II

103D CONGRESS

1ST SESSION S. 1275

To facilitate the establishment of community development financial

institutions.

IN THE SENATE OF THE UNITED STATES

JULY 21 (legislative day, JUNE 30), 1993

Mr. RIEGLE (for himself, Mr. SARBANES, Mr. DODD, Mr. KERRY, Mrs.

BOXER, Mr. CAMPBELL, Ms. MOSELEY-BRAUN, and Mr. BRADLEY) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To facilitate the establishment of community development

financial institutions.

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 ‘‘Community Develop5 ment Banking and Financial Institutions Act of 1993’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds that—

8 (1) many of the Nation’s urban and rural com9 munities and Indian reservations face critical social
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1 and economic problems arising in part from the lack

2 of economic growth, people living in poverty, and the

3 lack of employment and other opportunities;

4 (2) the restoration and maintenance of the

5 economies of these communities will require coordi6 nated development strategies, intensive supportive

7 services, and increased access to capital and credit

8 for development activities, including investment in

9 businesses, housing, commercial real estate, human

10 development, and other activities that promote the

11 long-term economic and social viability of the com12 munity;

13 (3) in many urban and rural communities, low14 and moderate-income neighborhoods, and Indian res15 ervations, there is a shortage of capital and credit

16 for business and affordable housing;

17 (4) access to capital and credit is essential to

18 unleash the untapped entrepreneurial energy of

19 America’s poorest communities and to empower indi20 viduals and communities to become self-sufficient;

21 and

22 (5) community development financial institu23 tions have proven their ability to identify and re24 spond to community needs for capital, credit, and
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1 development services in the absence of, or as a com2 plement to, services provided by other lenders.

3 (b) PURPOSE.—The purpose of this Act is to create

4 a Community Development Banking and Financial Insti5 tutions Fund that will support a program of investment

6 in and assistance to community development financial in7 stitutions. The Community Development Banking and Fi8 nancial Institutions Fund will provide financial and tech9 nical assistance, including training, to community develop10 ment financial institutions, serve as a national information

11 clearinghouse, and be an institutional voice for community

12 development. The community development financial insti13 tutions that the Community Development Banking and

14 Financial Institutions Fund supports will provide capital,

15 credit, and development services to targeted investment

16 areas or populations, and will promote economic revitaliza17 tion and community development.

18 SEC. 3. DEFINITIONS.

19 (a) APPROPRIATE FEDERAL BANKING AGENCY.—

20 The term ‘‘appropriate Federal banking agency’’ has the

21 same meaning given such term in section 3(q) of the Fed22 eral Deposit Insurance Act (12 U.S.C. 1813(q)).

23 (b) COMMUNITY DEVELOPMENT FINANCIAL INSTI24 TUTION.—The term ‘‘community development financial in25 stitution’’ means any bank, savings association, depository
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1 institution holding company, credit union, micro-enter2 prise loan fund, community development corporation, com3 munity development revolving loan fund, minority-owned

4 or other insured depository institution, or non-depository

5 organization that—

6 (1) has as its primary mission the promotion of

7 community development through the provision of

8 capital, credit, or development services in its invest9 ment areas or to targeted populations; and

10 (2) encourages, through representation on its

11 governing board or otherwise, the input of residents

12 in the investment area or the targeted populations.

13 A depository institution holding company may qualify as

14 a community development financial institution only if the

15 holding company and its subsidiaries collectively satisfy

16 the requirements of paragraphs (1) and (2). No subsidiary

17 of a depository institution holding company may qualify

18 as a community development financial institution if the

19 holding company and its subsidiaries collectively do not

20 meet the requirements of paragraphs (1) and (2). The

21 term ‘‘community development financial institution’’ does

22 not include an agency or instrumentality of the United

23 States or an agency or instrumentallity of any State or

24 political subdivision thereof.
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1 (c) DEPOSITORY INSTITUTION HOLDING COM2 PANY.—The term ‘‘depostitory institution holding com3 pany’’ has the same meaning given such term in section

4 3(w) of the Federal Deposit Insurance Act (12 U.S.C.

5 1813(w)).

6 (d) DEVELOPMENT SERVICES.—The term ‘‘develop7 ment services’’ means activities conducted by a community

8 development financial institution that promote community

9 development by developing, supporting, and strengthening

10 the lending, investment, and capacity-building activities

11 undertaken by institutions, including, but not limited to—

12 (1) business planning services;

13 (2) financial and credit counseling services;

14 (3) marketing and management assistance; and

15 (4) administrative activities associated with

16 lending or investment.

17 (e) INSURED COMMUNITY DEVELOPMENT FINANCIAL

18 INSTITUTION.—The term ‘‘insured community develop19 ment financial institution’’ means any community develop20 ment financial institution that is an insured depository in21 stitution. The term also includes an insured credit union

22 which has been designated as low-income by the National

23 Credit Union Administration.

24 (f) INSURED CREDIT UNION.—The term ‘‘insured

25 credit union’’ has the same meaning given such term in
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1 section 101(7) of the Federal Credit Union Act (12 U.S.C.

2 1752(7)).

3 (g) INSURED DEPOSITORY INSTITUTION.—The term

4 ‘‘insured depository institution’’ has the same meaning

5 given such term in section 3(c) of the Federal Deposit In6 surance Act (12 U.S.C. 1813(c)).

7 (h) INVESTMENT AREA.—The term ‘‘investment

8 area’’ means an identifiable community that—

9 (1) meets objective criteria of distress, including

10 the number of low-income families, the extent of

11 poverty, the extent of unemployment, the extent of

12 unmet credit needs, the degree of availability of

13 basic financial services, the degree of limited access

14 to capital and credit provided by existing financial

15 institutions, and other factors that the Fund deter16 mines to be appropriate; or

17 (2) is located in an empowerment zone or enter18 prise community designated under section 1391 of

19 the Internal Revenue Code of 1986.

20 (i) QUALIFIED COMMUNITY DEVELOPMENT FINAN21 CIAL INSTITUTION.—The term ‘‘qualified community de22 velopment financial institution’’ means a community devel23 opment financial institution that meets the requirements

24 of sections 5(b) (2) through (8) of this Act.
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1 (j) TARGETED POPULATION.—The term ‘‘targeted

2 population’’ means an identifiable group of low-income or

3 disadvantaged persons that are underserved by existing fi4 nancial institutions.

5 SEC. 4. ESTABLISHMENT OF NATIONAL FUND FOR COMMU6 NITY DEVELOPMENT BANKING.

7 (a) IN GENERAL.—There is created and chartered a

8 body corporate to be known as the Community Develop9 ment Banking and Financial Institutions Fund (referred

10 to in this Act as the ‘‘Fund’’) that shall have the powers

11 and responsibilities specified by this Act. The Fund shall

12 have succession until dissolved. The charter of the Fund

13 may be revised, amended, or modified by Congress at any

14 time. The offices of the Fund shall be in Washington, D.C.

15 (b) BOARD OF DIRECTORS.—

16 (1) IN GENERAL.—The powers and manage17 ment of the Fund shall be vested in a Board of Di18 rectors (referred to in this Act as the ‘‘Board’’),

19 which shall have nine members.

20 (2) MEMBERS.—The members of the Board

21 shall consist of the following:

22 (A) The Secretary of Agriculture.

23 (B) The Secretary of Commerce.

24 (C) The Secretary of Housing and Urban

25 Development.
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1 (D) The Secretary of the Treasury.

2 (E) The Administrator of the Small Busi3 ness Administration.

4 (F) Four private citizens, appointed by the

5 President with the advice and consent of the

6 Senate, that collectively—

7 (i) represent community groups whose

8 constituencies include low-income persons

9 or residents of investment areas,

10 (ii) have expertise in the operations

11 and activities of insured depository institu12 tions, and

13 (iii) have expertise in community de14 velopment and lending;

15 provided that there should not be less than one

16 member from each of the three categories de17 scribed in clauses (i) through (iii) of this sub18 paragraph.

19 (3) CHAIRPERSON.—The President shall ap20 point from among the members of the Board speci21 fied in paragraph (2)(F) a chairperson of the Board,

22 who shall serve at the pleasure of the President for

23 a term of two years.

24 (4) VICE-CHAIRPERSON.—The President shall

25 appoint from among the members specified in para-
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1 graph (2) a vice-chairperson who will serve as chair2 person in the absence, disability, or recusal of the

3 chairperson. The vice-chairperson shall serve at the

4 pleasure of the President for a term of two years.

5 (5) TERMS OF APPOINTED MEMBERS.—

6 (A) IN GENERAL.—Each member ap7 pointed pursuant to paragraph (2)(F) shall

8 serve at the pleasure of the President for a

9 term of four years, except as provided in para10 graph (5)(C).

11 (B) VACANCIES.—Any member appointed

12 to fill a vacancy occurring prior to the expira13 tion of the term for which the previous member

14 was appointed shall be appointed for the re15 mainder of such term. Appointed members may

16 continue to serve following the expiration of

17 their terms until a successor is appointed and

18 qualified.

19 (C) TERMS.—The terms of the initial ap20 pointed members shall be for four years and

21 shall begin on the date each member is ap22 pointed, except that two of the members ini23 tially appointed pursuant to paragraph (2)(F)

24 shall be designated to serve at the pleasure of

25 the President for five years.
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1 (6) ACTING OFFICIALS.—In the event of a va2 cancy or absence of the individual in any of the of3 fices described in paragraphs (2) (A) through (E),

4 the official acting in that office shall be a member

5 of the Board.

6 (7) AUTHORITY TO DELEGATE.—Each member

7 of the Board specified in paragraphs (2) (A)

8 through (E) may designate another official who has

9 been appointed by the President with the advice and

10 consent of the Senate within the same agency to

11 serve as a member in his or her stead.

12 (8) COMPENSATION.—Members of the Board

13 who are otherwise officers or employees of the Unit14 ed States shall serve without additional compensa15 tion for their duties as members, but shall be reim16 bursed by the Fund for travel, per diem, and other

17 necessary expenses incurred in the performance of

18 their duties, in accordance with sections 5702 and

19 5703 of title 5, United States Code. The appointed

20 members of the Board shall be entitled to receive

21 compensation at the daily equivalent of the rate for

22 a position under Level IV of the Executive Schedule

23 under section 5315 of title 5, United States Code,

24 and shall be reimbursed by the Fund for travel, per

25 diem, and other necessary expenses incurred in the
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1 performance of their duties, in accordance with sec2 tions 5702 and 5703 of title 5, United States Code.

3 (9) MEETINGS.—The Board shall hold meetings

4 at least quarterly. Special meetings of the Board

5 may be called by the Chairperson or on the written

6 request of three members of the Board. A majority

7 of the members of the Board in office shall con8 stitute a quorum.

9 (c) OFFICERS AND EMPLOYEES.—The Board shall

10 appoint a Chief Executive Officer who will be responsible

11 for the management of the Fund and such other duties

12 deemed appropriate by the Board. The Board shall ap13 point a Chief Financial Officer who shall oversee all of

14 the financial management activities of the Fund. The

15 Board shall also appoint an Inspector General. The Board

16 may appoint such other officers and employees of the

17 Fund as the Board determines to be necessary or appro18 priate. The Chief Executive Officer, Chief Financial Offi19 cer, and up to 3 other officers of the Fund may be ap20 pointed without regard to the provisions of title 5 of the

21 United States Code governing appointments in the Fed22 eral service and compensated without regard to chapter

23 51 and subchapter III of chapter 53 of title 5 of the Unit24 ed States Code, except that the rate of pay for the Chief

25 Executive Officer shall not exceed the rate for a position
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1 under Level II of the Executive Schedule under section

2 5313 of title 5 of the United States Code and the rate

3 of pay for the remaining four officers shall not exceed the

4 rate for a position under Level IV of the Executive Sched5 ule under section 5315 of title 5 of the United States

6 Code.

7 (d) GENERAL POWERS.—In carrying out its powers

8 and duties, the Fund—

9 (1) shall have all necessary and proper powers

10 to carry out its authority under this Act;

11 (2) may adopt, alter, and use a corporate seal,

12 which shall be judicially noticed;

13 (3) may sue and be sued in its corporate name

14 and complain and defend in any court of competent

15 jurisdiction;

16 (4) may adopt, amend, and repeal bylaws, rules,

17 and regulations governing the manner in which its

18 business may be conducted and shall have power to

19 make such rules and regulations as may be nec20 essary or appropriate to implement the provisions of

21 this Act;

22 (5) may enter into and perform such agree23 ments, contracts, and transactions as may be

24 deemed necessary or appropriate to the conduct of

25 activities authorized under this Act;
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1 (6) may determine the character of and neces2 sity for its expenditures and the manner in which

3 they shall be incurred, allowed, and paid;

4 (7) may utilize or employ the services of person5 nel of any agency or instrumentality of the United

6 States with the consent of the agency or instrumen7 tality concerned on a reimbursable or non reimburs8 able basis; and

9 (8) may execute all instruments necessary or

10 appropriate in the exercise of any of its functions

11 under this Act and may delegate to members of the

12 Board, the Chief Executive Officer, or the officers of

13 the Fund such of its powers and responsibilities as

14 it deems necessary or appropriate for the adminis15 tration of the Fund.

16 (e) WHOLLY-OWNED GOVERNMENT CORPORA17 TION.—

18 (1) The Fund shall be a wholly-owned Govern19 ment corporation in the Executive branch and shall

20 be treated in all respects as an agency of the United

21 States, except to the extent this Act provides other22 wise.

23 (2) Section 9101(3) of title 31, United States

24 Code (the Government Corporation Control Act), is

25 amended—
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1 (A) by redesignating paragraphs (B)

2 through (M) as paragraphs (C) through (N),

3 respectively; and

4 (B) by inserting after paragraph (A) the

5 following:

6 ‘‘(B) the Community Development Banking and

7 Financial Institutions Fund.’’; and

8 (3) Section 9107(b) of title 31, United States

9 Code (the Government Corporation Control Act),

10 shall not apply to deposits of the Fund made pursu11 ant to section 7 of this Act.

12 (f) LIMITATION OF FUND AND FEDERAL LIABIL13 ITY.—The liability of the Fund and of the United States

14 Government arising out of any investment in a community

15 development financial institution in accordance with this

16 Act shall be limited to the amount of the investment and

17 the Fund shall be exempt from any assessments and other

18 liabilities that may be imposed on controlling or principal

19 shareholders by any Federal law or the law of any State,

20 territory, or the District of Columbia. A community devel21 opment financial institution that receives assistance pur22 suant to this Act shall not be deemed to be an agency,

23 department, or instrumentality of the United States.
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1 (g) PROHIBITION ON ISSUANCE OF SECURITIES.—

2 The Fund may not issue stock, bonds, debentures, notes,

3 or other securities.

4 SEC. 5. APPLICATIONS FOR ASSISTANCE.

5 (a) FORM AND PROCEDURES.—An application for as6 sistance under this Act shall be submitted by an applicant

7 in such form and in accordance with such procedures as

8 the Board shall establish. The Board shall publish regula9 tions with respect to application requirements and proce10 dures not later than 210 days after enactment of this Act.

11 (b) MINIMUM REQUIREMENTS.—The Board shall re12 quire that the application—

13 (1) demonstrate to the satisfaction of the Board

14 that the applicant is, or upon the receipt of a char15 ter will be, a community development financial insti16 tution as defined in section 3(a) of this Act;

17 (2) demonstrate that the applicant will serve—

18 (A) a targeted population; or

19 (B) an area which is an investment area;

20 (3) in the case of an applicant that has pre21 viously received assistance under this Act, dem22 onstrate that the applicant—

23 (A) has successfully carried out its respon24 sibilities under this Act;
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1 (B) has become or is about to become an

2 entity that will not be dependent upon assist3 ance from the Fund for continued viability; and

4 (C) will expand its operations into a new

5 investment area, offer new services, or will in6 crease the volume of its current business;

7 (4) in the case of a community development fi8 nancial institution with existing operations, dem9 onstrate a record of success of serving investment

10 areas or targeted populations;

11 (5) include a detailed and comprehensive strate12 gic plan for the organization that contains—

13 (A) a business plan of at least five years

14 that demonstrates the applicant is properly

15 managed and has the capacity to form and op16 erate a community development financial insti17 tution that is, or will become, an entity that will

18 not be dependent upon assistance from the

19 Fund for continued viability;

20 (B) a statement that the applicant has, or

21 will have, in its charter or other governing doc22 uments a primary commitment to community

23 development, or other evidence of a prior his24 tory and a continuing affirmation of a primary

25 commitment of community development;
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1 (C) an analysis of the needs of the invest2 ment area or targeted populations and a strat3 egy for how the applicant will attempt to meet

4 those needs;

5 (D) a plan to coordinate use of assistance

6 from the Fund with existing Federal, govern7 ment-sponsored enterprise, and State and local

8 assistance programs, and private sector finan9 cial services;

10 (E) a statement that the proposed activi11 ties of the applicant are consistent with existing

12 economic, community and housing development

13 plans adopted by or applicable to the invest14 ment area;

15 (F) a description of how the applicant will

16 affiliate, network, or otherwise coordinate with

17 a full range of community organizations and fi18 nancial institutions which provide, or will pro19 vide, capital, credit, or secondary markets in

20 order to assure that banking, economic develop21 ment, investment, affordable housing, and other

22 related services will be available within the in23 vestment area or to targeted populations; and
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1 (G) such other information as the Board

2 deems appropriate for inclusion in the strategic

3 plan;

4 (6) demonstrate that the applicant will carry on

5 its activities consistent with the purposes of this Act

6 within the investment area or with respect to a tar7 geted population;

8 (7) include a detailed and specific statement of

9 applicant’s plans and likely sources of funds to

10 match the amount of assistance from the Fund with

11 funds from private sources in accordance with the

12 requirements of section 7(d) of this Act; and

13 (8) include such other information as the Board

14 may require.

15 (c) PRE-APPLICATION OUTREACH PROGRAM.—The

16 Fund shall provide for an outreach program to identify

17 and provide information to potential applicants and to in18 crease the capacity of potential applicants to meet the ap19 plication and other requirements of this Act.

20 SEC. 6. SELECTION OF INSTITUTIONS.

21 (a) SELECTION CRITERIA.—The Board shall, in its

22 discretion, select applications that meet the requirements

23 of section 5 of this Act and award assistance from the

24 Fund in accordance with section 7 of this Act. In selecting
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1 applications, the Board shall consider applications based

2 on, but not limited to—

3 (1) the likelihood of success of the applicant in

4 forming and operating a community development fi5 nancial institution;

6 (2) the range and comprehensiveness of the

7 capital, credit, and development services to be pro8 vided by the applicant;

9 (3) the extent of the need, as measured by ob10 jective criteria of distress, within the investment

11 areas or targeted populations for the types of activi12 ties proposed by the applicant;

13 (4) the likelihood that the proposed activities

14 will benefit a significant portion of the investment

15 areas or targeted populations or, in the case of a

16 community development financial institution with ex17 isting operations, evidence of a record of success in

18 serving investment areas or targeted populations;

19 (5) the extent to which the applicant will con20 centrate its activities on serving low and very low21 income families;

22 (6) the evidence of the extent of a broad cross23 section of support from the investment areas or tar24 geted populations;
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1 (7) the experience and background of the pro2 posed management team;

3 (8) the amount of legally enforceable commit4 ments available at the time of application to meet or

5 exceed the matching requirements under section 7(d)

6 of this Act and the strength of the plan for raising

7 the balance of the match;

8 (9) in the case of applicants that have pre9 viously received assistance pursuant to this Act, the

10 extent to which they have met or exceeded their per11 formance goals;

12 (10) the extent to which the proposed activities

13 will expand the employment base within the invest14 ment areas or the targeted populations;

15 (11) the extent to which the applicant is, or will

16 be, community-owned or community-governed;

17 (12) whether the applicant is, or will become,

18 an insured community development financial institu19 tion;

20 (13) whether the applicant is, or will be located,

21 in an empowerment zone or enterprise community

22 designated under section 1391 of the Internal Reve23 nue Code of 1986;

24 (14) in the case of an institution that is not an

25 insured community development financial institution,
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1 the extent to which the institution has or will have

2 the ability to increase its resources through affili3 ation with a secondary market, insured depository

4 institution, or other financial intermediary in order

5 to multiply the amount of capital or credit available

6 for community development;

7 (15) in the case of an insured depository insti8 tution or insured credit union applicant, whether the

9 institution—

10 (A) has or will have a substantial affili11 ation with an entity or network of entities that

12 are community development financial institu13 tions; and

14 (B) has a comprehensive plan for providing

15 meaningful financial assistance to such an en16 tity or network of entities; and

17 (16) other factors deemed appropriate by the

18 Board.

19 (b) GEOGRAPHIC DIVERSITY.—In addition to the

20 above, in making its selections, the Board shall seek to

21 fund a geographically diverse group of applicants, which

22 shall include applicants from nonmetropolitan and rural

23 areas.

24 (c) PUBLICATION REQUIREMENT.—The Board shall

25 publish regulations with respect to its selection criteria not
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1 later than 210 days after the date of enactment of this

2 Act.

3 SEC. 7. ASSISTANCE PROVIDED BY THE FUND.

4 (a) PURPOSE OF ASSISTANCE.—

5 (1) The Fund shall work to promote an envi6 ronment hospitable to business formation, economic

7 growth, community development, and affordable

8 housing in distressed communities. The Fund shall

9 coordinate its activities with existing Federal and

10 other community and economic development pro11 grams.

12 (2) Assistance may be provided to an existing

13 qualified community development financial institu14 tion to expand its activities to serve investment

15 areas or targeted populations not currently served by

16 another qualified community development financial

17 institution receiving assistance under this section or

18 to expand the volume of its activities consistent with

19 the purposes of this Act, or to form a new entity to

20 undertake activities consistent with the purposes of

21 this Act, or to assist an existing entity to modify its

22 structure or activities in order to undertake activi23 ties consistent with the purposes of this Act.

24 (b) TYPES OF ASSISTANCE.—
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1 (1) IN GENERAL.—The Fund may provide fi2 nancial assistance to qualified community develop3 ment financial institutions through equity invest4 ments, loans, deposits, membership shares, and

5 grants. The Fund may also provide technical assist6 ance, including training, and grants for technical as7 sistance to qualified community development finan8 cial institutions. The allocation of awards of assist9 ance between insured and uninsured community de10 velopment financial institutions shall be in the dis11 cretion of the Board, provided that due consider12 ation shall be given to the allocation of funds to in13 sured community development financial institutions.

14 (2) FINANCIAL ASSISTANCE.—The fund shall

15 structure financial assistance to a qualified commu16 nity development financial institution in such a man17 ner that it does not own more than 50 percent of

18 the equity of such institution and does not control

19 the operations of such institution. The Fund will not

20 be deemed to control such institution for the pur21 poses of applicable laws. With respect to equity in22 vestments, the Fund shall hold only transferable,

23 nonvoting investments. Such equity investments may

24 provide for convertibility to voting stock upon trans25 fer by the Fund.
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1 (3) DEPOSITS.—Notwithstanding any other

2 provision of law, deposits made pursuant to this sec3 tion in qualified insured community development fi4 nancial institutions shall not be subject to any re5 quirement for collateral or security.

6 (4) LIMITATIONS ON OBLIGATIONS.—Direct

7 loan obligations may be incurred only to the extent

8 that appropriations of budget authority to cover

9 their costs, as defined in section 502 of the Congres10 sional Budget Act of 1974, are made in advance.

11 (c) PURPOSE OF FINANCIAL ASSISTANCE.—Financial

12 assistance made available under this Act may be used by

13 assisted institutions to develop or support—

14 (1) commercial facilities that enhance revitaliza15 tion, community stability, or job creation and reten16 tion efforts;

17 (2) business creation and expansion efforts

18 that—

19 (A) create or retain jobs for low-income

20 people;

21 (B) enhance the availability of products

22 and services to low-income people; or

23 (C) create or retain businesses owned by

24 low-income people or residents of a targeted

25 area;
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1 (3) community facilities that provide benefits to

2 low-income people or enhance community stability;

3 (4) the provision of basic financial services to

4 low-income people or residents of a targeted area;

5 (5) the provision of development services;

6 (6) home ownership opportunities that are af7 fordable to low-income households;

8 (7) rental housing that is principally affordable

9 to low-income households; and

10 (8) other activities deemed appropriate by the

11 Fund.

12 (d) AMOUNT OF ASSISTANCE.—The Fund may pro13 vide up to $5,000,000 of assistance per application to any

14 one qualified insured community development financial in15 stitution and up to $2,000,000 per application to any

16 other qualified community development financial institu17 tion. The Fund shall have the authority to set minimum

18 amounts of assistance per institution.

19 (e) MATCHING REQUIREMENTS.—

20 (1) Assistance provided to qualified insured

21 community development financial institutions, other

22 than deposits or membership shares of $100,000 or

23 less, technical assistance, or grants for technical as24 sistance, shall be matched by no less than one dollar

25 of equity, deposits or membership shares for each
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1 dollar provided by the Fund. The Fund shall require

2 a match for all other assistance, the amount and

3 form of which shall be in the discretion of the Fund;

4 provided that, the Fund shall in no event require as5 sistance provided in the form of deposits or member6 ship shares of $100,000 or less, technical assistance,

7 or grants for technical assistance to be matched.

8 The Fund shall provide no assistance except tech9 nical assistance or grants for technical assistance

10 until a qualified community development financial

11 institution has secured legally enforceable commit12 ments for the entire match required. Assistance may

13 be provided in one lump sum, or over a period of

14 time, as determined by the Fund.

15 (2) Assistance shall be matched with funds

16 from sources other than the Federal Government.

17 (f) TERMS AND CONDITIONS.—

18 (1) IN GENERAL.—The Fund shall provide as19 sistance authorized under this Act in such form and

20 subject to such restrictions as are necessary to en21 sure that to the maximum extent practicable—

22 (A) all assistance granted is used by the

23 qualified community development financial in24 stitution in a manner consistent with the pur25 poses of this Act;
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1 (B) qualified community development fi2 nancial institutions receiving assistance that are

3 not otherwise regulated by the Federal govern4 ment or by a State government are financially

5 and managerially sound;

6 (C) assistance results in a net increase,

7 both nationally and in the local communities in

8 which assistance is provided, in capital, credit,

9 and development services; and

10 (D) assistance is provided in a manner

11 that encourages affiliations and partnerships

12 between insured depository institutions, second13 ary markets or other sources of credit or lever14 age and local organizations dedicated to com15 munity development.

16 (2) CONSULTATION WITH BANKING REGU17 LATORS.—Prior to providing assistance to a quali18 fied insured community development financial insti19 tution, the Board should consult with the appro20 priate Federal banking agency or, in the case of an

21 insured credit union, the National Credit Union Ad22 ministration.

23 (3) ASSISTANCE AGREEMENT.—

24 (A) The Board shall impose restrictions on

25 the use of assistance through a stock purchase
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1 agreement, share purchase agreement, or

2 through a contract entered into in consideration

3 for the provision of assistance.

4 (B) Such agreement or contract shall re5 quire institutions assisted under this Act to

6 comply with performance goals. The perform7 ance goals shall be negotiated between the

8 Board and each qualified community develop9 ment financial institution receiving assistance

10 based upon the strategic plan submitted pursu11 ant to section 5(b)(5) of this Act. The perform12 ance goals may be renegotiated jointly as nec13 essary or appropriate, subject to subparagraph

14 (C) of this section. Activity levels for insured

15 community development financial institutions

16 should be determined by the Board in consulta17 tion with the appropriate Federal banking agen18 cy or, in the case of an insured credit union,

19 with the National Credit Union Administration.

20 (C) The agreement or contract shall speci21 fy sanctions available to the Board, in its dis22 cretion, in the event of noncompliance with the

23 purposes of this Act or the terms of the agree24 ment. The sanctions may include revocation of

25 approval of the application, terminating or re-
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1 ducing future assistance, requiring repayment

2 of assistance, and requiring changes to the per3 formance goals imposed pursuant to subpara4 graph (B) or to the strategic plan submitted

5 pursuant to section 5(b)(5) of this Act. In the

6 case of an insured community development fi7 nancial institution, the Board shall consult with

8 the appropriate Federal banking agency or, in

9 the case of an insured credit union, the Na10 tional Credit Union Administration, before im11 posing sanctions pursuant to this paragraph.

12 (4) REVIEW.—At least annually, the Board

13 shall review the performance of each assisted quali14 fied community development financial institution in

15 carrying out its strategic plan and performance

16 goals.

17 (5) REPORTING.—The Board shall require each

18 qualified community development financial institu19 tion receiving assistance to submit an annual report

20 to the Fund on its activities, its financial condition,

21 its success in meeting performance goals, and its

22 compliance with other requirements of this Act.

23 (g) AUTHORITY TO SELL EQUITY INVESTMENT AND

24 LOANS.—The Board shall have the authority at any time

25 to sell its investments and loans and may, in its discretion,
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1 retain the power to enforce limitations on assistance en2 tered into in accordance with the requirements of this Act.

3 (h) NO AUTHORITY TO LIMIT SUPERVISION AND

4 REGULATION.—Nothing in this Act shall affect any au5 thority of the appropriate Federal banking agency or, in

6 the case of an insured credit union, the National Credit

7 Union Administration, to supervise and regulate an in8 sured community development financial institution.

9 SEC. 8. ENCOURAGEMENT OF PRIVATE ENTITIES.

10 The Board may cause to be incorporated, or encour11 age the incorporation of, private non-profit and for-profit

12 entities that will complement the activities of the Fund

13 in carrying out the purposes of this Act. The purposes

14 of any such entities shall be limited to investing in and

15 assisting community development financial institutions in

16 a manner similar to the activities of the Fund under this

17 Act. Any such entities shall be managed exclusively by pri18 vate individuals who are selected in accordance with the

19 laws of the jurisdiction of incorporation.

20 SEC. 9. CLEARINGHOUSE FUNCTION.

21 The Fund shall establish and maintain an informa22 tion clearinghouse in coordination with the Departments

23 of Agriculture, Commerce, and Housing and Urban Devel24 opment, the Small Business Administration, other Federal
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1 agencies, and community development financial institu2 tions—

3 (1) to cause to be collected, compiled, and ana4 lyzed information pertinent to community develop5 ment financial institutions that will assist in creat6 ing, developing, expanding, and preserving these in7 stitutions; and

8 (2) to cause to be established a service center

9 for comprehensive information on financial, tech10 nical, and management assistance, case studies of

11 the activities of community development financial in12 stitutions, regulations, and other information that

13 may promote the purposes of this Act.

14 SEC. 10. RECORDKEEPING, REPORTS, AND AUDITS.

15 (a) RECORDKEEPING.—

16 (1) A qualified community development finan17 cial institution receiving assistance from the Fund

18 shall keep such records as may be reasonably nec19 essary to disclose the disposition of any assistance

20 under this Act and to ensure compliance with the re21 quirements of this Act.

22 (2) The Fund shall have access, for the purpose

23 of determining compliance with this Act, to any

24 books, documents, papers, and records of a qualified

25 community development financial institution receiv-
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1 ing assistance from the Fund that are pertinent to

2 assistance received under this Act.

3 (b) REPORTS.—

4 (1) ANNUAL REPORT.—The Fund shall conduct

5 an annual evaluation of the activities carried out

6 pursuant to this Act and shall submit a report of its

7 findings to the President within 120 days of the end

8 of each fiscal year of the Fund. The report shall in9 clude financial statements audited in accordance

10 with subsection (c).

11 (2) INSTITUTIONAL VOICE FOR COMMUNITY DE12 VELOPMENT.—

13 (A) ONGOING STUDY.—The Fund shall

14 conduct, or cause to be conducted, an ongoing

15 study to identify and evaluate the most effective

16 and financially sound policies and practices for

17 encouraging investment in distressed commu18 nities, including small business and commercial

19 lending, business formation and expansion,

20 community and economic development, commer21 cial real estate and multi-family housing, and

22 home mortgages. In addition, the Fund may

23 study, or cause to be studied, related matters,

24 such as identification of sources of and access

25 to capital and loans for community investment;
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1 development of secondary markets for economic

2 and community development, small business

3 and commercial loans, and home mortgage

4 loans and investments; and methods to involve

5 all segments of the financial services industry in

6 community development.

7 (B) CONSULTATION.—In the conduct of

8 the study, the Fund shall consult, or cause con9 sultation with, the Office of the Comptroller of

10 the Currency, the Federal Deposit Insurance

11 Corporation, the Board of Governors of the

12 Federal Reserve System, the Federal Housing

13 Finance Board, the Farm Credit Administra14 tion, the Office of Thrift Supervision, the Na15 tional Credit Union Administration, community

16 reinvestment, civil rights, consumer and finan17 cial organizations, and such representatives of

18 agencies or other persons as the Fund may de19 termine.

20 (C) REPORTS.—Within 270 days after the

21 date of enactment of this Act, the Fund shall

22 report to the President its initial findings and

23 recommendations regarding the matters set

24 forth in subparagraph (A). Thereafter, the

25 Fund shall report its findings and recommenda-
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1 tions to the President with the annual report

2 required and recommendations to the President

3 with the annual report required by paragraph

4 (b)(1).

5 (3) INVESTMENT, GOVERNANCE, AND ROLE OF

6 FUND.—Six years following the date of enactment of

7 this Act, the Fund, in accordance with the proce8 dures described in paragraphs (2)(A) and (B), shall

9 conduct a study evaluating the structure, govern10 ance, and performance of the Fund. The study shall

11 be submitted to the President. Such study shall in12 clude an evaluation of the overall performance of the

13 Fund in meeting the purposes of this Act and any

14 recommendations of the Fund for restructuring the

15 Board, altering procedures under which the Fund is

16 governed, the future role of the Fund in addressing

17 community development, and the ability of the Fund

18 to become a private, self-sustaining entity capable of

19 fulfilling the purposes of this Act.

20 (c) EXAMINATION AND AUDIT.—The financial state21 ments of the Fund shall be audited in accordance with

22 section 9105 of title 31, United States Code, except that

23 audits required by section 9105(a) of that title shall be

24 performed annually.
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1 SEC. 11. INVESTMENT OF RECEIPTS AND PROCEEDS.

2 Any dividends on equity investments and proceeds

3 from the disposition of investments, deposits, or member4 ship shares that are received by the Fund as a result of

5 assistance provided pursuant to section 7 of this Act shall

6 be deposited and accredited to an account of the Fund

7 established to carry out the authorized purposes of this

8 Act. Upon request of the Chief Executive Officer, the Sec9 retary of the Treasury shall invest amounts deposited in

10 such account in public debt securities with maturities suit11 able to the needs of the Fund, as determined by the Chief

12 Executive Officer, and bearing interest at rates deter13 mined by the Secretary of the Treasury, taking into con14 sideration current market yields on outstanding market15 able obligations of the United States of comparable matu16 rities. Amounts deposited into the account and interest

17 earned on such amounts pursuant to this section shall be

18 available to the Fund until expended.

19 SEC. 12. AUTHORIZATION OF APPROPRIATIONS.

20 (a) IN GENERAL.—There are authorized to be appro21 priated to the Fund, to remain available until expanded,

22 $60,000,000 for fiscal year 1994, $104,000,000 for fiscal

23 year 1995, $107,000,000 for fiscal year 1996, and

24 $111,000,000 for fiscal year 1997, or such greater sums

25 as may be appropriated, to carry out the purposes of the

26 Act.
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1 (b) ADMINISTRATIVE EXPENSES.—The Fund may

2 set aside up to $10,000,000 each fiscal year to pay admin3 istrative costs and expenses.

4 SEC. 13. CONFORMING AMENDMENT.

5 Section 8E(a)(2) of the Inspector General Act of

6 1978 (5 U.S.C. app. 3, 8E(a)(2)) is amended by inserting

7 ‘‘the Community Development Banking and Financial In8 stitutions Fund,’’ immediately following ‘‘the Community

9 Futures Trading Commission,’’.

Æ

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