[Federal Register Volume 70, Number 132 (Tuesday, July 12, 2005)]
[Notices]
[Pages 40029-40031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13629]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Announcement of Board 
Approval Under Delegated Authority and Submission to OMB

Summary

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 Burdens on the 
Public). Board-approved collections of information are incorporated 
into the official OMB inventory of currently approved collections of 
information. Copies of the OMB 83-Is and supporting statements and 
approved collection of information instrument(s) 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.

FOR FURTHER INFORMATION CONTACT:
Federal Reserve Board Clearance Officer--Michelle Long--Division of 
Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, DC 20551 (202) 452-3829.
OMB Desk Officer--Mark Menchik--Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10235, Washington, DC 20503, or e-mail to 
[email protected].

    Final approval under OMB delegated authority of the extension for 
three years, with revision, of the following report:
    Report title: Reports of Foreign Banking Organizations.
    Agency form numbers: FR Y-7, FR Y-7N, FR Y-7NS, and FR Y-7Q.
    OMB control number: 7100-0125.
    Frequency: Quarterly and annually.
    Reporters: Foreign banking organizations (FBOs).
    Annual reporting hours: 5,384 hours.
    Estimated average hours per response: FR Y-7: 3.50 hours; FR Y-7N 
(quarterly): 6 hours; FR Y-7N (annual): 6 hours; FR Y-7NS: 1 hour; FR 
Y-7Q (quarterly): 1.25 hours; FR Y-7Q (annual): 1 hour.
    Number of respondents: FR Y-7: 257; FR Y-7N (quarterly): 129; FR Y-
7N (annual): 137; FR Y-7NS: 170; FR Y-7Q (quarterly): 52; FR Y-7Q 
(annual): 136.
    General description of report: This information collection is 
mandatory (12 U.S.C. 601-604a, 611-631, 1844(c), 3106, and 3108(a)). 
Confidential treatment is not routinely given to the data in these 
reports. However, the FR Y-7Q data will be held confidential until 120 
days after the as-of date. Also, confidential treatment for 
information, in whole or in part, on any of the reporting forms can be 
requested in accordance with the instructions to the form, pursuant to 
sections (b)(4) and (b)(6) of the Freedom of Information Act [5 U.S.C. 
522(b)(4) and (b)(6)].
    Abstract: The FR Y-7 is filed by all foreign banking organizations 
(FBOs) that engage in banking in the United States, either directly or 
indirectly, to update their financial and organizational information. 
The Federal Reserve uses information to assess an FBO's ability to be a 
continuing source of strength to its U.S. banking operations and to 
determine compliance with U.S. laws and regulations.
    The FR Y-7N collects financial information for U.S. nonbank 
subsidiaries held by FBOs other than through a U.S. bank holding 
company or bank. This report consists of a balance sheet and income 
statement; information on changes in equity capital, changes in the 
allowance for loan and lease losses, off-balance-sheet items, and 
loans; and a memoranda section. The FR Y-7NS collects net income, total 
assets, equity capital, and

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total off-balance-sheet items for smaller, less complex subsidiaries.
    The FR Y-7Q collects consolidated capital and asset information 
from all FBOs. The report collects tier 1 capital, total risk-based 
capital, risk-weighted assets, and total assets.
    Current actions: On October 25, 2004, the Federal Reserve issued 
for public comment proposed revisions to the FR Y-7 (69 FR 62269). The 
Federal Reserve proposed to revise the FR Y-7 by requiring that only 
top-tier FBOs file the FR Y-7 report, modifying the cover pages, 
changing the order of the report and instructions, and clarifying 
several areas in the instructions. The Federal Reserve proposed to 
revise the FR Y-7 to be consistent with the reporting requirements 
detailed in the Annual Report of Bank Holding Companies (FR Y-6; OMB 
No. 7100-0124), Report of Changes in Organizational Structure (FR Y-10; 
OMB No. 7100-0297), and the Report of Changes in FBO Organizational 
Structure (FR Y-10F; OMB No. 7100-0297). The proposed revisions to the 
FR Y-7 were to be effective beginning with fiscal year-ends of December 
31, 2004; the Federal Reserve requested specific comment on the 
appropriateness of this effective date. The Federal Reserve also 
proposed to revise the FR Y-7N reporting instructions with respect to 
balances due from related organizations, to insure consistent reporting 
of unconsolidated subsidiaries, and to parallel changes proposed for 
other nonbank subsidiary reports. The revisions to the FR Y-7N were to 
be effective as of the March 31, 2005, report date. The Federal Reserve 
received seven comment letters from: two international trade 
associations, three foreign banking organizations (FBOs), and two law 
firms. The comments are summarized and addressed below.

Top-Tier FBO Filing

    The Federal Reserve originally proposed requiring that only top-
tier FBOs file the FR Y-7 report, consistent with the reporting 
requirement of the Annual Report of Bank Holding Companies (FR Y-6; OMB 
No. 7100-0124) filed by domestic bank holding companies. All seven 
commenters expressed concerns about the feasibility of implementing 
this requirement. Commenters stated that the proposal, under which a 
top-tier FBO would be required to file on behalf of another foreign 
bank in which it had only a minority interest, would pose both legal 
and practical problems. Because the top-tier FBO may not have control 
of the minority-owned bank under applicable foreign law, the top-tier 
FBO might not be able to provide the information required by the FR Y-7 
on a consolidated basis. One commenter specifically noted that the top-
tier FBO often does not have any practical ability to control or 
require the minority interest investment to disclose what is considered 
confidential, proprietary information.
    In light of these comments, the Federal Reserve will withdraw the 
proposed requirement that only top-tier FBOs file the FR Y-7 and retain 
the current requirements.

Confidential Treatment of Shareholder Information

    The Federal Reserve proposed adding language to the confidentiality 
provisions of the FR Y-7 stating that it is Board policy to disclose 
information about persons owning 10 percent or more of any class of 
voting shares of a FBO absent a showing of a ``well-defined present 
threat to the liberty or personal security of individuals.'' 
Information on shareholders of FBOs is collected under Report Item 3. 
Similar language has appeared on the FR Y-6 for several years.
    Commenters expressed concern that the proposed language would 
change the operative standard under the Freedom of Information Act 
(``FOIA'') for withholding personal information \1\ and would 
discourage or preclude filers from arguing for withholding based on 
other grounds (e.g., that foreign law prohibits the public disclosure 
of shareholder information). One commenter expressed concern that a 
definition of ``well-defined, present threat to an individual's liberty 
or personal security'' was not included.
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    \1\ Exemption 6 of the FOIA permits the withholding of personal 
information the disclosure of which would result in a clearly 
unwarranted invasion of personal privacy. The privacy interest at 
issue is the individual's interest in restricting dissemination of 
information about him or her self. Once a request for withholding 
under exemption 6 is made, an agency must balance the asserted 
ground for withholding against the public interest in disclosure. 
The relevant public interest is in disclosure of material that would 
shed light on the agency's performance of its duties. If, on 
balance, the public interest outweighs the asserted personal 
interest, the information must be released absent another basis for 
withholding.
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    The proposed language does not change the operative FOIA standard; 
rather, it puts filers on notice that the Board considers the public 
interest in disclosure of information to be so strong that it generally 
will be considered to be outweighed only with this type of showing. The 
proposed language does not forbid filers from raising other, lesser 
grounds for withholding.
    The Federal Reserve will supplement the proposed text in a manner 
that would put reporters on notice of the Board's view of the strong 
public interest in the public availability of shareholder information 
while emphasizing that submitters may request confidentiality on any 
ground available under the FOIA.

Signature Requirement

    The Federal Reserve proposed that a director and officer of the FBO 
certify that the report has been prepared in conformance with the 
instructions. Five commenters argued that it was not reasonable to have 
a managing board member of the top-tier FBO sign the report which 
represents information from international banks with operations in a 
number of jurisdictions. They note that the data reported on the FR Y-7 
most often is compiled by non-executive employees who are most familiar 
with that information. They emphasize that the completed forms 
typically are signed by high-level individuals either within the U.S. 
operations structure or responsible for the FBO's foreign operations 
and suggest that the proposed change could result in the reporting of 
less accurate or less complete information. They also suggest that 
language differences might impede efforts to obtain a higher-level 
signature.
    The Federal Reserve recognizes the concern addressed by the 
commenters and believes that accountability issues of this nature are 
perhaps more appropriately advanced by a FBO's home, rather than host, 
supervisor. The Federal Reserve will not adopt this proposal and, 
instead, will retain the existing requirement that the FR Y-7 be signed 
by an ``authorized official.''

Implementation Date of Proposed Revisions

    The Federal Reserve had proposed to make the changes to the FR Y-7 
effective for fiscal years beginning December 31, 2004. Six commenters 
expressed concerns about their ability to meet this deadline, stating 
they needed additional time to make changes to their reporting systems 
and procedures.
    In response to these comments, the Federal Reserve will delay the 
implementation date until fiscal years beginning December 31, 2005.

Expand the Information Required for Companies Held Under Authority of 
Section 211.23(f)(5) of the Board's Regulation K

    The Federal Reserve proposed expanding the information collected on 
companies held under authority of section 2(h)(2) of the BHC Act to 
include the legal name, location,

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intercompany ownership and percentage of ownership of voting equity, 
nonvoting equity, or other interests. This change is needed to ensure 
that the Federal Reserve receives sufficient information to be able to 
verify reporters' compliance with the requirements of section 
211.23(f)(5) of Regulation K (12 CFR 211.23(f)(5)). Four commenters 
expressed concern with regard to the increased burden in obtaining and 
reporting this level of detail from these types of companies.
    The Federal Reserve acknowledges that the proposal would increase 
the filing burden of reporters. However, any burden should be minimal 
inasmuch as reporters are required to maintain the requested 
information for internal compliance purposes. This nominal increase in 
burden is outweighed by the Federal Reserve's need for the requested 
information.
    Upon review of this proposal, the Federal Reserve identified areas 
in which the proposed language of Report Item 2b could be improved. 
These improvements will be reflected in the report.

Comments Not Related to the Proposed Changes

Certain Interests Not Reportable Under Report Item 2b

    Since the FR Y-7 was last amended, counsel for one FBO asked 
whether foreign banks need to monitor holdings in dealing accounts at 
their foreign broker-dealers to determine whether those holdings comply 
with section 211.23(f)(5) of Regulation K. The commenter noted that 
foreign banks appear to be taking different approaches in this regard.
    Under a 1971 Board interpretation (12 CFR 225.124(d)), a foreign 
bank holding company may underwrite or deal in shares of stock 
(including shares of United States issuers) to be distributed outside 
the United States, provided that shares so acquired are disposed of 
within a reasonable time (essentially, no longer than one year). Shares 
held pursuant to this interpretation need not be reported on report 
item 2b, provided that the holding of the shares is in all respects 
consistent with the interpretation. The FR Y-7 instructions will be 
clarified using language from the 1971 Board interpretation.

Special Purpose Vehicles

    Three commenters requested a broader exemption for the reporting of 
special purpose vehicles (SPVs). The current exemption only applies to 
leasing SPVs.
    The Federal Reserve will continue to collect information on SPVs 
and will investigate whether a broader exemption might be practical or 
warranted in relation to the Federal Reserve's supervisory needs.

FR Y-7Q Confidentiality

    One commenter asked the Federal Reserve to extend the period of 
time following filing during which the FR Y-7Q reports are 
automatically granted confidential status. The current timeframe for 
not releasing the FR Y-7Q reports to the public is 120 days from the 
report date. The commenter requested that the timeframe be extended to 
180 days.
    In considering this comment, the Federal Reserve believes that 
transparency and disclosure are important and justify the current FR Y-
7Q policy and timeframe. As noted by the commenter, extensions of 
confidentiality are reviewed on a case-by-case basis and determined 
based on the merits of the argument presented for requesting 
confidential treatment.

Future FR Y-7 Revisions

    One commenter requested that the Federal Reserve consider 
improvements to the process for amending the FR Y-7 and reduce the 
frequency with which changes are made to the form.
    As mandated by the Paperwork Reduction Act, the Federal Reserve 
must review its information collections a minimum of every three years. 
However, changes in accounting practices, regulations, and industry 
practices often necessitate making revisions to reports on a more 
frequent basis.

Board of Governors of the Federal Reserve System, July 6, 2005.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 05-13629 Filed 7-11-05; 8:45 am]
BILLING CODE 6210-01-P