FRWW_20200320_omb

Supporting Statement for the
Reporting, Recordkeeping, and Disclosure Requirements
Associated with the Regulation WW
(FR WW; OMB No. 7100-0367)
Changes to Applicability Thresholds for Regulatory Capital and Liquidity Requirements
(Docket No. R-1628) (RIN 7100-AF21)
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 Reporting, Recordkeeping, and Disclosure Requirements Associated with
Regulation WW (FR WW; OMB No. 7100-0367). The Board, Office of the Comptroller of the
Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies)
implemented through Regulation WW - Liquidity Risk Measurement Standards (12 CFR Part
249) a liquidity coverage ratio (LCR) requirement, consistent with the international liquidity
standards published by the Basel Committee on Banking Supervision (BCBS)1, for large and
internationally active banking organizations. Each institution is required to hold high quality,
liquid assets (HQLA) such as central bank reserves and government and corporate debt that can
be converted easily and quickly into cash in an amount equal to or greater than its projected cash
outflows minus its projected cash inflows during a 30-day stress period. The ratio of the firm’s
liquid assets to its projected net cash outflow is its LCR. The BCBS published the international
liquidity standards in December 2010 as a part of the Basel III reform package2 and revised the
standards in January 2013 (as revised, the Basel III Revised Liquidity Framework).3 The LCR
applies to all banking organizations with $250 billion or more in total consolidated assets or $10
billion or more in on-balance sheet foreign exposure and to these banking organizations’
subsidiary depository institutions that have assets of $10 billion or more. The final rule also
applies a less stringent, modified LCR to bank holding companies and savings and loan holding
companies that do not meet these thresholds, but have $50 billion or more in total assets. Bank
holding companies and savings and loan holding companies with substantial insurance or
commercial operations are not covered by the final rule.
The agencies adopted a final rule to revise the criteria for determining the applicability of
regulatory capital and liquidity requirements for large U.S. banking organizations and the U.S.
intermediate holding companies of certain foreign banking organizations. The final rule
established four risk-based categories for determining the applicability of requirements under the
1

The BCBS is a committee of banking supervisory authorities that was established by the central bank governors of
the G10 countries in 1975. It currently consists of senior representatives of bank supervisory authorities and central
banks from Argentina, Australia, Belgium, Brazil, Canada, China, European Union, France, Germany, Hong Kong
SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, Russia, Saudi Arabia, Singapore,
South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States. Documents issued by the
BCBS are available through the Bank for International Settlements website at https://www.bis.org/.
2
“Basel III: International framework for liquidity risk measurement, standards and monitoring” (December 2010),
available at https://www.bis.org/publ/bcbs188.htm (Basel III Liquidity Framework).
3
“Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools” (January 2013), available at
https://www.bis.org/publ/bcbs238.htm.

agencies’ regulatory capital rule and LCR rule. Under the final rule, such requirements increased
in stringency based on measures of size, cross-jurisdictional activity, weighted short-term
wholesale funding, nonbank assets, and off-balance sheet exposure. The final rule applied
tailored regulatory capital and liquidity requirements to depository institution holding companies
and U.S. intermediate holding companies with $100 billion or more in total consolidated assets
as well as to certain depository institutions. Separately, the Board adopted a final rule that
revised the criteria for determining the applicability of enhanced prudential standards for large
domestic and foreign banking organizations using a risk-based category framework that is
consistent with the framework described in this final rule, and made additional modifications to
the Board’s company-run stress test and supervisory stress test rules. In addition, the Board and
the FDIC separately adopted a final rule that amends the resolution planning requirements under
section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) using a risk-based category framework that is consistent with the framework
described in this final rule. The final rule is effective on December 31, 2019.
The agencies final rule revised sections _.1, _.3, _.10, _.30, and _.50 of each of the
agencies’ respective LCR rules and sections 249.90 and 249.91 of the Board’s LCR rule to
require certain depository institution subsidiaries of large domestic banking organizations and
U.S. intermediate holding companies of foreign banking organizations to calculate an LCR.
The current estimated total annual burden for the FR WW is 4,453 hours, and would
decrease to 3,370 hours. The adopted revisions would result in a decrease of 1,083 hours. There
are no required reporting forms associated with this information collection.
Background and Justification
The recent financial crisis demonstrated significant weaknesses in the liquidity positions
of banking organizations, many of which experienced difficulty meeting their obligations due to
a breakdown of the funding markets. As a result, many governments and central banks across the
world provided unprecedented levels of liquidity support to companies in the financial sector in
an effort to sustain the global financial system. In the United States, the Board and FDIC
established various temporary liquidity facilities to provide sources of funding for a range of
asset classes.
These events came in the wake of a period characterized by ample liquidity in the
financial system. The rapid reversal in market conditions and the declining availability of
liquidity during the financial crisis illustrated both the speed with which liquidity can evaporate
and the potential for protracted illiquidity during and following these types of market events. In
addition, the recent financial crisis highlighted the pervasive detrimental effect of a liquidity
crisis on the banking sector, the financial system, and the economy as a whole.
Banking organizations’ failure to adequately address these challenges was in part due to
lapses in basic liquidity risk management practices. Recognizing the need for banking
organizations to improve their liquidity risk management and to control their liquidity risk
exposures, the agencies worked with regulators from foreign jurisdictions to establish
international liquidity standards. These standards include the principles based on supervisory

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expectations for liquidity risk management in the “Principles for Sound Liquidity Management
and Supervision.”4 In addition to these principles, the BCBS established quantitative standards
for liquidity in the “Basel III: International framework for liquidity risk measurement, standards
and monitoring” in December 2010, which introduced a liquidity coverage ratio (2010 LCR) and
a net stable funding ratio, as well as a set of liquidity monitoring tools. These reforms were
intended to strengthen liquidity and promote a more resilient financial sector by improving the
banking sector’s ability to absorb shocks arising from financial and economic stress.
Subsequently, in January 2013, the BCBS issued “Basel III: The Liquidity Coverage Ratio and
liquidity risk monitoring tools” (Basel III LCR), which updated key components of the 2010
LCR as part of the Basel III liquidity framework.5
Current U.S. regulations do not require banking organizations to meet a quantitative
liquidity standard. Rather, the agencies evaluate a banking organization’s methods for
measuring, monitoring, and managing liquidity risk on a case-by-case basis in conjunction with
their supervisory processes.6 Since the financial crisis, the agencies have worked to establish a
more rigorous supervisory and regulatory framework for U.S. banking organizations that would
incorporate and build upon the BCBS standards.
In 2012, pursuant to section 165 of the Dodd-Frank Act,7 the Board proposed enhanced
liquidity standards for large U.S. banking firms, certain foreign banking organizations, and
nonbank financial companies designated by the Financial Stability Oversight Council for Board
supervision.8 These enhanced liquidity standards include corporate governance provisions, senior
management responsibilities, independent review, a requirement to hold highly liquid assets to
cover stressed liquidity needs based on internally developed stress models, a contingency
funding plan, and specific limits on potential sources of liquidity risk.9
Regulation WW further enhanced supervisory processes by implementing a minimum
quantitative liquidity requirement in the form of an LCR. This quantitative requirement focused
on short-term liquidity risks and benefited the financial system as a whole by improving the
ability of companies subject to the proposal to absorb potential market and liquidity shocks in a
severe stress scenario over a short term. The agencies established a minimum LCR that is
consistent with the Basel III LCR, with some modifications to reflect characteristics and risks of
specific aspects of the U.S. market and U.S. regulatory framework. The reporting,
recordkeeping, and disclosure requirements in Regulation WW require that covered institutions
promptly notify the Board if they are not meeting the minimum LCR as required by the rule, and
4

Principles for Sound Liquidity Risk Management and Supervision (September 2008), available at
https://www.bis.org/publ/bcbs144.htm.
5
Key provisions of the 2010 LCR that were updated by the BCBS in 2013 include expanding the definition of
HQLAs, technical changes to the calculation of various inflow and outflow rates, introducing a phase-in period for
implementation, and a variety of rules text clarifications. See https://www.bis.org/press/p130106b.pdf for a complete
list of revisions to the 2010 LCR.
6
For instance, the Uniform Financial Rating System adopted by the Federal Financial Institutions Examination
Council requires examiners to assign a supervisory rating that assesses a banking organization’s liquidity position
and liquidity risk management.
7
See 12 U.S.C. § 5365.
8
See 77 FR 594 (January 5, 2012); 77 FR 76628 (December 28, 2012).
9
See 12 U.S.C. § 5365.

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that the institutions take prompt action to address any noncompliance. Covered institutions are
required to implement certain policies regarding control of its eligible HQLA and to document
its methodology for ensuring that eligible HQLA meet the requirements of the rule.
Description of Information Collection
The reporting, recordkeeping, and disclosure requirements in Regulation WW are found
in sections 249.22, 249.40, 249.90, and 249.91.
Section 249.22(a)(2) requires that, with respect to each asset eligible for inclusion in a
covered company’s HQLA amount, the covered company must implement policies that require
eligible HQLA to be under the control of the management function in the covered company
responsible for managing liquidity risk. The management function must evidence its control over
the HQLA by segregating the HQLA from other assets, with the sole intent to use the HQLA as a
source of liquidity, or demonstrating the ability to monetize the assets and making the proceeds
available to the liquidity management function without conflicting with a business or risk
management strategy of the covered company. In addition, section 249.22(a)(5) requires that a
covered company must have a documented methodology that results in a consistent treatment for
determining that the covered company’s eligible HQLA meet the requirements of section 249.22.
Section 249.40(a) requires a covered institution to notify the Board on any business day
when its LCR is calculated to be less than the minimum requirement in section 249.10. Section
249.40(b) requires that if an institution’s LCR is below the minimum requirement in section
249.10 for three consecutive business days, or if the Board has determined that the institution is
otherwise materially noncompliant, the institution must promptly provide a liquidity plan for
achieving compliance. The liquidity plan must include, as applicable, (1) an assessment of the
institution’s liquidity position, (2) the actions the institution has taken and will take to achieve
full compliance including a plan for adjusting the institution’s risk profile, risk management, and
funding sources in order to achieve full compliance and a plan for remediating any operational or
management issues that contributed to noncompliance, (3) an estimated timeframe for achieving
full compliance, and (4) a commitment to provide a progress report to the Board at least weekly
until full compliance is achieved.
Section 249.90 requires that a covered depository institution holding company, U.S.
intermediate holding company, or covered nonbank company provide timely public disclosures
each calendar quarter of all the information required under this subpart. A covered depository
institution holding company, U.S. intermediate holding company, or covered nonbank company
must provide the disclosures beginning with the first calendar quarter that includes the date that
is 18 months after the covered depository institution holding company or U.S. intermediate
holding company first became subject to this subpart. A covered depository institution holding
company or covered nonbank company must disclose publicly, in a direct and prominent
manner, the information required under this subpart on its public internet site or in its public
financial or other public regulatory reports. The disclosures must remain publicly available for at
least five years after the initial disclosure date.

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Section 249.91 requires a covered depository institution holding company or covered
nonbank company to disclose publicly information about certain components of its LCR
calculation in a standardized tabular format (Table 1 to section 249.91(a)) and include a
discussion of factors that have a significant effect on its LCR. Public disclosure of information
about covered company LCR calculations will help market participants and other parties
consistently assess the liquidity risk profile of covered companies. Quantitative disclosures will
convey information about a covered company’s HQLA and short-term cash flows, thereby
providing insight into a covered company’s liquidity risk profile. Consistent with the BCBS
common template, a covered company must disclose both average unweighted amounts and
average weighted amounts for the covered company’s HQLA, cash outflow amounts, and cash
inflow amounts. A covered company is also required to calculate all disclosed amounts as simple
averages of the components used to calculate its daily LCR over a calendar quarter, except that
modified LCR holding companies are required to calculate all disclosed amounts as simple
averages of the components used to calculate their monthly LCR. A covered company is required
to calculate all disclosed amounts on a consolidated basis and express the results in millions of
U.S. dollars or as a percentage, as applicable.
In addition, a covered company is required to provide a discussion of certain features of
its LCR. A covered company’s qualitative discussion may include, but does not have to be
limited to, the following items: (1) The main drivers of the LCR, (2) changes in the LCR over
time and causes of such changes, (3) the composition of eligible HQLA, (4) concentration of
funding sources, (5) derivative exposures and potential collateral calls, (6) currency mismatch in
the LCR, and (7) the covered company’s centralized liquidity management function and its
interaction with other functional areas of the covered company.
There are no required reporting forms associated with this information collection. No
other federal law mandates these reporting, recordkeeping, and disclosure requirements.
Respondent Panel
The FR WW panel comprises insured state member banks, bank holding companies, U.S.
intermediate holding companies, savings and loan holding companies, and any subsidiary
thereof.
Adopted Revisions
The agencies adopted a final rule to revise the criteria for determining the applicability of
regulatory capital and liquidity requirements for large U.S. banking organizations and the U.S.
intermediate holding companies of certain foreign banking organizations. The final rule
established four risk-based categories for determining the applicability of requirements under the
agencies’ regulatory capital rule and LCR rule. Under the final rule, such requirements increased
in stringency based on measures of size, cross-jurisdictional activity, weighted short-term
wholesale funding, nonbank assets, and off-balance sheet exposure. The final rule applied
tailored regulatory capital and liquidity requirements to depository institution holding companies
and U.S. intermediate holding companies with $100 billion or more in total consolidated assets
as well as to certain depository institutions. Separately, the Board adopted a final rule that

5

revised the criteria for determining the applicability of enhanced prudential standards for large
domestic and foreign banking organizations using a risk-based category framework that is
consistent with the framework described in this final rule, and made additional modifications to
the Board’s company-run stress test and supervisory stress test rules. In addition, the Board and
the FDIC separately adopted a final rule that amends the resolution planning requirements under
section 165(d) of the Dodd-Frank Act using a risk-based category framework that is consistent
with the framework described in this final rule. The final rule is effective on December 31, 2019.
The agencies final rule revised sections _.1, _.3, _.10, _.30, and _.50 of each of the
agencies’ respective LCR rules and sections 249.90 and 249.91 of the Board’s LCR rule to
require certain depository institution subsidiaries of large domestic banking organizations and
U.S. intermediate holding companies of foreign banking organizations to calculate an LCR.
Time Schedule for Information Collection
The information collection pursuant to the reporting, recordkeeping, and disclosure
requirements is event-generated.
Legal Status
FR WW is authorized by section 5 of the Bank Holding Company Act (12 U.S.C. §
1844), sections 9 and 11 of the Federal Reserve Act (12 U.S.C. §§ 324 and 334), section 10 of
the Home Owners’ Loan Act (12 U.S.C. § 1467a), and section 165 of the Dodd-Frank Act
(12 U.S.C. § 5365). Section 5(c) of the Bank Holding Company Act authorizes the Board to
require bank holding companies to submit reports to the Board regarding their financial
condition. Section 9 of the Federal Reserve Act (FRA) requires member banks to file reports
regarding nonbank affiliates that “contain such information as in the judgment of the Board …
shall be necessary to disclose fully the relations between such affiliate and such bank and to
enable the Board to inform itself as to the effect of such relations upon the affairs of such bank.”
Section 11 of the FRA authorizes the Board to require of member banks “such statements and
reports as it may deem necessary.” Section 10 of the Home Owners’ Loan Act requires a savings
and loan holding company to file “such reports as may be required by the Board” and provides
that such reports “shall contain such information concerning the operations of such savings and
loan holding company and its subsidiaries as the Board may require.” Section 165 of the DoddFrank Act requires the Board to establish prudential standards for certain bank holding
companies; these standards include liquidity requirements. The obligation to respond is
mandatory.
No issue of confidentiality arises in connection with the recordkeeping requirements of
Regulation WW, as no information is collected by the Board. However, Regulation WW also
contains two types of reporting requirements. One reporting requirement concerns the liquidity
coverage ratio, the amount of high quality assets held by the bank, and the bank’s total net cash
outflow. This information will be reported on quarterly basis as an average and made directly to
the public by the bank; there will be no issue of confidentiality regarding this information. The
second reporting requirement, found in section 249.40 of Regulation WW, requires a bank whose
liquidity coverage ratio falls below the regulatory minimum for three business days to report this

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fact the appropriate bank regulatory authority. Making this reporting requirement public would
be likely to cause substantial competitive harm to the bank making the report and impair the
Board’s ability to obtain sensitive financial information from supervised institutions. This
information is therefore exempt from disclosure pursuant to exemptions 4 and 8 of the Freedom
of Information Act (5 U.S.C. §§ 552(b)(4) and (b)(8), respectively). Exemption 4 covers
confidential commercial or financial information while exemption 8 covers matters contained in
or related to examination, operating, or condition reports prepared by, on behalf of, or for the use
of the Board, an agency responsible for the regulation and supervision of financial institutions.
Consultation Outside the Agency
The Board, OCC, and FDIC coordinated in developing these revisions.
Public Comments
On December 21, 2018, the agencies published a notice of proposed rulemaking for U.S.
banking organizations in the Federal Register (83 FR 66024) for public comment. The comment
period for this notice expired on January 22, 2019. On May 24, 2019, the agencies published a
notice of proposed rulemaking for foreign banking organizations in the Federal Register
(84 FR 24296) for public comment. The comment period for this notice expired on June 21,
2019. The agencies did not receive any public comments on the PRA analysis. On November 1,
2019, the agencies published a final rule in the Federal Register (84 FR 59230). The final rule is
effective on December 31, 2019.
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR WW is 4,453
hours, and would decrease to 3,370 hours with the adopted revisions. These reporting,
recordkeeping, and disclosure requirements represent less than 1 percent of the Board’s total
paperwork burden.

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FR WW
Current
Reporting
Section 249.40(a)
Section 249.40(b)
Section 249.40(b)(3)(iv)
Recordkeeping
Sections 249.22(a)(2) and (a)(5)
Section 249.40(b)
Disclosure
Sections 249.64, 90, and 91
Current Total
Proposed
Reporting
Section 249.40(a)
Section 249.40(b)
Section 249.40(b)(3)(iv)
Recordkeeping
Sections 249.22(a)(2) and (a)(5)
Section 249.40(b)
Disclosure
Sections 249.90 and 91
Proposed Total

Estimated
number of
respondents10

Annual
frequency

3
3
3

12
1
4

39
3

1
1

20
100

780
300

35

4

24

3,360
4,453

3
3
3

12
1
4

23
3

1
1

40
200

920
600

19

4

24

1,824
3,370

Change

Estimated
average hours
per response

0.25
0.25
0.25

0.5
0.5
0.5

Estimated
annual burden
hours

9
1
3

18
2
6

(1,083)

The current estimated total annual cost to the public for the FR WW is $256,493 and
would decrease to $194,112 with the adopted revisions.11

10

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.
11
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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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
The cost to the Federal Reserve System is negligible.

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