[Federal Register Volume 68, Number 12 (Friday, January 17, 2003)]
[Rules and Regulations]
[Pages 2666-2667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1114]



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Part III





Department of the Treasury





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Fiscal Service



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31 CFR Part 321 et al.



United States Savings Bonds; Extension of Holding Period; Final Rule

  Federal Register / Vol. 68, No. 12 / Friday, January 17, 2003 / Rules 
and Regulations  

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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Parts 321, 351, 352, 353, 359, and 360


United States Savings Bonds; Extension of Holding Period

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

ACTION: Final rule.

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SUMMARY: The purpose of this final rule is to amend regulations 
offering and governing United States Savings Bonds to require that 
owners hold their bonds 12 months before they are eligible for 
redemption instead of 6 months. This change affects Series EE and I 
United States Savings Bonds issued January 2003 or later. This change 
is being made to discourage investing in savings bonds for short terms, 
and to better align the effective return on savings bonds with short-
term marketable Treasury security yields.

EFFECTIVE DATE: Effective February 1, 2003.

ADDRESSES: You can download this final rule and correction at the 
following Internet address: http://www.publicdebt.treas.gov.

FOR FURTHER INFORMATION CONTACT:

Elisha Whipkey, Director, Division of Program Administration, Office of 
Securities Operations, Bureau of the Public Debt, at (304) 480-6319 or 
[email protected].
Susan Klimas, Attorney-Adviser, Office of the Chief Counsel, Bureau of 
the Public Debt, at (304) 480-8692 or [email protected].
Dean Adams, Assistant Chief Counsel, Office of the Chief Counsel, 
Bureau of the Public Debt, at (304) 480-8692 or 
[email protected].
Edward Gronseth, Deputy Chief Counsel, Bureau of the Public Debt, at 
(304) 480-8692 or [email protected].

SUPPLEMENTARY INFORMATION: Currently, investors must hold their Series 
EE and I United States Savings Bonds for 6 months before they can be 
redeemed. This Final Rule increases the holding period for U.S. Savings 
Bonds from 6 months to 12 months. This change affects Series EE and I 
United States Savings Bonds issued January 2003 or later. When EE and I 
bonds were introduced and first offered in January 1980 and September 
1998, respectively, offering and governing regulations prohibited 
owners from redeeming these bonds before they were 6 months old. While 
owners have always been able to cash their savings bonds prior to 
original maturity at the option of the owner or other person entitled 
to redemption, regulations have always prohibited redemption during an 
initial holding period to encourage retention and discourage the use of 
savings bonds as a short-term investment. The change will also address 
the anomaly that has resulted in yields for EE and I bonds redeemed six 
months after issue being greater than prevailing six-month Treasury 
security yields.

Procedural Requirements

    This final rule does not meet the criteria for a ``significant 
regulatory action'' as defined in Executive Order 12866. Therefore, the 
regulatory review procedures contained therein do not apply.
    This final rule relates to matters of public contract and 
procedures for United States securities. The notice and public 
procedures requirements and delayed effective date 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 Regulatory 
Flexibility Act (5 U.S.C. 601, et seq.) does not apply.
    We ask for no new collections of information in this final rule. 
Therefore, the Paperwork Reduction Act (44 U.S.C. 3507) does not apply.

List of Subjects

31 CFR Part 321

    Banks, Banking, Bonds.

31 CFR Part 351

    Bonds, Government securities.

31 CFR Part 352

    Bonds, Government securities.

31 CFR Part 353

    Bonds, Electronic funds transfers, Government securities.

31 CFR Part 359

    Bonds, Federal Reserve system, Government securities, Securities.

31 CFR Part 360

    Bonds, Federal Reserve system, Government securities, Securities.

    Accordingly, for the reasons set out in the preamble, 31 CFR 
Chapter II, Subchapter B, is 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 continues to read as 
follows:

    Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 
3105, 3126.


    2. Section 321.8 is amended by redesignating paragraphs (a)(2) as 
paragraph (a)(3), revising paragraph (a)(1) and adding paragraph (a)(2) 
to read as follows:


Sec.  321.8  Redemption-exchange of Series E and EE savings bonds and 
savings notes.

    (a) * * *
    (1) Series EE bonds bearing issue dates of December 1, 2002, or 
earlier, presented no earlier than six months from their issue dates;
    (2) Series EE bonds bearing issue dates of February 1, 2003, or 
thereafter, presented no earlier than 12 months from their issue dates; 
and
* * * * *
    3. Revise Sec.  321.9(a) to read as follows:


Sec.  321.9  Specific limitations on payment authority.

* * * * *
    (a)(1) If it is a Series EE bond or a Series I bond issued on 
December 1, 2002, or earlier, presented for payment prior to six months 
from its issue date; or
    (2) If it is a Series EE bond or a Series I bond issued on February 
1, 2003, or thereafter, presented for payment prior to 12 months from 
its issue date.
* * * * *

Appendix to Part 321 [Amended]

    4. Amend the Appendix to part 321 section (8)(a), by revising the 
second sentence to read as follows:
* * * * *
    8. Redemption-exchange of Series E and EE savings bonds and savings 
notes.
    (a) General. * * * Securities eligible for exchange are: (1) Series 
EE bonds issued December 1, 2002, or earlier, presented no earlier than 
six months from their issue dates; (2) Series EE bonds issued February 
1, 2003, or thereafter, presented no earlier than 12 months from their 
issue dates; and (3) Series E bonds and savings notes presented no 
later than one year from the month in which they reached final 
maturity. * * *
* * * * *

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PART 351--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES EE

    5. The authority citation for part 351 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.


    6. Amend Sec.  351.2(d) by revising the first sentence and adding a 
new sentence after the first sentence to read as follows:


Sec.  351.2  Description of bonds.

* * * * *
    (d) Redemption. A Series EE bond issued on December 1, 2002, or 
earlier, may be redeemed after 6 months from its issue date. A Series 
EE bond issued on February 1, 2003, or thereafter, may be redeemed 
after 12 months from its issue date. * * *

PART 352--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES HH

    7. The authority citation for part 353 continues to read as 
follows:

    Authority: 31 U.S.C. 3105; 5 U.S.C. 301.


    8. Amend Sec.  352.7(a) by revising the last sentence and adding a 
new sentence to read as follows:


Sec.  352.7  Issues on exchange.

    (a) * * * Series EE bonds issued on December 1, 2002, or earlier, 
become eligible for exchange six months after their issue dates. Series 
EE bonds issued on February 1, 2003, or thereafter, become eligible for 
exchange 12 months after their issue dates.
* * * * *

PART 353--REGULATIONS GOVERNING UNITED STATES SAVINGS BONDS, SERIES 
EE AND HH

    9. The authority citation for part 353 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105, 3125.


    10. Revise Sec.  353.35(b) to read as follows:


Sec.  353.35  Payment (redemption).

* * * * *
    (b) A Series EE bond issued on December 1, 2002, or earlier, will 
be paid at any time after 6 months from its issue date. A Series EE 
bond issued on February 1, 2003, or thereafter, will be paid at any 
time after 12 months from its issue date. Bonds will be paid at the 
current redemption value shown in Department of the Treasury Circular, 
Public Debt Series No. 1-80 (31 CFR part 351).
* * * * *

PART 359--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I

    11. The authority citation for part 359 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.


    12. Revise Sec.  359.6 to read as follows:


Sec.  359.6  When may I redeem my Series I bond?

    (a) Bonds issued on December 1, 2002, or earlier. You may redeem 
your Series I savings bond issued on December 1, 2002, or earlier, at 
any time after six months from its issue date.
    (b) Bonds issued on February 1, 2003, or thereafter. You may redeem 
your Series I savings bond issued on February 1, 2003, or thereafter, 
at any time after 12 months from its issue date.

PART 360--REGULATIONS GOVERNING UNITED STATES SAVINGS BONDS, SERIES 
I

    13. The authority citation for part 360 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 31 U.S.C. 3105 and 3125.


    14. Revise Sec.  360.35(b) to read as follows:


Sec.  360.35  Payment (redemption).

* * * * *
    (b) Mandatory initial holding period. A Series I bond issued on 
December 1, 2002, or earlier, will be paid at any time after six months 
from issue date. A Series I bond issued on February 1, 2003, or 
thereafter, will be paid at any time after 12 months from issue date. 
Bonds will be paid at the current redemption value determined in the 
manner described in Department of the Treasury Circular, Public Debt 
Series No. 1-98 (31 CFR part 359).

    Dated: December 19, 2003.
Donald V. Hammond,
Fiscal Assistant Secretary.
[FR Doc. 03-1114 Filed 1-15-03; 8:45 am]
BILLING CODE 4810-39-P