[Federal Register Volume 80, Number 176 (Friday, September 11, 2015)]
[Notices]
[Pages 54790-54793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22931]
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FEDERAL RESERVE SYSTEM
Agency Information Collection Activities: Announcement of Board
Approval Under Delegated Authority and Submission to OMB
AGENCY: Board of Governors of the Federal Reserve System.
SUMMARY: Notice is hereby given of the final approval of proposed
information collections by the Board of Governors of the Federal
Reserve System (Board) under OMB delegated authority, as per 5 CFR
1320.16 (OMB Regulations on Controlling Paperwork Burdens on the
Public). Board-approved collections of information are incorporated
into the official OMB inventory of currently approved collections of
information. Copies of the Paperwork Reduction Act Submission,
supporting statements and approved collection of information
instrument(s) are placed into OMB's public docket files. The Federal
Reserve may not conduct or sponsor, and the respondent is not required
to respond to, an information collection that has been extended,
revised, or implemented on or after October 1, 1995, unless it displays
a currently valid OMB control number.
FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance
Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of
Governors of the Federal Reserve System, Washington, DC 20551 (202)
452-3829. Telecommunications Device for the Deaf (TDD) users may
contact (202) 263-4869, Board of Governors of the Federal Reserve
System, Washington, DC 20551.
OMB Desk Officer--Shagufta Ahmed--Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 10235, 725 17th Street NW., Washington, DC 20503.
SUPPLEMENTARY INFORMATION:
Final approval under OMB delegated authority of the extension for
three years, without revision, of the following reports:
1. Report title: Notice of Mutual Holding Company Reorganization
and the Application for Approval of a Minority Stock Issuance by a
Savings Association Subsidiary of a Mutual Holding Company.
Agency form number: Form 1522; Form 1523.
OMB control number: 7100-0340.
Frequency: On occasion.
Reporters: Mutual savings associations and savings association
subsidiaries or subsidiary holding companies of a mutual holding
company.
Estimated annual reporting hours: Form 1522: 400 hours; Form 1523:
1,050 hours.
Estimated average hours per response: Form 1522: 400 hours; Form
1523: 350 hours.
Number of respondents: Form 1522: 1; Form 1523: 3.
General description of report: Forms 1522 and 1523 are mandatory
and authorized pursuant to section 10 of the Home Owners' Loan Act
(HOLA). Section 10 of HOLA (``Regulations of holding companies'')
provides generally that ``[t]he Board is authorized to issue such
regulations . . . as the Board deems necessary or appropriate to enable
the Board to administer and carry out the purposes of this section, and
to require compliance therewith and prevent evasions thereof.'' (12
U.S.C. 1467a(g)(1)). With respect to mutual holding companies, HOLA
states that a mutual holding company ``shall be subject to such
regulations as the Board may prescribe.'' (12 U.S.C. 1467a(o)(7)).
Section 10 of HOLA also requires a savings and loan holding company to
file ``such reports as may be required by the Board'' and provides that
such reports ``shall contain such information concerning the operations
of such savings and loan holding company and its subsidiaries as the
Board may require.'' (12 U.S.C. 1467a(b)(2)).
The information on Forms 1522 and 1523 generally are not considered
confidential. However, the notificant or applicant may request
confidential treatment for portions of these forms pursuant to
exemption 4 of the Freedom of Information Act, (5 U.S.C. 552(b)(4)) if
it believes disclosure of those portions would likely result in
substantial competitive harm. All such requests for confidential
treatment would need to be reviewed on a case-by-case basis and in
response to a specific request for disclosure.
Abstract: Any mutual savings association that wishes to reorganize
to form a mutual holding company must submit a notice (Form 1522) to
the Federal Reserve. The notice provides details of the reorganization
plan, which is to be approved by the majority of the association's
board of directors and any acquired association. Details of the
reorganization plan should contain a complete description of all
significant terms of the proposed reorganization, shall attach and
incorporate any Stock Issuance Plan proposed in connection with the
reorganization plan, and comply with other informational requirements
specified in (12 CFR 239.6).
Any savings association subsidiary or subsidiary holding company of
a mutual holding company must file an application (Form 1523) for
minority stock issuance. Minority stock issuances applications are
required to provide the Federal Reserve with information to determine
whether mutual holding companies and their subsidiaries are conducting
insider abuse or unsafe and unsound practices.
The Federal Reserve intends to update and revise the Notice and
Application to conform to Federal Reserve standards in the near future.
Current Actions: On June 17, 2015, the Federal Reserve published a
notice in the Federal Register (80 FR 34641) requesting public comment
for 60 days on the extension, without revision, of the Notice of Mutual
Holding Company Reorganization and the Application for Approval of a
Minority Stock Issuance by a Savings Association Subsidiary of a Mutual
Holding Company. The comment period for this notice expired on August
17, 2015. The Federal Reserve did not receive any comments. The
information collection will be extended as proposed.
2. Report title: Application for Conversion, Proxy Statement,
Offering Circular, and Order Form.
Agency form number: Form 1680, Form 1681, Form 1682, Form 1683.
OMB control number: 7100-0335.
Frequency: On occasion.
Reporters: Mutual holding companies.
Estimated annual reporting hours: Form 1680: 2,990 hours; Form
1681: 50 hours; Form 1682: 1.50 hours; Form 1683: 10 hours.
Estimated average hours per response: Form 1680: 299 hours; Form
1681: 500 hours; Form 1682: 150 hours; Form 1683: 1 hour.
Number of respondents: Form 1680: 10; Form 1681: 10; Form 1682: 10;
Form 1683: 10.
General description of report: The mutual stock conversion forms
are mandatory and authorized by Home Owners' Loan Act (HOLA) section
10, which provides generally that ``the Board is authorized to issue
such regulations . . . as the Board deems necessary or appropriate to
enable the Board to administer and carry out the
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purposes of this section, and to require compliance therewith and
prevent evasions thereof.'' (12 U.S.C. 1467a(g)(1)). With respect to
mutual holding companies, HOLA states that a mutual holding company
``shall be subject to such regulations as the Board may prescribe.''
(12 U.S.C. 1467a(o)(7)). Section 10 of HOLA also requires a savings and
loan holding company to file ``such reports as may be required by the
Board'' and provides that such reports ``shall contain such information
concerning the operations of such savings and loan holding company and
its subsidiaries as the Board may require.'' (12 U.S.C. 1467a(b)(2).
Forms 1681, 1682, and 1683 are distributed to the owners of the
mutual holding company; no issues of confidentiality should arise in
connection with these forms. One of the elements required for the
application on Form 1680 is a consolidated business plan showing how
the capital acquired in the conversion will be used. Business plans are
not considered confidential, although the applicant may request
confidential treatment pursuant to sections (b)(4), of the Freedom of
Information Act (5 U.S.C. 552(b)(4),) for portions of the business plan
if disclosure would likely result in substantial competitive harm. All
such requests for confidential treatment would need to be reviewed on a
case-by-case basis and in response to a specific request for
disclosure.
Abstract: Sections 5(i) (standard conversions) and 5(p)
(supervisory conversions) of HOLA authorize mutual to stock
conversions. The four individual forms are all one-time submissions
that are used by mutual holding companies requesting approval to
convert to a stock institution. The Federal Reserve intends to update
and revise the mutual stock conversion application forms to conform to
Federal Reserve standards in the near future.
Current Actions: On June 17, 2015, the Federal Reserve published a
notice in the Federal Register (80 FR 34641) requesting public comment
for 60 days on the extension, without revision, of the Application for
Conversion, Proxy Statement, Offering Circular, and Order Form. The
comment period for this notice expired on August 17, 2015. The Federal
Reserve did not receive any comments. The information collection will
be extended as proposed.
3. Report title: Savings and Loan Holding Company Application.
Agency form number: Form H-(e).
OMB control number: 7100-0336.
Frequency: On occasion.
Reporters: Entities seeking prior approval to become a savings and
loan holding company (SLHC).
Estimated annual reporting hours: 6,000 hours.
Estimated average hours per response: 500 hours.
Number of respondents: 12.
General description of report: The Savings and Loan Holding Company
Application is mandatory and authorized pursuant to section 10 of HOLA,
which provides that ``the Board is authorized to issue such regulations
. . . as the Board deems necessary or appropriate to enable the Board
to administer and carry out the purposes of this sections, and require
compliance therewith and prevent evasions thereof.'' (12 U.S.C.
1467a(g)(1)). Section 10 of HOLA also requires a savings and loan
holding company to file ``such reports as may be required by the
Board'' and provides that such reports ``shall contain such information
concerning the operations of such savings and loan holding company and
its subsidiaries as the Board may require (12 U.S.C. 1467a(b)(2).
The information on Form H-(e) is not considered confidential unless
the applicant requests confidential treatment pursuant to exemption 4
or 6 of the Freedom of Information Act (5 U.S.C. 552(b)(4),(6)). All
such requests for confidential treatment would need to be reviewed on a
case-by-case basis and in response to a specific request for
disclosure.
Abstract: The Federal Reserve analyzes each holding company
application to determine whether the applicant meets the statutory
criteria set forth in section 10(e) of the Home Owners' Loan Act (Act),
as amended, to become a savings and loan holding company. The
applications are reviewed for adequacy of answers to items and
completeness in all material respects. The applications are event-
generated and provide the Federal Reserve with information necessary to
evaluate the proposed transaction. The Federal Reserve intends to
update and revise the Application forms to conform to Federal Reserve
standards in the near future.
Current Actions: On June 17, 2015, the Federal Reserve published a
notice in the Federal Register (80 FR 34641) requesting public comment
for 60 days on the extension, without revision, of the Savings and Loan
Holding Company Application. The comment period for this notice expired
on August 17, 2015. The Federal Reserve did not receive any comments.
The information collection will be extended as proposed.
4. Report title: Recordkeeping Requirements Associated with the
Guidance on Sound Incentive Compensation Policies.
Agency form number: FR 4027.
OMB control number: 7100-0327.
Frequency: On occasion.
Reporters: State member banks, U.S. bank holding companies, savings
and loan holding companies, Edge Act and agreement corporations, and
the U.S. operations of foreign banks with a branch, agency, or
commercial lending company in the United States.
Estimated annual reporting hours: One-time implementation: Large
institutions: 2,400 hours and small institutions: 400 hours; Ongoing
maintenance: 228,400 hours.
Estimated average hours per response: One-time implementation:
Large institutions: 480 hours and small institutions: 80 hours; Ongoing
maintenance: 40 hours.
Number of respondents: One-time implementation: Large institutions:
5 respondents and small institutions: 5 respondents; Ongoing
maintenance: 5,710 respondents.
General description of report: This information collection is
authorized pursuant to sections 9, 11(a), 11(i), 25, and 25A of the
Federal Reserve Act (12 U.S.C. 248(a), 248(i), 324, 602, and 625),
section 5 of the Bank Holding Company Act (12 U.S.C. 1844), section
10(b)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2)), and
section 7(c) of the International Banking Act (12 U.S.C. 3105(c)).
Because the recordkeeping requirements are contained within guidance
(and not a statute or regulation) they are voluntary. Because the
records will be maintained by each banking institution, the Freedom of
Information Act (FOIA) would only be implicated if the Board's
examiners retained a copy of the records as part of an examination or
supervision of the banking institution. To the extent the Board
collects this information during the course of an examination or
supervision of a banking institution, the information is considered
confidential under exemption 8 of the FOIA (5 U.S.C. 552(b)(8)). In
addition, the information may also be kept confidential under exemption
4 of the FOIA which protects commercial or financial information
obtained from a person that is privileged or confidential (5 U.S.C.
552(b)(4)).
Abstract: Incentive compensation practices in the financial
services industry were one of many factors contributing to the
financial crisis that began in 2007. Banking organizations too often
rewarded employees for increasing the firm's short-term revenue or
profit without adequate recognition of the risks the employees'
activities
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posed for the firm. More importantly, problematic compensation
practices were not limited to the most senior executives at financial
firms. Compensation practices can encourage employees at various levels
of a banking organization, either individually or as a group, to
undertake imprudent risks that can significantly and adversely affect
the risk profile of the firm.
The Sound Incentive Compensation Policies (the Guidance) was
developed to help protect the safety and soundness of banking
organizations and promote the prompt improvement of incentive
compensation practices throughout the banking industry. In addition,
the guidance is consistent with the Principles for Sound Compensation
Practices adopted by the Financial Stability Board (FSB) in April 2009,
as well as the Implementation Standards for those principles issued by
the FSB in September 2009.
Compatibility With Effective Controls and Risk Management
Principle 2 of the Guidance states that a banking organization
should have strong controls governing its process for designing,
implementing, and monitoring incentive compensation arrangements. An
organization's policies and procedures should:
Identify and describe the role(s) of the personnel,
business units, and control units authorized to be involved in the
design, implementation, and monitoring of incentive compensation
arrangements;
identify the source of significant risk-related inputs
into these processes and establish appropriate controls governing the
development and approval of these inputs to help ensure their
integrity; and
identify the individual(s) and control unit(s) whose
approval is necessary for the establishment of new incentive
compensation arrangements or modification of existing arrangements.
Banking organizations also should create and maintain sufficient
documentation to permit an audit of the organization's processes for
establishing, modifying, and monitoring incentive compensation
arrangements.
The Guidance also states that a banking organization should conduct
regular internal reviews to ensure that its processes for achieving and
maintaining balanced incentive compensation arrangements are
consistently followed. Such reviews should be conducted by audit,
compliance, or other personnel in a manner consistent with the
organization's overall framework for compliance monitoring. An
organization's internal audit department also should separately conduct
regular audits of the organization's compliance with its established
policies and controls relating to incentive compensation arrangements.
The results should be reported to appropriate levels of management and,
where appropriate, the organization's board of directors.
Strong Corporate Governance
Principle 3 of the Guidance states that the board of directors
should review and approve the overall goals and purposes of the firm's
incentive compensation system. The board of directors should provide
clear direction to management to ensure that its policies and
procedures are carried out in a manner that achieves balance and is
consistent with safety and soundness.
The board of directors should approve and document any material
exceptions or adjustments to the incentive compensation arrangements
established for senior executives and should carefully consider and
monitor the effects of any approved exceptions or adjustments on the
balance of the arrangement, the risk-taking incentives of the senior
executive, and the safety and soundness of the organization.
The board of directors should receive and review, on an annual or
more frequent basis, an assessment by management, with appropriate
input from risk management personnel, of the effectiveness of the
design and operation of the organization's incentive compensation
system in providing risk taking incentives that are consistent with the
organization's safety and soundness. These reports should include an
evaluation of whether or how incentive compensation practices may be
encouraging excessive risk taking. These reviews and reports should be
appropriately scoped to reflect the size and complexity of the banking
organization's activities and the prevalence and scope of its incentive
compensation arrangements. In addition, at banking organizations that
are significant users of incentive compensation arrangements, the board
should receive periodic reports that review incentive compensation
awards and payments relative to risk outcomes on a backward-looking
basis to determine whether the organization's incentive compensation
arrangements may be promoting excessive risk-taking.
Current Actions: On June 23, 2015, the Federal Reserve published a
notice in the Federal Register (80 FR 35953) requesting comment for 60
days on the Recordkeeping Requirements Associated with the Guidance on
Sound Incentive Compensation Policies. The comment period for this
notice expired on August 24, 2015. The Federal Reserve did not receive
any comments. The information collection will be extended as proposed.
5. Report title: Interagency Guidance on Managing Compliance and
Reputation Risks for Reverse Mortgage Products.
Agency form number: FR 4029.
OMB control number: 7100-0330.
Frequency: On occasion.
Reporters: State member banks that originate proprietary and Home
Equity Conversion Program (HECM) reverse mortgages.
Estimated annual reporting hours: Implementation of policies and
procedures, 680 hours; Review and maintenance of policies and
procedures, 136 hours.
Estimated average hours per response: Implementation of policies
and procedures, 40 hours; Review and maintenance of policies and
procedures, 8 hours.
Number of respondents: Implementation of policies and procedures,
17 respondents; Review and maintenance of policies and procedures, 17
respondents.
General description of report: Previously, the Board's Legal
Division determined that the Board was authorized to issue this
guidance pursuant to its authority under section 18(f) of the Federal
Trade Commission Act, which authorized the Board to prescribe
regulations regarding unfair or deceptive acts or practice by banks (15
U.S.C. 57a(f)) and section 105 of the Truth in Lending Act, which
authorized the Board to prescribe regulations to carry out the purposes
of the Truth in Lending Act (TILA) (15 U.S.C. 1604). However, under the
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act) much of the Board's authority under these laws was transferred to
the Consumer Financial Protection Bureau. Nonetheless, we continue to
believe that the Board has the authority to issue this guidance
pursuant to its authority under section 39 of the Federal Deposit
Insurance Act (FDI Act), which generally authorizes the Board to
establish safety and soundness standards for depository institutions
supervised by the Board (12 U.S.C. 1381p-1(a)). Financial institutions'
obligation under this guidance is voluntary. Because the documentation
required by the guidance is maintained by each institution, the Freedom
of Information Act (FOIA) would only be implicated if the Board's
examiners retained a copy of this information as part of an examination
or supervision of a bank. However, records
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obtained as a part of an examination or supervision of a bank are
exempt from disclosure under FOIA exemption (b)(8), for examination
material (5 U.S.C. 552(b)(8)). In addition, the information may also be
kept confidential under exemption 4 of the FOIA which protects
commercial or financial information obtained from a person that is
privileged or confidential (5 U.S.C. 552(b)(4)).
Abstract: Reverse mortgages are home-secured loans typically
offered to elderly consumers. Financial institutions currently provide
two types of reverse mortgage products: the lenders' own proprietary
reverse mortgage products and reverse mortgages insured by the
Department of Housing and Urban Development's Federal Housing
Administration (FHA). Reverse mortgage loans insured by the FHA are
made pursuant to the guidelines and rules established by HUD's HECM
program. HECM loans and proprietary reverse mortgages are also subject
to the rules that implement consumer protection laws such as the Real
Estate Settlement Procedures Act (RESPA) and TILA.
In August 2010, the Federal Financial Institutions Examination
Council, on behalf of its member agencies,\1\ published a Federal
Register notice adopting supervisory guidance titled ``Reverse Mortgage
Products: Guidance for Managing Compliance and Reputation Risks.'' \2\
The guidance is designed to help financial institutions with risk
management and assist financial institutions' efforts to ensure that
their reverse mortgage lending practices adequately address consumer
compliance and reputation risks.
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\1\ The Board, the Federal Deposit Insurance Corporation, the
National Credit Union Administration, the Office of the Comptroller
of the Currency, and the Office of Thrift Supervision.
\2\ 75 FR 50801.
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The guidance describes reporting, recordkeeping, and disclosures
for both proprietary and HECM reverse mortgages. A number of these
disclosures are ``usual and customary'' business practices for
proprietary and HECM reverse mortgages, and these would not meet the
PRA's definition of ``paperwork.'' Other included disclosure
requirements are currently mandated by RESPA or TILA for all reverse
mortgage loans and information collections required by HUD's rules for
HECM loans.\3\ Discussion of these requirements in the guidance is also
not considered additional paperwork burden imposed by the guidance.
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\3\ OMB Control No. 2502-0524.
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Proprietary reverse mortgage products, however, are not subject to
HUD's rules for HECM loans. To the extent that the interagency guidance
applies HECM requirements to proprietary loans, this would meet the
PRA's definition of paperwork burden.
There are also additional provisions in the guidance that apply to
both proprietary and HECM reverse mortgages that do not meet the
``usual and customary'' standard, are not covered by already approved
information collections and, therefore, likewise meet the PRA's
definition of paperwork burden.
Proprietary Reverse Mortgages
Financial institutions offering proprietary reverse mortgages are
encouraged under the guidance to follow or adopt relevant HECM
requirements for mandatory counseling, disclosures, affordable
origination fees, restrictions on cross-selling of ancillary products,
and reliable appraisals.
Proprietary and HECM Reverse Mortgages
Financial institutions offering either proprietary or HECM reverse
mortgages are encouraged to develop clear and balanced product
descriptions and make them available to consumers shopping for a
mortgage. They should set forth a description of how disbursements can
be received and include timely information to supplement disclosures
mandated by TILA and other disclosures. Promotional materials and
product descriptions should include information about the costs, terms,
features, and risks of reverse mortgage products.
Financial institutions should adopt policies and procedures that
prohibit directing a consumer to a particular counseling agency or
contacting a counselor on the consumer's behalf. They should adopt
clear written policies and establish internal controls specifying that
neither the lender nor any broker will require the borrower to purchase
any other product from the lender in order to obtain the mortgage.
Policies should be clear so that originators do not have an
inappropriate incentive to sell other products that appear linked to
the granting of a mortgage. Legal and compliance reviews should include
oversight of compensation programs so that lending personnel are not
improperly encouraged to direct consumers to particular products.
Financial institutions making, purchasing, or servicing reverse
mortgages through a third party should conduct due diligence and
establish criteria for third-party relationships and compensation. They
should set requirements for agreements and establish systems to monitor
compliance with the agreement and applicable laws and regulations. They
should also take corrective action if a third party fails to comply.
Third-party relationships should be structured in a way that does not
conflict with RESPA.
Current Actions: On June 23, 2015, the Federal Reserve published a
notice in the Federal Register (80 FR 35953) requesting comment for 60
days on the Supervisory Guidance on Managing Compliance and Reputation
Risks for Reverse Mortgage Products. The comment period for this notice
expired on August 24, 2015. The Federal Reserve did not receive any
comments. The information collection will be extended as proposed.
Board of Governors of the Federal Reserve System, September 8,
2015.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2015-22931 Filed 9-10-15; 8:45 am]
BILLING CODE 6210-01-P