[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR202.6]

[Page 10-11]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 202_DEPOSITARIES AND FINANCIAL AGENTS OF THE FEDERAL GOVERNMENT \1\--
 
Sec.  202.6  Collateral security.

    (a) Requirement. Prior to receiving deposits of public money, a 
depositary authorized to perform services under Sec.  202.3(b) must 
pledge collateral security in the amount required by the Secretary of 
the Treasury.
    (b) Acceptable security. Types and valuations of acceptable 
collateral security are addressed in 31 CFR part 380. For a current list 
of acceptable classes of securities and instruments described in 31 CFR 
part 380 and their valuations, see the Bureau of the Public Debt's web 
site at www.publicdebt.treas.gov.
    (c) Deposits of securities. Unless the Secretary of the Treasury 
provides otherwise, collateral security under this part must be 
deposited with the Federal Reserve Bank or Branch of the district in 
which the depositary is located (depositaries located in Puerto Rico and 
the Virgin Islands will be considered as being located in the New York 
Federal Reserve district), or with a custodian or custodians within the 
United States designated by the Federal Reserve Bank, under terms and 
conditions prescribed by the Federal Reserve Bank. Securities deposited 
with a Federal Reserve Bank must be accompanied by a letter stating 
specifically the purpose for which the securities are being deposited.
    (d) Assignment. A depository that pledges securities which are not 
negotiable without its endorsement or assignment may, in lieu of placing 
its unqualified endorsement on each security, furnish an appropriate 
resolution and irrevocable power of attorney authorizing the Federal 
Reserve Bank to

[[Page 11]]

assign the securities. The resolution and power of attorney shall 
conform to such terms and conditions as the Federal Reserve Banks shall 
prescribe.
    (e) Disposition of principal and interest payments of the pledged 
securities after a depositary is declared insolvent--(1) General. In the 
event of the depositary's insolvency or closure, or in the event of the 
appointment of a receiver, conservator, liquidator, or other similar 
officer to terminate its business, the depositary agrees that all 
principal and interest payments on any security pledged to protect 
public money due as of the date of the insolvency or closure, or 
thereafter becoming due, shall be held separate and apart from any other 
assets and shall constitute a part of the pledged security available to 
satisfy any claim of the United States, including those not arising out 
of the depositary relationship.
    (2) Payment procedures. (i) Subject to the waiver in paragraph 
(e)(2)(iii) of this section, each depositary (including, with respect to 
such depositary, an assignee for the benefit of creditors, a trustee in 
bankruptcy, or a receiver in equity) shall immediately remit each 
payment of principal and/or interest received by it with respect to 
collateral pledged pursuant to this section to the Federal Reserve Bank 
of the district, as fiscal agent of the United States, and in any event 
shall so remit no later than ten days after receipt of such a payment.
    (ii) Subject to the waiver in paragraph (e)(2)(iii) of this section, 
each obligor on a security pledged by a depositary pursuant to this 
section shall make each payment of principal and/or interest with 
respect to such security directly to the Federal Reserve Bank of the 
district, as fiscal agent of the United States.
    (iii) The requirements of paragraphs (e)(2) (i) and (ii) of this 
section are hereby waived for only so long as a pledging depositary 
remains solvent. The foregoing waiver is terminated without further 
action immediately upon the involvency of a pledging depositary or, if 
earlier, upon notice by the Treasury of such termination. For purposes 
of this paragraph, a depositary is insolvent when, voluntarily or by 
action of competent authority, it is closed because of present or 
prospective inability to meet the demands of its depositors or 
shareholders.

[32 FR 14216, Oct. 13, 1967, as amended at 36 FR 6748, Apr. 8, 1971; 36 
FR 17995, Sept. 8, 1971; 39 FR 30832, Aug. 26, 1974; 44 FR 53067, Sept. 
11, 1979; 46 FR 28152, May 26, 1981; 62 FR 45521, Aug. 27, 1997; 65 FR 
55428, Sept. 13, 2000]