FR 2020-29028

General Summary

The document is a notice from the Board of Governors of the Federal Reserve System announcing changes to financial reporting requirements for holding companies and Edge corporations. These changes primarily involve updates to financial statements and definitions, particularly regarding savings deposits and the introduction of new temporary data items in response to the CARES Act and the Paycheck Protection Program Liquidity Facility (PPPLF). These revisions are part of an ongoing effort to ensure consistency across different financial reports and enhance the clarity of financial data collection.

Significant Issues or Concerns

One of the main challenges posed by this document is its use of complex financial and regulatory language, which might be difficult for the general public to understand without a background in finance or law. The frequent use of acronyms and references to specific schedules and items closely tied to banking regulations assumes a level of familiarity that most readers may not possess.

Moreover, the document involves several discussions on confidentiality, primarily hinging on legal exemptions under the Freedom of Information Act (FOIA). This reliance may appear ambiguous to readers unfamiliar with such legislations, as it lacks explicit details on what information will remain confidential versus what could be publicly disclosed.

Another concern is the absence of a clear cost analysis regarding implementing these measures, which leaves readers without insight into possible financial implications, both for the institutions affected and potentially for taxpayers.

Impact on the Public Broadly

For the general public, the document signifies continuing adjustments in federal financial oversight, particularly in response to economic impacts caused by unforeseen events like the COVID-19 pandemic. This type of regulatory change is indicative of efforts to maintain financial stability and transparency, which indirectly benefits consumers by strengthening the banking system's health.

Impact on Specific Stakeholders

Holding Companies and Financial Institutions: These stakeholders are directly affected, as they will need to comply with revised reporting requirements and potentially adjust their internal processes to align with updated definitions, such as those affecting savings deposits. This could entail additional administrative costs or a revamping of accounting practices.

Federal Reserve System and Regulatory Bodies: These entities benefit from improved data accuracy and consistency, enabling better oversight and regulatory decision-making. The updated provisions ensure that reporting requirements are in tune with recent legislative changes and economic realities, thereby enhancing the effectiveness of regulatory measures.

Consumers and Investors: Indirectly, these revisions aim to protect consumers and investors by ensuring that financial institutions operate transparently and with adequate oversight. Greater clarity in financial conditions can instill public confidence in the banking system.

In summary, while the document's technical jargon may create hurdles to understanding for the average reader, the systemized changes reflect an overarching aim to maintain regulatory consistency and adapt to new economic contexts, potentially enhancing the financial sector's stability and operation in the long term.

The document provides detailed information about reporting requirements and revisions related to financial statements for holding companies. It specifically focuses on the Financial Statements for Holding Companies (FR Y-9 reports; OMB Control Number 7100-0128) and the Consolidated Report of Condition and Income for Edge and Agreement Corporations (FR 2886b; OMB Control Number 7100-0086).

Financial Reporting and Respondents

The document highlights the reporting obligations for various holding companies, including bank holding companies (BHCs), savings and loan holding companies (SLHCs), securities holding companies, and U.S. intermediate holding companies (IHCs). According to the document, the estimated number of respondents varies based on their total assets:

• FR Y-9C (non-advanced approaches holding companies) with less than $5 billion in total assets: 124 respondents
• FR Y-9C (non-advanced approaches holding companies) with $5 billion or more in total assets: 218 respondents
• FR Y-9C (advanced approaches holding companies): 9 respondents
• Other categories such as FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR Y-9CS also show varying numbers of respondents.

Estimated Burden and Resource Commitment

The document provides detailed estimates of the average hours per response for these financial reports. For example:

• FR Y-9C (non-advanced approaches holding companies) with less than $5 billion in total assets requires an average of 35.72 hours per response.
• In comparison, those with $5 billion or more in total assets require 44.92 hours per response.

Such estimates indicate the resources that organizations must commit to fulfilling these reporting requirements, potentially highlighting the need for personnel who are familiar with financial reporting standards.

Annual Burden Hours

The overall estimated annual burden hours bring to light the significant workload imposed by these reporting obligations:

• The FR Y-9C (non-advanced approaches holding companies) with less than $5 billion in total assets demands approximately 17,715 burden hours annually.
• For those with more than $5 billion in total assets, the estimation rises to 39,166 burden hours annually.

These numbers suggest considerable use of time and resources by the reporting entities, which is a significant aspect of their operational compliance workload.

Targeted Data Collection

The document also indicates specific areas of focus for new data collection efforts. For instance, certain memorandum items are to be collected only from holding companies with $5 billion or more in total consolidated assets. This approach reflects a targeted use of resources by focusing on larger organizations, potentially easing the burden on smaller holding companies. This selective collection method aligns with efforts to balance regulatory oversight while acknowledging different capacities among institutions.

Confidentiality and Reporting Challenges

One notable issue related to financial reporting is the use of exemptions under the Freedom of Information Act (FOIA) to maintain confidentiality for certain reported items. This confidentiality assures organizations that sensitive financial information will not be disclosed publicly. However, lack of clear delineation of what is confidential versus public information can lead to misunderstanding among reporting institutions.

In conclusion, the document outlines significant commitments of time and resources required for financial reporting by holding companies. It emphasizes both the regulatory framework's complexity and the specific allocation of reporting responsibilities based on asset size. While these efforts aim to ensure accurate supervision and regulation, they pose challenges in terms of understanding and implementing confidentiality requirements under the FOIA.