A-3551, AUG 1, 1974, 54 COMP GEN 75

A-3551, AUG 1, 1974, 54 COMP GEN 75

CHECKS - ENDORSEMENTS - POWERS OF ATTORNEY - SPECIAL - WITHOUT TIME LIMITATION SPECIAL POWER OF ATTORNEY IN FAVOR OF RESPONSIBLE FINANCIAL INSTITUTION AUTHORIZING THAT INSTITUTION TO INDORSE AND NEGOTIATE GOVERNMENT BENEFIT CHECKS ON BEHALF OF PAYEE MAY BE EXECUTED WITHOUT TIME LIMITATION AS TO VALIDITY, SINCE RECENT COURT CASES, APPLYING TREASURY REGULATIONS WHICH PROVIDE THAT DEATH OF GRANTOR REVOKES POWER AND THAT PRESENTING BANK GUARANTEES ALL PRIOR INDORSEMENTS AS TO BOTH GENUINENESS AND CAPACITY, AFFORD ADEQUATE PROTECTION TO GOVERNMENT AGAINST RISK OF LOSS. MODIFIES 48 COMP. GEN. 706, 17 ID. 245 AND OTHER SIMILAR DECISIONS. POWERS OF ATTORNEY - SPECIAL - ACKNOWLEDGMENT ALTHOUGH GENERAL ACCOUNTING OFFICE (GAO) IS AWARE OF NO REQUIREMENT UNDER FEDERAL LAW, OTHER THAN TREASURY REGULATIONS, THAT SPECIAL POWER OF ATTORNEY BE ACKNOWLEDGED, AND FEELS THEREFORE THAT ACKNOWLEDGMENT MAY BE ELIMINATED WITHOUT PREJUDICE TO RIGHTS OF UNITED STATES, GAO NEVERTHELESS RECOMMENDS RETENTION OF ACKNOWLEDGMENT PROVISION IN POWER OF ATTORNEY FORM AS OPTION DUE TO POTENTIAL CONSEQUENCES OF LACK OF ACKNOWLEDGMENT UNDER LOCAL LAW TO PRIVATE PARTIES IN MATTERS NOT DIRECTLY INVOLVING RIGHTS OF UNITED STATES.

IN THE MATTER OF NEGOTIATION OF GOVERNMENT BENEFIT CHECKS UNDER POWER OF ATTORNEY, AUGUST 1, 1974:

THIS DECISION TO THE SECRETARY OF THE TREASURY IS IN RESPONSE TO A REQUEST DATED JUNE 11, 1974, FROM THE FISCAL ASSISTANT SECRETARY, DEPARTMENT OF THE TREASURY, THAT WE RECONSIDER PRIOR DECISIONS HOLDING THAT A SPECIAL POWER OF ATTORNEY EXECUTED IN FAVOR OF A RESPONSIBLE FINANCIAL INSTITUTION AUTHORIZING THAT INSTITUTION TO INDORSE AND NEGOTIATE GOVERNMENT BENEFIT CHECKS ON BEHALF OF THE PAYEE MUST BE RENEWED EVERY 12 MONTHS. WE ARE ALSO ASKED IF THE REQUIREMENT THAT SUCH POWERS OF ATTORNEY BE ACKNOWLEDGED (NOTARIZED) MAY BE ELIMINATED.

CURRENT TREASURY REQUIREMENTS, BASED IN PART ON OUR DECISIONS, ARE CONTAINED IN 31 C.F.R. SEC. 360.12, PERTINENT PARTS OF WHICH ARE SET FORTH BELOW:

SEC. 360.12. POWERS OF ATTORNEY.

(B) GENERAL POWERS OF ATTORNEY. CHECKS ISSUED FOR THE FOLLOWING CLASSES OR PAYMENTS MAY BE NEGOTIATED UNDER A GENERAL POWER OF ATTORNEY IN FAVOR OF AN INDIVIDUAL, FINANCIAL ORGANIZATION OR OTHER ENTITY:

(1) PAYMENTS FOR THE REDEMPTION OF CURRENCIES OR FOR PRINCIPAL OR INTEREST ON U.S. SECURITIES.

(2) PAYMENTS FOR TAX REFUNDS.

(3) PAYMENTS FOR GOODS AND SERVICES.

(C) SPECIAL POWERS OF ATTORNEY. UNDER DECISIONS OF THE COMPTROLLER GENERAL OF THE UNITED STATES, CLASSES OF CHECKS OTHER THAN THOSE SPECIFIED IN PARAGRAPH

(B) OF THIS SECTION MAY BE NEGOTIATED UNDER A SPECIAL POWER OF ATTORNEY WHICH NAMES A FINANCIAL ORGANIZATION AS ATTORNEY IN FACT, IS LIMITED TO A PERIOD NOT EXCEEDING 12 MONTHS, AND RECITES THAT IT IS NOT GIVEN TO CARRY INTO EFFECT AN ASSIGNMENT OF THE RIGHT TO RECEIVE PAYMENT, EITHER TO THE ATTORNEY IN FACT OR TO ANY OTHER PERSON.

(E) REVOCATION OF POWERS OF ATTORNEY. POWERS OF ATTORNEY ARE REVOKED BY THE DEATH OF THE GRANTOR ***.

(F) ACKNOWLEDGMENT OF POWERS OF ATTORNEY. POWERS OF ATTORNEY SHALL BE ACKNOWLEDGED BEFORE A NOTARY PUBLIC OR OTHER OFFICER AUTHORIZED BY LAW TO ADMINISTER OATHS GENERALLY. ***

THE TREASURY DEPARTMENT WOULD NOW LIKE TO ISSUE A NEW SPECIAL POWER OF ATTORNEY FORM WITHOUT TIME LIMITATION AS TO VALIDITY. THIS IS SEEN AS AN INTERIM MEASURE LEADING TO THE DIRECT DEPOSIT OF BENEFIT CHECKS WITH FINANCIAL INSTITUTIONS AS AUTHORIZED BY PUBLIC LAW 92-366, 86 STAT. 506, 31 U.S.C. 492(D), AND ULTIMATELY TO AN ELECTRONIC FUNDS TRANSFER SYSTEM. UNDER THE DIRECT DEPOSIT SYSTEM, A PAYEE MAY REQUEST THAT HIS CHECKS BE MADE PAYABLE TO A FINANCIAL INSTITUTION OF HIS CHOICE, AND MAILED DIRECTLY TO THAT INSTITUTION. THIS SYSTEM IS ALREADY IN USE FOR PAYMENTS OF WAGES AND SALARY. SEE 31 U.S.C. SEC. 492(B). THE EVENTUAL ADOPTION OF THE DIRECT DEPOSIT SYSTEM WILL OBVIATE THE NEED FOR A POWER OF ATTORNEY. THE TREASURY DEPARTMENT POINTS OUT THAT "FINANCIAL ORGANIZATIONS AND BANKING INDUSTRY TRADE ASSOCIATIONS INCREASINGLY REQUEST THE TREASURY TO CONSIDER REMOVING THE (12-MONTH) LIMITATION, AS DISCUSSIONS PROCEED CONCERNING THE STEPS TOWARDS DIRECT DEPOSIT AND ELECTRONIC FUNDS TRANSFER."

PRIOR TO 1937, AUTHORITY TO COLLECT AND INDORSE GOVERNMENT BENEFIT CHECKS COULD NOT BE GRANTED TO A FINANCIAL INSTITUTION UNDER A GENERAL OR SPECIAL POWER OF ATTORNEY, BUT REQUIRED THE EXECUTION OF A SPECIFIC POWER OF ATTORNEY WITH EACH CHECK. SEE 22 COMP. DEC. 393 (1916). THE MATTER WAS FREQUENTLY SUBJECT TO REEXAMINATION, HOWEVER, AND CERTAIN LIMITED EXCEPTIONS APPEARED. THUS, IN A-3551, APRIL 5, 1929, WE RECOGNIZED AN EXCEPTION IN THE CASE OF PAYMENTS UNDER A MATURED TERM WAR RISK INSURANCE POLICY, STATING AS FOLLOWS:

IN THE CASE OF PAYMENTS OF INSTALLMENTS OF INSURANCE, AS UNDER THE LAW AND THE CONDITION OF THE POLICY, THESE CONTINUING PAYMENTS ARE CONTINGENT UPON THE LIFE OF THE BENEFICIARY, AND ON THE DEATH OF THE BENEFICIARY OTHER RIGHTS MAY INTERVENE OR ARISE, IT WILL BE NECESSARY TO LIMIT PAYMENTS UNDER A POWER OF ATTORNEY TO A RELATIVELY SHORT PERIOD NOT EXCEEDING A YEAR ***.

IN 17 COMP. GEN. 245 (1937), A RETIRED EMPLOYEE SOUGHT TO HAVE HIS RETIREMENT ANNUITY CHECKS MAILED TO HIS BANK UNDER A SPECIAL POWER OF ATTORNEY, SINCE HE WAS CONTEMPLATING AN EXTENDED OVERSEAS CRUISE AND IT WOULD HAVE BEEN IMPOSSIBLE FOR HIM TO RECEIVE HIS CHECKS BY MAIL. NOTING THAT EXISTING RESTRICTIONS WERE NOT NECESSARY TO PROTECT THE INTERESTS OF THE UNITED STATES IN SUCH A CASE BECAUSE "THE AUTHORITY OF THE AGENT TERMINATES WITH THE DEATH OF THE PRINCIPAL AND THE AGENT'S IGNORANCE OF THE DEATH OF THE PRINCIPAL IS IMMATERIAL," WE SAID THAT WE WOULD -

*** INTERPOSE NO FURTHER OBJECTION TO THE ENDORSEMENT OF ANNUITY CHECKS UNDER A GENERAL POWER OF ATTORNEY IN FAVOR OF A REPUTABLE BANK OR TRUST COMPANY AS IN THE INSTANT CASE, PROVIDED THAT FOR THE ADEQUATE PROTECTION OF THE INTERESTS OF THE GOVERNMENT THE GENERAL POWER OF ATTORNEY BE REQUIRED TO BE RENEWED EVERY 12 MONTHS. *** ID. AT 248.

IN A-3551, AUGUST 15, 1956, WE EXTENDED THE RULE OF 17 COMP. GEN. 245 TO OTHER CLASSES OF GOVERNMENT BENEFIT CHECKS "IN THE SAME GENERAL CATEGORY, THAT IS, WHERE THE RIGHT THERETO IS DEPENDENT UPON THE CONTINUED EXISTENCE OF THE PAYEE." OUR MOST RECENT LETTER IN THIS AREA, A-3551, FEBRUARY 3, 1970, TO THE CHAIRMAN OF THE COMMITTEE ON BANKING AND CURRENCY, HOUSE OF REPRESENTATIVES, IS TO THE EFFECT THAT POWERS OF ATTORNEY OF THE TYPE IN QUESTION COULD BE EXECUTED IN FAVOR OF CREDIT UNIONS AS WELL AS BANKS AND TRUST COMPANIES. PROTECTION OF THE GOVERNMENT WAS THE REASON BEHIND THE 12-MONTH LIMITATION IN THESE CASES.

THE TREASURY DEPARTMENT CONTENDS THAT ITS REGULATIONS AND EXISTING COURT DECISIONS AFFORD THE GOVERNMENT ADEQUATE PROTECTION AGAINST RISK OF LOSS, AND THAT THE 12-MONTH LIMITATION IS NO LONGER NECESSARY FOR THIS PURPOSE.

THE SUPREME COURT, IN CLEAR FIELD TRUST CO. V. UNITED STATES, 318 U.S. 363 (1943), ESTABLISHED THE PRIMACY OF FEDERAL LAW IN THE AREA UNDER CONSIDERATION.

*** THE RIGHTS AND DUTIES OF THE UNITED STATES ON COMMERCIAL PAPER WHICH IT ISSUES ARE GOVERNED BY FEDERAL RATHER THAN LOCAL LAW. WHEN THE UNITED STATES DISBURSES ITS FUNDS OR PAYS ITS DEBTS, IT IS EXERCISING A CONSTITUTIONAL FUNCTION OR POWER. *** ID. AT 366.

THUS, THE REGULATIONS OF THE TREASURY DEPARTMENT, AS CONSTRUED AND IMPLEMENTED BY THE FEDERAL COURTS, BECAME RECOGNIZED AS THE GOVERNING BODY OF LAW.

THE RIGHTS OF THE UNITED STATES WITH RESPECT TO INDORSEMENT OF ITS COMMERCIAL PAPER ARE OUTLINED IN 31 C.F.R. PART 360, AS FOLLOWS:

SEC. 360.4 GUARANTY OF INDORSEMENTS.

THE PRESENTING BANK AND THE INDORSERS OF A CHECK PRESENTED TO THE TREASURY FOR PAYMENT ARE DEEMED TO GUARANTEE TO THE TREASURER THAT ALL PRIOR INDORSEMENTS ARE GENUINE, WHETHER OR NOT AN EXPRESS GUARANTY IS PLACED ON THE CHECK. WHEN THE FIRST INDORSEMENT HAS BEEN MADE BY ONE OTHER THAN THE PAYEE PERSONALLY, THE PRESENTING BANK AND THE INDORSERS ARE DEEMED TO GUARANTEE TO THE TREASURER, IN ADDITION TO OTHER WARRANTIES, THAT THE PERSON WHO SO INDORSED HAD UNQUALIFIED CAPACITY AND AUTHORITY TO INDORSE THE CHECK IN BEHALF OF THE PAYEE.

SEC. 360.5 RECLAMATION OF AMOUNTS OF PAID CHECKS.

THE TREASURER SHALL HAVE THE RIGHT TO DEMAND REFUND FROM THE PRESENTING BANK OF THE AMOUNT OF A PAID CHECK IF AFTER PAYMENT THE CHECK IS FOUND TO BEAR A FORGED OR UNAUTHORIZED INDORSEMENT OR AN INDORSEMENT BY ANOTHER FOR A DECEASED PAYEE WHERE THE RIGHT TO THE PROCEEDS OF SUCH CHECK TERMINATED UPON THE DEATH OF THE PAYEE, OR TO CONTAIN ANY OTHER MATERIAL DEFECT OR ALTERATION WHICH WAS NOT DISCOVERED UPON FIRST EXAMINATION. IF REFUND IS NOT MADE, THE TREASURER SHALL TAKE SUCH ACTION AGAINST THE PROPER PARTIES AS MAY BE NECESSARY TO PROTECT THE INTERESTS OF THE UNITED STATES.

OTHER SECTIONS PROVIDE SPECIFIC COVERAGE FOR INCOMPETENT PAYEES, DECEASED PAYEES, AND MINORS.

RECENT COURT CASES CITED BY THE TREASURY DEPARTMENT, BASED ON THE SUBSTANTIALLY IDENTICAL PREDECESSORS TO THE ABOVE-CITED REGULATIONS, SUPPORT ITS CONTENTION. THUS, IN UNITED STATES V. NATIONAL BANK OF COMMERCE IN NEW ORLEANS, 438 F.2D 809 (5TH CIR. 1971), CERT. DENIED, 404 U.S. 828 (1971), THE UNITED STATES SOUGHT TO RECOVER THE PROCEEDS OF 22 RETIREMENT ANNUITY CHECKS NEGOTIATED BY DEFENDANT BANK AFTER THE DEATH OF THE PAYEE. NOTING THAT THE BANK HAD NO AUTHORITY TO NEGOTIATE THE CHECKS AFTER THE PAYEE'S DEATH, NOTWITHSTANDING THAT NEITHER THE BANK NOR THE GOVERNMENT WAS NOTIFIED OF THE PAYEE'S DEATH FOR ALMOST 2 YEARS, THE COURT, RELYING HEAVILY ON CLEAR FIELD TRUST CO. V. UNITED STATES, SUPRA, HELD THAT SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED IN FAVOR OF THE UNITED STATES. ALTHOUGH THE 22 CHECKS WERE INDORSED BY THE BANK UNDER A SPECIAL POWER OF ATTORNEY, THE COURT IN ITS DECISION DID NOT MENTION OR DISCUSS THE POWER OF ATTORNEY.

IN UNITED STATES V. CITY NATIONAL BANK & TRUST CO., 491 F.2D 851 (8TH CIR. 1974), THE UNITED STATES WAS HELD ENTITLED TO RECOVER FROM DEFENDANT BANK THE PROCEEDS OF 72 DISABILITY PENSION CHECKS CASHED UNDER FORGED INDORSEMENT BY THE PAYEE'S COMMON-LAW WIFE AFTER HIS DEATH. ALTHOUGH THIS CASE DOES NOT INVOLVE A POWER OF ATTORNEY, IT IS SIGNIFICANT IN THAT THE COURT AFFIRMED THE CLEAR FIELD DOCTRINE AND LOOKED TO THE TREASURY REGULATIONS AS THE SOURCE OF GOVERNING LAW.

IN FURTHER SUPPORT OF ITS REQUEST, TREASURY CITES A JOINT STUDY OF THE IMPLEMENTATION OF PUBLIC LAW 92-366 (31 U.S.C. 492) MADE BY THE TREASURY DEPARTMENT AND THE SOCIAL SECURITY ADMINISTRATION, CONCLUDED IN NOVEMBER, 1973. CONCERNED PRIMARILY WITH SOCIAL SECURITY BENEFIT CHECKS, THE STUDY FOUND AS FOLLOWS:

*** AN EXAMINATION OF SUSPENDED AND TERMINATED SOCIAL SECURITY BENEFIT CASES DISCLOSED THAT BENEFICIARIES REPORT EVENTS WHICH AFFECT THEIR PAYMENT STATUS EVEN THOUGH THEY ARE BEING PAID AT FINANCIAL ORGANIZATIONS. IN AT LEAST 94% OF THE CASES EXAMINED, THE EVENT INVOLVED HAD BEEN REPORTED ON A TIMELY BASIS. SUSPENSION AND TERMINATION NOTIFICATIONS OF DEATH AND OTHER OCCURRENCES ARE RECEIVED FROM THE BENEFICIARY HIMSELF OR A MEMBER OF HIS FAMILY. WHERE OVERPAYMENTS HAVE OCCURRED DUE TO UNTIMELY NOTIFICATION, REFUNDS HAVE BEEN OBTAINED FROM THE OVERPAID BENEFICIARY OR WITHHELD FROM OTHER BENEFITS DUE ON THE ACCOUNT. ALTHOUGH OVERPAYMENTS ARE MADE TO POWER OF ATTORNEY BENEFICIARIES, THERE IS NO DISTINCTION BETWEEN THEM AND OVERPAYMENTS MADE TO THE GENERAL POPULATION OF SOCIAL SECURITY BENEFICIARIES.

IN CONSIDERATION OF THE FOREGOING, ESPECIALLY THE CASES WHICH INDICATE THAT THE COURTS WILL APPLY TREASURY REGULATIONS UNDER THE CLEAR FIELD DOCTRINE IN DETERMINING THE RIGHTS OF THE UNITED STATES ON ITS COMMERCIAL PAPER, WE CONCUR WITH THE TREASURY DEPARTMENT THAT THE 12-MONTH LIMITATION NO LONGER APPEARS NECESSARY TO PROTECT THE INTERESTS OF THE GOVERNMENT. WE THUS HAVE NO OBJECTION TO AN AMENDMENT OF THE TREASURY REGULATIONS WHICH WOULD PERMIT A SPECIAL POWER OF ATTORNEY TO BE EXECUTED IN FAVOR OF A RESPONSIBLE FINANCIAL INSTITUTION AUTHORIZING THAT INSTITUTION TO INDORSE AND NEGOTIATE GOVERNMENT BENEFIT CHECKS ON BEHALF OF THE PAYEE, WITHOUT TIME LIMITATION AS TO THE VALIDITY OF THE POWER. PRIOR DECISIONS INCONSISTENT WITH OUR HOLDING HEREIN ARE MODIFIED ACCORDINGLY.

THE TREASURY DEPARTMENT FURTHER PROPOSES TO ELIMINATE NOTARIZATION OF THE SPECIAL POWER OF ATTORNEY. APART FROM 31 C.F.R. SEC. 360.12(F), WE KNOW OF NO REQUIREMENT IN FEDERAL LAW THAT SUCH POWERS OF ATTORNEY BE ACKNOWLEDGED. SINCE, UNDER THE CLEAR FIELD DOCTRINE, THE RIGHTS AND DUTIES OF THE GOVERNMENT ARE TO BE DETERMINED UNDER FEDERAL LAW, THERE WOULD APPEAR TO BE NO NEED TO INSIST UPON ACKNOWLEDGMENT FROM THE STANDPOINT OF PROTECTION OF THE GOVERNMENT. ALSO, WE NOTE THAT THE UNIFORM COMMERCIAL CODE (SEC. 3-403), ADOPTED IN 49 STATES, REQUIRES NO PARTICULAR FORM OF APPOINTMENT TO ESTABLISH THE AUTHORITY OF AN AGENT TO INDORSE COMMERCIAL PAPER. WHILE THE UNIFORM COMMERCIAL CODE IS NOT CONTROLLING IN THIS AREA (CF. UNITED STATES V. CITY NATIONAL BANK & TRUST CO., SUPRA, AT 853), WE HAVE STATED OUR BELIEF THAT IT SHOULD BE FOLLOWED "TO THE MAXIMUM EXTENT PRACTICABLE IN THE INTEREST OF UNIFORMITY WHERE NOT INCONSISTENT WITH FEDERAL INTEREST, LAW OR COURT DECISIONS." 51 COMP. GEN. 668, 670 (1972).

EVEN THOUGH THERE MAY BE NO REQUIREMENT FOR ACKNOWLEDGMENT UNDER FEDERAL LAW, CONSIDERATIONS OF LOCAL LAW RENDER IT UNDESIRABLE IN OUR OPINION TO DELETE THE ACKNOWLEDGMENT PROVISION FROM THE POWER OF ATTORNEY FORM. STATE LAW REGARDING ACKNOWLEDGMENT IS SUBJECT TO CONSIDERABLE VARIATION, SUMMARIZED AS FOLLOWS:

AN ACKNOWLEDGMENT TO AN INSTRUMENT MAY HAVE ANY OF THREE FUNCTIONS: IT MAY GIVE VALIDITY TO THE INSTRUMENT, IT MAY PERMIT THE INSTRUMENT TO BE INTRODUCED IN EVIDENCE WITHOUT OTHER PROOF OF EXECUTION, OR IT MAY ENTITLE THE INSTRUMENT TO BE RECORDED. GENERALLY, ITS FUNCTION IS TO ENTITLE THE INSTRUMENT TO BE RECORDED AND TO AUTHORIZE ITS INTRODUCTION IN EVIDENCE WITHOUT FURTHER PROOF OF ITS EXECUTION. THE CERTIFICATE OF ACKNOWLEDGMENT FURNISHES FORMAL PROOF OF THE AUTHENTICITY OF THE EXECUTION OF THE INSTRUMENT WHEN PRESENTED FOR RECORDING, AND IN THE ABSENCE OF A SPECIFIC STATUTORY REQUIREMENT, ACKNOWLEDGMENT IS NOT NECESSARY TO THE VALIDITY OF AN INSTRUMENT, AND DOES NOT CONSTITUTE A PART OF THE INSTRUMENT, OR AFFECT ITS FORCE. *** 1 AM. JUR. 2D ACKNOWLEDGMENTS SEC. 4. THE REFERENCE TO RECORDING DEALS MAINLY WITH POWERS TO CONVEY REAL PROPERTY. THE OTHER TWO FUNCTIONS, HOWEVER, ARE PERTINENT. WE NOTE, FOR EXAMPLE, THAT ACKNOWLEDGMENT OF A POWER OF ATTORNEY MAY BE REQUIRED AS A CONDITION TO ITS VALIDITY EVEN IN SOME STATES WHICH HAVE ADOPTED THE UNIFORM COMMERCIAL CODE. SEE, E.G., NEW YORK GENERAL OBLIGATIONS LAW SEC. 5-1501, MCKINNEY'S CONSOL. LAWS, C. 24A (1964). THUS, THE ABSENCE OF ACKNOWLEDGMENT, WHILE PERHAPS NOT AFFECTING THE RIGHTS OF THE UNITED STATES, MAY HAVE SIGNIFICANT CONSEQUENCES FOR THE PARTIES INVOLVED. CF. BANK OF AMERICA V. PARNELL, 352 U.S. 29, 32-34 (1956), HOLDING THAT THE CLEAR FIELD DOCTRINE IS NOT APPLICABLE IN LITIGATION INVOLVING PRIVATE PARTIES WHERE THE RIGHTS OF THE UNITED STATES ARE NOT DIRECTLY IN ISSUE.

BECAUSE OF THE POTENTIAL IMPACT ON THE PRIVATE PARTIES INVOLVED, WE RECOMMEND THAT THE ACKNOWLEDGMENT LANGUAGE BE RETAINED IN THE POWER OF ATTORNEY FORM, ALONG WITH A NOTATION TO THE EFFECT THAT ACKNOWLEDGMENT IS NOT REQUIRED BY THE TREASURY DEPARTMENT BUT IS AN OPTIONAL PROCEDURE TO BE FOLLOWED IF REQUIRED OR DESIRABLE UNDER LOCAL LAW. WE RECOGNIZE THAT, UNDER THIS OPTION, BANKS MAY TEND TO INSIST UPON ACKNOWLEDGMENT AUTOMATICALLY AS A PRECAUTION; IN ANY EVENT, THE EXPENSE AND INCONVENIENCE FOR THE PAYEES INVOLVED WILL BE MINIMAL SINCE THE POWER OF ATTORNEY WILL NO LONGER BE A RECURRING REQUIREMENT.