[Federal Register Volume 65, Number 223 (Friday, November 17, 2000)]
[Notices]
[Pages 69525-69536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29426]


=======================================================================
-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Proposed Collection; 
Comment Request

AGENCY: Board of Governors of the Federal Reserve System.

SUMMARY:

Background

    On June 15, 1984, the Office of Management and Budget (OMB) 
delegated to the Board of Governors of the Federal Reserve System 
(Board) its approval authority under the Paperwork Reduction Act, as 
per 5 CFR 1320.16, to approve of and assign OMB control numbers to 
collection of information requests and requirements conducted or 
sponsored by the Board under conditions set forth in 5 CFR 1320 
Appendix A.1. Board-approved collections of information are 
incorporated into the official OMB inventory of currently approved 
collections of information. Copies of the OMB 83-Is and 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.

[[Page 69526]]

Request for Comment on Information Collection Proposals

    The following information collections, which are being handled 
under this delegated authority, have received initial Board approval 
and are hereby published for comment. At the end of the comment period, 
the proposed information collections, along with an analysis of 
comments and recommendations received, will be submitted to the Board 
for final approval under OMB delegated authority. Comments are invited 
on the following:
    a. whether the proposed collections of information is necessary for 
the proper performance of the Federal Reserve's functions; including 
whether the information has practical utility;
    b. the accuracy of the Federal Reserve's estimate of the burden of 
the proposed information collections, including the validity of the 
methodology and assumptions used;
    c. ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    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.

DATES: Comments must be submitted on or before January 16, 2001.

ADDRESSES: Comments, which should refer to the OMB control number or 
agency form number, should be addressed to Jennifer J. Johnson, 
Secretary, Board of Governors of the Federal Reserve System, 20th and C 
Streets, N.W., Washington, DC 20551, submitted by electronic mail to 
<a href="/cdn-cgi/l/email-protection#41332426326f222e2c2c242f3532012724252433202d332432243337246f262e37"><span class="__cf_email__" data-cfemail="b4c6d1d3c79ad7dbd9d9d1dac0c7f4d2d1d0d1c6d5d8c6d1c7d1c6c2d19ad3dbc2">[email protected]</span></a>, or delivered to the Board's mail room 
between 8:45 a.m. and 5:15 p.m., and to the security control room 
outside of those hours. Both the mail room and the security control 
room are accessible from the courtyard entrance on 20th Street between 
Constitution Avenue and C Street, N.W. Comments received may be 
inspected in room M-P-500 between 9:00 a.m. and 5:00 p.m., except as 
provided in section 261.14 of the Board's Rules Regarding Availability 
of Information, 12 CFR 261.14(a).
    A copy of the comments may also be submitted to the OMB desk 
officer for the Board: Alexander T. Hunt, Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 3208, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Draft copies of the proposed reporting 
forms may be obtained at the Board's web site (www.federalreserve.gov). 
Draft copies of the proposed forms, the Paperwork Reduction Act 
Submission (OMB 83-I), supporting statement, and other documents that 
will be placed into OMB's public docket files once approved may be 
requested from the agency clearance officer, whose name appears below.
    Mary M. West, Federal Reserve Board Clearance Officer (202-452-
3829), Division of Research and Statistics, Board of Governors of the 
Federal Reserve System, Washington, DC 20551. Telecommunications Device 
for the Deaf (TDD) users may contact Diane Jenkins (202-452-3544), 
Board of Governors of the Federal Reserve System, Washington, DC 20551.

Proposal To Approve Under OMB Delegated Authority 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: Bank holding companies.
    Annual reporting hours: 231,474.
    Estimated average hours per response: 33.45.
    Number of respondents: 1,730.
    Small businesses are affected.
    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. Currently data reported 
on the FR Y-9C, Schedule HC-H, Column A, requiring information of 
``assets past due 30 through 89 days and still accruing'' and memoranda 
item 2 are confidential pursuant to Section (b)(8) of the Freedom of 
Information Act 5 U.S.C. 552(b)(8).
    Abstract: The FR Y-9C consists of standardized consolidated 
financial statements similar to commercial bank Report of Condition and 
Income (Call Report) (FFIEC 031-034; OMB No. 7100-0036). The FR Y-9C is 
filed quarterly by top-tier bank holding companies that have total 
assets of $150 million or more and by lower-tier bank holding companies 
that have total consolidated assets of $1 billion or more. In addition, 
multibank holding companies with total consolidated assets of less than 
$150 million with debt outstanding to the general public or engaged in 
certain nonbank activities must file the FR Y-9C.
    Current actions: The Federal Reserve proposes to implement numerous 
revisions that will streamline the existing reporting requirements. 
These eliminations and reductions in detail will help the Federal 
Reserve achieve the objective set forth in Section 307(c) of the Riegle 
Community Development and Regulatory Improvement Act of 1994, which 
directs the banking agencies to review the information that 
institutions currently report in the Call Report and the bank holding 
company (BHC) reports and eliminate existing reporting requirements 
that are not warranted for safety and soundness or other public policy 
purposes.
    As part of the streamlining process, the Federal Reserve proposes 
several reporting changes that will introduce more uniformity to 
certain aspects of regulatory reporting. These changes would provide 
more uniformity within the holding company reports and also would bring 
several items into closer alignment with the Call Report and the Thrift 
Financial Report. For example, standard loan categories would be used 
for all of the schedules that collect loan information. However, not 
all loan-related items are needed on all schedules for supervisory 
purposes. Other proposed modifications to the BHC reports are intended 
to make its form and content more closely resemble the manner in which 
information is presented in financial statements that banks prepare in 
accordance with generally accepted accounting principles (GAAP) for 
other financial reporting purposes.
    In addition to streamlining the existing FR Y-9C reporting 
requirements by eliminating information that is no longer of 
significant value, the Federal Reserve is also endeavoring to improve 
the relevance of the FR Y-9C by identifying new types of information 
that are considered critical to the Federal Reserves' supervisory data 
needs going forward. In so doing, the Federal Reserve has focused 
primarily on new activities and other recent developments that may 
expose institutions to new or different types of risk.
    Furthermore, by proposing the following new reporting requirements 
at the same time as the FR Y-9C streamlining changes, BHCs will be able 
to make all of the necessary systems changes at one time. However, the 
new reporting requirements would be implemented on the same schedule as 
the Call Report. The Federal Reserve believes that combining these 
various types of revisions into a single package should result in lower 
start-up costs and

[[Page 69527]]

reporting burden for BHCs from a system's perspective.
    The Federal Reserve proposes to make the following changes to the 
FR Y-9C, except for new information on securitization activities, 
effective with the March 31, 2001, reporting date. Proposed new 
information on securtization activities would be effective with the 
June 30, 2001, reporting date.

Changes Related to Proposed Changes to the Call Report \1\
---------------------------------------------------------------------------

    \1\ Schedule lettering and titles used throughout this notice 
refer to existing schedules. However, the Federal Reserve also 
proposes to alter schedule order and schedule titles to align with 
the Call Report.
---------------------------------------------------------------------------

Schedule HC--Consolidated Balance Sheet

    1. Move ``Loans and leases held for sale'' onto the balance sheet 
as a separate category under item 4, ``Loans and lease financing 
receivables.'' This change will bring the FR Y-9C balance sheet 
presentation of these loans into conformity with GAAP. Loans and leases 
held for sale are currently included on the balance sheet in item 4.a, 
``Loans and leases, net of unearned income,'' together with loans that 
the holding company has the intent and ability to hold for the 
foreseeable future or until maturity or payoff. However, loans and 
leases held for sale are separately identified in the loan schedule in 
Schedule HC-B, part I, Memorandum item 3. Loans and leases held for 
sale would continue to be reported with the holding company's other 
loans in the loan schedule (Schedule HC-B, part I).
    2. Item 4.c, ``Allocated transfer risk reserve,'' would be deleted 
from the balance sheet, but would be reported in the new regulatory 
capital schedule, which is discussed below. BHCs would report their 
loans and leases net of any allocated transfer risk reserve in the loan 
schedule (Schedule HC-B, part I).
    3. Items 27.e, ``Net unrealized holding gains (losses) on 
available-for-sale securities,'' 27.f, ``Accumulated net gains (losses) 
on cash flow hedges,'' and 27.g, ``Cumulative foreign currency 
translation adjustments,'' would be combined and reported as 
``Accumulated other comprehensive income.'' \2\ This change would 
conform the presentation of the equity capital section of the FR Y-9C 
balance sheet to FASB Statement No. 130, Reporting Comprehensive 
Income.
---------------------------------------------------------------------------

    \2\ The first two of these components of ``Accumulated other 
comprehensive income'' would be separately identified in the 
proposed new regulatory capital schedule.
---------------------------------------------------------------------------

    4. A new item for ``Other equity capital components'' would be 
added to the equity capital section of the balance sheet. This item 
would include treasury stock and unearned Employee Stock Ownership Plan 
shares, which, under GAAP, are to be reported in a contra-equity 
account on the balance sheet. These items will continue to be reported 
separately in the proposed revised regulatory capital schedule. This 
change will make the equity capital section more consistent with GAAP 
and with the equity capital section of the balance sheet in the 
proposed bank Call Report and the Thrift Financial Report.

Schedule HC-A--Securities

    1. Add new items on fair value and amortized cost information for 
six categories of asset-backed securities that are currently included 
in the items for ``Debt securities.'' The six categories that would be 
reported on Schedule HC-A, item 5, are securities backed by: a. credit 
card receivables, b. home equity lines, c. auto loans, d. other 
consumer loans, e. commercial and industrial loans, and f. all other 
loans. The Federal Reserve proposes to collect information to 
facilitate more effective assessments of BHC credit and other exposures 
related to their portfolios of asset-backed securities. Currently, 
virtually all non-mortgage asset-backed securities are reported in two 
FR Y-9C items, i.e., Schedule HC-A, items 4.a and 5.a, U.S. and foreign 
``Debt securities.'' The proposed segregation of specific categories of 
asset-backed securities from ``Debt securities'' would promote risk-
focused supervision by enhancing the Federal Reserves' ability to 
assess credit exposures and asset concentrations.
    2. Memoranda items 4.a., ``Net unrealized holding losses on 
available-for-sale equity securities with readily determinable fair 
values' and 4.c., ``Amount of net unrealized holding gains on available 
for sale equity securities'' would be moved to the new regulatory 
capital schedule, which is discussed below.
    3. Memoranda item 9.c, ``All other equity securities,'' (equity 
securities without readily determinable fair values), would be moved to 
a new Schedule HC-F--Other Assets. These equity securities are outside 
the scope of FASB Statement No. 115, Accounting for Certain Investments 
in Debt and Equity Securities. Therefore, including them in the FR Y-9C 
with available-for-sale securities in Schedule HC-A, albeit at 
historical cost rather than at fair value, has not been consistent with 
GAAP. Moving equity securities without readily determinable fair values 
to the Memoranda schedule is intended to eliminate this inconsistency.

Schedule HC-B, Part I--Loans and Leases

    1. The definition of ``Construction and land development'' loans 
(item 1.a) and, hence, the definitions for the other categories of 
loans secured by real estate (items 1.b through 1.e) would be revised 
to make them consistent with reporting requirements in this area for 
savings associations as reported on the Thrift Financial Report. The FR 
Y-9C instructions for ``Construction and land development'' loans 
currently direct BHCs to exclude from this loan category loans to 
acquire and hold vacant land and construction loans with original 
maturities greater than 60 months. These two types of loans are instead 
reported as loans secured by farmland, 1-4 family residential 
properties, multifamily residential properties, or nonfarm 
nonresidential properties, as appropriate. The definitions for the five 
categories of ``Loans secured by real estate'' would be revised so that 
land loans and long-term construction loans are reported in a 
recaptioned item 1.a, ``Construction, land development, and other land 
loans.''
    2. The separate loan categories for ``Loans to depository 
institutions'' and ``Acceptances of other banks'' (items 3 and 4, 
respectively) would be combined.
    3. Item 6.a, column A, ``Credit cards and related plans'' to 
individuals for household, family, and other personal expenditures, 
would be split into separate loan categories for ``Credit cards'' and 
``Other revolving credit plans.''
    4. A single Memorandum item for the total amount of a BHC's ``Loans 
and leases restructured and in compliance with modified terms'' would 
replace the multiple Memorandum items in which BHCs must currently 
report information about such restructured credits (Memorandum items 
1.a through 1.h.) Restructured loans secured by 1-4 family residential 
properties and restructured consumer loans would be excluded from the 
revised Memorandum item.
    5. A new Memoranda item 3, ``Loans secured by real estate to non-
U.S. addressees (domicile)'' would be added in order to enhance the 
Federal Reserve's ability to evaluate the performance of real estate 
loans by addressee.
    6. The filing criteria for Part II, Trading Assets and Liabilities, 
would be modified. BHCs that report a quarterly average for trading 
assets of $2 million or more (new proposed item 4.a, Schedule HC-E) as 
of the March 31st

[[Page 69528]]

report date of the current calendar year would complete Schedule HC-B, 
Part II. Analysis of quarter-end trading assets data indicate that 
using this reporting threshold would provide adequate coverage of BHCs 
actively involved in trading and would be comparable to the coverage of 
bank trading activity proposed for the Call Report. In addition, Part 
II, Trading Assets and Liabilities, would be formatted as a separate 
Schedule HC-D, to be consistent with presentation in the Call Report.

Schedule HC-F--Off-Balance-Sheet Items

    1. The two-way breakout of Part I, item 2, ``Standby letters of 
credit and foreign office guarantees,'' between item 2.a.(1), ``To U.S. 
addressees,'' and 2.a.(2), ``To non-U.S. addressees,'' would be 
eliminated and replaced with a single combined item.
    2. Part II, Item 3, ``Securities borrowed,'' would no longer be 
collected from all BHCs. Instead, the amount of borrowed securities 
that exceed 10 percent of total equity capital \3\ would be reported in 
renumbered item 9, ``All other significant off-balance-sheet items.''
---------------------------------------------------------------------------

    \3\ As described below, the Federal Reserve proposes to 
eliminate this reporting threshold.
---------------------------------------------------------------------------

    3. The information collected in Part II, items 5.a, 5.b, and 5.c on 
the outstanding principal balance of and amount of recourse on three 
categories of financial asset transfers would be moved from Schedule 
HC-F and incorporated into the proposed new schedule on securitization 
and asset sale activities, which is discussed below.
    4. Part II, Item 6.b, ``Participations in acceptances acquired by 
the reporting BHC,'' and Memorandum item 1, ``Participations in unused 
commitments'' would be deleted from Schedule HC-F, and information 
would be collected only on the proposed new regulatory capital schedule 
discussed below. Memorandum item 1 would be redefined to collect 
information on commitments with an original maturity exceeding one year 
on the new regulatory capital schedule.
    5. Part III, Item 3.b for the gross notional amount of derivative 
contracts held for purposes other than trading that are not marked to 
market would be deleted. All derivative contracts, including those held 
for purposes other than trading, will be marked to market once a BHC 
adopts FASB Statement No. 133, Accounting for Derivative Instruments 
and Hedging Activities, which is effective for fiscal years beginning 
after June 15, 2000. Thus, item 3.b will no longer have any relevance 
in 2001.
    6. Part III, items 4.c.(1) and (2) for the gross positive and gross 
negative fair values of derivatives held for purposes other than 
trading that are not marked to market would be deleted because of the 
effect of FASB Statement No. 133.
    In addition, items on Schedule HC-F would be renumbered and 
formatted to better align with the order of items presented on Schedule 
RC-L, Off-Balance-Sheet Items, on the Call Report.

Schedule HC-G--Memoranda

    1. The scope of item 14, ``Income earned, not collected on loans,'' 
would be expanded to cover all ``Accrued interest receivable,'' and the 
item would be included on a new ``Other Assets'' schedule discussed 
below. Broadening this category to include interest earned, not 
collected on earning assets other than loans would be more consistent 
with the typical presentation of accrued interest receivable in 
financial statements prepared for other financial reporting purposes.
    2. Memorandum item 19, ``Deferred tax assets in excess of 
regulatory capital limits,'' would be retitled as ``Disallowed deferred 
tax assets'' and moved to the revised regulatory capital schedule 
(Schedule HC-R), which is discussed below. This proposed change is part 
of an effort by the Federal Reserve to place all items collected 
principally for regulatory capital calculation purposes in a revised 
regulatory capital schedule rather than having these items scattered 
across various FR Y-9C schedules as they are at present.
    3. Items 17.a through 17.d, in which banks report a six-way 
breakdown of the ``Outstanding principal balance of 1-4 family 
residential mortgage loans serviced for others' would be moved from 
Schedule HC-G and condensed into a two-way servicing breakdown in the 
proposed new schedule on securitization and asset sale activities, 
which is discussed below.
    4. Items 20.a through 20.f, which collect data on quarterly sales 
of annuities, mutual funds, and proprietary products, would be 
eliminated. In place of these items, each BHC would respond to a 
``yes'' or ``no'' question asking whether it sells private label or 
third party mutual funds and annuities. In addition, BHCs would report 
the total assets under the reporting BHC's management in proprietary 
mutual funds and annuities. For BHCs with proprietary mutual funds and 
annuities, reporting the amount of assets under management should be 
significantly less burdensome than reporting the quarterly sales volume 
for these proprietary products.
    5. Item 22, ``Net unamortized realized deferred gains (losses) on 
off-balance-sheet derivative contracts included in assets and 
liabilities reported in Schedule HC,'' would be eliminated.

Schedule HC-H--Past Due and Nonaccrual Loans, Lease Financing 
Receivables, Placements, and Other Assets

    1. The presentation of loan category information would be modified 
to better match the loan schedule (HC-B) as proposed by moving the 
current breakdown of loans secured by real estate from the Memoranda 
section of Schedule HC-H, item 4, to item 1 of Schedule HC-H, and item 
5.a would be redefined to exclude related plans, which would be 
reported in item 5.b. In addition BHCs would separately report their 
past due and nonaccrual loans secured by real estate in foreign 
offices. Also the presentation order and certain item captions would be 
revised to better align with Schedule RC-N, Past Due and Nonaccrual 
Loans, Leases, and Other Assets, on the Call Report.
    2. Memorandum item 6.b, ``Replacement cost of [past due derivative] 
contracts with a positive replacement cost,'' would be deleted. Once 
BHCs adopt FASB Statement No. 133, Accounting for Derivative 
Instruments and Hedging Activities, all of their derivative contracts 
will be carried on the balance sheet at fair value. Since the 
replacement cost of a derivative contract is its fair value and its 
book value will also be its fair value, Memorandum items 6.a., ``Book 
value of amounts carried as assets,'' and 6.b would duplicate each 
other. The caption for Memorandum item 6.a would be revised to read 
``Fair value of amounts carried as assets.''
    3. Eliminating confidential treatment for certain past due and 
nonaccrual data: The Federal Reserve proposes to eliminate the 
confidential treatment for items past due 30 to 89 days and 
restructured items beginning with amounts reported as of March 31, 
2001. An important public policy issue for the Federal Reserve has been 
how to use market discipline to complement supervisory resources. 
Market discipline relies on market participants having information 
about the risks and financial condition of banking organizations. The 
FR Y-9C, in particular, is widely used by securities analysts, rating 
agencies, and large institutional investors as sources of BHC-specific 
data. Disclosure that increases transparency should lead to more 
accurate market assessments of

[[Page 69529]]

risk and value. This, in turn, should result in more effective market 
discipline on BHCs.
    Despite this emphasis on market discipline, the Federal Reserve 
currently accords confidential treatment to the information BHCs report 
in Schedule HC-H of the FR Y-9C on the amounts of their loans, leases, 
and other assets that are past due 30 to 89 days and still accruing and 
on the amount of restructured loans and leases that are past due 90 
days or more and still accruing or in nonaccrual status. This is the 
only financial information currently collected on the FR Y-9C that is 
treated as confidential on an individual BHC basis. In contrast, the 
information BHCs report on the amounts of their loans, leases, and 
other assets that are 90 days or more past due and still accruing or 
that are in nonaccrual status has been publicly available. The Federal 
Reserve proposes to make all past due and restructured loan and lease 
information publicly available in order to give the public, including 
BHCs, more complete information on the level of and trends in asset 
quality at individual institutions.
    Some banking organizations have held that information on loans, 
leases and other assets that are past due 30 to 89 days is not a 
reliable indicator of future loan losses or of general asset quality. 
They further note that market discipline would be reduced, rather than 
enhanced, by the release of information that is highly susceptible to 
misinterpretation to the extent that it could cause an unjustifiable 
loss of funding to the industry. However, banking supervisors have 
consistently found information on loans and leases past due 30 to 89 
days to be helpful in identifying banks with emerging asset quality 
problems. Therefore the Federal Reserve believes that such information 
is a useful indicator of general asset quality and would not represent 
misleading information to the public. Moreover, BHCs have the option to 
include in their notes to the balance sheet a brief narrative statement 
that provides explanatory comments about any data disclosure which they 
feel may be subject to misinterpretation, the text of which is 
available to the public.

Schedule HC-I--Risked-Based Capital

    The Federal Reserve proposes to revise the risk-based capital 
schedule (Schedule HC-I) by incorporating many of the reporting 
concepts of the FR Y-9C's optional regulatory capital worksheet. All 
top-tier BHCs with total consolidated assets of $150 million or more 
would continue to be required to complete the entire revised regulatory 
capital schedule. The proposed schedule will also more directly 
correspond to the proposed commercial bank Regulatory Capital schedule 
on the Call Report. Schedule HC-I would also be retitled ``Regulatory 
Capital'' and relabeled Schedule HC-R.
    In general, the proposed revised format would use a systematic, 
step-by-step building block approach under which BHCs would report the 
various components and adjustments that determine Tier 1, Tier 2, and 
total capital, as well as risk-weighted assets. This means that all 
regulatory capital ratios--the Tier 1 leverage ratio, the Tier 1 risk-
based capital ratio, and the total risk-based capital ratio--would be 
derived directly from the items that BHCs report on this schedule. 
These ratios would also be disclosed in the schedule. The carrying 
values of all on-balance-sheet asset values and the face value or 
notional amount of most off-balance-sheet items used in the capital 
calculations would function as ``control totals'' and banks would 
allocate these amounts to the appropriate risk weight categories in 
accordance with the risk-based capital guidelines.
    Existing items in Part III require the reporting of the major 
capital categories--Tier 1, Tier 2, Tier 3, and total risk-based 
capital--as well as risk-weighted assets and average total assets, 
which is used in the Tier 1 leverage ratio. The amounts reported in 
these existing items should be the amounts determined by BHCs for their 
own internal capital analyses consistent with the applicable capital 
standards. These items (Part III items 1.a through 4) are so-called 
self-reported capital items. The first part of the proposed revised 
regulatory capital schedule would essentially replicate the steps that 
BHCs are already going through to determine the major capital 
categories on a self-reported basis and therefore should not impose 
significant additional reporting burden. Moreover, to facilitate this 
proposed step-by-step building block approach to computing these 
capital categories, the Federal Reserve proposes to move a number of 
items that are collected principally for regulatory capital calculation 
purposes from their currently scattered locations in other FR Y-9C 
schedules to their more logical position in the proposed revised 
capital schedule. For example, as previously discussed the item for 
``Deferred tax assets in excess of regulatory capital limits'' that is 
currently collected in Schedule HC-G--Memoranda, would now be included 
in the proposed revised Schedule HC-I (and retitled as ``Disallowed 
deferred tax assets'').
    Overall, the Federal Reserve believes that the proposed revisions 
to the regulatory capital schedule provide a rational, systematic 
approach to reporting the elements of capital as well as the components 
of risk-weighted assets. The proposed approach should offer both 
enhanced and efficient reporting for both BHCs and users of the FR Y-9C 
report.

Schedule HC-S--Securitization and Asset Sale Activities

    The Federal Reserve proposes to revise and expand the information 
collected in the FR Y-9C to facilitate more effective analysis of the 
impact of securitization and asset sale activities on BHC credit 
exposures. In this regard, the Federal Reserve proposes to introduce a 
separate new schedule (Schedule HC-S) effective with the June 30, 2001, 
reporting date that would comprehensively capture information related 
to BHC securitization and asset sale activities. At present, the FR Y-
9C includes several items in various schedules that are used to assess 
BHC involvement in securitization and asset sale activities. The items 
generally focus on the securitization and sale of 1-4 family 
residential mortgages and consumer loans. However, over the past few 
years, the scope and volume of BHC asset securitization activities have 
expanded significantly beyond the traditional 1-4 family residential 
mortgage and consumer loan areas into other areas, most notably into 
the areas of home equity and commercial lending.
    Under this proposal, BHCs involved in securitization and asset sale 
activities would report quarter-end (or year-to-date) data for seven 
loan categories similar to the manner in which they report their loan 
portfolios. These data would cover 1-4 family residential loans, home 
equity lines, credit card receivables, auto loans, other consumer 
loans, commercial and industrial loans, and all other loans and leases. 
For each loan category, BHCs would report: (1) The outstanding 
principal balance of assets sold and securitized with servicing 
retained or with recourse or seller-provided credit enhancements, (2) 
the maximum amount of credit exposure arising from recourse or credit 
enhancements to securitization structures (separately for those 
sponsored by the reporting institution and those sponsored by other 
institutions), (3) the past due amounts and charge-offs and recoveries 
on the underlying securitized assets, (4) the amount of any commitments 
to provide liquidity to the securitization structures, (5) the 
outstanding principal balance of assets sold with servicing retained or

[[Page 69530]]

with recourse or seller-provided credit enhancements that have not been 
securitized, (6) the amount of ownership (or seller's) interests 
carried as securities or loans, and (7) the maximum amount of credit 
exposure arising from assets sold with recourse or seller-provided 
credit enhancements that have not been securitized. A limited amount of 
information would also be collected on BHC credit exposures to asset-
backed commercial paper conduits. For the home equity line, credit card 
receivable, and the commercial and industrial loan categories, BHCs 
would also report the amount of any ownership (or seller's) interests 
in securitizations that are carried as securities and the past due 
amounts and charge-offs and recoveries on the assets underlying these 
seller's interests.
    At present, BHCs report certain information related to 
securitizations, asset sales, and servicing in current Schedule HC-F--
Off-Balance Sheet Items and Schedule HC-G--Memoranda. To avoid the loss 
of this information until the delayed effective date of new Schedule 
RC-S, these existing items will be moved into and reported in the 
Memoranda section of Schedule HC-S for the March 31, 2001, report date. 
These existing items and what will happen to them after they are 
collected in the March 31, 2001, FR Y-9C are as follows:
    1. Schedule HC-F, items 5.a.(1) and (2) and items 5.b.(1) and (2)--
in which BHCs report the outstanding principal balance and amount of 
recourse exposure on (a) ``First lien 1-4 family residential mortgage 
loans'' and (b) ``Other financial assets'' that have been transferred 
with recourse and are treated as sold--will be collected in Schedule 
HC-S, Memorandum items 4.a.(1) and (2) and items 4.b(1) and (2), for 
the final time as of March 31, 2001.
    2. Schedule HC-F, items 5.c.(1) and (2)--in which BHCs report the 
outstanding principal balance and amount of retained recourse on 
``Small business obligations transferred with recourse under Section 
208 of the Riegle Community Development and Regulatory Improvement Act 
of 1994''--will be collected in Schedule HC-S, Memorandum items 1.a and 
1.b, as of March 31, 2001, and thereafter.
    3. Schedule HC-G, item 17--in which BHCs provide a six-way 
breakdown of the ``Outstanding principal balance of 1-4 family 
residential mortgage loans serviced for others'' by type of servicing 
contract--will be collected in condensed form in Schedule HC-S, 
Memorandum items 2.a and 2.b, as of March 31, 2001, and thereafter. In 
addition item 2.c, which is not currently reported in the FR Y-9C, 
would begin to be reported as of June 30, 2001, consistent with the 
proposed reporting for Schedule RC-S.

Schedule HI--Consolidated Income Statement

    2. Report the combined amount of tax-exempt loan and lease income 
in a single income statement item, Memoranda item 3. This would mean 
that, going forward, the body of the income statement (Schedule HI) 
would contain only two items for interest and fee income from loans 
(item 1.a.(1), ``In domestic offices'' and item 1.a.(2), ``In foreign 
offices, Edge and Agreement subsidiaries, and IBFs'') and a single item 
(item 1.b) for income from lease financing receivables.
    2. The breakout of interest income on balances due from depository 
institutions (by domestic versus foreign offices) would be eliminated. 
Currently, this information is reported in Schedule HI, items 1.c.(1) 
and 1.c.(2). Going forward, there would only be a total reported for 
this information.
    4. The number of categories of securities income that BHCs are 
required to report would be reduced. BHCs would report their income for 
the three following categories of securities in the body of the income 
statement: (a) U.S. Treasury securities and U.S. government agency 
obligations, (b) Mortgage-backed securities, and (c) All other 
securities. BHCs would report their ``Income on tax-exempt securities 
issued by states and political subdivisions in the U.S.'' in a new 
income statement Memorandum item 4 rather than in the income statement 
(Schedule HI) itself.
    5. Item 2.c, ``Interest on borrowed funds,'' would be retitled 
``Interest on trading liabilities and other borrowed money.'' The 
instructions for this item also would be clarified to include trading 
liabilities.
    6. Item 4.a, ``Provision for credit losses,'' would be revised so 
that it includes only the provision for loan and lease losses. BHCs 
would report any provision for credit losses on off-balance-sheet 
exposures in item 7.e, ``Other noninterest expense'' and they would 
itemize and describe this provision in Memoranda item 7, if it is 
significant.
    7. Item 4.b, ``Provision for allocated transfer risk,'' would be 
eliminated as a specific income statement item. BHCs would report any 
provision for allocated transfer risk in ``Other noninterest expense'' 
and itemize and describe it in Memoranda item 7 if it is significant.
    8. Noninterest income: Board staff proposes to add several new 
noninterest income categories to those currently collected in the FR Y-
9C income statement (Schedule HI). Noninterest income has grown 
substantially over the last few years as a source of revenue for BHCs. 
A more detailed breakdown of noninterest income would provide the 
Federal Reserve with valuable supervisory information on the amount and 
type of fee-generating activities within the BHC.
    These categories were selected in part based on a review of 
noninterest income information currently reported by BHCs in Schedule 
HI, Memoranda items 5 and 6. In these items, BHCs must itemize and 
describe, using their own terminology, their most significant 
categories of ``Service charges, commissions, and fees'' and ``Other 
noninterest income.'' Two of the proposed new income statement 
categories represent items, or modifications of items, for which 
specific preprinted captions currently appear in Schedule HI (Memoranda 
items 6.a and 6.b). As a result, these items would no longer be 
reported in the Memoranda section of Schedule HI. The categories of 
noninterest income that would be added as specific items on the FR Y-9C 
income statement are: (1) Investment banking, advisory, brokerage, and 
underwriting fees and commissions, (2) venture capital revenue, (3) net 
servicing fees, (4) net securitization income, (5) insurance 
commissions and fees, (6) net gains (losses) on sales of loans, (7) net 
gains (losses) on sales of other real estate owned, and (8) net gains 
(losses) on sales of other assets (excluding securities). The current 
income statement item for ``Other service charges, commissions, and 
fees'' (item 5.b.(2)) would be discontinued. The new noninterest income 
items would provide greater comparability among the categories of 
noninterest income currently reported by BHCs. Some of the proposed 
noninterest income categories would represent the only information 
provided in the FR Y-9C on certain activities. By collecting more 
detailed noninterest income data, the significance of each of these 
activities can be compared to other income-generating activities of the 
BHC.
    9. New item 7.c, ``Amortization expense of intangible assets,'' 
would be added to the income statement (Schedule HI).
    10. In Schedule HI--Memoranda, the threshold for itemizing and 
describing significant components of ``Other noninterest income'' and 
``Other noninterest expense'' in items 6 and 7 would be changed to 1 
percent of the total of interest income and noninterest

[[Page 69531]]

income from the current threshold of 10 percent of other noninterest 
income and 10 percent of other noninterest expense, respectively. This 
revised threshold is consistent with the Securities and Exchange 
Commission's threshold for the disclosure by bank holding companies of 
components of other noninterest income and expense.
    11. Similar to the reporting revision proposed to Schedule HC-B, 
Part II, Trading Assets and Liabilities, the filing criteria for 
Memoranda item 9, ``Trading revenue,'' would be revised to require BHCs 
to complete Memoranda item 9 only if they report a quarterly average 
for trading assets of $2 million or more as of the March 31st report 
date for the current calendar year.
    12. The instructions for Memorandum items 10.a through 10.c that 
request BHCs to disclose the impact of derivatives held for purposes 
other than trading on interest income, interest expense, and 
noninterest income (expense) would be revised. For reporting beginning 
in 2001 when FASB Statement No. 133, Accounting for Derivative 
Instruments and Hedging Activities, is in effect, all derivatives would 
be reported on the balance sheet at fair value and the accounting for 
fair value and cash flow hedges under Statement No. 133 differs from 
current hedge accounting practices.
    In addition, certain item captions would be modified to better 
align with similar information reported on the bank Call Report Income 
Statement.

Schedule HI-A--Changes in Equity Capital

    1. The manner in which the previous year-end balance of equity 
capital is reported in this schedule so that it better corresponds with 
how this balance is presented in financial statements prepared in 
accordance with GAAP. At present, BHCs must report the ``Equity capital 
end of previous calendar year'' in the FR Y-9C in item 1. If the BHC 
has filed any amendments to this previous year-end FR Y-9C report that 
affected its originally reported total equity capital, these equity 
capital adjustments are reported in item 2, and the amended equity 
capital balance for the previous year-end is reported in item 3. The 
Federal Reserve proposes to eliminate item 2 and, in effect, have BHCs 
report what is now reported in item 3 as their previous year-end equity 
capital balance. Thus, as Schedule HI-A would be revised, BHCs would 
report ``Equity capital most recently reported for the end of the 
previous calendar year'' in item 1. The Federal Reserve also proposes 
to combine item 11, ``Cumulative effect of changes in accounting 
principles from prior years,'' and item 12, ``Corrections of material 
accounting errors from prior years,'' and designate the combined items 
as item 2, ``Restatements due to corrections of material accounting 
errors and changes in accounting principles,'' of revised Schedule HI-
A. The next item in revised Schedule HI-A (item 3) would then be 
captioned ``Balance end of previous calendar year as restated.''
    2. Items 13.a, ``Change in net unrealized holding gains (losses) on 
available-for-sale securities,'' 13.b., ``Change in accumulated net 
gains (losses) on cash flow hedges,'' and 18, ``Foreign currency 
translation adjustments'' would be combined and replaced by an item for 
``Other comprehensive income.'' This item would also include any 
minimum pension liability adjustment recognized during the year-to-date 
in accordance with GAAP, which BHCs currently have to report elsewhere 
in Schedule HI-A. Identifying ``Other comprehensive income'' in the 
changes in equity capital schedule is consistent with FASB Statement 
No. 130, Reporting Comprehensive Income.
    In addition, Schedule HI-A would be renumbered and certain captions 
would be modified to better align with the Changes in Equity Capital 
schedule on the Call Report.

Schedule HI-B--Charge-Offs and Recoveries on Loans and Leases and 
Changes in Allowance for Credit Losses

    1. The presentation of loan category information would be modified 
to better match the loan schedule (HC-B) as proposed by moving the 
current breakdown of loans secured by real estate from the Memoranda 
section of Schedule HI-B, item 1, to item 1 of Schedule HI-B, and item 
5.a would be redefined to exclude related plans which would be reported 
in item 5.b. In addition BHCs would also separately report their 
charge-offs and recoveries of loans secured by real estate in foreign 
offices. Also the presentation order and certain item captions would be 
revised to align with the Charge-Offs and Recoveries schedule on the 
Call Report.
    2. The scope of Part II would be revised to cover changes in the 
allowance for loan and lease losses rather than the entire allowance 
for credit losses. In addition, similar to the proposal discussed above 
for Schedule HI-A--Changes in Equity Capital, the manner in which the 
previous year-end balance of the allowance is reported in Schedule HI-
B, Part II, would be changed so that it better corresponds with its 
presentation in financial statements prepared in accordance with GAAP. 
At present, BHCs report the balance of the allowance as ``originally 
reported'' in their previous year-end FR Y-9C report in item 1. The 
effects of any amendments to the previous year-end FR Y-9C on the 
allowance as originally reported are included in item 3, 
``Adjustments.'' Item 1 would be revised to eliminate the need to 
report these adjustments from amended FR Y9-C reports in item 3. Thus, 
BHCs would report the ``Balance most recently reported at end of 
previous year'' for the year-end allowance for loan and lease losses in 
item 1.
    3. Schedule HI-B, Part II, Memorandum item 1, ``Credit losses on 
off-balance-sheet derivative contracts,'' would be retitled ``Credit 
losses on derivatives'' and moved to Schedule HI, memoranda item 11.

Other Revisions Not Related to Call Report Changes

    The following proposed revisions are not directly related to the 
proposed Call Report changes for March 2001. Most of these changes are 
proposed to provide greater consistency with current Call Report items 
that are not part of the March 2001 revisions.

Schedule HC--Consolidated Balance Sheet

    1. To better align the presentation of the FR Y-9C Balance Sheet 
with that of the Call Report Balance Sheet, components of item 7, 
``Other real estate owned,'' and item 10, ``Intangible assets,'' and 
line items 16, ``Commercial paper,'' and 17, ``Other borrowed money 
with a remaining maturity of more than one year'' would be moved to the 
Memoranda schedule.
    2. Item 20, ``Mandatory convertible securities,'' with a two-way 
breakout between item 10.a, ``Equity contract notes, gross'' and item 
10.b, ``Equity commitment notes, gross'' would be eliminated. 
Information on mandatory convertible securities would be included in 
item 21, ``Subordinated notes and debentures.
    In addition, items on Schedule HC would be renumbered and certain 
line item captions modified to better align with information reported 
on the Call Report Balance Sheet.

Schedule HC-A--Securities

    1. Memoranda item 7, ``U.S. government agency and corporation 
obligations (exclude mortgage-backed securities)'' would be moved to 
Schedule HC-A, as item 2. Currently a two-way breakout of this item is 
collected for such securities ``Issued by U.S. government agencies'' 
(Memoranda item 7.a) and for securities ``Issued by

[[Page 69532]]

U.S. government-sponsored agencies'' (Memoranda item 7.b) from BHCs 
with total consolidated assets of $1 billion or more. These two items 
would replace the total reported for U.S. government agency and 
corporate obligations currently reported in item 2 and would be 
reported by all BHCs. This change would provide for consistency in 
reporting with the Call Report Schedule RC-B, Securities.
    2. Memoranda item 8, ``Mortgage-backed securities (MBS),'' with the 
breakout between ``Pass-through securities'' (item 8.a) and ``Other 
mortgage-backed securities (include CMOs, REMICs, and stripped MBS)'' 
(item 8.b) would be moved to Schedule HC-A, new item 4. These items 
would then be reported by all BHCs, rather than by BHCs with total 
consolidated assets of $1 billion or more. FR Y-9C data show that BHCs 
of $1 billion or more in total assets have long been actively involved 
in mortgage-backed securities. For 1999, mortgage-backed securities 
represented 45 percent of the total securities portfolio for BHCs of $1 
billion or more in total assets. Call Report data show that, for 
commercial banks between $150 million and $1 billion in total assets, 
mortgage-backed securities represented nearly 30 percent of their total 
securities portfolio in 1999. Given the suspected significance of BHC 
involvement in this activity at all levels, the Federal Reserve 
proposes to collect mortgage-backed security information from all FR Y-
9C respondents. All commercial banks currently file this information on 
the Call Report.
    3. Collect a new item 7, ``Investments in mutual funds and other 
equity securities with readily determinable fair values' from all FR Y-
9C respondents in order to assure the completeness and continuity of 
the reporting of BHC security holdings given the proposed changes to 
Memoranda items 7 and 8. Currently this information (Memoranda item 
9.a) is collected only from BHCs with total consolidated assets of $1 
billion or more. All commercial banks currently file this information 
on the Call Report.
    4. Item 3.a, ``Taxable securities'' and item 3.b, ``Tax exempt 
securities,'' would be combined. The caption would read ``Securities 
issued by states and political subdivisions in the U.S.''
    5. Items reported for U.S. securities (item 4) and Foreign 
securities (item 5) would be modified to collect only U.S. debt 
securities and Foreign debt securities for consistency with the Call 
Report.

Schedule HC-B--Loans and Lease Financing Receivables

    1. The three-way breakout for item 8, ``All other loans,'' would be 
collapsed to a single item, eliminating items 8.a, ``Taxable 
obligations (other than securities) of states and political 
subdivisions in the U.S.'' and 8.b, ``Tax exempt obligations (other 
than securities) of states and political subdivisions in the U.S.'' 
This change would provide for consistency in reporting with the Call 
Report Loan schedule.
    In addition, items from Schedule HC-B would be renumbered to align 
with the presentation order on the Call Report Loan schedule.

Schedule HC-F--Derivatives and Off-Balance-Sheet Items

    1. Item 2, ``Financial standby letters of credit,'' and item 2.a, 
``Amount of financial standby letters of credit conveyed to others'' 
would be added to provide for consistency in reporting this off-
balance-sheet information with similar items collected on the Call 
Report, and to tie information reported in Schedule HC-F with off-
balance-sheet information proposed in Schedule HC-R, item 44, 
``Financial standby letters of credit.''
    2. Item 3, ``Performance standby letters of credit,'' and item 3.a, 
``Amount of performance standby letters of credit conveyed to others'' 
would be added to provide for consistency in reporting this off-
balance-sheet information with similar items collected on the Call 
Report, and to tie information reported in Schedule HC-F with off-
balance-sheet information proposed in Schedule HC-R, item 45, 
``Performance standby letters of credit.''
    3. Item 9, ``Other significant off-balance-sheet items (exclude 
off-balance-sheet derivatives) that exceed 10% of total equity 
capital'' would be retitled as ``All other off-balance-sheet items 
(exclude derivatives)'' to capture all other off-balance-sheet 
exposures to provide for consistency in reporting this off-balance-
sheet information with the similar item collected on the Call Report 
and would provide analysts a complete measure of the risk associated 
with these exposures.

Schedule HC-G--Memoranda

    1. The two-way breakdown of deferred tax assets captured in item 
1.a.(1), ``IRS loan loss provision,'' and item 1.a.(2), ``Other,'' 
would be eliminated in favor of a single item for ``Net deferred tax 
assets'' and the item would be included on a new ``Other Assets'' 
schedule discussed below. Similarly, the two-way breakdown of deferred 
tax liabilities captured in items 1.b.(1), ``IRS loan loss provision,'' 
and item 1.b.(2), ``Other,'' would be eliminated in favor of a single 
item for ``Net deferred tax liabilities'' and would be included on a 
new ``Other Liabilities'' schedule discussed below.
    2. Item 3, ``Number of full-time equivalent employees'' would be 
moved to Schedule HI, Income Statement, memoranda item 5, to be 
consistent with presentation in the Call Report.
    3. Item 7.a, ``Amount of cash items in process of collection netted 
against deposit liabilities in reporting Schedule HC,'' item 8, 
``Reciprocal demand balances with depository institutions (other than 
commercial banks in the U.S.),'' and item 16, ``Please describe and 
list below separately the dollar amount outstanding of assets removed 
from the reporting company's balance sheet (Schedule HC) in connection 
with assets netted against liabilities when there exists a legal right 
of offset'' would be eliminated.

Schedule HC-I--Risked Based Capital

    1. Schedule HC-I, Part I, Memoranda item 6, ``Fair value of 
mortgage servicing assets,'' would be retitled as ``Estimated fair 
value of mortgage servicing assets'' and moved to Schedule HC-M, 
Memoranda item 18.a(1).

Schedule HC-IC--Additional Detail on Capital Components

    Items on Schedule HC-IC would be included in the Memoranda section 
of the revised risk-based capital schedule. In addition, the Federal 
Reserve proposes the following changes.
    1. Item 1.a.(4), ``Other items included in `Minority interest in 
consolidated subsidiaries and similar items,' on Schedule HC subject to 
limits in Tier 1 capital,'' would be added to provide for a more 
complete disclosure of elements incorporated into the calculation of 
Tier 1 capital.
    2. Item 1.b., ``Auction rate preferred stock and any other 
perpetual preferred stock deemed by the Federal Reserve to be eligible 
for Tier 2 capital only,'' item 2., ``Total perpetual debt, undedicated 
portions of mandatory convertible securities and long-term preferred 
stock with an original maturity of 20 years or more that qualify for 
supplementary capital (after discounting),'' and item 3, ``Intermediate 
preferred stock with an original weighted-average maturity of 5 years 
or more; subordinated debt with an original weighted average maturity 
of 5 years or more; or unsecured long-term debt issued by BHC prior to 
March 12, 1988, that qualified as secondary capital

[[Page 69533]]

(after discounting)'' would be eliminated.

Schedule HC-H--Past Due and Nonaccrual Loans, Lease Financing 
Receivables, Placements, and Other Assets

    1. Item 1, ``Loans secured by real estate'' as a total would be 
deleted. This item can be derived from the sum of the components of 
revised item 1.

New Schedules for ``Other Assets'' and ``Other Liabilities''

    As mentioned previously, the Federal Reserve proposes to add two 
new schedules for the reporting of ``Other Assets'' and ``Other 
Liabilities.'' Items reported on these schedules consist of items 
currently reported on the Memoranda and Securities schedules, and 
certain new and revised items. The addition of these schedules will 
provide greater consistency with the presentation provided in the Call 
Report. The ``Other Assets'' schedule would consist of the following 
items: (1) Accrued interest receivables, (2) Net deferred tax assets, 
(3) Interest-only strips receivable (not in the form of a security) on 
Mortgage loans and Other financial assets, (4) Equity securities that 
do not have readily determinable fair values, and (5) Other. The 
``Other Liabilities'' schedule would consist of the following items: 
(1) Net deferred tax liabilities, (2) Allowance for credit losses on 
off-balance-sheet credit exposures, and (3) Other.
    Item 2 on the ``Other Liabilities'' schedule, ``Allowance for 
credit losses on off-balance-sheet credit exposures,'' is included on 
the balance sheet as a component of other liabilities sheet separate 
from the allowance for loan and lease losses. At present, the limited 
number of BHCs that have an allowance for credit losses on off-balance-
sheet credit exposures combine this allowance with their allowance for 
loan and lease losses when completing Schedule HI-B, Part II, (Changes 
in) Allowance for Credit Losses. Because the allowance for loan and 
lease losses is reported on the balance sheet (Schedule HC), the amount 
of the allowance for credit losses on off-balance-sheet exposures can 
be derived. However, as discussed previously, the Federal Reserve is 
proposing to revise the scope of Schedule HI-B, Part II. This change 
creates the need for the proposed new item to identify the amount, if 
any, of a BHC's allowance for credit losses on off-balance-sheet 
exposures.

Schedule HI--Consolidated Income Statement

    2. Item 5.b.(1) ``Service charges on deposit accounts'' and item 
5.b.(2) ``Other service charges, commissions, and fees'' would be 
combined and retitled ``Service charges on deposit accounts in domestic 
offices.'' In addition, Memorandum item 5 would be deleted since this 
item was for the purpose of describing items included in 5.b.(2) that 
exceeded a particular threshold.
    3. Memorandum item 4 ``Income taxes applicable to gains (losses) on 
securities not held in trading accounts'' would be deleted.

Schedule HI-B, Part II--Allowance for Credit Losses

    1. Item 6, ``Foreign currency translation adjustments,'' would be 
combined with new item 5, ``Adjustments.''

Revisions Related to the Gramm-Leach-Bliley Act of 1999

    The Federal Reserve proposes to collect certain information to 
address the difference in the supervisory requirements for BHCs and 
newly formed financial holding companies (FHCs) that conduct insurance-
related activities. While bank holding companies have engaged in a 
relatively limited amount of insurance-related activities for some 
time, the volume and complexity of insurance related activities engaged 
in by FHCs will likely increase as they take advantage of the 
provisions of the Gramm-Leach-Bliley Act of 1999 (GLBA).
    Insurance related activities of BHCs have been limited to the 
provisions provided under Regulation Y and the Garn-St. Germain 
Depository Institutions Act of 1982. Now FHCs, among other things, can 
engage in and affiliate with full service insurance companies providing 
insurance agency (sales) and underwriting activities. In addition, 
while traditional BHCs have been able to engage in various nonbank 
activities and new businesses, they were required to apply in advance 
to acquire or launch material new business lines. Today, BHCs that 
qualify as FHCs are able to rapidly enter insurance activities without 
advance notification to the Federal Reserve.
    The existing FR Y9-C is structured to accommodate bank, securities 
and other activities incidental to banking, but not for insurance 
activities. With the latest Call Report proposal, adjustments are being 
proposed to reflect both new authority and financial innovation for 
bank-level activities and many of these same changes are also being 
proposed for the FR Y9-C. However, those Call Report adjustments do not 
include insurance underwriting, since that activity remains 
impermissible for banks. Because insurance underwriting affiliates are 
unique to FHCs, the FR Y9-C will need to reflect this special 
affiliation in a way that is useful to supervisors and the public 
without creating undue burden.
    As an umbrella supervisor, it is essential for the Federal Reserve 
to evaluate the volume and nature of insurance activities conducted by 
an FHC on a fully consolidated basis. A few basic indicators of the 
nature and volume of the FHC's insurance business that cut across legal 
entities and business lines will be critical, especially since the 
number of entities and related functional regulators involved with such 
activities can be substantial and impractical for the Federal Reserve 
to aggregate on its own. Moreover, with hundreds of BHCs now qualified 
as FHCs, monitoring those that have begun to engage in insurance 
activities, and how rapidly they are growing that business, will be 
extremely challenging. Regulatory disclosures will be particularly 
important for smaller FHCs that do not regularly publish statements to 
the marketplace. By adopting some modest reporting supplements to the 
FR Y9-C, the Federal Reserve will be better prepared to tailor and 
calibrate its supervisory and coordination efforts with functional 
supervisors on an as needed and risk-focused basis.
    Simply stated, these data would serve to identify whether the 
organization has engaged in agency business (sales), underwriting and 
reinsurance activities and indicate the approximate size of its reserve 
positions (which constitute the largest liability for an insurance 
company and the most prominent source of insurer insolvency). These 
``identifiers'' will serve as a tool for identifying when the Federal 
Reserve will need to contact and coordinate with functional regulators 
to get additional information without duplicative or onerous burden on 
the FHC's functionally-regulated entities.
    The Federal Reserve proposes to add a new schedule HC-I, 
``Insurance-Related Activities,'' to obtain the following 
``identifier'' information: Part I, Property and Casualty; Part II, 
Life and Health; and Part III, All Insurance-Related Activities. Items 
proposed for Part I are: Agent balances; Reinsurance recoverables; 
Deferred acquisition costs and value of insurance acquired; Policy 
benefits, reserves, and loss adjusted expenses; and Unearned premiums. 
Items proposed for Part II are: Separate

[[Page 69534]]

account assets; Asset valuation reserve and interest maximization 
reserve; Policy benefits, reserves, and loss adjusted expenses; 
Liabilities for premiums and other deposit funds; and Separate account 
liabilities. Items proposed for Part III are: Total assets and Net 
Income.
    The Federal Reserve also proposes to add two ``identifier'' items 
to Schedule HI, Consolidated Income Statement. Under item 5, 
``Noninterest income,'' item 5.i, ``Premiums earned'' would be added. 
Under item 7, ``Noninterest expense,'' item 7.d, ``Benefits, losses and 
expenses from insurance related activities'' would be added.
Instructions
    Instructional revisions and clarifications will be done in 
accordance with changes made to the Call Report instructions and 
revisions to the Capital Guidelines.
    2. Report title: Parent Company Only Financial Statements for Large 
Bank Holding Companies
    Agency form number: FR Y-9LP.
    OMB control number: 7100-0128.
    Frequency: Quarterly.
    Reporters: Bank holding companies.
    Annual reporting hours: 37,985.
    Estimated average hours per response: 4.49.
    Number of respondents: 2,115.
    Small businesses are affected.
    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 this report. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form.
    Abstract: The FR Y-9LP includes standardized financial statements 
filed quarterly on a parent company only basis from each bank holding 
company that files the FR Y-9C. In addition, for tiered bank holding 
companies, a separate FR Y-9LP must be filed for each lower tier bank 
holding company.
    Current actions: The Federal Reserve proposes the following 
revisions to the FR Y-9LP effective with the March 31, 2001, reporting 
date.

Schedule PC--Parent Company Only Balance Sheet

    1. Item 4.f, ``Allocated transfer risk reserve,'' would be deleted 
from the balance sheet. BHCs would report item 4.c, ``Loans, net of 
unearned income'' and item 4.c, ``Leases, net of unearned income'' net 
of any allocated transfer risk reserve.
    2. Item 15, ``Mandatory convertible securities,'' with a two-way 
breakout between item 15.a, ``Equity contract notes, gross'' and item 
15.b, ``Equity commitment notes, gross'' would be eliminated. 
Information on mandatory convertible securities would be included in 
item 16, ``Subordinated notes and debentures.''
    3. Items 20.e, ``Net unrealized holding gains (losses) on 
available-for-sale securities,'' and 20.f, ``Accumulated net gains 
(losses) on cash flow hedges'' would be combined and reported as 
``Accumulated other comprehensive income.'' This change would conform 
the presentation of the equity capital section of the FR Y-9LP balance 
sheet to FASB Statement No. 130, Reporting Comprehensive Income.
    4. A new item for ``Other equity capital components'' would be 
added to the equity capital section of the balance sheet. This item 
would include treasury stock and unearned Employee Stock Ownership Plan 
shares, which, under GAAP, are to be reported in a contra-equity 
account on the balance sheet. Treasury stock (item 20.g) would no 
longer be reported separately. This change will make the equity capital 
section more consistent with GAAP and with the equity capital section 
of the balance sheet in the proposed bank Call Report and the Thrift 
Financial Report.

Schedule PI--Parent Company Only Income Statement

    1. Item 2.c.(1), ``Provision for credit losses,'' would be revised 
so that it includes only the provision for loan and lease losses. BHCs 
would report any provision for credit losses on off-balance-sheet 
exposures in item 2.d, ``All other expenses.''
    2. Item 2.c.(2), ``Provision for allocated transfer risk,'' would 
be eliminated as a specific income statement item. BHCs would report 
any provision for allocated transfer risk in item 2.d, ``All other 
expenses.''
Instructions
    Instructional revisions and clarifications would be made as 
necessary, to conform with changes made to the Call Report 
instructions.
    3. Report title: Parent Company Only Financial Statements for Large 
Bank Holding Companies.
    Agency form number: FR Y-9SP.
    OMB control number: 7100-0128.
    Frequency: Semiannual.
    Reporters: Bank holding companies.
    Annual reporting hours: 29,001.
    Estimated average hours per response: 3.82.
    Number of respondents: 3,796.
    Small businesses are affected.
    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 this report. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form.
    Abstract: The FR Y-9SP is a parent company only financial statement 
filed on a semiannual basis by one-bank holding companies with total 
consolidated assets of less than $150 million, and multibank holding 
companies with total consolidated assets of less than $150 million that 
meet certain other criteria. This report, an abbreviated version of the 
more extensive FR Y-9LP, is designed to obtain basic balance sheet and 
income statement information for the parent company, information on 
intangible assets, and information on intercompany transactions.
    Current actions: The Federal Reserve proposes the following 
revisions to the FR Y-9SP effective with the June 30, 2001, reporting 
date.

Balance Sheet

    1. Items 16.d, ``Net unrealized holding gains (losses) on 
available-for-sale securities,'' and 16.e, ``Accumulated net gains 
(losses) on cash flow hedges'' would be combined and reported as 
``Accumulated other comprehensive income.'' This change would conform 
the presentation of the equity capital section of the FR Y-9SP balance 
sheet to FASB Statement No. 130, Reporting Comprehensive Income.
    2. A new item for ``Other equity capital components'' would be 
added to the equity capital section of the balance sheet. This item 
would include treasury stock and unearned Employee Stock Ownership Plan 
shares, which, under GAAP, are to be reported in a contra-equity 
account on the balance sheet. Treasury stock will continue to be 
reported separately as Memoranda item 3 (if the amount exceeds 5 
percent of equity capital). This change would make the equity capital 
section more consistent with GAAP and with the equity capital section 
of the balance sheet in the proposed bank Call Report and the Thrift 
Financial Report.
    3. Memoranda item 4, ``Mandatory convertible securities, net,'' 
would be eliminated.
    In addition the following change would be made independent of 
changes proposed to the FR Y-9C. Instructions for Memoranda item 1, 
``Total consolidated assets of the bank holding company,'' indicate 
that this item is to be completed only by multibank holding companies 
with total consolidated assets of less than $150

[[Page 69535]]

million, without any debt outstanding to the general public and not 
engaged in a nonbank activity (either directly or indirectly) involving 
financial leverage and not engaged in credit extending activities. 
Board staff proposes to remove this reporting threshold and require all 
BHCs that file the FR Y-9SP to complete this item so that staff can 
monitor the size of these institutions.
Instructions
    Instructional revisions and clarifications would be made as 
necessary, to conform with changes made to the Call Report 
instructions.

Proposal To Approve Under OMB Delegated Authority To Extend for 
Three Years, With Revision, the Following Reports

    1. Report title: Quarterly Financial Statements of Nonbank 
Subsidiaries of Bank Holding Companies.
    Agency form number: FR Y-11Q.
    OMB control number: 7100-0244.
    Frequency: Quarterly.
    Reporters: Bank holding companies.
    Annual reporting hours: 14,402.
    Estimated average hours per response: 6.35.
    Number of respondents: 567.
    Small businesses are affected.
    General description of report: This information collection is 
mandatory (12 U.S.C. 1844(c)). Confidential treatment is not routinely 
given to most of the data in this report. However, confidential 
treatment for the reporting information, in whole or in part, can be 
requested in accordance with the instructions to the form. Currently FR 
Y-11Q, memorandum item 7.a, loans and leases past due 30 through 89 
days and FR Y-11Q, memorandum item 7.d, loans and leases restructured 
and included in past due and nonaccrual loans are confidential pursuant 
to Section (b)(8) of the Freedom of Information Act 5 U.S.C. 552(b)(8).
    Abstract: The FR Y-11Q is filed quarterly by the top tier bank 
holding companies for each nonbank subsidiary of a bank holding company 
with total consolidated assets of $150 million or more in which the 
nonbank subsidiary has total assets of 5 percent or more of the top-
tier bank holding company' consolidated Tier 1 capital, or where the 
nonbank subsidiary' total operating revenue equals 5 percent or more of 
the top-tier bank holding company' consolidated total operating 
revenue. The report consists of a balance sheet, income statement, off-
balance-sheet items, information on changes in equity capital, and a 
memoranda section.
    Current actions: The Federal Reserve proposes the following 
revisions to the FR Y-11Q effective with the March 31, 2001, reporting 
date.

Balance Sheet

    1. Items 20.e, ``Net unrealized holding gains (losses) on 
available-for-sale securities,'' and 20.f, ``Accumulated net gains 
(losses) on cash flow hedges'' would be combined and reported as 
``Accumulated other comprehensive income.'' This change would conform 
the presentation of the equity capital section of the FR Y-9C balance 
sheet to FASB Statement No. 130, Reporting Comprehensive Income.
    2. A new item for ``Other equity capital components'' would be 
added to the equity capital section of the balance sheet. This item 
would include treasury stock and unearned Employee Stock Ownership Plan 
shares that, under GAAP, are to be reported in a contra-equity account 
on the balance sheet. Treasury stock (item 20.h) would no longer be 
reported separately. This change will make the equity capital section 
more consistent with GAAP and with the equity capital section of the 
balance sheet in the proposed FR Y-9C.

Memoranda

    1. Consistent with changes proposed to the FR Y-9C, Memoranda item 
7.a, ``Loans and leases past due 30 through 89 days,'' and Memoranda 
item 7.d, Loans and leases restructured and included in past due and 
nonaccrual loans,'' would no longer be afforded confidential treatment.
    2. The scope of item 12.a, ``Income earned, not collected on 
loans,'' would be expanded to cover all ``Accrued interest 
receivable.'' Broadening this category to include interest earned, not 
collected on earning assets other than loans would be more consistent 
with the typical presentation of accrued interest receivable in 
financial statements prepared for other financial reporting purposes.

Income Statement

    Noninterest income: Noninterest income has grown substantially over 
the last few years as a source of revenue for BHCs. A more detailed 
breakdown of noninterest income would provide the Federal Reserve with 
valuable supervisory information on the amount and type of fee-
generating activities within the BHC.
    Therefore, the Federal Reserve proposes to add several new 
noninterest income categories to those currently collected in the FR Y-
11Q income statement. These categories were selected in part based on a 
review of noninterest income information currently reported by BHCs in 
Schedule HI, Memoranda items 5 and 6, of the FR Y-9C. In these items, 
BHCs must itemize and describe, using their own terminology, their most 
significant categories of ``Service charges, commissions, and fees'' 
and ``Other noninterest income.''
    The categories of noninterest income that would be added as 
specific items on the FR Y-11Q income statement are: (1) Investment 
banking, advisory, brokerage, and underwriting fees and commissions, 
(2) venture capital revenue, (3) net servicing fees, (4) net 
securitization income, and (5) insurance commissions and fees. The 
current income statement items for ``Income from underwriting 
activities,'' ``Income from brokerage activities,'' ``Income from loan 
servicing,'' and ``Other service charges, commissions, and fees'' 
(items 5.b.(2),(3),(4) and (6)) would be discontinued.
    The new noninterest income items would provide greater 
comparability among the categories of noninterest income currently 
reported by BHCs. Some of the proposed noninterest income categories 
would represent the only information provided in the FR Y-11Q on 
certain activities. By collecting more detailed noninterest income 
data, the significance of each of these activities can be compared to 
other income-generating activities of the nonbank subsidiary and of the 
BHC.

Changes in Equity Capital

    1. The manner in which the previous year-end balance of equity 
capital is reported in this schedule would be changed so that it better 
corresponds with how this balance is presented in financial statements 
prepared in accordance with GAAP. At present, nonbank subsidiaries must 
report the ``Equity capital end of previous calendar year'' in the FR 
Y-11Q in item 1. If the nonbank subsidiary has filed any amendments to 
this previous year-end FR Y-11Q report that affected its originally 
reported total equity capital, these equity capital adjustments are 
reported in item 6, and the amended equity capital balance for the 
previous year-end is reported in item 7. Item 1 would be revised to 
have nonbank subsidiaries report ``Equity capital most recently 
reported for the end of the previous calendar year.''
    2. Item 18, ``Foreign currency translation adjustments'' would be 
replaced by an item for ``Other comprehensive income.'' This new item 
would include any change in net unrealized holding gains (losses) on 
available-for-sale securities and any change in accumulated net gains 
(losses) on cash flow hedges (currently included

[[Page 69536]]

in item 6, ``Other adjustments''). Identifying ``Other comprehensive 
income'' in the changes in equity capital schedule is consistent with 
FASB Statement No. 130, Reporting Comprehensive Income.
Instructions
    Instructional revisions and clarifications would be made as 
necessary, to conform with changes made to the Call Report 
instructions.
    2. Report title: Annual Financial Statements of Nonbank 
Subsidiaries of Bank Holding Companies.
    Agency form number: FR Y-11I.
    OMB control number: 7100-0244.
    Frequency: Annual.
    Reporters: Bank holding companies.
    Annual reporting hours: 8,531.
    Estimated average hours per response: 3.24.
    Number of respondents: 2,633.
    Small businesses are affected.
    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 this report. However, confidential treatment for 
the reporting information, in whole or in part, can be requested in 
accordance with the instructions to the form. Currently FR Y-11I, 
Schedule A, item 7.a, loans and leases past due 30 through 89 days and 
FR Y-11I, Schedule A, item 7.d, loans and leases restructured and 
included in past due and nonaccrual loans are confidential pursuant to 
Section (b)(8) of the Freedom of Information Act 5 U.S.C. 552(b)(8).
    Abstract: The FR Y-11I is filed annually by the top tier bank 
holding companies for each of their nonbank subsidiaries that are not 
required to file a quarterly FR Y-11Q. The FR Y-11I report consists of 
similar balance sheet, income statement, off-balance-sheet, and change 
in equity capital information that is included on the FR Y-11Q. 
However, some of the items on the FR Y-11I are collected in a less 
detailed manner. In addition, the FR Y-11I also includes a loan 
schedule to be submitted only by respondents engaged in extending 
credit.
    Current actions: The Federal Reserve proposes the following 
revisions to the FR Y-11I effective with the December 31, 2001, 
reporting date.

Changes in Equity Capital

    1. The manner in which the previous year-end balance of equity 
capital is reported in this schedule would be changed so that it better 
corresponds with how this balance is presented in financial statements 
prepared in accordance with GAAP. At present, nonbank subsidiaries must 
report the ``Equity capital end of previous calendar year'' in the FR 
Y-11I in item 1. If the nonbank subsidiary has filed any amendments to 
this previous year-end FR Y-11I report that affected its originally 
reported total equity capital, these equity capital adjustments are 
reported in item 6, and the amended equity capital balance for the 
previous year-end is reported in item 7. Item 1 would be revised to 
have nonbank subsidiaries report ``Equity capital most recently 
reported for the end of the previous calendar year.''
    2. Item 5, ``Foreign currency translation adjustments'' would be 
replaced by an item for ``Other comprehensive income.'' This new item 
would include any change in net unrealized holding gains (losses) on 
available-for-sale securities and any change in accumulated net gains 
(losses) on cash flow hedges (currently included in item 6, ``Other 
adjustments''). Identifying ``Other comprehensive income'' in the 
changes in equity capital schedule is consistent with FASB Statement 
No. 130, Reporting Comprehensive Income.

Schedule A--Loans and Lease Financing Receivables

    1. Consistent with changes proposed to the FR Y-9C, item 7.a, 
``Loans and leases past due 30 through 89 days,'' and item 7.d, Loans 
and leases restructured and included in past due and nonaccrual 
loans,'' would no longer be afforded confidential treatment.
Instructions
    Instructional revisions and clarifications would be made as 
necessary, to conform with changes made to the Call Report 
instructions.

    Board of Governors of the Federal Reserve System, November 13, 
2000.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 00-29426 Filed 11-16-00; 8:45 am]
BILLING CODE 6210-01-F


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>