Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 60497 

SUPPLEMENTARY INFORMATION: 

Title: Credit for Contributions to 

Selected Community Development 

Corporations. 

OMB Number: 1545–1416. 

Form Number: Form 8847. 

Abstract: Internal Revenue Code 

section 38 allows a credit for 

contributions to selected community 

development corporations as part of the 

general business credit. Form 8847 is 

used to compute the amount of the 

credit for qualified contributions to a 

selected community development 

corporation. 

Current Actions: There are no changes 

being made to the form at this time. 

Type of Review: Extension of a 

currently approved collection. 

Affected Public: Business or other forprofit organizations and individuals. 

Estimated Number of Respondents: 

22. 

Estimated Time per Respondent: 1 hr., 

52 min. 

Estimated Total Annual Burden 

Hours: 41. 

The following paragraph applies to all 

of the collections of information covered 

by this notice: 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the collection of information 

displays a valid OMB control number. 

Books or records relating to a collection 

of information must be retained as long 

as their contents may become material 

in the administration of any internal 

revenue law. Generally, tax returns and 

tax return information are confidential, 

as required by 26 U.S.C. 6103. 

Request for Comments: Comments 

submitted in response to this notice will 

be summarized and/or included in the 

request for OMB approval. All 

comments will become a matter of 

public record. 

Comments are invited on: (a) Whether 

the collection of information is 

necessary for the proper performance of 

the functions of the agency, including 

whether the information shall have 

practical utility; (b) the accuracy of the 

agency’s estimate of the burden of the 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; (d) 

ways to minimize the burden of the 

collection of information 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. 

Approved: August 24, 2010. 

Gerald Shields, 

Supervisory Tax Analyst. 

[FR Doc. 2010–24501 Filed 9–29–10; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

FEDERAL RESERVE SYSTEM 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

Proposed Agency Information 

Collection Activities; Comment 

Request 

AGENCY: Office of the Comptroller of the 

Currency (OCC), Treasury; Board of 

Governors of the Federal Reserve 

System (Board); and Federal Deposit 

Insurance Corporation (FDIC). 

ACTION: Joint notice and request for 

comment. 

SUMMARY: In accordance with the 

requirements of the Paperwork 

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

chapter 35), the OCC, the Board, and the 

FDIC (the ‘‘agencies’’) may not conduct 

or sponsor, and the respondent is not 

required to respond to, an information 

collection unless it displays a currently 

valid Office of Management and Budget 

(OMB) control number. The Federal 

Financial Institutions Examination 

Council (FFIEC), of which the agencies 

are members, has approved the 

agencies’ publication for public 

comment of a proposal to extend, with 

revision, the Consolidated Reports of 

Condition and Income (Call Report), 

which are currently approved 

collections of information. At the end of 

the comment period, the comments and 

recommendations received will be 

analyzed to determine the extent to 

which the FFIEC and the agencies 

should modify the proposed revisions 

prior to giving final approval. The 

agencies will then submit the revisions 

to OMB for review and approval. 

DATES: Comments must be submitted on 

or before November 29, 2010. 

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: You should direct all written 

comments to: Communications 

Division, Office of the Comptroller of 

the Currency, Public Information Room, 

Mailstop 2–3, Attention: 1557–0081, 

250 E Street, SW., Washington, DC 

20219. In addition, comments may be 

sent by fax to (202) 874–5274, or by 

electronic mail to 

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

personally inspect and photocopy 

comments at the OCC, 250 E Street, 

SW., Washington, DC 20219. For 

security reasons, the OCC requires that 

visitors make an appointment to inspect 

comments. You may do so by calling 

(202) 874–4700. Upon arrival, visitors 

will be required to present valid 

government-issued photo identification 

and to submit to security screening in 

order to inspect and photocopy 

comments. 

Board: You may submit comments, 

which should refer to ‘‘Consolidated 

Reports of Condition and Income (FFIEC 

031 and 041),’’ by any of the following 

methods: 

• Agency Web site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments 

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

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include reporting form number in the 

subject line of the message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

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

weekdays. 

FDIC: You may submit comments, 

which should refer to ‘‘Consolidated 

Reports of Condition and Income, 3064– 

0052,’’ by any of the following methods: 

• Agency Web site: http:// 

www.fdic.gov/regulations/laws/federal/ 

propose.html. Follow the instructions 

for submitting comments on the FDIC 

Web site. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: comments@FDIC.gov. 

Include ‘‘Consolidated Reports of 

mstockstill on DSKH9S0YB1PROD with NOTICES6

60498 Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 

Condition and Income, 3064–0052’’ in 

the subject line of the message. 

• Mail: Gary A. Kuiper, (202) 898– 

3877, Counsel, Attn: Comments, Room 

F–1072, Federal Deposit Insurance 

Corporation, 550 17th Street, NW., 

Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street) on business days 

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

Public Inspection: All comments 

received will be posted without change 

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

federal/propose.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. 

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). 

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: Gary A. Kuiper, Counsel, (202) 

898–3877, Legal Division, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: The 

agencies are proposing to revise and 

extend for three years the Call Report, 

which is currently an approved 

collection of information for each 

agency. 

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 forprofit. 

OCC 

OMB Number: 1557–0081. 

Estimated Number of Respondents: 

1,491 national banks. 

Estimated Time per Response: 53.78 

burden hours. 

Estimated Total Annual Burden: 

320,744 burden hours. 

Board 

OMB Number: 7100–0036. 

Estimated Number of Respondents: 

841 state member banks. 

Estimated Time per Response: 55.87 

burden hours. 

Estimated Total Annual Burden: 

187,947 burden hours. 

FDIC 

OMB Number: 3064–0052. 

Estimated Number of Respondents: 

4,800 insured state nonmember banks. 

Estimated Time per Response: 40.83 

burden hours. 

Estimated Total Annual Burden: 

783,936 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 17 to 

665 hours per quarter, depending on an 

individual institution’s circumstances. 

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), and 12 U.S.C. 1817 (for insured 

state nonmember commercial and 

savings banks). At present, except for 

selected data items, these information 

collections are not given confidential 

treatment. 

Abstract 

Institutions submit Call Report 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 data 

provide the most current statistical data 

available for evaluating institutions’ 

corporate applications, for identifying 

areas of focus for both on-site and offsite examinations, and for monetary and 

other public policy purposes. The 

agencies use Call Report 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 data are also 

used to calculate institutions’ deposit 

insurance and Financing Corporation 

assessments and national banks’ 

semiannual assessment fees. 

Current Actions 

I. Overview 

The agencies are proposing to 

implement a number of changes to the 

Call Report requirements effective 

March 31, 2011. These changes, which 

are discussed in detail in Sections II.A 

through II.L of this notice, are intended 

to provide data needed for reasons of 

safety and soundness or other public 

purposes. The proposed revisions 

would assist the agencies in gaining a 

better understanding of banks’ credit 

and liquidity risk exposures, primarily 

through enhanced data on lending and 

securitization activities and sources of 

deposits. The banking agencies are also 

proposing certain revisions to the Call 

Report instructions. The proposed 

changes include: 

• A breakdown by loan category of 

the existing Memorandum items for 

‘‘Other loans and leases’’ that are 

troubled debt restructurings and are past 

due 30 days or more or in nonaccrual 

status (in Schedule RC–N, Past Due and 

Nonaccrual Loans, Leases, and Other 

Assets) or are in compliance with their 

modified terms (in Schedule RC–C, part 

I, Loans and Leases) as well as the 

elimination of the exclusion from 

reporting restructured troubled 

consumer loans in these Memorandum 

items; 

• A breakdown of ‘‘Other consumer 

loans’’ into automobile loans and all 

other consumer loans in the Call Report 

schedules in which loan data are 

reported: Schedule RC–C, part I, Loans 

and Leases; Schedule RC–K, Quarterly 

Averages; Schedule RC–N, Past Due and 

Nonaccrual Loans, Leases, and Other 

Assets; Schedule RI, Income Statement; 

and Schedule RI–B, part I, Charge-offs 

and Recoveries on Loans and Leases; 

• A breakdown of the existing items 

for commercial mortgage-backed 

securities between those issued or 

guaranteed by U.S. Government 

agencies and sponsored-agencies and 

those that are not in Schedule RC–B, 

Securities, and Schedule RC–D, Trading 

Assets and Liabilities; 

• A new Memorandum item for the 

estimated amount of nonbrokered 

deposits obtained through the use of 

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Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 60499 

deposit listing service companies in 

Schedule RC–E, Deposit Liabilities; 

• A breakdown of the existing items 

for deposits of individuals, 

partnerships, and corporations between 

deposits of individuals and deposits of 

partnerships and corporations in 

Schedule RC–E, Deposit Liabilities; 

• A new Schedule RC–V, Variable 

Interest Entities, for reporting the 

categories of assets of consolidated 

variable interest entities (VIEs) that can 

be used only to settle the VIEs’ 

obligations, the categories of liabilities 

of consolidated VIEs without recourse to 

the bank’s general credit, and the total 

assets and total liabilities of other 

consolidated VIEs included in the 

bank’s total assets and total liabilities, 

with these data reported separately for 

securitization trusts, asset-backed 

commercial paper conduits, and other 

VIEs; 

• Breakdowns of the existing items 

for loans and other real estate owned 

(OREO) covered by FDIC loss-sharing 

agreements by loan and OREO category 

in Schedule RC–M, Memoranda, along 

with a breakdown of the existing items 

in Schedule RC–N, Past Due and 

Nonaccrual Loans, Leases, and Other 

Assets for reporting past due and 

nonaccrual U.S. Government-guaranteed 

loans to segregate those covered by FDIC 

loss-sharing agreements (which would 

be reported by loan category) from other 

guaranteed loans; 

• A breakdown of the existing item 

for ‘‘Life insurance assets’’ in Schedule 

RC–F, Other Assets, into items for 

general account and separate account 

life insurance assets; 

• New items for the total assets of 

captive insurance and reinsurance 

subsidiaries in Schedule RC–M, 

Memoranda; 

• New Memorandum items in 

Schedule RI, Income Statement, for 

credit valuation adjustments and debit 

valuation adjustments included in 

trading revenues for banks with total 

assets of $100 billion or more; 

• A change in reporting frequency 

from annual to quarterly for the data 

reported in Schedule RC–T, Fiduciary 

and Related Services, on collective 

investment funds and common trust 

funds for those banks that currently 

report fiduciary assets and income 

quarterly, i.e., banks with fiduciary 

assets greater than $250 million or gross 

fiduciary income greater than 10 percent 

of bank revenue; and 

• Instructional revisions addressing 

the reporting of construction loans 

following the completion of 

construction in Schedule RC–C, part I, 

Loans and Leases, and other schedules 

that collect loan data; incorporating 

residential mortgages held for trading 

within the scope of Schedule RC–P, 1– 

4 Family Residential Mortgage Banking 

Activities; and revising the treatment of 

assets and liabilities whose interest rates 

have reached contractual ceilings or 

floors for purposes of reporting maturity 

and repricing data in Schedule RC–B, 

Securities, Schedule RC–C, part I, Loans 

and Leases, Schedule RC–E, Deposit 

Liabilities, and Schedule RC–M, 

Memoranda. 

For the March 31, 2011, report date, 

banks may provide reasonable estimates 

for any new or revised Call Report item 

initially required to be reported as of 

that date for which the requested 

information is not readily available. The 

specific wording of the captions for the 

new or revised Call Report data items 

discussed in this proposal and the 

numbering of these data items should be 

regarded as preliminary. 

Type of Review: Revision and 

extension of currently approved 

collections. 

II. Discussion of Proposed Call Report 

Revisions 

A. Troubled Debt Restructurings 

The banking agencies are proposing 

that banks report additional detail on 

loans that have undergone troubled debt 

restructurings in Call Report Schedule 

RC–C, part I, Loans and Leases, and 

Schedule RC–N, Past Due and 

Nonaccrual Loans, Leases, and Other 

Assets. More specifically, Schedule RC– 

C, part I, Memorandum item 1.b, ‘‘Other 

loans and all leases’’ that are 

restructured and in compliance with 

modified terms, and Schedule RC–N, 

Memorandum item 1.b, Restructured 

‘‘Other loans and all leases’’ that are past 

due or in nonaccrual status and 

included in Schedule RC–N, would be 

broken out to provide information on 

restructured troubled loans for many of 

the loan categories reported in the 

bodies of Schedule RC–C, part I, and 

Schedule RC–N. The breakout would 

also include ‘‘Loans to individuals for 

household, family, and other personal 

expenditures’’ whose terms have been 

modified in troubled debt 

restructurings, which are currently 

excluded from the reporting of troubled 

debt restructurings in the Call Report. 

In the aggregate, troubled debt 

restructurings for all insured 

institutions have grown from $6.9 

billion at year-end 2007, to $24.0 billion 

at year-end 2008, to $58.1 billion at 

year-end 2009, with a further increase to 

$64.0 billion as of March 31, 2010. The 

proposed additional detail on troubled 

debt restructurings in Schedules RC–C, 

part I, and RC–N would enable the 

agencies to better understand the level 

of restructuring activity at banks, the 

categories of loans involved in this 

activity, and, therefore, whether banks 

are working with their borrowers to 

modify and restructure loans. In 

particular, to encourage banks to work 

constructively with their commercial 

borrowers, the agencies recently issued 

guidance on commercial real estate loan 

workouts and small business lending. 

While this guidance has explained the 

agencies’ expectations for prudent 

workouts, the agencies and the industry 

would benefit from additional reliable 

data outside of the examination process 

to assess restructuring activity for 

commercial real estate loans and 

commercial and industrial loans. 

Further, it is important to separately 

identify commercial real estate loan 

restructurings from commercial and 

industrial loan restructurings given that 

the value of the real estate collateral is 

a consideration in a bank’s decision to 

modify the terms of a commercial real 

estate loan in a troubled debt 

restructuring, but such collateral 

protection would normally be absent 

from commercial and industrial loans 

for which a loan modification is being 

explored because of borrowers’ financial 

difficulties. 

It is also anticipated that other loan 

categories will experience continued 

workout activity in the coming months 

given that most asset classes have been 

adversely impacted by the recent 

recession. This impact is evidenced by 

the increase in past due and nonaccrual 

assets across virtually all asset classes 

over the past two to three years. 

Presently, banks report loans and 

leases restructured and in compliance 

with their modified terms (Schedule 

RC–C, part I, Memorandum item 1) with 

separate disclosure of (a) loans secured 

by 1–4 family residential properties (in 

domestic offices) and (b) other loans and 

all leases (excluding loans to 

individuals for household, family, and 

other personal expenditures). This same 

breakout is reflected in Schedule RC–N, 

Memorandum item 1, for past due and 

nonaccrual restructured troubled loans. 

The broad category of ‘‘other loans’’ in 

Schedule RC–C, part I, Memorandum 

item 1.b, and Schedule RC–N, 

Memorandum item 1.b, does not permit 

an adequate analysis of troubled debt 

restructurings. In addition, the 

disclosure requirements for troubled 

debt restructurings under generally 

accepted accounting principles do not 

exempt restructurings of loans to 

individuals for household, family, and 

other personal expenditures. Therefore, 

if the Call Report added more detail to 

match the reporting of loans in 

mstockstill on DSKH9S0YB1PROD with NOTICES6

60500 Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 

1Accounting Standards Codification paragraph 

470–60–15–11. 

2For banks with foreign offices, the 

Memorandum items for restructured real estate 

loans would cover such loans in domestic offices. 

In addition, banks with foreign offices or with $300 

million or more in total assets would also provide 

a breakdown of restructured commercial and 

industrial loans between U.S. and non-U.S. 

addressees. 

Schedule RC–C, part I, and Schedule 

RC–N, the new data would provide the 

banking agencies with the level of 

information necessary to assess banks’ 

troubled debt restructurings to the same 

extent that other loan quality and 

performance indicators can be assessed. 

However, the agencies note that, under 

generally accepted accounting 

principles, troubled debt restructurings 

do not include changes in lease 

agreements 1 and they therefore propose 

to exclude leases from Schedule RC–C, 

part I, Memorandum item 1, and from 

Schedule RC–N, Memorandum item 1. 

Thus, the banking agencies’ proposed 

breakdowns of existing Memorandum 

item 1.b in both Schedule RC–C, part I, 

and Schedule RC–N would create new 

Memorandum items in both schedules 

covering troubled debt restructurings of 

‘‘1–4 family residential construction 

loans,’’ ‘‘Other construction loans and all 

land development and other land 

loans,’’ loans ‘‘Secured by multifamily (5 

or more) residential properties,’’ ‘‘Loans 

secured by owner-occupied nonfarm 

nonresidential properties,’’ ‘‘Loans 

secured by other nonfarm 

nonresidential properties,’’ ‘‘Commercial 

and industrial loans,’’ and ‘‘All other 

loans (including loans to individuals for 

household, family, and other personal 

expenditures).’’ 2 If restructured loans in 

any category of loans (as defined in 

Schedule RC–C, part I) included in 

restructured ‘‘All other loans’’ exceeds 

10 percent of the amount of restructured 

‘‘All other loans,’’ the amount of 

restructured loans in this category or 

categories must be itemized and 

described. 

Finally, Schedule RC–C, part I, 

Memorandum item 1, and Schedule RC– 

N, Memorandum item 1, are intended to 

capture data on loans that have 

undergone troubled debt restructurings 

as that term is defined in generally 

accepted accounting principles. 

However, the captions of these two 

Memorandum items include only the 

term ‘‘restructured’’ rather than 

explicitly mentioning troubled debt 

restructurings, which has led to 

questions about the scope of these 

Memorandum items. Accordingly, the 

agencies propose to revise the captions 

so that they clearly indicate that the 

loans to be reported in Schedule RC–C, 

part I, Memorandum item 1, and 

Schedule RC–N, Memorandum item 1, 

are troubled debt restructurings. 

B. Auto Loans 

The banking agencies are proposing to 

add a breakdown of the ‘‘other consumer 

loans’’ loan category in five Call Report 

schedules in order to separately collect 

information on auto loans. The affected 

schedules would be Schedule RC–C, 

part I, Loans and Leases; Schedule RC– 

K, Quarterly Averages; Schedule RC–N, 

Past Due and Nonaccrual Loans, Leases, 

and Other Assets; Schedule RI, Income 

Statement; and Schedule RI–B, part I, 

Charge-offs and Recoveries on Loans 

and Leases. Auto loans would include 

loans arising from retail sales of 

passenger cars and other vehicles such 

as minivans, vans, sport-utility vehicles, 

pickup trucks, and similar light trucks 

for personal use. This new loan category 

would exclude loans to finance fleet 

sales, personal cash loans secured by 

automobiles already paid for, loans to 

finance the purchase of commercial 

vehicles and farm equipment, and lease 

financing. 

Automobile loans are a significant 

consumer business for many large 

banks. Because of the limited disclosure 

of auto lending on existing regulatory 

reports, supervisory oversight of auto 

lending is presently diminished by the 

need to rely on the examination process 

and public information sources that 

provide overall market information but 

not data on idiosyncratic risks. 

Roughly 65 percent of new vehicle 

sales and 40 percent of used vehicle 

sales are funded with auto loans. 

According to household surveys and 

data on loan originations, banks are an 

important source of auto loans. In 2008, 

this sector originated approximately 

one-third of all auto loans. Finance 

companies, both independent and those 

affiliated with auto manufacturers 

originated a bit more than one-third, 

while credit unions originated a bit less 

than one-quarter. In addition to 

originating auto loans, some banks 

purchase auto loans originated by other 

entities, which suggests that commercial 

banks could be the largest holder of auto 

loans. 

Despite the importance of banks to the 

auto loan market, the agencies know 

less about banks’ holdings of auto loans 

than is known about finance company, 

credit union, and savings association 

holdings of these loans. All nonbank 

depository institutions are required to 

report auto loans on their respective 

regulatory reports, including savings 

associations, which originate less than 

five percent of auto loans. On their 

regulatory reports, credit unions must 

provide not only the outstanding 

amount of new and used auto loans, but 

also the average interest rate and the 

number of loans. In a monthly survey, 

the Federal Reserve collects information 

on the amount of auto loans held by 

finance companies. As a consequence, 

during the financial crisis when funds 

were scarce for finance companies in 

general and the finance companies 

affiliated with automakers in particular, 

a lack of data on auto loans at banks 

hindered the banking agencies’ ability to 

estimate the extent to which banks were 

filling in the gap in auto lending left by 

the finance companies. 

Additional disclosure regarding auto 

loans on bank Call Reports is especially 

important with the implementation of 

the amendments to Financial 

Accounting Standards Board (FASB) 

Accounting Standards Codification 

(ASC) Topics 860, Transfers and 

Servicing, and 810, Consolidations, 

resulting from Accounting Standards 

Update (ASU) No. 2009–16 (formerly 

Statement of Financial Accounting 

Standards (SFAS) No. 166, Accounting 

for Transfers of Financial Assets (FAS 

166)), and ASU No. 2009–17 (formerly 

SFAS No. 167, Amendments to FASB 

Interpretation No. 46(R) (FAS 167)), 

respectively. Until 2010, Call Report 

Schedule RC–S had provided the best 

supervisory information on auto lending 

because it included a separate breakout 

of securitized auto loans outstanding as 

well as securitized auto loan 

delinquencies and charge-offs. The 

accounting changes brought about by 

the amendments to ASC Topics 860 and 

810, however, mean that if the auto loan 

securitization vehicle is now required to 

be consolidated, securitized auto 

lending previously reported on 

Schedule RC–S will be grouped as part 

of ‘‘other consumer loans’’ on Schedules 

RC–C, part I; RC–K; RC–N; RI; and RI– 

B, part I, which diminishes supervisors’ 

ability to assess auto loan exposures and 

performance. 

Finally, separating auto lending from 

other consumer loans will assist the 

agencies in understanding consumer 

lending activities at individual 

institutions. When an institution holds 

both auto loans and other types of 

consumer loans (other than credit cards, 

which are currently reported 

separately), the current combined 

reporting of these loans in the Call 

Report tends to masks any significant 

differences that may exist in the 

performance of these portfolios. For 

example, a bank could have a sizeable 

auto loan portfolio with low loan losses, 

but its other consumer lending, which 

could consist primarily of unsecured 

loans, could exhibit very high loss rates. 

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Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 60501 

3http://www.fdicig.gov/semi-reports/sar2010mar/ 

OIGSar2010.pdf. 

The current blending of these divergent 

portfolios into a single Call Report loan 

category makes it difficult to adequately 

monitor consumer loan performance. 

C. Commercial Mortgage Backed 

Securities Issued or Guaranteed by U.S. 

Government Agencies and Sponsored 

Agencies 

The agencies propose to split the 

existing items on commercial mortgagebacked securities (CMBS) in Schedule 

RC–B, Securities, and Schedule RC–D, 

Trading Assets and Liabilities, to 

distinguish between CMBS issued or 

guaranteed by U.S. Government 

agencies and sponsored agencies 

(collectively, U.S. Government agencies) 

and those issued by others. Until June 

2009, information reported in the Call 

Report on mortgage-backed securities 

(MBS) issued or guaranteed by U.S. 

Government agencies included both 

residential MBS and CMBS. However, 

in June 2009 when banks began to 

report information on CMBS separately 

from residential MBS, data was 

collected only for commercial mortgage 

pass-through securities and for other 

CMBS without regard to issuer or 

guarantor. Thus, the agencies were no 

longer able to identify all MBS issued or 

guaranteed by U.S. Government 

agencies. 

U.S. Government agencies issue or 

guarantee a significant volume of CMBS 

that are backed by multifamily 

residential properties. In the fourth 

quarter of 2009, out of a total of $854 

billion in commercial and multifamily 

loans that were securitized, loan pools 

issued or guaranteed by U.S. 

Government agencies accounted for 19 

percent or $164 billion. These pools 

present a substantially different risk 

profile than privately issued CMBS, but 

current reporting does not allow for the 

identification of bank holdings of CMBS 

issued or guaranteed by U.S. 

Government agencies. In addition, 

because CMBS issued or guaranteed by 

U.S. Government agencies are accorded 

lower risk weights for regulatory capital 

purposes than CMBS issued by others, 

banks generally should have the 

information necessary to separately 

report these two categories of CMBS in 

the proposed new items in Schedules 

RC–B and RC–D. 

Thus, in Schedule RC–B, the banking 

agencies are proposing to split both item 

4.c.(1), ‘‘Commercial mortgage passthrough securities,’’ and item 4.c.(2), 

‘‘Other commercial MBS,’’ into separate 

items for those issued or guaranteed by 

U.S. Government agencies (new items 

4.c.(1)(a) and 4.c.(2)(a)) and all other 

CMBS (new items 4.c.(1)(b) and 

4.c.(2)(b)). Similarly, in Schedule RC–D, 

existing item 4.d, ‘‘Commercial MBS,’’ 

would be split into separate items for 

CMBS issued or guaranteed by U.S. 

Government agencies (item 4.d.(1)) and 

all other CMBS (item 4.d.(2)). Less than 

five percent of banks hold commercial 

mortgage-backed securities and would 

be affected by this proposed reporting 

change. 

D. Nonbrokered Deposits Obtained 

Through the Use of Deposit Listing 

Service Companies 

In its semiannual report to the 

Congress covering October 1, 2009, 

through March 31, 2010, the FDIC’s 

Office of Inspector General addressed 

causes of bank failures and material 

losses and noted that ‘‘[f]ailed 

institutions often exhibited a growing 

dependence on volatile, non-core 

funding sources, such as brokered 

deposits, Federal Home Loan Bank 

advances, and Internet certificates of 

deposit. ’’ 3 At present, banks report 

information on their funding in the form 

of brokered deposits in Memorandum 

items 1.b through 1.d of Schedule RC– 

E, Deposit Liabilities. Data on Federal 

Home Loan Bank advances are reported 

in items 5.a.(1) through (3) of Schedule 

RC–M, Memoranda. These data are an 

integral component of the banking 

agencies’ analyses of individual 

institutions’ liquidity and funding, 

including their reliance on non-core 

sources to fund their activities. 

Deposit brokers have traditionally 

provided intermediary services for 

financial institutions and investors. 

However, the Internet, deposit listing 

services, and other automated services 

now enable investors who focus on 

yield to easily identify high-yielding 

deposit sources. Such customers are 

highly rate sensitive and can be a less 

stable source of funding than typical 

relationship deposit customers. Because 

they often have no other relationship 

with the bank, these customers may 

rapidly transfer funds to other 

institutions if more attractive returns 

become available. 

The agencies expect each institution 

to establish and adhere to a sound 

liquidity and funds management policy. 

The institution’s board of directors, or a 

committee of the board, should also 

ensure that senior management takes the 

necessary steps to monitor and control 

liquidity risk. This process includes 

establishing procedures, guidelines, 

internal controls, and limits for 

managing and monitoring liquidity and 

reviewing the institution’s liquidity 

position, including its deposit structure, 

on a regular basis. A necessary 

prerequisite to sound liquidity and 

funds management decisions is a sound 

management information system, which 

provides certain basic information 

including data on non-relationship 

funding programs, such as brokered 

deposits, deposits obtained through the 

Internet or other types of advertising, 

and other similar rate sensitive deposits. 

Thus, an institution’s management 

should be aware of the number and 

magnitude of such deposits. 

To improve the banking agencies’ 

ability to monitor potentially volatile 

funding sources, the agencies are 

proposing to close a gap in the 

information currently available to them 

through the Call Report by adding a new 

Memorandum item to Schedule RC–E in 

which banks would report the estimated 

amount of deposits obtained through the 

use of deposit listing services that are 

not brokered deposits. 

A deposit listing service is a company 

that compiles information about the 

interest rates offered on deposits, such 

as certificates of deposit, by insured 

depository institutions. A particular 

company could be a deposit listing 

service (compiling information about 

certificates of deposits) as well as a 

deposit broker (facilitating the 

placement of certificates of deposit. A 

deposit listing service is not a deposit 

broker if all of the following four criteria 

are met: 

(1) The person or entity providing the 

listing service is compensated solely by 

means of subscription fees (i.e., the fees 

paid by subscribers as payment for their 

opportunity to see the rates gathered by 

the listing service) and/or listing fees 

(i.e., the fees paid by depository 

institutions as payment for their 

opportunity to list or ‘‘post’’ their rates). 

The listing service does not require a 

depository institution to pay for other 

services offered by the listing service or 

its affiliates as a condition precedent to 

being listed. 

(2) The fees paid by depository 

institutions are flat fees: they are not 

calculated on the basis of the number or 

dollar amount of deposits accepted by 

the depository institution as a result of 

the listing or ‘‘posting’’ of the depository 

institution’s rates. 

(3) In exchange for these fees, the 

listing service performs no services 

except (A) the gathering and 

transmission of information concerning 

the availability of deposits; and/or (B) 

the transmission of messages between 

depositors and depository institutions 

(including purchase orders and trade 

confirmations). In publishing or 

displaying information about depository 

institutions, the listing service must not 

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60502 Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 

4An Individual Taxpayer Identification Number 

is a tax processing number only available for certain 

nonresident and resident aliens, their spouses, and 

dependents who cannot get a Social Security 

Number. It is a 9-digit number, beginning with the 

number ‘‘9,’’ formatted like a Social Security 

Number. 

5Formerly paragraph 22A of FIN 46(R), as 

amended by FAS 167. 

6 Deloitte & Touche LLP, ‘‘Back on-balance sheet: 

Observations from the adoption of FAS 167,’’ May 

2010, page 4 (http://www.deloitte.com/view/en_US/ 

us/Services/audit-enterprise-risk-services/

Financial-Accounting-Reporting/

f3a70ca28d9f8210VgnVCM200000bb42

f00aRCRD.htm). 

7See paragraphs A80 and A81 of FAS 167. 

attempt to steer funds toward particular 

institutions (except that the listing 

service may rank institutions according 

to interest rates and also may exclude 

institutions that do not pay the listing 

fee). Similarly, in any communications 

with depositors or potential depositors, 

the listing service must not attempt to 

steer funds toward particular 

institutions. 

(4) The listing service is not involved 

in placing deposits. Any funds to be 

invested in deposit accounts are 

remitted directly by the depositor to the 

insured depository institution and not, 

directly or indirectly, by or through the 

listing service. 

E. Deposits of Individuals, Partnerships, 

and Corporations 

In Call Report Schedule RC–E, 

Deposit Liabilities, banks currently 

report separate breakdowns of their 

transaction and nontransaction accounts 

(in domestic offices) by category of 

depositor. The predominant depositor 

category is deposits of ‘‘Individuals, 

partnerships, and corporations,’’ which 

comprises more than 90 percent of total 

deposits in domestic offices. The recent 

crisis has demonstrated that business 

depositors’ behavioral characteristics 

are significantly different than the 

behavioral characteristics of 

individuals. Thus, separate reporting of 

deposits of individuals versus deposits 

of partnerships and corporations would 

enable the banking agencies to better 

assess the liquidity risk profile of 

institutions given differences in the 

relative stability of deposits from these 

two sources. 

As proposed to be revised, Schedule 

RC–E, item 1, ‘‘Individuals, 

partnerships, and corporations,’’ would 

be split into item 1.a, ‘‘Individuals,’’ and 

item 1.b, ‘‘Partnerships and 

corporations.’’ Under this proposal, 

accounts currently reported in item 1 for 

which the depositor’s taxpayer 

identification number, as maintained on 

the account in the bank’s records, is a 

Social Security Number (or an 

Individual Taxpayer Identification 

Number 4) should be treated as deposits 

of individuals. In general, all other 

accounts currently reported in item 1 

should be treated as deposits of 

partnerships and corporations. 

However, Schedule RC–E, item 1, also 

includes all certified and official checks. 

To limit the reporting burden of this 

proposed change, official checks in the 

form of money orders and travelers 

checks would be reported as deposits of 

individuals. Certified checks and all 

other official checks would be reported 

as deposits of partnerships and 

corporations. The agencies request 

comment on this approach to reporting 

certified and official checks. 

F. Variable Interest Entities 

In June 2009, the Financial 

Accounting Standards Board (FASB) 

issued accounting standards that have 

changed the way entities account for 

securitizations and special purpose 

entities. ASU No. 2009–16 (formerly 

FAS 166) revised ASC Topic 860, 

Transfers and Servicing, by eliminating 

the concept of a ‘‘qualifying specialpurpose entity’’ (QSPE) and changing 

the requirements for derecognizing 

financial assets. ASU No. 2009–17 

(formerly FAS 167) revised ASC Topic 

810, Consolidations, by changing how a 

bank or other company determines 

when an entity that is insufficiently 

capitalized or is not controlled through 

voting or similar rights, i.e., a ‘‘variable 

interest entity’’ (VIE), should be 

consolidated. For most banks, ASU Nos. 

2009–16 and 2009–17 took effect 

January 1, 2010. 

Under ASC Topic 810, as amended, 

determining whether a bank is required 

to consolidate a VIE depends on a 

qualitative analysis of whether that bank 

has a ‘‘controlling financial interest’’ in 

the VIE and is therefore the primary 

beneficiary of the VIE. The analysis 

focuses on the bank’s power over and 

interest in the VIE. With the removal of 

the QSPE concept from generally 

accepted accounting principles that was 

brought about in amended ASC Topic 

860, a bank that transferred financial 

assets to an SPE that met the definition 

of a QSPE before the effective date of 

these amended accounting standards 

was required to evaluate whether, 

pursuant to amended ASC Topic 810, it 

must begin to consolidate the assets, 

liabilities, and equity of the SPE as of 

that effective date. Thus, when 

implementing amended ASC Topics 860 

and 810 at the beginning of 2010, banks 

began to consolidate certain previously 

off-balance securitization vehicles, 

asset-backed commercial paper 

conduits, and other structures. Going 

forward, banks with variable interests in 

new VIEs must evaluate whether they 

have a controlling financial interest in 

these entities and, if so, consolidate 

them. In addition, banks must 

continually reassess whether they are 

the primary beneficiary of VIEs in 

which they have variable interests. 

For those VIEs that banks must 

consolidate, the banking agencies’ Call 

Report instructional guidance advises 

institutions to report the assets and 

liabilities of these VIEs on the Call 

Report balance sheet (Schedule RC) in 

the balance sheet category appropriate 

to the asset or liability. However, ASC 

paragraph 810–10–45–25 5 requires a 

reporting entity to present ‘‘separately 

on the face of the statement of financial 

position: a. Assets of a consolidated 

variable interest entity (VIE) that can be 

used only to settle obligations of the 

consolidated VIE [and] b. Liabilities of 

a consolidated VIE for which creditors 

(or beneficial interest holders) do not 

have recourse to the general credit of the 

primary beneficiary.’’ This requirement 

has been interpreted to mean that ‘‘each 

line item of the consolidated balance 

sheet should differentiate which portion 

of those amounts meet the separate 

presentation conditions.’’ 6 In requiring 

separate presentation for these assets 

and liabilities, the FASB agreed with 

commenters on its proposed accounting 

standard on consolidation that ‘‘separate 

presentation . . . would provide 

transparent and useful information 

about an enterprise’s involvement and 

associated risks in a variable interest 

entity.’’ 7 The banking agencies concur 

that separate presentation would 

provide similar benefits to them and 

other Call Report users, particularly 

since data on securitized assets that are 

reconsolidated is no longer reported on 

Call Report Schedule RC–S, Servicing, 

Securitization, and Asset Sale 

Activities. 

Consistent with the presentation 

requirements discussed above, the 

banking agencies are proposing to add a 

new Schedule RC–V, Variable Interest 

Entities, to the Call Report in which 

banks would report a breakdown of the 

assets of consolidated VIEs that can be 

used only to settle obligations of the 

consolidated VIEs and liabilities of 

consolidated VIEs for which creditors 

do not have recourse to the general 

credit of the reporting bank. The 

following proposed categories for these 

assets and liabilities would include 

some of the same categories presented 

on the Call Report balance sheet 

(Schedule RC): Cash and balances due 

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Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 60503 

maturity securities; Available-for-sale 

securities; Securities purchased under 

agreements to resell, Loans and leases 

held for sale; Loans and leases, net of 

unearned income; Allowance for loan 

and lease losses; Trading assets (other 

than derivatives); Derivative trading 

assets; Other real estate owned; Other 

assets; Securities sold under agreements 

to repurchase; Derivative trading 

liabilities; Other borrowed money (other 

than commercial paper); Commercial 

paper; and Other liabilities. These assets 

and liabilities would be presented 

separately for securitization trusts, 

asset-backed commercial paper 

conduits, and other VIEs. 

In addition, the agencies propose to 

include two separate items in new 

Schedule RC–V in which banks would 

report the total amounts of all other 

assets and all other liabilities of 

consolidated VIEs (i.e., all assets of 

consolidated VIEs that are not dedicated 

solely to settling obligations of the VIE 

and all liabilities of consolidated VIEs 

for which creditors have recourse to the 

general credit of the reporting bank). 

The collection of this information 

would help the agencies understand the 

total magnitude of consolidated VIEs. 

These assets and liabilities would also 

be reported separately for securitization 

trusts, asset-backed commercial paper 

conduits, and other VIEs. 

The asset and liability information 

collected in Schedule RC–V would 

represent amounts included in the 

reporting bank’s consolidated assets and 

liabilities reported on Schedule RC, 

Balance Sheet, i.e., after eliminating 

intercompany transactions. 

G. Assets Covered by FDIC Loss-Sharing 

Agreements 

In March 2010, the banking agencies 

added a four-way breakdown of assets 

covered by loss-sharing agreements with 

the FDIC to Schedule RC–M, 

Memoranda. Items 13.a through 13.d 

collect data on covered loans and leases, 

other real estate owned, debt securities, 

and other assets. In a January 22, 2010, 

comment letter to the banking agencies 

on the agencies’ submission for OMB 

review of proposed Call Report 

revisions for implementation in 2010, 

the American Bankers Association 

(ABA) stated that while the addition of 

the covered asset items to Schedule RC– 

M was: 

a step in the right direction, ABA believes it 

would be beneficial to regulators, reporting 

banks, investors, and the public to have 

additional, more granular information about 

the various categories of assets subject to the 

FDIC loss-sharing agreements. While we 

recognize that this would result in additional 

reporting burden on banks, on balance our 

members feel strongly that the benefit of 

additional disclosure of loss-sharing data 

would outweigh the burden of providing 

these detailed data. Thus, we urge the 

Agencies and the FFIEC to further revise the 

collection of data from banks on assets 

covered by FDIC loss-sharing agreements on 

the Call Report to include the several changes 

suggested below * * * We believe these 

changes would provide a more precise and 

accurate picture of a bank’s asset quality. 

The changes suggested by the ABA 

included revising Schedule RC–M by 

replacing the two items for covered 

loans and leases and covered other real 

estate owned with separate breakdowns 

of these assets by loan category and real 

estate category. The ABA also suggested 

revising existing items 10 and 10.a in 

Schedule RC–N, Past Due and 

Nonaccrual Loans, Leases, and Other 

Assets, which collect data on past due 

and nonaccrual loans and leases that are 

wholly or partially guaranteed by the 

U.S. Government, including the FDIC. 

The ABA recommended that the 

reporting of these past due and 

nonaccrual loans and leases be 

segregated into separate items for loans 

and leases covered by FDIC loss-sharing 

agreements and loans and leases with 

other U.S. Government guarantees. 

After reviewing the ABA’s 

recommendations and discussing them 

with their staff, the banking agencies are 

proposing to revise the Call Report 

along the lines suggested by the ABA. 

Thus, the banking agencies are 

proposing to create a breakdown of 

Schedule RC–M, item 13.a, covered 

‘‘Loans and leases,’’ that would include 

each category of ‘‘Loans secured by real 

estate’’ (in domestic offices) from 

Schedule RC–C, part I, ‘‘Loans to finance 

agricultural production and other loans 

to farmers,’’ ‘‘Commercial and industrial 

loans,’’ ‘‘Credit cards,’’ ‘‘Other consumer 

loans,’’ and ‘‘All other loans and all 

leases.’’ If any category of loans or leases 

(as defined in Schedule RC–C, part I) 

included in covered ‘‘All other loans 

and all leases’’ exceeds 10 percent of 

total covered loans and leases, the 

amount of covered loans or leases in 

that category or categories must be 

itemized and described. Similarly, the 

banking agencies would create a 

breakdown of Schedule RC–M, item 

13.b, covered ‘‘Other real estate owned,’’ 

into the following categories: 

‘‘Construction, land development, and 

other land,’’ ‘‘Farmland,’’ ‘‘1–4 family 

residential properties,’’ ‘‘Multifamily (5 

or more) residential properties,’’ and 

‘‘Nonfarm nonresidential properties.’’ 

Banks would also report the guaranteed 

portion of the total amount of covered 

other real estate owned. In Schedule 

RC–N, as suggested by the ABA, the 

banking agencies would remove loans 

and leases covered by FDIC loss-sharing 

agreements from the scope of existing 

items 10 and 10.a on past due and 

nonaccrual loans wholly or partially 

guaranteed by the U.S. Government. 

Past due and nonaccrual covered loans 

and leases would then be collected in 

new item 11, which would include a 

breakdown of these loans and leases 

using the same categories as in proposed 

revised item 13.a of Schedule RC–M and 

also provide for banks to report the 

guaranteed portion of the total amount 

of covered loans and leases. 

H. Life Insurance Assets 

Banks purchase and hold bank-owned 

life insurance (BOLI) policies as assets, 

the premiums for which may be used to 

acquire general account or separate 

account life insurance policies. Banks 

currently report the aggregate amount of 

their life insurance assets in item 5 of 

Call Report Schedule RC–F, Other 

Assets, without regard to whether their 

holdings are general account or separate 

account policies. 

Many banks have BOLI assets, and the 

distinction between those life insurance 

policies that represent general account 

products and those that represent 

separate account products has meaning 

with respect to the degree of credit risk 

involved as well as performance 

measures for the life insurance assets in 

a volatile market environment. In a 

general account policy, the general 

assets of the insurance company issuing 

the policy support the policy’s cash 

surrender value. In a separate account 

policy, the policyholder’s cash 

surrender value is supported by assets 

segregated from the general assets of the 

insurance carrier. Under such an 

arrangement, the policyholder neither 

owns the underlying separate account 

created by the insurance carrier on its 

behalf nor controls investment decisions 

in the account. Nevertheless, the 

policyholder assumes all investment 

and price risk. 

A number of banks holding separate 

account life insurance policies have 

recorded significant losses in recent 

years due to the volatility in the markets 

and the vulnerability to market 

fluctuations of the instruments that are 

investment options in separate account 

life insurance policies. Information 

distinguishing between the cash 

surrender values of general account and 

separate account life insurance policies 

would allow the banking agencies to 

track banks’ holdings of both types of 

life insurance policies with their 

differing risk characteristics and 

changes in their carrying amounts 

resulting from their performance over 

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60504 Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 

time. Accordingly, the banking agencies 

are proposing to split item 5 of Schedule 

RC–F into two items: Item 5.a, ‘‘General 

account life insurance assets,’’ and item 

5.b, ‘‘Separate account life insurance 

assets.’’ 

I. Captive Insurance and Reinsurance 

Subsidiaries 

Captive insurance companies are 

utilized by banking organizations to 

‘‘self insure’’ or reinsure their own risks 

pursuant to incidental activities 

authority. A captive insurance company 

is a limited purpose insurer that may be 

licensed as a direct writer of insurance 

or as a reinsurer. Insurance premiums 

paid by a bank to its captive insurer, 

and claims paid back to the bank by the 

captive, are transacted on an 

intercompany basis, so there is no 

evidence of this type of self-insurance 

activity when a bank prepares 

consolidated financial statements, 

including its Call Report. The cash 

flows for a captive reinsurer’s 

transactions also are not apparent in a 

bank’s consolidated financial 

statements. 

A number of banks own captive 

insurers or reinsurers, several of which 

were authorized to operate more than 

ten years ago. Some of the most 

common lines of business underwritten 

by bank captive insurers are credit life, 

accident, and health; disability 

insurance; and employee benefits 

coverage. Additionally, bank captive 

reinsurance subsidiaries may 

underwrite private mortgage guaranty 

reinsurance and terrorism risk 

reinsurance. 

As part of their supervisory processes, 

the agencies have been following the 

proliferation of bank captive insurers 

and reinsurers and the performance 

trends of these captives for the past 

several years. Collection of financial 

information regarding the total assets of 

captive insurance and reinsurance 

subsidiaries would assist the agencies in 

monitoring the insurance activities of 

banking organizations as well as any 

safety and soundness risks posed to the 

parent bank from the activities of these 

subsidiaries. 

The agencies propose to collect two 

new items in Schedule RC–M, 

Memoranda, for captive insurance 

subsidiaries operated by banks: Item 

14.a, ‘‘Total assets of captive insurance 

subsidiaries,’’ and item 14.b, ‘‘Total 

assets of captive reinsurance 

subsidiaries.’’ These new items are not 

expected to be applicable to the vast 

majority of banks. When reporting the 

total assets of these captive subsidiaries 

in the proposed new items, banks 

should measure the subsidiaries’ total 

assets before eliminating intercompany 

transactions between the consolidated 

subsidiary and other offices or 

subsidiaries of the consolidated bank. 

J. Credit and Debit Valuation 

Adjustments Included in Trading 

Revenues 

Banks that reported average trading 

assets of $2 million or more for any 

quarter of the preceding calendar year 

provide a breakdown of trading revenue 

by type of exposure in Memorandum 

items 8.a through 8.e of Schedule RI, 

Income Statement. These revenue items 

are reported net of credit adjustments 

made to the fair value of banks’ 

derivative assets and liabilities that are 

reported as trading assets and liabilities. 

There are two forms of credit 

adjustments that affect the valuation of 

derivatives held for trading and trading 

revenue. The first is the credit valuation 

adjustment (CVA), which is the 

discounted value of expected losses on 

a bank’s derivative assets due to changes 

in the creditworthiness of the bank’s 

derivative counterparties and future 

exposures to those counterparties. In 

contrast, the debit valuation adjustment 

(DVA) reflects the effect of changes in 

the bank’s own creditworthiness on its 

derivative liabilities. During the 

financial crisis, the recognition of both 

the CVA and the DVA had a material 

impact on overall trading revenues. 

Because of their potential materiality, 

information on these two adjustments is 

needed in order for the agencies to 

better understand the level and trend of 

banks’ trading revenues. 

The banking agencies are therefore 

proposing to add two new 

Memorandum items to the existing 

Schedule RI Memorandum items for 

trading revenue. In new Memorandum 

item 8.f, banks would report the ‘‘Impact 

on trading revenue of changes in the 

creditworthiness of the bank’s 

derivatives counterparties on the bank’s 

derivative assets (included in 

Memorandum items 8.a through 8.e 

above).’’ In new Memorandum item 8.g, 

banks would report the ‘‘Impact on 

trading revenue of changes in the 

creditworthiness of the bank on the 

bank’s derivative liabilities (included in 

Memorandum items 8.a through 8.e 

above).’’ Because derivatives held for 

trading are heavily concentrated in the 

very largest banks, these new items 

would be reported by banks with $100 

billion or more in total assets. 

K. Quarterly Reporting for Collective 

Investment Funds 

For banks that provide fiduciary and 

related services, the volume of assets 

under management is an important 

metric for understanding risk at these 

institutions and in the banking system. 

A bank’s assets under management may 

include such pooled investment 

vehicles as collective investment funds 

and common trust funds (hereafter, 

collectively, CIFs) that it offers to 

investors. When considering how and 

where to place funds in pooled 

investment vehicles, which also include 

registered investment funds (mutual 

funds), investors’ decisions are highly 

influenced by risk and return factors. 

While registered investment funds 

regularly disclose an array of fundrelated data to the U.S. Securities and 

Exchange Commission and the investing 

public, the banking agencies’ collection 

and public disclosure of summary data 

on CIFs is limited to annual data 

reported in Memorandum items 3.a 

through 3.h of Call Report Schedule RC– 

T, Fiduciary and Related Services, as of 

each December 31. 

Like other investment vehicles, CIFs 

were affected by market disruptions 

during the recent financial crisis. 

However, annual reporting on CIFs 

limited the agencies’ ability to detect 

changes in investor behavior and bank 

investment management strategies at an 

early stage in this $2.5 trillion line of 

business. Thus, the agencies believe it 

would be beneficial to change the 

reporting frequency for the Schedule 

RC–T data on CIFs from annually to 

quarterly for those institutions that 

currently report their fiduciary assets 

and fiduciary income quarterly. 

Quarterly filing of these Schedule RC– 

T data is required of institutions with 

total fiduciary assets greater than $250 

million (as of the preceding December 

31) or with gross fiduciary and related 

services income greater than 10 percent 

of revenue for the preceding calendar 

year. This proposed reporting change 

would affect fewer than 100 banks. 

L. Call Report Instructional Revisions 

1. Construction Loans 

Banks report the amount of their 

‘‘Construction, land development, and 

other land loans’’ in the appropriate loan 

subcategory of Call Report Schedule 

RC–C, part I, item 1.a. Questions have 

arisen about the reporting treatment for 

a ‘‘Construction, land development, and 

other land loan’’ that was not originated 

as a ‘‘combination constructionpermanent loan,’’ but was originated 

with the expectation that repayment 

would come from the sale of the real 

estate, when the bank changes the loan’s 

terms so that principal amortization is 

required. This may occur after 

completion of construction when the 

bank renews or refinances the existing 

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loan or enters into a new real estate loan 

with the original borrower. The agencies 

believe that as long as the repayment of 

a loan that was originally categorized as 

a ‘‘Construction, land development, and 

other land loan’’ remains dependent on 

the sale of the real property, the loan 

should continue to be reported in the 

appropriate subcategory of item 1.a of 

Schedule RC–C, part I, because it 

continues to exhibit the risk 

characteristics of a construction loan. 

The instructions for Schedule RC–C, part I, 

item 1.a, state that: 

Loans written as combination constructionpermanent loans secured by real estate 

should be reported in this item until 

construction is completed or principal 

amortization payments begin, whichever 

comes first. When the first of these events 

occurs, the loans should begin to be reported 

in the real estate loan category in Schedule 

RC–C, part I, item 1, appropriate to the real 

estate collateral. All other construction loans 

secured by real estate should continue to be 

reported in this item after construction is 

completed unless and until (1) the loan is 

refinanced into a new permanent loan by the 

reporting bank or is otherwise repaid, (2) the 

bank acquires or otherwise obtains physical 

possession of the underlying collateral in full 

satisfaction of the debt, or (3) the loan is 

charged off. 

A combination constructionpermanent loan results when the lender 

enters into a contractual agreement with 

the original borrower at the time the 

construction loan is originated to also 

provide the original borrower with 

permanent financing that amortizes 

principal after construction is 

completed and a certificate of 

occupancy is obtained (if applicable). 

This construction-permanent loan 

structure is intended to apply to 

situations where, at the time the 

construction loan is originated, the 

original borrower: 

• Is expected to be the owneroccupant of the property upon 

completion of construction and receipt 

of a certificate of occupancy (if 

applicable), for example, where the 

financing is being provided to the 

original borrower for the construction 

and permanent financing of the 

borrower’s residence or place of 

business, or 

• Is not expected to be the owneroccupant of the property, but repayment 

of the permanent loan will be derived 

from rental income associated with the 

property being constructed after receipt 

of a certificate of occupancy (if 

applicable) rather than from the sale of 

the property being constructed. 

For a loan not written as a 

combination construction-permanent 

loan at the time the construction loan 

was originated, the agencies propose to 

clarify the instructional language quoted 

above stating that ‘‘[a]ll other 

construction loans secured by real estate 

should continue to be reported in this 

item after construction is completed 

unless and until * * * the loan is 

refinanced into a new permanent loan 

by the reporting bank.’’ This clarification 

is intended to ensure the appropriate 

categorization of such a loan in 

Schedule RC–C, part I. Thus, the 

agencies are proposing to revise the 

instructions for Schedule RC–C, part I, 

item 1.a, to explain that the phrase ‘‘the 

loan is refinanced into a new permanent 

loan’’ refers to: 

• An amortizing permanent loan to a 

new borrower (unrelated to the original 

borrower) who has purchased the real 

property, or 

• A prudently underwritten new 

amortizing permanent loan at market 

terms to the original borrower— 

including an appropriate interest rate, 

maturity, and loan-to-value ratio—that 

is no longer dependent on the sale of the 

property for repayment. The loan 

should have a clearly identified ongoing 

source of repayment sufficient to service 

the required principal and interest 

payments over a reasonable and 

customary period relative to the type of 

property securing the new loan. A new 

loan to the original borrower not 

meeting these criteria (including a new 

loan on interest-only terms or a new 

loan with a short-term balloon maturity 

that is inconsistent with the ongoing 

source of repayment criterion) should 

continue to be reported as a 

‘‘Construction, land development, and 

other land loan’’ in the appropriate 

subcategory of Schedule RC–C, part I, 

item 1.a. 

2. Reporting of 1–4 Family Residential 

Mortgages Held for Trading in Schedule 

RC–P 

The banking agencies began collecting 

information in Schedule RC–P, 1–4 

Family Residential Mortgage Banking 

Activities in Domestic Offices, in 

September 2006. At that time, the 

instructions for Schedule RC–C, part I, 

Loans and Leases, indicated that loans 

generally could not be classified as held 

for trading. Therefore, all 1–4 family 

residential mortgage loans designated as 

held for sale were reportable in 

Schedule RC–P. In March 2008, the 

banking agencies provided instructional 

guidance establishing conditions under 

which banks were permitted to classify 

certain assets (e.g., loans) as trading, and 

specified that loans classified as trading 

assets should be excluded from 

Schedule RC–C, part I, Loans and 

Leases, and reported instead in 

Schedule RC–D, Trading Assets and 

Liabilities (if the reporting threshold for 

this schedule were met). However, the 

agencies neglected to address the 

reporting treatment on Schedule RC–P 

of 1–4 family residential loans that met 

the conditions for classification as 

trading assets. Therefore, the agencies 

are proposing to correct this by 

providing explicit instructional 

guidance that all 1–4 family residential 

mortgage banking activities, whether 

held for sale or trading purposes, are 

reportable on Schedule RC–P. 

3. Maturity and Repricing Data for 

Assets and Liabilities at Contractual 

Ceilings and Floors 

Banks report maturity and repricing 

data for debt securities (not held for 

trading), loans and leases (not held for 

trading), time deposits, and other 

borrowed money in Call Report 

Schedule RC–B, Securities; Schedule 

RC–C, part I, Loans and Leases; 

Schedule RC–E, Deposit Liabilities; and 

Schedule RC–M, Memoranda, 

respectively. The agencies use these 

data to assess, at a broad level, a bank’s 

exposure to interest rate risk. The 

instructions for reporting the maturity 

and repricing data currently require that 

when the interest rate on a floating rate 

instrument has reached a contractual 

floor or ceiling level, which is a form of 

embedded option, the instrument is to 

be treated as ‘‘fixed rate’’ rather than 

‘‘floating rate’’ until the rate is again free 

to float. As a result, a floating rate 

instrument whose interest rate has 

fallen to its floor or risen to its ceiling 

is reported based on the time remaining 

until its contractual maturity date rather 

than the time remaining until the next 

interest rate adjustment date (or the 

contractual maturity date, if earlier). 

This reporting treatment is designed to 

capture the potential effect of the 

embedded option under particular 

interest rate scenarios. 

The ABA has requested that the 

agencies reconsider the reporting 

treatment for floating rate instruments 

with contractual floors and ceilings. 

More specifically, the ABA has 

recommended that the instructions be 

revised so that floating rate instruments 

would always be reporting based on the 

time remaining until the next interest 

rate adjustment date without regard to 

whether the rate on the instrument has 

reached a contractual floor or ceiling. 

The agencies have considered this 

request and have concluded that an 

instruction revision is warranted, but 

the extent of the revision should be 

narrower than recommended by the 

ABA. The agencies believe that when a 

floating rate instrument is at its 

contractual floor or ceiling and the 

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60506 Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Notices 

embedded option has intrinsic value to 

the bank, the floor or ceiling should be 

ignored and the instrument should be 

treated as a floating rate instrument. 

However, if the embedded option has 

intrinsic value to the bank’s 

counterparty, the contractual floor or 

ceiling should continue to be taken into 

account and the instrument should be 

treated as a fixed rate instrument. For 

example, when the interest rate on a 

floating rate loan reaches its contractual 

ceiling, the embedded option 

represented by the ceiling has intrinsic 

value to the borrower and is a detriment 

to the bank because the loan’s yield to 

the bank is lower than what it would 

have been without the ceiling. When the 

interest rate on a floating rate loan 

reaches its contractual floor, the 

embedded option represented by the 

floor has intrinsic value to the bank and 

is a benefit to the bank because the 

loan’s yield to the bank is higher than 

what it would have been without the 

floor. 

Accordingly, the agencies are 

proposing to revise the instructions for 

reporting maturity and repricing data in 

the four Call Report schedules identified 

above. As revised, the instructions 

would indicate that a floating rate asset 

that has reached its contractual ceiling 

and a floating rate liability that has 

reached its contractual floor would be 

treated as a fixed rate instrument and 

reported based on the time remaining 

until its contractual maturity date. In 

contrast, the instructions would state 

that a floating rate asset that has reached 

its contractual floor and a floating rate 

liability that has reached its contractual 

ceiling would be treated as a floating 

rate instrument and reported based on 

the time remaining until the next 

interest rate adjustment date (or the 

contractual maturity date, if earlier). 

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 collections of information that are 

the subject of this notice 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: September 23, 2010. 

Michele Meyer, 

Assistant Director, Legislative and Regulatory 

Activities Division, Office of the Comptroller 

of the Currency. 

Board of Governors of the Federal Reserve 

System, September 24, 2010. 

Jennifer J. Johnson 

Secretary of the Board. 

Dated at Washington, DC, this 23rd day of 

September, 2010. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2010–24476 Filed 9–29–10; 8:45 am] 

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

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

Proposed Collection; Comment 

Request for Revenue Procedure 2004– 

46 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice and request for 

comments. 

SUMMARY: The Department of the 

Treasury, as part of its continuing effort 

to reduce paperwork and respondent 

burden, invites the general public and 

other Federal agencies to take this 

opportunity to comment on proposed 

and/or continuing information 

collections, as required by the 

Paperwork Reduction Act of 1995, 

Public Law 104–13 (44 U.S.C. 

3506(c)(2)(A)). Currently, the IRS is 

soliciting comments concerning 

Revenue Procedure 2004–45, Relief 

from Late GST Allocation. 

DATES: Written comments should be 

received on or before November 29, 

2010 to be assured of consideration. 

ADDRESSES: Direct all written comments 

to Gerald Shields, Internal Revenue 

Service, Room 6129, 1111 Constitution 

Avenue, NW., Washington, DC 20224. 

FOR FURTHER INFORMATION CONTACT: 

Requests for additional information or 

copies of the revenue procedure should 

be directed to Allan Hopkins at Internal 

Revenue Service, Room 6129, 1111 

Constitution Avenue, NW., Washington, 

DC 20224, or at (202) 622–6665, or 

through the Internet at 

Allan.M.Hopkins@irs.gov. 

SUPPLEMENTARY INFORMATION: 

Title: Relief from Late GST Allocation. 

OMB Number: 1545–1895. 

Revenue Procedure Number: Revenue 

Procedure 2004–46. 

Abstract: Revenue Procedure 2004–45 

provides guidance to certain taxpayers 

in order to obtain an automatic 

extension of time to make an allocation 

of the generation-skipping transfer tax 

exemption. Rather than requesting a 

private letter ruling, the taxpayer may 

file certain documents directly with the 

Cincinnati Service Center to obtain 

relief. 

Current Actions: There are no changes 

being made to the revenue procedure at 

this time. 

Type of Review: Extension of a 

currently approved collection. 

Affected Public: Business or other forprofit organizations. 

Estimated Number of Respondents: 

50. 

Estimated Annual Average Time per 

Respondent: 7 hours. 

Estimated Total Annual Hours: 350. 

The following paragraph applies to all 

of the collections of information covered 

by this notice: 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the collection of information 

displays a valid OMB control number. 

Books or records relating to a collection 

of information must be retained as long 

as their contents may become material 

in the administration of any internal 

revenue law. Generally, tax returns and 

tax return information are confidential, 

as required by 26 U.S.C. 6103. 

Request for Comments: Comments 

submitted in response to this notice will 

be summarized and/or included in the 

request for OMB approval. All 

comments will become a matter of 

public record. Comments are invited on: 

(a) Whether the collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information shall have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the collection of 

information; (c)ways to enhance the 

quality, utility, and clarity of the 

information to be collected; (d) ways to 

minimize the burden of the collection of 

information 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, 

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