Frequently Asked Questions:Automated Loan Deposit Process for Pledging Loans


Last updated: June 7, 2010

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Table of Contents

  1. Introduction to the Enhanced Automated Loan Deposit Process
  2. Transmission Methods
  3. Loan File Contents and Submission Frequency
  4. Programming Requirements for Pledged Loan Listings Submitted in the Specified Fixed Text File Format for Legacy Automated Loan Deposit Processing

I. Introduction to the Enhanced Automated Loan Deposit Program
  1. What is an automated loan deposit (ALD)?

    "ALD" refers to the Federal Reserve's process for recording loan pledges at the individual loan detail level in its Collateral Management System (CMS). Loans that are processed in CMS as an automated loan deposit are considered "individually deposited"1 and receive the individual deposit collateral value and margin. Certain loans held in the custody of a Federal Reserve Bank are also entered individually into CMS. All other loan pledges are recorded in CMS in aggregate and are thus considered "group deposited"2 and receive the group deposit collateral value and margin. The collateral value of individually deposited loans will always be greater than or equal to that of comparable group deposited loans.


  2. What is the Federal Reserve's enhanced automated loan deposit process?

    The enhanced ALD process allows pledged loan listings to be processed as automated loan deposits when the pledged loan listings are submitted in one of a variety of electronic file formats including Excel®, comma separated value (CSV), text, and non-imaged portable document format (PDF). Previously, depository institutions were required to submit listings with details on pledged loans in a specified fixed-position text file format in order to have their loans processed as automated loan deposits.


  3. Why would my institution want to provide its pledged loan listings in one of a variety of electronic formats eligible for processing as an automated loan deposit?

    Electronic submission of your institution's pledged loan listings in a format eligible for processing as an automated loan deposit will allow the FRS to record, value, and margin your institution's pledged loans individually. The revised collateral value will likely be greater than the value your institution currently receives under the group deposit process. In no case will collateral value for pledged loans be less than your institution would have otherwise received.


  4. What are the specific requirements for a loan pledge to be eligible for processing under the enhanced automated loan deposit process?

    Institutions should submit pledged loan listings in one of the following electronic formats to be eligible for processing under the enhanced automated loan deposit process: Excel®, comma separated values (CSV), text, and non-imaged portable document format (PDF). The file contents may be in any order but should include the information presently required in your institution's Borrower-in-Custody (BIC), custodian, or Treasury Investment Program pledged loan listing that facilitates accurate identification of the pledged loans and ensures compliance with Federal Reserve/Treasury acceptance criteria.


  5. Does my institution need to request that its pledged loan listing be processed under the enhanced automated loan deposit process?

    No. If your institution is already submitting pledged loan listings electronically in a supported format, your Reserve Bank will attempt to process the listings using the enhanced ALD process. If the processing is successful, your institution's Statement of Collateral Holdings will reflect the individual deposit collateral value of the pledge. The revised collateral value will likely be greater than the value your institution currently receives under the group deposit process. In no case will collateral value be less than you would have otherwise received.


  6. What if my institution is already submitting its pledged loan listings in an eligible format but they cannot be processed successfully through the enhanced automated loan deposit process?

    If the Reserve Bank is unable to process your institution's pledged loan listings using the enhanced automated loan deposit process, the Reserve Bank will contact your institution to discuss what changes would be needed to take advantage of the enhanced automated loan deposit process.


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  8. If my institution's pledged loan listings are currently being submitted in an eligible format for enhanced automated loan deposit processing, when will my pledged loan listing be processed as an automated loan deposit rather than a group deposit?

    If your institution was already submitting its pledged loan listings in an eligible electronic file format at year-end 2009, your Reserve Bank will attempt to transition your institution's pledged loan listings to the automated loan deposit process as early as June 2010. The transition to automated loan deposit processing is expected to span approximately six months; the Federal Reserve expects to convert all eligible pledged loan listings to automated loan deposit processing by the end of 2010. If your institution began submitting its pledged loan listings in an eligible format after year end 2009, your Reserve Bank will work to transition your institution's pledged loan listings to automated loan deposit processing as soon as possible.


  9. What if I change the format or layout of my electronic pledged loan listing once it is being processed under the enhanced automated loan deposit functionality?

    It is very important for an institution that submits its pledged loan listings electronically to avoid changing the format of these listings unless otherwise instructed by its Reserve Bank. If a consistent reporting format is not maintained, the Reserve Bank cannot process pledges in a timely manner using the enhanced ALD process. If an institution changes its file format between reporting periods, the pledged loan listing may need to be processed as a group deposit or have a reduced margin applied until changes can be made to support the institution's revised reporting format.


  10. What should I do if my institution wants to take advantage of the enhanced automated loan deposit process and is not currently submitting its pledged loan listing electronically or is submitting its loan pledge in an electronic format that is not eligible under the enhancement?

    Contact your Reserve Bank for instructions on what steps you should take for your loan pledge to be eligible for the enhanced automated loan deposit process. Also, if your institution currently submits its pledged loan listings by mail or fax, please refer to the Transmission section below for more details on electronic submission.


  11. If my institution's pledged loan listings are currently being processed as automated loan deposits because the loan pledge is being submitted in accordance with the legacy fixed text file specifications for ALD, do I need to make any changes as a result of this enhancement?

    No. Institutions that follow the fixed-format electronic loan file specifications [MS Word; 133K] for automated loan deposit processing can continue using that format for current and future pledges. Section IV below describes the existing specified fixed-file format for loan pledges in more detail.


  12. Are all loan types supported for automated loan deposit processing?

    All loan types except credit card receivables and student loans are supported.


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II. Transmission Methods
  1. In what medium may electronic pledged loan listings be submitted?

    Upon receipt of the appropriate authorization from your institution, the Reserve Bank will accept electronic listings of pledged loans either via email or on a CD-ROM or diskette. The loan pledge must be made by an individual authorized to do so per Operating Circular No. 9 (for Treasury collateral) [PDF; 88K]offsite link or Operating Circular No. 10 (for discount window and Payment System Risk collateral) [PDF; 249K]offsite link. Reserve Banks may require an Electronic Pledge Authorization Letter [MS Word; 34K] to be provided and that a Cover Letter(s) [MS Word; 26K] accompany electronic pledged loan listings. If applicable, your Custodian may also need to execute a Custodian Electronic Pledge Authorization Letter [MS Word; 33K] as well. Please contact your Reserve Bank to discuss the requirements in detail.


  2. Do electronic pledged loan listings sent via e-mail need to be encrypted?

    Pledging institutions should consider their information security requirements before sending pledged loan listings electronically. Upon request, the Federal Reserve Banks will work with depository institutions to receive encrypted information or otherwise meet the requirements of an institution's information security program.



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III. Loan File Contents and Submission Frequency
  1. Did the required contents of pledged loan listings change under the enhanced automated loan deposit process?

    No. The contents of pledged loan listings should include information presently required in your (BIC), custodian, or Treasury Investment Program pledged loan listing that facilitates accurate identification of the pledged loans and ensures compliance with Federal Reserve/Treasury acceptance criteria.


  2. Did the required frequency of submitting pledged loan listings change under the enhanced automated loan deposit process? No. Pledged loan listings must be submitted with the frequency required by your Reserve Bank regardless of whether they are processed using the automated loan deposit process. Pledged loan listings are due on a periodic basis (at least monthly), as well as any time the total current outstanding balance of all loans reported on the most recent pledged loan listing decreases by 10% or more.

    Each subsequent pledged loan listing must contain updated principal balances.


  3. What if my institution participates in more than one collateral program (e.g., maintains both BIC and custodian collateral pledge arrangements) or pledges more than one loan type to the Reserve Bank?

    Under the enhanced automated loan deposit process, separate pledged loan listings will need to be submitted for each collateral program. Separate pledged loan listings do not need to be submitted if more than one loan type is being pledged as long as the different loan types are clearly separated in the file (for example, commercial loans on one Excel tab and residential real estate on another Excel tab). However, the more straightforward the pledged loan listing, the more expeditious the processing of pledges will be under the enhanced automated loan deposit process.

    Institutions submitting pledged loan listings in the legacy specified fixed text file format for ALD must continue to provide separate listings for each collateral program and for each loan type. More information on the legacy specified fixed text file format requirements can be found below in Section IV.

    A depository institution may also choose to submit multiple pledged loan listings for the same asset type or collateral program.


  4. My institution pledges a loan type for which "minimal risk" and "normal risk" margins are available. Do I need to change my pledged loan listing in order to receive greater collateral value for minimal risk loans under Automated Loan Deposit processing?

    As long as you report your institution's internal risk rating for each loan record, there is no need to modify your reporting format. Please note, depending on institution-specific circumstances, your Statement of Collateral Holdings may or may not display a separate minimal risk and normal risk collateral holding item for each loan type. In either case, your minimal risk loans will receive greater collateral value.



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IV. Programming Requirements for Pledged Loan Listings Submitted in the Specified Fixed Text File Format for Legacy Automated Loan Deposit Processing
  1. What are the programming specifications for the text file for pledged loan listings processed under the legacy ALD process?

    If your institution chooses to report your pledged loan listings in the fixed text file format utilized for the legacy automated loan deposit process, the extent to which programming will be required depends on your institution's own loan system. Your institution must send a fixed position text file that conforms to the Federal Reserve's electronic loan file specifications [MS Word; 133K]. To ease processing, depository institutions are encouraged to program the edits listed on page 4 of the electronic loan file specifications into their loan data file extraction.


  2. Are all fields listed in the Federal Reserve's pledged loan listing specifications required?

    No. Certain fields are optional and may be left blank (as indicated in the descriptions in the electronic loan file specification tables [MS Word; 133K]).


  3. What records must be included in a pledged loan listing for processing under the legacy ALD process?

    Each pledged loan listing should include only one Header Record (the first record in the pledged loan listing) and only one Trailer Record (the last record in the pledged loan listing). In addition, the pledged loan listing should include (i) one Obligor Record and one loan detail record for each loan that is not part of a master note facility, and (ii) for each master note facility, one Obligor Record and one Master Note Record, as well as a Loan Detail Record for each individual drawdown under the facility. Please see electronic loan file specifications [MS Word; 133K] for more information.


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  5. What if a required field is left blank or does not otherwise conform to the Federal Reserve's electronic pledged loan listing specifications under the legacy ALD process?

    Pledged loan listings where required fields are left blank or not completed in accordance with the electronic loan file specification tables [MS Word; 133K] will not receive value. The Federal Reserve Banks will work with depository institutions to make programming changes as needed. To ease processing, depository institutions are encouraged to program the edits listed on page 4 of the electronic loan file specifications into their loan data file extraction.


  6. What if my institution pledges more than one loan type to the Federal Reserve Bank and/or Treasury using the legacy automated loan deposit process?

    Although the programming elements will not differ, a separate Automated Loan Deposit file will be required for each loan type. For example, a depository institution holding both commercial loans and residential real estate loans in a BIC arrangement would submit one loan file for the commercial loans and another for the residential real estate loans.

    Additionally, a separate Automated Loan Deposit file will be required for each pledge arrangement. For example, a depository institution pledging commercial loans under both BIC and Custodian Collateral arrangements must submit one loan file for loans held in a BIC arrangement and another for the loans held in a Custodian Collateral arrangement.

    Similarly, if multiple loan types are held in different pledge arrangements, multiple loan files would be required. For example, a depository institution pledging commercial loans and residential real estate loans held in a BIC arrangement, as well as commercial loans and residential real estate loans held at a Custodian, must submit four Automated Loan Deposit files (one for the commercial loans held in a BIC arrangement, a second for the residential real estate loans held in a BIC arrangement, a third for the commercial loans held in at the Custodian, and a fourth for the residential real estate loans held at the Custodian).

    A depository institution may also choose to submit multiple files for the same asset type or collateral program (securities account number), but each file must have its own unique Loan Identifier. Please see electronic loan file specifications [MS Word; 133K] for more information.



  7. Footnotes:
    1, 2. These terms refer to the way the Federal Reserve Banks maintain information about pledged loans in the Collateral Management System (CMS). Loans that are recorded individually into CMS are considered "individually deposited." Loans are individually deposited if they are pledged through the Automated Loan Deposit process. Loans held in the custody of a Federal Reserve Bank and pledges of small pools of loans may also be entered into CMS individually. All other loan pledges are recorded into CMS as groups and are thus considered "group deposited."



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