FDIC Federal Register Citations

[Federal Register: January 27, 1997 (Volume 62, Number 17)]

[Rules and Regulations]

[Page 3771-3773]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr27ja97-1]

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Rules and Regulations

Federal Register

________________________________________________________________________

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

under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

Prices of new books are listed in the first FEDERAL REGISTER issue of each

week.

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[[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