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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6775 Introduced in House (IH)]

<DOC>

118th CONGRESS
  1st Session
                                H. R. 6775

  To provide for the Federal charter of certain public banks, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           December 13, 2023

  Ms. Tlaib (for herself, Ms. Ocasio-Cortez, Ms. Pressley, Ms. Lee of 
  California, Ms. Schakowsky, and Ms. Omar) introduced the following 
bill; which was referred to the Committee on Financial Services, and in 
 addition to the Committees on Oversight and Accountability, Ways and 
    Means, and Energy and Commerce, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
  To provide for the Federal charter of certain public banks, 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 ``Public Banking Act 
of 2023''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
              TITLE I--FEDERAL RECOGNITION OF PUBLIC BANKS

Sec. 101. Federal charter of public lending banks and public payment 
                            banks.
Sec. 102. Federal recognition of non-federally chartered banks.
Sec. 103. Federal Reserve System membership.
Sec. 104. Public member bank services.
Sec. 105. Specific requirements relating to covered banks.
Sec. 106. Regulations.
Sec. 107. Technical assistance.
           TITLE II--FEDERAL RECOGNITION OF PUBLIC SECURITIES

Sec. 201. Regulation of public lending banks and non-federally 
                            chartered banks.
                  TITLE III--PUBLIC DEPOSIT INSURANCE

Sec. 301. In general.
                        TITLE IV--POSTAL BANKING

Sec. 401. Partnerships with covered banks for postal banking services.
               TITLE V--PUBLIC BANK DEVELOPMENT PROGRAMS

Sec. 501. Public bank grant program.
Sec. 502. Public bank incubator program.
Sec. 503. Community development grant program.
Sec. 504. Treatment of funding.
         TITLE VI--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS

Sec. 601. State and local instrumentalities eligible to be community 
                            development financial institutions.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Board of governors.--The term ``Board of Governors'' 
        means the Board of Governors of the Federal Reserve System.
            (2) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (3) Copyleft license.--The term ``copyleft license'' means 
        any copyright license with respect to technology that grants 
        the licensee the authority to--
                    (A) use the technology for any purpose;
                    (B) study how the technology works, and change the 
                technology as desired;
                    (C) access any source code related to the 
                technology; and
                    (D) redistribute copies of the technology, 
                including modified or extended copies, to others, for 
                any purpose, if the authorities described under this 
                paragraph are also granted to all modified, extended, 
                or redistributed copies.
            (4) Corporation.--The term ``Corporation'' means the 
        Federal Deposit Insurance Corporation.
            (5) Covered bank.--The term ``covered bank'' means--
                    (A) a public lending bank (as defined in section 
                101(b));
                    (B) a public payment bank (as defined in section 
                101(c)); and
                    (C) a non-federally chartered bank (as defined in 
                section 102(b)) that obtains a certificate of Federal 
                recognition under section 102.
            (6) Environmental justice community.--With respect to a 
        public lending bank, the term ``environmental justice 
        community'' means--
                    (A) a community with significant representation of 
                communities of color, low-income communities, or Tribal 
                and Indigenous communities, that experience, or are at 
                risk of experiencing, higher or more adverse human 
                health or environmental effects; or
                    (B) notwithstanding subparagraph (A), a definition 
                established by the State in which the public lending 
                bank is located, if--
                            (i) the definition was established by using 
                        a process established, by rule, jointly by the 
                        Environmental Protection Agency and the Council 
                        on Environmental Quality; and
                            (ii) the State establishes a corresponding 
                        screening tool to identify which communities 
                        are an environmental justice community under 
                        such definition.
            (7) Public member bank.--The term ``public member bank'' 
        means a covered bank that is a member of the Federal Reserve 
        System.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (9) State.--The term ``State'' means each of the several 
        States, the District of Columbia, and any commonwealth, 
        territory, or possession of the United States.
            (10) Tribal and indigenous community.--The term ``Tribal 
        and indigenous community'' means a population of people who are 
        members of--
                    (A) a federally recognized Indian Tribe;
                    (B) a State-recognized Indian Tribe;
                    (C) an Alaska Native community or organization;
                    (D) a Native Hawaiian community or organization; or
                    (E) any other Indigenous community located in a 
                State.
            (11) Tribal covered bank.--The term ``Tribal covered bank'' 
        means a covered bank that is wholly owned and controlled by--
                    (A) a Tribal government, including a unit of local 
                Tribal government, or Tribal government agency;
                    (B) a Tribally chartered corporation;
                    (C) a nonprofit instrumentality designated by a 
                Tribal government as acting in the public interest of a 
                community within such Tribe, including an 
                unincorporated community; or
                    (D) an association of 1 or more entities described 
                in subparagraphs (A) through (C).

              TITLE I--FEDERAL RECOGNITION OF PUBLIC BANKS

SEC. 101. FEDERAL CHARTER OF PUBLIC LENDING BANKS AND PUBLIC PAYMENT 
              BANKS.

    (a) In General.--The Board of Governors shall charter public 
lending banks and public payment banks.
    (b) Public Lending Bank Defined.--In this Act, the term ``public 
lending bank'' means a person that--
            (1) is wholly owned and controlled by--
                    (A) a State or Tribal government, including a unit 
                of local government, or government agency;
                    (B) a State or Tribally chartered corporation;
                    (C) a nonprofit instrumentality designated by a 
                State or Tribal government as acting in the public 
                interest of a community within such State or Tribe, 
                including an unincorporated community; or
                    (D) an association of 1 or more entities described 
                in subparagraphs (A) through (C);
            (2) that--
                    (A) is not owned or governed by, operated as a 
                subsidiary of, or otherwise affiliated with any for-
                profit entity;
                    (B) does not own, govern, or operate a subsidiary 
                that is any for-profit entity; and
                    (C) does not compensate any employee, executive, or 
                board member at a rate to exceed the salary of the 
                President of the United States for that equivalent 
                period; and
            (3) provides--
                    (A) fiscal agent services;
                    (B) money transmitter services;
                    (C) digital dollar services as a pass-through 
                intermediary for the Federal Government;
                    (D) depository services;
                    (E) banking services in partnership with the United 
                States Postal Service;
                    (F) municipal deposit services;
                    (G) securities-related services; or
                    (H) any lending product approved by the Board of 
                Governors, including participation loans and letters of 
                credit.
    (c) Public Payment Bank Defined.--In this Act, the term ``public 
payment bank'' means a person that--
            (1) is wholly owned and controlled by an entity described 
        in subsection (b)(1);
            (2) provides at least one of the services specified in 
        subparagraphs (A) through (F) of subsection (b)(3); and
            (3) does not provide the services specified in subparagraph 
        (G) or (H) of subsection (b)(3).
    (d) Exception of Certain Public Lending Banks From Consideration as 
Bank Holding Company.--A person or entity described in subsection 
(b)(1) shall not be considered a bank holding company under the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) or any other law, 
solely due to the person or entity's ownership or control of a public 
lending bank, public payment bank, or non-federally chartered bank.

SEC. 102. FEDERAL RECOGNITION OF NON-FEDERALLY CHARTERED BANKS.

    (a) Certificates of Recognition.--The Board of Governors shall 
issue certificates of Federal recognition to non-federally chartered 
banks.
    (b) Non-Federally Chartered Bank Defined.--In this Act, the term 
``non-federally chartered bank'' means a person that is--
            (1) wholly owned and controlled by an entity described in 
        section 101(b)(1); and
            (2) either--
                    (A) chartered as a non-depository institution by an 
                approved non-Federal financial regulator described in 
                subsection (c); or
                    (B) insured as a depository institution by the 
                Corporation, by an approved non-Federal financial 
                regulator described in subsection (c), or under an 
                alternate public deposit insurance scheme approved by 
                the Corporation.
    (c) List of Approved Non-Federal Financial Regulators.--The Board 
of Governors shall establish and maintain on a public website of the 
Board of Governors a list of approved non-Federal financial regulators 
for the purpose of determining eligibility for a certificate of Federal 
recognition under this section.
    (d) Conversion.--At the request of a non-federally chartered bank, 
the Board of Governors may convert such bank into a public payment bank 
or a public lending bank.
    (e) Services.--A non-federally chartered bank--
            (1) may not offer depository services before--
                    (A) obtaining--
                            (i) deposit insurance or conditional 
                        deposit insurance from the Corporation; or
                            (ii) deposit insurance from alternate 
                        public deposit insurance scheme approved by the 
                        Corporation; and
                    (B) becoming a public member bank or a conditional 
                public member in accordance with section 103(b); and
            (2) may--
                    (A) invest any funds held on behalf of an entity 
                described in section 101(b)(1) in a fiscal agent 
                account;
                    (B) provide fiscal agent services, including 
                sending and receiving money and effectuating payments 
                to and from any entity whose funds are invested in a 
                fiscal agent account;
                    (C) invest any funds held on behalf of an entity 
                not described in section 101(b)(1) in a payments 
                account or as digital dollar products; and
                    (D) provide money transmitter and digital dollar 
                services.

SEC. 103. FEDERAL RESERVE SYSTEM MEMBERSHIP.

    (a) Eligibility.--A covered bank shall be eligible for membership 
in the Federal reserve system as a public member bank and, except as 
provided in subsection (c), shall be treated in the same manner as a 
member bank under section 4 of the Federal Reserve Act (12 U.S.C. 308).
    (b) Conditional Public Member Bank.--The Board of Governors shall 
establish a special category of public member bank, called a 
``conditional public member bank'', for persons that are in the process 
of applying for becoming a covered bank. Such conditional public member 
banks shall be subject to such conditions and restrictions as the Board 
of Governors determines to be necessary and appropriate to promote 
public welfare, provided that such conditions and restrictions are not 
arbitrary, punitive, or unduly burdensome.
    (c) Purchasing Stock.--The Board of Governors may not require a 
covered bank to purchase stock in a Federal reserve bank or otherwise 
maintain paid-in capital in the Federal reserve system.

SEC. 104. PUBLIC MEMBER BANK SERVICES.

    (a) Purposes of Services.--The Board of Governors shall offer the 
services described in subsection (b) to public member banks in order 
to--
            (1) promote the safety, soundness, viability, and 
        resiliency of publicly owned and operated financial 
        institutions;
            (2) facilitate the provision of payments, credit, and other 
        financial services as a public good; and
            (3) support the financial and budgetary health of State and 
        Tribal governments, local government units, government 
        agencies, State or tribally chartered corporations, nonprofit 
        entities designated by a State or Tribal government to be 
        acting in the public interest of a community within such State 
        or Tribe, or an association of one or more of such entities.
    (b) Services.--The Board of Governors shall offer the following 
services to public member banks:
            (1) Fiscal agent accounts--
                    (A) in which public member banks may invest funds 
                held on behalf of any entity described in section 
                101(b)(1); and
                    (B) under which--
                            (i) the Board of Governors shall pay 
                        interest on all balances held overnight in such 
                        fiscal agent accounts at a rate that is greater 
                        than or equal to the greater of--
                                    (I) the sum of the overnight policy 
                                target rate plus two percent; or
                                    (II) the daily rate on 30-year 
                                marketable Treasury bonds; and
                            (ii) the interest described in clause (i) 
                        (minus a reasonable administrative fee imposed 
                        by the public member bank) shall be paid to the 
                        entity for which the public member bank 
                        invested such funds.
            (2) Payment accounts--
                    (A) in which public member banks may invest funds 
                held on behalf of any entity other than an entity 
                described in section 101(b)(1) for purposes of 
                providing money transmitter services; and
                    (B) under which the Board of Governors shall pay 
                interest (minus a reasonable administrative fee) on all 
                balances held overnight in such fiscal agent accounts 
                at a rate that is greater than or equal to the greater 
                of--
                            (i) the overnight rate paid on required 
                        reserves; or
                            (ii) the overnight rate paid on excess 
                        reserves.
            (3)(A) Digital dollar services in which public member banks 
        may operate as pass-through intermediaries for any digital 
        dollar or other financial services offered by the Federal 
        Government, including--
                    (i) digital dollar account wallets administered by 
                the Board of Governors (commonly known as 
                ``FedAccounts'');
                    (ii) digital dollar cash wallets administered by 
                the Secretary (commonly known as ``eCash''); and
                    (iii) postal banking services provided by the 
                United States Postal Service.
            (B) The Board of Governors may issue regulations as 
        necessary to ensure effective harmonization and coordination 
        between covered banks and any entities responsible for 
        administering digital dollar services on behalf of the Federal 
        Government.
            (4)(A) A facility (to be known as the ``Public Bank Primary 
        Liquidity Facility'') to provide liquidity to public member 
        banks by buying or lending (at a reasonable rate of interest 
        that is not greater than the overnight policy target rate) 
        against federally recognized public loans (as described in 
        section 105) and federally-recognized public securities (as 
        described in section 201(b)), under terms and conditions that 
        the Board of Governors determines to be necessary and 
        appropriate to promote public welfare.
            (B) The facility under subparagraph (A) shall purchase or 
        accept loans or securities under such subparagraph at face 
        value.
            (5)(A) A facility (to be known as the ``Public Bank 
        Supplementary Liquidity Facility'') to provide liquidity to 
        public member banks by buying or lending (at a reasonable rate 
        of interest that is not greater than the overnight policy 
        target rate) against assets not otherwise eligible to be 
        purchased or accepted as collateral under paragraph (4).
            (B) The facility under subparagraph (A) may purchase or 
        accept assets as collateral under such subparagraph at a 
        reasonable discount.
            (6) A facility (to be known as the ``Public Bank Credit 
        Facility'') to provide credit to public member banks on an 
        unsecured basis, in such amounts and such rates of interests as 
        the Board of Governors determines to be necessary and 
        appropriate to promote public welfare.
            (7) A facility (to be known as the ``Federally Recognized 
        Public Loan Facility'') to, in consultation with the 
        Corporation--
                    (A) develop rules, standards, and criteria for 
                Federal recognition of loans, mortgages, credit cards, 
                account overdrafts, and other direct lending products 
                issued by public member banks; and
                    (B) provide prepurchase agreements under which the 
                facility will purchase loans and agree that such loans 
                will be repurchased by the public member bank at such 
                time as is agreed upon by such facility and member 
                bank.
    (c) Administrative, Operating, and Maintenance Costs.--The Board of 
Governors shall pay all administrative, operating, and maintenance 
costs associated with the accounts, services, and facilities described 
in subsection (b).
    (d) Reimbursement.--The Board of Governors shall reimburse a public 
member bank for any expenses reasonably incurred in the process of 
operating as a pass-through intermediary described in subsection 
(b)(3).
    (e) Expenses.--
            (1) Member services.--Any expenses incurred by the Board of 
        Governors under paragraphs (1) through (3) of subsection (b) 
        and under subsections (c) and (d) shall be recorded--
                    (A) in an account to be known as the ``Special 
                Public Member Bank Services Account'' established at 
                the Federal Reserve Bank of New York; and
                    (B) as a deferred asset (as described in section 
                11.96 of the Financial Accounting Manual for Federal 
                Reserve Banks, as in effect on the date of the 
                enactment of this Act) and maintained separately from 
                the balance sheet of the Federal Reserve Bank of New 
                York and the Federal Reserve System, so as to not 
                reduce or impact the calculation of total income or 
                revenue generated by the Federal Reserve System, or 
                otherwise reduce the total amount of net operating 
                profits to be made available for remittance to the 
                Treasury on an ongoing basis.
            (2) Facilities.--Any expenses incurred by the Board of 
        Governors under paragraphs (4) through (7) of subsection (b) 
        shall be recorded--
                    (A) in an account to be known as the ``Special 
                Public Member Bank Liquidity and Credit Account'' 
                established at the Federal Reserve Bank of New York; 
                and
                    (B) as a deferred asset (as described in section 
                11.96 of the Financial Accounting Manual for Federal 
                Reserve Banks, as in effect on the date of the 
                enactment of this Act) and maintained separately from 
                the balance sheet of the Federal Reserve Bank of New 
                York and the Federal Reserve System, so as to not 
                reduce or impact the calculation of total income or 
                revenue generated by the Federal Reserve System, or 
                otherwise reduce the total amount of net operating 
                profits to be made available for remittance to the 
                Treasury on an ongoing basis.

SEC. 105. SPECIFIC REQUIREMENTS RELATING TO COVERED BANKS.

    (a) Public Purpose Bank Requirement.--
            (1) In general.--A covered bank shall serve the public good 
        and promote the general welfare.
            (2) Definition in governing documents.--A covered bank 
        shall define the terms ``public good'' and ``promote the 
        general welfare'' in the governing documents of the covered 
        bank, after such definitions are approved by either--
                    (A) the Governing Assembly of the covered bank; or
                    (B) if the covered bank does not have a Governing 
                Assembly, the Board of Directors.
    (b) Democratic Governance.--
            (1) Governance policy.--Before the end of the 2-year period 
        beginning on the formation of a covered bank, the Board of 
        Directors of the covered bank or the Governing Assembly of the 
        covered bank shall establish a formal governance policy for the 
        covered bank.
            (2) Institutionalization of a democratic governance 
        structure.--A covered bank shall institutionalize a democratic 
        governance structure through the following:
                    (A) Board of directors.--The establishment of a 
                Board of Directors--
                            (i) charged with ensuring that fiduciary 
                        duties of the covered bank are met;
                            (ii) charged with ensuring the covered bank 
                        complies with policies and procedures required 
                        by statute, regulation, and principles of 
                        safety and soundness;
                            (iii) with no less than 5 members, of 
                        which--
                                    (I) at least one-third of the 
                                members shall represent community-
                                based, nonprofit organizations based 
                                primarily within the geographic area of 
                                (or, with respect to a corporation or 
                                nonprofit instrumentality, the 
                                geographic area served by) the relevant 
                                entity described in section 101(b)(1);
                                    (II) at least one member shall have 
                                demonstrated experience with, and 
                                endorsement from, organizations 
                                representing historically excluded and 
                                marginalized groups based primarily 
                                within the geographic area of (or, with 
                                respect to a corporation or nonprofit 
                                instrumentality, the geographic area 
                                served by) the relevant entity 
                                described in section 101(b)(1);
                                    (III) at least one member shall 
                                have demonstrated experience with, and 
                                endorsement from, environmental justice 
                                or environmental organizations based 
                                primarily within the geographic area of 
                                (or, with respect to a corporation or 
                                nonprofit instrumentality, the 
                                geographic area served by) the relevant 
                                entity described in section 101(b)(1);
                                    (IV) at least one member shall have 
                                demonstrated experience with, and 
                                endorsement from, community development 
                                organizations based primarily within 
                                the geographic area of (or, with 
                                respect to a corporation or nonprofit 
                                instrumentality, the geographic area 
                                served by) the relevant entity 
                                described in section 101(b)(1);
                                    (V) at least one member shall have 
                                demonstrated experience with, and 
                                endorsement from, labor organizations 
                                based primarily within the geographic 
                                area of (or, with respect to a 
                                corporation or nonprofit 
                                instrumentality, the geographic area 
                                served by) the relevant entity 
                                described in section 101(b)(1); and
                                    (VI) with respect to a Tribal 
                                covered bank, include a number of 
                                representatives of Indigenous 
                                communities on the board roughly 
                                proportionate to the percentage of the 
                                population of the geographic area of 
                                the relevant entity described in 
                                section 101(b)(1) who are Indigenous;
                            (iv) with respect to a covered bank with a 
                        Governing Assembly and a People's Review Board, 
                        that is--
                                    (I) responsible for the basic 
                                operations of the covered bank, 
                                including--
                                            (aa) hiring and firing 
                                        senior management;
                                            (bb) monitoring and 
                                        assessing the covered bank's 
                                        performance, operations, and 
                                        investment decisions;
                                            (cc) producing internal 
                                        annual reports; and
                                            (dd) interfacing with the 
                                        People's Review Board in the 
                                        issuance of public-facing 
                                        reports; and
                                    (II) responsible for ensuring that 
                                the mandates set by the Governing 
                                Assembly are successfully implemented; 
                                and
                            (v) with respect to a covered bank without 
                        a Governing Assembly and People's Review Board, 
                        responsible for the basic operations of the 
                        covered bank, including--
                                    (I) those responsibilities 
                                described under item (aa) through (cc) 
                                of clause (iv)(I);
                                    (II) setting the core mandates and 
                                policies which guide the covered bank's 
                                activities; and
                                    (III) issuing public-facing 
                                reports.
                    (B) Requirement for larger public lending banks.--
                With respect to a public lending bank with more than 
                $500,000,000 in total assets--
                            (i) the establishment of a Governing 
                        Assembly, which--
                                    (I) shall--
                                            (aa) be responsible for 
                                        setting the broad priorities of 
                                        the public lending bank's 
                                        financing and loan programs 
                                        over a multi-year investment 
                                        cycle;
                                            (bb) generate the public 
                                        lending bank's core mandates;
                                            (cc) make binding decisions 
                                        on the policy of the public 
                                        lending bank without exercising 
                                        control over day-to-day 
                                        decision making;
                                            (dd) be composed of members 
                                        in a manner that ensures 
                                        adequate representation of, or 
                                        democratic accountability to, 
                                        residents within the geographic 
                                        area of (or, with respect to a 
                                        corporation or nonprofit 
                                        instrumentality, the geographic 
                                        area served by) the relevant 
                                        entity described in section 
                                        101(b)(1); and
                                            (ee) with respect to a 
                                        Tribal covered bank, include a 
                                        number of representatives of 
                                        Indigenous communities on the 
                                        Governing Assembly roughly 
                                        proportionate to the percentage 
                                        of the population of the 
                                        geographic area of the relevant 
                                        entity described in section 
                                        101(b)(1) who are Indigenous; 
                                        and
                                    (II) may only have members selected 
                                by sortition if--
                                            (aa) a super-majority of 
                                        the members are selected by a 
                                        stratified sampling of 
                                        residents based primarily 
                                        within the geographic area of 
                                        (or, with respect to a 
                                        corporation or nonprofit 
                                        instrumentality, the geographic 
                                        area served by) the relevant 
                                        entity described in section 
                                        101(b)(1);
                                            (bb) the Governing Assembly 
                                        is professionally facilitated, 
                                        deliberative in nature, and 
                                        draw upon outside experts 
                                        representing a range of 
                                        divergent interests and 
                                        viewpoints;
                                            (cc) the members selected 
                                        through sortition are required 
                                        to receive a comprehensive 
                                        orientation and intensive 
                                        training on banking regulation 
                                        and finance prior to 
                                        participating in decision 
                                        making, and required to receive 
                                        continuing educational 
                                        programming throughout their 
                                        term; and
                                            (dd) no member serves for 
                                        longer than 6 months, absent 
                                        extenuating circumstances; and
                            (ii) the establishment of a People's Review 
                        Board--
                                    (I) which shall act in an advisory 
                                and oversight capacity for the public 
                                lending bank, including--
                                            (aa) monitoring and 
                                        assessing the public lending 
                                        bank's performance, operations, 
                                        and investment decisions to 
                                        ensure they are consistent with 
                                        the core mandates and policies 
                                        established by the Governing 
                                        Assembly;
                                            (bb) assessing the 
                                        priorities and mandates of the 
                                        public lending bank;
                                            (cc) ensuring the 
                                        viewpoints of affected groups 
                                        are represented in the policy 
                                        of the public lending bank; and
                                            (dd) providing information 
                                        and recommendations to the 
                                        Governing Assembly and Board of 
                                        Directors of the public lending 
                                        bank;
                                    (II) which shall have access to all 
                                public lending bank information 
                                pertinent to the operations and 
                                performance of the People's Review 
                                Board;
                                    (III) the meetings of which shall 
                                be open to public observation;
                                    (IV) which shall issue an annual 
                                report of the findings and 
                                recommendations of the People's Review 
                                Board, and make such report publicly 
                                available online;
                                    (V) the structure of which shall 
                                ensure adequate representation of, or 
                                democratic accountability to, residents 
                                within the geographic area of (or, with 
                                respect to a corporation or nonprofit 
                                instrumentality, the geographic area 
                                served by) the relevant entity 
                                described in section 101(b)(1);
                                    (VI) the membership of which shall 
                                prioritize community members 
                                representing historically redlined and 
                                marginalized communities; and
                                    (VII) which may only have members 
                                selected by sortition if--
                                            (aa) a super-majority of 
                                        the members are selected by a 
                                        stratified sampling of 
                                        residents based primarily 
                                        within the geographic area of 
                                        (or, with respect to a 
                                        corporation or nonprofit 
                                        instrumentality, the geographic 
                                        area served by) the relevant 
                                        entity described in section 
                                        101(b)(1);
                                            (bb) the People's Review 
                                        Board is professionally 
                                        facilitated, deliberative in 
                                        nature, and draw upon outside 
                                        experts representing a range of 
                                        divergent interests and 
                                        viewpoints; and
                                            (cc) the members selected 
                                        through sortition are required 
                                        to receive a comprehensive 
                                        orientation and intensive 
                                        training on banking regulation 
                                        and finance prior to 
                                        participating in decision 
                                        making, and required to receive 
                                        continuing educational 
                                        programming throughout their 
                                        term.
    (c) Tribal Covered Bank Lending Priorities.--A Tribal covered bank 
shall prioritize loans to Indigenous communities.
    (d) Environmental Policy.--Before the end of the 2-year period 
beginning on the formation of a covered bank, the Board of Directors of 
the covered bank or the Governing Assembly of the covered bank shall 
establish a formal environmental or environmental justice policy for 
the covered bank.
    (e) Use and Disclosure of Financial Information and Technology.--
            (1) Gramm-Leach-Bliley act.--Title V of the Gramm-Leach-
        Bliley Act (15 U.S.C. 6801 et seq.) shall apply to a covered 
        bank to the same extent such title applies to a financial 
        institution.
            (2) Use of technology.--A covered bank shall--
                    (A) wherever feasible, prefer, use, and promote 
                open source technologies;
                    (B) wherever possible, license under a copyleft 
                license any software, hardware, or other digital 
                technologies that are developed, financed, or otherwise 
                owned by the covered bank;
                    (C) wherever possible, make any software acquired 
                or developed by the covered bank available to other 
                covered banks to study, copy, and use, at zero cost, 
                upon request; and
                    (D) generally take all reasonable efforts to 
                encourage and promote technology sharing and the 
                development of technological best practices and common 
                standards.
            (3) Expectation of privacy.--A covered bank shall--
                    (A) maintain an individual or entity's legitimate 
                expectation of privacy if that individual or entity is 
                a customer of the covered bank; and
                    (B) not be presumed to have given up such a 
                legitimate expectation of privacy on the basis of the 
                third-party doctrine articulated by the Supreme Court 
                in United States v. Miller (1976).
            (4) Data privacy.--Data obtained by a covered bank--
                    (A) may not be sold to third parties, except 
                consumer reporting agencies;
                    (B) that is shared with a third party by the 
                covered bank, shall maintain an assumed right of 
                privacy;
                    (C) with respect to lending data, may only be 
                shared with--
                            (i) Federal, State, or Tribal agencies; or
                            (ii) a third party that is a consumer 
                        reporting agency under the Fair Credit 
                        Reporting Act and is in compliance with such 
                        Act; and
                    (D) with respect to account data, may only be 
                accessed by appropriate warrant or administrative 
                search subpoena.
            (5) Metadata.--A covered bank--
                    (A) may not share metadata with private or for-
                profit third parties; and
                    (B) shall hold metadata unused in a manner 
                consistent with rights of privacy and duty of care.
    (f) Terms of Lending.--
            (1) Establishment of policy on lending practices.--
                    (A) In general.--Not later than the end of the 1-
                year period beginning on the date of the formation of a 
                public lending bank, the public lending bank shall 
                establish a policy on lending practices. With respect 
                to a public lending bank in existence on the date of 
                enactment of this Act, the policy on lending practices 
                shall be established before the end of the 1-year 
                period beginning on the date of enactment of this Act.
                    (B) Update of policy.--A public lending bank shall 
                update the policy on lending practices required under 
                subparagraph (A) at least every 5 years.
                    (C) Public comment process.--A public lending bank 
                shall provide for a public comment period of at least 
                90 days before the establishment of, and any update of, 
                the policy on lending practices required under this 
                paragraph.
            (2) Lending preferences.--For purposes of determining the 
        projects with respect to which a public lending bank extends 
        loans, the public lending bank shall give preference to 
        projects that--
                    (A) maximize the creation of high-quality 
                employment and apprenticeship opportunities for local 
                workers, consistent with the public interest, 
                especially workers from environmental justice 
                communities and labor organizations;
                    (B) certify, for all contractors and 
                subcontractors, that the rights of workers to organize 
                and unionize are recognized;
                    (C) agree to implement a project labor agreement;
                    (D) ensure that no less than 40 percent of the 
                monetary value of such loans provide direct benefits, 
                including economic and health benefits, to 
                environmental justice communities; and
                    (E) meet unmet needs in the local banking market.
            (3) Requirements on who may receive loans.--The public 
        lending bank shall require, for any project for which the 
        public lending bank extends a loan, that--
                    (A) the recipient does not oppose or resist 
                unionization efforts involving projects utilizing 
                public funds;
                    (B) if the loan is $500,000 or more, as a condition 
                of receiving the loan, the recipient shall ensure that 
                all laborers employed by a nongovernmental entity that 
                enters into a contract for the performance of 
                construction, alteration, or repair work that is 
                facilitated, in whole or in part, by such loan, or a 
                subcontract thereof, are paid wages at rates not less 
                than those prevailing on similar construction, 
                alteration, or repair work in the locality as 
                determined by the Secretary of Labor in accordance with 
                subchapter IV of chapter 31 of title 40, United States 
                Code (commonly referred to as the ``Davis-Bacon Act'') 
                and with respect to such labor standards, the Secretary 
                of Labor shall have the authority and functions set 
                forth in Reorganization Plan Numbered 14 of 1950 (64 
                Stat. 1267; 5 U.S.C. App.) and section 3145 of title 
                40, United States Code;
                    (C) if the project with respect to which the loan 
                is being extended has a budget of $35,000,000 or more, 
                all contractors and subcontractors shall implement a 
                project labor agreement that includes--
                            (i) goals for hiring local community 
                        members, economically disadvantaged workers, or 
                        workers from other underrepresented 
                        communities;
                            (ii) an equity plan, including--
                                    (I) the impacts of the proposed 
                                project on underserved communities, 
                                including social and environmental 
                                impacts;
                                    (II) the overall benefits of the 
                                proposed project, if funded, to 
                                underserved communities; and
                                    (III) how diversity, equity, and 
                                inclusion objectives will be 
                                incorporated into the project; and
                            (iii) strategic recruitment and retention 
                        policies for workers from underserved 
                        communities and people facing systemic barriers 
                        to employment; and
                    (D) if the project is for the acquisition, 
                construction, or renovation of, or addition to, a 
                residential building which includes rental units, the 
                recipient--
                            (i) may not discriminate when renting the 
                        units based on an applicant's source of income, 
                        sexual orientation, gender expression or 
                        identity, immigration status, conviction or 
                        arrest history, bankruptcy history, eviction 
                        history, or credit score;
                            (ii) shall ensure the right of tenants to 
                        organize tenant unions, associations, or 
                        resident councils;
                            (iii) shall utilize minimum time-bound 
                        affordability requirements of at least 99 years 
                        for affordable housing;
                            (iv) except with respect to a building 
                        assisted under section 9 of the United States 
                        Housing Act of 1937 (42 U.S.C. 1437g) or a 
                        building that has been issued a certificate of 
                        occupancy within the previous 5 years, may not 
                        increase rent on an annual basis in excess of 
                        the annual percent change in the Consumer Price 
                        Index for All Urban Consumers published by the 
                        Bureau of Labor Statistics of the Department of 
                        Labor for the closest metropolitan core based 
                        statistical area, rounded to one decimal place, 
                        as established the August preceding the 
                        calendar year in question or 3 percent, 
                        whatever is less; and
                            (v) shall practice avoidance and mitigation 
                        of displacement, including by establishing a 
                        right of return and temporary relocation for 
                        tenants displaced by renovations.
            (4) Application of certain laws.--The following Acts shall 
        apply to a public lending bank to the same extent as such Acts 
        apply to applicable persons subject to such Acts:
                    (A) The Truth in Lending Act (15 U.S.C. 1601 et 
                seq.).
                    (B) The Fair Credit Reporting Act (15 U.S.C. 1681 
                et seq.).
                    (C) The Equal Credit Opportunity Act (15 U.S.C. 
                1691 et seq.).
                    (D) The Fair Debt Collection Practices Act (15 
                U.S.C. 1692 et seq.).
    (g) Terms of Retail Account Services.--Any covered bank that holds, 
administers, or manages funds on behalf of any unincorporated person in 
a payments account, or otherwise accepts funds on deposit or for the 
purpose of providing public depository accounts services--
            (1) may not--
                    (A) impose any fees, minimum balances, or maximum 
                balances on such payments accounts or public depository 
                accounts; or
                    (B) include on such payments accounts or public 
                depository accounts overdraft fees or penalties;
            (2) shall--
                    (A) prominently brand any such payments account or 
                public depository account as a ``public bank account'' 
                in all account statements, marketing materials, and 
                other communications of the public bank; and
                    (B) provide such account holders with reasonable 
                protection against losses caused by fraud or security 
                breaches, as determined by the Corporation or the 
                Director of the Bureau of Consumer Financial 
                Protection, or both; and
            (3) may only close or restrict access to such payments 
        accounts or public depository accounts on the basis of the 
        mandate of the covered bank.
    (h) Terms of Retail Credit.--
            (1) In general.--Notwithstanding any provision of law, the 
        annual percentage rate applicable to any extension of credit by 
        a covered bank may not exceed the lesser of--
                    (A) 15 percent on unpaid balances, inclusive of all 
                finance charges; or
                    (B) the maximum rate permitted by the laws of the 
                State in which the consumer resides.
            (2) Other fees.--Any fees that are not considered finance 
        charges under paragraph (1), including fees for ancillary 
        products and services, may not--
                    (A) exceed the total amount of finance charges 
                assessed; and
                    (B) be imposed in such a way as to evade or 
                frustrate the purpose of limiting the total interest 
                and related costs that may be charged in relation to 
                any lending product issued by covered banks under this 
                Act.
            (3) Penalties for charging higher rates on retail credit.--
                    (A) Violation.--The taking, receiving, reserving, 
                or charging of an annual percentage rate or fee greater 
                than that permitted by paragraph (1), when knowingly 
                done, shall be a violation of this subsection, and a 
                forfeiture of the entire interest which the note, bill, 
                or other evidence of the obligation carries with it, or 
                which has been agreed to be paid thereon.
                    (B) Refund of interest amounts.--
                            (i) In general.--With respect to a person 
                        charging interest, a finance charge, or a fee 
                        greater than that permitted by paragraph (1), 
                        the person paying such interest, finance 
                        charge, or fee may notify the Bureau of 
                        Consumer Financial Protection, and the Bureau 
                        of Consumer Financial Protection shall take 
                        such enforcement actions as the Director of the 
                        Bureau of Consumer Financial Protection 
                        determines appropriate.
                            (ii) Lack of bureau action.--If a person 
                        notifies the Bureau of Consumer Financial 
                        Protection under clause (i), and the Bureau of 
                        Consumer Financial Protection takes no action 
                        with respect to such notice during the 60-day 
                        period following such notice, such person may 
                        bring an action in a Federal district court to 
                        recover the entire amount of interest, finance 
                        charges, or fees paid.
                    (C) Civil liability.--Any creditor who violates 
                this subsection shall be subject to the provisions of 
                section 130(a) of the Truth in Lending Act (15 U.S.C. 
                1640(a)).
                    (D) Bank secrecy act.--In establishing and 
                maintaining personal accounts, each covered bank shall 
                comply with--
                            (i) section 21 of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1829b);
                            (ii) section 123 of Public Law 91-508; and
                            (iii) subchapter II of chapter 53 of title 
                        31, United States Code.
    (i) Annual Reporting Requirements.--Each covered bank shall make 
publicly available an annual report on the activities of such covered 
bank, including recipients of financial services, sources of funding, 
financial reporting, and evaluation of the effectiveness of the covered 
bank's services in achieving the public purposes for which it was 
chartered, as well as any other purposes, goals, and targets under this 
Act or other law or regulation, including the percentage of the 
monetary value of a public lending bank's loans which provide direct 
benefits to environmental justice communities.
    (j) Other Excluded Activities.--A covered bank may not provide 
loans to, make investments in, or otherwise engage in any activity that 
is financial in nature, or incidental to such financial activity, 
with--
            (1) a company supporting--
                    (A) weapon or gun manufacturing;
                    (B) private prisons;
                    (C) immigration detention facilities; or
                    (D) the tobacco industry; or
            (2) a company that has--
                    (A) a C.E.O. to median worker pay ratio in excess 
                of 100:1, as determined by the National Labor Relations 
                Board;
                    (B) a history of unfair labor practices, as 
                determined by the Secretary of Labor;
                    (C) a history of violations of the Fair Labor 
                Standards Act of 1938 and the Occupational Safety and 
                Health Act of 1970, as determined by the Secretary of 
                Labor; or
                    (D) a history of offshore tax avoidance, as 
                determined by the Commissioner of the Internal Revenue 
                Service.
    (k) Clarifying the Eligibility of Public Lending Banks and Public 
Payment Banks for Certain Federal Programs.--
            (1) Elective payment of applicable credits.--Section 
        6417(d)(1)(A) of the Internal Revenue Code of 1986 is amended--
                    (A) in clause (v), by striking ``or'' at the end;
                    (B) in clause (vi), by striking the period at the 
                end and inserting ``, or''; and
                    (C) by adding at the end the following:
                            ``(vii) a public lending bank or a public 
                        payment bank (as such terms are defined, 
                        respectively, under section 101 of the Public 
                        Banking Act of 2023).''.
            (2) Incentives for innovative technologies.--Section 
        1701(7)(B) of the Energy Policy Act of 2005 (42 U.S.C. 
        16511(7)(B)) is amended by inserting ``and an entity that is a 
        public lending bank or a public payment bank (as such terms are 
        defined, respectively, under section 101 of the Public Banking 
        Act of 2023)'' before the period at the end.
    (l) Exception for Existing Public Banks.--
            (1) In general.--Subsections (b), (e), (f), (g), and (h) 
        shall not apply to a covered bank in existence on the date of 
        enactment of this Act.
            (2) Public bank grant program participants.--Paragraph (1) 
        shall cease to apply to a covered bank described under that 
        paragraph after the end of the 24-month period beginning on the 
        date the covered bank receives a public bank grant under 
        section 501.

SEC. 106. REGULATIONS.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Board of Governors, the Director of the 
Bureau of Consumer Financial Protection, and the Corporation shall 
jointly--
            (1) establish a separate regulatory scheme with respect to 
        public lending banks, public payment banks, and non-federally 
        chartered banks that receive or are in the process of receiving 
        a certificate of Federal recognition under section 102; and
            (2) after a notice and comment period during which consumer 
        advocacy organizations shall be invited to submit feedback and 
        suggestions, issue such regulations as are necessary and 
        appropriate to promote public welfare with respect to public 
        lending banks, public payment banks, and non-federally 
        chartered banks that receive or are in the process of receiving 
        a certificate of Federal recognition under section 102.
    (b) Regulations With Respect to Excluded and Marginalized Groups.--
            (1) In general.--Not later than 1 year after the date of 
        the enactment of this Act, the Board of Governors shall issue 
        regulations for public lending banks, public payment banks, and 
        non-federally chartered banks to ensure that the services 
        provided by such banks are universal and comprehensively 
        include historically excluded and marginalized groups.
            (2) Limitations.--A regulation issued under this subsection 
        may not--
                    (A) supersede or supplant any other stronger 
                regulations or standards promulgated by other Federal 
                or applicable State regulatory entities, including any 
                such regulation issued by the Corporation or the 
                Director of the Bureau of Consumer Financial 
                Protection; and
                    (B) result in less robust or less stringent 
                protections to consumers than protections that exist on 
                the date of the enactment of this Act for consumers 
                served by other existing categories of depository 
                institutions, including protection under the Community 
                Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.).
            (3) Data reporting.--The Board of Governors and the 
        Corporation shall jointly, in a manner that respects the 
        privacy of covered bank customers to the greatest extent 
        possible, develop an annual assessment for determining if 
        covered banks have appropriately provided services to all 
        customers within the jurisdiction of service, based on 
        demographic information chosen by regulators, including race, 
        gender, and area median income of such customers.
    (c) Ecological Sustainability Considerations and Prohibitions on 
Fossil Fuel Investment.--
            (1) In general.--The Board of Governors, the Corporation, 
        and the Commission shall jointly develop and promulgate rules 
        and regulations to--
                    (A) ensure that any and all activities undertaken 
                and services offered by a covered bank, or any person 
                seeking or in the process of becoming a covered bank, 
                are consistent with Federal and scientifically 
                established standards, goals, and targets with respect 
                to ecological sustainability, climate crisis-
                mitigation, and decarbonization; and
                    (B) require that any covered bank or person seeking 
                or in the process of becoming a covered bank, may not 
                facilitate fossil fuel production, processing, or 
                infrastructure, including by--
                            (i) providing loans to, making investments 
                        in, or otherwise engaging in any activity that 
                        is financial in nature, or incidental to such 
                        financial activity, with a fossil fuel company;
                            (ii) providing loans to, making investments 
                        in, or otherwise engaging in any activity that 
                        is financial in nature, or incidental to such 
                        financial activity, for a fossil fuel project;
                            (iii) taking compensation to arrange or 
                        facilitate a transaction that provides funds 
                        for fossil fuel production or processing from 
                        existing or new sources;
                            (iv) securitizing assets that provide funds 
                        for fossil fuel production or processing from 
                        existing or new sources;
                            (v) entering into a derivatives transaction 
                        designed to provide funding for, facilitate, or 
                        hedge risks from fossil fuel production or 
                        processing from existing or new sources; and
                            (vi) engaging in any activity that is 
                        complementary to a financial activity involving 
                        fossil fuel production or processing from 
                        existing or new sources, including financing 
                        the international trade thereof; or any other 
                        form of activity defined by regulators or 
                        supervisors of the covered bank.
            (2) Definitions.--In this subsection:
                    (A) Existing sources.--The term ``existing 
                sources'' means--
                            (i) reserves of fossil fuels proven, 
                        developed, and producing as of the date of 
                        enactment of this section; or
                            (ii) fossil infrastructure that would 
                        facilitate the production described in clause 
                        (i).
                    (B) Fossil fuel.--The term ``fossil fuel'' means 
                coal, petroleum, natural gas, or any derivative of 
                coal, petroleum, or natural gas that is used for fuel.
                    (C) Fossil infrastructure.--The term ``fossil 
                infrastructure'' means fossil fuel-related projects, 
                including wells, rail infrastructure, pipelines, 
                terminals, refineries, and power plants.
                    (D) New sources.--The term ``new sources'' means--
                            (i) any production in excess of proven 
                        developed producing reserves of fossil fuels as 
                        of the date of enactment of this section; or
                            (ii) new or expanded fossil infrastructure 
                        that would facilitate the production described 
                        in clause (i).
                    (E) Processing.--The term ``processing'' means the 
                preparation of a chemical substance or mixture 
                (including any chemical transformations of, or physical 
                separations involving, such substance or mixture) after 
                its production or extraction, for distribution in 
                commerce--
                            (i) in the same form or physical state as, 
                        or in a different form or physical state from, 
                        that in which it was received by the person so 
                        preparing such substance or mixture; or
                            (ii) as part of an article of commerce 
                        containing the chemical substance or mixture.
                    (F) Production.--The term ``production'' means 
                extractive or production activities that result in 
                fossil fuels being made available for refining or use.
    (d) State Law.--Nothing in this section may be construed to preempt 
any provision of State law that provides greater protection to 
consumers, or establishes more stringent environmental or ecological 
regulations, than is provided in this section.

SEC. 107. TECHNICAL ASSISTANCE.

    The Board of Governors shall provide technical assistance to public 
member banks to develop, use, and share financial and infrastructure 
technologies, practices, and operational and business practice data 
that promote the public welfare, however such data may not include any 
customer data, including transactional and identifying information.

           TITLE II--FEDERAL RECOGNITION OF PUBLIC SECURITIES

SEC. 201. REGULATION OF PUBLIC LENDING BANKS AND NON-FEDERALLY 
              CHARTERED BANKS.

    (a) In General.--The Commission shall establish a separate 
registration and regulatory scheme for licensing and regulating as 
public investment entities all public lending banks and non-federally 
chartered banks that engage or seek to engage in securities-related 
activities, including origination, investment brokering, dealing, and 
trading of federally-recognized public securities.
    (b) Federally-Recognized Public Securities.--The Board of Governors 
shall, in consultation with the Commission, develop rules, standards, 
and criteria for Federal recognition of securities issued by public 
member banks (to be known as ``federally-recognized public 
securities'') as the Commission determines to be necessary and 
appropriate to promote public welfare.
    (c) Conditional License.--The Commission shall establish a special 
category of public investment entity license for entities that are in 
the process of applying for, but have not yet received, any license to 
issue federally-recognized public securities, which shall be subject to 
such conditions and restrictions as the Commission determines to be 
necessary and appropriate to promote public welfare.

                  TITLE III--PUBLIC DEPOSIT INSURANCE

SEC. 301. IN GENERAL.

    (a) Public Deposit Insurance.--Within 6 months of the date of 
enactment of this Act, the Corporation shall establish a separate 
registration and regulatory scheme for providing deposit insurance (to 
be known as ``public deposit insurance'') to covered banks and make 
such deposit insurance available to covered banks without regard to the 
total deposit amount.
    (b) Alternative Public Deposit Insurance.--Within 6 months of the 
date of enactment of this Act, the Corporation shall establish publicly 
available criteria for alternative public deposit insurance schemes 
established and provided by an approved non-Federal financial 
regulator, and subsequently approve, within 6 months of such 
submission, schemes that meet said criteria.
    (c) Conditional Insurance.--Within 6 months of the date of 
enactment of this Act, the Corporation shall establish a separate 
registration and regulatory scheme for providing deposit insurance (to 
be known as ``conditional public deposit insurance'') for entities that 
are in the process of applying for, but have not yet received, public 
deposit insurance, which shall be subject to such conditions and 
restrictions as the Corporation determines to be necessary and 
appropriate to promote public welfare.
    (d) Alternative Risk Profile.--The Corporation shall--
            (1) establish and utilize an alternative risk profile 
        methodology for covered banks at an advantage, in comparison to 
        other depository institutions provided deposit insurance, which 
        accounts for the benefits to the general welfare created by 
        publicly owned and operated financial institutions; and
            (2) within 6 months following the establishment of the 
        alternative risk profile methodology, the Corporation shall 
        publish a publicly available report on the alternative risk 
        profile methodology.

                        TITLE IV--POSTAL BANKING

SEC. 401. PARTNERSHIPS WITH COVERED BANKS FOR POSTAL BANKING SERVICES.

    (a) Partnership With USPS.--Notwithstanding section 404(e)(2) of 
title 36, United States Code, the Postmaster General shall, to the 
maximum extent practicable, partner with covered banks to make 
available retail account and payment services provided by covered banks 
at post offices, and via any postal banking platforms established by 
the United States Postal Service.
    (b) Funding.--The Board of Governors shall provide such funding to 
the United States Postal Service as the Postmaster General determines 
to be necessary to achieve carry out subsection (a).
    (c) Treatment of Expenses.--Any expenses incurred by the Board of 
Governors under this section shall be recorded--
            (1) in an account to be known as the ``Special Public 
        Member Bank Services Account'' established at the Federal 
        Reserve Bank of New York; and
            (2) as a deferred asset (as described in section 11.96 of 
        the Financial Accounting Manual for Federal Reserve Banks, as 
        in effect on the date of the enactment of this Act) and 
        maintained separately from the balance sheet of the Federal 
        Reserve Bank of New York and the Federal Reserve System, so as 
        to not reduce or impact the calculation of total income or 
        revenue generated by the Federal Reserve System, or otherwise 
        reduce the total amount of net operating profits to be made 
        available for remittance to the Treasury on an ongoing basis.

               TITLE V--PUBLIC BANK DEVELOPMENT PROGRAMS

SEC. 501. PUBLIC BANK GRANT PROGRAM.

    (a) Program Established.--
            (1) In general.--The Board of Governors shall, jointly with 
        the Secretary, carry out a grant program to make grants to 
        covered banks, or persons seeking to become or in the process 
        of becoming covered banks, to carry out the activities 
        described in subsection (b).
            (2) Considerations for eligibility.--
                    (A) Required considerations.--When determining 
                eligibility for grants under this section, the Board of 
                Governors and the Secretary shall consider, among other 
                factors, the extent to which a grant applicant has 
                established an appropriate degree of community 
                involvement and oversight, including dedicated 
                community representation on the governing board, and 
                evidence of support or commitment from community 
                representative organizations.
                    (B) Prohibited consideration.--When determining 
                eligibility for grants under this section, the Board of 
                Governors and the Secretary may not consider the 
                budgetary or financial health of the entity that wholly 
                owns or controls a covered bank.
    (b) Use of Funds.--An entity that receives a grant under this 
section may use the grant funds--
            (1) to carry out activities related to bank formation, 
        chartering, and regulatory compliance;
            (2) for capitalization;
            (3) to make payments and develop financial market 
        infrastructure;
            (4) to carry out activities related to information and 
        communications technology;
            (5) to support operations;
            (6) to cover unexpected losses;
            (7) to run sortition processes; and
            (8) to carry out such other activities as the Board of 
        Governors and the Secretary determine appropriate.
    (c) Matching Funds.--The Board of Governors and the Secretary may 
not require that an entity that receives a grant under this section 
provide matching funds with respect to such grant.

SEC. 502. PUBLIC BANK INCUBATOR PROGRAM.

    (a) In General.--The Board of Governors shall establish an 
incubator program to provide technical and technological assistance to 
persons seeking to be chartered by the Board of Governors under section 
101 or to obtain a certificate of Federal recognition under section 
102.
    (b) Application.--The Board of Governors, in coordination with the 
Secretary, the Corporation, and the Commission, shall establish a 
single application and review process for persons seeking to--
            (1) be federally chartered under section 101;
            (2) obtain a certificate of Federal recognition under 
        section 102;
            (3) become a public member bank;
            (4) obtain a license to issue federally-recognized public 
        securities under section 201;
            (5) obtain public deposit insurance pursuant to section 301 
        or from a Corporation-approved alternative provider; and
            (6) apply for a grant under section 401.

SEC. 503. COMMUNITY DEVELOPMENT GRANT PROGRAM.

    (a) Reasonable Efforts To Coordinate.--Covered banks shall, where 
and as appropriate, make reasonable efforts to coordinate activities 
with community development financial institutions, minority deposit 
institutions, and credit unions to promote community development and 
ensure community-oriented financial services are universal and 
comprehensively include historically excluded and marginalized groups.
    (b) Grants for Coordination.--The Board of Governors shall, jointly 
with the Secretary, award grants to covered banks, community 
development financial institutions, minority deposit institutions, and 
credit unions to facilitate coordination of activities under subsection 
(a).
    (c) Definitions.--In this section:
            (1) Community development financial institution.--The term 
        ``community development financial institution'' has the meaning 
        given the term in section 103(5) of the Riegle Community 
        Development and Regulatory Improvement Act of 1994 (12 U.S.C. 
        4702(5)).
            (2) Credit union.--The term ``credit union'' means a 
        Federal credit union or a State credit union (as such terms are 
        defined in section 101 of the Federal Credit Union Act (12 
        U.S.C. 1752)).
            (3) Minority deposit institution.--The term ``minority 
        deposit institution'' has the meaning given the term in section 
        308(b)(1) of the Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 1463(b)(1)).

SEC. 504. TREATMENT OF FUNDING.

    Any expenses incurred by the Board of Governors under this title 
shall be recorded--
            (1) in an account to be known as the ``Special Public Bank 
        Development Programs'' established at the Federal Reserve Bank 
        of New York; and
            (2) as a deferred asset (as described in section 11.96 of 
        the Financial Accounting Manual for Federal Reserve Banks, as 
        in effect on the date of the enactment of this Act) and 
        maintained separately from the balance sheet of the Federal 
        Reserve Bank of New York and the Federal Reserve System, so as 
        to not reduce or impact the calculation of total income or 
        revenue generated by the Federal Reserve System, or otherwise 
        reduce the total amount of net operating profits to be made 
        available for remittance to the Treasury on an ongoing basis.

         TITLE VI--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS

SEC. 601. STATE AND LOCAL INSTRUMENTALITIES ELIGIBLE TO BE COMMUNITY 
              DEVELOPMENT FINANCIAL INSTITUTIONS.

    Section 103(5)(A)(v) of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (12 U.S.C. 4702(5)(A)(v)) is amended 
by striking ``, or of any State or political subdivision of a State''.
                                 <all>
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