[Federal Register Volume 86, Number 1 (Monday, January 4, 2021)]
[Notices]
[Pages 92-97]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29028]


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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: The Board of Governors of the Federal Reserve System (Board) 
is adopting a proposal to extend for three years, with revision, the 
Financial Statements for Holding Companies (FR Y-9 reports; OMB Control 
Number 7100-0128) and the Consolidated Report of Condition and Income 
for Edge and Agreement Corporations (FR 2886b; OMB Control Number 7100-
0086). The new revisions to these reports are effective as of March 31, 
2021. The Board is also finalizing the following revisions that were 
previously approved on an interim basis: Revisions to the definition of 
``savings deposits'' in the FR Y-9C and FR 2886b instructions 
associated with the amendments to the Board's Regulation D (Reserve 
Requirements of Depository Institutions), collection of two new 
temporary data items on loan modifications consistent with section 
4013(d)(2) of the Coronavirus Aid, Relief and Economic Security (CARES) 
Act, and collection of four new temporary data items related to the an 
interim final rule implementing the Paycheck Protection Program 
Liquidity Facility (PPPLF). These changes became effective June 30, 
2020.

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.
    Office of Management and Budget (OMB) Desk Officer--Will Bestani--
Office of Information and Regulatory Affairs, Office of Management and 
Budget, New Executive Office Building, Room 10235, 725 17th Street NW, 
Washington, DC 20503, or by fax to (202) 395-6974.

SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board 
authority under the PRA to approve and assign OMB control numbers to 
collections of information conducted or sponsored by the Board. Board-
approved collections of information are incorporated into the official 
OMB inventory of currently approved collections of information. The OMB 
inventory, as well as copies of the PRA Submission, supporting 
statements, and approved collection of information instrument(s) are 
available at https://www.reginfo.gov/public/do/PRAMain. These documents 
are also available on the Federal Reserve Board's public website at 
https://www.federalreserve.gov/apps/reportforms/review.aspx or may be 
requested from the agency clearance officer, whose name appears above.

Final Approval Under OMB Delegated Authority of the Extension for Three 
Years, With Revision 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.
    Frequency: Quarterly, semiannually, and annually.
    Respondents: Bank holding companies (BHCs), savings and loan 
holding companies (SLHCs), securities holding companies, and U.S. 
intermediate holding companies (IHCs) (collectively, holding 
companies).\1\
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    \1\ 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 holding companies) with less than 
$5 billion in total assets--124,

[[Page 93]]

    FR Y-9C (non advanced approaches holding companies) with $5 billion 
or more in total assets--218,
    FR Y-9C (advanced approaches holding companies)--9,
    FR Y-9LP--416,
    FR Y-9SP--3,739,
    FR Y-9ES--78,
    FR Y-9CS--236.
    Estimated average hours per response:

Reporting

    FR Y-9C (non advanced approaches holding companies) with less than 
$5 billion in total assets--35.72;
    FR Y-9C (non advanced approaches holding companies) with $5 billion 
or more in total assets--44.92;
    FR Y-9C (advanced approaches holding companies)--50.14;
    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 advanced approaches holding companies) with less than 
$5 billion in total assets--17,715;
    FR Y-9C (non advanced approaches holding companies) with $5 billion 
or more in total assets--39,166;
    FR Y-9C (advanced approaches holding companies)--1,805;
    FR Y-9LP--8,769;
    FR Y-9SP--40,381;
    FR Y-9ES--39;
    FR Y-9CS--472.

Recordkeeping

    FR Y-9C--1,404;
    FR Y-9LP--1,664;
    FR Y-9SP--3,739;
    FR Y-9ES--39;
    FR Y-9CS--472.
    General description of report: The FR Y-9 family of reporting forms 
continues to be the primary source of financial data on holding 
companies that examiners rely on in the intervals between on-site 
inspections. The Board requires holding companies to provide 
standardized financial statements to fulfill the Board's statutory 
obligation to supervise these organizations. Financial data from these 
reporting forms are used to detect emerging financial problems, to 
review performance and conduct pre-inspection analysis, to monitor and 
evaluate capital adequacy, to evaluate holding company mergers and 
acquisitions, and to analyze a holding company's overall financial 
condition to ensure the safety and soundness of its operations. The FR 
Y-9C, FR Y-9LP, and FR Y-9SP serve as standardized financial statements 
for the holding companies. The FR Y-9ES is a financial statement for 
holding companies that are Employee Stock Ownership Plans. The Board 
uses the voluntary FR Y-9CS (a free-form supplement) to collect 
additional information deemed to be critical and needed in an expedited 
manner. Holding companies file the FR Y-9C on a quarterly basis, the FR 
Y-9LP quarterly, the FR Y-9SP semiannually, the FR Y-9ES annually, and 
the FR Y-9CS on a schedule that is determined when this supplement is 
used.
    Legal authorization and confidentiality: The reporting and 
recordkeeping requirements associated with the FR Y-9 series of reports 
are authorized for BHCs pursuant to section 5 of the Bank Holding 
Company Act (``BHC Act''); \2\ for 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 
and Consumer Protection Act (``Dodd-Frank Act''); for IHCs pursuant to 
section 5 of the BHC Act, as well as pursuant to sections 102(a)(1) and 
165 of the Dodd-Frank Act; \3\ and for securities holding companies 
pursuant to section 618 of the Dodd-Frank Act.\4\ Except for the FR Y-
9CS report, which is expected to be collected on a voluntary basis, the 
obligation to submit the remaining reports in the FR Y-9 series of 
reports and to comply with the recordkeeping requirements set forth in 
the respective instructions to each of the other reports, is mandatory.
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    \2\ 12 U.S.C. 1844.
    \3\ 12 U.S.C. 5311(a)(1) and 5365; Section 165(b)(2) of Title I 
of the Dodd-Frank Act, 12 U.S.C. 5365(b)(2), refers to ``foreign-
based bank holding company.'' Section 102(a)(1) of the Dodd-Frank 
Act, 12 U.S.C. 5311(a)(1), defines ``bank holding company'' for 
purposes of Title I of the Dodd-Frank Act to include foreign banking 
organizations that are treated as bank holding companies under 
section 8(a) of the International Banking Act, 12 U.S.C. 3106(a). 
The Board has required, pursuant to section 165(b)(1)(B)(iv) of the 
Dodd-Frank Act, 12 U.S.C. 5365(b)(1)(B)(iv), certain foreign banking 
organizations subject to section 165 of the Dodd-Frank Act to form 
U.S. intermediate holding companies. Accordingly, the parent 
foreign-based organization of a U.S. IHC is treated as a BHC for 
purposes of the BHC Act and section 165 of the Dodd-Frank Act. 
Because section 5(c) of the BHC Act authorizes the Board to require 
reports from subsidiaries of BHCs, section 5(c) provides additional 
authority to require U.S. IHCs to report the information contained 
in the FR Y-9 series of reports.
    \4\ 12 U.S.C. 1850a(c)(1)(A).
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    With respect to the FR Y-9C report, Schedule HI's Memorandum item 
7.g, ``FDIC deposit insurance assessments,'' Schedule HC-P's 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 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\ 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, the 
information also would be withheld pursuant to exemption 8 of the 
FOIA,\6\ which protects information related to the supervision or 
examination of a regulated financial institution.
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    \5\ 5 U.S.C. 552(b)(4).
    \6\ 5 U.S.C. 552(b)(8).
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    In addition, for both the FR Y-9C report and the FR Y-9SP report, 
Schedule HC'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,\7\ if 
the identity of the engagement partner is treated as private 
information by holding companies. The Board has assured respondents 
that this information will be treated as confidential since the 
collection of this data item was proposed in 2004.
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    \7\ 5 U.S.C. 552(b)(4).
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    Additionally, items on the FR Y-9C, Schedule HC-C regarding loans 
modified under section 4013 of the CARES Act (Memorandum item 16.a, 
``Number of Section 4013 loans outstanding'', and Memorandum item 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 believes the disclosure of 
these items at the holding company level would not be in the public 
interest.\8\ Such information is permitted to be collected on a 
confidential basis, consistent with 5 U.S.C. 552(b)(8).\9\ Holding 
companies

[[Page 94]]

may be reluctant to offer modifications under section 4013 if 
information on these modifications are 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.
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    \8\ See 12 U.S.C. 1464(v)(2).
    \9\ Exemption 8 of the Freedom of Information Act (FOIA) 
specifically exempts from disclosure information ``contained in or 
related to examination, operating, or condition reports prepared by, 
on behalf of, or for the use of an agency responsible for the 
regulation or supervision of financial institutions.''
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    Aside from the data items described above, the remaining data items 
collected 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 \10\ reports, are also generally not 
accorded confidential treatment. As provided in the Board's Rules 
Regarding Availability of Information,\11\ 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 granted or denied.
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    \10\ The FR Y-9CS is a supplemental report that may be utilized 
by the Board to collect additional information that is needed in an 
expedited manner from holding companies. The information collected 
on this supplemental report is subject to change as needed. 
Generally, the FR Y-9CS report is treated as public. However, where 
appropriate, data items on the FR Y-9CS report may be withheld under 
exemptions 4 or 8 of the FOIA, 5 U.S.C. 552(b)(4) and (8).
    \11\ 12 CFR part 261.
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    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 workpapers 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.\12\ In addition, the workpapers 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.\13\
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    \12\ 5 U.S.C. 552(b)(8).
    \13\ 5 U.S.C. 552(b)(4).
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    (2) Report title: Consolidated Report of Condition and Income for 
Edge and Agreement Corporations.
    Agency form number: FR 2886b.
    OMB control number: 7100-0086.
    Frequency: Quarterly and annually.
    Reporters: Edge and agreement corporations.
    Estimated annual reporting hours:
    Banking: Edge and agreement corporations (quarterly): 586;
    Banking: Edge and agreement corporations (annually): 16;
    Investment: Edge and agreement corporations (quarterly): 1,034;
    Investment: Edge and agreement corporations (annually): 79.
    Estimated average hours per response:
    Banking: Edge and agreement corporations (quarterly): 15.77;
    Banking: Edge and agreement corporations (annually): 15.87;
    Investment: Edge and agreement corporations (quarterly): 11.81;
    Investment: Edge and agreement corporations (annually): 10.82.
    Number of respondents:
    Banking: Edge and agreement corporations (quarterly): 9;
    Banking: Edge and agreement corporations (annually): 1;
    Investment: Edge and agreement corporations (quarterly): 21;
    Investment: Edge and agreement corporations (annually): 7.
    General description of report: The FR 2886b reporting form is filed 
quarterly and annually by banking Edge and agreement corporations and 
investment (nonbanking) Edge and agreement corporations (collectively, 
``Edges or Edge corporations''). The mandatory FR 2886b comprises a 
balance sheet, an income statement, two schedules reconciling changes 
in capital and reserve accounts, and 11 supporting schedules. The Board 
uses the FR 2886b data to help plan and target the scope of 
examinations of Edges and to evaluate applications from Edge 
corporations. Data from the FR 2886b are also used to monitor aggregate 
institutional trends, such as growth in assets and the number of 
offices, changes in leverage, and the types and locations of customers 
and to monitor and identify present and potential problems with Edge 
corporations.
    Legal authorization and confidentiality: Sections 25 and 25A of the 
Federal Reserve Act authorize the Federal Reserve to collect the FR 
2886b (12 U.S.C. 602, 625). The obligation to report this information 
is mandatory. For Edge and Agreement corporations engaged in banking, 
current Schedules RC-M (with the exception of item 3) and RC-V are held 
confidential pursuant to exemption 4 of FOIA (12 U.S.C. 552(b)(4)). For 
Edge and Agreement corporations not engaged in banking, only 
information collected on Schedule RC-M (with the exception of item 3) 
are given confidential treatment pursuant to exemption 4 of FOIA (12 
U.S.C. 552(b)(4)).
    Current actions: On July 7, 2020, the Board published a notice \14\ 
to temporarily revise the FR Y-9C to collect four new data items 
related to Paycheck Protection Program (PPP) loans and the PPPLF. Also, 
as part of this notice, the Board temporarily revised the FR Y-9C to 
collect two new data items related to section 4013 of the CARES act.
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    \14\ 85 FR 40646 (July 7, 2020).
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    On October 8, 2020, the Board published a separate notice \15\ to 
propose a number of revisions to the FR Y-9C, FR Y-9LP, and FR Y-9SP 
related to U.S. GAAP effective for reports with a March 31, 2021, as-of 
date, except for proposed revisions related to last-of-layer hedging, 
which were proposed to become effective following the adoption and 
implementation of a final standard by the Financial Accounting 
Standards Board (FASB). For holding companies that have adopted 
Accounting Standards Codification (ASC) Topic 326, Financial 
Instruments--Credit Losses, the Board proposed in the October 2020 
notice to add new Memorandum item 7, ``Provisions for credit losses on 
off-balance sheet credit exposures,'' to Schedule HI-B, Part II, 
Changes in allowances for Credit Losses. This line item would have 
enhanced transparency and differentiate between the provisions 
attributable to on-and off-balance sheet credit exposures reported in 
item 4, ``Provisions for loan and lease losses'' on the FR Y-9C income 
statement. As part of the GAAP-related changes, the Board also proposed 
new Memorandum item 8 to Schedule HI-B, Part II, ``Changes in 
Allowances for Credit Losses'', to the FR Y-9C report. The description 
of the memorandum item would have been ``Estimated amount of expected 
recoveries of amounts previously written off included within the 
allowance for credit losses on loans and leases held for investment 
(included in item 7, column A, `Balance end of current period,' 
above).'' In proposing this reporting change, the Board noted that, 
under ASC Topic 326, holding companies could in some circumstances 
reduce the amount of the allowance for credit losses that would 
otherwise be calculated for a pool of assets with similar risk 
characteristics, which includes charged-off assets, by the estimated 
amount of expected recoveries of amounts written off on these assets.
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    \15\ 85 FR 63553 (October 8, 2020).
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    In this same October notice, the Board proposed to finalize, on an 
interim basis, revisions to the definition of ``savings deposits'' in 
the FR Y-9C and FR 2886b instructions that are

[[Page 95]]

associated with the amendments to the Board's Regulation D (Reserve 
Requirements of Depository Institutions) published April 28, 2020.\16\ 
The temporarily-approved revisions permit, but do not require, 
depository institutions to immediately suspend enforcement of the six-
transfer limit on convenient transfers for savings deposits and to 
allow their customers to make an unlimited number of convenient 
transfers and withdrawals from their savings deposits. The General 
Instructions for FR Y-9C Schedule HC-E, Deposit Liabilities, and FR 
2886b Schedule RC-E, Deposit Liabilities, were revised to state that if 
an institution chooses to suspend enforcement of the six-transfer limit 
on a ``savings deposit,'' the institution may continue to report that 
account as a ``savings deposit'' or may instead choose to report that 
account as a ``transaction account'' based on an assessment of certain 
characteristics of the account.
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    \16\ 85 FR 23445 (April 28, 2020).
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    Also as part of the October notice, the Board proposed to revise 
the General Instructions for FR Y-9C Schedule HC-E and FR 2886b 
Schedule RC-E to state that where the reporting institution has 
suspended the enforcement of the six-transfer limit rule on an account 
that otherwise meets the definition of a savings deposit, the 
institution must report such deposits as a ``savings deposit'' (and as 
a ``nontransaction account'') or a ``transaction account'' based on an 
assessment of certain criteria.
    The comment period for the July 2020 notice ended on September 8, 
2020. The Board did not receive any comments on this proposal, and the 
revisions will be implemented as proposed, with the new data items 
being collected through December 31, 2021.
    The comment period for the October 2020 notice expired on December 
7, 2020. The Board received a comment from a banker's association on 
this proposal. Comments were also received on a comparable proposal 
involving the Consolidated Reports of Condition and Income (Call 
Report) (FFIEC 031, FFIEC 041and FFIEC 051; OMB Control Number 7100-
0036).\17\ The Board has taken the comments from the proposed changes 
to the Call Report into consideration in finalizing the proposed FR Y-
9C and FR 2886b changes. The revisions to the FR Y-9C and FR 2886b will 
be implemented as proposed, with certain modifications described below. 
The effective date of the proposed revisions to the FR Y-9C and FR 
2886b instructions regarding the definition of ``savings deposits'' is 
December 31, 2020. The effective date for all other changes is March 
31, 2021.
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    \17\ 85 FR 44361 (July 22, 2020).
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Comments Received on Provision for Credit Losses on Off-Balance Sheet 
Credit Exposures

    The lone commenter on the October 2020 notice noted the potential 
impact on other reports beyond the FR Y-9C of the GAAP change related 
to provision for credit losses on off-balance sheet credit exposures. 
These other reports include the FR Y-7N (OMB Control Number 7100-0125), 
FR Y-11 (OMB Control Number 7100-0244), FR 2314 (OMB Control Number 
7100-0073), FR 2886b (OMB Control Number 7100-0086), and FR 2644 (OMB 
Control Number 7100-0075).
    The Board will consider conforming changes to the forms and 
instructions for the FR 2886b, FR Y-7N, FR Y-11, and FR 2314 in the 
future. Any such changes would be proposed by the Board through a 
separate Federal Register notice pursuant to the Paperwork Reduction 
Act. The Board does not intend to make conforming changes to the FR 
2644 since this report is only comprised of balance sheet items and 
this GAAP-related change only impacts income statement items.

Comments Received on Final Regulation D Reporting Revisions

    The Board did not receive comments on the proposal to finalize the 
temporarily-approved revisions to the FR Y-9C and FR 2886b instructions 
regarding the definition of ``savings deposits'' associated with the 
amendments to the Board's Regulation D. The changes were effective as 
of June 30, 2020.
    The commenter on the October 2020 notice raised several concerns 
with the proposed changes related to the definition of ``savings 
deposits'' and the assessment criteria to remove certain optional 
reporting, and requested a clarification on the definition of ``retail 
sweep arrangements.'' The commenter recommended that the revisions be 
consistent across reports. Specifically, the commenter recommended that 
savings deposits be classified consistently as transaction or 
nontransaction accounts across reports. The commenter stated that the 
differences in the treatment of savings deposits would require firms to 
report savings deposits as nontransaction accounts on the Call Reports, 
FR Y-9C, and FR 2886b, while the same deposits would be classified as a 
transaction account on the Report of Transaction Accounts, Other 
Deposits and Vault Cash (FR 2900; OMB Control Number 7100-0087). The 
commenter recommended that the Board provide clear and consistent 
definitions of ``savings deposits,'' ``transaction accounts,'' and 
``nontransaction accounts.'' In response to the commenter's 
recommendation, the Board will continue to maintain the requirement to 
report ``savings deposits'' as a component of nontransaction accounts 
on the FR Y-9C and FR 2886b in order to maintain consistency with the 
Call Report. The Board will also maintain the definition of 
``transaction accounts'' and ``nontransaction accounts'' as currently 
stated in the FR Y-9C and FR 2886b instructions, which is consistent 
with the Call Report instructions. It is important to note the Call 
Report and FR Y-9C are principal sources of financial data used for 
supervision and regulation of the banking industry whereas the primary 
purpose of the FR 2900 report is to collect data for the construction 
of the monetary aggregates.
    Secondly, regarding the proposed changes to the assessment criteria 
for ``savings deposits,'' the commenter recommended that a depositor's 
eligibility to hold a NOW account should not be included in the 
criteria assessment to determine the reporting treatment for savings 
deposits for which the numeric limits on transfers and withdrawals have 
been removed. The commenter noted that ``if a firm does not offer NOW 
accounts, they would be required to report savings deposits as NOW 
accounts, ATS accounts, or telephone and preauthorized transfer 
accounts (and as transaction accounts) based on a depositor's 
eligibility to hold such account'' and ``for firms that do not offer 
NOW accounts, the data necessary to determine a depositor's eligibility 
for NOW accounts would not be readily available.'' In addition, the 
commenter noted that this reporting treatment would be inconsistent 
with the Regulation D definition of savings deposits, as NOW account 
eligibility is not a component of the definition. The commenter 
believed that gathering the data necessary to distinguish these 
depositors from other savings account holders solely for regulatory 
reporting purposes would create business and systems challenges. The 
Board agrees with the commenter that the depositor's eligibility to 
hold a NOW account should not be included in the assessment criteria 
for classification as a ``savings deposit,'' as such reporting would 
not be consistent with the Regulation D definition of savings deposits. 
Therefore, the Board will remove the depositor's eligibility to

[[Page 96]]

hold a NOW account from the assessment criteria. The Board and the 
other federal banking agencies have proposed comparable revisions to 
the Call Report.
    Additionally, the commenter recommended that the effective date of 
the proposed revisions to the FR Y-9C and the FR 2886b definition of 
``savings deposits'' be delayed from December 31, 2020, until June 30, 
2021, to better align with the proposed effective dates of the FR 2900 
\18\ and the Report of Foreign (Non-U.S.) Currency Deposits (FR 2915; 
OMB Control Number 7100-0087). The commenter noted that aligning the 
timing of the revisions would give firms additional time to implement 
any further changes made by the Board and other agencies in light of 
the comments received. In response to the commenter's recommendation, 
the Board has deferred the effective date of the proposed revisions 
that requires a depository institution to report each account as a 
``savings deposit'' or a ``transaction account'' based on the 
institution's assessment of account characteristics and removes the 
optionality in reporting savings deposits as either a ``savings 
deposit'' or a ``transaction account'' if the institution suspended the 
enforcement of the six-transfer limit until March 31, 2021. Choosing 
March 31, 2021 as the proposed effective date will align the FR Y-9C 
and FR 2886b Regulation D revisions with the Call Report and will 
provide institutions additional time to implement any necessary 
changes. The timing of the FR Y-9C changes was chosen to match the Call 
Report to allow for consistent quarterly reporting.
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    \18\ 85 FR 54577 (Nov. 2, 2020).
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    Lastly, the commenter requested clarification on how institutions 
should report the components of retail sweep arrangements on the FR Y-
9C report. Specifically, the commenter asked whether institutions 
should continue to report the nontransaction components of, or savings 
deposits in, retail sweep arrangements as nontransaction accounts. If 
not, the commenter asked whether institutions should strictly follow 
the proposed assessment criteria for the treatment of accounts where 
the transfer limit has been removed. In response to the comment, the 
Board has modified the description of retail sweep arrangements in the 
FR Y-9C instructions to remove references to transaction and 
nontransaction components. Further, the instructions will indicate that 
institutions should not follow the proposed assessment criteria for the 
treatment of accounts for which the transfer limit has been removed. 
Instead, the instructions will note that institutions that offer valid 
retail sweep programs must report each component of the retail sweep 
arrangement based on the customer account agreement established by the 
depository institution. The instructions will also note that two key 
criteria must be met for a valid retail sweep program. These criteria 
are: (1) A depository institution must establish by agreement with its 
customer two distinct, legally separate accounts; and (2) the swept 
funds must actually be moved between the customer's accounts on the 
depository institution's official books and records as of the close of 
business on the day(s) on which the depository institution intends to 
report the funds as being in separate accounts. These modifications are 
consistent with modifications to the Call Report instructions made in 
response to a similar comment.\19\
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    \19\ 85 FR 74784.
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Modifications to Proposed Memorandum Item 8 of Schedule HI-B, Part II, 
``Changes in Allowances for Credit Losses''

    As discussed above, the Board proposed to add a new Memorandum item 
8 to Schedule HI-B, Part II, to collect the estimated amount of 
expected recoveries of amounts previously written off included within 
the allowance for credit losses on loans and leases held for 
investment. The Board did not receive any comments on this aspect of 
the proposal, and will adopt this revision. However, the Board has 
decided to collect this new Memorandum item only from holding companies 
with $5 billion or more in total consolidated assets. The Board decided 
to limit this collection to such holding companies in order to minimize 
burden, consistent with a number of other FR Y-9C items that are not 
required from holding companies with less than $5 billion in total 
assets.

Proposed Revisions Related to Last-of-Layer Hedging

    In the October 2020 notice, the Board proposed to make certain 
revisions to the FR Y-9C related to the last-of-layer method of hedge 
accounting standards. This proposal would have implemented in the FR Y-
9C revisions related to a project added to the FASB agenda to expand 
last-of-layer hedging to multiple layers, thereby providing more 
flexibility to entities when applying hedge accounting to a closed 
portfolio of prepayable assets. The Board proposed for these revisions 
to become effective following the adoption and implementation of a 
final standard on this matter by FASB.
    Because FASB has not yet adopted a final standard regarding last-
of-layer hedging, the Board has not adopted the proposed FR Y-9C 
revisions associated with this topic at this time. The Board will 
consider whether to finalize the proposed revisions related to last-of-
layer hedging when FASB adopts a final standard.

Additional Instructional Matters

    The agencies addressed several additional instructional matters in 
the final Call Report notice. The Board will make comparable clarifying 
changes to the FR Y-9 reports for consistency purposes as discussed in 
detail below.

1. Uncollectible Accrued Interest Receivable Under ASC Topic 326

    In April 2019, the Financial Accounting Standards Board (FASB) 
issued ASU No. 2019-04, ``Codification Improvements to Topic 326, 
Financial Instruments--Credit Losses, Topic 815, Derivatives and 
Hedging, and Topic 825, Financial Instruments,'' which amended ASC 
Topic 326 to allow an institution to make certain accounting policy 
elections for accrued interest receivable balances, including a 
separate policy election, at the class of financing receivable or major 
security-type level, to charge off any uncollectible accrued interest 
receivable by reversing interest income, recognizing credit loss 
expense (i.e., provision expense), or a combination of both. The 
Glossary entry for ``Accrued Interest Receivable'' in the FR Y-9C 
report instructions currently references the following accounting 
policy elections in ASU 2019-04:
    <bullet> Holding companies may elect to separately present accrued 
interest receivable from the associated financial asset, and the 
accrued interest receivable is presented net of an allowance for credit 
losses (ACL), if any; and
    <bullet> Holding companies that charge off uncollectible accrued 
interest receivable in a timely manner, i.e., in accordance with the 
Glossary entry for ``Nonaccrual Status,'' may elect, at the class of 
financing receivable or the major security-type level, not to measure 
an ACL for accrued interest receivable.
    Although this Glossary entry does not currently provide for the 
ASU's separate accounting policy election for the charge-off of 
uncollectible accrued interest receivable at the class of financing 
receivable or major security-type level, this election is specifically 
addressed in the Interagency Policy Statement on Allowances for Credit

[[Page 97]]

Losses issued in May 2020.\20\ Accordingly, as provided in the FR Y-9C 
Supplemental Instructions for the September 30, 2020, report date,\21\ 
a holding company that has adopted ASC Topic 326 may make the charge-
off election for accrued interest receivable balances in ASU 2019-04 
separately from the other elections for these balances in the ASU for 
FR Y-9C reporting purposes. A holding company may also charge off 
uncollectible accrued interest receivable against an ACL for FR Y-9C 
reporting purposes.
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    \20\ 85 FR 32991 (June 1, 2020).
    \21\ https://www.federalreserve.gov/reportforms/supplemental/Final%20FR%20Y-9C%20September%202020%20Supplemental%20Instructions.pdf.
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    The Board plans to update the FR Y-9C Glossary entry for ``Accrued 
Interest Receivable'' to align the instructions in this entry with the 
elections permitted under U.S. GAAP for institutions that have adopted 
ASC 326, which also would achieve consistency with the discussion of 
accrued interest receivable in the Interagency Policy Statement on 
Allowances for Credit Losses.

2. Shared Fees and Commissions From Securities-Related and Insurance 
Activities

    Holding companies with $5 billion or more in total assets report 
income from certain securities-related and insurance activities in FR 
Y-9C report Schedule HI, Income Statement, items 5.d.(1) through (7), 
while holding companies with less than $5 billion in total assets 
report only items 5.d.(6) and 5.d.(7). When an institution partners 
with, or otherwise joins with, a third party to conduct these 
securities-related or insurance activities, and any fees and 
commissions generated by these activities are shared with the third 
party, the Schedule HI instructions do not currently address the 
reporting treatment for these sharing arrangements. Consequently, 
holding companies may have reported the gross fees and commissions from 
these activities in the appropriate subitem of Schedule HI, item 5, 
``Other noninterest income,'' and the third party's share of the fees 
and commissions separately as expenses in Schedule HI, item 7.d, 
``Other noninterest expense.'' Alternatively, holding companies may 
have reported only their net share of the fees or commissions in the 
appropriate subitem of Schedule HI, item 5.
    The Board believes that reporting shared fees and commissions on a 
net basis is preferable to gross reporting and is analogous to how 
income from certain other income-generating activities is reported on 
the FR Y-9C income statement, including securitization income and 
servicing fee income, which are currently reported net of specified 
expenses and costs.
    This net approach better represents an institution's income from a 
securities-related or insurance activity engaged in jointly with a 
third party than when the third party's share of the fees and 
commissions is separately reported as a noninterest expense in another 
income statement data item. As a result, the Board has clarified the 
existing Schedule HI instructions to ensure consistent reporting on a 
net basis of fees and commissions from securities-related and insurance 
activities that are shared with third parties. Furthermore, to avoid 
including repetitive language in the instructions for the multiple 
noninterest income items for income from securities-related and 
insurance activities in Schedule HI, a new non-reportable item 5.d 
captioned ``Income from securities-related and insurance activities'' 
has been added before the existing 5.d subitems on the FR Y-9C report. 
The reporting treatment for arrangements involving the sharing of fees 
and commissions with third parties arising from an institution's 
securities brokerage, investment banking, investment advisory, 
securities underwriting, insurance and annuity sales, insurance 
underwriting, or any other securities-related and insurance activities 
is explained once in the new item 5.d instructions.

3. Pledged Equity Securities

    In January 2016, the FASB issued ASU 2016-01, ``Recognition and 
Measurement of Financial Assets and Financial Liabilities.'' As one of 
its main provisions, the ASU requires investments in equity securities, 
except those accounted for under the equity method and those that 
result in consolidation, to be measured at fair value, with changes in 
fair value recognized in net income. Thus, the ASU eliminates the 
existing concept of available-for-sale (AFS) equity securities, which 
are measured at fair value with changes in fair value generally 
recognized in other comprehensive income. As of December 31, 2020, all 
holding companies will have been required to adopt ASU 2016-01 and, as 
a consequence, must report equity securities with readily determinable 
fair values not held for trading in Schedule HC, Balance Sheet, item 
2.c, ``Equity securities with readily determinable fair values not held 
for trading,'' instead of Schedule HC-B, Securities, item 7, 
``Investments in mutual funds and other equity securities with readily 
determinable fair values.'' Accordingly, Schedule HC-B, item 7, will be 
removed effective December 31, 2020.
    Holding companies report held-to-maturity and AFS securities in 
Schedule HC-B, items 1 through 7, and have long reported in Schedule 
HC-B, Memorandum item 1, ``Pledged securities'' the amount of such 
securities that are pledged to secure deposits and for other purposes. 
Considering that all institutions that previously reported their AFS 
equity securities in Schedule HC-B, item 7, now report these securities 
in Schedule HC, item 2.c, the Board is updating the instructions for 
Schedule HC-B, Memorandum item 1, and Schedule HC, item 2.c, to 
indicate that holding companies should include in Memorandum item 1 the 
fair value of pledged equity securities with readily determinable fair 
values not held for trading that are now reported in Schedule HC, item 
2.c. The wording of existing footnote 1 to Memorandum item 1 of 
Schedule HC-B on the FR Y-9C forms will be similarly updated. These 
instructional clarifications would ensure that pledged equity 
securities formerly reportable as AFS equity securities would continue 
to be reported in Memorandum item 1 notwithstanding the change in 
accounting for equity securities under U.S. GAAP. Information on 
pledged securities is an important element of the agencies' analysis of 
an institution's liquidity risk. The existing footnote 1 to Memorandum 
item 1, Schedule HC-B on the FR Y-9C forms and the instructions for PC-
B Memoranda line item 10, ``Pledged securities'', of the FR Y-9LP and 
related footnote 1 reference of this line item on the FR Y-9LP forms 
will be similarly updated.
    The FR Y-9C instructional clarifications to the Glossary entry for 
``Accrued Interest Receivable'' and Schedule HC-B for pledged equity 
securities will take effect December 31, 2020, while the instructional 
clarifications to Schedule HI for shared fees and commissions from 
securities-related and insurance activities will take effect March 31, 
2021.

    Board of Governors of the Federal Reserve System, December 28, 
2020.
Ann Misback,
Secretary of the Board.
[FR Doc. 2020-29028 Filed 12-31-20; 8:45 am]
BILLING CODE 6210-01-P