II

103D CONGRESS

1ST SESSION S. 1151

To facilitate the flow of credit to small business by easing certain regulatory

burdens on depository institutions, to require analysis of such burdens

and their effectiveness, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 24 (legislative day, JUNE 22), 1993

Mr. DOLE (for himself and Mr. D’AMATO) introduced the following bill; which

was read twice and referred to the Committee on Banking, Housing, and

Urban Affairs

A BILL

To facilitate the flow of credit to small business by easing

certain regulatory burdens on depository institutions, to

require analysis of such burdens and their effectiveness,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Credit Crunch Relief

5 Act of 1993’’.
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1 SEC. 2. EXEMPTION FROM LOAN DOCUMENTATION REVIEW.

2 Section 10 of the Federal Deposit Insurance Act (12

3 U.S.C. 1820) is amended by adding at the end the follow4 ing new subsection:

5 ‘‘(h) EXEMPTION FROM LOAN DOCUMENTATION RE6 VIEW.—

7 ‘‘(1) DEFINITIONS.—For purposes of this sub8 section—

9 ‘‘(A) the term ‘adequately capitalized’ has

10 the same meaning as in section 38;

11 ‘‘(B) the term ‘eligible depository institu12 tion’ means a depository institution that—

13 ‘‘(i) is adequately capitalized; and

14 ‘‘(ii) has a CAMEL or MACRO com15 posite rating of 1 or 2 under the Uniform

16 Financial Institutions Rating System as of

17 the most recent examination of such insti18 tution by the appropriate Federal banking

19 agency;

20 ‘‘(C) the term ‘small business’ has the

21 meaning given to such term by the Adminis22 trator of the Small Business Administration;

23 ‘‘(D) the term ‘small farm’ has the mean24 ing given to such term by the Secretary of Agri25 culture; and
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1 ‘‘(E) the term ‘qualifying loan’ means a

2 loan to a small business or a small farm that

3 is identified by an eligible depository institution

4 under paragraph (3) and that otherwise meets

5 the requirements of this subsection.

6 ‘‘(2) EXEMPTION.—Except to the extent pro7 vided by an order or regulation of an appropriate

8 Federal banking agency, a depository institution ex9 aminer may not consider the adequacy of the docu10 mentation accompanying the extension of qualifying

11 loans by an eligible depository institution in making

12 any examination or evaluation of the institution

13 under this section. Qualifying loans shall be evalu14 ated by the appropriate Federal banking agency

15 solely on the performance of such loans.

16 ‘‘(3) QUALIFYING LOANS.—An eligible deposi17 tory institution may identify a portion of its port18 folio of loans to small businesses or to small farms,

19 in writing, as qualifying loans for purposes of the ex20 emption provided in paragraph (2).

21 ‘‘(4) LIMITATIONS.—

22 ‘‘(A) LOAN TYPES AND AMOUNTS.—A loan

23 may not be considered to be a qualifying loan

24 if—
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1 ‘‘(i) inclusion of the loan in the total

2 number of qualifying loans identified by an

3 eligible depository institution would result

4 in an aggregate value of all qualifying

5 loans made by that institution equal to

6 more than 40 percent of the total capital

7 of the institution;

8 ‘‘(ii) the loan amount is more than

9 the lesser of—

10 ‘‘(I) $900,000; or

11 ‘‘(II) 5 percent of the total cap12 ital of the eligible depository institu13 tion; or

14 ‘‘(iii) the borrower is an executive offi15 cer, director, or principal shareholder of

16 such institution.

17 ‘‘(B) ADJUSTMENTS.—Each appropriate

18 Federal banking agency may adjust the limita19 tions set forth in subparagraph (A), to permit

20 eligible depository institutions to make addi21 tional qualifying loans, consistent with preserv22 ing the safety and soundness of such institu23 tions, in order to further promote credit avail24 ability.
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1 ‘‘(5) INTERNAL DOCUMENTATION.—An eligible

2 depository institution shall—

3 ‘‘(A) maintain an aggregate list or ac4 counting segregation of its qualifying loans

5 which includes the current performance status

6 of each such loan; and

7 ‘‘(B) fully evaluate and maintain an inter8 nal record of the collectibility of each qualifying

9 loan in determining the adequacy of its allow10 ance for loan and lease losses or general valu11 ation allowance attributable to such loan.

12 ‘‘(6) LOSS OF ELIGIBILITY.—A depository insti13 tution may not identify any new qualifying loans (in14 cluding loan renewals) for purposes of the exemption

15 provided in paragraph (2) at any time during which

16 it fails to meet the eligibility requirements of this

17 subsection.’’.

18 SEC. 3. PRESIDENTIAL REVIEW AND AUTHORITY TO SUS19 PEND.

20 (a) IN GENERAL.—Not later than 30 days after the

21 date of enactment of this Act, the President shall conduct

22 a thorough review and evaluation of all statutory and reg23 ulatory provisions affecting insured depository institu24 tions. This review shall include an analysis of—

25 (1) the purposes of the provision;
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1 (2) the effectiveness of the provision in achiev2 ing such purposes;

3 (3) whether any other provision provides an al4 ternative or duplicative means of achieving those

5 purposes;

6 (4) the cost imposed by compliance with the

7 provisions upon insured depository institutions and

8 consumers; and

9 (5) the relationship between the provision, its

10 compliance costs, and the availability of credit in the

11 United States.

12 (b) AUTHORITY TO SUSPEND.—If the President

13 makes a determination described in subsection (c), the

14 President may, by executive order, suspend the applicabil15 ity of—

16 (1) any Federal law affecting insured depository

17 institutions or depository institution holding compa18 nies (or any portion thereof); and

19 (2) any regulation or guideline promulgated by

20 any of the Federal banking agencies (or any portion

21 thereof).

22 (c) DETERMINATION.—The President may not sus23 pend the applicability of any law, regulation, or guideline

24 under subsection (b) unless the President determines

25 that—
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1 (1) the Federal law, regulation, or guideline has

2 accomplished its goal and the law, regulation, or

3 guideline is therefore no longer necessary;

4 (2) the law, regulation, or guideline is not as ef5 fective in achieving its intended purpose as other

6 available alternatives that would impose lesser costs

7 on financial institutions, their customers, or the

8 economy;

9 (3) the cost of compliance with the law, regula10 tion, or guideline outweighs the potential benefits

11 sought to be accomplished by the law, regulation, or

12 guideline; or

13 (4) the law, regulation, or guideline has a nega14 tive impact on the availability of credit in the United

15 States which outweighs the benefits sought to be ac16 complished by the law, regulation, or guideline.

17 (d) PUBLICATION AND EFFECTIVE DATE.—A Presi18 dential order issued pursuant to this section shall be pub19 lished in the Federal Register, and shall become effective

20 30 days after such publication, unless the President, for

21 good cause, determines that a shorter period is necessary

22 and in the public interest.

23 (e) CONSULTATION.—Prior to making a determina24 tion under subsection (b) that a law, regulation, or guide25 line is to be suspended, the President shall consult with
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1 the Secretary of the Treasury, the Chairperson of the Fed2 eral Deposit Insurance Corporation, the Chairman of the

3 Board of Governors of the Federal Reserve System, the

4 Comptroller of the Currency, and the Director of the Of5 fice of Thrift Supervision.

6 (f) NOTIFICATION.—The President shall notify the

7 Committee on Banking, Housing, and Urban Affairs of

8 the Senate and the Committee on Banking, Finance and

9 Urban Affairs of the House of Representatives prior to

10 issuing any order under subsection (b).

11 (g) RESTRICTION.—Nothing in this section author12 izes the President to suspend any law, regulation, or

13 guideline—

14 (1) that is necessary for the safe and sound op15 eration of insured depository institutions; or

16 (2) that—

17 (A) prohibits discrimination in the provi18 sion of financial services based on race, sex, na19 tional origin, marital status, or age;

20 (B) relates directly to the conduct of mon21 etary policy; or

22 (C) pertains to an enforcement proceeding

23 or supervisory action with respect to a particu24 lar institution or party.
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1 (h) SUNSET.—The authority of the President to sus2 pend any law, regulation, or guideline under this section

3 shall terminate on January 1, 1997.

4 (i) INCORPORATED DEFINITIONS.—For purposes of

5 this section, the terms ‘‘Federal banking agencies’’ and

6 ‘‘insured depository institution’’ have the same meanings

7 as in section 3 of the Federal Deposit Insurance Act.

8 SEC. 4. NEW FEDERAL BANKING REGULATIONS SUBJECT

9 TO REGULATORY IMPACT ANALYSIS.

10 (a) REGULATORY IMPACT ANALYSIS.—

11 (1) IN GENERAL.—No new regulation shall be

12 promulgated by an appropriate Federal banking

13 agency until such agency has conducted a regulatory

14 impact analysis and concluded that the benefits of

15 the proposed regulation outweigh the costs of imple16 menting and complying with the regulation, includ17 ing the particular benefits and costs of compliance

18 with the proposed regulation for small banks.

19 (2) NEW REGULATIONS.—For purposes of this

20 subsection, a regulation shall be considered to be

21 ‘‘new’’ if it is promulgated, modified, amended, or

22 reissued on or after the date of enactment of this

23 Act.

24 (b) COSTS.—In reviewing the costs of implementing

25 and complying with a proposed regulation under sub-
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1 section (a), the appropriate Federal banking agency shall

2 consider the impact of the proposed regulation on—

3 (1) the national economy (including the poten4 tial for job creation);

5 (2) consumers;

6 (3) small businesses;

7 (4) small banks (including administrative and

8 personnel costs);

9 (5) other users of financial services; and

10 (6) new paperwork and documentation require11 ments.

12 (c) BENEFITS.—In reviewing the benefits of a pro13 posed regulation under subsection (a), the appropriate

14 Federal banking agency shall consider the benefits of the

15 proposed regulation to—

16 (1) the public;

17 (2) taxpayers; and

18 (3) the overall safety and soundness of the Na19 tion’s banking system.

20 (d) EASING BURDEN ON SMALL BANKS.—In con21 ducting the regulatory impact analysis under subsection

22 (a), the appropriate Federal banking agency shall consider

23 including in the proposed regulation a provision that eases

24 the regulatory burden on small banks, including special

25 compliance provisions.
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1 (e) ESTIMATE REQUIRED.—The regulatory impact

2 analysis required by subsection (a) shall include an esti3 mate of the number of small banks and small businesses

4 that will be affected by the regulation.

5 (f) DEFINITIONS.—For the purposes of this section,

6 the following definitions shall apply:

7 (1) INCORPORATED DEFINITIONS.—The terms

8 ‘‘appropriate Federal banking agency’’ and ‘‘bank’’,

9 have the same meanings as in section 3 of the Fed10 eral Deposit Insurance Act.

11 (2) REGULATORY IMPACT ANALYSIS.—The term

12 ‘‘regulatory impact analysis’’ means a review of the

13 potential costs and benefits of a proposed regulation,

14 and in particular, the costs to small banks and their

15 customers.

16 (3) SMALL BANK.—The term ‘‘small bank’’

17 means a bank or savings association with total as18 sets of not more than $400,000,000.

19 SEC. 5. PRESUMPTION OF COMPLIANCE WITH COMMUNITY

20 REINVESTMENT ACT.

21 Section 804 of the Community Reinvestment Act of

22 1977 (12 U.S.C. 2903) is amended by adding at the end

23 the following new subsection:

24 ‘‘(c) SAFE HARBOR PROVISION.—
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1 ‘‘(1) PRESUMPTION OF COMPLIANCE.—In the

2 evaluation of an application for a deposit facility by

3 a regulated financial institution that has received a

4 rating of ‘Satisfactory’ or ‘Outstanding’ in the most

5 recent written evaluation of its record under section

6 807(b), the institution shall be entitled to a pre7 sumption, rebuttable by clear and convincing evi8 dence, that it is meeting the credit needs of the en9 tire community and is otherwise in compliance with

10 the requirements of this title.

11 ‘‘(2) RESOLUTION OF DISPUTES.—The appro12 priate Federal financial supervisory agency shall re13 solve any disputed evaluation of compliance with this

14 title not later than 30 days after the dispute

15 arises.’’.

16 SEC. 6. EXTENSION OF EFFECTIVE DATE.

17 Section 132 of the Federal Deposit Insurance Cor18 poration Improvement Act of 1991 (12 U.S.C. 1831p-1

19 note) is amended—

20 (1) in subsection (b), by striking ‘‘August 1,

21 1993’’ and inserting ‘‘January 1, 1996’’; and

22 (2) by amending subsection (c) to read as fol23 lows:
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1 ‘‘(c) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall become effective on January 1,

3 1996.’’.

4 SEC. 7. CONSUMER SURVEYS AND REPORT.

5 (a) SURVEYS.—Not later than 6 months after the

6 date of enactment of this Act, each of the Federal banking

7 agencies (as defined in section 3 of the Federal Deposit

8 Insurance Act) shall conduct a statistically valid survey

9 of financial services consumers to determine the general

10 public awareness of, perceived benefits to consumers of,

11 and cost effectiveness of the Federal banking laws under

12 which the agency operates that are intended for the pro13 tection of such consumers, including, but not limited to—

14 (1) the Expedited Funds Availability Act;

15 (2) the Truth in Lending Act;

16 (3) the Truth in Savings Act;

17 (4) the Real Estate Settlement Procedures Act

18 of 1974;

19 (5) the Home Mortgage Disclosure Act of 1975;

20 (6) the Fair Credit Reporting Act;

21 (7) the Equal Credit Opportunity Act;

22 (8) the Community Reinvestment Act of 1977;

23 (9) the Home Equity Loan Consumer Protec24 tion Act;
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1 (10) the Fair Credit and Charge Card Disclo2 sure Act; and

3 (11) the rules and regulations promulgated

4 under those Acts.

5 (b) REPORT.—Not later than 30 days after comple6 tion of its survey under subsection (a), each of the Federal

7 banking agencies shall submit a report of the results of

8 its survey to the Committee on Banking, Housing, and

9 Urban Affairs of the Senate and the Committee on Bank10 ing, Finance and Urban Affairs of the House of Rep11 resentatives.

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