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F ederal Reserve Ban k o f D allas DALLAS, TEXA S 75222 C i r c u l a r No. 77-55 M ay 5, 1977 F IS C A L A G E N C Y O P ER A TIN G C IR C U L A R NO . 3— FE D E R A L RECURRING C R E D IT P A Y M E N TS TO A LL BANKS, O T H E R F IN A N C IA L O R G A N IZ A T IO N S , A N D O THERS CO NCERNED IN TH E E L E V E N TH FE D E R A L RESERVE D IS T R IC T : With o u r C i r c u la r N o . 7 6 - 4 7 , dated M a rc h 30, 1976, you re c e iv e d a copy of this B a n k 's Fiscal A g e n c y O p e ra tin g C i r c u l a r No. 3, e n title d "F e d e ra l R e c u r r in g C r e d i t P a y m e n ts ." A p p e n d ix A of th a t o p e ra tin g c ir c u l a r contains the te x t of the T r e a s u r y D e p a rtm e n t's r e g u la tio n s g o v e r n in g the h a n d lin g of F e d e ra l r e c u r r i n g paym ents th ro u g h fin a n c ia l o rg a n iz a tio n s by means oth er than by c h e c k . E ffective J a n u a r y 3, 1977, the T r e a s u r y D e p a rtm e n t am ended those re g u la tio n s to: (1) c la r i f y the re s p o n s ib ilitie s and lia b ilitie s of a fin a n c ia l o r g a n iza tio n r e c e iv in g a c r e d it paym ent w ith e rro n e o u s in fo rm a tio n , and (2) p r e s c r ib e the p ro c e d u re s to be follo w ed b y the T r e a s u r y D e p a rtm e n t, b y a g e n cies th a t make r e c u r r i n g p a y m e n ts , and b y F e d e ra l R e s e rv e Banks in c o lle c t ing the amount for w h ic h a fin a n c ia l o rg a n iz a tio n is accountable in connection w ith c r e d it paym ents that ha ve p aym en t dates a fte r the date o r death o r legal in c ap a c ity of the desig n a te d r e c ip ie n t o r b e n e f ic ia r y . Enclosed is a copy o f the am endm ent to A p p e n d ix A o f Fiscal A g e n c y O p e ra tin g C i r c u l a r N o . 3, w h ic h sets fo rth the changes in the T r e a s u r y r e g u la tio n s . Also enclosed is the te x t of a statem ent b y the T r e a s u r y in s u b m ittin g the changes for p u b lic a tio n in the FE D E R A L R E G IS T E R . If you ha ve any questions w ith re sp e c t to the am endm ent to Fiscal A g e n c y O p e ra tin g C i r c u l a r No. 3 , please contact J . A . C l y m e r , A s s is ta n t V ic e P r e s id e n t, E x t . 6337, o r th e a p p r o p r ia t e o ffic e r at o u r El Paso, H ouston, or San A n to n io B r a n c h . A d d itio n a l copies w ill be fu r n is h e d upon re q u e s t to the S e c r e ta r y 's O ffice of this B a n k , E x t . 6267. S in c e r e ly y o u r s , R o b e rt H . B o y k in F i r s t V ic e P re s id e n t E n clo s u re Banks and others are encouraged to use the follo w in g to ll-fr e e incoming WATS numbers in contacting this Bank: 1-8 0 0 -49 2 -4 40 3 (in tra s ta te ) and 1 -8 0 0 -5 2 7 -4 9 7 0 (in te rs ta te ). For c a lls placed loc a lly , p lease use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) STATEMENT BY THE TREASURY DEPARTMENT ON FE D E R A L RECURR IN G P A Y M E N TS R E G U LA TIO N S On A u g u s t 4 , 1976, th e re was p u b lis h e d in the FEDERAL R E G ISTE R (41 FR 32605; c o rre c tio n p u b lis h e d at 41 FR 35855; extension of time to com ment p u b lis h e d at 41 FR 37117) a notice of proposed ru le m a k in g to am end P a rt 210, e n title d "F e d e ra l R e c u r r in g Payments T h r o u g h F in a n c ia l O rg a n iz a tio n By Means O th e r T h a n By C h e c k , " o f T i t l e 31 of the Code of Federal R e g u la tio n s . T h e s u b s ta n tiv e proposals w e r e an am endm ent to the e x is tin g §210 . 7 ( e ) , and the a d d itio n of a new § 2 1 0 .1 0 . T h e p u rp o s e of the fo rm e r was to c la r i f y the duties and lia b ilitie s of a fin a n c ia l o rg a n iz a tio n on its re c e ip t of a c r e d it p a y ment c o n ta in in g e rro n e o u s in fo rm a tio n , and o f the la t te r , to p r e s c r ib e p ro c e d u re s for c o lle c tin g from the fin a n c ia l o rg a n iz a tio n the amount of c r e d it paym ents re c e iv e d a fte r a r e c ip ie n t's o r b e n e f ic ia r y 's death or legal in c a p a c ity . In te re s te d p a rtie s w e r e g iv e n 45 days to comment on the proposed am endm ents. Num erous comments w e r e re c e iv e d from fin a n c ia l tr a d e associa tio n s , fin a n c ia l o r g a n iz a tio n s , in te re s te d F e d e ra l a g e n c ie s , and the Federal R e s e rv e S ystem . T h e T r e a s u r y D e p a rtm e n t c o n sid e re d all of these comments a n d , in s e v e ra l in s tan ce s, m odified the proposed am endm ent based on these comments. T h e p r in c ip a l d iffe re n c e s betw een the final am endm ent and the p r o posed am endm ent a re: 1. A t the end of the proposed new § 2 1 0 . 7 (e ) was a dd ed the fo llo w in g sentence: "A c r e d i t to a n y o th e r account b y a fin a n c ia l o rg a n iz a tio n w i ll con stitute a b re a c h of its w a r r a n t y made b y reason of §210. 7 (h ) ." A n y f a ilu r e of the fin a n c ia l o rg a n iz a tio n to comply w ith P art 210 in its h a n d lin g of c r e d it paym ents constitutes a b re ac h of the w a r r a n t y in § 2 1 0 .7 ( h ) and re n d e rs the fin a n c ia l o rg a n iz a tio n lia b le as p r o v id e d t h e r e in . T h u s , the above a d d itio n is optical r a th e r than s u b s ta n tiv e , and was added because s ev e ra l com m enters— fa ilin g to make the §210. 7 (h ) d e d u c tio n — e x p re s s e d an u n c e r ta in ty as to the lia b i l i t y of a fin a n c ia l o rg a n iz a tio n w h ic h c re d its an account other than that d e sig n a te d b y the r e c ip ie n t. 2. T h e f i r s t sentence of the proposed § 2 1 0 . 1 0(e ) has been r e v is e d to read: " I f the fin a n c ia l o rg a n iz a tio n has not f u l l y com plied w ith the dem and made u n d e r p a r a g r a p h s (c) o r (d ) of this s e c t i o n . * * *" As p ro p o s e d , this section conditioned the T r e a s u r y 's re q u e s t fo r a F e d e ra l R e s e rv e d e b it on the fa ilu r e to r e t u r n the amounts dem anded in § 2 1 0 . 1 0 ( c ) , o r (d) . T h e s e p a r a g ra p h s p r o v id e fo r notices dem an d in g the full amount of c r e d i t paym ents out s ta n d in g , w ith a p r o v is io n th a t the fin a n c ia l o rg a n iz a tio n can comply w ith these - 2 - notices b y r e tu r n in g a lesser am ount, c alc u la te d p u r s u a n t to § 2 1 0 . 9 (a) . T h e use of the p h ra s e "am ount dem anded" in proposed § 2 1 0 . 1 0 ( e ) , h o w e v e r , had the u n d e s ire d effect of r e q u ir in g F e d era l R e s e rv e debits w h e re a fin a n c ia l o r g a n iz a tio n has com plied w ith p a r a g r a p h (c) o r (d ) notices b u t — in ta k in g a d v a n tage of the § 2 1 0 .9 (a ) lim ited lia b i l i t y p r o v is io n — has not r e tu r n e d the fu ll am ount d e m an d e d . T h e intended p u rp o s e of § 2 1 0 . 10(e) w as to effect a d e b it to the a p p l i cable Fe d era l R e s e r v e account o n ly in the am ount of the fin a n c ia l o rg a n iz a tio n 's li a b i l i t y u n d e r § 2 1 0 .9 ( a ) , and the am endm ent has been r e v is e d to accom plish this p u rp o s e . It should be n o te d , h o w e v e r , th a t the fin a n c ia l o r g a n iz a tio n 's lia b ilit y is not re d u c e d to the amount p r o v id e d in § 2 1 0 .9 (a ) (3) ( i ) , and ( i i ) , u n less it has a ffir m a t iv e ly shown its com pliance w ith the th r e e conditions of § 2 1 0 .9 (a ) ( 1 ) , (2) , and (3) . 3. S e v e ra l com m enters q u e r ie d w h e th e r the w r i t t e n notice u n d e r § 2 1 0 . 1 0(a) w o u ld contain the ty p e of a cc o u n t, th e " t r a n s it n u m b e r" o f the fin a n cial o rg a n iz a tio n (o r a b ra n c h th e re o f) to w h ic h the c r e d it paym ents w e r e sent, and a d e s c r ip tio n of the r e c u r r i n g p a ym e n t fo r w h ic h the c r e d it p aym ent was m ade. T h e notice being p r e p a r e d by the T r e a s u r y D e p a rtm e n t w i ll contain th is and o th e r id e n tify in g in fo rm a tio n . T h e am endm ent as r e v is e d has a dded these items to the lis tin g of inform ation to be in c lu d e d in the § 2 1 0 . 1 0 (a ) notice. 4. T h e last sentence of the proposed § 2 1 0 . 1 0 (b ) has been r e w r itt e n to make c le a r th a t the p ro g ra m a g e n c y 's collection effort need not in c lu d e a setoff a g ain s t other than a c u r r e n t e n title m e n t. Since the am endm ent to be adopted adds no new lia b ilit y b u t m e re ly p ro v id e s a p r o c e d u re fo r co lle c tin g an e x is tin g lia b ilit y ; and because c r e d it paym ents a r e now being is s u e d , m aking the collection p ro c e d u re s im m ediately n e c e s s a r y , th e D e p a rtm en t of the T r e a s u r y h e r e b y fin d s th a t good cause exists for m akin g th is am endm ent e ffe c tiv e im m e d ia te ly . FISCAL AGENCY OPERATING CIRCULAR NO. 3 FEDERAL RECURRING CREDIT PAYMENTS A M E N D M E N T TO A P P E N D IX A Effective J a n u a r y 3, 1977, a m e n d e d to re a d as follows: A p p e n d ix A is d ate o f d e a th or legal incapacity, th e rou tin g n u m b e r o f th e financial organizatio n , a n d a list o f cred it p a y m e n ts w hich have p a y m e n t dates 1. S ection 210.7(e) is a m e n d e d to re a d as after th e ev en t o f d e a th o r legal incapacity a n d follows: w h ich h av e n o t b e en re tu rn e d p u r s u a n t to §210.7 ( f ) ( 3 ) . O n re c e ip t o f this notice, th e financial § 2 1 0 .7 F in a n c ia l O rg a n izatio n s. o rg a n iz atio n shall im m e d ia te ly r e t u r n to th e T r e a * * * * * sury D e p a r tm e n t th e a m o u n t re m a in in g in th e (e) A financial o rg a n iz atio n receiving a credit a c c o u n t u p to the to tal a m o u n t o f cred it p ay m en ts p a y m e n t shall cred it the a m o u n t o f such credit listed in the notice. I f the a m o u n t re tu rn e d is less p a y m e n t to th e a c c o u n t ind icated by th e de positor th a n the total a m o u n t listed in th e notice, the a c c o u n t n u m b e r in fo rm a tio n specified in the financial o rg an iza tio n shall, to th e e x te n t available, cred it p ay m en t. If th e financial o rg a niza tio n is p ro v id e th e n a m e a n d address o f all p erso n s w h o un ab le to cred it the a m o u n t o f a cred it p a y m e n t w ith dre w f u n d s fr o m th e a c c o u n t a fter th e date to th e a c c o u n t indicated by th e de p o sito r a cc o u n t th e first c re d it p a y m e n t listed in th e notice was n u m b e r in fo rm a tio n in th e c redit p a y m e n t b e cred ited to the account. cause such a n ac c o u n t does n o t exist o n its books, (b) B ased o n the in fo rm a tio n re ceiv ed fr o m th e o r because in p rocessing the cred it p a y m e n t it financial o rg a n iz atio n p u r s u a n t to p a r a g r a p h (a) o f h as re aso n to believe the ac c o u n t in dicated b y the this section, th e p ro g r a m agency shall a tte m p t to d ep o sito r a c c o u n t n u m b e r in f o rm a tio n in th e collect th e difference betw een the a m o u n t re tu rn e d c red it p a y m e n t is n o t th e a c c o u n t desig nated by a n d th e aggregate a m o u n t o f all cred it p ay m en ts th e recipient, it shall either: listed in th e first notice f r o m th e person(s) w h o (1) R e t u r n th e c red it p a y m e n t to th e F e d e ra l w ith dre w an y m o n ey s f r o m th e a c c o u n t su b se q u en t R eserv e B an k w ith a s tatem en t identifying th e to the d a te o f cred it o f th e first p a y m e n t listed reaso n th e refo r, or in th e first notice. T o the e x te n t p e rm itte d by law, this a tte m p t shall in c lu d e d ed u c tin g this (2) C re d it th e a m o u n t o f th e cre d it p a y m e n t a m o u n t fr o m p a y m e n ts to be m a d e b y th e p r o to th e a c c o u n t d esig n ated by th e recipient. g ra m agency to su ch persons u n d e r a c u rre n t A cred it to a n y o th e r a c c o u n t by a financial o rg an i entitlem ent. za tio n will constitute a b re a c h o f its w a rra n ty (c)(1) I f a financial o rg a niza tio n has n o t c o m m a d e by re a s o n o f §210.7(h). plied w ith p a ra g r a p h (a) o f this section w ithin * * * * * 30 days fr o m the d a te o f th e first notice, th e 2. T h e existing § 2 10.10 is re n u m b e re d §210.11 T re a su ry D e p a r tm e n t shall send a follow -up n o a n d th e follow ing is the tex t o f a n ew §210.10: tice to th e first n o tice to su c h financial o rg a n iz a tion d e m a n d in g th a t th e first n o tice b e com plied § 2 1 0 .1 0 C o lle c tio n P ro c ed u r es with. T h e a m o u n t f o r w h ich a financial o rga n iz ation (2) If the financial o rg a niza tio n has n o t c o m is a c c o u n ta b le u n d e r § 2 10 .9 shall b e collected as plied w ith p a r a g r a p h (a) o f this section w ith in 15 follows: days f r o m th e d ate o f th e follow-up notice, th e (a) F o r ea ch type o f re c u rrin g p ay m e n t, the D e p a r tm e n t o f the T r e a s u r y shall sen d a second D e p a r tm e n t of th e T re a s u r y shall send a w ritten notice to such financial org an iza tio n d e m a n d in g notice (“first n o tic e ”) to th e financial o rg an ization p r o m p t p a y m e n t o f the total a m o u n t of credit w hich shall inc lude th e n a m e o f th e re cip ien t an d p a y m e n ts listed in th e first notice. T o co m p ly w ith any beneficiary, th e d epositor a c c o u n t n u m b e r, this d em an d , th e financial o rg an iz atio n shall r e ty p e o f a cco u nt, type o f re c u rrin g p a y m en t, th e tu r n to the D e p a r tm e n t o f the T re a s u r y e ith e r the full a m o u n t d e m a n d ed , o r a lesser a m o u n t equal to its liability p u r s u a n t to §210.9(a)(3)(i) an d (ii), w ith evidence th a t the c onditions in § 2 10 .9(a)(1), (2), a n d (3) h av e been co m p lie d with. (d) If a financial o rg an iz atio n h as com plied w ith p a r a g r a p h (a), b u t th e total a m o u n t o f credit p a y m e n ts listed in th e first notice h as n o t been r e t u r n e d by th e financial o rg an iza tio n p u r s u a n t to p a ra g r a p h (a) o f this section, o r collected by the p ro g r a m agency p u r s u a n t to p a r a g r a p h (b) o f this section, th e D e p a rtm e n t o f the T re asu ry shall send a seco n d notice to such financial o rg an ization d e m a n d in g th e p r o m p t p a y m e n t o f th e a m o u n t listed in th e first notice less th e a m o u n t re tu rn e d in a c c o rd a n c e w ith p a r a g r a p h (a) o f this section an d collected in a c c o rd a n c e w ith p a r a g r a p h (b). T o com ply w ith this d e m a n d , the financial o rg a n i z atio n shall re tu rn to the D e p a rtm e n t o f the T re a su ry eith er the a m o u n t d e m an d e d , o r a lesser a m o u n t e q u al to the total a m o u n t o f cred it p a y m e n ts receiv ed w ithin 45 days a fter the ev en t of d eath or legal in capacity plus the a m o u n t, if any, re co v e red p u r s u a n t to §2 1 0 .9(a)(3) (a n d any a m o u n t th e n in th e account). If th e lesser a m o u n t is re tu rn e d , th e financial o rg an izatio n shall also p ro v id e a sta te m e n t to th e effect th a t it h as m et th e co nditions o f §210.9(a)(2) a n d (3). (e) I f a financial o rg a niza tio n h as n o t fully com plied w ith th e d e m a n d m a d e p u r s u a n t to p a ra g r a p h s (c) o r ( d ) o f this section w ith in 30 days fr o m the d a te o f th e second notice issued th e re u n d e r, th e D e p a r tm e n t of th e T re a s u r y will in stru c t th e a p p ro p ria te F e d e ra l R eserv e B an k th a t an a m o u n t, e qu a l to th e a m o u n t d u e a n d u n re tu rn e d u n d e r p a ra g ra p h s (c) o r (d) o f this sec tion, is to be debited to the a c c o u n t o n th e F e d eral R eserv e B a n k ’s books m a in ta in e d o r utilized by the financial o rga n iz ation f o r th e p u rp o s e o f receiving c red it p a y m e n ts u n d e r this P a rt, and is to be credited to the general a c c o u n t o f th e U n ite d States T rea su ry . By its action in receiving cred it p a y m e n ts u n d e r this P art, a financial o rg an i z atio n shall be d ee m ed to au th o riz e su ch d eb it to th e a c c o u n t it m a in ta in s o r utilizes on th e books o f th e F ed e ra l R eserve B a n k fo r th e p u rp o s e of receiving credit pay m en ts, as p ro v id ed in th e foregoing sentence. A desig n ated c o rre sp on d en t, in au th orizin g a financial o rg an izatio n to utilize such designated c o rre sp o n d e n t’s a c c o u n t o n the books o f th e F e d e ra l R eserv e B an k fo r th e p u r pose o f receiving the a m o u n t o f cred it p a y m e n ts u n d e r this P art, shall be d e e m e d to au th o rize such debit to th e a c c o u n t it m a in ta in s o r utilizes o n th e bo o k s o f th e F e d e ra l R eserv e B a n k f o r the p u rp o se o f receiving credit p ay m e n ts, as p ro v id ed herein.
