Enhancement to Automated Loan Deposit Processing

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Enhancement to Automated Loan Deposit Processing

Effective June 7, 2010, the Federal Reserve improved the processing of loan pledges for discount window, payment system risk, and Treasury program purposes by expanding the types of electronic file formats accepted by the automated loan deposit (ALD) process. Recording loan pledges through the ALD process offers several benefits, including the potential for higher collateral value being granted to the pledging institution and improved FRS access to collateral data.

Previously, depository institutions were required to submit details on pledged loans in a specified fixed-format text file in order to have their loans pledged through the Federal Reserve's ALD process. The new functionality allows pledged loan listings to be recorded using the ALD process when the listings are submitted in one of many electronic file formats, including Excel®, comma separated value (CSV), text and non-imaged portable document format (PDF). Pledged loan listings that follow the legacy fixed-format text file specifications [MS Word; 133K] for ALD processing will continue to be supported, and depository institutions can continue to use the fixed-format option for new loan pledges.

If an institution is already submitting its pledged loan listings electronically in a supported format, its Reserve Bank will attempt to process the listings using the enhanced ALD process. If the processing is successful, the institution's Statement of Collateral Holdings will reflect the individual deposit collateral value1 of the pledge, which will be greater than or equal to the collateral value the institution would have otherwise received. If the Reserve Bank is unable to process a pledged loan listing using the enhanced ALD process, the Reserve Bank will contact the institution to discuss the changes that are required to take advantage of the enhanced ALD process. An institution that already submits its pledged loan listings electronically should avoid changing the format of these listings unless otherwise instructed by its Reserve Bank. Maintaining a consistent pledged loan listing format for each reporting period ensures that the Reserve Bank will be able to process loan pledges using the enhanced ALD process.

Pledged loan listings will be processed using the enhanced ALD process beginning with the listings received in June 2010. The transition to ALD processing will span approximately six months; the FRS expects to convert all eligible loan pledges to ALD processing by the end of 2010.

Institutions that do not yet submit their pledged loan listings electronically are encouraged to contact their Reserve Bank's discount window staff to learn how to take advantage of the enhanced ALD process.

1. "Individual deposit" refers 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."