[Federal Register Volume 78, Number 164 (Friday, August 23, 2013)]
[Rules and Regulations]
[Pages 52391-52405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20306]


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FEDERAL RESERVE SYSTEM

12 CFR Part 246

[Regulation TT; Docket No. R-1457]
RIN 7100-AD-95


Supervision and Regulation Assessments for Bank Holding Companies 
and Savings and Loan Holding Companies With Total Consolidated Assets 
of $50 Billion or More and Nonbank Financial Companies Supervised by 
the Federal Reserve

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
is adopting a final rule to implement section 318 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). 
Section 318 directs the Board to collect assessments, fees, or other 
charges equal to the total expenses the Board estimates are necessary 
or appropriate to carry out the supervisory and regulatory 
responsibilities of the Board for bank holding companies and savings 
and loan holding companies with total consolidated assets of $50 
billion or more and nonbank financial companies designated for Board 
supervision by the Financial Stability Oversight Council.

DATES: Effective date: The final rule is effective October 25, 2013.

FOR FURTHER INFORMATION CONTACT: Mark Greiner, Senior Supervisory 
Financial Analyst (202-452-5290), Nancy Perkins, Assistant Director 
(202-973-5006), or William Spaniel, Senior Associate Director (202-452-
3469), Division of Banking Supervision and Regulation; Laurie Schaffer, 
Associate General Counsel (202-452-2272), or Michelle Moss Kidd, 
Attorney (202-736-5554), Legal Division; Board of Governors of the 
Federal Reserve System, 20th and C Streets NW., Washington, DC 20551. 
Users of Telecommunication Device for the Deaf (TTD) only, contact 
(202) 263-4869.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Description of the Final Rule
    A. Key Definitions
    1. Assessed Companies
    2. Total Assessable Assets
    3. Assessment Periods
    4. Assessment Basis
    B. Apportioning the Assessment Basis to Assessed Companies
    1. Apportionment Based on Size
    2. Assessment Formula
    C. Collection Procedures
    1. Notice of Assessment and Appeal Procedure
    2. Collection of Assessments
    D. Revisions to the FR Y-7Q
III. Administrative Law Matters
    A. Solicitation of Comments and Use of Plain Language
    B. Paperwork Reduction Act Analysis
    C. Regulatory Flexibility Act Analysis

I. Introduction

    On April 18, 2013, the Board published in the Federal Register a 
notice of proposed rulemaking (the NPR or the proposal) seeking public 
comment on the Board's proposal to implement section 318 of the Dodd-
Frank Act.\1\ Section 318 directs the Board to collect assessments, 
fees, or other charges (assessments) from bank holding companies (BHCs) 
and savings and loan holding companies (SLHCs) with $50 billion or more 
in total consolidated assets, and from nonbank financial companies 
designated by the Financial Stability Oversight Council (Council) 
pursuant to section 113 of the Dodd-Frank Act for supervision by the 
Board (Board-supervised nonbank financial companies), (collectively, 
assessed companies), equal to the expenses the Board estimates are 
necessary or appropriate to carry out its supervision and regulation of 
those companies. The proposed rule outlined the Board's assessment 
program, including how the Board would: (a) Determine which companies 
are assessed companies for each calendar-year assessment period, (b) 
estimate the total expenses that are necessary or appropriate to carry 
out the supervisory and regulatory responsibilities to be

[[Page 52392]]

covered by the assessment, (c) determine the assessment for each 
assessed company, and (d) bill for and collect the assessment from the 
assessed companies.
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    \1\ 78 FR 23162 (April 18, 2013).
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    The proposal provided that each calendar year would be an 
assessment period (assessment period) and that a BHC or SLHC would be 
an assessed company for that assessment period if the company's average 
total consolidated assets over the assessment period met or exceeded 
$50 billion, and a nonbank financial company would be an assessed 
company if it was a Board-supervised nonbank financial company on 
December 31 of the assessment period. The Board proposed to notify 
assessed companies of the amount of their assessment no later than July 
15 of the year following each assessment period. After an opportunity 
for appeal, each assessed company would have been required to pay its 
assessment by September 30 of the year following the assessment period. 
The Board proposed to collect assessments beginning with the 2012 
assessment period.
    The Board received 16 comments on the NPR from industry 
associations, companies, individuals, and members of the U.S. Congress. 
Certain commenters expressed concerns with the Board's methodology for 
allocating its expenses among assessed companies, as well as with the 
Board's determination of its assessment basis. Commenters also 
criticized the Board's methodology for assessing Board-supervised 
nonbank financial companies and SLHCs that are predominantly insurance 
companies. A more detailed discussion of the comments on particular 
aspects of the proposal is provided in the remainder of this preamble.

II. Description of the Final Rule

A. Key Definitions

1. Assessed Companies
    The proposed rule would have defined assessed companies to be BHCs 
and SLHCs with total consolidated assets of $50 billion or more and 
Board-supervised nonbank financial companies. In particular, for each 
assessment period, assessed companies were defined as:
     A company that, on December 31 of the assessment period, 
is a top-tier BHC, as defined in section 2 of the Bank Holding Company 
Act,\2\ other than a foreign BHC, that has total consolidated assets of 
$50 billion or more as determined based on the average of the BHC's 
total consolidated assets reported for the assessment period on its 
Schedule HC--Consolidated Balance Sheet of the BHC's Consolidated 
Financial Statements for Bank Holding Companies (FR Y-9C);
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    \2\ 12 U.S.C. 1841(a).
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     A company that, on December 31 of the assessment period, 
is a top-tier SLHC, as defined in section 10 of the Home Owners' Loan 
Act,\3\ other than a foreign SLHC, that has total consolidated assets 
of $50 billion or more as determined based on the average of the SLHC's 
total consolidated assets reported for the assessment period on the 
SLHC's FR Y-9C, or on the SLHC's Quarterly Savings and Loan Holding 
Company Report (FR 2320), as applicable \4\;
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    \3\ 12 U.S.C. 1467.
    \4\ The FR 2320 form is filed by top-tier savings and loan 
holding companies exempt from filing Federal Reserve regulatory 
reports, which include the Y-9C form submitted by BHCs and SLHCs 
with total consolidated assets of $500 million or more. Under the 
proposal, for multi-tiered BHCs and multi-tiered SLHCs in which a 
holding company owns or controls, or is owned or controlled by, 
other holding companies, the assessed company would be the top-tier, 
regulated holding company. In situations where two or more 
unaffiliated companies control the same U.S. bank or savings 
association and each company has average total consolidated assets 
of $50 billion or more, each of the unaffiliated companies would be 
designated an assessed company. Generally, a company has control 
over a bank, savings association, or company if the company has (a) 
ownership, control, or power to vote 25 percent or more of the 
outstanding shares of any class of voting securities of the bank, 
savings association, or company, directly or indirectly or acting 
through one or more other persons; (b) control in any manner over 
the election of a majority of the directors or trustees of the bank, 
savings association, or company; or (c) the Board determines the 
company exercises, directly or indirectly, a controlling influence 
over the management or policies of the bank, savings association, or 
company. See 12 U.S.C. 1841(a)(2) (BHCs) and 12 U.S.C. 1467a(a)(2) 
(SLHCs).
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     A foreign company that, on December 31 of the assessment 
period, is a top-tier BHC that has total consolidated assets of $50 
billion or more as determined based on the average of the foreign 
banking organization's total consolidated assets reported for the 
assessment period on the Capital and Asset Report for Foreign Banking 
Organizations (FR Y-7Q) submissions \5\;
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    \5\ For annual filers of the FR Y-7Q, the proposal provided that 
total consolidated assets would be determined from the foreign 
banking organization's FR Y-7Q annual submission for the calendar 
year of the assessment period.
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     A foreign company that, on December 31 of the assessment 
period, is a top-tier SLHC that has total consolidated assets of $50 
billion or more as determined based on the average of the foreign 
SLHC's total consolidated assets reported for the assessment period on 
regulatory reports required for the foreign SLHC \6\; and
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    \6\ At present, there are no foreign savings and loan holding 
companies.
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     A company that is a Board-supervised nonbank financial 
company on December 31 of the assessment period.
    In the proposal, the Board stated that it believed that relying on 
the average of assets reported in the financial reports submitted over 
the entire yearly assessment period, where available, would reduce 
volatility in an assessed company's assets over the year and avoid 
overreliance on any particular quarter.\7\
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    \7\ A four-quarter average of a company's total consolidated 
assets has also been used in the definition of a covered company in 
the notice of proposed rulemaking establishing enhanced prudential 
standards and early remediation requirements for covered companies, 
published in the Federal Register, 77 FR 594 (January 5, 2012), and 
the final rulemaking establishing the supervisory and company-run 
stress test requirements for covered companies, published in the 
Federal Register, 77 FR 62378 (October 12, 2012).
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    The Board received comments regarding this aspect of the proposal. 
Several comments related to the Board's use of generally accepted 
accounting principles (GAAP) in determining whether a company is an 
assessed company, noting that state insurance law and regulations 
require U.S. insurance companies to prepare their financial statements 
in accordance with statutory accounting principles (SAP) and that some 
of those companies do not prepare GAAP-based financial statements in 
addition to their SAP statements. Commenters asserted that the Board 
should use financial statements prepared in accordance with SAP to 
determine whether a company is an assessed company so that an assessed 
company would not have to expend significant financial and other 
resources in order to provide GAAP financial statements. In the final 
rule, for an assessed company that reports its consolidated assets 
under GAAP, the Board is retaining the requirement that the 
determination of that company's total consolidated assets will be based 
on GAAP accounting requirements. There are, however, a small number of 
companies that only file financial statements in accordance with SAP 
and do not report consolidated financial statements under GAAP. In 
response to the comments received, to avoid requiring companies that 
only file financial statements in accordance with SAP to undertake the 
full burden of preparing GAAP financial statements, such a company may 
request that the Board permit the company to file quarterly an estimate 
of its total consolidated assets, which the Board will consider. If a 
U.S.-domiciled company does not report total

[[Page 52393]]

consolidated assets in its public reports or uses a financial reporting 
methodology other than GAAP, the Board may use, at its discretion, any 
comparable financial information that the Board may require from the 
company for the determination of whether the company is an assessed 
company.
    One commenter stated that the Board should detail the manner in 
which information regarding nonpublic companies would need to be 
reported to the Board for purposes of the assessment and that, to the 
extent such information related to the assessment process is non-public 
and exempt from public disclosure, the Board should make reference to 
the rules and regulations regarding the confidential treatment of such 
information. The Board notes that the information used for purposes of 
the assessment, in general, is the type of information that is already 
being provided to the Board. Moreover, the FR Y-9C, FR Y-7Q, and FR 
2320 reporting forms each provide that a reporting company may request 
confidential treatment if the company believes that disclosure of 
specific commercial or financial information in the report would likely 
result in substantial harm to its competitive position or that 
disclosure of the submitted information would result in unwarranted 
invasion of personal privacy.
    A few commenters argued that, when determining which foreign 
companies are subject to assessments, the Board should not use a 
foreign company's worldwide assets but should instead only consider the 
assets associated with the company's U.S. operations because the Board 
is not the primary supervisor of foreign companies. Another commenter 
asserted that using a foreign BHC's worldwide assets to determine 
whether it is an assessed company exposes the company to double 
assessment by the Board and the home country supervisor. Another 
commenter recommended that grandfathered unitary SLHCs should be 
designated as assessed companies only if the assets associated with the 
savings association and other financial activities were greater than 
$50 billion, and another asserted that separate accounts held at 
insurance companies should be excluded from total consolidated assets 
for purposes of determining whether a company should be an assessed 
company. One commenter argued that total consolidated assets should not 
include foreign affiliates that are consolidated for accounting and 
public reporting purposes.
    Section 318 of the Dodd-Frank Act requires the Board to use total 
consolidated assets for BHCs and SLHCs to determine whether a company 
should be an assessed company. In determining whether a BHC or SLHC 
meets the $50 billion threshold, section 318 does not provide a basis 
for treating foreign companies that are BHCs or SLHCs differently from 
domestic companies or excluding specific types of assets from the 
determination of a company's total consolidated assets. The statute 
states that BHCs and SLHCs with total consolidated assets of $50 
billion or greater will be subject to an assessment. Therefore, the 
Board is not modifying its definition of total consolidated assets in 
response to these comments.
    One commenter asserted that the proposal does not account for 
foreign BHCs that file on an annual basis on form FR Y-7Q. Expressing 
concern that this approach might overstate variations in asset size, 
the commenter recommended that, to treat foreign BHCs that report total 
consolidated assets annually in a similar manner to assessed companies 
that report quarterly, the foreign BHC's total consolidated assets 
should be based on the average of its total consolidated assets as 
reported in the FR Y-7Q for the assessment period and the year 
immediately preceding the assessment period. In response to this 
comment, for a foreign BHC that files annually, the Board will average 
its total consolidated assets from the FR Y-7Q from the assessment 
period and from the FR Y-7Q filed for the prior year to determine 
whether the foreign BHC is an assessed company. The Board notes that 
after the proposed revisions to the FR Y-7Q become effective, foreign 
BHCs that are assessed companies will file on a quarterly basis and 
both foreign and domestic assessed companies will generally be 
determined to be assessed companies on the basis of a four-quarter 
average of total consolidated assets.
    Another commenter requested that the Board index the $50 billion 
threshold to inflation; however, section 318 of the Dodd-Frank Act 
requires the Board to use a $50 billion threshold and does not provide 
for the threshold to be indexed.
    The proposal provided that the organizational structure and 
financial information that the Board will use for the purpose of 
determining whether a company is an assessed company, including 
information with respect to whether a company has control over a U.S. 
bank or savings association, will be that information which the Board 
has received on or before June 30 of the year following that the 
applicable assessment period. Because the Board is changing the date on 
which it will notify assessed companies of the assessment to June 30 
from July 15, described further below, the Board is clarifying that all 
organizational structure and financial information must be received by 
the Board no later than June 15 to be consistent with the revised date.
    In the final rule, the Board also has amended the proposal to 
reserve the authority to avoid an inequitable or inconsistent 
application of the rule. Other than as noted above, the final rule 
adopts the proposed definition of assessed company without change.
2. Total Assessable Assets
    The proposed rule defined the term ``total assessable assets'' as 
the amount of assets that would be used to calculate an assessed 
company's assessment. In order to collect assessments that reflect the 
expenses of the Board in performing its role as the consolidated 
supervisor of assessed companies, total assessable assets included 
total assets for all activities subject to the Board's supervisory 
authority as the consolidated supervisor. For a U.S.-domiciled assessed 
company, the proposal provided that total assessable assets would be 
the company's total consolidated assets of its entire worldwide 
operations, determined by using an average of the total consolidated 
asset amounts reported in applicable regulatory reports for the 
assessment period.\8\ For a Board-supervised nonbank financial company, 
the proposal provided that total assessable assets would be the average 
of the nonbank financial company's total consolidated assets as 
reported during the assessment period on such regulatory or other 
reports as would be determined by the Board.\9\ At such time as a 
foreign SLHC would become an assessed company, the proposal provided 
that total assessable assets would be the average of the foreign SLHC's 
total combined assets of U.S. operations as reported during the 
assessment period by the foreign SLHC.
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    \8\ For assessed companies that are grandfathered unitary 
savings and loan holding companies, the proposal included only 
assets associated with its savings association subsidiary and its 
other financial activities in total assessable assets.
    \9\ If the Board-supervised nonbank financial company is a 
foreign company, the proposal provided that its assessable assets 
would be the average of the company's U.S. assets as reported during 
the assessment period. The Board may evaluate its methodology for 
determining total assessable assets for nonbank financial companies 
as the Board gains experience supervising nonbank financial 
companies.
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    For a foreign BHC, the proposal provided that the total assessable 
assets

[[Page 52394]]

would be equal to the company's total combined assets of U.S. 
operations,\10\ including U.S. branches and agencies, as the Board is 
the consolidated supervisor for the company's U.S. activities. Foreign 
BHCs do not currently submit a single regulatory reporting form that 
reports the total combined assets of their U.S. operations for which 
the Board has supervisory and regulatory authority.\11\ In order to 
determine a foreign BHC's total assessable assets for the 2012 and 2013 
assessment periods, the proposal provided that a foreign BHC's total 
assessable assets would be the average of the total combined assets of 
U.S. operations, net of U.S. intercompany balances and transactions (as 
allowed),\12\ from the regulatory reports for, specifically:
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    \10\ The proposal provided that a foreign BHC's total assessable 
assets does not include the assets of section 2(h)(2) companies as 
defined in section 2(h)(2) of the Bank Holding Company Act (12 
U.S.C. 1841(h)(2)).
    \11\ Currently, foreign BHCs, as foreign banking organizations, 
report total consolidated assets of worldwide operations on the FR 
Y-7Q. As described further below, the proposal provided that the FR 
Y-7Q would be amended to require a foreign banking organization to 
report its total combined assets of U.S. operations, in addition to 
its total consolidated assets of worldwide operations.
    \12\ The proposal provided that net intercompany balances and 
transactions between a U.S. entity and a foreign affiliate are not 
eliminated when determining total assessable assets, as such 
balances and transactions do not result in double counting of assets 
on a U.S.-combined basis. Further, only intercompany balances and 
transactions between U.S.-domiciled affiliates, branches or agencies 
that are itemized on a standalone regulatory report may be 
eliminated in the calculation of total assessable assets. For 
regulatory reports that do not distinguish between (i) balances and 
transactions between U.S. affiliates, and (ii) balances and 
transactions between a U.S affiliate and a foreign affiliate, the 
proposal provided that the Board will not eliminate any such 
balances or transactions between affiliates reported on the form 
because it would be impossible to distinguish between assets that 
would result in double counting and assets that would not result in 
double counting.
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     Top-tier, U.S.-domiciled BHCs and SLHCs \13\;
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    \13\ The proposal provided that total assets for each U.S.-
domiciled, top-tier BHC or SLHC would be the company's total assets 
as reported on line item 12, Schedule HC of the FR Y-9C, or as 
reported on line item 1, column B, of the FR 2320, as applicable.
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     U.S. branches and agencies \14\;
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    \14\ The proposal provided that total assets for each branch or 
agency would be calculated as total claims on nonrelated parties 
(line item 1.i from column A on Schedule RAL) plus due from related 
institutions in foreign countries (line items 2.a, 2.b(1), 2.b(2), 
and 2.c from column A, part 1 on Schedule M), as reported on the 
Report of Assets and Liabilities of U.S. Branches and Agencies of 
Foreign Banks (FFIEC 002). Note that due from head office of parent 
bank (line item 2.a, column A, part 1 on Schedule M) would be 
included net of due to head office of parent bank (line item 2.a, 
column B, part 1 on Schedule M) when there is a net due from 
position reported for line item 2.a. A net due to position for line 
item 2.a would result in no addition to total assets with respect to 
line item 2.a, part 1 on Schedule M.
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     U.S.-domiciled nonbank subsidiaries \15\;
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    \15\ Under the proposal, for quarterly Financial Statements of 
U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations (FR 
Y-N) filers, total assets for each nonbank subsidiary would have 
been calculated as total assets (line item 10, Schedule BS), minus 
gross balances due from related institutions located in the United 
States (line item 4.a of Schedule BS-M) as reported on the FR Y-7N. 
For annual Abbreviated Financial Statements of U.S. Nonbank 
Subsidiaries Held by Foreign Banking Organizations (FR Y-NS) filers, 
total assets for each nonbank subsidiary are as reported on line 
item 2 of the FR Y-7NS. Until foreign assessed companies report on 
the revised form FR Y-7Q described in this rule, the Board will only 
include the assets of affiliates for which the foreign assessed 
company is the majority owner, as the Board would not have 
sufficient information to accurately account for non-majority-owned 
affiliates.
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     Edge Act and Agreement Corporations \16\;
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    \16\ Under the proposal, total assets for each Edge Act or 
agreement corporation would have been the sum of claims on 
nonrelated organizations (line item 9, ``consolidated total'' column 
on Schedule RC of the Consolidated Report of Condition and Income 
for Edge Act and agreement corporations (FR 2886b)), and claims on 
related organizations domiciled outside the United States (line 
items 2.a and 2.b, column A on Schedule RC-M), as reported on FR 
2886b.
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     U.S. banks and U.S. savings associations \17\; and
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    \17\ Under the proposal, total assets for each bank or savings 
association that is not a subsidiary of a U.S.-domiciled bank 
holding company or savings and loan holding company would have been 
the bank's or savings association's total assets as reported on line 
item 12, Schedule RC of the Balance Sheet of the Consolidated 
Reports of Condition and Income (FFIEC 031 or FFIEC 041, as 
applicable).
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     Broker-dealers that are not reflected in the assets of a 
U.S. domiciled parent's regulatory reporting form submission.\18\
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    \18\ Under the proposal, total assets for each broker-dealer 
would have been the broker-dealer's total assets as reported on the 
statement of financial condition of the SEC's FOCUS Report, Part II 
(Form X-17A-5), FOCUS Report, Part IIa (Form X-17A-5), or FOCUS 
Report, Part II CSE (Form X-17A-5).
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    Some commenters requested that the Board refine its methodology for 
calculating total combined assets of a foreign assessed company prior 
to the effective date of the modified FR Y-7Q by excluding intercompany 
balances reported in Form FFIEC 002, Schedule M, amounts outstanding 
from related nondepository majority-owned subsidiaries in the U.S. The 
final rule reflects this comment.\19\
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    \19\ Under the final rule, total assets for each U.S. branch or 
agency will be calculated as total claims on nonrelated parties 
(line item 1.i from column A on Schedule RAL) plus net due from 
related institutions in foreign countries (line items 2.a, 2.b(1), 
2.b(2), and 2.c from column A, minus line items 2.a, 2.b(1), 2.b(2) 
and 2.c from column B, part 1 on Schedule M), minus transactions 
with related nondepository majority-owned subsidiaries in the U.S. 
(line item 1 from column A, part 3 on Schedule M), as reported on 
the Report of Assets and Liabilities of U.S. Branches and Agencies 
of Foreign Banks (FFIEC 002). Further, under the final rule, net due 
from related institutions in foreign countries (line items 2.a, 
2.b(1), 2.b(2), and 2.c from column A, minus line items 2.a, 2.b(1), 
2.b(2) and 2.c from column B, part 1 on Schedule M) are added to 
total assets only when there is a net due from position. A net due 
to related institutions in foreign countries results in no reduction 
to total assets.
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    As described above, there are a small number of companies that only 
file financial statements in accordance with SAP and do not report 
consolidated financial statements under GAAP. In response to comments 
that urge the Board to avoid requiring companies that only file 
financial statements in accordance with SAP to also provide GAAP 
financial statements, such a company may request the Board to permit 
the company to file quarterly an estimate of its total assessable 
assets, which the Board will consider.
    The final rule otherwise adopts the methodology for calculating 
total assessable assets for a foreign assessed company for the 2012 and 
2013 assessment periods as proposed. As provided in the proposal, 
beginning with the 2014 assessment periods, the Board will modify the 
FR Y-7Q by adding a line item for an FBO to report the total combined 
assets of a foreign banking organization's U.S. operations and base the 
determination of a foreign BHC's assessable assets on that line item.
    A number of commenters criticized how the Board proposed to 
calculate total assessable assets. Several of these commenters asserted 
that the final rule should exclude an insurance company's separate 
accounts from the calculation of total assessable assets, arguing that 
separate account assets are not indicative of insurer risk, and thus 
are not the focus of consolidated Board supervision and regulation. One 
commenter argued that when the Council assesses the systemic risk posed 
by nonbank financial companies, the Council excludes separate account 
assets from the calculation of ``total consolidated assets'' for 
purposes of the leverage ratio and short-term debt ratio Stage 1 
designation criteria, and therefore such assets should be excluded from 
total assessable assets. The Board notes that the designation criteria 
cited by the commenters are screening thresholds only for the purpose 
of determining whether to subject a company to further review under the 
Council's interpretive guidance, and, furthermore, the Council does not 
exclude separate accounts from the total consolidated assets Stage 1 
designation criterion.\20\
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    \20\ See 77 FR 21637 (April 11, 2012). The Council approved a 
rule and interpretive guidance on the ``Authority To Require 
Supervision and Regulation of Certain Nonbank Financial Companies'' 
in April 2012. The interpretive guidance establishes six thresholds 
that the Council uses to identify nonbank financial companies for 
further evaluation. The first threshold is $50 billion in total 
consolidated assets, with no exclusion of separate accounts. The 
fifth and sixth thresholds are the leverage ratio and the short-term 
debt ratio described by the commenter, both of which exclude 
separate accounts.

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[[Page 52395]]

    The Board believes that separate accounts are appropriately 
included in the calculation of total assessable assets. The Board is 
the consolidated supervisor of an assessed company that is an insurance 
company or has one or more subsidiaries that are insurance companies 
that engages in the activities that result in separate accounts. 
Accordingly, the activities involving separate accounts contribute to 
the cost of the Board's supervision for that assessed company.
    Some commenters also asserted that the Board should exclude assets 
attributable to nonfinancial activities of an assessed company. One 
commenter stated that the Board should resolve this issue by 
promulgating an intermediate holding company rule. As stated in the 
proposal, and under the final rule, total assessable assets for an 
assessed company, including Board-supervised nonbank financial company 
will be the total consolidated assets of that company because the Board 
would be the consolidated supervisor for the Board-supervised nonbank 
financial company. The Board may evaluate its methodology for 
determining total assessable assets for such companies as the Board 
gains experience supervising nonbank financial companies. Thus, the 
Board is adopting this aspect of the proposal without change.
3. Assessment Periods
    The proposal established each calendar year as an assessment 
period. For each assessment period, the Board proposed to make a 
determination as to whether an entity is an assessed company for that 
assessment period. The Board proposed to determine whether a company, 
as of December 31 of the assessment period, is (i) a BHC or SLHC with 
average total consolidated assets equal to or exceeding the $50 billion 
threshold, as reported on the relevant reporting form(s) or based on 
such other information as the Board might consider or (ii) a Board-
supervised nonbank financial company. The Board is adopting this aspect 
of the proposal without change.
4. Assessment Basis
    The proposal defined the assessment basis as the applicable 
estimated expenses of the Board and the Reserve Banks (to which the 
Board has delegated supervisory responsibility) relating to acting as 
the consolidated supervisor of assessed companies. Under the proposal, 
expenses are all operating expenses, including support, overhead, and 
pension expenses associated with the consolidated supervision and 
regulation of assessed companies. In order to determine the annual 
assessment basis, the proposal provided that the Board would estimate 
its aggregate expenses for activities related to the supervision and 
regulation of all assessed companies. These expenses included: 
conducting onsite and offsite examinations, inspections, visitations 
and reviews; providing ongoing supervision; meeting and corresponding 
with assessed companies regarding supervision matters; conducting 
stress tests; assessing resolution plans; developing, administering, 
interpreting and explaining regulations, laws, and supervisory guidance 
adopted by the Board; engaging in enforcement actions; processing and 
analyzing applications and notices, including conducting competitive 
analyses and financial stability analyses of proposed bank and BHC 
mergers, acquisitions, and other similar transactions; processing 
consumer complaints; and implementing a macro-prudential supervisory 
approach.\21\
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    \21\ Under the proposal, the Board's expenses with respect to 
its direct supervision of state member banks and branches and 
agencies of foreign banking organizations are excluded from the 
assessment basis because such expenses are not attributable to the 
Board's role as the consolidated supervisor of the assessed company, 
which is the unique supervisory role the Board serves among all 
federal banking supervisors. Therefore, it is the expenses 
associated with the Board's consolidated supervision and regulation 
of assessed companies that provide the basis for the Board's 
assessments.
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    In addition, the proposal provided that the estimated expenses in 
the assessment basis would include a proportion of expenses associated 
with activities that are integral to carrying out the supervisory and 
regulatory responsibilities of the Board as consolidated supervisor for 
assessed companies, although those expenses are not directly 
attributable to specific companies. These activities include: (i) The 
Shared National Credit Program, which the Board and the other federal 
banking agencies established in 1977 to promote the efficient and 
consistent review and classification of shared national credits; (ii) 
the training of staff in the supervision function; (iii) research and 
analysis, which includes library and subscription services, and 
development of supervisory and regulatory policies, procedures, and 
products of the Board; (iv) collecting, receiving, and processing 
regulatory reports received from institutions supervised and regulated 
by the Board; and (v) supervision and regulation automation (e.g., 
information technology) services. For these activities, the Board noted 
in the proposal that it would calculate the relative proportion of its 
supervision expenses that are attributable to assessed companies 
divided by expenses for those activities that are attributable to all 
companies supervised by the Board, and include that proportion of 
expenses associated with activities that are integral to carrying out 
the Board's supervisory and regulatory responsibilities in the 
assessment basis.
    Several commenters expressed concern with the proposal's 
description of the Board's procedures, accounting, and methodology for 
arriving at the assessment basis and asserted that the Board had not 
provided sufficient detail to assess whether the Board had met the 
``necessary or appropriate'' standard established by section 318 of the 
Dodd-Frank Act. Other commenters argued that the proposal did not 
distinguish between the supervision and regulation of assessed 
companies and the large number of other institutions subject to Board 
oversight. Some commenters recommended that the Board publish a report 
itemizing the expenses for each assessment period by the type of 
expenses. A few commenters asserted that the Board should clarify and 
publish for further comment the methodology it plans to use to identify 
and measure both those expenses that are directly related to its 
consolidated oversight of assessed companies, and those expenses that 
are not directly related to its consolidated oversight of assessed 
companies but are included in the assessment basis.
    With respect to the comments that the Board publish for comment 
more detail with respect to the assessment basis, the Board believes 
that the proposal provided meaningful opportunity for public comment. 
The proposal provided a description of expenses related to supervising 
and regulating assessed companies and described how the Board would 
also apply a proportion of expenses related to activities that are 
integral to carry out the supervisory and regulatory responsibilities 
of the Board. Nonetheless, the Board is clarifying for commenters the 
manner in which it will compute and apportion the assessment basis.
    The Board's operating expenses are published annually in the Board 
of Governors' Annual Report: Budget

[[Page 52396]]

Review.\22\ For 2012, supervision and regulation operating expenses at 
the Board and the Reserve Banks totaled $1,172 million, comprised of 
$1,057 million in supervision and regulation operating expenses for the 
Federal Reserve Banks (Reserve Banks) \23\ and $115 million in 
supervision and regulation operating expenses for the Board.\24\
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    \22\ See http://www.federalreserve.gov/publications/budget-review/default.htm.
    \23\ Refer to 2012 actual expenses in Table C.3. Operating 
Expenses of the Federal Reserve Banks, Federal Reserve Information 
Technology (FRIT), and Office of Employee Benefits (OEB) by 
operational area, as reported in the Board's 2013 Annual Report: 
Budget Review. Reserve Bank operating expenses include an allocation 
of all direct, support, and overhead expenses.
    \24\ Refer to 2012 actual expenses in Table B.1. Operating 
expenses of the Board of Governors, by division, office or special 
accounts as reported in the Board's 2013 Annual Report: Budget 
Review. The Board's total operating expenses for 2012 was $497 
million. The Board's supervision and regulation operating expenses 
reflect the expenses of the Division of Banking Supervision and 
Regulation ($93 million) and the Division of Consumer and Community 
Affairs ($22 million). The total of $115 million for 2012, however, 
does not include the contribution of expenses from other divisions 
at the Board that also perform supervision and regulation 
activities, including the Legal Division and to some extent the 
divisions of Research and Statistics, International Finance, 
Monetary Affairs, and Office of Financial Stability Policy and 
Research. The method for estimating the Board's expenses associated 
with the supervision and regulation of assessed companies is 
described below.
---------------------------------------------------------------------------

    The Reserve Banks' operating expenses are determined through a cost 
accounting system that provides uniform methods of accounting for 
expenses, allowing each Reserve Bank to determine the full cost of its 
and all Reserve Bank services. The activities involved in the 
supervision and regulation of assessed companies are used to identify 
the relevant expenses for the assessment basis. For example: employee-
time data are analyzed to determine the amount of time employees spend 
supervising assessed companies, and this analysis along with other, 
similar analyses are used to allocate salaries and other personnel 
expenses.
    Operating expenses for the assessment basis include all expenses 
associated with the supervision and regulation of assessed companies, 
which are comprised primarily of personnel expenses, as well as those 
expenses for related administrative processes, support operations, and 
travel. Certain expenses associated with activities that cannot be 
directly attributed to assessed companies, but are integral to carrying 
out the supervisory responsibilities of the Reserve Banks, are added to 
the assessment basis on a proportional basis. For these expenses, the 
Board determines the proportion of expenses directly attributable to 
the supervision of those companies subject to assessment, relative to 
the expenses directly attributable to the supervision of all financial 
institutions supervised by the Board. This proportion is then applied 
to the expenses for the activities integral to carrying out the 
supervisory responsibilities of the Reserve Banks \25\ and the 
resulting proportion of expenses is included in the assessment basis. 
For 2012, the Reserve Banks' proportion of expenses directly 
attributable to the supervision of assessed companies was about 34 
percent of the $742 million directly attributable to the Board's cost 
of supervising all financial institutions.
---------------------------------------------------------------------------

    \25\ Activities integral to carry out the supervisory 
responsibilities of the Reserve Banks include staff training and 
education, supervision policy and projects, regulatory reports 
processing, and supervision and regulation automation services.
---------------------------------------------------------------------------

    Since publishing the proposed rule, the Board has revised its 
calculation of the assessment basis for 2012 to incorporate actual, 
rather than budgeted, expenses for the assessment year, and to adjust 
the assessment basis in accordance with a change made to the final 
rule.\26\ The 2012 expenses associated with activities directly 
attributable to the supervision of assessed companies contribute about 
$256 million to the assessment basis, and the proportion of expenses 
(about 34 percent) for activities integral to carrying out the 
supervisory responsibilities of the Reserve Banks (a total of about 
$240 million) adds about $82 million. In addition, the Board assigned 
to the assessment basis a proportional share of pension expenses of 
about $56 million. Thus, the total estimated Reserve Bank operating 
expenses (direct, related, and pension expenses) attributed to the 
supervision and regulation of assessed companies for 2012 is about $394 
million.
---------------------------------------------------------------------------

    \26\ This change, relating to the Shared National Credit 
Program, is described below.
---------------------------------------------------------------------------

    With respect to the operating expenses of the Board, the Board 
groups all divisions into one of two categories for the purpose of 
determining the contribution to the assessment basis--those that 
perform supervision- and regulation-related activities with respect to 
assessed companies (direct) and those that provide support to 
supervision and regulation related activities (indirect). Divisions 
that are categorized as direct are Banking Supervision and Regulation, 
Consumer and Community Affairs, Research and Statistics, International 
Finance, Monetary Affairs, Office of Financial Stability Policy and 
Research, and Legal. The remaining divisions are classified as indirect 
based on the support they provide to the direct divisions, necessary 
for the continuation of normal operations.\27\
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    \27\ The indirect divisions include the Office of Board Members, 
Office of the Secretary, Division of Financial Management, 
Information Technology, Office of the Chief Operating Officer, 
Office of the Chief Data Officer, the Management Division, and 
Reserve Bank Operations and Payment Systems.
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    Similar to the employee time data the Reserve Banks use to estimate 
operating expenses attributable to the supervision and regulation of 
assessed companies, the Board uses annual time surveys from employees 
in the direct divisions to determine the estimated proportion of time 
attributable to the supervision and regulation of assessed companies. 
For 2012, operating expenses of the direct divisions totaled $246 
million, of which $29 million is directly attributable to the cost of 
supervising and regulating assessed companies. These totals are 
comprised of (i) the Division of Banking Supervision and Regulation, 
with total operating expenses of $93 million, of which about $22 
million is directly attributable to the supervision and regulation of 
assessed companies; (ii) the Division of Consumer and Community Affairs 
with total operating expenses of $22 million, of which about $1 million 
is directly attributable to the supervision and regulation of assessed 
companies; (iii) the Legal Division with total operating expenses of 
$20 million, of which about $4 million is directly attributable to the 
supervision and regulation of assessed companies; and (iv) the 
divisions of Research and Statistics, International Finance, Monetary 
Affairs and the Office of Financial Stability Policy and Research with 
total operating expenses of $111 million, of which about $2 million is 
directly attributable to the supervision and regulation of assessed 
companies. The employee-time survey data are also used to estimate the 
proportion of each direct division's non-personnel expenses, such as 
travel expenses, that is attributable to the supervision and regulation 
of assessed companies.
    To determine the proportion of the indirect divisions' expenses 
included in the assessment basis, the Board calculates the proportion 
of employee time in the direct divisions attributable to the 
supervision and regulation of assessed companies relative to the total 
employee time at the Board, which is then applied to the total expenses 
of the indirect divisions, and this proportion of indirect division 
expenses is added to the assessment basis. For the 2012 assessment 
period, the indirect divisions' expenses totaled $252 million, of which 
about 5 percent ($13 million) was added to the assessment

[[Page 52397]]

basis. The Board also includes in the assessment basis a similarly 
calculated proportion of the Board's pension expenses, which for 2012 
was $4 million. Thus, the total estimated Board operating expenses 
(direct, indirect and pension expenses) attributed to the supervision 
and regulation of assessed companies for 2012 is about $46 million.
    In total, the Board estimates that the total expenses necessary or 
appropriate to carry out its supervision and regulation of assessed 
companies in 2012 is $440 million. The Board does not anticipate 
changes to this estimate before publishing the assessment basis upon 
the effective date of this rule. Should any changes become necessary, 
the Board will provide explanation of the changes within the 
publication of the assessment basis and assessment rate for the 2012 
assessment.
    In response to commenters' requests that the Board provide a 
detailed report of its costs related to supervising and regulating 
assessed companies for a given assessment period, the Board will 
provide, on the Board's Web site each year by June 30, a report similar 
to the description contained in this preamble containing the operating 
expenses, together with the amount of those expenses that the Board 
estimates are attributable to supervision and regulation of assessed 
companies.
    One commenter asserted that some Reserve Banks do not supervise or 
regulate any assessed companies and, therefore, the assessment basis 
should not include the cost of support and overhead for those offices. 
Although certain Reserve Banks do not supervise assessed companies, 
they may provide support associated with the Board's and other Reserve 
Banks' supervision and regulation of assessed companies, such as staff 
training and automation services. In determining the assessment basis, 
the Board includes only the supervision and regulation expenses 
attributable to the supervision and regulation of assessed companies, 
as described above. The Board does not include support and overhead 
expenses of any portion of the Reserve Banks' operations that are not 
attributable to the supervision and regulation of assessed companies.
    Some commenters asserted that costs associated with functionally-
regulated subsidiaries of BHCs or SLHCs, such as national banks and 
state non-member banks, should not be included in the assessment basis. 
As the consolidated supervisor, the Board is charged with the 
supervision and regulation of the holding company parent, including its 
capital, leverage, liquidity, and enterprise-wide compliance risk 
management, which are affected by and may affect functionally regulated 
subsidiaries. In fulfilling its role, the Board relies to the fullest 
extent possible on the supervisory activities and reports of functional 
regulators. Thus, the Board does incur some expenses related to 
functionally regulated entities, including working with functional 
regulators to understand the consolidated risk profile of the firm. The 
Board believes it is appropriate to include those expenses in the 
assessment basis.
    A few commenters asserted that the Board's cost of development of 
the infrastructure for the supervision and regulation of Board-
supervised nonbank financial companies should be excluded from the 
assessment basis applicable to BHCs and SLHCs. Some commenters 
requested that costs associated with investigations and enforcement 
actions against BHCs should not be charged to SLHCs or Board-supervised 
nonbank financial companies. The Board, however, believes that a simple 
standard for apportioning all costs across all assessed companies is 
the most objective and transparent way to allocate the costs of 
supervision and regulation of assessed companies. Therefore, all of the 
Board's estimated expenses that are necessary and appropriate to carry 
out the supervisory and regulatory responsibilities of the Board with 
respect to assessed companies are being apportioned across all assessed 
companies.
    Commenters also urged the Board to exclude the cost of the Shared 
National Credit Program from the assessment basis. Upon consideration, 
the Board agrees with commenters that it should remove the proportion 
of expenses related to the Shared National Credit Program, which was 
approximately $6 million, from the assessment basis.
    Some commenters asked whether certain expenses included in the 
assessment basis can be classified properly as supervisory and 
regulatory, such as the processing of applications, competitive 
analyses, and the processing of consumer complaints. With respect to 
these commenters' views, the Board reviewed its determination that 
these expenses were necessary or appropriate to be included in the 
assessment basis. The Board is clarifying that, while the processing of 
consumer complaints is not included in the assessment basis, the Board 
does supervise and regulate an assessed company's enterprise-wide 
compliance risk management. The Board's processing of applications and 
competitive analyses are included as part of the Board's costs relating 
to its supervision and regulation of assessed companies because those 
activities are required under the Bank Holding Company Act and the Home 
Owners Loan Act and are therefore part of the Board's role as 
consolidated supervisor of assessed companies.
    The Board also received comments that supported the assessment 
basis as reasonable given the intricacies involved in monitoring, 
analyzing, and ensuring the safety and soundness of complex 
institutions. Other commenters asserted that the methodology 
appropriately recognizes the distinctive nature of the different types 
of companies subject to the assessment.
    The proposal also provided that the estimate of the Board's 
expenses would be based on an average of estimated expenses over the 
current and prior two assessment periods, with a transition period for 
2012, 2013, and 2014 during which the Board would use the assessment 
basis for the 2012 assessment period, with the effect of using the same 
assessment rate for each of those years. Thereafter, to mitigate 
volatility in assessments and provide a more stable basis from year to 
year, the Board would calculate a three-year rolling average of its 
estimated expenses, and would determine assessments for each year based 
on that three-year average. The proposal also noted that the Board 
expects to evaluate the volatility in assessment fees resulting from 
its methodology for determining the assessment basis on an ongoing 
basis and may refine its methodology as appropriate through the 
rulemaking process. The Board is finalizing this portion of the 
methodology for determining the assessment basis without change.

B. Apportioning the Assessment Basis to Assessed Companies

1. Apportionment Based on Size
    As discussed in the proposal, total expenses relating to the 
supervision of a company generally are a function of the size and 
associated complexity of the company. Larger companies are often more 
complex companies, with associated risks that play a large role in 
determining the supervisory resources necessary in relation to that 
company. The largest companies, because of their increased complexity, 
risk, and geographic footprints, usually receive more supervisory 
attention.\28\
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    \28\ See, e.g., ``Capital Plans,'' final rule published in the 
Federal Register, 76 FR 231 (Dec. 1, 2011), and ``Enhanced 
Prudential Standards and Early Remediation Requirements for Covered 
Companies,'' proposal published in the Federal Register, 77 FR 594 
(January 5, 2012).

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[[Page 52398]]

    Many commenters asserted that asset size should not be used as a 
proxy for the cost of supervision. For example, some commenters argued 
that the rule should provide for tailoring the assessments based on 
complexity, capital structure, risk, and interconnectedness and less on 
asset size. Some commenters asserted that an asset size measure may not 
provide adequate sensitivity for the types of risks to which a company 
might be exposed, and could result in less-complex companies, which the 
commenters asserted included smaller assessed companies or SLHCs, 
subsidizing the supervisory expenses for more complex institutions. 
Some of these commenters requested that the Board allocate higher costs 
to the nonbank operations of assessed companies, since those operations 
would not be subject to comprehensive prudential regulation similar to 
banking regulation. Some commenters urged the Board to adopt a 
methodology for apportioning expenses associated with the supervision 
and regulation of assessed companies on a company-specific basis. A few 
commenters suggested a tiered approach in which the assessment basis 
would be apportioned among assessed companies based on the number of 
supervisory activities to which the assessed company is subject, with 
each supervisory activity weighted based on the expense or percentage 
of time the Board devotes to that supervisory activity. Some 
commenters, however, supported the Board's approach to allocating 
assessments based on asset size.
    In the proposal, the Board stated that it believes that 
apportioning the assessment basis based on the total assessable asset 
size of assessed companies is generally reflective of the amount of 
supervisory and regulatory expenses associated with a particular 
company, and is an approach based on information that is well 
understood, objective, transparent, readily available, and comparable 
among all types of assessed companies. The Board is concerned that the 
alternatives suggested by commenters could result in assessment fees 
based upon subjective, non-transparent criteria, and would not provide 
assessed companies with a means for evaluating whether the Board is 
consistently or appropriately allocating the assessment basis among 
assessed companies. Moreover, the Board is concerned that, if an 
assessed company publicly reported the amount of its assessment, a 
system of allocating the assessment basis that is not relatively 
straightforward and objective could cause market participants and 
counterparties to draw incorrect inferences about one or more assessed 
companies, to the potential detriment of assessed companies and the 
efficient functioning of markets.
    Some commenters asserted that apportioning the assessment basis 
using size alone would result in SLHCs, which are not subject to 
section 165 of the Dodd-Frank Act (enhanced prudential standards), 
having to subsidize the Board's cost of carrying out enhanced 
prudential standards over other assessed companies. The Board notes 
that all assessed companies present unique supervisory concerns that 
require significant supervisory attention, including SLHCs. In fact, 
assessed companies that are SLHCs may present supervisory concerns that 
are not present for BHCs subject to enhanced prudential standards. As 
stated above, the Board believes that size is a reasonable proxy for 
estimating the amount of the Board's costs for regulating and 
supervising assessed companies. The Board is finalizing this aspect of 
the proposal without change.
2. Assessment Formula
    The proposal would have apportioned the assessment basis among 
assessed companies by means of an assessment formula that used the 
total assessable assets of each assessed company. For each assessment 
period, the assessment formula applied to the assessed companies was 
proposed to be:

Assessment = $50,000 + (Assessed Company's Total Assessable Assets x 
Assessment Rate).

    Under the proposal, each company's assessment would have been 
computed using a base amount of $50,000 for each assessed company. The 
Board stated in its proposal that including this base amount in each 
assessment would be appropriate to ensure that the nominal expenses 
related to the Board's supervision and regulation of such companies are 
covered, particularly for those companies that are near the $50 billion 
threshold. The proposal would have determined the ``assessment rate'' 
for each assessment period according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR23AU13.002

    The proposal would have determined the assessment rate by dividing 
the assessment basis (minus the base dollar amount covering nominal 
expenses times the number of assessed companies) by the total 
assessable assets of all assessed companies to determine a ratio of 
Board expenses to total assets for each assessment period, and then 
would have multiplied an assessed company's total assessable assets by 
the resulting assessment rate. Thus, under the proposal, a company with 
higher total assessable assets would have been charged a higher 
assessment than a company with lower total assessable assets, which 
generally reflects the greater supervisory and regulatory attention and 
associated workloads and expenses associated with larger companies.
    Some commenters suggested that an assessed company should be 
assessed on a pro-rata basis for the time within the year that the 
company becomes one of the types of companies listed in section 318 
(i.e., a BHC, SLHC or Board-supervised nonbank financial company) and 
falls under the Board's supervisory authority. In response to that 
comment, the Board has determined that when a company becomes a BHC, 
SLHC or Board-supervised nonbank financial company for the first time 
and it is also an assessed company, its assessment will be pro-rated 
based on the quarter in which it became an assessed company. For 
example, if, on August 30 of an assessment period, a foreign banking 
organization (that is not a BHC) with greater than $50 billion in total 
consolidated assets buys a U.S. bank and becomes a BHC and an assessed 
company for the first time, its assessment will be pro-rated at 50

[[Page 52399]]

percent to reflect the fact that the foreign BHC was an assessed 
company for two quarters. Additionally, if a nonbank company is 
designated by the Council for supervision by the Board on April 30 of 
an assessment period, its assessment will be pro-rated at 75 percent to 
reflect the fact that the Board-supervised nonbank financial company 
was an assessed company for three quarters.
    The proposal provided that over the first three years of the 
program, the assessment rate would be fixed, using the 2012 assessment 
rate for calculating the assessment for the following two assessment 
periods, ending with the assessments for 2014. Thereafter, for each 
assessment period, the proposal provided that the Board would calculate 
an assessment rate by averaging the Board's relevant expenses for the 
past three years in order to reduce year-to-year fluctuations in 
assessments (i.e., for the 2015 assessment period, the Board would 
average the expenses for the 2013, 2014, and 2015 assessment periods).
    Some commenters requested that Board-supervised nonbank financial 
companies not be required to pay an assessment until the first 
assessment period following designation as a Board-supervised company 
to allow such companies to prepare and budget accordingly. Considering 
that assessments are collected the year following an assessment period 
(for example, assessments for the 2013 assessment period will be 
collected in 2014), the Board believes that a Board-supervised nonbank 
financial company will have sufficient time to prepare and budget for 
its assessment.
Collection Procedures
1. Notice of Assessment and Appeal Procedure
    The proposal provided that the Board would send a notice of 
assessment no later than July 15 of the year following the assessment 
period to each assessed company stating: (1) That the Board had 
determined the company to be an assessed company, (2) the amount of the 
company's total assessable assets, and (3) the amount the assessed 
company must pay by September 30. The proposal also provided that the 
Board would, no later than July 15, publish on its public Web site the 
assessment rate for that assessment period.
    Under the proposal, companies identified as assessed companies 
would have 30 calendar days from July 15 to appeal the Board's 
determination that the company is an assessed company or the company's 
total assessable assets. Companies choosing to appeal would have been 
required to submit a request for redetermination in writing and include 
all the pertinent facts that the company believed would be relevant for 
the Board to consider. Grounds for appeal would have been limited to 
(i) that the assessed company is not an assessed company (i.e., it is 
not a BHC or SLHC with $50 billion in total consolidated assets, or a 
Board-supervised nonbank financial company as of December 31 of the 
assessment period), or (ii) review of the Board's determination of the 
assessed company's total assessable assets. The proposal provided that 
the Board would consider the company's appeal and respond within 15 
calendar days after the end of the appeal period with the results of 
its review. A successful appeal would not change the assessment for any 
other company.
    Several commenters recommended that the Board send the notices no 
later than June 30 rather than July 15 so that the assessed companies 
would have sufficient time to review and potentially appeal the 
assessment before they might be required to disclose the assessment 
publicly under the securities laws or respond to an investor question 
during an earnings call. They also expressed an interest in being able 
to incorporate the assessment into second quarter disclosures. In the 
final rule, in response to commenters, the Board is changing the date 
by which it will send the notice of assessments from July 15 to June 
30. In addition, consistent with the amendment to the notification date 
(from July 15 to June 30 in the final rule), the Board will also adjust 
the date by which it must receive payment from September 30 to 
September 15. The Board will publish on its public Web site the 
assessment rate for that assessment period and the description of how 
the Board determined the assessment basis no later than June 30.
    In response to the proposal's notification and appeal procedure, 
some commenters requested that the Board informally communicate with 
assessed companies before sending assessment notices, or explain any 
variation in its calculation of total assessable assets for a foreign 
assessed company, and that the Board notify assessed companies of any 
material changes to the composition of the assessment basis and provide 
them a reasonable opportunity to comment. One commenter suggested that 
the Board deliver the notice of assessment confidentially to each 
assessed company and itemize the Board's expenses. The Board notes that 
the rule as proposed provides the assessed companies with a process for 
appeal during which they may communicate with the Board about the 
assessment and that the assessment would be based on an assessed 
company's asset size, not an itemized list of expenses.
    One commenter recommended that the Board provide foreign assessed 
companies with a detailed explanation of the calculation of the foreign 
assessed company's total assessable assets during the transition 
period. The Board notes that the final rule provides the line items 
from which the Board will calculate a foreign assessed company's total 
assessable assets during the transition period, and the Board will 
follow that methodology each year during the transition period.\29\ In 
addition, the Board notes that the rule as proposed provides the 
assessed companies with a process for appeal during which they may 
communicate with the Board about the assessment. Thus, the final rule 
adopts the appeal procedure as proposed.
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    \29\ See also discussion of changes to the FR Y-7Q.
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    In addition, in the final rule, the Board is amending the dates on 
which it will notify assessed companies of, and collect the 2012 
assessment period. For the 2012 assessment period only, the Board will 
provide the date by which an assessed company must pay it assessment in 
the 2012 notice of assessments, which the Board anticipates will be 
sent out shortly after the effective date of this rule. The Board 
anticipates that the date by which an assessed company must pay its 
assessment will be sometime in December and, in any event, will be no 
later than December 15, 2013. Thereafter, the Board will notify 
assessed companies of their assessments and collect the assessments 
according to the dates set forth in the final rule.
2. Collection of Assessments
    Under the proposal, each assessed company would have been required 
to pay its assessments using the Fedwire Funds Service (Fedwire) to the 
Federal Reserve Bank of Richmond. The proposal provided that the 
assessments would then be transferred to the U.S. Treasury's General 
Account. The proposal provided that the assessments would need to be 
credited to the Board by September 30 of the year following the 
assessment period. The proposal provided that in the event that the 
Board did not receive the full amount of an assessed company's 
assessment by the payment date for any reason that is not attributable 
to an action of the Board, the assessment would have been considered 
delinquent and the Board

[[Page 52400]]

would have charged interest on the delinquent assessment until the 
assessment and interest, calculated daily from the collection date and 
based on the U.S. Treasury Department's current value of funds rate 
percentage,\30\ were paid.
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    \30\ The current value of funds rate percentage is issued under 
the Treasury Fiscal Requirements Manual and published quarterly in 
the Federal Register.
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    Several commenters asked the Board to postpone the commencement of 
its assessment program until 2014, asserting that assessed companies 
would need time to budget for the expenses. Other commenters asked the 
Board to charge the assessment prospectively. The Board provided notice 
of the assessment through its publication of the notice of proposed 
rulemaking on April 18, 2013. The proposal provided adequate notice of 
the Board's intent to collect assessments in 2013. Therefore, the Board 
believes that the notice provided adequate time for assessed companies 
to prepare for expenses payable in the second half of 2013. The Board 
is otherwise adopting this aspect of the proposal without change.
Revisions to the FR Y-7Q
    The FR Y-7Q requires each top-tier foreign banking organization to 
file asset and capital information. Currently, Part 1 of the report 
requires the filing of capital and asset information for the top-tier 
foreign banking organization,\31\ while Part 2 requires capital and 
asset information for lower-tier foreign banking organizations 
operating a U.S. branch or an agency, or owning an Edge Act or 
agreement corporation, a commercial lending company, or a commercial 
bank domiciled in the United States.\32\ As explained in the reporting 
instructions for the FR Y-7Q, both Part 1 and Part 2 of the reporting 
form collect capital and asset information with respect to the foreign 
banking organization's worldwide operations. However, neither Part 1 
nor Part 2 collects capital and asset information with respect to only 
the foreign banking organization's U.S. operations.
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    \31\ This form is reported annually by each top-tier foreign 
banking organization if it or any foreign banking organization in 
its tiered structure has not elected to be a financial holding 
company, and is reported quarterly by each top-tier foreign banking 
organization if it or any foreign banking organization in its tiered 
structure has elected to be a financial holding company.
    \32\ Reported quarterly by each lower-tier foreign banking 
organization (where applicable) operating a branch or an agency, or 
owning an Edge Act or Agreement corporation, a commercial lending 
company, or a commercial bank domiciled in the United States, if it 
or any foreign banking organization in its tiered structure has 
financial holding company status.
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    For the purpose of determining a foreign assessed company's total 
assessable assets, the Board noted in the proposal that combining the 
assets of the foreign assessed company's U.S. branches and agencies 
with the total assets of all U.S.-domiciled affiliates reported on 
other regulatory reports would likely not yield a result that is 
comparable to the consolidated approach required of U.S.-domiciled 
assessed companies, which report total consolidated assets on Schedule 
HC of FR Y-9C according to standard rules of consolidation. That is, 
not all reports itemize separately the intercompany balances and 
transactions between only U.S. affiliates that would be netted out on a 
U.S.-consolidated basis. Therefore, in order to improve parity among 
all assessed companies with respect to the determination of total 
assessable assets as set forth in the proposal, the Board proposed to 
revise Part 1 of the FR Y-7Q to collect the top-tier foreign banking 
organization's total combined assets of U.S. operations,\33\ net of 
intercompany balances and transactions between U.S. domiciled 
affiliates, branches and agencies.\34\ The amended instructions for the 
amended FR Y-7Q would have closely paralleled, to all practicable 
extents, the instructions for the FR Y-9C for consolidating assets of 
U.S. operations, including with respect to accounting for less-than-
majority-owned affiliates.
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    \33\ For purposes of the amended FR Y-7Q, total combined assets 
do not include the assets of section 2(h)(2) companies as defined in 
section 2(h)(2) of the Bank Holding Company Act (12 U.S.C. 
1841(h)(2)).
    \34\ For purposes of FR Y-7Q reporting, U.S.-domiciled 
affiliates are defined as subsidiaries, associated companies, and 
entities treated as associated companies (e.g., corporate joint 
ventures) as defined in the FR Y-9C.
---------------------------------------------------------------------------

    One commenter asserted that in determining total assessable assets 
for domestic BHCs, the Board should use Schedule HC-K of the FR Y-9C, 
which provides quarterly average numbers, rather than quarter-end asset 
numbers. To ensure consistency in reporting, however, the Board 
believes that the determination of total assessable assets should rely 
on quarter-end asset numbers so that the methodology used should be 
consistent with that used for other assessed companies \35\ and for 
similar rulemakings.\36\ The Board intends to implement the reporting 
requirements as proposed.
---------------------------------------------------------------------------

    \35\ The Board notes that regulatory reporting forms used for 
determining the total assessable assets of foreign-owned assessed 
companies do not universally report quarterly averages, as reported 
on Schedule HC-K of the FR Y-9C. Moreover, those forms that do, such 
as the FFIEC 002, do not report quarterly averages in a manner that 
is consistent with the exclusion of intercompany balances between 
only U.S.-domiciled affiliates.
    \36\ See, e.g., the final rulemaking establishing the 
supervisory and company-run stress test requirements for covered 
companies, published in the Federal Register 77 FR 62378 (October 
12, 2012).
---------------------------------------------------------------------------

    The Board also proposed to revise Part 1 of the FR Y-7Q to collect 
information about certain foreign banking organizations more 
frequently. As mentioned above, only top-tier foreign banking 
organizations with financial holding company status file Part 1 of the 
FR Y-7Q quarterly, while a top-tier foreign banking organization would 
report annually if the foreign banking organization, or any foreign 
banking organization in its tiered structure, has not effectively 
elected to be a financial holding company. Accordingly, for purposes of 
determining whether a foreign banking organization is an assessed 
company and the amount of a foreign assessed company's total assessable 
assets more frequent than annually, the Board proposed to revise the FR 
Y-7Q quarterly reporting requirements for Part 1 to include all top-
tier foreign banking organizations, regardless of financial holding 
company designation, with total consolidated worldwide assets of $50 
billion or more as reported on Part 1 of the FR Y-7Q. Once a foreign 
banking organization has total consolidated assets of $50 billion or 
more and begins to report quarterly, the foreign banking organization 
must continue to report Part 1 quarterly unless and until the foreign 
banking organization has reported total consolidated assets of less 
than $50 billion for each quarter in a full calendar year. Thereafter, 
the foreign banking organization may revert to annual reporting, in 
accordance with the FR Y-7Q reporting form's instructions for annual 
reporting of Part 1. If at any time, after reverting to annual 
reporting, a foreign banking organization has total consolidated assets 
of $50 billion or more, the Foreign Banking Organization (FBO) must 
return to quarterly reporting of Part 1. Regardless of size, all top-
tier foreign banking organizations that have elected to be financial 
holding companies at the foreign banking organization's top tier or 
tiered structure would continue to report quarterly.
    One commenter asserted that it was unnecessary to expand the FR Y-
7Q to require quarterly filing from all top-tier foreign banking 
organizations that are not financial holding companies, or to require 
all top-tier reporting entities to report total combined U.S. assets. 
However, the Board believes that

[[Page 52401]]

collecting comparable, more frequent information from foreign assessed 
companies will allow it to implement the assessment program more 
equitably among foreign and domestic assessed companies. Quarterly 
filing from all foreign banking organizations with more than $50 
billion in total consolidated assets will provide the data necessary 
for consistent determinations of whether a potential assessed company 
should be included in a given assessment period and such company's 
total assessable assets, and will also provide for consistent treatment 
between foreign and domestic banking organizations.
    Another commenter asked the Board to clarify the effective date of 
the revised FR Y-7Q. Companies required to file on the FR Y-7Q will be 
required to file on the amended form for the reporting periods ending 
on or after March 31, 2014. Finally, another commenter asked the Board 
to replace the ``Examples of who must report'' section of the reporting 
form. However, in the Board's experience, filers did not find the 
examples helpful, and the Board does not intend to replace them in the 
instructions to the reporting requirements for the amended FR Y-7Q. The 
Board intends to implement the reporting requirements as proposed.

III. Administrative Law Matters

A. Solicitation of Comments and Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113 
Stat. 1338, 1471, 12 U.S.C. 4809) requires the Federal banking agencies 
to use plain language in all proposed and final rules published after 
January 1, 2000. The Board sought to present the proposed rule in a 
simple and straightforward manner and did not receive any comments on 
the use of plain language.

B. Paperwork Reduction Act Analysis

    In accordance with the Paperwork Reduction Act of 1995 (PRA) (44 
U.S.C. 3506; 5 CFR Part 1320 Appendix A.1), the Board reviewed the 
final rule under the authority delegated to the Board by Office of 
Management and Budget (OMB). The Board may not conduct or sponsor, and 
a respondent is not required to respond to, an information collection 
unless it displays a currently valid OMB control number. The final rule 
contains reporting requirements that are found in Sec. Sec.  
246.3(e)(3) and 246.5(b). The OMB control numbers for these 
requirements are described below. As discussed above, on April 18, 
2013, the Board published in the Federal Register a notice of proposed 
rulemaking seeking public comment on its proposal to implement section 
318 of the Dodd-Frank Act.
Reporting Requirements in 246.3(e)(3)
    Section 318 of the Dodd-Frank Act directs the Board to collect 
assessments, fees, or other charges from assessed companies equal to 
the expenses the Board estimates would be necessary and appropriate to 
carry out its supervision and regulation of those companies. An 
assessed company is any company that, on December 31 of the assessment 
period, is: (1) A BHC (other than a foreign BHC) with $50 billion or 
more in total consolidated assets as determined based on the average of 
the BHC's total consolidated assets reported for the assessment period 
on the BHC's Consolidated Financial Statements for Holding Companies 
(FR Y-9C) (OMB No. 7100-0128) forms; (2) an SLHC (other than a foreign 
SLHC) with $50 billion or more in total consolidated assets, as 
determined based on the average of the SLHC's total consolidated assets 
as reported for the assessment period on the FR Y-9C, on column B of 
the Quarterly Savings and Loan Holding Company Report (FR 2320; OMB No. 
7100-0345), or based on an estimate agreed to by the Board, (3) a top-
tier foreign company that is a BHC or SLHC on December 31 of the 
assessment period, with $50 billion or more in total consolidated 
assets determined based on the average of the foreign company's total 
consolidated assets reported during the assessment period on the 
Capital and Asset Report for Foreign Banking Organizations (FR Y-7Q; 
OMB No. 7100-0125), or, for annual filers of the FR Y-7Q, the average 
of the company's total consolidated assets for the assessment period 
and the year preceding the assessment period, and (4) a Board-
supervised nonbank financial company designated by the Council pursuant 
to section 113 of the Dodd-Frank Act, for supervision by the Board. In 
order to improve parity among all assessed companies with respect to 
the determination of total assessable assets, as set forth in the final 
rule, the Board would revise Part 1 of the FR Y-7Q to collect a new 
data item from top-tier FBO's--Total combined assets of U.S. 
operations, net of intercompany balances and transactions between U.S. 
domiciled affiliates, branches and agencies.
    In addition, the Board would revise the reporting panel for Part 1 
of the FR Y-7Q to collect information about certain FBOs more 
frequently (from annual reporting to quarterly reporting) for purposes 
of determining whether a FBO is an assessed company. All top-tier FBOs, 
regardless of financial holding company designation, with total 
consolidated worldwide assets of $50 billion or more, as reported on 
Part 1 of the FR Y-7Q, would be required to submit data quarterly.
    The Board estimates that 71 FBOs would initially be required to 
change from annual reporting to quarterly reporting.\37\ The Board 
estimates that, upon implementation of the new data item, 109 FBOs 
would initially submit the FR Y-7Q on a quarterly basis. In addition, 
the Board estimates that 43 FBOs would initially submit the FR Y-7Q on 
an annual basis upon implementation of the new data item. In the 
proposed rule, the Board estimated that respondents affected by 
reporting requirements would take, on average, 15 minutes to submit the 
new data item on the FR Y-7Q. Upon a review of all these matters, 
including the comment received, described below, the annual reporting 
burden associated with the FR Y-7Q is estimated to be 404 hours.\38\
---------------------------------------------------------------------------

    \37\ Once an FBO reports total consolidated assets of $50 
billion or more and begins to report quarterly, the FBO must 
continue to report Part 1 quarterly unless and until the FBO has 
reported total consolidated assets of less than $50 billion for each 
of all four quarters in a full calendar year. Thereafter, the FBO 
may revert to annual reporting.
    \38\ The burden estimate associated with 7100-0125 does not 
include the current burden.
---------------------------------------------------------------------------

    The Board received one comment from an industry association in 
response to the PRA estimate in the proposed rule. The commenter 
asserted that the Board's PRA estimate to comply with the new reporting 
requirement contained in Sec.  246.3(e)(3) appears to be understated; 
however, the commenter did not provide an alternative estimates. In 
response, the Board recognizes that the amount of time required of any 
institution to comply with the reporting requirement may vary; however, 
the Board believes that estimates provided are reasonable averages.
Reporting Requirements in Sec.  246.5(b)
    Under Sec.  246.5(b) upon the Board issuing the notice of 
assessment to each assessed company, the company would have 30 calendar 
days from June 30, or, for the 2012 assessment period, 30 calendar day 
from the Board's issuance of a notice of assessment for that assessment 
period, to submit a written statement to appeal the Board's 
determination (i) that the company is an assessed company; or (ii) of 
the company's total assessable assets. This new collection would be 
titled the Dodd-Frank Act Assessment Fees Request for Redetermination 
(FR 4030; OMB No. 7100--to be assigned).
    The Board estimates that 7 assessed companies would submit a 
written

[[Page 52402]]

request for appeal annually. The Board estimates that these assessed 
companies would take, on average, 40 hours (one business week) to write 
and submit the written request. The total annual PRA burden for the new 
FR 4030 information collection is estimated to be 280 hours.
    The Board has a continuing interest in the public's opinions of our 
collections of information. At any time, comments regarding the burden 
estimate, or any other aspect of this collection of information, 
including suggestions for reducing the burden, may be sent to: 
Secretary, Board of Governors of the Federal Reserve System, 20th and C 
Streets NW., Washington, DC 20551; and to the Office of Management and 
Budget, Paperwork Reduction Project (7100--to-be-assigned), Washington, 
DC 20503.

C. Regulatory Flexibility Act

    In accordance with Section 4(a) of the Regulatory Flexibility Act, 
5 U.S.C. 604 (``RFA''), the Board is publishing a final regulatory 
flexibility analysis for this rulemaking. The RFA requires an agency 
either to provide a regulatory flexibility analysis with the final rule 
or to certify that the final rule will not have a significant economic 
impact on a substantial number of small entities.
    Based on its analysis and for the reasons stated below, the Board 
believes that this final rule would not have a significant economic 
impact on a substantial number of small entities. Nevertheless, the 
Board is publishing a final regulatory flexibility analysis.
    As required by section 318 of the Dodd-Frank Act, the Board is 
finalizing a rule to assess BHCs and SLHCs with assets of equal to or 
greater than $50 billion and nonbank financial companies supervised by 
the Board for the total expenses the Board estimates are necessary or 
appropriate to carry out the supervisory and regulatory 
responsibilities of the Board with respect to such companies. The Board 
received no comments relating to its regulatory flexibility analysis
    Under regulations issued by the Small Business Administration, a 
``small entity'' includes those firms within the ``Finance and 
Insurance'' sector with asset sizes that vary from $35 million or less 
to $500 million or less.\39\ The final rule, by definition, will affect 
BHCs and SLHCs with assets of equal to or greater than $50 billion. The 
final rule also will affect nonbank financial companies supervised by 
the Board under section 113 of the Dodd-Frank Act but it is unlikely 
that such an institution would be considered ``small'' by the Small 
Business Administration.
---------------------------------------------------------------------------

    \39\ 13 CFR 121.201.
---------------------------------------------------------------------------

    The Board's final rule is unlikely to impose any new recordkeeping, 
reporting, or compliance requirements or otherwise affect a small 
banking entity.
    The Board has not identified any Federal rules that duplicate, 
overlap, or conflict with the revisions of the final rule.
    The Board believes that no alternatives to the final rule are 
available for consideration.

List of Subjects in 12 CFR Part 246

    Administrative practice and procedure, Assessments, Banks, Banking, 
Holding companies, Nonbank financial companies, Reporting and 
recordkeeping requirements.

    For the reasons stated in the preamble, the Board amends 12 CFR 
Chapter II by adding part 246 to read as follows:

PART 246--SUPERVISION AND REGULATION ASSESSMENTS OF FEES 
(REGULATION TT)

Sec.
246.1 Authority, purpose and scope.
246.2 Definitions.
246.3 Assessed companies.
246.4 Assessments.
246.5 Notice of assessment and appeal.
246.6 Collection of assessments; payment of interest.

    Authority:  Pub. L. 111-203, 124 Stat. 1376, 1526, and section 
11(s) of the Federal Reserve Act (12 U.S.C. 248(s)).


Sec.  246.1  Authority, purpose and scope.

    (a) Authority. This part (Regulation TT) is issued by the Board of 
Governors of the Federal Reserve System (Board) under section 318 of 
Title III of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (the Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376, 1423-32, 12 
U.S.C. 5365 and 5366) and section 11(s) of the Federal Reserve Act (12 
U.S.C. 248(s)).
    (b) Scope. This part applies to:
    (1) Any bank holding company having total consolidated assets of 
$50 billion or more, as defined below;
    (2) Any savings and loan holding company having total consolidated 
assets of $50 billion or more, as defined below; and
    (3) Any nonbank financial company supervised by the Board, as 
defined below.
    (c) Purpose. This part implements provisions of section 318 of the 
Dodd-Frank Act that direct the Board to collect assessments, fees, or 
other charges from companies identified in paragraph (b) of this 
section that are equal to the total expenses the Board estimates are 
necessary or appropriate to carry out the supervisory and regulatory 
responsibilities of the Board with respect to these assessed companies.
    (d)(1) Reservation of authority. In exceptional circumstances, for 
the purpose of avoiding inequitable or inconsistent application of the 
rule, the Board may require an assessed company to pay a lesser amount 
of assessments than would otherwise be provided for under this Part.
    (2) Use of comparable financial information. The Board may use, at 
its discretion, any comparable financial information that the Board may 
require from a company in considering whether the company must pay to 
the Board an assessment and the amount of such assessment, pursuant to 
section 318 of the Dodd-Frank Act.


Sec.  246.2  Definitions.

    As used in this part:
    (a) Assessment period means January 1 through December 31 of each 
calendar year.
    (b) Bank means an insured depository institution as defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
    (c) Bank holding company is defined as in section 2 of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841), and the Board's 
Regulation Y (12 CFR part 225).
    (d) Company means a corporation, partnership, limited liability 
company, depository institution, business trust, special purpose 
entity, association, or similar organization.
    (e) Council means the Financial Stability Oversight Council 
established by section 111 of the Dodd-Frank Act (12 U.S.C. 5321).
    (f) Foreign bank holding company means a foreign bank that is a 
bank holding company and any foreign company that owns such foreign 
bank.
    (g) Foreign savings and loan holding company means a foreign bank 
or foreign company that is a savings and loan holding company.
    (h) GAAP means generally accepted accounting principles, as used in 
the United States.
    (i) Grandfathered unitary savings and loan holding company means a 
savings and loan holding company described in section 10(c)(9)(C) of 
the Home Owners' Loan Act (``HOLA'') (12 U.S.C. 1467a(c)(9)(C)).
    (j) Nonbank financial company supervised by the Board means a 
company that the Council has determined pursuant to section 113 of the 
Dodd-Frank Act shall be supervised by the Board and for which such 
determination is in effect.

[[Page 52403]]

    (k) Notice of assessment means the notice in which the Board 
informs a company that it is an assessed company and states the 
assessed company's total assessable assets and the amount of its 
assessment.
    (l) Savings and loan holding company is defined as in section 10 of 
HOLA (12 U.S.C. 1467a).
    (m) Savings association is defined as in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813).


Sec.  246.3  Assessed companies.

    An assessed company is any company that:
    (a) Is a top-tier company that, on December 31 of the assessment 
period:
    (1) Is a bank holding company, other than a foreign bank holding 
company, with $50 billion or more in total consolidated assets, as 
determined based on the average of the bank holding company's total 
consolidated assets reported for the assessment period on the Federal 
Reserve's Form FR Y-9C (``FR Y-9C''),
    (2)(i) Is a savings and loan holding company, other than a foreign 
savings and loan holding company, with $50 billion or more in total 
consolidated assets, as determined, except as provided in paragraph 
(a)(2)(ii) of this section, based on the average of the savings and 
loan holding company's total consolidated assets as reported for the 
assessment period on the FR Y-9C or on the Quarterly Savings and Loan 
Holding Company Report (FR 2320), as applicable.
    (ii) If a company does not calculate its total consolidated assets 
under GAAP for any regulatory purpose (including compliance with 
applicable securities laws), the company may request that the Board 
permit the company to file a quarterly estimate of its total 
consolidated assets. The Board may, in its discretion and subject to 
Board review and adjustment, permit the company to provide estimated 
total consolidated assets on a quarterly basis. For purposes of this 
part, the company's total consolidated assets will be the average of 
the estimated total consolidated assets provided for the assessment 
period.
    (b) Is a top-tier foreign bank holding company on December 31 of 
the assessment period, with $50 billion or more in total consolidated 
assets, as determined based on the average of the foreign bank holding 
company's total consolidated assets reported for the assessment period 
on the Federal Reserve's Form FR Y-7Q (``FR Y-7Q''), provided, however, 
that if any such company has filed only one FR Y-7Q during the 
assessment period, the Board shall use an average of the foreign bank 
holding company's total consolidated assets reported on that FR Y-7Q 
and on the FR Y-7Q for the corresponding period in the year prior to 
the assessment period.
    (c) Is a top-tier foreign savings and loan holding company on 
December 31 of the assessment period, with $50 billion or more in total 
consolidated assets, as determined based on the average of the foreign 
savings and loan holding company's total consolidated assets reported 
for the assessment period on the reporting forms applicable during the 
assessment period, provided, however, that if any such company has 
filed only one reporting form during the assessment period, the Board 
shall use an average of the foreign savings and loan holding company's 
total consolidated assets reported on that reporting form and on the 
reporting form for the corresponding period in the year prior to the 
assessment period, or
    (d) Is a nonbank financial company supervised by the Board.


Sec.  246.4  Assessments.

    (a) Assessment. Each assessed company shall pay to the Board an 
assessment for any assessment period for which the Board determines the 
company to be an assessed company.
    (b)(1) Assessment formula. Except as provided in paragraph (b)(2) 
of this section, the assessment will be calculated according to the 
Assessment Formula, as follows:

----------------------------------------------------------------------------------------------------------------
        Column A                      Column B                      Column C                     Column D
----------------------------------------------------------------------------------------------------------------
Base Amount ($50,000)     +   (Total Assessable         x   Assessment Rate)          =   Assessment
                               Assets
----------------------------------------------------------------------------------------------------------------

    (2) In any assessment period, if, at the time a company becomes a 
bank holding company or savings and loan holding company, it also 
becomes an assessed company, as defined in Sec.  246.3, the Board shall 
pro-rate that company's assessment for that assessment period based on 
the number of quarters in which such company is an assessed company. 
For a nonbank financial company supervised by the Board, for the 
assessment period that the company is designated for Board supervision, 
Board shall pro-rate that company's assessment for that assessment 
period based on the number of quarters the company has been a nonbank 
financial company supervised by the Board.
    (c) Assessment rate. Assessment rate means, with regard to a given 
assessment period, the rate published by the Board on its Web site for 
the calculation of assessments for that period.
    (1) The assessment rate will be calculated according to this 
formula:
[GRAPHIC] [TIFF OMITTED] TR23AU13.003

    (2) For the calculation set forth in paragraph (c)(1) of this 
section, the number of assessed companies and the total assessable 
assets of all assessed companies will each be that of the relevant 
assessment period, provided, however, that for the assessment periods 
corresponding to 2012, 2013 and 2014, the Board shall use the number of 
assessed companies and the total assessable assets of the 2012 
assessment period to calculate the assessment rate.
    (d) Assessment basis.
    (1) For the 2012, 2013, and 2014 assessment periods, the assessment 
basis is the amount of total expenses the Board estimates is necessary 
or appropriate to carry out the supervisory and regulatory 
responsibilities of the Board with respect to assessed companies for 
2012.\1\
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    \1\ The categories of operating expenses that the Board believes 
are necessary or appropriate include but are not limited to (1) 
direct operating expenses for supervising and regulating assessed 
companies such as conducting examinations, conducting stress tests, 
communicating with the company regarding supervisory matters and 
laws and regulations, etc.; and (2) operating expenses for 
activities integral to carrying out supervisory and regulatory 
responsibilities such as training staff in the supervisory function, 
research and analysis functions including library subscription 
services, collecting and processing regulatory reports filed by 
supervised institutions, etc. All operating expenses include 
applicable support, overhead, and pension expenses.

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[[Page 52404]]

    (2) For the 2015 assessment period and for each assessment period 
thereafter, the assessment basis is the average of the amount of total 
expenses the Board estimates is necessary or appropriate to carry out 
the supervisory and regulatory responsibilities of the Board with 
respect to assessed companies for that assessment period and the two 
prior assessment periods.\2\
---------------------------------------------------------------------------

    \2\ The categories of operating expenses that the Board believes 
are necessary or appropriate include but are not limited to (1) 
direct operating expenses for supervising and regulating assessed 
companies such as conducting examinations, conducting stress tests, 
communicating with the company regarding supervisory matters and 
laws and regulations, etc.; and (2) operating expenses for 
activities integral to carrying out supervisory and regulatory 
responsibilities such as training staff in the supervisory function, 
research and analysis functions including library subscription 
services, collecting and processing regulatory reports filed by 
supervised institutions, etc. All operating expenses include 
applicable support, overhead, and pension expenses.
---------------------------------------------------------------------------

    (e) Total assessable assets. Except as provided in paragraph (f) of 
this section, total assessable assets are calculated as follows:
    (1) Bank holding companies. For any bank holding company, other 
than a foreign bank holding company, total assessable assets will be 
the average of the bank holding company's total consolidated assets as 
reported for the assessment period on the bank holding company's FR Y-
9C or such other reports as determined by the Board as applicable to 
the bank holding company,
    (2) Foreign bank holding companies and foreign savings and loan 
holding companies.
    (i) In general. For any foreign bank holding company or any foreign 
savings and loan holding company, with the exception of the 2012 and 
2013 assessment periods, total assessable assets will be the average of 
the foreign bank holding company's or foreign savings and loan holding 
company's total combined assets of its U.S. operations, net of 
intercompany balances and transactions between U.S. domiciled 
affiliates, branches and agencies, as reported for the assessment 
period on the Part 1 of the FR Y-7Q or such other reports as determined 
by the Board as applicable to the foreign bank holding company or 
foreign savings and loan holding company,
    (ii) 2012 and 2013 assessment periods. For the 2012 and 2013 
assessment periods, for any foreign bank holding company, total 
assessable assets will be the average of the sum of the line items set 
forth in this section reported quarterly, plus any line items set forth 
in this section reported annually for the assessment period on an 
applicable regulatory reporting form for the assessment period for all 
of the foreign bank holding company's majority-owned:
    (A) Top-tier, U.S.-domiciled bank holding companies and savings and 
loan holding companies, calculated as:
    (1) Total assets (line item 12) as reported on Schedule HC of the 
FR Y-9C and, as applicable;
    (2) Total assets (line item 1, column B) as reported on FR 2320;
    (B) Related branches and agencies of Foreign Banks in the United 
States, calculated as: total claims on nonrelated parties (line item 
1.i from column A on Schedule RAL) plus net due from related 
institutions in foreign countries (line items 2.a, 2.b(1), 2.b(2), and 
2.c from column A, minus line items 2.a, 2.b(1), 2.b(2) and 2.c from 
column B, part 1 on Schedule M), minus transactions with related 
nondepository majority-owned subsidiaries in the U.S. (line item 1 from 
column A, part 3 on Schedule M), as reported on the Report of Assets 
and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 
002);
    (C) U.S.-domiciled nonbank subsidiaries, calculated as:
    (1) For FR Y-7N filers: total assets (line item 10) as reported for 
each nonbank subsidiary reported on Schedule BS--Balance Sheet of the 
Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign 
Banking Organizations (FR Y-7N); minus balances due from related 
institutions located in the United States, gross (line item 4.a), as 
reported on Schedule BS-M--Memoranda, and, as applicable;
    (2) For FR Y-7NS (annual) filers: total assets (line item 2) as 
reported for each nonbank subsidiary reported on abbreviated financial 
statements (page 3) of the Abbreviated Financial Statements of U.S. 
Nonbank Subsidiaries Held by Foreign Banking Organizations (FR Y-7NS);
    (D) Edge Act and agreement corporations that are not reflected in 
the assets of a U.S.-domiciled parent's regulatory reporting form 
submission, calculated as claims on nonrelated organizations (line item 
9, ``consolidated total'' column on Schedule RC of the Consolidated 
Report of Condition and Income for Edge and Agreement Corporations (FR 
2886b)), plus claims on related organizations domiciled outside the 
United States (line items 2.a and 2.b, column A on Schedule RC-M), as 
reported on FR 2886b;
    (E) Banks and savings associations that are not reflected in the 
assets of a U.S.-domiciled parent's regulatory reporting form 
submission, calculated as: total assets (line item 12) as reported on 
Schedule RC--Balance Sheet of the Consolidated Reports of Condition and 
Income for a Bank with Domestic and Foreign Offices (FFIEC 031), or 
total assets (line item 12) as reported on Schedule RC--Balance Sheet 
of the Consolidated Reports of Condition and Income for a Bank with 
Domestic Offices Only (FFIEC 041), as applicable; and
    (F) Broker-dealers that are not reflected in the assets of a U.S.-
domiciled parent's regulatory reporting form submission, calculated as: 
total assets as reported on statement of financial condition of the 
Securities and Exchange Commission's Form X-17A-5 (FOCUS REPORT), Part 
II line item 16, Part IIa, line item 12, or Part II CSE, line item 18, 
as applicable.
    (3)(i) Savings and loan holding companies. For any savings and loan 
holding company, other than a foreign savings and loan holding company, 
total assessable assets will be, except as provided in paragraph 
(e)(3)(ii) of this section, the average of the savings and loan holding 
company's total consolidated assets as reported for the assessment 
period on the regulatory reports on the savings and loan holding 
company's Form FR Y-9C, column B of the Quarterly Savings and Loan 
Holding Company Report (FR 2320), or other reports as determined by the 
Board as applicable to the savings and loan holding company. If the 
savings and loan holding company is a grandfathered unitary savings and 
loan holding company, total assessable assets will only include the 
assets associated with its savings association subsidiary and its other 
financial activities.
    (ii) If a company does not calculate its total consolidated assets 
under GAAP for any regulatory purpose (including compliance with 
applicable securities laws), the company may request that the Board 
permit the company to file a quarterly estimate of its total 
consolidated assets. The Board may, in its discretion and subject to 
Board review and adjustment, permit the company to provide estimated 
total consolidated assets on a quarterly basis. The company's total 
assessable assets will be the average of the estimated total 
consolidated assets provided for the assessment period.
    (4) Nonbank financial companies supervised by the Board. For a 
nonbank

[[Page 52405]]

financial company supervised by the Board, if the company is a U.S. 
company, this amount will be the average of the nonbank financial 
company's total consolidated assets as reported for the assessment 
period on such regulatory or other reports as are applicable to the 
nonbank financial company determined by the Board; if the company is a 
foreign company, this amount will be the average of the nonbank 
financial company's total combined assets of U.S. operations, net of 
intercompany balances and transactions between U.S. domiciled 
affiliates, branches and agencies, as reported for the assessment 
period on such regulatory or other reports as determined by the Board 
as applicable to the nonbank financial company.


Sec.  246.5  Notice of assessment and appeal.

    (a) Notice of Assessment. The Board shall issue a notice of 
assessment to each assessed company no later than June 30 of each 
calendar year following the assessment period, provided, however, that 
for the 2012 assessment period, the Board shall issue a notice of 
assessment as soon as reasonably practical after publication of the 
final rule in the Federal Register.
    (b) Appeal Period.
    (1) Each assessed company will have thirty calendar days from June 
30, or, for the 2012 assessment period, thirty calendar days from the 
Board's issuance of a notice of assessment for that assessment period, 
to submit a written statement to appeal the Board's determination:
    (i) That the company is an assessed company; or
    (ii) Of the company's total assessable assets.
    (2) The Board will respond with the results of its consideration to 
an assessed company that has submitted a written appeal within 15 
calendar days from the end of the appeal period in paragraph (b)(1) of 
this section.


Sec.  246.6  Collection of assessments; payment of interest.

    (a) Collection date. Each assessed company shall remit to the 
Federal Reserve the amount of its assessment using the Fedwire Funds 
Service by September 15 of the calendar year following the assessment 
period, or, for the 2012 assessment period, by a date specified in the 
notice of assessment for that assessment period.
    (b) Payment of interest.
    (1) If the Board does not receive the total amount of an assessed 
company's assessment by the collection date for any reason not 
attributable to the Board, the assessment will be delinquent and the 
assessed company shall pay to the Board interest on any sum owed to the 
Board according to this rule (delinquent payments).
    (2) Interest on delinquent payments will be assessed beginning on 
the first calendar day after the collection date, and on each calendar 
day thereafter up to and including the day payment is received. 
Interest will be simple interest, calculated for each day payment is 
delinquent by multiplying the daily equivalent of the applicable 
interest rate by the amount delinquent. The rate of interest will be 
the United States Treasury Department's current value of funds rate 
(the ``CVFR percentage''); issued under the Treasury Fiscal 
Requirements Manual and published quarterly in the Federal Register. 
Each delinquent payment will be charged interest based on the CVFR 
percentage applicable to the quarter in which all or part of the 
assessment goes unpaid.

    By order of the Board of Governors of the Federal Reserve 
System, August 15, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013-20306 Filed 8-22-13; 8:45 am]
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