[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR354.4]

[Page 346-347]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 354--REGULATIONS GOVERNING BOOK-ENTRY SECURITIES OF THE STUDENT LOAN MARKETING ASSOCIATION (SALLIE MAE)--Table of Contents
 
Sec. 354.4  Creation of Participant's Security Entitlement; security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book-entry that a Book-entry Sallie Mae 
Security has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including without limitation deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is 
marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a

[[Page 347]]

Participant is marked on the books of a Federal Reserve Bank, such 
Federal Reserve Bank may rely, and is protected in relying, exclusively 
on the order of an authorized representative of the United States 
directing the transfer of the security. For purposes of this paragraph, 
an ``authorized representative of the United States'' is the official 
designated in the applicable regulations or agreement to which a Federal 
Reserve Bank is a party, governing the security interest.
    (c)(1) Sallie Mae and the Federal Reserve Banks have no obligation 
to agree to act on behalf of any Person or to recognize the interest of 
any transferee of a security interest or other limited interest in favor 
of any Person except to the extent of any specific requirement of 
Federal law or regulation or to the extent set forth in any specific 
agreement with the Federal Reserve Bank on whose books the interest of 
the Participant is recorded. To the extent required by such law or 
regulation or set forth in an agreement with a Federal Reserve Bank, or 
the Federal Reserve Bank Operating Circular, a security interest in a 
Security Entitlement that is in favor of a Federal Reserve Bank, Sallie 
Mae, or a Person may be created and perfected by a Federal Reserve Bank 
marking its books to record the security interest. Except as provided in 
paragraph (b) of this section, a security interest in a Security 
Entitlement marked on the books of a Federal Reserve Bank shall have 
priority over any other interest in the securities.
    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest, including a security interest in favor of 
a Federal Reserve Bank, may be perfected by any method by which a 
security interest may be perfected under applicable law as described in 
Sec. 354.2(b) or Sec. 354.3. The perfection, effect of perfection or 
non-perfection and priority of a security interest are governed by such 
applicable law. A security interest in favor of a Federal Reserve Bank 
shall be treated as a security interest in favor of a clearing 
corporation in all respects under such law, including with respect to 
the effect of perfection and priority of such security interest. A 
Federal Reserve Bank Operating Circular shall be treated as a rule 
adopted by a clearing corporation for such purposes.