01-2735. Supplemental Standards of Ethical Conduct for Employees of the Department of the Treasury

AGENCY:

Department of the Treasury.

ACTION:

Final rule; amendment.

SUMMARY:

The Department of the Treasury (Department), with the concurrence of the Office of Government Ethics (OGE), amends the Supplemental Standards of Ethical Conduct for Employees of the Department of the Treasury (Treasury Ethics Regulations) to revise the circumstances under which certain Office of Thrift Supervision (OTS) employees may obtain credit cards from OTS-regulated savings associations or their subsidiaries, notwithstanding the general prohibition against “covered employees” obtaining loans or extensions of credit from these entities. The amendment also eliminates unnecessary provisions concerning retail store credit cards and mortgage assumptions.

EFFECTIVE DATE:

February 1, 2001.

FOR FURTHER INFORMATION CONTACT:

Henry H. Booth, Senior Ethics Counsel, Office of the Assistant General Counsel (General Law and Ethics), Department of the Treasury, Room 1410, Washington, DC 20220, [phone]; or Caroline Morris, Ethics Counsel, OTS General Law Division, 1700 G Street, NW, Washington, DC 20552, [phone].

SUPPLEMENTARY INFORMATION:

I. Background

The Treasury Ethics Regulations were issued in 1995 to minimize potential conflicts of interest and supplement OGE's Standards of Ethical Conduct for Employees of the Executive Branch (5 CFR part 2635) (Standards). See 60 FR 22251 (May 5, 1995), as codified at 5 CFR part 3101. The OTS-pertinent part of the Treasury Ethics Regulations, Additional rules for OTS employees, at 5 CFR 3101.109 prohibits “covered OTS employees” from seeking or obtaining any loan or other extension of credit from a savings association. The requirement prevents employees from taking actions that may violate conflict of interest laws or that may constitute violations of 18 U.S.C. 213 concerning credit extended to examiners. Exceptions to the general prohibition permit covered OTS employees to obtain a credit card from a savings association under certain circumstances. See 5 CFR 3101.109(c)(3).

Under the current regulation, most covered OTS employees are permitted to hold and use savings association credit cards if they recuse themselves from any work involving savings associations from which they hold credit cards. This general exception, however, is not available to covered OTS employees assigned to regional offices who wish to obtain a credit card from a savings association headquartered in their region. Under current Treasury Ethics Regulations, no regional covered employees may obtain credit cards from a savings association headquartered in their region. See 5 CFR 3101.109(c)(3)(i)(A).

The Department has been prohibiting regional covered OTS employees from holding credit cards issued by a saving association headquartered in their region to strengthen public confidence in the integrity of OTS programs and to facilitate the assignment of work without constraints arising from employees' credit card recusals. When adopted, this restriction did not impose a significant burden on regional covered employees seeking credit cards. Since then, industry consolidation and conversions to the savings association charter have reduced the credit card options available to those employees. Further, the current rules have created problems in terms of staffing certain matters because of widespread holding of particular cards by covered employees. Subsequent to the issuance of the Treasury Ethics Regulation, the OTS examined the extent to which credit cards present conflicts of interest and concluded that in most instances, neither obtaining nor holding a credit card creates a conflict of interest or presents a likelihood for a loss of impartiality by an OTS employee. For these reasons, the existing credit card exception is being revised so that the general prohibition more closely conforms to the scope of 18 U.S.C. 213, the statutory prohibition barring only examiners from accepting credit from savings associations that they examine. This amended rule changes the Treasury Ethics Regulations' prohibition against OTS covered employees obtaining credit and the exceptions to the prohibition in the following ways.

A. Application to OTS Employees Who Are Not Examiners

To assure that the regional and Washington offices have maximum flexibility to assign projects to covered employees who are not examiners, this amendment eliminates the requirement for employees who are not examiners (attorneys, economists, analysts, etc.) to be recused from work concerning savings associations that have issued them credit cards. These employees may obtain a credit card from a savings association as long as the credit card is obtained and held on terms and conditions no more favorable than those offered to the general public.^[1] Both the existing regulation and the regulation as amended concern the extension of credit by OTS-regulated savings associations and their subsidiaries. The exceptions in the existing regulation allow examiners and other covered employees to obtain credit cards from regulated savings associations under certain circumstances. These exceptions applied to subsidiaries of regulated savings associations only by implication. The amended regulation specifically extends the exceptions for examiners and other covered employees to subsidiaries of OTS-regulated savings associations from which credit cards may be obtained. See new § 3101.109(c)(3)(i) and (ii).

B. Application to Examiners

OTS is the primary federal regulator of savings associations. OTS examiners assigned to the agency's five regions conduct examinations, make recommendations and prepare reports for savings associations headquartered in these respective geographical jurisdictions. The current rule prohibits examiners from holding credit cards issued by savings associations headquartered in their region. This rule continues that provision. In addition, OTS assigns examiners with certain skills to examine institutions outside their region. Consistent with the statutory language, the rule has been revised to reflect current practice of prohibiting examiners from obtaining or holding credit from savings associations headquartered outside their region if they are actually assigned to examine the savings associations. The final rule prohibits an examiner from obtaining a credit card from any savings associations or their subsidiaries that are headquartered in his or her region; or if not headquartered in the examiner's region, that he or she is assigned to examine. The rule retains the requirement that an examiner must obtain and hold credit cards on terms and conditions no more favorable than those offered to the general public.

The rule also requires an examiner to submit a written disqualification from examining a savings association issuing a credit card to the examiner, but not from participating in other regulatory and supervisory matters affecting the savings association, such as applications, investigations, or records review. 18 U.S.C. 212 and 213 do not bar such participation, and permitting this participation by examiners broadens OTS staffing options for various activities.

Because this rule more clearly connects the credit card restriction to the examiners' actual or likely work assignments, it will provide OTS examiners greater access to credit cards without restricting the flexibility of supervisors in making work assignments and without increasing the potential for conflicts of interest. Therefore, the rule is consistent with the fundamental purpose of Treasury Ethics Regulations restrictions on savings association credit card use by covered OTS employees.

C. Related Changes

The existing regulations permit covered employees to use exceptions to the prohibition only under limited circumstances, including when the employee (1) obtains a credit card sponsored by a retail firm (§ 3101.109(c)(3)(ii)); or (2) obtains the credit through the assumption of a savings association mortgage on the employee's residence in accordance with the mortgage's original terms (§ 3101.109(c)(3)(iii)). The amended rule eliminates the reference to retail store sponsored credit cards, because a retail store credit card issued by a saving association will be treated no differently than any other savings association issued card. The amended rule's reference to mortgage assumptions also is being deleted as unnecessary.

The current rule's prohibition on obtaining credit from a savings association in § 3101.109(c)(1) applies to “any loan or extension of credit, including credit obtained through the use of a credit card.” The amended rule shortens and simplifies that provision by removing the reference to a credit card. It is clear from the content of the rest of paragraph (c) that credit includes the use of a credit card.

II. Matters of Regulatory Procedure

Administrative Procedure Act

Pursuant to 5 U.S.C. 553(a)(2), (b), and (d), the Department has found that good cause exists for waiving the regular notice of proposed rulemaking, opportunity for public comment, and 30-day delayed effective date for this final rule amendment. This action is being taken because it is in the public interest that this rule, which concerns matters of agency management, personnel, organization, practice and procedure, and which relieves certain restrictions placed on OTS employees, become effective on the date of publication.

Regulatory Flexibility Act Analysis

Pursuant to section 605(b) of the Regulatory Flexibility Act, the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Accordingly, no regulatory flexibility analysis is required. The rule would not increase the regulatory burden on savings associations. The economic impact of this rule on savings associations, regardless of size, is expected to be minuscule at most.

Executive Order 12866 Determination

The Department has determined that this final rule does not constitute a “significant regulatory action” for the purposes of Executive Order 12866.

Unfunded Mandates Reform Act of 1995 Determinations

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act) ^[2] requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. As discussed in the preamble, this rule limits the restrictions on OTS employees borrowing from savings associations. The Department therefore has determined that the rule will not result in expenditures by State, local, or tribal governments or by the private sector of $100 million or more. Accordingly, the Department has not prepared a budgetary impact statement or specifically addressed the regulatory alternatives considered.

List of Subjects in 5 CFR Part 3101

• Conflict of interests
• Ethics
• Extensions of credit
• Government employees
• OTS employees

Dated: January 16, 2001.

Neal S. Wolin,

General Counsel, Department of the Treasury.

Approved: January 19, 2001.

Amy L. Comstock,

Director, Office of Government Ethics.

For the reasons set forth in the preamble, the Department, with the concurrence of OGE, amends 5 CFR part 3101 as follows:

PART 3101—SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE DEPARTMENT OF THE TREASURY

1. The authority citation for part 3101 is revised to read as follows:

Authority: 5 U.S.C. 301, 7301, 7353; 5 U.S.C. App. (Ethics in Government Act of 1978); 18 U.S.C. 212, 213; 26 U.S.C. 7214(b); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105, 2635.203(a), 2635.403(a), 2635.803, 2635.807(a)(2)(ii).

2. In § 3101.109, paragraphs (c)(1) and (c)(3) are revised to read as follows:

§ 3101.109

Additional rules for Office of Thrift Supervision employees.

* * * * *

(c) Prohibited borrowing—(1) Prohibition on employee borrowing. Except as provided in this section, no covered OTS employee shall seek or obtain any loan or extension of credit from any OTS-regulated savings association or from an officer, director, employee, or subsidiary of any such association.

* * * * *

(3) Exceptions—(i) Covered employees other than examiners. Except for examiners, a covered OTS employee, or the spouse or minor child of a covered OTS employee, may obtain a credit card from an OTS-regulated savings association or its subsidiary if the credit card is issued and held on terms and conditions no more favorable than those offered the general public.

(ii) Examiners. An examiner, or the spouse or minor child of an examiner, may obtain or hold a credit card issued by an OTS-regulated savings association or its subsidiary, if:

(A) The savings association is not headquartered in the examiner's region;

(B) The examiner is not assigned to examine the savings association;

(C) The terms and conditions are no more favorable than those offered to the general public; and

(D) The examiner submits a written disqualification from examining that savings association. The examiner nonetheless may participate in other supervisory or regulatory matters involving the savings association.

* * * * *

Footnotes

1.  OTS will continue to require all covered employees to disclose their savings association credit cards on annual financial disclosure reports, and to require employees to continue to attest that their credit cards were obtained and are being held on non-preferential terms, i.e., on terms and conditions (including collection policies) no more favorable than those offered to the general public.

2.  Pub. L. 104-4, 109 Stat. 48 (1995) (codified at 2 U.S.C. Chs. 17A, 25).