MFA submitted a comment letter to the Board of Governors of the Federal Reserve System regarding amendments to the scope of Form FR Y-14 to collect additional information on bank lending to nondepository financial institutions.
The private fund industry is diverse, with different investment strategies for institutional investors, making a one-size-fits-all “know your borrower” approach unsuitable. Private funds typically provide detailed financial statements to lending banks and, absent extraordinary circumstances, the FR Y-14Q should reflect these long-standing, wellestablished, well-regulated practices between lending banks and private funds. If the FRB decides against adopting our recommendation to base reporting requirements on market practice, MFA recommends that:
- the FR Y-14Q should only require banks to collect and report “Short Term Debt” or “Long Term Debt” if they already receive such disclosures from counterparty NDFIs on a quarterly basis, such as those contained in borrower financial statements; and
- the instructions should be amended to provide minimum thresholds for disclosure of some fields that are not material to NDFIs.
In addition, MFA recommends narrowing the definition of “financial sponsor” to control entities as it is overly broad and would capture entities beyond the intended scope of the proposal. Lastly, for proposed field 36, disclosure of “Security Type,” the instructions should (i) provide workable definitions for each set of collateral types listed or leave the categories in their current form and (ii) introduce more appropriate granularity.
