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F ederal r e s e r v e Ba n k o f D allas
DALLAS, TEXAS

7S222

C i r c u l a r No. 78-154
O ctober 31, 1978

TREASURY T A X AND LOAN INVESTM ENT PROGRAM

TO THE CHIEF EXECUTIVE
O FFICER , EACH BANK IN THE
ELEVENTH FEDERAL RESERVE D IS T R IC T:
On May 15, 1978, C irc u la r No. 78-57 was d is trib u te d to all banks with
an attached T r e a s u r y booklet covering the T re a s u r y T a x and Loan Investment
Program . Included in this booklet was Bulletin No. 78-03 w hich contained the
procedural instructions for all T re a s u r y T a x and Loan depositaries. T h e T r e a s ­
u ry has advised us that pen and ink revisions need to be made to this procedure
in the two areas as outlined below:
Revisions
Delete

Insert

Page 1, Section 2 .C . (Line 3)
"quoted as a percentage to two
decimal places,"

Page 1, Section 2 .C . (Line 3)
"converted to a four decimal place
fa c to r,"

Page 2, Section 2 .C . (Lin e 10)
" , or to the n ext lower number"

Page 2, Section 2 .C . (Line 10)
" . T h e fifth number to the rig h t of
the decimal point w ill rem ain the
same"

A lso, as you a r e a w a re , the T re a s u r y T a x and Loan Investment Program
w ill begin on November 2. For you r referen ce, p rin te d on the follow ing pages is
the notice of the implementation date as was issued in the Federal Re gister on
October 16.
Additional copies of this c ir c u la r w ill be fu rn ish ed upon request to the
Fiscal Agency Departm ent at the Dallas O ffice, E x t. 6341.
S in ce re ly yo u rs ,
Robert H . Boykin
F irs t V ic e President

Banks and others are encouraged to use the fo llo w in g incom ing W ATS numbers in contacting this Bank:
1-800-492-4403 (intrastate) and 1-800-527-4970 (interstate). For calls placed locally, please 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)

[4810-35-M ]
Title 31— M oney and Finance:
Treasury

E xtract From
Federal Re gister
V O L. 43, NO. 200
M onday, October 16, 1978
p p . 47505 - 47506

CHAPTER II— FISCAL SERVICE;
DEPARTMENT OF THE TREASURY
TREASURY TAX A N D LOAN
ACCOUNTS
Announcement o f Effective Date of
Final Rule* and Amendments to
Certain Provisions Concerning Col­
lateral Pledged

AGENCY: Fiscal Service, D epartm ent
of th e Treasury.
ACTION: A nnouncem ent of effective
date of final rules and am endm ents to
certain provisions concerning collater­
al pledged under 31 CFR P a rt 203.
SUMMARY: In th e F e d e r a l R e g i s t e r
of May 2, 1978 (43 F R 18960) th e
T reasury D epartm ent issued final reg­
ulations (31 CFR P a rts 203, 214, 317,
and 321) and interim regulations (31
CFR 226) to im plem ent th e invest­
m ent provisions of Pub. L. 95-147 of
O ctober 28, 1977. T he regulations
issued on May 2, 1978, called for an ef­
fective date of July 6, 1978, provided
th e Congress had appropriated funds
to cover th e paym ent of fees for cer­
tain services rendered u nder th e regu­
lations. Since th e Congress h ad not
appropriated th e necessary funds, a
notice was published in th e F e d e r a l
R e g i s t e r on Ju n e 19, 1978 (43 FR
26309) deferring th a t effective date.
T he Congress has now made th e nec­
essary funds available. Accordingly,
th e effective date of b o th th e final
and interim rules issued on May 2 as
am ended by th is notice is November 2,
1978.
T he in te n t of Pub. L. 95-147 is to
perm it th e T reasury to earn in terest
by th e investm ent of its operating
cash balances and, a t th e same time,
pay fees for certain services which
have n o t heretofore been compensa­
ble.
S ub part D of 31 CFR P a rt 203 re la t­
ing to collateral pledged as security by
depositaries for tax and loan accounts
as published in th e F e d e r a l R e g i s t e r
of May 2 is being amended. First, by
th is am endm ent, th e m a tu rity of th e
type of collateral security accepted
under subparagraph 9 of § 203.15(d)
(i.e., conunerical and agricultural
paper and bankers’ acceptances) is
being extended from one year to two
years. Second, by th is am endm ent, a

new paragraph (i.e., paragrap h (f)) is
being added to § 203.15 to describe ac­
tions which will be taken, upon th e in ­
solvency of a depositary, to perfect th e
T reasury’s security in terest in th e pro­
ceeds of th e collateral which th a t de­
positary has pledged as security for
ta x and loan funds.
F u rth e r, 31 CFR P a rt 226, entitled
“Recognition of Insurance Covering
T reasury Tax and Loan D epositaries”
w hich was published as an interim
rule on May 2 is hereby being adopted
as a final rule.
EFFECTIV E DATES: T he provisions
of th e rules which were published in
th e F e d e r a l R e g i s t e r of May 2 (43 F R
18960) and as am ended by th is notice
are effective on November 2,1978.
FO R FU RTH ER INFORM ATION
CONTACT:
Mr. Jo h n Kilcoyne, A ssistant Fiscal
A ssistant
Secretary
(Banking),
Office of th e Secretary, D epartm ent
of th e Treasury, W ashington, D.C.
20220, 202-566-2849.
Additionally, financial institutions
having questions as to operating pro­
cedures may direct such questions to
th e Federal Reserve B ank or B ranch
serving th e geographical area in which
th e institution is located.
SUPPLEMENTARY INFORMATION:
By th is notice, th e effective date of
th e regulations issued on May 2, 1978,
as amended, is being established. Cer­
tain paragraphs of th e regulations
issued on M ay 2, 1978, cited specific
dates which were predicated on th e
presum ption th a t those regulations
were to be effective on Ju ly 6, 1978.
Consequently, due to th e postpone­
m ent of th e effective d ate to Novem­
ber 2, 1978, those parag raph s are
hereby being revised to reflect dates
consistent w ith th e revised effective
date.
In th e pream ble to th e final regula­
tions issued on May 2, 1978, it was
stated th a t th e T reasury was consider­
ing w hat action it could take to
expand categories of eligible collater­
al. W hile th e T reasury’s study of col­
lateral is continuing, th e D epartm ent
is now extending th e m atu rity lim ita­
tion of th e collateral security accepted
u nder subparagraph (9) of § 203.15(d)
from one year to two years: a t 90 p er­
cent of face value.
F u rth e r, by th is am endm ent, th e
T reasury is adding a new parag raph
(paragraph f ) to § 203.15 to describe
general requirem ents pertaining to th e
perfection of th e T reasury’s security
in terest in th e proceeds of pledged col­
lateral in th e event of th e insolvency
of th e depositary. This is an am end­
m ent of a technical n atu re w hich is intened to preserve, subsequent to th e
insolvency of a depositary, th e T rea­
su ry ’s in terest in th e proceeds of th e
collateral th a t a tax and loan deposi­

ta ry has pledged for th e purpose of se­
curing th e tax and loan funds on de­
posit or invested w ith it.
Since each Treasury Tax and Loan
D epositary enters into a depositary
co ntract as stated a t § 203.6, th e T reas­
u ry is of th e view th a t th e am end­
m ents involve a m a tte r relating to
“contracts” as th a t term is used in 5
U.S.C. 553(a)(2). F u rth e r, th e T reasu r­
y is of th e view th a t because th e
am endm ents (1) add to th e supply of
securities available to depositaries to
secure tax and loan funds, and (2) set
fo rth requirm ents intended to solidify
th e T reasury’s rights to th e proceeds
of th e collateral which a depositary
has pledged to secure public funds,
subsequent to th e insolvency of th a t
depositary, th e y involve *a m a tte r re­
lating to “public p roperty” w ithin th e
m eaning of 5 U.S.C. 553(a)(2).
Consequently, it has been d eter­
mined th a t th e am endm ents are n o t
subject to th e rulem aking require­
ments, including notice or proposed
rulem aking, which are contained in 5
U.S.C. 553.
31 CFR P a r t 226, entitled “Recogni­
tion of Insurance Covering T reasury
Tax and Loan D epositaries” was pub­
lished as an interim rule in th e F e d e r ­
a l R e g i s t e r of May 2, 1978 (43 FR
18972). Since th e publication of th a t
part, th e D epartm ent received one
w ritten com m ent concerning th a t in­
terim rule. In essence th a t com m ent
was a request for clarification of one
of th e provisions of th a t rule. Accord­
ingly, in view of th e absence of any
substantive com ment, th e D epartm ent
is of th e view th a t 31 CFR P a rt 226,
w hich was published in th e F e d e r a l
R e g i s t e r of M ay 2, 1978, as an interim
rule, should h ere a fte r be regarded as a
final rule. By th is notice, 31 CFR P a rt
226 is being adopted as a final regula­
tion.
O n May 24, 1978, a proposed T reas­
ury directive entitled “C riteria and
Procedures for th e
Preparation,
Review and Approval of R egulations”
was published a t 43 F R 22319, in im­
plem entation of Executive O rder
12044 (M arch 23, 1978; 43 F R 12661).
A lthough th e proposed directive was
m ade effective on May 22, 1978, it was
provided th a t regulations in process of
preparation before th a t date which
h ad been th e subject of a public h e a r­
ing would no t be subject to th e re ­
quirem ent of p arag rap h 9 of th e pro­
posed directive th a t a work plan be
prepared. As th e in stan t publication is
th e culm ination of a regulatory proj­
ect which was th e subject of a public
hearing on Ja n u a ry 12, 1978, no work
plan has been prepared. Nevertheless,
th e o th er applicable requirem ents of
th e proposed T reasury directive have
been complied with.
In consideration of all th e foregoing,
31 CFR C h apter II is am ended as fol­
lows:

PART 203— TREASURY TAX AND
LOAN DEPOSITORIES

§ 203.3 [Amended]
1. Section 203.3 is am ended by
changing th e date, “Ju ly 5, 1978,” in
th e first sentence of parag raph (a), to
“November 1, 1978.”
§ 203.11 [Amended]
2. Section 203.11 is am ended as fol­
lows:
(a) By changing th e date, “Ju ly 5,
1978,” in th e first sentence of p ara­
graph (a), to “November 1, 1978.”
(b) By changing th e date, “Ju ly 6,
1978,” in th e last sentence of p ara­
graph (a), to “November 2, 1978.”
(c) By changing th e date, “Ju ly 6,
1978,” each tim e it appears in p ara­
graphs (b) and (c), to “November 2,
1978.”
3. Section 203.15 is am ended by
am ending parag raph (d)(9) and by
adding a new p arag rap h (f) to read as
follows:
§ 203.15 Collateral security requirements.

*

•

•

•

•

(d) • • •
(9) Commercial and agricultural
paper and bankers’ acceptances ap­
proved by th e Federal Reserve Bank
of th e district and having a m atu rity
a t th e tim e of pledge no t to exceed 2
years: At 90 percent of face value.

•

•

•

•

•

Effecting payments of principal
and interest on securities pledged as
collateral subsequent to the insolvency
of a depositary— (1) General. In th e
(f)

event of th e depositary’s insolvency or
closure, or in th e event of th e appoint­
m ent of a receiver, conservator, liqui­
d ator or o th e r sim ilar officer to term i­
n ate its business, th e depositary agrees
th a t all principal and in terest pay­
m ents on any security pledged to pro­
tect th e note account (if applicable)
and th e T reasury ta x and loan ac­
count, due as of th e date of th e insol­
vency of closure, or th e re a fte r becom­
ing due, shall be held separate and
a p a rt from any o th er assets and shall
constitute a p a rt of th e pledged securi­
ty available to satisfy any claim of th e
U nited States.
(2) Payment procedures, (i) Subject
to th e waiver in subparagraph (2)(iii)
of this paragraph, each depositary (in­
cluding, w ith respect to such deposi­
tary, an assignee for th e benefit of
creditors, a tru stee in bankruptcy, or a
receiver in equity) shall immediately
rem it each paym ent of principal a n d /
or in terest received by it w ith respect
to collateral pledged p u rsu a n t to th is
section to th e Federal Reserve Bank of
th e district, as fiscal agent of th e
U nited S tates, and in any event shall

so rem it no la te r th a n te n days a fte r
receipt of such a paym ent.
(ii) Subject to th e waiver in sub para­
graph (2)(iii) of th is p aragraph, each
obligor on a security pledged by a de­
positary p u rsu an t to th is section shall
m ake each paym ent of principal a n d /
or in terest due w ith respect to such se­
curity directly to th e Federal Reserve
B ank of th e district, as fiscal agent of
th e U nited States.
(iii) T h e requirem ents of sub para­
graphs (2) (i) and (ii) of th is p a ra ­
g raph are hereby waived for only so
long as a pledging depositary rem ains
solvent. T he foregoing waiver is term i­
nated w itho ut fu rth e r action im medi­
ately upon th e insolvency of a pledg­
ing depositary or, if earlier, upon
notice by th e T reasury or th e Federal
Reserve B ank of th e district of such
term ination. For purposes of th is
paragraph, a depositary is insolvent
when, voluntarily or by action of com­
p e te n t auth ority, it is closed because
of present or prospective inability to
m eet th e dem ands of its depositors or
shareholders.
4.
Section 203.18 is am ended to read
as follows:
§ 203.18 Effective date.
T his revision of th is p a rt is effective
November 2,1978.
PART 214— DEPOSITORIES FOR
FEDERAL TAXES

5.
Section 214.9 is am ended to read
as follows:
§ 214.9 Effective date.
T his revision of th is p a rt is effective
November 2, 1978.
PART 226— RECOGNITION OF INSUR­
ANCE COVERING TREASURY TAX
A N D LOAN DEPOSITARIES

6. Section 226.7 is am ended to read
as follows:
§ 226.7 Effective date.
T h e provisions of th is p a rt become
effective November 2,1978.
7. In terim 31 CFR P a rt 226, as
am ended in item 6. of th is document,
is hereby adopted as a final rule.
PART 317— REGULATIONS GOVERN­
IN G AGENCIES FOR ISSUE OF U.S.
SAVINGS BONDS OF SERIES E AND
U.S. SAVINGS NOTES

8.
Section 317.5 is am ended by
changing p arag raph (e) to read as fol­
lows:
§ 317.5 Issuance of bonds.

*

*

*

*

*

(e) T he provisions of th is section, as
am ended, are effective November 2,
1978.
PART 321— PAYMENTS BY BANKS
A N D OTHER FINANCIAL INSTITU­
TIONS OF UNITED STATES SAVINGS
BONDS A N D UNITED STATES SAV­
INGS NOTES (FREEDOM SHARES)

9.
Section 321.5 is am ended by
changing p aragrap h (e) to read as fol­
lows:
§ 321.5 Paying agent fees and charges.
*

*

•

*

*

(e) T h e provisions of th is section, as
am ended, are effective November 2,
1978.
Dated: O ctober 11, 1978.
P a u l H . T a y lo r ,
Fiscal A ssis ta n t Secretary.
[FR Doc. 78-29199 Piled 10-13-78; 8:45 am]