FDIC Federal Register Citations

[Federal Register: October 2, 1997 (Volume 62, Number 191)]

[Notices]

[Page 51715-51720]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr02oc97-129]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

Federal Reserve System

Federal Deposit Insurance Corporation

Proposed Agency Information Collection Activities; 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 and request for comment.

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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, and information collection that has been

extended, revised, or implemented on or after October 1, 1995, unless

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

control number. The Federal Financial Institutions Examination Council

(FFIEC), of which the agencies are members, has approved the agencies'

publication for public comment of proposed revisions to the

Consolidated Reports of Condition and Income (Call Report), which are

currently approved collections of information. At the end of the

comment period, the comments and recommendations received will be

analyzed to determine the extent to which the FFIEC should modify the

proposed revisions prior to giving its final approval. The agencies

will then submit the revisions to OMB for review and approval.

DATES: Comments must be submitted on or before December 1, 1997.

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: Written comments should be submitted to the Communications

Division, Third Floor, Office of the Comptroller of the Currency, 250 E

Street, S.W., Washington, D.C. 20219; Attention: Paperwork Docket No.

1557-0081 (FAX number (202) 874-5274; Internet address:

REGS.comments@occ.treas.gov). Comments will be available for inspection

and photocopying at that address.

Board: Written comments should be addressed to Mr. William W.

Wiles, Secretary, Board of Governors of the Federal Reserve System,

20th and C Streets, N.W., Washington, D.C. 20551, or delivered to the

Board's mail room between 8:45 a.m. and 5:15 p.m., and to the security

control room outside of those hours. Both the mail room and the

security control room are accessible from the courtyard entrance on

20th Street between Constitution Avenue and C Street, N.W. Comments

received may be inspected in room M-P-500 between 9:00 a.m. and 5:00

p.m., except as provided in section 261.8 of the Board's Rules

Regarding Availability of Information, 12 CFR 261.8(a).

FDIC: Written comments should be addressed to Robert E. Feldman,

Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance

Corporation, 550 17th Street, N.W., Washington, D.C. 20429. Comments

may be hand delivered to the guard station at the rear of the 550 17th

Street Building (located on F Street ), on business days between 7:00

a.m. and 5:00 p.m. (Fax number: (202) 898-3838; Internet address:

comments@fdic.gov).

[[Page 51716]]

Comments may be inspected and photocopied in the FDIC Public

Information Center, Room 100, 801 17th Street, N.W., Washington, D.C.,

between 9:00 a.m. and 4:30 p.m. on business days.

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

officer for the agencies: Alexander Hunt, Office of Information and

Regulatory Affairs, Office of Management and Budget, New Executive

Office Building, Room 3208, Washington, D.C. 20503.

FOR FURTHER INFORMATION CONTACT:

A copy of the proposed revisions to the collections of information may

be requested from any of the agency clearance officers whose names

appear below.

OCC: Jessie Gates, OCC Clearance Officer, (202) 874-5090,

Legislative and Regulatory Activities Division, Office of the

Comptroller of the Currency, 250 E Street, S.W., Washington, D.C.

20219.

Board: Mary M. McLaughlin, 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 contact Diane

Jenkins, (202) 452-3544, Board of Governors of the Federal Reserve

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

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

Office of the Executive Secretary, Federal Deposit Insurance

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

SUPPLEMENTARY INFORMATION: Proposal to revise the following currently

approved collections of information:

Title: Consolidated Reports of Condition and Income.

Form Number: FFIEC 031, 032, 033,034.\1\

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\1\ The FFIEC 031 report form is filed by banks with domestic

and foreign offices. The FFIEC 032 report form is filed by banks

with domestic offices only and total assets of $300 million or more.

The FFIEC 033 report form is filed by banks with domestic offices

only and total assets of $100 million or more but less than $300

million. The FFIEC 034 report form is filed by banks with domestic

offices only and total assets of less than $100 million.

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For OCC

OMB Number: 1557-0081.

Frequency of Response: Quarterly.

Affected Public: National Banks.

Estimated Number of Respondents: 2,700 national banks.

Estimated Time per Response: 40.34 burden hours.

Estimated Total Annual Burden: 435,672 burden hours.

For Board

OMB Number: 7100-0036.

Frequency of Response: Quarterly.

Affected Public: State Member Banks.

Estimated Number of Respondents: 1,002 state member banks.

Estimated Time per Response: 46.46 burden hours.

Estimated Total Annual Burden: 186,215 burden hours.

For FDIC

OMB Number: 3064-0052.

Frequency of Response: Quarterly.

Affected Public: Insured State Nonmember Commercial and Savings

Banks.

Estimated Number of Respondents: 6,374 insured state nonmember

commercial and savings banks.

Estimated Time per Response: 30.27 burden hours.

Estimated Total Annual Burden: 771,859 burden hours.

The estimated time per response 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 banks, types of

activities in which they are engaged, and number of banks with foreign

offices). The time per response for a bank is estimated to range from

15 to 400 hours, depending on individual circumstances.

General Description of Report

This information collection is 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). Except

for select sensitive items, this information collection is not given

confidential treatment. Small businesses (i.e., small banks) are

affected.

Abstract

Consolidated Reports of Condition and Income are filed quarterly

with the agencies for their use in monitoring the condition and

performance of reporting banks and the industry as a whole. The reports

are also used to calculate banks' deposit insurance and Financing

Corporation assessments and for monetary policy and other public policy

purposes.

Current Actions

The reporting frequency for the ``Preferred deposits'' item would

be changed from quarterly to annually and the level of detail in the

trading assets and liabilities schedule generally applicable only to

larger banks would be reduced. Existing items for ``high-risk mortgage

securities'' and ``structured notes'' would be replaced by items for

``mortgage-backed securities backed by closed-end first lien 1-4 family

residential mortgages'' and ``other securities'' whose price volatility

in response to specified interest rate changes exceeds a specified

threshold level. New items would be added for reporting on transactions

with affiliates, low level recourse transactions, and (on the FFIEC 031

and 032 report forms only) capital requirements for market risk. The

reporting requirements relating to allowances and provisions for credit

losses would be clarified. For banks with foreign offices, holdings of

available-for-sale securities in the domestic office assets and

liabilities schedule would begin to be reported on a cost basis rather

than at fair value. The categorization of securitized consumer loans

for the purchase of light trucks and vans for personal use in two

Memorandum items collected annually from larger banks also would be

revised.

Type of Review: Revision.

The proposed revisions to the Consolidated Reports of Condition and

Income (Call Report) that are discussed below have been approved for

publication by the FFIEC. Unless otherwise indicated, the agencies

would implement these proposed Call Report changes as of the March 31,

1998, report date and the revisions would apply to all four sets of

report forms (FFIEC 031, 032, 033, and 034). Nonetheless, as is

customary for Call Report changes, banks are advised that, for the

March 31, 1998, report date, reasonable estimates may be provided for

any new or revised item for which the requested information is not

readily available. The specific wording of the captions for the new or

revised Call Report items discussed below should be regarded as

preliminary.

Reductions in Frequency and Detail

Based on their review of the current content of the Call Report,

the agencies are proposing to reduce the reporting frequency for one

item applicable to all banks and to reduce the level of detail in one

schedule applicable to larger banks, as follows:

(1) Schedule RC-E--Deposit Liabilities

Memorandum item 1.e., ``Preferred deposits,'' would be collected

annually as of December 31 rather than quarterly as at present. In

general, preferred deposits are deposits of states and political

subdivisions in the U.S. which are secured or collateralized as

required under state law. This Memorandum item was added to the Call

Report in 1993 in response to a newly enacted statutory requirement

directing the FDIC

[[Page 51717]]

to ensure that it ``receives on a regular basis'' from each FDIC-

insured depository institution information on the amount of preferred

deposits (12 U.S.C. 1817(a)(9)).

The agencies understand that bankers have identified the

``Preferred deposits'' item as one of the Call Report items they have

found to be particularly burdensome. Moreover, the statute does not

specifically mandate quarterly reporting for this item. Thus, the FDIC

has determined that collecting information on preferred deposits on an

annual, rather than quarterly, basis would be consistent with the

statutory requirement and would be adequate for purposes of meeting the

FDIC's obligations under the Federal Deposit Insurance Act.

(2) Schedule RC-D--Trading Assets and Liabilities

This schedule is completed by banks with $1 billion or more in

total assets or with $2 billion or more in notional amount of off-

balance sheet derivative contracts. The agencies are proposing to

eliminate item 6, ``Certificates of deposit (in domestic offices),''

item 7, ``Commercial paper (in domestic offices)'', and item 8,

``Bankers acceptances (in domestic offices).'' Commercial paper held

for trading would begin to be reported as part of a bank's trading

account securities, normally in Schedule RC-D, item 5, ``Other debt

securities (in domestic offices),'' consistent with the change in

balance sheet classification of commercial paper not held for trading

and the elimination of the loan schedule Memorandum item for commercial

paper, both of which took effect as of March 31, 1997. As for

certificates of deposit and bankers acceptances held for trading, the

reporting of these two types of instruments in separate Schedule RC-D

items is no longer considered sufficiently useful to warrant retaining

items 6 and 8. Instead, these instruments would be included in a bank's

``Other trading assets (in domestic offices),'' which are reported in

Scheduled RC-D, item 9.

Investment Securities With High Price Volatility

In December 1991, the FFIEC approved and the agencies adopted a

Supervisory Policy Statement on Securities Activities which became

effective on February 10, 1992 (57 FR 4029, February 3, 1992). Under

this policy statement, prior to purchase and at subsequent testing

dates, banks must test mortgage derivative products to determine

whether they are ``high-risk'' or ``nonhigh-risk.'' These tests measure

the expected weighted average life, average life sensitivity, and price

sensitivity of mortgage derivative securities for specified changes in

interest rates. During 1994, the agencies issued supervisory guidance

concerning bank investments in ``structured notes'' which, in general,

are debt securities (other than mortgage-backed securities) whose cash

flow characteristics (coupon rate, redemption amount, or stated

maturity) depend upon one or more indices and/or that have embedded

forwards or options. Beginning in 1995, banks began to report the

amortized cost and the fair value of their investment portfolio

holdings of high-risk mortgage securities (Schedule RC-B, Memorandum

items 8.a and 8.b) and structured notes (Schedule RC-B, Memorandum

items 9.a and 9.b).

With regard to structured notes, supervisory attention has

primarily focused on ensuring that institutions understand and evaluate

the market risks associated with these instruments. Instruments that

have high market value or fair value sensitivity to changes in interest

rates or other appropriate market risk factors, such as foreign

exchange rates, have been the primary targets of such attention.

However, some of the structured notes currently reported in Schedule

RC-B, Memorandum item 9, may not have high market risk profiles and, in

some cases, may have lower market risk volatility profiles than generic

U.S. Treasury and U.S. Government agency securities. As a consequence,

the agencies are considering revising the information collected on

these instruments for supervisory purposes to reflect information based

on significant price volatility under specific interest rate or major

factor scenarios, e.g., an estimated change in value of 20 percent or

more due to an immediate and sustained parallel shift in the yield

curve of plus or minus 300 basis points. When the agencies develop the

specific tests for significant price volatility, existing Memorandum

items 9.a and 9.b on Schedule RC-B would be replaced with revised items

requesting the amortized cost and fair value of securities (other than

mortgage-backed securities backed by closed-end first lien 1-4 family

residential mortgages) whose price volatility exceeds the specified

threshold level under the specified interest rate or major factor

scenario.

This consistency, Schedule RC-B, Memorandum items 8.a and 8.b,

which currently collect information on ``high-risk'' mortgage

securities would be similarly replaced with items requesting the

amortized cost and fair value of mortgage-backed securities backed by

closed-end first lien 1-4 family residential mortgages whose price

volatility exceeds a specified threshold level under a specified

interest rate or major factor scenario. These mortgage-backed

securities would be either the same as or a subset of the mortgage-

backed securities currently reported in Schedule RC-B, Memorandum items

8.a and 8.b.

If the agencies' specific tests for significant price volatility

have not been developed in time to implement this proposed reporting

change as of the March 31, 1998, report date, this Call Report revision

would take effect at a report date later in 1998 (or thereafter) after

the volatility tests have been devised.

Transactions Between Banks and Their Affiliates

Section 23A of the Federal Reserve Act is designed to safeguard the

resources of banks against misuse for the benefit of organizations

under common control with the bank by regulating certain ``covered

transactions'' (loans or extensions of credit and other transactions

that expose the bank to risk) with an affiliate. Section 23A restricts

the amount of such on terms that are at least as favorable to the bank

as transactions with unaffiliated companies. As the activities of

nonbank subsidiaries of bank holding companies have expanded, and as

regulatory restrictions have been reduced, more reliance has been

placed on Sections 23A and 23B to insulate institutions from the risks

posed by transactions with their affiliates.

Section 23A permits a bank to engage in covered transactions with

affiliates so long as the covered transactions do not in the aggregate

exceed: (1) 10 percent of the bank's capital stock and surplus with

respect to a single affiliate and (2) 20 percent of capital and surplus

with respect to all affiliates. Covered transactions are specifically

described in Section 23A and include (a) loans and extensions of credit

to an affiliate, (b) the purchase of securities issued by an affiliate,

(c) the purchase of nonexempted assets from an affiliate, (d) the

acceptance of securities issued by an affiliate as collateral for any

loan to an unaffiliated company, and (e) the issuance of guarantee,

acceptance, or letter of credit on behalf of an affiliate. In addition

to the quantitative limits on a bank's exposure to an affiliate,

Section 23A also imposes collateral requirements when a bank is lending

to the affiliate or is issuing a guarantee, acceptance, or letter of

credit for the account of the affiliate. These exposures

[[Page 51718]]

are the most direct method by which a bank can expose itself to an

affiliate, and the collateral requirements are designed to diminish any

risk related to these exposures.

In order to monitor compliance with the aggregate limits in Section

23A and to identify institution-specific and industry-wide levels of

changes in covered transaction which a bank can expose itself to an

affiliate, and the collateral requirements are designed to diminish any

risk related to these exposures.

In order to monitor compliance with the aggregate limits in Section

23A and to identify institution-specific and industry-wide levels of

and changes in covered transaction activity and its effects on bank

risk exposures, the agencies are proposing to add four new items to

Schedule RC-M--Memoranda. For covered transactions subject to Section

23A's collateral requirements, bank would report (a) the outstanding

amount of such transactions as of the Call Report date and (b) the

maximum amount of such transactions during the calendar quarter ending

with the report date. For covered transactions not subject to the

collateral requirements, banks would likewise report (a) the

outstanding amount of such transactions as of the Call Report date and

(b) maximum amount of such transactions during the calendar quarter

ending with the report date. Transactions that are exempt from

quantitative limits under the statute, e.g., extensions of credit fully

secured by U.S. Government securities and transactions with affiliate

(sister) banks, would be excluded from being reported in the proposed

items.

The agencies specifically request comment on the burden associated

with reporting date on covered transactions. Comment is also requested

on potential ways to reduce burden with respect to these items, in

particular the proposed reporting of the maximum amount of such

transactions during the calendar quarter ending with the report date.

For example, maximum amounts could be required to be reported only

under certain conditions, e.g., if they are significantly higher than

the end of period amount or if they approach the quantitative limits.

Reporting of Low Level Recourse Transactions for Risk-Based Capital

Purposes

The agencies' risk-based capital standards provide that the amount

of risk-based capital that must be maintained for assets transferred

with recourse should not exceed the maximum amount of recourse for

which a bank is contractually liable under the recourse agreement. This

rule applies to transactions in which a bank contractually limits its

risk of loss or recourse exposure to less than the full effective

minimum risk-based capital requirement for the assets transferred--

generally, four percent for qualifying first lien residential mortgages

and eight percent for most other assets. The low level recourse rule

also may apply to sales and securitizations of assets in which

contractual cash flows (e.g., interest-only strips receivable and so-

called spread accounts), retained subordinated interests, or other

assets (e.g., collateral invested amounts or cash collateral accounts)

act as credit enhancements. If this rule does apply to a credit

enhancement of this type, the maximum contractual dollar amount of the

bank's exposure as of a Call Report date is generally limited to the

amount carried as an asset on the balance sheet (Schedule RC) in

accordance with generally accepted accounting principles.

Current Call Report instructions require a bank to report its low

level recourse transactions in Schedule RC-R--Regulatory Capital using

the so-called ``gross-up'' method.

In general, this method requires the bank to multiply the maximum

amount of its recourse exposure by the reciprocal of the full effective

minimum risk-based capital requirement for the assets transferred and

to report the resulting dollar amount as an off-balance sheet credit

equivalent amount in the risk weight category appropriate to the assets

transferred.\2\

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\2\ For example, if the bank's maximum contractual exposure is

$10 million and the transferred assets would be in the 100 percent

risk weight category, the bank would report a credit equivalent

amount of $125 million [$10 million x (1/.08)] in the Schedule RC-R

item for credit equivalent amounts of off-balance sheet items

assigned to the 100 percent risk category (item 7.b).

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However, the greater the volume of a bank's low level recourse

transactions and the higher the bank's risk-based capital ratio in

relation to the minimum requirement, the more the bank's calculated

risk-based capital ratios become distorted as a result of applying the

gross-up method. In these situations, another method of handling the

bank's low level recourse transactions--the so-called ``direct

reduction'' method--results in a more accurate measure of the bank's

risk-based capital ratios. Under the direct reduction method, a bank

generally would reduce its Tier 1 capital by the maximum amount of its

recourse exposure (and would exclude this amount from its assets if the

exposure were in the form of an on-balance sheet asset). Nevertheless,

the Call Report instructions do not currently permit banks to use the

direct reduction method when completing Schedule RC-R because the

schedule's existing format does not provide a means for banks to

disclose the amount by which assets and Tier 1 capital have been

reduced through the application of the direct reduction method. Without

knowing this amount, the agencies cannot readily verify the reported

capital amounts and risk-weighted asset amounts for banks that would

use the direct reduction method when reporting their low level recourse

exposures.

Some bankers with low level recourse transactions have expressed a

strong preference for using the direct reduction method rather than the

gross-up method. The agencies also note that savings associations

report the dollar amount of their low level recourse exposures in the

Thrift Financial Reports they file with the Office of Thrift

Supervision in a manner consistent with the direct reduction method.

Accordingly, the agencies are proposing to add a new subitem under

Schedule RC-R, item 3, ``Amounts used in calculating regulatory capital

ratios,'' for the ``Maximum contractual dollar amount of recourse

exposure in low level recourse transactions.'' Banks preferring to

apply the direct reduction method to these exposures when they complete

Schedule RC-R would need to complete this new item and would include

any on-balance sheet asset amounts that represent low level recourse

exposures in item 8 of Schedule RC-R. Banks preferring to report their

low level recourse exposures under the gross-up method would retain the

option to use this method.

Capital Requirements for Market Risk

In 1996, the agencies amended their risk-based capital standards to

require banks with substantial trading activity to hold capital based

on their market risk exposure. The new rule applies to banks with

either (1) total trading assets and trading liabilities of at least $1

billion or (2) total trading assets and trading liabilities in excess

of 10 percent of total assets, unless exempted by their supervisory

agency. The banks that will be subject to this new rule must comply

with the market risk capital requirements by January 1, 1998. The

market risk rule supplements the risk-based capital ratio calculations

that focus principally on credit risk and adjusts both the risk-based

capital ratio denominator and numerator. These adjustments involve

``market risk equivalent assets'' for the denominator and ``Tier 3

capital'' for the numerator.

[[Page 51719]]

To enable the agencies and other users of the Call Report to

calculate the risk-based capital ratios of those banks subject to the

market risk rule, the agencies are proposing to add two new subitems to

Schedule RC-R, item 3, ``Amounts used in calculating regulatory capital

ratios,'' on the FFIEC 031 and 032 report forms only. In these new

subitems, banks would report their ``Market risk equivalent assets''

and their ``Tier 3 capital.'' In addition, the instructions for items 4

through 7 of Schedule RC-R, which are the items in which banks report

their assets and the credit equivalent amounts of their off-balance

sheet items by risk weight category, and item 8, ``On-balance sheet

asset values excluded from and deducted in the calculation of the risk-

based capital ratio,'' would be revised. As revised, the instructions

would tell banks to exclude from items 4 through 7 the amounts of all

``covered positions'' (except foreign exchange positions outside the

trading account and over-the-counter derivative positions) and to

report the amounts of those ``covered positions'' that are on the

balance sheet in item 8. The term ``covered positions'' means all

positions in a bank's trading account, and all foreign exchange and

commodity positions, whether or not in the trading account.

Allowance for Credit Losses

The American Institute of Certified Public Accountants' Audit and

Accounting Guide for Banks and Savings Institutions, issued as of April

1, 1996, requires the allocation on the balance sheet of the allowance

for credit losses between on-balance sheet financial instruments and

off-balance sheet credit exposures. Previously, these allowance

components often were reported in the aggregate in the allowance for

loan and lease losses (ALLL).

Banks have been advised to allocate the allowance for credit losses

on Schedule RC-Balance Sheet consistent with their allocation

methodology for other financial reporting purposes. For example,

portions of the allowance related to off-balance sheet credit exposures

that are reported as liabilities are to be included in Schedule RC,

item 20, ``Other liabilities,'' and in item 4 of Schedule RC-G. Banks

also have been advised to aggregate these components of the allowance

for credit losses when completing Schedule RI-B, part II--Changes in

Allowance for Loan and Lease Losses. institutions have been encouraged

to disclose the amounts of these components in Schedule RI-E, item 9,

``Other explanations.''

The agencies are proposing to retain this method of reporting the

allowance for credit losses. In so doing, Schedule RI-B, part II, would

be retitled Changes in Allowance for Credit Losses, and item 4.a of

Schedule RI--Income Statement would be recaptioned ``Provision for

credit losses.'' However, Schedule RI-B, part I--Charge-offs Recoveries

on Loans and Leases would not be changed, i.e., banks would continue to

disclose their loan and lease charge-offs and recoveries only.

Under the reporting standards in effect prior to the effective date

of the revised audit and accounting guide, banks had included all the

portion of he allowance related to off-balance sheet credit exposures

in Tier 2 capital for risk-based capital purpose, subject to specified

limits. This regulatory capital treatment remains in effect under the

new reporting standards set forth in the revised audit and accounting

guide.

Reporting by Banks With Foreign Offices of Investment Securities

Holdings in the Domestics Office Assets and Liabilities Schedule

On the FFIEC 031 version of the Call Report forms, banks with

foreign offices report a breakdown of the investment securities they

hold in domestic offices by type of security in Schedule RC-H--Selected

Balance Sheet Items for Domestic Offices. These investment securities

holdings are reported in Schedule RC-H on the same basis as they are

reported on these banks' consolidated balance sheet (Schedule RC),

i.e., held-to-maturity securities are reported at amortized cost while

available-for-sale securities are reported at fair value. In the

(consolidated) securities schedule (Schedule RC-B), held-to-maturity

and available-for-sale securities are each separately reported at

amortized cost and at fair value. This reporting treatment was

implementing in 1994 when Financial Accounting Standards Board

Statement No. 115, ``Accounting for Certain Investments in Debt and

Equity Securities,'' took effect.

Based on a review of the manner in which the domestic office

securities data reported in items 10 through 17 of Schedule RC-H are

analyzed and compared to other measures of domestic securities which

are held by nonbank sectors and reported on a cost basis, the agencies

are proposing to require banks with foreign offices to report all

investment securities held in domestic offices on a cost basis in these

eight Schedule RC-H items. This would mean that available-for-sale debt

securities would be reflected in Schedule RC-H, items 10 through 17, at

amortized cost rather than at fair value while equity securities would

be included in this schedule at historical cost. This cost basis data

should be available to banks with foreign offices because the

amortized/historical cost of their entire investment securities

portfolio is currently reported in the (consolidated) securities

schedule (Schedule RC-B).

This proposed change would not affect the reporting of a bank's

held-to-maturity or available-for-sale securities on the Call Report

balance sheet (Schedule RC) or on the securities schedule (Schedule RC-

B), nor would it alter the reporting of total assets in domestic

offices in Schedule RC-H, item 8.

Reporting of Securitized Consumer Loans for Vehicle Purchases

On the FFIEC 031 and 032 versions of the Call Report forms, banks

with foreign offices or with $300 million or more in assets report

annually as of September 30 the amount of their securitized consumer

installment loans to purchase private passenger automobiles and the

amount of all other securitized consumer installment loans (excluding

credit cards and related plans) in Schedule RC-L, Memorandum items 5.a

and 5.c, respectively. The instructions for these items currently

direct banks to report securitized consumer loans for the purchase of

pickup trucks and vans in the ``all other'' category, not in the

``private passenger automobiles'' category.

Based on a review of the manner in which these data are used for

analyzing consumer credit markets, the agencies believe that

securitized consumer loans for the purchase of pickup trucks, other

light trucks, and vans for personal use would be more appropriately

classified in the ``private passenger automobiles'' category. The

instructions for Memorandum item 5.a would be revised so that banks

would begin to include securitized consumer loans to purchase vans and

light trucks (such as pickup trucks) for personal use in this item

rather than in Memorandum item 5.c. In addition, the agencies would

strike the word ``installment'' from the captions and instructions

throughout Memorandum item 5.

Request for Comment

Comments submitted in response to this Notice will be shared among

the agencies and will be summarized or included in the agencies'

requests for OMB approval. 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 the information

[[Page 51720]]

collection request. Comments are invited on: (a) Whether the proposed

revisions to the following 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' estimate 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 collection 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 are also requested on the expected effects on information

currently reported in the Call Report resulting from this

implementation of those portions of Financial Accounting Standards

Board Statement No. 125, ``Accounting for Transfers and Servicing of

Financial Assets and Extinguishments of Liabilities,'' that have had

their effective date delayed until after December 31, 1997. The

agencies are evaluating the need for additional data in this area.

These portions of Statement No. 125 address collateral and secured

borrowings, repurchase agreements, dollar-rolls, securities lending,

and similar transactions.

Banks should note that the FDIC is considering amendments to its

regulations on the deposit insurance assessment base (12 CFR part 327)

which may require certain changes to the Call Report. Should the FDIC

adopt amendments that necessitate changes to the Call Report in 1998,

those changes will be separately published for public comment as

required under the Paperwork Reduction Act of 1995.

Dated: September 26, 1997.

Karen Solomon,

Director, Legislative and Regulatory Activities Division, Office of the

Comptroller of the Currency.

Board of Governors of the Federal Reserve System, September 18,

1997.

William W. Wiles,

Secretary of the Board.

Dated at Washington, D.C., this 17th day of September, 1997.

Federal Deposit Insurance Corporation.

Steven Hanft,

Assistant Executive Secretary.

[FR Doc. 97-26131 Filed 10-1-97; 8:45 am]

BILLING CODE 4810-33-M(\1/3\), 6210-01-M(\1/3\), 6714-01-M(\1/3\)