[Federal Register Volume 60, Number 87 (Friday, May 5, 1995)]
[Rules and Regulations]
[Pages 22249-22255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10941]



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DEPARTMENT OF THE TREASURY

5 CFR Chapter XXI

RIN 3209-AA15


Supplemental Standards of Ethical Conduct for Employees of the 
Department of the Treasury

AGENCY: Department of the Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury (Department), with the 
concurrence of the Office of Government Ethics (OGE), is issuing a 
final rule establishing uniform supplemental standards of ethical 
conduct for the officers and employees of the Department. The final 
rule is a necessary supplement to the Executive Branch-wide Standards 
because it addresses ethical issues unique to the Department. The final 
rule is effective upon publication and establishes regulations relating 
to: The designation of agency components for purposes of the rules 
concerning gifts and teaching, speaking and writing; prohibitions on 
the ownership of certain financial interests; prohibitions on certain 
forms of borrowing and extensions of credit; prohibitions on 
recommendations concerning certain securities and services of certain 
types of professionals; limitations on purchases of assets controlled 
by the Department or related to Department operations; and restrictions 
on outside employment and business activities.

EFFECTIVE DATE: May 5, 1995.

FOR FURTHER INFORMATION CONTACT: Stephen J. McHale, Henry H. Booth, or 
R. Peter Rittling, Office of the Assistant General Counsel (General Law 
and Ethics), Department of the Treasury, telephone (202) 622-0450, FAX 
(202) 622-1176, e-mail Peter.R<a href="/cdn-cgi/l/email-protection#4e273a3a222720290e3a3c2b2f3d603d3e3c27203a602d2123"><span class="__cf_email__" data-cfemail="87eef3f3ebeee9e0c7f3f5e2e6f4a9f4f7f5eee9f3a9e4e8ea">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Rulemaking Background

    On Tuesday August 3, 1993, the Department, with OGE's concurrence, 
published for comment a proposed rule to establish supplemental 
standards of ethical conduct for all Treasury Department employees (58 
FR 41193-41203). The proposed rule was intended 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 (5 
CFR Part 2635; see also the grace period extensions at 59 FR 4779-4780, 
Feb. 2, 1994, and 60 FR 6390-6391, Feb. 2, 1995). The proposed rule was 
issued pursuant to 5 CFR 2635.105, which authorizes executive branch 
agencies to publish agency-specific supplemental regulations necessary 
to implement their respective ethics programs. The Department, with 
OGE's concurrence, determined that the supplemental regulations 
contained in the proposed rule were necessary to implement the 
Department's ethics program successfully, considering the Department's 
unique programs and operations.
    The proposed rule prescribed a 30-day comment period and invited 
comments from all interested parties. The Department received timely 
comments from six sources, considered each comment carefully, and made 
appropriate modifications to the rule. The Department, with OGE's 
concurrence, is now publishing as a final rule the Supplemental 
Standards of Ethical Conduct for Employees of the Department of the 
Treasury, to be codified at a new part 3101, Title 5 of the Code of 
Federal Regulations.
    In a separate rule making, the Department is issuing as an interim 
rule the Department of the Treasury Employee Rules of Conduct. The 
Rules of Conduct will be codified at 31 CFR Part 0 and will prescribe 
Department-specific employee rules of conduct and procedure.

II. Summary of the Comments

    The Department received comments from two Department employees, two 
private financial institutions and two bureaus of the Department. The 
comments, discussed more fully below, fall into two general categories. 
The comments received from the Department employees and the financial 
[[Page 22250]] institutions asked for guidance on the application of 
either the rule in general or a specific section of the rule. The 
bureaus' comments recommended substantive changes to certain sections 
of the rule that applied specifically to their employees. After the 
comment period closed, certain offices in the Department requested 
changes to Sec. 3101.103 to make it more restrictive and to increase 
its coverage to include an employee's spouse and minor children. The 
suggested changes are being reviewed and may be implemented in the 
future by amending the rule. At this time, however, this section 
applies only to Department employees.

III. Analysis of the Comments

    One Department employee asked whether the final rule will apply 
retroactively. The employee was concerned that the final rule, once 
effective, would be used to discipline employees for actions taken 
before the effective date of the final rule. The final rule applies 
prospectively only.
    Another Department employee asked whether Sec. 3101.103, which 
prohibits Department employees from purchasing, either directly or 
indirectly, certain Government owned or controlled property, would 
apply to the relatives and friends of Department employees. Section 
3101.103 applies only to Department employees. However, a Department 
employee may not circumvent the prohibition by having a friend or 
relative purchase property for the employee's use or possession that 
the employee would otherwise be prohibited from purchasing. This is 
considered an indirect purchase and is prohibited by Sec. 3101.103.
    Two private financial institutions submitted comments asking 
whether the final rule will apply to the employees of private financial 
institutions. As stated in the Summary section of the proposed rule, 
the regulations will apply only to the officers and employees of the 
Department of the Treasury, with specific provisions also applicable to 
certain members of their families. This has not been changed; 
therefore, the final rule does not apply to private financial 
institutions or their employees.
    Finally, two bureaus of the Department, the OCC and the OTS, 
submitted comments recommending substantive changes to specific 
sections of the rule that will apply exclusively to their employees. 
All changes were incorporated into the final rule. In general, many of 
the regulations specific to OTS and OCC employees included in this rule 
are based on old OCC and OTS conduct regulations which predate and were 
displaced by the Executive Branch-wide Standards. These changes fixed 
inconsistencies between the new regulations and the old regulations on 
which they are based.
    The first change we made was to Sec. 3101.109(c)(3)(iii). Section 
3101.109(c)(3)(iii) prescribes an exception to the OTS borrowing 
prohibition contained in Sec. 3101.109(c). As proposed, the exception 
would have permitted an OTS employee to obtain a loan or extension of 
credit by assuming a mortgage loan on a personal residence without 
first obtaining approval from the bureau. In the final rule, the 
exception is retained but modified to require the employee to obtain 
the prior approval of the Chief Counsel, a Regional Director, Regional 
Deputy Director, or designee before securing a loan or extension of 
credit under this exception.
    We also revised Sec. 3101.109(c)(4). As proposed, 
Sec. 3101.109(c)(4) would have permitted covered OTS employees, their 
spouses and minor children, to retain preexisting credit in only three 
specific situations. In the final rule, Sec. 3101.109(c)(4) is revised 
to permit the retention of preexisting credit in a fourth situation. As 
modified, a covered employee, or a spouse or a minor child, may retain 
preexisting credit if the credit was extended before April 30, 1991, 
the date on which the borrowing prohibition included in 
Sec. 3101.109(c) was first implemented in the old OTS conduct rules. 
This final rule continues the OTS borrowing prohibition; therefore, it 
is necessary to include the exception for preexisting credit obtained 
before April 30, 1991, the date that the prohibition originally took 
effect.
    In the proposed rule, the prohibition on the purchase of assets in 
Sec. 3101.109(f), applied to all OTS employees, their spouses and minor 
children. In the final rule, the prohibition in Sec. 3101.109(f) was 
modified to apply only to ``covered'' OTS employees, their spouses and 
minor children. The reason for the modification was to make 
Sec. 3101.109(f) consistent with a similar prohibition contained in the 
old OTS conduct rules. The term covered OTS employee is defined in 
Sec. 3101.109(a).
    In a joint comment, both the OTS and the OCC recommended changing 
certain language in the exception to the prohibitions against owning 
certain financial interests. All recommended changes were incorporated 
into the final rule.
    Under Secs. 3101.108(a) and 3101.109(b) of the final rule, OCC 
employees and covered OTS employees are prohibited from owning the 
securities of entities regulated by their respective bureaus. However, 
under Secs. 3101.108(a)(3)(i) and 3101.109(b)(3)(i), which are nearly 
the same for the OCC and the OTS, an OCC or covered OTS employee may 
invest in a publicly traded or publicly available ``mutual fund or 
other collective investment fund or in a widely held pension or similar 
fund'' if the fund does not invest more than ``25 percent'' of its 
``assets'' in the securities of ``one or more'' regulated entities.
    In general, the revised exception describes in greater detail the 
types of funds in which an employee is permitted to invest. In the 
proposed rule, the exception was limited to ``publicly traded or 
publicly available investment fund[s].'' Now, under the modified 
exception, a covered employee may invest in a ``publicly traded or 
publicly available mutual fund or other collective investment fund,'' 
including a registered investment company like a money market fund, 
unit investment trust, or other publicly traded or publicly available 
pooled investment fund, or a ``widely held pension or similar fund,'' 
such as a deferred compensation plan administered by a corporation for 
its employees.
    Additionally, the effect of the exception, as revised, is to 
prohibit an employee from investing in a fund that invests more than 25 
percent of its assets in the securities of one or more regulated 
entities. This modification simplifies the restriction contained in the 
proposed rule that would have prohibited an employee from investing in 
a fund that invested more than 5 percent of its assets in the 
securities of one regulated entity or more than 20 percent of its 
assets in the securities of a regulated industry. The 25 percent 
limitation is based upon current security law and policy, including the 
definition of a diversified management company and the investment 
industry concentration limit contained in Secs. 5(b) and 8(b), 
respectively, of the Investment Company Act of 1940 (15 U.S.C. 80a-
5(b), 80a-8(b)). Overall, the changes to Secs. 3101.108(a) and 
3101.109(b)(3) will clarify the standards employees must follow in 
making personal investments.

IV. Change in the Final Rule

    Section 3101.102 lists the components of the Department that are 
designated as separate agencies for the purposes of the regulations 
contained in 5 CFR 2635.807 and subpart B of 5 CFR Part 2635. The 
United States Savings Bonds Division, which was listed as a separate 
agency in the proposed rule, is deleted from the list in the final rule 
because it was assumed into the Bureau of the Public 
[[Page 22251]] Debt after the proposed rule was published.
    Consistent with the additional grace period extensions at 59 FR 
4779-4780 and 60 FR 6390-6391, Sec. 3101.111 has been modified to 
grandfather until no later than January 3, 1996, the Secret Service 
rules prohibiting certain kinds of outside employment.

V. Matters of Regulatory Procedure

Executive Order 12866, Regulatory Planning and Review

    This rule is limited to agency organization, management and 
personnel matters; therefore, it is not subject to Executive Order 
12866.

Regulatory Flexibility Act

    It is hereby certified that this rule will not have significant 
economic impact on a substantial number of small entities. This rule 
affects only Federal employees and their immediate families.

List of Subjects in 5 CFR Part 3101

    Conflict of interests, Government employees.

    Dated: January 29, 1995.
Edward S. Knight,
General Counsel, Department of the Treasury.

    Approved: February 28, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the Department of the 
Treasury, in concurrence with the Office of Government Ethics, is 
amending title 5 of the Code of Federal Regulations by adding a new 
chapter XXI, consisting of part 3101, to read as follows:

CHAPTER XXI--DEPARTMENT OF THE TREASURY

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

Sec.
3101.101  General.
3101.102  Designation of separate agency components.
3101.103  Prohibition on purchase of certain assets.
3101.104  Outside employment.
3101.105  Additional rules for Bureau of Alcohol, Tobacco and 
Firearms employees.
3101.106  Additional rules for Internal Revenue Service employees.
3101.107  Additional rules for Legal Division employees.
3101.108  Additional rules for Office of the Comptroller of the 
Currency employees.
3101.109  Additional rules for Office of Thrift Supervision 
employees.
3101.110  Additional rules for United States Customs Service 
employees.
3101.111  Additional rules for United States Secret Service 
employees.

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


Sec. 3101.101  General.

    (a) Purpose. In accordance with 5 CFR 2635.105, the regulations in 
this part apply to employees of the Department of the Treasury and 
supplement the Standards of Ethical Conduct for Employees of the 
Executive Branch contained in 5 CFR part 2635. Employees are required 
to comply with 5 CFR part 2635, this part, and bureau guidance and 
procedures established pursuant to this section. Department employees 
are also subject to any additional rules of conduct that the Department 
or their employing bureaus are authorized to issue. See 31 CFR part 0, 
Department of the Treasury Employee Rules of Conduct.
    (b) Bureau instructions. With the concurrence of the Designated 
Agency Ethics Official (DAEO), bureaus of the Department of the 
Treasury are authorized to issue instructions or manual issuances 
providing explanatory guidance and establishing procedures necessary to 
implement this part and part 2635 of this title. See 5 CFR 2635.105(c).
    (c) Definition of ``agency designee''. As used in this part and in 
part 2635 of this title, the term ``agency designee'' refers to any 
employee who has been delegated authority by an instruction or manual 
issuance issued by a bureau under paragraph (b) of this section to make 
a determination, give an approval, or take other action required or 
permitted by this part or part 2635 of this title with respect to 
another employee. See 5 CFR 2635.102(b).


Sec. 3101.102  Designation of separate agency components.

    Pursuant to 5 CFR 2635.203(a), each of the following components of 
the Department of the Treasury is designated as a separate agency for 
purposes of the regulations contained in subpart B of 5 CFR part 2635 
governing gifts from outside sources and 5 CFR 2635.807 governing 
teaching, speaking or writing:
    (a) Bureau of Alcohol, Tobacco and Firearms (ATF);
    (b) Bureau of Engraving and Printing;
    (c) Bureau of the Public Debt;
    (d) Federal Law Enforcement Training Center;
    (e) Financial Management Service;
    (f) Internal Revenue Service (IRS);
    (g) Office of the Comptroller of the Currency (OCC);
    (h) Office of the Inspector General;
    (i) Office of Thrift Supervision (OTS);
    (j) United States Customs Service (USCS);
    (k) United States Mint; and
    (l) United States Secret Service.
    For purposes of this section, employees in the Legal Division shall 
be considered to be part of the bureaus or offices in which they serve.

    Note: As a result of the designations contained in this section, 
employees of the remaining parts of the Department of the Treasury 
(e.g., employees in Departmental Offices, including the Financial 
Crimes Enforcement Network) will also be treated as employees of an 
agency that is separate from all of the above listed bureaus and 
offices for purposes of determining whether the donor of a gift is a 
prohibited source under 5 CFR 2635.203(d) and for identifying an 
employee's ``agency'' under 5 CFR 2635.807 governing teaching, 
speaking and writing.


Sec. 3101.103  Prohibition on purchase of certain assets.

    (a) General prohibition. Except as provided in paragraph (b) of 
this section, no employee of the Department of the Treasury shall 
purchase, directly or indirectly, property:
    (1) Owned by the Government and under the control of the employee's 
bureau (or a bureau over which the employee exercises supervision); or
    (2) Sold under the direction or incident to the functions of the 
employee's bureau.
    (b) Exceptions. The prohibition in paragraph (a) of this section 
does not apply to the purchase of Government securities or items sold 
generally to the public at fixed prices, such as numismatic items 
produced by the United States Mint or foreign gifts deposited with the 
Department pursuant to 5 U.S.C. 7342 that an employee may purchase 
pursuant to 41 CFR part 101-49.
    (c) Waiver. An employee may make a purchase otherwise prohibited by 
this section where a written waiver of the prohibition has been given 
to the employee by an agency designee with the advice and legal 
clearance of the DAEO, or the appropriate Office of Chief or Legal 
Counsel. Such a waiver may be granted only on a determination that the 
waiver is not otherwise prohibited by law and that, in the mind of a 
reasonable person with knowledge of the particular circumstances, the 
purchase of the asset will not raise a question as to whether the 
employee has used his or her official position or inside information to 
obtain an [[Page 22252]] advantageous purchase or create an appearance 
of loss of impartiality in the performance of the employee's duties.

    Note: Employees of the OCC and OTS are subject to additional 
limitations on the purchase of assets that are set out in bureau-
specific rules contained in Secs. 3101.108 and 3101.109.


Sec. 3101.104  Outside employment.

    (a) General requirement for prior approval. All Department of the 
Treasury employees shall obtain prior written approval before engaging 
in any outside employment or business activities, with or without 
compensation, except to the extent that the employing bureau issues an 
instruction or manual issuance pursuant to paragraph (b) of this 
section exempting an activity or class of activities from this 
requirement. Approval shall be granted only on a determination that the 
employment or activity is not expected to involve conduct prohibited by 
statute, part 2635 of this title, or any provision of this part.

    Note: Employees of the ATF, IRS, Legal Division, OCC, USCS and 
United States Secret Service are subject to additional limitations 
on outside employment and activities that are set out in bureau-
specific rules contained in this part.

    (b) Bureau responsibilities. Each bureau, which for the purposes of 
this section includes the Departmental Offices and the Office of the 
Inspector General, shall issue instructions or manual issuances 
governing the submission of requests for approval of outside employment 
or business activities and designating appropriate officials to act on 
such requests. The instructions or manual issuances may exempt 
categories of employment or activities from the prior approval 
requirement based on a determination that employment or activities 
within those categories would generally be approved and are not likely 
to involve conduct prohibited by statute, part 2635 of this title or 
any provision of this part. Bureaus may include in their instructions 
or issuances examples of outside employment or activities that are 
permissible or impermissible consistent with this part and part 2635 of 
this title. Bureaus shall retain in employees' Official Personnel 
Folders (temporary side) all requests for approval whether granted or 
denied.


Sec. 3101.105  Additional rules for Bureau of Alcohol, Tobacco and 
Firearms employees.

    The following rules apply to the employees of the Bureau of 
Alcohol, Tobacco and Firearms and are in addition to Secs. 3101.101 
through 3101.104:
    (a) Prohibited financial interests. Except as provided in this 
section, no employee of the ATF, or spouse or minor child of an ATF 
employee, shall have, directly or indirectly, any financial interest, 
including compensated employment, in the alcohol, tobacco, firearms or 
explosives industries. The term financial interest is defined in 
Sec. 2635.403(c) of this title.
    (b) Waiver. An agency designee, with the advice and legal clearance 
of the DAEO or Office of the Chief Counsel, may grant a written waiver 
of the prohibition in paragraph (a) of this section on a determination 
that the financial interest is not prohibited by 26 U.S.C. 7214(b) and 
that, in the mind of a reasonable person with knowledge of the 
particular circumstances, the financial interest will not create an 
appearance of misuse of position or loss of impartiality, or call into 
question the impartiality and objectivity with which the ATF's programs 
are administered. A waiver under this paragraph may require appropriate 
conditions, such as execution of a written disqualification.


Sec. 3101.106  Additional rules for Internal Revenue Service employees.

    The following rules apply to the employees of the Internal Revenue 
Service and are in addition to Secs. 3101.101 through 3101.104:
    (a) Prohibited recommendations. Employees of the IRS shall not 
recommend, refer or suggest, specifically or by implication, any 
attorney, accountant, or firm of attorneys or accountants to any person 
in connection with any official business which involves or may involve 
the IRS.
    (b) Prohibited outside employment. Involvement by an employee of 
the IRS in the following types of outside employment or business 
activities is prohibited and shall constitute a conflict with the 
employee's official duties pursuant to 5 CFR 2635.802:
    (1) Performance of legal services involving Federal, State or local 
tax matters;
    (2) Appearing on behalf of any taxpayer as a representative before 
any Federal, State, or local government agency, in an action involving 
a tax matter except on written authorization of the Commissioner of 
Internal Revenue;
    (3) Engaging in accounting, or the use, analysis, and 
interpretation of financial records when such activity involves tax 
matters;
    (4) Engaging in bookkeeping, the recording of transactions, or the 
record-making phase of accounting, when such activity is directly 
related to a tax determination; and
    (5) Engaging in the preparation of tax returns for compensation, 
gift, or favor.
    (c) Seasonal employees. Seasonal employees of the IRS while in non-
duty status may engage in outside employment or activities other than 
those prohibited by paragraph (b) of this section without obtaining 
prior written permission.


Sec. 3101.107  Additional rules for Legal Division employees.

    The following rules apply to the employees of the Legal Division 
and are in addition to Secs. 3101.101 through 3101.104:
    (a) Application of rules of other bureaus. In addition to the rule 
contained in paragraph (b) of this section, employees in the Legal 
Division shall be covered by the rules contained in this part that are 
applicable to employees of the bureaus or offices in which the Legal 
Division employees serve, subject to any instructions which the General 
Counsel or appropriate Chief or Legal Counsel may issue in accordance 
with Sec. 3101.101(b).
    (b) Prohibited outside employment. Pursuant to 5 CFR 2635.802, it 
is prohibited and shall constitute a conflict with the employee's 
official duties for an attorney employed in the Legal Division to 
engage in the outside practice of law that might require the attorney 
to:
    (1) Take a position that is or appears to be in conflict with the 
interests of the Department of the Treasury which is the client to whom 
the attorney owes a professional responsibility; or
    (2) Interpret any statute, regulation or rule administered or 
issued by the Department.


Sec. 3101.108  Additional rules for Office of the Comptroller of the 
Currency employees.

    The following rules apply to the employees of the Office of the 
Comptroller of the Currency and are in addition to Secs. 3101.101-
3101.104:
    (a) Prohibited financial interests--(1) Prohibition. Except as 
provided in paragraphs (a)(3) and (g) of this section, no OCC employee, 
or spouse or minor child of an OCC employee, shall own, directly or 
indirectly, securities of any commercial bank (including both national 
and State-chartered banks) or commercial bank affiliate, including a 
bank holding company.
    (2) Definition of ``securities''. For purposes of paragraphs (a)(1) 
and (a)(3) of this section, the term ``securities'' includes all 
interests in debt or equity instruments. The term includes, without 
limitation, secured and unsecured bonds, debentures, notes, securitized 
assets and commercial paper, as well as [[Page 22253]] all types of 
preferred and common stock. The term encompasses both current and 
contingent ownership interests, including any beneficial or legal 
interest derived from a trust. It extends to any right to acquire or 
dispose of any long or short position in such securities and includes, 
without limitation, interests convertible into such securities, as well 
as options, rights, warrants, puts, calls, and straddles with respect 
thereto.
    (3) Exceptions. Nothing in this section prohibits an OCC employee, 
or spouse or minor child of an OCC employee, from:
    (i) Investing in a publicly traded or publicly available mutual 
fund or other collective investment fund or in a widely held pension or 
similar fund provided that the fund does not invest more than 25 
percent of its assets in securities of one or more commercial banks 
(including both national and State-chartered banks) and commercial bank 
affiliates (including bank holding companies) and the employee neither 
exercises control over nor has the ability to exercise control over the 
financial interests held in the fund;
    (ii) Investing in the publicly traded securities of a holding 
company of a nonbank bank or of a retailing firm that owns or sponsors 
a credit card bank as defined by the Competitive Equality Banking Act 
of 1987, except that an employee who owns such an interest must be 
disqualified from participating in the regulation or supervision of the 
nonbank bank or the credit card bank;
    (iii) Using a commercial bank or commercial bank affiliate as 
custodian or trustee of accounts containing tax-deferred retirement 
funds; or
    (iv) Owning any security pursuant to a waiver granted under 
paragraph (g) of this section.
    (b) Prohibited borrowing--(1) Prohibition on employee borrowing. 
Except as provided in this section, no covered OCC employee shall seek 
or obtain any loan or extension of credit, including credit obtained 
through the use of a credit card, from any national bank or from an 
officer, director, employee, or subsidiary of any national bank.
    (2) Prohibition on borrowing by a spouse or minor child. The 
prohibition in paragraph (b)(1) of this section shall apply to the 
spouse or minor child of a covered OCC employee unless the loan or 
extension of credit:
    (i) Is supported only by the income or independent means of the 
spouse or minor child;
    (ii) Is obtained on terms and conditions no more favorable than 
those offered to the general public; and
    (iii) The covered OCC employee does not participate in the 
negotiation for the loan or serve as co-maker, endorser, or guarantor 
of the loan.
    (3) Covered OCC employee. For purposes of the prohibitions on 
borrowing contained in paragraphs (b)(1) and (b)(2) of this section, 
``covered OCC employee'' means:
    (i) An OCC bank examiner; and
    (ii) Any other OCC employee specified in an OCC instruction or 
manual issuance whose duties and responsibilities, as determined by the 
Comptroller of the Currency or his or her designee, require application 
of the prohibition on borrowing contained in this section to ensure 
public confidence that the OCC's programs are conducted impartially and 
objectively.
    (4) Exceptions. Nothing in this section prohibits a covered OCC 
employee, or the spouse or minor child of a covered OCC employee, from 
obtaining a loan or extension of credit described in paragraphs 
(b)(4)(i) through (b)(4)(iii) of this section from a national bank if 
the loan or extension of credit is obtained on terms and conditions no 
more favorable than those offered to the general public, the employee 
is not assigned to examine the bank at the time the loan or extension 
of credit is obtained, and the employee submits to the Chief Counsel or 
designee a written disqualification from examining or otherwise 
participating in the supervision of the bank. The exceptions provided 
by this paragraph are for loans or extensions of credit obtained:
    (i) Through use of a credit card issued by a national bank where:
    (A) The employee is assigned to a district office and the bank is 
not headquartered in the employee's district;
    (B) The employee is assigned to the Multinational Division and the 
bank is not supervised by that Division; or
    (C) The employee is assigned to the Washington office (other than 
the Multinational Division);
    (ii) Through use of a national bank credit card sponsored by a 
retailing firm (e.g., Nordstrom, Lord and Taylor, Amoco Oil Company); 
or
    (iii) Through assumption of a mortgage loan on the employee's 
residence which is liquidated in accordance with its original terms 
without renewal or renegotiation.
    (5) Pre-existing credit. This section does not prohibit a covered 
OCC employee, or spouse or minor child of a covered OCC employee, from 
retaining a loan from a national bank on its original terms if the loan 
was incurred prior to employment by the OCC or as a result of the sale 
or transfer of a loan to a national bank or the conversion or merger of 
the lender into a national bank. Any renewal or renegotiation of a pre-
existing loan or extension of credit will be treated as a new loan 
subject to the prohibitions in paragraphs (b)(1) and (b)(2) of this 
section.
    (c) Restrictions arising from third party relationships. If any of 
the entities listed in paragraphs (c)(1) through (c)(7) of this section 
have securities that an OCC employee would be prohibited from having by 
paragraph (a) of this section, or loans or extensions of credit that a 
covered OCC employee would be prohibited from obtaining under paragraph 
(b) of this section, the employee shall promptly report such interests 
to the Chief Counsel or designee. The Chief Counsel or designee may 
require the employee to terminate the third party relationship, 
undertake an appropriate disqualification, or take other appropriate 
action necessary, under the particular circumstances, to avoid a 
statutory violation or a violation of part 2635 of this title, or this 
part, including an appearance of misuse of position or loss of 
impartiality. This paragraph applies to any:
    (1) Partnership in which the employee, or spouse or minor child of 
the employee, is a general partner;
    (2) Partnership in which the employee, or spouse or minor child of 
the employee, individually or jointly holds more than a 10 percent 
limited partnership interest;
    (3) Closely held corporation in which the employee, or spouse or 
minor child of the employee, individually or jointly holds more than a 
10 percent equity interest;
    (4) Trust in which the employee, or spouse or minor child of the 
employee, has a legal or beneficial interest;
    (5) Investment club or similar informal investment arrangement 
between the employee, or spouse or minor child of the employee, and 
others;
    (6) Qualified profit sharing, retirement or similar plan in which 
the employee, or spouse or minor child of the employee, has an 
interest; or
    (7) Other entity if the employee, or spouse or minor child of the 
employee, individually or jointly holds more than a 25 percent equity 
interest.
    (d) Prohibited recommendations. Employees of the OCC shall not make 
recommendations or suggestions, directly or indirectly, concerning the 
acquisition or sale or other divestiture of securities of any 
commercial bank or commercial bank affiliate, including a bank holding 
company.
    (e) Prohibited purchase of assets. No employee of the OCC, or 
spouse or [[Page 22254]] minor child of an OCC employee, shall 
purchase, directly or indirectly, an asset (e.g., real property, 
automobiles, furniture, or similar items) from a national bank or 
national bank affiliate, including a bank holding company, unless it is 
sold at a public auction or by other means which assure that the 
selling price is the asset's fair market value.
    (f) Outside employment--(1) Prohibition on outside employment. No 
covered OCC employee shall perform services for compensation for any 
bank, banking or loan association, or national bank affiliate, or for 
any officer, director or employee of, or for any person connected in 
any capacity with a bank, banking or loan association or national bank 
affiliate.
    (2) Covered OCC employee. For purposes of the prohibitions on 
outside employment contained in paragraph (f)(1) of this section, 
``covered OCC employee'' means:
    (i) An OCC bank examiner; and
    (ii) Any other OCC employee specified in an OCC instruction or 
manual issuance whose duties and responsibilities, as determined by the 
Comptroller of the Currency or his or her designee, require application 
of the prohibition on outside employment contained in this section to 
ensure public confidence that the OCC's programs are conducted 
impartially and objectively.
    (g) Waivers. An agency designee may grant a written waiver from any 
provision of this section based on a determination made with the advice 
and legal clearance of the DAEO or Office of the Chief Counsel that the 
waiver is not inconsistent with part 2635 of this title or otherwise 
prohibited by law and that, under the particular circumstances, 
application of the prohibition is not necessary to avoid the appearance 
of misuse of position or loss of impartiality or otherwise to ensure 
confidence in the impartiality and objectivity with which agency 
programs are administered. A waiver under this paragraph may impose 
appropriate conditions, such as requiring execution of a written 
disqualification.


Sec. 3101.109  Additional rules for Office of Thrift Supervision 
employees.

    The following rules apply to the employees of the Office of Thrift 
Supervision and are in addition to Secs. 3101.101 through 3101.104:
    (a) Covered OTS employee. For purposes of this section, the term 
``covered OTS employee'' means:
    (1) An OTS examiner;
    (2) An employee in a position at OTS grade 17 or above; and
    (3) Any other OTS employee specified in an OTS instruction or 
manual issuance whose duties and responsibilities, as determined by the 
Director of the OTS or his or her designee, require application of the 
prohibitions contained in this section to ensure public confidence that 
the OTS's programs are conducted impartially and objectively.
    (b) Prohibited financial interests--(1) Prohibition. Except as 
provided in paragraphs (b)(3) and (g) of this section, no covered OTS 
employee, or spouse or minor child of a covered OTS employee, shall 
own, directly or indirectly, securities of any OTS-regulated savings 
association or savings association holding company.
    (2) Definition of ``securities''. For purposes of paragraphs (b)(1) 
and (b)(3) of this section, the term ``securities'' includes all 
interests in debt or equity instruments. The term includes, without 
limitation, secured and unsecured bonds, debentures, notes, securitized 
assets and commercial paper, as well as all types of preferred and 
common stock. The term encompasses both current and contingent 
ownership interests, including any beneficial or legal interest derived 
from a trust. It extends to any right to acquire or dispose of any long 
or short position in such securities and includes, without limitation, 
interests convertible into such securities, as well as options, rights, 
warrants, puts, calls, and straddles with respect thereto.
    (3) Exceptions. Nothing in this section prohibits a covered OTS 
employee, or spouse or minor child of a covered OTS employee, from:
    (i) Investing in a publicly traded or publicly available mutual 
fund or other collective investment fund or in a widely held pension or 
similar fund provided that the fund does not invest more than 25 
percent of its assets in securities of one or more OTS-regulated 
savings associations or savings association holding companies and the 
employee neither exercises control over nor has the ability to exercise 
control over the financial interests held in the fund;
    (ii) Investing in certain non-financial holding companies whose 
principal business is unrelated to the financial services industry and 
which are identified as such on a list maintained by the Chief Counsel 
of the OTS;
    (iii) Using a savings association as custodian or trustee of 
accounts containing tax-deferred retirement funds; or
    (iv) Owning any security pursuant to a waiver granted under 
paragraph (g) of this section.
    (c) Prohibited borrowing--(1) Prohibition on employee borrowing. 
Except as provided in this section, no covered OTS employee shall seek 
or obtain any loan or extension of credit, including credit obtained 
through the use of a credit card, from any OTS-regulated savings 
association or an officer, director, employee, or subsidiary of any 
such association.
    (2) Prohibition on borrowing by a spouse or minor child. The 
prohibition in paragraph (c)(1) of this section shall apply to the 
spouse or minor child of a covered OTS employee unless the loan or 
extension of credit:
    (i) Is supported only by the income or independent means of the 
spouse or minor child;
    (ii) Is obtained on terms and conditions no more favorable than 
those offered to the general public; and
    (iii) The covered OTS employee does not participate in the 
negotiation for the loan or serve as co-maker, endorser, or guarantor 
of the loan.
    (3) Exceptions. Nothing in this section prohibits a covered OTS 
employee, or the spouse or minor child of a covered OTS employee, from 
obtaining a loan or extension of credit described in paragraphs 
(c)(3)(i) through (c)(3)(iii) of this section from an OTS-regulated 
savings association if the loan or extension of credit is obtained on 
terms and conditions no more favorable than those offered to the 
general public, the employee is not assigned to examine the savings 
association at the time the loan or extension of credit is obtained, 
and the employee submits to the Chief Counsel or designee a written 
disqualification from examining or otherwise participating in the 
supervision of the savings association. The exceptions provided by this 
paragraph are for loans or extensions of credit obtained:
    (i) Through use of a credit card issued by a savings association 
where:
    (A) The employee is assigned to a regional office and the savings 
association is not headquartered in the employee's region; or
    (B) The employee is assigned to the Washington office;
    (ii) Through use of a savings association credit card sponsored by 
a retailing firm (e.g., Sears); or
    (iii) Through assumption of a mortgage loan on the employee's 
residence which is liquidated in accordance with its original terms 
without renewal or renegotiation, with prior approval from the Chief 
Counsel, a Regional Director, Regional Deputy Director or designee.
    (4) Pre-existing credit. This section does not prohibit a covered 
OTS [[Page 22255]] employee, or spouse or minor child of a covered OTS 
employee, from retaining a loan from an OTS-regulated savings 
association on its original terms if the loan was incurred prior to 
April 30, 1991, or employment by the OTS, whichever date is later, or 
as a result of the sale or transfer of the loan to a savings 
association or the conversion or merger of the lender into an OTS-
regulated savings association. Any renewal or renegotiation of a pre-
existing loan or extension of credit is covered by paragraphs (c)(1) 
and (c)(2) of this section.
    (d) Restrictions arising from third party relationships. If any of 
the entities listed in paragraphs (d)(1) through (d)(7) of this section 
have securities that a covered OTS employee would be prohibited from 
having by paragraph (b) of this section, or loans or extensions of 
credit that a covered OTS employee would be prohibited from obtaining 
under paragraph (c) of this section, the employee shall promptly report 
such interests to the Chief Counsel or designee. The Chief Counsel or 
designee may require the employee to terminate the third party 
relationship, undertake an appropriate disqualification, or take other 
appropriate action necessary, under the particular circumstances, to 
avoid a statutory violation or a violation of part 2635 of this title 
or this part, including an appearance of misuse of position or loss of 
impartiality. This paragraph (d) applies to any:
    (1) Partnership in which the employee, or spouse or minor child of 
the employee, is a general partner;
    (2) Partnership in which the employee, or spouse or minor child of 
the employee, individually or jointly holds more than a 10 percent 
limited partnership interest;
    (3) Closely held corporation in which the employee, or spouse or 
minor child of the employee, individually or jointly holds more than a 
10 percent equity interest;
    (4) Trust in which the employee, or spouse or minor child of the 
employee, has a legal or beneficial interest;
    (5) Investment club or similar informal investment arrangement 
between the employee, or spouse or minor child of the employee, and 
others;
    (6) Qualified profit sharing, retirement or similar plan in which 
the employee, or spouse or minor child of the employee, has an 
interest; or
    (7) Other entity if the employee, or spouse or minor child of the 
employee, individually or jointly holds more than a 25 percent equity 
interest.
    (e) Prohibited recommendations. Employees of the OTS shall not make 
recommendations or suggestions, directly or indirectly, concerning the 
acquisition or sale, or other divestiture of securities of any OTS-
regulated savings association or savings association holding company.
    (f) Prohibited purchase of assets. No covered OTS employee, or 
spouse or minor child of a covered OTS employee, shall purchase, 
directly or indirectly, an asset (e.g., real property, automobiles, 
furniture, or similar items) from a savings association or savings 
association affiliate, including a savings association holding company, 
unless it is sold at a public auction or by other means which assure 
that the selling price is the asset's fair market value.
    (g) Waivers. An agency designee may grant a written waiver from any 
provision of this section based on a determination made with the advice 
and legal clearance of the DAEO or Office of the Chief Counsel that the 
waiver is not inconsistent with part 2635 of this title or otherwise 
prohibited by law and that, under the particular circumstances, 
application of the prohibition is not necessary to avoid the appearance 
of misuse of position or loss of impartiality, or otherwise to ensure 
confidence in the impartiality and objectivity with which agency 
programs are administered. A waiver under this paragraph may impose 
appropriate conditions, such as requiring execution of a written 
disqualification.


Sec. 3101.110  Additional rules for United States Customs Service 
employees.

    The following rules apply to the employees of the United States 
Customs Service and are in addition to Secs. 3101.101 through 3101.104:
    (a) Prohibition on outside employment. No employee of the USCS 
shall work for a customs broker, international carrier, bonded 
warehouse, foreign trade zone, cartman, law firm engaged in the 
practice of customs law or importation department of a business, nor be 
employed in any private capacity related to the importation or 
exportation of merchandise.
    (b) Restrictions arising from employment of relatives. If the 
spouse of a USCS employee, or other relative who is dependent on or 
resides with a USCS employee, is employed in a position that the 
employee would be prohibited from occupying by paragraph (a) of this 
section, the employee shall file a report of family member employment 
with his or her supervisor. Supervisors shall forward such reports to 
the appropriate Regional Counsel for transmittal to the Chief Counsel. 
The employee shall be disqualified from participation in any matter 
involving the relative or the relative's employer unless an agency 
designee, with the advice and legal clearance of the DAEO or Office of 
the Chief Counsel, authorizes the employee to participate in the matter 
using the standard in Sec. 2635.502(d) of this title.


Sec. 3101.111  Additional rules for United States Secret Service 
employees. [Reserved]

[FR Doc. 95-10941 Filed 5-4-95; 8:45 am]
BILLING CODE 4810-25-P

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