[Federal Register Volume 75, Number 39 (Monday, March 1, 2010)]
[Notices]
[Pages 9211-9217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4118]


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FEDERAL RESERVE SYSTEM


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

    This notice corrects a notice (FR Doc. 2010-3578) published on 
pages 8355 through 8362 of the issue for February 24, 2010.
    Under the Federal Reserve System heading, the entry for Agency 
Information Collection Activities: Announcement of Board Approval Under 
Delegated Authority and Submission to OMB, is revised to read as 
follows:
SUMMARY: Background. Notice is hereby given of the final approval of 
proposed information collections by the Board of Governors of the 
Federal Reserve System (Board) under OMB delegated authority, as per 5 
CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the 
Public). Board-approved collections of information are incorporated 
into the official OMB inventory of currently approved collections of 
information. Copies of the Paperwork Reduction Act Submission, 
supporting statements and approved collection of information 
instruments are placed into OMB's public docket files. The Federal 
Reserve may not conduct or sponsor, and the respondent is not required 
to respond to, an information collection that has been extended, 
revised, or implemented on or after October 1, 1995, unless it displays 
a currently valid OMB control number.

FOR FURTHER INFORMATION CONTACT:
    Federal Reserve Board Clearance Officer--Michelle Shore--Division 
of Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, DC 20551 (202-452-3829)
    OMB Desk Officer--Shagufta Ahmed--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New

[[Page 9212]]

Executive Office Building, Room 10235, Washington, DC 20503.
    Final approval under OMB delegated authority of the revision, 
without extension, of the following reports:
    1. Report title: Consolidated Financial Statements for Bank Holding 
Companies.
    Agency form number: FR Y-9C.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: BHCs.
    Estimated annual reporting hours: 174,070 hours.
    Estimated average hours per response: 42.25 hours.
    Number of respondents: 1,030.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to the data in these reports. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form, pursuant to sections 
(b)(4), (b)(6)and (b)(8) of the Freedom of Information Act (5 U.S.C. 
552(b)(4), (b)(6) and (b)(8)).
    Abstract: The FR Y-9 family of reports historically has been, and 
continues to be, the primary source of financial information on BHCs 
between on-site inspections. Financial information from these reports 
is used to detect emerging financial problems, to review performance 
and conduct pre-inspection analysis, to monitor and evaluate capital 
adequacy, to evaluate BHC mergers and acquisitions, and to analyze a 
BHC's overall financial condition to ensure safe and sound operations.
    The FR Y-9C consists of standardized financial statements similar 
to the Federal Financial Institutions Examination Council (FFIEC) 
Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031 
& 041; OMB No. 7100-0036) filed by commercial banks. The FR Y-9C 
collects consolidated data from BHCs. The FR Y-9C is filed by top-tier 
BHCs with total consolidated assets of $500 million or more. (Under 
certain circumstances defined in the General Instructions, BHCs under 
$500 million may be required to file the FR Y-9C.)
    Current Actions: On September 25, 2009, the Federal Reserve 
published a notice in the Federal Register (74 FR 48960) requesting 
public comment for 60 days on the revision, without extension, of the 
FR Y-9C report. The comment period for this notice expired on November 
24, 2009. The Federal Reserve received one comment letter on this 
proposal. In addition, the Federal Reserve, Federal Deposit Insurance 
Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) 
(the banking agencies) received six comment letters on proposed 
revisions to the Consolidated Reports of Condition and Income (Call 
Reports) (FFIEC 031 & 041; OMB No. 7100-0036) that parallel the 
proposed revisions to the FR Y-9C and are taken into consideration for 
this proposal.

Summary of Comments

    The Federal Reserve received one comment letter from a bankers' 
organization on proposed revisions to the FR Y-9C (who also submitted 
comparable comments on proposed changes to the Call Report). In 
addition, the banking agencies received comment letters from six 
organizations: two banks, one bank holding company (BHC), two bankers' 
organizations, and a bank insurance consultant on proposed changes to 
the Call Report, many of which parallel proposed changes to the FR Y-9C 
and are taken into consideration for this proposal.
    None of the commenters addressed all aspects of the proposed 
changes to the FR Y-9C and Call Report. Rather, individual respondents 
commented on one or more of the proposed changes. Four of the 
commenters offered general views on the overall proposal. One bank 
expressed general support for the proposal and identified a few items 
that deserved further consideration. The bankers' organization 
commented that its members expressed no concerns with many of the 
proposed changes, but it urged the Federal Reserve and the banking 
agencies to consider several suggested changes in the final revisions. 
The organization's suggested changes also included the proposed 
collection of data in one subject area that was not addressed in the 
proposal.
    One bank opposed the proposed revisions, stating they would not 
improve the safety and soundness of any banking organization, yet would 
add to banking organizations' costs of operations. While an important 
use of FR Y-9C data is to assist the Federal Reserve in fulfilling 
their supervisory responsibilities with respect to the safety and 
soundness of individual BHCs as well as the banking system as a whole, 
FR Y-9C data are also used for a variety of other purposes, such as 
supporting the conduct of monetary policy and assessing the 
availability of credit. Furthermore, in developing the FR Y-9C 
revisions for 2010, the Federal Reserve carefully considered the 
purposes for which the proposed additional data would be used, which 
are described in the September 25, 2009, Federal Register notice and, 
to the extent appropriate, in this Federal Register notice. The Federal 
Reserve also considered the estimated cost and burden to BHCs of 
reporting these additional data.
    The following section of this notice describes the proposed FR Y-9C 
report changes and discusses the Federal Reserve's evaluation of the 
comments received on the proposed changes, including modifications made 
in response to those comments. The following section also addresses the 
Federal Reserve's response to the recommendation from the bankers' 
organization's concerning the collection of certain additional data 
that had not been included in the September 25, 2009, notice.
    After considering the comments, the Federal Reserve will move 
forward in 2010 with the proposed reporting changes after making 
certain modifications in response to the comments. In addition, the 
Federal Reserve will add four data items to the FR Y-9C on assets 
covered by FDIC loss-sharing agreements in response to the 
recommendation from the bankers' organization.
    The Federal Reserve recognizes institutions' need for lead time to 
prepare for reporting changes. Thus, consistent with longstanding 
practice, for the March 31, 2010, report date, BHCs may provide 
reasonable estimates for any new or revised FR Y-9C data item initially 
required to be reported as of that date for which the requested 
information is not readily available. Furthermore, the specific wording 
of the captions for the new or revised FR Y-9C data items discussed in 
this notice and the numbering of these data items should be regarded as 
preliminary.

I. FR Y-9C Revisions Proposed for March 2010

    The Federal Reserve and the banking agencies received either no 
comments on or comments expressing support for the following revisions 
that were proposed to take effect as of March 31, 2010, and therefore 
the Federal Reserve will implement these revisions as proposed:
    <bullet> New Memorandum items in Schedule HI, Income Statement, 
identifying total other-than-temporary impairment losses on debt 
securities, the portion of the total recognized in other comprehensive 
income, and the net losses recognized in earnings, consistent with the 
presentation requirements of a recent accounting standard;
    <bullet> Clarification of the instructions for reporting brokered 
deposits in Schedule HC-E, and

[[Page 9213]]

    <bullet> Reformatting of loan information collected on Schedule HC-
K, Quarterly Averages.
    The Federal Reserve and the banking agencies received one or more 
comments addressing or otherwise relating to each of the following 
proposed revisions:
    <bullet> Clarification of the instructions for reporting unused 
commitments in Schedule HC-L, Derivatives and Off-Balance-Sheet Items;
    <bullet> Breakdowns of the existing data items in Schedule HC-L for 
unused credit card lines and other unused commitments, with the former 
breakdown required only for certain institutions, and a related 
breakdown of the existing data item for other loans in Schedule HC-C, 
Loans and Lease Financing Receivables; and
    <bullet> Clarification of impact of FAS Statements Nos. 166 and 167 
\1\ on the reporting instructions, and related potential future 
proposed revisions.
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    \1\ Statement of Financial Accounting Standards (FAS Statements) 
No. 166, Accounting for Transfers of Financial Assets, amends FAS 
Statement No. 140, Accounting for Transfers and Servicing of 
Financial Assets and Extinguishments of Liabilities. FAS Statement 
No. 167, Amendments to Financial Accounting Standards Board (FASB) 
Interpretation No. 46(R), amends FASB Interpretation No. 46(R), 
Consolidation of Variable Interest Entities. In general, under the 
FASB Accounting Standards Codification\TM\, see Topics 860, 
Transfers and Servicing, and 810, Consolidation.
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    The Federal Reserve and the banking agencies also received one 
comment recommending the addition of data to the FR Y-9C on assets 
covered by FDIC loss-sharing agreements, which the Federal Reserve had 
not proposed.

A. Clarification of the Instructions for Reporting Unused Commitments

    BHCs report unused commitments in data item 1 of Schedule HC-L, 
Derivatives and Off-Balance Sheet Items. The instructions for this data 
item identify various arrangements that should be reported as unused 
commitments, including but not limited to commitments for which the BHC 
has charged a commitment fee or other consideration, commitments that 
are legally binding, loan proceeds that the BHC is obligated to 
advance, commitments to issue a commitment, and revolving underwriting 
facilities. However, the Federal Reserve has found that some BHCs have 
not reported commitments that they have entered into until they have 
signed the loan agreement for the financing that they have committed to 
provide. Although the Federal Reserve considers these arrangements to 
be commitments to issue a commitment and within the scope of the 
existing instructions for reporting commitments in Schedule HC-L, the 
Federal Reserve believes that these instructions may not be 
sufficiently clear. Therefore, the Federal Reserve proposed to revise 
the instructions for Schedule HC-L, data item 1, Unused commitments, to 
clarify that commitments to issue a commitment at some point in the 
future are those where the BHC has extended terms and the borrower has 
accepted the offered terms, even though the related loan agreement has 
not yet been signed.
    One bank and the bankers' organization commented on this proposed 
revision to the instructions for reporting commitments to issue a 
commitment. The bank recommended that these instructions ``should 
include only terms extended and accepted in writing to allow the banks 
to develop a reliable tracking system.'' Similarly, the bankers' 
organization recommended that the commitment be in writing, but also 
stated that banking organizations should only be required to report 
when the commitment ``has an expiration date of greater than 90 days.'' 
The bankers' organization further added that it ``would be exceedingly 
difficult to capture commitments that have an expiration date of 90 
days or less and that are not in writing.'' The organization requested 
that the Federal Reserve and the banking agencies delay the effective 
date of the revised instructions for reporting commitments to issue a 
commitment by at least six months ``to allow [banking organizations] 
sufficient time to adjust their systems.''
    The Federal Reserve generally agrees with the recommendation that 
the instructions for reporting commitments to issue a commitment should 
cover situations where the terms extended and accepted are in writing. 
However, in those circumstances where the extension and acceptance of 
the terms are not in writing but are legally binding on both the BHC 
and the borrower under applicable law, the Federal Reserve believes 
that such commitments should be reported. Furthermore, when the terms 
of a commitment to issue a commitment have been extended and accepted 
in writing or, if not in writing, are legally binding, the Federal 
Reserve believes that it is a sound banking practice and a sound 
internal control for the BHC entering into such commitments to maintain 
an appropriate tracking system for the commitments whether or not there 
is a related regulatory reporting requirement.
    Accordingly, the Federal Reserve recommends revising the proposed 
instructional clarification pertaining to the reporting of commitments 
to issue a commitment in Schedule HC-L, data item 1, Unused 
commitments, to state that commitments to issue a commitment at some 
point in the future are those where the BHC has extended terms, the 
borrower has accepted the offered terms, and the terms extended and 
accepted are in writing or, if not in writing, are legally binding on 
the BHC and the borrower, even though the related loan agreement has 
not yet been signed. Although the Federal Reserve will not delay the 
effective date for this instructional clarification, BHCs will be 
reminded that, because of the revision to the instructions for 
reporting commitments to issue a commitment in Schedule HC-L, data item 
1, they may provide a reasonable estimate of the amount of such 
commitments in their FR Y-9C reports for March 31, 2010. In response to 
the comments received, the revised instructions for Schedule HC-L, data 
item 1, would read as follows:

    Report in the appropriate subitem the unused portions of 
commitments. Unused commitments are to be reported gross, i.e., 
include in the appropriate subitem the unused amount of commitments 
acquired from and conveyed or participated to others. However, 
exclude commitments conveyed or participated to others that the bank 
holding company is not legally obligated to fund even if the party 
to whom the commitment has been conveyed or participated fails to 
perform in accordance with the terms of the commitment.
    For purposes of this item, commitments include:
    (1) Commitments to make or purchase extensions of credit in the 
form of loans or participations in loans, lease financing 
receivables, or similar transactions.
    (2) Commitments for which the bank holding company has charged a 
commitment fee or other consideration.
    (3) Commitments that are legally binding.
    (4) Loan proceeds that the bank holding company is obligated to 
advance, such as:
    (a) Loan draws;
    (b) Construction progress payments; and
    (c) Seasonal or living advances to farmers under prearranged 
lines of credit.
    (5) Rotating, revolving, and open-end credit arrangements, 
including, but not limited to, retail credit card lines and home 
equity lines of credit.
    (6) Commitments to issue a commitment at some point in the 
future, where the bank holding company has extended terms, the 
borrower has accepted the offered terms, and the extension and 
acceptance of the terms are in writing or, if not in writing, are 
legally binding on the bank holding company and the borrower, even 
though the related loan agreement has not yet been signed.
    (7) Overdraft protection on depositors' accounts offered under a 
program where the bank holding company advises account holders of 
the available amount of overdraft protection, for example, when 
accounts are

[[Page 9214]]

opened or on depositors' account statements or ATM receipts.
    (8) The bank holding company's own takedown in securities 
underwriting transactions.
    (9) Revolving underwriting facilities (RUFs), note issuance 
facilities (NIFs), and other similar arrangements, which are 
facilities under which a borrower can issue on a revolving basis 
short-term paper in its own name, but for which the underwriting 
bank holding company has a legally binding commitment either to 
purchase any notes the borrower is unable to sell by the rollover 
date or to advance funds to the borrower.

    Exclude forward contracts and other commitments that meet the 
definition of a derivative and must be accounted for in accordance with 
FASB Accounting Standards Codifications Subtopic 815-10, Derivatives 
and Hedging--Overall (formerly referred to as Statement No. 133), which 
should be reported in Schedule HC-L, item 13. Include the amount (not 
the fair value) of the unused portions of loan commitments that do not 
meet the definition of a derivative that the bank holding company has 
elected to report at fair value under a fair value option. Also include 
forward contracts that do not meet the definition of a derivative.
    The unused portions of commitments are to be reported in the 
appropriate subitem regardless of whether they contain ``material 
adverse change'' clauses or other provisions that are intended to 
relieve the issuer of its funding obligations under certain conditions 
and regardless of whether they are unconditionally cancelable at any 
time.
    In the case of commitments for syndicated loans, report only the 
bank holding company's proportional share of the commitment.
    For purposes of reporting the unused portions of revolving asset-
based lending commitments, the commitment is defined as the amount a 
bank holding company is obligated to fund--as of the report date--based 
on the contractually agreed upon terms. In the case of revolving asset-
based lending, the unused portions of such commitments should be 
measured as the difference between (a) the lesser of the contractual 
borrowing base (i.e., eligible collateral times the advance rate) or 
the note commitment limit, and (b) the sum of outstanding loans and 
letters of credit under the commitment. The note commitment limit is 
the overall maximum loan amount beyond which the bank holding company 
will not advance funds regardless of the amount of collateral posted. 
This definition of ``commitment'' is applicable only to revolving 
asset-based lending, which is a specialized form of secured lending in 
which a borrower uses current assets (e.g., accounts receivable and 
inventory) as collateral for a loan. The loan is structured so that the 
amount of credit is limited by the value of the collateral.

B. Additional Categories of Unused Commitments and Loans

    The extent to which banks and other financial intermediaries are 
reducing the supply of credit during the current financial crisis has 
been of great interest to the Federal Reserve and to Congress. Also, 
BHC lending plays a central role in any economic recovery and the 
Federal Reserve needs data to better determine when credit conditions 
ease. One way to measure the supply of credit is to analyze the change 
in total lending commitments by BHCs, considering both the amount of 
loans outstanding and the volume of unused credit lines. These data are 
also needed for safety and soundness purposes because draws on 
commitments during periods when BHCs face significant funding 
pressures, such as during the Fall of 2008, can place significant and 
unexpected demands on the liquidity and capital positions of BHCs. 
Therefore, the Federal Reserve proposed breaking out in further detail 
two categories of unused commitments on Schedule HC-L, Derivatives and 
Off-Balance-Sheet Items. The Federal Reserve also proposed to break out 
in further detail one new loan category on Schedule HC-C, Loans and 
Lease Financing Receivables. These new data items would improve the 
Federal Reserve's ability to get timely and accurate readings on the 
supply of credit to households and businesses. These data would also be 
useful in determining the effectiveness of the government's economic 
stabilization programs.
    Unused commitments associated with credit card lines are currently 
reported in Schedule HC-L, data item 1.b. This data item is not 
meaningful for monitoring the supply of credit because it mixes 
consumer credit card lines with credit card lines for businesses and 
other entities. As a result of this aggregation, it is not possible to 
fully monitor credit available specifically to households. Furthermore, 
the Federal Reserve would benefit from the split because the usage 
patterns, profitability, and evolution of credit quality through the 
business cycle are likely to differ for consumer credit cards and 
business credit cards. Therefore, the Federal Reserve proposed to split 
Schedule HC-L, data item 1.b into unused consumer credit card lines and 
other unused credit card lines. Draws from these credit lines that have 
not been sold are already reported on Schedule HC-C. For example, BHCs 
must report draws on credit cards issued to nonfarm nonfinancial 
businesses as commercial and industrial (C&I) loans in Schedule HC-C, 
data item 4, and draws on personal credit cards as consumer loans in 
Schedule HC-C, data item 6.a.
    Schedule HC-L, data item 1.e, aggregates all other unused 
commitments and includes unused commitments to fund C&I loans (other 
than credit card lines to commercial and industrial enterprises, which 
are reported in data item 1.b, and commitments to fund commercial real 
estate, construction, and land development loans not secured by real 
estate, which are reported in data item 1.c.(2)). Separating these C&I 
lending commitments from the other commitments included in other unused 
commitments would considerably improve the Federal Reserve's ability to 
analyze business credit conditions. A very large percentage of banks 
responding to the Federal Reserve's Senior Loan Officer Opinion Survey 
on Bank Lending Practices (FR 2018; OMB No. 7100-0058) reported having 
tightened lending policies for C&I loans and credit lines during 2008; 
however, C&I loans on banks' balance sheets expanded through the end of 
October 2008, reportedly as a result of substantial draws on existing 
credit lines. In contrast, other unused commitments reported on the 
Call Report contracted. Without the proposed breakouts of such 
commitments, it was not possible to know how total business borrowing 
capacity had changed. The FR 2018 data do not suffice because they are 
qualitative rather than quantitative and are collected only from a 
sample of institutions up to six times per year. Having the additional 
unused commitment data reported separately on the FR Y-9C (and Call 
Report), along with the proposed changes to schedule HC-C described 
below, would have indicated more clearly whether there was a widespread 
restriction in new credit available to businesses.
    Therefore, the Federal Reserve proposed to split Schedule HC-L, 
data item 1.e into three categories: (1) Unused commitments to fund 
commercial and industrial loans (which would include only commitments 
not reported in Schedule HC-L, data items 1.b and 1.c(2), for loans 
that, when funded, would be reported in Schedule HC-C, data item 4), 
(2) unused commitments to fund loans to financial institutions (defined 
to include depository institutions and nondepository institutions such 
as real estate investment trusts, mortgage

[[Page 9215]]

companies, holding companies of other depository institutions, 
insurance companies, finance companies, mortgage finance companies, 
factors and other financial intermediaries, short-term business credit 
institutions, personal finance companies, investment banks, bank's own 
trust department, other domestic and foreign financial intermediaries, 
and Small Business Investment Companies), and (3) all other unused 
commitments.
    With respect to Schedule HC-C, the Federal Reserve proposed to 
split data item 9.b for all other loans into loans to nondepository 
financial institutions (as defined above) and all other loans. BHCs 
already report data on loans to depository institutions in Schedule HC-
C, data item 2. This change to schedule HC-C would allow the Federal 
Reserve to fully analyze the information gained by splitting data item 
1.e on Schedule HC-L. Lending by nondepository financial institutions 
was a key characteristic of the recent credit cycle and many such 
institutions failed, but little information existed on the exposure of 
the banking system to those firms as this information was obscured by 
the current structure of the FR Y-9C and Call Report loan schedule. The 
proposed addition of separate data items for unused commitments to 
financial institutions and loans to nondepository financial 
institutions, together with the existing data on loans to depository 
institutions, would allow supervisors and other interested parties to 
more closely monitor the exposure of individual BHCs to financial 
institutions and to assess the impact that changes in the credit 
availability to this sector have on the economy.
    Two commenters addressed these proposed revisions to Schedules HC-L 
and HC-C. The bankers' organization indicated that the proposed 
revisions relating to additional categories of unused commitments were 
acceptable. One bank expressed support for the proposed reporting of 
unused commitments and loans to nondepository financial institutions, 
agreeing that this information would be useful to the Federal Reserve 
and the banking agencies in their monitoring of lending activity. 
However, this bank also asserted that the instructions for categorizing 
loans in Schedule HC-C ``are complex, require considerable effort, and 
introduce the potential for inconsistency across reporting 
institutions.'' The bank asked the Federal Reserve and the banking 
agencies to consider simplifying the loan categorization requirements 
by ``(1) consolidating reporting categories, where feasible, (2) 
creating a decision tree matrix with prioritization for competing 
criteria, and (3) recommending the use of more objective criteria (such 
as SIC classifications).'' The Federal Reserve periodically reviews the 
reporting categories used in Schedule HC-C and have found that 
additional loan categories are needed to better monitor the credit risk 
profiles of individual institutions and the industry as a whole, to 
assess credit availability, and to conduct the Federal Reserve's other 
activities. When assigning loans to the loan categories in Schedule HC-
C, the schedule already assigns priority to loans secured by real 
estate, regardless of borrower loan purpose. Loans that do not meet the 
definition of the term loan secured by real estate are then categorized 
by borrower or purpose. The Federal Reserve believes the remaining loan 
categories (e.g., loans to depository institutions; commercial and 
industrial loans; loans to individuals for household, family, and other 
personal expenditures; and loans to foreign governments and official 
institutions) are sufficiently distinct from one another. The 
instructions for Schedule HC-C provide detailed descriptions of the 
types of loans and borrowers that fall within the scope of each loan 
category.

C. Effect of New Accounting Standards on Schedule HC-S, Servicing, 
Securitization, and Asset Sale Activities

    On June 12, 2009, the Financial Accounting Standards Board (FASB) 
issued FAS Statements Nos. 166 and 167, which revise the existing 
standards governing the accounting for financial asset transfers and 
the consolidation of variable interest entities. FAS Statement No. 166 
eliminates the concept of a qualifying special-purpose entity, changes 
the requirements for derecognizing financial assets, and requires 
additional disclosures. FAS Statement No. 167 changes how a company 
determines when an entity that is insufficiently capitalized or is not 
controlled through voting (or similar rights) should be consolidated. 
This consolidation determination is based on, among other things, an 
entity's purpose and design and a company's ability to direct the 
activities of the entity that most significantly impact the entity's 
economic performance.\2\ In general, the revised standards took effect 
January 1, 2010. The standards are expected to cause a substantial 
volume of assets in banking organization-sponsored entities associated 
with securitization and structured finance activities to be brought 
onto BHCs balance sheets.
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    \2\ FASB News Release, June 12, 2009, http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB/FASBContent_C/NewsPage&cid=1176156240834&pf=true.
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    The Federal Reserve currently collects data on BHCs' securitization 
and structured finance activities in Schedule HC-S, Servicing, 
Securitization, and Asset Sale Activities. The Federal Reserve will 
continue to collect Schedule HC-S after the effective date of FAS 
Statements Nos. 166 and 167 and BHCs should continue to complete this 
schedule in accordance with its existing instructions, taking into 
account the changes in accounting brought about by these two FASB 
statements. In this regard, data items 1 through 8 of Schedule HC-S 
involve the reporting of information for securitizations that the 
reporting BHC has accounted for as sales. Therefore, after the 
effective date of FAS Statements Nos. 166 and 167, a BHC should report 
information in data items 1 through 8 only for those securitizations 
for which the transferred assets qualify for sale accounting or are 
otherwise not carried as assets on the BHC's consolidated balance 
sheet. Thus, if a securitization transaction that qualified for sale 
accounting prior to the effective date of FAS Statements Nos. 166 and 
167 must be brought back onto the reporting BHC's consolidated balance 
sheet upon adoption of these statements, the BHC would no longer report 
information about the securitization in data items 1 through 8 of 
Schedule HC-S.
    Data items 11 and 12 of Schedule HC-S are applicable to assets that 
the reporting BHC has sold with recourse or other seller-provided 
credit enhancements, but has not securitized. In Memorandum item 1 of 
Schedule HC-S, a BHC reports certain transfers of small business 
obligations with recourse that qualifies for sale accounting. The scope 
of these data items will continue to be limited to such sold financial 
assets after the effective date of FAS Statements Nos. 166 and 167. In 
Memorandum item 2 of Schedule HC-S, a BHC currently reports the 
outstanding principal balance of loans and other financial assets that 
it services for others when the servicing has been purchased or when 
the assets have been originated or purchased and subsequently sold with 
servicing retained. Thus, after the effective date of FAS Statements 
Nos. 166 and 167, a BHC should continue to report retained servicing 
for those assets or portions of assets reported as sold as well as 
purchased servicing in Memorandum item 2. Finally, Memorandum item 3 of 
Schedule HC-S collects data on asset-

[[Page 9216]]

backed commercial paper conduits regardless of whether the reporting 
BHC must consolidate the conduit in accordance with FASB Interpretation 
No. 46(R). This will continue to be the case after the effective date 
of FAS Statement No. 167, which amended this FASB interpretation.
    The Federal Reserve plans to evaluate the disclosure requirements 
in FAS Statements Nos. 166 and 167 and the disclosure practices that 
develop in response to these requirements. This evaluation will assist 
the Federal Reserve in determining the need for revisions to Schedule 
HC-S that will improve its ability to assess the nature and scope of 
BHCs' involvement with securitization and structured finance 
activities, including those accounted for as sales and those accounted 
for as secured borrowings. Such revisions, which would not be 
implemented before March 2011, would be incorporated into a formal 
proposal that the Federal Reserve would then publish with a request for 
comment in accordance with the requirements of the Paperwork Reduction 
Act of 1995 (PRA).
    The bankers' organization commented on the reporting of information 
associated with securitization and structured finance activities and 
recommended that information be required in Schedule HC-S for assets 
that must be consolidated under FAS Statements Nos. 166 and 167 that 
are held as securities by third parties as well as any applicable loan 
loss allowances and related deferred tax assets. The Federal Reserve 
will consider these recommendations as we evaluate our data needs with 
respect to on-balance-sheet securitizations and structured finance 
transactions. Any resulting potential new reporting requirements would 
be incorporated into the formal proposal mentioned above.

D. Assets Covered by FDIC Loss-Sharing Agreements

    The bankers' organization requested that the Federal Reserve revise 
the FR Y-9C to collect information on loss-sharing agreements with the 
FDIC even though this had not been proposed by the Federal Reserve. The 
organization noted that there is currently no guidance on how a BHC 
that acquires a failed bank should report any loss-sharing agreement in 
the FR Y-9C. It also stated that the FR Y-9C does not provide users 
with a ``readily accessible summary of the [bank holding company's] net 
exposures on assets that are subject to loss-share agreements.'' The 
organization observed that ``[t]his will become an increasingly 
important long-term and more common reporting issue as additional 
failed banks are acquired from the FDIC under a loss-share agreement.''
    Under loss sharing, the FDIC agrees to absorb a portion of the loss 
on a specified pool of a failed institution's assets in order to 
maximize asset recoveries and minimize the FDIC's losses. In general, 
the FDIC will reimburse 80 percent of losses incurred by an acquiring 
institution on covered assets over a specified period of time up to a 
stated threshold amount, with the acquirer absorbing 20 percent. Any 
losses above the stated threshold amount will be reimbursed by the FDIC 
at 95 percent of the losses booked by the acquirer. Over the past year, 
the FDIC has entered into loss-sharing agreements with acquiring 
institutions in connection with approximately 80 failed banks and 
thrifts. Some acquiring institutions have been involved in multiple 
failed institution acquisitions. The continued use of loss-sharing 
agreements is expected in connection with the resolution of failures of 
insured institutions by the FDIC. Assets covered by loss-sharing 
agreements include, but are not limited to, loans, other real estate, 
and debt securities.
    As the bankers' organization indicated, the FR Y-9C does not 
include a ``readily accessible summary'' of assets that reporting BHCs 
have acquired from failed institutions that are covered by FDIC loss-
sharing agreements. Any covered loans and leases that are past due 30 
days or more or are in nonaccrual status are reportable in data items 
11 and 11.a of Schedule HC-N, Past Due and Nonaccrual Loans, Leases, 
and Other Assets, as loans and leases that are wholly or partially 
guaranteed by the U.S. Government. However, these data items would also 
include loans and leases guaranteed by other U.S. Government agencies 
(such as the Small Business Administration and the Federal Housing 
Administration) that are past due 30 days or more or are in nonaccrual 
status and they would exclude loans and leases covered by FDIC loss-
sharing agreements that do not meet these past due or nonaccrual 
reporting conditions as of the report date. Thus, the amount of covered 
loans and leases is not readily identifiable from the FR Y-9C and the 
amount of other covered assets cannot be determined at all from the FR 
Y-9C.
    The Federal Reserve agrees with the bankers' organization that the 
reporting of summary data on covered assets would be beneficial to FR 
Y-9C report users and to BHCs holding covered assets. Therefore, the 
Federal Reserve will add such a summary to FR Y-9C Schedule HC-M, 
Memoranda, effective as of March 31, 2010. In this summary, BHCs that 
have entered into loss-sharing agreements with the FDIC will separately 
report the carrying amounts of loans and leases, other real estate 
owned, debt securities, and other assets covered by such agreements. 
The Federal Reserve will also consider whether the collection of 
additional information concerning covered assets would be warranted 
and, if so, it would be incorporated into a formal proposal that the 
Federal Reserve would then publish with a request for comment in 
accordance with the requirements of the PRA.
    2. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
of U.S. Bank Holding Companies.
    Agency form number: FR Y-11.
    OMB control number: 7100-0244.
    Frequency: Quarterly and annually.
    Reporters: BHCs.
    Estimated annual reporting hours: FR Y-11 (quarterly), 15,504 
hours; and FR Y-11 (annual), 1,802 hours.
    Estimated average hours per response: FR Y-11 (quarterly), 6.80 
hours; and FR Y-11 (annual), 6.80 hours.
    Number of respondents: FR Y-11 (quarterly), 570; and FR Y-11 
(annual), 265.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec.  1844(c)). Confidential treatment is not 
routinely given to the data in these reports. However, confidential 
treatment for the reporting information, in whole or in part, can be 
requested in accordance with the instructions to the form, pursuant to 
sections (b)(4), (b)(6)and (b)(8) of the Freedom of Information Act (5 
U.S.C. 552(b)(4), (b)(6) and (b)(8)).
    Abstract: The FR Y-11 reports collect financial information for 
individual non-functionally regulated U.S. nonbank subsidiaries of 
domestic BHCs. BHCs file the FR Y-11 on a quarterly or annual basis 
according to filing criteria. The FR Y-11 data are used with other BHC 
data to assess the condition of BHCs that are heavily engaged in 
nonbanking activities and to monitor the volume, nature, and condition 
of their nonbanking operations.
    Current Actions: On September 25, 2009, the Federal Reserve 
published a notice in the Federal Register (74 FR 48960) requesting 
public comment for 60 days on the revision, without extension, of the 
FR Y-11. The comment period for this notice expired on November 24, 
2009. The Federal Reserve did not receive any comments; the revisions 
will be implemented as proposed.

[[Page 9217]]

    3. Report title: Financial Statements of Foreign Subsidiaries of 
U.S. Banking Organizations.
    Agency form number: FR 2314.
    OMB control number: 7100-0073.
    Frequency: Quarterly and annually.
    Reporters: U.S. state member banks (SMBs), BHCs, and Edge or 
agreement corporations.
    Estimated annual reporting hours: FR 2314 (quarterly), 15,365 
hours; and FR 2314 (annual), 1,313 hours.
    Estimated average hours per response: FR 2314 (quarterly), 6.60 
hours; and FR 2314 (annual), 6.60 hours.
    Number of respondents: FR 2314 (quarterly), 582; and FR 2314 
(annual), 199.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec.  324, 602, 625, and 1844(c)). 
Confidential treatment is not routinely given to the data in these 
reports. However, confidential treatment for the reporting information, 
in whole or in part, can be requested in accordance with the 
instructions to the form, pursuant to sections (b)(4), (b)(6) and 
(b)(8) of the Freedom of Information Act (5 U.S.C. Sec. Sec.  552(b)(4) 
(b)(6) and (b)(8)).
    Abstract: The FR 2314 reports collect financial information for 
non-functionally regulated direct or indirect foreign subsidiaries of 
U.S. SMBs, Edge and agreement corporations, and BHCs. Parent 
organizations (SMBs, Edge and agreement corporations, or BHCs) file the 
FR 2314 on a quarterly or annual basis according to filing criteria. 
The FR 2314 data are used to identify current and potential problems at 
the foreign subsidiaries of U.S. parent companies, to monitor the 
activities of U.S. banking organizations in specific countries, and to 
develop a better understanding of activities within the industry, in 
general, and of individual institutions, in particular.
    Current Actions: On September 25, 2009, the Federal Reserve 
published a notice in the Federal Register (74 FR 48960) requesting 
public comment for 60 days on the revision, without extension, of the 
FR 2314. The comment period for this notice expired on November 24, 
2009. The Federal Reserve did not receive any comments; the revisions 
will be implemented as proposed.
    4. Report title: Financial Statements of U.S. Nonbank Subsidiaries 
Held by Foreign Banking Organizations.
    Agency form number: FR Y-7N.
    OMB control number: 7100-0125.
    Frequency: Quarterly and annually.
    Reporters: Foreign banking organizations (FBOs).
    Estimated annual reporting hours: FR Y-7N (quarterly), 4,787 hours; 
and FR Y-7N (annual), 1,387 hours.
    Estimated average hours per response: FR Y-7N (quarterly), 6.8 
hours; and FR Y-7N (annual), 6.8 hours.
    Number of respondents: FR Y-7N (quarterly), 176; and FR Y-7N 
(annual), 204.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c), 3106(c), and 3108). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for information, in whole or in part, on any of 
the reporting forms can be requested in accordance with the 
instructions to the form, pursuant to sections (b)(4) and (b)(6) of the 
Freedom of Information Act (5 U.S.C. 522(b)(4) and (b)(6)).
    Abstract: The FR Y-7N collects financial information for non-
functionally regulated U.S. nonbank subsidiaries held by FBOs other 
than through a U.S. BHC, U.S. FHC, or U.S. bank. FBOs file the FR Y-7N 
on a quarterly or annual basis based on size thresholds.
    Current Actions: On September 25, 2009, the Federal Reserve 
published a notice in the Federal Register (74 FR 48960) requesting 
public comment for 60 days on the revision, without extension, of the 
FR Y-7N. The comment period for this notice expired on November 24, 
2009. The Federal Reserve did not receive any comments; the revisions 
will be implemented as proposed.

Board of Governors of the Federal Reserve System, February 24, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-4118 Filed 2-26-10; 8:45 am]
BILLING CODE 6210-01-P