FR4006_200707_omb

Supporting Statement for the
Request for Extension of Time to Dispose of Assets
Acquired in Satisfaction of Debts Previously Contracted
(FR 4006; OMB No. 7100-0129)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from the
Office of Management and Budget (OMB), proposes 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). A bank holding company that acquired voting
securities or assets through foreclosure in the ordinary course of collecting a debt previously
contracted may not retain ownership of those shares or assets for more than two years without prior
Federal Reserve approval. There is no formal reporting form, and each request for extension must
be filed at the appropriate Reserve Bank of the bank holding company. The Federal Reserve uses
the information provided in the request to fulfill its statutory obligation to supervise bank holding
companies. The annual burden for the FR 4006 is estimated to be 180 hours.
Background and Justification
Under section 4(c)(2) of the Bank Holding Company Act and section 225.22(d)(1) of
Regulation Y, a bank holding company is not required to seek prior Federal Reserve approval before
acquiring voting securities or assets, acquired by foreclosure or otherwise, in the ordinary course of
collecting a debt previously contracted (“DPC property”), if the DPC property is divested within two
years of acquisition. However, the two-year period may be extended by the Federal Reserve for up
to three additional years and for up to five additional years (for a total of ten years) in the case of
certain types of DPC property. The Bank Holding Company Act and Regulation Y specify the
standards that should be considered in granting extensions for different types of DPC property. A
request for extension must be filed in letter form at the appropriate Reserve Bank. The Federal
Reserve System uses the information in a request to determine if the proposed extension is consistent
with prudential supervisory and financial standards, as well as the public interest.
Description of the Information Collection
The request for extension only applies to a bank holding company that is unable to divest a
specific DPC property within two years of initial acquisition. The bank holding company’s letter to
the Reserve Bank must describe the efforts made, to date, to effect divestiture (including reasons for
any delay in the pace of divestiture) and include financial and descriptive data with respect to assets
as well as the sales price of any related divested assets. Generally, extensions are requested for a
period of one year, although in appropriate circumstances the Federal Reserve may grant an
extension request of longer than one year. In determining whether to approve a request, the Federal
Reserve takes into consideration whether the bank holding company has made a good faith effort to
dispose of the property, the value of the property relative to the organization’s capital, the effect that
selling or retaining the property would have on the financial condition of the bank holding company
(and any affected subsidiary), and the bank holding company’s supervisory record. The information
collected serves to identify potentially unsound situations and to encourage timely compliance with

the divestiture requirement contained in the statute and regulation. The Federal Reserve monitors
the bank holding company’s efforts to effect an orderly divestiture and may require divestiture
before the end of the approved period if supervisory concerns warrant such action.
Time Schedule for Information Collection
This information collection is event generated. The first request for extension must be filed
by a bank holding company before the second anniversary of the date that the specific DPC property
was originally acquired. Subsequent requests for extension must be filed before expiration of the
previously authorized holding period. Most requests are filed annually. The Federal Reserve
responds to extension requests in writing in a timely manner.
Legal Status
The Board’s Legal Division has determined that section 4(c)(2) of the Bank Holding
Company Act [12 U.S.C. § 1843(c)(2)] authorizes the Board to require a request for extension. The
information is required to obtain a benefit, that is, authorization to hold DPC shares or assets beyond
the two-year permissible holding period. The Board has established a procedure for requesting an
extension in its Regulation Y [12 C.F.R. § 225.22(d)(1)(ii)]. Bank holding companies may request
confidential treatment for information contained in the request. The Board, in turn, may grant
confidential treatment upon a showing by the individual company that such information should be
held confidential.
Consultation Outside the Agency
On May 8, 2007, the Federal Reserve published a notice in the Federal Register
(72 FR 26116) requesting public comment for 60 days on the extension of the FR 4006. The
comment period for this notice expired on July 9, 2007. No comments were received. On
July 18, 2007, the Federal Reserve published a final notice in the Federal Register (72 FR 39429)
for the FR 4006.
Estimate of Respondent Burden
Based upon prior experience and review, the respondent burden for this extension request is
estimated to average five hours per submission. The respondent burden varies depending upon the
complexity of the individual situation. The Federal Reserve received 36 requests for extension in
2006. The total respondent burden for the FR 4006 is estimated to be 180 hours annually, as
presented in the following table. This extension request represents less than 1 percent of total
Federal Reserve System reporting burden.

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FR 4006

Number
of
respondents

Estimated
annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

36

1

5

180

The total cost to the public is estimated to be $11,097.1
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Costs associated with the processing of this extension request are minimal. Storage of the
reported information is not automated. Because there is no standard reporting form, there are no
printing or distribution costs.

1

Total cost to the public was estimated using the following formula. Percent of staff time, multiplied by annual burden
hours, multiplied by hourly rate: 30% - Clerical @ $25, 45% - Managerial or Technical @ $55, 15% - Senior
Management @ $100, and 10% - Legal Counsel @ $144. Hourly rate estimates for each occupational group are averages
using data from the Bureau of Labor and Statistics, Occupational Employment and Wages, news release.

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