[Federal Register Volume 78, Number 61 (Friday, March 29, 2013)]
[Notices]
[Pages 19264-19267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-07272]


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FEDERAL RESERVE SYSTEM


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

AGENCY: Board of Governors of the Federal Reserve System.
SUMMARY: Notice is hereby given of the final approval of a proposed 
information collection by the Board of Governors of the Federal Reserve 
System (Board) under OMB delegated authority, as per 5 CFR 1320.16 (OMB 
Regulations on Controlling Paperwork Burdens on the Public). Board-
approved collections of information are incorporated into the official 
OMB inventory of currently approved collections of information. Copies 
of the Paperwork Reduction Act Submission, supporting statements and 
approved collection of information instrument(s) are placed into OMB's 
public docket files. The Federal Reserve may not conduct or sponsor, 
and the respondent is not required to respond to, an information 
collection that has been extended, revised, or implemented on or after 
October 1, 1995, unless it displays a currently valid OMB control 
number.

FOR FURTHER INFORMATION CONTACT:

Federal Reserve Board Clearance Officer, Cynthia Ayouch, Division of 
Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, DC 20551 (202) 452-3829. Telecommunications Device 
for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors 
of the Federal Reserve System, Washington, DC 20551.
OMB Desk Officer, Shagufta Ahmed, Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10235, 725 17th Street NW., Washington, DC 20503.

    Final approval under OMB delegated authority to revise the 
following report:
    Report title: Capital Assessments and Stress Testing information 
collection.
    Agency form number: FR Y-14A/Q/M.
    OMB Control number: 7100-0341.
    Effective Dates: March 31, 2013 and June 30, 2013.
    Frequency: Annually, semi-annual, quarterly, and monthly.
    Reporters: Large banking organizations that meet an annual 
threshold of $50 billion or more in total consolidated assets (large 
Bank Holding Companies or large BHCs), as defined by the Capital Plan 
rule (12 CFR 225.8).\1\
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    \1\ The Capital Plan rule applies to every top-tier large BHC. 
This asset threshold is consistent with the threshold established by 
section 165 of the Dodd-Frank Act relating to enhanced supervision 
and prudential standards for certain BHCs.
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    Estimated annual reporting hours: FR Y-14A: Summary, 50,160 hours; 
Macro scenario, 1,860 hours; Counterparty credit risk (CCR), 2,292 
hours; Basel III/Dodd-Frank, 600 hours; and Regulatory capital, 600 
hours. FR Y-14 Q: Securities risk, 1,200 hours; Retail risk, 1,920 
hours; Pre-provision net revenue (PPNR), 75,000 hours; Wholesale 
corporate loans, 6,720 hours; Wholesale commercial real estate (CRE) 
loans, 6,480 hours; Trading risk, 41,280 hours; Basel III/Dodd-Frank, 
2,400 hours; Regulatory capital, 4,800 hours; and Operational risk, 
3,360 hours; and Mortgage Servicing Rights (MSR) Valuation, 864 hours; 
Supplemental, 960 hours; and Retail Fair Value Option/Held for Sale 
(Retail FVO/HFS), 1,216 hours. FR Y-14M: Retail 1st lien mortgage, 
153,000 hours; Retail home equity, 146,880 hours; and Retail credit 
card, 91,800 hours. FR Y-14 Implementation and On-Going Automation: 
Start-up for new respondents, 79,200 hours; and On-going revisions for 
existing respondents, 9,120 hours.
    Estimated average hours per response: FR Y-14A: Summary, 836 hours; 
Macro scenario, 31 hours; CCR, 382 hours; Basel III/Dodd-Frank, 20 
hours; and

[[Page 19265]]

Regulatory capital, 20 hours. FR Y-14Q: Securities risk, 10 hours; 
Retail risk, 16 hours; PPNR, 625 hours; Wholesale corporate loans, 60 
hours; Wholesale CRE loans, 60 hours; Trading risk, 1,720 hours; Basel 
III/Dodd-Frank, 20 hours; Regulatory capital, 40 hours; Operational 
risk, 28 hours, MSR Valuation, 24 hours; Supplemental, 8 hours; and 
Retail FVO/HFS, 16 hours. FR Y-14M: Retail 1st lien mortgage, 510 
hours; Retail home equity, 510 hours; and Retail credit card, 510 
hours. FR Y-14 Implementation and On-Going Automation: Start-up for new 
respondents, 7,200 hours; and On-going revisions for existing 
respondents, 480 hours.
    Number of respondents: 30.
    General description of report: The FR Y-14 series of reports are 
authorized by section 165 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (Dodd-Frank Act), which requires the 
Federal Reserve to ensure that certain BHCs and nonbank financial 
companies supervised by the Federal Reserve are subject to enhanced 
risk-based and leverage standards in order to mitigate risks to the 
financial stability of the United States (12 U.S.C. 5365). 
Additionally, section 5 of the BHC Act authorizes the Board to issue 
regulations and conduct information collections with regard to the 
supervision of BHCs (12 U.S.C. 1844).
    As these data are collected as part of the supervisory process, 
they are subject to confidential treatment under exemption 8 of the 
Freedom of Information Act (FOIA) (5 U.S.C. 552(b)(8)). In addition, 
commercial and financial information contained in these information 
collections may be exempt from disclosure under FOIA exemption 4 U.S.C. 
552(b)(4)). Such exemptions would be made on a case-by-case basis.
    Abstract: The data collected through the FR Y-14A/Q/M schedules 
provide the Federal Reserve with the additional information and 
perspective needed to help ensure that large BHCs have strong, 
firm[hyphen]wide risk measurement and management processes supporting 
their internal assessments of capital adequacy and that their capital 
resources are sufficient given their business focus, activities, and 
resulting risk exposures. The annual Comprehensive Capital Analysis and 
Review (CCAR) exercise is also complemented by other Federal Reserve 
supervisory efforts aimed at enhancing the continued viability of large 
BHCs, including (1) continuous monitoring of BHCs' planning and 
management of liquidity and funding resources and (2) regular 
assessments of credit, market and operational risks, and associated 
risk management practices. Information gathered in this data collection 
is also used in the supervision and regulation of these financial 
institutions. In order to fully evaluate the data submissions, the 
Federal Reserve may conduct follow up discussions with or request 
responses to follow up questions from respondents, as needed.
    The annual FR Y-14A collects large BHCs' quantitative projections 
of balance sheet, income, losses, and capital across a range of 
macroeconomic scenarios and qualitative information on methodologies 
used to develop internal projections of capital across scenarios.\2\ 
The quarterly FR Y-14Q collects granular data on BHCs' various asset 
classes and PPNR for the reporting period, which are used to support 
supervisory stress test models and for continuous monitoring efforts. 
The monthly FR Y-14M comprises three loan- and portfolio-level 
collections, and one detailed address matching collection to supplement 
two of the loan- and portfolio-level collections for first lien 
mortgages and home equity mortgages.
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    \2\ BHCs that must re-submit their capital plan generally also 
must provide a revised FR Y-14A in connection with their 
resubmission.
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    On October 12, 2012, the Federal Reserve published two final rules 
in the Federal Register (77 FR 62409) with stress testing requirements 
for certain bank holding companies, state member banks, and savings and 
loan holding companies. The final rules implement sections 165(i)(1) 
and (i)(2) of the Dodd-Frank Act. Section 165(i)(1) of the Dodd-Frank 
Act requires the Board to conduct an annual stress test of each covered 
company \3\ to evaluate whether the covered company has sufficient 
capital, on a total consolidated basis, to absorb losses as a result of 
adverse economic conditions (supervisory stress tests). Section 165 
(i)(2) requires the Board to issue regulations that require covered 
companies to conduct stress tests semi-annually and require financial 
companies with total consolidated assets of more than $10 billion that 
are not covered companies and for which the Federal Reserve is the 
primary federal financial regulatory agency to conduct stress tests on 
an annual basis (collectively, company-run stress tests).
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    \3\ See 12 U.S.C. 5365(a). A ``covered company'' includes any 
bank holding company with total consolidated assets of $50 billion 
or more and each nonbank financial company that the Council has 
designated for supervision by the Board.
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    Current actions: On December 20, 2012, the Federal Reserve 
published a notice in the Federal Register (77 FR 75434) requesting 
public comment for 60 days on the revision of the FR Y-14 information 
collection. The Federal Reserve proposed revisions to the monthly FR Y-
14M schedules and modifications to the frequency for certain FR Y-14A 
and FR Y-14Q schedules, effective March 31, 2013, to help refine 
supervisory stress tests and better evaluate BHCs' stress tests 
results. Revisions to the FR Y-14M schedules included: (1) Adding data 
items to all three loan- and portfolio-level collections, and the 
address matching collection, (2) clarifying several data items 
currently collected, and (3) deleting data items that are no longer 
needed. The comment period expired on February 19, 2013. The Federal 
Reserve received eleven comment letters regarding the proposed changes: 
eight from BHCs, two from private companies, and one from a group of 
trade associations.\4\ All substantive comments are summarized and 
addressed below.
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    \4\ Three trade associations submitted a joint comment letter.
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Summary of Comments

    Most of the comments received requested clarification of the 
instructions for the information to be reported, or were technical in 
nature. These comments will be addressed in the final FR Y-14 reporting 
instructions. The Federal Reserve also received three comments not 
directly related to the proposed revisions to the FR Y-14 information 
collection regarding suggestions to (1) improve the current Frequently 
Asked Questions process, (2) prioritize collected data items in order 
of importance to the Federal Reserve, and (3) provide feedback to the 
mid-cycle company run stress test in a timely manner. Federal Reserve 
plans to take these comments under consideration and address them at a 
later date, as appropriate. The following is a detailed discussion of 
aspects of the proposed FR Y-14 collection for which the Federal 
Reserve received one or more substantive comments and an evaluation of, 
and responses to the comments received.

A. General

    In general, commenters expressed concerns about the overall 
expansion of the information collection, the ongoing frequency of 
modifications to the reporting forms, and the increased burden those 
modifications will cause to reporters. Specifically, several commenters 
noted that the proposal substantially increases the number of data 
items on the FR Y-14M schedules, leaving BHCs insufficient time to make

[[Page 19266]]

appropriate changes to their models, modify reporting systems, and 
integrate these systems with their internal controls structure. These 
commenters also requested delayed implementation of the revisions and 
guidance for BHCs and recommended developing a ``best efforts 
standard'' for missing or incomplete data.
    The Federal Reserve weighed the potential increase in respondent 
burden against the need to collect additional information to enhance 
the Federal Reserve's ability to conduct effective supervisory stress 
testing, and made certain modifications to the proposal in response to 
the comments received. Specifically, the Federal Reserve will eliminate 
12 proposed and 2 existing data items from the FR Y-14M schedules and 
delay the effective date until June 30, 2013 for most of the data items 
being added to the FR Y-14M schedules (except for the 8 proposed Basel 
II items on the FR Y-14M first-lien and home equity schedules).\5\ 
Additional details on the items being eliminated are provided below. 
Furthermore, the Federal Reserve agrees that changes to the reporting 
forms should be less frequent and substantive to allow for the 
development of mature systems and processes and is working towards 
minimizing changes to the FR Y-14 reporting forms going forward.
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    \5\ There are four Basel II items being added to both the First 
Lien Closed-End 1-4 Family Residential Loan Schedule and the 
Domestic Home Equity Loan and Home Equity Line Schedule: Basel II--
Probability of Default (PD), Basel II--Loss Given Default (LGD), 
Basel II--Expected Loss Given Default (ELGD), and Basel II--Exposure 
at Default (EAD).
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    Regarding the comment that a ``best efforts standard'' be applied, 
one commenter requested that such a standard be applied to data items 
that must be obtained from third parties. Other commenters noted 
particular data items that are difficult to obtain because of their 
historical nature or because they are part of portfolios that have been 
acquired. Firms are expected to comply with all regulatory reporting 
requirements and firms that have completed a merger or acquisition have 
requested and been granted extensions to allow additional time to reach 
full compliance. However, the Federal Reserve understands the 
difficulty in obtaining certain data items, particularly those obtained 
from third parties, and will investigate providing additional 
instructions regarding a ``best efforts standard.''
    Regarding the reporting forms, one commenter suggested modifying 
the FR Y-14 reporting forms to clearly distinguish between the 
reporting of retail loans secured by 1-4 family residential properties 
from commercial loans secured by similar collateral. The Federal 
Reserve recognizes this distinction in loan classification but needs 
additional time to understand the extent of this issue and will make 
this distinction in a future proposal, if appropriate. Additionally, 
one commenter suggested that the formulas in the FR Y-14A Summary 
Schedule be modified to allow a firm to make one submission for both 
the supervisory baseline scenario and the BHC baseline scenario if a 
firm uses the supervisory baseline scenario as the BHC baseline 
scenario. The Federal Reserve understands the potential reduction in 
burden of allowing one submission, but believes additional 
investigation into the effect this change may have on the next annual 
Comprehensive Capital Analysis and Review and Dodd-Frank Act (DFA) 
stress test is warranted, and will consider issuing further guidance to 
address this comment.
    Several commenters requested that the Federal Reserve attempt to 
minimize duplicative reporting requirements among the Federal Reserve's 
reporting forms and between the Federal Reserve's and other agencies' 
reporting forms. One commenter expressed concern over similar elements 
between the Consolidated Financial Statements for Bank Holding 
Companies (FR Y-9C; OMB No. 7100-0128), FR Y-14A, and FR Y-14Q and 
suggested the reporting forms be changed to eliminate duplication. 
While the Federal Reserve recognizes that the aforementioned reporting 
forms contain similar elements, their differing frequencies, data 
items, and levels of granularity prevent consolidation of similar 
elements on any one reporting form. Another commenter suggested that 
better alignment should be achieved between the FR Y-14 and similar 
reporting requirements of other banking agencies. The Federal Reserve 
coordinates closely with other federal banking agencies that collect 
similar information and is working to eliminate duplicative 
requirements; however, other agencies have independent authority to 
collect such information.
    The timing of reporting form submissions to the Federal Reserve and 
communication issued by the Federal Reserve was noted as an issue by 
several commenters. It was suggested by one commenter that the 
reporting timeline for the FR Y-14M should match the reporting timeline 
for the FR Y-14Q/FR Y-9C. Another commenter suggested that the 
submission deadlines for both the FR Y-14Q and FR Y-14M should be five 
days after the deadline for the FR Y-9C to provide more time for 
reconciliation between reporting forms. The Federal Reserve notes that 
all filers to date have largely complied with the reporting submission 
deadlines, which have been in place since the creation of the 
aforementioned reporting forms. The Federal Reserve needs to retain the 
current submission deadlines in order to allow sufficient time to 
conduct supervisory responsibilities.
    Numerous comments were received inquiring whether firms are 
required to submit historical data for new data items on the FR Y-14M 
schedules. The Federal Reserve generally notes that unless a reporting 
form specifically requests historical data, respondents are not 
required to provide the Federal Reserve with historical data for any 
new data items.
    Several commenters raised concerns regarding the mid-cycle DFA 
company run stress tests. One commenter suggested reducing the burden 
on reporters for the mid-cycle DFA company run stress test by both 
limiting the requirements for supporting documentation (as stated in 
the instructions to the FR Y-14A) and creating an abbreviated version 
of the FR Y-14A Summary Schedule. While the Federal Reserve agrees that 
limiting the supporting documentation for the mid-cycle submission may 
effectively reduce burden, creating an abbreviated version of the FR Y-
14A Summary Schedule may prevent the Federal Reserve from conducting a 
complete analysis consistent with the annual stress test.

B. FR Y-14M Credit Card Schedule

    In the December 20th proposal, the Federal Reserve proposed adding 
65 new data items to the FR Y-14M Credit Card schedule: 46 data items 
to the account level and 19 items to the portfolio level. Additionally, 
the Federal Reserve proposed to revise the reporting of 11 existing 
account level data items from optional to mandatory. After careful 
consideration of comments and reporting burden, the Federal Reserve 
will adopt a final schedule with 59 of the proposed new data items: 40 
data items to the account level and 19 items to the portfolio level. 
The majority of comments received requested clarification of item 
definitions and will be addressed in the final instructions. Some 
comments, however, suggested significant modification to data items and 
are addressed below.
    Several commenters noted a lack of clarity among the possible 
selections for Month-End and Cycle-End Account Status items, especially 
regarding charged-off accounts and accounts in

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collection stage. Specifically, commenters expressed confusion about 
which option should be applied to charged-off accounts and how the 
Federal Reserve defines an account being in the collections stage. The 
Federal Reserve will revise the proposed selection options to be more 
specific.
    Several commenters requested additional guidance regarding 
generating the information requested in the revised Customer ID item 
and the proposed new Co-borrower ID, Corporate ID and Trade Key items, 
because they are to be populated ``using the algorithm provided by the 
Federal Reserve Board or its agent.'' After consideration of the new 
definitions, the Federal Reserve believes that such an algorithm is 
unnecessary and will revert to the existing definition of Customer ID 
and remove Co-Borrower ID and Trade Key from the final schedule. 
Questions related to generating the Corporate ID would be directed to 
the Federal Reserve's data aggregator.
    Several commenters stated that they do not store census tract 
information in their internal data management systems. Therefore, the 
Federal Reserve will remove data items for Account Billing Address--
Census Tract, Account Billing Address--Street Address, and Account 
Billing Address--City.
    Several commenters suggested adding a third response of ''Other'' 
to the proposed data item Updated Income Source to account for sources 
that do not qualify as ''Household'' or ''Individual.'' The Federal 
Reserve will add a third response of ``Other.''
    Several commenters requested clarification regarding what to report 
if one Annual Percentage Rate (APR) is to be reported but several APRs 
existed in the reporting period. The Federal Reserve will clarify the 
instructions to state that firms should report a weighted average of 
APRs throughout the reporting period.

C. FR Y-14M First Lien Closed-End 1-4 Family Residential Loan Schedule

    In the December 20th proposal, the Federal Reserve proposed adding 
40 new data items to the loan-level table of the First Lien schedule. 
Additionally, the Federal Reserve proposed removing three existing data 
items from the same table. After consideration of comments and 
reporting burden, the Federal Reserve will revise the final schedule 
adding 36 of the proposed new data items to the loan-level table and 
removing 2 existing data items. With respect to the final list of 
proposed items, the Federal Reserve did not receive substantive 
comments on most of the proposed items. Most of the comments received 
required only clarification to definitions, which will be provided in 
the final instructions.
    The Federal Reserve proposed to eliminate the Home Affordable 
Refinance Flag item, because it had appeared, based on a preliminary 
analysis, that the information reflected in this data item could be 
derived from other data items. However, after further consideration and 
analysis, the Federal Reserve has determined that the information 
reflected in the Home Affordable Refinance Flag data item cannot be 
derived from other data items. In addition, several commenters 
suggested that the Federal Reserve work with other agencies to better 
align the FR Y-14M schedules with data collections by other agencies in 
order to reduce the burden on reporters. Retaining the Home Affordable 
Refinance Flag would facilitate greater consistency with other 
agencies' data collections and, accordingly, retaining this item may 
reduce the burden on FR Y-14M reporters. Therefore the Federal Reserve 
will retain the Home Affordable Refinance Flag data item in the final 
schedule.
    One commenter suggested that the data item Product Type should 
include an option for 10 year fixed-rate loans. The Federal Reserve has 
observed many instances of 10 year fixed-rate loans and will add an 
option for such loans.
    Similarly to the Credit Card schedule, several commenters requested 
additional guidance regarding the Customer ID and the Co-borrower ID 
items. After consideration of comments and additional burden to 
reporters of these proposed items, the Federal Reserve will remove the 
items Co-Borrower ID and Customer ID. In an effort to additionally 
minimize reporting burden, the proposed items Prepayment Penalty Waived 
This Month and Reason for Default will also be eliminated.

D. FR Y-14M Domestic Home Equity Loan and Home Equity Line Schedule

    The Federal Reserve proposed adding 27 new data items to the Loan/
Line Level Table and 1 new data item to the Portfolio Level Table. 
Additionally, the Federal Reserve proposed to delete 1 existing data 
item from the Loan/Line Level Table. After consideration of comments 
and reporting burden, the final schedule will add 25 and eliminate 1 of 
the proposed new data items and eliminate 1 existing data item from the 
Loan/Line Level Table. Most of the comments received required only 
clarification to definitions, which will be provided in the final 
instructions.
    Similarly to the First Lien schedule, several commenters requested 
additional guidance regarding the Customer ID and the Co-borrower ID 
items. After consideration of comments and additional burden to 
reporters of these proposed items, the Federal Reserve will remove the 
items Co-Borrower ID and Customer ID. In an effort to additionally 
minimize reporting burden, the proposed items Escrow Amount at 
Origination and Remodified Flag will also be eliminated as well as the 
existing item Escrow Amount Current.

    Board of Governors of the Federal Reserve System.

    March 25, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013-07272 Filed 3-28-13; 8:45 am]
BILLING CODE 6210-01-P