[Federal Register Volume 72, Number 7 (Thursday, January 11, 2007)]
[Notices]
[Pages 1325-1331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-246]


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FEDERAL RESERVE SYSTEM


Proposed Agency Information Collection Activities; 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 inventory of currently approved 
collections of information. Copies of the Paperwork Reduction Act 
Submission, 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 information collection proposals

    The following information collections, which are being handled 
under this delegated authority, have received initial Board approval 
and are hereby published for comment. At the end of the comment period, 
the proposed information collections, 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 collections of information are 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 collections,

[[Page 1326]]

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 collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology.

DATES: Comments must be submitted on or before March 12, 2007.

ADDRESSES: You may submit comments, identified by FR 2069 (OMB No. 
7100-0030), FR 2416 and FR 2644 (OMB No. 7100-0075), FR Y-9C (OMB No. 
7100-0128), FR Y-11 (OMB No. 7100-0244), FR 2314 (OMB No. 7100-0073), 
or FR 3036 (OMB No. 7100-0285) by any of the following methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: regs.comments#64;federalreserve.gov. Include the 
OMB control number in the subject line of the message.
     FAX: 202-452-3819 or 202-452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
N.W., Washington, DC 20551.
    All public comments are available from the Board's web site at 
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information. Public 
comments may also be viewed electronically or in paper in Room MP-500 
of the Board's Martin Building (20th and C Streets, N.W.) between 9:00 
a.m. and 5:00 p.m. on weekdays.
    Additionally, commenters should send a copy of their comments to 
the OMB Desk Officer by mail to the Office of Information and 
Regulatory Affairs, U.S. Office of Management and Budget, New Executive 
Office Building, Room 10235, 725 17th Street, NW., Washington, DC 20503 
or by fax to 202-395-6974.

FOR FURTHER INFORMATION CONTACT: A copy of the proposed form and 
instructions, the Paperwork Reduction Act Submission, 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.
    Michelle Shore, Federal Reserve Board Clearance Officer (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 (202-263-4869), 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 reports:

    1. Report title: Weekly Report of Assets and Liabilities for Large 
Banks and Weekly Report of Selected Assets
    Agency form numbers: FR 2416 and FR 2644
    OMB control number: 7100-0075
    Frequency: Weekly
    Reporters: U.S.-chartered commercial banks
    Annual reporting hours: FR 2416: 22,386 hours; FR 2644: 80,652 
hours
    Estimated average hours per response: FR 2416: 8.61 hours; FR 2644: 
1.41 hours
    Number of respondents: FR 2416: 50; FR 2644: 1,100
    General description of reports: These information collections are 
voluntary (12 U.S.C. Sec.  225(a) and 248(a)(2)). Individual respondent 
data are regarded as confidential under the Freedom of Information Act 
(5 U.S.C. Sec.  552(b)(4)).
    Abstract: The FR 2416, FR 2644, and the Weekly Report of Assets and 
Liabilities for Large U.S. Branches and Agencies of Foreign Banks (FR 
2069; OMB No. 7100-0030) are referred to collectively as the bank 
credit reports. The FR 2416 is a detailed balance sheet that covers 
domestic offices of large U.S.-chartered commercial banks. The FR 2644 
collects less-detailed information on investments, loans, total assets, 
and several memoranda items, covering domestic offices of small U.S.-
chartered commercial banks. The bank credit reports are collected as of 
each Wednesday.
    These three voluntary reports are mainstays of the Federal 
Reserve's reporting system from which data for analysis of current 
banking developments are derived. The FR 2416 is used on a stand-alone 
basis as the large domestic bank series. The FR 2644 collects sample 
data, which are used to estimate universe levels using data from the 
quarterly commercial bank Consolidated Reports of Condition and Income 
(FFIEC 031 and 041; OMB No. 7100-0036) (Call Report). Data from the 
bank credit reports, together with data from other sources, are used 
for constructing weekly estimates of bank credit, of sources and uses 
of bank funds, and of a balance sheet for the banking system as a 
whole.
    The Federal Reserve publishes the data in aggregate form in the 
weekly H.8 statistical release, Assets and Liabilities of Commercial 
Banks in the United States, which is followed closely by other 
government agencies, the banking industry, the financial press, and 
other users. This release provides a balance sheet for the banking 
industry as a whole and data disaggregated by its large domestic, small 
domestic, and foreign-related components.
    Current actions: The Federal Reserve proposes to reduce reporting 
burden by eliminating data items that are no longer useful beyond data 
already available from Call Reports, to collect information on real 
estate loan securitization activity, and to improve the detailed 
information associated with data on security loans. The Federal Reserve 
proposes to make the following modifications to the FR 2416: (1) delete 
data item 5.d, Loans to finance agricultural production and other loans 
to farmers; (2) delete data item 5.h, Loans to states and political 
subdivisions in the U.S.; (3) delete memorandum item M.8, Commercial 
and industrial loans: Outstanding principal balance of assets sold and 
securitized; (4) add a memorandum item, Real estate loans: Outstanding 
principal balance of assets sold and securitized; and (5) rename 
memoranda items M.1 and M.5 on revaluation gains and losses, 
respectively. The Federal Reserve proposes to make the following 
modifications to the FR 2644: (1) add a memorandum item, Real estate 
loans: Outstanding principal balance of assets sold and securitized, 
(the same data item proposed for the FR 2416 reporting form) and (2) 
renumber memoranda items M.4 and M.5 on net due from and net due to, 
respectively, to allow for the addition of the new data item on 
securitized real estate loans. The proposed revisions discussed above 
would be implemented as of June 2007. The Federal Reserve would like to 
reevaluate the bank credit data in coming quarters to determine whether 
changes consistent with the proposed March 2007 Call Report revisions 
would be necessary for the bank credit series. Therefore, another 
proposal to revise the reporting forms may be presented for review 
before the three-year extension expires.
    2. Report title: Weekly Report of Assets and Liabilities for Large 
U.S. Branches and Agencies of Foreign Banks
    Agency form number: FR 2069

[[Page 1327]]

    OMB control number: 7100-0030
    Frequency: Weekly
    Reporters: U.S. branches and agencies of foreign banks
    Annual reporting hours: 14,560 hours
    Estimated average hours per response: 4.00 hours
    Number of respondents: 70
    General description of report: This information collection is 
voluntary (12 U.S.C. Sec.  248(a)(2) and 3105(a)(2)). Individual 
respondent data are regarded as confidential under the Freedom of 
Information Act (5 U.S.C. Sec.  552(b)(4)).
    Abstract: The FR 2069 is a detailed balance sheet that covers large 
U.S. branches and agencies of foreign banks. This report, along with 
the FR 2416 and FR 2644, is collected as of each Wednesday.
    These three voluntary reports are mainstays of the Federal 
Reserve's reporting system from which data for analysis of current 
banking developments are derived. The FR2069 collects sample data, 
which are used to estimate universe levels using data from the 
quarterly Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Banks (FFIEC 002; OMB No. 7100-0032). Data from the 
bank credit reports, together with data from other sources, are used 
for constructing weekly estimates of bank credit, of sources and uses 
of bank funds, and of a balance sheet for the banking system as a 
whole.
    The Federal Reserve publishes the data in aggregate form in the 
weekly H.8 statistical release, Assets and Liabilities of Commercial 
Banks in the United States, which is followed closely by other 
government agencies, the banking industry, the financial press, and 
other users. This release provides a balance sheet for the banking 
industry as a whole and data disaggregated by its large domestic, small 
domestic, and foreign-related components.
    Current actions: The Federal Reserve proposes to make the following 
modifications to the FR 2069: (1) split data item 4.b, Federal funds 
sold and securities purchased under agreements to resell: With others, 
into two data items; (2) delete memorandum item M.3, Commercial and 
industrial loans: Outstanding principal balance of assets sold and 
securitized; and (3) rename memoranda items M.1 and M.2 on revaluation 
gains and losses, respectively. The proposed revisions discussed above 
would be implemented as of June 2007. The Federal Reserve would like to 
reevaluate the bank credit data in coming quarters to determine whether 
changes consistent with the proposed March 2007 Call Report revisions 
would be necessary for the bank credit series. Therefore, another 
proposal to revise the reporting forms may be presented for review 
before the three-year extension expires.

Proposal to approve under OMB delegated authority the revision, without 
extension, of the following reports:

    1. Report title: Consolidated Financial Statements for Bank Holding 
Companies.
    Agency form number: FR Y-9C.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: Bank holding companies (BHCs).
    Annual reporting hours: 117,504
    Estimated average hours per response: 38.35
    Number of respondents: 766
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in this report. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to section 
(b)(4) of the Freedom of Information Act (5 U.S.C. Sec. Sec. 522(b)(4).
    Abstract: The FR Y-9 family of reports historically has been, and 
continues to be, the primary source of financial information on BHCs 
between on-site inspections. Financial information from these reports 
is used to detect emerging financial problems, to review performance 
and conduct pre-inspection analysis, to monitor and evaluate capital 
adequacy, to evaluate BHC mergers and acquisitions, and to analyze a 
BHC's overall financial condition to ensure safe and sound operations.
    The FR Y-9C consists of standardized financial statements similar 
to the Consolidated Reports of Condition and Income (Call Report) 
(FFIEC 031 & 041; OMB No. 7100-0036) filed by commercial banks. The FR 
Y-9C collects consolidated data from the BHC and is generally filed by 
top-tier BHCs with total consolidated assets of $500 million or more.
    Current actions: The Federal Reserve proposes to make the following 
revisions to the FR Y-9C to parallel proposed changes to the Call 
Report. BHCs have commented that changes should be made to the FR Y-9C 
in a manner consistent with changes to the Call Report. Comments 
received on the Call Report proposal will also be taken into 
consideration for this proposal.

Reporting on Fair Value Measurements and the Use of the Fair Value 
Option

    On September 15, 2006, the Financial Accounting Standards Board 
(FASB) issued Statement No. 157, Fair Value Measurements (FAS 157), 
which is effective for BHCs and other entities for fiscal years 
beginning after November 15, 2007. Earlier adoption of FAS 157 is 
permitted as of the beginning of an earlier fiscal year, provided the 
BHC has not yet issued a financial statement or submitted FR Y-9C data 
for any period of that fiscal year. Thus, a BHC with a calendar year 
fiscal year may voluntarily adopt FAS 157 as of January 1, 2007. The 
fair value measurements standard provides guidance on how to measure 
fair value and would require BHCs and other entities to disclose the 
inputs used to measure fair value based on a three-level hierarchy for 
all assets and liabilities that are re-measured at fair value on a 
recurring basis.\1\
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    \1\ The FASB's three-level fair value hierarchy gives the 
highest priority to quoted prices in active markets for identical 
assets or liabilities (Level 1) and the lowest priority to 
unobservable inputs (Level 3). Level 1 inputs are quoted prices in 
active markets for identical assets or liabilities that the 
reporting BHC has the ability to access at the measurement date 
(e.g., the FR Y-9C reporting date). Level 2 inputs are inputs other 
than quoted prices included within Level 1 that are observable for 
the asset or liability, either directly or indirectly. Level 3 
inputs are unobservable inputs for the asset or liability.
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    The FASB plans to issue a final standard, The Fair Value Option for 
Financial Assets and Financial Liabilitiesduring the first quarter of 
2007, which would be effective for BHCs and other entities for fiscal 
years beginning after December 15, 2006. The FASB's Fair Value Option 
standard would allow BHCs and other entities to report certain 
financial assets and liabilities at fair value with the changes in fair 
value included in earnings. The Federal Reserve anticipates that 
relatively few BHCs will elect to use the fair value option for a 
significant portion of their financial assets and liabilities.
    The Federal Reserve proposes to add a new Schedule HC-Q to the FR 
Y-9C to collect data, by major asset and liability category, on the 
amount of assets and liabilities to which the fair value option has 
been applied along with separate disclosure of the amount of such 
assets and liabilities whose fair values were estimated under level two 
and under level three of the FASB's fair value hierarchy. The 
categories are:
     Securities held for purposes other than trading with 
changes in fair value reported in current earnings,
     Loans and leases,

[[Page 1328]]

     All other financial assets and servicing assets,
     Deposit liabilities,
     All other financial liabilities and servicing liabilities, 
and
     Loan commitments (not accounted for as derivatives).
    In addition, the Federal Reserve proposes to collect data on 
trading assets and trading liabilities in the new schedule from those 
BHCs that complete Schedule HC-D, Trading Assets and Liabilities, that 
is, BHCs that reported average trading assets of $2 million or more for 
any quarter of the preceding calendar year. In the proposed new 
schedule, such BHCs would report the carrying amount of trading assets 
and trading liabilities whose fair values were estimated under level 
two and under level three of the FASB's fair value hierarchy. Trading 
assets and trading liabilities are required to be reported at fair 
value and thus are not covered under the fair value option.
    The Federal Reserve anticipates using this fair value information 
to make appropriate risk assessments for on-site examinations and off-
site surveillance. The addition of these data items should result in 
minimal additional reporting burden for BHCs because FAS 157 requires 
disclosure of amounts under all three levels of the fair value 
hierarchy on a quarterly and annual basis in financial statements.
    The FASB's fair value measurements standard requires BHCs and other 
entities to consider the effect of a change in their own 
creditworthiness when determining the fair value of a financial 
liability. The Federal Reserve proposes to add one new data item to 
Schedule HC-R, Regulatory Capital, for the cumulative change in the 
fair value of all financial liabilities accounted for under the fair 
value option that is attributable to changes in the BHC's own 
creditworthiness. This amount would be excluded from the BHC's retained 
earnings for purposes of determining Tier 1 capital under the Federal 
Reserve's regulatory capital standards.
    The Federal Reserve plans to clarify the instructions to Schedule 
HI for the treatment of interest income on financial assets and 
interest expense on financial liabilities measured under a fair value 
option. The instructions would be modified to instruct BHCs to separate 
the contractual year-to-date amount of interest earned on financial 
assets and interest incurred on financial liabilities that are reported 
under a fair value option from the overall year-to-date fair value 
adjustment and report these contractual amounts in the appropriate 
interest income or interest expense items on Schedule HI. In addition, 
the Federal Reserve proposes to modify memoranda item 6, Other 
noninterest income, by adding data item 6.i, Net change in the fair 
values of financial instruments accounted for under a fair value 
option.

Reporting of Certain Data on 1-4 Family Residential Mortgage Loans 
withTermsthat Allow for Negative Amortization

    Recently, the volume of 1-4 family residential mortgage loan 
products whose terms allow for negative amortization and the number of 
institutions providing borrowers with such loans has increased 
significantly. Loans with this feature are structured in a manner that 
may result in an increase in the loan's principal balance even when the 
borrower's payments are technically current. When loans with negative 
amortization are not prudently underwritten and not properly monitored, 
they raise safety and soundness concerns. However, due to the 
classification of these loans with all other 1-4 family residential 
mortgage loans in the FR Y-9C, the Federal Reserve has no readily 
available means of identifying the industry's exposure to such loans. 
Therefore, the Federal Reserve proposes to collect four data items to 
monitor the extension of negatively amortizing residential mortgage 
loans in the industry.
    The Federal Reserve proposes to collect one memorandum item from 
all BHCs on Schedule HC-C, Loans and Leases, for the total amount of 
closed-end loans with negative amortization features secured by 1-4 
family residential properties in order to obtain an overall measure of 
this potentially higher risk lending activity. In addition, the Federal 
Reserve proposes to collect two memoranda items on Schedule HC-C and 
one memorandum item on Schedule HI, Income Statement, from BHCs with a 
significant volume of negatively amortizing 1-4 family residential 
mortgage loans. The determination of the threshold for significant 
volume would be based on the aggregate carrying amount of negatively 
amortizing loans in excess of a certain dollar amount, for example, 
$100 million or $250 million, or in excess of a certain percentage of 
the total loans and leases (in domestic offices) reported on Schedule 
HC-C, for example, 5 percent or 10 percent. A BHC with negatively 
amortizing loans would determine whether it met the size threshold for 
reporting the three additional memoranda items based on data reported 
from the previous year-end FR Y-9C report. The Federal Reserve requests 
public comment on the specific dollar amount and percentage of loans 
that should be used in setting the size threshold for additional 
reporting on negatively amortizing loans.
    The two additional Schedule HC-C memoranda items are (1) the total 
maximum remaining amount of negative amortization contractually 
permitted on closed-end loans secured by 1-4 family residential 
properties and (2) the total amount of negative amortization on closed-
end loans secured by 1-4 family residential properties that is included 
in the carrying amount of these loans. The first memorandum item would 
provide a measure of the maximum exposure that could be incurred for 
negative amortization loans in the current 1-4 family residential 
property loan portfolio. The second memorandum item would then identify 
what component of 1-4 family mortgage loans is comprised of negative 
amortization loans. The Schedule HI memorandum item is year-to-date 
non-cash income on closed-end loans with a negative amortization 
feature secured by 1-4 family residential properties. This memorandum 
item would identify the amount and extent of interest revenue accrued 
and uncollected to ascertain the degree this potentially higher risk 
lending activity supports the BHC's overall net income. BHCs with 
negatively amortizing 1-4 family residential loans in excess of the 
reporting threshold for these data items would report these three data 
items for the entire calendar year following the end of any calendar 
year when this threshold was exceeded.

Reporting of Certain Brokered Time Deposit Information

    The FFIEC is proposing to revise the reporting treatment of 
brokered time deposits on Call Report Schedule RC-E, Deposit 
Liabilities. Memorandum item 2.b, Total time deposits of less than 
$100,000, would be revised to include brokered time deposits issued in 
denominations of $100,000 or more that are participated out by the 
broker in shares of less than $100,000, as well as brokered 
certificates of deposit issued in $1,000 amounts under a master 
certificate of deposit. Memorandum item 2.c, Total time deposits of 
$100,000 or more, would be revised to exclude such brokered deposits.
    The Federal Reserve proposes to make similar instructional changes 
to seven data items on Schedule HC-E, Deposit Liabilities, to retain 
consistent definitions with the Call Report and to accommodate the 
consolidation of subsidiary bank information into the FR

[[Page 1329]]

Y-9C report. The Federal Reserve proposes to revise the instructions 
for data item 1.d, Time deposits of less than $100,000 held in domestic 
offices of commercial bank subsidiaries; data item 2.d, Time deposits 
of less than $100,000 held in domestic offices of other depository 
institution subsidiaries; Memorandum item 1, Brokered deposits less 
than $100,000 with a remaining maturity of one year or less; and 
Memorandum item 2, Brokered deposits less than $100,000 with a 
remaining maturity of more than one year, to include brokered time 
deposits issued in denominations of $100,000 or more that are 
participated out by the broker in shares of less than $100,000 and 
brokered certificates of deposit issued in $1,000 amounts under a 
master certificate of deposit. Data item 1.e, Time deposits of $100,000 
or more held in domestic offices of commercial bank subsidiaries; data 
item 2.e, Time deposits of $100,000 or more held in domestic offices of 
other depository institution subsidiaries; and Memorandum item 3, Time 
deposits of $100,000 or more with a remaining maturity of one year or 
less, would be revised to exclude such brokered time deposits.
Instructional Clarifications
    Servicing of Loan Participations
    BHCs report the outstanding principal balance of assets serviced 
for others in Memorandum item 2 of Schedule HC-S, Servicing, 
Securitization, and Asset Sale Activities. In Memoranda items 2.a and 
2.b, BHCs report the amounts of 1-4 family residential mortgages 
serviced with recourse and without recourse, respectively. Memorandum 
item 2.c covers all other loans and financial assets serviced for 
others, but BHCs are required to report the amount of such servicing 
only if the servicing volume is more than $10 million. The instructions 
for Memorandum item 2 do not explicitly state whether a bank holding 
company that has sold a participation in a 1-4 family residential 
mortgage or other loan or financial asset, which it continues to 
service, should include the servicing in Memorandum item 2.a, 2.b, or 
2.c, as appropriate. The absence of clear instructional guidance has 
resulted in questions from banking institutions and has produced 
diversity in practice among BHCs.
    Subject to the reporting threshold that applies to Memorandum item 
2.c, Memorandum item 2 was intended to cover the entire volume of loans 
and other financial assets for which BHCs perform the servicing 
function, regardless of whether the servicing involves whole loans and 
other financial assets or only portions thereof, as is typically the 
case with loan participations. The risks and responsibilities inherent 
in servicing are present whether all or part of a loan or financial 
asset is serviced for the benefit of another party. Accordingly, the 
Federal Reserve proposes to clarify the instructions to Memorandum item 
2 of Schedule HC-S to explicitly state that the amount of loan 
participations serviced for others should be included in this data 
item.
    2. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
of U.S. Bank Holding Companies.
    Agency form number: FR Y-11.
    OMB control number: 7100-0244.
    Frequency: Quarterly and annually.
    Reporters: Bank holding companies (BHCs).
    Annual reporting hours: FR Y-11 (quarterly): 32,690; FR Y-11 
(annually): 1,911.
    Estimated average hours per response: FR Y-11 (quarterly): 6.35; FR 
Y-11 (annually): 6.35.
    Number of respondents: FR Y-11 (quarterly): 1,287; FR Y-11 
(annually): 301.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec. 1844(c)). Confidential treatment is not 
routinely given to the data in these reports. However, confidential 
treatment for the reporting information, in whole or in part, can be 
requested in accordance with the instructions to the form, pursuant to 
section (b)(4) of the Freedom of Information Act [5 U.S.C. 
Sec. Sec. 522(b)(4)].
    Abstract: The FR Y-11 reports collect financial information for 
individual U.S. nonbank subsidiaries of domestic BHCs. BHCs file the FR 
Y-11 on a quarterly or annual basis according to filing criteria. The 
FR Y-11 data are used with other BHC data to assess the condition of 
BHCs that are heavily engaged in nonbanking activities and to monitor 
the volume, nature, and condition of their nonbanking operations.
    Current actions: Recently, the volume of 1-4 family residential 
mortgage loan products whose terms allow for negative amortization and 
the number of institutions providing borrowers with such loans has 
increased significantly. Loans with this feature are structured in a 
manner that may result in an increase in the loan's principal balance 
even when the borrower's payments are technically current. When loans 
with negative amortization are not prudently underwritten and not 
properly monitored, they raise safety and soundness concerns. Currently 
the Federal Reserve has no readily available means of identifying the 
industry's exposure to such loans. Therefore, the Federal Reserve 
proposes to collect four data items at the nonbank subsidiary level to 
monitor the extension of negatively amortizing residential mortgage 
loans in the industry and to parallel the data items being proposed for 
inclusion on the FR Y-9C.
    The Federal Reserve proposes to collect one memorandum item from 
all nonbank subsidiaries on Schedule BS-A, Loan and Leases Financing 
Receivables, for the total amount of closed-end loans with negative 
amortization features secured by 1-4 family residential properties in 
order to obtain an overall measure of this potentially higher risk 
lending activity. In addition, the Federal Reserve proposes to collect 
two memorandum items on Schedule BS-A and one memorandum item on 
Schedule IS, Income Statement, from nonbank subsidiaries with a 
significant volume of negatively amortizing 1-4 family residential 
mortgage loans. The Federal Reserve's determination of the threshold 
for significant volume would be based on the aggregate carrying amount 
of negatively amortizing loans in excess of a certain percentage of the 
total loans and leases reported on Schedule BS-A, for example, 5 
percent or 10 percent. A nonbank with negatively amortizing loans would 
determine whether it met the size threshold for reporting the three 
additional memorandum items based on data reported from the previous 
year-end FR Y-11. The Federal Reserve requests public comment on the 
percentage of loans that should be used in setting the size threshold 
for additional reporting on negatively amortizing loans. In addition, 
the Federal Reserve seeks comment as to whether the percentage 
threshold established for the nonbank subsidiary reports should be 
consistent with or differ from the percentage threshold established for 
the FR Y-9C.
    The Federal Reserve also proposes two additional Schedule BS-A 
memorandum items to collect (1) the total maximum remaining amount of 
negative amortization contractually permitted on closed-end loans 
secured by 1-4 family residential properties and (2) the total amount 
of negative amortization on closed-end loans secured by 1-4 family 
residential properties that is included in the carrying amount of these 
loans. The first memorandum item would provide a measure of the maximum 
exposure that could be incurred for negative amortization loans in the 
current 1-4 family residential property loan portfolio. The second 
memorandum item would then identify what

[[Page 1330]]

component of 1-4 family mortgage loans is comprised of negative 
amortization loans. The Schedule IS memorandum item is year-to-date 
non-cash income on closed-end loans with a negative amortization 
feature secured by 1-4 family residential properties. This memorandum 
item would identify the amount and extent of interest revenue accrued 
and uncollected to ascertain the degree this potentially higher risk 
lending activity supports the BHC's overall net income. All nonbank 
subsidiaries with negatively amortizing 1-4 family residential loans in 
excess of the reporting threshold would report these data items for the 
entire calendar year following the end of any calendar year when the 
threshold was exceeded.
    3. Report title: Financial Statements of Foreign Subsidiaries of 
U.S. Banking Organizations.
    Agency form number: FR 2314.
    OMB control number: 7100-0073.
    Frequency: Quarterly and annually.
    Reporters: Foreign subsidiaries of U.S. state member banks (SMBs), 
bank holding companies (BHCs), and Edge or agreement corporations.
    Annual reporting hours: FR 2314 (quarterly): 5,402; FR 2314 
(annually): 966.
    Estimated average hours per response: FR 2314 (quarterly): 6.40; FR 
2314 (annually): 6.40.
    Number of respondents: FR 2314 (quarterly): 211; FR 2314 
(annually): 151.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec. 324, 602, 625, and 1844(c). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for the reporting information, in whole or in 
part, can be requested in accordance with the instructions to the form, 
pursuant to section (b)(4) of the Freedom of Information Act [5 U.S.C. 
Sec. Sec. 522(b)(4)].
    Abstract: The FR 2314 reports collect financial information for 
direct or indirect foreign subsidiaries of U.S. SMBs, Edge and 
agreement corporations, and BHCs. Parent organizations (SMBs, Edge and 
agreement corporations, or BHCs) file the FR 2314 on a quarterly or 
annual basis according to filing criteria. The FR 2314 data are used to 
identify current and potential problems at the foreign subsidiaries of 
U.S. parent companies, to monitor the activities of U.S. banking 
organizations in specific countries, and to develop a better 
understanding of activities within the industry, in general, and of 
individual institutions, in particular.
    Current actions: Recently, the volume of 1-4 family residential 
mortgage loan products whose terms allow for negative amortization and 
the number of institutions providing borrowers with such loans has 
increased significantly. Loans with this feature are structured in a 
manner that may result in an increase in the loan's principal balance 
even when the borrower's payments are technically current. When loans 
with negative amortization are not prudently underwritten and not 
properly monitored, they raise safety and soundness concerns. Currently 
the Federal Reserve has no readily available means of identifying the 
industry's exposure to such loans. Therefore, the Federal Reserve 
proposes to collect four data items at the nonbank subsidiary level to 
monitor the extension of negatively amortizing residential mortgage 
loans in the industry and to parallel the data items being proposed for 
inclusion on the FR Y-9C.
    The Federal Reserve proposes to collect one memorandum item from 
all nonbank subsidiaries on Schedule BS-A, Loan and Leases Financing 
Receivables, for the total amount of closed-end loans with negative 
amortization features secured by 1-4 family residential properties in 
order to obtain an overall measure of this potentially higher risk 
lending activity. In addition, the Federal Reserve proposes to collect 
two memorandum items on Schedule BS-A and one memorandum item on 
Schedule IS, Income Statement, from nonbank subsidiaries with a 
significant volume of negatively amortizing 1-4 family residential 
mortgage loans. The Federal Reserve's determination of the threshold 
for significant volume would be based on the aggregate carrying amount 
of negatively amortizing loans in excess of a certain percentage of the 
total loans and leases reported on Schedule BS-A, for example, 5 
percent or 10 percent. A nonbank with negatively amortizing loans would 
determine whether it met the size threshold for reporting the three 
additional memorandum items based on data reported from the previous 
year-end FR 2314. The Federal Reserve requests public comment on the 
percentage of loans that should be used in setting the size threshold 
for additional reporting on negatively amortizing loans. In addition, 
the Federal Reserve seeks comment as to whether the percentage 
threshold established for the nonbank subsidiary reports should be 
consistent with or differ from the percentage threshold established for 
the FR Y-9C.
    The Federal Reserve also proposes two additional Schedule BS-A 
memorandum items to collect (1) the total maximum remaining amount of 
negative amortization contractually permitted on closed-end loans 
secured by 1-4 family residential properties and (2) the total amount 
of negative amortization on closed-end loans secured by 1-4 family 
residential properties that is included in the carrying amount of these 
loans. The first memorandum item would provide a measure of the maximum 
exposure that could be incurred for negative amortization loans in the 
current 1-4 family residential property loan portfolio. The second 
memorandum item would then identify what component of 1-4 family 
mortgage loans is comprised of negative amortization loans. The 
Schedule IS memorandum item is year-to-date non-cash income on closed-
end loans with a negative amortization feature secured by 1-4 family 
residential properties. This memorandum item would identify the amount 
and extent of interest revenue accrued and uncollected to ascertain the 
degree this potentially higher risk lending activity supports the BHC's 
overall net income. All nonbank subsidiaries with negatively amortizing 
1-4 family residential loans in excess of the reporting threshold would 
report these data items for the entire calendar year following the end 
of any calendar year when the threshold was exceeded.
    The Federal Reserve proposes to add the section Notes to the 
Financial Statements to allow respondents the opportunity to provide, 
at their option, any material information included in specific data 
items on the financial statements that the parent U.S. banking 
organization wishes to explain. The addition of this section would 
enable the Federal Reserve to automate information that respondents may 
want to report as footnotes to various reported data items and provide 
for release of this information to the public. This section is 
currently included on the FR Y-11.

Proposal to approve under OMB delegated authority the implementation of 
the following survey:

    Report title: Central Bank Survey of Foreign Exchange and 
Derivatives Market Activity
    Agency form number: FR 3036
    OMB control number: 7100-0285
    Frequency: One-time
    Reporters: Financial institutions that serve as intermediaries in 
the wholesale foreign exchange and derivatives market and dealers.
    Annual reporting hours: 3,150

[[Page 1331]]

    Estimated average hours per response: Turnover survey: 51 hours; 
outstandings survey: 60 hours
    Number of respondents: 60
    General description of report: This information collection is 
voluntary (12 U.S.C. 225a, 248(a)(2), 358, and 3105(c)) and is given 
confidential treatment (5 U.S.C. '552(b)(4)).
    Abstract: The FR 3036 is the U.S. part of a global data collection 
that is conducted by central banks every three years. More than fifty 
central banks plan to conduct the survey in 2007. The Bank for 
International Settlements compiles national data from each central bank 
to produce global market statistics.
    The Federal Reserve System and other government agencies use the 
survey to monitor activity in the foreign exchange and derivatives 
markets. Respondents use the published data to gauge their market 
share.
    Current actions: The proposed survey would collect information on 
the size and structure of the foreign exchange and over-the-counter 
derivatives markets. The survey would cover the turnover in the foreign 
exchange spot market, the foreign exchange derivatives market, and 
interest rate derivatives markets (forwards, swaps, and options). In 
addition, the survey would gather data on the notional amounts and 
gross positive and negative market values of outstanding derivatives 
contracts for over-the-counter foreign exchange, interest rates, 
equities, and commodities.
    To reduce reporting burden, the Derivatives Outstanding part of the 
survey is coordinated with the Semiannual Report of Derivatives 
Activity (FR 2436; OMB No. 7100-0286). Those firms that submit FR 2436 
data would not complete the Derivatives Outstanding part of the survey.
    Differences between the proposed survey and the 2004 survey are as 
follows:
    1. The abbreviated report for FR 2436 reporters has been eliminated 
from the Outstanding survey. Data on credit derivatives are now 
submitted on the FR 2436.
    2. Data items to capture credit default swaps have been added to 
the Outstanding survey to be consistent with the FR 2436. Given the 
growth in the credit derivative market, these data are important 
component of understanding the structure and activity of the overall 
over-the-counter derivatives market.
    3. Additional currencies have been identified in tables on interest 
rate derivatives and on foreign exchange transactions on both the 
Outstanding and Turnover surveys. This change will facilitate reporting 
and ensure comprehensive identification of turnover in all 
participating countries' currencies. Reporting central banks will 
retain discretion to customize this list.
    4. The section on electronic trading and identification of 
execution method has been simplified and adjusted in order to better 
distinguish between categories on the Turnover survey.
    5. The definition of internal and related party trades has been 
clarified on the Turnover survey in order to improve consistency of 
data reporting.
    6. The two data items in the memorandum section concerning trading 
activity trends on the Turnover survey have been split into four data 
items to provide detail on derivative contracts markets since these 
markets behave very differently.

    Board of Governors of the Federal Reserve System, January 8, 
2007.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7-246 Filed 1-10-07; 8:45 am]
BILLING CODE 6210-01-S