U.S. Treasury Bills, Notes, Bonds
The Department of the Treasury's regulations (31 CFR 225) details the requirements for accepting and depositing securities in lieu of sureties.
1) Acceptable Securities. Negotiable United States Treasury bills, notes, bonds, and other public debt obligations whose principal and interest is unconditionally guaranteed by the United States Government are acceptable as security for bonds (31 CFR 380). To avoid the frequent substitution of securities, securities that mature within 30 days of deposit are not accepted. Securities that mature or are redeemable within 1 year of the deposit date may be rejected.
2) Amount of Securities Required. The securities at their par value must equal the penal sum of the bond.
3) Power of Attorney. For all bonds secured by deposited securities, the principal must provide the bond-approving officer with an irrevocable Power of Attorney and Agreement that authorizes the Regional Forester to collect, sell, assign, or transfer deposited securities and any interest retained in satisfaction for any damages, demands, or deficiencies arising from the principal's default.
4) Ownership and Registration. The principal who deposits the securities must be the owner of the securities which must be registered in principal’s name. The securities may not be assigned to the bond-approving officer.
5) Direct Deposit of Securities by Principal. Securities must be deposited with a Federal Reserve Bank or other depository designated by the Secretary of the Treasury. Once deposited, securities may be withdrawn only by written order of the fiscal officer.
6) Payment of Accrued Interest on Deposited Securities. In the absence of any default, the principal is entitled to receive the accrued interest on deposited securities. The Federal Reserve Bank or depository having custody of the deposited securities must pay the interest to the registered owner.
In the event of default, the fiscal officer must direct the depository to retain accrued interest. Unless prohibited by law, accrued interest is available to satisfy costs related to the default.
7) Substitutions or Partial Withdrawal of Securities.
a) Substitution. Before substitution may be made, the principal must contact the fiscal officer to get instructions. The principal must return the original receipt and a Request for Substitution of Securities to the fiscal officer.
b) Partial Release. As the principal's liability under the bond is reduced, partial release of deposited securities is allowable. The principal must make written application to the fiscal officer for the release of securities.
8) Return of Securities to Principal Upon Completion of Bond Obligation. Securities that have not matured should be returned to the principal by the depository upon a written order by the fiscal officer in accordance with written instructions from the principal. Securities of the same par value, interest rate and maturity date as those originally deposited are transferred to the principal’s designated depository and account. If the securities have matured, they may be returned as cash. The principal must execute a receipt upon the complete or partial return of securities. Upon the return of all the securities to the principal, the principal must return the original receipt to the fiscal officer.