02-21017. Agency Information Collection Activities: Proposed Collection; Comment Request

AGENCY:

Board of Governors of the Federal Reserve System

ACTION:

Notice

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, 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 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 OMB 83-I's and 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 collections of information are 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 collections, 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 collections on respondents, including through the use of automated collection techniques or other forms of information technology.

DATES:

Comments must be submitted on or before October 18, 2002.

ADDRESSES:

Comments should be mailed to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551, or mailed electronically to [e-mail]. Comments addressed to Ms. Johnson may also be delivered to the Board's mail facility in the West Courtyard between 8:45 a.m. and 5:15 p.m., located on 21st Street between Constitution Avenue and C Street, N.W. Members of the public may inspect comments in Room MP-500 of the Martin Building between 9:00 a.m. and 5:00 p.m. on weekdays pursuant to § 261.12, except as provided in § 261.14, of the Board's Rules Regarding Availability of Information, 12 CFR 261.12 and 261.14.

A copy of the comments may also be submitted to the OMB desk officer for the Board: Joseph F. Lackey, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT:

A copy of the proposed form and instructions, the Paperwork Reduction Act Submission (OMB 83-I), supporting statement, and other documents that will be placed into OMB's public docket files once approved may be requested from the agency clearance officer, whose name appears below. Mary M. West, 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 Capria Mitchell [phone], Board of Governors of the Federal Reserve System, Washington, DC 20551.

SUPPLEMENTARY INFORMATION:

Proposal to Approve Under OMB Delegated Authority the Extension For Three Years, With Revision, the Following Reports:

1. Report title: Reports of Foreign Banking Organizations

Agency form number: FR Y-7 (and proposed FR Y-7N, FR Y-7NS, and FR Y-7Q)

OMB control number: 7100-0125

Frequency: Quarterly and annually

Reporters: Foreign banking organizations (FBO's)

Annual reporting hours: 5,920 hours

Estimated average hours per response:

FR Y-7: 3.25 hours,

FR Y-7N (quarterly): 6 hours,

FR Y-7N (annual): 6 hours,

FR Y-7NS: 1 hour,

FR Y-7Q (annual): 1 hour,

FR Y-7Q (quarterly): 1.25 hours

Number of respondents:

FR Y-7: 327,

FR Y-7N (quarterly): 128,

FR Y-7N (annual): 195,

FR Y-7NS: 184,

FR Y-7Q (annual):301,

FR Y-7Q (quarterly): 26

Small businesses are affected.

General description of report: This information collection is mandatory (12 U.S.C. §§ 601-604a, 611-631, 1844(c), 3106, and 3108(a)). 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) and (b)(6)].

Abstract: The FR Y-7 is an annual report filed by all FBO's that engage in banking in the United States, either directly or indirectly, to update their financial and organizational information. The Federal Reserve uses information to assess an FBO's ability to be a continuing source of strength to its U.S. banking operations and to determine compliance with U.S. laws and regulations.

Current actions: The Federal Reserve proposes the following revisions to the FR Y-7:

(1) Remove the risk-based capital reporting, Report Item 1.B., from the FR Y-7 report and require FBO's to report risk-based capital information on the new Capital and Asset Report for FBO's (FR Y-7Q).

(2) Remove the Nonbank Financial Information Summary (NFIS) report, which includes data from U.S. nonbank subsidiaries held directly by a foreign parent (i.e., not through a U.S. bank holding company (BHC) or financial holding company (FHC)), from the FR Y-7 and require these entities to file the new FR Y-7N or FR Y-7NS);

(3) Update the eligibility requirements for qualifying foreign banking organizations (QFBO's) in accordance with recent revisions to Regulation K;

(4) Remove Report Items 6 and 7 from the FR Y-7 pertaining to Financial Statements of Unconsolidated Majority-Owned Related Subsidiaries and Financial Data on Unconsolidated Minority-Owned Related Companies, respectively; and

(5) Provide other technical revisions to the FR Y-7 form and instructions to ensure consistency with other reporting forms, and reorder the sequence of the form to facilitate reporting.

In addition, the Federal Reserve proposes to implement the following information collections:

(1) Capital and Asset Report for Foreign Banking Organizations (FR Y-7Q) - This report would collect consolidated regulatory capital information from all FBO's either quarterly or annually. FBO's that have effectively elected to become financial holding companies (FHC's) will be required to file the FR Y-7Q on a quarterly basis. All other FBO's (those that have not elected to become FHCs) would file the FR Y-7Q annually.

(2) Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations (FR Y-7N) and Abbreviated Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations (FR Y-7NS) - The FR Y-7N report would collect nonbank financial information similar to information currently collected from U.S. BHC's for their nonbank activities. The FR Y-7N would be collected from significant nonbank subsidiaries and would be filed quarterly or annually based on total assets and other reporting criteria. Other, smaller respondents would file the FR Y-7NS, an abbreviated report with only four items.

In a change from current NFIS reporting, consolidation of reporters would not be permitted on the Y-7N and the Y-7NS. In the past, the Federal Reserve has found that the consolidation rules contribute to inaccurate data collection and raise processing issues. However, since a majority of reporters in the current panel would be exempt from reporting altogether, the removal of the consolidation option should not pose a material burden on reporters.

Also, functionally regulated^[1] subsidiaries and merchant banking investments would be exempt from reporting on the FR Y-7N and FR Y-7NS. Provisions of the Gramm-Leach-Bliley Act direct that the Federal Reserve must first rely on reports and information provided by the primary functional regulators for functionally regulated subsidiaries.

The proposed implementation date for all of the FR Y-7 changes is December 31, 2002.

2. Report title: Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies

Agency form number: FR Y-11Q and FR Y-11I (proposed FR Y-11, FR Y-11S)

OMB control number: 7100-0244

Frequency: Quarterly and annually

Reporters: Bank holding companies (BHC's)

Annual reporting hours: 23,809 hours

Estimated average hours per response:

FR Y-11 (quarterly): 6 hours,

FR Y-11 (annual): 6 hours,

FR Y-11S (annual): 1 hour

Number of respondents:

FR Y-11 (quarterly): 843,

FR Y-11 (annual): 488,

FR Y-11S (annual): 649

Small businesses are affected.

General description of report: This information collection is mandatory (12 U.S.C. §§ 1844(b) and (c) and 12 CFR 225.5(b)). 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) and (b)(6)].

Abstract: The FR Y-11Q is filed quarterly by top-tier bank holding companies for each nonbank subsidiary of a bank holding company with total consolidated assets of $150 million or more in which the nonbank subsidiary has total assets of 5 percent or more of the top-tier bank holding company's consolidated Tier 1 capital, or where the nonbank subsidiary's total operating revenue equals 5 percent or more of the top-tier bank holding company's consolidated total operating revenue. The report consists of a balance sheet, income statement, off-balance-sheet items, information on changes in equity capital, and a memoranda section. The FR Y-11I is filed annually by top-tier bank holding companies for each of their nonbank subsidiaries that are not required to file a quarterly FR Y-11Q. The FR Y-11I report consists of similar balance sheet, income statement, off-balance-sheet, and change in equity capital information that is included on the FR Y-11Q. However, some of the items on the FR Y-11I are collected in a less detailed manner. In addition, the FR Y-11I also includes a loan schedule to be submitted only by respondents engaged in extending credit.

Current actions: The Federal Reserve proposes to revise the FR Y-11Q and retitle the report as the Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies (FR Y-11). The Federal Reserve also proposes to eliminate the Annual Financial Statements of Nonbank Subsidiaries of Bank Holding Companies (FR Y-11I) and replace it with a new abbreviated annual report, the Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies (FR Y-11S).

The Federal Reserve proposes to streamline the existing nonbank subsidiary reporting framework for all non-functionally-regulated^[2] nonbank subsidiaries. The revised framework would both provide essential information to supervise and regulate non-functionally-regulated subsidiaries and reduce the burden on the industry. The proposed framework affects U.S. nonbank subsidiaries held by a U.S. bank holding company. Proposed revisions include:

(1) Implementing a uniform reporting form for all nonbank subsidiary filers;

(2) Reducing the burden by increasing or establishing consistent filing thresholds for all nonbank subsidiary filers;

(3) Establishing filing thresholds for reporters, consistent with risk-focused supervision, based on asset size and off-balance-sheet activity (absolute measures), plus operating revenues and equity capital (relative measures); and

(4) Eliminating reporting for the smallest filers.

The FR Y-11Q would be retitled as the Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies (FR Y-11). This proposed form would collect nonbank subsidiary financial information and would be filed by the top-tier BHC for more significant nonbank subsidiaries quarterly or annually based on total assets and other reporting criteria. The new Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies (FR Y-11S) report would comprise only four financial data items: net income, total assets, total equity capital, and total off-balance-sheet items. This report would be filed by the top-tier BHC for smaller nonbank subsidiaries.

The proposed reporting changes would introduce more uniformity to several aspects of reporting requirements for nonbank subsidiaries and reduce regulatory burden. The proposed implementation date for all of the FR Y-11 changes is December 31, 2002.

Also, functionally regulated subsidiaries and merchant banking investments would be exempt from reporting on the FR Y-11 and FR Y-11S. Provisions of the Gramm-Leach-Bliley Act direct that the Federal Reserve must first rely on reports and information provided by the primary functional regulators for functionally regulated subsidiaries.

3. Report title: Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations

Agency form number: FR 2314 a, b, and c (proposed FR 2314 and FR 2314S)

OMB control number: 7100-0073

Frequency: Quarterly and annually

Reporters: Foreign subsidiaries of U.S. state member banks, bank holding companies, and Edge or agreement corporations

Annual reporting hours: 5,087 hours

Estimated average hours per response:

FR Y-2314 (quarterly): 6 hours,

FR Y-2314 (annual): 6 hours,

FR Y-2314S (annual): 1 hour

Number of respondents:

FR Y-2314 (quarterly): 123,

FR Y-2314 (annual): 300,

FR Y-2314S (annual): 335

Small businesses are not affected.

General description of report: This information collection is mandatory (12 U.S.C. §§ 324, 602, 625, and 1844). FR 2314 data are exempt from disclosure pursuant to Sections (b)(4) and (b)(8) of the Freedom of Information Act (5 U.S.C. §552(b)(4) and (8)).^[3]

Abstract: The FR 2314 reports are collected from U.S. member banks, Edge and agreement corporations, and BHC's for their direct or indirect foreign subsidiaries. Separate reports are required for most subsidiaries, although they may consolidate affiliates that are principally engaged in a similar line of business and that are located in the same country. Newly established or acquired foreign subsidiaries are added to the reporting panel on a flow basis. The parent organization files the FR 2314a for their significant foreign subsidiaries (those with at least $2 billion in total assets or $5 billion in off-balance-sheet activity) quarterly and file the FR 2314a, b, or c annually for their other foreign subsidiaries as of December 31. Subsidiaries with total assets exceeding $250 million must be reported on the FR 2314a. Subsidiaries with total assets between $50 million and $250 million must be reported the FR 2314b. Subsidiaries with total assets less than $50 million must be reported on the FR 2314c. For nominee and inactive companies with total assets less than $1 million, the parent must provide only the name, location, and total assets of the company; the FR 2314c may be used for this purpose, or the information may be transmitted in letter format.

The FR 2314a collects information on assets and liabilities and includes several memoranda items on contingent liabilities and twelve supporting schedules. The supporting schedules provide detail on cash and balances due from depository institutions, securities, loans and lease financing receivables, other assets, claims on related organizations, deposits, other liabilities, liabilities to related organizations, changes in capital and reserve accounts, income and expenses, assets held in trading accounts, and past due and nonaccrual loans and leases. The FR 2314b collects somewhat less information on assets and liabilities, off-balance-sheet items, income and expenses, and securities. The FR 2314c is a brief, one-page report that collects information on total assets, equity capital, net income, and off-balance-sheet items.

Current actions: The Federal Reserve proposes to revise and retitle the FR 2314a as the Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations (FR 2314).

The FR 2314c would be revised and retitled as the Abbreviated Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations (FR 2314S). The FR 2314b the Report of Condition for Foreign Subsidiaries of U. S. Banking Organizations would be eliminated.

The Federal Reserve's proposal to streamline the existing nonbank subsidiary reporting framework for all non-functionally-regulated^[4] nonbank subsidiaries^[5] will also have an effect on existing FR 2314 reporters (not just those that are nonbanks). The revised framework would both provide essential information to supervise and regulate non-functionally-regulated subsidiaries and reduce the burden on the industry. The proposed framework affects foreign subsidiaries held by a U.S. bank holding company or U.S. bank (FR 2314 a, b, and c). Proposed revisions include:

(1) Implementing a reporting form that is consistent with the proposed form for domestic nonbank subsidiary filers;

(2) Reducing the burden by increasing or establishing filing thresholds that are consistent with those proposed for domestic nonbank subsidiary filers;

(3) Establishing filing thresholds for reporters, consistent with risk-focused supervision, based on asset size and off-balance-sheet activity (absolute measures), plus operating revenues and equity capital (relative measures);

(4) Allowing no consolidation among filers; and

(5) Eliminating reporting for the smallest filers.

The FR 2314a would be retitled as the Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations (FR 2314). This proposed form would collect financial information and would be filed by more significant subsidiaries quarterly or annually based on total assets and other reporting criteria. The Abbreviated Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations (FR 2314S) report would comprise only four financial data items: net income, total assets, total equity capital, and total off-balance-sheet items. These are the same four financial data items currently collected as part of the current FR 2314c. This report would be filed by the top-tier BHC or parent organization of smaller subsidiaries.

The proposed reporting changes would introduce more uniformity to several aspects of reporting requirements for subsidiaries and reduce regulatory burden. The proposed implementation date for all of the FR 2314 changes is December 31, 2002.

Also, functionally regulated subsidiaries and merchant banking investments would be exempt from reporting on the FR 2314 and FR 2314S. Provisions of the Gramm-Leach-Bliley Act direct that the Federal Reserve must first rely on reports and information provided by the primary functional regulators for functionally regulated subsidiaries.

In a change from current FR 2314 reporting, consolidation of reporters would not be permitted on the FR 2314 and the FR 2314S. In the past, the Federal Reserve has found that the consolidation rules contribute to inaccurate data collection and raise processing issues. However, since a majority of reporters in the current panel would be exempt from reporting altogether, the removal of the consolidation option should not pose a material burden on reporters.

Also, in accord with the accounting basis for all other regulatory reports filed with the Federal Reserve, the reporting basis for the FR 2314 would be revised to specifically instruct respondents to follow U.S. generally accepted accounting principles (GAAP).

The Federal Reserve proposes that data collected on the FR 2314 reports no longer be given confidential treatment and made available to the public. The Federal Reserve proposes this change in treatment for consistency with public disclosure requirements of other financial reports and believes that the concern of competitive disadvantage relative to their foreign corporate counterparts is no longer a prevalent issue. However, the Federal Reserve may grant confidential treatment for the reporting information, in whole or in part, on a case-by-case basis if justified by the respondent. The Federal Reserve requests specific comment on this proposed change.

Board of Governors of the Federal Reserve System, August 14, 2002.

Robert deV. Frierson,

Deputy Secretary of the Board.

Footnotes

1.  The term “functionally regulated” nonbank subsidiaries are entities where the primary regulator is an organization other than the Federal Reserve, namely the Securities and Exchange Commission, Commodity Futures Trading Commission, state insurance commissioners, or state securities departments.

2.  As distinguished from the term “functionally regulated” nonbank subsidiaries, which are entities in which the primary regulator is an organization other than the Federal Reserve, namely the Securities and Exchange Commission, Commodity Futures Trading Commission, state insurance commissioners, or state securities departments.

3.  Please see the FR 2314 “Current actions” section for the proposed change to confidentiality treatment.

4.  As distinguished from the term “functionally regulated” nonbank subsidiaries, which are entities in which the primary regulator is an organization other than the Federal Reserve, namely the Securities and Exchange Commission, Commodity Futures Trading Commission, state insurance commissioners, or state securities departments. Provisions of the Gramm-Leach-Bliley Act direct that the Federal Reserve must first rely on reports and information provided by the primary regulator for functionally regulated subsidiaries.

5.  The use of the term nonbank subsidiaries includes foreign bank subsidiaries of U.S. BHC's that file the FR 2314 report.