40486 Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules and Regulations

based on the producer’s yield prior to

replacing the actual yields or such other

basis as determined appropriate by

FCIC.

Signed in Washington, D.C., on June 27,

2000.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 00–16583 Filed 6–28–00; 10:03 am]

BILLING CODE 3410–08–P

FARM CREDIT ADMINISTRATION

12 CFR Parts 612 and 614

RIN 3052–AB95

Standards of Conduct; Loan Policies

and Operations

AGENCY: Farm Credit Administration

(FCA).

ACTION: Direct final rule with

opportunity to comment.

SUMMARY: The FCA is rewriting its

Standards of Conduct regulations in

plain language so that they are easier to

understand. This direct final rule does

not change the requirements of the

existing regulations.

DATES: Unless we receive significant

adverse comment by July 31, 2000, these

regulations will be effective 30 days

after publication in the Federal Register

during which either or both Houses of

Congress are in session. The FCA will

publish a document in the Federal

Register to establish the actual effective

date. If we receive significant adverse

comment on an amendment, paragraph,

or section of this rule, and that

provision can be addressed separately

from the rest of the rule, we will

withdraw that amendment, paragraph,

or section and adopt as final those

provisions of the rule that are not the

subject of a significant adverse

comment. In that case, we will tell you

how we expect to continue with

rulemaking on the provisions that were

the subject of a significant adverse

comment.

ADDRESSES: You may send comments by

electronic mail to ‘‘reg-comm@fca.gov’’

or through the Pending Regulations

section of our Web site at

‘‘www.fca.gov.’’ You may also send

comments to Patricia W. DiMuzio,

Director, Regulation and Policy

Division, Office of Policy and Analysis,

Farm Credit Administration, 1501 Farm

Credit Drive, McLean, Virginia 22102–

5090 or by fax to (703) 734–5784. You

may review copies of all comments we

receive in the Office of Policy and

Analysis, Farm Credit Administration.

FOR FURTHER INFORMATION CONTACT:

Dale Aultman, Policy Analyst, Office of

Policy and Analysis, Farm Credit

Administration, McLean, VA 22102–

5090, (703) 883–4498, TDD (703) 883–

4444,

or

Howard Rubin, Attorney, Office of

General Counsel, Farm Credit

Administration, McLean, VA 22102–

5090, (703) 883–4020, TDD (703) 883–

4444.

SUPPLEMENTARY INFORMATION:

I. Objective

The objective of our proposed

amendment is to rewrite the Standards

of Conduct regulations to make them

easier for the Farm Credit System

(System) to understand and to better

explain our expectations for high

standards of honesty and integrity. We

are also amending one of our other

regulations so it correctly references our

Standards of Conduct regulations.

II. Background

A. Reasons for Plain Language

We are amending these regulations so

you can read and understand them

easily. We are guided by a Presidential

memorandum dated June 1, 1998,

requiring the Federal Government’s

writing to be in plain language.

Eventually we will rewrite all of our

regulations in plain language.

B. Public Comments

On August 18, 1998, we published a

notice in the Federal Register that asked

you to identify existing regulations and

policies that impose unnecessary

burdens on the System. See 63 FR

44176. We received comments from four

Farm Credit banks, a jointly managed

production credit association/Federal

land credit association, and the Farm

Credit Council on Standards of Conduct

issues. Most of the commenters asked

that we rewrite the Standards of

Conduct regulations in plain language.

This direct final rule addresses their

request and clarifies our regulations.

Director, officer, and employee

requirements are now in individual

subparts so those persons can find the

regulations that apply to them more

easily. In addition, we clarify our

existing regulations stating that

directors, officers, and employees may

be subject to civil money penalties and

suspensions if they violate their duties.

One Farm Credit Bank asked that we

remove our prohibition against Farm

Credit bank or agricultural credit bank

(collectively, bank) officers also working

at an association affiliated with that

bank. We are not removing this

prohibition because persons serving in a

dual role may not be able to meet the

goals and fiduciary duties of both the

bank and association.

One bank asked that officers and

employees be allowed to act as real

estate agents and insurance sales agents

when not working at the System

institution. The bank did note that those

employees must not be allowed to

transact business with directors, other

officers or employees, borrowers, or

loan applicants. We are not removing

these prohibitions because System

institutions have a direct or indirect

involvement in many real estate

transactions and also sell insurance.

This involvement could cause actual

conflicts of interest. Even if there is not

an actual conflict of interest, System

institutions must avoid the appearance

of a conflict of interest that could result

if their officers or employees sold real

estate or insurance.

Another bank asked that System

employees without supervisory or

decision-making authorities be exempt

from disclosure requirements. The

preamble to our Standards of Conduct

rule published in the Federal Register

on May 13, 1994, stated that System

institution boards may exempt

employees from disclosures when they

have a substantial degree of supervision

and a low level of responsibility. See 59

FR 24893. We have rewritten our

regulation to include this guidance.

III. Direct Final Rule

We are amending these regulations by

a direct final rulemaking. The

Administrative Procedure Act, 5 U.S.C.

551–59, et seq. (APA), supports direct

final rulemaking, which allows Federal

agencies to enact noncontroversial

regulations more quickly, without the

usual notice and comment period. This

process lets us develop, review, and

publish a final rule quickly and gives

the public an opportunity to comment

or object.

In a direct final rulemaking, we tell

you the rule will become effective on a

specified date unless we receive

significant adverse comment during the

comment period. If we receive

significant adverse comment on an

amendment, paragraph, or section of

this rule, and that provision can be

addressed separately from the rest of the

rule, we will withdraw that amendment,

paragraph, or section and adopt as final

those provisions of the rule that are not

the subject of a significant adverse

comment. In that case, we will tell you

how we expect to continue with

rulemaking on the provisions that were

the subject of a significant adverse

comment.

Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules and Regulations 40487

A significant adverse comment is one

that explains why our rule would be

inappropriate (including challenges to

its underlying premise or approach),

ineffective, or unacceptable without a

change. In general, a significant adverse

comment raises an issue serious enough

to warrant a substantive response from

us in a notice-and-comment rulemaking.

For example, a significant adverse

comment to this plain language revision

would explain how we made a

substantive change to, or otherwise

misinterpreted, the existing

requirements. Because this direct final

rule does not change the existing

requirements of this part, a comment

regarding the existing requirements will

not be considered a significant adverse

comment.

Direct final rulemaking is justified

under 5 U.S.C. 553(b)(B). Under 5 U.S.C.

553(b)(B), for ‘‘good cause,’’ we may

omit notice and comment when ‘‘notice

and public procedure thereon are

impracticable, unnecessary, or contrary

to the public interest.’’ In a direct final

rulemaking, an agency finds the rule is

so straightforward and noncontroversial

that normal notice and comment are

unnecessary under the APA. However,

rather than eliminating public comment

altogether, which is permissible under 5

U.S.C. 553(b)(B), we are giving you an

opportunity to disagree with our

conclusion that public input on the rule

is unnecessary.

For these regulations, we believe that

a direct final rulemaking is proper, as

we do not expect significant adverse

comment. If we receive no significant

adverse comment, we will publish our

regular notice of the rule’s effective date

in compliance with section 5.17(c)(1) of

the Farm Credit Act of 1971, as

amended.

List of Subjects

12 CFR Part 612

Agriculture, Banks and banking,

Conflict of interests, Rural areas.

12 CFR Part 614

Agriculture, Banks and banking,

Flood Insurance, Foreign trade,

Reporting and recordkeeping

requirements, Rural areas.

For the reasons stated in the

preamble, parts 612 and 614 of chapter

VI, title 12 of the Code of Federal

Regulations are amended as follows:

PART 612—STANDARDS OF

CONDUCT

1. Revise part 612 to read as follows:

Subpart A—General Provisions

Sec.

612.2000 What is the purpose of this part?

612.2005 Am I covered by this rule?

612.2010 Definitions.

Subpart B—Director Duties

612.2100 What are my responsibilities as a

director?

612.2105 What are our responsibilities as a

board of directors?

612.2110 As a director what must I

disclose?

612.2115 What am I not permitted to do as

a director?

612.2120 What rules am I subject to if I

want to acquire property?

612.2125 What standards of conduct

policies and procedures must our board

of directors issue?

612.2130 May I own or buy System

obligations?

612.2135 What happens if I violate my

duties?

Subpart C—Officer and Employee Duties

612.2200 What are my responsibilities as an

officer or employee?

612.2205 As an officer or employee what

must I disclose?

612.2210 What am I not permitted to do as

an officer or employee?

612.2215 May I act as an agent or broker for

real estate or insurance?

612.2220 What rules am I subject to if I

want to acquire property?

612.2225 What rules apply if I work for

more than one System institution?

612.2230 May I own or buy System

obligations?

612.2235 What happens if I violate my

duties?

Subpart D—Standards of Conduct Official

Duties

612.2300 What are my duties as a Standards

of Conduct Official?

612.2305 What must I investigate as a

Standards of Conduct Official?

612.2310 What must I report as a Standards

of Conduct Official?

Subpart E—Standards of Conduct for

Agents

612.2400 What are my duties as an agent?

Authority: Secs. 5.9, 5.17, 5.19, of the Farm

Credit Act (12 U.S.C. 2243, 2252, 2254).

Subpart A—General Provisions

§ 612.2000 What is the purpose of this

part?

This part contains the Farm Credit

Administration’s (FCA/we/our)

expectations for high standards of

honesty, integrity, impartiality, and

conduct in the Farm Credit System

(System) to maintain the public’s

confidence.

§ 612.2005 Am I covered by this rule?

You are covered by this rule if you are

a director, officer, employee, agent, or

Standards of Conduct Official of a

System institution. The following

section defines those persons and other

terms that are used in this part.

§ 612.2010 Definitions.

For this part, the following terms

apply:

(a) Agent means any person (other

than a director, officer or employee)

who is authorized to act for or represent

a System institution. An agent includes

a person such as a lawyer, accountant,

or appraiser who provides professional

services to a System institution.

(b) A conflict of interest or an

appearance of a conflict of interest

exists when you have a financial

interest that actually affects, or appears

to a reasonable person who knows the

relevant facts to affect, your ability to

perform official duties objectively and

impartially in the best interest of your

System institution. To determine

whether you have a conflict of interest,

the following interests are considered

yours:

(1) Interests of your spouse;

(2) Interests of your minor children;

(3) Interests of your business partners;

(4) Interests of any organization or

entity that you serve as officer, director,

trustee, partner or employee; and

(5) Interests of any person,

organization, or entity with which you

are negotiating for, or have an

arrangement for, prospective

employment.

(c) Control of an entity means that

you, directly, indirectly, or acting with

others:

(1) Own 5 percent or more of the

entity’s equity;

(2) Own or have the power to vote 5

percent or more of any class of the

entity’s voting securities; or

(3) Have the power to exercise a

controlling influence over the entity.

(d) Director means a member of a

board of directors of a System

institution.

(e) Employee means an individual

(not including a director, officer, or

agent) who works for, is paid by, and

whose work performance is supervised

by a System institution.

(f) Entity means a corporation,

company, association, firm, joint

venture, partnership (general or

limited), society, joint stock company,

trust, fund, or other organization or

institution, except a System institution.

(g) Family means an individual and

spouse and anyone having the following

relationship to either: parent, child,

sibling, stepparent, stepchild,

stepsibling, half brother, half sister,

uncle, aunt, nephew, niece,

grandparent, grandchild, and their

spouses.

(h) A financial interest means an

interest in an activity, transaction,

property, or relationship with a person

or an entity that involves giving or

40488 Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules and Regulations

receiving something of present or

deferred monetary value.

(i) Financially obligated with means

that you are legally obligated for a debt

of another person or entity or someone

else is legally obligated for your debts.

This includes co-signing or guaranteeing

a debt for another person or entity or

using your property as security for

someone else’s debt.

(j) A material financial interest means

that you have a financial interest

significant enough to:

(1) Actually affect your decisionmaking, or

(2) Cause a reasonable person who

knows the relevant facts to question

your ability to perform your official

duties objectively, impartially, and in

the best interest of your System

institution.

(k) Mineral interest means any interest

in minerals, oil, or gas, including, but

not limited to, any right derived directly

or indirectly from a mineral, oil, or gas

lease, deed, or royalty conveyance.

(l) Officer means the chief executive

officer, president, chief operating

officer, vice president, secretary,

treasurer, general counsel, chief

financial officer, and chief credit officer

of each System institution, and any

person who holds a similar position of

authority.

(m) Ordinary course of business

means a transaction that is:

(1) Usual and customary based on the

prior conduct of the persons involved in

the transaction; or

(2) Made on terms and conditions

comparable to those used by other

persons in the same industry for similar

transactions.

(n) Person means individual or entity.

(o) Standards of Conduct Official

means the official designated under

subpart D of this part.

(p) System institution and institution

means any bank, association, service

organization, or the Federal Farm Credit

Banks Funding Corporation.

Subpart B—Director Duties

§ 612.2100 What are my responsibilities as

a director?

(a) You must maintain high standards

of honesty, integrity, impartiality, and

conduct to ensure the proper

performance of System business and

continued public confidence in System

institutions. You must avoid

misconduct and conflicts of interest to

maintain these standards.

(b) You must obey all applicable laws,

regulations, policies, instructions, and

procedures. You must exercise diligence

and good judgment in carrying out your

duties and responsibilities.

(c) You must ensure that other

directors, officers, employees, and

agents comply with this part and

promptly address any matter involving

a conflict of interest.

§ 612.2105 What are our responsibilities as

a board of directors?

(a) You must ensure that your

institution complies with all standards

of conduct requirements. You must

appoint a Standards of Conduct Official

to carry out subpart D of this part. You

may contract with your supervising

bank to provide a Standards of Conduct

Official.

(b) You must ensure that your

institution uses safe and sound business

practices with agents and that your

institution:

(1) Selects qualified and reputable

agents;

(2) Investigates and takes corrective

action when an agent breaches his or

her fiduciary duty;

(3) Avoids or controls the

employment of agents who are related to

your institution’s directors, officers, or

employees;

(4) Avoids or controls soliciting or

accepting gifts or favors by agents; and

(5) Avoids or controls an agent’s use

of System or borrower information

obtained in the course of the agent’s

dealings with System institutions.

(c) You must ensure your institution

keeps all standards of conduct policies

and procedures, reports, investigations,

determinations, and evidence of

compliance with this part for at least 6

years.

(d) You must establish periodic

written disclosure requirements for

directors, officers, and employees to

effectively enforce this part and your

institution’s standards of conduct

policy. You may exclude from these

reporting requirements employees who

have substantial supervision and low

levels of responsibility.

§ 612.2110 As a director what must I

disclose?

(a) Annually, and as required by

paragraph (c) of this section, you must

file a written and signed statement with

your Standards of Conduct Official that

discloses:

(1) The names of any immediate

family members and affiliated

organizations that did business with

your institution during the past 12

months.

(i) Immediate family means a person

and spouse and his or her parent, child,

sibling, and their spouses.

(ii) Affiliated organizations include

any organization, other than a System

institution, for which you served as a

partner, officer, or majority shareholder

at any time during the past 12 months;

(2) Any legal proceedings required to

be disclosed in the annual report to

shareholders under § 620.5(k) of this

chapter; and

(3) Any additional information your

institution needs to make the

disclosures required by part 620 of this

chapter.

(b) At such intervals as your board

determines is necessary to effectively

enforce this part and your standards of

conduct policy, you must file a written

and signed statement with your

Standards of Conduct Official that

contains the disclosures required by our

regulations and your institution’s

standards of conduct policy. At a

minimum, you must disclose:

(1) The name of any family member,

person living in your home, business

partner, or any entity they or you

control that does business with your

institution, any association your

institution supervises, or your

supervising bank; and

(2) The name and the nature of any

entity in which you have a material

financial interest or on whose board you

serve, if that entity does business with

your institution, any association your

institution supervises, or any of their

borrowers.

(c) When you become or plan to

become involved in any relationship,

transaction, or activity that must be

reported under this section or that could

create a conflict of interest, you must

promptly ask your Standards of Conduct

Official, in writing, whether the

relationship, transaction, or activity

creates a conflict of interest.

(d) When you become a director you

must make the disclosures required by

this section to your Standards of

Conduct Official within 30 days after

your election or appointment. You need

not do so if you completed a disclosure

as a director candidate under part 620

of this chapter in the past 180 days.

§ 612.2115 What am I not permitted to do

as a director?

(a) You must not participate (except

for matters that affect borrowers and

shareholders generally, such as interest

rate determinations) in System matters

or transactions that directly or indirectly

affect:

(1) Your financial interest;

(2) The financial interest of an entity

you control; or

(3) The financial interest of your

family, any person living in your home,

your business partner, or any entity they

or you control.

(b) You must not divulge or use

(except in your official duties) any

Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules and Regulations 40489

System information or document not

generally available to the public that

you acquire as a board member.

(c) You must not use your position to

obtain or attempt to obtain special

advantage or favoritism for any person,

entity, or yourself.

(d) You must not use your position or

information you acquire in your

position to solicit or obtain, directly or

indirectly, any gift, fee, compensation,

or other benefit for any person, entity,

or yourself.

(e) You must not accept, directly or

indirectly, any gift, fee, compensation,

or other benefit that is offered or could

reasonably be viewed as offered to:

(1) Influence your actions as a director

of a System institution, or

(2) Obtain information that you have

access to because you are a board

member.

(f) You must not borrow from, lend to,

or become financially obligated with or

for, directly or indirectly, a director,

officer, employee, agent, borrower, or

loan applicant of your institution, or a

director, officer, employee, or agent of

any association your institution

supervises, or your supervising bank,

unless:

(1) The transaction is with a family

member or person living in your home;

or

(2) The Standards of Conduct Official

determines, under your institution’s

policies and procedures, the potential

for conflict of interest is insignificant

because:

(i) The transaction is in the ordinary

course of business or does not involve

a material financial interest; and

(ii) You do not participate in any

matter affecting the financial interest of

the other party to the transaction unless

it is a matter that affects borrowers and

shareholders generally.

(g) You must not violate your

institution’s standards of conduct

policies and procedures.

§ 612.2120 What rules am I subject to if I

want to acquire property?

(a) As a director, you may acquire an

interest in real or personal property,

including mineral interests, in which a

System institution has an interest only

if you meet these conditions:

(1) You acquire the property through

public auction or similar open,

competitive bidding;

(2) You did not participate in the

decision to foreclose or dispose of the

property including setting the sale

terms; and

(3) In your position as a director, you

have received no information as a result

of your position that could give you an

advantage over other potential bidders

in making a successful bid.

(b) Even if you did not participate in

the decision to foreclose or dispose of

the property, as a director you may not

acquire any real or personal property,

including mineral interests, in a private

transaction if:

(1) Your institution, any association

your institution supervises, or your

supervising bank, owned the property

within the past 12 months; and

(2) The institution acquired the

property by foreclosure or similar

action.

§ 612.2125 What standards of conduct

policies and procedures must our board of

directors issue?

(a) Each board of directors must issue

standards of conduct policies and

procedures for directors, officers, and

employees consistent with the purposes

and specific requirements of this part.

(b) Your policies and procedures

must, at a minimum:

(1) Address:

(i) Hiring of family members;

(ii) Political activity by directors,

officers, and employees;

(iii) Devoting time to duty by

directors, officers, and employees;

(iv) Giving or receiving gifts or favors

by directors, officers, and employees;

and

(v) Improper use of official property,

position, or information.

(2) Outline the authorities and

responsibilities of the Standards of

Conduct Official;

(3) Set guidelines for directors,

officers, and employees to follow in

business relationships and transactions

not specifically prohibited by this part

that involve borrowers, loan applicants,

or other persons doing business with

your institution;

(4) If applicable, set guidelines for

directors, officers, and employees to

follow in business relationships and

transactions not specifically prohibited

by this part that involve directors,

officers, or employees of:

(i) Your supervising bank, any

association it supervises, or their

borrowers or loan applicants; or

(ii) Other persons doing business with

your supervising bank or any

association it supervises;

(5) Set guidelines for deciding

whether an officer or employee of your

bank or association may serve as a

director of a cooperative that borrows

from another System institution. Before

approving an officer’s or employee’s

request, your board must decide

whether the proposed service as a

director may cause the officer or

employee to violate any regulations in

this part or your institution’s policies

and procedures;

(6) Establish conditions under which

officers and employees may:

(i) Accept outside employment or

compensation;

(ii) Borrow from System institutions;

(iii) Acquire an interest in real or

personal property that secured a debt

owed to a System institution within the

preceding 12 months;

(iv) Buy real or personal property

from a System institution;

(7) Ensure that your institution uses

open competitive bidding when it sells

surplus property above a stated value

(as established by your board) to its

officers or employees;

(8) Give new directors, officers, and

employees a reasonable amount of time

to end transactions, relationships, or

activities that your policies and

procedures prohibit;

(9) Give directors, officers, and

employees a reasonable amount of time

after you change existing policies and

procedures to end transactions,

relationships, or activities the new

policies and procedures prohibit;

(10) Provide a procedure for directors,

officers, or employees to recuse

themselves from official action

(including deliberations) on matters in

which they may not participate under

the regulations in this part or your

policies and procedures;

(11) Ensure that compliance with

standards of conduct decisions and

board policy is adequately documented;

(12) Establish reporting requirements

that enable your institution to comply

with § 620.5 of this chapter;

(13) Establish a method to monitor

conflicts of interest and compliance

with your policies and procedures;

(14) Establish appeal procedures

available to officers and employees to

whom any required approval has been

denied.

(15) If applicable, establish guidelines

and prohibitions for bank for

cooperatives and agricultural credit

bank officers and employees involved

with foreign exchange activities as

required in § 614.4900(g) of this chapter.

§ 612.2130 May I own or buy System

obligations?

(a) A director of a System institution

other than the Federal Farm Credit

Banks Funding Corporation (Funding

Corporation) may only buy joint,

consolidated, or Systemwide obligations

that are both:

(1) Part of an offering available to the

public, and (2) Bought in the secondary

market or through a dealer or dealer

bank affiliated with a member of the

selling group designated by the Funding

Corporation.

(b) A director of the Funding

Corporation may not acquire, directly or

40490 Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules and Regulations

indirectly, any joint, consolidated, or

Systemwide obligations, except by

inheritance.

§ 612.2135 What happens if I violate my

duties?

If you violate your duties, FCA may

take action against you under 12 CFR

part 622 of our regulations, and may

impose civil money penalties and

suspensions.

Subpart C—Officer and Employee

Duties

§ 612.2200 What are my responsibilities as

an officer or employee?

(a) You must uphold high standards

of honesty, integrity, impartiality, and

conduct to ensure the proper

performance of System business and

continued public confidence in the

System and its institutions. You must

avoid misconduct and conflicts of

interest to maintain these standards.

(b) You must obey all applicable laws,

regulations, policy statements,

instructions, and procedures. You must

exercise diligence and good judgment in

carrying out your duties, obligations,

and responsibilities.

§ 612.2205 As an officer or employee what

must I disclose?

(a) Annually, and as required by

paragraph (c) of this section, officers

must file a written and signed statement

with their Standards of Conduct Official

that discloses:

(1) The names of any immediate

family members and affiliated

organizations who did business with

their institution during the past 12

months.

(i) Immediate family means a person

and spouse and his or her parent, child,

sibling, and their spouses.

(ii) Affiliated organizations include

any organization, other than a Farm

Credit organization, for which you

served as a partner, officer, or majority

shareholder at any time during the past

12 months;

(2) Any legal proceedings required to

be disclosed in the annual report to

shareholders under § 620.5(k) of this

chapter; and

(3) Any additional information your

institution needs to make the

disclosures required by part 620 of this

chapter.

(b) At such intervals as an officer’s

and employee’s board determines is

necessary to effectively enforce this part

and their institution’s standards of

conduct policy, officers and employees

must file a written and signed statement

with their Standards of Conduct Official

that contains the disclosures required by

our regulations and their institution’s

standards of conduct policy, unless

their board excludes their positions

from these reporting requirements. At a

minimum, as an officer or employee you

must disclose:

(1) The name of any family member,

person living in your home, business

partner, or any entity they or you

control that does business with your

institution, any association your

institution supervises, or your

supervising bank; and

(2) The name and the nature of any

entity in which you have a material

financial interest or on whose board you

serve if that entity does business with

your institution, any association your

institution supervises, or any of their

borrowers.

(c) If officers or employees become

involved in any relationship,

transaction, or activity that must be

reported under this section or that could

create a conflict of interest, they must

promptly ask their Standards of

Conduct Official, in writing, whether

the relationship, transaction, or activity

creates a conflict of interest.

(d) When you are hired as an officer

or employee, you must make the

disclosures required by this section to

your Standards of Conduct Official

within 30 days of accepting an offer for

employment.

§ 612.2210 What am I not permitted to do

as an officer or employee?

(a) You must not participate (except

for matters that affect borrowers and

shareholders generally, such as interest

rate determinations) in System matters

or transactions that directly or indirectly

affect:

(1) Your financial interest;

(2) The financial interest of an entity

you control; or

(3) The financial interest of your

family, any person living in your home,

your business partner, or any entity they

or you control.

(b) You must not divulge or use

(except in performing your official

duties) any System information or

document not generally available to the

public that you acquire as a System

officer or employee.

(c) You must not use your position to

obtain or attempt to obtain special

advantage or favoritism for any person,

entity, or yourself.

(d) You must not use your position or

information you acquire in your

position to solicit or obtain, directly or

indirectly, any gift, fee, compensation,

or other benefit for any person, entity,

or yourself.

(e) You must not accept, directly or

indirectly, any gift, fee, compensation,

or other benefit that is offered or could

reasonably be viewed as offered to:

(1) Influence your actions as an officer

or employee; or

(2) Obtain information that you have

access to because you are an officer or

employee.

(f) You must not borrow from, lend to,

or become financially obligated with or

for, directly or indirectly, a director,

officer, employee, agent, borrower, or

loan applicant of your institution, or a

director, officer, employee, or agent of

any association your institution

supervises, or your supervising bank,

unless:

(1) The transaction is with a family

member or person living in your home;

or

(2) The Standards of Conduct Official

determines, according to your

institution’s policies and procedures,

the potential for a conflict of interest is

insignificant because:

(i) The transaction is in the ordinary

course of business and does not involve

a material financial interest; and

(ii) You do not participate in any

matter affecting the financial interest of

the other party to the transaction unless

it is a matter that affects borrowers and

shareholders generally.

(g) You must not violate your

institution’s policies and procedures

governing standards of conduct.

§ 612.2215 May I act as an agent or broker

for real estate or insurance?

(a) You may not act as a real estate

agent or broker unless you are buying or

selling real estate for your own use or

for a family member or a person living

in your home.

(b) You may not act as an agent or

broker for the sale or placement of

insurance unless authorized under

section 4.29 of the Act.

§ 612.2220 What rules am I subject to if I

want to acquire property?

You may not acquire, directly or

indirectly, (except by inheritance) any

interest in any real or personal property,

including mineral interests, that your

institution, the associations your

institution supervises, or your

supervising bank owned within the

preceding 12 months as a result of

foreclosure or similar action.

§ 612.2225 What rules apply if I work for

more than one System institution?

(a) A bank officer may not be an

officer or employee of a supervised

association.

(b) A bank employee may not be an

officer of a supervised association.

(c) You may be an employee at both

a bank and a supervised association.

Employee expenses must be

appropriately reflected in each

institution’s financial statements.

Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules and Regulations 40491

(d) You may not serve as an officer or

director of an entity that transacts

business with any System institution in

your institution’s territory or any

commercial bank, thrift institution, or

other non-System financial institution

in your institution’s territory, except

employee credit unions. For purposes of

this section, ‘‘transacts business’’ does

not include System institution loans to

a family-owned entity, service on the

board of directors of the Federal

Agricultural Mortgage Corporation, or

transactions with nonprofit entities or

entities in which the System institution

has an ownership interest.

(e) If you are an officer or employee

of a bank or association you may serve

as a director of a cooperative that

borrows from another System institution

only after approval of your board,

subject to your institution’s policies and

procedures.

§ 612.2230 May I own or buy System

obligations?

(a) If you are an officer or employee

of a System institution other than the

Federal Farm Credit Banks Funding

Corporation (Funding Corporation) you

may only buy joint, consolidated, or

Systemwide obligations that are both:

(1) Part of an offering available to the

public, and

(2) Bought in the secondary market or

through a dealer or dealer bank

affiliated with a member of the selling

group designated by the Funding

Corporation.

(b) If you are an officer or employee

of the Funding Corporation you may not

acquire, directly or indirectly, any joint,

consolidated, or Systemwide

obligations, except by inheritance.

§ 612.2235 What happens if I violate my

duties?

If you violate your duties, FCA may

take action against you under 12 CFR

part 622 of our regulations, and may

impose civil money penalties and

suspensions.

Subpart D—Standards of Conduct

Official Duties

§ 612.2300 What are my duties as a

Standards of Conduct Official?

As a Standards of Conduct Official

you:

(a) Advise directors, director

candidates, officers, and employees

about this part;

(b) Receive reports required by this

part;

(c) Make determinations required by

this part;

(d) Maintain records of your actions;

and

(e) Investigate as directed by your

board.

§ 612.2305 What must I investigate as a

Standards of Conduct Official?

As a Standards of Conduct Official

you must investigate or ensure

investigation of all:

(a) Possible director, officer,

employee, or agent violations of

criminal statutes;

(b) Possible violations of this part or

your institution’s policies and

procedures;

(c) Complaints against directors,

officers, and employees; and

(d) Activities or suspected activities

that could affect continued public

confidence in the System.

§ 612.2310 What must I report as a

Standards of Conduct Official?

(a) As a Standards of Conduct Official

you must promptly report to your board

and our Office of General Counsel:

(1) Any preliminary investigation that

shows a director, officer, employee, or

agent may have violated a criminal

statute;

(2) The removal of a director or agent

or discharge of an officer or employee as

a result of an investigation; and

(3) Any matter that may have an

adverse impact on continued public

confidence in the System or any of its

institutions.

(b) You must periodically report to

your board on other significant matters

you handle as a Standards of Conduct

Official.

Subpart E—Standards of Conduct for

Agents

§ 612.2400 What are my duties as an

agent?

You must maintain high standards of

honesty, integrity, and impartiality to

ensure proper performance of System

business and continued public

confidence in the System. You must

avoid misconduct and conflicts of

interest.

PART 614—LOAN POLICIES AND

OPERATIONS

2. The authority citation for part 614

continues to read as follows:

Authority: 42 U.S.C. 4012a, 4104a, 4104b,

4106, and 4128; secs. 1.3, 1.5, 1.6, 1.7, 1.9,

1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13,

2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28,

4.12, 4.12A, 4.13, 4.13B, 4.14, 4.14A, 4.14C,

4.14D, 4.14E, 4.18, 4.18A, 4.19, 4.25, 4.26,

4.27, 4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2,

7.6, 7.8, 7.12, 7.13, 8.0, 8.5 of the Farm Credit

Act (12 U.S.C. 2011, 2013, 2014, 2015, 2017,

2018, 2019, 2071, 2073, 2074, 2075, 2091,

2093, 2094, 2097, 2121, 2122, 2124, 2128,

2129, 2131, 2141, 2149, 2183, 2184, 2199,

2201, 2202, 2202a, 2202c, 2202d, 2202e,

2206, 2206a, 2207, 2211, 2212, 2213, 2214,

2219a, 2219b, 2243, 2244, 2252, 2279a,

2279a–2, 2279b, 2279c–1, 2279f, 2279f–1,

2279aa, 2279aa–5); sec. 413 of Pub. L. 100–

233, 101 Stat. 1568, 1639.

Subpart L—Actions on Applications;

Review of Credit Decisions

§ 614.4440 [Amended]

3. Amend § 614.4440(f) by removing

‘‘, subpart B’’ in the last sentence.

Dated: June 19, 2000.

Vivian L. Portis,

Secretary, Farm Credit Administration Board.

[FR Doc. 00–16054 Filed 6–29–00; 8:45 am]

BILLING CODE 6705–01–P

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 997

[No. 2000–15]

RIN 3069–AA92

Determination of Appropriate PresentValue Factors Associated With

Payments Made by the Federal Home

Loan Banks to the Resolution Funding

Corporation; Correction

AGENCY: Federal Housing Finance

Board.

ACTION: Final rule; correction.

SUMMARY: The Federal Housing Finance

Board (Finance Board) published in the

Federal Register of April 3, 2000, a final

rule implementing provisions of the

Gramm-Leach-Bliley Act (GrammLeach-Bliley) that changed the

methodology for determining the

amount of the payments to be made by

the Federal Home Loan Banks (Banks) to

the Resolution Funding Corporation

(REFCORP). The final rule omitted a

reference to the value of an annuity, as

referenced in Gramm-Leach-Bliley, in

one section of the rule. This document

corrects that omission.

EFFECTIVE DATES: Effective on June 30,

2000.

FOR FURTHER INFORMATION CONTACT:

Thomas E. Joseph, Attorney-Advisor,

(202) 408–2512, josepht@fhfb.gov, or by

regular mail at the Federal Housing

Finance Board, 1777 F Street, N.W.,

Washington, D.C. 20006. A

telecommunication device for deaf

persons (TDD) is available at (202) 408–

2579.

SUPPLEMENTARY INFORMATION:

Need for Correction

In FR Doc. 00–8116, published in the

Federal Register on April 3, 2000 (65 FR

17435), the Finance Board added new