[Federal Register Volume 85, Number 131 (Wednesday, July 8, 2020)]
[Notices]
[Pages 41040-41045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14613]
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FEDERAL RESERVE SYSTEM
Proposed Agency Information Collection Activities; Comment
Request
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Temporary approval of information collection; notice, request
for comment.
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SUMMARY: The Board has temporarily revised the Capital Assessments and
Stress Testing Reports (FR Y-14A/Q/M; OMB No. 7100-0341) pursuant to
the authority delegated to the Board by the Office of Management and
Budget (OMB), per OMB Regulations on Controlling Paperwork Burdens on
the Public. The temporary revisions, which would collect data
pertaining to certain aspects of the Coronavirus Aid, Relief, and
Economic Security Act, information on firm activity associated with
various Federal Reserve lending facilities, and information regarding
emerging risks arising from the coronavirus disease 2019 (COVID-19)
pandemic, are applicable to reports beginning with the July 31, 2020,
or September 30, 2020, as of date. Additionally, the Board invites
comment on a proposal to extend for three years, with revision, the FR
Y-14A/Q/M reports in order to address questions related to the
reporting of certain current expected credit losses (CECL) and capital
data, which would be applicable to reports beginning with the December
31, 2020, as of date.
DATES: Comments must be submitted on or before September 8, 2020.
ADDRESSES: You may submit comments, identified by FR Y-14A, FR Y-14Q,
or FR Y-14M, by any of the following methods:
Agency website: https://www.federalreserve.gov/. Follow
the instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
Email: [email protected]. Include the OMB
number in the subject line of the message.
FAX: (202) 452-3819 or (202) 452-3102.
Mail: Ann E. Misback, 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 website at
https://www.federalreserve.gov/apps/foia/proposedregs.aspx as
submitted, unless modified for technical reasons or to remove
personally identifiable information at the commenter's request.
Accordingly, comments will not be edited to remove any identifying or
contact information. Public comments may also be viewed electronically
or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the
Board requires that visitors make an appointment to inspect comments.
You may do so by calling (202) 452-3684. Upon arrival, visitors will be
required to present valid government-issued photo identification and to
submit to security screening in order to inspect and photocopy
comments.
Additionally, commenters may send a copy of their comments to the
Office of Management and Budget (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.
FOR FURTHER INFORMATION CONTACT: A copy of the Paperwork Reduction Act
(PRA) OMB submission, including the reporting form and instructions,
supporting statement, and other documentation will be placed into OMB's
public docket files, if approved. These documents will also be made
available on the Board's public website at https://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested
from the agency clearance officer, whose name appears below.
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.
SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board
authority under the PRA to approve and assign OMB control numbers to
collections of information conducted or sponsored by the Board. In
exercising this delegated authority, the Board is directed to take
every reasonable step to solicit comment. In determining whether to
approve a collection of information, the Board will consider all
comments received from the public and other agencies. Pursuant to its
delegated authority, the Board may temporarily approve a revision to a
collection of information, without providing opportunity for public
comment, if the Board determines that a change in an existing
collection must be instituted quickly and that public participation in
the approval process would defeat the purpose of the collection or
substantially interfere with the Board's
[[Page 41041]]
ability to perform its statutory obligation.
As discussed below, the Board has made certain temporary revisions
to the FR Y-14A/Q/M information collection. The Board's delegated
authority requires that the Board, after temporarily approving a
collection, publish a notice soliciting public comment. Therefore, the
Board is also inviting comment on a proposal to extend the FR Y-14A/Q/M
information collection for three years, with these revisions.
Request for Comment on Information Collection Proposal
The Board invites public comment on the following information
collection, which is being reviewed under authority delegated by the
OMB under the PRA. Comments are invited on the following:
a. Whether the proposed collection of information is necessary for
the proper performance of the Board's functions, including whether the
information has practical utility;
b. The accuracy of the Board's estimate of the burden of the
proposed information collection, 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 startup costs and costs of operation,
maintenance, and purchase of services to provide information.
At the end of the comment period, the comments and recommendations
received will be analyzed to determine the extent to which the Board
should modify the proposal.
Final Approval Under OMB Delegated Authority of the Temporary Revision
of, and Proposal To Extend for Three Years, With Revision, of the
Following Information Collection
Report title: Capital Assessments and Stress Testing Reports.
Agency form number: FR Y-14A/Q/M.
OMB control number: 7100-0341.
Frequency: Annually, quarterly, and monthly.
Respondents: These collections of information are applicable to
bank holding companies (BHCs), U.S. intermediate holding companies
(IHCs), and covered savings and loan holding companies (SLHCs) \1\ with
$100 billion or more in total consolidated assets, as based on: (i) The
average of the firm's total consolidated assets in the four most recent
quarters as reported quarterly on the firm's Consolidated Financial
Statements for Holding Companies (FR Y-9C; OMB No. 7100-0128); or (ii)
if the firm has not filed an FR Y-9C for each of the most recent four
quarters, then the average of the firm's total consolidated assets in
the most recent consecutive quarters as reported quarterly on the
firm's FR Y-9Cs. Reporting is required as of the first day of the
quarter immediately following the quarter in which the respondent meets
this asset threshold, unless otherwise directed by the Board.
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\1\ Covered SLHCs are those which are not substantially engaged
in insurance or commercial activities. For more information, see the
definition of ``covered savings and loan holding company'' provided
in 12 CFR 217.2 and 12 CFR 238.2(ee). SLHCs with $100 billion or
more in total consolidated assets become members of the FR Y-14Q and
FR Y-14M panels effective June 30, 2020, and the FR Y-14A panel
effective December 31, 2020. See 84 FR 59032 (November 1, 2019).
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Estimated number of respondents: FR Y-14A/Q: 36; FR Y-14M: 34.\2\
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\2\ The estimated number of respondents for the FR Y-14M is
lower than for the FR Y-14Q and FR Y-14A because, in recent years,
certain respondents to the FR Y-14A and FR Y-14Q have not met the
materiality thresholds to report the FR Y-14M due to their lack of
mortgage and credit activities. The Board expects this situation to
continue for the foreseeable future.
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Estimated average hours per response: FR Y-14A: 1,085 hours; FR Y-
14Q: 2,142 hours; FR Y-14M: 1,072 hours; FR Y-14 On-going Automation
Revisions: 480 hours; FR Y-14 Attestation On-going Attestation: 2,560
hours.
Estimated annual burden hours: FR Y-14A: 39,060 hours; FR Y-14Q:
308,448 hours; FR Y-14M: 437,376 hours; FR Y-14 On-going Automation
Revisions: 17,280 hours; FR Y-14 Attestation On-going Attestation:
33,280 hours.
General description of report: This family of information
collections is composed of the following three reports:
The annual \3\ FR Y-14A collects quantitative projections
of balance sheet, income, losses, and capital across a range of
macroeconomic scenarios and qualitative information on methodologies
used to develop internal projections of capital across scenarios.\4\
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\3\ In certain circumstances, a BHC or IHC may be required to
re-submit its capital plan. See 12 CFR 225.8(e)(4). Firms that must
re-submit their capital plan generally also must provide a revised
FR Y-14A in connection with their resubmission.
\4\ On October 10, 2019, the Board issued a final rule that
eliminated the requirement for firms subject to Category IV
standards to conduct and publicly disclose the results of a company-
run stress test. See 84 FR 59032 (Nov. 1, 2019). That final rule
maintained the existing FR Y-14A/Q/M substantive reporting
requirements for these firms in order to provide the Board with the
data it needs to conduct supervisory stress testing and inform the
Board's ongoing monitoring and supervision of its supervised firms.
However, as noted in the final rule, the Board intends to provide
greater flexibility to banking organizations subject to Category IV
standards in developing their annual capital plans and consider
further change to the FR Y-14A/Q/M forms as part of a separate
proposal. See 84 FR 59032, 59063.
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The quarterly FR Y-14Q collects granular data on various
asset classes, including loans, securities, trading assets, and PPNR
for the reporting period.
The monthly FR Y-14M is comprised of three retail
portfolio- and loan-level schedules, and one detailed address-matching
schedule to supplement two of the portfolio and loan-level schedules.
The data collected through the FR Y-14A/Q/M reports provide the
Board with the information needed to help ensure that large firms have
strong, firm[hyphen]wide risk measurement and management processes
supporting their internal assessments of capital adequacy and that
their capital resources are sufficient given their business focus,
activities, and resulting risk exposures. The reports are used to
support the Board's annual Comprehensive Capital Analysis and Review
(CCAR) and Dodd-Frank Act Stress Test (DFAST) exercises, which
complement other Board supervisory efforts aimed at enhancing the
continued viability of large firms, including continuous monitoring of
firms' planning and management of liquidity and funding resources, as
well as regular assessments of credit, market and operational risks,
and associated risk management practices. Information gathered in this
data collection is also used in the supervision and regulation of
respondent financial institutions. Respondent firms are currently
required to complete and submit up to 17 filings each year: One annual
FR Y-14A filing, four quarterly FR Y-14Q filings, and 12 monthly FR Y-
14M filings. Compliance with the information collection is mandatory.
Current actions and proposed revisions: The Board has temporarily
revised the FR Y-14A/Q/M reports to implement changes necessary in
response to the coronavirus disease 2019 (COVID-19) pandemic.
Specifically, the Board has temporarily revised the FR Y-14A/Q/M
reports to collect data pertaining to certain aspects of the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act),\5\ as
[[Page 41042]]
well as information on firm activity associated with the Paycheck
Protection Program (PPP) \6\ and Federal Reserve lending facilities,
such as the Main Street Lending Program (MSLP),\7\ that have been
established to support markets and the broader economy during the
ongoing COVID-19 pandemic. The Board has also temporarily revised the
FR Y-14A/Q/M reports to receive FR Y-14Q, Schedule H (Wholesale) on a
more frequent basis, as well as to make other revisions, to better
understand the evolving effects of the COVID-19 pandemic on bank
positions and the broader economy.
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\5\ Coronavirus Aid, Relief, and Economic Security Act, Public
Law 116-136, 134 Stat. 281 (Mar. 27, 2020).
\6\ See 85 FR 20387 (April 13, 2020).
\7\ https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
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In addition, in response to various questions received from the
industry following the publication of the final rule to change the
current expected credit losses methodology (CECL) transition
provisions,\8\ the Board is proposing to revise the FR Y-14A to allow
firms to accurately reflect in their reporting the greater flexibility
on CECL implementation afforded in the interim final rule and to make
minor revisions and clarifications to several capital items on the FR
Y-14A and FR Y-14Q reports. The Board notes that the information
associated with the temporary revisions to the FR Y-14A/Q/M reports are
not available from other sources, such as the FR Y-9C.
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\8\ See 85 FR 17723 (March 31, 2020).
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Temporary Revisions to the FR Y-14A/Q/M
In response to the COVID-19 pandemic, the Board has temporarily
revised the FR Y-14A/Q/M reports to change the submission frequency of
one FR Y-14Q schedule, incorporate the reporting of loans in loss
mitigation or forbearance programs, collect information on firm
activity associated with the PPP, MSLP, and other Federal Reserve
lending facilities. The revised submission frequency of FR Y-14Q,
Schedule H (Wholesale) is effective beginning with the report as of
July 31, 2020. All other FR Y-14Q and FR Y-14M temporary revisions are
effective beginning with reports as of September 30, 2020. In addition,
the FR Y-14Q instructions specify that attestations are not required
for non-quarter-end submissions, or for new items temporarily added as
part of this notice. The Board has determined that it must revise the
FR Y-14Q and FR Y-14M quickly and that public participation in the
approval process would defeat the purpose of the collection of
information, as delaying the revisions would result in the collection
of incomplete information, and would interfere with the Board's ability
to perform its statutory duties pursuant to section 165 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act).\9\ These temporary revisions expire six months after the date of
publication of this notice in the Federal Register, unless extended by
the Board (i.e., data associated with these temporary revisions are
only required to be submitted up to and including data as of December
31, 2020--firms are not required to continue to submit data associated
with these temporary revisions for any as of dates in 2021 without
explicit reauthorization from the Board).
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\9\ 12 U.S.C. 5365.
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FR Y-14Q Reporting Frequency
Effective for data as of July 31, 2020, the Board has temporarily
revised the submission frequency of FR Y-14Q, Schedule H (Wholesale)
from a quarterly basis to a monthly basis for Category I-III firms.
This schedule has month-end as-of dates and is due either 30 days after
the as of date, or seven days after the FR Y-9C submission date (i.e.,
at the same time as most of the FR Y-14Q), depending on whether the as
of date aligns with a quarter-end date. In order to effectively
understand and react to the potentially quickly evolving effects of the
COVID-19 pandemic on bank positions and the broader economy,
particularly with respect to corporate and commercial real estate
exposures, the Board needs the information on this schedule on a more
frequent basis. Note that Schedule H data submitted monthly may be used
for supervisory purposes including, but not limited to, stress testing.
In addition, the Board has revised the FR Y-14Q instructions to
indicate the Board may require submission of the FR Y-14Q, or certain
schedules or items on the FR Y-14Q, on a more frequent basis in times
of crisis.
Loans in Loss Mitigation or Forbearance Programs
As described in the Interagency Statement on Loan Modifications and
Reporting for Financial Institutions Working with Customers Affected by
the Coronavirus Guidance,\10\ the CARES Act, among other things,
``creates a forbearance program for federally backed mortgage loans,
protects borrowers from negative credit reporting due to loan
accommodations related to the National Emergency, and provides
financial institutions the option to temporarily suspend certain
requirements under U.S. generally accepted accounting principles (GAAP)
related to troubled debt restructurings (TDR) for a limited period of
time to account for the effects of COVID-19.'' In the Guidance, the
Board and other regulatory agencies encouraged financial institutions
to work prudently with borrowers who are or maybe unable to meet their
contractual payment obligations because of the effects of COVID-19.
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\10\ https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20200407a1.pdf.
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Because firms may hold a larger number of loans in forbearance
programs and loans with other loss mitigation circumstances during the
COVID-19 pandemic, the Board has temporarily revised certain FR Y-14Q
and FR Y-14M schedules to add fields and options to existing fields to
collect information on loans in forbearance programs and other loss
mitigation circumstances.
FR Y-14Q, Schedule A (Retail)
In order to capture loss mitigation and forbearance loan balances,
the Board has temporarily added the ``$ Loss mitigation and
forbearance'' summary variable to the six retail schedules that do not
currently capture this information. Specifically, the summary variable
has been added to the following schedules:
Schedule A.1 (International Auto Loan);
Schedule A.3 (International Credit Card);
Schedule A.4 (International Home Equity);
Schedule A.5 (International First Lien Mortgage);
Schedule A.6 (International Other Consumer Schedule); and
Schedule A.7 (US Other Consumer).
Three retail schedules already have summary variables to capture
information regarding loss mitigation and modified loans. However, in
order to be consistent across Schedule A, the Board has temporarily
replaced the following summary variables with the same ``$ Loss
mitigation and forbearance'' summary variable as described above:
Schedule A.2 (US Auto Loan), Field #26 (``$ Loss
mitigation'');
Schedule A.8 (International Small Business), Field #6 (``$
Modifications''); and
Schedule A.9 (US Small Business), Field #6 (``$
Modifications'').
FR Y-14Q, Schedule H (Wholesale)
The Board has temporarily added the ``Modifications Flag'' item to
Schedules H.1 (Corporate) and H.2 (Commercial
[[Page 41043]]
Real Estate) (items 109 and 70, respectively) to capture information on
loans in loss mitigation or forbearance programs because of the COVID-
19 pandemic. Prior to this revision, it was not possible to identify
loans in these programs on these schedules. Loans in loss mitigation
and forbearance programs have different risk characteristics than other
loans reported on this schedule, and therefore need to be separately
identified.
FR Y-14Q, Schedule J (Retail Fair Value Option/Held for Sale (FVO/HFS))
The Board has temporarily added Column J (Loss Mitigation) to
Schedule J to capture information on FVO/HFS loans in loss mitigation
programs. Loans in loss mitigation programs have different risk
characteristics than other loans reported on this schedule, and
therefore need to be separately identified.
FR Y-14M, Schedule B (Home Equity)
In order to capture information regarding loans in forbearance
programs and for consistency with the corresponding item on FR Y-14M,
Schedule A (First Lien), the Board has temporarily added an option (``9
= Forbearance plan'') to item 61 (``Workout Type Completed'').
Paycheck Protection Program (PPP)
On April 9, 2020, the Federal Reserve announced it would help
facilitate the Small Business Administration's PPP by supplying
liquidity to participating financial institutions through term
financing backed by PPP loans to small businesses.\11\ The PPP provides
loans to small businesses so that they can keep their workers on the
payroll. The Paycheck Protection Program Liquidity Facility (PPPLF)
extends credit to eligible financial institutions that originate PPP
loans, taking the loans as collateral at face value.
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\11\ https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
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FR Y-14Q, Schedule A (Retail)
In order to identify loans fully guaranteed by the U.S. government,
such as loans associated with the PPP, the Board has temporarily added
the ``$ Under federally guaranteed programs'' (item 13) summary
variable to Schedule A.9 (US Small Business). This summary variable is
necessary as the credit risk characteristics of loans fully guaranteed
under federal programs differ from other loans reported on Schedule
A.9, and therefore these loans need to be reported separately from
other small business exposures for appropriate evaluation during the
stress test.
FR Y-14Q, Schedule H
In response to questions received from the industry, the Board has
temporarily revised the instructions to Schedules H.1 and H.2 to
explicitly exclude PPP loans. The Board does not need information for
PPP loans on these schedules.
FR Y-14Q, Schedule M (Balances)
The Board has temporarily added item 2.b.(1),''Paycheck Protection
Program (PPP) loans,'' to Schedule M.1. (Quarter-end Balances), to
capture the balance of PPP loans. The Board has also temporarily added
references to new item 2.b.(1) to Schedule M.2 (FR Y-9C
Reconciliation). In addition, the Board temporarily has added language
to the instructions for items 2.a, ``Graded C&I loans,'' and 2.b,
``Small business loans,'' requiring that PPP loans be excluded from
these items. PPP loans have different risk characteristics than non-
guaranteed loans, and therefore need to be separately identified.
Main Street Lending Program
On April 9, 2020, the Board announced the MSLP, which will enhance
support for small and mid-sized businesses that were in good financial
standing before the crisis by offering 4-year loans to companies
employing up to 10,000 workers or with revenues of less than $2.5
billion.\12\ Additionally, businesses with up to 15,000 employees or up
to $5 billion in annual revenue are now eligible, compared to the
initial program terms, which were for companies with up to 10,000
employees and $2.5 billion in revenue.\13\ Principal and interest
payments will be deferred for one year. Under the MSLP, banks will
retain a share of loans, selling the remaining share to the Main Street
facility.
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\12\ https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
\13\ https://www.federalreserve.gov/newsevents/pressreleases/monetary20200430a.htm.
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FR Y-14Q, Schedule A
The Board has temporarily added the following items to Schedule
A.9: item 14, ``$ Main Street New Loan Facility (MSNLF),'' item 15, ``$
Main Street Priority Loan Facility (MSPLF),'' and item 16, ``$ Main
Street Expanded Loan Facility (MSELF).'' MSLP loans have different risk
characteristics than other loans reported on this schedule, and
therefore need to be separately identified.
FR Y-14Q, Schedule H
The Board has temporarily added the ``Extended Facility ID'' item
to Schedules H.1 and H.2 (items 110 and 71, respectively). The Board
has also temporarily added options to the ``Credit Facility Purpose''
on Schedule H.1 (item 25) and the ``Loan Purpose'' item on Schedule H.2
(item 22) to capture information on MSLP loans. Specifically, the Board
temporarily has added the following options: ``MSLP New Loan
Facility,'' ``MSLP Expanded Loan Facility,'' and ``MSLP Priority Loan
Facility.'' MSLP loans have different risk characteristics than other
loans reported on these schedules, and therefore need to be separately
identified.
FR Y-14Q, Schedule K (Supplemental)
In order to capture MSLP loans that aren't reported on FR Y-14Q,
Schedules A and H, the Board temporarily has added three columns to
Schedule K: D.1, ``Main Street Loan Program New Loan Facility loans
under $1M in committed balance,'' D.2, Main Street Loan Program
Expanded Loan Facility loans under $1M in committed balance,'' and D.3,
Main Street Loan Program Priority Loan Facility loans under $1M in
committed balance.'' In addition, the Board has temporarily added
language to the instructions for column D, ``Outstanding Balance of
Commercial Real Estate (CRE) and Corporate loans under $1M in committed
balance,'' requiring that firms exclude MSLP loans balances from this
column.
Other Federal Reserve Lending Facilities
FR Y-14Q, Schedule B (Securities)
The Board temporarily has added an item (``COVID-19 facility'') to
Schedule B.1 (Main Schedule) to capture securities that have been
pledged under a Federal Reserve facility that supports the flow of
credit during the COVID-19 pandemic (e.g., Money Market Mutual Fund
Liquidity Facility). This information is needed to determine the amount
of protection provided by the put option positions associated with
these facilities.
FR Y-14Q, Schedule F (Trading)
The Board temporarily has created new submission types for Schedule
F dedicated to capturing information on trading assets that have been
pledged to Federal Reserve lending facilities. The submission type
would mirror the other submission types of the trading schedule and
firms would complete the submission type in the same manner as for
other submission types, as outlined
[[Page 41044]]
in the Schedule F instructions, unless otherwise indicated. This
information is needed to determine the amount of protection provided by
the put option positions associated with these facilities.
Other Revisions Related to the COVID-19 Pandemic
FR Y-14Q, Schedule D (Regulatory Capital)
In order to provide capital relief related to CECL to align with
the purpose of the interim CECL final rule and CARES Act, the Board
temporarily has revised Schedule D to allow firms to apply the CECL
transition provisions to reported values.
Proposed Revisions to the FR Y-14A/Q/M
As noted, the Board would collect the temporary items described
above through the December 31, 2020, as-of date, unless the Board
determines an extension is necessary. In addition, the Board is
proposing to make several revisions to FR Y-14A, Supplemental
Collection of CECL Information, and capital schedules across the FR Y-
14A and FR Y-14Q, effective for the December 31, 2020, as-of date.
Supplemental Collection of CECL Information
In order to accurately reflect the CECL transition provision as
modified by the interim CECL final rule, as well as the CARES Act, the
Board proposes to revise the instructions to the Supplemental
Collection of CECL Information schedule of the FR Y-14A. Since this
schedule was designed to capture data surrounding the CECL transition
provision before the interim CECL final rule, several items on the
schedule need to be revised.
First, the Board proposes to revise the schedule to only require it
to be reported one time by firms, as opposed to being reported
repeatedly over the course of the CECL transition horizon. This
revision is necessary since the interim CECL final rule revised the day
one impact to include the CECL, deferred tax asset (DTA), and adjusted
allowance for credit losses (AACL) transitional amounts. As a result of
this change, the Board no longer needs information over the course of
the CECL transition horizon.
Second, under the CARES Act, firms can delay adopting CECL until
December 31, 2020, or until the end of the national emergency,
whichever comes sooner. Therefore, firms may not have adopted CECL on
the timetable expected prior to the COVID-19 pandemic. Given that firms
may CECL adopt at different times throughout the year, the following
items would be revised to require firms to report expected values if
the firm adopts in the first quarter of a given year (i.e., before the
data are due in early April), and actual values if the firm adopted
CECL in the second through the fourth quarters of a given year. The
instructions would clarify that firms that adopt CECL in the second
through fourth quarters of a given year would submit actual data in the
reporting year (e.g., if a firm adopts CECL in September of 2020, then
it would report actual data for the December 31, 2020, FR Y-14A
submission). This revision would apply to the following items:
Item 3, ``Adoption of Current Expected Credit Loss
Methodology--ASC Topic 326'';
Item 4, ``Allowances for credit losses recognized upon the
acquisition of purchased credit-deteriorated assets'';
Item 5, ``Effect of adoption of current expected credit
losses methodology on allowances for credit losses on loans and leases
held for investment and held-to-maturity debt securities'';
Item 6, ``Total allowance for credit losses'';
Item 6a, ``Allowance for credit losses on loans and leases
held for investment'';
Item 6b, ``Allowance for credit losses on held-to-maturity
securities''; and
Item 6c, ``Allowance for credit losses on available-for-
sale securities''.
Capital
Due to various questions received from the industry regarding
reporting of several capital items, the Board proposes changes to these
items.
On December 23, 2019, the Board finalized revisions to the FR Y-
14A/Q/M reports.\14\ As part of those revisions, the Board provided
guidance on how firms should reflect the impact of the ``global market
shock'' on items subject to adjustment or deduction from capital.
However, the Board omitted FR Y-14A, Schedule A.1.d (Capital), item 68,
``Permitted offsetting short positions in relation to the specific
gross holdings included above'' from this guidance. The Board is now
proposing to allow firms to reflect the impact of the ``global market
shock'' for this item.
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\14\ See 84 FR 70529 (December 23, 2019).
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FR Y-14A, Schedule A.1.d, already captures data for aggregate non-
significant investments in the capital of unconsolidated financial
entities, including the form of common stock, additional tier 1
capital, and additional tier 2 capital in item 64 (``Aggregate non-
significant investments in the capital of unconsolidated financial
institutions, including in the form of common stock, additional tier 1,
and tier 2 capital''). However, in order to properly derive item 66
(``Amount of non-significant investments that exceed the 10 percent
deduction threshold for non-significant investments''), the Board has
determined that it needs to isolate the amount of aggregate non-
significant investments in the capital of unconsolidated financial
institutions in the form of common stock. Therefore, the Board proposes
to renumber existing item 64 to item 64a, and add item 64b, ``Aggregate
non-significant investments in the capital of unconsolidated financial
institutions in the form of common stock.'' As a result, the Board also
proposes to revise the derivation of item 66 to reference items 64a and
64b.
Finally, to ensure consistent reporting across firms, the Board
proposes to revise the instructions for FR Y-14A, Schedule A.1.d, item
113 (``Valuation allowances related to DTAs arising from temporary
differences'') and FR Y-14Q, Schedule D (Regulatory Capital), item 16
(``Valuation allowances related to DTAs arising from temporary
differences'') to clarify that these items should be reported as
positive values.
The Board proposes to extend the FR Y-14A/Q/M for three years, with
the revisions discussed above, in order to permit continued accurate
reporting.
Legal authorization and confidentiality: The Board has the
authority to require BHCs to file the FR Y-14A/Q/M reports pursuant to
section 5(c) of the Bank Holding Company Act (``BHC Act''), (12 U.S.C.
1844(c)), and pursuant to section 165(i) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank Act) (12 U.S.C. 5365(i))
as amended by section 401(a) and (e) of the Economic Growth, Regulatory
Relief, and Consumer Protection Act (EGRRCPA).\15\ The Board has
authority to require SLHCs to file the FR Y-14A/Q/M reports pursuant to
section 10(b) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)), as
amended by section 369(8) and 604(h)(2) of the Dodd-Frank Act. Lastly,
the Board has authority to require U.S. IHCs of FBOs to file the FR Y-
14A/Q/M reports pursuant to section 5 of the BHC Act, as well as
pursuant to sections 102(a)(1) and 165 of the Dodd-Frank Act (12 U.S.C.
5311(a)(1) and 5365).\16\ In
[[Page 41045]]
addition, section 401(g) of EGRRCPA (12 U.S.C. 5365 note) provides that
the Board has the authority to establish enhanced prudential standards
for foreign banking organizations with total consolidated assets of
$100 billion or more, and clarifies that nothing in section 401 ``shall
be construed to affect the legal effect of the final rule of the
Board... entitled `Enhanced Prudential Standard for [BHCs] and Foreign
Banking Organizations' (79 FR 17240 (March 27, 2014)), as applied to
foreign banking organizations with total consolidated assets equal to
or greater than $100 million.'' \17\ The FR Y-14A/Q/M reports are
mandatory. The information collected in the FR Y-14A/Q/M reports is
collected as part of the Board's supervisory process, and therefore,
such information is afforded confidential treatment pursuant to
exemption 8 of the Freedom of Information Act (FOIA) (5 U.S.C.
552(b)(8)). In addition, confidential commercial or financial
information, which a submitter actually and customarily treats as
private, and which has been provided pursuant to an express assurance
of confidentiality by the Board, is considered exempt from disclosure
under exemption 4 of the FOIA (5 U.S.C. 552(b)(4)).\18\
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\15\ Public Law 115-174, Title IV 401(a) and (e), 132 Stat.
1296, 1356-59 (2018).
\16\ Section 165(b)(2) of the Dodd-Frank Act (12 U.S.C.
5365(b)(2)) refers to ``foreign-based bank holding company.''
Section 102(a)(1) of the Dodd-Frank Act (12 U.S.C. 5311(a)(1))
defines ``bank holding company'' for purposes of Title I of the
Dodd-Frank Act to include foreign banking organizations that are
treated as bank holding companies under section 8(a) of the
International Banking Act of 1978 (12 U.S.C. 3106(a)). The Board has
required, pursuant to section 165(b)(1)(B)(iv) of the Dodd-Frank Act
(12 U.S.C. 5365(b)(1)(B)(iv)) certain foreign banking organizations
subject to section 165 of the Dodd-Frank Act to form U.S.
intermediate holding companies. Accordingly, the parent foreign-
based organization of a U.S. IHC is treated as a BHC for purposes of
the BHC Act and section 165 of the Dodd-Frank Act. Because Section
5(c) of the BHC Act authorizes the Board to require reports from
subsidiaries of BHCs, section 5(c) provides additional authority to
require U.S. IHCs to report the information contained in the FR Y-
14A/Q/M reports.
\17\ The Board's Final Rule referenced in section 401(g) of
EGRRCPA specifically stated that the Board would require IHCs to
file the FR Y-14A/Q/M reports. See 79 FR 17240, 17304 (March 27,
2014).
\18\ Please note that the Board publishes a summary of the
results of the Board's CCAR testing pursuant to 12 CFR
225.8(f)(2)(v), and publishes a summary of the results of the
Board's DFAST stress testing pursuant to 12 CFR 252.46(b) and 12 CFR
238.134, which includes aggregate data. In addition, under the
Board's regulations, covered companies must also publicly disclose a
summary of the results of the Board's DFAST stress testing. See 12
CFR 252.58; 12 CFR 238.146. The public disclosure requirement
contained in 12 CFR 252.58 for covered BHCs and covered IHCs is
separately accounted for by the Board in the Paperwork Reduction Act
clearance for FR YY (OMB No. 7100-0350) and the public disclosure
requirement for covered SLHCs is separately accounted for in by the
Board in the Paperwork Reduction Act clearance for FR LL (OMB No.
7100-NEW).
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Consultation outside the agency: There has been no consultation
outside the agency.
Board of Governors of the Federal Reserve System, July 1, 2020.
Michele Taylor Fennell,
Assistant Secretary of the Board.
[FR Doc. 2020-14613 Filed 7-7-20; 8:45 am]
BILLING CODE 6210-01-P