FRLL12_20231228_omb

Supporting Statement for the
Application for Exemption from Prohibited Service at
Savings and Loan Holding Companies
(FR LL-12; OMB No. 7100-0338)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the Application for Exemption from Prohibited Service at Savings and Loan Holding
Companies (FR LL-12; OMB No. 7100-0338). The Federal Deposit Insurance Act (FDI Act) and
the Board’s Regulation LL - Savings and Loan Holding Companies (12 CFR Part 238) prohibit
individuals who have been convicted of certain criminal offenses or who have agreed to enter
into a pretrial diversion or similar program in connection with a prosecution for such criminal
offenses from participating in the affairs of a savings and loan holding company (SLHC) or any
of its subsidiaries without the written consent of the Board. Such an individual, or the SLHC
with which the individual seeks to participate, may apply for an exemption from this prohibition.
The Board revised the FR LL-12 by clearing two previously uncleared recordkeeping and
disclosure requirements: (1) in order to utilize the exception at section 238.86 related to
employees in non-policymaking roles, an SLHC must maintain a list of all policymaking
positions and review this list annually and (2) a person who is not subject to the requirement to
seek an exemption from the Board because their criminal offenses are de minimis must disclose
the conviction or pretrial diversion or similar program to all insured depository institutions and
other banking organizations the affairs of which he or she participates.1
The estimated total annual burden for the FR LL-12 is 144 hours, and would increase to
674 hours. The revisions would result in an increase of 530 hours. There is no formal reporting
form for the FR LL-12. An exemption request to the Board may be filed in a letter, or by using
the Federal Deposit Insurance Corporation (FDIC) form described in the Description of
Information Collection section. The Board also proposes to create a web page for the FR LL-12
at https://www.federalreserve.gov/apps/reportingforms.
Background and Justification
Pursuant to section 19 of the FDI Act (12 U.S.C. § 1829) and Subpart I of Regulation LL
(12 CFR 238.81 et seq.), any person who has been convicted of any criminal offense involving
dishonesty or a breach of trust or money laundering, or has agreed to enter into a pretrial
diversion or similar program in connection with a prosecution for such an offense (prohibited
person), is prohibited from (1) becoming or continuing as an institution-affiliated party2 with
respect to any SLHC, (2) owning or controlling directly or indirectly any SLHC, or (3) otherwise
participating directly or indirectly in the conduct of the affairs of any SLHC. An SLHC may not

1

See 12 CFR § 238.85(b)(5).
12 U.S.C. § 1813(u) Defining institution-affiliated party, but substituting “savings and loan company” for “insured
depository institution” as provided at 12 CFR 238.82(a).
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permit a prohibited person to engage in any conduct or continue any relationship prohibited by
section 19 of the FDI Act.
Pursuant to section 19 of the FDI Act, the Board may provide an exemption to a
prohibited person if such exemption is consistent with the purposes of section 19. In order for a
prohibited person to participate in the conduct of the affairs of any SLHC in a manner described
above, the SLHC or the individual must file with the Board, and the Board must approve an
application seeking an exemption from the prohibitions of section 19 of the FDI Act and
Subpart I of Regulation LL. The Board will use information provided by the applicant when
considering an exemption request concerning a prohibited person. Such considerations will
include, but are not limited to, whether the prohibited person would participate in the major
policymaking functions of the SLHC or would threaten the safety and soundness of any
subsidiary insured depository institution of the SLHC or the public confidence in the insured
depository institution.3 This information is not available from other sources. If this information
were not collected, the Board would not be able to consider any exemptions to the general
prohibition.
Description of Information Collection
All prohibited persons and SLHCs that seek an exemption are subject to the application
requirements of Subpart I of Regulation LL. An applicant must provide information regarding
the position at the SLHC held or to be held by the prohibited person, the prohibited person’s
level of ownership of the SLHC, the specific nature of the offense involved, evidence of
rehabilitation (if any), and other relevant factors listed in section 238.88(b) of Regulation LL.
The SLHC or prohibited person may seek an exemption only for a designated position (or
positions) with respect to an SLHC identified in the application. If an individual who is granted a
waiver is subsequently convicted of or enters into a pretrial diversion program for a covered
crime, the individual must seek another exemption from the Board. An applicant may submit this
information in a letter or by using the FDIC’s Application Pursuant to Section 19 of the Federal
Deposit Insurance Act (OMB No. 3064-0018).4
Section 238.86 provides an exception to the general prohibition if an SLHC satisfies
certain requirements, including that the SLHC maintains a list of all policymaking positions and
reviews this list annually. Separately, section 238.85(b)(5) requires that a person who is not
subject to the requirement to seek an exemption from the Board because their criminal offense is
de minimis must also disclose the conviction or pretrial diversion or similar program to all
insured depository institutions and other banking organizations the affairs of which he or she
participates as a condition of using the de minimis exception.
The FR LL-12 may be submitted via FedEZFile at
https://www.federalreserve.gov/supervisionreg/afi/fedezfile-fluent.htm.

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12 CFR 238.88.
While the Board will accept submissions of the FDIC’s form, the Board has not adopted the FDIC’s interpretative
statements on the form and these should not be relied on by applicants. Information specific to the FDIC, such as the
FDIC’s Privacy Act statement or the FDIC’s regional offices, are also inapplicable to applicants to the Board.
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Respondent Panel
The FR LL-12 panel comprises SLHCs and prohibited persons that seek to participate in
the affairs of an SLHC.
Frequency and Time Scedule
The FR LL-12 is event-generated. The information is collected when an SLHC or a
prohibited person applies for an exemption. However, the SLHC or prohibited person may not
file an application less than one year after the latter of the date of a denial of the same exemption
under sections 238.89(b), 238.90(a), or 238.90(d) of Regulation LL.5
Revisions to the FR LL-12
The Board revised the FR LL-12 by clearing two previously uncleared recordkeeping and
disclosure requirements: (1) in order to utilize the exception at section 238.86 related to
employees in non-policymaking roles, an SLHC must maintain a list of all policymaking
positions and review this list annually and (2) a person who is not subject to the requirement to
seek an exemption from the Board because their criminal offenses are de minimis must disclose
the conviction or pretrial diversion or similar program to all insured depository institutions and
other banking organizations the affairs of which he or she participates.
Public Availability of Data
No data collected by this information collection are published.
Legal Status
The FR LL-12 is authorized under section 19(e)(2) of the FDI Act (12 U.S.C. §
1829(e)(2)).6 With respect to requirements that apply to SLHCs, the FR LL-12 is also authorized
under section 10(b)(2) of the Home Owners’ Loan Act (12 U.S.C. § 1467a(b)(2)).7 Compliance
with the requirements under the FR LL-12 is required to obtain a benefit (exemption from the
prohibitions on employment with an SLHC for individuals; eligibility for the exemption for
employees in non-policymaking roles under the exception contained in section 238.86 for
SLHCs).
Records retained by SLHCs or disclosed by individuals to insured depository institutions
or other banking organizations under the FR LL-12 would generally be maintained by the person
or entity that created them or to which they were disclosed. The Freedom of Information Act
(FOIA) would be implicated only if the Board obtained such records or disclosures as part of the
examination or supervision of a financial institution, in which case the records would be
5

12 CFR 238.87(a)(3).
Authorizing the Board to “provide exemptions [from the prohibition] by regulation or order … if the exemption is
consistent with the purposes of this subsection”.
7
Authorizing the Board to require SLHCs to submit to the Board reports containing “such information concerning
the operations of such savings and loan holding company and its subsidiaries as the Board may require”.
6

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protected from disclosure under FOIA exemption 8, which protects information contained in
“examination, operating, or condition reports” obtained in the bank supervisory process
(5 U.S.C. § 552(b)(8)). Information retained pursuant to the recordkeeping requirements under
the FR LL-12 may also be exempt from disclosure pursuant to FOIA exemption 4, if it is
nonpublic commercial or financial information which is both customarily and actually treated
as private by the respondent (5 U.S.C. § 552(b)(4)), or pursuant to FOIA exemption 6, if it
relates to personnel and medical files and similar files, the disclosure of which would constitute a
clearly unwarranted invasion of personal privacy (5 U.S.C. § 552(b)(6)).
Individual respondents may request that information submitted to the Board under the
FR LL-12 be kept confidential. If a respondent requests confidential treatment, the Board will
determine whether the information is entitled to confidential treatment on a case-by-case basis.
Information submitted by individual respondents may kept confidential under FOIA
exemption 4, if it is nonpublic commercial or financial information which is both customarily
and actually treated as private by the respondent, or under FOIA exemption 6, if it relates to
personnel and medical files and similar files, the disclosure of which would constitute a clearly
unwarranted invasion of personal privacy.
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On September 28, 2023, the Board published an initial notice in the Federal Register (88
FR 66844) requesting public comment for 60 days on the extension, with revision, of the
FR LL-12. The comment period for this notice expired on November 27, 2023. The Board did
not receive any comments. The Board adopted the extension, with revision, of the FR LL-12 as
originally proposed. On December 26, 2023, the Board published a final notice in the Federal
Register (88 FR 88923).

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Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR LL-12 is 144
hours, and would increase to 674 hours with the revisions. The number of respondents is based
on the average annual number of FR LL-12 filings received in the last three years. The Board
does not have data on the number of institutions who take advantage of the exception at section
238.86 related to non-policymaking roles.8 Based on publicly available information about SLHC
business activities, the Board estimates that five SLHCs utilize this exception. The Board also
does not have data on the number of individuals who must report de minimis criminal offenses.
Thus, the number of respondents is based on an estimated 5% of SLHC employees having a de
minimis conviction and that would need to be disclosed every four years (so 1.25% of SLHC
employees would need to disclose a year). These reporting, recordkeeping, and disclosure
requirements represent less than 1 percent of the Board’s total paperwork burden.

8

This exception was originally adopted by the former Office of Thrift Supervision (OTS) (see 72 FR 25948 (May 8,
2007)) with this explanation: “In the months following the enactment of section 19(e) of the [FDI Act], OTS
received several inquiries from SLHCs that conduct forestry, manufacturing, or retail merchandising operations at
the holding company level. These SLHCs employ thousands of employees that engage solely in these operations.
The SLHCs report that the vast majority of these employees have no policymaking functions, do not otherwise
participate in the conduct of the affairs of the SLHC or the subsidiary insured depository institution, and have no
working relationship with the subsidiary insured depository institution. These SLHCs argue that applying section
19(e) of the FDIA to these employees would require the SLHCs to implement unnecessary and costly background
checks and undertake unnecessary personnel actions. They also indicate that the application of section 19(e) of the
FDIA would place them at a competitive disadvantage with respect to others in their industry that do not own an
insured depository institution. As a result, several SLHCs requested exemptions from the prohibitions in section
19(e) of the FDIA for employees in their forestry, manufacturing, and retail merchandising operations.”

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Estimated
number of
respondents9

FR LL-12

Estimated
Estimated
annual
average hours
frequency per response

Estimated
annual burden
hours

Current
Reporting
Individuals
Institutions

8
1

1
1

16
16

128
16
144

8
1

1
1

16
16

128
16

5

1

4

20

111

0.25

Current Total
Proposed
Reporting
Individuals
Institutions
Recordkeeping
Institutions
Disclosure
Individuals
De minimis criminal offenses
Proposed Total

2,03910

Change

510
674
530

9

Of the respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $850 million in total assets). Size standards effective March 17, 2023. See
https://www.sba.gov/document/support-table-size-standards.
10
A recent report from the Bureau of Justice Statistics notes that “very little empirical information exists about
misdemeanor charges filed in state, county, and municipal courts” (See Data on Adjudication of Misdemeanor
Offenses: Results from a Feasibility Study). The Survey of State Criminal History Information Systems, 2020
reports that there are 114 million state-level criminal records. Based on U.S. Population Estimates from the Census
Bureau (U.S. Census Bureau QuickFacts: United States), this would suggest 34% of Americans have a criminal
record. However, a state-level criminal record may reflect an arrest without conviction and an individual may have
state-level criminal records in multiple states. In addition, a de minimis criminal offense excludes a number of
offenses, such as those punishable by more than one year or a fine of more than $1,000, anyone who actually served
jail time, or expunged offenses. It also does not include adjudication against youthful offenders or juvenile
delinquents. The Board estimates that 5% of the total number of full-time equivalent employees at SLHCs have a de
minimis criminal offense to disclose (the total number of full-time equivalent employees at SLHCs is 163,140,
based on employment data from the National Information Center, excluding employees at SLHCs included in the
estimate of SLHCs utilizing the exemption at section 238.86). As noted in the footnote below, this number (8,157)
was divided by 4 in order to arrive at the estimated annual number of respondents.
11
Individuals would need to disclose convictions, including pretrial diversions, for de minimis crimes each time
they become a new institution-affiliated party with an SLHC. According to Bureau of Labor Statistics data, between
January 2018 and January 2022, employees in the financial activities industry had a median tenure of 4.6 years
(https://www.bls.gov/news.release/pdf/tenure.pdf). The Board estimates a disclosure every 4 years on average to
account for those who may be affiliated with more than one banking organization, or who may need to disclose a
conviction or pretrial diversion that occurred while already an institution-affiliated party.

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The estimated total annual cost to institutions is $1,060,12 while the estimated total annual
cost to individuals is $3,840.13 With the revisions, the estimated total annual cost to institutions
would increase to $2,385, while the estimated total annual cost to individuals would increase to
$19,140. Accordingly, the estimated total annual cost to the public for the FR LL-12 is $21,525.
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing the
FR LL-12 is negligible.

12

Total cost to the responding public is estimated using the following formula: total burden hours, multiplied by the
cost of staffing, where the cost of staffing is calculated as a percent of time for each occupational group multiplied
by the group’s hourly rate and then summed (30% Office & Administrative Support at $22, 45% Financial
Managers at $80, 15% Lawyers at $79, and 10% Chief Executives at $118). Hourly rates for each occupational
group are the (rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment
and Wages, May 2022, published April 25, 2023, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations
are defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.
13
The average consumer cost of $30 is estimated using data from the BLS, Occupational Employment and Wages,
May 2022, published April 25, 2023, https://www.bls.gov/news.release/ocwage.t01.htm.

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