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

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SUMMARY:

Background

Notice is hereby given of the final approval of proposed information collection(s) by the Board of Governors of the Federal Reserve System (Board) under OMB delegated authority, as per 5 CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the Public). 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.

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FOR FURTHER INFORMATION CONTACT:

Federal Reserve Board Clearance Officer—Michelle Shore—Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, DC 20551 (202-452-3829).

OMB Desk Officer—Mark Menchik—Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503, or e-mail to mmenchik@omb.eop.gov.

Final approval under OMB delegated authority of the extension for three years, with revision, of the following reports:

Report titles: Report of Changes in Organizational Structure, Report of Changes in FBO Organizational Structure, Supplement to the Report of Changes in Organizational Structure, Notification of Foreign Branch Status, Annual Report of Bank Holding Companies, and Annual Report of Foreign Banking Organizations (collectively the Structure Reports).

Agency form numbers: FR Y-10 (formerly FR Y-10, FR Y-10F, FR Y-10S, and FR 2058), FR Y-10E, FR Y-6, and FR Y-7.

OMB control numbers: 7100-0297, 7100-0069, 7100-0124, and 7100-0125.

Effective Dates: FR Y-6, FR Y-7, and FR Y-10S: December 31, 2006; FR Y-10 and FR Y-10E: June 30, 2007.

Frequency: Event-generated, annual.

Reporters: Bank holding companies (BHCs), foreign banking organizations (FBOs), member banks, Edge and agreement corporations.

Annual reporting hours: FR Y-10, 11,072 hours; FR Y-10E, 1,384 hours; FR Y-6, 21,913 hours; FR Y-7, 900 hours.

Estimated average hours per response: FR Y-10, 1.00 hour; FR Y-10E, 0.50 hours; FR Y-6, 4.25 hours; FR Y-7, 3.50 hours.

Number of respondents: FR Y-10 and FR Y-10E, 2,768; FR Y-6, 5,156; FR Y-7, 257.

General description of report: These information collections are mandatory under the Federal Reserve Act, the BHC Act, and the International Banking Act (12 U.S.C. 248 (a)(1), 321, 601, 602, 611a, 615, 1843(k), 1844(c), 3106, and 3108(a)) and Regulations K and Y (12 CFR 211.13(c), 225.5(b), and 225.87). Individual respondent data are not considered confidential. However, respondents may request confidential treatment for any information that they believe is subject to an exemption from disclosure under the FOIA, 5 U.S.C. 552(b).

Abstract: The FR Y-10 is an event-generated information collection submitted by top-tier domestic BHCs, including financial holding companies (FHCs), and state member banks unaffiliated with a BHC, to capture changes in their regulated investments and activities. The Federal Reserve uses the data to monitor structure information on subsidiaries and regulated investments of these entities engaged in banking and nonbanking activities.

The FR Y-10F is an event-generated information collection submitted by FBOs, including FHCs, to capture changes in their regulated investments and activities. The Federal Reserve uses the data to ensure compliance with U.S. Start Printed Page 78208banking laws and regulations and to determine the risk profile of the FBO.

The FR Y-10S is a supplement to the FR Y-10. The Federal Reserve uses the data to assess the effectiveness of banking organizations' compliance with the Sarbanes-Oxley Act of 2002 and enhance the Federal Reserve's ability to evaluate regulatory data by reconciling it accurately with market data reported to shareholders.

The FR 2058 is an event-generated information collection submitted by member banks, BHCs, and Edge and agreement corporations to notify the Federal Reserve of the opening, closing, or relocation of a foreign branch. The Federal Reserve needs the information to fulfill its statutory obligation to supervise foreign branches of U.S. banking organizations.

The FR Y-6 is an annual information collection submitted by top-tier BHCs and nonqualifying FBOs. It collects financial data, an organization chart, and information about shareholders. The Federal Reserve uses the data to monitor holding company operations and determine holding company compliance with the provisions of the Bank Holding Company Act (BHC Act) and Regulation Y (12 CFR part 225).

The FR Y-7 is an annual information collection submitted by qualifying FBOs to update their financial and organizational information with the Federal Reserve. The Federal Reserve uses information to assess an FBO's ability to be a continuing source of strength to its U.S. operations and to determine compliance with U.S. laws and regulations.

Current Actions: On September 13, 2006, the Federal Reserve published a notice in the Federal Register (71 FR 54075) requesting public comment for 60 days on the extension, with revision, of the Structure Reports. The comment period for this notice expired on November 13, 2006. The Board received comment letters from four large BHCs and three industry trade associations. Nearly all of the commenters supported the Federal Reserve's proposal to combine the FR Y-10, FR Y-10F, FR Y-10S, and FR 2058 into one event-generated reporting form. They noted that this change would streamline and simplify the data submission process. In addition to addressing the comments, the Federal Reserve decided to retain a question on the Banking and Nonbanking Schedules of the FR Y-10 on whether a company is consolidated in the respondent's financial statements. This data will be collected for certain types of foreign offices as it is needed to determine which institutions must submit the Consolidated Reports of Condition and Income (FFIEC 031 and FFIEC 041; OMB No. 7100-0036).

General Comments

Definition of Control and Reportable Investments

Several commenters raised issues concerning the control standard used to determine reportability for purposes of the reporting forms. For ease of reference, the control standard will be moved to the Glossary portion of the instructions; however, the Glossary entry for control will be identical in substance to the control standard found in the current FR Y-10 and FR Y-10F instructions. One commenter expressed concern that a reporter's control of 25 percent or more of a company's total equity could, by itself, trigger reportability for purposes of the FR Y-10. However, in 2004, references to control of 25 percent or more of total equity were deleted from the control standard used for purposes of these reporting forms and, as noted, the current revisions make no changes to this control standard.

Several commenters requested that public welfare investments be exempt from reportability on the reporting forms. In addition to their current reportability on the FR Y-10, FR Y-10F, FR Y-6, and FR Y-7, public welfare investments made through banks are also subject to prior-or post-notice filing requirements with federal banking agencies, as are a limited number of similar investments made by BHCs outside banks. To avoid duplicate reporting of these investments, the FR Y-10, FR Y-6, and FR Y-7 instructions would be revised to exempt from reportability those public welfare investments subject to prior-or post-notice filing requirements with federal banking agencies,[1] if held through a company that itself has been reported on the FR Y-10 and that is principally engaged in community development or public welfare activities.

One trade association requested an exemption from reporting interests deemed to be controlled by the reporter solely by virtue of the “10 percent voting interest plus a director or officer interlock” presumption used for purposes of the reporting forms. The commenter asserted that this reporting requirement could be especially onerous with respect to FBO reporting of interests on the FR Y-7 held under section 2(h)(2) of the BHC Act. As noted, no change to the definition of control for reporting purposes, including in the application of this control presumption to any of the structure reporting forms, will be made at this time. Nevertheless, the Federal Reserve will continue to consider whether limited relief from the reporting requirements applicable to section 2(h)(2) investments may be appropriate.

Several commenters questioned whether the changes to reporting of limited liability companies, partnerships, limited partnerships, and entities that are 100% owned would require institutions to submit FR Y-10 data for entities currently in existence. The commenters noted that the number of submissions could be very large. The Federal Reserve will clarify that these new requirements will only be applicable for submissions after June 30, 2007, and would not be imposed retroactively. Several commenters requested further clarifications on reporting partnerships, limited liability companies, and entities with more than one class of voting securities. The Federal Reserve will clarify the FR Y-10 instructions in response to these comments.

FR Y-10 Comments

Domestic Branch Schedule

Several substantive comments were received regarding the proposal to add a schedule to the FR Y-10 to collect data on domestic branches, The Federal Reserve is continuing to evaluate these comments and will address them in a separate Federal Register notice in 2007.

4(k) Schedule

Commenters also contended that the proposed FR Y-10 instructions require duplicative reporting of information on the Nonbanking and 4(k) schedules when a respondent utilizes 4(k) authority to acquire a going concern or establish a de novo company without engaging in a 4(k) activity that is new to the respondent's organization. To address the comments, the Federal Reserve will clarify the instructions and delete two event types from the 4(k) schedule.

Burden Estimate

One large BHC asserted that the Federal Reserve's burden estimate for the FR Y-10 of one hour per response is too low. The Federal Reserve understands that for a large BHC this estimate may appear low. However, the estimate represents an average for all institutions and since the vast majority of respondents are small, the Federal Reserve feels comfortable with the estimate of one hour. Start Printed Page 78209

Automation Issues

Several commenters raised concerns with the current FR Y-10 online system used to submit the data electronically. The Federal Reserve has arranged a meeting with the commenters to further understand their concerns and will work with the commenters to resolve the issues.

FR Y-6 Comments

A couple of substantive comments were received regarding the proposal to add a requirement for institutions to verify a list of domestic branches. The Federal Reserve is continuing to evaluate these comments and will address them in a separate Federal Register notice in 2007. This requirement will not be implemented effective December 31, 2006, as originally proposed.

FR Y-10S Comments

A commenter requested clarifications to the instructions of Schedule A of the FR Y-10S. Data collected on this schedule currently are used to ensure compliance with the Sarbanes-Oxley Act. The commenter asked whether a report is necessary when (1) a reporter's subsidiary has been dissolved or sold since December 31, 2005, or (2) there has been no change to the information collected on Schedule A since December 31, 2005. The Federal Reserve will clarify the instructions to indicate that the Cover Page and Schedule A of the FR Y-10S reporting form do not need to be filed in either situation.

FR Y-10E Comments

One trade association expressed concern about the FR Y-10E free-form supplement that would be used to collect additional structural information deemed to be critical and needed in an expedited manner. This commenter asked the Federal Reserve to reconsider creating the supplement or to clearly circumscribe the situations under which it would be used. This supplement would only be used to meet new legislative requirements, answer Congressional inquiries, or respond to critical market events that could not be addressed in a timely manner through the reports clearance process. Subsequent to the implementation of this supplement, if the data were needed on a permanent basis, the Federal Reserve would complete the entire clearance process, including a request for public comment.

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Board of Governors of the Federal Reserve System, December 22, 2006.

Jennifer J. Johnson,

Secretary of the Board.

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Footnotes

1.  Such as those reportable on the CD-1 (OMB No. 1557-0196) or FR H-6 (OMB No. 7100-0278).

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[FR Doc. E6-22259 Filed 12-27-06; 8:45 am]

BILLING CODE 6210-01-P