[Federal Register Volume 73, Number 10 (Tuesday, January 15, 2008)]
[Notices]
[Pages 2491-2496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-531]


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FEDERAL RESERVE SYSTEM


Proposed Agency Information Collection Activities: Comment 
Request

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: 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 Board, the Federal Deposit 
Insurance Corporation (FDIC), and the Office of the Comptroller of the 
Currency (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 a proposal to extend, with 
revision, the Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Banks (FFIEC 002) and the Report of Assets and 
Liabilities of a Non-U.S. Branch That Is Managed or Controlled by a 
U.S. Branch or Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S), which 
are currently approved information collections. The Board is publishing 
this proposal on behalf of the agencies. 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 reports. The Board will then submit the reports to OMB for review 
and approval.

DATES: Comments must be submitted on or before March 17, 2008.

ADDRESSES: Interested parties are invited to submit written comments to 
the agency listed below. All comments, which should refer to the OMB 
control numbers, will be shared among the agencies. You may submit 
comments, identified by FFIEC 002 (7100-0032) or FFIEC 002S (7100-
0273), by any of the following methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. 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, 
NW., Washington, DC 20551.

All public comments are available from the Board's Web site at http://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 form in Room MP-
500 of the Board's Martin Building (20th and C Streets, NW.) between 9 
a.m. and 5 p.m. on weekdays.


[[Page 2492]]


    Additionally, commenters may send a copy of their comments to the 
OMB desk officer for the agencies 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: Additional information or a copy of 
the collections may be requested from Michelle E. Shore, Federal 
Reserve 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.

SUPPLEMENTARY INFORMATION: 

Proposal To Extend for Three Years With Revision the Following 
Currently Approved Collections of Information

    Report Titles: Report of Assets and Liabilities of U.S. Branches 
and Agencies of Foreign Banks; Report of Assets and Liabilities of a 
Non-U.S. Branch That Is Managed or Controlled by a U.S. Branch or 
Agency of a Foreign (Non-U.S.) Bank.
    Form Numbers: FFIEC 002; FFIEC 002S.
    OMB Numbers: 7100-0032; 7100-0273.
    Frequency of Response: Quarterly.
    Affected Public: U.S. branches and agencies of foreign banks.
    Estimated Number of Respondents: FFIEC 002--264; FFIEC 002S--65.
    Estimated Time per Response: FFIEC 002--25 hours; FFIEC 002S--6 
hours.
    Estimated Total Annual Burden: FFIEC 002--26,400 hours; FFIEC 
002S--1,560 hours.
    General Description of Reports: These information collections are 
mandatory: 12 U.S.C. 3105(c)(2), 1817(a)(1) and (3), and 3102(b). 
Except for select sensitive items, the FFIEC 002 is not given 
confidential treatment and the FFIEC 002S is given confidential 
treatment [5 U.S.C. 552(b)(4) and (8)].
    Abstract: On a quarterly basis, all U.S. branches and agencies of 
foreign banks are required to file the FFIEC 002, which is a detailed 
report of condition with a variety of supporting schedules. This 
information is used to fulfill the supervisory and regulatory 
requirements of the International Banking Act of 1978. The data are 
also used to augment the bank credit, loan, and deposit information 
needed for monetary policy and other public policy purposes. The FFIEC 
002S is a supplement to the FFIEC 002 that collects information on 
assets and liabilities of any non-U.S. branch that is managed or 
controlled by a U.S. branch or agency of the foreign bank. Managed or 
controlled means that a majority of the responsibility for business 
decisions, including but not limited to decisions with regard to 
lending or asset management or funding or liability management, or the 
responsibility for recordkeeping in respect of assets or liabilities 
for that foreign branch, resides at the U.S. branch or agency. A 
separate FFIEC 002S must be completed for each managed or controlled 
non-U.S. branch. The FFIEC 002S must be filed quarterly along with the 
U.S. branch or agency's FFIEC 002. The data from both reports are used 
for: (1) Monitoring deposit and credit transactions of U.S. residents; 
(2) monitoring the impact of policy changes; (3) analyzing structural 
issues concerning foreign bank activity in U.S. markets; (4) 
understanding flows of banking funds and indebtedness of developing 
countries in connection with data collected by the International 
Monetary Fund (IMF) and the Bank for International Settlements (BIS) 
that are used in economic analysis; and (5) assisting in the 
supervision of U.S. offices of foreign banks. The Federal Reserve 
System collects and processes these reports on behalf of all three 
agencies.
    Current Actions: The agencies propose to implement a number of 
revisions to the existing reporting requirements of the FFIEC 002. The 
proposed revisions would help to achieve consistency with the Reports 
of Condition and Income (Call Report) (FFIEC 031 and FFIEC 041) filed 
by insured commercial banks and state-chartered savings banks. The 
agencies are also proposing to combine the FFIEC 002 and FFIEC 002S 
into one OMB control number, 7100-0032. The proposed revisions to the 
FFIEC 002 summarized below have been approved for publication by the 
FFIEC. The agencies would implement the proposed changes for the June 
30, 2008, reporting date.

Discussion of Proposed Revisions

A. Officer Signature Requirements and Contact Information

    Considering the importance of data quality, the agencies believe 
that it is most appropriate for the branch or agency's chief financial 
officer (or the individual performing an equivalent function) to ensure 
that the FFIEC 002 and FFIEC 002S are reported accurately. The agencies 
are proposing to revise the existing officer signature requirement so 
that the FFIEC 002 and FFIEC 002S must be signed by the branch or 
agency's chief financial officer rather than by any authorized officer 
of the branch or agency. In signing the FFIEC 002 and FFIEC 002S, the 
chief financial officer would attest that the reporting forms have been 
prepared in conformance with the instructions issued by the FFIEC and 
are true and correct to the best of the officer's knowledge and belief. 
The agencies would also retain the existing requirement for the branch 
or agency's senior executive officer to sign the report.
    The agencies are also proposing to add contact information (name, 
title, e-mail address, telephone number, and fax number) for the chief 
financial officer and another person to whom questions about the 
reports should be directed to facilitate communication between the 
agencies and the branch or agency concerning the FFIEC 002 and FFIEC 
002S.

B. Bankers Acceptances

    The FFIEC 002 balance sheet (Schedule RAL) requires branches and 
agencies to separately disclose the amount of their ``Customers' 
liability to this branch or agency on acceptances outstanding'' (data 
items 1.g.(1) and 1.g.(2)) and their ``Branch or agency liability on 
acceptances executed and outstanding'' (data item 4.d). On the loan 
schedule (Schedule C) branches and agencies disclose ``Holdings of own 
acceptances included in Schedule C, part I, item 4'' (data item M.2). 
On the derivatives and off-balance-sheet items schedule (Schedule L) 
branches and agencies disclose ``Participations in acceptances conveyed 
to others by the reporting branch or agency'' (data item 5). On the 
confidential due from/due to related institutions in the U.S. and in 
Foreign Countries schedule (Schedule M, Part V) branches and agencies 
disclose ``Participations in acceptances conveyed to related depository 
institutions by the reporting branch or agency'' (data item 5). Over 
time, the volume of acceptance assets and liabilities as a percentage 
of industry assets and liabilities has declined substantially to a 
nominal amount, with only a small number of branches and agencies 
submitting these data items. The agencies are proposing to delete these 
six data items and branches and agencies would be instructed to include 
any acceptance assets and liabilities (other than holdings of the 
reporting branch or agency's own acceptances) in ``Other assets'' and 
``Other liabilities,'' respectively, on the FFIEC 002 balance sheet.

[[Page 2493]]

C. Scope of Securitizations To Be Included in Schedule S

    In column G of Schedule S, ``Servicing, Securitization, and Asset 
Sale Activities,'' branches and agencies submit information on 
securitizations and on asset sales with recourse or other seller-
provided credit enhancements involving loans and leases other than 
those covered in columns A through F. Although the scope of Schedule S 
was intended to cover all of a branch's or agency's securitizations and 
credit-enhanced asset sales, as currently structured column G does not 
capture transactions involving assets other than loans and leases. As a 
result, securitization transactions involving such assets as 
securities, for example, have not been submitted in Schedule S. 
Therefore, the agencies propose to revise the scope of column G to 
encompass ``All Other Loans, All Leases, and All Other Assets'' to 
ensure that they can identify and monitor the full range of branches' 
and agencies' involvement in and credit exposure to securitizations and 
asset sales. As a result, column G would begin to reflect 
securitization transactions involving such assets as securities. With 
fewer than 5 branches and agencies submitting data on securitizations 
in column G of Schedule S at present, the proposed change in the scope 
of column G is expected to affect only a nominal number of branches and 
agencies.

D. Breakdown of Real Estate Loans by Category

    FFIEC 002 reporters have become increasingly involved in real 
estate lending and the agencies are proposing that ``Loans secured by 
real estate'' (Schedule C, data item 1) be broken out by category in 
order to better track this activity. The proposed change would also 
make the FFIEC 002 more consistent with the Call Report. Specifically, 
the agencies are proposing to add the following categories of loans 
secured by real estate:
     Construction, land development, and other land loans;
     Loans secured by farmland (including farm residential and 
other improvements);
     Revolving, open-ended loans secured by 1-4 family 
residential properties and extended under lines of credit;
     Closed-end loans secured by 1-4 family residential 
properties;
     Loans secured by multi-family (5 or more) residential 
properties; and
     Loans secured by nonfarm nonresidential properties.

E. Reporting of Certain 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 generally is effective for banks and other entities for fiscal 
years beginning after November 15, 2007. On February 15, 2007, the FASB 
issued Statement No. 159, The Fair Value Option for Financial Assets 
and Financial Liabilities (FAS 159), which is effective for banks 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 entity has not yet issued a financial 
statement or filed an FFIEC 002 for any period of that fiscal year. 
Early adoption of FAS 159 was also permitted provided the entity also 
elected to apply FAS 157 at the same date or earlier. In addition, the 
FASB also issued Statement No. 155, Accounting for Certain Hybrid 
Financial Instruments (FAS 155), and Statement No. 156, Accounting for 
Servicing of Financial Assets (FAS 156), in 2006.
    The fair value measurements standard provides guidance on how to 
measure fair value and requires entities to disclose the inputs used to 
measure fair value based on a three-level hierarchy for all assets and 
liabilities that are remeasured at fair value on a recurring basis.\1\ 
FAS 155, FAS 156, and FAS 159 allow entities to irrevocably elect to 
report certain financial and servicing assets and liabilities at fair 
value with the changes in fair value included in earnings. This 
accounting election is referred to as a fair value option.
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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 entity has the ability to access at the measurement date 
(e.g., the FFIEC 002 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 agencies are proposing to add a new Schedule Q to the FFIEC 002 
to collect data, by major asset and liability category, on the total 
fair value of those assets and liabilities within the category to which 
a fair value option has been applied along with separate disclosure of 
the amount of such assets and liabilities within the category whose 
fair values were estimated under Levels 1, 2, and 3 of the FASB's fair 
value hiearchy. The schedule would also include an item for each asset 
and liability category that would allow branches and agencies to report 
any amounts netted in the determination of total fair value reported 
for that category on Schedule RAL. The categories are:
     Securities held for purposes other than trading with 
changes in fair value reported in current earnings;
     Loans and leases;
     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 agencies propose to collect fair value data on 
trading assets and trading liabilities in new Schedule Q from those 
branches and agencies that reported trading assets (the sum of Schedule 
RAL, data items 1.f.1 and 1.f.2, column A) of $2 million or more for 
any of the four preceding quarters.\2\ In the proposed new schedule, 
such entities would report the total fair value carrying amount of 
trading assets and trading liabilities as well as a breakdown of these 
assets and liabilities into the three fair value levels under FASB's 
fair value hierarchy and any netted amounts. Trading assets and trading 
liabilities are required to be reported at fair value and, thus, are 
not covered under the fair value option. The proposed change would also 
make the FFIEC 002 more consistent with the Call Report.
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    \2\ For example, if a branch or agency reported trading assets 
of $2 million or more for the first time in its FFIEC 002 for March 
31, 2008, it would begin to report the proposed fair value data on 
trading assets and trading liabilities in Schedule Q in its FFIEC 
002 for June 30, 2008. Assuming the branch or agency reported 
trading assets of less than $2 million in its FFIEC 002 for June 30, 
2008 and subsequent report dates, it would complete the Schedule Q 
items for trading assets and liabilities in its FFIEC 002 for June 
30, 2008, through March 31, 2009, but would discontinue completing 
these items beginning June 30, 2009.
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    The agencies are also proposing to add memorandum items to capture 
the fair value and unpaid principal balance of loans measured at fair 
value under a fair value option. One set of memorandum items would 
apply to such loans that are reported in ``Other trading assets'' (data 
item 1.f.2) on Schedule RAL and another set would apply to such loans 
that are reported on Schedule C. These proposed memorandum items would 
collect data for the following categories of loans:
     Construction, land development, and other land loans;
     Loans secured by farmland (including farm residential and 
other improvements);
     Revolving, open-ended loans secured by 1-4 family 
residential

[[Page 2494]]

properties and extended under lines of credit;
     Closed-end loans secured by 1-4 family residential 
properties;
     Loans secured by multi-family (5 or more) residential 
properties;
     Loans secured by nonfarm nonresidential properties;
     Commercial and industrial loans; and
     Other loans.
    These additional data items are necessary to enable the agencies to 
understand the differences between fair value and contractual cash 
flows for loans to which the fair value option is applied and to 
improve the agencies' ability to make comparisons among entities that 
elect a fair value option and those that do not, consistent with 
proposed Call Report changes.

F. Time Deposits Data

    The Federal Reserve uses data from Schedule E, Deposit Liabilities, 
to ensure accurate construction of the monetary aggregates for monetary 
policy purposes. In order to more accurately calculate the monetary 
aggregates, the agencies propose to revise ``Total time deposits of 
$100,000 or more'' (data item M.1.a). Memorandum item 1.a would be 
revised to exclude 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 (when 
information on the number of $1,000 amounts held by each of the 
broker's customers is not readily available to the branch or agency). A 
corresponding change would be made to Memorandum item 1.c, ``Time 
certificates of deposit of $100,000 or more with remaining maturity of 
more than 12 months.''
    In addition, as a result of the increase in the deposit insurance 
limit for certain retirement plan deposit accounts from $100,000 to 
$250,000, a new Memorandum item 1.b, ``Individual Retirement Accounts 
(IRAs) and Keogh Plan accounts included in Memorandum item 1.a, `Total 
time deposits of $100,000 or more,' above,'' would be added to Schedule 
E to separately identify the portion of the total time deposits of 
$100,000 or more reported in Memorandum item 1.a that represents IRA 
and Keogh Plan accounts. This new memorandum item is also necessary to 
support the accurate calculation of the monetary aggregates.
    The agencies are proposing a similar instructional change for 
Schedule O that would direct insured branches to include brokered time 
deposits, as discussed above, in Memorandum item 1.a, ``Deposit 
accounts of $100,000 or less,'' and to exclude these brokered time 
deposits from Memorandum item 1.b, ``Deposit accounts of more than 
$100,000.''

G. Information on Credit Derivatives

    Branches and agencies currently report the notional amounts of the 
credit derivatives on which they are the guarantor and on which they 
are the beneficiary as well as the gross positive and negative fair 
values of these credit derivatives in Memoranda items 1 and 2 of 
Schedule L, Derivatives and Off-Balance Sheet Items, and Schedule M, 
Due from/Due to Related Institutions in the U.S. and in Foreign 
Countries, Part V. The agencies propose to revise these existing items 
so that branches and agencies with credit derivatives will provide a 
breakdown of these notional amounts by type of credit derivative: 
Credit default swaps, total return swaps, credit options, and other 
credit derivatives, with those where the branch or agency is the 
guarantor reported in column A and those where the branch or agency is 
the beneficiary in column B. Branches and agencies would continue to 
separately report the gross positive and negative fair values of credit 
derivatives on which they are the guarantor and the beneficiary without 
a breakdown by type of credit derivative. The agencies are also 
proposing to move credit derivatives from a memoranda item to a line 
item on Schedule L and Schedule M, Part V.

H. Revising the Reporting of Federal Funds Transactions and Securities 
Repurchase/Resale Agreements

    On Schedule RAL, the agencies are proposing to revise the existing 
breakdowns of federal funds sold and securities purchased under 
agreements to resell that are reported in data items 1.d.1 and 1.d.2, 
respectively. First, the counterparty coverage of the federal funds 
sold and securities resale agreements reported in data items 1.d.1.a 
and 1.d.2.a would be changed from depository institutions in the U.S. 
to commercial banks in the U.S. This revision would facilitate the 
derivation of interbank loans, used for a weekly Federal Reserve 
release.
    Second, the agencies are proposing to add two-way breakdowns of 
federal funds sold to others, currently reported in data item 1.d.1.b, 
and securities resale agreements with others, currently reported in 
data item 1.d.2.b. In the first two-way breakdown, branches and 
agencies would separately report federal funds sold to nonbank brokers 
and dealers in securities and federal funds sold to others (including 
depository institutions in the U.S. other than commercial banks). 
Similarly, branches and agencies would separately report securities 
resale agreements with nonbank brokers and dealers in securities and 
securities resale agreements with others (including depository 
institutions in the U.S. other than commercial banks). This revision 
would facilitate the derivation of total security loans, used for a 
weekly Federal Reserve release.
    On the liability side, the agencies are proposing a more limited 
revision of the existing breakdowns of federal funds purchased and 
securities sold under agreements to repurchase that are reported in 
data items 4.b.1 and 4.b.2, respectively. Thus, the counterparty 
coverage of the federal funds purchased and securities repurchase 
agreements reported in data items 4.b.1.a and 4.b.2.a would be changed 
from depository institutions in the U.S. to commercial banks in the 
U.S. As a result, federal funds purchased from and securities 
repurchase agreements with depository institutions in the U.S. other 
than commercial banks would be included in data item 4.b.1.b, ``Federal 
funds purchased from others,'' and data item 4.b.2.b, ``Securities sold 
under agreements to repurchase with others,'' respectively. This would 
facilitate the collection of data on borrowings from commercial banks 
in the U.S. and borrowings from others that is published weekly in 
Federal Reserve releases. A further breakdown of the ``Other borrowed 
money'' reported in data item 4.c of Schedule RAL would not be required 
since data on such borrowings from commercial banks in the U.S. is 
already available from Schedule P of the FFIEC 002.

I. Deposit Insurance Assessment Revisions for FDIC-Insured Branches

    On November 30, 2006, the FDIC published a final rule amending Part 
327 of its regulations, ``Assessments,'' to improve and modernize its 
operational systems for deposit insurance assessments (71 FR 69270). 
These amendments to Part 327 revised the definition of the assessment 
base for deposit insurance purposes to be consistent with Section 3(l) 
of the Federal Deposit Insurance Act (FDI Act). This was intended to 
eliminate the need for periodic updates to the FDIC's assessment 
regulations in response to outside factors and allow a simplification 
of the associated reporting requirements. In addition, to address 
timing issues with quarter-end reporting, under amended Part 327, the 
FDIC will use daily average deposits

[[Page 2495]]

and exclusions over the quarter instead of quarter-end totals for 
deposits and exclusions to compute the assessment base for insured 
institutions with $1 billion or more in assets and other institutions 
that meet specified criteria. All other insured institutions may opt 
permanently to determine their assessment base using daily averages.
    In conjunction with these amendments to Part 327 of the FDIC's 
regulations, the agencies revised and reduced the overall reporting 
requirements related to deposit insurance assessments in the Call 
Report in order to simplify regulatory reporting. These assessment data 
reporting changes included an interim transition period during 2007 
with final implementation of the revised Call Report requirements 
taking place in 2008. The agencies are proposing to make comparable 
changes to the reporting requirements related to deposit insurance 
assessments in Schedule O of the FFIEC 002 for those branches of 
foreign banks that are insured by the FDIC. These proposed revised 
reporting requirements would contain the following key elements:
     Insured branches would separately report (a) gross 
deposits as defined in Section 3(l) of the FDI Act (12 U.S.C. 1813(l)) 
before any allowable exclusions, (b) allowable exclusions, including 
foreign deposits, and (c) foreign deposits;
     The same data items would be reported for both quarter-end 
and daily average deposits;
     All insured branches would report using quarter-end 
deposits, allowable exclusions, and foreign deposits; and
     All insured branches with $1 billion or more in total 
claims on nonrelated parties, and other insured branches that meet 
specified criteria, would also report daily averages for deposits, 
allowable exclusions, and foreign deposits in addition to quarter-end 
amounts.
    The agencies would also provide an interim transition period 
covering the June 30, 2008, through December 31, 2008, report dates 
during which insured branches would have the option to submit Schedule 
O using either the current or revised formats for reporting data for 
measuring their assessment base. An insured branch that chooses to 
begin reporting under the revised format in any quarter during the 
interim period would be required to continue to report under the 
revised format through the rest of the interim period and would not be 
permitted to revert back to the current reporting format. The revised 
reporting format would take effect for all insured branches on March 
31, 2009, at which time the current reporting format would be 
eliminated. Although no insured branch that chose to report under the 
revised format during the 2008 interim period would be required to 
report daily averages during this period, any insured branch could 
elect to report daily averages as of any quarter-end report date 
(beginning June 30) in 2008. However, once an insured branch begins to 
report daily averages (even during the interim period), it would be 
required to continue to report daily averages each quarter thereafter 
in Schedule O of its FFIEC 002.
    At present, 20 items are required in Schedule O of the FFIEC 002 to 
determine an insured branch's assessment base. As proposed by the 
agencies, the changes to Schedule O would effectively reduce the number 
of reported items to as few as two for certain small insured branches 
(without foreign deposits) and no more than six for other insured 
branches. Specifically, the agencies propose to replace items 1 through 
7 and Memorandum items 4 and 5 (including their subitems) on Schedule 
O, ``Other Data for Deposit Insurance Assessments,'' with the following 
six items:
     Total deposit liabilities before exclusions (gross) as 
defined in Section 3(l) of the FDI Act and FDIC regulations;
     Total allowable exclusions (including foreign deposits);
     Total foreign deposits (included in total allowable 
exclusions);
     Total daily average of deposit liabilities before 
exclusions (gross) as defined in Section 3(l) of the FDI Act and FDIC 
regulations;
     Total daily average of allowable exclusions (including 
foreign deposits); and
     Total daily average of foreign deposits (included in total 
daily average of allowable exclusions).
    Thus, instead of starting with total demand deposits and total time 
and savings deposits as reported in Schedule O of the FFIEC 002 and 
making adjustments to these reported deposits for purposes of measuring 
an insured branch's assessment base, which is the present method, the 
computation of the insured branch's assessment base under the FDIC's 
amended assessment regulations and these proposed revisions to the 
FFIEC 002 would start with the gross total deposit liabilities that 
meet the statutory definition of deposits in Section 3(l) of the FDI 
Act before any allowable exclusions from the definition. The total 
amount of allowable exclusions from the assessment base would be 
reported separately for any insured branch that maintains such records 
as will readily permit verification of the correctness of its 
assessment base. The allowable exclusions, which are set forth in 
Section 3(l)(5) and other sections of the FDI Act and in the FDIC's 
regulations, include foreign deposits (including International Banking 
Facility deposits), reciprocal balances, drafts drawn on other 
depository institutions, pass-through reserve balances, depository 
institution investment contracts, and deposits accumulated for the 
payment of personal loans that are assigned or pledged to assure 
payment at maturity. The net amount of unposted debits and credits 
would no longer be considered within the definition of the assessment 
base.
    The agencies believe that the amount of gross total deposit 
liabilities that meet the statutory definition of deposits is typically 
found in and supported by the control totals in an insured branch's 
deposit systems that provide the detail sufficient to track, control, 
and handle inquiries from depositors about their specific individual 
accounts. These deposit systems can be automated or manual. In any 
case, control totals for deposit liabilities should be readily 
available, which should ease an insured branch's transition to the 
revised Schedule O reporting requirements. Compared to the amount of 
information that an insured branch currently reports in order to 
determine its assessment base, the proposed changes to the Schedule O 
reporting requirements should also facilitate the reporting of daily 
averages for deposits and allowable exclusions since many of the 
presently reported adjustments will not need to be tracked and averaged 
separately.
    In addition to quarter-end balance reporting, insured branches that 
meet certain criteria would be required to report average daily deposit 
liabilities, average daily allowable exclusions, and average daily 
foreign deposits to determine their assessment base effective March 31, 
2009. The amounts to be reported would be averages of the balances as 
of the close of business for each day for the calendar quarter. For 
days that an insured branch is closed (e.g., Saturdays, Sundays, or 
holidays), the amounts outstanding from the previous business day would 
be used. An insured branch is considered closed if there are no 
transactions posted to the general ledger as of that date.
    The agencies are proposing to require an insured branch to report 
daily averages beginning March 31, 2009, if it reports $1 billion or 
more in total claims on nonrelated parties in data item 1.i, column A, 
of Schedule RAL of the FFIEC 002 for March 31, 2008,

[[Page 2496]]

regardless of the amount its total claims on nonrelated parties in 
subsequent quarters. In addition, if an insured branch reports $1 
billion or more in total claims on nonrelated parties in Schedule RAL 
in two consecutive FFIEC 002 reports beginning with its June 30, 2008, 
report, daily average reporting would begin on the later date of March 
31, 2009, or the report date six months after the second consecutive 
quarter. An insured branch reporting less than $1 billion in total 
claims on nonrelated parties in Schedule RAL of its FFIEC 002 for March 
31, 2008, would be permitted to continue to determine its assessment 
base using quarter-end balances until it met the two-consecutive-
quarter total claims size test for reporting daily averages unless it 
opted to determine its assessment base using daily averages. After an 
insured branch begins to report daily averages for its total deposits, 
allowable exclusions, and foreign deposits, either voluntarily or 
because it is required to do so, the insured branch would not be 
permitted to switch back to reporting only quarter-end balances.
    Under this proposal, insured branches will continue to report 
information on the number and amount of deposit accounts, the estimated 
amount of uninsured deposits (if total claims on nonrelated parties are 
$1 billion or more), and preferred deposits in Memorandum items 1 
through 3 of Schedule O. However, the agencies are proposing to reduce 
the reporting frequency for the memorandum item for preferred deposits. 
This memorandum item would be reported only as of December 31 each 
year, which is consistent with the reporting frequency in the Call 
Report, rather than quarterly as at present.

J. Instructional Clarifications

    For Schedule E, Column D, branches and agencies report all deposit 
liabilities of their International Banking Facilities (IBF). A footnote 
on the reporting form indicates that amounts in this column should 
exclude those IBF liabilities to be reported as federal funds purchased 
and securities sold under agreements to repurchase or as other borrowed 
money. In contrast, the FFIEC 002 instructions for Schedule E state 
that branches and agencies should ``[r]eport in column D all deposit 
liabilities of the branch or agency's International Banking Facility 
liabilities, regardless of whether they are transaction or 
nontransaction accounts. For purposes of this report, IBF deposit 
liabilities include deposits, placements, borrowings and similar 
obligations represented by promissory notes, acknowledgements of 
advance, or similar instruments that are not issued in negotiable or 
bearer form and that are issued to other IBFs or to nonrelated non-U.S. 
addressees, including banks.'' Since the FFIEC 002 instructional 
language conflicts with the language in the footnote on the reporting 
form, which provides correct guidance, the agencies will clarify the 
FFIEC 002 instructional language by removing the second sentence of the 
current instruction to Column D and by deleting the word 
``liabilities'' the second time it appears in the first sentence of the 
current instruction.

Request for Comment

International Financial Reporting Standards

    On November 15, 2007, the Securities and Exchange Commission (SEC) 
approved amendments to its rules that would allow foreign private 
issuers to file financial statements prepared using International 
Financial Reporting Standards (IFRS) as issued by the International 
Accounting Standards Board without a reconciliation to U.S. generally 
accepted accounting principles (GAAP). The agencies have received a 
number of questions concerning the potential use of IFRS in regulatory 
reports, including the FFIEC 002 and FFIEC 002s.
    The current reporting basis for the FFIEC 002 and FFIEC 002s is 
GAAP. The agencies are evaluating the potential use of IFRS in the 
FFIEC 002 and FFIEC 002S. As part of this analysis, the agencies 
request comment on the following:
    (a) The ability of respondents to prepare the FFIEC 002 and FFIEC 
002s based on IFRS as issued by the International Accounting Standards 
Board;
    (b) The degree to which respondents would need the agencies to 
provide specific reporting instructions to supplement IFRS to 
accurately prepare the FFIEC 002 and FFIEC 002s; and
    (c) The amount of time respondents would need to prepare their 
systems, personnel, and processes to transition from the current GAAP-
based FFIEC 002 and FFIEC 002S to IFRS-based reports.

Paperwork Reduction Act Request for Comment

    Comments are invited on:
    a. Whether the information collections are necessary for the proper 
performance of the agencies' functions, including whether the 
information has practical utility;
    b. The accuracy of the agencies' estimate of the burden of the 
information collections, 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 the 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 estimate and 
ways to minimize burden including the use of automated collection 
techniques or the use of other forms of information technology as well 
as other relevant aspects of the information collection request.

    Board of Governors of the Federal Reserve System, January 10, 
2008.
Jennifer J. Johnson,
Secretary of the Board.
 [FR Doc. E8-531 Filed 1-14-08; 8:45 am]
BILLING CODE 6210-01-P