[Federal Register Volume 62, Number 3 (Monday, January 6, 1997)]
[Rules and Regulations]
[Pages 621-625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-129]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 354
Regulations Governing Book-Entry Securities of the Student Loan
Marketing Association (Sallie Mae)
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury, on behalf of the Student Loan
Marketing Association, is publishing final regulations to govern Sallie
Mae book-entry securities. This action is being taken in conjunction
with similar amendments being made by the Department of the Treasury to
the regulations governing book-entry Treasury securities, and by other
government-sponsored enterprises (GSEs) for GSE securities that are
maintained on the book-entry system operated by the Federal Reserve
Banks. The rules incorporate recent and significant changes in
commercial law addressing the holding of securities in book-entry form
through financial intermediaries.
EFFECTIVE DATE: January 6, 1997. The incorporation by reference of
certain publications listed in the regulations is approved by the
Director of the Federal Register as of January 6, 1997.
FOR FURTHER INFORMATION CONTACT: Mary A. Sheehan, Assistant General
Counsel, Sallie Mae, (703) 810-7681, or Cynthia E. Reese, Deputy Chief
Counsel, Bureau of the Public Debt, (202) 219-3320.
SUPPLEMENTARY INFORMATION: Virtually all government-sponsored
enterprises (GSEs) have regulations governing their book-entry
securities maintained in the Federal Reserve book-entry system that are
nearly identical to the regulations governing marketable Treasury
securities.1
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\1\ 31 CFR Part 306, Subpart O.
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In the case of the Student Loan Marketing Association (``Sallie
Mae''), the Secretary of the Treasury is expressly authorized by the
Higher Education Act of 1965, as amended,2 to promulgate Sallie
Mae's book-entry regulations. The current Sallie Mae book-entry
regulations were issued by Treasury pursuant to that authority and
appear in 31 CFR Part 354.3 The regulations set forth rules for
the transfer, pledge and servicing of book-entry Sallie Mae securities.
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\2\ P.L. No. 99-498, 20 U.S.C. Sec. 1087-2(m).
\3\ 52 FR 4495 (February 12, 1987). Prior to that time, Treasury
had promulgated book-entry regulations only for Sallie Mae
securities issued February 25, 1983 through September 30, 1983 (48
FR 8059).
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The current Treasury regulations will be superseded by new
regulations (the ``TRADES regulations'') 4 that will go into
effect January 1, 1997. As explained below, the TRADES regulations
incorporate recent and significant changes in commercial law addressing
the holding of securities in book-entry form through financial
intermediaries.5
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\4\ 61 FR 43626 (August 23, 1996).
\5\ At the time the Sallie Mae regulations were issued, it was
noted in the preamble that once the TRADES regulations were
finalized, it was contemplated that the Sallie Mae regulations would
be replaced with a similar set of rules.
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Some commenters on the TRADES regulations were concerned about
coordination among Treasury and the GSEs. The commenters urged
simultaneous effectiveness of parallel GSE rules. Accordingly, pursuant
to Sallie Mae's request, Treasury is issuing revised regulations that
will be effective in January, 1997, for Sallie Mae securities
maintained on the Federal Reserve book-entry system.
Consistent with the approach in the TRADES regulations, the
regulations in this Part contain specific provisions that deal with the
rights and obligations of Sallie Mae and the Federal Reserve Banks with
respect to Sallie Mae securities and the operation of the book-entry
system. The regulations are also based in large part on Revised Article
8 on Investment Securities of the Uniform
[[Page 622]]
Commercial Code (``Revised Article 8''). The regulations include
certain choice of law rules patterned on Revised Article 8. In the
event the jurisdiction specified under the choice of law rules has not
adopted Revised Article 8, Revised Article 8 will be applied
nonetheless, as though it had been so adopted. At the time of the
publication of the final TRADES rule, 28 states had adopted Revised
Article 8.6
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\6\ California has since also adopted Revised Article 8.
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Except with respect to matters related to differences between
Sallie Mae securities and Treasury securities,7 the provisions of
these rules are the same as the rules that will apply to Treasury
securities. Sallie Mae intends that the analysis contained in the
commentary to the TRADES final rule, Appendix B to 31 CFR Part 357, and
other interpretations of the TRADES regulations published in the
Federal Register, are to be used in interpreting the Sallie Mae
regulations.
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\7\ Sallie Mae securities, together with interest thereon, are
not guaranteed by the United States and do not constitute a debt or
obligation of the United States or of any agency or instrumentality
thereof other than Sallie Mae.
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The most notable differences between these regulations and the
TRADES regulations are as follows. First, Sallie Mae maintains no
direct ownership system with respect to Sallie Mae securities
comparable to the ``TREASURY DIRECT'' 8 system for Treasury
securities. Second, Sallie Mae rarely has need to issue securities in
definitive (certificated) form; however, Sallie Mae retains the right
to issue securities in definitive form if it so chooses. Third, there
are some variations in the terminology used in these regulations and in
TRADES, particularly with respect to the type of documentation used to
establish the terms of the security. Finally, it should be noted that
these regulations apply only to Sallie Mae book-entry securities
maintained on the Federal Reserve book-entry system. These regulations
do not apply to Sallie Mae securities held through any other book-entry
clearing systems, such as those operated by the Depository Trust
Company, Euroclear or Cedel.
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\8\ In TREASURY DIRECT, the beneficial owners of Treasury
securities hold their securities directly, on the books of the
issuer (in contrast to holding through a financial intermediary).
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Procedural Requirements
This final rule does not meet the criteria for a ``significant
regulatory action'' pursuant to Executive Order 12866.
These regulations are being adopted as a final rule effective upon
publication. For the following reasons, the Department finds that
notice and public procedure and a 30-day delayed effective date are
unnecessary, impracticable, and contrary to the public interest,
pursuant to 5 U.S.C. 553(b)(3)(B) and (d)(3). First, the rule merely
conforms the regulations governing book-entry Sallie Mae securities to
the TRADES regulations that will govern book-entry Treasury securities.
Second, the TRADES regulations were published in various forms, as a
proposed rule four times and as a final rule once. In each instance,
the TRADES regulations were accompanied by extensive commentary
addressing the background and rule provisions. Third, the comments on
the TRADES regulations urged uniformity in substance and effectiveness
for regulations for GSEs that issue book-entry securities maintained on
the Federal Reserve book-entry system. Fourth, there are compelling
reasons for setting the effective date as close as possible to January
1, 1997, when the TRADES regulations and those of the other GSEs will
become effective. Having the rules become effective at different times
for securities that are all maintained and transferred on the book-
entry system would be burdensome and unworkable for market
participants.
As no notice of proposed rulemaking is required, the provisions of
the Regulatory Flexibility Act do not apply.
There are no collections of information contained in this final
rule. Therefore, the Paperwork Reduction Act does not apply.
List of Subjects in 31 CFR Part 354
Bonds, Electronic funds transfer, Federal Reserve System,
Government securities, Incorporation by reference, Securities.
For the reasons set forth in the preamble, Title 31, Chapter II,
Subchapter B, Code of Federal Regulations, is amended by revising Part
354 to read as follows:
PART 354--REGULATIONS GOVERNING BOOK-ENTRY SECURITIES OF THE
STUDENT LOAN MARKETING ASSOCIATION (SALLIE MAE)
Sec.
354.0 Applicability; maintenance of Sallie Mae Securities.
354.1 Definitions of terms.
354.2 Law governing rights and obligations of Federal Reserve
Banks, and Sallie Mae; rights of any Person against Federal Reserve
Banks, and Sallie Mae.
354.3 Law governing other interests.
354.4 Creation of Participant's Security Entitlement; security
interests.
354.5 Obligations of Sallie Mae; no adverse claims.
354.6 Authority of Federal Reserve Banks.
354.7 Withdrawal of eligible Book-entry Sallie Mae Securities for
conversion to definitive form.
354.8 Waiver of regulations.
354.9 Liability of Sallie Mae and Federal Reserve Banks.
354.10 Additional provisions.
Authority: 12 U.S.C. 391; 20 U.S.C. 1087-2(m).
Sec. 354.0 Applicability; maintenance of Sallie Mae Securities.
(a) A Sallie Mae Security may be maintained in the form of a
Definitive Sallie Mae Security or a Book-entry Sallie Mae Security. A
Book-entry Sallie Mae Security shall be maintained in the Book-entry
System.
(b) The Sallie Mae Securities to which the regulations in this part
apply are obligations which, by the terms of their issue, are available
exclusively as Book-entry Sallie Mae Securities or which, pursuant to
the securities documentation, are convertible from Book-entry Sallie
Mae Securities to Definitive Sallie Mae Securities or vice versa.
Sec. 354.1 Definitions of terms.
(a) Adverse Claim means a claim that a claimant has a property
interest in a Security and that it is a violation of the rights of the
claimant for another Person to hold, transfer, or deal with the
Security.
(b) Book-entry Sallie Mae Security means a Sallie Mae Security
issued or maintained in the Book-entry System.
(c) Book-entry System means the automated book-entry system
operated by the Federal Reserve Banks acting as the fiscal agent for
Sallie Mae, on which Book-entry Sallie Mae Securities are issued,
recorded, transferred and maintained in book-entry form.
(d) Definitive Sallie Mae Security means a Sallie Mae Security in
engraved or printed form, or that is otherwise represented by a
certificate.
(e) Eligible Book-entry Sallie Mae Security means a Book-entry
Sallie Mae Security issued or maintained in the Book-entry System which
by the terms of its Security Documentation is available in either
definitive or book-entry form.
(f) Entitlement Holder means a Person to whose account an interest
in a Book-entry Sallie Mae Security is credited on the records of a
Securities Intermediary.
(g) Federal Reserve Bank means a Federal Reserve Bank or Branch.
(h) Federal Reserve Bank Operating Circular means the publication
issued by each Federal Reserve Bank that sets forth the terms and
conditions under
[[Page 623]]
which the Federal Reserve Bank maintains book-entry Securities accounts
(including Book-entry Sallie Mae Securities) and transfers book-entry
Securities (including Book-entry Sallie Mae Securities).
(i) Funds Account means a reserve and/or clearing account at a
Federal Reserve Bank to which debits or credits are posted for
transfers against payment, book-entry securities transaction fees, or
principal and interest payments.
(j) Participant means a Person that maintains a Participant's
Securities Account with a Federal Reserve Bank.
(k) Participant's Securities Account means an account in the name
of a Participant at a Federal Reserve Bank to which Book-entry Sallie
Mae Securities held for a Participant are or may be credited.
(l) Person means and includes an individual, corporation, company,
governmental entity, association, firm, partnership, trust, estate,
representative, and any other similar organization, but does not mean
or include the United States, Sallie Mae, or a Federal Reserve Bank.
(m) Revised Article 8 means Uniform Commercial Code, Revised
Article 8, Investment Securities (with Conforming and Miscellaneous
Amendments to Articles 1, 3, 4, 5, 9, and 10) 1994 Official Text.
Revised Article 8 of the Uniform Commercial Code is incorporated by
reference in this Part pursuant to 5 U.S.C. 552(a) and 1 CFR Part 51.
Article 8 was adopted by the American Law Institute and the National
Conference of Commissioners on Uniform State laws and approved by the
American Bar Association on February 14, 1995. Copies of this
publication are available from the Executive Office of the American Law
Institute, 4025 Chestnut Street, Philadelphia, PA 19104, and the
National Conference of Commissioners on Uniform State Laws, 676 North
St. Clair Street, Suite 1700, Chicago, IL 60611. Copies are also
available for public inspection at the Department of the Treasury
Library, Room 5030, main Treasury Building, 1500 Pennsylvania Avenue,
N.W., Washington D.C. 20220, and in the Office of the Federal Register,
800 North Capitol St., N.W., Suite 700, Washington D.C.
(n) Sallie Mae means the Student Loan Marketing Association, a
stock holder-owned corporation and government-sponsored enterprise
established in 1972 by, and operating pursuant to, Section 439 of the
Higher Education Act of 1965, as amended, 20 U.S.C. 1087-2.
(o) Sallie Mae Security means any security or obligation of Sallie
Mae issued in the form of a Definitive Sallie Mae Security or a Book-
entry Sallie Mae Security.
(p) Securities Documentation means the applicable statement of
terms and conditions or other documents establishing the terms of a
Book-entry Sallie Mae Security.
(q) Securities Intermediary means:
(1) a Person that is registered as a ``clearing agency'' under the
federal securities laws; a Federal Reserve Bank; any other Person that
provides clearance or settlement services with respect to a Book-entry
Security that would require it to register as a clearing agency under
the federal securities laws but for an exclusion or exemption from the
registration requirement, if its activities as a clearing corporation,
including promulgation of rules, are subject to regulation by a federal
or state governmental authority; or
(2) a Person (other than an individual, unless such individual is
registered as a broker or dealer under the federal securities laws)
including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that
capacity.
(r) Security means any note, bond, debenture, evidence of
indebtedness, or, in general, any interest or instrument commonly known
as a ``security.''
(s) Security Entitlement means the rights and property interest of
an Entitlement Holder with respect to a Book-entry Sallie Mae Security.
(t) State means any state of the United States, the District of
Columbia, Puerto Rico, the Virgin Islands, or any other territory or
possession of the United States.
(u) Transfer Message means an instruction of a Participant to a
Federal Reserve Bank to effect a transfer of a Book-entry Security
(including a Book-entry Sallie Mae Security) maintained in the Book-
entry System, as set forth in Federal Reserve Bank Operating Circulars.
Sec. 354.2 Law governing rights and obligations of Federal Reserve
Banks, and Sallie Mae; rights of any Person against Federal Reserve
Banks and Sallie Mae.
(a) Except as provided in paragraph (b) of this section, the
following are governed solely by the book-entry regulations contained
in this Part 354, the Securities Documentation (to the extent not
inconsistent with these regulations) and Federal Reserve Bank Operating
Circulars:
(1) The rights and obligations of Sallie Mae and the Federal
Reserve Banks with respect to:
(i) A Book-entry Sallie Mae Security or Security Entitlement; and
(ii) The operation of the Book-entry System as it applies to Sallie
Mae Securities; and
(2) The rights of any Person, including a Participant, against
Sallie Mae and the Federal Reserve Banks with respect to:
(i) A Book-entry Sallie Mae Security or Security Entitlement; and
(ii) The operation of the Book-entry System as it applies to Sallie
Mae Securities.
(b) A security interest in a Security Entitlement that is in favor
of a Federal Reserve Bank from a Participant and that is not recorded
on the books of a Federal Reserve Bank pursuant to Sec. 354.4(c)(1), is
governed by the law (not including the conflict-of-law rules) of the
jurisdiction where the head office of the Federal Reserve Bank
maintaining the Participant's Securities Account is located. A security
interest in a Security Entitlement that is in favor of a Federal
Reserve Bank from a Person that is not a Participant, and that is not
recorded on the books of a Federal Reserve Bank pursuant to
Sec. 354.14(c)(1), is governed by the law determined in the manner
specified in Sec. 354.3.
(c) If the jurisdiction specified in the first sentence of
paragraph (b) of this section is a State that has not adopted Revised
Article 8 (incorporated by reference, see Sec. 354.1), then the law
specified in paragraph (b) shall be the law of that State as though
Revised Article 8 had been adopted by that State.
Sec. 354.3 Law governing other interests.
(a) To the extent not inconsistent with the regulations in this
Part, the law (not including the conflict-of-law rules) of a Securities
Intermediary's jurisdiction governs:
(1) The acquisition of a Security Entitlement from the Securities
Intermediary;
(2) The rights and duties of the Securities Intermediary and
Entitlement Holder arising out of a Security Entitlement;
(3) Whether the Securities Intermediary owes any duties to an
adverse claimant to a Security Entitlement;
(4) Whether an Adverse Claim can be asserted against a Person who
acquires a Security Entitlement from the Securities Intermediary or a
Person who purchases a Security Entitlement or interest therein from an
Entitlement Holder; and
(5) Except as otherwise provided in paragraph (c) of this section,
the perfection, effect of perfection or non-perfection and priority of
a security interest in a Security Entitlement.
[[Page 624]]
(b) The following rules determine a ``Securities Intermediary's
jurisdiction'' for purposes of this section:
(1) If an agreement between the Securities Intermediary and its
Entitlement Holder specifies that it is governed by the law of a
particular jurisdiction, that jurisdiction is the Securities
Intermediary's jurisdiction.
(2) If an agreement between the Securities Intermediary and its
Entitlement Holder does not specify the governing law as provided in
paragraph (b)(1) of this section, but expressly specifies that the
securities account is maintained at an office in a particular
jurisdiction, that jurisdiction is the Securities Intermediary's
jurisdiction.
(3) If an agreement between the Securities Intermediary and its
Entitlement Holder does not specify a jurisdiction as provided in
paragraph (b)(1) or (b)(2) of this section, the Securities
Intermediary's jurisdiction is the jurisdiction in which is located the
office identified in an account statement as the office serving the
Entitlement Holder's account.
(4) If an agreement between the Securities Intermediary and its
Entitlement Holder does not specify a jurisdiction as provided in
paragraph (b)(1) or (b)(2) of this section and an account statement
does not identify an office serving the Entitlement Holder's account as
provided in paragraph (b)(3) of this section, the Securities
Intermediary's jurisdiction is the jurisdiction in which is located the
chief executive office of the Securities Intermediary.
(c) Notwithstanding the general rule in paragraph (a)(5) of this
section, the law (but not the conflict-of-law rules) of the
jurisdiction in which the Person creating a security interest is
located governs whether and how the security interest may be perfected
automatically or by filing a financing statement.
(d) If the jurisdiction specified in paragraph (b) of this section
is a State that has not adopted Revised Article 8 (incorporated by
reference, see Sec. 354.1), then the law for the matters specified in
paragraph (a) of this section shall be the law of that State as though
Revised Article 8 had been adopted by that State. For purposes of the
application of the matters specified in paragraph (a) of this section,
the Federal Reserve Bank maintaining the Participant's Securities
Account is a clearing corporation, and the Participant's interest in a
Book-entry Security is a Security Entitlement.
Sec. 354.4 Creation of Participant's Security Entitlement; security
interests.
(a) A Participant's Security Entitlement is created when a Federal
Reserve Bank indicates by book-entry that a Book-entry Sallie Mae
Security has been credited to a Participant's Securities Account.
(b) A security interest in a Security Entitlement of a Participant
in favor of the United States to secure deposits of public money,
including without limitation deposits to the Treasury tax and loan
accounts, or other security interest in favor of the United States that
is required by Federal statute, regulation, or agreement, and that is
marked on the books of a Federal Reserve Bank is thereby effected and
perfected, and has priority over any other interest in the securities.
Where a security interest in favor of the United States in a Security
Entitlement of a Participant is marked on the books of a Federal
Reserve Bank, such Federal Reserve Bank may rely, and is protected in
relying, exclusively on the order of an authorized representative of
the United States directing the transfer of the security. For purposes
of this paragraph, an ``authorized representative of the United
States'' is the official designated in the applicable regulations or
agreement to which a Federal Reserve Bank is a party, governing the
security interest.
(c)(1) Sallie Mae and the Federal Reserve Banks have no obligation
to agree to act on behalf of any Person or to recognize the interest of
any transferee of a security interest or other limited interest in
favor of any Person except to the extent of any specific requirement of
Federal law or regulation or to the extent set forth in any specific
agreement with the Federal Reserve Bank on whose books the interest of
the Participant is recorded. To the extent required by such law or
regulation or set forth in an agreement with a Federal Reserve Bank, or
the Federal Reserve Bank Operating Circular, a security interest in a
Security Entitlement that is in favor of a Federal Reserve Bank, Sallie
Mae, or a Person may be created and perfected by a Federal Reserve Bank
marking its books to record the security interest. Except as provided
in paragraph (b) of this section, a security interest in a Security
Entitlement marked on the books of a Federal Reserve Bank shall have
priority over any other interest in the securities.
(2) In addition to the method provided in paragraph (c)(1) of this
section, a security interest, including a security interest in favor of
a Federal Reserve Bank, may be perfected by any method by which a
security interest may be perfected under applicable law as described in
Sec. 354.2(b) or Sec. 354.3. The perfection, effect of perfection or
non-perfection and priority of a security interest are governed by such
applicable law. A security interest in favor of a Federal Reserve Bank
shall be treated as a security interest in favor of a clearing
corporation in all respects under such law, including with respect to
the effect of perfection and priority of such security interest. A
Federal Reserve Bank Operating Circular shall be treated as a rule
adopted by a clearing corporation for such purposes.
Sec. 354.5 Obligations of Sallie Mae; no adverse claims.
(a) Except in the case of a security interest in favor of the
United States or a Federal Reserve Bank or otherwise as provided in
Sec. 354.4(c)(1), for the purposes of this Part 354, Sallie Mae and the
Federal Reserve Banks shall treat the Participant to whose Securities
Account an interest in a Book-entry Sallie Mae Security has been
credited as the person exclusively entitled to issue a Transfer
Message, to receive interest and other payments with respect thereof
and otherwise to exercise all the rights and powers with respect to
such Security, notwithstanding any information or notice to the
contrary. Neither the Federal Reserve Banks nor Sallie Mae is liable to
a Person asserting or having an Adverse Claim to a Security Entitlement
or to a Book-entry Sallie Mae Security in a Participant's Securities
Account, including any such claim arising as a result of the transfer
or disposition of a Book-entry Sallie Mae Security by a Federal Reserve
Bank pursuant to a Transfer Message that the Federal Reserve Bank
reasonably believes to be genuine.
(b) The obligation of Sallie Mae to make payments of interest and
principal with respect to Book-entry Sallie Mae Securities is
discharged at the time payment in the appropriate amount is made as
follows:
(1) Interest on Book-entry Sallie Mae Securities is either credited
by a Federal Reserve Bank to a Funds Account maintained at such Bank or
otherwise paid as directed by the Participant.
(2) Book-entry Sallie Mae Securities are redeemed at maturity or
pursuant to a call for redemption in accordance with their terms by a
Federal Reserve Bank withdrawing the securities from the Participant's
Securities Account in which they are maintained and by either crediting
the amount of the redemption proceeds, including both principal and
interest where applicable, to a Funds Account at such Bank or otherwise
paying such principal and interest, as directed by the Participant.
[[Page 625]]
Sec. 354.6 Authority of Federal Reserve Banks.
(a) Each Federal Reserve Bank is hereby authorized as fiscal agent
of Sallie Mae to perform functions with respect to the issuance of
Book-entry Sallie Mae Securities offered and sold by Sallie Mae, in
accordance with the Securities Documentation, and Federal Reserve Bank
Operating Circulars; to service and maintain Book-entry Sallie Mae
Securities in accounts established for such purposes; to make payments
of principal and interest with respect to such Book-entry Sallie Mae
Securities as directed by Sallie Mae; to effect transfer of Book-entry
Sallie Mae Securities between Participants' Securities Account as
directed by the Participants; to effect conversions between Book-entry
Sallie Mae securities and Definitive Sallie Mae Securities with respect
to those securities as to which conversion rights are available
pursuant to the applicable Securities Documentation; and to perform
such other duties as fiscal agent as may be requested by Sallie Mae.
(b) Each Federal Reserve Bank may issue Operating Circulars not
inconsistent with this Part, governing the details of its handling of
Book-entry Sallie Mae Securities, Security Entitlements, and the
operation of the Book-entry System under this Part.
Sec. 354.7 Withdrawal of eligible Book-entry Sallie Mae Securities for
conversion to definitive form.
(a) Eligible Book-entry Sallie Mae Securities may be withdrawn from
the Book-entry System by requesting delivery of like Definitive Sallie
Mae Securities.
(b) A Federal Reserve Bank shall, upon receipt of appropriate
instructions to withdraw Eligible Book-entry Sallie Mae Securities from
book-entry in the Book-entry System, convert such securities into
Definitive Sallie Mae Securities and deliver them in accordance with
such instructions. No such conversion shall affect existing interests
in such Sallie Mae Securities.
(c) All requests for withdrawal of Eligible Book-entry Sallie Mae
Securities must be made prior to the maturity or date of call of such
securities.
(d) Sallie Mae Securities which are to be delivered upon withdrawal
may be issued in either registered or bearer form, to the extent
permitted by the applicable Securities Documentation.
Sec. 354.8 Waiver of regulations.
The Secretary reserves the right, in the Secretary's discretion, to
waive any provision(s) of the regulations in this Part in any case or
class of cases for the convenience of Sallie Mae, or in order to
relieve any person or entity of unnecessary hardship, if such action is
not inconsistent with law, does not adversely affect substantial
existing rights, and the Secretary is satisfied that such action will
not subject Sallie Mae to any substantial expense or liability.
Sec. 354.9 Liability of Sallie Mae and Federal Reserve Banks.
Sallie Mae and the Federal Reserve Banks may rely on the
information provided in a Transfer Message, and are not required to
verify the information. Sallie Mae and the Federal Reserve Banks shall
not be liable for any action taken in accordance with the information
set out in a Transfer Message or evidence submitted in support thereof.
Sec. 354.10 Additional provisions.
(a) Additional requirements. In any case or any class of cases
arising under these regulations, Sallie Mae may require such additional
evidence and a bond of indemnity, with or without surety, as may in the
judgment of Sallie Mae be necessary for the protection of the interests
of Sallie Mae.
(b) Notice of attachment for Sallie Mae Securities in Book-entry
System. The interest of a debtor in a Security Entitlement may be
reached by a creditor only by legal process upon the Securities
Intermediary with whom the debtor's securities account is maintained,
except where a Security Entitlement is maintained in the name of a
secured party, in which case the debtor's interest may be reached by
legal process upon the secured party. The regulations in this part do
not purport to establish whether a Federal Reserve Bank is required to
honor an order or other notice of attachment in any particular case or
class of cases.
Dated: December 29, 1996.
Gerald Murphy,
Fiscal Assistant Secretary.
[FR Doc. 97-129 Filed 1-3-97; 8:45 am]
BILLING CODE 4810-39-W
