SPST PCA 3064-0115 2011 Renewal

SUPPORTING STATEMENT
PROMPT CORRECTIVE ACTION
(3064-0115)

INTRODUCTION
The FDIC is requesting OMB approval to continue the use of the information collection system
captioned above. The current clearance for the collection expires on October 31, 2011. There is
no change in the method or substance of the collection. The information collection requirements
are contained in FDIC regulations 12 CFR 303 and 325.
The Prompt Corrective Action ("PCA") provisions of section 38 of the Federal Deposit
Insurance Act require or permit the FDIC and other federal banking agencies to take certain
supervisory actions when FDIC-insured institutions fall within one of five capital categories.
They also restrict or prohibit certain activities and require the submission of a capital restoration
plan when an insured institution becomes undercapitalized. Various provisions of the statute and
the FDIC's implementing regulations require the prior approval of the FDIC before an
FDIC-supervised institution can engage in certain activities, or allow the FDIC to make
exceptions to restrictions that would otherwise be imposed. This collection of information
consists of the applications that are required to obtain the FDIC's prior approval.
A.

Justification
1.

Circumstances and Need
Specifically, the collection consists of applications: (1) to make a capital
distribution from an insured institution that would be undercapitalized after
making said distribution; (2) from undercapitalized institutions to engage in any
new line of business; (3) from critically undercapitalized institutions to pay
interest on subordinated debt; (4) from undercapitalized or significantly
undercapitalized institutions to pay any bonus or increased compensation to any
senior executive officer; (5) from critically undercapitalized institutions to enter
into any material transaction other than in the usual course of business; (6) from
critically undercapitalized institutions to extend credit for any highly leveraged
transaction; (7) from critically undercapitalized institutions to amend their
charters or bylaws under certain circumstances; (8) from critically
undercapitalized institutions to make any material change in accounting methods;
(9) from critically undercapitalized institutions to engage in any covered
transaction as defined in section 23A(b) of the Federal Reserve Act, 12 USC
371c; and (10) from critically undercapitalized institutions to pay excessive
compensation or bonuses.

2.

Use of Information Collected
This information helps institutions comply with the statutory requirements and
allows the FDIC to properly discharge its responsibilities under section 38 of the
FDI Act.

3.

Use of Technology to Reduce Burden
Institutions can submit PCA-related applications to the FDIC via the FDIC’s
interactive Website, FDICconnect.

4.

Efforts to Identify Duplication
There is no duplication. Each application is unique. Similar information is not
available from any other source.

5.

Minimizing the Burden on Small Businesses
The same requirements apply to all institutions regardless of size.

6.

Consequence of Less Frequent Collections
This is an occasional, not a periodic, collection. Institutions must submit
applications only when seeking FDIC approvals.

7.

Special Circumstances
None.

8.

Consultation with Persons Outside the FDIC
A Federal Register notice seeking comment was published on July 20, 2011 (76
FR 43330). The comment period ended on Sept. 19, 2011. No comments were
received.

9.

Payment or Gift to Respondents
None.

10.

Confidentiality
The Privacy Act (for personal information) and the Freedom of Information Act
(for business information) will govern the confidentiality accorded to the
information in this collection.

11.

Questions of a Sensitive Nature
No questions of a sensitive nature are included in this collection.
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12.

Estimates of Annualized Hour Burden and Associated Cost
Number of reports submitted
Hours to prepare the report
Total annual burden hours

50
4
200

Respondent processing cost per hour: $50
Total respondent cost = $50 x 200 = $10,000.
13.

Capital/Start-up and Operation/Maintenance Cost
None.

14.

Cost to Government
The cost to the federal government is $10,000. based on an estimated 50
applications annually with an average processing time of 4 hours per report at an
hourly rate of $50 per hour.

15.

Change in Burden
There has been a change in burden (+124 hours) due to an adjustment in the
number of respondents.

16.

Publication
There is no publication of the information reported.

17.

Display of Expiration Dates
The information collection is contained in FDIC regulations at 12 C.F.R. Parts
303 and 325 and the OMB information collection number (3064-0115) is included
in the regulatory text of proposed and final rules related to Prompt Corrective
Action. If the FDIC’s current review of the regulations results in development of
a method for banks to enter the required information on-line or submit the
required information electronically via an attachment, the on-line instructions will
include clear and conspicuous notice of the OMB information collection number
and its expiration date.

18.

Exceptions to Certification
None.

B.

STATISTICAL METHODS
Not applicable.
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