[Federal Register Volume 60, Number 79 (Tuesday, April 25, 1995)]
[Rules and Regulations]
[Pages 20171-20178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9733]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules
and Regulations
[[Page 20171]]
FEDERAL DEPOSIT INSURANCE CORPORATION
5 CFR Part 3201
12 CFR Part 336
RINs 3064-AA08, 3209-AA15
Supplemental Standards of Ethical Conduct for Employees of the
Federal Deposit Insurance Corporation
AGENCY: Federal Deposit Insurance Corporation (FDIC or Corporation).
ACTION: Final rule.
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SUMMARY: The Federal Deposit Insurance Corporation, with the
concurrence of the Office of Government Ethics (OGE), is issuing a
final rule establishing uniform standards of ethical conduct for
employees of the Corporation to supplement the Standards of Ethical
Conduct for Employees of the Executive Branch (Executive Branch-wide
Standards) issued by OGE. The final rule will become effective 30 days
after the date of publication, and will establish: prohibitions on
borrowing and extensions of credit; prohibitions on the ownership of
certain financial interests; prohibitions on the purchase of property
controlled by the Corporation or the Resolution Trust Corporation
(RTC); limitations on official dealings with former employers and
clients; disqualification requirements relating to employment of family
members outside the Corporation; and limitations on outside employment
activities.
EFFECTIVE DATE: May 25, 1995.
FOR FURTHER INFORMATION CONTACT: Katherine A. Corigliano, Assistant
Executive Secretary (Ethics), (202) 898-7272; Richard M. Handy, Ethics
Program Manager, (202) 898-7271; or Paul A. Jeddeloh, Senior Program
Attorney, (202) 898-7161, in the Office of the Executive Secretary of
the FDIC.
SUPPLEMENTARY INFORMATION:
I. Background
On July 12, 1994, with the concurrence of OGE, the Corporation
published for comment a proposed rule to establish supplemental
standards of ethical conduct for employees of the FDIC (59 FR 35480-
35487). The proposed rule was issued to supplement the Standards of
Ethical Conduct for Employees of the Executive Branch published by OGE
on August 7, 1992, and effective February 3, 1993 (57 FR 35006-35067,
as corrected at 57 FR 48557 and 57 FR 52583, with additional grace
period extensions for certain existing agency standards of conduct at
59 FR 4779-4780 and 60 FR 6390-6391, which grace period expires on
January 3, 1996). The Executive Branch-wide Standards, now codified at
5 CFR part 2635, establish uniform standards of ethical conduct for
executive branch employees. The proposed rule was issued pursuant to 5
CFR 2635.105 and the Resolution Trust Corporation Completion Act (P.L.
103-204) which authorize the Corporation to publish agency-specific
supplemental regulations necessary to implement its ethics program. The
Corporation, with the concurrence of OGE, determined that the
supplemental regulations contained in the proposed rule were necessary
successfully to continue the Corporation's ethics program in light of
the Corporation's unique programs and operations.
The proposed rule prescribed a 60-day comment period and invited
comments from all interested parties. The Corporation received nine
comment letters and, after careful consideration of each comment, has
made appropriate modifications to the rule. Technical changes were made
to accommodate the formation, subsequent to the publication of the
proposed rule, of a new Division within the Corporation--the Division
of Compliance and Consumer Affairs. At the request of the Board of
Directors, a provision was added to the credit restrictions in order to
retain the current restrictions for certain categories of employees of
the Division of Depositor and Asset Services. The Corporation, with the
concurrence of OGE, is now publishing as a final rule the Supplemental
Standards of Conduct for Employees of the Federal Deposit Insurance
Corporation, to be codified in new part 3201 of 5 CFR chapter XXII.
II. Summary of the Comments
The Corporation received comments from eight employees and one
financial institution trade association. The comments from employees
contained both requests for substantive changes and for guidance on the
application of the rule in general or in specific sections. The
comments received from the trade association expressed support for
certain specific sections of the rule and suggested substantive
changes.
III. Analysis of the Comments
Section 3201.101 General
One commenter requested guidance on the meaning of the term
employee as defined in Sec. 3201.101(d) as it would be applied to
employees of contractors doing business with the Corporation. As
required by section 19 of the Resolution Trust Corporation Completion
Act and implemented in the final rule, the term employee includes any
individual who, pursuant to a contract or any other arrangement,
performs functions or activities of the Corporation, under the direct
supervision of an officer or employee of the Corporation. All employees
of contractors who fall under such definition would be subject to the
Executive Branch-wide Standards and specified provisions of part 3201.
Section 3201.102 Extensions of Credit From FDIC-Insured Depository
Institutions
One commenter, in reference to the preamble discussion of
Sec. 3201.102(c) in the proposed rule, asked whether the prohibition on
examiners obtaining extensions of credit from institutions that they
have examined carried a time limitation and expressed concern that the
restriction, if it did not carry a time limitation, was too severe. The
prohibition referred to by the commenter is found at 18 U.S.C. 213, a
criminal statute, and was referenced in the preamble to assist the
reader in understanding part of the basis for the imposition of the
restrictions found at Sec. 3201.102(c). 18 U.S.C. 213 does not carry a
time limitation.
One commenter suggested that, for purposes of Sec. 3201.102(c), an
examiner might not be aware of the identity of the person or company
from whom or which he or she intended to obtain [[Page 20172]] credit.
The Board believes it is reasonable to expect an employee to make
inquiries in order to ascertain the identity of a lender prior to
engaging in a credit transaction. Similarly, the same commenter
suggested that, for purposes of Sec. 3201.102(c)(ii), the headquarters
of a credit card issuer might not be readily apparent. The Board
believes it is also reasonable to expect employees of the Division of
Supervision and the Division of Compliance and Consumer Affairs to make
inquiries to ascertain the location of the headquarters of a credit
card issuer.
The Corporation did not adopt the suggestion of one employee, in
reference to Sec. 3201.102(d) and Sec. 3201.103(c), to restate in part
3201 the text of certain definitions found in the Executive Branch-wide
Standards and referred to in such part. Since part 3201 is a supplement
to the Executive Branch-wide Standards, it is appropriate to make
references to the text of the primary regulation.
The Corporation did not adopt the suggestions of two employees to
narrow or remove the provisions of the regulation found at
Secs. 3201.102(a), as well as at 3201.103(a) and 3201.104(a), under
which the interests of an employee's spouse or minor child are to be
considered as if they were the interests of the employee. The Board
determined that the application of the prohibitions in Secs. 3201.102
to 3201.104 to the interests of a spouse or minor child of an employee
is necessary to avoid the appearance of a lack of impartiality by the
employee in his or her official dealings and to avoid a significant
number of recusals which would hinder program operations. The
application of these provisions to the interests of a spouse or minor
child is consistent with such application in Sec. 2635.403(a) of the
Executive Branch-wide Standards.
The trade association, commenting on the proposed rule, expressed
support for the provisions of Sec. 3201.102 but expressed concern that
an unreasonable recordkeeping burden might result from the two-year
prohibition on acceptance of credit found at Sec. 3201.102(d). The
Board does not believe that compliance with the provision would create
an unreasonable recordkeeping burden since employees have the
responsibility to keep track of matters in which they have participated
and since such requirement imposes no greater burden on an employee
than is imposed by other ethics provisions, such as the statutory post-
employment restrictions found at 18 U.S.C. 207 (a)(1) and (a)(2).
Section 3201.103 Prohibitions on Ownership of Securities of FDIC-
Insured Depository Institutions
One employee and the trade association commented that the exception
dealing with the ownership of interests in investment funds set forth
at Sec. 3201.103(b)(5) was too restrictive since its practical
application would prohibit ownership interests in investment funds
which might not hold interests in FDIC-insured depository institutions.
Based upon the comments, the reference to a fund ``concentrating its
investments in the financial services sector'' was deleted and replaced
with language which prohibits an employee from acquiring an interest in
a fund which, at the time an employee acquires an interest, holds more
than 30 percent of its investments in FDIC-insured depository
institutions or FDIC-insured depository institution holding companies.
Under the revised provision, an employee is required to verify the
holdings of the investment fund at any time the employee acquires an
interest in the fund, unless the acquisition results from the ordinary
reinvestment of earnings the employee has accrued from ownership
interests in the fund. The revised provision addresses the
Corporation's concern over employees holding ownership interests in the
institutions that it insures by prohibiting the acquisition of
interests in banking sector funds and provides employees with broader
investment opportunities than would have been provided by the proposed
rule.
Section 3201.104 Restrictions Concerning the Purchase of Property Held
by the Corporation or the RTC as Conservator, Receiver, or Liquidator
of the Assets of an Insured Depository Institution, or by a Bridge Bank
Organized by the Corporation
One commenter asked whether the term ``property'' as used in
Sec. 3201.104(a) includes furniture, fixtures, equipment, securities
and other items. The term ``property'' is intended to include all of
the items specified as well as other assets held by the Corporation or
the RTC as conservator, receiver, or liquidator of the assets of an
insured depository institution, or by a bridge bank organized by the
Corporation.
One employee suggested that the prohibition on employee purchases
of property held by the FDIC or RTC be expanded to prohibit employees
of FDIC contractors from purchasing such assets. No change was made to
the provision since the application of the rule is limited to FDIC
employees. Employees of contractors would only be covered by the rule
when such contractor employees are considered employees of the FDIC as
delineated in Sec. 3201.101(d)(4).
Section 3201.105 Prohibitions on Dealings With Former Employers,
Associates, and Clients
One employee suggested that the discretionary extension of the one-
year disqualification on dealings with former employers, associates,
and clients at Sec. 3201.105(c) specify that the discretion to impose
the extension would only be applicable after an individual becomes an
employee of the Corporation. No change was made to accommodate this
suggestion since the rule, as proposed, is only applicable to those who
have become Corporation employees.
In response to the suggestion of the trade association that, in the
case of an employee who was unemployed for the one-year period
immediately preceding entry on duty with the Corporation, the
prohibition on dealings with former employers be extended to include a
one-year prohibition on dealings with the last employer of the employee
regardless of when the employee was last employed, Sec. 3201.105(c) was
modified to provide the Corporation with discretion to extend the one-
year period preceding an employee's entrance on duty with the
Corporation, during which extended period employment will trigger
disqualification from matters affecting that former employer. The
interests of the Corporation in avoiding the appearance of a lack of
impartiality by an employee in his or her official dealings is better
served by extending the rule on a case-by-case basis as circumstances
warrant.
Section 3201.106 Employment of Family Members Outside the Corporation
The Board did not adopt the suggestion of one employee to define
separately the terms ``family'' and ``household.'' The term ``family''
is used only in the title of Sec. 3201.106 with specific
classifications of family members set forth in that section. The phrase
``member of the employee's household'' is generally understood, and is
used without specific regulatory definition in the Executive Branch-
wide Standards at Sec. 2635.502. The same employee also commented that
an undue burden would be created by requiring employees to report the
employment of family members not residing with the employee by FDIC-
insured depository institutions. Because the reporting requirement
applies only to the employment of spouses, children, parents, and
siblings, the Board does not [[Page 20173]] share the commenter's view
that the requirement could be onerous and unreasonable. Moreover, the
Corporation's prior regulation at 12 CFR 336.23, containing a
substantially identical reporting requirement, appears to have been
implemented without unduly burdening employees.
Section 3201.107 Outside Employment and Other Activities
The Corporation did not adopt the suggestions of one employee and
the trade association to tailor the application of the prohibition on
outside employment with FDIC-insured depository institutions to the
various positions held by Corporation employees within the Corporation
or to positions held by employees in FDIC-insured depository
institutions. The Corporation's sensitive relationships with FDIC-
insured depository institutions would invariably raise, at a minimum,
the appearance of preferential dealings or treatment whenever an FDIC
employee is provided compensation by such institution. In order to
avoid an adverse public perception and recusals in the operation of the
Corporation's programs, the Board determined that it was appropriate to
prohibit employees from engaging in compensated outside employment with
FDIC-insured depository institutions.
The Board did not adopt the suggestion of one commenter that the
restriction at Sec. 3201.107(b) on the use of real estate licenses by
employees whose duties with the Corporation require involvement in
matters related to real estate be eliminated for purposes of the
purchase and sale of an employee's personal residence or the purchase
and sale of real estate for the employee's personal investment
portfolio. The rule, as proposed and now as being adopted in final, is
intended to balance an employee's right to engage in outside activities
against the interests of the Corporation in protecting against
questions regarding the impartiality and objectivity of employees and
the administration of the Corporation's programs. It would hinder the
Corporation in meeting its missions if members of the public were to
question whether Corporation employees are using their public positions
or official contacts for private gain, including advancing their
personal real estate careers. It is important to note that the
restriction on the use of such licenses specifies that the prohibition
applies only to those situations involving the production of income,
thus targeting those situations most likely to raise questions by
members of the public. The use of a real estate license for the
purchase of a personal residence or vacation home would not ordinarily
be restricted since such transaction normally does not result in the
production of income.
The same commenter also suggested that Sec. 3201.107(b) was vague
and uncertain as written and that it should be re-written to provide
detailed procedural rules and an appeals procedure. The Board did not
share the view of the commenter. As written, the rule clearly prohibits
the use of professional licenses by employees and sets forth a standard
of review for requests for exceptions to the application of the
prohibition.
IV. Other Changes
The Board of Directors, upon reconsideration of the existing FDIC
standards set forth at 12 CFR part 336, requested that the existing
restriction on extensions of credit for field employees of the Division
of Depositor and Asset Services, formerly the Division of Liquidation,
be retained in the final rule in order to eliminate the possibility
that employees who participate in asset disposition activities will be
able to obtain favored treatment from assisted or assuming entities
located in their region of assignment. Therefore, a new
Sec. 3201.102(e) was added which continues to apply the existing
standard as set forth at 12 CFR 336.16(b)(3) to field employees of the
Division of Depositor and Asset Services. To accommodate the added
provision, definitions for assisted entity and assuming entity were
taken from part 336 and added at Sec. 3201.101(d)(3) and
Sec. 3201.101(d)(4), respectively. The existing standard, as set forth
in the final rule, provides that a covered employee in the Division of
Depositor and Asset Services assigned to a service center or other
field office is prohibited from obtaining credit from an assisted or
assuming entity, except for credit extended through the use of a credit
card under the same terms and conditions as are offered to the general
public. An assisted entity is generally defined as an FDIC-insured
depository institution which has received financial assistance from the
FDIC in order to prevent its failure, any FDIC-insured depository
institution resulting from a merger or consolidation with an
institution that has received such assistance, and a holding company of
an institution that has received assistance or has resulted from a
merger or consolidation with such institution. An assisted entity
retains its status as an assisted entity for such time as there is an
ongoing financial relationship with the FDIC.
An assuming entity is generally defined as an FDIC-insured
depository institution which has entered into a transaction to purchase
some or all of the assets and some or all of the liabilities of a
failed FDIC-insured depository institution, any holding company of such
institution, any FDIC-insured depository institution resulting from
such transaction and its wholly owned subsidiaries, and any branches or
wholly owned subsidiaries of the purchaser or its holding company. An
assuming entity retains its status as an assuming entity for a period
of one year after the failure of the FDIC-insured depository
institution.
V. Removal of FDIC Employee Responsibilities and Conduct Regulations
and Related Modifications
On the effective date of the final rule, the Employee
Responsibilities and Conduct regulation, 12 CFR part 336, will be
amended to remove and reserve subparts A, B, C, E, and F, Secs. 336.1-
336.23 and Secs. 336.29-336.37, and remove the appendix to part 336.
Additionally, a new Sec. 336.1 will be added to provide a cross-
reference to the Corporation's supplemental ethical conduct regulation,
to be codified at 5 CFR part 3201, the Corporation's supplemental
financial disclosure regulation at 5 CFR part 3202, and to the
Executive Branch-wide financial disclosure and standards of ethical
conduct regulations at 5 CFR parts 2634 and 2635. 12 CFR part 336,
subpart D, Secs. 336.24 through 336.28, was removed and reserved by
action of the Board of Directors of the Corporation dated November 24,
1992, 57 FR 39628.
VI. Matters of Regulatory Procedure
Regulatory Flexibility Act
The Board of Directors has concluded that the final rule will not
impose a significant economic hardship on small institutions.
Therefore, the Board of Directors hereby certifies pursuant to section
605 of the Regulatory Flexibility Act (5 U.S.C. 605) that the rule will
not have a significant economic impact on a substantial number of small
business entities within the meaning of the Regulatory Flexibility Act
(5 U.S.C. 601 et seq.).
Paperwork Reduction Act
The Board of Directors has determined that this final rule does not
contain any information collection requirements that require the
approval of the Office of Management and Budget [[Page 20174]] pursuant
to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
List of Subjects
5 CFR Part 3201
Administrative practice and procedure, Conflict of interests,
Government employees, Reporting and recordkeeping requirements.
12 CFR Part 336
Conflict of interests, Government employees.
Dated at Washington, D.C. this 11th day of April, 1995.
By Order of the Board of Directors.
Federal Deposit Insurance Corporation.
Patti C. Fox,
Acting Deputy Executive Secretary.
(SEAL)
Concurred in this 14th day of April, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.
For the reasons set forth in the preamble, the Federal Deposit
Insurance Corporation, with the concurrence of the Office of Government
Ethics, is amending title 5, Chapter XXII, of the Code of Federal
Regulations and title 12, Chapter III, of the Code of Federal
Regulations as follows:
5 CFR CHAPTER XXII--FEDERAL DEPOSIT INSURANCE CORPORATION
1. A new part 3201 is added to 5 CFR chapter XXII to read as
follows:
PART 3201--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE FEDERAL DEPOSIT INSURANCE CORPORATION
Sec.
3201.101 General.
3201.102 Extensions of credit from FDIC-insured depository
institutions.
3201.103 Prohibitions on ownership of securities of FDIC-insured
depository institutions.
3201.104 Restrictions concerning the purchase of property held by
the Corporation or the RTC as conservator, receiver, or liquidator
of the assets of an insured depository institution, or by a bridge
bank organized by the Corporation.
3201.105 Prohibition on dealings with former employers, associates,
and clients.
3201.106 Employment of family members outside the Corporation.
3201.107 Outside employment and other activities.
3201.108 Related statutory and regulatory authorities.
3201.109 Provisions of 5 CFR part 2635 not applicable to
Corporation employees.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 12 U.S.C. 1819(a), 1822; 26 U.S.C. 1043; 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, 2635.403,
2635.502, and 2635.803.
Sec. 3201.101 General.
(a) Purpose. The regulations in this part apply to employees of the
Federal Deposit Insurance Corporation (Corporation) and supplement the
Standards of Ethical Conduct for Employees of the Executive Branch
contained in 5 CFR part 2635. Where specified, these regulations also
apply to the Comptroller of the Currency and the Director of the Office
of Thrift Supervision in connection with their activities as members of
the Corporation's Board of Directors.
(b) Corporation ethics officials. The Executive Secretary of the
Corporation shall act as the Corporation's Ethics Counselor and as its
Designated Agency Ethics Official under 5 CFR part 2638. The Assistant
Executive Secretary (Ethics) shall act as the Corporation's Alternate
Ethics Counselor and as the Alternate Agency Ethics Official.
(1) The Ethics Counselor or Alternate Ethics Counselor may delegate
authority to one or more employees to serve as Deputy Ethics
Counselors.
(2) The delegation to a Deputy Ethics Counselor shall be in writing
and cannot be redelegated.
(c) Agency designees. The Ethics Counselor and Alternate Ethics
Counselor shall serve as the agency designees for purposes of making
the determinations, granting the approvals, and taking other actions
required by an agency designee under part 2635 and this part. The
Ethics Counselor or Alternate Ethics Counselor may delegate authority
to Deputy Ethics Counselors or to other employees to serve as agency
designees for specified purposes. The delegation to any agency designee
shall be in writing and cannot be redelegated.
(d) Definitions. For purposes of this part:
(1) Affiliate, as defined in 12 U.S.C. 1841(k), means any company
that controls, is controlled by, or is under common control with
another company.
(2) Appropriate director means the head of a Washington office or
division or the highest ranking official assigned to a regional office
in each division or the Ethics Counselor.
(3)(i) Assisted entity means:
(A) Any FDIC-insured depository institution which has received
financial assistance from the FDIC to prevent its failure;
(B) Any FDIC-insured depository institution resulting from a merger
or consolidation with any institution described in paragraph (d)(3)(i)
of this section; and
(C) Any holding company of an FDIC-insured depository institution
described in paragraphs (d)(3)(i) or (d)(3)(ii) of this section.
(ii) An assisted entity retains its status as an assisted entity
for such time as there is an ongoing financial relationship with the
FDIC including, but not limited to, a loan repayment obligation, the
servicing of assets on behalf of the FDIC, or the retention by the FDIC
of stock or stock warrants in the assisted entity.
(4)(i) Assuming entity means:
(A) Any FDIC-insured depository institution or FDIC-insured
depository institution holding company which has entered into a
transaction with the FDIC to purchase some or all of the assets and
assume some or all of the liabilities of a failed FDIC-insured
depository institution;
(B) Any FDIC-insured depository institution resulting from the
transaction described in paragraph (d)(4)(i) of this section and its
wholly owned subsidiaries; and
(C) Any branches and the wholly owned subsidiaries of the
institutions described in paragraph (d)(4)(i) of this section.
(ii) An assuming entity retains its status as an assuming entity
for a period of one year after the failure of the FDIC-insured
depository institution.
(5) Covered employee means an employee of the Corporation required
to file a public or confidential financial disclosure report under 5
CFR part 2634 or 5 CFR part 3202.
(6) Employee means an officer or employee, other than a special
Government employee, of the Corporation including a member of the Board
of Directors appointed under the authority of 12 U.S.C. 1812(a)(1)(C),
and a liquidation graded employee. For purposes of 5 CFR part 2635 and
Secs. 3201.103 and 3201.104, employee includes any individual who,
pursuant to a contract or any other arrangement, performs functions or
activities of the Corporation, under the direct supervision of an
officer or employee of the Corporation.
(7) Security includes an interest in debt or equity instruments.
The term includes, without limitation, a secured or unsecured bond,
debenture, note, securitized assets, commercial paper, and all types of
preferred and common stock. The term includes an interest or right in a
security, whether current or contingent, a beneficial or legal interest
derived from a trust, the right to acquire or dispose of any long or
short position, an interest convertible into a security, and an option,
right, warrant, put, or call with respect to a security. The term
[[Page 20175]] security does not include a deposit account.
(8) State nonmember bank means any State bank as defined in 12
U.S.C. 1813(e) which is not a member of the Federal Reserve System.
(9) Subsidiary, as defined in 12 U.S.C. 1813(w), means any company
which is owned or controlled directly or indirectly by another company.
Sec. 3201.102 Extensions of credit from FDIC-insured depository
institutions.
(a) Credit subject to this section. The prohibition,
disqualification, and retention provisions of this section apply to a
current or contingent financial obligation of the employee. For
purposes of this section, a current or contingent financial obligation
of an employee's spouse or minor child is considered to be an
obligation of the employee.
(b) Prohibition on acceptance of credit from FDIC-insured State
nonmember banks applicable to certain high-level officials. (1) An
employee described in paragraph (b)(2) of this section shall not,
directly or indirectly, accept or become obligated on an extension of
credit from an FDIC-insured State nonmember bank or its subsidiary,
except credit extended through the use of a credit card under the same
terms and conditions as are offered to the general public.
(2) The prohibition in paragraph (b)(1) of this section applies to:
(i) An employee who is a member of the Board of Directors, an
assistant or deputy to the Board of Directors or to an appointed Board
member, and a covered employee who is an assistant to such person; and
(ii) The director of a Washington office or of a division, other
than the Division of Supervision and the Division of Compliance and
Consumer Affairs, and a covered employee who holds a position
immediately subordinate to such director.
(c) Prohibition on acceptance of credit from FDIC-insured State
nonmember banks for employees assigned to the Division of Supervision
and employees assigned to the Division of Compliance and Consumer
Affairs. (1) An employee described in paragraph (c)(2) of this section
shall not, directly or indirectly, accept or become obligated on an
extension of credit from an FDIC-insured State nonmember bank or from
an officer, director, employee, or subsidiary of such bank, except:
(i) For an employee assigned to the Washington office, credit
extended through the use of a credit card on the same terms and
conditions as are offered to the general public; and
(ii) For an employee assigned to other than the Washington office,
credit extended by an FDIC-insured State nonmember bank headquartered
outside the employee's region of official assignment through the use of
a credit card on the same terms and conditions as are offered to the
general public.
(2) The prohibition in paragraph (c)(1) of this section applies to
the Executive Director for Supervision, Resolutions, and Compliance,
the Director of the Division of Supervision, the Director of the
Division of Compliance and Consumer Affairs, a covered employee
immediately subordinate to the Executive Director for Supervision,
Resolutions, and Compliance, the Director of the Division of
Supervision, or the Director of the Division of Compliance and Consumer
Affairs, and the following employees assigned to the Division of
Supervision and the Division of Compliance and Consumer Affairs: an
Assistant Director, Regional Director, Deputy Regional Director,
Assistant Regional Director, Regional Manager, examiner, assistant
examiner, review examiner, compliance examiner, assistant compliance
examiner, and a covered employee.
(3) Upon accepting credit extended by a credit card in accordance
with paragraph (c)(1)(i) or (c)(1)(ii) of this section, the employee
shall be disqualified in accordance with paragraph (f)(1) of this
section, and, within 30 days of accepting such credit, shall file with
the appropriate director a Statement of Credit Card Obligation in
Insured State Nonmember Bank and Acknowledgement of Conditions for
Retention--Notice of Disqualification.
(d) Two-year prohibition on acceptance of credit from FDIC-insured
depository institutions. (1) An employee described in paragraph (d)(2)
of this section shall not, directly or indirectly, accept or become
obligated on an extension of credit from an FDIC-insured depository
institution or its subsidiary for a period of two years from the date
of the employee's last personal and substantial participation in an
audit, resolution, liquidation, supervisory proceeding, or internal
agency deliberation affecting that particular institution, its
predecessor or successor, or any subsidiary of such institution. This
prohibition does not apply to credit obtained through the use of a
credit card under the same terms and conditions as are offered to the
general public.
(2) The prohibition in paragraph (d)(1) of this section applies to
an employee in the Division of Finance, Division of Depositor and Asset
Services, Division of Resolutions, Legal Division, or who is a member
of a standing committee of the Board of Directors whose official duties
include:
(i) Audit of insured depository institutions for deposit insurance
assessment purposes;
(ii) Resolution or liquidation of failed or failing insured
depository institutions;
(iii) Participation in the supervision of insured depository
institutions or enforcement proceedings under the Federal Deposit
Insurance Act; or
(iv) Internal agency deliberations affecting a particular insured
depository institution, its predecessor or successor, or a subsidiary
of such institution.
(e) Prohibition on acceptance of credit from an assisted or
assuming entity for employees of the Division of Depositor and Asset
Services. (1) An employee described in paragraph (e)(2) of this section
shall not, directly or indirectly, accept or become obligated on any
extension of credit from an assisted or assuming entity located in the
employee's region of official assignment. This prohibition does not
apply to credit obtained through the use of a credit card under the
same terms and conditions as are offered to the general public.
(2) The prohibition in paragraph (e)(1) of this section applies to
a regional director, deputy regional director, and any other covered
employee in the Division of Depositor and Asset Services assigned to a
service center or other field office.
(f) Employee disqualification. (1) An employee described in
paragraph (c)(2) of this section shall not participate in an
examination, audit, visitation, review, or investigation, or other
particular matter involving an FDIC-insured depository institution or
other person with whom the employee has an outstanding extension of
credit.
(2) A covered employee, other than an employee who is described in
paragraph (c)(2) of this section, shall not participate in any
particular matter involving an FDIC-insured depository institution or
other person with whom the employee has an outstanding extension of
credit.
(3) Disqualification is not required under paragraph (f)(2) of this
section:
(i) If the credit was extended through the use of a credit card on
the same terms and conditions as are offered to the general public; or
(ii) When the agency designee, with the concurrence of the
appropriate director, has authorized the employee to participate in the
matter using the standard set forth in 5 CFR 2635.502(d).
(4) The Comptroller of the Currency and the Director of the Office
of Thrift [[Page 20176]] Supervision shall be disqualified from matters
pending before the Board of Directors to the same extent as a covered
employee subject to paragraph (f)(2) of this section.
(g) Retention and renegotiation of pre-existing extensions of
credit. (1) Nothing in this section prohibits the retention of a pre-
existing extension of credit that an employee would be prohibited from
accepting by Sec. 3201.102(b) or (c) if the extension of credit was
permitted to be retained under 12 CFR part 336 prior to the adoption of
this regulation or if the employee's acceptance of the extension of
credit was proper at the time the obligation was incurred, as in the
case of an extension of credit incurred prior to commencement of
employment or reassignment to another division or location. Subsequent
action affecting the status of the creditor, such as merger,
acquisition, or transaction under 12 U.S.C. 1823, does not change the
character of an extension of credit that was proper when incurred. An
employee who retains a pre-existing extension that he or she would be
prohibited from accepting by Sec. 3201.102(b) or (c) shall report the
pre-existing extension of credit to the appropriate director or agency
designee within 30 days from the following event, as appropriate:
(i) Adoption of this part;
(ii) Commencement of employment;
(iii) Assignment to another division or location; or
(iv) Action affecting the status of the creditor.
(2) Any renegotiation of a pre-existing extension of credit shall
be treated as a new extension of credit that is subject to the
prohibitions contained in Sec. 3201.102(b) through (d). An employee may
request that an exception be made to the prohibitions to permit
renegotiation of a pre-existing extension of credit. Any such request
shall be made in writing to the appropriate director and agency
designee, or in the case of an employee described in paragraph
(b)(2)(i) and (ii) of this section, to the Ethics Counselor, stating:
(i) The purpose of the renegotiation;
(ii) The terms and conditions of the original extension of credit;
(iii) The terms and conditions now available to the general public;
(iv) The terms and conditions now offered to the employee;
(v) The action the employee has taken to move the loan to an
institution from which an employee would not be prohibited from
accepting an extension of credit; and
(vi) The financial hardship, if any, denial of the request will
cause.
(3) After submission of the request, the appropriate director and
agency designee, or the Ethics Counselor, may grant the employee's
request based upon a written determination that the request is not
inconsistent with 5 CFR part 2635 or otherwise prohibited by law and
that, under the particular circumstances, application of the
prohibition is not necessary to avoid the appearance of the misuse of
position or loss of impartiality, or otherwise to ensure confidence in
the impartiality and objectivity with which agency programs are
administered.
Sec. 3201.103 Prohibitions on ownership of securities of FDIC-insured
depository institutions.
(a) Prohibition on ownership. Except as permitted by this section,
an employee or the spouse or minor child of an employee, shall not
acquire, own, or control, directly or indirectly, a security of an
FDIC-insured depository institution, or an affiliate of an FDIC-insured
depository institution.
(b) Exception to prohibition for certain interests. Nothing in this
section prohibits an employee, or the spouse or minor child of an
employee, from:
(1) Acquiring, owning or controlling the securities of certain
publicly traded bank holding companies or their nonbank subsidiaries
where the bank holding company is not primarily engaged in banking and
either the bank holding company or the bank it holds is exempt under
the provisions of the Bank Holding Company Act of 1956 and which are
identified as such by the Board of Governors of the Federal Reserve
System (a list of exempt institutions can be obtained from the
Corporation's Ethics Section);
(2) Acquiring, owning, or controlling the securities of certain
nonfinancial savings association holding companies whose principal
business is unrelated to the financial services industry and which are
identified as such by the Office of Thrift Supervision pursuant to 5
CFR 3101.109(b)(3)(ii) (a list of such institutions can be obtained
from the Corporation's Ethics Section);
(3) Retaining a security of an FDIC-insured depository institution
or an affiliate of an FDIC-insured depository institution if the
security was permitted to be retained by the employee under 12 CFR part
336 prior to the adoption of this regulation, was obtained prior to
commencement of employment with the Corporation, or was acquired by a
spouse prior to marriage to the employee;
(4) Acquiring, owning, or controlling a security of an FDIC-insured
depository institution or the affiliate of an FDIC-insured depository
institution where the security was acquired by inheritance, gift, stock
split, involuntary stock dividend, merger, acquisition, or other change
in corporate ownership, exercise of preemptive right, or otherwise
without specific intent to acquire the security. This provision permits
the retention of any such interest only where:
(i) The employee makes full, written disclosure on FDIC form 2410/
07 to the Ethics Counselor within 30 days of commencing employment or
acquiring the interest; and
(ii) The employee is disqualified in accordance with 5 CFR part
2635, subpart D, from participating in any particular matter that
affects his or her financial interests, or that of his or her spouse or
minor child;
(5) Acquiring, owning, or controlling an interest in a publicly
traded or publicly available investment fund provided that, upon
initial or subsequent investment by the employee (excluding ordinary
dividend reinvestment), the fund does not have invested, or indicate in
its prospectus the intent to invest, more than 30 percent of its assets
in the securities of one or more FDIC-insured depository institutions
or FDIC-insured depository institution holding companies and the
employee neither exercises control nor has the ability to exercise
control over the financial interests held in the fund; or
(6) Using an FDIC-insured depository institution or an affiliate of
an FDIC-insured depository institution as custodian or trustee of
accounts containing tax-deferred retirement funds.
(c) Divestiture. Based upon a determination of substantial conflict
under 5 CFR 2635.403(b), the Ethics Counselor may require an employee,
or the spouse or minor child of an employee, to divest a security he or
she is otherwise authorized to retain under paragraph (b) of this
section.
Sec. 3201.104 Restrictions concerning the purchase of property held by
the Corporation or the RTC as conservator, receiver, or liquidator of
the assets of an insured depository institution, or by a bridge bank
organized by the Corporation.
(a) Prohibition on purchase of property. An employee, and an
employee's spouse or minor child shall not, directly or indirectly,
purchase or acquire any property held or managed by the Corporation or
the Resolution Trust Corporation (RTC) as conservator, receiver, or
liquidator of the assets of an insured depository institution, or by a
bridge bank organized by the [[Page 20177]] Corporation, regardless of
the method of disposition of the property.
(b) Disqualification. An employee who is involved in the
disposition of assets held by the Corporation or the RTC as
conservator, receiver, or liquidator of the assets of an insured
depository institution, or by a bridge bank organized by the
Corporation shall not participate in the disposition of assets held in
such capacities when the employee knows that any party with whom the
employee has a covered relationship, as defined in 5 CFR
2635.502(b)(1), is or will be attempting to acquire such assets. The
employee shall provide written notification of the disqualification to
his or her immediate supervisor and the agency designee.
Sec. 3201.105 Prohibition on dealings with former employers,
associates, and clients.
(a) An employee is prohibited for one year from the date of entry
on duty with the Corporation from participating in a particular matter
when an employer, or the successor to the employer, for whom the
employee worked at any time during the one year preceding the
employee's entrance on duty is a party or represents a party to the
matter.
(b) For purposes of this section, the term employer means a person
with whom the employee served as officer, director, trustee, general
partner, agent, attorney, accountant, consultant, contractor, or
employee.
(c) The one-year prohibition imposed by paragraph (a) of this
section, and the one-year period preceding the employee's entrance on
duty specified in paragraph (a) of this section, may each be extended
in an individual case based on a written determination by the agency
designee that, under the particular circumstances, the employee's
participation in the particular matter would cause a reasonable person
with knowledge of the facts to question his or her impartiality.
Sec. 3201.106 Employment of family members outside the Corporation.
(a) Disqualification of employees. An employee shall not
participate in an examination, audit, investigation, application,
contract, or other particular matter if the employer of the employee's
spouse, child, parent, brother, sister, or a member of the employee's
household is a party or represents a party to the matter, unless an
agency designee authorizes the employee to participate using the
standard in 5 CFR 2635.502(d).
(b) Reporting certain relationships. A covered employee shall make
a written report to an agency designee within 30 days of the employment
of the employee's spouse, child, parent, brother, sister, or a member
of the employee's household by:
(1) An FDIC-insured depository institution or its affiliate;
(2) A firm or business with which, to the employee's knowledge, the
Corporation has a contractual or other business or financial
relationship; or
(3) A firm or business which, to the employee's knowledge, is
seeking a business or contractual relationship with the Corporation.
Sec. 3201.107 Outside employment and other activities.
(a) Prohibition on employment with FDIC-insured depository
institutions. An employee shall not provide service for compensation,
in any capacity, to an FDIC-insured depository institution or an
employee or person employed by or connected with such institution.
(b) Use of professional licenses. A covered employee who holds a
license related to real estate, appraisals, securities, or insurance
and whose official duties with the Corporation require personal and
substantial involvement in matters related to, respectively, real
estate, appraisal, securities, or insurance is prohibited from using
such license, other than in the performance of his or her official
duties, for the production of income. The appropriate director, in
consultation with an agency designee, may grant exceptions to this
prohibition based on a finding that the specific transactions which
require use of the license will not create an appearance of loss of
impartiality or use of public office for private gain.
(c) Responsibility to consult with agency designee. An employee who
engages in, or intends to engage in, any outside employment or other
activity that may require disqualification from the employee's official
duties shall consult with an agency designee prior to engaging in or
continuing to engage in the activity.
Sec. 3201.108 Related statutory and regulatory authorities.
(a) 18 U.S.C. 213, which prohibits an examiner from accepting a
loan or gratuity from an FDIC-insured depository institution examined
by him or her or from any person connected with such institution.
(b) 18 U.S.C. 1906, which prohibits disclosure of information from
a bank examination report except as authorized by law.
(c) 17 CFR 240.10b-5 which prohibits the use of manipulative or
deceptive devices in connection with the purchase or sale of any
security.
(d) 18 U.S.C. 1909, which prohibits examiners from providing any
service for compensation for any bank or person connected therewith.
Sec. 3201.109 Provisions of 5 CFR part 2635 not applicable to
Corporation employees.
The following provisions of 5 CFR part 2635 are not applicable to
employees of the Corporation:
(a) Because of the restrictions imposed by 18 U.S.C. 213 on
examiners accepting loans or gratuities, an examiner in the Division of
Supervision or Division of Compliance and Consumer Affairs may not use
any of the gift exceptions at 5 CFR 2635.204 to accept a gift from an
FDIC-insured depository institution examined by him or her or from any
person connected with such institution.
(b) Provisions of 41 U.S.C. 423 (Procurement integrity) and the
implementing regulations at 48 CFR 3.104 (of the Federal Acquisition
Regulation) applicable to procurement officials referred to in:
(1) 5 CFR 2635.202(c)(4)(iii);
(2) The note following 5 CFR 2635.203(b)(7);
(3) Example 5 following 5 CFR 2635.204(a);
(4) Examples 2 and 3 following 5 CFR 2635.703(b)(3);
(5) 5 CFR 2635.902(f), (h), (l), and (bb);
(c) Provisions of 31 U.S.C. 1353 (Acceptance of travel and related
expenses from non-Federal sources) and the implementing regulations at
41 CFR part 304-1 (Acceptance of payment from a non-Federal source for
travel expenses) referred to in 5 CFR 2635.203(b)(8)(i).
(d) Provisions of 41 CFR Chapter 101 (Federal Property Management
Regulations) referred to in 5 CFR 2635.205(a)(4).
(e) Provisions of 41 CFR Chapter 201 (Federal Information Resources
Management Regulation) referred to in Example 1 following 5 CFR
2635.704(b)(2).
12 CFR CHAPTER III--FEDERAL DEPOSIT INSURANCE CORPORATION
PART 336--EMPLOYEE RESPONSIBILITIES AND CONDUCT
2. The authority citation for part 336 is revised to read as
follows:
Authority: 5 U.S.C. 7301; 12 U.S.C. 1819(a).
3. Section 336.1 is revised to read as follows: [[Page 20178]]
Sec. 336.1 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
Employees of the Federal Deposit Insurance Corporation
(Corporation) are subject to the Executive Branch-wide Standards of
Ethical Conduct at 5 CFR part 2635, the Corporation regulation at 5 CFR
part 3201 which supplements the Executive Branch-wide Standards, the
Executive Branch-wide financial disclosure regulations at 5 CFR part
2634, and the Corporation regulation at 5 CFR part 3202 which
supplements the Executive Branch-wide financial disclosure regulations.
Secs. 336.2-336.23 [Removed]
Secs. 336.29-336.37 [Removed]
Appendix to Part 336 [Removed]
4. Sections 336.2 through 336.23 and 336.29 through 336.37 and all
subpart headings are removed and reserved and the appendix to part 336
is removed.
[FR Doc. 95-9733 Filed 4-24-95; 8:45 am]
BILLING CODE 6714-01-P
