63848 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 

16The efforts of the MENA FATF are particularly 

exemplary of international efforts to combat 

terrorist abuse of charities. MENA FATF Member 

States have issued a best practices paper, based on 

the FATF’s international standard for combating 

terrorist abuse of the non-profit sector, tailored to 

the specific religious, social, and economic values 

of the region. The comprehensive framework, 

crafted by the MENA FATF, outlines legislative, 

regulatory, and procedural measures to ensure that 

the charitable sector is not misused or abused by 

terrorist financiers. The MENA FATF charities best 

practices paper is an indispensable tool for the 

Middle East and North Africa region in helping to 

protect against terrorist abuse of charities by 

offering guidance to promote transparency and 

accountability in the charitable sector. 

activities; (iii) facilitating international 

action to address these abuses; and (iv) 

conducting comprehensive outreach to 

the charitable sector to raise awareness 

of terrorist exploitation and the steps 

charities can take to protect themselves 

from such abuse. 

U.S. designations of charities and 

charitable officials demonstrate the 

breadth of the problem of terrorist 

infiltration and exploitation of the 

charitable sector. To date, the United 

States has designated forty-three 

charities worldwide and twenty-nine 

associated individuals for their support 

of terrorist organizations and operations. 

These seventy-two charities and 

individuals comprise over fifteen 

percent of all U.S.-designated terrorist 

supporters or financiers, indicating the 

primary importance of charities as a 

critical means of support for terrorist 

organizations and activities. Treasury 

maintains a summary of all designated 

charities, including unclassified 

background information summarizing 

the basis of each designation, to assist 

the donor and charitable communities 

in identifying those charities associated 

with terrorist financing and support. 

Further information and press releases 

relating to these designations are 

available on the Treasury Web site at 

http://www.treas.gov/offices/ 

enforcement/key-issues/protecting/ 

charities_exec-orders.shtml. 

In addition to these ongoing efforts by 

Treasury and the U.S. Government, 

other countries and organizations from 

around the world have recognized and 

helped curb abuse of the charitable 

sector by terrorist organizations. The 

Financial Action Task Force (FATF)—

the premier inter-governmental 

organization responsible for developing 

and promoting global policies to combat 

money laundering and terrorist 

financing—has studied the problem of 

terrorist financing and abuse across the 

charitable sector globally and has 

published typologies of such abuse. The 

FATF has also published Best Practices 

for Non-Profit Organizations and more 

recently issued interpretive guidance 

strengthening the international standard 

for combating terrorist abuse of nonprofit organizations. Additionally, FATF 

style regional bodies (FSRBs) such as 

the Asia Pacific Group (APG), Eurasian 

Group (EAG) and the Middle East and 

North Africa Financial Action Task 

Force (MENA FATF) are developing 

typologies and studies on the active 

threat of terrorist financing and support 

through charities that operate within 

their regions.16 These organizations and 

their member countries are 

implementing measures to actively 

combat this threat through the 

development and application of 

supervisory, investigative, and financial 

authorities to identify and dismantle 

charities engaged in terrorist financing 

or support. Many of these documents, 

which underscore the threat that 

terrorist organizations and operations 

pose to the charitable sector, are 

available on the Treasury Web site at 

http://www.treas.gov/offices/ 

enforcement/key-issues/protecting/ 

index.shtml. 

Treasury continually engages in 

outreach and updates its Web site to 

communicate useful information 

regarding: (i) The ongoing risks of 

terrorist abuse in the charitable sector; 

(ii) ongoing U.S. and other 

governmental efforts to mitigate these 

risks and combat terrorist abuse, and 

(iii) steps the sector can take to protect 

against such abuse. Treasury’s 

Guidelines represent one essential 

component and product of the ongoing 

outreach that Treasury is conducting 

with the charitable sector to empower 

and protect the sector from terrorist 

abuse. Another example of available 

resources is Treasury’s December 2005 

advisory paper, which provides 

information to charities delivering relief 

in areas affected by the 2005 South Asia 

earthquake by detailing typologies of 

terrorist abuse of charities and reports 

on activity by militant and terrorist 

groups in those areas. This paper also 

shows, through media reports, the 

extent to which terrorist organizations 

pose a risk to charities trying to deliver 

aid in unstable areas, where terrorist 

organizations themselves and/or their 

charitable fronts are often engaged in 

delivering relief as an effective 

recruitment mechanism in building 

broader support for their organizations. 

Treasury will continue its outreach 

and informational efforts as part of its 

larger mission to combat terrorist 

financing and safeguard the charitable 

sector from terrorist abuse. 

[FR Doc. 06–8961 Filed 10–30–06; 8:45 am] 

BILLING CODE 4811–37–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

FEDERAL RESERVE SYSTEM 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

Proposed Agency Information 

Collection Activities; Comment 

Request 

AGENCIES: Office of the Comptroller of 

the Currency (OCC), Treasury; Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); and 

Office of Thrift Supervision (OTS), 

Treasury. 

ACTION: Joint notice and request for 

comment. 

SUMMARY: In accordance with the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

chapter 35), the OCC, the Board, the 

FDIC, and the OTS (the ‘‘agencies’’) may 

not conduct or sponsor, and the 

respondent is not required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. The Federal Financial 

Institutions Examination Council 

(FFIEC), of which the agencies are 

members, has approved the agencies’

publication for public comment a 

proposal to extend, with revision, the 

Consolidated Reports of Condition and 

Income (Call Report) for banks and the 

Thrift Financial Report (TFR) for 

savings associations, which are 

currently approved collections of 

information. At the end of the comment 

period, the comments and 

recommendations received will be 

analyzed to determine the extent to 

which the FFIEC and the agencies 

should modify the proposed revisions 

prior to giving final approval. The 

agencies will then submit the revisions 

to OMB for review and approval. 

DATES: Comments must be submitted on 

or before January 2, 2007. 

ADDRESSES: Interested parties are 

invited to submit written comments to 

any or all of the agencies. All comments, 

which should refer to the OMB control 

number(s), will be shared among the 

agencies. 

OCC: Communications Division, 

Office of the Comptroller of the 

Currency, Public Information Room, 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 63849 

Mailstop 1–5, Attention: 1557–0081, 

250 E Street, SW., Washington, DC 

20219. In addition, comments may be 

sent by fax to (202) 874–4448, or by 

electronic mail to 

regs.comments@occ.treas.gov. You can 

inspect and photocopy the comments at 

the OCC’s Public Information Room, 250 

E Street, SW., Washington, DC 20219. 

You can make an appointment to 

inspect the comments by calling (202) 

874–5043. 

Board: You may submit comments, 

which should refer to ‘‘Consolidated 

Reports of Condition and Income, 7100–

0036,’’ by any of the following methods: 

• Agency Web site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments 

on the http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• Fax: 202–452–3819 or 202–452–

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

NW.) between 9 a.m. and 5 p.m. on 

weekdays. 

FDIC: You may submit comments, 

which should refer to ‘‘Consolidated 

Reports of Condition and Income, 3064–

0052,’’ by any of the following methods: 

• http://www.FDIC.gov/regulations/ 

laws/federal/notices.html. 

• E-mail: comments@FDIC.gov. 

Include ‘‘Consolidated Reports of 

Condition and Income, 3064–0052’’ in 

the subject line of the message. 

• Mail: Steven F. Hanft (202–898–

3907), Clearance Officer, Attn: 

Comments, Room MB–2088, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street) on business days 

between 7 a.m. and 5 p.m. 

Public Inspection: All comments 

received will be posted without change 

to http://www.fdic.gov/regulations/laws/ 

federal/notices.html including any 

personal information provided. 

Comments may be inspected at the FDIC 

Public Information Center, Room E–

1002, 3501 Fairfax Drive, Arlington, VA 

22226, between 9 a.m. and 5 p.m. on 

business days. 

OTS: You may submit comments, 

identified by ‘‘1550–0023 (TFR: 

Schedule DI Revisions),’’ by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail address: 

infocollection.comments@ots.treas.gov. 

Please include ‘‘1550–0023 (TFR: 

Schedule DI Revisions)’’ in the subject 

line of the message and include your 

name and telephone number in the 

message. 

• Fax: (202) 906–6518. 

• Mail: Information Collection 

Comments, Chief Counsel’s Office, 

Office of Thrift Supervision, 1700 G 

Street, NW., Washington, DC 20552, 

Attention: ‘‘1550–0023 (TFR: Schedule 

DI Revisions).’’

• Hand Delivery/Courier: Guard’s 

Desk, East Lobby Entrance, 1700 G 

Street, NW., from 9 a.m. to 4 p.m. on 

business days, Attention: Information 

Collection Comments, Chief Counsel’s 

Office, Attention: ‘‘1550–0023 (TFR: 

Schedule DI Revisions).’’

Instructions: All submissions received 

must include the agency name and OMB 

Control Number for this information 

collection. All comments received will 

be posted without change to the OTS 

Internet Site at http://www.ots.treas.gov/ 

pagehtml.cfm?catNumber=67&an=1, 

including any personal information 

provided. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.ots.treas.gov/ 

pagehtml.cfm?catNumber=67&an=1. In 

addition, you may inspect comments at 

the Public Reading Room, 1700 G Street, 

NW., by appointment. To make an 

appointment for access, call (202) 906–

5922, send an e-mail to 

public.info@ots.treas.gov, or send a 

facsimile transmission to (202) 906–

7755. (Prior notice identifying the 

materials you will be requesting will 

assist us in serving you.) We schedule 

appointments on business days between 

10 a.m. and 4 p.m. In most cases, 

appointments will be available the next 

business day following the date we 

receive a request. 

Additionally, commenters may send a 

copy of their comments to the OMB 

desk officer for the Agencies by mail to 

the Office of Information and Regulatory 

Affairs, U.S. 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. 

FOR FURTHER INFORMATION CONTACT: For 

further information about the revisions 

discussed in this notice, please contact 

any of the agency clearance officers 

whose names appear below. In addition, 

copies of the Call Report forms can be 

obtained at the FFIEC’s Web site 

(http://www.ffiec.gov/ 

ffiec_report_forms.htm). Copies of the 

TFR can be obtained from the OTS’s 

Web site (http://www.ots.treas.gov/ 

main.cfm?catNumber=2&catParent=0). 

OCC: Mary Gottlieb, OCC Clearance 

Officer, or Camille Dickerson, (202) 

874–5090, Legislative and Regulatory 

Activities Division, Office of the 

Comptroller of the Currency, 250 E 

Street, SW., Washington, DC 20219. 

Board: Michelle E. Long, Federal 

Reserve Board Clearance Officer, (202) 

452–3829, Division of Research and 

Statistics, Board of Governors of the 

Federal Reserve System, 20th and C 

Streets, NW., Washington, DC 20551. 

Telecommunications Device for the Deaf 

(TDD) users may call (202) 263–4869. 

FDIC: Steven F. Hanft, Paperwork 

Clearance Officer, (202) 898–3907, Legal 

Division, Federal Deposit Insurance 

Corporation, 550 17th Street, NW., 

Washington, DC 20429. 

OTS: Marilyn K. Burton, OTS 

Clearance Officer, at 

marilyn.burton@ots.treas.gov, (202) 

906–6467, or facsimile number (202) 

906–6518, Litigation Division, Chief 

Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC. 20552. 

SUPPLEMENTARY INFORMATION: The 

agencies are proposing to revise and 

extend for three years the Call Report 

and the TFR, which are currently 

approved collections of information. 

1. Report Title: Consolidated Reports 

of Condition and Income (Call Report). 

Form Number: Call Report: FFIEC 031 

(for banks with domestic and foreign 

offices) and FFIEC 041 (for banks with 

domestic offices only). Frequency of 

Response: Quarterly. Affected Public: 

Business or other for-profit. 

OCC: OMB Number: 1557–0081. 

Estimated Number of Respondents: 

1,900 national banks. Estimated Time 

per Response: 44.31 burden hours. 

Estimated Total Annual Burden: 

336,756 burden hours. 

Board: OMB Number: 7100–0036. 

Estimated Number of Respondents: 919 

state member banks. Estimated Time per 


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Response: 51.27 burden hours. 

Estimated Total Annual Burden: 

188,469 burden hours. 

FDIC: OMB Number: 3064–0052. 

Estimated Number of Respondents: 

5,247 insured state nonmember banks. 

Estimated Time per Response: 35.52 

burden hours. Estimated Total Annual 

Burden: 745,494 burden hours. 

The estimated time per response for 

the Call Report is an average that varies 

by agency because of differences in the 

composition of the institutions under 

each agency’s supervision (e.g., size 

distribution of institutions, types of 

activities in which they are engaged, 

and existence of foreign offices). The 

average reporting burden for the Call 

Report is estimated to range from 16 to 

630 hours per quarter, depending on an 

individual institution’s circumstances. 

2. Report Title: Thrift Financial 

Report (TFR). Form Number: OTS 1313 

(for savings associations). Frequency of 

Response: Quarterly. Affected Public: 

Business or other for-profit. 

OTS: OMB Number: 1550–0023. 

Estimated Number of Respondents: 854 

savings associations. Estimated Time 

per Response: 36.5 burden hours. 

Estimated Total Annual Burden: 

124,684 burden hours. 

The TFR estimates in this notice are 

carried forward from the burden 

estimates that appeared in OTS’s final 

Paperwork Reduction Act notice 

concerning items related to retirement 

deposit accounts (71 FR 47866, August 

18, 2006). 

General Description of Reports 

These information collections are 

mandatory: 12 U.S.C. 161 (for national 

banks), 12 U.S.C. 324 (for state member 

banks), 12 U.S.C. 1817 (for insured state 

nonmember commercial and savings 

banks), and 12 U.S.C. 1464 (for savings 

associations). Except for selected data 

items, these information collections are 

not given confidential treatment. 

Abstract 

Institutions submit Call Report and 

TFR data to the agencies each quarter 

for the agencies’ use in monitoring the 

condition, performance, and risk profile 

of individual institutions and the 

industry as a whole. 

Call Report and TFR data provide the 

most current statistical data available for 

evaluating institutions’ corporate 

applications, for identifying areas of 

focus for both on-site and off-site 

examinations, and for monetary and 

other public policy purposes. The 

agencies use Call Report and TFR data 

in evaluating interstate merger and 

acquisition applications to determine, as 

required by law, whether the resulting 

institution would control more than ten 

percent of the total amount of deposits 

of insured depository institutions in the 

United States. Call Report and TFR data 

are also used to calculate all 

institutions’ deposit insurance and 

Financing Corporation assessments, 

national banks’ semiannual assessment 

fees, and the OTS’s assessments on 

savings associations. 

Current Actions 

I. Overview 

The four agencies are proposing to 

replace certain information currently 

collected in the Call Report and TFR for 

deposit insurance assessment purposes 

with the information described in 

proposed amendments to Part 327 of the 

FDIC’s regulations (71 FR 28790, May 

18, 2006). The four agencies also 

propose to revise the information 

collected in the Call Report and TFR on 

time deposits, particularly with respect 

to certain retirement accounts affected 

by the FDIC’s amended deposit 

insurance regulations. 

In addition, the OCC, the Board, and 

the FDIC (the banking agencies) propose 

to implement a number of other changes 

to the Call Report requirements, most of 

which are expected to apply to a small 

percentage of banks. First, the banking 

agencies would revise the Call Report to 

collect certain data on fair value 

measurements from those institutions 

that choose, under generally accepted 

accounting principles, to apply a fair 

value option to one or more financial 

instruments and one or more classes of 

servicing assets and liabilities and from 

certain institutions that report trading 

assets and liabilities. The banking 

agencies will also collect an item to 

capture the change in the fair value of 

liabilities under the fair value option 

that is attributable to a change in a 

bank’s own creditworthiness for 

purposes of measuring a bank’s 

regulatory capital under the banking 

agencies’ capital adequacy standards. 

Second, the banking agencies propose to 

collect certain data in the Call Report on 

1–4 family residential mortgages with 

terms that allow for negative 

amortization. The banking agencies 

currently do not collect any supervisory 

data on such loans. Finally, the banking 

agencies propose to clarify the Call 

Report instructions for assets serviced 

for others by explicitly stating that such 

servicing includes the servicing of loan 

participations. 

These proposed revisions to the Call 

Report and the TFR, which have been 

approved for publication by the FFIEC 

and are discussed in more detail below, 

would take effect as of March 31, 2007, 

and, for certain deposit insurance 

assessment revisions, March 31, 2008. 

The specific wording of the captions for 

the new or revised Call Report and TFR 

data items discussed in this proposal 

and the numbering of these data items 

should be regarded as preliminary. 

Type of Review: Revision and 

extension of currently approved 

collections. 

II. Discussion of Proposed Revisions 

A. Deposit Insurance Assessment 

Revisions to the Call Report and TFR 

On May 18, 2006, the FDIC issued 

proposed amendments to Part 327 of its 

regulations, ‘‘Assessments,’’ under 

which the FDIC’s computation of 

deposit insurance assessments for 

certain institutions would be 

determined using daily averages for 

deposits rather than quarter-end 

balances. In addition to the proposed 

amendments, the agencies are proposing 

to revise and reduce the overall 

reporting requirements related to 

deposit insurance assessments in both 

the Call Report and the TFR in order to 

simplify regulatory reporting. Key 

elements of the proposed revised 

reporting requirements are: 

• Institutions will separately report 

(a) gross deposits as defined in Section 

3(l) of the Federal Deposit Insurance Act 

(FDI Act) (12 U.S.C. 1813(l)) before any 

allowable exclusions and (b) allowable 

exclusions; 

• The same data items will be 

reported for both quarter-end and daily 

average deposits; 

• All institutions will report using 

quarter-end deposits and allowable 

exclusions; and 

• All institutions with $300 million 

or more in assets, and other institutions 

that meet specified criteria, will also 

report daily averages for deposits and 

allowable exclusions in addition to 

quarter-end amounts. 

The proposal would provide an 

interim period covering the March 31, 

2007, through December 31, 2007, 

report dates during which institutions 

can submit Call Reports and TFRs using 

either the current or revised formats for 

reporting data for measuring their 

assessment base. An institution that 

chooses to begin reporting under the 

revised format in any quarter during the 

interim period must continue to report 

under the revised format through the 

rest of the interim period and may not 

revert back to the current reporting 

format. The revised reporting format 

will take effect for all institutions on 

March 31, 2008, at which time the 

current format will be eliminated. 

Although no institution that chooses to 


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Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 63851 

report under the revised format during 

the 2007 interim period would be 

required to report daily averages during 

this period, any institution may elect to 

report daily averages as of any quarterend report date in 2007. However, once 

an institution begins to report daily 

averages (even during the interim 

period), it must continue to report daily 

averages each quarter thereafter in its 

Call Report or TFR. 

Currently, the assessment base 

definition as detailed in 12 CFR 327.5 

of the FDIC’s regulations has been 

driven by the agencies’ regulatory 

reporting requirements. Therefore, as 

the reporting requirements for deposits 

in the Call Report and TFR changed 

over time, the regulatory definition of 

the assessment base required periodic 

updates. As a result of the Federal 

Deposit Insurance Reform Act, the FDIC 

has proposed to revise the definition of 

the assessment base within its 

regulations to be consistent with Section 

3(l) of the FDI Act. This will eliminate 

the need for periodic updates to the 

FDIC’s assessment regulations in 

response to outside factors and allow a 

simplification of the associated 

reporting requirements. In addition, to 

address timing issues with quarter-end 

reporting, the FDIC will use daily 

average deposits and exclusions over 

the quarter instead of quarter-end totals 

for deposits and exclusions to compute 

the assessment base for institutions with 

$300 million or more in assets and other 

institutions who meet specified criteria, 

which are discussed below. Any 

institution that reports less than $300 

million in assets and does not meet the 

other specified criteria may opt 

permanently to determine its 

assessment base using daily averages. 

At present, 23 items are required in 

the Call Report to determine a bank’s 

assessment base and eight items are 

required in the TFR to determine a 

savings association’s assessment base. 

The agencies are proposing changes to 

the way the assessment base is reported 

that would effectively reduce the 

number of reported items to as few as 

two for certain small institutions 

(without foreign offices) and no more 

than six for other institutions. 

Specifically, the banking agencies are 

proposing to replace items 1 through 12 

(including their subitems) on Schedule 

RC–O, ‘‘Other Data for Deposit 

Insurance and FICO Assessments,’’ and 

OTS is proposing to replace the eight 

items in the section of Schedule DI, 

‘‘Consolidated Deposit Information,’’ for 

‘‘Deposit and Escrow Data for Deposit 

Insurance Premium Assessments’’ with 

the following six items: 

• Total Deposit Liabilities as Defined 

in Section 3(l) of the FDI Act before 

Exclusions; 

• Total Allowable Exclusions 

(including Foreign Deposits); 

• Total Foreign Deposits (included in 

Total Allowable Exclusions); 

• Total Daily Average of Deposit 

Liabilities as Defined in Section 3(l) of 

the FDI Act before Exclusions; 

• Total Daily Average Allowable 

Exclusions (including Foreign Deposits); 

• Total Daily Average Foreign 

Deposits (included in Total Daily 

Average Allowable Exclusions). 

Thus, instead of starting with deposits 

as reported on the balance sheet of the 

Call Report and TFR and making 

adjustments to these reported deposits 

for purposes of measuring an 

institution’s assessment base, which is 

the present method, the computation of 

the institution’s assessment base under 

the proposed amendments to the FDIC’s 

assessment regulations and these 

proposed regulatory reporting revisions 

will start with the gross total deposit 

liabilities that meet the statutory 

definition of deposits in Section 3(l) of 

the FDI Act before any allowable 

exclusions from the definition. The 

allowable exclusions, which are set 

forth in Section 3(l)(5) and other 

sections of the FDI Act and in the 

FDIC’s regulations, include foreign 

deposits (including International 

Banking Facility deposits) and other 

deposits described below. As the next 

step in the assessment base calculation, 

an institution would report the total 

amount of all allowable exclusions from 

the statutory definition of deposits (with 

separate disclosure of foreign deposits, 

if any). Total Deposit Liabilities as 

Defined in Section 3(l) of the FDI Act 

before Exclusions minus Total 

Allowable Exclusions would be the 

institution’s Assessment Base. As 

previously stated, the computation will 

use either quarter-end balances or daily 

averages. 

The net amount of unposted debits 

and credits will now not be considered 

within the definition of the assessment 

base. For institutions that report daily 

averages, these debits and credits are 

captured in the next day’s deposits and 

thus are reflected in the averages. For 

consistency and because they should 

not materially affect assessment bases, 

unposted debits and credits will also 

not be considered for institutions that 

only report quarter-end balances. 

The agencies believe that the amount 

of gross total deposit liabilities that meet 

the statutory definition of deposits is 

typically found in and supported by the 

control totals in an institution’s deposit 

systems that provide the detail 

sufficient to track, control, and handle 

inquiries from depositors about their 

specific individual accounts. 

These deposit systems can be 

automated or manual. In any case, 

control totals for deposit liabilities 

should be readily available, which 

should ease an institution’s transition to 

the revised regulatory reporting 

requirements. Compared to the amount 

of information that an institution 

currently reports in order to determine 

its assessment base, the proposed 

changes to the reporting requirements 

should also facilitate the reporting of 

daily averages for deposits and 

allowable exclusions since many of the 

presently reported adjustments will not 

need to be tracked and averaged 

separately. 

Section 3(1) of the FDI Act states that the 

term ‘‘deposit’’ means 

(1) The unpaid balance of money or its 

equivalent received or held by a bank or 

savings association in the usual course of 

business and for which it has given or is 

obligated to give credit, either conditionally 

or unconditionally, to a commercial, 

checking, savings, time, or thrift account, or 

which is evidenced by its certificate of 

deposit, thrift certificate, investment 

certificate, certificate of indebtedness, or 

other similar name, or a check or draft drawn 

against a deposit account and certified by the 

bank or savings association, or a letter of 

credit or a traveler’s check on which the bank 

or savings association is primarily liable: 

Provided, That, without limiting the 

generality of the term ‘‘money or its 

equivalent’’, any such account or instrument 

must be regarded as evidencing the receipt of 

the equivalent of money when credited or 

issued in exchange for checks or drafts or for 

a promissory note upon which the person 

obtaining any such credit or instrument is 

primarily or secondarily liable, or for a 

charge against a deposit account, or in 

settlement of checks, drafts, or other 

instruments forwarded to such bank or 

savings association for collection, 

(2) Trust funds as defined in this Act 

received or held by such bank or savings 

association, whether held in the trust 

department or held or deposited in any other 

department of such bank or savings 

association, 

(3) Money received or held by a bank or 

savings association, or the credit given for 

money or its equivalent received or held by 

a bank or savings association, in the usual 

course of business for a special or specific 

purpose, regardless of the legal relationship 

thereby established, including without being 

limited to, escrow funds, funds held as 

security for an obligation due to the bank or 

savings association or others (including 

funds held as dealers reserves) or for 

securities loaned by the bank or savings 

association, funds deposited by a debtor to 

meet maturing obligations, funds deposited 

as advance payment on subscriptions to 

United States Government securities, funds 

held for distribution or purchase of 

securities, funds held to meet its acceptances 


cprice-sewell on PROD1PC66 with NOTICES
63852 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 

1 In order to calculate the money stock measure 

M2, the Federal Reserve takes M1 (which consists 

of currency held by the public, traveler’s checks, 

demand deposits, and other checkable deposits) 

and adds (1) savings deposits, (2) smalldenomination time deposits (time deposits in 

amounts of less than $100,000) less Individual 

Retirement Account (IRA) and Keogh balances at 

depository institutions, and (3) balances in retail 

money market mutual funds, less IRA and Keogh 

balances at money market mutual funds. 

or letters of credit, and withheld taxes: 

Provided, That there shall not be included 

funds which are received by the bank or 

savings association for immediate application 

to the reduction of an indebtedness to the 

receiving bank or savings association, or 

under condition that the receipt thereof 

immediately reduces or extinguishes such an 

indebtedness, 

(4) Outstanding draft (including advice or 

authorization to charge a bank’s or a savings 

association’s balance in another bank or 

savings association), cashier’s check, money 

order, or other officer’s check issued in the 

usual course of business for any purpose, 

including without being limited to those 

issued in payment for services, dividends, or 

purchases, and 

(5) Such other obligations of a bank or 

savings association as the Board of Directors, 

after consultation with the Comptroller of the 

Currency, Director of the Office of Thrift 

Supervision, and the Board of Governors of 

the Federal Reserve System, shall find and 

prescribe by regulation to be deposit 

liabilities by general usage, except that the 

following shall not be a deposit for any of the 

purposes of this Act or be included as part 

of the total deposits or of an insured deposit: 

(A) Any obligation of a depository 

institution which is carried on the books and 

records of an office of such bank or savings 

association located outside of any State, 

unless—

(i) Such obligation would be a deposit if it 

were carried on the books and records of the 

depository institution, and would be payable 

at, an office located in any State; and 

(ii) The contract evidencing the obligation 

provides by express terms, and not by 

implication, for payment at an office of the 

depository institution located in any State; 

(B) Any international banking facility 

deposit, including an international banking 

facility time deposit, as such term is from 

time to time defined by the Board of 

Governors of the Federal Reserve System in 

regulation D or any successor regulation 

issued by the Board of Governors of the 

Federal Reserve System; and 

(C) Any liability of an insured depository 

institution that arises under an annuity 

contract, the income of which is tax deferred 

under section 72 of the Internal Revenue 

Code of 1986. 

The total amount of allowable exclusions 

from the assessment base will be reported 

separately for any institution that maintains 

such records as will readily permit 

verification of the correctness of its 

assessment base. These exclusions include: 

Foreign deposits: The obligations described 

in subparagraphs (A) and (B) of section 3(l)(5) 

of the FDI Act, quoted above, which 

generally relate to foreign deposits. 

Reciprocal balances: Any demand deposit 

due from or cash item in the process of 

collection due from any depository 

institution (not including a foreign bank or 

foreign office of another U.S. depository 

institution) up to the total of the amount of 

deposit balances due to cash and cash items 

in the process of collection due such 

depository institution. 

Drafts drawn on other depository 

institutions: Any outstanding drafts 

(including advices and authorization to 

charge the depository institution’s balance in 

another bank) drawn in the regular course of 

business by the reporting depository 

institution. 

Pass-through reserve balances: Reserve 

balances passed through to the Federal 

Reserve by the reporting institution that are 

also reflected as deposit liabilities of the 

reporting institution. This is not applicable to 

an institution that does not act as a 

correspondent institution in any passthrough reserve balance relationship. An 

institution that is not a member of the 

Federal Reserve System generally cannot act 

as a pass-through correspondent unless it 

maintains an account for its own reserve 

balances directly with the Federal Reserve. 

Depository institution investment 

contracts: Liabilities arising from depository 

institution investment contracts that are not 

treated as insured deposits under section 

11(a)(5) of the Federal Deposit Insurance Act 

(12 U.S.C. 1821(a)(5)). A Depository 

Institution Investment Contract is a 

separately negotiated depository agreement 

between an employee benefit plan and an 

insured depository institution that guarantees 

a specified rate for all deposits made over a 

prescribed period and expressly permits 

benefit-responsive withdrawals or transfers. 

In addition to quarter-end balance 

reporting, institutions that meet certain 

criteria would be required to report 

average daily deposit liabilities and 

average daily allowable exclusions to 

determine their assessment base 

effective March 30, 2008. The amounts 

to be reported would be averages of the 

balances as of the close of business for 

each day for the calendar quarter. For 

days that an office of the reporting 

institution (or any of its subsidiaries or 

branches) is closed (e.g., Saturdays, 

Sundays, or holidays), the amounts 

outstanding from the previous business 

day would be used. An office is 

considered closed if there are no 

transactions posted to the general ledger 

as of that date. 

The requirement for an institution to 

report daily averages would apply to 

any institution that: 

(1) Reports $300 million or more in 

total assets in its March 31, 2007, Call 

Report or TFR. The institution would be 

required to report daily averages 

beginning in its March 31, 2008, Call 

Report or TFR. 

(2) Reports $300 million or more in 

total assets in two consecutive Call 

Reports or TFRs beginning with its June 

30, 2007, report. The institution would 

be required to report daily averages in 

its Call Report or TFR beginning March 

31, 2008, or on the report date six 

months after the second consecutive 

quarter in which it reported $300 

million or more in total assets, 

whichever is later. For example, if an 

institution reported $300 million or 

more in total assets in its reports for 

June 30 and September 30, 2007, it 

would begin to report daily averages in 

its report for March 31, 2008. If the 

institution reported $300 million or 

more in total assets in its reports for 

December 31, 2007, and March 31, 2008, 

it would begin to report daily averages 

in its report for September 30, 2008. 

(3) Becomes newly insured after 

March 31, 2007. The institution would 

be required to report daily averages in 

its Call Report or TFR beginning March 

31, 2008, or on the first report date after 

becoming insured, whichever is later. If 

daily averages are reported in the first 

Call Report or TFR the institution files 

after becoming insured, the daily 

averages would include only the dollar 

amounts for the days since the 

institution began operations. 

After an institution has begun to 

report daily averages for its total 

deposits and allowable exclusions, 

either voluntarily or because it is 

required to do so, the institution cannot 

switch back to reporting only quarterend balances. 

An insured depository institution 

reporting less than $300 million in total 

assets in its March 31, 2007, Call Report 

or TFR may continue to determine its 

assessment base using quarter-end 

balances until it meets one of the 

requirements for reporting daily 

averages described above. Alternatively, 

the institution may opt permanently to 

determine its assessment base using 

daily averages. 

B. Revision of Certain Time Deposit 

Information on the Call Report and TFR 

The Federal Reserve uses data from 

Call Report Schedule RC–E, Deposit 

Liabilities, and from TFR Schedule DI, 

Consolidated Deposit Information, to 

ensure accurate construction of the 

monetary aggregates for monetary policy 

purposes.1 In order to more accurately 

calculate the monetary aggregates, the 

banking agencies propose to revise two 

Schedule RC–E items, Memorandum 

items 2.b, ‘‘Total time deposits of less 

than $100,000,’’ and 2.c, ‘‘Total time 

deposits of $100,000 or more,’’ and add 

a new Memorandum item 2.c.(1) to this 

schedule. 

In Schedule RC–E, Memorandum item 

2.b would be revised to include 


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Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 63853 

2The FASB’s three-level fair value hierarchy 

gives the highest priority to quoted prices in active 

markets for identical assets or liabilities (Level 1) 

and the lowest priority to unobservable inputs 

(Level 3). Level 1 inputs are quoted prices in active 

markets for identical assets or liabilities that the 

reporting bank has the ability to access at the 

measurement date (e.g., the Call Report date). Level 

2 inputs are inputs other than quoted prices 

included within Level 1 that are observable for the 

asset or liability, either directly or indirectly. Level 

3 inputs are unobservable inputs for the asset or 

liability. 

3The banking agencies also are planning to issue 

further guidance on the regulatory capital treatment 

of this cumulative change, and are considering 

possible regulatory changes. 

brokered time deposits issued in 

denominations of $100,000 or more that 

are participated out by the broker in 

shares of less than $100,000 as well as 

brokered certificates of deposit issued in 

$1,000 amounts under a master 

certificate of deposit. Memorandum 

item 2.c would be revised to exclude 

such brokered time deposits. In 

addition, as a result of the increase in 

the deposit insurance limit for certain 

retirement plan deposit accounts from 

$100,000 to $250,000 earlier this year, a 

new Memorandum item 2.c.(1) would 

be added to Schedule RC–E to 

separately identify the portion of the 

total time deposits of $100,000 or more 

reported in Memorandum item 2.c that 

represents IRA and Keogh Plan 

accounts. 

For the same reasons, OTS proposes 

to add two new items to Schedule DI of 

the TFR. These data items would be (1) 

Time Deposits of $100,000 or More 

(excluding brokered time deposits 

participated out by the broker in shares 

of less than $100,000 and brokered 

certificates of deposit issued in $1,000 

amounts under a master certificate of 

deposit) and (2) IRA/Keogh Accounts 

included in Time Deposits of $100,000 

or More. 

C. Reporting of Certain Fair Value 

Measurements and the Use of the Fair 

Value Option in the Call Report 

On September 15, 2006, the Financial 

Accounting Standards Board (FASB) 

issued Statement No. 157, Fair Value 

Measurements (FAS 157), which is 

effective for banks and other entities for 

fiscal years beginning after November 

15, 2007. Earlier adoption of FAS 157 is 

permitted as of the beginning of an 

earlier fiscal year, provided the bank has 

not yet issued a financial statement or 

filed a Call Report for any period of that 

fiscal year. Thus, a bank with a calendar 

year fiscal year may voluntarily adopt 

FAS 157 as of January 1, 2007. The fair 

value measurements standard provides 

guidance on how to measure fair value 

and would require banks and other 

entities to disclose the inputs used to 

measure fair value based on a threelevel hierarchy for all assets and 

liabilities that are remeasured at fair 

value on a recurring basis.2

The FASB plans to issue a final 

standard, The Fair Value Option for 

Financial Assets and Financial 

Liabilities, before year-end 2006, which 

would be effective for banks and other 

entities for fiscal years beginning after 

December 15, 2006. The FASB’s Fair 

Value Option standard would allow 

banks and other entities to report certain 

financial assets and liabilities at fair 

value with the changes in fair value 

included in earnings. The banking 

agencies anticipate that relatively few 

banks will elect to use the fair value 

option for a significant portion of their 

financial assets and liabilities. 

The banking agencies plan to clarify 

the Call Report instructions to explain 

where financial assets and liabilities 

measured under the fair value option 

should be reported in the existing line 

items of the Call Report. The banking 

agencies are also proposing to add a 

new Schedule RC–Q to the Call Report 

to collect data, by major asset and 

liability category, on the amount of 

assets and liabilities to which the fair 

value option has been applied along 

with separate disclosure of the amount 

of such assets and liabilities whose fair 

values were estimated under level two 

and under level three of the FASB’s fair 

value hiearchy. The categories are: 

• Securities held for purposes other 

than trading with changes in fair value 

reported in current earnings; 

• Loans and leases; 

• All other financial assets and 

servicing assets; 

• Deposit liabilities; 

• All other financial liabilities and 

servicing liabilities; and 

• Loan commitments (not accounted 

for as derivatives). 

In addition, the banking agencies 

propose to collect data on trading assets 

and trading liabilities in the new 

schedule from those banks that 

complete Schedule RC–D, Trading 

Assets and Liabilities, i.e., banks that 

reported average trading assets of $2 

million or more for any quarter of the 

preceding calendar year. In the 

proposed new schedule, such banks 

would report the carrying amount of 

trading assets and trading liabilities 

whose fair values were estimated under 

level two and under level three of the 

FASB’s fair value hierarchy. Trading 

assets and trading liabilities are required 

to be reported at fair value and, thus, are 

not covered under the fair value option. 

The banking agencies anticipate using 

this fair value information to make 

appropriate risk assessments for on-site 

examinations and off-site surveillance. 

The addition of these data items should 

result in minimal additional reporting 

burden for banks because FAS 157 

requires disclosure of amounts under all 

three levels of the fair value hierarchy 

on a quarterly and annual basis in 

financial statements. 

The FASB’s fair value measurements 

standard requires banks and other 

entities to consider the effect of a 

change in their own creditworthiness 

when determining the fair value of a 

financial liability. The banking agencies 

are proposing to add one new item to 

Schedule RC–R, Regulatory Capital, for 

the cumulative change in the fair value 

of all financial liabilities accounted for 

under the fair value option that is 

attributable to changes in the bank’s 

own creditworthiness.3 This amount 

would be excluded from the bank’s 

retained earnings for purposes of 

determining Tier 1 capital under the 

banking agencies’ regulatory capital 

standards. 

The banking agencies plan to clarify 

the instructions to Schedule RI for the 

treatment of interest income on 

financial assets and interest expense on 

financial liabilities measured under a 

fair value option. The instructions 

would be modified to instruct banks to 

separate the contractual year-to-date 

amount of interest earned on financial 

assets and interest incurred on financial 

liabilities that are reported under a fair 

value option from the overall year-todate fair value adjustment and report 

these contractual amounts in the 

appropriate interest income or interest 

expense items on Schedule RI. 

D. Reporting of Certain Data in the Call 

Report on 1–4 Family Residential 

Mortgage Loans With Terms That Allow 

for Negative Amortization 

Recently, the volume of 1–4 family 

residential mortgage loan products 

whose terms allow for negative 

amortization and the number of 

institutions providing borrowers with 

such loans has increased significantly. 

Loans with this feature are structured in 

a manner that may result in an increase 

in the loan’s principal balance even 

when the borrower’s payments are 

technically current. When loans with 

negative amortization are not prudently 

underwritten and not properly 

monitored, they raise safety and 

soundness concerns. However, due to 

the classification of these loans with all 

other 1–4 family residential mortgage 

loans in the Call Report, the banking 


cprice-sewell on PROD1PC66 with NOTICES
63854 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 

agencies have no readily available 

means of identifying the industry’s 

exposure to such loans. Therefore, the 

banking agencies propose to collect 

some Call Report items to monitor the 

extent of use of negatively amortizing 

residential mortgage loans in the 

industry. 

The banking agencies propose to 

collect one memorandum item from all 

banks on Schedule RC–C, Part I, Loans 

and Leases, for the total amount of 

closed-end loans with negative 

amortization features secured by 1–4 

family residential properties. In 

addition, the banking agencies propose 

to collect two memorandum items on 

Schedule RC–C and one memorandum 

item on Schedule RI, Income Statement, 

from banks with a significant volume of 

negatively amortizing 1–4 family 

residential mortgage loans. The banking 

agencies’ determination of the threshold 

for significant volume would be based 

on the aggregate carrying amount of 

negatively amortizing loans being in 

excess of a certain dollar amount, e.g., 

$100 million or $250 million, or in 

excess of a certain percentage of the 

total loans and leases (in domestic 

offices) reported on Schedule RC–C, 

e.g., five percent or ten percent. For 

reporting during 2007, a bank with 

negatively amortizing loans would 

determine whether it met the size 

threshold for reporting the three 

additional memorandum items using 

data reported in its December 31, 2006, 

Call Report. For reporting in 2008 and 

subsequent years, the determination 

would be based on data from the 

previous year-end Call Report. The 

banking agencies request comment on 

the specific dollar amount and 

percentage of loans that should be used 

in setting the size threshold for 

additional reporting on negatively 

amortizing loans. 

The two additional Schedule RC–C 

memorandum items are (1) the total 

maximum remaining amount of negative 

amortization contractually permitted on 

closed-end loans secured by 1–4 family 

residential properties and (2) the total 

amount of negative amortization on 

closed-end loans secured by 1–4 family 

residential properties that is included in 

the carrying amount of these loans. The 

Schedule RI memorandum item is yearto-date noncash income on closed-end 

loans with a negative amortization 

feature secured by 1–4 family 

residential properties. Banks with 

negatively amortizing 1–4 family 

residential loans in excess of the 

reporting threshold for these items 

would report these three items for the 

entire calendar year following the end of 

any calendar year when this threshold 

was exceeded. 

For the same reasons, OTS proposed 

on July 31, 2006, to add two new items 

to Schedule LD of the TFR (71 FR 

43286). These items would be the total 

amount of (1) 1–4 dwelling adjustable 

rate mortgage loans with negative 

amortization and (2) total capitalized 

negative amortization on 1–4 dwelling 

adjustable rate mortgage loans. 

E. Call Report Instructional Clarification 

for Servicing of Loan Participations 

Banks report the outstanding 

principal balance of assets serviced for 

others in Memorandum item 2 of 

Schedule RC–S, ‘‘Servicing, 

Securitization, and Asset Sale 

Activities.’’ In Memorandum items 2.a 

and 2.b, banks disclose the amounts of 

1–4 family residential mortgages 

serviced with recourse and without 

recourse, respectively. Memorandum 

item 2.c covers all other loans and 

financial assets serviced for others, but 

banks are required to disclose the 

amount of such servicing only if the 

servicing volume is more than 

$10 million. The instructions for 

Memorandum item 2 do not explicitly 

state whether a bank that has sold a 

participation in a 1–4 family residential 

mortgage or other loan or financial asset, 

which it continues to service, should 

include the servicing in Memorandum 

item 2.a, 2.b, or 2.c, as appropriate. The 

absence of clear instructional guidance 

has resulted in questions from bankers 

and has produced diversity in practice 

among banks. 

Subject to the reporting threshold that 

applies to Memorandum data item 2.c, 

Memorandum data item 2 was intended 

to cover the entire volume of loans and 

other financial assets for which banks 

perform the servicing function, 

regardless of whether the servicing 

involves whole loans and other 

financial assets or only portions thereof, 

as is typically the case with loan 

participations. The risks and 

responsibilities inherent in servicing are 

present whether all or part of a loan or 

financial asset is serviced for the benefit 

of another party. Accordingly, the 

banking agencies propose to clarify the 

instructions to Memorandum item 2 of 

Schedule RC–S to explicitly state that 

the amount of loan participations 

serviced for others should be included 

in this item. 

III. Request for Comment 

Public comment is requested on all 

aspects of this joint notice. Comments 

are invited on: 

(a) Whether the proposed revisions to 

the Call Report and TFR collections of 

information are necessary for the proper 

performance of the agencies’ functions, 

including whether the information has 

practical utility; 

(b) The accuracy of the agencies’

estimates of the burden of the 

information collections as they are 

proposed to be revised, including the 

validity of the methodology and 

assumptions used; 

(c) Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

(d) Ways to minimize the burden of 

information collections on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 

(e) Estimates of capital or start up 

costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

Comments submitted in response to 

this joint notice will be shared among 

the agencies and will be summarized or 

included in the agencies’ requests for 

OMB approval. All comments will 

become a matter of public record. 

Written comments should address the 

accuracy of the burden estimates and 

ways to minimize burden as well as 

other relevant aspects of the information 

collection request. 

Dated: September 25, 2006. 

Stuart E. Feldstein, 

Assistant Director, Legislative and Regulatory 

Activities Division, Office of the Comptroller 

of the Currency. 

Board of Governors of the Federal Reserve 

System, October 23, 2006. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated at Washington, DC, this 24th day of 

October, 2006. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

Dated: October 20, 2006. 

Deborah Dakin, 

Senior Deputy Chief Counsel, Regulations and 

Legislation Division, Office of Thrift 

Supervision. 

[FR Doc. 06–8982 Filed 10–30–06; 8:45 am] 

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; 

6720–01–P 

DEPARTMENT OF THE TREASURY 

Office of Foreign Assets Control 

Additional Designation of Entities 

Pursuant to Executive Order 12978 

AGENCY: Office of Foreign Assets 

Control, Treasury. 

ACTION: Notice. 


cprice-sewell on PROD1PC66 with NOTICES