RegG_20130129_omb

Supporting Statement for the

Disclosure and Reporting Requirements of

Community Reinvestment Act-Related Agreements

(Reg G; OMB No. 7100-0299)

Summary

The Board of Governors of the Federal Reserve System (the Board), under delegated authority from the Office of Management and Budget (OMB), proposes to extend for three years, without revision, Regulation G’s mandatory disclosure and reporting requirements for CRA-Related Agreements. The Federal Reserve is required to renew these requirements every three years pursuant to the Paperwork Reduction Act (PRA), which classifies reporting, recordkeeping, or disclosure requirements of certain regulations, including Regulation G, as an “information collection.”¹

Regulation G implements provisions of the Gramm-Leach-Bliley Act that require reporting and public disclosure of written agreements between (1) insured depository institutions (IDIs) or their affiliates and (2) nongovernmental entities or persons (NGEPs), that are made in connection with the fulfillment of Community Reinvestment Act of 1977 (CRA) requirements.²

The Federal Reserve accounts for the paperwork burden associated with Regulation G only for Federal Reserve-supervised institutions. Other federal banking agencies³ account for the paperwork burden imposed on entities for which they have administrative enforcement authority. The estimated annual burden for this information collection is 78 hours. The burden estimate is an average based on (1) the number of IDIs and affiliates of IDIs that reported covered agreements to the Federal Reserve from 2010 to 2012, and (2) the additional savings and loan holding companies (SLHCs), which formerly reported to the Office of Thrift Supervision (OTS) but are now required to report to the Federal Reserve. ⁴ There are no required reporting forms associated with Regulation G.

Background and Justification

Section 48 of the Federal Deposit Insurance Act (FDI Act), entitled “CRA Sunshine Requirements,” imposes disclosure and reporting requirements on IDIs or their affiliates, and NGEPs that enter into written agreements that meet certain criteria (covered agreements).⁵ The written agreements must (1) be made in fulfillment of the CRA and (2) involve funds or other resources of an IDI or affiliate with an aggregate value of more than $10,000 in a year, or loans with an aggregate principal value of more than $50,000 in a year. Section 48 excludes from the disclosure and reporting requirements any agreement between an IDI or its affiliate and an NGEP if the NGEP has not contacted the IDI or its affiliate, or a banking agency, concerning the CRA performance of the IDI.

The Gramm-Leach-Bliley Act directed the Federal Reserve, as well as the other federal banking agencies, to issue consistent and comparable regulations to implement the requirements of Section 48 of the FDI Act. In 2001, the agencies promulgated substantially identical regulations, which interpret the scope of written agreements that are subject to the statute and implement the disclosure and reporting requirements of Section 48.

Description of Information Collection

Regulation G contains the following disclosure and reporting requirements for IDIs and affiliates and NGEPs.

Requirements for Insured Depository Institutions, Affiliates,

and Nongovernmental Entities or Persons

Disclosure of covered agreements to the public – Disclosure requirements (12 CFR 207.6(b)(1)). Each NGEP and each IDI or affiliate that enters into a covered agreement must promptly make a copy of the covered agreement available to any individual or entity upon request.

Annual report required (12 CFR 207.7(b)). Each NGEP and each IDI or affiliate that is a party to a covered agreement must file an annual report with each relevant supervisory agency concerning the disbursement, receipt, and use of funds or other resources under the covered agreement. An NGEP must file an annual report for any fiscal year in which the NGEP receives or uses funds or other resources under the agreement. An IDI or affiliate must file an annual report for any fiscal year in which it provides or receives any payments, fees, or loans under the covered agreement or has data to report on loans, investments, and services provided by a party to the covered agreement under the covered agreement. This requirement applies only to covered agreements entered into on or after May 12, 2000.

Alternative method of fulfilling annual reporting requirement for a NGEP (12 CFR 207.7(f)(2)(ii)). An IDI or affiliate that receives an annual report from an NGEP pursuant to Section 207.7(f)(2)(i) must file the report with the relevant supervisory agency or agencies on behalf of the NGEP within 30 days.

Requirements for Insured Depository Institutions and Affiliates Only

Disclosure Agreements relating to activities of CRA affiliates (12 CFR 207.4(b)). An IDI or affiliate that is a party to a covered agreement that concerns any activity of a CRA affiliate⁶ as described in Section 207.4(a) must, before the covered agreement is entered into, notify each NGEP that is a party to the agreement that the agreement concerns a CRA affiliate.

Disclosure of covered agreements by the IDI or affiliate to the relevant supervisory agency (12 CFR 207.6(d)(1)). Within 60 days of the end of each calendar quarter, each IDI and affiliate must provide each relevant supervisory agency with -

(i) A copy of each covered agreement entered into by the IDI or affiliate during the calendar quarter, and in the event the IDI or affiliate proposes the withholding of any information contained in the agreement in accordance with Section 207.6(b)(2), a public version of the agreement with an explanation justifying the exclusions; or

(ii) A list of all covered agreements entered into by the IDI or affiliate during the calendar quarter. The list must contain: the name and address of each IDI or affiliate that is a party to the agreement; the name and address of each NGEP that is a party to the covered agreement; the date the covered agreement was entered into; the estimated total value of all payments, fees, loans, and other considerations to be provided by the IDI or affiliate under the covered agreement; and the date the covered agreement terminates.

Prompt filing of covered agreements contained in list (12 CFR 207.6(d)(2)). If an IDI or affiliate files a list of the covered agreements entered into by the IDI or affiliate pursuant to Section 207.6 (d)(1)(ii), the IDI or affiliate must provide any relevant supervisory agency a complete copy and public version of any covered agreement referenced in the list within seven calendar days of receiving a request from the agency for a copy of the agreement. The obligation to provide the covered agreement to the relevant supervisory agency extends until 36 months after the termination of the agreement. The estimated burden to provide a copy of the covered agreement is included in the estimate of the burden to provide the list of covered agreements to the agencies.

Requirement for Nongovernmental Entities or Persons Only

Reporting by NGEPs of covered agreements to the relevant supervisory agency (12 CFR 207.6(c)(1)). Each NGEP that is a party to a covered agreement must provide a complete copy of the covered agreement within 30 days of receiving a request from the relevant supervisory agency.

Time Schedule for Information Collection

The disclosure of a covered agreement to the public by each NGEP and each IDI or affiliate that enters into a covered agreement must be made promptly upon request. An NGEP must file an annual report for any fiscal year in which the NGEP receives or uses funds or other resources under the agreement. An IDI or affiliate must file an annual report for any fiscal year in which it provides or receives any payments, fees, or loans under the covered agreement or has data to report on loans, investments, and services provided by a party to the covered agreement under the covered agreement.

An NGEP that is entering into a covered agreement with an IDI or affiliate that concerns any activity of a CRA affiliate must be notified before the covered agreement is entered into that concerns a CRA affiliate. Within 60 days of the end of each calendar quarter, each IDI and affiliate must provide each relevant supervisory agency with either a copy of each covered agreement entered into by the IDI or affiliate during the calendar quarter or a list of all covered agreements entered into by the IDI or affiliate during the calendar quarter. If an IDI or affiliate chooses to file a list of covered agreements with the relevant supervisory agency, then the IDI or affiliate must provide a complete copy and public version of any covered agreement referenced in the list to the agency within seven calendar days of receiving a request from the agency for a copy of the agreement. The obligation to provide the covered agreement to the relevant supervisory agency extends until 36 months after the termination of the agreement. An IDI or affiliate that receives an annual report from an NGEP must file the report with the relevant supervisory agency or agencies on behalf of the NGEP within 30 days. Each NGEP that is a party to a covered agreement must provide a complete copy of the agreement within 30 days of receiving a request from the relevant supervisory agency.

Legal Status

The Board's Legal Division determined that Section 48 of the FDI Act, 12 U.S.C. § 1831y authorizes the Board to require the disclosure and reporting requirements of Regulation G. In general, the Board does not consider individual respondent commercial and financial information collected by the Board pursuant to Regulation G as confidential. However, a respondent may request confidential treatment pursuant to section (b)(4) of Freedom of Information Act, 5 U.S.C 552(b)(4).

Estimate of Respondent Burden

The total annual burden for the disclosure and reporting requirements associated with Regulation G is estimated to be 78 hours, as shown in the table below. This estimate is an average based on (1) the number of IDIs or their affiliates that reported covered agreements to the Federal Reserve from 2010 to 2012, and (2) the additional SLHCs which formerly reported to the OTS but are now required to report to the Federal Reserve. The number of NGEP respondents is based upon an assumption that one NGEP is a party to each covered agreement. The estimated annual burden represents less than one percent of the total Federal Reserve System paperwork burden.

	Estimated number of respondents7	Estimated annual frequency	Estimated response time	Estimated annual burden hours
Disclosure burden for IDI and affiliates
Covered agreements to public	3	2	1	6
Agreements relating to activities of CRA affiliates	3	2	1	6
Reporting burden for IDI and affiliates
Copy of agreements to agency	3	2	1	6
List of agreements to agency	3	2	1	6
Annual report	3	1	4	12
Filing NGEP annual report	6	1	1	6
Disclosure burden for NGEP
Covered agreements to public	6	1	1	6
Reporting burden for NGEP
Copy of agreements to agency	6	1	1	6
Annual report	6	1	4	24
Total	6			78

The estimated cost to the public for this information collection is $4,290.⁸

Sensitive Questions

This collection of information does not contain questions of a sensitive nature, as defined by Office of Management and Budget guidelines.

Consultation Outside the Agency

On November 21, 2012, the agencies published an initial notice in the Federal Register (77 FR 69843) requesting public comment for 60 days on the extension, without revision, of Regulation G. The comment period for this notice expired on January 22, 2013. The Federal Reserve did not receive any comments. On January 29, 2013, the Federal Reserve published a final notice in the Federal Register (78 FR 6106).

Estimate of Cost to the Federal Reserve System

Since there are so few filings submitted to the Federal Reserve, the cost to the Federal Reserve System is negligible.

1 44 U.S.C. § 3501 et seq.

2 12 U.S.C. § 2901 et seq.

3 The other “federal banking agencies” are the Office of the Comptroller of the Currency (OMB No.1557–0219) and the Federal Deposit Insurance Corporation (OMB No. 3064–0139).

4 Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) transferred all former Office of Thrift Supervision (OTS) authorities (including rulemaking) related to savings and loan holding companies (SLHCs) to the Federal Reserve on July 21, 2011. Section 207.1(b) of Regulation G generally defines Federal Reserve-regulated financial institutions as: State member banks and their subsidiaries; bank holding companies; savings and loan holding companies; and affiliates of bank holding companies and savings and loan holding institutions, other than banks, savings associations and subsidiaries of banks and savings associations; and NGEPs that enter into covered agreements with any of the aforementioned companies.

5 12 U.S.C. § 1831y.

6 A “CRA affiliate” of an insured depository institution is defined in § 207.11(c) as “any company that is an affiliate of an insured depository institution to the extent, and only to the extent, that the activities of the affiliate were considered by the appropriate federal banking agency when evaluating the CRA performance of the institution at its most recent CRA examination prior to the agreement. An insured depository institution or affiliate also may designate any company as a CRA affiliate at any time prior to the time a covered agreement is entered into by informing the NGEP that is a party to the agreement of such designation.”

7 Of the respondents, none are small entities as defined by the Small Business Administration (i.e., for commercial banking, entities with less than $175 million in total assets). See www.sba.gov/content/table-small-business-size-standards.

8 Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual burden hours, multiplied by hourly rate (100% Legal Counsel @ $55). Hourly rate for this occupational group is the median hourly wage (rounded up) from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages 2011, 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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