II

106TH CONGRESS

2D SESSION S. 2592

To establish a program to promote access to financial services, in particular

for low- and moderate-income persons who lack access to such services,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 18, 2000

Mr. SARBANES (for himself, Mr. DASCHLE, Mr. DODD, Mr. KERRY, Mr.

BRYAN, Mr. JOHNSON, Mr. REED, Mr. SCHUMER, Mr. BAYH, and Mr.

EDWARDS) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing and Urban Affairs

A BILL

To establish a program to promote access to financial services, in particular for low- and moderate-income persons

who lack access to such services, 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 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘First Accounts Act

5 of 2000’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds as follows:
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1 (1) Many low- and moderate-income persons

2 lack adequate access to basic financial services, such

3 as a low-cost transaction or savings account at a

4 federally insured depository institution.

5 (2) The lack of such basic financial services in6 creases costs for such persons, reduces their ability

7 to manage their finances and to save and plan for

8 the future, and limits their access to other financial

9 products, such as credit cards, home mortgages, or

10 automobile loans.

11 (3) Existing products and services may not be

12 adequate to meet the needs of low- and moderate-in13 come persons for financial services, such persons

14 may be inadequately informed about financial issues,

15 and depository institutions may have insufficient in16 formation about such persons to develop suitable

17 products for them.

18 (4) Increasing access to basic financial services

19 will require research and development, incentives to

20 provide basic accounts and increase access to finan21 cial services, and consumer and depository institu22 tion education.

23 (b) PURPOSE.—The primary purpose of this Act is

24 to establish a program to promote access to financial serv25 ices, in particular for low- and moderate-income persons
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1 who lack access to such services, including low- and mod2 erate-income persons who do not receive Federal benefits.

3 SEC. 3. DEFINITIONS.

4 For purposes of this Act, the following definitions

5 shall apply:

6 (1) COMMUNITY PARTNER.—The term ‘‘com7 munity partner’’ means a nonprofit organization,

8 State or local government agency, quasi-govern9 mental entity, or community development financial

10 institution (as defined in section 103(5) of the Com11 munity Development and Financial Institutions Act

12 of 1994) that provides education to low- and mod13 erate-income persons regarding financial services, or

14 develops or provides financial services for low- and

15 moderate-income persons or otherwise facilitates the

16 provision of financial services to such persons.

17 (2) DEPOSITORY INSTITUTION.—The term ‘‘de18 pository institution’’ means—

19 (A) any insured depository institution (as

20 defined in section 3(c) of the Federal Deposit

21 Insurance Act); and

22 (B) any insured credit union (as defined in

23 section 101(7) of the Federal Credit Union

24 Act).
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1 (3) FINANCIAL SERVICES ELECTRONIC NET2 WORK.—The term ‘‘financial services electronic net3 work’’ means an organization or entity that provides

4 electronic access to an individual’s account at a de5 pository institution, including an automated teller

6 machine network, point-of-sale network, and a pro7 vider of such services through the Internet.

8 (4) INDIAN RESERVATION.—The term ‘‘Indian

9 reservation’’ has the same meaning as in section

10 4(10) of the Indian Child Welfare Act of 1978 and,

11 to the extent not already included, includes—

12 (A) lands held by incorporated Native

13 groups, regional corporations, and village cor14 porations, as defined in or established pursuant

15 to the Alaska Native Claims Settlement Act;

16 (B) public domain Indian allotments; and

17 (C) former Indian reservations in the State

18 of Oklahoma.

19 (5) LOW- AND MODERATE-INCOME.—The term

20 ‘‘low- and moderate-income’’ means a family income

21 that does not exceed—

22 (A) for nonmetropolitan areas, 80 percent

23 of the statewide median family income; and
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1 (B) for metropolitan areas, 80 percent of

2 the greater of statewide median family income

3 or metropolitan area median family income.

4 (6) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of the Treasury.

6 (7) SERVICE AREA.—

7 (A) IN GENERAL.—The term ‘‘service

8 area’’ means—

9 (i) any population census tract for

10 which the poverty rate is 20 percent or

11 greater, based on the most recent census

12 data;

13 (ii) any population census tract—

14 (I) which is not located within a

15 metropolitan area; and

16 (II) for which the median family

17 income does not exceed 80 percent of

18 statewide median family income;

19 (iii) any population census tract—

20 (I) which is located within a met21 ropolitan area; and

22 (II) for which the median family

23 income does not exceed 80 percent of

24 the greater of statewide median family
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1 income or the metropolitan area me2 dian family income;

3 (iv) an Indian reservation; and

4 (v) any other area that has significant

5 unmet needs for financial services, as may

6 be determined by the Secretary.

7 (B) APPLICATION IN ABSENCE OF POPU8 LATION CENSUS TRACTS.—In the case of an

9 area that is not tracted for population census

10 tracts, the equivalent county divisions (as de11 fined by the Bureau of the Census for purposes

12 of defining poverty areas) shall be used in lieu

13 of a population census tract for purposes of

14 clauses (i), (ii), and (iii) of subparagraph (A)

15 and in determining poverty rates and median

16 family income for purposes of those clauses.

17 (8) SERVICE POPULATION.—The term ‘‘service

18 population’’ means individuals, or a group of individ19 uals, who are low- or moderate-income, or who oth20 erwise lack adequate access to financial services, as

21 may be determined by the Secretary.
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1 SEC. 4. ESTABLISHMENT OF A PROGRAM FOR EXPANSION

2 OF FINANCIAL SERVICES TO THE UNDER3 SERVED.

4 The Secretary shall establish a program to support

5 and promote—

6 (1) the expansion of access to financial services,

7 in particular for low- and moderate-income persons

8 who lack access to such services, and for other pur9 poses;

10 (2) the development of new financial products

11 and services that are adequate to meet the needs of

12 low- and moderate-income persons for financial serv13 ices;

14 (3) education for both low- and moderate-in15 come persons and depository institutions concerning

16 the availability and use of financial services for and

17 by such persons; and

18 (4) such other activities and projects as the

19 Secretary may determine are consistent with the

20 purpose of this Act.

21 SEC. 5. POWERS AND AUTHORITIES OF THE SECRETARY.

22 (a) IN GENERAL.—In carrying out the program es23 tablished under section 4, the Secretary may award

24 grants, enter into cooperative agreements and contracts,

25 and designate depository institutions as financial agents

26 of the Treasury, in order to provide for technical assist-
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1 ance, education, training, or financial services to further

2 the purpose of this Act.

3 (b) SPECIFIC POWERS.—The powers of the Secretary

4 under this Act shall include the following:

5 (1) FINANCIAL SERVICES.—The Secretary may

6 promote access to financial services by providing fi7 nancial and technical assistance to depository insti8 tutions for providing low-cost financial services,

9 including—

10 (A) electronic transaction accounts;

11 (B) savings accounts; and

12 (C) other financial services deemed appro13 priate by the Secretary to meet the needs of

14 service areas or service populations.

15 (2) DISTRIBUTION.—The Secretary may pro16 mote access to financial services by providing finan17 cial and technical assistance to depository institu18 tions, financial services electronic networks, or com19 munity partners for expanding the distribution of fi20 nancial services to service areas or service popu21 lations, including through financial services elec22 tronic networks.

23 (3) EDUCATION.—The Secretary may promote

24 access to financial services by—
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1 (A) providing financial education to service

2 areas or service populations;

3 (B) providing technical assistance or train4 ing to or by depository institutions or commu5 nity partners; and

6 (C) otherwise promoting financial services

7 to or by service areas, service populations, de8 pository institutions, or community partners.

9 (4) RESEARCH AND DEVELOPMENT.—The Sec10 retary may conduct or support such research and de11 velopment as the Secretary considers appropriate in

12 order to further the purpose of this Act, including

13 the collection of information about access to finan14 cial services.

15 (c) SELECTION CRITERIA.—

16 (1) IN GENERAL.—In selecting any depository

17 institution, community partner, or financial services

18 electronic network as a recipient of a grant or other

19 assistance under this Act, the Secretary shall

20 consider—

21 (A) the likelihood of success of the deposi22 tory institution, community partner, or finan23 cial services electronic network in achieving the

24 purpose of the grant or assistance and carrying

25 out the purpose of this Act;
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1 (B) the experience of the depository insti2 tution, community partner, or financial services

3 electronic network in undertaking activities

4 similar to the activities to be funded or sup5 ported by the proceeds of the grant or other as6 sistance; and

7 (C) such other factors, including manage8 ment and performance criteria, as the Secretary

9 may determine to be appropriate.

10 (2) PUBLICATION OF CRITERIA.—The Secretary

11 shall publish the selection criteria established pursu12 ant to paragraph (1) in the Federal Register.

13 (d) TERMS AND CONDITIONS.—

14 (1) IN GENERAL.—Before providing any assist15 ance under this Act, the Secretary and each entity

16 to be assisted shall enter into an agreement that re17 quires such entity to comply with performance goals

18 and abide by other terms and conditions, as deter19 mined by the Secretary.

20 (2) REMEDIAL TERMS AND CONDITIONS.—The

21 agreement required by paragraph (1) shall provide

22 that, in the event of fraud, mismanagement, or non23 compliance with the terms of the agreement, the

24 Secretary shall have discretion to—
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1 (A) require changes to the performance

2 goals;

3 (B) terminate the agreement or reduce as4 sistance under the agreement;

5 (C) require repayment of assistance;

6 (D) bar an entity from reapplying under

7 the program established under section 4; or

8 (E) take such other action as the Secretary

9 may determine to be appropriate.

10 (e) FINALITY OF DECISIONS.—Any determination,

11 including the selection of recipients of grants and other

12 assistance under this Act, shall be made in the sole discre13 tion of the Secretary and shall be final.

14 (f) REGULATIONS.—The Secretary may prescribe

15 such regulations and procedures as the Secretary deter16 mines to be appropriate to carry out the program estab17 lished under section 4 and the purpose of this Act.

18 SEC. 6. REPORTS.

19 Not later than 2 years after the date of enactment

20 of this Act, and annually thereafter, the Secretary shall

21 submit to Congress a report containing—

22 (1) a detailed description of the operation of the

23 program established under section 4;

24 (2) the findings and conclusions of the Sec25 retary on the extent to which the program estab-
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1 lished under section 4 is meeting the purpose of this

2 Act and the goals of the Secretary in establishing

3 the program; and

4 (3) such recommendations for legislative or ad5 ministrative action as the Secretary may consider to

6 be appropriate.

7 SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

8 (a) IN GENERAL.—To carry out this Act, there are

9 authorized to be appropriated to the Secretary, to remain

10 available until expended—

11 (1) $30,000,000 for fiscal year 2001; and

12 (2) such sums as may be necessary for each of

13 fiscal years 2002 through 2005.

14 (b) ADMINISTRATIVE EXPENSES.—

15 (1) IN GENERAL.—Of amounts appropriated to

16 the Secretary under this section, not more than

17 $3,000,000 may be used in any fiscal year to pay

18 the administrative costs and expenses of the pro19 gram established under section 4.

20 (2) EXCLUSION OF CERTAIN COSTS.—Costs as21 sociated with research and development, training,

22 technical assistance, and education shall not be con23 sidered to be administrative expenses for purposes of

24 this subsection.

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