Transmittal Letter No. 596                   Volume I
To:  Heads of Government Departments, Agencies and Others Concerned
1.  Purpose
     This transmittal letter releases I TFM 6-9000: Securing Government Deposits in Federal Agency
Accounts. This chapter describes Federal agency requirements to secure public money on deposit at
financial institutions. It does not include requirements for money deposited in Treasury General Accounts
(V TFM 1-2000), Treasury Tax and Loan Accounts (IV TFM 1-2300), Treasury Lockbox (I TFM 5-
4600) and Plastic Card Accounts (I TFM 5-4700). This chapter also includes the requirements for
collateralizing all Treasury time balances placed for these accounts.
 2.  Page Changes
Remove Insert
I TFM 6-9000       I TFM 6-9000
3.  Effective Date
     October 23, 2000.
4.  Inquiries
     Direct questions concerning this transmittal letter to:
Cash Management Policy and Planning Division
Financial Management Service
Department of the Treasury
401 14th Street, SW.
Liberty Center, Room 420
Washington, DC  20227
Telephone:  202-874-6590
Internet website:  www.fms.treas.gov/collateral
Date: September 23, 2000      Richard L. Gregg
                   Commissioner       
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Section 9010—Introduction
Agencies must ensure the security of
public money. Public money includes,
but is not limited to, revenue and funds
of the United States and any funds the
deposit of which is subject to the control
or regulation of the United States or any
of its officers, agents or employees.
Financial institutions must pledge
collateral as requested by agencies.
Federal Reserve Banks (FRBs) or
authorized third-party custodians must
secure and monitor pledged collateral.
Section 9015—Authority
The Department of the Treasury
(Treasury) issues these procedures
under 31 Code of Federal Regulations
(CFR) Part 202 (Depositaries and
Financial Agents of the Federal
Government) and Part 380 (Collateral
Acceptability and Valuation). Those
regulations govern:
• The designation of financial
institutions as depositaries and
financial agents of the Federal
Government.
• The deposit of public money.
• The acceptability and valuation
of collateral pledged to secure
public money.
Title 31 CFR 202 incorporates former
Treasury Department Circular No. 176,
issued October 15, 1979.
Section 9020—Definition of
Terms
Definitive Safekeeping System—FRBs
employ this client-server application to
store and maintain information about
definitive securities and other collateral
not considered in book-entry form.
Demand Deposits—Funds held by a
financial institution that the owner can
withdraw at any time without prior notice
are called demand deposits. Checking
accounts are the most common form of a
demand deposit.
Designated Depositary—Treasury
designates financial institutions as
depositaries and financial agents of the
Federal Government. Agencies then use
these depositaries to hold public funds.
FRB of the District—The FRB of the
district serves specific geographical
areas. As used here, the “FRB of the
district” refers to the FRB or branch that
serves the designated depositary for an
agency. Depositaries located in Puerto
Rico and the Virgin Islands are served by
the New York FRB district. Depositaries
located in Guam and Saipan are served
by the San Francisco FRB district.
Financial Institution—A financial
institution is defined as any bank,
savings bank, savings and loan
association, credit union, or similar
institution. Financial institutions may be
designated as depositaries and financial
agents of the Federal Government if:
• They are insured by the Federal
Deposit Insurance Corporation
(FDIC).
• They are insured by the National
Credit Union Administration
(NCUA).
• They operate under the law of
any State as banks, savings
banks, savings and loans,
building and loans, homestead
associations or credit unions and
are insured by the State, an
agency thereof, or a deposit
insurance corporation chartered
by the State.
• They possess, under their
charter, general or specific
authority to perform the services
outlined in 31 CFR 202.3(b).
• They possess the authority to
pledge collateral to secure public
funds.
Government Deposits—Government
deposits consist of public money
including, but not limited to, revenue and
funds of the United States and any
funds the deposit of which is subject to
Part 6—Chapter 9000
SECURING GOVERNMENT DEPOSITS IN FEDERAL
AGENCY ACCOUNTS
This chapter describes Federal agency requirements to secure public
money on deposit at financial institutions. It does not include
requirements for money deposited in Treasury General Accounts (V TFM
1-2000), Treasury Tax and Loan Accounts (IV TFM 1-2300), Treasury
Lockbox (I TFM 5-4600) and Plastic Card Accounts (I TFM 5-4700). This
chapter also includes the requirements for collateralizing all Treasury
time balances placed for these accounts.
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September 2000                                                                                                                        T/L 5962
the control or regulation of the United
States or any of its officers, agents or
employees.
Official Custodian—This refers to a
Government official with plenary
authority, including control of funds
owned by the public unit the custodian
is appointed or elected to serve. Control
of public funds includes possession and
the authority to establish accounts for
such funds in insured depositaries and
to make deposits, withdrawals, and
disbursements of such funds.
National Book Entry System (NBES)—
This centralized FRB system facilitates
the transfer of book-entry securities.
This system also stores and maintains
relevant information about those
securities.
National Customer Service Area
(NCSA)—The St. Louis FRB houses
NCSA, which monitors collateral pledged
to secure public monies.
Pledgee Collateral Holdings Report
(Holdings Report)—The FRB uses this
monthly report to document collateral
pledged for agencies as security for
public funds in depositaries.
Recognized Insurance Coverage—The
FDIC, the National Credit Union Share
Insurance Fund and other qualified
organizations recognized by Treasury
under 31 CFR 202 provide recognized
insurance coverage.
Security Account Collateral Monitoring
Recap Report (Recap Report)—The
NCSA provides the monthly Recap
Report to agencies summarizing balance
and collateral values throughout the
month.
Time and Savings Deposits—These
deposits are subject to an interest
penalty if withdrawn before a specific
maturity date. Financial institutions may
require advance notice of intent to
withdraw savings deposits.
Treasury Investment Program (TIP)—
The FRB uses this centralized computer
system to receive information on tax
collections, invest funds and monitor
collateral pledged to secure public
money on behalf of Treasury.
Section 9025—Responsibilities
for Public Money
Treasury’s Financial Management
Service (FMS) promulgates rules and
provides guidance for the security of
deposited public money. Title 31 CFR
202 and its associated collateral releases
offer broad policy guidance. In the TFM,
FMS publishes policy guidance and
detailed procedures for agencies and
FRBs. Each agency must maintain all
collateral releases and related materials.
They should use this material to assure
the security of deposited public money.
Treasury’s Bureau of the Public Debt
(BPD) determines the types of collateral
depositaries can use to secure deposits
of public money. That agency also
determines collateral value.
Each agency must:
• Ensure that funds under its
control are handled in accordance
with 31 CFR 202.
• Ensure it has statutory authority
to hold public money outside
Treasury’s cash account (I TFM
6-8000) before placing it in a
designated depositary account.
• Follow the depositary guidelines
(I TFM 6-8030.20) for
determining when deposits must
be made.
• Ensure that the financial
institution holding public money
has been designated a
“Depositary and Financial Agent
of the Government,” pursuant to
31 CFR 202.2 (Designations).
• Establish a collateral account
with the NCSA through FMS by
providing FMS with a list of
collateral contacts using the
Federal Agency Collateral
Contact Information form. See
Appendix 1.
• Provide FMS with a timely annual
update of contact information.
• Notify FMS immediately when
there are changes to authorized
individuals or the certifying
official (see Section 9045.30).
Agencies should submit this form
electronically whenever possible.
See the website at
www.fms.treas.gov/collateral.
• Provide timely address changes
to FMS.
• Notify FMS in writing when
canceling a “V” account. The
agency must state that it no
longer has collateral holdings and
no longer needs the “V” account.
• Develop and maintain internal
operating procedures to ensure
the security of public money.
FMS may request a copy of
agency procedures.
• Provide NCSA with current
information on collateralized
amounts. This allows NCSA to
maintain sufficient collateral in
excess of the recognized deposit
insurance limit (generally
$100,000). See 12 CFR 330
(Deposit Insurance Coverage).
• Maintain and monitor agency
collateral records by reviewing
monthly FRB Recap and
Holdings Reports.
All FRBs must:
• Secure pledged collateral to
protect public funds.
• Open collateral accounts in
NBES.
• Value collateral.
The NCSA at the St. Louis FRB must:
• Ensure that pledged collateral is
eligible and sufficient to secure
deposits of public money.
• Maintain and distribute form
FMS 5902: Resolution
Authorizing Execution of
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Depositary, Financial Agency,
and Collateral Agreement, and
form FMS 5903: Depositary,
Financial Agency, and Collateral
Agreement.
• Maintain a current list of
collateral contacts.
• Provide each agency with a
monthly Recap Report.
• Provide each depositary with a
Pledgor Collateral Recap Report.
• Notify depositaries when they are
ineligible to increase participation
in this program.
The Richmond FRB must:
• Provide each agency with a
monthly Holdings Report.
Financial institutions must:
• Complete FMS 5902 and 5903
(available from NCSA) and
submit them to NCSA.
• Pledge sufficient eligible
collateral security as required by
the Secretary of the Treasury.
• Provide agencies and FRBs with
requested information.
• Advise agencies when the
depositary is not able or willing
to increase participation in the
program.
FMS must:
• Assign collateral account
numbers (referred to as “V”
accounts) and provide agency
information to the FRB so it may
establish accounts.
• Send annual release notices to
agencies reminding them to
update their Federal Agency
Collateral Contact Information
form.
• Establish collateral policy (except
acceptability and valuation).
• Provide FRBs with authorization
and contact information.
• Provide FRBs with timely address
changes.
• Maintain “V” account numbers.
BPD must:
• Establish and maintain lists of
acceptable collateral and
valuations. BPD periodically
distributes criteria for acceptable
collateral and its valuation. See
the website at
www.publicdebt.treas.gov or the
FRB’s Financial Services website
at www.frbservices.org.
Section 9030—Selection of a
Depositary
An agency with statutory authority
to hold public money outside of
Treasury’s cash account must deposit
funds in a financial institution meeting
the requirements of 31 CFR 202.
Agencies are encouraged, but not
required, to use minority financial
institutions as depositaries whenever
these institutions can provide required
banking services without an appreciable
increase in cost or risk to the
Government. Treasury’s Minority Bank
Deposit Program (MBDP) is a voluntary
program to encourage agencies, State
and local governments, and the private
sector to use participants as depositaries
and financial agents. FMS annually
certifies qualified minority institutions
and maintains a roster of MBDP
participants. See the website at
www.fms.treas.gov/mbdp.
Section 9035—Establishing a
Federal Agency Account
Every agency must use the FMS
assigned 4-digit alphanumeric agency
account number (such as V000) to
pledge collateral. Each agency must use
its account number to establish an
account at an authorized depositary. It
also must use this number every time it
requests an increase or decrease in
collateral. FMS assigns agency account
numbers.
Section 9040—Securing Agency
Accounts
All public money deposited in a
depositary must be fully secured at all
times. The current Federal deposit
insurance limit per insured account is
$100,000. Public money is considered
sufficiently secured if:
• The total amount of agency
deposits in a single depositary is
less than the recognized deposit
insurance limit.
OR
• The depositary pledges eligible
collateral before an agency
deposit exceeding the recognized
deposit insurance limit.
The total value of Treasury time
balances, placed by FMS for depositary
services, must be 100 percent
collateralized at all times.
9040.10—FDIC Regulations
Under FDIC regulations:
• Agency deposit accounts
maintained at different branches
or offices of the same insured
depositary are not separately
insured.
• Each official custodian of public
money, however, is insured up to
$100,000 for the aggregate of all
time and savings deposits and up
to $100,000 for the aggregate of
all demand deposits. See 12 CFR
330.15(a).
9040.20—Securing Deposits with
Collateral
When an agency deposits public
money exceeding the recognized deposit
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insurance limit (generally $100,000), the
agency must request that the depositary
pledge eligible collateral to secure the
uninsured amount. The depositary must
pledge collateral with an FRB or an
authorized third-party custodian
approved by the FRB. If a third-party
custodian is used, the depositary must
notify the FRB by a trust receipt.
The NCSA must ensure the
depositary pledges collateral according
to the list of “Acceptable Collateral for
Pledging to Federal Agencies” under 31
CFR 202 and 380. See the website at
www.publicdebt.treas.gov.
This collateral requirement applies to
total agency deposits at a depositary
that exceed the applicable insurance
limit, regardless of how many accounts
and whether or not the deposits are
disbursed among several branches.
Section 9045—Pledging
Collateral
9045.10—Initial Deposits
When an agency deposits public
money in a designated depositary
account, the agency must contact the
depositary. If the balance exceeds the
deposit insurance limit, the agency must
request that the depositary pledge
collateral to the FRB using the agency’s
designated “V” account number (such as
V000). This designated account number
must be used on all collateral
transactions.
FDIC regulations provide that each
“official custodian” of public money in a
depositary is separately insured for
$100,000 in the aggregate for “time and
savings deposits” and $100,000 in the
aggregate for all “demand deposits.” The
FDIC regulations do not limit the number
of official custodians an agency may
have. Therefore, if an agency has three
official custodians, each with a “time and
savings deposit” account and “demand
deposit” account, each account is
insured for $100,000.
When an agency anticipates its
deposits will exceed the insurance limit,
an authorized collateral contact
individual must inform the NCSA of the
amount to be collateralized and the name
of the pledging financial institution.
9045.20—Requesting Additional
Collateral
The NCSA ensures that sufficient
collateral has been pledged to cover an
agency’s deposits at the designated
depositary. When the NCSA requires
additional collateral to secure these
accounts, the NCSA will request the
depositary pledge additional collateral.
The agency must review the Recap
Report from the Richmond FRB and the
Holdings Report from the NCSA to
ensure that the amount to be
collateralized is adequate. The agency
must notify NCSA of changes to the
amount to be collateralized. NCSA will
contact the depositary to request
additional collateral.
9045.30—Information Required
by FMS
Agencies must provide FMS an
electronic or the original Federal Agency
Collateral Contact Information form (see
Appendix 1). This form replaces the
Federal Agency Authorization to
Release Collateral form, the information
sheet and the signature form. Each
agency must update this new form
annually as of January 1, or whenever it
changes contact information or
certifying officials. The agency should
send each form to FMS, which will
forward a final list to NCSA.
Section 9050—Releasing
Collateral
9050.10—NCSA’s Responsibilities
The NCSA approves the release of
collateral. If a depositary requests the
release of collateral causing a deficiency,
the NCSA will contact an authorized
name on the Federal Agency Collateral
Contact Information form to determine
the exact amount to be collateralized. If
the collateral release does not cause a
deficiency, the NCSA may release it.
Neither NCSA nor agencies can
release collateral held by an insolvent
depositary. Only FMS has that authority
(see Section 9060.20).
9050.20—Agency Responsibilities
NCSA will contact agencies when it
determines a collateral deficiency would
result from a collateral release. Agencies
must confirm the amount to be
collateralized. If an agency wishes to
close an account, it must notify NCSA
either by telephone or in writing that the
account balance is zero and collateral is
no longer needed. The agency also must
notify FMS in writing that the agency no
longer needs the “V” account.
Only after an agency account is
debited, which eliminates the need for
collateral, will NCSA release collateral.
When NCSA releases pledged
collateral, an agency must:
• Make the appropriate accounting
debits to the agency internal
records.
• Verify that all information
regarding the release is correct
upon receipt of the Recap Report.
• Retain this report as part of its
collateral records.
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Section 9055—Monitoring
Collateral Levels
NCSA ensures that agency deposits
always are protected. Agencies must
maintain adequate records to ensure that
the amount to be collateralized on
agency reports accurately reflects the
amount on deposit. Agencies must
document that deposits are protected at
all times and ensure NCSA has accurate
account balance information.
9055.10—Verifying Collateral
Amounts
Agencies must verify that the Recap
and Holdings Reports accurately reflect
amounts to be collateralized. Agencies
must maintain individual collateral
balances independently of the Holdings
Report balance.
9055.20—Monthly Reconciliation
Statements
The Richmond FRB provides a
monthly Holdings Report to each
agency. The NCSA provides a monthly
Recap Report to each agency. Each
agency must review the statements to
ensure that the amount to be
collateralized accurately reflects the
account balance on deposit at the
designated depositary. The agency will
notify the NCSA immediately if there is a
discrepancy on either report.
Section 9060—Mergers and
Insolvencies
9060.10—Mergers
It is important that agency and
NCSA collateral records correctly reflect
the outcome of depositary mergers. This
ensures that collateral deficiencies do
not develop. When an agency maintains
accounts with two depositaries, each
account is separately insured by
recognized deposit insurance (generally
$100,000). If two depositaries serving the
same agency merge, the surviving
depositary may need to pledge
additional collateral to replace the
insurance coverage lost because of the
merger.
9060.20—Insolvencies
If an agency maintains public funds
in an account at a depositary that
becomes insolvent, the agency must
immediately contact FMS (see the
Contacts page). FMS will guide agencies
in the disposition of the collateral on
deposit with the depositary. The
proceeds of collateral on deposit with a
depositary will be applied to satisfy any
claim of the United States against the
depositary.
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CONTACTS
Direct inquiries concerning this chapter (except for acceptability and
valuation issues as noted below) to:
Cash Management Policy and Planning Division
Financial Management Service
Department of the Treasury
401 14th Street, SW.
Liberty Center, Room 420
Washington, DC  20227
Telephone:  202-874-6590
Direct inquiries concerning acceptable collateral and collateral valuation to:
Government Securities Regulations Staff
Bureau of the Public Debt
Department of the Treasury
999 E Street, NW., Room 315
Washington, DC  20235
Telephone:  202-691-3632
For information describing acceptable collateral and its valuation, see BPD’s website at  www.publicdebt.treas.gov
and the Federal Reserve’s Financial Services website at www.frbservices.org.
For information on collateral policy, see FMS’ website at www.fms.treas.gov/collateral.
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Federal Agency Collateral Contact Information
Instructions:  Provide the names and titles of collateral contacts for your agency.  Have this form signed and
certified by an authorized agency official.  Mail this original to the Financial Management Service.  This form
must be updated annually or whenever there is a change in collateral contacts.  The individuals listed below are
collateral contacts to secure Federal Government deposits held in safekeeping by Federal Reserve Banks under
the terms of Title 31 CFR Part 202.
Agency account number V _________________
Name of Agency (Type or Print)
Address
City State ZIP Code
Name and title of authorized collateral contact (Type or Print)                    (Area code) Telephone number
Name and title of authorized collateral contact (Type or Print)                    (Area code) Telephone number
Name and title of authorized collateral contact (Type or Print)                    (Area code) Telephone number
Name and title of authorized collateral contact (Type or Print)                    (Area code) Telephone number
I hereby certify that the above named official(s) are collateral contacts:
Signature Date
Type or Print Name Title
Telephone Facsimile Email
Send original to:
Financial Management Service
Financial Services Division
401 14th Street, SW., Room 318A
Washington, DC  20227  
            Rev. 10/23/00