69–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–465 

PRESERVING AND EXPANDING MINORITY DEPOSITORY 

INSTITUTIONS ACT 

DECEMBER 4, 2007.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

[To accompany H.R. 4043] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 4043) to amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to preserve and expand minority 

depository institutions, and for other purposes, having considered 

the same, report favorably thereon without amendment and recommend that the bill do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 2 

Background and Need for Legislation .................................................................... 2 

Hearings ................................................................................................................... 3 

Committee Consideration ........................................................................................ 4 

Committee Votes ...................................................................................................... 4 

Committee Oversight Findings ............................................................................... 4 

Performance Goals and Objectives ......................................................................... 4 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 4 

Committee Cost Estimate ....................................................................................... 4 

Congressional Budget Office Estimate ................................................................... 4 

Federal Mandates Statement ................................................................................. 5 

Advisory Committee Statement .............................................................................. 5 

Constitutional Authority Statement ...................................................................... 6 

Applicability to Legislative Branch ........................................................................ 6 

Earmark Identification ............................................................................................ 6 

Section-by-Section Analysis of the Legislation ...................................................... 6 

Changes in Existing Law Made by the Bill, as Reported ..................................... 6 


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1For purposes of the GAO Report, ‘‘minority-owned financial institutions’’ or ‘‘minority banks’’ refers to all depository institutions, including thrifts, that are considered minority- or womenowned by the Department of the Treasury (Treasury) and federal banking regulators—the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Federal Reserve), the Office of the Comptroller of Currency (OCC) and the Office of Thrift 

Supervision (OTS). FDIC and OTS are subject to the ‘‘minority depository institution’’ definition 

set forth in Section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act 

of 1989 (FIRREA). 2 Effective July 7, 2004, GAO’s legal name was changed from the U.S. General Accounting Office to the U.S. Government Accountability Office. 

PURPOSE AND SUMMARY

H.R. 4043, the ‘‘Preserving and Expanding Minority Depository 

Institutions Act,’’ extends the requirements under Section 308 of 

the Financial Institutions Reform, Recovery, and Enforcement Act 

of (FIRREA) 1989 to the Chairman of the Board of Governors of 

the Federal Reserve System and the Comptroller of the Currency 

(OCC). H.R. 4043 also requires the federal banking agencies subject to Section 308 of FIRREA to submit an annual report to Congress describing their efforts to implement it. 

BACKGROUND AND NEED FOR LEGISLATION

Minority-owned financial institutions 1 comprise about two percent of all financial institutions and total industry assets in the 

United States. Under Section 308 of the FIRREA, the Secretary of 

the Treasury is required to consult with the Chairperson of the 

Board of Directors of the Federal Deposit Insurance Corporation 

(FDIC) and the Director of the Office of Thrift Supervision (OTS) 

on the methods to achieve the following five goals: 

(1) preserving the present number of minority banks; 

(2) preserving their minority character in cases involving 

mergers or acquisitions of minority banks; 

(3) providing technical assistance to prevent the insolvency 

of institutions that are not currently insolvent; 

(4) promoting and encouraging the creation of new minority 

banks; and 

(5) providing for training, technical assistance and educational programs. 

Only the OTS, under Section 3(g)(2) of the Home Owners’ Loan 

Act, is required to submit an annual report to Congress describing 

its actions to carry out Section 308 of FIRREA. 

In November 1993, the U.S. General Accounting Office 2 (GAO) 

issued a report entitled, ‘‘Minority-Owned Financial Institutions: 

Status of Federal Efforts to Preserve Minority Ownership’’ at the 

request of Representative John Conyers, then Chairman of the 

Government Operations Committee, on the implementation of Section 308 of FIRREA and Section 403 of the Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991. 

(GAO/GGD–94–1). In this report, GAO found that the agencies had 

taken steps to satisfy the statutory requirements under Section 308 

of FIRREA but they had not assessed whether these steps were effective. 1993 GAO Report at 3. GAO also found that minority trade 

associations and the executives of minority-owned financial institutions had mixed perceptions of the effectiveness of these agencies’

programs. Id. at 15. GAO recommended that Treasury consult with 

the FDIC and OTS to systematically assess the effectiveness of 

their approaches. Id. at 19. GAO also noted that a key component 


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of the assessment process should be surveys of minority-owned financial institutions to glean their views on the federal regulators’

efforts to preserve these institutions. Id. 

In October 2005, 29 Financial Services Committee Democratic 

members sent a letter to the GAO requesting a review of all of the 

federal banking agencies’ current efforts to promote and preserve 

minority-owned financial institutions and the views of the minority 

financial services industry on the effectiveness of these efforts. In 

October 2006, the GAO issued a report entitled, ‘‘Minority Banks: 

Regulators Need to Better Assess Effectiveness of Support Efforts.’’

(GAO–07–6). While the scope of the 1993 GAO Report was limited 

to just the agencies that are statutorily mandated under Section 

308 of FIRREA to try to maintain minority ownership of banks, the 

2006 GAO Report more broadly addressed the efforts of the FDIC, 

OTS, OCC, and the Federal Reserve to promote and preserve minority banks. 

Despite the recommendation contained in the 1993 GAO Report, 

GAO found that none of the banking regulators have routinely surveyed institutions within their jurisdiction to assess the effectiveness of support efforts to minority banks, nor have they established 

outcome-oriented performance measures to gauge results. 2006 

GAO Report at 20. As a result, according to the GAO, regulators 

need more information in order to assess the results of their efforts, or to identify areas for improvement. Id. However, the 2005 

report also found while the regulators offer training and educational opportunities to assist minority banks, these programs are 

underutilized. The GAO also found that the banks that do participate in these programs find this assistance very helpful. 

HEARINGS

The Oversight and Investigations Subcommittee of the Financial 

Services Committee held a hearing entitled, ‘‘Preserving and Expanding Minority Banks,’’ on Tuesday, October 30, 2007, to examine federal banking regulators’ efforts to promote and preserve minority-owned financial institutions and to review the GAO report 

entitled, ‘‘Minority Banks: Regulators Need to Better Assess Effectiveness of Support Efforts,’’ that was issued in October 2006. The 

following witnesses testified: 

• Mr. George Scott, Director, Education, Workforce & Income Security Issues, Government Accountability Office 

• Ms. Sandra L. Thompson, Director, Division of Supervision 

and Consumer Protection, Federal Deposit Insurance Corporation 

• Ms. Montrice Yakimov, Managing Director, Compliance 

and Consumer Protection, Office of Thrift Supervision 

• Ms. Sandra F. Braunstein, Director, Division of Consumer 

and Community Affairs, Board of Governors of the Federal Reserve System 

• Mr. John Walsh, Chief of Staff and Public Affairs, Office 

of Comptroller of the Currency 

• Mr. Bob Cooper, Senior Counsel, One United Bank, on behalf of the National Bankers Association (NBA) 

• Ms. Kim Saunders, Chief Executive Officer of Mechanics & 

Farmers Bank 


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COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on November 7, 2007, and ordered H.R. 4043, the ‘‘Preserving and Expanding Minority Depository Institutions Act’’, favorably reported 

to the House by a voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. No record votes were 

taken with in conjunction with the consideration of this legislation. 

A motion by Mr. Frank to report the bill to the House with a favorable recommendation was agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

H.R. 4043 extends the requirements under Section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 

(FIRREA) 1989 to the Chairman of the Board of Governors of the 

Federal Reserve System and the Comptroller of the Currency. H.R. 

4043 also requires the federal banking agencies subject to Section 

308 of FIRREA to submit an annual report to Congress describing 

their efforts to implement it. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 


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U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, November 30, 2007. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4043, the Preserving and 

Expanding Minority Depository Institutions Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Kathleen Gramp. 

Sincerely, 

PETER H. FONTAINE

(For Peter R. Orszag, Director). 

Enclosure. 

H.R. 4043—Preserving and Expanding Minority Depository Institutions Act 

Existing law requires officials from two of the federal agencies 

that regulate banks—the Office of Thrift Supervision (OTS) and 

the Federal Deposit Insurance Corporation (FDIC)—to consult with 

the Department of the Treasury on methods to preserve and promote minority ownership of depository institutions. H.R. 4043 

would direct the Chairman of the Board of Governors of the Federal Reserve System and the Comptroller of the Currency to participate in those activities. In addition, the bill would require each 

of the participating agencies to submit an annual report to the 

Congress on actions taken to implement the law. 

Based on information from the Federal Reserve and affected 

agencies, CBO estimates that additional costs under the bill incurred by the Office of the Comptroller of the Currency, the OTS, 

and FDIC would affect direct spending, but such expenditures 

would be offset by income from annual fees or deposit insurance 

premiums. The budgetary effects on the Federal Reserve would be 

recorded as changes in revenues, and CBO estimates that such 

changes would reduce revenues by less than $500,000 a year. Enacting the bill would have a negligible net effect on direct spending. 

H.R. 4043 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on state, local, or tribal governments. 

The CBO staff contact for this estimate is Kathleen Gramp. This 

estimate was approved by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 


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CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 4043 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section establishes the short title of the bill as the ‘‘Preserving and Expanding Minority Depository Institutions Act.’’

Section 2. Preserving and expanding minority depository institutions 

This section extends the requirements under Section 308 of the 

Financial Institutions Reform, Recovery, and Enforcement Act of 

(FIRREA) 1989 to the Chairman of the Board of the Governors of 

the Federal Reserve System and the Comptroller of the Currency. 

It also requires the federal banking agency subject to Section 308 

of FIRREA to submit an annual report to Congress describing actions taken to carry out the requirements of Section 308 of 

FIRREA. Because the OTS is currently required to submit an annual report of its actions to implement Section 308 of FIRREA 

under Section 3(g)(2) of the Home Owners’ Loan Act, the bill makes 

a technical and conforming change to repeal the existing reporting 

requirement under HOLA. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND 

ENFORCEMENT ACT OF 1989 

* * * * * * * 


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TITLE III—SAVINGS ASSOCIATIONS 

* * * * * * * 

SEC. 308. PRESERVING MINORITY OWNERSHIP OF MINORITY FINANCIAL INSTITUTIONS. 

(a) CONSULTATION ON METHODS.—The Secretary of the Treasury 

shall consult with the Chairman of the Board of Governors of the 

Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, and the Chairperson of the 

Board of Directors of the Federal Deposit Insurance Corporation on 

methods for best achieving the following goals: 

(1) * * * 

* * * * * * * 

(c) REPORTS.—The Secretary of the Treasury, the Chairman of the 

Board of Governors of the Federal Reserve System, the Comptroller 

of the Currency, the Director of the Office of Thrift Supervision, and 

the Chairperson of the Federal Deposit Insurance Corporation shall 

each submit an annual report to the Congress containing a description of actions taken to carry out this section. 

* * * * * * * 

HOME OWNERS’ LOAN ACT 

* * * * * * * 

SEC. 3. DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION. 

(a) * * * 

* * * * * * * 

(g) ANNUAL REPORT REQUIRED.—The Director shall make an annual report to the Congress. Such report shall include— (1) * * * 

ø(2) a description of actions taken to carry out section 308 

of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.¿ 

(2) [Repealed]. 

* * * * * * * 

Æ 


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