Overview
Title
Proposed Agency Information Collection Activities; Comment Request
Agencies
ELI5 AI
The Federal Reserve wants to know what people think about letting banks hold on to certain things they get when people can’t pay their debts for three more years. They’re asking for comments and will listen to ideas on how to make this plan better or if any changes are needed.
Summary AI
The Board of Governors of the Federal Reserve System is asking the public to comment on a plan to extend, for three more years, the time allowed for holding on to assets gained in settling past debts. This process, identified as FR 4006, requires bank holding companies to seek approval to keep such assets for more than two years. Comments on this proposal must be submitted by May 27, 2025, and can be submitted through the Federal Reserve's website or by other methods like mail or email. The Board will consider feedback to decide if any changes to this proposal are necessary.
Abstract
The Board of Governors of the Federal Reserve System (Board) invites comment on a proposal to extend for three years, without revision, the Request for Extension of Time to Dispose of Assets Acquired in Satisfaction of Debts Previously Contracted (FR 4006; OMB No. 7100-0129).
Keywords AI
Sources
AnalysisAI
Summary of the Document
The document in question is a notice from the Board of Governors of the Federal Reserve System concerning a proposal to extend for three years the timeframe for retaining assets acquired in satisfaction of debts previously contracted. Known as FR 4006, this extension allows bank holding companies to hold onto these assets longer than the two-year limit, but they must seek prior approval from the Board. This request for extension is subject to public commentary, which must be submitted by late May 2025. The Federal Reserve Board will take into account all feedback before deciding on any potential modifications to the proposal.
Significant Issues and Concerns
Several areas of concern arise from this document:
Lack of Clarity on Justification: The document does not clearly explain the rationale for needing a three-year extension for the disposal of assets. This absence might raise questions about why such an extension is deemed necessary.
Complexity of Language: The document contains technical terms and complex regulatory references, such as "Regulation Y—Bank Holding Companies and Change in Bank Control," which may not be easily understood by readers without prior knowledge of Federal Reserve operations.
Evaluation Criteria: There is a lack of information on the criteria used to assess whether the information collection is necessary for the Board's functions, which might lead to questions about the practical utility of the data being collected.
Analysis Terms Ambiguity: The document uses terms like "extent to which the Board should modify the proposal" without clarifying what potential actions could result from the public comments, leaving an ambiguity about how feedback could influence the process.
Impact on the Public
Broadly, the document may not have a direct impact on the general public but affects them indirectly through its influence on bank holding companies' operations. By extending the time bank holding companies can hold certain assets, the proposal potentially affects how these companies manage their portfolios and compliance with Federal Reserve regulations.
Impact on Specific Stakeholders
Bank Holding Companies (BHCs): Positively, this proposal offers BHCs additional time to dispose of certain assets, which could be beneficial in unstable economic times or when market conditions are not favorable for selling. However, the requirement to seek Board approval introduces an administrative aspect that might present challenges in terms of time and resources.
Regulatory Bodies: For the Federal Reserve Board and other regulators, extending the disposal timeframe provides an opportunity to monitor BHC compliance with a more flexible timeline, potentially reducing pressure to expedite asset divestments during unfavorable economic conditions.
Investors and Financial Markets: This proposal might also have an indirect impact on investors by potentially altering the investment dynamics within BHCs, as assets held longer in BHC portfolios might reflect differently in the companies' financial reports.
Overall, while the document discusses a technical regulatory change, improving clarity and accessibility could enhance public understanding and engagement with the proposal.
Issues
• The document does not provide a clear explanation of why the Request for Extension of Time to Dispose of Assets Acquired in Satisfaction of Debts Previously Contracted needs to be extended for three years.
• The document could benefit from a simpler and more straightforward explanation regarding the necessity of the information being collected to improve public understanding.
• No information is provided regarding the criteria used to evaluate whether the information collection is necessary for the Board's functions, which may lead to questions about its practical utility.
• The phrase 'extent to which the Board should modify the proposal' in the section discussing the analysis of comments received could be clarified to better explain the potential actions the Board might take.
• The document includes technical terms and references to specific regulations (e.g., 'Board's Regulation Y—Bank Holding Companies and Change in Bank Control') that might not be easily understood by all readers without prior knowledge of the subject.