[Federal Register Volume 60, Number 79 (Tuesday, April 25, 1995)]
[Rules and Regulations]
[Pages 20171-20178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9733]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / Rules 
and Regulations  
[[Page 20171]]

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 Sec. 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 
Sec. 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 Sec. 3201.102(c). 18 U.S.C. 213 does not carry a 
time limitation.
    One commenter suggested that, for purposes of Sec. 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 [[Page 20172]] 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 Sec. 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 Sec. 3201.102(d) and Sec. 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 Branch-wide 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 
Secs. 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 Secs. 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 Sec. 2635.403(a) of the 
Executive Branch-wide Standards.
    The trade association, commenting on the proposed rule, expressed 
support for the provisions of Sec. 3201.102 but expressed concern that 
an unreasonable recordkeeping burden might result from the two-year 
prohibition on acceptance of credit found at Sec. 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 Sec. 3201.103(b)(5) was too restrictive since its practical 
application would prohibit ownership interests in investment funds 
which might not hold interests in FDIC-insured 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 
Sec. 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 Sec. 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 Sec. 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 
one-year prohibition on dealings with the last employer of the employee 
regardless of when the employee was last employed, Sec. 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 case-by-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 Sec. 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 Sec. 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 FDIC-
insured depository institutions. Because the reporting requirement 
applies only to the employment of spouses, children, parents, and 
siblings, the Board does not [[Page 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 FDIC-insured 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 Sec. 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 Sec. 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 
Sec. 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 Sec. 3201.101(d)(3) and 
Sec. 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 FDIC-insured 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, Secs. 336.1-
336.23 and Secs. 336.29-336.37, and remove the appendix to part 336. 
Additionally, 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.

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 [[Page 20174]] 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 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 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 FDIC-insured 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 FDIC-insured 
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 
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.
    (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 
[[Page 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.


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 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 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, 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 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) 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 [[Page 20176]] 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 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 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 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 [[Page 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.


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 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.


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 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: [[Page 20178]] 


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  [Removed]


Secs. 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