Federal Reserve Proposes Two-Year Phase-In Period for Most Savings and Loan Holding Companies to File Regulatory Reports

in Federal Reserve Board, Thrifts

By: Derrick Cephas and Alex Radetsky

On August 22, 2011 the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued a proposal and request for comments (the “Proposal”) to implement a two-year phase-in period for most savings and loan holding companies (“SLHCs”) to file Federal Reserve regulatory reports. The Proposal also calls for an exemption for some SLHCs from initially filing Federal Reserve regulatory reports.  As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, supervisory and rulemaking authority for SLHCs and their nondepository subsidiaries transferred from the Office of Thrift Supervision (“OTS”) to the Federal Reserve on July 21, 2011.  The Federal Reserve previously issued a notice of intent to require SLHCs to submit the same reports as bank holding companies (“BHCs”) beginning with the reporting period ending on March 31, 2012.  The reports covered by the Proposal can be found in the table below.  In the Proposal, the Federal Reserve proposes to exempt a limited number of SLHCs from initial regulatory reporting to the Federal Reserve and also implement a two-year phase-in period for regulatory reporting for all other SLHCs.  The Proposal does note that “exempt SLHCs would continue to submit Schedule HC, which is currently a part of the Thrift Financial Report, and the OTS H-(b)11 Annual/Current Report.”

Exempt SLHCs

The following two categories of SLHCs would be, according to the Proposal, initially exempt from the Federal Reserve’s BHC reports:

  • SLHCs that are exempt pursuant to section 10(c)(9)(C) of the Home Owners Loan Act (which are grandfathered unitary SLHCs in existence prior to May 4, 1999) and whose savings association subsidiaries’ consolidated assets make up less than 5 percent of the total consolidated assets of the SLHC as of the quarter end prior to the reporting date quarter end; or
  • SLHCs where the top-tier holding company is an insurance company that only prepares financial statements using statutory accounting principles.

All Other SLHCs

SLHCs which are not excluded pursuant to the two categories above would be subject to a two-year phase-in period, which would begin no sooner than the March 31, 2012 reporting period.  The purpose of the phase-in period is to give SLHCs an adequate amount of time to develop appropriate reporting systems.  The phase-in period would, according to the Proposal, work as follows:

  1. During 2012, SLHCs that are not excluded would be required to submit the FR Y-9 series of reports and one of two year-end annual reports (FR Y-6 or FR Y-7 reports).
  2. During 2013, these SLHCs would be required to submit all BHC regulatory reports that are applicable to the SLHC, depending on the size, complexity and nature of the holding company.
  3. All SLHCs submitting reports to the Federal Reserve would also continue to submit the Form H-(b)11 until further notice.

Table: Federal Reserve Regulatory Reports

Report Title Form Number(s) Filing Frequency Entities Required to Report
Annual Report of Bank Holding Companies FR Y-6 Annually Top-tier domestic BHCs
Annual Report of Foreign Banking Organizations FR Y-7 Annually Foreign banking organizations (“FBOs”)
Financial Statements for Bank Holding Companies FR Y-9C, FR Y-9LP, FRY-9SP, FR Y-9ES, and FR Y-9CS Quarterly, semiannually, and annually BHCs
Financial Statements for Nonbank Subsidiaries of U.S. Bank Holding Companies FR Y-11 and FR Y-11S Quarterly and annually BHCs
Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations FR 2314 and FR 2314S Quarterly and annually Foreign subsidiaries of U.S. state member banks, BHCs, and Edge or agreement corporations
Bank Holding Company Report of Insured Depository Institutions’ Section 23A Transactions with Affiliates FR Y-8 Quarterly Top-tier BHCs, including financial holding companies (“FHCs”), for all insured depository institutions that are owned by the BHC and by FBOs that directly own a U.S. subsidiary bank
Consolidated Bank Holding Company Report of Equity Investments in Nonfinancial Companies, and FR Y-12 Quarterly, semiannually, and annually BHCs and FHCs
Annual Report of Merchant Banking Investments Held for an Extended Period FR Y-12A Annually BHCs and FHCs
Capital and Asset Report of Foreign Banking Organizations, and the Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations FR Y-7Q, FR Y-7N and FR Y-7NS Quarterly and annually FBOs

The full text of the Proposal is available here.

The Working Group will continue to monitor any developments and provide timely coverage at Weil’s Financial Regulatory Reform Center.  If you are interested in discussing the Proposal, please contact Working Group members Derrick D. Cephas (212-310-8797 or derrick.cephas@weil.com) or Alex Radetsky (212-310-8905 or alex.radetsky@weil.com).

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