31 CFR Part 150 Final & Interim Final Rule

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requirements of paragraph (c)(1)(i) of
this section regarding the abolition of
countervailable subsidy programs, and
that it will not reinstate for the subject
merchandise those programs or
substitute other countervailable subsidy
programs;
(ii) During the fifth and subsequent
annual anniversary months of the
publication of a countervailing duty
order or suspended countervailing duty
investigation, the government of the
affected country may request in writing
that the Secretary revoke an order or
terminate a suspended investigation
under paragraph (c)(2) of this section if
the government submits with the
request:
(A) Certifications for all exporters and
producers covered by the order or
suspension agreement that they have
not applied for or received any net
countervailable subsidy on the subject
merchandise for a period of at least five
consecutive years (see paragraph
(c)(2)(i) of this section);
(B) Those exporters’ and producers’
certifications that they will not apply for
or receive any net countervailable
subsidy on the subject merchandise
from any program the Secretary has
found countervailable in any proceeding
involving the affected country or from
other countervailable programs (see
paragraph (c)(2)(ii) of this section); and
(C) A certification from each exporter
or producer that, during each of the
consecutive years referred to in
paragraph (c)(2) of this section, that
person sold the subject merchandise to
the United States in commercial
quantities.
(f) Procedures. (1) Upon receipt of a
timely request for revocation or
termination under paragraph (e) of this
section, the Secretary will consider the
request as including a request for an
administrative review and will initiate
and conduct a review under § 351.213.
(2) When the Secretary is considering
a request for revocation or termination
under paragraph (e) of this section, in
addition to the requirements of
§ 351.221 regarding the conduct of an
administrative review, the Secretary
will:
(i) Publish with the notice of
initiation under § 351.221(b)(1), notice
of ‘‘Request for Revocation of Order’’ or
‘‘Request for Termination of Suspended
Investigation’’ (whichever is applicable);
(ii) Conduct a verification under
§ 351.307;
(iii) Include in the preliminary results
of review under § 351.221(b)(4) the
Secretary’s decision whether there is a
reasonable basis to believe that the

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requirements for revocation or
termination are met;
(iv) If the Secretary decides that there
is a reasonable basis to believe that the
requirements for revocation or
termination are met, publish with the
notice of preliminary results of review
under § 351.221(b)(4) notice of ‘‘Intent
To Revoke Order’’ or ‘‘Intent To
Terminate Suspended Investigation’’
(whichever is applicable);
(v) Include in the final results of
review under § 351.221(b)(5) the
Secretary’s final decision whether the
requirements for revocation or
termination are met; and
(vi) If the Secretary determines that
the requirements for revocation or
termination are met, publish with the
notice of final results of review under
§ 351.221(b)(5) notice of ‘‘Revocation of
Order’’ or ‘‘Termination of Suspended
Investigation’’ (whichever is applicable).
(3) If the Secretary revokes an order,
the Secretary will order the suspension
of liquidation terminated for the
merchandise covered by the revocation
on the first day after the period under
review, and will instruct the Customs
Service to release any cash deposit or
bond.
*
*
*
*
*
[FR Doc. 2012–12257 Filed 5–18–12; 8:45 am]
BILLING CODE 3510–DS–P

DEPARTMENT OF THE TREASURY

RIN 1505—AC42

Assessment of Fees on Large Bank
Holding Companies and Nonbank
Financial Companies Supervised by
the Federal Reserve Board To Cover
the Expenses of the Financial
Research Fund
Departmental Offices, Treasury.
Final rule and interim final rule.

AGENCY:

The Department of the
Treasury is issuing this final rule and
interim final rule to implement Section
155 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(‘‘Dodd-Frank Act’’), which directs the
Treasury to establish by regulation an
assessment schedule for bank holding
companies with total consolidated
assets of $50 billion or greater and
nonbank financial companies
supervised by the Board of Governors of
the Federal Reserve (‘‘the Board’’) to
collect assessments equal to the total
expenses of the Office of Financial
Research (‘‘OFR’’ or ‘‘the Office’’).

SUMMARY:

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Effective date for final rule: July
20, 2012. Effective date for interim final
rule: Sections 150.2, 150.3(b), 150.5, and
150.6(a) and (b), which relate to
nonbank financial companies, are
effective on July 20, 2012 Comment due
date: September 18, 2012. Comments
are invited on §§ 150.2, 150.3(b)(4),
150.5, and 150.6(a) and (b), which relate
to nonbank financial companies.

DATES:

Submit comments
electronically through the Federal
eRulemaking Portal: http://
www.regulations.gov, or by mail (if hard
copy, preferably an original and two
copies) to: The Treasury Department,
Attn: Financial Research Fund
Assessment Comments, 1500
Pennsylvania Avenue NW., Washington,
DC 20220. Because paper mail in the
Washington, DC area may be subject to
delay, it is recommended that comments
be submitted electronically. Please
include your name, affiliation, address,
email address, and telephone number in
your comment. Comments will be
available for public inspection on
www.regulations.gov. In general
comments received, including
attachments and other supporting
materials, are part of the public record
and are available to the public. Do not
submit any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.

ADDRESSES:

31 CFR Part 150

ACTION:

Included in the Office’s expenses are
expenses of the Financial Stability
Oversight Council (‘‘FSOC’’ or ‘‘the
Council’’), as provided under Section
118 of the Dodd-Frank Act, and certain
expenses of the Federal Deposit
Insurance Corporation (‘‘FDIC’’), as
provided under Section 210 of the
Dodd-Frank Act. The portion of this rule
concerning the assessment schedule for
bank holding companies is issued as a
final rule. The portion of this rule
related to the assessments for nonbank
financial companies supervised by the
Board is issued as an interim final rule,
to allow for the consideration of
additional comments in conjunction
with related FSOC rules. This final rule
and interim final rule establish the key
elements of Treasury’s assessment
program, which will collect semiannual
assessment fees from these companies
beginning on July 20, 2012. These rules
take into account the comments
received on the January 3, 2012
proposed rule and make minor revisions
pursuant to the comments.

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FOR FURTHER INFORMATION CONTACT:

Jonathan Sokobin: (202) 927–8172.
SUPPLEMENTARY INFORMATION:

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B. Summary of the Major Provisions of
This Regulatory Action

I. Executive Summary
A. Purpose of the Regulatory Action
1. Need for Regulatory Action
Section 155 of the Dodd-Frank Act,
Public Law 111–203 (July 21, 2010),
directs the Secretary of the Treasury to
establish by regulation, and with the
approval of the Council, an assessment
schedule to collect assessments from
certain companies equal to the total
expenses of the Office beginning on July
20, 2012. Section 155 describes these
companies as:
(A) Bank holding companies having
total consolidated assets of $50 billion
or greater; and
(B) Nonbank financial companies
supervised by the Board.
Under Section 118 of the Dodd-Frank
Act, the expenses of the Council are
considered expenses of, and are paid by,
the OFR. In addition, under Section 210
implementation expenses associated
with the FDIC’s orderly liquidation
authorities are treated as expenses of the
Council,1 and the FDIC is directed to
periodically submit requests for
reimbursement to the Council Chair.
The total expenses for the OFR thereby
include the combined expenses of the
OFR, the Council, and certain expenses
of the FDIC. All of these expenses are
paid out of the Financial Research Fund
(FRF), a fund managed by the
Department of the Treasury for this sole
purpose.
The Council was established by the
Dodd-Frank Act to coordinate across
agencies in monitoring risks and
emerging threats to U.S. financial
stability. The OFR was established
within the Treasury Department by the
Dodd-Frank Act to serve the Council, its
member agencies, and the public by
improving the quality, transparency,
and accessibility of financial data and
information, by conducting and
sponsoring research related to financial
stability, and by promoting best
practices in risk management.

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2. Legal Authority
The authority for this regulation is
Section 155(d) of the Dodd-Frank Act,
which directs the Secretary of the
Treasury to establish an assessment
schedule by regulation, including the
assessment base and rates, with the
approval of the Council.
1 Under Title II, Section 210(n)(10)(C) of the
Dodd-Frank Act the term implementation expenses
‘‘(i) means costs incurred by [the FDIC] beginning
on the date of enactment of this Act, as part of its
efforts to implement [Title II] that do not relate to
a particular covered financial company; and (ii)
includes the costs incurred in connection with the
development of policies, procedures, rules, and
regulations and other planning activities of the
[FDIC] consistent with carrying out [Title II].’’

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This final rule and interim final rule
direct (a) how the Treasury will
determine which companies will be
subject to an assessment fee, (b) how the
Treasury will estimate the total
expenses that are necessary to carry out
the activities to be covered by the
assessment, (c) how the Treasury will
determine the assessment fee for each of
these companies, and (d) how the
Treasury will bill and collect the
assessment fee from these companies.
The final rule applies to bank holding
companies and foreign banking
organizations; the interim final rule
applies to nonbank financial companies.
The comment period for the interim
final rule is 120 days.
Bank holding companies that have
eligible assets of $50 billion or more
will be subject to assessments, where
eligible assets are calculated as the
average of a company’s total
consolidated assets for the four quarters
preceding the determination date.
Foreign banking organizations that have
eligible assets of $50 billion or more
will be subject to assessments, where
eligible assets are calculated as the
average of the company’s total assets of
combined U.S. operations for the four
quarters preceding the determination
date. (For foreign banking organizations
that only report to the Federal Reserve
annually, eligible assets are calculated
as the average of the company’s total
assets of combined U.S. operations for
the two years preceding the
determination date.) All nonbank
financial companies supervised by the
Board will be subject to assessments.
For each assessment period, the
Department will calculate an assessment
basis that is sufficient to replenish the
FRF to a level equivalent to the sum of
the operating expenses of the OFR and
the Council for the assessment period,
the capital expenses for the OFR and the
Council for the 12-month period
beginning on the first day of the
assessment period, and an amount
necessary to reimburse reasonable
implementation expenses of the FDIC
orderly liquidation authorities. For the
initial assessment covering July 21, 2012
to March 31, 2013, the assessment basis
will be calculated as the sum of the
operating expenses for the OFR and the
Council during this time period, the
capital expenses for the OFR and the
Council for July 21, 2012 to April 30,
2013, and the amount necessary to
reimburse reasonable implementation
expenses of the FDIC orderly liquidation
authorities.

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Assessments for each company will
be calculated as the product of a
company’s eligible assets and a fee rate,
where the fee rate is set to replenish the
FRF to the levels defined in the
preceding paragraph. Fee rates will be
published roughly one month prior to
collections, with billing at least 14 days
prior to collections. Collections will be
managed through www.pay.gov, and
will generally occur on March 15 and
September 15. Determination dates will
generally be November 30 and May 31
of each year. The determination date for
the initial assessment will be December
31, 2011.
C. Costs and Benefits
The assessment and collection of fees
described in this rule represent an
economic transfer from assessed
companies to the government, for
purposes of providing the benefits
associated with coordinated
identification and monitoring of risks to
U.S. financial stability, promoting
market discipline, and responding to
emerging threats to the U.S. financial
system. As such, the assessments do not
represent an economic cost. However,
the allocation of the assessment may
have distributional impacts. Treasury
estimates that approximately 50
companies will be determined as
eligible for the initial assessment, and in
addition the estimated cost for each
company of filling out the forms and
submitting payment to the Treasury
Department will be $600.
II. Background
Section 155 of the Dodd-Frank Act,
Public Law 111–203 (July 21, 2010),
directs the Secretary of the Treasury to
establish by regulation, and with the
approval of the Council, an assessment
schedule to collect assessments from
certain companies equal to the total
expenses of the Office beginning on July
20, 2012. Section 155 describes these
companies as:
(A) Bank holding companies having
total consolidated assets of $50 billion
or greater; and
(B) Nonbank financial companies
supervised by the Board.
Under Section 118 of the Dodd-Frank
Act, the expenses of the Council are
considered expenses of, and are paid by,
the OFR. In addition, under Section 210
implementation expenses associated
with the FDIC’s orderly liquidation
authorities are treated as expenses of the
Council,2 and the FDIC is directed to
2 Under Title II, Section 210(n)(10)(C) of the
Dodd-Frank Act the term implementation expenses
‘‘(i) means costs incurred by [the FDIC] beginning
on the date of enactment of this Act, as part of its

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periodically submit requests for
reimbursement to the Council Chair.
The total expenses for the OFR thereby
include the combined expenses of the
OFR, the Council, and certain expenses
of the FDIC. All of these expenses are
paid out of the Financial Research Fund
(FRF), a fund managed by the
Department of the Treasury.
The Council was established by the
Dodd-Frank Act to coordinate across
agencies in monitoring risks and
emerging threats to U.S. financial
stability. The Council is chaired by the
Secretary of the Treasury and brings
together all federal financial regulators,
an independent member with insurance
expertise appointed by the President,
and certain state regulators. Under the
Dodd-Frank Act, the Council is tasked
with identifying and monitoring risks to
U.S. financial stability, promoting
market discipline, and responding to
emerging threats to the U.S. financial
system.3
The OFR was established within the
Treasury Department by the Dodd-Frank
Act to serve the Council, its member
agencies, and the public by improving
the quality, transparency, and
accessibility of financial data and
information, by conducting and
sponsoring research related to financial
stability, and by promoting best
practices in risk management. Among
the OFR’s key tasks are:
• Measuring and analyzing factors
affecting financial stability and helping
FSOC member agencies to develop
policies to promote it;
• Collecting needed financial data,
and promoting their integrity, accuracy,
and transparency for the benefit of
market participants, regulators, and
research communities;
• Reporting to the Congress and the
public on the OFR’s assessment of
significant financial market
developments and potential threats to
financial stability; and
efforts to implement [Title II] that do not relate to
a particular covered financial company; and (ii)
includes the costs incurred in connection with the
development of policies, procedures, rules, and
regulations and other planning activities of the
[FDIC] consistent with carrying out [Title II].’’
3 As outlined in Section 112 of the Dodd-Frank
Act, the Council is tasked with the following:
1. To identify risks to the financial stability of the
United States that could arise from the material
financial distress or failure, or ongoing activities, of
large, interconnected bank holding companies or
nonbank financial companies, or that could arise
outside the financial services marketplace.
2. To promote market discipline, by eliminating
expectations on the part of shareholders, creditors,
and counterparties of such companies that the
Government will shield them from losses in the
event of failure.
3. To respond to emerging threats to the stability
of the United States financial system.

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• Collaborating with foreign
policymakers and regulators,
multilateral organizations, and industry
to establish global standards for data
and analysis of policies that promote
financial stability.
On January 3, 2012, the Treasury
published a proposed rule (77 FR 35) to
establish procedures to estimate, bill,
and collect, on an ongoing basis
beginning on July 20, 2012, the total
budgeted expenses of the OFR,
including those estimated separately by
the Council for the Council’s expenses,
and expenses submitted by the FDIC.4
As described in the proposed rule, the
aggregate of these estimated expenses
would provide the basis for an
assessment that the Treasury would
collect through a semiannual fee on
individual companies based on each
company’s total consolidated assets. For
a foreign company, the assessment fee
would be based on the total
consolidated assets of the foreign
company’s combined U.S. operations.
The proposed rule outlined how the
Treasury’s assessment fee program
would be administered, including (a)
how the Treasury would determine
which companies will be subject to an
assessment fee, (b) how the Treasury
would estimate the total expenses that
are necessary to carry out the activities
to be covered by the assessment, (c) how
the Treasury would determine the
assessment fee for each of these
companies, and (d) how the Treasury
would bill and collect the assessment
fee from these companies. Treasury
sought comments on all aspects of the
proposed rulemaking. See 77 FR 35 for
a complete discussion of the proposal.
III. This Final Rule and Interim Final
Rule
The final rule is adopted essentially
as proposed for bank holding companies
and foreign banking organizations, with
an adjustment to the timeframe for
assessment collections. The rule for
nonbank financial companies is issued
as an interim final rule, reflecting the
Treasury’s intent to evaluate the
assessment schedule for nonbank
financial companies as the Council
implements its authority to determine
companies for enhanced supervision by
the Board.5 In response to comments
received, several technical and
4 As proposed, the assessment basis would be
determined so as to replenish the FRF at the start
of each assessment period to a level equivalent to
six months of budgeted operating expenses and
twelve months of capital expenses for the OFR and
FSOC, as well as covered FDIC expenses.
5 ‘‘Authority to Require Supervision and
Regulation of Certain Nonbank Financial
Companies’’, 77 FR 21637.

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administrative changes were made to
clarify these rules, which are discussed
below.
The Treasury received 12 comment
letters on the proposed rule. Six
comment letters were from associations
that represent financial institutions
(including one joint letter sent by five
associations); two comment letters were
from insurance companies; two
comment letters were from individuals;
one comment letter was from an
association that represents financial
professionals; and one comment letter
was from a public interest group. For
the reasons that follow, the Treasury has
determined to adopt this rule and
interim final rule as follows.
Comments and the Treasury’s
Responses
Comments were received in the
following broad categories:
• Assessment methodology
Æ Use of total consolidated assets to
calculate total assessable assets
Æ Other assessment methodology
comments
• Assessments on nonbank financial
companies
• Assessment basis and
administration
• Assessment timeframe
• Term definitions
• Comments of general support
Assessment Methodology
Use of Total Consolidated Assets To
Calculate Total Assessable Assets
Six of the comment letters from
associations that represent financial
institutions and insurance companies
were critical of the proposed use of total
consolidated assets to allocate the
assessment basis to assessed companies.
The letters argued that total
consolidated assets alone was an
insufficient representation of the risk
factors outlined in Section 115(a)(2)(A)
of the Dodd-Frank Act as referenced in
Section 155(d) of the Act, and would
not be sufficient to differentiate risk
levels between companies for purposes
of assessments. Two comment letters
suggested alternative assessment
approaches. One commenter suggested
that the methodology be based on the
six-category framework used to evaluate
the potential for a nonbank financial
company to pose a threat to U.S.
financial stability, as outlined in the
Council’s rule on determination of
nonbank financial companies for
heightened supervision by the Board.
Another commenter suggested that it be
based on the risk-adjusted assessment
schedule used by the FDIC to collect
deposit insurance premiums from banks

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and thrifts. Two of the comment letters,
while expressing the concerns described
above, also noted that using total
consolidated assets to calculate
assessable assets was simple, clear and
transparent.
One comment letter supported the
proposal to base calculation of total
assessable assets for foreign banking
organizations on assets of combined
U.S. operations and to only assess those
companies with more than $50 billion
in total assessable assets. The comment
letter noted that these two features of
the rule will facilitate administration of
assessments and are consistent with the
statutory requirement that the
assessment schedule take into account
differences among assessed companies,
based on the considerations set forth in
Section 115.
The Treasury’s proposed
implementation of Section 155 6 was
guided by the following principles:
• The assessment structure should be
simple and transparent; and
• Allocation among companies
should take into account differences
among such companies, based on the
considerations for establishing the
prudential standards under Section 115
of the Dodd-Frank Act as required by
the Act.
As stated in the Preamble to the
Notice of Public Rulemaking, the
Treasury believes there is significant
benefit to adopting a standard that is
transparent, well-understood by market
participants, and reasonably estimable.
Commenters suggested that this
transparency and predictability was
particularly important for foreign
entities assessed. As discussed in the
proposed rule, a number of different
assessment schedules for assessing
companies were considered, based on
the two principles outlined above. After

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6 Section

155(d) of the Act reads:
PERMANENT SELF-FUNDING.—Beginning 2
years after the date of enactment of this Act, the
Secretary shall establish, by regulation, and with
the approval of the Council, an assessment
schedule, including the assessment base and rates,
applicable to bank holding companies with total
consolidated assets of $50,000,000,000 or greater
and nonbank financial companies supervised by the
Board of Governors, that takes into account
differences among such companies, based on the
considerations for establishing the prudential
standards under Section 115, to collect assessments
equal to the total expenses of the Office.
Section 115(a)(2) of the Act reads, in part:
RECOMMENDED APPLICATION OF REQUIRED
STANDARDS.—In making recommendations under
this section, the Council may—
(A) differentiate among companies that are
subject to heightened standards on an individual
basis or by category, taking into consideration their
capital structure, riskiness, complexity, financial
activities (including the financial activities of their
subsidiaries), size, and any other risk-related factors
that the Council deems appropriate.

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evaluating these different assessment
schedules, the Treasury proposed to
allocate the assessment basis among
assessed companies based on the total
consolidated assets of each company.
The Treasury, after considering the
comments, continues to believe that
relying on the total consolidated assets
of each assessed company to allocate
assessments on a percentage basis is
consistent with its legislative mandate
and represents the best approach to take
into account differences among
companies based on the considerations
in Section 115 while keeping the
assessment structure simple and
transparent. Applying each Section 115
factor with respect to each assessed firm
could well require individualized
subjective determinations, which would
be impracticable as well as opaque, and
would not be consistent with the
statutory requirement to create an
‘‘assessment schedule, including the
assessment base and rates.’’ 7 Similarly,
the Treasury considered relying on an
established ratings system, such as the
CAMELS system employed by the FDIC,
as suggested by one commenter. The
Treasury deemed such an approach as
inappropriate for the following reasons:
first, the methodology to produce the
CAMELS ratings is non-public, the
ratings are confidential supervisory
information ,8 and the rating system was
developed for U.S. depository
institutions. Second, the broad rankings
provided by such a system (CAMELS
ratings range from one to five) would
require subjective translation by the
Treasury into assessment levels,
introducing complexity and opacity.
The Treasury considered other methods
to calculate assessments based on riskweighted assets, but these proved
unsatisfactory for similar reasons. After
considering all of the Section 115
factors, the Treasury has determined
that an assessment schedule based on
total consolidated assets best achieves
the statutory purpose.
As discussed further below, the rule
has been modified to include a final rule
applicable to bank holding companies
and foreign banking organizations, and
an interim final rule applicable to those
entities that are identified by the
Council’s rulemaking for determination
of nonbank financial companies for
heightened supervision by the Board.
Other Assessment Methodology
Comments
Two comment letters (the joint
associations’ letter and a second letter
7 Dodd-Frank

Act, Title I, Section 155(d).
ratings are confidential supervisory
information per 12 CFR 309.5(g)(8), 309.6, 327.4(d).
8 CAMELS

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29887

written by two authors of the joint
letter) suggested that the Board continue
providing funds to the FRF after July 21,
2012. Even if this suggestion could be
reconciled with the statutory
requirement that ‘‘[b]eginning 2 years
after the date of enactment,’’ the
Treasury shall ‘‘collect assessments
equal to the total expenses of the
Office,’’ 9 the imposition of additional
requirements on the Board of Governors
would be beyond the Treasury’s
authority under Section 155(d) and
outside the scope of this rulemaking.10
One comment letter suggested that
since the Council and the OFR will
likely be investing a significantly larger
proportion of their resources
researching and monitoring nonbank
financial companies as opposed to bank
holding companies, the assessment
methodology should charge nonbank
financial companies proportionately
higher assessments. The letter further
suggested creation of a credit system
whereby previously assessed bank
holding companies and nonbank
financial companies would pay lower
assessment rates when new companies
are assessed. The Treasury notes that
the Dodd-Frank Act requires that the
Council and the OFR monitor the
financial system and respond to threats
to U.S. financial stability across the
system. Mitigating current and potential
future threats to financial stability
provides benefits for financial market
participants, including bank holding
companies, foreign banking
organizations, and nonbank financial
companies. Likewise, previously
assessed companies, as well as newly
assessed companies, are beneficiaries of
these activities to mitigate threats to
financial stability. For these reasons, the
Treasury believes that a consistent
allocation irrespective of sequence of
inclusion in the assessment pool or
institution type is appropriate.
One comment letter suggested
including language in the rule
prohibiting banking institutions from
passing OFR assessments through to
retail or commercial customers in the
form of fees or higher interest rates. The
Treasury has considered this concern,
but believes such a requirement would
be difficult and costly to administer,
and it is questionable whether such an
9 Dodd-Frank

Act, Title I, Section 155(d).
comment letter from the public interest
group stated that OFR, the Council and
implementation expenses of the FDIC should be
paid solely through the FRF assessment base after
July 21, 2012, as intended by the Dodd-Frank Act,
and should not be paid by the Board, as suggested
in the two comment letters noted above. The
Treasury agrees with this comment, which is
consistent with the proposed and final rules.
10 The

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approach would be permitted by the
law.
One comment letter suggested that
FDIC expenses associated with its
orderly liquidation authorities should
be well-defined to avoid shifting costs to
OFR that should be borne by the FDIC.
The Council and the FDIC have
established guidelines for these
expenses to ensure that only appropriate
expenses are covered by the FRF.
Some commenters raised issues
related to budget process, strategy and
the creation of an advisory committee
that are outside the scope of this
rulemaking. Materials relevant to these
issues may be found in the OFR’s
Strategic Framework for FY2012–
FY2014 published on March 15, 2012 11
and in the notice of interest to establish
a Financial Research Advisory
Committee published in the Federal
Register on March 22, 2012.12
Assessments on Nonbank Financial
Companies
Seven of the comment letters,
including those from associations that
represent financial institutions and
insurance companies, expressed
concerns about using unadjusted total
consolidated assets to allocate the
assessment basis among nonbank
financial companies. Three comment
letters (from an insurance company and
two associations) suggested that
insurance separate accounts be
excluded from total consolidated assets
for purposes of assessments. One
association suggested that private equity
managed accounts be excluded from
total consolidated assets for purposes of
assessments. Another association
suggested that all nonbank financial
companies’ non-financial assets be
excluded from total consolidated assets
for purposes of assessments.
In addition, several comment letters
suggested alternative methods to assess
nonbank financial companies or
suggested that the Treasury delay its
final rulemaking until after the Council
has made determinations regarding
nonbank financial companies for
heightened supervision by the Board.
One comment letter from an insurer
suggested differentiating industries into
classes based on their primary business
activity and developing class-specific
assessments based on Section 155
criteria. Two comment letters suggested
delaying rulemaking for nonbank
financial companies altogether until
11 The FY2012–FY2014 Strategic Framework for
the OFR, which includes information on the OFR’s
budget process, can be found at: http://
www.treasury.gov/initiatives/wsr/ofr/Documents/
OFRStrategicFramework.pdf.
12 77 FR 16894.

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after the Council has made
determinations of nonbank financial
companies for heightened supervision
by the Board. Two additional comment
letters supported the intent to reevaluate the assessment schedule for
nonbank financial companies after the
Council’s rule on determination of
nonbank financial companies is
finalized and the Council has begun
making determinations. One comment
letter emphasized that assessments
should be reasonably and fairly
allocated across bank holding
companies and nonbank financial
companies. One comment letter
requested clarification on how nonpublic nonbank financial companies
would be treated under the rule and the
manner in which information from
these companies would need to be
reported to the Treasury for purposes of
assessments.
After reviewing these comments, the
Treasury has decided to issue a final
rule for bank holding companies and
foreign banking organizations, and an
interim final rule for nonbank financial
companies. The comment period for the
interim final rule for nonbank financial
companies will be open for 120 days
after the publication date of these rules,
with possible extension. After the
comment period, the Treasury will
review the assessments schedule for
nonbank financial companies and make
adjustments to the nonbank financial
company rule as necessary.
The bank holding company and
foreign banking organization final rule
and nonbank financial company interim
final rule both rely on total consolidated
assets to calculate assessable assets. The
Treasury agrees that, to the extent
practicable, the composition of total
consolidated assets used to calculate
assessable assets for nonbank financial
companies, bank holding companies,
and foreign banking organizations
should be comparable. As the Council
implements its authority to determine
nonbank financial companies for
heightened supervision by the Board,
the Treasury will evaluate substantive
accounting differences between total
consolidated assets as reported by
nonbank financial companies
supervised by the Board, bank holding
companies, and foreign banking
organizations and review the need to
make adjustments to its definition of
total consolidated assets for nonbank
financial companies.
Through its interim final rule, the
Treasury continues to seek and consider
comment on whether the methodology
adopted here for determining the
amount of the assessment for nonbank
financial companies is appropriate and

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what alternative methodologies might
be more appropriate. The Treasury also
specifically seeks comments on the
question of whether a single
methodology for determining the
amount of the assessment for nonbank
financial companies is appropriate and,
if not, what an appropriate framework
for differentiating between nonbank
financial companies might be.
Assessment Basis and Administration
The Treasury received comments on
the assessment basis and assessment
administration from two commenters.
One comment letter suggested that
collecting 12 months of capital
expenses, as opposed to six months of
capital expenses, would result in an
unnecessarily large amount of unused
resources. Given the variability of
timing for large-scale capital
expenditures and the importance of
avoiding unnecessary interruptions in
budgeted investments, the Treasury
believes it is necessary for each
assessment to replenish the FRF to a
total of 12 months of capital
expenditures. The final rule and interim
final rule retain the provision for each
assessment to replenish the FRF to a
level equivalent to six months of
operating and 12 months of capital
expenses for the FSOC and OFR.
One commenter noted that the initial
assessment basis will include operating
expenses through March 31, 2013,
capital expenses for the OFR and the
Council through April 30, 2013, and the
FDIC’s implementation expenses
through September 30, 2013. To clarify
these dates, the first assessment in July
2012 is transitional and includes
operating expenses for the remainder of
fiscal year 2012 (July 21, 2012 to
September 30, 2012), the first six
months of fiscal year 2013 (October 1,
2012 to March 31, 2013) and an amount
necessary to reimburse reasonable
implementation expenses of the FDIC,
as provided under section 210(n)(10) of
the Dodd-Frank Act. Rather than collect
12 months of capital expenses in the
initial assessment, as a smoothing
measure the initial assessment includes
capital expenses for the remainder of
FY2012 (July 21, 2012 to September 30,
2012) plus the first seven months of
FY2013 capital expenses (covering
October 1, 2012 to April 30, 2013), for
a total of approximately nine months of
capital expenses. The second
assessment will bring capital funding in
the FRF up to the full 12-month level
contemplated in the rule.
One comment letter expressed
concern that the reports used to
calculate a foreign banking
organization’s U.S.-based assets in the

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proposed rule do not report assets on a
consolidated basis, so that referencing
data from multiple reports could result
in double-counting. The commenter
requested greater clarity on what line
items will be used from each report to
determine total assessable assets for
foreign banking organizations and
suggested that the confirmation
statement sent to foreign banking
organizations include a list of financial
report line items used to calculate
assessable assets. Treasury will make
every effort to avoid double counting,
consulting with the Board and the
affected firms as necessary. Any
questions can be addressed through the
appeals process.
Assessment Timeframe
Under the proposed rule, semiannual
determination dates for a typical year
would be December 31 and June 30.
Confirmation statements to assessed
companies would be sent out
approximately two weeks after the
determination date (and no later than 30
days prior to the first day of the
assessment period); publication of the
Notice of Fees would be about one
month prior to the payment date; and
billing would occur at least 14 calendar

days prior to the payment date. Two
comment letters noted that this time
schedule for assessment collections
allowed too little time for assessed
companies to prepare appeals to
assessments and too little time for
companies with less liquid portfolios to
arrange payments. Ambiguities in the
dates for issuance of confirmation
statements and publication of the Notice
of Fees were also noted in the letters.
The commenters proposed extending
the time between issuance of the
confirmation statement and billing date
to allow more time for appeals and
payment arrangements.
The Treasury has considered these
comments and is persuaded that an
adjustment, as described below, is
appropriate. In this final rule and
interim final rule, the determination
dates for a typical year are moved back
one month (to November 30 and May
31); confirmation statements will be
sent out 15 calendar days after the
determination date (December 15 and
June 15); written appeals requesting a
redetermination would need to be
provided by January 15 or July 15
(under the guidelines outlined in the
NPRM); publication of the Notice of
Fees will be on February 15 and August

15; and billing will be on March 1 and
September 1 for payment on March 15
and September 15. (See table below.) If
the Treasury receives a written request
for redetermination from a company by
these dates, the Treasury will consider
the company’s request and respond with
the results of a redetermination within
21 calendar days, if the Treasury
concludes that a redetermination is
warranted. If one of the dates referenced
falls on a holiday or weekend, aside
from the Billing Date, the effective date
will be the next business day. (For the
Billing Date, if the date referenced falls
on a holiday or weekend, the effective
date will be the first preceding business
day.) The initial determination date,
confirmation statement date,
publication of Notice of Fees, billing
date, and payment date are as outlined
in the NPRM. These changes to the rule
will provide assessed companies
additional time to prepare appeals and
make payment arrangements, as well as
permit the Treasury additional time to
calculate assessments, administer the
billing process, and receive payments,
as suggested in the comment letters. The
table below shows dates of the
assessment billing and collection
process:

Assessment period

Determination date

Confirmation
statement date

Publication of notice
of fees *

Billing date

Initial Assessment
(July 2012 to March
2013).
1st semiannual Assessment (April–
September).
2nd semiannual Assessment (October–
March).

December 31, 2011

7 calendar days after
final rule publication
date.
December 15 (or next
business day).

About one month prior
to payment date.

14 calendar days prior
to payment date.

July 20, 2012.

February 15 (or next
business day).

March 1 (or prior business day).

March 15 (or next
business day).

June 15 (or next business day).

August 15 (or next
business day).

September 1 (or prior
business day).

September 15 (or next
business day).

November 30 .........
May 31 ...................

Payment date

* Rate published in the Notice of Fees.

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Term Definitions
Several comment letters suggested
clarifications to term definitions in the
rule.
One comment letter requested
clarification on the conditions and
procedure under which a company
would cease to be an assessed company.
Another comment letter stated that
companies that cease to be assessable
companies between the initial
determination date and start of the
initial assessment period should not be
assessed.
Under the definitions provided in this
rule, companies meeting the following
conditions will not be determined to be
assessable companies on the
determination date:
• For bank holding companies as
defined in Section 2 of the Bank

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Holding Company Act of 1956, the
average total consolidated assets
(Schedule HC—Consolidated Balance
Sheet), as reported on the bank holding
company’s four most recent
Consolidated Financial Statements for
Bank Holding Companies (FR Y–9C;
OMB No. 7100–0128) submissions, is
below $50 billion;
• For foreign banking organizations,
the average of total assets at the end of
a period (Part 1—Capital and Asset
Information for the Top-tier
Consolidated Foreign Banking
Organization), as reported on the foreign
banking organization’s four most recent
Capital and Asset Information for the
Top-tier Consolidated Foreign Banking

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Organization (FR Y–7Q; OMB no. 7100–
0125), is below $50 billion; 13
• For nonbank financial companies,
the company is not determined by the
Council to be required to be supervised
by the Board under Section 113 of the
Dodd-Frank Act.
Companies that are determined to be
assessable companies on the
determination date for an assessment
period will be assessed for that
assessment period according to the rule.
The assessment schedule is structured
so that the sum of assessments on
individual companies equals the sum
13 For those foreign banking organizations that file
the FR Y–7Q annually instead of quarterly, the
company’s total consolidated assets would be
determined based on the average of total assets at
end of period as reported on the foreign banking
organization’s two most recent FR Y–7Qs.

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total necessary to support the duties of
the Council and the OFR during each
period plus implementation expenses
associated with the FDIC’s orderly
liquidation authorities. Changes to one
company’s assessment for a particular
period would necessitate a change in all
other companies’ assessments so that
the aggregate of all assessment fees
equals the assessment basis for the
period. The Treasury believes that the
burden and uncertainty that such
changes would bring are too high to
warrant attempting to delineate a
process to allow changes to the
information used by the Treasury to
make its determinations, or adjust the
company’s semiannual fee determined
by the published assessment fee
schedule. The Treasury believes this
burden and uncertainty would be issues
for the initial assessment period as they
are for subsequent assessment periods.
One comment letter requested the rule
include a list of financial reports that
will be used to calculate total assessable
assets for foreign banking organizations.
While the list of financial reports that
the Treasury anticipates it will use to
calculate total assessable assets for
foreign banking organizations are listed
in the Preamble of the NPRM, it is
possible that reporting requirements for
foreign banking organizations will
change over time and the list of reports
will need to be adjusted. The rule does
not include specific reference to these
reports to allow for the possibility of
these changes. The Treasury will
provide a list of reports used to
calculate assessments to any assessed
company, and will also maintain a list
of reports used to calculate assessments
on its Web site for reference in advance
of the assessment period.
One comment letter requested that the
definition of total assessable assets for
foreign banking organizations be
clarified to include U.S. branches and
agencies in addition to subsidiaries. The
definition of total assessable assets for
foreign banking organizations in Section
150.2 has been modified to provide this
clarity.
One comment letter requested that the
rule provide clarity that total assessable
assets for foreign banking organizations
will be calculated as the average of the
four most recent FR Y7–Q total assets at
end of period for quarterly filers and the
average of the two most recent annual
FR Y7–Q total assets at end of period for
annual filers. (This distinction was
provided in the Preamble of the NPRM
but not the text of the rule.) For reasons
noted above, the Treasury has not
included a list of reference reports in
the final rule, but language was added
to the rule clarifying that the average of

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four quarters of data will be used to
calculate assessments for quarterly filers
and the average of two years of annual
data will be used to calculate
assessments for annual filers.
One comment letter requested that the
definition of ‘‘bank holding company’’
and ‘‘foreign banking organization’’ be
clarified so that foreign banking
organizations are limited to
international banks that are subject to
the Bank Holding Company Act of 1956
pursuant to Section 8(a) of the
International Banking Act of 1978. The
letter suggested modifying the definition
of ‘‘bank holding company’’ to specify
U.S.-domiciled bank holding companies
and modify the definition of ‘‘foreign
banking organization’’ to incorporate by
reference the definition of that term in
Section 211.21(o) of the Board’s
Regulation K. The letter also suggested
revising paragraphs (1) and (2) of the
definition of total assessable assets to
reflect these revisions. The final rule
clarifies these definitions accordingly.
One comment letter suggested that the
final rule clarify that only total assets of
combined U.S. operations of U.S.
companies with foreign affiliates would
be assessable. The Dodd-Frank Act is
silent on this point. However, the DoddFrank Act requires that the Council and
the OFR monitor the financial system
and respond to threats to U.S. financial
stability across the system. Mitigating
current and potential future threats to
financial stability provides particular
benefits for companies that conduct a
majority of their business in U.S.
markets. Treasury also notes that a
significant disruption to foreign
operations could impact the parent
company, and where the parent
company is a U.S. entity, it may have
consequences for U.S. financial
stability. The rule consequently retains
calculation of total assessable assets for
U.S.-based companies based on global
total consolidated assets.
Comments of General Support
The two letters from individuals
expressed general support for the rule.
One comment letter expressed support
for assessing financial institutions to
fund the Office. One comment letter
expressed support for the permanent
self-funding provisions reflected in the
rule and the mission of the Office.
III. Procedural Requirements
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA),
5 U.S.C. 601 et seq., requires agencies to
prepare an initial regulatory flexibility
analysis (IRFA) to determine the
economic impact of the rule on small

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entities. Section 605(b) allows an agency
to prepare a certification in lieu of an
IRFA if the rule will not have a
significant economic impact on a
substantial number of small entities.
Pursuant to 5 U.S.C. 605(b), it is hereby
certified that this rule will not have a
significant economic impact on a
substantial number of small entities.
The size standard for determining
whether a bank holding company or a
nonbank financial company is small is
$7 million in average annual receipts.
Under Section 155 of the Dodd-Frank
Act, only bank holding companies with
more than $50 billion in total
consolidated assets or nonbank financial
companies regulated by the Federal
Reserve will be subject to assessment.
As such, this rule will not apply to
small entities and a regulatory flexibility
analysis is not required.
B. Paperwork Reduction Act
On a one-time basis, assessed entities
would be required to set up a bank
account for fund transfers and provide
the required information to the Treasury
Department on a form. The form
includes bank account routing
information and contact information for
the individuals at the company that will
be responsible for setting up the account
and ensuring that funds are available on
the billing date. The Treasury
Department estimates that
approximately 50 companies 14 may be
affected, and that completing and
submitting the form would take
approximately fifteen minutes. The
aggregate paper work burden is
estimated at 12.5 hours.
On a semi-annual basis, assessed
companies will have the opportunity to
review the confirmation statement and
assessment bill. The rules do not require
the companies to conduct the review,
but it does permit it. We anticipate that
at least some of the companies will
conduct reviews, in part because the
cost associated with it is very low.
The collection of information
contained in this rule has been
approved by the Office of Management
and Budget (OMB) under the
requirements of the Paperwork
Reduction Act, 44 U.S.C. 3507(d) and
assigned control number 1505–0245. An
agency may not conduct or sponsor an
a person is not required to respond to
14 The Treasury estimates that approximately 50
bank holding companies and foreign banking
organizations will be assessed in the initial
assessment. The number of eligible bank holding
companies and foreign banking organizations could
increase or decrease over time. The number of
assessed companies could also increase if the
Council determines nonbank financial companies
for heightened supervision by the Board.

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a collection of information unless it
displays a valid OMB control number.
The information collections are
included in § 150.6.
C. Regulatory Planning and Review
(Executive Orders 12866 and 13563)
It has been determined that this
regulation is a significant regulatory
action as defined in Executive Order
12866 as supplemented by Executive
Order 13563, in that this rule would
have an annual effect on the economy
of $100 million or more. Accordingly,
this rule has been reviewed by the
Office of Management and Budget. The
Regulatory Impact Assessment prepared
by Treasury for this regulation is
provided below.

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1. Description of Need for the
Regulatory Action
Section 155 of the Dodd-Frank Act
directs the Board to provide funding
sufficient to cover the expenses of the
OFR and FSOC during the two-year
period following enactment. (The DoddFrank Act was enacted on July 21,
2010.) To provide funding after July 21,
2012, Section 155(d) of the Dodd-Frank
Act directs the Secretary of the Treasury
to establish by regulation, and with the
approval of the FSOC, an assessment
schedule for bank holding companies
with total consolidated assets of $50
billion or greater and nonbank financial
companies supervised by the Board.
2. Provision—Affected Population
Section 155(d) of the Dodd-Frank Act
defines the population of assessed
companies as bank holding companies
with total consolidated assets of $50
billion or greater and nonbank financial
companies supervised by the Board.
Under this definition, U.S bank
holding companies and foreign banking
organizations with $50 billion or more
in total worldwide consolidated assets
and nonbank financial companies
supervised by the Board qualify for
assessment. However, under the rule
only U.S.-based assets of foreign
banking organizations would be used to
calculate their assessments. Foreign
banking organizations with less than
$50 billion in U.S.-based assets would
not be assessed. Based on information
provided by the Board, we estimate that
forty-eight bank holding companies
qualified as assessed companies as of
June 30, 2011.
Nonbank financial companies
determined by the FSOC to require
heightened supervision under Title I
would be assessed on the basis of their
total consolidated assets for U.S. entities
and on the basis of total consolidated
assets of U.S. operations for foreign

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entities, similar to bank holding
companies. All such nonbank financial
companies would be assessed,
regardless of their level of total
consolidated assets.15
3. Baseline
The Dodd-Frank Act established the
FSOC and the OFR, and vested the FDIC
with orderly liquidation authorities.
Prior to passage of the Act, these entities
and authorities did not exist. Expenses
associated with these activities are
directed by the Dodd-Frank Act to be
funded by the Board for a two-year
period to end on July 21, 2012. After
July 21, 2012, the Dodd-Frank Act
requires the Secretary of the Treasury
establish an assessment schedule by
regulation, with approval by the
Council, to collect funds necessary to
cover these expenses. There is no
provision in the Dodd-Frank Act for the
FSOC or the OFR to receive
appropriated funds. Section 152(e) of
the Dodd-Frank Act allows departments
or agencies of government to provide
funds, facilities, staff, and other support
services to the OFR as the OFR may
determine advisable. Section 152(e) and
Section 111(j) allow for employees of
the Federal Government to be detailed
to the OFR and the FSOC, respectively,
without reimbursement. Funding
through departments or agencies of
government would not be sufficient to
perform all of the functions of the
FSOC, the OFR, and the FDIC required
by the Act. Agencies funded by
appropriations would be restricted in
the amount of funding support they
could provide to the FSOC or the OFR.
Agencies not funded by appropriations
would be restricted in the amount of
funding support they could provide for
activities outside their primary
mandate. Restrictions on the availability
of funds or lack of predictability of
funding would make it difficult to
maintain consistent program activities,
and complete analysis required to
identify possible threats to financial
stability. The implementation of this
rule is not expected to have a
discernible effect on the structure of the
financial sector.
15 To date, the Council has not made a
determination regarding the applicability of Board
supervision under section 113 for a nonbank
financial company. Moreover, it is unclear as to
what type of nonbank financial companies the
Council may consider for a determination. For these
reasons, as the Council begins to make
determinations regarding nonbank financial
companies under section 113, the Treasury’s
methodology for determining the assessment fee for
these companies would be reviewed and, as
needed, revised through the rulemaking process to
assure that the assessment fees charged to these
companies would be appropriate.

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29891

4. Assessment of Total Fees Collected
It is anticipated that the annual
assessments for the FRF will exceed
$100 million, making the rule a
significant regulatory action as defined
in Executive Order 12866.
The assessment and collection of fees
described in this rule represent an
economic transfer from assessed
companies to the government, for
purposes of providing the benefits
described above. As such, the
assessments do not represent an
economic cost for purposes of this
analysis. However, the allocation of the
assessment may have distributional
impacts.
There is a wide range of possible
assessment schedules which could be
used to collect funds for the OFR and
the FSOC. For example, the schedule
could be structured to charge eligible
companies a similar fee, it could
include tiered fees and rates, or it could
include assessments for all eligible
companies as opposed to just entities
with $50 billion in U.S.-based assets
(i.e., including foreign banking
organizations with more than $50
billion in worldwide assets but less than
$50 billion in U.S.-based assets). Having
a simple, more transparent assessment
schedule reduces costs for government
and for assessed companies by making
assessments easier to calculate, budget
for, and manage administratively.
Executive Order 12866 specifically
requires that agencies ‘‘design its
regulations in the most cost-effective
manner to achieve the regulatory
objective.’’
The selection of the assessment
schedule was governed by two guiding
principles:
• The assessment structure should be
simple and transparent; and
• Allocation should take into account
differences among such companies,
based on the considerations for
establishing the prudential standards
under section 115 of the Dodd-Frank
Act as required by the Act.
Under Section 155 of the Act, the
assessment schedule is required to take
into account criteria for establishing
prudential standards for supervision
and regulation of large bank holding
companies and nonbank financial
companies as described in Section 115
of the Act. The criteria in Section 115
include: ‘‘Capital structure, riskiness,
complexity, financial activities
(including the financial activities of
subsidiaries), size, and any other riskrelated factors that the Council deems
appropriate.’’ Selection of total
consolidated assets as the basis for
assessments was intended to take into

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account the criteria identified in Section
115, while providing a more transparent
and administratively cost effective
metric. Using other risk-related metrics
as a base for calculation could
dramatically increase the cost of
calculating assessments, as well as
reduce a company’s ability to project
their assessment level. As of June 30,
2011, companies meeting the criteria for
assessment had $18.7 trillion in total
consolidated assets.
Under the assessment structure, each
assessed company’s eligible assets
would be multiplied by an assessment
fee rate to determine their assessment
amount. (Eligible assets would be total
worldwide consolidated assets for U.S.based bank holding companies and
designated U.S.-based nonbank
financial companies, and total U.S.based assets for foreign banking
organizations and foreign designated
nonbank financial companies.)
Assessments would be made
semiannually, generally based on an
average of the company’s last four
quarters of total consolidated assets.
For example, based on data on
assessable assets as of June 30, 2011, for
every $100 million collected the range
of assessments would be $280,000 for
the smallest assessed company (with
just over $50 billion in assets) to $12.5
million for the largest assessed company
(with approximately $2.3 trillion in
assets).16 Assessments on the ten largest
assessed companies would provide
roughly two-thirds of the total assessed
amount.
Based on currently available data, no
assessed company will have less than
$50 billion in assets; thus no small
businesses are directly affected by the
regulation. Under the structure of the
rule, the only assessed companies that
could have less than $50 billion in
assets would be nonbank financial
companies subject to enhanced
prudential supervision by the Board.
While no such determinations have yet
been made, Treasury believes that the
FSOC will not make such a
determination for any nonbank financial
company that is a small business. It is
not anticipated that the regulation will
unduly interfere with state, local, and
tribal governments in the exercise of
their governmental functions.
16 Semiannual assessments will be set to maintain
FRF balance at 12 months of budgeted capital
expenses and six months of budgeted operating
expenses. The initial assessment basis would be
equivalent to the budgeted expenses for the end of
fiscal year 2012 (July 20, 2012 to September 30,
2012), seven months of budgeted capital expenses
and six months of budgeted operating expenses for
FY 2013.

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We estimate that there are certain
direct costs associated with complying
with these rules. On a one-time basis,
assessed entities would be required to
set up a bank account for fund transfers
and provide the required information to
the Treasury Department through an
information collection form. The
information collection form includes
bank account routing information and
contact information for the individuals
at the company that will be responsible
for setting up the account and ensuring
that funds are available on the billing
date. We estimate that approximately 50
companies could be affected, and that
the cost associated with filling out the
form and submitting it to the Treasury
Department is approximately $600.17
We note that this represents a
conservative estimate of costs as some of
these companies may have already
established an account for payments or
collections to the U.S. government.
On a semi-annual basis, assessed
companies will have the opportunity to
review the confirmation statement and
assessment bill. The rules do not require
the companies to conduct the review,
but it does permit it. We anticipate that
at least some of the companies will
conduct reviews, in part because the
cost associated with it is very low.
5. Alternative Approaches Considered
We have noted that there are many
possible assessment structures which
could be employed to collect
assessments. As part of the rulemaking
process, Treasury contemplated a
variety of structures for determining
how assessments would be allocated.
Particularly, Treasury considered
alternate approaches with regard to the
complexity of the method of assessment.
In addition, Treasury considered
alternative approaches with the
following features: (1) Approaches
designed to charge assessed companies
at a similar fee level, distributing
collections more evenly; (2) approaches
designed to charge different rates for
different levels of total consolidated
assets, creating a ‘‘tiered’’ structure of
rates; and (3) approaches designed to
charge eligible bank holding companies
and foreign banking organizations
against world-wide assets, as opposed to
charging foreign banking organizations
against U.S.-based assets. We discuss
these alternative approaches below.
17 The cost of this activity is calculated by
multiplying the 50 companies by the time it takes
to complete the form (15 minutes) by an
approximate hourly wage of $48 (assuming an
annual salary of $100,000).

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a. Complexity of Approach
In evaluating methodologies for
determining individual company
assessments, the Treasury notes that
there has been a variety of assessment
approaches employed by other federal
and international agencies which
incorporate measures of risk that are
similar to the considerations mentioned
in Section 115 of the Dodd-Frank Act.
For example, Basel III capital adequacy
standards set minimum capital
requirements based on risk-weighted
assets and also provide a mandatory
capital conservation buffer and a
discretionary countercyclical buffer.
The risk-based calculations incorporate
capital tiers, leverage, credit valuation
adjustments, and other factors. As
required by the Dodd-Frank Act, the
FDIC recently revised how banks are
charged deposit insurance assessments.
With some minor exceptions, the FDIC
assessment base is total consolidated
assets minus tangible equity.
In the U.S., the FDIC uses the
CAMELS system to assign risk ranking
to its regulated banks. As suggested by
commenters, the Treasury considered
using CAMELS as a classification
system for assigning relative
assessments, but deemed the approach
inappropriate as the methodology used
to produce CAMELS ratings is nonpublic, the ratings are confidential
supervisory information, and the rating
system was developed to apply to U.S.
depository institutions. The system also
provides broad rankings (ranging from
one to five) which would require
subjective translation into assessment
levels.
In each of these cases, and in other
related determinations, the complexity
of the assessment methodology is tied to
the goal of the charge. For instance, the
Dodd-Frank Act requires the Board to
collect assessments designed to cover
the costs of heightened regulation and
supervision of large bank holding
companies, large savings and loan
holding companies, and nonbank
financial companies supervised by the
Board.
In evaluating these arrangements,
Treasury notes that complexity in the
assessment design increases the
administrative burden to assessed
companies, including planning for those
assessments, and decreases
transparency to the public. Treasury
does not believe that the benefits of a
complex methodology justify their
increased costs in the context of this
rulemaking.

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Federal Register / Vol. 77, No. 98 / Monday, May 21, 2012 / Rules and Regulations
b. Charging Companies Fees at a Similar
Level
Section 155 of the Dodd-Frank Act
requires that the assessment schedule
take into account criteria for
establishing prudential standards for
supervision and regulation of large bank
holding companies and nonbank
financial companies as described in
Section 115 of the Act. The criteria in
Section 115 include: ‘‘capital structure,
riskiness, complexity, financial
activities (including the financial
activities of subsidiaries), size, and any
other risk-related factors that the
Council deems appropriate.’’ The option
of charging companies at a similar level
was rejected as it would appear to
contradict the intent of the Act for the
schedule to charge larger, more complex
and riskier firms higher fees. On the
basis of size alone, we estimate that the
largest eligible companies have over 40
times the assessable assets of smallest
companies.

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c. Charging Fees Under a Tiered Rate
Structure
A number of regulators rely on tiered
assessment schedules to collect fees.
The Office of the Comptroller of the
Currency uses a tiered assessment
structure to collect fees associated with
regulating and supervising national
banks. The Office of Thrift Supervision
used a tiered structure to collect fees to
regulate and supervise thrifts. The main
benefit of a tiered structure is that it
allows fees to be charged at different
rates to different companies. For
example, supervision may benefit from
economies of scale, meaning that the
additional resources required for
supervision do not grow dollar for
dollar with the size of the entity.
Alternatively, larger companies may
pose risks that are disproportionately
larger than their asset size, requiring
even more resources for supervision
than do smaller companies. A tiered
approach could accommodate such
differences by allowing different fee
rates to be charges against assessed
assets by tier.
Consideration was given to
establishing such a structure for FRF
assessments. The primary benefit would
have been greater flexibility in
determining the relative amounts
assessed on larger companies versus
smaller companies. However, these
benefits were balanced against an
interest for assessment fees to be
reasonably estimable and simpler to
calculate, reducing administrative costs
both for assessed companies and the
Treasury, improving transparency, and
allowing companies to better anticipate

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assessment amounts. Given that all
assessed companies are large (generally
with over $50 billion in assets) and
systemically important, and the
activities of the FSOC, the OFR, and
implementation expenses of the FDIC
correspond to all of them, the relative
benefits of a tiered structure over a fixed
rate structure were unclear.
d. Charging All Eligible Bank Holding
Companies
Based on the definition of ‘‘bank
holding company’’ in Title I of the
Dodd-Frank Act, assessments can be
made against any foreign banking
organizations with $50 billion or more
in total consolidated assets. Since many
of these eligible foreign banking
companies have a relatively small
percentage of their operations in the
United States, there is limited basis for
assessing these companies.
Consideration was given to charging a
small fee, so that all eligible companies
would be charged, but the additional
costs associated with administering the
fee and cost of compliance by these
companies outweighed the perceived
benefits of this choice. The final
determination was to charge foreign
banking organizations with $50 billion
or more in total U.S.-based assets and
U.S. based bank holding companies
with $50 billion or more in total
consolidated assets.
D. Congressional Review Act
The Congressional Review Act, 5
U.S.C. 801 et seq., generally provides
that before a rule may take effect, the
agency promulgating the rule must
submit a rule report, which includes a
copy of the rule, to each House of the
Congress and to the Comptroller General
of the United States. A major rule
cannot take effect until 60 days after it
is published in the Federal Register.
This action is a ‘‘major rule’’ as defined
by 5 U.S.C. 804(2) and will be effective
60 days after publication.
E. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act
of 1995 (2 U.S.C. 1531–1538) requires
federal agencies to assess the effects of
their discretionary regulatory actions. In
particular, the Act addresses actions
that may result in the expenditure by a
state, local, or tribal government, in the
aggregate, or by the private sector of
$100,000,000 (adjusted for inflation) or
more in any one year. Treasury believes
that the regulatory impact analysis
provides the analysis required by the
Unfunded Mandates Reform Act.

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29893

F. Administrative Procedure Act
The Administrative Procedure Act
(5 U.S.C. 551 et seq.) (APA) generally
requires public notice and comment
procedures before promulgation of
regulations. See 5 U.S.C. 553(b). The
Treasury published a notice of proposed
rulemaking requesting comment on the
proposed rule on January 3, 2012. The
Treasury is finalizing the rule as it
relates to bank holding companies
without an opportunity for additional
comment.
The comments that relate to nonbank
financial companies have been
considered but have not been fully
addressed in this interim rule because
the Department believes the rulemaking
would benefit from additional public
comment prior to establishing it as a
final rule.
The Department believes, however,
that good cause exists under 5 U.S.C.
553(b) to effectuate the rule as it relates
to nonbank financial companies on an
interim basis. As discussed in this
preamble, nonbank financial companies
supervised by the Board pursuant to
section 113 of the Dodd-Frank Act are
subject to assessments. To date, no
nonbank financial company has been
subject to the section 113 supervision.
Once designated by the Council and
subject to Board supervision, a nonbank
financial company will also be subject
to assessments under the Dodd-Frank
Act. In order to be consistent with the
requirements of section 155 of the Act
in assessing designated nonbank
financial companies, the Treasury finds
that it would be impracticable and
contrary to the public interest to delay
implementation of the rule pending
further public comment. To implement
the rule only as it relates to bank
holding companies would impose an
increased burden on bank holding
companies and prevent the collection
from designated nonbank financial
companies of the assessments required
to be imposed by statute. Accordingly,
the Treasury is effectuating the rule as
it relates to nonbank financial
companies, but also invites public
comment on portions of §§ 150.2, 150.3,
150.4, 150.5, and 150.6 as they relate to
nonbank financial companies.
List of Subjects in 31 CFR Part 150
Bank holding companies, Nonbank
financial companies, Financial research
fund.
For the reasons set forth in the
preamble, the Treasury amends Title 31,
Chapter I of the Code of Federal
Regulations by adding part 150 to read
as follows:

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Federal Register / Vol. 77, No. 98 / Monday, May 21, 2012 / Rules and Regulations

PART 150—FINANCIAL RESEARCH
FUND
Sec.
150.1
150.2
150.3
150.4
150.5
150.6

Scope.
Definitions.
Determination of assessed companies.
Calculation of assessment basis.
Calculation of assessments.
Notice and payment of assessments.

Authority: 12 U.S.C. 5345; 31 U.S.C. 321.
§ 150.1

Scope.

The assessments contained in this
part are made pursuant to the authority
contained in 12 U.S.C. 5345.

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§ 150.2

Definitions.

As used in this part:
Assessed company means:
(1) A bank holding company that has
$50 billion or more in total consolidated
assets, based on the average of total
consolidated assets as reported on the
bank holding company’s four most
recent quarterly Consolidated Financial
Statements for Bank Holding Companies
(or, in the case of a foreign banking
organization, based on the average of
total assets at end of period as reported
on such company’s four most recent
quarterly Capital and Asset Information
for the Top-tier Consolidated Foreign
Banking Organization submissions if
filed quarterly, or two most recent
annual submissions if filed annually, as
appropriate); or
(2) A nonbank financial company
required to be supervised by the Board
under section 113 of the Dodd-Frank
Act.
Assessment basis means, for a given
assessment period, an estimate of the
total expenses that are necessary or
appropriate to carry out the
responsibilities of the Office and the
Council as set out in the Dodd-Frank
Act (including an amount necessary to
reimburse reasonable implementation
expenses of the Corporation that shall
be treated as expenses of the Council
pursuant to section 210(n)(10) of the
Dodd-Frank).
Assessment fee rate, with regard to a
particular assessment period, means the
rate published by the Department for the
calculation of assessment fees for that
period.
Assessment payment date means:
(1) For the initial assessment period,
July 20, 2012;
(2) For any semiannual assessment
period ending on March 31 of a given
calendar year, September 15 of the prior
calendar year; and
(3) For any semiannual assessment
period ending on September 30 of a
given calendar year, March 15 of the
same year.
Assessment period means any of:

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(1) The initial assessment period; or
(2) Any semiannual assessment
period.
Bank holding company means:
(1) A bank holding company as
defined in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841);
or
(2) A foreign banking organization.
Board means the Board of Governors
of the Federal Reserve System.
Corporation means the Federal
Deposit Insurance Corporation.
Council means the Financial Stability
Oversight Council established by
section 111 of the Dodd-Frank Act.
Department means the Department of
the Treasury.
Determination date means:
(1) For the initial assessment period,
December 31, 2011.
(2) For any semiannual assessment
period ending on March 31 of a given
calendar year, May 31 of the prior
calendar year.
(3) For any semiannual assessment
period ending on September 30 of a
given calendar year, November 30 of the
prior calendar year.
Dodd-Frank Act means the DoddFrank Wall Street Reform and Consumer
Protection Act.
Foreign banking organization means a
foreign bank or company that is treated
as a bank holding company for purposes
of the Bank Holding Company Act of
1956, pursuant to section 8(a) of the
International Banking Act of 1978 (12
U.S.C. 3106(a)).
Initial assessment period means the
period of time beginning on July 20,
2012 and ending on March 31, 2013.
Office means the Office of Financial
Research established by section 152 of
the Dodd-Frank Act.
Semiannual assessment period
means:
(1) Any period of time beginning after
the initial assessment period on October
1 and ending on March 31 of the
following calendar year; or
(2) Any period of time beginning after
the initial assessment period on April 1
and ending on September 30 of the same
calendar year.
Total assessable assets means:
(1) For a bank holding company other
than a foreign banking organization, the
average of total consolidated assets for
the four quarters preceding the
determination date, as reported on the
bank holding company’s four most
recent FR Y–9C filings;
(2) For any other bank holding
company that has $50 billion or more in
total consolidated assets, the average of
the company’s total assets of combined
U.S. operations for the four quarters
preceding the determination date, based

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on the combined total assets of the
foreign banking organization’s U.S.
branches, agencies, and subsidiaries as
reported on the foreign banking
organization’s four most recent quarterly
financial reports, or, if the company
only files financial reports annually, the
average of the company’s total assets of
combined U.S. operations for the two
years preceding the determination date,
based on the combined total assets of
the foreign banking organization’s U.S.
branches, agencies, and subsidiaries as
reported on the foreign banking
organization’s two most recent annual
financial reports; or
(3) For a nonbank financial company
supervised by the Board under section
113 of the Dodd-Frank Act, either the
average of total consolidated assets for
the four quarters preceding the
determination date, if the company is a
U.S. company, or the average of total
assets of combined U.S. operations for
the four quarters preceding the
determination date, if the company is a
foreign company.
§ 150.3 Determination of assessed
companies.

(a) The determination that a bank
holding company or a nonbank financial
company is an assessed company will
be made by the Department.
(b) The Department will apply the
following principles in determining
whether a company is an assessed
company:
(1) For tiered bank holding companies
for which a holding company owns or
controls, or is owned or controlled by,
other holding companies, the assessed
company shall be the top-tier, regulated
holding company.
(2) In situations where more than one
top-tier, regulated bank holding
company has a legal authority for
control of a U.S. bank, each of the toptier regulated holding companies shall
be designated as an assessed company.
(3) In situations where a company has
not filed four consecutive quarters of the
financial reports referenced above for
the most recent quarters (or two
consecutive years for annual filers of the
FR Y–7Q or successor form), such as
may be true for companies that recently
converted to a bank holding company,
the Department will use, at its
discretion, other financial or annual
reports filed by the company, such as
Securities and Exchange Commission
(SEC) filings, to determine a company’s
total consolidated assets.
(4) In situations where a company
does not report total consolidated assets
in its public reports or where a company
uses a financial reporting methodology
other than U.S. GAAP to report on its

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Federal Register / Vol. 77, No. 98 / Monday, May 21, 2012 / Rules and Regulations
U.S. operations, the Department will
use, at its discretion, any comparable
financial information that the
Department may require from the
company for this determination.
(c) Any company that the Department
determines is an assessed company on
a given determination date will be an
assessed company for the entire
assessment period related to such
determination date, and will be subject
to the full assessment fee for that
assessment period, regardless of any
changes in the company’s assets or other
attributes that occur after the
determination date.

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§ 150.4

Calculation of assessment basis.

(a) For the initial assessment period,
the Department will calculate the
assessment basis such that it is
equivalent to the sum of:
(1) Budgeted operating expenses for
the Office for the period beginning July
21, 2012 and ending March 31, 2013;
(2) Budgeted operating expenses for
the Council for the period beginning
July 21, 2012 and ending March 31,
2013;
(3) Capital expenses for the Office for
the period beginning July 21, 2012 and
ending April 30, 2013; and
(4) Capital expenses for the Council
for the period beginning July 21, 2012
and ending April 30, 2013; and
(5) An amount necessary to reimburse
reasonable implementation expenses of
the Federal Deposit Insurance
Corporation as provided under section
210(n)(10) of the Dodd-Frank Act.
(b) For each subsequent assessment
period, the Department will calculate an
assessment basis that shall be sufficient
to replenish the Financial Research
Fund to a level equivalent to the sum of:
(1) Budgeted operating expenses for
the Office for the applicable assessment
period;
(2) Budgeted operating expenses for
the Council for the applicable
assessment period;
(3) Budgeted capital expenses for the
Office for the 12-month period
beginning on the first day of the
applicable assessment period;
(4) Budgeted capital expenses for the
Council for the 12-month period
beginning on the first day of the
applicable assessment period; and
(5) An amount necessary to reimburse
reasonable implementation expenses of
the Federal Deposit Insurance
Corporation as provided under section
210(n)(10) of the Dodd-Frank Act.
§ 150.5

Calculation of assessments.

(a) For each assessed company, the
Department will calculate the total
assessable assets in accordance with the
definition in § 150.2.

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(b) The Department will allocate the
assessment basis to the assessed
companies in the following manner:
(1) Based on the sum of all assessed
companies’ total assessable assets, the
Department will calculate the
assessment fee rate necessary to collect
the assessment basis for the applicable
assessment period.
(2) The assessment payable by an
assessed company for each assessment
period shall be equal to the assessment
fee rate for that assessment period
multiplied by the total assessable assets
of such assessed company.
(3) Foreign banking organizations
with less than $50 billion in total
assessable assets shall not be assessed.
§ 150.6 Notice and payment of
assessments.

(a) No later than fifteen calendar days
after the determination date (or, in the
case of the initial assessment period, no
later than seven days after the
publication date of this rule), the
Department will send to each assessed
company a statement that:
(1) Confirms that such company has
been determined by the Department to
be an assessed company; and
(2) States the total assessable assets
that the Department has determined will
be used for calculating the company’s
assessment.
(b) If a company that is required to
make an assessment payment for a given
semiannual assessment period believes
that the statement referred to in
paragraph (a) of this section contains an
error, the company may provide the
Department with a written request for a
revised statement. Such request must be
received by the Department via email
within one month and must include all
facts that the company requests the
Department to consider. The
Department will respond to all such
requests within 21 calendar days of
receipt thereof.
(c) No later than the 14 calendar days
prior to the payment date for a given
assessment period, the Department will
send an electronic billing notification to
each assessed company, containing the
final assessment that is required to be
paid by such assessed company.
(d) For the purpose of making the
payments described in § 150.5, each
assessed company shall designate a
deposit account for direct debit by the
Department through www.pay.gov or
successor Web site. No later than the
later of 30 days prior to the payment
date for an assessment period, or the
effective date of this rule, each such
company shall provide notice to the
Department of the account designated,
including all information and

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29895

authorizations required by the
Department for direct debit of the
account. After the initial notice of the
designated account, no further notice is
required unless the company designates
a different account for assessment debit
by the Department, in which case the
requirements of the preceding sentence
apply.
(e) Each assessed company shall take
all actions necessary to allow the
Department to debit assessments from
such company’s designated deposit
account. Each such company shall, prior
to each assessment payment date,
ensure that funds in an amount at least
equal to the amount on the relevant
electronic billing notification are
available in the designated deposit
account for debit by the Department.
Failure to take any such action or to
provide such funding of the account
shall be deemed to constitute
nonpayment of the assessment. The
Department will cause the amount
stated in the applicable electronic
billing notification to be directly debited
on the appropriate payment date from
the deposit account so designated.
(f) In the event that, for a given
assessment period, an assessed
company materially misstates or
misrepresents any information that is
used by the Department in calculating
that company’s total assessable assets,
the Department may at any time recalculate the assessment payable by that
company for that assessment period,
and the assessed company shall take all
actions necessary to allow the
Department to immediately debit any
additional payable amounts from such
assessed company’s designated deposit
account.
(g) If a due date under this section
falls on a date that is not a business day,
the applicable date shall be the next
business day.
Dated: May 14, 2012.
Mary Miller,
Under Secretary for Domestic Finance,
Department of the Treasury.
[FR Doc. 2012–12047 Filed 5–18–12; 8:45 am]
BILLING CODE 4810–25–P

DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[Docket No. USCG–2011–0937]

Drawbridge Operation Regulation;
Black River, La Crosse, WI
AGENCY:

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Coast Guard, DHS.

21MYR1