I

103D CONGRESS

1ST SESSION H. R. 238

To promote community development lending by financial institutions in

economically distressed areas.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. LEACH introduced the following bill; which was referred to the Committee

on Banking and Finance

A BILL

To promote community development lending by financial

institutions in economically distressed areas.

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 shall be cited as the ‘‘Community Develop5 ment Banking Act of 1993’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds that:

8 (1) Many small and medium size businesses,

9 low- to moderate-income individuals and economi-
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1 cally distressed areas lack adequate access to credit

2 and private capital.

3 (2) Community development is most productive

4 when neighborhood residents and merchants, non5 profit organizations, local government officials, and

6 private lenders cooperate to create a more positive

7 physical, financial and market environment which

8 encourages and supports private investment and re9 investment.

10 (3) The best way to address problems of de11 pressed economies in inner cities, rural areas, and

12 other underserved communities is by empowering

13 local residents through technical assistance and mar14 ket incentives for pooling local resources.

15 (4) There is a need to provide existing regu16 lated financial institutions with incentives to provide

17 these groups with adequate access to credit and pri18 vate capital without compromising safety and sound19 ness.

20 (5) There is a need to encourage other private

21 sector institutions, such as community development

22 banks, community development corporations, com23 munity development credit unions and small busi24 ness investment corporations to provide these groups

25 with adequate access to credit and private capital
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1 without the creation of an additional Federal bu2 reaucracy and without exposing taxpayers to unnec3 essary risk.

4 (6) There is a need for the Administration to

5 complete implementing guidelines for existing initia6 tives, such as the Bank Enterprise Act, designed to

7 provide these groups with adequate access to credit

8 and private capital.

9 (b) PURPOSE.—The purpose of this Act is to provide

10 small and medium size businesses, low- and moderate-in11 come individuals and economically distressed areas with

12 adequate access to credit and private capital by providing

13 incentives to regulated financial institutions and other pri14 vate sector institutions.

15 TITLE I—BANK COMMUNITY

16 DEVELOPMENT INCENTIVES

17 SEC. 101. CRA CREDIT FOR COMMUNITY INVESTMENTS.

18 (a) CRA CREDIT FOR COMMUNITY LENDING ACTIVI19 TIES.—The Community Reinvestment Act of 1977 (12

20 U.S.C. 2901 et seq.) is amended by inserting at the end

21 the following new section:

22 ‘‘SEC. 809. STANDARDS FOR CRA CREDIT.

23 ‘‘(a) IN GENERAL.—Not later than 1 year after the

24 date of enactment of this section, the Federal Financial

25 Institutions Examination Council, in consultation with the
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1 Community Enterprise Assessment Credit Board, individ2 uals representing regulated financial institutions, consum3 ers, community groups, and other interested parties, shall

4 establish standards to assess the record of a regulated fi5 nancial institution in meeting its community credit needs

6 and for purposes of written evaluations prepared under

7 section 807. Such standards shall evaluate a regulated fi8 nancial institution’s record of meeting the credit needs of

9 its entire community and expressly grant credit for pur10 poses of written evaluations under section 807 of this Act

11 based on, but not limited to, the following—

12 ‘‘(1) the actual volume of lending by the institu13 tion to its delineated community;

14 ‘‘(2) the percentage of earning assets, new loan

15 production or capital that the institution has in16 vested in its delineated community;

17 ‘‘(3) investments by the institution designed

18 primarily to promote the public welfare, including

19 the welfare of low- and moderate-income commu20 nities or families (such as by providing housing serv21 ices or jobs in the institution’s community);

22 ‘‘(4) investments in any community develop23 ment organization, community development bank,

24 community development corporation, community de25 velopment credit union, minority depository institu-
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1 tion, women’s depository institution, small business

2 investment corporation operating in the regulated fi3 nancial institution’s delineated community or any

4 qualifying activity pursuant to section 233(a) of the

5 Bank Enterprise Act of 1991;

6 ‘‘(5) achieving the assessment factors identified

7 in the regulations prescribed by the Federal finan8 cial supervisory agencies to implement this Act;

9 ‘‘(6) additional factors that demonstrate an in10 stitution’s commitment to meeting the credit needs

11 of its entire community.

12 ‘‘(b) REGULATIONS TO INCLUDE STANDARDS.—Each

13 appropriate Federal financial supervisory agency shall in14 clude the standards established under subsection (a) in its

15 regulations required by section 806.

16 ‘‘(c) ASSIGNED RATINGS.—

17 ‘‘(1) RATING STANDARDS.—The Federal finan18 cial supervisory agencies shall base the assigned rat19 ings required under section 807(b)(2) of this Act on

20 the standards established pursuant to subsection (a).

21 ‘‘(2) AGENCY DISCRETION.—In connection with

22 the use of the standards established under sub23 section (a) and for purposes of the assigned ratings

24 required under section 807(b)(2), the appropriate

25 Federal financial supervisory agency shall consider
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1 and give appropriate weight and consideration for a

2 regulated financial institution’s asset size and serv3 ice area, access to Federal programs, local economic

4 conditions, legal impediments and any additional

5 factors that reasonably bear upon such institution’s

6 ability to meet its community credit needs.’’

7 (b) CONFORMING AMENDMENT.—Section 808(a) of

8 the Community Reinvestment Act of 1977 (12 U.S.C.

9 2907(a)) (as amended by section 909 of the Housing and

10 Community Development Act of 1992) is amended by

11 striking ‘‘may be a factor’’ and inserting ‘‘shall be consid12 ered and given credit’’.

13 SEC. 102. CRA COMPLIANCE.

14 (a) IN GENERAL.—Section 804 of the Community

15 Reinvestment Act of 1977 (12 U.S.C. 2903) is amended—

16 (1) by striking ‘‘In connection with’’ and insert17 ing ‘‘(a) IN GENERAL.—Subject to subsection (b), in

18 connection with’’;

19 (2) by adding at the end the following:

20 ‘‘(b) CRA COMPLIANCE.—Notwithstanding sub21 section (a)(2), an application for a deposit facility by a

22 regulated financial institution shall not be denied on the

23 basis of such institution’s compliance with this Act if such

24 institution has received a rating in its last evaluation

25 under section 804 of ‘outstanding’ in its record of meeting
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1 its community needs based on the standards established

2 under section 809(b).

3 ‘‘(c) COMMUNITY DEVELOPMENT INVESTMENT AC4 TIVITIES.—

5 ‘‘(1) REGULATED FINANCIAL INSTITUTIONS.—

6 Any well capitalized (as defined in section 38 of the

7 Federal Deposit Insurance Act and the regulations

8 promulgated thereto), regulated financial institution

9 that fully invests the maximum amount permissible

10 by the appropriate Federal banking agency or State

11 supervisor for an institution which meets the defini12 tion of ‘well capitalized’, as authorized by law, regu13 lation or order, in a qualifying investment shall be

14 deemed to have met all requirements under this Act,

15 including for purposes of any application for a de16 posit facility by such regulated financial institution.

17 ‘‘(2) DEPOSITORY INSTITUTION HOLDING COM18 PANIES.—Any depository institution holding com19 pany that owns or controls 80 percent of its assets

20 in regulated financial institutions that are well cap21 italized, and

22 ‘‘(A) has fully invested the maximum

23 amount permissible by the appropriate Federal

24 banking agency as authorized by law, regulation

25 or order, in a qualifying investment; or
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1 ‘‘(B) owns or controls 80 percent of its as2 sets in regulated financial institutions that have

3 fully invested the maximum amount permissible

4 by the appropriate Federal banking agency or

5 State supervisor for an institution which meets

6 the definition of ‘well capitalized’, as authorized

7 by law, regulation or order, in a qualifying in8 vestment;

9 shall be deemed to have met all requirements under

10 this Act, including for purposes of any application

11 for a deposit facility by such depository institution

12 holding company.

13 ‘‘(3) QUALIFYING INVESTMENTS.—

14 ‘‘(A) For purposes of this subsection, the

15 term ‘qualifying investment’ means any invest16 ment by a regulated financial institution or a

17 depository institution holding company in a

18 community development bank, community de19 velopment corporation, community development

20 credit union, or small business investment cor21 poration operating in the regulated financial in22 stitution’s delineated community, subject to

23 subparagraphs (B) and (C).

24 ‘‘(B) No investment will be considered a

25 ‘qualifying investment’ under this paragraph if
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1 the appropriate Federal financial supervisory

2 agency determines that such an investment is

3 not consistent with safe and sound banking

4 practices.

5 ‘‘(C) Any ‘qualifying investment’ under

6 this paragraph shall be designed to satisfy the

7 affiliated regulated financial institution’s con8 tinuing and affirmative obligation to help meet

9 the credit needs of the local community where

10 it is chartered.’’.

11 (b) CONFORMING AMENDMENT.—Section 803 of the

12 Community Reinvestment Act is amended by inserting at

13 the end the following:

14 ‘‘(5) The term ‘depository institution holding

15 company’ has the same meaning given such term as

16 in section 3(w)(1) of the Federal Deposit Insurance

17 Act (12 U.S.C. 1813(w)(1)).

18 ‘‘(6) The terms ‘community development orga19 nization’, ‘community development bank’, and ‘com20 munity development corporation’ have the same

21 meaning given such terms in section 234 of the

22 Bank Enterprise Act of 1991.

23 ‘‘(7) The term ‘community development credit

24 union’ has the same meaning given such term as in
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1 section 101(1) of the Federal Credit Union Act (12

2 U.S.C. 1752(10)) [as amended herein].’’

3 SEC. 103. EXPEDITED PROCEDURES FOR COMMUNITY DE4 VELOPMENT CORPORATIONS.

5 Section 4 of the Bank Holding Company Act of 1956

6 (12 U.S.C. 1843) is amended by inserting at the end the

7 following new subsection:

8 ‘‘(j) NOTICE PROCEDURES FOR COMMUNITY DEVEL9 OPMENT CORPORATION ACTIVITIES.—

10 ‘‘(1) GENERAL NOTICE PROCEDURE.—No bank

11 holding company may acquire or retain ownership or

12 control of the shares of a community development

13 corporation as authorized pursuant to subsection (c)

14 of this section without providing the Board with at

15 least 30 days prior written notice of the proposed

16 transaction or expansion.

17 ‘‘(2) CONTENTS OF NOTICE.—The notice sub18 mitted to the Board shall contain such information

19 as the Board shall prescribe by regulation or by spe20 cific request in connection with a particular notice.

21 ‘‘(3) PROCEDURE FOR AGENCY ACTION.—A no22 tice filed under this subsection shall be deemed to be

23 approved by the Board unless, prior to the expira24 tion of 30 days from the receipt of a complete no-
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1 tice, the Board issues an order setting forth the rea2 sons for disapproval.

3 ‘‘(4) WAIVER.—Any activity of a Community

4 Development Corporation authorized under sub5 section (c) and subject to paragraph (1), may pro6 ceed prior to the expiration of the disapproval period

7 if the Board issues a written notice of approval.

8 ‘‘(5) SHORTER PERIOD.—The Board may pro9 vide for a shorter period of time for notice under

10 this subsection if such action would produce benefits

11 to the public without adversely affecting the safety

12 and soundness of insured depository institutions.’’

13 SEC. 104. COMMUNITY DEVELOPMENT INVESTMENT AC14 COUNTS.

15 (a) NATIONAL BANKS.—Section 5136 of the revised

16 statutes (12 U.S.C. 24) is amended by inserting at the

17 end the following:

18 ‘‘Twelfth. Notwithstanding any other provision of

19 law, to organize, sponsor or underwrite securities issued

20 by companies that are registered as investment companies

21 under the Investment Company Act of 1940: Provided,

22 That such investment companies invest and trade only in

23 securities issued by companies located and primarily doing

24 business in qualified distressed communities as defined in

25 section 233(b) of the Bank Enterprise Act of 1991.’’
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1 (b) SAVINGS ASSOCIATIONS.—(b) Section 5(c)(1) of

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

3 amended by inserting at the end the following:

4 ‘‘(S) COMMUNITY DEVELOPMENT INVESTMENT

5 ACCOUNTS.—Notwithstanding any other provision of

6 law, to organize, sponsor or underwrite securities is7 sued by companies that are registered as investment

8 companies under the Investment Company Act of

9 1940: Provided, That such investment companies in10 vest and trade only in securities issued by companies

11 located and primarily doing business in qualified dis12 tressed communities as defined in section 233(b) of

13 the Bank Enterprise Act of 1991.’’

14 SEC. 105. ENHANCED PASSIVE INVESTMENTS AUTHORIZED

15 FOR COMMUNITY DEVELOPMENT ACTIVITIES.

16 (a) IN GENERAL.—Section 4(c) of the Bank Holding

17 Company Act of 1956 (12 U.S.C. 1843(c)) is amended

18 by adding the following paragraph:

19 ‘‘(15) shares of any company located and pri20 marily doing business in a qualified distressed com21 munity as defined in section 233(b) of the Bank En22 terprise Act of 1991 to the extent that—

23 ‘‘(A) the total amount of the shares of

24 such company acquired or retained in accord25 ance with this paragraph (by the bank holding
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1 company and any subsidiary of the bank hold2 ing company) does not exceed 25 percent of the

3 outstanding voting shares of the company;

4 ‘‘(B) the company is not under the oper5 ational control, directly or indirectly, of the

6 bank holding company;

7 ‘‘(C) the company does not engage in real

8 estate or real estate related activities not per9 missible for a national bank; and

10 ‘‘(D) the Board has been given notice by

11 the bank holding company of its intent to ac12 quire or retain the shares of such company in

13 accordance with this paragraph and has not

14 disapproved the acquisition within 45 days

15 based on a finding that such acquisition or re16 tention of shares would adversely affect the

17 safety and soundness of insured depository in18 stitution affiliates.’’

19 (b) CONFORMING AMENDMENT.—Section 2(a)(3) of

20 the Bank Holding Company Act of 1956 (12 U.S.C.

21 1841(a)) is amended by redesignating paragraphs (4), (5),

22 and (6) as paragraphs (5), (6), and (7), respectively, and

23 by inserting after paragraph (3) the following new para24 graph:
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1 ‘‘(4) For the purpose of any proceeding under para2 graph (2)(C) or to which paragraph (5) applies, there shall

3 be a presumption that any company which owns, controls,

4 or has the power to vote not more than 25 percent of any

5 class of voting stock of any company as authorized by,

6 and in conformity with, section 4(c)(15) of this Act does

7 not control such company.’’

8 SEC. 106. AWARDS PROGRAM.

9 The Federal Financial Institutions Examination

10 Council shall establish an annual awards program to pub11 licly recognize tangible examples of outstanding efforts by

12 insured depository institutions to meet the credit needs of

13 their communities.

14 SEC. 107. QUALIFIED STOCK ISSUANCES FOR MINORITY

15 THRIFTS.

16 Section 10(q) of the Home Owners’ Loan Act, 12

17 U.S.C. 1467a(q), is amended—

18 (1) by deleting ‘‘undercapitalized’’ each place

19 that it appears and inserting ‘‘eligible’’;

20 (2) in paragraph (1)(F), by deleting ‘‘has cap21 ital’’ and all that follows and inserting ‘‘is ade22 quately capitalized as determined under section 38

23 of the Federal Deposit Insurance Act (12 U.S.C.

24 1831o).’’;
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1 (3) in paragraph (1)(G), by deleting ‘‘not more

2 than 15’’ and inserting ‘‘less than 25’’;

3 (4) by deleting subparagraphs (A) and (B) of

4 paragraph (4), as amended, and inserting new sub5 paragraphs (A) and (B) to read as follows—

6 ‘‘(A) that is ‘undercapitalized’ as deter7 mined under section 38 of the Federal Deposit

8 Insurance Act (12 U.S.C. 1831o); or

9 ‘‘(B) that is a ‘minority depository institu10 tion’ as determined under section 3 note of the

11 Home Owners’ Loan Act (12 U.S.C. 1463

12 note), as added by section 308 of the Financial

13 Institutions Reform, Recovery and Enforcement

14 Act of 1989 (Public Law 101–73, 103 Stat.

15 183).’’.

16 TITLE II—HOUSING AND SMALL

17 BUSINESS FINANCE

18 SEC. 201. GOVERNMENT SPONSORED ENTERPRISE PUR19 CHASE GOALS.

20 (a) LOW- AND MODERATE-INCOME HOUSING

21 GOALS.—Section 1332(a) of the Federal Housing Enter22 prises Financial Safety and Soundness Act of 1992 is

23 amended by adding the following new sentence to the end

24 thereof: ‘‘The Secretary shall establish a separate specific

25 sub-goal within the goal under this section for the pur-
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1 chase by each enterprise of mortgages originated by com2 munity development organizations as such term is de3 scribed in section 234 of the Bank Enterprise Act of

4 1991.’’.

5 (b) SPECIAL AFFORDABLE HOUSING GOALS.—Sec6 tion 1333(a) of the Federal Housing Enterprises Finan7 cial Safety and Soundness Act of 1992 is amended by add8 ing the following new sentence to the end thereof: ‘‘The

9 Secretary shall establish a separate specific sub-goal with10 in the goal under this section for the purchase by each

11 enterprise of mortgages originated by community develop12 ment organizations as such term is described in section

13 234 of the Bank Enterprise Act of 1991.’’.

14 (c) HOUSING GOALS FOR UNDERSERVED AREAS.—

15 Section 1334(a) of the Federal Housing Enterprises Fi16 nancial Safety and Soundness Act of 1992 is amended by

17 adding the following new sentence to the end thereof:

18 ‘‘The Secretary shall establish a separate specific sub-goal

19 within the goal under this section for the purchase by each

20 enterprise of mortgages originated by community develop21 ment organizations as such term is described in section

22 234 of the Bank Enterprise Act of 1991.’’

23 (d) ADDITIONAL REQUIREMENTS.—Section 1335 of

24 the Federal Housing Enterprises Financial Safety and

25 Soundness Act of 1992 is amended—
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1 (1) by striking ‘‘and’’ at the end of paragraph

2 (3);

3 (2) by striking the period at the end of para4 graph (4) and inserting in lieu thereof ‘‘; and’’; and

5 (3) by inserting the following new paragraph

6 (5) at the end thereof:

7 ‘‘(5) assist community development organizations, as

8 such term is described in section 234 of the Bank Enter9 prise Act of 1991, to develop the institutional capacity to

10 assist low- and moderate-income families with the pur11 chase of their first home.’’

12 SEC. 202. QUALIFIED THRIFT LENDER TEST.

13 Section 10(m)(4)(C)(ii) of the Home Owners Loan

14 Act (12 U.S.C. 1467a(m)(4)(C)(ii)) is amended by insert15 ing at the end the following subclause:

16 ‘‘(VII) Loans or extensions of

17 credit for the purchase, improvement,

18 or construction of churches, schools,

19 nursing homes or hospitals located

20 within, and loans or extensions of

21 credit for any purposes to any small

22 businesses located within, a qualified

23 distressed community as defined in

24 section 233(b) of the Bank Enterprise

25 Act of 1991.’’.
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1 SEC. 203. MICRO-LOAN GUARANTEE DEMONSTRATION PRO2 GRAM.

3 (a) PURPOSES.—Section 7(m)(1)(A)(iii) of the Small

4 Business Act is amended by redesignating subclauses (II),

5 (III), and (IV) as subclauses (III), (IV), and (V), respec6 tively, and inserting after subclause (I) the following new

7 subclause (II):

8 ‘‘(II) to establish a model pro9 gram to determine the feasibility of

10 developing a private secondary market

11 for loans guaranteed under this sub12 section to enhance the availability of

13 credit to small business concerns for

14 working capital or the acquisition of

15 material, supplies, or equipment.’’.

16 (b) ESTABLISHMENT.—Section 7(m)(1)(B) of the

17 Small Business Act is amended by striking out ‘‘direct

18 loans’’ in clause (i), and inserting in lieu thereof the fol19 lowing: ‘‘loans (either directly or through agreements to

20 participate on a guaranteed basis)’’;

21 (c) ELIGIBILITY FOR PARTICIPATION.—Section

22 7(m)(2)(B) of the Small Business Act is amended—

23 (1) in subparagraph (A), by striking ‘‘(10)’’

24 and inserting in lieu thereof ‘‘(12)’’; and

25 (2) in subparagraph (B), by striking the period

26 at the end and inserting in lieu thereof the following:
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1 ‘‘or has demonstrated to the satisfaction of the Ad2 ministration a commitment to establish a micro-loan

3 program that includes intensive marketing, manage4 ment, and technical assistance to its borrowers.’’.

5 (d) TERMS AND CONDITIONS.—Section 7(m)(3)(F)

6 of the Small Business Act is amended by adding the fol7 lowing new clause after clause (v):

8 ‘‘(vi) Notwithstanding any other re9 quirement of this subparagraph, the Ad10 ministration may provide such terms and

11 conditions, including interest rate require12 ments and percentage of guarantee but not

13 less than 90 percent, as it deems appro14 priate for purposes of making loan guaran15 tees under this subsection.’’.

16 (e) PORTFOLIO REQUIREMENT.—Section 7(m)(6)(B)

17 of the Small Business Act is amended by inserting after

18 ‘‘practicable’’ the following: ‘‘and except as provided by

19 the Administration with regard to loan guarantees made

20 under this subsection’’.

21 (f) MODEL PROGRAM TO ESTABLISH A SECONDARY

22 MARKET FOR GUARANTEED LOANS.—Section 7(m) of the

23 Small Business Act is amended by redesignating para24 graphs (10) and (11) as paragraphs (11) and (12), respec-
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1 tively, and inserting after paragraph (9) the following new

2 paragraph (10):

3 ‘‘(10) Model Program for Establishing a Sec4 ondary Market for Guaranteed Loans.—The Admin5 istration is authorized to establish a model program

6 to determine the feasibility of developing a private

7 secondary market for loans guaranteed under this

8 subsection (including the guaranteeing of locally

9 originated loan pools) to enhance the availability of

10 credit to small business concerns for working capital

11 or the acquisition of material, supplies, or equip12 ment.’’.

13 (g) REPORT TO CONGRESS.—Section 7(m)(11) of the

14 Small Business Act (as redesignated by this section) is

15 amended—

16 (1) in subparagraph (F), striking ‘‘and’’ after

17 the semicolon; and

18 (2) redesignating subparagraph (G) as subpara19 graph (H), and inserting after subparagraph (F) the

20 following new subparagraph (G):

21 ‘‘(G) a description of the loan guarantee

22 program, including the extent to which credit

23 may be made available to small businesses

24 through a private secondary market for small

25 business loan guarantees and the cost to the
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1 Federal Government for making such guaran2 tees available; and’’.

3 (h) DEFINITIONS.—Section 7(m)(12) of the Small

4 Business Act (as redesignated by this section) is amend5 ed—

6 (1) in clause (iii), by striking ‘‘or’’ after the

7 semicolon;

8 (2) by inserting after clause (iv), the following:

9 ‘‘(v) any insured depository institu10 tion, as such term is defined in section

11 3(c)(2) of the Federal Deposit Insurance

12 Act;

13 ‘‘(vi) any insured credit union, as

14 such term is defined in section 101(7) of

15 the Federal Credit Union Act; or

16 ‘‘(vii) any community development or17 ganization as such term is described in sec18 tion 234 of the Bank Enterprise Act of

19 1991.’’.

20 TITLE III—CREDIT UNION

21 AMENDMENTS

22 SEC. 301. COMMUNITY DEVELOPMENT CREDIT UNIONS.

23 (a) Section 101(5) of the Federal Credit Union Act

24 (12 U.S.C. 1752(5)) is amended by striking ‘‘in the case

25 of a credit union serving predominantly low-income mem-
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1 bers (as defined by the Board)’’ and inserting ‘‘in the case

2 of a community development credit union as defined in

3 subsection (10)’’.

4 (b) Section 101 of the Federal Credit Union Act (12

5 U.S.C. 1752) is amended by adding at the end the follow6 ing:

7 ‘‘(10) In determining whether a State or feder8 ally chartered credit union is a ‘community develop9 ment credit union’, the Board may consider whether

10 the institution—

11 ‘‘(A) serves predominantly members whose

12 median household incomes are below 80 percent

13 of the national median, or who make less than

14 80 percent of the average for all wage earners

15 as established by the Bureau of Labor Statis16 tics; or

17 ‘‘(B) serves predominately low- and mod18 erate-income minorities.’’.

19 SEC. 302. COMMUNITY DEVELOPMENT REVOLVING LOAN

20 FUND AND TECHNICAL ASSISTANCE.

21 (a) Section 120(k) of the Federal Credit Union Act

22 (12 U.S.C. 1766(k)) is deleted.

23 (b) The Federal Credit Union Act is amended by in24 serting after section 129 (12 U.S.C. 1772c) the following

25 new section:
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1 ‘‘SECTION 130. COMMUNITY DEVELOPMENT REVOLVING

2 LOAN FUND FOR CREDIT UNIONS.

3 ‘‘(a) Notwithstanding any other provision of law, the

4 Board may exercise the authority granted it by the Com5 munity Development Credit Union Revolving Loan Fund

6 Transfer Act (Public Law 99–609, section 1, November

7 6, 1986) including any additional appropriation made and

8 earnings accrued, subject only to this section and to rules

9 and regulations prescribed by the Board.

10 ‘‘(b) The Board has the authority to invest any idle

11 Fund monies in United States Treasury securities. Any

12 interest accrued on such securities shall become a part of

13 the fund.

14 ‘‘(c) The Board may require that any loans it makes

15 from the Fund be matched by increased shares in the bor16 rower credit union.

17 ‘‘(d) Interest earned by the Fund may be allocated

18 by the Board for technical assistance to community devel19 opment credit unions, as defined by the Board subject to

20 section 101(10) of the Act.’’.

21 TITLE IV—BANK ENTERPRISE

22 ACT ENHANCEMENTS

23 SEC. 401. CREDITS FOR NEWLY CHARTERED COMMUNITY

24 DEVELOPMENT BANKS.

25 (a) Section 233(a) of the Bank Enterprise Act of

26 1991 (12 U.S.C. 1834a(a)) is amended by redesignating
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1 paragraphs (3), (4), (5) and (6) as paragraphs (4), (5),

2 (6), and (7) and by inserting after paragraph (2) the fol3 lowing:

4 ‘‘(3) NEWLY CHARTERED COMMUNITY DEVEL5 OPMENT BANKS.—Notwithstanding paragraph (2),

6 any insured depository institution chartered as a

7 community development bank in accordance with the

8 requirements of section 234(b) of this Act shall be

9 eligible for any community enterprise assessment

10 credit for any semiannual period during the first

11 three years following the approval of the initial char12 ter of such insured depository institution by the ap13 propriate Federal banking agency or State super14 visor.’’.

15 (b) CONFORMING AMENDMENT.—Section

16 233(a)(1)(B) of the Bank Enterprise Act of 1991 (12

17 U.S.C. 1834a(a)(1)(B)) is amended by striking ‘‘para18 graph (3)’’ and inserting ‘‘paragraph (4)’’.

19 SEC. 402. FINANCIAL SERVICES FOR DISTRESSED COMMU20 NITIES.

21 (a) BANK ENTERPRISE ACT.—The Bank Enterprise

22 Act of 1991 is amended by inserting at the end the follow23 ing new section:
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1 ‘‘SEC. 235. FINANCIAL SERVICES FOR DISTRESSED COMMU2 NITIES.

3 ‘‘(a) DISTRESSED COMMUNITIES LACKING INSUR4 ANCE SERVICES.—

5 ‘‘(1) IN GENERAL.—With the approval of the

6 appropriate Federal banking agency and notwith7 standing any provision of the law of any State to the

8 contrary, any insured depository institution which is

9 located in (or maintains a full service branch located

10 in) a qualified distressed community may sell prop11 erty and casualty insurance, as agent or broker, to

12 the extent—

13 ‘‘(A) the insurance activities are confined

14 to that community; and

15 ‘‘(B) the insurance is sold only to residents

16 of the community or individuals employed with17 in such community.

18 ‘‘(2) CERTAIN ACTIVITIES PROHIBITED IN CON19 NECTION WITH INSURANCE ACTIVITIES.—No insured

20 depository institution which sells insurance pursuant

21 to paragraph (1) may—

22 ‘‘(A) assume or guarantee the payment of

23 any premium on any insurance policy issued

24 through the agency of the institution by the in25 surance company for which the institution is

26 acting as agent; or
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1 ‘‘(B) guarantee the truth of any statement

2 made by an insurance customer in filing such

3 customer’s application for insurance.

4 ‘‘(3) SHOWING OF UNAVAILABILITY OF INSUR5 ANCE SERVICES.—The appropriate Federal banking

6 agency may approve an application by an insured

7 depository institution to sell insurance under para8 graph (1) in any qualified distressed community only

9 if the institution provides sufficient evidence that the

10 availability of insurance agents providing competi11 tively-priced products in the community is inad12 equate.

13 ‘‘(4) DEFINITIONS.—For purposes of this sub14 section—

15 ‘‘(A) APPROPRIATE FEDERAL BANKING

16 AGENCY.—The term ‘appropriate Federal bank17 ing agency’ has the meaning given to such term

18 in section 3(q) of the Federal Deposit Insur19 ance Act.

20 ‘‘(B) QUALIFIED DISTRESSED COMMU21 NITY.—The term ‘qualified distressed commu22 nity’ has the meaning given to such term in sec23 tion 233(b).’’.

24 (b) BANK ELIGIBLE SECURITIES.—The clause des25 ignated the ‘‘Seventh’’ of section 5136 of the Revised Stat-
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1 utes (12 U.S.C. 24) is amended by adding at the end the

2 following new sentence: ‘‘Subject to the approval of the

3 appropriate Federal banking agency (as defined in section

4 3(q) of the Federal Deposit Insurance Act (12 U.S.C.

5 1813(q)), and to such limits as may be prescribed by regu6 lation, any well capitalized national bank which is located

7 in (or maintains a full service branch located in) a quali8 fied distressed community (as defined in section 233(b)

9 of the Bank Enterprise Act of 1991) may purchase for

10 its own account, deal in, or underwrite securities issued

11 by any small business located in such community.’’.

12 (c) SAVINGS ASSOCIATIONS.—Section 5(c)(1) of the

13 Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)) (as pre14 viously amended herein) is amended by inserting at the

15 end the following:

16 ‘‘(T) THRIFT ELIGIBLE SECURITIES.—

17 Subject to the approval of the Director and to

18 such limits as may be prescribed by regulation,

19 any well capitalized savings association which is

20 located in (or maintains a full service branch lo21 cated in) a qualified distressed community (as

22 defined in section 233(b) of the Bank Enter23 prise Act of 1991) may purchase for its own ac24 count, deal in, or underwrite securities issued
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1 by any small business located in such commu2 nity.’’

3 SEC. 403. BANK ENTERPRISE ACT ENHANCEMENTS.

4 (a) QUALIFIED DISTRESSED COMMUNITIES.—Sec5 tion 233(b)(1)(B) of the Bank Enterprise Act of 1991 is

6 amended to read as follows:

7 ‘‘(B) is designated as a distressed commu8 nity by the Board or by any insured depository

9 institution in accordance with paragraph (2)

10 and any designation by an insured depository

11 institution is not disapproved by the appro12 priate federal banking agency under such para13 graph.’’.

14 (b) RURAL DISTRESSED AREAS.—Section 233(b) of

15 the Bank Enterprise Act of 1991 is amended by inserting

16 at the end the following:

17 ‘‘(5) QUALIFIED DISTRESSED RURAL AREAS.—

18 ‘‘(A) IN GENERAL.—Notwithstanding

19 paragraph (4), the Board shall establish inde20 pendent criteria for a distressed rural area to

21 be eligible as a ‘qualified distressed community’

22 under this subsection.

23 ‘‘(B) FACTORS.—In establishing the cri24 teria for a distressed rural area to be eligible as

25 a ‘qualified distressed community’ under this
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1 subsection, the Board shall consider, but not be

2 limited to, the following factors:

3 ‘‘(i) Population (as determined by the

4 most recent; census data available);

5 ‘‘(ii) State of distress;

6 ‘‘(iii) Size;

7 ‘‘(iv) Unemployment rate;

8 ‘‘(v) Poverty rate;

9 ‘‘(vi) Job loss; and

10 ‘‘(vii) Out-migration.’’.

11 (c) EXPANDED QUALIFIED LOANS AND FINANCIAL

12 ASSISTANCE.—Section 233(a)(4) of the Bank Enterprise

13 Act of 1991 is amended by inserting at the end the follow14 ing:

15 ‘‘(L) Extensions of credit to small busi16 nesses located within a qualified distressed com17 munity.

18 ‘‘(M) Consumer education programs either

19 sponsored or offered by insured depository in20 stitutions that provide assistance to residents of

21 qualified distressed communities in managing

22 their personal finances.

23 ‘‘(N) Technical assistance and consulting

24 services to newly formed small businesses lo25 cated in qualified distressed communities.’’.
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1 ‘‘(O) Technical assistance to, or servicing

2 the loans of, low- or moderate-income home3 owners, and homeowners located in qualified

4 distressed communities.

5 (d) PRIORITY OF FUNDING.—Section 233 of the

6 Bank Enterprise Act of 1991 is amended by redesignating

7 subsection (g) as subsection (h) and inserting after sub8 section (f) the following:

9 ‘‘(g) PRIORITY OF FUNDING.—In allocating funds for

10 the implementation of this section, the Board shall grant

11 a priority to qualified distressed communities designated

12 by the Board pursuant to section 233(b)(1)(B) and no less

13 than 25 percent of the funds authorized and appropriated

14 for the implementation of this section shall be allocated

15 by the Board to distressed rural areas that are determined

16 to be qualified distressed communities pursuant to section

17 233(b)(5).’’.

18 (e) COMMUNITY DEVELOPMENT ORGANIZATIONS.—

19 Section 234(e) of the Bank Enterprise Act of 1991 is

20 amended by striking ‘‘institution,’’ and inserting ‘‘institu21 tion, non-profit micro-loan lending organization licensed

22 by the Small Business Administration, Small Business

23 Association certified development company,’’.
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1 TITLE V—CONSUMER

2 EDUCATION

3 SEC. 501. CONSUMER EDUCATION PROGRAMS.

4 (a) IN GENERAL.—The appropriate Federal banking

5 agencies (as defined in section 3(q) of the Federal Deposit

6 Insurance Act) shall, to the extent practicable, encourage

7 insured depository institutions to offer or sponsor edu8 cational services for consumers residing in qualified dis9 tressed communities (as defined in section 233(b) of the

10 Bank Enterprise Act of 1991) located in the service area

11 of such institutions, relating to the financial products and

12 services offered by the institution.

13 (b) EDUCATIONAL SERVICES.—The educational serv14 ices sponsored or offered by insured depository institutions

15 as described in subsection (a) shall, to the extent prac16 ticable, include a course in personal finance designed for

17 persons in a qualified distressed community and such

18 course may include information related to the following:

19 (1) Consumer credit laws and consumer rights

20 and obligations;

21 (2) The credit process and how to obtain a

22 loan;

23 (3) The meaning and significance of entries on

24 a consumer report (as defined in section 603(d) of

25 the Fair Credit Reporting Act);
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1 (4) Basic banking and personal finances; and

2 (5) Development of an individual financial plan

3 and budget.

4 SECTION 502. CREDIT REPORTS.

5 (a) INSURED DEPOSITORY INSTITUTIONS.—Any in6 sured depository institution that sponsors or offers a

7 course for consumers residing in a qualified distressed

8 community as described in section 501(b) of the Commu9 nity Development Banking Act of 1993 may, in its discre10 tion and to the extent practicable, report the names of

11 any consumer who complete such course to any consumer

12 reporting agency (as defined in section 603(f) of the Fair

13 Credit Reporting Act) to which the institution regularly

14 reports credit information on consumers.

15 (b) CONSUMER REPORTING AGENCIES.—Any

16 consumer report furnished by a consumer reporting agen17 cy on any consumer residing in a qualified distressed com18 munity who has completed an educational course spon19 sored or offered by an insured depository institution as

20 described in section 501(b) of the Community Develop21 ment Banking Act of 1993 may, to the extent practicable,

22 include an indication of the completion of such course if

23 the consumer reporting agency has received notice of the

24 course completion from the institution.
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1 SECTION 503. CREDIT CARDS.

2 Insured depository institutions are encouraged to

3 sponsor or offer courses for consumers residing in quali4 fied distressed communities as described in section 501(b)

5 of the Community Development Banking Act of 1993, and

6 at their discretion and to the extent practicable, offer

7 consumer financial services otherwise available at such in8 stitution, including consumer credit card services, to such

9 consumers who complete such course and qualify for such

10 financial services.

Æ

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