12 C.F.R. PART 366—MINIMUM STANDARDS OF INTEGRITY AND FITNESS FOR AN FDIC CONTRACTOR
Title 12 - Banks and Banking
Authority: Section 9 (Tenth) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1819 (Tenth); sections 12(f)(3) and (4) of the FDI Act, 12 U.S.C. 1822(f)(3) and (4); and section 19 of Pub. L. 103–204, 107 Stat. 2369.
Source: 67 FR 69991, Nov. 20, 2002, unless otherwise noted.
As used in this part: (a) The word person refers to an individual, corporation, partnership, or other entity with a legally independent existence. (b) The terms we, our, and us refer to the Federal Deposit Insurance Corporation (FDIC), except when acting as conservator or operator of a bridge bank. (c) The terms I, me, my, mine, you, and yourself refer to a person who submits an offer to perform or performs, directly or indirectly, contractual services or functions on our behalf. (d) The phrase insured depository institution refers to any bank or savings association whose deposits are insured by the FDIC. This part establishes the minimum standards of integrity and fitness that contractors, subcontractors, and employees of contractors and subcontractors must meet if they perform any service or function on our behalf. This part includes regulations governing conflicts of interest, ethical responsibility, and use of confidential information in accordance with section 12(f)(3) of the FDI Act, 12 U.S.C. 1822(f)(3), and the prohibitions and the requirements for submission of information in accordance with section 12(f)(4) of the FDI Act, 12 U.S.C. 1822(f)(4). (a) This part applies to a person who submits an offer to perform or performs, directly or indirectly, a contractual service or function on our behalf. (b) This part does not apply to: (1) An FDIC employee for the purposes of title 18, United States Code; or (2) The FDIC when we operate an insured depository institution such as a bridge bank or conservatorship. We will not enter into a contract with you to perform a service or function on our behalf, if you or any person that owns or controls you, or any entity you own or control: (a) Has a felony conviction; (b) Was removed from or is prohibited from participating in the affairs of an insured depository institution as a result of a federal banking agency final enforcement action; (c) Has a pattern or practice of defalcation; or (d) Is responsible for a substantial loss to the Deposit Insurance Fund (or any predecessor deposit insurance fund). [67 FR 69991, Nov. 20, 2002, as amended at 71 FR 20527, Apr. 21, 2006] (a) You have a pattern or practice of defalcation under §366.3(c) when you, any person that owns or controls you, or any entity you own or control has a legal responsibility for the payment on at least two obligations that are: (1) To one or more insured depository institutions; (2) More than 90 days delinquent in the payment of principal, interest, or a combination thereof; and (3) More than $50,000 each. (b) The following are examples of when you have or do not have a pattern or practice of defalcation. These examples are not inclusive. (1) You have five loans at insured depository institutions. Three of them are 90 days past due. Two of the three loans have outstanding balances of more than $50,000 each. You have a pattern or practice of defalcation. (2) You have five loans at insured depository institutions. Two of them are 90 days past due. One of the two is with ABC Bank for $170,000. The other one is with XYZ bank for $60,000. You have a pattern or practice of defalcation. (3) You have five loans at insured depository institutions. Three of them are 90 days past due. One of the three has an outstanding balance of more than $50,000. The other two have outstanding balances of less than $50,000. You do not have a pattern or practice of defalcation. (4) You have five loans at insured depository institutions. Three of them have outstanding balances of more than $50,000. Two of those three were 90 days past due but are now current. You do not have a pattern or practice of defalcation. You cause a substantial loss to the Deposit Insurance Fund (or any predecessor deposit insurance fund) under §366.3(d) when you, or any person that owns or controls you, or any entity you own or control has: (a) An obligation to us that is delinquent for 90 days or more and on which there is an outstanding balance of principal, interest, or a combination thereof of more than $50,000; (b) An unpaid final judgment in our favor that is in excess of $50,000, regardless of whether it becomes discharged in whole or in part in a bankruptcy proceeding; (c) A deficiency balance following foreclosure of collateral on an obligation owed to us that is in excess of $50,000, regardless of whether it becomes discharged in whole or in part in a bankruptcy proceeding; or (d) A loss to us that is in excess of $50,000 that we report on IRS Form 1099–C, Information Reporting for Discharge of Indebtedness. [67 FR 69991, Nov. 20, 2002, as amended at 71 FR 20527, Apr. 21, 2006] (a) Your ownership or control is determined on a case-by-case basis. Your ownership or control depends on the specific facts of your situation and the particular industry and legal entity involved. You must provide documentation to us to use in determining your ownership or control. (b) The interest of a spouse or other family member in the same organization is imputed to you in determining your ownership or control. (c) The following are examples of when your ownership or control may or may not exist. These examples are not inclusive. (1) You have control if you are the president or chief executive officer of an organization. (2) You have ownership or control if you are a partner in a small law firm. You might not have ownership or control if you are a partner in a large national law firm. (3) You have control if you are a general partner of a limited partnership. You have ownership or control if you have a limited partnership interest of 25 percent or more. (4) You have ownership or control if you have the: (i) Power to vote, directly or indirectly, 25% or more interest of any class of voting stock of a company; (ii) Ability to direct in any manner the election of a majority of a company's directors or trustees; or (iii) Ability to exercise a controlling influence over the company's management and policies. We may waive the prohibitions for entities other than individuals for good cause shown at our discretion when our need to contract for your services outweighs all relevant factors. The statute does not allow us to waive the prohibitions for individuals. The FDIC's Board of Directors delegates to the Chairman, or his designee, authority to issue waivers and implement procedures for part 366. You must avoid a conflict of interest, be ethically responsible, and maintain confidential information as described in §§366.10 through 366.13. You must also provide us with the information we require in §366.14. Failure to meet these requirements may prevent you from contracting with us. (a) You have a conflict of interest when you, any person that owns or controls you, or any entity you own or control: (1) Has a personal, business, or financial interest or relationship that relates to the services you perform under the contract; (2) Is a party to litigation against us, or represents a party that is; (3) Submits an offer to acquire an asset from us for which services were performed during the past three years, unless the contract allows for the acquisition; or (4) Engages in an activity that would cause us to question the integrity of the service you provided, are providing or offer to provide us, or impairs your independence. (b) The following are examples of a conflict of interest. These examples are not inclusive. (1) You submit an offer to perform property management services for us and you own or manage a competing property. (2) You audit a business under a contract with us and you or a partner in your firm has an ownership interest in that business. (3) You perform loan services on a pool of loans we are selling, and you submit a bid to purchase one or more of the loans in the pool. (4) You audit your own work or provide nonaudit services that are significant or material to the subject matter of the audit. (a) We may waive a conflict of interest for good cause shown at our discretion when our need to contract for your services outweighs all relevant factors. (b) The following are examples of when we may grant you a waiver for a conflict of interest. These examples are not inclusive. (1) We may grant a waiver to an outside counsel who has a representational conflict. We will weigh all relevant facts and circumstances in making our determination. (2) We may grant a waiver to allow a contractor to acquire an asset from us who is providing or has provided services on that asset. We will consider whether granting the waiver will adversely affect the fairness of the sale, the type of services provided, and other facts and circumstances relevant to the sale in making our determination. (a) You and any person who performs services for us must not provide preferential treatment to any person in your dealings with the public on our behalf. (b) You must ensure that any person you employ to perform services for us is informed about their responsibilities under this part. (c) You must disclose to us waste, fraud, abuse or corruption. Contact the Inspector General at 1–800–964–FDIC or [email protected]. (d) You and any person who performs contract services to us must not: (1) Accept or solicit for yourself or others any favor, gift, or other item of monetary value from any person who you reasonably believe is seeking an official action from you on our behalf, or has an interest that the performance or nonperformance of your duties to us may substantially affect; (2) Use or allow the use of our property, except as specified in the contract; (3) Make an unauthorized promise or commitment on our behalf; or (4) Provide impermissible gifts or entertainment to an FDIC employee or other person providing services to us. (e) The following are examples of when you are engaging in unethical behavior. These examples are not inclusive. (1) Using government resources, including our Internet connection, to conduct any business that is unrelated to the performance of your contract with us. (2) Submitting false invoices or claims, or making misleading or false statements. (3) Committing us to forgive or restructure a debt or portion of a debt, unless we provide you with written authority to do so. (a) Neither you nor any person who performs services on your behalf may use or disclose information obtained from us or a third party in connection with an FDIC contract, unless: (1) The contract allows or we authorize the use or disclosure; (2) The information is generally available to the general public; or (3) We make the information available to the general public. (b) The following are examples of when your use of confidential information is inappropriate. These examples are not inclusive. (1) Disclosing information about an asset, such as internal asset valuations, appraisals or environmental reports, except as part of authorized due diligence materials, to a prospective asset purchaser. (2) Disclosing a borrower's or guarantor's personal or financial information, such as a financial statement to an unauthorized party. You must: (a) Certify in writing that you can perform services for us under §366.3 and have no conflict of interest under §366.10(a). (b) Submit a list and description of any instance during the preceding five years in which you, any person that owns or controls you, or any entity you own or control, defaulted on a material obligation to an insured depository institution. A default on a material obligation occurs when a loan or advance with an outstanding balance of more than $50,000 is or was delinquent for 90 days or more. (c) Notify us within 10 business days after you become aware that you, or any person you employ to perform services for us, are not in compliance with this part. Your notice must include a detailed description of the facts of the situation and how you intend to resolve the matter. (d) Agree in writing that you will employ only persons who meet the requirements of this part to perform services on our behalf. (e) Comply with any request from us for information. (f) Retain any information you prepare or rely upon regarding the provisions of this part for a period of three years following termination or expiration and final payment of the related contract for services whichever occurs last. (a) We are available to you for consultation on those determinations you are responsible for making under this part, including those with respect to any person you employ or engage to perform services for us. (b) We will determine if this part prohibits you from performing services for us prior to contract award, after contract award, and during the performance of a contract. (c) We may determine what corrective action you must take. (d) We may grant you a waiver for good cause shown where provided for under this part. (a) You may seek reconsideration or review of our initial determination by sending a written request to the individual who issued you the initial decision. (b) You must provide new information or explain a change in circumstances for our reconsideration of an initial decision. The individual who issued you the initial decision may either make a new determination or refer your request to a higher authority for review. (c) You must provide an explanation of how you perceive that we misapplied this part that sets forth the legal or factual errors for our review of an initial decision. Depending on the circumstances, violations of this part may result in rescission or termination of a contract, as well as administrative, civil, or criminal sanctions.
Title 12: Banks and Banking
PART 366—MINIMUM STANDARDS OF INTEGRITY AND FITNESS FOR AN FDIC CONTRACTOR
Section Contents
§ 366.0 Definitions.
§ 366.1 What is the purpose of this part?
§ 366.2 What is the scope of this part?
§ 366.3 Who cannot perform contractual services for the FDIC?
§ 366.4 When is there a pattern or practice of defalcation?
§ 366.5 What causes a substantial loss to a federal deposit insurance fund?
§ 366.6 How is my ownership or control determined?
§ 366.7 Will the FDIC waive the prohibitions under §366.3?
§ 366.8 Who can grant a waiver of a prohibition or conflict of interest?
§ 366.9 What other requirements could prevent me from performing contractual services for the FDIC?
§ 366.10 When would I have a conflict of interest?
§ 366.11 Will the FDIC waive a conflict of interest?
§ 366.12 What are the FDIC's minimum standards of ethical responsibility?
§ 366.13 What is my obligation regarding confidential information?
§ 366.14 What information must I provide the FDIC?
§ 366.15 What advice or determinations will the FDIC provide me on the applicability of this part?
§ 366.16 When may I seek a reconsideration or review of an FDIC determination?
§ 366.17 What are the possible consequences for violating this part?
§ 366.0 Definitions.
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§ 366.1 What is the purpose of this part?
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§ 366.2 What is the scope of this part?
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§ 366.3 Who cannot perform contractual services for the FDIC?
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§ 366.4 When is there a pattern or practice of defalcation?
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§ 366.5 What causes a substantial loss to a federal deposit insurance fund?
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§ 366.6 How is my ownership or control determined?
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§ 366.7 Will the FDIC waive the prohibitions under §366.3?
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§ 366.8 Who can grant a waiver of a prohibition or conflict of interest?
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§ 366.9 What other requirements could prevent me from performing contractual services for the FDIC?
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§ 366.10 When would I have a conflict of interest?
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§ 366.11 Will the FDIC waive a conflict of interest?
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§ 366.12 What are the FDIC's minimum standards of ethical responsibility?
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§ 366.13 What is my obligation regarding confidential information?
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§ 366.14 What information must I provide the FDIC?
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§ 366.15 What advice or determinations will the FDIC provide me on the applicability of this part?
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§ 366.16 When may I seek a reconsideration or review of an FDIC determination?
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§ 366.17 What are the possible consequences for violating this part?
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