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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.