[Federal Register Volume 73, Number 23 (Monday, February 4, 2008)]
[Notices]
[Pages 6506-6515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2024]


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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


Agency Information Collection Activities: Submission for OMB 
Review; Joint 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: Notice of information collections to be submitted to OMB for 
review and approval under the Paperwork Reduction Act.

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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. On September 11, 2007, the agencies, under the 
auspices of the Federal Financial Institutions Examination Council 
(FFIEC), requested public comment for 60 days on 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 
that are collected quarterly. After considering the comments, the FFIEC 
and the agencies have modified some of the proposed changes, which will 
be implemented March 31, 2008, as proposed, but with the reporting of 
certain proposed new items optional for this initial report date.

DATES: Comments must be submitted on or before March 5, 2008.

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, 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 
<a href="/cdn-cgi/l/email-protection#bcced9dbcf92dfd3d1d1d9d2c8cffcd3dfdf92c8ced9ddcf92dbd3ca"><span class="__cf_email__" data-cfemail="acdec9cbdf82cfc3c1c1c9c2d8dfecc3cfcf82d8dec9cddf82cbc3da">[email protected]</span></a>. 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:
    <bullet> Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#04766163772a676b6969616a70774462616061766568766177617672612a636b72"><span class="__cf_email__" data-cfemail="e290878591cc818d8f8f878c9691a28487868790838e90879187909487cc858d94">[email protected]</span></a>. Include docket 
number in the subject line of the message.
    <bullet> Fax: 202-452-3819 or 202-452-3102.
    <bullet> 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.

[[Page 6507]]

    FDIC: You may submit comments, which should refer to ``Consolidated 
Reports of Condition and Income, 3064-0052,'' by any of the following 
methods:
    <bullet> http://www.FDIC.gov/regulations/laws/federal/notices.html.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#b7d4d8dadad2d9c3c4f7f1f3fef499d0d8c1"><span class="__cf_email__" data-cfemail="c5a6aaa8a8a0abb1b68583818c86eba2aab3">[email protected]</span></a>. Include ``Consolidated Reports 
of Condition and Income, 3064-0052'' in the subject line of the 
message.
    <bullet> Mail: Valerie J. Best (202-898-3812), Supervisory Counsel, 
Attn: Comments, Room F-1070, Federal Deposit Insurance Corporation, 550 
17th Street, NW., Washington, DC 20429.
    <bullet> 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: March 
2008 Revisions),'' by any of the following methods:
    <bullet> E-mail address: <a href="/cdn-cgi/l/email-protection#a7cec9c1c8c4c8cbcbc2c4d3cec8c989c4c8cacac2c9d3d4e7c8d3d489d3d5c2c6d489c0c8d1"><span class="__cf_email__" data-cfemail="3b52555d54585457575e584f52545515585456565e554f487b544f48154f495e5a48155c544d">[email protected]</span></a>. 
Please include ``1550-0023 (TFR: March 2008 Revisions)'' in the subject 
line of the message and include your name and telephone number in the 
message.
    <bullet> Fax: (202) 906-6518.
    <bullet> Mail: Information Collection Comments, Chief Counsel's 
Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552, Attention: ``1550-0023 (TFR: March 2008 Revisions).''
    <bullet> 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: March 2008 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 
<a href="/cdn-cgi/l/email-protection#bc80dd9cd4ced9da81" http: public.info">public.info</a>@ots.treas.gov">public.info@ots.treas.gov</a>, 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, (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. Shore, 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: Valerie J. Best, Supervisory Counsel, (202) 898-3812, Legal 
Division, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
    OTS: Ira L. Mills, OTS Clearance Officer, at 
<a href="/cdn-cgi/l/email-protection#a2ebd0c38cefcbceced1e2cdd6d18cd6d0c7c3d18cc5cdd4"><span class="__cf_email__" data-cfemail="29605b4807644045455a69465d5a075d5b4c485a074e465f">[email protected]</span></a>, (202) 906-6531, 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 requesting OMB approval 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: 1,750 national banks.
    Estimated Time per Response: 45.42 burden hours.
    Estimated Total Annual Burden: 317,967 burden hours.

Board

    OMB Number: 7100-0036.
    Estimated Number of Respondents: 885 state member banks.
    Estimated Time per Response: 52.07 burden hours.
    Estimated Total Annual Burden: 184,328 burden hours.

FDIC

    OMB Number: 3064-0052.
    Estimated Number of Respondents: 5,199 insured state nonmember 
banks.
    Estimated Time per Response: 36.16 burden hours.
    Estimated Total Annual Burden: 751,983 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 635 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: 838 savings associations.
    Estimated Time per Response: 36.50 burden hours.
    Estimated Total Annual Burden: 193,881 burden hours.

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

[[Page 6508]]

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

    On September 11, 2007, the agencies requested comment on proposed 
revisions to the Call Report and the TFR (72 FR 51814). All four 
agencies proposed to revise the Call Report and TFR instructions for 
reporting daily average deposit data by newly insured institutions for 
deposit insurance assessment purposes to conform the instructions with 
the FDIC's assessment regulations (12 CFR Part 327).
    In the same Federal Register notice, the OCC, the Board, and the 
FDIC (the banking agencies) also proposed to implement a number of 
other changes to the Call Report requirements. These Call Report 
changes included several related to 1-4 family residential mortgage 
loans such as separately reporting interest and fee income and 
quarterly averages for 1-4 family residential mortgages and all other 
real estate loans and adding new items for restructured troubled 
mortgages and mortgage loans in process of foreclosure. The banking 
agencies proposed to expand Call Report Schedule RC-P on closed-end 1-4 
family residential mortgage banking activities, which is completed by 
larger banks and smaller banks with a significant level of such 
activities, to include originations, purchases, and sales of open-end 
mortgages as well as closed-end and open-end mortgage loan repurchases 
and indemnifications during the quarter. The Call Report's trading 
account definition was proposed to be modified in response to the 
creation of a fair value option in generally accepted accounting 
principles (GAAP). Revisions were proposed to Call Report Schedule RC-
Q, which collects data on fair value measurements for trading assets 
and liabilities and other assets and liabilities accounted for under a 
fair value option, and certain other schedules, including the loan 
schedule (Schedule RC-C), to enhance the information available on 
instruments accounted for under this option. Other revisions were also 
proposed to be made to the schedule on trading assets and liabilities 
(Schedule RC-D). The banking agencies also proposed to clarify the Call 
Report instructions for reporting credit derivative data in the risk-
based capital schedule (Schedule RC-R) and to make a corresponding 
change to the schedule itself; to change the threshold for reporting 
significant items of other noninterest income and expense in the 
explanations schedule (Schedule RI-E); and to conform the instructions 
for reporting fully insured brokered deposits in Schedule RC-E, Deposit 
Liabilities, to the instructions for reporting time deposits in this 
schedule. Finally, the banking agencies requested comment on a plan to 
discontinue the mailing of paper Call Report forms and instructions to 
banks.
    The revisions to the Call Report and the TFR set forth herein, 
which were approved for publication by the FFIEC, were proposed to take 
effect as of March 31, 2008. After considering the comments received on 
the proposal, the proposed revision to the Call Report and TFR 
instructions for reporting daily average deposit data by newly insured 
institutions for deposit insurance assessment purposes would be 
implemented March 31, 2008, as proposed. With respect to the remaining 
proposed revisions, which apply only to the Call Report, the banking 
agencies approved certain modifications to them to address concerns 
expressed by commenters. The banking agencies will move forward with 
the modified reporting changes on March 31, 2008, although the 
reporting of certain proposed new items will be optional for this 
initial report date and will be required beginning June 30, 2008. For 
the March 31, 2008, report date, institutions may provide reasonable 
estimates for any new or revised Call Report item required to be 
reported as of that date for which the requested information is not 
readily available. For the new Call Report items that are optional as 
of the March 31, 2008, report date, this same policy on the use of 
reasonable estimates will apply to these new items as of the June 30, 
2008, report date.
    The agencies collectively received comments from nine respondents: 
seven banking organizations, one bankers' organization, and a 
government agency. None of the commenters addressed all of the aspects 
of the proposal. Rather, individual respondents addressed certain 
specific proposed changes. No comments were received on the 
instructional change for reporting daily average deposit data by newly 
insured institutions (the only proposed revision that also applied to 
the TFR), the proposed new items for restructured troubled 1-4 family 
residential mortgages and for the fair value and unpaid principal 
balance by loan category of loans held for sale or investment that are 
measured at fair value, the revised reporting threshold for the trading 
assets and liabilities schedule, the revisions to the regulatory 
capital schedule and instructions for credit derivatives, the 
conformity changes for brokered deposits within the deposits schedule, 
and the proposed discontinuance of mailing Call Report forms and 
instructions. In contrast, the three banking organizations that 
commented on the proposed modification of the Call Report's trading 
account definition all expressed support for this definitional change. 
Thus, all of the revisions discussed in this paragraph will be 
implemented as proposed.
    With respect to the other proposed revisions to the Call Report, 
some commenters recommended that certain changes be phased in rather 
than being implemented as of March 31, 2008, because the information 
was not readily available in a form that would facilitate reporting in 
proposed new data items. Some commenters also requested clarifications 
of terminology used to describe certain proposed items or the amounts 
to be reported in these items. One commenter opposed the proposed 
collection of a two-way breakdown of the difference between the fair 
value and the unpaid principal balance of loans measured at fair value 
under a fair value option, which would disclose the portion 
attributable to changes in credit risk since origination and the 
portion attributable to all other factors. Another commenter supported 
proposed changes to the Call Report schedule on fair value 
measurements, but recommended that the schedule's focus on disclosures

[[Page 6509]]

about such measurements for instruments to which a fair value option 
has been applied be broadened to cover all instruments measured at fair 
value. One commenter suggested the addition of a de minimis dollar 
amount to the proposed percentage threshold for disclosures of 
components of other noninterest income and expense. Finally, the 
proposal contained a footnote indicating that the banking agencies are 
considering a separate proposal to incorporate the FDIC's Summary of 
Deposits report into the Call Report, a proposed change about which two 
commenters voiced concerns. This separate proposal remains under 
consideration and would be subject to notice and comment before it 
could be implemented.
    The banking agencies' responses to the comments received and a 
discussion of the related Call Report revisions are presented below.

II. Discussion of Revisions

A. Reporting of Data for Deposit Insurance Assessments in the Call 
Report and TFR by Newly Insured Institutions

    On March 31, 2007, the banking agencies and the OTS introduced a 
revision and reduction in the overall reporting requirements related to 
deposit insurance assessments in Call Report Schedule RC-O and TFR 
Schedule DI, respectively, that was intended to simplify regulatory 
reporting. As part of these revised overall reporting requirements, the 
agencies provided an interim period covering the March 31, 2007, 
through December 31, 2007, report dates during which each institution 
had the option to submit its Call Reports or TFRs using either the 
current or revised formats for reporting the data used to measure their 
assessment base. The revised reporting format will take effect for all 
institutions on March 31, 2008, at which time the current reporting 
format will be eliminated.
    The instructions issued in March 2007 for the revised reporting 
format state that an institution that becomes newly insured on or after 
April 1, 2008, would be required to report daily average balances 
beginning in the first quarterly Call Report or TFR that it files. 
However, these instructions do not conform to the language in Section 
327.5(a)(1) of the FDIC's assessment regulations (12 CFR 327.5(a)(1)) 
with respect to their treatment of institutions that become insured 
between April 1, 2007, and March 31, 2008. Therefore, the agencies 
proposed to revise the instructions to Call Report Schedule RC-O and 
TFR Schedule DI to require an institution that becomes insured after 
March 31, 2007, but on or before March 31, 2008, to begin reporting 
daily average balances in its Call Report or TFR for the March 31, 
2008, report date. The agencies received no comments on this proposed 
reporting revision, which will be implemented as proposed.

B. Call Report Revisions Related to 1-4 Family Residential Mortgage 
Loans

    Since year-end 2000, commercial bank holdings of 1-4 family 
residential mortgage loans in domestic offices have increased nearly 
108 percent to more than $1.9 trillion. Nearly 98 percent of all banks 
hold such mortgages. 1-4 family residential mortgages now represent the 
single largest category of loans held by commercial banks, surpassing 
commercial and industrial loans as the largest category in 2002. As a 
percentage of total loans and leases at commercial banks, 1-4 family 
residential mortgages have grown from 24 percent at year-end 2000 to 32 
percent at year-end 2006. Similarly, 1-4 family residential mortgages 
have increased from less than 15 percent of total assets to nearly 19 
percent of total assets during this period. During the first quarter of 
2007, bank originations and purchases of closed-end 1-4 family 
residential mortgages for resale exceeded $287 billion.
    The use of nontraditional residential mortgage products has grown 
and the number of banks that have offered such products has increased. 
Also, the volume of 1-4 family residential mortgage loans extended to 
subprime borrowers has increased. At the same time, home prices have 
stagnated or declined in many areas of the country. Foreclosure rates 
have substantially increased along with an increase in restructured 
loans. The higher concentration of 1-4 family residential mortgages 
across the industry and the changing risk profile of the loans with 
which banks are associated in some capacity has led the banking 
agencies to evaluate the information they collect about such loans in 
the Call Report. Therefore, the banking agencies will proceed with 
their proposed Call Report changes that are intended to enhance the 
ability to monitor the nature and extent of banks' involvement with 1-4 
family residential mortgage loans as originators, holders, sellers, and 
servicers of such loans. Commenters requested a six-month reporting 
delay on some of the new items and asked the banking agencies to 
clarify for reporting purposes what principal amount funded means when 
reporting on open-end mortgages. The banking agencies considered these 
suggestions and made a number of changes in response.
1. Interest and Fee Income and Quarterly Average
    Currently, banks report the total amount of interest and fee income 
on their ``Loans secured by real estate'' (in domestic offices) in the 
Call Report income statement (Schedule RI, item 1.a.(1)(a) on the FFIEC 
031 and item 1.a.(1) on the FFIEC 041) and the quarterly average for 
these loans (in domestic offices) in the quarterly averages schedule 
(Schedule RC-K, item 6.a.(2) on the FFIEC 031 and item 6.b on the FFIEC 
041). The banking agencies proposed to split these existing income 
statement and quarterly average items into separate items for the 
interest and fee income on and the quarterly averages of ``Loans 
secured by 1-4 family residential properties'' and ``All other loans 
secured by real estate.''
    One banking organization commented on these additions to the Call 
Report. This bank noted that these additions would require changes to 
its loan processing and accounting systems, which will affect loan 
personnel, but that it is possible to implement these changes. The 
banking agencies will proceed to add these items to the Call Report as 
proposed.
2. Restructured Mortgages
    Banks currently report information on the amount of loans whose 
terms have been modified, because of the borrower's financial 
difficulties, to provide for a reduction of either interest or 
principal. When such restructured loans are past due 30 days or more or 
are in nonaccrual status in relation to their modified terms as of the 
report date, they are reported in Schedule RC-N, Memorandum item 1. In 
contrast, when such restructured loans are less than 30 days past due 
and are not otherwise in nonaccrual status, that is, when they are 
deemed to be in compliance with their modified terms as discussed in 
the Call Report instructions, banks report the amount of these loans in 
the Call Report loan schedule (Schedule RC-C, part I, Memorandum item 
1). However, the instructions advise banks to exclude restructured 
loans secured by 1-4 family residential properties from these 
Memorandum items.
    This exclusion was incorporated into the Call Report instructions 
because the original disclosure requirements for troubled debt 
restructurings under GAAP provided that creditors need not disclose 
information on restructured real estate loans secured by 1-4 family

[[Page 6510]]

residential properties.\1\ However, this exemption from disclosure 
under GAAP has since been eliminated.\2\ Accordingly, the banking 
agencies proposed to add a new Memorandum item to Schedule RC-C, part 
I, for ``Loans secured by 1-4 family residential properties (in 
domestic offices)'' that have been restructured and are in compliance 
with their modified terms and a new Memorandum item to Schedule RC-N 
for restructured ``Loans secured by 1-4 family residential properties 
(in domestic offices)'' that under their modified terms are past due 30 
days or more or in nonaccrual status.
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    \1\ See Financial Accounting Standards Board Statement No. 15, 
Accounting by Debtors and Creditors for Troubled Debt 
Restructurings, footnote 25.
    \2\ 2 See Financial Accounting Standards Board Statement No. 
114, Accounting by Creditors for Impairment of a Loan, paragraph 
22(f).
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    No public comments were received on these additions to the Call 
Report. The banking agencies will proceed to add these items to the 
Call Report as proposed.
3. Mortgages in Foreclosure
    The banking agencies currently collect data on the amount of loans 
secured by 1-4 family residential properties that are past due 30 days 
or more or are in nonaccrual status (Schedule RC-N, item 1.c) and on 
the amount of foreclosed 1-4 family residential properties held by the 
bank (Schedule RC-M, item 3.b.(3)). However, regardless of whether the 
bank owns the loans or services the loans for others, banks do not 
report the volume of 1-4 family residential mortgage loans that are in 
process of foreclosure, an indicator of potential additions to the 
bank's ``other real estate owned'' in the near term.
    The banking agencies proposed to add two new Memorandum items for 
the amount of 1-4 family residential mortgage loans owned by the bank 
and serviced by the bank that are in foreclosure as of the quarter-end 
report date. Mortgage loans in foreclosure would be those for which the 
legal process of foreclosure has been initiated, but for which the 
foreclosure process has not yet been resolved at quarter-end.\3\ These 
Memorandum items would be added to the Call Report loan schedule 
(Schedule RC-C, part I) and the servicing, securitization, and asset 
sale activities schedule (Schedule RC-S), with the carrying amount 
(before any applicable allowance for loan and leases losses) reported 
in the former Memorandum item and the outstanding principal amount 
reported in the latter Memorandum item. Reporting mortgage loans as 
being in process of foreclosure will not exempt those loans owned by 
the bank from being reported as past due or nonaccrual, as appropriate, 
in Call Report Schedule RC-N, and will not exempt those loans serviced 
by the bank that are reported in Schedule RC-S, item 1, from being 
reported as past due, as appropriate, in that schedule.
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    \3\ For banks that participate in the Mortgage Bankers 
Association's (MBA) National Delinquency Survey, the time at which 
mortgage loans would become reportable as being in process of 
foreclosure for Call Report purposes would be the same time at which 
mortgage loans become reportable as being in ``foreclosure 
inventory'' for MBA survey purposes (although the dollar amount of 
such loans would be reported in the Call Report while the number of 
such loans are reported for MBA survey purposes).
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    The bankers' organization provided comments on these proposed items 
and three banking organizations supported their comments. The 
commenters did not object to reporting these items but requested that 
the data collection be delayed six months because the data are not 
currently readily available. The banking agencies elected to go forward 
with collecting the new data items as proposed because of the 
substantial increase in the number of foreclosures reported by the 
industry and the potentially higher number of foreclosures in the next 
couple of years. Given current conditions in the residential mortgage 
market, the agencies have a strong supervisory interest in being able 
to evaluate foreclosure data and obtain data needed as the starting 
point for trend analyses at the earliest possible date. As with all new 
Call Report items, banks may report reasonable estimates for the 
amounts of loans in foreclosure for the first reporting period (March 
31, 2008) using the best information available.
4. Open-end 1-4 Family Residential Mortgage Banking Activities
    Banks with $1 billion or more in total assets and smaller banks 
that meet certain criteria currently provide data on originations, 
purchases, and sales of closed-end 1-4 family residential mortgage 
loans during the quarter arising from their mortgage banking activities 
in domestic offices in Call Report Schedule RC-P. These banks also 
report the amount of closed-end 1-4 family residential mortgage loans 
held for sale at quarter-end as well as the noninterest income for the 
quarter from the sale, securitization, and servicing of these mortgage 
loans. Data (other than for noninterest income) is provided separately 
for first lien and junior lien mortgages in Schedule RC-P. About 650 
banks complete Schedule RC-P, less than 300 of which have total assets 
of less than $1 billion. However, this information does not provide a 
complete picture of banks' mortgage banking activities since it 
excludes open-end 1-4 family residential mortgages extended under lines 
of credit. From year-end 2001 to year-end 2006, bank holdings of 1-4 
family residential mortgage loans extended under lines of credit more 
than tripled to nearly $470 billion. Accordingly, the banking agencies 
proposed to expand the scope of Schedule RC-P to include separate items 
for originations, purchases, and sales of open-end 1-4 family 
residential mortgages during the quarter; the amount of such mortgages 
held for sale at quarter-end; and noninterest income for the quarter 
from the sale, securitization, and servicing of open-end residential 
mortgages. When reporting the originations, purchases, sales, and 
mortgages held for sale, banks would report both the total commitment 
under the line of credit and the principal amount funded under the 
line. For banks with less than $1 billion in total assets, the criteria 
used to determine whether Schedule RC-P must be completed would be 
modified to include both closed-end and open-end 1-4 family residential 
mortgage banking activities.
    One banking organization and the bankers' organization provided 
comments on these proposed revisions and three other banking 
organizations supported the latter's comments. The bankers' 
organization did not object to reporting the new items but requested 
that the data collection be delayed six months because of the time 
needed to identify and capture the unused commitment amounts and 
outstanding principal balances. The banking agencies agreed not to 
require the new open-end mortgage data to be reported until the June 
30, 2008, Call Report, with reporting of these data optional in the 
March 31, 2008, Call Report, if the information is available.
    The banking organization encouraged the banking agencies to clearly 
define the terms ``total commitment under the lines of credit'' and the 
``principal amount funded under the lines of credit'' as they relate to 
originations of open-end 1-4 family residential mortgages during the 
quarter because different interpretations could result in the absence 
of clear instructions. The organization recommended that ``total 
commitment'' be defined as the initial committed balance made to 
customers on newly established open-end lines of credit and ``principal 
amount funded'' be defined as initial fundings made to customers on 
newly established lines. The banking agencies agree on the

[[Page 6511]]

necessity for clear definitions of these terms. Thus, the instructions 
for reporting the ``total commitment'' would define it as the total 
amount of the lines of credit granted to customers at the time the 
open-end credits were originated, which is consistent with the banking 
organization's recommendation. For retail and wholesale originations of 
such open-end loans, the instructions would define ``principal amount 
funded'' as the initial fundings made to customers on newly established 
lines of credit. In addition, for open-end loans purchased, sold, held 
for sale, and (as discussed in the following section) repurchased or 
indemnified, the ``principal amount funded'' would be defined as the 
principal balance outstanding of loans extended under lines of credit 
at the transaction date or at quarter-end, as appropriate.
5. Mortgage Repurchases and Indemnifications
    As a result of its 1-4 family residential mortgage banking 
activities, a bank may be obligated to repurchase mortgage loans that 
it has sold or otherwise indemnify the loan purchaser against loss 
because of borrower defaults, loan defects, other breaches of 
representations and warranties, or for other reasons, thereby exposing 
the bank to additional risk. Such information is not currently captured 
in Call Report Schedule RC-P. Therefore, the banking agencies proposed 
to add four new items to Schedule RC-P to collect data on mortgage loan 
repurchases and indemnifications during the quarter. For both closed-
end first lien and closed-end junior lien 1-4 family residential 
mortgages, banks would report the outstanding principal amount of 
mortgages repurchased or indemnified as of the date of repurchase or 
indemnification. For open-end 1-4 family residential mortgages, banks 
would report both the total commitment under the line of credit and the 
principal amount funded under the line for mortgages repurchased or 
indemnified.
    The banking agencies received comments from one banking 
organization and the bankers' organization on these additions to the 
Call Report, with three other banking organizations supporting the 
bankers' organization's comments. The banking organization sought 
clarification as to the scope of indemnifications, particularly with 
respect to whether indemnifications that consisted of reimbursements of 
legal fees or administrative costs were expected to be reported. The 
agencies will clarify in the instructions that indemnifications are 
limited to reimbursements for credit losses, including reimbursements 
for losses arising from sales of real estate collateral. The bankers' 
organization also requested a clarification involving terminology, 
questioning whether, if there is a difference between the book value of 
a loan and its principal balance, which amount banks are expected to 
report. The banking agencies reiterate that the amount to be reported 
for closed-end loans is the mortgages' outstanding principal amount as 
of the date of repurchase or indemnification, not the book value of 
these mortgages. For open-end residential mortgage loans, the concept 
of ``principal amount funded'' is discussed in the preceding section.
    Finally, also as discussed in the preceding section, the new items 
on repurchases and indemnifications of open-end loans will not be 
required to be reported until the June 30, 2008, report date, with 
reporting of these data optional as of the March 31, 2008, report date, 
if the information is available. Subject to these modifications and 
clarifications to their original proposal, the banking agencies will 
proceed to implement these new items on repurchases and 
indemnifications.

C. Call Report Data on Trading Assets and Liabilities and Other Assets 
and Liabilities Accounted for Under a Fair Value Option

1. Reporting of Assets and Liabilities Under the Fair Value Option as 
Trading
    On February 15, 2007, the Financial Accounting Standards Board 
(FASB) issued Statement No. 159, The Fair Value Option for Financial 
Assets and Financial Liabilities (FAS 159), which is effective for 
fiscal years beginning after November 15, 2007. Earlier adoption of FAS 
159 was permitted as of the beginning of an earlier fiscal year, 
provided the bank (i) also adopts all of the requirements of FASB 
Statement No. 157, Fair Value Measurements (FAS 157) at the early 
adoption date of FAS159; (ii) has not yet issued a financial statement 
or submitted Call Report data for any period of that fiscal year; and 
(iii) satisfies certain other conditions. Thus, a bank with a calendar 
year fiscal year may have voluntarily adopted FAS 159 as of January 1, 
2007. Changes in the fair value of financial assets and liabilities to 
which the fair value option is applied are reported in current earnings 
as is currently the case for trading assets and liabilities. Since the 
fair value option standard allows a bank to elect fair value 
measurement through earnings for financial assets and financial 
liabilities, the banking agencies understand that some institutions 
would like to reclassify certain loans elected to be accounted for 
under the fair value option as trading assets. The Call Report 
instructions currently do not allow loans held for sale to be reported 
as trading assets.
    Under FAS 159, all securities within the scope of FASB Statement 
No. 115, Accounting for Certain Investments in Debt and Equity 
Securities (FAS 115), that a bank has elected to report at fair value 
under a fair value option should be classified as trading securities. 
Recognizing the provisions of FAS 159, the banking agencies proposed 
the following clarification to the Call Report instructions, including 
the Call Report Glossary entry for ``Trading Account.'' Banks may 
classify assets (other than securities within the scope of FAS 115 for 
which a fair value option is elected) and liabilities as trading if the 
bank applies fair value accounting, with changes in fair value reported 
in current earnings, and manages these assets and liabilities as 
trading positions, subject to the controls and applicable regulatory 
guidance related to trading activities.
    Three banking organizations provided comments in support of the 
proposed expanded definition of the trading account to permit the 
classification of certain loans as trading. The banking agencies will 
proceed with the revised definition of trading account as proposed.
2. Revision of Certain Fair Value Measurement and Fair Value Option 
Information in the Call Report
    Effective for the March 31, 2007, report date, the banking agencies 
started collecting information on certain assets and liabilities 
measured at fair value on Call Report Schedule RC-Q, Financial Assets 
and Liabilities Measured at Fair Value. Schedule RC-Q was intended to 
be consistent with the disclosure and other requirements contained in 
FAS 157 and FAS 159. Based on the banking agencies' review of initial 
industry practice and inquiries from banks, the agencies have 
determined that industry practice for preparing and reporting FAS 157 
disclosures has evolved differently than the process for the 
information collected on Schedule RC-Q. This divergence has resulted in 
unnecessary burden and less transparency for the affected banks in two 
material respects.
    First, Schedule RC-Q does not allow banks to separately identify 
each of the three levels of fair value measurements prescribed by FAS 
157. The banking agencies included Level 1 fair value

[[Page 6512]]

measurements in the total fair value amount in column A of Schedule RC-
Q as a means of minimizing reporting burden. However, the omission of a 
separate column on Schedule RC-Q for Level 1 fair value measurements 
has increased the time bank managements spend preparing and reviewing 
Schedule RC-Q because the fair value disclosures on Schedule RC-Q 
differ from those in the banks' other financial statements. Second, 
Schedule RC-Q does not allow banks to separately identify any amounts 
by which the gross fair values of assets and liabilities reported for 
Level 2 and 3 fair value measurements included in columns B and C have 
been offset (netted) in the determination of the total fair value 
reported on the Call Report balance sheet (Schedule RC), which is 
disclosed in column A of Schedule RC-Q. Based on a review of industry 
practice, these disclosures are commonly made in the banks' other 
financial statements.
    To reduce confusion related to the differences in industry practice 
and the Call Report, the banking agencies proposed to add two columns 
to Schedule RC-Q to allow banks to report any netting adjustments and 
Level 1 fair value measurements separately in a manner consistent with 
industry practice. The new columns would be captioned column B, Amounts 
Netted in the Determination of Total Fair Value Reported on Schedule 
RC, and column C, Level 1 Fair Value Measurements. Existing column B, 
Level 2 Fair Value Measurements, and column C, Level 3 Fair Value 
Measurements, of Schedule RC-Q would be recaptioned as columns D and E, 
respectively. Column A would remain unchanged.
    One commenter, a banking organization, offered comments on the 
proposed changes to Schedule RC-Q. The commenter supported the addition 
of the two new columns to the schedule. The commenter also suggested 
the banking agencies amend the scope of Schedule RC-Q to collect 
information on all assets and liabilities measured at fair value 
pursuant to FAS 157 rather than the current scope, which collects 
information primarily based on a bank's election to measure assets at 
fair value under a fair value option and only includes some of the 
assets and liabilities covered by FAS 157. The banking agencies 
recognize that a significant number of banks have only recently adopted 
FAS 157 and are working through a number of implementation issues. In 
addition, the FASB recently proposed a 1-year delay in the effective 
date of FAS 157 for all nonfinancial assets and nonfinancial 
liabilities, except those that are recognized or disclosed at fair 
value in the financial statements on a recurring basis. In light of 
these factors, the banking agencies determined it would not be prudent, 
at this time, to modify the scope of the Schedule RC-Q to include all 
assets and liabilities covered by FAS 157 as suggested by the 
commenter. The banking agencies will proceed with the addition of the 
two additional columns to Schedule RC-Q as proposed.
    The banking agencies also considered other types of information 
that will be necessary to effectively assess the safety and soundness 
of banks that utilize the fair value option pursuant to FAS 159. Based 
on this assessment, the banking agencies proposed to amend certain 
other Call Report schedules to improve the agencies' ability to make 
comparisons among entities that elect a fair value option and those 
that do not. The primary focus of these proposed changes is to enhance 
the information provided by banks that elect the fair value option for 
loans. The proposed changes are based on the principal objectives for 
disclosures and the required disclosures in FAS 159, which were 
intended to provide ``information to enable users to understand the 
differences between fair value and contractual cash flows'' and to 
provide information ``that would have been disclosed if the fair value 
option had not been elected.''
    Specifically, the banking agencies proposed to add items to 
Schedule RC-C, part I, Loans and Leases, to collect data on the loans 
reported in this schedule that are measured at fair value under a fair 
value option: (1) The fair value of such loans measured by major loan 
category, (2) the unpaid principal balance of such loans by major loan 
category, and (3) the aggregate amount of the difference between the 
fair value and the unpaid principal balance of such loans that is 
attributable (a) to changes in the credit risk of the loan since its 
origination and (b) to all other factors. Because Schedule RC-C, part 
I, only provides data on loans held for investment and for sale, the 
banking agencies proposed to add the same items to Schedule RC-D, 
Trading Assets and Liabilities, for loans measured at fair value under 
a fair value option that are designated as held for trading. The 
banking agencies also proposed to add a new item to Schedule RC-D for 
``Other trading liabilities'' in recognition of a bank's ability to 
elect to measure certain liabilities at fair value in accordance with 
FAS 159 and designate them as held for trading.
    The banking agencies proposed to add two items to Schedule RC-N, 
Past Due and Nonaccrual Loans, Leases, and Other Assets, to collect 
data on the fair value and unpaid principal balance of loans measured 
at fair value under a fair value option that are past due or in 
nonaccrual status. The items would follow the existing three column 
breakdown on Schedule RC-N that banks utilize to report all other past 
due and nonaccrual loans. Since trading assets are not currently 
reported on Schedule RC-N, the banking agencies proposed to add similar 
items to Schedule RC-D to collect the total fair value and unpaid 
principal balance of loans 90 days or more past due that are classified 
as trading. Finally, the banking agencies proposed to add items to 
Schedule RI, Income Statement, to collect information on: (1) Net gains 
(losses) recognized in earnings on assets that are reported at fair 
value under a fair value option; (2) estimated net gains (losses) on 
loans attributable to changes in instrument-specific credit risk; (3) 
net gains (losses) recognized in earnings on liabilities that are 
reported at fair value under a fair value option; (4) estimated net 
gains (losses) on liabilities attributable to changes in the 
instrument-specific credit risk.
    Two banking organizations and the bankers' organization provided 
comments on the proposed changes. One banking organization opposed the 
proposal to collect information on Schedules RC-C and RC-D on the 
aggregate amount of the difference between the fair value and the 
unpaid principal balance of loans measured at fair value under a fair 
value option attributable to (a) changes in the credit risk of the loan 
since its origination and (b) all other factors. The banking 
organization indicated the proposed information may exist in theory but 
that banks do not have the ability to readily and reliably produce this 
information. The banking agencies reconsidered the proposal and concur 
with the commenter's assessment of banks' ability to readily and 
reliably produce this information. As a result, the banking agencies 
will not implement the proposed change.
    One banking organization opposed the proposed breakouts on Schedule 
RC-D of the fair value and the unpaid principal balance of loans 
measured at fair value under a fair value option by major loan category 
indicating the information was excessive and burdensome to collect for 
loans designated as trading and would require changes to the bank's 
trading systems. The banking agencies' safety and soundness objective 
for collecting this information is to make comparisons among entities 
that elect a fair value

[[Page 6513]]

option for loans and those that do not. This objective can not be 
achieved if the information collected on Schedules RC-C and RC-D is not 
comparable. Since banks have considerable experience reporting 
information by major loan category as required by Schedule RC-C and are 
only now able to report loans under a fair value option on Schedule RC-
D, the banking agencies determined it would be less burdensome to adapt 
the proposed loan breakouts on Schedule RC-D to the current breakouts 
on Schedule RC-C than to develop a unique format for reporting loans 
under a fair value option in both Schedules RC-C and RC-D as inferred 
by the commenter. The banking agencies will proceed with the breakouts 
for loans reported under a fair value option on Schedule RC-D as 
proposed.
    The banking organization also questioned whether the banking 
agencies should collect separate items on Schedule RI for the net gains 
(losses) recognized in earnings on assets that are reported at fair 
value under a fair value option and the estimated net gains (losses) on 
loans attributable to changes in instrument-specific credit risk. 
Similarly, the commenter questioned whether the agencies should collect 
separate items on Schedule RI for the net gains (losses) recognized in 
earnings on liabilities that are reported at fair value under a fair 
value option and the estimated net gains (losses) on liabilities 
attributable to changes in the instrument-specific credit risk. The 
commenter suggested the agencies clarify what changes other than credit 
risk would be reported in net gains (losses) on assets and liabilities 
reported at fair value under a fair value option that would warrant a 
separate breakout for net gains (losses) on loans and liabilities for 
instrument-specific credit risk. The content of the proposed items for 
Schedule RI are the same as those mandated by the disclosure 
requirements of paragraphs 19(a), (c)(1), and (d)(1) of FAS 159. 
However, to reduce burden, the banking agencies grouped the 
requirements of subparagraph (a) into net gains (losses) recognized in 
earnings on assets that are reported at fair value under a fair value 
option and net gains (losses) recognized in earnings on liabilities 
that are reported at fair value under a fair value option rather than 
requiring separate breakouts for the amount of gains and losses on fair 
value option items for each line item on a bank's balance sheet as 
required by paragraph 19(a). Thus, the banking agencies' rationale for 
collecting the separate breakouts on Schedule RI is the same as FAS 
159, to facilitate comparisons between banks that adopt the fair value 
option and those that do not. The banking agencies will proceed with 
the proposed breakouts on Schedule RI for net gains (losses) recognized 
in earnings on assets and liabilities reported under a fair value 
option and the estimated net gains (losses) on loans and liabilities 
reported under a fair value option attributable to changes in 
instrument-specific credit risk as proposed.
    The bankers' organization recommended a six month delay in the 
effective date of the proposal to collect information on Schedule RC-N 
on the fair value and unpaid principal balance of loans measured at 
fair value under a fair value option that are past due or in nonaccrual 
status and Schedule RC-D on the total fair value and unpaid principal 
balance of loans 90 days or more past due. The commenter indicated the 
delay would give banks sufficient time to make changes to their systems 
to capture this information. The banking agencies agree that a delay 
would be advisable and will delay the implementation date of the 
proposed Schedule RC-N and RC-D items by 90 days, which will make the 
changes effective for the June 30, 2008, report date. However, the 
banking agencies will allow banks the option of submitting this 
information effective for the March 31, 2008, report date, if the 
information is available.
    The banking agencies did not receive comments on the proposal to 
add items to Schedule RC-C, part I, Loans and Leases, to collect the 
fair value and unpaid principal balance of loans measured at fair value 
under a fair value option by major loan category. The banking agencies 
also did not receive comments on the proposal to add a new item to 
Schedule RC-D for ``Other trading liabilities.'' The banking agencies 
will proceed with these changes as proposed.
3. Other Revisions to the Call Report Information on Trading Assets and 
Liabilities
    The banking agencies proposed three revisions to Schedule RC-D to 
enhance the agencies' ability to assess bank exposures to market, 
liquidity, credit, operational, and other risks posed by trading assets 
and liabilities and to appropriately assess the safety and soundness of 
banks with these exposures and banks with significant concentrations in 
trading assets and liabilities. First, the banking agencies proposed to 
eliminate the single line item for trading assets in foreign offices on 
the FFIEC 031 Call Report form and revise the schedule to include 
separate columns for the consolidated bank and for domestic offices. 
Second, the banking agencies proposed to change the reporting threshold 
for Schedule RC-D. As proposed, Schedule RC-D would be completed for 
any quarter when the quarterly average for trading assets in Schedule 
RC-K, item 7, was $2 million or more in any of the four preceding 
quarters. Third, the banking agencies proposed to require banks with 
average trading assets of $1 billion or more in any of the four 
preceding quarters to provide additional detail on trading assets and 
liabilities currently included in certain trading asset and liability 
categories. These banks would provide additional breakouts for asset-
backed securities by major category, collateralized debt obligations 
(both synthetic and non-synthetic), retained interests in 
securitizations, equity securities (both with and without readily 
determinable fair values), and loans held pending securitization. In 
addition, these banks would be required to provide a description of and 
report the fair value of any type of trading asset or liability in the 
``Other trading assets'' and ``Other trading liabilities'' categories 
that is greater than $25,000 and exceeds 25 percent of the amount 
reported in that trading category.
    One banking organization requested the banking agencies reconsider 
the proposed expansion of information for banks with average trading 
assets of $1 billion or more due to current systems limitations. The 
banking agencies assessed the systems challenges resulting from other 
regulatory initiatives at banking organizations with trading assets of 
$1 billion or more and determined a delay in the implementation date 
for these changes would be reasonable. The banking agencies will delay 
the implementation date of the proposed expanded information on 
Schedule RC-D items by 90 days, which will make the changes effective 
for the June 30, 2008, report date. However, the banking agencies will 
allow banks the option of submitting this information effective for the 
March 31, 2008 report date, if the information is available.
    The banking agencies did not receive comments on the proposal to 
eliminate the single line item for trading assets in foreign offices on 
the FFIEC 031 Call Report form and revise the schedule to include 
separate columns for the consolidated bank and for domestic offices. 
The banking agencies also did not receive comments on the proposal to 
change the reporting threshold for Schedule RC-D. The banking agencies 
will proceed with these changes as proposed.

[[Page 6514]]

D. Reporting Credit Derivative Data for Risk-Based Capital Purposes in 
the Call Report

    For credit derivative contracts that are covered by the banking 
agencies' risk-based capital standards, the Call Report instructions 
require banks to report these credit derivatives in item 52, ``All 
other off-balance sheet liabilities,'' of Schedule RC-R, Regulatory 
Capital, unless the credit derivatives represent recourse arrangements 
or direct credit substitutes, which are reported in one of the 
preceding items in the Derivatives and Off-Balance Sheet Items section 
of the schedule. This reporting approach was developed to enable banks 
that sold credit protection and held the credit derivative to apply a 
100 percent risk weight to the notional amount consistent with the 
risk-based capital treatment of standby letters of credit and 
guarantees. At present, Schedule RC-R, item 54, ``Derivative 
contracts,'' specifically excludes credit derivatives and does not 
include a 100 percent risk weight column because the maximum risk 
weight on the counterparty credit risk charge for other types of 
derivatives is 50 percent. However, this reporting approach does not 
consider that some credit derivative positions are subject to a 
counterparty credit risk charge, which is calculated for other 
derivative positions in item 54, even if the credit derivatives are 
held by a bank that is subject to the market risk capital rules. The 
banking agencies proposed to modify the Call Report instructions for 
Schedule RC-R to allow the reporting of the credit equivalent amount of 
credit derivatives subject to the counterparty credit risk charge in 
item 54 of the schedule and to extend the existing 100 percent risk 
weight column in Schedule RC-R to item 54, ``Derivative contracts.''
    The banking agencies did not receive comments on the proposed 
changes for credit derivatives in Schedule RC-R. However, upon further 
consideration of the reporting of such derivatives in Schedule RC-R, 
item 54, the banking agencies concluded that extending the 100 percent 
risk weight column to this item is not necessary. The instructions will 
indicate that credit derivatives entered into for trading purposes and 
subject to the market risk capital guidelines should be reported in 
item 54.

E. Revision of Reporting Threshold for Other Noninterest Income and 
Other Noninterest Expense in the Call Report

    The banking agencies proposed to change the threshold for reporting 
detailed information on the components of other noninterest income and 
other noninterest expense as reported on Schedule RI-E, Explanations, 
items 1 and 2. Specifically, the banking agencies proposed to change 
the threshold to require banks to separately disclose the description 
and amount of any item included in Schedule RI, item 5.l, ``Other 
noninterest income'' that exceeds 3 percent of other noninterest income 
and any item included in Schedule RI, item 7.d, ``Other noninterest 
expense'' that exceeds 3 percent of other noninterest expense.
    In addition, the banking agencies proposed to add one new 
preprinted caption for other noninterest income and four new preprinted 
captions for other noninterest expense to help banks comply with the 
disclosure requirements. As with the existing preprinted captions for 
other noninterest income and other noninterest expense, banks are only 
required to use these descriptions and provide the amounts for these 
components when the amounts included in other noninterest income or 
other noninterest expense exceed the reporting threshold. The new 
preprinted other noninterest income caption is bank card/credit card 
interchange fees. The new preprinted noninterest expense captions are 
accounting and auditing expenses, consulting and advisory expenses, 
automated teller machine (ATM) and interchange expenses, and 
telecommunications expenses.
    Two banking organizations and the government agency provided 
comments on the proposed changes. The agency supported the additional 
new preprinted captions. One banking organization indicated the 
application of the new thresholds to the smaller base of other 
noninterest income or expense would result in their bank reporting 
amounts as small as $1,000 in the other noninterest income disclosures 
and $7,500 in the other noninterest expense disclosures. The commenter 
recommended the banking agencies establish a $50,000 floor to the 
reporting threshold to eliminate the reporting of de minimis amounts. 
The banking agencies recognize the merit of this request and will 
implement modified thresholds to require banks to separately disclose 
the description and amount of any item in other noninterest income that 
is greater than $25,000 and exceeds 3 percent of other noninterest 
income and any item included in other noninterest expense that is 
greater than $25,000 and exceeds 3 percent of other noninterest 
expense. The $25,000 amount is consistent with the threshold floors 
used for ``All other assets'' in Schedule RC-F, Other Assets, and ``All 
other liabilities'' in Schedule RC-G, Other Liabilities.
    Another banking organization commented that they would have 
difficulty breaking out expenses incurred for multiple services 
provided by a third party vendor where separate charges for specific 
services would be burdensome to identify. The commenter requested the 
banking agencies provide a definition of telecommunications expenses. 
To reduce reporting burden, the banking agencies will modify the 
instructions for Schedule RI-E, item 2, ``Other noninterest expense,'' 
to indicate that banks should report expenses that reflect a single 
charge for grouped or ``bundled'' services in the item that most 
closely describes the predominant type of expense incurred, and that 
this categorization should be used consistently over time. Regarding 
the definition of telecommunications expenses, banks should include any 
expenses associated with telephone, cable, and internet services 
(including web page maintenance).

F. Reporting Brokered Time Deposits Participated Out by the Broker in 
the Call Report

    The banking agencies revised the instructions for Schedule RC-E, 
Memorandum items 2.b, ``Total time deposits of less than $100,000,'' 
and 2.c, ``Total time deposits of $100,000 or more,'' in March 2007. 
This was done so that 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 would be reported in the former rather than the 
latter Memorandum item. However, the banking agencies did not make a 
conforming instructional revision to Schedule RC-E, Memorandum items 
1.c.(1) and 1.c.(2), on fully insured brokered deposits. This means 
that these participated brokered time deposits continue to be reported 
as brokered deposits of greater than $100,000 rather than brokered 
deposits of less than $100,000. To achieve consistent reporting of 
these brokered time deposits in Schedule RC-E, the banking agencies 
proposed to revise Schedule RC-E, Memorandum items 1.c.(1) and 1.c.(2), 
so that 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 are reported in Memorandum item 1.c.(1) as fully insured 
brokered deposits of less than $100,000.
    The banking agencies did not receive any comments on this proposed 
change to the reporting of brokered time deposits, which will be 
implemented as proposed.

[[Page 6515]]

III. Discontinuance of Mailing of Call Report Forms and Instructions

     The banking agencies requested comment on their plan to 
discontinue the mailing of Call Report forms and instructions for the 
FFIEC 031 and FFIEC 041. The agencies' current practice is to mail 
sample forms to banks only in those quarters when significant revisions 
are made to the report forms. Updates to the Call Report instruction 
book have been printed and mailed to banks in those quarters when such 
updates have been issued.
     The Call Report forms and their instructions are available on the 
FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm) and 
the FDIC's Web site (http://www.fdic.gov/regulations/resources/call/index.html) each quarter before any mailings of the paper forms and 
instructions are completed. A paper copy of the report forms and 
instructions can be printed from the Web sites. In addition, banks that 
use Call Report software generally can print paper copies of blank 
forms from their software.
    No comments were received on this issue. The agencies will 
discontinue mailing paper Call Report forms and instructions in 2008, 
while retaining their practice of making these materials available to 
banks electronically.

IV. Other Matters

     On February 14, 2007, the OCC, the Board, the FDIC, and the OTS 
requested comment on a proposed regulatory capital schedule for 
collecting Basel IA risk-based capital data in the Call Report and the 
TFR (72 FR 7115). No comments were received on this proposal. On July 
20, 2007, the four agencies announced an agreement to issue a proposal 
to adopt a standardized approach under the Basel II Accord that would 
replace the Basel IA proposal. As a consequence, the agencies are 
withdrawing their Basel IA regulatory capital reporting proposal. A 
regulatory capital reporting proposal for the standardized approach 
will be issued for comment at a later date.

V. Paperwork Reduction Act 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. All comments will become a matter of public record.

    Dated: January 31, 2008.
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, January 29, 
2008.
Jennifer J. Johnson
Secretary of the Board.

    Dated at Washington, DC, this 25th day of January, 2008.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.

    Dated: January 25, 2008.
Deborah Dakin,
Senior Deputy Chief Counsel, Regulations and Legislation Division, 
Office of Thrift Supervision.
 [FR Doc. E8-2024 Filed 2-1-08; 8:45 am]
BILLING CODES 6720-01-P (25%); 6714-01-P (25%); 6210-01-P (25%); 4810-
33-P (25%)


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