[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37196-37197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17988]
[[Page 37195]]
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Part VI
Department of the Treasury
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Fiscal Service
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31 CFR Part 321
Regulations Governing Payments by Banks and Other Financial
Institutions of United States Savings Bonds and United States Savings
Notes (Freedom Shares); Final Rule
Federal Register / Vol. 61, No. 137 / Tuesday, July 16, 1996 / Rules
and Regulations
[[Page 37196]]
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 321
[Department of the Treasury Circular, Public Debt Series No. 750]
Regulations Governing Payments by Banks and Other Financial
Institutions of United States Savings Bonds and United States Savings
Notes (Freedom Shares)
AGENCY: Bureau of the Public Debt, Fiscal Service, Department of the
Treasury.
ACTION: Final rule.
SUMMARY: The Department of the Treasury hereby publishes this final
rule amending the regulations to update procedures used by the Bureau
of the Public Debt for collecting debts owed by paying agents of United
States Savings Bonds and Savings Notes (collectively referred to herein
as savings bonds or bonds). These collection procedures are used when a
paying agent cannot be relieved of liability for a savings bond
transaction and the paying agent fails to reimburse Public Debt in a
timely manner.
Accounts designated or utilized by paying agents at Federal Reserve
Banks for receiving settlements for savings bond redemptions are
immediately credited upon the receipt of paid bonds with cash letters
by Federal Reserve Banks or Branches through the EZ CLEAR system. These
immediate settlements occur with the understanding that adjustments to
correct errors may later be necessary. This system has expedited the
process of crediting the accounts paying agents have designated or
utilized for receiving savings bond transaction settlements. However,
the system has also made it more cumbersome for Public Debt to collect
monies from paying agents, not relieved of liability, that fail to
reimburse Public Debt in a timely manner.
This amendment corrects this problem by providing that paying
agents are deemed to have authorized the debit of any overdue amount,
interest, administrative cost, and penalty assessed, directly from the
agents' Reserve, correspondent, or clearing accounts designated or
utilized at Federal Reserve Banks or Branches for settlement of
redeemed savings bonds.
EFFECTIVE DATE: July 16, 1996.
FOR FURTHER INFORMATION CONTACT: Wallace L. Earnest, Division Director,
Division of Staff Services (304) 480-6319, or Edward Gronseth, Deputy
Chief Counsel, Office of the Chief Counsel (304) 480-5192.
SUPPLEMENTARY INFORMATION:
I. Background
The final rule will update the debt collection process used by the
Bureau of the Public Debt. This update is necessitated by the automated
processing of redeemed savings bonds through EZ CLEAR.
Paying agents receive settlements for the value of savings bonds
redeemed via credits to Reserve, correspondent, and clearing accounts
with Federal Reserve Banks, or their Branches.
When a depository financial institution qualifies as a savings bond
paying agent, it agrees in writing to be bound by all of the provisions
set out in 31 CFR part 321 and the Appendix thereto, as revised and
amended, including any instructions promulgated by Treasury and its
fiscal agents.
Relief of a paying agent from liability for a loss related to the
redemption of a savings bond is a determination made under authority of
31 U.S.C. 3126(a).
The collection procedures will apply when a paying agent cannot be
relieved of liability under 31 U.S.C. 3126(a) for a loss resulting from
a payment of a savings bond pursuant to 31 CFR part 321. No change is
being made in the procedure for assessing liability under 31 U.S.C.
3126(a), or in the regulations with respect to such liability
determinations.
II. Summary of Amendments
Section 321.21 refers to collection procedures outlined in
Paragraph 21 of the appendix to this part.
Paragraph 21 of the appendix to this part provides a detailed
explanation of the consequences of a paying agent's failure to make
reimbursement within 30 days of Public Debt's mailing the first demand
letter, provided the paying agent cannot be relieved of liability under
31 U.S.C. 3126(a) for an erroneous payment.
A paying agent receiving settlement for the redemption value of
redeemed savings bonds via credits to a Reserve, correspondent, or
clearing account is deemed to have authorized the Federal Reserve Bank
or Branch to debit the amount due from that account. Such debits shall
be made if the paying agent fails to make timely reimbursement or
submit new evidence sufficient for Public Debt to change a
determination of liability within 120 days of the mailing of the first
demand letter. The amount due from the redemption of a security for
which the paying agent is not relieved of liability, under 31 U.S.C.
3126(a), shall include the amount of the final loss resulting from the
erroneous payment, interest, administrative costs, and penalty charges.
A financial institution designated by a paying agent to receive
settlement for redeemed savings bonds on behalf of that paying agent
via a credit to a Reserve, correspondent, or clearing account with a
Federal Reserve Bank or Branch is deemed to have authorized a debit
from such account to collect an amount due from the paying agent. The
consequences of a paying agent's failure to make timely reimbursement
include the paying agent's being required to pay:
(a) Interest charges accruing from the date the first demand letter
is mailed to the date of reimbursement, at the current value of funds
rate published by the Secretary of the Treasury annually or quarterly
in the Federal Register;
(b) Administrative costs (currently processing costs of $6.00) will
be assessed, if reimbursement is not made within 30 days of the date
the first demand letter is mailed;
(c) Penalty charges in accordance with 31 U.S.C. 3717(e), if
reimbursement is not made within 120 days of the date the first demand
letter is mailed. When assessed, the penalty charge will accrue and be
calculated from 30 days after the date the first demand letter is
mailed to the date of reimbursement.
Procedural Requirements
It has been determined that this final rule is not a ``significant
regulatory action'' pursuant to Executive Order 12866.
Although this rule was published in the Federal Register as a
proposed rule on April 1, 1996, to secure the benefit of public
comment, the rule relates to matters of public contract, as well as the
borrowing power and fiscal authority of the United States. The notice
and public procedures requirements of the Administrative Procedure Act
are inapplicable, pursuant to 5 U.S.C. 553(a)(2). As no notice of
proposed rulemaking is required, the provisions of the Regulatory
Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
There are no collections of information required by this final
rule, therefore, the Paperwork Reduction Act does not apply.
Comments
No comments were received on the proposed rule published April 1,
1996, with a 30 day comment period.
List of Subjects in 31 CFR Part 321
Banks, Banking, Bonds, Government securities.
[[Page 37197]]
Dated: July 3, 1996.
John Kilcoyne,
Deputy Fiscal Assistant Secretary.
For the reasons set forth in the preamble, part 321 of title 31 of
the Code of Federal Regulations is amended to read as follows:
PART 321--PAYMENTS BY BANKS AND OTHER FINANCIAL INSTITUTIONS OF
UNITED STATES SAVINGS BONDS AND UNITED STATES SAVINGS NOTES
(FREEDOM SHARES)
1. The authority citation for part 321 is revised as follows:
Authority: 2 U.S.C. 901, 5 U.S.C. 301, 12 U.S.C. 391, 31 U.S.C.
3105, 31 U.S.C. 3126.
2. Section 321.21 is revised to read as follows:
Sec. 321.21 Replacement and recovery of losses.
(a) If a final loss results from the redemption of a security, and
the paying agent redeeming the security is not relieved of liability
for such loss under 31 U.S.C. 3126(a), the Bureau of the Public Debt
will demand that the paying agent promptly reimburse the United States
in the amount of the final loss and will take such other action as may
be necessary to collect such amount as set out in the procedure
described in Paragraph 21 of the appendix to this part.
(b) If a final loss has resulted from the redemption of a security,
and no reimbursement has been or will be made, the loss shall be
subject to replacement out of the fund established by the Government
Losses in Shipment Act, as amended.
3. Subpart E, paragraph 21 of the appendix to this part is revised
as follows:
21. Determination of liability. (Sec. 321.18 and Sec. 321.21)
(a) Upon completing the investigation, the Bureau of the Public
Debt will examine the available information and determine whether a
paying agent may be relieved of liability for any loss that may have
resulted. If the paying agent cannot be relieved of liability,
demand will be made upon the paying agent to reimburse the Treasury
promptly. Any amount not paid within 30 days following the mailing
of the first demand letter is subject to the following charges.
(1) Interest shall accrue from the date the first demand letter
is mailed to the date reimbursement is made. The rate of interest to
be used will be the current value of funds rate published annually
or quarterly in the Federal Register and in effect during the entire
period in which the remittance is late.
(2) Administrative costs shall be assessed as set out in the
first demand letter, if reimbursement is not made within 30 days of
the date the first demand letter is mailed.
(3) Penalty charges shall be assessed, in accordance with 31
U.S.C. 3717(e), if reimbursement is not made within 120 days of the
date the first demand letter is mailed. The penalty charge will
accrue and be calculated from 30 days after the date the first
demand letter is mailed to the date of reimbursement.
(b) When a paying agent fails, within 120 days of the date the
first demand letter is mailed, to make such reimbursement or to
submit new evidence sufficient for Public Debt to change the
determination of liability, by virtue of the paying agent's
acceptance of settlement via credits to a Reserve, correspondent, or
clearing account with a Federal Reserve Bank or Branch, the agent is
deemed to have authorized the Federal Reserve Bank to debit the
amount due from that account designated or utilized by the agent at
the Federal Reserve Bank or Branch. An institution, designated by a
paying agent to receive settlement on its behalf, in authorizing
such paying agent to utilize its Reserve, correspondent, or clearing
account on the books at the Federal Reserve Bank shall similarly be
deemed to authorize such debits from that account.
(c) Reconsideration of a determination of liability will be made
in any case when a paying agent so requests and presents additional
evidence and information regarding the transaction.
* * * * *
[FR Doc. 96-17988 Filed 7-15-96; 8:45 am]
BILLING CODE 4810-39-M
