II

103D CONGRESS

1ST SESSION S. 1230

To provide for community development banks.

IN THE SENATE OF THE UNITED STATES

JULY 14 (legislative day, JUNE 30), 1993

Mr. D’AMATO (for himself, Mr. BOND, Mr. GRAMM, Mr. ROTH, Mr. MACK,

Mr. FAIRCLOTH, Mr. BENNETT, and Mr. DOMENICI) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To provide for community development banks.

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 Bank Act’’.

6 SEC. 2. STATEMENT OF PURPOSES.

7 The purposes of this Act are as follows:

8 (1) To increase the amount of credit available

9 for the economic revitalization of distressed urban

10 and rural communities.
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1 (2) To enable economically disadvantaged per2 sons and small, minority-owned, and women-owned

3 business to have improved access to the resources of

4 our financial system, and to use such resources as

5 a foundation for economic growth, increased employ6 ment and community development.

7 (3) To increase the supply of mortgage credit

8 and other financing necessary for the private sector

9 to rehabilitate the housing stock in inner cities and

10 rural areas for low- and moderate-income families.

11 (4) To provide capital for housing construction

12 and development, small businesses, and community

13 development projects.

14 (5) To provide technical and managerial assist15 ance to small businesses and other entrepreneurs lo16 cated in economically distressed areas.

17 (6) To encourage the establishment of privately

18 capitalized community development banks to serve

19 the credit needs of financially underserved residents

20 of urban and rural areas of our country.
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1 TITLE I—COMMUNITY

2 DEVELOPMENT BANKS

3 SEC. 101. ESTABLISHMENT OF A COMMUNITY DEVELOP4 MENT BANKERS’ BANK.

5 (a) IN GENERAL.—The Comptroller of the Currency

6 is hereby authorized to issue a certificate of authority to

7 commence the business of banking to a national banking

8 association that is owned exclusively (except to the extent

9 directors’ qualifying shares are required by law) by one

10 or more insured depository institutions and will be en11 gaged primarily in community development activities.

12 (b) REQUIRED NAME.—A national banking associa13 tion chartered pursuant to subsection (a) shall be known

14 as a ‘‘community development bank’’, and shall use the

15 term ‘‘community development bank’’ and the name of the

16 community in which it is located and will serve, in its title.

17 (c) REGULATION.—A community development bank

18 chartered pursuant to subsection (a) shall be subject to

19 such rules and orders as the Comptroller deems appro20 priate, and, except as otherwise specifically provided in

21 this title or in such rules and orders, shall be vested with

22 and subject to the same rights, duties and limitations that

23 apply to other national banking associations, including the

24 right to accept deposits.
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1 (d) BOARD OF DIRECTORS.—At least 25 percent of

2 members of the community development bank’s board of

3 directors shall be individuals residing in and representing

4 the interests of the community that the bank will serve.

5 SEC. 102. AUTHORITY TO INVEST IN A COMMUNITY DEVEL6 OPMENT BANK.

7 An insured depository institution may invest in the

8 shares of one or more community development banks.

9 Such investment may not exceed, in the aggregate, an

10 amount in excess of 5 percent of the depository institu11 tion’s tier 1 or core capital or, in the case of a particular

12 institution, such lesser amount as the appropriate Federal

13 banking agency determines to be necessary in order to

14 protect the safety and soundness of the institution.

15 SEC. 103. EXPEDITED PROCEDURES.

16 Within 6 months after the date of enactment of this

17 Act, the Comptroller of the Currency shall develop and

18 publish in the Federal Register expedited procedures for

19 the consideration of applications for a certificate to com20 mence the business of banking for a community develop21 ment bank. The Federal Deposit Insurance Corporation

22 shall develop expedited procedures for consideration of an

23 application by a community development bank for deposit

24 insurance. Final decisions shall be made by the Comptrol-
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1 ler and the Federal Deposit Insurance Corporation within

2 9 months after the receipt of completed applications.

3 SEC. 104. COMMUNITY DEVELOPMENT BANK ACTIVITIES.

4 (a) PRIMARY PURPOSE.—A community development

5 bank may only make loans and other investments designed

6 to provide a reasonable economic return to the bank and

7 its shareholders, consistent with its primary purpose of

8 providing credit, capital, and related services to targeted

9 persons and targeted geographic areas within its

10 community.

11 (b) LOAN AND INVESTMENT ACTIVITIES.—In order

12 to accomplish the purposes of this Act, a community devel13 opment bank may engage in activities consistent with this

14 Act, including the making or providing of the following:

15 (1) Residential mortgage loans.

16 (2) Residential construction loans.

17 (3) Small business commercial loans.

18 (4) Home improvement and rehabilitation loans.

19 (5) Neighborhood commercial revitalization

20 loans.

21 (6) Small farm loans.

22 (7) Industrial development loans.

23 (8) Equity investments in low- and moderate-in24 come real estate development and rehabilitation

25 projects.
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1 (9) Equity investments in community develop2 ment corporations and projects.

3 (10) Equity investments in small business de4 velopment corporations.

5 (11) Marketing and management assistance.

6 (12) Business planning and counseling services.

7 (13) Financial and technical services.

8 (14) Vocational training.

9 (15) Deposit funds in credit unions serving pre10 dominately low-income members as defined by the

11 National Credit Union Administration Board.

12 (c) COORDINATION.—A community development

13 bank shall coordinate its activities with activities and pro14 grams of the Department of Housing and Urban Develop15 ment, the Department of Veterans Affairs, the Depart16 ment of Commerce, the Small Business Administration,

17 and other agencies with respect to the development and

18 financing of community development organizations and

19 projects and small businesses.

20 (d) COMPETITION WITH EXISTING INSTITUTIONS.—

21 A community development bank shall target its activities

22 to customers not adequately served by existing depository

23 institutions.
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1 SEC. 105. OTHER COMMUNITY DEVELOPMENT BANKS.

2 Any insured depository institution may apply to the

3 appropriate Federal banking agency to be certified as a

4 ‘‘community development bank’’. The agency shall issue

5 such certification if it finds that such bank is primarily

6 engaged in community development activities, and other7 wise complies with the provisions of this Act, other than

8 subsections (a), (b) and (c) of section 101, and that such

9 certification will further the purposes of this title.

10 SEC. 106. COMMUNITY REINVESTMENT ACT EVALUATION.

11 (a) EXAMINATION.—The appropriate Federal bank12 ing agency shall conduct an annual onsite examination

13 and evaluation of every community development bank in

14 order to determine compliance with this Act and to assess

15 the bank’s record of meeting the credit needs of its com16 munity, as described in section 804 of the Community Re17 investment Act of 1977.

18 (b) HEARING REQUIRED.—Prior to issuing a final

19 Community Reinvestment Act evaluation and rating, the

20 appropriate Federal banking agency shall—

21 (1) publish in 2 or more newspapers of general

22 circulation a statement that an informal hearing on

23 the bank’s success in meeting the credit needs of its

24 community is to be held; and

25 (2) directly notify known representatives of

26 consumer and community groups located within the
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1 bank’s community that an informal hearing is to be

2 held.

3 (c) NOTICE.—The publication and notice required

4 under subsection (b) shall state the date and place for the

5 hearing, which must be at least 30 days following the date

6 of the publication or mailing of the notice, and shall invite

7 interested persons and organizations to provide oral and

8 written testimony concerning the performance of the com9 munity development bank.

10 (d) CONSIDERATION OF TESTIMONY.—The appro11 priate Federal banking agency shall consider and take into

12 account the testimony and statements provided by commu13 nity representatives in evaluating the performance of a

14 community development bank under this section.

15 (e) FINAL EVALUATION.—Following the hearing, the

16 appropriate Federal banking agency shall provide a final

17 Community Reinvestment Act of 1977 evaluation and rat18 ing, including a written explanation for any findings and

19 conclusions.

20 (f) RE-EVALUATION.—A community development

21 bank that receives a final rating that is less than a satis22 factory rating shall be reevaluated within 90 days by the

23 appropriate Federal banking agency in order to determine

24 whether it has made the necessary changes in policies or

25 practices to warrant a satisfactory rating.
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1 SEC. 107. COMMUNITY REINVESTMENT ACT COMPLIANCE.

2 (a) EFFECT OF RATING.—For purposes of the Com3 munity Reinvestment Act of 1977, the evaluation and rat4 ing of a community development bank shall be deemed to

5 be the evaluation and rating of each insured depository

6 institution that has made a qualifying investment in such

7 community development bank. Any insured depository in8 stitution receiving a satisfactory or outstanding rating

9 pursuant to this section shall be deemed to have met the

10 credit needs of its community.

11 (b) COORDINATION WITH OTHER LAW.—An insured

12 depository institution that maintains a qualifying invest13 ment in a community development bank shall not be sub14 ject to an evaluation conducted pursuant to section 804

15 of the Community Reinvestment Act of 1977.

16 (c) EFFECT OF NON-QUALIFYING INVESTMENT.—An

17 insured depository institution that makes an investment

18 that is not a qualifying investment shall have that invest19 ment considered by the appropriate Federal banking agen20 cy when that institution is evaluated under sections 804

21 and 807 of the Community Reinvestment Act of 1977.

22 SEC. 108. BANK HOLDING COMPANY ACT.

23 No person shall be considered a bank holding com24 pany, or subject to the Bank Holding Company Act of

25 1956, due to an investment in a community development

26 bank authorized under this title.
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1 SEC. 109. DEFINITIONS.

2 For purposes of this title—

3 (1) the term ‘‘community development bank’’

4 means—

5 (A) a bank established pursuant to section

6 101, or

7 (B) certified as a community development

8 bank pursuant to section 105,

9 that is primarily engaged in the business of provid10 ing credit and investment capital and related serv11 ices to targeted populations and targeted geographic

12 areas;

13 (2) the term ‘‘targeted population’’ means mi14 nority-owned and women-owned businesses, non15 profit organizations, community groups, and eco16 nomically disadvantaged persons;

17 (3) the term ‘‘targeted geographic area’’ means

18 a neighborhood or other geographic area that is suf19 fering economic distress, as measured by unemploy20 ment, poverty, condition of housing stock, availabil21 ity of credit, or other indicator of relative economic

22 condition;

23 (4) the term a community development bank’s

24 ‘‘community’’ means 1 or more contiguous geo25 graphic areas that represent the combined market or
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1 service areas of the financial institutions that have

2 made qualifying investments in such bank;

3 (5) the term ‘‘insured depository institution’’

4 shall have the meaning given such term in section 3

5 of the Federal Deposit Insurance Act;

6 (6) the term ‘‘appropriate Federal banking

7 agency’’ shall have the meaning given such term in

8 section 3 of the Federal Deposit Insurance Act; and

9 (7) the term ‘‘qualifying investment’’ means an

10 investment in the equity shares of a community de11 velopment bank in an amount that is equal to the

12 maximum permissible amount for that investing in13 stitution, as prescribed in section 102.

14 SEC. 110. SAFETY AND SOUNDNESS.

15 Nothing in this title shall be deemed to interfere with

16 the authority of the appropriate Federal banking agency

17 or the Federal Deposit Insurance Corporation to limit the

18 permissible activities or investments of an insured deposi19 tory institution or depository institution holding company,

20 by order or regulation, in order to protect the safety or

21 soundness of such institution or holding company.

22 SEC. 111. DISCRIMINATION AND FAIR HOUSING.

23 (a) IN GENERAL.—Nothing in this title shall be

24 deemed to interfere with the authority of the appropriate

25 Federal banking agencies to examine institutions for com-
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1 pliance with or to enforce the Equal Credit Opportunity

2 Act, the Fair Housing Act, or the Home Mortgage Disclo3 sure Act.

4 (b) APPLICABILITY OF SECTION 107.—Section 107

5 shall not apply to any institution found, in a civil or crimi6 nal judicial proceeding or final agency adjudication, to

7 have violated any law described in subsection (a).

8 TITLE II—CONFORMING

9 AMENDMENTS

10 SEC. 201. COMMUNITY DEVELOPMENT REVOLVING LOAN

11 FUND FOR CREDIT UNIONS.

12 (a) REPEAL.—Section 120(k) of the Federal Credit

13 Union Act (12 U.S.C. 1766(k)) is repealed.

14 (b) AMENDMENT.—The Federal Credit Union Act is

15 amended by inserting after section 129 (12 U.S.C. 1772c)

16 the following new section:

17 ‘‘SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN

18 FUND FOR CREDIT UNIONS.

19 ‘‘(a) IN GENERAL.—The Board may exercise the au20 thority granted it by the Community Development Credit

21 Union Revolving Loan Fund Transfer Act (Public Law

22 99–609) including any additional appropriation made or

23 earnings accrued, subject only to this section and to regu24 lations prescribed by the Board.
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1 ‘‘(b) INVESTMENT.—The Board may invest any idle

2 Fund moneys in United States Treasury securities. Any

3 interest accrued on such securities shall become a part of

4 the Fund.

5 ‘‘(c) LOANS.—The Board may require that any loans

6 made from the Fund be matched by increased shares in

7 the borrower credit union.

8 ‘‘(d) INTEREST.—Interest earned by the Fund may

9 be allocated by the Board for technical assistance to com10 munity development credit unions.

11 ‘‘(e) DEFINITION.—As used in this section, the term

12 ‘Fund’ means the Community Development Credit Union

13 Revolving Loan Fund.’’.

14 SEC. 202. STUDY OF COMMUNITY DEVELOPMENT CREDIT

15 UNION.

16 (a) IN GENERAL.—The National Credit Union Ad17 ministration Board in consultation with representatives of

18 the credit union industry shall conduct a study of commu19 nity development credit activities by credit unions. In con20 ducting the study, the Board shall consider—

21 (1) the role of these institutions in providing

22 credit and related financial services to inner city and

23 rural areas,

24 (2) the failure rate of these institutions in the

25 past,
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1 (3) the desirability of establishing a special ex2 amination force for community development credit

3 unions, and mentor programs,

4 (4) the desirability of establishing a clearing5 house for the recirculation of startup equipment and

6 furniture for community development credit unions,

7 and

8 (5) appropriate startup and permanent financ9 ing programs for such credit unions.

10 (b) REPORT.—Not later than October 1, 1993, the

11 Board shall issue a report to the Committee on Banking,

12 Housing, and Urban Affairs of the Senate and the Com13 mittee on Banking, Finance and Urban Affairs of the

14 House of Representatives on the study and the regulatory

15 and legislative changes that may be necessary to ensure

16 that community development activity by credit unions be17 come and remain viable and productive.

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