FRW_20220412_omb

Supporting Statement for the
Reporting and Recordkeeping Requirements Associated with Regulation W
(FR W; OMB No. 7100-0304)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the Reporting and Recordkeeping Requirements Associated with Regulation W (FR W;
OMB No. 7100-0304), which implements sections 23A and 23B of the Federal Reserve Act
(FRA).1 The information collections associated with the Board’s Regulation W - Transactions
Between Member Banks and Their Affiliates (12 CFR Part 223) are triggered by specific events,
and there are no associated reporting forms (the FR W designation is for internal purposes only).
Filings are required from insured depository institutions and uninsured member banks
(collectively, depository institutions) 2 that seek to request certain exemptions from the
requirements of sections 23A and 23B. The FR W is separate from the quarterly Holding
Company Report of Insured Depository Institutions’ Section 23A Transactions with Affiliates
(FR Y-8; OMB No. 7100-0126), which collects information on transactions between an insured
depository institution and its affiliates that are subject to section 23A of the Federal Reserve Act.
The Board revised the FR W to account for two recordkeeping provisions in section
223.42 of Regulation W that have not been previously cleared by the Board under the Paperwork
Reduction Act (PRA).
The current estimated total annual burden for the FR W is 24 hours, and would increase
to 28 hours. The revisions would result in an increase of 4 hours.
Background and Justification
Sections 23A and 23B of the FRA are designed to protect a depository institution from
exposure arising from certain transactions with affiliates.3 They also limit the ability of an
insured depository institution to transfer the subsidy arising from access to the federal safety net
to such affiliates. Sections 23A and 23B apply, by their terms, to banks that are members of the
Federal Reserve System (member banks). As discussed in footnote 2, other federal law subjects
insured nonmember banks and insured thrifts to sections 23A and 23B in the same manner and to
the same extent as member banks. Regulation W implements sections 23A and 23B by defining

This information collection is currently titled “Reporting Requirements Associated with Regulation W.” Under the
proposal, the name of the collection would be changed to “Reporting and Recordkeeping Requirements Associated
with Regulation W” in order to reflect that the clearance would include recordkeeping requirements.
2
Sections 23A and 23B of the FRA and Regulation W apply by their terms to “member banks” that is, any national
bank, state bank, trust company, or other institution that is a member of the Federal Reserve System. In addition, the
Federal Deposit Insurance Act (12 U.S.C. § 1828(j)) applies sections 23A and 23B to insured state nonmember
banks in the same manner and to the same extent as if they were member banks. The Home Owners’ Loan Act (12
U.S.C. §1468(a)) also applies sections 23A and 23B to insured savings associations in the same manner and to the
same extent as if they were member banks (and imposes two additional restrictions). See generally 12 CFR 223.1.
3
See 12 U.S.C. §§ 371c and 371c-1.
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terms used in the statute, explaining the statute’s requirements, and exempting certain
transactions.
As discussed below, the regulation includes provisions requiring the reporting of
information to the Board under certain circumstances. This information is not available from
other sources, and is critical to the Federal Reserve and other Federal banking agencies being
able to determine whether a depository institution is complying with sections 23A and 23B and
Regulation W and whether a proposed transaction is financially sound and consistent with the
public interest.
Description of Information Collection
The FR W comprises the reporting requirements of Regulation W that are found in
sections 223.15(b)(4), 223.31(d)(4), 223.41(d)(2), and 223.43(b). This information is used to
demonstrate compliance with sections 23A and 23B and to request certain exemptions from the
Board.
Loan participation renewal notice (Section 223.15(b)(4)). Generally, a depository
institution is prohibited from purchasing a low-quality asset, as defined by Regulation W, from
an affiliate unless, pursuant to an independent credit evaluation, the depository institution had
committed itself to purchase the asset before the time the asset was acquired by the affiliate.
However, a depository institution may renew or extend additional credit with respect to a loan
participation if the loan was not a low-quality asset at the time the depository institution
purchased its participation, if certain requirements are met. One such requirement is that the
participating depository institution must provide its appropriate federal banking agency with a
written notice of the renewal of, or the extension of additional credit in connection with, a low quality asset not later than 20 calendar days after consummation.
Acquisition notice (Section 223.31(d)(4)). In general, a depository institution’s
acquisition of a security issued by a company that was an affiliate of the depository institution
before the acquisition is treated as a purchase of assets from an affiliate if, as a result of the
transaction, the company becomes an operating subsidiary or the depository institution and the
company either has liabilities or the depository institution gives cash or any other consideration
in exchange for the security. However, such a transaction is exempt from the requirements of
Regulation W if it is a “step transaction,” as described in section 223.31(d) of Regulation W. In
order to meet the requirements for this exemption, a depository institution must notify the
appropriate federal banking agency and the appropriate Reserve Bank of its intention to acquire
the company at or before the time that the company becomes an affiliate of the institution.
Internal-corporate-reorganization transactions notice (Section 223.41(d)(2)). An
internal corporate reorganization transaction is exempt from the quantitative limits and collateral
requirements of Regulation W if certain conditions are met. The depository institution involved
must provide the appropriate federal banking agency and the appropriate Reserve Bank with
written notice of the transaction before consummation. The notice must describe the primary
business activities of the affiliate and indicate the proposed date of the asset purchase.

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Additional exemptions from the requirements of section 23A (Section 223.43(b)).
The Board may, at its discretion, by regulation or order, exempt transactions or relationships
from the requirements of section 23A if it finds such exemptions to be in the public interest and
consistent with the purposes of section 23A. A state member bank may request an exemption by
submitting a written request to the General Counsel of the Board. Other depository institutions
should contact their federal supervisor to determine the procedures that the institution needs to
follow. The request must describe in detail the transaction or relationship for which the state
member bank seeks exemption, explain why the Board should exempt the transaction or
relationship, and explain how the exemption would be in the public interest and consistent with
the purposes of section 23A.
Respondent Panel
The FR W panel comprises insured depository institutions and uninsured member banks.
Revisions to the FR W
The Board revised the FR W to account for two recordkeeping provisions in section
223.42 of Regulation W that have not been previously cleared by the Board under the PRA. The
Board did not to create any forms associated with the FR W to address these provisions.
Certain transactions with affiliates are exempt from the quantitative limits, collateral
requirements, and low-quality asset prohibition of Regulation W. Section 12 CFR 223.42(f)
exempts from those provisions certain purchases by a depository institution of securities from a
securities affiliate if, among other requirements, the depository institution maintains, for a period
of two years, records and supporting information that are sufficient to enable the appropriate
Federal banking agency to ensure the depository institution’s compliance with the terms of the
exemption.4 Separately, section 12 CFR 223.42(g)(3) exempts purchases by a depository
institution of municipal securities from a securities affiliate if, among other requirements, the
price of the security is quoted routinely on an unaffiliated electronic service that provides
indicative data from real-time financial networks and the price paid for the security can be
verified by reference to the written summary provided by the syndicate manager to syndicate
members that discloses the aggregate par values and prices of all bonds sold from th e syndicate
account, so long as the depository institution obtains a copy of the summary from its securities
affiliate and retains the summary for three years. 5
Time Schedule for Information Collection
The notifications required under Regulation W are event-generated and must be provided
to the appropriate federal banking agency and, if applicable, the Board within the time periods
established by the law, as discussed above. The recordkeeping requirements of Regulation W
also are event-generated.

4
5

12 CFR 223.42(f)(6).
12 CFR 223.42(g)(3)(iii).

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Public Availability of Data
No data collected by this information collection is published.
Legal Status
Sections 23A and 23B of the FRA authorize the Board to issue these requirements (12
U.S.C. §§ 371c(f) and 371c-1(e)). Compliance with the FR W requirements is required to obtain
a benefit.
Information provided on the Loan Participation Renewal notice (Section 223.15(b)(4))
may be considered confidential under exemption 4 of the Freedom of Information Act (FOIA) as
confidential commercial or financial information that is both customarily and actually treated as
private (5 U.S.C. § 552(b)(4)). Information provided on the Acquisition notice (Section
223.31(d)(4)), the Internal Corporate Reorganization Transaction notice (Section 223.41(d)(2)),
and the Section 23A Additional Information request (Section 223.43(b)) generally is not
considered confidential, but respondents may request confidential treatment under exemption 4
of the FOIA if the information is confidential commercial or financial information that is both
customarily and actually treated as private. Information collected under the FR W may also be
considered confidential under the FOIA exemption 8 if it is obtained as part of an examination or
supervision of a financial institution (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On September 1, 2021, the Board published an initial notice in the Federal Register (86
FR 49031) requesting public comment for 60 days on the extension, with revision, of the FR W.
The comment period for this notice expired on November 1, 2021. The Board did not receive any
comments. The Board adopted the extension, with revision, of the FR W as originally proposed.
On December 10, 2021, the Board published a final notice in the Federal Register (86 FR
70495).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR W is 24 hours,
and would increase to 28 hours with the revisions. The Board estimates that the average hours
per response for the two recordkeeping requirements would be 2 hours each. These reporting and
recordkeeping requirements represent less than 1 percent of the Board’s total paperwork burden.

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Estimated
Estimated
Estimated
Annual
number of
average hours annual burden
frequency
respondents6
per response
hours

FR W
Current
Section 223.15(b)(4)
Section 223.31(d)(4)
Section 223.41(d)(2)
Section 223.43(b)
Current Total
Proposed
Reporting
Section 223.15(b)(4)
Section 223.31(d)(4)
Section 223.41(d)(2)
Section 223.43(b)
Recordkeeping
Section 223.42(f)
Section 223.42(g)(3)
Proposed Total

1
1
1
1

1
1
1
1

2
6
6
10

2
6
6
10
24

1
1
1
1

1
1
1
1

2
6
6
10

2
6
6
10

1
1

1
1

2
2

2
2
28

Change

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The estimated total annual cost to the public for the FR W is $1,451, and would increase
to $1,693 with the revisions.7
Sensitive Questions
These collections of information contain no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

6

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.
7
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $21, 45% Financial Managers at
$74, 15% Lawyers at $71, and 10% Chief Executives at $102). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and
Wages, May 2021, published March 31, 2022, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are
defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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