[Federal Register Volume 65, Number 127 (Friday, June 30, 2000)]
[Rules and Regulations]
[Pages 40486-40491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16054]


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FARM CREDIT ADMINISTRATION

12 CFR Parts 612 and 614

RIN 3052-AB95


Standards of Conduct; Loan Policies and Operations

AGENCY: Farm Credit Administration (FCA).

ACTION: Direct final rule with opportunity to comment.

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SUMMARY: The FCA is rewriting its Standards of Conduct regulations in 
plain language so that they are easier to understand. This direct final 
rule does not change the requirements of the existing regulations.

DATES: Unless we receive significant adverse comment by July 31, 2000, 
these regulations will be effective 30 days after publication in the 
Federal Register during which either or both Houses of Congress are in 
session. The FCA will publish a document in the Federal Register to 
establish the actual effective date. If we receive significant adverse 
comment on an amendment, paragraph, or section of this rule, and that 
provision can be addressed separately from the rest of the rule, we 
will withdraw that amendment, paragraph, or section and adopt as final 
those provisions of the rule that are not the subject of a significant 
adverse comment. In that case, we will tell you how we expect to 
continue with rulemaking on the provisions that were the subject of a 
significant adverse comment.

ADDRESSES: You may send comments by electronic mail to ``[email protected]'' or through the Pending Regulations section of our Web 
site at ``www.fca.gov.'' You may also send comments to Patricia W. 
DiMuzio, Director, Regulation and Policy Division, Office of Policy and 
Analysis, Farm Credit Administration, 1501 Farm Credit Drive, McLean, 
Virginia 22102-5090 or by fax to (703) 734-5784. You may review copies 
of all comments we receive in the Office of Policy and Analysis, Farm 
Credit Administration.

FOR FURTHER INFORMATION CONTACT:
Dale Aultman, Policy Analyst, Office of Policy and Analysis, Farm 
Credit Administration, McLean, VA 22102-5090, (703) 883-4498, TDD (703) 
883-4444,

  or

Howard Rubin, Attorney, Office of General Counsel, Farm Credit 
Administration, McLean, VA 22102-5090, (703) 883-4020, TDD (703) 883-
4444.

SUPPLEMENTARY INFORMATION:

I. Objective

    The objective of our proposed amendment is to rewrite the Standards 
of Conduct regulations to make them easier for the Farm Credit System 
(System) to understand and to better explain our expectations for high 
standards of honesty and integrity. We are also amending one of our 
other regulations so it correctly references our Standards of Conduct 
regulations.

II. Background

A. Reasons for Plain Language

    We are amending these regulations so you can read and understand 
them easily. We are guided by a Presidential memorandum dated June 1, 
1998, requiring the Federal Government's writing to be in plain 
language. Eventually we will rewrite all of our regulations in plain 
language.

B. Public Comments

    On August 18, 1998, we published a notice in the Federal Register 
that asked you to identify existing regulations and policies that 
impose unnecessary burdens on the System. See 63 FR 44176. We received 
comments from four Farm Credit banks, a jointly managed production 
credit association/Federal land credit association, and the Farm Credit 
Council on Standards of Conduct issues. Most of the commenters asked 
that we rewrite the Standards of Conduct regulations in plain language. 
This direct final rule addresses their request and clarifies our 
regulations. Director, officer, and employee requirements are now in 
individual subparts so those persons can find the regulations that 
apply to them more easily. In addition, we clarify our existing 
regulations stating that directors, officers, and employees may be 
subject to civil money penalties and suspensions if they violate their 
duties.
    One Farm Credit Bank asked that we remove our prohibition against 
Farm Credit bank or agricultural credit bank (collectively, bank) 
officers also working at an association affiliated with that bank. We 
are not removing this prohibition because persons serving in a dual 
role may not be able to meet the goals and fiduciary duties of both the 
bank and association.
    One bank asked that officers and employees be allowed to act as 
real estate agents and insurance sales agents when not working at the 
System institution. The bank did note that those employees must not be 
allowed to transact business with directors, other officers or 
employees, borrowers, or loan applicants. We are not removing these 
prohibitions because System institutions have a direct or indirect 
involvement in many real estate transactions and also sell insurance. 
This involvement could cause actual conflicts of interest. Even if 
there is not an actual conflict of interest, System institutions must 
avoid the appearance of a conflict of interest that could result if 
their officers or employees sold real estate or insurance.
    Another bank asked that System employees without supervisory or 
decision-making authorities be exempt from disclosure requirements. The 
preamble to our Standards of Conduct rule published in the Federal 
Register on May 13, 1994, stated that System institution boards may 
exempt employees from disclosures when they have a substantial degree 
of supervision and a low level of responsibility. See 59 FR 24893. We 
have rewritten our regulation to include this guidance.

III. Direct Final Rule

    We are amending these regulations by a direct final rulemaking. The 
Administrative Procedure Act, 5 U.S.C. 551-59, et seq. (APA), supports 
direct final rulemaking, which allows Federal agencies to enact 
noncontroversial regulations more quickly, without the usual notice and 
comment period. This process lets us develop, review, and publish a 
final rule quickly and gives the public an opportunity to comment or 
object.
    In a direct final rulemaking, we tell you the rule will become 
effective on a specified date unless we receive significant adverse 
comment during the comment period. If we receive significant adverse 
comment on an amendment, paragraph, or section of this rule, and that 
provision can be addressed separately from the rest of the rule, we 
will withdraw that amendment, paragraph, or section and adopt as final 
those provisions of the rule that are not the subject of a significant 
adverse comment. In that case, we will tell you how we expect to 
continue with rulemaking on the provisions that were the subject of a 
significant adverse comment.

[[Page 40487]]

    A significant adverse comment is one that explains why our rule 
would be inappropriate (including challenges to its underlying premise 
or approach), ineffective, or unacceptable without a change. In 
general, a significant adverse comment raises an issue serious enough 
to warrant a substantive response from us in a notice-and-comment 
rulemaking. For example, a significant adverse comment to this plain 
language revision would explain how we made a substantive change to, or 
otherwise misinterpreted, the existing requirements. Because this 
direct final rule does not change the existing requirements of this 
part, a comment regarding the existing requirements will not be 
considered a significant adverse comment.
    Direct final rulemaking is justified under 5 U.S.C. 553(b)(B). 
Under 5 U.S.C. 553(b)(B), for ``good cause,'' we may omit notice and 
comment when ``notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' In a direct final 
rulemaking, an agency finds the rule is so straightforward and 
noncontroversial that normal notice and comment are unnecessary under 
the APA. However, rather than eliminating public comment altogether, 
which is permissible under 5 U.S.C. 553(b)(B), we are giving you an 
opportunity to disagree with our conclusion that public input on the 
rule is unnecessary.
    For these regulations, we believe that a direct final rulemaking is 
proper, as we do not expect significant adverse comment. If we receive 
no significant adverse comment, we will publish our regular notice of 
the rule's effective date in compliance with section 5.17(c)(1) of the 
Farm Credit Act of 1971, as amended.

List of Subjects

12 CFR Part 612

    Agriculture, Banks and banking, Conflict of interests, Rural areas.

12 CFR Part 614

    Agriculture, Banks and banking, Flood Insurance, Foreign trade, 
Reporting and recordkeeping requirements, Rural areas.

    For the reasons stated in the preamble, parts 612 and 614 of 
chapter VI, title 12 of the Code of Federal Regulations are amended as 
follows:

PART 612--STANDARDS OF CONDUCT

    1. Revise part 612 to read as follows:
Subpart A--General Provisions
Sec.
612.2000   What is the purpose of this part?
612.2005   Am I covered by this rule?
612.2010   Definitions.
Subpart B--Director Duties
612.2100   What are my responsibilities as a director?
612.2105   What are our responsibilities as a board of directors?
612.2110   As a director what must I disclose?
612.2115   What am I not permitted to do as a director?
612.2120   What rules am I subject to if I want to acquire property?
612.2125   What standards of conduct policies and procedures must 
our board of directors issue?
612.2130   May I own or buy System obligations?
612.2135   What happens if I violate my duties?
Subpart C--Officer and Employee Duties
612.2200   What are my responsibilities as an officer or employee?
612.2205   As an officer or employee what must I disclose?
612.2210   What am I not permitted to do as an officer or employee?
612.2215   May I act as an agent or broker for real estate or 
insurance?
612.2220   What rules am I subject to if I want to acquire property?
612.2225   What rules apply if I work for more than one System 
institution?
612.2230   May I own or buy System obligations?
612.2235   What happens if I violate my duties?
Subpart D--Standards of Conduct Official Duties
612.2300   What are my duties as a Standards of Conduct Official?
612.2305   What must I investigate as a Standards of Conduct 
Official?
612.2310   What must I report as a Standards of Conduct Official?
Subpart E--Standards of Conduct for Agents
612.2400   What are my duties as an agent?

    Authority: Secs. 5.9, 5.17, 5.19, of the Farm Credit Act (12 
U.S.C. 2243, 2252, 2254).

Subpart A--General Provisions


Sec. 612.2000  What is the purpose of this part?

    This part contains the Farm Credit Administration's (FCA/we/our) 
expectations for high standards of honesty, integrity, impartiality, 
and conduct in the Farm Credit System (System) to maintain the public's 
confidence.


Sec. 612.2005  Am I covered by this rule?

    You are covered by this rule if you are a director, officer, 
employee, agent, or Standards of Conduct Official of a System 
institution. The following section defines those persons and other 
terms that are used in this part.


Sec. 612.2010  Definitions.

    For this part, the following terms apply:
    (a) Agent means any person (other than a director, officer or 
employee) who is authorized to act for or represent a System 
institution. An agent includes a person such as a lawyer, accountant, 
or appraiser who provides professional services to a System 
institution.
    (b) A conflict of interest or an appearance of a conflict of 
interest exists when you have a financial interest that actually 
affects, or appears to a reasonable person who knows the relevant facts 
to affect, your ability to perform official duties objectively and 
impartially in the best interest of your System institution. To 
determine whether you have a conflict of interest, the following 
interests are considered yours:
    (1) Interests of your spouse;
    (2) Interests of your minor children;
    (3) Interests of your business partners;
    (4) Interests of any organization or entity that you serve as 
officer, director, trustee, partner or employee; and
    (5) Interests of any person, organization, or entity with which you 
are negotiating for, or have an arrangement for, prospective 
employment.
    (c) Control of an entity means that you, directly, indirectly, or 
acting with others:
    (1) Own 5 percent or more of the entity's equity;
    (2) Own or have the power to vote 5 percent or more of any class of 
the entity's voting securities; or
    (3) Have the power to exercise a controlling influence over the 
entity.
    (d) Director means a member of a board of directors of a System 
institution.
    (e) Employee means an individual (not including a director, 
officer, or agent) who works for, is paid by, and whose work 
performance is supervised by a System institution.
    (f) Entity means a corporation, company, association, firm, joint 
venture, partnership (general or limited), society, joint stock 
company, trust, fund, or other organization or institution, except a 
System institution.
    (g) Family means an individual and spouse and anyone having the 
following relationship to either: parent, child, sibling, stepparent, 
stepchild, stepsibling, half brother, half sister, uncle, aunt, nephew, 
niece, grandparent, grandchild, and their spouses.
    (h) A financial interest means an interest in an activity, 
transaction, property, or relationship with a person or an entity that 
involves giving or

[[Page 40488]]

receiving something of present or deferred monetary value.
    (i) Financially obligated with means that you are legally obligated 
for a debt of another person or entity or someone else is legally 
obligated for your debts. This includes co-signing or guaranteeing a 
debt for another person or entity or using your property as security 
for someone else's debt.
    (j) A material financial interest means that you have a financial 
interest significant enough to:
    (1) Actually affect your decision-making, or
    (2) Cause a reasonable person who knows the relevant facts to 
question your ability to perform your official duties objectively, 
impartially, and in the best interest of your System institution.
    (k) Mineral interest means any interest in minerals, oil, or gas, 
including, but not limited to, any right derived directly or indirectly 
from a mineral, oil, or gas lease, deed, or royalty conveyance.
    (l) Officer means the chief executive officer, president, chief 
operating officer, vice president, secretary, treasurer, general 
counsel, chief financial officer, and chief credit officer of each 
System institution, and any person who holds a similar position of 
authority.
    (m) Ordinary course of business means a transaction that is:
    (1) Usual and customary based on the prior conduct of the persons 
involved in the transaction; or
    (2) Made on terms and conditions comparable to those used by other 
persons in the same industry for similar transactions.
    (n) Person means individual or entity.
    (o) Standards of Conduct Official means the official designated 
under subpart D of this part.
    (p) System institution and institution means any bank, association, 
service organization, or the Federal Farm Credit Banks Funding 
Corporation.

Subpart B--Director Duties


Sec. 612.2100  What are my responsibilities as a director?

    (a) You must maintain high standards of honesty, integrity, 
impartiality, and conduct to ensure the proper performance of System 
business and continued public confidence in System institutions. You 
must avoid misconduct and conflicts of interest to maintain these 
standards.
    (b) You must obey all applicable laws, regulations, policies, 
instructions, and procedures. You must exercise diligence and good 
judgment in carrying out your duties and responsibilities.
    (c) You must ensure that other directors, officers, employees, and 
agents comply with this part and promptly address any matter involving 
a conflict of interest.


Sec. 612.2105  What are our responsibilities as a board of directors?

    (a) You must ensure that your institution complies with all 
standards of conduct requirements. You must appoint a Standards of 
Conduct Official to carry out subpart D of this part. You may contract 
with your supervising bank to provide a Standards of Conduct Official.
    (b) You must ensure that your institution uses safe and sound 
business practices with agents and that your institution:
    (1) Selects qualified and reputable agents;
    (2) Investigates and takes corrective action when an agent breaches 
his or her fiduciary duty;
    (3) Avoids or controls the employment of agents who are related to 
your institution's directors, officers, or employees;
    (4) Avoids or controls soliciting or accepting gifts or favors by 
agents; and
    (5) Avoids or controls an agent's use of System or borrower 
information obtained in the course of the agent's dealings with System 
institutions.
    (c) You must ensure your institution keeps all standards of conduct 
policies and procedures, reports, investigations, determinations, and 
evidence of compliance with this part for at least 6 years.
    (d) You must establish periodic written disclosure requirements for 
directors, officers, and employees to effectively enforce this part and 
your institution's standards of conduct policy. You may exclude from 
these reporting requirements employees who have substantial supervision 
and low levels of responsibility.


Sec. 612.2110  As a director what must I disclose?

    (a) Annually, and as required by paragraph (c) of this section, you 
must file a written and signed statement with your Standards of Conduct 
Official that discloses:
    (1) The names of any immediate family members and affiliated 
organizations that did business with your institution during the past 
12 months.
    (i) Immediate family means a person and spouse and his or her 
parent, child, sibling, and their spouses.
    (ii) Affiliated organizations include any organization, other than 
a System institution, for which you served as a partner, officer, or 
majority shareholder at any time during the past 12 months;
    (2) Any legal proceedings required to be disclosed in the annual 
report to shareholders under Sec. 620.5(k) of this chapter; and
    (3) Any additional information your institution needs to make the 
disclosures required by part 620 of this chapter.
    (b) At such intervals as your board determines is necessary to 
effectively enforce this part and your standards of conduct policy, you 
must file a written and signed statement with your Standards of Conduct 
Official that contains the disclosures required by our regulations and 
your institution's standards of conduct policy. At a minimum, you must 
disclose:
    (1) The name of any family member, person living in your home, 
business partner, or any entity they or you control that does business 
with your institution, any association your institution supervises, or 
your supervising bank; and
    (2) The name and the nature of any entity in which you have a 
material financial interest or on whose board you serve, if that entity 
does business with your institution, any association your institution 
supervises, or any of their borrowers.
    (c) When you become or plan to become involved in any relationship, 
transaction, or activity that must be reported under this section or 
that could create a conflict of interest, you must promptly ask your 
Standards of Conduct Official, in writing, whether the relationship, 
transaction, or activity creates a conflict of interest.
    (d) When you become a director you must make the disclosures 
required by this section to your Standards of Conduct Official within 
30 days after your election or appointment. You need not do so if you 
completed a disclosure as a director candidate under part 620 of this 
chapter in the past 180 days.


Sec. 612.2115  What am I not permitted to do as a director?

    (a) You must not participate (except for matters that affect 
borrowers and shareholders generally, such as interest rate 
determinations) in System matters or transactions that directly or 
indirectly affect:
    (1) Your financial interest;
    (2) The financial interest of an entity you control; or
    (3) The financial interest of your family, any person living in 
your home, your business partner, or any entity they or you control.
    (b) You must not divulge or use (except in your official duties) 
any

[[Page 40489]]

System information or document not generally available to the public 
that you acquire as a board member.
    (c) You must not use your position to obtain or attempt to obtain 
special advantage or favoritism for any person, entity, or yourself.
    (d) You must not use your position or information you acquire in 
your position to solicit or obtain, directly or indirectly, any gift, 
fee, compensation, or other benefit for any person, entity, or 
yourself.
    (e) You must not accept, directly or indirectly, any gift, fee, 
compensation, or other benefit that is offered or could reasonably be 
viewed as offered to:
    (1) Influence your actions as a director of a System institution, 
or
    (2) Obtain information that you have access to because you are a 
board member.
    (f) You must not borrow from, lend to, or become financially 
obligated with or for, directly or indirectly, a director, officer, 
employee, agent, borrower, or loan applicant of your institution, or a 
director, officer, employee, or agent of any association your 
institution supervises, or your supervising bank, unless:
    (1) The transaction is with a family member or person living in 
your home; or
    (2) The Standards of Conduct Official determines, under your 
institution's policies and procedures, the potential for conflict of 
interest is insignificant because:
    (i) The transaction is in the ordinary course of business or does 
not involve a material financial interest; and
    (ii) You do not participate in any matter affecting the financial 
interest of the other party to the transaction unless it is a matter 
that affects borrowers and shareholders generally.
    (g) You must not violate your institution's standards of conduct 
policies and procedures.


Sec. 612.2120  What rules am I subject to if I want to acquire 
property?

    (a) As a director, you may acquire an interest in real or personal 
property, including mineral interests, in which a System institution 
has an interest only if you meet these conditions:
    (1) You acquire the property through public auction or similar 
open, competitive bidding;
    (2) You did not participate in the decision to foreclose or dispose 
of the property including setting the sale terms; and
    (3) In your position as a director, you have received no 
information as a result of your position that could give you an 
advantage over other potential bidders in making a successful bid.
    (b) Even if you did not participate in the decision to foreclose or 
dispose of the property, as a director you may not acquire any real or 
personal property, including mineral interests, in a private 
transaction if:
    (1) Your institution, any association your institution supervises, 
or your supervising bank, owned the property within the past 12 months; 
and
    (2) The institution acquired the property by foreclosure or similar 
action.


Sec. 612.2125  What standards of conduct policies and procedures must 
our board of directors issue?

    (a) Each board of directors must issue standards of conduct 
policies and procedures for directors, officers, and employees 
consistent with the purposes and specific requirements of this part.
    (b) Your policies and procedures must, at a minimum:
    (1) Address:
    (i) Hiring of family members;
    (ii) Political activity by directors, officers, and employees;
    (iii) Devoting time to duty by directors, officers, and employees;
    (iv) Giving or receiving gifts or favors by directors, officers, 
and employees; and
    (v) Improper use of official property, position, or information.
    (2) Outline the authorities and responsibilities of the Standards 
of Conduct Official;
    (3) Set guidelines for directors, officers, and employees to follow 
in business relationships and transactions not specifically prohibited 
by this part that involve borrowers, loan applicants, or other persons 
doing business with your institution;
    (4) If applicable, set guidelines for directors, officers, and 
employees to follow in business relationships and transactions not 
specifically prohibited by this part that involve directors, officers, 
or employees of:
    (i) Your supervising bank, any association it supervises, or their 
borrowers or loan applicants; or
    (ii) Other persons doing business with your supervising bank or any 
association it supervises;
    (5) Set guidelines for deciding whether an officer or employee of 
your bank or association may serve as a director of a cooperative that 
borrows from another System institution. Before approving an officer's 
or employee's request, your board must decide whether the proposed 
service as a director may cause the officer or employee to violate any 
regulations in this part or your institution's policies and procedures;
    (6) Establish conditions under which officers and employees may:
    (i) Accept outside employment or compensation;
    (ii) Borrow from System institutions;
    (iii) Acquire an interest in real or personal property that secured 
a debt owed to a System institution within the preceding 12 months;
    (iv) Buy real or personal property from a System institution;
    (7) Ensure that your institution uses open competitive bidding when 
it sells surplus property above a stated value (as established by your 
board) to its officers or employees;
    (8) Give new directors, officers, and employees a reasonable amount 
of time to end transactions, relationships, or activities that your 
policies and procedures prohibit;
    (9) Give directors, officers, and employees a reasonable amount of 
time after you change existing policies and procedures to end 
transactions, relationships, or activities the new policies and 
procedures prohibit;
    (10) Provide a procedure for directors, officers, or employees to 
recuse themselves from official action (including deliberations) on 
matters in which they may not participate under the regulations in this 
part or your policies and procedures;
    (11) Ensure that compliance with standards of conduct decisions and 
board policy is adequately documented;
    (12) Establish reporting requirements that enable your institution 
to comply with Sec. 620.5 of this chapter;
    (13) Establish a method to monitor conflicts of interest and 
compliance with your policies and procedures;
    (14) Establish appeal procedures available to officers and 
employees to whom any required approval has been denied.
    (15) If applicable, establish guidelines and prohibitions for bank 
for cooperatives and agricultural credit bank officers and employees 
involved with foreign exchange activities as required in 
Sec. 614.4900(g) of this chapter.


Sec. 612.2130  May I own or buy System obligations?

    (a) A director of a System institution other than the Federal Farm 
Credit Banks Funding Corporation (Funding Corporation) may only buy 
joint, consolidated, or Systemwide obligations that are both:
    (1) Part of an offering available to the public, and (2) Bought in 
the secondary market or through a dealer or dealer bank affiliated with 
a member of the selling group designated by the Funding Corporation.
    (b) A director of the Funding Corporation may not acquire, directly 
or

[[Page 40490]]

indirectly, any joint, consolidated, or Systemwide obligations, except 
by inheritance.


Sec. 612.2135  What happens if I violate my duties?

    If you violate your duties, FCA may take action against you under 
12 CFR part 622 of our regulations, and may impose civil money 
penalties and suspensions.

Subpart C--Officer and Employee Duties


Sec. 612.2200  What are my responsibilities as an officer or employee?

    (a) You must uphold high standards of honesty, integrity, 
impartiality, and conduct to ensure the proper performance of System 
business and continued public confidence in the System and its 
institutions. You must avoid misconduct and conflicts of interest to 
maintain these standards.
    (b) You must obey all applicable laws, regulations, policy 
statements, instructions, and procedures. You must exercise diligence 
and good judgment in carrying out your duties, obligations, and 
responsibilities.


Sec. 612.2205  As an officer or employee what must I disclose?

    (a) Annually, and as required by paragraph (c) of this section, 
officers must file a written and signed statement with their Standards 
of Conduct Official that discloses:
    (1) The names of any immediate family members and affiliated 
organizations who did business with their institution during the past 
12 months.
    (i) Immediate family means a person and spouse and his or her 
parent, child, sibling, and their spouses.
    (ii) Affiliated organizations include any organization, other than 
a Farm Credit organization, for which you served as a partner, officer, 
or majority shareholder at any time during the past 12 months;
    (2) Any legal proceedings required to be disclosed in the annual 
report to shareholders under Sec. 620.5(k) of this chapter; and
    (3) Any additional information your institution needs to make the 
disclosures required by part 620 of this chapter.
    (b) At such intervals as an officer's and employee's board 
determines is necessary to effectively enforce this part and their 
institution's standards of conduct policy, officers and employees must 
file a written and signed statement with their Standards of Conduct 
Official that contains the disclosures required by our regulations and 
their institution's standards of conduct policy, unless their board 
excludes their positions from these reporting requirements. At a 
minimum, as an officer or employee you must disclose:
    (1) The name of any family member, person living in your home, 
business partner, or any entity they or you control that does business 
with your institution, any association your institution supervises, or 
your supervising bank; and
    (2) The name and the nature of any entity in which you have a 
material financial interest or on whose board you serve if that entity 
does business with your institution, any association your institution 
supervises, or any of their borrowers.
    (c) If officers or employees become involved in any relationship, 
transaction, or activity that must be reported under this section or 
that could create a conflict of interest, they must promptly ask their 
Standards of Conduct Official, in writing, whether the relationship, 
transaction, or activity creates a conflict of interest.
    (d) When you are hired as an officer or employee, you must make the 
disclosures required by this section to your Standards of Conduct 
Official within 30 days of accepting an offer for employment.


Sec. 612.2210  What am I not permitted to do as an officer or employee?

    (a) You must not participate (except for matters that affect 
borrowers and shareholders generally, such as interest rate 
determinations) in System matters or transactions that directly or 
indirectly affect:
    (1) Your financial interest;
    (2) The financial interest of an entity you control; or
    (3) The financial interest of your family, any person living in 
your home, your business partner, or any entity they or you control.
    (b) You must not divulge or use (except in performing your official 
duties) any System information or document not generally available to 
the public that you acquire as a System officer or employee.
    (c) You must not use your position to obtain or attempt to obtain 
special advantage or favoritism for any person, entity, or yourself.
    (d) You must not use your position or information you acquire in 
your position to solicit or obtain, directly or indirectly, any gift, 
fee, compensation, or other benefit for any person, entity, or 
yourself.
    (e) You must not accept, directly or indirectly, any gift, fee, 
compensation, or other benefit that is offered or could reasonably be 
viewed as offered to:
    (1) Influence your actions as an officer or employee; or
    (2) Obtain information that you have access to because you are an 
officer or employee.
    (f) You must not borrow from, lend to, or become financially 
obligated with or for, directly or indirectly, a director, officer, 
employee, agent, borrower, or loan applicant of your institution, or a 
director, officer, employee, or agent of any association your 
institution supervises, or your supervising bank, unless:
    (1) The transaction is with a family member or person living in 
your home; or
    (2) The Standards of Conduct Official determines, according to your 
institution's policies and procedures, the potential for a conflict of 
interest is insignificant because:
    (i) The transaction is in the ordinary course of business and does 
not involve a material financial interest; and
    (ii) You do not participate in any matter affecting the financial 
interest of the other party to the transaction unless it is a matter 
that affects borrowers and shareholders generally.
    (g) You must not violate your institution's policies and procedures 
governing standards of conduct.


Sec. 612.2215  May I act as an agent or broker for real estate or 
insurance?

    (a) You may not act as a real estate agent or broker unless you are 
buying or selling real estate for your own use or for a family member 
or a person living in your home.
    (b) You may not act as an agent or broker for the sale or placement 
of insurance unless authorized under section 4.29 of the Act.


Sec. 612.2220  What rules am I subject to if I want to acquire 
property?

    You may not acquire, directly or indirectly, (except by 
inheritance) any interest in any real or personal property, including 
mineral interests, that your institution, the associations your 
institution supervises, or your supervising bank owned within the 
preceding 12 months as a result of foreclosure or similar action.


Sec. 612.2225  What rules apply if I work for more than one System 
institution?

    (a) A bank officer may not be an officer or employee of a 
supervised association.
    (b) A bank employee may not be an officer of a supervised 
association.
    (c) You may be an employee at both a bank and a supervised 
association. Employee expenses must be appropriately reflected in each 
institution's financial statements.

[[Page 40491]]

    (d) You may not serve as an officer or director of an entity that 
transacts business with any System institution in your institution's 
territory or any commercial bank, thrift institution, or other non-
System financial institution in your institution's territory, except 
employee credit unions. For purposes of this section, ``transacts 
business'' does not include System institution loans to a family-owned 
entity, service on the board of directors of the Federal Agricultural 
Mortgage Corporation, or transactions with nonprofit entities or 
entities in which the System institution has an ownership interest.
    (e) If you are an officer or employee of a bank or association you 
may serve as a director of a cooperative that borrows from another 
System institution only after approval of your board, subject to your 
institution's policies and procedures.


Sec. 612.2230  May I own or buy System obligations?

    (a) If you are an officer or employee of a System institution other 
than the Federal Farm Credit Banks Funding Corporation (Funding 
Corporation) you may only buy joint, consolidated, or Systemwide 
obligations that are both:
    (1) Part of an offering available to the public, and
    (2) Bought in the secondary market or through a dealer or dealer 
bank affiliated with a member of the selling group designated by the 
Funding Corporation.
    (b) If you are an officer or employee of the Funding Corporation 
you may not acquire, directly or indirectly, any joint, consolidated, 
or Systemwide obligations, except by inheritance.


Sec. 612.2235  What happens if I violate my duties?

    If you violate your duties, FCA may take action against you under 
12 CFR part 622 of our regulations, and may impose civil money 
penalties and suspensions.

Subpart D--Standards of Conduct Official Duties


Sec. 612.2300  What are my duties as a Standards of Conduct Official?

    As a Standards of Conduct Official you:
    (a) Advise directors, director candidates, officers, and employees 
about this part;
    (b) Receive reports required by this part;
    (c) Make determinations required by this part;
    (d) Maintain records of your actions; and
    (e) Investigate as directed by your board.


Sec. 612.2305  What must I investigate as a Standards of Conduct 
Official?

    As a Standards of Conduct Official you must investigate or ensure 
investigation of all:
    (a) Possible director, officer, employee, or agent violations of 
criminal statutes;
    (b) Possible violations of this part or your institution's policies 
and procedures;
    (c) Complaints against directors, officers, and employees; and
    (d) Activities or suspected activities that could affect continued 
public confidence in the System.


Sec. 612.2310  What must I report as a Standards of Conduct Official?

    (a) As a Standards of Conduct Official you must promptly report to 
your board and our Office of General Counsel:
    (1) Any preliminary investigation that shows a director, officer, 
employee, or agent may have violated a criminal statute;
    (2) The removal of a director or agent or discharge of an officer 
or employee as a result of an investigation; and
    (3) Any matter that may have an adverse impact on continued public 
confidence in the System or any of its institutions.
    (b) You must periodically report to your board on other significant 
matters you handle as a Standards of Conduct Official.

Subpart E--Standards of Conduct for Agents


Sec. 612.2400  What are my duties as an agent?

    You must maintain high standards of honesty, integrity, and 
impartiality to ensure proper performance of System business and 
continued public confidence in the System. You must avoid misconduct 
and conflicts of interest.

PART 614--LOAN POLICIES AND OPERATIONS

    2. The authority citation for part 614 continues to read as 
follows:

    Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128; secs. 
1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 
2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 
4.13, 4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.18A, 4.19, 
4.25, 4.26, 4.27, 4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 
7.8, 7.12, 7.13, 8.0, 8.5 of the Farm Credit Act (12 U.S.C. 2011, 
2013, 2014, 2015, 2017, 2018, 2019, 2071, 2073, 2074, 2075, 2091, 
2093, 2094, 2097, 2121, 2122, 2124, 2128, 2129, 2131, 2141, 2149, 
2183, 2184, 2199, 2201, 2202, 2202a, 2202c, 2202d, 2202e, 2206, 
2206a, 2207, 2211, 2212, 2213, 2214, 2219a, 2219b, 2243, 2244, 2252, 
2279a, 2279a-2, 2279b, 2279c-1, 2279f, 2279f-1, 2279aa, 2279aa-5); 
sec. 413 of Pub. L. 100-233, 101 Stat. 1568, 1639.

Subpart L--Actions on Applications; Review of Credit Decisions


Sec. 614.4440  [Amended]

    3. Amend Sec. 614.4440(f) by removing ``, subpart B'' in the last 
sentence.

    Dated: June 19, 2000.
Vivian L. Portis,
Secretary, Farm Credit Administration Board.
[FR Doc. 00-16054 Filed 6-29-00; 8:45 am]
BILLING CODE 6705-01-P