[Federal Register: July 11, 2003 (Volume 68, Number 133)]
[Rules and Regulations]
[Page 41266-41267]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jy03-5]
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DEPARTMENT OF THE TREASURY
Fiscal Service
Bureau of the Public Debt
31 CFR Part 348
Regulations Governing Depositary Compensation Securities
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: The Bureau of the Public Debt (Public Debt) is issuing
regulations governing Depositary Compensation Securities that will be
used to compensate financial agents for work performed on behalf of the
Department of the Treasury.
EFFECTIVE DATE: July 11, 2003.
ADDRESSES: You can download this final rule at the following World Wide
Web address: http://www.publicdebt.treas.gov. You may also inspect and
copy this rule at: Treasury Department Library, Room 1428, Main
Treasury Building, 1500 Pennsylvania Ave., NW., Washington, DC 20220.
Before visiting the library, you must call (202) 622-0990 for an
appointment.
FOR FURTHER INFORMATION CONTACT: For information contact Ann Fowler in
the Office of the Chief Counsel, Bureau of the Public Debt, at 304-480-
8692, or at CHCOUNSEL@bpd.treas.gov.
SUPPLEMENTARY INFORMATION: The former 31 CFR part 348 is being
reinstituted and revised to provide for
[[Page 41267]]
the issuance of Depositary Compensation Securities in book-entry form,
and for their automatic reinvestment at maturity.
These special issue securities, formerly known as 2-Percent
Depositary Bonds, were first offered in 1941 as a means to compensate
depositaries and financial agents of the Government for essential
banking services provided in support of the day-to-day operations of
the Government, including the collection and deposit of all Treasury
receipts. The securities were phased out when other methods of
compensation were used. Hence, the offering was terminated in 1994.
The former 31 CFR part 348 is now being reinstituted and revised
because we have determined that the use of Depositary Compensation
Securities to compensate financial agents is in the public interest.
Financial agents will purchase Depositary Compensation Securities
with funds placed by the United States Treasury in a non-interest
bearing time balance account at the financial agent equal to the
principal amount of the security. The interest earned from Depositary
Compensation Securities will serve to compensate financial agents for
services performed on behalf of the Treasury. Some financial agents
have inquired regarding the proper accounting of this transaction and
the potential impact on their balance sheet. The transaction, as more
fully described in agreements between Treasury and its Financial
Agents, is structured so that the principal amount of the security and
the time balance will be set-off at maturity consistent with the
criteria described in Financial Accounting Standards Board (FASB)
Interpretation No. 39. Financial agents should consult with their
auditors regarding the applicability of FASB Interpretation 39 to this
transaction.
Procedural Requirements
This final rule does not meet the criteria for a ``significant
regulatory action'' as defined in Executive Order 12866. Therefore, the
regulatory review procedures contained therein do not apply.
This final rule relates to matters of public contract and
procedures for United States securities. The notice and public
procedures requirements and delayed effective date requirements of the
Administrative Procedure Act are inapplicable, pursuant to 5 U.S.C.
553(a)(2).
As no notice of proposed rulemaking is required, the Regulatory
Flexibility Act (5 U.S.C. 601, et seq.) does not apply. We ask for no
new collections of information in this final rule. Therefore, the
Paperwork Reduction Act (44 U.S.C. 3507) does not apply.
List of Subjects in 31 CFR Part 348
Banks, Banking, Electronic funds transfer, Government securities.
0
Accordingly, for the reasons set out in the preamble, 31 CFR Chapter
II, Subchapter B, is amended by adding Part 348 to read as follows:
PART 348--REGULATIONS GOVERNING DEPOSITARY COMPENSATION SECURITIES
Sec.
348.0 Offering of securities.
348.1 Description of securities.
348.2 Redemption/call/reinvestment.
348.3 Reservations.
Authority: 31 U.S.C. 3121; 5 U.S.C. 301.
Sec. 348.0 Offering of securities.
The Secretary of the Treasury (the Secretary) under authority of
Title 31, Chapter 31, offers, at par, Depositary Compensation
Securities (securities) to financial agents of the Department of the
Treasury. The securities are offered to financial agents of the
Department of the Treasury designated under federal law (including, but
not limited to: 12 U.S.C. 90, 265-266, 1464(k), and 1789a; 31 U.S.C.
3303) which have executed a Depositary, Financial Agency, and
Collateral Agreement satisfactory to the Secretary, and are authorized
to provide essential banking services to the Department of the
Treasury. The securities will be issued in an amount not to exceed, in
any case, the amount for which the financial agents are authorized. The
securities are non-marketable Treasury securities that will be utilized
to compensate financial agents, in whole or in part, for services
performed on behalf of the Department of the Treasury. The financial
agents will be compensated from the interest earned on the securities.
This offering will continue until terminated by the Secretary. The
Fiscal Assistant Secretary is authorized to act on behalf of the
Secretary upon all matters contained in these regulations.
Sec. 348.1 Description of securities.
(a) General. The securities will be issued in book-entry form on
the books of the Department of the Treasury, Bureau of the Public Debt,
Parkersburg, WV.
(b) Terms and rate of interest. The securities will be issued as
notes or bonds, depending on their maturity, under such terms and at
such rates as determined and announced by the Secretary. The Secretary
will set a given rate of interest that will apply to all securities
issued while the rate is in effect. The interest will be payable on a
monthly basis. The securities will be issued in a minimum of $1,000
each.
(c) Nontransferability. The securities are not transferable, but
they will be acceptable to secure compensating balances with financial
agents (as described in Sec. 348.0) and may not be used for any other
purpose.
Sec. 348.2 Redemption/call/reinvestment.
(a) Redemption by financial agents. The securities may be redeemed
prior to maturity by financial agents only under such terms and
conditions as set forth in agreements between the financial agents and
the Department of the Treasury, Financial Management Service,
Washington, DC.
(b) Call by the Treasury. The securities are subject to call before
maturity. The Secretary will announce such call by any means the
Secretary deems appropriate.
(c) Reinvestment at maturity. The securities shall be automatically
redeemed at maturity and the principal amount reinvested in new
securities having the same description in all material respects as the
ones redeemed, except that the Secretary shall have the authority to
modify the rate of interest for the re-issued securities. The
securities shall be automatically redeemed and re-invested unless the
agent certifies in writing, to the Treasury, Financial Management
Service, Washington, DC, that it declines automatic reinvestment within
seven calendar days prior to maturity date.
Sec. 348.3 Reservations.
The Secretary reserves the right to reject any application for the
purchase of securities hereunder, in whole or in part, and to refuse to
issue or permit to be issued any such securities in any case if the
Secretary deems such action to be in the public interest, and the
Secretary's action in any such respect shall be final. The Secretary
may also at any time, supplement or amend the terms of these
regulations, or of any amendments or supplements thereto.
Dated: July 7, 2003.
Donald V. Hammond,
Fiscal Assistant Secretary.
[FR Doc. 03-17531 Filed 7-10-03; 8:45 am]
BILLING CODE 4810-39-P