Agency Information Collection Activities; Announcement of Board Approval Under Delegated Authority and Submission to OMB

AGENCY:

Board of Governors of the Federal Reserve System.

SUMMARY:

The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, with revision, the mandatory Financial Statements for Holding Companies (FR Y-9) (OMB No. 7100-0128).

FOR FURTHER INFORMATION CONTACT:

Federal Reserve Board Clearance Officer—Nuha Elmaghrabi—Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551, (202) 452-3829. Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors of the Federal Reserve System, Washington, DC 20551. OMB Desk Officer—Shagufta Ahmed—Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503 or by fax to (202) 395-6974.

SUPPLEMENTARY INFORMATION:

On June 15, 1984, the Office of Management and Budget (OMB) delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve of and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board. Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. Copies of the Paperwork Reduction Act Submission, supporting statements and approved collection of information instrument(s) are placed into OMB's public docket files. The Federal Reserve may not conduct or sponsor, and the respondent is not required to respond to, an information collection that has been extended, revised, or implemented on or after October 1, 1995, unless it displays a currently valid OMB control number.

Final Approval Under OMB Delegated Authority of the Extension for Three Years, With Revision, of the Following Report

Report title: Consolidated Financial Statements for Holding Companies, Parent Company Only Financial Statements for Large Holding Companies, Parent Company Only Financial Statements for Small Holding Companies, Financial Statement for Employee Stock Ownership Plan Holding Companies, and the Supplement to the Consolidated Financial Statements for Holding Companies.

Agency form number: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR Y-9CS.

OMB control number: 7100-0128.

Frequency: Quarterly and semiannually.

Reporters: Bank holding companies (BHCs), savings and loan holding companies, securities holding companies, and U.S. Intermediate Holding Companies (IHCs) (collectively, holding companies (HCs)).

Estimated annual reporting hours: FR Y-9C (non-advanced approaches holding companies): 119,094 hours; FR Y-9C (advanced approached holding companies): 3,482 hours; FR Y-9LP: 16,442 hours; FR Y-9SP: 42,001; FR Y-9ES: 40 hours; FR Y-9CS: 472 hours.

Estimated average hours per response: FR Y-9C (non-advanced approaches holding companies): 47.11 hours; FR Y-9C (advanced approached holding companies HCs): 48.36 hours; FR Y-9LP: 5.27 hours; FR Y-9SP: 5.40 hours; FR Y-9ES: 0.50 hours; FR Y-9CS: 0.50 hours.

Number of respondents: FR Y-9C (non-advanced approaches holding companies): 632; FR Y-9C (advanced approached holding companies): 18; FR Y-9LP: 780; FR Y-9SP: 3,889; FR Y-9ES: 80; FR Y-9CS: 236.

General description of report: Pursuant to the Bank Holding Company Act of 1956 (BHC Act), as amended, and the Home Owners' Loan Act (HOLA), the Federal Reserve requires HCs to provide standardized financial statements to fulfill the Federal Reserve's statutory obligation to supervise these organizations. HCs file the FRY-9C and FR Y-9LP quarterly, and the FR Y-9SP semiannually, the FR Y-9ES annually, and the FR Y-9CS on a schedule that is determined when this supplement is used.

Proposed revisions: The Board is implementing a number of revisions to the FR Y-9C requirements, most of which are consistent with the recent changes to the Federal Financial Institutions Examination Council (FFIEC) Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-0036). The revisions to the FR Y-9C include deletions, consolidations of existing data items into new data items, reductions in reporting frequency, and new and revised reporting thresholds for certain data items. The Board is also making changes to the reporting forms and instructions for the FR Y-9C, FR Y-9LP, and FR Y-9SP to implement accounting changes pertaining to equity securities under Accounting Standards update (ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.”). The accounting changes pertaining to equity securities would be effective beginning with the reports reflecting the March 31, 2018, report date and June 30, 2018 for all other changes. The changes include:

• Deleting and combining of certain data items pertaining to (1) Goodwill and Other intangible assets from Schedule HC, Balance Sheet; (2) U.S. Government agency obligations and structured financial products from Schedule HC-B, Securities; (3) Structured financial products and certain loans and the unpaid principal balance of such loans on Schedule HC-D, Trading Assets; (4) Certain over-the counter derivatives on Schedule HC-L, Derivatives and Off-Balance sheet items, and (5) Purchased credit card relationships and nonmortgage servicing assets from Schedule HC-M, Memoranda;
• Deleting two preprinted captions for other noninterest income on Schedule HI, Income Statement and certain data items on Schedule HC-D, Trading Assets and Liabilities;
• Deleting Column B (Domestic Office) from Schedule HC-D, Trading Assets and Liabilities;
• Reducing the reporting frequency from quarterly to semiannual and from quarterly to annual for certain data items on the FR Y-9C report;
• Increasing and adding reporting thresholds for certain data items in four FR Y-9C schedules;
• Revising the reporting forms and instructions to implement the reporting of equity securities under ASU-2016-0;1 and
• Moving the reporting of “Goodwill” from Schedule HC to Schedule HC-M, Memoranda.

Effective Date: March 31, 2018, for accounting changes pertaining to equity securities; June 30, 2018, for all other changes.

Legal authorization and confidentiality: The FR Y-9 family of reports is authorized by section 5(c) of the BHC Act (12 U.S.C. 1844(c)), section 10 of HOLA (12 U.S.C. 1467a(b)), sections 165 and 618 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 1850a(c)(1) and 5365), and section 252.153(b)(2) of Regulation YY (12 CFR 252.153(b)(2)). These reports are mandatory. In general, the Board does not consider the financial data in these reports to be confidential. However, a respondent may request confidential treatment pursuant to sections (b)(4), (b)(6), and (b)(8) of the Freedom of Information Act (5 U.S.C. 552(b)(4), (b)(6), and (b)(8)). The applicability of these exemptions will be reviewed on a case-by-case basis.

Effective Date: March 31, 2018 and June 30, 2018.

Current Actions: On January 2, 2018, the Board published a notice in the Federal Register (83 FR 123) requesting public comment for 60 days on the proposal to extend with revision the FR Y-9 family of reports. The comment period expired on March 5, 2018. The Board received one comment from a banking association. A detailed discussion of the responses to comment is provided below. The Board has approved, pursuant to authority delegated by the OMB, the collections of information as proposed and amended (as discussed below). The Final proposal is unchanged from the version that went out for public comment, except for the addition of the instructional clarification discussed below.

Detailed Discussion of Public Comment: While supporting the Federal Reserve's efforts to align the FR Y-9 series with the Call Report, a banking association recommended that revisions to the FR Y-9 reports occur only once a year, that those revisions become effective on March 31, and that the finalization of revisions occur prior to September 30 of the previous year in order to allow HCs sufficient time to implement the revisions.

In the past, the Board typically has followed a schedule of making revisions only once per year, generally starting in the March 31 report. However, the proposal is part of a three-phase process occurring over the course of the last year to align the FR Y-9 series with the three-phase process for the Call Reports. As a result, certain revisions to the FR Y-9 reports made through the current process have or will become effective with reports reflecting dates other than March 31. The Board will strive to return to an annual schedule for future revisions, with revisions becoming effective for the March 31 report, unless the revisions must be implemented at a different time due to changes in law, regulation, or accounting standards. With respect to the time HCs are given to implement revisions to the FR Y-9C reports, the Board notes, however, that it is important to have such changes become on the same timeline as changes to the Call Reports, to prevent inconsistencies between the FR Y-9C reports and the Call Reports. In the future, the Board will strive to provide more lead time for firms to implement revisions to the FR Y-9 reports while also ensuring alignment with the Call Report.

Additionally, the commenter urged the Board to conduct a comprehensive review of all reports that it requires banks and their affiliates to file, including the identification and removal of obsolete, overlapping, or unnecessary line items and a review of the threshold indicators (such as size and complexity) that institutions must meet before they are required to provide data on various products and activities.

In lieu of conducting a comprehensive review of all reports simultaneously, the Board performs a thorough review of each regulatory report at least every three years as part of the Paperwork Reduction Act (PRA) review process. The PRA review process led to burden-reducing changes recently, for example, when the Board terminated the FR 2052b, and the Board recently proposed burden-reducing changes, for example, for the FR Y-8. Also, in 2015, the Board raised the asset threshold of its Small Bank Holding Company Policy Statement, which allows qualifying holding companies to operate with higher levels of debt than would normally be permitted, from $500 million to $1 billion. The Board also raised the threshold for reporting the FR Y-9C from $500 million to $1 billion. In March 2017, the Board, together with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (together, the “Agencies”), issued a report pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (“EGRPRA”), which also included several initiatives to reduce burden. Because the Board's current process frequently leads to the types of changes that the commenter suggested could result from a comprehensive review, the Board will not be adopting the approach advocated by the commenter.

The commenter recommended that the Board establish an industry task force or advisory committee to help identify outdated or overlapping data items in Federal Reserve reports and identify burdens associated with these reports. In response to this comment, the Board plans to continue to offer outreach in connection with significant revisions to the FR Y-9C reports. Additionally, the Board frequently responds to questions from individual institutions regarding the requirements of the FR Y-9C reports and often addresses issues that could affect multiple institutions through quarterly correspondence to affected institutions. As required under the PRA, the Federal Reserve also offers an opportunity for the public to comment on proposed changes to the FR Y-9C report or to make any additional suggestions for improving, streamlining, or clarifying the FR Y-9C report. As a result, the Board will not establish an industry task force or advisory committee as advocated by the commenter.

The commenter further noted that two recent or pending amendments to U.S. Generally Accepted Accounting Practices (GAAP) would create inconsistencies between the requirements of the FR Y-9C family of reports and GAAP. These proposals concern accounting for leases (ASU 2016-02) and pensions (ASU 2017-07). The Board will consult with the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency regarding these accounting changes.

The commenter noted that the proposal to add a reporting threshold of $10 billion or more in total trading assets on Schedule HC-D, memorandum items 2 through 10, and the proposal to add a reporting threshold of $10 million or more in total trading assets in any of the four preceding calendar quarters on Schedule HC-K, line item 4, should be updated to add language for meeting the FDIC's definition of a large or highly complex institution, similar to a Call Report change that is effective, June 30, 2018. In response, the Board will not require institutions that meet the FDIC's definition of a large or highly complex institution that is used for deposit insurance assessment purposes to report these items because these data are not needed at the holding company level; however, the Board will allow these institutions to provide the data on a voluntary basis if it is easier to be consistent with their Call Report filings. Additionally, the commenter asked for clarification on whether the proposed $10 billion threshold on Schedule HC-D, memorandum items 2 through 10, is based on the prior four quarters or a point in time. In response, the report form has been revised to indicate that this reporting threshold is based on trading assets as of the end of each quarter.

The commenter noted several inconsistences on the FR Y-9C instructions when compared to the Call Report pertaining to the implementation of equity securities and various other line item discrepancies. The Call Report instructions were updated after the publication of the FR Y-9 proposal. The Board agrees with these changes and has revised the FR Y-9C family of forms so that they align all applicable line items to the Call Report. Additional editorial updates to the report form and instructions have been made to address the comments pertaining to the FR Y-9LP report.

The revisions will be implemented, as proposed, with the changes in response to the comment noted above. Modifications for all changes would be effective for reports reflecting the June 30, 2018, report date, except that the modifications for equity securities would be effective for reports reflecting the March 31, 2018, report date.