Proposed Agency Information Collection Activities; Comment Request
| Citation | 84 FR 51569 |
| Record Number | 2019-21064 |
| Published date | 30 September 2019 |
| Section | Notices |
| Court | Federal Reserve System |
Federal Register, Volume 84 Issue 189 (Monday, September 30, 2019)
[Federal Register Volume 84, Number 189 (Monday, September 30, 2019)]
[Notices]
[Pages 51569-51572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21064]
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FEDERAL RESERVE SYSTEM
Proposed Agency Information Collection Activities; Comment
Request
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice, request for comment.
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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
invites comment on a proposal to extend for three years, without
revision, the Recordkeeping and Disclosure Requirements Associated with
Regulation RR (FR RR; OMB No. 7100-0372).\1\
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\1\ The internal Agency Tracking Number previously assigned by
the Board to this information collection was ``Reg RR.'' The Board
is changing the internal Agency Tracking Number to ``FR RR'' for the
purpose of consistency.
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DATES: Comments must be submitted on or before November 29, 2019.
ADDRESSES: You may submit comments, identified by FR RR, by any of the
following methods:
Agency website: https://www.federalreserve.gov/. Follow
the instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
Email: [email protected]. Include the OMB
number in the subject line of the message.
FAX: (202) 452-3819 or (202) 452-3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments are available from the Board's website at
https://www.federalreserve.gov/apps/foia/proposedregs.aspx as
submitted, unless modified for technical reasons or to remove
personally identifiable information at the commenter's request.
Accordingly, comments will not be edited to remove any identifying or
contact information. Public comments may also be viewed electronically
or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the
Board requires that visitors make an appointment to inspect comments.
You may do so by calling (202) 452-3684. Upon arrival, visitors will be
required to present valid government-issued photo identification and to
submit to security screening in order to inspect and photocopy
comments.
Additionally, commenters may send a copy of their comments to the
Office of Management and Budget (OMB) Desk Officer--Shagufta Ahmed--
Office of Information and Regulatory Affairs, Office of Management and
Budget, New Executive Office Building, Room 10235, 725 17th Street NW,
Washington, DC 20503, or by fax to (202) 395-6974.
FOR FURTHER INFORMATION CONTACT: A copy of the Paperwork Reduction Act
(PRA) OMB submission, including the reporting form and instructions,
supporting statement, and other documentation will be placed into OMB's
public docket files, if approved. These documents will also be made
available on the Board's public website at https://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested
from the agency clearance officer, whose name appears below.
Federal Reserve Board Clearance Officer--Nuha Elmaghrabi--Office of
the Chief Data Officer, Board of Governors of the Federal Reserve
System, Washington, DC 20551, (202) 452-3829.
SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board
authority under the PRA to approve and assign OMB control numbers to
collections of information conducted or sponsored by the Board. In
exercising this delegated authority, the Board is directed to take
every reasonable step to solicit comment. In determining whether to
approve a collection of information, the Board will consider all
comments received from the public and other agencies.
Request for Comment on Information Collection Proposal
The Board invites public comment on the following information
collection, which is being reviewed under authority delegated by the
OMB under the PRA. Comments are invited on the following:
[[Page 51570]]
a. Whether the proposed collection of information is necessary for
the proper performance of the Board's functions, including whether the
information has practical utility;
b. The accuracy of the Board's estimate of the burden of the
proposed information collection, 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 collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
At the end of the comment period, the comments and recommendations
received will be analyzed to determine the extent to which the Board
should modify the proposal.
Proposal under OMB Delegated Authority to Extend for Three Years,
Without Revision, the Following Information Collection:
Report title: Recordkeeping and Disclosure Requirements Associated
with Regulation RR.
Agency form number: FR RR.
OMB control number: 7100-0372.
Frequency: Event generated; annual.
Respondents: Securitizers that are, or are a subsidiary of, a state
member bank, bank holding company, savings and loan holding company,
intermediate holding company, Edge or agreement corporation, foreign
banking organization, or nonbank financial company supervised by the
Board.
Estimated number of respondents: 10.
Estimated average hours per response:
Sections 244.4 and 246.4--standard risk retention: Horizontal
interests: Recordkeeping--0.5 hours, disclosures--5.5 hours; vertical
interests: Recordkeeping--0.5 hours, disclosures--2.0 hours; combined
horizontal and vertical interests: Recordkeeping--0.5 hours,
disclosures--7.5 hours;
Sections 244.5 and 246.5--revolving master trusts: Recordkeeping--
0.5 hours, disclosures--7.0 hours;
Sections 244.6 and 246.6--eligible asset-backed commercial paper
(ABCP) conduits: Recordkeeping--20.0 hours, disclosures--3.0 hours;
Sections 244.7 and 246.7--commercial mortgage-backed securities:
Recordkeeping--30.0 hours, disclosures--20.75 hours;
Sections 244.8 and 246.8--FNMA and FHLMC asset-backed securities
(ABS): Disclosures--1.5 hours;
Sections 244.9 and 246.9--open market collateralized loan
obligations (CLOs): Disclosures--20.25 hours;
Sections 244.10 and 246.10--qualified tender option bonds:
Disclosures--6.0 hours;
Sections 244.11 and 246.11--allocation of risk retention to an
originator: Recordkeeping--20.0 hours, disclosures--2.5 hours;
Sections 244.13, 244.19(g), 246.13, and 246.19(g)--exemption for
qualified residential mortgages and qualifying 3-to-4 unit residential
mortgage loans: Recordkeeping--40.0 hours, disclosures--1.25 hours;
Sections 244.15 and 246.15--exemption for qualifying commercial
loans, commercial real estate loans, and automobile loans:
Recordkeeping--0.5 hours, disclosures--20.0 hours;
Sections 244.16 and 246.16--underwriting standards for qualifying
commercial loans: Recordkeeping--40.5 hours, disclosures--1.25 hours;
Sections 244.17 and 246.17--underwriting standards for qualifying
commercial real estate (CRE) loans: Recordkeeping--40.5 hours,
disclosures--1.25 hours; and
Sections 244.18 and 246.18--underwriting standards for qualifying
automobile loans: Recordkeeping--40.5 hours, disclosures--1.25 hours.
Estimated annual burden hours: 2,114.
General description of report: The recordkeeping and disclosure
requirements in the credit risk retention rule are set forth below.
Compliance with the information collections is mandatory.
Standard Risk Retention. Section 244.4 of Regulation RR and section
246.4 of the Securities and Exchange Commission's (SEC's) credit risk
retention rule set forth the conditions that must be met by sponsors of
a securitization that elects to use the credit risk retention rule's
standard risk retention option, which may consist of an eligible
vertical interest or an eligible horizontal residual interest, as
defined by the rule, or any combination thereof. Sections 244.4(c) of
Regulation RR and section 246.4(c) of the SEC's credit risk retention
rule set forth the disclosure requirements for a sponsor that uses the
standard risk retention option.
A reasonable period of time prior to the sale of an ABS issued in
the same offering of ABS interests, a sponsor retaining any eligible
horizontal residual interest (or funding a horizontal cash reserve
account), is required to disclose to potential investors: The fair
value (or a range of fair values and the method used to determine such
range) of the eligible horizontal residual interest that the sponsor
expects to retain at the closing of the securitization transaction; the
material terms of the eligible horizontal residual interest; the
methodology used to calculate the fair value (or range of fair values)
of all classes of ABS interests; the key inputs and assumptions used in
measuring the estimated total fair value (or range of fair values) of
all classes of ABS interests, including, to the extent applicable,
certain enumerated items; and a description of the reference data set
or other historical information used to develop the key inputs and
assumptions. A reasonable time after the closing of the securitization
transaction, the sponsor must disclose: The fair value of the eligible
horizontal residual interest retained by the sponsor; the fair value of
the eligible horizontal residual interest required to be retained by
the sponsor; and a description of any material differences between the
methodology used in calculating the fair value disclosed prior to sale
and the methodology used to calculate the fair value at the time of
closing. If the sponsor retains risk through the funding of an eligible
horizontal cash reserve account, the sponsor must also disclose the
amount placed by the sponsor in the horizontal cash reserve account at
closing, the fair value of the eligible horizontal residual interest
that the sponsor is required to fund through such account, and a
description of such account.
For eligible vertical interests, a reasonable period of time prior
to the sale of an ABS issued in the same offering of ABS interests, the
sponsor is required to disclose to potential investors: The form of the
eligible vertical interest; the percentage that the sponsor is required
to retain; and a description of the material terms of the vertical
interest and the amount the sponsor expects to retain at closing. A
reasonable time after the closing of the securitization transaction,
the sponsor must disclose the amount of vertical interest retained by
the sponsor at closing, if that amount is materially different from the
amount disclosed earlier.
Section 244.4(d) of Regulation RR and section 246.4(d) of the SEC's
credit risk retention rule require a sponsor to retain the
certifications and disclosures by section 244.4 of Regulation RR and
section 246.4 of the SEC's credit risk retention rule. The sponsor must
retain these records until three years after all ABS interests are no
longer outstanding.
Revolving Pool Securitizations. Section 244.5 of Regulation RR and
section 246.5 of the SEC's credit risk retention rule require sponsors
relying
[[Page 51571]]
on the revolving pool securitization risk retention option to disclose
in writing to potential investors, a reasonable period of time prior to
the sale of an ABS, the material terms of the seller's interest and the
percentage of the seller's interest that the sponsor expects to retain
at the closing of the transaction. A reasonable time after the closing
of the transaction, the sponsor must disclose in writing: The amount of
the seller's interest that the sponsor retained at closing, if
materially different from the amount previously disclosed; the material
terms of any horizontal risk retention offsetting the seller's interest
under sections 244.5(g), 244.5(h), and 244.5(i) of Regulation RR or
sections 246.5(g), 246.5(h), or 246.5(i) of the SEC's credit risk
retention rule, as applicable; and the fair value of any horizontal
risk retention retained by the sponsor. Additionally, a sponsor must
retain these disclosures in its records until three years after all are
ABS interests are no longer outstanding.
Eligible ABCP Conduits. Section 244.6 of Regulation RR and section
246.6 of the SEC's credit risk retention rule address the requirements
for sponsors utilizing the eligible ABCP conduit risk retention option.
The sponsor must disclose to each purchaser of ABCP, before or at the
time of the first sale of ABCP to such purchaser and at least monthly
thereafter to each holder of commercial paper issued by the ABCP
conduit: The name and form of organization of the regulated liquidity
provider that provides liquidity coverage to the eligible ABCP conduit,
including a description of the material terms of such liquidity
coverage, and notice of any failure to fund; and with respect to each
ABS interest held by the ABCP conduit, the asset class or brief
description of the underlying securitized assets, the standard
industrial category code for each originator-seller that retains an
interest in the securitization transaction, and a description of the
percentage amount and form of interest retained by each originator-
seller.
A sponsor relying on the eligible ABCP conduit risk retention
option shall maintain and adhere to policies and procedures to monitor
compliance by each relevant originator-seller. If the ABCP conduit
sponsor determines that an originator-seller is no longer in
compliance, the sponsor must promptly notify the holders of the ABCP in
writing of the name and form of organization of any originator-seller
that fails to properly retain risk; the amount of ABS interests issued
by an intermediate special purpose vehicle (SPV) of such originator-
seller and held by the ABCP conduit; the name and form of organization
of any originator-seller that hedges, directly or indirectly through an
intermediate SPV; the risk retention in violation of the rule; the
amount of ABS interests issued by an intermediate SPV of such
originator-seller and held by the ABCP conduit; and any remedial
actions taken by the ABCP conduit sponsor or other party with respect
to such ABS interests.
Commercial Mortgage-Backed Securities. Section 244.7 of Regulation
RR and section 246.7 of the SEC's credit risk retention rule set forth
the requirements for sponsors relying on the commercial mortgage-backed
securities risk retention option and requires a sponsor to make, a
reasonable period of time prior to the sale of the ABS as part of the
securitization transaction, the following disclosures to potential
investors: The name and form of organization of each initial third-
party purchaser; each initial third-party purchaser's experience in
investing in commercial mortgage-backed securities; other material
information regarding each initial third-party purchaser or each
initial third-party purchaser's retention of the interest; the fair
value and purchase price of the eligible horizontal residual interest
retained by each third-party purchaser; the fair value of the eligible
horizontal residual interest that the sponsor would have retained if
the sponsor had relied on retaining an eligible horizontal residual
interest under the standard risk retention option; a description of the
material terms of the eligible horizontal residual interest retained by
each initial third-party purchaser, including the same information as
is required to be disclosed by sponsors retaining horizontal interests
pursuant to section 244.4; the material terms of the applicable
transaction documents with respect to the Operating Advisor; and
representations and warranties concerning the securitized assets, a
schedule of any securitized assets that are determined not to comply
with such representations and warranties, and the factors used to
determine that such securitized assets should be included in the pool
notwithstanding that they did not comply with the representations and
warranties. A sponsor relying on the commercial mortgage-backed
securities risk retention option is also required to include in the
underlying securitization transaction documents certain provisions
related to the appointment of an operating advisor, to maintain and
adhere to policies and procedures to monitor compliance by third-party
purchasers with regulatory requirements, and to notify the holders of
the ABS interests in the event of noncompliance by a third-party
purchaser with such regulatory requirements.
Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation ABS. Section 244.8(c) of Regulation RR and section
246.8(c) of the SEC's credit risk retention rule require that a sponsor
relying on the Federal National Mortgage Association and Federal Home
Loan Mortgage Corporation risk retention option disclose to investors a
description of the manner in which it has met the credit risk retention
requirements.
Open Market CLOs. Section 244.9 of Regulation RR and section 246.9
of the SEC's credit risk retention rule set forth the requirements for
sponsors relying on the open market CLO risk retention option. A
reasonable period of time prior to the sale of ABS in the
securitization transaction, a sponsor must disclose to potential
investors a complete list of, and certain information related to, every
asset held by an open market CLO and the full legal name and form of
organization of the CLO manager.
Qualified Tender Option Bonds. Section 244.10 of Regulation RR and
section 246.10 of the SEC's credit risk retention rule set forth the
requirements for sponsors relying on the qualified tender option bond
risk retention option and requires, a reasonable period of time prior
to the sale of the ABS as part of the securitization transaction, the
following disclosures to potential investors: The name and form of
organization of the qualified tender option bond entity; a description
of the form and subordination features of the retained interest in
accordance with the disclosure obligations associated with the standard
risk retention option; the fair value of any portion of the retained
interest that is claimed by the sponsor as an eligible horizontal
residual interest; and the percentage of ABS interests issued that is
represented by any portion of the retained interest that is claimed by
the sponsor as an eligible vertical interest. In addition, to the
extent any portion of the retained interest claimed by the sponsor is a
municipal security held outside of the qualified tender option bond
entity, the sponsor must disclose the name and form of organization of
the qualified tender option bond entity; the identity of the issuer of
the municipal securities; the face value of the municipal securities
deposited into the qualified tender option bond entity; and the face
value of the municipal securities
[[Page 51572]]
retained outside of the qualified tender option bond entity by the
sponsor or its majority-owned affiliates.
Allocation of Risk Retention to an Originator. Section 244.11 of
Regulation RR and section 246.11 of the SEC's credit risk retention
rule set forth the conditions that apply when the sponsor of a
securitization allocates to originators of securitized assets a portion
of the credit risk the sponsor is required to retain. The sponsor must
provide the same disclosures required by section 244.4(c) of Regulation
RR or section 246.6(c) of the SEC's credit risk retention rule, as
applicable, and must also, a reasonable period of time prior to the
sale of the ABS as part of the securitization transaction, disclose the
following to potential investors: The name and form of organization of
any originator that acquired and retained (or will acquire and retain)
an interest in the transaction; a description of the form, amount, and
nature of such interest; and the method of payment for such interest. A
sponsor relying on this section is also required to maintain and adhere
to policies and procedures that are reasonably designed to monitor
originator compliance with the retention amount, as well as hedging,
transferring, and pledging requirements, and to promptly notify the
holders of the ABS interests issued in the transaction in the event of
originator non-compliance with such requirements.
Exemption for Qualified Residential Mortgages and Exemptions for
Securitizations of Certain Three-to-Four Unit Mortgage Loans. Sections
244.13 and 244.19(g) of Regulation RR and sections 246.13 and 246.19(g)
of the SEC's credit risk retention rule provide exemptions from the
risk retention requirements for qualified residential mortgages and
qualifying three-to-four unit residential mortgage loans that meet
certain criteria, including that the depositor with respect to the
securitization transaction certify that it has evaluated the
effectiveness of its internal supervisory controls and concluded that
the controls are effective, and that the sponsor provide a copy of the
certification to potential investors prior to sale of asset-backed
securities in the issuing entity. In addition, sections 244.13(c)(3)
and 244.19(g)(3) of Regulation RR and sections 246.13(c)(3) and
246.19(g)(3) of the SEC's credit risk retention rule provide that a
sponsor that has relied upon the exemptions will not lose the
exemptions if, after closing of the transaction, it is determined that
one or more of the residential mortgage loans does not meet all of the
criteria, provided that the depositor complies with certain specified
requirements, including prompt notice to the holders of the asset-
backed securities of any loan that is required to be repurchased by the
sponsor, the amount of such repurchased loan, and the cause for such
repurchase.
Qualifying Commercial Loans, CRE Loans, and Automobile Loans.
Section 244.15 of Regulation RR and section 246.15 of the SEC's credit
risk retention rule provide exemptions from the risk retention
requirements for qualifying commercial loans that meet the criteria
specified in section 244.16 of Regulation RR or section 246.16 of the
SEC's credit risk retention rule, qualifying CRE loans that meet the
criteria specified in section 244.17 of Regulation RR or section 246.17
of the SEC's credit risk retention rule, and qualifying automobile
loans that meet the criteria specified in section 244.18 of Regulation
RR or section 246.18 of the SEC's credit risk retention rule. A sponsor
must disclose to potential investors, a reasonable period of time prior
to the sale of asset-backed securities of the issuing entity: A
description of the manner in which the sponsor determined the aggregate
risk retention requirement for the securitization transaction after
including qualifying commercial loans, qualifying CRE loans, or
qualifying automobile loans with 0 percent risk retention. In addition,
the sponsor is required to disclose descriptions of the qualifying
commercial loans, qualifying CRE loans, and qualifying automobile loans
(qualifying assets), and descriptions of the assets that are not
qualifying assets, and the material differences between the group of
qualifying assets and the group of assets that are not qualifying
assets with respect to the composition of each group's loan balances,
loan terms, interest rates, borrower credit information, and
characteristics of any loan collateral. Additionally, a sponsor must
retain the above disclosures in its records until three years after all
ABS interests are no longer outstanding.
Underwriting Standards for Qualifying Commercial Loans,
Underwriting Standards for Qualifying CRE Loans, and Underwriting
Standards for Qualifying Automobile Loans. Sections 244.16, 244.17, and
244.18 of Regulation RR and sections 246.16, 246.17, and 246.18 of the
SEC's credit risk retention rule each require that the depositor of an
asset-backed security certify that it has evaluated the effectiveness
of its internal supervisory controls and concluded that its internal
supervisory controls are effective. The sponsor is required to provide
a copy of the certification to potential investors prior to the sale of
asset-backed securities in the issuing entity, and the sponsor must
promptly notify the holders of the asset-backed securities of any loan
included in the transaction that is required to be cured or repurchased
by the sponsor, including the principal amount of such loan and the
cause for such cure or repurchase. Additionally, a sponsor must retain
the disclosures required in sections 244.16(a)(8), 244.17(a)(10), and
244.18(a)(8) of Regulation RR or sections 246.16(a)(8), 246.17(a)(10),
and 246.18(a)(8) of the SEC's credit risk retention rule, as
applicable, in its records until three years after all ABS interests
are no longer outstanding.
Legal authorization and confidentiality: The FR RR is authorized
pursuant to section 15G of the Securities Exchange Act, which
authorizes the Board, jointly with the Office of the Comptroller of the
Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and SEC,
to prescribe risk retention regulations (15 U.S.C. 78o-11). The FR RR
is mandatory.
The FR RR contains recordkeeping and disclosure requirements that
are not submitted to the Board, so the issue of confidentiality will
not normally arise. If the Board's examiners retain a copy of the
records as part of an examination, the records may be exempt from
disclosure under exemption 8 of the Freedom of Information Act, which
exempts from disclosure matters that are ``contained in or related to
examination, operating, or condition reports prepared by, on behalf of,
or for the use of an agency responsible for the regulation or
supervision of financial institutions'' (5 U.S.C. 552(b)(8)).
Consultation outside the agency: The credit risk retention rule was
adopted on an interagency basis. The Board consulted with the OCC,
FDIC, and SEC with respect to the proposed extension, without revision,
of this collection of information.
Board of Governors of the Federal Reserve System, September 24,
2019.
Michele Taylor Fennell,
Assistant Secretary of the Board.
[FR Doc. 2019-21064 Filed 9-27-19; 8:45 am]
BILLING CODE 6210-01-P
