2011-4568. Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB

SUMMARY:

Background. Notice is hereby given of the final approval of proposed information collections by the Board of Governors of the Federal Reserve System (Board) under OMB delegated authority, as per 5 CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the Public). 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 instrument(s) 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.

FOR FURTHER INFORMATION CONTACT:

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.

OMB Desk Officer—Shagufta Ahmed —Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503.

Final approval under OMB delegated authority of 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.

Effective Date: March 31, 2011.

Frequency: Quarterly.

Reporters: Bank holding companies.

Estimated annual reporting hours: FR Y-9C: 188,820; FR Y-9LP: 27,195.

Estimated average hours per response: FR Y-9C: 45.0; FR Y-9LP: 5.25.

Number of respondents: FR Y-9C: 1,049; FR Y-9LP: 1,295.

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 pre-inspection 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: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements for Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve received two comment letters from bankers' organizations on proposed revisions to the FR Y-9C and FR Y-9LP. In addition, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (the banking agencies) received nine comment letters on proposed revisions to the Call Reports, which parallel proposed revisions to the FR Y-9C, from three banks, three bankers' organizations, two bank insurance consultants, and an insurance company.

No comments were received on the following revisions that were proposed to take effect as of March 31, 2011, and therefore the Federal Reserve will implement these revisions as proposed: (1) The break out of commercial mortgage-backed securities issued or guaranteed by U.S. Government agencies and sponsored agencies, (2) the break out of loans and other real estate owned (OREO) information covered by FDIC loss-sharing agreements by loan and OREO category, (3) the addition of new data items for the total assets of captive insurance and reinsurance subsidiaries, (4) the addition of 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), (5) the revision of reporting instructions for construction lending, and (6) the collection of expanded information on the quarterly-averages schedule.

The following section of this notice describes the remaining proposed FR Y-9C and FR Y-9LP report changes and discusses the Federal Reserve's evaluation of the comments received on the proposed changes. After considering the comments, the Federal Reserve will move forward in 2011 with the proposed reporting changes after making certain modifications in response to the comments.

The Federal Reserve recognizes institutions' need for lead time to prepare for reporting changes. Thus, consistent with longstanding practice, for the March 31, 2011, report date, BHCs may provide reasonable estimates for any new or revised FR Y-9C data item initially required to be reported as of that date for which the requested information is not readily available. Furthermore, the specific wording of the captions for the new or revised FR Y-9C data items discussed in this notice and the numbering of these data items should be regarded as preliminary.

Revisions—FR Y-9C

Revisions Related to Call Report Revisions

The Federal Reserve proposed 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.

1. Troubled Debt Restructurings

The Federal Reserve proposed 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 ^[1] issued guidance on commercial real estate loan workouts and small business lending. 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 adversely affected by the recent recession. This effect 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 proposed 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.

The banking agencies received comments from three bankers' associations on the proposed additional detail in the Call Report on loans that have undergone troubled debt restructurings, comparable to the proposed changes to the FR Y-9C described above. Two of the commenters recommended the banking agencies defer the proposed troubled debt restructuring revisions, including the new breakdowns by loan category, until the Financial Accounting Standards Board (FASB) finalizes proposed clarifications to the accounting for troubled debt restructurings by creditors.^[4] In addition, two of the bankers' associations recommended retaining the term “restructured” in the caption titles instead of changing to the term “troubled debt restructurings,” stating that changing this term would result in the collection of only a subset of total restructurings and would misrepresent banks' efforts to work with their customers.

As noted above, BHCs currently report loans and leases restructured and in compliance with their modified terms in Schedule HC-C, Memorandum item 1, and report past due and nonaccrual restructured loans in Schedule HC-N, Memorandum item 1. Although the captions for these line items do not use the term “troubled debt restructurings,” the line item instructions generally characterize loans reported in these items as troubled debt restructurings and direct the reader to the Glossary entry for “troubled debt restructurings” for further information. Furthermore, the Glossary entry states that “all loans that have undergone troubled debt restructurings and that are in compliance with their modified terms must be reported as restructured loans in Schedule HC-C, Memorandum item 1.” Therefore, the Federal Reserve's longstanding intent has been to collect information on troubled debt restructurings in these line items, and these items were not designed to include loan modifications and restructurings that do not constitute troubled debt restructurings (e.g., where a BHC grants a concession to a borrower who is not experiencing financial difficulties).

The accounting standards for troubled debt restructurings are set forth in Accounting Standards Codification (ASC) Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors (formerly FASB Statement No. 15, “Accounting by Debtors and Creditors for Troubled Debt Restructurings,” as amended by FASB Statement No. 114, “Accounting by Creditors for Impairment of a Loan”). This is the accounting basis for the current reporting of restructured troubled loans in existing Schedule HC-C, Memorandum item 1, and Schedule HC-N, Memorandum item 1. The proposed breakdown of the total amount of restructured “other loans” in existing Memorandum item 1.b in both schedules would result in additional detail on loans already within the scope of ASC Subtopic 310-40. To the extent the clarifications emanating from the FASB proposed accounting standards update may result in BHCs having to report certain loans as troubled debt restructurings that had not previously been identified as such, this accounting outcome will arise irrespective of the proposed breakdown of the “other loans” category in Schedule HC-C, Memorandum item 1, and Schedule HC-N, Memorandum item 1. Therefore, the Federal Reserve will implement the new breakdown for the reporting of troubled debt restructurings as proposed.

2. Auto Loans

The Federal Reserve proposed to add a breakdown of the other consumer loans ^[5] or all other loans loan categories contained in several 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-D, Trading Assets and Liabilities; 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 one-quarter. 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 FASBASC Topics 860, Transfers and Servicing, and 810, Consolidations, resulting from ASU No. 2009-16,^[6] and ASU No. 2009-17,^[7] respectively. Until 2010, Schedule HC-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.

The banking agencies received three comments from banks and one comment from a bankers' association on the proposal to separately collect information on automobile loans in the Call Report schedules containing loan category data, comparable to the proposed changes to the FR Y-9C described above. The three banks requested an exemption from the proposed reporting requirements for smaller banks, with one of the banks seeking the exemption only for reporting auto loan interest income and quarterly averages. The bankers' association stated that this revision should not create a significant burden for future loans because core data processors generally have the ability to break out loan types, but it also asked for clarification on the reporting for situations in which auto loans are extended for multiple purposes. In addition, the bankers' association observed that some community banks do not have data readily available on the types or purposes of existing consumer loans, which would prevent them from determining the purpose of loans collateralized by autos, i.e., for the purchase of the auto or for some other purpose, without searching paper loan files.

After considering these comments, the Federal Reserve continues to believe the reporting of information on auto loans from all respondent BHCs is necessary for the Federal Reserve to carry out its supervisory and regulatory responsibilities and meet other public policy purposes. However, the Federal Reserve agrees that the reporting of interest income and quarterly averages for auto loans may be particularly burdensome for BHCs to report. Therefore, the Federal Reserve will not implement the proposed collection of auto loan data on Schedule HI, Income Statement, or Schedule HC-K, Quarterly Averages, in 2011. Instead, the Federal Reserve will evaluate the auto loan data that will begin to be collected in the other FR Y-9C schedules in March 2011 and reconsider whether to collect data on interest income and quarterly averages for auto loans. A decision to propose to collect auto loan interest income and quarterly averages would be subject to notice and comment.

Regarding the request for clarification of the reporting treatment for auto loans extended for multiple purposes and existing consumer loans with autos as collateral, the Federal Reserve has concluded that, to reduce burden, all consumer loans originated or purchased before April 1, 2011, that are collateralized by automobiles, regardless of the purpose of the loan, should be classified as auto loans and included in the new FR Y-9C items for auto loans. For consumer loans originated or purchased on or after April 1, 2011, BHCs should exclude from auto loans any personal cash loans secured by automobiles already paid for and consumer loans where some of the proceeds are used to purchase an auto and the remainder of the proceeds are used for other purposes.

3. Variable Interest Entities

In June 2009, the FASB issued accounting standards that have changed the way entities account for securitizations and special purpose entities (SPE). ASU No. 2009-16 (formerly FAS 166) revised ASC Topic 860, Transfers and Servicing, by eliminating the concept of a qualifying special-purpose 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 Variable Interest Entity (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 ^[8] requires a reporting entity to present “separately on the face of the statement of financial position: a. Assets of a consolidated 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.” ^[9] 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 associated risks in a variable interest entity.” ^[10] 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 proposed 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 proposed 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.

The banking agencies received one comment from a bankers' association that addressed proposed Call Report Schedule RC-V, which is comparable to proposed FR Y-9C Schedule HC-V. The bankers' association recommended a delayed effective date to allow sufficient time for systems modifications.

Because the FR Y-9C balance sheet is completed on a consolidated basis, the VIE amounts that BHCs would report in new Schedule HC-V are amounts that, through the consolidation process, already must be reported in the appropriate balance sheet asset and liability categories. These balance sheet categories, by and large, have been carried over into Schedule HC-V. Schedule HC-V distinguishes between assets of consolidated VIEs that can be used only to settle obligations of the consolidated VIEs and assets not meeting this condition as well as liabilities of consolidated VIEs for which creditors do not have recourse to the general credit of the reporting BHC and liabilities not meeting this condition. This distinction is based on existing disclosure requirements applicable to financial statements prepared in accordance with U.S. GAAP, to which the BHCs likely to have material amounts of consolidated VIE assets and liabilities to report have been subject for one year. Thus, these BHCs should have a process in place, even if manual, for segregating VIE assets and liabilities based on this distinction.

The Federal Reserve recognizes that the proposed separate reporting of consolidated VIE assets and liabilities by the type of VIE activity, i.e., securitization vehicles, asset-backed commercial paper conduits, and other VIEs, goes beyond the disclosure requirements in U.S. GAAP. Otherwise, the proposed data requirements for Schedule HC-V have been based purposely on the GAAP framework. Thus, the Federal Reserve has concluded that it is appropriate to proceed with the addition of new Schedule HC-V in March 2011, as proposed. BHCs are reminded that, as mentioned above, they may provide reasonable estimates in their March 31, 2011, FR Y-9C report for any new or revised item initially required to be reported as of that date for which the requested information is not readily available.

4. 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 the type of policies they hold.

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 the policy support the policy's cash surrender value. In a separate account policy, the policy'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 proposed 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.

The banking agencies received comments from two insurance consultants and an insurance company supporting the proposed revision to provide a breakdown of life insurance assets by type of policy on the Call Report, comparable to the proposed changes to the FR Y-9C described above. However, all three commenters noted that the evolution of life insurance products in recent years has led to a third type of policy becoming more prevalent in the banking industry: Hybrid accounts. Such accounts combine features of general and separate account products by providing the additional asset protection offered by separate accounts while also providing a guaranteed minimum interest-crediting rate, which is common to general accounts. They recommended that the proposal be revised from a two-way to a three-way breakdown of life insurance assets or, although not the preferable approach, advise banking institutions with hybrid account life insurance assets to report them together with general account life insurance assets because they have more general account characteristics.

Because of the Federal Reserve's interest in being better able to understand the risk characteristics of BHCs' holdings of life insurance assets, the Federal Reserve will implement the three-way breakdown of these assets consistent with the commenters' recommendation.

5. Instructional Revisions

A. Reporting of 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 proposed 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.

The banking agencies received one comment from a bankers' association on the proposed guidance on the reporting of 1-4 family residential mortgages held for trading in Call Report Schedule RC-P, comparable to the proposed guidance to the FR Y-9C described above. The commenter supported the proposed clarification and requested further clarification on the reporting of repurchases and indemnifications in this schedule. The commenter suggested separate reporting of loan repurchases from indemnifications for all subitems of Call Report Schedule RC-P, item 6, “Repurchases and indemnifications of 1-4 family residential mortgage loans during the quarter.”

In December 2010, the Federal Reserve clarified the FR Y-9C reporting instructions for Schedule HC-P, item 6, to explain which repurchases of 1-4 family residential mortgage loans are reportable in this item. Specifically, instructional guidance was provided stating that BHCs should exclude 1-4 family residential mortgage loans that have been repurchased solely at the discretion of the BHC from item 6. The Federal Reserve does not believe there is a supervisory need to separate the reporting of loan repurchases from indemnifications in Schedule HC-P, item 6.

B. 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 American Bankers Association (ABA) requested that the Federal Reserve reconsider the reporting treatment for floating rate instruments with contractual floors and ceilings. More specifically, the ABA recommended revising the reporting instructions so that floating rate instruments would always be reported 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 concluded that an instructional revision was warranted, but the extent of the revision should be narrower than recommended by the ABA. The Federal Reserve concluded 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 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 proposed to revise the instructions for reporting maturity and repricing data in Schedule HC-B. As proposed, 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).

The banking agencies received comments from two bankers' associations on this proposed instructional change. One bankers' association recommended the banking agencies adopt their proposed approach only for floating rate loans reported in Schedule RC-C, part I. This bankers' association opposed extending the same proposed approach to the other three Call Report schedules in which repricing data are reported for certain other floating rate instruments because its “members believe that not enough research has been completed” to understand the effect of the proposed instructional change on how these other instruments would be reported. The other bankers' association recommended against proceeding with the proposed instructional change because of the implementation burden associated with the multiple systems that would need to be revised. This association also observed that the revised information for floating rate instruments at contractual ceilings and floors would be commingled with the maturity and repricing information for all of the other instruments in the same asset or liability category.

After considering the comments received, the banking agencies have decided not to change the instructions for reporting repricing information for floating rate instruments at contractual ceilings and floors. Such floating rate instruments should continue to be reported in accordance with the longstanding requirement that the instruments be treated as “fixed rate” rather than “floating rate” until their rate is again free to float. To maintain consistency between the Call Report and FR Y-9C reporting instructions, the Federal Reserve will retain the current instructions for reporting maturity and repricing information on FR Y-9C Schedule HC-B.

Revisions—FR Y-9LP

The Federal Reserve proposed 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 proposed 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 proposed 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.

Like their comments to proposed revisions to the FR Y-9C, two bankers' associations commented that the Federal Reserve should defer proposed FR Y-9LP instructional modifications until the FASB finalizes proposed clarifications to the accounting for troubled debt restructurings by creditors. As discussed above, ASC Subtopic 310-40 provides the accounting basis for the current reporting of restructured troubled loan information on the FR Y-9LP. To the extent the clarifications emanating from the FASB proposed accounting standards update may result in BHCs having to report certain loans as troubled debt restructurings that had not previously been identified as such, this accounting outcome will arise irrespective of the proposed instructional modifications to the FR Y-9LP. Therefore, the Federal Reserve will implement the instructional modifications for the reporting of troubled debt restructurings as proposed.

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

Agency form number: FR Y-11.

OMB control number: 7100-0244.

Effective Date: March 31, 2011.

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 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: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve received one comment from a bankers' association recommending that the FR Y-11 and the FR 2314 be combined into a single form to enable the use of vendor software and electronic submission. The commenter stated that such functionalities are available on the FR Y-11 but are not available on the FR 2314.

The Federal Reserve has offered BHCs the option of submitting their FR 2314 reports electronically for several years. Any BHC interested in submitting their reports electronically should contact their Reserve Bank concerning procedures for electronic submission. Therefore, the Federal Reserve will not merge the reporting forms. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed.

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

Agency form number: FR 2314.

OMB control number: 7100-0073.

Effective Date: March 31, 2011.

Frequency: Quarterly and annually.

Reporters: Foreign subsidiaries of U.S. state member banks, BHCs, 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 non-functionally 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: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. The comment period expired on January 3, 2011. The Federal Reserve received one comment from a bankers' association recommending that the FR Y-11 and the FR 2314 be combined into a single form to enable the use of vendor software and electronic submission. The commenter stated that such functionalities are available on the FR Y-11 but are not available on the FR 2314.

The Federal Reserve has offered BHCs the option of submitting their FR 2314 reports electronically for several years. Any BHC interested in submitting their reports electronically should contact their Reserve Bank concerning procedures for electronic submission. Therefore, the Federal Reserve will not merge the reporting forms. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed.

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.

Effective Date: March 31, 2011.

Frequency: Quarterly and annually.

Reporters: Foreign banking organizations.

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 non-functionally regulated U.S. nonbank subsidiaries held by foreign banking organizations (FBOs) other than through a U.S. 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: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations. The comment period expired on January 3, 2011. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed.

5. Report title: Consolidated Report of Condition and Income for Edge and Agreement Corporations.

Agency form number: FR 2886b.

OMB control number: 7100-0086.

Effective Date: March 31, 2011.

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 statement, two schedules reconciling changes in capital and reserve accounts, and 11 supporting schedules and it parallels the Call Report 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: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, with revision, of the Consolidated Report of Condition and Income for Edge and Agreement Corporations. The comment period expired on January 3, 2011. As no comments were received on the proposed changes, the Federal Reserve will implement the changes as initially proposed.

Final approval under OMB delegated authority of 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.

Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Financial Statements for Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters.

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-balance-sheet 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.

Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters.

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, BHCs, 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-balance-sheet 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.

Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Abbreviated Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters.

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.

Reporters: Foreign banking organizations.

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 non-functionally regulated U.S. nonbank subsidiaries held by FBOs other than through a U.S. BHC, U.S. 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.

Current actions: On November 3, 2010, the Federal Reserve published a notice in the Federal Register (75 FR 67721) requesting public comment for 60 days on the extension, without revision, of the Financial Reports of Foreign Banking Organizations. The comment period expired on January 3, 2011. The Federal Reserve did not receive any comment letters.

Board of Governors of the Federal Reserve System, February 24, 2011.

Jennifer J. Johnson,

Secretary of the Board.

Footnotes

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.

2.  Accounting Standards Codification paragraph 470-60-15-11.

3.  For 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.

4.  FASB Proposed Accounting Standards Update (ASU): Receivables (Topic 310), Clarifications to Accounting for Troubled Debt Restructurings by Creditors.

5.  As described later in this notice, the other consumer loans loan category was proposed to be added to Schedule HC-K beginning March 31, 2011.

6.  Formerly Statement of Financial Accounting Standards (SFAS) No. 166, Accounting for Transfers of Financial Assets (FAS 166).

7.  Formerly SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (FAS 167).

8.  Formerly paragraph 22A of FIN 46(R), as amended by FAS 167.

9.  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/​f3a70ca28d9f8210VgnVCM200000bb42f00aRCRD.htm).

10.  See paragraphs A80 and A81 of FAS 167.