Supervision and Regulation Assessments of Fees for Bank Holding Companies and Savings and Loan Holding Companies With Total Consolidated Assets of $100 Billion or More
| Published date | 12 November 2019 |
| Record Number | 2019-24491 |
| Section | Proposed rules |
| Court | Federal Reserve System |
Federal Register, Volume 84 Issue 218 (Tuesday, November 12, 2019)
[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Proposed Rules]
[Pages 60944-60949]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24491]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 /
Proposed Rules
[[Page 60944]]
FEDERAL RESERVE SYSTEM
12 CFR Part 246
[Regulation TT; Docket No. R-1683]
RIN 7100-AF 63
Supervision and Regulation Assessments of Fees for Bank Holding
Companies and Savings and Loan Holding Companies With Total
Consolidated Assets of $100 Billion or More
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
is inviting comment on a proposal to amend the Board's assessment rule
(Regulation TT), pursuant to Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Dodd-Frank Act), to address amendments made by the
Economic Growth, Regulatory Relief, and Consumer Protection Act
(EGRRCPA). The proposed amendments to Regulation TT raise the minimum
threshold for being considered an assessed company from $50 billion to
$100 billion in total consolidated assets for bank holding companies
and savings and loan holding companies and adjust the amount charged to
assessed companies with total consolidated assets between $100 billion
and $250 billion to reflect changes in supervisory and regulatory
responsibilities resulting from EGRRCPA.
DATES: Comments must be received on or before January 9, 2019.
ADDRESSES: You may submit comments, identified by Docket No. 1683 and
RIN 7100 AF-63, by any of the following methods:
Agency Website: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include docket
and RIN numbers in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Ann 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 http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons or to remove sensitive
personally identifiable information at the commenter's request. Public
comments may also be viewed electronically or in paper form in Room
146, 1709 New York Avenue, Washington, DC 20006 between 9:00 a.m. and
5:00 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Anna Lee Hewko, Associate Director,
(202) 530-6260, Teresa Scott, Manager, (202) 973-6114, Naima Jefferson,
Lead Financial Institution Policy Analyst, (202) 912-4613, Mark
Greiner, Lead Financial Institution Policy Analyst, (202) 452-5290,
Kelsi Wilken, Lead Business Analyst, (202) 530-6287, Division of
Supervision and Regulation; Laurie Schaffer, Associate General Counsel
(202) 452-2272 or Daniel Hickman, Senior Counsel, (202) 973-7432, Legal
Division, Board of Governors of the Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551. For the hearing impaired only,
Telecommunication Device for the Deaf (TTD), (202) 263-4869.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Overview of the Assessment Process
III. Overview of the Assessment Proposal
A. Identification of Assessed Companies
B. Apportioning the Assessment Basis to Assessed Companies
C. Assessment Rate
IV. Impact Analysis
V. Administrative Law Matters
A. Paperwork Reduction Act Analysis
B. Regulatory Flexibility Act Analysis
C. Solicitation of Comments and Use of Plain Language
I. Introduction
Section 318 of the Dodd-Frank Act,\1\ as enacted, directed the
Board to collect assessments, fees, or other charges (assessments),
from bank holding companies and savings and loan holding companies with
$50 billion or more in total consolidated assets, and nonbank financial
companies designated by the Financial Stability Oversight Council
(Council) for supervision by the Board (collectively, assessed
companies), equal to the expenses the Board estimates are necessary or
appropriate to carry out its supervision and regulation of those
companies. The Board transfers the assessment proceeds to the U.S.
Treasury's General Account.
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\1\ Public Law 111-203, 124 Stat. 1376 (2010), section 318,
codified at section 11 of the Federal Reserve Act, 12 U.S.C. 248(s).
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The Economic Growth, Regulatory Relief, and Consumer Protection Act
(EGRRCPA) \2\ amended several provisions of the Dodd Frank Act, which
resulted in various changes to the regulatory framework such as
tailoring the application of certain prudential standards for large
banking organizations,\3\ tailoring and revising the Board's company-
run and supervisory stress test requirements, amending resolution
planning requirements, and modifying the assessment framework.
Specifically, section 401 of EGRRCPA raised the minimum size threshold
for bank holding companies and savings and loan holding companies to be
considered assessed companies from $50 billion to $100 billion in total
consolidated assets. In addition, section 401 directed the Board to
adjust the amount charged to assessed companies with total consolidated
assets between $100 billion and $250 billion to reflect any changes in
supervisory and regulatory responsibilities resulting from EGRRCPA.\4\
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\2\ Public Law 115-174, 132 Stat. 1296 (2018).
\3\ EGRRCPA raised the $50 billion minimum asset threshold for
general application of enhanced prudential standards to bank holding
companies with $250 billion, and provided the Board with discretion
to apply standards to bank holding companies with total consolidated
assets of between $100 billion and $250 billion.
\4\ In addition, EGRRCPA provided that any bank holding company,
regardless of asset size, that has been identified as a global
systemically important bank holding company under 12 CFR 217.402,
shall be considered a bank holding company with total consolidated
assets equal to or greater than $250 billion for purposes of the
assessments standards and requirements. Public Law 115-174, 132
Stat. 1296 (2018), section 401(f).
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[[Page 60945]]
II. The Assessment Process
In August 2013, the Board adopted the final rule to implement
section 318 of the Dodd Frank Act, Regulation TT,\5\ which became
effective on October 25, 2013. Regulation TT explains the Board's
assessment framework and details how the Board: (a) Determines whether
a company is an assessed company for each assessment period,\6\ (b)
estimates the total expenses that are necessary or appropriate to carry
out the supervisory and regulatory responsibilities to be covered by
the assessment, (c) determines the assessment amount for each assessed
company, and (d) bills for and collects the assessment from the
assessed companies. Since 2013, the Board has annually provided notice
of the supervision and regulation assessment on the Board's public
website.\7\
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\5\ 12 CFR part 246.
\6\ Assessment period means January 1 through December 31 of
each calendar year.
\7\ See, https://www.federalreserve.gov/supervisionreg/supervisory-assessment-fees.htm.
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III. The Assessment Proposal
The proposed rule would revise the minimum threshold for assessed
bank holding companies and savings and loan holding companies from $50
billion or more in total consolidated assets to $100 billion or more in
total consolidated assets. The proposed rule also would adjust the
amount charged to assessed companies with between $100 billion and $250
billion in total consolidated assets to reflect changes in supervisory
and regulatory responsibilities resulting from EGRRCPA. The proposal
would align the assessment framework with the Board's application of
prudential standards based on banking organizations' risk profiles. The
Board is inviting comments on all aspects of this proposed rulemaking.
A. Identification of Assessed Companies
EGRRCPA raised the asset threshold for bank holding companies and
savings and loan holding companies to be considered assessed companies
from $50 billion or more in total consolidated assets to $100 billion
or more in total consolidated assets.\8\ The proposed rule will revise
the asset threshold for bank holding companies and savings and loan
holding companies in the definition of an assessed company in
Regulation TT to reflect this change. All nonbank financial companies
designed by the Council for supervision by the Board would continue to
be assessed companies. The Board would continue to make the
determination of whether a company is an assessed company for each
assessment period, based on information reported by the company on
regulatory or other reports as determined by the Board.\9\
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\8\ In accordance with EGRRCPA, bank holding companies and
savings and loan holding companies with total consolidated assets
between $50 billion and $100 billion were not assessed for the 2018
assessment period.
\9\ All organizational structure and financial information that
the Board would use for the purpose of determining whether a company
is an assessed company, including information with respect to
whether a company has control over a U.S. bank or savings
association, must have been received by the Board on or before June
15 following that assessment period and must reflect events that
were effective on or before December 31 of the assessment period.
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B. Apportioning the Assessment Basis to Assessed Companies
Section 401 of EGRRCPA directs the Board to adjust the amount
charged to assessed companies with between $100 billion and $250
billion in total consolidated assets to reflect any changes in
supervisory and regulatory responsibilities resulting from EGRRCPA.
Consistent with section 401 of EGRRCPA, the Board has issued a final
rule (the tailoring rule) that establishes four categories for the
application of enhanced prudential standards based on certain
indicators designed to measure the risk profile of a banking
organization.\10\ In addition, concurrently with the tailoring rule,
the Board, with the Office of the Comptroller of the Currency (OCC) and
the Federal Deposit Insurance Corporation (FDIC), separately finalized
amendments to the capital and liquidity requirements of the agencies to
introduce the same risk-based categories for tailoring standards.\11\
The Board and the FDIC also finalized changes to the resolution
planning requirements (the resolution planning rule) to align with the
tailoring rule's risk-based categories, build on the Board's tailoring
of its rules and experience implementing those rules, and account for
changes to the enhanced prudential standards requirements made by
EGRRCPA.\12\ Collectively, these final rules will result in changes to
the Board's supervisory and regulatory responsibilities with respect to
certain companies, including modification of enhanced prudential
standards relating to capital, stress testing, and resolution planning.
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\10\ Prudential Standards for Large Bank Holding Companies and
Savings and Loan Holding Companies (Final Rule) 84 FR 59032
(November 1, 2019); Prudential Standards for Large Bank Holding
Companies and Savings and Loan Holding Companies (Proposed Rule), 83
FR 61408 (November 29, 2018); Prudential Standards for Large Foreign
Banking Organizations; Revisions to Proposed Prudential Standards
for Large Domestic Bank Holding Companies and Savings and Loan
Holding Companies (Proposed Rule), 84 FR 21988 (May 15, 2019).
\11\ See Changes to Applicability Thresholds for Regulatory
Capital and Liquidity Requirements (Final Rule) 84 FR 59230
(November 1, 2019); Proposed Changes to Applicability Thresholds for
Regulatory Capital and Liquidity Requirements (Proposed Rule), 83 FR
66024 (December 21, 2018).
\12\ See Resolution Plans Required (Final Rule) 84 FR 59194
(November 1, 2019); Resolution Plans Required (Proposed Rule) 84 FR
21600 (May 14, 2019).
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The Board is proposing to modify Regulation TT to incorporate the
tailoring rule's risk-based categories for purposes of adjusting the
amount charged to assessed companies with between $100 billion and $250
billion in total consolidated assets.\13\ This would align the Board's
assessment rule with its enhanced prudential standards framework for
large banking organizations and EGRRCPA-related changes to the Board's
supervision and regulation of those companies.
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\13\ See Prudential Standards for Large Bank Holding Companies
and Savings and Loan Holding Companies (Final Rule) 84 FR 59032
(November 1, 2019). The tailoring rule establishes the following
categories for the application of prudential standards:
Category I: U.S. global systemically important banks;
Category II: Domestic firms with $700 billion or more
in total consolidated assets, or $100 billion or more in total
consolidated assets and $75 billion or more in cross-jurisdictional
activity; and foreign banking organizations with $700 billion or
more in combined U.S. assets, or with $100 billion or more in
combined U.S. assets and $75 billion or more in cross jurisdictional
activity measured based on the firm's combined U.S. operations;
Category III: Domestic firms that have (a) $250 billion
or more in total consolidated assets or (b) $100 billion or more in
total consolidated assets and $75 billion or more in any of the
following risk-based indicators: Nonbank assets, weighted short-term
wholesale funding, or off-balance-sheet exposure; and foreign
banking organizations that have (a) $250 billion or more in combined
U.S. assets or (b) $100 billion or more in combined U.S. assets and
$75 billion or more in any of the following risk-based indicators:
Nonbank assets, weighted short term wholesale funding or off-
balance-sheet exposure measured based on the firm's combined U.S.
operations; and,
Category IV: Domestic firms that have total
consolidated assets equal to or greater than $100 billion but less
than $250 billion; and foreign banking organizations with at least
$100 billion in combined U.S. assets.
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Because these categories are designed to tailor supervisory and
regulatory requirements to the level of risk associated with specific
firms, the categories provide a consistent basis for adjusting the
assessments for assessed companies with between $100 billion and $250
billion in total consolidated assets.\14\ The Board proposes that
[[Page 60946]]
assessed companies subject to Category IV standards pursuant to the
tailoring rule (Category IV firms), would receive an adjusted
assessment rate, to reflect this tailoring and other EGRRCPA-related
changes to the supervision and regulation of these companies. In
addition, the Board proposes that any assessed companies that are not
subject to enhanced prudential standards outlined in Categories I
through IV pursuant to the tailoring rule (``other'' firms) \15\ would
also receive the adjusted assessment rate because the Board does not
incur the supervisory and regulatory costs associated with such
standards for those firms. Under the proposal, and consistent with
EGRRCPA and the requirements in the tailoring rule, firms with between
$100 and $250 billion in total consolidated assets that are subject to
Category I, II, or III standards would not be eligible for the adjusted
assessment rate.
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\14\ EGRRCPA acknowledges that eligibility for the adjustment
can be effected by the risk-based category of supervision and
regulation of an assessed company. Under section 401(f) of EGRRCPA,
all U.S. GSIBs (i.e., companies subject to Category I standards),
regardless of asset size, are considered to have total consolidated
assets equal to or greater than $250,000,000,000 for purposes of the
assessments standards and requirements. Public Law 115-174, 132
Stat. 1296 (2018), section 401(f).
\15\ For example, insurance savings and loan holding companies
and foreign banking organizations with small U.S. presences.
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Consistent with Regulation TT's methodology for determining whether
a company is an assessed company, the determination of whether a
company is eligible for the adjusted assessment rate will be based on
the company's status with respect to the four categories of prudential
standards in the tailoring rule as of December 31 of the assessment
period.
Question 1: What, if any, alternatives to the tailoring rule
categories should the Board consider as a basis for adjusting the
assessment charged to assessed companies from $100 billion to $250
billion in total consolidated assets?
Question 2: What, if any, challenges does the proposed December 31
``as of'' date present for determining whether an assessed company is
subject to Category I through IV standards for purposes of Regulation
TT?
C. Assessment Rate
The tailoring rule and resolution planning rule will modify the
application of certain enhanced prudential standards and supervisory
and regulatory programs for Category IV firms relating to capital
stress testing; risk management; liquidity risk management, stress
testing, and buffer requirements; single-counterparty credit limits;
and resolution planning programs.\16\ In addition, the Board has
indicated that it intends to issue a capital plan proposal that would
align capital planning requirements with the two-year supervisory
stress testing cycle and provide greater flexibility for Category IV
firms.\17\
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\16\ See Prudential Standards for Large Bank Holding Companies
and Savings and Loan Holding Companies (Final Rule) 84 FR 59032
(November 1, 2019); Changes to Applicability Thresholds for
Regulatory Capital and Liquidity Requirements, 84 FR 59230 (November
1, 2019); Resolution Plans Required (Final Rule) 84 FR 59194
(November 1, 2019).
\17\ See Prudential Standards for Large Bank Holding Companies
and Savings and Loan Holding Companies (Proposed Rule) 83 FR 61408,
61421 (November 29, 2018); Prudential Standards for Large Foreign
Banking Organizations; Revisions to Proposed Prudential Standards
for Large Domestic Bank Holding Companies and Savings and Loan
Holding Companies (Proposed Rule) 84 FR 21988, 22003 (May 15, 2019).
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As a result of these changes, the Board expects the share of its
expenses incurred in the supervision and regulation of Category IV and
``other'' firms to decline relative to the share of expenses incurred
in the supervision and regulation of assessed companies subject to
Categories I, II, and III standards (Category I, II, and III
firms).\18\ The expenses associated with these programs for Category IV
and ``other'' firms were estimated to be approximately 10 percent of
the Board's total estimated expenses for assessed companies in
2018.\19\ Accordingly, the Board proposes to adjust the amount charged
to assessed companies with total consolidated assets between $100
billion and $250 billion to reflect EGRRCPA-related changes by reducing
Category IV and ``other'' firms' share of the net assessment basis \20\
by 10 percent. The Board is providing this estimate of costs, based in
part on potential modifications to the supervisory and regulatory
framework for large banking organizations, in order for the issuance of
the assessment proposal to coincide with the issuance of the tailoring
rule and to provide sufficient opportunity for public comment. To the
extent that the actual modifications of the relevant supervisory and
regulatory programs differ from the basis for the underlying estimate
of costs, the proposed rule may be revised to reflect these changes.
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\18\ Assessed companies subject to Category I, II, and III
standards would continue to bear their share of costs for these
programs.
\19\ The Board and Reserve Banks generally do not account for
expenses on a firm-by-firm or program-by-program basis; therefore,
the share of EGRRCPA-related program costs represents an estimate
based on analysis of system-wide accounting data and time surveys.
\20\ The assessment basis is the average of the amount of total
expenses the Board estimates is necessary or appropriate to carry
out the supervisory and regulatory responsibilities for assessed
companies. 12 CFR 246.4(d). The net assessment basis is the
assessment basis net of the total $50,000 base amount charged to all
assessed companies (i.e., net assessment basis = assessment basis-(#
of assessed companies x $50,000)).
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The assessment rate for Category IV and ``other'' firms would be
determined according to the following formula, where the estimated
share of total program costs attributable to EGRRCPA-related
supervisory and regulatory changes for Category IV and ``other'' firms
is represented by the variable S:
Assessment rate for Category IV and ``other'' firms = [(Net assessment
basis x Category IV and ``other'' firms' share of the total assessable
assets of all assessed companies) x (1 - S)]
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Category IV firms and ``other'' firms' total assessable assets
The assessment rate for Category IV and ``other'' firms would be
determined by multiplying the net assessment basis by these firms'
share of the total assessable assets of all assessed companies
multiplied by 0.9 (i.e., 1-S, or 1-0.1), the product of which is then
divided by the total assessable assets of Category IV and ``other''
firms.
The assessment rate for Category I, II, and III firms would be
determined according to the following formula:
Assessment rate for Category I, II and III firms = [(Net assessment
basis x Category I, II, and III firms' share of the total assessable
assets of all assessed companies) + (Net assessment basis x Category IV
and ``other'' firms' share of total assessable assets x S)]
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Category I, II, and III firms' total assessable assets
The assessment rate for Category I, II, and III firms would be
determined by multiplying the net assessment basis by these firms'
share of the total assessable assets of all assessed companies, plus
the sum of the net assessment basis multiplied by the Category IV and
``other'' firms share of the total assessable assets multiplied by 0.1
(i.e., S), the sum of which is then divided by the total assessable
assets of Category I, II, and III firms.
The assessment formula, for calculating a specific assessed
company's assessment amount, will remain a base amount of $50,000 plus
the assessed company's total assessable assets multiplied by the
assessed company's assessment rate:
Assessment = $50,000 + (Assessed company's total assessable assets x
Assessed company's assessment rate)
Assessment Calculation Example
For purposes of illustration, based on information from the 2018
assessment period, there were 56 assessed companies with aggregate
total assessable assets of $18.6 trillion and an aggregate assessment
basis of $585.9
[[Page 60947]]
million.\21\ Using these figures, and the methodologies set forth in
this proposal, a Category IV firm with total assessable assets of $100
billion would have been required to pay an assessment of approximately
$2.9 million and a Category I firm with total assessable assets of $1
trillion would have been required to pay an assessment of approximately
$32.9 million.
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\21\ See, https://www.federalreserve.gov/supervisionreg/supervision-regulation-assessment-2018.htm.
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Question 3: What, if any, alternative methods for calculating
adjusted assessment rates should the Board consider, and why?
Question 4: The Board currently averages the assessment basis over
three years in order to reduce volatility in assessments. What, if any,
alternative approaches to the three-year average should the Board
consider and, why?
As described above, the EGRRCPA-related supervisory and regulatory
changes that are the basis for the estimated reduction in program costs
for Category IV and ``other'' firms are expected to occur beginning in
2020. Accordingly, the Board proposes that the revised assessment rates
would apply beginning with the 2020 assessment period. Consistent with
the existing assessment process, assessed companies would receive a
notice of assessment for the 2020 assessment period, using the new
assessment rates, no later than June 30, 2021. Assessed companies would
continue to have 30 calendar days from June 30 to appeal the Board's
determination (a) that the company is an assessed company or (b) of the
company's total assessable assets.
Question 5: Does the proposed rule and proposed effective date
present implementation challenges? What, if any, alternative approaches
should the Board consider? Responses should address whether the Board
should consider implementing transitional arrangements in the rule to
address these challenges.
IV. Impact Analysis
Using data from the 2018 assessment period, the change in the
minimum threshold of total consolidated assets from $50 billion to $100
billion decreased the number of assessed companies from 64 to 56. These
companies would have been charged an aggregate amount of $10.1 million,
or approximately 1.7 percent of the estimated assessment basis.
As of December 31, 2018, firms with between $100 billion and $250
billion in total consolidated assets accounted for 17 percent of total
U.S. industry assets. In 2018, an assessed company subject to Category
IV standards with $100 billion in total consolidated assets would have
been charged $3.1 million. Under the proposed rule, an assessed company
subject to Category IV standards with $100 billion in total
consolidated assets would be charged $2.9 million.
Question 6: The Board invites comment on all aspects of the impact
analysis associated with the proposal. What, if any, additional costs
and benefits should be considered? Commenters are encouraged to submit
data on potential impacts, as well as potential costs or benefits of
the proposal that the Board may not have considered.
V. Administrative Law Matters
A. Paperwork Reduction Act Analysis
Regulation TT contains a ``collection of information'' within the
meaning of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-
3521) that would be affected by the proposed rule. Specifically, under
the proposal, bank holding companies and savings and loan holding
companies with total consolidated assets of between $50 billion and
$100 billion would no longer be assessed companies, and therefore would
no longer be respondents for the reporting provision located at section
246.5(b) of Regulation TT, which permits assessed companies to submit a
written statement to appeal the Board's determination that the company
is an assessed company or its determination of the company's total
assessable assets.
In accordance with the requirements of the PRA, the Board may not
conduct or sponsor, and a respondent is not required to respond to, an
information collection unless it displays a currently valid Office of
Management and Budget (OMB) control number. Under the authority
delegated to the Board by OMB, the Board recently approved a revision
to the collection of information pursuant to Regulation TT to account
for the changes described above (OMB Control Number 7100-0369).\22\
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\22\ 84 FR 39847 (Aug. 12, 2019).
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B. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency, in connection with a proposed rule, to
prepare and make available for public comment an initial regulatory
flexibility analysis that describes the impact of a proposed rule on
small entities. However, a regulatory flexibility analysis is not
required if the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
The Small Business Administration (SBA) has defined ``small entities''
to include banking organizations with total assets of less than or
equal to $600 million.\23\ The Board has considered the potential
impact of the proposal on small entities in accordance with the RFA.
The Board believes that the proposal will not have a significant
economic impact on a substantial number of small entities.
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\23\ See 13 CFR 121.201; 84 FR 34261 (July 18, 2019).
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This notice of proposed rulemaking is being issued because section
401 of EGRRCPA raised the minimum threshold for being considered an
assessed bank holding company and savings and loan holding company from
$50 billion to $100 billion in total consolidated assets and directed
the Board to adjust the amount charged to assessed companies with
between $100 billion and $250 billion in total consolidated assets. As
discussed in the SUPPLEMENTARY INFORMATION section, the objective in
proposing this rule is to update Regulation TT to reflect the new
minimum threshold for being considered an assessed holding company and
to revise the assessment rate calculation to account for EGRRCPA-
related changes in the Board's supervisory and regulatory
responsibilities. The Board is required by section 318 of the Dodd-
Frank Act to collect assessments equal to the total expenses the Board
estimates are necessary or appropriate to carry out supervisory and
regulatory responsibilities with respect to assessed companies. Section
401 of EGRRCPA directs to Board to revise the assessment framework by
raising the minimum threshold for being considered an assessed holding
company to $100 billion in total consolidated assets and adjusting the
amount charged to assessed companies with between $100 billion and $250
billion in total consolidated assets.
The proposal would apply to assessed companies, which includes bank
holding companies and savings and loan holding companies with $100
billion or more in total consolidated assets, foreign banking
organizations that are bank holding companies and savings and loan
holding companies with $100 billion or more in total global
consolidated assets, and nonbank financial companies that the Council
has determined must be supervised by the Board. These companies are
well above the $600 million asset threshold
[[Page 60948]]
at which a banking organization is considered a ``small entity'' under
SBA regulations.\24\ Because the proposal is not likely to apply to any
company with assets of $600 million or less if adopted in final form,
the proposal is not expected to affect any small entity for purposes of
the RFA.
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\24\ While nonbank financial companies designated by the Council
are considered assessed companies, it is unlikely that these
companies would have less than $600 million in consolidated assets,
because material financial distress at such firms, or the nature,
scope, size, scale, concentration, interconnectedness, or mix of
activities at such firms, are likely to pose a threat to the
financial stability of the United States.
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Bank holding companies and savings and loan holding companies with
between $50 billion and $100 billion in total consolidated assets will
no longer be subject to Regulation TT. Bank holding companies and
savings and loan holding companies with $100 billion or more in total
consolidated assets will continue to be assessed companies subject to
Regulation TT. The Board's proposed rule is unlikely to impose any new
recordkeeping, reporting, or compliance requirements. The Board does
not believe that the proposal duplicates, overlaps, or conflicts with
any other Federal rules. The Board believes that no alternatives to the
proposed rule are available for consideration. In light of the
foregoing, the Board does not believe that the proposal, if adopted in
final form, would have a significant economic impact on a substantial
number of small entities. Nonetheless, the Board seeks comment on
whether the proposal would impose undue burdens on, or have unintended
consequences for, small banking organizations, and whether there are
ways such potential burdens or consequences could be minimized in a
manner consistent with the purpose of the proposal.
C. Solicitation of Comments and Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471, 12 U.S.C. 4809) requires the Federal banking agencies
to use plain language in all proposed and final rules published after
January 1, 2000. The Board has sought to present the proposed rule in a
simple and straightforward manner and invites comment on the use of
plain language. For example:
Is the material organized to suit your needs? If not, how
could the Board present the proposed rule more clearly?
Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
Does the proposal contain technical language or jargon
that is not clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes would achieve that?
Is this section format adequate? If not, which of the
sections should be changed and how?
What other changes can the Board incorporate to make the
proposed rule easier to understand?
List of Subjects in 12 CFR 246
Administrative practice and procedure, Banks, banking, Holding
companies, Reporting and recordkeeping requirements, Savings
associations.
Authority and Issuance
For the reasons set forth in the SUPPLEMENTARY INFORMATION, the
Board proposes to amend 12 CFR part 246 as follows:
PART 246--SUPERVISION AND REGULATION ASSESSMENTS OF FEES
(REGULATION TT)
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1. The authority citation for Part 246 is revised to read as follows:
Authority: Pub. L. 111-203, 124 Stat. 1376, 1526 (2010), Pub. L.
115-174, 132 Stat. 1296 (2018), and section 11(s) of the Federal
Reserve Act (12 U.S.C. 248(s)).
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2. Amend Sec. 246.1 by revising paragraphs (a) through (c) to read as
follows:
Sec. 246.1 Authority, purpose and scope.
(a) Authority. This part (Regulation TT) is issued by the Board of
Governors of the Federal Reserve System (Board) under section 318 of
Title III of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376, 142332, 12
U.S.C. 5365 and 5366), section 401 of the Economic Growth, Regulatory
Relief, and Consumer Protection Act (EGRRCPA) (Pub. L. 115-174, 132
Stat. 1296), and section 11(s) of the Federal Reserve Act (12 U.S.C.
248(s)).
(b) Scope. This part applies to:
(1) Any bank holding company having total consolidated assets of
$100 billion or more, as defined below;
(2) Any savings and loan holding company having total consolidated
assets of $100 billion or more, as defined below; and
(3) Any nonbank financial company supervised by the Board, as
defined below.
(c) Purpose. This part implements provisions of section 318 of the
Dodd-Frank Act and section 401 of EGRRCPA that direct the Board to
collect assessments, fees, or other charges from companies identified
in paragraph (b) of this section that are equal to the total expenses
the Board estimates are necessary or appropriate to carry out the
supervisory and regulatory responsibilities of the Board with respect
to these assessed companies and to adjust the amount charged to
assessed companies with total consolidated assets between $100 billion
and $250 billion to reflect any changes in supervisory and regulatory
responsibilities resulting from EGRRCPA.
* * * * *
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3. Amend Sec. 246.2 by adding paragraphs (n) through (p) to read as
follows:
Sec. 246.2 Definitions.
* * * * *
(n) Category I, II, and III firms are assessed companies subject to
Category I, II, or III standards, as defined under 12 CFR parts 238 and
252, as of December 31 of the assessment period.
(o) Category IV firms are assessed companies subject to Category IV
standards, as defined under 12 CFR parts 238 and 252, as of December 31
of the assessment period.
(p) ``Other'' firms are assessed companies not subject to the
Category I, II, III, or IV standards, as defined under 12 CFR parts 238
and 252, as of December 31 of the assessment period.
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4. Section 246.3 is revised to read as follows:
Sec. 246.3 Assessed companies.
An assessed company is any company that:
(a) Is a top-tier company that, on December 31 of the assessment
period:
(1) Is a bank holding company, other than a foreign bank holding
company, with $100 billion or more in total consolidated assets, as
determined based on the average of the bank holding company's total
consolidated assets reported for the assessment period on the Federal
Reserve's Form FR Y-9C (``FR Y-9C''),
(2)(i) Is a savings and loan holding company, other than a foreign
savings and loan holding company, with $100 billion or more in total
consolidated assets, as determined, except as provided in paragraph
(a)(2)(ii) of this section, based on the average of the savings and
loan holding company's total consolidated assets as reported for the
assessment period on the FR Y-9C or on the Quarterly Savings and Loan
[[Page 60949]]
Holding Company Report (FR 2320), as applicable.
(ii) If a company does not calculate its total consolidated assets
under GAAP for any regulatory purpose (including compliance with
applicable securities laws), the company may request that the Board
permit the company to file a quarterly estimate of its total
consolidated assets. The Board may, in its discretion and subject to
Board review and adjustment, permit the company to provide estimated
total consolidated assets on a quarterly basis. For purposes of this
part, the company's total consolidated assets will be the average of
the estimated total consolidated assets provided for the assessment
period.
(b) Is a top-tier foreign bank holding company on December 31 of
the assessment period, with $100 billion or more in total consolidated
assets, as determined based on the average of the foreign bank holding
company's total consolidated assets reported for the assessment period
on the Federal Reserve's Form FR Y-7Q (``FR Y-7Q''), provided, however,
that if any such company has filed only one FR Y-7Q during the
assessment period, the Board shall use an average of the foreign bank
holding company's total consolidated assets reported on that FR Y-7Q
and on the FR Y-7Q for the corresponding period in the year prior to
the assessment period.
(c) Is a top-tier foreign savings and loan holding company on
December 31 of the assessment period, with $100 billion or more in
total consolidated assets, as determined based on the average of the
foreign savings and loan holding company's total consolidated assets
reported for the assessment period on the reporting forms applicable
during the assessment period, provided, however, that if any such
company has filed only one reporting form during the assessment period,
the Board shall use an average of the foreign savings and loan holding
company's total consolidated assets reported on that reporting form and
on the reporting form for the corresponding period in the year prior to
the assessment period, or
(d) Is a nonbank financial company supervised by the Board.
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5. Section 246.4, is amended by revising paragraph (c)(1) and adding
paragraphs (d)(3) and (4) to read as follows:
Sec. 246.4 Assessments.
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(c) Assessment rates. Assessment rates means, with regard to a
given assessment period, the two rates published by the Board for the
calculation of assessments for Category IV and ``other'' firms and for
Category I, II, and III firms.
(1)(i) The assessment rate for Category IV and ``other'' firms will
be calculated according to this formula:
[(Net Assessment Basis x Category IV and ``other'' firms' share of total
assessable Assessment rate assets of all assessed companies) x (1 - S)]
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Category IV and ``other'' firms' total assessable assets
(ii) The assessment rate for Category I, II, and III firms will be
calculated according to this formula:
Assessment rate = [(Net Assessment Basis x Category I, II, and III
firms' share of total assessable assets of all assessed companies) +
(Net Assessment Basis x Category IV and ``other'' firms' share of total
assessable assets x S)]
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Category I, II, and III firms' total assessable assets
* * * * *
(d) * * *
(3) Net Assessment Basis is the assessment basis, as defined by
paragraph (d)(2), net of the total $50,000 base amount charged to all
assessed companies. Net Assessment Basis = assessment basis - (number
of assessed companies x $50,000).
(4) The variable S represents the estimated share of total costs
attributable to changes in supervisory and regulatory responsibilities
resulting from EGRRCPA for Category IV and ``other'' firms. S = 0.1 (10
percent).
* * * * *
By order of the Board of Governors of the Federal Reserve
System, November 5, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-24491 Filed 11-8-19; 8:45 am]
BILLING CODE 6210-01-P
