[Federal Register Volume 60, Number 112 (Monday, June 12, 1995)]
[Rules and Regulations]
[Pages 30773-30778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14215]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 112 / Monday, June 12, 1995 / Rules 
and Regulations  

[[Page 30773]]

FARM CREDIT SYSTEM INSURANCE CORPORATION

5 CFR Part 4001

12 CFR Part 1401

RIN 3055-AA03, 3209-AA15


Supplemental Standards of Ethical Conduct for Employees of the 
Farm Credit System Insurance Corporation

AGENCY: Farm Credit System Insurance Corporation (Corporation).

ACTION: Interim rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: The Farm Credit System Insurance Corporation, with the 
concurrence of the Office of Government Ethics (OGE), is issuing as an 
interim rule regulations for the officers and employees of the 
Corporation that supplement the Standards of Ethical Conduct for 
Employees of the Executive Branch (Executive Branch-wide Standards) 
issued by OGE. The interim rule is a necessary supplement to the 
Executive Branch-wide Standards because it addresses ethical issues 
unique to Corporation programs and operations. Prior to the issuance of 
the interim rule, the Corporation had administratively adopted the Farm 
Credit Administration (FCA) standards of conduct regulations. The FCA, 
however, is issuing supplemental regulations to the Executive Branch-
wide Standards that, when effective, will remove its conduct 
regulations except for a residual cross-reference. This Corporation 
interim rule establishes regulations imposing prohibitions on the 
ownership of certain financial interests; prohibitions on certain forms 
of borrowing and extensions of credit; limitations on purchases of 
assets owned by Farm Credit System (System) institutions, 
conservatorship or receivership assets, or certain assets held by the 
Corporation; restrictions arising from the employment of relatives; a 
prohibition against involvement in Farm Credit System board member 
elections; and restrictions on outside employment and business 
activities. In addition to this interim rule, the Corporation will be 
issuing a single section in its regulations that provides cross-
references to the Executive Branch-wide Standards and financial 
disclosure regulations, as well as these new supplemental regulations.

DATES: This interim rule is effective July 12, 1995. Notice of 
effective date will be published in the Federal Register. Comments must 
be submitted on or before July 12, 1995.

ADDRESSES: Comments should be mailed or delivered (in triplicate) to 
Mary A. Creedon, Chief Operating Officer, in care of Cindy Nicholson, 
Farm Credit System Insurance Corporation, McLean, Virginia 22102-0826. 
Copies of all comments will be available for examination by interested 
parties in the offices of the Farm Credit System Insurance Corporation.

FOR FURTHER INFORMATION CONTACT:

Eric Howard, Policy Analyst, Farm Credit System Insurance Corporation, 
McLean, VA 22102-0826, (703) 883-4498,

      or

Wendy R. Laguarda, Senior Attorney and Deputy Ethics Official, Farm 
Credit System Insurance Corporation, McLean, VA 22102-0826, (703) 883-
4234, TDD (703) 883-4444.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, OGE published Executive Branch-wide Standards 
for employees of the executive branch. See 57 FR 35006-35067, as 
corrected at 57 FR 48557 and FR 52583, with additional grace period 
extensions at 59 FR 4779-4780 and 60 FR 6390-6391. The Executive 
Branch-wide Standards are codified at 5 CFR part 2635. Effective 
February 3, 1993, they established uniform ethical conduct standards 
applicable to all executive branch personnel.
    With the concurrence of OGE, 5 CFR 2635.105 authorizes executive 
branch agencies to publish agency-specific supplemental regulations 
necessary to implement their respective ethics programs. The 
Corporation, with OGE's concurrence, has determined, in light of the 
Corporation's specialized functions as insurer, conservator, and 
receiver for Corporation-insured System institutions, that the 
following supplemental regulations being codified in new chapter XXX, 
consisting of part 4001, of title 5 of the Code of Federal Regulations, 
are necessary to implement the Corporation's ethics program 
successfully.

II. Analysis of the Regulations

Section 4001.101--General

    Section 4001.101 explains that the regulations contained in the 
interim rule apply to Corporation employees and supplement the 
Executive Branch-wide Standards. Corporation employees must comply with 
the Executive Branch-wide Standards, the supplemental regulations in 
this interim rule, and Corporation guidance and procedures issued 
pursuant to the Executive Branch-wide Standards and these supplemental 
regulations.

Section 4001.102--Definitions

    Section 4001.102 identifies and defines the unique terms used in 
the supplemental regulations. The term ``covered employee'' is intended 
to include all examiners of System institutions who perform work for 
the Corporation and any other employee specified as such by Corporation 
directive whose duties and responsibilities require application of 
these supplemental regulations to ensure public confidence that the 
Corporation's programs are conducted impartially and objectively. The 
Corporation Designated Agency Ethics Official (DAEO) or his or her 
designee, in consultation with the Chief Operating Officer, will 
determine which employees are covered for purposes of this regulation.
    The term ``related entity'' is intended to be broadly interpreted 
and includes agricultural mortgage marketing facilities established by 
System institutions, affiliates of the Federal Agricultural Mortgage 
Corporation, service organizations established by the System banks, and 
all other entities owned or controlled by one or more System 
institutions that are not chartered by the FCA.
    The term ``System institution'' refers to all institutions 
chartered and regulated by the FCA, and also includes 
[[Page 30774]] the Federal Farm Credit Banks Funding Corporation and 
the Federal Agricultural Mortgage Corporation.
Section 4001.103--Prohibited Financial Interests

    (a) Prohibition. Section 4001.103(a) prohibits a covered employee, 
or a spouse or minor child of a covered employee, from owning 
securities issued by a System institution or related entity.
    The Corporation has determined, in accordance with 5 CFR 
2635.403(a), that this restriction is necessary, in light of its 
multifaceted responsibilities, to maintain public confidence in the 
impartiality and objectivity with which the Corporation executes its 
functions. The restriction will eliminate any reason for regulated 
entities to be concerned that sensitive information provided to the 
Corporation might be misused for private gain and will avoid widespread 
disqualification of employees from official matters, which might result 
in the Corporation's inability to fulfill its mission.
    (b) Definition of Securities. Section 4001.103(b) contains a 
definition of the term ``securities'' to be applied to Sec. 4001.103. 
It includes any ``interest in debt or equity instruments'' such as, for 
example, stocks, bonds, and commercial paper.
    (c) Exceptions. Section 4001.103(c) includes several exceptions to 
the prohibition in Sec. 4001.103(a) against owning securities issued by 
System institutions or related entities. The exceptions are intended to 
permit ownership of interests of a character unlikely to raise 
questions regarding the objective and impartial performance of 
Corporation employees' official duties or the possible misuse of their 
positions.
    Section 4001.103(c) (1) and (2) permit employees to retain System 
securities in certain funds or plans, the assets of which are managed 
by an independent third party and are not concentrated in System 
securities. Such funds may include a publicly traded or publicly 
available investment fund or an employee's interest in a qualified 
profit sharing, retirement, or similar plan.
    Section 4001.103(c)(3) permits employees to retain securities of 
System institutions held, in accordance with Sec. 4001.104(b), as a 
result of pre-existing credit. This exception is necessary because the 
System institutions are borrower-owned institutions that require 
eligible borrowers to purchase a minimum amount of an institution's 
stock as a condition of obtaining a loan. Thus, if an employee has pre-
existing credit from a System institution, he or she also will own 
stock in the institution, which is generally not retired until after 
the loan is paid off.
    Section 4001.103(c)(4) is included as a specific cross-reference to 
the waiver authority at Sec. 4001.109 which is to be used on a case-by-
case basis.

Section 4001.104--Prohibited Borrowing

    (a) Prohibition on Employee Borrowing. Section 4001.104(a) 
prohibits a covered employee, or a spouse or minor child of a covered 
employee, from seeking or obtaining a loan or extension of credit from 
a System institution or an officer, director, employee, or related 
entity of a System institution.
    Imposed pursuant to 5 CFR 2635.403(a), this prohibition on 
borrowing is necessary for several reasons. First, it is necessary to 
prevent covered employees from obtaining or appearing to obtain loans 
or extensions of credit on preferential terms, or from benefiting or 
appearing to benefit from their official positions through possible 
forbearance by the lender in collecting on the indebtedness. Public 
confidence in the impartiality and objectivity with which Corporation 
programs are administered will be strengthened by prohibiting 
Corporation employees from engaging in financial transactions with 
institutions insured by the Corporation. The borrowing prohibition also 
will help to ensure that System institutions and their examiners do not 
violate the prohibitions in 18 U.S.C. 212 and 213 against the offer and 
acceptance of certain loans. Finally, limitations on Corporation 
employees borrowing from regulated institutions will result in fewer 
employee disqualifications from official matters, thereby avoiding a 
situation that would have a detrimental effect on the Corporation's 
ability to carry out its mission.
    (b) Exception. Section 4001.104(b) serves to clarify that 
Sec. 4001.104(a) only prohibits covered employees and their spouses and 
minor children from seeking or obtaining loans or extensions of credit. 
Thus, a covered employee, or a spouse or minor child of a covered 
employee, is not prohibited from retaining a loan from a System 
institution on its original terms if the loan was obtained prior to 
appointment to a covered employee position at the Corporation. The 
renewal or renegotiation of a pre-existing loan or extension of credit, 
however, will be treated as a new loan subject to the prohibition in 
Sec. 4001.104(a), but an employee may request, pursuant to the waiver 
provision in Sec. 4001.109, that an exception be made. Employees who 
retain pre-existing credit, by virtue of their own credit or the credit 
of a spouse or minor child, will be required to disqualify themselves 
from participation in the regulation, supervision, examination, audit, 
visitation, review, investigation, or other particular matter involving 
the System institution providing the retained credit.

Section 4001.105--Purchase of System Institution Assets

    (a) Prohibition on Purchasing Assets Owned by a System Institution. 
Section 4001.105(a) prohibits all Corporation employees, or a spouse or 
minor child of an employee, from purchasing assets from a System 
institution or related entity, regardless of how the asset is sold.
    (b) Assets Held or Managed by the Farm Credit System Insurance 
Corporation or a Receiver or Conservator. Section 4001.105(b)(1) 
prohibits all Corporation employees, or a spouse or minor child of an 
employee, from purchasing assets held or managed by a receiver or 
conservator for a System institution or by the Corporation as a result 
of its provision of open bank assistance to troubled System banks, 
regardless of how the asset is sold. This section prohibits the 
purchase of such assets held by a receiver or conservator appointed by 
the FCA prior to January 1, 1993, as well as assets held by the 
Corporation, which is the only entity FCA may appoint as receiver or 
conservator of troubled System institutions starting January 1, 1993.
    Section 4001.105(b)(2) requires a Corporation employee who is 
involved in the disposition of receivership or conservatorship assets 
to disqualify himself from a sales transaction when the employee 
becomes aware that anyone with whom he holds a covered relationship, as 
defined in Sec. 2635.502(b)(1) of the Executive Branch-wide Standards, 
is or will be attempting to acquire receivership or conservatorship 
assets.
    The prohibitions in Sec. 4001.105 are intended to supplement the 
provisions of 5 CFR 2635.702 regarding use of public office for private 
gain and to preserve public confidence in the impartiality and 
objectivity with which Corporation programs and operations are 
administered. They are necessary to prevent employees from purchasing 
or appearing to purchase assets on preferential terms, or from 
benefiting or appearing to benefit from their official positions by 
purchasing assets based on information obtained in the course of the 
employees' performance of their official duties. And because the 
Corporation, acting through its receivership powers, exercises broad 
powers to seize, hold, and forfeit private [[Page 30775]] property, the 
prohibitions will help to preserve the public's confidence that these 
powers will not be misused to benefit the private interests of a 
Corporation employee.

Section 4001.106--Restrictions Arising From the Employment of Relatives

    Section 4001.106 requires a covered employee to file a report of 
family member employment with his or her immediate supervisor, the 
ethics liaison in the office, and the DAEO if the covered employee's 
spouse or a relative who is dependent on or resides with the covered 
employee is employed with an entity specified in Sec. 4001.108(a). The 
employee would be disqualified from participating in any matter 
involving the employee's spouse or relative, or the employing entity, 
unless the employee received the appropriate authorization pursuant to 
the standard in Sec. 2635.502(d) of the Executive Branch-wide 
Standards.
    In effect, Sec. 4001.106 supplements Sec. 2635.502 of the Executive 
Branch-wide Standards, relating to impartial performance of official 
duties, and is necessary to ensure that the employment of a close 
family member by System institutions or related entities does not 
interfere with the objective and impartial execution of a covered 
employee's official duties. The requirements of Sec. 4001.106 will help 
to ensure public confidence in the Corporation's execution of its 
mission.

Section 4001.107--Involvement in System Institution Board Member 
Elections

    Section 4001.107 prohibits those covered employees who own stock in 
a System institution, by virtue of retaining a pre-existing loan or 
extension of credit from a System institution in accordance with 
Sec. 4001.104(b), from participating in a stockholder nomination or 
election of a System institution's board members, other than by 
exercising their right to vote. In addition, this section prohibits 
covered employees from making any oral or written statements that could 
be reasonably construed as an attempt to influence a nomination or 
election.
    Section 4001.107 supplements Sec. 2635.702 of the Executive Branch-
wide Standards by prohibiting conduct that, given the broad power of 
the Corporation over System institutions, is likely to give rise to an 
appearance of misuse of official authority.

Section 4001.108--Outside Employment and Business Activity

    (a) Prohibition. Section 4001.108(a) supplements Sec. 2635.802 of 
the Executive Branch-wide Standards by prohibiting covered employees 
from engaging in specified outside employment and activities. Covered 
employees are prohibited from performing paid or unpaid services for 
any System institution or related entity, or any officer, director, 
employee, or person connected with a System institution or related 
entity. This regulation is based, in part, on 18 U.S.C. 1909, which 
prohibits an examiner of a System institution from performing any 
service for compensation for any System institution or for any person 
connected therewith, such as persons working on a contract basis for a 
System institution. It is expanded to cover persons other than 
examiners in order to ensure that covered employees do not engage in 
outside activities that are likely to appear to interfere with the 
objective and impartial performance of their official duties.
    (b) General Requirement for Prior Approval. Pursuant to 
Sec. 2635.803 of the Executive Branch-wide Standards, agencies may, by 
supplemental regulation, require employees to obtain prior approval 
before engaging in outside employment or activities. Under 12 CFR 
601.101, which has been administratively adopted by the Corporation, 
the Corporation has required employees who engage in outside employment 
to seek prior approval. Based on its finding that this requirement has 
helped ensure that employees' outside activities conform to applicable 
statutes and regulations, the Corporation has determined that 
continuing this requirement is necessary for the purposes of its ethics 
program. Thus, Sec. 4001.108(b) requires all employees to obtain 
written approval from the DAEO before engaging in any outside 
employment, with or without compensation. This section also provides 
that approval shall be granted only upon a determination that the 
outside employment is not expected to involve conduct prohibited by 
statute or Federal regulation, including 5 CFR part 2635 and these 
supplemental regulations.
    (c) Definition. The term ``employment'' is broadly defined at 
Sec. 4001.108(c) to cover any form of non-Federal employment or 
business relationship involving the provision of personal services, 
including writing when done under an arrangement with another person 
for production or publication of the written product. It does not, 
however, include participation in the activities of nonprofit 
charitable, religious, professional, social, fraternal, and similar 
organizations for which no compensation is received other than 
reimbursement for necessary expenses.

Section 4001.109--Waivers

    Section 4001.109 gives the DAEO authority to grant a written waiver 
of any provision in part 4001 based upon a determination that the 
waiver is not inconsistent with law and the Executive Branch-wide 
Standards, and meets the waiver standard established in Sec. 4001.109. 
An employee may be required under the waiver to disqualify himself or 
herself from a particular matter or take other appropriate action.
    The waiver provision is intended, in appropriate cases, to ease the 
burden that the supplemental regulations may impose on the private 
lives of Corporation employees, while ensuring that employees do not 
engage in actions that may interfere with the objective and impartial 
execution of their official duties or raise questions about possible 
misuse of their official positions.

III. Addition of Corporation Employee Responsibilities and Conduct 
Regulations

    On the effective date of the FCA's interim rule, the FCA's 
regulations on Employee Responsibilities and Conduct, 12 CFR part 601, 
which had been administratively adopted by the Corporation, will be 
amended by the FCA to remove Secs. 601.100 through 601.102 and to add a 
residual cross-reference. On the effective date of the Corporation's 
own interim rule, the Corporation will issue new regulations on 
Employee Responsibilities and Conduct in 12 CFR part 1401, to provide a 
cross-reference to the Corporation's own supplemental ethical conduct 
regulation, to be codified at 5 CFR part 4001, and to the Executive 
Branch-wide financial disclosure and standards of ethical conduct 
regulations at 5 CFR parts 2634 and 2635.

IV. Matters of Regulatory Procedure

Administrative Procedure Act

    Pursuant to 5 U.S.C. 553 (b) and (d), the Corporation finds good 
cause exists for waiving the general notice of proposed rulemaking and 
30-day delay in effectiveness as to this interim final rule. The notice 
and delayed effective date are being waived because these supplemental 
regulations for Corporation employees and their families concern 
matters of Corporation organization, practice and procedure and because 
it is in the public interest that these supplemental regulations be 
effective as soon as possible. The Corporation is, however, issuing 
these regulations as an interim rule, with a request for comments, and 
will consider any comments received when adopting the regulations in 
final form.

[[Page 30776]]

Executive Order 12866

    In promulgating these interim supplemental regulations, the 
Corporation has adhered to the regulatory philosophy and the applicable 
principles of regulation set forth in section 1 of Executive Order 
12866, Regulatory Planning and Review. This interim rule deals with 
Corporation organization, management, and personnel matters and is, 
therefore, not deemed ``significant'' under Executive Order 12866.

Regulatory Flexibility Act

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

Paperwork Reduction Act

    It is hereby certified that the Paperwork Reduction Act (44 U.S.C. 
chapter 35) does not apply because this regulation does not contain any 
information collection requirements that require the approval of the 
Office of Management and Budget.

List of Subjects

5 CFR Part 4001

    Conflicts of interest, Government employees.

12 CFR Part 1401

    Conflicts of interest.

    Dated: May 10, 1995.

Floyd Fithian,

Secretary, Farm Credit System Insurance Corporation.

    Approved: May 30, 1995.

Stephen D. Potts,

Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the Farm Credit System 
Insurance Corporation, with the concurrence of the Office of Government 
Ethics, is amending title 5 and adding a new part 1401 to chapter XIV, 
title 12 of the Code of Federal Regulations to read as follows:

TITLE 5--[AMENDED]

    1. A new chapter XXX, consisting of part 4001, is added to title 5 
of the Code of Federal Regulations to read as follows:
CHAPTER XXX--FARM CREDIT SYSTEM INSURANCE CORPORATION

PART 4001--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE FARM CREDIT SYSTEM INSURANCE CORPORATION

Sec.
4001.101  General.
4001.102  Definitions.
4001.103  Prohibited financial interests.
4001.104  Prohibited borrowing.
4001.105  Purchase of System institution assets.
4001.106  Restrictions arising from the employment of relatives.
4001.107  Involvement in System institution board member elections.
4001.108  Outside employment and business activity.
4001.109  Waivers.

    Authority: 5 U.S.C. 7301, 7353; 5 U.S.C. App. (Ethics in 
Government Act of 1978); 12 U.S.C. 2277a-7, 2277a-8; E.O. 12674, 3 
CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 3 CFR, 1990 
Comp., p. 306; 5 CFR 2635.105, 2635.403(a), 2635.502, 2635.702, 
2635.802(a), 2635.803.


Sec. 4001.101  General.

    In accordance with 5 CFR 2635.105, the regulations in this part 
apply to Farm Credit System Insurance Corporation (Corporation) 
employees and supplement the Standards of Ethical Conduct for Employees 
of the executive branch contained in 5 CFR part 2635. Employees are 
required to comply with 5 CFR part 2635, this part, and Corporation 
guidance and procedures established pursuant to 5 CFR 2635.105.


Sec. 4001.102  Definitions.

    For purposes of this part:
    (a) Covered employee means:
    (1) All examiners who perform work for the Corporation; and
    (2) Any other employee specified by Corporation directive whose 
duties and responsibilities require application of these supplemental 
regulations to ensure public confidence that the Corporation's programs 
are conducted impartially and objectively. The Corporation Designated 
Agency Ethics Official (DAEO) or his or her designee, in consultation 
with the Chief Operating Officer, will determine which employees are 
covered for the purpose of this part.
    (b) Related entity means:
    (1) Affiliates defined in section 8.5(e) of the Farm Credit Act of 
1971, as amended (Act), 12 U.S.C. 2001 et seq., 12 U.S.C. 2279aa-5;
    (2) Affiliates defined in section 8.11(e) of the Act, 12 U.S.C. 
2279aa-11;
    (3) Service organizations authorized by section 4.25 of the Act, 12 
U.S.C. 2211; and
    (4) Any other entity owned or controlled by one or more Farm Credit 
System (System) institution that is not chartered by the Farm Credit 
Administration (FCA).
    (c) System institution refers to:
    (1) All institutions chartered and regulated by the FCA as 
described in section 1.2 of the Act, 12 U.S.C. 2002;
    (2) The Federal Farm Credit Banks Funding Corporation, established 
pursuant to section 4.9 of the Act, 12 U.S.C. 2160; and
    (3) The Federal Agricultural Mortgage Corporation, established 
pursuant to section 8.1 of the Act, 12 U.S.C. 2279aa-1.


Sec. 4001.103  Prohibited financial interests.

    (a) Prohibition. Except as provided in paragraph (c) of this 
section and Sec. 4001.109, no covered employee, or spouse or minor 
child of a covered employee, shall own, directly or indirectly, 
securities issued by a System institution or related entity.
    (b) Definition of securities. For purposes of this section, the 
term ``securities'' includes all interests in debt or equity 
instruments. The term includes, without limitation, secured and 
unsecured bonds, debentures, notes, securitized assets and commercial 
paper, as well as all types of preferred and common stock. The term 
encompasses both current and contingent ownership interests, including 
any beneficial or legal interest derived from a trust. It extends to 
any right to acquire or dispose of any long and short position in such 
securities and includes, without limitation, interests convertible into 
such securities, as well as options, rights, warrants, puts, calls, and 
straddles relating to such securities.
    (c) Exceptions. Nothing in this section prohibits a covered 
employee, or spouse or minor child of a covered employee, from:
    (1) Investing 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 securities of System 
institutions or related entities, if the employee neither exercises 
control over nor has the ability to exercise control over the financial 
interests held in the fund;
    (2) Having a legal or beneficial interest in a qualified profit 
sharing, retirement, or similar plan, provided that the plan does not 
invest more than 25 percent of its funds in securities of System 
institutions or related entities, [[Page 30777]] and the employee 
neither exercises control over nor has the ability to exercise control 
over the financial interests held in the plan;
    (3) Owning securities of System institutions held as a result of 
pre-existing credit, as specified in Sec. 4001.104(b); or
    (4) Owning any security pursuant to a waiver granted under 
Sec. 4001.109.


Sec. 4001.104  Prohibited borrowing.

    (a) Prohibition on employee borrowing. Except as provided in 
paragraph (b) of this section, no covered employee, or spouse or minor 
child of a covered employee, shall seek or obtain any loan or extension 
of credit from a System institution or from an officer, director, 
employee, or related entity of a System institution.
    (b) Exception. This section does not prohibit a covered employee, 
or spouse or minor child of a covered employee, from retaining a loan 
from a System institution on its original terms if the loan was 
obtained prior to appointment to a covered employee position. For loans 
retained pursuant to this paragraph, a covered employee shall submit to 
his or her immediate supervisor, the ethics liaison in his or her 
office, and the DAEO, a written disqualification from examining, 
auditing, visiting, reviewing, investigating, or otherwise 
participating in the regulation or supervision of the System 
institution that is providing the retained credit. Written 
disqualification shall be made within 30 days of appointment to a 
covered employee position on a form prescribed by the DAEO. Any renewal 
or renegotiation of a pre-existing loan or extension of credit will be 
treated as a new loan subject to the prohibition in paragraph (a) of 
this section.


Sec. 4001.105  Purchase of System institution assets.

    (a) Prohibition on purchasing assets owned by a System institution. 
No employee, or spouse or minor child of an employee, shall purchase, 
directly or indirectly, an asset (such as real property, vehicles, 
furniture, or similar items) from a System institution or related 
entity, regardless of how the asset is sold.
    (b) Assets held or managed by the Corporation or a receiver or 
conservator--(1) Prohibition on purchase. No employee, or spouse or 
minor child of an employee, shall purchase, directly or indirectly, an 
asset (such as real property, vehicles, furniture, or similar items) 
that is held or managed by a receiver or conservator for a System 
institution or that is held by the Corporation as a result of its 
provision of open bank assistance to troubled System banks, regardless 
of how the asset is sold.
    (2) Disqualification. An employee who is involved in the 
disposition of receivership or conservatorship assets, or assets 
acquired by the Corporation as a result of its provision of open bank 
assistance to troubled System banks, shall disqualify himself or 
herself from participation in the disposition of such assets when the 
employee becomes aware that anyone with whom the employee has a covered 
relationship, as defined in Sec. 2635.502(b)(1) of the Executive 
Branch-wide Standards, is or will be attempting to acquire such assets. 
The employee shall provide written notification of the disqualification 
to his or her immediate supervisor, the ethics liaison in his or her 
office, and the DAEO.


Sec. 4001.106  Restrictions arising from the employment of relatives.
    When the spouse of a covered employee, or other relative who is 
dependent on or resides with a covered employee, is employed in a 
position that the employee would be prohibited from occupying by 
Sec. 4001.108(a), the employee shall file a report of family member 
employment with his or her immediate supervisor, the ethics liaison in 
his or her office, and the DAEO on a form prescribed by the DAEO. 
Notice shall be made as soon as possible after learning about 
employment already in existence or in advance of known prospective 
employment. The employee shall be disqualified from participation in 
any matter involving the employee's spouse or relative, or the 
employing entity, unless the DAEO authorizes the employee to 
participate in the matter using the standard in Sec. 2635.502(d) of the 
Executive Branch-wide Standards.


Sec. 4001.107  Involvement in System institution board member 
elections.

    No covered employee who is able to participate in a System 
institution board election because of System securities owned by virtue 
of retaining a pre-existing loan or extension of credit from a System 
institution in accordance with Sec. 4001.104(b) shall take any part, 
directly or indirectly, in the nomination or election of a board member 
of a System institution, other than by exercising the right to vote. In 
addition, a covered employee shall not make any oral or written 
statement that may be reasonably construed as intending to influence 
any vote in such nominations or elections.


Sec. 4001.108  Outside employment and business activity.

    (a) Prohibition. No covered employee shall perform services, either 
on a paid or unpaid basis, for any System institution or related 
entity, or any officer, director, employee, or person connected with a 
System institution or related entity. Nothing in this section would 
prohibit covered employees from providing any service that is a part of 
their official duties.
    (b) General requirement for prior approval. All employees shall 
obtain prior written approval before engaging in any outside employment 
or business activity, with or without compensation, unless the outside 
activity is exempt from the definition of ``employment'' as set forth 
in paragraph (c) of this section. An employee proposing to engage in 
outside employment and business activities is required, prior to 
commencement, to send a written notice of the proposed employment or 
activity to the DAEO on a form prescribed by the DAEO. Approval shall 
be granted only upon a determination that the employment or activity is 
not expected to involve conduct prohibited by statute, part 2635 of 
this title, or paragraph (a) of this section.
    (c) Definition. For purposes of this section, ``employment'' means 
any form of non-Federal employment, business relationship or activity 
involving the provision of personal services by the employee, whether 
or not for compensation. It includes, but is not limited to, personal 
services as an officer, director, employee, agent, attorney, 
consultant, contractor, general partner, trustee, teacher, or speaker. 
It includes writing when done under an arrangement with another person 
for production or publication of the written product. It does not, 
however, include participation in the activities of a nonprofit 
charitable, religious, professional, social, fraternal, educational, 
recreational, public service, or civic organization for which no 
compensation is received other than reimbursement for necessary 
expenses.


Sec. 4001.109  Waivers.

    The DAEO may grant a written waiver from any provision of this part 
based on a determination that the waiver is not inconsistent with part 
2635 of this title or otherwise prohibited by law and that, under the 
particular circumstances, application of the provision is not necessary 
to avoid the appearance of misuse of position or loss of impartiality, 
or otherwise to ensure confidence in the impartiality and objectivity 
with which Corporation programs are administered. A waiver 
[[Page 30778]] under this paragraph may impose appropriate conditions, 
such as requiring execution of a written disqualification.
12 CFR CHAPTER XIV--FARM CREDIT SYSTEM INSURANCE CORPORATION
    2. Part 1401.1 is added to read as follows:

PART 1401--EMPLOYEE RESPONSIBILITIES AND CONDUCT

    Authority: 5 U.S.C. 7301; 12 U.S.C. 2277a-7.


Sec. 1401.1  Cross-references to employee ethical conduct standards and 
financial disclosure regulations.

    Board members, officers, and other employees of the Farm Credit 
System Insurance Corporation are subject to the Standards of Ethical 
Conduct for Employees of the Executive Branch at 5 CFR part 2635, the 
Farm Credit System Insurance Corporation regulation at 5 CFR part 4001, 
which supplements the Executive Branch-wide Standards, and the 
executive branch-wide financial disclosure regulations at 5 CFR part 
2634.

[FR Doc. 95-14215 Filed 6-9-95; 8:45 am]
BILLING CODE 6710-01-P