[Federal Register Volume 59, Number 132 (Tuesday, July 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16557]
[[Page Unknown]]
[Federal Register: July 12, 1994]
VOL. 59, NO. 132
Tuesday, July 12, 1994
FEDERAL DEPOSIT INSURANCE CORPORATION
5 CFR Part 3201
12 CFR Part 336
RIN: 3064-AA08
Supplemental Standards of Ethical Conduct for Employees of the
Federal Deposit Insurance Corporation
AGENCY: Federal Deposit Insurance Corporation (FDIC or Corporation).
ACTION: Proposed rule.
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SUMMARY: The Federal Deposit Insurance Corporation, with the
concurrence of the Office of Government Ethics (OGE), proposes to issue
regulations for the employees of the Corporation which would supplement
the Standards of Ethical Conduct for Employees of the Executive Branch
(Executive Branch-wide Standards) issued by OGE. The proposed rule is a
necessary supplement to the Executive Branch-wide Standards and has
been designed to address the specialized functions and operations of
the Corporation. The proposed rule would 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.
DATES: Comments must be received on or before September 12, 1994.
ADDRESSES: Send comments to Robert E. Feldman, Acting Executive
Secretary, FDIC, 550 17th Street, NW, Washington, DC 20429. Comments
may be hand-delivered to room 400, 1776 F Street, NW, Washington, DC
20429 on business days between 8:30 a.m. and 5 p.m. [FAX number: (202)
898-3838].
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, all at the FDIC.
SUPPLEMENTARY INFORMATION:
I. Background
On August 7, 1992, the Office of Government Ethics published the
Standards of Ethical Conduct For Employees of the Executive Branch. See
57 FR 35006-35067, as corrected at 57 FR 48557 and 57 FR 52583, with an
additional grace period extension at 59 FR 4779-4780. The Executive
Branch-wide Standards, now codified at 5 CFR part 2635 and effective
February 3, 1993, establish uniform standards of ethical conduct for
executive branch employees.
With the concurrence of the OGE, 5 CFR 2635.105 and the Resolution
Trust Corporation Completion Act (P.L. 103-204) authorize the
Corporation to publish agency-specific supplemental regulations
necessary to implement its ethics programs. The Corporation and OGE
have determined that the following supplemental regulations contained
in the proposed rule are necessary to successfully continue the
Corporation's ethics program in light of the Corporation's unique
programs and operations. The proposed supplemental rule addresses
issues relevant to the Corporation's specialized roles as the insurer,
conservator, receiver, liquidator, organizer of bridge banks, and
regulator or back-up enforcement agency for FDIC-insured depository
institutions. Upon finalization of the supplemental regulation, the
Corporation will, as proposed, delete those portions of 12 CFR part 336
that are superseded by the Executive Branch-wide Standards and the
supplemental regulations.
II. Analysis of Regulation
The following regulations are proposed to appear in new part 3201
of 5 CFR chapter XXII.
Section 3201.101 General
(a) Purpose. Proposed Sec. 3201.101(a) explains that the
regulations would apply to all Corporation employees and would
supplement the Executive Branch-wide Standards. Because they are
covered under rules applicable to the Department of the Treasury, two
members of the Board of Directors, the Comptroller of the Currency and
the Director of the Office of Thrift Supervision, would be covered only
by those provisions of the supplemental regulation specifically made
applicable to them in connection with their activities as members of
the Corporation's Board of Directors.
(b) Corporation ethics officials. Proposed Sec. 3201.101(b)
explains that the Designated Agency Ethics Official would be the
Executive Secretary and that the Alternate Agency Ethics Official would
be the Assistant Executive Secretary (Ethics) of the FDIC. This
provision would delegate authority to the Executive Secretary and the
Assistant Executive Secretary (Ethics) to act in such capacities as
contemplated under 5 CFR part 2638. The provision would continue the
designations currently found at 12 CFR part 336, as updated to
accommodate organizational changes.
(c) Agency designees. Proposed Sec. 3201.101(c) specifies those
employees who would hold the authority to act as agency designees under
the Executive Branch-wide Standards and the supplemental regulation. It
also explains that only the Ethics Counselor or Alternate Ethics
Counselor would be able to delegate authority to act as agency
designees and that such delegation would have to be in writing and
could not be re-delegated.
(d) Definitions. Proposed Sec. 3201.101(d) would include as an
affiliate those companies which control, are controlled by, or are
under common control with, an FDIC-insured depository institution. The
definition for affiliate was taken from the Bank Holding Company Act of
1956 and is intended to be broadly interpreted and include any holding
companies, subsidiaries, or other affiliated companies of an FDIC-
insured depository institution.
The term appropriate director would include the heads of offices
and divisions in the Washington office, the highest ranking officials
in each division in the regional offices, and the Ethics Counselor.
The term covered employee would include all employees of the
Corporation required to file confidential or public financial
disclosure reports under 5 CFR part 2634 or 5 CFR part 3202.
Under the proposed regulation, the term employee would include all
persons, other than special Government employees, employed by the
Corporation. Pursuant to the Resolution Trust Corporation Completion
Act (P.L. 103-204), the Corporation is also required to consider the
employees of contractors as employees of the Corporation for certain
purposes. Therefore, the term employee would include, for purposes of 5
CFR part 2635 and Secs. 3201.103 and 3201.104 of this part, 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. The term
employee would not include independent contractors who are not deemed
to be employees under 12 U.S.C. 1822(f)(1)(B). In the case of members
of the Board of Directors, it would include only the three members
appointed by the President under 12 U.S.C. 1812(a)(1)(C).
The proposed regulation provides a broad definition of the term
security which includes an interest in debt or equity instruments such
as, for example, stocks, bonds, and commercial paper. However, the term
security would not include a deposit account.
The term State nonmember bank is a statutory term taken from 12
U.S.C. 1813 and would include all State banks that are not members of
the Federal Reserve System.
The definition of subsidiary was taken from section 3(w) of the
Federal Deposit Insurance Act, codified to 12 U.S.C. 1813(w), and would
include all companies owned or controlled directly or indirectly by
another company.
Section 3201.102 Extensions of Credit From FDIC-Insured Depository
Institutions
The proposed rules on extensions of credit from FDIC-insured
depository institutions provide the conditions under which certain
specified categories of Corporation employees can obtain credit from
depository institutions insured by the Corporation. Restrictions on the
availability of credit to Corporation employees are necessary for
several reasons. First, 5 CFR 2635.403(a) permits the Corporation to
prohibit or restrict the acquisition or holding of a financial interest
or class of financial interests by Corporation employees, and the
spouses and minor children of those employees, when the Corporation has
made the determination that the acquisition or holding of such
financial interests would cause a reasonable person to question the
impartiality and objectivity with which Corporation programs are
administered, and 5 CFR 2635.403(c) specifically provides that the term
financial interest may include an indebtedness relationship. For
purposes of the extensions of credit covered by Sec. 3201.102 (a)
through (d), the Corporation has made such a determination. These
prohibitions and restrictions on employees entering into financial
arrangements with institutions over which the Corporation has
regulatory and resolution authority are necessary to prevent loss of
public confidence in the integrity of the Corporation. In addition, the
borrowing prohibition would incorporate the substance of the statutory
prohibition at 18 U.S.C. 213 on bank examiners accepting certain loans.
Finally, limitations on borrowing from FDIC-insured depository
institutions would avoid a high number of employee disqualifications
that would have a detrimental effect on the Corporation's
administration of its multifaceted responsibilities.
Under proposed Sec. 3201.102(a), a current or contingent financial
obligation of an employee is considered a financial obligation for
purposes of the prohibition, disqualification, and retention provisions
of proposed Sec. 3201.102. A current or contingent financial obligation
of a spouse or minor child is attributed to the employee for purposes
of this section since the Corporation has determined, pursuant to 5 CFR
2635.403(a), that there is a direct and appropriate nexus between the
efficiency of the service and the prohibitions and restrictions in
Sec. 3201.102 as applied to the spouses and minor children of
Corporation employees.
Under proposed Sec. 3201.102(b), members of the Board of Directors
and other Corporation officials who are in top management positions
would be prohibited from incurring financial obligations with an
institution over which the Corporation has primary Federal supervisory
authority or a subsidiary of such an institution. A deputy or an
assistant to the Board of Directors or to an individual board member, a
covered employee who is an assistant to such deputy or assistant, the
director of a Washington office or division (other than the Division of
Supervision), and a covered employee immediately subordinate to such a
director would be included in the restricted class. The prohibition
would not apply to credit extended through an ordinary credit card
relationship due to the standardized handling and low credit amounts
customary in such relationship.
Under Sec. 3201.102(c), depository institutions examination staff,
including all covered employees assigned to the Division of
Supervision, would be prohibited from obtaining credit from an FDIC-
insured State nonmember bank, the class of FDIC-insured depository
institutions for which the FDIC has primary supervisory responsibility,
any subsidiary of such bank, or any person employed by such bank. An
exception would be carved out for an ordinary credit card relationship
but, for those employees assigned to regional or field offices, the
exception would be limited to credit cards offered by FDIC-insured
State nonmember banks located outside the employee's region of
assignment. The rule, which is substantially the same as 12 CFR
336.16(a), is consistent with 18 U.S.C. 213 which prohibits examiners
from accepting credit from institutions which they have examined. Under
the proposed rule, an employee would be required to file a report upon
obtaining a credit card from a State nonmember bank located outside the
employee's region of assignment.
Proposed Sec. 3201.102(d) would impose a two-year prohibition on an
employee in the Division of Finance, the Division of Depositor and
Asset Services, the Division of Resolutions, or the Legal Division, or
who is a member of a standing committee of the Board of Directors
obtaining credit from an FDIC-insured depository institution or its
subsidiary when the employee has participated personally and
substantially in certain matters affecting the institution, its
predecessor or successor, or an affiliate of such institution. This
prohibition would be applicable to the universe of FDIC-insured
depository institutions and would be limited to those Corporation
employees who perform functions associated with the audit, resolution,
liquidation, supervision, or agency deliberation affecting a specific
FDIC-insured depository institution. The two-year prohibition has been
designed to eliminate concerns over potential benefits that an employee
holding a sensitive non-examiner position could derive through a
financial relationship with an institution that has close business ties
to the Corporation. An exception has been made for an ordinary credit
card relationship. The definition of personally and substantially can
be found at 5 CFR 2635.402(b)(4) of the Executive Branch-wide
Standards.
Proposed Sec. 3201.102(e)(1) would prohibit a member of the
depository institution's examination staff, including senior level
staff, from participating in the supervisory review of any institution
with which they hold an extension of credit. No exceptions to this rule
have been provided due to the sensitive nature of the duties involved.
Under proposed Sec. 3201.102(e)(2)-(4), a covered employee and the
Comptroller of the Currency and the Director of the Office of Thrift
Supervision would be prohibited from participating in matters affecting
persons with whom the employee has an outstanding extension of credit.
Exceptions have been provided for ordinary credit card relationships or
when the agency designee, with the concurrence of the appropriate
director, determines that participation by the employee would be
appropriate under the standard outlined under 5 CFR 2635.502(d).
Proposed Sec. 3201.102(f) would clarify that an employee may retain
certain extensions of credit that he or she would be prohibited from
obtaining anew. For example, an employee who had obtained an extension
of credit prior to employment with the Corporation would not be
required to refinance the credit. Any extension of credit retained
under this section would be required to be reported to an agency
designee. An employee would not be allowed to renew or renegotiate the
credit without the consent of the agency designee and appropriate
director or, in the case of certain higher-level officials, without the
consent of the Ethics Counselor. This provision is substantially the
same as current 12 CFR 336.16(d), and extensions of credit which were
permissibly held under such provision could be retained under the new
provision.
Section 3201.103 Prohibitions on Ownership of Securities of FDIC-
Insured Depository Institutions
The Corporation has determined that, in light of its sensitive and
diverse mission involving the institutions that it insures,
restrictions on employee ownership of securities in such institutions
are necessary in order to maintain public confidence in the
impartiality and objectivity with which the Corporation executes its
various functions; eliminate concerns by private entities that
sensitive information provided to the Corporation might be used for
private gain; and avoid the widespread disqualification of employees
from their duties which could result in the Corporation having
difficulty in performing its mission. Under proposed Sec. 3201.103(a),
an employee would be prohibited from having a direct or indirect
ownership interest in a security of an FDIC-insured depository
institution or an affiliate of such institution.
As proposed, the exceptions in Sec. 3201.103(b) would allow an
employee to acquire, own or control certain direct and indirect
ownership interests in an FDIC-insured depository institution. For
example, an employee would be permitted to retain an interest which had
been acquired prior to employment with the Corporation or involuntarily
acquired by the employee such as by gift, stock split, or through a
merger of a company. An employee could also acquire, own or control an
interest in an FDIC-insured depository institution through the
investment vehicle of a publicly traded or available diversified
investment fund when the fund does not have an objective or practice of
concentrating its investments in securities of the financial services
sector. An employee who owned securities of an FDIC-insured depository
institution under one of the exceptions in proposed Sec. 3201.103(b)
would be disqualified under 5 CFR 2635.402 from participating in any
particular matter that, by reason of his or her ownership of those
securities, affects his or her financial interests or those of his or
her spouse or minor child.
Under proposed Sec. 3201.103(c), the Ethics Counselor could require
an employee, or the spouse or minor child of an employee, to divest an
ownership interest that would otherwise be allowed to be retained under
Sec. 3201.103(b) using the standard set forth in 5 CFR 2635.403(b).
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
In order to avoid any self-dealing, appearance of self-dealing,
adversarial relationship with the Corporation, or diminution of public
confidence in the Corporation's ability to accomplish its mission, an
employee, or the spouse or minor child of an employee, would be
prohibited under Sec. 3201.104(a) from purchasing assets held by the
Corporation or the Resolution Trust Corporation (RTC) as conservator,
receiver, or liquidator or held by a bridge bank organized by the
Corporation. In such roles, the Corporation and the RTC generally act
as a fiduciary to the creditors of failed depository institutions.
Property held by the RTC has been included in the proposed prohibition
because of the RTC's significant ties with the Corporation.
As proposed, Sec. 3201.104(b) would disqualify an employee involved
in the disposition of the assets of a failed insured depository
institution from participation in the disposition of such assets when
the employee knows that a person with whom he or she holds a covered
relationship intends to purchase such assets. Written notification of
the disqualification would be required to be made by the employee to
his or her immediate supervisor and the agency designee.
Section 3201.105 Prohibition on Dealings With Former Employers,
Associates, and Clients
In order to avoid the appearance of favoritism and maintain the
integrity of the Corporation's regulatory oversight, insurance
assessments, and resolution and liquidation transactions, proposed
Sec. 3201.105(a) would prohibit an employee, for a period of one year
after entering on duty with the Corporation, from participating in
official Corporation matters involving an employer with whom the
employee worked during the year preceding the employee's entry on duty
with the Corporation. Proposed Sec. 3201.105(b) would include within
the definition of the term employer a broad range of persons, as
defined in 5 CFR 2635.502, with whom the employee has a covered
relationship. In an individual case, Sec. 3201.105(c) would give the
agency designee discretion to extend the prohibition beyond the one
year period that would automatically apply to all new Corporation
employees.
Section 3201.106 Employment of Family Members Outside the Corporation
As proposed, Sec. 3201.106 would continue the Corporation's
requirement at 12 CFR 336.21 that an employee be disqualified from
participation in particular matters involving employers of family
members or members of the employee's household. It would also require
the employee to report the employment of family members or members of
the employee's household by FDIC-insured depository institutions or
companies that have business, or are seeking to do business, with the
Corporation. This requirement eliminates the potential for any
appearance of preferential treatment in those instances where
employment of a family member or a member of the employee's household
would be likely to raise questions regarding the appropriateness of
actions taken by the employee or the Corporation.
Section 3201.107 Outside Employment and Other Activities
Proposed Sec. 3201.107(a) would prohibit an employee from providing
services, for compensation, to an FDIC-insured depository institution
or to a person employed by such institution. The prohibition is based,
in part, on 18 U.S.C. 1909, which prohibits an examiner from performing
any service for compensation for any FDIC-insured depository
institution or for any person connected therewith.
Similarly, proposed Sec. 3201.107(b) would restrict an employee
from using certain professional licenses in compensated outside
activities when the employee's duties to the Corporation involve those
activities. The areas involved in the prohibition have been limited to
areas identified as especially sensitive and critical to corporate
operations.
Proposed Sec. 3201.107(c) would make it the responsibility of the
employee to consult with an agency designee concerning outside
employment or activities that could result in disqualification of the
employee from his or her official duties.
Section 3201.108 Related Statutory and Regulatory Authorities
This section sets forth additional statutory and regulatory
authorities with which an employee should be familiar.
Section 3201.109 Provisions of 5 CFR Part 2635 Not Applicable to
Corporation Employees
Certain provisions of the Standards of Ethical Conduct have been
determined by the Corporation to be inapplicable to its employees based
on the Corporation's status as a mixed-ownership Corporation. To avoid
confusion, the authorities which are not applicable to the Corporation
and its employees would be listed in Sec. 3201.109 (b) through (e).
Proposed Sec. 3201.109(a) would caution examiners that they may not use
the gift exceptions in 5 CFR 2635.204 to accept a gift that would
violate the criminal prohibitions in 18 U.S.C. 213 against examiners
accepting gifts or gratuities from the institutions they examine.
III. Removal of FDIC Employees 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 336.29-336.37, and remove the appendix to part 336. As
proposed, 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.
IV. Matters of Regulatory Procedure
Administrative Procedure Act
This proposed rulemaking is in compliance with the Administrative
Procedure Act (5 U.S.C. 553) and allows for a 60-day comment period.
Regulatory Flexibility Act
The Board of Directors has concluded that the proposed 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 proposed
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 proposed regulation
does not contain any information collection requirements that require
the approval of the Office of Management and Budget 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 14th day of June, 1994.
By Order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Acting Executive Secretary.
Concurred in this 1st day of July, 1994.
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 proposing to amend 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 designee 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) 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.
(4) 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.
(5) 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
security does not include a deposit account.
(6) 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.
(7) 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 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.
(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 and Resolutions, the Director of
the Division of Supervision, a covered employee immediately subordinate
to the Director of the Division of Supervision and the following
employees assigned to the Division of Supervision: an Assistant
Director, Regional Director, Deputy Regional Director, Assistant
Regional Director, 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 paragraphs (c)(1)(i) or (c)(1)(ii) of this section, the employee
shall be disqualified in accordance with paragraph (e)(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) 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 (e)(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 Supervision shall be disqualified from matters pending before
the Board of Directors to the same extent as a covered employee subject
to paragraph (e)(2) of this section.
(f) 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 which, in its prospectus,
does not indicate the objective or practice of concentrating its
investments in the financial services sector 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 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 period of disqualification imposed by paragraph
(a) of this section may 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 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:
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, 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 the appendix to part 336 is removed.
[FR Doc. 94-16557 Filed 7-11-94; 8:45 am]
BILLING CODE 6714-01-P
