H. R. 3474
One Hundred Third Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-fifth day of January, one thousand nine hundred and ninety-four
An Act
To reduce administrative requirements for insured depository institutions to the
extent consistent with safe and sound banking practices, to facilitate the establish-
ment of community development financial institutions, 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 ‘‘Riegle Commu-
nity Development and Regulatory Improvement Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I—COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION
Subtitle A—Community Development Banking and Financial Institutions Act
Sec. 101. Short title.
Sec. 102. Findings and purposes.
Sec. 103. Definitions.
Sec. 104. Establishment of National Fund for Community Development Banking.
Sec. 105. Applications for assistance.
Sec. 106. Community partnerships.
Sec. 107. Selection of institutions.
Sec. 108. Assistance provided by the Fund.
Sec. 109. Training.
Sec. 110. Encouragement of private entities.
Sec. 111. Collection and compilation of information.
Sec. 112. Investment of receipts and proceeds.
Sec. 113. Capitalization assistance to enhance liquidity.
Sec. 114. Incentives for depository institution participation.
Sec. 115. Recordkeeping.
Sec. 116. Special provisions with respect to institutions that are supervised by Fed-
eral banking agencies.
Sec. 117. Studies and reports; examination and audit.
Sec. 118. Inspector General.
Sec. 119. Enforcement.
Sec. 120. Community Development Revolving Loan Fund for credit unions.
Sec. 121. Authorization of appropriations.
Subtitle B—Home Ownership and Equity Protection
Sec. 151. Short title.
Sec. 152. Consumer protections for certain mortgages.
Sec. 153. Civil liability.
Sec. 154. Reverse mortgage disclosure.
Sec. 155. Regulations.
Sec. 156. Applicability.
Sec. 157. Federal Reserve study.
Sec. 158. Hearings on home equity lending.
TITLE II—SMALL BUSINESS CAPITAL FORMATION
Subtitle A—Small Business Loan Securitization
Sec. 201. Short title.
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Sec. 202. Small business related security.
Sec. 203. Applicability of margin requirements.
Sec. 204. Borrowing in the course of business.
Sec. 205. Small business related securities as collateral.
Sec. 206. Investment by depository institutions.
Sec. 207. Preemption of State law.
Sec. 208. Insured depository institution capital requirements for transfers of small
business obligations.
Sec. 209. Joint study on the impact of additional securities based on pooled obliga-
tions.
Sec. 210. Consistent use of financial terminology.
Subtitle B—Small Business Capital Enhancement
Sec. 251. Findings and purposes.
Sec. 252. Definitions.
Sec. 253. Approving States for participation.
Sec. 254. Participation agreements.
Sec. 255. Terms of participation agreements.
Sec. 256. Reports.
Sec. 257. Reimbursement by the Fund.
Sec. 258. Reimbursement to the Fund.
Sec. 259. Regulations.
Sec. 260. Authorization of appropriations.
Sec. 261. Effective date.
TITLE III—PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT
Sec. 301. Incorporated definitions.
Sec. 302. Administrative consideration of burden with new regulations.
Sec. 303. Streamlining of regulatory requirements.
Sec. 304. Elimination of duplicative filings.
Sec. 305. Coordinated and unified examinations.
Sec. 306. Eighteen-month examination rule for certain small institutions.
Sec. 307. Call report simplification.
Sec. 308. Repeal of publication requirements.
Sec. 309. Regulatory appeals process, ombudsman, and alternative dispute resolu-
tion.
Sec. 310. Electronic filing of currency transaction reports.
Sec. 311. Bank Secrecy Act publication requirements.
Sec. 312. Exemption of business loans from Real Estate Settlement Procedures Act
requirements.
Sec. 313. Flexibility in choosing boards of directors.
Sec. 314. Holding company audit requirements.
Sec. 315. State regulation of real estate appraisals.
Sec. 316. Acceleration of effective date for interaffiliate transactions.
Sec. 317. Collateralization of public deposits.
Sec. 318. Modification of regulatory provisions.
Sec. 319. Expedited procedures.
Sec. 320. Exemption of certain holding company formations from registration under
the Securities Act of 1933.
Sec. 321. Reduction of post-approval waiting periods for certain acquisitions and
mergers.
Sec. 322. Bankers’ banks.
Sec. 323. Bank Service Corporation Act amendment.
Sec. 324. Merger transaction reports.
Sec. 325. Credit card accounts receivable sales.
Sec. 326. Limiting potential liability on foreign accounts.
Sec. 327. GAO reports.
Sec. 328. Study and report on capital standards and their impact on the economy.
Sec. 329. Study on the impact of the payment of interest on reserves.
Sec. 330. Study and report on the consumer credit system.
Sec. 331. Clarification of provisions relating to administrative autonomy.
Sec. 332. Exemption for business accounts.
Sec. 333. Study on check-related fraud.
Sec. 334. Insider lending.
Sec. 335. Revisions of standards.
Sec. 336. Alternative rules for radio advertising.
Sec. 337. Deposit broker registration.
Sec. 338. Amendments to the Depository Institution Management Interlocks Act.
Sec. 339. Adverse information about consumers.
Sec. 340. Simplified disclosure for existing depositors.
Sec. 341. Feasibility study of data bank.
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Sec. 342. Timely completion of CRA review.
Sec. 343. Time limit on agency consideration of completed applications.
Sec. 344. Waiver of right of rescission for certain refinancing transactions.
Sec. 345. Clarification of RESPA disclosure requirements.
Sec. 346. Notice procedures for bank holding companies to seek approval to engage
in certain activities.
Sec. 347. Commercial mortgage related securities.
Sec. 348. Clarifying amendment relating to data collection.
Sec. 349. Guidelines for examinations.
Sec. 350. Revising regulatory requirements for transfers of all types of assets with
recourse.
TITLE IV—MONEY LAUNDERING
Sec. 401. Short title.
Sec. 402. Reform of CTR exemption requirements to reduce number and size of re-
ports consistent with effective law enforcement.
Sec. 403. Single designee for reporting of suspicious transactions.
Sec. 404. Improvement of identification of money laundering schemes.
Sec. 405. Negotiable instruments drawn on foreign banks subject to recordkeeping
and reporting requirements.
Sec. 406. Imposition of civil money penalties by appropriate Federal banking agen-
cies.
Sec. 407. Uniform State licensing and regulation of check cashing, currency ex-
change, and money transmitting businesses.
Sec. 408. Registration of money transmitting businesses to promote effective law
enforcement.
Sec. 409. Uniform Federal regulation of casinos.
Sec. 410. Authority to grant exemptions to States with effective regulation and en-
forcement.
Sec. 411. Criminal and civil penalties for structuring domestic and international
transactions.
Sec. 412. GAO study of cashiers’ checks.
Sec. 413. Technical amendments and corrections.
TITLE V—NATIONAL FLOOD INSURANCE REFORM
Sec. 501. Short title.
Subtitle A—Definitions
Sec. 511. Flood Disaster Protection Act of 1973.
Sec. 512. National Flood Insurance Act of 1968.
Subtitle B—Compliance and Increased Participation
Sec. 521. Nonwaiver of flood purchase requirement for recipients of Federal disas-
ter assistance.
Sec. 522. Expanded flood insurance purchase requirements.
Sec. 523. Escrow of flood insurance payments.
Sec. 524. Placement of flood insurance by lenders.
Sec. 525. Penalties for failure to require flood insurance or notify.
Sec. 526. Fees for determining applicability of flood insurance purchase require-
ments.
Sec. 527. Notice requirements.
Sec. 528. Standard hazard determination forms.
Sec. 529. Examinations regarding compliance.
Sec. 530. Financial Institutions Examination Council.
Sec. 531. Clerical amendment.
Subtitle C—Ratings and Incentives for Community Floodplain Management
Programs
Sec. 541. Community rating system and incentives for community floodplain man-
agement.
Sec. 542. Funding.
Subtitle D—Mitigation of Flood Risks
Sec. 551. Repeal of flooded property purchase and loan program.
Sec. 552. Termination of erosion-threatened structures program.
Sec. 553. Mitigation assistance program.
Sec. 554. Establishment of National Flood Mitigation Fund.
Sec. 555. Additional coverage for compliance with land use and control measures.
Subtitle E—Task Forces
Sec. 561. Flood Insurance Interagency Task Force.
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Sec. 562. Task Force on Natural and Beneficial Functions of the Floodplain.
Subtitle F—Miscellaneous Provisions
Sec. 571. Extension of flood insurance program.
Sec. 572. Limitation on premium increases.
Sec. 573. Maximum flood insurance coverage amounts.
Sec. 574. Flood insurance program arrangements with private insurance entities.
Sec. 575. Updating of flood maps.
Sec. 576. Technical Mapping Advisory Council.
Sec. 577. Evaluation of erosion hazards.
Sec. 578. Study of economic effects of charging actuarially based premium rates for
pre-FIRM structures.
Sec. 579. Effective dates of policies.
Sec. 580. Agricultural structures.
Sec. 581. Implementation review by Director.
Sec. 582. Prohibited flood disaster assistance.
Sec. 583. Regulations.
Sec. 584. Relation to State and local laws.
TITLE VI—MISCELLANEOUS PROVISIONS
Sec. 601. Oversight hearings.
Sec. 602. Technical amendments to the Federal banking laws.
TITLE I—COMMUNITY DEVELOPMENT
AND CONSUMER PROTECTION
Subtitle A—Community Development
Banking and Financial Institutions Act
SEC. 101. SHORT TITLE.
This subtitle may be cited as the ‘‘Community Development
Banking and Financial Institutions Act of 1994’’.
SEC. 102. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) many of the Nation’s urban, rural, and Native American
communities face critical social and economic problems arising
in part from the lack of economic growth, people living in
poverty, and the lack of employment and other opportunities;
(2) the restoration and maintenance of the economies of
these communities will require coordinated development strate-
gies, intensive supportive services, and increased access to
equity investments and loans for development activities, includ-
ing investment in businesses, housing, commercial real estate,
human development, and other activities that promote the long-
term economic and social viability of the community; and
(3) community development financial institutions have
proven their ability to identify and respond to community needs
for equity investments, loans, and development services.
(b) PURPOSE.—The purpose of this subtitle is to create a
Community Development Financial Institutions Fund to promote
economic revitalization and community development through invest-
ment in and assistance to community development financial institu-
tions, including enhancing the liquidity of community development
financial institutions.
SEC. 103. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
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(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the
Administrator of the Fund appointed under section 104(b).
(2) APPROPRIATE
FEDERAL
BANKING
AGENCY.—The term
‘‘appropriate Federal banking agency’’ has the same meaning
as in section 3 of the Federal Deposit Insurance Act, and
also includes the National Credit Union Administration Board
with respect to insured credit unions.
(3) AFFILIATE.—The term ‘‘affiliate’’ has the same meaning
as in section 2(k) of the Bank Holding Company Act of 1956.
(4) BOARD.—The term ‘‘Board’’ means the Community
Development Advisory Board established under section 104(d).
(5) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—
(A) IN GENERAL.—The term ‘‘community development
financial institution’’ means a person (other than an
individual) that—
(i) has a primary mission of promoting community
development;
(ii) serves an investment area or targeted
population;
(iii) provides development services in conjunction
with equity investments or loans, directly or through
a subsidiary or affiliate;
(iv) maintains, through representation on its
governing board or otherwise, accountability to resi-
dents of its investment area or targeted population;
and
(v) is not an agency or instrumentality of the
United States, or of any State or political subdivision
of a State.
(B) CONDITIONS
FOR
QUALIFICATION
OF
HOLDING
COMPANIES.—
(i) 
CONSOLIDATED
TREATMENT.—A 
depository
institution holding company may qualify as a commu-
nity development financial institution only if the hold-
ing company and the subsidiaries and affiliates of the
holding company collectively satisfy the requirements
of subparagraph (A).
(ii) EXCLUSION OF SUBSIDIARY OR AFFILIATE FOR
FAILURE TO MEET CONSOLIDATED TREATMENT RULE.—
No subsidiary or affiliate of a depository institution
holding company may qualify as a community develop-
ment financial institution if the holding company and
the subsidiaries and affiliates of the holding company
do not collectively meet the requirements of subpara-
graph (A).
(C) CONDITIONS FOR SUBSIDIARIES.—No subsidiary of
an insured depository institution may qualify as a commu-
nity development financial institution if the insured deposi-
tory institution and its subsidiaries do not collectively meet
the requirements of subparagraph (A).
(6) COMMUNITY PARTNER.—The term ‘‘community partner’’
means a person (other than an individual) that provides loans,
equity investments, or development services, including a deposi-
tory institution holding company, an insured depository institu-
tion, an insured credit union, a nonprofit organization, a State
or local government agency, a quasi-governmental entity, and
H. R. 3474—6
an investment company authorized to operate pursuant to the
Small Business Investment Act of 1958.
(7) COMMUNITY PARTNERSHIP.—The term ‘‘community part-
nership’’ means an agreement between a community develop-
ment financial institution and a community partner to provide
development services, loans, or equity investments, to an invest-
ment area or targeted population.
(8) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term
‘‘depository institution holding company’’ has the same meaning
as in section 3 of the Federal Deposit Insurance Act.
(9) DEVELOPMENT SERVICES.—The term ‘‘development serv-
ices’’ means activities that promote community development
and are integral to lending or investment activities, including—
(A) business planning;
(B) financial and credit counseling; and
(C) marketing and management assistance.
(10) FUND.—The term ‘‘Fund’’ means the Community Devel-
opment Financial Institutions Fund established under section
104(a).
(11) INDIAN RESERVATION.—The term ‘‘Indian reservation’’
has the same meaning as in section 4(10) of the Indian Child
Welfare Act of 1978, and shall include land held by incorporated
Native groups, regional corporations, and village corporations,
as defined in or established pursuant to the Alaska Native
Claims Settlement Act, public domain Indian allotments, and
former Indian reservations in the State of Oklahoma.
(12) INDIAN TRIBE.—The term ‘‘Indian tribe’’ means any
Indian tribe, band, pueblo, nation, or other organized group
or community, including any Alaska Native village or regional
or village corporation, as defined in or established pursuant
to the Alaska Native Claims Settlement Act, which is recog-
nized as eligible for the special programs and services provided
by the United States to Indians because of their status as
Indians.
(13) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITU-
TION.—The term ‘‘insured community development financial
institution’’ means any community development financial
institution that is an insured depository institution or an
insured credit union.
(14) INSURED
CREDIT
UNION.—The term ‘‘insured credit
union’’ has the same meaning as in section 101(7) of the Federal
Credit Union Act.
(15) INSURED DEPOSITORY INSTITUTION.—The term ‘‘insured
depository institution’’ has the same meaning as in section
3 of the Federal Deposit Insurance Act.
(16) INVESTMENT
AREA.—The term ‘‘investment area’’
means a geographic area (or areas) including an Indian reserva-
tion that—
(A)(i) meets objective criteria of economic distress
developed by the Fund, which may include the percentage
of low-income families or the extent of poverty, the rate
of unemployment or underemployment, rural population
outmigration, lag in population growth, and extent of blight
and disinvestment; and
(ii) has significant unmet needs for loans or equity
investments; or
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(B) encompasses or is located in an empowerment zone
or enterprise community designated under section 1391
of the Internal Revenue Code of 1986.
(17) LOW-INCOME.—The term ‘‘low-income’’ means having
an income, adjusted for family size, of not more than—
(A) for metropolitan areas, 80 percent of the area
median income; and
(B) for nonmetropolitan areas, the greater of—
(i) 80 percent of the area median income; or
(ii) 80 percent of the statewide nonmetropolitan
area median income.
(18) STATE.—The term ‘‘State’’ has the same meaning as
in section 3 of the Federal Deposit Insurance Act.
(19) SUBSIDIARY.—The term ‘‘subsidiary’’ has the same
meaning as in section 3 of the Federal Deposit Insurance Act,
except that a community development financial institution that
is a corporation shall not be considered to be a subsidiary
of any insured depository institution or depository institution
holding company that controls less than 25 percent of any
class of the voting shares of such corporation, and does not
otherwise control in any manner the election of a majority
of the directors of the corporation.
(20) TARGETED
POPULATION.—The term ‘‘targeted popu-
lation’’ means individuals, or an identifiable group of individ-
uals, including an Indian tribe, who—
(A) are low-income persons; or
(B) otherwise lack adequate access to loans or equity
investments.
(21) TRAINING
PROGRAM.—The term ‘‘training program’’
means the training program operated by the Fund under section
109.
SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY
DEVELOPMENT BANKING.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is established a corporation to be
known as the Community Development Financial Institutions
Fund that shall have the duties and responsibilities specified
by this subtitle and subtitle B of title II. The Fund shall
have succession until dissolved. The offices of the Fund shall
be in Washington, D.C. The Fund shall not be affiliated with
or be within any other agency or department of the Federal
Government.
(2) WHOLLY OWNED GOVERNMENT CORPORATION.—The Fund
shall be a wholly owned Government corporation in the execu-
tive branch and shall be treated in all respects as an agency
of the United States, except as otherwise provided in this
subtitle.
(b) MANAGEMENT OF FUND.—
(1) APPOINTMENT OF ADMINISTRATOR.—The management of
the Fund shall be vested in an Administrator, who shall be
appointed by the President, by and with the advice and consent
of the Senate. The Administrator shall not engage in any other
business or employment during service as the Administrator.
(2) CHIEF
FINANCIAL
OFFICER.—The Administrator shall
appoint a chief financial officer, who shall have the authority
and functions of an agency Chief Financial Officer under section
H. R. 3474—8
902 of title 31, United States Code. In the event of a vacancy
in the position of the Administrator or during the absence
or disability of the Administrator, the chief financial officer
shall perform the duties of the position of Administrator.
(3) OTHER OFFICERS AND EMPLOYEES.—The Administrator
may appoint such other officers and employees of the Fund
as the Administrator determines to be necessary or appropriate.
(4) EXPEDITED HIRING.—During the 2-year period beginning
on the date of enactment of this Act, the Administrator may—
(A) appoint and terminate the individuals referred to
in paragraphs (2) and (3) without regard to the civil service
laws and regulations; and
(B) fix the compensation of the individuals referred
to in paragraph (3) without regard to the provisions of
chapter 51 and subchapter III of chapter 53 of title 5,
United States Code, relating to classification of positions
and General Schedule pay rates, except that the rate of
pay for such individuals may not exceed the rate payable
for level V of the Executive Schedule under section 5316
of such title.
(c) GENERAL POWERS.—In carrying out the functions of the
Fund, the Administrator—
(1) shall have all necessary and proper authority to carry
out this subtitle and subtitle B of title II;
(2) shall have the power to adopt, alter, and use a corporate
seal for the Fund, which shall be judicially noticed;
(3) may adopt, amend, and repeal bylaws, rules, and regula-
tions governing the manner in which business of the Fund
may be conducted and such rules and regulations as may
be necessary or appropriate to implement this subtitle and
subtitle B of title II;
(4) may enter into, perform, and enforce such agreements,
contracts, and transactions as may be deemed necessary or
appropriate to the conduct of activities authorized under this
subtitle and subtitle B of title II;
(5) may determine the character of and necessity for
expenditures of the Fund and the manner in which they shall
be incurred, allowed, and paid;
(6) may utilize or employ the services of personnel of any
agency or instrumentality of the United States with the consent
of the agency or instrumentality concerned on a reimbursable
or nonreimbursable basis; and
(7) may execute all instruments necessary or appropriate
in the exercise of any of the functions of the Fund under
this subtitle and subtitle B of title II and may delegate to
the officers of the Fund such of the powers and responsibilities
of the Administrator as the Administrator deems necessary
or appropriate for the administration of the Fund.
(d) ADVISORY BOARD.—
(1) ESTABLISHMENT.—There is established an advisory
board to the Fund to be known as the Community Development
Advisory Board, which shall be operated in accordance with
the provisions of the Federal Advisory Committee Act, except
that section 14 of that Act does not apply to the Board.
(2) MEMBERSHIP.—The Board shall consist of 15 members,
including—
(A) the Secretary of Agriculture or his or her designee;
H. R. 3474—9
(B) the Secretary of Commerce or his or her designee;
(C) the Secretary of Housing and Urban Development
or his or her designee;
(D) the Secretary of the Interior or his or her designee;
(E) the Secretary of the Treasury or his or her designee;
(F) the Administrator of the Small Business Adminis-
tration or his or her designee; and
(G) 9 private citizens, appointed by the President, who
shall be selected, to the maximum extent practicable, to
provide for national geographic representation and racial,
ethnic, and gender diversity, including—
(i) 2 individuals who are officers of existing commu-
nity development financial institutions;
(ii) 2 individuals who are officers of insured deposi-
tory institutions;
(iii) 2 individuals who are officers of national
consumer or public interest organizations;
(iv) 2 individuals who have expertise in community
development; and
(v) 1 individual who has personal experience and
specialized expertise in the unique lending and commu-
nity development issues confronted by Indian tribes
on Indian reservations.
(3) CHAIRPERSON.—The members of the Board specified
in paragraph (2)(G) shall select, by majority vote, a chairperson
of the Board, who shall serve for a term of 2 years.
(4) BOARD FUNCTION.—It shall be the function of the Board
to advise the Administrator on the policies of the Fund regard-
ing activities under this subtitle. The Board shall not advise
the Administrator on the granting or denial of any particular
application.
(5) TERMS OF PRIVATE MEMBERS.—
(A) IN GENERAL.—Each member of the Board appointed
under paragraph (2)(G) shall serve for a term of 4 years.
(B) VACANCIES.—Any member appointed to fill a
vacancy occurring prior to the expiration of the term for
which the previous member was appointed shall be
appointed for the remainder of such term. Members may
continue to serve following the expiration of their terms
until a successor is appointed.
(6) MEETINGS.—The Board shall meet at least annually
and at such other times as requested by the Administrator
or the chairperson. A majority of the members of the Board
shall constitute a quorum.
(7) REIMBURSEMENT FOR EXPENSES.—The members of the
Board may receive reimbursement for travel, per diem, and
other necessary expenses incurred in the performance of their
duties, in accordance with the Federal Advisory Committee
Act.
(8) COSTS AND EXPENSES.—The Fund shall provide to the
Board all necessary staff and facilities.
(e) CONFORMING AMENDMENTS.—Section 9101(3) of title 31,
United States Code, is amended—
(1) by redesignating subparagraphs (B) through (M) as
subparagraphs (C) through (N), respectively; and
(2) by inserting after subparagraph (A) the following new
subparagraph:
H. R. 3474—10
‘‘(B) the Community Development Financial Institu-
tions Fund;’’.
(f) GOVERNMENT CORPORATION CONTROL ACT EXEMPTION.—Sec-
tion 9107(b) of title 31, United States Code, shall not apply to
deposits of the Fund made pursuant to section 108.
(g) LIMITATION OF FUND AND FEDERAL LIABILITY.—The liability
of the Fund and the United States Government arising out of
any investment in a community development financial institution
in accordance with this subtitle shall be limited to the amount
of the investment. The Fund shall be exempt from any assessments
and other liabilities that may be imposed on controlling or principal
shareholders by any Federal law or the law of any State, Territory,
or the District of Columbia. Nothing in this subsection shall affect
the application of any Federal tax law.
(h) PROHIBITION ON ISSUANCE OF SECURITIES.—The Fund may
not issue stock, bonds, debentures, notes, or other securities.
(i) COMPENSATION.—Title 5, United States Code, is amended
in section 5313, by adding at the end the following:
‘‘Administrator of the Community Development Financial
Institutions Fund.’’.
(j) ASSISTED INSTITUTIONS NOT UNITED STATES INSTRUMENTAL-
ITIES.—A community development financial institution or other
organization that receives assistance pursuant to this subtitle shall
not be deemed to be an agency, department, or instrumentality
of the United States.
(k) TRANSITION PERIOD.—
(1) IN GENERAL.—During the transition period, the Sec-
retary of the Treasury may—
(A) assist in the establishment of the administrative
functions of the Fund listed in paragraph (2); and
(B) hire not more than 6 individuals to serve as employ-
ees of the Fund during the transition period.
(2) CONTINUED SERVICE.—Individuals hired in accordance
with paragraph (1)(B) may continue to serve as employees
of the Fund after the transition period.
(3) ADMINISTRATIVE FUNCTIONS.—The administrative func-
tions referred to in paragraph (1)(A) shall be limited to—
(A) establishing accounting, information, and record-
keeping systems for the Fund; and
(B) procuring office space, equipment, and supplies.
(4) EXPEDITED HIRING.—During the transition period, the
Secretary of the Treasury may—
(A) appoint and terminate the individuals referred to
in paragraph (1)(B) without regard to the civil service
laws and regulations; and
(B) fix the compensation of the individuals referred
to in paragraph (1)(B) without regard to the provisions
of chapter 51 and subchapter III of chapter 53 of title
5, United States Code, relating to classification of positions
and General Schedule pay rates, except that the rate of
pay for such individuals may not exceed the rate payable
for level V of the Executive Schedule under section 5316
of such title.
(5) CERTAIN
EMPLOYEES.—During the transition period,
employees of the Department of the Treasury may only com-
prise less than one-half of the total number of individuals
hired in accordance with paragraph (1)(B).
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(6) TRANSITION
EXPENSES.—Amounts previously appro-
priated to the Department of the Treasury may be used to
pay obligations and expenses of the Fund incurred under this
section, and such amounts may be reimbursed by the Fund
to the Department of the Treasury from amounts appropriated
to the Fund for fiscal year 1995.
(7) DEFINITION.—For purposes of this subsection, the term
‘‘transition period’’ means the period beginning on the date
of enactment of this Act and ending on the date on which
the Administrator is appointed.
SEC. 105. APPLICATIONS FOR ASSISTANCE.
(a) FORM
AND PROCEDURES.—An application for assistance
under this subtitle shall be submitted in such form and in accord-
ance with such procedures as the Fund shall establish.
(b) MINIMUM REQUIREMENTS.—Except as provided in sections
106 and 113, the Fund shall require an application—
(1) to establish that the applicant is, or will be, a commu-
nity development financial institution;
(2) to include a comprehensive strategic plan for the
organization that contains—
(A) a business plan of not less than 5 years in duration
that demonstrates that the applicant will be properly man-
aged and will have the capacity to operate as a community
development financial institution that will not be depend-
ent upon assistance from the Fund for continued viability;
(B) an analysis of the needs of the investment area
or targeted population and a strategy for how the applicant
will attempt to meet those needs;
(C) a plan to coordinate use of assistance from the
Fund with existing Federal, State, local, and tribal govern-
ment assistance programs, and private sector financial
services;
(D) an explanation of how the proposed activities of
the applicant are consistent with existing economic,
community, and housing development plans adopted by
or applicable to an investment area or targeted population;
and
(E) a description of how the applicant will coordinate
with community organizations and financial institutions
which will provide equity investments, loans, secondary
markets, or other services to investment areas or targeted
populations;
(3) to include a detailed description of the applicant’s plans
and likely sources of funds to match the amount of assistance
requested from the Fund;
(4) in the case of an applicant that has previously received
assistance under this subtitle, to demonstrate that the
applicant—
(A) has substantially met its performance goals and
otherwise carried out its responsibilities under this subtitle
and the assistance agreement; and
(B) will expand its operations into a new investment
area or serve a new targeted population, offer more prod-
ucts or services, or increase the volume of its business;
H. R. 3474—12
(5) in the case of an applicant with a prior history of
serving investment areas or targeted populations, to dem-
onstrate that the applicant—
(A) has a record of success in serving investment areas
or targeted populations; and
(B) will expand its operations into a new investment
area or to serve a new targeted population, offer more
products or services, or increase the volume of its current
business; and
(6) to include such other information as the Fund deems
appropriate.
(c) PREAPPLICATION OUTREACH PROGRAM.—The Fund shall pro-
vide an outreach program to identify and provide information to
potential applicants and may provide technical assistance to poten-
tial applicants, but shall not assist in the preparation of any
application.
SEC. 106. COMMUNITY PARTNERSHIPS.
(a) APPLICATION.—An application for assistance may be filed
jointly by a community development financial institution and a
community partner to carry out a community partnership.
(b) APPLICATION REQUIREMENTS.—The Fund shall require a
community partnership application—
(1) to meet the minimum requirements established for
community development financial institutions under section
105(b), except that the criteria specified in paragraphs (1) and
(2)(A) of section 105(b) shall not apply to the community
partner;
(2) to describe how each coapplicant will participate in
carrying out the community partnership and how the partner-
ship will enhance activities serving the investment area or
targeted population; and
(3) to demonstrate that the community partnership activi-
ties are consistent with the strategic plan submitted by the
community development financial institution coapplicant.
(c) SELECTION CRITERIA.—The Fund shall consider a community
partnership application based on—
(1) the community development financial institution
coapplicant—
(A) meeting the minimum selection criteria described
in section 105; and
(B) satisfying the selection criteria of section 107;
(2) the extent to which the community partner coapplicant
will participate in carrying out the partnership;
(3) the extent to which the community partnership will
enhance the likelihood of success of the community development
financial institution coapplicant’s strategic plan; and
(4) the extent to which service to the investment area
or targeted population will be better performed by a partnership
as opposed to the individual community development financial
institution coapplicant.
(d) LIMITATION ON DISTRIBUTION OF ASSISTANCE.—Assistance
provided upon approval of an application under this section shall
be distributed only to the community development financial institu-
tion coapplicant, and shall not be used to fund any activities carried
out directly by the community partner or an affiliate or subsidiary
thereof.
H. R. 3474—13
(e) OTHER REQUIREMENTS AND LIMITATIONS.—All other require-
ments and limitations imposed by this subtitle on a community
development financial institution assisted under this subtitle shall
apply (in the manner that the Fund determines to be appropriate)
to assistance provided to carry out community partnerships. The
Fund may establish additional guidelines and restrictions on the
use of Federal funds to carry out community partnerships.
SEC. 107. SELECTION OF INSTITUTIONS.
(a) SELECTION CRITERIA.—Except as provided in section 113,
the Fund shall, in its sole discretion, select community development
financial institution applicants meeting the requirements of section
105 for assistance based on—
(1) the likelihood of success of the applicant in meeting
the goals of its comprehensive strategic plan;
(2) the experience and background of the management
team;
(3) the extent of need for equity investments, loans, and
development services within the investment areas or targeted
populations;
(4) the extent of economic distress within the investment
areas or the extent of need within the targeted populations,
as those factors are measured by objective criteria;
(5) the extent to which the applicant will concentrate
its activities on serving its investment areas or targeted
populations;
(6) the amount of firm commitments to meet or exceed
the matching requirements and the likely success of the plan
for raising the balance of the match;
(7) the extent to which the matching funds are derived
from private sources;
(8) the extent to which the proposed activities will expand
economic opportunities within the investment areas or the tar-
geted populations;
(9) whether the applicant is, or will become, an insured
community development financial institution;
(10) the extent of support from the investment areas or
targeted populations;
(11) the extent to which the applicant is, or will be, commu-
nity-owned or community-governed;
(12) the extent to which the applicant will increase its
resources through coordination with other institutions or
participation in a secondary market;
(13) in the case of an applicant with a prior history of
serving investment areas or targeted populations, the extent
of success in serving them; and
(14) other factors deemed to be appropriate by the Fund.
(b) GEOGRAPHIC DIVERSITY.—In selecting applicants for assist-
ance, the Fund shall seek to fund a geographically diverse group
of applicants, which shall include applicants from metropolitan,
nonmetropolitan, and rural areas.
SEC. 108. ASSISTANCE PROVIDED BY THE FUND.
(a) FORMS OF ASSISTANCE.—
(1) IN GENERAL.—The Fund may provide—
(A) financial assistance through equity investments,
deposits, credit union shares, loans, and grants; and
(B) technical assistance—
H. R. 3474—14
(i) directly;
(ii) through grants; or
(iii) by contracting with organizations that possess
expertise in community development finance, without
regard to whether the organizations receive or are
eligible to receive assistance under this subtitle.
(2) EQUITY INVESTMENTS.—
(A) LIMITATION ON EQUITY INVESTMENTS.—The Fund
shall not own more than 50 percent of the equity of a
community development financial institution and may not
control the operations of such institution. The Fund may
hold only transferable, nonvoting equity investments in
the institution. Such equity investments may provide for
convertibility to voting stock upon transfer by the Fund.
(B) FUND DEEMED NOT TO CONTROL.—Notwithstanding
any other provision of law, the Fund shall not be deemed
to control a community development financial institution
by reason of any assistance provided under this subtitle
for the purpose of any other applicable law to the extent
that the Fund complies with subparagraph (A). Nothing
in this subparagraph shall affect the application of any
Federal tax law.
(3) DEPOSITS.—Deposits made pursuant to this section in
an insured community development financial institution shall
not be subject to any requirement for collateral or security.
(4) LIMITATIONS ON OBLIGATIONS.—Direct loan obligations
may be incurred by the Fund only to the extent that appropria-
tions of budget authority to cover their cost, as defined in
section 502(5) of the Congressional Budget Act of 1974, are
made in advance.
(b) USES OF FINANCIAL ASSISTANCE.—
(1) IN
GENERAL.—Financial assistance made available
under this subtitle may be used by assisted community develop-
ment financial institutions to serve investment areas or tar-
geted populations by developing or supporting—
(A) commercial facilities that promote revitalization,
community stability, or job creation or retention;
(B) businesses that—
(i) provide jobs for low-income people or are owned
by low-income people; or
(ii) enhance the availability of products and serv-
ices to low-income people;
(C) community facilities;
(D) the provision of basic financial services;
(E) housing that is principally affordable to low-income
people, except that assistance used to facilitate homeowner-
ship shall only be used for services and lending products—
(i) that serve low-income people; and
(ii) that—
(I) are not provided by other lenders in the
area; or
(II) complement the services and lending prod-
ucts provided by other lenders that serve the
investment area or targeted population; and
(F) other businesses and activities deemed appropriate
by the Fund.
H. R. 3474—15
(2) LIMITATIONS.—No assistance made available under this
subtitle may be expended by a community development finan-
cial institution (or an organization receiving assistance under
section 113) to pay any person to influence or attempt to
influence any agency, elected official, officer, or employee of
a State or local government in connection with the making,
award, extension, continuation, renewal, amendment, or modi-
fication of any State or local government contract, grant, loan,
or cooperative agreement (as such terms are defined in section
1352 of title 31, United States Code).
(c) USES OF TECHNICAL ASSISTANCE.—
(1) TYPES OF ACTIVITIES.—Technical assistance may be used
for activities that enhance the capacity of a community develop-
ment financial institution, such as training of management
and other personnel and development of programs and invest-
ment or loan products.
(2) AVAILABILITY
OF
TECHNICAL
ASSISTANCE.—The Fund
may provide technical assistance, regardless of whether or not
the recipient also receives financial assistance under this
section.
(d) AMOUNT OF ASSISTANCE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
Fund may provide not more than $5,000,000 of assistance,
in the aggregate, during any 3-year period to any 1 community
development financial institution and its subsidiaries and
affiliates.
(2) EXCEPTION.—The Fund may provide not more than
$3,750,000 of assistance in addition to the amount specified
in paragraph (1) during the same 3-year period to an existing
community development financial institution that proposes to
establish a subsidiary or affiliate for the purpose of serving
an investment area or targeted population outside of any State
and outside of any metropolitan area presently served by the
institution, if—
(A) the subsidiary or affiliate—
(i) would be a community development financial
institution; and
(ii) independently—
(I) meets the selection criteria described in
section 105; and
(II) satisfies the selection criteria of section
107; and
(B) no other application for assistance to serve the
investment area or targeted population has been submitted
to the Administrator within a reasonable period of time
preceding the date of receipt of the application at issue.
(3) TIMING OF ASSISTANCE.—Assistance may be provided
as described in paragraphs (1) and (2) in a lump sum or
over a period of time, as determined by the Fund.
(e) MATCHING REQUIREMENTS.—
(1) IN GENERAL.—Assistance other than technical assist-
ance shall be matched with funds from sources other than
the Federal Government on the basis of not less than one
dollar for each dollar provided by the Fund. Such matching
funds shall be at least comparable in form and value to assist-
ance provided by the Fund. The Fund shall provide no
assistance (other than technical assistance) until a community
H. R. 3474—16
development financial institution has secured firm commit-
ments for the matching funds required.
(2) EXCEPTION.—In the case of an applicant with severe
constraints on available sources of matching funds, the Fund
may permit an applicant to comply with the matching require-
ments of paragraph (1) by—
(A) reducing such matching requirement by 50 percent;
or
(B) permitting an applicant to provide matching funds
in a form to be determined at the discretion of the Fund,
if such applicant—
(i) has total assets of less than $100,000;
(ii) serves nonmetropolitan or rural areas; and
(iii) is not requesting more than $25,000 in assist-
ance.
(3) LIMITATION.—Not more than 25 percent of the total
funds disbursed in any fiscal year by the Fund may be matched
as authorized under paragraph (2).
(4) CONSTRUCTION
OF ‘‘FEDERAL
GOVERNMENT
FUNDS’’.—
For purposes of this subsection, notwithstanding section
105(a)(9) of the Housing and Community Development Act of
1974, funds provided pursuant to such Act shall be considered
to be Federal Government funds.
(f) TERMS AND CONDITIONS.—
(1) SOUNDNESS OF UNREGULATED INSTITUTIONS.—The Fund
shall—
(A) ensure, to the maximum extent practicable, that
each community development financial institution (other
than an insured community development financial institu-
tion or depository institution holding company) assisted
under this subtitle is financially and managerially sound
and maintains appropriate internal controls;
(B) require such institution to submit, not less than
once during each 18-month period, a statement of financial
condition audited by an independent certified public
accountant as part of the report required by section
115(e)(1); and
(C) require that all assistance granted under this sec-
tion is used by the community development financial
institution or community development partnership in a
manner consistent with the purposes of this subtitle.
(2) ASSISTANCE AGREEMENT.—
(A) IN
GENERAL.—Before providing any assistance
under this subtitle, the Fund and each community develop-
ment financial institution to be assisted shall enter into
an agreement that requires the institution to comply with
performance goals and abide by other terms and conditions
pertinent to assistance received under this subtitle.
(B) PERFORMANCE GOALS.—Performance goals shall be
negotiated between the Fund and each community develop-
ment financial institution receiving assistance based upon
the strategic plan submitted pursuant to section 105(b)(2).
Such goals may be modified with the consent of the parties,
or as provided in subparagraph (C). Performance goals
for insured community development financial institutions
shall be determined in consultation with the appropriate
Federal banking agency.
H. R. 3474—17
(C) SANCTIONS.—The agreement shall provide that, in
the event of fraud, mismanagement, noncompliance with
this subtitle, or noncompliance with the terms of the agree-
ment, the Fund, in its discretion, may—
(i) require changes to the performance goals
imposed pursuant to subparagraph (B);
(ii) require changes to the strategic plan submitted
pursuant to section 105(b)(2);
(iii) revoke approval of the application;
(iv) reduce or terminate assistance;
(v) require repayment of assistance;
(vi) bar an applicant from reapplying for assistance
from the Fund; and
(vii) take such other actions as the Fund deems
appropriate.
(D) CONSULTATION
WITH
TRIBAL
GOVERNMENTS.—In
reviewing the performance of any assisted community
development financial institution, the investment area of
which includes an Indian reservation, or the targeted popu-
lation of which includes an Indian tribe, the Fund shall
consult with, and seek input from, any appropriate tribal
government.
(g) AUTHORITY TO SELL EQUITY INVESTMENTS AND LOANS.—
The Fund may, at any time, sell its equity investments and loans,
but the Fund shall retain the power to enforce limitations on
assistance entered into in accordance with the requirements of
this subtitle until the performance goals related to the investment
or loan have been met.
(h) NO AUTHORITY TO LIMIT SUPERVISION AND REGULATION.—
Nothing in this subtitle shall affect any authority of the appropriate
Federal banking agency to supervise and regulate any institution
or company.
SEC. 109. TRAINING.
(a) IN GENERAL.—The Fund may operate a training program
to increase the capacity and expertise of community development
financial institutions and other members of the financial services
industry to undertake community development finance activities.
(b) PROGRAM ACTIVITIES.—The training program shall provide
educational programs to assist community development financial
institutions and other members of the financial services industry
in developing lending and investment products, underwriting and
servicing loans, managing equity investments, and providing devel-
opment services targeted to areas of economic distress, low-income
persons, and persons who lack adequate access to loans and equity
investments.
(c) PARTICIPATION.—The training program shall be made avail-
able to community development financial institutions and other
members of the financial services industry that serve or seek to
serve areas of economic distress, low-income persons, and persons
who lack adequate access to loans and equity investments.
(d) CONTRACTING.—The Fund may offer the training program
described in this section directly or through a contract with other
organizations. The Fund may contract to provide the training pro-
gram through organizations that possess special expertise in
community development, without regard to whether the organiza-
tions receive or are eligible to receive assistance under this subtitle.
H. R. 3474—18
(e) COORDINATION.—The Fund shall coordinate with other
appropriate Federal departments or agencies that operate similar
training programs in order to prevent duplicative efforts.
(f) REGULATORY FEE FOR PROVIDING TRAINING SERVICES.—
(1) GENERAL RULE.—The Fund may, at the discretion of
the Administrator and in accordance with this subsection,
assess and collect regulatory fees solely to cover the costs
of the Fund in providing training services under a training
program operated in accordance with this section.
(2) PERSONS SUBJECT TO FEE.—Fees may be assessed under
paragraph (1) only on persons who participate in the training
program.
(3) LIMITATION ON MANNER OF COLLECTION.—Fees may be
assessed and collected under this subsection only in such man-
ner as may reasonably be expected to result in the collection
of an aggregate amount of fees during any fiscal year which
does not exceed the aggregate costs of the Fund for such year
in providing training services under a training program oper-
ated in accordance with this section
(4) LIMITATION ON AMOUNT OF FEE.—The amount of any
fee assessed under this subsection on any person may not
exceed the amount which is reasonably based on the proportion
of the training services provided under a training program
operated in accordance with this section which relate to such
person.
SEC. 110. ENCOURAGEMENT OF PRIVATE ENTITIES.
The Fund may facilitate the organization of corporations in
which the Federal Government has no ownership interest. The
purpose of any such entity shall be to assist community development
financial institutions in a manner that is complementary to the
activities of the Fund under this subtitle. Any such entity shall
be managed exclusively by persons not employed by the Federal
Government or any agency or instrumentality thereof, or by any
State or local government or any agency or instrumentality thereof.
SEC. 111. COLLECTION AND COMPILATION OF INFORMATION.
The Fund shall—
(1) collect and compile information pertinent to community
development financial institutions that will assist in creating,
developing, expanding, and preserving such institutions; and
(2) make such information available to promote the pur-
poses of this subtitle.
SEC. 112. INVESTMENT OF RECEIPTS AND PROCEEDS.
(a) ESTABLISHMENT
OF ACCOUNT.—Any dividends on equity
investments and proceeds from the disposition of investments,
deposits, or credit union shares that are received by the Fund
as a result of assistance provided pursuant to section 108 or 113,
and any fees received pursuant to section 109(f) shall be deposited
and accredited to an account of the Fund in the United States
Treasury (hereafter in this section referred to as ‘‘the account’’)
established to carry out the purpose of this subtitle.
(b) INVESTMENTS.—Upon request of the Administrator, the Sec-
retary of the Treasury shall invest amounts deposited in the account
in public debt securities with maturities suitable to the needs
of the Fund, as determined by the Administrator, and bearing
interest at rates determined by the Secretary of the Treasury,
H. R. 3474—19
comparable to current market yields on outstanding marketable
obligations of the United States of similar maturities.
(c) AVAILABILITY.—Amounts deposited into the account and
interest earned on such amounts pursuant to this section shall
be available to the Fund until expended.
SEC. 113. CAPITALIZATION ASSISTANCE TO ENHANCE LIQUIDITY.
(a) ASSISTANCE.—
(1) IN
GENERAL.—The Fund may provide assistance for
the purpose of providing capital to organizations to purchase
loans or otherwise enhance the liquidity of community develop-
ment financial institutions, if—
(A) the primary purpose of such organizations is to
promote community development; and
(B) any assistance received is matched with funds—
(i) from sources other than the Federal Govern-
ment;
(ii) on the basis of not less than one dollar for
each dollar provided by the Fund; and
(iii) that are comparable in form and value to
the assistance provided by the Fund.
(2) LIMITATION
ON
OTHER
ASSISTANCE.—An organization
that receives assistance under this section may not receive
other financial or technical assistance under this subtitle.
(3) CONSTRUCTION OF FEDERAL GOVERNMENT FUNDS.—For
purposes of this subsection, notwithstanding section 105(a)(9)
of the Housing and Community Development Act of 1974, funds
provided pursuant to such Act shall be considered to be Federal
Government funds.
(b) SELECTION.—The selection of organizations to receive assist-
ance under this section shall be at the discretion of the Fund
and in accordance with criteria established by the Fund. In
establishing such criteria, the Fund shall take into account the
criteria contained in sections 105(b) and 107, as appropriate.
(c) AMOUNT OF ASSISTANCE.—The Fund may provide a total
of not more than $5,000,000 of assistance to an organization or
its subsidiaries or affiliates under this section during any 3-year
period. Assistance may be provided in a lump sum or over a period
of time, as determined by the Fund.
(d) AUDIT
AND REPORT REQUIREMENTS.—Organizations that
receive assistance from the Fund in accordance with this section
shall—
(1) submit to the Fund, not less than once in every 18-
month period, financial statements audited by an independent
certified public accountant, as part of the report required by
paragraph (2);
(2) submit an annual report on its activities; and
(3) keep such records as may be necessary to disclose
the manner in which any assistance under this section is used.
(e) LIMITATIONS ON LIABILITY.—
(1) LIABILITY OF FUND.—The liability of the Fund and the
United States Government arising out of the provision of assist-
ance to any organization in accordance with this section shall
be limited to the amount of such assistance. The Fund shall
be exempt from any assessments and any other liabilities that
may be imposed on controlling or principal shareholders by
any Federal law or the law of any State, or territory. Nothing
H. R. 3474—20
in this paragraph shall affect the application of Federal tax
law.
(2) LIABILITY OF GOVERNMENT.—This section does not oblige
the Federal Government, either directly or indirectly, to provide
any funds to any organization assisted pursuant to this section,
or to honor, reimburse, or otherwise guarantee any obligation
or liability of such an organization. This section shall not be
construed to imply that any such organization or any obliga-
tions or securities of any such organization are backed by
the full faith and credit of the United States.
(f) USE OF PROCEEDS.—Any proceeds from the sale of loans
by an organization assisted under this section shall be used by
the seller for community development purposes.
SEC. 114. INCENTIVES FOR DEPOSITORY INSTITUTION PARTICIPATION.
(a) FUNCTION OF ADMINISTRATOR.—
(1) IN GENERAL.—Of any funds appropriated pursuant to
the authorization in section 121(a), the funds made available
for use in carrying out this section in accordance with section
121(a)(4) shall be administered by the Administrator of the
Fund, in consultation with—
(A) the Federal banking agencies (as defined in section
3 of the Federal Deposit Insurance Act) and the National
Credit Union Administration;
(B) the individuals named pursuant to clauses (ii) and
(iv) of section 104(d)(2)(G); and
(C) any other representatives of insured depository
institutions or other persons as the Administrator may
determine to be appropriate.
(2) APPLICABILITY OF BANK ENTERPRISE ACT OF 1991.—Sub-
ject to subsection (b) and the consultation requirement of para-
graph (1)—
(A) section 233 of the Bank Enterprise Act of 1991
shall be applicable to the Administrator, for purposes of
this section, in the same manner and to the same extent
that such section is applicable to the Community Enterprise
Assessment Credit Board;
(B) the Administrator shall, for purposes of carrying
out this section and section 233 of the Bank Enterprise
Act of 1991—
(i) have all powers and rights of the Community
Enterprise Assessment Credit Board under section 233
of the Bank Enterprise Act of 1991 to administer and
enforce any provision of such section 233 which is
applicable to the Administrator under this section; and
(ii) shall be subject to the same duties and restric-
tions imposed on the Community Enterprise Assess-
ment Credit Board; and
(C) the Administrator shall—
(i) have all powers and rights of an appropriate
Federal banking agency under section 233(b)(2) of the
Bank Enterprise Act of 1991 to approve or disapprove
the designation of qualified distressed communities for
purposes of this section and provide information and
assistance with respect to any such designation; and
H. R. 3474—21
(ii) shall be subject to the same duties imposed
on the appropriate Federal banking agencies under
such section 233(b)(2).
(3) AWARDS.—The Administrator shall determine the
amount of assessment credits, and shall make awards of those
credits.
(4) REGULATIONS
AND
GUIDELINES.—The Administrator
may prescribe such regulations and issue such guidelines as
the Administrator determines to be appropriate to carry out
this section.
(5) EXCEPTIONS TO APPLICABILITY.—Notwithstanding para-
graphs (1) through (4) of this subsection, subsections (a)(1)
and (e)(2) of section 233 of the Bank Enterprise Act of 1991,
and any other provision of the Federal Deposit Insurance Act
relating to the Bank Enterprise Act of 1991, do not apply
to the Administrator for purposes of this subtitle.
(b) PROVISIONS
RELATING
TO
ADMINISTRATION
OF
THIS
SECTION.—
(1) NEW LIFELINE ACCOUNTS.—In applying section 233 of
the Bank Enterprise Act of 1991 for purposes of this section,
the Administrator shall treat the provision of new lifeline
accounts by an insured depository institution as an activity
which is qualified to be taken into account under section
233(a)(2)(A) of such Act.
(2) DETERMINATION OF ASSESSMENT CREDIT.—For the pur-
pose of this subtitle, section 233(a)(3) of the Bank Enterprise
Act of 1991 (12 U.S.C. 1834a(a)(3)) shall be applied by substitut-
ing the following text:
‘‘(3) AMOUNT OF ASSESSMENT CREDIT.—The amount of an
assessment credit which may be awarded to an insured deposi-
tory institution to carry out the qualified activities of the
institution or of the subsidiaries of the institution pursuant
to this section for any semiannual period shall be equal to
the sum of—
‘‘(A) with respect to qualifying activities described in
paragraph (2)(A), the amount which is equal to—
‘‘(i) 5 percent of the sum of the amounts deter-
mined under such subparagraph, in the case of an
institution which is not a community development
financial institution; or
‘‘(ii) 15 percent of the sum of the amounts deter-
mined under such subparagraph, in the case of an
institution which is a community development financial
institution; and
‘‘(B) with respect to qualifying activities described in
paragraph (2)(C), 15 percent of the amounts determined
under such subparagraph.’’.
(3) ADJUSTMENT OF PERCENTAGE.—Section 233(a)(5) of the
Bank Enterprise Act of 1991 shall be applied for purposes
of this section by—
(A) substituting ‘‘institutions which are community
development financial institutions’’ for ‘‘institutions which
meet the community development organization require-
ments under section 234’’; and
(B) substituting ‘‘institutions which are not community
development financial institutions’’ for ‘‘institutions which
do not meet such requirements’’.
H. R. 3474—22
(4) DESIGNATION OF QDC.—Section 233(b)(2) of the Bank
Enterprise Act of 1991 shall be applied for purposes of this
section without regard to subparagraph (A)(ii) of such section
233(b)(2).
(5) OPERATION ON ANNUAL BASIS.—The Administrator may,
in the Administrator’s discretion, apply section 233 of the Bank
Enterprise Act of 1991 for purposes of this section by providing
community enterprise assessment credits with respect to
annual periods rather than semiannual periods.
(6) OUTREACH.—The Administrator shall ensure that
information about the Bank Enterprise Act of 1991 under this
section is widely disseminated to all interested parties.
(7) QUALIFIED ACTIVITIES.—For the purpose of this subtitle,
section 233(a)(2)(A) of the Bank Enterprise Act of 1991 shall
be applied by inserting ‘‘of the increase’’ after ‘‘the amount’’.
(c) TECHNICAL AND CONFORMING AMENDMENTS TO THE BANK
ENTERPRISE ACT OF 1991.—
(1) ASSISTANCE TO CDFI MAY BE TAKEN INTO ACCOUNT AS
QUALIFYING ACTIVITY.—Section 233(a)(2) of the Bank Enterprise
Act of 1991 (12 U.S.C. 1834a(a)(2)) is amended—
(A) in the material preceding subparagraph (A), by
striking ‘‘shall be eligible’’ and inserting ‘‘may apply for’’;
(B) in subparagraph (A), by striking ‘‘financial assist-
ance’’ and inserting ‘‘assistance’’;
(C) by striking ‘‘and’’ at the end of subparagraph (A);
(D) by striking the period at the end of subparagraph
(B) and inserting ‘‘; and’’; and
(E) by adding at the end the following new subpara-
graph:
‘‘(C) any increase during the period in the amount
of new equity investments in community development
financial institutions.’’.
(2) ADDITIONAL ASSISTANCE WHICH MAY BE CONSIDERED AS
QUALIFYING ACTIVITIES.—Section 233(a)(4) of the Bank Enter-
prise Act of 1991 (12 U.S.C. 1834a(a)(4)) is amended—
(A) in the material preceding subparagraph (A), by
striking ‘‘financial’’; and
(B) by adding at the end the following new subpara-
graphs:
‘‘(L) Loans made for the purpose of developing or
supporting—
‘‘(i) commercial facilities that enhance revitaliza-
tion, community stability, or job creation and retention
efforts;
‘‘(ii) business creation and expansion efforts that—
‘‘(I) create or retain jobs for low-income people;
‘‘(II) enhance the availability of products and
services to low-income people; or
‘‘(III) create or retain businesses owned by
low-income people or residents of a targeted area;
‘‘(iii) community facilities that provide benefits to
low-income people or enhance community stability;
‘‘(iv) home ownership opportunities that are afford-
able to low-income households;
‘‘(v) rental housing that is principally affordable
to low-income households; and
H. R. 3474—23
‘‘(vi) other activities deemed appropriate by the
Board.
‘‘(M) The provision of technical assistance to residents
of qualified distressed communities in managing their per-
sonal finances through consumer education programs either
sponsored or offered by insured depository institutions.
‘‘(N) The provision of technical assistance and consult-
ing services to newly formed small businesses located in
qualified distressed communities.
‘‘(O) The provision of technical assistance to, or servic-
ing the loans of low- or moderate-income homeowners and
homeowners located in qualified distressed communities.’’.
(3) RESTRICTION ON ADJUSTMENT OF PERCENTAGES.—Sec-
tion 233(a)(5) of the Bank Enterprise Act of 1991 (12 U.S.C.
1834a(a)(5)) is amended by striking ‘‘paragraph (3)’’ and insert-
ing ‘‘paragraph (3)(A)’’.
(4) CREDIT LIMITED TO ORIGINATIONS BY INSTITUTIONS.—
Section 233(a)(6) of the Bank Enterprise Act of 1991 (12 U.S.C.
1834a(a)(6)) is amended by striking ‘‘Investments by any
insured depository institution in loans and securities’’ and
inserting ‘‘Loans, financial assistance, and equity investments
made by any insured depository institution’’.
(5) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.—
Section 233(a) of the Bank Enterprise Act of 1991 (12 U.S.C.
1834a(a)) is amended by adding at the end the following new
paragraph:
‘‘(7) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.—
The Board may establish guidelines for analyzing the technical
assistance described in subparagraphs (M), (N), and (O) of
paragraph (4) for the purpose of quantifying the results of
such assistance in determining the amount of any community
assessment credit under this subsection.’’.
(6) PROHIBITION
ON
DOUBLE
FUNDING
FOR
SAME
ACTIVI-
TIES.—Section 233 of the Bank Enterprise Act of 1991 (12
U.S.C. 1834a) is amended—
(A) by redesignating subsection (g) as subsection (j);
and
(B) by inserting after subsection (f) the following new
subsection:
‘‘(g) PROHIBITION ON DOUBLE FUNDING FOR SAME ACTIVITIES.—
No community development financial institution may receive a
community enterprise assessment credit if such institution, either
directly or through a community partnership—
‘‘(1) has received assistance within the preceding 12-month
period, or has an application for assistance pending, under
section 105 of the Community Development Banking and Finan-
cial Institutions Act of 1994; or
‘‘(2) has ever received assistance, under section 108 of
the Community Development Banking and Financial Institu-
tions Act of 1994, for the same activity during the same semi-
annual period for which the institution seeks a community
enterprise assessment credit under this section.’’.
(7) ADDITIONAL
ADMINISTRATIVE
REQUIREMENTS.—Section
233 of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a)
is amended by inserting after subsection (g) (as added by para-
graph (6) of this subsection) the following new subsections:
‘‘(h) PRIORITY OF AWARDS.—
H. R. 3474—24
‘‘(1) QUALIFYING LOANS AND SERVICES.—
‘‘(A) IN GENERAL.—If the amount of funds appropriated
for purposes of carrying out this section for any fiscal
year are insufficient to award the amount of assessment
credits for which insured depository institutions have
applied and are eligible under this section, the Board shall,
in awarding community enterprise assessment credits for
qualifying activities under subparagraphs (A) and (B) of
subsection (a)(2) for any semiannual period for which such
appropriation is available, determine which institutions
shall receive an award.
‘‘(B) PRIORITY
FOR
SUPPORT
OF
EFFORTS
OF
CDFI.—
The Board shall give priority to institutions that have
supported the efforts of community development financial
institutions in the qualified distressed community.
‘‘(C) OTHER FACTORS.—The Board may also consider
the following factors:
‘‘(i) DEGREE
OF
DIFFICULTY.—The degree of dif-
ficulty in carrying out the activities that form the
basis for the institution’s application.
‘‘(ii) COMMUNITY IMPACT.—The extent to which the
activities that form the basis for the institution’s
application have benefited the qualified distressed
community.
‘‘(iii) INNOVATION.—The degree to which the activi-
ties that form the basis for the institution’s application
have incorporated innovative methods for meeting
community needs.
‘‘(iv) LEVERAGE.—The leverage ratio between the
dollar amount of the activities that form the basis
for the institution’s application and the amount of the
assessment credit calculated in accordance with this
section for such activities.
‘‘(v) SIZE.—The amount of total assets of the
institution.
‘‘(vi) NEW
ENTRY.—Whether the institution had
provided financial services in the designated distressed
community before such semiannual period.
‘‘(vii) NEED FOR SUBSIDY.—The degree to which
the qualified activity which forms the basis for the
application needs enhancement through an assessment
credit.
‘‘(viii) EXTENT OF DISTRESS IN COMMUNITY.—The
degree of poverty and unemployment in the designated
distressed community, the proportion of the total popu-
lation of the community which are low-income families
and unrelated individuals, and the extent of other
adverse economic conditions in such community.
‘‘(2) QUALIFYING
INVESTMENTS.—If the amount of funds
appropriated for purposes of carrying out this section for any
fiscal year are insufficient to award the amount of assessment
credits for which insured depository institutions have applied
and are eligible under this section, the Board shall, in awarding
community enterprise assessment credits for qualifying activi-
ties under subsection (a)(2)(C) for any semiannual period for
which such appropriation is available, determine which institu-
tions shall receive an award based on the leverage ratio between
H. R. 3474—25
the dollar amount of the activities that form the basis for
the institution’s application and the amount of the assessment
credit calculated in accordance with this section for such
activities.
‘‘(i) DETERMINATION OF AMOUNT OF ASSESSMENT CREDIT.—Not-
withstanding any other provision of this section, the determination
of the amount of any community enterprise assessment credit under
subsection (a)(3) for any insured depository institution for any semi-
annual period shall be made solely at the discretion of the Board.
No insured depository institution shall be awarded community
enterprise assessment credits for any semiannual period in excess
of an amount determined by the Board.’’.
(8) ADDITIONAL DEFINITIONS.—Subsection (j) of section 233
of the Bank Enterprise Act of 1991 (as redesignated by para-
graph (6) of this subsection) is amended by adding at the
end the following new paragraphs:
‘‘(4) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—
The term ‘community development financial institution’ has
the same meaning as in section 103(5) of the Community Devel-
opment Banking and Financial Institutions Act of 1994.
‘‘(5) AFFILIATE.—The term ‘affiliate’ has the same meaning
as in section 2 of the Bank Holding Company Act of 1956.’’.
SEC. 115. RECORDKEEPING.
(a) IN GENERAL.—A community development financial institu-
tion receiving assistance from the Fund shall keep such records,
for such periods as may be prescribed by the Fund and necessary
to disclose the manner in which any assistance under this subtitle
is used and to demonstrate compliance with the requirements of
this subtitle.
(b) USER PROFILE INFORMATION.—The Fund shall require each
community development financial institution or other organization
receiving assistance from the Fund to compile such data, as is
determined to be appropriate by the Fund, on the gender, race,
ethnicity, national origin, or other pertinent information concerning
individuals that utilize the services of the assisted institution to
ensure that targeted populations and low-income residents of invest-
ment areas are adequately served.
(c) ACCESS
TO RECORDS.—The Fund shall have access on
demand, for the purpose of determining compliance with this sub-
title, to any records of a community development financial institu-
tion or other organization that receives assistance from the Fund.
(d) REVIEW.—Not less than annually, the Fund shall review
the progress of each assisted community development financial
institution in carrying out its strategic plan, meeting its perform-
ance goals, and satisfying the terms and conditions of its assistance
agreement.
(e) REPORTING.—
(1) ANNUAL REPORTS.—The Fund shall require each commu-
nity development financial institution receiving assistance
under this subtitle to submit an annual report to the Fund
on its activities, its financial condition, and its success in meet-
ing performance goals, in satisfying the terms and conditions
of its assistance agreement, and in complying with other
requirements of this subtitle, in such form and manner as
the Fund shall specify.
H. R. 3474—26
(2) AVAILABILITY OF REPORTS.—The Fund, after deleting
or redacting any material as appropriate to protect privacy
or proprietary interests, shall make such reports submitted
under paragraph (1) available for public inspection.
SEC. 116. SPECIAL PROVISIONS WITH RESPECT TO INSTITUTIONS
THAT ARE SUPERVISED BY FEDERAL BANKING AGENCIES.
(a) CONSULTATION WITH APPROPRIATE AGENCIES.—The Fund
shall consult with and consider the views of the appropriate Federal
banking agency prior to providing assistance under this subtitle
to—
(1) an insured community development financial institu-
tion;
(2) any community development financial institution that
is examined by or subject to the reporting requirements of
an appropriate Federal banking agency; or
(3) any community development financial institution that
has as its community partner an institution that is examined
by or subject to the reporting requirements of an appropriate
Federal banking agency.
(b) REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.—
(1) IN GENERAL.—Except as provided in paragraph (4), not-
withstanding any other provisions of this subtitle, prior to
directly requesting information from or imposing reporting or
recordkeeping requirements on an insured community develop-
ment financial institution or other institution that is examined
by or subject to the reporting requirements of an appropriate
Federal banking agency, the Fund shall consult with the appro-
priate Federal banking agency to determine if the information
requested is available from or may be obtained by such agency
in the form, format, or detail required by the Fund.
(2) TIMING OF RESPONSE FROM APPROPRIATE FEDERAL BANK-
ING AGENCY.—If the information, reports, or records requested
by the Fund pursuant to paragraph (1) are not provided by
the appropriate Federal banking agency in less than 15 cal-
endar days after the date on which the material is requested,
the Fund may request the information from or impose the
recordkeeping or reporting requirements directly on such
institutions with notice to the appropriate Federal banking
agency.
(3) ELIMINATION OF DUPLICATIVE INFORMATION AND REPORT-
ING REQUIREMENTS.—The Fund shall use any information pro-
vided the appropriate Federal banking agency under this
section to the extent practicable to eliminate duplicative
requests for information and reports from, and recordkeeping
by an insured community development financial institution or
other institution that is examined by or subject to the reporting
requirements of an appropriate Federal banking agency.
(4) EXCEPTION.—Notwithstanding paragraphs (1) and (2),
the Fund may require an insured community development
financial institution or other institution that is examined by
or subject to the reporting requirements of an appropriate
Federal banking agency to provide information with respect
to the institution’s implementation of its strategic plan or
compliance with the terms of its assistance agreement under
this subtitle, after providing notice to the appropriate Federal
banking agency.
H. R. 3474—27
(c) EXCLUSION FOR EXAMINATION REPORTS.—Nothing in this
section shall be construed to permit the Fund to require an insured
community development financial institution or other institution
that is examined by or subject to the reporting requirements of
an appropriate Federal banking agency, to obtain, maintain, or
furnish an examination report of any appropriate Federal banking
agency or records contained in or related to such a report.
(d) SHARING OF INFORMATION.—The Fund and the appropriate
Federal banking agency shall promptly notify each other of material
concerns about an insured community development financial institu-
tion or other institution that is examined by or subject to the
reporting requirements of an appropriate Federal banking agency,
and share appropriate information relating to such concerns.
(e) DISCLOSURE PROHIBITED.—Neither the Fund nor the appro-
priate Federal banking agency shall disclose confidential informa-
tion obtained pursuant to this section from any party without
the written consent of that party.
(f) PRIVILEGE MAINTAINED.—The Fund, the appropriate Federal
banking agency, and any other party providing information under
this section shall not be deemed to have waived any privilege
applicable to any information or data, or any portion thereof, by
providing such information or data to the other party or by permit-
ting such data or information, or any copies or portions thereof,
to be used by the other party.
(g) EXCEPTIONS.—Nothing in this section shall authorize the
Fund or the appropriate Federal banking agency to withhold
information from the Congress or prevent it from complying with
a request for information from a Federal department or agency
in compliance with applicable law.
(h) SANCTIONS.—
(1) NOTIFICATION.—The Fund shall notify the appropriate
Federal banking agency before imposing any sanction pursuant
to the authority in section 108(f)(2)(C) on an insured community
development financial institution or other institution that is
examined by or subject to the reporting requirements of that
agency.
(2) EXCEPTIONS.—The Fund shall not impose a sanction
referred to in paragraph (1) if the appropriate Federal banking
agency, in writing, not later than 30 calendar days after receiv-
ing notice from the Fund—
(A) objects to the proposed sanction;
(B) determines that the sanction would—
(i) have a material adverse effect on the safety
and soundness of the institution; or
(ii) impede or interfere with an enforcement action
against that institution by that agency;
(C) proposes a comparable alternative action; and
(D) specifically explains—
(i) the basis for the determination under subpara-
graph (B) and, if appropriate, provides documentation
to support the determination; and
(ii) how the alternative action suggested pursuant
to subparagraph (C) would be as effective as the sanc-
tion proposed by the Fund in securing compliance with
this subtitle and deterring future noncompliance.
(i) SAFETY AND SOUNDNESS CONSIDERATIONS.—The Fund and
each appropriate Federal banking agency shall cooperate and
H. R. 3474—28
respond to requests from each other and from other appropriate
Federal banking agencies in a manner that ensures the safety
and soundness of the insured community development financial
institution or other institution that is examined by or subject to
the reporting requirements of an appropriate Federal banking
agency.
SEC. 117. STUDIES AND REPORTS; EXAMINATION AND AUDIT.
(a) ANNUAL REPORT BY THE FUND.—The Fund shall conduct
an annual evaluation of the activities carried out by the Fund
and the community development financial institutions and other
organizations assisted pursuant to this subtitle, and shall submit
a report of its findings to the President and the Congress not
later than 120 days after the end of each fiscal year of the Fund.
The report shall include financial statements audited in accordance
with subsection (f).
(b) OPTIONAL STUDIES.—The Fund may conduct such studies
as the Fund determines necessary to further the purpose of this
subtitle and to facilitate investment in distressed communities.
The findings of any studies conducted pursuant to this subsection
shall be included in the report required by subsection (a).
(c) NATIVE AMERICAN LENDING STUDY.—
(1) IN GENERAL.—The Fund shall conduct a study on lend-
ing and investment practices on Indian reservations and other
land held in trust by the United States. Such study shall—
(A) identify barriers to private financing on such lands;
and
(B) identify the impact of such barriers on access to
capital and credit for Native American populations.
(2) REPORT.—Not later than 12 months after the date on
which the Administrator is appointed, the Fund shall submit
a report to the President and the Congress that—
(A) contains the findings of the study conducted under
paragraph (1);
(B) recommends any necessary statutory and regu-
latory changes to existing Federal programs; and
(C) makes policy recommendations for community
development financial institutions, insured depository
institutions, secondary market institutions, and other pri-
vate sector capital institutions to better serve such
populations.
(d) INVESTMENT, GOVERNANCE, AND ROLE
OF FUND.—Thirty
months after the appointment and qualification of the Adminis-
trator, the Comptroller General of the United States shall submit
to the President and the Congress a study evaluating the structure,
governance, and performance of the Fund.
(e) CONSULTATION.—In the conduct of the studies required
under this section, the Fund shall consult, as appropriate, with
the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System,
the Federal Housing Finance Board, the Farm Credit Administra-
tion, the Director of the Office of Thrift Supervision, the National
Credit Union Administration Board, Indian tribal governments,
community reinvestment organizations, civil rights organizations,
consumer organizations, financial organizations, and such rep-
resentatives of agencies or other persons, at the discretion of the
Fund.
H. R. 3474—29
(f) EXAMINATION AND AUDIT.—The financial statements of the
Fund shall be audited in accordance with section 9105 of title
31, United States Code, except that audits required by section
9105(a) of such title shall be performed annually.
SEC. 118. INSPECTOR GENERAL.
(a) ESTABLISHMENT.—Section 11 of the Inspector General Act
of 1978 (5 U.S.C. App. 11) is amended—
(1) in paragraph (1), by inserting ‘‘; the Administrator
of the Community Development Financial Institutions Fund;’’
before ‘‘and the chief’’; and
(2) in paragraph (2), by inserting ‘‘the Community Develop-
ment Financial Institutions Fund,’’ after ‘‘the Agency for Inter-
national Development,’’.
(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated such sums as may be necessary for the operation
of the Office of Inspector General established by the amendments
made by subsection (a).
SEC. 119. ENFORCEMENT.
(a) REGULATIONS.—
(1) IN GENERAL.—Not later than 180 days after the appoint-
ment and qualification of the Administrator, the Fund shall
promulgate such regulations as may be necessary to carry
out this subtitle.
(2) REGULATIONS REQUIRED.—The regulations promulgated
under paragraph (1) shall include regulations applicable to
community development financial institutions that are not
insured depository institutions to—
(A) prevent conflicts of interest on the part of directors,
officers, and employees of community development financial
institutions as the Fund determines to be appropriate;
and
(B) establish such standards with respect to loans by
a community development financial institution to any direc-
tor, officer, or employee of such institution as the Fund
determines to be appropriate, including loan amount
limitations.
(b) ADMINISTRATIVE ENFORCEMENT.—The provisions of this sub-
title, and regulations prescribed and agreements entered into under
this subtitle, shall be enforced under section 8 of the Federal
Deposit Insurance Act by the appropriate Federal banking agency,
in the case of an insured community development financial institu-
tion. A violation of this subtitle, or any regulation prescribed under
or any agreement entered into under this subtitle, shall be treated
as a violation of the Federal Deposit Insurance Act.
(c) CRIMINAL PROVISION.—Section 657 of title 18, United States
Code, is amended by inserting ‘‘or any community development
financial institution receiving financial assistance under the Riegle
Community Development and Regulatory Improvement Act of
1994,’’ after ‘‘small business investment company,’’.
SEC. 120. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR
CREDIT UNIONS.
(a) REPEAL.—Section 120 of the Federal Credit Union Act (12
U.S.C. 1766) is amended by striking subsection (k).
H. R. 3474—30
(b) REVOLVING LOAN FUND.—The Federal Credit Union Act
(12 U.S.C. 1751 et seq.) is amended by inserting after section
129 the following new section:
‘‘SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR
CREDIT UNIONS.
‘‘(a) IN GENERAL.—The Board may exercise the authority
granted to it by the Community Development Credit Union Revolv-
ing Loan Fund Transfer Act, including any additional appropriation
made or earnings accrued, subject only to this section and to regula-
tions prescribed by the Board.
‘‘(b) INVESTMENT.—The Board may invest any idle Fund moneys
in United States Treasury securities. Any interest accrued on such
securities shall become a part of the Fund.
‘‘(c) LOANS.—The Board may require that any loans made from
the Fund be matched by increased shares in the borrower credit
union.
‘‘(d) INTEREST.—Interest earned by the Fund may be allocated
by the Board for technical assistance to community development
credit unions, subject to an appropriations Act.
‘‘(e) DEFINITION.—As used in this section, the term ‘Fund’ means
the Community Development Credit Union Revolving Loan Fund.’’.
SEC. 121. AUTHORIZATION OF APPROPRIATIONS.
(a) FUND AUTHORIZATION.—
(1) IN
GENERAL.—To carry out this subtitle, there are
authorized to be appropriated to the Fund, to remain available
until expended—
(A) $60,000,000 for fiscal year 1995;
(B) $104,000,000 for fiscal year 1996;
(C) $107,000,000 for fiscal year 1997; and
(D) $111,000,000 for fiscal year 1998;
or such greater sums as may be necessary to carry out this
subtitle.
(2) ADMINISTRATIVE EXPENSES.—
(A) IN GENERAL.—Of amounts authorized to be appro-
priated to the Fund pursuant to this section, not more
than $5,550,000 may be used by the Fund in each fiscal
year to pay the administrative costs and expenses of the
Fund. Costs associated with the training program estab-
lished under section 109 and the technical assistance pro-
gram established under section 108 shall not be considered
to be administrative expenses for purposes of this
paragraph.
(B) CALCULATIONS.—The amounts referred to in para-
graphs (3) and (4) shall be calculated after subtracting
the amount referred to in subparagraph (A) of this para-
graph from the total amount appropriated to the Fund
in accordance with paragraph (1) in any fiscal year.
(3) CAPITALIZATION ASSISTANCE.—Not more than 5 percent
of the amounts authorized to be appropriated under paragraph
(1) may be used as provided in section 113.
(4) AVAILABILITY FOR FUNDING SECTION 114.—331⁄3 percent
of the amounts appropriated to the Fund for any fiscal year
pursuant to the authorization in paragraph (1) shall be avail-
able for use in carrying out section 114.
(5) SUPPORT
OF
COMMUNITY
DEVELOPMENT
FINANCIAL
INSTITUTIONS.—The Administrator shall allocate funds author-
H. R. 3474—31
ized under this section, to the maximum extent practicable,
for 
the 
support 
of 
community 
development 
financial
institutions.
(b) COMMUNITY DEVELOPMENT CREDIT UNION REVOLVING LOAN
FUND.—There are authorized to be appropriated for the purposes
of the Community Development Credit Union Revolving Loan
Fund—
(1) $4,000,000 for fiscal year 1995;
(2) $2,000,000 for fiscal year 1996;
(3) $2,000,000 for fiscal year 1997; and
(4) $2,000,000 for fiscal year 1998.
(c) BUDGETARY TREATMENT.—Amounts authorized to be appro-
priated under this section shall be subject to discretionary spending
caps, as provided in section 601 of the Congressional Budget Act
of 1974, and therefore shall reduce by an equal amount funds
made available for other discretionary spending programs.
Subtitle B—Home Ownership and Equity
Protection
SEC. 151. SHORT TITLE.
This subtitle may be cited as the ‘‘Home Ownership and Equity
Protection Act of 1994’’.
SEC. 152. CONSUMER PROTECTIONS FOR CERTAIN MORTGAGES.
(a) MORTGAGE DEFINITION.—Section 103 of the Truth in Lend-
ing Act (15 U.S.C. 1602) is amended by adding at the end the
following new subsection:
‘‘(aa)(1) A mortgage referred to in this subsection means a
consumer credit transaction that is secured by the consumer’s prin-
cipal dwelling, other than a residential mortgage transaction, a
reverse mortgage transaction, or a transaction under an open end
credit plan, if—
‘‘(A) the annual percentage rate at consummation of the
transaction will exceed by more than 10 percentage points
the yield on Treasury securities having comparable periods
of maturity on the fifteenth day of the month immediately
preceding the month in which the application for the extension
of credit is received by the creditor; or
‘‘(B) the total points and fees payable by the consumer
at or before closing will exceed the greater of—
‘‘(i) 8 percent of the total loan amount; or
‘‘(ii) $400.
‘‘(2)(A) After the 2-year period beginning on the effective date
of the regulations promulgated under section 155 of the Riegle
Community Development and Regulatory Improvement Act of 1994,
and no more frequently than biennially after the first increase
or decrease under this subparagraph, the Board may by regulation
increase or decrease the number of percentage points specified
in paragraph (1)(A), if the Board determines that the increase
or decrease is—
‘‘(i) consistent with the consumer protections against abu-
sive lending provided by the amendments made by subtitle
B of title I of the Riegle Community Development and Regu-
latory Improvement Act of 1994; and
‘‘(ii) warranted by the need for credit.
H. R. 3474—32
‘‘(B) An increase or decrease under subparagraph (A) may not
result in the number of percentage points referred to in subpara-
graph (A) being—
‘‘(i) less that 8 percentage points; or
‘‘(ii) greater than 12 percentage points.
‘‘(C) In determining whether to increase or decrease the number
of percentage points referred to in subparagraph (A), the Board
shall consult with representatives of consumers, including low-
income consumers, and lenders.
‘‘(3) The amount specified in paragraph (1)(B)(ii) shall be
adjusted annually on January 1 by the annual percentage change
in the Consumer Price Index, as reported on June 1 of the year
preceding such adjustment.
‘‘(4) For purposes of paragraph (1)(B), points and fees shall
include—
‘‘(A) all items included in the finance charge, except interest
or the time-price differential;
‘‘(B) all compensation paid to mortgage brokers;
‘‘(C) each of the charges listed in section 106(e) (except
an escrow for future payment of taxes), unless—
‘‘(i) the charge is reasonable;
‘‘(ii) the creditor receives no direct or indirect com-
pensation; and
‘‘(iii) the charge is paid to a third party unaffiliated
with the creditor; and
‘‘(D) such other charges as the Board determines to be
appropriate.
‘‘(5) This subsection shall not be construed to limit the rate
of interest or the finance charge that a person may charge a
consumer for any extension of credit.’’.
(b) MATERIAL DISCLOSURES.—Section 103(u) of the Truth in
Lending Act (15 U.S.C. 1602(u)) is amended—
(1) by striking ‘‘and the due dates’’ and inserting ‘‘the
due dates’’; and
(2) by inserting before the period ‘‘, and the disclosures
required by section 129(a)’’.
(c) DEFINITION OF CREDITOR CLARIFIED.—Section 103(f) of the
Truth in Lending Act (15 U.S.C. 1602(f)) is amended by adding
at the end the following: ‘‘Any person who originates 2 or more
mortgages referred to in subsection (aa) in any 12-month period
or any person who originates 1 or more such mortgages through
a mortgage broker shall be considered to be a creditor for purposes
of this title.’’.
(d) DISCLOSURES REQUIRED AND CERTAIN TERMS PROHIBITED.—
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended
by inserting after section 128 the following new section:
‘‘SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES.
‘‘(a) DISCLOSURES.—
‘‘(1) SPECIFIC DISCLOSURES.—In addition to other disclo-
sures required under this title, for each mortgage referred
to in section 103(aa), the creditor shall provide the following
disclosures in conspicuous type size:
‘‘(A) ‘You are not required to complete this agreement
merely because you have received these disclosures or have
signed a loan application.’.
H. R. 3474—33
‘‘(B) ‘If you obtain this loan, the lender will have a
mortgage on your home. You could lose your home, and
any money you have put into it, if you do not meet your
obligations under the loan.’.
‘‘(2) ANNUAL PERCENTAGE RATE.—In addition to the disclo-
sures required under paragraph (1), the creditor shall disclose—
‘‘(A) in the case of a credit transaction with a fixed
rate of interest, the annual percentage rate and the amount
of the regular monthly payment; or
‘‘(B) in the case of any other credit transaction, the
annual percentage rate of the loan, the amount of the
regular monthly payment, a statement that the interest
rate and monthly payment may increase, and the amount
of the maximum monthly payment, based on the maximum
interest rate allowed pursuant to section 1204 of the
Competitive Equality Banking Act of 1987.
‘‘(b) TIME OF DISCLOSURES.—
‘‘(1) IN GENERAL.—The disclosures required by this section
shall be given not less than 3 business days prior to consumma-
tion of the transaction.
‘‘(2) NEW DISCLOSURES REQUIRED.—
‘‘(A) IN
GENERAL.—After providing the disclosures
required by this section, a creditor may not change the
terms of the extension of credit if such changes make
the disclosures inaccurate, unless new disclosures are pro-
vided that meet the requirements of this section.
‘‘(B) TELEPHONE DISCLOSURE.—A creditor may provide
new disclosures pursuant to subparagraph (A) by telephone,
if—
‘‘(i) the change is initiated by the consumer; and
‘‘(ii) at the consummation of the transaction under
which the credit is extended—
‘‘(I) the creditor provides to the consumer the
new disclosures, in writing; and
‘‘(II) the creditor and consumer certify in writ-
ing that the new disclosures were provided by
telephone, by not later than 3 days prior to the
date of consummation of the transaction.
‘‘(3) MODIFICATIONS.—The Board may, if it finds that such
action is necessary to permit homeowners to meet bona fide
personal financial emergencies, prescribe regulations authoriz-
ing the modification or waiver of rights created under this
subsection, to the extent and under the circumstances set forth
in those regulations.
‘‘(c) NO PREPAYMENT PENALTY.—
‘‘(1) IN GENERAL.—
‘‘(A) LIMITATION ON TERMS.—A mortgage referred to
in section 103(aa) may not contain terms under which
a consumer must pay a prepayment penalty for paying
all or part of the principal before the date on which the
principal is due.
‘‘(B) CONSTRUCTION.—For purposes of this subsection,
any method of computing a refund of unearned scheduled
interest is a prepayment penalty if it is less favorable
to the consumer than the actuarial method (as that term
is defined in section 933(d) of the Housing and Community
Development Act of 1992).
H. R. 3474—34
‘‘(2) EXCEPTION.—Notwithstanding paragraph (1), a mort-
gage referred to in section 103(aa) may contain a prepayment
penalty (including terms calculating a refund by a method
that is not prohibited under section 933(b) of the Housing
and Community Development Act of 1992 for the transaction
in question) if—
‘‘(A) at the time the mortgage is consummated—
‘‘(i) the consumer is not liable for an amount of
monthly indebtedness payments (including the amount
of credit extended or to be extended under the trans-
action) that is greater than 50 percent of the monthly
gross income of the consumer; and
‘‘(ii) the income and expenses of the consumer are
verified by a financial statement signed by the
consumer, by a credit report, and in the case of employ-
ment income, by payment records or by verification
from the employer of the consumer (which verification
may be in the form of a copy of a pay stub or other
payment record supplied by the consumer);
‘‘(B) the penalty applies only to a prepayment made
with amounts obtained by the consumer by means other
than a refinancing by the creditor under the mortgage,
or an affiliate of that creditor;
‘‘(C) the penalty does not apply after the end of the
5-year period beginning on the date on which the mortgage
is consummated; and
‘‘(D) the penalty is not prohibited under other
applicable law.
‘‘(d) LIMITATIONS AFTER DEFAULT.—A mortgage referred to in
section 103(aa) may not provide for an interest rate applicable
after default that is higher than the interest rate that applies
before default. If the date of maturity of a mortgage referred to
in subsection 103(aa) is accelerated due to default and the consumer
is entitled to a rebate of interest, that rebate shall be computed
by any method that is not less favorable than the actuarial method
(as that term is defined in section 933(d) of the Housing and
Community Development Act of 1992).
‘‘(e) NO BALLOON PAYMENTS.—A mortgage referred to in section
103(aa) having a term of less than 5 years may not include terms
under which the aggregate amount of the regular periodic payments
would not fully amortize the outstanding principal balance.
‘‘(f) NO NEGATIVE AMORTIZATION.—A mortgage referred to in
section 103(aa) may not include terms under which the outstanding
principal balance will increase at any time over the course of
the loan because the regular periodic payments do not cover the
full amount of interest due.
‘‘(g) NO PREPAID PAYMENTS.—A mortgage referred to in section
103(aa) may not include terms under which more than 2 periodic
payments required under the loan are consolidated and paid in
advance from the loan proceeds provided to the consumer.
‘‘(h) PROHIBITION ON EXTENDING CREDIT WITHOUT REGARD TO
PAYMENT ABILITY OF CONSUMER.—A creditor shall not engage in
a pattern or practice of extending credit to consumers under mort-
gages referred to in section 103(aa) based on the consumers’ collat-
eral without regard to the consumers’ repayment ability, including
the consumers’ current and expected income, current obligations,
and employment.
H. R. 3474—35
‘‘(i) REQUIREMENTS FOR PAYMENTS UNDER HOME IMPROVEMENT
CONTRACTS.—A creditor shall not make a payment to a contractor
under a home improvement contract from amounts extended as
credit under a mortgage referred to in section 103(aa), other than—
‘‘(1) in the form of an instrument that is payable to the
consumer or jointly to the consumer and the contractor; or
‘‘(2) at the election of the consumer, by a third party
escrow agent in accordance with terms established in a written
agreement signed by the consumer, the creditor, and the con-
tractor before the date of payment.
‘‘(j) CONSEQUENCE OF FAILURE TO COMPLY.—Any mortgage that
contains a provision prohibited by this section shall be deemed
a failure to deliver the material disclosures required under this
title, for the purpose of section 125.
‘‘(k) DEFINITION.—For purposes of this section, the term ‘affili-
ate’ has the same meaning as in section 2(k) of the Bank Holding
Company Act of 1956.
‘‘(l) DISCRETIONARY REGULATORY AUTHORITY OF BOARD.—
‘‘(1) EXEMPTIONS.—The Board may, by regulation or order,
exempt specific mortgage products or categories of mortgages
from any or all of the prohibitions specified in subsections
(c) through (i), if the Board finds that the exemption—
‘‘(A) is in the interest of the borrowing public; and
‘‘(B) will apply only to products that maintain and
strengthen home ownership and equity protection.
‘‘(2) PROHIBITIONS.—The Board, by regulation or order,
shall prohibit acts or practices in connection with—
‘‘(A) mortgage loans that the Board finds to be unfair,
deceptive, or designed to evade the provisions of this sec-
tion; and
‘‘(B) refinancing of mortgage loans that the Board finds
to be associated with abusive lending practices, or that
are otherwise not in the interest of the borrower.’’.
(e) CONFORMING AMENDMENTS.—
(1) TABLE OF SECTIONS.—The table of sections at the begin-
ning of chapter 2 of the Truth in Lending Act is amended
by striking the item relating to section 129 and inserting the
following:
‘‘129. Requirements for certain mortgages.’’.
(2) TRUTH IN LENDING ACT.—The Truth in Lending Act
(15 U.S.C. 1601 et seq.) is amended—
(A) in the second sentence of section 105(a), by striking
‘‘These’’ and inserting ‘‘Except in the case of a mortgage
referred to in section 103(aa), these’’;
(B) in section 111(a)(2), by inserting before the period
the following: ‘‘, and such State-required disclosure may
not be made in lieu of the disclosures applicable to certain
mortgages under section 129’’; and
(C) in section 111(b)—
(i) by striking ‘‘This’’ and inserting ‘‘Except as pro-
vided in section 129, this’’; and
(ii) by adding at the end the following: ‘‘The provi-
sions of section 129 do not annul, alter, or affect the
applicability of the laws of any State or exempt any
person subject to the provisions of section 129 from
complying with the laws of any State, with respect
H. R. 3474—36
to the requirements for mortgages referred to in section
103(aa), except to the extent that those State laws
are inconsistent with any provisions of section 129,
and then only to the extent of the inconsistency.’’.
SEC. 153. CIVIL LIABILITY.
(a) DAMAGES.—Section 130(a) of the Truth in Lending Act (15
U.S.C. 1640(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph (2)(B);
(2) by striking the period at the end of paragraph (3)
and inserting ‘‘; and’’; and
(3) by inserting after paragraph (3) the following new
paragraph:
‘‘(4) in the case of a failure to comply with any requirement
under section 129, an amount equal to the sum of all finance
charges and fees paid by the consumer, unless the creditor
demonstrates that the failure to comply is not material.’’.
(b) STATE ATTORNEY GENERAL ENFORCEMENT.—Section 130(e)
of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by
adding at the end the following: ‘‘An action to enforce a violation
of section 129 may also be brought by the appropriate State attorney
general in any appropriate United States district court, or any
other court of competent jurisdiction, not later than 3 years after
the date on which the violation occurs. The State attorney general
shall provide prior written notice of any such civil action to the
Federal agency responsible for enforcement under section 108 and
shall provide the agency with a copy of the complaint. If prior
notice is not feasible, the State attorney general shall provide
notice to such agency immediately upon instituting the action.
The Federal agency may—
‘‘(1) intervene in the action;
‘‘(2) upon intervening—
‘‘(A) remove the action to the appropriate United States
district court, if it was not originally brought there; and
‘‘(B) be heard on all matters arising in the action;
and
‘‘(3) file a petition for appeal.’’.
(c) ASSIGNEE LIABILITY.—Section 131 of the Truth in Lending
Act (15 U.S.C. 1641) is amended by adding at the end the following
new subsection:
‘‘(d) RIGHTS UPON ASSIGNMENT OF CERTAIN MORTGAGES.—
‘‘(1) IN GENERAL.—Any person who purchases or is other-
wise assigned a mortgage referred to in section 103(aa) shall
be subject to all claims and defenses with respect to that
mortgage that the consumer could assert against the creditor
of the mortgage, unless the purchaser or assignee demonstrates,
by a preponderance of the evidence, that a reasonable person
exercising ordinary due diligence, could not determine, based
on the documentation required by this title, the itemization
of the amount financed, and other disclosure of disbursements
that the mortgage was a mortgage referred to in section 103(aa).
The preceding sentence does not affect rights of a consumer
under subsection (a), (b), or (c) of this section or any other
provision of this title.
‘‘(2) LIMITATION ON DAMAGES.—Notwithstanding any other
provision of law, relief provided as a result of any action made
permissible by paragraph (1) may not exceed—
H. R. 3474—37
‘‘(A) with respect to actions based upon a violation
of this title, the amount specified in section 130; and
‘‘(B) with respect to all other causes of action, the
sum of—
‘‘(i) the amount of all remaining indebtedness; and
‘‘(ii) the total amount paid by the consumer in
connection with the transaction.
‘‘(3) OFFSET.—The amount of damages that may be awarded
under paragraph (2)(B) shall be reduced by the amount of
any damages awarded under paragraph (2)(A).
‘‘(4) NOTICE.—Any person who sells or otherwise assigns
a mortgage referred to in section 103(aa) shall include a promi-
nent notice of the potential liability under this subsection as
determined by the Board.’’.
SEC. 154. REVERSE MORTGAGE DISCLOSURE.
(a) DEFINITION OF REVERSE MORTGAGE.—Section 103 of the
Truth in Lending Act (15 U.S.C. 1602) is amended by adding
at the end the following new subsection:
‘‘(bb) The term ‘reverse mortgage transaction’ means a
nonrecourse transaction in which a mortgage, deed of trust, or
equivalent consensual security interest is created against the
consumer’s principal dwelling—
‘‘(1) securing one or more advances; and
‘‘(2) with respect to which the payment of any principal,
interest, and shared appreciation or equity is due and payable
(other than in the case of default) only after—
‘‘(A) the transfer of the dwelling;
‘‘(B) the consumer ceases to occupy the dwelling as
a principal dwelling; or
‘‘(C) the death of the consumer.’’.
(b) DISCLOSURE.—Chapter 2 of title I of the Truth in Lending
Act (15 U.S.C. 1631 et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 138. REVERSE MORTGAGES.
‘‘(a) IN GENERAL.—In addition to the disclosures required under
this title, for each reverse mortgage, the creditor shall, not less
than 3 days prior to consummation of the transaction, disclose
to the consumer in conspicuous type a good faith estimate of the
projected total cost of the mortgage to the consumer expressed
as a table of annual interest rates. Each annual interest rate
shall be based on a projected total future credit extension balance
under a projected appreciation rate for the dwelling and a term
for the mortgage. The disclosure shall include—
‘‘(1) statements of the annual interest rates for not less
than 3 projected appreciation rates and not less than 3 credit
transaction periods, as determined by the Board, including—
‘‘(A) a short-term reverse mortgage;
‘‘(B) a term equaling the actuarial life expectancy of
the consumer; and
‘‘(C) such longer term as the Board deems appropriate;
and
‘‘(2) a statement that the consumer is not obligated to
complete the reverse mortgage transaction merely because the
consumer has received the disclosure required under this sec-
tion or has signed an application for the reverse mortgage.
H. R. 3474—38
‘‘(b) PROJECTED TOTAL COST.—In determining the projected
total cost of the mortgage to be disclosed to the consumer under
subsection (a), the creditor shall take into account—
‘‘(1) any shared appreciation or equity that the lender will,
by contract, be entitled to receive;
‘‘(2) all costs and charges to the consumer, including the
costs of any associated annuity that the consumer elects or
is required to purchase as part of the reverse mortgage trans-
action;
‘‘(3) all payments to and for the benefit of the consumer,
including, in the case in which an associated annuity is pur-
chased (whether or not required by the lender as a condition
of making the reverse mortgage), the annuity payments
received by the consumer and financed from the proceeds of
the loan, instead of the proceeds used to finance the annuity;
and
‘‘(4) any limitation on the liability of the consumer under
reverse mortgage transactions (such as nonrecourse limits and
equity conservation agreements).’’.
(c) HOME EQUITY PLAN EXEMPTION.—Section 137(b) of the
Truth in Lending Act (15 U.S.C. 1647(b)) is amended by adding
at the end the following:
‘‘This subsection does not apply to reverse mortgage transactions.’’.
(d) TABLE OF SECTIONS.—The table of sections at the beginning
of chapter 2 of the Truth in Lending Act is amended by inserting
after the item relating to section 137 the following:
‘‘138. Reverse mortgages.’’.
SEC. 155. REGULATIONS.
Not later than 180 days after the date of enactment of this
Act, the Board of Governors of the Federal Reserve System shall
issue such regulations as may be necessary to carry out this subtitle,
and such regulations shall become effective on the date on which
disclosure regulations are required to become effective under section
105(d) of the Truth in Lending Act.
SEC. 156. APPLICABILITY.
This subtitle, and the amendments made by this subtitle, shall
apply to every mortgage referred to in section 103(aa) of the Truth
in Lending Act (as added by section 152(a) of this Act) consummated
on or after the date on which regulations issued under section
155 become effective.
SEC. 157. FEDERAL RESERVE STUDY.
During the period beginning 180 days after the date of enact-
ment of this Act and ending 2 years after that date of enactment,
the Board of Governors of the Federal Reserve System shall conduct
a study and submit to the Congress a report, including recommenda-
tions for any appropriate legislation, regarding—
(1) whether a consumer engaging in an open end credit
transaction (as defined in section 103 of the Truth in Lending
Act) secured by the consumer’s principal dwelling is provided
adequate protections under Federal law, including section 127A
of the Truth in Lending Act; and
(2) whether a more appropriate interest rate index exists
for purposes of subparagraph (A) of section 103(aa)(1) of the
Truth in Lending Act (as added by section 152(a) of this Act)
H. R. 3474—39
than the yield on Treasury securities referred to in that
subparagraph.
SEC. 158. HEARINGS ON HOME EQUITY LENDING.
(a) HEARINGS.—Not less than once during the 3-year period
beginning on the date of enactment of this Act, and regularly
thereafter, the Board of Governors of the Federal Reserve System,
in consultation with the Consumer Advisory Council of the Board,
shall conduct a public hearing to examine the home equity loan
market and the adequacy of existing regulatory and legislative
provisions and the provisions of this subtitle in protecting the
interests of consumers, and low-income consumers in particular.
(b) PARTICIPATION.—In conducting hearings required by sub-
section (a), the Board of Governors of the Federal Reserve System
shall solicit participation from consumers, representatives of
consumers, lenders, and other interested parties.
TITLE II—SMALL BUSINESS CAPITAL
FORMATION
Subtitle A—Small Business Loan
Securitization
SEC. 201. SHORT TITLE.
This subtitle may be cited as the ‘‘Small Business Loan
Securitization and Secondary Market Enhancement Act of 1994’’.
SEC. 202. SMALL BUSINESS RELATED SECURITY.
Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)) is amended by adding at the end the following new
paragraph:
‘‘(53)(A) The term ‘small business related security’ means
a security that is rated in 1 of the 4 highest rating categories
by at least 1 nationally recognized statistical rating organiza-
tion, and either—
‘‘(i) represents an interest in 1 or more promissory
notes or leases of personal property evidencing the obliga-
tion of a small business concern and originated by an
insured depository institution, insured credit union, insur-
ance company, or similar institution which is supervised
and examined by a Federal or State authority, or a finance
company or leasing company; or
‘‘(ii) is secured by an interest in 1 or more promissory
notes or leases of personal property (with or without
recourse to the issuer or lessee) and provides for payments
of principal in relation to payments, or reasonable projec-
tions of payments, on notes or leases described in clause
(i).
‘‘(B) For purposes of this paragraph—
‘‘(i) an ‘interest in a promissory note or a lease of
personal property’ includes ownership rights, certificates
of interest or participation in such notes or leases, and
rights designed to assure servicing of such notes or leases,
or the receipt or timely receipt of amounts payable under
such notes or leases;
H. R. 3474—40
‘‘(ii) the term ‘small business concern’ means a business
that meets the criteria for a small business concern estab-
lished by the Small Business Administration under section
3(a) of the Small Business Act;
‘‘(iii) the term ‘insured depository institution’ has the
same meaning as in section 3 of the Federal Deposit Insur-
ance Act; and
‘‘(iv) the term ‘insured credit union’ has the same mean-
ing as in section 101 of the Federal Credit Union Act.’’.
SEC. 203. APPLICABILITY OF MARGIN REQUIREMENTS.
Section 7(g) of the Securities Exchange Act of 1934 (15 U.S.C.
78g(g)) is amended by inserting ‘‘or a small business related secu-
rity’’ after ‘‘mortgage related security’’.
SEC. 204. BORROWING IN THE COURSE OF BUSINESS.
Section 8(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78h(a)) is amended in the last sentence by inserting ‘‘or a small
business related security’’ after ‘‘mortgage related security’’.
SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COLLATERAL.
Clause (ii) of section 11(d)(1) of the Securities Exchange Act
of 1934 (15 U.S.C. 78k(d)(1)) is amended by inserting ‘‘or any
small business related security’’ after ‘‘mortgage related security’’.
SEC. 206. INVESTMENT BY DEPOSITORY INSTITUTIONS.
(a) HOME OWNERS’ LOAN ACT AMENDMENT.—Section 5(c)(1)
of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)) is amended
by adding at the end the following new subparagraph:
‘‘(S) SMALL
BUSINESS
RELATED
SECURITIES.—Invest-
ments in small business related securities (as defined in
section 3(a)(53) of the Securities Exchange Act of 1934),
subject to such regulations as the Director may prescribe,
including regulations concerning the minimum size of the
issue (at the time of the initial distribution), the minimum
aggregate sales price, or both.’’.
(b) CREDIT UNIONS.—Section 107(15) of the Federal Credit
Union Act (12 U.S.C. 1757(15)) is amended—
(1) in subparagraph (A), by striking ‘‘or’’ at the end;
(2) in subparagraph (B), by inserting ‘‘or’’ at the end; and
(3) by adding at the end the following new subparagraph:
‘‘(C) are small business related securities (as defined
in section 3(a)(53) of the Securities Exchange Act of 1934),
subject to such regulations as the Board may prescribe,
including regulations prescribing the minimum size of the
issue (at the time of the initial distribution), the minimum
aggregate sales price, or both;’’.
(c) NATIONAL BANKING ASSOCIATIONS.—Section 5136 of the
Revised Statutes (12 U.S.C. 24) is amended in the last sentence
in the first full paragraph of paragraph Seventh, by striking ‘‘or
(B) are mortgage related securities’’ and inserting the following:
‘‘(B) are small business related securities (as defined in section
3(a)(53) of the Securities Exchange Act of 1934); or (C) are mortgage
related securities’’.
H. R. 3474—41
SEC. 207. PREEMPTION OF STATE LAW.
(a) IN GENERAL.—Section 106(a)(1) of the Secondary Mortgage
Market Enhancement Act of 1984 (15 U.S.C. 77r–1(a)(1)) is
amended—
(1) by striking ‘‘or’’ at the end of subparagraph (B);
(2) by redesignating subparagraph (C) as subparagraph
(D); and
(3) by inserting after subparagraph (B) the following new
subparagraph:
‘‘(C) small business related securities (as defined in
section 3(a)(53) of the Securities Exchange Act of 1934),
or’’.
(b) OBLIGATIONS
OF
THE UNITED STATES.—Section 106(a)(2)
of the Secondary Mortgage Market Enhancement Act of 1984 (15
U.S.C. 77r–1(a)(2)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph (B);
(2) by redesignating subparagraph (C) as subparagraph
(D); and
(3) by inserting after subparagraph (B) the following new
subparagraph:
‘‘(C) small business related securities (as defined in
section 3(a)(53) of the Securities Exchange Act of 1934),
or’’.
(c) PREEMPTION OF STATE LAWS.—Section 106(c) of the Second-
ary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r–
1(c)) is amended—
(1) in the first sentence, by striking ‘‘or that’’ and inserting
‘‘, that’’; and
(2) by inserting ‘‘, or that are small business related securi-
ties (as defined in section 3(a)(53) of the Securities Exchange
Act of 1934)’’ before ‘‘shall be exempt’’.
(d) IMPLEMENTATION.—Section 106 of the Secondary Mortgage
Market Enhancement Act of 1984 (15 U.S.C. 77r–1) is amended
by adding at the end the following new subsection:
‘‘(d) IMPLEMENTATION.—
‘‘(1) LIMITATION.—The provisions of subsections (a) and (b)
concerning small business related securities shall not apply
with respect to a particular person, trust, corporation, partner-
ship, association, business trust, or business entity or class
thereof in any State that, prior to the expiration of 7 years
after the date of enactment of this subsection, enacts a statute
that specifically refers to this section and either prohibits or
provides for a more limited authority to purchase, hold, or
invest in such small business related securities by any person,
trust, corporation, partnership, association, business trust, or
business entity or class thereof than is provided in this section.
The enactment by any State of any statute of the type described
in the preceding sentence shall not affect the validity of any
contractual commitment to purchase, hold, or invest that was
made prior to such enactment, and shall not require the sale
or other disposition of any small business related securities
acquired prior to the date of such enactment.
‘‘(2) STATE
REGISTRATION
OR
QUALIFICATION
REQUIRE-
MENTS.—Any State may, not later than 7 years after the date
of enactment of this subsection, enact a statute that specifically
refers to this section and requires registration or qualification
of any small business related securities on terms that differ
H. R. 3474—42
from those applicable to any obligation issued by the United
States.’’.
SEC. 208. INSURED DEPOSITORY INSTITUTION CAPITAL REQUIRE-
MENTS FOR TRANSFERS OF SMALL BUSINESS OBLIGA-
TIONS.
(a) 
ACCOUNTING
PRINCIPLES.—The 
accounting 
principles
applicable to the transfer of a small business loan or a lease
of personal property with recourse contained in reports or state-
ments required to be filed with Federal banking agencies by a
qualified insured depository institution shall be consistent with
generally accepted accounting principles.
(b) CAPITAL
AND RESERVE REQUIREMENTS.—With respect to
the transfer of a small business loan or lease of personal property
with recourse that is a sale under generally accepted accounting
principles, each qualified insured depository institution shall—
(1) establish and maintain a reserve equal to an amount
sufficient to meet the reasonable estimated liability of the
institution under the recourse arrangement; and
(2) include, for purposes of applicable capital standards
and other capital measures, only the amount of the retained
recourse in the risk-weighted assets of the institution.
(c) QUALIFIED INSTITUTIONS CRITERIA.—An insured depository
institution is a qualified insured depository institution for purposes
of this section if, without regard to the accounting principles or
capital requirements referred to in subsections (a) and (b), the
institution is—
(1) well capitalized; or
(2) with the approval, by regulation or order, of the appro-
priate Federal banking agency, adequately capitalized.
(d) AGGREGATE AMOUNT OF RECOURSE.—The total outstanding
amount of recourse retained by a qualified insured depository
institution with respect to transfers of small business loans and
leases of personal property under subsections (a) and (b) shall
not exceed—
(1) 15 percent of the risk-based capital of the institution;
or
(2) such greater amount, as established by the appropriate
Federal banking agency by regulation or order.
(e) INSTITUTIONS THAT CEASE TO BE QUALIFIED OR EXCEED
AGGREGATE LIMITS.—If an insured depository institution ceases
to be a qualified insured depository institution or exceeds the limits
under subsection (d), this section shall remain applicable to any
transfers of small business loans or leases of personal property
that occurred during the time that the institution was qualified
and did not exceed such limit.
(f) PROMPT CORRECTIVE ACTION NOT AFFECTED.—The capital
of an insured depository institution shall be computed without
regard to this section in determining whether the institution is
adequately 
capitalized, 
undercapitalized, 
significantly
undercapitalized, or critically undercapitalized under section 38
of the Federal Deposit Insurance Act.
(g) REGULATIONS REQUIRED.—Not later than 180 days after
the date of enactment of this Act each appropriate Federal banking
agency shall promulgate final regulations implementing this section.
(h) ALTERNATIVE SYSTEM PERMITTED.—
H. R. 3474—43
(1) IN GENERAL.—At the discretion of the appropriate Fed-
eral banking agency, this section shall not apply if the regula-
tions of the agency provide that the aggregate amount of capital
and reserves required with respect to the transfer of small
business loans and leases of personal property with recourse
does not exceed the aggregate amount of capital and reserves
that would be required under subsection (b).
(2) EXISTING TRANSACTIONS NOT AFFECTED.—Notwithstand-
ing paragraph (1), this section shall remain in effect with
respect to transfers of small business loans and leases of per-
sonal property with recourse by qualified insured depository
institutions occurring before the effective date of regulations
referred to in paragraph (1).
(i) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘adequately capitalized’’ has the same meaning
as in section 38(b) of the Federal Deposit Insurance Act;
(2) the term ‘‘appropriate Federal banking agency’’ has
the same meaning as in section 3 of the Federal Deposit Insur-
ance Act;
(3) the term ‘‘capital standards’’ has the same meaning
as in section 38(c) of the Federal Deposit Insurance Act;
(4) the term ‘‘Federal banking agencies’’ has the same
meaning as in section 3 of the Federal Deposit Insurance Act;
(5) the term ‘‘insured depository institution’’ has the same
meaning as in section 3 of the Federal Deposit Insurance Act;
(6) the term ‘‘other capital measures’’ has the meaning
as in section 38(c) of the Federal Deposit Insurance Act;
(7) the term ‘‘recourse’’ has the meaning given to such
term under generally accepted accounting principles;
(8) the term ‘‘small business’’ means a business that meets
the criteria for a small business concern established by the
Small Business Administration under section 3(a) of the Small
Business Act; and
(9) the term ‘‘well capitalized’’ has the same meaning as
in section 38(b) of the Federal Deposit Insurance Act.
SEC. 209. JOINT STUDY ON THE IMPACT OF ADDITIONAL SECURITIES
BASED ON POOLED OBLIGATIONS.
(a) JOINT STUDY REQUIRED.—The Board and the Commission
shall conduct a joint study of the impact of the provisions of this
subtitle (including the amendments made by this subtitle) on the
credit and securities markets. Such study shall evaluate—
(1) the impact of the provisions of this subtitle on the
availability of credit for business and commercial enterprises
in general, and the availability of credit in particular for—
(A) businesses in low- and moderate-income areas;
(B) businesses owned by women and minorities;
(C) community development efforts;
(D) community development financial institutions;
(E) businesses in different geographical regions; and
(F) a diversity of types of businesses;
(2) the structure and operation of the markets that develop
for small business related securities and commercial mortgage
related securities, including the types of entities (such as pen-
sion funds and insurance companies) that are significant pur-
chasers of such securities, the extent to which such entities
are sophisticated investors, the use of credit enhancements
H. R. 3474—44
in obtaining investment-grade ratings, any conflicts of interest
that arise in such markets, and any adverse effects of such
markets on commercial real estate ventures, pension funds,
or pension fund beneficiaries;
(3) the extent to which the provisions of this subtitle with
regard to margin requirements, the number of eligible invest-
ment rating categories, preemption of State law, and the treat-
ment of such securities as government securities for the purpose
of State investment limitations, affect the structure and oper-
ation of such markets; and
(4) in view of the findings made pursuant to paragraphs
(2) and (3), any additional suitability or disclosure requirements
or other investor protections that should be required.
(b) REPORTS.—
(1) IN
GENERAL.—The Board and the Commission shall
submit to the Congress a report on the results of the study
required by subsection (a) before the end of—
(A) the 2-year period beginning on the date of enact-
ment of this Act;
(B) the 4-year period beginning on such date of enact-
ment; and
(C) the 6-year period beginning on such date of
enactment.
(2) CONTENTS
OF
REPORT.—Each report required under
paragraph (1) shall contain or be accompanied by such rec-
ommendations for administrative or legislative action as the
Board and the Commission consider appropriate and may
include recommendations regarding the need to develop a sys-
tem for reporting additional information concerning invest-
ments by the entities described in subsection (a)(2).
(c) DEFINITIONS.—As used in this section—
(1) the term ‘‘Board’’ means the Board of Governors of
the Federal Reserve System; and
(2) the term ‘‘Commission’’ means the Securities and
Exchange Commission.
SEC. 210. CONSISTENT USE OF FINANCIAL TERMINOLOGY.
Not later than 2 years after the date of enactment of this
Act, the Financial Institutions Examination Council shall report
to the Congress on its recommendations for the use of consistent
financial terminology by depository institutions for small business
loans or leases of personal property which are sold for the creation
of small business related securities (as defined in section 3(a)(53)(A)
of the Securities Exchange Act of 1934).
Subtitle B—Small Business Capital
Enhancement
SEC. 251. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) small business concerns are a vital part of the economy,
accounting for the majority of new jobs, new products, and
new services created in the United States;
(2) adequate access to debt capital is a critical component
for small business development, productivity, expansion, and
success in the United States;
H. R. 3474—45
(3) commercial banks are the most important suppliers
of debt capital to small business concerns in the United States;
(4) commercial banks and other depository institutions have
various incentives to minimize their risk in financing small
business concerns;
(5) as a result of such incentives, many small business
concerns with economically sound financing needs are unable
to obtain access to needed debt capital;
(6) the small business capital access programs implemented
by certain States are a flexible and efficient tool to assist
financial institutions in providing access to needed debt capital
for many small business concerns in a manner consistent with
safety and soundness regulations;
(7) a small business capital access program would com-
plement other programs which assist small business concerns
in obtaining access to capital; and
(8) Federal policy can stimulate and accelerate efforts by
States to implement small business capital access programs
by providing an incentive to States, while leaving the
administration of such programs to each participating State.
(b) PURPOSES.—By encouraging States to implement adminis-
tratively efficient capital access programs that encourage commer-
cial banks and other depository institutions to provide access to
debt capital for a broad portfolio of small business concerns, and
thereby promote a more efficient and effective debt market, the
purposes of this subtitle are—
(1) to promote economic opportunity and growth;
(2) to create jobs;
(3) to promote economic efficiency;
(4) to enhance productivity; and
(5) to spur innovation.
SEC. 252. DEFINITIONS.
For purposes of this subtitle—
(1) the term ‘‘Fund’’ means the Community Development
Financial Institutions Fund established under section 104;
(2) the term ‘‘appropriate Federal banking agency’’—
(A) has the same meaning as in section 3 of the Federal
Deposit Insurance Act; and
(B) includes the National Credit Union Administration
Board in the case of any credit union the deposits of which
are insured in accordance with the Federal Credit Union
Act;
(3) the term ‘‘early loan’’ means a loan enrolled at a time
when the aggregate covered amount of loans previously enrolled
under the Program by a particular participating financial
institution is less than $5,000,000;
(4) the term ‘‘enrolled loan’’ means a loan made by a
participating financial institution that is enrolled by a partici-
pating State in accordance with this subtitle;
(5) the term ‘‘financial institution’’ means any federally
chartered or State-chartered commercial bank, savings associa-
tion, savings bank, or credit union;
(6) the term ‘‘participating financial institution’’ means any
financial institution that has entered into a participation agree-
ment with a participating State in accordance with section
254;
H. R. 3474—46
(7) the term ‘‘participating State’’ means any State that
has been approved for participation in the Program in accord-
ance with section 253;
(8) the term ‘‘passive real estate ownership’’ means owner-
ship of real estate for the purpose of deriving income from
speculation, trade, or rental, except that such term shall not
include—
(A) the ownership of that portion of real estate being
used or intended to be used for the operation of the business
of the owner of the real estate (other than the business
of passive ownership of real estate); or
(B) the ownership of real estate for the purpose of
construction or renovation, until the completion of the
construction or renovation phase;
(9) the term ‘‘Program’’ means the Small Business Capital
Enhancement Program established under this subtitle;
(10) the term ‘‘reserve fund’’ means a fund, established
by a participating State, earmarked for a particular participat-
ing financial institution, for the purposes of—
(A) depositing all required premium charges paid by
the participating financial institution and by each borrower
receiving a loan under the Program from a participating
financial institution;
(B) depositing contributions made by the participating
State; and
(C) covering losses on enrolled loans by disbursing
accumulated funds; and
(11) the term ‘‘State’’ means—
(A) a State of the United States;
(B) the District of Columbia;
(C) any political subdivision of a State of the United
States, which subdivision has a population in excess of
the population of the least populated State of the United
States; and
(D) any other political subdivision of a State of the
United States that the Fund determines has the capacity
to participate in the program.
SEC. 253. APPROVING STATES FOR PARTICIPATION.
(a) APPLICATION.—Any State may apply to the Fund for
approval to be a participating State under the Program and to
be eligible for reimbursement by the Fund pursuant to section
257.
(b) APPROVAL CRITERIA.—The Fund shall approve a State to
be a participating State, if—
(1) a specific department or agency of the State has been
designated to implement the Program;
(2) all legal actions necessary to enable such designated
department or agency to implement the Program have been
accomplished;
(3) funds in the amount of at least $1 for every 2 people
residing in the State (as of the last decennial census for which
data have been released) are available and have been legally
committed to contributions by the State to reserve funds, with
such funds being available without time limit and without
requiring additional legal action, except that such requirements
shall not be construed to limit the authority of the State to
H. R. 3474—47
take action at a later time that results in the termination
of its obligation to enroll loans and make contributions to
reserve funds;
(4) the State has prescribed a form of participation agree-
ment to be entered into between it and each participating
financial institution that is consistent with the requirements
and purposes of this subtitle; and
(5) the State and the Fund have executed a reimbursement
agreement that conforms to the requirements of this subtitle.
(c) EXISTING STATE PROGRAMS.—
(1) IN GENERAL.—A State that is not a participating State,
but that has its own capital access program providing portfolio
insurance for business loans (based on a separate loss reserve
fund for each financial institution), may apply at any time
to the Fund to be approved to be a participating State. The
Fund shall approve such State to be a participating State,
and to be eligible for reimbursements by the Fund pursuant
to section 257, if the State—
(A) satisfies the requirements of subsections (a) and
(b); and
(B) certifies that each affected financial institution has
satisfied the requirements of section 254.
(2) APPLICABLE TERMS OF PARTICIPATION.—
(A) STATUS OF INSTITUTIONS.—If a State is approved
for participation under paragraph (1), each financial
institution with a participation agreement in effect with
the participating State shall immediately be considered
a participating financial institution. Reimbursements may
be made under section 237 in connection with all contribu-
tions made to the reserve fund by the State in connection
with lending that occurs on or after the date on which
the Fund approves the State for participation.
(B) EFFECTIVE DATE OF PARTICIPATION.—If an amended
participation agreement that conforms with section 255
is required in order to secure participation approval by
the Fund, contributions subject to reimbursement under
section 257 shall include only those contributions made
to a reserve fund with respect to loans enrolled on or
after the date that an amended participation agreement
between the participating State and the participating finan-
cial institution becomes effective.
(C) USE OF ACCUMULATED RESERVE FUNDS.—A State
that is approved for participation in accordance with this
subsection may continue to implement the program utiliz-
ing the reserve funds accumulated under the State
program.
(d) PRIOR APPROPRIATIONS REQUIREMENT.—The Fund shall not
approve a State for participation in the Program until at least
$50,000,000 has been appropriated to the Fund (subject to an appro-
priations Act), without fiscal year limitation, for the purpose of
making reimbursements pursuant to section 257 and otherwise
carrying out this subtitle.
(e) AMENDMENTS TO AGREEMENTS.—If a State that has been
approved to be a participating State wishes to amend its form
of participation agreement and continue to be a participating State,
such State shall submit such amendment for review by the Fund
H. R. 3474—48
in accordance with subsection (b)(4). Any such amendment shall
become effective only after it has been approved by the Fund.
SEC. 254. PARTICIPATION AGREEMENTS.
(a) IN GENERAL.—A participating State may enter into a partici-
pation agreement with any financial institution determined by the
participating State, after consultation with the appropriate Federal
banking agency, to have sufficient commercial lending experience
and financial and managerial capacity to participate in the Program.
The determination by the State shall not be reviewable by the
Fund.
(b) PARTICIPATING FINANCIAL INSTITUTIONS.—Upon entering
into the participation agreement with the participating State, the
financial institution shall become a participating financial institu-
tion eligible to enroll loans under the Program.
SEC. 255. TERMS OF PARTICIPATION AGREEMENTS.
(a) IN GENERAL.—The participation agreement to be entered
into by a participating State and a participating financial institution
shall include all provisions required by this section, and shall not
include any provisions inconsistent with the provisions of this
section.
(b) ESTABLISHMENT OF SEPARATE RESERVE FUNDS.—A separate
reserve fund shall be established by the participating State for
each participating financial institution. All funds credited to a
reserve fund shall be the exclusive property of the participating
State. Each reserve fund shall be an administrative account for
the purposes of—
(1) receiving all required premium charges to be paid by
the borrower and participating financial institution and con-
tributions by the participating State; and
(2) disbursing funds, either to cover losses sustained by
the participating financial institution in connection with loans
made under the Program, or as contemplated by subsections
(d) and (r).
(c) INVESTMENT AUTHORITY.—Subject to applicable State law,
the participating State may invest, or cause to be invested, funds
held in a reserve fund by establishing a deposit account at the
participating financial institution in the name of the participating
State. In the event that funds in the reserve fund are not deposited
in such an account, such funds shall be invested in a form that
the participating State determines is safe and liquid.
(d) EARNED INCOME AND INTEREST.—Interest or income earned
on the funds credited to a reserve fund shall be deemed to be
part of the reserve fund, except that a participating State may,
as further specified in the participation agreement, provide author-
ity for the participating State to withdraw some or all of such
interest or income earned.
(e) LOAN TERMS AND CONDITIONS.—
(1) IN GENERAL.—A loan to be filed for enrollment under
the Program may be made with such interest rate, fees, and
other terms and conditions as agreed upon by the participating
financial institution and the borrower, consistent with
applicable law.
(2) LINES OF CREDIT.—If a loan to be filed for enrollment
is in the form of a line of credit, the amount of the loan
shall be considered to be the maximum amount that can be
drawn by the borrower against the line of credit.
H. R. 3474—49
(f) ENROLLMENT PROCESS.—
(1) FILING.—
(A) IN GENERAL.—A participating financial institution
shall file each loan made under the Program for enrollment
by completing and submitting to the participating State
a form prescribed by the participating State.
(B) FORM.—The form referred to in subparagraph (A)
shall include a representation by the participating financial
institution that it has complied with the participation
agreement in enrolling the loan with the State.
(C) PREMIUM CHARGES.—Accompanying the completed
form shall be the nonrefundable premium charges paid
by the borrower and the participating financial institution,
or evidence that such premium charges have been deposited
into the deposit account containing the reserve fund, if
applicable.
(D) SUBMISSION.—The participation agreement shall
require that the items required by this subsection shall
be submitted to the participating State by the participating
financial institutions not later than 10 calendar days after
a loan is made.
(2) ENROLLMENT BY STATE.—Upon receipt by the participat-
ing State of the filing submitted in accordance with paragraph
(1), the participating State shall promptly enroll the loan and
make a matching contribution to the reserve fund in accordance
with subsection (j), unless the information submitted indicates
that the participating financial institution has not complied
with the participation agreement in enrolling the loan.
(g) COVERAGE AMOUNT.—In filing a loan for enrollment under
the Program, the participating financial institution may specify
an amount to be covered under the Program that is less than
the full amount of the loan.
(h) PREMIUM CHARGES.—
(1) MINIMUM
AND
MAXIMUM
AMOUNTS.—The premium
charges payable to the reserve fund by the borrower and the
participating financial institution shall be prescribed by the
participating financial institution, within minimum and maxi-
mum limits set forth in the participation agreement. The
participation agreement shall establish minimum and maxi-
mum limits whereby the sum of the premium charges paid
in connection with a loan by the borrower and the participating
financial institution is not less than 3 percent nor more than
7 percent of the amount of the loan covered under the Program.
(2) ALLOCATION OF PREMIUM CHARGES.—The participation
agreement shall specify terms for allocating premium charges
between the borrower and the participating financial institu-
tion. However, if the participating financial institution is
required to pay any of the premium charges, the participation
agreement shall authorize the participating financial institution
to recover from the borrower the cost of the payment of the
participating financial institution, in any manner on which
the participating financial institution and the borrower agree.
(i) RESTRICTIONS.—
(1) ACTIONS PROHIBITED.—Except as provided in subsection
(h) and paragraph (2) of this subsection, the participating State
may not—
H. R. 3474—50
(A) impose any restrictions or requirements, relating
to the interest rate, fees, collateral, or other business terms
and conditions of the loan; or
(B) condition enrollment of a loan in the Program
on the review by the State of the risk or creditworthiness
of a loan.
(2) EFFECT ON OTHER LAW.—Nothing in this subtitle shall
affect the applicability of any other law to the conduct by
a participating financial institution of its business.
(j) STATE CONTRIBUTIONS.—In enrolling a loan under the Pro-
gram, the participating State shall contribute to the reserve fund
an amount, as provided for in the participation agreement, which
shall not be less than the sum of the amount of premium charges
paid by the borrower and the participating financial institution.
(k) ELEMENTS OF CLAIMS.—
(1) FILING.—If a participating financial institution charges
off all or part of an enrolled loan, such participating financial
institution may file a claim for reimbursement with the partici-
pating State by submitting a form that—
(A) includes the representation by the participating
financial institution that it is filing the claim in accordance
with the terms of the applicable participation agreement;
and
(B) contains such other information as may be required
by the participating State.
(2) TIMING.—Any claim filed under paragraph (1) shall
be filed contemporaneously with the action of the participating
financial institution to charge off all or part of an enrolled
loan. The participating financial institution shall determine
when and how much to charge off on an enrolled loan, in
a manner consistent with its usual method for making such
determinations on business loans that are not enrolled loans
under this subtitle.
(l) ELEMENTS
OF CLAIMS.—A claim filed by a participating
financial institution may include the amount of principal charged
off, not to exceed the covered amount of the loan. Such claim
may also include accrued interest and out-of-pocket expenses, if
and to the extent provided for under the participation agreement.
(m) PAYMENT OF CLAIMS.—
(1) IN GENERAL.—Except as provided in subsection (n) and
paragraph (2) of this subsection, upon receipt of a claim filed
in accordance with this section and the participation agreement,
the participating State shall promptly pay to the participating
financial institution, from funds in the reserve fund, the full
amount of the claim as submitted.
(2) INSUFFICIENT RESERVE FUNDS.—If there are insufficient
funds in the reserve fund to cover the entire amount of a
claim of a participating financial institution, the participating
State shall pay to the participating financial institution an
amount equal to the current balance in the reserve fund. If
the enrolled loan for which the claim has been filed—
(A) is not an early loan, such payment shall be deemed
fully to satisfy the claim, and the participating financial
institution shall have no other or further right to receive
any amount from the reserve fund with respect to such
claim; or
H. R. 3474—51
(B) is an early loan, such payment shall not be deemed
fully to satisfy the claim of the participating financial
institution, and at such time as the remaining balance
of the claim does not exceed 75 percent of the balance
in the reserve fund, the participating State shall, upon
the request of the participating financial institution, pay
any remaining amount of the claim.
(n) DENIAL
OF CLAIMS.—A participating State may deny a
claim if a representation or warranty made by the participating
financial institution to the participating State at the time that
the loan was filed for enrollment or at the time that the claim
was submitted was known by the participating financial institution
to be false.
(o) SUBSEQUENT RECOVERY OF CLAIM AMOUNT.—If, subsequent
to payment of a claim by the participating State, a participating
financial institution recovers from a borrower any amount for which
payment of the claim was made, the participating financial institu-
tion shall promptly pay to the participating State for deposit into
the reserve fund the amount recovered, less any expenses incurred
by the institution in collection of such amount.
(p) PARTICIPATION AGREEMENT TERMS.—
(1) IN GENERAL.—In connection with the filing of a loan
for enrollment in the Program, the participation agreement—
(A) shall require the participating financial institution
to obtain an assurance from each borrower that—
(i) the proceeds of the loan will be used for a
business purpose;
(ii) the loan will not be used to finance passive
real estate ownership; and
(iii) the borrower is not—
(I) an executive officer, director, or principal
shareholder of the participating financial institu-
tion;
(II) a member of the immediate family of an
executive officer, director, or principal shareholder
of the participating financial institution; or
(III) a related interest of any such executive
officer, director, principal shareholder, or member
of the immediate family;
(B) shall require the participating financial institution
to provide assurances to the participating State that the
loan has not been made in order to place under the protec-
tion of the Program prior debt that is not covered under
the Program and that is or was owed by the borrower
to the participating financial institution or to an affiliate
of the participating financial institution;
(C) may provide that if—
(i) a participating financial institution makes a
loan to a borrower that is a refinancing of a loan
previously made to the borrower by the participating
financial institution or an affiliate of the participating
financial institution;
(ii) such prior loan was not enrolled in the Pro-
gram; and
(iii) additional or new financing is extended by
the participating financial institution as part of the
refinancing,
H. R. 3474—52
the participating financial institution may file the loan
for enrollment, with the amount to be covered under the
Program not to exceed the amount of any additional or
new financing; and
(D) may include additional restrictions on the eligibility
of loans or borrowers that are not inconsistent with the
provisions and purposes of this subtitle.
(2) DEFINITIONS.—For purposes of this subsection, the
terms ‘‘executive officer’’, ‘‘director’’, ‘‘principal shareholder’’,
‘‘immediate family’’, and ‘‘related interest’’ refer to the same
relationship to a participating financial institution as the rela-
tionship described in part 215 of title 12 of the Code of Federal
Regulations, or any successor to such part.
(q) TERMINATION CLAUSE.—In each participation agreement,
the participating State shall reserve for itself the ability to termi-
nate its obligation to enroll loans under the Program. Any such
termination shall be prospective only, and shall not apply to
amounts of loans enrolled under the Program prior to such
termination.
(r) ALLOWABLE WITHDRAWALS FROM FUND.—The participation
agreement may provide that, if, for any consecutive period of not
less than 24 months, the aggregate outstanding balance of all
enrolled loans for a participating financial institution is continually
less than the outstanding balance in the reserve fund for that
participating financial institution, the participating State, in its
discretion, may withdraw an amount from the reserve fund to
bring the balance in the reserve fund down to the outstanding
balance of all such enrolled loans.
(s) GRANDFATHERED PROVISION.—
(1) SPECIAL TREATMENT OF PREMIUM CHARGES.—Notwith-
standing subsection (b) or (d), the participation agreement,
if explicitly authorized by a statute enacted by the State before
the date of enactment of this Act, may allow a participating
financial institution to treat the premium charges paid by the
participating financial institution and the borrower into the
reserve fund, and interest or income earned on funds in the
reserve fund that are deemed to be attributable to such pre-
mium charges, as assets of the participating financial institu-
tion for accounting purposes, subject to withdrawal by the
participating financial institution only—
(A) for the payment of claims approved by the partici-
pating State in accordance with this section; and
(B) upon the participating financial institution’s with-
drawal from authority to make new loans under the
Program.
(2) PAYMENT
OF
POST-WITHDRAWAL
CLAIMS.—After any
withdrawal of assets from the reserve fund pursuant to para-
graph (1)(B), any future claims filed by the participating finan-
cial institution on loans remaining in its capital access program
portfolio shall only be paid from funds remaining in the reserve
fund to the extent that, in the aggregate, such claims exceed
the sum of the amount of such withdrawn assets, and interest
on that amount, imputed at the same rate as income would
have accrued had the amount not been withdrawn.
(3) CONDITIONS
FOR
TERMINATING
SPECIAL
AUTHORITY.—
If the Fund determines that the inclusion in a participation
agreement of the provisions authorized by this subsection is
H. R. 3474—53
resulting in the enrollment of loans under the Program that
are likely to have been made without assistance provided under
this subtitle, the Fund may notify the participating State that
henceforth, the Fund will only make reimbursements to the
State under section 257 with respect to a loan if the participa-
tion agreement between the participating State and each
participating financial institution has been amended to conform
with this section, without exercise of the special authority
granted by this subsection.
SEC. 256. REPORTS.
(a) RESERVE FUNDS REPORT.—On or before the last day of
each calendar quarter, a participating State shall submit to the
Fund a report of contributions to reserve funds made by the partici-
pating State during the previous calendar quarter. If the participat-
ing State has made contributions to one or more reserve funds
during the previous quarter, the report shall—
(1) indicate the total amount of such contributions;
(2) indicate the amount of contributions which is subject
to reimbursement, which shall be equal to the total amount
of contributions, unless one of the limitations contained in
section 257 is applicable;
(3) if one of the limitations in section 257 is applicable,
provide documentation of the applicability of such limitation
for each loan for which the limitation applies; and
(4) include a certification by the participating State that—
(A) the information provided in accordance with para-
graphs (1), (2), and (3) is accurate;
(B) funds in an amount meeting the minimum require-
ments of section 253(b)(3) continue to be available and
legally committed to contributions by the State to reserve
funds, less any amount that has been contributed by the
State to reserve funds subsequent to the State being
approved for participation in the Program;
(C) there has been no unapproved amendment to any
participation agreement or the form of participation agree-
ments; and
(D) the participating State is otherwise implementing
the Program in accordance with this subtitle and regula-
tions issued pursuant to section 259.
(b) ANNUAL DATA.—Not later than March 31 of each year,
each participating State shall submit to the Fund annual data
indicating the number of borrowers financed under the Program,
the total amount of covered loans, and breakdowns by industry
type, loan size, annual sales, and number of employees of the
borrowers financed.
(c) FORM.—The reports and data filed pursuant to subsections
(a) and (b) shall be in such form as the Fund may require.
SEC. 257. REIMBURSEMENT BY THE FUND.
(a) REIMBURSEMENTS.—Not later than 30 calendar days after
receiving a report filed in compliance with section 256, the Fund
shall reimburse the participating State in an amount equal to
50 percent of the amount of contributions by the participating
State to the reserve funds that are subject to reimbursement by
the Fund pursuant to section 256 and this section. The Fund
shall reimburse participating States, as it receives reports pursuant
to section 256(a), until available funds are expended.
H. R. 3474—54
(b) SIZE OF ASSISTED BORROWER.—The Fund shall not provide
any reimbursement to a participating State with respect to an
enrolled loan made to a borrower that has 500 or more employees
at the time that the loan is enrolled in the Program.
(c) THREE-YEAR MAXIMUM.—The amount of reimbursement to
be provided by the Fund to a participating State over any 3-
year period in connection with loans made to any single borrower
or any group of borrowers among which a common enterprise exists
shall not exceed $75,000. For purposes of this subsection, ‘‘common
enterprise’’ shall have the same meaning as in part 32 of title
12 of the Code of Federal Regulations, or any successor to that
part.
(d) LOANS TOTALING LESS THAN $2,000,000.—In connection
with a loan in which the covered amount of the loan plus the
covered amount of all previous loans enrolled by a participating
financial institution does not exceed $2,000,000, the amount of
reimbursement by the Fund to the participating State shall not
exceed the lesser of—
(1) 75 percent of the sum of the premium charges paid
to the reserve fund by the borrower and the participating
financial institution; or
(2) 5.25 percent of the covered amount of the loan.
(e) LOANS TOTALING MORE THAN $2,000,000.—In connection
with a loan in which the sum of the covered amounts of all previous
loans enrolled by the participating financial institution in the Pro-
gram equals or exceeds $2,000,000, the amount of reimbursement
to be provided by the Fund to the participating State shall not
exceed the lesser of—
(1) 50 percent of the sum of the premium charges paid
by the borrower and the participating financial institution;
or
(2) 3.5 percent of the covered amount of the loan.
(f) OTHER AMOUNTS.—In connection with the enrollment of
a loan that will cause the aggregate covered amount of all enrolled
loans to exceed $2,000,000, the amount of reimbursement by the
Fund to the participating State shall be determined—
(1) by applying subsection (d) to the portion of the loan,
which when added to the aggregate covered amount of all
previously enrolled loans equals $2,000,000; and
(2) by applying subsection (e) to the balance of the loan.
SEC. 258. REIMBURSEMENT TO THE FUND.
(a) IN GENERAL.—If a participating State withdraws funds from
a reserve fund pursuant to terms of the participation agreement
permitted by subsection (d) or (r) of section 255, such participating
State shall, not later than 15 calendar days after such withdrawal,
submit to the Fund an amount computed by multiplying the amount
withdrawn by the appropriate factor, as determined under sub-
section (b).
(b) FACTOR.—The appropriate factor shall be obtained by divid-
ing the total amount of contributions that have been made by
the participating State to all reserve funds which were subject
to reimbursement—
(1) by 2; and
(2) by the total amount of contributions made by the partici-
pating State to all reserve funds, including if applicable, con-
tributions that have been made by the State prior to becoming
H. R. 3474—55
a participating State if the State continued its own capital
access program in accordance with section 253(b).
(c) USE
OF
REIMBURSEMENTS.—The Fund may use funds
reimbursed pursuant to this section to make reimbursements under
section 257.
SEC. 259. REGULATIONS.
The Fund shall promulgate appropriate regulations to imple-
ment this subtitle.
SEC. 260. AUTHORIZATION OF APPROPRIATIONS.
(a) AMOUNT.—There are authorized to be appropriated to the
Fund $50,000,000 to carry out this subtitle.
(b) BUDGETARY TREATMENT.—The amount authorized to be
appropriated under subsection (a) shall be subject to discretionary
spending caps, as provided in section 601 of the Congressional
Budget Act of 1974, and therefore shall reduce by an equal amount
funds made available for other discretionary spending programs.
SEC. 261. EFFECTIVE DATE.
This subtitle shall become effective on January 6, 1996.
TITLE III—PAPERWORK REDUCTION
AND REGULATORY IMPROVEMENT
SEC. 301. INCORPORATED DEFINITIONS.
Unless otherwise specifically provided in this title, for purposes
of this title—
(1) the terms ‘‘appropriate Federal banking agency’’, ‘‘Fed-
eral banking agencies’’, ‘‘insured depository institution’’, and
‘‘State bank supervisor’’ have the same meanings as in section
3 of the Federal Deposit Insurance Act; and
(2) the term ‘‘insured credit union’’ has the same meaning
as in section 101 of the Federal Credit Union Act.
SEC. 302. ADMINISTRATIVE CONSIDERATION OF BURDEN WITH NEW
REGULATIONS.
(a) AGENCY CONSIDERATIONS.—In determining the effective date
and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements
on insured depository institutions, each Federal banking agency
shall consider, consistent with the principles of safety and sound-
ness and the public interest—
(1) any administrative burdens that such regulations would
place on depository institutions, including small depository
institutions and customers of depository institutions; and
(2) the benefits of such regulations.
(b) ADEQUATE TRANSITION PERIOD FOR NEW REGULATIONS.—
(1) IN
GENERAL.—New regulations and amendments to
regulations prescribed by a Federal banking agency which
impose additional reporting, disclosures, or other new require-
ments on insured depository institutions shall take effect on
the first day of a calendar quarter which begins on or after
the date on which the regulations are published in final form,
unless—
H. R. 3474—56
(A) the agency determines, for good cause published
with the regulation, that the regulation should become
effective before such time;
(B) the regulation is issued by the Board of Governors
of the Federal Reserve System in connection with the
implementation of monetary policy; or
(C) the regulation is required to take effect on a date
other than the date determined under this paragraph
pursuant to any other Act of Congress.
(2) EARLY COMPLIANCE.—Any person who is subject to a
regulation described in paragraph (1) may comply with the
regulation before the effective date of the regulation.
SEC. 303. STREAMLINING OF REGULATORY REQUIREMENTS.
(a) REVIEW OF REGULATIONS; REGULATORY UNIFORMITY.—Dur-
ing the 2-year period beginning on the date of enactment of this
Act, each Federal banking agency shall, consistent with the prin-
ciples of safety and soundness, statutory law and policy, and the
public interest—
(1) conduct a review of the regulations and written policies
of that agency to—
(A) streamline and modify those regulations and poli-
cies in order to improve efficiency, reduce unnecessary
costs, and eliminate unwarranted constraints on credit
availability;
(B) remove inconsistencies and outmoded and duplica-
tive requirements; and
(C) with respect to regulations prescribed pursuant
to section 18(o) of the Federal Deposit Insurance Act, con-
sider the impact that such standards have on the availabil-
ity of credit for small business, residential, and agricultural
purposes, and on low- and moderate-income communities;
(2) work jointly with the other Federal banking agencies
to make uniform all regulations and guidelines implementing
common statutory or supervisory policies; and
(3) submit a joint report to the Congress at the end of
such 2-year period detailing the progress of the agencies in
carrying out this subsection.
(b) REVIEW OF DISCLOSURES.—The Board of Governors of the
Federal Reserve System, in consultation with the consumer advisory
council to such Board, consumers, representatives of consumers,
lenders, and other interested persons, shall—
(1) review the regulations and written policies of the Board
with respect to disclosures pursuant to the Truth in Lending
Act with regard to variable-rate mortgages in order to simplify
the disclosures, if necessary, and make the disclosures more
meaningful and comprehensible to consumers;
(2) implement any necessary regulatory changes, consistent
with applicable law; and
(3) not later than 2 years after completion of the review
required by paragraph (1), submit a report to the Congress
on the results of its actions taken in accordance with this
subsection and any recommended legislative actions.
SEC. 304. ELIMINATION OF DUPLICATIVE FILINGS.
The Federal banking agencies shall work jointly—
H. R. 3474—57
(1) to eliminate, to the extent practicable, duplicative or
otherwise unnecessary requests for information in connection
with applications or notices to the agencies; and
(2) to harmonize, to the extent practicable, any inconsistent
publication and public notice requirements.
SEC. 305. COORDINATED AND UNIFIED EXAMINATIONS.
(a) IN GENERAL.—Section 10(d) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1820(d)) is amended by adding at the end
the following new paragraphs:
‘‘(6) COORDINATED EXAMINATIONS.—To minimize the disrup-
tive effects of examinations on the operations of insured deposi-
tory institutions—
‘‘(A) each appropriate Federal banking agency shall,
to the extent practicable and consistent with principles
of safety and soundness and the public interest—
‘‘(i) coordinate examinations to be conducted by
that agency at an insured depository institution and
its affiliates;
‘‘(ii) coordinate with the other appropriate Federal
banking agencies in the conduct of such examinations;
‘‘(iii) work to coordinate with the appropriate State
bank supervisor—
‘‘(I) the conduct of all examinations made
pursuant to this subsection; and
‘‘(II) the number, types, and frequency of
reports required to be submitted to such agencies
and supervisors by insured depository institutions,
and the type and amount of information required
to be included in such reports; and
‘‘(iv) use copies of reports of examinations of
insured depository institutions made by any other Fed-
eral banking agency or appropriate State bank super-
visor to eliminate duplicative requests for information;
and
‘‘(B) not later than 2 years after the date of enactment
of the Riegle Community Development and Regulatory
Improvement Act of 1994, the Federal banking agencies
shall jointly establish and implement a system for deter-
mining which one of the Federal banking agencies shall
be the lead agency responsible for managing a unified
examination of each insured depository institution and its
affiliates, as required by this subsection.
‘‘(7) SEPARATE
EXAMINATIONS
PERMITTED.—Notwithstand-
ing paragraph (6), each appropriate Federal banking agency
may conduct a separate examination in an emergency or under
other exigent circumstances, or when the agency believes that
a violation of law may have occurred.
‘‘(8) REPORT.—At the time the system provided for in para-
graph (6) is established, the Federal banking agencies shall
submit a joint report describing the system to the Committee
on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Banking, Finance and Urban Affairs of the
House of Representatives. Thereafter, the Federal banking
agencies shall annually submit a joint report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Banking, Finance and Urban Affairs of the
H. R. 3474—58
House of Representatives regarding the progress of the agencies
in implementing the system and indicating areas in which
enhancements to the system, including legislature improve-
ments, would be appropriate.’’.
(b) STATE ACCESS TO FEDERAL AGENCY REPORTS.—The first
sentence of section 7(a)(2)(A) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(a)(2)(A)) is amended by inserting ‘‘and, with respect
to any State depository institution, any appropriate State bank
supervisor for such institution,’’ after ‘‘The Corporation’’.
SEC. 306. EIGHTEEN-MONTH 
EXAMINATION 
RULE 
FOR 
CERTAIN
SMALL INSTITUTIONS.
(a) IN GENERAL.—Section 10(d)(4) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1820(d)(4)) is amended—
(1) in subparagraph (A), by striking ‘‘$100,000,000’’ and
inserting ‘‘$250,000,000’’;
(2) in subparagraph (C), by striking ‘‘and its composite
condition was found to be outstanding; and’’ and inserting
‘‘and its composite condition—
‘‘(i) was found to be outstanding; or
‘‘(ii) was found to be outstanding or good, in the
case of an insured depository institution that has total
assets of not more than $100,000,000;’’;
(3) by redesignating subparagraph (D) as subparagraph
(E); and
(4) by inserting after subparagraph (C) the following new
subparagraph:
‘‘(D) the insured institution is not currently subject
to a formal enforcement proceeding or order by the Corpora-
tion or the appropriate Federal banking agency; and’’.
(b) AGENCY DISCRETION TO RAISE ASSET LIMIT.—Section 10(d)
of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended
by adding at the end the following new paragraph:
‘‘(8) AGENCIES AUTHORIZED TO INCREASE MAXIMUM ASSET
AMOUNT OF INSTITUTIONS FOR CERTAIN PURPOSES.—At any time
after the end of the 2-year period beginning on the date of
enactment of the Riegle Community Development and Regu-
latory Improvement Act of 1994, the appropriate Federal
banking agency, in the agency’s discretion, may increase the
maximum amount limitation contained in paragraph (4)(C)(ii),
by regulation, from $100,000,000 to an amount not to exceed
$175,000,000 for purposes of such paragraph, if the agency
determines that the greater amount would be consistent with
the principles of safety and soundness for insured depository
institutions.’’.
SEC. 307. CALL REPORT SIMPLIFICATION.
(a) MODERNIZATION OF CALL REPORT FILING AND DISCLOSURE
SYSTEM.—In order to reduce the administrative requirements
pertaining to bank reports of condition, savings association financial
reports, and bank holding company consolidated and parent-only
financial statements, and to improve the timeliness of such reports
and statements, the Federal banking agencies shall—
(1) work jointly to develop a system under which—
(A) insured depository institutions and their affiliates
may file such reports and statements electronically; and
H. R. 3474—59
(B) the Federal banking agencies may make such
reports and statements available to the public electroni-
cally; and
(2) not later than 1 year after the date of enactment of
this Act, report to the Congress and make recommendations
for legislation that would enhance efficiency for filers and users
of such reports and statements.
(b) UNIFORM REPORTS AND SIMPLIFICATION OF INSTRUCTIONS.—
The Federal banking agencies shall, consistent with the principles
of safety and soundness, work jointly—
(1) to adopt a single form for the filing of core information
required to be submitted under Federal law to all such agencies
in the reports and statements referred to in subsection (a);
and
(2) to simplify instructions accompanying such reports and
statements and to provide an index to the instructions that
is adequate to meet the needs of both filers and users.
(c) REVIEW OF CALL REPORT SCHEDULE.—Each Federal banking
agency shall—
(1) 
review 
the 
information 
required 
by 
schedules
supplementing the core information referred to in subsection
(b); and
(2) eliminate requirements that are not warranted for rea-
sons of safety and soundness or other public purposes.
SEC. 308. REPEAL OF PUBLICATION REQUIREMENTS.
(a) REVISED STATUTES.—Section 5211 of the Revised Statutes
(12 U.S.C. 161) is amended—
(1) in the 5th sentence of subsection (a), by striking ‘‘;
and the statement of resources’’ and all that follows through
‘‘as may be required by the Comptroller’’; and
(2) in subsection (c), by striking the 4th sentence.
(b) FDIA.—Section 7(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1817(a)(1)) is amended by striking the 4th sentence.
(c) FEDERAL RESERVE ACT.—Section 9 of the Federal Reserve
Act (12 U.S.C. 324) is amended in the last sentence of the 6th
undesignated paragraph, by striking ‘‘and shall be published’’ and
all that follows through the end of the sentence and inserting
a period.
SEC. 309. REGULATORY 
APPEALS 
PROCESS, 
OMBUDSMAN, 
AND
ALTERNATIVE DISPUTE RESOLUTION.
(a) IN GENERAL.—Not later than 180 days after the date of
enactment of this Act, each appropriate Federal banking agency
and the National Credit Union Administration Board shall establish
an independent intra-agency appellate process. The process shall
be available to review material supervisory determinations made
at insured depository institutions or at insured credit unions that
the agency supervises.
(b) REVIEW PROCESS.—In establishing the independent appel-
late process under subsection (a), each agency shall ensure that—
(1) any appeal of a material supervisory determination
by an insured depository institution or insured credit union
is heard and decided expeditiously; and
(2) appropriate safeguards exist for protecting the appellant
from retaliation by agency examiners.
(c) COMMENT PERIOD.—Not later than 90 days after the date
of enactment of this Act, each appropriate Federal banking agency
H. R. 3474—131
(A) by striking ‘‘with an insured institution’’ and insert-
ing ‘‘with another insured depository institution’’; and
(B) by striking ‘‘by an insured institution’’ and inserting
‘‘by another insured depository institution’’;
(36) in section 13(f)(2)(B)(i), by striking ‘‘the in default
insured bank’’ and inserting ‘‘the insured bank in default’’;
(37) in section 13(f)(2)(B)(iii), by striking ‘‘of of’’ and insert-
ing ‘‘of’’;
(38) in section 13(f)(3), by striking ‘‘CLOSING’’ in the heading
and inserting ‘‘DEFAULT’’;
(39) in section 13(f)(6)(A), by striking ‘‘bank that has in
default’’ and inserting ‘‘bank that is in default’’;
(40) in section 13(f)(6)(B)(i), by striking the semicolon at
the end and inserting a period;
(41) in section 13(f)(7)—
(A) in subparagraph (A), by striking ‘‘or’’ at the end;
and
(B) in subparagraph (B), by striking the period at
the end and inserting ‘‘; or’’;
(42) in section 13(f)(12)(A), by striking ‘‘is less than’’ and
inserting ‘‘are less than’’;
(43) in section 15(c)(1), by striking ‘‘OBLIGATIONS LIABIL-
ITIES’’ in the heading and inserting ‘‘OBLIGATIONS, GUARANTEES,
AND LIABILITIES’’;
(44) in section 18(b), by striking ‘‘, if such bank shall
deposit’’ and inserting ‘‘if the insured depository institution
deposits’’;
(45) in section 18(c)(1)(B), by inserting ‘‘or’’ at the end;
(46) in section 18(c)(4), by striking ‘‘other two banking
agencies’’ each place such term appears and inserting ‘‘other
Federal banking agencies’’;
(47) in section 18(c)(6), by striking ‘‘other two banking
agencies’’ and inserting ‘‘other Federal banking agencies’’;
(48) in section 18(c)(9), by striking ‘‘with the following
information:’’ and inserting ‘‘with—’’;
(49) in section 18(f)—
(A) by striking ‘‘such bank’’ and inserting ‘‘such insured
depository institution’’; and
(B) by striking ‘‘the bank’’ and inserting ‘‘the insured
depository institution’’;
(50) in section 18(k)(4)(A)(ii)(II), by striking ‘‘or’’ at the
end;
(51) in section 20(a)(3), by inserting ‘‘or’’ at the end;
(52) in section 21(c), by striking ‘‘the bank’’ and inserting
‘‘the insured depository institution’’;
(53) in section 21(d)(2), by striking ‘‘the bank’’ and inserting
‘‘the insured depository institution’’;
(54) in section 21(e), by striking ‘‘the bank’’ and inserting
‘‘the insured depository institution’’;
(55) in section 25(a), by striking ‘‘the bank’’ each place
it appears and inserting ‘‘the insured depository institution,
insured branch, or bank’’;
(56) in section 28(c)(2)(A)(i) by striking ‘‘, or’’ and inserting
‘‘; or’’;
(57) in section 28(d)(4)(C), by striking ‘‘subparagraphs’’ and
inserting ‘‘subparagraph’’;
H. R. 3474—132
(58) in section 28(e)(4), by striking ‘‘any other’’ and insert-
ing ‘‘and any other’’;
(59) in section 30(e)(1)(A), by striking ‘‘venders’’ and insert-
ing ‘‘the vendors’’;
(60) in section 31(b)(1), by striking ‘‘Board of Directors’’
and inserting ‘‘board of directors’’;
(61) in section 33(c)(1), by striking the comma at the end
and inserting a semicolon;
(62) in section 34(a)(1)(A)(iii)—
(A) by striking ‘‘sections’’ and inserting ‘‘section’’; and
(B) by striking ‘‘and’’ and inserting ‘‘or’’;
(63) in section 34(a)(2), by adding a period at the end;
(64) in section 38(f)(6), by striking ‘‘Commisssion’’ and
inserting ‘‘Commission’’;
(65) in section 40(c)(4)(A), by striking ‘‘subsections
(p)(12)(B) and (C)’’ and inserting ‘‘subparagraphs (B) and (C)
of subsection (p)(12)’’; and
(66) in section 40(d)(8)(A), by striking ‘‘meeting’’ and insert-
ing ‘‘meeting the’’.
(b) FEDERAL HOME LOAN BANK ACT.—Section 21A of the
Federal Home Loan Bank Act (12 U.S.C. 1441a) is amended—
(1) in subsection (a)(11), by striking ‘‘a United States Dis-
trict Court’’ and inserting ‘‘a United States district court’’;
(2) in subsection (b)(11)(B)(iii), by striking the comma after
‘‘chapter 5’’;
(3) in subsection (b)(11)(E)(iv)(II), by striking ‘‘knowledg-
able’’ and inserting ‘‘knowledgeable’’;
(4) in subsection (b)(11)(G), by inserting ‘‘ADVISORY PERSON-
NEL.—’’ before ‘‘The Corporation shall’’;
(5) in subsection (r)(4), by striking ‘‘subsection.—’’ and
inserting ‘‘subsection, the following definitions shall apply:’’;
(6) in subsection (s)(2), by striking ‘‘subsection—’’ and
inserting ‘‘subsection, the following definitions shall apply:’’;
and
(7) in subsection (u)(5), by striking ‘‘subsection—’’ and
inserting ‘‘subsection, the following definitions shall apply:’’.
(c) RESOLUTION TRUST CORPORATION COMPLETION ACT.—Sec-
tion 21(a) of the Resolution Trust Corporation Completion Act (107
Stat. 2406) is amended—
(1) by striking ‘‘33(a)’’ and inserting ‘‘33’’;
(2) by striking ‘‘1831j(a)’’ and inserting ‘‘1831j’’;
(3) in paragraph (1), by striking ‘‘paragraph (1)’’ and insert-
ing ‘‘subsection (a)(1)’’; and
(4) in paragraph (2), by striking ‘‘paragraph (2)’’ and insert-
ing ‘‘subsection (a)(2)’’.
(d) FEDERAL RESERVE ACT.—Section 7(a) of the Federal Reserve
Act (12 U.S.C. 289) is amended—
(1) in paragraph (1)(B), by inserting ‘‘(A)’’ after ‘‘subpara-
graph’’; and
(2) in paragraph (2), by striking ‘‘subparagraph (A)’’ and
inserting ‘‘paragraph (1)(A)’’.
(e) REPEAL OF PROVISIONS IN THE REVISED STATUTES.—The
following sections of the Revised Statutes are hereby repealed:
(1) Section 5170 (12 U.S.C. 28).
(2) Section 5203 (12 U.S.C. 87).
(3) Section 5206 (12 U.S.C. 88).
(4) Section 5196 (12 U.S.C. 89).
H. R. 3474—133
(5) Section 5158 (12 U.S.C. 102).
(6) Section 5159 (12 U.S.C. 101a).
(7) Section 5172 (12 U.S.C. 104).
(8) Section 5173 (12 U.S.C. 107).
(9) Section 5174 (12 U.S.C. 108).
(10) Section 5182 (12 U.S.C. 109).
(11) Section 5183 (12 U.S.C. 110).
(12) Section 5195 (12 U.S.C. 123).
(13) Section 5184 (12 U.S.C. 124).
(14) Section 5226 (12 U.S.C. 131).
(15) Section 5227 (12 U.S.C. 132).
(16) Section 5228 (12 U.S.C. 133).
(17) Section 5229 (12 U.S.C. 134).
(18) Section 5230 (12 U.S.C. 137).
(19) Section 5231 (12 U.S.C. 138).
(20) Section 5232 (12 U.S.C. 135).
(21) Section 5233 (12 U.S.C. 136).
(22) Section 5185 (12 U.S.C. 151).
(23) Section 5186 (12 U.S.C. 152).
(24) Section 5160 (12 U.S.C. 168).
(25) Section 5161 (12 U.S.C. 169).
(26) Section 5162 (12 U.S.C. 170).
(27) Section 5163 (12 U.S.C. 171).
(28) Section 5164 (12 U.S.C. 172).
(29) Section 5165 (12 U.S.C. 173).
(30) Section 5166 (12 U.S.C. 174).
(31) Section 5167 (12 U.S.C. 175).
(32) Section 5222 (12 U.S.C. 183).
(33) Section 5223 (12 U.S.C. 184).
(34) Section 5224 (12 U.S.C. 185).
(35) Section 5225 (12 U.S.C. 186).
(36) Section 5237 (12 U.S.C. 195).
(f) REPEAL
OF
OTHER
OBSOLETE
PROVISIONS
IN
BANKING
LAWS.—The following provisions of law are hereby repealed:
(1) Section 26 of the Federal Deposit Insurance Act (12
U.S.C. 1831c).
(2) Section 12 of the Act entitled ‘‘An Act To define and
fix the standard of value, to maintain the parity of all forms
of money issued or coined by the United States, to refund
the public debt, and for other purposes.’’ and approved March
14, 1900 (12 U.S.C. 101).
(3) Section 3 of the Act entitled ‘‘An Act To amend the
laws relating to the denominations of circulating notes by
national banks and to permit the issuance of notes of small
denominations, and for other purposes.’’ and approved October
5, 1917 (12 U.S.C. 103).
(4) The following sections of the Act entitled ‘‘An Act fixing
the amount of United States notes, providing for a redistribu-
tion of the national-bank currency, and for other purposes.’’
and approved June 20, 1874:
(A) Section 5 (12 U.S.C. 105).
(B) Section 3 (12 U.S.C. 121).
(C) Section 8 (12 U.S.C. 126).
(D) Section 4 (12 U.S.C. 176).
(5) The following sections of the Act entitled ‘‘An Act to
enable national-banking associations to extend their corporate
existence, and for other purposes.’’ and approved July 12, 1882:
H. R. 3474—134
(A) Section 8 (12 U.S.C. 177).
(B) Section 9 (12 U.S.C. 178).
(6) The Act entitled ‘‘An Act to amend the national bank
act in providing for the redemption of national bank notes
stolen from or lost by banks of issue.’’ and approved July
28, 1892 (12 U.S.C. 125).
(7) The Act entitled ‘‘An Act authorizing the conversion
of national gold banks.’’ and approved February 14, 1880 (12
U.S.C. 153).
(g) AMENDMENTS TO OTHER LAWS.—
(1) The 8th paragraph of the 4th undesignated paragraph
of section 4 of the Federal Reserve Act (12 U.S.C. 341) is
amended by striking ‘‘Comptroller of the Currency’’ and insert-
ing ‘‘Secretary of the Treasury’’.
(2) Section 11(d) of the Federal Reserve Act (12 U.S.C.
248(d)) is amended—
(A) by striking ‘‘bureau under the charge of the
Comptroller of the Currency’’ and inserting ‘‘Secretary of
the Treasury’’; and
(B) by striking ‘‘Comptroller’’ and inserting ‘‘Secretary
of the Treasury’’.
(3) The 1st sentence of the 8th undesignated paragraph
of section 16 of the Federal Reserve Act (12 U.S.C. 418) is
amended by striking ‘‘the Comptroller of the Currency shall
under the direction of the Secretary of the Treasury,’’ and
inserting ‘‘the Secretary of the Treasury shall’’.
(4) The 9th undesignated paragraph of section 16 of the
Federal Reserve Act (12 U.S.C. 419) is amended to read as
follows:
‘‘When such notes have been prepared, the notes shall
be delivered to the Board of Governors of the Federal Reserve
System subject to the order of the Secretary of the Treasury
for the delivery of such notes in accordance with this Act.’’.
(5) The 10th undesignated paragraph of section 16 of the
Federal Reserve Act (12 U.S.C. 420) is amended—
(A) by striking ‘‘Comptroller of the Currency’’ and
inserting ‘‘Secretary of the Treasury’’; and
(B) by striking ‘‘Federal Reserve Board’’ and inserting
‘‘Board of Governors of the Federal Reserve System’’.
(6) The 11th undesignated paragraph of section 16 of the
Federal Reserve Act (12 U.S.C. 421) is amended to read as
follows:
‘‘The Secretary of the Treasury may examine the plates,
dies, bed pieces, and other material used in the printing of
Federal Reserve notes and issue regulations relating to such
examinations.’’.
(7) The 6th undesignated paragraph of section 18 of the
Federal Reserve Act (38 Stat. 269) is amended—
(A) by striking ‘‘Comptroller of the Currency’’ each
place it appears and inserting ‘‘Secretary of the Treasury’’;
and
(B) in the 7th sentence, by striking ‘‘Comptroller’’ and
inserting ‘‘Secretary of the Treasury’’.
(8) The Act entitled ‘‘An Act to provide for the redemption
of national-bank notes, Federal Reserve bank notes, and Fed-
eral Reserve notes which cannot be identified as to the bank
of issue.’’ and approved June 13, 1933, is amended—