US Agencies (FDIC, FED, and OCC) published a request for comment on ways to modify the requirements for reporting data on loans to small businesses and small farms in the Consolidated Reports of Condition and Income (Call Reports) so that the reported data better reflect lending to these sectors of the U.S. economy. The agencies are seeking feedback from all national banks and federal savings associations, including community banks, that report data on Schedule RC-C, Part II, “Loans to Small Businesses and Small Farms.” Data under Schedule RC-C, Part II is reported through Call Reports including FFIEC 031, FFIEC 041, and FFIEC 051. Comment period on this consultation ends on December 16, 2019.
GAO reviewed the data collected on Call Report Schedule RC-C, Part II as part of a study, which was published in August 2018, on the effect of regulations on small business lending. In summarizing its findings with respect to the Call Report data on loans to small businesses, GAO indicated that the amounts reported by community banks do not accurately capture lending to small businesses. This is because the definition of small business loans excludes loans greater than USD 1 million and these thresholds have not been adjusted for inflation since 1992. In addition, the reported amounts are based on loan size rather than the size of the borrowing entity and, therefore, could include small loans to large businesses. As a conclusion to its review, GAO recommended that the agencies should collaborate to re-evaluate and modify, as needed, the requirements for the data banks report in the Call Reports to better reflect lending to small businesses.
In response to this recommendation, the agencies are reviewing the data collected on small business and small farm loans on Schedule RC-C, Part II, in the Call Reports to identify options for improving the usefulness of the data reported on these loans. The agencies recognize that institutions already have processes in place that enable them to report their small business and small farm lending data in the Call Reports in accordance with the reporting instructions for Schedule RC-C, Part II, which generally have not been revised since the implementation of Schedule RC-C, Part II, in 1993. Certain options for revisions may change the burden in differing ways, particularly if the options are not aligned with how institutions currently identify loans to small businesses and small farms and then collect and report data on these loans to their managements or internal purposes. The agencies are interested in learning the following:
- The data institutions collect and maintain on small business and small farm loans in their loan systems and other automated systems for internal purposes
- The data required to be reported on these loans in Call Report Schedule RC-C, Part II
- Internal uses of these data by institutions to identify which options may improve the usefulness of the Call Report data collection while considering the burden impact of any adjustments to the current reporting requirements for Schedule RC-C, Part II
The agencies will use the feedback received in response to this request for comment to assess what steps they should take in response to the recommendation from GAO. After considering the feedback, if the agencies determine that a change to the existing collection of small business and small farm lending data in Schedule RC-C, Part II, is warranted, the agencies would seek further comment on a specific proposal to revise this Call Report schedule in accordance with the Paperwork Reduction Act.
Comment Due Date: December 16, 2019
Keywords: Americas, US, Banking, Call Reports, Schedule RC-C, Reporting, Loan to Small Business, FFIEC 031, FFIEC 041, FFIEC 051, GAO, FED, FDIC, OCC
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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