Federal Register / Vol. 70, No. 98 / Monday, May 23, 2005 / Rules and Regulations 29445
DEPARTMENT OF THE TREASURY Staff, (202) 504–3632 or e-mail us at FDIC, and the Board adequately met the
govsecreg@bpd.treas.gov. purposes of the regulations.7
17 CFR Part 450 Consequently, Treasury provided an
SUPPLEMENTARY INFORMATION: On
RIN 1505–AB06 October 6, 2003, we received a letter exemption in § 450.3 for depository
from the OTS requesting that the institutions 8 subject to these standards
[Docket No. BPD GSRS 05–01] exemption at 17 CFR 450.3 of the GSA with respect to their holdings in a
fiduciary capacity.9
regulations for holdings subject to
Government Securities Act
fiduciary standards be expanded to B. OTS Request
Regulations: Custodial Holdings of
include OTS-regulated savings In 1987, when Treasury developed the
Government Securities
associations.1 On September 23, 2004, GSA regulations, savings associations
AGENCY: Office of the Assistant we published a proposed amendment to were not eligible for the exemption
Secretary for Financial Markets, § 450.3 that would make OTS-regulated because the Federal Home Loan Bank
Treasury. savings associations eligible for the Board, OTS’s predecessor, had not
ACTION: Final rule. exemption under the same conditions completed its examination procedures
that apply to depository institutions or guidance related to the GSA
SUMMARY: The Department of the regulated by the OCC, the FDIC and the regulations. Savings associations were
Treasury (‘‘Treasury,’’ ‘‘We,’’ or ‘‘Us’’) is Board.2 We received one comment letter not included in the exemption and,
issuing in final form an amendment to that strongly supported the proposed therefore, were required to comply with
the regulations issued under the amendment. Therefore, as explained in the requirements contained in part 450
Government Securities Act of 1986, as more detail below, we are adopting the with respect to all government securities
amended (‘‘GSA’’), that are applicable to rule as proposed. held for the account of customers in a
depository institutions that hold capacity as a fiduciary or a custodian, as
I. Background
government securities as fiduciary, well as the requirements under
custodian, or otherwise for the account A. GSA Regulations applicable fiduciary law, including OTS
of customers. The provisions of the GSA Title II of the GSA 3 requires Treasury fiduciary regulations at 12 CFR part 550.
regulations for custodial holding of to prescribe, by regulation, standards for On October 6, 2003, the OTS
government securities held by the safeguarding and use of government submitted a written request that the
depository institutions generally securities. The standards apply to exemption at § 450.3 be extended to
provide an exemption from these rules depository institutions that hold include OTS-regulated savings
for a depository institution’s holdings of government securities as fiduciary, associations that meet its conditions.10
such government securities that are custodian, or otherwise for the account The OTS request states that when
subject to the fiduciary standards of the of a customer. The regulations are to Congress gave Federal savings
Board of Governors of the Federal provide for the adequate segregation of associations trust powers in 1980, the
Reserve System (‘‘the Board’’), the government securities, including intent was to provide them with the
Federal Deposit Insurance Corporation government securities subject to ability to offer trust services on the same
(‘‘FDIC’’), or the Office of the repurchase transactions. Prior to the basis as national banks.11 Without this
Comptroller of the Currency (‘‘OCC’’). adoption of regulations, Treasury is same ability, the OTS states that savings
We published a proposed rule required to determine, with respect to associations are at a competitive
amendment to the exemption on each appropriate regulatory agency, disadvantage and subject to duplicative
September 23, 2004, and are now whether its ‘‘rules and standards rules.
adopting the change as proposed. adequately meet the purposes of the The OTS further states in its request
Specifically, this amendment modifies regulations’’ 4 to be issued, and if that it now has examination procedures
the exemption to include savings Treasury so determines, it must exempt for the GSA regulations in place, and
associations subject to the fiduciary any depository institution subject to
standards of the Office of Thrift those rules or standards from the
7 52 FR 5677 (February 25, 1987).
Supervision (‘‘OTS’’). regulations.
8 See 17 CFR 450.2(c). The GSA regulations at
§ 450.2(c) define ‘‘depository institution’’ as having
EFFECTIVE DATE: May 23, 2005. Treasury issued regulations under the meaning stated in clauses (i) through (vi) of
ADDRESSES: You may download this Title II of the GSA in 1987 at 17 CFR § 19(b)(1)(A) of the Federal Reserve Act (12 U.S.C.
final rule from the Bureau of the Public part 450.5 Based on the information 461 (b)(1)(A)(i)–(vi)). Savings associations are
included in the definition of depository institutions
Debt’s Web site at http:// provided by the appropriate regulatory at 12 U.S.C. 461(b)(1)(A)(vi).
www.publicdebt.treas.gov or from the agencies 6 and Treasury’s own analysis, 9 The exemption also extends to government
Electronic Code of Federal Regulations Treasury determined in 1987 that the securities held in a custodial capacity, provided the
(e-CFR) Web site at http:// rules and standards of the OCC, the institutions have adopted policies and procedures
that would apply to such custodial holdings all of
www.gpoaccess.gov/ecfr. It is also the requirements imposed by their appropriate
available for public inspection and 1 See Letter from Scoot M. Albinson, Managing
regulatory agency on government securities held in
copying at the Treasury Department Director, Office of Thrift Supervision, Department a fiduciary capacity, and the custodial holdings are
of the Treasury, to Van Zeck, Commissioner of the subject to examination by the appropriate
Library, Room 1318, Main Treasury Public Debt, Bureau of the Public Debt, Department regulatory agency for compliance with such
Building, 1500 Pennsylvania Avenue, of the Treasury (October 6, 2003). fiduciary requirements. Whether or not they are
NW., Washington, DC 20220. To visit 2 69 FR 56968 (September 23, 2004).
exempt under § 450.3, depository institutions that
the library, call (202) 622–0990 for an 3 Pub. L. 99–571, 100 Stat. 3208 (1986).
retain custody of government securities subject to
4 31 U.S.C. 3121(h)(4) & 9110(d). a repurchase agreement are required to comply with
appointment.
5 The GSA implementing regulations were the confirmation requirements for hold-in-custody
FOR FURTHER INFORMATION CONTACT: Lori published as a final rule on July 24, 1987 (52 FR repurchase agreements in the regulations under
Santamorena (Executive Director), Lee 27901). The regulations, as amended, are codified Title I of the GSA at § 403.5(d). See 17 CFR
at 17 CFR chapter IV. The requirements for 403.5(a)(2) & 401.4(b)(1)(ii).
Grandy (Associate Director), or Kevin
depository institutions that hold government 10 See supra note 2.
Hawkins (Government Securities securities as a fiduciary, custodian, or otherwise are 11 See § 5(n) of Home Owners’ Loan Act (HOLA)
Specialist), Bureau of the Public Debt, set out in subchapter B (17 CFR part 450). 12 U.S.C. 1464(n) for thrifts and 12 U.S.C. 92a for
Government Securities Regulations 6 See 17 CFR 450.2(a). banks.
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29446 Federal Register / Vol. 70, No. 98 / Monday, May 23, 2005 / Rules and Regulations
that OTS’s regulation of fiduciary, based on the information provided by 132 savings associations will qualify for
custodial and other holdings of the OTS and Treasury’s own analysis, the exemption, thus making them no
government securities adequately we have determined that the rules and longer subject to part 450.
protects customer accounts. Further, the standards of the OTS adequately meet
OTS states that the regulatory oversight the purposes of part 450. List of Subjects in 17 CFR Part 450
of fiduciary activities of savings We believe this change will ensure Banks, banking, Depository
associations is the same as other Federal that savings associations subject to the
institutions, Government securities,
banking agencies, and its trust jurisdiction of the OTS are not subject
Reporting and recordkeeping
regulations, policies and procedures are to duplicative requirements. In
similarly aligned with those of the OCC. developing this amendment, we have requirements.
II. Comments Received in Response to consulted with the staffs of the bank I For the reasons set out in the preamble,
the Proposed Rule regulatory agencies and the Securities 17 CFR part 450 is amended as follows:
and Exchange Commission.
On September 23, 2004, we issued a While the Treasury does not PART 450—CUSTODIAL HOLDINGS
proposed amendment to the GSA anticipate that subsequent modifications OF GOVERNMENT SECURITIES BY
regulations to make savings associations of the applicable OTS rules and
regulated by the OTS eligible for the DEPOSITORY INSTITUTIONS
standards will make this exemption
exemption in § 450.3.12 We received one inappropriate, we expect (as provided in I 1. The authority citation for part 450
comment letter on the proposed rule § 450.3(b)) that the OTS would inform continues to read as follows:
amendment, from America’s us of any material revisions to such
Community Bankers (‘‘ACB’’), which rules and standards. Authority: Sec. 201, Pub. L. 99–571, 100
strongly supported the proposal.13 ACB Stat. 3222–23 (31 U.S.C. 3121, 9110); Sec.
stated that ‘‘extending the exemption to IV. Special Analysis 101, Pub. L. 99–571, 100 Stat. 3208 (15 U.S.C.
savings associations supervised by the This final rule makes a technical 78o-5(b)(1)(A), (b)(4), (b)(5)(B)).
OTS would ensure that savings amendment to the GSA regulations that I 2. Section 450.3 is amended by
associations are not subject to expands the exemption from the part revising paragraph (a) to read as follows:
duplicative requirements and would 450 requirements, thus making OTS-
meet the objectives of the GSA regulated savings associations eligible § 450.3 Exemption for holdings subject to
regulations.’’ for the exemption. This amendment fiduciary standards.
III. Analysis does not meet the criteria for a (a) The Secretary has determined that
‘‘significant regulatory action’’ for the
After considering the comment letter, the rules and standards of the
purposes of Executive Order 12866.
and based on the information provided In addition, pursuant to the Comptroller of the Currency, the Board
by the OTS and our analysis, we are Regulatory Flexibility Act,15 we certify of Governors of the Federal Reserve
amending the GSA regulations to add that the regulation, if adopted, will not System, the Federal Deposit Insurance
savings associations regulated by the have a significant economic impact on Corporation, and the Office of Thrift
OTS to the exemption in § 450.3 under a substantial number of small entities. Supervision governing the holding of
the same conditions that currently apply The rule is deregulatory in that it government securities in a fiduciary
to depository institutions regulated by provides a basis for exempting OTS- capacity by depository institutions
the OCC, the FDIC and the Board. We regulated savings associations from the subject thereto are adequate.
are not changing any other provisions of requirements of part 450. Accordingly, a Accordingly, such depository
the current rule. regulatory flexibility analysis is not institutions are exempt from this part
The OTS is responsible for ensuring required. with respect to their holdings of
that fiduciary powers are exercised by The Office of Management and Budget government securities in a fiduciary
savings associations in a manner previously approved the collections of capacity and their holdings of
consistent with the best interests of information contained in this final rule government securities in a custodial
fiduciary beneficiaries and other parties in accordance with the Paperwork capacity provided that:
at interest through conformity with Reduction Act under Control Number
applicable Federal and State law and (1) Such institution has adopted
1535–0089.16 Under the Act, an agency
sound fiduciary principles. The OTS policies and procedures that would
may not conduct or sponsor, and a
also is responsible for ensuring that in person is not required to respond to, a apply to such custodial holdings all the
the safekeeping of fiduciary assets, such collection of information unless it requirements imposed by its appropriate
assets are kept separate from the savings displays a valid OMB control number. regulatory agency that are applicable to
association’s assets.14 Accordingly, The collections of information related government securities held in a
to this final rule are contained in part fiduciary capacity, and
12 See supra note 2.
13 The proposed rule and the comment letter,
450 of the GSA regulations. This rule (2) Such custodial holdings are
dated October 25, 2004, are available for expands the exemption at § 450.3 to subject to examination by the
downloading from http://www.publicdebt.treas.gov include savings associations regulated appropriate regulatory agency for
and for inspection and copying at the Treasury by the OTS that meet the conditions of
Department Library at the address provided earlier
compliance with such fiduciary
in this final rule.
the exemption. The OTS estimates that requirements.
14 See 12 U.S.C. 1464(n)(2), also 12 CFR part 550.
program. Additionally, the OTS has confirmation
* * * * *
Savings associations regulated by the OTS are also
subject to examination procedures that require a requirements that are consistent with those of the Dated: May 18, 2005.
review of the institution’s systems and procedures other bank regulators. All savings associations must
comply with 12 CFR part 551, subpart A, which Timothy S. Bitsberger,
to ensure that assets are adequately protected;
review of applicable laws, regulations and fiduciary established recordkeeping and confirmation Assistant Secretary for Financial Markets.
principles governing the safekeeping of assets; requirements for securities transactions. 67 FR
76293 (December 12, 2002).
[FR Doc. 05–10217 Filed 5–20–05; 8:45 am]
review of the institution’s accounting system to
insure that records are accurate and reliable; and 15 5 U.S.C. 601, et. seq. BILLING CODE 4810–39–P
review of the adequacy of the institution’s audit 16 44 U.S.C. 3507(d).
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