II

104TH CONGRESS

1ST SESSION S. 941

To provide for the termination of the status of the College Construction

Loan Insurance Association (‘‘the Corporation’’) as a Government Sponsored Enterprise, to require the Secretary of Education to divest himself

of the Corporation’s stock, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 16 (legislative day, JUNE 5), 1995

Mr. DODD (for himself and Mr. KENNEDY) introduced the following bill; which

was read twice and referred to the Committee on Labor and Human

Resources

A BILL

To provide for the termination of the status of the College

Construction Loan Insurance Association (‘‘the Corporation’’) as a Government Sponsored Enterprise, to require

the Secretary of Education to divest himself of the Corporation’s stock, and for other purposes.

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

3 That this Act may be cited as the ‘‘College Construction

4 Loan Insurance Association Privatization Act of 1995’’.

5 FINDINGS AND PURPOSES

6 SEC. 2. (a) FINDINGS.—The Congress finds that—
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1 (1) the College Construction Loan Insurance

2 Association (hereinafter referred to as ‘‘the Corpora3 tion’’) was established by the Higher Education

4 Amendments of 1986 (Public Law 99–498) in order

5 to assist in financing the construction, reconstruc6 tion, renovation, acquisition, or purchase of post7 secondary education facilities;

8 (2) in order to attract initial investors and es9 tablish the Corporation as a viable corporate entity,

10 the Secretary of Education was required by statute

11 to purchase a minority equity interest in the Cor12 poration;

13 (3) it was the intent of Congress, in establish14 ing the Corporation, that the Federal Government’s

15 ownership interest in the Corporation would eventu16 ally terminate through the sale of the stock of the

17 Corporation owned by the Secretary of Education;

18 (4) current statutory restrictions on the Cor19 poration’s business activities and organization im20 pede the Corporation’s efforts to operate effectively

21 and to provide the services needed by educational in22 stitutions; and

23 (5) eliminating all statutory restrictions on the

24 Corporation’s business activities, as well as other
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1 links between the Federal Government and the Cor2 poration, would—

3 (A) eliminate a Federal presence where the

4 operation of market forces would be more suit5 able and contribute toward reducing the scope

6 of Government;

7 (B) improve the ability of the Corporation

8 to provide assistance in the financing of edu9 cation facilities; and

10 (C) return funds to the United States

11 Treasury.

12 (b) PURPOSES.—The purposes of this Act are to—

13 (1) terminate, in an orderly manner, the Cor14 poration’s financial and other connections to the

15 United States Government; and

16 (2) enable the Corporation to engage in any

17 business or other activities for which corporations

18 may be organized under the laws of any State of the

19 United States or the District of Columbia.

20 STATUS OF THE CORPORATION AND CORPORATE POWERS;

21 OBLIGATIONS NOT FEDERALLY GUARANTEED

22 SEC. 3. (a) STATUS OF THE CORPORATION.—The

23 Corporation shall not be an agency, instrumentality, or es24 tablishment of the United States Government and shall

25 not be a ‘‘Government corporation’’ nor a ‘‘Government

26 controlled corporation’’ as defined in section 103 of title
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1 5, United States Code. No action under section 1491 of

2 title 28, United States Code (commonly known as the

3 Tucker Act) shall be allowable against the United States

4 based on the actions of the Corporation.

5 (b) CORPORATE POWERS.—The Corporation shall be

6 subject to the provisions of this Act, and, to the extent

7 not inconsistent with this Act, to the District of Columbia

8 Business Corporation Act (or the comparable law of an9 other State, if applicable). The Corporation shall have the

10 powers conferred upon a corporation by the District of Co11 lumbia Business Corporation Act (or such other applicable

12 State law) as from time to time in effect in order to con13 duct its affairs as a private, for-profit corporation and to

14 carry out its purposes and activities incidental thereto.

15 The Corporation shall have the power to enter into con16 tracts, to execute instruments, to incur liabilities, to pro17 vide products and services, and to do all things as are nec18 essary or incidental to the proper management of its af19 fairs and the efficient operation of a private, for-profit

20 business.

21 (c) NO FEDERAL GUARANTEE.—

22 (1) OBLIGATIONS INSURED BY THE CORPORA23 TION.—

24 (A) No obligation that is insured, guaran25 teed, or otherwise backed by the Corporation
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1 shall be deemed to be an obligation that is

2 guaranteed by the full faith and credit of the

3 United States.

4 (B) No obligation that is insured, guaran5 teed, or otherwise backed by the Corporation

6 shall be deemed to be an obligation that is

7 guaranteed by the Student Loan Marketing As8 sociation.

9 (C) This paragraph shall not affect the de10 termination of whether such obligation is guar11 anteed for purposes of Federal income taxes.

12 (2) SECURITIES OFFERED BY THE CORPORA13 TION.—No debt or equity securities of the Corpora14 tion shall be deemed to be guaranteed by the full

15 faith and credit of the United States.

16 (d) DEFINITION.—The term ‘‘Corporation’’ as used

17 in this Act shall refer to the College Construction Loan

18 Insurance Association as in existence as of the day before

19 enactment of this Act, and to any successor corporation.

20 RELATED PRIVATIZATION REQUIREMENTS

21 SEC. 4. (a) NOTICE REQUIREMENTS.—

22 (1) During the six-year period following the

23 date of enactment of this Act, the Corporation shall

24 include, in each of the Corporation’s contracts for

25 the insurance, guarantee, or reinsurance of obliga26 tions, and in each document offering debt or equity
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1 securities of the Corporation a prominent statement

2 providing notice that—

3 (A) such obligations or such securities, as

4 the case may be, are not obligations of the

5 United States, nor are they guaranteed in any

6 way by the full faith and credit of the United

7 States; and

8 (B) the Corporation is not an instrumen9 tality of the United States.

10 (2) During the five-year period following the

11 sale of stock pursuant to section 5(a), in addition to

12 the notice requirements in paragraph (1), the Cor13 poration shall include, in each of the contracts and

14 documents referred to in such paragraph, a promi15 nent statement providing notice that the United

16 States is not an investor in the Corporation.

17 (b) CORPORATE CHARTER.—The Corporation’s char18 ter shall be amended as necessary and without delay to

19 conform to the requirements of this Act.

20 (c) CORPORATE NAME.—The name of the Corpora21 tion, or of any direct or indirect subsidiary thereof, may

22 not contain the term ‘‘College Construction Loan Insur23 ance Association’’, or any substantially similar variation

24 thereof.

25 (d) TRANSITIONAL REQUIREMENTS.—
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1 (1) REQUIREMENTS UNTIL STOCK SALE.—Not2 withstanding section 6, the requirements of sections

3 754 and 760 of the Higher Education Act of 1965

4 (20 U.S.C. 1001 et seq., hereinafter referred to as

5 ‘‘the Act’’), as in existence as of the day before en6 actment of this Act, shall continue to be effective

7 until the day immediately following the date of clos8 ing of the purchase of the Secretary’s stock (or the

9 date of closing of the final purchase, in the case of

10 multiple transactions) pursuant to section 5(a) of

11 this Act.

12 (2) REPORTS AFTER STOCK SALE.—The Cor13 poration shall, not later than March 30 of the first

14 full calendar year immediately following the sale

15 pursuant to section 5(a), and each of the two suc16 ceeding years, submit to the Secretary of Education

17 a report describing the Corporation’s efforts to as18 sist in the financing of education facilities projects,

19 including projects for elementary, secondary, and

20 postsecondary educational institution infrastructure,

21 and detailing, on a project-by-project basis, the Cor22 poration’s business dealings with educational institu23 tions that are rated by a nationally recognized sta24 tistical rating organization at or below the organiza25 tion’s third highest rating.
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1 SALE OF FEDERALLY-OWNED STOCK

2 SEC. 5. (a) SALE OF STOCK REQUIRED.—The Sec3 retary of the Treasury shall, upon the request of the Sec4 retary of Education, make every appropriate effort to sell,

5 pursuant to section 324 of title 31 of the United States

6 Code, the voting common stock of the Corporation owned

7 by the Secretary of Education not later than one year

8 after the date of enactment of this Act.

9 (b) PURCHASE BY THE CORPORATION.—In the event

10 that the Secretary of the Treasury is unable to sell the

11 voting common stock, or any portion thereof, at a price

12 acceptable to the Secretary of Education and the Sec13 retary of the Treasury within the period specified in sub14 section (a), the Corporation shall purchase such stock at

15 a price determined by the Secretary of the Treasury, in

16 consultation with the Secretary of Education, based on the

17 independent appraisal of one or more nationally recog18 nized financial firms. Such firm or firms shall be selected

19 by the Secretary of the Treasury in consultation with the

20 Secretary of Education and the Corporation.

21 (c) REIMBURSEMENT OF COSTS OF SALE.—The Sec22 retary of the Treasury shall be reimbursed from the pro23 ceeds of the sale of the stock under this section for all

24 reasonable costs related to such sale, including all reason-
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1 able expenses relating to one or more independent apprais2 als under this section.

3 (d) ASSISTANCE BY THE CORPORATION.—The Cor4 poration shall provide such assistance as the Secretary of

5 the Treasury and the Secretary of Education may require

6 to facilitate the sale of the stock under this section.

7 REPEAL OF STATUTORY RESTRICTIONS AND RELATED

8 PROVISIONS

9 SEC. 6. Part D of Title VII of the Higher Education

10 Act of 1965 (20 U.S.C. 1001 et seq.) is repealed.

Æ