[Federal Register Volume 69, Number 83 (Thursday, April 29, 2004)]
[Notices]
[Pages 23502-23505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9772]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision


Proposed Agency Information Collection Activities; Comment 
Request

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

ACTION: Joint notice and request for comment.

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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, the FDIC, and 
the OTS (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. The Federal Financial Institutions Examination 
Council (FFIEC), of which the agencies are members, has approved the 
agencies' publication for public comment of proposed revisions to the 
instructions for the Consolidated Reports of Condition and Income (Call 
Report) and the Thrift Financial Report (TFR), which are currently 
approved collections of information. At the end of the comment period, 
the comments and recommendations received will be analyzed to determine 
the extent to which the FFIEC and the agencies should modify the 
proposed revised instructions prior to giving final approval. The 
agencies will then submit the revisions to OMB for review and approval.

DATES: Comments must be submitted on or before June 28, 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, 
Clearance Officer, Legal Division, Room MB-3046, 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]. 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. Comments may be inspected and photocopied in the FDIC Public 
Information Center, Room 100, 801 17th Street, NW., Washington, DC, 
between 9 a.m. and 4:30 p.m. on business days.
    OTS: Information Collection Comments, Chief Counsel's Office, 
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, 
Attention: 1550-0023, Fax number (202) 906-6518, or e-mail to 
[email protected]. Due to temporary disruptions in 
mail service in the Washington, DC, area, commenters are encouraged to 
send comments by fax or e-mail, if possible. OTS will post comments and 
the related index on the OTS Internet site at www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1. In addition, interested persons may 
inspect comments at the Public Reading Room, 1700 G Street, NW., by 
appointment. To make an appointment, call (202) 906-5922, send an e-
mail to [email protected], or send a facsimile transmission to 
(202) 906-7755.
    A copy of the comments may also be submitted to the OMB desk 
officer for the agencies: Mark Menchik, 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, copies of 
Call Report forms can be obtained at the FFIEC's Web site 
(www.ffiec.gov/ffiec_report_forms.htm). Copies of the TFR can be 
obtained at the OTS's Web site (www.ots.treas.gov/pagehtml.cfm?catNumber=15).
    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: Michelle E. Long, Acting 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.
    OTS: Marilyn K. Burton, OTS Paperwork Clearance Officer, (202) 906-
6467, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 
20552,

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by electronic mail at [email protected].

SUPPLEMENTARY INFORMATION: The agencies are proposing to revise the 
following currently approved collections of information:
    The effect of the proposed revisions to the reporting requirements 
will vary from institution to institution depending on the 
institution's involvement with the types of activities or transactions 
to which the proposed instructional changes apply. The agencies 
estimate that since the proposed instructional revisions change how 
existing information is reported in the Call Report and TFR, 
implementation of these instructional changes will result in little or 
no change in the current reporting burden imposed by the Call Report 
and TFR. The following burden estimates include the proposed revisions.
    Report Title: OCC, Board, and FDIC: Consolidated Reports of 
Condition and Income (Call Report). OTS: Thrift Financial Report (TFR).
    Form Number: Call Report: FFIEC 031 (for banks with domestic and 
foreign offices) and FFIEC 041 (for banks with domestic offices only). 
TFR: OTS Form No. 1313.
    Frequency of Response: Quarterly.
    Affected Public: Business or other for-profit.

OCC

    OMB Number: 1557-0081.
    Estimated Number of Respondents: 2,126 national banks.
    Estimated Time per Response: 46.40 burden hours.
    Estimated Total Annual Burden: 394,589 burden hours.

Board

    OMB Number: 7100-0036.
    Estimated Number of Respondents: 952 state member banks.
    Estimated Time per Response: 52.36 burden hours.
    Estimated Total Annual Burden: 199,369 burden hours.

FDIC

    OMB Number: 3064-0052.
    Estimated Number of Respondents: 5,332 insured state nonmember 
banks.
    Estimated Time per Response: 37.04 burden hours.
    Estimated Total Annual Burden: 790,085 burden hours.

OTS

    OMB Number: 1550-0023.
    Estimated Number of Respondents: 925 insured savings associations.
    Estimated Time per Response: 36.4 burden hours.
    Estimated Total Annual Burden: 134,679 burden hours.
    The estimated time per response for the Call Report and the TFR is 
an average, which varies by agency because of differences in the 
composition of the institutions under each agency's supervision (e.g., 
size distribution of institutions, types of activities in which they 
are engaged, and, for banks, existence of foreign offices). For the 
Call Report, the average reporting burden includes the effect on burden 
during 2004 of the new Central Data Repository (CDR) system for 
processing Call Reports. The time per response for the Call Report is 
estimated to range from 15 to 600 hours, depending on an individual 
institution's circumstances, before considering the effect of voluntary 
testing and global enrollment activities related to the CDR. The 
reporting burden for testing and enrollment activities for an 
individual institution is estimated to range from 16 to 69 hours in 
2004, depending on the institution's level of participation.

General Description of Reports

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

Abstract

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

Current Action

I. Overview

    This joint notice and request for comment addresses two proposed 
instructional changes that will affect how institutions report certain 
information in the Call Report and TFR. The agencies are not proposing 
to change the report forms themselves. First, the agencies are 
proposing to change and clarify the reporting requirements for certain 
securitized loans that are 90 days or more past due and subject to 
seller buy-back provisions. This first change will primarily affect 
institutions that originate or purchase and then securitize certain 
residential mortgage loans. Second, the agencies are proposing to 
change the reporting requirements for ``when-issued'' securities from 
settlement date accounting to trade date accounting. This change would 
affect institutions filing the Call Report that purchase or sell 
``when-issued'' securities and will not affect institutions filing the 
TFR because the TFR instructions already require this reporting 
treatment.
    Type of Review: Revision of currently approved collections.
    The proposed instructional revisions to the Call Report and the TFR 
have been approved for publication by the FFIEC. The agencies intend to 
implement the proposed Call Report and TFR changes as of the September 
30, 2004, report date. Nonetheless, as is customary for Call Report and 
TFR changes, if the information to be reported in accordance with the 
revised instructions is not readily available, institutions are advised 
that they may report reasonable estimates of this information for the 
report date as of which the proposed changes first take effect.

II. Discussion of Proposed Instructional Revisions

A. GNMA Buy-Back Option
    Under the Government National Mortgage Association (GNMA) Mortgage-
Backed Securities Guide, the issuer of GNMA securities has the option 
to repurchase individual Federal Housing Administration (FHA), 
Department of Veterans Affairs/Veterans Administration (VA), and 
Farmers Home Administration (FmHA) loans backing the securities when 
the loans meet certain delinquency criteria. Such a buy-back option is 
considered a conditional option under Financial Accounting Standards 
Board (FASB) Statement No. 140, Accounting for Transfers and Servicing 
of Financial Assets and Extinguishments of Liabilities (FAS 140), until 
the delinquency criteria are met, at which time the option becomes 
unconditional.
    When the loans backing a GNMA security (GNMA loans) are initially 
securitized, the issuer of the security treats the transaction as a 
sale for accounting purposes under FAS 140

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because the option is conditional and the issuer has surrendered 
control of the loans. Accordingly, the loans are removed from the 
issuer's balance sheet. When individual loans later meet GNMA's 
specified delinquency criteria and are eligible for repurchase, the 
issuer is deemed to have regained control of these loans and, under FAS 
140, the loans can no longer be reported as sold. These individual 
delinquent GNMA loans must be brought back onto the issuer's books as 
assets, along with an offsetting liability, regardless of whether the 
issuer intends to exercise the buy-back option.
    Recently, the agencies became aware of several inconsistencies in 
the way issuers of GNMA securities have reported certain information in 
their Call Reports and TFRs relating to GNMA loans after they have 
become delinquent. In this regard, the agencies found that some 
institutions were reporting GNMA loans that were eligible for 
repurchase, as well as those that have actually been repurchased, as 
``Other assets'' on the balance sheet. Other institutions were 
reporting these assets as ``Loans.'' Based on discussions with 
representatives of the FASB, the Securities and Exchange Commission, 
and other industry personnel, the agencies concluded that ``Loans'' is 
the appropriate balance sheet classification for these assets and 
included such guidance in the December 2003 Call Report Supplemental 
Instructions and TFR Financial Reporting Bulletin.\1\
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    \1\ The December 2003 Call Report Supplemental Instructions and 
TFR Financial Reporting Bulletin can be accessed at http://www.ffiec.gov/PDF/FFIEC_forms/FFIEC031_041_suppinst_200312.pdf 
and http://www.ots.treas.gov/docs/78166.pdf, respectively.
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    However, additional inconsistencies in practice still exist 
regarding:
     the appropriateness of reporting repurchased 
GNMA loans, and GNMA loans that are eligible for repurchase, as past 
due loans in Call Report Schedule RC-N and TFR Schedule PD, and
     the appropriate balance sheet classification of 
foreclosed real estate that had been the collateral for GNMA loans, 
i.e., whether the foreclosed real estate should be reported as ``other 
real estate owned'' or ``other assets.''

The agencies December 2003 guidance did not address these reporting 
issues.
    The agencies' objective is to ensure consistent accounting and 
reporting for these loans and foreclosed real estate. However, 
achieving consistency will require changes to current practice for some 
institutions and changes and clarifications to existing regulatory 
reporting guidance. Accordingly, we are seeking comments on a number of 
proposed changes.
    Delinquency Status. For delinquent GNMA loans that are repurchased 
when they are ``in foreclosure status'' at the time of repurchase, 
current Call Report and TFR instructions permit institutions not to 
report these loans as past due provided the government reimbursement 
process is proceeding normally. However, some institutions are applying 
this exception to their other rebooked delinquent GNMA loans, whether 
repurchased or eligible for repurchase, and not reporting them as past 
due in the Call Report and TFR. Other institutions report all rebooked 
delinquent GNMA loans, except those covered by the exception, as past 
due.
    The exception from past due reporting for GNMA loans ``in 
foreclosure status'' predates FAS 140. More specifically, when this 
exception was added to the Call Report and TFR instructions, the 
accounting standards then in effect did not require the seller to 
rebook delinquent GNMA loans for which the repurchase option became 
unconditional unless the loans were actually repurchased. Institutions 
could choose to repurchase delinquent GNMA loans ``in foreclosure 
status'' from the loan pool backing a GNMA security rather than 
continuing to make monthly advances to the pool on these delinquent 
loans while initiating foreclosure action. Until the exception was 
added, an institution that repurchased delinquent loans in foreclosure 
status had to report the loans as past due in its regulatory reports 
whereas an institution making monthly advances on delinquent loans 
without repurchasing them did not have to report these loans as past 
due. The creation of the exception eliminated this reporting 
difference, which depended on how the institution chose to handle its 
servicing responsibilities. In contrast, under FAS 140, delinquent GNMA 
loans must be rebooked as assets as soon as the repurchase option 
becomes unconditional, whether or not the loans are repurchased. 
Consequently, the difference in balance sheet treatment for repurchased 
delinquent GNMA loans versus those eligible for repurchase that led the 
agencies to create the exception from past due reporting no longer 
exists.
    Thus, the agencies are proposing that all delinquent rebooked GNMA 
loans (including those for which the institution is taking steps to 
foreclose on the real estate collateral at the time of repurchase, but 
for which the sheriff's sale has not yet taken place) should be treated 
consistently and reported as past due on Call Report Schedule RC-N and 
TFR Schedule PD in accordance with their contractual terms. Some 
institutions that are GNMA issuers have objected to the possibility of 
having to report delinquent GNMA loans as past due, so the agencies are 
now seeking industry comment on the reporting of all delinquent 
rebooked GNMA loans as past due residential mortgage loans. It should 
be noted that such delinquent GNMA loans would also be reported in the 
items for past due loans wholly or partially guaranteed by the U.S. 
Government on Call Report Schedule RC-N and TFR Schedule PD. These 
items provide a method for users of the Call Report and TFR to identify 
the amount of delinquent loans that are not guaranteed by the U.S. 
Government.
    The agencies are seeking comment on whether this past due reporting 
approach is appropriate and whether there are alternative methods to 
ensure that all delinquent loans are treated consistently.
    Foreclosed Real Estate. There are also inconsistencies in how 
institutions, for balance sheet purposes, report the real estate 
collateral backing delinquent GNMA loans on which they have foreclosed. 
Some institutions report the foreclosed real estate as ``other real 
estate owned.'' Other institutions report it as ``other assets'' 
because they consider their asset to be a receivable from the U.S. 
Department of Housing and Urban Development (HUD), the federal entity 
that administers the GNMA program.
    The agencies understand that in the case of FHA properties (which 
eventually go back to HUD), the institution forecloses on the real 
estate collateral for delinquent loans in its own name. The institution 
must then hold the property through the state-specified redemption, 
confirmation, or ratification periods. The length of these periods 
varies from state to state. The property is not conveyed to HUD until 
it is ``clean'' in terms of the completion of the redemption period and 
the eviction of any occupants of the property, which could be an 
extended period of time following foreclosure. HUD is not obligated to 
receive the property until the successful completion of the entire 
legal process.
    In the case of VA loans, the institution also forecloses on the 
real estate collateral in its own name. If the institution wins the bid 
at the sheriff's sale, it instructs the sheriff to title the property 
in the name of the VA. However, as with FHA loans, title is not 
actually conveyed to the VA until the end of the redemption period, 
which may be several months after foreclosure.
    The agencies understand that in both FHA and VA foreclosures, HUD 
cannot

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accept the property nor can the government guarantee or insurance be 
honored until all legal actions pursuant to foreclosure have been 
completed.
    A rationale that institutions have given for reporting the 
foreclosed property as an ``other asset'' is that the financial 
institution essentially is acting as an agent for HUD. The institution 
makes arrangements for a sheriff's sale in its own name and bids for 
the property in its name. Institutions that follow this reporting 
treatment then record a receivable from HUD representing the amount due 
under the government guarantee or insurance. Following the completion 
of all legal proceedings and acceptance of the property, HUD is 
responsible for disposing of the real estate.
    However, the process for resolving foreclosed properties that 
served as collateral for mortgage loans backing GNMA securities may 
result in an institution's involvement with the property for an 
extended period of time following the sheriff's sale. Accordingly, as 
with other real estate collateral on which an institution forecloses, 
an institution that forecloses on real estate backing delinquent GNMA 
loans it has rebooked as assets should report the property as ``other 
real estate owned'' on the balance sheet in the Call Report and TFR. 
The foreclosed property should be reported in this manner beginning at 
the time of foreclosure until it has been sold, transferred to HUD, or 
otherwise disposed of.
    The agencies request comments on the appropriateness of this 
balance sheet treatment.
B. ``When-Issued'' Securities
    The agencies have identified a potential difference in the 
accounting for ``when-issued'' securities between the Call Report 
instructions and generally accepted accounting principles (GAAP). 
Specifically, the Call Report Glossary entry for ``When-Issued 
Securities Transactions'' indicates that ``[p]urchases and sales of 
when-issued securities for which settlement date has not occurred as of 
the report date are not to be reflected in the balance sheet, Schedule 
RC, until settlement date.'' Accordingly, the Call Report instructions 
indicate that institutions should follow ``settlement date accounting'' 
for when-issued securities. Under GAAP, all securities are required to 
be reported on the balance sheet as of the ``trade date.'' 
Specifically, paragraph 5.92 of the American Institute of Certified 
Public Accountants' (AICPA) Audit and Accounting Guide for Banks and 
Savings Institutions (May 2000 edition) indicates that purchases and 
sales of securities are recorded on the balance sheet as of the trade 
date (``trade date accounting'').
    The requirement that institutions account for when-issued 
securities at settlement date is a longstanding regulatory reporting 
practice. However, given that GAAP and industry practice seem to 
predominantly follow trade date accounting, the agencies are proposing 
to eliminate the Call Report instruction that indicates institutions 
should follow settlement date accounting for when-issued securities and 
replace it with one that calls for trade date accounting for such 
securities.
    In addition, the agencies would remove the references to 
commitments to purchase and sell when-issued securities from the 
instructions for Schedule RC-L, item 9, ``All other off-balance sheet 
liabilities,'' and item 10, ``All other off-balance sheet assets,'' 
respectively. The instructions would instead indicate that, consistent 
with the reporting of other purchased securities under trade date 
accounting, an institution's purchases of when-issued securities should 
be reported on the balance sheet as ``Held-to-maturity securities,'' 
``Available-for-sale securities,'' or ``Trading assets,'' as 
appropriate, when recorded on the trade date. The selling of when-
issued securities is considered a trading activity.
    Furthermore, the agencies would revise the Call Report Glossary 
entry for ``Trade Date and Settlement Date Accounting'' to clarify that 
institutions should follow trade date accounting for all securities, 
including when-issued securities. In so doing, this Glossary entry's 
reference to the conditions under which settlement date accounting is 
acceptable would be eliminated.
    The proposed change will improve regulatory reporting by 
eliminating a potential unnecessary difference between the Call Report 
instructions and GAAP. The agencies request comment on whether these 
instructional changes are appropriate and whether they would be 
consistent with institutions' current accounting practices. In this 
regard, the agencies request comment on whether there is justification 
for retaining the current settlement date accounting treatment for 
when-issued securities when the accounting for all other securities is 
based on trade date. The agencies also request comment on the 
appropriateness of reporting purchases of when-issued securities on the 
balance sheet as ``Held-to-maturity securities,'' ``Available-for-sale 
securities,'' or ``Trading assets,'' as appropriate, on the trade date.

III. Request for Comment

    Public comment is requested on all aspects of this joint notice. In 
addition, comments are invited on:
    (a) Whether the proposed revisions to the Call Report and TFR 
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 joint notice will be shared 
among the agencies and will be summarized or included in the agencies' 
requests for OMB approval. 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 the information collection request.

    Dated: April 19, 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, April 22, 
2004.
Jennifer J. Johnson,
Secretary of the Board.
    Dated at Washington, DC, this 20th day of April, 2004.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
    Dated: April 20, 2004.

    By the Office of Thrift Supervision.
James E. Gilleran,
Director.
[FR Doc. 04-9772 Filed 4-28-04; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P