Request for Emergency Clearance Letter 0052 6-16-11

FDII

Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990

Executive Secretary

June 16, 2011

Ms. Shagufta Ahmed
Desk Offcer

Office of Information and Regulatory Affairs
Office of Management and Budget
Washington, D.C. 20530
Dear Ms. Ahmed:

The Federal Deposit Insurance Corporation (FDIC), in coordination with the Board of Governors
of

the Federal Reserve System (Board), the Office of

the Comptroller of

the Currency (OCC),

Thrift Supervision (OTS) (collectively, the "agencies"), each of
which is
submitting a separate request, hereby requests approval by June 21, 2011, for revisions to the
following currently approved collections of information pursuant to the Offce of Management
and Budget's (OMB) Paperwork Reduction Act (PRA) emergency processing procedures at
5 CFR § 1320.13:

and the Offce of

Condition and Income (Call Report) (OMB Nos. 7100-0036 (for

. Consolidated Reports of

the Board), 3064-0052 (for the FDIC), and 1557-0081 (for the OCC))
. Thrift Financial Report (TFR) (OMB No. 1550-0023 (for the OTS))

Foreign Banks
(FFIEC 002) and Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or
Controlled by a U.S. Branch or Agency of a Foreign (Non-U.S.) Bank (FFIEC 002S)
(OMB No. 7100-0032 (for the Board))

. Report of Assets and Liabilities of

U.S. Branches and Agencies of

The agencies have determined that (1) the collection of information within the scope of this
request is needed prior to the expiration of

time periods established under 5 C.F.R. § 1320.10;

the agencies; and (3) the agencies
(2) this collection of
cannot reasonably comply with the normal clearance procedures because an unanticipated event
has occurred and the use of normal clearance procedures is reasonably likely to prevent or
disrupt the collection of information.
information is essential to the mission of

the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which was signed into
law on July 21, 2010,1 required the FDIC to amend its regulations to redefine the assessment
base used for calculating deposit insurance assessments as average consolidated total assets
minus average tangible equity. Under prior law, the assessment base has been defined as

As described more fully in the attached Supporting Statement, Section 331(b) of

1 Public Law 111-203, 124 Stat. 1376 (July 21, 2010).

domestic deposits minus certain allowable exclusions, such as pass-through reserve balances. In
general, the intent of Congress in changing the assessment base was to shift a greater percentage
of overall total assessments away from community banks and toward the largest institutions,
which rely less on domestic deposits for their funding than do smaller institutions.
the Dodd-Frank Act, the FDIC published a Notice of
Proposed Rulemaking (NPR) to revise the assessment system applicable to large insured
depository institutions. The proposed amendments to the FDIC's assessment regulations were
risk
designed to better differentiate large institutions by taking a more forward-looking view of
and better take into account the losses that the FDIC will incur if an institution fails. The
comment period for the May 2010 NPR ended July 2,2010, and most commenters requested

In May 2010, prior to the enactment of

that the FDIC delay the implementation of

the rulemaking until the effects of

the then pending

Dodd-Fran legislation were known.

two NPRs, one that
proposed to redefine the assessment base as prescribed by the Dodd-Frank Act and another that
proposed revisions to the large institution assessment system while also factoring in the proposed
redefinition of the assessment base as well as comments received on the May 2010 NPR. After
revising the proposals where appropriate in response to the comments received on the two
November 2010 NPRs, the FDIC Board adopted a final rule on February 7, 2011, amending the
FDIC's regulations to redefine the assessment base used for calculating deposit insurance
assessments for all 7,500 insured depository institutions and revise the assessment system for
On November 9,2010, the FDIC Board approved the publication of

approximately 110 large institutions. The final rule took effect for the quarter beginning April 1,

2011, and wil be reflected for the first time in the invoices for deposit insurance assessments due
September 30, 2011, using data reported in the Call Reports, TFRs, and FFIEC 002/002S reports
for June 30, 2011.
On March 16, 2011, the agencies published an initial PRA Federal Register notice in which they
requested comment on proposed revisions to these regulatory reports that would provide the data
the February 2011 final rule beginning with
needed by the FDIC to implement the provisions of
the June 30, 2011, report date. The new data items proposed in the initial PRA notice were
linked to specific requirements in the FDIC's amended assessment regulations. The draft
instructions for these proposed new items incorporated the definitions in and other provisions of
these regulations. Accordingly, the FDIC and the other agencies did not anticipate receiving
material comments on the reporting changes proposed in their March 2011 initial PRA notice
because the FDIC's February 2011 final rule on assessments had taken into account the
comments received on the two November 2010 NPRs as well as the earlier May 2010 NPR.
Thus, the agencies expected to follow normal clearance procedures and publish a final PRA
Federal Register notice for the proposed reporting changes and submit these changes to OMB for
the comment period for the initial PRA notice.
review soon after the May 16,2011, close of

The agencies collectively received comments from 19 respondents on their initial PRA notice on
the proposed assessment-related reporting changes published on March 16, 2011. Of

these 19

respondents, 17 addressed the new data items for subprime and leveraged loans that are inputs to

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the revised assessment system for large institutions? More specifically, these commenters stated
that institutions generally do not maintain data on these loans in the manner in which these two
loan categories are defined for assessment purposes in the FDIC's final rule or do not have the
ability to capture the prescribed data to enable them to identify these loans in time to fie their
regulatory reports for the June 30, 2011, report date. These data availability concerns,
particularly as they relate to institutions' existing loan portfolios, had not been raised as an issue
during the rulemaking process for the revised large institution assessment system, which
included the publication of two NPRs in 2010.3 This unanticipated outcome at the end of the
public comment process for the agencies' March 2011 initial PRA notice required the FDIC to
consider possible reporting approaches that would address institutions' concerns about their
ability to identify loans meeting the subprime and leveraged loan definitions in the FDIC's
the revised large institution
assessments final rule while also meeting the objectives of
assessment system. However, the consequence of the unexpected need to develop and reach
agreement on a workable transition approach for identifying loans that are to be reported as
subprime or leveraged for assessment purposes 4 is that the agencies' use of normal clearance
procedures for the assessment-related reporting changes to the Call Report, TFR, and
FFIEC 002/002S reports is reasonably likely to prevent or disrupt the initial collection of these
the June 30, 2011, report date as called for under the FDIC's final
new assessment data as of
rule.

In order for the FDIC to calculate deposit insurance assessments under the final rule
implementing Section 331 (b) of the Dodd-Frank Act and the revised large institution assessment
system, the FDIC needs certain information not currently collected from insured depository
institutions. The best method for obtaining this information would be through revisions to the
collections of information identified above. These revisions involve the addition of new items to
be completed by all insured depository institutions to support the measurement of the redefined
assessment base as well as new items applicable only to institutions subject to the revised large
institution assessment system that wil be used as inputs to the scorecard measures that determine
the initial base assessment rates for these institutions. These new items would be added to these
2 In contrast, only four respondents commented on other aspects of the overall reporting proposaL.

3 In response to the November 2010 NPR on the revised large institution assessment system, the FDIC received a
number of comments recommending changes to the definitions of subprime and leveraged loans, which the FDIC
addressed in its February 201 i final rule amending its assessment regulations. For example, several commenters on
the November 2010 NPR indicated that regular (quarterly) updating of data to evaluate loans for subprime or
retail loans, would not be possible
leveraged status would be burdensome and costly and, for certain types of
because existing loan agreements do not require borrowers to routinely provide updated financial information. In
response to these comments, the FDIC's February 2011 final rule stated that large institutions should evaluate loans
for subprire or leveraged status upon origination, refinance, or renewaL. However, no comments were received on
the November 20 I 0 NPR indicating that large institutions would not be able to identifY and report subprime or
leveraged loans in accordance with the definitions proposed for assessment purposes in their Call Reports and TFRs
beginning as of June 30, 2011. These data availability concerns were first expressed in comments on the
March 201 I initial PRA notice.
4 The FDIC presented this transition approach to large institutions during a conference call on June 7, 20 11, that all

large institutions had been invited to attend. Several institutions offered favorable comments about the transition
approach during this calL.

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information collections effective June 30, 2011, the first quarter-end report date following the
effective date of
the FDIC's February 2011 final rule amending its assessment regulations.
Absent OMB approval to implement these reporting changes as of June 30, 2011, community
institutions wil experience a delay in the shifting of a portion of the overall deposit insurance
assessment burden away from them, which was the intent of
Section 331(b) ofthe Dodd-Frank
Act.

The FDIC's amended assessment regulations and the related revised reporting requirements will
remain in effect beyond the six-month approval period associated with an emergency clearance
request. Accordingly, the agencies plan to follow this emergency request with a request for
approval of these revisions that wil be processed under OMB' s normal clearance procedures in
accordance with the provisions of 5 C.F.R. § 1320.10.
Sincerely,

-#L-

Robert E. Feldman

Executive Secretary
FDIC

Attachment

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