• To manage the Government's finances by protecting the revenue and collecting the correct amount of revenue under the Internal Revenue Code, overseeing customs revenue functions, financing the Federal Government and managing its fiscal operations, and producing our Nation's coins and currency.

• To safeguard the U.S. and international financial systems from those who would use these systems for illegal purposes or to compromise U.S. national security interests, while keeping them free and open to legitimate users.

Consistent with these missions, most regulations of the Department and its constituent bureaus are promulgated to interpret and implement the laws as enacted by the Congress and signed by the President. It is the policy of the Department to comply with requirements to issue a notice of proposed rulemaking and carefully consider public comments before adopting a final rule. Also, in particular cases, the Department invites interested parties to submit views on rulemaking projects while a proposed rule is being developed.

In response to the events of September 11, 2001, the President signed the USA PATRIOT Act of 2001 into law on October 26, 2001. Since then, the Department has accorded the highest priority to developing and issuing regulations to implement the provisions in this historic legislation that target money laundering and terrorist financing. These efforts, which will continue during the coming year, are reflected in the regulatory priorities of the Financial Crimes Enforcement Network (FinCEN).

To the extent permitted by law, it is the policy of the Department to adhere to the regulatory philosophy and principles set forth in Executive Order 12866, and to develop regulations that maximize aggregate net benefits to society while minimizing the economic and paperwork burdens imposed on persons and businesses subject to those regulations.

Emergency Economic Stabilization Act

On October 3, 2008, the President signed the Emergency Economic Stabilization Act of 2008 (EESA) (Pub. L. 110-334). Section 101(a) of EESA authorizes the Secretary of the Treasury to establish a Troubled Asset Relief Program (TARP) to "purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and policies and procedures developed and published by the Secretary."

EESA provides authority to issue regulations and guidance to implement the program. Regulations and guidance required by EESA include conflicts of interest, executive compensation, and tax guidance. The Secretary is also charged with establishing a program that will guarantee principal of, and interest on, troubled assets originated or issued prior to March 14, 2008.

The Department has issued guidance and regulations and will continue to provide program information through the next year. Regulatory actions taken to date include the following:

During Fiscal Year 2010, the Department will continue implementing the EESA authorities to restore capital flows to the consumers and businesses that form the core of the nation's economy.

Terrorism Risk Insurance Program Office

The Terrorism Risk Insurance Act of 2002 (TRIA) was signed into law on November 26, 2002. The law, which was enacted as a consequence of the events of September 11, 2001, established a temporary Federal reinsurance program under which the Federal Government shares the risk of losses associated with certain types of terrorist acts with commercial property and casualty insurers. The Act, originally scheduled to expire on December 31, 2005, was extended to December 31, 2007 by the Terrorism Risk Insurance Extension Act of 2005 (TRIEA). The Act has since been extended to December 31, 2014, by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA).

The Office of the Assistant Secretary for Financial Institutions is responsible for developing and promulgating regulations implementing TRIA, as extended and amended by TRIEA and TRIPRA. The Terrorism Risk Insurance Program Office, which is part of the Office of the Assistant Secretary for Financial Institutions, is responsible for operational implementation of TRIA. The purposes of this legislation are to address market disruptions, ensure the continued widespread availability and affordability of commercial property and casualty insurance for terrorism risk, and to allow for a transition period for the private markets to stabilize and build capacity while preserving State insurance regulation and consumer protections.

Over the past year, the Office of the Assistant Secretary has issued proposed rules implementing changes authorized by TRIA as revised by TRIPRA. The following regulations should be published by December 31, 2009:

• Recoupment of Federal Share of Compensation for Insured Losses. This final rule would implement and establish requirements for determining amounts to be recouped and for procedures insurers are to use for collecting terrorism policy surcharges and remitting them to the Treasury.

• Cap on Annual Liability and Pro Rata Share of Insured Losses. This final rule would establish, for purposes of the $100 billion cap on annual liability, how Treasury will determine whether aggregate insured losses will exceed $100 billion and, if so, how Treasury will determine the pro rata share of insured losses to be paid by each insurer that incurs insured losses under the Program.

During 2010, Treasury will continue the ongoing work of implementing TRIA and carrying out revised operations as a result of the TRIPRA related regulation changes.

Customs Revenue Functions

On November 25, 2002, the President signed the Homeland Security Act of 2002 (the Act), establishing the Department of Homeland Security (DHS). The Act transferred the United States Customs Service from the Department of the Treasury to the DHS, where it is was known as the Bureau of Customs and Border Protection (CBP). Effective March 31, 2007, DHS changed the name of the Bureau of Customs and Border Protection to U.S. Customs and Border Protection (CBP) pursuant to section 872(a)(2) of the Act (6 USC 452(a)(2)) in a Federal Register notice (72 FR 20131) published on April 23, 2007. Notwithstanding the transfer of the Customs Service to DHS, the Act provides that the Secretary of the Treasury retains sole legal authority over the customs revenue functions. The Act also authorizes the Secretary of the Treasury to delegate any of the retained authority over customs revenue functions to the Secretary of Homeland Security. By Treasury Department Order No. 100-16, the Secretary of the Treasury delegated to the Secretary of Homeland Security authority to prescribe regulations pertaining to the customs revenue functions. This Order further provided that the Secretary of the Treasury retained the sole authority to approve any such regulations concerning import quotas or trade bans, user fees, marking, labeling, copyright and trademark enforcement, and the completion of entry or substance of entry summary including duty assessment and collection, classification, valuation, application of the U.S. Harmonized Schedules, eligibility or requirements for preferential trade programs and the establishment of recordkeeping requirements relating thereto.

During the past fiscal year, among the Treasury-retained CBP customs-revenue function regulations issued was an interim rule to amend the regulatory provisions relating to the requirement under the United States-Bahrain FTA (BFTA) that a good must be "imported directly" from Bahrain to the United States or from the United States to Bahrain to qualify for preferential tariff treatment. The change removed the condition that a good passing through the territory of an intermediate country must remain under the control of the customs authority of the intermediate country. CBP plans to finalize this rulemaking in the upcoming fiscal year.

In addition, during the past fiscal year, CBP amended the regulations on an interim basis to implement certain provisions of the Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008 (Public Law 110-286) (the "JADE Act") and Presidential Proclamation 8294 of September 26, 2008, which includes new Additional U.S. Note 4 to Chapter 71 of the Harmonized Tariff Schedule of the United States ("HTSUS"). The interim amendments prohibit the importation of Burmese-covered articles of jadeite, rubies and articles of jewelry containing jadeite or rubies, and sets forth restrictions for the importation of non-Burmese covered articles of jadeite, rubies and articles of jewelry containing jadeite or rubies.

As a result of last year's "Farm Bill" legislation, CBP implemented interim regulations on the Softwood Lumber Act of 2008, which prescribed special entry requirements as well as an importer declaration program applicable to certain softwood lumber (SWL) and SWL products exported from any country into the United States; CBP plans to finalize the interim rule in the upcoming fiscal year.

During fiscal year 2010, CBP and Treasury plan to give priority to the following regulatory matters involving the customs revenue functions not delegated to DHS:

• Trade Act of 2002's preferential trade benefit provisions. Treasury and CBP plan to finalize several interim regulations that implement the trade benefit provisions of the Trade Act of 2002 including the Caribbean Basin Economic Recovery Act and the African Growth and Opportunity Act.

• Free Trade Agreements. Treasury and CBP also plan to finalize interim regulations this fiscal year to implement the preferential tariff treatment provisions of the United States-Singapore Free Trade Agreement Implementation Act and the Dominican Republic-Central America-United States Free Trade Agreement (also known as "CAFTA-DR") Implementation Act. Treasury and CBP expect to issue interim regulations implementing the United States-Australia Free Trade Agreement Implementation Act, the United States-Oman Free Trade Agreement Implementation Act, and the United States-Peru Free Trade Agreement Implementation Act.

• Country of Origin of Textile and Apparel Products. Treasury and CBP also plan to publish a final rule adopting an interim rule that was published on the Country of Origin of Textile and Apparel Products, which implemented the changes brought about, in part, by the expiration of the Agreement on Textile and Clothing and the resulting elimination of quotas on the entry of textile and apparel products from World Trade Organizations (WTO) members.

• North American Free Trade Agreement country of origin rules. Treasury and CBP are determining how to proceed regarding a proposal which was published in July 2008 seeking public comment regarding uniform rules governing the determination of the country of origin of imported merchandise. The proposal attracted considerable interest from the trading community. If finalized, the proposed amendments would extend the application of the North American Free Trade Agreement country of origin rules to all trade.

• Customs Modernization provisions of the North American Free Trade Implementation Act (Customs Mod Act). Treasury and CBP also plan to continue moving forward with amendments to improve its regulatory procedures began under the authority granted by the Customs Mod Act. These efforts, in accordance with the principles of Executive Order 12866, have involved and will continue to involve significant input from the importing public. CBP will also continue to test new programs to see if they work before proceeding with proposed rulemaking to establish permanently the programs. Consistent with this practice, we expect to finalize a proposal to establish permanently the remote location filing program, which has been a test program under the Customs Mod Act. This rule would allow remote location filing of electronic entries of merchandise from a location other than where the merchandise will arrive. In addition, Treasury and CBP plan to finalize a proposal which was published in August 2008 regarding the electronic payment and refund of quarterly harbor maintenance fees. The rule would provide the trade with expanded electronic payment/refund options for quarterly harbor maintenance fees and would modernize and enhance CBP's port use fee collection efforts.

Community Development Financial Institutions Fund

The Community Development Financial Institutions Fund (Fund) was established by the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.). The primary purpose of the Fund is to promote economic revitalization and community development through the following programs: the Community Development Financial Institutions (CDFI) Program, the Bank Enterprise Award (BEA) Program, the Native American CDFI Assistance (NACA) Program, and the New Markets Tax Credit (NMTC) Program. In addition the Fund administers the Financial Education and Counseling Pilot Program (FEC) and the Capital Magnet Fund (CMF).

In fiscal year (FY) 2010, subject to funding availability, the Fund will provide awards through the following programs:

• New Markets Tax Credit (NMTC) Program. Through the NMTC Program, the CDFI Fund will provide allocations of tax credits to qualified community development entities (CDEs). The CDEs in turn provide tax credits to private sector investors in exchange for their investment dollars; investment proceeds received by the CDEs are be used to make loans and equity investments in low-income communities. The Fund administers the NMTC Program in coordination with the Office of Tax Policy and the Internal Revenue Service.

• Financial Education and Counseling (FEC) Pilot Program. Through the FEC Pilot Program, the CDFI Fund will provide grants to eligible organizations to provide a range of financial education and counseling services to prospective homebuyers. The Fund will administer the FEC Program in coordination with the Office of Financial Education.

• Capital Magnet Fund (CMF). Through the Capital Magnet Fund, the CDFI Fund will provide competitively awarded grants to CDFIs and qualified nonprofit housing organizations to finance affordable housing and related community development projects. In FY 2010, the Fund expects to draft and publish regulations to govern the application process, award selection, and compliance components of the CMF.

Financial Crimes Enforcement Network

As chief administrator of the Bank Secrecy Act (BSA), FinCEN's regulations constitute the core of the Department's anti-money laundering and counter-terrorism financing programmatic efforts. FinCEN's responsibilities and objectives are linked to, and flow from, that role. In fulfilling this role, FinCEN seeks to enhance U.S. national security by making the financial system increasingly resistant to abuse by money launderers, terrorists and their financial supporters, and other perpetrators of crime.

The Secretary of the Treasury, through FinCEN, is authorized by the BSA to issue regulations requiring financial institutions to file reports and keep records that are determined to have a high degree of usefulness in criminal, tax, or regulatory matters, or in the conduct of intelligence or counter-intelligence activities to protect against international terrorism. Those regulations also require designated financial institutions to establish anti-money laundering programs and compliance procedures. To implement and realize its mission, FinCEN has established regulatory objectives and priorities to safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering, and other illicit activity. These objectives and priorities include: (1) issuing, interpreting, and enforcing compliance with regulations implementing the BSA; (2) supporting, working with, and, as appropriate, overseeing compliance examination functions delegated to other Federal regulators; (3) managing the collection, processing, storage, and dissemination of data related to the BSA; (4) maintaining a Government-wide access service to that same data, and for network users with overlapping interests; (5) conducting analysis in support of policymakers, law enforcement, regulatory and intelligence agencies, and the financial sector; and (6) coordinating with and collaborating on anti-terrorism and anti-money laundering initiatives with domestic law enforcement and intelligence agencies, as well as foreign financial intelligence units.

During fiscal year 2009, FinCEN issued, or plans to issue, the following regulatory actions:

• Reorganization of BSA Rules. On October 23, 2008, FinCEN issued a Notice of Proposed Rulemaking to re-designate and reorganize the BSA regulations in a new chapter within the Code of Federal Regulations. The re-designation and reorganization of the regulations in a new chapter is not intended to alter regulatory requirements. The regulations will be organized in a more consistent and intuitive structure that more easily allows financial institutions to identify their specific regulatory requirements under the BSA. The new chapter will replace 31 CFR Part 103.

• Money Services Businesses. On May 12, 2009, FinCEN issued a Notice of Proposed Rulemaking addressing definitional thresholds for Money Services Businesses (MSBs), incorporating previously issued Administrative Rules and guidance with regard to MSBs, and addressing the issue of foreign-located MSBs.

• Confidentiality of Suspicious Activity Reports. On March 3, 2009, FinCEN issued a Notice of Proposed Rulemaking clarifying the non-disclosure provisions with respect to the existing regulations pertaining to the confidentiality of suspicious activity reports (SARs). In conjunction with this notice, FinCEN issued for comment two guidance documents, SAR Sharing with Affiliates for depository institutions and SAR Sharing with Affiliates for securities and futures industry entities, to solicit comment permitting certain financial institutions to share SARs with their U.S. affiliates that are also subject to SAR reporting requirements.

FinCEN's regulatory priorities for fiscal year 2010 include finalizing the proposed initiatives mentioned above, as well as the following projects:

Other Requirements. FinCEN will continue to consider regulatory action in conjunction with the feasibility study prepared pursuant to the Intelligence Reform and Terrorism Prevention Act of 2004 concerning the issue of obtaining information about certain cross-border funds transfers and transmittals of funds. FinCEN also will continue to issue proposed and final rules pursuant to Section 311 of the USA PATRIOT Act, as appropriate. Finally, FinCEN expects to propose various technical and other regulatory amendments in conjunction with its ongoing, comprehensive review of existing regulations to enhance regulatory efficiency.

Internal Revenue Service

The Internal Revenue Service (IRS), working with the Office of the Assistant Secretary (Tax Policy), promulgates regulations that interpret and implement the Internal Revenue Code and related tax statutes. The purpose of these regulations is to carry out the tax policy determined by Congress in a fair, impartial, and reasonable manner, taking into account the intent of Congress, the realities of relevant transactions, the need for the Government to administer the rules and monitor compliance, and the overall integrity of the Federal tax system. The goal is to make the regulations practical and as clear and simple as possible.

Most IRS regulations interpret tax statutes to resolve ambiguities or fill gaps in the tax statutes. This includes interpreting particular words, applying rules to broad classes of circumstances, and resolving apparent and potential conflicts between various statutory provisions.

During fiscal year 2010, the IRS will accord priority to the following regulatory projects:

• Arbitrage Investment Restrictions on Tax-Exempt Bonds. The arbitrage investment restrictions on tax-exempt bonds under section 148 generally limit issuers from investing bond proceeds higher-yielding investments. Treasury and the IRS plan to issue proposed regulations to address selected current issues involving the arbitrage restrictions, including clarification of the issue price definition used in the computation of bond yield, clarification and simplification of the rules regarding modifications and terminations of qualified hedging transactions, guidance on the treatment of working capital financing, and selected other issues.

• Tax Credit Bonds. Tax credit bonds are bonds in which the holder receives a federal tax credit in lieu of some or all of the interest on the bond. The American Recovery and Reinvestment Act of 2009 created a number of new types of tax credit bonds and modified the law as it concerned several existing types of tax credit bonds. The IRS and Treasury intend to provide guidance on numerous legal issues concerning tax credit bonds and to develop clear guidelines for the IRS Tax Exempt Bond enforcement program.

• Build America Bonds. Treasury and the IRS plan to issue proposed regulations to provide guidance on interpretative issues that have arisen in implementing the broad new Build America Bond program in section 54AA under the American Recovery and Reinvestment Act of 2009.

• Private Activity Bonds. Treasury and the IRS to issue final regulations on allocation and accounting rules for application of the private business restrictions on tax-exempt governmental bonds under section 141. These regulations will include guidance on public-private partnerships and mixed use arrangements in which projects are used in part by State and local governments and in part by private businesses. These regulations will finalize 2006 proposed regulations with modifications in consideration of the public comments.

• Guidance on the Tax Treatment of Distressed Debt. Recent events in the financial markets have highlighted a number of unresolved tax issues relating to the amount, character, and timing of income, expense, gain, or loss on distressed debt. In addition, the tax treatment of distressed debt, including distressed debt that has been modified, may affect the qualification of certain entities for tax purposes or result in additional taxes on the investors in such entities, such as regulated investment companies, real estate investment trusts, and real estate mortgage investment conduits. During fiscal year 2009, Congress, Treasury, and the IRS have addressed some of these issues through statutory changes and published guidance. Treasury and the IRS plan to address more of these issues in published guidance.

• Classification of Series LLCs and Cell Companies. Series LLCs were first introduced in Delaware in 1996, and since then, series LLC statutes have been adopted in several other states. These statutes typically permit the entity to segregate assets and liabilities and to associate certain members with specified assets and liabilities. In the insurance and foreign arena, similar entities are sometimes referred to as cell companies. In Notice 2008-19, the IRS requested comments on when a cell of a protected cell company should be treated as a separate insurance company for federal income tax purposes. The IRS also requested comments on similar segregated arrangements, such as series LLCs that do not involve insurance. It is likely that, over time, the use of series LLCs and cell companies will increase. Accordingly, it is important to provide timely guidance to clarify the classification and other tax treatment of this new form of organization. Guidance has been requested on the federal tax classification of these domestic and foreign entities. The IRS and Treasury intend to issue guidance that will address the characterization of domestic and foreign series and cells for federal tax purposes.

• Elective Deferral of Certain Business Discharge of Indebtedness Income. In the recent economic downturn, many business taxpayers realized income as a result of modifying the terms of their outstanding indebtedness or refinancing on terms subjecting them to less risk of default. The American Recovery and Reinvestment Act of 2009 includes a special relief provision allowing for the elective deferral of certain discharge of indebtedness income realized in 2009 and 2010. The provision, section 108(i) of the Code, is complicated and many of the details will have to be supplied through regulatory guidance. This guidance will have to be provided expeditiously so taxpayers will be able to evaluate the benefits of electing deferral. Treasury and the IRS recently issued Revenue Procedure 2009-37 that prescribes the procedure for making the election. The IRS and Treasury intend to issue additional guidance on such issues as the types of indebtedness eligible for the relief, acceleration of deferred amounts, the operation of the provision in the context of flow-through entities, the treatment of the discharge for the purpose of computing earnings and profits, and the operation of a provision of the statute deferring original issue discount deductions with respect to related refinancings.

• Rules under the Pension Protection Act of 2006 and Other Retirement-Related Guidance. Significant new rules regarding the funding of qualified defined benefit pension plans were enacted as part of the Pension Protection Act of 2006 (PPA). The IRS and Treasury prioritized the various pieces of guidance required to comply with those rules. The IRS and Treasury intend to issue additional guidance on the provisions of the PPA related to funding. In addition, the IRS and Treasury will be issuing various items of administrative guidance that facilitate or enhance retirement savings and security.

• Withholding on Government Payments for Property and Services. Section 3402(t) was added to the Internal Revenue Code by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA). Section 3402(t) requires all Federal, State and local Government entities (except for certain small State entities) to deduct and withhold an income tax equal to 3 percent from all payments (with certain enumerated exceptions) the Government entity makes for property or services. Section 3402(t) will be effective with respect to payments made after December 31, 2011. On March 11, 2008, the IRS issued Notice 2008-38 soliciting public comments regarding guidance to be provided to Federal, State and local governments required to withhold under section 3402(t). After considering the many comments, the IRS and Treasury issued a Notice of Proposed Rulemaking, which was published in the Federal Register on December 4, 2008. A hearing on the proposed regulations was held on April 16, 2009, and the IRS has received 168 comments from stakeholders on the proposed regulations. The IRS and Treasury are considering the comments and intend to issue final regulations.

• Information Reporting of Basis by Brokers and Others. Section 403 of the Energy Improvement and Extension Act of 2008 (Pub. L. No. 110-343) enacted on October 3, 2008, amended section 6045 to require brokers to report both the basis and gross proceeds of securities sold by customers. Form 1099-B is used for this purpose. Basis reporting generally will be required for stock acquired after December 31, 2010. Basis reporting will be required for debt securities, such as bonds, acquired after December 31, 2012. The legislation also imposed basis reporting requirements on others in certain circumstances. The IRS and Treasury intend to issue proposed and final regulations under to address these new reporting requirements.

• Information Reporting Concerning Payment Card Transactions. Section 6050W was added to the Internal Revenue Code by the Housing Assistance Tax Act of 2008, enacted on July 30, 2008. Section 6050W requires information returns to be made for each calendar year beginning after December 31, 2010, by merchant-acquiring entities and third-party settlement organizations with respect to payment card transactions and third-party payment network transactions occurring in that calendar year. Certain payment card transactions subject to information reporting under section 6050W are subject to backup withholding if the payee has not provided a valid taxpayer identification number (TIN). Announcement 2009-6, 2009-9 IRB 643 (Feb. 6, 2009), advised section 6050W filers that they may participate in the TIN matching program under the procedures established in Rev. Proc. 2003-9, 2003-1 C.B. 516, which permits program participants to verify the payee TINs required to be reported on information returns and payee statements. Notice 2009-19, 2009-10 IRB 660 (Feb. 20, 2009), requested public comments regarding guidance to be provided to payment settlement entities and other affected persons concerning the new requirements under section 6050W. The IRS and Treasury intend to issue proposed and final regulations under sections 6050W to address these requirements.

• Withholding Tax and the Role of Financial Intermediaries. In 1997 the IRS and Treasury issued regulations under the section 1441 provisions for withholding tax on certain items of portfolio investment income from U.S. sources. The qualified intermediary (QI) system was a key element. In October 2008 the IRS issued Announcement 2008-98 concerning proposed amendments to the qualified intermediary agreements and rules to address early notice of failures of internal controls, evaluation of risk that foreign accounts may be subject to control by U.S. persons, and association of a U.S. auditor to the oversight of QI performance. The IRS and Treasury intend to issue regulations to address these various areas of compliance involving the withholding taxes on portfolio investment income.

• Foreign Bank Account Reporting (FBAR). In May 2009 the Treasury issued budget proposals for Fiscal Year 2010 which included proposed legislation to address FBAR related issues. In August 2009, the IRS and Treasury issued Notice 2009-62 providing an extension until June 30, 2010 to file FBARs for 2008 and earlier calendar years, pending the preparation of further guidance. The IRS and Treasury intend to issue regulations to address these FBAR issues.

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) was created by Congress to charter national banks, to oversee a nationwide system of banking institutions, and to assure that national banks are safe and sound, competitive and profitable, and capable of serving in the best possible manner the banking needs of their customers.

The OCC seeks to assure a banking system in which national banks soundly manage their risks, maintain the ability to compete effectively with other providers of financial services, meet the needs of their communities for credit and financial services, comply with laws and regulations, and provide fair access to financial services and fair treatment of their customers.

Significant rules issued during fiscal year 2009 include:

The OCC proposed to revise its regulations governing the release of non-public OCC information set forth in 12 CFR part 4, subpart C. The proposal would clarify that the OCC's decision to release a suspicious activity report (SAR) will be governed by the standards set forth in proposed amendments to the OCC's SAR regulation, 12 CFR 21.11(k), that are part of a separate, but simultaneously issued, rulemaking. A notice of proposed rulemaking was published on March 9, 2009 (74 FR 10136).

The OCC's regulatory priorities for fiscal year 2010 include the following:

Office of Thrift Supervision

As the primary Federal regulator of the thrift industry, the Office of Thrift Supervision (OTS) has established regulatory objectives and priorities to supervise thrift institutions effectively and efficiently. These objectives include maintaining and enhancing the safety and soundness of the thrift industry; a flexible, responsive regulatory structure that enables savings associations to provide credit and other financial services to their communities, particularly housing mortgage credit; and a risk-focused, timely approach to supervision.

OTS, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the banking agencies) continue to work together on regulations where they share the responsibility to implement statutory requirements. For example, the banking agencies are working jointly on several rules to update capital standards to maintain and improve consistency in agency rules. These rules implement revisions to the International Convergence of Capital Management and Capital Standards: A Revised Framework (Basel II Framework) and include:

• Risk-Based Capital Guidelines: Implementation of Revised Basel Capital Accord. The final Basel II Advanced Approaches rule was published by the banking agencies on December 7, 2007 and became effective April 1, 2008. The OTS, in conjunction with the other banking agencies, is working on implementing the Advanced Approaches rule first for core banking organizations. This is an institution-specific and multi-year process of evaluating each organization's readiness and qualification to move forward into transitional capital floors.

• Risk-Based Capital Standards: Market Risk. On September 25, 2006, the Agencies issued an NPRM on Market Risk. In this rule, OTS proposed to require savings associations to measure and hold capital to cover their exposure to market risk. The Agencies did not finalize the 2006 NPRM. Subsequently, the Basel Committee directed international revisions which were completed in July 2009. At that time the Agencies began drafting a new NPR, based upon the international revisions as well as on the comments received in 2006. The new NPRM should be issued in 2010.

• Risk-Based Capital Standards: Standardized Approach. The banking agencies issued an NPRM implementing the Standardized Approach to credit risk and approaches to operational risk that are contained in the Basel II Framework. 73 FR 43982 (July 29, 2008). Banking organizations would be able to elect to adopt these proposed revisions or remain subject to the agencies' existing risk-based capital rules, unless the banking organization uses the Advanced Capital Adequacy Framework described above. The comment period closed October 27, 2008 and the proposal is still pending final action by the banking agencies.

• Risk-Based Capital Guidelines: Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs. The banking agencies are proposing to modify its general risk-based capital standards and advanced risk-based capital adequacy framework to eliminate the exclusion of certain consolidated asset-backed commercial paper programs from risk-weighted assets; and permit the banking agencies to require banking organizations to treat structures that are not consolidated under accounting standards as if they were consolidated for risk-based capital purposes commensurate with the risk relationship of the banking organization to the structure. The agencies issued an NPRM on September 15, 2009 (74 FR 47138).

Significant proposed rules issued during fiscal year 2009 include:

Significant final rules issued during fiscal year 2009 include:

• OTS, FRB and NCUA issued a final rule on January 29, 2009 (74 FR 5498) to prohibit certain unfair or deceptive acts or practices in the areas of credit cards and overdrafts and proposed clarifications to that final rule on May 5, 2009 (84 FR 20804). The comment period closed on July 30, 2009 and, in accordance with the statute, the agencies may issue further clarifications at a later date.

• OTS anticipates implementing section 728 of the Financial Services Regulatory Relief Act by amending its privacy rules under the Gramm-Leach Bliley Act to include a safe harbor model privacy form. The banking agencies, NCUA, FTC, Commodity Futures Trading Commission (FTC), and SEC expect to issue final amendments to their rules requiring initial and annual privacy notices to their customers. And, pursuant to Section 728 of the Financial Services Regulatory Relief Act of 2006, the agencies are adopting a model privacy form that financial institutions may rely on as a safe harbor to provide disclosures under the privacy rules.

Alcohol and Tobacco Tax and Trade Bureau

The Alcohol and Tobacco Tax and Trade Bureau (TTB) issues regulations to enforce the Federal laws relating to alcohol, tobacco, firearms, and ammunition taxes and relating to commerce involving alcohol beverages. TTB's mission and regulations are designed to:

1) Regulate with regard to the issuance of permits and authorizations to operate in the alcohol and tobacco industries;

2) Assure the collection of all alcohol, tobacco, and firearms and ammunition taxes, and obtain a high level of voluntary compliance with all laws governing those industries; and

3) Suppress commercial bribery, consumer deception, and other prohibited practices in the alcohol beverage industry.

TTB plans to pursue one significant regulatory action during FY 2010. In 2007, the Department approved the publication of a notice of proposed rulemaking soliciting comments on a proposal to require a serving facts statement on alcohol beverage labels. The proposed statement would include information about the serving size, the number of servings per container, and per-serving information on calories and grams of carbohydrates, fat, and protein. The proposed rule would also require information about alcohol content. This regulatory action was initiated under section 105(e) of the Federal Alcohol Administration Act, 27 U.S.C. 205(e), which confers on the Secretary of the Treasury authority to promulgate regulations for the labeling of alcoholic beverages, including regulations that prohibit consumer deception and the use of misleading statements on labels and that ensure that such labels provide the consumer with adequate information as to the identity and quality of the product. TTB received and reviewed approximately 800 comments on the serving facts proposal and plans to put forward for Department approval a final rule on this matter in FY 2010.

In addition to the regulatory action described above, in FY 2010 TTB plans to give priority to the following regulatory matters:

• Modernization of title 27, Code of Federal Regulations. TTB will continue to pursue its multi-year program of modernizing its regulations in title 27 of the Code of Federal Regulations. This program involves updating and revising the regulations to be more clear, current, and concise, with an emphasis on the application of plain language principles. TTB laid the groundwork for this program in 2002 when it started to recodify its regulations in order to present them in a more logical sequence. In FY 2005, TTB evaluated all of the 36 CFR parts in title 27 and prioritized them as "high," "medium," or "low" in terms of the need for complete revision or regulation modernization. TTB determined importance based on industry member numbers, revenue collected, and enforcement and compliance issues identified through field audits and permit qualifications, statutory changes, significant industry innovations, and other factors. The 10 parts of title 27, Code of Federal Regulations, that TTB ranked as "high" include the five parts directing operation of the major taxpayers under the Internal Revenue Code of 1986: Part 19 - Distilled Spirits Plants; Part 24 - Wine; Part 25 - Beer; Part 40 - Manufacture of Tobacco Products and Cigarette Papers and Tubes; and Part 53 - Manufacturers Excise Taxes - Firearms and Ammunition. These five parts represent nearly all the tax revenue that TTB collects, which is expected to be approximately $22 billion in FY 2010. The remaining five parts rated "high" consist of regulations covering imports and exports (Part 27 - Importation of Distilled Spirits, Wine and Beer; Part 28 - Exportation of Alcohol; and Part 41 - Exportation of Tobacco Products and Cigarette Papers and Tubes), as well as regulations addressing the American Viticultural Area program (Part 9) and TTB procedures (Part 70).

To date, related to the modernization plan, TTB has published notices of proposed rulemaking to revise Part 19 and to amend Part 9 and has reviewed the public comments received in response to those notices, and TTB anticipates that in FY 2010 it will forward to the Department final rules for both parts for publication approval. In FY 2010, TTB plans to put forward to the Department for publication approval an advance notice for proposed rulemaking for the revision of the beer regulations in Part 25.

• Allergen Labeling. In FY 2006 TTB published interim regulations setting forth standards for voluntary allergen labeling of alcohol beverages. These regulatory changes were an outgrowth of changes made to the Federal Food, Drug and Cosmetic Act by the Food Allergen Labeling and Consumer Protection Act of 2004. At the same time, TTB published a proposal to make those interim requirements mandatory. In FY 2010 TTB intends to continue its review of mandatory allergen labeling with a view to preparing a final rule document that would take effect on the same date as the serving facts regulatory changes discussed above.

• Multi-Region Appellations for Imported Wine. TTB will put forward for Departmental publication approval a proposal to amend its wine labeling regulations to allow the labeling of imported wines with multi-region appellations of origin. The proposed regulatory change would provide labeling treatment for imported wines that is similar to what is currently available for domestic wines, which may be labeled with a multi-state or multi-county appellation of origin.

• Other wine labeling issues. In FY 2010 TTB will continue to act on petitions for the establishment of new American viticultural areas (AVAs) and for the modification of the boundaries of existing AVAs. TTB also will seek Departmental publication approval of a number of other wine labeling rulemaking documents for public comment in FY 2010. These initiatives include a clarification of the approval process for the use of American grape varietal names on labels and an updating of the list of approved American grape varietal names. We also plan regulatory action on petitions seeking to adopt new label designation standards for wines now generally described as "wine with natural flavors," and to limit the use of American appellations to wines produced entirely from U.S. grapes.

• Specially Denatured and Completely Denatured Alcohol Formulas. TTB will submit for publication approval by the Department a proposal to reclassify some specially denatured alcohol (SDA) formulas as completely denatured alcohol (CDA) for which formula submission to TTB is not required. The proposed regulatory changes would also allow other SDA formulas to be used without the submission of article formulas. These changes would allow TTB to shift its SDA-dedicated resources from the current front-end pre-market formula control approach to a post-market assessment of actual compliance with SDA regulations.

• Special (Occupational) Tax Repeal. TTB published in FY 2009 a temporary rule, together with a contemporaneous notice of proposed rulemaking that amended the TTB regulations in response to the statutory repeal of the special (occupational) taxes on producers and marketers of alcoholic beverages. In FY 2010 TTB intends to put forward for Departmental approval a document that adopts those temporary amendments as a final rule.

• Alternation of Brewery Premises. In FY 2010 TTB will forward to the Department for publication approval a notice of proposed rulemaking to amend the TTB regulations to set forth specific standards for the approval and operation of alternating proprietorships at the same brewery premises. The proposed regulations will include standards for alternation agreements between host and tenant brewers as well as rules for recordkeeping and segregation of products made by different brewers.

• Determination of Tax on Large Cigars. TTB will forward to the Department for publication approval a notice of proposed rulemaking that clarifies the rules for determining the amount of tax that is due on large cigars, which is based on their sale price. The proposed regulatory changes will include specific standards for determining the tax on large cigars that are provided at no cost in connection with a sale.

• Time For Payment of Tax on Alcohol Beverages. In FY 2010 TTB will forward to the Department for publication approval a temporary rule, together with a contemporaneous notice of proposed rulemaking, to reflect statutory standards for the deferred payment of taxes on alcohol beverages in the month of September and for quarterly payment of tax by small producers of alcohol beverages.

• Classification of Tobacco Products. In FY 2010 TTB will continue its review of standards for the classification of different tobacco products. In FY 2007 TTB published a notice of proposed rulemaking to set standards for distinguishing between cigars and cigarettes and, after a review of the public comments received in response to that proposal, TTB determined that further review was necessary with a view to possible publication of new proposals for further comment. In addition, TTB will consider the possibility of proposing standards to distinguish between pipe tobacco and roll-your-own tobacco.

Bureau of the Public Debt

The Bureau of the Public Debt (BPD) has responsibility for borrowing the money needed to operate the Federal Government and accounting for the resulting debt, regulating the primary and secondary Treasury securities markets, and ensuring that reliable systems and processes are in place for buying and transferring Treasury securities.

BPD administers regulations: (1) Governing transactions in Government securities by Government securities brokers and dealers under the Government Securities Act of 1986 (GSA), as amended; (2) Implementing Treasury's borrowing authority, including rules governing the sale and issue of savings bonds, marketable Treasury securities, and State and local Government securities; (3) Setting out the terms and conditions by which Treasury may redeem (buy back) outstanding, unmatured marketable Treasury securities through debt buyback operations; (4) Governing securities held in Treasury's retail systems; and (5) Governing the acceptability and valuation of all collateral pledged to secure deposits of public monies and other financial interests of the Federal Government.

Treasury's GSA rules govern financial responsibility, the protection of customer funds and securities, record keeping, reporting, audit, and large position reporting for all government securities brokers and dealers, including financial institutions.

Treasury maintains regulations governing two retail systems for purchasing and holding Treasury securities: Legacy Treasury Direct, in which investors can purchase, manage, and hold marketable Treasury securities in book-entry form, and TreasuryDirect, in which investors may purchase, manage, and hold savings bonds, marketable Treasury securities, and certificates of indebtedness in an Internet-based system.

During fiscal year 2010, BPD will accord priority to the following regulatory projects:

Financial Management Service

The Financial Management Service (FMS) issues regulations to improve the quality of Government financial management and to administer its payments, collections, debt collection, and Government-wide accounting programs. For fiscal year 2010, FMS's regulatory plan includes the following priorities:

• Federal Government Participation in the Automated Clearing House. FMS is proposing to amend our regulation at 31 CFR part 210 governing the use of the Automated Clearing House (ACH) system by Federal agencies. The proposed amendments will adopt, with some exceptions, the ACH Rules developed by NACHA - The Electronic Payments Association (NACHA) as the rules governing the use of the ACH Network by Federal agencies. We are issuing this proposed rule to address changes that NACHA has made to the ACH Rules since the publication of NACHA's 2007 ACH Rules book. These changes include new requirements to identify all international payment transactions using a new Standard Entry Class Code and to include certain information in the ACH record sufficient to allow the receiving financial institution to identity the parties to the transaction and to allow the Office of Foreign Assets Control (OFAC) screening. In addition, we are proposing (1) to streamline the process for reclaiming post-death benefit payments from financial institutions; (2) to require financial institutions to provide limited account-related customer information related to the reclamation of post-death benefit payments as permitted under the Payment Transactions Integrity Act of 2008; and (3) to modify our previous guidance regarding the requirement that non-vendor payments be delivered to a deposit account in the name of the recipient.

• Debt Collection Authorities Under the Debt Collection Improvement Act. FMS is amending its regulation at 31 CFR part 285 governing the centralized offset of federal payments, including tax refund payments, to collect nontax debts owed to the United States. The amendments remove the time limitation on the collection of nontax debts by centralized offset, consistent with a change in the statute on which it is based. The statutory change, enacted as part of the Food, Conservation and Energy Act of 2008, allows for the use of centralized offset of federal payments, including federal salary payments, to collect nontax debts owed to the United States irrespective of the amount of time the debt has been outstanding.

Domestic Finance - Office of the Fiscal Assistant Secretary (OFAS)

The Office of the Fiscal Assistant Secretary develops policy for and oversees the operations of the financial infrastructure of the federal government, including payments, collections, cash management, financing, central accounting, and delinquent debt collection.

[1] Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision.

[2] 73 FR 55704 (September 26, 2008).