[Federal Register Volume 85, Number 209 (Wednesday, October 28, 2020)]
[Rules and Regulations]
[Pages 68243-68249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21894]
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DEPARTMENT OF TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 3 and 50
[Docket ID OCC-2020-0017]
RIN 1557-AE89; 1557-AE90; 1557-AE92]
FEDERAL RESERVE SYSTEM
12 CFR Parts 217 and 249
[Docket Nos. R-1711; 1712; and 1717]
RIN 7100-AF85; 7100-AF86: 7100-AF90
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 324 and 329
RIN 3064-AF41; 3064-AF49; 3064-AF51
Treatment of Certain Emergency Facilities in the Regulatory
Capital Rule and the Liquidity Coverage Ratio Rule
AGENCY: The Office of the Comptroller of the Currency, Department of
the 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
regulatory capital rule and the liquidity coverage ratio (LCR) rule
made under three interim final rules published in the Federal Register
on March 23, April 13, and May 6, 2020. The agencies are adopting these
interim final rules as final with no changes. Under this final rule,
banking organizations may continue to neutralize the regulatory capital
effects of participating in the Money Market Mutual Fund Liquidity
Facility (MMLF) and the Paycheck Protection Program Liquidity Facility
(PPPLF), and are required to continue to neutralize the LCR effects of
participating in the MMLF and the PPPLF. In addition, Paycheck
Protection Program loans will receive a zero percent risk weight under
the agencies' regulatory capital rules.
DATES: The final rule is effective December 28, 2020.
[[Page 68244]]
FOR FURTHER INFORMATION CONTACT:
OCC: Andrew Tschirhart, Risk Expert, Capital and Regulatory Policy,
(202) 649-6370; James Weinberger, Technical Expert, Treasury & Market
Risk Policy, (202) 649-6360; Henry Barkhausen, Counsel, Kevin
Korzeniewski, Counsel, Rima Kundnani, Senior Attorney, 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: Anna Lee Hewko, Associate Director, (202) 530-6360;
Constance M. Horsley, Deputy Associate Director, (202) 452-5239; Juan
Climent, Assistant Director, (202) 872-7526; Kathryn Ballintine,
Manager, (202) 452-2555; Kevin Littler, Lead Financial Institution
Policy Analyst, (202) 475-6677; Devyn Jeffereis, Senior Financial
Institution Policy Analyst, (202) 365-2467; or Brendan Rowan, Senior
Financial Institution Policy Analyst, (202) 475-6685, Division of
Supervision and Regulation; or Benjamin W. McDonough, Assistant General
Counsel, (202) 452-2036; David W. Alexander, Senior Counsel, (202) 452-
2877; Steve Bowne, Senior Counsel, (202) 452-3900; Jason Shafer, Senior
Counsel, (202) 728-5811; Laura Bain, Counsel (202) 736-5546; or Jeffery
Zhang, Attorney, (202) 736-1968, 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]; Eric Schatten, Senior Policy
Analyst, [email protected]; Andrew Carayiannis, 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]; Sue Dawley, Counsel, [email protected]; Gregory Feder,
Counsel, [email protected]; Andrew B. Williams, II, 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
A. Capital Rule
B. LCR Rule
II. Overview of the Interim Final Rules and Public Comments
A. MMLF Capital Interim Final Rule
B. PPPLF Capital Interim Final Rule
C. LCR Interim Final Rule
D. Public Comments
III. Summary of the Final Rule
IV. 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. OCC Unfunded Mandates Reform Act of 1995
I. Background
In light of recent disruptions in economic conditions caused by the
outbreak of the coronavirus disease 2019 and the stress in U.S.
financial markets, the Board of Governors of the Federal Reserve System
(Board), with the approval of the U.S. Secretary of the Treasury,
established certain liquidity facilities pursuant to section 13(3) of
the Federal Reserve Act.\1\
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\1\ 12 U.S.C. 343(3).
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In order to prevent disruptions in the money markets from
destabilizing the financial system, the Board authorized the Federal
Reserve Bank of Boston to establish the Money Market Mutual Fund
Liquidity Facility (MMLF). Under the MMLF, the Federal Reserve Bank of
Boston may extend non-recourse loans to eligible borrowers to purchase
assets from money market mutual funds. Assets purchased from money
market mutual funds are posted as collateral to the Federal Reserve
Bank of Boston.
In order to provide liquidity to small business lenders and the
broader credit markets, and to help stabilize the financial system, the
Board authorized each of the Federal Reserve Banks to extend credit
under the Paycheck Protection Program Liquidity Facility (PPPLF).\2\
Under the PPPLF, each of the Federal Reserve Banks may extend non-
recourse loans to institutions that are eligible to make Paycheck
Protection Program (PPP) covered loans as defined in section 7(a)(36)
of the Small Business Act.\3\ Under the PPPLF, only PPP covered loans
that are guaranteed by the Small Business Administration (SBA) with
respect to both principal and accrued interest and that are originated
by an eligible institution may be pledged as collateral to the Federal
Reserve Banks. The maturity date of the extension of credit under the
PPPLF equals the maturity date of the PPP covered loans pledged to
secure the extension of credit.\4\
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\2\ The Paycheck Protection Program Liquidity Facility was
previously known as the Paycheck Protection Program Lending
Facility.
\3\ Congress created the PPP as part of the Coronavirus Aid,
Relief, and Economic Security Act and in recognition of the exigent
circumstances faced by small businesses. PPP covered loans are fully
guaranteed as to principal and accrued interest by the Small
Business Administration (SBA) and also afford borrower forgiveness
up to the principal amount and accrued interest of the PPP covered
loan, if the proceeds of the PPP covered loan are used for certain
expenses. Under the PPP, eligible borrowers generally include
businesses with fewer than 500 employees or that are otherwise
considered to be small by the SBA. The SBA reimburses PPP lenders
for any amount of a PPP covered loan that is forgiven. In general,
PPP lenders are not held liable for any representations made by PPP
borrowers in connection with a borrower's request for PPP covered
loan forgiveness. For more information on the Paycheck Protection
Program, see https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.
\4\ The maturity date of the loan made under the PPPLF will be
accelerated if the underlying PPP covered loan goes into default and
the eligible borrower sells the PPP covered loan to the Small
Business Administration (SBA) to realize the SBA guarantee. The
maturity date of the loan made under the PPPLF also will be
accelerated to the extent of any PPP covered loan forgiveness
reimbursement received by the eligible borrower from the SBA.
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Eligible borrowers from the MMLF and PPPLF and holders of PPP
covered loans include banking organizations supervised by the Office of
the Comptroller of the Currency (OCC), the Board, and the Federal
Deposit Insurance Corporation (FDIC) (together, the agencies) that are
subject to the agencies' regulatory capital rule (capital rule) \5\ and
that may be subject to the liquidity coverage ratio (LCR) rule.\6\ To
facilitate the use of the MMLF and the PPPLF, the agencies adopted
three interim final rules (interim final rules) to address the capital
treatment of participation in the MMLF (MMLF capital interim final
rule),\7\ the capital treatment of participation in the PPPLF (PPPLF
capital interim final rule),\8\ and the LCR treatment of participation
in the
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MMLF and the PPPLF (LCR interim final rule),\9\ respectively.
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\5\ Banking organizations subject to the capital rule include
national banks, state member banks, state nonmember banks, savings
associations, and top-tier bank holding companies and savings and
loan holding companies domiciled in the United States not subject to
the Board's Small Bank Holding Company Policy Statement (12 CFR part
225, appendix C), but exclude certain savings and loan holding
companies that are substantially engaged in insurance underwriting
or commercial activities or that are estate trusts, and bank holding
companies and savings and loan holding companies that are employee
stock ownership plans. See 12 CFR part 3 (OCC); 12 CFR part 217
(Board); and 12 CFR part 324 (FDIC).
\6\ See 12 CFR part 50 (OCC); 12 CFR part 249 (Board); and 12
CFR part 329 (FDIC).
\7\ 85 FR 16232 (Mar. 23, 2020).
\8\ 85 FR 20387 (Apr. 13, 2020).
\9\ 85 FR 26835 (May 6, 2020).
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A. Capital Rule
The capital rule requires banking organizations to comply with
risk-based and leverage capital requirements, which are expressed as a
ratio of regulatory capital to assets and certain other exposures.
Risk-based capital requirements are based on risk-weighted assets,
whereas leverage capital requirements are based on a measure of average
total consolidated assets or total leverage exposure. Participation in
the MMLF or the PPPLF affects the balance sheet of a banking
organization. To participate in the MMLF, a banking organization must
acquire and hold assets (that is, eligible collateral pledged to the
Federal Reserve Bank of Boston) on its balance sheet. Similarly, to
participate in the PPPLF, a banking organization must hold PPP covered
loans on its balance sheet. As a result, without the agencies' issuance
of the MMLF capital and PPPLF capital interim final rules, a banking
organization that participates in either facility could have been
required to maintain increased regulatory capital.
B. LCR Rule
The LCR rule requires covered companies \10\ to calculate and
maintain an amount of high-quality liquid assets (HQLA) sufficient to
cover their total net cash outflows over a 30-day stress period. A
covered company's LCR is the ratio of its HQLA amount divided by its
total net cash outflow amount. The total net cash outflow amount is
calculated as the difference between outflow and inflow amounts, which
are determined by applying a standardized set of outflow and inflow
rates to the cash flows of various assets and liabilities, together
with off-balance sheet items, as specified in sections __.32 and __.33
of the LCR rule.\11\
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\10\ The applicability of the LCR rule is described in 12 CFR
50.1 (OCC); 12 CFR 249.1 (Board); and 12 CFR 329.1 (FDIC).
\11\ See 12 CFR 50.32 and 50.33 (OCC); 12 CFR 249.32 and 249.33
(Board); and 12 CFR 329.32 and 329.33 (FDIC). Section __.30 of the
LCR rule also requires a covered company, as applicable, to include
in its total net cash outflow amount a maturity mismatch add-on,
which is calculated as the difference (if greater than zero) between
the covered company's largest net cumulative maturity outflow amount
for any of the 30 calendar days following the calculation date and
the net day 30 cumulative maturity outflow amount. See 12 CFR 50.30
(OCC); 12 CFR 249.30 (Board); and 12 CFR 329.30 (FDIC).
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Absent changes to the LCR rule, covered companies would have been
required to recognize outflows for MMLF and PPPLF advances with a
remaining maturity of 30 days or less and inflows for certain assets
securing the MMLF and PPPLF advances. As a result, a covered company's
participation in the MMLF or PPPLF could have affected its total net
cash outflow amount, which potentially could have resulted in an
inconsistent, unpredictable, and more volatile calculation of LCR
requirements across covered companies.
II. Overview of the Interim Final Rules and Public Comments
A. MMLF Capital Interim Final Rule
On March 23, 2020, the agencies published in the Federal Register
the MMLF capital interim final rule to neutralize the regulatory
capital effect of participation in the MMLF. The MMLF capital interim
final rule permits a banking organization to exclude exposures acquired
as part of the MMLF from the banking organization's total leverage
exposure, average total consolidated assets, advanced approaches total
risk-weighted assets, and standardized total risk-weighted assets, as
applicable. Because of the non-recourse nature of the Federal Reserve
Bank of Boston's extension of credit to the banking organization, the
organization is not exposed to credit or market risk from the assets
purchased by the banking organization and pledged to the Federal
Reserve Bank of Boston. The MMLF capital interim final rule reflects
the agencies' determination that, prior to the MMLF capital interim
final rule, the leverage and risk-based capital requirements in place
in the capital rule for the assets acquired by a banking organization
as part of the MMLF did not reflect the substantial protections
provided to the organization by the Federal Reserve Bank of Boston in
connection with the facility.
B. PPPLF Capital Interim Final Rule
On April 13, 2020, the agencies published in the Federal Register
the PPPLF capital interim final rule to neutralize the regulatory
capital effect of participation in the PPPLF. The PPPLF capital interim
final rule permits a banking organization to exclude exposures pledged
as collateral to the PPPLF from the banking organization's total
leverage exposure, average total consolidated assets, advanced
approaches total risk-weighted assets, and standardized total risk-
weighted assets, as applicable. Because of the non-recourse nature of
each Federal Reserve Bank's extension of credit to the banking
organization, the banking organization is not exposed to credit or
market risk from the pledged PPP covered loans. The PPPLF capital
interim final rule reflects the agencies' determination that, prior to
the PPPLF capital interim final rule, the regulatory capital
requirements in place in the capital rule for PPP covered loans pledged
by a banking organization to a Federal Reserve Bank as part of the
PPPLF did not reflect the substantial protections from risk provided to
the banking organization in connection with the facility.
Additionally, the PPPLF capital interim final rule provides that a
banking organization must apply a zero percent risk weight to PPP
covered loans, as required by Section 1102 of the Coronavirus Aid,
Relief, and Economic Security (CARES) Act. A banking organization must
apply a zero percent risk weight to PPP covered loans regardless of
whether they are pledged under the PPPLF.
C. LCR Interim Final Rule
On May 6, 2020, the agencies published in the Federal Register the
LCR interim final rule to require a banking organization subject to the
LCR rule to neutralize the effect on its LCR of participation in the
MMLF and PPPLF. The LCR interim final rule requires a covered company
to neutralize the LCR effects of the advances made by the MMLF and
PPPLF together with the assets securing these advances. Specifically,
the LCR interim final rule adds a new definition to the LCR rule for
``Covered Federal Reserve Facility Funding'' to identify MMLF and PPPLF
advances separately from other secured funding transactions under the
LCR rule. The LCR interim final rule requires outflow amounts
associated with Covered Federal Reserve Facility Funding and inflow
amounts associated with the assets securing this funding to be excluded
from a covered company's total net cash outflow amount under the LCR
rule.\12\
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\12\ See 12 CFR 50.34 (OCC); 12 CFR 249.34 (Board); and 12 CFR
329.34 (FDIC). Section __.34 does not apply to the extent the
covered company secures Covered Federal Reserve Facility Funding
with securities, debt obligations, or other instruments issued by
the covered company or its consolidated entity.
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Advances from the MMLF and PPPLF facilities are non-recourse and
the maturity of the advance generally aligns with the maturity of the
collateral. Accordingly, a covered company is not exposed to credit or
market risk from the collateral securing the MMLF or PPPLF advance that
could otherwise affect the banking organization's ability to settle the
loan and generally can use the value of cash received from the
collateral to repay the advances at
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maturity. For these reasons, the agencies issued the LCR interim final
rule to better align the treatment of these advances and collateral
under the LCR rule with the liquidity risk associated with funding
exposures through these facilities, and to ensure consistent and
predictable treatment of covered companies' participation in the
facilities under the LCR rule.
D. Public Comments
Comments on the MMLF Capital Interim Final Rule
The agencies received two comment letters, from a trade association
and an advocacy organization, addressing the MMLF capital interim final
rule. These commenters supported the agencies' actions to encourage
banking organizations' participation in the emergency lending facility.
One commenter recommended broader considerations for money market
mutual fund reform that are outside the scope of this rulemaking.
Comments on the PPPLF Capital Interim Final Rule
The agencies received 14 comment letters from industry
participants, advocacy groups, trade associations, and individuals
addressing the PPPLF interim final rule. Several commenters expressed
support for the agencies' actions under the PPPLF capital interim final
rule, and two of these commenters further supported the agencies'
determination that good cause existed to issue the interim final rules
without notice and comment. Several commenters suggested that the
agencies extend the zero percent risk weight to PPP covered loans
purchased in secondary markets. The agencies note that, under the PPPLF
capital interim final rule, the risk weight for all PPP covered loans
is zero percent.
Several commenters asserted that the PPPLF capital interim final
rule should extend the leverage exclusion to PPP covered loans that are
not pledged to the PPPLF, arguing that the treatment could discourage
banking organizations that are not using the PPPLF from making PPP
covered loans. Notwithstanding these arguments, the agencies are
adopting as final the PPPLF capital interim final rule. The CARES Act
set the risk weight of these loans at zero percent and did not exclude
these loans from the leverage capital requirements. The favorable
leverage capital treatment in the PPPLF capital interim final rule
reflects the non-recourse nature of the relevant Federal Reserve Bank's
extension of credit to a banking organization only for PPP covered
loans pledged by a banking organization to a Federal Reserve Bank.
Comments on the LCR Interim Final Rule
The agencies received one comment letter, from a trade association,
on the LCR interim final rule. The commenter supported the requirements
under the LCR interim final rule, arguing that the requirements
encourage participation in the facilities, which ultimately provides
benefits to small businesses, households, and investors.
III. Summary of the Final Rule
For the reasons discussed above, the agencies are adopting as final
the revisions to the capital and LCR rules unchanged from the interim
final rules. Accordingly, a banking organization may continue to
exclude assets acquired as part of the MMLF and PPP covered loans
pledged under the PPPLF from its total leverage exposure, average total
consolidated assets, advanced approaches total risk-weighted assets,
and standardized total risk-weighted assets, as applicable (and for
purposes of the community bank leverage ratio).\13\ Further, a banking
organization must continue to apply a zero percent risk weight to all
PPP covered loans that are not pledged to the PPPLF (regardless of
whether the banking organization originated the loan). In addition, a
banking organization subject to the LCR rule is required to continue
excluding from its total net cash outflow amount outflow amounts
associated with advances from the MMLF and PPPLF and inflow amounts
associated with collateral securing the advances.
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\13\ Assets acquired as part of the MMLF and PPP covered loans
pledged to the PPPLF would continue to be included in a bank's
measure of total consolidated assets, including for purposes of
determining whether a banking organization is a qualifying community
banking organization.
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IV. 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.\14\ 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.\15\
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\14\ 5 U.S.C. 801 et seq.
\15\ 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.\16\
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\16\ 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 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 interim final rules, the Board temporarily revised the Financial
Statements for Holding Companies (FR Y-9 reports; OMB No. 7100-0128)
and the Complex Institution Liquidity Monitoring Report (FR 2052a; OMB
No. 7100-0361) and invited comment on proposals to extend those
collections of information for three years, with revision.\17\
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\17\ The Board published a separate Federal Register notice to
make temporary revisions to the FR Y-9 reports in connection with
the MMLF Capital Interim Final Rule. 85 FR 19944 (Apr. 9, 2020).
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Additionally, in connection with the interim final rules, the
agencies made revisions to the Call Reports (OCC OMB Control No. 1557-
0081; Board OMB Control No. 7100-0036; FDIC OMB Control No. 3064-0052),
the Report of Assets and Liabilities of U.S. Branches and Agencies of
Foreign Banks (FFIEC 002; OMB Control No. 7100-0032), and the
Regulatory Capital Reporting for Institutions Subject to the Advanced
Capital Adequacy Framework (FFIEC 101; OCC OMB Control No. 1557-0239;
Board OMB Control No. 7100-0319; FDIC OMB Control No. 3064-0159). The
changes to the Call Reports, FFIEC 002, and FFIEC 101 and their related
instructions are addressed in a separate Federal Register notice.\18\
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\18\ See 85 FR 44361 (July 22, 2020).
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Current Actions
The Board has extended the FR Y-9 and FR 2052a for three years,
with
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revision, as originally proposed. The updates to the FR Y-9 and FR
2052a resulted in an estimated zero net change in hourly burden. No
public comments were received regarding these proposals under the PRA.
Revision, With Extension, of the Following Information Collections
(1) Report title: Financial Statements for Holding Companies.
Agency form numbers: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR
Y-9CS.
OMB control number: 7100-0128.
Effective date: December 28, 2020.
Frequency: Quarterly, semiannually, and annually.
Affected public: Businesses or other for-profit.
Respondents: Bank holding companies (BHCs), savings and loan
holding companies (SLHCs), securities holding companies (SHCs), and
U.S. intermediate holding companies (IHCs) (collectively, holding
companies (HCs)).\19\
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\19\ An SLHC must file one or more of the FR Y-9 family of
reports unless it is: (1) A grandfathered unitary SLHC with
primarily commercial assets and thrifts that make up less than five
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 (AA) HCs community bank leverage
ratio (CBLR)) with less than $5 billion in total assets--71,
FR Y-9C (non AA HCs CBLR) with $5 billion or more in total assets--
35,
FR Y-9C (non AA HCs non-CBLR) with less than $5 billion in total
assets--84,
FR Y-9C (non AA HCs non-CBLR) with $5 billion or more in total
assets--154,
FR Y-9C (AA 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 AA HCs CBLR) with less than $5 billion in total
assets--29.17,
FR Y-9C (non AA HCs CBLR) with $5 billion or more in total assets--
35.14,
FR Y-9C (non AA HCs non-CBLR) with less than $5 billion in total
assets--41.01,
FR Y-9C (non AA HCs non-CBLR) with $5 billion or more in total
assets--46.98,
FR Y-9C (AA HCs)--48.80,
FR Y-9LP--5.27,
FR Y-9SP--5.40,
FR Y-9ES--0.50,
FR Y-9CS--0.50.
Recordkeeping
FR Y-9C--1,
FR Y-9LP--1,
FR Y-9SP--0.50,
FR Y-9ES--0.50,
FR Y-9CS--0.50.
Estimated annual burden hours:
Reporting
FR Y-9C (non AA HCs CBLR) with less than $5 billion in total
assets--8,284,
FR Y-9C (non AA HCs CBLR) with $5 billion or more in total assets--
4,920,
FR Y-9C (non AA HCs non-CBLR) with less than $5 billion in total
assets--13,779,
FR Y-9C (non AA HCs non-CBLR) with $5 billion or more in total
assets--28,940,
FR Y-9C (AA HCs)--3,709,
FR Y-9LP--9,149,
FR Y-9SP--42,768,
FR Y-9ES--42,
FR Y-9CS--472.
Recordkeeping
FR Y-9C--1,452,
FR Y-9LP--1,736,
FR Y-9SP--3,960,
FR Y-9ES--42,
FR Y-9CS--472.
General description of report: The FR Y-9C consists of standardized
financial statements similar to the Call Reports filed by banks and
savings associations. 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.\20\
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\20\ 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.
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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.\21\ The report consists of standardized
financial statements.
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\21\ 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 BHCs pursuant to
section 5 of the Bank Holding Company Act of 1956 (BHC Act) (12 U.S.C.
1844); on SLHCs 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 Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act); on U.S. IHCs 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 SHCs 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
[[Page 68248]]
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 considerations.
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)).
(2) Report title: Complex Institution Liquidity Monitoring Report.
Agency form number: FR 2052a.
OMB control number: 7100-0361.
Effective date: December 28, 2020.
Frequency: Monthly, and each business day (daily).
Affected public: Businesses or other for-profit.
Respondents: U.S. BHCs, U.S. SLHCs, and foreign banking
organizations (FBOs) with U.S. assets.
Estimated number of respondents: Monthly, 26; daily, 16.
Estimated average hours per response: Monthly, 120; daily, 220.
Estimated annual burden hours: 917,440.
General description of report: The Board uses the FR 2052a to
monitor the overall liquidity profile of supervised institutions. These
data provide detailed information on the liquidity risks within
different business lines (e.g., financing of securities positions,
prime brokerage activities). In particular, these data serve as part of
the Board's supervisory surveillance program in its liquidity risk
management area and provide timely information on firm-specific
liquidity risks during periods of stress. Analyses of systemic and
idiosyncratic liquidity risk issues are then used to inform the Board's
supervisory processes, including the preparation of analytical reports
that detail funding vulnerabilities.
Legal authorization and confidentiality: The FR 2052a is authorized
pursuant to section 5 of the BHC Act (12 U.S.C. 1844), section 8 of the
International Banking Act (12 U.S.C. 3106), section 165 of the Dodd-
Frank Act (12 U.S.C. 5365), and section 10 of the Home Owners' Loan Act
(12 U.S.C. 1467(a)) and is mandatory. Section 5(c) of the BHC Act
authorizes the Board to require BHCs to submit reports to the Board
regarding their financial condition. Section 8(a) of the International
Banking Act subjects FBOs to the provisions of the BHC Act. Section 165
of the Dodd-Frank Act requires the Board to establish prudential
standards for certain BHCs and FBOs, which include liquidity
requirements. Section 10(g) of the Home Owners' Loan Act authorizes the
Board to collect reports from SLHCs.
Financial institution information required by the FR 2052a is
collected as part of the Board's supervisory process. Therefore, such
information is entitled to confidential treatment under Exemption 8 of
the FOIA (5 U.S.C. 552(b)(8)). In addition, the institution information
provided by each respondent would not be otherwise available to the
public and its disclosure could cause substantial competitive harm.
Accordingly, it is entitled to confidential treatment under the
authority of exemption 4 of the FOIA (5 U.S.C. 552(b)(4)), which
protects from disclosure trade secrets and commercial or financial
information.
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. 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. As discussed previously, the agencies have decided
to adopt, without changes, revisions to the capital and LCR rules made
under the interim final rules. There was no general notice of proposed
rulemaking associated with the interim final rules or this final rule.
Accordingly, the agencies have concluded that the RFA's requirements
relating to initial and final regulatory flexibility analyses do not
apply to the promulgation of this final rule.
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),\22\ in determining the effective
date and administrative compliance requirements for new regulations
that
[[Page 68249]]
impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), each Federal banking agency
must consider, consistent with the principle of safety and soundness
and the public interest, any administrative burdens that the
regulations would place on depository institutions, including small
depository institutions and customers of depository institutions, as
well as the benefits of the 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
IDIs 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.\23\ 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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\22\ 12 U.S.C. 4802(a).
\23\ 12 U.S.C. 4802.
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E. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act \24\ 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 in the interim final rules.
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\24\ 12 U.S.C. 4809.
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F. OCC Unfunded Mandates Reform Act of 1995
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.\25\ Because there was no general notice of proposed
rulemaking associated with the interim final rules or the final rule,
the OCC concludes that the requirements of the UMRA do not apply to
this final rule.
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\25\ See 2 U.S.C. 1532(a).
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Authority and Issuance
For the reasons set forth in the joint SUPPLEMENTARY INFORMATION
section, the interim final rules, which were published at 85 FR 16232,
85 FR 20387, and 85 FR 26835 on March 23, April 13, and May 6, 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 E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on or about September 15, 2020.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2020-21894 Filed 10-27-20; 8:45 am]
BILLING CODE 4810-33-6210-01-6714-01-P