BANK REPORTS

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Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

banks and bank holding companies);

and 12 U.S.C. 1817 and 1820 (for

insured state nonmember commercial

and savings banks). The FFIEC 009

information collection is given

confidential treatment (5 U.S.C.

552(b)(4) and (b)(8)). The FFIEC 009a

information collection is not given

confidential treatment. Small businesses

(i.e., small banks) are not affected.

Abstract

The Country Exposure Report (FFIEC

009) is filed quarterly with the agencies

and provides information on

international claims of U.S. banks and

bank holding companies that is used for

supervisory and analytical purposes.

The information is used to monitor

country exposure of banks to determine

the degree of risk in their portfolios and

the possible impact on U.S. banks of

adverse developments in particular

countries. The Country Exposure

Information Report (FFIEC 009a) is a

supplement to the FFIEC 009 and

provides publicly available information

on material foreign country exposures

(all exposures to a country in excess of

one percent of total assets or 20 percent

of capital, whichever is less) of U.S.

banks and bank holding companies that

file the FFIEC 009 report. As part of the

Country Exposure Information Report,

reporting institutions must also furnish

a list of countries in which they have

lending exposures above 0.75 percent of

total assets or 15 percent of total capital,

whichever is less.

Current Action

The agencies propose to require

electronic submission of all FFIEC 009

and 009a reports effective with the

March 31, 2003, report date. The

agencies would no longer accept paper

(hard copy) reports from banks and bank

holding companies after the December

31, 2002, report date. The submission

deadline would remain 45 calendar

days after the report date. No changes

are proposed to the FFIEC 009 and 009a

reporting forms.

Type of Review: Revision of a

currently approved collection

ective with the

March 31, 2003, report date. The

agencies would no longer accept paper

(hard copy) reports from banks and bank

holding companies after the December

31, 2002, report date. The submission

deadline would remain 45 calendar

days after the report date. No changes

are proposed to the FFIEC 009 and 009a

reporting forms.

Type of Review: Revision of a

currently approved collection.

Proposed Change in Submission

Method

The agencies propose to require

electronic submission of the FFIEC 009

and 009a reports as part of an ongoing

effort to improve data quality and the

efficiency of the data collection process.

Over the past five years, the agencies

have implemented an electronic

submission requirement for bank

Reports of Condition and Income (Call

Reports) and have realized efficiencies

in the collection process with minimal

increase in burden to reporting

institutions. In addition, the agencies

have allowed foreign banks to

electronically submit the Report of

Assets and Liabilities of U.S. Branches

and Agencies of Foreign Banks (FFIEC

002) and the Report of Assets and

Liabilities of Non–U.S. Branches that

are Managed or Controlled by a U.S.

Branch or Agency of a Foreign Bank

(FFIEC 002s), which has improved the

efficiency of the collection process for

those reports. The agencies believe that

requiring electronic submission of

FFIEC 009 and 009a reports can result

in similar benefits.

The agencies propose to have the

Board collect and process the FFIEC 009

and 009a reports on their behalf via the

Federal Reserve System’s Internet

Electronic Submission (IESUB) system.

The Board, which collects and processes

the FFIEC 002 and 002s for the three

agencies, currently allows foreign banks

to submit these reports via IESUB.

Electronic filing capability via IESUB is

available on the Internet through the use

of data entry or a file transfer feature.

These methods are secure and result in

a minimal burden to banks and bank

holding companies

ion (IESUB) system.

The Board, which collects and processes

the FFIEC 002 and 002s for the three

agencies, currently allows foreign banks

to submit these reports via IESUB.

Electronic filing capability via IESUB is

available on the Internet through the use

of data entry or a file transfer feature.

These methods are secure and result in

a minimal burden to banks and bank

holding companies. Reporting

institutions must enroll and be

authenticated before IESUB will accept

a report submission.

The file transfer feature allows

institutions to submit reports over the

Internet in a pre–defined file format.

The files can be created from a

spreadsheet (e.g., Microsoft Excel (c),

Lotus 123 (c)) or any other back–end

system that a reporting institution uses

to generate its data. When an institution

submits its FFIEC 009 and 009a reports

either through data entry or a pre–

defined file format, IESUB will check

the validity of the data and provide the

institution with a receipt containing the

data submitted and the date and time

that IESUB received the file. A complete

description of IESUB, including the

system requirements, security and file

transfer features is available at the

Federal Reserve System reporting

website http://

www.reportingandreserves.org/

req.html.

The agencies believe that this revision

would not be a significant burden to

banks or bank holding companies

because of advancements in, and the

common use of, computer technology

currently available for the filing of

regulatory reports.

Request for Comment

Public comment is requested on all

aspects of this proposal. In addition,

comments are invited on:

(a) Whether the proposed revisions to

the FFIEC 009 and 009a collections of

information are necessary for the proper

performance of the agencies’ functions,

including whether the information has

practical utility;

currently available for the filing of

regulatory reports.

Request for Comment

Public comment is requested on all

aspects of this proposal. In addition,

comments are invited on:

(a) Whether the proposed revisions to

the FFIEC 009 and 009a collections of

information are necessary for the proper

performance of the agencies’ functions,

including whether the information has

practical utility;

(b) The accuracy of the agencies’

estimates of the burden of the

information collections as they are

proposed to be revised, including the

validity of the methodology and

assumptions used;

(c) Ways to enhance the quality,

utility, and clarity of the information to

be collected;

(d) Ways to minimize the burden of

information collections on respondents,

including through the use of automated

collection techniques or other forms of

information technology; and

(e) Estimates of capital or start up

costs and costs of operation,

maintenance, and purchase of services

to provide information.

Comments submitted in response to

this Notice will be shared among the

agencies and will be summarized or

included in the agencies’ requests for

OMB approval. All comments will

become a matter of public record.

Written comments should address the

accuracy of the burden estimates and

ways to minimize burden as well as

other relevant aspects of the information

collection request.

Dated: October 28, 2002.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory

Activities Division, Office of the Comptroller

of the Currency.

Board of Governors of the Federal Reserve

System, October 31, 2002.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, D.C., this 28th day of

October, 2002.

FEDERAL DEPOSIT INSURANCE

CORPORATION

Robert E. Feldman,

Executive Secretary.

[FR Doc

002.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory

Activities Division, Office of the Comptroller

of the Currency.

Board of Governors of the Federal Reserve

System, October 31, 2002.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, D.C., this 28th day of

October, 2002.

FEDERAL DEPOSIT INSURANCE

CORPORATION

Robert E. Feldman,

Executive Secretary.

[FR Doc. 02–28118 Filed 11–7–02; 8:45 am]

BILLING CODES OCC: 4810–33–S 1/3; Board: 6210–01–S

1/3; FDIC: 6714–01–S 1/3

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE

CORPORATION

Proposed Agency Information

Collection Activities; Comment

Request

AGENCIES: Office of the Comptroller of

the Currency (OCC), Treasury; Board of

Governors of the Federal Reserve

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Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

System (Board); and Federal Deposit

Insurance Corporation (FDIC).

ACTION: Joint notice and request for

comment.

SUMMARY: In accordance with the

requirements of the Paperwork

Reduction Act of 1995 (44 U.S.C.

chapter 35), the OCC, the Board, and the

FDIC (the ‘‘agencies’’) may not conduct

or sponsor, and the respondent is not

required to respond to, an information

collection unless it displays a currently

valid Office of Management and Budget

(OMB) control number. The Federal

Financial Institutions Examination

Council (FFIEC), of which the agencies

are members, has approved the

agencies’ publication for public

comment of proposed revisions to the

Consolidated Reports of Condition and

Income (Call Report), which are

currently approved collections of

information. At the end of the comment

period, the comments and

recommendations received will be

analyzed to determine the extent to

which the FFIEC should modify the

proposed revisions prior to giving its

final approval

ies’ publication for public

comment of proposed revisions to the

Consolidated Reports of Condition and

Income (Call Report), which are

currently approved collections of

information. At the end of the comment

period, the comments and

recommendations received will be

analyzed to determine the extent to

which the FFIEC should modify the

proposed revisions prior to giving its

final approval. The agencies will then

submit the revisions to OMB for review

and approval.

DATES: Comments must be submitted on

or before January 7, 2003.

ADDRESSES: Interested parties are

invited to submit written comments to

any or all of the agencies. All comments,

which should refer to the OMB control

number(s), will be shared among the

agencies.

OCC: Comments should be sent to the

Public Information Room, Office of the

Comptroller of the Currency, Mailstop

1–5, Attention: 1557–0081, 250 E Street,

SW., Washington, DC 20219. Due to

disruptions in the OCC’s mail service

since September 11, 2001, commenters

are encouraged to submit comments by

fax or e–mail. Comments may be sent by

fax to (202) 874–4448, or by e–mail to

regs.comments@occ.treas.gov. You can

inspect and photocopy the comments at

the OCC’s Public Information Room, 250

E Street, SW., Washington, DC 20219.

You can make an appointment to

inspect the comments by calling (202)

874–5043.

Board: Written comments, which

should refer to ‘‘Consolidated Reports of

Condition and Income, 7100–0036,’’

may be mailed to Ms. Jennifer J.

Johnson, Secretary, Board of Governors

of the Federal Reserve System, 20th and

C Streets, NW., Washington, DC 20551.

Due to temporary disruptions in the

Board’s mail service, commenters are

encouraged to submit comments by

electronic mail to

regs.comments@federalreserve.gov, or

by fax to the Office of the Secretary at

202–452–3819 or 202–452–3102.

Comments addressed to Ms. Johnson

also may be delivered to the Board’s

mailroom between 8:45 a.m. and 5:15

p.m

th and

C Streets, NW., Washington, DC 20551.

Due to temporary disruptions in the

Board’s mail service, commenters are

encouraged to submit comments by

electronic mail to

regs.comments@federalreserve.gov, or

by fax to the Office of the Secretary at

202–452–3819 or 202–452–3102.

Comments addressed to Ms. Johnson

also may be delivered to the Board’s

mailroom between 8:45 a.m. and 5:15

p.m. weekdays, and to the security

control room outside of those hours.

Both the mailroom and the security

control room are accessible from the

Eccles Building courtyard entrance on

20th Street between Constitution

Avenue and C Street, NW. Comments

received may be inspected in room M–

P–500 between 9 a.m. and 5 p.m. on

weekdays pursuant to sections 261.12

and 261.14 of the Board’s Rules

Regarding Availability of Information,

12 CFR 261.12 and 261.14.

FDIC: Written comments should be

addressed to Robert E. Feldman,

Executive Secretary, Attention:

Comments/Legal, Federal Deposit

Insurance Corporation, 550 17th Street,

NW., Washington, DC 20429. All

comments should refer to ‘‘Consolidated

Reports of Condition and Income, 3064–

0052.’’ Commenters are encouraged to

submit comments by fax or electronic

mail [Fax number: (202) 898–3838;

Internet address: comments@fdic.gov].

Comments also may be hand–delivered

to the guard station at the rear of the 550

17th Street Building (located on F

Street) on business days between 7 a.m.

and 5 p.m. Comments may be inspected

and photocopied in the FDIC Public

Information Center, Room 100, 801 17th

Street, NW., Washington, DC, between 9

a.m. and 4:30 p.m. on business days.

A copy of the comments may also be

submitted to the OMB desk officer for

the agencies: Joseph F. Lackey, Jr.,

Office of Information and Regulatory

Affairs, Office of Management and

Budget, New Executive Office Building,

Room 10235, Washington, DC 20503 or

electronic mail to jlackeyj@omb.eop.gov

Room 100, 801 17th

Street, NW., Washington, DC, between 9

a.m. and 4:30 p.m. on business days.

A copy of the comments may also be

submitted to the OMB desk officer for

the agencies: Joseph F. Lackey, Jr.,

Office of Information and Regulatory

Affairs, Office of Management and

Budget, New Executive Office Building,

Room 10235, Washington, DC 20503 or

electronic mail to jlackeyj@omb.eop.gov.

FOR FURTHER INFORMATION CONTACT:

Draft copies of the proposed revisions to

the Call Report forms may be requested

from any of the agency clearance

officers whose names appear below.

OCC: Jessie Dunaway, OCC Clearance

Officer, or Camille Dixon, (202) 874–

5090, Legislative and Regulatory

Activities Division, Office of the

Comptroller of the Currency, 250 E

Street, SW., Washington, DC 20219.

Board: Cynthia M. Ayouch, Board

Clearance Officer, (202) 452–2204,

Division of Research and Statistics,

Board of Governors of the Federal

Reserve System, 20th and C Streets,

NW., Washington, DC 20551.

Telecommunications Device for the Deaf

(TDD) users may call (202) 263–4869.

FDIC: Tamara R. Manly, Management

Analyst (Regulatory Analysis), (202)

898–7453, Legal Division, Federal

Deposit Insurance Corporation, 550 17th

Street NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: Proposal

to revise the following currently

approved collections of information:

The effect of the proposed revisions in

reporting requirements will vary from

bank to bank depending on (1) the

bank’s involvement with the types of

activities or transactions to which

proposed new items relate, (2) whether

the bank has or has had more than one

foreign office, and (3) the number and

type of edit exceptions the agencies’

validation process identifies in the

bank’s Call Report. The agencies

estimate that, on average for all 8,700

banks, each bank would need

approximately an additional 0.5 to 1.5

hours to complete its Call Report each

quarter if the revisions were

implemented as proposed

ther

the bank has or has had more than one

foreign office, and (3) the number and

type of edit exceptions the agencies’

validation process identifies in the

bank’s Call Report. The agencies

estimate that, on average for all 8,700

banks, each bank would need

approximately an additional 0.5 to 1.5

hours to complete its Call Report each

quarter if the revisions were

implemented as proposed. However, the

proposed revisions may result in a

significantly larger increase in burden,

perhaps as much as 40 hours, for about

40 banks, including the very largest

banks in the U.S. The following burden

estimates include the proposed

revisions.

Report Title: Consolidated Reports of

Condition and Income (Call Report)

Form Number: FFIEC 031 (for banks

with domestic and foreign offices) and

FFIEC 041 (for banks with domestic

offices only).

Frequency of Response: Quarterly.

Affected Public: Business or other for–

profit.

For OCC:

OMB Number: 1557–0081.

Estimated Number of Respondents:

2,200 national banks.

Estimated Time per Response: 43.29

burden hours.

Estimated Total Annual Burden:

381,000 burden hours.

For Board:

OMB Number: 7100–0036.

Estimated Number of Respondents:

978 state member banks.

Estimated Time per Response: 49.50

burden hours.

Estimated Total Annual Burden:

193,644 burden hours.

For FDIC:

OMB Number: 3064–0052.

Estimated Number of Respondents:

5,480 insured state nonmember banks.

Estimated Time per Response: 33.91

burden hours.

Estimated Total Annual Burden:

743,393 burden hours.

The estimated time per response for

the Call Report is an average, which

varies by agency because of differences

in the composition of the banks under

each agency’s supervision (e.g., size

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me per Response: 33.91

burden hours.

Estimated Total Annual Burden:

743,393 burden hours.

The estimated time per response for

the Call Report is an average, which

varies by agency because of differences

in the composition of the banks under

each agency’s supervision (e.g., size

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Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

distribution of institutions, types of

activities in which they are engaged,

and number of banks with foreign

offices). For the Call Report, the time

per response for a bank is estimated to

range from 15 to 600 hours, depending

on individual circumstances.

General Description of Reports

These information collections are

mandatory: 12 U.S.C. 161 (for national

banks), 12 U.S.C. 324 (for state member

banks), 12 U.S.C. 1817 (for insured state

nonmember commercial and savings

banks, and for all banks for deposit

information). Except for selected items,

this information collection is not given

confidential treatment. Small businesses

(i.e., small banks) are affected.

Abstract

Banks file Call Reports with the

agencies each quarter for the agencies’

use in monitoring the condition,

performance, and risk profile of

reporting banks and the industry as a

whole. In addition, Call Reports provide

the most current statistical data

available for evaluating bank corporate

applications such as mergers, for

identifying areas of focus for both on–

site and off–site examinations, and for

monetary and other public policy

purposes. Call Reports are also used to

calculate all banks’ deposit insurance

and Financing Corporation assessments

and national banks’ semiannual

assessment fees.

Current Action

I. Overview

The agencies’ request for comment

addresses a number of different types of

changes to the Call Report requirements

for both on–

site and off–site examinations, and for

monetary and other public policy

purposes. Call Reports are also used to

calculate all banks’ deposit insurance

and Financing Corporation assessments

and national banks’ semiannual

assessment fees.

Current Action

I. Overview

The agencies’ request for comment

addresses a number of different types of

changes to the Call Report requirements.

These changes relate to the content of

the Call Report itself, the submission

deadline for certain banks, and the

agencies’ process for validating and

releasing the data that banks report.

First, the agencies are proposing several

revisions to the content of the Call

Report that are focused on improving

the information they collect from banks

that engage in certain specific activities.

This focus means that the proposed new

or revised Call Report items that pertain

to each of these activities will be

applicable to small percentages of banks

rather than to most or all banks. The

agencies also would clarify an

instruction and the scope of one group

of items. This first group of proposed

revisions, which would take effect as of

March 31, 2003, include:

• adding five items dealing with accrued

fees and finance charges on credit card

accounts, allowances for uncollectible

accrued fees and finance charges, and

charge–offs of such accrued amounts,

which would be reported by banks with

a significant volume of credit card

activity;

• breaking down the existing item in the

securitization schedule (Schedule RC–S)

for seller–provided credit enhancements

to the bank’s securitization structures

(other than credit–enhancing interest–

only strips) into separate items for those

enhancements that are in the form of

on–balance sheet assets and those

enhancements that are in some other

form;

• splitting the current income statement

(Schedule RI) item for income from

insurance activities into separate items

for insurance underwriting income and

income from other insurance activities;

• adding a yes/no

dit–enhancing interest–

only strips) into separate items for those

enhancements that are in the form of

on–balance sheet assets and those

enhancements that are in some other

form;

• splitting the current income statement

(Schedule RI) item for income from

insurance activities into separate items

for insurance underwriting income and

income from other insurance activities;

• adding a yes/no question asking

whether any of the bank’s Internet Web

sites has transactional capability, i.e.,

allows the bank’s customers to execute

transactions on their accounts;

• eliminating the exemption from

disclosing the fair values of derivative

contracts for banks with less than $100

million in assets in Schedule RC–L –

Derivative and Off–Balance Sheet Items,

because accounting standards require

derivatives to reported on the balance

sheet as assets or liabilities at fair value;

• changing the income statement

(Schedule RI) item in which banks

report any provisions for allocated

transfer risk, which also affects the

reconciliation of the allowance for loan

and lease losses in Schedule RI–B, part

II, and a related disclosure in the

explanations schedule (Schedule RI–E);

• creating a supplement to the Call

Report, in which the agencies, in

response to a future event giving rise to

an immediate and critical need for

specific information, would be

authorized to collect a limited amount

of data from certain banks;

• clarifying the instructions to describe

the limited circumstances in which

loans may be reported as held for

trading purposes; and

• explaining on both the report form and

in the instructions that, for the

Memorandum items in the insurance

assessments schedule (Schedule RC–O)

on the number and amount of deposit

accounts by size of account, the dollar

amount for the size of an account

(currently $100,000) represents the

deposit insurance limit in effect on the

report date

be reported as held for

trading purposes; and

• explaining on both the report form and

in the instructions that, for the

Memorandum items in the insurance

assessments schedule (Schedule RC–O)

on the number and amount of deposit

accounts by size of account, the dollar

amount for the size of an account

(currently $100,000) represents the

deposit insurance limit in effect on the

report date.

Second, the agencies are proposing to

shorten the Call Report submission

deadline for certain banks with foreign

offices so that the same submission

deadline applies to all banks. In general,

banks with more than one foreign office

currently are permitted to take an

additional 15 days beyond the standard

30 days applicable to all other banks for

filing their Call Reports. The agencies

are proposing a reduction in the filing

period to 30 days effective June 30,

2003, for banks with more than one

foreign office. In a related change, the

agencies are proposing to authorize the

FDIC, in connection with its

responsibility to set insurance premium

assessment rates semiannually, to obtain

certain deposit data from those banks

with foreign offices whose March 2003

Call Reports have not been filed within

the standard 30–day filing period. The

FDIC would contact these banks in early

May 2003 and direct them to disclose to

the agency the amounts then available

from their Call Report preparation

process for two Call Report items: total

domestic office deposits and estimated

uninsured deposits.

Third, beginning perhaps as early as

the March 31, 2003, Call Reports, the

agencies would begin to make

individual bank Call Reports available

to the public on the FDIC’s Web site as

soon as the data validation process for

a bank’s report had been completed. At

present, all of the Call Reports for a

specific report date are released to the

public simultaneously some 60–75 days

after the quarter–end report date

s as early as

the March 31, 2003, Call Reports, the

agencies would begin to make

individual bank Call Reports available

to the public on the FDIC’s Web site as

soon as the data validation process for

a bank’s report had been completed. At

present, all of the Call Reports for a

specific report date are released to the

public simultaneously some 60–75 days

after the quarter–end report date. Under

this proposal, after the edit exceptions,

if any, in an individual bank’s Call

Report have been resolved and the

analysis of the report has been

completed, the report will be made

publicly available. This will make

individual bank data available to the

public on a more timely basis than at

present.

Finally, the agencies’ currently plan

to implement a new business model for

collecting and validating Call Reports in

March 2004. In connection with the

introduction of this new business

model, the agencies are proposing that

a bank’s Call Report must pass all

validity edits and must include an

explanatory comment addressing each

quality edit exception identified in the

bank’s report in order for the agencies

to accept the bank’s Call Report

submission. Otherwise, the bank’s

report will not be accepted and the bank

will need to make appropriate

corrections to its report data, add any

required explanatory comments, and

resubmit its data file by the submission

deadline.

Type of Review: Revision of a

currently approved collection.

The proposed revisions to the Call

Report have been approved for

publication by the FFIEC. Unless

otherwise indicated, the agencies would

implement these proposed Call Report

changes as of the March 31, 2003, report

date. Nonetheless, as is customary for

Call Report changes, banks are advised

that, for the March 31, 2003, report date

only, reasonable estimates may be

provided for any new or revised item

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es would

implement these proposed Call Report

changes as of the March 31, 2003, report

date. Nonetheless, as is customary for

Call Report changes, banks are advised

that, for the March 31, 2003, report date

only, reasonable estimates may be

provided for any new or revised item

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Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

taking effect as of that date for which

the requested information is not readily

available. The specific wording of the

captions for the new and revised Call

Report items discussed in this proposal

and the numbering of these items in the

report forms should be regarded as

preliminary.

The agencies note that on July 12,

2002, they requested comment on the

addition of a proposed new Call Report

schedule that would collect data on

consumer loans in subprime lending

programs beginning March 31, 2003 (67

FR 46250). The agencies are currently

reviewing the comments received on

this separate proposal.

II. Discussion of Proposed Revisions

A. Charge–offs of Accrued Fees and

Finance Charges on Credit Card

Accounts

Many institutions engaged in credit

card lending have adopted the practice

of ‘‘purifying’’ charge–offs for financial

reporting purposes. ‘‘Purification’’ refers

to the practice of reversing uncollectible

accrued fees and finance charges against

earnings rather than accounting for

them as charge–offs against the

allowance for loan and lease losses. This

practice obscures charge–off ratios (i.e.,

charge–offs divided by loan balances)

because the charged–off amount does

not include the accrued fees and finance

charges while the aggregate loan balance

does include them. Thus, the

transparency of financial reports is

diminished

nst

earnings rather than accounting for

them as charge–offs against the

allowance for loan and lease losses. This

practice obscures charge–off ratios (i.e.,

charge–offs divided by loan balances)

because the charged–off amount does

not include the accrued fees and finance

charges while the aggregate loan balance

does include them. Thus, the

transparency of financial reports is

diminished.

Further, the effect of this practice on

credit card lending institutions’

financial statements has become more

material as the level of accrued but

uncollected finance charges and fees

have become more significant during

the past several years. Most if not all of

the accrued fees and finance charges

reversed under the purification practice

are included in credit card loan

balances, or in other words, have been

capitalized into the credit card loan

balances.

The proposed additional Call Report

items will collect information on

reversals of credit card fees and finance

charges that are not reported as charge–

offs against the loan loss allowance. The

proposed additions will also collect

information on the outstanding amount

of fees and finance charges included in

credit card receivables and the related

allowance, whether it is a component of

the allowance for loan and lease losses

or a separate contra–asset account.

These new items will cover both bank–

owned portfolios and securitized

portfolios of credit cards. The five

proposed items would be included as

memorandum items in Schedule RI–B,

parts I and II, Schedule RC–C, part I,

and Schedule RC–S. Additionally, these

proposed changes to the Call Report

include clarifications to the instructions

for four items: Schedule RC–S, items 1,

5.a, and 8, column C, and Schedule RI,

item 1.a.(3)(a) on the FFIEC 041 (item

1.a.(1)(d)(1) on the FFIEC 031). The

proposed items with their instructions

and the instructional clarifications are

presented at the end of this section

and Schedule RC–S. Additionally, these

proposed changes to the Call Report

include clarifications to the instructions

for four items: Schedule RC–S, items 1,

5.a, and 8, column C, and Schedule RI,

item 1.a.(3)(a) on the FFIEC 041 (item

1.a.(1)(d)(1) on the FFIEC 031). The

proposed items with their instructions

and the instructional clarifications are

presented at the end of this section.

The proposed changes will improve

financial reporting transparency for

losses on credit card accounts and

permit Call Report users to calculate

loss rates for credit card loan receivables

that are comparable across credit card

lending institutions. Users of Call

Report data will have more complete

loss information relating to credit card

fees and finance charges that are written

off as uncollectible. Furthermore, the

changes will provide better information

regarding the composition of and level

of credit risk in credit card loan

receivables that the institution manages

both for its own account and in

securitizations. The items regarding

outstanding credit card fees and finance

charges will provide useful information

to facilitate the agencies’ supervision of

credit card lending activities.

The proposed new items would be

completed only by those banks that: (1)

either individually or on a combined

basis with their affiliated depository

institutions, report outstanding credit

card receivables that exceed, in the

aggregate, $500 million as of the report

date. Outstanding credit card

receivables will be measured as the sum

of Schedule RC–C, part I, item 6.a

(column B on the FFIEC 041, column A

on the FFIEC 031); Schedule RC–S, item

1, column C; and Schedule RC–S, item

6.a, column C. (Include comparable data

on managed credit card receivables for

any affiliated savings association.) or

ceed, in the

aggregate, $500 million as of the report

date. Outstanding credit card

receivables will be measured as the sum

of Schedule RC–C, part I, item 6.a

(column B on the FFIEC 041, column A

on the FFIEC 031); Schedule RC–S, item

1, column C; and Schedule RC–S, item

6.a, column C. (Include comparable data

on managed credit card receivables for

any affiliated savings association.) or

(2) are credit card specialty banks as

defined for purposes of the Uniform

Bank Performance Report (UBPR).

According to the UBPR Users Guide,

credit card specialty banks are currently

defined as those that exceed 50% for the

following two criteria:

(a) Credit Cards plus Securitized and

Sold Credit Cards divided by Total

Loans plus Securitized and Sold Credit

Cards.

(b) Total Loans plus Securitized and

Sold Credit Cards divided by Total

Assets plus Securitized and Sold Credit

Cards.

Based on these reporting criteria, the

agencies estimate that fewer than 100

banks will be subject to this proposed

new reporting requirement.

The proposed new items, with their

instructions, are as follows:

(1) Schedule RI–B, part I, Memorandum

item 4, ‘‘Uncollectible credit card fees

and finance charges reversed against

income (i.e., not included in charge–offs

against the allowance for loan and lease

losses).’’ Report the amount of credit

card fees and finance charges that the

bank reversed against either interest and

fee income or a separate contra–asset

account during the calendar year–to–

date. Exclude from this item credit card

fees and finance charges reported as

charge–offs against the allowance for

loan and lease losses in Schedule RI–B,

part I, item 5.a, column A.

an and lease

losses).’’ Report the amount of credit

card fees and finance charges that the

bank reversed against either interest and

fee income or a separate contra–asset

account during the calendar year–to–

date. Exclude from this item credit card

fees and finance charges reported as

charge–offs against the allowance for

loan and lease losses in Schedule RI–B,

part I, item 5.a, column A.

(2) Schedule RI–B, part II, Memorandum

item 1, ‘‘Separate valuation allowance

for uncollectible credit card fees and

finance charges.’’ Report the amount of

any valuation allowance or contra–asset

account that the bank maintains

separate from the allowance for loan

and lease losses to account for

uncollectible credit card fees and

finance charges. Because this amount is

separate from the amount included in

Schedule RC, item 4.c, and Schedule

RI–B, part II, item 7, this Memorandum

item is only applicable for those banks

that maintain an allowance or contra–

asset account separate from the

allowance for loan and lease losses.

(3) Schedule RI–B, part II, Memorandum

item 2, ‘‘Amount of allowance for loan

and lease losses attributable to credit

card fees and finance charges.’’ Report

in this item the amount of the allowance

for loan and lease losses that is

attributable to outstanding credit card

fees and finance charges. This amount

should have been included within the

amount reported in Schedule RC, item

4.c, and Schedule RI–B, part II, item 7.

(4) Schedule RC–C, part I, Memorandum

item 6, ‘‘Outstanding credit card fees

and finance charges.’’ Report the

amount of fees and finance charges

included in the amount of credit card

receivables reported in Schedule RC–C,

part I, item 6.a (column A on the FFIEC

031; column B on the FFIEC 041).

cluded within the

amount reported in Schedule RC, item

4.c, and Schedule RI–B, part II, item 7.

(4) Schedule RC–C, part I, Memorandum

item 6, ‘‘Outstanding credit card fees

and finance charges.’’ Report the

amount of fees and finance charges

included in the amount of credit card

receivables reported in Schedule RC–C,

part I, item 6.a (column A on the FFIEC

031; column B on the FFIEC 041).

(5) Schedule RC–S, Memorandum item

4, ‘‘Outstanding credit card fees and

finance charges.’’ Report the amount of

fees and finance charges included in the

credit card receivables that the bank has

reported as securitized and sold in

Schedule RC–S, item 1, column C.

As proposed, these five new items

would be added to four separate

schedules. However, as indicated above,

the agencies will collect this

information from a limited number of

banks, i.e., banks with a significant

volume of credit card lending. The

agencies therefore request comment on

whether it would be preferable to group

these items together in a separate Call

Report schedule that would be

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completed only by these credit card

banks rather than having the five items

appear at scattered locations in the Call

Report.

The proposed clarifications to existing

instructions are as follows:

d be

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completed only by these credit card

banks rather than having the five items

appear at scattered locations in the Call

Report.

The proposed clarifications to existing

instructions are as follows:

(1) Schedule RI, item 1.a.(3)(a) on the

FFIEC 041, item 1.a.(1)(d)(1) on the

FFIEC 031, ‘‘Interest and fee income on

credit cards.’’ The following sentence

would be added to the instructions for

this item: Include in this item, as a

reduction of income, the amount of

uncollectible credit card fees and

finance charges the bank has reversed

against interest and fee income and the

amount charged to earnings for

additions to any contra–asset account

for uncollectible credit card fees and

finance charges that the bank maintains

and reports separately from its

allowance for loan and lease losses.

(2) Schedule RC–S, item 1,

‘‘Outstanding principal balance of assets

sold and securitized by the reporting

bank with servicing retained or with

recourse or other seller–provided credit

enhancements.’’ The following sentence

would be added to the instructions for

this item: For credit card receivables,

include in column C any fees and

finance charges capitalized into the

credit card receivable balances that the

reporting bank has securitized and sold.

(3) Schedule RC–S, item 5.a, ‘‘Charge–

offs’’ [on assets sold and securitized

with servicing retained or with recourse

or other seller–provided credit

enhancements (calendar year–to–date)].

The following sentence would be added

to the instructions for this item: Include

in column C charge–offs or reversals of

uncollectible credit card fees and

finance charges that had been

capitalized into the credit card

receivable balances that have been

securitized and sold.

d

with servicing retained or with recourse

or other seller–provided credit

enhancements (calendar year–to–date)].

The following sentence would be added

to the instructions for this item: Include

in column C charge–offs or reversals of

uncollectible credit card fees and

finance charges that had been

capitalized into the credit card

receivable balances that have been

securitized and sold.

(4) Schedule RC–S, item 8.a, ‘‘Charge–

offs’’ [on loan amounts included in

interests reported as securities in item

6.a (calendar year–to–date)]. The

following sentence would be added to

the instructions for this item: Include in

column C the amount of credit card fees

and finance charges written off as

uncollectible that were attributable to

the credit card receivables included in

ownership interests reported as

securities in item 6.a, column C.

B. Breakdown of Seller–provided Credit

Enhancements to the Bank’s

Securitization Structures

Banks currently report the maximum

amount of credit exposure from seller–

provided credit enhancements to

securitization structures (other than

credit–enhancing interest–only strips,

which are reported separately) in

Schedule RC–S, item 2.b. These credit

enhancements include both on–balance

sheet assets (such as subordinated

securities, spread accounts, and cash

collateral accounts) and enhancements

that are not assets (such as recourse

liabilities and standby letters of credit).

When credit enhancements are in the

form of assets, credit losses on the

securitized loans result in reduced cash

inflows to the asset holder. In contrast,

when seller–provided credit

enhancements take some other form,

cash outflows from the seller are

required to cover credit losses on the

securitized loans

hat are not assets (such as recourse

liabilities and standby letters of credit).

When credit enhancements are in the

form of assets, credit losses on the

securitized loans result in reduced cash

inflows to the asset holder. In contrast,

when seller–provided credit

enhancements take some other form,

cash outflows from the seller are

required to cover credit losses on the

securitized loans. In addition, under the

agencies’ risk–based capital standards

that were revised as of January 1, 2002,

seller–provided credit enhancements

that are on–balance sheet assets are

‘‘residual interests’’ subject to a dollar–

for–dollar capital charge unless they

qualify for the ratings–based approach.

The capital charge for enhancements

that are not assets generally is capped at

8 percent of the assets enhanced.

To distinguish between the amount of

a bank’s seller–provided credit

enhancements that are on–balance sheet

assets (other than credit–enhancing

interest–only strips) and those that are

not, item 2.b would be split into two

items. This proposed revision will

enable the agencies to better understand

the types of credit support that banks

are providing to their securitizations,

including which types are typically

used for different types of securitized

loans. In revised item 2.b, banks would

disclose the carrying value of

‘‘Subordinated securities and other

residual interests’’ carried as on–balance

sheet assets that have been retained in

connection with the securitization

structures reported in Schedule RC–S,

item 1. In new item 2.c, ‘‘Standby letters

of credit and other enhancements,’’

banks would disclose the unused

portion of standby letters of credit and

the maximum contractual amount of

recourse or other credit exposure not in

the form of an on–balance sheet asset

that have been provided or retained in

connection with the securitization

structures reported in Schedule RC–S,

item 1.

C

S,

item 1. In new item 2.c, ‘‘Standby letters

of credit and other enhancements,’’

banks would disclose the unused

portion of standby letters of credit and

the maximum contractual amount of

recourse or other credit exposure not in

the form of an on–balance sheet asset

that have been provided or retained in

connection with the securitization

structures reported in Schedule RC–S,

item 1.

C. Income from Insurance Activities

In Schedule RI, item 5.h, ‘‘Insurance

commissions and fees,’’ banks report

their income from insurance and

reinsurance underwriting, sales of

insurance and annuities, insurance

agency and brokerage operations, and

management fees for insurance

products. The risks arising from

insurance and reinsurance underwriting

are significantly different from those

arising from other insurance activities.

Given this distinction in risk, the

agencies are proposing to split the

current single income statement item for

insurance–related income into two

items so that underwriting income can

be separately identified. This will

enable the agencies to more clearly

identify institutions engaged in

underwriting and to better monitor the

results of these underwriting activities.

In new item 5.h.(1), ‘‘Insurance and

reinsurance underwriting income,’’

banks would report all income from

insurance and reinsurance

underwriting, including the amount of

premiums earned by property–casualty

insurers and the amount of premiums

written by life and health insurers. This

item would also include the bank’s

proportionate share of the income or

loss before extraordinary items and

other adjustments from its investments

in equity method investees that are

principally engaged in insurance and

reinsurance underwriting

iting, including the amount of

premiums earned by property–casualty

insurers and the amount of premiums

written by life and health insurers. This

item would also include the bank’s

proportionate share of the income or

loss before extraordinary items and

other adjustments from its investments

in equity method investees that are

principally engaged in insurance and

reinsurance underwriting.

In new item 5.h.(2), ‘‘Income from

other insurance and reinsurance

activities,’’ banks would report income

from insurance agency and brokerage

operations (including sales of annuities

and supplemental contracts); service

charges, commissions, and fees from the

sale of insurance (including credit life

insurance), reinsurance, and annuities;

and management fees from separate

accounts, deferred annuities, and

universal life products. This item would

also include the bank’s proportionate

share of the income or loss before

extraordinary items and other

adjustments from its investments in

equity method investees that are

principally engaged insurance activities

other than insurance underwriting.

The agencies request comment on

whether the instructional language in

the two preceding paragraphs clearly

describes insurance activities, including

underwriting, and the types of income

to be reported in each item.

D. Transactional Capability of Bank

Web Sites

An increasing number of banks’

Internet Web sites allow customers to

execute transactions on their accounts at

the bank. These transactional Web sites

present greater security risks to a bank

than sites that provide only information

to customers and the public. For

examination planning and risk scoping

purposes and to monitor industry trends

in this area, the agencies are proposing

to add a yes/no question to the Call

Report (as new item 8 of Schedule RC–

M) asking ‘‘Do any of the bank’s Internet

Web sites have transactional capability,

i.e., allow the bank’s customers to

execute transactions on their accounts

through the Web site.’’

E

e public. For

examination planning and risk scoping

purposes and to monitor industry trends

in this area, the agencies are proposing

to add a yes/no question to the Call

Report (as new item 8 of Schedule RC–

M) asking ‘‘Do any of the bank’s Internet

Web sites have transactional capability,

i.e., allow the bank’s customers to

execute transactions on their accounts

through the Web site.’’

E. Disclosure of the Fair Value of

Derivative Contracts

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Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

Schedule RC–L, item 15, collects data

on the fair values of derivatives, with

gross positive and negative fair values

reported separately by type of exposure

for contracts held for trading (items

15.a.(1) and (2)) and for those held for

purposes other than trading (items

15.b.(1) and (2)). At present, banks with

domestic offices only and less than $100

million in assets are exempt from this

disclosure requirement. This exemption

originated when derivative contracts

were considered off–balance sheet items

and predates FASB Statement No. 133,

Accounting for Derivative Instruments

and Hedging Activities (FAS 133),

which took effect in 2001. FAS 133

requires all derivatives to be measured

at fair value and reported on the balance

sheet as assets or liabilities. Because

banks with less than $100 million in

assets that have derivatives now have to

regularly determine their fair value for

balance sheet purposes, these banks

have the information necessary to

disclose the fair value of their

derivatives in Schedule RC–L.

Accordingly, the agencies are proposing

to eliminate this disclosure exemption.

The fair value data on derivatives will

complement the data that banks with

less than $100 million in assets

currently report on the notional amount

of their derivative contracts

alance sheet purposes, these banks

have the information necessary to

disclose the fair value of their

derivatives in Schedule RC–L.

Accordingly, the agencies are proposing

to eliminate this disclosure exemption.

The fair value data on derivatives will

complement the data that banks with

less than $100 million in assets

currently report on the notional amount

of their derivative contracts. The

number of banks in this size range that

have derivative contracts and will

therefore be affected by this proposed

change is less than 200.

F. Provisions for Allocated Transfer Risk

Prior to 2001, the Call Report income

statement (Schedule RI) included a

specific line item for ‘‘Provision for

allocated transfer risk,’’ but amounts

were reported in this item only

infrequently and only by a small

number of banks. This separate item

was removed from the face of the

income statement in 2001 and banks

were instructed to include these

provisions in ‘‘Other noninterest

expense’’ on Schedule RI (item 7.d).

However, in reviewing the continuing

merits of this instructional change, the

agencies found that institutions exposed

to transfer risk generally view these

provisions more like provisions for loan

losses than a noninterest expense. As a

result, the agencies concluded that it

would be preferable for banks to include

the ‘‘Provision for allocated transfer

risk’’ with the ‘‘Provision for loan and

lease losses’’ in item 4 on the Call

Report income statement and are

proposing to make this change.

In addition, in order for the end–of–

period allowance in the reconciliation

of the ‘‘Allowance for loan and lease

losses’’ in Schedule RI–B, part II, to

equal the loan loss allowance on the

balance sheet (Schedule RC, item 4.c),

which excludes the ‘‘Allocated transfer

risk reserve,’’ the instructions for

Schedule RI–B, part II, will also be

revised

and are

proposing to make this change.

In addition, in order for the end–of–

period allowance in the reconciliation

of the ‘‘Allowance for loan and lease

losses’’ in Schedule RI–B, part II, to

equal the loan loss allowance on the

balance sheet (Schedule RC, item 4.c),

which excludes the ‘‘Allocated transfer

risk reserve,’’ the instructions for

Schedule RI–B, part II, will also be

revised. More specifically, the

instructions for Schedule RI–B, part II,

item 6, ‘‘Adjustments,’’ will direct banks

to report as a negative number in item

6 the amount of any ‘‘Provision for

allocated transfer risk’’ included in the

amount of ‘‘Provision for loan and lease

losses’’ reported in item 4 of the income

statement (Schedule RI). Additionally,

as with all items reported in Schedule

RI–B, part II, item 6, ‘‘Adjustments,’’ the

amount of any ‘‘Provision for allocated

transfer risk’’ would need to be itemized

and described in item 6 of the

explanations schedule (Schedule RI–E).

G. Call Report Supplement for Future

Data Needs

The agencies are proposing to obtain

authority to collect a supplement to the

Call Report so that, should there be an

immediate need for the agencies to

collect certain critical information from

a segment of the banking industry, the

necessary items could be collected on

this supplement to the Call Report at the

earliest practicable date. Such a need

could arise, for example, because of a

statutory change or an unexpected

market event or change in credit

conditions that has a material effect on

certain institutions. While the

Paperwork Reduction Act has

emergency procedures for obtaining

authority to collect information on a

one–time basis, the agencies believe it

would be preferable to take a proactive

approach and establish in advance of a

possible critical future data need their

authority to collect such data. The

agencies further note that the Board

currently has comparable authority to

collect a supplement to the FR Y–9C

bank holding company report

res for obtaining

authority to collect information on a

one–time basis, the agencies believe it

would be preferable to take a proactive

approach and establish in advance of a

possible critical future data need their

authority to collect such data. The

agencies further note that the Board

currently has comparable authority to

collect a supplement to the FR Y–9C

bank holding company report.

The agencies would expect to use

their authority to collect a Call Report

supplement infrequently. Furthermore,

to ensure that the exercise of this

authority is subject to proper oversight

and control, the agencies would require

the members of the Federal Financial

Institutions Examination Council to

approve the specific use of the

supplement. Thus, the Examination

Council’s Reports Task Force would not

have the delegated authority to institute

a data collection using the Call Report

supplement.

For purposes of obtaining the

authority for this supplement for future

data needs, the agencies estimate that

the burden of any data collection using

this supplement would be imposed on

no more than 10 percent of the banks

under each agencies’ supervision. In

addition, the estimated reporting burden

imposed on these banks in connection

with reporting the requested data on the

supplement would not exceed one hour

per quarter. As a consequence, the

burden of any specific supplemental

items that the Examination Council

would approve for collection under this

authority in the future could not exceed

the approved burden estimates. The

burden estimates disclosed above for the

three agencies include the estimated

burden of this proposed supplement.

H

ted data on the

supplement would not exceed one hour

per quarter. As a consequence, the

burden of any specific supplemental

items that the Examination Council

would approve for collection under this

authority in the future could not exceed

the approved burden estimates. The

burden estimates disclosed above for the

three agencies include the estimated

burden of this proposed supplement.

H. Loans Held for Trading Purposes

The General Instructions for Schedule

RC–C, Part I – Loans and Leases, advise

banks to exclude from Schedule RC–C

‘‘all loans and leases held for trading

purposes’’ and to report them instead as

‘‘Trading assets’’ on the Call Report

balance sheet (Schedule RC, item 5) and

in Schedule RC–D – Trading Assets and

Liabilities, if this latter schedule is

applicable. However, the instructions

for the balance sheet item for ‘‘Trading

assets’’ and for Schedule RC–D do not

explicitly refer to loans (and leases) as

trading assets, nor does the Glossary

entry for ‘‘Trading Account.’’

Accordingly, questions have been raised

concerning the circumstances in which

it may be appropriate to categorize

certain loans (and leases) as trading

assets. Trading assets are carried on the

balance sheet at fair value, with changes

in fair value (unrealized holding gains

and losses) recognized in earnings.

The agencies have reviewed the

accounting literature for guidance on

the financial statement presentation and

disclosure of loans designated as held

for trading. This review included

consideration of Financial Accounting

Standards Board (FASB) No. 65,

Accounting for Certain Mortgage

Banking Activities (FAS 65), as

amended; FASB Statement No. 91,

Accounting for Nonrefundable Fees and

Costs Associated with Originating or

Acquiring Loans and Initial Direct Costs

of Leases (FAS 91), as amended; FASB

Statement No

loans designated as held

for trading. This review included

consideration of Financial Accounting

Standards Board (FASB) No. 65,

Accounting for Certain Mortgage

Banking Activities (FAS 65), as

amended; FASB Statement No. 91,

Accounting for Nonrefundable Fees and

Costs Associated with Originating or

Acquiring Loans and Initial Direct Costs

of Leases (FAS 91), as amended; FASB

Statement No. 115, Accounting for

Certain Investments in Debt and Equity

Securities (FAS 115); the FASB staff’s

Implementation Guide for FAS 115; and

chapters 5, 6, and 8 of the current (May

2000) edition of Audit and Accounting

Guide – Banks and Savings Institutions

(Audit Guide), published by the

American Institute of Certified Public

Accountants.

In particular, paragraph 6.74 of the

Audit Guide’s chapter on loans explains

that ‘‘management’s disclosure in the

summary of significant accounting

policies should include the basis of

accounting for loans and lease

financings, both held in a portfolio and

held for sale.’’ In the two introductory

paragraphs of the loan chapter’s section

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entitled ‘‘Accounting and Financial

Reporting’’ (paragraphs 6.48 and 6.49),

the Audit Guide describes the basis of

reporting for ‘‘portfolio’’ loans and

‘‘held–for–sale’’ loans, neither of which

is the market (fair) value reporting basis

applicable to trading assets. Paragraph

6.01 of the Audit Guide notes that banks

‘‘sell loans or portions of loans, and

securitize loans’’ and states that these

two activities are discussed in chapter 8,

but does not mention loans held for

trading purposes. A review of chapter 8,

‘‘Mortgage Banking Activities and Loan

Sales,’’ also reveals no references to

loans held for trading purposes or

carried at market (fair) value

graph

6.01 of the Audit Guide notes that banks

‘‘sell loans or portions of loans, and

securitize loans’’ and states that these

two activities are discussed in chapter 8,

but does not mention loans held for

trading purposes. A review of chapter 8,

‘‘Mortgage Banking Activities and Loan

Sales,’’ also reveals no references to

loans held for trading purposes or

carried at market (fair) value.

Question 35 in the FASB staff’s

Implementation Guide for FAS 115 asks

whether an institution that acquires a

security without the intent to sell it in

the near term may classify the security

in the trading category. The staff

answered this question is in the

affirmative, stating that the

‘‘[c]lassification of a security as trading

is not precluded simply because the

enterprise does not intend to sell it in

the near term.’’ However, Appendix C

(paragraph 137) of FAS 115 defines both

‘‘security’’ and ‘‘debt security’’ for

purposes of this accounting standard.

The definition of the term ‘‘debt

security’’ states that ‘‘loans receivable

arising from consumer, commercial, and

real estate lending activities of financial

institutions are examples of receivables

that do not meet the definition of

security; thus, those receivables are not

debt securities (unless they have been

securitized, in which case they would

meet the definition).’’ Therefore, loans

do not fall within the scope of FAS 115.

Given the relatively extensive amount

of guidance in the accounting literature

on accounting for loans as ‘‘portfolio’’

loans and ‘‘held–for–sale’’ loans, but the

sparse guidance on loans ‘‘carried at

market value’’ or designated as trading

assets, the agencies believe that, under

generally accepted accounting

principles, it is appropriate in only

limited circumstances for banks to

designate loans as held for trading and

account for them at fair value, with

changes in fair value recognized in

earnings

’’

loans and ‘‘held–for–sale’’ loans, but the

sparse guidance on loans ‘‘carried at

market value’’ or designated as trading

assets, the agencies believe that, under

generally accepted accounting

principles, it is appropriate in only

limited circumstances for banks to

designate loans as held for trading and

account for them at fair value, with

changes in fair value recognized in

earnings. In this regard, the agencies do

not believe that the trading

classification option accorded securities

at acquisition by the FASB’s response to

Question 35 in the FAS 115

Implementation Guide should be

extended to loans.

Accordingly, the agencies propose to

provide guidance for regulatory

reporting purposes on the use of the

trading account designation for loans by

revising the Glossary entry for ‘‘Trading

Account’’ in the Call Report

instructions. Conforming changes would

be made elsewhere in the instructions

where appropriate. A new second

paragraph of the ‘‘Trading Account’’

Glossary entry would read as follows:

There is a rebuttable presumption that

loans and leases (hereafter, loans)

should not be reported as trading assets.

In order to overcome this presumption

for particular loans, a bank must

demonstrate, from the pattern and

practice of its activity, that it is

acquiring these loans principally for the

purpose of selling them in the near term

with the objective of generating profits

on short–term differences in price.

Thus, such loans are held for only a

short period of time (generally not

months or years). This presumption is

not overcome if a bank acquires loans

(through origination or purchase) with

the intent or expectation that they may

or will be sold at some date in the

future. In addition, loans acquired and

held for securitization purposes should

not be reported as trading assets, but

should be reported as loans held for

sale.

I

hort period of time (generally not

months or years). This presumption is

not overcome if a bank acquires loans

(through origination or purchase) with

the intent or expectation that they may

or will be sold at some date in the

future. In addition, loans acquired and

held for securitization purposes should

not be reported as trading assets, but

should be reported as loans held for

sale.

I. Number and Amount of Deposit

Accounts

Schedule RC–O, Memorandum item

1, collects information on the number

and amount of deposit accounts of (a)

$100,000 or less and (b) more than

$100,000. This information provides the

basis for calculating ‘‘simple estimates’’

of the amount of insured and uninsured

deposits. The captions for these

memorandum items explicitly refer to

$100,000, which is the current deposit

insurance limit. Given the purpose of

these memorandum items, the dollar

amount cited in the caption would need

to be changed if the deposit insurance

limit were to change, which Congress is

considering. To ensure that the dollar

amount cited in the caption changes

automatically as a function of the

deposit insurance limit in effect on the

report date, the caption for

Memorandum item 1 would be

footnoted to state that the specific dollar

amounts used as the basis for reporting

the number and amount of deposit

accounts in Memorandum items 1.a and

1.b reflect the deposit insurance limits

in effect on the report date. The

instructions for this Memorandum item

would be similarly clarified.

J. Reduction in the Filing Period for

Banks with More than One Foreign

Office

Banks are required to submit their

Call Reports electronically so that the

reported data are received by the

banking agencies’ electronic collection

agent no later than 30 days after the

quarter–end report date, e.g., by July 30

for the June 30 report. This 30–day

filing period applies to nearly all banks

ified.

J. Reduction in the Filing Period for

Banks with More than One Foreign

Office

Banks are required to submit their

Call Reports electronically so that the

reported data are received by the

banking agencies’ electronic collection

agent no later than 30 days after the

quarter–end report date, e.g., by July 30

for the June 30 report. This 30–day

filing period applies to nearly all banks.

However, fewer than one half of one

percent of all banks are permitted an

additional 15 days to file their Call

Report data, e.g., by August 14 for the

June 30 report. The approxmiately 40

banks that are eligible for this lengthier

filing period are institutions that have

more than one foreign office, other than

a ‘‘shell’’ branch or an International

Banking Facility. Of these banks, nearly

half have only 2 foreign offices and just

6 have more than 20 foreign offices. The

9 largest banks with more than one

foreign office each have more than $100

billion in total assets, with the assets of

the remaining banks ranging down to

less than $5 billion.

The number of banks with between $5

and $100 billion in total assets that do

not have more than one foreign office

exceeds the number in this size range

that have more than one foreign office.

The banks in this former group are

required to submit their Call Reports

within 30 days after quarter–end, while

the banks in the latter group have the

additional 15–day filing period

available to them.

The longer filing period for banks

with more than one foreign office delays

the availability to the agencies, as well

as to banks and the general public, of

timely data on the condition and

performance of the banking industry

and the direction in which various

indicators, such as deposit flows and

earnings, are moving. Critical to the

agencies’ analyses of the industry are

the data from the largest banks, nearly

all of which have 45 days in which to

file their Call Reports because they have

more than one foreign office

the general public, of

timely data on the condition and

performance of the banking industry

and the direction in which various

indicators, such as deposit flows and

earnings, are moving. Critical to the

agencies’ analyses of the industry are

the data from the largest banks, nearly

all of which have 45 days in which to

file their Call Reports because they have

more than one foreign office. With more

timely receipt of Call Report data from

all institutions, the agencies can identify

the risks in the banking industry sooner

and provide the results of their analyses

back to bankers and the marketplace

earlier when the data may be more

useful for decision–making purposes.

The importance of making information

available to the marketplace within

shorter timeframes can be seen in the

Securities and Exchange Commission’s

decision on August 27, 2002, to

accelerate the filing deadlines for the

quarterly and annual reports that are

required from larger public companies

under the federal securities laws.

Accordingly, the agencies are

proposing to eliminate the additional

15–day period that banks with more

than one foreign office have for filing

their Call Reports, effective with the

reports for June 30, 2003. Thus, the

submission deadline for the second

quarter 2003 Call Reports for all banks

would be July 30, 2003.

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to eliminate the additional

15–day period that banks with more

than one foreign office have for filing

their Call Reports, effective with the

reports for June 30, 2003. Thus, the

submission deadline for the second

quarter 2003 Call Reports for all banks

would be July 30, 2003.

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68236

Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

1 See Section 7(b)(2)(A)(iv)(1) of the Federal

Deposit Insurance Act (12 U.S.C.

1817(b)(2)(A)(iv)(1)).

The agencies acknowledge that banks

with foreign offices are asked to report

a larger amount of data in their Call

Reports than banks without foreign

offices are required to provide in their

reports. The agencies also recognize,

from comments received on previous

proposals to reduce the filing period for

banks with more than one foreign office

and from more recent conversations

with bankers, that shortening this

period will impose additional costs on

the affected institutions. These banks

will need to implement changes in their

systems and quality review processes to

ensure that their publicly–available Call

Report data continue to be of high

quality despite the reduced amount of

time for completing these reports.

Therefore, the agencies believe that

scheduling the effective date for the

reduction in the filing period to be June

30, 2003, rather than March 31, 2003,

the quarter when changes in Call Report

requirements are customarily

implemented, will provide a more

reasonable amount of time for affected

banks to update their systems and

processes in a manner that considers

both the burden of this change and the

benefit of expedited collection of the

data.

K

ate for the

reduction in the filing period to be June

30, 2003, rather than March 31, 2003,

the quarter when changes in Call Report

requirements are customarily

implemented, will provide a more

reasonable amount of time for affected

banks to update their systems and

processes in a manner that considers

both the burden of this change and the

benefit of expedited collection of the

data.

K. Early Collection of Deposit Items

from Certain Banks with Foreign Offices

The FDIC is required to maintain the

deposit insurance funds that it

administers at a minimum level known

as the Designated Reserve Ratio, which

is set at 1.25 percent of estimated

insured deposits.1 The insurance fund

ratios are calculated by dividing the

insurance fund level by the estimated

amount of insured deposits. The FDIC

Board of Directors is required

semiannually to set assessment rates for

the premiums to be paid by insured

depository institutions to ensure that

the insurance fund ratios are maintained

at the Designated Reserve Ratio. To do

this effectively and without burdening

institutions with unnecessary insurance

premiums, the FDIC needs a timely and

reliably estimated measure of insurance

fund ratios, particularly when those

levels are likely to be near or below the

statutory target of 1.25 percent.

Among the information that banks

report in the Call Report is the amount

of total deposits in domestic offices

(Schedule RC, item 13.a) and the

estimated amount of uninsured deposits

(Schedule RC–O, Memorandum item 2).

These amounts are used to calculate the

insurance fund ratio. For most banks,

Call Reports must be received not later

than 30 days after the end of the quarter.

However, for banks with more than one

foreign office, which includes most of

the largest banks in the United States,

the Call Report must be received not

later than 45 days after quarter–end

until the proposed elimination of this

extended filing period takes effect in

June 2003 as discussed above

st banks,

Call Reports must be received not later

than 30 days after the end of the quarter.

However, for banks with more than one

foreign office, which includes most of

the largest banks in the United States,

the Call Report must be received not

later than 45 days after quarter–end

until the proposed elimination of this

extended filing period takes effect in

June 2003 as discussed above. About 40

banks are eligible for this 45–day

submission period.

Because of the timing of the

semiannual assessment rate–setting

schedule and the proposed June 2003

effective date for the elimination of the

extended filing period, the FDIC may

need insured deposit data from the

banks that have 45 days in which to file

their March 2003 Call Report earlier

than the May 15, 2003, submission

deadline for these banks. To meet

statutory and regulatory timeframes,

which currently require the FDIC Board

to announce the semiannual assessment

rate schedules on approximately May 15

and November 15 each year, the Board

must meet to decide on the rate

schedule for the next semiannual period

in early May and November. If any of

the banks with more than one foreign

office files its March 2003 Call Report

near the 45–day submission deadline of

May 15, 2003, then the most reliable

estimate of the amount of insured

deposits available to the FDIC Board

when it sets assessment rates for the

next semiannual period early in those

months will include Call Report data

that is approximately 4 1/2 months old,

i.e., data as of the preceding December

31.

Using 4 1/2–month old data is

problematic for the FDIC when there is

a reasonable likelihood that an

insurance fund ratio, such as the Bank

Insurance Fund ratio, could fall below

its 1.25 percent Designated Reserve

Ratio, which is a distinct possibility any

time that a fund ratio is near that target

ratio

that is approximately 4 1/2 months old,

i.e., data as of the preceding December

31.

Using 4 1/2–month old data is

problematic for the FDIC when there is

a reasonable likelihood that an

insurance fund ratio, such as the Bank

Insurance Fund ratio, could fall below

its 1.25 percent Designated Reserve

Ratio, which is a distinct possibility any

time that a fund ratio is near that target

ratio. If the data that the FDIC Board

uses to determine an insurance fund

ratio suggests that the ratio has fallen

below the Designated Reserve Ratio, the

Board may determine that it is necessary

to charge institutions higher insurance

premiums to increase assessment

revenue and bring the fund ratio ratio

back up to its statutory requirement.

Using incomplete Call Report data

also could lead the FDIC Board to make

improper pricing decisions about

insurance premiums. The data on

domestic office deposits and estimated

uninsured deposits received from

institutions that file their Call Reports

within 30 days of the March 31, 2003,

report date may not be representative of

the overall industry–wide trend for that

date. Accordingly, the absence of the

March 31, 2003, data from institutions

that file their reports within 45 days

after this dates could contribute to a

decision by the FDIC Board that results

in an overpricing or underpricing of

assessment rates.

Thus, the FDIC proposes to obtain

information on the level of domestic

office deposits and estimated uninsured

deposits from certain institutions on or

about May 1, 2003, which is

approximately two weeks before the

date by which these institutions are

required to submit this information in

their Call Reports. This information–

gathering effort would be accomplished

via telephone calls from the FDIC to

appropriate staff at these institutions,

who would then supply the requested

information over the telephone, by e–

mail, or by fax

s on or

about May 1, 2003, which is

approximately two weeks before the

date by which these institutions are

required to submit this information in

their Call Reports. This information–

gathering effort would be accomplished

via telephone calls from the FDIC to

appropriate staff at these institutions,

who would then supply the requested

information over the telephone, by e–

mail, or by fax. At that stage in their Call

Report preparation process, the FDIC

expects that these institutions will

already have at least preliminary

numbers for these two deposit items.

Based on historical experience, fewer

than 20 institutions with multiple

foreign offices would be directed to

provide the FDIC with the amounts then

available for these two items from their

Call Report preparation process. The

preliminary information reported by

these institutions will not be provided

to the public. Nevertheless, with this

information, the FDIC staff will be able

to more confidently advise the FDIC

Board of the insurance fund ratios in

early May 2003 and thereby avoid

mispricing decisions.

The FDIC has separately requested

and received approval from OMB

pursuant to OMB’s emergency

processing procedures to collect

information in early November 2002 on

domestic office deposits and estimated

uninsured deposits as of September 30,

2002, from not more than 20 large banks

with multiple foreign offices. (OMB

Control No. 3064–0144, which expires

December 31, 2002.) (See 67 Fed. Reg.

60684, September 26, 2002.) Under

these emergency processing procedures,

however, OMB’s approval of the FDIC’s

proposal enables the FDIC to contact

these institutions on a one–time basis in

early November 2002. Accordingly, the

FDIC is now seeking the authority to

collect these two items on a preliminary

basis in May 2003 from not more than

20 banks with multiple foreign offices

ed. Reg.

60684, September 26, 2002.) Under

these emergency processing procedures,

however, OMB’s approval of the FDIC’s

proposal enables the FDIC to contact

these institutions on a one–time basis in

early November 2002. Accordingly, the

FDIC is now seeking the authority to

collect these two items on a preliminary

basis in May 2003 from not more than

20 banks with multiple foreign offices.

The FDIC would exercise this authority

only if the insurance fund ratio as of

May 31, 2003, is expected to be at or

near the Designated Reserve Ratio level

of 1.25 percent.

L. Earlier Release of Individual Bank

Call Reports

At present, the agencies wait until

they have completed the data validation

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68237

Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

process for all 8,500 banks that file Call

Reports before the Call Reports for a

particular quarter–end report date are

made available to the public. This

simultaneous release of all bank Call

Reports occurs some 60–75 days after

the report date. However, the data

validation process for most bank Call

Reports is generally completed at a

much earlier date. By delaying the

release of these reports, the information

about a bank’s condition and

performance contained in its most

recent quarter–end report is less useful

to the public than if the report data had

been made available at an earlier date.

Because the usefulness of a bank’s

report data goes hand–in–hand with the

timeliness of the data, the agencies are

proposing to change their release date

for individual bank Call Reports. Under

this proposal, beginning perhaps as

early as the Call Reports for March 31,

2003, the agencies would begin to make

each bank’s Call Report available to the

public on the FDIC’s Internet Web site

(www.fdic.gov) as soon as they complete

the data validation process for that

bank’s report

he data, the agencies are

proposing to change their release date

for individual bank Call Reports. Under

this proposal, beginning perhaps as

early as the Call Reports for March 31,

2003, the agencies would begin to make

each bank’s Call Report available to the

public on the FDIC’s Internet Web site

(www.fdic.gov) as soon as they complete

the data validation process for that

bank’s report. This would mean that,

after any edit exceptions identified in a

bank’s Call Report have been resolved

and the analysis of the report has been

completed, the public would be able to

access the report (except for any

confidential information). As a result,

individual bank data would be available

to the public on a more timely basis

than at present.

M. Criteria for Acceptance of Call

Reports

On August 1, 2002, the FFIEC, on

behalf of the agencies, issued a Request

for Proposal for the design and

implementation of a new business

model for processing Call Reports with

a target effective date of March 2004. A

principal feature of this new model

would be a central data repository to

collect, validate, manage and distribute

Call Report information. As part of the

introduction of this new business

model, the agencies would change the

manner in which Call Reports would be

edited.

Currently, after the agencies receive a

bank’s electronically submitted Call

Report, the report is subjected to

numerous edit checks to assess the

accuracy and reasonableness of the data

the bank has submitted. Validity edits

verify the accuracy of reported data, e.g.,

whether the individual items in a report

schedule add up to the reported total

and whether an item reported in one

schedule agrees with the amount

reported for the same item in another

schedule. Validity edits include both

mathematical and logical tests

to assess the

accuracy and reasonableness of the data

the bank has submitted. Validity edits

verify the accuracy of reported data, e.g.,

whether the individual items in a report

schedule add up to the reported total

and whether an item reported in one

schedule agrees with the amount

reported for the same item in another

schedule. Validity edits include both

mathematical and logical tests. Quality

edits test the reasonableness of data and

include tests against historical

performance and other relational tests,

e.g., whether the amount reported for a

year–to–date item is greater than or

equal to the amount reported for the

same item in the previous quarter and

whether the fair value reported for a

category of securities falls within a

specified range of the amortized cost

reported for these securities.

If this validation process identifies

any edit exceptions in a bank’s report,

an agency Call Report analyst normally

contacts the bank and explains the edit

exceptions detected in the bank’s report.

The bank then reviews the reported data

associated with these edit exceptions

and provides the Call Report analyst

with any necessary corrections and/or

describes the underlying facts and

circumstances that explain why the data

are correct as reported. The agencies’

follow–up with a bank on edit

exceptions typically occurs by

telephone and takes place anywhere

from one day to three or four weeks after

a bank has submitted its report.

Under the new business model, the

validation process will take place in

conjunction with a bank’s submission of

its Call Report data to the agencies. The

central data repository will contain all

of the edit criteria and formulas, where

they would be publicly available. This

will enable the edits to be incorporated

into the Call Report software a bank

uses to prepare and submit its report to

the agencies, which means that edit

exceptions will be identified while a

bank is completing its report

n of

its Call Report data to the agencies. The

central data repository will contain all

of the edit criteria and formulas, where

they would be publicly available. This

will enable the edits to be incorporated

into the Call Report software a bank

uses to prepare and submit its report to

the agencies, which means that edit

exceptions will be identified while a

bank is completing its report. The bank

will then be able to correct its report

data to eliminate any validity edit

exceptions. The bank will also be

provided a method for supplying

explanatory comments concerning any

quality edit exceptions.

Once the central data repository is

implemented, which is targeted for

March 2004, the agencies are proposing

that they will not accept a bank’s Call

Report submission if it contains any

validity edit exceptions and lacks

explanatory comments for any quality

edit exceptions. Because a bank will be

aware of any edit exceptions while its

staff is completing its Call Report, the

bank’s follow–up on these exceptions

will be immediate rather than after–the–

fact as it is under the agencies’ current

approach to data validation. Thus,

although the agencies are proposing to

change the manner in which banks

provide information to respond to edit

exceptions identified in their Call

Reports, including requiring the

submission of explanatory comments

concerning quality edit exceptions, this

change should produce a net decrease in

reporting burden on banks by reducing

subsequent questions from the agencies.

Furthermore, it should result in quicker

validation, acceptance, disclosure and

use of individual bank Call Report data.

In anticipation of this change in the

data validation process, the agencies

note that they have established a single

set of validation criteria and have

published the criteria for the March,

June and September 2002 Call Report

data on the FFIEC web site for banks’

reference and use

it should result in quicker

validation, acceptance, disclosure and

use of individual bank Call Report data.

In anticipation of this change in the

data validation process, the agencies

note that they have established a single

set of validation criteria and have

published the criteria for the March,

June and September 2002 Call Report

data on the FFIEC web site for banks’

reference and use. The agencies also

have made this material available to the

Call Report software vendors. Beginning

in September 2002, some Call Report

software products will include a feature

that enables a bank, at its option, to

provide explanatory comments for edit

exceptions to the banking agencies.

III. Request for Comment

Public comment is requested on all

aspects of this proposal. In addition,

comments are invited on:

(a) Whether the proposed revisions to

the Call Report collections of

information are necessary for the proper

performance of the agencies’ functions,

including whether the information has

practical utility;

(b) The accuracy of the agencies’

estimates of the burden of the

information collections as they are

proposed to be revised, including the

validity of the methodology and

assumptions used;

(c) Ways to enhance the quality, utility,

and clarity of the information to be

collected;

(d) Ways to minimize the burden of

information collections on respondents,

including through the use of automated

collection techniques or other forms of

information technology; and

mation collections as they are

proposed to be revised, including the

validity of the methodology and

assumptions used;

(c) Ways to enhance the quality, utility,

and clarity of the information to be

collected;

(d) Ways to minimize the burden of

information collections on respondents,

including through the use of automated

collection techniques or other forms of

information technology; and

(e) Estimates of capital or start up costs

and costs of operation, maintenance,

and purchase of services to provide

information.

Comments submitted in response to

this Notice will be shared among the

agencies and will be summarized or

included in the agencies’ requests for

OMB approval. All comments will

become a matter of public record.

Written comments should address the

accuracy of the burden estimates and

ways to minimize burden as well as

other relevant aspects of the information

collection request.

Dated: October 23, 2002.

Mark J. Tenhundfeld,

Assistant Director, Legislative and Regulatory

Activities Division,Office of the Comptroller

of the Currency.

Board of Governors of the Federal Reserve

System, November 4, 2002.

Jennifer J. Johnson,

Secretary of the Board.

Dated at Washington, D.C., this the 23rd

day of October, 2002.

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68238

Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices

FEDERAL DEPOSIT INSURANCE

CORPORATION

Robert E. Feldman,

Executive Secretary

[FR Doc. 02–28435 Filed 11–7–02; 8:45 am]

BILLING CODE: OCC: 4810–33–S 1/3; Board: 6210–01–S;

1/3; FDIC: 6714–01–S; 1/3

DEPARTMENT OF THE TREASURY

Customs Service

Modification and Clarification of

Procedures of the National Customs

Automation Program Test Regarding

Reconciliation; Correction

AGENCY: Customs Service, Treasury.

ACTION: General notice; correction

E. Feldman,

Executive Secretary

[FR Doc. 02–28435 Filed 11–7–02; 8:45 am]

BILLING CODE: OCC: 4810–33–S 1/3; Board: 6210–01–S;

1/3; FDIC: 6714–01–S; 1/3

DEPARTMENT OF THE TREASURY

Customs Service

Modification and Clarification of

Procedures of the National Customs

Automation Program Test Regarding

Reconciliation; Correction

AGENCY: Customs Service, Treasury.

ACTION: General notice; correction.

SUMMARY: On September 27, 2002,

Customs published a document in the

Federal Register which announced

modifications to the Customs

Automated Commercial System (ACS)

Reconciliation prototype test and

clarified certain aspects of the test. The

notice stated that among the topics

related to the test for which Customs

was providing clarifications and

reminders was the ‘‘right to file

Reconciliation entries.’’ The language

reminding test participants who has the

right to file entries under the test was

inadvertently omitted from the notice.

This document sets forth the omitted

language.

DATES: Effective as of November 8, 2002.

FOR FURTHER INFORMATION CONTACT: Mr.

John Leonard at (202) 927–0915 or Ms.

Christine Furgason at (202) 927–2293.

Additional information regarding the

test can be found at http://

www.customs.gov/recon. Email

inquiries may be sent to:

Recon.Help@customs.treas.gov.

SUPPLEMENTARY INFORMATION:

Background

A general notice document was

published in the Federal Register (67

FR 61200) on Friday September 27,

2002, to announce certain modifications

to the Automated Commercial System

(ACS) Reconciliation Prototype test

regarding NAFTA Reconciliation

entries, the method for filing

Reconciliation entries covering flagged

entry summaries for which liquidated

damages have been assessed, acceptance

of compact disks for Reconciliation

spreadsheets, and applicability to test

participants of previously suspended

regulatory provisions of part 111,

Customs Regulations

System

(ACS) Reconciliation Prototype test

regarding NAFTA Reconciliation

entries, the method for filing

Reconciliation entries covering flagged

entry summaries for which liquidated

damages have been assessed, acceptance

of compact disks for Reconciliation

spreadsheets, and applicability to test

participants of previously suspended

regulatory provisions of part 111,

Customs Regulations. The notice also

provided clarifications and reminders to

test participants regarding certain other

aspects of the test and announced a new

address for Reconciliation submissions

for the port of NY/Newark.

In the third paragraph of the

‘‘Background’’ section of the general

notice, it stated that among the topics

related to the test for which Customs

was providing clarifications and

reminders was the ‘‘right to file

Reconciliation entries.’’ Inadvertently,

the language reminding Reconciliation

test participants who has the right to file

entries under the test was omitted from

the ‘‘Clarifications and Reminders’’

section of the notice.

This document sets forth the omitted

language.

Correction

In general notice FR Doc 02–24588,

published on September 27, 2002 (67 FR

61200), make the following correction:

On page 61204, in the second column,

immediately before the section entitled

‘‘Updated Address and ABI Filing

Information for NY/Newark Port 1001,’’

insert the following section:

Right to File Reconciliation Entries

Customs reminds test participants

that the filing of a Reconciliation entry,

like the filing of a regular consumption

entry, is governed by 19 U.S.C. 1484 and

can be done only by the importer of

record as defined in that statute.

Dated: November 5, 2002.

Jayson P. Ahern,

Assistant Commissioner, Office of Field

Operations.

[FR Doc. 02–28464 Filed 11–7–02; 8:45 am]

BILLING CODE 4820–02–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

[PS–54–89]

Proposed Collection; Comment

Request for Regulation Project

AGENCY: Internal Revenue Service (IRS),

Treasury

e only by the importer of

record as defined in that statute.

Dated: November 5, 2002.

Jayson P. Ahern,

Assistant Commissioner, Office of Field

Operations.

[FR Doc. 02–28464 Filed 11–7–02; 8:45 am]

BILLING CODE 4820–02–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

[PS–54–89]

Proposed Collection; Comment

Request for Regulation Project

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice and request for

comments.

SUMMARY: The Department of the

Treasury, as part of its continuing effort

to reduce paperwork and respondent

burden, invites the general public and

other Federal agencies to take this

opportunity to comment on proposed

and/or continuing information

collections, as required by the

Paperwork Reduction Act of 1995,

Public Law 104–13 (44 U.S.C.

3506(c)(2)(A)). Currently, the IRS is

soliciting comments concerning an

existing final regulation, PS–54–89 (TD

8444). Applicable Conventions Under

the Accelerated Cost Recovery System

(§ 1.168(d)–1(b)(7)).

DATES: Written comments should be

received on or before January 7, 2003, to

be assured of consideration.

ADDRESSES: Direct all written comments

to Glenn Kirkland, Internal Revenue

Service, room 6411, 1111 Constitution

Avenue NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or

copies of the regulation should be

directed to Larnice Mack (202) 622–

3179, or through the Internet

(Larnice.Mack@irs.gov), Internal

Revenue Service, room 6407, 1111

Constitution Avenue NW., Washington,

DC 20224.

SUPPLEMENTARY INFORMATION:

Title: Applicable Conventions Under

the Accelerated Cost Recovery System.

OMB Number: 1545–1146. Regulation

Project Number: PS–54–89 Final.

Abstract: The regulations describe the

time and manner of making the notation

required to be made on Form 4562,

under certain circumstances when the

taxpayer transfers property in certain

non-recognition transactions

20224.

SUPPLEMENTARY INFORMATION:

Title: Applicable Conventions Under

the Accelerated Cost Recovery System.

OMB Number: 1545–1146. Regulation

Project Number: PS–54–89 Final.

Abstract: The regulations describe the

time and manner of making the notation

required to be made on Form 4562,

under certain circumstances when the

taxpayer transfers property in certain

non-recognition transactions. The

information is necessary to monitor

compliance with section 168 of the

Internal Revenue Code.

Current Actions: There is no change to

this existing regulation.

Type of Review: Extension of a

currently approved collection.

Affected Public: Business or other for-

profit organizations, and farms.

Estimated Number of Respondents:

700.

Estimated Time Per Respondent: 6

min.

Estimated Total Annual Burden

Hours: 70 hours.

The following paragraph applies to all

of the collections of information covered

by this notice:

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information

displays a valid OMB control number.

Books or records relating to a collection

of information must be retained as long

as their contents may become material

in the administration of any internal

revenue law. Generally, tax returns and

tax return information are confidential,

as required by 26 U.S.C. 6103.

Request for Comments: Comments

submitted in response to this notice will

be summarized and/or included in the

request for OMB approval. All

comments will become a matter of

public record. Comments are invited on:

(a) Whether the collection of

information is necessary for the proper

performance of the functions of the

VerDate 0ct<31>2002

16:24 Nov 07, 2002

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