2022-24028. Proposed Agency Information Collection Activities; Comment Request

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Notice, request for comment.

SUMMARY:

The Board of Governors of the Federal Reserve System (Board) invites comment on a proposal to extend for three years, with revision, the Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation Q (FR Q; OMB No. 7100-0313).

DATES:

Comments must be submitted on or before January 3, 2023.

ADDRESSES:

You may submit comments, identified by FR Q, by any of the following methods:

• Agency Website: https://www.federalreserve.gov/​. Follow the instructions for submitting comments at https://www.federalreserve.gov/​apps/​foia/​proposedregs.aspx.

• Email:[e-mail]. Include the OMB number or FR number in the subject line of the message.

• Fax: [phone] or [phone].

• Mail: Federal Reserve Board of Governors, Attn: Ann E. Misback, Secretary of the Board, Mailstop M-4775, 2001 C St. NW, Washington, DC 20551.

All public comments are available from the Board's website at https://www.federalreserve.gov/​apps/​foia/​proposedregs.aspx as submitted, unless modified for technical reasons or to remove personally identifiable information at the commenter's request. Accordingly, comments will not be edited to remove any confidential business information, identifying information, or contact information. Public comments may also be viewed electronically or in paper in Room M-4365A, 2001 C St. NW, Washington, DC 20551, between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the Board requires that visitors make an appointment to inspect comments. You may do so by calling [phone]. Upon arrival, visitors will be required to present valid government-issued photo identification and to submit to security screening in order to inspect and photocopy comments.

Additionally, commenters may send a copy of their comments to the Office of Management and Budget (OMB) Desk Officer for the Federal Reserve Board, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503, or by fax to [phone].

FOR FURTHER INFORMATION CONTACT:

Federal Reserve Board Clearance Officer—Nuha Elmaghrabi—Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, [e-mail], [phone].

SUPPLEMENTARY INFORMATION:

On June 15, 1984, OMB delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve and assign OMB control numbers to collections of information conducted or sponsored by the Board. In exercising this delegated authority, the Board is directed to take every reasonable step to solicit comment. In determining whether to approve a collection of information, the Board will consider all comments received from the public and other agencies.

During the comment period for this proposal, a copy of the proposed PRA OMB submission, including the draft reporting form and instructions, supporting statement, and other documentation, will be made available on the Board's public website at https://www.federalreserve.gov/​apps/​reportforms/​review.aspx or may be requested from the agency clearance officer, whose name appears above. Final versions of these documents will be made available at https://www.reginfo.gov/​public/​do/​PRAMain, if approved.

Request for Comment on Information Collection Proposal

The Board invites public comment on the following information collection, which is being reviewed under authority delegated by the OMB under the PRA. Comments are invited on the following:

a. Whether the proposed collection of information is necessary for the proper performance of the Board's functions, including whether the information has practical utility;

b. The accuracy of the Board'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;

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 startup costs and costs of operation, maintenance, and purchase of services to provide information.

At the end of the comment period, the comments and recommendations received will be analyzed to determine the extent to which the Board should modify the proposal.

Proposal Under OMB Delegated Authority To Extend for Three Years, With Revision, the Following Information Collection

Collection title: Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation Q.

Collection identifier: FR Q.

OMB control number: 7100-0313.

Frequency: Annual, quarterly.

Respondents: State member banks (SMBs), certain bank holding companies (BHCs), U.S. intermediate holding companies (IHCs), and certain covered savings and loan holding companies (SLHCs) ^[1] (collectively, Board-regulated institutions).

Estimated number of respondents:

Minimum Capital Ratios

Recordkeeping (Ongoing)—1,055.

Standardized Approach

Reporting (Ongoing)—1.

Recordkeeping (Initial Setup)—1.

Recordkeeping (Ongoing)—1,055.

Disclosure (Initial Setup)—1.

Disclosure (Ongoing)—38.

Advanced Approach

Reporting (Initial Setup)—1.

Reporting (Ongoing)—21.

Recordkeeping (Initial Setup)—1.

Recordkeeping (Ongoing)—21.

Recordkeeping (Ongoing quarterly)—21.

Disclosure (Initial setup)—1.

Disclosure (Ongoing)—21.

Disclosure (Ongoing quarterly)—21.

Disclosure (Ongoing quarterly Table 13)—27.

Estimated average hours per response:

Minimum Capital Ratios

Recordkeeping (Ongoing)—16.

Standardized Approach

Reporting (Ongoing)—1.

Recordkeeping (Initial Setup)—122.

Recordkeeping (Ongoing)—20.

Disclosure (Initial Setup)—226.25.

Disclosure (Ongoing)—131.25.

Advanced Approach

Reporting (Initial Setup)—161.

Reporting (Ongoing)—111.77.

Recordkeeping (Initial Setup)—299.

Recordkeeping (Ongoing)—429.

Recordkeeping (Ongoing quarterly)—20.

Disclosure (Initial setup)—328.

Disclosure (Ongoing)—5.78.

Disclosure (Ongoing quarterly)—41.5.

Disclosure (Ongoing quarterly Table 13)—5.

Estimated annual burden hours: Initial setup—1,136; Ongoing—75,114.

General description of collection: The Board's Regulation Q—Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks (12 CFR part 217) sets forth the capital adequacy requirements for Board-regulated institutions.

The reporting, recordkeeping, and disclosure requirements included in the FR Q information collection provide the Board and other stakeholders, including market participants, with information regarding the interaction between firms and the regulatory capital framework. Specifically, the reporting and recordkeeping requirements allow the Board to verify that firms are appropriately implementing the capital framework; they also provide the Board with information necessary for monitoring firms participating in the advanced approaches framework. The disclosure requirements are intended to support market discipline by providing information regarding banking organizations' activities, overall risk profiles, and risk management policies. Together, these requirements help to ensure the safety and soundness of the financial system by facilitating the identification of problems at firms and ensuring that firms have implemented any corrective actions imposed by the Board, as well as by allowing stakeholders to make meaningful assessments of firms' financial position.

Proposed revisions: The Board proposes to revise the FR Q information collection to account for a reporting provision in section 217.37(c)(4)(i)(E) of Regulation Q and a disclosure provision in section 217.124(a) of Regulation Q, which have not been previously cleared by the Board under the PRA.

Section 217.37 of Regulation Q relates to when a Board-regulated institution may recognize the credit risk mitigation benefits of financial collateral that secures a transaction. With the prior written approval of the Board, a Board-regulated institution may calculate haircuts using its own internal estimates of the volatilities of market prices and foreign exchange rates. A Board-regulated institution must have policies and procedures that describe how it determines the period of significant financial stress used to calculate the Board-regulated institution's own internal estimates for haircuts under this section and must be able to provide empirical support for the period used. Section 217.37(c)(4)(i)(E) requires Board-regulated institutions to obtain the prior approval of the Board for, and notify the Board if the Board-regulated institution makes any material changes to, these policies and procedures.

Subpart E of Regulation Q requires a Board-regulated institution to have a rigorous process for assessing its overall capital adequacy in relation to its risk profile and a comprehensive strategy for maintaining an appropriate level of capital. Section 217.124(a) permits a Board-regulated institution that merges with or acquires a company that does not calculate its risk-based capital requirements using advanced systems to use a standardized approach to determine the risk-weighted asset amounts for the merged or acquired company's exposures. A Board-regulated institution that takes advantage of this provision must disclose publicly the amounts of risk-weighted assets and qualifying capital using advance approaches for the acquiring Board-regulated institution and standard approaches for the acquired company.

Legal authorization and confidentiality: Section 38 of the Federal Deposit Insurance Act ^[2] and section 908 of the International Lending Supervision Act of 1983 ^[3] require each appropriate Federal banking agency to develop capital standards and to ensure that banking institutions maintain adequate capital. The Board is the appropriate Federal banking agency for SMBs, and thus, these provisions authorize the FR Q with respect to SMBs.^[4] The FR Q is authorized for BHCs by section 5(b) of the Bank Holding Company Act of 1956 (BHC Act), which authorizes the Board to “issue such regulations and orders, including regulations and orders relating to the capital requirements for [BHCs], as may be necessary to enable it to administer and carry out the purposes of this chapter and prevent evasions thereof.” ^[5] The FR Q is authorized for SLHCs by section 10(g) of the Home Owners' Loan Act (HOLA), which states that “[t]he Board is authorized to issue such regulations and orders, including regulations and orders relating to capital requirements for [SLHCs], as the Board deems necessary or appropriate to enable the Board to administer and carry out the purposes of this section, and to require compliance therewith and prevent evasions thereof.” ^[6]

Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), as amended by section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, requires the Board to establish prudential standards for nonbank financial companies supervised by the Board, as well as certain large BHCs supervised by the Board, that are more stringent than the standards and requirements applicable to companies that do not present similar risks to financial stability.^[7] These include risk-based capital requirements and leverage limits.^[8] The Board has required, pursuant to section 165(b)(1)(B)(iv) of the Dodd-Frank Act,^[9] certain foreign banking organizations subject to section 165 of the Dodd-Frank Act to form IHCs, and section 165 of the Dodd-Frank Act authorizes the FR Q with regards to these IHCs.

The reporting requirements contained in the FR Q are also authorized by the Board's reporting authorities, which are contained in section 9(6) of the Federal Reserve Act for SMBs,^[10] section 5(c) of the BHC Act for BHCs and their subsidiaries,^[11] and section 10(b)(2) of HOLA for SLHCs.^[12] Additionally, with respect to SMBs, the reporting requirements contained in the FR Q are authorized by section 11(a) of the Federal Reserve Act, which authorizes the Board to “require such statements and reports as it may deem necessary” from member banks.^[13] The information collections associated with the FR Q are mandatory.

The disclosure requirements in Regulation Q must be made publicly and therefore are generally not confidential. If a Board-regulated institution described in section 217.61 of Regulation Q concludes that specific commercial or financial information that it would otherwise be required to disclose under sections 217.62 or 217.63 of Regulation Q would be exempt from disclosure by the Board under the Freedom of Information Act (FOIA),^[14] then the Board-regulated institution is not required to disclose that specific information, but must disclose more general information about the subject matter of the requirement, together with the fact that, and the reason why, the specific items of information have not been disclosed.

The information submitted pursuant to the reporting requirements in Regulation Q is likely to be nonpublic commercial or financial information, which is both customarily and actually treated as private by the respondent, and therefore eligible for confidential treatment pursuant to exemption 4 of FOIA.^[15]

Because the information required to be retained pursuant to the recordkeeping requirements in Regulation Q is not routinely reported to the Board, it would likely only come into the Board's possession through the supervisory process. Under these circumstances, information collected under the recordkeeping requirements would be eligible for confidential treatment pursuant to exemption 8 of FOIA, which protects information contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.^[16] Additionally, information retained pursuant to these requirements may be nonpublic commercial or financial information, which is both customarily and actually treated as private by the respondent, and therefore may be eligible for confidential treatment pursuant to exemption 4 of FOIA.^[17]

Consultation outside the agency: The Board worked with staff from the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency to confirm the burden estimates for this renewal.

Board of Governors of the Federal Reserve System, November 1, 2022.

Michele Taylor Fennell,

Deputy Associate Secretary of the Board.

Footnotes

1.  The Board's capital rule generally does not apply to BHCs or covered SLHCs that meet the requirements of the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement, 12 CFR part 225, Appendix C. For the definition of “Covered savings and loan holding company,” see 12 CFR 217.2.

2.  12 U.S.C. 1831o.

3.  12 U.S.C. 3907(a)(l).

4.  12 U.S.C. 1813(q).

5.  12 U.S.C. 1844(b).

6.  12 U.S.C. 1467a(g).

7.  12 U.S.C. 5365.

8.  12 U.S.C. 5365(b)(1)(A)(i). See 12 U.S.C. 5371.

9.  12 U.S.C. 5365(b)(1)(B)(iv).

10.  12 U.S.C. 324.

11.  12 U.S.C. 1844(c).

12.  12 U.S.C. 1467a(b)(2).

13.  12 U.S.C. 248(a).

14.  5 U.S.C. 552.

15.  5 U.S.C. 552(b)(4).

16.  5 U.S.C. 552(b)(8).

17.  5 U.S.C. 552(b)(4).