To Whom It May Concern:
The Bank Policy Institute[1] and the Institute of International Bankers[2] welcome the opportunity to respond to the notice and request for comment by the Board of Governors of the Federal Reserve System regarding revisions to the Financial Statements for Holding Companies and Capital Assessments and Stress Testing Reports.[3] The Associations are supportive of the purpose of the proposed revisions to the FR Y-9C in improving the consistency of reporting of nondepository financial institution (NDFI) exposures. Our comments herein are aimed largely at (i) alignment between the FR Y-9C, Call Reports, and FR Y-14, (ii) continuing to express our views on the reporting treatment of purpose and non-purpose loans secured by securities (non-purpose loans) in Schedule HC-C line item 9.b.(1), and (iii) clarifying a number of NDFI reporting items for purposes of both the FR Y-9C and Call Reports.
I. The effective date of the FR Y-9C NDFI revisions should be consistent with the Call Reports, with reporting as-of December 31, 2024, on a best efforts basis until June 30, 2025.
As previously discussed in BPI comment letters on similar changes across the Call Reports, FR Y- 9C and FR Y-14 report forms,[4] we continue to stress the importance of alignment of the content and effective dates for new information added to regulatory reports. In the 30-day notice for the Call Report proposal related to the reporting of loans to NDFIs,[5] the Agencies stated that the changes from the December 2023 Call Report notice[6] would be effective as of the December 31, 2024, report date, rather than as of the June 30, 2024, report date, as originally proposed. The proposal continues to remain outstanding and has not yet been finalized and published in the Federal Register. Following this 30-day notice, the Agencies issued a letter to provide guidance pertaining to Call Report reporting on NDFIs for the September 30, 2024, report date.[7] Here, the Agencies state that the revisions to the Call Report forms and instructions related to the reporting of loans to NDFIs that were included in the 30-day Federal Register notice[8] are effective as of the December 31, 2024, report date and that “[i]nstitutions that require additional time should still report loans to NDFIs on a best efforts basis as of the December 31, 2024, and March 31, 2025, report dates, and comprehensively no later than June 30, 2025.”[9]
This period of best efforts reporting is beneficial to firms who are actively developing new processes and procedures to comply with the new reporting requirements. To better align reporting between the Call Reports and the FR Y-9C, we request that the Federal Reserve align the reporting for the FR Y-9C with this same guidance, instituting a best efforts reporting basis for firms beginning with the December 31, 2024 reports until the June 30, 2025 reports. We further ask that the Federal Reserve and other agencies clarify that this reporting treatment is applicable to all proposed changes from the December 2023 Call Report notice, as these items were grouped together for reporting timelines in the final 30-day Federal Register notice. Specifically, this would entail that the revisions related to the reporting of loans to NDFIs, and the reporting of purpose and non-purpose loans secured by securities in Schedule HC-C/RC-C line item 9.b.(1), be effective as of December 31, 2024, and that firms be permitted to report on a best efforts basis until June 30, 2025.
As stated in prior BPI letters,[10] these proposed changes would require the development of new systems, processes and controls, as well as testing to ensure that these are compliant and operational, and firms would have to undergo an extensive review of a significant number of loans. If the Federal Reserve were to extend the reporting timeline and best efforts reporting period outlined in FIL-71-2024 to the FR Y-9 report series, it would provide firms the necessary additional time to address the required systems changes. Additionally, alignment with the Call Reports would eliminate the burden of running dual processes for the reporting of these items. As noted below, there remain outstanding questions requiring further clarification on the reporting instructions with respect to the reporting of purpose and non-purpose loans in Schedule HC-C item 9.b.(1) and NDFI items that will take time for banks to implement after receiving the requested clarifications. Further, this reporting timeline and best efforts basis should be extended to other applicable regulatory reporting forms based on FR Y-9 reporting and impacted by the currently proposed changes, including the FR 2644 and FR 2886b.
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[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
[2] The Institute of International Bankers (IIB) represents the U.S. operations of internationally headquartered financial institutions from more than 35 countries around the world. The membership consists principally of international banks that operate branches, agencies, bank subsidiaries, and broker- dealer subsidiaries in the United States. The IIB works to ensure a level playing field for these institutions, which are an important source of credit for U.S. borrowers and comprise the majority of U.S. primary dealers. These institutions also enhance the depth and liquidity of U.S. financial markets and contribute significantly to the U.S. economy through direct employment of U.S. citizens, as well as through other operating and capital expenditures.
[3] 89 Fed. Reg. 80244.
[4] Bank Policy Institute, BPI Comments to FR Y-9 OMB No. 7100-0128 Revisions; FR 2886b OMB No. 7100- 0086 Revisions (Aug. 6, 2024), available at https://bpi.com/bpi-comments-on-reporting-requirement-changes-for-holding-companies-and-edge-and-agreement-corporations/; Bank Policy Institute, BPI Comments to Call Report and FFIEC 002 Revisions, OCC 1557- 0081 (June 18, 2024), available at bpi.com/wp-content/uploads/2024/07/BPI-Responds-to-Banking-Regulators-Call-Report-Revisions.pdf; Bank Policy Institute., BPI Comments to Call Report and FFIEC 002 Revisions (Feb. 26, 2024), available at bpi.com/wp-content/uploads/2024/02/BPI-Comment-Letter-Call-Report-and-FFIEC-002-Revisions.pdf
[5] 89 Fed. Reg. 45046.
[6] 88 Fed. Reg. 89489.
[7] FDIC, FIL-71-2024, available at https://www.fdic.gov/news/financial-institution- letters/2024/consolidated-reports-condition-and-income-third-quarter.
[8] Supra note 4.
[9] Supra note 6.
[10] Supra note 3.
