FRO_20210331_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements Associated with Regulation O
(FR O; OMB No. 7100-0382)
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,
without revision, the Recordkeeping and Disclosure Requirements Associated with Regulation O
(FR O; OMB No. 7100-0382). The Board’s Regulation O - Loans to Executive Officers,
Directors, and Principal Shareholders of Member Banks (12 CFR Part 215) governs any
extension of credit made by a member bank1 to an executive officer, director, or principal
shareholder of the member bank, of any company of which the member bank is a subsidiary, and
of any other subsidiary of that company. It prohibits such extensions of credit unless they are
made on substantially the same terms (including interest rates and collateral) as those prevailing
at the time for comparable transactions by the bank with other persons who are not employed by
the bank and do not involve more than the normal risk of repayment or present other unfavorable
features. Sections 215.8 and 215.9 of Regulation O contain recordkeeping and disclosure
requirements on member banks.
The estimated total annual burden for the FR O is 9,420 hours.
Background and Justification
Sections 22(g) and (h) of the Federal Reserve Act restrict certain transactions between
banks and their insiders or insiders of their affiliates.2 Insiders include executive officers,
directors, principal shareholders, and companies controlled by such persons. Congress enacted
sections 22(g) and (h) to prevent bank insiders from abusing their positions to gain favorable
treatment from their associated banks and authorized the Board to prescribe rules and regulations
as necessary to effectuate the purposes and to prevent evasions. Accordingly, the Board has
promulgated the Board’s Regulation O to prevent insider abuse in banks. The regulation contains
recordkeeping and disclosure requirements related to member banks’ compliance with
Regulation O. This information is not available from other sources.
Implementation of FR O on a Temporary Basis
The delegation of authority to the Board from OMB that permits the Board to approve
collections of information under the Paperwork Reduction Act (PRA) includes the authority to
temporarily approve a collection of information without seeking public comment. To exercise
this authority, the Board must determine that a new collection of information or a change to an
existing collection must be instituted quickly and that public participation in the approval process
would substantially interfere with the Board’s ability to perform its statutory obligation.
Following the temporary approval of an information collection, the Board must conduct a normal
12 U.S.C. § 221 defines a “member bank” as any national bank, state bank, or bank or trust company which has
become a member of one of the Federal Reserve banks.
2
12 U.S.C. §§ 375a and 375b.
1

delegated review of the collection within six months, including publishing in the Federal
Register a notice seeking public comment.
On April 22, 2020, the Board published an interim final rule in the Federal Register
(85 FR 22345). In connection with that interim final rule, the Board temporarily approved the
collections of information contained within Regulation O. The Board determined that this
collection of information had to be instituted quickly and that public participation in the approval
process would defeat the purpose of the collection of information, as the Board’s ability to
perform its statutory duties would be diminished if the Board were unable to enforce the
collections of information contained within Regulation O due to possible noncompliance with
the PRA. The Board has now finalized this information collection through the normal delegated
review process.
Description of Information Collection
Regulation O contains certain recordkeeping and disclosure requirements. Pursuant to
section 215.8 of Regulation O, respondents must maintain records necessary for compliance with
the requirements of Regulation O. Any recordkeeping method adopted by a respondent shall
identify, through an annual survey, all insiders of the respondent and maintain records of all
extensions of credit to insiders of the respondent, including the amount and terms of each such
extension of credit. Additionally, any recordkeeping method adopted by a respondent shall
maintain records of extensions of credit to insiders of the respondent’s affiliates by using either
the survey method or borrower inquiry method, as set forth in Regulation O, or a different
recordkeeping method if the appropriate federal banking agency determines that the respondent’s
method is at least as effective as the listed methods.3
Pursuant to section 215.9 of Regulation O, upon receipt of a written request from the
public, a respondent must make available the names of each of its executive officers and each of
its principal shareholders to whom, or to whose related interests, the member bank had
outstanding as of the end of the latest previous quarter of the year, an extension of credit that,
when aggregated with all other outstanding extensions of credit at such time from the member
bank to such person and to all related interests of such person, equaled or exceeded 5 percent of
the member bank’s capital and unimpaired surplus or $500,000, whichever amount is less.
Respondents are not required to disclose the specific amounts of individual extensions of credit.
Additionally, each respondent must maintain records of all requests for the information described
above and the disposition of such requests. These records may be disposed of after two years
from the date of the request.
Respondent Panel
The FR O panel comprises member banks.

3

A member bank that is prohibited by law or by an express resolution of the board of directors of the bank from
making an extension of credit to any company or other entity that is covered by Regulation O as a company is not
required to maintain any records of the related interests of the insiders of the bank or its affiliates or to inquire of
borrowers whether they are related interests of the insiders of the bank or its affiliates. 12 CFR 215.8(d).

2

Time Schedule for Information Collection
The time schedule for when the records associated with this collection are produced and
maintained is contingent on the method of compliance with Regulation O chosen by the member
bank, and can include annually, upon an extension of credit, or on an ongoing basis. Disclosure
is required when requests by the public are received by the member bank.
Public Availability of Data
Upon receipt of a written request from the public, a member bank shall make available
the names of each of its executive officers and each of its principal shareholders to whom, or to
whose related interests, the member bank had outstanding as of the end of the latest previous
quarter of the year, an extension of credit that, when aggregated with all other outstanding
extensions of credit at such time from the member bank to such person and to all related interests
of such person, equaled or exceeded 5 percent of the member bank’s capital and unimpaired
surplus or $500,000, whichever amount is less.
Legal Status
The FR O is authorized by section 7 of the Federal Deposit Insurance Act (12 U.S.C. §
1817(k)) and section 22(h) of the Federal Reserve Act (12 U.S.C. § 375b). The Board also has
the authority to require reports from state member banks (12 U.S.C. §§ 248(a) and 324).
Section 7 authorizes the Board to require state member banks to report and publicly disclose
information concerning extensions of credit by the state member bank to its executive officers,
principal shareholders, or related interests of those persons. Section 22(h) authorizes the Board to
prescribe rules related to extensions of credit to executive officers, directors, and principal
shareholders.4 The obligation to respond is mandatory.
The information disclosed under the disclosure requirements of Regulation O is not
confidential. The information that is subject to the recordkeeping requirements of Regulation O
would be maintained at each state member bank. For this information, the Freedom of
Information Act (FOIA) would only be implicated if the Board obtained such records as part of
the examination or supervision of a banking organization. In the event the records are obtained
by the Board as part of an examination or supervision of a financial institution, this information
would be considered confidential pursuant to exemption 8 of the FOIA, which protects
information contained in “examination, operating, or condition reports” obtained in the bank
supervisory process (5 U.S.C. § 552(b)(8)). In addition, in these cases, the information may also
be kept confidential under exemption 4 for the FOIA, which protects commercial or financial
information obtained from a person that is privileged or confidential (5 U.S.C. § 552(b)(4)).
Finally, this information may be kept confidential under exemption 6, which protects information
“the disclosure of which would constitute a clearly unwarranted invasion of personal privacy”
(5 U.S.C. § 552(b)(6)).

4

Section 306(o) of the Federal Deposit Insurance Corporation Improvement Act of 1991 contains a similar
authorization.

3

Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On April 22, 2020, the Board published an interim final rule in the Federal Register
(85 FR 22345) requesting public comment on the extension, without revision, of the FR O. The
comment period for this notice expired on June 8, 2020. The Board did not receive any
comments. The Board adopted the extension, without revision, of the FR O as originally
proposed. On March 8, 2021, the Board published a final notice in the Federal Register
(86 FR 13384).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR O is 9,420
hours. The estimated number of respondents is based on the current total of member banks, and
the time per response is based on a broad estimate of how long it is expected to take to fulfill
each requirement. These recordkeeping and disclosure requirements represent less than 1 percent
of the Board’s total paperwork burden.
Estimated
number of
respondents5

FR O
Recordkeeping
Sections 215.8 and 215.9
Disclosure
Section 215.9

Estimated
Annual
average hours
frequency
per response

Estimated
annual burden
hours

1,570

1

4

6,280

1,570

1

2

3,140
9,420

Total
The estimated total annual cost to the public for the FR O is $544,005.6
Sensitive Questions

This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.

5

Of these respondents, 1,074 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.
There are no special accommodations given to mitigate the burden on small institutions.
6
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 $20, 45% Financial Managers at
$71, 15% Lawyers at $70, and 10% Chief Executives at $93). 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 2019, published March 31, 2020, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

4

Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing the FR O
is negligible.

5