06-4208. Effect of the Federal Deposit Insurance Reform Act on the Consolidated Reports of Condition and Income

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:

Joint notice and request for comment.

SUMMARY:

The Federal Financial Institutions Examination Council (FFIEC), of which the agencies are members, has approved the agencies' publication of this notice announcing the effect of the Federal Deposit Insurance Reform Act on the reporting of certain deposit-related data in the Consolidated Reports of Condition and Income (Call Report; FFIEC 031 and 041). Because the deposit insurance coverage for certain retirement plan deposits has increased from $100,000 to $250,000 while the insurance limit for deposit accounts in other ownership capacities has remained at $100,000, data will begin to be reported separately for the number and amount of retirement deposit accounts with balances within and in excess of the new $250,000 insurance limit. The instructions for reporting estimated uninsured deposits by banks with $1 billion or more in total assets and for reporting brokered deposits will be revised to reflect the new insurance limit for retirement deposit accounts. In addition, with the merger of the insurance funds administered by the FDIC, items in which banks with “Oakar deposits” have reported information on purchases and sales of deposits are no longer needed and will be eliminated. These reporting changes will take effect in the Call Report for June 30, 2006. In a separate action, the agencies have decided not to implement two new credit-derivative-related items that were to be added to the Call Report on September 30, 2006.

DATES:

Comments must be submitted on or before May 22, 2006.

ADDRESSES:

Interested parties are invited to submit written comments to any or all of the agencies. All comments, which should refer to the Office of Management and Budget (OMB) control number(s), will be shared among the agencies.

OCC: You may submit comments, identified by [Attention: 1557-0081], by any of the following methods:

• E-mail: [e-mail]. Include [Attention: 1557-0081] in the subject line of the message.
• Fax: [phone].
• Mail: Public Information Room, Office of the Comptroller of the Currency, 250 E Street, SW., Mailstop 1-5, Washington, DC 20219; Attention: 1557-0081.

Public Inspection: You may inspect and photocopy comments at the Public Information Room. You can make an appointment to inspect the comments by calling [phone].

Board: You may submit comments, which should refer to “Consolidated Reports of Condition and Income, 7100-0036,” by any of the following methods:

• Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments on the http://www.federalreserve.gov/​generalinfo/​foia/​ProposedRegs.cfm.
• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• E-mail: [e-mail]. Include docket number in the subject line of the message.
• FAX: [phone] or 202-452-3102.
• Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551.

All public comments are available from the Board's Web site at http://www.federalreserve.gov/​generalinfo/​foia/​ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.

FDIC: You may submit comments, which should refer to “Consolidated Reports of Condition and Income, 3064-0052,” by any of the following methods:

• Agency Web site: http://www.FDIC.gov/​regulations/​laws/​federal/​notices.html.
• E-mail: [e-mail]. Include “Consolidated Reports of Condition and Income, 3064-0052” in the subject line of the message.
• Mail: Steven F. Hanft (202-898-3907), Paperwork Clearance Officer, Room MB-3064, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
• Hand Delivery: Comments may be hand delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7 a.m. and 5 p.m.

Public Inspection: All comments received will be posted without change to http://www.fdic.gov/​regulations/​laws/​federal/​notices.html including any personal information provided. Comments may be inspected at the FDIC Public Information Center, Room E-1002, 3502 North Fairfax Drive, Arlington, VA 22226, between 9 a.m. and 5 p.m. on business days.

Additionally, commenters should send a copy of their comments to the OMB desk officer for the Agencies by mail to the Office of Information and Regulatory Affairs, U.S. Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street, NW., Washington, DC 20503, or by fax to [phone].

FOR FURTHER INFORMATION CONTACT:

 

OCC: Mary Gottlieb, OCC Clearance Officer, or Camille Dickerson, [phone], Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.

Board: Michelle E. Long, Board Clearance Officer, [phone], Division of Research and Statistics, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551. Telecommunications Device for the Deaf (TDD) users may call [phone].

FDIC: Steven F. Hanft, [phone], Room MB-3064, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

Banks file Call Report data with the agencies each quarter for the agencies' use in monitoring the condition, performance, and risk profile of reporting banks and the industry as a whole. In addition, Call Report data provide the most current statistical data available for evaluating bank corporate applications such as mergers, for identifying areas of focus for both on-site and off-site examinations, and for monetary and other public policy purposes. Call Report data are also used to calculate all banks' deposit insurance and Financing Corporation assessments and national banks' semiannual assessment fees.

II. Current Actions

A. Changes Due to Deposit Insurance Reform

The Federal Deposit Insurance Reform Act of 2005 (Reform Act) (Pub. L. 109-171), enacted in February 2006, increased the deposit insurance limit for certain retirement plan deposit accounts from $100,000 to $250,000. The basic insurance limit for other depositors—individuals, joint accountholders, businesses, government entities, and trusts—remains at $100,000. The FDIC issued an interim rule to implement this increase in coverage and other provisions of the Reform Act pertaining to deposit insurance coverage effective April 1, 2006 (71 FR 14629).

“Retirement deposit accounts” that are eligible for $250,000 in deposit insurance coverage are deposits made in connection with the following types of retirement plans: Individual Retirement Accounts (IRAs), including traditional and Roth IRAs; Simplified Employee Pension (SEP) plans; “Section 457” deferred compensation plans; self-directed Keogh (HR 10) plans; and self-directed defined contribution plans, which are primarily 401(k) plan accounts. The term “self-directed” means that the plan participants have the right to direct how their funds are invested, including the ability to direct that the funds be deposited at an FDIC-insured institution. Retirement deposit accounts exclude Coverdell Education Savings Accounts, formerly known as Education IRAs.

At present, all banks report the number and amount of deposit accounts of (a) $100,000 or less and (b) more than $100,000 in Call Report Schedule RC-O, Memorandum items 1.a.(1) through 1.b.(2). This information provides the basis for calculating “simple estimates” of the amount of insured and uninsured deposits and is the only information reported by individual banks with less than $1 billion in total assets pertaining to their estimated uninsured deposits. In 2003, the Office of Management and Budget (OMB) approved a revision to the Call Report information collection pursuant to the Paperwork Reduction Act that provided that “for the Memorandum items on the number and amount of deposit accounts by size of account in the insurance assessments schedule (Schedule RC-O), the dollar amount for the size of an account represents the deposit insurance limit in effect on the report date.”^[1] This action was taken to ensure that the reporting on the number and amount of deposits accounts in Schedule RC-O, Memorandum item 1, could be changed automatically as a function of the deposit insurance limits in effect on any particular quarter-end Call Report date.

Therefore, in response to the change in the deposit insurance coverage for “retirement deposit accounts,” which creates a different level of coverage than for all other deposit accounts, the agencies are adding new Memorandum items 1.c.(1) through 1.d.(2) to Call Report Schedule RC-O effective June 30, 2006. As revised, Memorandum item 1 (including its subitems) would be as follows:

1. Total deposits (in domestic offices) of the bank (and in insured branches in Puerto Rico and U.S. territories and possession):^[2]

a. Deposit accounts (excluding retirement accounts) of $100,000 or less:

(1) Amount of deposit accounts (excluding retirement accounts) of $100,000 or less

(2) Number of deposit accounts (excluding retirement accounts) of $100,000 or less (to be completed for the June report only)

b. Deposit accounts (excluding retirement accounts) of more than $100,000:

(1) Amount of deposit accounts (excluding retirement accounts) of more than $100,000

(2) Number of deposit accounts (excluding retirement accounts) of more than $100,000

c. Retirement deposit accounts of $250,000 or less:

(1) Amount of retirement deposit accounts of $250,000 or less

(2) Number of retirement deposit accounts of $250,000 or less (to be completed for the June report only)

d. Retirement deposit accounts of more than $250,000:

(1) Amount of retirement deposit accounts of more than $250,000

(2) Number of retirement deposit accounts of more than $250,000

In addition, banks with $1 billion or more in total assets report the estimated amount of their uninsured deposits in Schedule RC-O, Memorandum item 2.^[3] Through March 31, 2006, the reporting of this estimate has been based on the $100,000 limit of deposit insurance coverage that applied to deposits in all ownership capacities. With the increase in the deposit insurance coverage on “retirement deposit accounts” on April 1, 2006, the instructions for Memorandum item 2 are being revised effective June 30, 2006, to state that a bank's estimate of its uninsured deposits should reflect the deposit insurance limits in effect for “retirement deposit accounts” and other deposit accounts on the report date, which are $250,000 and $100,000, respectively.

Banks also report data on fully insured brokered deposits in Call Report Schedule RC-E, Memorandum items 1.c.(1), “Issued in denominations of less than $100,000,” and 1.c.(2), “Issued either in denominations of $100,000 or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less.” With the change in the insurance coverage for “retirement deposit accounts,” the instructions for these items are being updated effective June 30, 2006. As revised, the instructions state that, for brokered deposits that represent retirement deposit accounts eligible for $250,000 in deposit insurance coverage, banks should report such brokered deposits in Schedule RC-E, Memorandum item 1.c.(1), only if they have been issued by the bank in denominations of less than $100,000. Banks should report such brokered deposits in Schedule RC-E, Memorandum item 1.c.(2), if they have been issued by the bank (a) in denominations of exactly $100,000 through exactly $250,000 or (b) in denominations greater than $100,000 that have been participated out by the broker in shares of $250,000 or less.

The Reform Act also provided for the merger of the two deposit insurance funds administered by the FDIC (the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF)), a merger that the FDIC effected on March 31, 2006. As a result, banks with “Oakar deposits,” e.g., deposits insured by the SAIF in an institution that is a member of the BIF, no longer need to report information on purchases and sales of deposits during the quarter in Call Report Schedule RC-O, items 8.a.(1), 8.a.(2), and 8.b. These items are being deleted from the Call Report.

The preceding reporting changes will take effect in the Call Report for June 30, 2006. For this June 30 report date only, banks may provide reasonable estimates for any new or revised item for which the requested information is not readily available.

After banks make any necessary changes to their systems and records, the agencies estimate that these deposit-related reporting changes will produce an average net increase of 0.5 hours per bank per year in the ongoing reporting burden of the Call Report.

The agencies will monitor the impact of the new deposit insurance limits on bank practices and may propose additional revisions to the Call Report in the future to address supervisory or other public policy concerns resulting from any changes in bank practices.

B. Changes to Proposed Items on Credit Derivatives

In March 2006, OMB approved the agencies' request to add new items 7.c.(1) and (2) to Call Report Schedule RC-L to collect information on the maximum amounts that the reporting bank can collect or must pay on the credit derivatives into which it has entered. These items were to be added to the Call Report effective September 30, 2006.^[4] Upon further consideration after consulting with banks active in the credit derivatives market, the agencies have decided not to implement these two new items.

Dated: April 28, 2006.

Stuart E. Feldstein,

Assistant Director, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency.

Board of Governors of the Federal Reserve System, April 28, 2006.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, DC, this 1st day of May, 2006.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

Footnotes

1.  68 FR 10311, March 4, 2003. Also see 67 FR 68230, November 8, 2002.

2.  On the FFIEC 031 report form, the sum of Schedule RC-O, Memorandum items 1.a.(1), 1.b.(1), 1.c.(1), and 1.d.(1) must equal the sum of Schedule RC, item 13.a, and Schedule RC-O, items 5.a and 5.b. On the FFIEC 041 report form, the sum of Schedule RC-O, Memorandum items 1.a.(1), 1.b.(1), 1.c.(1), and 1.d.(1) must equal Schedule RC, item 13.a.

3.  Each year, the $1 billion asset size test is generally based on the total assets reported on the bank's balance sheet in the previous year's June 30 Call Report.

4.  See 71 FR 8654.