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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2600 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2600

  To promote economic growth and credit formation by facilitating the 
    development of a secondary market for business, commercial, and 
   community development debt and equity investments, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              July 1, 1993

 Mr. Kanjorski (for himself, Mrs. Roukema, Mr. Neal of North Carolina, 
    Mr. Orton, Mr. Klein, Mr. Moran, and Ms. Kaptur) introduced the 
following bill; which was referred to the Committee on Banking, Finance 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
  To promote economic growth and credit formation by facilitating the 
    development of a secondary market for business, commercial, and 
   community development debt and equity investments, 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.

    This Act may be cited as the ``Business, Commercial, and Community 
Development Secondary Market Development Act''.

SEC. 2. FINDINGS; PURPOSES; DEFINITIONS.

    (a) Findings.--The Congress makes the following findings:
            (1) The availability of financing for the Nation's small- 
        and medium-sized businesses is a key factor in promoting 
        economic growth, full employment, and competitive innovation 
        essential for long-term gains in the emerging global economy.
            (2) The creation of a secondary market for business, 
        commercial, and community development debt and equity 
        investments can stimulate an increased flow of funds through 
        capital markets, and increase the liquidity of our lending 
        institutions.
            (3) The sale of portions of bank portfolios, without 
        recourse, in a secondary market for business, commercial, and 
        community development debt and equity investments would 
        encourage lending institutions to utilize their increased 
        liquidity to make additional debt and equity investments in the 
        Nation's economy.
            (4) Increased access to funds will play a crucial role in 
        the revitalization of the economy of the United States, 
        significantly increase the availability of credit at reasonable 
        interest rates for business, commercial, and community 
        development investments, and create new opportunities for 
        growth and employment.
            (5) The creation of a secondary market for business, 
        commercial, and community development debt and equity 
        investments can greatly increase the likelihood that businesses 
        seeking to develop emerging technologies or processes will be 
        able to obtain the funding necessary to permit them to become 
        growth industries to enhance the economic future of the Nation.
            (6) The development of a secondary market for business, 
        commercial, and community development debt and equity 
        investments can facilitate the spreading of risk associated 
        with new business, commercial, and community development 
        lending and allow more venture capital investments to be made.
            (7) The development of a secondary market for business, 
        commercial, and community development debt and equity 
        investments would facilitate investments by pension and 
        insurance funds in business, commercial, and community 
        development enterprises.
            (8) The development of a secondary market for business, 
        commercial, and community development debt and equity 
        investments, should significantly increase the availability of 
        credit for new and expanding minority- and women-owned 
        businesses and for efforts to revitalize the economies of 
        disadvantaged communities.
            (9) A secondary market for business, commercial, and 
        community development debt and equity investments can help 
        stabilize and absorb cyclical downturns in business and real 
        estate cycles.
            (10) A secondary market for business, commercial, and 
        community development debt and equity investments would be a 
        highly effective tool to multiply Federal and State government 
        funds dedicated to community and economic development debt and 
        equity investments.
            (11) The development of a secondary market for business, 
        commercial, and community development debt and equity 
        investments can play a critical role in securing the amount of 
        capital necessary for community development financial 
        institutions to realize their full potential.
            (12) The development of a secondary market for business, 
        commercial, and community development debt and equity 
        investments can play an important role in stabilizing 
        commercial real estate markets and enhance the value of real 
        estate-backed collateral frequently used by businesses to 
        secure necessary credit from financial institutions.
            (13) Active and efficient secondary markets currently exist 
        for nearly all types of investments except for business, 
        commercial, and community development debt and equity 
        investments. This puts business, commercial, and community 
        development borrowers at a competitive disadvantage in securing 
        necessary funds.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To facilitate the development of an efficient secondary 
        market for business, commercial, and community development debt 
        and equity investments in the private sector of the economy.
            (2) To further develop the loan-originating and loan-
        servicing capabilities of, and enhance the amount of credit 
        available through, the banking system.
            (3) To afford financial institutions in the United States 
        greater liquidity to enhance the long-term stability of the 
        financial system and facilitate the potential inherent in the 
        origination and servicing of business, commercial, and 
        community development debt and equity investments for 
        additional fee income.
            (4) To provide additional sources of credit to business, 
        commercial, and community development enterprises to revitalize 
        the Nation's economy and foster additional employment 
        opportunities.
            (5) To provide additional sources of capital to Federal and 
        State governments for reinvestment in business, commercial, and 
        community development enterprises.
    (c) Definitions.--For purposes of this Act--
            (1) Secondary market facilitating organization.--The term 
        ``secondary market facilitating organization'' means any person 
        or governmental unit which is authorized by the Secretary to 
        engage in secondary market operations with respect to business, 
        commercial, and community development debt and equity 
        investments in accordance with this Act.
            (2) Secondary market operations.--The term ``secondary 
        market operations'' means any of the following activities:
                    (A) Underwriting, dealing in, or acting as a 
                principal in the placement of securities that are 
                backed by or represent interests in debt or equity.
                    (B) Guaranteeing the timely payment of the 
                principal of or interest on any security described in 
                subparagraph (A).
                    (C) Selling or purchasing business, commercial, and 
                community development debt and equity assets or 
                participations in such assets.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 3. CERTIFICATION OF SECONDARY MARKET FACILITATING ORGANIZATIONS TO 
              ENGAGE IN SECONDARY MARKET OPERATIONS FOR BUSINESS, 
              COMMERCIAL, AND COMMUNITY DEVELOPMENT DEBT AND EQUITY 
              INVESTMENTS.

    (a) In General.--The Secretary of the Treasury may certify any 
person or government unit which meets the requirements established by 
the Secretary under this section as a secondary market facilitating 
organization for business, commercial, and community development debt 
and equity investments.
    (b) Eligibility Standards.--
            (1) Establishment required.--The Secretary shall establish, 
        by regulation, standards for the certification of any secondary 
        market facilitating organization for business, commercial, or 
        community development debt and equity investments, including 
        eligibility standards in accordance with paragraph (2).
            (2) Minimum requirements.--To be eligible to be certified 
        under the standards referred to in paragraph (1), a secondary 
        market facilitating organization shall--
                    (A) meet or exceed minimum capital standards 
                established by the Secretary;
                    (B) meet or exceed minimum reserves for losses 
                requirements established by the Secretary;
                    (C) meet or exceed the business, commercial, and 
                community development debt and equity investment 
                portfolio requirements established by the Secretary 
                under subsection (c);
                    (D) demonstrate that directors, officers, and 
                employees of the organization and persons who control 
                the organization meet the standards for competence, 
                experience, integrity, and financial ability 
                established by the Secretary, including managerial 
                ability with respect to--
                            (i) business, commercial, and community 
                        development debt and equity investment 
                        underwriting, servicing, and marketing; and
                            (ii) secondary market operations for 
                        business, commercial, and community development 
                        debt and equity investments;
                    (E) adopt appropriate business, commercial, or 
                community development debt and equity investment 
                underwriting, appraisal, and servicing standards and 
                procedures that meet or exceed minimum standards 
                required by the Secretary;
                    (F) for purposes of enabling the Secretary to 
                examine the organization, agree to allow the Secretary 
                to have access to all books, accounts, financial 
                records, reports, and all property of, or used by, the 
                organization that are necessary to facilitate 
                examinations by the Secretary, or the agency designated 
                by the Secretary, under section 5;
                    (G) adopt appropriate minimum standards and 
                procedures relating to loan administration and 
                disclosures to business, commercial, and community 
                development debt and equity borrowers that meet or 
                exceed uniform standards established by the Secretary;
                    (H) comply with the uniform reporting standards 
                established under section 8; and
                    (I) comply with all regulations prescribed by the 
                Secretary under this Act.
    (c) Portfolio and Bulk Sale Standards.--
            (1) In general.--The Secretary shall establish such 
        requirements relating to the manner in which business, 
        commercial, and community development debt and equity 
        investments are held or sold by certified secondary market 
        facilitating organizations in connection with secondary market 
        operations, including portfolio standards and requirements for 
        diversity of the assets which are subject to a multiasset sales 
        initiative, as the Secretary determines to be appropriate for 
        the achievement of essential economic objectives in the public 
        interest, such as employment enhancement, community 
        development, investments in low- and moderate-income areas, 
        investment diversity, and equal opportunity in accordance with 
        paragraph (2).
            (2) Goals.--In establishing the requirements referred to in 
        paragraph (1), the Secretary, in consultation with certified 
        secondary market facilitating organizations and other 
        interested parties, shall establish goals for the 
        intermediation of debt and equity investments by secondary 
        market facilitating organizations which--
                    (A) enhance employment opportunities;
                    (B) promote community development;
                    (C) are directed to business and commercial 
                enterprises in low- and moderate-income areas;
                    (D) promote investment diversity; and
                    (E) promote equal opportunity.
            (3) Factors to be considered.--In establishing the goals 
        referred to in paragraph (2), the Secretary shall consider--
                    (A) the need to maintain the sound financial 
                condition of, and a reasonable economic return to, the 
                secondary market facilitating organizations;
                    (B) economic conditions;
                    (C) the past performance and efforts of secondary 
                market facilitating organizations to meet or exceed the 
                goals referred to in paragraph (2);
                    (D) the availability of debt and equity investments 
                necessary to meet or exceed the goals referred to in 
                paragraph (2); and
                    (E) such other factors as the Secretary determines 
                to be appropriate in meeting the requirements of this 
                section.
            (4) Adjustment of goals.--The Secretary may adjust any goal 
        for the intermediation of debt and equity investments by 
        secondary market facilitating organizations established under 
        paragraph (2).
            (5) Nondiscrimination.--The Secretary shall, by regulation, 
        prohibit each secondary market facilitating organization from 
        discriminating in any manner in the purchase of any debt or 
        equity investment because of race, color, religion, sex, 
        handicap, familial status, age, or national origin, including 
        any consideration of the neighborhood or census tract in which 
        the business, commercial, or community development debt and 
        equity investment is located in a manner that has a 
        discriminatory effect.
    (d) Revocation.--After notice and opportunity for hearing, the 
Secretary may revoke the certification of a secondary market 
facilitating organization if the Secretary determines that the 
organization fails to meet any eligibility requirement under subsection 
(b) or (c).
    (e) Public Disclosure.--
            (1) In general.--The Secretary shall, by regulation, 
        provide for periodic public disclosure of the standards 
        established under this subsection and the performance of 
        secondary market facilitating organizations in the fulfillment 
        of the goals established under subsection (c).
            (2) Nondisclosure of proprietary information.--Paragraph 
        (1) shall not be construed as authorizing the Secretary to 
        publicly disclose any proprietary information of a secondary 
        market facilitating organization.

SEC. 4. WAIVERS TO MEET ESSENTIAL ECONOMIC OBJECTIVES IN THE PUBLIC 
              INTEREST.

    (a) Waivers Authorized.--
            (1) In general.--For purposes of this Act, the Secretary 
        may, by regulation, waive the application of any provision of 
        Federal or State law, including any provision of any regulation 
        prescribed under any Federal or State law, to a certified 
        secondary market facilitating organization, or the activities 
        or products of a certified secondary market facilitating 
        organization, which meets the minimum portfolio requirements 
        established under section 3(c) and is in full compliance with 
        all other standards applicable for certification under this Act 
        if the Secretary determines that such waiver is appropriate in 
        order to meet the essential economic objectives in the public 
        interest described in this Act.
            (2) Specificity of waiver.--Any waiver granted by the 
        Secretary under paragraph (1) shall specify in detail each 
        provision of law or regulation which is the subject of the 
        waiver.
    (b) Exceptions.--
            (1) In general.--No waiver may be granted under this 
        section of any law or regulation respecting public or 
        individual health or safety, civil rights and 
        nondiscrimination, environmental protection, labor relations, 
        labor standards, occupational health or safety, pensions, or 
        any other law or regulation that the Attorney General 
        determines, by regulation, to be inappropriate.
            (2) Safety and soundness.--No waiver of a law or regulation 
        may be granted under this section with respect to a secondary 
        market facilitating organization if the appropriate Federal 
        regulatory agency of the organization notifies the Secretary 
        that the agency has determined that there is a reasonable basis 
        to believe that the waiver of such law or regulation would have 
        an adverse effect on the safety and soundness of the 
        organization.
            (3) Exception to prevent increase in direct spending.--No 
        waiver may be granted under this section that would have the 
        effect of increasing direct Federal spending above levels that 
        would have occurred in the absence of the waivers.
    (c) Consultation.--Before granting any waiver under subsection (a), 
the Secretary shall consult with the head of the agency or department 
of the Federal or State government responsible for carrying out and 
enforcing the provision of law or regulation which would be affected by 
the waiver.
    (d) Suspension, Revocation, Modification, or Limitation.--
            (1) In general.--The Secretary may suspend, revoke, modify, 
        or limit the scope of any waiver granted under subsection 
        (a)(1) with respect to a secondary market facilitating 
        organization if the Secretary determines that--
                    (A) the organization fails to meet any eligibility 
                standard under subsection (b) or (c) of section 3 or 
                any regulation prescribed by the Secretary under this 
                Act; or
                    (B) the waiver is no longer appropriate in order to 
                meet essential economic objectives in the public 
                interest.
            (2) Effective upon notice.--The suspension, revocation, 
        modification, or limitation of any waiver in accordance with 
        paragraph (1) shall take effect upon receipt of notice by the 
        secondary market facilitating organization of such revocation.
            (3) Hearing after notice.--Any person adversely affected by 
        a suspension, revocation, modification, or limitation of a 
        waiver in accordance with paragraph (1) shall be afforded a 
        hearing in accordance with chapter 5 of title 5, United States 
        Code.
            (4) Scope of application.--The suspension, revocation, 
        modification, or limitation of any waiver in accordance with 
        paragraph (1) with respect to a secondary market facilitating 
        organization shall--
                    (A) apply with respect to activities engaged in and 
                products produced by the organization on or after the 
                effective date of the waiver; and
                    (B) not apply with respect to activities engaged in 
                and products produced by the organization before such 
                date.

SEC. 5. EXAMINATION AND OVERSIGHT OF CERTIFIED SECONDARY MARKET 
              FACILITATING ORGANIZATIONS.

    (a) Provision for Examiners.--
            (1) Appointment of examiners.--The Secretary may appoint 
        examiners to carry out this section.
            (2) Delegation of examination authority.--With respect to a 
        certified secondary market facilitating organization which is 
        subject to complete examination by another Federal regulatory 
        agency, the Secretary may delegate, on a reimbursable basis and 
        subject to such standards and guidelines as the Secretary may 
        establish, the authority to conduct an examination under this 
        section of such organization to such other agency.
    (b) Examinations Required.--
            (1) In general.--The Secretary shall require the 
        examination of a certified secondary market facilitating 
        organization whenever the Secretary determines an examination 
        is necessary for purposes of this Act.
            (2) Required components of examination.--In conducting any 
        examination under this section of any certified secondary 
        market facilitating organization, the following factors shall 
        be examined:
                    (A) The secondary market operations of the 
                organization.
                    (B) The operations of the organization relating to 
                underwriting, appraising, servicing, and marketing 
                business, commercial, and community development debt 
                and equity investments.
                    (C) The compliance of the secondary market 
                facilitating organization with the eligibility and 
                portfolio standards of subsections (b) and (c) of 
                section 3.
                    (D) The financial condition of the organization, 
                including the financial condition of the operations of 
                the organization which are described in subparagraphs 
                (A), (B), and (C).
            (3) Examination of applicants.--No secondary market 
        facilitating organization may be certified by the Secretary 
        under this Act until the Secretary completes an examination of 
        such organization to determine that the organization meets the 
        eligibility requirements under section 3(b).
    (c) Reports.--
            (1) In general.--Each certified secondary market 
        facilitating organization shall submit such reports to the 
        Secretary as the Secretary may require, by regulation or order.
            (2) Minimum requirement.--The Secretary shall, by 
        regulation, require each secondary market facilitating 
        organization to submit annual reports concerning the 
        composition and performance of all secondary market operations 
        of the organization.
            (3) Time and manner.--Reports required under this 
        subsection shall be made at such time and in such manner as the 
        Secretary may require.
    (d) Assessments and Fees.--
            (1) Examination costs.--The cost of conducting examinations 
        of certified secondary market facilitating organizations and 
        persons or governmental units applying for certification as 
        secondary market facilitating organizations shall be assessed 
        by the Secretary against each such organization, person, or 
        unit as the Secretary determines to be necessary to recover the 
        costs incurred by the Secretary in conducting the examination.
            (2) Fees for other administrative costs.--The 
        administrative costs incurred by the Secretary in carrying out 
        the requirements of this Act shall be recovered by the 
        Secretary through fees imposed on certified secondary market 
        facilitating organizations and persons or governmental units 
        applying for certification as secondary market facilitating 
        organizations.
            (3) Assessments.--
                    (A) Written notice.--Any assessment or fee 
                authorized under this subsection may be assessed and 
                collected by the Secretary upon written notice.
                    (B) Finality of assessment.--If, with respect to 
                any assessment under subparagraph (A), a hearing is not 
                requested in accordance with subparagraph (C), the 
                assessment shall constitute a final and unappealable 
                order.
                    (C) Hearings.--The certified secondary market 
                facilitating organization, person, or governmental unit 
                against whom any assessment is made under subparagraph 
                (A) shall be afforded an agency hearing if such 
                organization, person, or governmental unit submits a 
                request for such hearing within 20 days of the issuance 
                of the written notice under such subparagraph.
                    (D) Collection.--If any certified secondary market 
                facilitating organization, person, or governmental unit 
                fails to pay an assessment under this paragraph after 
                the assessment has become final, the Secretary shall 
                recover the amount of the assessment by action in the 
                appropriate United States district court.
    (e) Regulations.--The Secretary shall prescribe such regulations as 
the Secretary determines to be necessary to carry out the provisions of 
this Act.

SEC. 6. NO FULL FAITH AND CREDIT OF THE UNITED STATES FOR OBLIGATIONS 
              OF CERTIFIED SECONDARY MARKET FACILITATING ORGANIZATIONS.

    (a) In General.--The activities of a certified secondary market 
facilitating organization and any debt or equity security or other 
obligation issued or guaranteed by any such organization shall not be 
obligations of, or guaranteed in any respect by, the United States.
    (b) Notice to Customers.--The Secretary shall require, by 
regulation, each certified secondary market facilitating organization 
to provide adequate notice to customers of the organization and 
purchasers of obligations issued or guaranteed by the organization of 
the applicability of the rule contained in subsection (a) to 
obligations of such organization.

SEC. 7. AUTHORITY OF REGULATORY AGENCIES NOT AFFECTED.

    No provision of this Act shall be construed as affecting the 
authority of any Federal regulatory agency to supervise or regulate any 
person or government unit which is certified by the Secretary as a 
secondary market facilitating organization.

SEC. 8. UNIFORM REPORTING STANDARDS.

    In order to improve the procedures for rating business, commercial, 
and community development debt and equity investments involved in 
secondary market operations, the Financial Institutions Examination 
Council shall establish, before the end of the 6-month period beginning 
on the date of enactment of this Act, uniform reporting standards with 
respect to such debt and equity investments for bank examination 
purposes.

                                 <all>

HR 2600 IH----2
HR 2600 IH----3
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