[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)]
[Rules and Regulations]
[Pages 35883-35888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-15597]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
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  Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / 
Rules and Regulations  

[[Page 35883]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

5 CFR Part 9401

[Docket No. CFPB-2016-0050]
RIN 3209-AA15


Supplemental Standards of Ethical Conduct for Employees of the 
Bureau of Consumer Financial Protection

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule.

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

SUMMARY: The Bureau of Consumer Financial Protection (CFPB or Bureau), 
with the concurrence of the Office of Government Ethics (OGE), is 
issuing a final rule amending the Supplemental Standards of Ethical 
Conduct for Employees of the Bureau of Consumer Financial Protection 
(CFPB Ethics Regulations) involving: Outside employment for covered 
employees; Bureau employees' ownership or control of certain 
securities; restrictions on seeking, obtaining, or renegotiating credit 
or indebtedness; disqualification requirements based on existing credit 
or indebtedness; and restrictions on participating in matters involving 
covered entities. The final rule also clarifies and makes minor 
revisions to certain definitions.

DATES: This final rule is effective September 1, 2017.

FOR FURTHER INFORMATION CONTACT: Amber Vail, Senior Ethics Counsel, at 
(202) 435-7305 or Amy Mertz Brown, Alternate Designated Agency Ethics 
Official, at (202) 435-7256 at the Legal Division, Consumer Financial 
Protection Bureau.

SUPPLEMENTARY INFORMATION: 

I. Background

    On January 10, 2017, the Bureau, with OGE's concurrence, published 
a proposed rule in the Federal Register, 82 FR 2921, Jan. 10, 2017, 
proposing to amend the CFPB Ethics Regulations. The proposed rule 
provided a 30-day comment period, which ended on February 9, 2017. The 
Bureau did not receive any comments. The rationale for the proposed 
rule, which the Bureau is now adopting as final, is explained in the 
preamble at: https://www.federalregister.gov/documents/2017/01/10/2016-31596/supplemental-standards-of-ethical-conduct-for-employees-of-the-bureau-of-consumer-financial.
    The Bureau has made six technical changes in the final rule that 
are not intended to change the substantive meaning of the rule. First, 
in 5 CFR 9401.102, the Bureau removed the phrase ``on a mortgage'' from 
the definition of ``indebted to an entity'' to clarify that the term 
includes any type of servicer to whom payments are made. Second, the 
Bureau replaced the phrase ``he or she'' with the term ``employee'' in 
the definition of ``participate'' in 5 CFR 9401.102. Third, the Bureau 
inserted the phrase ``or indebtedness'' in the section heading of 5 CFR 
9401.108 and the subsection heading in Sec.  9401.108(d) to highlight 
that the restrictions in this section apply to both credit and 
indebtedness. Fourth, the Bureau added the phrase ``or lenders'' to the 
section heading of 5 CFR 9401.109 to clarify that the restrictions in 
this section apply to both creditors and lenders. The Bureau added the 
phrase to ensure that the language in the section heading is parallel 
to the substantive language regarding credit or indebtedness in the 
text of that section. The revision does not change the substance of the 
rule. Fifth, the Bureau made a grammatical correction by changing the 
word ``with'' to ``within'' in 5 CFR 9401.111(b)(1). Finally, in 
several places within the regulation, the Bureau revised the phrase 
``is or represents a party'' to read ``is a party or represents a 
party.'' This revision is intended to clarify that the regulation 
applies when an entity is a party, as well as when an entity is 
representing a party in a particular matter involving specific parties.

II. Matters of Regulatory Procedure

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 (the 
RFA), requires each agency to consider the potential impact of its 
regulations on small entities, including small businesses, small 
governmental units, and small not-for-profit organizations, unless the 
head of the agency certifies that the rules will not have a significant 
economic impact on a substantial number of small entities. The Director 
of the Bureau so certifies. The rule does not impose any obligations or 
standards of conduct for purposes of analysis under the RFA, and it 
therefore does not give rise to a regulatory compliance burden for 
small entities.

Paperwork Reduction Act

    The Bureau has determined that this rule does not impose any new 
recordkeeping, reporting, or disclosure requirements on members of the 
public that would be collections of information requiring approval 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects in 5 CFR Part 9401

    Conflict of interests, Government employees.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau, in 
concurrence with OGE, is amending part 9401 of title 5 of the Code of 
Federal Regulations as follows:

PART 9401--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION

0
1. The authority citation for part 9401 is revised to read as follows:

    Authority:  5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government 
Act of 1978); E.O. 12674, 54 FR 15159 (April 12, 1989); 3 CFR, 1898 
Comp., p.215, as modified by E.O. 12731, 55 FR 42547 (October 17, 
1990); 3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105, 2635.403, 2635.502 
and 2635.803.

0
2. Revise Sec.  9401.102 to read as follows:


Sec.  9401.102  Definitions.

    For purposes of this part:
    CFPB Ethics Regulations means the supplemental ethics standards set 
forth in this part.
    Control means the possession, direct or indirect, of the power or 
authority to manage, direct, or oversee.
    Credit has the meaning set forth in 12 U.S.C. 5481(7) and as 
further defined in

[[Page 35884]]

regulations promulgated by the Bureau to implement that statute. A 
person may have credit without any outstanding balance owed.
    Dependent child has the meaning set forth in 5 CFR 2634.105(d). It 
includes an employee's son, daughter, stepson, or stepdaughter if:
    (1) Unmarried, under the age of 21, and living in the employee's 
household; or
    (2) Claimed as a ``dependent'' on the employee's income tax return.
    Designated Agency Ethics Official (DAEO) means the official within 
the Bureau that the Director has appointed to coordinate and manage the 
ethics program at the Bureau, under 5 CFR 2638.104(a). For purposes of 
this part, the term ``DAEO'' also includes the Alternate DAEO appointed 
under 5 CFR 2638.104(d), and a designee of the DAEO or Alternate DAEO 
unless a particular provision says an authority is reserved to the 
DAEO.
    Director means the Director of the Bureau.
    Domestic partner means a person with whom a Bureau employee:
    (1) Has a close and committed personal relationship and both 
parties are at least 18 years of age, are each other's sole domestic 
partner and intend to remain in the relationship indefinitely, and 
neither is married to, in a civil union with, or partnered with any 
other spouse or domestic partner;
    (2) Is not related by blood in a manner that would bar marriage 
under the laws of the jurisdiction in which the employee resides;
    (3) Is in a financially interdependent relationship in which both 
agree to be responsible for each other's common welfare and share in 
financial obligations; and
    (4) Has shared for at least six months the same regular and 
permanent residence in a committed relationship and both parties intend 
to do so indefinitely, or would maintain a common residence but for an 
assignment abroad or other employment-related, financial, or similar 
obstacle.
    Employee means an employee of the Bureau, other than a special 
Government employee.
    Entity supervised by the Bureau means a person that is subject to 
the Bureau's supervision authority pursuant to 12 U.S.C. 5514(a)(1) or 
5515(a) and in regulations promulgated thereunder, as identified on a 
list to be maintained by the Bureau.
    Indebted or indebtedness means a legal obligation under which an 
individual or borrower received money or assets on credit, and 
currently owes payment.
    Indebted to an entity means an obligation to make payments to an 
entity as a result of an indebtedness, whether originally made with 
that entity or with another entity. This includes without limitation, a 
servicer to whom payments are made.
    OGE Standards mean the Standards of Ethical Conduct for Employees 
of the Executive Branch contained in 5 CFR part 2635.
    Participate means personal and substantial participation and has 
the meaning set forth in 5 CFR 2635.402(b)(4). An employee participates 
when, for example, the employee makes a decision, gives approval or 
disapproval, renders advice, provides a recommendation, conducts an 
investigation or examination, or takes an official action in a 
particular matter, and such involvement is of significance to the 
matter. It requires more than official responsibility, knowledge, 
perfunctory involvement, or involvement on an administrative or 
peripheral issue.
    Particular matter has the meaning set forth in 5 CFR 
2635.402(b)(3). The term includes a matter that involves deliberation, 
decision, or action and is focused upon the interests of specific 
persons or a discrete and identifiable class of persons. It may include 
governmental action such as legislation, regulations, or policy-making 
that is narrowly focused on the interests of a discrete and 
identifiable class of persons.
    Particular matter involving specific parties has the meaning set 
forth in 5 CFR 2641.201(h). Such a matter typically involves a specific 
proceeding affecting the legal rights of the parties or an isolatable 
transaction or related set of transactions between identified parties. 
The term includes without limitation, a contract, audit, enforcement 
action, examination, investigation, litigation proceeding, or request 
for a ruling.
    Person has the same meaning set forth in 5 CFR 2635.102(k). It 
includes without limitation, an individual, corporation and 
subsidiaries it controls, company, association, firm, partnership, 
society, joint stock company, or any other organization or institution.
    Practice of law means the provision of legal advice or services 
where there is a client relationship of trust or reliance. One is 
presumed to be practicing law when engaging in any of the following 
conduct on behalf of another:
    (1) Preparing any legal document, including any deeds, mortgages, 
assignments, discharges, leases, trust instruments, or any other 
instruments intended to affect interests in real or personal property, 
wills, codicils, instruments intended to affect the disposition of 
property of decedents' estates, other instruments intended to affect or 
secure legal rights, and contracts except routine agreements incidental 
to a regular course of business;
    (2) Preparing or expressing legal opinions;
    (3) Appearing or acting as an attorney in any tribunal;
    (4) Preparing any claims, demands or pleadings of any kind, or any 
written documents containing legal argument or interpretation of law, 
for filing in any court, administrative agency, or other tribunal;
    (5) Providing advice or counsel as to how any of the activities 
described in paragraphs (1) through (4) of this definition might be 
done, or whether they were done, in accordance with applicable law; or
    (6) Furnishing an attorney or attorneys, or other persons, to 
render the services described in paragraphs (1) through (5) of this 
definition.
    Security means an interest in debt or equity instruments. The term 
includes without limitation, secured and unsecured bonds, debentures, 
notes, securitized assets, commercial papers, and preferred and common 
stock. The term encompasses both current and contingent ownership 
interests; a beneficial or legal interest derived from a trust; a right 
to acquire or dispose of any long or short position in debt or equity 
interests; interests convertible into debt or equity interests; and 
options, rights, warrants, puts, calls, straddles, derivatives, and 
other similar interests. It does not include deposits; credit union 
shares; a future interest created by someone other than the employee or 
the employee's spouse or dependent child; or a right as a beneficiary 
of an estate that has not been settled.
    Special Government employee has the meaning set forth in 5 CFR 
2635.102(l).
    Spouse means an employee's husband or wife by lawful marriage, but 
does not include an employee's spouse if:
    (1) The employee and the employee's spouse are separated;
    (2) The employee and the employee's spouse live apart;
    (3) There is an intention to end the marriage or separate 
permanently; and
    (4) The employee has no control over the separated spouse's 
securities.
    Vested legal or beneficial interest means a present right or title 
to property, which carries with it an existing right of alienation, 
even though the right to possession or enjoyment

[[Page 35885]]

may be postponed to some uncertain time in the future. This includes a 
future interest when one has a right, defeasible or indefeasible, to 
immediate possession or enjoyment of the property, upon the ceasing of 
another's interest.

0
3. Revise Sec.  9401.104 to read as follows:


Sec.  9401.104  Additional rules concerning outside employment for 
covered employees.

    (a) Prohibited outside employment with an entity supervised by the 
Bureau. A covered employee shall not engage in compensated outside 
employment for an entity supervised by the Bureau or for an officer, 
director, or employee of such entity. For purposes of this section, 
``employment'' has the same meaning as set forth in Sec.  9401.103(b).
    (b) Use of professional licenses related to real estate. A covered 
employee who holds a license related to real estate, mortgage 
brokerage, property appraisals, or real property insurance is 
prohibited from using such license for the production of income. The 
DAEO, in consultation with senior management in the Division in which 
the employee works, may grant a limited waiver to this prohibition 
based on a written finding that the specific transaction which requires 
use of the license will not create an appearance of loss of 
impartiality or use of public office for private gain.
    (c) Definition of covered employee. For purposes of this section, 
``covered employee'' means:
    (1) An employee in the Division of Supervision, Enforcement, and 
Fair Lending;
    (2) An employee serving in an attorney position;
    (3) An employee in the Office of Research, serving as a section 
chief at Bureau pay band 71 or above or as a senior economist in the 
Compliance Analytics and Policy Section;
    (4) An employee serving in the Office of Consumer Response in an 
investigations position;
    (5) An employee required to file a Public Financial Disclosure 
Report (OGE Form 278e) under 5 CFR part 2634; or
    (6) Any other Bureau employee specified in a Bureau order or 
directive whose duties and responsibilities, as determined by the DAEO, 
require application of the prohibition on outside employment contained 
in this section to ensure public confidence that the Bureau's programs 
are conducted impartially and objectively.

0
4. Amend Sec.  9401.105 by revising paragraphs (a) introductory text, 
(a)(1), (b)(1), and (b)(2) to read as follows:


Sec.  9401.105   Additional rules concerning outside employment for 
Bureau attorneys.

    (a) Prohibited outside practice of law. In addition to the prior 
approval requirements under Sec.  9401.103 and the outside employment 
restrictions under Sec.  9401.104, an employee serving in an attorney 
position shall not engage in the practice of law outside the employee's 
official Bureau duties that might require the attorney to:
    (1) Take a position that is or appears to be in conflict with the 
interests of the Bureau; or
* * * * *
    (b) * * *
    (1) In those matters in which the attorney has participated 
personally and substantially as a Government employee; or
    (2) In those matters which are the subject of the attorney's 
official responsibility.

0
5. Revise Sec.  9401.106 to read as follows:


Sec.  9401.106  Prohibited financial interests.

    (a) Prohibited interests. Except as permitted by this section, an 
employee or an employee's spouse or minor child shall not own or 
control a security in:
    (1) An entity supervised by the Bureau; or
    (2) A collective investment fund that has a stated policy of 
concentrating its investments in the financial services or banking 
industry. A collective investment fund includes, without limitation, 
mutual funds, unit investment trusts (UITs), exchange traded funds 
(ETFs), real estate investment trusts (REITs), and limited 
partnerships.
    (b) Exceptions. Interests prohibited in paragraph (a) of this 
section do not include the ownership or control of a security in:
    (1) Collective investment funds. A publicly traded or publicly 
available collective investment fund if:
    (i) The fund does not have a stated policy of concentrating its 
investments in the financial services or banking industry; and
    (ii) Neither the employee nor the employee's spouse or minor child 
exercises or has the ability to exercise control over or selection of 
the financial interests held by the fund.
    (2) Diversified employee benefit plans. A pension or other 
retirement fund, trust, or plan established or maintained by an 
employer or an employee organization, or both, to provide its 
participants with medical, disability, death, unemployment, or vacation 
benefits, training programs, day care centers, scholarship funds, 
prepaid legal services, deferred income, or retirement income (employee 
plan), provided:
    (i) The employee plan does not have a stated policy of 
concentrating its investments in any industry, business, single country 
other than the United States, or bonds of a single State within the 
United States;
    (ii) The investments of the employee plan are administered by an 
independent trustee;
    (iii) The employee plan's trustee has a written policy of varying 
the plan investments;
    (iv) Neither the employee nor the employee's spouse or minor child 
participates in the selection of the employee plan's investments or 
designates specific plan investments (except for directing that 
contributions be divided among several different categories of 
investments, such as stocks, bonds, or mutual funds, which are 
available to plan participants); and
    (v) The employee plan is not a profit-sharing or stock bonus plan.
    (3) Federal retirement and thrift savings plans. Funds administered 
by the Thrift Plan for Employees of the Federal Reserve System, the 
Retirement Plan for Employees of the Federal Reserve System, the Thrift 
Savings Plan, or a Federal government agency.
    (4) State pension plans. A pension plan established or maintained 
by a State government or any political subdivision of a State 
government for its employees.
    (c) Reporting and divestiture of prohibited interests--(1) New 
employees. Within 30 calendar days from the start of employment with 
the Bureau, an employee must notify the DAEO in writing of a financial 
interest prohibited under paragraph (a) of this section that the 
employee or the employee's spouse or minor child acquired prior to the 
start of the employee's employment with the Bureau. The employee or the 
employee's spouse or minor child shall divest prohibited securities 
within 90 days after the start of the employee's employment at the 
Bureau.
    (2) Newly prohibited interest. Within 30 days after the Bureau 
updates and internally publishes a new list of entities supervised by 
the Bureau, an employee who owns or controls, or whose spouse or minor 
child owns or controls, a security in an entity newly added to that 
list must notify the DAEO in writing. The employee or the employee's 
spouse or minor child shall divest prohibited securities within 90 days 
after internal publication of the new list.
    (3) Interests acquired without specific intent. If an employee or 
an employee's

[[Page 35886]]

spouse or minor child acquires a financial interest prohibited under 
paragraph (a) of this section as a result of marriage, inheritance, or 
otherwise without specific intent to acquire, the employee must notify 
the DAEO in writing within 30 days of the acquisition. The employee or 
the employee's spouse or minor child shall divest prohibited securities 
within 90 days of the acquisition.
    (d) Disqualification and divestiture--(1) Securities in entities 
supervised by the Bureau. If an employee or an employee's spouse or 
minor child owns or controls a security in an entity that is prohibited 
under paragraph (a)(1) of this section, the employee shall immediately 
disqualify himself or herself from participating in all particular 
matters affecting that entity, unless and until the security is 
divested or the employee is granted a waiver pursuant to paragraph (e) 
of this section and the waiver includes an authorization allowing the 
employee to participate in such matters.
    (2) Securities in collective investment funds. If an employee or an 
employee's spouse or minor child owns or controls a security in a 
collective investment fund that is prohibited under paragraph (a)(2) of 
this section, the employee shall immediately disqualify himself or 
herself from participating in all particular matters affecting one or 
more holdings of the collective investment fund if the affected holding 
is invested in the financial services or banking industry, unless and 
until the collective investment fund is divested or the employee is 
granted a waiver pursuant to paragraph (e) of this section and the 
waiver includes an authorization allowing the employee to participate 
in such matters.
    (e) Waivers. Upon request by the employee, the DAEO in the DAEO's 
sole discretion has the authority to grant an individual waiver under 
this paragraph. The DAEO's authority to grant an individual waiver 
under this paragraph may not be delegated to any person except the 
Alternate DAEO. The DAEO, in consultation with senior management in the 
Division in which the employee works, may issue a written waiver 
permitting the employee or the employee's spouse or minor child to own 
or control a particular security that otherwise would be prohibited by 
this section, after considering all relevant factors. Relevant factors 
include, without limitation, whether:
    (1) Mitigating circumstances exist due to the way the employee or 
the employee's spouse or minor child acquired ownership or control of 
the security. Mitigating circumstances may include without limitation:
    (i) The employee or the employee's spouse or minor child acquired 
the security through inheritance, merger, acquisition, or other change 
in corporate structure, or otherwise without specific intent on the 
part of the employee or the employee's spouse or minor child; or
    (ii) The employee's spouse received the security as part of a 
compensation package in connection with employment or prior to marriage 
to the employee;
    (2) The employee makes a prompt and complete written disclosure of 
the security to the DAEO;
    (3) The disqualification of the employee from participating in 
particular matters pursuant to paragraph (d) of this section, as 
specified in the written waiver, would not unduly interfere with the 
full performance of the employee's duties; and
    (4) The granting of the waiver would not unduly undermine the 
public's confidence in the impartiality and objectivity with which:
    (i) The employee performs the employee's official Bureau duties; 
and
    (ii) The Division in which the employee works executes its programs 
and functions.
    (f) Covered third party entities. Immediately after becoming aware 
that a covered third party entity owns or controls a security that an 
employee would be prohibited from owning or controlling under paragraph 
(a) of this section, the employee shall report the interest in writing 
to the DAEO. The DAEO may require the employee to terminate the 
relationship with the covered third party entity, disqualify himself or 
herself from certain particular matters, or take other action as 
necessary to avoid a statutory violation, a violation of the OGE 
Standards, or the CFPB Ethics Regulations, including an appearance of 
misuse of position or loss of impartiality. For purposes of this 
paragraph, ``covered third party entity'' includes:
    (1) A partnership in which the employee or the employee's spouse or 
minor child is a general partner;
    (2) A partnership or closely held corporation in which the employee 
or the employee's spouse or minor child individually or jointly holds 
more than a 10 percent equity interest;
    (3) A trust in which the employee or the employee's spouse or minor 
child has a vested legal or beneficial interest;
    (4) An investment club or similar informal investment arrangement 
between the employee or the employee's spouse or minor child, and 
others;
    (5) A qualified profit sharing, retirement, or similar plan in 
which the employee or the employee's spouse or minor child has an 
interest; or
    (6) An entity in which the employee or the employee's spouse or 
minor child individually or jointly holds more than a 25 percent equity 
interest.

0
6. Revise Sec.  9401.107 to read as follows:


Sec.  9401.107   Prohibition on acceptance of credit or indebtedness on 
preferential terms from an entity supervised by the Bureau.

    An employee or the employee's spouse or minor child may not accept 
credit from, become indebted to, or enter into a financial relationship 
with an entity supervised by the Bureau, unless the credit, 
indebtedness, or other financial relationship:
    (a) Is offered on terms and conditions no more favorable than those 
offered to the general public; and
    (b) Is not otherwise prohibited by law or inconsistent with the OGE 
Standards or the CFPB Ethics Regulations.

0
7. Revise Sec.  9401.108 to read as follows:


Sec.  9401.108  Restrictions on seeking, obtaining, or renegotiating 
credit or indebtedness from an entity that is a party or represents a 
party to a matter to which an employee is assigned or may be assigned.

    (a) General rules regarding seeking, obtaining, or renegotiating 
credit or indebtedness--(1) Prohibition. While an employee is assigned 
to participate in a particular matter involving specific parties, the 
employee or the employee's spouse or minor child shall not seek, 
obtain, or renegotiate credit or indebtedness with an entity that is a 
party or represents a party to the matter. This prohibition also 
applies to a particular matter involving specific parties pending at 
the Bureau in which the employee is not currently participating but of 
which the employee is aware and believes it is likely that the employee 
will participate.
    (2) Cooling off period. The prohibition in paragraph (a)(1) of this 
section continues for two years after the employee's participation in 
the particular matter has ended.
    (b) Rules regarding credit or indebtedness secured by principal 
residence. Notwithstanding paragraph (a) of this section, an employee 
or an employee's spouse or minor child may seek, obtain, or renegotiate 
credit or indebtedness secured by residential real property with an 
entity, subject to the following conditions:
    (1) The residential real property is or will be the principal 
residence of the

[[Page 35887]]

employee or the employee's spouse or minor child;
    (2) A minimum of three months have passed since the end of the 
employee's participation in each particular matter involving specific 
parties in which that entity was a party or represented a party;
    (3) The employee is disqualified from participating in particular 
matters involving specific parties in which that entity is a party or 
represents a party while the employee or the employee's spouse or minor 
child is seeking, obtaining, or renegotiating the credit or 
indebtedness;
    (4) The employee or the employee's spouse or minor child seeking, 
obtaining, or negotiating the credit or indebtedness must satisfy all 
financial requirements generally applicable to all applicants for the 
same type of credit or indebtedness for residential real property; and
    (5) The credit or indebtedness is obtained on terms and conditions 
no more favorable than those offered to the general public.
    (c) Specific rules for employee's spouse and minor child. The 
prohibitions in paragraphs (a) and (b) of this section do not apply 
when the employee's spouse or minor child is seeking, obtaining, or 
renegotiating credit or indebtedness and:
    (1) The credit or indebtedness is supported only by the income or 
independent means of the spouse or minor child;
    (2) The credit or indebtedness is obtained on terms and conditions 
no more favorable than those offered to the general public; and
    (3) The employee does not participate in the negotiating for the 
credit or indebtedness or serve as co-maker, endorser or guarantor of 
the credit or indebtedness.
    (d) Disqualification requirement for credit or indebtedness sought 
by person related to an employee. An employee shall disqualify himself 
or herself from participating in a particular matter involving specific 
parties as soon as the employee learns that any of the following 
persons are seeking, obtaining, or renegotiating credit or indebtedness 
with an entity that is a party or represents a party to the matter:
    (1) The employee's spouse, domestic partner, or dependent child;
    (2) A partnership in which the employee or the employee's spouse, 
domestic partner, or dependent child is a general partner;
    (3) A partnership or closely held corporation in which the employee 
or the employee's spouse, domestic partner, or dependent child 
individually or jointly owns or controls more than a 10 percent equity 
interest;
    (4) A trust in which the employee or the employee's spouse, 
domestic partner, or dependent child has a vested legal or beneficial 
interest;
    (5) An investment club or similar informal investment arrangement 
between the employee or the employee's spouse, domestic partner, or 
dependent child, and others;
    (6) A qualified profit sharing, retirement, or similar plan in 
which the employee or the employee's spouse, domestic partner, or 
dependent child has an interest; or
    (7) An entity in which the employee or the employee's spouse, 
domestic partner, or dependent child individually or jointly holds more 
than a 25 percent equity interest.
    (e) Exemptions. The following forms of credit are exempted from the 
prohibitions in paragraphs (a) and (b) of this section and the 
disqualification requirement in paragraph (d) of this section, provided 
the credit is offered on terms and conditions no more favorable than 
those offered to the general public:
    (1) Revolving consumer credit or charge cards;
    (2) Overdraft protection on checking accounts and similar accounts; 
and
    (3) The provision of telephone, cable, gas, electricity, water, or 
other similar utility services provided on credit (i.e., the service is 
provided before payment is due such that consumers incur debt as they 
use the service and receive periodic bills for the services used).
    (f) Waivers. The DAEO, after consultation with senior management in 
the Division in which the employee works, may grant a written waiver 
from the prohibition in paragraphs (a) or (b) of this section or the 
disqualification requirement in paragraph (d) of this section, based on 
a determination that participation in matters otherwise prohibited by 
this section would not be prohibited by law (18 U.S.C. 208) or create 
an appearance of loss of impartiality or use of public office for 
private gain, and would not otherwise be inconsistent with the OGE 
Standards or the CFPB Ethics Regulations.

0
8. Amend Sec.  9401.109 by revising the section heading, paragraphs (a) 
introductory text, (a)(5) and (b)(1) through (5) and adding paragraphs 
(b)(6) and (7) to read as follows:


Sec.  9401.109  Disqualification of employees from particular matters 
involving existing creditors or lenders.

    (a) Disqualification required. Absent an authorization pursuant to 
paragraph (d) of this section, an employee shall not participate in a 
particular matter involving specific parties if the employee is aware 
that any of the following have credit with or are indebted to an entity 
that is a party or represents a party to the matter:
* * * * *
    (5) A trust in which the employee or the employee's spouse, 
domestic partner, or dependent child has a vested legal or beneficial 
interest;
* * * * *
    (b) * * *
    (1) Revolving consumer credit or charge cards;
    (2) Overdraft protection on checking accounts and similar accounts;
    (3) Amortizing indebtedness on consumer goods (e.g., automobiles);
    (4) Automobile leases for primarily personal (consumer) use 
vehicles;
    (5) The provision of telephone, cable, gas, electricity, water, or 
other similar utility services provided on credit (i.e., the service is 
provided before payment is due such that consumers incur debt as they 
use the service and receive periodic bills for the services used);
    (6) Educational loans (e.g., student loans; loans taken out by a 
parent or guardian to pay for a child's education costs); and
    (7) Loans on residential homes (e.g., home mortgages; home equity 
lines of credit).
* * * * *

0
9. Revise Sec.  9401.110 to read as follows:


Sec.  9401.110  Prohibited recommendations.

    An employee shall not make recommendations or suggestions, directly 
or indirectly, concerning the acquisition or sale or other divestiture 
of a security in an entity supervised by the Bureau, or an entity that 
is a party or represents a party to a particular matter involving 
specific parties to which the employee is assigned.

0
10. Revise Sec.  9401.111 to read as follows:


Sec.  9401.111  Restriction on participating in matters involving 
covered entities.

    (a) Disqualification required. Absent an authorization pursuant to 
paragraph (c) of this section, an employee shall not participate in a 
particular matter involving specific parties if a covered entity is a 
party or represents a party to the matter.
    (b) ``Covered entity'' defined. For purposes of this section, a 
``covered entity'' includes:
    (1) Any person for whom the employee is serving or seeking to 
serve, or has served within the last year, as officer, director, 
trustee, general partner, agent, attorney, consultant, contractor, or 
employee; or

[[Page 35888]]

    (2) Any person for whom the employee is aware the employee's 
spouse, domestic partner, fianc[eacute], child, parent, sibling, 
stepfather, stepmother, stepson, stepdaughter, stepbrother, stepsister, 
half-brother, half-sister, or member of the employee's household is 
serving or seeking to serve as an officer, director, trustee, general 
partner, agent, attorney, consultant, contractor, or employee.
    (c) Waivers. The DAEO may authorize the employee to participate in 
a matter that would require disqualification under paragraph (a) of 
this section, using the authorization process set forth in 5 CFR 
2635.502(d) of the OGE Standards. The DAEO will consult with senior 
management in the Division in which the employee works before issuing 
such an authorization.

    Dated: July 17, 2017.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
    Approved:
Walter M. Shaub, Jr.,
Director, Office of Government Ethics.
[FR Doc. 2017-15597 Filed 8-1-17; 8:45 am]
BILLING CODE 4810-AM-P