FR4202_20210719_omb

Supporting Statement for the
Recordkeeping Provisions Associated with Stress Testing Guidance
(FR 4202; OMB No. 7100-0348)
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,
without revision,1 the Recordkeeping Provisions Associated with Stress Testing Guidance
(FR 4202; OMB No. 7100-0348). The Stress Testing Guidance was issued jointly by the Board,
Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (the
agencies) on May 17, 2012. The interagency guidance outlines high-level principles for stress
testing practices applicable to all Board-supervised banking organizations with more than $10
billion in total consolidated assets. 2
The estimated total annual burden for the FR 4202 is 18,000 hours.
Background and Justification
All banking organizations should have the capacity to understand their risks and the
potential impact of stressful events and circumstances on their financial condition. The U.S.
federal banking agencies have previously highlighted the use of stress testing as a means to
better understand the range of banking organizations’ potential risk exposures. The financial
crisis that occurred between 2007 and 2009 further underscored the need for banking
organizations to incorporate stress testing into their risk management, as banking organizations
unprepared for stressful events and circumstances can suffer acute threats to their financial
condition and viability.
On May 17, 2012, the agencies jointly published the Stress Testing Guidance in the
Federal Register.3 The Stress Testing Guidance outlines high-level principles for firms’ stress
testing practices and highlights the importance of stress testing as an ongoing risk management
practice that supports a banking organization’s forward-looking assessment of its risks.
The guidance is consistent with industry practices and with international supervisory
standards.4 The guidance does not explicitly address the stress testing requirements imposed
upon certain companies by section 165(i) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd-Frank Act). On October 9, 2012, the Board approved final rules to
1

Although FR 4202 may be revised in the near future due to provisions of the Economic Growth, Regulatory Relief,
and Consumer Protection Act (EGRRCPA) affecting stress testing, the extension of the information collection for
three years is necessary to ensure that institutions comply with the current provisions. Given ongoing discussions by
the Board relating to the EGRRCPA and efforts to implement it, there could be changes to the Board’s regulations
and/or guidance in this area that could have an impact on the FR 4202 in the future.
2
Board-supervised banking organizations include state member banks, bank holding companies, and all other
institutions for which the Board is the primary federal supervisor.
3
77 FR 29458.
4
See “Principles for Sound Stress Testing Practices and Supervision,” Basel Committee on Banking Supervision,
May 2009, https://www.bis.org/publ/bcbs155.htm.

implement the stress testing requirements contained in section 165(i) of the Dodd -Frank Act.5
The provisions in those final rules are consistent with the principles in the guidance.
Description of Information Collection
The Stress Testing Guidance recommends that banking organizations (1) have a stress
testing framework that includes clearly defined objectives, well-designed scenarios tailored to
the banking organization’s business and risks, well-documented assumptions, conceptually
sound methodologies to assess potential impact on the banking organization’s financial
condition, informative management reports, and recommended actions based on stress test
results; and (2) have policies and procedures for a stress testing framework. These recordkeeping
activities are collections of information under the PRA.
An organization should have written policies, approved and annually reviewed by the
board, that direct and govern the implementation of the stress testing framework in a
comprehensive manner. Policies, along with procedures to implement them, should:
• describe the overall purpose of stress testing activities,
• articulate consistent and sufficiently rigorous stress testing practices across the entire
organization,
• indicate stress testing roles and responsibilities, including controls over external
resources used for any part of stress testing (such as vendors and data providers),
• describe the frequency and priority with which stress testing activities should be
conducted,
• indicate how stress test results are used and by whom, and
• be reviewed and updated as necessary to ensure that stress testing practices remain
appropriate and keep up to date with changes in market conditions, organization products
and strategies, organization exposures and activities, the organization’s established risk
appetite, and industry stress testing practices.
Respondent Panel
The FR 4202 panel comprises all Board-supervised banking organizations with more than
$10 billion in total consolidated assets.
Time Schedule for Information Collection
The documentation associated with the activities described in the Stress Testing
Guidance is maintained by each institution and may be reviewed by Federal Reserve System
examiners.
Public Availability of Data
There is no data related to this information collection available to the public.
5

Annual Company-Run Stress Test Requirements for Banking Organizations With Total Consolidated Assets Over
$10 Billion Other Than Covered Companies, 77 FR 62396 (October 12, 2012) and Supervisory and Company-Run
Stress Test Requirements for Covered Companies, 77 FR 62378 (October 12, 2012).

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Legal Status
The FR 4202 is authorized pursuant to section 11 of the Federal Reserve Act (12 U.S.C. §
248) (state member banks); sections 25 and 25A of the Federal Reserve Act (12 U.S.C. §§ 602
and 625) (Edge and agreement corporations); section 5 of the Bank Holding Company Act of
1956 (12 U.S.C. § 1844) (bank holding companies and, in conjunction with section 8 of the
International Banking Act of 1978 (12 U.S.C. § 3106) (foreign banking organizations); section
7(c) of the International Banking Act of 1978 (12 U.S.C. § 3105(c)) (branches and agencies of
foreign banks); section 10 of the Home Owners’ Loan Act (12 U.S.C. § 1467a) (savings and loan
holding companies); and section 165(i) of the Dodd-Frank Act (12 U.S.C. § 5365) (nonbank
financial companies supervised by the Board). The information collection associated with the
FR 4202 is voluntary.
Because the collections of information associated with the FR 4202 do not involve the
submission of information to the Board, no issues of confidentiality would normally arise. To the
extent that the Board collects such information during an examination of the banking
organization, confidential treatment may be afforded to that information under exemption 8 of
the Freedom of Information Act (FOIA) (5 U.S.C. § 552(b)(8)), which protects information
collected as part of the Board’s supervisory process. Additionally, individual respondents may
request confidential treatment of information pursuant to exemption 4 of the FOIA (5 U.S.C. §
552(b)(4)), which protects “trade secrets and commercial or financial information obtained from
a person [that is] privileged or confidential.” The Board will treat such information as
confidential to the extent permitted by law, including the FOIA.
Consultation Outside the Agency
The Board consulted with the agencies and confirmed that there will be no revisions to
the guidance, and no revision to the time per response estimates. Each agency may update their
respective respondent counts if needed.
Public Comments
On March 8, 2021, the Board published an initial notice in the Federal Register
(86 FR 13378) requesting public comment for 60 days on the extension, without revision, of the
FR 4202. The comment period for this notice expired on May 7, 2021. The Board did not receive
any comments. The Board adopted the extension, without revision, of the FR 4202 as originally
proposed. On June 9, 2021, the Board published a final notice in the Federal Register
(86 FR 30602).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 4202 is 18,000
hours. The Board estimates that it takes the approximately 100 Board-supervised institutions
with more than $10 billion in total consolidated assets 180 hours to comply with the
recordkeeping provisions, including 40 hours to document the assumptions used in its stress tests
and note the degree of uncertainty that may be incorporated into the tools used for stress testing,

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40 hours to maintain a summary of test results, 80 hours for the initial creation of the policies
and procedures, and 20 hours for training. These recordkeeping provisions represent less than 1
percent of the Board’s total paperwork burden.

FR 4202
Recordkeeping

Estimated
number of
respondents6

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

100

1

180

18,000

The estimated total annual cost to the public for the FR 4202 is $1,064,700.7
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Since the FR 4202 does not require the Federal Reserve to collect any information, the
estimated cost to the Federal Reserve System is negligible.

6

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.
7
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 $20, 45% Financial Managers at
$73, 15% Lawyers at $72, and 10% Chief Executives at $95). 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 2020, published March 31, 2021, 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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