[Federal Register Volume 65, Number 178 (Wednesday, September 13, 2000)]
[Rules and Regulations]
[Pages 55426-55427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23087]



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Part V





Department of the Treasury





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Fiscal Service



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31 CFR Part 202, 203, 225, 380



Collateral Acceptability and Valuation; Final Rule



Depositaries and Financial Agents of the Government; Final Rule



Payment of Federal Taxes and the Treasury Tax and Loan Program; Final 
Rule



Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds 
with Sureties; Final Rule

  Federal Register / Vol. 65, No. 178 / Wednesday, September 13, 2000 / 
Rules and Regulations  

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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 380

RIN 1535--AA00


Collateral Acceptability and Valuation

AGENCY: Bureau of the Public Debt, Fiscal Service, Department of the 
Treasury.

ACTION: Final Rule.

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SUMMARY: The Department of the Treasury (``Treasury,'' ``We,'' or 
``Us'') is issuing a rule in final form that governs the acceptability 
and valuation of all collateral pledged to secure deposits of public 
monies and other financial interests of the Federal Government under 
Treasury's three Fiscal Service collateral programs. These programs are 
titled and described in existing parts of the Code of Federal 
Regulations (``CFR'') as: Depositaries and Financial Agents of the 
Government (31 CFR part 202); Payment of Federal Taxes and the Treasury 
Tax and Loan Program (31 CFR part 203); and Acceptance of Bonds Secured 
by Government Obligations in Lieu of Bonds with Sureties (31 CFR part 
225). We are establishing a new part in the CFR for this purpose. This 
final rule provides a central location for the acceptability and 
valuation provisions for Treasury's collateral programs without 
substantive changes.

EFFECTIVE DATE: October 13, 2000.

ADDRESSES: You may download this final rule from Treasury's Bureau of 
the Public Debt website at www.publicdebt.treas.gov. It is also 
available for public inspection and copying at the Treasury Department 
Library, Room 1428, Main Treasury Building, 1500 Pennsylvania Avenue, 
NW., Washington, DC 20220. To visit the library, call (202) 622-0990 
for an appointment.

FOR FURTHER INFORMATION CONTACT: Lori Santamorena (Executive Director), 
Kurt Eidemiller (Senior Financial Advisor), or Nadir Z. Isfahani 
(Government Securities Specialist), Department of the Treasury, Bureau 
of the Public Debt, Government Securities Regulations Staff, (202) 691-
3632.

SUPPLEMENTARY INFORMATION:

I. Background

    We are publishing this final rule governing the determination of 
the acceptable types of collateral and their assigned values when 
pledged to secure deposits of public monies and other financial 
interests of the Federal Government under Treasury's three Fiscal 
Service collateral programs. We are centralizing these collateral 
provisions and establishing a new part 380 of Title 31 of the CFR for 
this purpose.
    Treasury's Fiscal Service administers three financial programs that 
involve the pledging of specific collateral. These programs are 
governed by 31 CFR part 202 (Depositaries and Financial Agents of the 
Government), 31 CFR part 203 (Payment of Federal Taxes and the Treasury 
Tax and Loan Program), and 31 CFR part 225 (Acceptance of Bonds Secured 
by Government Obligations in Lieu of Bonds with Sureties). The 
Financial Management Service (``FMS''), a bureau within Treasury's 
Fiscal Service, administers these programs, which are handled 
operationally by the Federal Reserve System, acting as the fiscal agent 
for Treasury. FMS will continue to be responsible for administering and 
amending the regulations for these programs and providing operational 
oversight. The Bureau of the Public Debt (``Public Debt''), another 
bureau within Treasury's Fiscal Service, will administer 31 CFR part 
380, pertaining to the acceptability and valuation of the collateral in 
these programs and will provide guidance accordingly.
    On October 29, 1999, we published a proposed rule for public 
comment that laid out our intent to centralize the acceptability and 
valuation standards for collateral pledged to Treasury's three Fiscal 
Service financial programs.\1\ The closing date for comments was 
November 29, 1999. We have decided to adopt the approach essentially as 
proposed.
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    \1\ 64 FR 58364 (October 29, 1999).
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II. Comments Received in Response to Proposed Rule

    In response to the proposed rule, we received one comment letter 
and the commenter was supportive of the proposal.\2\ The commenter 
recommended that fixed income securities be included in parts 202 and 
225. The commenter also suggested that valuation for all pledged 
collateral be based on the class of acceptable securities using a 
market valuation methodology.
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    \2\ See Bank of America Corporation letter dated November 29, 
1999, from Patrick M. Frawley, Director, Regulatory Relations, to 
Van Zeck, Commissioner, Bureau of the Public Debt. The comment 
letter is available for downloading on the Internet and for 
inspection and copying at the Treasury Department Library at the 
addresses provided earlier in this rule.
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    Certain fixed income securities are currently acceptable collateral 
for pledging in these programs. Obligations of the U.S. government, 
government-sponsored corporations, and those issued by certain 
international development banks, such as the Inter-American Development 
Bank or the World Bank, are acceptable for part 202. Acceptable 
collateral for Part 225 is statutorily limited to public debt 
obligations of the United States and those obligations ``whose 
principal and interest is unconditionally guaranteed by the 
Government.'' \3\ Such obligations, including U.S. Treasury notes, 
bonds, and selected U.S. government agency issues, are commonly called 
fixed income securities. Also, we currently apply a market valuation 
methodology for collateral pledged under part 203 and continue to work 
at extending this methodology to the other two programs.
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    \3\ 31 U.S.C. 9301(2).
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III. Changes from the Proposed Rule

    We have decided to adopt this rule to establish a different 
regulatory structure to centralize the acceptability and valuation 
standards for Treasury's three financial programs that require the 
pledging of collateral. The final rule adopts the proposed rule without 
significant changes. The only change that has been made is to reference 
current Treasury guidance rather than set out the acceptable classes of 
collateral and respective valuations in the regulation, as we had 
considered in the preamble to the proposed rule.\4\ Eliminating 
specific mention of the acceptable classes and respective valuations in 
the final rule allows us the flexibility to maintain guidance that can 
be readily updated for the benefit of participants in the programs. 
Sections 380.2, 380.3, and 380.4 of this rule provide that we will list 
the types and valuation of acceptable collateral in Treasury procedural 
instructions. The term ``procedural instructions,'' for instance, is 
described in 31 CFR 203.2 as ``the Treasury Financial Manual, Volume IV 
(TFM IV), other Treasury instructions issued through the TFAs, and FRB 
operating circulars issued consistent with this part.'' \5\ We will 
also provide guidance and information about collateral acceptability 
and valuation issues on Treasury's Bureau of the

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Public Debt website at: www.publicdebt.treas.gov.
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    \4\ 64 FR 58365 (October 29, 1999).
    \5\ For example Secs. 203.1 and 203.2 of Title 31 of the CFR 
reference several terms that are applied to part 203 and that will 
also be applied by reference to part 380, as applied to part 203. 
Included in these references and definitions is the term ``TFA'' 
meaning ``Treasury Financial Agent.'' Also, Treasury procedural 
instructions consistent with 31 CFR part 203 include periodic 
releases distributed by Treasury to supplement and update the 
Treasury Financial Manual. These are often referred to as Treasury 
Tax and Loan (TT&L) Releases. FRB refers to Federal Reserve Banks.
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    The office responsible for implementation of part 380, including 
interpretations, is the Office of the Commissioner, Bureau of the 
Public Debt. FMS and Public Debt are coordinating on the issuance of 
their respective rules. FMS is simultaneously publishing its 
corresponding regulatory amendments to parts 202, 203, and 225 of Title 
31 of the CFR, removing current references to collateral acceptability 
and valuation and replacing them with references to 31 CFR part 380.

IV. Procedural Requirements

    This final rule is not a ``significant regulatory action'' under 
Executive Order 12866. We certify that this regulation will not have a 
significant economic impact on a substantial number of small entities. 
This regulation provides a central location, without substantive 
change, for regulatory provisions that currently appear in three 
separate sets of regulations for Treasury's collateral programs. 
Accordingly, we are not required to perform a regulatory flexibility 
analysis. Finally, this final rule contains no new collection of 
information. Therefore, the Paperwork Reduction Act does not apply.

List of Subjects in 31 CFR Part 380

    Collateral, Depositaries, Government obligations, Government 
securities, Securities, Surety bonds.

    For the reasons set forth in the preamble, we amend Subchapter B of 
Chapter II of Title 31 of the Code of Federal Regulations, by adding 
Part 380 to read as follows:

PART 380--COLLATERAL ACCEPTABILITY AND VALUATION

Subpart A--General Information
Sec.
380.0   What do these regulations govern?
380.1   What special definitions apply to this part?
Subpart B--Acceptable Collateral and its Valuation
380.2   What collateral may I pledge if I am a depositary or a 
financial agent of the Government under 31 CFR part 202, and what 
value will you assign to it?
380.3   What collateral may I pledge if I am a Treasury Tax and Loan 
depositary under 31 CFR part 203, and what value will you assign to 
it?
380.4   What collateral may I pledge instead of a surety bond under 
31 CFR part 225, and what value will you assign to it?
Subpart C--Miscellaneous Provisions
380.5   Where can I find current information, and who can I contact 
for additional guidance and interpretation?

    Authority: 12 U.S.C. 90, 265-266, 332, 391, 1452(d), 1464(k), 
1767, 1789a, 2013, 2122, 3101-3102; 26 U.S.C. 6302; 31 U.S.C. 321, 
323, 3301-3304, 3336, 9301, 9303.

Subpart A--General Information


Sec. 380.0  What do these regulations govern?

    The regulations in this part govern the types of acceptable 
collateral that you may pledge to secure deposits of public monies and 
other financial interests of the Federal Government, as well as the 
valuation of that collateral. Specifically, the regulations in this 
part apply to the programs governed by the Department of the Treasury's 
regulations at 31 CFR part 202 (Depositaries and Financial Agents of 
the Government), 31 CFR part 203 (Payment of Federal Taxes and the 
Treasury Tax and Loan Program), and 31 CFR part 225 (Acceptance of 
Bonds Secured by Government Obligations in Lieu of Bonds with 
Sureties). The regulations in this part apply only to the acceptability 
and valuation of collateral that may be pledged under these programs. 
31 CFR parts 202, 203, and 225 continue to govern the respective 
programs themselves.


Sec. 380.1  What special definitions apply to this part?

    Special definitions that may apply to this part are contained in 31 
CFR parts 202, 203 and 225.

Subpart B--Acceptable Collateral and its Valuation


Sec. 380.2  What collateral may I pledge if I am a depositary or a 
financial agent of the Government under 31 CFR part 202, and what value 
will you assign to it?

    Unless we specify otherwise, we will list the types and valuation 
of acceptable collateral in Treasury procedural instructions. We will 
also post updated information and guidance on Treasury's Bureau of the 
Public Debt website at www.publicdebt.treas.gov.


Sec. 380.3  What collateral may I pledge if I am a Treasury Tax and 
Loan depositary under 31 CFR part 203, and what value will you assign 
to it?

    Unless we specify otherwise, we will list the types and valuation 
of acceptable collateral in Treasury procedural instructions. We will 
also post updated information and guidance on Treasury's Bureau of the 
Public Debt website at www.publicdebt.treas.gov.


Sec. 380.4  What collateral may I pledge instead of a surety bond under 
31 CFR part 225, and what value will you assign to it?

    Unless we specify otherwise, we will list the types and valuation 
of acceptable collateral in Treasury procedural instructions. We will 
also post updated information and guidance on Treasury's Bureau of the 
Public Debt website at www.publicdebt.treas.gov.

Subpart C--Miscellaneous Provisions


Sec. 380.5  Where can I find current information, and who can I contact 
for additional guidance and interpretation?

    You can find a current list of acceptable classes of securities, 
instruments and respective valuations on Treasury's Bureau of the 
Public Debt website at www.publicdebt.treas.gov. You may also contact 
the Office of the Commissioner. We can be reached by postal mail at: 
Department of the Treasury, Bureau of the Public Debt, Office of the 
Commissioner, Government Securities Regulations Staff, 999 E Street, 
NW., Room 315, Washington, DC 20239-0001, or by e-mail at 
[email protected].

    Dated: August 17, 2000.
Van Zeck,
Commissioner.
[FR Doc. 00-23087 Filed 9-12-00; 8:45 am]
BILLING CODE 4810-39-P