[Federal Register: September 13, 2000 (Volume 65, Number 178)]
[Rules and Regulations]
[Page 55425-55427]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13se00-13]

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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

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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
govsecreg@bpd.treas.gov.

    Dated: August 17, 2000.
Van Zeck,
Commissioner.
[FR Doc. 00-23087 Filed 9-12-00; 8:45 am]
BILLING CODE 4810-39-P