FDIC Federal Register Citations

Federal Register: January 27, 2004

(Volume 69, Number 17)]

[Notices] 

[Page 2597-2598]

[DOCID:fr16ja04-61]                

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION

Agency Information Collection Activities: Submission for OMB Review; Comment Request

AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury;

Board of Governors of the Federal Reserve System (Board); and

Federal Deposit Insurance Corporation (FDIC)

ACTION: Notice of information collection to be submitted to OMB for

review and approval under the Paperwork Reduction Act of 1995.

SUMMARY: In accordance with the requirements of the Paperwork Reduction

Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the FDIC

(the ``agencies'') may not conduct or sponsor, and the respondent is

not required to respond to, an information collection unless it

displays a currently valid Office of Management and Budget (OMB)

control number. On November 8, 2002, the agencies requested public

comment for 60 days on proposed

revisions to the Consolidated Reports of Condition and Income (Call

Report), which are currently approved collections of information. After

making certain modifications, some of these proposed revisions were

adopted by the Federal Financial Institutions Examination Council

(FFIEC), of which the agencies are members, approved by OMB, and took

effect March 31, 2003. After considering the comments the agencies

received on the other proposed revisions from the November 2002

proposal, the FFIEC has adopted these remaining revisions with certain

changes and the agencies are submitting them to OMB for review and

approval.

DATES: Comments must be submitted on or before February 26, 2004.

ADDRESSES: Interested parties are invited to submit written comments to

any or all of the agencies. All comments, which should refer to the OMB

control number(s), will be shared among the agencies.

OCC: Comments should be sent to the Public Information Room, Office

of the Comptroller of the Currency, Mailstop 1-5, Attention: 1557-0081,

250 E Street, SW., Washington, DC 20219. Due to delays in paper mail

delivery in the Washington area, commenters are encouraged to submit

comments by fax or e-mail. Comments may be sent by fax to (202) 874-

4448, or by e-mail to regs.comments@occ.treas.gov. You can inspect and

photocopy the comments at the OCC's Public Information Room, 250 E

Street, SW., Washington, DC 20219. You can make an appointment to

inspect the comments by calling (202) 874-5043.

Board: Written comments, which should refer to ``Consolidated

Reports of Condition and Income, 7100-0036,'' may be mailed to Ms.

Jennifer J. Johnson, Secretary, Board of Governors of the Federal

Reserve System, 20th and C Streets, NW., Washington, DC 20551. Due to

temporary disruptions in the Board's mail service, commenters are

encouraged to submit comments by electronic mail to

regs.comments@federalreserve.gov, or by fax to the Office of the

Secretary at 202-452-3819 or 202-452-3102. Comments addressed to Ms.

Johnson also may be delivered to the Board's mailroom between 8:45 a.m.

and 5:15 p.m. weekdays, and to the security control room outside of

those hours. Both the mailroom and the security control room are

accessible from the Eccles Building courtyard entrance on 20th Street

between Constitution Avenue and C Street, NW. Comments received may be

inspected in room M-P-500 between 9 a.m. and 5 p.m. on weekdays

pursuant to sections 261.12 and 261.14 of the Board's Rules Regarding

Availability of Information, 12 CFR 261.12 and 261.14.

FDIC: Written comments should be addressed to Steven F. Hanft,

Paperwork Clearance Officer, Room MB-3964, Federal Deposit Insurance

Corporation, 550 17th Street, NW., Washington, DC 20429. All comments

should refer to ``Consolidated Reports of Condition and Income, 3064-

0052.'' Commenters are encouraged to submit comments by electronic mail

to shanft@fdic.gov or by fax to (202) 898-3838. Comments also 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.

A copy of the comments may also be submitted to the OMB desk

officer for the agencies: Joseph F. Lackey, Jr., Office of Information

and Regulatory Affairs, Office of Management and Budget, New Executive

Office Building, Room 10235, Washington, DC 20503 or electronic mail to

jlackeyj@omb.eop.gov.

FOR FURTHER INFORMATION CONTACT: For further information about the

revisions discussed in this notice, please contact any of the agency

clearance officers whose names appear below. In addition, sample copies

of Call Report forms can be obtained at the FFIEC's Web site (http://www.ffiec.gov

).

OCC: John Ference, Acting OCC Clearance Officer, or Camille Dixon,

(202) 874-5090, Legislative and Regulatory Activities Division, Office

of the Comptroller of the Currency, 250 E Street, SW., Washington, DC

20219.

Board: Cynthia M. Ayouch, Board Clearance Officer, (202) 452-3829,

Division of Research and Statistics, Board of Governors of the Federal

Reserve System, 20th and C Streets, NW., Washington, DC 20551.

Telecommunications Device for the Deaf (TDD) users may call (202) 263-

4869.

FDIC: Steven F. Hanft, Paperwork Clearance Officer, (202) 898-3907,

Legal Division, Federal Deposit Insurance Corporation, 550 17th Street,

NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: Request for OMB approval to extend, with

revision, the following currently approved collections of information:

Report Title: Consolidated Reports of Condition and Income.

Form Number: FFIEC 031 (for banks with domestic and foreign

offices) and FFIEC 041 (for banks with domestic offices only).

Frequency of Response: Quarterly.

Affected Public: Business or other for-profit.

For OCC:

OMB Number: 1557-0081.

Estimated Number of Respondents: 2,126 national banks.

Estimated Time per Response: 42.30 burden hours.

Estimated Total Annual Burden: 359,719 burden hours.

For Board:

OMB Number: 7100-0036.

Estimated Number of Respondents: 952 state member banks.

Estimated Time per Response: 48.35 burden hours.

Estimated Total Annual Burden: 184,117 burden hours.

For FDIC:

OMB Number: 3064-0052.

Estimated Number of Respondents: 5,332 insured state nonmember

banks.

Estimated Time per Response: 32.95 burden hours.

Estimated Total Annual Burden: 702,758 burden hours.

The estimated time per response for the Call Report is an average,

which varies by agency because of differences in the composition of the

banks under each agency's supervision (e.g., size distribution of

institutions, types of activities in which they are engaged, and number

of banks with foreign offices). For the Call Report as it would be

revised, the time per response for a bank is estimated to range from 15

to 600 hours, depending on individual circumstances.

General Description of Report

These information collections are mandatory: 12 U.S.C. 161 (for

national banks), 12 U.S.C. 324 (for state member banks), and 12 U.S.C.

1817 (for insured state nonmember commercial and savings banks, and for

all banks for deposit information). Except for selected items, these

information collections are not given confidential treatment.

Abstract

Banks file Call Reports 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 Reports provide the most current statistical data available for

identifying areas of focus for both on-site and off-site examinations,

for evaluating bank corporate applications such as mergers, and for

monetary and other public policy purposes. Call Reports are also used

to calculate all banks' deposit insurance and Financing Corporation

assessments and national banks' semiannual assessment fees.

Current Actions

On November 8, 2002, the OCC, the Board, and the FDIC jointly

published a

notice soliciting comments for 60 days on proposed revisions to the

Call Report (67 FR 68229). The agencies' notice addressed a number of

different types of changes to the Call Report requirements. These

changes related to the content of the Call Report itself, the

submission deadline for certain banks, and the agencies' process for

validating and publicly releasing the data that banks report.

After considering the comments the agencies received on the

November 2002 proposal, the FFIEC and the agencies adopted some of the

proposed revisions after making certain modifications to them,

submitted them to OMB for review with a request for public comment on

them (68 FR 10310), and received OMB approval to implement them as of

March 31, 2003. The agencies' notice also explained that the FFIEC and

the agencies were continuing to evaluate three other elements of their

November 2002 proposal:

(1) A reduction from 45 to 30 days in the Call Report filing period

for banks with more than one foreign office,¹

(2) The creation of a supplement to the Call Report that would

enable the agencies to collect a limited amount of data from certain

banks in the event of an immediate and critical need for specific

information, and

(3) The establishment of edit criteria that would have to be met in

order for a bank's Call Report data to be accepted beginning upon

implementation of the agencies' new business model for collecting and

validating Call Reports in 2004.

The FFIEC and the agencies have concluded their evaluations of

these three elements of their November 2002 proposal and have decided

to proceed with them in modified form as more fully discussed below. In

addition, in preparation for the implementation of the agencies' new

Call Report business model, banks will begin to provide contact

information for the authorized officer who signs their Call Report as

part of their submission of the report. The contact information would

be afforded confidential treatment and includes the officer's name,

title, phone number, e-mail address, and fax number. This revision

would take effect with the Call Report for March 31, 2004.

Type of Review: Revisions of currently approved collections.

Comments Received on the Agencies' Proposal

In response to their November 8, 2002, notice, the agencies

received 13 comment letters, eight from banks and banking

organizations, three from bankers' associations, one from a

governmental entity, and one from a trade group outside the banking

industry. The FFIEC and the agencies have considered the comments

received from these 13 respondents as they relate to the revisions that

are the subject of this notice.

Reduction in the Filing Period for Banks with More Than One Foreign

Office--Of the 13 commenters, 8 addressed the proposed reduction from

45 to 30 days in the filing period for banks with more than one foreign

office. One bankers' association observed that its member banks

generally did not perceive this proposed change to be a problem.

However, five large banks and two other bankers' associations objected

to this proposed change. These commenters indicated that, compared to

other banks of similar size that have a 30-day filing deadline, banks

with multiple foreign offices are more heavily involved in certain

activities, such as securitizations, credit enhancements, and fiduciary

activities, which affect the amount and complexity of the information

these banks must report in the Call Report. In addition, foreign office

data often must be translated from another currency into U.S. dollars

and converted from local accounting principles to U.S. accounting

principles. These commenters therefore expressed concern about the cost

and burden of a shorter filing period, which would require affected

banks to modify their reporting systems and processes and add or

reallocate staff. They further stated that an earlier filing deadline

could adversely affect data quality, at least in part by limiting the

amount of time available for the review of Call Report data prior to

submission.

Commenters suggested alternatives to the agencies' proposal to

reduce the filing period for banks with multiple foreign offices to 30

days beginning June 30, 2003. One alternative would be for the agencies

to implement a staggered submission process for banks with multiple

foreign offices under which these banks would file a preliminary

balance sheet, income statement, and domestic office deposit data

within 30 days followed by complete Call Report data within 45 days.

Another alternative would be for the agencies to adopt a three-year

phased-in approach like the Securities and Exchange Commission (SEC)

did in August 2002 when it shortened the filing period for larger

public companies' quarterly reports on Form 10-Q from 45 to 35 days.

Finally, commenters suggested that if the filing period for the Call

Report data is reduced, the filing periods for other regulatory reports

that banking organizations submit to the agencies should be lengthened.

In proposing to reduce the filing period for the approximately 40

banks with more than one foreign office, a group that includes the

largest banks in the industry, the agencies noted that more timely

receipt of Call Report data from all institutions would enable the

agencies to make these data, and the agencies' analyses thereof,

available to bankers and the marketplace earlier than at present. The

agencies' proposal also cited the SEC's August 2002 decision to

accelerate the filing period for quarterly and annual reports required

from larger public companies under the federal securities laws as

evidence of the importance of earlier public availability of

information to decision-making. At the same time, the FFIEC and the

agencies understand the concerns expressed by commenters about the

impact that an almost immediate one-third reduction in the filing

period would have on the systems and staffs of affected banks. The

FFIEC and the agencies have considered these concerns and the

alternatives suggested by commenters as well as the Board's March 2003

decision concerning the shortening of the filing deadline for the bank

holding company report on form FR Y-9C (68 FR 15725). As a result, the

FFIEC and the agencies have modified their original proposal and,

similar to the actions by the SEC and Board, are adopting a phased-in

approach for the Call Report. For banks with more than one foreign

office, the filing deadline will be reduced to 40 calendar days from 45

calendar days starting with the June 2004 Call Report and to 35

calendar days starting with the June 2005 Call Report. These reduced

filing periods will apply to each quarterly Call Report, including the

year-end report. For all other banks, the Call Report filing deadline

will remain 30 calendar days.

The changes in Call Report requirements that OMB approved for

implementation as of March 31, 2003, included authorization for the

FDIC to contact not more than 20 banks with more than one foreign

office on or about each May 1 and November 1 if their March 31 and

September 30 Call Reports had not been received in order to obtain

certain deposit data needed to estimate insured deposits. As approved

by OMB, the FDIC is permitted to

survey these banks as long as the current 45-day filing period remains

in effect. However, under the current statutory and regulatory

timeframes for setting the semiannual deposit insurance assessment

rates, the FDIC Board is required to announce the assessment rate

schedules on approximately May 15 and November 15 each year. In order

to do so, the FDIC Board must meet to decide on the rate schedule for

the next semiannual period in early May and November. Thus, the

reduction in the Call Report filing period to 35 days, rather than to

30 days as the agencies proposed in November 2002, does not eliminate

the need for the FDIC's limited-scope deposit data survey. Accordingly,

as long as the Call Report filing period for banks with multiple

foreign offices exceeds 30 days, the FDIC is seeking ongoing authority

to contact not more than 20 banks of these banks by telephone on or

about each May 1 and November 1 if their March 31 and September 30 Call

Reports have not been submitted. The FDIC would then receive the

requested information on the amount of domestic office deposits and

estimated uninsured deposits from the surveyed banks over the

telephone, by e-mail, or by fax.

Call Report Supplement--Two banks and two bankers'' associations

offered comments on the proposed addition to the Call Report of a

supplement that the agencies would expect to use in the infrequent

event of an immediate and critical need to collect certain information

from a segment of the banking industry.² The November 2002 proposal

noted that the Paperwork Reduction Act of 1995 has emergency procedures

for obtaining OMB approval to collect information on a one-time basis,

but stated the agencies' preference to take a proactive approach and

obtain authority to collect critical data in advance of such a future

need. The Board currently has comparable authority to collect a

supplement to the FR Y-9C bank holding company report (Supplement to

the Consolidated Financial Statements for Bank Holding Companies; FR Y-

9CS; OMB No. 7100-0128).

One commenter questioned whether the agencies' proposed addition of

a supplement to the Call Report had satisfied applicable Administrative

Procedure Act requirements because the proposal lacked sufficient

specificity, made no provision for confidential treatment of the data

that would be collected, and the burden estimate was without

foundation. Rather than creating a Call Report supplement, this

commenter recommended that the agencies should rely on the existing

emergency provisions of the Paperwork Reduction Act should they be

confronted with an ad hoc need for critical information.

Two other commenters sought clarification of the frequency with

which the Call Report supplement would be collected and magnitude of

the data that would be requested because of the cost and burden to

banks should the agencies overuse their authority for this supplement.

One of these commenters also expressed concern about the absence of a

prior opportunity to evaluate and comment on the data to be collected

on the supplement, which led the commenter to recommend that such data

be accorded confidential treatment. In contrast, the other commenter

recommended that the agencies should permit institutions to request

confidential treatment for their data. Finally, both of these

commenters, as well as the fourth commenter, questioned what the

submission deadline for the supplement would be. In addition, the

fourth commenter recommended that the agencies set specific criteria

for identifying the banks that must complete the supplement and limit

the data to be collected to specific predefined items. This commenter

also sought clarification of the circumstances in which there would be

an ``immediate and critical need'' for data.

The Paperwork Reduction Act of 1995 and OMB's implementing

regulation (5 CFR 1320) establish procedures for obtaining OMB approval

for information collections. The November 2002 notice that the agencies

published in the Federal Register seeking public comment on the

proposed Call Report supplement is sufficiently specific to meet the

standards established in that law and regulation. The notice and

comment requirements of the Administrative Procedure Act do not apply

to the proposed supplement. The Paperwork Reduction Act does not

require that burden estimates for collections of information meet a

specified level of precision, accuracy, and reliability. It requires

only that the agencies make explicit the assumptions they used to

estimate the number of respondents and the time needed to respond. The

assumptions underlying the burden estimate associated with the proposed

supplement have a degree of reliability that is typical for collections

of this nature.

Furthermore, the agencies believe that they established appropriate

constraints in their proposal with respect to their use of a Call

Report supplement in order to limit the frequency of its use and the

resulting reporting burden. In this regard, to limit the potential for

overuse of the Call Report supplement, the agencies proposed that the

members of the Federal Financial Institutions Examination Council would

be required to approve the specific use of the supplement. Thus, the

Examination Council's Reports Task Force would not have the delegated

authority to institute a data collection using the Call Report

supplement. The agencies note that the Board has used its authority to

collect the bank holding company supplement (FR Y-9CS) only twice over

the last 18 years, and its most recent use was to capture information

on new activities authorized by the Gramm-Leach-Bliley Act of 1999.

In their November 2002 proposal, the agencies also stated that in

any quarter in which the supplement were to be collected, no more than

10 percent of the banks under each agency's supervision would be

required to complete the supplement and the reporting burden imposed on

these banks would not exceed one hour per quarter. This is based on the

assumption that the event giving rise to an immediate and critical data

need would have a significant effect on a limited number of

institutions. Thus, if the agencies were confronted with an immediate

and critical need for data from more than 10 percent of their

supervised banks or if the collection of such data would impose a

reporting burden greater than one hour per quarter, the agencies would

have to request OMB approval to use the Call Report supplement to

collect the data. Otherwise, the agencies would need to follow the

emergency procedures established under the Paperwork Reduction Act for

obtaining the authority to collection the data on a one-time basis.

Should there be a continuing need for data reported on the supplement

or collected under emergency authority, the agencies would have to

adhere to the standard Paperwork Reduction Act procedures for revising

an existing approved information collection.

As for the circumstances in which the agencies would envision an

``immediate and critical need'' for data, the proposal cited as

examples an unexpected market event or change in credit conditions that

materially affects certain institutions as well as a statutory change.

Another example would be a material change in accounting standards. If

and when an

immediate and critical need for data were to arise and the Examination

Council members approved the use of the Call Report supplement, the

supplement would consist of specifically defined items (and related

instructions) and specific criteria would be established for

identifying the banks required to complete the supplement. The

supplement normally would be collected as part of the next quarterly

Call Report and the submission deadline for the supplement would be the

same as for the Call Report (unless the Examination Council approved a

later deadline). Accordingly, the ``as of'' date for the items on the

supplement typically would be the Call Report date (or a period ending

as of the report date). The Examination Council's approval to collect

the supplement also would specify whether the reported data would be

accorded confidential treatment on an individual institution basis,

taking into consideration the nature of the data and the limited number

of banks from which it would be collected. The FFIEC and the agencies

would advise all banks about the supplemental reporting requirement at

the earliest practicable date, and the notification would contain the

information discussed above in this paragraph.

Criteria for Acceptance of Call Report Data--In August 2002, the

FFIEC, on behalf of the agencies, issued a Request for Proposal for the

design and implementation of a new business model for processing Call

Report data. In June 2003, the FFIEC awarded a contract for the

development of this new business model, a principal feature of which is

a central data repository (CDR) to collect, validate, manage and

distribute Call Report information. As part of the introduction of this

new business model, currently targeted for implementation with the

September 2004 Call Report, the agencies would change the validation

process for Call Report data.

At present, a bank's completed Call Report data are subjected to

numerous edit checks to assess the accuracy and reasonableness of the

reported data after the data have been electronically submitted to the

agencies. If the agencies' validation process identifies any edit

failures or exceptions in a bank's reported data, an agency Call Report

analyst normally contacts the bank, typically by telephone, to obtain

either an explanation of the facts and circumstances that support the

correctness of data as reported or any necessary corrections. This

follow-up with a bank takes place anywhere from one day to four weeks

after a bank has submitted its data.

Under the new business model, the validation process will take

place in conjunction with a bank's submission of its Call Report data

to the agencies. The CDR will contain all of the edit criteria and

formulas, where they would be publicly available. Call Report

preparation software into which the edits have been incorporated will

identify any edit failures or exceptions while a bank is completing its

report. The bank will then be able to correct its data to eliminate any

validity edit failures, which are mathematical and logical tests. The

software will also provide a method for the bank to supply explanatory

comments concerning any quality edit exceptions, which are tests of the

reasonableness of the data, including tests against historical

performance and other relational tests.

Upon implementation of the CDR, the agencies proposed to not accept

a bank's Call Report submission if it contains any validity edit

failures and lacks explanatory comments for any quality edit

exceptions. Because a bank would be aware of any edit failures or

exceptions as it completes its Call Report, edit failures and

exceptions will be addressed immediately rather than after-the-fact as

they are under the agencies' current approach to data validation.

Although banks will still have to correct validity edit failures and

provide explanations for quality edit exceptions that support their

reported data, the planned shift in the validation process should

reduce the agencies' subsequent questions about these data. The new

process also should result in quicker validation, acceptance,

disclosure, and use of individual bank Call Report data.

Three banks and two bankers' associations commented on several

matters relating to this aspect of the November 2002 proposal. Four of

these commenters stated that the proposed requirement for a bank to

provide explanatory comments for quality edit exceptions by the

submission deadline for its Call Report data, rather than in response

to an agency inquiry after the data have been filed and edited, will

necessitate more work on the bank's part before it files its data than

under the current processing system. They indicated that this has the

potential to increase reporting burden and reduce the time available to

a bank to ensure the accuracy of its reported data. The fifth commenter

stated that the quality edits must be logical and reasonable in number

so that banks do not spend an unreasonable amount of time and effort

providing explanatory comments.

The agencies acknowledge that the change in the timing of when

banks need to address edit failures and exceptions means that banks

will need to allot time prior to the Call Report submission deadline to

address any edit failures or exceptions identified by their Call Report

preparation software. However, under the agencies' current validation

process, the average number of edit exceptions identified upon receipt

of Call Report data is from 3 to 4 per bank. The actual number of edit

exceptions varies from none for about 35 percent of all banks to an

average of about 12 for the largest banks with foreign offices. The

number of edit exceptions per bank is not expected to change with the

introduction of the CDR. Thus, the number of explanations that most

banks will need to provide as part of their Call Report submission

under the new business model should not be excessive. Furthermore, one

of the purposes for implementing the new process is to ensure that

banks are accountable for the quality and accuracy of their data so

that the data validation process can be completed sooner, which will

enable the data to be made available to users within the agencies and

to the public earlier.

Four of the commenters sought assurance from the agencies that

banks' explanatory comments for quality edit exceptions would be

accorded confidential treatment. Reasons given for this request

included the following: (1) Public disclosure of explanatory comments

could place banks at a competitive disadvantage compared to other

companies not subject to such disclosure requirements; (2) the

explanatory comments are of a supervisory nature and are supplemental

to the Call Report data; (3) the comments may be misinterpreted by the

public; and (4) edit exceptions may occur as a result of institution-

specific business strategies or transactions.

Under the agencies' current data validation approach, agency Call

Report analysts record the explanations they obtain from banks

concerning edit exceptions that are identified when their Call Report

data are processed after they have been submitted to the agencies.

Obtaining these after-the-fact explanations is an element of the

agencies' overall supervision of banks and, as commenters observed, the

explanations currently receive confidential treatment. The agencies'

adoption of the new business model will simply shift the timing of

receipt of the explanations that banks will provide to support the

correctness of the data they have reported. Accordingly, the agencies

will continue to treat banks'

explanatory comments that address any quality edit exceptions as

confidential. Should the agencies seek to make the explanatory comments

publicly available in the future, they will propose a change in their

policy and request public comment.

Five commenters recommended that the agencies disclose the quality

edits they plan to implement in advance of their effective date so that

banks can evaluate and comment on them. All but one of these commenters

suggested that the issuance of these edits take place at least two

quarters in advance. Another commenter expressed concern that because

explanatory comments about edit exceptions would be an integral part of

a bank's Call Report submission, the edits themselves would be

considered part of the reporting requirements, which would make them

subject to notice and comment. The agencies believe that both they and

banks will benefit from the release of planned edits prior to their

implementation date. The implementation of revisions to the data

collected in the Call Report normally takes place as of the March 31

report date. The agencies' timeline for the introduction of reporting

revisions under the new business model calls upon them to make the

edits associated with reporting revisions available to banks, software

vendors, and other interested parties for review on the CDR Web site

five and one half months before the customary March 31 effective

date.³  Banks and other parties could then submit any questions or

comments about these edits to the agencies. The final version of these

edits would be available on the CDR Web site three and one half months

before the effective date. Banks also would be free to provide the

agencies with their views on specific Call Report edits at any other

time. In this regard, the agencies note that, for more than one year,

they have published the Call Report edits currently in use on the

FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm) for

banks' reference.

Two commenters indicated that some banks on occasion have triggered

certain validity edit failures due to unusual circumstances and not

because of inaccurately reported data. These commenters expressed

concern that there would be situations in which the agencies would not

accept a bank's Call Report data due to a validity edit failure caused

by a problem with the edit itself rather than with the data. This could

result in the late filing of an institution's data, which could subject

the institution to monetary penalties. These two commenters as well as

a third recommended that the agencies' new business model include an

override feature that would allow them to accept data as reported when

a validity edit problem exists. The agencies are reviewing their

validity edits to ensure that they are properly designated as such. Any

that are more properly considered quality edits will be redesignated

accordingly. In addition, once the new business model is implemented,

should the agencies find that an edit contained within the CDR is not

performing properly, they will be able to override the edit until the

problem is resolved.

Two commenters also requested that, when a bank has reached the

Call Report submission deadline but its data contain one or more

quality edit exceptions, the bank should be allowed to file its data

while indicating that the exception is still under investigation. From

the agencies' perspective, a key reason for requiring banks to provide

explanatory comments concerning quality edit exceptions is to hold

banks accountable and responsible for the quality of the Call Report

data that they submit. When a bank prepares its data, it will need to

complete its internal review process at an early enough date prior to

the submission deadline so that if changes to the bank's Call Report

data arise from the final review of the data and trigger edit

exceptions, the bank has sufficient time to do any necessary research.

Therefore, the agencies do not believe it is appropriate for a bank to

file its Call Report with an explanatory comment stating that it is

investigating the reason for an edit exception. In addition, as noted

above, the average number of edit exceptions per bank Call Report under

the agencies' existing validation process is low.

Two commenters noted that there are quality edit exceptions that

recur from quarter to quarter and suggested that the new business model

should permit some flexibility in responding to quality edit

exceptions. One possible means for doing so would be by providing a

method that would enable banks to carry quality edit explanations

forward from one quarter to the next so that they can avoid reentering

the same explanation in successive quarters. The agencies recognize

that such a method would aid in reducing burden, but they are also

concerned about the potential for a bank to carry forward the prior

quarter's explanation when that explanation does not fit the

circumstances giving rise to the quality edit exception in the current

quarter. Nevertheless, the Call Report software vendors are aware of

this matter and each vendor will determine the level of service that it

will make available to its bank customers in its software.

In addition, two commenters sought a better explanation of what

constitutes a quality edit for which an explanation would be required

in order for a bank's Call Report data to be accepted. More

specifically, one commenter asked whether the quality edits include

edits that compare a bank's currently reported data to data reported in

a prior period and to data reported in another regulatory report, e.g.,

the bank holding company report on the Board's form FR Y-9C. As

previously mentioned, the Call Report edits currently in use are posted

on the FFIEC's Web site for banks' reference. The agencies currently

employ and will continue to use edits that perform comparisons between

current and prior period data. As for comparisons between data from the

Call Report and data from another regulatory report, edits of this

nature will not at this time be included among the quality edits the

agencies' new business model will use to determine whether to accept a

bank's Call Report data. Nevertheless, the agencies may use edits of

this nature in their analyses of individual banks' Call Report data

after the data has been submitted to the CDR and accepted by the

agencies.

Finally, one commenter recommended that the agencies not

immediately finalize their proposal to not accept a Call Report

submission that contains any validity edit failures and lacks

explanatory comments for any quality edit exceptions, but to continue

to work with the banking industry to ensure that the Call Report

acceptance process is workable and secure before implementing it. In

the time since this comment was received in January 2003, the agencies

have established a collaborative working group of representatives from

banking institutions and industry trade groups. This group serves as a

two-way vehicle for gaining input from, and responding to, banks

concerning all aspects of the new business model, including the

criteria for acceptance of Call Report submissions. Through meetings

and conference calls, the agencies are in frequent communication with

industry representatives. The collaborative process will also entail

voluntary testing of the new CDR system in three phases prior to

industry-wide implementation: A functional pilot test beginning in

approximately April 2004, an end-to-end test beginning in approximately

May 2004, and a volume test beginning

in approximately August 2004. Following the successful completion of

testing, the agencies will proceed with global enrollment so that all

banks are ready to submit their Call Report data using the new CDR

system, which is scheduled to be implemented as of the September 30,

2004, report date. The Call Report acceptance process will begin as

proposed at that time.

Request for Comment

Comments are invited on:

(a) Whether the proposed revisions to the Call Report collections

of information are necessary for the proper performance of the

agencies' functions, including whether the information has practical

utility;

(b) The accuracy of the agencies' estimates of the burden of the

information collections as they are proposed to be revised, including

the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the

information to be collected;

(d) Ways to minimize the burden of information collections on

respondents, including through the use of automated collection

techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation,

maintenance, and purchase of services to provide information.

Comments submitted in response to this notice will be shared among

the agencies. All comments will become a matter of public record.

Written comments should address the accuracy of the burden estimates

and ways to minimize burden as well as other relevant aspects of these

information collection requests.

Dated: January 20, 2004.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory Activities Division,

Office of the Comptroller of the Currency.

Board of Governors of the Federal Reserve System, January 14,

2004.

Jennifer J. Johnson,

Secretary of the Board.

Dated in Washington, DC, this 22nd day of January, 2004.<

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 04-1729 Filed 1-26-04; 8:45 am]

BILLING CODE 4810-33-P, 6210-01-P and 6714-01-P

 

¹ Because the agencies had proposed in November 2002 to reduce

this filing period effective June 30, 2003, their notice requesting

comment on the revisions submitted to OMB for review stated that any

reduction in the filing period would not take effect until after

June 30, 2003.

² One other bank briefly referred to the creation of this

supplement in conjunction with its comments concerning the reduction

in the filing period.

³ These edits would not be published for comment in the

Federal Register.