[Federal Register Volume 59, Number 132 (Tuesday, July 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16557]


[[Page Unknown]]

[Federal Register: July 12, 1994]


                                                   VOL. 59, NO. 132

                                             Tuesday, July 12, 1994

FEDERAL DEPOSIT INSURANCE CORPORATION

5 CFR Part 3201

12 CFR Part 336

RIN: 3064-AA08

 

Supplemental Standards of Ethical Conduct for Employees of the 
Federal Deposit Insurance Corporation

AGENCY: Federal Deposit Insurance Corporation (FDIC or Corporation).

ACTION: Proposed rule.

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SUMMARY: The Federal Deposit Insurance Corporation, with the 
concurrence of the Office of Government Ethics (OGE), proposes to issue 
regulations for the employees of the Corporation which would supplement 
the Standards of Ethical Conduct for Employees of the Executive Branch 
(Executive Branch-wide Standards) issued by OGE. The proposed rule is a 
necessary supplement to the Executive Branch-wide Standards and has 
been designed to address the specialized functions and operations of 
the Corporation. The proposed rule would establish: prohibitions on 
borrowing and extensions of credit; prohibitions on the ownership of 
certain financial interests; prohibitions on the purchase of property 
controlled by the Corporation or the Resolution Trust Corporation 
(RTC); limitations on official dealings with former employers and 
clients; disqualification requirements relating to employment of family 
members outside the Corporation; and limitations on outside employment 
activities.

DATES: Comments must be received on or before September 12, 1994.

ADDRESSES: Send comments to Robert E. Feldman, Acting Executive 
Secretary, FDIC, 550 17th Street, NW, Washington, DC 20429. Comments 
may be hand-delivered to room 400, 1776 F Street, NW, Washington, DC 
20429 on business days between 8:30 a.m. and 5 p.m. [FAX number: (202) 
898-3838].

FOR FURTHER INFORMATION CONTACT: Katherine A. Corigliano, Assistant 
Executive Secretary (Ethics), (202) 898-7272; Richard M. Handy, Ethics 
Program Manager, (202) 898-7271; or Paul A. Jeddeloh, Senior Program 
Attorney, (202) 898-7161, all at the FDIC.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, the Office of Government Ethics published the 
Standards of Ethical Conduct For Employees of the Executive Branch. See 
57 FR 35006-35067, as corrected at 57 FR 48557 and 57 FR 52583, with an 
additional grace period extension at 59 FR 4779-4780. The Executive 
Branch-wide Standards, now codified at 5 CFR part 2635 and effective 
February 3, 1993, establish uniform standards of ethical conduct for 
executive branch employees.
    With the concurrence of the OGE, 5 CFR 2635.105 and the Resolution 
Trust Corporation Completion Act (P.L. 103-204) authorize the 
Corporation to publish agency-specific supplemental regulations 
necessary to implement its ethics programs. The Corporation and OGE 
have determined that the following supplemental regulations contained 
in the proposed rule are necessary to successfully continue the 
Corporation's ethics program in light of the Corporation's unique 
programs and operations. The proposed supplemental rule addresses 
issues relevant to the Corporation's specialized roles as the insurer, 
conservator, receiver, liquidator, organizer of bridge banks, and 
regulator or back-up enforcement agency for FDIC-insured depository 
institutions. Upon finalization of the supplemental regulation, the 
Corporation will, as proposed, delete those portions of 12 CFR part 336 
that are superseded by the Executive Branch-wide Standards and the 
supplemental regulations.

II. Analysis of Regulation

    The following regulations are proposed to appear in new part 3201 
of 5 CFR chapter XXII.

Section 3201.101  General

    (a) Purpose. Proposed Sec. 3201.101(a) explains that the 
regulations would apply to all Corporation employees and would 
supplement the Executive Branch-wide Standards. Because they are 
covered under rules applicable to the Department of the Treasury, two 
members of the Board of Directors, the Comptroller of the Currency and 
the Director of the Office of Thrift Supervision, would be covered only 
by those provisions of the supplemental regulation specifically made 
applicable to them in connection with their activities as members of 
the Corporation's Board of Directors.
    (b) Corporation ethics officials. Proposed Sec. 3201.101(b) 
explains that the Designated Agency Ethics Official would be the 
Executive Secretary and that the Alternate Agency Ethics Official would 
be the Assistant Executive Secretary (Ethics) of the FDIC. This 
provision would delegate authority to the Executive Secretary and the 
Assistant Executive Secretary (Ethics) to act in such capacities as 
contemplated under 5 CFR part 2638. The provision would continue the 
designations currently found at 12 CFR part 336, as updated to 
accommodate organizational changes.
    (c) Agency designees. Proposed Sec. 3201.101(c) specifies those 
employees who would hold the authority to act as agency designees under 
the Executive Branch-wide Standards and the supplemental regulation. It 
also explains that only the Ethics Counselor or Alternate Ethics 
Counselor would be able to delegate authority to act as agency 
designees and that such delegation would have to be in writing and 
could not be re-delegated.
    (d) Definitions. Proposed Sec. 3201.101(d) would include as an 
affiliate those companies which control, are controlled by, or are 
under common control with, an FDIC-insured depository institution. The 
definition for affiliate was taken from the Bank Holding Company Act of 
1956 and is intended to be broadly interpreted and include any holding 
companies, subsidiaries, or other affiliated companies of an FDIC-
insured depository institution.
    The term appropriate director would include the heads of offices 
and divisions in the Washington office, the highest ranking officials 
in each division in the regional offices, and the Ethics Counselor.
    The term covered employee would include all employees of the 
Corporation required to file confidential or public financial 
disclosure reports under 5 CFR part 2634 or 5 CFR part 3202.
    Under the proposed regulation, the term employee would include all 
persons, other than special Government employees, employed by the 
Corporation. Pursuant to the Resolution Trust Corporation Completion 
Act (P.L. 103-204), the Corporation is also required to consider the 
employees of contractors as employees of the Corporation for certain 
purposes. Therefore, the term employee would include, for purposes of 5 
CFR part 2635 and Secs. 3201.103 and 3201.104 of this part, any 
individual who, pursuant to a contract or any other arrangement, 
performs functions or activities of the Corporation, under the direct 
supervision of an officer or employee of the Corporation. The term 
employee would not include independent contractors who are not deemed 
to be employees under 12 U.S.C. 1822(f)(1)(B). In the case of members 
of the Board of Directors, it would include only the three members 
appointed by the President under 12 U.S.C. 1812(a)(1)(C).
    The proposed regulation provides a broad definition of the term 
security which includes an interest in debt or equity instruments such 
as, for example, stocks, bonds, and commercial paper. However, the term 
security would not include a deposit account.
    The term State nonmember bank is a statutory term taken from 12 
U.S.C. 1813 and would include all State banks that are not members of 
the Federal Reserve System.
    The definition of subsidiary was taken from section 3(w) of the 
Federal Deposit Insurance Act, codified to 12 U.S.C. 1813(w), and would 
include all companies owned or controlled directly or indirectly by 
another company.

Section 3201.102  Extensions of Credit From FDIC-Insured Depository 
Institutions

    The proposed rules on extensions of credit from FDIC-insured 
depository institutions provide the conditions under which certain 
specified categories of Corporation employees can obtain credit from 
depository institutions insured by the Corporation. Restrictions on the 
availability of credit to Corporation employees are necessary for 
several reasons. First, 5 CFR 2635.403(a) permits the Corporation to 
prohibit or restrict the acquisition or holding of a financial interest 
or class of financial interests by Corporation employees, and the 
spouses and minor children of those employees, when the Corporation has 
made the determination that the acquisition or holding of such 
financial interests would cause a reasonable person to question the 
impartiality and objectivity with which Corporation programs are 
administered, and 5 CFR 2635.403(c) specifically provides that the term 
financial interest may include an indebtedness relationship. For 
purposes of the extensions of credit covered by Sec. 3201.102 (a) 
through (d), the Corporation has made such a determination. These 
prohibitions and restrictions on employees entering into financial 
arrangements with institutions over which the Corporation has 
regulatory and resolution authority are necessary to prevent loss of 
public confidence in the integrity of the Corporation. In addition, the 
borrowing prohibition would incorporate the substance of the statutory 
prohibition at 18 U.S.C. 213 on bank examiners accepting certain loans. 
Finally, limitations on borrowing from FDIC-insured depository 
institutions would avoid a high number of employee disqualifications 
that would have a detrimental effect on the Corporation's 
administration of its multifaceted responsibilities.
    Under proposed Sec. 3201.102(a), a current or contingent financial 
obligation of an employee is considered a financial obligation for 
purposes of the prohibition, disqualification, and retention provisions 
of proposed Sec. 3201.102. A current or contingent financial obligation 
of a spouse or minor child is attributed to the employee for purposes 
of this section since the Corporation has determined, pursuant to 5 CFR 
2635.403(a), that there is a direct and appropriate nexus between the 
efficiency of the service and the prohibitions and restrictions in 
Sec. 3201.102 as applied to the spouses and minor children of 
Corporation employees.
    Under proposed Sec. 3201.102(b), members of the Board of Directors 
and other Corporation officials who are in top management positions 
would be prohibited from incurring financial obligations with an 
institution over which the Corporation has primary Federal supervisory 
authority or a subsidiary of such an institution. A deputy or an 
assistant to the Board of Directors or to an individual board member, a 
covered employee who is an assistant to such deputy or assistant, the 
director of a Washington office or division (other than the Division of 
Supervision), and a covered employee immediately subordinate to such a 
director would be included in the restricted class. The prohibition 
would not apply to credit extended through an ordinary credit card 
relationship due to the standardized handling and low credit amounts 
customary in such relationship.
    Under Sec. 3201.102(c), depository institutions examination staff, 
including all covered employees assigned to the Division of 
Supervision, would be prohibited from obtaining credit from an FDIC-
insured State nonmember bank, the class of FDIC-insured depository 
institutions for which the FDIC has primary supervisory responsibility, 
any subsidiary of such bank, or any person employed by such bank. An 
exception would be carved out for an ordinary credit card relationship 
but, for those employees assigned to regional or field offices, the 
exception would be limited to credit cards offered by FDIC-insured 
State nonmember banks located outside the employee's region of 
assignment. The rule, which is substantially the same as 12 CFR 
336.16(a), is consistent with 18 U.S.C. 213 which prohibits examiners 
from accepting credit from institutions which they have examined. Under 
the proposed rule, an employee would be required to file a report upon 
obtaining a credit card from a State nonmember bank located outside the 
employee's region of assignment.
    Proposed Sec. 3201.102(d) would impose a two-year prohibition on an 
employee in the Division of Finance, the Division of Depositor and 
Asset Services, the Division of Resolutions, or the Legal Division, or 
who is a member of a standing committee of the Board of Directors 
obtaining credit from an FDIC-insured depository institution or its 
subsidiary when the employee has participated personally and 
substantially in certain matters affecting the institution, its 
predecessor or successor, or an affiliate of such institution. This 
prohibition would be applicable to the universe of FDIC-insured 
depository institutions and would be limited to those Corporation 
employees who perform functions associated with the audit, resolution, 
liquidation, supervision, or agency deliberation affecting a specific 
FDIC-insured depository institution. The two-year prohibition has been 
designed to eliminate concerns over potential benefits that an employee 
holding a sensitive non-examiner position could derive through a 
financial relationship with an institution that has close business ties 
to the Corporation. An exception has been made for an ordinary credit 
card relationship. The definition of personally and substantially can 
be found at 5 CFR 2635.402(b)(4) of the Executive Branch-wide 
Standards.
    Proposed Sec. 3201.102(e)(1) would prohibit a member of the 
depository institution's examination staff, including senior level 
staff, from participating in the supervisory review of any institution 
with which they hold an extension of credit. No exceptions to this rule 
have been provided due to the sensitive nature of the duties involved.
    Under proposed Sec. 3201.102(e)(2)-(4), a covered employee and the 
Comptroller of the Currency and the Director of the Office of Thrift 
Supervision would be prohibited from participating in matters affecting 
persons with whom the employee has an outstanding extension of credit. 
Exceptions have been provided for ordinary credit card relationships or 
when the agency designee, with the concurrence of the appropriate 
director, determines that participation by the employee would be 
appropriate under the standard outlined under 5 CFR 2635.502(d).
    Proposed Sec. 3201.102(f) would clarify that an employee may retain 
certain extensions of credit that he or she would be prohibited from 
obtaining anew. For example, an employee who had obtained an extension 
of credit prior to employment with the Corporation would not be 
required to refinance the credit. Any extension of credit retained 
under this section would be required to be reported to an agency 
designee. An employee would not be allowed to renew or renegotiate the 
credit without the consent of the agency designee and appropriate 
director or, in the case of certain higher-level officials, without the 
consent of the Ethics Counselor. This provision is substantially the 
same as current 12 CFR 336.16(d), and extensions of credit which were 
permissibly held under such provision could be retained under the new 
provision.

Section 3201.103  Prohibitions on Ownership of Securities of FDIC-
Insured Depository Institutions

    The Corporation has determined that, in light of its sensitive and 
diverse mission involving the institutions that it insures, 
restrictions on employee ownership of securities in such institutions 
are necessary in order to maintain public confidence in the 
impartiality and objectivity with which the Corporation executes its 
various functions; eliminate concerns by private entities that 
sensitive information provided to the Corporation might be used for 
private gain; and avoid the widespread disqualification of employees 
from their duties which could result in the Corporation having 
difficulty in performing its mission. Under proposed Sec. 3201.103(a), 
an employee would be prohibited from having a direct or indirect 
ownership interest in a security of an FDIC-insured depository 
institution or an affiliate of such institution.
    As proposed, the exceptions in Sec. 3201.103(b) would allow an 
employee to acquire, own or control certain direct and indirect 
ownership interests in an FDIC-insured depository institution. For 
example, an employee would be permitted to retain an interest which had 
been acquired prior to employment with the Corporation or involuntarily 
acquired by the employee such as by gift, stock split, or through a 
merger of a company. An employee could also acquire, own or control an 
interest in an FDIC-insured depository institution through the 
investment vehicle of a publicly traded or available diversified 
investment fund when the fund does not have an objective or practice of 
concentrating its investments in securities of the financial services 
sector. An employee who owned securities of an FDIC-insured depository 
institution under one of the exceptions in proposed Sec. 3201.103(b) 
would be disqualified under 5 CFR 2635.402 from participating in any 
particular matter that, by reason of his or her ownership of those 
securities, affects his or her financial interests or those of his or 
her spouse or minor child.
    Under proposed Sec. 3201.103(c), the Ethics Counselor could require 
an employee, or the spouse or minor child of an employee, to divest an 
ownership interest that would otherwise be allowed to be retained under 
Sec. 3201.103(b) using the standard set forth in 5 CFR 2635.403(b).

Section 3201.104  Restrictions Concerning the Purchase of Property Held 
by the Corporation or the RTC as Conservator, Receiver, or Liquidator 
of the Assets of an Insured Depository Institution, or by a Bridge Bank 
Organized by the Corporation

    In order to avoid any self-dealing, appearance of self-dealing, 
adversarial relationship with the Corporation, or diminution of public 
confidence in the Corporation's ability to accomplish its mission, an 
employee, or the spouse or minor child of an employee, would be 
prohibited under Sec. 3201.104(a) from purchasing assets held by the 
Corporation or the Resolution Trust Corporation (RTC) as conservator, 
receiver, or liquidator or held by a bridge bank organized by the 
Corporation. In such roles, the Corporation and the RTC generally act 
as a fiduciary to the creditors of failed depository institutions. 
Property held by the RTC has been included in the proposed prohibition 
because of the RTC's significant ties with the Corporation.
    As proposed, Sec. 3201.104(b) would disqualify an employee involved 
in the disposition of the assets of a failed insured depository 
institution from participation in the disposition of such assets when 
the employee knows that a person with whom he or she holds a covered 
relationship intends to purchase such assets. Written notification of 
the disqualification would be required to be made by the employee to 
his or her immediate supervisor and the agency designee.

Section 3201.105  Prohibition on Dealings With Former Employers, 
Associates, and Clients

    In order to avoid the appearance of favoritism and maintain the 
integrity of the Corporation's regulatory oversight, insurance 
assessments, and resolution and liquidation transactions, proposed 
Sec. 3201.105(a) would prohibit an employee, for a period of one year 
after entering on duty with the Corporation, from participating in 
official Corporation matters involving an employer with whom the 
employee worked during the year preceding the employee's entry on duty 
with the Corporation. Proposed Sec. 3201.105(b) would include within 
the definition of the term employer a broad range of persons, as 
defined in 5 CFR 2635.502, with whom the employee has a covered 
relationship. In an individual case, Sec. 3201.105(c) would give the 
agency designee discretion to extend the prohibition beyond the one 
year period that would automatically apply to all new Corporation 
employees.

Section 3201.106  Employment of Family Members Outside the Corporation

    As proposed, Sec. 3201.106 would continue the Corporation's 
requirement at 12 CFR 336.21 that an employee be disqualified from 
participation in particular matters involving employers of family 
members or members of the employee's household. It would also require 
the employee to report the employment of family members or members of 
the employee's household by FDIC-insured depository institutions or 
companies that have business, or are seeking to do business, with the 
Corporation. This requirement eliminates the potential for any 
appearance of preferential treatment in those instances where 
employment of a family member or a member of the employee's household 
would be likely to raise questions regarding the appropriateness of 
actions taken by the employee or the Corporation.

Section 3201.107  Outside Employment and Other Activities

    Proposed Sec. 3201.107(a) would prohibit an employee from providing 
services, for compensation, to an FDIC-insured depository institution 
or to a person employed by such institution. The prohibition is based, 
in part, on 18 U.S.C. 1909, which prohibits an examiner from performing 
any service for compensation for any FDIC-insured depository 
institution or for any person connected therewith.
    Similarly, proposed Sec. 3201.107(b) would restrict an employee 
from using certain professional licenses in compensated outside 
activities when the employee's duties to the Corporation involve those 
activities. The areas involved in the prohibition have been limited to 
areas identified as especially sensitive and critical to corporate 
operations.
    Proposed Sec. 3201.107(c) would make it the responsibility of the 
employee to consult with an agency designee concerning outside 
employment or activities that could result in disqualification of the 
employee from his or her official duties.

Section 3201.108  Related Statutory and Regulatory Authorities

    This section sets forth additional statutory and regulatory 
authorities with which an employee should be familiar.

Section 3201.109  Provisions of 5 CFR Part 2635 Not Applicable to 
Corporation Employees

    Certain provisions of the Standards of Ethical Conduct have been 
determined by the Corporation to be inapplicable to its employees based 
on the Corporation's status as a mixed-ownership Corporation. To avoid 
confusion, the authorities which are not applicable to the Corporation 
and its employees would be listed in Sec. 3201.109 (b) through (e). 
Proposed Sec. 3201.109(a) would caution examiners that they may not use 
the gift exceptions in 5 CFR 2635.204 to accept a gift that would 
violate the criminal prohibitions in 18 U.S.C. 213 against examiners 
accepting gifts or gratuities from the institutions they examine.

III. Removal of FDIC Employees Responsibilities and Conduct 
Regulations and Related Modifications

    On the effective date of the final rule, the Employee 
Responsibilities and Conduct regulation, 12 CFR part 336, will be 
amended to remove and reserve subparts A, B, C, E, and F, Secs. 336.1-
336.23 and 336.29-336.37, and remove the appendix to part 336. As 
proposed, a new Sec. 336.1 will be added to provide a cross-reference 
to the Corporation's supplemental ethical conduct regulation, to be 
codified at 5 CFR part 3201, the Corporation's supplemental financial 
disclosure regulation at 5 CFR part 3202, and to the Executive Branch-
wide financial disclosure and standards of ethical conduct regulations 
at 5 CFR parts 2634 and 2635. 12 CFR part 336, subpart D, Secs. 336.24 
through 336.28, was removed and reserved by action of the Board of 
Directors of the Corporation dated November 24, 1992, 57 FR 39628.

IV. Matters of Regulatory Procedure

Administrative Procedure Act

    This proposed rulemaking is in compliance with the Administrative 
Procedure Act (5 U.S.C. 553) and allows for a 60-day comment period.

Regulatory Flexibility Act

    The Board of Directors has concluded that the proposed rule will 
not impose a significant economic hardship on small institutions. 
Therefore, the Board of Directors hereby certifies pursuant to section 
605 of the Regulatory Flexibility Act (5 U.S.C. 605) that the proposed 
rule will not have a significant economic impact on a substantial 
number of small business entities within the meaning of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.).

Paperwork Reduction Act

    The Board of Directors has determined that this proposed regulation 
does not contain any information collection requirements that require 
the approval of the Office of Management and Budget pursuant to the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

List of Subjects

5 CFR Part 3201

    Administrative practice and procedure, Conflict of interests, 
Government employees, Reporting and recordkeeping requirements.

12 CFR Part 336

    Conflict of interests, Government employees.

    Dated at Washington, D.C. this 14th day of June, 1994.

    By Order of the Board of Directors.
Federal Deposit Insurance Corporation.

Robert E. Feldman,
Acting Executive Secretary.

    Concurred in this 1st day of July, 1994.

Stephen D. Potts,
Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the Federal Deposit 
Insurance Corporation, with the concurrence of the Office of Government 
Ethics, is proposing to amend title 5, Chapter XXII, of the Code of 
Federal Regulations and title 12, Chapter III, of the Code of Federal 
Regulations as follows:

5 CFR CHAPTER XXII--FEDERAL DEPOSIT INSURANCE CORPORATION

    1. A new part 3201 is added to 5 CFR Chapter XXII to read as 
follows:

PART 3201--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE FEDERAL DEPOSIT INSURANCE CORPORATION

Sec.
3201.101  General.
3201.102  Extensions of credit from FDIC-insured depository 
institutions.
3201.103  Prohibitions on ownership of securities of FDIC-insured 
depository institutions.
3201.104  Restrictions concerning the purchase of property held by 
the Corporation or the RTC as conservator, receiver, or liquidator 
of the assets of an insured depository institution, or by a bridge 
bank organized by the Corporation.
3201.105 Prohibition on dealings with former employers, associates, 
and clients.
3201.106 Employment of family members outside the Corporation.
3201.107  Outside employment and other activities.
3201.108  Related statutory and regulatory authorities.
3201.109 Provisions of 5 CFR part 2635 not applicable to Corporation 
employees.

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government 
Act of 1978); 12 U.S.C. 1819(a), 1822; 26 U.S.C. 1043; E.O. 12674, 
54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 
55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105, 2635.403, 
2635.502, and 2635.803.


Sec. 3201.101  General.

    (a) Purpose. The regulations in this part apply to employees of the 
Federal Deposit Insurance Corporation (Corporation) and supplement the 
Standards of Ethical Conduct for Employees of the Executive Branch 
contained in 5 CFR part 2635. Where specified, these regulations also 
apply to the Comptroller of the Currency and the Director of the Office 
of Thrift Supervision in connection with their activities as members of 
the Corporation's Board of Directors.
    (b) Corporation ethics officials. The Executive Secretary of the 
Corporation shall act as the Corporation's Ethics Counselor and as its 
Designated Agency Ethics Official under 5 CFR part 2638. The Assistant 
Executive Secretary (Ethics) shall act as the Corporation's Alternate 
Ethics Counselor and as the Alternate Agency Ethics Official.
    (1) The Ethics Counselor or Alternate Ethics Counselor may delegate 
authority to one or more employees to serve as Deputy Ethics 
Counselors.
    (2) The delegation to a Deputy Ethics Counselor shall be in writing 
and cannot be redelegated.
    (c) Agency designees. The Ethics Counselor and Alternate Ethics 
Counselor shall serve as the agency designee for purposes of making the 
determinations, granting the approvals, and taking other actions 
required by an agency designee under part 2635 and this part. The 
Ethics Counselor or Alternate Ethics Counselor may delegate authority 
to Deputy Ethics Counselors or to other employees to serve as agency 
designees for specified purposes. The delegation to any agency designee 
shall be in writing and cannot be redelegated.
    (d) Definitions. For purposes of this part:
    (1) Affiliate, as defined in 12 U.S.C. 1841(k), means any company 
that controls, is controlled by, or is under common control with 
another company.
    (2) Appropriate director means the head of a Washington office or 
division or the highest ranking official assigned to a regional office 
in each division or the Ethics Counselor.
    (3) Covered employee means an employee of the Corporation required 
to file a public or confidential financial disclosure report under 5 
CFR part 2634 or 5 CFR part 3202.
    (4) Employee means an officer or employee, other than a special 
Government employee, of the Corporation including a member of the Board 
of Directors appointed under the authority of 12 U.S.C. 1812(a)(1)(C), 
and a liquidation graded employee. For purposes of 5 CFR part 2635 and 
Secs. 3201.103 and 3201.104, employee includes any individual who, 
pursuant to a contract or any other arrangement, performs functions or 
activities of the Corporation, under the direct supervision of an 
officer or employee of the Corporation.
    (5) Security includes an interest in debt or equity instruments. 
The term includes, without limitation, a secured or unsecured bond, 
debenture, note, securitized assets, commercial paper, and all types of 
preferred and common stock. The term includes an interest or right in a 
security, whether current or contingent, a beneficial or legal interest 
derived from a trust, the right to acquire or dispose of any long or 
short position, an interest convertible into a security, and an option, 
right, warrant, put, or call with respect to a security. The term 
security does not include a deposit account.
    (6) State nonmember bank means any State bank as defined in 12 
U.S.C. 1813(e) which is not a member of the Federal Reserve System.
    (7) Subsidiary, as defined in 12 U.S.C. 1813(w), means any company 
which is owned or controlled directly or indirectly by another company.


Sec. 3201.102  Extensions of credit from FDIC-Insured depository 
institutions.

    (a) Credit subject to this section. The prohibition, 
disqualification, and retention provisions of this section apply to a 
current or contingent financial obligation of the employee. For 
purposes of this section, a current or contingent financial obligation 
of an employee's spouse or minor child is considered to be an 
obligation of the employee.
    (b) Prohibition on acceptance of credit from FDIC-insured State 
nonmember banks applicable to certain high-level officials. (1) An 
employee described in paragraph (b)(2) of this section shall not, 
directly or indirectly, accept or become obligated on an extension of 
credit from an FDIC-insured State nonmember bank or its subsidiary, 
except credit extended through the use of a credit card under the same 
terms and conditions as are offered to the general public.
    (2) The prohibition in paragraph (b)(1) of this section applies to:
    (i) An employee who is a member of the Board of Directors, an 
assistant or deputy to the Board of Directors or to an appointed Board 
member, and a covered employee who is an assistant to such person; and
    (ii) The director of a Washington office or of a division, other 
than the Division of Supervision, and a covered employee who holds a 
position immediately subordinate to such director.
    (c) Prohibition on acceptance of credit from FDIC-insured State 
nonmember banks for employees assigned to the Division of Supervision. 
(1) An employee described in paragraph (c)(2) of this section shall 
not, directly or indirectly, accept or become obligated on an extension 
of credit from an FDIC-insured State nonmember bank or from an officer, 
director, employee, or subsidiary of such bank, except:
    (i) For an employee assigned to the Washington office, credit 
extended through the use of a credit card on the same terms and 
conditions as are offered to the general public; and
    (ii) For an employee assigned to other than the Washington office, 
credit extended by an FDIC-insured State nonmember bank headquartered 
outside the employee's region of official assignment through the use of 
a credit card on the same terms and conditions as are offered to the 
general public.
    (2) The prohibition in paragraph (c)(1) of this section applies to 
the Executive Director for Supervision and Resolutions, the Director of 
the Division of Supervision, a covered employee immediately subordinate 
to the Director of the Division of Supervision and the following 
employees assigned to the Division of Supervision: an Assistant 
Director, Regional Director, Deputy Regional Director, Assistant 
Regional Director, examiner, assistant examiner, review examiner, 
compliance examiner, assistant compliance examiner, and a covered 
employee.
    (3) Upon accepting credit extended by a credit card in accordance 
with paragraphs (c)(1)(i) or (c)(1)(ii) of this section, the employee 
shall be disqualified in accordance with paragraph (e)(1) of this 
section, and, within 30 days of accepting such credit, shall file with 
the appropriate director a Statement of Credit Card Obligation in 
Insured State Nonmember Bank and Acknowledgement of Conditions for 
Retention--Notice of Disqualification.
    (d) Two-year prohibition on acceptance of credit from FDIC-insured 
depository institutions. (1) An employee described in paragraph (d)(2) 
of this section shall not, directly or indirectly, accept or become 
obligated on an extension of credit from an FDIC-insured depository 
institution or its subsidiary for a period of two years from the date 
of the employee's last personal and substantial participation in an 
audit, resolution, liquidation, supervisory proceeding, or internal 
agency deliberation affecting that particular institution, its 
predecessor or successor, or any subsidiary of such institution. This 
prohibition does not apply to credit obtained through the use of a 
credit card under the same terms and conditions as are offered to the 
general public.
    (2) The prohibition in paragraph (d)(1) of this section applies to 
an employee in the Division of Finance, Division of Depositor and Asset 
Services, Division of Resolutions, Legal Division, or who is a member 
of a standing committee of the Board of Directors whose official duties 
include:
    (i) Audit of insured depository institutions for deposit insurance 
assessment purposes;
    (ii) Resolution or liquidation of failed or failing insured 
depository institutions;
    (iii) Participation in the supervision of insured depository 
institutions or enforcement proceedings under the Federal Deposit 
Insurance Act; or
    (iv) Internal agency deliberations affecting a particular insured 
depository institution, its predecessor or successor, or a subsidiary 
of such institution.
    (e) Employee disqualification. (1) An employee described in 
paragraph (c)(2) of this section shall not participate in an 
examination, audit, visitation, review, or investigation, or other 
particular matter involving an FDIC-insured depository institution or 
other person with whom the employee has an outstanding extension of 
credit.
    (2) A covered employee, other than an employee who is described in 
paragraph (c)(2) of this section, shall not participate in any 
particular matter involving an FDIC-insured depository institution or 
other person with whom the employee has an outstanding extension of 
credit.
    (3) Disqualification is not required under paragraph (e)(2) of this 
section:
    (i) If the credit was extended through the use of a credit card on 
the same terms and conditions as are offered to the general public; or
    (ii) When the agency designee, with the concurrence of the 
appropriate director, has authorized the employee to participate in the 
matter using the standard set forth in 5 CFR 2635.502(d).
    (4) The Comptroller of the Currency and the Director of the Office 
of Thrift Supervision shall be disqualified from matters pending before 
the Board of Directors to the same extent as a covered employee subject 
to paragraph (e)(2) of this section.
    (f) Retention and renegotiation of pre-existing extensions of 
credit. (1) Nothing in this section prohibits the retention of a pre-
existing extension of credit that an employee would be prohibited from 
accepting by Sec. 3201.102 (b) or (c) if the extension of credit was 
permitted to be retained under 12 CFR part 336 prior to the adoption of 
this regulation or if the employee's acceptance of the extension of 
credit was proper at the time the obligation was incurred, as in the 
case of an extension of credit incurred prior to commencement of 
employment or reassignment to another division or location. Subsequent 
action affecting the status of the creditor, such as merger, 
acquisition, or transaction under 12 U.S.C. 1823, does not change the 
character of an extension of credit that was proper when incurred. An 
employee who retains a pre-existing extension that he or she would be 
prohibited from accepting by Sec. 3201.102 (b) or (c) shall report the 
pre-existing extension of credit to the appropriate director or agency 
designee within 30 days from the following event, as appropriate:
    (i) Adoption of this part;
    (ii) Commencement of employment;
    (iii) Assignment to another division or location; or
    (iv) Action affecting the status of the creditor.
    (2) Any renegotiation of a pre-existing extension of credit shall 
be treated as a new extension of credit that is subject to the 
prohibitions contained in Sec. 3201.102 (b) through (d). An employee 
may request that an exception be made to the prohibitions to permit 
renegotiation of a pre-existing extension of credit. Any such request 
shall be made in writing to the appropriate director and agency 
designee, or in the case of an employee described in paragraph (b)(2) 
(i) and (ii) of this section, to the Ethics Counselor, stating:
    (i) The purpose of the renegotiation;
    (ii) The terms and conditions of the original extension of credit;
    (iii) The terms and conditions now available to the general public;
    (iv) The terms and conditions now offered to the employee;
    (v) The action the employee has taken to move the loan to an 
institution from which an employee would not be prohibited from 
accepting an extension of credit; and
    (vi) The financial hardship, if any, denial of the request will 
cause.
    (3) After submission of the request, the appropriate director and 
agency designee, or the Ethics Counselor, may grant the employee's 
request based upon a written determination that the request is not 
inconsistent with 5 CFR part 2635 or otherwise prohibited by law and 
that, under the particular circumstances, application of the 
prohibition is not necessary to avoid the appearance of the misuse of 
position or loss of impartiality, or otherwise to ensure confidence in 
the impartiality and objectivity with which agency programs are 
administered.


Sec. 3201.103  Prohibitions on ownership of securities of FDIC-insured 
depository institutions.

    (a) Prohibition on ownership. Except as permitted by this section, 
an employee or the spouse or minor child of an employee, shall not 
acquire, own, or control, directly or indirectly, a security of an 
FDIC-insured depository institution, or an affiliate of an FDIC-insured 
depository institution.
    (b) Exception to prohibition for certain interests. Nothing in this 
section prohibits an employee, or the spouse or minor child of an 
employee, from:
    (1) Acquiring, owning or controlling the securities of certain 
publicly traded bank holding companies or their nonbank subsidiaries 
where the bank holding company is not primarily engaged in banking and 
either the bank holding company or the bank it holds is exempt under 
the provisions of the Bank Holding Company Act of 1956 and which are 
identified as such by the Board of Governors of the Federal Reserve 
System (a list of exempt institutions can be obtained from the 
Corporation's Ethics Section);
    (2) Acquiring, owning, or controlling the securities of certain 
nonfinancial savings association holding companies whose principal 
business is unrelated to the financial services industry and which are 
identified as such by the Office of Thrift Supervision pursuant to 5 
CFR 3101.109(b)(3)(ii) (a list of such institutions can be obtained 
from the Corporation's Ethics Section);
    (3) Retaining a security of an FDIC-insured depository institution 
or an affiliate of an FDIC-insured depository institution if the 
security was permitted to be retained by the employee under 12 CFR part 
336 prior to the adoption of this regulation, was obtained prior to 
commencement of employment with the Corporation, or was acquired by a 
spouse prior to marriage to the employee;
    (4) Acquiring, owning, or controlling a security of an FDIC-insured 
depository institution or the affiliate of an FDIC-insured depository 
institution where the security was acquired by inheritance, gift, stock 
split, involuntary stock dividend, merger, acquisition, or other change 
in corporate ownership, exercise of preemptive right, or otherwise 
without specific intent to acquire the security. This provision permits 
the retention of any such interest only where:
    (i) The employee makes full, written disclosure on FDIC form 2410/
07 to the Ethics Counselor within 30 days of commencing employment or 
acquiring the interest; and
    (ii) The employee is disqualified in accordance with 5 CFR part 
2635, subpart D, from participating in any particular matter that 
affects his or her financial interests, or that of his or her spouse or 
minor child;
    (5) Acquiring, owning, or controlling an interest in a publicly 
traded or publicly available investment fund which, in its prospectus, 
does not indicate the objective or practice of concentrating its 
investments in the financial services sector and the employee neither 
exercises control nor has the ability to exercise control over the 
financial interests held in the fund; or
    (6) Using an FDIC-insured depository institution or an affiliate of 
an FDIC-insured depository institution as custodian or trustee of 
accounts containing tax-deferred retirement funds.
    (c) Divestiture. Based upon a determination of substantial conflict 
under 5 CFR 2635.403(b), the Ethics Counselor may require an employee, 
or the spouse or minor child of an employee, to divest a security he or 
she is otherwise authorized to retain under paragraph (b) of this 
section.


Sec. 3201.104  Restrictions concerning the purchase of property held by 
the Corporation or the RTC as conservator, receiver, or liquidator of 
the assets of an insured depository institution, or by a bridge bank 
organized by the Corporation.

    (a) Prohibition on purchase of property. An employee, and an 
employee's spouse or minor child shall not, directly or indirectly, 
purchase or acquire any property held or managed by the Corporation or 
the Resolution Trust Corporation (RTC) as conservator, receiver, or 
liquidator of the assets of an insured depository institution, or by a 
bridge bank organized by the Corporation, regardless of the method of 
disposition of the property.
    (b) Disqualification. An employee who is involved in the 
disposition of assets held by the Corporation or the RTC as 
conservator, receiver, or liquidator of the assets of an insured 
depository institution, or by a bridge bank organized by the 
Corporation shall not participate in the disposition of assets held in 
such capacities when the employee knows that any party with whom the 
employee has a covered relationship, as defined in 5 CFR 
2635.502(b)(1), is or will be attempting to acquire such assets. The 
employee shall provide written notification of the disqualification to 
his or her immediate supervisor and the agency designee.


Sec. 3201.105  Prohibition on dealings with former employers, 
associates, and clients.

    (a) An employee is prohibited for one year from the date of entry 
on duty with the Corporation from participating in a particular matter 
when an employer, or the successor to the employer, for whom the 
employee worked at any time during the one year preceding the 
employee's entrance on duty is a party or represents a party to the 
matter.
    (b) For purposes of this section, the term employer means a person 
with whom the employee served as officer, director, trustee, general 
partner, agent, attorney, accountant, consultant, contractor, or 
employee.
    (c) The one-year period of disqualification imposed by paragraph 
(a) of this section may be extended in an individual case based on a 
written determination by the agency designee that, under the particular 
circumstances, the employee's participation in the particular matter 
would cause a reasonable person with knowledge of the facts to question 
his or her impartiality.


Sec. 3201.106  Employment of family members outside the Corporation.

    (a) Disqualification of employees. An employee shall not 
participate in an examination, audit, investigation, application, 
contract, or other particular matter if the employer of the employee's 
spouse, child, parent, brother, sister, or a member of the employee's 
household is a party or represents a party to the matter, unless an 
agency designee authorizes the employee to participate using the 
standard in 5 CFR 2635.502(d).
    (b) Reporting certain relationships. A covered employee shall make 
a written report to an agency designee within 30 days of the employment 
of the employee's spouse, child, parent, brother, sister, or a member 
of the employee's household by:
    (1) An FDIC-insured depository institution or its affiliate;
    (2) A firm or business with which, to the employee's knowledge, the 
Corporation has a contractual or other business or financial 
relationship; or
    (3) A firm or business which, to the employee's knowledge, is 
seeking a business or contractual relationship with the Corporation.


Sec. 3201.107  Outside employment and other activities.

    (a) Prohibition on employment with FDIC-insured depository 
institutions. An employee shall not provide service for compensation, 
in any capacity, to an FDIC-insured depository institution or an 
employee or person employed by or connected with such institution.
    (b) Use of professional licenses. A covered employee who holds a 
license related to real estate, appraisals, securities, or insurance 
and whose official duties with the Corporation require personal and 
substantial involvement in matters related to, respectively, real 
estate, appraisal, securities, or insurance is prohibited from using 
such license, other than in the performance of his or her official 
duties, for the production of income. The appropriate director, in 
consultation with an agency designee, may grant exceptions to this 
prohibition based on a finding that the specific transactions which 
require use of the license will not create an appearance of loss of 
impartiality or use of public office for private gain.
    (c) Responsibility to consult with agency designee. An employee who 
engages in, or intends to engage in, any outside employment or other 
activity that may require disqualification from the employee's official 
duties shall consult with an agency designee prior to engaging in or 
continuing to engage in the activity.


Sec. 3201.108  Related statutory and regulatory authorities.

    (a) 18 U.S.C. 213, which prohibits an examiner from accepting a 
loan or gratuity from an FDIC-insured depository institution examined 
by him or her or from any person connected with such institution.
    (b) 18 U.S.C. 1906, which prohibits disclosure of information from 
a bank examination report except as authorized by law.
    (c) 17 CFR 240.10b-5 which prohibits the use of manipulative or 
deceptive devices in connection with the purchase or sale of any 
security.
    (d) 18 U.S.C. 1909, which prohibits examiners from providing any 
service for compensation for any bank or person connected therewith.


Sec. 3201.109  Provisions of 5 CFR part 2635 not applicable to 
Corporation employees.

    The following provisions of 5 CFR part 2635 are not applicable to 
employees of the Corporation:
    (a) Because of the restrictions imposed by 18 U.S.C. 213 on 
examiners accepting loans or gratuities, an examiner in the Division of 
Supervision may not use any of the gift exceptions at 5 CFR 2635.204 to 
accept a gift from an FDIC-insured depository institution examined by 
him or her or from any person connected with such institution.
    (b) Provisions of 41 U.S.C. 423 (Procurement integrity) and the 
implementing regulations at 48 CFR 3.104 (of the Federal Acquisition 
Regulation) applicable to procurement officials referred to in:
    (1) 5 CFR 2635.202(c)(4)(iii);
    (2) The note following 5 CFR 2635.203(b)(7);
    (3) Example 5 following 5 CFR 2635.204(a);
    (4) Examples 2 and 3 following 5 CFR 2635.703(b)(3);
    (5) 5 CFR 2635.902(f), (h), (l), and (bb);
    (c) Provisions of 31 U.S.C. 1353 (Acceptance of travel and related 
expenses from non-Federal sources) and the implementing regulations at 
41 CFR part 304-1 (Acceptance of payment from a non-Federal source for 
travel expenses) referred to in 5 CFR 2635.203(b)(8)(i).
    (d) Provisions of 41 CFR Chapter 101 (Federal Property Management 
Regulations) referred to in 5 CFR 2635.205(a)(4).
    (e) Provisions of 41 CFR Chapter 201 (Federal Information Resources 
Management Regulation) referred to in Example 1 following 5 CFR 
2635.704(b)(2).

12 CFR CHAPTER III--FEDERAL DEPOSIT INSURANCE CORPORATION

PART 336--EMPLOYEE RESPONSIBILITIES AND CONDUCT

    2. The authority citation for part 336 is revised to read as 
follows:

    Authority: 5 U.S.C. 7301; 12 U.S.C. 1819(a).

    3. Section 336.1 is revised to read as follows:


Sec. 336.1  Cross-reference to employee ethical conduct standards and 
financial disclosure regulations.

    Employees of the Federal Deposit Insurance Corporation 
(Corporation) are subject to the Executive Branch-wide Standards of 
Ethical Conduct at 5 CFR part 2635, the Corporation regulation at 5 CFR 
part 3201 which supplements the Executive Branch-wide Standards, the 
Executive Branch-wide financial disclosure regulations at 5 CFR part 
2634, and the Corporation regulation at 5 CFR part 3202 which 
supplements the Executive Branch-wide financial disclosure regulations.


Secs. 336.2-336.23, 336.29-336.37  [Removed]

Appendix to Part 336--[Removed]

    4. Sections 336.2 through 336.23 and 336.29 through 336.37 and all 
subpart headings are removed and the appendix to part 336 is removed.
[FR Doc. 94-16557 Filed 7-11-94; 8:45 am]
BILLING CODE 6714-01-P