This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

20171

Vol. 60, No. 79

Tuesday, April 25, 1995

FEDERAL DEPOSIT INSURANCE

CORPORATION

5 CFR Part 3201

12 CFR Part 336

RINs 3064–AA08, 3209–AA15

Supplemental Standards of Ethical

Conduct for Employees of the Federal

Deposit Insurance Corporation

AGENCY: Federal Deposit Insurance

Corporation (FDIC or Corporation).

ACTION: Final rule.

SUMMARY: The Federal Deposit

Insurance Corporation, with the

concurrence of the Office of

Government Ethics (OGE), is issuing a

final rule establishing uniform

standards of ethical conduct for

employees of the Corporation to

supplement the Standards of Ethical

Conduct for Employees of the Executive

Branch (Executive Branch-wide

Standards) issued by OGE. The final

rule will become effective 30 days after

the date of publication, and will

establish: prohibitions on borrowing

and extensions of credit; prohibitions on

the ownership of certain financial

interests; prohibitions on the purchase

of property controlled by the

Corporation or the Resolution Trust

Corporation (RTC); limitations on

official dealings with former employers

and clients; disqualification

requirements relating to employment of

family members outside the

Corporation; and limitations on outside

employment activities.

EFFECTIVE DATE: May 25, 1995.

FOR FURTHER INFORMATION CONTACT:

Katherine A. Corigliano, Assistant

Executive Secretary (Ethics), (202) 898–

7272; Richard M. Handy, Ethics

Program Manager, (202) 898–7271; or

Paul A. Jeddeloh, Senior Program

Attorney, (202) 898–7161, in the Office

of the Executive Secretary of the FDIC.

SUPPLEMENTARY INFORMATION:

I. Background

On July 12, 1994, with the

concurrence of OGE, the Corporation

published for comment a proposed rule

to establish supplemental standards of

ethical conduct for employees of the

FDIC (59 FR 35480–35487). The

proposed rule was issued to supplement

the Standards of Ethical Conduct for

Employees of the Executive Branch

published by OGE on August 7, 1992,

and effective February 3, 1993 (57 FR

35006–35067, as corrected at 57 FR

48557 and 57 FR 52583, with additional

grace period extensions for certain

existing agency standards of conduct at

59 FR 4779–4780 and 60 FR 6390–6391,

which grace period expires on January

3, 1996). The Executive Branch-wide

Standards, now codified at 5 CFR part

2635, establish uniform standards of

ethical conduct for executive branch

employees. The proposed rule was

issued pursuant to 5 CFR 2635.105 and

the Resolution Trust Corporation

Completion Act (P.L. 103–204) which

authorize the Corporation to publish

agency-specific supplemental

regulations necessary to implement its

ethics program. The Corporation, with

the concurrence of OGE, determined

that the supplemental regulations

contained in the proposed rule were

necessary successfully to continue the

Corporation’s ethics program in light of

the Corporation’s unique programs and

operations.

The proposed rule prescribed a 60-

day comment period and invited

comments from all interested parties.

The Corporation received nine comment

letters and, after careful consideration of

each comment, has made appropriate

modifications to the rule. Technical

changes were made to accommodate the

formation, subsequent to the publication

of the proposed rule, of a new Division

within the Corporation—the Division of

Compliance and Consumer Affairs. At

the request of the Board of Directors, a

provision was added to the credit

restrictions in order to retain the current

restrictions for certain categories of

employees of the Division of Depositor

and Asset Services. The Corporation,

with the concurrence of OGE, is now

publishing as a final rule the

Supplemental Standards of Conduct for

Employees of the Federal Deposit

Insurance Corporation, to be codified in

new part 3201 of 5 CFR chapter XXII.

II. Summary of the Comments

The Corporation received comments

from eight employees and one financial

institution trade association. The

comments from employees contained

both requests for substantive changes

and for guidance on the application of

the rule in general or in specific

sections. The comments received from

the trade association expressed support

for certain specific sections of the rule

and suggested substantive changes.

III. Analysis of the Comments

Section 3201.101 General

One commenter requested guidance

on the meaning of the term employee as

defined in § 3201.101(d) as it would be

applied to employees of contractors

doing business with the Corporation. As

required by section 19 of the Resolution

Trust Corporation Completion Act and

implemented in the final rule, the term

employee includes any individual who,

pursuant to a contract or any other

arrangement, performs functions or

activities of the Corporation, under the

direct supervision of an officer or

employee of the Corporation. All

employees of contractors who fall under

such definition would be subject to the

Executive Branch-wide Standards and

specified provisions of part 3201.

Section 3201.102 Extensions of Credit

From FDIC-Insured Depository

Institutions

One commenter, in reference to the

preamble discussion of § 3201.102(c) in

the proposed rule, asked whether the

prohibition on examiners obtaining

extensions of credit from institutions

that they have examined carried a time

limitation and expressed concern that

the restriction, if it did not carry a time

limitation, was too severe. The

prohibition referred to by the

commenter is found at 18 U.S.C. 213, a

criminal statute, and was referenced in

the preamble to assist the reader in

understanding part of the basis for the

imposition of the restrictions found at

§ 3201.102(c). 18 U.S.C. 213 does not

carry a time limitation.

One commenter suggested that, for

purposes of § 3201.102(c), an examiner

might not be aware of the identity of the

person or company from whom or

which he or she intended to obtain
20172 Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations

credit. The Board believes it is

reasonable to expect an employee to

make inquiries in order to ascertain the

identity of a lender prior to engaging in

a credit transaction. Similarly, the same

commenter suggested that, for purposes

of § 3201.102(c)(ii), the headquarters of

a credit card issuer might not be readily

apparent. The Board believes it is also

reasonable to expect employees of the

Division of Supervision and the

Division of Compliance and Consumer

Affairs to make inquiries to ascertain the

location of the headquarters of a credit

card issuer.

The Corporation did not adopt the

suggestion of one employee, in reference

to § 3201.102(d) and § 3201.103(c), to

restate in part 3201 the text of certain

definitions found in the Executive

Branch-wide Standards and referred to

in such part. Since part 3201 is a

supplement to the Executive Branchwide Standards, it is appropriate to

make references to the text of the

primary regulation.

The Corporation did not adopt the

suggestions of two employees to narrow

or remove the provisions of the

regulation found at §§ 3201.102(a), as

well as at 3201.103(a) and 3201.104(a),

under which the interests of an

employee’s spouse or minor child are to

be considered as if they were the

interests of the employee. The Board

determined that the application of the

prohibitions in §§ 3201.102 to 3201.104

to the interests of a spouse or minor

child of an employee is necessary to

avoid the appearance of a lack of

impartiality by the employee in his or

her official dealings and to avoid a

significant number of recusals which

would hinder program operations. The

application of these provisions to the

interests of a spouse or minor child is

consistent with such application in

§ 2635.403(a) of the Executive Branchwide Standards.

The trade association, commenting on

the proposed rule, expressed support for

the provisions of § 3201.102 but

expressed concern that an unreasonable

recordkeeping burden might result from

the two-year prohibition on acceptance

of credit found at § 3201.102(d). The

Board does not believe that compliance

with the provision would create an

unreasonable recordkeeping burden

since employees have the responsibility

to keep track of matters in which they

have participated and since such

requirement imposes no greater burden

on an employee than is imposed by

other ethics provisions, such as the

statutory post-employment restrictions

found at 18 U.S.C. 207 (a)(1) and (a)(2).

Section 3201.103 Prohibitions on

Ownership of Securities of FDIC-Insured

Depository Institutions

One employee and the trade

association commented that the

exception dealing with the ownership of

interests in investment funds set forth at

§ 3201.103(b)(5) was too restrictive since

its practical application would prohibit

ownership interests in investment funds

which might not hold interests in FDICinsured depository institutions. Based

upon the comments, the reference to a

fund ‘‘concentrating its investments in

the financial services sector’’ was

deleted and replaced with language

which prohibits an employee from

acquiring an interest in a fund which, at

the time an employee acquires an

interest, holds more than 30 percent of

its investments in FDIC-insured

depository institutions or FDIC-insured

depository institution holding

companies. Under the revised provision,

an employee is required to verify the

holdings of the investment fund at any

time the employee acquires an interest

in the fund, unless the acquisition

results from the ordinary reinvestment

of earnings the employee has accrued

from ownership interests in the fund.

The revised provision addresses the

Corporation’s concern over employees

holding ownership interests in the

institutions that it insures by

prohibiting the acquisition of interests

in banking sector funds and provides

employees with broader investment

opportunities than would have been

provided by the proposed rule.

Section 3201.104 Restrictions

Concerning the Purchase of Property

Held by the Corporation or the RTC as

Conservator, Receiver, or Liquidator of

the Assets of an Insured Depository

Institution, or by a Bridge Bank

Organized by the Corporation

One commenter asked whether the

term ‘‘property’’ as used in § 3201.104(a)

includes furniture, fixtures, equipment,

securities and other items. The term

‘‘property’’ is intended to include all of

the items specified as well as other

assets held by the Corporation or the

RTC as conservator, receiver, or

liquidator of the assets of an insured

depository institution, or by a bridge

bank organized by the Corporation.

One employee suggested that the

prohibition on employee purchases of

property held by the FDIC or RTC be

expanded to prohibit employees of FDIC

contractors from purchasing such assets.

No change was made to the provision

since the application of the rule is

limited to FDIC employees. Employees

of contractors would only be covered by

the rule when such contractor

employees are considered employees of

the FDIC as delineated in

§ 3201.101(d)(4).

Section 3201.105 Prohibitions on

Dealings With Former Employers,

Associates, and Clients

One employee suggested that the

discretionary extension of the one-year

disqualification on dealings with former

employers, associates, and clients at

§ 3201.105(c) specify that the discretion

to impose the extension would only be

applicable after an individual becomes

an employee of the Corporation. No

change was made to accommodate this

suggestion since the rule, as proposed,

is only applicable to those who have

become Corporation employees.

In response to the suggestion of the

trade association that, in the case of an

employee who was unemployed for the

one-year period immediately preceding

entry on duty with the Corporation, the

prohibition on dealings with former

employers be extended to include a oneyear prohibition on dealings with the

last employer of the employee

regardless of when the employee was

last employed, § 3201.105(c) was

modified to provide the Corporation

with discretion to extend the one-year

period preceding an employee’s

entrance on duty with the Corporation,

during which extended period

employment will trigger disqualification

from matters affecting that former

employer. The interests of the

Corporation in avoiding the appearance

of a lack of impartiality by an employee

in his or her official dealings is better

served by extending the rule on a caseby-case basis as circumstances warrant.

Section 3201.106 Employment of

Family Members Outside the

Corporation

The Board did not adopt the

suggestion of one employee to define

separately the terms ‘‘family’’ and

‘‘household.’’ The term ‘‘family’’ is used

only in the title of § 3201.106 with

specific classifications of family

members set forth in that section. The

phrase ‘‘member of the employee’s

household’’ is generally understood,

and is used without specific regulatory

definition in the Executive Branch-wide

Standards at § 2635.502. The same

employee also commented that an

undue burden would be created by

requiring employees to report the

employment of family members not

residing with the employee by FDICinsured depository institutions. Because

the reporting requirement applies only

to the employment of spouses, children,

parents, and siblings, the Board does not
Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations 20173

share the commenter’s view that the

requirement could be onerous and

unreasonable. Moreover, the

Corporation’s prior regulation at 12 CFR

336.23, containing a substantially

identical reporting requirement, appears

to have been implemented without

unduly burdening employees.

Section 3201.107 Outside Employment

and Other Activities

The Corporation did not adopt the

suggestions of one employee and the

trade association to tailor the

application of the prohibition on

outside employment with FDIC-insured

depository institutions to the various

positions held by Corporation

employees within the Corporation or to

positions held by employees in FDICinsured depository institutions. The

Corporation’s sensitive relationships

with FDIC-insured depository

institutions would invariably raise, at a

minimum, the appearance of

preferential dealings or treatment

whenever an FDIC employee is

provided compensation by such

institution. In order to avoid an adverse

public perception and recusals in the

operation of the Corporation’s programs,

the Board determined that it was

appropriate to prohibit employees from

engaging in compensated outside

employment with FDIC-insured

depository institutions.

The Board did not adopt the

suggestion of one commenter that the

restriction at § 3201.107(b) on the use of

real estate licenses by employees whose

duties with the Corporation require

involvement in matters related to real

estate be eliminated for purposes of the

purchase and sale of an employee’s

personal residence or the purchase and

sale of real estate for the employee’s

personal investment portfolio. The rule,

as proposed and now as being adopted

in final, is intended to balance an

employee’s right to engage in outside

activities against the interests of the

Corporation in protecting against

questions regarding the impartiality and

objectivity of employees and the

administration of the Corporation’s

programs. It would hinder the

Corporation in meeting its missions if

members of the public were to question

whether Corporation employees are

using their public positions or official

contacts for private gain, including

advancing their personal real estate

careers. It is important to note that the

restriction on the use of such licenses

specifies that the prohibition applies

only to those situations involving the

production of income, thus targeting

those situations most likely to raise

questions by members of the public. The

use of a real estate license for the

purchase of a personal residence or

vacation home would not ordinarily be

restricted since such transaction

normally does not result in the

production of income.

The same commenter also suggested

that § 3201.107(b) was vague and

uncertain as written and that it should

be re-written to provide detailed

procedural rules and an appeals

procedure. The Board did not share the

view of the commenter. As written, the

rule clearly prohibits the use of

professional licenses by employees and

sets forth a standard of review for

requests for exceptions to the

application of the prohibition.

IV. Other Changes

The Board of Directors, upon

reconsideration of the existing FDIC

standards set forth at 12 CFR part 336,

requested that the existing restriction on

extensions of credit for field employees

of the Division of Depositor and Asset

Services, formerly the Division of

Liquidation, be retained in the final rule

in order to eliminate the possibility that

employees who participate in asset

disposition activities will be able to

obtain favored treatment from assisted

or assuming entities located in their

region of assignment. Therefore, a new

§ 3201.102(e) was added which

continues to apply the existing standard

as set forth at 12 CFR 336.16(b)(3) to

field employees of the Division of

Depositor and Asset Services. To

accommodate the added provision,

definitions for assisted entity and

assuming entity were taken from part

336 and added at § 3201.101(d)(3) and

§ 3201.101(d)(4), respectively. The

existing standard, as set forth in the

final rule, provides that a covered

employee in the Division of Depositor

and Asset Services assigned to a service

center or other field office is prohibited

from obtaining credit from an assisted or

assuming entity, except for credit

extended through the use of a credit

card under the same terms and

conditions as are offered to the general

public. An assisted entity is generally

defined as an FDIC-insured depository

institution which has received financial

assistance from the FDIC in order to

prevent its failure, any FDIC-insured

depository institution resulting from a

merger or consolidation with an

institution that has received such

assistance, and a holding company of an

institution that has received assistance

or has resulted from a merger or

consolidation with such institution. An

assisted entity retains its status as an

assisted entity for such time as there is

an ongoing financial relationship with

the FDIC.

An assuming entity is generally

defined as an FDIC-insured depository

institution which has entered into a

transaction to purchase some or all of

the assets and some or all of the

liabilities of a failed FDIC-insured

depository institution, any holding

company of such institution, any FDICinsured depository institution resulting

from such transaction and its wholly

owned subsidiaries, and any branches

or wholly owned subsidiaries of the

purchaser or its holding company. An

assuming entity retains its status as an

assuming entity for a period of one year

after the failure of the FDIC-insured

depository institution.

V. Removal of FDIC Employee

Responsibilities and Conduct

Regulations and Related Modifications

On the effective date of the final rule,

the Employee Responsibilities and

Conduct regulation, 12 CFR part 336,

will be amended to remove and reserve

subparts A, B, C, E, and F, §§ 336.1–

336.23 and §§ 336.29–336.37, and

remove the appendix to part 336.

Additionally, a new § 336.1 will be

added to provide a cross-reference to the

Corporation’s supplemental ethical

conduct regulation, to be codified at 5

CFR part 3201, the Corporation’s

supplemental financial disclosure

regulation at 5 CFR part 3202, and to the

Executive Branch-wide financial

disclosure and standards of ethical

conduct regulations at 5 CFR parts 2634

and 2635. 12 CFR part 336, subpart D,

§§ 336.24 through 336.28, was removed

and reserved by action of the Board of

Directors of the Corporation dated

November 24, 1992, 57 FR 39628.

VI. Matters of Regulatory Procedure

Regulatory Flexibility Act

The Board of Directors has concluded

that the final rule will not impose a

significant economic hardship on small

institutions. Therefore, the Board of

Directors hereby certifies pursuant to

section 605 of the Regulatory Flexibility

Act (5 U.S.C. 605) that the rule will not

have a significant economic impact on

a substantial number of small business

entities within the meaning of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.).

Paperwork Reduction Act

The Board of Directors has

determined that this final rule does not

contain any information collection

requirements that require the approval

of the Office of Management and Budget
20174 Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations

pursuant to the Paperwork Reduction

Act (44 U.S.C. 3501 et seq.).

List of Subjects

5 CFR Part 3201

Administrative practice and

procedure, Conflict of interests,

Government employees, Reporting and

recordkeeping requirements.

12 CFR Part 336

Conflict of interests, Government

employees.

Dated at Washington, D.C. this 11th day of

April, 1995.

By Order of the Board of Directors.

Federal Deposit Insurance Corporation.

Patti C. Fox,

Acting Deputy Executive Secretary.

(SEAL)

Concurred in this 14th day of April, 1995.

Stephen D. Potts,

Director, Office of Government Ethics.

For the reasons set forth in the

preamble, the Federal Deposit Insurance

Corporation, with the concurrence of

the Office of Government Ethics, is

amending title 5, Chapter XXII, of the

Code of Federal Regulations and title 12,

Chapter III, of the Code of Federal

Regulations as follows:

5 CFR CHAPTER XXII—FEDERAL DEPOSIT

INSURANCE CORPORATION

1. A new part 3201 is added to 5 CFR

chapter XXII to read as follows:

PART 3201—SUPPLEMENTAL

STANDARDS OF ETHICAL CONDUCT

FOR EMPLOYEES OF THE FEDERAL

DEPOSIT INSURANCE CORPORATION

Sec.

3201.101 General.

3201.102 Extensions of credit from FDICinsured depository institutions.

3201.103 Prohibitions on ownership of

securities of FDIC-insured depository

institutions.

3201.104 Restrictions concerning the

purchase of property held by the

Corporation or the RTC as conservator,

receiver, or liquidator of the assets of an

insured depository institution, or by a

bridge bank organized by the

Corporation.

3201.105 Prohibition on dealings with

former employers, associates, and

clients.

3201.106 Employment of family members

outside the Corporation.

3201.107 Outside employment and other

activities.

3201.108 Related statutory and regulatory

authorities.

3201.109 Provisions of 5 CFR part 2635 not

applicable to Corporation employees.

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

(Ethics in Government Act of 1978); 12

U.S.C. 1819(a), 1822; 26 U.S.C. 1043; E.O.

12674, 54 FR 15159, 3 CFR, 1989 Comp., p.

215, as modified by E.O. 12731, 55 FR 42547,

3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105,

2635.403, 2635.502, and 2635.803.

§ 3201.101 General.

(a) Purpose. The regulations in this

part apply to employees of the Federal

Deposit Insurance Corporation

(Corporation) and supplement the

Standards of Ethical Conduct for

Employees of the Executive Branch

contained in 5 CFR part 2635. Where

specified, these regulations also apply to

the Comptroller of the Currency and the

Director of the Office of Thrift

Supervision in connection with their

activities as members of the

Corporation’s Board of Directors.

(b) Corporation ethics officials. The

Executive Secretary of the Corporation

shall act as the Corporation’s Ethics

Counselor and as its Designated Agency

Ethics Official under 5 CFR part 2638.

The Assistant Executive Secretary

(Ethics) shall act as the Corporation’s

Alternate Ethics Counselor and as the

Alternate Agency Ethics Official.

(1) The Ethics Counselor or Alternate

Ethics Counselor may delegate authority

to one or more employees to serve as

Deputy Ethics Counselors.

(2) The delegation to a Deputy Ethics

Counselor shall be in writing and

cannot be redelegated.

(c) Agency designees. The Ethics

Counselor and Alternate Ethics

Counselor shall serve as the agency

designees for purposes of making the

determinations, granting the approvals,

and taking other actions required by an

agency designee under part 2635 and

this part. The Ethics Counselor or

Alternate Ethics Counselor may delegate

authority to Deputy Ethics Counselors

or to other employees to serve as agency

designees for specified purposes. The

delegation to any agency designee shall

be in writing and cannot be redelegated.

(d) Definitions. For purposes of this

part:

(1) Affiliate, as defined in 12 U.S.C.

1841(k), means any company that

controls, is controlled by, or is under

common control with another company.

(2) Appropriate director means the

head of a Washington office or division

or the highest ranking official assigned

to a regional office in each division or

the Ethics Counselor.

(3)(i) Assisted entity means:

(A) Any FDIC-insured depository

institution which has received financial

assistance from the FDIC to prevent its

failure;

(B) Any FDIC-insured depository

institution resulting from a merger or

consolidation with any institution

described in paragraph (d)(3)(i) of this

section; and

(C) Any holding company of an FDICinsured depository institution described

in paragraphs (d)(3)(i) or (d)(3)(ii) of this

section.

(ii) An assisted entity retains its status

as an assisted entity for such time as

there is an ongoing financial

relationship with the FDIC including,

but not limited to, a loan repayment

obligation, the servicing of assets on

behalf of the FDIC, or the retention by

the FDIC of stock or stock warrants in

the assisted entity.

(4)(i) Assuming entity means:

(A) Any FDIC-insured depository

institution or FDIC-insured depository

institution holding company which has

entered into a transaction with the FDIC

to purchase some or all of the assets and

assume some or all of the liabilities of

a failed FDIC-insured depository

institution;

(B) Any FDIC-insured depository

institution resulting from the

transaction described in paragraph

(d)(4)(i) of this section and its wholly

owned subsidiaries; and

(C) Any branches and the wholly

owned subsidiaries of the institutions

described in paragraph (d)(4)(i) of this

section.

(ii) An assuming entity retains its

status as an assuming entity for a period

of one year after the failure of the FDICinsured depository institution.

(5) Covered employee means an

employee of the Corporation required to

file a public or confidential financial

disclosure report under 5 CFR part 2634

or 5 CFR part 3202.

(6) Employee means an officer or

employee, other than a special

Government employee, of the

Corporation including a member of the

Board of Directors appointed under the

authority of 12 U.S.C. 1812(a)(1)(C), and

a liquidation graded employee. For

purposes of 5 CFR part 2635 and

§§ 3201.103 and 3201.104, employee

includes any individual who, pursuant

to a contract or any other arrangement,

performs functions or activities of the

Corporation, under the direct

supervision of an officer or employee of

the Corporation.

(7) Security includes an interest in

debt or equity instruments. The term

includes, without limitation, a secured

or unsecured bond, debenture, note,

securitized assets, commercial paper,

and all types of preferred and common

stock. The term includes an interest or

right in a security, whether current or

contingent, a beneficial or legal interest

derived from a trust, the right to acquire

or dispose of any long or short position,

an interest convertible into a security,

and an option, right, warrant, put, or

call with respect to a security. The term
Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations 20175

security does not include a deposit

account.

(8) State nonmember bank means any

State bank as defined in 12 U.S.C.

1813(e) which is not a member of the

Federal Reserve System.

(9) Subsidiary, as defined in 12 U.S.C.

1813(w), means any company which is

owned or controlled directly or

indirectly by another company.

§ 3201.102 Extensions of credit from FDICinsured depository institutions.

(a) Credit subject to this section. The

prohibition, disqualification, and

retention provisions of this section

apply to a current or contingent

financial obligation of the employee. For

purposes of this section, a current or

contingent financial obligation of an

employee’s spouse or minor child is

considered to be an obligation of the

employee.

(b) Prohibition on acceptance of credit

from FDIC-insured State nonmember

banks applicable to certain high-level

officials. (1) An employee described in

paragraph (b)(2) of this section shall not,

directly or indirectly, accept or become

obligated on an extension of credit from

an FDIC-insured State nonmember bank

or its subsidiary, except credit extended

through the use of a credit card under

the same terms and conditions as are

offered to the general public.

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

of this section applies to:

(i) An employee who is a member of

the Board of Directors, an assistant or

deputy to the Board of Directors or to an

appointed Board member, and a covered

employee who is an assistant to such

person; and

(ii) The director of a Washington

office or of a division, other than the

Division of Supervision and the

Division of Compliance and Consumer

Affairs, and a covered employee who

holds a position immediately

subordinate to such director.

(c) Prohibition on acceptance of credit

from FDIC-insured State nonmember

banks for employees assigned to the

Division of Supervision and employees

assigned to the Division of Compliance

and Consumer Affairs. (1) An employee

described in paragraph (c)(2) of this

section shall not, directly or indirectly,

accept or become obligated on an

extension of credit from an FDICinsured State nonmember bank or from

an officer, director, employee, or

subsidiary of such bank, except:

(i) For an employee assigned to the

Washington office, credit extended

through the use of a credit card on the

same terms and conditions as are

offered to the general public; and

(ii) For an employee assigned to other

than the Washington office, credit

extended by an FDIC-insured State

nonmember bank headquartered outside

the employee’s region of official

assignment through the use of a credit

card on the same terms and conditions

as are offered to the general public.

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

of this section applies to the Executive

Director for Supervision, Resolutions,

and Compliance, the Director of the

Division of Supervision, the Director of

the Division of Compliance and

Consumer Affairs, a covered employee

immediately subordinate to the

Executive Director for Supervision,

Resolutions, and Compliance, the

Director of the Division of Supervision,

or the Director of the Division of

Compliance and Consumer Affairs, and

the following employees assigned to the

Division of Supervision and the

Division of Compliance and Consumer

Affairs: an Assistant Director, Regional

Director, Deputy Regional Director,

Assistant Regional Director, Regional

Manager, examiner, assistant examiner,

review examiner, compliance examiner,

assistant compliance examiner, and a

covered employee.

(3) Upon accepting credit extended by

a credit card in accordance with

paragraph (c)(1)(i) or (c)(1)(ii) of this

section, the employee shall be

disqualified in accordance with

paragraph (f)(1) of this section, and,

within 30 days of accepting such credit,

shall file with the appropriate director

a Statement of Credit Card Obligation in

Insured State Nonmember Bank and

Acknowledgement of Conditions for

Retention—Notice of Disqualification.

(d) Two-year prohibition on

acceptance of credit from FDIC-insured

depository institutions. (1) An employee

described in paragraph (d)(2) of this

section shall not, directly or indirectly,

accept or become obligated on an

extension of credit from an FDICinsured depository institution or its

subsidiary for a period of two years from

the date of the employee’s last personal

and substantial participation in an

audit, resolution, liquidation,

supervisory proceeding, or internal

agency deliberation affecting that

particular institution, its predecessor or

successor, or any subsidiary of such

institution. This prohibition does not

apply to credit obtained through the use

of a credit card under the same terms

and conditions as are offered to the

general public.

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

of this section applies to an employee in

the Division of Finance, Division of

Depositor and Asset Services, Division

of Resolutions, Legal Division, or who is

a member of a standing committee of the

Board of Directors whose official duties

include:

(i) Audit of insured depository

institutions for deposit insurance

assessment purposes;

(ii) Resolution or liquidation of failed

or failing insured depository

institutions;

(iii) Participation in the supervision of

insured depository institutions or

enforcement proceedings under the

Federal Deposit Insurance Act; or

(iv) Internal agency deliberations

affecting a particular insured depository

institution, its predecessor or successor,

or a subsidiary of such institution.

(e) Prohibition on acceptance of credit

from an assisted or assuming entity for

employees of the Division of Depositor

and Asset Services. (1) An employee

described in paragraph (e)(2) of this

section shall not, directly or indirectly,

accept or become obligated on any

extension of credit from an assisted or

assuming entity located in the

employee’s region of official

assignment. This prohibition does not

apply to credit obtained through the use

of a credit card under the same terms

and conditions as are offered to the

general public.

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

of this section applies to a regional

director, deputy regional director, and

any other covered employee in the

Division of Depositor and Asset Services

assigned to a service center or other

field office.

(f) Employee disqualification. (1) An

employee described in paragraph (c)(2)

of this section shall not participate in an

examination, audit, visitation, review,

or investigation, or other particular

matter involving an FDIC-insured

depository institution or other person

with whom the employee has an

outstanding extension of credit.

(2) A covered employee, other than an

employee who is described in paragraph

(c)(2) of this section, shall not

participate in any particular matter

involving an FDIC-insured depository

institution or other person with whom

the employee has an outstanding

extension of credit.

(3) Disqualification is not required

under paragraph (f)(2) of this section:

(i) If the credit was extended through

the use of a credit card on the same

terms and conditions as are offered to

the general public; or

(ii) When the agency designee, with

the concurrence of the appropriate

director, has authorized the employee to

participate in the matter using the

standard set forth in 5 CFR 2635.502(d).

(4) The Comptroller of the Currency

and the Director of the Office of Thrift
20176 Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations

Supervision shall be disqualified from

matters pending before the Board of

Directors to the same extent as a covered

employee subject to paragraph (f)(2) of

this section.

(g) Retention and renegotiation of preexisting extensions of credit. (1) Nothing

in this section prohibits the retention of

a pre-existing extension of credit that an

employee would be prohibited from

accepting by § 3201.102(b) or (c) if the

extension of credit was permitted to be

retained under 12 CFR part 336 prior to

the adoption of this regulation or if the

employee’s acceptance of the extension

of credit was proper at the time the

obligation was incurred, as in the case

of an extension of credit incurred prior

to commencement of employment or

reassignment to another division or

location. Subsequent action affecting the

status of the creditor, such as merger,

acquisition, or transaction under 12

U.S.C. 1823, does not change the

character of an extension of credit that

was proper when incurred. An

employee who retains a pre-existing

extension that he or she would be

prohibited from accepting by

§ 3201.102(b) or (c) shall report the preexisting extension of credit to the

appropriate director or agency designee

within 30 days from the following

event, as appropriate:

(i) Adoption of this part;

(ii) Commencement of employment;

(iii) Assignment to another division or

location; or

(iv) Action affecting the status of the

creditor.

(2) Any renegotiation of a pre-existing

extension of credit shall be treated as a

new extension of credit that is subject

to the prohibitions contained in

§ 3201.102(b) through (d). An employee

may request that an exception be made

to the prohibitions to permit

renegotiation of a pre-existing extension

of credit. Any such request shall be

made in writing to the appropriate

director and agency designee, or in the

case of an employee described in

paragraph (b)(2)(i) and (ii) of this

section, to the Ethics Counselor, stating:

(i) The purpose of the renegotiation;

(ii) The terms and conditions of the

original extension of credit;

(iii) The terms and conditions now

available to the general public;

(iv) The terms and conditions now

offered to the employee;

(v) The action the employee has taken

to move the loan to an institution from

which an employee would not be

prohibited from accepting an extension

of credit; and

(vi) The financial hardship, if any,

denial of the request will cause.

(3) After submission of the request,

the appropriate director and agency

designee, or the Ethics Counselor, may

grant the employee’s request based upon

a written determination that the request

is not inconsistent with 5 CFR part 2635

or otherwise prohibited by law and that,

under the particular circumstances,

application of the prohibition is not

necessary to avoid the appearance of the

misuse of position or loss of

impartiality, or otherwise to ensure

confidence in the impartiality and

objectivity with which agency programs

are administered.

§ 3201.103 Prohibitions on ownership of

securities of FDIC-insured depository

institutions.

(a) Prohibition on ownership. Except

as permitted by this section, an

employee or the spouse or minor child

of an employee, shall not acquire, own,

or control, directly or indirectly, a

security of an FDIC-insured depository

institution, or an affiliate of an FDICinsured depository institution.

(b) Exception to prohibition for

certain interests. Nothing in this section

prohibits an employee, or the spouse or

minor child of an employee, from:

(1) Acquiring, owning or controlling

the securities of certain publicly traded

bank holding companies or their

nonbank subsidiaries where the bank

holding company is not primarily

engaged in banking and either the bank

holding company or the bank it holds is

exempt under the provisions of the

Bank Holding Company Act of 1956 and

which are identified as such by the

Board of Governors of the Federal

Reserve System (a list of exempt

institutions can be obtained from the

Corporation’s Ethics Section);

(2) Acquiring, owning, or controlling

the securities of certain nonfinancial

savings association holding companies

whose principal business is unrelated to

the financial services industry and

which are identified as such by the

Office of Thrift Supervision pursuant to

5 CFR 3101.109(b)(3)(ii) (a list of such

institutions can be obtained from the

Corporation’s Ethics Section);

(3) Retaining a security of an FDICinsured depository institution or an

affiliate of an FDIC-insured depository

institution if the security was permitted

to be retained by the employee under 12

CFR part 336 prior to the adoption of

this regulation, was obtained prior to

commencement of employment with the

Corporation, or was acquired by a

spouse prior to marriage to the

employee;

(4) Acquiring, owning, or controlling

a security of an FDIC-insured depository

institution or the affiliate of an FDICinsured depository institution where the

security was acquired by inheritance,

gift, stock split, involuntary stock

dividend, merger, acquisition, or other

change in corporate ownership, exercise

of preemptive right, or otherwise

without specific intent to acquire the

security. This provision permits the

retention of any such interest only

where:

(i) The employee makes full, written

disclosure on FDIC form 2410/07 to the

Ethics Counselor within 30 days of

commencing employment or acquiring

the interest; and

(ii) The employee is disqualified in

accordance with 5 CFR part 2635,

subpart D, from participating in any

particular matter that affects his or her

financial interests, or that of his or her

spouse or minor child;

(5) Acquiring, owning, or controlling

an interest in a publicly traded or

publicly available investment fund

provided that, upon initial or

subsequent investment by the employee

(excluding ordinary dividend

reinvestment), the fund does not have

invested, or indicate in its prospectus

the intent to invest, more than 30

percent of its assets in the securities of

one or more FDIC-insured depository

institutions or FDIC-insured depository

institution holding companies and the

employee neither exercises control nor

has the ability to exercise control over

the financial interests held in the fund;

or

(6) Using an FDIC-insured depository

institution or an affiliate of an FDICinsured depository institution as

custodian or trustee of accounts

containing tax-deferred retirement

funds.

(c) Divestiture. Based upon a

determination of substantial conflict

under 5 CFR 2635.403(b), the Ethics

Counselor may require an employee, or

the spouse or minor child of an

employee, to divest a security he or she

is otherwise authorized to retain under

paragraph (b) of this section.

§ 3201.104 Restrictions concerning the

purchase of property held by the

Corporation or the RTC as conservator,

receiver, or liquidator of the assets of an

insured depository institution, or by a

bridge bank organized by the Corporation.

(a) Prohibition on purchase of

property. An employee, and an

employee’s spouse or minor child shall

not, directly or indirectly, purchase or

acquire any property held or managed

by the Corporation or the Resolution

Trust Corporation (RTC) as conservator,

receiver, or liquidator of the assets of an

insured depository institution, or by a

bridge bank organized by the
Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations 20177

Corporation, regardless of the method of

disposition of the property.

(b) Disqualification. An employee

who is involved in the disposition of

assets held by the Corporation or the

RTC as conservator, receiver, or

liquidator of the assets of an insured

depository institution, or by a bridge

bank organized by the Corporation shall

not participate in the disposition of

assets held in such capacities when the

employee knows that any party with

whom the employee has a covered

relationship, as defined in 5 CFR

2635.502(b)(1), is or will be attempting

to acquire such assets. The employee

shall provide written notification of the

disqualification to his or her immediate

supervisor and the agency designee.

§ 3201.105 Prohibition on dealings with

former employers, associates, and clients.

(a) An employee is prohibited for one

year from the date of entry on duty with

the Corporation from participating in a

particular matter when an employer, or

the successor to the employer, for whom

the employee worked at any time during

the one year preceding the employee’s

entrance on duty is a party or represents

a party to the matter.

(b) For purposes of this section, the

term employer means a person with

whom the employee served as officer,

director, trustee, general partner, agent,

attorney, accountant, consultant,

contractor, or employee.

(c) The one-year prohibition imposed

by paragraph (a) of this section, and the

one-year period preceding the

employee’s entrance on duty specified

in paragraph (a) of this section, may

each be extended in an individual case

based on a written determination by the

agency designee that, under the

particular circumstances, the

employee’s participation in the

particular matter would cause a

reasonable person with knowledge of

the facts to question his or her

impartiality.

§ 3201.106 Employment of family members

outside the Corporation.

(a) Disqualification of employees. An

employee shall not participate in an

examination, audit, investigation,

application, contract, or other particular

matter if the employer of the employee’s

spouse, child, parent, brother, sister, or

a member of the employee’s household

is a party or represents a party to the

matter, unless an agency designee

authorizes the employee to participate

using the standard in 5 CFR

2635.502(d).

(b) Reporting certain relationships. A

covered employee shall make a written

report to an agency designee within 30

days of the employment of the

employee’s spouse, child, parent,

brother, sister, or a member of the

employee’s household by:

(1) An FDIC-insured depository

institution or its affiliate;

(2) A firm or business with which, to

the employee’s knowledge, the

Corporation has a contractual or other

business or financial relationship; or

(3) A firm or business which, to the

employee’s knowledge, is seeking a

business or contractual relationship

with the Corporation.

§ 3201.107 Outside employment and other

activities.

(a) Prohibition on employment with

FDIC-insured depository institutions. An

employee shall not provide service for

compensation, in any capacity, to an

FDIC-insured depository institution or

an employee or person employed by or

connected with such institution.

(b) Use of professional licenses. A

covered employee who holds a license

related to real estate, appraisals,

securities, or insurance and whose

official duties with the Corporation

require personal and substantial

involvement in matters related to,

respectively, real estate, appraisal,

securities, or insurance is prohibited

from using such license, other than in

the performance of his or her official

duties, for the production of income.

The appropriate director, in

consultation with an agency designee,

may grant exceptions to this prohibition

based on a finding that the specific

transactions which require use of the

license will not create an appearance of

loss of impartiality or use of public

office for private gain.

(c) Responsibility to consult with

agency designee. An employee who

engages in, or intends to engage in, any

outside employment or other activity

that may require disqualification from

the employee’s official duties shall

consult with an agency designee prior to

engaging in or continuing to engage in

the activity.

§ 3201.108 Related statutory and

regulatory authorities.

(a) 18 U.S.C. 213, which prohibits an

examiner from accepting a loan or

gratuity from an FDIC-insured

depository institution examined by him

or her or from any person connected

with such institution.

(b) 18 U.S.C. 1906, which prohibits

disclosure of information from a bank

examination report except as authorized

by law.

(c) 17 CFR 240.10b–5 which prohibits

the use of manipulative or deceptive

devices in connection with the purchase

or sale of any security.

(d) 18 U.S.C. 1909, which prohibits

examiners from providing any service

for compensation for any bank or person

connected therewith.

§ 3201.109 Provisions of 5 CFR part 2635

not applicable to Corporation employees.

The following provisions of 5 CFR

part 2635 are not applicable to

employees of the Corporation:

(a) Because of the restrictions

imposed by 18 U.S.C. 213 on examiners

accepting loans or gratuities, an

examiner in the Division of Supervision

or Division of Compliance and

Consumer Affairs may not use any of

the gift exceptions at 5 CFR 2635.204 to

accept a gift from an FDIC-insured

depository institution examined by him

or her or from any person connected

with such institution.

(b) Provisions of 41 U.S.C. 423

(Procurement integrity) and the

implementing regulations at 48 CFR

3.104 (of the Federal Acquisition

Regulation) applicable to procurement

officials referred to in:

(1) 5 CFR 2635.202(c)(4)(iii);

(2) The note following 5 CFR

2635.203(b)(7);

(3) Example 5 following 5 CFR

2635.204(a);

(4) Examples 2 and 3 following 5 CFR

2635.703(b)(3);

(5) 5 CFR 2635.902(f), (h), (l), and

(bb);

(c) Provisions of 31 U.S.C. 1353

(Acceptance of travel and related

expenses from non-Federal sources) and

the implementing regulations at 41 CFR

part 304–1 (Acceptance of payment

from a non-Federal source for travel

expenses) referred to in 5 CFR

2635.203(b)(8)(i).

(d) Provisions of 41 CFR Chapter 101

(Federal Property Management

Regulations) referred to in 5 CFR

2635.205(a)(4).

(e) Provisions of 41 CFR Chapter 201

(Federal Information Resources

Management Regulation) referred to in

Example 1 following 5 CFR

2635.704(b)(2).

12 CFR CHAPTER III—FEDERAL DEPOSIT

INSURANCE CORPORATION

PART 336—EMPLOYEE

RESPONSIBILITIES AND CONDUCT

2. The authority citation for part 336

is revised to read as follows:

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

1819(a).

3. Section 336.1 is revised to read as

follows:
20178 Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules and Regulations

§ 336.1 Cross-reference to employee

ethical conduct standards and financial

disclosure regulations.

Employees of the Federal Deposit

Insurance Corporation (Corporation) are

subject to the Executive Branch-wide

Standards of Ethical Conduct at 5 CFR

part 2635, the Corporation regulation at

5 CFR part 3201 which supplements the

Executive Branch-wide Standards, the

Executive Branch-wide financial

disclosure regulations at 5 CFR part

2634, and the Corporation regulation at

5 CFR part 3202 which supplements the

Executive Branch-wide financial

disclosure regulations.

§§ 336.2–336.23 [Removed]

§§ 336.29–336.37 [Removed]

Appendix to Part 336 [Removed]

4. Sections 336.2 through 336.23 and

336.29 through 336.37 and all subpart

headings are removed and reserved and

the appendix to part 336 is removed.

[FR Doc. 95–9733 Filed 4–24–95; 8:45 am]

BILLING CODE 6714–01–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 58

[DA–91–010A]

Grading and Inspection, General

Specifications for Approved Plants and

Standards for Grades of Dairy

Products; United States Standards for

Grades of Colby Cheese; Correction

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Correction to final rule.

SUMMARY: This document corrects the

final rule [DA–91–010A], published

Wednesday, March 1, 1995 [60 FR

11246]. The regulations related to

changes in the United States Standards

for Grades of Colby Cheese.

EFFECTIVE DATE: April 25, 1995.

FOR FURTHER INFORMATION CONTACT:

Roland S. Golden, Dairy Products

Marketing Specialist, Dairy

Standardization Branch, USDA/AMS/

Dairy Division, Room 2750–S, P.O. Box

96456, Washington, DC 20090–6456,

(202) 720–7473.

SUPPLEMENTARY INFORMATION:

Background

The final rule that is the subject of

these corrections inadvertently omitted

the word ‘‘not’’ in the third sentence of

7 CFR 58.2475. This omission created

an error in the maximum moisture

content for colby cheese.

Need for Corrections

As published, the final rule contained

an error which needs to be corrected to

provide accuracy.

§ 58.2475 Colby cheese. [Corrected]

On page 11247, at the top of the third

column, in § 58.2475, in sentence three

of the paragraph, after ‘‘common salt

and’’ and before ‘‘more than 40 percent

moisture’’ add the word ‘‘not’’.

Dated: April 19, 1995.

Lon Hatamiya,

Administrator.

[FR Doc. 95–10154 Filed 4–25–95; 8:45 am]

BILLING CODE 3410–02–M

Food and Consumer Service

7 CFR Parts 272 and 274

[Amendment No. 333]

RIN 0584–AB32

Food Stamp Program: Benefit Delivery

Rule

AGENCY: Food and Consumer Service,

USDA.

ACTION: Final rule.

SUMMARY: This rulemaking finalizes

three Food Stamp Program provisions

relating to benefit delivery. These

regulations relate to the staggered

issuance of benefits on Indian

reservations, combined or aggregate

allotments, and the issuance of benefits

in rural areas where households may

experience difficulty in obtaining

program benefits.

In addition to the regulatory changes

described above, this rule makes final

three minor technical changes in current

regulatory issuance provisions which

are deemed appropriate by the

Department to improve benefit issuance.

DATES: The amendments to

§§ 272.2(a)(2) and (d)(1)(xi), and

§§ 274.2(a), (c), and (g) are effective

February 1, 1992. State agencies were

instructed through an agency directive

dated May 20, 1992, to implement these

provisions on that date. The amendment

to § 274.2(d)(2) is effective March 25,

1994. State agencies were instructed

through an agency directive dated

March 31, 1994, to implement this

provision on that date. All remaining

amendments are effective September 1,

1995.

FOR FURTHER INFORMATION CONTACT:

James I. Porter, Supervisor, Issuance and

Accountability Section, State

Administration Branch, Program

Accountability Division, Food Stamp

Program, Food and Consumer Service,

USDA, 3101 Park Center Drive, Room

904, Alexandria, Virginia 22302,

telephone (703) 305–2383.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be

not significant for purposes of Executive

Order 12866 and, therefore, has not

been reviewed by the Office of

Management and Budget.

Regulatory Flexibility Act

This action has also been reviewed

with regard to the requirements of the

Regulatory Flexibility Act of 1980 (5

U.S.C. 601–612). Ellen Haas, Under

Secretary for Food, Nutrition, and

Consumer Services, has certified that

this final rule will not have a significant

impact on a substantial number of small

entities. The requirements of the rule

will affect State and local agencies

which administer the Food Stamp

Program, as well as food stamp

applicants and recipients.

Paperwork Reduction Act

The provisions of this final rule do

not contain record-keeping or reporting

requirements subject to approval by the

Office of Management and Budget under

the Paperwork Reduction Act of 1980

(44 U.S.C. 3507).

Executive Order 12778

This final rule has been reviewed

under Executive Order 12778, Civil

Justice Reform. This rule is intended to

have preemptive effect with respect to

any State or local laws, regulations, or

policies which conflict with its

provisions or which would otherwise

impede its full implementation. This

rule is not intended to have retroactive

effect unless so specified in the

‘‘Effective Date’’ section of this

preamble. Prior to any judicial challenge

to the provisions of this rule or the

application of its provisions, all

applicable administrative procedures

must be exhausted. In the Food Stamp

Program the administrative procedures

are as follows: (1) for program benefit

recipients—State administrative

procedures issued pursuant to 7 U.S.C.

2020(e)(10) and set out at 7 CFR 273.15;

(2) for State agencies—administrative

procedures issued pursuant to 7 U.S.C.

2023 and set out at 7 CFR 276.7; and (3)

for program retailers and wholesalers—

administrative procedures issued

pursuant to 7 U.S.C. 2023 and set out at

7 CFR 278.8.