45520 Federal Register / Vol. 62, No. 166 / Wednesday, August 27, 1997 / Rules and Regulations

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.

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Outdated references to specific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:

§ 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
Federal Register / Vol. 62, No. 166 / Wednesday, August 27, 1997 / Rules and Regulations 45521

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:

§ 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:

§ 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:

§ 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:

§ 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:

§ 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]

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