[Federal Register Volume 61, Number 110 (Thursday, June 6, 1996)]
[Rules and Regulations]
[Pages 28725-28730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14001]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 336
RIN 3064-AB43
Minimum Standards of Fitness for Employment With the Federal
Deposit Insurance Corporation
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is publishing
a final regulation to implement the requirements contained in section
19 of the Resolution Trust Corporation Completion Act, which amended
the Federal Deposit Insurance Act to prohibit certain persons from
[[Page 28726]]
becoming employed or providing services to the FDIC.
EFFECTIVE DATE: July 8, 1996.
FOR FURTHER INFORMATION CONTACT:
Joy Crosser, Personnel Management Specialist, Division of
Administration, (202) 942-3314; Michelle Borzillo, Counsel, Legal
Division, (202) 898-7400; or Gladys C. Gallagher, Counsel, Legal
Division, (202) 898-3833.
SUPPLEMENTARY INFORMATION: This regulation was published as a proposed
rule on February 15, 1996, 61 FR 5956. Copies were provided to
interested parties, including the National Treasury Employees Union. No
comments were received in the 30-day comment period, which ended March
15, 1996; therefore, the final rule is being published as originally
proposed, with one minor technical correction at 336.3(f), the
definition of ``Federal Deposit Insurance Funds'', to add '', or their
successors,'' after ``(RTC)''.
Paperwork Reduction Act
The collection of information contained in this rule has been
approved by the Office of Management and Budget (OMB) under control
number 3064-0121 (``Certification of Compliance With Mandatory Bars to
Employment''), pursuant to the Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.). Comments regarding the accuracy of the burden
estimate, and suggestions for reducing the burden, should be addressed
to the Office of Management and Budget, Paperwork Reduction Project
(3064-0121), Washington, D.C. 20503, with copies of such documents sent
to Steven F. Hanft, Assistant Executive Secretary (Regulatory
Analysis), FDIC, Room F-400, 550 17th Street, NW., Washington, DC
20429.
The collection of information in this rule is found in
Sec. 336.4(b) and takes the form of a certification of compliance.
However, in addition to the certification, the person applying for
employment must provide an attachment to the certification describing
any instance in the preceding five years in which the applicant, or a
company under the applicant's control, has defaulted on a material
obligation to an insured depository institution. The information is
used by the FDIC to identify those persons prohibited from becoming
employed by or providing services to the FDIC.
The estimated annual reporting burden for the collection of
information requirement in this rule is summarized as follows:
Number of Respondents: 200.
Number of Responses per Respondent: 1.
Total Annual Responses: 200.
Hours per Response: 20 minutes.
Total Annual Burden Hours: 66.6.
This regulation was developed consistent with the intent of section
303(a) of the Riegle Community Development and Regulatory Improvement
Act of 1994, 12 U.S.C. 4803(a), to reduce regulatory burden and improve
efficiency.
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996
(Public Law 104-121) provides (with a few limited exceptions) for
Congressional review of agency rules. An exception is provided,
however, for rules relating to agency management or personnel (5 U.S.C.
804(3)). Since this regulation will only affect individuals who are
employed or will seek employment with the FDIC, the Board has
determined that it is a rule relating to agency management or personnel
and thus is not subject to Congressional review.
Regulatory Flexibility Act
The Board hereby certifies that the rule does not have a
significant economic impact on a substantial number of small entities
within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.). This regulation affects only those individuals who are employed
or will become employed by the FDIC. Therefore, the provisions of that
Act relating to an initial and final regulatory analysis (5 U.S.C. 603
and 604) do not apply here.
Background
The Resolution Trust Corporation Completion Act (hereafter referred
to as the Completion Act), Pub. L. 103-204, enacted on December 17,
1993, amended section 12 of the Federal Deposit Insurance Act, 12
U.S.C. 1822, to prohibit any person from becoming employed or providing
service to or on behalf of the FDIC who does not meet minimum standards
of competence, experience, integrity, and fitness.
The Completion Act provides that FDIC employees are subject to
title 18 of the U.S. Code, and are subject to the ethics and conflict
of interest rules and regulations issued by the Office of Government
Ethics, including those concerning employee conduct, financial
disclosure, and post-employment activities. The statute also provides
that the Corporation shall issue regulations implementing provisions
that prohibit any person from becoming employed who: has been convicted
of any felony; has been removed from, or prohibited from participating
in the affairs of any insured depository institution pursuant to any
final enforcement action by any appropriate federal banking agency;
demonstrated a pattern or practice of defalcation regarding obligations
to insured depository institutions; or caused a substantial loss to
federal deposit insurance funds. The statute requires the collection
from applicants for employment information describing any instance
during the preceding 5 years in which the applicant or a company under
the applicant's control defaulted on a material obligation to an
insured depository institution, along with other information the
Corporation may require by regulation. The Completion Act gives the
Corporation sole discretion over any issues that arise as a result of
these prohibitions, and any decisions made by the Corporation shall not
be subject to review.
A. Scope of the Regulation
FDIC operates in a number of separate and distinct capacities and
situations. This part applies to all FDIC employees performing duties
for or on behalf of the FDIC in any capacity.
This regulation implements the mandatory bars contained in section
19 of the Completion Act which amends 12 U.S.C. 1822(f)(4)(E). This
part does not in any way modify other applicable rules and regulations
governing employee conduct, ethics, or qualification standards.
Further, there is no need to augment in FDIC regulations the existing
education and experience requirements defined in the U.S. Office of
Personnel Management's (U.S. OPM) Operating Manual for General Schedule
Qualification Standards.
B. Definitions
Section 336.3 contains definitions of terms used throughout this
regulation.
Company: The definition of company expands on that used in section
2(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(b)) to
include firms, societies and joint ventures. These entities are
included to amplify the original definition and for consistency with
the application of the Completion Act to contractors providing services
to the FDIC.
Default on a Material Obligation: The FDIC defines this term to
mean a delinquency of 90 or more days as to payment of principal or
interest, or a combination thereof, on a loan or advance from an
insured depository institution in any amount. As prescribed by the
statute, this regulation requires that all applicants for employment
submit a list and description of defaults on material obligations
incurred by
[[Page 28727]]
themselves or a company under their control during the 5 years
preceding the submission. All defaults are to be listed regardless of
whether or not they have been cured. The Corporation has set no minimum
dollar value to this definition; information regarding the candidate's
conduct in meeting obligations to insured depository institutions is
significant in assessing the fitness and integrity of an individual for
employment with the FDIC. Therefore, all defaults which meet this
definition, regardless of outstanding balances, shall be reported, but
are not automatic bars to employment in themselves.
Pattern or Practice of Defalcation Regarding Obligations: This
definition addresses two situations. The first concerns individuals who
have a history of financial irresponsibility with regard to an open
insured depository institution to such an extent that the FDIC's
employment of such an individual reflects adversely on the FDIC's
integrity and credibility. The second situation concerns individuals
who have wrongfully refused to fulfill obligations to an insured
depository institution.
In the first situation involving financial irresponsibility, a
pattern or practice of defalcation regarding obligations exists when an
employee has defaulted on obligations totalling in excess of $50,000 in
the aggregate. Defaults caused by catastrophic events such as death,
disability or illness, or loss of financial support are not considered
a violation of this standard. Examples are provided in the regulation's
definition to clarify the meaning of ``financial irresponsibility'',
including the example of failing to pay debts which were secured by
uninsured property that was destroyed. Another example of such
financial irresponsibility would be an abuse of credit cards or
incurring excessive debt well beyond the individual's ability to repay.
The second part of this definition addresses individuals who
wrongfully refuse to fulfill duties and obligations to insured
depository institutions. Again, examples are provided, which illustrate
the full scope of ``wrongful refusal to fulfill duties and
obligations''. The examples include misconduct on the part of a
borrower, such as use of false financial statements, misrepresentation
of ability to repay a debt, or concealing assets. Additional examples
focus on findings of misconduct on the part of officers, employees,
contractors or others providing service to an insured depository
institution, or who have committed fraud, embezzlement or similar
misconduct.
Substantial Loss to Federal Deposit Insurance Funds: This
definition incorporates $50,000 as the threshold amount for
establishing a substantial loss. This loss must have inured to one of
the Federal Deposit Insurance Funds (Insurance Funds) maintained by the
FDIC, the Resolution Trust Corporation (RTC), Federal Savings & Loan
Insurance Corporation, or their successors. Two types of losses are
addressed, which are: (1) debts in default for which there remain a
legal obligation to pay; and (2) final judgments, regardless of whether
forgiven in whole or in part in a bankruptcy proceeding.
C. Minimum Standards for Appointment to a Position with the FDIC
All applicants, including former employees of the FDIC who are
reemployed after a break in service of more than 3 days, are subject to
this regulation for any noncompliance with the prohibitions which
occurred either before or after the enactment of the Completion Act.
Applicants are required to submit a certification prior to employment
which addresses each of the statutory prohibitions and are required to
submit information regarding any default during the previous five
years. Investigations are conducted on all new appointees to ascertain
all relevant information regarding the individual's history of
defaults. Regardless of the number of years for which an applicant is
required to submit a written report regarding defaults, any pattern or
practice of defalcation regarding obligations or substantial loss, as
defined in this regulation, is subject to these minimum standards.
Similarly, any felony conviction and any removal from, or prohibition
from participation in the affairs of, any insured depository
institution by a federal banking agency is subject to the prohibitions
of this regulation without time limitation. A felony conviction that
has been pardoned, as opposed to being overturned on appeal, remains a
conviction and is therefore subject to the prohibition mandated by the
Completion Act.
D. Minimum Standards for Employment With the FDIC
The Corporation finds sufficient support in the text of the statute
for applying the terms of the Completion Act prospectively, and
therefore does not require the enforcement of these minimum standards
against incumbent employees of the FDIC under an appointment authorized
by title 5 of the United States Code on or before June 17, 1994, for
noncompliance which occurred prior to that date. However, any final
enforcement action by any appropriate federal banking agency, any final
judgment or any felony conviction which is finalized on or after June
18, 1994, even though the act or omission which is the basis of the
action or judgment occurred prior to June 18, 1994, is subject to the
standards of this regulation. Additionally, eligibility for employment
with the FDIC continues to be based on suitability standards for
federal employment as measured from past and present conduct which
determines whether or not an employee can perform his or her duties
with efficiency and effectiveness.
All employees, regardless of date of first appointment or tenure,
are subject to this regulation for any noncompliance with the standards
that occurs on or after June 18, 1994. Further, any noncompliance with
the standards that first occurred prior to June 18, 1994, which meets
the definitions of causing a substantial loss to the Insurance Funds or
a pattern or practice of defalcation regarding obligations to an
insured depository institution based on financial irresponsibility and
which resulted in indebtedness that remains uncured after June 18,
1994, cannot be excused.
Employees appointed prior to the June 18, 1994 effective date for
section 19 of the Completion Act and who continue without a break in
service of more than 3 days from one type of appointment with the FDIC
to another are not subject to the prohibitions for noncompliance prior
to June 18, 1994. For example, an employee serving on an excepted-
service temporary appointment who may be selected for a competitive-
service time-limited or permanent appointment without a break in
service would not be considered a new applicant for purposes of this
regulation. This regulation applies to all appointments, including co-
operative student hires, experts and consultants, detailees from other
agencies and any other individual appointed to provide service to or on
behalf of the FDIC.
Employees assigned to the RTC were held to comparable minimum
standards of fitness for employment in the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, Pub. L. 101-73, as
implemented by regulation in 12 CFR Part 1605, which were applied
retroactively by statute. Therefore, unlike incumbent FDIC employees
who were not covered by Pub. L. 101-73 minimum standards, any
noncompliance with the standards by incumbent employees assigned to RTC
[[Page 28728]]
prior to June 18, 1994, remain subject to the Public Law 101-73 minimum
standards, and is not excused.
Noncompliance occurring on or after June 18, 1994, with the
standards contained in this regulation is a basis for removal of the
employee under the authority of the Completion Act.
E. Verification of Compliance
Under the authority provided by 12 U.S.C. 1819 and 1822, the FDIC
conducts background investigations to verify the information certified
by applicants and to determine suitability for employment with the
FDIC. In addition, the FDIC screens the Financial Institution's
Investigative and Enforcement Records System maintained internally by
the FDIC's Division of Supervision regarding records of federal banking
agency enforcement actions. The FDIC also examines its own and other
regulatory records systems for findings of a pattern or practice of
defalcation regarding obligations and/or a substantial loss to the
Insurance Funds as defined in this regulation.
F. Employee Responsibility, Counseling and Distribution of Regulation
Employees are required to familiarize themselves with the
provisions of this regulation. Within ten days of the action or the
discovery of the noncompliance, an employee shall report in writing to
the Ethics Counselor regarding noncompliance with any of the
prohibitions contained in Sec. 336.5(a) (1) through (4) of this
regulation. Also, if the employee receives a letter from the FDIC
demanding payment on an obligation that was initially owed to an
insured depository institution and is now owed to the FDIC, the
employee must notify the Ethics Counselor within 10 days of receipt of
such letter. Employees shall consult with the Ethics Counselor
regarding the impact of this regulation on their continued employment.
The Ethics Counselor shall provide counseling and guidance to employees
regarding the statutes, regulations and Corporation's policies under
this part. The Ethics Counselor shall review all information presented
by the employee and/or the employee's representative relevant to
establishing responsibility for the debt and corrective actions taken.
The employee has a duty to cooperate with the Ethics Counselor in
providing the information that is necessary to the Ethics Counselor's
determination of compliance or noncompliance.
G. Sanctions and Remedial Actions
There is no remedial action for an employee found in noncompliance
with the standards at Sec. 336.5(a)(1) and (2), for felony convictions
and enforcement actions, as an employee is afforded the opportunity to
remedy those findings through other proceedings. Also, there is no
remedial action for an employee found in noncompliance with the
standards of Sec. 336.4(a)(4), as the Corporation's Division of
Depositor and Asset Services provides the opportunity to work out debts
owed to the Insurance Funds. Further, noncompliance with
Sec. 336.5(a)(3) based on wrongful refusal to fulfill duties on
obligations to insured depository institutions cannot be remedied.
However, employees will be provided a reasonable opportunity to remedy
following notification of noncompliance with the prohibitions at
Sec. 336.5(a)(3) based on financial irresponsibility as defined in
336.3(i)(1). Such employees may establish an agreement to resolve the
outstanding indebtedness that satisfies both the insured depository
institution and the FDIC, or otherwise resolve the matter to the
satisfaction of the FDIC. This remedial action provided employees would
not be extended to applicants for employment. Filling a vacancy is not
delayed in order for an applicant to cure his or her debts that are
deemed not in compliance with Sec. 336.4(a)(3) through (4).
Individuals appointed by the President with the advice and consent
of the Senate, which includes both the appointed and ex officio members
of the Board of Directors and the Inspector General, cannot be removed
from their positions under the authority of the FDIC. Therefore, this
regulation does not apply to individuals appointed to or serving on an
acting basis in positions designated by Title 5 of the U.S. Code as
officials of the Federal Executive Schedule. Federal employees who are
serving the FDIC, but are employed by another agency, such as detailees
or employees of the Office of Thrift Supervision or the Office of the
Comptroller of the Currency, may be returned to the employing agency if
found not to be in compliance with the minimum standards.
H. Finality of Determination
Section 336.9 of this regulation tracks the language of the Federal
Deposit Insurance Act, 12 U.S.C. 1822(f)(4)(D)(ii).
List of Subjects in 12 CFR Part 336
Conflict of interests.
For the reasons set out in the preamble, the Board of Directors of
the Federal Deposit Insurance Corporation is revising part 336 of
chapter III of title 12 of the Code of Federal Regulations as follows:
PART 336--FDIC EMPLOYEES
Subpart A--Employee Responsibilities and Conduct
Sec.
336.1 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
Subpart B--Minimum Standards of Fitness for Employment With the Federal
Deposit Insurance Corporation
336.2 Authority, purpose and scope.
336.3 Definitions.
336.4 Minimum standards for appointment to a position with the
FDIC.
336.5 Minimum standards for employment with the FDIC.
336.6 Verification of compliance.
336.7 Employee responsibility, counseling and distribution of
regulation.
336.8 Sanctions and remedial actions.
336.9 Finality of determination.
Subpart A--Employee Responsibilities and Conduct
Authority: 5 U.S.C. 7301; 12 U.S.C. 1819(a).
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.
Subpart B--Minimum Standards of Fitness for Employment With the
Federal Deposit Insurance Corporation
Authority: 12 U.S.C. 1819 (Tenth), 1822(f).
Sec. 336.2 Authority, purpose and scope.
(a) Authority. This part is adopted pursuant to section 12(f) of
the Federal Deposit Insurance Act, 12 U.S.C. 1822, and the rulemaking
authority of the Federal Deposit Insurance Corporation (FDIC) found at
12 U.S.C. 1819. This part is in addition to, and not in lieu of, any
other statutes or regulations which may apply to standards for ethical
conduct or fitness for employment with the FDIC and is consistent with
the
[[Page 28729]]
goals and purposes of 18 U.S.C. 201, 203, 205, 208, and 209.
(b) Purpose. The purpose of this part is to state the minimum
standards of fitness and integrity required of individuals who provide
service to or on behalf of the FDIC and provide procedures for
implementing these requirements.
(c) Scope. (1) This part applies to applicants for employment with
the FDIC under title 5 of the U.S. Code appointing authority in either
the excepted or competitive service, including Special Government
Employees. This part applies to all appointments, regardless of tenure,
including intermittent, temporary, time-limited and permanent
appointments.
(2) In addition, this part applies to all employees of the FDIC who
serve under an appointing authority under chapter 21 of title 5 of the
U.S. Code.
(3) Further, this part applies to 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.
Sec. 336.3 Definitions.
For the purposes of this part:
(a) Company means any corporation, firm, partnership, society,
joint venture, business trust, association or similar organization, or
any other trust unless by its terms it must terminate within twenty-
five years or not later than twenty-one years and ten months after the
death of individuals living on the effective date of the trust, or any
other organization or institution, but shall not include any
corporation the majority of the shares of which are owned by the United
States, any state, or the District of Columbia.
(b) Control means the power to vote, directly or indirectly, 25
percent or more of any class of the voting stock of a company, the
ability to direct in any manner the election of a majority of a
company's directors or trustees, or the ability to exercise a
controlling influence over the company's management and policies. For
purposes of this definition, a general partner of a limited partnership
is presumed to be in control of that partnership. For purposes of this
part, an entity or individual shall be presumed to have control of a
company if the entity or individual directly or indirectly, or acting
in concert with one or more entities or individuals, or through one or
more subsidiaries, owns or controls 25 percent or more of its equity,
or otherwise controls or has power to control its management or
policies.
(c) Default on a material obligation means a loan or advance from
an insured depository institution which is or was delinquent for 90 or
more days as to payment of principal or interest, or any combination
thereof.
(d) Employee means any officer or employee, including a liquidation
graded or temporary employee, providing service to or on behalf of the
FDIC who has been appointed to a position under an authority contained
in title 5 of the U.S. Code. This definition excludes those individuals
designated by title 5 of the U.S. Code as officials in the Federal
Executive Schedule.
(e) Federal banking agency means the Office of the Comptroller of
the Currency, the Office of Thrift Supervision, the Board of Governors
of the Federal Reserve System, or the Federal Deposit Insurance
Corporation, or their successors.
(f) Federal deposit insurance fund means the Bank Insurance Fund,
the Savings Association Insurance Fund, the Federal Savings and Loan
Insurance Corporation (FSLIC) Resolution Fund, or the funds that were
formerly maintained by the Resolution Trust Corporation (RTC), or their
successors, for the benefit of insured depositors.
(g) FDIC means the Federal Deposit Insurance Corporation, in its
receivership and corporate capacities.
(h) Insured depository institution means any bank or savings
association the deposits of which are insured by the FDIC.
(i) Pattern or practice of defalcation regarding obligations means:
(1) A history of financial irresponsibility with regard to debts
owed to insured depository institutions which are in default in excess
of $50,000 in the aggregate. Examples of such financial
irresponsibility include, without limitation:
(i) Failure to pay a debt or debts totalling more than $50,000
secured by an uninsured property which is destroyed; or
(ii) Abuse of credit cards or incurring excessive debt well beyond
the individual's ability to repay resulting in default(s) in excess of
$50,000 in the aggregate.
(2) Wrongful refusal to fulfill duties and obligations to insured
depository institutions. Examples of such wrongful refusal to fulfill
duties and obligations include, without limitation:
(i) Any use of false financial statements;
(ii) Misrepresentation as to the individual's ability to repay
debts;
(iii) Concealing assets from the insured depository institution;
(iv) Any instance of fraud, embezzlement or similar misconduct in
connection with an obligation to the insured depository institution;
and
(v) Any conduct described in any civil or criminal judgment against
an individual for breach of any obligation, contractual or otherwise,
or any duty of loyalty or care that the individual owed to an insured
depository institution.
(3) Defaults shall not be considered a pattern or practice of
defalcation where the defaults are caused by catastrophic events beyond
the control of the employee such as death, disability, illness or loss
of financial support.
(j) Substantial loss to federal deposit insurance funds. (1)
Substantial loss to federal deposit insurance funds means:
(i) A loan or advance from an insured depository institution, which
is now owed to the FDIC, RTC, FSLIC or their successors, or any federal
deposit insurance fund, that is delinquent for ninety (90) or more days
as to payment of principal, interest, or a combination thereof and on
which there remains a legal obligation to pay an amount in excess of
$50,000; or
(ii) A final judgment in excess of $50,000 in favor of any federal
deposit insurance fund, the FDIC, RTC, FSLIC, or their successors
regardless of whether it becomes forgiven in whole or in part in a
bankruptcy proceeding.
(2) For purposes of computing the $50,000 ceiling in paragraphs
(j)(1)(i) and (ii) of this section, all delinquent judgments, loans, or
advances currently owed to the FDIC, RTC, FSLIC or their successors, or
any federal deposit insurance fund, shall be aggregated. In no event
shall delinquent loans or advances from different insured depository
institutions be separately considered.
Sec. 336.4 Minimum standards for appointment to a position with the
FDIC.
(a) No person shall become employed on or after June 18, 1994, by
the FDIC or otherwise perform any service for or on behalf of the FDIC
who has:
(1) Been convicted of any felony;
(2) Been removed from, or prohibited from participating in the
affairs of, any insured depository institution pursuant to any final
enforcement action by any appropriate federal banking agency;
(3) Demonstrated a pattern or practice of defalcation regarding
obligations to insured depository institutions; or
(4) Caused a substantial loss to federal deposit insurance funds.
(b) Prior to an offer of employment, any person applying for
employment with the FDIC shall sign a certification of compliance with
the minimum standards listed in paragraphs (a)(1)
[[Page 28730]]
through (4) of this section. In addition, any person applying for
employment with the FDIC shall provide as an attachment to the
certification any instance in which the applicant, or a company under
the applicant's control, defaulted on a material obligation to an
insured depository institution within the preceding five years.
(c) Incumbent employees who separate from the FDIC and are
subsequently reappointed after a break in service of more than three
days are subject to the minimum standards listed in paragraphs (a)(1)
though (4) of this section. The former employee is required to submit a
new certification statement including attachments, as provided in
paragraph (b) of this section, prior to appointment to the new
position.
Sec. 336.5 Minimum standards for employment with the FDIC.
(a) No person who is employed by the FDIC shall continue in
employment in any manner whatsoever or perform any service for or on
behalf of the FDIC who, beginning June 18, 1994 and thereafter:
(1) Is convicted of any felony;
(2) Is prohibited from participating in the affairs of any insured
depository institution pursuant to any final enforcement action by any
appropriate federal banking agency;
(3) Demonstrates a pattern or practice of defalcation regarding
obligations to insured depository institution(s); or
(4) Causes a substantial loss to federal deposit insurance funds.
(b) Any noncompliance with the standards listed in paragraphs
(a)(1) through (4) of this section is a basis for removal from
employment with the FDIC.
Sec. 336.6 Verfication of compliance.
The FDIC's Division of Administration shall order appropriate
investigations as authorized by 12 U.S.C. 1819 and 1822 on newly
appointed employees, either prior to or following appointment, to
verify compliance with the minimum standards listed under
Sec. 336.4(a)(1) through (4).
Sec. 336.7 Employee responsibility, counseling and distribution of
regulation.
(a) Each employee is responsible for being familiar with and
complying with the provisions of this part.
(b) The Ethics Counselor shall provide a copy of this part to each
new employee within 30 days of initial appointment.
(c) An employee who believes that he or she may not be in
compliance with the minimum standards provided under Sec. 336.5(a)(1)
through (4), or who receives a demand letter from the FDIC for any
reason, shall make a written report of all relevant facts to the Ethics
Counselor within ten (10) business days after the employee discovers
the possible noncompliance, or after the receipt of a demand letter
from the FDIC.
(d) The Ethics Counselor shall provide guidance to employees
regarding the appropriate statutes, regulations and corporate policies
affecting employee's ethical responsibilities and conduct under this
part.
(e) The Ethics Counselor shall provide the Personnel Services
Branch with notice of an employee's noncompliance.
Sec. 336.8 Sanctions and remedial actions.
(a) Any employee found not in compliance with the minimum standards
except as provided in paragraph (b) of this section below shall be
terminated and prohibited from providing further service for or on
behalf of the FDIC in any capacity. No other remedial action is
authorized for sanctions for noncompliance.
(b) Any employee found not in compliance with the minimum standards
under Sec. 336.5(a)(3) based on financial irresponsibility as defined
in Sec. 336.3(i)(1) shall be terminated consistent with applicable
procedures and prohibited from providing future services for or on
behalf of the FDIC in any capacity, unless the employee brings him or
herself into compliance with the minimum standards as provided in
paragraphs (b)(1) and (2) of this section.
(1) Upon written notification by the Corporation of financial
irresponsibility, the employee will be allowed a reasonable period of
time to establish an agreement that satisfies the creditor and the FDIC
as to resolution of outstanding indebtedness or otherwise resolves the
matter to the satisfaction of the FDIC prior to the initiation of a
termination action.
(2) As part of the agreement described in paragraph (b)(1) of this
section, the employee shall provide authority to the creditor to report
any violation by the employee of the terms of the agreement directly to
the FDIC Ethics Counselor.
Sec. 336.9 Finality of determination.
Any determination made by the FDIC pursuant to this part shall be
at the FDIC's sole discretion and shall not be subject to further
review.
By order of the Board of Directors.
Dated at Washington, D.C. this 14th day of May 1996.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 96-14001 Filed 6-5-96; 8:45 am]
BILLING CODE 6714-01-M