[Federal Register Volume 61, Number 63 (Monday, April 1, 1996)]
[Proposed Rules]
[Pages 14444-14445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7880]
[[Page 14443]]
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Part X
Department of the Treasury
_______________________________________________________________________
Fiscal Service
_______________________________________________________________________
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); Proposed Rule
Federal Register / Vol. 61, No. 63 / Monday, April 1, 1996 / Proposed
Rules
[[Page 14444]]
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: Proposed Rule.
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SUMMARY: The Department of the Treasury hereby publishes, for comment,
a proposed 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 will correct 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.
DATES: Comments must be received on or before May 1, 1996.
ADDRESSES: Comments should be sent to: Department of the Treasury,
Bureau of the Public Debt, P. O. Box 1328, Parkersburg, West Virginia
26106-1328, Attention Debit Reg. Group, Room 507, Division of Staff
Services. Comments received will be available for public inspection and
copying at the Treasury Department Library, FOIA Collection, Room 5030,
Main Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC
20220. Persons wishing to visit the library should call (202) 622-0990
for an appointment.
FOR FURTHER INFORMATION CONTACT: Wallace L. Earnest, Division Director,
Division of Staff Services, Bureau of the Public Debt, (304) 480-6319,
or Edward Gronseth, Deputy Chief Counsel, Office of the Chief Counsel,
Bureau of the Public Debt, (304) 480-5192.
SUPPLEMENTARY INFORMATION:
I. Background
The Proposed 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.
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.
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).
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, as revised and amended,
including any instructions promulgated by Treasury and its fiscal
agents.
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.
II. Summary of Amendments
Section 321.21 will refer to collection procedures outlined in
Paragraph 21 of the Appendix to this Part.
Paragraph 21 of the Appendix to this Part, will provide 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 Proposed Rule is not a
``significant regulatory action,'' pursuant to Executive Order 12866.
Although this rule is being issued in proposed form 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
[[Page 14445]]
of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
There are no collections of information required by this Proposed
Rule, therefore, the Paperwork Reduction Act does not apply.
Comments: Consideration will be given to any written comments that
are submitted to the Bureau of the Public Debt. All comments will be
available for public inspection and copying.
List of Subjects in 31 CFR Part 321
Banks, Banking, Bonds, Government securities.
Dated: March 26, 1996.
Gerald Murphy,
Fiscal Assistant Secretary.
For the reasons set forth in the preamble, Part 321 of Title 31 of
the Code of Federal Regulations is proposed to be amended 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 proposed to be 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 proposed to be 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 proposed
to be revised to read as follows:
Appendix to Department of the Treasury Circular No. 750, Fourth
Addition
* * * * *
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 resulting
from a payment. 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. 96-7880 Filed 3-29-96; 8:45 am]
BILLING CODE 4810-39-P
