[Federal Register Volume 61, Number 30 (Tuesday, February 13, 1996)]
[Notices]
[Pages 5554-5557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3129]



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FEDERAL DEPOSIT INSURANCE CORPORATION

Policy Statement on the Fitness and Integrity of Lessors of Real 
Property to the FDIC

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Statement of policy.

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SUMMARY: The FDIC has adopted a statement of policy which establishes 
the standards of fitness and integrity for Lessors who lease space to 
the FDIC. The policy statement ensures that the FDIC addresses 
conflicts of interest associated with the ownership of buildings leased 
by the Corporation. The policy statement is consistent with the 
purposes of section 19 of the RTC Completion Act.

EFFECTIVE DATE: February 6, 1996.

FOR FURTHER INFORMATION CONTACT: Joanna K. Lyckberg, Policy Analyst, 
(202-942-3217), Division of Administration, 550 17th Street NW., 
Washington, DC 20429.

SUPPLEMENTARY INFORMATION: The text of the policy statement follows:

Policy Statement on the Fitness and Integrity of Lessors of Real 
Property to the FDIC

    I. Purpose. To establish:
    A. Minimum standards governing Conflicts of Interest and ethical 
responsibilities for Lessors who have entered into Leases with the 
FDIC, or who seek to lease real property to the FDIC; and
    B. Official written guidance for FDIC personnel including, without 
limitation, personnel in the Division of Administration, the Division 
of Supervision and the Office of the Executive Secretary, on the 
implementation of those minimum standards.
    II. Applicability. This policy will apply to:
    A. All Leases of 10,000 square feet or more awarded as a result of 
Requests for Proposals issued after the date of this policy; and
    B. All Lease Amendments entered into after the date of this policy 
to (1) Existing Leases of 10,000 square feet or more, or (2) existing 
Leases of less than 10,000 square feet where the total square footage 
of the Lease will be 10,000 square feet or more if the Lease Amendment 
is executed.
    III. Definitions. As used in this policy statement:
    A. Company means any corporation, firm, partnership, society, joint 
venture, business trust, association or similar organization, or any 
other trust, or any other organization or institution.
    B. Conflict of Interest means a situation in which:
    (1) A Lessor or a Lessor's Affiliate is adverse to the FDIC, RTC, 
Federal Savings and Loan Insurance Corporation (FSLIC), or their 
successors in a lawsuit, for which no final adjudication or settlement 
has occurred; or
    (2) A Lessor or a Lessor's Affiliate has caused a Substantial Loss 
to Federal Deposit Insurance Funds within the ten year period preceding 
the submission of its offer; or
    (3) A Lessor or a Lessor's Affiliate has been convicted of a Fraud 
Offense or of conspiring to commit a Fraud Offense affecting any 
Insured Depository Institution; or
    (4) A Lessor or a Lessor's Affiliate has Defaulted on a Material 
Obligation within the last five years; or
    (5) A Lessor or a Lessor's Affiliate has been removed from, or 
prohibited from participating in the affairs of any Insured Depository 
Institution pursuant to any final enforcement action by the Office of 
the Comptroller of the Currency, the Office of Thrift Supervision, the 
Board of Governors of 

[[Page 5555]]
the Federal Reserve System, or the FDIC or their successors; or
    (6) A situation in which the FDIC determines, in its sole 
discretion, that the FDIC's award of a Lease to a Lessor could cause a 
reasonable person to question the integrity of the FDIC's operations. 
An example (without limitation) of a Conflict of Interest determined by 
the FDIC is a situation in which an individual who is not a Lessor's 
Affiliate, but has a direct or indirect equity interest in the Lessor, 
or directly or indirectly controls the Lessor, has been convicted of a 
Fraud Offense.
    C. Default on a Material Obligation means a loan or advance from an 
Insured Depository Institution which has been delinquent for 90 or more 
days as to payment of principal or interest, or a combination thereof, 
with a remaining balance of principal, and accrued interest on the 
ninetieth day, or any time thereafter, in an amount in excess of 
$1,000,000.
    D. Family Member means the Lessor's spouse or dependent child.
    E. FDIC means the Federal Deposit Insurance Corporation in its 
receivership and corporate capacities. It does not mean the FDIC in its 
conservatorship capacity or when it is operating a bridge bank.
    F. Fraud Offense means any felony offense under the sections of 
title 18 U.S. Code as listed in Part IX, or similar offenses under 
state laws.
    G. Insured Depository Institution means any bank or savings 
association the deposits of which are insured by the FDIC.
    H. Insurer means the FDIC, RTC, FSLIC or their successors; or the 
Bank Insurance Fund, the Savings Association Insurance Fund, the FSLIC 
Resolution Fund, or funds maintained by the RTC for the benefit of 
insured depositors.
    I. Lease means a lease or sublease of real property for the use of 
the FDIC (including its contractors) as tenant, including but not 
limited to warehouse, office and retail space. As used herein, 
``Lease'' does not include contracts for storage services.
    J. Lease Amendment means any change to a Lease which extends the 
term of the Lease, increases the rentable square footage of the 
premises leased, or increases the rent paid under the Lease. As used 
herein, however, ``Lease Amendment'' does not refer to the exercise of 
a priced renewal option or an expansion option at a predetermined 
rental rate under any Lease entered into prior to the date of this 
policy.
    K. Lessor means an individual or a Company which intends to or has 
submitted an Offer to lease or sublease real property to the FDIC, or 
which has entered into a Lease or a sublease with the FDIC.
    L. Lessor's Affiliate means:
    (1) if the Lessor is a Company, (a) any general partner of the 
Lessor, or (b) any beneficial owner of a 25% or greater equity interest 
in the Lessor; or
    (2) any Company of which the Lessor is (a) A general partner, or 
(b) in which the Lessor is the beneficial owner of a 25% or greater 
equity interest; or
    (3) if the Lessor is an individual, any Family Member of the 
Lessor.
    A Lessor's Affiliate may be either an individual or a Company.
    M. Obligation means a commitment to pay money to an Insurer, that 
is currently owing to, and held by, an Insurer, and which currently is 
not performing in accordance with the terms thereof (including any 
modifications thereto), including, without limitation, (1) Any 
unsatisfied final judgment, and (2) any guarantee of any Obligation.
    N. Offer means a proposal to enter into a Lease.
    O. RTC means the Resolution Trust Corporation in any of its 
capacities.
    P. Substantial Loss to Federal Deposit Insurance Funds means: An 
Obligation that is or has been delinquent for 90 or more days as to 
payment of principal, interest, or a combination thereof and on which 
there remains a legal duty to pay an amount in excess of $50,000. A 
Substantial Loss to Federal Deposit Insurance Funds does NOT include 
situations where the Obligation (1) has been fully resolved and the 
debtor has been released in full by the applicable Insurer, or (2) has 
been sold or transferred by the applicable Insurer and such Insurer 
retains no interest therein.
    IV. Policy.
    A. General. The FDIC will not consider Offers from Lessors, award 
Leases to Lessors, or enter into Lease Amendments with Lessors that 
either (a) fail to provide any of the information required by this 
policy; or (b) have Conflicts of Interest, unless such Conflicts of 
Interest are eliminated by the Lessor or waived by the FDIC.
    B. Waivers. Waivers of Conflicts of Interest will be granted only 
when, in light of all relevant circumstances, the Executive Secretary, 
or the designee of the Executive Secretary determines in his or her 
discretion that the interests of the FDIC in entering into a Lease or a 
Lease Amendment with the Lessor outweigh the concern that a reasonable 
person may question the integrity of the FDIC's operations.
    V. Procedures.
    A. Conflicts of Interest.
    (1) Conflicts of Interest in existence prior to submission of an 
Offer.
    (a) A Lessor shall provide all information and certifications 
required in paragraph V.B. hereof at the time it makes an Offer to the 
FDIC.
    (b) A Lessor that has a Conflict of Interest as defined at 
paragraph III.B.(1) through (4) of this policy statement shall, with 
its Offer, request that the Conflict of Interest be waived in 
accordance with paragraph IV.B., or propose how the Lessor will 
eliminate the Conflict of Interest.
    (c) The Executive Secretary or designee, in his or her discretion, 
may waive the Conflict of Interest in accordance with paragraph IV.B., 
or may approve in writing a Lessor's proposal to eliminate the Conflict 
of Interest for purposes of the specific Lease.
    (2) Conflicts of Interest arising after submission of an Offer but 
prior to entering into a Lease.
    (a) If, after submitting its Offer, but prior to entering into a 
Lease, a Lessor discovers that it has a Conflict of Interest, it must 
notify the FDIC in writing within five business days of such discovery. 
The Lessor shall include with such notification a detailed description 
of the Conflict of Interest, and either (i) A statement of how it 
intends to eliminate the Conflict of Interest; or (ii) a request for a 
waiver of the Conflict of Interest.
    (b) The Executive Secretary or designee, in his or her discretion, 
may waive the Conflict of Interest in accordance with paragraph IV.B., 
or may approve in writing a Lessor's proposal to eliminate the Conflict 
of Interest for purposes of the specific Lease.
    (3) Conflicts of Interest that arise after entering into a Lease. 
FDIC Lease agreements shall require that the Lessor notify the FDIC in 
writing within five business days after discovering a Conflict of 
Interest that arises after the Lessor and the FDIC have entered into a 
Lease. The Lessor shall include with such notification a detailed 
description of the Conflict of Interest, and either (i) A statement of 
how it intends to eliminate the Conflict of Interest; or (ii) a request 
for a waiver of the Conflict of Interest. After receipt of such notice 
from the Lessor, the FDIC shall take such action as it determines is in 
the FDIC's best interests, including:
    (a) The FDIC shall notify the Lessor in writing of its finding as 
to whether a Conflict of Interest exists. If the FDIC finds that a 
Conflict of Interest exists, the FDIC shall also notify the Lessor in 

[[Page 5556]]
writing of the basis for such determination, and when applicable
    (i) whether a waiver will be granted, and if so, the terms and 
conditions of such waiver; or
    (ii) a description of the corrective actions, if any, that the 
Lessor will take in order to eliminate the Conflict of Interest. 
Corrective actions must be completed by the Lessor not later than 30 
days after notification is mailed by the FDIC unless the FDIC, in its 
sole discretion, determines that it is in the best interests of the 
FDIC to grant the Lessor an extension in which to complete such 
corrective action.
    (b) Unless the FDIC waives the Conflict of Interest or the Lessor 
eliminates the Conflict of Interest the FDIC shall not enter into any 
Lease Amendments with the Lessor.
    (4) Conflicts of Interest discovered by the FDIC. The FDIC will 
review all information provided by the Lessor with its Offer, as well 
as information from other sources that the FDIC determines is relevant. 
If the FDIC, in its sole discretion determines, based on such reviews, 
that a Conflict of Interest exists, an FDIC representative shall notify 
the Lessor of the basis for such determination.
    (a) If the FDIC discovers a Conflict of Interest after submission 
of an Offer, but prior to entering into a Lease:
    (i) The Lessor must respond to the FDIC in writing, within five 
business days of the FDIC's notification of its determination in one of 
the following ways:
    [1] Stating how it intends to eliminate the Conflict of Interest; 
or
    [2] Requesting that the FDIC waive the Conflict of Interest; or
    [3] If the FDIC's determination was based solely on information 
from a source other than the Lessor, and the Lessor can demonstrate 
that such information was incomplete or incorrect, the Lessor may 
provide additional or corrected facts and request that the FDIC 
consider such facts and reevaluate its determination that a Conflict of 
Interest exists. After reviewing the Lessor's additional or corrected 
information, the FDIC will notify the Lessor promptly whether it 
confirms its determination that a Conflict of Interest exists.
    (ii) If the Lessor does not respond in writing to the FDIC within 
five business days, the FDIC shall deem the Lessor's Offer to have been 
withdrawn.
    (b) If the FDIC discovers a Conflict of Interest after entering 
into a Lease, the FDIC shall take such action as it determines is in 
the FDIC's best interest, including the actions described at V.A.(3) 
(a) and (b). As detailed at V.A.(4)(a)(i)[3], the Lessor can request 
that the FDIC reevaluate its determination if the FDIC's determination 
was based solely on information from a source other than the Lessor, 
and the Lessor can demonstrate that such information was incomplete or 
incorrect. After reviewing the Lessor's additional or corrected 
information, the FDIC will notify the lessor promptly whether or not it 
will reverse its determination that a Conflict of Interest exists.
    (5) Reconsideration of decisions. The Lessor may request that the 
Chairman or designee(s) reconsider FDIC decisions regarding acceptance 
of a Lessor's proposal for the elimination of a Conflict of Interest, 
or the issuance of a requested waiver to a Conflict of Interest. Such 
requests must be in writing and contain the reasons for the request. 
The Chairman or designee(s) shall have the right to decline 
reconsideration.
    B. Information required to be submitted.
    (1) Initial submission. Every Lessor shall submit a completed 
``FDIC Leasing Representations and Certifications'' form, including 
Part II, ``Lessor Fitness and Integrity Certification'' and such other 
information as the FDIC may deem appropriate to permit it to make a 
determination with respect to Conflicts of Interest at the time the 
Lessor submits an Offer and prior to entering into any Lease Amendment. 
Among other items, the form shall require that the Lessor provide the 
following:
    (a) Certifications that no Conflicts of Interest, as defined in 
paragraph III.B. (1) through (4) exist, or;
    (b) In the event that one or more Conflicts of Interest exist, the 
following information:
    (i) When applicable, a description of any lawsuit in which the 
Lessor or any Lessor's Affiliate is adverse to the FDIC, RTC, FSLIC, or 
their successors and for which no final adjudication or settlement has 
occurred;
    (ii) When applicable, a list and description of any instance during 
the five years preceding the submission of the Offer in which the 
Lessor or any Lessor's Affiliate has caused a Substantial Loss to 
Federal Deposit Insurance Funds;
    (iii) When applicable, a list and description of any Fraud Offense 
of which the Lessor or any Lessor's Affiliate has been convicted;
    (iv) When applicable, a list and description of any instance during 
the five years preceding the submission of the Offer in which the 
Lessor or any Lessor's Affiliate has Defaulted on a Material 
Obligation;
    (v) When applicable, a list and description of any instances in 
which the Lessor or any Lessor's Affiliate has been removed from, or 
prohibited from participating in the affairs of any Insured Depository 
Institution pursuant to any final enforcement action by the Office of 
the Comptroller of the Currency, the Office of Thrift Supervision, the 
Board of Governors of the Federal Reserve System, or the FDIC or their 
successors; and
    (vi) The Lessor's request for waiver of such Conflicts of Interest 
or proposal for elimination of such Conflicts of Interest; and
    (c) A description of any commitment to pay $50,000 or more to an 
Insurer that has been fully released by the Insurer but for which the 
Insurer received less than 100% (including interest, late charges and 
other costs of collection) of the amount due; and
    (d) Any other information which the FDIC may deem appropriate.
    (2) Subsequent submissions. FDIC Lease agreements shall require 
that during the term of the Lease, the Lessor shall:
    (a) immediately notify the FDIC if any of the information submitted 
pursuant to this policy was incorrect at the time of submission or has 
subsequently become incorrect; and
    (b) at any time, submit such information as the FDIC requests in 
order to permit the FDIC to determine if a Conflict of Interest exists.
    (3) Failure to provide information. Any Lessor who fails to provide 
any of the information required by this policy will neither be 
considered for, nor be eligible for, the award of a Lease or a Lease 
Amendment.
    (4) Misstatement of material fact. Any Lessor who misstates or 
fails to disclose to the FDIC a material fact or any Conflict of 
Interest, as defined in paragraph III.B.(1) through (4), whether prior 
to or during the term of the Lease, will not be considered eligible for 
the award of any Lease or Lease Amendment.
    VI. Lease agreement requirements
    A. Retention of information. FDIC Lease agreements shall specify 
that the Lessor shall retain the information upon which it relied in 
preparing its certification(s) during the term of the Lease and for a 
period of three years following the termination or expiration of the 
Lease or any extension thereof, and shall make such information 
available for review by the FDIC upon request.
    B. Response to requests for additional information. FDIC Lease 
agreements shall specify that any Lessor who fails to respond to a 
request for information 

[[Page 5557]]
made by the FDIC pursuant to Section V.B.2.(b) of this policy, shall be 
in default under the Lease for which such information was requested.
    C. Additional Lease agreement provisions. In addition to the 
provisions of this policy, the FDIC may include in its Lease agreements 
such provisions, conditions and limitations as the FDIC deems 
necessary, including additional standards for Lessor fitness and 
integrity, and minimum standards of ethical responsibility for Lessors.
    VII. Delayed compliance in emergencies. In emergencies, when 
unforeseeable circumstances make it necessary to enter into a Lease 
immediately in order to protect FDIC personnel or property, the FDIC 
may delay compliance with this policy.
    VIII. Finality of determination. Any determination made by the FDIC 
pursuant to this policy shall be in the FDIC's sole discretion and 
shall not be subject to further review, except as otherwise provided 
pursuant to a specific Lease agreement.
    IX. General. Felony offenses as used in the standards set forth in 
this statement of policy mean the following statutes that establish 
standards to which a Lessor's conduct must conform and which shall not 
have been violated. This list is as follows:
    A. Bribery of Public Officials (18 U.S.C. 201).
    B. Offer of a loan or gratuity to bank examiners (18 U.S.C. 212).
    C. Continuing financial crimes enterprise (18 U.S.C. 225).
    D. Taking or using papers relating to claims (18 U.S.C. 285).
    E. Conspiracy to defraud the Government with respect to claims (18 
U.S.C. 286).
    F. False, fictitious or fraudulent claims (18 U.S.C. 287).
    G. Bonds and obligations of certain lending agencies (18 U.S.C. 
493).
    H. Contractors' bonds, bids, and public records (18 U.S.C. 494).
    I. Contracts, deeds, and powers of attorney (18 U.S.C. 495).
    J. Chapter 31 Embezzlement and Theft (18 U.S.C. 642 through 668).
    K. Statements or entries generally (18 U.S.C. 1001).
    L. Possession of false papers to defraud United States (18 U.S.C. 
1002).
    M. Bank entries, reports and transactions (18 U.S.C. 1005).
    N. Federal credit institution entries, reports and transactions (18 
U.S.C. 1006).
    O. Federal Deposit Insurance Corporation transactions (18 U.S.C. 
1007).
    P. Loans and credit applications generally (18 U.S.C. 1014).
    Q. Concealment of assets from conservator, receiver, or liquidating 
agent of financial institution (18 U.S.C. 1032).
    R. Chapter 63 Mail Fraud (18 U.S.C. 1341 through 1344).
    S. Laundering of monetary instruments (18 U.S.C. 1956).

    By order of the Board of Directors, dated at Washington, DC, 
this 6th day of February, 1996.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-3129 Filed 2-12-96; 8:45 am]
BILLING CODE 6714-01-P