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5000 - Statements of Policy
{{2-29-96 p.5415}}
POLICY STATEMENT ON THE FITNESS AND INTEGRITY OF LESSORS OF
REAL PROPERTY TO THE FDIC
I. Purpose. To establish:
A. Minimum standards governing Conflicts of Interest and ethical
responsibilities for Lessors who have entered into Leases with the
FDIC, or who seeks to lease real property to the FDIC; and
B. Official written guidance for FDIC personnel including, without
limitation, personnel in the Division of Administration, the Division
of Supervision and the Office of the Executive Secretary, on the
implementation of those minimum standards.
II. Applicability. This policy will apply to:
A. All Leases of 10,000 square feet or more awarded as a result of
Requests for Proposals issued after the date of this policy; and
B. All Lease Amendments entered into after the date of this policy
to (1) Existing Leases of 10,000 square feet or more, or (2) existing
Leases of less than 10,000 square feet where the total square footage
of the Lease will be 10,000 square feet or more if the Lease Amendment
is executed.
III. Definitions. As used in this policy statement:
A. Company means any corporation, firm, partnership,
society, joint venture, business trust, association or similar
organization, or any other trust, or any other organization or
institution.
B. Conflict of Interest means a situation in which:
(1) A Lessor or a Lessor's Affiliate is adverse to the FDIC, RTC,
Federal Savings and Loan Insurance Corporation (FSLIC), or their
successors in a lawsuit, for which no final adjudication or settlement
has occurred; or
(2) A Lessor or a Lessor's Affiliate has caused a Substantial
Loss to Federal Deposit Insurance Funds within the ten year period
preceding the submission of its offer; or
(3) A Lessor or a Lessor's Affiliate has been convicted of a
Fraud Offense or of conspiring to commit a Fraud Offense affecting any
Insured Depository Institution; or
(4) A Lessor or a Lessor's Affiliate has Defaulted on a Material
Obligation within the last five years; or
(5) A Lessor or a Lessor's Affiliate has been removed from, or
prohibited from participating in the affairs of any Insured Depository
Institution pursuant to any final enforcement action by the Office of
the Comptroller of the Currency, the Office of Thrift Supervision, the
Board of Governors of the Federal Reserve System, or the FDIC or their
successors; or
(6) A situation in which the FDIC determines, in its sole
discretion, that the FDIC's award of a Lease to a Lessor could cause a
reasonable person to question the integrity of the FDIC's operations.
An example (without limitation) of a Conflict of Interest determined by
the FDIC is a situation in which an individual who is not a Lessor's
Affiliate, but has a direct or indirect equity interest in the Lessor,
or directly or indirectly controls the Lessor, has been convicted of a
Fraud Offense.
C. Default on a Material Obligation means a loan or
advance from an Insured Depository Institution which has been
delinquent for 90 or more days as to payment of principal or interest,
or a combination thereof, with a remaining balance of principal, and
accrued interest on the ninetieth day, or any time thereafter, in an
amount in excess of $1,000,000.
D. Family Member means the Lessor's spouse or dependent
child.
E. FDIC means the Federal Deposit Insurance Corporation
in its receivership and corporate capacities. It does not mean the FDIC
in its conservatorship capacity or when it is operating a bridge bank.
F. Fraud Offense means any felony offense under the
sections of title 18 U.S. Code as listed in Part IX, or similar
offenses under state laws.
G. Insured Depository Institution means any bank or
savings association the deposits of which are insured by the
FDIC.
{{2-29-96 p.5416}}
H. Insurer means the FDIC, RTC, FSLIC or their
successors; or the Bank Insurance Fund, the Savings Association
Insurance Fund, the FSLIC Resolution Fund, or funds maintained by the
RTC for the benefit of insured depositors.
I. Lease means a lease or sublease of real property for
the use of the FDIC (including its contractors) as tenant, including
but not limited to warehouse, office and retail space. As used herein,
"Lease" does not include contracts for storage services.
J. Lease Amendment means any change to a Lease which
extends the term of the Lease, increases the rentable square footage of
the premises leased, or increases the rent paid under the Lease. As
used herein, however, "Lease Amendment" does not refer to the
exercise of a priced renewal option or an expansion option at a
predetermined rental rate under any Lease entered into prior to the
date of this policy.
K. Lessor means an individual or a Company which
intends to or has submitted an Offer to lease or sublease real property
to the FDIC, or which has entered into a Lease or a sublease with the
FDIC.
L. Lessor's Affiliate means
(1) if the Lessor is a Company, (a) any general partner of the
Lessor, or (b) any beneficial owner of a 25% or greater equity
interest in the Lessor; or
(2) any Company of which the Lessor is (a) A general partner, or
(b) in which the Lessor is the beneficial owner of a 25% or greater
equity interest; or
(3) if the Lessor is an individual, any Family Member of the
Lessor.
A Lessor's Affiliate may be either an individual or a Company.
M. Obligation means a commitment to pay money to an
Insurer, that is currently owing to, and held by, an Insurer and which
currently is not performing in accordance with the terms thereof
(including any modifications thereto), including, without limitation,
(1) Any unsatisfied final judgment, and (2) any guarantee of any
Obligation.
N. Offer means a proposal to enter into a Lease.
O. RTC means the Resolution Trust Corporation in any of
its capacities.
P. Substantial Loss to Federal Deposit Insurance Funds
means: An Obligation that is or has been delinquent for 90 or more
days as to payment of principal, interest, or a combination thereof and
on which there remains a legal duty to pay an amount in excess of
$50,000. A Substantial Loss to Federal Deposit Insurance Funds does NOT
include situations where the Obligation (1) has been fully resolved and
the debtor has been released in full by the applicable Insurer, or (2)
has been sold or transferred by the applicable Insurer and such Insurer
retains no interest therein.
IV. Policy.
A. General. The FDIC will not consider Offers from
Lessors, award Leases to Lessors, or enter into Lease Amendments with
Lessors that either (a) fail to provide any of the information required
by this policy; or (b) have Conflicts of Interest, unless such
Conflicts of Interest are eliminated by the Lessor or waived by the
FDIC.
B. Waivers. Waivers of Conflicts of Interest will be
granted only when, in light of all relevant circumstances the Executive
Secretary, or the designee of the Executive Secretary determines in his
or her discretion that the interests of the FDIC in entering into a
Lease or a Lease Amendment with the Lessor outweigh the concern that a
reasonable person may question the integrity of the FDIC's operations.
V. Procedures.
A. Conflicts of Interest.
(1) Conflicts of Interest in existence prior to submission
of an Offer.
(a) A Lessor shall provide all information and certifications
required in paragraph V.B. hereof at the time it makes an Offer to the
FDIC.
(b) A Lessor that has a Conflict of Interest as defined at
paragraph III.B.(1) through (5) of this policy statement shall, with
its Offer, request that the Conflict of Interest be waived in
accordance with paragraph IV.B., or propose how the Lessor will
eliminate the Conflict of Interest.
{{6-28-96 p.5417}}
(c) The Executive Secretary or designee, in his or her
discretion, may waive the Conflict of Interest in accordance with
paragraph IV.B., or may approve in writing a Lessor's proposal to
eliminate the Conflict of Interest for purposes of the specific Lease.
(2) Conflicts of Interest arising after submission of an Offer
but prior to entering into a Lease.
(a) If, after submitting its Offer, but prior to entering into a
Lease, a Lessor discovers that it has a Conflict of Interest, it must
notify the FDIC in writing within five business days of such discovery.
The Lessor shall include with such notification a detailed description
of the Conflict of Interest, and either (i) A statement of how it
intends to eliminate the Conflict of Interest; or (ii) a request for a
waiver of the Conflict of Interest.
(b) The Executive Secretary or designee, in his or her
discretion, may waive the Conflict of Interest in accordance with
paragraph IV.B., or may approve in writing a Lessor's proposal to
eliminate the Conflict of Interest for purposes of the specific Lease.
(3) Conflicts of Interest that arise after entering into a Lease.
FDIC Lease agreements shall require that the Lessor notify the FDIC in
writing within five business days after discovering a Conflict of
Interest that arises after the Lessor and the FDIC have entered into a
Lease. The Lessor shall include with such notification a detailed
description of the Conflict of Interest, and either (i) A statement of
how it intends to eliminate the Conflict of Interest; or (ii) a request
for a waiver of the Conflict of Interest. After receipt of such notice
from the Lessor, the FDIC shall take such action as it determines is in
the FDIC's best interests, including:
(a) The FDIC shall notify the Lessor in writing of its finding as
to whether a Conflict of Interest exists. If the FDIC finds that a
Conflict of Interest exists, the FDIC shall also notify the Lessor in
writing of the basis for such determination, and when applicable
(i) whether a waiver will be granted, and if so, the terms and
conditions of such waiver; or
(ii) a description of the corrective actions, if any, that the
Lessor will take in order to eliminate the Conflict of Interest.
Corrective actions must be completed by the Lessor not later than 30
days after notification is mailed by the FDIC unless the FDIC, in its
sole discretion, determines that it is in the best interests of the
FDIC to grant the Lessor an extension in which to complete such
corrective action.
(b) Unless the FDIC waives the Conflict of Interest or the Lessor
eliminates the Conflict of Interest the FDIC shall not enter into any
Lease Amendments with the Lessor.
(4) Conflicts of Interests discovered by the FDIC. The FDIC will
review all information provided by the Lessor with its Offer, as well
as information from other sources that the FDIC determines is relevant.
If the FDIC, in its sole discretion determines, based on such reviews,
that a Conflict of Interest exists, an FDIC representative shall notify
the Lessor of the basis for such determination.
(a) If the FDIC discovers a Conflict of Interest after submission
of an Offer, but prior to entering into a Lease:
(i) The Lessor must respond to the FDIC in writing, within five
business days of the FDIC's notification of its determination in one of
the following ways:
[1] Stating how it intends to eliminate the Conflict of
Interest; or
[2] Requesting that the FDIC waive the Conflict of Interest; or
[3] If the FDIC's determination was based solely on information
from a source other than the Lessor, and the Lessor can demonstrate
that such information was incomplete or incorrect, the Lessor may
provide additional or corrected facts and request that the FDIC
consider such facts and reevaluate its determination that a Conflict of
Interest exists. After reviewing the Lessor's additional or corrected
information, the FDIC will notify the Lessor promptly whether it
confirms its determination that a Conflict of Interest exists.
(ii) If the Lessor does not respond in writing to the FDIC within
five business days, the FDIC shall deem the Lessor's Offer to have been
withdrawn.
{{6-28-96 p.5418}}
(b) If the FDIC discovers a Conflict of Interest after entering
into a Lease, the FDIC shall take such action as it determines is in
the FDIC's best interest, including the actions described at V.A.(3)(a)
and (b). As detailed at V.A.(4)(a)(i)[3], the Lessor can request that
the FDIC reevaluate its determination if the FDIC's determination was
based solely on information from a source other than the Lessor, and
the Lessor can demonstrate that such information was incomplete or
incorrect. After reviewing the Lessor's additional or corrected
information, the FDIC will notify the lessor promptly whether or not it
will reverse its determination that a Conflict of Interest exists.
(5) Reconsideration of decisions. The Lessor may request that the
Chairman or designee(s) reconsider FDIC decisions regarding acceptance
of a Lessor's proposal for the elimination of a Conflict of Interest,
or the issuance of a requested waiver to a Conflict of Interest. Such
requests must be in writing and contain the reasons for the request.
The Chairman or designee(s) shall have the right to decline
reconsideration.
B. Information required to be submitted.
(1) Initial submission. Every Lessor shall submit a completed
"FDIC Leasing Representations and Certifications" form, including
Part II, "Lessor Fitness and Integrity Certification" and such
other information as the FDIC may deem appropriate to permit it to make
a determination with respect to Conflicts of Interest at the time the
Lessor submits an Offer and prior to entering into any Lease Amendment.
Among other items, the form shall require that the Lessor provide the
following:
(a) Certifications that no Conflicts of Interest, as defined in
paragraph III.B.(1) through (5) exist, or;
(b) In the event that one or more Conflicts of Interest exist,
the following information:
(i) When applicable, a description of any lawsuit in which the
Lessor or any Lessor's Affiliate is adverse to the FDIC, RTC, FSLIC, or
their successors and for which no final adjudication or settlement has
occurred;
(ii) When applicable, a list and description of any instance
during the five years preceding the submission of the Offer in which
the Lessor or any Lessor's Affiliate has caused a Substantial Loss to
Federal Deposit Insurance Funds;
(iii) When applicable, a list and description of any Fraud
Offense of which the Lessor or any Lessor's Affiliate has been
convicted;
(iv) When applicable, a list and description of any instance
during the five years preceding the submission of the Offer in which
the Lessor or any Lessor's Affiliate has Defaulted on a Material
Obligation;
(v) When applicable, a list and description of any instances in
which the Lessor or any Lessor's Affiliate has been removed from, or
prohibited from participating in the affairs of any Insured Depository
Institution pursuant to any final enforcement action by the Office of
the Comptroller of the Currency, the Office of Thrift Supervision, the
Board of Governors of the Federal Reserve System, or the FDIC on their
successors; and
(vi) The Lessor's request for waiver of such Conflicts of
Interest or proposal for elimination of such Conflicts of Interest; and
(c) A description of any commitment to pay $50,000 or more to an
Insurer that has been fully released by the Insurer but for which the
Insurer received less than 100% (including interest, late charges and
other costs of collection) of the amount due; and
(d) Any other information which the FDIC may deem appropriate.
(2) Subsequent submissions. FDIC Lease agreements shall require
that during the term of the Lease, the Lessor shall:
(a) immediately notify the FDIC if any of the information
submitted pursuant to this policy was incorrect at the time of
submission or has subsequently become incorrect; and
(b) at any time, submit such information as the FDIC requests in
order to permit the FDIC to determine if a Conflict of Interest
exists.
{{6-28-96 p.5419}}
(3) Failure to provide information. Any Lessor who fails to
provide any of the information required by this policy will neither be
considered for, nor be eligible for, the award of a Lease or a Lease
Amendment.
(4) Misstatement of material fact. Any Lessor who misstates or
fails to disclose to the FDIC a material fact or any Conflict of
Interest, as defined in paragraph III.B.(1) through (5), whether prior
to or during the term of the Lease, will not be considered eligible for
the award of any Lease or Lease Amendment.
VI. Lease agreement requirements
A. Retention of information. FDIC Lease agreements
shall specify that the Lessor shall retain the information upon which
it relied in preparing its certification(s) during the term of the
Lease and for a period of three years following the termination or
expiration of the Lease or any extension thereof, and shall make such
information available for review by the FDIC upon request.
B. Response to requests for additional information.
FDIC Lease agreements shall specify that any Lessor who fails to
respond to a request for information made by the FDIC pursuant to
Section V.B.2.(b) of this policy, shall be in default under the Lease
for which such information was requested.
C. Additional Lease agreement provisions. In addition
to the provisions of this policy, the FDIC may include in its Lease
agreements such provisions, conditions and limitations as the FDIC
deems necessary, including additional standards for Lessor fitness and
integrity, and minimum standards of eithical responsibility for
Lessors.
VII. Delayed compliance in emergencies. In emergencies,
when unforeseeable circumstances make it necessary to enter into a
Lease immediately in order to protect FDIC personnel or property, the
FDIC may delay compliance with this policy.
VIII. Finality of determination. Any determination made
by the FDIC pursuant to this policy shall be in the FDIC's sole
discretion and shall not be subject to further review, except as
otherwise provided pursuant to a specific Lease agreement.
IX. General. Felony offenses as used in the standards
set forth in this statement of policy mean the following statutes that
establish standards to which a Lessor's conduct must conform and which
shall not have been violated. This list is as follows:
A. Bribery of Public Officials (18 U.S.C. 201).
B. Offer of a loan or gratuity to bank examiners
(18 U.S.C. 212).
C. Continuing financial crimes enterprise (18 U.S.C. 225).
D. Taking or using papers relating to claims (18 U.S.C. 285).
E. Conspiracy to defraud the Government with respect to claims (18
U.S.C. 286).
F. False, fictitious or fraudulent claims (18 U.S.C. 287).
G. Bonds and obligations of certain lending agencies
(18 U.S.C. 493).
H. Contractors' bonds, bids, and public records (18 U.S.C. 494).
I. Contracts, deeds, and powers of attorney (18 U.S.C. 495).
J. Chapter 31 Embezzlement and Theft (18 U.S.C. 642 through 668).
K. Statements or entries generally
(18 U.S.C. 1001).
L. Possession of false papers to defraud United States (18 U.S.C.
1002).
M. Bank entries, reports and transactions
(18 U.S.C. 1005).
N. Federal credit institution entries, reports and transactions
(18 U.S.C. 1006).
O. Federal Deposit Insurance Corporation transactions
(18 U.S.C. 1007).
P. Loans and credit applications generally
(18 U.S.C. 1014).
Q. Concealment of assets from conservator, receiver, or liquidating
agent of financial institution (18
U.S.C. 1032).
R. Chapter 63 Mail Fraud (18
U.S.C. 1341 through
1344).
S. Laundering of monetary instruments
(18 U.S.C. 1956).
By order of the Board of Directors, February 6, 1996.
[Source: 61 Fed. Reg. 5554, February 13, 1996, effective
February 6, 1996; 61 Fed. Reg. 19939, May 3, 1996]
{
}
is (1) Less than 80 percent of the median family income for
the metropolitan statistical area (as designated by the Director of the
Office of Management and Budget) in which the census tract is located;
or (2) in the case of a census tract that is not located in a
metropolitan statistical area, less than 80 percent of the median
family income for the state in which the census tract is located, as
determined without taking into account family income in metropolitan
statistical areas in such state. (12 U.S.C. 1831r--1(d)(4)).}
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