[Federal Register Volume 74, Number 185 (Friday, September 25, 2009)]
[Notices]
[Pages 48960-48967]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23164]


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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 (PRA), 
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 collection of information is 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 collection, 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 collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology.

DATES: Comments must be submitted on or before November 24, 2009.

ADDRESSES: You may submit comments, identified by FR 4001, FR Y-9, FR 
Y-11, FR 2314, FR Y-7N, or FR Y-12, 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: [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://

[[Page 48961]]

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.
    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 PRA OMB submission, 
including the proposed reporting form and instructions, supporting 
statement, and other documentation will be placed into OMB's public 
docket files, once approved. These documents will also be made 
available on the Federal Reserve Board's public Web site at: http://www.federalreserve.gov/boarddocs/reportforms/review.cfm or 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).
    Proposal to approve under OMB delegated authority the extension for 
three years, without revision, of the following report:
    1. Report title: Domestic Branch Notification.
    Agency form number: FR 4001.
    OMB control number: 7100-0097.
    Frequency: On occasion.
    Reporters: State member banks (SMBs).
    Estimated annual reporting hours: 810 hours.
    Estimated average hours per response: 30 minutes for expedited 
notifications and 1 hour for nonexpedited notifications.
    Number of respondents: 159 expedited and 730 nonexpedited.
    General description of report: This information collection is 
mandatory per Section 9(3) of the Federal Reserve Act (12 U.S.C. 321) 
and is not given confidential treatment.
    Abstract: The Federal Reserve Act and Regulation H require an SMB 
to seek prior approval of the Federal Reserve System before 
establishing or acquiring a domestic branch. Such requests for approval 
must be filed as notifications at the appropriate Reserve Bank for the 
SMB. Due to the limited information that an SMB generally has to 
provide for branch proposals, there is no formal reporting form for a 
domestic branch notification. An SMB is required to notify the Federal 
Reserve by letter of its intent to establish one or more new branches, 
and provide with the letter evidence that public notice of the proposed 
branch(es) has been published by the SMB in the appropriate 
newspaper(s). The Federal Reserve uses the information provided to 
fulfill its statutory obligation to review any public comment on 
proposed branches before acting on the proposals, and otherwise to 
supervise SMBs.
    Proposal to approve under OMB delegated authority the extension for 
three years, with revision, of the following report:
    Report title: Consolidated Bank Holding Company Report of Equity 
Investments in Nonfinancial Companies, and the Annual Report of 
Merchant Banking Investments Held for an Extended Period.
    Agency form number: FR Y-12 and FR Y-12A, respectively.
    OMB control number: 7100-0300.
    Frequency: FR Y-12, quarterly and semiannually; and FR Y-12A, 
annually.
    Reporters: Bank holding companies (BHCs) and financial holding 
companies (FHCs).
    Estimated annual reporting hours: FR Y-12, 1,485 hours; and FR Y-
12A, 91 hours.
    Estimated average hours per response: FR Y-12, 16.5 hours; and FR 
Y-12A, 7 hours.
    Number of respondents: FR Y-12, 26; and FR Y-12A, 13.
    General description of report: This collection of information is 
mandatory pursuant to Section 5(c) of the Bank Holding Company Act (12 
U.S.C. 1844(c)). The FR Y-12 data are not considered confidential. 
However, bank holding companies may request confidential treatment for 
any information that they believe is subject to an exemption from 
disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. 
552(b). The FR Y-12A data are considered confidential on the basis that 
disclosure of specific commercial or financial data relating to 
investments held for extended periods of time could result in 
substantial harm to the competitive position of the financial holding 
company pursuant to the FOIA (5 U.S.C. 552(b)(4) and (b)(8)).
    Abstract: The FR Y-12 collects information from certain domestic 
BHCs on their equity investments in nonfinancial companies. Respondents 
report the FR Y-12 either quarterly or semi-annually based on reporting 
threshold criteria. The FR Y-12A is filed annually by institutions that 
hold merchant banking investments that are approaching the end of the 
holding period permissible under Regulation Y.
    Current actions: The Federal Reserve proposes the following 
revisions to the FR Y-12 reporting form and instructions effective 
March 31, 2010: (1) Add one Memorandum item to Schedule A to collect 
data on the pre-tax impact of management fee income and (2) add two 
columns to Schedule D to collect data on direct investments in 
nonpublic entities. The Federal Reserve also proposes to clarify the FR 
Y-12 instructions for reporting nonfinancial equity investments and 
also the reporting of negative values.
    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: BHCs.
    Estimated annual reporting hours: 174,070 hours.
    Estimated average hours per response: 42.25 hours.
    Number of respondents: 1,030.
    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 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 sections 
(b)(4), (b)(6)and (b)(8) of the Freedom of Information Act (5 U.S.C. 
552(b)(4), (b)(6) and (b)(8)).
    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 Federal Financial Institutions Examination Council (FFIEC) 
Consolidated Reports of Condition and

[[Page 48962]]

Income (Call Reports) (FFIEC 031 & 041; OMB No. 7100-0036) filed by 
commercial banks. The FR Y-9C collects consolidated data from BHCs. The 
FR Y-9C is filed by top-tier BHCs with total consolidated assets of 
$500 million or more. (Under certain circumstances defined in the 
General Instructions, BHCs under $500 million may be required to file 
the FR Y-9C.)
    Current Actions: The Federal Reserve proposes the following 
revisions and clarifications to the FR Y-9C effective March 31, 2010: 
(1) New data items and revisions to existing data items on unused 
commitments and other loans, (2) new data items providing disclosures 
on other than temporary impairment required under generally accepted 
accounting principles (GAAP), (3) clarification of the instructions for 
reporting unused commitments, (4) modification of the instructions for 
reporting brokered deposits, and (5) reformatting of loan information 
collected on the quarterly average schedule.

Proposed Revisions--FR Y-9C

Proposed Revisions Related to Call Report Revisions

    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 to reduce reporting burden.
A.1 Additional Categories of Unused Commitments and Loans
    The extent to which banks and other financial intermediaries are 
reducing the supply of credit during the current financial crisis has 
been of great interest to the Federal Reserve and to Congress. Also, 
BHC lending plays a central role in any economic recovery and the 
Federal Reserve needs data to better determine when credit conditions 
ease. One way to measure the supply of credit is to analyze the change 
in total lending commitments by BHCs, considering both the amount of 
loans outstanding and the volume of unused credit lines. These data are 
also needed for safety and soundness purposes because draws on 
commitments during periods when BHCs face significant funding 
pressures, such as during the fall of 2008, can place significant and 
unexpected demands on the liquidity and capital positions of BHCs. 
Therefore, the Federal Reserve proposes breaking out in further detail 
two categories of unused commitments on Schedule HC-L, Derivatives and 
Off-Balance-Sheet Items. The Federal Reserve also proposes to breakout 
in further detail one new loan category on Schedule HC-C, Loans and 
Lease Financing Receivables. These new data items would improve the 
Federal Reserve's ability to get timely and accurate readings on the 
supply of credit to households and businesses. These data would also be 
useful in determining the effectiveness of the government's economic 
stabilization programs.
    Unused commitments associated with credit card lines are currently 
reported in Schedule HC-L, data item 1.b. This data item is not 
meaningful for monitoring the supply of credit because it mixes 
consumer credit card lines with credit card lines for businesses and 
other entities. As a result of this aggregation, it is not possible to 
fully monitor credit available specifically to households. Furthermore, 
the Federal Reserve would benefit from the split because the usage 
patterns, profitability, and evolution of credit quality through the 
business cycle are likely to differ for consumer credit cards and 
business credit cards. Therefore, the Federal Reserve proposes to split 
Schedule HC-L, data item 1.b into unused consumer credit card lines and 
other unused credit card lines. Draws from these credit lines that have 
not been sold are already reported on Schedule HC-C. For example, BHCs 
must report draws on credit cards issued to nonfarm nonfinancial 
businesses as commercial and industrial (C&I) loans in Schedule HC-C, 
data item 4, and draws on personal credit cards as consumer loans in 
Schedule HC-C, data item 6.a.
    Schedule HC-L, data item 1.e, aggregates all other unused 
commitments and includes unused commitments to fund C&I loans (other 
than credit card lines to commercial and industrial enterprises, which 
are reported in data item 1.b, and commitments to fund commercial real 
estate, construction, and land development loans not secured by real 
estate, which are reported in data item 1.c.(2)). Separating these C&I 
lending commitments from the other commitments included in other unused 
commitments would considerably improve the Federal Reserve's ability to 
analyze business credit conditions. A very large percentage of banks 
responding to the Federal Reserve's Senior Loan Officer Opinion Survey 
on Bank Lending Practices (FR 2018; OMB No. 7100-0058) reported having 
tightened lending policies for C&I loans and credit lines during 2008; 
however, C&I loans on banks' balance sheets expanded through the end of 
October 2008, reportedly as a result of substantial draws on existing 
credit lines. In contrast, other unused commitments reported on the 
Call Report contracted. Without the proposed breakouts of such 
commitments, it was not possible to know how total business borrowing 
capacity had changed. The FR 2018 data do not suffice because they are 
qualitative rather than quantitative and are collected only from a 
sample of institutions up to six times per year. Having the additional 
unused commitment data reported separately on the FR Y-9C (and Call 
Report), along with the proposed changes to Schedule HC-C described 
below, would have indicated more clearly whether there was a widespread 
restriction in new credit available to businesses.
    Therefore, the Federal Reserve proposes to split Schedule HC-L, 
data item 1.e into three categories: unused commitments to fund 
commercial and industrial loans (which would include only commitments 
not reported in Schedule HC-L, data items 1.b and 1.c(2), for loans 
that, when funded, would be reported in Schedule HC-C, data item 4); 
unused commitments to fund loans to financial institutions (defined to 
include depository institutions and nondepository institutions such as 
real estate investment trusts, mortgage companies, holding companies of 
other depository institutions, insurance companies, finance companies, 
mortgage finance companies, factors and other financial intermediaries, 
short-term business credit institutions, personal finance companies, 
investment banks, bank's own trust department, other domestic and 
foreign financial intermediaries, and Small Business Investment 
Companies); and all other unused commitments.
    With respect to Schedule HC-C, the Federal Reserve proposes to 
split data item 9.b for all other loans into loans to nondepository 
financial institutions (as defined above) and all other loans. BHCs 
already report data on loans to depository institutions in Schedule HC-
C, data item 2. This change to Schedule HC-C would allow the Federal 
Reserve to fully analyze the information gained by splitting data item 
1.e on Schedule HC-L. Lending by nondepository financial institutions 
was a key characteristic of the recent credit cycle and many such 
institutions failed, but little information existed on the exposure of 
the banking system to those firms as this information was obscured by 
the current structure of the FR Y-9C and Call Report loan schedule. The 
proposed addition of separate data items for unused commitments to 
financial

[[Page 48963]]

institutions and loans to nondepository financial institutions, 
together with the existing data on loans to depository institutions, 
would allow supervisors and other interested parties to more closely 
monitor the exposure of individual BHCs to financial institutions and 
to assess the impact that changes in the credit availability to this 
sector have on the economy.
    The Federal Reserve, in conjunction with the other bank regulatory 
agencies,\1\ has also proposed adding these data items to the 
commercial bank Call Report. Collection of the data on the FR Y-9C 
would enhance the Federal Reserve's ability to conduct consolidated 
supervision by providing a fuller treatment of the channels through 
which these key sources of credit flow within the BHC. Further, with 
the heightened focus on the banking sector and its role in the economy, 
as well as continued evolution in the structure of the banking 
industry, the BHC increasingly serves as the fundamental unit of 
analysis rather than the commercial bank. As a result, it is prudent to 
maintain similar levels of detail on the Call Report and the FR Y-9C, 
when appropriate. Combining Call Report data for these proposed 
categories of unused commitments and other loans from subsidiary 
commercial banks to approximate data items at the holding company level 
is inadequate because it omits the data of important nonbank 
subsidiaries \2\ and intra-holding-company transactions lead to double-
counting and other distortions of these data items.
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    \1\ The Federal Deposit Insurance Corporation, the Office of the 
Comptroller of the Currency, and the Office of Thrift Supervision.
    \2\ Unused commitments associated with credit card lines and the 
all other unused commitment category at nonbank subsidiaries 
represents over 15 percent of the aggregate of unused commitments 
extended in these categories by BHCs. Other loans extended by 
nonbank subsidiaries represent over 60 percent of the other loans 
category at BHCs.
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A.2 Other-Than-Temporary Impairment of Debt Securities
    On April 9, 2009, the Financial Accounting Standards Board (FASB) 
issued FASB Staff Position (FSP) Nos. 115-2 and 124-2, Recognition and 
Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2).\3\ 
This FSP amended the other-than-temporary impairment guidance in other 
accounting standards that applies to investments in debt securities. 
Under FSP FAS 115-2, if a BHC intends to sell a debt security or it is 
more likely than not that it will be required to sell the debt security 
before recovery of its amortized cost basis, an other-than-temporary 
impairment has occurred and the entire difference between the 
security's amortized cost basis and its fair value at the balance sheet 
date must be recognized in earnings. FSP FAS 115-2 also provides that 
if the present value of cash flows expected to be collected on a debt 
security is less than its amortized cost basis, a credit loss exists. 
In this situation, if a BHC does not intend to sell the security and it 
is not more likely than not that the BHC will be required to sell the 
debt security before recovery of its amortized cost basis less any 
current-period credit loss, an other-than-temporary impairment has 
occurred. The amount of the total other-than-temporary impairment 
related to the credit loss must be recognized in earnings, but the 
amount of the total impairment related to other factors must be 
recognized in other comprehensive income, net of applicable taxes.
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    \3\ Under the FASB Accounting Standards 
CodificationTM, see Topic 320, Investments--Debt and 
Equity Securities.
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    For other-than-temporary impairment losses on held-to-maturity and 
available-for-sale debt securities, BHCs report the amount of the 
other-than-temporary impairment losses that must be recognized in 
earnings in Schedule HI, Consolidated Income Statement, data items 6.a, 
Realized gains (losses) on held-to-maturity securities and 6.b, 
Realized gains (losses) on available-for-sale securities, respectively. 
Other-than-temporary impairment losses that are to be recognized in 
other comprehensive income, net of applicable taxes, are reported in 
Schedule HI-A, Changes in Bank Holding Company Equity Capital, data 
item 12, Other comprehensive income. However, because data items 6.a 
and 6.b of Schedule HI also include other amounts, such as gains 
(losses) on sales of held-to-maturity and available-for-sale 
securities, the Federal Reserve currently is not able to determine the 
effect on the net income of BHCs, individually and in the aggregate, of 
other-than-temporary impairment losses that must be recognized in 
earnings. Similarly, because data item 12 of Schedule HI-A includes all 
of the other components of a BHC's other comprehensive income, the 
Federal Reserve cannot identify the portion of other comprehensive 
income attributable to other-than-temporary impairment losses for BHCs 
individually and in the aggregate.
    According to FSP FAS 115-2, in a period in which a BHC determines 
that a debt security's decline in fair value below its amortized cost 
basis is other than temporary, the BHC must present the total other-
than-temporary impairment loss in the income statement with an offset 
for the amount of the total loss that is recognized in other 
comprehensive income. This new presentation provides additional 
information about the amounts that a BHC does not expect to collect 
related to its investments in debt securities held for purposes other 
than trading. Therefore, to enhance the Federal Reserve's ability to 
evaluate the factors affecting BHC earnings, the Federal Reserve 
proposes to add three Memoranda items to Schedule HI that would mirror 
the presentation requirements of FSP FAS 115-2. In these new Memoranda 
items, BHCs would report total other-than-temporary impairment losses 
on debt securities for the calendar year-to-date reporting period, the 
portion of these losses recognized in other comprehensive income, and 
the net losses recognized in earnings.
A.3 Clarification of the Instructions for Reporting Unused Commitments
    BHCs report unused commitments in data item 1 of Schedule HC-L, 
Derivatives and Off-Balance-Sheet Items. The instructions for this data 
item identify various arrangements that should be reported as unused 
commitments, including but not limited to commitments for which the BHC 
has charged a commitment fee or other consideration, commitments that 
are legally binding, loan proceeds that the BHC is obligated to 
advance, commitments to issue a commitment, and revolving underwriting 
facilities. However, the Federal Reserve has found that some BHCs have 
not reported commitments that they have entered into until they have 
signed the loan agreement for the financing that they have committed to 
provide. Although the Federal Reserve considers these arrangements to 
be commitments to issue a commitment and, therefore, within the scope 
of the existing instructions for reporting commitments in Schedule HC-
L, the Federal Reserve believes that these instructions may not be 
sufficiently clear. Therefore, the Federal Reserve originally proposed 
to revise the instructions for Schedule HC-L, data item 1, Unused 
commitments, as one of the proposed changes to the FR Y-9C for 
implementation as of March 31, 2009.\4\ More specifically, with respect 
to commitments to issue a commitment at some point in the future, the 
Federal Reserve proposed to add language to the instructions for this 
data item explicitly stating that such commitments include those that 
have been entered into even though the

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related loan agreement has not yet been signed.
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    \4\ 73 FR 67159, November 13, 2008.
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    In response to the agencies' request for comment on Call Report 
revisions for 2009 (comments received were also considered for 
comparable proposed revisions to the FR Y-9C), three commenters 
specifically addressed the proposed instructional clarification 
pertaining to unused commitments. One commenter agreed that 
clarification is needed but recommended that commitments to issue a 
commitment in the future, including those entered into even though the 
related loan agreement has not yet been signed, should be removed from 
the list of types of arrangements that the instructions would direct 
banks to report as unused commitments. A second commenter expressed 
concern about reporting ``commitments that contain a relatively high 
level of uncertainty until a loan agreement has been signed or the loan 
has been funded with a first advance'' and the reliability of data on 
such commitments. The third commenter stated that because some banks do 
not have systems for tracking such arrangements, the instructions 
should in effect permit banks to exclude commitment letters with an 
expiration date of 90 days or less. Finally, the first commenter also 
recommended that the instructions for reporting unused commitments 
should state that amounts conveyed or participated to others that the 
conveying or participating bank is not obligated to fund should not be 
reported as unused commitments by the conveying or participating bank.
    After evaluating these comments, the Federal Reserve has refined 
their approach to identifying commitments to issue a commitment in a 
manner that is intended to address the commenters' concerns by focusing 
on a point in the commitment process when the Federal Reserve believes 
that BHCs' systems should be tracking their commitments. Thus, the 
instructions would state that commitments to issue a commitment at some 
point in the future are those where the BHC has extended terms and the 
borrower has accepted the offered terms, even though the related loan 
agreement has not yet been signed. In addition, the Federal Reserve 
agrees with the commenter's recommendation concerning commitments that 
have been conveyed or participated to others and is proposing to modify 
the instructions accordingly. The proposed revised instructions for 
Schedule HC-L, data item 1, would read as follows:

    Report in the appropriate subitem the unused portions of 
commitments. Unused commitments are to be reported gross, i.e., 
include in the appropriate subitem the unused amount of commitments 
acquired from and conveyed or participated to others. However, 
exclude commitments conveyed or participated to others that the bank 
holding company is not legally obligated to fund even if the party 
to whom the commitment has been conveyed or participated fails to 
perform in accordance with the terms of the commitment.
    For purposes of this data item, commitments include:
    (1) Commitments to make or purchase extensions of credit in the 
form of loans or participations in loans, lease financing 
receivables, or similar transactions.
    (2) Commitments for which the bank holding company has charged a 
commitment fee or other consideration.
    (3) Commitments that are legally binding.
    (4) Loan proceeds that the bank holding company is obligated to 
advance, such as:
    (a) Loan draws;
    (b) Construction progress payments; and
    (c) Seasonal or living advances to farmers under prearranged 
lines of credit.
    (5) Rotating, revolving, and open-end credit arrangements, 
including, but not limited to, retail credit card lines and home 
equity lines of credit.
    (6) Commitments to issue a commitment at some point in the 
future, where the bank holding company has extended terms and the 
borrower has accepted the offered terms, even though the related 
loan agreement has not yet been signed.
    (7) Overdraft protection on depositors' accounts offered under a 
program where the bank holding company advises account holders of 
the available amount of overdraft protection, for example, when 
accounts are opened or on depositors' account statements or ATM 
receipts.
    (8) The bank holding company's own takedown in securities 
underwriting transactions.
    (9) Revolving underwriting facilities (RUFs), note issuance 
facilities (NIFs), and other similar arrangements, which are 
facilities under which a borrower can issue on a revolving basis 
short-term paper in its own name, but for which the underwriting 
bank holding companies have a legally binding commitment either to 
purchase any notes the borrower is unable to sell by the rollover 
date or to advance funds to the borrower.
    Exclude forward contracts and other commitments that meet the 
definition of a derivative and must be accounted for in accordance 
with FASB Statement No. 133, which should be reported in Schedule 
HC-L, data item 11. Include the amount (not the fair value) of the 
unused portions of loan commitments that do not meet the definition 
of a derivative that the bank holding company has elected to report 
at fair value under a fair value option. Also include forward 
contracts that do not meet the definition of a derivative.
    The unused portions of commitments are to be reported in the 
appropriate subitem regardless of whether they contain ``material 
adverse change'' clauses or other provisions that are intended to 
relieve the issuer of its funding obligations under certain 
conditions and regardless of whether they are unconditionally 
cancelable at any time.
    In the case of commitments for syndicated loans, report only the 
bank holding company's proportional share of the commitment.
    For purposes of reporting the unused portions of revolving 
asset-based lending commitments, the commitment is defined as the 
amount a bank holding company is obligated to fund--as of the report 
date--based on the contractually agreed upon terms. In the case of 
revolving asset-based lending, the unused portions of such 
commitments should be measured as the difference between (a) the 
lesser of the contractual borrowing base (i.e., eligible collateral 
times the advance rate) or the note commitment limit, and (b) the 
sum of outstanding loans and letters of credit under the commitment. 
The note commitment limit is the overall maximum loan amount beyond 
which the bank holding company will not advance funds regardless of 
the amount of collateral posted. This definition of ``commitment'' 
is applicable only to revolving asset-based lending, which is a 
specialized form of secured lending in which a borrower uses current 
assets (e.g., accounts receivable and inventory) as collateral for a 
loan. The loan is structured so that the amount of credit is limited 
by the value of the collateral.
A.4 Modification of the Instructions for Reporting Brokered Deposits
    Information reported on Schedule HC-E, Deposit Liabilities, for 
brokered deposits less than $100,000 is not currently defined 
consistently with information reported on this schedule for time 
deposits of less than $100,000. Information on time deposits is 
reported based on balances of less than $100,000, while information on 
brokered deposits is reported based on issuances in denominations of 
less than $100,000. For consistency within Schedule HC-E, and for 
conformity with comparable instructional changes proposed for the Call 
Report, brokered deposits would be reported based on their balances 
rather than the denominations in which they were issued. The proposed 
revised instructions for Schedule HC-E, memoranda items 1 and 2, would 
read as follows:

Memoranda

    Line Item M1 Brokered deposits less than $100,000 with a remaining 
maturity of one year or less.
    Report in this item those brokered time deposits included in items 
1 or 2 above with balances of less than $100,000 with a remaining 
maturity of one year or less and are held in domestic offices of 
commercial banks or other depository institutions that are subsidiaries 
of the reporting bank holding company. Remaining maturity is the amount 
of time remaining from the report date until the final contractual 
maturity of a brokered

[[Page 48965]]

deposit. Include in this item time deposits issued to deposit brokers 
in the form of large ($100,000 or more) certificates of deposit that 
have been participated out by the broker in shares with balances of 
less than $100,000. Also report in this item all brokered demand and 
savings deposits with balances of less than $100,000. See the Glossary 
entries for ``Brokered deposits'' and ``Brokered retail deposits'' for 
additional information.
    Line Item M2 Brokered deposits less than $100,000 with a remaining 
maturity of more than one year.
    Report in this item those brokered time deposits included in items 
1 or 2 above with balances of less than $100,000 with a remaining 
maturity of more than one year and are held in domestic offices of 
commercial banks or other depository institutions that are subsidiaries 
of the reporting bank holding company. Remaining maturity is the amount 
of time remaining from the report date until the final contractual 
maturity of a brokered deposit. Include in this item time deposits 
issued to deposit brokers in the form of large ($100,000 or more) 
certificates of deposit that have been participated out by the broker 
in shares with balances of less than $100,000. See the Glossary entries 
for ``Brokered deposits'' and ``Brokered retail deposits'' for 
additional information.
A.5 Effect of New Accounting Standards on Schedule HC-S, Servicing, 
Securitization, and Asset Sale Activities
    On June 12, 2009, FASB issued Statements of Financial Accounting 
Standards Nos. 166 and 167, which revise the existing standards 
governing the accounting for financial asset transfers and the 
consolidation of variable interest entities.\5\ Statement No. 166 
eliminates the concept of a ``qualifying special-purpose entity,'' 
changes the requirements for derecognizing financial assets, and 
requires additional disclosures. Statement No. 167 changes how a 
company determines when an entity that is insufficiently capitalized or 
is not controlled through voting (or similar rights) should be 
consolidated. This consolidation determination is based on, among other 
things, an entity's purpose and design and a company's ability to 
direct the activities of the entity that most significantly impact the 
entity's economic performance.\6\ In general, the revised standards 
take effect January 1, 2010. The standards are expected to cause a 
substantial volume of assets in BHC-sponsored entities associated with 
securitization and structured finance activities to be brought onto BHC 
balance sheets.
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    \5\ Statement of Financial Accounting Standards No. 166, 
Accounting for Transfers of Financial Assets, amends Statement No. 
140, Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities. Statement of Financial Accounting 
Standards No. 167, Amendments to FASB Interpretation No. 46(R), 
amends FASB Interpretation No. 46(R), Consolidation of Variable 
Interest Entities. In general, under the FASB Accounting Standards 
CodificationTM, see Topics 860, Transfers and Servicing, 
and 810, Consolidation.
    \6\ FASB News Release, June 12, 2009, http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB/FASBContent_C/NewsPage&cid=1176156240834&pf=true.
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    The Federal Reserve currently collects data on BHCs' securitization 
and structured finance activities in Schedule HC-S, Servicing, 
Securitization, and Asset Sale Activities. The Federal Reserve will 
continue to collect Schedule HC-S after the effective date of 
Statements Nos. 166 and 167 and BHCs should continue to complete this 
schedule in accordance with its existing instructions, taking into 
account the changes in accounting brought about by these two FASB 
statements. In this regard, data items 1 through 8 of Schedule HC-S 
involve the reporting of information for securitizations that the 
reporting BHC has accounted for as sales. Therefore, after the 
effective date of Statements Nos. 166 and 167, a BHC should report 
information in data items 1 through 8 only for those securitizations 
for which the transferred assets qualify for sale accounting or are 
otherwise not carried as assets on the BHC's consolidated balance 
sheet. Thus, if a securitization transaction that qualified for sale 
accounting prior to the effective date of Statements Nos. 166 and 167 
must be brought back onto the reporting BHC's consolidated balance 
sheet upon adoption of these statements, the BHC would no longer report 
information about the securitization in data items 1 through 8 of 
Schedule HC-S.
    Data items 11 and 12 of Schedule HC-S are applicable to assets that 
the reporting BHC has sold with recourse or other seller-provided 
credit enhancements, but has not securitized. In Memorandum item 1 of 
Schedule HC-S, a BHC reports certain transfers of small business 
obligations with recourse that qualify for sale accounting. The scope 
of these data items will continue to be limited to such sold financial 
assets after the effective date of Statements Nos. 166 and 167. In 
Memorandum item 2 of Schedule HC-S, a BHC currently reports the 
outstanding principal balance of loans and other financial assets that 
it services for others when the servicing has been purchased or when 
the assets have been originated or purchased and subsequently sold with 
servicing retained. Thus, after the effective date of Statements Nos. 
166 and 167, a BHC should report retained servicing for those assets or 
portions of assets reported as sold as well as purchased servicing in 
Memorandum data item 2. Finally, Memorandum item 3 of Schedule HC-S 
collects data on asset-backed commercial paper conduits regardless of 
whether the reporting BHC must consolidate the conduit in accordance 
with FASB Interpretation No. 46(R). This will continue to be the case 
after the effective date of Statement No. 167, which amended this FASB 
interpretation.
    The Federal Reserve plans to evaluate the disclosure requirements 
in Statements Nos. 166 and 167 and the disclosure practices that 
develop in response to these requirements. This evaluation will assist 
the Federal Reserve in determining the need for revisions to Schedule 
HC-S that would improve their ability to assess the nature and scope of 
BHCs' involvement with securitization and structured finance 
activities, including those accounted for as sales and those accounted 
for as secured borrowings. Such revisions, which would not be 
implemented before March 2011, would be incorporated into a formal 
proposal to the Board.
    In addition, should new FR Y-9C data items pertaining to 
securitization and structured finance transactions be necessary for 
regulatory capital calculation purposes after the effective date of 
Statements No. 166 and 167, a proposal to collect these data items 
would be incorporated into any notice of proposed rulemaking to amend 
the Federal Reserve's regulatory capital standards that the Federal 
Reserve would publish for comment in the Federal Register.
A.6 Trading Assets That Are Past Due or in Nonaccrual Status
    In the proposed FR Y-9C revisions for 2009, which were issued for 
comment on November 13, 2008,\7\ the Federal Reserve proposed to 
replace Schedule HC-N, Past Due and Nonaccrual Loans, Leases, and Other 
Assets, data item 9, Debt securities and other assets that are past due 
30 days or more or in nonaccrual status with two separate data items: 
Data item 9.a, Trading assets, and data item 9.b, All other assets 
(including available-for-sale and held-to-maturity securities). The 
Federal

[[Page 48966]]

Reserve also proposed to expand the scope of Schedule HC-D, Trading 
Assets and Liabilities, Memorandum item 3, Loans measured at fair value 
that are past due 90 days or more, to include loans held for trading 
and measured at fair value that are in nonaccrual status. The Federal 
Reserve proposed to collect this information to improve their ability 
to assess the quality of assets held for trading purposes and generally 
enhance surveillance and examination planning efforts. One commenter on 
these proposed reporting changes questioned the meaningfulness of 
delinquency and nonaccrual data for trading assets because they are 
accounted for at fair value through earnings. After fully considering 
this commenter's views, the Federal Reserve has decided not to 
implement the proposed revisions to Schedule HC-N, data item 9, and 
Schedule HC-D, Memorandum item 3. These data items will remain in their 
current form.
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    \7\ 73 FR 67159.
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A.7 Unpaid Premiums on Certain Credit Derivatives
    In its proposed 2009 revisions to the FR Y-9C, the Federal Reserve 
also included the addition of new Memoranda items 3.a and 3.b to 
Schedule HC-R, Regulatory Capital, to collect the present value of 
unpaid premiums on credit derivatives for which the BHC is the 
protection seller that are defined as covered positions under the 
Federal Reserve's market risk capital guidelines. This present value 
information was to be reported by remaining maturity and with a 
breakdown between investment grade and subinvestment grade for the 
rating of the underlying reference asset. One commenter on this 
proposed credit derivative data requested clarification of the impact 
of the reporting requirement on the institution's risk-based capital 
calculations. The Federal Reserve has reconsidered this proposed 
reporting change and has decided not to add these new Memoranda items 
to Schedule HC-R.

Proposed Revision Not Related to Call Report Revisions

    The Federal Reserve proposes to make the following revision to the 
FR Y-9C effective as of March 31, 2010, which is unrelated to the 
revisions proposed to the Call Report.

B.1 Reformatting of Loan Information Collected on Schedule HC-K, 
Quarterly Averages

    The following categories of loans are collected on Schedule HC-K, 
Quarterly Averages: Data item 3, Loans and leases (consolidated); data 
item 3.a, Loans secured by 1-4 family residential properties in 
domestic offices; data item 3.b, All other loans secured by real estate 
in domestic offices; and data item 3.c, All other loans in domestic 
offices. The Call Report collects loan information on Schedule RC-K, 
Quarterly Averages, in a different format starting with total loans in 
domestic offices with a more expanded number of loan categories in 
domestic offices, but a category for all other loans in domestic 
offices is not collected. A data item for total loans in foreign 
offices, Edge and Agreement subsidiaries, and IBFs and a data item for 
lease financing receivables are separately collected on Schedule RC-K 
such that total consolidated loans and leases may be derived.
    The Federal Reserve has learned that many BHCs in attempting to 
incorporate Call Report quarterly average loan information into FR Y-9C 
quarterly average loan categories are misreporting the FR Y-9C data 
items. This misreporting is likely due to the difference in format of 
the loan data items on the two schedules. In order to improve the 
quality of quarterly average loan information collected on Schedule HC-
K, the Federal Reserve proposes to revise data item 3 to collect total 
loans and leases in domestic offices, and revise data item 3.c to 
collect total loans in foreign offices, Edge and agreement 
subsidiaries, and International Banking Facilities (IBFs). Current data 
items 3, 3.a, 3.b, and 3.c would be renumbered as data items 3.a, 
3.a.(1), 3.a.(2) and 3.b, respectively.
    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: BHCs.
    Estimated annual reporting hours: FR Y-11 (quarterly), 15,504 
hours; and FR Y-11 (annual), 1,802 hours.
    Estimated average hours per response: FR Y-11 (quarterly), 6.80 
hours; and FR Y-11 (annual), 6.80 hours.
    Number of respondents: FR Y-11 (quarterly), 570; and FR Y-11 
(annual), 265.
    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 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 sections 
(b)(4), (b)(6)and (b)(8) of the Freedom of Information Act (5 U.S.C. 
552(b)(4), (b)(6) and (b)(8)).
    Abstract: The FR Y-11 reports collect financial information for 
individual non-functionally regulated 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: The Federal Reserve proposes to revise the 
instructions for Schedule IS, data item 7(b) Noninterest expense 
pertaining to related organizations, to indicate that negative amounts 
reported in this data item should not be reported as net credit 
balances in data item 5(b), Noninterest income from related 
organizations. Rather, paper filers should report negative amounts in 
parentheses or with a minus (-) sign and electronic filers should 
report negative amounts with a minus (-) sign. The proposed revision 
would make the reporting of negative amounts consistent with reporting 
of negative amounts in data item 7(a), Noninterest expense pertaining 
to nonrelated organizations and the treatment of negative amounts 
reported on the Consolidated Financial Statements for Bank Holding 
Companies (FR Y-9C; OMB No. 7100-0128).
    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: U.S. state member banks (SMBs), BHCs, and Edge or 
agreement corporations.
    Estimated annual reporting hours: FR 2314 (quarterly), 15,365 
hours; and FR 2314 (annual), 1,313 hours.
    Estimated average hours per response: FR 2314 (quarterly), 6.60 
hours; and FR 2314 (annual), 6.60 hours.
    Number of respondents: FR 2314 (quarterly), 582; and FR 2314 
(annual), 199.
    General description of report: This information collection is 
mandatory (12 U.S.C. 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 sections (b)(4), (b)(6) and (b)(8) of the Freedom of 
Information Act (5 U.S.C. 552(b)(4) (b)(6) and (b)(8)).
    Abstract: The FR 2314 reports collect financial information for 
non-functionally regulated direct or indirect foreign subsidiaries of 
U.S. SMBs, Edge

[[Page 48967]]

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: The Federal Reserve proposes to revise the 
instructions for Schedule IS, data item 7(b) Noninterest expense 
pertaining to related organizations, to indicate that negative amounts 
reported in this data item should not be reported as net credit 
balances in data item 5(b), Noninterest income from related 
organizations. Rather, paper filers should report negative amounts in 
parentheses or with a minus (-) sign and electronic filers should 
report negative amounts with a minus (-) sign. The proposed revision 
would make the reporting of negative amounts consistent with reporting 
of negative amounts in data item 7(a), Noninterest expense pertaining 
to nonrelated organizations and the treatment of negative amounts 
reported on the Consolidated Financial Statements for Bank Holding 
Companies (FR Y-9C; OMB No. 7100-0128).
    4. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
Held by Foreign Banking Organizations.
    Agency form number: FR Y-7N.
    OMB control number: 7100-0125.
    Frequency: Quarterly and annually.
    Reporters: Foreign banking organizations (FBOs).
    Estimated annual reporting hours: FR Y-7N (quarterly), 4,787 hours; 
and FR Y-7N (annual), 1,387 hours.
    Estimated average hours per response: FR Y-7N (quarterly), 6.8 
hours; and FR Y-7N (annual), 6.8 hours.
    Number of respondents: FR Y-7N (quarterly), 176; and FR Y-7N 
(annual), 204.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential 
treatment is not routinely given to the data in these reports. However, 
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-7N collects financial information for non-
functionally regulated U.S. nonbank subsidiaries held by FBOs other 
than through a U.S. BHC, U.S. FHC, or U.S. bank. FBOs file the FR Y-7N 
on a quarterly or annual basis based on size thresholds.
    Current Actions: The Federal Reserve proposes to revise the 
instructions for Schedule IS, data item 7(b) Noninterest expense 
pertaining to related organizations, to indicate that negative amounts 
reported in this data item should not be reported as net credit 
balances in data item 5(b), Noninterest income from related 
organizations. Rather, paper filers should report negative amounts in 
parentheses or with a minus (-) sign and electronic filers should 
report negative amounts with a minus (-) sign. The proposed revision 
would make the reporting of negative amounts consistent with reporting 
of negative amounts in data item 7(a), Noninterest expense pertaining 
to nonrelated organizations and the treatment of negative amounts 
reported on the Consolidated Financial Statements for Bank Holding 
Companies (FR Y-9C; OMB No. 7100-0128).

    Board of Governors of the Federal Reserve System, September 22, 
2009.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E9-23164 Filed 9-24-09; 8:45 am]
BILLING CODE 6210-01-P