FR2064.20090521.omb

Supporting Statement for the
Recordkeeping Requirements Associated with Changes in Foreign Investments
(Made Pursuant to Regulation K)
(FR 2064; OMB No. 7100-0109)
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 Recordkeeping Requirements Associated with Changes in Foreign Investments (Made
Pursuant to Regulation K) (FR 2064; OMB No. 7100-0109). Internationally active U.S banking
organizations (member banks, Edge and agreement corporations, and bank holding companies)
are required to maintain adequate internal records that demonstrate compliance with the
investment provisions contained in Subpart A of Regulation K. 1 There is no formal reporting
form for this recordkeeping requirement. The estimated annual burden for this recordkeeping
requirement is 320 hours.
Background and Justification
Effective September 1, 2001, the Federal Reserve eliminated the collection of the FR 2064
reporting form, and replaced it with a recordkeeping requirement. This recordkeeping
requirement is used to fulfill the Federal Reserve’s supervisory responsibilities and monitor
compliance with relevant sections of the Federal Reserve Act (FRA) and Regulation K. The
recordkeeping requirement allows the Federal Reserve to monitor compliance with the general
consent provisions of Regulation K. 2 Monitoring the level of international investments is
necessary in order to ensure compliance with relevant banking laws and regulations, and to
ensure that banking organizations do not expose themselves to undue risk.
Although the FR 2064 reporting form has been eliminated, the Federal Reserve has a
continuing need to monitor compliance with the FRA and Sections 211.8 - 211.10 of Regulation
K. Organizational structure information previously collected in the FR 2064 is now being
collected through the Report of Changes in Organizational Structure (FR Y-10; OMB No. 71000297) and the Annual Report of Bank Holding Companies (FR Y-6; OMB No. 7100-0297).
Banking organizations must maintain records for other information previously collected on the
FR 2064 as detailed in the SR Letter 02-2 published February 7, 2002. Internationally active
U.S. banking organizations are also expected to maintain adequate internal records to allow
examiners to review compliance with the investment provisions of Regulation K.

1

See Letter SR 02-2 published February 7, 2002.
The Board has granted its general consent to U.S. banking organizations to make foreign investments without prior
notice to the Board if the investment meets certain criteria. The criteria relate to the dollar amount of the investment,
whether the investment is in a subsidiary or a joint venture, or is a portfolio investment, and whether the investor is a
bank holding company, a member bank, or an Edge or agreement corporation.
2

INTERNAL FR
Description of Information Collection
For each investment made under Subpart A of Regulation K, internal records should be
maintained regarding the type of investment, for example, equity (voting shares, nonvoting
shares, partnerships, interests conferring ownership rights, participating loans), binding
commitments, capital contributions, and subordinated debt; the amount of the investment; the
percentage ownership; activities conducted by the company and the legal authority for such
activities; and whether the investment was made under general consent, prior notice, or specific
consent authority. With respect to investments made under general consent authority,
information also must be maintained that demonstrates compliance with the various limits set out
in Section 211.9 of Regulation K.
Time Schedule for Information Collection
This recordkeeping information maintained by the banking organization should be made
available to the Federal Reserve during the course of on-site examinations and pursuant to other
supervisory requests. At this time, the Federal Reserve does not require that such information be
maintained in a specific format.
Consultation Outside the Agency and Discussion of Public Comments
On March 4, 2009, the Federal Reserve published a notice in the Federal Register (74 FR
9401) requesting public comment for 60 days on the FR 2064 information collection. The
comment period for this notice expired on May 4, 2009. The Federal Reserve did not receive
any comments. On May 15, 2009, the Federal Reserve published a final notice in the Federal
Register (74 FR 22928).
Sensitive Questions
There are no questions of a sensitive nature in this report, as defined by OMB guidelines.
Legal Status
The Board’s Legal Division has determined that the Federal Reserve Board has the legal
authority to require recordkeeping of this information set forth in Section 5(c) of the BHC Act
(12 U.S.C. 1844(c)); Sections 7 and 13(a) of the International Banking Act of 1978 (12 U.S.C.
3106 and 3108(a)); Section 25 of the Federal Reserve Act (FRA) (12 U.S.C. 601-604a); Section
25A of the FRA (12 U.S.C. 611-631); and Regulation K (12 CFR 211.8(c)-211.10(a)). The
recordkeeping requirements are mandatory. Since the Federal Reserve does not collect any
records, no issue of confidentiality under the Freedom of Information Act (FOIA) arises. FOIA
will only be implicated if the Board’s examiners retain a copy of the records in their examination
or supervision of the institution, and would be exempt from disclosure pursuant to FOIA (5
U.S.C. 552(b)(4), (b)(6), and (b)(8)).
2

Estimate of Respondent Burden
The Federal Reserve estimates the annual burden hours for the FR 2064 to be 320 hours.
The number of respondents has remained relatively unchanged over the past several years. The
Federal Reserve estimates that the effort associated with the recordkeeping requirements will
take an average of two hours per quarter. The burden for this report represents less than 1 percent
of total Federal Reserve System paperwork burden.

FR 2064

Number
of
respondents

Annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

40

4

2

320

The total annual cost to the public is estimated to be $17,600. 3
Estimate of Cost to the Federal Reserve System
Since the Federal Reserve does not collect any information the related cost to the System is
negligible.

3

Total cost to the public was estimated using the following formula. Percent of staff time, multiplied by annual burden hours,
multiplied by hourly rate: 0% Administrative or Junior Analyst @ $25, 100% Managerial or Technical @ $55, 0% Senior
Management @ $100, and 0% Legal Counsel @ $144. Hourly rate estimates for each occupational group are averages using
data from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages 2007,
http://www.bls.gov/news.release/ocwage.nr0.htm Occupations are defined using the BLS Occupational Classification System.
http://www.bls.gov/soc/

3