the Federal Reserve Bank of its district, to maintain for that Federal Reserve Bank, as Fiscal Agent of the United States, a separate account, for deposits to be made under this part, to be known as the Treasury Tax and Loan Account.

(b) Qualification. To obtain approval for a Treasury Tax and Loan Account a special depositary must (1) file with the Federal Reserve Bank of its district an application accompanied by a resolution of its board of directors authorizing the application (both on forms prescribed by and available from the Federal Reserve Bank), and (2) pledge collateral security as provided for in § 203.8.

(c) Maximum balance. The balance in a Treasury Tax and Loan Account with a special depositary may not exceed an amount determined by the Federal Reserve Bank of its district.

(d) Particular locations. For the purposes of this part, special depositaries 10cated in Puerto Rico, the Virgin Islands, and the Panama Canal Zone will be considered as being located in the New York Federal Reserve district.

§ 203.4 Contract of deposit.

A special depositary which accepts a deposit under this part enters into a contract of deposit with the Treasury Department. The terms of the contract include all the provisions of this part and the provisions prescribed in section 202 of Executive Order 11246, entitled "Equal Employment Opportunity." § 203.5

Previously qualified special depositaries.

A special depositary previously qualified will, by the acceptance or retention of deposits, be presumed to have assented to all the terms and provisions of this part and to the retention of collateral security theretofore pledged.

§ 203.6 Discontinuance of special depositaries.

The authority to maintain a Treasury Tax and Loan Account of a special depositary which has received an allotment on a subscription for obligations of the United States and refuses to accept the allotment and to make payment, or otherwise fails to comply with the provisions of this part, will be discontinued. § 203.7 Deposits.

(a) Sources. A special depositary may credit in its Treasury Tax and Loan Account funds representing:

(1) Payments for U.S. Savings Bonds and U.S. Savings Notes issued by the special depositary;

(2) Payments for U.S. Savings Bonds and U.S. Savings Notes which are applied for through the special depositary on behalf of its customers but which may be issued only by Federal Reserve Banks and the Treasurer of the United States;

(3) Payments made by or through the special depositary for allotments on subscriptions for other obligations of the United States issued under authority of the Second Liberty Bond Act, as amended, when this method of payment is permitted under the terms of the offering circulars;

(4) Payments of such internal revenue taxes as the Secretary of the Treasury may from time to time authorize to be paid through Treasury Tax and Loan Accounts.

(b) Procedures. In order to make payment by credit to its Treasury Tax and Loan Account, a special depositary must:

(1) In the case of payments described in paragraph (a) (1), (2), and (3) of this section, comply with terms and conditions prescribed by the Federal Reserve Bank of its district;

(2) In the case of payments described in paragraph (a) (4) of this section, comply with such requirements as the Secretary of the Treasury may prescribe. § 203.8 Collateral security.

(a) Requirement. Prior to crediting deposits to its Treasury Tax and Loan Account, a special depositary must pledge collateral security in an amount, taken at the values provided in paragraph (b) of this section, at least equal to the portion of the balance in the account that will be in excess of the insurance coverage provided by the Federal Deposit Insurance Corporation.

(b) Acceptable securities. Unless otherwise specified by the Secretary of the Treasury, collateral security pledged under this section may be transferable securities of any of the following classes:

(1) Obligations issued or fully insured or guaranteed by the United States or any U.S. Government agency, and obligations of Government-sponsored corporations which under specific statute may be accepted as security for public funds: At face value.

(2) Obligations issued or fully guaranteed by the International Bank for Reconstruction and Development, the Inter

American Development Bank or the Asian Development Bank: At face value.

(3) Obligations partially insured or guaranteed by any U.S. Government agency: At a value equal to the amount of the insurance or guaranty.

(4) Notes representing loans to students in colleges or vocational schools which are insured either by Federal insurance or by a State agency or private nonprofit institution or organization administering a student loan insurance program in accordance with a formal agreement with the Commissioner of Education under the provisions of the Higher Education Act of 1965 or the National Vocational Student Loan Insurance Act of 1965: At face value.

(5) Obligations issued by States of the United States: At 90 percent of face value.

(6) Obligations of Puerto Rico: At 90 percent of face value.

(7) Obligations of counties, cities, and other governmental authorities and instrumentalities which are not in default as to payments on principal or interest: At 80 percent of face value.

(8) Obligations of domestic corporations which may be purchased by banks as investment securities under the requirements of Federal bank regulatory agencies: At 80 percent of face value.

(9) Commercial and agricultural paper and bankers' acceptances approved by the Federal Reserve Bank of the district and having a maturity at the time of pledge of not to exceed one year at 90 percent of face value.

(c) Deposit of securities. Collateral security under this part must be deposited with the Federal Reserve Bank or Branch of the district in which the special depositary is located, 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.

(d) Assignment of securities. A special depositary 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 assign the securities. The resolution and power of attorney shall conform to such

Federal grant and other programs involving advances to various organizations outside the Federal Government constitute a significant portion of the Federal Budget. Advances of cash from the Treasury to such organizations (hereinafter called "recipient organizations") for the purpose of financing their current operations under the Federal programs have a substantial impact on Treasury financing cost and the level of the public debt. The purpose of this part is to prescribe the timing of such advances and the procedures to be observed to assure that cash withdrawals from the Treasury occur only as and when essential to meet the needs of a recipient organization for its actual disbursements.

§ 205.2 Scope of regulations.

The regulations in this part cover disbursement practices for all cash advances to recipient organizations (including States and local governments, educational institutions, international organizations, and any other public and private organizations) under Federal grant or other programs. The regulations also establish guidelines to be observed by Federal program agencies with respect to their responsibilities in executing grant and other programs, including their review of recipient organization practices in obtaining cash advances by drawing down letters of credit and otherwise. Coverage applies to any Federal program requiring advances to finance the recipient organization's activities in carrying out the program, whether by contract, grant, contribution, or other form of agreement. These regulations are not intended to apply to Government disbursements made to reimburse an organization for work already performed (and financed with the organization's own working capital); however, specific applications of features of these regulations to reimbursement payments will be considered by the Department of the Treasury if requested by a program agency.

Advances to a recipient organization shall be limited to the minimum amounts needed and shall be timed to be in accord with only the actual cash requirements of the recipient organization in carrying out the purpose of the approved program or project. For relatively small operations (where the aggregate annual amount of advances is under $250,000) cash advances to recipient organizations ordinarily shall be made monthly or more frequently to meet current disbursement needs. For larger operations the timing and amount of cash advances to recipient organizations shall be as close to actual daily disbursements as is administratively feasible.

§ 205.4 Methods of making cash ad

vances.

If a program agency has, or expects to have, a continuing relationship with a recipient organization for at least 1 year, involving annual advances aggregating at least $250,000, the agency may use

whichever of the following two methods best meets its own operating objectives provided that in the circumstances involved the two methods are equally advantageous to the Federal Government in terms of the timing of cash withdrawals from the Treasury. The first of these methods, hereinafter called the letter-of-credit method and further described in § 205.5, provides program agencies, recipient organizations and the Department of the Treasury with mechanics specially designed to enable a recipient organization to obtain cash from the Treasury promptly and with such frequency as may be necessary based upon its own determination of when and how much is actually needed for its disbursements. The second method, the conventional method of advancing cash by Treasury check, may be used if it will produce cash management benefits for the Treasury which equal the advantages made possible by the mechanics of the letter-of-credit method. This means it would be practicable to issue Treasury checks to a recipient organization coordinate with the amount of cash financing actually needed by the recipient organization for its current disbursements with a frequency comparable to what a recipient organization can achieve by its own direct and frequent drawdowns on a letter of credit. Agencies may request from the Department of the Treasury specific approval of other methods which purport to be equally advantageous to the Federal Government. § 205.5 Letter of credit.

(a) A letter of credit, which must be executed by an authorized certifying officer of the program agency concerned, gives the recipient organization the authority to draw directly on the Treasury, through its commercial bank (acting as its agent) and either a Federal Reserve Bank (acting as agent of the Treasury) or the Cash Division, Office of the Treasurer of the United States, subject to any monetary and other limits established by the program agency. Withdrawals must be made by authorized officials of the recipient organization designated by it and approved by the program agency's certifying officer.

(b) A letter of credit is irrevocable (the equivalent of cash available to the recipient organization) to the extent the recipient organization has obligated

funds in good faith thereunder in executing the authorized Federal program in accordance with the grant, contract, or other agreement.

(c) Use of letters of credit shall be covered by a clause in the grant, contract, or other agreement for advance financing whereby the recipient organization commits itself (1) to the practice of requesting cash drawdowns only as and when actually needed for its disbursements, and (2) to timely reporting as required by the program agency, with the understanding that failure to adhere to these commitments may cause the unobligated portion of the letter of credit to be revoked. In general, agreements shall provide for a recipient organization to initiate each drawdown at approximately the same time that checks are issued by the organization in payment of program liabilities, and in an amount approximately equal to the Federal share of such payments, except that drawdowns shall not ordinarily be made more frequently than daily, or be in amounts less than $10,000 or more than $1 million, but in no case more than $5 million unless so stated on the letter of credit.

(d) In specific instances, as determined mutually by the Department of the Treasury and the program agency, a recipient organization may be requested to authorize its commercial bank to draw on a letter of credit in its behalf when checks issued by the recipient organization (covering disbursements of Federal funds) are presented to the bank for payment.

208.12

208.13

Supply of blank checks and use of

208.14

208.15 208.16

Exceptions to part.

Disbursing officer ceases to disburse.

symbol numbers.

Official signatures.

Transactions by disbursing officers under act approved December 23, 1944 (58 Stat. 921; 50 U.S.C. App 1705-1707).

208.17 Withdrawal or amendment of part. AUTHORITY: The provisions of this Part 208 issued under 80 Stat. 379; 5 U.S.C. 301.

SOURCE: The provisions of this Part 208 contained in 1946 Revised Department Circular 195, 11 F.R. 5017, May 8, 1946, unless otherwise noted.

NOTE: Transfer Order 11, 13 F.R. 2678, transferred to the Secretary of the Air Force and to the Department of the Air Force cer

All funds advanced to Government disbursing officers for disbursement will be placed to their credit, subject to their official check, with the Treasurer of the United States in Washington (checks of certain accounts may be designated as payable only through a specified Federal Reserve Bank), except in cases where the Secretary of the Treasury specifically authorizes depositary banks located outside the forty-eight States and the District of Columbia to accept and carry official accounts of disbursing officers or such funds as the Secretary of the Treasury specially authorizes disbursing officers to keep at their own personal risk. § 208.6

Checks shall show object for which drawn.

Any disbursing officer drawing checks against a balance to his official credit shall state on the face of each check the object or purpose for which drawn or shall give the voucher number for which the check is issued in payment. Such statement may be made in brief form, but shall clearly indicate the object of the expenditure, as, for instance, "pay," "subsistence," "supplies," "advance of funds," or, as above stated, shall give the number of the voucher (in his disbursing account) for which the particular check was issued in payment. Checks issued by disbursing officers to obtain cash to be held at their personal risk shall show under object for which drawn the legend "exchange for cash."

§ 208.7

Payee of check in certain cases. Checks issued by disbursing officers in exchange for cash may be drawn to the order of the person from whom the cash is received. Checks drawn on the Treasurer of the United States for credit of another disbursing officer should be drawn in the following form: Treasurer of the United States for credit of John Doe, symbol 62,103; checks drawn for credit to an appropriation should be drawn to the order of "Treasurer of the United States." Checks shall not be drawn to the order of "cash" or in any other form which renders them payable to bearer.

§ 208.8 Disbursing officer's advice of credit.

A disbursing officer is not authorized to draw checks until he has received a

signed certificate of deposit issued by the Treasurer of the United States, a Federal Reserve Bank, Federal Reserve Branch Bank, or a General Depositary Bank, or has received appropriate advice from any such depositary, showing that credit has been entered in the Treasurer's account for credit in the disbursing officer's checking account.

§ 208.9 Disposition of checks paid by drawee.

Ordinarily checks will not be returned to the drawer after their payment. Checks paid by the Treasurer of the United States will be forwarded by him to the General Accounting Office. Checks drawn on and paid by depositary banks will be forwarded, when not prohibited by law of the country in which the depositary is located, to the Secretary of the Treasury, Bureau of Accounts, Division of Deposits, for transmittal to the General Accounting Office: Provided, however, That checks drawn against deposits of court funds with depositary banks by United States courts and their officers, shall, at the intervals fixed by the applicable banking regulations or custom in the jurisdiction, be returned with a statement of the account, by the depositary, to the issuing officer.

§ 208.10 Statement of checking account.

The Treasurer of the United States, or other depositary, as the case may be, will furnish each disbursing officer with a monthly statement of his account, supported by a list of credits therein and by a detailed list or lists of checks paid. § 208.11 Deposits of public moneys.

Deposits to the credit of the Treasurer of the United States on account of repayment of disbursing officers' unexpended balances or deposits for credit in disbursing officers' checking accounts shall be made in accordance with the provisions of Part 202 of this subchapter appearing also as Treasury Department Circular No. 176, Revised December 21, 1945. No allowance shall be made hereunder to any disbursing officer for expenses charged for collection of checks, drafts, et cetera.

§ 208.12 Disbursing officer ceases to disburse.

Whenever any disbursing officer of the United States shall cease to act in that capacity he shall at once so inform the Treasurer of the United States. The disbursing officer shall deposit his unex