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:

The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, without revision, the Recordkeeping Provisions Associated with Stress Testing Guidance (FR 4202; OMB No. 7100-0348). The Board has extended the FR 4202 without revision to ensure compliance with the Paperwork Reduction Act (PRA). However, whether and how any changes should be made to the guidance in light of recent amendments made by the Board to its stress testing rules is under consideration. The Board will publish any proposed changes to the FR 4202 via a separate notice for comment.

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.

Office of Management and Budget (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, or by fax to (202) 395-6974.

SUPPLEMENTARY INFORMATION:

On June 15, 1984, OMB delegated to the Board authority under the PRA to approve and assign OMB control numbers to collections of information conducted or sponsored by the Board. Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. The OMB inventory, as well as copies of the PRA Submission, supporting statements, and approved collection of information instrument(s) are available at https://www.reginfo.gov/public/do/PRAMain. These documents are also available on the Federal Reserve Board's public website at https://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested from the agency clearance officer, whose name appears above.

Final Approval Under OMB Delegated Authority of the Extension for Three Years, Without Revision, of the Following Information Collection

Report title: Recordkeeping Provisions Associated with Stress Testing Guidance.

Agency form number: FR 4202.

OMB control number: 7100-0348.

Frequency: As needed.

Respondents: Banking organizations.

Estimated number of respondents: 100.

Estimated average hours per response: 180.

Estimated annual burden hours: 18,000.

General description of report: On May 17, 2012, the Board published the Supervisory Guidance on Stress Testing for Banking Organizations With More Than $10 Billion in Total Consolidated Assets (Stress Testing Guidance) in the Federal Register. The Stress Testing Guidance outlines high-level principles for stress testing practices applicable to all Board-supervised banking organizations with more than $10 billion in total consolidated assets.

The Stress Testing Guidance recommends that banking organizations (i) have a stress testing framework that includes clearly defined objectives, well-designed scenarios tailored to the banking organization's business and risks, well-documented assumptions, conceptually sound methodologies to assess potential impact on the banking organization's financial condition, informative management reports, and recommended actions based on stress test results; and (ii) have policies and procedures for a stress testing framework. These recordkeeping activities are collections of information under the PRA.

An organization should have written policies, approved and annually reviewed by the board, that direct and govern the implementation of the stress testing framework in a comprehensive manner. Policies, along with procedures to implement them, should:

• Describe the overall purpose of stress testing activities;
• articulate consistent and sufficiently rigorous stress testing practices across the entire organization;
• indicate stress testing roles and responsibilities, including controls over external resources used for any part of stress testing (such as vendors and data providers);
• describe the frequency and priority with which stress testing activities should be conducted;
• indicate how stress test results are used and by whom, and
• be reviewed and updated as necessary to ensure that stress testing practices remain appropriate and keep up to date with changes in market conditions, organization products and strategies, organization exposures and activities, the organization's established risk appetite, and industry stress testing practices.

Legal authorization and confidentiality: This voluntary information collection is authorized pursuant to section 11 of the Federal Reserve Act, 12 U.S.C. 248 (state member banks); sections 25 and 25A of the Federal Reserve Act, 12 U.S.C. 602 and 625 (Edge and Agreement corporations); section 5 of the Bank Holding Company Act of 1956, 12 U.S.C. 1844 (bank holding companies) and, in conjunction with section 8 of the International Banking Act, 12 U.S.C. 3106 (foreign banking organizations); section 7(c) of the International Banking Act of 1978, 12 U.S.C. 3105(c) (branches and agencies of foreign banks); section 10 of the Home Owners' Loan Act, 12 U.S.C. 1467a, (savings and loan holding companies), and section 165(i) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. 5365 (nonbank financial companies supervised by the Board).

Because the collections of information associated with the FR 4202 do not involve the submission of information to the Board, no issues of confidentiality would normally arise. To the extent that the Board collects such information during an examination of the banking organization, confidential treatment may be afforded to that information under exemption 8 of the Freedom of Information Act (FOIA) (5 U.S.C. 552(b)(8)), which protects information collected as part of the Board's supervisory process. Additionally, individual respondents may request confidential treatment of information pursuant to exemption 4 of the FOIA (5 U.S.C. 552(b)(4)), which protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” The Board will treat such information as confidential to the extent permitted by law, including the FOIA.

Current actions: On March 8, 2021, the Board published an initial notice in the Federal Register (86 FR 13378) requesting public comment for 60 days on the extension, without revision, of the FR 4202. The comment period for this notice expired on May 7, 2021. The Board did not receive any comments. The Board will adopt the extension, without revision, of the FR 4202 as originally proposed.