[Federal Register Volume 62, Number 17 (Monday, January 27, 1997)]
[Rules and Regulations]
[Pages 3771-3773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1867]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 17 / Monday, January 27, 1997 / Rules 
and Regulations  

[[Page 3771]]



FEDERAL DEPOSIT INSURANCE CORPORATION

5 CFR Part 3201

RIN 3064-AA08, 3209-AA15


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

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule; amendment.

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SUMMARY: The FDIC, with the concurrence of the Office of Government 
Ethics (OGE), is amending the Supplemental Standards of Ethical Conduct 
for Employees of the Federal Deposit Insurance Corporation to allow 
certain employees in the FDIC's Division of Supervision (DOS) and 
Division of Compliance and Consumer Affairs (DCA) to obtain credit 
cards from State chartered nonmember banks that are headquartered 
outside the geographical jurisdiction of the field office to which the 
employee is assigned. The FDIC is also making minor changes in its 
Supplemental Standards to conform them to previous organizational 
changes.

EFFECTIVE DATE: January 27, 1997.

FOR FURTHER INFORMATION CONTACT: Richard M. Handy, Assistant Executive 
Secretary (Ethics), Office of the Executive Secretary of the Federal 
Deposit Insurance Corporation, 550 17th Street, N.W., Washington, D.C. 
20429; telephone (202) 898-7271.

SUPPLEMENTARY INFORMATION:

I. Background

    The FDIC is the primary regulator for State chartered banks that 
are not members of the Federal Reserve System. FDIC bank examinations 
are generally conducted by examiners assigned to the FDIC's DOS or DCA. 
Both divisions maintain numerous field offices that report to one of 
eight regional offices. The responsibility for examining any particular 
State nonmember bank belongs to the field office whose geographical 
jurisdiction includes that bank's headquarters. Bank examination 
reports and recommendations are sent from the field office to its 
regional office for approval.
    In order to minimize potential conflicts of interest between 
examiners and the banks they examine, the FDIC's ethics regulations 
have traditionally prohibited examiners from obtaining credit from 
State nonmember banks. Since 1988, the FDIC's employee ethics 
regulation has made an exception to the general prohibition to allow 
examiners in the field offices and regional offices to accept credit in 
the form of credit cards from State nonmember banks headquartered 
outside the FDIC region to which they are assigned, subject to certain 
conditions. Also since 1988, an exception for headquarters employees 
subject to the general credit restriction has allowed them to obtain 
credit cards from any State nonmember bank. Any employee who avails him 
or herself of the credit card exception was required to disqualify him 
or herself from taking any official action affecting the State 
nonmember bank that issued the credit card. The disqualification 
requirement prevents employees from taking actions that would 
constitute a conflict of interest for the employee, thus avoiding 
violations of the Federal conflict of interest statute (18 U.S.C. 208) 
or subpart D of the Office of Government Ethics' Standards of Ethical 
Conduct for Executive Branch Employees that apply to FDIC employees, 5 
CFR part 2635. See also OGE's recent final 18 U.S.C. 208 regulation, 61 
FR 6830-66851 (part III) (December 18, 1996). The general State 
nonmember bank credit prohibition and its exception are consistent 
with, but not the same as, 18 U.S.C. 213 which prohibits examiners from 
accepting credit from any institution that they have previously 
examined.
    The FDIC's employee ethics regulation (5 CFR part 3201) was 
comprehensively revised in 1995 to supplement OGE's executive branch-
wide employee ethics regulation. See 60 FR 20171-20178 (April 25, 
1995), as amended at 61 FR 35915-35916 (July 9, 1996). The FDIC's 
present general credit restriction applies to designated DOS and DCA 
employees, most but not all of whom are bank examiners. See 
Sec. 3201.102(c)(1). The credit card exception for headquarters 
employees which allows them to acquire credit cards from any State 
nonmember bank, subject to the disqualification requirement, is at 
Sec. 3201.102(c)(1)(i). The credit card exception for employees 
assigned to DOS and DCA regional and field offices that allows them to 
acquire credit cards from State nonmember banks headquartered outside 
their region of assignment, subject to the disqualification 
requirement, is at Sec. 3201.102(c)(1)(ii).
    Thus, at present, employees of all field offices within a region 
are prohibited from getting any credit, including a credit card, from 
any State nonmember bank headquartered in their region, even from banks 
that are examined by a different field office than the one to which 
they are assigned. The narrowness of the credit card exception has 
allowed management the maximum flexibility to assign employees within 
their region as staffing needs require. This is because, in most cases, 
the combination of the broad credit restriction and the narrow 
exception to it has meant that most examiners assigned to a region have 
no credit from any State nonmember bank located within that region. 
Absent disqualifications that result from an extension of credit, the 
employees can be assigned to work on any bank within the region as well 
as their field office as the need arises.
    However, the current Sec. 3201.102(c)(1)(ii) prohibition and narrow 
exception has kept DOS and DCA employees from obtaining credit that 
many citizens consider important in conducting their personal business. 
For example, in certain cases, department stores have transferred their 
customer credit accounts to State nonmember banks from which examiners 
in the region of the bank's headquarters are prohibited from accepting 
credit cards. In other cases, nationally chartered banks from whom DOS 
and DCA employees can generally obtain credit issue their credit cards 
through State chartered nonmember banks. In such cases, DOS and DCA 
employees covered by Sec. 3201.102(c)(1)(ii) are prohibited from 
accepting credit available to others.

[[Page 3772]]

    In order to alleviate somewhat the difficulty in obtaining credit 
card credit by employees covered by Sec. 3201.102(c)(1)(ii), the FDIC 
has determined to modify the exception to the prohibition in a way that 
still maintains protection against potential conflicts of interest. 
Specifically, the FDIC has determined to expand the 
Sec. 3201.102(c)(1)(ii) exception to allow employees assigned to a 
field office to obtain credit cards from State nonmember banks that are 
headquartered outside their field office's geographical examination 
responsibility. Thus, for example, an employee assigned to one of the 
17 field offices within the Atlanta Regional Office will be able to 
obtain credit card credit from State nonmember banks headquartered in 
the other 16 field offices within the region that were previously not 
allowed. Potential conflicts of interest will still be avoided by 
continuing the requirement that any employee who obtains credit card 
credit pursuant to the newly expanded exception shall disqualify him or 
herself from taking any official action regarding the issuer of that 
credit.
    The broadened exception to the Sec. 3201.102(c)(1) prohibition may 
reduce FDIC management's flexibility, in certain cases, to reassign 
employees to different offices. However, management has determined that 
the increased availability of credit to its employees is worth the 
increased effort required. Similarly, employees who obtain previously 
prohibited credit as a result of this change must recognize that their 
ability to accept assignments will be narrowed to the extent that they 
use this expanded exception to the rule.
    The change in the exception would not affect DOS or DCA employees 
assigned to the Washington office who would continue to be allowed by 
Sec. 3201.102(c)(1)(i) to obtain credit through the use of a credit 
card from any State nonmember bank. Nor will the change affect DOS or 
DCA employees whose official assignment is to a regional office. Since 
those employees can take action affecting any State nonmember bank 
within their region, they will still be permitted to obtain credit 
cards only from State nonmember banks headquartered outside their 
region of assignment.
    The FDIC is also making a couple of other minor changes in 
Sec. 3201.102 to reflect organizational changes that have occurred 
since the regulation was finalized. First, Sec. 3201.102(c)(2), which 
identifies the employees to whom the credit restriction of 
Sec. 102(c)(1) applies, is amended to delete two references to the 
positions of Executive Director for Supervision, Resolutions, and 
Compliance and Regional Manager which no longer exist. Second, the FDIC 
is amending Sec. 3201.102(d) which prohibits employees of certain FDIC 
divisions who have certain listed official duties from accepting credit 
from an FDIC-insured depository institution for two years after their 
last participation in an official matter affecting that institution. 
The amendment adds to the list of divisions covered by Sec. 3201.102(d) 
the Division of Insurance which was created after the FDIC's 
supplemental employee ethics regulation was made final and substitutes 
the new Division of Resolutions and Receiverships for the former 
Division of Depositor and Asset Services and the Division of 
Resolutions.

II. Matters of Regulatory Procedure

Administrative Procedure Act

    Pursuant to 5 U.S.C. 553(a)(2), (b) and (d), the Board of Directors 
has found that good cause exists for waiving the regular notice of 
proposed rulemaking and 30-day delayed effective date as to this final 
rule amendment. This action is being taken because it is in the public 
interest that this rule, which concerns matters of agency organization, 
practice and procedure and which relieves certain restrictions placed 
on FDIC employees, become effective on the date of publication.

Regulatory Flexibility Act

    The Board of Directors has concluded that the amendment to the rule 
will not impose a significant economic hardship on small institutions. 
Therefore, the Board of Directors hereby certifies pursuant to Sec. 605 
of the Regulatory Flexibility Act (5 U.S.C. 605) that the amended 
regulation will 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.).

Paperwork Reduction Act

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

List of Subjects in 5 CFR Part 3201

    Administrative practice and procedure, Conflict of interests, 
Government employees, Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, the Federal Deposit 
Insurance Corporation, with the concurrence of the Office of Government 
Ethics, is amending 5 CFR part 3201 as follows:

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

    1. The authority citation for part 3201 continues to read as 
follows:

    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.

    2. Section 3201.102 is amended as set forth below:
    A. Removing the word ``and'' at the end of paragraph (c)(1)(i);
    B. Revising paragraph (c)(1)(ii);
    C. Adding a new paragraph (c)(1)(iii);
    D. Removing the words ``the Executive Director for Supervision, 
Resolutions, and Compliance,'' in both places in which they appear and 
the words ``Regional Manager,'' where it appears in paragraph (c)(2); 
and
    E. Amending paragraph (c)(3) by removing the phrase ``(c)(1)(i) or 
(c)(1)(ii)'' and adding in its place the phrase ``(c)(1)(i), 
(c)(1)(ii), or (c)(1)(iii);'' and
    F. Amending paragraph (d)(2) by removing the words ``Division of 
Depositor and Asset Services, Division of Resolutions'' and adding in 
their place ``Division of Resolutions and Receiverships,'' and adding 
``Division of Insurance,'' before the words ``Legal Division.'' The 
revised paragraph (c)(1)(ii) and the added paragraph (c)(1)(iii) read 
as follows:


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

* * * * *
    (c) * * *
    (1) * * *
    (ii) For an employee assigned to a regional 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; and
    (iii) For an employee assigned to a field office, credit extended 
by an FDIC-insured State nonmember bank headquartered outside the 
employee's field office of official assignment through the use of a 
credit card on the same terms and conditions as are offered to the 
general public.
* * * * *
    Dated at Washington, D.C. this 11th day of December 1996.


[[Page 3773]]


    By Order of the Board of Directors.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
    Concurred in this 17th day of January 1997.
Stephen D. Potts,
Director, Office of Government Ethics.
[FR Doc. 97-1867 Filed 1-24-97; 8:45 am]
BILLING CODE 6714-01-P