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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]