FR4006_20100615_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 (BHC) that acquired voting
securities or assets through foreclosure in the ordinary course of collecting a debt previously
contracted (DPC) 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 BHC. The FR 4006 is required to obtain the
benefit of authorization to hold DPC shares or assets beyond the two year permissible holding
period. The Federal Reserve uses the information provided in the request to fulfill its statutory
obligation to supervise BHCs. The annual burden for the FR 4006 is estimated to be 505 hours.
Background and Justification
Under section 4(c)(2) of the Bank Holding Company Act (BHC Act) and section
225.22(d)(1) of Regulation Y, a BHC 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 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 10 years) in the case of certain types of DPC
property. The BHC 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 by
letter with 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 BHC that is unable to divest a specific DPC
property within two years of initial acquisition. The BHC’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 BHC 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 BHC (and any affected subsidiary), and the BHC’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 BHC’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 BHC 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 sections 4(a) and 4(c)(2) of the BHC Act
[12 U.S.C. § 1843(a) and (c)(2)] authorizes the Board to require a request for extension. The Board
has established a procedure for requesting an extension in its Regulation Y [12 C.F.R. § 225.22(d)(1)
and 225.140]. The FR 4006 is required to obtain a benefit because in order for a BHC to retain
ownership of voting securities or assets acquired through foreclosure in the ordinary course of
collection a debt previously contracted for more than two years, the BHC must file a request with the
appropriate Reserve Bank. BHCs 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 March 31, 2010, the Federal Reserve published a notice in the Federal Register
(75 FR 16120) requesting public comment for 60 days on the extension of the FR 4006. The
comment period for this notice expired on June 1, 2010. The Federal Reserve did not receive any
comments on the extension. On June 15, 2010, the Federal Reserve published a final notice in the
Federal Register (75 FR 33807) 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 101 requests for extension in
2009. The total respondent burden for the FR 4006 is estimated to be 505 hours annually, as
presented in the following table. These reporting requirements represent less than 1 percent of total
Federal Reserve System paperwork burden.

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FR 4006

Number
of
respondents

Estimated
annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

101

1

5

505

The total cost to the public is estimated to be $31,133.1
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% Administrative or Junior Analyst @ $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 (BLS), Occupational Employment and Wages 2007,
www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the BLS Occupational Classification System,
www.bls.gov/soc/.

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