40664 Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Notices
EXPORT-IMPORT BANK OF THE
UNITED STATES
[Public Notice 41]
Agency Information Collection
Activities; Proposed Collection;
Common Request
AGENCY: Export-Import Bank of the
United States (Ex-Im Bank).
ACTION: Notice and request for
comments.
SUMMARY: Ex-Im Bank as a part of its
continuing effort to reduce paperwork
and respondent burden, invites the
general public and other Federal
agencies to take this opportunity to
comment on the proposed information
collection, as required by the Paperwork
Reduction Act of 1995.
DATES: Written comments should be
received on or before August 28, 2000
to be assured of consideration.
ADDRESSES: Direct all written comments
and requests for additional information
to Carlista Robinson, 811 Vermont
Avenue, N.W., Room 764, Washington,
D.C. 20571, (202) 565-3351.
SUPPLEMENTARY INFORMATION:
Title: U.S. Small Business
Administration, Export-Import Bank of
the United States, Joint Application for
Working Capital Guarantee.
OMB Number: 3048–0003.
Form Number: EIB–SBA 84–1 (Rev. 8/
2000).
Type of Review: Revision.
Abstract: The proposed form is to be
used by commercial banks and other
lenders as well as U.S. Exporters in
applying for guarantees on working
capital loans advanced by the lenders to
U.S. exporters.
Frequency of use: Upon application
for guarantees on working capital loans
advanced by the lenders to U.S.
exporters.
Respondents: Commercial banks and
other lenders, as well as U.S. exporters
throughout the United States.
Estimated total number of annual
responses: 600.
Estimated time per respondent: 2
hours.
Estimated total number of hours
needed to fill out the form: 1200.
Request for comment: Comments are
invited on: (a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Dated: June 26, 2000.
Carlista D. Robinson,
Agency Clearance Officer.
[FR Doc. 00–16590 Filed 6–29–00; 8:45 am]
BILLING CODE 6690–01–M
FEDERAL DEPOSIT INSURANCE
CORPORATION
Differences in Capital and Accounting
Standards Among the Federal Banking
and Thrift Agencies; Report to
Congressional Committees
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Report to the Committee on
Banking and Financial Services of the
U.S. House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the United States
Senate regarding differences in capital
and accounting standards among the
Federal banking and thrift agencies.
SUMMARY: This report has been prepared
by the FDIC pursuant to Section 37(c) of
the Federal Deposit Insurance Act (12
U.S.C. 1831n(c)). Section 37(c) requires
each federal banking agency to report to
the Committee on Banking and
Financial Services of the House of
Representatives and to the Committee
on Banking, Housing, and Urban Affairs
of the Senate any differences between
any accounting or capital standard used
by such agency and any accounting or
capital standard used by any other such
agency. The report must also contain an
explanation of the reasons for any
discrepancy in such accounting and
capital standards and must be published
in the Federal Register.
FOR FURTHER INFORMATION CONTACT:
Robert F. Storch, Chief, Accounting
Section, Division of Supervision,
Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, D.C.
20429, telephone (202) 898–8906.
SUPPLEMENTARY INFORMATION: The text of
the report follows:
Report to the Committee on Banking
and Financial Services of the U.S.
House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the United States
Senate Regarding Differences in Capital
and Accounting Standards Among the
Federal Banking and Thrift Agencies
A. Introduction
The Federal Deposit Insurance
Corporation (FDIC) has prepared this
report pursuant to Section 37(c) of the
Federal Deposit Insurance Act. Section
37(c) requires the agency to submit a
report to specified Congressional
Committees describing any differences
in regulatory capital and accounting
standards among the federal banking
and thrift agencies, including an
explanation of the reasons for these
differences. Section 37(c) also requires
the FDIC to publish this report in the
Federal Register. This report covers
differences existing during 1999 and
developments affecting these
differences.
The FDIC, the Board of Governors of
the Federal Reserve System (FRB), and
the Office of the Comptroller of the
Currency (OCC) (hereafter, the banking
agencies) have substantially similar
leverage and risk-based capital
standards. While the Office of Thrift
Supervision (OTS) employs a regulatory
capital framework that also includes
leverage and risk-based capital
requirements, it differs in some respects
from that of the banking agencies.
Nevertheless, the agencies view the
leverage and risk-based capital
requirements as minimum standards
and most institutions are expected to
operate with capital levels well above
the minimums, particularly those
institutions that are expanding or
experiencing unusual or high levels of
risk.
The banking agencies, under the
auspices of the Federal Financial
Institutions Examination Council
(FFIEC), have developed uniform
Reports of Condition and Income (Call
Reports) for all insured commercial
banks and FDIC-supervised savings
banks. The OTS requires each savings
association to file the Thrift Financial
Report (TFR). The reporting standards
for recognition and measurement in
both the Call Report and the TFR are
consistent with generally accepted
accounting principles (GAAP). Thus,
there are no significant differences in
reporting standards among the agencies.
However, two minor differences remain
between the standards of the banking
agencies and those of the OTS.
Section 303 of the Riegle Community
Development and Regulatory
VerDate 11<MAY>2000 18:23 Jun 29, 2000 Jkt 190000 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\30JNN1.SGM pfrm08 PsN: 30JNN1
EXPORT-IMPORT BANK OF THE
UNITED STATES
[Public Notice 41]
Agency Information Collection
Activities; Proposed Collection;
Common Request
AGENCY: Export-Import Bank of the
United States (Ex-Im Bank).
ACTION: Notice and request for
comments.
SUMMARY: Ex-Im Bank as a part of its
continuing effort to reduce paperwork
and respondent burden, invites the
general public and other Federal
agencies to take this opportunity to
comment on the proposed information
collection, as required by the Paperwork
Reduction Act of 1995.
DATES: Written comments should be
received on or before August 28, 2000
to be assured of consideration.
ADDRESSES: Direct all written comments
and requests for additional information
to Carlista Robinson, 811 Vermont
Avenue, N.W., Room 764, Washington,
D.C. 20571, (202) 565-3351.
SUPPLEMENTARY INFORMATION:
Title: U.S. Small Business
Administration, Export-Import Bank of
the United States, Joint Application for
Working Capital Guarantee.
OMB Number: 3048–0003.
Form Number: EIB–SBA 84–1 (Rev. 8/
2000).
Type of Review: Revision.
Abstract: The proposed form is to be
used by commercial banks and other
lenders as well as U.S. Exporters in
applying for guarantees on working
capital loans advanced by the lenders to
U.S. exporters.
Frequency of use: Upon application
for guarantees on working capital loans
advanced by the lenders to U.S.
exporters.
Respondents: Commercial banks and
other lenders, as well as U.S. exporters
throughout the United States.
Estimated total number of annual
responses: 600.
Estimated time per respondent: 2
hours.
Estimated total number of hours
needed to fill out the form: 1200.
Request for comment: Comments are
invited on: (a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Dated: June 26, 2000.
Carlista D. Robinson,
Agency Clearance Officer.
[FR Doc. 00–16590 Filed 6–29–00; 8:45 am]
BILLING CODE 6690–01–M
FEDERAL DEPOSIT INSURANCE
CORPORATION
Differences in Capital and Accounting
Standards Among the Federal Banking
and Thrift Agencies; Report to
Congressional Committees
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Report to the Committee on
Banking and Financial Services of the
U.S. House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the United States
Senate regarding differences in capital
and accounting standards among the
Federal banking and thrift agencies.
SUMMARY: This report has been prepared
by the FDIC pursuant to Section 37(c) of
the Federal Deposit Insurance Act (12
U.S.C. 1831n(c)). Section 37(c) requires
each federal banking agency to report to
the Committee on Banking and
Financial Services of the House of
Representatives and to the Committee
on Banking, Housing, and Urban Affairs
of the Senate any differences between
any accounting or capital standard used
by such agency and any accounting or
capital standard used by any other such
agency. The report must also contain an
explanation of the reasons for any
discrepancy in such accounting and
capital standards and must be published
in the Federal Register.
FOR FURTHER INFORMATION CONTACT:
Robert F. Storch, Chief, Accounting
Section, Division of Supervision,
Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, D.C.
20429, telephone (202) 898–8906.
SUPPLEMENTARY INFORMATION: The text of
the report follows:
Report to the Committee on Banking
and Financial Services of the U.S.
House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the United States
Senate Regarding Differences in Capital
and Accounting Standards Among the
Federal Banking and Thrift Agencies
A. Introduction
The Federal Deposit Insurance
Corporation (FDIC) has prepared this
report pursuant to Section 37(c) of the
Federal Deposit Insurance Act. Section
37(c) requires the agency to submit a
report to specified Congressional
Committees describing any differences
in regulatory capital and accounting
standards among the federal banking
and thrift agencies, including an
explanation of the reasons for these
differences. Section 37(c) also requires
the FDIC to publish this report in the
Federal Register. This report covers
differences existing during 1999 and
developments affecting these
differences.
The FDIC, the Board of Governors of
the Federal Reserve System (FRB), and
the Office of the Comptroller of the
Currency (OCC) (hereafter, the banking
agencies) have substantially similar
leverage and risk-based capital
standards. While the Office of Thrift
Supervision (OTS) employs a regulatory
capital framework that also includes
leverage and risk-based capital
requirements, it differs in some respects
from that of the banking agencies.
Nevertheless, the agencies view the
leverage and risk-based capital
requirements as minimum standards
and most institutions are expected to
operate with capital levels well above
the minimums, particularly those
institutions that are expanding or
experiencing unusual or high levels of
risk.
The banking agencies, under the
auspices of the Federal Financial
Institutions Examination Council
(FFIEC), have developed uniform
Reports of Condition and Income (Call
Reports) for all insured commercial
banks and FDIC-supervised savings
banks. The OTS requires each savings
association to file the Thrift Financial
Report (TFR). The reporting standards
for recognition and measurement in
both the Call Report and the TFR are
consistent with generally accepted
accounting principles (GAAP). Thus,
there are no significant differences in
reporting standards among the agencies.
However, two minor differences remain
between the standards of the banking
agencies and those of the OTS.
Section 303 of the Riegle Community
Development and Regulatory
VerDate 11<MAY>2000 18:23 Jun 29, 2000 Jkt 190000 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\30JNN1.SGM pfrm08 PsN: 30JNN1
40665Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Notices
1 For further information on these previous
differences in capital standards, please refer to the
FDIC’s Report Regarding Capital and Accounting
Differences Among the Federal Banking and Thrift
Agencies for 1998 (64 FR 26962).
2 When assets are sold with limited recourse, the
banking and thrift agencies’ risk-based capital
standards limit the amount of capital that must be
maintained against this exposure to the less of the
amount of the recourse retained (e.g., through the
retention of a subordinated interest) or the amount
of risk-based capital that would otherwise be
required to be held against the assets that were sold,
i.e., the full effective risk-based capital charge. This
is known as the ‘‘low-level recourse’’ rule.
Improvement Act of 1994 (12 U.S.C.
4803) requires the banking agencies and
the OTS to conduct a systematic review
of their regulations and written policies
in order to improve efficiency, reduce
unnecessary costs, and eliminate
inconsistencies. It also directs the four
agencies to work jointly to make
uniform all regulations and guidelines
implementing common statutory or
supervisory policies. The results of
these efforts must be ‘‘consistent with
the principles of safety and soundness,
statutory law and policy, and the public
interest.’’
Effective April 1, 1999, the four
agencies amended their capital
standards to adopt a uniform minimum
leverage capital requirement and
uniform risk-based capital standards for
the treatment of presold residential
construction loans, junior liens on one-
to-four family residential properties,
and investments in mutual funds.1 The
four agencies’ ongoing efforts to
eliminate other differences among their
regulatory capital standards are
discussed in the following section.
B. Differences in Capital Standards
Among the Federal Banking and Thrift
Agencies
B.1. Capital Requirements for Recourse
Arrangements
B.1.a. Senior-Subordinated
Structures—Some asset securitization
structures involve the creation of senior
and subordinated classes of securities or
other financial instruments. When a
bank originates such a transaction and
retains a subordinated interest, the
banking agencies generally require that
the bank maintain risk-based capital
against its subordinated interest plus all
more senior interests unless the low-
level recourse rule applies.2 However,
when a bank purchases a subordinated
interest in a pool of assets that it did not
own, the banking agencies assign the
investment in the subordinated interest
to the 100 percent risk weight category.
In general, unless the low-level
recourse rule applies, the OTS requires
a thrift that holds the subordinated
interest in a senior-subordinated
structure to maintain capital against the
subordinated interest plus all more
senior interests regardless of whether
the subordinated interest has been
retained or has been purchased.
On March 8, 2000, the banking and
thrift agencies published a proposal
that, among other provisions, generally
would treat both retained and
purchased subordinated interests
similarly for risk-based capital
purposes, i.e., banks and thrifts would
be required to hold capital against the
subordinated interest plus all more
senior interests unless the low-level
recourse rule applies. The proposal also
includes a multi-level approach for
determining the capital requirements for
asset securitizations. The multi-level
approach would vary the risk-based
capital requirements for positions in
securitizations, including subordinated
interests, according to their relative risk
exposure. The comment period for the
proposal ended on June 7, 2000. After
the agencies evaluate the comments
received, they will determine how to
proceed with their joint proposal.
B.1.b. Recourse Servicing—The right
to service loans and other financial
assets may be retained when the assets
are sold. This right also may be acquired
from another entity. Regardless of
whether servicing rights are retained or
acquired, recourse is present whenever
the servicer must absorb credit losses on
the assets being serviced. The banking
agencies and the OTS require an
institution to maintain risk-based
capital against the full amount of assets
sold by the institution if the institution,
as servicer, must absorb credit losses on
those assets. Additionally, the OTS
applies a capital charge to the full
amount of assets being serviced by a
thrift that has purchased the servicing
from another party if the thrift is
required to absorb credit losses on the
assets being serviced.
The agencies’ March 2000 risk-based
capital proposal would require banks
that purchase loan servicing rights
which provide loss protection to the
owners of the serviced loans to begin to
hold capital against those loans, thereby
making the risk-based capital treatment
of these servicing rights uniform for
banks and savings associations. As
mentioned above, after evaluating the
comments received on the proposal, the
agencies will determine how to proceed
with the proposal.
B.2. Interest Rate Risk
Section 305 of the FDIC Improvement
Act of 1991 mandates that the agencies’
risk-based capital standards take
adequate account of interest rate risk. In
August 1995, each of the banking
agencies amended its capital standards
to specifically include an assessment of
a bank’s interest rate risk, as measured
by its exposure to declines in the
economic value of its capital due to
changes in interest rates, in the
evaluation of bank capital adequacy. In
June 1996, the banking agencies issued
a Joint Agency Policy Statement on
Interest Rate Risk that provides
guidance on sound practices for
managing interest rate risk. This policy
statement does not establish a
standardized measure of interest rate
risk nor does it create an explicit capital
charge for interest rate risk. Instead, the
policy statement identifies the standards
that the banking agencies will use to
evaluate the adequacy and effectiveness
of a bank’s interest rate risk
management.
In 1993, the OTS adopted a final rule
that adds an interest rate risk
component to its risk-based capital
standards. Under this rule, savings
associations with a greater than normal
interest rate exposure must take a
deduction from the total capital
available to meet their risk-based capital
requirement. The deduction is equal to
one half of the difference between the
institution’s actual measured exposure
and the normal level of exposure. The
OTS has partially implemented this rule
by formalizing the review of interest rate
risk; however, no deductions from
capital are being made. Thus, the
regulatory capital approach to interest
rate risk adopted by the OTS differs
from that of the banking agencies.
B.3. Subsidiaries
The banking agencies generally
consolidate all significant majority-
owned subsidiaries of the parent bank
for regulatory capital purposes. The
purpose of this practice is to assure that
capital requirements are related to all of
the risks to which the bank is exposed.
For subsidiaries that are not
consolidated on a line-for-line basis,
their balance sheets may be
consolidated on a pro-rata basis, bank
investments in such subsidiaries may be
deducted entirely from capital, or the
investments may be risk-weighted at
100 percent, depending upon the
circumstances. These options for
handling subsidiaries for purposes of
determining the capital adequacy of the
parent bank provide the banking
agencies with the flexibility necessary to
ensure that institutions maintain capital
levels that are commensurate with the
actual risks involved.
Under the OTS’ capital guidelines, a
statutorily mandated distinction is
drawn between subsidiaries engaged in
activities that are permissible for
VerDate 11<MAY>2000 18:23 Jun 29, 2000 Jkt 190000 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\30JNN1.SGM pfrm08 PsN: 30JNN1
1 For further information on these previous
differences in capital standards, please refer to the
FDIC’s Report Regarding Capital and Accounting
Differences Among the Federal Banking and Thrift
Agencies for 1998 (64 FR 26962).
2 When assets are sold with limited recourse, the
banking and thrift agencies’ risk-based capital
standards limit the amount of capital that must be
maintained against this exposure to the less of the
amount of the recourse retained (e.g., through the
retention of a subordinated interest) or the amount
of risk-based capital that would otherwise be
required to be held against the assets that were sold,
i.e., the full effective risk-based capital charge. This
is known as the ‘‘low-level recourse’’ rule.
Improvement Act of 1994 (12 U.S.C.
4803) requires the banking agencies and
the OTS to conduct a systematic review
of their regulations and written policies
in order to improve efficiency, reduce
unnecessary costs, and eliminate
inconsistencies. It also directs the four
agencies to work jointly to make
uniform all regulations and guidelines
implementing common statutory or
supervisory policies. The results of
these efforts must be ‘‘consistent with
the principles of safety and soundness,
statutory law and policy, and the public
interest.’’
Effective April 1, 1999, the four
agencies amended their capital
standards to adopt a uniform minimum
leverage capital requirement and
uniform risk-based capital standards for
the treatment of presold residential
construction loans, junior liens on one-
to-four family residential properties,
and investments in mutual funds.1 The
four agencies’ ongoing efforts to
eliminate other differences among their
regulatory capital standards are
discussed in the following section.
B. Differences in Capital Standards
Among the Federal Banking and Thrift
Agencies
B.1. Capital Requirements for Recourse
Arrangements
B.1.a. Senior-Subordinated
Structures—Some asset securitization
structures involve the creation of senior
and subordinated classes of securities or
other financial instruments. When a
bank originates such a transaction and
retains a subordinated interest, the
banking agencies generally require that
the bank maintain risk-based capital
against its subordinated interest plus all
more senior interests unless the low-
level recourse rule applies.2 However,
when a bank purchases a subordinated
interest in a pool of assets that it did not
own, the banking agencies assign the
investment in the subordinated interest
to the 100 percent risk weight category.
In general, unless the low-level
recourse rule applies, the OTS requires
a thrift that holds the subordinated
interest in a senior-subordinated
structure to maintain capital against the
subordinated interest plus all more
senior interests regardless of whether
the subordinated interest has been
retained or has been purchased.
On March 8, 2000, the banking and
thrift agencies published a proposal
that, among other provisions, generally
would treat both retained and
purchased subordinated interests
similarly for risk-based capital
purposes, i.e., banks and thrifts would
be required to hold capital against the
subordinated interest plus all more
senior interests unless the low-level
recourse rule applies. The proposal also
includes a multi-level approach for
determining the capital requirements for
asset securitizations. The multi-level
approach would vary the risk-based
capital requirements for positions in
securitizations, including subordinated
interests, according to their relative risk
exposure. The comment period for the
proposal ended on June 7, 2000. After
the agencies evaluate the comments
received, they will determine how to
proceed with their joint proposal.
B.1.b. Recourse Servicing—The right
to service loans and other financial
assets may be retained when the assets
are sold. This right also may be acquired
from another entity. Regardless of
whether servicing rights are retained or
acquired, recourse is present whenever
the servicer must absorb credit losses on
the assets being serviced. The banking
agencies and the OTS require an
institution to maintain risk-based
capital against the full amount of assets
sold by the institution if the institution,
as servicer, must absorb credit losses on
those assets. Additionally, the OTS
applies a capital charge to the full
amount of assets being serviced by a
thrift that has purchased the servicing
from another party if the thrift is
required to absorb credit losses on the
assets being serviced.
The agencies’ March 2000 risk-based
capital proposal would require banks
that purchase loan servicing rights
which provide loss protection to the
owners of the serviced loans to begin to
hold capital against those loans, thereby
making the risk-based capital treatment
of these servicing rights uniform for
banks and savings associations. As
mentioned above, after evaluating the
comments received on the proposal, the
agencies will determine how to proceed
with the proposal.
B.2. Interest Rate Risk
Section 305 of the FDIC Improvement
Act of 1991 mandates that the agencies’
risk-based capital standards take
adequate account of interest rate risk. In
August 1995, each of the banking
agencies amended its capital standards
to specifically include an assessment of
a bank’s interest rate risk, as measured
by its exposure to declines in the
economic value of its capital due to
changes in interest rates, in the
evaluation of bank capital adequacy. In
June 1996, the banking agencies issued
a Joint Agency Policy Statement on
Interest Rate Risk that provides
guidance on sound practices for
managing interest rate risk. This policy
statement does not establish a
standardized measure of interest rate
risk nor does it create an explicit capital
charge for interest rate risk. Instead, the
policy statement identifies the standards
that the banking agencies will use to
evaluate the adequacy and effectiveness
of a bank’s interest rate risk
management.
In 1993, the OTS adopted a final rule
that adds an interest rate risk
component to its risk-based capital
standards. Under this rule, savings
associations with a greater than normal
interest rate exposure must take a
deduction from the total capital
available to meet their risk-based capital
requirement. The deduction is equal to
one half of the difference between the
institution’s actual measured exposure
and the normal level of exposure. The
OTS has partially implemented this rule
by formalizing the review of interest rate
risk; however, no deductions from
capital are being made. Thus, the
regulatory capital approach to interest
rate risk adopted by the OTS differs
from that of the banking agencies.
B.3. Subsidiaries
The banking agencies generally
consolidate all significant majority-
owned subsidiaries of the parent bank
for regulatory capital purposes. The
purpose of this practice is to assure that
capital requirements are related to all of
the risks to which the bank is exposed.
For subsidiaries that are not
consolidated on a line-for-line basis,
their balance sheets may be
consolidated on a pro-rata basis, bank
investments in such subsidiaries may be
deducted entirely from capital, or the
investments may be risk-weighted at
100 percent, depending upon the
circumstances. These options for
handling subsidiaries for purposes of
determining the capital adequacy of the
parent bank provide the banking
agencies with the flexibility necessary to
ensure that institutions maintain capital
levels that are commensurate with the
actual risks involved.
Under the OTS’ capital guidelines, a
statutorily mandated distinction is
drawn between subsidiaries engaged in
activities that are permissible for
VerDate 11<MAY>2000 18:23 Jun 29, 2000 Jkt 190000 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\30JNN1.SGM pfrm08 PsN: 30JNN1