FR4198_20191104_omb

Supporting Statement for the
Interagency Policy Statement on Funding and Liquidity Risk Management
(FR 4198; OMB No. 7100-0326)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the recordkeeping provisions associated with the Interagency Policy Statement on
Funding and Liquidity Risk Management (FR 4198; OMB No. 7100-0326). The Interagency
Policy Statement on Funding and Liquidity Risk Management (Guidance)1 was issued to provide
consistent interagency expectations on sound practices for managing funding and liquidity risk.
The Guidance includes a number of voluntary recordkeeping provisions that apply to bank
holding companies, savings and loan holding companies, state-licensed branches and agencies of
foreign banks (other than insured branches), corporations organized or operating under
sections 25 or 25A of the Federal Reserve Act (agreement corporations and Edge corporations)
and state member banks (collectively, financial institutions). There are no required reporting
forms associated with the Guidance (the FR 4198 designation is for internal purposes only).
The Board adopted a revision of the FR 4198 to account for certain aspects of the
Guidance that include recordkeeping provisions related to liquidity risk management policies,
procedures, and assumptions, and contingency funding plans (CFPs).2 The current estimated total
annual burden for the FR 4198 is 727,456 hours, and would decrease to 158,048 hours.
Background and Justification
The financial market stress experienced in 2007-2009 demonstrated the importance of
liquidity risk management to the safety and soundness of financial institutions. Following the
financial crisis, financial supervisory authorities worked on an international and national level
through various groups (e.g., the Basel Committee on Banking Supervision (BCBS), the Senior
Supervisors Group, and the Financial Stability Forum) to review institutions’ assessment of
liquidity risk and supervisors’ approach to liquidity risk supervision.
As part of these efforts, the agencies issued the Guidance, which became effective
May 21, 2010. The Guidance summarizes principles of sound liquidity risk management that the
agencies had identified in the past and, where appropriate, harmonized those principles with the
“Principles for Sound Liquidity Risk Management and Supervision” issued by the BCBS in
September 2008.3
“Interagency Policy Statement on Funding and Liquidity Risk Management,” 75 FR 13656 (March 22, 2010). The
Guidance was published jointly by the Board, Office of the Comptroller of the Currency (OCC), Office of Thrift
Supervision, Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration
(collectively, the agencies).
2
Previous versions of the OMB Supporting Statement for the FR 4198 included references to certain aspects of the
Guidance that do not constitute collections of information under the Paperwork Reduction Act. These references
have been removed in this version.
3
Basel Committee on Banking Supervision, “Principles for Sound Liquidity Risk Management and Supervision,”
September 2008. See https://www.bis.org/publ/bcbs144.htm. While the BCBS liquidity principles primarily focus
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Description of Information Collection
The Guidance includes two voluntary recordkeeping provisions:
Liquidity Risk Management Policies, Procedures, and Assumptions
The Guidance states that financial institutions should develop and document liquidity risk
management policies and procedures commensurate with the institution’s complexity, risk
profile, and scope of operations. Sections 3 and 6 of the Guidance provide that financial
institutions should maintain such policies and procedures. The content that should be included in
such policies and procedures are set forth in sections 9, 11, 12, and 13 of the Guidance.
Additionally, section 15 of the Guidance provides that financial institutions should document the
assumptions that they use when measuring liquidity risk.
CFPs
Section 6 of the Guidance states that financial institutions should have a CFP that
sufficiently addresses potential adverse liquid events and emergency cash flow requirements, and
section 34 of the Guidance states that the CFP should be documented. The content that should be
included in a CFP are set forth in sections 31, 34, 35, and 37 of the Guidance.
Respondent Panel
The FR 4198 panel comprises bank holding companies, savings and loan holding
companies, state-licensed branches and agencies of foreign banks (other than insured branches),
corporations organized or operating under sections 25 or 25A of the Federal Reserve Act
(agreement corporations and Edge corporations), and state member banks.
Adopted Revisions to the FR 4198
The Board adopted a revision to FR 4198 to account for all of the recordkeeping
provisions set forth in the Guidance related to liquidity risk management policies, procedures,
and assumptions and CFPs. The FR 4198 currently does not account for the recordkeeping
provisions related to CFPs, and does not fully account for the recordkeeping provisions related to
liquidity risk management policies, procedures, and assumptions.
Time Schedule for Information Collection
The documentation required by the Guidance is maintained by each institution; therefore,
the documentation is not collected or published by the Federal Reserve System. The voluntary
recordkeeping described in the Guidance is ongoing.

on large internationally active financial institutions, the Guidance emphasizes supervisory expectations for all
domestic financial institutions including banks, thrifts, and credit unions.

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Public Availability of Data
There is no data related to this information collection available to the public.
Legal Status
The recordkeeping provisions of the Guidance are authorized pursuant to sections 9(6),
25, and 25A of the Federal Reserve Act (for state member banks, agreement corporations, and
Edge corporations, respectively) (12 U.S.C. §§ 324, 602, and 625, respectively); section 5(c) of
the Bank Holding Company Act of 1956 (for bank holding companies) (12 U.S.C. § 1844(c));
section 10(b)(3) of the Home Owners’ Loan Act (savings and loan holding companies)
(12 U.S.C. § 1467a(b)(3)); and section 7(c)(2) of the International Banking Act of 1978 (statelicensed branches and agencies of foreign banks, other than insured branches) (12 U.S.C. §
3105(c)(2)). Because the recordkeeping provisions are contained within guidance, which is
nonbinding, they are voluntary.4
Because these records would be maintained at each banking organization, the Freedom of
Information Act (FOIA) would only be implicated if the Board obtained such records as part of
the examination or supervision of a banking organization. In the event the records are obtained
by the Board as part of an examination or supervision of a financial institution, this information
is considered confidential pursuant to exemption 8 of the FOIA, which protects information
contained in “examination, operating, or condition reports” obtained in the bank supervisory
process (5 U.S.C. § 552(b)(8)). In addition, the information may also be kept confidential under
exemption 4 for the FOIA, which protects commercial or financial information obtained from a
person that is privileged or confidential (5 U.S.C. § 552(b)(4)).
Consultation Outside the Agency
The Guidance was published jointly by the agencies. There has been no consultation
outside of the Federal Reserve System with regard to the adoption of the extension of the
FR 4198 for three years, with revision.
Public Comments
On June 25, 2019, the Board published an initial notice in the Federal Register
(84 FR 29862), requesting public comment for 60 days on the extension, with revision, of the
FR 4198. The comment period for this notice expired on August 26, 2019. The Board did not
receive any comments. The Board adopted the extension, with revision, of the FR 4198 as
originally proposed. On October 18, 2019, the Board published a final notice in the Federal
Register (84 FR 55957).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 4198 is
727,456 hours, and would decrease to 158,048 hours with the revisions. Certain recordkeeping
4

See SR 18-5 / CA 18-7: Interagency Statement Clarifying the Role of Supervisory Guidance (September 11, 2018).

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provisions included in the FR 4198 overlap with substantively identical requirements in the
Board’s Regulation YY. The estimated total burden for the FR 4198 does not include the burden
of complying with these Regulation YY requirements, which are accounted for in the Paperwork
Reduction Act clearance for the Reporting, Recordkeeping, and Disclosure Requirements
Associated with Regulation YY (OMB No. 7100-0350).
The revisions to FR 4198 result in an increase to the estimated ongoing recordkeeping
burden for those respondents that have already implemented the recordkeeping provisions of the
Guidance. However, the total estimated burden decreased due to a significant decrease in the
estimated number of respondents that would newly implement the recordkeeping provisions of
the Guidance, as the Board believes that most respondents have already implemented those
provisions. These recordkeeping provisions represent approximately 1.4 percent of the Board’s
total paperwork burden.

FR 4198
Current
Section 14
Strategic Planning and
Budgeting Processes:
Large institutions
Mid-sized institutions
Small institutions
Section 20
Liquidity Risk Reports
Current Total
Proposed
Implementation of
Recordkeeping Guidance
Ongoing Recordkeeping
Proposed Total

Estimated
number of
respondents5

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

28
73
5,351

1
1
1

720
240
80

20,160
17,520
428,080

5,452

12

4

261,696
727,456

30
4,789

1
1

160
32

4,800
153,248
158,048
(569,408)

Change

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Of these respondents, approximately 29 implementing recordkeeping and 4,693 maintaining ongoing
recordkeeping are considered small entities, as defined by the Small Business Administration (i.e., entities with less
than $550 million in assets), https://www.sba.gov/document/support--table-size-standards. There are no special
accommodations given to mitigate the burden on small institutions.

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The current estimated total annual cost to the public for this information collection is
$41,901,466 and would decrease to $9,103,565 with the adopted revisions.6
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
Because the records maintained pursuant to the Guidance are maintained at the financial
institutions and not collected by the Federal Reserve System, the estimated cost to the Federal
Reserve System is negligible.

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Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $19, 45% Financial Managers at
$71, 15% Lawyers at $69, and 10% Chief Executives at $96). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2018, published March 29, 2019, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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