Federal Register / Vol. 75, No. 212 / Wednesday, November 3, 2010 / Notices 67721 

SUMMARY: Notice is hereby given, 

pursuant to the Government in the 

Sunshine Act (5 U.S.C. 552b(e)(3)), of 

the regular meeting of the Farm Credit 

Administration Board (Board). 

DATE AND TIME: The regular meeting of 

the Board will be held at the offices of 

the Farm Credit Administration in 

McLean, Virginia, on November 10, 

2010, from 9 a.m. until such time as the 

Board concludes its business. 

FOR FURTHER INFORMATION CONTACT: 

Roland E. Smith, Secretary to the Farm 

Credit Administration Board, (703) 883– 

4009, TTY (703) 883–4056. 

ADDRESSES: Farm Credit 

Administration, 1501 Farm Credit Drive, 

McLean, Virginia 22102–5090. 

SUPPLEMENTARY INFORMATION: This 

meeting of the Board will be open to the 

public (limited space available. In order 

to increase the accessibility to Board 

meetings, persons requiring assistance 

should make arrangements in advance. 

The matters to be considered at the 

meeting are: 

Open Session 

A. Approval of Minutes 

• October 14, 2010 

B. New Business 

• Advance Notice of Proposed 

Rulemaking—Disclosure to 

Shareholders and Investors on 

Senior Officer Compensation 

Closed Session* 

Reports 

• Office of Management Services 

Quarterly Report 

Dated: October 28, 2010. 

Roland E. Smith, 

Secretary, Farm Credit Administration Board 

[FR Doc. 2010–27910 Filed 11–1–10; 4:15 pm] 

BILLING CODE 6705–01–P 

FEDERAL RESERVE SYSTEM 

Proposed Agency Information 

Collection Activities; Comment 

Request 

AGENCY: Board of Governors of the 

Federal Reserve System 

SUMMARY: Background. On June 15, 

1984, the Office of Management and 

Budget (OMB) delegated to the Board of 

Governors of the Federal Reserve 

System (Board) its approval authority 

under the Paperwork Reduction Act 

(PRA), as per 5 CFR 1320.16, to approve 

of and assign OMB control numbers to 

collection of information requests and 

requirements conducted or sponsored 

by the Board under conditions set forth 

in 5 CFR Part 1320 Appendix A.1. 

Board-approved collections of 

information are incorporated into the 

official OMB inventory of currently 

approved collections of information. 

Copies of the Paperwork Reduction Act 

Submission, supporting statements and 

approved collection of information 

instruments are placed into OMB’s 

public docket files. The Federal Reserve 

may not conduct or sponsor, and the 

respondent is not required to respond 

to, an information collection that has 

been extended, revised, or implemented 

on or after October 1, 1995, unless it 

displays a currently valid OMB control 

number. 

Request for Comment on Information 

Collection Proposals 

The following information 

collections, which are being handled 

under this delegated authority, have 

received initial Board approval and are 

hereby published for comment. At the 

end of the comment period, the 

proposed information collections, along 

with an analysis of comments and 

recommendations received, will be 

submitted to the Board for final 

approval under OMB delegated 

authority. Comments are invited on the 

following: 

a. Whether the proposed collection of 

information is necessary for the proper 

performance of the Federal Reserve’s 

functions; including whether the 

information has practical utility; 

b. The accuracy of the Federal 

Reserve’s estimate of the burden of the 

proposed information collection, 

including the validity of the 

methodology and assumptions used; 

c. Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; and 

d. Ways to minimize the burden of 

information collection on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology. 

DATES: Comments must be submitted on 

or before January 3, 2011. 

ADDRESSES: You may submit comments, 

identified by FR Y–9C, FR Y–9LP, FR Y– 

11, FR 2314, FR Y–7N, or FR 2886b, by 

any of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• Fax: 202/452–3819 or 202/452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available from 

the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper form 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. 

Additionally, commenters should 

send a copy of their comments to the 

OMB Desk Officer 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: A 

copy of the PRA OMB submission, 

including the proposed reporting form 

and instructions, supporting statement, 

and other documentation will be placed 

into OMB’s public docket files, once 

approved. These documents will also be 

made available on the Federal Reserve 

Board’s public Web site at: http:// 

www.federalreserve.gov/boarddocs/ 

reportforms/review.cfm or may be 

requested from the agency clearance 

officer, whose name appears below. 

Cynthia Ayouch, Acting Federal 

Reserve Board Clearance Officer (202– 

452–3829), Division of Research and 

Statistics, Board of Governors of the 

Federal Reserve System, Washington, 

DC 20551. Telecommunications Device 

for the Deaf (TDD) users may contact 

(202–263–4869), Board of Governors of 

the Federal Reserve System, 

Washington, DC 20551. 

Proposal to approve under OMB 

delegated authority the extension for 

three years, with revision of the 

following reports: 

1. Report title: Financial Statements 

for Bank Holding Companies. 

Agency form number: FR Y–9C, FR Y– 

9LP. 

OMB control number: 7100–0128. 

Frequency: Quarterly. 

Reporters: Bank holding companies. 

Estimated annual reporting hours: FR 

Y–9C: 189,449; FR Y–9LP: 27,195. 

Estimated average hours per response: 

FR Y–9C: 45.15; FR Y–9LP: 5.25. 

Number of respondents: FR Y–9C: 

1,049; FR Y–9LP: 1,295. 


jlentini on DSKJ8SOYB1PROD with NOTICES
67722 Federal Register / Vol. 75, No. 212 / Wednesday, November 3, 2010 / Notices 

1 Interagency Statement on Meeting the Credit 

Needs of Creditworthy Small Business Borrowers, 

issued February 12, 2010, and Policy Statement on 

Prudent Commercial Real Estate Loan Workouts, 

issued October 30, 2009. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 1844(c)). Confidential treatment 

is not routinely given to the data in 

these reports. However, confidential 

treatment for the reporting information, 

in whole or in part, can be requested in 

accordance with the instructions to the 

form, pursuant to sections (b)(4) and 

(b)(6) of the Freedom of Information Act 

(5 U.S.C. 522(b)(4), (b)(6)). 

Abstract: The FR Y–9C and the FR Y– 

9LP are standardized financial 

statements for the consolidated bank 

holding company (BHC) and its parent. 

The FR Y–9 family of reports 

historically has been, and continues to 

be, the primary source of financial 

information on BHCs between on-site 

inspections. Financial information from 

these reports is used to detect emerging 

financial problems, to review 

performance and conduct preinspection analysis, to monitor and 

evaluate capital adequacy, to evaluate 

BHC mergers and acquisitions, and to 

analyze a BHC’s overall financial 

condition to ensure safe and sound 

operations. 

The FR Y–9C consists of standardized 

financial statements similar to the 

Federal Financial Institutions 

Examination Council (FFIEC) 

Consolidated Reports of Condition and 

Income (Call Reports) (FFIEC 031 & 041; 

OMB No. 7100–0036) filed by 

commercial banks. The FR Y–9C 

collects consolidated data from BHCs. 

The FR Y–9C is filed by top-tier BHCs 

with total consolidated assets of $500 

million or more. (Under certain 

circumstances defined in the General 

Instructions, BHCs under $500 million 

may be required to file the FR Y–9C.) 

The FR Y–9LP includes standardized 

financial statements filed quarterly on a 

parent company only basis from each 

BHC that files the FR Y–9C. In addition, 

for tiered BHCs, a separate FR Y–9LP 

must be filed for each lower tier BHC. 

Current actions: The Federal Reserve 

proposes the following revisions and 

clarifications to the FR Y–9C: (1) Break 

out by loan category of other loans and 

leases that are troubled debt 

restructurings for those that (a) are past 

due 30 days or more or in nonaccrual 

status or (b) are in compliance with 

their modified terms and clarify 

reporting of restructured troubled debt 

consumer loans, (2) break out other 

consumer loans into automobile loans 

and all other consumer loans in several 

schedules, (3) break out commercial 

mortgage-backed securities issued or 

guaranteed by U.S. Government 

agencies and sponsored agencies, (4) 

create a new Schedule HC–V, Variable 

Interest Entities, for reporting major 

categories of assets and liabilities of 

consolidated variable interest entities 

(VIEs), (5) break out loans and other real 

estate owned (OREO) information 

covered by FDIC loss-sharing 

agreements by loan and OREO category, 

(6) break out life insurance assets into 

data items for general account and 

separate account life insurance assets, 

(7) add new data items for the total 

assets of captive insurance and 

reinsurance subsidiaries, (8) add new 

income statement items for credit 

valuation adjustments and debit 

valuation adjustments included in 

trading revenues (for BHCs with total 

assets of $100 billion or more), (9) revise 

reporting instructions in the areas of 

construction lending, 1–4 family 

residential mortgage banking activities, 

and maturity and repricing data, and 

(10) collect expanded information on 

the quarterly-averages schedule. The 

proposed changes would be effective as 

of March 31, 2011. 

The Federal Reserve proposes to 

revise the FR Y–9LP to modify a data 

item collecting loans and leases of the 

parent restructured in compliance with 

modified terms. This data item would 

be redefined to exclude leases and to 

explicitly refer to restructured loans in 

this data item as troubled debt 

restructurings. The proposed changes 

would be effective as of March 31, 2011. 

For the March 31, 2011, reporting 

date, BHCs may provide reasonable 

estimates for any new or revised FR Y– 

9C or FR Y–9LP data 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 FR Y–9C or FR Y–9LP data 

items discussed in this proposal and the 

numbering of these data items should be 

regarded as preliminary. 

Proposed Revisions—FR Y–9C 

A. Proposed Revisions Related to Call 

Report Revisions 

The Federal Reserve proposes to make 

the following revisions to the FR Y–9C 

to parallel proposed changes to the Call 

Report. BHCs have commented that 

changes should be made to the FR Y– 

9C in a manner consistent with changes 

to the Call Report to reduce reporting 

burden. 

A.1 Troubled Debt Restructurings 

The Federal Reserve proposes that 

BHCs report additional detail on loans 

that have undergone troubled debt 

restructurings in Schedule HC–C, Loans 

and Lease Financing Receivables, and 

Schedule HC–N, Past Due and 

Nonaccrual Loans, Leases, and Other 

Assets. More specifically, Schedule HC– 

C, Memorandum item 1.b, Other loans 

and all leases, restructured and in 

compliance with modified terms, and 

Schedule HC–N, Memorandum item 1.b, 

restructured, Other loans and all leases, 

included in Schedule HC–N, would be 

broken out to provide information on 

restructured troubled loans for many of 

the loan categories reported in the 

bodies of Schedule HC–C and Schedule 

HC–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 aggregate, troubled debt 

restructurings for all FR Y–9C 

respondents have grown from $11.4 

billion at year-end 2007 to $106.2 

billion as of March 31, 2010. The 

proposed additional detail on troubled 

debt restructurings in Schedules HC–C 

and HC–N would enable the Federal 

Reserve to better understand the level of 

restructuring activity at BHCs, the 

categories of loans involved in this 

activity, and whether BHCs are working 

with their borrowers to modify and 

restructure loans. In particular, to 

encourage banking organizations to 

work constructively with their 

commercial borrowers, the banking 

agencies recently issued guidance on 

commercial real estate loan workouts 

and small business lending.1 While this 

guidance has explained the agencies’ 

expectations for prudent workouts, the 

Federal Reserve and the industry would 

benefit from additional reliable data 

outside of the examination process to 

assess restructuring activity at BHCs 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 BHC’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 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 212 / Wednesday, November 3, 2010 / Notices 67723 

2Accounting Standards Codification paragraph 

470–60–15–11. 

3For BHCs with foreign offices, the Memorandum 

items for restructured real estate loans would cover 

such loans in domestic offices. In addition, BHCs 

would also provide a breakdown of restructured 

commercial and industrial loans between U.S. and 

non-U.S. addressees. 

4As described later in this notice, the other 

consumer loans loan category is proposed to be 

added to Schedule HC–K beginning March 31, 

2011. 

5Formerly Statement of Financial Accounting 

Standards (SFAS) No. 166, Accounting for Transfers 

of Financial Assets (FAS 166). 

6Formerly SFAS No. 167, Amendments to FASB 

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

adversely affected by the recent 

recession. This affect is evidenced by 

the increase in past due and nonaccrual 

assets across virtually all asset classes 

over the past two to three years. 

Currently, BHCs report loans and 

leases restructured and in compliance 

with their modified terms (Schedule 

HC–C, 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 HC–N, 

Memorandum item 1, for past due and 

nonaccrual restructured troubled loans. 

The broad category of other loans in 

Schedule HC–C, Memorandum item 1.b, 

and Schedule HC–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 (GAAP) do not exempt 

restructurings of loans to individuals for 

household, family, and other personal 

expenditures. Therefore, if more detail 

were to be added to match the reporting 

of loans in Schedule HC–C and 

Schedule HC–N, the new data would 

provide the Federal Reserve with the 

level of information necessary to assess 

BHCs’ troubled debt restructurings to 

the same extent that other loan quality 

and performance indicators can be 

assessed. However, the Federal Reserve 

notes that, under GAAP, troubled debt 

restructurings do not include changes in 

lease agreements 2 and therefore propose 

to exclude leases from Schedule HC–C, 

Memorandum item 1, and from 

Schedule HC–N, Memorandum item 1, 

and strike the phrase ‘‘and all other 

leases’’ from the caption of these data 

items. 

Thus, the proposed breakdowns of 

existing Memorandum item 1.b in both 

Schedule HC–C and Schedule HC–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 

and all leases (including loans to 

individuals for household, family, and 

other personal expenditures). 3 If 

restructured loans in any category of 

loans, as defined in Schedule HC–C, 

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 would be 

itemized and described. 

Finally, Schedule HC–C, 

Memorandum item 1, and Schedule 

HC–N, Memorandum item 1, are 

intended to capture data on loans that 

have undergone troubled debt 

restructurings as that term is defined in 

GAAP. 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 

Federal Reserve proposes to revise the 

captions so that they clearly indicate 

that the loans to be reported in Schedule 

HC–C, Memorandum item 1, and 

Schedule HC–N, Memorandum item 1, 

are troubled debt restructurings. 

A.2 Auto Loans 

The Federal Reserve proposes to add 

a breakdown of the other consumer 

loans 4 or all other loans loan categories 

contained in five separate schedules in 

order to separately collect information 

on auto loans. The affected schedules 

would be Schedule HC–C, Loans and 

Lease Financing Receivables; Schedule 

HC–K, Quarterly Averages; Schedule 

HC–N, Past Due and Nonaccrual Loans, 

Leases, and Other Assets; Schedule HI, 

Income Statement; and Schedule HI–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 

BHCs. 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, commercial 

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 onequarter. 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 BHCs to the 

auto loan market, the Federal Reserve 

knows less about BHCs’ 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 5 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 Federal Reserve’s ability to 

estimate the extent to which BHCs were 

filling in the gap in auto lending left by 

the finance companies. 

Additional disclosure regarding 

consolidated auto loans on the FR Y–9C 

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 5, and ASU No. 2009–17 6, 

respectively. Until 2010, Schedule HC– 


jlentini on DSKJ8SOYB1PROD with NOTICES
67724 Federal Register / Vol. 75, No. 212 / Wednesday, November 3, 2010 / Notices 

7Formerly paragraph 22A of FIN 46(R), as 

amended by FAS 167. 

8 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/f3a70ca28d9f8210

VgnVCM200000bb42f00aRCRD.htm). 

S, Servicing, Securitization, and Asset 

Sale Activities, 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 HC–S will be grouped as part 

of other consumer loans or all other 

loans on Schedules HC–C, HC–K, HC– 

N, HI, and HI–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 

Federal Reserve 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 

FR Y–9C tends to mask any significant 

differences that may exist in the 

performance of these portfolios. For 

example, a BHC 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. 

The current blending of these divergent 

portfolios into a single loan category 

makes it difficult to adequately monitor 

consumer loan performance. 

A.3 Commercial Mortgage Backed 

Securities Issued or Guaranteed by U.S. 

Government Agencies and Sponsored 

Agencies 

The Federal Reserve proposes to split 

the existing data items on commercial 

mortgage-backed securities (CMBS) in 

Schedule HC–B, Securities, and 

Schedule HC–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 FR Y–9C on mortgage-backed 

securities (MBS) issued or guaranteed 

by U.S. Government agencies included 

both residential MBS and CMBS. 

However, in June 2009 when BHCs 

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 Federal Reserve 

was 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 than CMBS issued by 

others, banks generally should have the 

information necessary to separately 

report these two categories of CMBS in 

the proposed new data items in 

Schedules HC–B and HC–D. 

Thus, in Schedule HC–B, the Federal 

Reserve proposes to split both data item 

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

Other commercial MBS, into separate 

data items for those issued or 

guaranteed by U.S. Government 

agencies (new data items 4.c.(1)(a) and 

4.c.(2)(a)) and all other CMBS (new data 

items 4.c.(1)(b) and 4.c.(2)(b)). Similarly, 

in Schedule HC–D, existing data item 

4.d, Commercial MBS, would be split 

into separate data items for CMBS 

issued or guaranteed by U.S. 

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

and all other CMBS (data item 4.d.(2)). 

A.4 Variable Interest Entities 

In June 2009, the 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 

banking organization or other company 

determines when an entity that is 

insufficiently capitalized or is not 

controlled through voting or similar 

rights, for example a VIE, should be 

consolidated. For most banking 

organizations, ASU Nos. 2009–16 and 

2009–17 took effect January 1, 2010. 

Under ASC Topic 810, as amended, 

determining whether a BHC is required 

to consolidate a VIE depends on a 

qualitative analysis of whether that BHC 

has a ‘‘controlling financial interest’’ in 

the VIE and is therefore the primary 

beneficiary of the VIE. The analysis 

focuses on the BHC’s power over and 

interest in the VIE. With the removal of 

the QSPE concept from GAAP that was 

brought about in amended ASC Topic 

860, a BHC 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, BHCs 

began to consolidate certain previously 

off-balance-sheet securitization vehicles, 

asset-backed commercial paper 

conduits, and other structures. Going 

forward, BHCs 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, BHCs 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 Federal Reserve’s FR Y– 

9C instructional guidance advises 

institutions to report the assets and 

liabilities of these VIEs on the balance 

sheet (Schedule HC) in the category 

appropriate to the asset or liability. 

However, ASC paragraph 810–10–45– 

25 7 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.’’ 8 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 


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9See paragraphs A80 and A81 of FAS 167. 

associated risks in a variable interest 

entity.’’ 9 The Federal Reserve concurs 

that separate presentation would 

provide similar benefits to them and 

other FR Y–9C users, particularly since 

data on securitized assets that are 

reconsolidated is no longer reported on 

Schedule HC–S, Servicing, 

Securitization, and Asset Sale 

Activities. 

Consistent with the presentation 

requirements discussed above, the 

Federal Reserve proposes to add a new 

Schedule HC–V, Variable Interest 

Entities, to the FR Y–9C in which BHCs 

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 BHC. The 

following proposed categories for these 

assets and liabilities would include 

some of the same categories presented 

on the balance sheet (Schedule HC): (1) 

Cash and balances due from depository 

institutions, (2) Held-to-maturity 

securities, (3) Available-for-sale 

securities, (4) Securities purchased 

under agreements to resell, (5) Loans 

and leases held for sale, (6) Loans and 

leases, net of unearned income, (7) Less: 

Allowance for loan and lease losses, (8) 

Trading assets (other than derivatives), 

(9) Derivative assets, (10) Other real 

estate owned, (11) Other assets, (12) 

Securities sold under agreements to 

repurchase, (13) Derivative liabilities, 

(14) Other borrowed money (other than 

commercial paper), (15) Commercial 

paper, and (16) Other liabilities. These 

assets and liabilities would be presented 

separately for securitization trusts, 

asset-backed commercial paper 

conduits, and other VIEs. 

In addition, the Federal Reserve 

proposes to include two separate data 

items in new Schedule HC–V in which 

BHCs 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 BHC). 

The collection of this information 

would help the Federal Reserve 

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 HC–V would represent 

amounts included in the reporting 

BHC’s consolidated assets and liabilities 

reported on Schedule HC, Balance 

Sheet, i.e., after eliminating 

intercompany transactions. 

A.5 Assets Covered by FDIC LossSharing Agreements 

In March 2010, the banking agencies 

added a four-way breakdown of assets 

covered by loss-sharing agreements with 

the FDIC to Call Report Schedule RC– 

M, Memoranda (and a comparable fourway breakdown was added to FR Y–9C 

Schedule HC–M, Memoranda). FR Y–9C 

data items 6.a through 6.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 

data 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 Call Report Schedule 

RC–M by replacing the two data 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 data 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 data items for 

loans and leases covered by FDIC losssharing agreements and loans and leases 

with other U.S. Government guarantees. 

After reviewing the ABA’s 

recommendations, the Federal Reserve 

proposes to make substantively similar 

revisions to the FR Y–9C. Thus, the 

Federal Reserve proposes to create a 

breakdown of Schedule HC–M, data 

item 6.a, covered Loans and leases, that 

would include each category of Loans 

secured by real estate (in domestic 

offices) from Schedule HC–C, 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 HC–C, 

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 Federal 

Reserve proposes to create a breakdown 

of Schedule HC–M, data item 6.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. BHCs would 

also report the guaranteed portion of the 

total amount of covered other real estate 

owned. In Schedule HC–N, as suggested 

by the ABA for the Call Report, the 

Federal Reserve proposes to remove 

loans and leases covered by FDIC losssharing agreements from the scope of 

existing data items 11 and 11.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 data item 12, which 

would include a breakdown of these 

loans and leases using the same 

categories as in proposed revised data 

item 6.a of Schedule HC–M. 

A.6 Life Insurance Assets 

BHCs 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. BHCs 

currently report the aggregate amount of 

their life insurance assets in data item 

5 of Schedule HC–F, Other Assets, 

without regard to whether their 

holdings are general account or separate 

account policies. 

Many BHCs 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 


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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 BHCs 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 Federal Reserve to 

track BHCs’ holdings of both types of 

life insurance policies with their 

differing risk characteristics and 

changes in their carrying amounts 

resulting from their performance over 

time. Accordingly, the Federal Reserve 

proposes to split data item 5 of 

Schedule HC–F into two data items: 

data item 5.a, General account life 

insurance assets, and data item 5.b, 

Separate account life insurance assets. 

A.7 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 BHC to its captive insurer, and 

claims paid back to the BHC by the 

captive, are transacted on an 

intercompany basis, so there is no 

evidence of this type of self-insurance 

activity when a BHC prepares 

consolidated financial statements, 

including its FR Y–9C. The cash flows 

for a captive reinsurer’s transactions 

also are not transparent in a BHC’s 

consolidated financial statements. 

A number of BHCs own captive 

insurers or reinsurers, several of which 

were authorized to operate more than 10 

years ago. Some of the most common 

lines of business underwritten by BHC 

captive insurers are credit life, accident 

and health, and disability insurance and 

employee benefits coverage. 

Additionally, BHC captive reinsurance 

subsidiaries may underwrite private 

mortgage guaranty reinsurance or 

terrorism risk reinsurance. 

As part of their supervisory processes, 

the Federal Reserve has been following 

the proliferation of BHC 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 BHC from the activities of these 

subsidiaries. 

The Federal Reserve proposes to 

collect two new data items in Schedule 

HC–M, Memoranda, for captive 

insurance subsidiaries operated by 

BHCs: Data item 7.a, Total assets of 

captive insurance subsidiaries, and data 

item 7.b, Total assets of captive 

reinsurance subsidiaries. These new 

data items are not expected to be 

applicable to the vast majority of BHCs. 

When reporting the total assets of these 

captive subsidiaries in the proposed 

new data items, BHCs should measure 

the subsidiaries’ total assets before 

eliminating intercompany transactions 

between the consolidated subsidiary 

and other offices or subsidiaries of the 

consolidated BHC. 

A.8 Credit and Debit Valuation 

Adjustments Included in Trading 

Revenues 

BHCs 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 9.a through 9.e of Schedule HI, 

Income Statement. These revenue data 

items are reported net of credit 

adjustments made to the fair value of 

BHCs’ 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 BHC’s derivative assets due to changes 

in the creditworthiness of the BHC’s 

derivative counterparties and future 

exposures to those counterparties. In 

contrast, the debit valuation adjustment 

(DVA) reflects the effect of changes in 

the BHC’s own creditworthiness on its 

derivative liabilities. During the 

financial crisis, the recognition of both 

the CVA and the DVA had a material 

affect on overall trading revenues. 

Because of their potential materiality, 

information on these two adjustments is 

needed in order for the Federal Reserve 

to better understand the level and trend 

of BHCs’ trading revenues. 

The Federal Reserve therefore 

proposes to add two new Memorandum 

items to the existing Schedule HI 

Memorandum items for trading revenue. 

In new Memorandum item 9.f, BHCs 

would report the Impact on trading 

revenue of changes in the 

creditworthiness of the bank holding 

company’s derivatives counterparties on 

the bank holding company’s derivative 

assets (included in Memorandum items 

9.a through 9.e above). In new 

Memorandum item 9.g., BHCs would 

report the Impact on trading revenue of 

changes in the creditworthiness of the 

bank holding company on the bank 

holding company’s derivative liabilities 

(included in Memorandum items 9.a 

through 9.e above). Because derivatives 

held for trading are heavily 

concentrated in the very largest BHCs, 

these new data items would be reported 

only by BHCs with $100 billion or more 

in total assets. 

A.9 Instructional Revisions 

1. Construction Loans: 

BHCs report the amount of their 

Construction, land development, and 

other land loans in the appropriate loan 

subcategory of Schedule HC–C, data 

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 BHC changes the loan’s 

terms so that principal amortization is 

required. This may occur after 

completion of construction when the 

BHC renews or refinances the existing 

loan or enters into a new real estate loan 

with the original borrower. The Federal 

Reserve believes 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 data item 1.a of Schedule 

HC–C because it continues to exhibit the 

risk characteristics of a construction 

loan. 

The instructions for Schedule HC–C, 

data 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 


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in the real estate loan category in Schedule 

HC–C, data 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 holding company or is 

otherwise repaid, (2) the bank holding 

company 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 in 

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 Federal Reserve 

proposes 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 holding 

company.’’ This clarification is intended 

to ensure the appropriate categorization 

of such a loan in Schedule HC–C. Thus, 

the Federal Reserve proposes to revise 

the instructions for Schedule HC–C, 

data 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 HC–C, data 

item 1.a. 

2. Revisions Related to 1–4 Family 

Residential Mortgages Held for Trading 

in Schedule HC–P 

The Federal Reserve began collecting 

information in Schedule HC–P, 1–4 

Family Residential Mortgage Banking 

Activities in Domestic Offices, in 

September 2006. At that time, the 

instructions for Schedule HC–C, Loans 

and Lease Financing Receivables, were 

written to indicate 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 HC–P. In March 2008, the 

Federal Reserve provided instructional 

guidance establishing conditions under 

which BHCs were permitted to classify 

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

specified that loans classified as trading 

assets should be excluded from 

Schedule HC–C, Loans and Lease 

Financing Receivables, and reported 

instead in Schedule HC–D, Trading 

Assets and Liabilities (if the reporting 

threshold for this schedule were met). 

However, the Federal Reserve neglected 

to address the reporting treatment on 

Schedule HC–P of 1–4 family residential 

loans that met the conditions for 

classification as trading assets. 

Therefore, the Federal Reserve proposes 

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 HC–P. 

3. Maturity and Repricing Data for 

Assets and Liabilities at Contractual 

Ceilings and Floors 

BHCs report maturity and repricing 

data for debt securities (not held for 

trading) in Schedule HC–B, Securities. 

The Federal Reserve uses these data to 

assess, at a broad level, a BHC’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 

Federal Reserve 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 Federal Reserve agrees that an 

instruction revision is warranted, but 

the extent of the revision should be 

narrower than recommended by the 

ABA. The Federal Reserve believes that 

when a floating rate instrument is at its 

contractual floor or ceiling and the 

embedded option has intrinsic value to 

the BHC, 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 BHC’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 BHC because the loan’s yield to 

the BHC 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 


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embedded option represented by the 

floor has intrinsic value to the BHC and 

is a benefit to the BHC because the 

loan’s yield to the BHC is higher than 

what it would have been without the 

floor. 

Accordingly, the Federal Reserve 

proposes to revise the instructions for 

reporting maturity and repricing data in 

Schedule HC–B. 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). 

B. Proposed Revisions Not Related to 

Call Report Revisions 

The Federal Reserve proposes to make 

the following revisions to the FR Y–9C 

effective as of March 31, 2011. These 

proposed revisions are not related to the 

revisions proposed to the Call Report. 

B.1 Expanding Information Collected 

on Schedule HC–K, Quarterly Averages 

The Federal Reserve proposes to 

expand the information collected on 

Schedule HC–K, Quarterly Averages, to 

collect more detailed breakdowns on 

securities and loan portfolios, consistent 

with information currently reported by 

commercial banks on Call Report 

Schedule RC–K, Quarterly Averages. 

Specifically, Schedule HC–K, data item 

2, Securities, would be broken out to 

provide information on (1) U.S. 

Treasury securities and U.S. 

Government agency obligations 

(excluding mortgage-backed securities), 

(2) Mortgage-backed securities, and (3) 

All other securities. Also, new loan 

categories would be added to Schedule 

HC–K, data item 6, Loans, to provide 

information on (1) Loans to finance 

agricultural production and other loans 

to farmers, (2) Commercial and 

industrial loans, and (3) Loans to 

individuals for household, family, and 

other personal expenditures, with a 

breakdown of (a) Credit cards, (b) Auto 

loans, and (c) Other. 

A more granular breakdown on 

securities and loan portfolios would 

facilitate analysis when the value or size 

of a firm’s assets has changed or 

fluctuated over a quarter, particularly 

when used to calculate net charge-off, 

growth, and return on average asset 

rates. Disclosure of this information 

would also be consistent with firms’ 

public Securities and Exchange 

Commission (SEC) filings, where net 

charge-off rates by product type are 

calculated using quarterly average 

balances. 

Proposed Revisions—FR Y–9LP 

The Federal Reserve proposes to make 

the following revision to the FR Y–9LP 

effective as of March 31, 2011. 

Troubled Debt Restructurings 

To be consistent with revisions 

proposed for the FR Y–9C, the Federal 

Reserve proposes to modify the 

instructions for Schedule PC–B— 

Memoranda item 8, Loans and leases of 

the parent restructured in compliance 

with modified terms, to clearly indicate 

that the loans to be reported in this data 

item should be troubled debt 

restructurings and to exclude leases. 

Also the phrase ‘‘and leases’’ would be 

stricken from the caption of this data 

item. Under GAAP, troubled debt 

restructurings do not include changes in 

lease agreements. Also consistent with 

the proposed change to the FR Y–9C, 

the Federal Reserve proposes to revise 

the instructions for this data item to 

include (currently excluded) loans to 

individuals for household, family, and 

other personal expenditures and all 

loans secured by 1–4 family residential 

properties whose terms have been 

modified in troubled debt 

restructurings. 

2. Report title: Financial Statements 

for Nonbank Subsidiaries of U.S. Bank 

Holding Companies. 

Agency form number: FR Y–11. 

OMB control number: 7100–0244. 

Frequency: Quarterly and annually. 

Reporters: Bank holding companies. 

Annual reporting hours: FR Y–11 

(quarterly): 15,966; FR Y–11 (annual): 

2,768. 

Estimated average hours per response: 

FR Y–11 (quarterly): 6.80; FR Y–11 

(annual): 6.80. 

Number of respondents: FR Y–11 

(quarterly): 587; FR Y–11 (annual): 407. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 1844(c)). Confidential treatment 

is not routinely given to the data in 

these reports. However, confidential 

treatment for the reporting information, 

in whole or in part, can be requested in 

accordance with the instructions to the 

form, pursuant to sections (b)(4), (b)(6) 

and (b)(8) of the Freedom of Information 

Act [5 U.S.C. 522(b)(4), (b)(6) and (b)(8)]. 

Abstract: The FR Y–11 reports collect 

financial information for individual 

non-functionally regulated U.S. 

nonbank subsidiaries of domestic bank 

holding companies (BHCs). BHCs file 

the FR Y–11 on a quarterly or annual 

basis according to filing criteria. The FR 

Y–11 data are used with other BHC data 

to assess the condition of BHCs that are 

heavily engaged in nonbanking 

activities and to monitor the volume, 

nature, and condition of their 

nonbanking operations. 

Current Actions: The Federal Reserve 

proposes to revise the FR Y–11 

reporting form and instructions to 

clarify the reporting of the net change in 

fair values of financial instruments 

accounted for under a fair value option. 

The Federal Reserve proposes to revise 

the item caption for Schedule IS, 

Income Statement, Memorandum item 

2, Net change in fair values of financial 

instruments accounted for under a fair 

value option, by adding the 

parenthetical (included in items 5.a.(3), 

5.a.(6), 5.a.(10) and 5.b. above). 

Schedule IS, Memoranda item 2 

instructions currently state that 

respondents only include net change in 

fair value included in noninterest 

income from nonrelated organizations. 

However, respondents should also 

include the net change in fair value 

included in trading revenue, net 

servicing fees, and other noninterest 

income from nonrelated and related 

organizations. The Federal Reserve 

would also make the corresponding 

instructional revision. 

To be consistent with revisions 

proposed to the FR Y–9C, the Federal 

Reserve also proposes to clarify the 

caption for Schedule BS–A, Loans and 

Lease Financing Receivables, data item 

7.d, Restructured loans and leases, to 

clearly indicate that the loans to be 

reported in this item should be troubled 

debt restructurings and to exclude 

leases. Under generally accepted 

accounting principles, troubled debt 

restructurings do not include changes in 

lease agreements. Also consistent with 

the proposed change to the FR Y–9C, 

The Federal Reserve proposes to revise 

the instructions for this item to include 

(currently excluded) loans to 

individuals for household, family, and 

other personal expenditures, and all 

loans secured by 1–4 family residential 

properties whose terms have been 

modified in troubled debt 

restructurings. These revisions would be 

effective as of March 31, 2011. 

3. Report title: Financial Statements of 

Foreign Subsidiaries of U.S. Banking 

Organizations. 

Agency form number: FR 2314. 

OMB control number: 7100–0073. 

Frequency: Quarterly and annually. 


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Reporters: Foreign subsidiaries of U.S. 

state member banks, bank holding 

companies, and Edge or agreement 

corporations. 

Annual reporting hours: FR 2314 

(quarterly): 16,394; FR 2314 (annual): 

3,379. 

Estimated average hours per response: 

FR 2314 (quarterly): 6.60; FR 2314 

(annual): 6.60. 

Number of respondents: FR 2314 

(quarterly): 621; FR 2314 (annual): 512. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 324, 602, 625, and 1844(c)). 

Confidential treatment is not routinely 

given to the data in these reports. 

However, confidential treatment for the 

reporting information, in whole or in 

part, can be requested in accordance 

with the instructions to the form, 

pursuant to sections (b)(4), (b)(6) and 

(b)(8) of the Freedom of Information Act 

[5 U.S.C. 522(b)(4) (b)(6) and (b)(8)]. 

Abstract: The FR 2314 reports collect 

financial information for nonfunctionally regulated direct or indirect 

foreign subsidiaries of U.S. state 

member banks (SMBs), Edge and 

agreement corporations, and BHCs. 

Parent organizations (SMBs, Edge and 

agreement corporations, or BHCs) file 

the FR 2314 on a quarterly or annual 

basis according to filing criteria. The FR 

2314 data are used to identify current 

and potential problems at the foreign 

subsidiaries of U.S. parent companies, 

to monitor the activities of U.S. banking 

organizations in specific countries, and 

to develop a better understanding of 

activities within the industry, in 

general, and of individual institutions, 

in particular. 

Current actions: The Federal Reserve 

proposes to revise the FR 2314 reporting 

form and instructions to clarify the 

reporting of the net change in fair values 

of financial instruments accounted for 

under a fair value option. The Federal 

Reserve proposes to revise the item 

caption for Schedule IS, Income 

Statement, Memorandum item 2, Net 

change in fair values of financial 

instruments accounted for under a fair 

value option, by adding the 

parenthetical (included in items 5.a.(3), 

5.a.(6), 5.a.(10) and 5.b. above). 

Schedule IS, Memoranda item 2 

instructions currently state that 

respondents only include net change in 

fair value included in noninterest 

income from nonrelated organizations. 

However, respondents should also 

include the net change in fair value 

included in trading revenue, net 

servicing fees, and other noninterest 

income from nonrelated and related 

organizations. The Federal Reserve 

would also make the corresponding 

instructional revision. 

To be consistent with revisions 

proposed to the FR Y–9C, the Federal 

Reserve also proposes to clarify the 

caption for Schedule BS–A, Loans and 

Lease Financing Receivables, data item 

7.d, Restructured loans and leases, to 

clearly indicate that the loans to be 

reported in this item should be troubled 

debt restructurings and to exclude 

leases. Under generally accepted 

accounting principles, troubled debt 

restructurings do not include changes in 

lease agreements. Also consistent with 

the proposed change to the FR Y–9C, 

The Federal Reserve proposes to revise 

the instructions for this item to include 

(currently excluded) loans to 

individuals for household, family, and 

other personal expenditures, and all 

loans secured by 1–4 family residential 

properties whose terms have been 

modified in troubled debt 

restructurings. These revisions would be 

effective as of March 31, 2011. 

4. Report title: Financial Statements of 

U.S. Nonbank Subsidiaries Held by 

Foreign Banking Organizations. 

Agency form number: FR Y–7N. 

OMB control number: 7100–0125. 

Frequency: Quarterly and annually. 

Reporters: Foreign banking 

organizations (FBOs). 

Annual reporting hours: FR Y–7N 

(quarterly): 4,978; FR Y–7N (annual): 

1,299. 

Estimated average hours per response: 

FR Y–7N (quarterly): 6.80; FR Y–7N 

(annual): 6.80. 

Number of respondents: FR Y–7N 

(quarterly): 183; FR Y–7N (annual): 191. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 1844(c), 3106(c), and 3108). 

Confidential treatment is not routinely 

given to the data in these reports. 

However, confidential treatment for 

information, in whole or in part, on any 

of the reporting forms can be requested 

in accordance with the instructions to 

the form, pursuant to sections (b)(4) and 

(b)(6) of the Freedom of Information Act 

[5 U.S.C. 522(b)(4) and (b)(6)]. 

Abstract: The FR Y–7N collects 

financial information for nonfunctionally regulated U.S. nonbank 

subsidiaries held by FBOs other than 

through a U.S. bank holding company 

(BHC), U.S. financial holding company 

(FHC) or U.S. bank. FBOs file the FR Y– 

7N on a quarterly or annual basis. 

Current actions: The Federal Reserve 

proposes to revise the FR Y–7N 

reporting form and instructions to 

clarify the reporting of the net change in 

fair values of financial instruments 

accounted for under a fair value option. 

The Federal Reserve proposes to revise 

the item caption for Schedule IS, 

Income Statement, Memoranda item 1, 

Net change in fair values of financial 

instruments accounted for under a fair 

value option, by adding the 

parenthetical (included in items 5.a.(3), 

5.a.(6), 5.a.(10) and 5.b. above). 

Schedule IS, Memoranda item 1, 

instructions currently state that 

respondents only include net change in 

fair value included in noninterest 

income from nonrelated organizations. 

However, respondents should include 

the net change in fair value included in 

trading revenue, net servicing fees, and 

other noninterest income from 

nonrelated and related organizations. 

The Federal Reserve would also make 

the corresponding instructional 

revision. 

To be consistent with revisions 

proposed to the FR Y–9C, the Federal 

Reserve also proposes to clarify the 

caption for Schedule BS–A, Loans and 

Lease Financing Receivables, data item 

7.d, Restructured loans and leases, to 

clearly indicate that the loans to be 

reported in this data item should be 

troubled debt restructurings and to 

exclude leases. Under generally 

accepted accounting principles, 

troubled debt restructurings do not 

include changes in lease agreements. 

Also consistent with the proposed 

change to the FR Y–9C, The Federal 

Reserve proposes to revise the 

instructions for this item to include 

(currently excluded) loans to 

individuals for household, family, and 

other personal expenditures, and all 

loans secured by 1–4 family residential 

properties whose terms have been 

modified in troubled debt 

restructurings. These revisions would be 

effective as of March 31, 2011. 

5. Report title: Consolidated Report of 

Condition and Income for Edge and 

Agreement Corporations. 

Agency form number: FR 2886b. 

OMB control number: 7100–0086. 

Frequency: Quarterly. 

Reporters: Edge and agreement 

corporations. 

Annual reporting hours: 1,679. 

Estimated average hours per response: 

15.15 banking corporations, 9.60 

investment corporations. 

Number of respondents: 13 banking 

corporations, 42 investment 

corporations. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 602 and 625). Schedules RC–M 

(with the exception of item 3) and RC– 

V are held as confidential pursuant to 

section (b)(4) of the Freedom of 

Information Act (5 U.S.C. 552 (b)(4)). 

Abstract: The mandatory FR 2886b 

comprises a balance sheet, income 


jlentini on DSKJ8SOYB1PROD with NOTICES
67730 Federal Register / Vol. 75, No. 212 / Wednesday, November 3, 2010 / Notices 

statement, two schedules reconciling 

changes in capital and reserve accounts, 

and 11 supporting schedules and it 

parallels the Consolidated Reports of 

Condition and Income (Call Report) 

(FFIEC 031 and FFIEC 041; OMB No. 

7100–0036) that commercial banks file. 

The Federal Reserve uses the data 

collected on the FR 2886b to supervise 

Edge corporations, identify present and 

potential problems, and monitor and 

develop a better understanding of 

activities within the industry. 

Current actions: The Federal Reserve 

proposes to revise the FR 2886b 

reporting form and instructions to 

clarify the reporting of the net change in 

fair values of financial instruments 

accounted for under a fair value option. 

The Federal Reserve proposes to revise 

the item caption for Schedule RI, 

Income Statement, Memoranda item 1, 

Net change in fair values of financial 

instruments accounted for under a fair 

value option, by changing the 

parenthetical from (included in item 

5.a.(6) above) to (included in items 

5.a.(6) and 5.b. above). Schedule RI, 

Memoranda item 1 currently states that 

respondents only include net change in 

fair value included in noninterest 

income from nonrelated organizations. 

However, respondents may elect to 

apply the fair value option to 

instruments with nonrelated and related 

organizations. The Federal Reserve 

would also make the corresponding 

instructional revision. 

To be consistent with revisions 

proposed for the FR Y–9C, the Federal 

Reserve also proposes to revise the 

caption for Schedule RC–N, Past Due 

and Nonaccrual Loans, Leases, and 

Other Assets, Memorandum item 1, 

Restructured loans and leases, to clearly 

indicate that the loans to be reported in 

this item should be troubled debt 

restructurings and to exclude leases. 

Under generally accepted accounting 

principles, troubled debt restructurings 

do not include changes in lease 

agreements. Also consistent with the 

proposed change to the FR Y–9C, the 

Federal Reserve proposes to revise the 

instructions for this item to include 

(currently excluded) loans to 

individuals for household, family, and 

other personal expenditures, and all 

loans secured by 1–4 family residential 

properties whose terms have been 

modified in troubled debt 

restructurings. These revisions would be 

effective as of March 31, 2011. 

Proposal to approve under OMB 

delegated authority the extension for 

three years, without revision of the 

following reports: 

1. Report title: Financial Statements 

for Bank Holding Companies. 

Agency form number: FR Y–9SP, FR 

Y–9ES, and FR Y–9CS. 

OMB control number: 7100–0128. 

Frequency: Quarterly and annually. 

Reporters: Bank holding companies. 

Annual reporting hours: FR Y–9SP: 

45,209; FR Y–9ES: 44; FR Y–9CS: 400. 

Estimated average hours per response: 

FR Y–9SP: 5.40; FR Y–9ES: 30 minutes; 

FR Y–9CS: 30 minutes. 

Number of respondents: FR Y–9SP: 

4,186; FR Y–9ES: 87; FR Y–9CS: 200. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 1844(c)). Confidential treatment 

is not routinely given to the data in 

these reports. However, confidential 

treatment for the reporting information, 

in whole or in part, can be requested in 

accordance with the instructions to the 

form, pursuant to sections (b)(4) and 

(b)(6) of the Freedom of Information Act 

(5 U.S.C. 522(b)(4), (b)(6)). 

Abstract: The FR Y–9SP is a parent 

company only financial statement filed 

by smaller BHCs. Respondents include 

BHCs with total consolidated assets of 

less than $500 million. This form is a 

simplified or abbreviated version of the 

more extensive parent company only 

financial statement for large BHCs (FR 

Y–9LP). This report is designed to 

obtain basic balance sheet and income 

information for the parent company, 

information on intangible assets, and 

information on intercompany 

transactions. 

The FR Y–9ES collects financial 

information from ESOPs that are also 

BHCs on their benefit plan activities. It 

consists of four schedules: Statement of 

Changes in Net Assets Available for 

Benefits, Statement of Net Assets 

Available for Benefits, Memoranda, and 

Notes to the Financial Statements. The 

FR Y–9CS is a supplemental report that 

may be utilized to collect additional 

information deemed to be critical and 

needed in an expedited manner from 

BHCs. The information is used to assess 

and monitor emerging issues related to 

BHCs. It is intended to supplement the 

FR Y–9 reports, which are used to 

monitor BHCs between on-site 

inspections. The data items of 

information included on the 

supplement may change as needed. 

2. Report title: Abbreviated Financial 

Statements of U.S. Nonbank 

Subsidiaries of U.S. Bank Holding 

Companies. 

Agency form number: FR Y–11S. 

OMB control number: 7100–0244. 

Frequency: Annually. 

Reporters: Bank holding companies. 

Annual reporting hours: 774. 

Estimated average hours per response: 

1.0. 

Number of respondents: 774. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 1844(c)). Confidential treatment 

is not routinely given to the data in 

these reports. However, confidential 

treatment for the reporting information, 

in whole or in part, can be requested in 

accordance with the instructions to the 

form, pursuant to sections (b)(4), (b)(6) 

and (b)(8) of the Freedom of Information 

Act [5 U.S.C. 522(b)(4)]. 

Abstract: The FR Y–11S is an 

abbreviated reporting form that collects 

four data items: Net income, total assets, 

equity capital, and total off-balancesheet data items. The FR Y–11S is filed 

annually, as of December 31, by top-tier 

BHCs for each individual nonbank 

subsidiary (that does not meet the 

criteria for filing the detailed report) 

with total assets of at least $50 million, 

but less than $250 million, or with total 

assets greater than 1 percent of the total 

consolidated assets of the top-tier 

organization. 

3. Report title: Abbreviated Financial 

Statements of Foreign Subsidiaries of 

U.S. Banking Organizations. 

Agency form number: FR 2314S. 

OMB control number: 7100–0073. 

Frequency: Annually. 

Reporters: U.S. state member banks, 

bank holding companies, and Edge or 

agreement corporations. 

Annual reporting hours: 787. 

Estimated average hours per response: 

1.0. 

Number of respondents: 787. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 324, 602, 625, and 1844(c)). 

Confidential treatment is not routinely 

given to the data in these reports. 

However, confidential treatment for the 

reporting information, in whole or in 

part, can be requested in accordance 

with the instructions to the form, 

pursuant to sections (b)(4), (b)(6) and 

(b)(8) of the Freedom of Information Act 

[5 U.S.C. 522(b)(4), (b)(6) and (b)(8)]. 

Abstract: The FR 2314S is an 

abbreviated reporting form that collects 

four data items: Net income, total assets, 

equity capital, and total off-balancesheet data items. The FR 2314S is filed 

annually, as of December 31, for each 

individual subsidiary (that does not 

meet the criteria for filing the detailed 

report) with assets of at least $50 

million but less than $250 million, or 

with total assets greater than 1 percent 

of the total consolidated assets of the 

top-tier organization. 

4. Report title: Financial Reports of 

Foreign Banking Organizations. 

Agency form number: FR Y–7NS, FR 

Y–7Q. 

OMB control number: 7100–0125. 

Frequency: Annually and quarterly. 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 212 / Wednesday, November 3, 2010 / Notices 67731 

1The ten-year recovery rate is based on the pro 

forma income statement for Federal Reserve priced 

services published in the Board’s Annual Report. 

Effective December 31, 2006, the Reserve Banks 

implemented Statement of Financial Accounting 

Standards (SFAS) No. 158: Employers’ Accounting 

for Defined Benefit Pension and Other 

Postretirement Plans [Accounting Standards 

Codification (ASC) 715 Compensation—Retirement 

Benefits], which resulted in recognizing a reduction 

in equity related to the priced services’ benefit 

plans. Including this reduction in equity results in 

cost recovery of 93.0 percent for the ten-year period. 

This measure of long-run cost recovery is also 

published in the Board’s Annual Report. 

Reporters: Foreign banking 

organizations (FBOs). 

Annual reporting hours: FR Y–7NS: 

237; FR Y–7Q (quarterly): 340; FR Y–7Q 

(annual): 111. 

Estimated average hours per response: 

FR Y–7NS: 1.0; FR Y–7Q (quarterly): 

1.25; FR Y–7Q (annual): 1.0. 

Number of respondents: FR Y–7NS: 

237; FR Y–7Q (quarterly): 68; FR Y–7Q 

(annual): 111. 

General description of report: This 

information collection is mandatory (12 

U.S.C. 1844(c), 3106(c), and 3108). 

Confidential treatment is not routinely 

given to the data in these reports. 

However, confidential treatment for 

information, in whole or in part, on any 

of the reporting forms can be requested 

in accordance with the instructions to 

the form, pursuant to sections (b)(4) and 

(b)(6) of the Freedom of Information Act 

[5 U.S.C. 522(b)(4) and (b)(6)]. 

Abstract: The FR Y–7NS collect 

financial information for nonfunctionally regulated U.S. nonbank 

subsidiaries held by foreign banking 

organizations (FBOs) other than through 

a U.S. bank holding company (BHC), 

U.S. financial holding company (FHC), 

or U.S. bank. The FR Y–7NS is filed 

annually, as of December 31, by top-tier 

FBOs for each individual nonbank 

subsidiary (that does not meet the filing 

criteria for filing the detailed report) 

with total assets of at least $50 million, 

but less than $250 million. The FR Y– 

7Q collects consolidated regulatory 

capital information from all FBOs either 

quarterly or annually. FBOs that have 

effectively elected to become FHCs file 

the FR Y–7Q quarterly. All other FBOs 

(those that have not elected to become 

FHCs) file the FR Y–7Q annually. 

Board of Governors of the Federal Reserve 

System, October 29, 2010. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2010–27698 Filed 11–2–10; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

Change in Bank Control Notices; 

Acquisitions of Shares of a Bank or 

Bank Holding Company 

The notificants listed below have 

applied under the Change in Bank 

Control Act (12 U.S.C. 1817(j)) and 

§ 225.41 of the Board’s Regulation Y (12 

CFR 225.41) to acquire shares of a bank 

or bank holding company. The factors 

that are considered in acting on the 

notices are set forth in paragraph 7 of 

the Act (12 U.S.C. 1817(j)(7)). 

The notices are available for 

immediate inspection at the Federal 

Reserve Bank indicated. The notices 

also will be available for inspection at 

the offices of the Board of Governors. 

Interested persons may express their 

views in writing to the Reserve Bank 

indicated for that notice or to the offices 

of the Board of Governors. Comments 

must be received not later than 

November 16, 2010. 

A. Federal Reserve Bank of Chicago 

(Colette A. Fried, Assistant Vice 

President) 230 South LaSalle Street, 

Chicago, Illinois 60690–1414: 

1. Robert John Dentel, Victor, Iowa, 

and Mary P. Howell, Ames, Iowa; each 

to control 25 percent or more of the 

voting shares of Dentel Bancorporation, 

and thereby indirectly control of Victor 

State Bank, both of Victor, Iowa; 

Corydon State Bank, Corydon, Iowa; 

First State Bank of Colfax, Colfax, Iowa; 

Maxwell State Bank, Maxwell, Iowa; 

Pocahontas State Bank, Pocahontas, 

Iowa; and Panora State Bank, Panora, 

Iowa. 

Board of Governors of the Federal Reserve 

System, October 28, 2010. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. 2010–27683 Filed 11–2–10; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

[Docket No. OP 1396] 

Federal Reserve Bank Services 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Notice. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) has 

approved the private sector adjustment 

factor (PSAF) for 2011 of $39.5 million 

and the 2011 fee schedules for Federal 

Reserve priced services and electronic 

access. These actions were taken in 

accordance with the requirements of the 

Monetary Control Act of 1980, which 

requires that, over the long run, fees for 

Federal Reserve priced services be 

established on the basis of all direct and 

indirect costs, including the PSAF. The 

Board has also approved maintaining 

the current earnings credit rate on 

clearing balances. 

DATES: The new fee schedules and 

earnings credit rate become effective 

January 3, 2011. 

FOR FURTHER INFORMATION CONTACT: For 

questions regarding the fee schedules: 

Jeffrey C. Marquardt, Deputy Director, 

(202/452–2360); Jeffrey S.H. Yeganeh, 

Manager, Retail Payments, (202/728– 

5801); Linda S. Healey, Senior Financial 

Services Analyst, (202/452–5274), 

Division of Reserve Bank Operations 

and Payment Systems. For questions 

regarding the PSAF and earnings credits 

on clearing balances: Gregory L. Evans, 

Deputy Associate Director, (202/452– 

3945); Brenda L. Richards, Manager, 

Financial Accounting, (202/452–2753); 

or Jonathan C. Mueller, Senior Financial 

Analyst, (202/530–6291), Division of 

Reserve Bank Operations and Payment 

Systems. For users of 

Telecommunications Device for the Deaf 

(TDD) only, please call 202/263–4869. 

Copies of the 2011 fee schedules for the 

check service are available from the 

Board, the Federal Reserve Banks, or the 

Reserve Banks’ financial services web 

site at http://www.frbservices.org. 

SUPPLEMENTARY INFORMATION: 

I. Private Sector Adjustment Factor 

And Priced Services 

A. Overview—Each year, as required 

by the Monetary Control Act of 1980, 

the Reserve Banks set fees for priced 

services provided to depository 

institutions. These fees are set to 

recover, over the long run, all direct and 

indirect costs and imputed costs, 

including financing costs, taxes, and 

certain other expenses, as well as the 

return on equity (profit) that would have 

been earned if a private business firm 

provided the services. The imputed 

costs and imputed profit are collectively 

referred to as the PSAF. Similarly, 

investment income is imputed and 

netted with related direct costs 

associated with clearing balances to 

estimate net income on clearing 

balances (NICB). From 2000 through 

2009, the Reserve Banks recovered 97.8 

percent of their total expenses 

(including imputed costs) and targeted 

after-tax profits or return on equity 

(ROE) for providing priced services.1

Table 1 summarizes 2009, 2010 

estimated, and 2011 budgeted costrecovery rates for all priced services. 

Cost recovery is estimated to be 102.9 

percent in 2010 and budgeted to be 

102.0 percent in 2011. The check 

service accounts for slightly over half of 

the total cost of priced services and thus 


jlentini on DSKJ8SOYB1PROD with NOTICES