The Department of the Treasury, Financial Management Service (Treasury), administers the Federal corporate surety program. Treasury issues certificates of authority to qualified sureties to underwrite and reinsure Federal bond obligations, monitors the ongoing performance and financial strength of certified sureties to ensure that requisite standards continue to be met, and revokes certificates, as appropriate, when sureties no longer meet program standards. When a certificate is revoked, the surety is no longer authorized to write additional Federal bonds.
Congress delegated to Treasury the discretion to issue a certificate if Treasury decides the surety's articles of incorporation authorize it to engage in the business of surety, the corporation has the requisite paid-up capital, cash, or equivalent assets, and the corporation is able to "carry out its contracts." We are proposing to amend our regulation to clarify the circumstances when a surety is no longer "carrying out its contracts" for agency bond acceptance and certification purposes. We are also proposing minor changes to incorporate improvements in risk management, and technical amendments to reflect current authorities and organizational responsibilities.