[Federal Register Volume 80, Number 176 (Friday, September 11, 2015)]
[Notices]
[Pages 54790-54793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22931]


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FEDERAL RESERVE SYSTEM


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

AGENCY: Board of Governors of the Federal Reserve System.

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

FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance 
Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of 
Governors of the Federal Reserve System, Washington, DC 20551 (202) 
452-3829. Telecommunications Device for the Deaf (TDD) users may 
contact (202) 263-4869, Board of Governors of the Federal Reserve 
System, Washington, DC 20551.
    OMB Desk Officer--Shagufta Ahmed--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, 725 17th Street NW., Washington, DC 20503.

SUPPLEMENTARY INFORMATION: 
    Final approval under OMB delegated authority of the extension for 
three years, without revision, of the following reports:
    1. Report title: Notice of Mutual Holding Company Reorganization 
and the Application for Approval of a Minority Stock Issuance by a 
Savings Association Subsidiary of a Mutual Holding Company.
    Agency form number: Form 1522; Form 1523.
    OMB control number: 7100-0340.
    Frequency: On occasion.
    Reporters: Mutual savings associations and savings association 
subsidiaries or subsidiary holding companies of a mutual holding 
company.
    Estimated annual reporting hours: Form 1522: 400 hours; Form 1523: 
1,050 hours.
    Estimated average hours per response: Form 1522: 400 hours; Form 
1523: 350 hours.
    Number of respondents: Form 1522: 1; Form 1523: 3.
    General description of report: Forms 1522 and 1523 are mandatory 
and authorized pursuant to section 10 of the Home Owners' Loan Act 
(HOLA). Section 10 of HOLA (``Regulations of holding companies'') 
provides generally that ``[t]he Board is authorized to issue such 
regulations . . . as the Board deems necessary or appropriate to enable 
the Board to administer and carry out the purposes of this section, and 
to require compliance therewith and prevent evasions thereof.'' (12 
U.S.C. 1467a(g)(1)). With respect to mutual holding companies, HOLA 
states that a mutual holding company ``shall be subject to such 
regulations as the Board may prescribe.'' (12 U.S.C. 1467a(o)(7)). 
Section 10 of HOLA also requires a savings and loan holding company to 
file ``such reports as may be required by the Board'' and provides that 
such reports ``shall contain such information concerning the operations 
of such savings and loan holding company and its subsidiaries as the 
Board may require.'' (12 U.S.C. 1467a(b)(2)).
    The information on Forms 1522 and 1523 generally are not considered 
confidential. However, the notificant or applicant may request 
confidential treatment for portions of these forms pursuant to 
exemption 4 of the Freedom of Information Act, (5 U.S.C. 552(b)(4)) if 
it believes disclosure of those portions would likely result in 
substantial competitive harm. All such requests for confidential 
treatment would need to be reviewed on a case-by-case basis and in 
response to a specific request for disclosure.
    Abstract: Any mutual savings association that wishes to reorganize 
to form a mutual holding company must submit a notice (Form 1522) to 
the Federal Reserve. The notice provides details of the reorganization 
plan, which is to be approved by the majority of the association's 
board of directors and any acquired association. Details of the 
reorganization plan should contain a complete description of all 
significant terms of the proposed reorganization, shall attach and 
incorporate any Stock Issuance Plan proposed in connection with the 
reorganization plan, and comply with other informational requirements 
specified in (12 CFR 239.6).
    Any savings association subsidiary or subsidiary holding company of 
a mutual holding company must file an application (Form 1523) for 
minority stock issuance. Minority stock issuances applications are 
required to provide the Federal Reserve with information to determine 
whether mutual holding companies and their subsidiaries are conducting 
insider abuse or unsafe and unsound practices.
    The Federal Reserve intends to update and revise the Notice and 
Application to conform to Federal Reserve standards in the near future.
    Current Actions: On June 17, 2015, the Federal Reserve published a 
notice in the Federal Register (80 FR 34641) requesting public comment 
for 60 days on the extension, without revision, of the Notice of Mutual 
Holding Company Reorganization and the Application for Approval of a 
Minority Stock Issuance by a Savings Association Subsidiary of a Mutual 
Holding Company. The comment period for this notice expired on August 
17, 2015. The Federal Reserve did not receive any comments. The 
information collection will be extended as proposed.
    2. Report title: Application for Conversion, Proxy Statement, 
Offering Circular, and Order Form.
    Agency form number: Form 1680, Form 1681, Form 1682, Form 1683.
    OMB control number: 7100-0335.
    Frequency: On occasion.
    Reporters: Mutual holding companies.
    Estimated annual reporting hours: Form 1680: 2,990 hours; Form 
1681: 50 hours; Form 1682: 1.50 hours; Form 1683: 10 hours.
    Estimated average hours per response: Form 1680: 299 hours; Form 
1681: 500 hours; Form 1682: 150 hours; Form 1683: 1 hour.
    Number of respondents: Form 1680: 10; Form 1681: 10; Form 1682: 10; 
Form 1683: 10.
    General description of report: The mutual stock conversion forms 
are mandatory and authorized by Home Owners' Loan Act (HOLA) section 
10, which provides generally that ``the Board is authorized to issue 
such regulations . . . as the Board deems necessary or appropriate to 
enable the Board to administer and carry out the

[[Page 54791]]

purposes of this section, and to require compliance therewith and 
prevent evasions thereof.'' (12 U.S.C. 1467a(g)(1)). With respect to 
mutual holding companies, HOLA states that a mutual holding company 
``shall be subject to such regulations as the Board may prescribe.'' 
(12 U.S.C. 1467a(o)(7)). Section 10 of HOLA also requires a savings and 
loan holding company to file ``such reports as may be required by the 
Board'' and provides that such reports ``shall contain such information 
concerning the operations of such savings and loan holding company and 
its subsidiaries as the Board may require.'' (12 U.S.C. 1467a(b)(2).
    Forms 1681, 1682, and 1683 are distributed to the owners of the 
mutual holding company; no issues of confidentiality should arise in 
connection with these forms. One of the elements required for the 
application on Form 1680 is a consolidated business plan showing how 
the capital acquired in the conversion will be used. Business plans are 
not considered confidential, although the applicant may request 
confidential treatment pursuant to sections (b)(4), of the Freedom of 
Information Act (5 U.S.C. 552(b)(4),) for portions of the business plan 
if disclosure would likely result in substantial competitive harm. All 
such requests for confidential treatment would need to be reviewed on a 
case-by-case basis and in response to a specific request for 
disclosure.
    Abstract: Sections 5(i) (standard conversions) and 5(p) 
(supervisory conversions) of HOLA authorize mutual to stock 
conversions. The four individual forms are all one-time submissions 
that are used by mutual holding companies requesting approval to 
convert to a stock institution. The Federal Reserve intends to update 
and revise the mutual stock conversion application forms to conform to 
Federal Reserve standards in the near future.
    Current Actions: On June 17, 2015, the Federal Reserve published a 
notice in the Federal Register (80 FR 34641) requesting public comment 
for 60 days on the extension, without revision, of the Application for 
Conversion, Proxy Statement, Offering Circular, and Order Form. The 
comment period for this notice expired on August 17, 2015. The Federal 
Reserve did not receive any comments. The information collection will 
be extended as proposed.
    3. Report title: Savings and Loan Holding Company Application.
    Agency form number: Form H-(e).
    OMB control number: 7100-0336.
    Frequency: On occasion.
    Reporters: Entities seeking prior approval to become a savings and 
loan holding company (SLHC).
    Estimated annual reporting hours: 6,000 hours.
    Estimated average hours per response: 500 hours.
    Number of respondents: 12.
    General description of report: The Savings and Loan Holding Company 
Application is mandatory and authorized pursuant to section 10 of HOLA, 
which provides that ``the Board is authorized to issue such regulations 
. . . as the Board deems necessary or appropriate to enable the Board 
to administer and carry out the purposes of this sections, and require 
compliance therewith and prevent evasions thereof.'' (12 U.S.C. 
1467a(g)(1)). Section 10 of HOLA also requires a savings and loan 
holding company to file ``such reports as may be required by the 
Board'' and provides that such reports ``shall contain such information 
concerning the operations of such savings and loan holding company and 
its subsidiaries as the Board may require (12 U.S.C. 1467a(b)(2).
    The information on Form H-(e) is not considered confidential unless 
the applicant requests confidential treatment pursuant to exemption 4 
or 6 of the Freedom of Information Act (5 U.S.C. 552(b)(4),(6)). All 
such requests for confidential treatment would need to be reviewed on a 
case-by-case basis and in response to a specific request for 
disclosure.
    Abstract: The Federal Reserve analyzes each holding company 
application to determine whether the applicant meets the statutory 
criteria set forth in section 10(e) of the Home Owners' Loan Act (Act), 
as amended, to become a savings and loan holding company. The 
applications are reviewed for adequacy of answers to items and 
completeness in all material respects. The applications are event-
generated and provide the Federal Reserve with information necessary to 
evaluate the proposed transaction. The Federal Reserve intends to 
update and revise the Application forms to conform to Federal Reserve 
standards in the near future.
    Current Actions: On June 17, 2015, the Federal Reserve published a 
notice in the Federal Register (80 FR 34641) requesting public comment 
for 60 days on the extension, without revision, of the Savings and Loan 
Holding Company Application. The comment period for this notice expired 
on August 17, 2015. The Federal Reserve did not receive any comments. 
The information collection will be extended as proposed.
    4. Report title: Recordkeeping Requirements Associated with the 
Guidance on Sound Incentive Compensation Policies.
    Agency form number: FR 4027.
    OMB control number: 7100-0327.
    Frequency: On occasion.
    Reporters: State member banks, U.S. bank holding companies, savings 
and loan holding companies, Edge Act and agreement corporations, and 
the U.S. operations of foreign banks with a branch, agency, or 
commercial lending company in the United States.
    Estimated annual reporting hours: One-time implementation: Large 
institutions: 2,400 hours and small institutions: 400 hours; Ongoing 
maintenance: 228,400 hours.
    Estimated average hours per response: One-time implementation: 
Large institutions: 480 hours and small institutions: 80 hours; Ongoing 
maintenance: 40 hours.
    Number of respondents: One-time implementation: Large institutions: 
5 respondents and small institutions: 5 respondents; Ongoing 
maintenance: 5,710 respondents.
    General description of report: This information collection is 
authorized pursuant to sections 9, 11(a), 11(i), 25, and 25A of the 
Federal Reserve Act (12 U.S.C. 248(a), 248(i), 324, 602, and 625), 
section 5 of the Bank Holding Company Act (12 U.S.C. 1844), section 
10(b)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2)), and 
section 7(c) of the International Banking Act (12 U.S.C. 3105(c)). 
Because the recordkeeping requirements are contained within guidance 
(and not a statute or regulation) they are voluntary. Because the 
records will be maintained by each banking institution, the Freedom of 
Information Act (FOIA) would only be implicated if the Board's 
examiners retained a copy of the records as part of an examination or 
supervision of the banking institution. To the extent the Board 
collects this information during the course of an examination or 
supervision of a banking institution, the information is considered 
confidential under exemption 8 of the FOIA (5 U.S.C. 552(b)(8)). In 
addition, the information may also be kept confidential under exemption 
4 of the FOIA which protects commercial or financial information 
obtained from a person that is privileged or confidential (5 U.S.C. 
552(b)(4)).
    Abstract: Incentive compensation practices in the financial 
services industry were one of many factors contributing to the 
financial crisis that began in 2007. Banking organizations too often 
rewarded employees for increasing the firm's short-term revenue or 
profit without adequate recognition of the risks the employees' 
activities

[[Page 54792]]

posed for the firm. More importantly, problematic compensation 
practices were not limited to the most senior executives at financial 
firms. Compensation practices can encourage employees at various levels 
of a banking organization, either individually or as a group, to 
undertake imprudent risks that can significantly and adversely affect 
the risk profile of the firm.
    The Sound Incentive Compensation Policies (the Guidance) was 
developed to help protect the safety and soundness of banking 
organizations and promote the prompt improvement of incentive 
compensation practices throughout the banking industry. In addition, 
the guidance is consistent with the Principles for Sound Compensation 
Practices adopted by the Financial Stability Board (FSB) in April 2009, 
as well as the Implementation Standards for those principles issued by 
the FSB in September 2009.

Compatibility With Effective Controls and Risk Management

    Principle 2 of the Guidance states that a banking organization 
should have strong controls governing its process for designing, 
implementing, and monitoring incentive compensation arrangements. An 
organization's policies and procedures should:
     Identify and describe the role(s) of the personnel, 
business units, and control units authorized to be involved in the 
design, implementation, and monitoring of incentive compensation 
arrangements;
     identify the source of significant risk-related inputs 
into these processes and establish appropriate controls governing the 
development and approval of these inputs to help ensure their 
integrity; and
     identify the individual(s) and control unit(s) whose 
approval is necessary for the establishment of new incentive 
compensation arrangements or modification of existing arrangements. 
Banking organizations also should create and maintain sufficient 
documentation to permit an audit of the organization's processes for 
establishing, modifying, and monitoring incentive compensation 
arrangements.
    The Guidance also states that a banking organization should conduct 
regular internal reviews to ensure that its processes for achieving and 
maintaining balanced incentive compensation arrangements are 
consistently followed. Such reviews should be conducted by audit, 
compliance, or other personnel in a manner consistent with the 
organization's overall framework for compliance monitoring. An 
organization's internal audit department also should separately conduct 
regular audits of the organization's compliance with its established 
policies and controls relating to incentive compensation arrangements. 
The results should be reported to appropriate levels of management and, 
where appropriate, the organization's board of directors.

Strong Corporate Governance

    Principle 3 of the Guidance states that the board of directors 
should review and approve the overall goals and purposes of the firm's 
incentive compensation system. The board of directors should provide 
clear direction to management to ensure that its policies and 
procedures are carried out in a manner that achieves balance and is 
consistent with safety and soundness.
    The board of directors should approve and document any material 
exceptions or adjustments to the incentive compensation arrangements 
established for senior executives and should carefully consider and 
monitor the effects of any approved exceptions or adjustments on the 
balance of the arrangement, the risk-taking incentives of the senior 
executive, and the safety and soundness of the organization.
    The board of directors should receive and review, on an annual or 
more frequent basis, an assessment by management, with appropriate 
input from risk management personnel, of the effectiveness of the 
design and operation of the organization's incentive compensation 
system in providing risk taking incentives that are consistent with the 
organization's safety and soundness. These reports should include an 
evaluation of whether or how incentive compensation practices may be 
encouraging excessive risk taking. These reviews and reports should be 
appropriately scoped to reflect the size and complexity of the banking 
organization's activities and the prevalence and scope of its incentive 
compensation arrangements. In addition, at banking organizations that 
are significant users of incentive compensation arrangements, the board 
should receive periodic reports that review incentive compensation 
awards and payments relative to risk outcomes on a backward-looking 
basis to determine whether the organization's incentive compensation 
arrangements may be promoting excessive risk-taking.
    Current Actions: On June 23, 2015, the Federal Reserve published a 
notice in the Federal Register (80 FR 35953) requesting comment for 60 
days on the Recordkeeping Requirements Associated with the Guidance on 
Sound Incentive Compensation Policies. The comment period for this 
notice expired on August 24, 2015. The Federal Reserve did not receive 
any comments. The information collection will be extended as proposed.
    5. Report title: Interagency Guidance on Managing Compliance and 
Reputation Risks for Reverse Mortgage Products.
    Agency form number: FR 4029.
    OMB control number: 7100-0330.
    Frequency: On occasion.
    Reporters: State member banks that originate proprietary and Home 
Equity Conversion Program (HECM) reverse mortgages.
    Estimated annual reporting hours: Implementation of policies and 
procedures, 680 hours; Review and maintenance of policies and 
procedures, 136 hours.
    Estimated average hours per response: Implementation of policies 
and procedures, 40 hours; Review and maintenance of policies and 
procedures, 8 hours.
    Number of respondents: Implementation of policies and procedures, 
17 respondents; Review and maintenance of policies and procedures, 17 
respondents.
    General description of report: Previously, the Board's Legal 
Division determined that the Board was authorized to issue this 
guidance pursuant to its authority under section 18(f) of the Federal 
Trade Commission Act, which authorized the Board to prescribe 
regulations regarding unfair or deceptive acts or practice by banks (15 
U.S.C. 57a(f)) and section 105 of the Truth in Lending Act, which 
authorized the Board to prescribe regulations to carry out the purposes 
of the Truth in Lending Act (TILA) (15 U.S.C. 1604). However, under the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 
Act) much of the Board's authority under these laws was transferred to 
the Consumer Financial Protection Bureau. Nonetheless, we continue to 
believe that the Board has the authority to issue this guidance 
pursuant to its authority under section 39 of the Federal Deposit 
Insurance Act (FDI Act), which generally authorizes the Board to 
establish safety and soundness standards for depository institutions 
supervised by the Board (12 U.S.C. 1381p-1(a)). Financial institutions' 
obligation under this guidance is voluntary. Because the documentation 
required by the guidance is maintained by each institution, the Freedom 
of Information Act (FOIA) would only be implicated if the Board's 
examiners retained a copy of this information as part of an examination 
or supervision of a bank. However, records

[[Page 54793]]

obtained as a part of an examination or supervision of a bank are 
exempt from disclosure under FOIA exemption (b)(8), for examination 
material (5 U.S.C. 552(b)(8)). In addition, the information may also be 
kept confidential under exemption 4 of the FOIA which protects 
commercial or financial information obtained from a person that is 
privileged or confidential (5 U.S.C. 552(b)(4)).
    Abstract: Reverse mortgages are home-secured loans typically 
offered to elderly consumers. Financial institutions currently provide 
two types of reverse mortgage products: the lenders' own proprietary 
reverse mortgage products and reverse mortgages insured by the 
Department of Housing and Urban Development's Federal Housing 
Administration (FHA). Reverse mortgage loans insured by the FHA are 
made pursuant to the guidelines and rules established by HUD's HECM 
program. HECM loans and proprietary reverse mortgages are also subject 
to the rules that implement consumer protection laws such as the Real 
Estate Settlement Procedures Act (RESPA) and TILA.
    In August 2010, the Federal Financial Institutions Examination 
Council, on behalf of its member agencies,\1\ published a Federal 
Register notice adopting supervisory guidance titled ``Reverse Mortgage 
Products: Guidance for Managing Compliance and Reputation Risks.'' \2\ 
The guidance is designed to help financial institutions with risk 
management and assist financial institutions' efforts to ensure that 
their reverse mortgage lending practices adequately address consumer 
compliance and reputation risks.
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    \1\ The Board, the Federal Deposit Insurance Corporation, the 
National Credit Union Administration, the Office of the Comptroller 
of the Currency, and the Office of Thrift Supervision.
    \2\ 75 FR 50801.
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    The guidance describes reporting, recordkeeping, and disclosures 
for both proprietary and HECM reverse mortgages. A number of these 
disclosures are ``usual and customary'' business practices for 
proprietary and HECM reverse mortgages, and these would not meet the 
PRA's definition of ``paperwork.'' Other included disclosure 
requirements are currently mandated by RESPA or TILA for all reverse 
mortgage loans and information collections required by HUD's rules for 
HECM loans.\3\ Discussion of these requirements in the guidance is also 
not considered additional paperwork burden imposed by the guidance.
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    \3\ OMB Control No. 2502-0524.
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    Proprietary reverse mortgage products, however, are not subject to 
HUD's rules for HECM loans. To the extent that the interagency guidance 
applies HECM requirements to proprietary loans, this would meet the 
PRA's definition of paperwork burden.
    There are also additional provisions in the guidance that apply to 
both proprietary and HECM reverse mortgages that do not meet the 
``usual and customary'' standard, are not covered by already approved 
information collections and, therefore, likewise meet the PRA's 
definition of paperwork burden.

Proprietary Reverse Mortgages

    Financial institutions offering proprietary reverse mortgages are 
encouraged under the guidance to follow or adopt relevant HECM 
requirements for mandatory counseling, disclosures, affordable 
origination fees, restrictions on cross-selling of ancillary products, 
and reliable appraisals.

Proprietary and HECM Reverse Mortgages

    Financial institutions offering either proprietary or HECM reverse 
mortgages are encouraged to develop clear and balanced product 
descriptions and make them available to consumers shopping for a 
mortgage. They should set forth a description of how disbursements can 
be received and include timely information to supplement disclosures 
mandated by TILA and other disclosures. Promotional materials and 
product descriptions should include information about the costs, terms, 
features, and risks of reverse mortgage products.
    Financial institutions should adopt policies and procedures that 
prohibit directing a consumer to a particular counseling agency or 
contacting a counselor on the consumer's behalf. They should adopt 
clear written policies and establish internal controls specifying that 
neither the lender nor any broker will require the borrower to purchase 
any other product from the lender in order to obtain the mortgage. 
Policies should be clear so that originators do not have an 
inappropriate incentive to sell other products that appear linked to 
the granting of a mortgage. Legal and compliance reviews should include 
oversight of compensation programs so that lending personnel are not 
improperly encouraged to direct consumers to particular products.
    Financial institutions making, purchasing, or servicing reverse 
mortgages through a third party should conduct due diligence and 
establish criteria for third-party relationships and compensation. They 
should set requirements for agreements and establish systems to monitor 
compliance with the agreement and applicable laws and regulations. They 
should also take corrective action if a third party fails to comply. 
Third-party relationships should be structured in a way that does not 
conflict with RESPA.
    Current Actions: On June 23, 2015, the Federal Reserve published a 
notice in the Federal Register (80 FR 35953) requesting comment for 60 
days on the Supervisory Guidance on Managing Compliance and Reputation 
Risks for Reverse Mortgage Products. The comment period for this notice 
expired on August 24, 2015. The Federal Reserve did not receive any 
comments. The information collection will be extended as proposed.

    Board of Governors of the Federal Reserve System, September 8, 
2015.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2015-22931 Filed 9-10-15; 8:45 am]
BILLING CODE 6210-01-P