[Federal Register Volume 76, Number 226 (Wednesday, November 23, 2011)]
[Notices]
[Pages 72410-72413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30150]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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 January 23, 2012.

ADDRESSES: Interested parties are invited to submit written comments to 
the agency listed below. All comments will be shared among the 
agencies. You may submit comments, identified by FFIEC 002 (7100-0032), 
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.
     Email: [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.
    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 Cynthia M. Ayouch, 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 Number: 7100-0032.
    Frequency of Response: Quarterly.
    Affected Public: U.S. branches and agencies of foreign banks.
    Estimated Number of Respondents: FFIEC 002--237; FFIEC 002S--59.
    Estimated Time per Response: FFIEC 002--25.57 hours; FFIEC 002S--
6.0 hours.
    Estimated Total Annual Burden: FFIEC 002--24,240 hours; FFIEC 
002S--1,416 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; 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.

[[Page 72411]]

    Current Actions: The agencies propose to implement a limited number 
of revisions to the FFIEC 002 reporting requirements in 2012. These 
changes are intended to provide data needed for reasons of safety and 
soundness and other public purposes. The proposed changes would also 
help achieve consistency with revisions the agencies are proposing to 
make to the Consolidated Reports of Condition and Income (Call Report) 
(FFIEC 031 and FFIEC 041) filed by insured banks and savings 
institutions. 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, 2012, reporting date.

Discussion of Proposed Revisions to the FFIEC 002

A. Additional Detail on Trading Assets

    U.S. branches and agencies of foreign banks (branches) currently 
report ``other securities'' held for investment (i.e., securities other 
than U.S. Government securities, mortgage-backed securities, and other 
asset-backed securities) in Schedule RAL, Assets and Liabilities, item 
1.c.(1), Securities of foreign governments and official institutions, 
and Schedule RAL, item 1.c.(4), All other (bonds, notes, debentures, 
and corporate stock). However, branches currently report these ``other 
securities,'' when held for trading purposes, together with assets 
other than securities that are held for trading purposes, in Schedule 
RAL, item 1.f.(4), other trading assets. The agencies propose to 
collect a new item on Schedule RAL, for ``other securities'' held for 
trading purposes (new Schedule RAL, item 1.f.(4)). Current Schedule 
RAL, item 1.f.(4), Other trading assets, would be renumbered as item 
1.f.(5) and would be defined to exclude all securities held for 
trading. The additional detail would allow the agencies to better 
monitor movements in other securities held for trading purposes over 
time, and provide for more meaningful analysis of the existing 
categories of trading assets.

B. Loan Origination Data

    As highlighted by the recent financial crisis and its aftermath, 
the ability to assess credit availability is a key consideration for 
monetary policy, financial stability, and the supervision and 
regulation of the banking system. However, the information currently 
available to policymakers both within and outside the agencies is 
insufficient to accurately monitor the extent to which depository 
institutions are providing credit to households and businesses. In its 
current form, the FFIEC 002 report collects data on the amount of loans 
to both households and businesses that are outstanding on institutions' 
books at the end of each quarter. However, the underlying flow of loan 
originations cannot be deduced from these quarter-end data owing to the 
myriad of factors and banking activities that routinely affect the 
amount of outstanding loans held by institutions, including activities 
such as loan paydowns, extensions, purchases and sales, 
securitizations, and repurchases. Direct reporting of loan originations 
would allow the agencies to isolate the flow of credit creation from 
the effects of these other banking activities.
    Economic research points to a crucial link between the availability 
of credit and macroeconomic outcomes.\1\ For example, the rapid 
contraction in both total loans held on institutions' balance sheets 
and in credit lines held off their balance sheets in the volatile 
period following the collapse of Lehman Brothers in the fall of 2008 
likely contributed to the depth of the economic recession as well as to 
the subsequent weakness in the recovery in economic activity. However, 
the lack of data on loan originations made it very difficult for 
policymakers to assess the sources of the steep declines in outstanding 
loans and credit lines during the recent crisis and in other periods of 
slow loan growth such as the early 1990s ``credit crunch.'' In fact, a 
fall in outstanding loans could be driven by reduced demand for credit, 
reduced supply of credit by banking organizations, or both. Looking 
only at changes in outstanding loan balances can give misleading 
signals and mask important shifts in the supply of, and demand for, 
credit. Policymakers may react differently in each of these cases.
---------------------------------------------------------------------------

    \1\ See, for example, A.K. Kashyap and J.C. Stein (2000), ``What 
Do a Million Observations on Banks Say About the Transmission of 
Monetary Policy,'' The American Economic Review, Vol. 90, No. 3, 
pages 407-428. See also Michael Woodford, ``Financial Intermediation 
and Macroeconomic Analysis,'' Journal of Economic Perspectives, Fall 
2010, volume 24, issue 4, pages 21-44.
---------------------------------------------------------------------------

    The sources of loan growth--such as whether loans were made under 
commitment or not under commitment--also contain important insights for 
those monitoring financial stability or developing macroprudential 
regulatory policies.\2\ As observed in the fall of 2008, strong loan 
growth that is driven primarily by customers drawing down funds from 
preexisting lending commitments can be a sign of stresses in financial 
markets, and therefore a signal that the economy could be slowing down. 
In contrast, strong growth in credit that includes robust extensions to 
new customers could signal a broad pickup in demand for financing and 
hence renewed economic growth, or it could suggest that institutions 
have eased their lending standards. Accordingly, rapid loan growth can 
be an important indicator of the safety and soundness of individual 
institutions.\3\ Loan origination data, if collected from banking 
institutions, would better identify when such developments warrant 
greater supervisory scrutiny. Loan data currently available to the 
agencies provide insufficient detail to accurately monitor credit 
creation by banking institutions. The FFIEC 002 report currently 
collects data on the recorded amounts of a wide variety of loan 
categories in Schedule C, Loans. On Schedule S, Servicing, 
Securitization, and Asset Sale Activities, branches report the 
outstanding principal balance of seven categories of loans sold and 
securitized for which the institution has retained servicing or has 
provided recourse or other credit enhancements.\4\ For these same seven 
loan categories, branches also report the unpaid principal balance of 
loans they have sold (but not securitized) with recourse or other 
seller-provided credit enhancements. No data exist for those loans that 
branches have sold without recourse or seller-provided credit 
enhancements when servicing has not been retained.
---------------------------------------------------------------------------

    \2\ Moritz Schularick and Alan M. Taylor, ``Credit Booms Gone 
Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-
2008,'' 2009, National Bureau of Economic Research, Inc., NBER 
Working Papers: 15512.
    \3\ William R. Keeton, ``Does Faster Loan Growth Lead to Higher 
Loan Losses?'' Federal Reserve Bank of Kansas City Economic Review, 
2nd Quarter 1999, volume 84, issue 2, pages 57-75, and Deniz Igan 
and Marcelo Pinheiro, ``Exposure to Real Estate in Bank 
Portfolios,'' Journal of Real Estate Research, January-March 2010, 
volume 32, issue 1, pages 47-74.
    \4\ The seven categories are (1) 1-4 family residential 
mortgages, (2) home equity loans, (3) credit card loans, (4) auto 
loans, (5) other consumer loans, (6) commercial and industrial 
loans, and (7) all other loans, all leases, and all other assets 
(commercial real estate loans, for example, are subsumed in this 
category).
---------------------------------------------------------------------------

    In contrast, savings associations currently report data on loan 
originations, sales, and purchases in the Thrift Financial Report (TFR) 
(OTS 1313; OMB No. 1550-0023). On TFR Schedule CF, Consolidated Cash 
Flow Information, savings associations report by major loan category 
the dollar amount of loans that were closed or disbursed, loans and 
participations purchased, and loan sales during the quarter. In 
addition, on TFR Schedule

[[Page 72412]]

LD, Loan Data, savings associations report the amount of net charge-
offs, purchases, originations, and sales of certain 1-4 family and 
multifamily residential mortgages with high loan-to-value ratios.\5\
---------------------------------------------------------------------------

    \5\ Savings associations will discontinue filing the TFR after 
the December 31, 2011, report date, which means that these data, as 
currently reported in the TFR, will no longer be collected going 
forward.
---------------------------------------------------------------------------

    The agencies propose to begin collecting data on loan originations 
from branches with total assets of $300 million or more because, as 
outlined in detail above, this information would be of substantial 
benefit in light of the fact that the data currently available for 
banking organizations are inadequate for monetary policy and financial 
stability regulators to monitor and analyze credit flows and because 
the proposed data will support the agencies' supervisory efforts.
    More specifically, for branches with $300 million or more in total 
assets, the agencies propose to collect quarterly information on loan 
originations for several important loan categories by introducing a new 
Schedule U, Loan Origination Activity.\6\ Under this proposal, all 
branches with $300 million or more in total assets would report in 
column A of Schedule U, for certain loan categories reported in 
Schedule C, Loans, the quarter-end balance sheet amount of those loans 
that were originated during the quarter that ended on the report 
date.\7\ Branches with $1 billion or more in total assets would also 
report, for relevant loan categories, (1) The portion of this quarter-
end amount that was originated under a newly established commitment \8\ 
(column B of Schedule U) and (2) the portion that was not originated 
under a commitment (column C of Schedule U). In general, the additional 
data that would be reported in columns B and C of Schedule U by 
branches with $1 billion or more in total assets represent two ways 
that institutions originate new loans, both of which affect the amounts 
of loans on institutions' balance sheets.
---------------------------------------------------------------------------

    \6\ Thus, branches with less than $300 million in total assets 
would be exempt from completing proposed Schedule U.
    \7\ For example, a loan was originated for $120,000 during the 
quarter. As a result of principal payments received during the 
quarter, the recorded amount of the loan as reported on the 
institution's balance sheet (Schedule RAL) and in the loan schedule 
(Schedule C) at quarter-end was $101,000. The institution would 
report the $101,000 quarter-end recorded amount for this loan in 
column A of proposed Schedule U. In general, in reporting amounts in 
column A, if a loan origination date is unknown, the reporting 
institution would be instructed to use the date that the loan was 
first booked by the institution.
    \8\ A newly established commitment is one for which the terms 
were finalized and the commitment became available for use during 
the quarter that ended on the report date. A newly established 
commitment also includes a commitment that was renewed during the 
quarter that ended on the report date.
---------------------------------------------------------------------------

    In the proposed originations schedule, all branches with $300 
million or more in total assets would report the amounts reported in 
Schedule C, Part I, as of the quarter-end report date that were 
originated during the quarter that ended on the report date for the 
following loan categories reported on a domestic office only basis:
     Construction, land development, and other land loans;
     Loans secured by multifamily (5 or more) residential 
properties;
     Loans secured by nonfarm nonresidential properties;
     Loans to commercial banks and other depository 
institutions in the U.S.;
     Loans to banks in foreign countries;
     Loans to other financial institutions;
     Commercial and industrial loans to U.S. addressees; and
     All other loans (as reported in Schedule C, Part I, item 
8).
    In addition, for each of the preceding loan categories, branches 
with $1 billion or more in total assets would separately disclose the 
portion of the quarter-end amount of loans originated during the 
quarter that was originated under a newly established commitment and 
the portion that was not originated under a commitment.
    Loan originations that were made under a newly established 
commitment or a commitment that was renewed during the quarter are 
likely to more closely reflect the current lending standards and loan 
terms being applied by an institution, so an expansion or contraction 
in this subset of loans is indicative of current supply and demand 
conditions. In this regard, research has shown that loans not made 
under a commitment are more sensitive to changes in monetary policy 
than loans made under a commitment.\9\ In contrast, loans drawn under 
previous commitments reflect lending standards and terms that were in 
place at the time the loan agreements were reached. Hence, changes in 
outstanding balances associated with previously committed lines are 
more indicative of demand for funds from the firms that have these 
lines, as institutions are less able to ration such credit.
---------------------------------------------------------------------------

    \9\ Donald P. Morgan, ``The Credit Effects of Monetary Policy: 
Evidence Using Loan Commitments,'' Journal of Money, Credit and 
Banking, Vol. 30, No. 1 (Feb. 1998), pages 102-118.
---------------------------------------------------------------------------

    As mentioned above, all savings associations, many of which are 
small, have for many years reported in the TFR the dollar amount of 
loans that were closed or disbursed, loans and participations 
purchased, and loan sales during the quarter by major loan category. 
Thus, the additional reporting burden of proposed FFIEC 002 Schedule U 
for branches with $300 million or more in total assets may be 
manageable for banking institutions. Nevertheless, because branches 
have not previously been required to report data pertaining to loan 
originations for FFIEC 002 reporting purposes, the agencies recognize 
that branches' data systems may not at present be designed to identify 
and capture data on loans originated during the quarter that ended on 
the report date. The agencies request comment on the ability of 
branches' existing loan systems to generate the data proposed for 
Schedule U. If this information is not currently available, the 
agencies request comment on how burdensome it would be to adapt current 
systems to report the proposed origination data for Schedule U. To the 
extent that existing loan systems enable branches to track data on 
loans originated during the quarter by loan category in a different 
manner than has been proposed, branches are invited to suggest 
alternative ways in which such origination data could be collected in 
the FFIEC 002 report and to explain how an alternative would meet the 
agencies' data needs as described above in this section.

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.


[[Page 72413]]


    Board of Governors of the Federal Reserve System, November 17, 
2011.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011-30150 Filed 11-22-11; 8:45 am]
BILLING CODE 6210-01-P