[Federal Register Volume 62, Number 166 (Wednesday, August 27, 1997)]
[Rules and Regulations]
[Pages 45520-45521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22698]
[[Page 45519]]
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Part IV
Department of the Treasury
_______________________________________________________________________
Fiscal Service
_______________________________________________________________________
31 CFR Part 202
Depositaries and Financial Agents of the Federal Government; Final Rule
Federal Register / Vol. 62, No. 166 / Wednesday, August 27, 1997 /
Rules and Regulations
[[Page 45520]]
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 202
RIN 1510-AA42
Depositaries and Financial Agents of the Federal Government
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: This final rule revises regulations which govern the
designation of Depositaries and Financial Agents of the Federal
Government (depositaries); their authorization to accept deposits of
public money and to perform other specific services; and the securing
of public money. The revisions update, clarify, and simplify current
requirements, but do not change them. Outdated references to specific
acceptable insurers are deleted. Existing language concerning the types
and valuation of acceptable collateral securities is clarified. In
addition, various references are updated.
EFFECTIVE DATE: September 26, 1997.
FOR FURTHER INFORMATION CONTACT: Mark R. Matolak, (202) 874-6846
(Financial Program Specialist, Cash Management Policy and Planning
Division) or Cynthia L. Johnson, (202) 874-6590 (Director, Cash
Management Policy and Planning Division).
SUPPLEMENTARY INFORMATION:
Background
Depositaries accepting deposits of public money and providing other
financial agency services to the United States are required to pledge
adequate acceptable securities as collateral, as directed by the
Secretary of the Treasury (Secretary). The Secretary previously
promulgated regulations, codified at 31 CFR Part 202, setting forth the
general requirements for designating depositaries and the pledging of
collateral.
Under the current rule, certain identified securities are
acceptable at face value, unless otherwise specified by the Secretary.
Since the current rule was last amended, the Secretary has ``otherwise
specified'' that certain securities, including certain of those
expressly referenced in the current rule, are acceptable only at 90% of
face value, rather than at 100% of face value. In order to eliminate
any possible confusion regarding acceptable types and valuation of
collateral security, the revised rule provides that types and valuation
of acceptable collateral securities will be specified in Treasury
procedural instructions. In addition, under the current rule, eligible
banks insured by the Federal Deposit Insurance Corporation (FDIC) and
eligible institutions insured by the Federal Savings and Loan Insurance
Corporation (FSLIC) are designated as depositaries. The revised rule
deletes references to the FSLIC, which has been abolished, and provides
that eligible financial institutions insured by the FDIC are designated
as depositaries.
Public Comments
The Financial Management Service (FMS) received two comments on its
June 21, 1996, Notice of Proposed Rulemaking (NPRM) from the financial
community. One commenter noted that section 202.2(a)(2) of the NPRM
designates as depositaries eligible credit unions insured by the
Administrator of the National Credit Union Administration (NCUA). The
commenter noted that the NCUA is governed now by a three-member board
of directors, rather than an administrator. The NCUA confirmed this
fact. The commenter suggested that the final rule be revised to
designate as depositaries eligible credit unions insured by the
National Credit Union Share Insurance Fund (NCUSIF). For reasons of
consistency throughout section 202.2, however, section 202.2(a)(2) of
the final rule has been revised to designate as depositaries eligible
credit unions insured by the NCUA, rather than the NCUSIF.
The other commenter noted that Treasury procedural instructions now
will specify the types and valuation of acceptable collateral
securities. The commenter expressed the desire to continue to have an
opportunity to comment on changes to procedural items, including the
types and valuation of acceptable collateral securities. Both the
current and revised rules provide that the Secretary may specify types
and valuation of acceptable collateral. There is no requirement in
either to seek comments prior to this specification. The current rule
provides valuation for certain listed types of acceptable collateral
unless the Secretary otherwise specifies. In practice, the Secretary
has utilized Treasury procedural instructions to ``otherwise specify''
types and valuation of certain acceptable collateral, including some of
those specifically listed in the current rule. The revised rule
clarifies and eliminates any possible confusion on this issue by
providing that Treasury procedural instructions will specify the types
and valuation of acceptable collateral. The revised rule does not
reduce the ability of financial institutions to comment on the
Secretary's determination of the types and valuation of acceptable
collateral. Therefore, the revised rule is not changed as a result of
this comment.
Authorities
As a result of the enactment of sections 664 and 665 of Title VI of
the Omnibus Consolidated Appropriations Act, 1997, Pub. L. 104-208,
subsequent to the publication of the Notice of Proposed Rulemaking,
additional authorities are included in the authorities citation for the
revised rule.
Rulemaking Analysis
Executive Order 12866
It has been determined that this regulation is not a significant
regulatory action as defined in Executive Order 12866. Therefore, a
Regulatory Assessment is not required.
Regulatory Flexibility Act
It is hereby certified pursuant to the Regulatory Flexibility Act
that this revision will not have a significant economic impact on a
substantial number of small business entities. This revision makes no
change to current procedures and only updates, clarifies, and
simplifies the current rule. Accordingly, a Regulatory Flexibility Act
analysis is not required.
List of Subjects in 31 CFR Part 202
Banks, Banking.
For the reasons set out in the preamble, 31 CFR part 202 is amended
as follows:
PART 202--DEPOSITARIES AND FINANCIAL AGENTS OF THE FEDERAL
GOVERNMENT
1. The authority citation for part 202 is revised, and the
authority citations at the end of the sections are removed, to read as
follows:
Authority: 12 U.S.C. 90; 12 U.S.C. 265-266; 12 U.S.C. 391; 12
U.S.C. 1452(d); 12 U.S.C. 1464(k); 12 U.S.C. 1789a; 12 U.S.C. 2013;
12 U.S.C. 2122; 12 U.S.C. 3101-3102; 31 U.S.C. 3303; 31 U.S.C. 3336.
2. Section 202.1 is revised to read as follows:
Sec. 202.1 Scope of regulations.
The regulations in this part govern the designation of Depositaries
and Financial Agents of the Federal Government (hereinafter referred to
as depositaries), and their authorization to accept deposits of public
money and to perform other services as may be required of them. Public
money
[[Page 45521]]
includes, but is not limited to, revenue and funds of the United
States, and any funds the deposit of which is subject to the control or
regulation of the United States or any of its officers, agents, or
employees. The designation and authorization of Treasury Tax and Loan
depositaries for the receipt of deposits representing Federal taxes are
governed by the regulations in part 203 of this chapter.
3. Section 202.2 is amended by revising paragraph (a)(1), removing
paragraph (a)(2), by redesignating paragraphs (a)(3) and (a)(4) as
(a)(2) and (a)(3), and by revising redesignated paragraphs (a)(2) and
(a)(3) to read as follows:
Sec. 202.2 Designations.
(a) * * *
(1) Financial institutions insured by the Federal Deposit Insurance
Corporation.
(2) Credit unions insured by the National Credit Union
Administration.
(3) Banks, savings banks, savings and loan, building and loan, and
homestead associations, credit unions created under the laws of any
State, the deposits or accounts of which are insured by a State or
agency thereof or by a corporation chartered by a State for the sole
purpose of insuring deposits or accounts of such financial
institutions, United States branches of foreign banking corporations
authorized by the State in which they are located to transact
commercial banking business, and Federal branches of foreign banking
corporations, the establishment of which has been approved by the
Comptroller of the Currency.
* * * * *
4. Section 202.3 is amended by revising paragraphs (a), (b)(1)
introductory text, (b)(2) introductory text, and (b)(2)(i) to read as
follows:
Sec. 202.3 Authorization.
(a) To accept deposits covered by the appropriate Federal or State
insurer. Every depositary is authorized to accept a deposit of public
money in an official account, other than an account in the name of the
United States Treasury, in which the maximum balance does not exceed
the ``Recognized Insurance Coverage.'' ``Recognized Insurance
Coverage'' means the insurance provided by the Federal Deposit
Insurance Corporation, the National Credit Union Administration, and by
insurance organizations specifically qualified by the Secretary of the
Treasury.
(b) To perform other services. (1) The Secretary of the Treasury
may authorize a depositary to perform other services including, but not
limited to:
* * * *
(2) To obtain authorization to perform services, a depositary must:
(i) File with the Secretary of the Treasury an appropriate
agreement and resolution of its board of directors authorizing the
agreement (both on forms prescribed by the Financial Management Service
and available from Federal Reserve Banks), and
* * * * *
5. Section 202.4 is amended by revising the heading, introductory
text and paragraphs (c), (d), and (e) to read as follows:
Sec. 202.4 Agreement of deposit.
A depositary which accepts a deposit under this part enters into an
agreement of deposit with the Treasury Department. The terms of this
agreement include:
* * * * *
(c) The provisions prescribed in Executive Order 11246, entitled
``Equal Employment Opportunity,'' as amended by Executive Orders 11375
and 12086, and regulations issued thereunder at 41 CFR chapter 60, as
amended.
(d) The requirements of section 503 of the Rehabilitation Act of
1973, as amended, and the regulations issued thereunder at 41 CFR part
60-741, requiring Federal contractors to take affirmative action to
employ and advance in employment qualified individuals with
disabilities.
(e) The requirements of section 503 of the Vietnam Era Veterans'
Readjustment Assistance Act of 1972, as amended, 38 U.S.C. 4212,
Executive Order 11701, and the regulations issued thereunder at 41 CFR
parts 60-250 and 61-250, requiring Federal contractors to take
affirmative action to employ and advance in employment qualified
special disabled and Vietnam Era veterans.
6. Section 202.6 is amended by revising paragraphs (b) and (e)(1)
to read as follows:
Sec. 202.6 Collateral security.
* * * * *
(b) Acceptable security. Types and valuations of acceptable
collateral security will be specified by the Secretary of the Treasury
in Treasury procedural instructions.
* * * * *
(e) Disposition of principal and interest payments of the pledged
securities after a depositary is declared insolvent--(1) General. In
the event of the depositary's insolvency or closure, or in the event of
the appointment of a receiver, conservator, liquidator, or other
similar officer to terminate its business, the depositary agrees that
all principal and interest payments on any security pledged to protect
public money due as of the date of the insolvency or closure, or
thereafter becoming due, shall be held separate and apart from any
other assets and shall constitute a part of the pledged security
available to satisfy any claim of the United States, including those
not arising out of the depositary relationship.
* * * * *
7. Section 202.7 is amended by revising paragraph (a) to read as
follows:
Sec. 202.7 Maintenance of balances within authorizations.
(a) Federal Government agencies shall contact the Department of the
Treasury, Financial Management Service, before making deposits with a
financial institution insured by a State or agency thereof or by a
corporation chartered by a State for the sole purpose of insuring
deposits or accounts. The contact should be directed to the Cash
Management Policy and Planning Division, Federal Finance, Financial
Management Service, Department of the Treasury, Washington, DC 20227.
* * * * *
Dated: August 21, 1997.
Russell D. Morris,
Commissioner.
[FR Doc. 97-22698 Filed 8-26-97; 8:45 am]
BILLING CODE 4810-35-P
