Treatment of Certain Emergency Facilities in the Regulatory Capital Rule and the Liquidity Coverage Ratio Rule (rule, 85 FR 68243, October 28, 2020)
Summary
Federal Register pages of Wednesday, October 28, 2020 (Vol. 85, No. 209) carrying the final rule on the Treatment of Certain Emergency Facilities in the Regulatory Capital Rule and the Liquidity Coverage Ratio Rule, issued by the OCC, the Federal Reserve System and the Federal Deposit Insurance Corporation. The agencies adopt three interim final rules as final with no changes. Under the rule, banking organizations may continue to neutralize the regulatory capital effects of participating in the MMLF and the PPPLF, and must continue to neutralize the LCR effects of participating in them. The same pages carry a Nuclear Regulatory Commission correction to a final rule published on October 16, 2020, and a correction to final regulations TD 9901.
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Cite this document
“Treatment of Certain Emergency Facilities in the Regulatory Capital Rule and the Liquidity Coverage Ratio Rule (rule, 85 FR 68243, October 28, 2020).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/treatment-of-certain-emergency-facilities-in-the-regulatory-capital-ru-8923760194/
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68243
Rules and Regulations Federal Register
Vol. 85, No. 209
Wednesday, October 28, 2020
This section of the FEDERAL REGISTER 415–4737, or by email to DEPARTMENT OF TREASURY
contains regulatory documents having general PDR.Resource@nrc.gov.
applicability and legal effect, most of which Office of the Comptroller of the
are keyed to and codified in the Code of • Attention: The Public Document
Currency
Federal Regulations, which is published under Room (PDR), where you may examine
50 titles pursuant to 44 U.S.C. 1510. and order copies of public documents is
12 CFR Parts 3 and 50
currently closed. You may submit your
The Code of Federal Regulations is sold by request to the PDR via email at [Docket ID OCC–2020–0017]
the Superintendent of Documents.
PDR.Resource@nrc.gov or call 1–800–
RIN 1557–AE89; 1557–AE90; 1557–AE92]
397–4209 between 8:00 a.m. and 4:00
NUCLEAR REGULATORY p.m. (EST), Monday through Friday, FEDERAL RESERVE SYSTEM
COMMISSION except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Jill 12 CFR Parts 217 and 249
10 CFR Chapter I
Shepherd, Office of Nuclear Material [Docket Nos. R–1711; 1712; and 1717]
[NRC–2020–0125] Safety and Safeguards, U.S. Nuclear
Regulatory Commission, Washington, RIN 7100–AF85; 7100–AF86: 7100–AF90
RIN 3150–AK48
DC 20555–0001; telephone: 301–415–
Miscellaneous Corrections FEDERAL DEPOSIT INSURANCE
1230, email: Jill.Shepherd@nrc.gov.
CORPORATION
AGENCY: Nuclear Regulatory SUPPLEMENTARY INFORMATION: The NRC
Commission. is correcting FR Doc. 20–21148, a final 12 CFR Parts 324 and 329
ACTION: Final rule, correction. rule that published in the Federal
RIN 3064–AF41; 3064–AF49; 3064–AF51
Register on October 16, 2020 (85 FR
SUMMARY: The U.S. Nuclear Regulatory 65656).
Commission (NRC) is correcting a final Treatment of Certain Emergency
rule that appeared in the Federal ■ On page 65661, second column, sixth Facilities in the Regulatory Capital
Register on October 16, 2020. The NRC paragraph, revise Instruction 8, to read Rule and the Liquidity Coverage Ratio
is amending its regulations to make as follows ‘‘In § 20.1906, revise the Rule
miscellaneous corrections. These introductory text of paragraph (d) to AGENCY: The Office of the Comptroller
changes include redesignating footnotes, read as follows:’’. of the Currency, Department of the
correcting references, typographical Dated October 19, 2020. Treasury; the Board of Governors of the
errors, nomenclature, titles, email Federal Reserve System; and the Federal
addresses, and contact information. This For the Nuclear Regulatory Commission.
Deposit Insurance Corporation.
action is necessary to correct an error Cindy K. Bladey,
ACTION: Final rule.
that appeared in Instruction 8 of the Chief, Regulatory Analysis and Rulemaking
final rule. Support Branch, Division of Rulemaking, SUMMARY: The Office of the Comptroller
DATES: This correction is effective on Environmental, and Financial Support, Office of the Currency, the Board of Governors
November 16, 2020. of Nuclear Material Safety and Safeguards. of the Federal Reserve System, and the
[FR Doc. 2020–23520 Filed 10–27–20; 8:45 am] Federal Deposit Insurance Corporation
ADDRESSES: Please refer to Docket ID
NRC–2020–0125 when contacting the BILLING CODE 7590–01–P are adopting as final the revisions to the
NRC about the availability of regulatory capital rule and the liquidity
information for this action. You may coverage ratio (LCR) rule made under
obtain publicly-available information three interim final rules published in
related to this action by any of the the Federal Register on March 23, April
following methods: 13, and May 6, 2020. The agencies are
• Federal Rulemaking Website: Go to adopting these interim final rules as
https://www.regulations.gov and search final with no changes. Under this final
for Docket ID NRC–2020–0125. Address rule, banking organizations may
questions about NRC dockets to Carol continue to neutralize the regulatory
Gallagher; telephone: 301–415–3463; capital effects of participating in the
email: Carol.Gallagher@nrc.gov. Money Market Mutual Fund Liquidity
• NRC’s Agencywide Documents Facility (MMLF) and the Paycheck
Access and Management System Protection Program Liquidity Facility
(ADAMS): You may obtain publicly- (PPPLF), and are required to continue to
available documents online in the neutralize the LCR effects of
ADAMS Public Documents Collection at participating in the MMLF and the
PPPLF. In addition, Paycheck Protection
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https://www.nrc.gov/reading-rm/
adams.html. To begin the search, select Program loans will receive a zero
‘‘Begin Web-based ADAMS Search.’’ For percent risk weight under the agencies’
problems with ADAMS, please contact regulatory capital rules.
the NRC’s Public Document Room (PDR) DATES: The final rule is effective
reference staff at 1–800–397–4209, 301– December 28, 2020.
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68244 Federal Register / Vol. 85, No. 209 / Wednesday, October 28, 2020 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT: Table of Contents covered loans that are guaranteed by the
OCC: Andrew Tschirhart, Risk Expert, I. Background Small Business Administration (SBA)
Capital and Regulatory Policy, (202) A. Capital Rule with respect to both principal and
649–6370; James Weinberger, Technical B. LCR Rule accrued interest and that are originated
Expert, Treasury & Market Risk Policy, II. Overview of the Interim Final Rules and by an eligible institution may be
(202) 649–6360; Henry Barkhausen, Public Comments pledged as collateral to the Federal
Counsel, Kevin Korzeniewski, Counsel, A. MMLF Capital Interim Final Rule Reserve Banks. The maturity date of the
Rima Kundnani, Senior Attorney, or B. PPPLF Capital Interim Final Rule
extension of credit under the PPPLF
Daniel Perez, Senior Attorney, Chief C. LCR Interim Final Rule
D. Public Comments equals the maturity date of the PPP
Counsel’s Office, (202) 649–5490, for covered loans pledged to secure the
III. Summary of the Final Rule
persons who are deaf or hearing IV. Administrative Law Matters extension of credit.4
impaired, TTY, (202) 649–5597, Office A. Congressional Review Act
of the Comptroller of the Currency, 400 Eligible borrowers from the MMLF
B. Paperwork Reduction Act
7th Street SW, Washington, DC 20219. and PPPLF and holders of PPP covered
C. Regulatory Flexibility Act
Board: Anna Lee Hewko, Associate D. Riegle Community Development and loans include banking organizations
Director, (202) 530–6360; Constance M. Regulatory Improvement Act of 1994 supervised by the Office of the
Horsley, Deputy Associate Director, E. Use of Plain Language Comptroller of the Currency (OCC), the
(202) 452–5239; Juan Climent, Assistant F. OCC Unfunded Mandates Reform Act of Board, and the Federal Deposit
Director, (202) 872–7526; Kathryn 1995 Insurance Corporation (FDIC) (together,
Ballintine, Manager, (202) 452–2555; I. Background the agencies) that are subject to the
Kevin Littler, Lead Financial Institution agencies’ regulatory capital rule (capital
In light of recent disruptions in rule) 5 and that may be subject to the
Policy Analyst, (202) 475–6677; Devyn economic conditions caused by the
Jeffereis, Senior Financial Institution liquidity coverage ratio (LCR) rule.6 To
outbreak of the coronavirus disease facilitate the use of the MMLF and the
Policy Analyst, (202) 365–2467; or 2019 and the stress in U.S. financial
Brendan Rowan, Senior Financial PPPLF, the agencies adopted three
markets, the Board of Governors of the interim final rules (interim final rules)
Institution Policy Analyst, (202) 475– Federal Reserve System (Board), with
6685, Division of Supervision and to address the capital treatment of
the approval of the U.S. Secretary of the
Regulation; or Benjamin W. participation in the MMLF (MMLF
Treasury, established certain liquidity
McDonough, Assistant General Counsel, capital interim final rule),7 the capital
facilities pursuant to section 13(3) of the
(202) 452–2036; David W. Alexander, treatment of participation in the PPPLF
Federal Reserve Act.1
Senior Counsel, (202) 452–2877; Steve In order to prevent disruptions in the (PPPLF capital interim final rule),8 and
Bowne, Senior Counsel, (202) 452–3900; money markets from destabilizing the the LCR treatment of participation in the
Jason Shafer, Senior Counsel, (202) 728– financial system, the Board authorized
5811; Laura Bain, Counsel (202) 736– the Federal Reserve Bank of Boston to loan, if the proceeds of the PPP covered loan are
5546; or Jeffery Zhang, Attorney, (202) establish the Money Market Mutual
used for certain expenses. Under the PPP, eligible
736–1968, Legal Division, Board of borrowers generally include businesses with fewer
Fund Liquidity Facility (MMLF). Under than 500 employees or that are otherwise
Governors of the Federal Reserve the MMLF, the Federal Reserve Bank of considered to be small by the SBA. The SBA
System, 20th Street and Constitution Boston may extend non-recourse loans reimburses PPP lenders for any amount of a PPP
Avenue NW, Washington, DC 20551. to eligible borrowers to purchase assets
covered loan that is forgiven. In general, PPP
Users of Telecommunication Device for lenders are not held liable for any representations
from money market mutual funds. made by PPP borrowers in connection with a
the Deaf (TDD) only, call (202) 263– Assets purchased from money market borrower’s request for PPP covered loan
4869. mutual funds are posted as collateral to forgiveness. For more information on the Paycheck
FDIC: Bobby R. Bean, Associate the Federal Reserve Bank of Boston.
Protection Program, see https://www.sba.gov/
Director, bbean@fdic.gov; Benedetto funding-programs/loans/coronavirus-relief-options/
In order to provide liquidity to small paycheck-protection-program-ppp.
Bosco, Chief, Capital Policy Section, business lenders and the broader credit 4 The maturity date of the loan made under the
bbosco@fdic.gov; Noah Cuttler, Senior markets, and to help stabilize the PPPLF will be accelerated if the underlying PPP
Policy Analyst, ncuttler@fdic.gov; Eric financial system, the Board authorized covered loan goes into default and the eligible
Schatten, Senior Policy Analyst, borrower sells the PPP covered loan to the Small
each of the Federal Reserve Banks to Business Administration (SBA) to realize the SBA
eschatten@fdic.gov; Andrew extend credit under the Paycheck guarantee. The maturity date of the loan made
Carayiannis, Senior Policy Analyst, Protection Program Liquidity Facility under the PPPLF also will be accelerated to the
acarayiannis@fdic.gov; (PPPLF).2 Under the PPPLF, each of the extent of any PPP covered loan forgiveness
regulatorycapital@fdic.gov; Capital reimbursement received by the eligible borrower
Federal Reserve Banks may extend non- from the SBA.
Markets Branch, Division of Risk recourse loans to institutions that are 5 Banking organizations subject to the capital rule
Management Supervision, (202) 898– eligible to make Paycheck Protection include national banks, state member banks, state
6888; or Michael Phillips, Counsel, Program (PPP) covered loans as defined nonmember banks, savings associations, and top-
mphillips@fdic.gov; Catherine Wood, in section 7(a)(36) of the Small Business tier bank holding companies and savings and loan
Counsel, cawood@fdic.gov; Sue Dawley, holding companies domiciled in the United States
Act.3 Under the PPPLF, only PPP not subject to the Board’s Small Bank Holding
Counsel, sudawley@fdic.gov; Gregory Company Policy Statement (12 CFR part 225,
Feder, Counsel, gfeder@fdic.gov; 1 12 U.S.C. 343(3). appendix C), but exclude certain savings and loan
Andrew B. Williams, II, Counsel, 2 The Paycheck Protection Program Liquidity holding companies that are substantially engaged in
andwilliams@fdic.gov; Supervision and Facility was previously known as the Paycheck insurance underwriting or commercial activities or
Protection Program Lending Facility. that are estate trusts, and bank holding companies
Legislation Branch, Legal Division, 3 Congress created the PPP as part of the and savings and loan holding companies that are
Federal Deposit Insurance Corporation,
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Coronavirus Aid, Relief, and Economic Security Act employee stock ownership plans. See 12 CFR part
550 17th Street NW, Washington, DC and in recognition of the exigent circumstances 3 (OCC); 12 CFR part 217 (Board); and 12 CFR part
20429. For the hearing impaired only, faced by small businesses. PPP covered loans are 324 (FDIC).
6 See 12 CFR part 50 (OCC); 12 CFR part 249
Telecommunication Device for the Deaf fully guaranteed as to principal and accrued interest
by the Small Business Administration (SBA) and (Board); and 12 CFR part 329 (FDIC).
(TDD), (800) 925–4618. also afford borrower forgiveness up to the principal 7 85 FR 16232 (Mar. 23, 2020).
SUPPLEMENTARY INFORMATION: amount and accrued interest of the PPP covered 8 85 FR 20387 (Apr. 13, 2020).
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Federal Register / Vol. 85, No. 209 / Wednesday, October 28, 2020 / Rules and Regulations 68245
MMLF and the PPPLF (LCR interim remaining maturity of 30 days or less covered loans. The PPPLF capital
final rule),9 respectively. and inflows for certain assets securing interim final rule reflects the agencies’
the MMLF and PPPLF advances. As a determination that, prior to the PPPLF
A. Capital Rule
result, a covered company’s capital interim final rule, the regulatory
The capital rule requires banking participation in the MMLF or PPPLF capital requirements in place in the
organizations to comply with risk-based could have affected its total net cash capital rule for PPP covered loans
and leverage capital requirements, outflow amount, which potentially pledged by a banking organization to a
which are expressed as a ratio of could have resulted in an inconsistent, Federal Reserve Bank as part of the
regulatory capital to assets and certain unpredictable, and more volatile PPPLF did not reflect the substantial
other exposures. Risk-based capital calculation of LCR requirements across protections from risk provided to the
requirements are based on risk-weighted covered companies. banking organization in connection with
assets, whereas leverage capital the facility.
requirements are based on a measure of II. Overview of the Interim Final Rules Additionally, the PPPLF capital
average total consolidated assets or total and Public Comments interim final rule provides that a
leverage exposure. Participation in the A. MMLF Capital Interim Final Rule banking organization must apply a zero
MMLF or the PPPLF affects the balance percent risk weight to PPP covered
sheet of a banking organization. To On March 23, 2020, the agencies loans, as required by Section 1102 of the
participate in the MMLF, a banking published in the Federal Register the Coronavirus Aid, Relief, and Economic
organization must acquire and hold MMLF capital interim final rule to Security (CARES) Act. A banking
assets (that is, eligible collateral pledged neutralize the regulatory capital effect of organization must apply a zero percent
to the Federal Reserve Bank of Boston) participation in the MMLF. The MMLF risk weight to PPP covered loans
on its balance sheet. Similarly, to capital interim final rule permits a regardless of whether they are pledged
participate in the PPPLF, a banking banking organization to exclude under the PPPLF.
organization must hold PPP covered exposures acquired as part of the MMLF
loans on its balance sheet. As a result, from the banking organization’s total C. LCR Interim Final Rule
without the agencies’ issuance of the leverage exposure, average total On May 6, 2020, the agencies
MMLF capital and PPPLF capital consolidated assets, advanced published in the Federal Register the
interim final rules, a banking approaches total risk-weighted assets, LCR interim final rule to require a
organization that participates in either and standardized total risk-weighted banking organization subject to the LCR
facility could have been required to assets, as applicable. Because of the rule to neutralize the effect on its LCR
maintain increased regulatory capital. non-recourse nature of the Federal of participation in the MMLF and
Reserve Bank of Boston’s extension of PPPLF. The LCR interim final rule
B. LCR Rule credit to the banking organization, the requires a covered company to
The LCR rule requires covered organization is not exposed to credit or neutralize the LCR effects of the
companies 10 to calculate and maintain market risk from the assets purchased advances made by the MMLF and
an amount of high-quality liquid assets by the banking organization and PPPLF together with the assets securing
(HQLA) sufficient to cover their total net pledged to the Federal Reserve Bank of these advances. Specifically, the LCR
cash outflows over a 30-day stress Boston. The MMLF capital interim final interim final rule adds a new definition
period. A covered company’s LCR is the rule reflects the agencies’ determination to the LCR rule for ‘‘Covered Federal
ratio of its HQLA amount divided by its that, prior to the MMLF capital interim Reserve Facility Funding’’ to identify
total net cash outflow amount. The total final rule, the leverage and risk-based MMLF and PPPLF advances separately
net cash outflow amount is calculated as capital requirements in place in the from other secured funding transactions
the difference between outflow and capital rule for the assets acquired by a under the LCR rule. The LCR interim
inflow amounts, which are determined banking organization as part of the final rule requires outflow amounts
by applying a standardized set of MMLF did not reflect the substantial associated with Covered Federal
outflow and inflow rates to the cash protections provided to the organization Reserve Facility Funding and inflow
flows of various assets and liabilities, by the Federal Reserve Bank of Boston amounts associated with the assets
together with off-balance sheet items, as in connection with the facility. securing this funding to be excluded
specified in sections __.32 and __.33 of from a covered company’s total net cash
B. PPPLF Capital Interim Final Rule
the LCR rule.11 outflow amount under the LCR rule.12
Absent changes to the LCR rule, On April 13, 2020, the agencies Advances from the MMLF and PPPLF
covered companies would have been published in the Federal Register the facilities are non-recourse and the
required to recognize outflows for PPPLF capital interim final rule to maturity of the advance generally aligns
MMLF and PPPLF advances with a neutralize the regulatory capital effect of with the maturity of the collateral.
participation in the PPPLF. The PPPLF Accordingly, a covered company is not
9 85 FR 26835 (May 6, 2020). capital interim final rule permits a exposed to credit or market risk from
10 The applicability of the LCR rule is described
banking organization to exclude the collateral securing the MMLF or
in 12 CFR 50.1 (OCC); 12 CFR 249.1 (Board); and exposures pledged as collateral to the
12 CFR 329.1 (FDIC). PPPLF advance that could otherwise
11 See 12 CFR 50.32 and 50.33 (OCC); 12 CFR PPPLF from the banking organization’s affect the banking organization’s ability
249.32 and 249.33 (Board); and 12 CFR 329.32 and total leverage exposure, average total to settle the loan and generally can use
329.33 (FDIC). Section __.30 of the LCR rule also consolidated assets, advanced the value of cash received from the
requires a covered company, as applicable, to approaches total risk-weighted assets,
include in its total net cash outflow amount a collateral to repay the advances at
maturity mismatch add-on, which is calculated as
and standardized total risk-weighted
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the difference (if greater than zero) between the assets, as applicable. Because of the 12 See 12 CFR 50.34 (OCC); 12 CFR 249.34
covered company’s largest net cumulative maturity non-recourse nature of each Federal (Board); and 12 CFR 329.34 (FDIC). Section __.34
outflow amount for any of the 30 calendar days Reserve Bank’s extension of credit to the does not apply to the extent the covered company
following the calculation date and the net day 30 secures Covered Federal Reserve Facility Funding
cumulative maturity outflow amount. See 12 CFR
banking organization, the banking with securities, debt obligations, or other
50.30 (OCC); 12 CFR 249.30 (Board); and 12 CFR organization is not exposed to credit or instruments issued by the covered company or its
329.30 (FDIC). market risk from the pledged PPP consolidated entity.
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68246 Federal Register / Vol. 85, No. 209 / Wednesday, October 28, 2020 / Rules and Regulations
maturity. For these reasons, the agencies pledged by a banking organization to a likely to result in (A) an annual effect
issued the LCR interim final rule to Federal Reserve Bank. on the economy of $100,000,000 or
better align the treatment of these more; (B) a major increase in costs or
Comments on the LCR Interim Final
advances and collateral under the LCR prices for consumers, individual
Rule
rule with the liquidity risk associated industries, Federal, State, or local
with funding exposures through these The agencies received one comment government agencies or geographic
facilities, and to ensure consistent and letter, from a trade association, on the regions; or (C) significant adverse effects
predictable treatment of covered LCR interim final rule. The commenter on competition, employment,
companies’ participation in the facilities supported the requirements under the investment, productivity, innovation, or
under the LCR rule. LCR interim final rule, arguing that the on the ability of United States-based
requirements encourage participation in enterprises to compete with foreign-
D. Public Comments the facilities, which ultimately provides based enterprises in domestic and
Comments on the MMLF Capital Interim benefits to small businesses, export markets.16
Final Rule households, and investors. As required by the Congressional
III. Summary of the Final Rule Review Act, the agencies will submit
The agencies received two comment the final rule and other appropriate
letters, from a trade association and an For the reasons discussed above, the reports to Congress and the Government
advocacy organization, addressing the agencies are adopting as final the Accountability Office for review.
MMLF capital interim final rule. These revisions to the capital and LCR rules
commenters supported the agencies’ unchanged from the interim final rules. B. Paperwork Reduction Act
actions to encourage banking Accordingly, a banking organization The Paperwork Reduction Act of 1995
organizations’ participation in the may continue to exclude assets acquired (44 U.S.C. 3501–3521) (PRA) states that
emergency lending facility. One as part of the MMLF and PPP covered no agency may conduct or sponsor, nor
commenter recommended broader loans pledged under the PPPLF from its is the respondent required to respond
considerations for money market mutual total leverage exposure, average total to, an information collection unless it
fund reform that are outside the scope consolidated assets, advanced displays a currently valid OMB control
of this rulemaking. approaches total risk-weighted assets, number. This final rule does not contain
and standardized total risk-weighted any information collection
Comments on the PPPLF Capital Interim
assets, as applicable (and for purposes requirements. However, in connection
Final Rule
of the community bank leverage ratio).13 with the interim final rules, the Board
The agencies received 14 comment Further, a banking organization must temporarily revised the Financial
letters from industry participants, continue to apply a zero percent risk Statements for Holding Companies (FR
advocacy groups, trade associations, and weight to all PPP covered loans that are Y–9 reports; OMB No. 7100–0128) and
individuals addressing the PPPLF not pledged to the PPPLF (regardless of the Complex Institution Liquidity
interim final rule. Several commenters whether the banking organization Monitoring Report (FR 2052a; OMB No.
expressed support for the agencies’ originated the loan). In addition, a 7100–0361) and invited comment on
actions under the PPPLF capital interim banking organization subject to the LCR proposals to extend those collections of
final rule, and two of these commenters rule is required to continue excluding information for three years, with
further supported the agencies’ from its total net cash outflow amount revision.17
determination that good cause existed to outflow amounts associated with Additionally, in connection with the
issue the interim final rules without advances from the MMLF and PPPLF interim final rules, the agencies made
notice and comment. Several and inflow amounts associated with revisions to the Call Reports (OCC OMB
commenters suggested that the agencies collateral securing the advances. Control No. 1557–0081; Board OMB
extend the zero percent risk weight to Control No. 7100–0036; FDIC OMB
IV. Administrative Law Matters
PPP covered loans purchased in Control No. 3064–0052), the Report of
secondary markets. The agencies note A. Congressional Review Act Assets and Liabilities of U.S. Branches
that, under the PPPLF capital interim For purposes of the Congressional and Agencies of Foreign Banks (FFIEC
final rule, the risk weight for all PPP Review Act, the Office of Management 002; OMB Control No. 7100–0032), and
covered loans is zero percent. and Budget (OMB) makes a the Regulatory Capital Reporting for
Several commenters asserted that the determination as to whether a final rule Institutions Subject to the Advanced
PPPLF capital interim final rule should constitutes a ‘‘major’’ rule.14 If a rule is Capital Adequacy Framework (FFIEC
extend the leverage exclusion to PPP deemed a ‘‘major rule’’ by the OMB, the 101; OCC OMB Control No. 1557–0239;
covered loans that are not pledged to the Congressional Review Act generally Board OMB Control No. 7100–0319;
PPPLF, arguing that the treatment could provides that the rule may not take FDIC OMB Control No. 3064–0159). The
discourage banking organizations that effect until at least 60 days following its changes to the Call Reports, FFIEC 002,
are not using the PPPLF from making publication.15 and FFIEC 101 and their related
PPP covered loans. Notwithstanding The Congressional Review Act defines instructions are addressed in a separate
these arguments, the agencies are a ‘‘major rule’’ as any rule that the Federal Register notice.18
adopting as final the PPPLF capital Administrator of the Office of
interim final rule. The CARES Act set Current Actions
Information and Regulatory Affairs of
the risk weight of these loans at zero the OMB finds has resulted in or is The Board has extended the FR Y–9
percent and did not exclude these loans and FR 2052a for three years, with
from the leverage capital requirements. 13 Assets acquired as part of the MMLF and PPP
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The favorable leverage capital treatment covered loans pledged to the PPPLF would 16 5 U.S.C. 804(2).
in the PPPLF capital interim final rule continue to be included in a bank’s measure of total 17 The Board published a separate Federal
consolidated assets, including for purposes of Register notice to make temporary revisions to the
reflects the non-recourse nature of the determining whether a banking organization is a FR Y–9 reports in connection with the MMLF
relevant Federal Reserve Bank’s qualifying community banking organization. Capital Interim Final Rule. 85 FR 19944 (Apr. 9,
extension of credit to a banking 14 5 U.S.C. 801 et seq. 2020).
organization only for PPP covered loans 15 5 U.S.C. 801(a)(3). 18 See 85 FR 44361 (July 22, 2020).
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Federal Register / Vol. 85, No. 209 / Wednesday, October 28, 2020 / Rules and Regulations 68247
revision, as originally proposed. The FR Y–9SP—5.40, The FR Y–9ES is filed annually by
updates to the FR Y–9 and FR 2052a FR Y–9ES—0.50, each employee stock ownership plan
resulted in an estimated zero net change FR Y–9CS—0.50. (ESOP) that is also an HC. The report
in hourly burden. No public comments Recordkeeping collects financial data on the ESOP’s
were received regarding these proposals benefit plan activities. The FR Y–9ES
under the PRA. FR Y–9C—1, consists of four schedules: A Statement
FR Y–9LP—1, of Changes in Net Assets Available for
Revision, With Extension, of the FR Y–9SP—0.50, Benefits, a Statement of Net Assets
Following Information Collections FR Y–9ES—0.50, Available for Benefits, Memoranda, and
(1) Report title: Financial Statements FR Y–9CS—0.50.
Notes to the Financial Statements.
Estimated annual burden hours:
for Holding Companies. The FR Y–9CS is a free-form
Agency form numbers: FR Y–9C, FR Reporting supplemental report that the Board may
Y–9LP, FR Y–9SP, FR Y–9ES, and FR FR Y–9C (non AA HCs CBLR) with utilize to collect critical additional data
Y–9CS. less than $5 billion in total assets— deemed to be needed in an expedited
OMB control number: 7100–0128. 8,284, manner from HCs on a voluntary basis.
Effective date: December 28, 2020. FR Y–9C (non AA HCs CBLR) with $5 The data are used to assess and monitor
Frequency: Quarterly, semiannually, emerging issues related to HCs, and the
billion or more in total assets—4,920,
and annually. FR Y–9C (non AA HCs non-CBLR) report is intended to supplement the
Affected public: Businesses or other with less than $5 billion in total assets— other FR Y–9 reports. The data items
for-profit. 13,779, included on the FR Y–9CS may change
Respondents: Bank holding FR Y–9C (non AA HCs non-CBLR) as needed.
companies (BHCs), savings and loan with $5 billion or more in total assets— Legal authorization and
holding companies (SLHCs), securities 28,940, confidentiality: The Board has the
holding companies (SHCs), and U.S. FR Y–9C (AA HCs)—3,709, authority to impose the reporting and
intermediate holding companies (IHCs) FR Y–9LP—9,149, recordkeeping requirements associated
(collectively, holding companies FR Y–9SP—42,768, with the FR Y–9 family of reports on
(HCs)).19 FR Y–9ES—42, BHCs pursuant to section 5 of the Bank
Estimated number of respondents: FR Y–9CS—472. Holding Company Act of 1956 (BHC
FR Y–9C (non-advanced approaches Act) (12 U.S.C. 1844); on SLHCs
(AA) HCs community bank leverage Recordkeeping pursuant to section 10(b)(2) and (3) of
ratio (CBLR)) with less than $5 billion FR Y–9C—1,452, the Home Owners’ Loan Act (12 U.S.C.
in total assets—71, FR Y–9LP—1,736, 1467a(b)(2) and (3)), as amended by
FR Y–9C (non AA HCs CBLR) with $5 FR Y–9SP—3,960, sections 369(8) and 604(h)(2) of the
billion or more in total assets—35, FR Y–9ES—42, Dodd-Frank Wall Street Reform and
FR Y–9C (non AA HCs non-CBLR) FR Y–9CS—472. Consumer Protection Act (Dodd-Frank
with less than $5 billion in total assets— General description of report: The FR Act); on U.S. IHCs pursuant to section
84, Y–9C consists of standardized financial 5 of the BHC Act (12 U.S.C. 1844), as
FR Y–9C (non AA HCs non-CBLR) statements similar to the Call Reports well as pursuant to sections 102(a)(1)
with $5 billion or more in total assets— filed by banks and savings associations. and 165 of the Dodd-Frank Act (12
154, The FR Y–9C collects consolidated data U.S.C. 511(a)(1) and 5365); and on SHCs
FR Y–9C (AA HCs)—19, from HCs and is filed quarterly by top- pursuant to section 618 of the Dodd-
FR Y–9LP—434, tier HCs with total consolidated assets Frank Act (12 U.S.C. 1850a(c)(1)(A)).
FR Y–9SP—3,960, of $3 billion or more.20 The obligation to submit the FR Y–9
FR Y–9ES—83, The FR Y–9LP, which collects parent series of reports, and the recordkeeping
FR Y–9CS—236. company only financial data, must be requirements set forth in the respective
Estimated average hours per response: submitted by each HC that files the FR instructions to each report, are
Y–9C, as well as by each of its mandatory, except for the FR Y–9CS,
Reporting
subsidiary HCs.21 The report consists of which is voluntary.
FR Y–9C (non AA HCs CBLR) with standardized financial statements. With respect to the FR Y–9C report,
less than $5 billion in total assets— The FR Y–9SP is a parent company Schedule HI’s data item 7(g), ‘‘FDIC
29.17, only financial statement filed deposit insurance assessments,’’
FR Y–9C (non AA HCs CBLR) with $5 semiannually by HCs with total Schedule HC–P’s data item 7(a),
billion or more in total assets—35.14, consolidated assets of less than $3 ‘‘Representation and warranty reserves
FR Y–9C (non AA HCs non-CBLR) billion. In a banking organization with for 1–4 family residential mortgage
with less than $5 billion in total assets— total consolidated assets of less than $3 loans sold to U.S. government agencies
41.01, billion that has tiered HCs, each HC in and government sponsored agencies,’’
FR Y–9C (non AA HCs non-CBLR) the organization must submit, or have and Schedule HC–P’s data item 7(b),
with $5 billion or more in total assets— the top-tier HC submit on its behalf, a ‘‘Representation and warranty reserves
46.98, separate FR Y–9SP. This report is for 1–4 family residential mortgage
FR Y–9C (AA HCs)—48.80, designed to obtain basic balance sheet loans sold to other parties’’ are
FR Y–9LP—5.27, and income data for the parent considered confidential commercial and
company, and data on its intangible financial information. Such treatment is
19 An SLHC must file one or more of the FR Y–
9 family of reports unless it is: (1) A grandfathered
assets and intercompany transactions. appropriate under exemption 4 of the
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unitary SLHC with primarily commercial assets and Freedom of Information Act (FOIA) (5
thrifts that make up less than five percent of its 20 Under certain circumstances described in the
U.S.C. 552(b)(4)) because these data
consolidated assets; or (2) a SLHC that primarily FR Y–9C’s General Instructions, HCs with assets items reflect commercial and financial
holds insurance-related assets and does not under $3 billion may be required to file the FR Y–
otherwise submit financial reports with the SEC 9C. information that is both customarily and
pursuant to section 13 or 15(d) of the Securities 21 A top-tier HC may submit a separate FR Y–9LP actually treated as private by the
Exchange Act of 1934. on behalf of each of its lower-tier HCs. submitter, and which the Board has
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68248 Federal Register / Vol. 85, No. 209 / Wednesday, October 28, 2020 / Rules and Regulations
previously assured submitters will be request confidential treatment for any 3106), section 165 of the Dodd-Frank
treated as confidential. It also appears data items the respondent believes Act (12 U.S.C. 5365), and section 10 of
that disclosing these data items may should be withheld pursuant to a FOIA the Home Owners’ Loan Act (12 U.S.C.
reveal confidential examination and exemption. The Board will review any 1467(a)) and is mandatory. Section 5(c)
supervisory information, and in such such request to determine if confidential of the BHC Act authorizes the Board to
instances, this information would also treatment is appropriate, and will require BHCs to submit reports to the
be withheld pursuant to exemption 8 of inform the respondent if the request for Board regarding their financial
the FOIA (5 U.S.C. 552(b)(8)), which confidential treatment has been denied. condition. Section 8(a) of the
protects information related to the To the extent the instructions to the International Banking Act subjects FBOs
supervision or examination of a FR Y–9C, FR Y–9LP, FR Y–9SP, and FR to the provisions of the BHC Act.
regulated financial institution. Y–9ES reports each respectively direct Section 165 of the Dodd-Frank Act
In addition, for both the FR Y–9C the financial institution to retain the requires the Board to establish
report, Schedule HC’s memorandum work papers and related materials used prudential standards for certain BHCs
item 2.b. and the FR Y–9SP report, in preparation of each report, such and FBOs, which include liquidity
Schedule SC’s memorandum item 2.b., material would only be obtained by the requirements. Section 10(g) of the Home
the name and email address of the Board as part of the examination or Owners’ Loan Act authorizes the Board
external auditing firm’s engagement supervision of the financial institution. to collect reports from SLHCs.
partner, is considered confidential Accordingly, such information is Financial institution information
commercial information and protected considered confidential pursuant to required by the FR 2052a is collected as
by exemption 4 of the FOIA (5 U.S.C. exemption 8 of the FOIA (5 U.S.C. part of the Board’s supervisory process.
552(b)(4)) if the identity of the 552(b)(8)). In addition, the financial Therefore, such information is entitled
engagement partner is treated as private institution’s work papers and related to confidential treatment under
information by HCs. The Board has materials may also be protected by Exemption 8 of the FOIA (5 U.S.C.
assured respondents that this exemption 4 of the FOIA, to the extent 552(b)(8)). In addition, the institution
information will be treated as such financial information is treated as information provided by each
confidential since the collection of this confidential by the respondent (5 U.S.C. respondent would not be otherwise
data item was proposed in 2004. 552(b)(4)). available to the public and its disclosure
Additionally, items on the FR Y–9C, (2) Report title: Complex Institution could cause substantial competitive
Schedule HC–C for loans modified Liquidity Monitoring Report. harm. Accordingly, it is entitled to
under Section 4013, data items Agency form number: FR 2052a. confidential treatment under the
Memorandum items 16.a, ‘‘Number of OMB control number: 7100–0361. authority of exemption 4 of the FOIA (5
Section 4013 loans outstanding’’; and Effective date: December 28, 2020. U.S.C. 552(b)(4)), which protects from
Memorandum items 16.b, ‘‘Outstanding Frequency: Monthly, and each disclosure trade secrets and commercial
balance of Section 4013 loans’’ are business day (daily). or financial information.
considered confidential. While the Affected public: Businesses or other
Board generally makes institution-level for-profit. C. Regulatory Flexibility Act
FR Y–9C report data publicly available, Respondents: U.S. BHCs, U.S. SLHCs, The Regulatory Flexibility Act (RFA)
the Board is collecting Section 4013 and foreign banking organizations requires an agency to consider whether
loan information as part of condition (FBOs) with U.S. assets. the rules it proposes will have a
reports for the impacted HCs and the Estimated number of respondents: significant economic impact on a
Board considers disclosure of these Monthly, 26; daily, 16. substantial number of small entities.
items at the HC level would not be in Estimated average hours per response: The RFA requires an agency to prepare
the public interest. Such information is Monthly, 120; daily, 220. a final regulatory flexibility analysis
permitted to be collected on a Estimated annual burden hours: when it promulgates a final rule after
confidential basis, consistent with 5 917,440. being required to publish a general
U.S.C. 552(b)(8). In addition, holding General description of report: The notice of proposed rulemaking. As
companies may be reluctant to offer Board uses the FR 2052a to monitor the discussed previously, the agencies have
modifications under Section 4013 if overall liquidity profile of supervised decided to adopt, without changes,
information on these modifications institutions. These data provide detailed revisions to the capital and LCR rules
made by each holding company is information on the liquidity risks within made under the interim final rules.
publicly available, as analysts, different business lines (e.g., financing There was no general notice of proposed
investors, and other users of public FR of securities positions, prime brokerage rulemaking associated with the interim
Y–9C report information may penalize activities). In particular, these data serve final rules or this final rule.
an institution for using the relief as part of the Board’s supervisory Accordingly, the agencies have
provided by the CARES Act. The Board surveillance program in its liquidity risk concluded that the RFA’s requirements
may disclose Section 4013 loan data on management area and provide timely relating to initial and final regulatory
an aggregated basis, consistent with information on firm-specific liquidity flexibility analyses do not apply to the
confidentiality considerations. risks during periods of stress. Analyses promulgation of this final rule.
Aside from the data items described of systemic and idiosyncratic liquidity
above, the remaining data items on the risk issues are then used to inform the D. Riegle Community Development and
FR Y–9C report and the FR Y–9SP Board’s supervisory processes, Regulatory Improvement Act of 1994
report are generally not accorded including the preparation of analytical Pursuant to section 302(a) of the
confidential treatment. The data items reports that detail funding Riegle Community Development and
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collected on FR Y–9LP, FR Y–9ES, and vulnerabilities. Regulatory Improvement Act
FR Y–9CS reports, are also generally not Legal authorization and (RCDRIA),22 in determining the effective
accorded confidential treatment. As confidentiality: The FR 2052a is date and administrative compliance
provided in the Board’s Rules Regarding authorized pursuant to section 5 of the requirements for new regulations that
Availability of Information (12 CFR part BHC Act (12 U.S.C. 1844), section 8 of
261), however, a respondent may the International Banking Act (12 U.S.C. 22 12 U.S.C. 4802(a).
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Federal Register / Vol. 85, No. 209 / Wednesday, October 28, 2020 / Rules and Regulations 68249
impose additional reporting, disclosure, interim final rules, which were under sections 250 and 861 of the
or other requirements on insured published at 85 FR 16232, 85 FR 20387, Internal Revenue Code.
depository institutions (IDIs), each and 85 FR 26835 on March 23, April 13,
Need for Correction
Federal banking agency must consider, and May 6, 2020, are adopted as a final
consistent with the principle of safety rule by the OCC, Board, and FDIC As published on July 15, 2020 (85 FR
and soundness and the public interest, without change. 43042), the final regulations (TD 9901;
any administrative burdens that the FR Doc. 2020–14649) contains errors
Brian P. Brooks, that need to be corrected.
regulations would place on depository
institutions, including small depository Acting Comptroller of the Currency.
List of Subjects in 26 CFR Part 1
institutions and customers of depository By order of the Board of Governors of the
institutions, as well as the benefits of Federal Reserve System. Income taxes, Reporting and
the regulations. In addition, section Ann E. Misback, recordkeeping requirements.
302(b) of RCDRIA requires new Secretary of the Board. Correction of Publication
regulations and amendments to Federal Deposit Insurance Corporation.
regulations that impose additional Accordingly, 26 CFR part 1 is
By order of the Board of Directors. corrected by making the following
reporting, disclosures, or other new
Dated at Washington, DC, on or about correcting amendments:
requirements on IDIs generally to take September 15, 2020.
effect on the first day of a calendar PART 1—INCOME TAXES
James P. Sheesley,
quarter that begins on or after the date
on which the regulations are published Assistant Executive Secretary.
■ Paragraph 1. The authority citation
in final form.23 Each Federal banking [FR Doc. 2020–21894 Filed 10–27–20; 8:45 am]
for part 1 continues to read in part as
agency has determined that the final BILLING CODE 4810–33–6210–01–6714–01–P
follows:
rule would not impose additional
Authority: 26 U.S.C. 7805 * * *
reporting, disclosure, or other
requirements; therefore the DEPARTMENT OF THE TREASURY § 1.250–1 [Amended]
requirements of the RCDRIA do not
■ Par. 2. Section 1.250–1, paragraph (b),
apply. Internal Revenue Service
is amended by adding at the end of the
E. Use of Plain Language 26 CFR Part 1 third sentence ‘‘, but once applied,
Section 722 of the Gramm-Leach- taxpayers must apply the final
Bliley Act 24 requires the Federal [TD 9901] regulations for all subsequent taxable
banking agencies to use ‘‘plain years beginning before January 1, 2021’’.
RIN 1545–BO55
language’’ in all proposed and final § 1.250(b)–4 [Amended]
rules published after January 1, 2000. In Deduction for Foreign-Derived
light of this requirement, the agencies ■ Par. 3. Section 1.250(b)–4 is amended:
Intangible Income and Global
have sought to present the final rule in ■ a. In the last sentence of paragraph
Intangible Low-Taxed Income;
a simple and straightforward manner. (d)(1)(ii)(D), by adding ‘‘for the seller’s
Correcting Amendments
The agencies did not receive any taxable year’’ after the words ‘‘less than
comments on the use of plain language AGENCY: Internal Revenue Service (IRS), $50,000’’.
Treasury. ■ b. In the last sentence of paragraph
in the interim final rules.
ACTION: Correcting amendments. (d)(2)(ii)(A), by adding ‘‘or (iii)’’ after
F. OCC Unfunded Mandates Reform Act ‘‘(d)(1)(ii)’’.
of 1995 SUMMARY: This document contains ■ c. In paragraph (d)(2)(iv)(B)(10)(ii), by
As a general matter, the Unfunded corrections to the Treasury Decision removing ‘‘potion’’ and adding in its
Mandates Act of 1995 (UMRA), 2 U.S.C. 9901, which was published in the place ‘‘portion’’.
1531 et seq., requires the preparation of Federal Register on Wednesday July 15, ■ Par. 4. Section 1.250(b)–5 is amended:
a budgetary impact statement before 2020. Treasury Decision 9901 contained ■ a. In paragraph (c)(1), by removing ‘‘to
promulgating a rule that includes a final regulations that provide guidance consumers’’;
Federal mandate that may result in the regarding the deduction for foreign- ■ b. In the first sentence of paragraph
expenditure by State, local, and tribal derived intangible income (FDII) and (e)(2)(iii), by removing ‘‘accesses the
governments, in the aggregate, or by the global intangible low-taxed income service’’ and adding in its place
private sector, of $100 million or more (GILTI) and for coordinating the ‘‘accesses or otherwise uses the
in any one year. However, the UMRA deduction for FDII and GILTI with other service’’;
does not apply to final rules for which provisions in the Internal Revenue ■ c. By revising paragraph
a general notice of proposed rulemaking Code. (e)(5)(ii)(F)(1); and
was not published.25 Because there was ■ d. By revising the third and fourth
DATES: These corrections are effective
no general notice of proposed on October 28, 2020. For dates of sentences of paragraph (e)(5)(ii)(F)(2).
rulemaking associated with the interim applicability, see §§ 1.250–1(b) and The revisions read as follows:
final rules or the final rule, the OCC 1.861–8(h). § 1.250(b)–5 Foreign-derived deduction
concludes that the requirements of the
FOR FURTHER INFORMATION CONTACT: Brad eligible income (FDDEI) services.
UMRA do not apply to this final rule.
McCormack at (202) 317–6911 and * * * * *
Authority and Issuance Lorraine Rodriguez at (202) 317–6726 (e) * * *
(not toll-free numbers).
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For the reasons set forth in the joint (5) * * *
SUPPLEMENTARY INFORMATION section, the SUPPLEMENTARY INFORMATION: (ii) * * *
(F) Example 6: Electronically supplied
23 12 U.S.C. 4802.
Background services that are accessed by the
24 12 U.S.C. 4809. The final regulations (TD 9901) that business recipient—(1) Facts. DC
25 See 2 U.S.C. 1532(a). are the subject of this correction are maintains an inventory management
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