§ 336.735-33 Time and place for submission of employees' statements. An employee required to submit statements of employment and financial interest under § 336.735-31 shall submit that statement to the Assistant to the Chairman of the Board of Directors not later than: (a) Ninety days after the effective date of the agency regulations issued under this part if employed on or before that effective date; or (b) Thirty days after his entrance on duty, but not earlier than ninety days after the effective date, if appointed after that effective date. § 336.735-34 Supplementary state ments. Changes in, or addition to, the information contained in an employee's statement of employment and financial interests shall be reported in a supplementary statement os of June 30 each year. If no changes or additions occur, a negative report is required. Notwithstanding the filing of the annual report required by this section, each employee shall at all times avoid acquiring a financial interest that could result, or taking an action that would result, in a violation of the conflicts-of-interest provisions of section 208 of title 18, United States Code, or Subpart B of this part. [32 FR. 13064, Oct. 7, 1967] § 336.735-35 Interests of employees' relatives. The interest of a spouse, minor child, or other member of an employee's immediate household is considered to be an Interest of the employee. For the purpose of this section, "member of an employee's immediate household" means those blood relations of the employee who are residents of the employee's household. § 336.735-36 Information not known by employees. If any information required to be included on a statement of employment and financial interests or supplementary statement, including holdings placed in trust, is not known to the employee but is known to another person, the employee shall request that other person to submit information in his behalf. § 336.735-37 Information prohibited. This subpart does not require an employee to submit on a statement of employment and financial interests or supplementary statement any information relating to the employee's connection with, or interest in, a professional society or a charitable, religious, social, fraternal, recreational, public service, civic, or political organization or a similar organization not conducted as a business enterprise. For the purpose of this section, educational and other institutions doing research and development or related work involving grants of money from or contracts with the Government are deemed "business enterprises" and are required to be included in an employee's statement of employment and financial interests. § 336.735-38 Confidentiality of employ. ees' statements. The Corporation shall hold statements of employment and financial interest, and each supplementary statement, in confidence. All statements shall be received, reviewed, and retained in the office of the assistant to the Chairman of the Board of Directors who is responsible for maintaining the statements in confidence and shall not allow access to, or allow information to be disclosed from, a statement except to carry out the purposes of this part. The Corporation may not disclose information from a statement except as the Chairman of the Corporation or the Civil Service Commission may determine for good cause shown. [32 F.R. 13964, Oct. 7, 1967] § 336.735-40 Specific provisions of regulations for special Corporation employees. (a) Except as provided in paragraph (b) of this section, each special Corporation employee shall submit a statement of employment and financial interests which reports: (1) All other employment; and (2) The financial interests cî the special Corporation employee which the Corporation determines are relevant in the light of the duties he is to perform. (b) The Chairman of the Corporation may waive the requirement in paragraph (a) of this section for the submission of a statement of employment and financial interests in the case of a special Corporation employee, who is not a consultant or an expert when the Chairman finds that the duties of the position held by that special Corporation employee are of a nature and at such a level of responsibility that the submission of the statement by the incumbent is not necessary to protect the integrity of the Corporation. For the purpose of this paragraph, “consultant" and "expert" have the meanings given those terms by Chapter 304 of the Federal Personnel Manual, but do not include a physician, dentist, or allied medical specialist whose services are procured to provide care and service to patients. (c) A statement of employment and financial interests required to be submitted under this section shall be submitted not later than the time of employment of the special Corporation employee. Each special Corporation employee shall keep his statement current throughout his employment with the Corporation by the submission of supplementary statements. 131 FR 5751, Apr. 14, 1966, as amended at 32 FR 13964, Oct. 7, 1967] § 336.735-41 Reviewing statements and reporting conflicts of interest. (a) When a statement submitted under this subpart or information from other sources indicates a conflict between the interests of an employee or special Corporation employee and the performance of his services for the Corporation, the Counselor designated in the regulations in this part shall investigate and dispose of the matter in such manner as he may deem appropriate. When the conflict or appearance of conflict is not resolved by the Counselor, the information concerning the conflict or appearance of conflict shall be reported to the Chairman of the Board of Directors. (b) The employee or special Corporation employee concerned shall have a reasonable opportunity, orally and/or in writing to explain the conflict or appearance of conflict. § 336.735-42 Disciplinary and other remedial actions. (a) A violation of the regulations in this part by an employee or special Corporation employee may be cause for appropriate disciplinary action which may be in addition to any penalty prescribed by law. (b) When, after consideration of the explanation of the employee or special Corporation employee provided by § 336.735-41, the Chairman of the Board decides that remedial action is required, he shall take immediate action to end the conflicts or appearance of conflicts of interest. Remedial action includes, but is not limited to: (1) Changes in assigned duties; (2) Divestment by the employee or special Corporation employee of his conflicting interest; (3) Disciplinary action; or (4) Disqualification for a particular assignment. Remedial action, whether disciplinary or otherwise, shall be effected in accordance with any applicable law, Executive orders, and regulations. APPENDIX A-EMPLOYEES WHO MUST FILE SPECIFIC POSITIONS A Head, Associate Head or Assistant Head of a Division or Office of the Corporation (regardless of his specific title). An Adviser or Assistant to the Board of Directors. A Regional Director. An Assistant Regional Director. A Regional Counsel. 131 FR 5751, Apr. 14, 1966, as amended at 40 FR 48499, Oct. 16, 1975] 90-052-77—14 The provisions of this part apply to certain banking practices which are likely to have adverse effects on the safety and soundness of insured State nonmember banks or which are likely to result in violations of law, rule, or regulation. § 337.2 Standby Letters of Credit. (a) Definition. As used in this § 337.2, the term "standby letter of credit" means any letter of credit, or similar arrangement however named or described, which represents an obligation to the beneficiary on the part of the issuer (1) to repay money borrowed by or advanced to or for the account of the account party, or (2) to make payment on account of any indebtedness undertaken by the account party, or (3) to make payment on account of any default (including any statement of default) by the account party in the performance of an obligation. The term "similiar arrangement" includes creation of an acceptance or similar undertaking. the (b) Restriction. A standby letter of credit issued by an insured State nonmember bank shall be combined with all other standby letters of credit and all loans for purposes of applying any legal limitation on loans of the bank (includ 1 As defined in this paragraph (a), the term "standby letter of credit” would not include commercial letters of credit and similar instruments where the issuing bank expects the beneficiary to draw upon the issuer, which do not “guaranty" payment of a money obligation of the account party and which do not provide that payment is occasioned by default on the part of the account party. ing limitations on loans to any one borrower, on loans to affiliates of the bank, or on aggregate loans); Provided, however, That if such standby letter of credit is subject to separate limitation under applicable State or federal law, then the separate limitation shall apply in lieu of the loan limitation." (c) Exceptions. All standby letters of credit shall be subject to the provisions of paragraph (b) of this section except where: (1) Prior to or at the time of issuance, the issuing bank is paid an amount equal to the bank's maximum liability under the standby letter of credit; or, (2) Prior to or at the time of issuance, the issuing bank has set aside sufficient funds in a segregated deposit account, clearly earmarked for that purpose, to cover the bank's maximum liability under the standby letter of credit. (d) Disclosure. Each insured State nonmember bank must maintain adequate control and subsidiary records of its standby letters of credit comparable to the records maintained in connection with the bank's direct loans so that at all times the bank's potential liability thereunder and the bank's compliance with this § 337.2 may be readily determined. In addition, all such standby letters of credit must be adequately reflected on the bank's published financial statements. § 337.3 Insider Transaction. (a) Definitions-(1) Bank. The term "bank" means an insured State nonmember commercial or mutual savings bank, and any majority-owned subsidiary of such bank. (2) Person. The term "person" means a corporation, partnership, association, or other business entity; any trust; or any natural person. (3) Control. The term "control" (including the terms "controlling", "controlled by", and "under common control with") means the possession, directly or 'Where the standby letter of credit is subject to a non-recourse participation agreement with another bank or other banks, this section shall apply to the issuer and each participant in the same manner as in the case of a participated loan. indirectly, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. (4) Insider. The term "insider" means any officer or employee who participates or has authority to participate in major policy-making functions of a bank, any director or trustee of a bank, or any other person who has direct or indirect control over the voting rights of ten percent of the shares of any class of voting stock of a bank or otherwise controls the management or policies of a bank. (5) Person related to an insider. The term "person related to an insider" means any person controlling, controlled by or under common control with an insider, and also, in the case of a natural person, means: (1) An insider's spouse; (ii) An insider's parent or stepparent, or child or stepchild; or (iii) Any other relative who lives in an insider's home. (6) Insider transaction. The term "insider transaction" means any business transaction or series of related business transactions between a bank and: (i) An insider of the bank; (ii) A person related to an insider of the bank; (iii) Any other person where the transaction is made in contemplation of such person becoming an insider of the bank; or (iv) Any other person where the transaction inures to the tangible economic benefit of an insider or a person related to an insider. (7) Business transaction. The term "business transaction" includes, but is not limited to, the following types of transactions: (i) Loans or other extensions of credit; (ii) Purchases of assets or services from the bank; 1 The phrase "series of related business transactions" includes transactions which are in substance part of an integrated business arrangement or relationship such as borrowings on a line of credit, law firm billings, or recurring transactions of a similar nature within a holding company system. (iii) Sales of assets or services to the bank; (iv) Use of the bank's facilities, its real or personal property, or its personnel; (v) Leases of property to or from the bank; (vi) Payment by the bank of commissions and fees, including brokerage commissions and management, consultant, architectural and legal fees; and (vii) Payment by the bank of interest on time deposits which are in amounts of $100,000 or more. For the purpose of this regulation, the term does not include deposit account activities other than those specified in paragraph (a) (7) (g) of this section, safekeeping transactions, credit card transactions, trust activities, and activities undertaken in the capacity of securities transfer agent or municipal securities dealer. (b) Approval and Disclosure of Insider Transactions. An insider transaction, either alone or when aggregated in accordance with paragraph (c) of this section, involving assets or services having a fair market value amounting to more than: (1) $20,000 if the bank has not more than $100,000,000 in total assets; (2) $50,000 if the bank has more than $100,000,000 and not more than $500,000,000 in total assets; or (3) $100,000 if the bank has more than $500,000,000 in total assets shall be specifically reviewed and approved by the bank's board of directors or board of trustees, provided, however, that, when an insider transaction is part of a series of related business transactions involving the same insider, approval of each separate transaction is not required so long as the bank's board of directors or board of trustees has reviewed and approved the entire series of related transactions and the terms and conditions under which such transactions may take place. The minutes of Although not specifically required by the proposed regulation, prior review and approval is desirable and should occur except under circumstances in which such review and approval is clearly impractical. Where prior review and approval by the board of directors or board of trustees is clearly impractical, subsequent action should occur as soon as possible. the meeting at which approval is given shall indicate the nature of the transaction or transactions, the parties to the transaction or transactions, that such review was undertaken and approval given, and the names of individual directors or trustees who voted to approve or disapprove the transaction or transactions. In the case of negative votes, a brief statement of each dissenting director's or trustee's reason for voting to disapprove the proposed insider transaction or transactions shall be included in the minutes if its inclusion is requested by the dissenting director or trustee. (c) Aggregation of Loans or Other Extensions of Credit Which Are Insider Transactions. Any loan or extension of credit involving an insider shall be aggregated with the outstanding balances of all other loans or extensions of credit involving that insider. For purposes of this regulation, a loan or extension of credit involves a specific insider when the loan or extension of credit is made to that insider, to a person related to that insider, or to any other person where the loan or extension of credit inures to the tangible economic benefit of that insider or a person related to that insider. (d) Information Pertaining to Insider Transactions. Each bank shall maintain a record of insider transactions requiring review and approval under paragraph (b) of this section in a manner and form that will enable examiner personnel to identify such insider transactions. Information pertaining to such insider transactions shall be readily accessible to examiners and shall include all documents and other material relied upon by the board in approving each transaction, including the name of the insider, the insider's position or relationship that causes such person to be considered an insider, the date on which the transaction was approved by the board, the type of insider transaction and the relevant terms of the transaction, any other pertinent facts which serve to explain or support the basis for the board's decision, and any statements submitted for the minutes or the file by directors or trustees who voted not to approve the transaction setting forth their reasons for such vote. (e) Discovery of Insider Relationship. When a bank becomes aware of the existence of an insider relationship after entering into a transaction for which approval would have been required under paragraph (b) of this section, the bank shall promptly report such transaction in writing to the Regional Director of the Corporation in charge of the Region in which the bank is headquartered. (f) Knowledge of Proposed Insider Transaction. Any insider, having knowledge of an insider transaction between the bank and: (3) Any other person where the transaction inures to the tangible economic benefit of that insider or person related to that insider shall give timely notice of such transaction to the bank's board of directors or board of trustees. (g) Supervisory Action in Regard to Certain Insider Transactions. Notwithstanding compliance with the review and approval requirements of paragraph (b) of this section, the Corporation will take appropriate supervisory action against the bank, its officers or its directors or trustees when the Corporation determines that an insider transaction, alone or when aggregated with other insider transactions, is indicative of unsafe or unsound practices. Such supervisory action may involve institution of formal proceedings under section 8 of the Federal Deposit Insurance Act. Among the factors which the Corporation will consider in determining the presence of unsafe or unsound banking practices involving insider transactions are: (1) Whether, because of preferential terms and conditions, such insider transactions are likely to result in significant loan losses, excessive costs, or other significant economic detriment which would not occur in a comparable arm's length transaction with a person of comparable creditworthiness or otherwise similarly situated; (2) Whether transactions with an insider and all persons related to that insider are excessive in amount, either in relation to the bank's capital and re |