2013-09061

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This section of the FEDERAL REGISTERcontains notices to the public of the proposedissuance of rules and regulations. The

purpose of these notices is to give interestedpersons an opportunity to participate in therule making prior to the adoption of the finalrules.

Proposed Rules Federal Register

23162

Vol. 78, No. 75

Thursday, April 18, 2013

1To date, the Council has not designated anynonbank financial company for Board supervisionunder section 113 of the Dodd-Frank Act.

FEDERAL RESERVE SYSTEM

12 CFR Part 246

[Regulation TT; Docket No. R–1457]

RIN 7100–AD–95

Supervision and RegulationAssessments for Bank HoldingCompanies and Savings and Loan

Holding Companies With TotalConsolidated Assets of $50 Billion orMore and Nonbank FinancialCompanies Supervised by the FederalReserve

AGENCY: Board of Governors of theFederal Reserve System.ACTION: Proposed rule.

SUMMARY: The Board of Governors of theFederal Reserve System (Board) isinviting comments on a proposed rule toimplement section 318 of the Dodd-Frank Wall Street Reform and ConsumerProtection Act (Dodd-Frank Act), which

directs the Board to collect assessments,fees, or other charges equal to the totalexpenses the Board estimates arenecessary or appropriate to carry out thesupervisory and regulatoryresponsibilities of the Board for bankholding companies and savings andloan holding companies with totalconsolidated assets of $50 billion ormore and nonbank financial companiesdesignated for Board supervision by theFinancial Stability Oversight Council(Council).

DATES: Comments should be received by June 15, 2013.

ADDRESSES: You may submit comments,identified by Docket No. 1457 and RIN7100–AD–95, by any of the followingmethods:• Agency Web site: http://

www.federalreserve.gov. Follow theinstructions for submitting comments athttp://www.federalreserve.gov/ generalinfo/foia/ProposedRegs.cfm. • Federal eRulemaking Portal: http://

www.regulations.gov. Follow theinstructions for submitting comments.• Email:

[email protected].

Include docket and RIN numbers in thesubject line of the message.• FAX: (202) 452–3819 or (202) 452–

3102.• Mail: Robert deV. Frierson,

Secretary, Board of Governors of theFederal Reserve System, 20th Street andConstitution Avenue NW., Washington,DC 20551.All public comments are available fromthe Board’s Web site at http:// www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted,unless modified for technical reasons.Accordingly, your comments will not beedited to remove any identifying orcontact information. Public commentsmay also be viewed electronically or in

paper form in Room MP–500 of theBoard’s Martin Building (20th and CStreets NW.) between 9:00 a.m. and 5:00p.m. on weekdays.FOR FURTHER INFORMATION CONTACT:Mark Greiner (202–452–5290), NancyPerkins (202–973–5006), or WilliamSpaniel (202–452–3469), Division of Banking Supervision and Regulation;Laurie Schaffer, Associate GeneralCounsel (202–452–2272) or MichelleMoss Kidd, Attorney (202–736–5554),Legal Division; Board of Governors of the Federal Reserve System, 20th and CStreets NW., Washington, DC 20551.

Users of Telecommunication Device forthe Deaf (TTD) only, contact (202) 263–4869.SUPPLEMENTARY INFORMATION:

Table of Contents

I. Overview of Proposed RuleII. Description of the Proposal

A. Key Definitions1. Assessed Companies2. Total Assessable Assets3. Assessment Periods4. Assessment BasisB. Apportioning the Assessment Basis to

Assessed Companies1. Apportionment Based on Size

2. Assessment FormulaC. Collection Procedures1. Notice of Assessment and Appeal

Procedure2. Collection of AssessmentsD. Revisions to the FR Y–7Q

III. Administrative Law MattersA. Solicitation of Comments and Use of

Plain LanguageB. Paperwork Reduction Act AnalysisC. Regulatory Flexibility Act Analysis

I. Overview of Proposed Rule

Section 318 of the Dodd-Frank Actdirects the Board to collect assessments,

fees, or other charges (assessments) from bank holding companies and savingsand loan holding companies with $50

billion or more in total consolidatedassets, and nonbank financialcompanies designated by the Councilpursuant to section 113 of the Dodd-Frank Act for supervision by the Board 1 (collectively, assessed companies) equalto the expenses the Board estimates arenecessary or appropriate to carry out itssupervision and regulation of thosecompanies. This proposed rule outlinesthe Board’s assessment program,including how the Board would: (a)Determine which companies would besubject to an assessment for eachcalendar-year assessment period, (b)

estimate the total expenses that arenecessary or appropriate to carry out thesupervisory and regulatoryresponsibilities to be covered by theassessment, (c) determine theassessment for each of these companies,and (d) bill for and collect theassessment from these companies.

Under the proposal, each calendaryear would be an assessment period.Companies would be covered by thisrule if the total consolidated assets forthe company meets or exceeds $50

billion or the company has beendesignated for Board supervision by the

Council during the assessment period.The Board proposes to notify thosecompanies of the amount of theirassessment no later than July 15 of theyear following each assessment period.After an opportunity for appeal,assessed companies would be requiredto pay their assessments by September30 of the year following the assessmentperiod. The Board is proposing tocollect assessments beginning with the2012 assessment period. The Board

believes that initiating the assessmentprogram with the 2012 assessmentperiod is appropriate as the Board has

completed the development of aframework for the estimation of appropriate expenses and the collectionof assessments. Additionally, the 2012assessment period would be the first fullcalendar-year assessment periodsubsequent to the effective date of section 318 of Dodd-Frank.

The Board is inviting comments on allaspects of this proposed rulemaking.

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23163Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013/ Proposed Rules

2All organizational structure and financialinformation that the Board would use for thepurpose of determining whether a company is anassessed company, including information withrespect to whether a company has control over aU.S. bank or savings association, must have beenreceived by the Board on or before June 30following that assessment period and must reflectevents that were effective on or before December 31of the assessment period.

312 U.S.C. 1841(a).4

12 U.S.C. 1467.5Generally, for multi-tiered bank holdingcompanies and multi-tiered savings and loanholding companies in which a holding companyowns or controls, or is owned or controlled by,other holding companies, the assessed companywould be the top-tier, regulated holding company.If a U.S.-domiciled company does not report totalconsolidated assets in its public reports or uses afinancial reporting methodology other than U.S.GAAP, the Board may use, at its discretion, anycomparable financial information that the Boardmay require from the company for thisdetermination. In situations where two or moreunaffiliated companies control the same U.S. bankor savings association and each company hasaverage total consolidated assets of $50 billion or

more, each of the unaffiliated companies would bedesignated an assessed company. Generally, acompany has control over a bank, savingsassociation, or company if the company has (a)ownership, control, or power to vote 25 percent or

more of the outstanding shares of any class of voting securities of the bank, savings association, orcompany, directly or indirectly or acting throughone or more other persons; (b) control in anymanner over the election of a majority of thedirectors or trustees of the bank, savingsassociation, or company; or (c) the Boarddetermines the company exercises, directly orindirectly, a controlling influence over themanagement or policies of the bank, savingsassociation, or company. See 12 U.S.C. 1841(a)(2)(bank holding companies) and 12 U.S.C. 1467a(a)(2)(savings and loan holding companies).

6For annual filers of the FR Y–7Q, the totalconsolidated assets would be determined from theforeign banking organization’s FR Y–7Q annualsubmission for the calendar year of the assessmentperiod.

7At present, there are no foreign savings and loan

holding companies.8A four-quarter average of a company’s totalconsolidated assets also has been proposed for thedefinition of a covered company in the notice of proposed rulemaking for ‘‘Enhanced PrudentialStandards and Early Remediation Requirements forCovered Companies’’ published in the FederalRegister 77 FR 594 (January 5, 2012). If an assessedcompany has not reported its total consolidatedassets to the Board pursuant to one of the reportingforms named above, the Board may also use, at itsdiscretion, other financial or annual reports filed bythe company to determine a company’s totalconsolidated assets. For example, the Board mayuse the Savings Association Holding CompanyReport (FR H–(b)11), or any filing filed with theSecurities and Exchange Commission (SEC).

9For assessed companies that are grandfatheredunitary savings and loan holding companies, theBoard would only include assets associated with itssavings association subsidiary and its otherfinancial activities.

10 If the nonbank financial company supervised by the Board under section 113 of the Dodd-FrankAct is a foreign company, its assessable assetswould be the average of the foreign nonbankfinancial company’s U.S. assets as reported duringthe assessment period. As the Council begins todesignate nonbank financial companies undersection 113, the Board’s methodology fordetermining the assessments for these companieswould be reviewed and, as needed, revised.

11 If any foreign savings and loan holdingcompany becomes an assessed company, theBoard’s methodology for determining theassessments for these companies would bereviewed and, as needed, revised.

12A foreign bank holding company’s totalassessable assets would not include the assets of section 2(h)(2) companies as defined in section2(h)2 of the Bank Holding Company Act (12 U.S.C.1841(h)(2)).

II. Description of the Proposal

A. Key Definitions

1. Assessed Companies

The Board would make thedetermination for each calendar-yearperiod (the assessment period) that acompany is a bank holding company orsavings and loan holding company withtotal consolidated assets equal to orexceeding $50 billion, or a nonbankfinancial company designated for Boardsupervision by the Council, based oninformation reported by the company onregulatory or other reports asdetermined by the Board.2 In general,for each assessment period, the proposalwould identify assessed companies as:

• A company that, on December 31 of theassessment period, is a top-tier bank holdingcompany, other than a foreign bank holdingcompany, as defined in section 2 of the BankHolding Company Act,3 that has totalconsolidated assets of $50 billion or more as

determined based on the average of the bankholding company’s total consolidated assetsreported for the assessment period on itsSchedule HC—Consolidated Balance Sheet of the bank holding company’s ConsolidatedFinancial Statements for Bank HoldingCompanies (FR Y–9C) forms;• A company that, on December 31 of the

assessment period, is a top-tier savings andloan holding company, other than a foreignsavings and loan holding company, asdefined in section 10 of the Home Owners’Loan Act,4 that has total consolidated assetsof $50 billion or more as determined basedon the average of the savings and loanholding company’s total consolidated assetsreported for the assessment period on the

savings and loan holding company’s FR Y–9C forms, or in column B (consolidated) of the savings and loan holding company’sQuarterly Savings and Loan HoldingCompany Report (FR 2320) forms, asapplicable;5

• A foreign company that, on December 31of the assessment period, is a top-tier bankholding company that has total consolidatedassets of $50 billion or more as determined

based on the average of the foreign bankingorganization’s total consolidated assetsreported for the assessment period on theCapital and Asset Report for Foreign BankingOrganizations (FR Y–7Q) submissions; 6 • A foreign company that, on December 31

of the assessment period, is a savings andloan holding company that has totalconsolidated assets of $50 billion or more asdetermined based on the average of theforeign savings and loan holding company’stotal consolidated assets reported for theassessment period on regulatory reportingforms required for the foreign savings andloan holding company; 7 and• A company that is a nonbank financial

company designated for supervision by theBoard under section 113 of the Dodd-FrankAct on December 31 of the assessmentperiod.

Relying on the average assets reportedin the financial reports submitted overthe entire yearly assessment period,where available, would reduce volatilityin an assessed company’s assets over theyear and avoid overreliance on anyparticular quarter.8

Question 1: What alternative decisioncriteria or procedures should the Board consider for determining whether acompany is an assessed company, suchas considering a greater or lesser number of regulatory reports, and why?

2. Total Assessable Assets

The term ‘‘total assessable assets’’means the amount of assets that will beused to calculate an assessed company’sassessment. In order to collectassessments that reflect the Board’s roleas the consolidated supervisor of assessed companies, further describedin Section A.4, total assessable assetswould include total assets for allactivities subject to the Board’ssupervisory authority as theconsolidated supervisor. For a U.S.-domiciled assessed company, totalassessable assets would be thecompany’s total consolidated assets of its entire worldwide operations,determined by using an average of thetotal consolidated asset amountsreported in applicable regulatory reportsfor the assessment period.9 For anonbank financial company supervised

by the Board, total assessable assetswould be the average of the nonbank

financial company’s total consolidatedassets as reported during the assessmentperiod on such regulatory or otherreports as determined by the Board.10 Similarly, at such time as any foreignsavings and loan holding company

becomes an assessed company, totalassessable assets would be the averageof the foreign savings and loan holdingcompany’s total combined assets of U.S.operations as reported during theassessment period on such regulatoryreports as are applicable to the foreignsavings and loan holding company.11

For a foreign bank holding company,total assessable assets would be equal tothe company’s total combined assets of U.S. operations,12 including U.S.

branches and agencies, as the Board hassupervisory and regulatoryresponsibilities for the company’s U.S.activities. Foreign bank holdingcompanies do not currently submit a


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13Currently, foreign bank holding companies, asforeign banking organizations, report totalconsolidated assets of worldwide operations on theFR Y–7Q, which the proposal would use for

determining whether a foreign bank holdingcompany is an assessed company.14Net intercompany balances and transactions

between a U.S. entity and a foreign affiliate wouldnot be eliminated, as such balances andtransactions would not result in double counting of assets on a U.S.-combined basis. If any standaloneregulatory reporting form does not itemizeintercompany balances and transactions betweenU.S.-domiciled affiliates, branches or agencies, thisproposal would not eliminate intercompany balances and transactions reported on that formfrom the calculation of total assessable assets. Forregulatory reporting forms that do not distinguish between (i) balances and transactions between U.S.affiliates, and (ii) balances and transactions betweena U.S affiliate and a foreign affiliate, the Boardwould not eliminate any such balances ortransactions between affiliates reported on the form because it would be impossible to distinguish between assets that would result in double countingand assets that would not result in double counting.

15The proposed approach would exclude fromthe sum the assets of entities for which a stand-alone regulatory report has been filed, but whoseassets are reflected in the consolidated balancesheet of a U.S.-domiciled higher-tier regulatoryreporting form filer.

16Total assets for each U.S.-domiciled, top-tier bank holding company or savings and loan holdingcompany would be the company’s total assets asreported on line item 12, Schedule HC of the FRY–9C, or as reported on line item 1, column B, of the FR 2320, as applicable.

17Total assets for each branch or agency would be calculated as total claims of nonrelated parties(line item 1.i from column A on Schedule RAL)plus due from related institutions in foreign

countries (line items 2.a, 2.b(1), 2.b(2), and 2.c fromcolumn A, part 1 on Schedule M), as reported onthe Report of Assets and Liabilities of U.S. Branchesand Agencies of Foreign Banks (FFIEC 002). Notethat due from head office of parent bank (line item2.a, column A, part 1 on Schedule M) would beincluded net of due to head office of parent bank(line item 2.a, column B, part 1 on Schedule M)when there is a net due from position reported forline item 2.a. A net due to position for line item2.a would result in no addition to total assets withrespect to line item 2.a, part 1 on Schedule M.

18For quarterly Financial Statements of U.S.Nonbank Subsidiaries Held by Foreign BankingOrganizations (FR Y–N) filers, total assets for eachnonbank subsidiary would be calculated as totalassets (line item 10, Schedule BS), minus balances

due from related institutions located in the UnitedStates, gross (line item 4.a of Schedule BS–M) of theFR Y–7N. For annual Abbreviated FinancialStatements of U.S. Nonbank Subsidiaries Held byForeign Banking Organizations (FR Y–NS) filers,total assets for each nonbank subsidiary would beas reported on line item 2 of the FR Y–7NS. Untilforeign assessed companies report on the revisedform FR Y–7Q described in this proposal, the Boardwould only include the assets of affiliates for whichthe foreign assessed company is the majority owner,as the Board would not have sufficient informationto accurately account for non-majority-ownedaffiliates.

19Total assets for each Edge Act or agreementcorporation would be the sum of claims onnonrelated organizations (line item 9, ‘‘consolidatedtotal’’ column on Schedule RC of the ConsolidatedReport of Condition and Income for Edge Act andagreement corporations (FR 2886b)), and claims onrelated organizations domiciled outside the UnitedStates (line items 2.a and 2.b, column A onSchedule RC–M), as reported on FR 2886b.

20Total assets for each bank or savingsassociation that is not a subsidiary of a U.S.-domiciled bank holding company or savings andloan holding company would be the bank’s orsavings association’s total assets as reported on lineitem 12, Schedule RC of the Balance Sheet of theConsolidated Reports of Condition and Income(FFIEC 031 or FFIEC 041, as applicable).

21Total assets for each broker-dealer would be the broker-dealer’s total assets as reported on thestatement of financial condition of the SEC’sFOCUS Report, Part II (Form X–17A–5), FOCUSReport, Part IIa (Form X–17A–5), or FOCUS Report,Part II CSE (Form X–17A–5).

22Expenses include all direct operating expenses,including support, overhead, and pension expenses.

single regulatory reporting form thatreports the total combined assets of theirU.S. operations for which the Board hassupervisory and regulatory authority.13 In order to determine a foreign bankholding company’s total assessableassets for the 2012 and 2013 assessmentperiods, a foreign bank holdingcompany’s total assessable assets would

be the average of the total combinedassets of U.S. operations, net of U.S.intercompany balances and transactions(as allowed 14), from the stand aloneregulatory reporting form for,specifically: 15

• A top-tier, U.S.-domiciled bank holdingcompany or U.S.-domiciled savings and loanholding company; 16 • U.S. branches and agencies; 17 • U.S.-domiciled nonbank subsidiaries; 18

• Edge Act and Agreement Corporations; 19 U.S. banks and U.S. savings associations; 20 and broker-dealers that are not reflected inthe assets of a U.S. domiciled parent’sregulatory reporting form submission.21

For assessment periods after 2013, theBoard proposes to modify the FR Y–7Q

by adding a line item for reporting thetotal combined assets of a foreign

banking organization’s U.S. operations,consistent with the Board’s supervisoryand regulatory authority over foreign

banking organizations’ U.S. operations.Question 2: What, if any, challenges

does the proposed approach present for determining the total assessable assetsof an assessed company, foreign or domestic?

Question 3: What, if any, specific concerns arise for assessed companiesthat are primarily non-depository firms,and what method of determining total assessable assets should be considered

for those companies and why?

3. Assessment PeriodsUnder the proposed rule, each

calendar year would be an assessmentperiod. For each assessment period, theBoard would make a determination as towhether an entity is an assessedcompany for that assessment period.The Board anticipates that thepopulation of assessed companies will

be relatively stable, and it is likely thatan entity that is an assessed companyduring one assessment period will be anassessed company for following

assessment periods. Nevertheless, someentities with average total consolidatedassets near the $50 billion thresholdmight be included in one assessmentperiod and not in another.

The Board would determine whichcompanies, as of December 31 of theprior calendar year, (i) were of the typesof entities enumerated in the rule (i.e.,

a bank holding company, savings andloan holding company, or designatednonbank financial company subject toBoard supervision) and (ii) had averagetotal consolidated assets equal to orexceeding the $50 billion threshold, asreported on the relevant reportingform(s) or based on other information asthe Board may consider. The Boardwould notify each company that it is anassessed company by July 15 of eachcalendar year following the assessmentperiod.

Question 4: What, if any, burdens arecreated for assessed companies by the

Board’s use of December 31 as the ‘‘asof’’ date for determining assessed companies and notifying assessed companies on July 15 of the following

year? What alternative dates or methodologies should the Board consider and why?

Question 5: For companies near $50billion in total consolidated assets,what, if any, concerns are associated with not being certain whether thecompany would be an assessed company from one assessment period toanother and what alternatives might mitigate those concerns?

4. Assessment BasisThe assessment basis means the

applicable estimated expenses 22 of theBoard and the Reserve Banks (to whichthe Board has delegated supervisoryresponsibility) as consolidatedsupervisor of assessed companies. Theassessment basis would includenecessary or appropriate expensesassociated with consolidated regulationand supervision of all assessedcompanies. In order to determine theassessment basis, the Board wouldestimate its aggregate expenses foractivities related to the supervision and

regulation of the entire population of assessed companies. These expensesinclude, but are not limited to:conducting onsite and offsiteexaminations, inspections, visitationsand reviews; providing ongoingsupervision; meeting and correspondingregarding supervision matters;conducting stress tests; assessingresolution plans; developing,administering, interpreting and


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23The Board’s costs with respect to supervisingstate member banks and branches and agencies of foreign banking organizations are excluded from theassessment basis because such costs are notattributable to the Board’s role as consolidatedsupervisor of the parent company. However, assuch assets and the assets of the company’s otherdepository institutions, nonbank subsidiaries, andother similar entities contribute to the costsincurred by the Board as the consolidatedsupervisor, such assets are therefore included intotal assessable assets.

24These activities include (i) the Shared NationalCredit (SNC) Program, which the Board and theother federal banking agencies established in 1977to promote the efficient and consistent review andclassification of shared national credits; (ii) thetraining of staff in the supervision function; (iii)research, analysis, and development of supervisoryand regulatory policies, procedures, and products of the Board; and (iv) collecting, receiving, andprocessing regulatory reports received frominstitutions supervised and regulated by the Board.

25As explained further in section B.2, the Boardwould also use the 2012 assessment rate tocalculate each assessed company’s assessment in2013 and 2014.

26See, e.g., ‘‘Capital Plans,’’ final rule publishedin the Federal Register 76 FR 231 (Dec. 1, 2011),‘‘Credit Risk Retention,’’ proposal published in theFederal Register 76 FR 83 (April 29, 2011), and‘‘Enhanced Prudential Standards and EarlyRemediation Requirements for CoveredCompanies,’’ proposal published in the FederalRegister 77 FR 594 (January 5, 2012).

explaining regulations, laws, andsupervisory guidance adopted by theBoard; engaging in enforcement actions;processing and analyzing applicationsand notices, including conductingcompetitive analyses and financialstability analyses of proposed bank and

bank holding company mergers,acquisitions, and other similar

transactions; processing consumercomplaints; and implementing a macro-prudential supervisory approach.23 Inaddition, the estimated expenses for theassessment basis would include a shareof expenses associated with activitiesthat are integral to carry out thesupervisory and regulatoryresponsibilities of the Board, even whenthose expenses are not directlyattributable to specific companies.24 Forthose activities, the Board wouldcalculate the relative proportion of expenses that are attributable toassessed companies divided by

expenses for those activities that areattributable to all companies andentities supervised by the Board, andapply that proportion to the sharedexpenses.

For each assessment period, theBoard’s assessment basis would be theBoard’s estimate of the total expensesnecessary or appropriate to carry out thesupervisory and regulatoryresponsibilities of the Board withrespect to the population of assessedcompanies, based on an average of estimated expenses over the current andprior two assessment periods. For the2012 assessment period, the Boardestimates that the assessment basiswould be approximately $440 million.Thereafter, to mitigate volatility inassessments and provide a more stable

basis from year to year, the Board wouldcalculate a three-year average of itsestimated expenses, and woulddetermine assessments for each year

based on that three-year average. Thus,

as an example, the assessment basis for2015 would be the average of theBoard’s estimated expenses relating toassessed companies from calendar years2013, 2014, and 2015. For theassessment bases for calendar years2012, 2013, and 2014, the Board woulduse the estimate of its expenses for2012, the first year for which it will

collect assessments.25 The Boardexpects to evaluate the volatility inassessment fees resulting from itsmethodology for determining theassessment basis on an ongoing basisand may refine its methodology asappropriate through the rulemakingprocess.

B. Apportioning the Assessment Basis toAssessed Companies

1. Apportionment Based On Size

In general, total expenses relating tothe supervision of a company are afunction of the size and associated

complexity of the company. Forexample, for companies with assets of $50 billion or more, supervisiontypically consists of onsite teams with acontinuous presence at the firm, offsitesurveillance and monitoring, and aseries of targeted onsite examinationsconducted throughout the year thatfocus on individual areas of operationsand risk. Larger companies are oftenmore complex companies, withassociated risks that play a large role indetermining the supervisory resourcesneeded for that company. The largestcompanies, because of their increased

complexity, risk and geographicfootprints, usually receive moresupervisory attention. For example, anumber of regulations in developmentto implement provisions of the Dodd-Frank Act are directed at financialinstitutions with total consolidatedassets of $50 billion or more andnonbank companies designated forsupervision by the Board, and some of

these regulations are tailored further based on the size of a company.26

Apportioning the assessment basis based on the total consolidated assetsize of the assessed companies isgenerally reflective of the amount of supervisory and regulatory expensesassociated with a particular company,and generally is information that is well

understood, objective, transparent,readily available, and comparableamong all types of assessed companies.As a result, the Board proposes todetermine assessments based on theassessed companies’ total assessableassets for the assessment period.

Question 6: What, if any, alternativesto a total consolidated assets measureshould the Board consider for apportioning the assessment basisamong assessed companies and why?

2. Assessment Formula

The proposal would apportion the

assessment basis among assessedcompanies by means of an assessmentformula that uses the total assessableasset size of each assessed company. Foreach assessment period, the assessmentformula applied to the assessedcompanies is proposed to be:

Assessment = $50,000 + (AssessedCompany’s Total Assessable Assets× Assessment Rate).

Each company’s assessment would becomputed using a base amount of $50,000 for each assessed company. TheBoard believes that including this baseamount in each assessment isappropriate to ensure that the nominalexpenses related to the Board’ssupervision and regulation of suchcompanies, particularly for thosecompanies that are near the $50 billionthreshold, are covered. The ‘‘assessmentrate’’ would be determined eachassessment period according to thisformula:


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27Total assessable assets could be less than $50 billion for foreign companies with totalconsolidated worldwide assets of $50 billion ormore, but total combined U.S. assets of less than$50 billion.

28As stated above, this date may be adjusted forthe 2012 assessment period to accommodate thefinal rulemaking.

29This form is reported annually by each top-tierforeign banking organization if it or any foreign banking organization in its tiered structure has notelected to be a financial holding company, and isreported quarterly by each top-tier foreign bankingorganization if it or any foreign bankingorganization in its tiered structure has elected to bea financial holding company.

30Reported quarterly by each lower-tier foreign banking organization (where applicable) operating a branch or an agency, or owning an Edge Act orAgreement corporation, a commercial lendingcompany, or a commercial bank domiciled in theUnited States, if it or any foreign bankingorganization in its tiered structure has financialholding company status.

The assessment rate would bedetermined by dividing the assessment

basis (minus the base amount thatcovers nominal expenses times thenumber of assessed companies) by thetotal assessable assets of all assessedcompanies to determine a ratio of Boardexpenses to total assets for eachassessment period, and then multiplies

an assessed company’s total assessableassets by the resulting assessment rate.Thus, a company with higher totalassessable assets would be charged ahigher assessment than a company withlower total assessable assets, whichgenerally reflects the greater supervisoryand regulatory attention and associatedworkloads and expenses associated withlarger companies. The assessmentrepresents a cost to the assessedcompanies. This cost, however, asmandated by section 318 of the Dodd-Frank Act, is for the purpose of collecting the estimated expenses of

supervising and regulating assessedcompanies.Over the first three years of the

program, the assessment rate would befixed. After the Board determines theassessment rate for 2012, it would usethat assessment rate for calculating theassessment for the following twoassessment periods, ending with theassessments for 2014. Thereafter, foreach assessment period, the Boardwould calculate an assessment rate byaveraging the Board’s relevant expensesfor the past three years. Keeping thesame assessment rate for the first threeyears and the subsequent three-year

average would reduce year-to-yearfluctuations in assessments.

Assessment Calculation Example

For purposes of illustration, using themethodologies set forth in this proposaland based on information as of the dateof this notice of proposed rulemaking,the Board estimates that for 2012 therewould be approximately 70 assessedcompanies with aggregate totalassessable assets of about $20 trillionand that the assessment basis would beabout $440 million. Using these figures,a company with total assessable assets

of $50 billion27

would be required topay an assessment of approximately $1million and a company with totalassessable assets of $1 trillion would berequired to pay an assessment of approximately $22 million.

Question 7: What alternatives should the Board consider for differentiating assessments among assessed companies

(for example, a tiered fee structure), and why?

Question 8: What alternativeapproaches to the three-year averageshould the Board consider for reducing volatility in assessments for assessed companies, and why?

Question 9: Does the Board’s proposal

to use the same assessment rate for the first three years permit adequate preparation for assessed companies,and if not, what should the Board consider in initiating its assessmentssystem?

C. Collection Procedures

1. Notice of Assessment and AppealProcedure

Under the proposal, the Board wouldsend a notice of assessment to eachassessed company no later than July 15of the year following the assessmentperiod stating that the Board had

determined the company to be anassessed company for the prior calendaryear, stating the amount of thecompany’s total assessable assets andthe amount the assessed company mustpay by September 30. The Board wouldalso, no later than July 15, publish onits Web site the assessment formula forthat assessment period. For the 2012assessment period, the notice of assessment and the date on which theassessment is due may be adjusteddepending on the date of the issuanceof the final regulation.

Companies identified as assessed

companies would have 30 calendar daysfrom July 15 to appeal the Board’sdetermination of the company as anassessed company or the Board’sdetermination of the company’s totalassessable assets. Under the proposal,companies choosing to appeal mustsubmit a request for redetermination inwriting and include all the pertinentfacts the company believes would berelevant for the Board to consider.Grounds for appeal would be limited to(i) whether the assessed company wasnot properly considered an assessedcompany (i.e., it is not a bank holding

company, savings and loan holdingcompany, or nonbank financialcompany designated by the Council asof December 31 of the assessmentperiod), or (ii) review of the Board’sdetermination of the assessedcompany’s total assessable assets. TheBoard would consider the company’srequest and respond within 15 calendardays from the end of the appeal periodwith the results of its review of anyproperly filed appeal. A successfulappeal would not change the assessmentfor any other company.

2. Collection of Assessments

Under the proposal, each assessedcompany would pay its assessmentsusing the Fedwire Funds Service(Fedwire) to the Federal Reserve Bank of Richmond. The assessments will then

be transferred to the U.S. Treasury’sGeneral Account. Assessments must be

credited to the Board by September 30of the year following the assessmentperiod.28 In the event that the Boarddoes not receive the full amount of anassessed company’s assessment by thepayment date for any reason that is notattributable to an action of the Board,the assessment would be considereddelinquent and the Board would chargeinterest on the delinquent assessmentuntil the assessment and interest,calculated daily from the collection dateand based on the U.S. TreasuryDepartment’s current value of funds ratepercentage, is paid.

Question 10: What alternativeapproaches or additional factors should the Board consider for the billing and collection of assessments and why?

Revisions to the FR Y–7Q

The FR Y–7Q requires each top-tierforeign banking organization to file assetand capital information. Currently, Part1 of the report requires the filing of capital and asset information for thetop-tier foreign banking organization,29 while Part 2 requires capital and assetinformation for lower-tier foreign

banking organizations operating a branch or an agency, or owning an Edge

Act or Agreement Corporation, acommercial lending company, or acommercial bank domiciled in theUnited States.30 As explained in thereporting instructions for the FR Y–7Q,

both Part 1 and Part 2 of the reportingform collect capital and assetinformation with respect to the foreign

banking organization’s worldwideoperations. However, neither Part 1 orPart 2 collects capital and assetinformation with respect to only the


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31For purposes of the amended FR Y–7Q, totalcombined assets would not include the assets of section 2(h)(2) companies as defined in section2(h)(2) of the Bank Holding Company Act (12 U.S.C.1841(h)(2)).

32For purposes of FR Y–7Q reporting, U.S.-domiciled affiliates would be defined assubsidiaries, associated companies, and entitiestreated as associated companies (e.g., corporatejoint ventures) as defined in the FR Y–9C.

foreign banking organization’s U.S.operations.

For the purpose of determining aforeign assessed company’s totalassessable assets, the Board believes thatcombining the assets of the foreignassessed company’s U.S. branches andagencies with the total assets of all U.S.domiciled affiliates reported on other

regulatory reports on a standalone basiswould likely not yield a result that iscomparable to the consolidatedapproach required of U.S.-domiciledassessed companies, which report totalconsolidated assets on Schedule HC of FR Y–9C according to standard rules of consolidation. That is, not allstandalone reports itemize separatelythe intercompany balances andtransactions between only U.S. affiliatesthat would be netted out on a U.S.consolidated basis. Therefore, in orderto improve parity among all assessedcompanies with respect to the

determination of total assessable assets,the Board is proposing to revise Part 1of the FR Y–7Q to collect the top-tierforeign banking organization’s totalcombined assets of U.S. operations,31 net of intercompany balances andtransactions between U.S. domiciledaffiliates, branches and agencies.32 Theinstructions for the amended FR Y–7Q will closely parallel, to all practicableextents, the instructions for the FR Y–9C for consolidating assets of U.S.operations, including for accounting forless-than-majority-owned affiliates.

In addition, the Board is proposing to

revise Part 1 of the FR Y–7Q to collectinformation about certain foreign banking organizations more frequently.As mentioned above, only top-tierforeign banking organizations withfinancial holding company status filePart 1 of the FR Y–7Q quarterly, whilea top-tier foreign banking organizationwould report annually if the foreign

banking organization, or any foreign banking organization in its tieredstructure, has not effectively elected to

be a financial holding company.Accordingly, for purposes of determining whether a foreign bankingorganization is an assessed companyand the amount of a foreign assessedcompany’s total assessable assets morefrequent than annually, the Board isproposing to revise the FR Y–7Q

quarterly reporting requirements for Part1 to include all top-tier foreign bankingorganizations, regardless of financialholding company designation, with totalconsolidated worldwide assets of $50

billion or more as reported on Part 1 of the FR Y–7Q. Once a foreign bankingorganization has total consolidatedassets of $50 billion or more and begins

to report quarterly, the foreign bankingorganization must continue to reportPart 1 quarterly unless and until theforeign banking organization hasreported total consolidated assets of lessthan $50 billion for each of all fourquarters in a full calendar year.Thereafter, the foreign bankingorganization may revert to annualreporting, in accordance with the FR Y–7Q reporting form’s instructions forannual reporting of Part 1. If at any time,after reverting to annual reporting, aforeign banking organization has totalconsolidated assets of $50 billion or

more, the FBO must return to quarterlyreporting of Part 1. Regardless of size,all top-tier foreign bankingorganizations that have elected to befinancial holding companies at theforeign banking organization’s top tieror tiered structure would continue toreport quarterly.

Question 11: What changes, if any,should be made to the proposal toensure consistency and accuracy of determining foreign bank holding company assets in a manner that ismost comparable to U.S.-domiciled bank holding companies?

Question 12: The Board requestscomment on all aspects of the proposed rule. Specifically, what aspects of the

proposed rule present implementationchallenges and why? What, if any,alternative approaches should theBoard consider? Responses should bedetailed as to the nature and impact of these challenges and should addresswhether the Board should consider implementing additional transitional arrangements in the rule to addressthese challenges.

III. Administrative Law Matters

A. Solicitation of Comments and Use of

Plain LanguageSection 722 of the Gramm-Leach-

Bliley Act (Pub. L. 106–102, 113 Stat.1338, 1471, 12 U.S.C. 4809) requires theFederal banking agencies to use plainlanguage in all proposed and final rulespublished after January 1, 2000. TheBoard invites comment on how to makethe proposed rule easier to understand.For example:

• Is the material organized to suit yourneeds? If not, how could the Board presentthe rule more clearly?

• Are the requirements in the rule clearlystated? If not, how could the rule be moreclearly stated?• Do the regulations contain technical

language or jargon that is not clear? If so,which language requires clarification?• Would a different format (grouping and

order of sections, use of headings,paragraphing) make the regulation easier tounderstand? If so, what changes would

achieve that?• Is this section format adequate? If not,

which of the sections should be changed andhow?• What other changes can the agencies

incorporate to make the regulation easier tounderstand?

B. Paperwork Reduction Act Analysis

In accordance with the PaperworkReduction Act of 1995 (PRA) (44 U.S.C.3506; 5 CFR 1320 Appendix A.1), theBoard reviewed the proposed rule underthe authority delegated to the Board byOffice of Management and Budget(OMB). The Board may not conduct or

sponsor, and a respondent is notrequired to respond to, an informationcollection unless it displays a currentlyvalid OMB control number.

The proposed rule containsrequirements subject to the PRA. Thereporting requirements are found insections 246.3(e)(3) and 246.5(b).

1. Reporting Requirements in 246.3(e)(3)

Section 318 of the Dodd-Frank Actdirects the Board to collect assessments,fees, or other charges, from assessedcompanies equal to the expenses theBoard estimates would be necessary andappropriate to carry out its supervision

and regulation of those companies.Section 318 describes these companiesas (1) a bank holding company (BHC)(other than a foreign bank holdingcompany) with total consolidated assetsof $50 billion or more determined basedon the average of the BHC’s totalconsolidated assets reported during theassessment period on its Schedule HC—Consolidated Balance Sheet of theBHC’s Consolidated FinancialStatements for Bank Holding Companies(FR Y–9C) (OMB No. 7100–0128) forms;(2) a savings and loan holding company(SLHC) (other than a foreign savings and

loan holding company) with totalconsolidated assets of $50 billion ormore, (3) a foreign company that is aBHC or SLHC with $50 billion or morein total consolidated assets determined

based on the average of the foreigncompany’s total consolidated assetsreported during the assessment periodon the Capital and Asset Report forForeign Banking Organizations (FR Y–7Q; OMB No. 7100–0125) and (4) anonbank financial company designatedfor supervision by the Board undersection 113 of the Dodd-Frank Act. In


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33Once an FBO reports total consolidated assetsof $50 billion or more and begins to reportquarterly, the FBO must continue to report Part 1quarterly unless and until the FBO has reportedtotal consolidated assets of less than $50 billion foreach of all four quarters in a full calendar year.Thereafter, the FBO may revert to annual reporting. 3413 CFR 121.201.

order to improve parity among allassessed companies with respect to thedetermination of total assessable assets,the Board proposes to revise Part 1 of the FR Y–7Q to collect a new data itemfrom top-tier FBO’s—Total combinedassets of U.S. operations, net of intercompany balances and transactions

between U.S. domiciled affiliates,

branches and agencies. In addition, theBoard proposes to revise the reportingpanel for Part 1 of the FR Y–7Q tocollect information about certain FBOsmore frequently (from annual reportingto quarterly reporting) for purposes of determining whether a FBO is anassessed company. All top-tier FBOs,regardless of financial holding companydesignation, with total consolidatedworldwide assets of $50 billion or moreas reported on Part 1 of the FR Y–7Q would be required to submit dataquarterly. The Board estimates that 71FBOs would initially be required to

change from annual reporting toquarterly reporting.33 The Boardestimates that, upon implementation of the new data item, 109 FBOs wouldinitially submit the FR Y–7Q on aquarterly basis. In addition, the Boardestimates that 43 FBOs would initiallysubmit the FR Y–7Q on an annual basisupon implementation of the new dataitem. The Board estimates that it wouldtake, on average, 15 minutes persubmission to report the new data item.The total annual reporting burdenassociated with the revisions to the FRY–7Q is estimated to be 393 hours.

2. Reporting Requirements in 246.5(b)Under section 246.5(b) upon the

Federal Reserve issuing the notice of assessment to each assessed company,the company would have 30 calendardays to submit a written statement toappeal the Board’s determination of thecompany as (i) a BHC, SLHC, foreign

bank holding company, or nonbankfinancial company supervised by theBoard; (ii) the Board’s determination of the company’s total consolidated assets,or (iii) the Board’s determination of thecompany’s total assessable assets, as setforth in 246.4(e) of this rule. This new

collection would be titled the Dodd-Frank Act Assessment Fees Request forRedetermination (FR 4030; OMB No.7100—to be assigned).

The Board estimates that 7 assessedcompanies would submit a writtenrequest for appeal annually. The Board

estimates that these assessed companieswould take, on average, 40 hours (one

business week) to write and submit thewritten request. The total annual PRA

burden for the new FR 4030 informationcollection is estimated to be 280 hours.

Comments are invited on: (1) Whetherthe proposed collection of informationis necessary for the proper performance

of the Board’s functions, includingwhether the information has practicalutility; (2) the accuracy of the Board’sestimate of the burden of the proposedinformation collection, including thecost of compliance; (3) ways to enhancethe quality, utility, and clarity of theinformation to be collected; and (4)ways to minimize the burden of information collection on respondents,including through the use of automatedcollection techniques or other forms of information technology. Comments onthe collection of information should besent to Cynthia Ayouch, Federal Reserve

Board Clearance Officer, Division of Research and Statistics, Mail Stop 95–A,Board of Governors of the FederalReserve System, Washington, DC 20551.Copies of such comments may also besubmitted to the Office of Managementand Budget, 725 17th St. NW., #10235(Docket FRB Docket No. R–1457),Washington, DC 20503, Attn: FederalReserve Desk Officer.

C. Regulatory Flexibility Act

In accordance with Section 3(a) of theRegulatory Flexibility Act, 5 U.S.C. 601et seq. (‘‘RFA’’), the Board is publishingan initial regulatory flexibility analysis

for the proposed rule. The RFA requiresan agency to provide an initialregulatory flexibility analysis with theproposed rule or to certify that theproposed rule will not have a significanteconomic impact on a substantialnumber of small entities.

Based on its analysis and for thereasons stated below, the Board believesthat this proposed rule would not havea significant economic impact on asubstantial number of small entities. Afinal regulatory flexibility analysis will

be conducted after consideration of comments received during the public

comment period if the Board determinesthat the rule will have a significanteconomic impact on a substantialnumber of small entities.

1. Statement of the objectives of the proposal. As required by section 318 of the Dodd-Frank Act, the Board isproposing a rule to assess bank holdingcompanies and savings and loanholding companies with assets of equalto or greater than $50 billion andnonbank financial companiessupervised by the Board for the totalexpenses the Board estimates are

necessary or appropriate to carry out thesupervisory and regulatoryresponsibilities of the Board withrespect to such companies.

2. Small entities affected by the proposal. Under regulations issued bythe Small Business Administration, a

banking entity is considered ‘‘small’’ if

it has $175 million or less in assets for banks and other depository institutions;and $7 million or less in revenues fornonbank mortgage lenders.34 Theproposed rule, by definition, will affect

bank holding companies and savingsand loan holding companies with assetsof equal to or greater than $50 billion.The proposed rule also will affectnonbank financial companiessupervised by the Board under section113 of the Dodd-Frank Act but it isunlikely that such an institution would

be considered ‘‘small’’ by the SmallBusiness Administration. The Boardinvites comment on the effect of theproposed rule on small entities.

3. Recordkeeping, reporting, and compliance requirements. The Board’sproposed rule is unlikely to impose anynew recordkeeping, reporting, orcompliance requirements. As statedabove, a small banking entity is unlikelyto be affected by the proposed rule. TheBoard seeks information and commenton any changes in recordkeeping,reporting, and compliance requirementsarising from the application of theproposed rule to small entities.

4. Other Federal rules. The Board has

not identified any Federal rules thatduplicate, overlap, or conflict with theproposed revisions of the proposed rule.

5. Significant alternatives to the proposed revisions. The Board believesthat no alternatives to the proposed ruleare available for consideration. TheBoard nevertheless welcomes commentson any significant alternatives,consistent with the requirements of theDodd-Frank Act that would minimizethe impact of the proposed rule on smallentities.

List of Subjects in 12 CFR Part 246

Administrative practice andprocedure, Assessments, Banks,Banking, Holding companies, Nonbankfinancial companies, Reporting andrecordkeeping requirements.

For the reasons stated in thepreamble, the Board proposes to amend12 CFR chapter II as follows:

■ 1. Add new Part 246 to read asfollows:


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PART 246—SUPERVISION ANDREGULATION ASSESSMENTS OFFEES (REGULATION TT)

Sec.246.1 Authority, purpose and scope.246.2 Definitions.246.3 Assessed Companies.246.4 Assessments.

246.5 Notice of Assessment and Appe246.6 Collection of Assessments; Paymentof Interest.

Authority: Pub. L. 111–203, 124 Stat. 1376,1526, and section 11(s) of the Federal ReserveAct (12 U.S.C. 248(s)).

Part A—In General

§ 246.1 Authority, purpose and scope.

(a) Authority. This part (RegulationTT) is issued by the Board of Governorsof the Federal Reserve System (Board)under section 318 of Title III of theDodd-Frank Wall Street Reform andConsumer Protection Act (the Dodd-

Frank Act) (Pub. L. 111–203, 124 Stat.1376, 1423–32, 12 U.S.C. 5365 and5366) and section 11(s) of the FederalReserve Act (12 U.S.C. 248(s)).

(b) Scope. This part applies to:

(1) Any bank holding company havingtotal consolidated assets of $50 billionor more, as defined below;

(2) Any savings and loan holdingcompany having total consolidatedassets of $50 billion or more, as defined

below; and

(3) Any nonbank financial companysupervised by the Board, as defined

below.

(c) Purpose. This part implementsprovisions of section 318 of the Dodd-Frank Act that direct the Board tocollect assessments, fees, or othercharges from companies identified insubsection (b) that are equal to the totalexpenses the Board estimates arenecessary or appropriate to carry out thesupervisory and regulatoryresponsibilities of the Board withrespect to these assessed companies.

§ 246.2 Definitions.

(a) Bank holding company is definedas in section 2 of the Bank HoldingCompany Act, as amended (12 U.S.C.§ 1841), and the Board’s Regulation Y(12 CFR part 225).

(b) Company means a corporation,partnership, limited liability company,depository institution, business trust,

special purpose entity, association, orsimilar organization.

(c) Council means the FinancialStability Oversight Council established

by section 111 of the Dodd-Frank Act(12 U.S.C. §5321).

(d) Foreign bank holding company means a foreign bank or company thatis a bank holding company.

(e) Foreign savings and loan holding company means a foreign bank orforeign company that is a savings andloan holding company.

(f) Grandfathered unitary savings and loan holding company means a savingsand loan holding company described insection 10(c)(9)(C) of the Home Owners’Loan Act (‘‘HOLA’’) (12 U.S.C.§ 1467a(c)(9)(C).

(g) Notice of assessment means thenotice in which the Board informs acompany that it is an assessed companyand states the assessed company’s totalassessable assets and the amount of itsassessment.

(h) Savings and loan holding company is defined as in section 10 of HOLA (12 U.S.C. §1467a).

(i) Savings association means asavings association, as defined in 12U.S.C. §1813 of this title.

§ 246.3 Assessed Companies

(a) Assessed companies. An assessedcompany is any company that:

(1) is a top-tier company that, onDecember 31 of the assessment period:

(i) is a bank holding company, otherthan a foreign bank holding company,with $50 billion or more in totalconsolidated assets, as determined

based on the average of the bankholding company’s total consolidatedassets reported for the assessment

period on the Federal Reserve’s FormFR Y–9C (‘‘FR Y–9C’’),

(ii) is a savings and loan holdingcompany, other than a foreign savingsand loan holding company, with $50

billion or more in total consolidatedassets, as determined based on theaverage of the savings and loan holdingcompany’s total consolidated assets as

reported for the assessment period onthe FR Y–9C or on column B of theQuarterly Savings and Loan HoldingCompany Report (FR 2320), asapplicable,

(2) is a top-tier foreign bank holdingcompany on December 31 of theassessment period, with $50 billion ormore in total consolidated assets, asdetermined based on the average of theforeign bank holding company’s totalconsolidated assets reported for theassessment period on the FederalReserve’s Form FR Y–7Q (‘‘FR Y–7Q’’),

(3) is a top-tier foreign savings and

loan holding company on December 31of the assessment period, with $50

billion or more in total consolidatedassets, as determined based on theaverage of the foreign savings and loanholding company’s total consolidatedassets reported for the assessmentperiod on the reporting forms applicableduring the assessment period, or

(4) the Council has determined undersection 113 of the Dodd-Frank Act (12U.S.C. §5323) to be supervised by theBoard and for which such determinationis in effect as of December 31 of theassessment period.

(b) Assessment period means January1 through December 31 of each calendaryear.

§246.4 Assessments.

(a) Assessment. Each assessedcompany shall pay to the Board anassessment for any assessment periodfor which the Board determines thecompany to be an assessed company.

(b) Assessment formula. Theassessment will be calculated accordingto the Assessment Formula, as follows:

Column A Column B Column C Column D

Base amount + (Total assessable assets × Assessment rate) = Assessment

$50,000 + ($B × C) = $D

The assessed company’s assessmentwould be comprised of the base amount,plus the amount of the assessedcompany’s total assessable assets in

Column B times the assessment rate inColumn C.

(c) Assessment rate. Assessment ratemeans, with regard to a givenassessment period, the rate published by

the Board for the calculation of assessments for that period.

(1) The assessment rate will becalculated according to this formula:


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(2) For the calculation set forth in (1),above, the number of assessedcompanies and the total assessableassets of all assessed companies will

each be that of the relevant assessmentperiod, provided, however, that for theassessment periods corresponding to2012, 2013 and 2014, the Board shalluse the number of assessed companiesand the total assessable assets of the2012 assessment period to calculate theassessment rate.

(d) Assessment basis. Assessment basis means:

(1) For the 2012, 2013, and 2014assessment periods, the assessment

basis is the amount of total expenses theBoard estimates is necessary orappropriate to carry out the supervisoryand regulatory responsibilities of the

Board with respect to assessedcompanies for 2012.

(2) For the 2015 assessment periodand for each assessment periodthereafter, the assessment basis is theaverage of the amount of total expensesthe Board estimates is necessary orappropriate to carry out the supervisoryand regulatory responsibilities of theBoard with respect to assessedcompanies for that assessment periodand the two prior assessment periods.

(e) Total assessable assets. Totalassessable assets are calculated inaccordance with this section as follows:

(1) Bank holding companies. For any bank holding company, other than aforeign bank holding company, totalassessable assets will be determined bythe average of the bank holdingcompany’s total consolidated assets asreported for the assessment period onthe bank holding company’s FR Y–9C orsuch other reports as determined by theBoard as applicable to the bank holdingcompany,

(2) Foreign bank holding companiesand foreign savings and loan holding companies.

(i) In general. For any foreign bank

holding company or for any foreignsavings and loan holding company, withthe exception of the 2012 and 2013assessment periods, this amount will bethe average of the foreign bank holdingcompany’s or savings and loan holdingcompany’s total combined assets of U.S.operations, net of intercompany

balances and transactions between U.S.domiciled affiliates, branches andagencies, as reported for the assessmentperiod on the Part 1 of the FR Y–7Q orsuch other reports as determined by theBoard as applicable to the foreign bank

holding company or foreign savings andloan holding company,

(ii) 2012 and 2013 assessment periods. For the 2012 and 2013

assessment periods, for any foreign bankholding company, total assessable assetswill be the average of the sum of therespective line items reported quarterly,plus any line items reported annuallyfor the assessment period on anapplicable regulatory reporting form forthe assessment period for all majority-owned U.S.-domiciled affiliates,

branches and agencies of the foreign bank holding company, as set forth inthis section:

(A) Top-tier, U.S.-domiciled bankholding companies and savings andloan holding companies,

(1) Total assets (line item 12) as

reported on Schedule HC of the FR Y–9C, as applicable, and

(2) Total assets (line item 1, columnB) as reported on FR 2320.

(B) Related branches and agencies inthe United States (line items 1.i, columnA, on Schedule RAL of Report of Assetsand Liabilities of U.S. Branches andAgencies of Foreign Banks (FFIEC 002)plus due from related institutions inforeign countries (line items 2.a, 2.b(1),2.b(2), and 2.c from column A, part 1 onSchedule M), as reported on FFIEC 002,provided however that due from headoffice of parent bank (line item 2.a,

column A, part 1 on Schedule M of FFIEC 002) would be included net of due to head office of parent bank (lineitem 2.a, column B, part 1 on ScheduleM of FFIEC 002) when there is a net duefrom position reported for line item 2.a.,while a net due to position for line item2.a would result in no addition to totalassets with respect to line item 2.a, part1 on Schedule M of FFIEC 002.

(C) U.S.-domiciled nonbanksubsidiaries:

(1) For FR Y–7N filers: total assets(line item 10) as reported for eachnonbank subsidiary reported on

Schedule BS—Balance Sheet of theFinancial Statements of U.S. NonbankSubsidiaries Held by Foreign BankingOrganizations (FR Y–7N); less balancesdue from related institutions located inthe United States, gross (line item 4.a),as reported on Schedule BS–M—Memoranda.

(2) For FR Y–7NS (annual) filers: totalassets (line item 2) as reported for eachnonbank subsidiary reported onabbreviated financial statements (page3) of the Abbreviated FinancialStatements of U.S. Nonbank

Subsidiaries Held by Foreign BankingOrganizations (FR Y–7NS).

(D) For Edge Act and agreementcorporations that are not reflected in theassets of a U.S.-domiciled parent’sregulatory reporting form submission,claims on nonrelated organizations (lineitem 9, ‘‘consolidated total’’ column onSchedule RC of the Consolidated Reportof Condition and Income for Edge andAgreement Corporations (FR 2886b)),plus claims on related organizationsdomiciled outside the United States(line items 2.a and 2.b, column A onSchedule RC–M), as reported on FR2886b.

(E) For banks and savings associationsthat are not reflected in the assets of aU.S.-domiciled parent’s regulatoryreporting form submission, total assets

(line item 12) as reported on ScheduleRC—Balance Sheet of the ConsolidatedReports of Condition and Income for aBank with Domestic and Foreign Offices(FFIEC 031), or total assets (line item 12)as reported on Schedule RC—BalanceSheet of the Consolidated Reports of Condition and Income for a Bank withDomestic Offices Only (FFIEC 041), asapplicable.

(F) For broker-dealers that are notreflected in the assets of a U.S.-domiciled parent’s regulatory reportingform submission, total assets (line item16, ‘‘total’’ column) as reported on

statement of financial condition of theSecurities and Exchange Commission’sForm X–17A–5 (FOCUS REPORT), PartII, Part IIa, or Part II CSE, as applicable.

(4) Savings and loan holding companies. For any savings and loanholding company, other than a foreignsavings and loan holding company, totalassessable assets will be determined bythe average of the savings and loanholding company’s total consolidatedassets as reported for the assessmentperiod on the regulatory reports on thesavings and loan holding company’sForm FR Y–9C, column B of the

Quarterly Savings and Loan HoldingCompany Report (FR 2320), or otherreports as determined by the Board asapplicable to the savings and loanholding company. If the savings andloan holding company is agrandfathered unitary savings and loanholding company, total assessable assetswill only include the assets associatedwith its savings association subsidiaryand its other financial activities.

(5) Nonbank financial companiessupervised by the Board. For a nonbankfinancial company supervised by the


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178 FR 4726 (Jan. 22, 2013).2The other rules include: Ability-to-Repay and

Qualified Mortgage Standards under the Truth inLending Act (Regulation Z) (2013 ATR Final Rule),78 FR 6407; High-Cost Mortgages andHomeownership Counseling Amendments to the

Truth in Lending Act (Regulation Z) andHomeownership Counseling Amendments to theReal Estate Settlement Procedures Act (RegulationX) (2013 HOEPA Final Rule), 78 FR 6855;Disclosure and Delivery Requirements for Copies of Appraisals and Other Written Valuations under theEqual Credit Opportunity Act (Regulation B), 78 FR7215; Mortgage Servicing Rules Under the RealEstate Settlement Procedures Act (Regulation X), 78FR 10695; Mortgage Servicing Rules Under theTruth in Lending Act (Regulation Z), 78 FR 10901;Appraisals for Higher-Priced Mortgage Loans(issued jointly with other agencies) (2013Interagency Appraisals Final Rule), 78 FR 10367;Loan Originator Compensation Requirements underthe Truth in Lending Act (Regulation Z), 78 FR11279.

Board, if the company is a U.S.company, this amount will be theaverage of the nonbank financialcompany’s total consolidated assets asreported for the assessment period onsuch regulatory or other reports as areapplicable to the nonbank financialcompany determined by the Board; if the company is a foreign company, this

amount will be the average of thenonbank financial company’s totalcombined assets of U.S. operations, netof intercompany balances andtransactions between U.S. domiciledaffiliates, branches and agencies, asreported for the assessment period onsuch regulatory or other reports asdetermined by the Board as applicableto the nonbank financial company.

§ 246.5 Notice of Assessment and Appeal

(a) Notice of Assessment. The Boardshall issue a notice of assessment toeach assessed company no later than

July 15 of each calendar year followingthe assessment period.(b) Appeal Period.(1) Each assessed company will have

thirty calendar days from July 15 tosubmit a written statement to appeal theBoard’s determination (i) that thecompany is an assessed company; or (ii)of the company’s total assessable assets.

(2) The Board will respond with theresults of its consideration to anassessed company that has submitted awritten appeal within 15 calendar daysfrom the end of the appeal period.

§ 246.6 Collection of Assessments;

Payment of Interest.(a) Collection date. Each assessed

company shall remit to the FederalReserve the amount of its assessmentusing the Fedwire Funds Service bySeptember 30 of the calendar yearfollowing the assessment period.

(b) Payment of interest.(1) If the Board does not receive the

total amount of an assessed company’sassessment by the collection date forany reason not attributable to the Board,the assessment will be delinquent andthe assessed company shall pay to theBoard interest on any sum owed to the

Board according to this rule (delinquentpayments).(2) Interest on delinquent payments

will be assessed beginning on the firstcalendar day after the collection date,and on each calendar day thereafter upto and including the day payment isreceived. Interest will be simpleinterest, calculated for each daypayment is delinquent by multiplyingthe daily equivalent of the applicableinterest rate by the amount delinquent.The rate of interest will be the UnitedState Treasury Department’s current

value of funds rate (the ‘‘CVFRpercentage’’); issued under the TreasuryFiscal Requirements Manual andpublished quarterly in the FederalRegister. Each delinquent payment will

be charged interest based on the CVFRpercentage applicable to the quarter inwhich all or part of the assessment goesunpaid.

By order of the Board of Governors of theFederal Reserve System, April 12, 2013.

Robert deV. Frierson,

Secretary of the Board.

[FR Doc. 2013–09061 Filed 4–17–13; 8:45 am]

BILLING CODE P

BUREAU OF CONSUMER FINANCIALPROTECTION

12 CFR Part 1026

[Docket No. CFPB–2013–0009]

RIN 3170–AA37

Amendments to the 2013 EscrowsFinal Rule Under the Truth in LendingAct (Regulation Z)

AGENCY: Bureau of Consumer FinancialProtection.ACTION: Proposed rule with request forpublic comment.

SUMMARY: This rule proposes clarifyingand technical amendments to a finalrule issued by the Bureau of ConsumerFinancial Protection (Bureau) on

January 10, 2013, which, among otherthings, lengthens the time for which a

mandatory escrow account establishedfor a higher-priced mortgage loan(HPML) must be maintained. The rulealso established an exemption from theescrow requirement for certain creditorsthat operate predominantly in ‘‘rural’’ or‘‘underserved’’ areas. The amendmentsclarify the determination method for the‘‘rural’’ and ‘‘underserved’’ designationsand keep in place certain existingprotections for HPMLs until othersimilar provisions take effect in January2014.DATES: Comments must be received onor before May 3, 2013.

ADDRESSES: You may submit comments,identified by Docket No. CFPB–2013–0009 or RIN 3170–AA37, by any of thefollowing methods:• Electronic: http://

www.regulations.gov. Follow theinstructions for submitting comments.• Mail/Hand Delivery/Courier:

Monica Jackson, Office of the ExecutiveSecretary, Consumer FinancialProtection Bureau, 1700 G Street NW.,Washington, DC 20552.

Instructions: All submissions shouldinclude the agency name and docket

number or Regulatory InformationNumber (RIN) for this rulemaking.Because paper mail in the Washington,DC area and at the Bureau is subject todelay, commenters are encouraged tosubmit comments electronically. Ingeneral, all comments received will beposted without change to http:// www.regulations.gov. In addition,

comments will be available for publicinspection and copying at 1700 G StreetNW., Washington, DC 20552, on official

business days between the hours of 10a.m. and 5 p.m. Eastern Time. You canmake an appointment to inspect thedocuments by telephoning (202) 435–7275.

All comments, including attachmentsand other supporting materials, will

become part of the public record andsubject to public disclosure. Sensitivepersonal information, such as accountnumbers or social security numbers,should not be included. Comments will

not be edited to remove any identifyingor contact information.FOR FURTHER INFORMATION CONTACT:Whitney Patross, Attorney; JosephDevlin and Richard Arculin, Counsels;Office of Regulations, at (202) 435–7700.SUPPLEMENTARY INFORMATION:

I. Summary of Proposed Rule

In January 2013, the Bureau issuedseveral final rules concerning mortgagemarkets in the United States pursuant tothe Dodd-Frank Wall Street Reform andConsumer Protection Act (Dodd-FrankAct) Public Law 111–203, 124 Stat. 1376(2010) (2013 Title XIV Final Rules). One

of these rules was Escrow RequirementsUnder the Truth in Lending Act(Regulation Z) (2013 Escrows FinalRule),1 issued on January 10.2 The ruleexpanded on an existing Regulation Zrequirement that creditors maintainescrow accounts for higher-pricedmortgage loans and created anexemption for certain loans made by

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2013-09061

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Transcript of 2013-09061