Continuing market turmoil will lead to a wide range of changes in future Call Reports. The OCC, Fed, and FDIC recently asked for comments on proposed Call Report changes that have already been approved by the Federal Financial Institutions Examination Council (FFIEC). The changes would take effect on a phased-in basis during 2009.

“The proposed Call Report revisions reflect a thorough and careful review of the agencies’ data needs in a variety of areas as institutions encounter the most turbulent banking environment in more than a decade,” the agencies said in their request for comments. “Thus, the revisions include new items that focus on areas in which the banking industry is facing heightened risk as a result of market turmoil and illiquidity and weakening economic and credit conditions.”

One area of particular concern to regulators is construction and development (C&D) loans. The agencies noted that market conditions have weakened in the C&D sector since their issuance of commercial real estate guidance in December 2006. “As this weakening has occurred, the agencies’ examiners are encountering C&D loans on projects that are troubled, but where interest has been capitalized inappropriately, resulting in overstated income and understated volumes of past due and nonaccrual C&D loans,” the agencies said.

The agencies are therefore proposing to add two new Call Report items to help them monitor C&D lending activities at those banks with C&D loans (in domestic offices) that exceeded 100 percent of total risk-based capital as of the previous calendar year-end.

The agencies also plan to beef up data collection with regard to structured financial products. “Recent market events have demonstrated the need for the agencies to collect more comprehensive information on investment products with significant market, credit, liquidity, and valuation risks in order to identify and monitor banks with exposures to these products and to track such exposures for the industry as a whole,” the agencies said.

In addition to the long list of proposed changes, the agencies said they will develop a separate proposal on collecting information on higher-risk mortgages and mortgage-backed securities. They may also decide, depending on the outcome of Financial Accounting Standards Board actions, that they face “an immediate and critical need for specific information pertaining to the securitization and structured finance activities affected by the amended accounting standards.”