View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

51806
§ 592.510

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules
Base time rate.

(a) For each fiscal year and based on
the previous fiscal year’s actual costs
and hours, FSIS calculates the base time
rate for inspection services, per hour per
program employee, using the following
formula: Office of Field Operations plus
Office of International Affairs inspection
program personnel salaries paid divided
by regular hours multiplied by the next
year’s percentage of cost of living
increase, plus the benefits rate, plus the
travel and operating rate, plus the
overhead rate, plus an allowance for bad
debt.
(b) FSIS calculates the components of
the base time rate (which are based on
previous fiscal year’s actual costs) using
the following formulas:
(1) Benefits Rate: Direct benefits costs
multiplied by the next calendar year’s
percentage cost of living increase. Some
examples of direct benefits are health
insurance, retirement, life insurance,
and Thrift Saving Plan (TSP) retirement
basic and matching contributions.
(2) Travel and Operating Rate: Total
direct travel and operating costs
multiplied by the percentage of
inflation.
(3) Overhead Rate: All indirect costs
plus the average information technology
(IT) costs over the previous two years in
the Public Health Data Communication
Infrastructure System Fund plus the
Office of Management Program cost in
the Reimbursable and Voluntary Funds
less any Greenbook costs (i.e., costs of
USDA support services prorated to the
service component for which fees are
charged) that are not related to food
inspection, divided by total direct hours
(regular, overtime, and holiday) worked
across all funds, multiplied by the
percentage of inflation.
(4) Allowance for Bad Debt Rate: Total
allowance for bad debt (for plants and
establishments that declare bankruptcy)
divided by total direct hours (regular,
overtime, and holiday) worked.
(c) The cost of living increases and
percentage of inflation factors used in
the formulas in this section are based on
the Office of Management and Budget’s
Presidential Economic Assumptions.
12. In § 592.520, revise the second
sentence to read as follows:

srobinson on DSKHWCL6B1PROD with PROPOSALS

§ 592.520

Overtime rate.

* * * The official plant must give
reasonable advance notice to the
inspector of any overtime service
necessary. For each fiscal year and
based on the previous fiscal year’s
actual costs and hours, FSIS calculates
the overtime rate for inspection service,
per hour per program employee, using
the following formula: Office of Field
Operations plus Office of International

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

Affairs inspection program personnel
salaries paid divided by regular hours
multiplied by the next year’s percentage
of cost of living increase multiplied by
1.5 plus the benefits rate, plus the travel
and operating rate, plus the overhead
rate, plus an allowance for bad debt.
FSIS calculates the benefits rate, travel
and operating rate, overhead rate, and
allowance for bad debt using the
formulas in § 592.510(b), and the cost of
living increases and percentage of
inflation factors in § 592.510(b).
13. In 592.530, revise the second
sentence to read as follows:
§ 592.530

Holiday rate.

* * * The official plant must, in
advance of such holiday work, request
that the inspector in charge furnish
inspection service during such period
and must pay the Agency for such
holiday work at the hourly rate. For
each fiscal year and based on the
previous fiscal year’s actual costs and
hours, FSIS calculates the holiday rate
for inspection service, per hour per
program employee, using the following
formula: Office of Field Operations plus
Office of International Affairs inspection
program personnel salaries paid divided
by regular hours multiplied by the next
year’s percentage of cost of living
increase multiplied by 2, plus benefits
rate, plus the travel and operating rate,
plus the overhead rate, plus an
allowance for bad debt. FSIS calculates
the benefits rate, travel and operating
rate, overhead rate, and allowance for
bad debt using the formulas in
§ 592.510(b), and the cost of living
increases and percentage of inflation
factors in § 592.510(b).
Done in Washington, DC, on October 5,
2009.
Alfred V. Almanza,
Administrator.
[FR Doc. E9–24283 Filed 10–7–09; 8:45 am]
BILLING CODE 3410–DM–P

FEDERAL RESERVE SYSTEM
[Regulation A; Docket No. R–1371]

12 CFR Part 201
Extensions of Credit by Federal
Reserve Banks
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Proposed rule.
SUMMARY: The Board of Governors
(Board) is publishing for public
comment a proposed amendment to
Regulation A that would provide a
process by which the Federal Reserve

PO 00000

Frm 00007

Fmt 4702

Sfmt 4702

Bank of New York may determine the
eligibility of credit rating agencies and
the ratings they issue for use in the
Term Asset-Backed Securities Loan
Facility, which is maintained by the
Federal Reserve Bank of New York and
for which the Board has expressly set a
particular credit rating requirement for
collateral offered by the borrower. The
proposed rule would not apply to
discount window lending or other
extensions of credit provided by the
Federal Reserve System. In addition, the
rule would only apply to asset-backed
securities that are not backed by
commercial real estate. This proposed
amendment is designed to provide the
Federal Reserve Bank of New York with
a consistent framework for determining
the eligibility of ratings issued by
individual credit rating agencies when
used in conjunction with a separate
asset-level risk assessment process. The
proposed amendment does not
represent a change in the stance of
monetary policy. The Board solicits
comment on all aspects of the proposal,
as well as specific aspects of the
proposal as set out in the preamble.
DATES: Written comments on this notice
of proposed rulemaking must be
submitted on or before November 9,
2009.
ADDRESSES: You may submit comments,
identified by Docket Number R–1371,
by any of the following methods:
• Agency Web site: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail:
regs.comments@federalreserve.gov.
Include docket number in the subject
line of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm, as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper in Room MP–500 of the Board’s
Martin Building (20th and C Streets,
NW.) between 9 a.m. and 5 p.m. on
weekdays.

E:\FR\FM\08OCP1.SGM

08OCP1

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules
FOR FURTHER INFORMATION CONTACT:
William R. Nelson, Associate Director
(202/452–3579), Division of Monetary
Affairs; Christopher W. Clubb, Senior
Counsel (202/452–3904), Legal Division;
for users of Telecommunication Devices
for the Deaf (TDD) only, contact 202/
263–4869.
SUPPLEMENTARY INFORMATION:

srobinson on DSKHWCL6B1PROD with PROPOSALS

I. Background
Credit rating agencies. Credit rating
agencies assess the credit risk of
corporate or government borrowers and
issuers of bonds, debt securities, and
other financial obligations.1 A credit
rating is a credit rating agency’s opinion
of how likely an issuer is to make timely
payments on a financial obligation,
based on a variety of information
regarding the issuer, the market in
which the issuer operates, the overall
economy, and the nature of the security.
Because issuers may issue different
types of fixed-income securities,
different securities by the same issuer
may have different credit ratings
according to their different risk profiles.
Credit rating agencies issue credit
ratings for debt securities of public
companies, sovereign governments, and
municipalities, and for structured
products such as asset-backed
securities.2
Some credit rating agencies
emphasize quantitative models based on
statistical analysis of an issuer’s
financial disclosures to derive their
ratings, while other credit rating
agencies review both quantitative and
qualitative indicators (including
information that may be provided by the
issuer and other sources) to form an
assessment that is recommended to a
rating committee, which then assigns
the rating. While the exact processes
used by a credit rating agency to derive
a credit rating may be proprietary in
some cases, credit rating agencies
generally provide public statements
outlining their rating philosophy or
general methodology for a particular
asset class. After the credit rating is
issued, the credit rating agency will
generally continue to monitor the issuer
and/or its securities on an ongoing
basis, although the U.S. Securities and
Exchange Commission (SEC) has found
1 See International Organization of Securities
Commissions, Report on the Activities of Credit
Rating Agencies, (Sept. 2003).
2 See Securities and Exchange Commission,
Proposed Rule: Oversight of Credit Rating Agencies
as Nationally Recognized Statistical Rating
Organizations, 72 FR 6378–01 (Feb. 9, 2007) (herein
‘‘CRA Proposed Rule’’).

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

that such monitoring tends to be less
comprehensive than the initial review.3
NRSRO credit ratings. The term
‘‘nationally recognized statistical rating
organization’’ was originally adopted by
the SEC in 1975 for use in determining
capital charges for broker-dealers on
different grades of debt securities.4 The
concept of ratings by ‘‘nationally
recognized statistical rating
organizations’’ has been incorporated
into a range of state and federal
legislation and regulations.5
The Credit Rating Agency Reform Act
of 2006 (CRARA) sets out a statutory
definition of ‘‘nationally recognized
statistical rating organization’’ (NRSRO)
and provides the SEC with the authority
to implement registration and oversight
rules with respect to registered credit
rating agencies.6 The CRARA’s
provisions, and the grants of SEC
rulemaking authority under these
provisions, establish a voluntary
registration process and regulatory
program for credit rating agencies opting
to have their credit ratings qualify for
purposes of laws and rules using the
term ‘‘nationally recognized statistical
rating organization.’’ 7 Such credit rating
agencies are required to register with the
SEC; make public certain information to
help persons assess their credibility;
make and retain certain records; furnish
the SEC with certain financial reports;
implement policies and manage the
handling of material non-public
information and conflicts of interest;
and abide by certain prohibitions
against unfair, coercive, or abusive
practices. The CRARA also prohibits the
SEC from evaluating the quality of
rating methodologies in making a
determination about whether a credit
3 U.S. Securities and Exchange Commission,
Office of Inspector General, The SEC’s Role
Regarding and Oversight of Nationally Recognized
Statistical Rating Organizations (NRSROs), (Sept.
2009) p. 44.
4 U.S. Securities and Exchange Commission,
Report on the Role and Function of Credit Rating
Agencies in the Operation of the Securities Markets,
(Jan. 2003) p. 6.
5 See, e.g., 12 U.S.C. 24a(a)(3)(A)(i) (financial
subsidiaries of national banks); 12 U.S.C.
1831e(d)(4)(A) (activities of savings associations);
15 U.S.C. 78c(a)(41) (definition of ‘‘mortgage related
security’’); 15 U.S.C. 80a–6(a)(5)(A)(iv)(I)
(exemption from Investment Company Act
provisions); and 29 U.S.C. 1341(b)(5)(B)(i)(I) (ERISA
termination of single employer plans); Cal. Gov.
Code § 53601 (West 2009); N.Y. Gen. Municipal
Law § 10 (McKinney 2009).
6 CRARA (Pub. L. No. 109–291, 120 Stat. 1327) is
primarily codified at 15 U.S.C. 78o–7.
7 The CRARA replaced the existing SEC staff
approval system with ‘‘a transparent and voluntary
registration system that favors no particular
business model, thus encouraging purely statistical
models to compete with the qualitative models of
the dominant rating agencies and investor-based
models to compete with fee-based models.’’ S. Rep.
No. 109–326 at p. 7.

PO 00000

Frm 00008

Fmt 4702

Sfmt 4702

51807

rating agency is an NRSRO. The SEC has
promulgated regulations to implement
the CRARA statutory provisions.8
Like other participants in the
financial markets, the Federal Reserve
System is an active user of NRSRO
credit ratings. Credit ratings are used to
support the efforts of several System
programs, including discount window
lending and recent specialized System
liquidity and securities lending
programs in response to the financial
crisis.9 Reserve Banks make credit
available to depository institutions
through the discount window to meet
various liquidity needs. Under the
Board’s Regulation A, the Reserve Banks
have the discretion to determine when
a discount window advance to a
depository institution is adequately
secured.10
TALF. The Term Asset-backed
Securities Lending Facility (TALF) is a
funding facility to help market
participants meet the credit needs of
households and businesses by
supporting the issuance of new assetbacked securities (ABS) collateralized
by loans of various types to consumers
and businesses of all sizes.11 The
underlying credit exposures of TALFeligible ABS must be auto loans, student
loans, credit card receivables,
equipment loans, floorplan loans,
insurance premium finance loans,
receivables related to residential
mortgage servicing advances (servicing
advance receivables), or commercial
mortgages.12 The TALF was established
under section 13(3) of the Federal
Reserve Act, which permits the Board of
Governors of the Federal Reserve Board,
in unusual and exigent circumstances,
to authorize Reserve Banks to extend
credit to individuals, partnerships and
corporations that are unable to obtain
adequate credit accommodations. The
Board has determined the terms and
conditions for TALF borrowing and
eligible collateral, including minimum
credit ratings and the set of credit rating
agencies whose ratings may be accepted
8 See

17 CFR 240.17g–1 through 240.17g–6.
addition to the use of ratings in helping to
manage the credit risk of the Federal Reserve’s
balance sheet, credit ratings also play a role in the
Federal Reserve’s banking supervision and
regulation function.
10 Regulation A states that a Reserve Bank’s
advance to a depository institution must be secured
to the satisfaction of the Reserve Bank. 12 CFR
201.3(a)(2).
11 For the terms and conditions and frequently
asked question of the TALF, refer to http://
www.federalreserve.gov/monetarypolicy/talf.htm.
12 Small business loans whose principal and
interest payments are fully guaranteed by the full
faith and credit of the United States are also
accepted at the TALF, however, no credit rating is
required for ABS backed by such loans.
9 In

E:\FR\FM\08OCP1.SGM

08OCP1

srobinson on DSKHWCL6B1PROD with PROPOSALS

51808

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules

for purposes of TALF by the Federal
Reserve Bank of New York.
In authorizing the TALF, the Board
directed that TALF-eligible collateral
must be ABS denominated in U.S.
dollars that has a credit rating in the
highest long-term or short-term
investment-grade rating category from
two or more eligible NRSROs and does
not have a credit rating below the
highest investment-grade category from
an eligible NRSRO. When TALF was
established, the Board and the Federal
Reserve Bank of New York accepted
credit ratings from three NRSROs
(Standard & Poor’s, Moody’s Investors
Service, and Fitch Ratings). The Federal
Reserve put a high priority on making
the TALF available expeditiously while
ensuring appropriate protection against
credit risk for the U.S. taxpayer. In its
efforts to provide liquidity to TALF ABS
sectors as expeditiously as possible, the
Board recognized that market
participants have continued to rely
upon the ratings of these NRSROs,
generally to the exclusion of those with
less experience rating ABS.
Since the establishment of TALF, the
Federal Reserve has been conducting a
broader review of its approach to using
rating agencies encompassing the
ratings of securities of all types accepted
as collateral at all of the Federal
Reserve’s recently established credit
facilities as well as collateral accepted
to secure regular discount window
loans. In May 2009, the Board
announced an extension of eligible
TALF collateral to include certain highquality newly issued and legacy
commercial mortgage-backed securities
(CMBS).13 Due to concerns about the
historical accuracy of CMBS ratings, the
role of ratings in the evaluation of
legacy CMBS (which depend on the
NRSROs continued monitoring
activities), and the presence of two
additional NRSROs with substantial
experience rating CMBS, the Board and
the Federal Reserve Bank of New York
conducted a review of the five NRSROs
who expressed interest in having their
ratings accepted for CMBS pledged to
the TALF. The review concluded that
the ratings of these five NRSROs were
of sufficient quality to provide useful
information in the Federal Reserve Bank
of New York’s verification of the credit
quality on the most senior classes of
newly issued and legacy CMBS when
used in conjunction with a separate
asset-level risk assessment process. As a
13 Only ABS issued on or after January 1, 2009
may qualify for TALF funding except for ABS
guaranteed by the Small Business Administration,
which can be issued on or after January 1, 2008. All
outstanding CMBS meeting the other TALF
requirements may qualify for TALF funding.

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

result, the Board amended the terms of
the TALF to provide that TALF-eligible
CMBS must have a triple-A long-term
rating from at least two of those five
NRSROs, and not have a lower rating
from any of the other five NRSROs. Due
to the factors listed above, particularly
the importance of verifying the
monitoring capabilities of the NRSROs
that rate CMBS, the rule proposed in
this notice will not apply to the NRSRO
ratings that are accepted for CMBS
pledged to the TALF.
II. Proposed Rule
The proposed rule presented in this
notice is another step in the Federal
Reserve’s process of reviewing the
appropriate use of NRSROs in its credit
facilities. By this notice, the Board is
proposing an amendment to the Board’s
Regulation A to govern the Federal
Reserve Bank of New York’s acceptance
of credit ratings in connection with
TALF ABS other than CMBS. As noted
above, the proposed rule would apply
only to the acceptance of credit ratings
with respect to ABS pledged to the
TALF and does not apply to general
discount window lending under the
primary, secondary, or seasonal credit
facilities established in Regulation A, or
any other credit facilities. Extensions of
credit through the discount window are
structured differently from those
extended under TALF and the approach
presented in the proposed rule would
likely not be feasible in the discount
window scenario. In such cases, the
Reserve Banks would continue to ensure
that they are adequately secured as
otherwise provided in Regulation A.14
The Federal Reserve will continue to
review the use of credit ratings with
respect to its other credit facilities.
The proposed rule adopts an objective
minimal experience-based approach
specific to the types of assets accepted
as collateral in TALF. The proposed rule
is intended to strike a balance between
the goal of promoting competition
among NRSROs and the goal of ensuring
appropriate protection against credit
risk for the U.S. taxpayer. As explained
below, an additional risk assessment by
the Federal Reserve Bank of New York
with respect to TALF collateral is an
important complement to the proposed
rule’s broadening of the set of eligible
NRSROs.
As a threshold requirement, the
proposed rule states that the Federal
Reserve Bank of New York may only
accept a credit rating issued by a credit
rating agency that is registered with the
SEC as an NRSRO for issuers of assetbacked securities pursuant to the
14 12

PO 00000

CFR 201.3(a)(2).

Frm 00009

Fmt 4702

Sfmt 4702

CRARA. The proposed rule would
leverage off of the NRSRO framework
established by CRARA and the SEC
regulations. A registered NRSRO must
comply with SEC rules regarding the
prevention of misuse of material
nonpublic information; conflicts of
interest; and prohibitions against unfair,
coercive, or abusive practices. In
particular, an NRSRO is expressly
prohibited from having certain types of
conflicts of interest relating to the
issuance of credit ratings (such as the
NRSRO being paid by issuers to
determine credit ratings with respect to
securities they issue) unless the
conflicts are publicly disclosed in the
NRSRO’s registration materials and the
NRSRO establishes and enforces written
policies and procedures to address and
manage the conflict of interest.15 In
addition, SEC rules prohibit NRSROs
from having certain enumerated
conflicts of interest under any
circumstances (such as the NRSRO
directly owning securities of the
organization that is subject to the credit
rating).16 The Board believes that these
disclosure provisions and conflict of
interest prohibitions are prudent and
relevant to the evaluation of credit
rating agencies with respect to TALF.
Registration with the SEC as an
NRSRO is not, however, a guarantee of
the quality of the credit ratings issued.
The CRARA expressly prohibits the SEC
and any state from regulating the
substance of credit ratings or the
procedures and methodologies by which
any NRSRO determines credit ratings.17
Therefore, the Board believes additional
criteria should be established to ensure
that the Federal Reserve Bank of New
York only accepts credit ratings that are
reasonably likely to assist in the Federal
Reserve Bank of New York’s risk
assessment to determine eligibility of
ABS pledged as collateral to the TALF.
The Board specifically solicits public
comment regarding whether NRSRO
registration is an appropriate threshold
requirement for being accepted at TALF
and whether NRSRO registration should
be the sole requirement for eligibility for
use in TALF. In responding, a
commenter should explain how credit
risk can be controlled with NRSRO
registration as the sole criterion.
The Board is proposing a rule for
reviewing the acceptability of a
particular NRSRO generally by reference
to certain experience-based criteria. The
experience requirement is consistent
15 SEC Form NRSRO (SEC 1541) (4–09) Exhibits
6 and 7. See also 17 CFR 240.17g–5(a) and (b); 15
U.S.C. 78o–7(h).
16 17 CFR 240.17g–5(c)(2).
17 15 U.S.C. 78o–7(c)(2).

E:\FR\FM\08OCP1.SGM

08OCP1

srobinson on DSKHWCL6B1PROD with PROPOSALS

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules
with the intent of CRARA, which
requires a measure of market acceptance
for NRSRO designation as well as the
SEC rules regarding the NRSRO
designation that require market
acceptance within a defined asset
category. Rather than requiring
attestations from a particular number of
Qualified Institutional Buyers (QIBs)
that they rely upon an NRSRO’s ratings,
the rule would require that the NRSRO
had issued ratings on at least ten
transactions within a specified asset
category. The asset categories are:
• Category 1—auto loans, floorplan
loans, and equipment loans TALF
sectors;
• Category 2—credit card receivables
and insurance premium finance loans
TALF sectors;
• Category 3—mortgage servicing
advance receivables TALF sector; 18 and
• Category 4—student loans TALF
sector.
The Board believes that experience in
any of the TALF sectors grouped
together in an asset category provides
similar experience for each of the TALF
sectors within that asset category. For
example, Category 1 includes the auto
loans, floorplan loans, and equipment
loans TALF sectors. The Board believes
that the ABS sectors within each
category are similar in terms of the types
of collateral, the manner in which the
collateral is typically evaluated, and
typical transactional structures and legal
features. Experience across asset
categories would not, however, be
permitted to be aggregated under the
proposed rule because the Board
believes that the competencies required
for ratings of ABS across different
categories are not sufficiently similar.
The four asset categories defined in
the rule are significantly narrower than
the ‘‘ABS’’ category in which a credit
rating agency may be approved as an
NRSRO by the SEC. Relying upon the
issuance of a minimal number of ratings
as opposed to attestations from QIBs in
each of the four asset categories should
ensure a minimal level of expertise in
rating the types of assets for which the
ratings will be accepted. Furthermore,
the Board believes that credit rating
agencies’ expertise when rating
collateral of any given type can increase
considerably upon reviewing a modest
number of transactions. The experience
requirement, therefore, would ensure
that TALF-eligible NRSROs have
accumulated sufficient knowledge of the
18 The proposed rule would permit an NRSRO to
aggregate ratings on residential mortgage-backed
securities (not currently included in the TALF) for
purposes of meeting the ten-transaction
requirement for Category 3 (mortgage servicing
advance loans TALF sector).

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

specific asset category. The Board
specifically solicits comments on
whether an experience-based approach
is appropriate for determining the
suitability of NRSROs for the TALF
program.
In addition, the proposed rule would
allow the Federal Reserve Bank of New
York to accept credit ratings only from
a credit rating agency that has a current
and publicly available rating
methodology specific to ABS in the
particular TALF asset sector (as defined
in the TALF haircut schedule) for which
the credit rating agency wishes its
ratings to be considered for TALF. The
Board believes that this is a prudent
requirement because it ensures that the
NRSRO has carefully thought about its
approach to the TALF sector and that
market participants are aware of the
methodology and have had an
opportunity to provide feedback to the
NRSRO. The Board requests comment
on whether a published methodology
specific to asset-backed securities in the
relevant TALF sector is an appropriate
requirement for credit rating agencies in
the TALF program.
In specifying that only transactions
denominated in U.S. dollars would
qualify under the experience
requirement, the Board recognizes that
rating opinions rely heavily upon expert
judgment regarding conditions in the
market within which the collateral is
originated, the legal environment in
which lenders and borrowers operate
(both at origination and in the event of
default), and complex transactional
features that have resulted as a response
to legal and institutional considerations
specific to the United States.19
The Board considered both the
number of transactions and period
within which they must have occurred
in determining an appropriate
experience threshold for the rule. The
Board believes that, while the learning
curve for rating ABS is relatively steep,
developing expertise in assessing the
credit risk of an ABS transaction
requires exposure to a diversity of
transactional features within a given
asset category. The types of collateral
backing the securities within each of the
TALF ABS sectors is relatively more
homogenous than other types of ABS
(such as CMBS), and therefore a
threshold of ten transactions within
approximately a three-year period (a
19 Such legal and institutional considerations
include: legal standards for recognition of ‘‘true
sale’’ of assets into a special purpose vehicle; legal
standards for determining substantive consolidation
and their impact on the rights of creditors and the
management of ‘‘clawback risk’’; treatment of issuer
bankruptcies across different regulators; and tax
considerations.

PO 00000

Frm 00010

Fmt 4702

Sfmt 4702

51809

little more than three transactions per
year) appeared to be appropriate.
Recognizing that ABS has evolved and
rating agencies have turnover that can
degrade institutional memory, a threeyear window appeared to be an
appropriate amount of time within
which past expertise would be generally
applicable in the present.
The Board requests comment
generally on whether the experience
approach set out in the proposed rule is
appropriate. In addition, the Board
invites comment on whether ten
transactions within the approximately
three-year window is appropriate to
achieve the goals of the proposed rule.
The Board also requests comment on
whether the TALF asset sectors grouped
together in the asset categories set out in
the proposed rule are sufficiently
similar that experience gained by
issuing ratings with respect to one of the
TALF sectors in a asset category can act
as a substitute for experience gained by
issuing ratings with respect to the other
TALF sectors in the category. The Board
also solicits comment on whether
experience issuing credit ratings with
respect to residential mortgage-backed
securities should be treated as a
substitute for experience in issuing
credit ratings in the mortgage servicing
advances TALF sector. Finally, the
Board requests comment on whether the
experience requirement is appropriately
limited to transactions denominated in
U.S. dollars for the reasons set out
above.
The proposed rule also describes the
process whereby the Federal Reserve
Bank of New York would determine
whether an NRSRO becomes eligible to
have its ratings accepted for TALF ABS.
Under the proposal, a credit rating
agency that wishes to have its ratings
accepted for TALF ABS transactions
would send a written notice to the
Credit, Investment, and Payment Risk
group of the Federal Reserve Bank of
New York and include the information
addressing the factors listed above (i.e.,
registered NRSRO for ABS, published
methodology, and experience issuing
ratings in the TALF category) with
respect to each TALF asset sector for
which it wishes its ratings to be
accepted. The Federal Reserve Bank of
New York will review the submission
and notify the NRSRO within five
business days as to whether any
additional information is necessary.
After review of all information
necessary to determine the eligibility of
an NRSRO pursuant to the factors in the
proposed rule, the Federal Reserve Bank
of New York will notify the NRSRO
regarding its eligibility to have its
ratings accepted at the TALF. The Board

E:\FR\FM\08OCP1.SGM

08OCP1

srobinson on DSKHWCL6B1PROD with PROPOSALS

51810

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules

requests comment on whether this
process will be efficient for purposes of
NRSROs wishing to have their ratings
accepted at TALF and, in particular,
whether the proposed time frames are
appropriate.
Under the proposed rule, the Federal
Reserve Bank of New York could, at any
time, review the continued use of
ratings from a credit rating agency in
one or more TALF ABS sectors and
determine that such credit ratings were
no longer acceptable if the credit rating
agency no longer met the eligibility
requirements or conditions. The NRSRO
would be notified by the Federal
Reserve Bank of New York of its
concerns.
Finally, the proposed rule sets out
two conditions that the Federal Reserve
Bank of New York must ensure are met
by an NRSRO in order for an NRSRO to
have its credit ratings accepted for
TALF ABS. First, the NRSRO must agree
to discuss with the Federal Reserve its
views of the credit risk of any
transaction within the TALF asset sector
that has been submitted to TALF and
upon which the NRSRO is being or has
been consulted by the issuer. The Board
recognizes that qualitative analysis and
expert judgment constitutes much of the
value provided to investors by credit
rating agencies and therefore can assist
the Federal Reserve Bank of New York
in the risk assessment process. In
addition, issuers typically consult with
several NRSROs about a transaction, but
request formal ratings from only a
subset. The condition will enable the
Federal Reserve to learn the views of
NRSROs consulted but ultimately not
hired by the issuer to provide a rating.
Second, the NRSRO must agree to
provide any information requested by
the Federal Reserve regarding the credit
rating agency’s continued eligibility for
its ratings to be accepted at TALF under
the factors set out in the proposed rules.
Submission of this information is
necessary to ensure that NRSROs that
are accepted for TALF continue to meet
the eligibility requirements for TALF
under the proposed rule. The Board
solicits comment on whether these
conditions are appropriate for NRSROs
submitting credit ratings for purposes of
TALF.
Additional risk assessment.
Expanding the set of NRSROs accepted
at TALF could increase credit risk in the
program by increasing the risk of less
rigorous credit rating standards or by
increasing the risk of ‘‘rating-shopping.’’
To address this and to protect against
TALF accepting excessive risk, the
Federal Reserve Bank of New York will
implement an additional risk
assessment process for TALF ABS

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

transactions.20 The business reasons for
the additional risk assessment process
are independent of an expansion of the
set of NRSROs accepted for purpose of
TALF, but the Board believes that such
a risk assessment could serve to mitigate
any increase in credit risk to the U.S.
taxpayer that could potentially result
from an expansion of the set of NRSROs
accepted at TALF.
In order for the Federal Reserve Bank
of New York to be able to conduct the
additional risk assessment in a timely
manner, the TALF ABS terms and
conditions include a provision that each
issuer wishing to bring a TALF-eligible
ABS transaction to market is required to
provide to the Reserve Bank, at least
three weeks prior to the subscription
date of the transaction, a specific set of
information, including, but not limited
to, all data the issuer has provided to
any NRSRO regarding the transaction.
The Federal Reserve Bank of New York
(along with the TALF collateral
monitor) will use that information to
assist in its risk assessment process.
Issuers would also be required to submit
an executed waiver or consent for each
prospective TALF transaction that
would authorize any NRSRO from
which the issuer has sought preliminary
ratings or any other form of feedback on
the transaction to share its view of the
credit quality of the transaction with the
Federal Reserve Bank of New York. This
provision is intended to mitigate the
credit risk associated with ‘‘rating
shopping.’’
III. Administrative Law Matters
A. Initial Regulatory Flexibility Analysis
Congress enacted the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) to address concerns related to the
effects of agency rules on small entities
and the Board is sensitive to the impact
its rules may impose on small entities.
The RFA requires agencies either to
provide an initial regulatory flexibility
analysis with a proposed rule or to
certify that the proposed rule will not
have a significant economic impact on
a substantial number of small entities.
Under regulations issued by the Small
Business Administration (SBA), a small
credit rating agency includes those
20 The additional risk assessment is being adopted
to clarify and make systematic the process whereby
the Federal Reserve Bank of New York determines
whether a bond is acceptable as TALF collateral
based on the TALF terms and conditions. The
Federal Reserve Bank of New York already uses an
additional risk assessment process to determine
whether CMBS is eligible for TALF. Satisfaction of
the Federal Reserve Bank of New York’s risk
assessment process for ABS is being added to the
TALF program terms and conditions.

PO 00000

Frm 00011

Fmt 4702

Sfmt 4702

institutions with $7 million in assets.21
In accordance with section 3(a) of the
RFA, the Board has reviewed the
proposed rule. An Initial Regulatory
Flexibility Analysis (IRFA) has been
prepared in accordance with the RFA.22
The Board encourages comments with
respect to any aspect of this IRFA,
including comments with respect to the
number of small entities that may be
affected by the proposed rule.
Comments should specify the costs of
compliance with the proposed rule and
suggest alternatives that would
accomplish the goals of the rules,
including an estimate of any cost
savings. Comments will be considered
in determining whether a Final
Regulatory Flexibility Analysis (FRFA)
is required and will be placed in the
same public file as comments on the
proposed rule. Comments should be
submitted to the Board at the addresses
previously indicated. The Board will
determine whether a FRFA is necessary
after consideration of comments
received during the public comment
period.
1. Reasons for the Proposed Action
As discussed in the preamble above,
the Board is proposing these rules to
govern the Federal Reserve Bank of New
York’s determination of eligibility of
NRSROs and their credit ratings for use
in TALF ABS for which the Board has
established a requirement for collateral
to be rated by one or more NRSROs. The
Board anticipates that implementation
of the proposed rule will permit an
expansion of the set of NRSROs
accepted for TALF ABS, while
maintaining appropriate protection
against credit risk for the U.S. taxpayer
in connection with TALF.
2. Objective
As discussed in the preamble above,
the objective of the proposed rule is to
govern the Federal Reserve Bank of New
York’s determinations of eligibility of
particular credit ratings for TALF ABS
to meet a Board requirement for
collateral to be rated by one or more
credit rating agencies. The Board
intends for the proposed rules to
provide for an objective, prudent, and
reasonably consistent process for the
Federal Reserve Bank of New York to
determine the eligibility of NRSROs and
their credit ratings for purposes of TALF
ABS.
3. Legal Basis
Section 11 of the Federal Reserve Act
(12 U.S.C. 248(j)) authorizes the Board
21 13
22 5

E:\FR\FM\08OCP1.SGM

CFR 121.201.
U.S.C. 603.

08OCP1

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules
to exercise general supervision over the
Reserve Banks. The TALF is authorized
under section 13(3) of the Federal
Reserve Act (12 U.S.C. 343).
4. Small Entities Subject to the Rule
The proposed rule would establish
criteria and conditions governing the
acceptance of credit ratings by the
Federal Reserve Bank of New York for
use in TALF. The Board has prepared
this IRFA in order to determine any
impact on small entities in order to
determine if there is a more costeffective manner to accomplish the
goals of the regulation.
At present, there are ten NRSROs
registered with the SEC. Of those ten,
the Board’s review of publicly available
information indicates that three
NRSROs are not ‘‘small entities’’ under
the RFA because their asset size (or the
asset size of the NRSRO’s parent
company) is larger than the level set in
the SBA regulation. The Board does not
have access to appropriate non-public
information on the asset sizes of the
other NRSROs. For purposes of
estimating costs for this IRFA, the Board
will assume that all seven of the
NRSROs would qualify as a ‘‘small
entity’’ under the SBA regulations and
could be indirectly impacted by the
proposed rule.

srobinson on DSKHWCL6B1PROD with PROPOSALS

5. Reporting, Recordkeeping, and Other
Compliance Requirements
As noted above, the proposed rule
would leverage off the SEC’s existing
NRSRO registration process. The Board
believes that the proposed rule would
not establish any reporting,
recordkeeping, or other compliance
requirements that are not already part of
the NRSRO registration process or
involve records that would not
otherwise be created in the normal
course of an NRSRO’s business. Other
than that which is normally required in
the credit rating agency industry,
special expertise should not be required
to compile the information necessary to
submit an eligibility request to the
Federal Reserve Bank of New York for
use of an NRSRO’s credit ratings in
TALF. An NRSRO that wishes for its
credit ratings to be accepted for TALF
would merely have to supply its
methodology for rating the relevant
TALF asset sector and document how it
has the relevant experience issuing
ratings in the TALF asset sector. Most
NRSROs should have this information
readily available in the normal and
customary course of business. The
Board estimates that the costs of
compiling this information and
submitting a notice to the Federal

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

Reserve Bank of New York would be
nominal.23
The conditions required for the
Federal Reserve Bank of New York to
accept ratings from an NRSRO similarly
also should require minimal
expenditure of resources. If requested by
the Federal Reserve Bank of New York,
an NRSRO may be requested to provide
information on its continued eligibility
under the proposed rule. Such
information, however, would be in
connection with the eligibility criteria
in the proposed rule (such as continued
NRSRO registration with the SEC) and
should be readily available in the
normal course of business. An NRSRO
that has been consulted on a transaction
in TALF may be requested by the
Federal Reserve Bank of New York to
discuss its views of the particular
transaction, but it would not be required
to conduct any more analysis than it
had already conducted in the course of
its business.
The Board requests comment on the
description of burden for compliance
with the proposed rule described above.
Commenters should provide identify
any potential burdens not discussed
herein, as well as any actual or
estimated cost data.
6. Duplicative, Overlapping, or
Conflicting Federal Rules
The Board believes that there are no
federal rules that duplicate, overlap, or
conflict with the proposed rules.
7. Significant Alternatives
Pursuant to section 3(a) of the RFA,
the Board must consider certain types of
alternatives, including: (1) The
establishment of differing compliance or
reporting requirements or timetables
that take into account the resources
available to small entities; (2) the
clarification, consolidation, or
simplification of compliance and
reporting requirements under the rule
23 As noted above, for purposes of this IRFA, the
Board assumes that there are no more than seven
NRSROs that would qualify as ‘‘small entities. The
Board estimates that compiling the necessary
information and submitting a notice to the Federal
Reserve Bank of New York should take no more
than four hours per NRSRO. Total cost was
estimated using the following formula: percent of
staff time, multiplied by annual burden hours,
multiplied by hourly rate (30% Administrative or
Junior Analyst @ $25, 10% Managerial or Technical
@ $55, 10% Senior Management @ $100, and 50%
Legal Counsel @ $144). Hourly rate estimates for
each occupational group are averages using data
from the Bureau of Labor and Statistics (BLS),
Occupational Employment and Wages 2007, http://
www.bls.gov/news.release/ocwage.nr0.htm.
Occupations are defined using the BLS
Occupational Classification System, http://
www.bls.gov/soc/. The total costs are estimated at
$2,660 if seven small entity NRSROs applied to
have their ratings accepted for all TALF sectors.

PO 00000

Frm 00012

Fmt 4702

Sfmt 4702

51811

for small entities; (3) the use of
performance rather than design
standards; and (4) an exemption from
coverage of the rule, or any part of the
rule, for small entities.
The proposed rule does not establish
any compliance or reporting
requirements, including any
performance or design standards.
Because the proposed rule provides a
process through which credit rating
agencies can have their credit ratings
accepted by the Federal Reserve Bank of
New York for purposes of the TALF, the
Board preliminarily believes that small
entities that wish to apply should be
covered by the rule. Like the NRSRO
registration procedure, the process set
out in the proposed rule for a credit
rating agency to have its ratings
accepted by the Federal Reserve Bank of
New York is voluntary.
The Board considered two substantive
alternatives to the approach adopted in
the proposed rule. First, the Board
considered accepting for TALF all
NRSROs registered with the SEC
without any further requirements. The
Board determined that this was not
prudent as the SEC’s registration
process did not address the quality of
credit ratings issued by registered
NRSROs. In addition, the SEC ABS
registration does not sufficiently track
the TALF asset sectors to ensure that
NRSROs would have experience to rate
ABS transactions of the type being
pledged to TALF. The Board also
considered an approach wherein the
Federal Reserve Bank of New York
would conduct an extensive review of
the methodology and resources of each
NRSRO applying to be accepted at
TALF in order to determine whether the
NRSRO had the expertise and facilities
to issue ratings suitable for use in each
of the TALF asset sectors for which the
NRSRO wished its ratings to be
accepted. The Board did not propose
this approach because of the time and
resources that such in-depth reviews
would require of the Federal Reserve
Bank of New York; these resources also
would likely be diverted away from the
risk assessment process discussed
above. The time and resource issue
would be significant as it would involve
detailed analysis of multiple NRSROs
across seven different TALF asset
sectors. Even with unlimited resources,
designing the in-depth reviews,
including the role that subjective
judgment would play, would require
time to perfect. TALF is intended as a
temporary facility and there is the risk
that the in-depth reviews would take
longer than the remaining life of TALF.

E:\FR\FM\08OCP1.SGM

08OCP1

51812

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules

8. Request for Comments
The Board encourages the submission
of comments on any aspect of the IRFA.
In addition, the Board specifically
requests comments on the estimate of
the number of NRSROs that would be
considered ‘‘small entities’’ indirectly
impacted by the proposed rule for
purposes of the RFA. Commenters that
disagree with these estimates are
requested to describe in detail the basis
for their conclusions and identify the
sources of any industry statistics they
relied on to reach their conclusions. The
Board also requests comment on any
alternatives to the approach adopted in
the proposed rule that would
accomplish the goals of the proposed
rule in a more cost-effective manner.

srobinson on DSKHWCL6B1PROD with PROPOSALS

B. Paperwork Reduction Act Analysis
Office of Management and Budget
(OMB) regulations implementing the
Paperwork Reduction Act (PRA) state
that agencies must submit ‘‘collections
of information’’ contained in proposed
rules published for public comment in
the Federal Register in accordance with
OMB regulations.24 OMB regulations
define a ‘‘collection of information’’ as
obtaining, causing to be obtained,
soliciting, or requiring the disclosure to
an agency, third parties or the public of
information by or for an agency ‘‘by
means of identical questions posed to,
or identical reporting, recordkeeping, or
disclosure requirements imposed on,
ten or more persons, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit.’’ 25
In accordance with the PRA, the
Board reviewed the proposed rule under
the authority delegated to the Board by
OMB. The Federal Reserve may not
conduct or sponsor, and an organization
is not required to respond to, this
information collection unless it displays
a currently valid OMB control number,
which will be assigned. The collections
of information that are proposed to be
revised by this rulemaking are found in
subsection 201.3(e)(1)(ii) and (iii) of the
proposed rule (to be codified at 12 CFR
201.3(e)(1)(ii) and (iii)). This
information is required to permit the
Federal Reserve Bank of New York to
determine eligibility of credit rating
agencies to have their ratings accepted
in TALF in accordance with Board
regulations. The respondents are
NRSROs, which may be small entities.
There is no record retention
requirement in the proposed rule.
24 5 CFR 1320.11. The PRA is codified at 44
U.S.C. 3506 et seq.
25 5 CFR 1320.11(c).

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

The estimated burden per response is
two hours. It is estimated that there will
be ten respondents providing
information on a one-time basis.
Therefore, the total amount of annual
burden is estimated to be 20 hours.
The proposed rule in this notice
implements a threshold requirement of
registration with the SEC as an NRSRO.
As noted above, registration with the
SEC as an NRSRO requires, among other
things, the completion of the SEC Form
NRSRO. This form includes exhibits
regarding a general description of the
procedures and methodologies used by
the credit rating agency to determine
credit ratings for the classes of assets for
which the credit rating agency is
seeking registration. The SEC, however,
already budgets for paperwork burden
connected with its NRSRO registration
program. Accordingly, it would be
redundant for the Board to budget
additional paperwork burden for the
SEC’s registration process.
In addition to NRSRO registration, the
proposed rule would require the NRSRO
to submit to the Federal Reserve Bank
of New York additional information to
demonstrate that it has sufficient
expertise and experience to provide
credit ratings that would assist in the
Reserve Bank’s risk assessment on the
most senior classes of newly issued
asset-backed securities in a particular
TALF asset sector. The additional
requirements includes an NRSRO (i)
having a current and publicly available
rating methodology specific to assetbacked securities in the particular TALF
asset sector for which it wishes its
ratings to be accepted; and (ii) having
made public or made available to a
paying subscriber base, since September
30, 2006, at least ten ratings on U.S.
dollar-denominated transactions within
a particular group of complementary
ABS categories as set out in the
proposed rule. These requirements are
found in subsection 201.3(e)(1)(ii) and
(iii) of the proposed rule (to be codified
at 12 CFR 201.3(e)(1)(ii) and (iii)).
The Board believes that each of these
requirements should require minimal
effort on the part of an NRSRO. Most
NRSROs that issue credit ratings for a
type of asset make public their
methodology. In addition, it should be
a relatively simple matter for an NRSRO
to certify that it has issued ten ratings
in the appropriate asset category by
enclosing a list containing the CUSIP
number and original and current rating
of the most senior tranche from at least
ten transactions it has rated within the
appropriate asset category and
timeframe.
Comments are invited regarding (a)
whether the proposed collection of

PO 00000

Frm 00013

Fmt 4702

Sfmt 4702

information is necessary for the proper
performance of the Federal Reserve’s
functions, including whether the
information has practical utility; (b) the
accuracy of the Federal Reserve’s
estimate of the burden of the proposed
information collection, including the
cost of compliance; (c) ways to enhance
the quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of
information collection on respondents,
including through the use of automated
collection techniques or other forms of
information technology. Comments on
the collection of information should be
sent to Secretary, Board of Governors of
the Federal Reserve System,
Washington, DC 20551, with copies of
such comments to be sent to the Office
of Management and Budget, Paperwork
Reduction Project, Washington, DC
20503.
C. Plain Language
Each Federal banking agency, such as
the Board, is required to use plain
language in all proposed and final
rulemakings published after January 1,
2000. 12 U.S.C. 4809. The Board has
sought to present the proposed rule, to
the extent possible, in a simple and
straightforward manner. The Board
invites comment on whether there are
additional steps that could be taken to
make the proposed rule easier to
understand, such as with respect to the
organization of the materials or the
clarity of the presentation.
IV. Statutory Authority
Pursuant to the authority set out in
the Federal Reserve Act and particularly
section 11 (codified at 12 U.S.C. 248(j)),
the Board proposes the rules set out
below.
V. Text of Proposed Rule
List of Subjects in 12 CFR Part 201
Credit.
Authority and Issuance
For the reasons set forth in the
preamble, the Board proposes to amend
12 CFR Chapter II to read as follows:
PART 201—EXTENSIONS OF CREDIT
BY FEDERAL RESERVE BANKS
(REGULATION A)
1. The authority citation for part 201
continues to read as follows:
Authority: 12 U.S.C. 248(i)–(j), 343 et seq.,
347a, 347b, 347c, 348 et seq., 357, 374, 374a,
and 461.

2. In § 201.3, paragraph (e) is added to
read as follows:

E:\FR\FM\08OCP1.SGM

08OCP1

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules
§ 201.3

Extensions of credit generally.

srobinson on DSKHWCL6B1PROD with PROPOSALS

*

*
*
*
*
(e) Credit ratings for Term AssetBacked Securities Loan Facility (TALF).
(1) If the Board requires that a TALF
advance, discount, or other extension of
credit be against collateral (other than
commercial mortgage-backed securities)
that is rated by one or more credit rating
agencies, the Federal Reserve Bank of
New York may accept the ratings of any
credit rating agency that:
(i) Is registered with the Securities
and Exchange Commission as a
Nationally Recognized Statistical Rating
Organization for issuers of asset-backed
securities;
(ii) Has a current and publicly
available rating methodology specific to
asset-backed securities in the particular
TALF asset sector (as defined in the
TALF haircut schedule) for which it
wishes its ratings to be accepted; and
(iii) Demonstrates that it has sufficient
experience to provide credit ratings that
would assist in the Federal Reserve
Bank of New York’s risk assessment on
the most senior classes of newly issued
asset-backed securities in the particular
TALF asset sector by having made
public or made available to a paying
subscriber base, since September 30,
2006, ratings on at least ten transactions
denominated in U.S. dollars within the
particular category to which the
particular TALF asset sector is assigned
as set out below—
(A) Category 1—auto, floorplan, and
equipment TALF sectors;
(B) Category 2—credit card and
insurance premium finance TALF
sectors;
(C) Category 3—mortgage servicing
advances TALF sector; and
(D) Category 4—student loans TALF
sector.
(2) For purposes of the requirement in
paragraph (e)(1)(iii) of this section,
ratings on residential mortgage-backed
securities may be included in Category
3 (servicer advances).
(3) The Federal Reserve Bank of New
York may in its discretion review at any
time the eligibility of a credit rating
agency to rate one or more types of
assets being offered as collateral.
(4) Process.
(i) Credit rating agencies that wish to
have their ratings accepted for TALF
transactions should send a written
notice to the Credit, Investment, and
Payment Risk group of the Federal
Reserve Bank of New York including
information on the factors listed in
paragraph (e)(1) of this section with
respect to each TALF asset sector for
which they wish their ratings to be
accepted.

VerDate Nov<24>2008

17:02 Oct 07, 2009

Jkt 220001

(ii) The Federal Reserve Bank of New
York will notify the submitter within 5
business days of receipt of a submission
whether additional information needs to
be submitted.
(iii) Within 5 business days of receipt
of all necessary information to evaluate
a credit rating agency pursuant to the
factors set out in paragraph (e)(1) of this
section, the Federal Reserve Bank of
New York will notify the credit rating
agency regarding its eligibility.
(5) Conditions. The Federal Reserve
Bank of New York may accept credit
ratings under this subsection only from
a credit rating agency that agrees to—
(i) Discuss with the Federal Reserve
its views of the credit risk of any
transaction within the TALF asset sector
that has been submitted to TALF and
upon which the credit rating agency is
being or has been consulted by the
issuer; and
(ii) Provide any information requested
by the Federal Reserve regarding the
credit rating agency’s continued
eligibility under paragraph (e)(1) of this
section.
By the Board of Governors of the Federal
Reserve System, October 5, 2009.
Jennifer J. Johnson,
Secretary.
[FR Doc. E9–24252 Filed 10–7–09; 8:45 am]
BILLING CODE 6210–01–P

DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 25
[Docket No. NM414 Special Conditions No.
25–09–10–SC]

Special Conditions: Boeing Model 747–
8/–8F Series Airplanes; Design Roll
Maneuver Requirement
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed special
conditions.
SUMMARY: This notice proposes special
conditions for the Boeing Model 747–8/
–8F airplane. This airplane will have
novel or unusual design features when
compared to the state of technology
envisioned in the airworthiness
standards for transport category
airplanes. These design features include
an electronic flight control system that
provides roll control of the airplane
through pilot inputs to the flight
computers. These proposed special
conditions contain the additional safety
standards that the Administrator
considers necessary to establish a level

PO 00000

Frm 00014

Fmt 4702

Sfmt 4702

51813

of safety equivalent to that established
by the existing airworthiness standards.
Additional special conditions will be
issued for other novel or unusual design
features of the Boeing 747–8/–8F
airplanes.
DATES: Comments must be received on
or before November 9, 2009.
ADDRESSES: Comments on this proposal
may be mailed in duplicate to: Federal
Aviation Administration, Transport
Airplane Directorate, Attention: Rules
Docket (ANM–113), Docket No. NM414,
1601 Lind Avenue, SW., Renton,
Washington 98057–3356; or delivered in
duplicate to the Transport Airplane
Directorate at the above address. All
comments must be marked Docket No.
NM414. Comments may be inspected in
the Rules Docket weekdays, except
Federal holidays, between 7:30 a.m. and
4 p.m.
FOR FURTHER INFORMATION CONTACT:
Todd Martin, FAA, Airframe and Cabin
Safety Branch, ANM–115, Transport
Airplane Directorate, Aircraft
Certification Service, 1601 Lind
Avenue, SW., Renton, Washington
98057–3356; telephone (425) 227–1178;
facsimile (425) 227–1232.
SUPPLEMENTARY INFORMATION:
Comments Invited
The FAA invites interested persons to
participate in this rulemaking by
submitting written comments, data, or
views. The most helpful comments
reference a specific portion of the
special conditions, explain the reason
for any recommended change, and
include supporting data. We ask that
you send us two copies of written
comments.
We will file in the docket all
comments we receive as well as a report
summarizing each substantive public
contact with FAA personnel concerning
these proposed special conditions. The
docket is available for public inspection
before and after the comment closing
date. If you wish to review the docket
in person, go to the address in the
ADDRESSES section of this notice
between 7:30 a.m. and 4 p.m., Monday
through Friday, except Federal holidays.
We will consider all comments we
receive on or before the closing date for
comments. We will consider comments
filed late if it is possible to do so
without incurring expense or delay. We
may change the proposed special
conditions based on comments we
receive.
If you want the FAA to acknowledge
receipt of your comments on this
proposal, include with your comments
a pre-addressed, stamped postcard on
which the docket number appears. We

E:\FR\FM\08OCP1.SGM

08OCP1