[Federal Register Volume 62, Number 191 (Thursday, October 2, 1997)]
[Notices]
[Pages 51715-51720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26131]
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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
AGENCIES: 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: Notice and request for comment.
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SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the FDIC
(the ``agencies'') may not conduct or sponsor, and the respondent is
not required to respond to, and information collection that has been
extended, revised, or implemented on or after October 1, 1995, 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 proposed revisions to 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 should modify the
proposed revisions prior to giving its final approval. The agencies
will then submit the revisions to OMB for review and approval.
DATES: Comments must be submitted on or before December 1, 1997.
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: Written comments should be submitted to the Communications
Division, Third Floor, Office of the Comptroller of the Currency, 250 E
Street, S.W., Washington, D.C. 20219; Attention: Paperwork Docket No.
1557-0081 (FAX number (202) 874-5274; Internet address:
REGS.comments@occ.treas.gov). Comments will be available for inspection
and photocopying at that address.
Board: Written comments should be addressed to Mr. William W.
Wiles, Secretary, Board of Governors of the Federal Reserve System,
20th and C Streets, N.W., Washington, D.C. 20551, or delivered to the
Board's mail room between 8:45 a.m. and 5:15 p.m., and to the security
control room outside of those hours. Both the mail room and the
security control room are accessible from the courtyard entrance on
20th Street between Constitution Avenue and C Street, N.W. Comments
received may be inspected in room M-P-500 between 9:00 a.m. and 5:00
p.m., except as provided in section 261.8 of the Board's Rules
Regarding Availability of Information, 12 CFR 261.8(a).
FDIC: Written comments should be addressed to Robert E. Feldman,
Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance
Corporation, 550 17th Street, N.W., Washington, D.C. 20429. 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 7:00
a.m. and 5:00 p.m. (Fax number: (202) 898-3838; Internet address:
comments@fdic.gov).
[[Page 51716]]
Comments may be inspected and photocopied in the FDIC Public
Information Center, Room 100, 801 17th Street, N.W., Washington, D.C.,
between 9:00 a.m. and 4:30 p.m. on business days.
A copy of the comments may also be submitted to the OMB desk
officer for the agencies: Alexander Hunt, Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 3208, Washington, D.C. 20503.
FOR FURTHER INFORMATION CONTACT:
A copy of the proposed revisions to the collections of information may
be requested from any of the agency clearance officers whose names
appear below.
OCC: Jessie Gates, OCC Clearance Officer, (202) 874-5090,
Legislative and Regulatory Activities Division, Office of the
Comptroller of the Currency, 250 E Street, S.W., Washington, D.C.
20219.
Board: Mary M. McLaughlin, 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 contact Diane
Jenkins, (202) 452-3544, Board of Governors of the Federal Reserve
System, 20th and C Streets, NW., Washington, DC 20551.
FDIC: Steven F. Hanft, FDIC Clearance Officer, (202) 898-3907,
Office of the Executive Secretary, Federal Deposit Insurance
Corporation, 550 17th Street NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION: Proposal to revise the following currently
approved collections of information:
Title: Consolidated Reports of Condition and Income.
Form Number: FFIEC 031, 032, 033,034.\1\
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\1\ The FFIEC 031 report form is filed by banks with domestic
and foreign offices. The FFIEC 032 report form is filed by banks
with domestic offices only and total assets of $300 million or more.
The FFIEC 033 report form is filed by banks with domestic offices
only and total assets of $100 million or more but less than $300
million. The FFIEC 034 report form is filed by banks with domestic
offices only and total assets of less than $100 million.
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For OCC
OMB Number: 1557-0081.
Frequency of Response: Quarterly.
Affected Public: National Banks.
Estimated Number of Respondents: 2,700 national banks.
Estimated Time per Response: 40.34 burden hours.
Estimated Total Annual Burden: 435,672 burden hours.
For Board
OMB Number: 7100-0036.
Frequency of Response: Quarterly.
Affected Public: State Member Banks.
Estimated Number of Respondents: 1,002 state member banks.
Estimated Time per Response: 46.46 burden hours.
Estimated Total Annual Burden: 186,215 burden hours.
For FDIC
OMB Number: 3064-0052.
Frequency of Response: Quarterly.
Affected Public: Insured State Nonmember Commercial and Savings
Banks.
Estimated Number of Respondents: 6,374 insured state nonmember
commercial and savings banks.
Estimated Time per Response: 30.27 burden hours.
Estimated Total Annual Burden: 771,859 burden hours.
The estimated time per response is an average which varies by
agency because of differences in the composition of the banks under
each agency's supervision (e.g., size distribution of banks, types of
activities in which they are engaged, and number of banks with foreign
offices). The time per response for a bank is estimated to range from
15 to 400 hours, depending on individual circumstances.
General Description of Report
This information collection is 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). Except
for select sensitive items, this information collection is not given
confidential treatment. Small businesses (i.e., small banks) are
affected.
Abstract
Consolidated Reports of Condition and Income are filed quarterly
with the agencies for their use in monitoring the condition and
performance of reporting banks and the industry as a whole. The reports
are also used to calculate banks' deposit insurance and Financing
Corporation assessments and for monetary policy and other public policy
purposes.
Current Actions
The reporting frequency for the ``Preferred deposits'' item would
be changed from quarterly to annually and the level of detail in the
trading assets and liabilities schedule generally applicable only to
larger banks would be reduced. Existing items for ``high-risk mortgage
securities'' and ``structured notes'' would be replaced by items for
``mortgage-backed securities backed by closed-end first lien 1-4 family
residential mortgages'' and ``other securities'' whose price volatility
in response to specified interest rate changes exceeds a specified
threshold level. New items would be added for reporting on transactions
with affiliates, low level recourse transactions, and (on the FFIEC 031
and 032 report forms only) capital requirements for market risk. The
reporting requirements relating to allowances and provisions for credit
losses would be clarified. For banks with foreign offices, holdings of
available-for-sale securities in the domestic office assets and
liabilities schedule would begin to be reported on a cost basis rather
than at fair value. The categorization of securitized consumer loans
for the purchase of light trucks and vans for personal use in two
Memorandum items collected annually from larger banks also would be
revised.
Type of Review: Revision.
The proposed revisions to the Consolidated Reports of Condition and
Income (Call Report) that are discussed below have been approved for
publication by the FFIEC. Unless otherwise indicated, the agencies
would implement these proposed Call Report changes as of the March 31,
1998, report date and the revisions would apply to all four sets of
report forms (FFIEC 031, 032, 033, and 034). Nonetheless, as is
customary for Call Report changes, banks are advised that, for the
March 31, 1998, report date, reasonable estimates may be provided for
any new or revised item for which the requested information is not
readily available. The specific wording of the captions for the new or
revised Call Report items discussed below should be regarded as
preliminary.
Reductions in Frequency and Detail
Based on their review of the current content of the Call Report,
the agencies are proposing to reduce the reporting frequency for one
item applicable to all banks and to reduce the level of detail in one
schedule applicable to larger banks, as follows:
(1) Schedule RC-E--Deposit Liabilities
Memorandum item 1.e., ``Preferred deposits,'' would be collected
annually as of December 31 rather than quarterly as at present. In
general, preferred deposits are deposits of states and political
subdivisions in the U.S. which are secured or collateralized as
required under state law. This Memorandum item was added to the Call
Report in 1993 in response to a newly enacted statutory requirement
directing the FDIC
[[Page 51717]]
to ensure that it ``receives on a regular basis'' from each FDIC-
insured depository institution information on the amount of preferred
deposits (12 U.S.C. 1817(a)(9)).
The agencies understand that bankers have identified the
``Preferred deposits'' item as one of the Call Report items they have
found to be particularly burdensome. Moreover, the statute does not
specifically mandate quarterly reporting for this item. Thus, the FDIC
has determined that collecting information on preferred deposits on an
annual, rather than quarterly, basis would be consistent with the
statutory requirement and would be adequate for purposes of meeting the
FDIC's obligations under the Federal Deposit Insurance Act.
(2) Schedule RC-D--Trading Assets and Liabilities
This schedule is completed by banks with $1 billion or more in
total assets or with $2 billion or more in notional amount of off-
balance sheet derivative contracts. The agencies are proposing to
eliminate item 6, ``Certificates of deposit (in domestic offices),''
item 7, ``Commercial paper (in domestic offices)'', and item 8,
``Bankers acceptances (in domestic offices).'' Commercial paper held
for trading would begin to be reported as part of a bank's trading
account securities, normally in Schedule RC-D, item 5, ``Other debt
securities (in domestic offices),'' consistent with the change in
balance sheet classification of commercial paper not held for trading
and the elimination of the loan schedule Memorandum item for commercial
paper, both of which took effect as of March 31, 1997. As for
certificates of deposit and bankers acceptances held for trading, the
reporting of these two types of instruments in separate Schedule RC-D
items is no longer considered sufficiently useful to warrant retaining
items 6 and 8. Instead, these instruments would be included in a bank's
``Other trading assets (in domestic offices),'' which are reported in
Scheduled RC-D, item 9.
Investment Securities With High Price Volatility
In December 1991, the FFIEC approved and the agencies adopted a
Supervisory Policy Statement on Securities Activities which became
effective on February 10, 1992 (57 FR 4029, February 3, 1992). Under
this policy statement, prior to purchase and at subsequent testing
dates, banks must test mortgage derivative products to determine
whether they are ``high-risk'' or ``nonhigh-risk.'' These tests measure
the expected weighted average life, average life sensitivity, and price
sensitivity of mortgage derivative securities for specified changes in
interest rates. During 1994, the agencies issued supervisory guidance
concerning bank investments in ``structured notes'' which, in general,
are debt securities (other than mortgage-backed securities) whose cash
flow characteristics (coupon rate, redemption amount, or stated
maturity) depend upon one or more indices and/or that have embedded
forwards or options. Beginning in 1995, banks began to report the
amortized cost and the fair value of their investment portfolio
holdings of high-risk mortgage securities (Schedule RC-B, Memorandum
items 8.a and 8.b) and structured notes (Schedule RC-B, Memorandum
items 9.a and 9.b).
With regard to structured notes, supervisory attention has
primarily focused on ensuring that institutions understand and evaluate
the market risks associated with these instruments. Instruments that
have high market value or fair value sensitivity to changes in interest
rates or other appropriate market risk factors, such as foreign
exchange rates, have been the primary targets of such attention.
However, some of the structured notes currently reported in Schedule
RC-B, Memorandum item 9, may not have high market risk profiles and, in
some cases, may have lower market risk volatility profiles than generic
U.S. Treasury and U.S. Government agency securities. As a consequence,
the agencies are considering revising the information collected on
these instruments for supervisory purposes to reflect information based
on significant price volatility under specific interest rate or major
factor scenarios, e.g., an estimated change in value of 20 percent or
more due to an immediate and sustained parallel shift in the yield
curve of plus or minus 300 basis points. When the agencies develop the
specific tests for significant price volatility, existing Memorandum
items 9.a and 9.b on Schedule RC-B would be replaced with revised items
requesting the amortized cost and fair value of securities (other than
mortgage-backed securities backed by closed-end first lien 1-4 family
residential mortgages) whose price volatility exceeds the specified
threshold level under the specified interest rate or major factor
scenario.
This consistency, Schedule RC-B, Memorandum items 8.a and 8.b,
which currently collect information on ``high-risk'' mortgage
securities would be similarly replaced with items requesting the
amortized cost and fair value of mortgage-backed securities backed by
closed-end first lien 1-4 family residential mortgages whose price
volatility exceeds a specified threshold level under a specified
interest rate or major factor scenario. These mortgage-backed
securities would be either the same as or a subset of the mortgage-
backed securities currently reported in Schedule RC-B, Memorandum items
8.a and 8.b.
If the agencies' specific tests for significant price volatility
have not been developed in time to implement this proposed reporting
change as of the March 31, 1998, report date, this Call Report revision
would take effect at a report date later in 1998 (or thereafter) after
the volatility tests have been devised.
Transactions Between Banks and Their Affiliates
Section 23A of the Federal Reserve Act is designed to safeguard the
resources of banks against misuse for the benefit of organizations
under common control with the bank by regulating certain ``covered
transactions'' (loans or extensions of credit and other transactions
that expose the bank to risk) with an affiliate. Section 23A restricts
the amount of such on terms that are at least as favorable to the bank
as transactions with unaffiliated companies. As the activities of
nonbank subsidiaries of bank holding companies have expanded, and as
regulatory restrictions have been reduced, more reliance has been
placed on Sections 23A and 23B to insulate institutions from the risks
posed by transactions with their affiliates.
Section 23A permits a bank to engage in covered transactions with
affiliates so long as the covered transactions do not in the aggregate
exceed: (1) 10 percent of the bank's capital stock and surplus with
respect to a single affiliate and (2) 20 percent of capital and surplus
with respect to all affiliates. Covered transactions are specifically
described in Section 23A and include (a) loans and extensions of credit
to an affiliate, (b) the purchase of securities issued by an affiliate,
(c) the purchase of nonexempted assets from an affiliate, (d) the
acceptance of securities issued by an affiliate as collateral for any
loan to an unaffiliated company, and (e) the issuance of guarantee,
acceptance, or letter of credit on behalf of an affiliate. In addition
to the quantitative limits on a bank's exposure to an affiliate,
Section 23A also imposes collateral requirements when a bank is lending
to the affiliate or is issuing a guarantee, acceptance, or letter of
credit for the account of the affiliate. These exposures
[[Page 51718]]
are the most direct method by which a bank can expose itself to an
affiliate, and the collateral requirements are designed to diminish any
risk related to these exposures.
In order to monitor compliance with the aggregate limits in Section
23A and to identify institution-specific and industry-wide levels of
changes in covered transaction which a bank can expose itself to an
affiliate, and the collateral requirements are designed to diminish any
risk related to these exposures.
In order to monitor compliance with the aggregate limits in Section
23A and to identify institution-specific and industry-wide levels of
and changes in covered transaction activity and its effects on bank
risk exposures, the agencies are proposing to add four new items to
Schedule RC-M--Memoranda. For covered transactions subject to Section
23A's collateral requirements, bank would report (a) the outstanding
amount of such transactions as of the Call Report date and (b) the
maximum amount of such transactions during the calendar quarter ending
with the report date. For covered transactions not subject to the
collateral requirements, banks would likewise report (a) the
outstanding amount of such transactions as of the Call Report date and
(b) maximum amount of such transactions during the calendar quarter
ending with the report date. Transactions that are exempt from
quantitative limits under the statute, e.g., extensions of credit fully
secured by U.S. Government securities and transactions with affiliate
(sister) banks, would be excluded from being reported in the proposed
items.
The agencies specifically request comment on the burden associated
with reporting date on covered transactions. Comment is also requested
on potential ways to reduce burden with respect to these items, in
particular the proposed reporting of the maximum amount of such
transactions during the calendar quarter ending with the report date.
For example, maximum amounts could be required to be reported only
under certain conditions, e.g., if they are significantly higher than
the end of period amount or if they approach the quantitative limits.
Reporting of Low Level Recourse Transactions for Risk-Based Capital
Purposes
The agencies' risk-based capital standards provide that the amount
of risk-based capital that must be maintained for assets transferred
with recourse should not exceed the maximum amount of recourse for
which a bank is contractually liable under the recourse agreement. This
rule applies to transactions in which a bank contractually limits its
risk of loss or recourse exposure to less than the full effective
minimum risk-based capital requirement for the assets transferred--
generally, four percent for qualifying first lien residential mortgages
and eight percent for most other assets. The low level recourse rule
also may apply to sales and securitizations of assets in which
contractual cash flows (e.g., interest-only strips receivable and so-
called spread accounts), retained subordinated interests, or other
assets (e.g., collateral invested amounts or cash collateral accounts)
act as credit enhancements. If this rule does apply to a credit
enhancement of this type, the maximum contractual dollar amount of the
bank's exposure as of a Call Report date is generally limited to the
amount carried as an asset on the balance sheet (Schedule RC) in
accordance with generally accepted accounting principles.
Current Call Report instructions require a bank to report its low
level recourse transactions in Schedule RC-R--Regulatory Capital using
the so-called ``gross-up'' method.
In general, this method requires the bank to multiply the maximum
amount of its recourse exposure by the reciprocal of the full effective
minimum risk-based capital requirement for the assets transferred and
to report the resulting dollar amount as an off-balance sheet credit
equivalent amount in the risk weight category appropriate to the assets
transferred.\2\
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\2\ For example, if the bank's maximum contractual exposure is
$10 million and the transferred assets would be in the 100 percent
risk weight category, the bank would report a credit equivalent
amount of $125 million [$10 million x (1/.08)] in the Schedule RC-R
item for credit equivalent amounts of off-balance sheet items
assigned to the 100 percent risk category (item 7.b).
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However, the greater the volume of a bank's low level recourse
transactions and the higher the bank's risk-based capital ratio in
relation to the minimum requirement, the more the bank's calculated
risk-based capital ratios become distorted as a result of applying the
gross-up method. In these situations, another method of handling the
bank's low level recourse transactions--the so-called ``direct
reduction'' method--results in a more accurate measure of the bank's
risk-based capital ratios. Under the direct reduction method, a bank
generally would reduce its Tier 1 capital by the maximum amount of its
recourse exposure (and would exclude this amount from its assets if the
exposure were in the form of an on-balance sheet asset). Nevertheless,
the Call Report instructions do not currently permit banks to use the
direct reduction method when completing Schedule RC-R because the
schedule's existing format does not provide a means for banks to
disclose the amount by which assets and Tier 1 capital have been
reduced through the application of the direct reduction method. Without
knowing this amount, the agencies cannot readily verify the reported
capital amounts and risk-weighted asset amounts for banks that would
use the direct reduction method when reporting their low level recourse
exposures.
Some bankers with low level recourse transactions have expressed a
strong preference for using the direct reduction method rather than the
gross-up method. The agencies also note that savings associations
report the dollar amount of their low level recourse exposures in the
Thrift Financial Reports they file with the Office of Thrift
Supervision in a manner consistent with the direct reduction method.
Accordingly, the agencies are proposing to add a new subitem under
Schedule RC-R, item 3, ``Amounts used in calculating regulatory capital
ratios,'' for the ``Maximum contractual dollar amount of recourse
exposure in low level recourse transactions.'' Banks preferring to
apply the direct reduction method to these exposures when they complete
Schedule RC-R would need to complete this new item and would include
any on-balance sheet asset amounts that represent low level recourse
exposures in item 8 of Schedule RC-R. Banks preferring to report their
low level recourse exposures under the gross-up method would retain the
option to use this method.
Capital Requirements for Market Risk
In 1996, the agencies amended their risk-based capital standards to
require banks with substantial trading activity to hold capital based
on their market risk exposure. The new rule applies to banks with
either (1) total trading assets and trading liabilities of at least $1
billion or (2) total trading assets and trading liabilities in excess
of 10 percent of total assets, unless exempted by their supervisory
agency. The banks that will be subject to this new rule must comply
with the market risk capital requirements by January 1, 1998. The
market risk rule supplements the risk-based capital ratio calculations
that focus principally on credit risk and adjusts both the risk-based
capital ratio denominator and numerator. These adjustments involve
``market risk equivalent assets'' for the denominator and ``Tier 3
capital'' for the numerator.
[[Page 51719]]
To enable the agencies and other users of the Call Report to
calculate the risk-based capital ratios of those banks subject to the
market risk rule, the agencies are proposing to add two new subitems to
Schedule RC-R, item 3, ``Amounts used in calculating regulatory capital
ratios,'' on the FFIEC 031 and 032 report forms only. In these new
subitems, banks would report their ``Market risk equivalent assets''
and their ``Tier 3 capital.'' In addition, the instructions for items 4
through 7 of Schedule RC-R, which are the items in which banks report
their assets and the credit equivalent amounts of their off-balance
sheet items by risk weight category, and item 8, ``On-balance sheet
asset values excluded from and deducted in the calculation of the risk-
based capital ratio,'' would be revised. As revised, the instructions
would tell banks to exclude from items 4 through 7 the amounts of all
``covered positions'' (except foreign exchange positions outside the
trading account and over-the-counter derivative positions) and to
report the amounts of those ``covered positions'' that are on the
balance sheet in item 8. The term ``covered positions'' means all
positions in a bank's trading account, and all foreign exchange and
commodity positions, whether or not in the trading account.
Allowance for Credit Losses
The American Institute of Certified Public Accountants' Audit and
Accounting Guide for Banks and Savings Institutions, issued as of April
1, 1996, requires the allocation on the balance sheet of the allowance
for credit losses between on-balance sheet financial instruments and
off-balance sheet credit exposures. Previously, these allowance
components often were reported in the aggregate in the allowance for
loan and lease losses (ALLL).
Banks have been advised to allocate the allowance for credit losses
on Schedule RC-Balance Sheet consistent with their allocation
methodology for other financial reporting purposes. For example,
portions of the allowance related to off-balance sheet credit exposures
that are reported as liabilities are to be included in Schedule RC,
item 20, ``Other liabilities,'' and in item 4 of Schedule RC-G. Banks
also have been advised to aggregate these components of the allowance
for credit losses when completing Schedule RI-B, part II--Changes in
Allowance for Loan and Lease Losses. institutions have been encouraged
to disclose the amounts of these components in Schedule RI-E, item 9,
``Other explanations.''
The agencies are proposing to retain this method of reporting the
allowance for credit losses. In so doing, Schedule RI-B, part II, would
be retitled Changes in Allowance for Credit Losses, and item 4.a of
Schedule RI--Income Statement would be recaptioned ``Provision for
credit losses.'' However, Schedule RI-B, part I--Charge-offs Recoveries
on Loans and Leases would not be changed, i.e., banks would continue to
disclose their loan and lease charge-offs and recoveries only.
Under the reporting standards in effect prior to the effective date
of the revised audit and accounting guide, banks had included all the
portion of he allowance related to off-balance sheet credit exposures
in Tier 2 capital for risk-based capital purpose, subject to specified
limits. This regulatory capital treatment remains in effect under the
new reporting standards set forth in the revised audit and accounting
guide.
Reporting by Banks With Foreign Offices of Investment Securities
Holdings in the Domestics Office Assets and Liabilities Schedule
On the FFIEC 031 version of the Call Report forms, banks with
foreign offices report a breakdown of the investment securities they
hold in domestic offices by type of security in Schedule RC-H--Selected
Balance Sheet Items for Domestic Offices. These investment securities
holdings are reported in Schedule RC-H on the same basis as they are
reported on these banks' consolidated balance sheet (Schedule RC),
i.e., held-to-maturity securities are reported at amortized cost while
available-for-sale securities are reported at fair value. In the
(consolidated) securities schedule (Schedule RC-B), held-to-maturity
and available-for-sale securities are each separately reported at
amortized cost and at fair value. This reporting treatment was
implementing in 1994 when Financial Accounting Standards Board
Statement No. 115, ``Accounting for Certain Investments in Debt and
Equity Securities,'' took effect.
Based on a review of the manner in which the domestic office
securities data reported in items 10 through 17 of Schedule RC-H are
analyzed and compared to other measures of domestic securities which
are held by nonbank sectors and reported on a cost basis, the agencies
are proposing to require banks with foreign offices to report all
investment securities held in domestic offices on a cost basis in these
eight Schedule RC-H items. This would mean that available-for-sale debt
securities would be reflected in Schedule RC-H, items 10 through 17, at
amortized cost rather than at fair value while equity securities would
be included in this schedule at historical cost. This cost basis data
should be available to banks with foreign offices because the
amortized/historical cost of their entire investment securities
portfolio is currently reported in the (consolidated) securities
schedule (Schedule RC-B).
This proposed change would not affect the reporting of a bank's
held-to-maturity or available-for-sale securities on the Call Report
balance sheet (Schedule RC) or on the securities schedule (Schedule RC-
B), nor would it alter the reporting of total assets in domestic
offices in Schedule RC-H, item 8.
Reporting of Securitized Consumer Loans for Vehicle Purchases
On the FFIEC 031 and 032 versions of the Call Report forms, banks
with foreign offices or with $300 million or more in assets report
annually as of September 30 the amount of their securitized consumer
installment loans to purchase private passenger automobiles and the
amount of all other securitized consumer installment loans (excluding
credit cards and related plans) in Schedule RC-L, Memorandum items 5.a
and 5.c, respectively. The instructions for these items currently
direct banks to report securitized consumer loans for the purchase of
pickup trucks and vans in the ``all other'' category, not in the
``private passenger automobiles'' category.
Based on a review of the manner in which these data are used for
analyzing consumer credit markets, the agencies believe that
securitized consumer loans for the purchase of pickup trucks, other
light trucks, and vans for personal use would be more appropriately
classified in the ``private passenger automobiles'' category. The
instructions for Memorandum item 5.a would be revised so that banks
would begin to include securitized consumer loans to purchase vans and
light trucks (such as pickup trucks) for personal use in this item
rather than in Memorandum item 5.c. In addition, the agencies would
strike the word ``installment'' from the captions and instructions
throughout Memorandum item 5.
Request for Comment
Comments submitted in response to this Notice will be shared among
the agencies and will be summarized or included in the agencies'
requests for OMB approval. All comments will become a matter of public
record. Written comments should address the accuracy of the burden
estimates and ways to minimize burden as well as other relevant aspects
of the information
[[Page 51720]]
collection request. Comments are invited on: (a) Whether the proposed
revisions to the following collections of information are necessary for
the proper performance of the agencies' functions, including whether
the information has practical utility; (b) the accuracy of the
agencies' estimate 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 collection 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 are also requested on the expected effects on information
currently reported in the Call Report resulting from this
implementation of those portions of Financial Accounting Standards
Board Statement No. 125, ``Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,'' that have had
their effective date delayed until after December 31, 1997. The
agencies are evaluating the need for additional data in this area.
These portions of Statement No. 125 address collateral and secured
borrowings, repurchase agreements, dollar-rolls, securities lending,
and similar transactions.
Banks should note that the FDIC is considering amendments to its
regulations on the deposit insurance assessment base (12 CFR part 327)
which may require certain changes to the Call Report. Should the FDIC
adopt amendments that necessitate changes to the Call Report in 1998,
those changes will be separately published for public comment as
required under the Paperwork Reduction Act of 1995.
Dated: September 26, 1997.
Karen Solomon,
Director, Legislative and Regulatory Activities Division, Office of the
Comptroller of the Currency.
Board of Governors of the Federal Reserve System, September 18,
1997.
William W. Wiles,
Secretary of the Board.
Dated at Washington, D.C., this 17th day of September, 1997.
Federal Deposit Insurance Corporation.
Steven Hanft,
Assistant Executive Secretary.
[FR Doc. 97-26131 Filed 10-1-97; 8:45 am]
BILLING CODE 4810-33-M(\1/3\), 6210-01-M(\1/3\), 6714-01-M(\1/3\)
