Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Proposed Rules 65249

Wilson

Zapata

Zavala

* * * * *

West Virginia

West Virginia

Survey Area

West Virginia:

Cabell

Harrison

Kanawha

Marion

Monongalia

Putnam

Wayne

Ohio:

Lawrence

Kentucky:

Boyd Greenup

Area of Application. Survey Area Plus

West Virginia:

Barbour

Boone

Braxton

Calhoun

Clay

Doddridge

Fayette

Gilmer

Grant

Greenbrier

Jackson

Lewis

Lincoln

Logan

McDowell

Mason

Mercer

Mingo

Monroe

Nicholas

Pendleton

Pleasants

Pocahontas

Preston

Raleigh

Randolph

Ritchie

Roane

Summers

Taylor

Tucker

Tyler

Upshur

Webster

Wetzel

Wirt

Wood

Wyoming

Ohio:

Athens

Gallia

Jackson

Meigs

Monroe

Morgan

Noble

Pike

Scioto

Vinton

Washington

Kentucky:

Carter

Elliott

Floyd

Johnson

Lawrence

Lewis

Magoffin

Martin

Pike

Virginia (city):

Norton

Virginia (counties):

Dickenson

Wise

* * * * *

[FR Doc. 95–30737 Filed 12–18–95; 8:45 am]

BILLING CODE 6325–01–M

FEDERAL RESERVE SYSTEM

5 CFR Chapter LVIII

12 CFR Part 264

[Docket No. R–0900]

RIN 3209–AA15

Supplemental Standards of Ethical

Conduct for Employees of the Board of

Governors of the Federal Reserve

System

AGENCY: Board of Governors of the

Federal Reserve System (Board).

ACTION: Proposed rule.

SUMMARY: The Board of Governors of the

Federal Reserve System, with the

concurrence of the Office of

Government Ethics (OGE), proposes to

issue regulations for the officers and

employees of the Board that supplement

the Standards of Ethical Conduct for

Employees of the Executive Branch

issued by OGE. The proposed regulation

is a necessary supplement to the

Executive Branch-wide Standards

because it addresses ethical issues

unique to the Board. The regulation as

proposed would establish rules relating

to: financial interests and transactions;

borrowing and extensions of credit;

employment relationships of immediate

family members; and outside

employment. The Board is also

proposing to replace its old employee

conduct regulation with a residual

cross-reference to the new provisions.

DATES: Comments are invited and must

be received on or before February 20,

1996.

ADDRESSES: Comments should refer to

Docket No. R–0900, and may be mailed

to Williams W. Wiles, Secretary, Board

of Governors of the Federal Reserve

System, 20th Street and Constitution

Avenue, NW., Washington, DC 20551.

Comments also may be delivered to

Room B–2222 of the Eccles Building

between 8:45 a.m. and 5:15 p.m.

weekdays, or to the guard station in the

Eccles Building courtyard on 20th

Street, NW. (between Constitution

Avenue and C Street) at any time.

Comments received will be available for

inspection in Room MP–500 of the

Martin Building between 9:00 a.m. and

5:00 p.m. weekdays, except as provided

in 12 CFR 261.8 of the Board’s rules

regarding availability of information.

FOR FURTHER INFORMATION CONTACT: Cary

Williams, Managing Senior Counsel,

Legal Division, Board of Governors of

the Federal Reserve System, telephone

(202) 452–3295, FAX (202) 452–3101.

For the hearing impaired only,

Telecommunications Device for the

Deaf, Dorothea Thompson (202) 452–

3544.

SUPPLEMENTARY INFORMATION:

I. Background

On August 7, 1992, OGE published

the Standards of Ethical Conduct for

Employees in the Executive Branch. See

57 FR 35006–35067, as corrected at 57

FR 48557 and 57 FR 52583, with

additional grace period extensions at 59

FR 4779–4780 and 60 FR 6390–6391.

The Executive Branch-wide Standards

are now codified at 5 CFR part 2635.

Effective February 3, 1993, they

established uniform ethical conduct

standards applicable to all executive

branch personnel.

With the concurrence of OGE, 5 CFR

2635.105 authorizes executive agencies

to publish agency-specific supplemental

regulations necessary to implement

their respective ethics programs. The

Board, with OGE’s concurrence, has

determined that the following proposed

supplemental regulations are necessary

to implement the Board’s ethics

program successfully, in light of the

Board’s unique programs and

operations. The proposed supplemental

rule addresses issues relevant to the

Board’s roles with respect to monetary

policy and banking regulation. The

Board is also proposing to delete the

existing provisions of 12 CFR part 264

that its supplemental regulation, once

finally adopted, and the Executive

Branch-wide Standards supersede and

to add in their place a residual crossreference to the current provisions.

II. Analysis of the Proposed Regulations

Section 6801.101 General

Section 6801.101 explains that the

proposed regulations contained in the

rule would apply to all Board

employees, including Board members,

and are supplemental to the Executive

Branch-wide Standards.
65250 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Proposed Rules

Section 6801.102 Definitions

For purposes of interpreting the

provisions in this part, § 6801.102 sets

forth a proposed definition of the terms

‘‘affiliate,’’ ‘‘debt or equity interest,’’

‘‘dependent child,’’ ‘‘depository

institution,’’ ‘‘employee’’ and ‘‘primary

government securities dealer’’ and

‘‘supervisory employee.’’

Proposed § 6801.102 would include as

an affiliate companies that control, are

controlled by, or are under common

control with, a depository institution.

This definition was taken from the Bank

Holding Company Act of 1956 and is

intended to include any holding

companies, subsidiaries or other

affiliated companies of depository

institutions.

The term debt or equity interest as

proposed would include ‘‘secured and

unsecured bonds, debentures, notes,

securitized assets, commercial paper,

and preferred and common stock.’’ It

would extend to any right to acquire or

dispose of any such debt or equity

interest and to beneficial or legal

interests derived from a trust. The

proposed term does not, however,

include deposit accounts, future

interests created by someone other than

the employee or the employee’s spouse

or dependent, or any right as a

beneficiary of an estate that has not been

settled.

The term dependent child is to be

given the same meaning as in OGE’s

financial disclosure regulation at 5 CFR

2635.105(d).

The term depository institution is

defined in proposed § 6801.102 as any

institution that accepts deposits. This

would include thrifts and foreign banks.

The term employee would include all

Board employees, including Board

members, but would not include special

Government employees.

The term primary government

securities dealer as proposed is defined

as a firm with which the Federal

Reserve conducts its open market

operations.

The term supervisory employee would

encompass Board members, all

professional staff in the Division of

Banking Supervision and Regulation,

and professional staff in other divisions

who participate substantially in

supervisory matters involving

depository institutions.

Section 6801.103 Prohibited Financial

Interests

Section 6801.103(a) as proposed

would prohibit a Board employee, and

the spouse and minor child of a Board

employee, from owning or controlling

any debt or equity interest in a

depository institution or its affiliates or

of a primary government securities

dealer or its affiliates. Under 5 CFR

2635.403(a), an agency may, by

supplemental regulation, prohibit or

restrict the holding of a financial

interest by its employees and the

spouses and minor children of those

employees based on the agency’s

determination that the acquisition or

holding of such financial interest would

cause a reasonable person to question

the impartiality and objectivity with

which agency programs are

administered. The Board has

determined that, in light of the Board’s

sensitive bank regulatory and monetary

policy functions, the restriction is

necessary to: (1) Maintain public

confidence in the impartiality and

objectivity with which the Board

executes its regulatory and monetary

policy functions; (2) eliminate any

concern that sensitive information

provided to the Board might be misused

for private gain; and (3) avoid the widespread disqualification of employees

from official matters that might result in

the Board’s inability to fulfill its

mission.

The Board’s current rule prohibits

employees from holding equity interests

in banks or their affiliates. 12 CFR

264.735–6(d). This rule does not apply

to debt interests in banks, such as

bonds, or to equity interests in thrifts.

The proposed prohibition in

§ 6801.103(a) would extend to debt and

equity interests in all depository

institutions regardless of whether the

depository institution is regulated by

the Board. The Board believes that this

is appropriate in light of the Board’s

broad regulatory and supervisory

authority. For example, the Board is

responsible for setting reserve

requirements for all depository

institutions, and the Federal Reserve

System provides liquidity to all

depository institutions through the

discount window. In connection with a

discount window advance, the Board is

authorized to examine any depository

institution.

The Board’s current rule also

prohibits employees from holding

equity interests in government securities

dealers. 12 CFR 264.735–6(d). The

proposed rule would clarify and expand

this prohibition by extending to debt

and equity interests in primary

government securities dealers and their

affiliates. The Federal Reserve conducts

business with primary government

securities dealers, which in turn are

expected to facilitate the Federal

Reserve’s open market operations and to

provide the Federal Reserve with

information to assist it in performing its

duties. Primary government securities

dealers are required to submit reports

reflecting their activities to the Federal

Reserve on a regular basis, and must

meet qualification requirements of the

System and the Treasury Department

The proposed prohibition in

§ 6801.103(a) would apply to the spouse

and minor children of a Board

employee. In the past, spouses and

minor children of Board employees

have not been subject to the Board’s rule

on prohibited financial interests. As a

result, there has been a need to

disqualify employees from official

matters in order to avoid violations of

the criminal laws (18 U.S.C. 208) and in

order to maintain public confidence in

the objectivity and impartiality with

which Board programs are carried out.

Under 5 CFR 2635.403(a), any

restriction on the holdings of financial

interests by the spouses or minor

children of agency employees must be

based on the agency’s determination

that there is a direct and appropriate

nexus between the restriction as applied

to spouses and minor children and the

efficiency of the service. Based on the

experiences outlined above, and in

order to avoid the potential appearance

that an employee’s spouse could trade

on information obtained through the

employee’s position with the Board, the

Board has determined that such a nexus

exists.

Section 6801.103(b) as proposed

would provide several exceptions to the

proposed prohibition in § 6801.103(a)

on financial interests. The proposed

exceptions are intended to ease the

restrictions on the financial interests of

Board employees, their spouses and

minor children, and to permit interests

of a character unlikely to raise questions

regarding the objective or impartial

performance of Board employees’

official duties or the possible misuse of

their positions. The exception proposed

for nonbanking holding companies

would permit an employee to own stock

in an automobile manufacturer or a

retail company, for example, that owned

a credit card bank or other depository

institution, provided the company’s

principal line of business was not

banking. The next two proposed

exceptions would permit employees to

own interests in depository institutions

indirectly through investments in a

publicly traded or available mutual fund

(so long as it does not have a stated

policy of concentrating in the financial

services industry), or in a widely held,

diversified pension plan.

Section 6801.103(c) of the proposed

rule would authorize the Board’s

Designated Agency Ethics Official

(DAEO), in consultation with Division
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Proposed Rules 65251

management, to waive the prohibition

in § 6801.103(a) under certain limited

circumstances. In general, a request for

a waiver could be considered if the

prohibited interest is acquired without

specific intent, particularly if the owner

of the interest is the employee’s spouse

or minor child. However, the standards

for granting a waiver would be based, in

part, on the policies of each division

and, therefore, could vary among

divisions. For example, because of the

greater potential for an actual conflict of

interest arising from depository

institution stock ownership, the Board’s

Division of Banking Supervision and

Regulation could be less inclined to

consider a waiver request for these

interests than another division having

no regulatory responsibilities.

Proposed § 6801.103(d) would require

employees to consult with the DAEO

concerning the need for recusal as a

result of holding any debt or equity

interest based on an exception or a

waiver exception in 6801.103(b)(1) or

(c).

Section 6801.104 Speculative Dealings

[Reserved]

A provision of the Board’s current

ethics rules prohibits Board employees

from engaging in speculative dealings.

See 12 CFR 264.735–6(d)(iii). The Office

of Government Ethics has voiced

concern regarding this provision’s lack

of notice to employees as to what

constitutes speculative dealings. The

Board is in discussion with OGE about

this rule and may amend its

supplemental rule, once it is adopted as

a final rule, to include a provision on

speculation at some point in the future.

Board employees continue to be

prohibited by the Standards of Ethical

Conduct from engaging in a financial

transaction using, or appearing to use,

nonpublic information to further their

own private interests or those of

another. 5 CFR 2635.101(b)(14) and

2635.703.

Section 6801.105 Prohibition on

Preferential Terms From Regulated

Institutions

Proposed § 6801.105 would prohibit a

Board employee from entering into a

financial relationship with an entity

regulated by the Board if such

relationship is governed by terms more

favorable than those available in like

circumstances to members of the public.

This provision has always been a part of

the Board’s ethics regulation (12 CFR

264.735–6(b)(2)(i)), and the Board has

found that it has helped to remind

employees of their responsibility to

avoid receiving preferential treatment in

their personal dealings with regulated

entities.

Section 6801.106 Prohibition on

Supervisory Employees From Seeking

Credit From Institutions Involved in

Work Assignments

Section 6801.106 as proposed would

apply only to ‘‘supervisory employees.’’

The term ‘‘supervisory employee’’ is

defined in proposed § 6801.102(g) as all

professional staff at the Board with

responsibilities in the area of banking

supervision and regulation. This would

include all professional staff in the

Division of Banking Supervision and

Regulation, the Legal Division, and the

Division of Consumer and Community

Affairs; professional staff in the Division

of Research and Statistics who have

responsibility for applications;

professional staff in the Office of the

Inspector General who are involved in

evaluating the Supervision and

Regulation function; and the Board

members.

Section 6801.106(a) as proposed

would prohibit a supervisory employee

from seeking credit from, or

renegotiating or rolling over existing

credit with, a depository institution if

the employee is assigned to a matter

affecting that institution or if the

employee is aware of the pendency of

the matter and knows that he or she will

participate in the matter. This

prohibition would also apply for three

months after the employee’s

participation in the matter has ended. In

addition, proposed § 6801.106(b)

provides that a supervisory employee

must be disqualified from a matter if he

or she learns that his or her spouse or

other related persons or entities have

borrowed from a depository institution

that is a party to the matter while the

matter is pending. Section 6801.106(c)

provides a proposed exception to the

application of these provisions with

respect to borrowing through the use of

a credit card on terms and conditions

available to the general public, or to

borrowing through overdraft protection.

The Board’s DAEO may grant a waiver

of these provisions. The proposed

temporary ban on seeking credit is

necessary to prevent the potential

appearance that supervisory employees

might use their official position or their

contacts with a depository institution

resulting from their work on a matter

involving that institution, to obtain

loans or extensions of credit on

favorable terms. The Board’s current

rule does not contain restrictions in this

area.

Section 6801.107 Disqualification of

Supervisory Employees From Matters

Involving Lenders

A supervisory employee would be

restricted by proposed § 6801.107 from

participating in any matter in which a

depository institution or an affiliate of a

depository institution is a party if the

supervisory employee or the spouse or

dependent child of the supervisory

employee, or certain related entities are

indebted to the depository institution or

its affiliate. Typical consumer credit,

such as home mortgage loans and credit

card debt, would not give rise to the

disqualification requirement.

Section 6801.107 would supplement

§ 2635.502 of the Executive Branchwide Standards. The restriction is

necessitated by the frequent contact that

supervisory employees have with

lending institutions. The restriction as

proposed is designed to ensure that

supervisory employees do not benefit or

appear to benefit from their official

positions and do not lose or appear to

lose their impartiality.

Exceptions to the proposed restriction

related to borrowing relationships are

set forth in § 6801.107(b). Under the

exceptions, a supervisory employee

could participate in matters involving

depository institutions to which the

supervisory employee, or the

supervisory employee’s spouse or

dependent child, is indebted under one

of the conditions indicated in

subsection (b)(1)(i)–(iv) as proposed.

The exceptions proposed in

§ 6801.107(b) are intended to ease the

restrictions on supervisory employees’

participation in particular matters in

situations where a loan or extension of

credit is unlikely to raise issues

regarding the motivation of the lender or

the objective or impartial performance

of official duties by supervisory

employees.

Proposed § 6801.107(c) would give

the Board’s DAEO authority to grant a

written waiver from the prohibitions in

§ 6801.107 in accordance with 5 CFR

2635.502(d).

Section 6801.108 Restrictions

Resulting From Employment of Family

Members

Section 6801.108(a) as proposed

would require a supervisory employee

(as defined in § 6801.101(b)(2)) to report

the employment of an immediate family

member (spouse, child, parent or

sibling) if the immediate family member

is employed by a depository institution

or a depository institution affiliate. The

reporting requirement would be

triggered immediately upon the
65252 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Proposed Rules

supervisory employee’s discovery of the

employment relationship.

Under proposed § 6801.108(c), a

supervisory employee would be

disqualified from participating in any

matter involving an immediate family

member’s employer unless the

supervisory employee received the

appropriate authorization pursuant to

the standard in § 2635.502(d) of the

Executive Branch-wide Standards. This

proposed requirement would eliminate

the potential for any appearance of

preferential treatment in those instances

where employment of a family member

would be likely to raise questions

regarding the appropriateness of actions

taken by the employee.

Section 6801.109 Prior Approval for

Compensated Outside Employment

5 CFR 2635.803 provides that an

agency may, by supplemental

regulations, require its employees to

obtain prior approval before engaging in

outside employment when it has

determined that such a requirement is

necessary or desirable for the purpose of

administering its ethics program. The

Board’s current regulation at 12 CFR

264.735–6(c) imposes a requirement for

prior approval for outside business and

teaching. Based on its finding that this

requirement has helped to ensure that

employees’ outside activities conform to

applicable statutes and regulations, the

Board has determined to continue this

requirement in a somewhat modified

form. The proposed provision requires

prior written approval before engaging

in any compensated outside

employment, a defined term that may

provide more specific guidance to

employees than ‘‘outside business or

teaching,’’ the scope of which has not

always been clear.

III. Proposed Repeal of the Board’s

Regulations on Employee

Responsibilities and Conduct

The Board is also proposing to repeal

its regulations on the Responsibilities

and Conduct of Board Employees, 12

CFR part 264, and to add a residual

cross-reference to the new provisions.

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 has determined under the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) that this regulation will not

have a significant economic impact on

a substantial number of small business

entities because it affects only Board

employees.

Paperwork Reduction Act

The Board has determined that the

Paperwork Reduction Act (44 U.S.C.

chapter 35) does not apply because this

regulation does not contain any

information collection requirements that

require the approval of the Office of

Management and Budget.

List of Subjects

5 CFR Part 6801

Conflict of interests, Government

employees.

12 CFR Part 264

Conflict of interests, Federal Reserve

System.

Dated: November 3, 1995.

William W. Wiles,

Secretary, Board of Governors of the Federal

Reserve System.

Approved: November 13, 1995.

Stephen D. Potts,

Director, Office of Government Ethics.

For the reasons set forth in the

preamble, the Board, with the

concurrence with the Office of

Government Ethics, is proposing to

amend title 5 and chapter II of title 12

of the Code of Federal Regulations as

follows:

TITLE 5—[AMENDED]

1. A new chapter LVIII, consisting of

part 6801, is added to title 5 of the Code

of Federal Regulations to read as

follows:

CHAPTER LVIII—BOARD OF GOVERNORS

OF THE FEDERAL RESERVE SYSTEM

PART 6801—SUPPLEMENTAL

STANDARDS OF ETHICAL CONDUCT

FOR EMPLOYEES OF THE BOARD OF

GOVERNORS OF THE FEDERAL

RESERVE SYSTEM

Sec.

6801.101 Purpose.

6801.102 Definitions.

6801.103 Prohibited financial interests.

6801.104 Speculative dealings. [Reserved]

6801.105 Prohibition on preferential terms

from regulated institutions.

6801.106 Prohibition on supervisory

employees’ seeking credit from

institutions involved in work

assignments.

6801.107 Disqualification of supervisory

employees from matters involving

lenders.

6801.108 Restrictions resulting from

employment of family members.

6801.109 Prior approval for compensated

outside employment.

Authority: 5 U.S.C. 7301; 5 U.S.C. App.

(Ethics in Government Act of 1978); 12

U.S.C. 244, 248; 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(a),

2635.502, 2635.803.

§ 6801.101 Purpose.

In accordance with 5 CFR 2635.105,

the regulations in this part supplement

the Standards of Ethical Conduct for

Employees of the Executive Branch

found at 5 CFR part 2635. They apply

to members and other employees of the

Board of Governors of the Federal

Reserve System (‘‘Board’’).

§ 6801.102 Definitions.

For purposes of this part:

(a) Affiliate means any company that

controls, is controlled by, or is under

common corporate control with another

company.

(b) (1) Debt or equity interest includes

secured and unsecured bonds,

debentures, notes, securitized assets,

commercial paper, and preferred and

common stock. The term encompasses

both current and contingent ownership

interests therein; any such beneficial or

legal interest derived from a trust; any

right to acquire or dispose of any long

or short position in debt or equity

interests; any interests convertible into

debt or equity interests; and any

options, rights, warrants, puts, calls,

straddles, and derivatives with respect

thereto.

(2) Debt or equity interest does not

include deposits; credit union shares;

any future interest created by someone

other than the employee, his or her

spouse, or dependent; or any right as a

beneficiary of an estate that has not been

settled.

(c) Dependent child means an

employee’s son, daughter, stepson, or

stepdaughter if:

(1) Unmarried, under the age of 21,

and living in the employee’s household;

or

(2) Claimed as a ‘‘dependent’’ on the

employee’s income tax return.

(d) Depository institution means a

bank, trust company, thrift institution,

or any institution that accepts deposits,

including a bank chartered under the

laws of a foreign country.

(e) Employee means an officer or

employee of the Board, including a

Board member. It does not include a

special Government employee.

(f) Primary government securities

dealer means a firm with which the

Federal Reserve conducts its open

market operations.

(g) Supervisory employee means an

employee who is a member of the

professional staff at the Board with

responsibilities in the area of banking

supervision and regulation.
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Proposed Rules 65253

§ 6801.103 Prohibited financial interests.

(a) Prohibited interests. Except as

permitted by this section, an employee,

or an employee’s spouse or minor child,

shall not own or control, directly or

indirectly, any debt or equity interest in:

(1) A depository institution or any of

its affiliates; or

(2) A primary government securities

dealer or any of its affiliates.

(b) Exceptions. The prohibition in

paragraph (a) of this section does not

apply to the ownership or control of a

debt or equity interest in the following:

(1) Nonbanking holding companies. A

publicly traded holding company that:

(i) Owns a bank and either the

holding company or the bank is exempt

under the Bank Holding Company Act

of 1956, 12 U.S.C. 1841 et seq., (for

example, a credit card bank, a nonbank

bank or a grandfathered bank holding

company), and the holding company’s

predominant activity is not the

ownership or operation of banks and

thrifts;

(ii) Owns a thrift and its predominant

activity is not the ownership or

operation of banks and thrifts; or

(iii) Owns a primary government

securities dealer and its predominant

activity is not the ownership and

operation of banks, thrifts or securities

firms.

(2) Mutual funds. A publicly traded or

publicly available mutual fund or other

collective investment fund if:

(i) The fund does not have a stated

policy of concentration in the financial

services industry; and

(ii) Neither the employee nor the

employee’s spouse exercises or has the

ability to exercise control over the

financial interests held by the fund or

their selection.

(3) Pension plans. A widely held,

diversified pension or other retirement

fund that is administered by an

independent trustee.

(c) Waivers. The Board’s Designated

Agency Ethics Official, in consultation

with Division management, may grant a

written waiver permitting the employee

to own or control a debt or equity

interest prohibited by paragraph (a) of

this section if:

(1) Extenuating circumstances exist,

such as that ownership or control was

acquired:

(i) Through inheritance, gift, merger,

acquisition, or other change in corporate

structure, or otherwise without specific

intent on the part of the employee,

spouse, or minor child to acquire the

debt or equity interest; or

(ii) By an employee’s spouse as part

of a compensation package in

connection with the spouse’s

employment or prior to marriage to the

employee;

(2) The employee makes a prompt and

complete written disclosure of the

interest;

(3) The employee’s disqualification

from participating in any particular

matter having a direct and predictable

effect on the institution or any of its

affiliates does not unduly interfere with

the full performance of the employee’s

duties; and

(4) Granting the waiver would be

consistent with Division policy.

(d) Disqualification. If an employee or

an employee’s spouse or minor child

holds an interest in a holding company

under paragraph (b)(1) or (c) of this

section, the employee must consult the

Designated Agency Ethics Official in

order to determine whether the

employee must be disqualified from

participating in any particular matter

involving that holding company or

affiliate under the conflicts of interest

rules of the Office of Government

Ethics.

§ 6801.104 Speculative dealings.

[Reserved]

§ 6801.105 Prohibition on preferential

terms from regulated institutions.

An employee may not accept a loan

from, or enter into any other financial

relationship with, an institution

regulated by the Board, if the loan or

financial relationship is governed by

terms more favorable than would be

available in like circumstances to

members of the public.

§ 6801.106 Prohibition on supervisory

employees’ seeking credit from institutions

involved in work assignments.

(a) Prohibition on supervisory

employee’s seeking credit. (1) A

supervisory employee may not, on his

or her own behalf, or on behalf of his

or her spouse or child or anyone else

(including any business or nonprofit

organization), seek or accept credit

from, or renew or renegotiate credit

with, a depository institution or any of

its affiliates if the institution or affiliate

is a party to an application, enforcement

action, investigation, or other particular

matter involving specific parties

pending before the Board and:

(i) The supervisory employee is

assigned to the matter; or

(ii) The supervisory employee is

aware of the pendency of the matter and

knows that he or she will participate in

the matter by action, advice or

recommendation.

(2) The prohibition in paragraph (a)(1)

of this section also applies for three

months after the supervisory employee’s

participation in the matter has ended.

(b) Credit sought by spouse and other

related persons. A supervisory

employee must disqualify himself or

herself from participating (by action,

advice or recommendation) in any

application, enforcement action,

investigation or other particular matter

involving specific parties to which a

depository institution or any of its

affiliates is a party as soon as the

supervisory employee learns that any of

the following related persons are

seeking or have sought or accepted

credit from, or have renewed or

renegotiated credit with, the depository

institution or any of its affiliates while

the matter is pending before the Board:

(1) The employee’s spouse or

dependent child;

(2) A company or business if the

employee or the employee’s spouse or

dependent child owns or controls more

than 10 percent of its equity; or

(3) A partnership if the employee, or

the employee’s spouse or dependent

child is a general partner.

(c) Exception. The prohibition in

paragraph (a) of this section and the

disqualification requirement in

paragraph (b) of this section do not

apply with respect to credit obtained

through the use of a credit card or

overdraft protection on terms and

conditions available to the public.

(d) Waivers. The Board’s Designated

Agency Ethics Official, after consulting

with the relevant division director, may

grant a written waiver from the

prohibition in paragraph (a) of this

section, or the disqualification

requirement in paragraph (b) of this

section, based on a determination that

participation in matters otherwise

prohibited by this section would not

create an appearance of loss of

impartiality or use of public office for

private gain, and would not otherwise

be inconsistent with the Office of

Government Ethics’ Standards of Ethical

Conduct for Employees of the Executive

Branch (5 CFR part 2635) or prohibited

by law.

§ 6801.107 Disqualification of supervisory

employees from matters involving lenders.

(a) Disqualification required. A

supervisory employee may not

participate by action, advice or

recommendation in any application,

enforcement action, investigation, or

other particular matter involving

specific parties to which a depository

institution or its affiliate is a party if any

of the following are indebted to the

depository institution or any of its

affiliates:

(1) The employee;

(2) The spouse or dependent child of

the employee;
65254 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Proposed Rules

(3) A company or business if the

employee or the employee’s spouse or

dependent child owns or controls more

than 10 percent of its equity; or

(4) A partnership if the employee or

the employee’s spouse or dependent

child is a general partner.

(b) Exceptions—(1) Consumer credit

on nonpreferential terms.

Disqualification of a supervisory

employee is not required by paragraph

(a) of this section for the following types

of indebtedness if payment on the

indebtedness is current and the

indebtedness is on terms and conditions

offered to the public:

(i) Credit extended through the use of

a credit card;

(ii) Credit extended through use of an

overdraft protection line;

(iii) Amortizing consumer credit (e.g.,

home mortgage loans, automobile

loans); and

(iv) Credit extended under home

equity lines of credit.

(2) Indebtedness of a spouse or

dependent child. Disqualification is not

required with respect to any

indebtedness of the employee’s spouse

or dependent child, or a company,

business or partnership in which the

spouse or dependent child has an

interest described in paragraphs (a)(3)

and (a)(4) of this section, if:

(i) The indebtedness represents the

sole financial interest or responsibility

of the spouse, child, company, business

or partnership and is not derived from

the employee’s income, assets or

activities; and

(ii) The employee has no knowledge

of the identity of the lender.

(c) Waivers. The Board’s Designated

Agency Ethics Official, after consulting

with the relevant division director, may

grant a written waiver from the

disqualification requirement in

paragraph (a) of this section using the

authorization process set forth in the

Office of Government Ethics’ Standards

of Ethical Conduct at 5 CFR

2635.502(d).

§ 6801.108 Restrictions resulting from

employment of family members.

(a) Reporting certain employment

relationships. A supervisory employee

who has knowledge that his or her

spouse, child, parent or sibling is

employed by a depository institution or

its holding company shall report such

employment to his or her supervisor

and the Ethics Office within thirty days

of the commencement of the

supervisory employee’s employment at

the Board or promptly upon learning of

the employment relationship.

(b) Disqualification. A supervisory

employee may not participate in any

particular matter to which a depository

institution or its affiliate is a party if the

depository institution or affiliate

employs his or her spouse, child, parent

or sibling unless the supervising officer,

with the concurrence of the Board’s

Designated Agency Ethics Official, has

authorized the employee to participate

in the matter using the authorization

process set forth in the Office of

Government Ethics’ Standards of Ethical

Conduct at 5 CFR 2635.502(d).

§ 6801.109 Prior approval for compensated

outside employment.

(a) Approval requirement. An

employee shall obtain prior written

approval from his or her division

director (or the division director’s

designee) and the concurrence of the

Board’s Designated Agency Ethics

Official before engaging in compensated

outside employment.

(b) Standard for approval. Approval

will be granted unless a determination

is made that the prospective outside

employment is expected to involve

conduct prohibited by statute or Federal

regulation, including 5 CFR part 2635

and this part.

(c) Definition of employment. For

purposes of this section, the term

compensated outside employment

means any form of compensated nonFederal employment or business

relationship involving the provision of

personal services by the employee. It

includes, but is not limited to, personal

services as an officer, director,

employee, agent, attorney, consultant,

contractor, general partner, trustee,

teacher or speaker.

TITLE 12—BANKS AND BANKING

CHAPTER II—FEDERAL RESERVE SYSTEM

2. 12 CFR part 264 is revised to read

as follows:

PART 264—EMPLOYEE

RESPONSIBILITIES AND CONDUCT

§ 264.101 Cross-reference to employees’

ethical conduct standards and financial

disclosure regulations.

Employees of the Board of Governors

of the Federal Reserve System (Board)

are subject to the executive branch-wide

standards of ethical conduct at 5 CFR

part 2635 and the Board’s regulation at

5 CFR part 6801, which supplements

the executive branch-wide standards,

and the executive branch-wide financial

disclosure regulation at 5 CFR part

2634.

Authority: 5 U.S.C. 7301; 12 U.S.C. 244.

[FR Doc. 95–30581 Filed 12–18–95; 8:45 am]

BILLING CODE 6210–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 1

[Docket No. 25767; Notice No. 95–16]

RIN 2120–AF92

Definitions of Special Use Airspace;

Correction

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Correction to the notice of

proposed rulemaking.

SUMMARY: This document contains a

correction to the notice of proposed

rulemaking (NPRM), 60 FR 58494,

published on November 27, 1995. The

correction to the address in the

preamble reads as follows: Comments

may also be sent electronically to the

following Internet address:

nprmcmts@mail.hq.faa.gov.

ADDRESSES: Comments on this NPRM

should be mailed, in triplicate, to:

Federal Aviation Administration, Office

of the Chief Counsel, Attention: Rules

Docket (AGC–200), Docket No. 25767,

800 Independence Avenue, SW.,

Washington, DC 20591. Comments may

also be sent electronically to the

following Internet address:

nprmcmts@mail.hq.faa.gov. Comments

delivered must be marked Docket No.

25767. Comments may be examined in

Room 915G weekdays between 8:30 a.m.

and 5 p.m., except on Federal holidays.

Issued in Washington, DC on December 13,

1995.

Harold W. Becker,

Acting Program Director for Air Traffic Rules

and Procedures.

[FR Doc. 95–30777 Filed 12–18–95; 8:45 am]

BILLING CODE 4910–13–M

14 CFR Part 39

[Docket No. 95–NM–141–AD]

Airworthiness Directives; Beech Model

BAe 125–1000A and Hawker 1000

Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of proposed rulemaking

(NPRM).

SUMMARY: This document proposes the

adoption of a new airworthiness

directive (AD) that is applicable to all

Beech Model BAe 125–1000A and

Hawker 1000 series airplanes. This

proposal would require a detailed visual

inspection to detect chafing damage to

the hydraulic pipes adjacent to the