response for a bank is estimated to range from 15 
to 600 hours, depending on individual circumstances.

General Description of Report

    These information collections are mandatory: 12 U.S.C. 161 (for 
national banks), 12 U.S.C. 324 (for state member banks), and 12 U.S.C. 
1817 (for insured state nonmember commercial and savings banks, and for 
all banks for deposit information). Except for selected items, these 
information collections are not given confidential treatment.

Abstract

    Banks file Call Reports with the agencies each quarter for the 
agencies' use in monitoring the condition, performance, and risk 
profile of reporting banks and the industry as a whole. In addition, 
Call Reports provide the most current statistical data available for 
identifying areas of focus for both on-site and off-site examinations, 
for evaluating bank corporate applications such as mergers, and for 
monetary and other public policy purposes. Call Reports are also used 
to calculate all banks' deposit insurance and Financing Corporation 
assessments and national banks' semiannual assessment fees.

Current Actions

    On November 8, 2002, the OCC, the Board, and the FDIC jointly 
published a

[[Page 3997]]

notice soliciting comments for 60 days on proposed revisions to the 
Call Report (67 FR 68229). The agencies' notice addressed a number of 
different types of changes to the Call Report requirements. These 
changes related to the content of the Call Report itself, the 
submission deadline for certain banks, and the agencies' process for 
validating and publicly releasing the data that banks report.
    After considering the comments the agencies received on the 
November 2002 proposal, the FFIEC and the agencies adopted some of the 
proposed revisions after making certain modifications to them, 
submitted them to OMB for review with a request for public comment on 
them (68 FR 10310), and received OMB approval to implement them as of 
March 31, 2003. The agencies' notice also explained that the FFIEC and 
the agencies were continuing to evaluate three other elements of their 
November 2002 proposal:
    (1) A reduction from 45 to 30 days in the Call Report filing period 
for banks with more than one foreign office,\1\
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    \1\ Because the agencies had proposed in November 2002 to reduce 
this filing period effective June 30, 2003, their notice requesting 
comment on the revisions submitted to OMB for review stated that any 
reduction in the filing period would not take effect until after 
June 30, 2003.
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    (2) The creation of a supplement to the Call Report that would 
enable the agencies to collect a limited amount of data from certain 
banks in the event of an immediate and critical need for specific 
information, and
    (3) The establishment of edit criteria that would have to be met in 
order for a bank's Call Report data to be accepted beginning upon 
implementation of the agencies' new business model for collecting and 
validating Call Reports in 2004.
    The FFIEC and the agencies have concluded their evaluations of 
these three elements of their November 2002 proposal and have decided 
to proceed with them in modified form as more fully discussed below. In 
addition, in preparation for the implementation of the agencies' new 
Call Report business model, banks will begin to provide contact 
information for the authorized officer who signs their Call Report as 
part of their submission of the report. The contact information would 
be afforded confidential treatment and includes the officer's name, 
title, phone number, e-mail address, and fax number. This revision 
would take effect with the Call Report for March 31, 2004.
    Type of Review: Revisions of currently approved collections.

Comments Received on the Agencies' Proposal

    In response to their November 8, 2002, notice, the agencies 
received 13 comment letters, eight from banks and banking 
organizations, three from bankers' associations, one from a 
governmental entity, and one from a trade group outside the banking 
industry. The FFIEC and the agencies have considered the comments 
received from these 13 respondents as they relate to the revisions that 
are the subject of this notice.
    Reduction in the Filing Period for Banks with More Than One Foreign 
Office--Of the 13 commenters, 8 addressed the proposed reduction from 
45 to 30 days in the filing period for banks with more than one foreign 
office. One bankers' association observed that its member banks 
generally did not perceive this proposed change to be a problem. 
However, five large banks and two other bankers' associations objected 
to this proposed change. These commenters indicated that, compared to 
other banks of similar size that have a 30-day filing deadline, banks 
with multiple foreign offices are more heavily involved in certain 
activities, such as securitizations, credit enhancements, and fiduciary 
activities, which affect the amount and complexity of the information 
these banks must report in the Call Report. In addition, foreign office 
data often must be translated from another currency into U.S. dollars 
and converted from local accounting principles to U.S. accounting 
principles. These commenters therefore expressed concern about the cost 
and burden of a shorter filing period, which would require affected 
banks to modify their reporting systems and processes and add or 
reallocate staff. They further stated that an earlier filing deadline 
could adversely affect data quality, at least in part by limiting the 
amount of time available for the review of Call Report data prior to 
submission.
    Commenters suggested alternatives to the agencies' proposal to 
reduce the filing period for banks with multiple foreign offices to 30 
days beginning June 30, 2003. One alternative would be for the agencies 
to implement a staggered submission process for banks with multiple 
foreign offices under which these banks would file a preliminary 
balance sheet, income statement, and domestic office deposit data 
within 30 days followed by complete Call Report data within 45 days. 
Another alternative would be for the agencies to adopt a three-year 
phased-in approach like the Securities and Exchange Commission (SEC) 
did in August 2002 when it shortened the filing period for larger 
public companies' quarterly reports on Form 10-Q from 45 to 35 days. 
Finally, commenters suggested that if the filing period for the Call 
Report data is reduced, the filing periods for other regulatory reports 
that banking organizations submit to the agencies should be lengthened.
    In proposing to reduce the filing period for the approximately 40 
banks with more than one foreign office, a group that includes the 
largest banks in the industry, the agencies noted that more timely 
receipt of Call Report data from all institutions would enable the 
agencies to make these data, and the agencies' analyses thereof, 
available to bankers and the marketplace earlier than at present. The 
agencies' proposal also cited the SEC's August 2002 decision to 
accelerate the filing period for quarterly and annual reports required 
from larger public companies under the federal securities laws as 
evidence of the importance of earlier public availability of 
information to decision-making. At the same time, the FFIEC and the 
agencies understand the concerns expressed by commenters about the 
impact that an almost immediate one-third reduction in the filing 
period would have on the systems and staffs of affected banks. The 
FFIEC and the agencies have considered these concerns and the 
alternatives suggested by commenters as well as the Board's March 2003 
decision concerning the shortening of the filing deadline for the bank 
holding company report on form FR Y-9C (68 FR 15725). As a result, the 
FFIEC and the agencies have modified their original proposal and, 
similar to the actions by the SEC and Board, are adopting a phased-in 
approach for the Call Report. For banks with more than one foreign 
office, the filing deadline will be reduced to 40 calendar days from 45 
calendar days starting with the June 2004 Call Report and to 35 
calendar days starting with the June 2005 Call Report. These reduced 
filing periods will apply to each quarterly Call Report, including the 
year-end report. For all other banks, the Call Report filing deadline 
will remain 30 calendar days.
    The changes in Call Report requirements that OMB approved for 
implementation as of March 31, 2003, included authorization for the 
FDIC to contact not more than 20 banks with more than one foreign 
office on or about each May 1 and November 1 if their March 31 and 
September 30 Call Reports had not been received in order to obtain 
certain deposit data needed to estimate insured deposits. As approved 
by OMB, the FDIC is permitted to

[[Page 3998]]

survey these banks as long as the current 45-day filing period remains 
in effect. However, under the current statutory and regulatory 
timeframes for setting the semiannual deposit insurance assessment 
rates, the FDIC Board is required to announce the assessment rate 
schedules on approximately May 15 and November 15 each year. In order 
to do so, the FDIC Board must meet to decide on the rate schedule for 
the next semiannual period in early May and November. Thus, the 
reduction in the Call Report filing period to 35 days, rather than to 
30 days as the agencies proposed in November 2002, does not eliminate 
the need for the FDIC's limited-scope deposit data survey. Accordingly, 
as long as the Call Report filing period for banks with multiple 
foreign offices exceeds 30 days, the FDIC is seeking ongoing authority 
to contact not more than 20 banks of these banks by telephone on or 
about each May 1 and November 1 if their March 31 and September 30 Call 
Reports have not been submitted. The FDIC would then receive the 
requested information on the amount of domestic office deposits and 
estimated uninsured deposits from the surveyed banks over the 
telephone, by e-mail, or by fax.
    Call Report Supplement--Two banks and two bankers'' associations 
offered comments on the proposed addition to the Call Report of a 
supplement that the agencies would expect to use in the infrequent 
event of an immediate and critical need to collect certain information 
from a segment of the banking industry.\2\ The November 2002 proposal 
noted that the Paperwork Reduction Act of 1995 has emergency procedures 
for obtaining OMB approval to collect information on a one-time basis, 
but stated the agencies' preference to take a proactive approach and 
obtain authority to collect critical data in advance of such a future 
need. The Board currently has comparable authority to collect a 
supplement to the FR Y-9C bank holding company report (Supplement to 
the Consolidated Financial Statements for Bank Holding Companies; FR Y-
9CS; OMB No. 7100-0128).
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    \2\ One other bank briefly referred to the creation of this 
supplement in conjunction with its comments concerning the reduction 
in the filing period.
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    One commenter questioned whether the agencies' proposed addition of 
a supplement to the Call Report had satisfied applicable Administrative 
Procedure Act requirements because the proposal lacked sufficient 
specificity, made no provision for confidential treatment of the data 
that would be collected, and the burden estimate was without 
foundation. Rather than creating a Call Report supplement, this 
commenter recommended that the agencies should rely on the existing 
emergency provisions of the Paperwork Reduction Act should they be 
confronted with an ad hoc need for critical information.
    Two other commenters sought clarification of the frequency with 
which the Call Report supplement would be collected and magnitude of 
the data that would be requested because of the cost and burden to 
banks should the agencies overuse their authority for this supplement. 
One of these commenters also expressed concern about the absence of a 
prior opportunity to evaluate and comment on the data to be collected 
on the supplement, which led the commenter to recommend that such data 
be accorded confidential treatment. In contrast, the other commenter 
recommended that the agencies should permit institutions to request 
confidential treatment for their data. Finally, both of these 
commenters, as well as the fourth commenter, questioned what the 
submission deadline for the supplement would be. In addition, the 
fourth commenter recommended that the agencies set specific criteria 
for identifying the banks that must complete the supplement and limit 
the data to be collected to specific predefined items. This commenter 
also sought clarification of the circumstances in which there would be 
an ``immediate and critical need'' for data.
    The Paperwork Reduction Act of 1995 and OMB's implementing 
regulation (5 CFR 1320) establish procedures for obtaining OMB approval 
for information collections. The November 2002 notice that the agencies 
published in the Federal Register seeking public comment on the 
proposed Call Report supplement is sufficiently specific to meet the 
standards established in that law and regulation. The notice and 
comment requirements of the Administrative Procedure Act do not apply 
to the proposed supplement. The Paperwork Reduction Act does not 
require that burden estimates for collections of information meet a 
specified level of precision, accuracy, and reliability. It requires 
only that the agencies make explicit the assumptions they used to 
estimate the number of respondents and the time needed to respond. The 
assumptions underlying the burden estimate associated with the proposed 
supplement have a degree of reliability that is typical for collections 
of this nature.
    Furthermore, the agencies believe that they established appropriate 
constraints in their proposal with respect to their use of a Call 
Report supplement in order to limit the frequency of its use and the 
resulting reporting burden. In this regard, to limit the potential for 
overuse of the Call Report supplement, the agencies proposed that the 
members of the Federal Financial Institutions Examination Council would 
be required to approve the specific use of the supplement. Thus, the 
Examination Council's Reports Task Force would not have the delegated 
authority to institute a data collection using the Call Report 
supplement. The agencies note that the Board has used its authority to 
collect the bank holding company supplement (FR Y-9CS) only twice over 
the last 18 years, and its most recent use was to capture information 
on new activities authorized by the Gramm-Leach-Bliley Act of 1999.
    In their November 2002 proposal, the agencies also stated that in 
any quarter in which the supplement were to be collected, no more than 
10 percent of the banks under each agency's supervision would be 
required to complete the supplement and the reporting burden imposed on 
these banks would not exceed one hour per quarter. This is based on the 
assumption that the event giving rise to an immediate and critical data 
need would have a significant effect on a limited number of 
institutions. Thus, if the agencies were confronted with an immediate 
and critical need for data from more than 10 percent of their 
supervised banks or if the collection of such data would impose a 
reporting burden greater than one hour per quarter, the agencies would 
have to request OMB approval to use the Call Report supplement to 
collect the data. Otherwise, the agencies would need to follow the 
emergency procedures established under the Paperwork Reduction Act for 
obtaining the authority to collection the data on a one-time basis. 
Should there be a continuing need for data reported on the supplement 
or collected under emergency authority, the agencies would have to 
adhere to the standard Paperwork Reduction Act procedures for revising 
an existing approved information collection.
    As for the circumstances in which the agencies would envision an 
``immediate and critical need'' for data, the proposal cited as 
examples an unexpected market event or change in credit conditions that 
materially affects certain institutions as well as a statutory change. 
Another example would be a material change in accounting standards. If 
and when an

[[Page 3999]]

immediate and critical need for data were to arise and the Examination 
Council members approved the use of the Call Report supplement, the 
supplement would consist of specifically defined items (and related 
instructions) and specific criteria would be established for 
identifying the banks required to complete the supplement. The 
supplement normally would be collected as part of the next quarterly 
Call Report and the submission deadline for the supplement would be the 
same as for the Call Report (unless the Examination Council approved a 
later deadline). Accordingly, the ``as of'' date for the items on the 
supplement typically would be the Call Report date (or a period ending 
as of the report date). The Examination Council's approval to collect 
the supplement also would specify whether the reported data would be 
accorded confidential treatment on an individual institution basis, 
taking into consideration the nature of the data and the limited number 
of banks from which it would be collected. The FFIEC and the agencies 
would advise all banks about the supplemental reporting requirement at 
the earliest practicable date, and the notification would contain the 
information discussed above in this paragraph.
    Criteria for Acceptance of Call Report Data--In August 2002, the 
FFIEC, on behalf of the agencies, issued a Request for Proposal for the 
design and implementation of a new business model for processing Call 
Report data. In June 2003, the FFIEC awarded a contract for the 
development of this new business model, a principal feature of which is 
a central data repository (CDR) to collect, validate, manage and 
distribute Call Report information. As part of the introduction of this 
new business model, currently targeted for implementation with the 
September 2004 Call Report, the agencies would change the validation 
process for Call Report data.
    At present, a bank's completed Call Report data are subjected to 
numerous edit checks to assess the accuracy and reasonableness of the 
reported data after the data have been electronically submitted to the 
agencies. If the agencies' validation process identifies any edit 
failures or exceptions in a bank's reported data, an agency Call Report 
analyst normally contacts the bank, typically by telephone, to obtain 
either an explanation of the facts and circumstances that support the 
correctness of data as reported or any necessary corrections. This 
follow-up with a bank takes place anywhere from one day to four weeks 
after a bank has submitted its data.
    Under the new business model, the validation process will take 
place in conjunction with a bank's submission of its Call Report data 
to the agencies. The CDR will contain all of the edit criteria and 
formulas, where they would be publicly available. Call Report 
preparation software into which the edits have been incorporated will 
identify any edit failures or exceptions while a bank is completing its 
report. The bank will then be able to correct its data to eliminate any 
validity edit failures, which are mathematical and logical tests. The 
software will also provide a method for the bank to supply explanatory 
comments concerning any quality edit exceptions, which are tests of the 
reasonableness of the data, including tests against historical 
performance and other relational tests.
    Upon implementation of the CDR, the agencies proposed to not accept 
a bank's Call Report submission if it contains any validity edit 
failures and lacks explanatory comments for any quality edit 
exceptions. Because a bank would be aware of any edit failures or 
exceptions as it completes its Call Report, edit failures and 
exceptions will be addressed immediately rather than after-the-fact as 
they are under the agencies' current approach to data validation. 
Although banks will still have to correct validity edit failures and 
provide explanations for quality edit exceptions that support their 
reported data, the planned shift in the validation process should 
reduce the agencies' subsequent questions about these data. The new 
process also should result in quicker validation, acceptance, 
disclosure, and use of individual bank Call Report data.
    Three banks and two bankers' associations commented on several 
matters relating to this aspect of the November 2002 proposal. Four of 
these commenters stated that the proposed requirement for a bank to 
provide explanatory comments for quality edit exceptions by the 
submission deadline for its Call Report data, rather than in response 
to an agency inquiry after the data have been filed and edited, will 
necessitate more work on the bank's part before it files its data than 
under the current processing system. They indicated that this has the 
potential to increase reporting burden and reduce the time available to 
a bank to ensure the accuracy of its reported data. The fifth commenter 
stated that the quality edits must be logical and reasonable in number 
so that banks do not spend an unreasonable amount of time and effort 
providing explanatory comments.
    The agencies acknowledge that the change in the timing of when 
banks need to address edit failures and exceptions means that banks 
will need to allot time prior to the Call Report submission deadline to 
address any edit failures or exceptions identified by their Call Report 
preparation software. However, under the agencies' current validation 
process, the average number of edit exceptions identified upon receipt 
of Call Report data is from 3 to 4 per bank. The actual number of edit 
exceptions varies from none for about 35 percent of all banks to an 
average of about 12 for the largest banks with foreign offices. The 
number of edit exceptions per bank is not expected to change with the 
introduction of the CDR. Thus, the number of explanations that most 
banks will need to provide as part of their Call Report submission 
under the new business model should not be excessive. Furthermore, one 
of the purposes for implementing the new process is to ensure that 
banks are accountable for the quality and accuracy of their data so 
that the data validation process can be completed sooner, which will 
enable the data to be made available to users within the agencies and 
to the public earlier.
    Four of the commenters sought assurance from the agencies that 
banks' explanatory comments for quality edit exceptions would be 
accorded confidential treatment. Reasons given for this request 
included the following: (1) Public disclosure of explanatory comments 
could place banks at a competitive disadvantage compared to other 
companies not subject to such disclosure requirements; (2) the 
explanatory comments are of a supervisory nature and are supplemental 
to the Call Report data; (3) the comments may be misinterpreted by the 
public; and (4) edit exceptions may occur as a result of institution-
specific business strategies or transactions.
    Under the agencies' current data validation approach, agency Call 
Report analysts record the explanations they obtain from banks 
concerning edit exceptions that are identified when their Call Report 
data are processed after they have been submitted to the agencies. 
Obtaining these after-the-fact explanations is an element of the 
agencies' overall supervision of banks and, as commenters observed, the 
explanations currently receive confidential treatment. The agencies' 
adoption of the new business model will simply shift the timing of 
receipt of the explanations that banks will provide to support the 
correctness of the data they have reported. Accordingly, the agencies 
will continue to treat banks'

[[Page 4000]]

explanatory comments that address any quality edit exceptions as 
confidential. Should the agencies seek to make the explanatory comments 
publicly available in the future, they will propose a change in their 
policy and request public comment.
    Five commenters recommended that the agencies disclose the quality 
edits they plan to implement in advance of their effective date so that 
banks can evaluate and comment on them. All but one of these commenters 
suggested that the issuance of these edits take place at least two 
quarters in advance. Another commenter expressed concern that because 
explanatory comments about edit exceptions would be an integral part of 
a bank's Call Report submission, the edits themselves would be 
considered part of the reporting requirements, which would make them 
subject to notice and comment. The agencies believe that both they and 
banks will benefit from the release of planned edits prior to their 
implementation date. The implementation of revisions to the data 
collected in the Call Report normally takes place as of the March 31 
report date. The agencies' timeline for the introduction of reporting 
revisions under the new business model calls upon them to make the 
edits associated with reporting revisions available to banks, software 
vendors, and other interested parties for review on the CDR Web site 
five and one half months before the customary March 31 effective 
date.\3\ Banks and other parties could then submit any questions or 
comments about these edits to the agencies. The final version of these 
edits would be available on the CDR Web site three and one half months 
before the effective date. Banks also would be free to provide the 
agencies with their views on specific Call Report edits at any other 
time. In this regard, the agencies note that, for more than one year, 
they have published the Call Report edits currently in use on the 
FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm) for 
banks' reference.
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    \3\ These edits would not be published for comment in the 
Federal Register.
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    Two commenters indicated that some banks on occasion have triggered 
certain validity edit failures due to unusual circumstances and not 
because of inaccurately reported data. These commenters expressed 
concern that there would be situations in which the agencies would not 
accept a bank's Call Report data due to a validity edit failure caused 
by a problem with the edit itself rather than with the data. This could 
result in the late filing of an institution's data, which could subject 
the institution to monetary penalties. These two commenters as well as 
a third recommended that the agencies' new business model include an 
override feature that would allow them to accept data as reported when 
a validity edit problem exists. The agencies are reviewing their 
validity edits to ensure that they are properly designated as such. Any 
that are more properly considered quality edits will be redesignated 
accordingly. In addition, once the new business model is implemented, 
should the agencies find that an edit contained within the CDR is not 
performing properly, they will be able to override the edit until the 
problem is resolved.
    Two commenters also requested that, when a bank has reached the 
Call Report submission deadline but its data contain one or more 
quality edit exceptions, the bank should be allowed to file its data 
while indicating that the exception is still under investigation. From 
the agencies' perspective, a key reason for requiring banks to provide 
explanatory comments concerning quality edit exceptions is to hold 
banks accountable and responsible for the quality of the Call Report 
data that they submit. When a bank prepares its data, it will need to 
complete its internal review process at an early enough date prior to 
the submission deadline so that if changes to the bank's Call Report 
data arise from the final review of the data and trigger edit 
exceptions, the bank has sufficient time to do any necessary research. 
Therefore, the agencies do not believe it is appropriate for a bank to 
file its Call Report with an explanatory comment stating that it is 
investigating the reason for an edit exception. In addition, as noted 
above, the average number of edit exceptions per bank Call Report under 
the agencies' existing validation process is low.
    Two commenters noted that there are quality edit exceptions that 
recur from quarter to quarter and suggested that the new business model 
should permit some flexibility in responding to quality edit 
exceptions. One possible means for doing so would be by providing a 
method that would enable banks to carry quality edit explanations 
forward from one quarter to the next so that they can avoid reentering 
the same explanation in successive quarters. The agencies recognize 
that such a method would aid in reducing burden, but they are also 
concerned about the potential for a bank to carry forward the prior 
quarter's explanation when that explanation does not fit the 
circumstances giving rise to the quality edit exception in the current 
quarter. Nevertheless, the Call Report software vendors are aware of 
this matter and each vendor will determine the level of service that it 
will make available to its bank customers in its software.
    In addition, two commenters sought a better explanation of what 
constitutes a quality edit for which an explanation would be required 
in order for a bank's Call Report data to be accepted. More 
specifically, one commenter asked whether the quality edits include 
edits that compare a bank's currently reported data to data reported in 
a prior period and to data reported in another regulatory report, e.g., 
the bank holding company report on the Board's form FR Y-9C. As 
previously mentioned, the Call Report edits currently in use are posted 
on the FFIEC's Web site for banks' reference. The agencies currently 
employ and will continue to use edits that perform comparisons between 
current and prior period data. As for comparisons between data from the 
Call Report and data from another regulatory report, edits of this 
nature will not at this time be included among the quality edits the 
agencies' new business model will use to determine whether to accept a 
bank's Call Report data. Nevertheless, the agencies may use edits of 
this nature in their analyses of individual banks' Call Report data 
after the data has been submitted to the CDR and accepted by the 
agencies.
    Finally, one commenter recommended that the agencies not 
immediately finalize their proposal to not accept a Call Report 
submission that contains any validity edit failures and lacks 
explanatory comments for any quality edit exceptions, but to continue 
to work with the banking industry to ensure that the Call Report 
acceptance process is workable and secure before implementing it. In 
the time since this comment was received in January 2003, the agencies 
have established a collaborative working group of representatives from 
banking institutions and industry trade groups. This group serves as a 
two-way vehicle for gaining input from, and responding to, banks 
concerning all aspects of the new business model, including the 
criteria for acceptance of Call Report submissions. Through meetings 
and conference calls, the agencies are in frequent communication with 
industry representatives. The collaborative process will also entail 
voluntary testing of the new CDR system in three phases prior to 
industry-wide implementation: A functional pilot test beginning in 
approximately April 2004, an end-to-end test beginning in approximately 
May 2004, and a volume test beginning

[[Page 4001]]

in approximately August 2004. Following the successful completion of 
testing, the agencies will proceed with global enrollment so that all 
banks are ready to submit their Call Report data using the new CDR 
system, which is scheduled to be implemented as of the September 30, 
2004, report date. The Call Report acceptance process will begin as 
proposed at that time.

Request for Comment

    Comments are invited on:
    (a) Whether the proposed revisions to the Call Report collections 
of information are necessary for the proper performance of the 
agencies' functions, including whether the information has practical 
utility;
    (b) The accuracy of the agencies' estimates of the burden of the 
information collections as they are proposed to be revised, including 
the validity of the methodology and assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    Comments submitted in response to this notice will be shared among 
the agencies. All comments will become a matter of public record. 
Written comments should address the accuracy of the burden estimates 
and ways to minimize burden as well as other relevant aspects of these 
information collection requests.

    Dated: January 20, 2004.
Mark J. Tenhundfeld,
Assistant Director, Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency.
    Board of Governors of the Federal Reserve System, January 14, 
2004.
Jennifer J. Johnson,
Secretary of the Board.
    Dated in Washington, DC, this 22nd day of January, 2004.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 04-1729 Filed 1-26-04; 8:45 am]
BILLING CODE 4810-33-P, 6210-01-P and 6714-01-P