[Federal Register: October 31, 2006 (Volume 71, Number 210)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE CORPORATION
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
Proposed Agency Information Collection Activities; Comment
AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision
ACTION: Joint notice and request for comment.
SUMMARY: In accordance with the requirements of the Paperwork Reduction
Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, the FDIC, and
the OTS (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. The Federal Financial Institutions Examination
Council (FFIEC), of which the agencies are members, has approved the
agencies' publication for public comment a proposal to extend, with
revision, the Consolidated Reports of Condition and Income (Call
Report) for banks and the Thrift Financial Report (TFR) for savings
associations, 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
and the agencies should modify the proposed revisions prior to giving
final approval. The agencies will then submit the revisions to OMB for
review and approval.
DATES: Comments must be submitted on or before January 2, 2007.
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: Communications Division, Office of the Comptroller of the
Currency, Public Information Room,
Mailstop 1-5, Attention: 1557-0081, 250 E Street, SW., Washington, DC
20219. In addition, comments may be sent by fax to (202) 874-4448, or
by electronic mail to
email@example.com. 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: You may submit comments, which should refer to
``Consolidated Reports of Condition and Income, 7100-0036,'' by any of
the following methods:
Agency Web site:
http://www.federalreserve.gov Follow the instructions for submitting
comments on the http://.
Federal eRulemaking Portal:
Follow the instructions for submitting comments.
number in the subject line of the message.
Fax: 202-452-3819 or 202-452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper in Room MP-500 of the Board's Martin Building (20th and C
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
FDIC: You may submit comments, which should refer to ``Consolidated
Reports of Condition and Income, 3064-0052,'' by any of the following
E-mail: firstname.lastname@example.org. Include
of Condition and Income, 3064-0052'' in the subject line of the
Mail: Steven F. Hanft (202-898-3907), Clearance Officer,
Attn: Comments, Room MB-2088, Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7 a.m. and 5 p.m.
Public Inspection: All comments received will be posted without
including any personal information provided. Comments may be inspected
at the FDIC Public Information Center, Room E-1002, 3501 Fairfax Drive,
Arlington, VA 22226, between 9 a.m. and 5 p.m. on business days.
OTS: You may submit comments, identified by ``1550-0023 (TFR:
Schedule DI Revisions),'' by any of the following methods:
Federal eRulemaking Portal:
Follow the instructions for submitting comments.
Please include ``1550-0023 (TFR: Schedule DI Revisions)'' in the
subject line of the message and include your name and telephone number
in the message.
Fax: (202) 906-6518.
Mail: Information Collection Comments, Chief Counsel's
Office, Office of Thrift Supervision, 1700 G Street, NW., Washington,
DC 20552, Attention: ``1550-0023 (TFR: Schedule DI Revisions).''
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Information Collection Comments, Chief Counsel's Office, Attention:
``1550-0023 (TFR: Schedule DI Revisions).''
Instructions: All submissions received must include the agency name
and OMB Control Number for this information collection. All comments
received will be posted without change to the OTS Internet Site at
http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1, including any
personal information provided.
Docket: For access to the docket to read background documents or
comments received, go to
In addition, you may inspect comments at the Public Reading Room, 1700 G
Street, NW., by appointment. To make an appointment for access, call (202)
906-5922, send an e-mail to
send a facsimile transmission to (202)
906-7755. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
Additionally, commenters may send a copy of their comments to the
OMB desk officer for the Agencies by mail to the Office of Information
and Regulatory Affairs, U.S. Office of Management and Budget, New
Executive Office Building, Room 10235, 725 17th Street, NW.,
Washington, DC 20503, or by fax to (202) 395-6974.
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, copies of the
Call Report forms can be obtained at the FFIEC's Web site (http://www.ffiec.gov/ffiec_report_forms.htm
). Copies of the TFR can be
obtained from the OTS's Web site (http://www.ots.treas.gov/main.cfm?catNumber=2&catParent=0
OCC: Mary Gottlieb, OCC Clearance Officer, or Camille Dickerson,
(202) 874-5090, Legislative and Regulatory Activities Division, Office
of the Comptroller of the Currency, 250 E Street, SW., Washington, DC
Board: Michelle E. Long, Federal Reserve 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
FDIC: Steven F. Hanft, Paperwork Clearance Officer, (202) 898-3907,
Legal Division, Federal Deposit Insurance Corporation, 550 17th Street,
NW., Washington, DC 20429.
OTS: Marilyn K. Burton, OTS Clearance Officer, at
(202) 906-6467, or facsimile number (202)
906-6518, Litigation Division, Chief Counsel's Office, Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC. 20552.
SUPPLEMENTARY INFORMATION: The agencies are proposing to revise and
extend for three years the Call Report and the TFR, which are currently
approved collections of information.
1. Report Title: Consolidated Reports of Condition and Income (Call
Report). Form Number: Call Report: 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
OCC: OMB Number: 1557-0081. Estimated Number of Respondents: 1,900
national banks. Estimated Time per Response: 44.31 burden hours.
Estimated Total Annual Burden: 336,756 burden hours.
Board: OMB Number: 7100-0036. Estimated Number of Respondents: 919
state member banks. Estimated Time per
Response: 51.27 burden hours. Estimated Total Annual Burden: 188,469
FDIC: OMB Number: 3064-0052. Estimated Number of Respondents: 5,247
insured state nonmember banks. Estimated Time per Response: 35.52
burden hours. Estimated Total Annual Burden: 745,494 burden hours.
The estimated time per response for the Call Report is an average
that varies by agency because of differences in the composition of the
institutions under each agency's supervision (e.g., size distribution
of institutions, types of activities in which they are engaged, and
existence of foreign offices). The average reporting burden for the
Call Report is estimated to range from 16 to 630 hours per quarter,
depending on an individual institution's circumstances.
2. Report Title: Thrift Financial Report (TFR). Form Number: OTS
1313 (for savings associations). Frequency of Response: Quarterly.
Affected Public: Business or other for-profit.
OTS: OMB Number: 1550-0023. Estimated Number of Respondents: 854
savings associations. Estimated Time per Response: 36.5 burden hours.
Estimated Total Annual Burden: 124,684 burden hours.
The TFR estimates in this notice are carried forward from the
burden estimates that appeared in OTS's final Paperwork Reduction Act
notice concerning items related to retirement deposit accounts (71 FR
47866, August 18, 2006).
General Description of Reports
These information collections are mandatory: 12 U.S.C. 161 (for
national banks), 12 U.S.C. 324 (for state member banks), 12 U.S.C. 1817
(for insured state nonmember commercial and savings banks), and 12
U.S.C. 1464 (for savings associations). Except for selected data items,
these information collections are not given confidential treatment.
Institutions submit Call Report and TFR data to the agencies each
quarter for the agencies' use in monitoring the condition, performance,
and risk profile of individual institutions and the industry as a
Call Report and TFR data provide the most current statistical data
available for evaluating institutions' corporate applications, for
identifying areas of focus for both on-site and off-site examinations,
and for monetary and other public policy purposes. The agencies use
Call Report and TFR data in evaluating interstate merger and
acquisition applications to determine, as required by law, whether the
resulting institution would control more than ten percent of the total
amount of deposits of insured depository institutions in the United
States. Call Report and TFR data are also used to calculate all
institutions' deposit insurance and Financing Corporation assessments,
national banks' semiannual assessment fees, and the OTS's assessments
on savings associations.
The four agencies are proposing to replace certain information
currently collected in the Call Report and TFR for deposit insurance
assessment purposes with the information described in proposed
amendments to Part 327 of the FDIC's regulations (71 FR 28790, May 18,
2006). The four agencies also propose to revise the information
collected in the Call Report and TFR on time deposits, particularly
with respect to certain retirement accounts affected by the FDIC's
amended deposit insurance regulations.
In addition, the OCC, the Board, and the FDIC (the banking
agencies) propose to implement a number of other changes to the Call
Report requirements, most of which are expected to apply to a small
percentage of banks. First, the banking agencies would revise the Call
Report to collect certain data on fair value measurements from those
institutions that choose, under generally accepted accounting
principles, to apply a fair value option to one or more financial
instruments and one or more classes of servicing assets and liabilities
and from certain institutions that report trading assets and
liabilities. The banking agencies will also collect an item to capture
the change in the fair value of liabilities under the fair value option
that is attributable to a change in a bank's own creditworthiness for
purposes of measuring a bank's regulatory capital under the banking
agencies' capital adequacy standards. Second, the banking agencies
propose to collect certain data in the Call Report on 1-4 family
residential mortgages with terms that allow for negative amortization.
The banking agencies currently do not collect any supervisory data on
such loans. Finally, the banking agencies propose to clarify the Call
Report instructions for assets serviced for others by explicitly
stating that such servicing includes the servicing of loan
These proposed revisions to the Call Report and the TFR, which have
been approved for publication by the FFIEC and are discussed in more
detail below, would take effect as of March 31, 2007, and, for certain
deposit insurance assessment revisions, March 31, 2008. The specific
wording of the captions for the new or revised Call Report and TFR data
items discussed in this proposal and the numbering of these data items
should be regarded as preliminary.
Type of Review: Revision and extension of currently approved
II. Discussion of Proposed Revisions
A. Deposit Insurance Assessment Revisions to the Call Report and TFR
On May 18, 2006, the FDIC issued proposed amendments to Part 327 of
its regulations, ``Assessments,'' under which the FDIC's computation of
deposit insurance assessments for certain institutions would be
determined using daily averages for deposits rather than quarter-end
balances. In addition to the proposed amendments, the agencies are
proposing to revise and reduce the overall reporting requirements
related to deposit insurance assessments in both the Call Report and
the TFR in order to simplify regulatory reporting. Key elements of the
proposed revised reporting requirements are:
Institutions will separately report (a) gross deposits as
defined in Section 3(l) of the Federal Deposit Insurance Act (FDI Act)
(12 U.S.C. 1813(l)) before any allowable exclusions and (b) allowable
The same data items will be reported for both quarter-end
and daily average deposits;
All institutions will report using quarter-end deposits
and allowable exclusions; and
All institutions with $300 million or more in assets, and
other institutions that meet specified criteria, will also report daily
averages for deposits and allowable exclusions in addition to quarter-
The proposal would provide an interim period covering the March 31,
2007, through December 31, 2007, report dates during which institutions
can submit Call Reports and TFRs using either the current or revised
formats for reporting data for measuring their assessment base. An
institution that chooses to begin reporting under the revised format in
any quarter during the interim period must continue to report under the
revised format through the rest of the interim period and may not
revert back to the current reporting format. The revised reporting
format will take effect for all institutions on March 31, 2008, at
which time the current format will be eliminated. Although no
institution that chooses to
report under the revised format during the 2007 interim period would be
required to report daily averages during this period, any institution
may elect to report daily averages as of any quarter-end report date in
2007. However, once an institution begins to report daily averages
(even during the interim period), it must continue to report daily
averages each quarter thereafter in its Call Report or TFR.
Currently, the assessment base definition as detailed in 12 CFR
327.5 of the FDIC's regulations has been driven by the agencies'
regulatory reporting requirements. Therefore, as the reporting
requirements for deposits in the Call Report and TFR changed over time,
the regulatory definition of the assessment base required periodic
updates. As a result of the Federal Deposit Insurance Reform Act, the
FDIC has proposed to revise the definition of the assessment base
within its regulations to be consistent with Section 3(l) of the FDI
Act. This will eliminate the need for periodic updates to the FDIC's
assessment regulations in response to outside factors and allow a
simplification of the associated reporting requirements. In addition,
to address timing issues with quarter-end reporting, the FDIC will use
daily average deposits and exclusions over the quarter instead of
quarter-end totals for deposits and exclusions to compute the
assessment base for institutions with $300 million or more in assets
and other institutions who meet specified criteria, which are discussed
below. Any institution that reports less than $300 million in assets
and does not meet the other specified criteria may opt permanently to
determine its assessment base using daily averages.
At present, 23 items are required in the Call Report to determine a
bank's assessment base and eight items are required in the TFR to
determine a savings association's assessment base. The agencies are
proposing changes to the way the assessment base is reported that would
effectively reduce the number of reported items to as few as two for
certain small institutions (without foreign offices) and no more than
six for other institutions. Specifically, the banking agencies are
proposing to replace items 1 through 12 (including their subitems) on
Schedule RC-O, ``Other Data for Deposit Insurance and FICO
Assessments,'' and OTS is proposing to replace the eight items in the
section of Schedule DI, ``Consolidated Deposit Information,'' for
``Deposit and Escrow Data for Deposit Insurance Premium Assessments''
with the following six items:
Total Deposit Liabilities as Defined in Section 3(l) of
the FDI Act before Exclusions;
Total Allowable Exclusions (including Foreign Deposits);
Total Foreign Deposits (included in Total Allowable
Total Daily Average of Deposit Liabilities as Defined in
Section 3(l) of the FDI Act before Exclusions;
Total Daily Average Allowable Exclusions (including
Total Daily Average Foreign Deposits (included in Total
Daily Average Allowable Exclusions).
Thus, instead of starting with deposits as reported on the balance
sheet of the Call Report and TFR and making adjustments to these
reported deposits for purposes of measuring an institution's assessment
base, which is the present method, the computation of the institution's
assessment base under the proposed amendments to the FDIC's assessment
regulations and these proposed regulatory reporting revisions will
start with the gross total deposit liabilities that meet the statutory
definition of deposits in Section 3(l) of the FDI Act before any
allowable exclusions from the definition. The allowable exclusions,
which are set forth in Section 3(l)(5) and other sections of the FDI
Act and in the FDIC's regulations, include foreign deposits (including
International Banking Facility deposits) and other deposits described
below. As the next step in the assessment base calculation, an
institution would report the total amount of all allowable exclusions
from the statutory definition of deposits (with separate disclosure of
foreign deposits, if any). Total Deposit Liabilities as Defined in
Section 3(l) of the FDI Act before Exclusions minus Total Allowable
Exclusions would be the institution's Assessment Base. As previously
stated, the computation will use either quarter-end balances or daily
The net amount of unposted debits and credits will now not be
considered within the definition of the assessment base. For
institutions that report daily averages, these debits and credits are
captured in the next day's deposits and thus are reflected in the
averages. For consistency and because they should not materially affect
assessment bases, unposted debits and credits will also not be
considered for institutions that only report quarter-end balances.
The agencies believe that the amount of gross total deposit
liabilities that meet the statutory definition of deposits is typically
found in and supported by the control totals in an institution's
deposit systems that provide the detail sufficient to track, control,
and handle inquiries from depositors about their specific individual
These deposit systems can be automated or manual. In any case,
control totals for deposit liabilities should be readily available,
which should ease an institution's transition to the revised regulatory
reporting requirements. Compared to the amount of information that an
institution currently reports in order to determine its assessment
base, the proposed changes to the reporting requirements should also
facilitate the reporting of daily averages for deposits and allowable
exclusions since many of the presently reported adjustments will not
need to be tracked and averaged separately.
Section 3(1) of the FDI Act states that the term ``deposit''
(1) The unpaid balance of money or its equivalent received or
held by a bank or savings association in the usual course of
business and for which it has given or is obligated to give credit,
either conditionally or unconditionally, to a commercial, checking,
savings, time, or thrift account, or which is evidenced by its
certificate of deposit, thrift certificate, investment certificate,
certificate of indebtedness, or other similar name, or a check or
draft drawn against a deposit account and certified by the bank or
savings association, or a letter of credit or a traveler's check on
which the bank or savings association is primarily liable: Provided,
That, without limiting the generality of the term ``money or its
equivalent'', any such account or instrument must be regarded as
evidencing the receipt of the equivalent of money when credited or
issued in exchange for checks or drafts or for a promissory note
upon which the person obtaining any such credit or instrument is
primarily or secondarily liable, or for a charge against a deposit
account, or in settlement of checks, drafts, or other instruments
forwarded to such bank or savings association for collection,
(2) Trust funds as defined in this Act received or held by such
bank or savings association, whether held in the trust department or
held or deposited in any other department of such bank or savings
(3) Money received or held by a bank or savings association, or
the credit given for money or its equivalent received or held by a
bank or savings association, in the usual course of business for a
special or specific purpose, regardless of the legal relationship
thereby established, including without being limited to, escrow
funds, funds held as security for an obligation due to the bank or
savings association or others (including funds held as dealers
reserves) or for securities loaned by the bank or savings
association, funds deposited by a debtor to meet maturing
obligations, funds deposited as advance payment on subscriptions to
United States Government securities, funds held for distribution or
purchase of securities, funds held to meet its acceptances
or letters of credit, and withheld taxes: Provided, That there shall
not be included funds which are received by the bank or savings
association for immediate application to the reduction of an
indebtedness to the receiving bank or savings association, or under
condition that the receipt thereof immediately reduces or
extinguishes such an indebtedness,
(4) Outstanding draft (including advice or authorization to
charge a bank's or a savings association's balance in another bank
or savings association), cashier's check, money order, or other
officer's check issued in the usual course of business for any
purpose, including without being limited to those issued in payment
for services, dividends, or purchases, and
(5) Such other obligations of a bank or savings association as
the Board of Directors, after consultation with the Comptroller of
the Currency, Director of the Office of Thrift Supervision, and the
Board of Governors of the Federal Reserve System, shall find and
prescribe by regulation to be deposit liabilities by general usage,
except that the following shall not be a deposit for any of the
purposes of this Act or be included as part of the total deposits or
of an insured deposit:
(A) Any obligation of a depository institution which is carried
on the books and records of an office of such bank or savings
association located outside of any State, unless--
(i) Such obligation would be a deposit if it were carried on the
books and records of the depository institution, and would be
payable at, an office located in any State; and
(ii) The contract evidencing the obligation provides by express
terms, and not by implication, for payment at an office of the
depository institution located in any State;
(B) Any international banking facility deposit, including an
international banking facility time deposit, as such term is from
time to time defined by the Board of Governors of the Federal
Reserve System in regulation D or any successor regulation issued by
the Board of Governors of the Federal Reserve System; and
(C) Any liability of an insured depository institution that
arises under an annuity contract, the income of which is tax
deferred under section 72 of the Internal Revenue Code of 1986.
The total amount of allowable exclusions from the assessment
base will be reported separately for any institution that maintains
such records as will readily permit verification of the correctness
of its assessment base. These exclusions include:
Foreign deposits: The obligations described in subparagraphs (A)
and (B) of section 3(l)(5) of the FDI Act, quoted above, which
generally relate to foreign deposits.
Reciprocal balances: Any demand deposit due from or cash item in
the process of collection due from any depository institution (not
including a foreign bank or foreign office of another U.S.
depository institution) up to the total of the amount of deposit
balances due to cash and cash items in the process of collection due
such depository institution.
Drafts drawn on other depository institutions: Any outstanding
drafts (including advices and authorization to charge the depository
institution's balance in another bank) drawn in the regular course
of business by the reporting depository institution.
Pass-through reserve balances: Reserve balances passed through
to the Federal Reserve by the reporting institution that are also
reflected as deposit liabilities of the reporting institution. This
is not applicable to an institution that does not act as a
correspondent institution in any pass-through reserve balance
relationship. An institution that is not a member of the Federal
Reserve System generally cannot act as a pass-through correspondent
unless it maintains an account for its own reserve balances directly
with the Federal Reserve.
Depository institution investment contracts: Liabilities arising
from depository institution investment contracts that are not
treated as insured deposits under section 11(a)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)(5)). A Depository
Institution Investment Contract is a separately negotiated
depository agreement between an employee benefit plan and an insured
depository institution that guarantees a specified rate for all
deposits made over a prescribed period and expressly permits
benefit-responsive withdrawals or transfers.
In addition to quarter-end balance reporting, institutions that
meet certain criteria would be required to report average daily deposit
liabilities and average daily allowable exclusions to determine their
assessment base effective March 30, 2008. The amounts to be reported
would be averages of the balances as of the close of business for each
day for the calendar quarter. For days that an office of the reporting
institution (or any of its subsidiaries or branches) is closed (e.g.,
Saturdays, Sundays, or holidays), the amounts outstanding from the
previous business day would be used. An office is considered closed if
there are no transactions posted to the general ledger as of that date.
The requirement for an institution to report daily averages would
apply to any institution that:
(1) Reports $300 million or more in total assets in its March 31,
2007, Call Report or TFR. The institution would be required to report
daily averages beginning in its March 31, 2008, Call Report or TFR.
(2) Reports $300 million or more in total assets in two consecutive
Call Reports or TFRs beginning with its June 30, 2007, report. The
institution would be required to report daily averages in its Call
Report or TFR beginning March 31, 2008, or on the report date six
months after the second consecutive quarter in which it reported $300
million or more in total assets, whichever is later. For example, if an
institution reported $300 million or more in total assets in its
reports for June 30 and September 30, 2007, it would begin to report
daily averages in its report for March 31, 2008. If the institution
reported $300 million or more in total assets in its reports for
December 31, 2007, and March 31, 2008, it would begin to report daily
averages in its report for September 30, 2008.
(3) Becomes newly insured after March 31, 2007. The institution
would be required to report daily averages in its Call Report or TFR
beginning March 31, 2008, or on the first report date after becoming
insured, whichever is later. If daily averages are reported in the
first Call Report or TFR the institution files after becoming insured,
the daily averages would include only the dollar amounts for the days
since the institution began operations.
After an institution has begun to report daily averages for its
total deposits and allowable exclusions, either voluntarily or because
it is required to do so, the institution cannot switch back to
reporting only quarter-end balances.
An insured depository institution reporting less than $300 million
in total assets in its March 31, 2007, Call Report or TFR may continue
to determine its assessment base using quarter-end balances until it
meets one of the requirements for reporting daily averages described
above. Alternatively, the institution may opt permanently to determine
its assessment base using daily averages.
B. Revision of Certain Time Deposit Information on the Call Report and
The Federal Reserve uses data from Call Report Schedule RC-E,
Deposit Liabilities, and from TFR Schedule DI, Consolidated Deposit
Information, to ensure accurate construction of the monetary aggregates
for monetary policy purposes.\1\ In order to more accurately calculate
the monetary aggregates, the banking agencies propose to revise two
Schedule RC-E items, Memorandum items 2.b, ``Total time deposits of
less than $100,000,'' and 2.c, ``Total time deposits of $100,000 or
more,'' and add a new Memorandum item 2.c.(1) to this schedule.
\1\ In order to calculate the money stock measure M2, the
Federal Reserve takes M1 (which consists of currency held by the
public, traveler's checks, demand deposits, and other checkable
deposits) and adds (1) savings deposits, (2) small-denomination time
deposits (time deposits in amounts of less than $100,000) less
Individual Retirement Account (IRA) and Keogh balances at depository
institutions, and (3) balances in retail money market mutual funds,
less IRA and Keogh balances at money market mutual funds.
In Schedule RC-E, Memorandum item 2.b would be revised to include
brokered time deposits issued in denominations of $100,000 or more that
are participated out by the broker in shares of less than $100,000 as
well as brokered certificates of deposit issued in $1,000 amounts under
a master certificate of deposit. Memorandum item 2.c would be revised
to exclude such brokered time deposits. In addition, as a result of the
increase in the deposit insurance limit for certain retirement plan
deposit accounts from $100,000 to $250,000 earlier this year, a new
Memorandum item 2.c.(1) would be added to Schedule RC-E to separately
identify the portion of the total time deposits of $100,000 or more
reported in Memorandum item 2.c that represents IRA and Keogh Plan
For the same reasons, OTS proposes to add two new items to Schedule
DI of the TFR. These data items would be (1) Time Deposits of $100,000
or More (excluding brokered time deposits participated out by the
broker in shares of less than $100,000 and brokered certificates of
deposit issued in $1,000 amounts under a master certificate of deposit)
and (2) IRA/Keogh Accounts included in Time Deposits of $100,000 or
C. Reporting of Certain Fair Value Measurements and the Use of the Fair
Value Option in the Call Report
On September 15, 2006, the Financial Accounting Standards Board
(FASB) issued Statement No. 157, Fair Value Measurements (FAS 157),
which is effective for banks and other entities for fiscal years
beginning after November 15, 2007. Earlier adoption of FAS 157 is
permitted as of the beginning of an earlier fiscal year, provided the
bank has not yet issued a financial statement or filed a Call Report
for any period of that fiscal year. Thus, a bank with a calendar year
fiscal year may voluntarily adopt FAS 157 as of January 1, 2007. The
fair value measurements standard provides guidance on how to measure
fair value and would require banks and other entities to disclose the
inputs used to measure fair value based on a three-level hierarchy for
all assets and liabilities that are remeasured at fair value on a
\2\ The FASB's three-level fair value hierarchy gives the
highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). Level 1 inputs are quoted prices in
active markets for identical assets or liabilities that the
reporting bank has the ability to access at the measurement date
(e.g., the Call Report date). Level 2 inputs are inputs other than
quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 3 inputs
are unobservable inputs for the asset or liability.
The FASB plans to issue a final standard, The Fair Value Option for
Financial Assets and Financial Liabilities, before year-end 2006, which
would be effective for banks and other entities for fiscal years
beginning after December 15, 2006. The FASB's Fair Value Option
standard would allow banks and other entities to report certain
financial assets and liabilities at fair value with the changes in fair
value included in earnings. The banking agencies anticipate that
relatively few banks will elect to use the fair value option for a
significant portion of their financial assets and liabilities.
The banking agencies plan to clarify the Call Report instructions
to explain where financial assets and liabilities measured under the
fair value option should be reported in the existing line items of the
Call Report. The banking agencies are also proposing to add a new
Schedule RC-Q to the Call Report to collect data, by major asset and
liability category, on the amount of assets and liabilities to which
the fair value option has been applied along with separate disclosure
of the amount of such assets and liabilities whose fair values were
estimated under level two and under level three of the FASB's fair
value hiearchy. The categories are:
Securities held for purposes other than trading with
changes in fair value reported in current earnings;
Loans and leases;
All other financial assets and servicing assets;
All other financial liabilities and servicing liabilities;
Loan commitments (not accounted for as derivatives).
In addition, the banking agencies propose to collect data on
trading assets and trading liabilities in the new schedule from those
banks that complete Schedule RC-D, Trading Assets and Liabilities,
i.e., banks that reported average trading assets of $2 million or more
for any quarter of the preceding calendar year. In the proposed new
schedule, such banks would report the carrying amount of trading assets
and trading liabilities whose fair values were estimated under level
two and under level three of the FASB's fair value hierarchy. Trading
assets and trading liabilities are required to be reported at fair
value and, thus, are not covered under the fair value option.
The banking agencies anticipate using this fair value information
to make appropriate risk assessments for on-site examinations and off-
site surveillance. The addition of these data items should result in
minimal additional reporting burden for banks because FAS 157 requires
disclosure of amounts under all three levels of the fair value
hierarchy on a quarterly and annual basis in financial statements.
The FASB's fair value measurements standard requires banks and
other entities to consider the effect of a change in their own
creditworthiness when determining the fair value of a financial
liability. The banking agencies are proposing to add one new item to
Schedule RC-R, Regulatory Capital, for the cumulative change in the
fair value of all financial liabilities accounted for under the fair
value option that is attributable to changes in the bank's own
creditworthiness.\3\ This amount would be excluded from the bank's
retained earnings for purposes of determining Tier 1 capital under the
banking agencies' regulatory capital standards.
\3\ The banking agencies also are planning to issue further
guidance on the regulatory capital treatment of this cumulative
change, and are considering possible regulatory changes.
The banking agencies plan to clarify the instructions to Schedule
RI for the treatment of interest income on financial assets and
interest expense on financial liabilities measured under a fair value
option. The instructions would be modified to instruct banks to
separate the contractual year-to-date amount of interest earned on
financial assets and interest incurred on financial liabilities that
are reported under a fair value option from the overall year-to-date
fair value adjustment and report these contractual amounts in the
appropriate interest income or interest expense items on Schedule RI.
D. Reporting of Certain Data in the Call Report on 1-4 Family
Residential Mortgage Loans With Terms That Allow for Negative
Recently, the volume of 1-4 family residential mortgage loan
products whose terms allow for negative amortization and the number of
institutions providing borrowers with such loans has increased
significantly. Loans with this feature are structured in a manner that
may result in an increase in the loan's principal balance even when the
borrower's payments are technically current. When loans with negative
amortization are not prudently underwritten and not properly monitored,
they raise safety and soundness concerns. However, due to the
classification of these loans with all other 1-4 family residential
mortgage loans in the Call Report, the banking
agencies have no readily available means of identifying the industry's
exposure to such loans. Therefore, the banking agencies propose to
collect some Call Report items to monitor the extent of use of
negatively amortizing residential mortgage loans in the industry.
The banking agencies propose to collect one memorandum item from
all banks on Schedule RC-C, Part I, Loans and Leases, for the total
amount of closed-end loans with negative amortization features secured
by 1-4 family residential properties. In addition, the banking agencies
propose to collect two memorandum items on Schedule RC-C and one
memorandum item on Schedule RI, Income Statement, from banks with a
significant volume of negatively amortizing 1-4 family residential
mortgage loans. The banking agencies' determination of the threshold
for significant volume would be based on the aggregate carrying amount
of negatively amortizing loans being in excess of a certain dollar
amount, e.g., $100 million or $250 million, or in excess of a certain
percentage of the total loans and leases (in domestic offices) reported
on Schedule RC-C, e.g., five percent or ten percent. For reporting
during 2007, a bank with negatively amortizing loans would determine
whether it met the size threshold for reporting the three additional
memorandum items using data reported in its December 31, 2006, Call
Report. For reporting in 2008 and subsequent years, the determination
would be based on data from the previous year-end Call Report. The
banking agencies request comment on the specific dollar amount and
percentage of loans that should be used in setting the size threshold
for additional reporting on negatively amortizing loans.
The two additional Schedule RC-C memorandum items are (1) the total
maximum remaining amount of negative amortization contractually
permitted on closed-end loans secured by 1-4 family residential
properties and (2) the total amount of negative amortization on closed-
end loans secured by 1-4 family residential properties that is included
in the carrying amount of these loans. The Schedule RI memorandum item
is year-to-date noncash income on closed-end loans with a negative
amortization feature secured by 1-4 family residential properties.
Banks with negatively amortizing 1-4 family residential loans in excess
of the reporting threshold for these items would report these three
items for the entire calendar year following the end of any calendar
year when this threshold was exceeded.
For the same reasons, OTS proposed on July 31, 2006, to add two new
items to Schedule LD of the TFR (71 FR 43286). These items would be the
total amount of (1) 1-4 dwelling adjustable rate mortgage loans with
negative amortization and (2) total capitalized negative amortization
on 1-4 dwelling adjustable rate mortgage loans.
E. Call Report Instructional Clarification for Servicing of Loan
Banks report the outstanding principal balance of assets serviced
for others in Memorandum item 2 of Schedule RC-S, ``Servicing,
Securitization, and Asset Sale Activities.'' In Memorandum items 2.a
and 2.b, banks disclose the amounts of 1-4 family residential mortgages
serviced with recourse and without recourse, respectively. Memorandum
item 2.c covers all other loans and financial assets serviced for
others, but banks are required to disclose the amount of such servicing
only if the servicing volume is more than $10 million. The instructions
for Memorandum item 2 do not explicitly state whether a bank that has
sold a participation in a 1-4 family residential mortgage or other loan
or financial asset, which it continues to service, should include the
servicing in Memorandum item 2.a, 2.b, or 2.c, as appropriate. The
absence of clear instructional guidance has resulted in questions from
bankers and has produced diversity in practice among banks.
Subject to the reporting threshold that applies to Memorandum data
item 2.c, Memorandum data item 2 was intended to cover the entire
volume of loans and other financial assets for which banks perform the
servicing function, regardless of whether the servicing involves whole
loans and other financial assets or only portions thereof, as is
typically the case with loan participations. The risks and
responsibilities inherent in servicing are present whether all or part
of a loan or financial asset is serviced for the benefit of another
party. Accordingly, the banking agencies propose to clarify the
instructions to Memorandum item 2 of Schedule RC-S to explicitly state
that the amount of loan participations serviced for others should be
included in this item.
III. Request for Comment
Public comment is requested on all aspects of this joint notice.
Comments are invited on:
(a) Whether the proposed revisions to the Call Report and TFR
collections of information are necessary for the proper performance of
the agencies' functions, including whether the information has
(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 joint 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 collection request.
Dated: September 25, 2006.
Stuart E. Feldstein,
Assistant Director, Legislative and Regulatory Activities Division,
Office of the Comptroller of the Currency.
Board of Governors of the Federal Reserve System, October 23,
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 24th day of October, 2006.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Dated: October 20, 2006.
Senior Deputy Chief Counsel, Regulations and Legislation Division,
Office of Thrift Supervision.
[FR Doc. 06-8982 Filed 10-30-06; 8:45 am]
BILLING CODE 4810-33-P