H. R. 3474

One Hundred Third Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twenty-fifth day of January, one thousand nine hundred and ninety-four

An Act

To reduce administrative requirements for insured depository institutions to the

extent consistent with safe and sound banking practices, to facilitate the establishment of community development financial institutions, and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Riegle Community Development and Regulatory Improvement Act of 1994’’.

(b) TABLE OF CONTENTS.—The table of contents for this Act

is as follows:

Sec. 1. Short title; table of contents.

TITLE I—COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

Subtitle A—Community Development Banking and Financial Institutions Act

Sec. 101. Short title.

Sec. 102. Findings and purposes. Sec. 103. Definitions.

Sec. 104. Establishment of National Fund for Community Development Banking. Sec. 105. Applications for assistance. Sec. 106. Community partnerships. Sec. 107. Selection of institutions.

Sec. 108. Assistance provided by the Fund. Sec. 109. Training. Sec. 110. Encouragement of private entities. Sec. 111. Collection and compilation of information. Sec. 112. Investment of receipts and proceeds. Sec. 113. Capitalization assistance to enhance liquidity. Sec. 114. Incentives for depository institution participation. Sec. 115. Recordkeeping. Sec. 116. Special provisions with respect to institutions that are supervised by Federal banking agencies. Sec. 117. Studies and reports; examination and audit. Sec. 118. Inspector General. Sec. 119. Enforcement.

Sec. 120. Community Development Revolving Loan Fund for credit unions. Sec. 121. Authorization of appropriations.

Subtitle B—Home Ownership and Equity Protection

Sec. 151. Short title.

Sec. 152. Consumer protections for certain mortgages. Sec. 153. Civil liability. Sec. 154. Reverse mortgage disclosure. Sec. 155. Regulations. Sec. 156. Applicability. Sec. 157. Federal Reserve study. Sec. 158. Hearings on home equity lending.

TITLE II—SMALL BUSINESS CAPITAL FORMATION

Subtitle A—Small Business Loan Securitization

Sec. 201. Short title.
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Sec. 202. Small business related security.

Sec. 203. Applicability of margin requirements.

Sec. 204. Borrowing in the course of business.

Sec. 205. Small business related securities as collateral.

Sec. 206. Investment by depository institutions.

Sec. 207. Preemption of State law.

Sec. 208. Insured depository institution capital requirements for transfers of small

business obligations.

Sec. 209. Joint study on the impact of additional securities based on pooled obligations.

Sec. 210. Consistent use of financial terminology.

Subtitle B—Small Business Capital Enhancement

Sec. 251. Findings and purposes.

Sec. 252. Definitions.

Sec. 253. Approving States for participation.

Sec. 254. Participation agreements.

Sec. 255. Terms of participation agreements.

Sec. 256. Reports.

Sec. 257. Reimbursement by the Fund.

Sec. 258. Reimbursement to the Fund.

Sec. 259. Regulations.

Sec. 260. Authorization of appropriations.

Sec. 261. Effective date.

TITLE III—PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

Sec. 301. Incorporated definitions.

Sec. 302. Administrative consideration of burden with new regulations.

Sec. 303. Streamlining of regulatory requirements.

Sec. 304. Elimination of duplicative filings.

Sec. 305. Coordinated and unified examinations.

Sec. 306. Eighteen-month examination rule for certain small institutions.

Sec. 307. Call report simplification.

Sec. 308. Repeal of publication requirements.

Sec. 309. Regulatory appeals process, ombudsman, and alternative dispute resolution.

Sec. 310. Electronic filing of currency transaction reports.

Sec. 311. Bank Secrecy Act publication requirements.

Sec. 312. Exemption of business loans from Real Estate Settlement Procedures Act

requirements.

Sec. 313. Flexibility in choosing boards of directors.

Sec. 314. Holding company audit requirements.

Sec. 315. State regulation of real estate appraisals.

Sec. 316. Acceleration of effective date for interaffiliate transactions.

Sec. 317. Collateralization of public deposits.

Sec. 318. Modification of regulatory provisions.

Sec. 319. Expedited procedures.

Sec. 320. Exemption of certain holding company formations from registration under

the Securities Act of 1933.

Sec. 321. Reduction of post-approval waiting periods for certain acquisitions and

mergers.

Sec. 322. Bankers’ banks.

Sec. 323. Bank Service Corporation Act amendment.

Sec. 324. Merger transaction reports.

Sec. 325. Credit card accounts receivable sales.

Sec. 326. Limiting potential liability on foreign accounts.

Sec. 327. GAO reports.

Sec. 328. Study and report on capital standards and their impact on the economy.

Sec. 329. Study on the impact of the payment of interest on reserves.

Sec. 330. Study and report on the consumer credit system.

Sec. 331. Clarification of provisions relating to administrative autonomy.

Sec. 332. Exemption for business accounts.

Sec. 333. Study on check-related fraud.

Sec. 334. Insider lending.

Sec. 335. Revisions of standards.

Sec. 336. Alternative rules for radio advertising.

Sec. 337. Deposit broker registration.

Sec. 338. Amendments to the Depository Institution Management Interlocks Act.

Sec. 339. Adverse information about consumers.

Sec. 340. Simplified disclosure for existing depositors.

Sec. 341. Feasibility study of data bank.
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Sec. 342. Timely completion of CRA review. Sec. 343. Time limit on agency consideration of completed applications. Sec. 344. Waiver of right of rescission for certain refinancing transactions. Sec. 345. Clarification of RESPA disclosure requirements. Sec. 346. Notice procedures for bank holding companies to seek approval to engage

in certain activities.

Sec. 347. Commercial mortgage related securities. Sec. 348. Clarifying amendment relating to data collection. Sec. 349. Guidelines for examinations.

Sec. 350. Revising regulatory requirements for transfers of all types of assets with

recourse.

TITLE IV—MONEY LAUNDERING

Sec. 401. Short title.

Sec. 402. Reform of CTR exemption requirements to reduce number and size of reports consistent with effective law enforcement. Sec. 403. Single designee for reporting of suspicious transactions. Sec. 404. Improvement of identification of money laundering schemes. Sec. 405. Negotiable instruments drawn on foreign banks subject to recordkeeping

and reporting requirements. Sec. 406. Imposition of civil money penalties by appropriate Federal banking agencies.

Sec. 407. Uniform State licensing and regulation of check cashing, currency exchange, and money transmitting businesses. Sec. 408. Registration of money transmitting businesses to promote effective law

enforcement.

Sec. 409. Uniform Federal regulation of casinos. Sec. 410. Authority to grant exemptions to States with effective regulation and enforcement.

Sec. 411. Criminal and civil penalties for structuring domestic and international

transactions.

Sec. 412. GAO study of cashiers’ checks. Sec. 413. Technical amendments and corrections.

TITLE V—NATIONAL FLOOD INSURANCE REFORM

Sec. 501. Short title.

Subtitle A—Definitions

Sec. 511. Flood Disaster Protection Act of 1973.

Sec. 512. National Flood Insurance Act of 1968.

Subtitle B—Compliance and Increased Participation

Sec. 521. Nonwaiver of flood purchase requirement for recipients of Federal disaster assistance.

Sec. 522. Expanded flood insurance purchase requirements. Sec. 523. Escrow of flood insurance payments. Sec. 524. Placement of flood insurance by lenders. Sec. 525. Penalties for failure to require flood insurance or notify. Sec. 526. Fees for determining applicability of flood insurance purchase requirements.

Sec. 527. Notice requirements. Sec. 528. Standard hazard determination forms.

Sec. 529. Examinations regarding compliance. Sec. 530. Financial Institutions Examination Council.

Sec. 531. Clerical amendment.

Subtitle C—Ratings and Incentives for Community Floodplain Management

Programs

Sec. 541. Community rating system and incentives for community floodplain management. Sec. 542. Funding.

Subtitle D—Mitigation of Flood Risks

Sec. 551. Repeal of flooded property purchase and loan program. Sec. 552. Termination of erosion-threatened structures program. Sec. 553. Mitigation assistance program. Sec. 554. Establishment of National Flood Mitigation Fund. Sec. 555. Additional coverage for compliance with land use and control measures.

Subtitle E—Task Forces

Sec. 561. Flood Insurance Interagency Task Force.
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Sec. 562. Task Force on Natural and Beneficial Functions of the Floodplain.

Subtitle F—Miscellaneous Provisions

Sec. 571. Extension of flood insurance program.

Sec. 572. Limitation on premium increases.

Sec. 573. Maximum flood insurance coverage amounts.

Sec. 574. Flood insurance program arrangements with private insurance entities.

Sec. 575. Updating of flood maps.

Sec. 576. Technical Mapping Advisory Council.

Sec. 577. Evaluation of erosion hazards.

Sec. 578. Study of economic effects of charging actuarially based premium rates for

pre-FIRM structures.

Sec. 579. Effective dates of policies.

Sec. 580. Agricultural structures.

Sec. 581. Implementation review by Director.

Sec. 582. Prohibited flood disaster assistance.

Sec. 583. Regulations.

Sec. 584. Relation to State and local laws.

TITLE VI—MISCELLANEOUS PROVISIONS

Sec. 601. Oversight hearings.

Sec. 602. Technical amendments to the Federal banking laws.

TITLE I—COMMUNITY DEVELOPMENT

AND CONSUMER PROTECTION

Subtitle A—Community Development

Banking and Financial Institutions Act

SEC. 101. SHORT TITLE.

This subtitle may be cited as the ‘‘Community Development

Banking and Financial Institutions Act of 1994’’.

SEC. 102. FINDINGS AND PURPOSES.

(a) FINDINGS.—The Congress finds that— (1) many of the Nation’s urban, rural, and Native American

communities face critical social and economic problems arising

in part from the lack of economic growth, people living in

poverty, and the lack of employment and other opportunities; (2) the restoration and maintenance of the economies of

these communities will require coordinated development strategies, intensive supportive services, and increased access to

equity investments and loans for development activities, including investment in businesses, housing, commercial real estate,

human development, and other activities that promote the longterm economic and social viability of the community; and (3) community development financial institutions have

proven their ability to identify and respond to community needs

for equity investments, loans, and development services.

(b) PURPOSE.—The purpose of this subtitle is to create a

Community Development Financial Institutions Fund to promote

economic revitalization and community development through investment in and assistance to community development financial institutions, including enhancing the liquidity of community development

financial institutions.

SEC. 103. DEFINITIONS.

For purposes of this subtitle, the following definitions shall

apply:
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(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the

Administrator of the Fund appointed under section 104(b).

(2) APPROPRIATE FEDERAL BANKING AGENCY.—The term

‘‘appropriate Federal banking agency’’ has the same meaning

as in section 3 of the Federal Deposit Insurance Act, and

also includes the National Credit Union Administration Board

with respect to insured credit unions.

(3) AFFILIATE.—The term ‘‘affiliate’’ has the same meaning

as in section 2(k) of the Bank Holding Company Act of 1956.

(4) BOARD.—The term ‘‘Board’’ means the Community

Development Advisory Board established under section 104(d).

(5) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—

(A) IN GENERAL.—The term ‘‘community development

financial institution’’ means a person (other than an

individual) that—

(i) has a primary mission of promoting community

development;

(ii) serves an investment area or targeted

population;

(iii) provides development services in conjunction

with equity investments or loans, directly or through

a subsidiary or affiliate;

(iv) maintains, through representation on its

governing board or otherwise, accountability to residents of its investment area or targeted population;

and

(v) is not an agency or instrumentality of the

United States, or of any State or political subdivision

of a State.

(B) CONDITIONS FOR QUALIFICATION OF HOLDING

COMPANIES.—

(i) CONSOLIDATED TREATMENT.—A depository

institution holding company may qualify as a community development financial institution only if the holding company and the subsidiaries and affiliates of the

holding company collectively satisfy the requirements

of subparagraph (A).

(ii) EXCLUSION OF SUBSIDIARY OR AFFILIATE FOR

FAILURE TO MEET CONSOLIDATED TREATMENT RULE.—

No subsidiary or affiliate of a depository institution

holding company may qualify as a community development financial institution if the holding company and

the subsidiaries and affiliates of the holding company

do not collectively meet the requirements of subparagraph (A).

(C) CONDITIONS FOR SUBSIDIARIES.—No subsidiary of

an insured depository institution may qualify as a community development financial institution if the insured depository institution and its subsidiaries do not collectively meet

the requirements of subparagraph (A).

(6) COMMUNITY PARTNER.—The term ‘‘community partner’’

means a person (other than an individual) that provides loans,

equity investments, or development services, including a depository institution holding company, an insured depository institution, an insured credit union, a nonprofit organization, a State

or local government agency, a quasi-governmental entity, and
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an investment company authorized to operate pursuant to the

Small Business Investment Act of 1958.

(7) COMMUNITY PARTNERSHIP.—The term ‘‘community partnership’’ means an agreement between a community development financial institution and a community partner to provide

development services, loans, or equity investments, to an investment area or targeted population.

(8) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term

‘‘depository institution holding company’’ has the same meaning

as in section 3 of the Federal Deposit Insurance Act.

(9) DEVELOPMENT SERVICES.—The term ‘‘development services’’ means activities that promote community development

and are integral to lending or investment activities, including—

(A) business planning;

(B) financial and credit counseling; and

(C) marketing and management assistance.

(10) FUND.—The term ‘‘Fund’’ means the Community Development Financial Institutions Fund established under section

104(a).

(11) INDIAN RESERVATION.—The term ‘‘Indian reservation’’

has the same meaning as in section 4(10) of the Indian Child

Welfare Act of 1978, and shall include land held by incorporated

Native groups, regional corporations, and village corporations,

as defined in or established pursuant to the Alaska Native

Claims Settlement Act, public domain Indian allotments, and

former Indian reservations in the State of Oklahoma.

(12) INDIAN TRIBE.—The term ‘‘Indian tribe’’ means any

Indian tribe, band, pueblo, nation, or other organized group

or community, including any Alaska Native village or regional

or village corporation, as defined in or established pursuant

to the Alaska Native Claims Settlement Act, which is recognized as eligible for the special programs and services provided

by the United States to Indians because of their status as

Indians.

(13) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—The term ‘‘insured community development financial

institution’’ means any community development financial

institution that is an insured depository institution or an

insured credit union.

(14) INSURED CREDIT UNION.—The term ‘‘insured credit

union’’ has the same meaning as in section 101(7) of the Federal

Credit Union Act.

(15) INSURED DEPOSITORY INSTITUTION.—The term ‘‘insured

depository institution’’ has the same meaning as in section

3 of the Federal Deposit Insurance Act.

(16) INVESTMENT AREA.—The term ‘‘investment area’’

means a geographic area (or areas) including an Indian reservation that—

(A)(i) meets objective criteria of economic distress

developed by the Fund, which may include the percentage

of low-income families or the extent of poverty, the rate

of unemployment or underemployment, rural population

outmigration, lag in population growth, and extent of blight

and disinvestment; and

(ii) has significant unmet needs for loans or equity

investments; or
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(B) encompasses or is located in an empowerment zone

or enterprise community designated under section 1391

of the Internal Revenue Code of 1986.

(17) LOW-INCOME.—The term ‘‘low-income’’ means having

an income, adjusted for family size, of not more than—

(A) for metropolitan areas, 80 percent of the area

median income; and

(B) for nonmetropolitan areas, the greater of—

(i) 80 percent of the area median income; or

(ii) 80 percent of the statewide nonmetropolitan

area median income.

(18) STATE.—The term ‘‘State’’ has the same meaning as

in section 3 of the Federal Deposit Insurance Act.

(19) SUBSIDIARY.—The term ‘‘subsidiary’’ has the same

meaning as in section 3 of the Federal Deposit Insurance Act,

except that a community development financial institution that

is a corporation shall not be considered to be a subsidiary

of any insured depository institution or depository institution

holding company that controls less than 25 percent of any

class of the voting shares of such corporation, and does not

otherwise control in any manner the election of a majority

of the directors of the corporation.

(20) TARGETED POPULATION.—The term ‘‘targeted population’’ means individuals, or an identifiable group of individuals, including an Indian tribe, who—

(A) are low-income persons; or

(B) otherwise lack adequate access to loans or equity

investments.

(21) TRAINING PROGRAM.—The term ‘‘training program’’

means the training program operated by the Fund under section

109.

SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY

DEVELOPMENT BANKING.

(a) ESTABLISHMENT.— (1) IN GENERAL.—There is established a corporation to be

known as the Community Development Financial Institutions

Fund that shall have the duties and responsibilities specified

by this subtitle and subtitle B of title II. The Fund shall

have succession until dissolved. The offices of the Fund shall

be in Washington, D.C. The Fund shall not be affiliated with

or be within any other agency or department of the Federal

Government.

(2) WHOLLY OWNED GOVERNMENT CORPORATION.—The Fund

shall be a wholly owned Government corporation in the executive branch and shall be treated in all respects as an agency

of the United States, except as otherwise provided in this

subtitle.

(b) MANAGEMENT OF FUND.—

(1) APPOINTMENT OF ADMINISTRATOR.—The management of

the Fund shall be vested in an Administrator, who shall be

appointed by the President, by and with the advice and consent

of the Senate. The Administrator shall not engage in any other

business or employment during service as the Administrator.

(2) CHIEF FINANCIAL OFFICER.—The Administrator shall

appoint a chief financial officer, who shall have the authority

and functions of an agency Chief Financial Officer under section
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902 of title 31, United States Code. In the event of a vacancy

in the position of the Administrator or during the absence

or disability of the Administrator, the chief financial officer

shall perform the duties of the position of Administrator.

(3) OTHER OFFICERS AND EMPLOYEES.—The Administrator

may appoint such other officers and employees of the Fund

as the Administrator determines to be necessary or appropriate.

(4) EXPEDITED HIRING.—During the 2-year period beginning

on the date of enactment of this Act, the Administrator may—

(A) appoint and terminate the individuals referred to

in paragraphs (2) and (3) without regard to the civil service

laws and regulations; and

(B) fix the compensation of the individuals referred

to in paragraph (3) without regard to the provisions of

chapter 51 and subchapter III of chapter 53 of title 5,

United States Code, relating to classification of positions

and General Schedule pay rates, except that the rate of

pay for such individuals may not exceed the rate payable

for level V of the Executive Schedule under section 5316

of such title.

(c) GENERAL POWERS.—In carrying out the functions of the

Fund, the Administrator—

(1) shall have all necessary and proper authority to carry

out this subtitle and subtitle B of title II;

(2) shall have the power to adopt, alter, and use a corporate

seal for the Fund, which shall be judicially noticed;

(3) may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which business of the Fund

may be conducted and such rules and regulations as may

be necessary or appropriate to implement this subtitle and

subtitle B of title II;

(4) may enter into, perform, and enforce such agreements,

contracts, and transactions as may be deemed necessary or

appropriate to the conduct of activities authorized under this

subtitle and subtitle B of title II;

(5) may determine the character of and necessity for

expenditures of the Fund and the manner in which they shall

be incurred, allowed, and paid;

(6) may utilize or employ the services of personnel of any

agency or instrumentality of the United States with the consent

of the agency or instrumentality concerned on a reimbursable

or nonreimbursable basis; and

(7) may execute all instruments necessary or appropriate

in the exercise of any of the functions of the Fund under

this subtitle and subtitle B of title II and may delegate to

the officers of the Fund such of the powers and responsibilities

of the Administrator as the Administrator deems necessary

or appropriate for the administration of the Fund.

(d) ADVISORY BOARD.—

(1) ESTABLISHMENT.—There is established an advisory

board to the Fund to be known as the Community Development

Advisory Board, which shall be operated in accordance with

the provisions of the Federal Advisory Committee Act, except

that section 14 of that Act does not apply to the Board.

(2) MEMBERSHIP.—The Board shall consist of 15 members,

including—

(A) the Secretary of Agriculture or his or her designee;
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(B) the Secretary of Commerce or his or her designee;

(C) the Secretary of Housing and Urban Development

or his or her designee;

(D) the Secretary of the Interior or his or her designee;

(E) the Secretary of the Treasury or his or her designee;

(F) the Administrator of the Small Business Administration or his or her designee; and

(G) 9 private citizens, appointed by the President, who

shall be selected, to the maximum extent practicable, to

provide for national geographic representation and racial,

ethnic, and gender diversity, including—

(i) 2 individuals who are officers of existing community development financial institutions;

(ii) 2 individuals who are officers of insured depository institutions;

(iii) 2 individuals who are officers of national

consumer or public interest organizations;

(iv) 2 individuals who have expertise in community

development; and

(v) 1 individual who has personal experience and

specialized expertise in the unique lending and community development issues confronted by Indian tribes

on Indian reservations.

(3) CHAIRPERSON.—The members of the Board specified

in paragraph (2)(G) shall select, by majority vote, a chairperson

of the Board, who shall serve for a term of 2 years.

(4) BOARD FUNCTION.—It shall be the function of the Board

to advise the Administrator on the policies of the Fund regarding activities under this subtitle. The Board shall not advise

the Administrator on the granting or denial of any particular

application.

(5) TERMS OF PRIVATE MEMBERS.— (A) IN GENERAL.—Each member of the Board appointed

under paragraph (2)(G) shall serve for a term of 4 years. (B) VACANCIES.—Any member appointed to fill a

vacancy occurring prior to the expiration of the term for

which the previous member was appointed shall be

appointed for the remainder of such term. Members may

continue to serve following the expiration of their terms

until a successor is appointed.

(6) MEETINGS.—The Board shall meet at least annually

and at such other times as requested by the Administrator

or the chairperson. A majority of the members of the Board

shall constitute a quorum.

(7) REIMBURSEMENT FOR EXPENSES.—The members of the

Board may receive reimbursement for travel, per diem, and

other necessary expenses incurred in the performance of their

duties, in accordance with the Federal Advisory Committee

Act.

(8) COSTS AND EXPENSES.—The Fund shall provide to the

Board all necessary staff and facilities.

(e) CONFORMING AMENDMENTS.—Section 9101(3) of title 31,

United States Code, is amended—

(1) by redesignating subparagraphs (B) through (M) as

subparagraphs (C) through (N), respectively; and

(2) by inserting after subparagraph (A) the following new

subparagraph:
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‘‘(B) the Community Development Financial Institutions Fund;’’.

(f) GOVERNMENT CORPORATION CONTROL ACT EXEMPTION.—Section 9107(b) of title 31, United States Code, shall not apply to

deposits of the Fund made pursuant to section 108.

(g) LIMITATION OF FUND AND FEDERAL LIABILITY.—The liability

of the Fund and the United States Government arising out of

any investment in a community development financial institution

in accordance with this subtitle shall be limited to the amount

of the investment. The Fund shall be exempt from any assessments

and other liabilities that may be imposed on controlling or principal

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

or the District of Columbia. Nothing in this subsection shall affect

the application of any Federal tax law.

(h) PROHIBITION ON ISSUANCE OF SECURITIES.—The Fund may

not issue stock, bonds, debentures, notes, or other securities.

(i) COMPENSATION.—Title 5, United States Code, is amended

in section 5313, by adding at the end the following:

‘‘Administrator of the Community Development Financial

Institutions Fund.’’.

(j) ASSISTED INSTITUTIONS NOT UNITED STATES INSTRUMENTALITIES.—A community development financial institution or other

organization that receives assistance pursuant to this subtitle shall

not be deemed to be an agency, department, or instrumentality

of the United States.

(k) TRANSITION PERIOD.—

(1) IN GENERAL.—During the transition period, the Secretary of the Treasury may— (A) assist in the establishment of the administrative

functions of the Fund listed in paragraph (2); and (B) hire not more than 6 individuals to serve as employees of the Fund during the transition period.

(2) CONTINUED SERVICE.—Individuals hired in accordance

with paragraph (1)(B) may continue to serve as employees

of the Fund after the transition period.

(3) ADMINISTRATIVE FUNCTIONS.—The administrative functions referred to in paragraph (1)(A) shall be limited to— (A) establishing accounting, information, and recordkeeping systems for the Fund; and (B) procuring office space, equipment, and supplies. (4) EXPEDITED HIRING.—During the transition period, the

Secretary of the Treasury may— (A) appoint and terminate the individuals referred to

in paragraph (1)(B) without regard to the civil service

laws and regulations; and

(B) fix the compensation of the individuals referred

to in paragraph (1)(B) without regard to the provisions

of chapter 51 and subchapter III of chapter 53 of title

5, United States Code, relating to classification of positions

and General Schedule pay rates, except that the rate of

pay for such individuals may not exceed the rate payable

for level V of the Executive Schedule under section 5316

of such title.

(5) CERTAIN EMPLOYEES.—During the transition period,

employees of the Department of the Treasury may only comprise less than one-half of the total number of individuals

hired in accordance with paragraph (1)(B).
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(6) TRANSITION EXPENSES.—Amounts previously appropriated to the Department of the Treasury may be used to

pay obligations and expenses of the Fund incurred under this

section, and such amounts may be reimbursed by the Fund

to the Department of the Treasury from amounts appropriated

to the Fund for fiscal year 1995.

(7) DEFINITION.—For purposes of this subsection, the term

‘‘transition period’’ means the period beginning on the date

of enactment of this Act and ending on the date on which

the Administrator is appointed.

SEC. 105. APPLICATIONS FOR ASSISTANCE.

(a) FORM AND PROCEDURES.—An application for assistance

under this subtitle shall be submitted in such form and in accordance with such procedures as the Fund shall establish.

(b) MINIMUM REQUIREMENTS.—Except as provided in sections

106 and 113, the Fund shall require an application—

(1) to establish that the applicant is, or will be, a community development financial institution;

(2) to include a comprehensive strategic plan for the

organization that contains—

(A) a business plan of not less than 5 years in duration

that demonstrates that the applicant will be properly managed and will have the capacity to operate as a community

development financial institution that will not be dependent upon assistance from the Fund for continued viability;

(B) an analysis of the needs of the investment area

or targeted population and a strategy for how the applicant

will attempt to meet those needs;

(C) a plan to coordinate use of assistance from the

Fund with existing Federal, State, local, and tribal government assistance programs, and private sector financial

services;

(D) an explanation of how the proposed activities of

the applicant are consistent with existing economic,

community, and housing development plans adopted by

or applicable to an investment area or targeted population;

and

(E) a description of how the applicant will coordinate

with community organizations and financial institutions

which will provide equity investments, loans, secondary

markets, or other services to investment areas or targeted

populations;

(3) to include a detailed description of the applicant’s plans

and likely sources of funds to match the amount of assistance

requested from the Fund;

(4) in the case of an applicant that has previously received

assistance under this subtitle, to demonstrate that the

applicant—

(A) has substantially met its performance goals and

otherwise carried out its responsibilities under this subtitle

and the assistance agreement; and

(B) will expand its operations into a new investment

area or serve a new targeted population, offer more products or services, or increase the volume of its business;
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(5) in the case of an applicant with a prior history of

serving investment areas or targeted populations, to demonstrate that the applicant—

(A) has a record of success in serving investment areas

or targeted populations; and

(B) will expand its operations into a new investment

area or to serve a new targeted population, offer more

products or services, or increase the volume of its current

business; and

(6) to include such other information as the Fund deems

appropriate.

(c) PREAPPLICATION OUTREACH PROGRAM.—The Fund shall provide an outreach program to identify and provide information to

potential applicants and may provide technical assistance to potential applicants, but shall not assist in the preparation of any

application.

SEC. 106. COMMUNITY PARTNERSHIPS.

(a) APPLICATION.—An application for assistance may be filed

jointly by a community development financial institution and a

community partner to carry out a community partnership.

(b) APPLICATION REQUIREMENTS.—The Fund shall require a

community partnership application—

(1) to meet the minimum requirements established for

community development financial institutions under section

105(b), except that the criteria specified in paragraphs (1) and

(2)(A) of section 105(b) shall not apply to the community

partner;

(2) to describe how each coapplicant will participate in

carrying out the community partnership and how the partnership will enhance activities serving the investment area or

targeted population; and (3) to demonstrate that the community partnership activities are consistent with the strategic plan submitted by the

community development financial institution coapplicant.

(c) SELECTION CRITERIA.—The Fund shall consider a community

partnership application based on—

(1) the community development financial institution

coapplicant—

(A) meeting the minimum selection criteria described

in section 105; and

(B) satisfying the selection criteria of section 107; (2) the extent to which the community partner coapplicant

will participate in carrying out the partnership; (3) the extent to which the community partnership will

enhance the likelihood of success of the community development

financial institution coapplicant’s strategic plan; and

(4) the extent to which service to the investment area

or targeted population will be better performed by a partnership

as opposed to the individual community development financial

institution coapplicant.

(d) LIMITATION ON DISTRIBUTION OF ASSISTANCE.—Assistance

provided upon approval of an application under this section shall

be distributed only to the community development financial institution coapplicant, and shall not be used to fund any activities carried

out directly by the community partner or an affiliate or subsidiary

thereof.
H. R. 3474—13

(e) OTHER REQUIREMENTS AND LIMITATIONS.—All other requirements and limitations imposed by this subtitle on a community

development financial institution assisted under this subtitle shall

apply (in the manner that the Fund determines to be appropriate)

to assistance provided to carry out community partnerships. The

Fund may establish additional guidelines and restrictions on the

use of Federal funds to carry out community partnerships.

SEC. 107. SELECTION OF INSTITUTIONS.

(a) SELECTION CRITERIA.—Except as provided in section 113,

the Fund shall, in its sole discretion, select community development

financial institution applicants meeting the requirements of section

105 for assistance based on—

(1) the likelihood of success of the applicant in meeting the goals of its comprehensive strategic plan; (2) the experience and background of the management

team;

(3) the extent of need for equity investments, loans, and development services within the investment areas or targeted

populations; (4) the extent of economic distress within the investment

areas or the extent of need within the targeted populations,

as those factors are measured by objective criteria; (5) the extent to which the applicant will concentrate

its activities on serving its investment areas or targeted

populations; (6) the amount of firm commitments to meet or exceed

the matching requirements and the likely success of the plan

for raising the balance of the match; (7) the extent to which the matching funds are derived from private sources; (8) the extent to which the proposed activities will expand

economic opportunities within the investment areas or the targeted populations; (9) whether the applicant is, or will become, an insured

community development financial institution; (10) the extent of support from the investment areas or

targeted populations; (11) the extent to which the applicant is, or will be, community-owned or community-governed; (12) the extent to which the applicant will increase its

resources through coordination with other institutions or

participation in a secondary market; (13) in the case of an applicant with a prior history of serving investment areas or targeted populations, the extent

of success in serving them; and (14) other factors deemed to be appropriate by the Fund.

(b) GEOGRAPHIC DIVERSITY.—In selecting applicants for assistance, the Fund shall seek to fund a geographically diverse group

of applicants, which shall include applicants from metropolitan,

nonmetropolitan, and rural areas.

SEC. 108. ASSISTANCE PROVIDED BY THE FUND.

(a) FORMS OF ASSISTANCE.—

(1) IN GENERAL.—The Fund may provide—

(A) financial assistance through equity investments,

deposits, credit union shares, loans, and grants; and

(B) technical assistance—
H. R. 3474—14

(i) directly;

(ii) through grants; or

(iii) by contracting with organizations that possess

expertise in community development finance, without

regard to whether the organizations receive or are

eligible to receive assistance under this subtitle.

(2) EQUITY INVESTMENTS.—

(A) LIMITATION ON EQUITY INVESTMENTS.—The Fund

shall not own more than 50 percent of the equity of a

community development financial institution and may not

control the operations of such institution. The Fund may

hold only transferable, nonvoting equity investments in

the institution. Such equity investments may provide for

convertibility to voting stock upon transfer by the Fund.

(B) FUND DEEMED NOT TO CONTROL.—Notwithstanding

any other provision of law, the Fund shall not be deemed

to control a community development financial institution

by reason of any assistance provided under this subtitle

for the purpose of any other applicable law to the extent

that the Fund complies with subparagraph (A). Nothing

in this subparagraph shall affect the application of any

Federal tax law.

(3) DEPOSITS.—Deposits made pursuant to this section in

an insured community development financial institution shall

not be subject to any requirement for collateral or security.

(4) LIMITATIONS ON OBLIGATIONS.—Direct loan obligations

may be incurred by the Fund only to the extent that appropriations of budget authority to cover their cost, as defined in

section 502(5) of the Congressional Budget Act of 1974, are

made in advance.

(b) USES OF FINANCIAL ASSISTANCE.—

(1) IN GENERAL.—Financial assistance made available

under this subtitle may be used by assisted community development financial institutions to serve investment areas or targeted populations by developing or supporting—

(A) commercial facilities that promote revitalization,

community stability, or job creation or retention;

(B) businesses that—

(i) provide jobs for low-income people or are owned

by low-income people; or

(ii) enhance the availability of products and services to low-income people;

(C) community facilities;

(D) the provision of basic financial services;

(E) housing that is principally affordable to low-income

people, except that assistance used to facilitate homeownership shall only be used for services and lending products—

(i) that serve low-income people; and

(ii) that—

(I) are not provided by other lenders in the

area; or

(II) complement the services and lending products provided by other lenders that serve the

investment area or targeted population; and

(F) other businesses and activities deemed appropriate

by the Fund.
H. R. 3474—15

(2) LIMITATIONS.—No assistance made available under this

subtitle may be expended by a community development financial institution (or an organization receiving assistance under

section 113) to pay any person to influence or attempt to

influence any agency, elected official, officer, or employee of

a State or local government in connection with the making,

award, extension, continuation, renewal, amendment, or modification of any State or local government contract, grant, loan,

or cooperative agreement (as such terms are defined in section

1352 of title 31, United States Code).

(c) USES OF TECHNICAL ASSISTANCE.—

(1) TYPES OF ACTIVITIES.—Technical assistance may be used

for activities that enhance the capacity of a community development financial institution, such as training of management

and other personnel and development of programs and investment or loan products.

(2) AVAILABILITY OF TECHNICAL ASSISTANCE.—The Fund

may provide technical assistance, regardless of whether or not

the recipient also receives financial assistance under this

section.

(d) AMOUNT OF ASSISTANCE.—

(1) IN GENERAL.—Except as provided in paragraph (2), the

Fund may provide not more than $5,000,000 of assistance,

in the aggregate, during any 3-year period to any 1 community

development financial institution and its subsidiaries and

affiliates.

(2) EXCEPTION.—The Fund may provide not more than

$3,750,000 of assistance in addition to the amount specified

in paragraph (1) during the same 3-year period to an existing

community development financial institution that proposes to

establish a subsidiary or affiliate for the purpose of serving

an investment area or targeted population outside of any State

and outside of any metropolitan area presently served by the

institution, if—

(A) the subsidiary or affiliate— (i) would be a community development financial

institution; and

(ii) independently— (I) meets the selection criteria described in

section 105; and

(II) satisfies the selection criteria of section

107; and

(B) no other application for assistance to serve the

investment area or targeted population has been submitted

to the Administrator within a reasonable period of time

preceding the date of receipt of the application at issue.

(3) TIMING OF ASSISTANCE.—Assistance may be provided

as described in paragraphs (1) and (2) in a lump sum or

over a period of time, as determined by the Fund.

(e) MATCHING REQUIREMENTS.—

(1) IN GENERAL.—Assistance other than technical assistance shall be matched with funds from sources other than

the Federal Government on the basis of not less than one

dollar for each dollar provided by the Fund. Such matching

funds shall be at least comparable in form and value to assistance provided by the Fund. The Fund shall provide no

assistance (other than technical assistance) until a community
H. R. 3474—16

development financial institution has secured firm commitments for the matching funds required.

(2) EXCEPTION.—In the case of an applicant with severe

constraints on available sources of matching funds, the Fund

may permit an applicant to comply with the matching requirements of paragraph (1) by—

(A) reducing such matching requirement by 50 percent;

or

(B) permitting an applicant to provide matching funds

in a form to be determined at the discretion of the Fund,

if such applicant—

(i) has total assets of less than $100,000;

(ii) serves nonmetropolitan or rural areas; and

(iii) is not requesting more than $25,000 in assistance.

(3) LIMITATION.—Not more than 25 percent of the total

funds disbursed in any fiscal year by the Fund may be matched

as authorized under paragraph (2).

(4) CONSTRUCTION OF ‘‘FEDERAL GOVERNMENT FUNDS’’.—

For purposes of this subsection, notwithstanding section

105(a)(9) of the Housing and Community Development Act of

1974, funds provided pursuant to such Act shall be considered

to be Federal Government funds.

(f) TERMS AND CONDITIONS.—

(1) SOUNDNESS OF UNREGULATED INSTITUTIONS.—The Fund

shall—

(A) ensure, to the maximum extent practicable, that

each community development financial institution (other

than an insured community development financial institution or depository institution holding company) assisted

under this subtitle is financially and managerially sound

and maintains appropriate internal controls;

(B) require such institution to submit, not less than

once during each 18-month period, a statement of financial

condition audited by an independent certified public

accountant as part of the report required by section

115(e)(1); and

(C) require that all assistance granted under this section is used by the community development financial

institution or community development partnership in a

manner consistent with the purposes of this subtitle.

(2) ASSISTANCE AGREEMENT.— (A) IN GENERAL.—Before providing any assistance

under this subtitle, the Fund and each community development financial institution to be assisted shall enter into

an agreement that requires the institution to comply with

performance goals and abide by other terms and conditions

pertinent to assistance received under this subtitle.

(B) PERFORMANCE GOALS.—Performance goals shall be

negotiated between the Fund and each community development financial institution receiving assistance based upon

the strategic plan submitted pursuant to section 105(b)(2).

Such goals may be modified with the consent of the parties,

or as provided in subparagraph (C). Performance goals

for insured community development financial institutions

shall be determined in consultation with the appropriate

Federal banking agency.
H. R. 3474—17

(C) SANCTIONS.—The agreement shall provide that, in

the event of fraud, mismanagement, noncompliance with

this subtitle, or noncompliance with the terms of the agreement, the Fund, in its discretion, may—

(i) require changes to the performance goals

imposed pursuant to subparagraph (B);

(ii) require changes to the strategic plan submitted

pursuant to section 105(b)(2);

(iii) revoke approval of the application;

(iv) reduce or terminate assistance;

(v) require repayment of assistance;

(vi) bar an applicant from reapplying for assistance

from the Fund; and

(vii) take such other actions as the Fund deems

appropriate.

(D) CONSULTATION WITH TRIBAL GOVERNMENTS.—In

reviewing the performance of any assisted community

development financial institution, the investment area of

which includes an Indian reservation, or the targeted population of which includes an Indian tribe, the Fund shall

consult with, and seek input from, any appropriate tribal

government.

(g) AUTHORITY TO SELL EQUITY INVESTMENTS AND LOANS.—

The Fund may, at any time, sell its equity investments and loans,

but the Fund shall retain the power to enforce limitations on

assistance entered into in accordance with the requirements of

this subtitle until the performance goals related to the investment

or loan have been met.

(h) NO AUTHORITY TO LIMIT SUPERVISION AND REGULATION.— Nothing in this subtitle shall affect any authority of the appropriate

Federal banking agency to supervise and regulate any institution

or company.

SEC. 109. TRAINING.

(a) IN GENERAL.—The Fund may operate a training program

to increase the capacity and expertise of community development

financial institutions and other members of the financial services

industry to undertake community development finance activities. (b) PROGRAM ACTIVITIES.—The training program shall provide

educational programs to assist community development financial

institutions and other members of the financial services industry

in developing lending and investment products, underwriting and

servicing loans, managing equity investments, and providing development services targeted to areas of economic distress, low-income

persons, and persons who lack adequate access to loans and equity

investments.

(c) PARTICIPATION.—The training program shall be made available to community development financial institutions and other

members of the financial services industry that serve or seek to

serve areas of economic distress, low-income persons, and persons

who lack adequate access to loans and equity investments.

(d) CONTRACTING.—The Fund may offer the training program

described in this section directly or through a contract with other

organizations. The Fund may contract to provide the training program through organizations that possess special expertise in

community development, without regard to whether the organizations receive or are eligible to receive assistance under this subtitle.
H. R. 3474—18

(e) COORDINATION.—The Fund shall coordinate with other

appropriate Federal departments or agencies that operate similar

training programs in order to prevent duplicative efforts. (f) REGULATORY FEE FOR PROVIDING TRAINING SERVICES.— (1) GENERAL RULE.—The Fund may, at the discretion of the Administrator and in accordance with this subsection,

assess and collect regulatory fees solely to cover the costs

of the Fund in providing training services under a training

program operated in accordance with this section. (2) PERSONS SUBJECT TO FEE.—Fees may be assessed under paragraph (1) only on persons who participate in the training

program. (3) LIMITATION ON MANNER OF COLLECTION.—Fees may be assessed and collected under this subsection only in such manner as may reasonably be expected to result in the collection

of an aggregate amount of fees during any fiscal year which

does not exceed the aggregate costs of the Fund for such year

in providing training services under a training program operated in accordance with this section

(4) LIMITATION ON AMOUNT OF FEE.—The amount of any

fee assessed under this subsection on any person may not

exceed the amount which is reasonably based on the proportion

of the training services provided under a training program

operated in accordance with this section which relate to such

person.

SEC. 110. ENCOURAGEMENT OF PRIVATE ENTITIES.

The Fund may facilitate the organization of corporations in

which the Federal Government has no ownership interest. The

purpose of any such entity shall be to assist community development

financial institutions in a manner that is complementary to the

activities of the Fund under this subtitle. Any such entity shall

be managed exclusively by persons not employed by the Federal

Government or any agency or instrumentality thereof, or by any

State or local government or any agency or instrumentality thereof.

SEC. 111. COLLECTION AND COMPILATION OF INFORMATION.

The Fund shall—

(1) collect and compile information pertinent to community

development financial institutions that will assist in creating,

developing, expanding, and preserving such institutions; and (2) make such information available to promote the purposes of this subtitle.

SEC. 112. INVESTMENT OF RECEIPTS AND PROCEEDS.

(a) ESTABLISHMENT OF ACCOUNT.—Any dividends on equity

investments and proceeds from the disposition of investments,

deposits, or credit union shares that are received by the Fund

as a result of assistance provided pursuant to section 108 or 113,

and any fees received pursuant to section 109(f) shall be deposited

and accredited to an account of the Fund in the United States

Treasury (hereafter in this section referred to as ‘‘the account’’)

established to carry out the purpose of this subtitle. (b) INVESTMENTS.—Upon request of the Administrator, the Secretary of the Treasury shall invest amounts deposited in the account

in public debt securities with maturities suitable to the needs

of the Fund, as determined by the Administrator, and bearing

interest at rates determined by the Secretary of the Treasury,
H. R. 3474—19

comparable to current market yields on outstanding marketable

obligations of the United States of similar maturities.

(c) AVAILABILITY.—Amounts deposited into the account and

interest earned on such amounts pursuant to this section shall

be available to the Fund until expended.

SEC. 113. CAPITALIZATION ASSISTANCE TO ENHANCE LIQUIDITY.

(a) ASSISTANCE.—

(1) IN GENERAL.—The Fund may provide assistance for

the purpose of providing capital to organizations to purchase

loans or otherwise enhance the liquidity of community development financial institutions, if—

(A) the primary purpose of such organizations is to

promote community development; and

(B) any assistance received is matched with funds—

(i) from sources other than the Federal Government;

(ii) on the basis of not less than one dollar for

each dollar provided by the Fund; and

(iii) that are comparable in form and value to

the assistance provided by the Fund.

(2) LIMITATION ON OTHER ASSISTANCE.—An organization

that receives assistance under this section may not receive

other financial or technical assistance under this subtitle.

(3) CONSTRUCTION OF FEDERAL GOVERNMENT FUNDS.—For

purposes of this subsection, notwithstanding section 105(a)(9)

of the Housing and Community Development Act of 1974, funds

provided pursuant to such Act shall be considered to be Federal

Government funds.

(b) SELECTION.—The selection of organizations to receive assistance under this section shall be at the discretion of the Fund

and in accordance with criteria established by the Fund. In

establishing such criteria, the Fund shall take into account the

criteria contained in sections 105(b) and 107, as appropriate.

(c) AMOUNT OF ASSISTANCE.—The Fund may provide a total

of not more than $5,000,000 of assistance to an organization or

its subsidiaries or affiliates under this section during any 3-year

period. Assistance may be provided in a lump sum or over a period

of time, as determined by the Fund. (d) AUDIT AND REPORT REQUIREMENTS.—Organizations that

receive assistance from the Fund in accordance with this section

shall—

(1) submit to the Fund, not less than once in every 18-

month period, financial statements audited by an independent

certified public accountant, as part of the report required by

paragraph (2);

(2) submit an annual report on its activities; and

(3) keep such records as may be necessary to disclose

the manner in which any assistance under this section is used.

(e) LIMITATIONS ON LIABILITY.—

(1) LIABILITY OF FUND.—The liability of the Fund and the

United States Government arising out of the provision of assistance to any organization in accordance with this section shall

be limited to the amount of such assistance. The Fund shall

be exempt from any assessments and any other liabilities that

may be imposed on controlling or principal shareholders by

any Federal law or the law of any State, or territory. Nothing
H. R. 3474—20

in this paragraph shall affect the application of Federal tax

law.

(2) LIABILITY OF GOVERNMENT.—This section does not oblige

the Federal Government, either directly or indirectly, to provide

any funds to any organization assisted pursuant to this section,

or to honor, reimburse, or otherwise guarantee any obligation

or liability of such an organization. This section shall not be

construed to imply that any such organization or any obligations or securities of any such organization are backed by

the full faith and credit of the United States.

(f) USE OF PROCEEDS.—Any proceeds from the sale of loans

by an organization assisted under this section shall be used by

the seller for community development purposes.

SEC. 114. INCENTIVES FOR DEPOSITORY INSTITUTION PARTICIPATION.

(a) FUNCTION OF ADMINISTRATOR.—

(1) IN GENERAL.—Of any funds appropriated pursuant to

the authorization in section 121(a), the funds made available

for use in carrying out this section in accordance with section

121(a)(4) shall be administered by the Administrator of the

Fund, in consultation with—

(A) the Federal banking agencies (as defined in section

3 of the Federal Deposit Insurance Act) and the National

Credit Union Administration;

(B) the individuals named pursuant to clauses (ii) and

(iv) of section 104(d)(2)(G); and

(C) any other representatives of insured depository

institutions or other persons as the Administrator may

determine to be appropriate.

(2) APPLICABILITY OF BANK ENTERPRISE ACT OF 1991.—Subject to subsection (b) and the consultation requirement of paragraph (1)—

(A) section 233 of the Bank Enterprise Act of 1991

shall be applicable to the Administrator, for purposes of

this section, in the same manner and to the same extent

that such section is applicable to the Community Enterprise

Assessment Credit Board;

(B) the Administrator shall, for purposes of carrying

out this section and section 233 of the Bank Enterprise

Act of 1991—

(i) have all powers and rights of the Community

Enterprise Assessment Credit Board under section 233

of the Bank Enterprise Act of 1991 to administer and

enforce any provision of such section 233 which is

applicable to the Administrator under this section; and

(ii) shall be subject to the same duties and restrictions imposed on the Community Enterprise Assessment Credit Board; and

(C) the Administrator shall—

(i) have all powers and rights of an appropriate

Federal banking agency under section 233(b)(2) of the

Bank Enterprise Act of 1991 to approve or disapprove

the designation of qualified distressed communities for

purposes of this section and provide information and

assistance with respect to any such designation; and
H. R. 3474—21

(ii) shall be subject to the same duties imposed

on the appropriate Federal banking agencies under

such section 233(b)(2).

(3) AWARDS.—The Administrator shall determine the

amount of assessment credits, and shall make awards of those

credits.

(4) REGULATIONS AND GUIDELINES.—The Administrator

may prescribe such regulations and issue such guidelines as

the Administrator determines to be appropriate to carry out

this section.

(5) EXCEPTIONS TO APPLICABILITY.—Notwithstanding paragraphs (1) through (4) of this subsection, subsections (a)(1)

and (e)(2) of section 233 of the Bank Enterprise Act of 1991,

and any other provision of the Federal Deposit Insurance Act

relating to the Bank Enterprise Act of 1991, do not apply

to the Administrator for purposes of this subtitle.

(b) PROVISIONS RELATING TO ADMINISTRATION OF THIS

SECTION.—

(1) NEW LIFELINE ACCOUNTS.—In applying section 233 of

the Bank Enterprise Act of 1991 for purposes of this section,

the Administrator shall treat the provision of new lifeline

accounts by an insured depository institution as an activity

which is qualified to be taken into account under section

233(a)(2)(A) of such Act.

(2) DETERMINATION OF ASSESSMENT CREDIT.—For the purpose of this subtitle, section 233(a)(3) of the Bank Enterprise

Act of 1991 (12 U.S.C. 1834a(a)(3)) shall be applied by substituting the following text: ‘‘(3) AMOUNT OF ASSESSMENT CREDIT.—The amount of an

assessment credit which may be awarded to an insured depository institution to carry out the qualified activities of the

institution or of the subsidiaries of the institution pursuant

to this section for any semiannual period shall be equal to

the sum of—

‘‘(A) with respect to qualifying activities described in paragraph (2)(A), the amount which is equal to— ‘‘(i) 5 percent of the sum of the amounts determined under such subparagraph, in the case of an

institution which is not a community development

financial institution; or

‘‘(ii) 15 percent of the sum of the amounts determined under such subparagraph, in the case of an

institution which is a community development financial

institution; and

‘‘(B) with respect to qualifying activities described in

paragraph (2)(C), 15 percent of the amounts determined

under such subparagraph.’’.

(3) ADJUSTMENT OF PERCENTAGE.—Section 233(a)(5) of the

Bank Enterprise Act of 1991 shall be applied for purposes

of this section by—

(A) substituting ‘‘institutions which are community

development financial institutions’’ for ‘‘institutions which

meet the community development organization requirements under section 234’’; and

(B) substituting ‘‘institutions which are not community

development financial institutions’’ for ‘‘institutions which

do not meet such requirements’’.
H. R. 3474—22

(4) DESIGNATION OF QDC.—Section 233(b)(2) of the Bank

Enterprise Act of 1991 shall be applied for purposes of this

section without regard to subparagraph (A)(ii) of such section

233(b)(2).

(5) OPERATION ON ANNUAL BASIS.—The Administrator may,

in the Administrator’s discretion, apply section 233 of the Bank

Enterprise Act of 1991 for purposes of this section by providing

community enterprise assessment credits with respect to

annual periods rather than semiannual periods.

(6) OUTREACH.—The Administrator shall ensure that

information about the Bank Enterprise Act of 1991 under this

section is widely disseminated to all interested parties.

(7) QUALIFIED ACTIVITIES.—For the purpose of this subtitle,

section 233(a)(2)(A) of the Bank Enterprise Act of 1991 shall

be applied by inserting ‘‘of the increase’’ after ‘‘the amount’’.

(c) TECHNICAL AND CONFORMING AMENDMENTS TO THE BANK

ENTERPRISE ACT OF 1991.—

(1) ASSISTANCE TO CDFI MAY BE TAKEN INTO ACCOUNT AS

QUALIFYING ACTIVITY.—Section 233(a)(2) of the Bank Enterprise

Act of 1991 (12 U.S.C. 1834a(a)(2)) is amended—

(A) in the material preceding subparagraph (A), by

striking ‘‘shall be eligible’’ and inserting ‘‘may apply for’’;

(B) in subparagraph (A), by striking ‘‘financial assistance’’ and inserting ‘‘assistance’’;

(C) by striking ‘‘and’’ at the end of subparagraph (A);

(D) by striking the period at the end of subparagraph

(B) and inserting ‘‘; and’’; and

(E) by adding at the end the following new subparagraph:

‘‘(C) any increase during the period in the amount

of new equity investments in community development

financial institutions.’’.

(2) ADDITIONAL ASSISTANCE WHICH MAY BE CONSIDERED AS

QUALIFYING ACTIVITIES.—Section 233(a)(4) of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a(a)(4)) is amended—

(A) in the material preceding subparagraph (A), by

striking ‘‘financial’’; and

(B) by adding at the end the following new subparagraphs:

‘‘(L) Loans made for the purpose of developing or

supporting—

‘‘(i) commercial facilities that enhance revitalization, community stability, or job creation and retention

efforts;

‘‘(ii) business creation and expansion efforts that—

‘‘(I) create or retain jobs for low-income people;

‘‘(II) enhance the availability of products and

services to low-income people; or

‘‘(III) create or retain businesses owned by

low-income people or residents of a targeted area;

‘‘(iii) community facilities that provide benefits to

low-income people or enhance community stability;

‘‘(iv) home ownership opportunities that are affordable to low-income households;

‘‘(v) rental housing that is principally affordable

to low-income households; and
H. R. 3474—23

‘‘(vi) other activities deemed appropriate by the

Board.

‘‘(M) The provision of technical assistance to residents

of qualified distressed communities in managing their personal finances through consumer education programs either

sponsored or offered by insured depository institutions.

‘‘(N) The provision of technical assistance and consulting services to newly formed small businesses located in

qualified distressed communities.

‘‘(O) The provision of technical assistance to, or servicing the loans of low- or moderate-income homeowners and

homeowners located in qualified distressed communities.’’.

(3) RESTRICTION ON ADJUSTMENT OF PERCENTAGES.—Section 233(a)(5) of the Bank Enterprise Act of 1991 (12 U.S.C.

1834a(a)(5)) is amended by striking ‘‘paragraph (3)’’ and inserting ‘‘paragraph (3)(A)’’.

(4) CREDIT LIMITED TO ORIGINATIONS BY INSTITUTIONS.—

Section 233(a)(6) of the Bank Enterprise Act of 1991 (12 U.S.C.

1834a(a)(6)) is amended by striking ‘‘Investments by any

insured depository institution in loans and securities’’ and

inserting ‘‘Loans, financial assistance, and equity investments

made by any insured depository institution’’.

(5) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.—

Section 233(a) of the Bank Enterprise Act of 1991 (12 U.S.C.

1834a(a)) is amended by adding at the end the following new

paragraph:

‘‘(7) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.—

The Board may establish guidelines for analyzing the technical

assistance described in subparagraphs (M), (N), and (O) of

paragraph (4) for the purpose of quantifying the results of

such assistance in determining the amount of any community

assessment credit under this subsection.’’.

(6) PROHIBITION ON DOUBLE FUNDING FOR SAME ACTIVI- TIES.—Section 233 of the Bank Enterprise Act of 1991 (12

U.S.C. 1834a) is amended—

(A) by redesignating subsection (g) as subsection (j);

and

(B) by inserting after subsection (f) the following new

subsection:

‘‘(g) PROHIBITION ON DOUBLE FUNDING FOR SAME ACTIVITIES.— No community development financial institution may receive a

community enterprise assessment credit if such institution, either

directly or through a community partnership— ‘‘(1) has received assistance within the preceding 12-month

period, or has an application for assistance pending, under

section 105 of the Community Development Banking and Financial Institutions Act of 1994; or

‘‘(2) has ever received assistance, under section 108 of

the Community Development Banking and Financial Institutions Act of 1994, for the same activity during the same semiannual period for which the institution seeks a community

enterprise assessment credit under this section.’’.

(7) ADDITIONAL ADMINISTRATIVE REQUIREMENTS.—Section

233 of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a)

is amended by inserting after subsection (g) (as added by paragraph (6) of this subsection) the following new subsections:

‘‘(h) PRIORITY OF AWARDS.—
H. R. 3474—24

‘‘(1) QUALIFYING LOANS AND SERVICES.—

‘‘(A) IN GENERAL.—If the amount of funds appropriated

for purposes of carrying out this section for any fiscal

year are insufficient to award the amount of assessment

credits for which insured depository institutions have

applied and are eligible under this section, the Board shall,

in awarding community enterprise assessment credits for

qualifying activities under subparagraphs (A) and (B) of

subsection (a)(2) for any semiannual period for which such

appropriation is available, determine which institutions

shall receive an award.

‘‘(B) PRIORITY FOR SUPPORT OF EFFORTS OF CDFI.—

The Board shall give priority to institutions that have

supported the efforts of community development financial

institutions in the qualified distressed community.

‘‘(C) OTHER FACTORS.—The Board may also consider

the following factors:

‘‘(i) DEGREE OF DIFFICULTY.—The degree of difficulty in carrying out the activities that form the

basis for the institution’s application.

‘‘(ii) COMMUNITY IMPACT.—The extent to which the

activities that form the basis for the institution’s

application have benefited the qualified distressed

community.

‘‘(iii) INNOVATION.—The degree to which the activities that form the basis for the institution’s application

have incorporated innovative methods for meeting

community needs. ‘‘(iv) LEVERAGE.—The leverage ratio between the

dollar amount of the activities that form the basis

for the institution’s application and the amount of the

assessment credit calculated in accordance with this

section for such activities.

‘‘(v) SIZE.—The amount of total assets of the

institution.

‘‘(vi) NEW ENTRY.—Whether the institution had

provided financial services in the designated distressed

community before such semiannual period. ‘‘(vii) NEED FOR SUBSIDY.—The degree to which

the qualified activity which forms the basis for the

application needs enhancement through an assessment

credit.

‘‘(viii) EXTENT OF DISTRESS IN COMMUNITY.—The

degree of poverty and unemployment in the designated

distressed community, the proportion of the total population of the community which are low-income families

and unrelated individuals, and the extent of other

adverse economic conditions in such community.

‘‘(2) QUALIFYING INVESTMENTS.—If the amount of funds

appropriated for purposes of carrying out this section for any

fiscal year are insufficient to award the amount of assessment

credits for which insured depository institutions have applied

and are eligible under this section, the Board shall, in awarding

community enterprise assessment credits for qualifying activities under subsection (a)(2)(C) for any semiannual period for

which such appropriation is available, determine which institutions shall receive an award based on the leverage ratio between
H. R. 3474—25

the dollar amount of the activities that form the basis for

the institution’s application and the amount of the assessment

credit calculated in accordance with this section for such

activities.

‘‘(i) DETERMINATION OF AMOUNT OF ASSESSMENT CREDIT.—Notwithstanding any other provision of this section, the determination

of the amount of any community enterprise assessment credit under

subsection (a)(3) for any insured depository institution for any semiannual period shall be made solely at the discretion of the Board.

No insured depository institution shall be awarded community

enterprise assessment credits for any semiannual period in excess

of an amount determined by the Board.’’.

(8) ADDITIONAL DEFINITIONS.—Subsection (j) of section 233

of the Bank Enterprise Act of 1991 (as redesignated by paragraph (6) of this subsection) is amended by adding at the

end the following new paragraphs:

‘‘(4) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—

The term ‘community development financial institution’ has

the same meaning as in section 103(5) of the Community Development Banking and Financial Institutions Act of 1994.

‘‘(5) AFFILIATE.—The term ‘affiliate’ has the same meaning

as in section 2 of the Bank Holding Company Act of 1956.’’.

SEC. 115. RECORDKEEPING.

(a) IN GENERAL.—A community development financial institution receiving assistance from the Fund shall keep such records,

for such periods as may be prescribed by the Fund and necessary

to disclose the manner in which any assistance under this subtitle

is used and to demonstrate compliance with the requirements of

this subtitle.

(b) USER PROFILE INFORMATION.—The Fund shall require each

community development financial institution or other organization

receiving assistance from the Fund to compile such data, as is

determined to be appropriate by the Fund, on the gender, race,

ethnicity, national origin, or other pertinent information concerning

individuals that utilize the services of the assisted institution to

ensure that targeted populations and low-income residents of investment areas are adequately served.

(c) ACCESS TO RECORDS.—The Fund shall have access on

demand, for the purpose of determining compliance with this subtitle, to any records of a community development financial institution or other organization that receives assistance from the Fund.

(d) REVIEW.—Not less than annually, the Fund shall review

the progress of each assisted community development financial

institution in carrying out its strategic plan, meeting its performance goals, and satisfying the terms and conditions of its assistance

agreement.

(e) REPORTING.—

(1) ANNUAL REPORTS.—The Fund shall require each community development financial institution receiving assistance

under this subtitle to submit an annual report to the Fund

on its activities, its financial condition, and its success in meeting performance goals, in satisfying the terms and conditions

of its assistance agreement, and in complying with other

requirements of this subtitle, in such form and manner as

the Fund shall specify.
H. R. 3474—26

(2) AVAILABILITY OF REPORTS.—The Fund, after deleting

or redacting any material as appropriate to protect privacy

or proprietary interests, shall make such reports submitted

under paragraph (1) available for public inspection.

SEC. 116. SPECIAL PROVISIONS WITH RESPECT TO INSTITUTIONS

THAT ARE SUPERVISED BY FEDERAL BANKING AGENCIES.

(a) CONSULTATION WITH APPROPRIATE AGENCIES.—The Fund

shall consult with and consider the views of the appropriate Federal

banking agency prior to providing assistance under this subtitle

to—

(1) an insured community development financial institution;

(2) any community development financial institution that

is examined by or subject to the reporting requirements of

an appropriate Federal banking agency; or

(3) any community development financial institution that

has as its community partner an institution that is examined

by or subject to the reporting requirements of an appropriate

Federal banking agency.

(b) REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.—

(1) IN GENERAL.—Except as provided in paragraph (4), notwithstanding any other provisions of this subtitle, prior to

directly requesting information from or imposing reporting or

recordkeeping requirements on an insured community development financial institution or other institution that is examined

by or subject to the reporting requirements of an appropriate

Federal banking agency, the Fund shall consult with the appropriate Federal banking agency to determine if the information

requested is available from or may be obtained by such agency

in the form, format, or detail required by the Fund. (2) TIMING OF RESPONSE FROM APPROPRIATE FEDERAL BANK- ING AGENCY.—If the information, reports, or records requested

by the Fund pursuant to paragraph (1) are not provided by

the appropriate Federal banking agency in less than 15 calendar days after the date on which the material is requested,

the Fund may request the information from or impose the

recordkeeping or reporting requirements directly on such

institutions with notice to the appropriate Federal banking

agency. (3) ELIMINATION OF DUPLICATIVE INFORMATION AND REPORT- ING REQUIREMENTS.—The Fund shall use any information provided the appropriate Federal banking agency under this

section to the extent practicable to eliminate duplicative

requests for information and reports from, and recordkeeping

by an insured community development financial institution or

other institution that is examined by or subject to the reporting

requirements of an appropriate Federal banking agency.

(4) EXCEPTION.—Notwithstanding paragraphs (1) and (2),

the Fund may require an insured community development

financial institution or other institution that is examined by

or subject to the reporting requirements of an appropriate

Federal banking agency to provide information with respect

to the institution’s implementation of its strategic plan or

compliance with the terms of its assistance agreement under

this subtitle, after providing notice to the appropriate Federal

banking agency.
H. R. 3474—27

(c) EXCLUSION FOR EXAMINATION REPORTS.—Nothing in this

section shall be construed to permit the Fund to require an insured

community development financial institution or other institution

that is examined by or subject to the reporting requirements of

an appropriate Federal banking agency, to obtain, maintain, or

furnish an examination report of any appropriate Federal banking

agency or records contained in or related to such a report.

(d) SHARING OF INFORMATION.—The Fund and the appropriate

Federal banking agency shall promptly notify each other of material

concerns about an insured community development financial institution or other institution that is examined by or subject to the

reporting requirements of an appropriate Federal banking agency,

and share appropriate information relating to such concerns.

(e) DISCLOSURE PROHIBITED.—Neither the Fund nor the appropriate Federal banking agency shall disclose confidential information obtained pursuant to this section from any party without

the written consent of that party.

(f) PRIVILEGE MAINTAINED.—The Fund, the appropriate Federal

banking agency, and any other party providing information under

this section shall not be deemed to have waived any privilege

applicable to any information or data, or any portion thereof, by

providing such information or data to the other party or by permitting such data or information, or any copies or portions thereof,

to be used by the other party.

(g) EXCEPTIONS.—Nothing in this section shall authorize the

Fund or the appropriate Federal banking agency to withhold

information from the Congress or prevent it from complying with

a request for information from a Federal department or agency

in compliance with applicable law.

(h) SANCTIONS.— (1) NOTIFICATION.—The Fund shall notify the appropriate

Federal banking agency before imposing any sanction pursuant

to the authority in section 108(f)(2)(C) on an insured community

development financial institution or other institution that is

examined by or subject to the reporting requirements of that

agency. (2) EXCEPTIONS.—The Fund shall not impose a sanction

referred to in paragraph (1) if the appropriate Federal banking

agency, in writing, not later than 30 calendar days after receiving notice from the Fund— (A) objects to the proposed sanction;

(B) determines that the sanction would—

(i) have a material adverse effect on the safety

and soundness of the institution; or

(ii) impede or interfere with an enforcement action

against that institution by that agency;

(C) proposes a comparable alternative action; and

(D) specifically explains—

(i) the basis for the determination under subparagraph (B) and, if appropriate, provides documentation

to support the determination; and

(ii) how the alternative action suggested pursuant

to subparagraph (C) would be as effective as the sanction proposed by the Fund in securing compliance with

this subtitle and deterring future noncompliance.

(i) SAFETY AND SOUNDNESS CONSIDERATIONS.—The Fund and

each appropriate Federal banking agency shall cooperate and
H. R. 3474—28

respond to requests from each other and from other appropriate

Federal banking agencies in a manner that ensures the safety

and soundness of the insured community development financial

institution or other institution that is examined by or subject to

the reporting requirements of an appropriate Federal banking

agency.

SEC. 117. STUDIES AND REPORTS; EXAMINATION AND AUDIT.

(a) ANNUAL REPORT BY THE FUND.—The Fund shall conduct

an annual evaluation of the activities carried out by the Fund

and the community development financial institutions and other

organizations assisted pursuant to this subtitle, and shall submit

a report of its findings to the President and the Congress not

later than 120 days after the end of each fiscal year of the Fund.

The report shall include financial statements audited in accordance

with subsection (f).

(b) OPTIONAL STUDIES.—The Fund may conduct such studies

as the Fund determines necessary to further the purpose of this

subtitle and to facilitate investment in distressed communities.

The findings of any studies conducted pursuant to this subsection

shall be included in the report required by subsection (a).

(c) NATIVE AMERICAN LENDING STUDY.—

(1) IN GENERAL.—The Fund shall conduct a study on lending and investment practices on Indian reservations and other

land held in trust by the United States. Such study shall—

(A) identify barriers to private financing on such lands;

and

(B) identify the impact of such barriers on access to

capital and credit for Native American populations.

(2) REPORT.—Not later than 12 months after the date on

which the Administrator is appointed, the Fund shall submit

a report to the President and the Congress that— (A) contains the findings of the study conducted under paragraph (1); (B) recommends any necessary statutory and regulatory changes to existing Federal programs; and (C) makes policy recommendations for community

development financial institutions, insured depository

institutions, secondary market institutions, and other private sector capital institutions to better serve such

populations.

(d) INVESTMENT, GOVERNANCE, AND ROLE OF FUND.—Thirty

months after the appointment and qualification of the Administrator, the Comptroller General of the United States shall submit

to the President and the Congress a study evaluating the structure,

governance, and performance of the Fund.

(e) CONSULTATION.—In the conduct of the studies required

under this section, the Fund shall consult, as appropriate, with

the Comptroller of the Currency, the Federal Deposit Insurance

Corporation, the Board of Governors of the Federal Reserve System,

the Federal Housing Finance Board, the Farm Credit Administration, the Director of the Office of Thrift Supervision, the National

Credit Union Administration Board, Indian tribal governments,

community reinvestment organizations, civil rights organizations,

consumer organizations, financial organizations, and such representatives of agencies or other persons, at the discretion of the

Fund.
H. R. 3474—29

(f) EXAMINATION AND AUDIT.—The financial statements of the

Fund shall be audited in accordance with section 9105 of title

31, United States Code, except that audits required by section

9105(a) of such title shall be performed annually.

SEC. 118. INSPECTOR GENERAL.

(a) ESTABLISHMENT.—Section 11 of the Inspector General Act

of 1978 (5 U.S.C. App. 11) is amended—

(1) in paragraph (1), by inserting ‘‘; the Administrator

of the Community Development Financial Institutions Fund;’’

before ‘‘and the chief’’; and

(2) in paragraph (2), by inserting ‘‘the Community Development Financial Institutions Fund,’’ after ‘‘the Agency for International Development,’’.

(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated such sums as may be necessary for the operation

of the Office of Inspector General established by the amendments

made by subsection (a).

SEC. 119. ENFORCEMENT.

(a) REGULATIONS.—

(1) IN GENERAL.—Not later than 180 days after the appointment and qualification of the Administrator, the Fund shall

promulgate such regulations as may be necessary to carry

out this subtitle.

(2) REGULATIONS REQUIRED.—The regulations promulgated

under paragraph (1) shall include regulations applicable to

community development financial institutions that are not

insured depository institutions to—

(A) prevent conflicts of interest on the part of directors,

officers, and employees of community development financial

institutions as the Fund determines to be appropriate;

and

(B) establish such standards with respect to loans by

a community development financial institution to any director, officer, or employee of such institution as the Fund

determines to be appropriate, including loan amount

limitations.

(b) ADMINISTRATIVE ENFORCEMENT.—The provisions of this subtitle, and regulations prescribed and agreements entered into under

this subtitle, shall be enforced under section 8 of the Federal

Deposit Insurance Act by the appropriate Federal banking agency,

in the case of an insured community development financial institution. A violation of this subtitle, or any regulation prescribed under

or any agreement entered into under this subtitle, shall be treated

as a violation of the Federal Deposit Insurance Act.

(c) CRIMINAL PROVISION.—Section 657 of title 18, United States

Code, is amended by inserting ‘‘or any community development

financial institution receiving financial assistance under the Riegle

Community Development and Regulatory Improvement Act of

1994,’’ after ‘‘small business investment company,’’.

SEC. 120. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR

CREDIT UNIONS.

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

U.S.C. 1766) is amended by striking subsection (k).
H. R. 3474—30

(b) REVOLVING LOAN FUND.—The Federal Credit Union Act

(12 U.S.C. 1751 et seq.) is amended by inserting after section

129 the following new section:

‘‘SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR

CREDIT UNIONS.

‘‘(a) IN GENERAL.—The Board may exercise the authority granted to it by the Community Development Credit Union Revolving Loan Fund Transfer Act, including any additional appropriation

made or earnings accrued, subject only to this section and to regulations prescribed by the Board. ‘‘(b) INVESTMENT.—The Board may invest any idle Fund moneys in United States Treasury securities. Any interest accrued on such

securities shall become a part of the Fund. ‘‘(c) LOANS.—The Board may require that any loans made from the Fund be matched by increased shares in the borrower credit

union.

‘‘(d) INTEREST.—Interest earned by the Fund may be allocated by the Board for technical assistance to community development

credit unions, subject to an appropriations Act. ‘‘(e) DEFINITION.—As used in this section, the term ‘Fund’ means

the Community Development Credit Union Revolving Loan Fund.’’.

SEC. 121. AUTHORIZATION OF APPROPRIATIONS.

(a) FUND AUTHORIZATION.— (1) IN GENERAL.—To carry out this subtitle, there are authorized to be appropriated to the Fund, to remain available

until expended— (A) $60,000,000 for fiscal year 1995;

(B) $104,000,000 for fiscal year 1996;

(C) $107,000,000 for fiscal year 1997; and

(D) $111,000,000 for fiscal year 1998; or such greater sums as may be necessary to carry out this

subtitle.

(2) ADMINISTRATIVE EXPENSES.— (A) IN GENERAL.—Of amounts authorized to be appropriated to the Fund pursuant to this section, not more

than $5,550,000 may be used by the Fund in each fiscal

year to pay the administrative costs and expenses of the

Fund. Costs associated with the training program established under section 109 and the technical assistance program established under section 108 shall not be considered

to be administrative expenses for purposes of this

paragraph. (B) CALCULATIONS.—The amounts referred to in para- graphs (3) and (4) shall be calculated after subtracting

the amount referred to in subparagraph (A) of this paragraph from the total amount appropriated to the Fund

in accordance with paragraph (1) in any fiscal year.

(3) CAPITALIZATION ASSISTANCE.—Not more than 5 percent

of the amounts authorized to be appropriated under paragraph

(1) may be used as provided in section 113. (4) AVAILABILITY FOR FUNDING SECTION 114.—331⁄3 percent

of the amounts appropriated to the Fund for any fiscal year

pursuant to the authorization in paragraph (1) shall be available for use in carrying out section 114. (5) SUPPORT OF COMMUNITY DEVELOPMENT FINANCIAL

INSTITUTIONS.—The Administrator shall allocate funds author-
H. R. 3474—31

ized under this section, to the maximum extent practicable,

for the support of community development financial

institutions.

(b) COMMUNITY DEVELOPMENT CREDIT UNION REVOLVING LOAN

FUND.—There are authorized to be appropriated for the purposes

of the Community Development Credit Union Revolving Loan

Fund—

(1) $4,000,000 for fiscal year 1995;

(2) $2,000,000 for fiscal year 1996;

(3) $2,000,000 for fiscal year 1997; and

(4) $2,000,000 for fiscal year 1998. (c) BUDGETARY TREATMENT.—Amounts authorized to be appropriated under this section shall be subject to discretionary spending

caps, as provided in section 601 of the Congressional Budget Act

of 1974, and therefore shall reduce by an equal amount funds

made available for other discretionary spending programs.

Subtitle B—Home Ownership and Equity

Protection

SEC. 151. SHORT TITLE.

This subtitle may be cited as the ‘‘Home Ownership and Equity

Protection Act of 1994’’.

SEC. 152. CONSUMER PROTECTIONS FOR CERTAIN MORTGAGES.

(a) MORTGAGE DEFINITION.—Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the

following new subsection:

‘‘(aa)(1) A mortgage referred to in this subsection means a

consumer credit transaction that is secured by the consumer’s principal dwelling, other than a residential mortgage transaction, a

reverse mortgage transaction, or a transaction under an open end

credit plan, if—

‘‘(A) the annual percentage rate at consummation of the

transaction will exceed by more than 10 percentage points

the yield on Treasury securities having comparable periods

of maturity on the fifteenth day of the month immediately

preceding the month in which the application for the extension

of credit is received by the creditor; or

‘‘(B) the total points and fees payable by the consumer

at or before closing will exceed the greater of—

‘‘(i) 8 percent of the total loan amount; or

‘‘(ii) $400.

‘‘(2)(A) After the 2-year period beginning on the effective date

of the regulations promulgated under section 155 of the Riegle

Community Development and Regulatory Improvement Act of 1994,

and no more frequently than biennially after the first increase

or decrease under this subparagraph, the Board may by regulation

increase or decrease the number of percentage points specified

in paragraph (1)(A), if the Board determines that the increase

or decrease is—

‘‘(i) consistent with the consumer protections against abusive lending provided by the amendments made by subtitle

B of title I of the Riegle Community Development and Regulatory Improvement Act of 1994; and

‘‘(ii) warranted by the need for credit.
H. R. 3474—32

‘‘(B) An increase or decrease under subparagraph (A) may not

result in the number of percentage points referred to in subparagraph (A) being—

‘‘(i) less that 8 percentage points; or

‘‘(ii) greater than 12 percentage points.

‘‘(C) In determining whether to increase or decrease the number

of percentage points referred to in subparagraph (A), the Board

shall consult with representatives of consumers, including lowincome consumers, and lenders.

‘‘(3) The amount specified in paragraph (1)(B)(ii) shall be

adjusted annually on January 1 by the annual percentage change

in the Consumer Price Index, as reported on June 1 of the year

preceding such adjustment.

‘‘(4) For purposes of paragraph (1)(B), points and fees shall

include—

‘‘(A) all items included in the finance charge, except interest

or the time-price differential;

‘‘(B) all compensation paid to mortgage brokers;

‘‘(C) each of the charges listed in section 106(e) (except

an escrow for future payment of taxes), unless—

‘‘(i) the charge is reasonable;

‘‘(ii) the creditor receives no direct or indirect compensation; and

‘‘(iii) the charge is paid to a third party unaffiliated

with the creditor; and

‘‘(D) such other charges as the Board determines to be

appropriate.

‘‘(5) This subsection shall not be construed to limit the rate

of interest or the finance charge that a person may charge a

consumer for any extension of credit.’’.

(b) MATERIAL DISCLOSURES.—Section 103(u) of the Truth in

Lending Act (15 U.S.C. 1602(u)) is amended—

(1) by striking ‘‘and the due dates’’ and inserting ‘‘the

due dates’’; and

(2) by inserting before the period ‘‘, and the disclosures

required by section 129(a)’’.

(c) DEFINITION OF CREDITOR CLARIFIED.—Section 103(f) of the

Truth in Lending Act (15 U.S.C. 1602(f)) is amended by adding

at the end the following: ‘‘Any person who originates 2 or more

mortgages referred to in subsection (aa) in any 12-month period

or any person who originates 1 or more such mortgages through

a mortgage broker shall be considered to be a creditor for purposes

of this title.’’.

(d) DISCLOSURES REQUIRED AND CERTAIN TERMS PROHIBITED.—

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended

by inserting after section 128 the following new section:

‘‘SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES.

‘‘(a) DISCLOSURES.—

‘‘(1) SPECIFIC DISCLOSURES.—In addition to other disclosures required under this title, for each mortgage referred

to in section 103(aa), the creditor shall provide the following

disclosures in conspicuous type size:

‘‘(A) ‘You are not required to complete this agreement

merely because you have received these disclosures or have

signed a loan application.’.
H. R. 3474—33

‘‘(B) ‘If you obtain this loan, the lender will have a

mortgage on your home. You could lose your home, and

any money you have put into it, if you do not meet your

obligations under the loan.’.

‘‘(2) ANNUAL PERCENTAGE RATE.—In addition to the disclosures required under paragraph (1), the creditor shall disclose—

‘‘(A) in the case of a credit transaction with a fixed

rate of interest, the annual percentage rate and the amount

of the regular monthly payment; or

‘‘(B) in the case of any other credit transaction, the

annual percentage rate of the loan, the amount of the

regular monthly payment, a statement that the interest

rate and monthly payment may increase, and the amount

of the maximum monthly payment, based on the maximum

interest rate allowed pursuant to section 1204 of the

Competitive Equality Banking Act of 1987.

‘‘(b) TIME OF DISCLOSURES.—

‘‘(1) IN GENERAL.—The disclosures required by this section

shall be given not less than 3 business days prior to consummation of the transaction.

‘‘(2) NEW DISCLOSURES REQUIRED.—

‘‘(A) IN GENERAL.—After providing the disclosures

required by this section, a creditor may not change the

terms of the extension of credit if such changes make

the disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section.

‘‘(B) TELEPHONE DISCLOSURE.—A creditor may provide

new disclosures pursuant to subparagraph (A) by telephone,

if—

‘‘(i) the change is initiated by the consumer; and

‘‘(ii) at the consummation of the transaction under

which the credit is extended—

‘‘(I) the creditor provides to the consumer the

new disclosures, in writing; and ‘‘(II) the creditor and consumer certify in writing that the new disclosures were provided by

telephone, by not later than 3 days prior to the

date of consummation of the transaction.

‘‘(3) MODIFICATIONS.—The Board may, if it finds that such

action is necessary to permit homeowners to meet bona fide

personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this

subsection, to the extent and under the circumstances set forth

in those regulations.

‘‘(c) NO PREPAYMENT PENALTY.—

‘‘(1) IN GENERAL.—

‘‘(A) LIMITATION ON TERMS.—A mortgage referred to

in section 103(aa) may not contain terms under which

a consumer must pay a prepayment penalty for paying

all or part of the principal before the date on which the

principal is due.

‘‘(B) CONSTRUCTION.—For purposes of this subsection,

any method of computing a refund of unearned scheduled

interest is a prepayment penalty if it is less favorable

to the consumer than the actuarial method (as that term

is defined in section 933(d) of the Housing and Community

Development Act of 1992).
H. R. 3474—34

‘‘(2) EXCEPTION.—Notwithstanding paragraph (1), a mortgage referred to in section 103(aa) may contain a prepayment

penalty (including terms calculating a refund by a method

that is not prohibited under section 933(b) of the Housing

and Community Development Act of 1992 for the transaction

in question) if—

‘‘(A) at the time the mortgage is consummated—

‘‘(i) the consumer is not liable for an amount of

monthly indebtedness payments (including the amount

of credit extended or to be extended under the transaction) that is greater than 50 percent of the monthly

gross income of the consumer; and

‘‘(ii) the income and expenses of the consumer are

verified by a financial statement signed by the

consumer, by a credit report, and in the case of employment income, by payment records or by verification

from the employer of the consumer (which verification

may be in the form of a copy of a pay stub or other

payment record supplied by the consumer);

‘‘(B) the penalty applies only to a prepayment made

with amounts obtained by the consumer by means other

than a refinancing by the creditor under the mortgage,

or an affiliate of that creditor;

‘‘(C) the penalty does not apply after the end of the

5-year period beginning on the date on which the mortgage

is consummated; and

‘‘(D) the penalty is not prohibited under other

applicable law.

‘‘(d) LIMITATIONS AFTER DEFAULT.—A mortgage referred to in section 103(aa) may not provide for an interest rate applicable

after default that is higher than the interest rate that applies

before default. If the date of maturity of a mortgage referred to

in subsection 103(aa) is accelerated due to default and the consumer

is entitled to a rebate of interest, that rebate shall be computed

by any method that is not less favorable than the actuarial method

(as that term is defined in section 933(d) of the Housing and

Community Development Act of 1992). ‘‘(e) NO BALLOON PAYMENTS.—A mortgage referred to in section 103(aa) having a term of less than 5 years may not include terms

under which the aggregate amount of the regular periodic payments

would not fully amortize the outstanding principal balance. ‘‘(f) NO NEGATIVE AMORTIZATION.—A mortgage referred to in section 103(aa) may not include terms under which the outstanding

principal balance will increase at any time over the course of

the loan because the regular periodic payments do not cover the

full amount of interest due.

‘‘(g) NO PREPAID PAYMENTS.—A mortgage referred to in section

103(aa) may not include terms under which more than 2 periodic

payments required under the loan are consolidated and paid in

advance from the loan proceeds provided to the consumer.

‘‘(h) PROHIBITION ON EXTENDING CREDIT WITHOUT REGARD TO

PAYMENT ABILITY OF CONSUMER.—A creditor shall not engage in

a pattern or practice of extending credit to consumers under mortgages referred to in section 103(aa) based on the consumers’ collateral without regard to the consumers’ repayment ability, including

the consumers’ current and expected income, current obligations,

and employment.
H. R. 3474—35

‘‘(i) REQUIREMENTS FOR PAYMENTS UNDER HOME IMPROVEMENT

CONTRACTS.—A creditor shall not make a payment to a contractor

under a home improvement contract from amounts extended as

credit under a mortgage referred to in section 103(aa), other than—

‘‘(1) in the form of an instrument that is payable to the

consumer or jointly to the consumer and the contractor; or

‘‘(2) at the election of the consumer, by a third party

escrow agent in accordance with terms established in a written

agreement signed by the consumer, the creditor, and the contractor before the date of payment.

‘‘(j) CONSEQUENCE OF FAILURE TO COMPLY.—Any mortgage that

contains a provision prohibited by this section shall be deemed

a failure to deliver the material disclosures required under this

title, for the purpose of section 125.

‘‘(k) DEFINITION.—For purposes of this section, the term ‘affiliate’ has the same meaning as in section 2(k) of the Bank Holding

Company Act of 1956.

‘‘(l) DISCRETIONARY REGULATORY AUTHORITY OF BOARD.—

‘‘(1) EXEMPTIONS.—The Board may, by regulation or order,

exempt specific mortgage products or categories of mortgages

from any or all of the prohibitions specified in subsections

(c) through (i), if the Board finds that the exemption—

‘‘(A) is in the interest of the borrowing public; and

‘‘(B) will apply only to products that maintain and

strengthen home ownership and equity protection.

‘‘(2) PROHIBITIONS.—The Board, by regulation or order,

shall prohibit acts or practices in connection with—

‘‘(A) mortgage loans that the Board finds to be unfair,

deceptive, or designed to evade the provisions of this section; and

‘‘(B) refinancing of mortgage loans that the Board finds

to be associated with abusive lending practices, or that

are otherwise not in the interest of the borrower.’’.

(e) CONFORMING AMENDMENTS.— (1) TABLE OF SECTIONS.—The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended

by striking the item relating to section 129 and inserting the

following:

‘‘129. Requirements for certain mortgages.’’.

(2) TRUTH IN LENDING ACT.—The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended—

(A) in the second sentence of section 105(a), by striking

‘‘These’’ and inserting ‘‘Except in the case of a mortgage

referred to in section 103(aa), these’’;

(B) in section 111(a)(2), by inserting before the period

the following: ‘‘, and such State-required disclosure may

not be made in lieu of the disclosures applicable to certain

mortgages under section 129’’; and

(C) in section 111(b)—

(i) by striking ‘‘This’’ and inserting ‘‘Except as provided in section 129, this’’; and

(ii) by adding at the end the following: ‘‘The provisions of section 129 do not annul, alter, or affect the

applicability of the laws of any State or exempt any

person subject to the provisions of section 129 from

complying with the laws of any State, with respect
H. R. 3474—36

to the requirements for mortgages referred to in section

103(aa), except to the extent that those State laws

are inconsistent with any provisions of section 129,

and then only to the extent of the inconsistency.’’.

SEC. 153. CIVIL LIABILITY.

(a) DAMAGES.—Section 130(a) of the Truth in Lending Act (15

U.S.C. 1640(a)) is amended—

(1) by striking ‘‘and’’ at the end of paragraph (2)(B);

(2) by striking the period at the end of paragraph (3)

and inserting ‘‘; and’’; and

(3) by inserting after paragraph (3) the following new

paragraph:

‘‘(4) in the case of a failure to comply with any requirement

under section 129, an amount equal to the sum of all finance

charges and fees paid by the consumer, unless the creditor

demonstrates that the failure to comply is not material.’’.

(b) STATE ATTORNEY GENERAL ENFORCEMENT.—Section 130(e)

of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by

adding at the end the following: ‘‘An action to enforce a violation

of section 129 may also be brought by the appropriate State attorney

general in any appropriate United States district court, or any

other court of competent jurisdiction, not later than 3 years after

the date on which the violation occurs. The State attorney general

shall provide prior written notice of any such civil action to the

Federal agency responsible for enforcement under section 108 and

shall provide the agency with a copy of the complaint. If prior

notice is not feasible, the State attorney general shall provide

notice to such agency immediately upon instituting the action.

The Federal agency may— ‘‘(1) intervene in the action;

‘‘(2) upon intervening— ‘‘(A) remove the action to the appropriate United States

district court, if it was not originally brought there; and ‘‘(B) be heard on all matters arising in the action;

and

‘‘(3) file a petition for appeal.’’.

(c) ASSIGNEE LIABILITY.—Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by adding at the end the following

new subsection:

‘‘(d) RIGHTS UPON ASSIGNMENT OF CERTAIN MORTGAGES.— ‘‘(1) IN GENERAL.—Any person who purchases or is other- wise assigned a mortgage referred to in section 103(aa) shall

be subject to all claims and defenses with respect to that

mortgage that the consumer could assert against the creditor

of the mortgage, unless the purchaser or assignee demonstrates,

by a preponderance of the evidence, that a reasonable person

exercising ordinary due diligence, could not determine, based

on the documentation required by this title, the itemization

of the amount financed, and other disclosure of disbursements

that the mortgage was a mortgage referred to in section 103(aa).

The preceding sentence does not affect rights of a consumer

under subsection (a), (b), or (c) of this section or any other

provision of this title.

‘‘(2) LIMITATION ON DAMAGES.—Notwithstanding any other

provision of law, relief provided as a result of any action made

permissible by paragraph (1) may not exceed—
H. R. 3474—37

‘‘(A) with respect to actions based upon a violation

of this title, the amount specified in section 130; and

‘‘(B) with respect to all other causes of action, the

sum of—

‘‘(i) the amount of all remaining indebtedness; and

‘‘(ii) the total amount paid by the consumer in

connection with the transaction.

‘‘(3) OFFSET.—The amount of damages that may be awarded

under paragraph (2)(B) shall be reduced by the amount of

any damages awarded under paragraph (2)(A).

‘‘(4) NOTICE.—Any person who sells or otherwise assigns

a mortgage referred to in section 103(aa) shall include a prominent notice of the potential liability under this subsection as

determined by the Board.’’.

SEC. 154. REVERSE MORTGAGE DISCLOSURE.

(a) DEFINITION OF REVERSE MORTGAGE.—Section 103 of the

Truth in Lending Act (15 U.S.C. 1602) is amended by adding

at the end the following new subsection:

‘‘(bb) The term ‘reverse mortgage transaction’ means a

nonrecourse transaction in which a mortgage, deed of trust, or

equivalent consensual security interest is created against the

consumer’s principal dwelling—

‘‘(1) securing one or more advances; and

‘‘(2) with respect to which the payment of any principal,

interest, and shared appreciation or equity is due and payable

(other than in the case of default) only after—

‘‘(A) the transfer of the dwelling;

‘‘(B) the consumer ceases to occupy the dwelling as

a principal dwelling; or ‘‘(C) the death of the consumer.’’.

(b) DISCLOSURE.—Chapter 2 of title I of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at the end

the following new section:

‘‘SEC. 138. REVERSE MORTGAGES.

‘‘(a) IN GENERAL.—In addition to the disclosures required under

this title, for each reverse mortgage, the creditor shall, not less

than 3 days prior to consummation of the transaction, disclose

to the consumer in conspicuous type a good faith estimate of the

projected total cost of the mortgage to the consumer expressed

as a table of annual interest rates. Each annual interest rate

shall be based on a projected total future credit extension balance

under a projected appreciation rate for the dwelling and a term

for the mortgage. The disclosure shall include—

‘‘(1) statements of the annual interest rates for not less

than 3 projected appreciation rates and not less than 3 credit

transaction periods, as determined by the Board, including—

‘‘(A) a short-term reverse mortgage;

‘‘(B) a term equaling the actuarial life expectancy of

the consumer; and

‘‘(C) such longer term as the Board deems appropriate;

and

‘‘(2) a statement that the consumer is not obligated to

complete the reverse mortgage transaction merely because the

consumer has received the disclosure required under this section or has signed an application for the reverse mortgage.
H. R. 3474—38

‘‘(b) PROJECTED TOTAL COST.—In determining the projected

total cost of the mortgage to be disclosed to the consumer under

subsection (a), the creditor shall take into account—

‘‘(1) any shared appreciation or equity that the lender will,

by contract, be entitled to receive;

‘‘(2) all costs and charges to the consumer, including the

costs of any associated annuity that the consumer elects or

is required to purchase as part of the reverse mortgage transaction;

‘‘(3) all payments to and for the benefit of the consumer,

including, in the case in which an associated annuity is purchased (whether or not required by the lender as a condition

of making the reverse mortgage), the annuity payments

received by the consumer and financed from the proceeds of

the loan, instead of the proceeds used to finance the annuity;

and

‘‘(4) any limitation on the liability of the consumer under

reverse mortgage transactions (such as nonrecourse limits and

equity conservation agreements).’’.

(c) HOME EQUITY PLAN EXEMPTION.—Section 137(b) of the

Truth in Lending Act (15 U.S.C. 1647(b)) is amended by adding

at the end the following:

‘‘This subsection does not apply to reverse mortgage transactions.’’.

(d) TABLE OF SECTIONS.—The table of sections at the beginning

of chapter 2 of the Truth in Lending Act is amended by inserting

after the item relating to section 137 the following:

‘‘138. Reverse mortgages.’’.

SEC. 155. REGULATIONS.

Not later than 180 days after the date of enactment of this

Act, the Board of Governors of the Federal Reserve System shall

issue such regulations as may be necessary to carry out this subtitle,

and such regulations shall become effective on the date on which

disclosure regulations are required to become effective under section

105(d) of the Truth in Lending Act.

SEC. 156. APPLICABILITY.

This subtitle, and the amendments made by this subtitle, shall

apply to every mortgage referred to in section 103(aa) of the Truth

in Lending Act (as added by section 152(a) of this Act) consummated

on or after the date on which regulations issued under section

155 become effective.

SEC. 157. FEDERAL RESERVE STUDY.

During the period beginning 180 days after the date of enactment of this Act and ending 2 years after that date of enactment,

the Board of Governors of the Federal Reserve System shall conduct

a study and submit to the Congress a report, including recommendations for any appropriate legislation, regarding—

(1) whether a consumer engaging in an open end credit

transaction (as defined in section 103 of the Truth in Lending

Act) secured by the consumer’s principal dwelling is provided

adequate protections under Federal law, including section 127A

of the Truth in Lending Act; and

(2) whether a more appropriate interest rate index exists

for purposes of subparagraph (A) of section 103(aa)(1) of the

Truth in Lending Act (as added by section 152(a) of this Act)
H. R. 3474—39

than the yield on Treasury securities referred to in that

subparagraph.

SEC. 158. HEARINGS ON HOME EQUITY LENDING.

(a) HEARINGS.—Not less than once during the 3-year period

beginning on the date of enactment of this Act, and regularly

thereafter, the Board of Governors of the Federal Reserve System,

in consultation with the Consumer Advisory Council of the Board,

shall conduct a public hearing to examine the home equity loan

market and the adequacy of existing regulatory and legislative

provisions and the provisions of this subtitle in protecting the

interests of consumers, and low-income consumers in particular.

(b) PARTICIPATION.—In conducting hearings required by subsection (a), the Board of Governors of the Federal Reserve System

shall solicit participation from consumers, representatives of

consumers, lenders, and other interested parties.

TITLE II—SMALL BUSINESS CAPITAL

FORMATION

Subtitle A—Small Business Loan

Securitization

SEC. 201. SHORT TITLE.

This subtitle may be cited as the ‘‘Small Business Loan

Securitization and Secondary Market Enhancement Act of 1994’’.

SEC. 202. SMALL BUSINESS RELATED SECURITY.

Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.

78c(a)) is amended by adding at the end the following new

paragraph:

‘‘(53)(A) The term ‘small business related security’ means

a security that is rated in 1 of the 4 highest rating categories

by at least 1 nationally recognized statistical rating organization, and either—

‘‘(i) represents an interest in 1 or more promissory

notes or leases of personal property evidencing the obligation of a small business concern and originated by an

insured depository institution, insured credit union, insurance company, or similar institution which is supervised

and examined by a Federal or State authority, or a finance

company or leasing company; or

‘‘(ii) is secured by an interest in 1 or more promissory

notes or leases of personal property (with or without

recourse to the issuer or lessee) and provides for payments

of principal in relation to payments, or reasonable projections of payments, on notes or leases described in clause

(i).

‘‘(B) For purposes of this paragraph— ‘‘(i) an ‘interest in a promissory note or a lease of

personal property’ includes ownership rights, certificates

of interest or participation in such notes or leases, and

rights designed to assure servicing of such notes or leases,

or the receipt or timely receipt of amounts payable under

such notes or leases;
H. R. 3474—40

‘‘(ii) the term ‘small business concern’ means a business

that meets the criteria for a small business concern established by the Small Business Administration under section

3(a) of the Small Business Act;

‘‘(iii) the term ‘insured depository institution’ has the

same meaning as in section 3 of the Federal Deposit Insurance Act; and

‘‘(iv) the term ‘insured credit union’ has the same meaning as in section 101 of the Federal Credit Union Act.’’.

SEC. 203. APPLICABILITY OF MARGIN REQUIREMENTS.

Section 7(g) of the Securities Exchange Act of 1934 (15 U.S.C.

78g(g)) is amended by inserting ‘‘or a small business related security’’ after ‘‘mortgage related security’’.

SEC. 204. BORROWING IN THE COURSE OF BUSINESS.

Section 8(a) of the Securities Exchange Act of 1934 (15 U.S.C.

78h(a)) is amended in the last sentence by inserting ‘‘or a small

business related security’’ after ‘‘mortgage related security’’.

SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COLLATERAL.

Clause (ii) of section 11(d)(1) of the Securities Exchange Act

of 1934 (15 U.S.C. 78k(d)(1)) is amended by inserting ‘‘or any

small business related security’’ after ‘‘mortgage related security’’.

SEC. 206. INVESTMENT BY DEPOSITORY INSTITUTIONS.

(a) HOME OWNERS’ LOAN ACT AMENDMENT.—Section 5(c)(1)

of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)) is amended

by adding at the end the following new subparagraph:

‘‘(S) SMALL BUSINESS RELATED SECURITIES.—Investments in small business related securities (as defined in

section 3(a)(53) of the Securities Exchange Act of 1934),

subject to such regulations as the Director may prescribe,

including regulations concerning the minimum size of the

issue (at the time of the initial distribution), the minimum

aggregate sales price, or both.’’.

(b) CREDIT UNIONS.—Section 107(15) of the Federal Credit

Union Act (12 U.S.C. 1757(15)) is amended—

(1) in subparagraph (A), by striking ‘‘or’’ at the end;

(2) in subparagraph (B), by inserting ‘‘or’’ at the end; and

(3) by adding at the end the following new subparagraph:

‘‘(C) are small business related securities (as defined

in section 3(a)(53) of the Securities Exchange Act of 1934),

subject to such regulations as the Board may prescribe,

including regulations prescribing the minimum size of the

issue (at the time of the initial distribution), the minimum

aggregate sales price, or both;’’.

(c) NATIONAL BANKING ASSOCIATIONS.—Section 5136 of the

Revised Statutes (12 U.S.C. 24) is amended in the last sentence

in the first full paragraph of paragraph Seventh, by striking ‘‘or

(B) are mortgage related securities’’ and inserting the following:

‘‘(B) are small business related securities (as defined in section

3(a)(53) of the Securities Exchange Act of 1934); or (C) are mortgage

related securities’’.
H. R. 3474—41

SEC. 207. PREEMPTION OF STATE LAW.

(a) IN GENERAL.—Section 106(a)(1) of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r–1(a)(1)) is

amended—

(1) by striking ‘‘or’’ at the end of subparagraph (B);

(2) by redesignating subparagraph (C) as subparagraph (D); and

(3) by inserting after subparagraph (B) the following new subparagraph: ‘‘(C) small business related securities (as defined in

section 3(a)(53) of the Securities Exchange Act of 1934),

or’’.

(b) OBLIGATIONS OF THE UNITED STATES.—Section 106(a)(2)

of the Secondary Mortgage Market Enhancement Act of 1984 (15

U.S.C. 77r–1(a)(2)) is amended—

(1) by striking ‘‘or’’ at the end of subparagraph (B);

(2) by redesignating subparagraph (C) as subparagraph (D); and

(3) by inserting after subparagraph (B) the following new subparagraph: ‘‘(C) small business related securities (as defined in

section 3(a)(53) of the Securities Exchange Act of 1934),

or’’.

(c) PREEMPTION OF STATE LAWS.—Section 106(c) of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r–

1(c)) is amended—

(1) in the first sentence, by striking ‘‘or that’’ and inserting

‘‘, that’’; and

(2) by inserting ‘‘, or that are small business related securities (as defined in section 3(a)(53) of the Securities Exchange

Act of 1934)’’ before ‘‘shall be exempt’’.

(d) IMPLEMENTATION.—Section 106 of the Secondary Mortgage

Market Enhancement Act of 1984 (15 U.S.C. 77r–1) is amended

by adding at the end the following new subsection:

‘‘(d) IMPLEMENTATION.—

‘‘(1) LIMITATION.—The provisions of subsections (a) and (b)

concerning small business related securities shall not apply

with respect to a particular person, trust, corporation, partnership, association, business trust, or business entity or class

thereof in any State that, prior to the expiration of 7 years

after the date of enactment of this subsection, enacts a statute

that specifically refers to this section and either prohibits or

provides for a more limited authority to purchase, hold, or

invest in such small business related securities by any person,

trust, corporation, partnership, association, business trust, or

business entity or class thereof than is provided in this section.

The enactment by any State of any statute of the type described

in the preceding sentence shall not affect the validity of any

contractual commitment to purchase, hold, or invest that was

made prior to such enactment, and shall not require the sale

or other disposition of any small business related securities

acquired prior to the date of such enactment.

‘‘(2) STATE REGISTRATION OR QUALIFICATION REQUIREMENTS.—Any State may, not later than 7 years after the date

of enactment of this subsection, enact a statute that specifically

refers to this section and requires registration or qualification

of any small business related securities on terms that differ
H. R. 3474—42

from those applicable to any obligation issued by the United

States.’’.

SEC. 208. INSURED DEPOSITORY INSTITUTION CAPITAL REQUIREMENTS FOR TRANSFERS OF SMALL BUSINESS OBLIGATIONS.

(a) ACCOUNTING PRINCIPLES.—The accounting principles

applicable to the transfer of a small business loan or a lease

of personal property with recourse contained in reports or statements required to be filed with Federal banking agencies by a

qualified insured depository institution shall be consistent with

generally accepted accounting principles.

(b) CAPITAL AND RESERVE REQUIREMENTS.—With respect to

the transfer of a small business loan or lease of personal property

with recourse that is a sale under generally accepted accounting

principles, each qualified insured depository institution shall—

(1) establish and maintain a reserve equal to an amount

sufficient to meet the reasonable estimated liability of the

institution under the recourse arrangement; and

(2) include, for purposes of applicable capital standards

and other capital measures, only the amount of the retained

recourse in the risk-weighted assets of the institution.

(c) QUALIFIED INSTITUTIONS CRITERIA.—An insured depository

institution is a qualified insured depository institution for purposes

of this section if, without regard to the accounting principles or

capital requirements referred to in subsections (a) and (b), the

institution is—

(1) well capitalized; or

(2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.

(d) AGGREGATE AMOUNT OF RECOURSE.—The total outstanding

amount of recourse retained by a qualified insured depository

institution with respect to transfers of small business loans and

leases of personal property under subsections (a) and (b) shall

not exceed—

(1) 15 percent of the risk-based capital of the institution;

or

(2) such greater amount, as established by the appropriate

Federal banking agency by regulation or order.

(e) INSTITUTIONS THAT CEASE TO BE QUALIFIED OR EXCEED

AGGREGATE LIMITS.—If an insured depository institution ceases

to be a qualified insured depository institution or exceeds the limits

under subsection (d), this section shall remain applicable to any

transfers of small business loans or leases of personal property

that occurred during the time that the institution was qualified

and did not exceed such limit.

(f) PROMPT CORRECTIVE ACTION NOT AFFECTED.—The capital

of an insured depository institution shall be computed without

regard to this section in determining whether the institution is

adequately capitalized, undercapitalized, significantly

undercapitalized, or critically undercapitalized under section 38

of the Federal Deposit Insurance Act.

(g) REGULATIONS REQUIRED.—Not later than 180 days after

the date of enactment of this Act each appropriate Federal banking

agency shall promulgate final regulations implementing this section.

(h) ALTERNATIVE SYSTEM PERMITTED.—
H. R. 3474—43

(1) IN GENERAL.—At the discretion of the appropriate Federal banking agency, this section shall not apply if the regulations of the agency provide that the aggregate amount of capital

and reserves required with respect to the transfer of small

business loans and leases of personal property with recourse

does not exceed the aggregate amount of capital and reserves

that would be required under subsection (b).

(2) EXISTING TRANSACTIONS NOT AFFECTED.—Notwithstanding paragraph (1), this section shall remain in effect with

respect to transfers of small business loans and leases of personal property with recourse by qualified insured depository

institutions occurring before the effective date of regulations

referred to in paragraph (1).

(i) DEFINITIONS.—For purposes of this section—

(1) the term ‘‘adequately capitalized’’ has the same meaning

as in section 38(b) of the Federal Deposit Insurance Act;

(2) the term ‘‘appropriate Federal banking agency’’ has

the same meaning as in section 3 of the Federal Deposit Insurance Act;

(3) the term ‘‘capital standards’’ has the same meaning

as in section 38(c) of the Federal Deposit Insurance Act;

(4) the term ‘‘Federal banking agencies’’ has the same

meaning as in section 3 of the Federal Deposit Insurance Act;

(5) the term ‘‘insured depository institution’’ has the same

meaning as in section 3 of the Federal Deposit Insurance Act;

(6) the term ‘‘other capital measures’’ has the meaning

as in section 38(c) of the Federal Deposit Insurance Act;

(7) the term ‘‘recourse’’ has the meaning given to such

term under generally accepted accounting principles; (8) the term ‘‘small business’’ means a business that meets

the criteria for a small business concern established by the

Small Business Administration under section 3(a) of the Small

Business Act; and

(9) the term ‘‘well capitalized’’ has the same meaning as in section 38(b) of the Federal Deposit Insurance Act.

SEC. 209. JOINT STUDY ON THE IMPACT OF ADDITIONAL SECURITIES

BASED ON POOLED OBLIGATIONS.

(a) JOINT STUDY REQUIRED.—The Board and the Commission

shall conduct a joint study of the impact of the provisions of this

subtitle (including the amendments made by this subtitle) on the

credit and securities markets. Such study shall evaluate— (1) the impact of the provisions of this subtitle on the

availability of credit for business and commercial enterprises

in general, and the availability of credit in particular for—

(A) businesses in low- and moderate-income areas;

(B) businesses owned by women and minorities;

(C) community development efforts;

(D) community development financial institutions;

(E) businesses in different geographical regions; and

(F) a diversity of types of businesses;

(2) the structure and operation of the markets that develop

for small business related securities and commercial mortgage

related securities, including the types of entities (such as pension funds and insurance companies) that are significant purchasers of such securities, the extent to which such entities

are sophisticated investors, the use of credit enhancements
H. R. 3474—44

in obtaining investment-grade ratings, any conflicts of interest

that arise in such markets, and any adverse effects of such

markets on commercial real estate ventures, pension funds,

or pension fund beneficiaries; (3) the extent to which the provisions of this subtitle with

regard to margin requirements, the number of eligible investment rating categories, preemption of State law, and the treatment of such securities as government securities for the purpose

of State investment limitations, affect the structure and operation of such markets; and

(4) in view of the findings made pursuant to paragraphs (2) and (3), any additional suitability or disclosure requirements

or other investor protections that should be required.

(b) REPORTS.— (1) IN GENERAL.—The Board and the Commission shall

submit to the Congress a report on the results of the study

required by subsection (a) before the end of— (A) the 2-year period beginning on the date of enactment of this Act;

(B) the 4-year period beginning on such date of enactment; and

(C) the 6-year period beginning on such date of

enactment.

(2) CONTENTS OF REPORT.—Each report required under

paragraph (1) shall contain or be accompanied by such recommendations for administrative or legislative action as the

Board and the Commission consider appropriate and may

include recommendations regarding the need to develop a system for reporting additional information concerning investments by the entities described in subsection (a)(2).

(c) DEFINITIONS.—As used in this section—

(1) the term ‘‘Board’’ means the Board of Governors of

the Federal Reserve System; and (2) the term ‘‘Commission’’ means the Securities and

Exchange Commission.

SEC. 210. CONSISTENT USE OF FINANCIAL TERMINOLOGY.

Not later than 2 years after the date of enactment of this

Act, the Financial Institutions Examination Council shall report

to the Congress on its recommendations for the use of consistent

financial terminology by depository institutions for small business

loans or leases of personal property which are sold for the creation

of small business related securities (as defined in section 3(a)(53)(A)

of the Securities Exchange Act of 1934).

Subtitle B—Small Business Capital

Enhancement

SEC. 251. FINDINGS AND PURPOSES.

(a) FINDINGS.—The Congress finds that— (1) small business concerns are a vital part of the economy,

accounting for the majority of new jobs, new products, and

new services created in the United States;

(2) adequate access to debt capital is a critical component

for small business development, productivity, expansion, and

success in the United States;
H. R. 3474—45

(3) commercial banks are the most important suppliers

of debt capital to small business concerns in the United States;

(4) commercial banks and other depository institutions have

various incentives to minimize their risk in financing small

business concerns;

(5) as a result of such incentives, many small business

concerns with economically sound financing needs are unable

to obtain access to needed debt capital;

(6) the small business capital access programs implemented

by certain States are a flexible and efficient tool to assist

financial institutions in providing access to needed debt capital

for many small business concerns in a manner consistent with

safety and soundness regulations;

(7) a small business capital access program would complement other programs which assist small business concerns

in obtaining access to capital; and

(8) Federal policy can stimulate and accelerate efforts by

States to implement small business capital access programs

by providing an incentive to States, while leaving the

administration of such programs to each participating State.

(b) PURPOSES.—By encouraging States to implement administratively efficient capital access programs that encourage commercial banks and other depository institutions to provide access to

debt capital for a broad portfolio of small business concerns, and

thereby promote a more efficient and effective debt market, the

purposes of this subtitle are—

(1) to promote economic opportunity and growth;

(2) to create jobs;

(3) to promote economic efficiency;

(4) to enhance productivity; and

(5) to spur innovation.

SEC. 252. DEFINITIONS.

For purposes of this subtitle—

(1) the term ‘‘Fund’’ means the Community Development

Financial Institutions Fund established under section 104;

(2) the term ‘‘appropriate Federal banking agency’’— (A) has the same meaning as in section 3 of the Federal

Deposit Insurance Act; and

(B) includes the National Credit Union Administration

Board in the case of any credit union the deposits of which

are insured in accordance with the Federal Credit Union

Act;

(3) the term ‘‘early loan’’ means a loan enrolled at a time

when the aggregate covered amount of loans previously enrolled

under the Program by a particular participating financial

institution is less than $5,000,000;

(4) the term ‘‘enrolled loan’’ means a loan made by a

participating financial institution that is enrolled by a participating State in accordance with this subtitle;

(5) the term ‘‘financial institution’’ means any federally

chartered or State-chartered commercial bank, savings association, savings bank, or credit union;

(6) the term ‘‘participating financial institution’’ means any

financial institution that has entered into a participation agreement with a participating State in accordance with section

254;
H. R. 3474—46

(7) the term ‘‘participating State’’ means any State that

has been approved for participation in the Program in accordance with section 253;

(8) the term ‘‘passive real estate ownership’’ means ownership of real estate for the purpose of deriving income from

speculation, trade, or rental, except that such term shall not

include—

(A) the ownership of that portion of real estate being

used or intended to be used for the operation of the business

of the owner of the real estate (other than the business

of passive ownership of real estate); or

(B) the ownership of real estate for the purpose of

construction or renovation, until the completion of the

construction or renovation phase;

(9) the term ‘‘Program’’ means the Small Business Capital

Enhancement Program established under this subtitle;

(10) the term ‘‘reserve fund’’ means a fund, established

by a participating State, earmarked for a particular participating financial institution, for the purposes of—

(A) depositing all required premium charges paid by

the participating financial institution and by each borrower

receiving a loan under the Program from a participating

financial institution;

(B) depositing contributions made by the participating

State; and

(C) covering losses on enrolled loans by disbursing

accumulated funds; and

(11) the term ‘‘State’’ means—

(A) a State of the United States;

(B) the District of Columbia;

(C) any political subdivision of a State of the United

States, which subdivision has a population in excess of

the population of the least populated State of the United

States; and

(D) any other political subdivision of a State of the

United States that the Fund determines has the capacity

to participate in the program.

SEC. 253. APPROVING STATES FOR PARTICIPATION.

(a) APPLICATION.—Any State may apply to the Fund for

approval to be a participating State under the Program and to

be eligible for reimbursement by the Fund pursuant to section

257.

(b) APPROVAL CRITERIA.—The Fund shall approve a State to

be a participating State, if—

(1) a specific department or agency of the State has been

designated to implement the Program;

(2) all legal actions necessary to enable such designated

department or agency to implement the Program have been

accomplished;

(3) funds in the amount of at least $1 for every 2 people

residing in the State (as of the last decennial census for which

data have been released) are available and have been legally

committed to contributions by the State to reserve funds, with

such funds being available without time limit and without

requiring additional legal action, except that such requirements

shall not be construed to limit the authority of the State to
H. R. 3474—47

take action at a later time that results in the termination

of its obligation to enroll loans and make contributions to

reserve funds;

(4) the State has prescribed a form of participation agreement to be entered into between it and each participating

financial institution that is consistent with the requirements

and purposes of this subtitle; and

(5) the State and the Fund have executed a reimbursement

agreement that conforms to the requirements of this subtitle.

(c) EXISTING STATE PROGRAMS.—

(1) IN GENERAL.—A State that is not a participating State,

but that has its own capital access program providing portfolio

insurance for business loans (based on a separate loss reserve

fund for each financial institution), may apply at any time

to the Fund to be approved to be a participating State. The

Fund shall approve such State to be a participating State,

and to be eligible for reimbursements by the Fund pursuant

to section 257, if the State—

(A) satisfies the requirements of subsections (a) and

(b); and

(B) certifies that each affected financial institution has

satisfied the requirements of section 254.

(2) APPLICABLE TERMS OF PARTICIPATION.—

(A) STATUS OF INSTITUTIONS.—If a State is approved

for participation under paragraph (1), each financial

institution with a participation agreement in effect with

the participating State shall immediately be considered

a participating financial institution. Reimbursements may

be made under section 237 in connection with all contributions made to the reserve fund by the State in connection

with lending that occurs on or after the date on which

the Fund approves the State for participation.

(B) EFFECTIVE DATE OF PARTICIPATION.—If an amended

participation agreement that conforms with section 255

is required in order to secure participation approval by

the Fund, contributions subject to reimbursement under

section 257 shall include only those contributions made

to a reserve fund with respect to loans enrolled on or

after the date that an amended participation agreement

between the participating State and the participating financial institution becomes effective.

(C) USE OF ACCUMULATED RESERVE FUNDS.—A State

that is approved for participation in accordance with this

subsection may continue to implement the program utilizing the reserve funds accumulated under the State

program.

(d) PRIOR APPROPRIATIONS REQUIREMENT.—The Fund shall not

approve a State for participation in the Program until at least

$50,000,000 has been appropriated to the Fund (subject to an appropriations Act), without fiscal year limitation, for the purpose of

making reimbursements pursuant to section 257 and otherwise

carrying out this subtitle.

(e) AMENDMENTS TO AGREEMENTS.—If a State that has been

approved to be a participating State wishes to amend its form

of participation agreement and continue to be a participating State,

such State shall submit such amendment for review by the Fund
H. R. 3474—48

in accordance with subsection (b)(4). Any such amendment shall

become effective only after it has been approved by the Fund.

SEC. 254. PARTICIPATION AGREEMENTS.

(a) IN GENERAL.—A participating State may enter into a partici- pation agreement with any financial institution determined by the

participating State, after consultation with the appropriate Federal

banking agency, to have sufficient commercial lending experience

and financial and managerial capacity to participate in the Program.

The determination by the State shall not be reviewable by the

Fund.

(b) PARTICIPATING FINANCIAL INSTITUTIONS.—Upon entering into the participation agreement with the participating State, the

financial institution shall become a participating financial institution eligible to enroll loans under the Program.

SEC. 255. TERMS OF PARTICIPATION AGREEMENTS.

(a) IN GENERAL.—The participation agreement to be entered into by a participating State and a participating financial institution

shall include all provisions required by this section, and shall not

include any provisions inconsistent with the provisions of this

section.

(b) ESTABLISHMENT OF SEPARATE RESERVE FUNDS.—A separate

reserve fund shall be established by the participating State for

each participating financial institution. All funds credited to a

reserve fund shall be the exclusive property of the participating

State. Each reserve fund shall be an administrative account for

the purposes of— (1) receiving all required premium charges to be paid by the borrower and participating financial institution and contributions by the participating State; and (2) disbursing funds, either to cover losses sustained by the participating financial institution in connection with loans

made under the Program, or as contemplated by subsections

(d) and (r).

(c) INVESTMENT AUTHORITY.—Subject to applicable State law, the participating State may invest, or cause to be invested, funds

held in a reserve fund by establishing a deposit account at the

participating financial institution in the name of the participating

State. In the event that funds in the reserve fund are not deposited

in such an account, such funds shall be invested in a form that

the participating State determines is safe and liquid. (d) EARNED INCOME AND INTEREST.—Interest or income earned

on the funds credited to a reserve fund shall be deemed to be

part of the reserve fund, except that a participating State may,

as further specified in the participation agreement, provide authority for the participating State to withdraw some or all of such

interest or income earned.

(e) LOAN TERMS AND CONDITIONS.—

(1) IN GENERAL.—A loan to be filed for enrollment under

the Program may be made with such interest rate, fees, and

other terms and conditions as agreed upon by the participating

financial institution and the borrower, consistent with

applicable law.

(2) LINES OF CREDIT.—If a loan to be filed for enrollment

is in the form of a line of credit, the amount of the loan

shall be considered to be the maximum amount that can be

drawn by the borrower against the line of credit.
H. R. 3474—49

(f) ENROLLMENT PROCESS.—

(1) FILING.—

(A) IN GENERAL.—A participating financial institution

shall file each loan made under the Program for enrollment

by completing and submitting to the participating State

a form prescribed by the participating State.

(B) FORM.—The form referred to in subparagraph (A)

shall include a representation by the participating financial

institution that it has complied with the participation

agreement in enrolling the loan with the State.

(C) PREMIUM CHARGES.—Accompanying the completed

form shall be the nonrefundable premium charges paid

by the borrower and the participating financial institution,

or evidence that such premium charges have been deposited

into the deposit account containing the reserve fund, if

applicable.

(D) SUBMISSION.—The participation agreement shall

require that the items required by this subsection shall

be submitted to the participating State by the participating

financial institutions not later than 10 calendar days after

a loan is made.

(2) ENROLLMENT BY STATE.—Upon receipt by the participating State of the filing submitted in accordance with paragraph

(1), the participating State shall promptly enroll the loan and

make a matching contribution to the reserve fund in accordance

with subsection (j), unless the information submitted indicates

that the participating financial institution has not complied

with the participation agreement in enrolling the loan.

(g) COVERAGE AMOUNT.—In filing a loan for enrollment under

the Program, the participating financial institution may specify

an amount to be covered under the Program that is less than

the full amount of the loan.

(h) PREMIUM CHARGES.—

(1) MINIMUM AND MAXIMUM AMOUNTS.—The premium

charges payable to the reserve fund by the borrower and the

participating financial institution shall be prescribed by the

participating financial institution, within minimum and maximum limits set forth in the participation agreement. The

participation agreement shall establish minimum and maximum limits whereby the sum of the premium charges paid

in connection with a loan by the borrower and the participating

financial institution is not less than 3 percent nor more than

7 percent of the amount of the loan covered under the Program.

(2) ALLOCATION OF PREMIUM CHARGES.—The participation

agreement shall specify terms for allocating premium charges

between the borrower and the participating financial institution. However, if the participating financial institution is

required to pay any of the premium charges, the participation

agreement shall authorize the participating financial institution

to recover from the borrower the cost of the payment of the

participating financial institution, in any manner on which

the participating financial institution and the borrower agree.

(i) RESTRICTIONS.—

(1) ACTIONS PROHIBITED.—Except as provided in subsection

(h) and paragraph (2) of this subsection, the participating State

may not—
H. R. 3474—50

(A) impose any restrictions or requirements, relating

to the interest rate, fees, collateral, or other business terms

and conditions of the loan; or

(B) condition enrollment of a loan in the Program

on the review by the State of the risk or creditworthiness

of a loan.

(2) EFFECT ON OTHER LAW.—Nothing in this subtitle shall

affect the applicability of any other law to the conduct by

a participating financial institution of its business.

(j) STATE CONTRIBUTIONS.—In enrolling a loan under the Program, the participating State shall contribute to the reserve fund

an amount, as provided for in the participation agreement, which

shall not be less than the sum of the amount of premium charges

paid by the borrower and the participating financial institution.

(k) ELEMENTS OF CLAIMS.—

(1) FILING.—If a participating financial institution charges

off all or part of an enrolled loan, such participating financial

institution may file a claim for reimbursement with the participating State by submitting a form that—

(A) includes the representation by the participating

financial institution that it is filing the claim in accordance

with the terms of the applicable participation agreement;

and

(B) contains such other information as may be required

by the participating State.

(2) TIMING.—Any claim filed under paragraph (1) shall

be filed contemporaneously with the action of the participating

financial institution to charge off all or part of an enrolled

loan. The participating financial institution shall determine

when and how much to charge off on an enrolled loan, in

a manner consistent with its usual method for making such

determinations on business loans that are not enrolled loans

under this subtitle.

(l) ELEMENTS OF CLAIMS.—A claim filed by a participating

financial institution may include the amount of principal charged

off, not to exceed the covered amount of the loan. Such claim

may also include accrued interest and out-of-pocket expenses, if

and to the extent provided for under the participation agreement.

(m) PAYMENT OF CLAIMS.—

(1) IN GENERAL.—Except as provided in subsection (n) and

paragraph (2) of this subsection, upon receipt of a claim filed

in accordance with this section and the participation agreement,

the participating State shall promptly pay to the participating

financial institution, from funds in the reserve fund, the full

amount of the claim as submitted.

(2) INSUFFICIENT RESERVE FUNDS.—If there are insufficient

funds in the reserve fund to cover the entire amount of a

claim of a participating financial institution, the participating

State shall pay to the participating financial institution an

amount equal to the current balance in the reserve fund. If

the enrolled loan for which the claim has been filed—

(A) is not an early loan, such payment shall be deemed

fully to satisfy the claim, and the participating financial

institution shall have no other or further right to receive

any amount from the reserve fund with respect to such

claim; or
H. R. 3474—51

(B) is an early loan, such payment shall not be deemed

fully to satisfy the claim of the participating financial

institution, and at such time as the remaining balance

of the claim does not exceed 75 percent of the balance

in the reserve fund, the participating State shall, upon

the request of the participating financial institution, pay

any remaining amount of the claim.

(n) DENIAL OF CLAIMS.—A participating State may deny a

claim if a representation or warranty made by the participating

financial institution to the participating State at the time that

the loan was filed for enrollment or at the time that the claim

was submitted was known by the participating financial institution

to be false.

(o) SUBSEQUENT RECOVERY OF CLAIM AMOUNT.—If, subsequent

to payment of a claim by the participating State, a participating

financial institution recovers from a borrower any amount for which

payment of the claim was made, the participating financial institution shall promptly pay to the participating State for deposit into

the reserve fund the amount recovered, less any expenses incurred

by the institution in collection of such amount.

(p) PARTICIPATION AGREEMENT TERMS.—

(1) IN GENERAL.—In connection with the filing of a loan

for enrollment in the Program, the participation agreement—

(A) shall require the participating financial institution

to obtain an assurance from each borrower that—

(i) the proceeds of the loan will be used for a

business purpose;

(ii) the loan will not be used to finance passive

real estate ownership; and

(iii) the borrower is not—

(I) an executive officer, director, or principal

shareholder of the participating financial institution;

(II) a member of the immediate family of an

executive officer, director, or principal shareholder

of the participating financial institution; or (III) a related interest of any such executive

officer, director, principal shareholder, or member

of the immediate family; (B) shall require the participating financial institution

to provide assurances to the participating State that the

loan has not been made in order to place under the protection of the Program prior debt that is not covered under

the Program and that is or was owed by the borrower

to the participating financial institution or to an affiliate

of the participating financial institution;

(C) may provide that if—

(i) a participating financial institution makes a

loan to a borrower that is a refinancing of a loan

previously made to the borrower by the participating

financial institution or an affiliate of the participating

financial institution;

(ii) such prior loan was not enrolled in the Program; and

(iii) additional or new financing is extended by

the participating financial institution as part of the

refinancing,
H. R. 3474—52

the participating financial institution may file the loan

for enrollment, with the amount to be covered under the

Program not to exceed the amount of any additional or

new financing; and

(D) may include additional restrictions on the eligibility

of loans or borrowers that are not inconsistent with the

provisions and purposes of this subtitle.

(2) DEFINITIONS.—For purposes of this subsection, the

terms ‘‘executive officer’’, ‘‘director’’, ‘‘principal shareholder’’,

‘‘immediate family’’, and ‘‘related interest’’ refer to the same

relationship to a participating financial institution as the relationship described in part 215 of title 12 of the Code of Federal

Regulations, or any successor to such part.

(q) TERMINATION CLAUSE.—In each participation agreement,

the participating State shall reserve for itself the ability to terminate its obligation to enroll loans under the Program. Any such

termination shall be prospective only, and shall not apply to

amounts of loans enrolled under the Program prior to such

termination.

(r) ALLOWABLE WITHDRAWALS FROM FUND.—The participation

agreement may provide that, if, for any consecutive period of not

less than 24 months, the aggregate outstanding balance of all

enrolled loans for a participating financial institution is continually

less than the outstanding balance in the reserve fund for that

participating financial institution, the participating State, in its

discretion, may withdraw an amount from the reserve fund to

bring the balance in the reserve fund down to the outstanding

balance of all such enrolled loans.

(s) GRANDFATHERED PROVISION.— (1) SPECIAL TREATMENT OF PREMIUM CHARGES.—Notwithstanding subsection (b) or (d), the participation agreement,

if explicitly authorized by a statute enacted by the State before

the date of enactment of this Act, may allow a participating

financial institution to treat the premium charges paid by the

participating financial institution and the borrower into the

reserve fund, and interest or income earned on funds in the

reserve fund that are deemed to be attributable to such premium charges, as assets of the participating financial institution for accounting purposes, subject to withdrawal by the

participating financial institution only— (A) for the payment of claims approved by the participating State in accordance with this section; and (B) upon the participating financial institution’s withdrawal from authority to make new loans under the

Program.

(2) PAYMENT OF POST-WITHDRAWAL CLAIMS.—After any

withdrawal of assets from the reserve fund pursuant to paragraph (1)(B), any future claims filed by the participating financial institution on loans remaining in its capital access program

portfolio shall only be paid from funds remaining in the reserve

fund to the extent that, in the aggregate, such claims exceed

the sum of the amount of such withdrawn assets, and interest

on that amount, imputed at the same rate as income would

have accrued had the amount not been withdrawn.

(3) CONDITIONS FOR TERMINATING SPECIAL AUTHORITY.—

If the Fund determines that the inclusion in a participation

agreement of the provisions authorized by this subsection is
H. R. 3474—53

resulting in the enrollment of loans under the Program that

are likely to have been made without assistance provided under

this subtitle, the Fund may notify the participating State that

henceforth, the Fund will only make reimbursements to the

State under section 257 with respect to a loan if the participation agreement between the participating State and each

participating financial institution has been amended to conform

with this section, without exercise of the special authority

granted by this subsection.

SEC. 256. REPORTS.

(a) RESERVE FUNDS REPORT.—On or before the last day of each calendar quarter, a participating State shall submit to the

Fund a report of contributions to reserve funds made by the participating State during the previous calendar quarter. If the participating State has made contributions to one or more reserve funds

during the previous quarter, the report shall— (1) indicate the total amount of such contributions;

(2) indicate the amount of contributions which is subject to reimbursement, which shall be equal to the total amount

of contributions, unless one of the limitations contained in

section 257 is applicable; (3) if one of the limitations in section 257 is applicable,

provide documentation of the applicability of such limitation

for each loan for which the limitation applies; and (4) include a certification by the participating State that— (A) the information provided in accordance with para- graphs (1), (2), and (3) is accurate; (B) funds in an amount meeting the minimum require- ments of section 253(b)(3) continue to be available and

legally committed to contributions by the State to reserve

funds, less any amount that has been contributed by the

State to reserve funds subsequent to the State being

approved for participation in the Program; (C) there has been no unapproved amendment to any participation agreement or the form of participation agreements; and

(D) the participating State is otherwise implementing the Program in accordance with this subtitle and regulations issued pursuant to section 259. (b) ANNUAL DATA.—Not later than March 31 of each year, each participating State shall submit to the Fund annual data

indicating the number of borrowers financed under the Program,

the total amount of covered loans, and breakdowns by industry

type, loan size, annual sales, and number of employees of the

borrowers financed.

(c) FORM.—The reports and data filed pursuant to subsections

(a) and (b) shall be in such form as the Fund may require.

SEC. 257. REIMBURSEMENT BY THE FUND.

(a) REIMBURSEMENTS.—Not later than 30 calendar days after

receiving a report filed in compliance with section 256, the Fund

shall reimburse the participating State in an amount equal to

50 percent of the amount of contributions by the participating

State to the reserve funds that are subject to reimbursement by

the Fund pursuant to section 256 and this section. The Fund

shall reimburse participating States, as it receives reports pursuant

to section 256(a), until available funds are expended.
H. R. 3474—54

(b) SIZE OF ASSISTED BORROWER.—The Fund shall not provide

any reimbursement to a participating State with respect to an

enrolled loan made to a borrower that has 500 or more employees

at the time that the loan is enrolled in the Program.

(c) THREE-YEAR MAXIMUM.—The amount of reimbursement to

be provided by the Fund to a participating State over any 3-

year period in connection with loans made to any single borrower

or any group of borrowers among which a common enterprise exists

shall not exceed $75,000. For purposes of this subsection, ‘‘common

enterprise’’ shall have the same meaning as in part 32 of title

12 of the Code of Federal Regulations, or any successor to that

part.

(d) LOANS TOTALING LESS THAN $2,000,000.—In connection

with a loan in which the covered amount of the loan plus the

covered amount of all previous loans enrolled by a participating

financial institution does not exceed $2,000,000, the amount of

reimbursement by the Fund to the participating State shall not

exceed the lesser of—

(1) 75 percent of the sum of the premium charges paid

to the reserve fund by the borrower and the participating

financial institution; or

(2) 5.25 percent of the covered amount of the loan.

(e) LOANS TOTALING MORE THAN $2,000,000.—In connection

with a loan in which the sum of the covered amounts of all previous

loans enrolled by the participating financial institution in the Program equals or exceeds $2,000,000, the amount of reimbursement

to be provided by the Fund to the participating State shall not

exceed the lesser of—

(1) 50 percent of the sum of the premium charges paid

by the borrower and the participating financial institution;

or

(2) 3.5 percent of the covered amount of the loan.

(f) OTHER AMOUNTS.—In connection with the enrollment of

a loan that will cause the aggregate covered amount of all enrolled

loans to exceed $2,000,000, the amount of reimbursement by the

Fund to the participating State shall be determined— (1) by applying subsection (d) to the portion of the loan,

which when added to the aggregate covered amount of all

previously enrolled loans equals $2,000,000; and (2) by applying subsection (e) to the balance of the loan.

SEC. 258. REIMBURSEMENT TO THE FUND.

(a) IN GENERAL.—If a participating State withdraws funds from

a reserve fund pursuant to terms of the participation agreement

permitted by subsection (d) or (r) of section 255, such participating

State shall, not later than 15 calendar days after such withdrawal,

submit to the Fund an amount computed by multiplying the amount

withdrawn by the appropriate factor, as determined under subsection (b).

(b) FACTOR.—The appropriate factor shall be obtained by dividing the total amount of contributions that have been made by

the participating State to all reserve funds which were subject

to reimbursement—

(1) by 2; and

(2) by the total amount of contributions made by the participating State to all reserve funds, including if applicable, contributions that have been made by the State prior to becoming
H. R. 3474—55

a participating State if the State continued its own capital

access program in accordance with section 253(b).

(c) USE OF REIMBURSEMENTS.—The Fund may use funds

reimbursed pursuant to this section to make reimbursements under

section 257.

SEC. 259. REGULATIONS.

The Fund shall promulgate appropriate regulations to implement this subtitle.

SEC. 260. AUTHORIZATION OF APPROPRIATIONS.

(a) AMOUNT.—There are authorized to be appropriated to the

Fund $50,000,000 to carry out this subtitle.

(b) BUDGETARY TREATMENT.—The amount authorized to be

appropriated under subsection (a) shall be subject to discretionary

spending caps, as provided in section 601 of the Congressional

Budget Act of 1974, and therefore shall reduce by an equal amount

funds made available for other discretionary spending programs.

SEC. 261. EFFECTIVE DATE.

This subtitle shall become effective on January 6, 1996.

TITLE III—PAPERWORK REDUCTION

AND REGULATORY IMPROVEMENT

SEC. 301. INCORPORATED DEFINITIONS.

Unless otherwise specifically provided in this title, for purposes

of this title—

(1) the terms ‘‘appropriate Federal banking agency’’, ‘‘Federal banking agencies’’, ‘‘insured depository institution’’, and

‘‘State bank supervisor’’ have the same meanings as in section

3 of the Federal Deposit Insurance Act; and

(2) the term ‘‘insured credit union’’ has the same meaning

as in section 101 of the Federal Credit Union Act.

SEC. 302. ADMINISTRATIVE CONSIDERATION OF BURDEN WITH NEW

REGULATIONS.

(a) AGENCY CONSIDERATIONS.—In determining the effective date

and administrative compliance requirements for new regulations

that impose additional reporting, disclosure, or other requirements

on insured depository institutions, each Federal banking agency

shall consider, consistent with the principles of safety and soundness and the public interest—

(1) any administrative burdens that such regulations would

place on depository institutions, including small depository

institutions and customers of depository institutions; and

(2) the benefits of such regulations.

(b) ADEQUATE TRANSITION PERIOD FOR NEW REGULATIONS.—

(1) IN GENERAL.—New regulations and amendments to

regulations prescribed by a Federal banking agency which

impose additional reporting, disclosures, or other new requirements on insured depository institutions shall take effect on

the first day of a calendar quarter which begins on or after

the date on which the regulations are published in final form,

unless—
H. R. 3474—56

(A) the agency determines, for good cause published

with the regulation, that the regulation should become

effective before such time;

(B) the regulation is issued by the Board of Governors

of the Federal Reserve System in connection with the

implementation of monetary policy; or

(C) the regulation is required to take effect on a date

other than the date determined under this paragraph

pursuant to any other Act of Congress.

(2) EARLY COMPLIANCE.—Any person who is subject to a

regulation described in paragraph (1) may comply with the

regulation before the effective date of the regulation.

SEC. 303. STREAMLINING OF REGULATORY REQUIREMENTS.

(a) REVIEW OF REGULATIONS; REGULATORY UNIFORMITY.—During the 2-year period beginning on the date of enactment of this

Act, each Federal banking agency shall, consistent with the principles of safety and soundness, statutory law and policy, and the

public interest—

(1) conduct a review of the regulations and written policies

of that agency to—

(A) streamline and modify those regulations and policies in order to improve efficiency, reduce unnecessary

costs, and eliminate unwarranted constraints on credit

availability;

(B) remove inconsistencies and outmoded and duplicative requirements; and

(C) with respect to regulations prescribed pursuant

to section 18(o) of the Federal Deposit Insurance Act, consider the impact that such standards have on the availability of credit for small business, residential, and agricultural

purposes, and on low- and moderate-income communities;

(2) work jointly with the other Federal banking agencies

to make uniform all regulations and guidelines implementing

common statutory or supervisory policies; and

(3) submit a joint report to the Congress at the end of

such 2-year period detailing the progress of the agencies in

carrying out this subsection.

(b) REVIEW OF DISCLOSURES.—The Board of Governors of the

Federal Reserve System, in consultation with the consumer advisory

council to such Board, consumers, representatives of consumers,

lenders, and other interested persons, shall—

(1) review the regulations and written policies of the Board

with respect to disclosures pursuant to the Truth in Lending

Act with regard to variable-rate mortgages in order to simplify

the disclosures, if necessary, and make the disclosures more

meaningful and comprehensible to consumers;

(2) implement any necessary regulatory changes, consistent

with applicable law; and

(3) not later than 2 years after completion of the review

required by paragraph (1), submit a report to the Congress

on the results of its actions taken in accordance with this

subsection and any recommended legislative actions.

SEC. 304. ELIMINATION OF DUPLICATIVE FILINGS.

The Federal banking agencies shall work jointly—
H. R. 3474—57

(1) to eliminate, to the extent practicable, duplicative or

otherwise unnecessary requests for information in connection

with applications or notices to the agencies; and

(2) to harmonize, to the extent practicable, any inconsistent

publication and public notice requirements.

SEC. 305. COORDINATED AND UNIFIED EXAMINATIONS.

(a) IN GENERAL.—Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by adding at the end

the following new paragraphs:

‘‘(6) COORDINATED EXAMINATIONS.—To minimize the disruptive effects of examinations on the operations of insured depository institutions—

‘‘(A) each appropriate Federal banking agency shall,

to the extent practicable and consistent with principles

of safety and soundness and the public interest—

‘‘(i) coordinate examinations to be conducted by

that agency at an insured depository institution and

its affiliates;

‘‘(ii) coordinate with the other appropriate Federal

banking agencies in the conduct of such examinations;

‘‘(iii) work to coordinate with the appropriate State

bank supervisor—

‘‘(I) the conduct of all examinations made

pursuant to this subsection; and

‘‘(II) the number, types, and frequency of

reports required to be submitted to such agencies

and supervisors by insured depository institutions,

and the type and amount of information required

to be included in such reports; and

‘‘(iv) use copies of reports of examinations of

insured depository institutions made by any other Federal banking agency or appropriate State bank supervisor to eliminate duplicative requests for information;

and

‘‘(B) not later than 2 years after the date of enactment

of the Riegle Community Development and Regulatory

Improvement Act of 1994, the Federal banking agencies

shall jointly establish and implement a system for determining which one of the Federal banking agencies shall

be the lead agency responsible for managing a unified

examination of each insured depository institution and its

affiliates, as required by this subsection.

‘‘(7) SEPARATE EXAMINATIONS PERMITTED.—Notwithstanding paragraph (6), each appropriate Federal banking agency

may conduct a separate examination in an emergency or under

other exigent circumstances, or when the agency believes that

a violation of law may have occurred.

‘‘(8) REPORT.—At the time the system provided for in paragraph (6) is established, the Federal banking agencies shall

submit a joint report describing the system to the Committee

on Banking, Housing, and Urban Affairs of the Senate and

the Committee on Banking, Finance and Urban Affairs of the

House of Representatives. Thereafter, the Federal banking

agencies shall annually submit a joint report to the Committee

on Banking, Housing, and Urban Affairs of the Senate and

the Committee on Banking, Finance and Urban Affairs of the
H. R. 3474—58

House of Representatives regarding the progress of the agencies

in implementing the system and indicating areas in which

enhancements to the system, including legislature improvements, would be appropriate.’’.

(b) STATE ACCESS TO FEDERAL AGENCY REPORTS.—The first

sentence of section 7(a)(2)(A) of the Federal Deposit Insurance Act

(12 U.S.C. 1817(a)(2)(A)) is amended by inserting ‘‘and, with respect

to any State depository institution, any appropriate State bank

supervisor for such institution,’’ after ‘‘The Corporation’’.

SEC. 306. EIGHTEEN-MONTH EXAMINATION RULE FOR CERTAIN

SMALL INSTITUTIONS.

(a) IN GENERAL.—Section 10(d)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)(4)) is amended—

(1) in subparagraph (A), by striking ‘‘$100,000,000’’ and

inserting ‘‘$250,000,000’’;

(2) in subparagraph (C), by striking ‘‘and its composite

condition was found to be outstanding; and’’ and inserting

‘‘and its composite condition—

‘‘(i) was found to be outstanding; or

‘‘(ii) was found to be outstanding or good, in the

case of an insured depository institution that has total

assets of not more than $100,000,000;’’;

(3) by redesignating subparagraph (D) as subparagraph

(E); and

(4) by inserting after subparagraph (C) the following new

subparagraph:

‘‘(D) the insured institution is not currently subject

to a formal enforcement proceeding or order by the Corporation or the appropriate Federal banking agency; and’’.

(b) AGENCY DISCRETION TO RAISE ASSET LIMIT.—Section 10(d)

of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended

by adding at the end the following new paragraph:

‘‘(8) AGENCIES AUTHORIZED TO INCREASE MAXIMUM ASSET

AMOUNT OF INSTITUTIONS FOR CERTAIN PURPOSES.—At any time

after the end of the 2-year period beginning on the date of

enactment of the Riegle Community Development and Regulatory Improvement Act of 1994, the appropriate Federal

banking agency, in the agency’s discretion, may increase the

maximum amount limitation contained in paragraph (4)(C)(ii),

by regulation, from $100,000,000 to an amount not to exceed

$175,000,000 for purposes of such paragraph, if the agency

determines that the greater amount would be consistent with

the principles of safety and soundness for insured depository

institutions.’’.

SEC. 307. CALL REPORT SIMPLIFICATION.

(a) MODERNIZATION OF CALL REPORT FILING AND DISCLOSURE

SYSTEM.—In order to reduce the administrative requirements

pertaining to bank reports of condition, savings association financial

reports, and bank holding company consolidated and parent-only

financial statements, and to improve the timeliness of such reports

and statements, the Federal banking agencies shall—

(1) work jointly to develop a system under which—

(A) insured depository institutions and their affiliates

may file such reports and statements electronically; and
H. R. 3474—59

(B) the Federal banking agencies may make such reports and statements available to the public electronically; and

(2) not later than 1 year after the date of enactment of this Act, report to the Congress and make recommendations

for legislation that would enhance efficiency for filers and users

of such reports and statements.

(b) UNIFORM REPORTS AND SIMPLIFICATION OF INSTRUCTIONS.— The Federal banking agencies shall, consistent with the principles

of safety and soundness, work jointly— (1) to adopt a single form for the filing of core information required to be submitted under Federal law to all such agencies

in the reports and statements referred to in subsection (a);

and

(2) to simplify instructions accompanying such reports and statements and to provide an index to the instructions that

is adequate to meet the needs of both filers and users.

(c) REVIEW OF CALL REPORT SCHEDULE.—Each Federal banking agency shall— (1) review the information required by schedules supplementing the core information referred to in subsection

(b); and

(2) eliminate requirements that are not warranted for reasons of safety and soundness or other public purposes.

SEC. 308. REPEAL OF PUBLICATION REQUIREMENTS.

(a) REVISED STATUTES.—Section 5211 of the Revised Statutes

(12 U.S.C. 161) is amended—

(1) in the 5th sentence of subsection (a), by striking ‘‘; and the statement of resources’’ and all that follows through

‘‘as may be required by the Comptroller’’; and (2) in subsection (c), by striking the 4th sentence. (b) FDIA.—Section 7(a)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)(1)) is amended by striking the 4th sentence. (c) FEDERAL RESERVE ACT.—Section 9 of the Federal Reserve

Act (12 U.S.C. 324) is amended in the last sentence of the 6th

undesignated paragraph, by striking ‘‘and shall be published’’ and

all that follows through the end of the sentence and inserting

a period.

SEC. 309. REGULATORY APPEALS PROCESS, OMBUDSMAN, AND

ALTERNATIVE DISPUTE RESOLUTION.

(a) IN GENERAL.—Not later than 180 days after the date of enactment of this Act, each appropriate Federal banking agency

and the National Credit Union Administration Board shall establish

an independent intra-agency appellate process. The process shall

be available to review material supervisory determinations made

at insured depository institutions or at insured credit unions that

the agency supervises. (b) REVIEW PROCESS.—In establishing the independent appellate process under subsection (a), each agency shall ensure that—

(1) any appeal of a material supervisory determination

by an insured depository institution or insured credit union

is heard and decided expeditiously; and

(2) appropriate safeguards exist for protecting the appellant

from retaliation by agency examiners.

(c) COMMENT PERIOD.—Not later than 90 days after the date

of enactment of this Act, each appropriate Federal banking agency
H. R. 3474—60

and the National Credit Union Administration Board shall provide

public notice and opportunity for comment on proposed guidelines

for the establishment of an appellate process under this section.

(d) AGENCY OMBUDSMAN.—

(1) ESTABLISHMENT REQUIRED.—Not later than 180 days

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

agency and the National Credit Union Administration Board

shall appoint an ombudsman.

(2) DUTIES OF OMBUDSMAN.—The ombudsman appointed

in accordance with paragraph (1) for any agency shall—

(A) act as a liaison between the agency and any affected

person with respect to any problem such party may have

in dealing with the agency resulting from the regulatory

activities of the agency; and

(B) assure that safeguards exist to encourage complainants to come forward and preserve confidentiality.

(e) ALTERNATIVE DISPUTE RESOLUTION PILOT PROGRAM.—

(1) IN GENERAL.—Not later than 18 months after the date

of enactment of this Act, each Federal banking agency and

the National Credit Union Administration Board shall develop

and implement a pilot program for using alternative means

of dispute resolution of issues in controversy (hereafter in this

section referred to as the ‘‘alternative dispute resolution program’’) that is consistent with the requirements of subchapter

IV of chapter 5 of title 5, United States Code, if the parties

to the dispute, including the agency, agree to such proceeding.

(2) STANDARDS.—An alternative dispute resolution pilot

program developed under paragraph (1) shall— (A) be fair to all interested parties to a dispute;

(B) resolve disputes expeditiously; and

(C) be less costly than traditional means of dispute

resolution, including litigation.

(3) INDEPENDENT EVALUATION.—Not later than 18 months

after the date on which a pilot program is implemented under

paragraph (1), the Administrative Conference of the United

States shall submit to the Congress a report containing— (A) an evaluation of that pilot program;

(B) the extent to which the pilot programs meet the standards established under paragraph (2); (C) the extent to which parties to disputes were offered

alternative means of dispute resolution and the frequency

with which the parties, including the agencies, accepted

or declined to use such means; and

(D) any recommendations of the Conference to improve

the alternative dispute resolution procedures of the Federal

banking agencies and the National Credit Union Administration Board.

(4) IMPLEMENTATION OF PROGRAM.—At any time after

completion of the evaluation under paragraph (3)(A), any Federal banking agency and the National Credit Union Administration Board may implement an alternative dispute resolution

program throughout the agency, taking into account the results

of that evaluation.

(5) COORDINATION WITH EXISTING AGENCY ADR PROGRAMS.—

(A) EVALUATION REQUIRED.—If any Federal banking

agency or the National Credit Union Administration maintains an alternative dispute resolution program as of the
H. R. 3474—61

date of enactment of this Act under any other provision

of law, the Administrative Conference of the United States

shall include such program in the evaluation conducted

under paragraph (3)(A).

(B) MULTIPLE ADR PROGRAMS.—No provision of this

section shall be construed as precluding any Federal banking agency or the National Credit Union Administration

Board from establishing more than 1 alternative means

of dispute resolution.

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

definitions shall apply:

(1) MATERIAL SUPERVISORY DETERMINATIONS.—The term

‘‘material supervisory determinations’’—

(A) includes determinations relating to—

(i) examination ratings;

(ii) the adequacy of loan loss reserve provisions;

and

(iii) loan classifications on loans that are significant to an institution; and

(B) does not include a determination by a Federal

banking agency or the National Credit Union Administration Board to appoint a conservator or receiver for an

insured depository institution or a liquidating agent for

an insured credit union, as the case may be, or a decision

to take action pursuant to section 38 of the Federal Deposit

Insurance Act or section 212 of the Federal Credit Union

Act, as appropriate.

(2) INDEPENDENT APPELLATE PROCESS.—The term

‘‘independent appellate process’’ means a review by an agency

official who does not directly or indirectly report to the agency

official who made the material supervisory determination under

review.

(3) ALTERNATIVE MEANS OF DISPUTE RESOLUTION.—The

term ‘‘alternative means of dispute resolution’’ has the meaning

given to such term in section 571 of title 5, United States

Code.

(4) ISSUES IN CONTROVERSY.—The term ‘‘issues in controversy’’ means—

(A) any final agency decision involving any claim

against an insured depository institution or insured credit

union for which the agency has been appointed conservator

or receiver or for which a liquidating agent has been

appointed, as the case may be;

(B) any final action taken by an agency in the agency’s

capacity as conservator or receiver for an insured depository

institution or by the liquidating agent appointed for an

insured credit union; and

(C) any other issue for which the appropriate Federal

banking agency or the National Credit Union Administration Board determines that alternative means of dispute

resolution would be appropriate.

(g) EFFECT ON OTHER AUTHORITY.—Nothing in this section

shall affect the authority of an appropriate Federal banking agency

or the National Credit Union Administration Board to take enforcement or supervisory action.
H. R. 3474—62

SEC. 310. ELECTRONIC FILING OF CURRENCY TRANSACTION REPORTS.

Section 123 of Public Law 91–508 (12 U.S.C. 1953) is amended

by adding at the end the following new subsection: ‘‘(c) ACCEPTANCE OF AUTOMATED RECORDS.—The Secretary shall

permit an uninsured bank or financial institution to retain or

maintain records referred to in subsection (a) in electronic or automated form, subject to terms and conditions established by the

Secretary.’’.

SEC. 311. BANK SECRECY ACT PUBLICATION REQUIREMENTS.

(a) IN GENERAL.—Subchapter II of chapter 53 of title 31, United

States Code, is amended by adding at the end the following new

section:

‘‘SEC. 5329. STAFF COMMENTARIES.

‘‘The Secretary shall—

‘‘(1) publish all written rulings interpreting this subchapter;

and

‘‘(2) annually issue a staff commentary on the regulations

issued under this subchapter.’’.

(b) CONFORMING AMENDMENT.—The table of sections for chapter

53 of title 31, United States Code, is amended by inserting after

the item relating to section 5328 the following new item:

‘‘5329. Staff commentaries.’’.

SEC. 312. EXEMPTION OF BUSINESS LOANS FROM REAL ESTATE

SETTLEMENT PROCEDURES ACT REQUIREMENTS.

The Real Estate Settlement Procedures Act of 1974 (12 U.S.C.

2601 et seq.) is amended by inserting after section 6 the following

new section:

‘‘SEC. 7. EXEMPTED TRANSACTIONS.

‘‘This Act does not apply to credit transactions involving extensions of credit—

‘‘(1) primarily for business, commercial, or agricultural purposes; or

‘‘(2) to government or governmental agencies or instrumentalities.’’.

SEC. 313. FLEXIBILITY IN CHOOSING BOARDS OF DIRECTORS.

Section 5146 of the Revised Statutes (12 U.S.C. 72) is amended

in the 1st sentence, by striking ‘‘two thirds’’ and inserting ‘‘a majority’’.

SEC. 314. HOLDING COMPANY AUDIT REQUIREMENTS.

(a) IN GENERAL.—Section 36(i) of the Federal Deposit Insurance

Act (12 U.S.C. 1831m(i)) is amended—

(1) by redesignating paragraph (1) as subparagraph (A)

and indenting appropriately; (2) by striking ‘‘Except with respect’’ and inserting the

following: ‘‘(1) IN GENERAL.—Except with respect’’; and

(3) by striking paragraph (2) and inserting the following:

‘‘(B) the institution—

‘‘(i) has total assets, as of the beginning of such

fiscal year, of less than $5,000,000,000; or ‘‘(ii) has—
H. R. 3474—63

‘‘(I) total assets, as of the beginning of such

fiscal year, of $5,000,000,000, or more; and

‘‘(II) a CAMEL composite rating of 1 or 2

under the Uniform Financial Institutions Rating

System (or an equivalent rating by any such

agency under a comparable rating system) as of

the most recent examination of such institution

by the Corporation or the appropriate Federal

banking agency.

‘‘(2) LARGE INSTITUTIONS.—For purposes of this subsection,

in the case of an insured depository institution described in

paragraph (1)(B)(ii) that the Corporation determines to be a

large institution, the audit committee of the holding company

of such an institution shall not include any large customers

of the institution.

‘‘(3) APPLICABILITY BASED ON RISK TO FUND.—The appropriate Federal banking agency may require an institution with

total assets in excess of $9,000,000,000 to comply with this

section, notwithstanding the exemption provided by this subsection, if it determines that such exemption would create

a significant risk to the affected deposit insurance fund if

applied to that institution.’’.

(b) WRITTEN NOTICE OF REQUIREMENT FOR AUDIT OF QUARTERLY REPORTS.—Section 36(g)(2) of the Federal Deposit Insurance

Act (12 U.S.C. 1831m(g)(2)) is amended by adding at the end

the following new subparagraph:

‘‘(D) NOTICE TO INSTITUTION.—The Corporation shall

promptly notify an insured depository institution, in writing, of a determination pursuant to subparagraph (A) to

require a review of such institution’s quarterly financial

reports.’’.

SEC. 315. STATE REGULATION OF REAL ESTATE APPRAISALS.

Section 1122 of the Financial Institutions Reform, Recovery,

and Enforcement Act of 1989 (12 U.S.C. 3351) is amended—

(1) by redesignating subsections (b) through (e) as subsections (c) through (f), respectively;

(2) by inserting after subsection (a) the following new

subsection:

‘‘(b) RECIPROCITY.—The Appraisal Subcommittee shall encourage the States to develop reciprocity agreements that readily authorize appraisers who are licensed or certified in one State (and who

are in good standing with their State appraiser certifying or licensing agency) to perform appraisals in other States.’’; and

(3) in subsection (a)—

(A) by redesignating paragraphs (1) through (3) as

subparagraphs (A) through (C);

(B) by striking ‘‘A State’’ and inserting the following:

‘‘(1) IN GENERAL.—A State’’; and

(C) by adding at the end the following new paragraph:

‘‘(2) FEES FOR TEMPORARY PRACTICE.—A State appraiser

certifying or licensing agency shall not impose excessive fees

or burdensome requirements, as determined by the Appraisal

Subcommittee, for temporary practice under this subsection.’’.
H. R. 3474—64

SEC. 316. ACCELERATION OF EFFECTIVE DATE FOR INTERAFFILIATE

TRANSACTIONS.

(a) HOME OWNERS’ LOAN ACT AMENDMENT.—Section 11(a)(2)

of the Home Owners’ Loan Act (12 U.S.C. 1468(a)(2)) is amended

by adding at the end the following new subparagraph:

‘‘(C) TRANSITION RULE FOR WELL CAPITALIZED SAVINGS

ASSOCIATIONS.—

‘‘(i) IN GENERAL.—A savings association that is

well capitalized (as defined in section 38 of the Federal

Deposit Insurance Act), as determined without including goodwill in calculating core capital, shall be treated

as a bank for purposes of section 23A(d)(1) and section

23B of the Federal Reserve Act.

‘‘(ii) LIABILITY OF COMMONLY CONTROLLED DEPOSITORY INSTITUTIONS.—Any savings association that

engages under clause (i) in a transaction that would

not otherwise be permissible under this subsection,

and any affiliated insured bank that is commonly controlled (as defined in section 5(e)(9) of the Federal

Deposit Insurance Act), shall be subject to subsection

(e) of section 5 of the Federal Deposit Insurance Act

as if paragraph (6) of that subsection did not apply.’’.

(b) REPEAL PROVISION.—Effective on January 1, 1995, subparagraph (C) of section 11(a)(2) of the Home Owners’ Loan Act (12

U.S.C. 1468(a)(2)) (as added by subsection (a) of this section) is

repealed.

SEC. 317. COLLATERALIZATION OF PUBLIC DEPOSITS.

Section 13(e) of the Federal Deposit Insurance Act (12 U.S.C.

1823(e)) is amended—

(1) by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively, and indent appropriately;

(2) by striking ‘‘No agreement’’ and inserting the following:

‘‘(1) IN GENERAL.—No agreement’’; and

(3) by adding at the end the following new paragraph:

‘‘(2) PUBLIC DEPOSITS.—An agreement to provide for the

lawful collateralization of deposits of a Federal, State, or local

governmental entity or of any depositor referred to in section

11(a)(2) shall not be deemed to be invalid pursuant to paragraph (1)(B) solely because such agreement was not executed

contemporaneously with the acquisition of the collateral or

with any changes in the collateral made in accordance with

such agreement.’’.

SEC. 318. MODIFICATION OF REGULATORY PROVISIONS.

(a) IN GENERAL.—Section 39(b) of the Federal Deposit Insurance

Act (12 U.S.C. 1831p–1(b), as added by section 132(a) of the Federal

Deposit Insurance Corporation Improvement Act of 1991) is

amended to read as follows:

‘‘(b) ASSET QUALITY, EARNINGS, AND STOCK VALUATION STANDARDS.—Each appropriate Federal banking agency shall prescribe

standards, by regulation or guideline, for all insured depository

institutions relating to asset quality, earnings, and stock valuation

that the agency determines to be appropriate.’’.

(b) ESTABLISHING STANDARDS.—Section 39(d) of the Federal

Deposit Insurance Act (12 U.S.C. 1831p–1(d), as added by section
H. R. 3474—65

132(a) of the Federal Deposit Insurance Corporation Improvement

Act of 1991) is amended—

(1) in the subsection heading, by striking ‘‘BY REGULATION’’;

and

(2) in paragraph (1)—

(A) in the 1st sentence, by inserting ‘‘or guideline’’

before the period; and

(B) in the 2d sentence, by inserting ‘‘or guidelines’’

after ‘‘Such regulations’’.

(c) HOLDING COMPANIES EXCLUDED FROM SCOPE OF STANDARDS.—Section 39 of the Federal Deposit Insurance Act (12 U.S.C.

1831p–1, as added by section 132(a) of the Federal Deposit Insurance Corporation Improvement Act of 1991) is amended—

(1) in subsections (a), by striking ‘‘and depository institution

holding companies’’; and

(2) in subsection (e)—

(A) by striking ‘‘or company’’ each place such term

appears;

(B) in paragraphs (1)(A) and (2), by striking ‘‘or depository institution holding company’’;

(C) in paragraph (1)(A)—

(i) by striking ‘‘or (b) the agency shall require’’

and inserting the following: ‘‘or (b)—

‘‘(i) if such standard is prescribed by regulation

of the agency, the agency shall require’’; and

(ii) by striking the period at the end and inserting

the following: ‘‘; and

‘‘(ii) if such standard is prescribed by guideline,

the agency may require the institution to submit a

plan described in clause (i).’’; and

(D) in paragraph (1)(C)(i), by striking ‘‘and companies’’.

(d) EFFECTIVE DATE.—The amendments made by this section

shall be construed to have the same effective date as section 39

of the Federal Deposit Insurance Act, as provided in section 132(c)

of the Federal Deposit Insurance Corporation Improvement Act

of 1991.

SEC. 319. EXPEDITED PROCEDURES.

(a) AMENDMENTS TO THE BANK HOLDING COMPANY ACT.—The

2d sentence of section 3(a) of the Bank Holding Company Act

of 1956 (12 U.S.C. 1842(a)) is amended—

(1) by striking ‘‘or (B)’’ and inserting ‘‘(B)’’; and

(2) by inserting before the period the following: ‘‘; or (C)

the acquisition, by a company, of control of a bank in a reorganization in which a person or group of persons exchanges

their shares of the bank for shares of a newly formed bank

holding company and receives after the reorganization substantially the same proportional share interest in the holding

company as they held in the bank except for changes in shareholders’ interests resulting from the exercise of dissenting

shareholders’ rights under State or Federal law if—

‘‘(i) immediately following the acquisition—

‘‘(I) the bank holding company meets the capital and other financial standards prescribed by

the Board by regulation for such a bank holding

company; and
H. R. 3474—66

‘‘(II) the bank is adequately capitalized (as

defined in section 38 of the Federal Deposit Insurance Act);

‘‘(ii) the holding company does not engage in any

activities other than those of managing and controlling

banks as a result of the reorganization;

‘‘(iii) the company provides 30 days prior notice

to the Board and the Board does not object to such

transaction during such 30-day period; and

‘‘(iv) the holding company will not acquire control

of any additional bank as a result of the reorganization.’’.

(b) AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.—

Section 5(d)(3) of the Federal Deposit Insurance Act (12 U.S.C.

1815(d)(3)) is amended—

(1) by striking subparagraph (A) and inserting the following:

‘‘(A) CONVERSIONS ALLOWED.—Notwithstanding paragraph (2)(A), and subject to the requirements of this paragraph, any insured depository institution may participate

in a transaction described in clause (ii), (iii), or (iv) of

paragraph (2)(B) with the prior written approval of the

responsible agency under section 18(c)(2).’’;

(2) in subparagraph (E)—

(A) in clause (i), by striking ‘‘(and, in the event the

acquiring, assuming, or resulting depository institution is

a Bank Insurance Fund member which is a subsidiary

of a bank holding company, the Board)’’; (B) in clause (ii), by striking ‘‘or Board’’; and

(C) in clause (iv)—

(i) by striking ‘‘, and the appropriate Federal banking agency for any depository institution holding

company,’’; (ii) by striking ‘‘each’’; and

(iii) by striking ‘‘, and any depository institution

holding company which controls such institution,’’; (3) in subparagraph (F)— (A) by striking ‘‘The Board’’ and all that follows through

‘‘a Bank’’ and inserting ‘‘A Bank’’; and (B) by striking ‘‘unless the Board determines that’’

and inserting ‘‘may not be the acquiring, assuming, or

resulting depository institution in a transaction under

subparagraph (A) unless’’; and

(4) by striking subparagraph (K).

SEC. 320. EXEMPTION OF CERTAIN HOLDING COMPANY FORMATIONS

FROM REGISTRATION UNDER THE SECURITIES ACT OF

1933.

Section 3(a) of the Securities Act of 1933 (15 U.S.C. 77c(a))

is amended by adding at the end the following new paragraph:

‘‘(12) Any equity security issued in connection with the

acquisition by a holding company of a bank under section

3(a) of the Bank Holding Company Act of 1956 or a savings

association under section 10(e) of the Home Owners’ Loan Act,

if—

‘‘(A) the acquisition occurs solely as part of a reorganization in which security holders exchange their shares
H. R. 3474—67

of a bank or savings association for shares of a newly

formed holding company with no significant assets other

than securities of the bank or savings association and

the existing subsidiaries of the bank or savings association; ‘‘(B) the security holders receive, after that reorganiza- tion, substantially the same proportional share interests

in the holding company as they held in the bank or savings

association, except for nominal changes in shareholders’

interests resulting from lawful elimination of fractional

interests and the exercise of dissenting shareholders’ rights

under State or Federal law;

‘‘(C) the rights and interests of security holders in the holding company are substantially the same as those

in the bank or savings association prior to the transaction,

other than as may be required by law; and ‘‘(D) the holding company has substantially the same assets and liabilities, on a consolidated basis, as the bank

or savings association had prior to the transaction. For purposes of this paragraph, the term ‘savings association’

means a savings association (as defined in section 3(b) of the

Federal Deposit Insurance Act) the deposits of which are

insured by the Federal Deposit Insurance Corporation.’’.

SEC. 321. REDUCTION OF POST-APPROVAL WAITING PERIODS FOR

CERTAIN ACQUISITIONS AND MERGERS.

(a) ACQUISITIONS.—Section 11(b)(1) of the Bank Holding Com- pany Act of 1956 (12 U.S.C. 1849(b)(1)) is amended by inserting

before the period at the end of the 4th sentence the following:

‘‘or, if the Board has not received any adverse comment from the

Attorney General of the United States relating to competitive factors, such shorter period of time as may be prescribed by the

Board with the concurrence of the Attorney General, but in no

event less than 15 calendar days after the date of approval’’. (b) MERGERS.—Section 18(c)(6) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(6)) is amended by inserting before the period

at the end of the last sentence the following: ‘‘or, if the agency

has not received any adverse comment from the Attorney General

of the United States relating to competitive factors, such shorter

period of time as may be prescribed by the agency with the concurrence of the Attorney General, but in no event less than 15 calendar

days after the date of approval’’.

SEC. 322. BANKERS’ BANKS.

(a) OWNERSHIP BY BANKERS’ BANKS.— (1) SECTION 5136.—Paragraph Seventh of section 5136 of the Revised Statutes (12 U.S.C. 24) is amended in the 5th

proviso—(A) by inserting ‘‘or depository institution holding companies (as defined in section 3 of the Federal Deposit

Insurance Act)’’ after ‘‘(except to the extent directors’

qualifying shares are required by law) by depository institutions’’; and

(B) by striking ‘‘services for other depository institutions and their officers, directors and employees’’ and

inserting the following: ‘‘services to or for other depository

institutions, their holding companies, and the officers,

directors, and employees of such institutions and companies, and in providing correspondent banking services at
H. R. 3474—68

the request of other depository institutions or their holding

companies (also referred to as a ‘banker’s bank’)’’.

(2) SECTION 5169.—Section 5169(b)(1) of the Revised Statutes (12 U.S.C. 27(b)(1)) is amended—

(A) by inserting ‘‘or depository institution holding companies’’ after ‘‘(except to the extent directors’ qualifying

shares are required by law) by other depository institutions’’; and

(B) by striking ‘‘services for other depository institu- tions and their officers, directors and employees’’ and

inserting the following: ‘‘services to or for other depository

institutions, their holding companies, and the officers,

directors, and employees of such institutions and companies, and in providing correspondent banking services at

the request of other depository institutions or their holding

companies (also referred to as a ‘banker’s bank’)’’. (b) OWNERSHIP BY SAVINGS ASSOCIATIONS.—Section 5(c)(4) of

the Home Owners’ Loan Act (12 U.S.C. 1464(c)(4)) is amended

by adding at the end the following new subparagraph: ‘‘(E) BANKERS’ BANKS.—A Federal savings association may purchase for its own account shares of stock of a

bankers’ bank, described in Paragraph Seventh of section

5136 of the Revised Statutes or in section 5169(b) of the

Revised Statutes, on the same terms and conditions as

a national bank may purchase such shares.’’. (c) TECHNICAL AND CONFORMING AMENDMENTS.— (1) BANK HOLDING COMPANY ACT.—Section 3(e) of the Bank

Holding Company Act of 1956 (12 U.S.C. 1842(e)) is amended

by striking the 2d sentence. (2) MANAGEMENT INTERLOCKS ACT.—Section 202(3)(D) of

the Depository Institution Management Interlocks Act (12

U.S.C. 3201(3)(D)) is amended by striking ‘‘the voting securities’’ the first place such term appears and all that follows

through the end of the subparagraph and inserting ‘‘and is

a bankers’ bank, described in Paragraph Seventh of section

5136 of the Revised Statutes; or’’.

(d) LENDING LIMIT FOR LOANS SECURED BY SECURITIES.—Section 11(m) of the Federal Reserve Act (12 U.S.C. 248(m)) is amended

by striking ‘‘10 percentum’’ each place such term appears and

inserting ‘‘15 percent’’.

SEC. 323. BANK SERVICE CORPORATION ACT AMENDMENT.

Section 5 of the Bank Service Corporation Act (12 U.S.C. 1865)

is amended—

(1) in subsection (a), by striking ‘‘the prior approval of’’ and inserting ‘‘prior notice, as determined by’’; and (2) in subsection (c), by inserting ‘‘or whether to approve

or disapprove any notice’’ after ‘‘approval’’.

SEC. 324. MERGER TRANSACTION REPORTS.

Section 18(c)(4) of the Federal Deposit Insurance Act (12 U.S.C.

1828(c)(4)) is amended by adding at the end the following: ‘‘Notwithstanding the preceding sentence, a banking agency shall not be

required to file a report requested by the responsible agency under

this paragraph if such banking agency advises the responsible

agency by the applicable date under the preceding sentence that

the report is not necessary because none of the effects described

in paragraph (5) are likely to occur as a result of the transaction.’’.
H. R. 3474—69

SEC. 325. CREDIT CARD ACCOUNTS RECEIVABLE SALES.

Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) is amended by adding at the end the following new

paragraphs: ‘‘(14) SELLING CREDIT CARD ACCOUNTS RECEIVABLE.— ‘‘(A) NOTIFICATION REQUIRED.—An undercapitalized insured depository institution (as defined in section 38)

shall notify the Corporation in writing before entering into

an agreement to sell credit card accounts receivable. ‘‘(B) WAIVER BY CORPORATION.—The Corporation may at any time, in its sole discretion and upon such terms

as it may prescribe, waive its right to repudiate an agreement to sell credit card accounts receivable if the Corporation—

‘‘(i) determines that the waiver is in the best

interests of the deposit insurance fund; and ‘‘(ii) provides a written waiver to the selling

institution.

‘‘(C) EFFECT OF WAIVER ON SUCCESSORS.— ‘‘(i) IN GENERAL.—If, under subparagraph (B), the Corporation has waived its right to repudiate an agreement to sell credit card accounts receivable—

‘‘(I) any provision of the agreement that

restricts solicitation of a credit card customer of

the selling institution, or the use of a credit card

customer list of the institution, shall bind any

receiver or conservator of the institution; and

‘‘(II) the Corporation shall require any acquirer

of the selling institution, or of substantially all

of the selling institution’s assets or liabilities, to

agree to be bound by a provision described in

subclause (I) as if the acquirer were the selling

institution.

‘‘(ii) EXCEPTION.—Clause (i)(II) does not—

‘‘(I) restrict the acquirer’s authority to offer

any product or service to any person identified

without using a list of the selling institution’s customers in violation of the agreement;

‘‘(II) require the acquirer to restrict any

preexisting relationship between the acquirer and

a customer; or

‘‘(III) apply to any transaction in which the

acquirer acquires only insured deposits.

‘‘(D) WAIVER NOT ACTIONABLE.—The Corporation shall

not, in any capacity, be liable to any person for damages

resulting from the waiver of or failure to waive the Corporation’s right under this section to repudiate any contract

or lease, including an agreement to sell credit card accounts

receivable. No court shall issue any order affecting any

such waiver or failure to waive.

‘‘(E) OTHER AUTHORITY NOT AFFECTED.—This paragraph does not limit any other authority of the Corporation

to waive the Corporation’s right to repudiate an agreement

or lease under this section.

‘‘(15) CERTAIN CREDIT CARD CUSTOMER LISTS PROTECTED.—

‘‘(A) IN GENERAL.—If any insured depository institution

sells credit card accounts receivable under an agreement
H. R. 3474—70

negotiated at arm’s length that provides for the sale of

the institution’s credit card customer list, the Corporation

shall prohibit any party to a transaction with respect to

the institution under this section or section 13 from using

the list, except as permitted under the agreement. ‘‘(B) FRAUDULENT TRANSACTIONS EXCLUDED.—Subpara- graph (A) does not limit the Corporation’s authority to

repudiate any agreement entered into with the intent to

hinder, delay, or defraud the institution, the institution’s

creditors, or the Corporation.’’.

SEC. 326. LIMITING POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.

(a) AMENDMENT TO THE FEDERAL RESERVE ACT.—The Federal

Reserve Act (12 U.S.C. 221 et seq.) is amended by inserting after

section 25B the following new section:

‘‘SEC. 25C. POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.

‘‘(a) EXCEPTIONS FROM REPAYMENT REQUIREMENT.—A member

bank shall not be required to repay any deposit made at a foreign

branch of the bank if the branch cannot repay the deposit due

to—

‘‘(1) an act of war, insurrection, or civil strife; or

‘‘(2) an action by a foreign government or instrumentality (whether de jure or de facto) in the country in which the

branch is located;

unless the member bank has expressly agreed in writing to repay

the deposit under those circumstances. ‘‘(b) REGULATIONS.—The Board and the Comptroller of the Currency may jointly prescribe such regulations as they deem necessary

to implement this section.’’. (b) CONFORMING AMENDMENTS TO THE FEDERAL DEPOSIT

INSURANCE ACT.— (1) IN GENERAL.—Section 18 of the Federal Deposit Insur- ance Act (12 U.S.C. 1828) is amended by inserting after subsection (p) the following new subsection:

‘‘(q) SOVEREIGN RISK.—Section 25C of the Federal Reserve Act

shall apply to every nonmember insured bank in the same manner

and to the same extent as if the nonmember insured bank were

a member bank.’’.

(2) CONFORMING AMENDMENT.—Subparagraph (A) of section 3(l)(5) of the Federal Deposit Insurance Act (12 U.S.C.

1813(l)(5)) is amended to read as follows:

‘‘(A) any obligation of a depository institution which is carried on the books and records of an office of such

bank or savings association located outside of any State,

unless—

‘‘(i) such obligation would be a deposit if it were carried on the books and records of the depository

institution, and would be payable at, an office located

in any State; and

‘‘(ii) the contract evidencing the obligation provides

by express terms, and not by implication, for payment

at an office of the depository institution located in

any State; and’’.

(c) EXISTING CLAIMS NOT AFFECTED.—Section 25C of the Federal Reserve Act (as added by subsection (a)) shall not be applied

retroactively and shall not be construed to affect or apply to any

claim or cause of action addressed by that section arising from
H. R. 3474—71

events or circumstances that occurred before the date of enactment

of this Act.

SEC. 327. GAO REPORTS.

Section 102(b)(1) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 1825 note) is amended to

read as follows:

‘‘(1) QUARTERLY REPORTING.—Not later than 90 days after the end of any calendar quarter in which the Federal Deposit

Insurance Corporation (hereafter in this section referred to

as the ‘Corporation’) has any obligations pursuant to section

14 of the Federal Deposit Insurance Act outstanding, the

Comptroller General of the United States shall submit a report

on the Corporation’s compliance at the end of that quarter

with section 15(c) of the Federal Deposit Insurance Act to

the Committee on Banking, Housing, and Urban Affairs of

the Senate and the Committee on Banking, Finance and Urban

Affairs of the House of Representatives. Such report shall be

included in the Comptroller General’s audit report for that

year, as required by section 17 of the Federal Deposit Insurance

Act.’’.

SEC. 328. STUDY AND REPORT ON CAPITAL STANDARDS AND THEIR

IMPACT ON THE ECONOMY.

(a) IN GENERAL.—The Secretary of the Treasury, in consultation

with the Federal banking agencies, shall conduct a study of the

effect that the implementation of risk-based capital standards for

depository institutions, including the Basle international capital

standards, is having on—

(1) the safety and soundness of insured depository institutions;

(2) the availability of credit, particularly to individuals

and small businesses; and

(3) economic growth.

(b) REPORT.—

(1) IN GENERAL.—Before the end of the 1-year period beginning on the date of enactment of this Act, the Secretary of

the Treasury shall submit a report to the Congress on the

findings and conclusions of the Secretary with respect to the

study conducted under subsection (a). (2) RECOMMENDATIONS.—The report shall contain any recommendations with respect to capital standards that the Secretary of the Treasury may determine to be appropriate.

SEC. 329. STUDY ON THE IMPACT OF THE PAYMENT OF INTEREST

ON RESERVES.

(a) FEDERAL RESERVE STUDY.—Not later than 180 days after

the date of enactment of this Act, the Board of Governors of the

Federal Reserve System, in consultation with the Federal Deposit

Insurance Corporation and the National Credit Union Administration Board, shall conduct a study and report to the Congress on— (1) the necessity, for monetary policy purposes, of continuing to require insured depository institutions to maintain sterile

reserves;

(2) the appropriateness of paying a market rate of interest

to insured depository institutions on sterile reserves or, in

the alternative, providing for payment of such interest into

the appropriate deposit insurance fund;
H. R. 3474—72

(3) the monetary impact that the failure to pay interest

on sterile reserves has had on insured depository institutions,

including an estimate of the total dollar amount of interest

and the potential income lost by insured depository institutions;

and

(4) the impact that the failure to pay interest on sterile

reserves has had on the ability of the banking industry to

compete with nonbanking providers of financial services and

with foreign banks.

(b) BUDGETARY IMPACT STUDY.—Not later than 180 days after

the date of enactment of this Act, the Director of the Office of

Management and Budget and the Director of the Congressional

Budget Office, in consultation with the Committees on the Budget

of the Senate and the House of Representatives, shall jointly conduct

a study and report to the Congress on the budgetary impact of—

(1) paying a market rate of interest to insured depository

institutions on sterile reserves; and

(2) paying such interest into the respective deposit insurance funds.

SEC. 330. STUDY AND REPORT ON THE CONSUMER CREDIT SYSTEM.

(a) STUDY.—The Secretary of the Treasury, in consultation

with the Board of Governors of the Federal Reserve System, the

Administrator of the Small Business Administration, the Secretary

of Housing and Urban Development, and the other Federal banking

agencies, shall conduct a study of the process, including any Federal

laws, by which credit is made available for consumers and small

businesses in order to identify procedures, including any Federal

laws, which have the effect of—

(1) reducing the amount of credit available for such purposes or the number of persons eligible for such credit;

(2) increasing the level of consumer inconvenience, cost,

and time delays in connection with the extension of consumer

and small business credit without corresponding benefit with

respect to the protection of consumers or small businesses

or the safety and soundness of insured depository institutions;

and

(3) increasing costs and burdens on insured depository

institutions, insured credit unions, and other lenders without

corresponding benefit with respect to the protection of consumers or small business concerns or to the safety and soundness

of insured institutions.

(b) REPORT.—

(1) IN GENERAL.—Not later than 1 year after the date

of enactment of this Act, the Secretary of the Treasury shall

submit a report to the Congress on the findings and conclusions

of the Secretary with respect to the study conducted under

subsection (a).

(2) RECOMMENDATIONS.—The report required by paragraph

(1) shall contain any recommendations for administrative action

or statutory changes that the Secretary of the Treasury may

determine to be appropriate.

(c) PUBLIC PARTICIPATION.—In conducting the study required

by subsection (a), comments shall be solicited from consumers,

representatives of consumers, insured depository institutions,

insured credit unions, other lenders, and other interested parties.
H. R. 3474—73

SEC. 331. CLARIFICATION OF PROVISIONS RELATING TO ADMINISTRATIVE AUTONOMY.

(a) PUBLIC LAW 93–495.—Section 111 of Public Law 93–495

(12 U.S.C. 250) is amended by inserting ‘‘the Comptroller of the

Currency,’’ after ‘‘Federal Deposit Insurance Corporation,’’.

(b) REVISED STATUTES.—

(1) SECTION 5240.—The third paragraph of section 5240

of the Revised Statutes (12 U.S.C. 482) is amended by inserting

‘‘or section 301(f)(1) of title 31, United States Code,’’ after

‘‘provisions of this section’’.

(2) SECTION 324.—Section 324 of the Revised Statutes (12

U.S.C. 1) is amended by adding at the end the following:

‘‘The Comptroller of the Currency shall have the same authority

over matters within the jurisdiction of the Comptroller as the

Director of the Office of Thrift Supervision has over matters

within the Director’s jurisdiction under section 3(b)(3) of the

Home Owners’ Loan Act. The Secretary of the Treasury may

not delay or prevent the issuance of any rule or the promulgation of any regulation by the Comptroller of the Currency.’’.

(3) SECTION 5239.—Section 5239 of the Revised Statutes

(12 U.S.C. 93) is amended by adding at the end the following

new subsection:

‘‘(d) AUTHORITY.—The Comptroller of the Currency may act

in the Comptroller’s own name and through the Comptroller’s own

attorneys in enforcing any provision of this title, regulations thereunder, or any other law or regulation, or in any action, suit, or

proceeding to which the Comptroller of the Currency is a party.’’.

(c) AMENDMENTS TO THE HOME OWNERS’ LOAN ACT.—Section

3(b) of the Home Owners’ Loan Act (12 U.S.C. 1462a(b)) is

amended—

(1) in paragraph (3), by striking ‘‘unless otherwise provided

by law’’ and inserting ‘‘(including agency enforcement actions)

unless otherwise specifically provided by law’’; and

(2) by adding at the end the following new paragraph:

‘‘(4) BANKING AGENCY RULEMAKING.—The Secretary of the

Treasury may not delay or prevent the issuance of any rule

or the promulgation of any regulation by the Director.’’.

(d) AMENDMENT TO THE FEDERAL RESERVE ACT.—Section 11

of the Federal Reserve Act (12 U.S.C. 248) is amended by adding

at the end the following new subsection:

‘‘(p) AUTHORITY.—The Board may act in its own name and

through its own attorneys in enforcing any provision of this title,

regulations promulgated hereunder, or any other law or regulation,

or in any action, suit, or proceeding to which the Board is a

party and which involves the Board’s regulation or supervision

of any bank, bank holding company (as defined in section 2 of

the Bank Holding Company Act of 1956), or other entity, or the

administration of its operations.’’.

(e) AMENDMENT TO THE FEDERAL DEPOSIT INSURANCE ACT.—

Section 9(a) of the Federal Deposit Insurance Act (12 U.S.C. 1819(a))

is amended in paragraph Fourth, by inserting ‘‘by and through

its own attorneys,’’ after ‘‘complain and defend,’’.

SEC. 332. EXEMPTION FOR BUSINESS ACCOUNTS.

Section 274(1) of the Truth in Savings Act (12 U.S.C. 4313(1))

is amended to read as follows:
H. R. 3474—74

‘‘(1) ACCOUNT.—The term ‘account’ means any account

intended for use by and generally used by consumers primarily

for personal, family, or household purposes that is offered by

a depository institution into which a consumer deposits funds,

including demand accounts, time accounts, negotiable order

of withdrawal accounts, and share draft accounts.’’.

SEC. 333. STUDY ON CHECK-RELATED FRAUD.

(a) STUDY.—The Board of Governors of the Federal Reserve

System (hereafter in this section referred to as the ‘‘Board’’) shall

conduct a study on the advisability of extending the 1-businessday period specified in section 603(b)(1) of the Expedited Funds

Availability Act, regarding availability of funds deposited by local

checks, to 2 business days.

(b) CONSIDERATIONS.—In conducting the study under subsection

(a), the Board shall consider—

(1) whether there is a pattern of significant increases in

check-related losses at depository institutions attributable to

the provisions of the Expedited Funds Availability Act; and

(2) whether extension of the time period referred to in

subsection (a) is necessary to diminish the volume of any such

check-related losses.

(c) REPORT TO THE CONGRESS.—Not later than 2 years after

the date of enactment of this Act, the Board shall submit a report

to the Congress concerning the results of the study conducted

under this section and including any recommendations for legislative action.

SEC. 334. INSIDER LENDING.

(a) LOANS TO EXECUTIVE OFFICERS BY MEMBER BANKS.—Section

22(g)(2) of the Federal Reserve Act (12 U.S.C. 375a(2)) is amended

by striking ‘‘With the specific prior approval of its board of directors,

a member’’ and inserting ‘‘A member’’. (b) EXTENSIONS OF CREDIT TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS OF MEMBER BANKS.—Section

22(h)(8) of the Federal Reserve Act (12 U.S.C. 375b(8)) is amended—

(1) by striking ‘‘MEMBER BANK.—FOR’’ and inserting the

following: ‘‘MEMBER BANK.— ‘‘(A) IN GENERAL.—For’’; and

(2) by adding at the end the following: ‘‘(B) EXCEPTION.—The Board may, by regulation, make exceptions to subparagraph (A), except as that subparagraph makes applicable paragraph (2), for an executive

officer or director of a subsidiary of a company that controls

the member bank, if that executive officer or director does

not have authority to participate, and does not participate,

in major policymaking functions of the member bank.’’.

SEC. 335. REVISIONS OF STANDARDS.

Section 305(b)(1) of the Federal Deposit Insurance Corporation

Improvement Act of 1991 (12 U.S.C. 1828 note) is amended—

(1) in subparagraph (A), by striking ‘‘and’’ at the end;

(2) in subparagraph (B), by striking the period at the

end and inserting ‘‘; and’’; and

(3) by adding at the end the following new subparagraph:

‘‘(C) take into account the size and activities of the

institutions and do not cause undue reporting burdens.’’.
H. R. 3474—75

SEC. 336. ALTERNATIVE RULES FOR RADIO ADVERTISING.

(a) AMENDMENT TO THE TRUTH IN LENDING ACT.—Section 184

of the Truth in Lending Act (15 U.S.C. 1667c) is amended— (1) by redesignating subsection (b) as subsection (c); and

(2) by inserting after subsection (a) the following new subsection:

‘‘(b) RADIO ADVERTISEMENTS.— ‘‘(1) IN GENERAL.—An advertisement by radio broadcast to aid, promote, or assist, directly or indirectly, any consumer

lease shall be deemed to be in compliance with the requirements

of subsection (a) if such advertisement clearly and conspicuously— ‘‘(A) states the information required by paragraphs (1) and (2) of subsection (a);

‘‘(B) states the number, amounts, due dates or periods

of scheduled payments, and the total of such payments

under the lease;

‘‘(C) includes—

‘‘(i) a referral to—

‘‘(I) a toll-free telephone number established in accordance with paragraph (2) that may be used

by consumers to obtain the information required

under subsection (a); or

‘‘(II) a written advertisement that—

‘‘(aa) appears in a publication in general

circulation in the community served by the

radio station on which such advertisement is

broadcast during the period beginning 3 days

before any such broadcast and ending 10 days

after such broadcast; and

‘‘(bb) includes the information required to

be disclosed under subsection (a); and

‘‘(ii) the name and dates of any publication referred

to in clause (i)(II); and

‘‘(D) includes any other information which the Board

determines necessary to carry out this chapter.

‘‘(2) ESTABLISHMENT OF TOLL-FREE NUMBER.—

‘‘(A) IN GENERAL.—In the case of a radio broadcast

advertisement described in paragraph (1) that includes a

referral to a toll-free telephone number, the lessor who

offers the consumer lease shall—

‘‘(i) establish such a toll-free telephone number

not later than the date on which the advertisement

including the referral is broadcast; ‘‘(ii) maintain such telephone number for a period

of not less than 10 days, beginning on the date of

any such broadcast; and ‘‘(iii) provide the information required under subsection (a) with respect to the lease to any person

who calls such number.

‘‘(B) FORM OF INFORMATION.—The information required

to be provided under subparagraph (A)(iii) shall be provided

verbally or, if requested by the consumer, in written form.

‘‘(3) NO EFFECT ON OTHER LAW.—Nothing in this subsection

shall affect the requirements of Federal law as such requirements apply to advertisement by any medium other than radio

broadcast.’’.
H. R. 3474—76

(b) STUDY OF ADVERTISING RULES.—Not later than 365 days after the date of enactment of this Act, the Board of Governors

of the Federal Reserve System shall submit a report to the Congress

on—

(1) the current rules applicable to credit advertising;

(2) how such rules could be modified to increase consumer

benefit and decrease creditor costs; and

(3) how such rules could be modified, if at all, for radio

advertisements without diminishing consumer protection.

SEC. 337. DEPOSIT BROKER REGISTRATION.

Section 29(g)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1831f(g)(3)) is amended— (1) by inserting ‘‘that is not well capitalized (as defined in section 38)’’ after ‘‘includes any insured depository institution’’;

(2) by striking ‘‘of any insured depository’’ and inserting ‘‘of such’’;

(3) by striking ‘‘(with respect to such deposits)’’; and

(4) by striking ‘‘having the same type of charter’’.

SEC. 338. AMENDMENTS TO THE DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT.

(a) MANAGEMENT EXEMPTION.—Section 206 of the Depository Institution Management Interlocks Act (12 U.S.C. 3205) is

amended—

(1) in subsections (a) and (b), by striking ‘‘15 years after the date of enactment of this title’’ each place it appears and

inserting ‘‘, subject to the requirements of subsection (c), 20

years after the date of enactment of this title’’; and (2) by adding at the end the following new subsection: ‘‘(c) REVIEW OF EXISTING MANAGEMENT INTERLOCKS.—Upon the

timely filing of a submission by a person petitioning to serve as

a management official in more than 1 position pursuant to subsection (a) or (b), each appropriate Federal depository institutions

regulatory agency shall, not later than 6 months after the date

of enactment of this Act—

‘‘(1) review, on a case-by-case basis, the circumstances under which such person has served as a management official

under the provisions of subsection (a) or (b); and ‘‘(2) permit the management official to continue to serve in such position only if— ‘‘(A) such person has provided a resolution from the

boards of directors of each affected depository institution,

depository holding company, or company described in subsection (b), certifying to the appropriate Federal depository

institutions regulatory agency for each of the institutions

involved that there is no other qualified candidate from

the community described in paragraph (1) or (2) of section

203 who—

‘‘(i) possesses the level of expertise necessary for

such service with respect to the affected depository

institution, depository holding company, or company

described in subsection (b); and

‘‘(ii) is willing to serve as a management official

at the affected depository institution, depository holding company, or company described in subsection (b);

and
H. R. 3474—77

‘‘(B) the appropriate Federal depository institutions

regulatory agency determines that continuation of service

by the management official does not produce an anticompetitive effect with respect to each affected depository

institution, depository holding company, or company

described in subsection (b).’’.

(b) AMENDMENTS TO SECTION 209.—Section 209 of the Depository Institution Management Interlocks Act (12 U.S.C. 3207) is

amended—

(1) by striking ‘‘Rules’’ and inserting ‘‘(a) IN GENERAL.—

Rules’’;

(2) by striking ‘‘, including rules or regulations which permit service by a management official which would otherwise

be prohibited by section 203 or section 204,’’; and

(3) by adding at the end the following new subsections:

‘‘(b) REGULATORY STANDARDS.—An appropriate Federal depository institution regulatory agency may permit, on a case-by-case

basis, service by a management official which would otherwise

be prohibited by section 203 or 204 only if—

‘‘(1) the board of directors of the affected depository institution, depository institution holding company, or company

described in section 206(b), provides a resolution to the appropriate Federal depository institutions regulatory agency certifying that there is no other candidate from the community

described in paragraph (1) or (2) of section 203 who—

‘‘(A) possesses the level of expertise necessary for such

service with respect to the affected depository institution,

depository institution holding company, or company

described in section 206(b) and is not prohibited from service under section 203 or 204; and

‘‘(B) is willing to serve as a management official at

the affected depository institution, depository institution

holding company, or company described in section 206(b);

and

‘‘(2) the appropriate Federal depository institutions regulatory agency determines that—

‘‘(A) the management official is critical to the safe

and sound operations of the affected depository institution,

depository institution holding company, or company

described in section 206(b);

‘‘(B) continuation of service by the management official

does not produce an anticompetitive effect with respect

to the affected depository institution, depository institution

holding company, or company described in section 206(b);

and

‘‘(C) the management official meets such additional

requirements as the agency may impose.

‘‘(c) LIMITED EXCEPTION FOR MANAGEMENT OFFICIAL CONSIGNMENT PROGRAM.—

‘‘(1) IN GENERAL.—Notwithstanding the requirements of

subsection (b), an appropriate Federal depository institutions

regulatory agency may establish a program to permit, on a

case-by-case basis, service by a management official which

would otherwise be prohibited by section 203 or 204, for a

period of not more than 2 years, if the agency determines

that such service would—
H. R. 3474—78

‘‘(A) improve the provision of credit to low- and moderate-income areas;

‘‘(B) increase the competitive position of minority- and

woman-owned institutions; or

‘‘(C) strengthen the management of newly chartered

institutions that are in an unsafe or unsound condition.

‘‘(2) EXTENSION OF SERVICE PERIOD.—The appropriate Federal depository institutions regulatory agency may extend the

2-year period referred to in paragraph (1) for one additional

period of not more than 2 years, subject to making a new

determination described in subparagraphs (A) through (C) of

paragraph (1).’’.

SEC. 339. ADVERSE INFORMATION ABOUT CONSUMERS.

Section 609(a) of the Fair Credit Reporting Act (15 U.S.C.

1681g(a)) is amended by adding at the end the following new

paragraph:

‘‘(4) The dates, original payees, and amounts of any checks

upon which is based any adverse characterization of the

consumer, included in the file at the time of the disclosure.’’.

SEC. 340. SIMPLIFIED DISCLOSURE FOR EXISTING DEPOSITORS.

(a) IN GENERAL.—Section 43(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1831t(b)(3)) is amended to read as follows:

‘‘(3) ACKNOWLEDGEMENT OF DISCLOSURE.—

‘‘(A) NEW DEPOSITORS.—With respect to any depositor

who was not a depositor at the depository institution before

June 19, 1994, receive any deposit for the account of such

depositor only if the depositor has signed a written

acknowledgement that— ‘‘(i) the institution is not federally insured; and

‘‘(ii) if the institution fails, the Federal Government

does not guarantee that the depositor will get back

the depositor’s money.

‘‘(B) CURRENT DEPOSITORS.—Receive any deposit after

the effective date of this paragraph for the account of

any depositor who was a depositor before June 19, 1994,

only if—‘‘(i) the depositor has signed a written acknowl- edgement described in subparagraph (A); or ‘‘(ii) the institution has complied with the provisions of subparagraph (C) which are applicable as of

the date of the deposit.

‘‘(C) ALTERNATIVE PROVISION OF NOTICE TO CURRENT

DEPOSITORS.—

‘‘(i) IN GENERAL.—Transmit to each depositor who

was a depositor before June 19, 1994, and has not

signed a written acknowledgement described in

subparagraph (A)—

‘‘(I) a card containing the information

described in clauses (i) and (ii) of subparagraph

(A), and a line for the signature of the depositor;

and

‘‘(II) accompanying materials requesting the

depositor to sign the card, and return the signed

card to the institution.

‘‘(ii) MANNER AND TIMING OF NOTICE.—
H. R. 3474—79

‘‘(I) FIRST NOTICE.—Make the transmission

described in clause (i) via first class mail not later

than September 12, 1994. ‘‘(II) SECOND NOTICE.—Make a second transmission described in clause (i) via first class mail

not less than 30 days and not more than 45 days

after a transmission to the depositor in accordance

with subclause (I), if the institution has not, by

the date of such mailing, received from the depositor a card referred to in clause (i) which has been

signed by the depositor. ‘‘(III) THIRD NOTICE.—Make a third transmission described in clause (i) via first class mail

not less than 30 days and not more than 45 days

after a transmission to the depositor in accordance

with subclause (II), if the institution has not, by

the date of such mailing, received from the depositor a card referred to in clause (i) which has been

signed by the depositor.’’.

(b) EFFECTIVE DATE.—Section 43(b)(3) of the Federal Deposit

Insurance Act, as amended by subsection (a), shall take effect

in accordance with section 151(a)(2)(D) of the Federal Deposit Insurance Corporation Improvement Act of 1991.

SEC. 341. FEASIBILITY STUDY OF DATA BANK.

(a) IN GENERAL.—Not later than 18 months after the date

of enactment of this Act, the Federal Financial Institutions Examination Council shall—

(1) study the feasibility, including the costs and benefits

to insured depository institutions, of establishing and maintaining a data bank for reports submitted by any depository institution to a Federal banking agency; and

(2) report the results of such study to the Congress.

(b) ADDITIONAL FACTORS.—The study required under subsection

(a) shall consider the feasibility of—

(1) permitting depository institutions to file reports directly

with the data bank; and

(2) permitting Federal banking agencies, State bank supervisors, and the public to obtain access to any appropriate report

on file with the data bank which such agency or supervisor

or the public is otherwise authorized to receive.

SEC. 342. TIMELY COMPLETION OF CRA REVIEW.

The comprehensive regulatory review of the Community

Reinvestment Act of 1977 that, as of the date of enactment of

this Act, is being conducted by the Federal banking agencies, shall

be completed at the earliest practicable time.

SEC. 343. TIME LIMIT ON AGENCY CONSIDERATION OF COMPLETED

APPLICATIONS.

(a) IN GENERAL.—Each Federal banking agency shall take final

action on any application to the agency before the end of the

1-year period beginning on the date on which a completed application is received by the agency.

(b) WAIVER BY APPLICANT AUTHORIZED.—Any person submitting

an application to a Federal banking agency may waive the

applicability of subsection (a) with respect to such application at

any time.
H. R. 3474—80

SEC. 344. WAIVER OF RIGHT OF RESCISSION FOR CERTAIN REFINANCING TRANSACTIONS.

Not later than 6 months after the date of enactment of this

Act, the Board of Governors of the Federal Reserve System, in

consultation with the consumer advisory council to such Board,

consumers, representatives of consumers, lenders, and other

interested parties, shall submit recommendations to the Congress

regarding whether a waiver or modification, at the option of a

consumer, of the right of rescission under section 125 of the Truth

in Lending Act with respect to transactions which constitute a

refinancing or consolidation (with no new advances) of the principal

balance then due, and any accrued and unpaid finance charges

of an existing extension of credit by a different creditor secured

by an interest in the same property, would benefit consumers.

SEC. 345. CLARIFICATION OF RESPA DISCLOSURE REQUIREMENTS.

Section 6(a)(1)(B) of the Real Estate Settlement Procedures

Act of 1974 (12 U.S.C. 2605(a)(1)(B)) is amended—

(1) by striking ‘‘(B) for each of the most recent’’ and inserting ‘‘(B) at the choice of the person making a federally related

mortgage loan—

‘‘(i) for each of the most recent’’;

(2) by redesignating clauses (i) and (ii) as subclauses (I)

and (II), respectively, and indenting appropriately;

(3) by striking ‘‘and’’ at the end of subclause (II) (as redesignated by paragraph (2)) and inserting ‘‘or’’; and

(4) by inserting after clause (i) (as redesignated by paragraph (1)) the following new clause:

‘‘(ii) a statement that the person making the loan

has previously assigned, sold, or transferred the servicing of federally related mortgage loans; and’’.

SEC. 346. NOTICE PROCEDURES FOR BANK HOLDING COMPANIES TO

SEEK APPROVAL TO ENGAGE IN CERTAIN ACTIVITIES.

Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C.

1843) is amended—

(1) by adding at the end the following new subsection:

‘‘(j) NOTICE PROCEDURES FOR NONBANKING ACTIVITIES.—

‘‘(1) GENERAL NOTICE PROCEDURE.—

‘‘(A) NOTICE REQUIREMENT.—No bank holding company

may engage in any nonbanking activity or acquire or retain

ownership or control of the shares of a company engaged

in activities based on subsection (c)(8) or (a)(2) without

providing the Board with written notice of the proposed

transaction or activity at least 60 days before the transaction or activity is proposed to occur or commence.

‘‘(B) CONTENTS OF NOTICE.—The notice submitted to

the Board shall contain such information as the Board

shall prescribe by regulation or by specific request in

connection with a particular notice.

‘‘(C) PROCEDURE FOR AGENCY ACTION.—

‘‘(i) NOTICE OF DISAPPROVAL.—Any notice filed

under this subsection shall be deemed to be approved

by the Board unless, before the end of the 60-day

period beginning on the date the Board receives a

complete notice under subparagraph (A), the Board
H. R. 3474—81

issues an order disapproving the transaction or activity

and setting forth the reasons for disapproval.

‘‘(ii) EXTENSION OF PERIOD.—The Board may

extend the 60-day period referred to in clause (i) for

an additional 30 days. The Board may further extend

the period with the agreement of the bank holding

company submitting the notice pursuant to this

subsection.

‘‘(iii) DETERMINATION OF PERIOD IN CASE OF PUBLIC

HEARING.—In the event a hearing is requested or the

Board determines that a hearing is warranted, the

Board may extend the notice period provided in this

subsection for such time as is reasonably necessary

to conduct a hearing and to evaluate the hearing

record. Such extension shall not exceed the 91-day

period beginning on the date that the hearing record

is complete.

‘‘(D) APPROVAL BEFORE END OF PERIOD.—

‘‘(i) IN GENERAL.—Any transaction or activity may

commence before the expiration of any period for disapproval established under this paragraph if the Board

issues a written notice of approval.

‘‘(ii) SHORTER PERIODS BY REGULATION.—The Board

may prescribe regulations which provide for a shorter

notice period with respect to particular activities or

transactions.

‘‘(E) EXTENSION OF PERIOD.—In the case of any notice

to engage in, or to acquire or retain ownership or control

of shares of any company engaged in, any activity pursuant

to subsection (c)(8) or (a)(2) that has not been previously

approved by regulation, the Board may extend the notice

period under this subsection for an additional 90 days.

The Board may further extend the period with the agreement of the bank holding company submitting the notice

pursuant to this subsection.

‘‘(2) GENERAL STANDARDS FOR REVIEW.—

‘‘(A) CRITERIA.—In connection with a notice under this

subsection, the Board shall consider whether performance

of the activity by a bank holding company or a subsidiary

of such company can reasonably be expected to produce

benefits to the public, such as greater convenience,

increased competition, or gains in efficiency, that outweigh

possible adverse effects, such as undue concentration of

resources, decreased or unfair competition, conflicts of

interests, or unsound banking practices.

‘‘(B) GROUNDS FOR DISAPPROVAL.—The Board may deny

any proposed transaction or activity for which notice has

been submitted pursuant to this subsection if the bank

holding company submitting such notice neglects, fails, or

refuses to furnish the Board all the information required

by the Board.

‘‘(C) CONDITIONAL ACTION.—Nothing in this subsection

limits the authority of the Board to impose conditions in

connection with an action under this section.’’; and

(2) in subsection (c), by striking the penultimate sentence.
H. R. 3474—82

SEC. 347. COMMERCIAL MORTGAGE RELATED SECURITIES.

(a) IN GENERAL.—Section 3(a)(41)(A)(i) of the Securities

Exchange Act of 1934 (15 U.S.C. 78c(a)(41)(A)(i)) is amended—

(1) by striking ‘‘or on a residential’’ and inserting ‘‘on a

residential’’; and

(2) by inserting before the semicolon ‘‘, or on one or more

parcels of real estate upon which is located one or more commercial structures’’.

(b) AMENDMENT TO THE REVISED STATUTES.—Paragraph Seventh of section 5136 of the Revised Statutes (12 U.S.C. 24) is

amended in the twelfth sentence, by striking ‘‘(15 U.S.C.

78c(a)(41))), subject to such regulations’’ and inserting ‘‘(15 U.S.C.

78c(a)(41)). The exception provided for the securities described in

subparagraphs (A), (B), and (C) shall be subject to such regulations’’.

(c) REGULATIONS.—Not later than 1 year after the date of

enactment of this Act, the Comptroller of the Currency shall promulgate final regulations, in accordance with the thirteenth sentence

of Paragraph Seventh of section 5136 of the Revised Statutes (as

amended by subsection (b)), to carry out the amendments made

by this section.

(d) EFFECTIVE DATE.—The amendments made by this section

shall become effective upon the date of promulgation of final regulations under subsection (c).

(e) STATE OPT OUT.—Notwithstanding the amendments made

by this section, a note that is directly secured by a first lien

on one or more parcels of real estate upon which is located one

or more commercial structures shall not be considered to be a

mortgage related security under section 3(a)(41) of the Securities

Exchange Act of 1934 in any State that, prior to the expiration

of 7 years after the date of enactment of this Act, enacts a statute

that specifically refers to this section and either prohibits or provides for a more limited authority to purchase, hold, or invest

in such securities by any person, trust, corporation, partnership,

association, business trust, or business entity or class thereof than

is provided by the amendments made by this subsection. The enactment by any State of any statute of the type described in the

preceding sentence shall not affect the validity of any contractual

commitment to purchase, hold, or invest that was made prior thereto, and shall not require the sale or other disposition of any securities acquired prior thereto.

SEC. 348. CLARIFYING AMENDMENT RELATING TO DATA COLLECTION.

Section 7(a)(9) of the Federal Deposit Insurance Act (12 U.S.C.

1817(a)(9)) is amended by adding at the end the following: ‘‘In

prescribing reporting and other requirements for the collection of

actual and accurate information pursuant to this paragraph, the

Corporation shall minimize the regulatory burden imposed upon

insured depository institutions that are well capitalized (as defined

in section 38) while taking into account the benefit of the information to the Corporation, including the use of the information to

enable the Corporation to more accurately determine the total

amount of insured deposits in each insured depository institution

for purposes of compliance with this Act.’’.
H. R. 3474—83

SEC. 349. GUIDELINES FOR EXAMINATIONS.

(a) ADEQUACY OF STATE EXAMINATIONS.—Section 10(d) of the

Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by

adding at the end the following new paragraph:

‘‘(9) STANDARDS FOR DETERMINING ADEQUACY OF STATE

EXAMINATIONS.—The Federal Financial Institutions Examination Council shall issue guidelines establishing standards to

be used at the discretion of the appropriate Federal banking

agency for purposes of making a determination under paragraph (3).’’.

(b) EFFECTIVE DATE OF INITIAL GUIDELINES.—The initial guidelines required to be issued pursuant to the amendment made by

subsection (a) shall become effective not later than 1 year after

the date of enactment of this Act.

SEC. 350. REVISING REGULATORY REQUIREMENTS FOR TRANSFERS

OF ALL TYPES OF ASSETS WITH RECOURSE.

(a) REVIEW AND REVISION OF REGULATIONS.—

(1) IN GENERAL.—During the 180-day period beginning on

the date of enactment of this Act, each appropriate Federal

banking agency shall, consistent with the principles of safety

and soundness and the public interest—

(A) review the agency’s regulations and written policies

relating to transfers of assets with recourse by insured

depository institutions; and

(B) in consultation with the other Federal banking

agencies, promulgate regulations that better reflect the

exposure of an insured depository institution to credit risk

from transfers of assets with recourse.

(2) REGULATIONS REQUIRED.—Before the end of the 180-

day period beginning on the date of enactment of this Act,

each appropriate Federal banking agency shall prescribe the

regulations developed pursuant to paragraph (1)(B).

(b) REGULATIONS REQUIRED.—

(1) IN GENERAL.—After the end of the 180-day period beginning on the date of enactment of this Act, the amount of

risk-based capital required to be maintained, under regulations

prescribed by the appropriate Federal banking agency, by any

insured depository institution with respect to assets transferred

with recourse by such institution may not exceed the maximum

amount of recourse for which such institution is contractually

liable under the recourse agreement.

(2) EXCEPTION FOR SAFETY AND SOUNDNESS.—The appropriate Federal banking agency may require any insured depository institution to maintain risk-based capital in an amount

greater than the amount determined under paragraph (1), if

the agency determines, by regulation or order, that such higher

amount is necessary for safety and soundness reasons.

(c) COORDINATION WITH SECTION 208(b).—This section shall

not be construed as superseding the applicability of section 208(b).

(d) DEFINITIONS.—For purposes of this section, the terms

‘‘appropriate Federal banking agency’’, ‘‘Federal banking agency’’,

and ‘‘insured depository institution’’ have the same meanings as

in section 3 of the Federal Deposit Insurance Act.
H. R. 3474—84

TITLE IV—MONEY LAUNDERING

SEC. 401. SHORT TITLE.

This title may be cited as the ‘‘Money Laundering Suppression

Act of 1994’’.

SEC. 402. REFORM OF CTR EXEMPTION REQUIREMENTS TO REDUCE

NUMBER AND SIZE OF REPORTS CONSISTENT WITH EFFECTIVE LAW ENFORCEMENT.

(a) IN GENERAL.—Section 5313 of title 31, United States Code,

is amended by adding at the end the following new subsections:

‘‘(d) MANDATORY EXEMPTIONS FROM REPORTING REQUIREMENTS.—

‘‘(1) IN GENERAL.—The Secretary of the Treasury shall

exempt, pursuant to section 5318(a)(6), a depository institution

from the reporting requirements of subsection (a) with respect

to transactions between the depository institution and the following categories of entities:

‘‘(A) Another depository institution.

‘‘(B) A department or agency of the United States,

any State, or any political subdivision of any State.

‘‘(C) Any entity established under the laws of the

United States, any State, or any political subdivision of

any State, or under an interstate compact between 2 or

more States, which exercises governmental authority on

behalf of the United States or any such State or political

subdivision.

‘‘(D) Any business or category of business the reports

on which have little or no value for law enforcement purposes.

‘‘(2) NOTICE OF EXEMPTION.—The Secretary of the Treasury

shall publish in the Federal Register at such times as the

Secretary determines to be appropriate (but not less frequently

than once each year) a list of all the entities whose transactions

with a depository institution are exempt under this subsection

from the reporting requirements of subsection (a).

‘‘(e) DISCRETIONARY EXEMPTIONS FROM REPORTING REQUIRE- MENTS.—

‘‘(1) IN GENERAL.—The Secretary of the Treasury may exempt, pursuant to section 5318(a)(6), a depository institution

from the reporting requirements of subsection (a) with respect

to transactions between the depository institution and a qualified business customer of the institution on the basis of information submitted to the Secretary by the institution in accordance

with procedures which the Secretary shall establish.

‘‘(2) QUALIFIED BUSINESS CUSTOMER DEFINED.—For purposes of this subsection, the term ‘qualified business customer’

means a business which—

‘‘(A) maintains a transaction account (as defined in

section 19(b)(1)(C) of the Federal Reserve Act) at the depository institution;

‘‘(B) frequently engages in transactions with the

depository institution which are subject to the reporting

requirements of subsection (a); and

‘‘(C) meets criteria which the Secretary determines are

sufficient to ensure that the purposes of this subchapter
H. R. 3474—85

are carried out without requiring a report with respect

to such transactions.

‘‘(3) CRITERIA FOR EXEMPTION.—The Secretary of the Treasury shall establish, by regulation, the criteria for granting

and maintaining an exemption under paragraph (1).

‘‘(4) GUIDELINES.—

‘‘(A) IN GENERAL.—The Secretary of the Treasury shall

establish guidelines for depository institutions to follow

in selecting customers for an exemption under this

subsection.

‘‘(B) CONTENTS.—The guidelines may include a description of the types of businesses or an itemization of specific

businesses for which no exemption will be granted under

this subsection to any depository institution.

‘‘(5) ANNUAL REVIEW.—The Secretary of the Treasury shall

prescribe regulations requiring each depository institution to—

‘‘(A) review, at least once each year, the qualified business customers of such institution with respect to whom

an exemption has been granted under this subsection; and

‘‘(B) upon the completion of such review, resubmit

information about such customers, with such modifications

as the institution determines to be appropriate, to the

Secretary for the Secretary’s approval.

‘‘(6) 2-YEAR PHASE-IN PROVISION.—During the 2-year period

beginning on the date of enactment of the Money Laundering

Suppression Act of 1994, this subsection shall be applied by

the Secretary on the basis of such criteria as the Secretary

determines to be appropriate to achieve an orderly implementation of the requirements of this subsection.

‘‘(f) PROVISIONS APPLICABLE TO MANDATORY AND DISCRETIONARY

EXEMPTIONS.—

‘‘(1) LIMITATION ON LIABILITY OF DEPOSITORY INSTITUTIONS.—No depository institution shall be subject to any penalty

which may be imposed under this subchapter for the failure

of the institution to file a report with respect to a transaction

with a customer for whom an exemption has been granted

under subsection (d) or (e) unless the institution—

‘‘(A) knowingly files false or incomplete information

to the Secretary with respect to the transaction or the

customer engaging in the transaction; or

‘‘(B) has reason to believe at the time the exemption

is granted or the transaction is entered into that the customer or the transaction does not meet the criteria established for granting such exemption.

‘‘(2) COORDINATION WITH OTHER PROVISIONS.—Any exemption granted by the Secretary of the Treasury under section

5318(a) in accordance with this section, and any transaction

which is subject to such exemption, shall be subject to any

other provision of law applicable to such exemption, including—

‘‘(A) the authority of the Secretary, under section

5318(a)(6), to revoke such exemption at any time; and

‘‘(B) any requirement to report, or any authority to

require a report on, any possible violation of any law or

regulation or any suspected criminal activity.

‘‘(g) DEPOSITORY INSTITUTION DEFINED.—For purposes of this

section, the term ‘depository institution’—
H. R. 3474—86

‘‘(1) has the meaning given to such term in section

19(b)(1)(A) of the Federal Reserve Act; and

‘‘(2) includes—

‘‘(A) any branch, agency, or commercial lending company (as such terms are defined in section 1(b) of the

International Banking Act of 1978);

‘‘(B) any corporation chartered under section 25A of

the Federal Reserve Act; and

‘‘(C) any corporation having an agreement or undertaking with the Board of Governors of the Federal Reserve

System under section 25 of the Federal Reserve Act.’’.

(b) REPORT REDUCTION GOAL; REPORTS.—

(1) IN GENERAL.—In implementing the amendment made

by subsection (a), the Secretary of the Treasury shall seek

to reduce, within a reasonable period of time, the number

of reports required to be filed in the aggregate by depository

institutions pursuant to section 5313(a) of title 31, United

States Code, by at least 30 percent of the number filed during

the year preceding the date of enactment of this Act.

(2) INTERIM REPORT.—The Secretary of the Treasury shall

submit a report to the Congress not later than the end of

the 180-day period beginning on the date of enactment of this

Act on the progress made by the Secretary in implementing

the amendment made by subsection (a).

(3) ANNUAL REPORT.—The Secretary of the Treasury shall

submit an annual report to the Congress after the end of

each of the first 5 calendar years which begin after the date

of enactment of this Act on the extent to which the Secretary

has reduced the overall number of currency transaction reports

filed with the Secretary pursuant to section 5313(a) of title

31, United States Code, consistent with the purposes of such

section and effective law enforcement.

(c) STREAMLINED CURRENCY TRANSACTION REPORTS.—The Secretary of the Treasury shall take such action as may be appropriate

to—

(1) redesign the format of reports required to be filed under section 5313(a) of title 31, United States Code, by any financial

institution (as defined in section 5312(a)(2) of such title) to

eliminate the need to report information which has little or

no value for law enforcement purposes; and

(2) reduce the time and effort required to prepare such

report for filing by any such financial institution under such

section.

SEC. 403. SINGLE DESIGNEE FOR REPORTING OF SUSPICIOUS TRANSACTIONS.

(a) IN GENERAL.—Section 5318(g) of title 31, United States

Code, is amended by adding at the end the following new paragraph:

‘‘(4) SINGLE DESIGNEE FOR REPORTING SUSPICIOUS

TRANSACTIONS.—

‘‘(A) IN GENERAL.—In requiring reports under paragraph (1) of suspicious transactions, the Secretary of the

Treasury shall designate, to the extent practicable and

appropriate, a single officer or agency of the United States

to whom such reports shall be made.

‘‘(B) DUTY OF DESIGNEE.—The officer or agency of the

United States designated by the Secretary of the Treasury
H. R. 3474—87

pursuant to subparagraph (A) shall refer any report of

a suspicious transaction to any appropriate law enforcement or supervisory agency.

‘‘(C) COORDINATION WITH OTHER REPORTING REQUIREMENTS.—Subparagraph (A) shall not be construed as

precluding any supervisory agency for any financial institution from requiring the financial institution to submit any

information or report to the agency or another agency

pursuant to any other applicable provision of law.’’.

(b) REPORTS.—

(1) REPORTS REQUIRED.—The Secretary of the Treasury

shall submit an annual report to the Congress at the times

required under paragraph (2) on the number of suspicious

transactions reported to the officer or agency designated under

section 5318(g)(4)(A) of title 31, United States Code, during

the period covered by the report and the disposition of such

reports.

(2) TIME FOR SUBMITTING REPORTS.—The 1st report

required under paragraph (1) shall be filed before the end

of the 1-year period beginning on the date of enactment of

the Money Laundering Suppression Act of 1994 and each subsequent report shall be filed within 90 days after the end of

each of the 5 calendar years which begin after such date of

enactment.

(c) DESIGNATION REQUIRED TO BE MADE EXPEDITIOUSLY.—The

initial designation of an officer or agency of the United States

pursuant to the amendment made by subsection (a) shall be made

before the end of the 180-day period beginning on the date of

enactment of this Act.

SEC. 404. IMPROVEMENT OF IDENTIFICATION OF MONEY LAUNDERING

SCHEMES.

(a) ENHANCED TRAINING, EXAMINATIONS, AND REFERRALS BY

BANKING AGENCIES.—Before the end of the 6-month period beginning on the date of enactment of this Act, each appropriate Federal

banking agency shall, in consultation with the Secretary of the

Treasury and other appropriate law enforcement agencies— (1) review and enhance training and examination procedures to improve the identification of money laundering

schemes involving depository institutions; and (2) review and enhance procedures for referring cases to

any appropriate law enforcement agency.

(b) IMPROVED REPORTING OF CRIMINAL SCHEMES BY LAW

ENFORCEMENT AGENCIES.—The Secretary of the Treasury and each

appropriate law enforcement agency shall provide, on a regular

basis, information regarding money laundering schemes and activities involving depository institutions to each appropriate Federal

banking agency in order to enhance each agency’s ability to examine

for and identify money laundering activity.

(c) REPORT TO CONGRESS.—The Financial Institutions Examination Council shall submit a report on the progress made in carrying

out subsection (a) and the usefulness of information received pursuant to subsection (b) to the Congress by the end of the 1-year

period beginning on the date of enactment of this Act.

(d) DEFINITION.—For purposes of this section, the term ‘‘appropriate Federal banking agency’’ has the same meaning as in section

3 of the Federal Deposit Insurance Act.
H. R. 3474—88

SEC. 405. NEGOTIABLE INSTRUMENTS DRAWN ON FOREIGN BANKS

SUBJECT TO RECORDKEEPING AND REPORTING REQUIREMENTS.

Section 5312(a)(3) of title 31, United States Code, is amended—

(1) by striking ‘‘and’’ at the end of subparagraph (A);

(2) by striking the period at the end of subparagraph (B)

and inserting ‘‘; and’’; and

(3) by adding at the end the following new subparagraph:

‘‘(C) as the Secretary of the Treasury shall provide

by regulation for purposes of section 5316, checks, drafts,

notes, money orders, and other similar instruments which

are drawn on or by a foreign financial institution and

are not in bearer form.’’.

SEC. 406. IMPOSITION OF CIVIL MONEY PENALTIES BY APPROPRIATE

FEDERAL BANKING AGENCIES.

Section 5321 of title 31, United States Code, is amended by

adding at the end the following new subsection:

‘‘(e) DELEGATION OF ASSESSMENT AUTHORITY TO BANKING

AGENCIES.—

‘‘(1) IN GENERAL.—The Secretary of the Treasury shall delegate, in accordance with section 5318(a)(1) and subject to such

terms and conditions as the Secretary may impose in accordance

with paragraph (3), any authority of the Secretary to assess

a civil money penalty under this section on depository institutions (as defined in section 3 of the Federal Deposit Insurance

Act) to the appropriate Federal banking agencies (as defined

in such section 3).

‘‘(2) AUTHORITY OF AGENCIES.—Subject to any term or

condition imposed by the Secretary of the Treasury under

paragraph (3), the provisions of this section shall apply to

an appropriate Federal banking agency to which is delegated

any authority of the Secretary under this section in the same

manner such provisions apply to the Secretary.

‘‘(3) TERMS AND CONDITIONS.—

‘‘(A) IN GENERAL.—The Secretary of the Treasury shall

prescribe by regulation the terms and conditions which

shall apply to any delegation under paragraph (1).

‘‘(B) MAXIMUM DOLLAR AMOUNT.—The terms and conditions authorized under subparagraph (A) may include, in

the Secretary’s sole discretion, a limitation on the amount

of any civil penalty which may be assessed by an appropriate Federal banking agency pursuant to a delegation

under paragraph (1).’’.

SEC. 407. UNIFORM STATE LICENSING AND REGULATION OF CHECK

CASHING, CURRENCY EXCHANGE, AND MONEY TRANSMITTING BUSINESSES.

(a) UNIFORM LAWS AND ENFORCEMENT.—For purposes of

preventing money laundering and protecting the payment system

from fraud and abuse, it is the sense of the Congress that the

several States should—

(1) establish uniform laws for licensing and regulating

businesses which—

(A) provide check cashing, currency exchange, or money

transmitting or remittance services, or issue or redeem
H. R. 3474—89

money orders, travelers’ checks, and other similar

instruments; and

(B) are not depository institutions (as defined in section

5313(g) of title 31, United States Code); and

(2) provide sufficient resources to the appropriate State

agency to enforce such laws and regulations prescribed pursuant to such laws.

(b) MODEL STATUTE.—It is the sense of the Congress that

the several States should develop, through the auspices of the

National Conference of Commissioners on Uniform State Laws,

the American Law Institute, or such other forum as the States

may determine to be appropriate, a model statute to carry out

the goals described in subsection (a) which would include the

following:

(1) LICENSING REQUIREMENTS.—A requirement that any

business described in subsection (a)(1) be licensed and regulated

by an appropriate State agency in order to engage in any

such activity within the State.

(2) LICENSING STANDARDS.—A requirement that—

(A) in order for any business described in subsection

(a)(1) to be licensed in the State, the appropriate State

agency shall review and approve—

(i) the business record and the capital adequacy

of the business seeking the license; and

(ii) the competence, experience, integrity, and

financial ability of any individual who—

(I) is a director, officer, or supervisory

employee of such business; or (II) owns or controls such business; and

(B) any record, on the part of any business seeking

the license or any person referred to in subparagraph

(A)(ii), of—

(i) any criminal activity;

(ii) any fraud or other act of personal dishonesty;

(iii) any act, omission, or practice which constitutes

a breach of a fiduciary duty; or (iv) any suspension or removal, by any agency

or department of the United States or any State, from

participation in the conduct of any federally or State

licensed or regulated business,

may be grounds for the denial of any such license by

the appropriate State agency.

(3) REPORTING REQUIREMENTS.—A requirement that any business described in subsection (a)(1)—

(A) disclose to the appropriate State agency the fees

charged to consumers for services described in subsection

(a)(1)(A); and

(B) conspicuously disclose to the public, at each location

of such business, the fees charged to consumers for such

services.

(4) PROCEDURES TO ENSURE COMPLIANCE WITH FEDERAL

CASH TRANSACTION REPORTING REQUIREMENTS.—A civil or criminal penalty for operating any business referred to in paragraph

(1) without establishing and complying with appropriate procedures to ensure compliance with subchapter II of chapter 53

of title 31, United States Code (relating to records and reports

on monetary instruments transactions).
H. R. 3474—90

(5) CRIMINAL PENALTIES FOR OPERATION OF BUSINESS WITHOUT A LICENSE.—A criminal penalty for operating any business

referred to in paragraph (1) without a license within the State

after the end of an appropriate transition period beginning

on the date of enactment of such model statute by the State.

(c) STUDY REQUIRED.—The Secretary of the Treasury shall conduct a study of—

(1) the progress made by the several States in developing

and enacting a model statute which—

(A) meets the requirements of subsection (b); and

(B) furthers the goals of—

(i) preventing money laundering by businesses

which are required to be licensed under any such statute; and

(ii) protecting the payment system, including the

receipt, payment, collection, and clearing of checks,

from fraud and abuse by such businesses; and

(2) the adequacy of—

(A) the activity of the several States in enforcing the

requirements of such statute; and

(B) the resources made available to the appropriate

State agencies for such enforcement activity.

(d) REPORT REQUIRED.—Not later than the end of the 3-year

period beginning on the date of enactment of this Act and not

later than the end of each of the first two 1-year periods beginning

after the end of such 3-year period, the Secretary of the Treasury

shall submit a report to the Congress containing the findings and

recommendations of the Secretary in connection with the study

under subsection (c), together with such recommendations for legislative and administrative action as the Secretary may determine

to be appropriate.

(e) RECOMMENDATIONS IN CASES OF INADEQUATE REGULATION

AND ENFORCEMENT BY STATES.—If the Secretary of the Treasury

determines that any State has been unable to— (1) enact a statute which meets the requirements described

in subsection (b);

(2) undertake adequate activity to enforce such statute;

or

(3) make adequate resources available to the appropriate

State agency for such enforcement activity, the report submitted pursuant to subsection (d) shall contain recommendations of the Secretary which are designed to facilitate

the enactment and enforcement by the State of such a statute. (f) FEDERAL FUNDING STUDY.— (1) STUDY REQUIRED.—The Secretary of the Treasury shall

conduct a study to identify possible available sources of Federal

funding to cover costs which will be incurred by the States

in carrying out the purposes of this section.

(2) REPORT.—The Secretary of the Treasury shall submit

a report to the Congress on the study conducted pursuant

to paragraph (1) not later than the end of the 18-month period

beginning on the date of enactment of this Act.

SEC. 408. REGISTRATION OF MONEY TRANSMITTING BUSINESSES TO

PROMOTE EFFECTIVE LAW ENFORCEMENT.

(a) FINDINGS AND PURPOSES.—

(1) FINDINGS.—The Congress hereby finds the following:
H. R. 3474—91

(A) Money transmitting businesses are subject to the

recordkeeping and reporting requirements of subchapter

II of chapter 53 of title 31, United States Code.

(B) Money transmitting businesses are largely unregulated businesses and are frequently used in sophisticated

schemes to—

(i) transfer large amounts of money which are

the proceeds of unlawful enterprises; and

(ii) evade the requirements of such subchapter II,

the Internal Revenue Code of 1986, and other laws

of the United States.

(C) Information on the identity of money transmitting

businesses and the names of the persons who own or control, or are officers or employees of, a money transmitting

business would have a high degree of usefulness in criminal, tax, or regulatory investigations and proceedings.

(2) PURPOSE.—It is the purpose of this section to establish

a registration requirement for businesses engaged in providing

check cashing, currency exchange, or money transmitting or

remittance services, or issuing or redeeming money orders,

travelers’ checks, and other similar instruments to assist the

Secretary of the Treasury, the Attorney General, and other

supervisory and law enforcement agencies to effectively enforce

the criminal, tax, and regulatory laws and prevent such money

transmitting businesses from engaging in illegal activities.

(b) IN GENERAL.—Subchapter II of chapter 53 of title 31, United

States Code, is amended by adding at the end the following new

section:

‘‘§ 5330. Registration of money transmitting businesses

‘‘(a) REGISTRATION WITH SECRETARY OF THE TREASURY

REQUIRED.—

‘‘(1) IN GENERAL.—Any person who owns or controls a

money transmitting business shall register the business

(whether or not the business is licensed as a money transmitting business in any State) with the Secretary of the Treasury

not later than the end of the 180-day period beginning on

the later of—

‘‘(A) the date of enactment of the Money Laundering

Suppression Act of 1994; or

‘‘(B) the date on which the business is established.

‘‘(2) FORM AND MANNER OF REGISTRATION.—Subject to the requirements of subsection (b), the Secretary of the Treasury

shall prescribe, by regulation, the form and manner for registering a money transmitting business pursuant to paragraph (1).

‘‘(3) BUSINESSES REMAIN SUBJECT TO STATE LAW.—This section shall not be construed as superseding any requirement

of State law relating to money transmitting businesses operating in such State.

‘‘(4) FALSE AND INCOMPLETE INFORMATION.—The filing of

false or materially incomplete information in connection with

the registration of a money transmitting business shall be

considered as a failure to comply with the requirements of

this subchapter.

‘‘(b) CONTENTS OF REGISTRATION.—The registration of a money

transmitting business under subsection (a) shall include the following information:
H. R. 3474—92

‘‘(1) The name and location of the business.

‘‘(2) The name and address of each person who—

‘‘(A) owns or controls the business;

‘‘(B) is a director or officer of the business; or

‘‘(C) otherwise participates in the conduct of the affairs

of the business.

‘‘(3) The name and address of any depository institution

at which the business maintains a transaction account (as

defined in section 19(b)(1)(C) of the Federal Reserve Act).

‘‘(4) An estimate of the volume of business in the coming

year (which shall be reported annually to the Secretary).

‘‘(5) Such other information as the Secretary of the Treasury may require.

‘‘(c) AGENTS OF MONEY TRANSMITTING BUSINESSES.—

‘‘(1) MAINTENANCE OF LISTS OF AGENTS OF MONEY TRANSMITTING BUSINESSES.—Pursuant to regulations which the Secretary

of the Treasury shall prescribe, each money transmitting business shall—

‘‘(A) maintain a list containing the names and

addresses of all persons authorized to act as an agent

for such business in connection with activities described

in subsection (d)(1)(A) and such other information about

such agents as the Secretary may require; and

‘‘(B) make the list and other information available on

request to any appropriate law enforcement agency.

‘‘(2) TREATMENT OF AGENT AS MONEY TRANSMITTING BUSINESS.—The Secretary of the Treasury shall prescribe regulations establishing, on the basis of such criteria as the Secretary

determines to be appropriate, a threshold point for treating

an agent of a money transmitting business as a money

transmitting business for purposes of this section.

‘‘(d) DEFINITIONS.—For purposes of this section, the following

definitions shall apply:

‘‘(1) MONEY TRANSMITTING BUSINESS.—The term ‘money

transmitting business’ means any business other than the

United States Postal Service which—

‘‘(A) provides check cashing, currency exchange, or

money transmitting or remittance services, or issues or

redeems money orders, travelers’ checks, and other similar

instruments;

‘‘(B) is required to file reports under section 5313;

and

‘‘(C) is not a depository institution (as defined in section

5313(g)).

‘‘(2) MONEY TRANSMITTING SERVICE.—The term ‘money

transmitting service’ includes accepting currency or funds

denominated in the currency of any country and transmitting

the currency or funds, or the value of the currency or funds,

by any means through a financial agency or institution, a

Federal reserve bank or other facility of the Board of Governors

of the Federal Reserve System, or an electronic funds transfer

network.

‘‘(e) CIVIL PENALTY FOR FAILURE TO COMPLY WITH REGISTRATION REQUIREMENTS.—

‘‘(1) IN GENERAL.—Any person who fails to comply with

any requirement of this section or any regulation prescribed
H. R. 3474—93

under this section shall be liable to the United States for

a civil penalty of $5,000 for each such violation.

‘‘(2) CONTINUING VIOLATION.—Each day a violation

described in paragraph (1) continues shall constitute a separate

violation for purposes of such paragraph.

‘‘(3) ASSESSMENTS.—Any penalty imposed under this subsection shall be assessed and collected by the Secretary of

the Treasury in the manner provided in section 5321 and

any such assessment shall be subject to the provisions of such

section.’’.

(c) CRIMINAL PENALTY FOR FAILURE TO COMPLY WITH REGISTRATION REQUIREMENTS.—Section 1960(b)(1) of title 18, United

States Code, is amended to read as follows:

‘‘(1) the term ‘illegal money transmitting business’ means

a money transmitting business which affects interstate or foreign commerce in any manner or degree and—

‘‘(A) is intentionally operated without an appropriate

money transmitting license in a State where such operation

is punishable as a misdemeanor or a felony under State

law; or

‘‘(B) fails to comply with the money transmitting business registration requirements under section 5330 of title

31, United States Code, or regulations prescribed under

such section;’’.

(d) CLERICAL AMENDMENT.—The table of sections for chapter

53 of title 31, United States Code, is amended by inserting after

the item relating to section 5329 (as added by section 311) the

following new item:

‘‘5330. Registration of money transmitting businesses.’’.

SEC. 409. UNIFORM FEDERAL REGULATION OF CASINOS.

Section 5312(a)(2) of title 31, United States Code, is amended—

(1) by redesignating subparagraphs (X) and (Y) as subparagraphs (Y) and (Z), respectively; and

(2) by inserting after subparagraph (W) the following new

subparagraph:

‘‘(X) a casino, gambling casino, or gaming establishment with an annual gaming revenue of more than

$1,000,000 which—

‘‘(i) is licensed as a casino, gambling casino, or

gaming establishment under the laws of any State

or any political subdivision of any State; or

‘‘(ii) is an Indian gaming operation conducted

under or pursuant to the Indian Gaming Regulatory

Act other than an operation which is limited to class

I gaming (as defined in section 4(6) of such Act);’’.

SEC. 410. AUTHORITY TO GRANT EXEMPTIONS TO STATES WITH EFFECTIVE REGULATION AND ENFORCEMENT.

(a) IN GENERAL.—Section 5318(a) of title 31, United States

Code, is amended—

(1) by striking ‘‘and’’ at the end of paragraph (4);

(2) by redesignating paragraph (5) as paragraph (6); and

(3) by inserting after paragraph (4) the following new

paragraph:
H. R. 3474—94

‘‘(5) exempt from the requirements of this subchapter any

class of transactions within any State if the Secretary determines that—

‘‘(A) under the laws of such State, that class of transactions is subject to requirements substantially similar to

those imposed under this subchapter; and

‘‘(B) there is adequate provision for the enforcement

of such requirements; and’’.

(b) TECHNICAL AND CONFORMING AMENDMENT.—The penultimate sentence of section 5318(a)(6) of title 31, United States

Code (as so redesignated by the amendment made by subsection

(a) of this section) is amended by inserting ‘‘under this paragraph

or paragraph (5)’’ after ‘‘exemption’’.

SEC. 411. CRIMINAL AND CIVIL PENALTIES FOR STRUCTURING DOMESTIC AND INTERNATIONAL TRANSACTIONS.

(a) CRIMINAL PENALTY.—Section 5324 of title 31, United States

Code, is amended by adding at the end the following new subsection:

‘‘(c) CRIMINAL PENALTY.—

‘‘(1) IN GENERAL.—Whoever violates this section shall be

fined in accordance with title 18, United States Code, imprisoned for not more than 5 years, or both.

‘‘(2) ENHANCED PENALTY FOR AGGRAVATED CASES.—Whoever

violates this section while violating another law of the United

States or as part of a pattern of any illegal activity involving

more than $100,000 in a 12-month period shall be fined twice

the amount provided in subsection (b)(3) or (c)(3) (as the case

may be) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both.’’.

(b) AMENDMENT RELATING TO CIVIL PENALTY.—Section

5321(a)(4)(A) of title 31, United States Code, is amended by striking

‘‘willfully’’.

(c) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Subsections (a) and (b) of section 5322 of title 31,

United States Code, are amended by inserting ‘‘or 5324’’ after

‘‘section 5315’’ each place such term appears.

(2) The following sections are each amended by striking

‘‘section 5322 of title 31’’ and inserting ‘‘section 5322 or 5324

of title 31’’ each place such term appears in such sections:

(A) Sections 8(g)(1)(A)(ii), 8(w)(1)(B), and 11(c)(5)(M)

of the Federal Deposit Insurance Act.

(B) Sections 131(a)(2), 206(h)(1)(C), 206(i)(1)(A)(ii), and

206(v)(1)(B) of the Federal Credit Union Act.

(C) Section 5239(d)(1)(B) of the Revised Statutes of

the United States (as redesignated by section 413(b)(2)

of this Act).

(D) Section 5(w)(1)(B) of the Home Owners’ Loan Act.

(E) Sections 984(a), 986(a), and 1956(g) (the first place

it appears) of title 18, United States Code.

SEC. 412. GAO STUDY OF CASHIERS’ CHECKS.

(a) STUDY REQUIRED.—The Comptroller General of the United

States shall conduct a study to—

(1) determine the extent to which the practice of issuing

of cashiers’ checks by financial institutions is vulnerable to

money laundering schemes;
H. R. 3474—95

(2) determine the extent to which additional recordkeeping

requirements should be imposed on financial institutions which

issue cashiers’ checks; and

(3) analyze such other factors relating to the use and regulation of cashiers’ checks as the Comptroller General determines

to be appropriate.

(b) REPORT REQUIRED.—Before the end of the 6-month period

beginning on the date of enactment of this Act, the Comptroller

General shall submit a report to the Congress containing—

(1) the findings and conclusions of the Comptroller General

in connection with the study conducted pursuant to subsection

(a); and

(2) such recommendations for legislative and administrative

action as the Comptroller General may determine to be

appropriate.

SEC. 413. TECHNICAL AMENDMENTS AND CORRECTIONS.

(a) TITLE 31, U.S.C., AMENDMENTS.—

(1) Section 5321(a)(5)(A) of title 31, United States Code,

is amended by inserting ‘‘any violation of’’ after ‘‘causing’’.

(2) Section 5324(a) of title 31, United States Code, is

amended—

(A) by striking ‘‘section 5313(a), section 5325, or the

regulations issued thereunder or section 5325 or regulations prescribed under such section 5325’’ each place such

term appears and inserting ‘‘section 5313(a) or 5325 or

any regulation prescribed under any such section’’; and

(B) by striking ‘‘with respect to such transaction’’.

(b) AMENDMENTS RELATING TO TITLE 31, U.S.C.—

(1) Effective as of the date of enactment of the AnnunzioWylie Anti-Money Laundering Act, section 1517(b) of such Act

is amended by striking ‘‘5314’’ and inserting ‘‘5318’’.

(2) Section 5239 of the Revised Statutes of the United

States is amended by redesignating the 2d subsection (c) (as

added by section 1502(a) of the Annunzio-Wylie Anti-Money

Laundering Act) as subsection (d).

(c) TITLE 18, U.S.C., AMENDMENTS.—

(1) Section 1956 of title 18, United States Code, is

amended—

(A) in subsection (a)(2)—

(i) by inserting ‘‘not more than’’ before ‘‘$500,000’’;

and

(ii) by striking ‘‘transfer.’’ each place such term

appears and inserting ‘‘transfer’’;

(B) in subsection (b)—

(i) by inserting ‘‘or (a)(3)’’ after ‘‘(a)(1)’’; and

(ii) by striking ‘‘transfer.’’ and inserting ‘‘transfer’’;

(C) in subsection (c)(7)(B)(iii), by inserting a close

parenthesis after ‘‘1978’’;

(D) in subsection (c)(7)(D), by striking ‘‘section 9(c)

of the Food Stamp Act of 1977’’ and inserting ‘‘section

15 of the Food Stamp Act of 1977’’;

(E) in subsection (c)(7)(E), by striking the period which

follows a period;

(F) in subsection (e), by striking ‘‘Evironmental’’ and

inserting ‘‘Environmental’’; and
H. R. 3474—96

(G) by redesignating subsection (g), the second place it appears, as subsection (h).

(2) Section 1957(f)(1) of title 18, United States Code, is

amended by striking the comma which follows a comma.

(d) REPEAL OF OBSOLETE TECHNICAL CORRECTION TO SECTION

1956 OF TITLE 18, U.S.C.—Section 3557(2)(E) of Public Law 101–

647 is repealed, effective on the date of enactment of such Public

Law.

TITLE V—NATIONAL FLOOD INSURANCE

REFORM

SEC. 501. SHORT TITLE.

This title may be cited as the ‘‘National Flood Insurance Reform Act of 1994’’.

Subtitle A—Definitions

SEC. 511. FLOOD DISASTER PROTECTION ACT OF 1973.

(a) IN GENERAL.—Section 3(a) of the Flood Disaster Protection

Act of 1973 (42 U.S.C. 4003(a)) is amended—

(1) by striking paragraph (5) and inserting the following new paragraph: ‘‘(5) ‘Federal entity for lending regulation’ means the Board of Governors of the Federal Reserve System, the Federal

Deposit Insurance Corporation, the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit

Union Administration, and the Farm Credit Administration,

and with respect to a particular regulated lending institution

means the entity primarily responsible for the supervision of

the institution;’’;

(2) in paragraph (6), by striking the period at the end and inserting a semicolon; and (3) by inserting after paragraph (6) the following new para- graphs: ‘‘(7) ‘Federal agency lender’ means a Federal agency that makes direct loans secured by improved real estate or a mobile

home, to the extent such agency acts in such capacity; ‘‘(8) the term ‘improved real estate’ means real estate upon

which a building is located; ‘‘(9) ‘lender’ means a regulated lending institution or Federal agency lender; ‘‘(10) ‘regulated lending institution’ means any bank,

savings and loan association, credit union, farm credit bank,

Federal land bank association, production credit association,

or similar institution subject to the supervision of a Federal

entity for lending regulation; and

‘‘(11) ‘servicer’ means the person responsible for receiving

any scheduled periodic payments from a borrower pursuant

to the terms of a loan, including amounts for taxes, insurance

premiums, and other charges with respect to the property securing the loan, and making the payments of principal and interest

and such other payments with respect to the amounts received

from the borrower as may be required pursuant to the terms

of the loan.’’.
H. R. 3474—97

(b) CONFORMING AMENDMENT.—Section 202(b) of the Flood

Disaster Protection Act of 1973 (42 U.S.C. 4106(b)) is amended

by striking ‘‘Federal instrumentality described in such section shall

by regulation require the institutions’’ and inserting ‘‘Federal entity

for lending regulation shall by regulation require the regulated

lending institutions described in such section, and each Federal

agency lender shall issue regulations requiring the Federal agency

lender,’’.

SEC. 512. NATIONAL FLOOD INSURANCE ACT OF 1968.

(a) IN GENERAL.—Section 1370(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is amended—

(1) in paragraph (5), by striking ‘‘and’’ at the end;

(2) in paragraph (6), by striking the period at the end

and inserting a semicolon; and

(3) by inserting after paragraph (6) the following new

paragraphs:

‘‘(7) the term ‘repetitive loss structure’ means a structure

covered by a contract for flood insurance under this title that

has incurred flood-related damage on 2 occasions during a

10-year period ending on the date of the event for which a

second claim is made, in which the cost of repair, on the

average, equaled or exceeded 25 percent of the value of the

structure at the time of each such flood event;

‘‘(8) the term ‘Federal agency lender’ means a Federal

agency that makes direct loans secured by improved real estate

or a mobile home, to the extent such agency acts in such

capacity; ‘‘(9) the term ‘Federal entity for lending regulation’ means

the Board of Governors of the Federal Reserve System, the

Federal Deposit Insurance Corporation, the Comptroller of the

Currency, the Office of Thrift Supervision, the National Credit

Union Administration, and the Farm Credit Administration,

and with respect to a particular regulated lending institution

means the entity primarily responsible for the supervision of

the institution;

‘‘(10) the term ‘improved real estate’ means real estate

upon which a building is located; ‘‘(11) the term ‘lender’ means a regulated lending institution or Federal agency lender; ‘‘(12) the term ‘natural and beneficial floodplain functions’

means—

‘‘(A) the functions associated with the natural or relatively undisturbed floodplain that (i) moderate flooding,

retain flood waters, reduce erosion and sedimentation, and

mitigate the effect of waves and storm surge from storms,

and (ii) reduce flood related damage; and

‘‘(B) ancillary beneficial functions, including maintenance of water quality and recharge of ground water, that

reduce flood related damage;

‘‘(13) the term ‘regulated lending institution’ means any

bank, savings and loan association, credit union, farm credit

bank, Federal land bank association, production credit association, or similar institution subject to the supervision of a

Federal entity for lending regulation; and

‘‘(14) the term ‘servicer’ means the person responsible for

receiving any scheduled periodic payments from a borrower
H. R. 3474—98

pursuant to the terms of a loan, including amounts for taxes,

insurance premiums, and other charges with respect to the

property securing the loan, and making the payments of principal and interest and such other payments with respect to

the amounts received from the borrower as may be required

pursuant to the terms of the loan.’’.

(b) CONFORMING AMENDMENT.—Section 1322(d) of the National

Flood Insurance Act of 1968 (42 U.S.C. 4029(d)) is amended by

striking ‘‘federally supervised, approved, regulated or insured financial institution’’ and inserting ‘‘regulated lending institution or

Federal agency lender’’.

Subtitle B—Compliance and Increased

Participation

SEC. 521. NONWAIVER OF FLOOD PURCHASE REQUIREMENT FOR

RECIPIENTS OF FEDERAL DISASTER ASSISTANCE.

Section 311(b) of the Robert T. Stafford Disaster Relief and

Emergency Assistance Act (42 U.S.C. 5154(b)) is amended by adding

at the end the following new sentence: ‘‘The requirements of this

subsection may not be waived under section 301.’’.

SEC. 522. EXPANDED FLOOD INSURANCE PURCHASE REQUIREMENTS.

(a) IN GENERAL.—Section 102(b) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(b)) is amended to read as follows:

‘‘(b) REQUIREMENT FOR MORTGAGE LOANS.—

‘‘(1) REGULATED LENDING INSTITUTIONS.—Each Federal

entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council established under the Federal Financial Institutions Examination

Council Act of 1974) shall by regulation direct regulated lending

institutions not to make, increase, extend, or renew any loan

secured by improved real estate or a mobile home located

or to be located in an area that has been identified by the

Director as an area having special flood hazards and in which

flood insurance has been made available under the National

Flood Insurance Act of 1968, unless the building or mobile

home and any personal property securing such loan is covered

for the term of the loan by flood insurance in an amount

at least equal to the outstanding principal balance of the loan

or the maximum limit of coverage made available under the

Act with respect to the particular type of property, whichever

is less.

‘‘(2) FEDERAL AGENCY LENDERS.—A Federal agency lender

may not make, increase, extend, or renew any loan secured

by improved real estate or a mobile home located or to be

located in an area that has been identified by the Director

as an area having special flood hazards and in which flood

insurance has been made available under the National Flood

Insurance Act of 1968, unless the building or mobile home

and any personal property securing such loan is covered for

the term of the loan by flood insurance in the amount provided

in paragraph (1). Each Federal agency lender shall issue any

regulations necessary to carry out this paragraph. Such regulations shall be consistent with and substantially identical to

the regulations issued under paragraph (1).
H. R. 3474—99

‘‘(3) GOVERNMENT-SPONSORED ENTERPRISES FOR HOUSING.—

The Federal National Mortgage Association and the Federal

Home Loan Mortgage Corporation shall implement procedures

reasonably designed to ensure that, for any loan that is—

‘‘(A) secured by improved real estate or a mobile home

located in an area that has been identified, at the time

of the origination of the loan or at any time during the

term of the loan, by the Director as an area having special

flood hazards and in which flood insurance is available

under the National Flood Insurance Act of 1968, and

‘‘(B) purchased by such entity,

the building or mobile home and any personal property securing

the loan is covered for the term of the loan by flood insurance

in the amount provided in paragraph (1).

‘‘(4) APPLICABILITY.—

‘‘(A) EXISTING COVERAGE.—Except as provided in

subparagraph (B), paragraph (1) shall apply on the date

of enactment of the Riegle Community Development and

Regulatory Improvement Act of 1994.

‘‘(B) NEW COVERAGE.—Paragraphs (2) and (3) shall

apply only with respect to any loan made, increased,

extended, or renewed after the expiration of the 1-year

period beginning on the date of enactment of the Riegle

Community Development and Regulatory Improvement Act

of 1994. Paragraph (1) shall apply with respect to any

loan made, increased, extended, or renewed by any lender

supervised by the Farm Credit Administration only after

the expiration of the period under this subparagraph. ‘‘(C) CONTINUED EFFECT OF REGULATIONS.—Notwithstanding any other provision of this subsection, the regulations to carry out paragraph (1), as in effect immediately

before the date of enactment of the Riegle Community

Development and Regulatory Improvement Act of 1994,

shall continue to apply until the regulations issued to carry

out paragraph (1) as amended by section 522(a) of such

Act take effect.’’.

(b) EXEMPTION FOR SMALL LOANS.—Section 102(c) of the Flood

Disaster Protection Act of 1973 (42 U.S.C. 4012a(c)) is amended—

(1) by striking ‘‘(c) Notwithstanding’’ and inserting the

following:

‘‘(c) EXCEPTIONS TO PURCHASE REQUIREMENTS.— ‘‘(1) STATE-OWNED PROPERTY.—Notwithstanding’’; and (2) by adding at the end the following new paragraph:

‘‘(2) SMALL LOANS.—Notwithstanding any other provision of this section, subsections (a) and (b) shall not apply to any

loan having—

‘‘(A) an original outstanding principal balance of $5,000

or less; and

‘‘(B) a repayment term of 1 year or less.’’.

SEC. 523. ESCROW OF FLOOD INSURANCE PAYMENTS.

Section 102 of the Flood Disaster Protection Act of 1973 (42

U.S.C. 4012a) is amended by adding at the end the following new

subsection:

‘‘(d) ESCROW OF FLOOD INSURANCE PAYMENTS.—

‘‘(1) REGULATED LENDING INSTITUTIONS.—Each Federal

entity for lending regulation (after consultation and coordina-
H. R. 3474—100

tion with the Financial Institutions Examination Council) shall

by regulation require that, if a regulated lending institution

requires the escrowing of taxes, insurance premiums, fees, or

any other charges for a loan secured by residential improved

real estate or a mobile home, then all premiums and fees

for flood insurance under the National Flood Insurance Act

of 1968 for the real estate or mobile home shall be paid to

the regulated lending institution or other servicer for the loan

in a manner sufficient to make payments as due for the duration of the loan. Upon receipt of the premiums, the regulated

lending institution or servicer of the loan shall deposit the

premiums in an escrow account on behalf of the borrower.

Upon receipt of a notice from the Director or the provider

of the insurance that insurance premiums are due, the regulated lending institution or servicer shall pay from the escrow

account to the provider of the insurance the amount of insurance premiums owed.

‘‘(2) FEDERAL AGENCY LENDERS.—Each Federal agency

lender shall by regulation require and provide for escrow and

payment of any flood insurance premiums and fees relating

to residential improved real estate and mobile homes securing

loans made by the Federal agency lender under the circumstances and in the manner provided under paragraph (1).

Any regulations issued under this paragraph shall be consistent

with and substantially identical to the regulations issued under

paragraph (1).

‘‘(3) APPLICABILITY OF RESPA.—Escrow accounts established

pursuant to this subsection shall be subject to the provisions

of section 10 of the Real Estate Settlement Procedures Act

of 1974.

‘‘(4) DEFINITION.—For purposes of this subsection, the term

‘residential improved real estate’ means improved real estate

for which the improvement is a residential building. ‘‘(5) APPLICABILITY.—This subsection shall apply only with

respect to any loan made, increased, extended, or renewed

after the expiration of the 1-year period beginning on the date

of enactment of the Riegle Community Development and Regulatory Improvement Act of 1994.’’.

SEC. 524. PLACEMENT OF FLOOD INSURANCE BY LENDERS.

Section 102 of the Flood Disaster Protection Act of 1973 (42

U.S.C. 4012a), as amended by the preceding provisions of this

title, is further amended by adding at the end the following new

subsection:

‘‘(e) PLACEMENT OF FLOOD INSURANCE BY LENDER.—

‘‘(1) NOTIFICATION TO BORROWER OF LACK OF COVERAGE.—

If, at the time of origination or at any time during the term

of a loan secured by improved real estate or by a mobile

home located in an area that has been identified by the Director

(at the time of the origination of the loan or at any time

during the term of the loan) as an area having special flood

hazards and in which flood insurance is available under the

National Flood Insurance Act of 1968, the lender or servicer

for the loan determines that the building or mobile home and

any personal property securing the loan is not covered by

flood insurance or is covered by such insurance in an amount

less than the amount required for the property pursuant to
H. R. 3474—101

paragraph (1), (2), or (3) of subsection (b), the lender or servicer

shall notify the borrower under the loan that the borrower

should obtain, at the borrower’s expense, an amount of flood

insurance for the building or mobile home and such personal

property that is not less than the amount under subsection

(b)(1), for the term of the loan.

‘‘(2) PURCHASE OF COVERAGE ON BEHALF OF BORROWER.—

If the borrower fails to purchase such flood insurance within

45 days after notification under paragraph (1), the lender or

servicer for the loan shall purchase the insurance on behalf

of the borrower and may charge the borrower for the cost

of premiums and fees incurred by the lender or servicer for

the loan in purchasing the insurance.

‘‘(3) REVIEW OF DETERMINATION REGARDING REQUIRED

PURCHASE.—

‘‘(A) IN GENERAL.—The borrower and lender for a loan

secured by improved real estate or a mobile home may

jointly request the Director to review a determination of

whether the building or mobile home is located in an area

having special flood hazards. Such request shall be supported by technical information relating to the improved

real estate or mobile home. Not later than 45 days after

the Director receives the request, the Director shall review

the determination and provide to the borrower and the

lender with a letter stating whether or not the building

or mobile home is in an area having special flood hazards.

The determination of the Director shall be final.

‘‘(B) EFFECT OF DETERMINATION.—Any person to whom

a borrower provides a letter issued by the Director pursuant

to subparagraph (A), stating that the building or mobile

home securing the loan of the borrower is not in an area

having special flood hazards, shall have no obligation under

this title to require the purchase of flood insurance for

such building or mobile home during the period determined

by the Director, which shall be specified in the letter and

shall begin on the date on which such letter is provided.

‘‘(C) EFFECT OF FAILURE TO RESPOND.—If a request

under subparagraph (A) is made in connection with the

origination of a loan and the Director fails to provide a

letter under subparagraph (A) before the later of (i) the

expiration of the 45-day period under such subparagraph,

or (ii) the closing of the loan, no person shall have an

obligation under this title to require the purchase of flood

insurance for the building or mobile home securing the

loan until such letter is provided.

‘‘(4) APPLICABILITY.—This subsection shall apply to all loans

outstanding on or after the date of enactment of the Riegle

Community Development and Regulatory Improvement Act of

1994.’’.

SEC. 525. PENALTIES FOR FAILURE TO REQUIRE FLOOD INSURANCE

OR NOTIFY.

Section 102 of the Flood Disaster Protection Act of 1973 (42

U.S.C. 4012a), as amended by the preceding provisions of this

title, is further amended by adding at the end the following new

subsections:
H. R. 3474—102

‘‘(f) CIVIL MONETARY PENALTIES FOR FAILURE TO REQUIRE

FLOOD INSURANCE OR NOTIFY.—

‘‘(1) CIVIL MONETARY PENALTIES AGAINST REGULATED LENDERS.—Any regulated lending institution that is found to have

a pattern or practice of committing violations under paragraph

(2) shall be assessed a civil penalty by the appropriate Federal

entity for lending regulation in the amount provided under

paragraph (5).

‘‘(2) LENDER VIOLATIONS.—The violations referred to in

paragraph (1) shall include—

‘‘(A) making, increasing, extending, or renewing loans

in violation of—

‘‘(i) the regulations issued pursuant to subsection

(b) of this section;

‘‘(ii) the escrow requirements under subsection (d)

of this section; or

‘‘(iii) the notice requirements under section 1364

of the National Flood Insurance Act of 1968; or

‘‘(B) failure to provide notice or purchase flood insurance coverage in violation of subsection (e) of this section.

‘‘(3) CIVIL MONETARY PENALTIES AGAINST GSE’S.—

‘‘(A) IN GENERAL.—If the Federal National Mortgage

Association or the Federal Home Loan Mortgage Corporation is found by the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing

and Urban Development to have a pattern or practice

of purchasing loans in violation of the procedures established pursuant to subsection (b)(3), the Director of such

Office shall assess a civil penalty against such enterprise

in the amount provided under paragraph (5) of this

subsection.

‘‘(B) DEFINITION.—For purposes of this subsection, the

term ‘enterprise’ means the Federal National Mortgage

Association or the Federal Home Loan Mortgage

Corporation.

‘‘(4) NOTICE AND HEARING.—A penalty under this subsection

may be issued only after notice and an opportunity for a hearing

on the record.

‘‘(5) AMOUNT.—A civil monetary penalty under this subsection may not exceed $350 for each violation under paragraph

(2) or paragraph (3). The total amount of penalties assessed

under this subsection against any single regulated lending

institution or enterprise during any calendar year may not

exceed $100,000.

‘‘(6) LENDER COMPLIANCE.—Notwithstanding any State or

local law, for purposes of this subsection, any regulated lending

institution that purchases flood insurance or renews a contract

for flood insurance on behalf of or as an agent of a borrower

of a loan for which flood insurance is required shall be considered to have complied with the regulations issued under

subsection (b).

‘‘(7) EFFECT OF TRANSFER ON LIABILITY.—Any sale or other

transfer of a loan by a regulated lending institution that has

committed a violation under paragraph (1), that occurs subsequent to the violation, shall not affect the liability of the

transferring lender with respect to any penalty under this

subsection. A lender shall not be liable for any violations relat-
H. R. 3474—103

ing to a loan committed by another regulated lending institution

that previously held the loan.

‘‘(8) DEPOSIT OF PENALTIES.—Any penalties collected under

this subsection shall be paid into the National Flood Mitigation

Fund under section 1367 of the National Flood Insurance Act

of 1968.

‘‘(9) ADDITIONAL PENALTIES.—Any penalty under this subsection shall be in addition to any civil remedy or criminal

penalty otherwise available.

‘‘(10) STATUTE OF LIMITATIONS.—No penalty may be

imposed under this subsection after the expiration of the 4-

year period beginning on the date of the occurrence of the

violation for which the penalty is authorized under this

subsection.

‘‘(g) OTHER ACTIONS TO REMEDY PATTERN OF NONCOMPLIANCE.—

‘‘(1) AUTHORITY OF FEDERAL ENTITIES FOR LENDING REGULATION.—A Federal entity for lending regulation may require

a regulated lending institution to take such remedial actions

as are necessary to ensure that the regulated lending institution

complies with the requirements of the national flood insurance

program if the Federal agency for lending regulation makes

a determination under paragraph (2) regarding the regulated

lending institution.

‘‘(2) DETERMINATION OF VIOLATIONS.—A determination

under this paragraph shall be a finding that—

‘‘(A) the regulated lending institution has engaged in

a pattern and practice of noncompliance in violation of

the regulations issued pursuant to subsection (b), (d), or

(e) or the notice requirements under section 1364 of the

National Flood Insurance Act of 1968; and

‘‘(B) the regulated lending institution has not demonstrated measurable improvement in compliance despite

the assessment of civil monetary penalties under subsection

(f).’’.

SEC. 526. FEES FOR DETERMINING APPLICABILITY OF FLOOD INSURANCE PURCHASE REQUIREMENTS.

Section 102 of the Flood Disaster Protection Act of 1973 (42

U.S.C. 4012a) as amended by the preceding provisions of this title,

is further amended by adding at the end the following new subsection:

‘‘(h) FEE FOR DETERMINING LOCATION.—Notwithstanding any

other Federal or State law, any person who makes a loan secured

by improved real estate or a mobile home or any servicer for

such a loan may charge a reasonable fee for the costs of determining

whether the building or mobile home securing the loan is located

in an area having special flood hazards, but only in accordance

with the following requirements:

‘‘(1) BORROWER FEE.—The borrower under such a loan may

be charged the fee, but only if the determination—

‘‘(A) is made pursuant to the making, increasing,

extending, or renewing of the loan that is initiated by

the borrower;

‘‘(B) is made pursuant to a revision or updating under

section 1360(f) of the floodplain areas and flood-risk zones

or publication of a notice or compendia under subsection
H. R. 3474—104

(h) or (i) of section 1360 that affects the area in which

the improved real estate or mobile home securing the loan

is located or that, in the determination of the Director,

may reasonably be considered to require a determination

under this subsection; or

‘‘(C) results in the purchase of flood insurance coverage

pursuant to the requirement under subsection (e)(2).

‘‘(2) PURCHASER OR TRANSFEREE FEE.—The purchaser or

transferee of such a loan may be charged the fee in the case

of sale or transfer of the loan.’’.

SEC. 527. NOTICE REQUIREMENTS.

Section 1364 of the National Flood Insurance Act of 1968 (42

U.S.C. 4104a) is amended to read as follows:

‘‘NOTICE REQUIREMENTS

‘‘SEC. 1364. (a) NOTIFICATION OF SPECIAL FLOOD HAZARDS.—

‘‘(1) REGULATED LENDING INSTITUTIONS.—Each Federal

entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council) shall

by regulation require regulated lending institutions, as a condition of making, increasing, extending, or renewing any loan

secured by improved real estate or a mobile home that the

regulated lending institution determines is located or is to

be located in an area that has been identified by the Director

under this title or the Flood Disaster Protection Act of 1973

as an area having special flood hazards, to notify the purchaser

or lessee (or obtain satisfactory assurances that the seller or

lessor has notified the purchaser or lessee) and the servicer

of the loan of such special flood hazards, in writing, a reasonable

period in advance of the signing of the purchase agreement,

lease, or other documents involved in the transaction. The

regulations shall also require that the regulated lending institution retain a record of the receipt of the notices by the purchaser

or lessee and the servicer.

‘‘(2) FEDERAL AGENCY LENDERS.—Each Federal agency

lender shall by regulation require notification in the manner

provided under paragraph (1) with respect to any loan that

is made by the Federal agency lender and secured by improved

real estate or a mobile home located or to be located in an

area that has been identified by the Director under this title

or the Flood Disaster Protection Act of 1973 as an area having

special flood hazards. Any regulations issued under this paragraph shall be consistent with and substantially identical to

the regulations issued under paragraph (1).

‘‘(3) CONTENTS OF NOTICE.—Written notification required

under this subsection shall include—

‘‘(A) a warning, in a form to be established by the

Director, stating that the building on the improved real

estate securing the loan is located, or the mobile home

securing the loan is or is to be located, in an area having

special flood hazards;

‘‘(B) a description of the flood insurance purchase

requirements under section 102(b) of the Flood Disaster

Protection Act of 1973;
H. R. 3474—105

‘‘(C) a statement that flood insurance coverage may be purchased under the national flood insurance program

and is also available from private insurers; and ‘‘(D) any other information that the Director considers necessary to carry out the purposes of the national flood

insurance program. ‘‘(b) NOTIFICATION OF CHANGE OF SERVICER.— ‘‘(1) LENDING INSTITUTIONS.—Each Federal entity for lend- ing regulation (after consultation and coordination with the

Financial Institutions Examination Council) shall by regulation

require regulated lending institutions, in connection with the

making, increasing, extending, renewing, selling, or transferring any loan described in subsection (a)(1), to notify the Director (or the designee of the Director) in writing during the

term of the loan of the servicer of the loan. Such institutions

shall also notify the Director (or such designee) of any change

in the servicer of the loan, not later than 60 days after the

effective date of such change. The regulations under this subsection shall provide that upon any change in the servicing

of a loan, the duty to provide notification under this subsection

shall transfer to the transferee servicer of the loan.

‘‘(2) FEDERAL AGENCY LENDERS.—Each Federal agency lender shall by regulation provide for notification in the manner

provided under paragraph (1) with respect to any loan described

in subsection (a)(1) that is made by the Federal agency lender.

Any regulations issued under this paragraph shall be consistent

with and substantially identical to the regulations issued under

paragraph (1) of this subsection.

‘‘(c) NOTIFICATION OF EXPIRATION OF INSURANCE.—The Director

(or the designee of the Director) shall, not less than 45 days before

the expiration of any contract for flood insurance under this title,

issue notice of such expiration by first class mail to the owner

of the property covered by the contract, the servicer of any loan

secured by the property covered by the contract, and (if known

to the Director) the owner of the loan.’’.

SEC. 528. STANDARD HAZARD DETERMINATION FORMS.

Chapter III of the National Flood Insurance Act of 1968 (42

U.S.C. 4101 et seq.) is amended by adding at the end the following

new section:

‘‘STANDARD HAZARD DETERMINATION FORMS

‘‘SEC. 1365. (a) DEVELOPMENT.—The Director, in consultation

with representatives of the mortgage and lending industry, the

Federal entities for lending regulation, the Federal agency lenders,

and any other appropriate individuals, shall develop a standard

form for determining, in the case of a loan secured by improved

real estate or a mobile home, whether the building or mobile home

is located in an area identified by the Director as an area having

special flood hazards and in which flood insurance under this title

is available. The form shall be established by regulations issued

not later than 270 days after the date of enactment of the Riegle

Community Development and Regulatory Improvement Act of 1994.

‘‘(b) DESIGN AND CONTENTS.—

‘‘(1) PURPOSE.—The form under subsection (a) shall be

designed to facilitate compliance with the flood insurance purchase requirements of this title.
H. R. 3474—106

‘‘(2) CONTENTS.—The form shall require identification of

the type of flood-risk zone in which the building or mobile

home is located, the complete map and panel numbers for

the improved real estate or property on which the mobile home

is located, the community identification number and community

participation status (for purposes of the national flood insurance

program) of the community in which the improved real estate

or such property is located, and the date of the map used

for the determination, with respect to flood hazard information

on file with the Director. If the building or mobile home is

not located in an area having special flood hazards the form

shall require a statement to such effect and shall indicate

the complete map and panel numbers of the improved real

estate or property on which the mobile home is located. If

the complete map and panel numbers are not available because

the building or mobile home is not located in a community

that is participating in the national flood insurance program

or because no map exists for the relevant area, the form shall

require a statement to such effect. The form shall provide

for inclusion or attachment of any relevant documents indicating revisions or amendments to maps.

‘‘(c) REQUIRED USE.—The Federal entities for lending regulation

shall by regulation require the use of the form under this section

by regulated lending institutions. Each Federal agency lender shall

by regulation provide for the use of the form with respect to any

loan made by such Federal agency lender. The Federal National

Mortgage Association and the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association shall

require the use of the form with respect to any loan purchased

by such entities. A lender or other person may comply with the

requirement under this subsection by using the form in a printed,

computerized, or electronic manner.

‘‘(d) GUARANTEES REGARDING INFORMATION.—In providing

information regarding special flood hazards on the form developed

under this section, any lender (or other person required to use

the form) who makes, increases, extends, or renews a loan secured

by improved real estate or a mobile home may provide for the

acquisition or determination of such information to be made by

a person other than such lender (or other person), only to the

extent such person guarantees the accuracy of the information. ‘‘(e) RELIANCE ON PREVIOUS DETERMINATION.—Any person

increasing, extending, renewing, or purchasing a loan secured by

improved real estate or a mobile home may rely on a previous

determination of whether the building or mobile home is located

in an area having special flood hazards (and shall not be liable

for any error in such previous determination), if the previous determination was made not more than 7 years before the date of

the transaction and the basis for the previous determination has

been set forth on a form under this section, unless—

‘‘(1) map revisions or updates pursuant to section 1360(f)

after such previous determination have resulted in the building

or mobile home being located in an area having special flood

hazards; or

‘‘(2) the person contacts the Director to determine when

the most recent map revisions or updates affecting such property occurred and such revisions and updates have occurred

after such previous determination.
H. R. 3474—107

‘‘(f) EFFECTIVE DATE.—The regulations under this section

requiring use of the form established pursuant to this section shall

be issued together with the regulations required under subsection

(a) and shall take effect upon the expiration of the 180-day period

beginning on such issuance.’’.

SEC. 529. EXAMINATIONS REGARDING COMPLIANCE.

(a) AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.—Section

10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is amended

by adding at the end the following new subsection:

‘‘(i) FLOOD INSURANCE COMPLIANCE BY INSURED DEPOSITORY

INSTITUTIONS.—

‘‘(1) EXAMINATIONS.—The appropriate Federal banking

agency shall, during each scheduled on-site examination

required by this section, determine whether the insured depository institution is complying with the requirements of the

national flood insurance program.

‘‘(2) REPORT.—

‘‘(A) REQUIREMENT.—Not later than 1 year after the

date of enactment of the Riegle Community Development

and Regulatory Improvement Act of 1994 and biennially

thereafter for the next 4 years, each appropriate Federal

banking agency shall submit a report to the Congress on

compliance by insured depository institutions with the

requirements of the national flood insurance program.

‘‘(B) CONTENTS.—Each report submitted under this

paragraph shall include a description of the methods used

to determine compliance, the number of institutions examined during the reporting year, a listing and total number

of institutions found not to be in compliance, actions taken

to correct incidents of noncompliance, and an analysis of

compliance, including a discussion of any trends, patterns,

and problems, and recommendations regarding reasonable

actions to improve the efficiency of the examinations processes.’’.

(b) AMENDMENT TO FEDERAL CREDIT UNION ACT.—Section 204

of the Federal Credit Union Act (12 U.S.C. 1784) is amended

by adding at the end the following new subsection: ‘‘(e) FLOOD INSURANCE COMPLIANCE BY INSURED CREDIT

UNIONS.—

‘‘(1) EXAMINATION.—The Board shall, during each examination conducted under this section, determine whether the

insured credit union is complying with the requirements of

the national flood insurance program. ‘‘(2) REPORT.—

‘‘(A) REQUIREMENT.—Not later than 1 year after the

date of enactment of the Riegle Community Development

and Regulatory Improvement Act of 1994 and biennially

thereafter for the next 4 years, the Board shall submit

a report to the Congress on compliance by insured credit

unions with the requirements of the national flood insurance program.

‘‘(B) CONTENTS.—The report shall include a description

of the methods used to determine compliance, the number

of insured credit unions examined during the reporting

year, a listing and total number of insured credit unions

found not to be in compliance, actions taken to correct
H. R. 3474—108

incidents of noncompliance, and an analysis of compliance,

including a discussion of any trends, patterns, and problems, and recommendations regarding reasonable actions

to improve the efficiency of the examinations processes.’’.

(c) AMENDMENT TO FEDERAL HOUSING ENTERPRISES FINANCIAL

SAFETY AND SOUNDNESS ACT OF 1992.—Section 1319B(a) of the

Federal Housing Enterprises Financial Safety and Soundness Act

of 1992 (12 U.S.C. 4521(a)) is amended—

(1) in paragraph (2), by striking ‘‘and’’ at the end;

(2) in paragraph (3), by striking the period at the end

and inserting ‘‘; and’’; and

(3) by adding at the end the following new paragraph:

‘‘(4) a description of—

‘‘(A) whether the procedures established by each enterprise pursuant to section 102(b)(3) of the Flood Disaster

Protection Act of 1973 are adequate and being complied

with, and

‘‘(B) the results and conclusions of any examination,

as determined necessary by the Director, to determine the

compliance of the enterprises with the requirements of

section 102(b)(3) of such Act, which shall include a description of the methods used to determine compliance and

the types and sources of deficiencies (if any), and identify

any corrective measures that have been taken to remedy

any such deficiencies,

except that the information described in this paragraph shall

be included only in each of the first, third, and fifth annual

reports under this subsection required to be submitted after

the expiration of the 1-year period beginning on the date of

enactment of the Riegle Community Development and Regulatory Improvement Act of 1994.’’.

SEC. 530. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL.

Section 1006 of the Federal Financial Institutions Examination

Council Act of 1978 (12 U.S.C. 3305) is amended by adding at

the end the following new subsection:

‘‘(g) FLOOD INSURANCE.—The Council shall consult with and

assist the Federal entities for lending regulation, as such term

is defined in section 1370(a) of the National Flood Insurance Act

of 1968, in developing and coordinating uniform standards and

requirements for use by regulated lending institutions under the

national flood insurance program.’’.

SEC. 531. CLERICAL AMENDMENT.

Section 102 of the Flood Disaster Protection Act of 1973 (42

U.S.C. 4012a) is amended by striking the section heading and

inserting the following new section heading:
H. R. 3474—109

‘‘FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND

ESCROW ACCOUNTS’’.

Subtitle C—Ratings and Incentives for

Community Floodplain Management Programs

SEC. 541. COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMUNITY FLOODPLAIN MANAGEMENT.

Section 1315 of the National Flood Insurance Act of 1968 (42

U.S.C. 4022) is amended—

(1) by striking ‘‘After December’’ and inserting the

following:

‘‘(a) REQUIREMENT FOR PARTICIPATION IN FLOOD INSURANCE

PROGRAM.—

‘‘(1) IN GENERAL.—After December’’; and

(2) by adding at the end the following new subsection:

‘‘(b) COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMUNITY FLOODPLAIN MANAGEMENT.—

‘‘(1) AUTHORITY AND GOALS.—The Director shall carry out

a community rating system program, under which communities

participate voluntarily—

‘‘(A) to provide incentives for measures that reduce

the risk of flood or erosion damage that exceed the criteria

set forth in section 1361 and evaluate such measures;

‘‘(B) to encourage adoption of more effective measures

that protect natural and beneficial floodplain functions;

‘‘(C) to encourage floodplain and erosion management;

and

‘‘(D) to promote the reduction of Federal flood insurance

losses.

‘‘(2) INCENTIVES.—The program shall provide incentives in

the form of credits on premium rates for flood insurance coverage in communities that the Director determines have

adopted and enforced measures that reduce the risk of flood

and erosion damage that exceed the criteria set forth in section

1361. In providing incentives under this paragraph, the Director

may provide for credits to flood insurance premium rates in

communities that the Director determines have implemented

measures that protect natural and beneficial floodplain

functions.

‘‘(3) CREDITS.—The credits on premium rates for flood

insurance coverage shall be based on the estimated reduction

in flood and erosion damage risks resulting from the measures

adopted by the community under this program. If a community

has received mitigation assistance under section 1366, the credits shall be phased in a manner, determined by the Director,

to recover the amount of such assistance provided for the

community. ‘‘(4) REPORTS.—Not later than 2 years after the date of

enactment of the Riegle Community Development and Regulatory Improvement Act of 1994 and not less than every 2

years thereafter, the Director shall submit a report to the

Congress regarding the program under this subsection. Each

report shall include an analysis of the cost-effectiveness of
H. R. 3474—110

the program, any other accomplishments or shortcomings of

the program, and any recommendations of the Director for

legislation regarding the program.’’.

SEC. 542. FUNDING.

Section 1310(a) of the National Flood Insurance Act of 1968

(42 U.S.C. 4017(a)) is amended—

(1) in paragraph (4), by striking ‘‘and’’ at the end;

(2) in paragraph (5), by striking the period at the end

and inserting a semicolon; and

(3) by adding after paragraph (5) the following new

paragraph:

‘‘(6) for carrying out the program under section 1315(b);’’.

Subtitle D—Mitigation of Flood Risks

SEC. 551. REPEAL OF FLOODED PROPERTY PURCHASE AND LOAN

PROGRAM.

(a) REPEAL.—Section 1362 of the National Flood Insurance

Act of 1968 (42 U.S.C. 4103) is hereby repealed.

(b) TRANSITION PHASE.—Notwithstanding subsection (a), during

the 1-year period beginning on the date of enactment of this Act,

the Director of the Federal Emergency Management Agency may

enter into loan and purchase commitments as provided under section 1362 of the National Flood Insurance Act of 1968 (as in effect

immediately before the enactment of this Act).

(c) SAVINGS PROVISION.—Notwithstanding subsection (a), the

Director shall take any action necessary to comply with any purchase or loan commitment entered into before the expiration of

the period referred to in subsection (b) pursuant to authority under

section 1362 of the National Flood Insurance Act of 1968 or subsection (b).

SEC. 552. TERMINATION OF EROSION-THREATENED STRUCTURES

PROGRAM.

(a) IN GENERAL.—Section 1306 of the National Flood Insurance

Act of 1968 (42 U.S.C. 4013) is amended by striking subsection

(c).

(b) TRANSITION PHASE.—Notwithstanding subsection (a), during

the 1-year period beginning on the date of enactment of this Act,

the Director of the Federal Emergency Management Agency may

pay amounts under flood insurance contracts for demolition or

relocation of structures as provided in section 1306(c) of the

National Flood Insurance Act of 1968 (as in effect immediately

before the enactment of this Act).

(c) SAVINGS PROVISION.—Notwithstanding subsection (a), the

Director shall take any action necessary to make payments under

flood insurance contracts pursuant to any commitments made before

the expiration of the period referred to in subsection (b) pursuant

to the authority under section 1306(c) of the National Flood Insurance Act of 1968 or subsection (b).

(d) REPEAL OF FINDINGS PROVISION.—Section 1302 of the

National Flood Insurance Act of 1968 (42 U.S.C. 4001) is amended

by striking subsection (g).
H. R. 3474—111

SEC. 553. MITIGATION ASSISTANCE PROGRAM.

(a) IN GENERAL.—Chapter III of the National Flood Insurance

Act of 1968 (42 U.S.C. 4101 et seq.), as amended by the preceding

provisions of this title, is further amended by adding at the end

the following new section:

‘‘MITIGATION ASSISTANCE

‘‘SEC. 1366. (a) AUTHORITY.—The Director shall carry out a

program to provide financial assistance to States and communities,

using amounts made available from the National Flood Mitigation

Fund under section 1367, for planning and carrying out activities

designed to reduce the risk of flood damage to structures covered

under contracts for flood insurance under this title. Such financial

assistance shall be made available to States and communities in

the form of grants under subsection (b) for planning assistance

and in the form of grants under this section for carrying out

mitigation activities.

‘‘(b) PLANNING ASSISTANCE GRANTS.—

‘‘(1) IN GENERAL.—The Director may make grants under

this subsection to States and communities to assist in developing mitigation plans under subsection (c).

‘‘(2) FUNDING.—Of any amounts made available from the

National Flood Mitigation Fund for use under this section

in any fiscal year, the Director may use not more than

$1,500,000 to provide planning assistance grants under this

subsection.

‘‘(3) LIMITATIONS.—

‘‘(A) TIMING.—A grant under this subsection may be

awarded to a State or community not more than once

every 5 years and each grant may cover a period of 1

to 3 years.

‘‘(B) SINGLE GRANTEE AMOUNT.—A grant for planning

assistance may not exceed—

‘‘(i) $150,000, to any State; or

‘‘(ii) $50,000, to any community.

‘‘(C) CUMULATIVE STATE GRANT AMOUNT.—The sum of

the amounts of grants made under this subsection in any

fiscal year to any one State and all communities located

in such State may not exceed $300,000.

‘‘(c) ELIGIBILITY FOR MITIGATION ASSISTANCE.—To be eligible

to receive financial assistance under this section for mitigation

activities, a State or community shall develop, and have approved

by the Director, a flood risk mitigation plan (in this section referred

to as a ‘mitigation plan’), that describes the mitigation activities

to be carried out with assistance provided under this section, is

consistent with the criteria established by the Director under section

1361, and provides protection against flood losses to structures

for which contracts for flood insurance are available under this

title. The mitigation plan shall be consistent with a comprehensive

strategy for mitigation activities for the area affected by the mitigation plan, that has been adopted by the State or community following a public hearing.

‘‘(d) NOTIFICATION OF APPROVAL AND GRANT AWARD.—

‘‘(1) IN GENERAL.—The Director shall notify a State or

community submitting a mitigation plan of the approval or
H. R. 3474—112

disapproval of the plan not later than 120 days after submission

of the plan.

‘‘(2) NOTIFICATION OF DISAPPROVAL.—If the Director does

not approve a mitigation plan submitted under this subsection,

the Director shall notify, in writing, the State or community

submitting the plan of the reasons for such disapproval.

‘‘(e) ELIGIBLE MITIGATION ACTIVITIES.—

‘‘(1) USE OF AMOUNTS.—Amounts provided under this section (other than under subsection (b)) may be used only for

mitigation activities specified in a mitigation plan approved

by the Director under subsection (d). The Director shall provide

assistance under this section to the extent amounts are available in the National Flood Mitigation Fund pursuant to

appropriation Acts, subject only to the absence of approvable

mitigation plans.

‘‘(2) DETERMINATION OF ELIGIBLE PLANS.—The Director may

approve only mitigation plans that specify mitigation activities

that the Director determines are technically feasible and costeffective and only such plans that propose activities that are

cost-beneficial to the National Flood Mitigation Fund.

‘‘(3) STANDARD FOR APPROVAL.—The Director shall approve

mitigation plans meeting the requirements for approval under

paragraph (1) that will be most cost-beneficial to the National

Flood Mitigation Fund.

‘‘(4) PRIORITY.—The Director shall make every effort to

provide mitigation assistance under this section for mitigation

plans proposing activities for repetitive loss structures and

structures that have incurred substantial damage.

‘‘(5) ELIGIBLE ACTIVITIES.—The Director shall determine

whether mitigation activities described in a mitigation plan

submitted under subsection (d) comply with the requirements

under paragraph (1). Such activities may include—

‘‘(A) demolition or relocation of any structure located

on land that is along the shore of a lake or other body

of water and is certified by an appropriate State or local

land use authority to be subject to imminent collapse or

subsidence as a result of erosion or flooding;

‘‘(B) elevation, relocation, demolition, or floodproofing

of structures (including public structures) located in areas

having special flood hazards or other areas of flood risk;

‘‘(C) acquisition by States and communities of properties (including public properties) located in areas having

special flood hazards or other areas of flood risk and properties substantially damaged by flood, for public use, as

the Director determines is consistent with sound land

management and use in such area;

‘‘(D) minor physical mitigation efforts that do not duplicate the flood prevention activities of other Federal agencies

and that lessen the frequency or severity of flooding and

decrease predicted flood damages, which shall not include

major flood control projects such as dikes, levees, seawalls,

groins, and jetties unless the Director specifically determines in approving a mitigation plan that such activities

are the most cost-effective mitigation activities for the

National Flood Mitigation Fund;

‘‘(E) beach nourishment activities;
H. R. 3474—113

‘‘(F) the provision of technical assistance by States

to communities and individuals to conduct eligible mitigation activities;

‘‘(G) other activities that the Director considers appropriate and specifies in regulation; and

‘‘(H) other mitigation activities not described in subparagraphs (A) through (F) or the regulations issued under

subparagraph (G), that are described in the mitigation

plan of a State or community.

‘‘(f) LIMITATIONS ON AMOUNT OF ASSISTANCE.—

‘‘(1) AMOUNT.—The sum of the amounts of mitigation assistance provided under this section during any 5-year period may

not exceed—

‘‘(A) $10,000,000, to any State; or

‘‘(B) $3,300,000, to any community.

‘‘(2) GEOGRAPHIC.—The sum of the amounts of mitigation

assistance provided under this section during any 5-year period

to any one State and all communities located in such State

may not exceed $20,000,000.

‘‘(3) WAIVER.—The Director may waive the dollar amount

limitations under paragraphs (1) and (2) for any State or

community for any 5-year period during which a major disaster

or emergency declared by the President (pursuant to the Robert

T. Stafford Disaster Relief and Emergency Assistance Act) as

a result of flood conditions is in effect with respect to areas

in the State or community.

‘‘(g) MATCHING REQUIREMENT.—

‘‘(1) IN GENERAL.—The Director may not provide mitigation

assistance under this section to a State or community in an

amount exceeding 3 times the amount that the State or community certifies, as the Director shall require, that the State

or community will contribute from non-Federal funds to develop

a mitigation plan under subsection (c) and to carry out mitigation activities under the approved mitigation plan. In no case

shall any in-kind contribution by any State or community

exceed one-half of the amount of non-Federal funds contributed

by the State or community.

‘‘(2) NON-FEDERAL FUNDS.—For purposes of this subsection,

the term ‘non-Federal funds’ includes State or local agency

funds, in-kind contributions, any salary paid to staff to carry

out the mitigation activities of the recipient, the value of the

time and services contributed by volunteers to carry out such

activities (at a rate determined by the Director), and the value

of any donated material or building and the value of any

lease on a building.

‘‘(h) OVERSIGHT OF MITIGATION PLANS.—The Director shall conduct oversight of recipients of mitigation assistance under this

section to ensure that the assistance is used in compliance with

the approved mitigation plans of the recipients and that matching

funds certified under subsection (g) are used in accordance with

such certification.

‘‘(i) RECAPTURE.—

‘‘(1) NONCOMPLIANCE WITH PLAN.—If the Director determines that a State or community that has received mitigation

assistance under this section has not carried out the mitigation

activities as set forth in the mitigation plan, the Director shall
H. R. 3474—114

recapture any unexpended amounts and deposit the amounts

in the National Flood Mitigation Fund under section 1367. ‘‘(2) FAILURE TO PROVIDE MATCHING FUNDS.—If the Director

determines that a State or community that has received mitigation assistance under this section has not provided matching

funds in the amount certified under subsection (g), the Director

shall recapture any unexpended amounts of mitigation assistance exceeding 3 times the amount of such matching funds

actually provided and deposit the amounts in the National

Flood Mitigation Fund under section 1367.

‘‘(j) REPORTS.—Not later than 1 year after the date of enactment of the Riegle Community Development and Regulatory Improvement

Act of 1994 and biennially thereafter, the Director shall submit

a report to the Congress describing the status of mitigation activities

carried out with assistance provided under this section. ‘‘(k) DEFINITION OF COMMUNITY.—For purposes of this section,

the term ‘community’ means— ‘‘(1) a political subdivision that (A) has zoning and building code jurisdiction over a particular area having special flood

hazards, and (B) is participating in the national flood insurance

program; or ‘‘(2) a political subdivision of a State, or other authority, that is designated to develop and administer a mitigation plan

by political subdivisions, all of which meet the requirements

of paragraph (1).’’.

(b) REGULATIONS.—Not later than 6 months after the date

of enactment of this Act, the Director of the Federal Emergency

Management Agency shall issue regulations to carry out section

1366 of the National Flood Insurance Act of 1968, as added by

subsection (a).

SEC. 554. ESTABLISHMENT OF NATIONAL FLOOD MITIGATION FUND.

(a) IN GENERAL.—Chapter III of the National Flood Insurance

Act of 1968 (42 U.S.C. 4101 et seq.), as amended by the preceding

provisions of this title, is further amended by adding at the end

the following new section:

‘‘NATIONAL FLOOD MITIGATION FUND

‘‘SEC. 1367. (a) ESTABLISHMENT AND AVAILABILITY.—The Director shall establish in the Treasury of the United States a fund

to be known as the National Flood Mitigation Fund, which shall

be credited with amounts described in subsection (b) and shall

be available, to the extent provided in appropriation Acts, for providing assistance under section 1366.

‘‘(b) CREDITS.—The National Flood Mitigation Fund shall be

credited with—

‘‘(1) amounts from the National Flood Insurance Fund,

in amounts not exceeding—

‘‘(A) $10,000,000 in the fiscal year ending September

30, 1994;

‘‘(B) $15,000,000 in the fiscal year ending September 30, 1995;

‘‘(C) $20,000,000 in the fiscal year ending September

30, 1996; and

‘‘(D) $20,000,000 in each fiscal year thereafter;

‘‘(2) any penalties collected under section 102(f) of the Flood

Disaster Protection Act of 1973; and
H. R. 3474—115

‘‘(3) any amounts recaptured under section 1366(i).

‘‘(c) INVESTMENT.—If the Director determines that the amounts

in the National Flood Mitigation Fund are in excess of amounts

needed under subsection (a), the Director may invest any excess

amounts the Director determines advisable in interest-bearing

obligations issued or guaranteed by the United States.

‘‘(d) REPORT.—The Director shall submit a report to the Congress not later than the expiration of the 1-year period beginning

on the date of enactment of this Act and not less than once during

each successive 2-year period thereafter. The report shall describe

the status of the Fund and any activities carried out with amounts

from the Fund.’’.

(b) NATIONAL FLOOD INSURANCE FUND AS SEPARATE

ACCOUNT.—Section 1310(a) of the National Flood Insurance Act

of 1968 (42 U.S.C. 4017(a)) is amended—

(1) in the matter preceding paragraph (1)—

(A) by striking ‘‘is authorized to’’ and inserting ‘‘shall’’;

and

(B) by inserting after ‘‘which shall be’’ the following:

‘‘an account separate from any other accounts or funds

available to the Director and shall be’’; and

(2) by adding after paragraph (6) (as added by the preceding

provisions of this title) the following new paragraph:

‘‘(7) for transfers to the National Flood Mitigation Fund,

but only to the extent provided in section 1367(b)(1); and’’.

SEC. 555. ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE

AND CONTROL MEASURES.

(a) IN GENERAL.—Section 1304 of the National Flood Insurance

Act of 1968 (42 U.S.C. 4011) is amended—

(1) by redesignating subsection (b) as subsection (c); and

(2) by inserting after subsection (a) the following new subsection:

‘‘(b) ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE

AND CONTROL MEASURES.—The national flood insurance program

established pursuant to subsection (a) shall enable the purchase

of insurance to cover the cost of compliance with land use and

control measures established under section 1361 for—

‘‘(1) properties that are repetitive loss structures;

‘‘(2) properties that have flood damage in which the cost

of repairs equals or exceeds 50 percent of the value of the

structure at the time of the flood event; and

‘‘(3) properties that have sustained flood damage on multiple occasions, if the Director determines that it is cost-effective

and in the best interests of the National Flood Insurance Fund

to require compliance with the land use and control measures.

The Director shall impose a surcharge on each insured of not

more than $75 per policy to provide cost of compliance coverage

in accordance with the provisions of this subsection.’’.

(b) APPLICABILITY.—The provisions of subsection (a) shall apply

only to properties that sustain flood-related damage after the date

of enactment of this Act.
H. R. 3474—116

Subtitle E—Task Forces

SEC. 561. FLOOD INSURANCE INTERAGENCY TASK FORCE.

(a) ESTABLISHMENT.—There is hereby established an interagency task force to be known as the Flood Insurance Task Force

(in this section referred to as the ‘‘Task Force’’).

(b) MEMBERSHIP.—

(1) IN GENERAL.—The Task Force shall be composed of

10 members, who shall be the designees of—

(A) the Federal Insurance Administrator;

(B) the Federal Housing Commissioner;

(C) the Secretary of Veterans Affairs;

(D) the Administrator of the Farmers Home

Administration;

(E) the Administrator of the Small Business

Administration;

(F) the Chairman of the Board of Directors of the

Farm Credit Administration;

(G) a designee of the Financial Institutions Examination Council;

(H) the Director of the Office of Federal Housing Enterprise Oversight;

(I) the chairman of the Board of Directors of the

Federal Home Loan Mortgage Corporation; and

(J) the chairman of the Board of Directors of the

Federal National Mortgage Association.

(2) QUALIFICATIONS.—Members of the Task Force shall be

designated for membership on the Task Force by reason of

demonstrated knowledge and competence regarding the

national flood insurance program.

(c) DUTIES.—The Task Force shall carry out the following

duties:

(1) RECOMMENDATIONS OF STANDARDIZED ENFORCEMENT

PROCEDURES.—Make recommendations to the head of each Federal agency and enterprise referred to under subsection (b)(1)

regarding establishment or adoption of standardized enforcement procedures among such agencies and corporations responsible for enforcing compliance with the requirements under

the national flood insurance program to ensure fullest possible

compliance with such requirements.

(2) STUDY OF COMPLIANCE ASSISTANCE.—Conduct a study

of the extent to which Federal agencies and the secondary

mortgage market can provide assistance in ensuring compliance

with the requirements under the national flood insurance program and submit to the Congress a report describing the study

and any conclusions.

(3) STUDY OF COMPLIANCE MODEL.—Conduct a study of

the extent to which existing programs of Federal agencies and

corporations for compliance with the requirements under the

national flood insurance program can serve as a model for

other Federal agencies responsible for enforcing compliance,

and submit to the Congress a report describing the study and

any conclusions.

(4) RECOMMENDATIONS FOR ENFORCEMENT AND COMPLIANCE

PROCEDURES.—Develop recommendations regarding enforce-
H. R. 3474—117

ment and compliance procedures, based on the studies and

findings of the Task Force, and publish such recommendations.

(5) STUDY OF DETERMINATION FEES.—Conduct a study of—

(A) the reasonableness of fees charged pursuant to

102(h) of the Flood Disaster Protection Act of 1973 for

costs of determining whether the property securing a loan

is located in an area having special flood hazards; and

(B) whether the fees charged pursuant to such section

by lenders and servicers are greater than the amounts

paid by such lenders and servicers to persons actually

conducting such determinations and the extent to which

the fees exceed such amounts.

(d) NONCOMPENSATION.—Members of the Task Force shall

receive no additional pay by reason of their service on the Task

Force.

(e) CHAIRPERSON.—The members of the Task Force shall elect

one member as chairperson of the Task Force.

(f) MEETINGS AND ACTION.—The Task Force shall meet at the

call of the chairman or a majority of the members of the Task

Force and may take action by a vote of the majority of the members.

The Federal Insurance Administrator shall coordinate and call the

initial meeting of the Task Force.

(g) OFFICERS.—The chairperson of the Task Force may appoint

any officers to carry out the duties of the Task Force under subsection (c).

(h) STAFF OF FEDERAL AGENCIES.—Upon request of the chairperson of the Task Force, the head of any of the Federal agencies

and entities referred to under subsection (b)(1) may detail, on

a nonreimbursable basis, any of the personnel of such agency to

the Task Force to assist the Task Force in carrying out its duties

under this section.

(i) POWERS.—In carrying out this section, the Task Force may

hold hearings, sit and act at times and places, take testimony,

receive evidence and assistance, provide information, and conduct

research as the Task Force considers appropriate.

(j) TERMINATION.—The Task Force shall terminate upon the

expiration of the 24-month period beginning upon the designation

of the last member to be designated under subsection (b)(1).

SEC. 562. TASK FORCE ON NATURAL AND BENEFICIAL FUNCTIONS

OF THE FLOODPLAIN.

(a) ESTABLISHMENT.—There is hereby established an interagency task force to be known as the Task Force on Natural

and Beneficial Functions of the Floodplain (in this section referred

to as the ‘‘Task Force’’).

(b) MEMBERSHIP.—The Task Force shall be composed of 5 members, who shall be the designees of—

(1) the Under Secretary of Commerce for Oceans and

Atmosphere;

(2) the Director of the United States Fish and Wildlife

Service;

(3) the Administrator of the Environmental Protection

Agency;

(4) the Secretary of the Army, acting through the Chief

of Engineers; and

(5) the Director of the Federal Emergency Management

Agency.
H. R. 3474—118

(c) DUTIES.—The Task Force shall—

(1) conduct a study to—

(A) identify the natural and beneficial functions of

the floodplain that reduce flood-related losses; and

(B) develop recommendations on how to reduce flood

losses by protecting the natural and beneficial functions

of the floodplain; and

(2) make the information and recommendations under subparagraphs (A) and (B) publicly available.

(d) NONCOMPENSATION.—Members of the Task Force shall

receive no additional pay by reason of their service on the Task

Force.

(e) CHAIRPERSON.—The members of the Task Force shall elect

one member as chairperson of the Task Force.

(f) MEETINGS AND ACTION.—The Task Force shall meet at the

call of the chairperson or a majority of the members of the Task

Force and may take action by a vote of the majority of the members.

The Federal Insurance Administrator shall coordinate and call the

initial meeting of the Task Force.

(g) OFFICERS.—The chairperson of the Task Force may appoint

any officers to carry out the duties of the Task Force under subsection (c).

(h) STAFF OF FEDERAL AGENCIES.—Upon request of the chairperson of the Task Force, the head of any of the Federal agencies

and entities referred to under subsection (b) may detail, on a

nonreimbursable basis, any of the personnel of such agency to

the Task Force to assist the Task Force in carrying out its duties

under this section.

(i) POWERS.—In carrying out this section, the Task Force may

hold hearings, sit and act at times and places, take testimony,

receive evidence and assistance, provide information, and conduct

research as the Task Force considers appropriate.

(j) TERMINATION.—The Task Force shall terminate upon the

expiration of the 24-month period beginning upon the designation

of the last member to be designated under subsection (b).

Subtitle F—Miscellaneous Provisions

SEC. 571. EXTENSION OF FLOOD INSURANCE PROGRAM.

(a) IN GENERAL.—Section 1319 of the National Flood Insurance

Act of 1968 (42 U.S.C. 4026) is amended by striking ‘‘September 30, 1995’’ and inserting ‘‘September 30, 1996’’. (b) EMERGENCY IMPLEMENTATION.—Section 1336(a) of the

National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)) is

amended by striking ‘‘September 30, 1995’’ and inserting ‘‘September 30, 1996’’.

SEC. 572. LIMITATION ON PREMIUM INCREASES.

(a) PROPERTY-SPECIFIC LIMITATION.—Section 1308 of the

National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is

amended—

(1) in subsection (c), by striking ‘‘Notwithstanding any other

provision of this title’’ and inserting ‘‘Subject only to the limitation under subsection (e)’’; and

(2) by inserting after subsection (d) the following new subsection:
H. R. 3474—119

‘‘(e) ANNUAL LIMITATION ON PREMIUM INCREASES.—Notwithstanding any other provision of this title, the chargeable risk premium rates for flood insurance under this title for any properties

within any single risk classification may not be increased by an

amount that would result in the average of such rate increases

for properties within the risk classification during any 12-month

period exceeding 10 percent of the average of the risk premium

rates for properties within the risk classification upon the

commencement of such 12-month period.’’. (b) REPEAL OF PROGRAM-WIDE LIMITATION.—Subsection (d) of

section 541 of the Housing and Community Development Act of

1987 (42 U.S.C. 4015 note) is hereby repealed.

SEC. 573. MAXIMUM FLOOD INSURANCE COVERAGE AMOUNTS.

(a) IN GENERAL.—Section 1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is amended as follows:

(1) RESIDENTIAL PROPERTY.—In paragraph (2), by striking ‘‘an amount of $150,000 under the provisions of this clause’’

and inserting the following: ‘‘a total amount (including such

limits specified in paragraph (1)(A)(i)) of $250,000’’. (2) RESIDENTIAL PROPERTY CONTENTS.—In paragraph (3),

by striking ‘‘an amount of $50,000 under the provisions of

this clause’’ and inserting the following: ‘‘a total amount (including such limits specified in paragraph (1)(A)(ii)) of $100,000’’. (3) NONRESIDENTIAL PROPERTY AND CONTENTS.—By striking paragraph (4) and inserting the following new paragraph: ‘‘(4) in the case of any nonresidential property, including

churches, for which the risk premium rate is determined in

accordance with the provisions of section 1307(a)(1), additional

flood insurance in excess of the limits specified in subparagraphs (B) and (C) of paragraph (1) shall be made available

to every insured upon renewal and every applicant for insurance, in respect to any single structure, up to a total amount

(including such limit specified in subparagraph (B) or (C) of

paragraph (1), as applicable) of $500,000 for each structure

and $500,000 for any contents related to each structure; and’’.

(b) REMOVAL OF CEILING ON COVERAGE REQUIRED.—Section

1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C.

4013(b)) is amended—

(1) in paragraph (5), by striking ‘‘; and’’ at the end and

inserting a period; and (2) by striking paragraph (6).

SEC. 574. FLOOD INSURANCE PROGRAM ARRANGEMENTS WITH PRIVATE INSURANCE ENTITIES.

Section 1345(b) of the National Flood Insurance Act of 1968

(42 U.S.C. 4081(b)) is amended by striking the period at the end

and inserting the following: ‘‘and without regard to the provisions

of the Federal Advisory Committee Act (5 U.S.C. App.).’’.

SEC. 575. UPDATING OF FLOOD MAPS.

Section 1360 of the National Flood Insurance Act of 1968 (42

U.S.C. 4101) is amended by adding at the end the following new

subsections:

‘‘(e) REVIEW OF FLOOD MAPS.—Once during each 5-year period

(the 1st such period beginning on the date of enactment of the

Riegle Community Development and Regulatory Improvement Act

of 1994) or more often as the Director determines necessary, the
H. R. 3474—120

Director shall assess the need to revise and update all floodplain

areas and flood risk zones identified, delineated, or established

under this section, based on an analysis of all natural hazards

affecting flood risks.

‘‘(f) UPDATING FLOOD MAPS.—The Director shall revise and

update any floodplain areas and flood-risk zones—

‘‘(1) upon the determination of the Director, according to

the assessment under subsection (e), that revision and updating

are necessary for the areas and zones; or

‘‘(2) upon the request from any State or local government

stating that specific floodplain areas or flood-risk zones in the

State or locality need revision or updating, if sufficient technical

data justifying the request is submitted and the unit of government making the request agrees to provide funds in an amount

determined by the Director, but which may not exceed 50

percent of the cost of carrying out the requested revision or

update.

‘‘(g) AVAILABILITY OF FLOOD MAPS.—To promote compliance

with the requirements of this title, the Director shall make flood

insurance rate maps and related information available free of charge

to the Federal entities for lending regulation, Federal agency lenders, State agencies directly responsible for coordinating the national

flood insurance program, and appropriate representatives of communities participating in the national flood insurance program, and

at a reasonable cost to all other persons. Any receipts resulting

from this subsection shall be deposited in the National Flood Insurance Fund, pursuant to section 1310(b)(6).

‘‘(h) NOTIFICATION OF FLOOD MAP CHANGES.—The Director shall

cause notice to be published in the Federal Register (or shall provide

notice by another comparable method) of any change to flood insurance map panels and any change to flood insurance map panels

issued in the form of a letter of map amendment or a letter of

map revision. Such notice shall be published or otherwise provided

not later than 30 days after the map change or revision becomes

effective. Notice by any method other than publication in the Federal Register shall include all pertinent information, provide for

regular and frequent distribution, and be at least as accessible

to map users as notice in the Federal Register. All notices under

this subsection shall include information on how to obtain copies

of the changes or revisions. ‘‘(i) COMPENDIA OF FLOOD MAP CHANGES.—Every 6 months,

the Director shall publish separately in their entirety within a

compendium, all changes and revisions to flood insurance map

panels and all letters of map amendment and letters of map revision

for which notice was published in the Federal Register or otherwise

provided during the preceding 6 months. The Director shall make

such compendia available, free of charge, to Federal entities for

lending regulation, Federal agency lenders, and States and communities participating in the national flood insurance program pursuant to section 1310 and at cost to all other parties. Any receipts

resulting from this subsection shall be deposited in the National

Flood Insurance Fund, pursuant to section 1310(b)(6).

‘‘(j) PROVISION OF INFORMATION.—In the implementation of revisions to and updates of flood insurance rate maps, the Director

shall share information, to the extent appropriate, with the Under

Secretary of Commerce for Oceans and Atmosphere and representatives from State coastal zone management programs.’’.
H. R. 3474—121

SEC. 576. TECHNICAL MAPPING ADVISORY COUNCIL.

(a) ESTABLISHMENT.—There is established a council to be known

as the Technical Mapping Advisory Council (in this section referred

to as the ‘‘Council’’).

(b) MEMBERSHIP.—

(1) IN GENERAL.—The Council shall consist of the Director

of the Federal Emergency Management Agency (in this section

referred to as the ‘‘Director’’), or the Director’s designee, and

10 additional members to be appointed by the Director or

the designee of the Director, who shall be—

(A) the Under Secretary of Commerce for Oceans and

Atmosphere (or his or her designee);

(B) a member of recognized surveying and mapping

professional associations and organizations;

(C) a member of recognized professional engineering

associations and organizations;

(D) a member of recognized professional associations

or organizations representing flood hazard determination

firms;

(E) a representative of the United States Geologic

Survey;

(F) a representative of State geologic survey programs;

(G) a representative of State national flood insurance

coordination offices;

(H) a representative of a regulated lending institution;

(I) a representative of the Federal Home Loan Mortgage Corporation; and

(J) a representative of the Federal National Mortgage

Association.

(2) QUALIFICATIONS.—Members of the Council shall be

appointed based on their demonstrated knowledge and competence regarding surveying, cartography, remote sensing,

geographic information systems, or the technical aspects of

preparing and using flood insurance rate maps.

(c) DUTIES.—The Council shall—

(1) make recommendations to the Director on how to

improve in a cost-effective manner the accuracy, general quality, ease of use, and distribution and dissemination of flood

insurance rate maps;

(2) recommend to the Director mapping standards and

guidelines for flood insurance rate maps; and

(3) submit an annual report to the Director that contains—

(A) a description of the activities of the Council;

(B) an evaluation of the status and performance of

flood insurance rate maps and mapping activities to revise

and update flood insurance rate maps, as established

pursuant to the amendment made by section 675; and

(C) a summary of recommendations made by the Council to the Director.

(d) CHAIRPERSON.—The members of the Council shall elect 1

member to serve as the chairperson of the Council (in this section

referred to as the ‘‘Chairperson’’).

(e) COORDINATION.—To ensure that the Council’s recommendations are consistent to the maximum extent practicable with

national digital spatial data collection and management standards,

the Chairperson shall consult with the Chairperson of the Federal
H. R. 3474—122

Geographic Data Committee (established pursuant to OMB Circular

A–16).

(f) COMPENSATION.—Members of the Council shall receive no

additional compensation by reason of their service on the Council.

(g) MEETINGS AND ACTIONS.—

(1) IN GENERAL.—The Council shall meet not less than

twice each year at the request of the Chairperson or a majority

of its members and may take action by a vote of the majority

of the members.

(2) INITIAL MEETING.—The Director, or a person designated

by the Director, shall request and coordinate the initial meeting

of the Council.

(h) OFFICERS.—The Chairperson may appoint officers to assist

in carrying out the duties of the Council under subsection (c).

(i) STAFF OF FEMA.—Upon the request of the Chairperson,

the Director may detail, on a nonreimbursable basis, personnel

of the Federal Emergency Management Agency to assist the Council

in carrying out its duties.

(j) POWERS.—In carrying out this section, the Council may

hold hearings, receive evidence and assistance, provide information,

and conduct research as it considers appropriate.

(k) TERMINATION.—The Council shall terminate 5 years after

the date on which all members of the Council have been appointed

under subsection (b)(1).

SEC. 577. EVALUATION OF EROSION HAZARDS.

(a) REPORT REQUIREMENT.—The Director of the Federal Emergency Management Agency (in this section referred to as the ‘‘Director’’) shall submit a report under this section to the Congress

that—

(1) lists all communities that are likely to be identified

as having erosion hazard areas; (2) estimates the amount of flood insurance claims under

the national flood insurance program that are attributable to

erosion;

(3) states the amount of flood insurance claims under such

program that are attributable to claims under section 1306(c)

of the National Flood Insurance Act of 1968;

(4) assesses the full economic impact of erosion on the

National Flood Insurance Fund; and

(5) determines the costs and benefits of expenditures necessary from the National Flood Insurance Fund to complete

mapping of erosion hazard areas.

(b) ESTIMATE OF FLOOD CLAIMS.—In developing the estimate under subsection (a)(2)—

(1) the Director may map a statistically valid and representative number of communities with erosion hazard areas

throughout the United States, including coastal, Great Lakes,

and, if technologically feasible, riverine areas; and

(2) the Director shall take into consideration the efforts

of State and local governments to assess, measure, and reduce

erosion hazards.

(c) ECONOMIC IMPACT.—

(1) IN GENERAL.—The assessment under subsection (a)(4)

shall assess the economic impact of—

(A) erosion on communities listed pursuant to subsection (a)(1);
H. R. 3474—123

(B) the denial of flood insurance for all structures

in communities listed pursuant to subsection (a)(1);

(C) the denial of flood insurance for structures that

are newly constructed in whole in communities listed

pursuant to subsection (a)(1);

(D) the establishment of (i) actuarial rates for existing

structures in communities listed pursuant to subsection

(a)(1), and (ii) actuarial rates for such structures in connection with the denial of flood insurance as described in

subparagraph (C);

(E) the establishment of actuarial rates for structures

newly constructed in whole in erosion hazard areas in

communities listed pursuant to subsection (a)(1);

(F) the denial of flood insurance pursuant to existing

requirements for coverage under the national flood insurance program;

(G) erosion hazard assessment, measurement, and

management activities undertaken by State and local

governments, including building restrictions, beach

nourishment, construction of sea walls and levees, and

other activities that reduce the risk of damage due to

erosion; and

(H) the mapping and identifying of communities (or

subdivisions thereof) having erosion hazard areas.

(2) SCOPE.—In assessing the economic impact of the activities under subparagraphs (A) through (H) of paragraph (1),

the assessment under subsection (a)(4) shall address such

impact on all significant economic factors, including the impact

on—

(A) the value of residential and commercial properties

in communities with erosion hazards;

(B) community tax revenues due to potential changes

in property values or commercial activity; (C) employment, including the potential loss or gain

of existing and new jobs in the community; (D) existing businesses and future economic development;

(E) the estimated cost of Federal and State disaster

assistance to flood victims; and

(F) the mapping and identifying of communities (or subdivisions thereof) having erosion hazard areas.

(3) PREPARATION.—The assessment required under subsection (a)(4) shall be conducted by a private independent entity

selected by the Director. The private entity shall consult with

a statistically valid and representative number of communities

listed pursuant to subsection (a)(1) in conducting the

assessment.

(d) COSTS AND BENEFITS OF MAPPING.—The determination

under subsection (a)(5) shall—

(1) determine the costs and benefits of mapping erosion

hazard areas, based upon the Director’s estimate of the actual

and prospective amount of flood insurance claims attributable

to erosion;

(2) if the Director determines that the savings to the

National Flood Insurance Fund will exceed the cost of mapping

erosion hazard areas, further assess whether using flood insurance premiums for costs of mapping erosion hazard areas is
H. R. 3474—124

cost-beneficial compared to alternative uses of such amounts,

including—

(A) funding the mitigation assistance program under

section 1366 of the National Flood Insurance Act of 1968

(as added by section 553 of this Act);

(B) funding the program under section 1304(b) of the

National Flood Insurance Act of 1968 (as added by section

555(a) of this Act) that provides additional coverage under

the national flood insurance program for compliance with

land use and control measures; and

(C) reviewing, revising, and updating flood insurance

rate maps under subsections (e) and (f) of section 1360

of the National Flood Insurance Act of 1968 (as added

by the amendment made by section 575 of this Act);

(3) if the Director determines under subsection (b)(1) that

mapping of riverine areas for erosion hazard areas is technologically feasible, determine the costs and benefits of conducting

the mapping of erosion hazards in riverine areas (A) separately

from the mapping of other erosion hazard areas, and (B)

together with the mapping of other such areas;

(4) if the Director determines that the savings to the

National Flood Insurance Fund will exceed the cost of mapping

erosion hazard areas in riverine areas, assess whether using

flood insurance premiums for costs of mapping erosion hazard

areas in riverine areas is cost-beneficial compared to alternative

uses of such amounts, including the uses under subparagraphs

(A) through (C) of paragraph (2); and

(5) determine the costs and benefits of mapping erosion,

other than those directly related to the financial condition

of the National Flood Insurance Program, and the costs of

not mapping erosion.

(e) DEFINITION.—For purposes of this section, the term ‘‘erosion

hazard area’’ means, based on erosion rate information and other

historical data available, an area where erosion or avulsion is

likely to result in damage to or loss of buildings and infrastructure

within a 60-year period.

(f) CONSULTATION.—In preparing the report under this section,

the Director shall consult with—

(1) representatives from State coastal zone management

programs approved under section 306 of the Coastal Zone

Management Act of 1972;

(2) the Administrator of the National Oceanic and

Atmospheric Administration; and

(3) any other persons, officials, or entities that the Director

considers appropriate.

(g) SUBMISSION.— The Director shall submit the report to the

Congress as soon as practicable, but not later than 2 years after

the date of enactment of this Act.

(h) AVAILABILITY OF NATIONAL FLOOD INSURANCE FUND.—Section 1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C.

4017(a)) is amended—

(1) in the matter preceding paragraph (1), by inserting

‘‘(except as otherwise provided in this section)’’ after ‘‘without

fiscal year limitation’’; and

(2) by inserting after paragraph (7) (as added by the preceding provisions of this title) the following new paragraph:
H. R. 3474—125

‘‘(8) for costs of preparing the report under section 577 of the Riegle Community Development and Regulatory Improvement Act of 1994, except that the fund shall be available

for the purpose under this paragraph in an amount not to

exceed an aggregate of $5,000,000 over the 2-year period beginning on the date of enactment of the Riegle Community Development and Regulatory Improvement Act of 1994.’’.

SEC. 578. STUDY OF ECONOMIC EFFECTS OF CHARGING ACTUARIALLY

BASED PREMIUM RATES FOR PRE-FIRM STRUCTURES.

(a) STUDY.—The Director of the Federal Emergency Manage- ment Agency (in this section referred to as the ‘‘Director’’) shall

conduct a study of the economic effects that would result from

increasing premium rates for flood insurance coverage made available under the national flood insurance program for pre-FIRM

structures to the full actuarial risk based premium rate determined

under section 1307(a)(1) of the National Flood Insurance Act of

1968 for the area in which the property is located. In conducting

the study, the Director shall— (1) determine each area that would be subject to such increased premium rates; and (2) for each such area, determine—

(A) the amount by which premium rates would be increased;

(B) the number and types of properties affected and the number and types of properties covered by flood insurance under this title likely to cancel such insurance if

the rate increases were made;

(C) the effects that the increased premium rates would

have on land values and property taxes; and (D) any other effects that the increased premium rates would have on the economy and homeowners. (b) DEFINITION OF PRE-FIRM STRUCTURE.—For purposes of sub- section (a), the term ‘‘pre-FIRM structure’’ means a structure that

was not constructed or substantially improved after the later of— (1) December 31, 1974; or

(2) the effective date of the initial rate map published by the Director under section 1360(a)(2) of the National Flood

Insurance Act of 1968 for the area in which such structure

is located.

(c) REPORT.—The Director shall submit a report to the Congress describing and explaining the findings of the study conducted under

this section. The report shall be submitted not later than 12 months

after the date of enactment of this Act.

SEC. 579. EFFECTIVE DATES OF POLICIES.

(a) 30-DAY DELAY.—Section 1306 of the National Flood Insurance Act of 1968 (42 U.S.C. 4013), as amended by the preceding

provisions of this title, is further amended by adding at the end

the following new subsection:

‘‘(c) EFFECTIVE DATE OF POLICIES.—

‘‘(1) WAITING PERIOD.—Except as provided in paragraph

(2), coverage under a new contract for flood insurance coverage

under this title entered into after the date of enactment of

the Riegle Community Development and Regulatory Improvement Act of 1994, and any modification to coverage under

an existing flood insurance contract made after such date,

shall become effective upon the expiration of the 30-day period
H. R. 3474—126

beginning on the date that all obligations for such coverage

(including completion of the application and payment of any

initial premiums owed) are satisfactorily completed.

‘‘(2) EXCEPTION.—The provisions of paragraph (1) shall not

apply to—

‘‘(A) the initial purchase of flood insurance coverage

under this title when the purchase of insurance is in

connection with the making, increasing, extension, or

renewal of a loan; or

‘‘(B) the initial purchase of flood insurance coverage

pursuant to a revision or updating of floodplain areas or

flood-risk zones under section 1360(f), if such purchase

occurs during the 1-year period beginning upon publication

of notice of the revision or updating under section 1360(h).’’.

(b) STUDY.—The Director of the Federal Emergency Management Agency shall conduct a study to determine the appropriateness

of existing requirements regarding the effective date and time of

coverage under flood insurance contracts obtained through the

national flood insurance program. In conducting the study, the

Director shall determine whether any delay between the time of

purchase of flood insurance coverage and the time of initial effectiveness of the coverage should differ for various classes of properties

(based upon the type of property, location of the property, or any

other factors related to the property) or for various circumstances

under which such insurance was purchased. Not later than the

expiration of the 6-month period beginning on the date of enactment

of this Act, the Director shall submit to the Congress a report

on the results of the study.

SEC. 580. AGRICULTURAL STRUCTURES.

Section 1315(a) of the National Flood Insurance Act of 1968

(42 U.S.C. 4022(a)), as amended by the preceding provisions of

this title, is further amended by adding at the end the following

new paragraph: ‘‘(2) AGRICULTURAL STRUCTURES.— ‘‘(A) ACTIVITY RESTRICTIONS.—Notwithstanding any

other provision of law, the adequate land use and control

measures required to be adopted in an area (or subdivision

thereof) pursuant to paragraph (1) may provide, at the

discretion of the appropriate State or local authority, for

the repair and restoration to predamaged conditions of

an agricultural structure that— ‘‘(i) is a repetitive loss structure; or

‘‘(ii) has incurred flood-related damage to the

extent that the cost of restoring the structure to its

predamaged condition would equal or exceed 50 percent

of the market value of the structure before the damage

occurred.

‘‘(B) PREMIUM RATES AND COVERAGE.—To the extent

applicable, an agricultural structure repaired or restored

pursuant to subparagraph (A) shall pay chargeable premium rates established under section 1308 at the estimated

risk premium rates under section 1307(a)(1). If resources

are available, the Director shall provide technical assistance and counseling, upon request of the owner of the

structure, regarding wet flood-proofing and other flood damage reduction measures for agricultural structures. The
H. R. 3474—127

Director shall not be required to make flood insurance

coverage available for such an agricultural structure unless

the structure is wet flood-proofed through permanent or

contingent measures applied to the structure or its contents

that prevent or provide resistance to damage from flooding

by allowing flood waters to pass through the structure,

as determined by the Director. ‘‘(C) PROHIBITION ON DISASTER RELIEF.—Notwithstanding any other provision of law, any agricultural structure

repaired or restored pursuant to subparagraph (A) shall

not be eligible for disaster relief assistance under any program administered by the Director or any other Federal

agency. ‘‘(D) DEFINITIONS.—For purposes of this paragraph— ‘‘(i) the term ‘agricultural structure’ means any structure used exclusively in connection with the

production, harvesting, storage, raising, or drying of

agricultural commodities; and ‘‘(ii) the term ‘agricultural commodities’ means agricultural commodities and livestock.’’.

SEC. 581. IMPLEMENTATION REVIEW BY DIRECTOR.

Section 1320 of the National Flood Insurance Act of 1968 (42

U.S.C. 4027) is amended—

(1) by striking ‘‘The Director’’ and inserting ‘‘(a) IN GEN- ERAL.—The Director’’; and

(2) by adding at the end the following new subsection: ‘‘(b) EFFECTS OF FLOOD INSURANCE PROGRAM.—The Director

shall include, as part of the biennial report submitted under subsection (a), a chapter reporting on the effects on the flood insurance

program observed through implementation of requirements under

the Riegle Community Development and Regulatory Improvement

Act of 1994.’’.

SEC. 582. PROHIBITED FLOOD DISASTER ASSISTANCE.

(a) GENERAL PROHIBITION.—Notwithstanding any other provi- sion of law, no Federal disaster relief assistance made available

in a flood disaster area may be used to make a payment (including

any loan assistance payment) to a person for repair, replacement,

or restoration for damage to any personal, residential, or commercial

property if that person at any time has received flood disaster

assistance that was conditional on the person first having obtained

flood insurance under applicable Federal law and subsequently

having failed to obtain and maintain flood insurance as required

under applicable Federal law on such property. (b) TRANSFER OF PROPERTY.— (1) DUTY TO NOTIFY.—In the event of the transfer of any property described in paragraph (3), the transferor shall, not

later than the date on which such transfer occurs, notify the

transferee in writing of the requirements to—

(A) obtain flood insurance in accordance with

applicable Federal law with respect to such property, if

the property is not so insured as of the date on which

the property is transferred; and

(B) maintain flood insurance in accordance with

applicable Federal law with respect to such property.

Such written notification shall be contained in documents

evidencing the transfer of ownership of the property.
H. R. 3474—128

(2) FAILURE TO NOTIFY.—If a transferor described in para- graph (1) fails to make a notification in accordance with such

paragraph and, subsequent to the transfer of the property— (A) the transferee fails to obtain or maintain flood

insurance in accordance with applicable Federal law with

respect to the property, (B) the property is damaged by a flood disaster, and

(C) Federal disaster relief assistance is provided for

the repair, replacement, or restoration of the property as

a result of such damage, the transferor shall be required to reimburse the Federal

Government in an amount equal to the amount of the Federal

disaster relief assistance provided with respect to the property. (3) PROPERTY DESCRIBED.—For purposes of paragraph (1), a property is described in this paragraph if it is personal,

commercial, or residential property for which Federal disaster

relief assistance made available in a flood disaster area has

been provided, prior to the date on which the property is

transferred, for repair, replacement, or restoration of the property, if such assistance was conditioned upon obtaining flood

insurance in accordance with applicable Federal law with

respect to such property.

(c) AMENDMENT TO THE FLOOD DISASTER PROTECTION ACT OF

1973.—Section 102(a) of the Flood Disaster Protection Act of 1973

(42 U.S.C. 4012a(a)) is amended—

(1) by striking ‘‘, during the anticipated economic or useful life of the project,’’; and (2) by adding at the end the following: ‘‘The requirement of maintaining flood insurance shall apply during the life of

the property, regardless of transfer of ownership of such property.’’.

(d) DEFINITION.—For purposes of this section, the term ‘‘flood

disaster area’’ means an area with respect to which— (1) the Secretary of Agriculture finds, or has found, to have been substantially affected by a natural disaster in the

United States pursuant to section 321(a) of the Consolidated

Farm and Rural Development Act (7 U.S.C. 1961(a)); or (2) the President declares, or has declared, the existence

of a major disaster or emergency pursuant to the Robert T.

Stafford Disaster Relief and Emergency Assistance Act (42

U.S.C. 5121 et seq.), as a result of flood conditions existing

in or affecting that area.

(e) EFFECTIVE DATE.—This section and the amendments made

by this section shall apply to disasters declared after the date

of enactment of this Act.

SEC. 583. REGULATIONS.

The Director of the Federal Emergency Management Agency

and any appropriate Federal agency may each issue any regulations

necessary to carry out the applicable provisions of this title and

the applicable amendments made by this title.

SEC. 584. RELATION TO STATE AND LOCAL LAWS.

This title and the amendments made by this title may not

be construed to preempt, annul, alter, amend, or exempt any person

from compliance with any law, ordinance, or regulation of any

State or local government with respect to land use, management,

or control.
H. R. 3474—129

TITLE VI—GENERAL PROVISIONS

SEC. 601. OVERSIGHT HEARINGS.

It is the sense of the Senate that—

(a) Congress has a constitutional obligation to conduct oversight of matters relating to the operations of the Government,

including matters related to any governmental investigations

which may, from time to time, be undertaken.

(b) The Majority Leader and the Republican Leader should

meet and determine the appropriate timetable, procedures, and

forum for appropriate Congressional oversight, including hearings on all matters related to ‘‘Madison Guaranty Savings and

Loan Association (‘MGS&L’), Whitewater Development Corporation and Capital Management Services Inc. (‘CMS’).’’.

(c) No witness called to testify at these hearings shall

be granted immunity under sections 6002 and 6005 of title

18, United States Code, over the objection of Special Counsel

Robert B. Fiske, Jr.

(d) The hearings should be structured and sequenced in

such a manner that in the judgment of the Leaders they would

not interfere with the ongoing investigation of Special Counsel

Robert B. Fiske, Jr.

SEC. 602. TECHNICAL AMENDMENTS TO THE FEDERAL BANKING LAWS.

(a) FEDERAL DEPOSIT INSURANCE ACT AMENDMENTS.—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(1) in section 3—

(A) in subsection (i)(1), by striking ‘‘(11)(h)’’ and inserting ‘‘(11)(m)’’;

(B) in subsection (l)(4), by striking ‘‘bank’s or’’ and

inserting ‘‘a bank’s or a’’; and

(C) in subsection (q)(2)(E), by striking ‘‘Depository

Institutions Supervisory Act’’ and inserting ‘‘Financial

Institutions Supervisory Act of 1966’’;

(2) in section 5(b)(5), by striking the semicolon at the

end and inserting a comma;

(3) in section 5(e)(4), by redesignating clauses (i) and (ii)

as subparagraphs (A) and (B) respectively, and indenting

appropriately;

(4) in section 7(a)(3), by striking ‘‘Chairman of the’’ before

‘‘Director of the Office of Thrift Supervision’’;

(5) in section 7(b)(3)(C), by striking the first period at

the end;

(6) in section 7(j)(2)(A), in the third sentence—

(A) by striking ‘‘this section (j)(2)’’ and inserting ‘‘this

paragraph’’; and

(B) by striking ‘‘this subsection (j)(2)’’ and inserting

‘‘this paragraph’’;

(7) in section 7(j)(7)(A), by striking ‘‘monoplize’’ and inserting ‘‘monopolize’’;

(8) in section 7(l)(7), by striking ‘‘the ratio of the value

of’’ and inserting ‘‘the ratio of’’;

(9) in section 7(m)(5)(A) by striking ‘‘savings association

institution’’ and inserting ‘‘such institution’’;

(10) in section 7(m)(7), by inserting ‘‘the’’ before ‘‘Federal’’;
H. R. 3474—130

(11) in section 8(a)(3), by striking ‘‘subparagraph (B) of

this subsection’’ and inserting ‘‘paragraph (2)(B)’’;

(12) in section 8(a)(7)—

(A) by inserting a comma after ‘‘Board of Directors’’;

and

(B) by striking ‘‘the period the period’’ and inserting

‘‘the period’’;

(13) in section 8(b)(4), by striking ‘‘subparagraph (3)’’ and

inserting ‘‘paragraph (3)’’;

(14) in section 8(c)(2), by striking ‘‘injuction’’ and inserting

‘‘injunction’’;

(15) in section 8(g)(2), by striking ‘‘depository institution’’

each place such term appears and inserting ‘‘bank’’;

(16) in section 8(o)—

(A) in the second sentence, by striking ‘‘subsection

(b)’’ and inserting ‘‘subsection (d)’’; and

(B) by striking ‘‘board of directors’’ each place such

term appears and inserting ‘‘Board of Directors’’;

(17) in section 8(p), by striking ‘‘banking’’ each place such

term appears and inserting ‘‘depository’’;

(18) in section 8(r)(2), by striking ‘‘therof’’ and inserting

‘‘thereof’’;

(19) in section 10(b)(1), by striking ‘‘claim’’ and inserting

‘‘claims’’;

(20) in section 10(b)(2)(B), by adding ‘‘and’’ at the end;

(21) in the section heading for paragraph (4) of section

11(a), by striking ‘‘PROVISIONS’’ and inserting ‘‘PROVISIONS’’;

(22) in section 11(d)(2)(B)(iii), by striking ‘‘is’’ and inserting

‘‘are’’;

(23) in section 11(d)(8)(B)(ii), by inserting ‘‘provide’’ before

‘‘a statement’’;

(24) in section 11(d)(14)(B), by striking ‘‘statute of limitation’’ and inserting ‘‘statute of limitations’’; (25) in section 11(d)(16)(B)(iv), by striking ‘‘dispositions’’

and inserting ‘‘disposition’’; (26) in section 11(e)(8)(D)(v)(I), by inserting a closing parenthesis after ‘‘1934’’;

(27) in section 11(e)(12)(B), by striking ‘‘directors or officers’’

and inserting ‘‘director’s or officer’s’’; (28) in section 11(f)(3)(A), by striking ‘‘TO’’ in the heading

and inserting ‘‘WITH’’;

(29) in the second sentence of section 11(i)(3)(A), by striking

‘‘other claimant or category or claimants’’ and inserting ‘‘other

claimant or category of claimants’’; (30) in section 11(n)(4)(E)(i), by adding ‘‘and’’ at the end;

(31) in section 11(n)(12)(A), by striking ‘‘subparagraphs’’

and inserting ‘‘subparagraph’’;

(32) in the second sentence of section 11(q)(1), by striking

‘‘decided’’ and inserting ‘‘held’’;

(33) in section 11(u)(3)(B), by striking ‘‘subsection (c)(9)’’

and inserting ‘‘section 40(p)’’;

(34) in section 13(c)(1)(B)—

(A) by striking ‘‘a in default insured bank’’ and inserting ‘‘an insured bank in default’’; and

(B) by striking ‘‘such in default insured bank’’ and

inserting ‘‘such insured bank’’;

(35) in section 13(c)(2)(A)—
H. R. 3474—131

(A) by striking ‘‘with an insured institution’’ and inserting ‘‘with another insured depository institution’’; and

(B) by striking ‘‘by an insured institution’’ and inserting

‘‘by another insured depository institution’’;

(36) in section 13(f)(2)(B)(i), by striking ‘‘the in default

insured bank’’ and inserting ‘‘the insured bank in default’’;

(37) in section 13(f)(2)(B)(iii), by striking ‘‘of of’’ and inserting ‘‘of’’;

(38) in section 13(f)(3), by striking ‘‘CLOSING’’ in the heading

and inserting ‘‘DEFAULT’’;

(39) in section 13(f)(6)(A), by striking ‘‘bank that has in

default’’ and inserting ‘‘bank that is in default’’;

(40) in section 13(f)(6)(B)(i), by striking the semicolon at

the end and inserting a period;

(41) in section 13(f)(7)—

(A) in subparagraph (A), by striking ‘‘or’’ at the end;

and

(B) in subparagraph (B), by striking the period at

the end and inserting ‘‘; or’’;

(42) in section 13(f)(12)(A), by striking ‘‘is less than’’ and

inserting ‘‘are less than’’;

(43) in section 15(c)(1), by striking ‘‘OBLIGATIONS LIABILITIES’’ in the heading and inserting ‘‘OBLIGATIONS, GUARANTEES,

AND LIABILITIES’’;

(44) in section 18(b), by striking ‘‘, if such bank shall

deposit’’ and inserting ‘‘if the insured depository institution

deposits’’;

(45) in section 18(c)(1)(B), by inserting ‘‘or’’ at the end;

(46) in section 18(c)(4), by striking ‘‘other two banking

agencies’’ each place such term appears and inserting ‘‘other

Federal banking agencies’’;

(47) in section 18(c)(6), by striking ‘‘other two banking

agencies’’ and inserting ‘‘other Federal banking agencies’’;

(48) in section 18(c)(9), by striking ‘‘with the following

information:’’ and inserting ‘‘with—’’;

(49) in section 18(f)—

(A) by striking ‘‘such bank’’ and inserting ‘‘such insured

depository institution’’; and

(B) by striking ‘‘the bank’’ and inserting ‘‘the insured

depository institution’’;

(50) in section 18(k)(4)(A)(ii)(II), by striking ‘‘or’’ at the

end;

(51) in section 20(a)(3), by inserting ‘‘or’’ at the end;

(52) in section 21(c), by striking ‘‘the bank’’ and inserting

‘‘the insured depository institution’’;

(53) in section 21(d)(2), by striking ‘‘the bank’’ and inserting

‘‘the insured depository institution’’;

(54) in section 21(e), by striking ‘‘the bank’’ and inserting

‘‘the insured depository institution’’;

(55) in section 25(a), by striking ‘‘the bank’’ each place

it appears and inserting ‘‘the insured depository institution,

insured branch, or bank’’;

(56) in section 28(c)(2)(A)(i) by striking ‘‘, or’’ and inserting

‘‘; or’’;

(57) in section 28(d)(4)(C), by striking ‘‘subparagraphs’’ and

inserting ‘‘subparagraph’’;
H. R. 3474—132

(58) in section 28(e)(4), by striking ‘‘any other’’ and inserting ‘‘and any other’’;

(59) in section 30(e)(1)(A), by striking ‘‘venders’’ and inserting ‘‘the vendors’’;

(60) in section 31(b)(1), by striking ‘‘Board of Directors’’

and inserting ‘‘board of directors’’;

(61) in section 33(c)(1), by striking the comma at the end

and inserting a semicolon;

(62) in section 34(a)(1)(A)(iii)—

(A) by striking ‘‘sections’’ and inserting ‘‘section’’; and

(B) by striking ‘‘and’’ and inserting ‘‘or’’;

(63) in section 34(a)(2), by adding a period at the end;

(64) in section 38(f)(6), by striking ‘‘Commisssion’’ and

inserting ‘‘Commission’’;

(65) in section 40(c)(4)(A), by striking ‘‘subsections

(p)(12)(B) and (C)’’ and inserting ‘‘subparagraphs (B) and (C)

of subsection (p)(12)’’; and

(66) in section 40(d)(8)(A), by striking ‘‘meeting’’ and inserting ‘‘meeting the’’.

(b) FEDERAL HOME LOAN BANK ACT.—Section 21A of the

Federal Home Loan Bank Act (12 U.S.C. 1441a) is amended—

(1) in subsection (a)(11), by striking ‘‘a United States District Court’’ and inserting ‘‘a United States district court’’;

(2) in subsection (b)(11)(B)(iii), by striking the comma after

‘‘chapter 5’’;

(3) in subsection (b)(11)(E)(iv)(II), by striking ‘‘knowledgable’’ and inserting ‘‘knowledgeable’’;

(4) in subsection (b)(11)(G), by inserting ‘‘ADVISORY PERSON- NEL.—’’ before ‘‘The Corporation shall’’;

(5) in subsection (r)(4), by striking ‘‘subsection.—’’ and

inserting ‘‘subsection, the following definitions shall apply:’’; (6) in subsection (s)(2), by striking ‘‘subsection—’’ and

inserting ‘‘subsection, the following definitions shall apply:’’;

and

(7) in subsection (u)(5), by striking ‘‘subsection—’’ and

inserting ‘‘subsection, the following definitions shall apply:’’.

(c) RESOLUTION TRUST CORPORATION COMPLETION ACT.—Section 21(a) of the Resolution Trust Corporation Completion Act (107

Stat. 2406) is amended—

(1) by striking ‘‘33(a)’’ and inserting ‘‘33’’;

(2) by striking ‘‘1831j(a)’’ and inserting ‘‘1831j’’;

(3) in paragraph (1), by striking ‘‘paragraph (1)’’ and insert- ing ‘‘subsection (a)(1)’’; and (4) in paragraph (2), by striking ‘‘paragraph (2)’’ and insert- ing ‘‘subsection (a)(2)’’.

(d) FEDERAL RESERVE ACT.—Section 7(a) of the Federal Reserve

Act (12 U.S.C. 289) is amended—

(1) in paragraph (1)(B), by inserting ‘‘(A)’’ after ‘‘subparagraph’’; and

(2) in paragraph (2), by striking ‘‘subparagraph (A)’’ and

inserting ‘‘paragraph (1)(A)’’.

(e) REPEAL OF PROVISIONS IN THE REVISED STATUTES.—The

following sections of the Revised Statutes are hereby repealed:

(1) Section 5170 (12 U.S.C. 28).

(2) Section 5203 (12 U.S.C. 87).

(3) Section 5206 (12 U.S.C. 88).

(4) Section 5196 (12 U.S.C. 89).
H. R. 3474—133

(5) Section 5158 (12 U.S.C. 102).

(6) Section 5159 (12 U.S.C. 101a).

(7) Section 5172 (12 U.S.C. 104).

(8) Section 5173 (12 U.S.C. 107).

(9) Section 5174 (12 U.S.C. 108).

(10) Section 5182 (12 U.S.C. 109).

(11) Section 5183 (12 U.S.C. 110).

(12) Section 5195 (12 U.S.C. 123).

(13) Section 5184 (12 U.S.C. 124).

(14) Section 5226 (12 U.S.C. 131).

(15) Section 5227 (12 U.S.C. 132).

(16) Section 5228 (12 U.S.C. 133).

(17) Section 5229 (12 U.S.C. 134).

(18) Section 5230 (12 U.S.C. 137).

(19) Section 5231 (12 U.S.C. 138).

(20) Section 5232 (12 U.S.C. 135).

(21) Section 5233 (12 U.S.C. 136).

(22) Section 5185 (12 U.S.C. 151).

(23) Section 5186 (12 U.S.C. 152).

(24) Section 5160 (12 U.S.C. 168).

(25) Section 5161 (12 U.S.C. 169).

(26) Section 5162 (12 U.S.C. 170).

(27) Section 5163 (12 U.S.C. 171).

(28) Section 5164 (12 U.S.C. 172).

(29) Section 5165 (12 U.S.C. 173).

(30) Section 5166 (12 U.S.C. 174).

(31) Section 5167 (12 U.S.C. 175).

(32) Section 5222 (12 U.S.C. 183).

(33) Section 5223 (12 U.S.C. 184).

(34) Section 5224 (12 U.S.C. 185).

(35) Section 5225 (12 U.S.C. 186).

(36) Section 5237 (12 U.S.C. 195).

(f) REPEAL OF OTHER OBSOLETE PROVISIONS IN BANKING

LAWS.—The following provisions of law are hereby repealed: (1) Section 26 of the Federal Deposit Insurance Act (12

U.S.C. 1831c).

(2) Section 12 of the Act entitled ‘‘An Act To define and

fix the standard of value, to maintain the parity of all forms

of money issued or coined by the United States, to refund

the public debt, and for other purposes.’’ and approved March

14, 1900 (12 U.S.C. 101).

(3) Section 3 of the Act entitled ‘‘An Act To amend the

laws relating to the denominations of circulating notes by

national banks and to permit the issuance of notes of small

denominations, and for other purposes.’’ and approved October

5, 1917 (12 U.S.C. 103).

(4) The following sections of the Act entitled ‘‘An Act fixing

the amount of United States notes, providing for a redistribution of the national-bank currency, and for other purposes.’’

and approved June 20, 1874:

(A) Section 5 (12 U.S.C. 105).

(B) Section 3 (12 U.S.C. 121).

(C) Section 8 (12 U.S.C. 126).

(D) Section 4 (12 U.S.C. 176).

(5) The following sections of the Act entitled ‘‘An Act to

enable national-banking associations to extend their corporate

existence, and for other purposes.’’ and approved July 12, 1882:
H. R. 3474—134

(A) Section 8 (12 U.S.C. 177).

(B) Section 9 (12 U.S.C. 178).

(6) The Act entitled ‘‘An Act to amend the national bank

act in providing for the redemption of national bank notes

stolen from or lost by banks of issue.’’ and approved July

28, 1892 (12 U.S.C. 125).

(7) The Act entitled ‘‘An Act authorizing the conversion

of national gold banks.’’ and approved February 14, 1880 (12

U.S.C. 153).

(g) AMENDMENTS TO OTHER LAWS.—

(1) The 8th paragraph of the 4th undesignated paragraph

of section 4 of the Federal Reserve Act (12 U.S.C. 341) is

amended by striking ‘‘Comptroller of the Currency’’ and inserting ‘‘Secretary of the Treasury’’.

(2) Section 11(d) of the Federal Reserve Act (12 U.S.C.

248(d)) is amended—

(A) by striking ‘‘bureau under the charge of the

Comptroller of the Currency’’ and inserting ‘‘Secretary of

the Treasury’’; and

(B) by striking ‘‘Comptroller’’ and inserting ‘‘Secretary

of the Treasury’’.

(3) The 1st sentence of the 8th undesignated paragraph

of section 16 of the Federal Reserve Act (12 U.S.C. 418) is

amended by striking ‘‘the Comptroller of the Currency shall

under the direction of the Secretary of the Treasury,’’ and

inserting ‘‘the Secretary of the Treasury shall’’.

(4) The 9th undesignated paragraph of section 16 of the

Federal Reserve Act (12 U.S.C. 419) is amended to read as

follows:

‘‘When such notes have been prepared, the notes shall

be delivered to the Board of Governors of the Federal Reserve

System subject to the order of the Secretary of the Treasury

for the delivery of such notes in accordance with this Act.’’. (5) The 10th undesignated paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 420) is amended—

(A) by striking ‘‘Comptroller of the Currency’’ and

inserting ‘‘Secretary of the Treasury’’; and (B) by striking ‘‘Federal Reserve Board’’ and inserting

‘‘Board of Governors of the Federal Reserve System’’.

(6) The 11th undesignated paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 421) is amended to read as

follows:

‘‘The Secretary of the Treasury may examine the plates,

dies, bed pieces, and other material used in the printing of

Federal Reserve notes and issue regulations relating to such

examinations.’’.

(7) The 6th undesignated paragraph of section 18 of the

Federal Reserve Act (38 Stat. 269) is amended—

(A) by striking ‘‘Comptroller of the Currency’’ each

place it appears and inserting ‘‘Secretary of the Treasury’’;

and

(B) in the 7th sentence, by striking ‘‘Comptroller’’ and

inserting ‘‘Secretary of the Treasury’’.

(8) The Act entitled ‘‘An Act to provide for the redemption

of national-bank notes, Federal Reserve bank notes, and Federal Reserve notes which cannot be identified as to the bank

of issue.’’ and approved June 13, 1933, is amended—
H. R. 3474—135

(A) in the 1st section (12 U.S.C. 121a)—

(i) by striking ‘‘whenever any national-bank notes,

Federal Reserve bank notes,’’ and inserting ‘‘whenever

any Federal Reserve bank notes’’; and

(ii) by striking ‘‘, and the notes, other than Federal

Reserve notes, so redeemed shall be forwarded to the

Comptroller of the Currency for cancellation and

destruction’’; and

(B) in section 2 (12 U.S.C. 122a)—

(i) by striking ‘‘National-bank notes and’’; and

(ii) by striking ‘‘national-bank notes and’’.

(9) The 1st section of the Act entitled ‘‘An Act making

appropriations for sundry civil expenses of the Government

for the fiscal year ending June thirtieth, eighteen hundred

and seventy-six, and for other purposes.’’ and approved March

3, 1875, is amended in the 1st paragraph which appears under

the heading ‘‘NATIONAL CURRENCY’’ by striking ‘‘Secretary of

the Treasury: Provided, That’’ and all that follows through

the period and inserting ‘‘Secretary of the Treasury.’’.

(10) The Act entitled ‘‘An Act to simplify the accounts

of the Treasurer of the United States, and for other purposes.’’

and approved October 10, 1940 (12 U.S.C. 177a) is amended

by striking all after the enacting clause and inserting the

following: ‘‘That the cost of transporting and redeeming

outstanding national bank notes and Federal Reserve bank

notes as may be presented to the Treasurer of the United

States for redemption shall be paid from the regular annual

appropriation for the Department of the Treasury.’’. (11) Section 5234 of the Revised Statutes (12 U.S.C. 192)

is amended by striking ‘‘has refused to pay its circulating

notes as therein mentioned, and’’.

(12) Section 5236 of the Revised Statutes (12 U.S.C. 194)

is amended by striking ‘‘, after full provision has been first

made for refunding to the United States any deficiency in

redeeming the notes of such association’’. (13) Section 5238 of the Revised Statutes (12 U.S.C. 196)

is amended by striking the 1st sentence. (14) Section 5119(b)(2) of title 31, United States Code,

is amended by adding at the end the following: ‘‘The Secretary

shall not be required to reissue United States currency notes

upon redemption.’’.

(h) AMENDMENTS TO OUTDATED DIVIDEND PROVISIONS.— (1) WITHDRAWAL OF CAPITAL.—Section 5204 of the Revised

Statutes (12 U.S.C. 56) is amended—

(A) in the 2d sentence, by striking ‘‘net profits then

on hand, deducting therefrom its losses and bad debts’’

and inserting ‘‘undivided profits, subject to other applicable

provisions of law’’; and

(B) by striking the 3d sentence.

(2) DECLARATION OF DIVIDENDS.—Section 5199 of the

Revised Statutes (12 U.S.C. 60) is amended—

(A) in the 1st sentence, by striking ‘‘net profits of

the association’’ and inserting ‘‘undivided profits of the

association, subject to the limitations in subsection (b),’’;

(B) by striking ‘‘net profits’’ each subsequent place

such term appears and inserting ‘‘net income’’; and

(C) by striking subsection (c).
H. R. 3474—136

(i) CLERICAL AMENDMENTS.—

(1) The table of sections for chapter 1 of title LXII of

the Revised Statutes of the United States is amended—

(A) by inserting after the item relating to section 5156

the following new item:

‘‘5156A. Mergers, consolidations, and other acquisitions authorized.’’;

and

(B) by striking the items relating to sections 5141

and 5151.

(2) The table of sections for chapter 2 of title LXII of

the Revised Statutes of the United States is amended by striking the item relating to each of the following sections:

(A) Section 5158.

(B) Section 5159.

(C) Section 5160.

(D) Section 5161.

(E) Section 5162.

(F) Section 5163.

(G) Section 5164.

(H) Section 5165.

(I) Section 5166.

(J) Section 5167.

(K) Section 5170.

(L) Section 5171.

(M) Section 5172.

(N) Section 5173.

(O) Section 5174.

(P) Section 5175.

(Q) Section 5176.

(R) Section 5177.

(S) Section 5178.

(T) Section 5179.

(U) Section 5180.

(V) Section 5181.

(W) Section 5182.

(X) Section 5183.

(Y) Section 5184.

(Z) Section 5185.

(AA) Section 5186.

(BB) Section 5187.

(CC) Section 5188.

(DD) Section 5189.

(3) The table of sections for chapter 3 of title LXII of

the Revised Statutes of the United States is amended by striking the item relating to each of the following sections:

(A) Section 5193.

(B) Section 5194.

(C) Section 5195.

(D) Section 5196.

(E) Section 5202.

(F) Section 5203.

(G) Section 5206.

(H) Section 5209.

(I) Section 5212.

(4) The table of sections for chapter 4 of title LXII of

the Revised Statutes of the United States is amended—
H. R. 3474—137

(A) by inserting after the item relating to section 5239

the following new item:

‘‘5239A. Regulatory authority.’’;

and

(B) by striking the items relating to the following sections:

(i) Section 5222.

(ii) Section 5223.

(iii) Section 5224.

(iv) Section 5225.

(v) Section 5226.

(vi) Section 5227.

(vii) Section 5228.

(viii) Section 5229.

(ix) Section 5230.

(x) Section 5231.

(xi) Section 5232.

(xii) Section 5233.

(xiii) Section 5237.

(xiv) Section 5243.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.