and financial interests. When a complaint cannot be resolved or explained satisfactorily to the employee he shall be granted a review of the matter through the Corporation's grievance procedure.

[32 F.R. 13964, Oct. 7, 1967]

§ 336.735-32 Employees not required to submit statements.

Employees subject to separate reporting requirements under section 401 of the Executive order.

[32 F.R. 13964, Oct. 7, 1967]

§ 336.735-33 Time and place for submission of employees' statements.

An employee required to submit statements of employment and financial interest under § 336.735-31 shall submit that statement to the Assistant to the Chairman of the Board of Directors not later than:

(a) Ninety days after the effective date of the agency regulations issued under this part if employed on or before that effective date; or

(b) Thirty days after his entrance on duty, but not earlier than ninety days after the effective date, if appointed after that effective date.

§ 336.735-34 Supplementary state

ments.

Changes in, or addition to, the information contained in an employee's statement of employment and financial interests shall be reported in a supplementary statement os of June 30 each year. If no changes or additions occur, a negative report is required. Notwithstanding the filing of the annual report required by this section, each employee shall at all times avoid acquiring a financial interest that could result, or taking an action that would result, in a violation of the conflicts-of-interest provisions of section 208 of title 18, United States Code, or Subpart B of this part.

[32 F.R. 13964, Oct. 7, 1967]

§ 336.735-35

relatives.

Interests of employees'

The interest of a spouse, minor child, or other member of an employee's immediate household is considered to be an interest of the employee. For the purpose of this section, "member of an employee's immediate household" means those blood relations of the employee who

are residents of the employee's household.

§ 336.735-36 Information not known by employees.

If any information required to be included on a statement of employment and financial interests or supplementary statement, including holdings placed in trust, is not known to the employee but is known to another person, the employee shall request that other person to submit information in his behalf.

§ 336.735-37 Information prohibited.

This subpart does not require an employee to submit on a statement of employment and financial interests or supplementary statement any information relating to the employee's connection with, or interest in, a professional society or a charitable, religious, social, fraternal, recreational, public service, civic, or political organization or a similar organization not conducted as a business enterprise. For the purpose of this section, educational and other institutions doing research and development or related work involving grants of money from or contracts with the Government are deemed "business enterprises" and are required to be included in an employee's statement of employment and financial interests.

§ 336.735-38 Confidentiality of employ. ees' statements.

The Corporation shall hold statements of employment and financial interest, and each supplementary statement, in confidence. All statements shall be received, reviewed, and retained in the office of the assistant to the Chairman of the Board of Directors who is responsible for maintaining the statements in confidence and shall not allow access to, or allow information to be disclosed from, a statement except to carry out the purposes of this part. The Corporation may not disclose information from a statement except as the Chairman of the Corporation or the Civil Service Commission may determine for good cause shown. [32 F.R. 13964, Oct. 7, 1967]

§ 336.735-39 Effect of employees' state ments on other requirements.

The statements of employment and filnancial interests and supplementary statements required of employees are in addition to, and not in substitution for,

or in derogation of, any similar requirement imposed by law, order, or regulation. The submission of a statement or supplementary statement by an employee does not permit him or any other person to participate in a manner in which his or the other person's participation is prohibited by law, order, or regulation.

$336.735-40 Specific provisions of reg. ulations for special Corporation employees.

(a) Except as provided in paragraph (b) of this section, each special Corporation employee shall submit a statement of employment and financial interests which reports:

(1) All other employment; and

(2) The financial interests of the special Corporation employee which the Corporation determines are relevant in the light of the duties he is to perform.

(b) The Chairman of the Corporation may waive the requirement in paragraph (a) of this section for the submission of a statement of employment and financial interests in the case of a special Corporation employee, who is not a consultant or an expert when the Chairman finds that the duties of the position held by that special Corporation employee are of a nature and at such a level of responsibility that the submission of the statement by the incumbent is not necessary to protect the integrity of the Corporation. For the purpose of this paragraph, "consultant" and "expert" have the meanings given those terms by Chapter 304 of the Federal Personnel Manual, but do not include a physician, dentist, or allied medical specialist whose services are procured to provide care and service to patients.

(c) A statement of employment and financial interests required to be submitted under this section shall be submitted not later than the time of employment of the special Corporation employee. Each special Corporation employee shall keep his statement current throughout his employment with the Corporation by the submission of supplementary statements.

[31 PR. 5751, Apr. 14, 1966, as amended at 32 FR. 13964, Oct. 7, 1967]

§ 336.735-41 Reviewing statements and reporting conflicts of interest.

(a) When a statement submitted under this subpart or information from

other sources indicates a conflict between the interests of an employee or special Corporation employee and the performance of his services for the Corporation, the Counselor designated in the regulations in this part shall investigate and dispose of the matter in such manner as he may deem appropriate. When the conflict or appearance of conflict is not resolved by the Counselor, the information concerning the conflict or appearance of conflict shall be reported to the Chairman of the Board of Directors.

(b) The employee or special Corporation employee concerned shall have a reasonable opportunity, orally and/or in writing to explain the conflict or appearance of conflict.

§ 336.735-42 Disciplinary and other remedial actions.

(a) A violation of the regulations in this part by an employee or special Corporation employee may be cause for appropriate disciplinary action which may be in addition to any penalty prescribed by law.

(b) When, after consideration of the explanation of the employee or special Corporation employee provided by § 336.735-41, the Chairman of the Board decides that remedial action is required, he shall take immediate action to end the conflicts or appearance of conflicts of interest. Remedial action includes, but is not limited to:

(1) Changes in assigned duties;

(2) Divestment by the employee or special Corporation employee of his conflicting interest;

(3) Disciplinary action; or

(4) Disqualification for a particular assignment.

Remedial action, whether disciplinary or otherwise, shall be effected in accordance with any applicable law, Executive orders, and regulations.

APPENDIX A-EMPLOYEES WHO MUST FILE

§ 337.1 Scope.

The provisions of this part apply to certain banking practices which are likely to have adverse effects on the safety and soundness of insured State nonmember banks or which are likely to result in violations of law, rule, or regulation.

§ 337.2 Standby Letters of Credit.

(a) Definition. As used in this § 337.2, the term "standby letter of credit" means any letter of credit, or similar arrangement however named or described, which represents an obligation to the beneficiary on the part of the issuer (1) to repay money borrowed by or advanced to or for the account of the account party, or (2) to make payment on account of any indebtedness undertaken by the account party, or (3) to make payment on account of any default (including any statement of default) by the account party in the performance of an obligation.1 The term "similar arrangement" includes the cresimilar ation of undertaking.

an

acceptance

or

(b) Restriction. A standby letter of credit issued by an insured State nonmember bank shall be combined with all other standby letters of credit and all loans for purposes of applying any legal limitation on loans of the bank (including limitations on loans to any one borrower, on loans to affiliates of the bank, or on aggregate loans); Provided, however, That if such standby letter of credit is subject to separate limitation under applicable State or federal law, then the

1 As defined in this paragraph (a), the term "standby letter of credit" would not include commercial letters of credit and similar instruments where the issuing bank expects the beneficiary to draw upon the issuer, which do not "guaranty" payment of a money obligation of the account party and which do not provide that payment is occasioned by default on the part of the account party.

separate limitation shall apply in lieu of the loan limitation.2

(c) Exceptions. All standby letters of credit shall be subject to the provisions of paragraph (b) of this section except where:

(1) Prior to or at the time of issuance, the issuing bank is paid an amount equal to the bank's maximum liability under the standby letter of credit; or,

(2) Prior to or at the time of issuance, the issuing bank has set aside sufficient funds in a segregated deposit account, clearly earmarked for that purpose, to cover the bank's maximum liability under.the standby letter of credit.

(d) Disclosure. Each insured State nonmember bank must maintain adequate control and subsidiary records of its standby letters of credit comparable to the records maintained in connection with the bank's direct loans so that at all times the bank's potential liability thereunder and the bank's compliance with this § 337.2 may be readily determined. In addition, all such standby letters of credit must be adequately reflected on the bank's published financial statements.

in writing by the Corporation in connection with the granting of any application or other request by an insured State nonmember bank, or any written agreement entered into by such bank with the Corporation. Compliance with the provisions of this Part shall not relieve an insured State nonmember bank from its duty to conduct its operations in a safe and sound manner nor prevent the Corporation from taking whatever action it deems necessary and desirable to deal with specific acts or practices which, although they do not violate the provisions of this part, are considered detrimental to the safety and sound operation of the bank engaged therein.

339.2 Prohibition as to loans in nonparticipating communities.

339.3 Exemption.

339.4 Records of compliance.

339.5 Notice to borrower of special flood hazard.

AUTHORITY: Sec. 102(b), 202(b), 205(b), 87 Stat. 978, 982, 983, unless otherwise noted.1 SOURCE: 39 FR 4756, Feb. 7, 1974, unless otherwise noted.

§ 339.0 Introduction and scope.

The provisions of this Part 339 apply to certain loans secured by improved real estate made by insured State nonmember banks in areas determined by the Secretary of Housing and Urban Development to be areas having special flood hazards.

§ 339.1 Requirement to purchase flood

insurance.

On and after the effective date of this Part 339, no insured State nonmember bank shall make, increase, extend, or renew any loan secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968, unless the building or mobile home and any personal property securing such loan is covered for the term of the loan

139 FR 5748, Feb. 15, 1974.

39-057-75-11

Notwithstanding the provisions of § 339.1 of this Part 339, flood insurance shall not be required on any Stateowned property that is covered under an adequate policy of self-insurance satisfactory to the Secretary of Housing and Urban Development who shall publish and periodically revise the list of States falling within the exemption provided by this section.

§ 339.4 Records of compliance.

Each insured State nonmember bank shall maintain, in connection with all loans secured by improved real estate, or a mobile home, sufficient records to indicate the method used by the bank to determine whether or not such loans fall within the provisions of §§ 339.1, 339.2 or § 339.3 of this Part 339.

§ 339.5 Notice to borrower of special flood hazard.

After September 21, 1974, each insured State nonmember bank shall, as a con

2 For the purposes of this Part 339, a community is a State or a political subdivision thereof which has building code jurisdiction over a particular area having special flood hazards.

3 For the purposes of this Part 339, a community participating in the national flood insurance program is a community which has complied with the requirements for participation as set forth in § 1909.22 of the regulations of the Federal Insurance Administration of the Department of Housing and Urban Development (24 CFR 1909.22) and in which flood insurance is currently being sold.

dition of making, increasing, extending, or renewing any loan secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards, mail or deliver as soon as feasible but not less than 10 days in advance of closing of the transaction (or not later than the bank's commitment, if any, if the period between commitment and closing is less than 10 days) a written notice to the borrower that the property securing the loan is in an area so identified. In lieu of the notification re

quired in this section, a bank may obtain satisfactory written assurances from the seller or lessor that such seller or lessor has notified the borrower, prior to the execution of any agreement for sale or lease, that the property securing the loan is in an area so identified. A bank shall require the borrower, prior to closing, to provide the bank with a written acknowledgment that the borrower realizes that the property, securing the loan or upon which a mobile home is or will be located, is in an area so identified.

(Sec. 816(a), Pub. L. 93-383, 88 Stat. 739) [39 FR 34021, Sept. 23, 1974]