Economic Revitalization Act of 1994

Summary: Economic Revitalization Act of 1994 - Amends Federal law to set forth conditions under which the Secretary of the Treasury may:  (1) participate in and guarantee loans made by certain participating financial institutions to specified sound business enterprises ("qualified loans"); and (2) issue securities backed by a pool of qualified loans acquired by the Secretary for such purpose.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Economic Revitalization Act of 
1994''.

SEC. 2. PARTICIPATION AND COOPERATION BETWEEN PUBLIC AND PRIVATE 
              SECTORS TO STIMULATE ECONOMIC DEVELOPMENT.

    (a) In General.--Title 31, United States Code, is amended by 
redesignating subtitle VI as subtitle IX and by inserting after 
subtitle V the following new subtitle:

     ``Subtitle VI--Cooperation Between Public and Private Sectors

``Chapter                                                          Sec.
``75. Cooperative Economic Growth and Development Financing.       7501

  ``CHAPTER 75--COOPERATIVE ECONOMIC GROWTH AND DEVELOPMENT FINANCING

``Sec.
``7501. Definitions.
``7502. Financial participation.
``7503. Financing.
``7504. Participating financial institutions.
``Sec. 7501. Definitions
    ``For purposes of this chapter--
            ``(1) Participating financial institution.--The term 
        `participating financial institution' means any depository 
        institution (as defined in section 19(b)(1)(A) of the Federal 
        Reserve Act) or other lending institution--
                    ``(A) which meets such criteria as the Secretary 
                may establish for participating in any cooperative 
                economic growth and development financing project 
                established by the Secretary under this chapter; and
                    ``(B) whose application to participate as a lender 
                in any such project, subject to such conditions as the 
                Secretary may prescribe, is approved by the Secretary.
            ``(2) Qualified loan.--The term `qualified loan' means a 
        loan which--
                    ``(A) is made to a business which--
                            ``(i) is in good financial condition;
                            ``(ii) has a strong potential for expansion 
                        and growth; and
                            ``(iii) is experiencing difficulty in 
                        obtaining sufficient amounts of credit on terms 
                        which are economically viable for such business 
                        due to prevailing economic conditions or other 
                        circumstances unrelated to the financial 
                        condition of the business;
                    ``(B) is made for purposes which the Secretary 
                determines will--
                            ``(i) produce a significant net increase in 
                        the number of jobs relative to the total amount 
                        of the loan; and
                            ``(ii) stimulate economic growth in a 
                        region or community in which such business is 
                        located; and
                    ``(C) meets such underwriting standards and other 
                criteria as the Secretary determines to be appropriate.
            ``(3) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
``Sec. 7502. Financial participation
    ``(a) Loan Participations and Guarantees.--
            ``(1) In general.--Subject to subsections (b) and (d), the 
        Secretary may--
                    ``(A) purchase a participation in any qualified 
                loan made by a participating financial institution; and
                    ``(B) guarantee the payment of interest on, and the 
                repayment of principal of, a portion of any qualified 
                loan made by a participating financial institution.
            ``(2) Terms and conditions.--The Secretary may establish 
        such terms and conditions for a loan participation or loan 
        guarantee under paragraph (1) as the Secretary determines to be 
        appropriate, including--
                    ``(A) minimum and maximum limitations on the amount 
                of any qualified loan which is eligible for any such 
                participation or guarantee; and
                    ``(B) in the case of a loan guarantee with respect 
                to any qualified loan, a requirement that the 
                participating financial institution which originated 
                the loan maintain a prescribed amount of reserves with 
                respect to the loan or retain a subordinated 
                participating interest in the loan.
            ``(3) Fees.--The Secretary may impose a fee in such amount 
        as the Secretary determines to be appropriate for any loan 
        participation or loan guarantee made by the Secretary under 
        this section to cover the costs incurred by the Secretary in 
        carrying out this subsection.
    ``(b) Maximum Amount Limitations on Participations and 
Guarantees.--
            ``(1) Loan participations.--Except with respect to the 
        purchase of loans in connection with the securitization of 
        qualified loans in accordance with subsection (c), the amount 
        of any loan participation or other interest in any qualified 
        loan acquired by the Secretary under this chapter may not 
        exceed the amount which is equal to 70 percent of the total 
        amount of the loan.
            ``(2) Loan guarantees.--The amount of any guarantee made by 
        the Secretary under subsection (a)(2) with respect to any 
        qualified loan may not exceed 50 percent of the amount which is 
        equal to--
                    ``(A) the total principal of the loan; minus
                    ``(B) the amount of any participation in such loan 
                which the Secretary has acquired.
    ``(c) Securitization of Qualified Loans.--
            ``(1) In general.--The Secretary may issue securities 
        backed by a pool of qualified loans acquired by the Secretary 
        for such purpose.
            ``(2) Securities not backed by full faith and credit of the 
        united states.--
                    ``(A) In general.--A security issued by the 
                Secretary under paragraph (1) shall not be an 
                obligation of the United States, or guaranteed in any 
                respect by, the United States.
                    ``(B) Coordination with loan guarantees.--A loan 
                guarantee provided by the Secretary with respect to any 
                portion of a qualified loan shall cease to be effective 
                at the time the loan is acquired by the Secretary for 
                inclusion in a pool of qualified loans under paragraph 
                (1).
            ``(3) Standards.--The Secretary shall establish standards 
        governing the composition of a pool of qualified loans under 
        paragraph (1), including standards requiring--
                    ``(A) a broad geographical distribution of the 
                businesses which received the loans which are in the 
                pool;
                    ``(B) a diversity in the types of businesses which 
                received the loans and in the purposes for which the 
                loans were made;
                    ``(C) a wide variety in the amounts of principal of 
                the qualified loans included in the pool; and
                    ``(D) a large number of loans in the pool.
            ``(4) Maximum size of loan includible in pool.--In order to 
        be included in a pool under paragraph (1), the total amount of 
        principal of a qualified loan may not exceed an amount equal to 
        10 percent of the total amount of all loans in such pool.
            ``(5) Authority to purchase qualified loans for inclusion 
        in pool.--Subject to subsection (d), the Secretary may purchase 
        qualified loans for inclusion in a pool under paragraph (1).
    ``(d) Annual Limitation on Aggregate Amount of Loans and 
Guarantees.--
            ``(1) Loan participations.--The aggregate amount of 
        qualified loan participations acquired by the Secretary and the 
        amount of qualified loans purchased by the Secretary for 
        inclusion in a pool under subsection (c) shall not exceed 
        $100,000 in any fiscal year.
            ``(2) Loan guarantees.--The aggregate amount of guarantees 
        issued by the Secretary with respect to qualified loans shall 
        not exceed $200,000 in any fiscal year.
``Sec. 7503. Financing
    ``(a) Bond Authority.--
            ``(1) In general.--In order to obtain additional resources 
        to carry out section 7503 at no expense to the Federal 
        Government or the taxpayer, the Secretary may issue bonds in 
        accordance with this section to obtain additional resources to 
        carry out section 7503.
            ``(2) Private guarantee.--The Secretary may not issue a 
        bond under paragraph (1) unless (a) the issuance is fully 
        guaranteed by a financial institution which has the highest 
        credit rating of any financial institution in the United States 
        by at least 1 unaffiliated, nationally recognized statistical 
        rating organization or (b) the loan obligation is insured or 
        underwritten by a letter of credit or credit insurance issued 
        by a financial institution which has the highest credit rating 
        of any financial institution in the United States by at least 1 
        unaffiliated, nationally statistical rating organization.
            ``(3) Terms and conditions imposed by underwriter.--Except 
        to the extent otherwise provided in this chapter, the Secretary 
        shall comply with any term or condition imposed by an 
        underwriter in connection with the issuance of any bond under 
        paragraph (1).
            ``(4) Securities not backed by full faith and credit of the 
        united states.--A bond issued by the Secretary under paragraph 
        (1) shall not be an obligation of the United States, or 
        guaranteed in any respect by, the United States.
``Sec. 7504. Participating financial institutions
    ``(a) Standards and Application Process.--The Secretary shall 
establish standards and application procedures for the designation of 
participating financial institutions for purposes of this chapter.
    ``(b) Advertising and Public Notice.--The Secretary shall provide 
advertising and public notices, and take such other actions as the 
Secretary determines to be appropriate, to publicize--
            ``(1) the existence of the cooperative financial 
        participation projects established under this chapter; and
            ``(2) the names and addresses of the participating 
        financial institutions involved in such cooperative 
        projects.''.
    (b) Clerical Amendment.--The table of subtitles for title 31, 
United States Code, is amended by redesignating the item relating to 
subtitle VI as subtitle IX and by inserting after the item relating to 
subtitle V the following new item:

``VI. Cooperation Between Public and Private Sectors........    7501''.