[Federal Register Volume 85, Number 197 (Friday, October 9, 2020)]
[Rules and Regulations]
[Pages 64003-64009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19922]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 3

[Docket ID OCC-2020-0017]
RIN 1557-AE89

FEDERAL RESERVE SYSTEM

12 CFR Part 217

[Regulation Q; Docket No. R-1711]
RIN 7100-AF85

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 324

RIN 3064-AF47


Regulatory Capital Rule: Temporary Changes to and Transition for 
the Community Bank Leverage Ratio Framework

AGENCY: The Office of the Comptroller of the Currency, Treasury; the 
Board of Governors of the Federal Reserve System; and the Federal 
Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, and the Federal Deposit 
Insurance Corporation are adopting as final the revisions to the 
community bank leverage ratio framework made under two interim final 
rules issued in the Federal Register on April 23, 2020. The final rule 
adopts these interim final rules with no changes. Under the final rule, 
the community bank leverage ratio will remain 8 percent through 
calendar year 2020, will be 8.5 percent through calendar year 2021, and 
will be 9 percent thereafter. The final rule also maintains a two-
quarter grace period for a qualifying community banking organization 
whose leverage ratio falls no more than 1 percentage point below the 
applicable community bank leverage ratio requirement.

DATES: The final rule is effective November 9, 2020.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Benjamin Pegg, Risk Expert, or Jung Sup Kim, Risk Specialist, 
Capital and Regulatory Policy, (202) 649-6370; Carl Kaminski, Special 
Counsel, or Daniel Perez, Senior Attorney, Chief Counsel's Office, 
(202) 649-5490, for persons who are deaf or hearing impaired, TTY, 
(202) 649-5597, Office of the Comptroller of the Currency, 400 7th 
Street SW, Washington, DC 20219.
    Board: Constance M. Horsley, Deputy Associate Director, (202) 452-
5239; Elizabeth MacDonald, Manager, (202) 872-7526; Christopher Appel, 
Senior Financial Institution Policy Analyst II, (202) 973-6862; or 
Brendan Rowan, Senior Financial Institution Policy Analyst I, (202) 
475-6685, Division of Supervision and Regulation; or Benjamin W. 
McDonough, Assistant General Counsel, (202) 452-2036; Mark Buresh, 
Senior Counsel, (202) 452-2877; Andrew Hartlage, Counsel, (202) 452-
6483; or Jonah Kind, Senior Attorney, (202) 452-2045, Legal Division, 
Board of Governors of the Federal Reserve System, 20th Street and 
Constitution Avenue NW, Washington, DC 20551. Users of 
Telecommunication Device for the Deaf (TDD) only, call (202) 263-4869.
    FDIC: Bobby R. Bean, Associate Director, [email protected]; Benedetto 
Bosco, Chief, Capital Policy Section, [email protected]; Noah Cuttler, 
Senior Policy Analyst, [email protected]; [email protected]; 
Capital Markets Branch, Division of Risk Management Supervision, (202) 
898-6888; or Michael Phillips, Counsel, [email protected]; Catherine 
Wood, Counsel, [email protected]; Supervision and Legislation Branch, 
Legal Division, Federal Deposit Insurance Corporation, 550 17th Street 
NW, Washington, DC 20429. For the hearing impaired only, 
Telecommunication Device for the Deaf (TDD), (800) 925-4618.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background on the Community Bank Leverage Ratio Framework
II. Interim Final Rules
III. Final Rule
IV. Impact Analysis
V. Administrative Law Matters
    A. Congressional Review Act
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Riegle Community Development and Regulatory Improvement Act 
of 1994
    E. Use of Plain Language
    F. Unfunded Mandates Act

I. Background on the Community Bank Leverage Ratio Framework

    The community bank leverage ratio framework provides a simple 
measure of capital adequacy for community banking organizations that 
meet certain qualifying criteria. The community bank leverage ratio 
framework implements section 201 of the Economic Growth, Regulatory 
Relief, and Consumer Protection Act (EGRRCPA), which requires the 
Office of the Comptroller of the Currency (OCC), the Board of

[[Page 64004]]

Governors of the Federal Reserve System (Board), and the Federal 
Deposit Insurance Corporation (FDIC) (collectively, the agencies) to 
establish a community bank leverage ratio of not less than 8 percent 
and not more than 10 percent for a qualifying community banking 
organization.\1\ Under section 201(c) of EGRRCPA, a qualifying 
community banking organization whose leverage ratio exceeds the 
community bank leverage ratio, as established by the agencies, shall be 
considered to have met the generally applicable risk-based and leverage 
capital requirements in the capital rule (generally applicable rule), 
any other applicable capital or leverage requirements, and, if 
applicable, the ``well capitalized'' capital ratio requirements for 
purposes of section 38 of the Federal Deposit Insurance Act. Section 
201(b) of EGRRCPA also requires the agencies to establish procedures 
for the treatment of a qualifying community banking organization whose 
leverage ratio falls below the community bank leverage ratio 
requirement as established by the agencies.
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    \1\ Public Law 115-174, 132 Stat. 1296, 1306-07 (2018) (codified 
at 12 U.S.C. 5371 note). The authorizing statutes use the term 
``qualifying community bank,'' whereas the regulation implementing 
the statutes uses the term ``qualifying community banking 
organization.'' The terms generally have the same meaning. Section 
201(a)(3) of EGRRCPA provides that a qualifying community bank is a 
depository institution or depository institution holding company 
with total consolidated assets of less than $10 billion that 
satisfies such other factors, based on the banking organization's 
risk profile, that the agencies determine are appropriate. This 
determination shall be based on consideration of off-balance sheet 
exposures, trading assets and liabilities, total notional 
derivatives exposures, and any such factors that the agencies 
determine appropriate.
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    In November 2019, the agencies issued a final rule establishing the 
community bank leverage ratio framework, which became effective January 
1, 2020 (2019 final rule).\2\ Under the 2019 final rule, the agencies 
established a community bank leverage ratio of 9 percent using the 
existing leverage ratio calculation. A qualifying community banking 
organization that maintained a leverage ratio of greater than 9 percent 
and elected to use the community bank leverage ratio framework would 
have been considered to have satisfied the generally applicable rule, 
any other applicable capital or leverage requirements, and, if 
applicable, the capital ratio requirements to be considered well 
capitalized.\3\
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    \2\ 84 FR 61776 (November 13, 2019).
    \3\ Under existing prompt corrective action requirements 
applicable to insured depository institutions, to be considered 
``well capitalized'' a banking organization must demonstrate that it 
is not subject to any written agreement, order, capital directive, 
or as applicable, prompt corrective action directive, to meet and 
maintain a specific capital level for any capital measure. See 12 
CFR 6.4(b)(1)(iv) (OCC); 12 CFR 208.43(b)(1)(v) (Board); 12 CFR 
324.403(b)(1)(v) (FDIC). The same legal requirements continue to 
apply under the community bank leverage ratio framework.
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    Under the 2019 final rule, a qualifying community banking 
organization is any depository institution or depository institution 
holding company that has less than $10 billion in total consolidated 
assets, off-balance sheet exposures (excluding derivatives other than 
sold credit derivatives and unconditionally cancelable commitments) of 
25 percent or less of total consolidated assets, and trading assets and 
liabilities of 5 percent or less of total consolidated assets. The 
banking organization also cannot be an advanced approaches banking 
organization.\4\
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    \4\ A banking organization is an advanced approaches banking 
organization if it is a global systemically important bank holding 
company, is a Category II banking organization, has elected to be an 
advanced approaches banking organization, is a subsidiary of a 
company that is an advanced approaches banking organization, or has 
a subsidiary depository institution that is an advanced approaches 
banking organization. See 12 CFR 3.100 (OCC); 12 CFR 217.100 
(Board); 12 CFR 324.100 (FDIC).
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    In addition, the 2019 final rule established a two-quarter grace 
period during which a qualifying community banking organization that 
temporarily failed to meet any of the qualifying criteria, including 
the leverage ratio requirement, generally would still have been 
considered well capitalized so long as the banking organization 
maintained a leverage ratio of greater than 8 percent during that grace 
period. A banking organization that either failed to meet all the 
qualifying criteria within the grace period or failed to maintain a 
leverage ratio of greater than 8 percent would have been required to 
comply with the generally applicable rule and file the appropriate 
regulatory reports.

II. Interim Final Rules

    On March 27, 2020, the Coronavirus Aid, Relief, and Economic 
Security Act (CARES Act) became law.\5\ Section 4012 of the CARES Act 
directs the agencies to issue an interim final rule providing that, for 
purposes of section 201 of EGRRCPA, the community bank leverage ratio 
shall be 8 percent, and a qualifying community banking organization 
whose leverage ratio falls below the community bank leverage ratio 
requirement established under the CARES Act shall have a reasonable 
grace period to satisfy that requirement. Section 4012 of the CARES Act 
specifies that the interim final rule is effective during the period 
beginning on the date on which the agencies issue the interim final 
rule and ending on the sooner of the termination date of the national 
emergency concerning the coronavirus disease (COVID-19) outbreak 
declared by the President on March 13, 2020, under the National 
Emergencies Act, or December 31, 2020 (termination date).
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    \5\ Public Law 116-136, 134 Stat. 281.
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    Accordingly, the agencies issued an interim final rule that 
implements a temporary 8-percent community bank leverage ratio 
requirement, as mandated under section 4012 of the CARES Act (statutory 
interim final rule).\6\ In addition, under the statutory interim final 
rule, a community banking organization that temporarily fails to meet 
any of the qualifying criteria, including the 8-percent community bank 
leverage ratio requirement, generally will still be considered well 
capitalized provided that the banking organization maintains a leverage 
ratio equal to 7 percent or greater. A banking organization that fails 
to meet the qualifying criteria after the end of the grace period or 
reports a leverage ratio of less than 7 percent must comply with the 
generally applicable rule and file the appropriate regulatory reports.
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    \6\ 85 FR 22924 (April 23, 2020).
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    Since the statutory interim final rule could cease to be effective 
at any time before December 31, 2020, the agencies issued a separate 
interim final rule pursuant to section 201(b) of EGRRCPA that provides 
a graduated transition from the temporary 8-percent community bank 
leverage ratio requirement to the 9-percent community bank leverage 
ratio requirement as established under the 2019 final rule (transition 
interim final rule).\7\ Specifically, the transition interim final rule 
provides that, once the statutory interim final rule ceases to apply, 
the community bank leverage ratio will be 8 percent in the second 
quarter through fourth quarter of calendar year 2020, 8.5 percent in 
calendar year 2021, and 9 percent thereafter. The transition interim 
final rule also modifies the two-quarter grace period for a qualifying 
community banking organization to account for the graduated increase in 
the community bank leverage ratio requirement. The interim final rules 
do not make any changes to the other qualifying criteria in the 
community bank leverage ratio framework.
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    \7\ 85 FR 22930 (April 23, 2020).
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    The transition interim final rule extends the 8-percent community 
bank leverage ratio through December 31, 2020, in the event the 
statutory interim final rule terminates before December 31, 2020. Thus, 
even if the statutory

[[Page 64005]]

interim final rule were to terminate prior to December 31, 2020, the 
community bank leverage ratio would continue to be set at 8 percent for 
the remainder of 2020. Section 201 of EGRRCPA requires a qualifying 
community banking organization to exceed the community bank leverage 
ratio established by the agencies in order to be considered to have met 
the generally applicable rule, any other applicable capital or leverage 
requirements, and, if applicable, the ``well capitalized'' capital 
ratio requirements, whereas section 4012 of the CARES Act requires that 
a qualifying community banking organization meet or exceed an 8 percent 
community bank leverage ratio to be considered the same.
    In the 2019 final rule, the agencies adopted a 9-percent community 
bank leverage ratio requirement on the basis that this threshold, with 
complementary qualifying criteria, generally maintains the current 
level of regulatory capital held by qualifying banking organizations 
and supports the agencies' goals of reducing regulatory burden while 
maintaining safety and soundness. The agencies intend for the graduated 
approach under the transition interim final rule to provide community 
banking organizations with sufficient time to meet a 9-percent 
community bank leverage ratio requirement while they also focus on 
supporting lending to creditworthy households and businesses. This 
latter goal is particularly critical given the recent strain on the 
U.S. economy caused by COVID-19.
    Consistent with section 201(c) of EGRRCPA, under the transition 
interim final rule, a qualifying community banking organization that 
temporarily fails to meet any of the qualifying criteria, including the 
applicable community bank leverage ratio requirement, generally would 
still be deemed well capitalized during a two-quarter grace period so 
long as the banking organization maintains a leverage ratio of the 
following: Greater than 7 percent in the second quarter through fourth 
quarter of calendar year 2020, greater than 7.5 percent in calendar 
year 2021, and greater than 8 percent thereafter.\8\ A banking 
organization that fails to meet the qualifying criteria by the end of 
the grace period or reports a leverage ratio of equal to or less than 7 
percent in the second through fourth quarters of calendar year 2020, 
equal to or less than 7.5 percent in calendar year 2021, or equal to or 
less than 8 percent thereafter, would be required to comply immediately 
with the generally applicable rule and file the appropriate regulatory 
reports.
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    \8\ While the statutory interim final rule is in effect, a 
qualifying community banking organization that temporarily fails to 
meet any of the qualifying criteria, including the applicable 
community bank leverage ratio requirement, generally would still be 
deemed well capitalized so long as the banking organization 
maintains a leverage ratio of 7 percent or greater during a two-
quarter grace period. Similarly, while the statutory interim final 
rule is in effect, a banking organization that fails to meet the 
qualifying criteria by the end of the grace period or reports a 
leverage ratio of less than 7 percent must comply with the generally 
applicable rule and file the appropriate regulatory reports.
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    The agencies adopted in the 2019 final rule a two-quarter grace 
period with a leverage ratio requirement that is 1 percentage point 
below the community bank leverage ratio on the basis that this grace 
period would appropriately mitigate potential volatility in capital and 
associated regulatory reporting requirements based on temporary changes 
in a banking organization's risk profile from quarter to quarter, while 
capturing more permanent changes in a banking organization's risk 
profile. The agencies maintained this approach in the interim final 
rules because they believed that this approach is appropriate and 
provides a qualifying community banking organization whose leverage 
ratio falls below the applicable community bank leverage ratio 
requirement a reasonable amount of time to once again satisfy that 
requirement. This approach is consistent with section 201(b)(2) of 
EGRRCPA, which directs the agencies to establish procedures for the 
treatment of a qualifying community bank whose leverage ratio falls 
below the community bank leverage ratio requirement as established by 
the agencies.
    The agencies received one public comment that addressed the 
substance of the interim final rules. The commenter urged the agencies 
to revert to a 9 percent community bank leverage ratio by January 1, 
2022, which is consistent with the transition interim final rule. The 
agencies are adopting as final the interim final rules with no changes.

III. Final Rule

    Under the final rule, a qualifying community banking organization 
must have a leverage ratio equal to or greater than 8 percent beginning 
in the second quarter of calendar year 2020. If the national emergency 
is terminated during 2020, under the final rule, a qualifying community 
banking organization must have a leverage ratio greater than 8 percent 
for the remainder of calendar year 2020. Subsequently, a qualifying 
community banking organization must have a leverage ratio greater than 
8.5 percent through calendar year 2021 and greater than 9 percent 
thereafter.\9\
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    \9\ The provisions under the final rule are effective November 
9, 2020. Banking organizations will continue to be subject to the 
requirements under the statutory interim final rule or transition 
interim final rule for purposes of filing their Consolidated Report 
of Condition and Income (Call Report) or Form FR Y-9C, as 
applicable. A banking organization's compliance with capital 
requirements for a quarter prior to the final rule's effective date 
shall be determined according to the generally applicable rule 
unless the banking organization has filed its Call Report or FR Y-9C 
report, as applicable, for the prior quarter and has indicated that 
it has elected to use the community bank leverage ratio framework.
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    The final rule also includes the modified two-quarter grace period 
for a qualifying community banking organization to take into account 
the graduated increase in the community bank leverage ratio 
requirement.\10\ Specifically, a qualifying community banking 
organization that temporarily fails to meet any of the qualifying 
criteria, including the applicable community bank leverage ratio 
requirement, will generally still be deemed well capitalized during a 
two-quarter grace period so long as the banking organization maintains 
a leverage ratio of the following: greater than 7 percent in the second 
quarter through fourth quarter of calendar year 2020, greater than 7.5 
percent in calendar year 2021, and greater than 8 percent 
thereafter.\11\
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    \10\ Consistent with the 2019 final rule, a banking organization 
that ceases to satisfy the qualifying criteria as a result of a 
business combination also will receive no grace period and will be 
required to comply with the generally applicable rule.
    \11\ Prior to the termination date, a qualifying community 
banking organization that temporarily fails to meet any of the 
qualifying criteria, including the applicable community bank 
leverage ratio requirement, generally would still be deemed well 
capitalized so long as the banking organization maintains a leverage 
ratio of 7 percent or greater during a two-quarter grace period. 
Similarly, prior to the termination date, a banking organization 
that fails to meet the qualifying criteria after the end of the 
grace period or reports a leverage ratio of less than 7 percent must 
comply with the generally applicable rule and file the appropriate 
regulatory reports.
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    The final rule does not make any changes to the other qualifying 
criteria in the community bank leverage ratio framework.

[[Page 64006]]



     Table 1--Schedule of Community Bank Leverage Ratio Requirements
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                                                          Leverage ratio
                                          Community bank    requirement
                                          leverage ratio     under the
              Calendar year                 requirement     applicable
                                             (percent)     grace period
                                                             (percent)
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2020....................................               8               7
2021....................................             8.5             7.5
2022 and thereafter.....................               9               8
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    The agencies are maintaining the 2019 final rule's requirement that 
the grace period will begin as of the end of the calendar quarter in 
which the electing banking organization ceases to satisfy any of the 
qualifying criteria (so long as the banking organization maintains a 
leverage ratio of greater than the requirement for the applicable grace 
period) and will end after two consecutive calendar quarters. For 
example, if an electing banking organization, which had met all 
qualifying criteria as of March 31, 2020, no longer met one of the 
qualifying criteria as of May 15, 2020, and still had not met the 
criteria as of the end of that quarter, the grace period for the 
banking organization would have begun as of the end of the quarter 
ending June 30, 2020. The banking organization may continue to use the 
community bank leverage ratio framework as of September 30, 2020 (so 
long as the banking organization maintains a leverage ratio of greater 
than the requirement for the applicable grace period), but would need 
to comply fully with the generally applicable rule and associated 
reporting requirements as of December 31, 2020, unless the banking 
organization once again meets all qualifying criteria by that date.
    If an electing banking organization is in the grace period when the 
community bank leverage ratio increases, the banking organization would 
be subject, as of the date of the change, to both the higher community 
bank leverage ratio requirement and higher grace period leverage ratio 
requirement. For example, if the electing banking organization that 
were to meet all qualifying criteria as of September 30, 2020, but 
reports a 7.2 percent leverage ratio as of December 31, 2020, and meets 
all the other qualifying criteria, the grace period for such a banking 
organization would begin as of the end of the fourth quarter 2020. The 
banking organization may continue to use the community bank leverage 
ratio framework as of March 31, 2021, if the banking organization 
reports a leverage ratio of greater than 7.5 percent, and would need to 
comply fully with the generally applicable rule and associated 
reporting requirements as of June 30, 2021, unless the banking 
organization reports a leverage ratio of greater than 8.5 percent (and 
meets all the other qualifying criteria) by that date. In this example, 
if the banking organization has a leverage ratio equal to or less than 
7.5 percent as of March 31, 2021, it would not be eligible to use the 
community bank leverage ratio framework and would be subject to the 
requirements of the generally applicable rule and associated reporting 
requirements as of March 31, 2021.
    As mentioned above, the grace period for an electing community 
banking organization is limited to two consecutive calendar quarters. 
For example, if an electing banking organization were to meet all 
qualifying criteria as of June 30, 2021, but reports a 8.3 percent 
leverage ratio (while meeting all the other qualifying criteria) as of 
the end of September 30, 2021, the grace period for such a banking 
organization would begin as of the end of the third quarter 2021. The 
banking organization may continue to use the community bank leverage 
ratio framework as of December 31, 2021, if the banking organization 
reports a leverage ratio of greater than 7.5 percent, and would need to 
comply fully with the generally applicable rule and associated 
reporting requirements as of March 31, 2022, unless the banking 
organization reports a leverage ratio of greater than 9.0 percent (and 
meets all the other qualifying criteria) by that date.

IV. Impact Analysis

    The final rule will affect all banking organizations (i.e., 
depository institutions and depository institution holding companies) 
that qualify for the community bank leverage ratio framework and elect 
to adopt it. Based on data as of March 31, 2020, there are 5,189 
banking organizations with less than $10 billion in total consolidated 
assets.\12\ The agencies estimate that approximately 96 percent of 
these banking organizations qualify to use the community bank leverage 
ratio framework under the 8 percent requirement in effect for the 
remainder of calendar year 2020. As of March 31, 2020, the temporary 
reduction in the community bank leverage ratio requirement during the 
remainder of calendar year 2020 from 9 percent to 8 percent will 
increase the scope of qualifying community banks by approximately 480 
depository institutions and approximately 20 depository institution 
holding companies (holding companies).
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    \12\ Based on data reported on Form FR Y-9C and the Reports of 
Condition and Income (Call Reports).
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    As of March 31, 2020, approximately 39 percent of qualifying 
banking organizations have elected to use the community bank leverage 
ratio framework. Approximately 92 percent of these banking 
organizations have total assets of less than $1 billion. As of March 
31, 2020, 1,709 depository institutions have elected to use the 
community bank leverage ratio framework. As of the same period, 29 
holding companies have elected to use the community bank leverage ratio 
framework. The agencies anticipate that banking organizations that have 
elected to use the community bank leverage ratio framework should be 
able to manage the transition in the leverage ratio requirement under 
the final rule in a prudent manner, given that the final rule provides 
a graduated transition back to a 9 percent leverage ratio requirement 
by 2022.

V. Administrative Law Matters

A. Congressional Review Act

    For purposes of the Congressional Review Act, the Office of 
Management and Budget (OMB) makes a determination as to whether a final 
rule constitutes a ``major'' rule.\13\ If a rule is deemed a ``major 
rule'' by the OMB, the Congressional Review Act generally provides that 
the rule may not take effect until at least 60 days following its 
publication.\14\
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    \13\ 5 U.S.C. 801 et seq.
    \14\ 5 U.S.C. 801(a)(3).
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    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in (A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions; or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\15\
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    \15\ 5 U.S.C. 804(2).
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    As required by the Congressional Review Act, the agencies will 
submit the final rule and other appropriate reports to Congress and the 
Government Accountability Office for review.

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) 
states that

[[Page 64007]]

no agency may conduct or sponsor, nor is the respondent required to 
respond to, an information collection unless it displays a currently 
valid OMB control number. This final rule does not contain any 
information collection requirements. However, in connection with the 
transition interim final rule, the Board temporarily revised the 
Financial Statements for Holding Companies (FR Y-9 reports; OMB No. 
7100-0128) and invited comment on a proposal to extend that collection 
of information for three years, with revision. No comments were 
received regarding this proposal under the PRA. The Board has now 
extended, with revision, the FR Y-9 reports, as proposed, to align the 
reporting instructions with this final rule. The Board will submit 
information collection burden estimates to OMB to finalize the 
revisions. All of the updates to the FR Y-9C noted in the transition 
interim final rule should be minimal and result in zero net change in 
hourly burden.
    Additionally, in connection with the transition interim final rule, 
the agencies made revisions to the Call Reports (OCC OMB Control No. 
1557-0081; Board OMB Control No. 7100-0036; and FDIC OMB Control No. 
3064-0052) and the FFIEC 101 (OCC OMB Control No. 1557-0239; Board OMB 
Control No. 7100-0319; FDIC OMB Control No. 3064-0159). The final 
changes to the Call Reports, the FFIEC 101, and their related 
instructions are addressed in a separate Federal Register notice.\16\
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    \16\ See 85 FR 44361 (May 22, 2020).
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Revision, With Extension, of the Following Information Collections
    (1) Report Title: Financial Statements for Holding Companies.
    Agency form number: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR 
Y-9CS.
    OMB control number: 7100-0128.
    Effective date: Currently effective.
    Frequency: Quarterly, semiannually, and annually.
    Respondents: Bank holding companies, savings and loan holding 
companies,\17\ securities holding companies, and U.S. intermediate 
holding companies (collectively, HCs).
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    \17\ A savings and loan holding company (SLHC) must file one or 
more of the FR Y-9 series of reports unless it is: (1) A 
grandfathered unitary SLHC with primarily commercial assets and 
thrifts that make up less than 5 percent of its consolidated assets; 
or (2) a SLHC that primarily holds insurance-related assets and does 
not otherwise submit financial reports with the SEC pursuant to 
section 13 or 15(d) of the Securities Exchange Act of 1934.
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    Estimated number of respondents: FR Y-9C (non-advanced approaches 
CBLR HCs with less than $5 billion in total assets): 71; FR Y-9C (non-
advanced approaches CBLR HCs with $5 billion or more in total assets): 
35; FR Y-9C (non-advanced approaches, non CBLR, HCs with less than $5 
billion in total assets): 84; FR Y-9C (non-advanced approaches, non 
CBLR HCs, with $5 billion or more in total assets): 154; FR Y-9C 
(advanced approaches HCs): 19; FR Y-9LP: 434; FR Y-9SP: 3,960; FR Y-
9ES: 83; FR Y-9CS: 236.
    Estimated average hours per response:
Reporting
    FR Y-9C (non-advanced approaches CBLR HCs with less than $5 billion 
in total assets): 29.17 hours; FR Y-9C (non-advanced approaches CBLR 
HCs with $5 billion or more in total assets): 35.14; FR Y-9C (non-
advanced approaches, non CBLR HCs, with less than $5 billion in total 
assets): 41.01; FR Y-9C (non-advanced approaches, non CBLR, HCs with $5 
billion or more in total assets): 46.98 hours; FR Y-9C (advanced 
approaches HCs): 48.80 hours; FR Y-9LP: 5.27 hours; FR Y-9SP: 5.40 
hours; FR Y-9ES: 0.50 hours; FR Y-9CS: 0.50 hours.
Recordkeeping
    FR Y-9C (non-advanced approaches HCs with less than $5 billion in 
total assets), FR Y-9C (non-advanced approaches HCs with $5 billion or 
more in total assets), FR Y-9C (advanced approaches HCs), and FR Y-9LP: 
1.00 hour; FR Y-9SP, FR Y-9ES, and FR Y-9CS: 0.50 hours.
    Estimated annual burden hours:
Reporting
    FR Y-9C (non-advanced approaches CBLR HCs with less than $5 billion 
in total assets): 8,284 hours; FR Y-9C (non-advanced approaches CBLR 
HCs with $5 billion or more in total assets): 4,920; FR Y-9C (non-
advanced approaches non CBLR HCs with less than $5 billion in total 
assets): 13,779; FR Y-9C (non-advanced approaches non CBLR HCs with $5 
billion or more in total assets): 28,940 hours; FR Y-9C (advanced 
approaches HCs): 3,709 hours; FR Y-9LP: 9,149 hours; FR Y-9SP: 42,768 
hours; FR Y-9ES: 42 hours; FR Y-9CS: 472 hours.
Recordkeeping
    FR Y-9C: 1,452 hours; FR Y-9LP: 1,736 hours; FR Y-9SP: 3,960 hours; 
FR Y-9ES: 42 hours; FR Y-9CS: 472 hours.
    General description of report:
    The FR Y-9C consists of standardized financial statements similar 
to the Call Reports filed by commercial banks.\18\ The FR Y-9C collects 
consolidated data from HCs and is filed quarterly by top-tier HCs with 
total consolidated assets of $3 billion or more.\19\ The FR Y-9LP, 
which collects parent company only financial data, must be submitted by 
each HC that files the FR Y-9C, as well as by each of its subsidiary 
HCs.\20\ The report consists of standardized financial statements.
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    \18\ The Call Reports consist of the Consolidated Reports of 
Condition and Income for a Bank with Domestic Offices Only and Total 
Assets Less Than $5 Billion (FFIEC 051), the Consolidated Reports of 
Condition and Income for a Bank with Domestic Offices Only (FFIEC 
041) and the Consolidated Reports of Condition and Income for a Bank 
with Domestic and Foreign Offices (FFIEC 031).
    \19\ Under certain circumstances described in the FR Y-9C's 
General Instructions, HCs with assets under $3 billion may be 
required to file the FR Y-9C.
    \20\ A top-tier HC may submit a separate FR Y-9LP on behalf of 
each of its lower-tier HCs.
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    The FR Y-9SP is a parent company only financial statement filed 
semiannually by HCs with total consolidated assets of less than $3 
billion. In a banking organization with total consolidated assets of 
less than $3 billion that has tiered HCs, each HC in the organization 
must submit, or have the top-tier HC submit on its behalf, a separate 
FR Y-9SP. This report is designed to obtain basic balance sheet and 
income data for the parent company, and data on its intangible assets 
and intercompany transactions.
    The FR Y-9ES is filed annually by each employee stock ownership 
plan (ESOP) that is also an HC. The report collects financial data on 
the ESOP's benefit plan activities. The FR Y-9ES consists of four 
schedules: A Statement of Changes in Net Assets Available for Benefits, 
a Statement of Net Assets Available for Benefits, Memoranda, and Notes 
to the Financial Statements.
    The FR Y-9CS is a free-form supplemental report that the Board may 
utilize to collect critical additional data deemed to be needed in an 
expedited manner from HCs on a voluntary basis. The data are used to 
assess and monitor emerging issues related to HCs, and the report is 
intended to supplement the other FR Y-9 reports. The data items 
included on the FR Y-9CS may change as needed.
    Legal authorization and confidentiality: The Board has the 
authority to impose the reporting and recordkeeping requirements 
associated with the FR Y 9 family of reports on bank holding companies 
pursuant to section 5 of the Bank Holding Company Act of 1956 (BHC Act) 
(12 U.S.C. 1844); on savings and loan holding companies pursuant to 
section 10(b)(2) and (3) of the Home Owners' Loan Act (12 U.S.C. 
1467a(b)(2) and (3)), as amended by sections 369(8) and 604(h)(2) of 
the

[[Page 64008]]

Dodd-Frank Wall Street and Consumer Protection Act (Dodd-Frank Act); on 
U.S. intermediate holding companies pursuant to section 5 of the BHC 
Act (12 U.S.C. 1844), as well as pursuant to sections 102(a)(1) and 165 
of the Dodd-Frank Act (12 U.S.C. 511(a)(1) and 5365); and on securities 
holding companies pursuant to section 618 of the Dodd-Frank Act (12 
U.S.C. 1850a(c)(1)(A)). The obligation to submit the FR Y 9 series of 
reports, and the recordkeeping requirements set forth in the respective 
instructions to each report, are mandatory, except for the FR Y-9CS, 
which is voluntary.
    With respect to the FR Y 9C report, Schedule HI's data item 7(g) 
``FDIC deposit insurance assessments,'' Schedule HC P's data item 7(a) 
``Representation and warranty reserves for 1 4 family residential 
mortgage loans sold to U.S. government agencies and government 
sponsored agencies,'' and Schedule HC P's data item 7(b) 
``Representation and warranty reserves for 1 4 family residential 
mortgage loans sold to other parties'' are considered confidential 
commercial and financial information. Such treatment is appropriate 
under exemption 4 of the Freedom of Information Act (FOIA) (5 U.S.C. 
552(b)(4)) because these data items reflect commercial and financial 
information that is both customarily and actually treated as private by 
the submitter, and which the Board has previously assured submitters 
will be treated as confidential. It also appears that disclosing these 
data items may reveal confidential examination and supervisory 
information, and in such instances, this information would also be 
withheld pursuant to exemption 8 of the FOIA (5 U.S.C. 552(b)(8)), 
which protects information related to the supervision or examination of 
a regulated financial institution.
    In addition, for both the FR Y 9C report, Schedule HC's memorandum 
item 2.b. and the FR Y 9SP report, Schedule SC's memorandum item 2.b., 
the name and email address of the external auditing firm's engagement 
partner, is considered confidential commercial information and 
protected by exemption 4 of the FOIA (5 U.S.C. 552(b)(4)) if the 
identity of the engagement partner is treated as private information by 
HCs. The Board has assured respondents that this information will be 
treated as confidential since the collection of this data item was 
proposed in 2004.
    Additionally, items on the FR Y-9C, Schedule HC-C for loans 
modified under Section 4013, data items Memorandum items 16.a, ``Number 
of Section 4013 loans outstanding''; and Memorandum items 16.b, 
``Outstanding balance of Section 4013 loans'' are considered 
confidential. While the Board generally makes institution-level FR Y-9C 
report data publicly available, the Board is collecting Section 4013 
loan information as part of condition reports for the impacted HCs and 
the Board considers disclosure of these items at the HC level would not 
be in the public interest. Such information is permitted to be 
collected on a confidential basis, consistent with 5 U.S.C. 552(b)(8). 
In addition, holding companies may be reluctant to offer modifications 
under Section 4013 if information on these modifications made by each 
holding company is publicly available, as analysts, investors, and 
other users of public FR Y-9C report information may penalize an 
institution for using the relief provided by the CARES Act. The Board 
may disclose Section 4013 loan data on an aggregated basis, consistent 
with confidentiality.
    Aside from the data items described above, the remaining data items 
on the FR Y-9C report and the FR-Y 9SP report are generally not 
accorded confidential treatment. The data items collected on FR Y-9LP, 
FR Y-9ES, and FR Y-9CS reports, are also generally not accorded 
confidential treatment. As provided in the Board's Rules Regarding 
Availability of Information (12 CFR part 261), however, a respondent 
may request confidential treatment for any data items the respondent 
believes should be withheld pursuant to a FOIA exemption. The Board 
will review any such request to determine if confidential treatment is 
appropriate, and will inform the respondent if the request for 
confidential treatment has been denied.
    To the extent the instructions to the FR Y-9C, FR Y-9LP, FR Y-9SP, 
and FR Y-9ES reports each respectively direct the financial institution 
to retain the work papers and related materials used in preparation of 
each report, such material would only be obtained by the Board as part 
of the examination or supervision of the financial institution. 
Accordingly, such information is considered confidential pursuant to 
exemption 8 of the FOIA (5 U.S.C. 552(b)(8)). In addition, the 
financial institution's work papers and related materials may also be 
protected by exemption 4 of the FOIA, to the extent such financial 
information is treated as confidential by the respondent (5 U.S.C. 
552(b)(4)).

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires an agency to consider 
whether the rules it proposes will have a significant economic impact 
on a substantial number of small entities.\21\ The RFA requires an 
agency to prepare a final regulatory flexibility analysis when it 
promulgates a final rule after being required to publish a general 
notice of proposed rulemaking.\22\ As discussed previously, the 
agencies have decided to adopt, without changes, revisions to the 
community bank leverage ratio framework made under the statutory 
interim final rule and the transition interim final rule. There is no 
general notice of proposed rulemaking associated with this final rule. 
Accordingly, the agencies have concluded that the RFA's requirements 
relating to initial and final regulatory flexibility analysis do not 
apply to the promulgation of this final rule.
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    \21\ Under regulations issued by the Small Business 
Administration, a small entity includes a depository institution, 
bank holding company, or savings and loan holding company with total 
assets of $600 million or less and trust companies with annual 
receipts of $41.5 million or less. See 13 CFR 121.201.
    \22\ 5 U.S.C. 604.
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D. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\23\ in determining the effective 
date and administrative compliance requirements for new regulations 
that impose additional reporting, disclosure, or other requirements on 
insured depository institutions, each Federal banking agency must 
consider, consistent with the principle of safety and soundness and the 
public interest, any administrative burdens that such regulations would 
place on depository institutions, including small depository 
institutions, and customers of depository institutions, as well as the 
benefits of such regulations. In addition, section 302(b) of RCDRIA 
requires new regulations and amendments to regulations that impose 
additional reporting, disclosures, or other new requirements on insured 
depository institutions generally to take effect on the first day of a 
calendar quarter that begins on or after the date on which the 
regulations are published in final form.\24\ Each Federal banking 
agency has determined that the final rule would not impose additional 
reporting, disclosure, or other requirements; therefore the 
requirements of the RCDRIA do not apply.
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    \23\ 12 U.S.C. 4802(a).
    \24\ 12 U.S.C. 4802.

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[[Page 64009]]

E. Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \25\ requires the Federal 
banking agencies to use ``plain language'' in all proposed and final 
rules published after January 1, 2000. In light of this requirement, 
the agencies have sought to present the final rule in a simple and 
straightforward manner. The agencies did not receive any comments on 
the use of plain language.
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    \25\ 12 U.S.C. 4809.
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F. Unfunded Mandates Act

    As a general matter, the Unfunded Mandates Act of 1995 (UMRA), 2 
U.S.C. 1531 et seq., requires the preparation of a budgetary impact 
statement before promulgating a rule that includes a Federal mandate 
that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. However, the UMRA does not apply to 
final rules for which a general notice of proposed rulemaking was not 
published.\26\ Therefore, because the OCC has found good cause to 
dispense with notice and comment for the final rule, the OCC concludes 
that the requirements of UMRA do not apply to this final rule.
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    \26\ See 2 U.S.C. 1532(a).
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Authority and Issuance

    For the reasons set forth in the joint preamble, the interim final 
rules which were published at 85 FR 22924 and 85 FR 22930 on April 23, 
2020, are adopted as a final rule by the OCC, Board, and FDIC without 
change.

Brian P. Brooks,
Acting Comptroller of the Currency.

    By order of the Board of Governors of the Federal Reserve 
System.
Ann Misback,
Secretary of the Board.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on or about August 21, 2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
[FR Doc. 2020-19922 Filed 10-8-20; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P