[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