Supplemental Standards of Ethical Conduct for Employees of the Federal Housing Finance Agency, 19909-19915 [2010-8649]
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19909
Proposed Rules
Federal Register
Vol. 75, No. 73
Friday, April 16, 2010
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL HOUSING FINANCE
AGENCY
5 CFR Chapter LXXX
RINs 2590–AA02, 3209–AA15
Supplemental Standards of Ethical
Conduct for Employees of the Federal
Housing Finance Agency
AGENCY: Federal Housing Finance
Agency.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Housing Finance
Agency (FHFA) is issuing and seeking
comment on a proposed regulation, with
the concurrence of the Office of
Government Ethics, which would
supplement the Standards of Ethical
Conduct for Employees of the Executive
Branch. To ensure a comprehensive and
effective ethics program at FHFA and to
address ethical issues unique to FHFA,
the proposed regulation would establish
prohibitions on the ownership of certain
financial interests and restrictions on
outside employment and business
activities.
DATES: Comments regarding the notice
of proposed rulemaking must be
received on or before May 17, 2010. For
additional information, see
SUPPLEMENTARY INFORMATION.
ADDRESSES: You may submit your
comments on the proposed rulemaking,
identified by ‘‘RIN 2590–AA02,’’ by any
of the following methods:
• U.S. Mail, United Parcel Service,
Federal Express, or Other Mail Service:
The mailing address for comments is:
Alfred M. Pollard, General Counsel;
Attention: Comments/RIN 2590–AA02,
Federal Housing Finance Agency,
Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552.
• Hand Delivery/Courier: The hand
delivery address is: Alfred M. Pollard,
General Counsel; Attention: Comments/
RIN 2590–AA02, Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The
package should be logged at the Guard
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Desk, First Floor, on business days
between 9 a.m. and 5 p.m.
• E-mail: Comments to Alfred M.
Pollard, General Counsel, may be sent
by e-mail at RegComments@FHFA.gov.
Please include ‘‘RIN 2590–AA02’’ in the
subject line of the message.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
FOR FURTHER INFORMATION CONTACT:
Isabella Sammons, Deputy General
Counsel, telephone (202) 414–3790 (not
a toll-free number), Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The
telephone number for the
Telecommunications Device for the Deaf
is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
I. Comments
The Federal Housing Finance Agency
(FHFA) invites comment on all aspects
of the proposed regulation, and will take
all relevant comments into
consideration before issuing the final
regulation.
Copies of all comments will be posted
on the FHFA internet Web site at
https://www.fhfa.gov. In addition, copies
of all comments received will be
available for examination by the public
on business days between the hours of
10 a.m. and 3 p.m. at the Federal
Housing Finance Agency, Fourth Floor,
1700 G Street, NW., Washington, DC
20552. To make an appointment to
inspect comments, please call the Office
of General Counsel at (202) 414–3751.
II. Background
The Housing and Economic Recovery
Act of 2008 (HERA), Public Law 110–
289, 122 Stat. 2654, amended the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.) (Safety and
Soundness Act), and the Federal Home
Loan Bank Act (12 U.S.C. 1421–1449) to
establish FHFA as an independent
agency of the Federal Government.1
FHFA was established to oversee the
prudential operations of the Federal
National Mortgage Association, the
Federal Home Loan Mortgage
Corporation (collectively, enterprises),
and the Federal Home Loan Banks
(Banks) (collectively, regulated entities)
and to ensure that they operate in a safe
and sound manner including being
capitalized adequately; foster liquid,
efficient, competitive and resilient
national housing finance markets;
comply with the Safety and Soundness
Act and rules, regulations, guidelines
and orders issued by the Director of
FHFA, and the respective authorizing
statutes of the regulated entities; and
carry out their missions through
activities authorized and consistent
with the Safety and Soundness Act and
their authorizing statutes; and, that the
activities and operations of the
regulated entities are consistent with the
public interest.
The Office of Federal Housing
Enterprise Oversight (OFHEO) and the
Federal Housing Finance Board (FHFB)
were abolished one year after enactment
of the HERA. However, the regulated
entities continue to operate under
regulations promulgated by OFHEO and
FHFB; and such regulations are
enforceable by the Director of FHFA
until such regulations are modified,
terminated, set aside, or superseded by
the Director of FHFA.2
Executive Order 12674, as amended
by Executive Order 12731, authorized
the United States Office of Government
Ethics (OGE) to establish a single,
comprehensive and clear set of
executive-branch standards of conduct.
On August 7, 1992, OGE published the
Standards of Ethical Conduct for
Employees of the Executive Branch
(Standards).3 Codified at 5 CFR part
2635, the Standards took effect on
February 3, 1993, and established
uniform standards of ethical conduct for
all executive branch employees.
With the concurrence of OGE, 5 CFR
2635.105 authorizes executive branch
agencies to publish agency-specific
supplemental regulations necessary to
implement their respective ethics
programs. The FHFA, with the
concurrence of OGE, has determined
that the following supplemental rules
contained in the proposed regulation,
which would add a new 5 CFR chapter
LXXX, consisting of part 9001, are
necessary to implement successfully the
ethics program of FHFA in light of the
2 See
sections 1302 and 1312 of HERA.
57 FR 35006–35067, as corrected at 57 FR
48557 and 57 FR 52583, with additional grace
period extensions at 59 FR 4779–4780, 60 FR 6390–
6391, 60 FR 66857–66858 and 61 FR 40950–40952.
3 See
1 See Division A, titled the ‘‘Federal Housing
Finance Regulatory Reform Act of 2008,’’ Title I,
§ 1101 of HERA.
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unique programs and operations of
FHFA.
III. Section-by-Section Analysis
The following is a section by section
analysis of the proposed regulation.
Section 9001.101
General
Proposed § 9001.101 explains that the
proposed regulation would apply to all
employees of FHFA and would
supplement the Standards found in 5
CFR part 2635. It would also require
that employees of FHFA must comply
with the Standards, this part, guidance,
and procedures established pursuant to
this part, and any additional rules of
conduct that FHFA is authorized to
issue. It also notes that employees
should contact the Designated Agency
Ethics Official (DAEO) if they have
questions about any provision of this
regulation or other ethics-related
matters.
The proposed section also contains
cross-references to other executive
branch ethics regulations and a
subsequent employment restriction of
section 1317D of the Safety and
Soundness Act, 12 U.S.C. 4523,
applicable to certain highly
compensated former FHFA officers and
employees, including the FHFA
Director, along with an annual
employee notification requirement as to
that statutory restriction. Section 1317D
prohibits such highly compensated
former FHFA officers and employees,
and the Director, from accepting
compensation from an enterprise under
section 1317D of the Safety and
Soundness Act for two years after
leaving FHFA.
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Section 9001.102
Definitions
Proposed § 9001.102 defines the key
terms used in the proposed regulation.
Affiliate would be defined as any
entity that controls, is controlled by, or
is under common control with another
entity.
Designated Agency Ethics Official, or
DAEO, as also used in 5 CFR part 2635,
and ‘‘alternate DAEO’’ would be defined
as the individuals so designated by the
Director, FHFA. The DAEO is
responsible for designating agency
ethics officials and ethics designees, as
such terms are used in 5 CFR part 2635.
As proposed, the alternate DAEO would
act as the DAEO in the DAEO’s absence.
Director would be defined as the
Director of FHFA or his or her designee.
Employee would be defined as an
officer or employee of FHFA, including
a special Government employee. For
purposes of this part, it also would be
defined as an individual on detail from
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another agency to FHFA for a period of
more than 30 days.
Enterprise would be defined as the
Federal National Mortgage Association
or the Federal Home Loan Mortgage
Corporation.
Federal Home Loan Bank or Bank
would be defined as a Bank established
under the Federal Home Loan Bank Act;
the term ‘‘Federal Home Loan Banks’’
means, collectively, all the Federal
Home Loan Banks.
Federal Home Loan Bank System
would be defined as the Federal Home
Loan Banks under the supervision of
FHFA.
Regulated entity would be defined as
the Federal National Mortgage
Association and any affiliate thereof; the
Federal Home Loan Mortgage
Corporation and any affiliate thereof; or
any Federal Home Loan Bank; the term
‘‘regulated entities’’ means, collectively,
the Federal National Mortgage
Association and any affiliate thereof; the
Federal Home Loan Mortgage
Corporation and any affiliate thereof;
and the Federal Home Loan Banks.
Safety and Soundness Act would be
defined to mean the Federal Housing
Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4501
et seq.), as amended by the Housing and
Economic Recovery Act of 2008 (HERA),
Public Law 110–289, 122 Stat. 2654
(2008).
Security would be defined as all
interests in debt or equity instruments.
The term includes, without limitation,
secured and unsecured bonds,
debentures, notes, securitized assets and
commercial paper including loans
securitized by mortgages or deeds of
trust and securities backed by such
instruments, as well as all types of
preferred and common stock. The term
encompasses current and contingent
ownership interests including any
beneficial or legal interest derived from
a trust. Such interest includes any right
to acquire or dispose of any long or
short position in such securities and
also includes, without limit, interests
convertible into such securities, as well
as options, rights, warrants, puts, calls
and straddles with respect thereto. The
term shall not, however, be construed to
include deposit accounts, such as
checking, savings, or money market
deposit accounts.
Section 9001.103 Waivers
Proposed § 9001.103 would authorize
the DAEO to grant employees of FHFA
written waivers of any provision of the
proposed FHFA regulation based upon
a determination that the waiver will not
result in conduct inconsistent with 5
CFR part 2635 or otherwise prohibited
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by law, and that application of the
provision would not be necessary to
ensure public confidence in the
impartiality and objectivity with which
the programs of FHFA are administered.
In granting a waiver under proposed
§ 9001.103, the DAEO may require the
employee to take further action,
including executing a written
disqualification statement. This
proposed provision is intended, in
appropriate cases, to ease the burden
that these supplemental regulations as
proposed would impose on employees
of FHFA while ensuring that employees
do not engage in actions or hold
financial interests that may interfere
with the objective and impartial
performance of their official duties.
Section 9001.104
Interests
Prohibited Financial
Proposed § 9001.104(a) would
prohibit FHFA employees and the
employees’ spouse and minor children
from owning or controlling certain
financial interests that are related to or
affected by the operations of FHFA,
such as securities owned, issued,
guaranteed, securitized, or collateralized
by the regulated entities. This
prohibition would not apply to special
Government employees.4 The
prohibition of proposed § 9001.104(a) is
based on the view of FHFA that
permitting FHFA employees and their
spouse and minor children directly or
indirectly to own or control securities
owned, issued, guaranteed, securitized,
or collateralized by the regulated
entities would cause a reasonable
person to question the impartiality with
which FHFA programs are
administered. Specifically, FHFA
believes that there is a direct and
appropriate nexus between the
prohibition against owning or
controlling such securities as applied
both to employees and to the spouses
and minor children of employees and
the efficiency of the service.
In addition, while Federal conflict of
interest statutes and the Standards
prohibit an employee of FHFA from
participating in matters in which the
employee or the employee’s spouse or
minor children have a conflicting
financial interest, FHFA has determined
that a broader ban would be more
effective in ensuring that no reasonable
4 The term ‘‘special Government employee’’ is
defined in 5 CFR 2635.102 to mean ‘‘those executive
branch officers or employees specified in 18 U.S.C.
202(a). A special Government employee is retained,
designated, appointed, or employed to perform
temporary duties either on a full-time or
intermittent basis, with or without compensation,
for a period not to exceed 130 days during any
consecutive 365-day period.’’
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person could question the impartiality
and objectivity of the agency’s actions.
The broader ban of § 9001.104(a)
establishes a clear prohibition that will
be easily understood by observers of
FHFA.
Moreover, the proposed prohibition
would substantially reduce the burden
on the FHFA and FHFA employees to
determine the scope of the prohibition
for each employee. By promulgating a
broad ban that excludes all securities
owned, issued, guaranteed, securitized,
or collateralized by the regulated
entities, proposed § 9001.104(a) would
substantially reduce the need for FHFA
employees, the DAEO, and other agency
ethics officials or counselors to
determine the financial interests
prohibited by each employee’s duties.
The proposed rule should be easier for
FHFA to implement and for employees
to follow.
Proposed § 9001.104(b) also would
attribute to an FHFA employee, or to the
employee’s spouse and minor children,
securities he or she would be prohibited
from holding directly by § 9001.104(a)
that are held by certain described thirdparty entities.
Proposed § 9001.104(c) would permit
an FHFA employee and the employee’s
spouse and minor children to own
interests in publicly-traded or publiclyavailable diversified mutual or other
collective diversified investment funds
that contain within their portfolios
interests that they would be prohibited
from holding by proposed § 9001.104(c).
Under this provision, ownership of such
investment funds would be permitted as
long as the employee or the employee’s
spouse or minor children do not have
the ability to control the fund or its
portfolio, and the fund does not have an
objective or practice of concentrating its
investments in securities of a regulated
entity or the regulated entities generally,
and less than 25 percent of the total
holdings of the fund are comprised of
securities owned, issued, guaranteed,
securitized, or collateralized by one or
more regulated entities.
This exception to proposed
§ 9001.104(a) reflects the view of FHFA
that the prohibition on owning or
controlling securities of the regulated
entities should not be extended to
publicly-traded or publicly-available
mutual funds or other collective
investment funds that are diversified
and over which employees have no
control, since it would be unreasonable
to require employees to divest
themselves of such mutual funds based
on investment decisions in which they
played no role. FHFA believes that
allowing an FHFA employee and the
employee’s spouse and minor children
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to own interests in publicly-traded or
publicly-available diversified mutual
funds and collective investment funds
would not endanger the impartiality or
objectivity of FHFA, even if these funds
held some limited interest in securities
owned, issued, securitized, guaranteed,
or collateralized by one or more of the
regulated entities.
Proposed § 9001.104(d) would require
new employees of FHFA, within 30
days of commencing employment, to
provide to the DAEO in writing all
financial interests acquired prior to the
commencement of their employment
with FHFA that they are prohibited
from holding by § 9001.104(a).
Employees would be required to divest
such interests, within 90 days of the
date reported, unless they receive a
written waiver from the DAEO in
accordance with § 9001.103. The
proposed section would impose a
similar reporting and divestiture
requirement upon employees who
acquire, without specific intent,
financial interests prohibited by
§ 9001.104(a).
Section 9001.105 Outside Employment
The proposed regulation is designed
to balance several important ethical
principles against an employee’s right to
engage in outside activities. Paragraph
(a) of the proposed section would
prohibit an FHFA employee, except for
a special Government employee, from
engaging in paid or unpaid employment
with (1) a person, other than a State or
local government, who is a registered
lobbyist engaged in lobbying activities
concerning the FHFA programs; (2) any
regulated entity, or (3) the Office of
Finance of the Federal Home Loan Bank
System. FHFA is of the view that such
a policy against active participation in
such businesses is necessary to protect
against questions regarding the
impartiality and objectivity of
employees and the administration of the
programs of FHFA. FHFA believes that
it would hinder FHFA in meeting its
missions if members of the public could
question whether employees are using
their public positions or connections at
FHFA to advance alternate careers.
Furthermore, in accordance with
5 CFR 2635.803, FHFA is of the view
that it is necessary or desirable for the
purpose of administering its ethics
program to require FHFA employees to
obtain approval before engaging in
outside employment or activities. An
approval requirement would help to
ensure that potential ethical problems
are resolved before employees begin
outside employment or activities that
could involve a violation of applicable
statutes and standards of conduct.
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Thus, proposed § 9001.105(b) would
provide that an FHFA employee, other
than a special Government employee,
must obtain advance written approval
from the employee’s supervisor and the
concurrence of the DAEO before
engaging in any outside employment.
Proposed paragraph (c) to § 9001.105
broadly defines outside employment to
cover any form of non-Federal
employment or business relationship
involving the provision of personal
services, whether or not for
compensation, other than in the
discharge of official duties. It also
includes writing when done under an
arrangement with another person or
entity for production or publication of
the written product. It does not,
however, include participation in the
activities of nonprofit charitable,
religious, professional, social, fraternal,
educational, recreational, public service,
or civic organizations, unless such
activities are for compensation other
than reimbursement of expenses, the
organization’s activities are devoted
substantially to matters relating to the
employee’s official duties as defined in
5 CFR 2635.807(a)(2)(i)(B) through (E)
and the employee will serve as officer
or director of the organization, or the
activities will involve the provision of
consultative or professional services.
Consultative services is proposed to
mean the provision of personal services
by an employee, including the rendering
of advice or consultation, which
requires advanced knowledge in a field
of science or learning customarily
acquired by a course of specialized
instruction and study in an institution
of higher education, hospital, or similar
facility. Professional services is
proposed to mean the provision of
personal services by an employee,
including the rendering of advice or
consultation, which involves
application of the skills of a profession
as defined in 5 CFR 2636.305(b)(1) or
involves a fiduciary relationship as
defined in 5 CFR 2636.305(b)(2).
A note following proposed paragraph
(c) of § 9001.105 pertains to the special
approval requirement set out in both 18
U.S.C. 203(d) and 205(e), respectively,
for certain representational activities
otherwise covered by the conflict of
interest restrictions on compensation
and activities of employees in claims
against and other matters affecting the
Government. The note, as proposed,
explains that an employee who wishes
to act as agent or attorney for, or
otherwise represent his or her parents,
spouse, children, or any person for
whom, or any estate for which, he or she
is serving as guardian, executor,
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administrator, trustee, or other personal
fiduciary in such matters must obtain
the approval required by law of the
Government official responsible for the
employee’s appointment in addition to
the regulatory approval that would be
required in proposed § 9001.105.
As proposed, § 9001.105(d) sets out
the procedures for requesting prior
approval to engage in outside
employment initially, or within seven
calendar days of a significant change in
the nature or scope of the outside
employment or the employee’s official
position. Proposed paragraph (e) of
§ 9001.105 would provide that approval
would be granted only upon a
determination that the outside
employment is not expected to involve
conduct prohibited by statute or Federal
regulation, including 5 CFR part 2635
and this proposed part.
Proposed § 9001.105(f) would provide
that the DAEO may issue written
instructions governing the submission
of requests for approval of outside
employment, which may exempt
categories of employment from the prior
approval requirement based on a
determination that employment within
those categories would generally be
approved and would likely not involve
conduct prohibited by Federal law or
regulation, including 5 CFR part 2635
and this proposed part.
Section 9001.106 Restrictions
Resulting From Employment of Family
and Household Members
Proposed § 9001.106 would prohibit
an employee of FHFA from participating
in any matter in which a regulated
entity is a party if the regulated entity
employs, as an employee or consultant,
his or her spouse, child, parent, or
sibling, or member of his or her
household unless the DAEO has
authorized the employee to participate
in the matter using the standard in
5 CFR 2635.502(d). Proposed § 9001.106
would require such an employee to
make a written report to the DAEO
within 30 days of the employment by a
regulated entity of the employee’s
spouse, child, parent, sibling, or
member of his or her household. This
requirement is intended to eliminate the
potential for any appearance of
preferential treatment in those instances
where employment of a family member
or a member of the employee’s
household would be likely to raise
questions regarding the appropriateness
of actions taken by the employee or
FHFA.
Section 9001.107 Other Limitations
Proposed § 9001.107(a) would
reference the statutory restriction on
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financial interests applicable to the
Director, the Deputy Director of the
Division of Enterprise Regulation, the
Deputy Director of the Division of
Federal Home Loan Bank Regulation,
and the Deputy Director for Housing
Mission and Goals. These individuals
are subject to additional financial
interest limitations set forth in section
1312(g) of the Safety and Soundness Act
(12 U.S.C. 4512(g)). Section 1312(g)
provides that the Director and each
Deputy Director may not—
(1) Have any direct or indirect
financial interest in any regulated entity
or entity-affiliated party; 5
(2) Hold any office, position, or
employment in any regulated entity or
entity-affiliated party; or
(3) Have served as an executive officer
or director of any regulated entity or
entity-affiliated party at any time during
the 3-year period preceding the date of
appointment or designation of such
individual as Director or Deputy
Director, as applicable.
Proposed paragraph (b) of § 9001.107
would provide that if an employee or
the spouse or minor children of the
employee directly or indirectly owns a
financial interest in a member of a Bank
or in a financial institution such as a
mortgage bank, mortgage broker, bank,
thrift, or other financial institution that
originates, insures, or services
mortgages that are owned, issued,
guaranteed, securitized, or collateralized
by a regulated entity, the employee is
cautioned not to violate the statutory
prohibition against financial conflicts of
interest set forth in 18 U.S.C. 208. The
proposed language would note that the
government-wide de minimis and other
exceptions set forth in 5 CFR 2640.202
are applicable to the ownership or
control of interests in such financial
institutions. Employees are encouraged
to seek a determination from the DAEO
as to whether the financial interest in
the member of a Bank or in the financial
institution creates a financial conflict of
interest or an appearance of a conflict of
interest and whether the employee
should disqualify himself or herself
from participating in an official capacity
in a particular matter involving the
financial institution.
Section 9001.108 Prohibited
Recommendations
Proposed § 9001.108 would prohibit
an employee of FHFA from
recommending, suggesting, or giving
advice to any person with respect to
financial transactions or investment
5 The term ‘‘entity-affiliated party’’ is defined in
section 1301(11) of the Safety and Soundness Act
(12 U.S.C. 4502(11)).
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actions involving the acquisition, sale,
or divestiture of securities of a regulated
entity. The Standards at 5 CFR 2635.703
prohibit an employee from allowing the
improper use of nonpublic information
to further his or her private interest or
that of another, whether through advice
or recommendation or by knowing
unauthorized disclosure. The proposed
section would supplement 5 CFR
2635.703 in that the section expressly
would prohibit FHFA employees from
using or creating the appearance of
using information that is not available to
the general public to further a private
interest. The proposed prohibition is
also intended to eliminate any
misunderstanding or harm that could
result from such a recommendation. For
example, an investor should not be
misled into believing, pursuant to the
recommendation of an FHFA employee,
that the securities of a particular
regulated entity regulated by FHFA is a
sound buy because the investor believes
that the employee may have access to
inside information.
Section 9001.109
of Assets
Prohibited Purchase
Proposed § 9001.109 would prohibit
employees, the spouses of employees
and the minor children of employees of
FHFA from purchasing real or personal
property from the regulated entities
unless it is sold at public auction or by
other means that would ensure that the
selling price of the property is the
asset’s fair market value. It is proposed
as a supplement to the general
prohibition in 5 CFR 2635.702 against
the use of public office for private gain.
Regulatory Impacts
Paperwork Reduction Act
The proposed regulation does not
contain any information collection
requirement that requires the approval
of OMB under the Paperwork Reduction
Act (44 U.S.C. 3501 et seq.).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
number of small entities, small
businesses, or small organizations must
include an initial regulatory flexibility
analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
agency has certified that the regulation
does not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has
considered the impact of the proposed
regulation under the Regulatory
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Flexibility Act. FHFA certifies that the
proposed regulation is not likely to have
a significant economic impact on a
substantial number of small business
entities because the regulation is
applicable only to employees of FHFA.
List of Subjects in 5 CFR Part 9001
Administration, Conflicts of interest,
Ethics, Government employees.
Accordingly, for the reasons stated in
the preamble, FHFA, with the
concurrence of OGE, is proposing to
amend title 5 of the Code of Federal
Regulations by adding a new chapter
LXXX, consisting of part 9001, to read
as follows:
CHAPTER LXXX—FEDERAL HOUSING
FINANCE AGENCY
PART 9001—SUPPLEMENTAL
STANDARDS OF ETHICAL CONDUCT
FOR EMPLOYEES OF THE FEDERAL
HOUSING FINANCE AGENCY
Sec.
9001.101 General.
9001.102 Definitions.
9001.103 Waivers.
9001.104 Prohibited financial interests.
9001.105 Outside employment.
9001.106 Restrictions resulting from
employment of family and household
members.
9001.107 Other limitations.
9001.108 Prohibited recommendations.
9001.109 Prohibited purchase of assets.
Authority: 5 U.S.C. 7301; 5 U.S.C. App.
(Ethics in Government Act of 1978); 12
U.S.C. 4526; 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, 2635.402(c),
2635.403(a), 2635.502(e), 2635.604, 2635.702,
2635.703, 2635.802(a), 2635.803.
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§ 9001.101
General.
(a) Purpose and scope. In accordance
with 5 CFR 2635.105, the purpose of
this regulation is to supplement the
Standards of Ethical Conduct for
Employees of the Executive Branch
contained in 5 CFR part 2635. The
regulation applies to employees of the
Federal Housing Finance Agency
(FHFA). Employees are required to
comply with 5 CFR part 2635, this part,
guidance and procedures established
pursuant to this part, and any additional
rules of conduct that the FHFA is
authorized to issue. Employees should
contact the DAEO if they have questions
about any provision of this regulation or
other ethics-related matters.
(b) Cross-references—(1) Regulations.
FHFA employees are also subject to the
regulations concerning executive branch
financial disclosure contained in 5 CFR
part 2634, the regulations concerning
executive branch financial interests
contained in 5 CFR part 2640, and the
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regulations concerning executive branch
employee responsibilities and conduct
contained in 5 CFR part 735.
(2)(i) Statutory restriction. Section
1319D of the Act, 12 U.S.C. 4523,
prohibits the Director or any former
officer or employee of the FHFA who,
while employed by the FHFA, was
compensated at a rate in excess of the
lowest rate for a position classified
higher than GS–15 of the General
Schedule under section 5107 of title 5,
United States Code, from accepting
compensation from an enterprise during
the two-year period beginning on the
date of his or her separation from
employment by the FHFA.
(ii) Notice to employees. The DAEO
shall notify employees on an annual
basis of the rate of compensation that
triggers the subsequent employment
restriction.
§ 9001.102
Definitions.
For purposes of this part, the term:
Affiliate means any entity that
controls, is controlled by, or is under
common control with another entity.
Designated Agency Ethics Official, or
DAEO, as also used in 5 CFR part 2635,
and ‘‘alternate DAEO’’ mean the
individuals so designated by the
Director, FHFA. The DAEO is
responsible for designating agency
ethics officials and ethics designees, as
such terms are used in 5 CFR part 2635.
The alternate DAEO acts as the DAEO
in the DAEO’s absence.
Director means the Director of FHFA
or his or her designee.
Employee means an officer or
employee of FHFA, including a special
Government employee. For purposes of
this part, it also means an individual on
detail from another agency to FHFA for
a period of more than 30 days.
Enterprise means the Federal National
Mortgage Association or the Federal
Home Loan Mortgage Corporation.
Federal Home Loan Bank or Bank
means a Bank established under the
Federal Home Loan Bank Act; the term
‘‘Federal Home Loan Banks’’ means,
collectively, all the Federal Home Loan
Banks.
Federal Home Loan Bank System
means the Federal Home Loan Banks
under the supervision of the Federal
Housing Finance Agency.
Regulated entity means the Federal
National Mortgage Association and any
affiliate thereof; the Federal Home Loan
Mortgage Corporation and any affiliate
thereof; or any Federal Home Loan
Bank; the term ‘‘regulated entities’’
means, collectively, the Federal
National Mortgage Association and any
affiliate thereof; the Federal Home Loan
Mortgage Corporation and any affiliate
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19913
thereof; and the Federal Home Loan
Banks.
Safety and Soundness Act means the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.), as amended by the
Housing and Economic Recovery Act of
2008 (HERA), Public Law 110–289, 122
Stat. 2654 (2008).
Security means all interests in debt or
equity instruments. The term includes,
without limitation, secured and
unsecured bonds, debentures, notes,
securitized assets and commercial paper
including loans securitized by
mortgages or deeds of trust and
securities backed by such instruments,
as well as all types of preferred and
common stock. The term encompasses
current and contingent ownership
interests including any beneficial or
legal interest derived from a trust. Such
interest includes any right to acquire or
dispose of any long or short position in
such securities and also includes,
without limit, interests convertible into
such securities, as well as options,
rights, warrants, puts, calls and
straddles with respect thereto. The term
shall not, however, be construed to
include deposit accounts, such as
checking, savings, or money market
deposit accounts.
§ 9001.103
Waivers.
(a) General. The DAEO may waive
any provision of this part upon finding
that the waiver will not result in
conduct inconsistent with 5 CFR part
2635 or otherwise prohibited by law,
and that application of the provision is
not necessary to ensure public
confidence in the impartiality and
objectivity with which the programs of
the FHFA are administered. Each waiver
shall be in writing and supported by a
statement of the facts and findings upon
which it is based and may impose
appropriate conditions, including but
not limited to requiring the employee to
execute a written disqualification
statement or an agreement not to acquire
additional securities.
(b) Waiver of prohibitions relating to
ownership or control of securities. The
DAEO may grant a waiver permitting
the employee or the employee’s spouse
or minor children to own or control,
directly or indirectly, any security
prohibited under § 9001.104, if, in
addition to the standards under
paragraph (a) of this section:
(1) Extenuating circumstances exist,
such as ownership or control of the
security was acquired:
(i) Prior to employment with FHFA;
(ii) Through inheritance, gift, merger,
acquisition, or other change in corporate
structure, or otherwise without specific
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intent on the part of the employee, or
employee’s spouse or minor children, to
acquire the security; or
(iii) By an employee’s spouse or
minor children as part of a
compensation package in connection
with employment or prior to marriage to
the employee;
(2) The amount of the prohibited
financial interest has a market value of
less than the de minimis amount set
forth in 5 CFR 2640.202(a);
(3) The employee makes a prompt and
complete written disclosure of the
interest; and
(4) If the employee is required to
disqualify himself or herself from
certain assignments, the disqualification
does not unduly interfere with the full
performance of the employee’s duties.
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§ 9001.104
Prohibited financial interests.
(a) General prohibition. This section
applies to all employees, except special
Government employees. Except as
permitted in paragraph (c) of this
section, an employee or an employee’s
spouse or minor children, shall not
directly or indirectly own or control
securities owned, issued, guaranteed,
securitized, or collateralized by a
regulated entity.
(b) Restrictions arising from thirdparty relationships. If any of the entities
listed in paragraphs (b)(1) through (6) of
this section owns securities that an
employee would be prohibited from
owning directly by paragraph (a) of this
section, the employee is deemed to hold
the securities indirectly. The entities
are—
(1) A partnership in which the
employee or employee’s spouse or
minor children are general partners;
(2) A partnership in which the
employee or employee’s spouse or
minor children individually or jointly
hold more than a 10 percent limited
partnership interest;
(3) A closely held corporation in
which the employee or employee’s
spouse or minor children individually
or jointly hold more than a 10 percent
equity interest;
(4) A trust in which the employee or
employee’s spouse or minor children
have a legal or beneficial interest;
(5) An investment club or similar
informal investment arrangement
between the employee or employee’s
spouse or minor children and others; or
(6) Any other entity in which the
employee or employee’s spouse or
minor children individually or jointly
hold more than a 10 percent equity
interest.
(c) Exceptions to prohibition for
certain interests. Notwithstanding
paragraphs (a) and (b) of this section, an
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employee or an employee’s spouse or
minor children may directly or
indirectly own or control:
(1) A security for which a waiver has
been granted pursuant to § 9001.103;
and
(2) An interest in a publicly-traded or
publicly-available diversified mutual
fund or other collective diversified
investment fund, including a widelyheld pension or other retirement fund if:
(i) Neither the employee, the
employee’s spouse, nor the employee’s
minor children exercise or have the
ability to exercise control over the
financial interests held by the fund; and
(ii) The fund does not indicate in its
prospectus the objective or practice of
concentrating its investments in
securities of a regulated entity or
regulated entities generally, and less
than 25 percent of the total holdings of
the fund are comprised of securities
owned, issued, guaranteed, securitized,
or collateralized by one or more
regulated entities.
(d) Reporting and divestiture. An
employee must provide, in writing, to
the DAEO any financial interest
prohibited under paragraph (a) of this
section acquired prior to the
commencement of employment with the
FHFA or without specific intent, as
through gift, inheritance, or marriage,
within 30 days from the start of
employment or acquisition of such
interest. Such financial interest must be
divested within 90 days from the date
reported unless a waiver is granted in
accordance with § 9001.103.
§ 9001.105
Outside employment.
(a) Prohibited outside employment.
Employees, except special Government
employees, shall not engage in:
(1) Employment with a person or
entity, other than a State or local
government, that is registered as a
lobbyist under the Lobbying Disclosure
Act of 1995 (2 U.S.C. chapter 26) and
engages in lobbying activities
concerning the FHFA programs; or
(2) Employment with any regulated
entity or with the Office of Finance of
the Federal Home Loan Bank System.
(b) Prior approval for other outside
employment. Before engaging in any
outside employment that is not
prohibited under paragraph (a) of this
section, with or without compensation,
an employee of the FHFA, other than a
special Government employee, must
obtain written approval from the
employee’s supervisor and the
concurrence of the DAEO. Nonetheless,
special Government employees remain
subject to other statutory and regulatory
provisions governing their outside
activities, including 18 U.S.C. 203(c)
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and 205(c), as well as applicable
provisions of 5 CFR part 2635.
(c) Definition of outside employment.
For purposes of paragraph (b) of this
section, outside employment means any
form of non-Federal employment or
business relationship involving the
provision of personal services, whether
or not for compensation. It includes, but
is not limited to, services as an officer,
director, employee, agent, advisor,
attorney, consultant, contractor, general
partner, trustee, teacher, or speaker. It
includes writing when done under an
arrangement with another person or
entity for production or publication of
the written product. The definition does
not include positions as trustee for a
family trust for which the only
beneficiaries are the employee, the
employee’s spouse, the employee’s
minor or dependent children, or any
combination thereof. The definition also
does not include participation in the
activities of a nonprofit charitable,
religious, professional, social, fraternal,
educational, recreational, public service
or civic organization, unless:
(1) The employee will receive
compensation other than reimbursement
of expenses;
(2) The organization’s activities are
devoted substantially to matters relating
to the employee’s official duties as
defined in 5 CFR 2635.807(a)(2)(i)(B)
through (E) and the employee will serve
as officer or director of the organization;
or
(3) The activities will involve the
provision of consultative or professional
services. Consultative services means
the provision of personal services by an
employee, including the rendering of
advice or consultation, which requires
advanced knowledge in a field of
science or learning customarily acquired
by a course of specialized instruction
and study in an institution of higher
education, hospital, or similar facility.
Professional services means the
provision of personal services by an
employee, including the rendering of
advice or consultation, which involves
application of the skills of a profession
as defined in 5 CFR 2636.305(b)(1) or
involves a fiduciary relationship as
defined in 5 CFR 2636.305(b)(2).
Note to § 9001.105(c): There is a special
approval requirement set out in both 18
U.S.C. 203(d) and 205(e), respectively, for
certain representational activities otherwise
covered by the conflict of interest restrictions
on compensation and activities of employees
in claims against and other matters affecting
the Government. Thus, an employee who
wishes to act as agent or attorney for, or
otherwise represent his or her parents,
spouse, children, or any person for whom, or
any estate for which, he or she is serving as
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guardian, executor, administrator, trustee, or
other personal fiduciary in such matters must
obtain the approval required by law of the
Government official responsible for the
employee’s appointment in addition to the
regulatory approval required in this section.
parent, sibling, or member of the
employee’s household being employed
by the regulated entity, the employee
shall provide in writing notice of such
employment to the DAEO.
(d) Procedure for requesting
approval—(1) The approval required by
paragraph (b) of this section shall be
requested by e-mail or other form of
written correspondence in advance of
engaging in outside employment as
defined in paragraph (c) of this section.
(2) The request for approval to engage
in outside employment or certain other
activities shall set forth, at a minimum:
(i) The name of the employer or
organization;
(ii) The nature of the legal activity or
other work to be performed;
(iii) The title of the position; and
(iv) The estimated duration of the
outside employment.
(3) Upon a significant change in the
nature or scope of the outside
employment or in the employee’s
official position within FHFA, the
employee must, within seven calendar
days of the change, submit a revised
request for approval.
(e) Standard for approval. The DAEO
may grant the approval required by
paragraph (b) of this section only upon
his or her written determination that the
outside employment is not expected to
involve conduct prohibited by statute or
Federal regulation, including 5 CFR part
2635 and this part.
(f) Issuance of instructions. The DAEO
may issue written instructions
governing the submission of requests for
approval of outside employment under
paragraph (d) of this section. The
instructions may exempt categories of
employment from the prior approval
requirement of paragraph (b) of this
section based on a determination by the
DAEO that employment within those
categories of employment would
generally be approved and is not likely
to involve conduct prohibited by
Federal law or regulation, including 5
CFR part 2635 and this part.
§ 9001.107
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§ 9001.106 Restrictions resulting from
employment of family and household
members.
(a) Disqualification of employee. An
employee may not participate in any
particular matter in which a regulated
entity is a party if the regulated entity
employs as an employee or a consultant
his or her spouse, child, parent, or
sibling, or member of his or her
household unless the DAEO has
authorized the employee to participate
in the matter using the standard set
forth in 5 CFR 2635.502(d).
(b) Reporting certain relationships.
Within 30 days of the spouse, child,
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Other limitations.
(a) Director and Deputy Directors. The
Director, the Deputy Director of the
Division of Enterprise Regulation, the
Deputy Director of the Division of
Federal Home Loan Bank Regulation,
and the Deputy Director for Housing
Mission and Goals are subject to
additional financial interest limitations
as set forth in section 1312(g) of the
Safety and Soundness Act, 12 U.S.C.
4512(g).
(b) Financial interests in Bank
members and other financial
institutions. If an employee or the
spouse or minor children of the
employee directly or indirectly owns a
financial interest in a member of a Bank
or in a financial institution such as a
mortgage bank, mortgage broker, bank,
thrift, or other financial institution that
originates, insures, or services
mortgages that are owned, guaranteed,
securitized, or collateralized by a
regulated entity, the employee is
cautioned not to violate the statutory
prohibition against financial conflicts of
interest set forth in 18 U.S.C. 208. The
government-wide de minimis and other
exceptions set forth in 5 CFR 2640.202
are applicable to the ownership or
control of interests in such financial
institutions. Employees are encouraged
to seek a determination from the DAEO
as to whether the financial interest in
the member of the Bank or in the
financial institution creates a financial
conflict of interest or an appearance of
a conflict of interest and whether the
employee should disqualify himself or
herself from participating in an official
capacity in a particular matter involving
the financial institution.
§ 9001.108
Prohibited recommendations.
Employees shall not make any
recommendation or suggestion, directly
or indirectly, concerning the
acquisition, sale, or divestiture of
securities of a regulated entity.
§ 9001.109
Prohibited purchase of assets.
An employee or the employee’s
spouse or minor children shall not
purchase, directly or indirectly, any real
or personal property from a regulated
entity, unless it is sold at public auction
or by other means which would assure
that the selling price is the asset’s fair
market value.
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19915
Dated: January 18, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance
Agency.
Approved: April 8, 2010.
Robert I. Cusick,
Director, Office of Government Ethics.
[FR Doc. 2010–8649 Filed 4–15–10; 8:45 am]
BILLING CODE 8070–01–P
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection
Service
9 CFR Part 94
[Docket No. APHIS-2009-0034]
RIN 0579-AD12
Changes in Disease Status of the
Brazilian State of Santa Catarina with
Regard to Certain Ruminant and Swine
Diseases
AGENCY: Animal and Plant Health
Inspection Service, USDA.
ACTION: Proposed rule.
SUMMARY: We are proposing to amend
the regulations governing the
importation of certain animals and
animal products by adding the Brazilian
State of Santa Catarina to the list of
regions we recognize as free of foot-andmouth disease, rinderpest, swine
vesicular disease, classical swine fever,
and African swine fever. We are
proposing this action at the request of
the Government of Brazil and after
conducting a risk evaluation that
concludes that the Brazilian State of
Santa Catarina is free of these diseases.
This proposed action would relieve
certain restrictions on the importation
into the United States of live swine,
swine semen, pork meat, pork products,
live ruminants, ruminant semen,
ruminant meat, and ruminant products
from Santa Catarina while continuing to
protect against the introduction of these
diseases into the United States.
DATES: We will consider all comments
that we receive on or before June 15,
2010.
ADDRESSES: You may submit comments
by either of the following methods:
∑ Federal eRulemaking Portal: Go to
(https://www.regulations.gov/
fdmspublic/component/main?main=
DocketDetail&d=APHIS-2009-0034) to
submit or view comments and to view
supporting and related materials
available electronically.
∑ Postal Mail/Commercial Delivery:
Please send two copies of your comment
to Docket No. APHIS-2009-0034,
E:\FR\FM\16APP1.SGM
16APP1
Agencies
[Federal Register Volume 75, Number 73 (Friday, April 16, 2010)]
[Proposed Rules]
[Pages 19909-19915]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8649]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 75, No. 73 / Friday, April 16, 2010 /
Proposed Rules
[[Page 19909]]
FEDERAL HOUSING FINANCE AGENCY
5 CFR Chapter LXXX
RINs 2590-AA02, 3209-AA15
Supplemental Standards of Ethical Conduct for Employees of the
Federal Housing Finance Agency
AGENCY: Federal Housing Finance Agency.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing and
seeking comment on a proposed regulation, with the concurrence of the
Office of Government Ethics, which would supplement the Standards of
Ethical Conduct for Employees of the Executive Branch. To ensure a
comprehensive and effective ethics program at FHFA and to address
ethical issues unique to FHFA, the proposed regulation would establish
prohibitions on the ownership of certain financial interests and
restrictions on outside employment and business activities.
DATES: Comments regarding the notice of proposed rulemaking must be
received on or before May 17, 2010. For additional information, see
SUPPLEMENTARY INFORMATION.
ADDRESSES: You may submit your comments on the proposed rulemaking,
identified by ``RIN 2590-AA02,'' by any of the following methods:
U.S. Mail, United Parcel Service, Federal Express, or
Other Mail Service: The mailing address for comments is: Alfred M.
Pollard, General Counsel; Attention: Comments/RIN 2590-AA02, Federal
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington,
DC 20552.
Hand Delivery/Courier: The hand delivery address is:
Alfred M. Pollard, General Counsel; Attention: Comments/RIN 2590-AA02,
Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552. The package should be logged at the Guard Desk,
First Floor, on business days between 9 a.m. and 5 p.m.
E-mail: Comments to Alfred M. Pollard, General Counsel,
may be sent by e-mail at RegComments@FHFA.gov. Please include ``RIN
2590-AA02'' in the subject line of the message.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
FOR FURTHER INFORMATION CONTACT: Isabella Sammons, Deputy General
Counsel, telephone (202) 414-3790 (not a toll-free number), Federal
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington,
DC 20552. The telephone number for the Telecommunications Device for
the Deaf is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Comments
The Federal Housing Finance Agency (FHFA) invites comment on all
aspects of the proposed regulation, and will take all relevant comments
into consideration before issuing the final regulation.
Copies of all comments will be posted on the FHFA internet Web site
at https://www.fhfa.gov. In addition, copies of all comments received
will be available for examination by the public on business days
between the hours of 10 a.m. and 3 p.m. at the Federal Housing Finance
Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make
an appointment to inspect comments, please call the Office of General
Counsel at (202) 414-3751.
II. Background
The Housing and Economic Recovery Act of 2008 (HERA), Public Law
110-289, 122 Stat. 2654, amended the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.)
(Safety and Soundness Act), and the Federal Home Loan Bank Act (12
U.S.C. 1421-1449) to establish FHFA as an independent agency of the
Federal Government.\1\ FHFA was established to oversee the prudential
operations of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation (collectively, enterprises), and the
Federal Home Loan Banks (Banks) (collectively, regulated entities) and
to ensure that they operate in a safe and sound manner including being
capitalized adequately; foster liquid, efficient, competitive and
resilient national housing finance markets; comply with the Safety and
Soundness Act and rules, regulations, guidelines and orders issued by
the Director of FHFA, and the respective authorizing statutes of the
regulated entities; and carry out their missions through activities
authorized and consistent with the Safety and Soundness Act and their
authorizing statutes; and, that the activities and operations of the
regulated entities are consistent with the public interest.
---------------------------------------------------------------------------
\1\ See Division A, titled the ``Federal Housing Finance
Regulatory Reform Act of 2008,'' Title I, Sec. 1101 of HERA.
---------------------------------------------------------------------------
The Office of Federal Housing Enterprise Oversight (OFHEO) and the
Federal Housing Finance Board (FHFB) were abolished one year after
enactment of the HERA. However, the regulated entities continue to
operate under regulations promulgated by OFHEO and FHFB; and such
regulations are enforceable by the Director of FHFA until such
regulations are modified, terminated, set aside, or superseded by the
Director of FHFA.\2\
---------------------------------------------------------------------------
\2\ See sections 1302 and 1312 of HERA.
---------------------------------------------------------------------------
Executive Order 12674, as amended by Executive Order 12731,
authorized the United States Office of Government Ethics (OGE) to
establish a single, comprehensive and clear set of executive-branch
standards of conduct. On August 7, 1992, OGE published the Standards of
Ethical Conduct for Employees of the Executive Branch (Standards).\3\
Codified at 5 CFR part 2635, the Standards took effect on February 3,
1993, and established uniform standards of ethical conduct for all
executive branch employees.
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\3\ See 57 FR 35006-35067, as corrected at 57 FR 48557 and 57 FR
52583, with additional grace period extensions at 59 FR 4779-4780,
60 FR 6390-6391, 60 FR 66857-66858 and 61 FR 40950-40952.
---------------------------------------------------------------------------
With the concurrence of OGE, 5 CFR 2635.105 authorizes executive
branch agencies to publish agency-specific supplemental regulations
necessary to implement their respective ethics programs. The FHFA, with
the concurrence of OGE, has determined that the following supplemental
rules contained in the proposed regulation, which would add a new 5 CFR
chapter LXXX, consisting of part 9001, are necessary to implement
successfully the ethics program of FHFA in light of the
[[Page 19910]]
unique programs and operations of FHFA.
III. Section-by-Section Analysis
The following is a section by section analysis of the proposed
regulation.
Section 9001.101 General
Proposed Sec. 9001.101 explains that the proposed regulation would
apply to all employees of FHFA and would supplement the Standards found
in 5 CFR part 2635. It would also require that employees of FHFA must
comply with the Standards, this part, guidance, and procedures
established pursuant to this part, and any additional rules of conduct
that FHFA is authorized to issue. It also notes that employees should
contact the Designated Agency Ethics Official (DAEO) if they have
questions about any provision of this regulation or other ethics-
related matters.
The proposed section also contains cross-references to other
executive branch ethics regulations and a subsequent employment
restriction of section 1317D of the Safety and Soundness Act, 12 U.S.C.
4523, applicable to certain highly compensated former FHFA officers and
employees, including the FHFA Director, along with an annual employee
notification requirement as to that statutory restriction. Section
1317D prohibits such highly compensated former FHFA officers and
employees, and the Director, from accepting compensation from an
enterprise under section 1317D of the Safety and Soundness Act for two
years after leaving FHFA.
Section 9001.102 Definitions
Proposed Sec. 9001.102 defines the key terms used in the proposed
regulation.
Affiliate would be defined as any entity that controls, is
controlled by, or is under common control with another entity.
Designated Agency Ethics Official, or DAEO, as also used in 5 CFR
part 2635, and ``alternate DAEO'' would be defined as the individuals
so designated by the Director, FHFA. The DAEO is responsible for
designating agency ethics officials and ethics designees, as such terms
are used in 5 CFR part 2635. As proposed, the alternate DAEO would act
as the DAEO in the DAEO's absence.
Director would be defined as the Director of FHFA or his or her
designee.
Employee would be defined as an officer or employee of FHFA,
including a special Government employee. For purposes of this part, it
also would be defined as an individual on detail from another agency to
FHFA for a period of more than 30 days.
Enterprise would be defined as the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation.
Federal Home Loan Bank or Bank would be defined as a Bank
established under the Federal Home Loan Bank Act; the term ``Federal
Home Loan Banks'' means, collectively, all the Federal Home Loan Banks.
Federal Home Loan Bank System would be defined as the Federal Home
Loan Banks under the supervision of FHFA.
Regulated entity would be defined as the Federal National Mortgage
Association and any affiliate thereof; the Federal Home Loan Mortgage
Corporation and any affiliate thereof; or any Federal Home Loan Bank;
the term ``regulated entities'' means, collectively, the Federal
National Mortgage Association and any affiliate thereof; the Federal
Home Loan Mortgage Corporation and any affiliate thereof; and the
Federal Home Loan Banks.
Safety and Soundness Act would be defined to mean the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.), as amended by the Housing and Economic Recovery
Act of 2008 (HERA), Public Law 110-289, 122 Stat. 2654 (2008).
Security would be defined as all interests in debt or equity
instruments. The term includes, without limitation, secured and
unsecured bonds, debentures, notes, securitized assets and commercial
paper including loans securitized by mortgages or deeds of trust and
securities backed by such instruments, as well as all types of
preferred and common stock. The term encompasses current and contingent
ownership interests including any beneficial or legal interest derived
from a trust. Such interest includes any right to acquire or dispose of
any long or short position in such securities and also includes,
without limit, interests convertible into such securities, as well as
options, rights, warrants, puts, calls and straddles with respect
thereto. The term shall not, however, be construed to include deposit
accounts, such as checking, savings, or money market deposit accounts.
Section 9001.103 Waivers
Proposed Sec. 9001.103 would authorize the DAEO to grant employees
of FHFA written waivers of any provision of the proposed FHFA
regulation based upon a determination that the waiver will not result
in conduct inconsistent with 5 CFR part 2635 or otherwise prohibited by
law, and that application of the provision would not be necessary to
ensure public confidence in the impartiality and objectivity with which
the programs of FHFA are administered. In granting a waiver under
proposed Sec. 9001.103, the DAEO may require the employee to take
further action, including executing a written disqualification
statement. This proposed provision is intended, in appropriate cases,
to ease the burden that these supplemental regulations as proposed
would impose on employees of FHFA while ensuring that employees do not
engage in actions or hold financial interests that may interfere with
the objective and impartial performance of their official duties.
Section 9001.104 Prohibited Financial Interests
Proposed Sec. 9001.104(a) would prohibit FHFA employees and the
employees' spouse and minor children from owning or controlling certain
financial interests that are related to or affected by the operations
of FHFA, such as securities owned, issued, guaranteed, securitized, or
collateralized by the regulated entities. This prohibition would not
apply to special Government employees.\4\ The prohibition of proposed
Sec. 9001.104(a) is based on the view of FHFA that permitting FHFA
employees and their spouse and minor children directly or indirectly to
own or control securities owned, issued, guaranteed, securitized, or
collateralized by the regulated entities would cause a reasonable
person to question the impartiality with which FHFA programs are
administered. Specifically, FHFA believes that there is a direct and
appropriate nexus between the prohibition against owning or controlling
such securities as applied both to employees and to the spouses and
minor children of employees and the efficiency of the service.
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\4\ The term ``special Government employee'' is defined in 5 CFR
2635.102 to mean ``those executive branch officers or employees
specified in 18 U.S.C. 202(a). A special Government employee is
retained, designated, appointed, or employed to perform temporary
duties either on a full-time or intermittent basis, with or without
compensation, for a period not to exceed 130 days during any
consecutive 365-day period.''
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In addition, while Federal conflict of interest statutes and the
Standards prohibit an employee of FHFA from participating in matters in
which the employee or the employee's spouse or minor children have a
conflicting financial interest, FHFA has determined that a broader ban
would be more effective in ensuring that no reasonable
[[Page 19911]]
person could question the impartiality and objectivity of the agency's
actions. The broader ban of Sec. 9001.104(a) establishes a clear
prohibition that will be easily understood by observers of FHFA.
Moreover, the proposed prohibition would substantially reduce the
burden on the FHFA and FHFA employees to determine the scope of the
prohibition for each employee. By promulgating a broad ban that
excludes all securities owned, issued, guaranteed, securitized, or
collateralized by the regulated entities, proposed Sec. 9001.104(a)
would substantially reduce the need for FHFA employees, the DAEO, and
other agency ethics officials or counselors to determine the financial
interests prohibited by each employee's duties. The proposed rule
should be easier for FHFA to implement and for employees to follow.
Proposed Sec. 9001.104(b) also would attribute to an FHFA
employee, or to the employee's spouse and minor children, securities he
or she would be prohibited from holding directly by Sec. 9001.104(a)
that are held by certain described third-party entities.
Proposed Sec. 9001.104(c) would permit an FHFA employee and the
employee's spouse and minor children to own interests in publicly-
traded or publicly-available diversified mutual or other collective
diversified investment funds that contain within their portfolios
interests that they would be prohibited from holding by proposed Sec.
9001.104(c). Under this provision, ownership of such investment funds
would be permitted as long as the employee or the employee's spouse or
minor children do not have the ability to control the fund or its
portfolio, and the fund does not have an objective or practice of
concentrating its investments in securities of a regulated entity or
the regulated entities generally, and less than 25 percent of the total
holdings of the fund are comprised of securities owned, issued,
guaranteed, securitized, or collateralized by one or more regulated
entities.
This exception to proposed Sec. 9001.104(a) reflects the view of
FHFA that the prohibition on owning or controlling securities of the
regulated entities should not be extended to publicly-traded or
publicly-available mutual funds or other collective investment funds
that are diversified and over which employees have no control, since it
would be unreasonable to require employees to divest themselves of such
mutual funds based on investment decisions in which they played no
role. FHFA believes that allowing an FHFA employee and the employee's
spouse and minor children to own interests in publicly-traded or
publicly-available diversified mutual funds and collective investment
funds would not endanger the impartiality or objectivity of FHFA, even
if these funds held some limited interest in securities owned, issued,
securitized, guaranteed, or collateralized by one or more of the
regulated entities.
Proposed Sec. 9001.104(d) would require new employees of FHFA,
within 30 days of commencing employment, to provide to the DAEO in
writing all financial interests acquired prior to the commencement of
their employment with FHFA that they are prohibited from holding by
Sec. 9001.104(a). Employees would be required to divest such
interests, within 90 days of the date reported, unless they receive a
written waiver from the DAEO in accordance with Sec. 9001.103. The
proposed section would impose a similar reporting and divestiture
requirement upon employees who acquire, without specific intent,
financial interests prohibited by Sec. 9001.104(a).
Section 9001.105 Outside Employment
The proposed regulation is designed to balance several important
ethical principles against an employee's right to engage in outside
activities. Paragraph (a) of the proposed section would prohibit an
FHFA employee, except for a special Government employee, from engaging
in paid or unpaid employment with (1) a person, other than a State or
local government, who is a registered lobbyist engaged in lobbying
activities concerning the FHFA programs; (2) any regulated entity, or
(3) the Office of Finance of the Federal Home Loan Bank System. FHFA is
of the view that such a policy against active participation in such
businesses is necessary to protect against questions regarding the
impartiality and objectivity of employees and the administration of the
programs of FHFA. FHFA believes that it would hinder FHFA in meeting
its missions if members of the public could question whether employees
are using their public positions or connections at FHFA to advance
alternate careers.
Furthermore, in accordance with 5 CFR 2635.803, FHFA is of the view
that it is necessary or desirable for the purpose of administering its
ethics program to require FHFA employees to obtain approval before
engaging in outside employment or activities. An approval requirement
would help to ensure that potential ethical problems are resolved
before employees begin outside employment or activities that could
involve a violation of applicable statutes and standards of conduct.
Thus, proposed Sec. 9001.105(b) would provide that an FHFA
employee, other than a special Government employee, must obtain advance
written approval from the employee's supervisor and the concurrence of
the DAEO before engaging in any outside employment. Proposed paragraph
(c) to Sec. 9001.105 broadly defines outside employment to cover any
form of non-Federal employment or business relationship involving the
provision of personal services, whether or not for compensation, other
than in the discharge of official duties. It also includes writing when
done under an arrangement with another person or entity for production
or publication of the written product. It does not, however, include
participation in the activities of nonprofit charitable, religious,
professional, social, fraternal, educational, recreational, public
service, or civic organizations, unless such activities are for
compensation other than reimbursement of expenses, the organization's
activities are devoted substantially to matters relating to the
employee's official duties as defined in 5 CFR 2635.807(a)(2)(i)(B)
through (E) and the employee will serve as officer or director of the
organization, or the activities will involve the provision of
consultative or professional services. Consultative services is
proposed to mean the provision of personal services by an employee,
including the rendering of advice or consultation, which requires
advanced knowledge in a field of science or learning customarily
acquired by a course of specialized instruction and study in an
institution of higher education, hospital, or similar facility.
Professional services is proposed to mean the provision of personal
services by an employee, including the rendering of advice or
consultation, which involves application of the skills of a profession
as defined in 5 CFR 2636.305(b)(1) or involves a fiduciary relationship
as defined in 5 CFR 2636.305(b)(2).
A note following proposed paragraph (c) of Sec. 9001.105 pertains
to the special approval requirement set out in both 18 U.S.C. 203(d)
and 205(e), respectively, for certain representational activities
otherwise covered by the conflict of interest restrictions on
compensation and activities of employees in claims against and other
matters affecting the Government. The note, as proposed, explains that
an employee who wishes to act as agent or attorney for, or otherwise
represent his or her parents, spouse, children, or any person for whom,
or any estate for which, he or she is serving as guardian, executor,
[[Page 19912]]
administrator, trustee, or other personal fiduciary in such matters
must obtain the approval required by law of the Government official
responsible for the employee's appointment in addition to the
regulatory approval that would be required in proposed Sec. 9001.105.
As proposed, Sec. 9001.105(d) sets out the procedures for
requesting prior approval to engage in outside employment initially, or
within seven calendar days of a significant change in the nature or
scope of the outside employment or the employee's official position.
Proposed paragraph (e) of Sec. 9001.105 would provide that approval
would be granted only upon a determination that the outside employment
is not expected to involve conduct prohibited by statute or Federal
regulation, including 5 CFR part 2635 and this proposed part.
Proposed Sec. 9001.105(f) would provide that the DAEO may issue
written instructions governing the submission of requests for approval
of outside employment, which may exempt categories of employment from
the prior approval requirement based on a determination that employment
within those categories would generally be approved and would likely
not involve conduct prohibited by Federal law or regulation, including
5 CFR part 2635 and this proposed part.
Section 9001.106 Restrictions Resulting From Employment of Family and
Household Members
Proposed Sec. 9001.106 would prohibit an employee of FHFA from
participating in any matter in which a regulated entity is a party if
the regulated entity employs, as an employee or consultant, his or her
spouse, child, parent, or sibling, or member of his or her household
unless the DAEO has authorized the employee to participate in the
matter using the standard in 5 CFR 2635.502(d). Proposed Sec. 9001.106
would require such an employee to make a written report to the DAEO
within 30 days of the employment by a regulated entity of the
employee's spouse, child, parent, sibling, or member of his or her
household. This requirement is intended to eliminate the potential for
any appearance of preferential treatment in those instances where
employment of a family member or a member of the employee's household
would be likely to raise questions regarding the appropriateness of
actions taken by the employee or FHFA.
Section 9001.107 Other Limitations
Proposed Sec. 9001.107(a) would reference the statutory
restriction on financial interests applicable to the Director, the
Deputy Director of the Division of Enterprise Regulation, the Deputy
Director of the Division of Federal Home Loan Bank Regulation, and the
Deputy Director for Housing Mission and Goals. These individuals are
subject to additional financial interest limitations set forth in
section 1312(g) of the Safety and Soundness Act (12 U.S.C. 4512(g)).
Section 1312(g) provides that the Director and each Deputy Director may
not--
(1) Have any direct or indirect financial interest in any regulated
entity or entity-affiliated party; \5\
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\5\ The term ``entity-affiliated party'' is defined in section
1301(11) of the Safety and Soundness Act (12 U.S.C. 4502(11)).
---------------------------------------------------------------------------
(2) Hold any office, position, or employment in any regulated
entity or entity-affiliated party; or
(3) Have served as an executive officer or director of any
regulated entity or entity-affiliated party at any time during the 3-
year period preceding the date of appointment or designation of such
individual as Director or Deputy Director, as applicable.
Proposed paragraph (b) of Sec. 9001.107 would provide that if an
employee or the spouse or minor children of the employee directly or
indirectly owns a financial interest in a member of a Bank or in a
financial institution such as a mortgage bank, mortgage broker, bank,
thrift, or other financial institution that originates, insures, or
services mortgages that are owned, issued, guaranteed, securitized, or
collateralized by a regulated entity, the employee is cautioned not to
violate the statutory prohibition against financial conflicts of
interest set forth in 18 U.S.C. 208. The proposed language would note
that the government-wide de minimis and other exceptions set forth in 5
CFR 2640.202 are applicable to the ownership or control of interests in
such financial institutions. Employees are encouraged to seek a
determination from the DAEO as to whether the financial interest in the
member of a Bank or in the financial institution creates a financial
conflict of interest or an appearance of a conflict of interest and
whether the employee should disqualify himself or herself from
participating in an official capacity in a particular matter involving
the financial institution.
Section 9001.108 Prohibited Recommendations
Proposed Sec. 9001.108 would prohibit an employee of FHFA from
recommending, suggesting, or giving advice to any person with respect
to financial transactions or investment actions involving the
acquisition, sale, or divestiture of securities of a regulated entity.
The Standards at 5 CFR 2635.703 prohibit an employee from allowing the
improper use of nonpublic information to further his or her private
interest or that of another, whether through advice or recommendation
or by knowing unauthorized disclosure. The proposed section would
supplement 5 CFR 2635.703 in that the section expressly would prohibit
FHFA employees from using or creating the appearance of using
information that is not available to the general public to further a
private interest. The proposed prohibition is also intended to
eliminate any misunderstanding or harm that could result from such a
recommendation. For example, an investor should not be misled into
believing, pursuant to the recommendation of an FHFA employee, that the
securities of a particular regulated entity regulated by FHFA is a
sound buy because the investor believes that the employee may have
access to inside information.
Section 9001.109 Prohibited Purchase of Assets
Proposed Sec. 9001.109 would prohibit employees, the spouses of
employees and the minor children of employees of FHFA from purchasing
real or personal property from the regulated entities unless it is sold
at public auction or by other means that would ensure that the selling
price of the property is the asset's fair market value. It is proposed
as a supplement to the general prohibition in 5 CFR 2635.702 against
the use of public office for private gain.
Regulatory Impacts
Paperwork Reduction Act
The proposed regulation does not contain any information collection
requirement that requires the approval of OMB under the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation does not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the
proposed regulation under the Regulatory
[[Page 19913]]
Flexibility Act. FHFA certifies that the proposed regulation is not
likely to have a significant economic impact on a substantial number of
small business entities because the regulation is applicable only to
employees of FHFA.
List of Subjects in 5 CFR Part 9001
Administration, Conflicts of interest, Ethics, Government
employees.
Accordingly, for the reasons stated in the preamble, FHFA, with the
concurrence of OGE, is proposing to amend title 5 of the Code of
Federal Regulations by adding a new chapter LXXX, consisting of part
9001, to read as follows:
CHAPTER LXXX--FEDERAL HOUSING FINANCE AGENCY
PART 9001--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE FEDERAL HOUSING FINANCE AGENCY
Sec.
9001.101 General.
9001.102 Definitions.
9001.103 Waivers.
9001.104 Prohibited financial interests.
9001.105 Outside employment.
9001.106 Restrictions resulting from employment of family and
household members.
9001.107 Other limitations.
9001.108 Prohibited recommendations.
9001.109 Prohibited purchase of assets.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 12 U.S.C. 4526; 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, 2635.402(c), 2635.403(a),
2635.502(e), 2635.604, 2635.702, 2635.703, 2635.802(a), 2635.803.
Sec. 9001.101 General.
(a) Purpose and scope. In accordance with 5 CFR 2635.105, the
purpose of this regulation is to supplement the Standards of Ethical
Conduct for Employees of the Executive Branch contained in 5 CFR part
2635. The regulation applies to employees of the Federal Housing
Finance Agency (FHFA). Employees are required to comply with 5 CFR part
2635, this part, guidance and procedures established pursuant to this
part, and any additional rules of conduct that the FHFA is authorized
to issue. Employees should contact the DAEO if they have questions
about any provision of this regulation or other ethics-related matters.
(b) Cross-references--(1) Regulations. FHFA employees are also
subject to the regulations concerning executive branch financial
disclosure contained in 5 CFR part 2634, the regulations concerning
executive branch financial interests contained in 5 CFR part 2640, and
the regulations concerning executive branch employee responsibilities
and conduct contained in 5 CFR part 735.
(2)(i) Statutory restriction. Section 1319D of the Act, 12 U.S.C.
4523, prohibits the Director or any former officer or employee of the
FHFA who, while employed by the FHFA, was compensated at a rate in
excess of the lowest rate for a position classified higher than GS-15
of the General Schedule under section 5107 of title 5, United States
Code, from accepting compensation from an enterprise during the two-
year period beginning on the date of his or her separation from
employment by the FHFA.
(ii) Notice to employees. The DAEO shall notify employees on an
annual basis of the rate of compensation that triggers the subsequent
employment restriction.
Sec. 9001.102 Definitions.
For purposes of this part, the term:
Affiliate means any entity that controls, is controlled by, or is
under common control with another entity.
Designated Agency Ethics Official, or DAEO, as also used in 5 CFR
part 2635, and ``alternate DAEO'' mean the individuals so designated by
the Director, FHFA. The DAEO is responsible for designating agency
ethics officials and ethics designees, as such terms are used in 5 CFR
part 2635. The alternate DAEO acts as the DAEO in the DAEO's absence.
Director means the Director of FHFA or his or her designee.
Employee means an officer or employee of FHFA, including a special
Government employee. For purposes of this part, it also means an
individual on detail from another agency to FHFA for a period of more
than 30 days.
Enterprise means the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation.
Federal Home Loan Bank or Bank means a Bank established under the
Federal Home Loan Bank Act; the term ``Federal Home Loan Banks'' means,
collectively, all the Federal Home Loan Banks.
Federal Home Loan Bank System means the Federal Home Loan Banks
under the supervision of the Federal Housing Finance Agency.
Regulated entity means the Federal National Mortgage Association
and any affiliate thereof; the Federal Home Loan Mortgage Corporation
and any affiliate thereof; or any Federal Home Loan Bank; the term
``regulated entities'' means, collectively, the Federal National
Mortgage Association and any affiliate thereof; the Federal Home Loan
Mortgage Corporation and any affiliate thereof; and the Federal Home
Loan Banks.
Safety and Soundness Act means the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as
amended by the Housing and Economic Recovery Act of 2008 (HERA), Public
Law 110-289, 122 Stat. 2654 (2008).
Security means all interests in debt or equity instruments. The
term includes, without limitation, secured and unsecured bonds,
debentures, notes, securitized assets and commercial paper including
loans securitized by mortgages or deeds of trust and securities backed
by such instruments, as well as all types of preferred and common
stock. The term encompasses current and contingent ownership interests
including any beneficial or legal interest derived from a trust. Such
interest includes any right to acquire or dispose of any long or short
position in such securities and also includes, without limit, interests
convertible into such securities, as well as options, rights, warrants,
puts, calls and straddles with respect thereto. The term shall not,
however, be construed to include deposit accounts, such as checking,
savings, or money market deposit accounts.
Sec. 9001.103 Waivers.
(a) General. The DAEO may waive any provision of this part upon
finding that the waiver will not result in conduct inconsistent with 5
CFR part 2635 or otherwise prohibited by law, and that application of
the provision is not necessary to ensure public confidence in the
impartiality and objectivity with which the programs of the FHFA are
administered. Each waiver shall be in writing and supported by a
statement of the facts and findings upon which it is based and may
impose appropriate conditions, including but not limited to requiring
the employee to execute a written disqualification statement or an
agreement not to acquire additional securities.
(b) Waiver of prohibitions relating to ownership or control of
securities. The DAEO may grant a waiver permitting the employee or the
employee's spouse or minor children to own or control, directly or
indirectly, any security prohibited under Sec. 9001.104, if, in
addition to the standards under paragraph (a) of this section:
(1) Extenuating circumstances exist, such as ownership or control
of the security was acquired:
(i) Prior to employment with FHFA;
(ii) Through inheritance, gift, merger, acquisition, or other
change in corporate structure, or otherwise without specific
[[Page 19914]]
intent on the part of the employee, or employee's spouse or minor
children, to acquire the security; or
(iii) By an employee's spouse or minor children as part of a
compensation package in connection with employment or prior to marriage
to the employee;
(2) The amount of the prohibited financial interest has a market
value of less than the de minimis amount set forth in 5 CFR
2640.202(a);
(3) The employee makes a prompt and complete written disclosure of
the interest; and
(4) If the employee is required to disqualify himself or herself
from certain assignments, the disqualification does not unduly
interfere with the full performance of the employee's duties.
Sec. 9001.104 Prohibited financial interests.
(a) General prohibition. This section applies to all employees,
except special Government employees. Except as permitted in paragraph
(c) of this section, an employee or an employee's spouse or minor
children, shall not directly or indirectly own or control securities
owned, issued, guaranteed, securitized, or collateralized by a
regulated entity.
(b) Restrictions arising from third-party relationships. If any of
the entities listed in paragraphs (b)(1) through (6) of this section
owns securities that an employee would be prohibited from owning
directly by paragraph (a) of this section, the employee is deemed to
hold the securities indirectly. The entities are--
(1) A partnership in which the employee or employee's spouse or
minor children are general partners;
(2) A partnership in which the employee or employee's spouse or
minor children individually or jointly hold more than a 10 percent
limited partnership interest;
(3) A closely held corporation in which the employee or employee's
spouse or minor children individually or jointly hold more than a 10
percent equity interest;
(4) A trust in which the employee or employee's spouse or minor
children have a legal or beneficial interest;
(5) An investment club or similar informal investment arrangement
between the employee or employee's spouse or minor children and others;
or
(6) Any other entity in which the employee or employee's spouse or
minor children individually or jointly hold more than a 10 percent
equity interest.
(c) Exceptions to prohibition for certain interests.
Notwithstanding paragraphs (a) and (b) of this section, an employee or
an employee's spouse or minor children may directly or indirectly own
or control:
(1) A security for which a waiver has been granted pursuant to
Sec. 9001.103; and
(2) An interest in a publicly-traded or publicly-available
diversified mutual fund or other collective diversified investment
fund, including a widely-held pension or other retirement fund if:
(i) Neither the employee, the employee's spouse, nor the employee's
minor children exercise or have the ability to exercise control over
the financial interests held by the fund; and
(ii) The fund does not indicate in its prospectus the objective or
practice of concentrating its investments in securities of a regulated
entity or regulated entities generally, and less than 25 percent of the
total holdings of the fund are comprised of securities owned, issued,
guaranteed, securitized, or collateralized by one or more regulated
entities.
(d) Reporting and divestiture. An employee must provide, in
writing, to the DAEO any financial interest prohibited under paragraph
(a) of this section acquired prior to the commencement of employment
with the FHFA or without specific intent, as through gift, inheritance,
or marriage, within 30 days from the start of employment or acquisition
of such interest. Such financial interest must be divested within 90
days from the date reported unless a waiver is granted in accordance
with Sec. 9001.103.
Sec. 9001.105 Outside employment.
(a) Prohibited outside employment. Employees, except special
Government employees, shall not engage in:
(1) Employment with a person or entity, other than a State or local
government, that is registered as a lobbyist under the Lobbying
Disclosure Act of 1995 (2 U.S.C. chapter 26) and engages in lobbying
activities concerning the FHFA programs; or
(2) Employment with any regulated entity or with the Office of
Finance of the Federal Home Loan Bank System.
(b) Prior approval for other outside employment. Before engaging in
any outside employment that is not prohibited under paragraph (a) of
this section, with or without compensation, an employee of the FHFA,
other than a special Government employee, must obtain written approval
from the employee's supervisor and the concurrence of the DAEO.
Nonetheless, special Government employees remain subject to other
statutory and regulatory provisions governing their outside activities,
including 18 U.S.C. 203(c) and 205(c), as well as applicable provisions
of 5 CFR part 2635.
(c) Definition of outside employment. For purposes of paragraph (b)
of this section, outside employment means any form of non-Federal
employment or business relationship involving the provision of personal
services, whether or not for compensation. It includes, but is not
limited to, services as an officer, director, employee, agent, advisor,
attorney, consultant, contractor, general partner, trustee, teacher, or
speaker. It includes writing when done under an arrangement with
another person or entity for production or publication of the written
product. The definition does not include positions as trustee for a
family trust for which the only beneficiaries are the employee, the
employee's spouse, the employee's minor or dependent children, or any
combination thereof. The definition also does not include participation
in the activities of a nonprofit charitable, religious, professional,
social, fraternal, educational, recreational, public service or civic
organization, unless:
(1) The employee will receive compensation other than reimbursement
of expenses;
(2) The organization's activities are devoted substantially to
matters relating to the employee's official duties as defined in 5 CFR
2635.807(a)(2)(i)(B) through (E) and the employee will serve as officer
or director of the organization; or
(3) The activities will involve the provision of consultative or
professional services. Consultative services means the provision of
personal services by an employee, including the rendering of advice or
consultation, which requires advanced knowledge in a field of science
or learning customarily acquired by a course of specialized instruction
and study in an institution of higher education, hospital, or similar
facility. Professional services means the provision of personal
services by an employee, including the rendering of advice or
consultation, which involves application of the skills of a profession
as defined in 5 CFR 2636.305(b)(1) or involves a fiduciary relationship
as defined in 5 CFR 2636.305(b)(2).
Note to Sec. 9001.105(c): There is a special approval
requirement set out in both 18 U.S.C. 203(d) and 205(e),
respectively, for certain representational activities otherwise
covered by the conflict of interest restrictions on compensation and
activities of employees in claims against and other matters
affecting the Government. Thus, an employee who wishes to act as
agent or attorney for, or otherwise represent his or her parents,
spouse, children, or any person for whom, or any estate for which,
he or she is serving as
[[Page 19915]]
guardian, executor, administrator, trustee, or other personal
fiduciary in such matters must obtain the approval required by law
of the Government official responsible for the employee's
appointment in addition to the regulatory approval required in this
section.
(d) Procedure for requesting approval--(1) The approval required by
paragraph (b) of this section shall be requested by e-mail or other
form of written correspondence in advance of engaging in outside
employment as defined in paragraph (c) of this section.
(2) The request for approval to engage in outside employment or
certain other activities shall set forth, at a minimum:
(i) The name of the employer or organization;
(ii) The nature of the legal activity or other work to be
performed;
(iii) The title of the position; and
(iv) The estimated duration of the outside employment.
(3) Upon a significant change in the nature or scope of the outside
employment or in the employee's official position within FHFA, the
employee must, within seven calendar days of the change, submit a
revised request for approval.
(e) Standard for approval. The DAEO may grant the approval required
by paragraph (b) of this section only upon his or her written
determination that the outside employment is not expected to involve
conduct prohibited by statute or Federal regulation, including 5 CFR
part 2635 and this part.
(f) Issuance of instructions. The DAEO may issue written
instructions governing the submission of requests for approval of
outside employment under paragraph (d) of this section. The
instructions may exempt categories of employment from the prior
approval requirement of paragraph (b) of this section based on a
determination by the DAEO that employment within those categories of
employment would generally be approved and is not likely to involve
conduct prohibited by Federal law or regulation, including 5 CFR part
2635 and this part.
Sec. 9001.106 Restrictions resulting from employment of family and
household members.
(a) Disqualification of employee. An employee may not participate
in any particular matter in which a regulated entity is a party if the
regulated entity employs as an employee or a consultant his or her
spouse, child, parent, or sibling, or member of his or her household
unless the DAEO has authorized the employee to participate in the
matter using the standard set forth in 5 CFR 2635.502(d).
(b) Reporting certain relationships. Within 30 days of the spouse,
child, parent, sibling, or member of the employee's household being
employed by the regulated entity, the employee shall provide in writing
notice of such employment to the DAEO.
Sec. 9001.107 Other limitations.
(a) Director and Deputy Directors. The Director, the Deputy
Director of the Division of Enterprise Regulation, the Deputy Director
of the Division of Federal Home Loan Bank Regulation, and the Deputy
Director for Housing Mission and Goals are subject to additional
financial interest limitations as set forth in section 1312(g) of the
Safety and Soundness Act, 12 U.S.C. 4512(g).
(b) Financial interests in Bank members and other financial
institutions. If an employee or the spouse or minor children of the
employee directly or indirectly owns a financial interest in a member
of a Bank or in a financial institution such as a mortgage bank,
mortgage broker, bank, thrift, or other financial institution that
originates, insures, or services mortgages that are owned, guaranteed,
securitized, or collateralized by a regulated entity, the employee is
cautioned not to violate the statutory prohibition against financial
conflicts of interest set forth in 18 U.S.C. 208. The government-wide
de minimis and other exceptions set forth in 5 CFR 2640.202 are
applicable to the ownership or control of interests in such financial
institutions. Employees are encouraged to seek a determination from the
DAEO as to whether the financial interest in the member of the Bank or
in the financial institution creates a financial conflict of interest
or an appearance of a conflict of interest and whether the employee
should disqualify himself or herself from participating in an official
capacity in a particular matter involving the financial institution.
Sec. 9001.108 Prohibited recommendations.
Employees shall not make any recommendation or suggestion, directly
or indirectly, concerning the acquisition, sale, or divestiture of
securities of a regulated entity.
Sec. 9001.109 Prohibited purchase of assets.
An employee or the employee's spouse or minor children shall not
purchase, directly or indirectly, any real or personal property from a
regulated entity, unless it is sold at public auction or by other means
which would assure that the selling price is the asset's fair market
value.
Dated: January 18, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
Approved: April 8, 2010.
Robert I. Cusick,
Director, Office of Government Ethics.
[FR Doc. 2010-8649 Filed 4-15-10; 8:45 am]
BILLING CODE 8070-01-P