[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]



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Part IV





Department of the Treasury





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Fiscal Service



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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  

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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 Outdated references to specific 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

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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