I
105TH CONGRESS
1ST SESSION
H. R. 1121
To amend the Federal Credit Union Act to clarify existing law and ratify
the longstanding policy of the National Credit Union Administration
Board with regard to field of membership of Federal credit unions
and to repeal the Community Reinvestment Act of 1977, and to provide
for a reduced tax rate for qualified community lenders.
IN THE HOUSE OF REPRESENTATIVES
MARCH 19, 1997
Mr. PAUL introduced the following bill; which was referred to the Committee
on Banking and Financial Services, and in addition to the Committee on
Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideraton of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To amend the Federal Credit Union Act to clarify existing
law and ratify the longstanding policy of the National
Credit Union Administration Board with regard to field
of membership of Federal credit unions and to repeal
the Community Reinvestment Act of 1977, and to pro-
vide for a reduced tax rate for qualified community lend-
ers.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Financial Freedom Act
of 1997’’.
SEC. 2. FIELD OF MEMBERSHIP OF FEDERAL CREDIT
UNIONS.
Section 109 of the Federal Credit Union Act (12
U.S.C. 1759) is amended by striking ‘‘Federal credit
union membership shall be limited to groups having a
common bond’’ and inserting ‘‘the membership of any
Federal credit union shall be limited to 1 or more groups
each of which have (within such group) a common bond’’.
SEC. 3. REPEAL OF COMMUNITY REINVESTMENT ACT OF
1977.
The Community Reinvestment Act of 1977 (12
U.S.C. 2901 et seq.) is hereby repealed.
SEC. 4. REDUCED TAX RATE FOR QUALIFIED COMMUNITY
LENDERS.
(a) IN GENERAL.—Section 11 of the Internal Reve-
nue Code of 1986 (relating to tax on corporations) is
amended by adding at the end the following new sub-
section:
‘‘(e) REDUCED TAX RATE FOR QUALIFIED COMMU-
NITY LENDERS.—
‘‘(1) IN GENERAL.—In the case of a qualified
community lender, the tax imposed by subsection (a)
for any taxable year shall not exceed 15 percent of
the excess (if any) of—
‘‘(A) taxable income for such year, over
‘‘(B) $250,000.
‘‘(2) QUALIFIED
COMMUNITY
LENDER.—For
purposes of this paragraph, the term ‘qualified com-
munity lender’ means an insured depository institu-
tion (as defined by section 3(c) of the Federal De-
posit Insurance Act) if, as determined at the end of
the institution’s taxable year—
‘‘(A) 60 percent of the aggregate outstand-
ing loans made by such institution, its parent,
and its affiliates, consist of loans made to bor-
rowers who are—
‘‘(i) not related persons with respect
to such institution, and
‘‘(ii)(I) are residents of the local com-
munity in which such institution is char-
tered, or
‘‘(II) are engaged in a trade or busi-
ness in such community, but only if such
loans are made with respect to such trade
or business in such community,
‘‘(B) two-thirds or more of the common
stockholders of record of such institution or its
parent company are residents of, or engaged in
a trade or business in, such community,
‘‘(C) less than 10 percent of all outstand-
ing common stock of such institution or its par-
ent is owned directly or indirectly by persons
other than individuals,
‘‘(D) neither the common stock of such in-
stitution nor the common stock of its parent is
publicly traded on an established securities
market, and
‘‘(E) the aggregate assets of such institu-
tion, its parent, and its affiliates do not exceed
$5,000,000,000.
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For
purposes of this subsection—
‘‘(A) AFFILIATE.—The term ‘affiliate’,
with respect to any institution, has the meaning
given such term by paragraphs (1) and (2) of
section 23A(b) of the Federal Reserve Act (de-
termined 
without 
regard 
to 
section
23A(b)(2)(E) of such Act).
‘‘(B) PARENT.—
‘‘(i) IN GENERAL.—The term ‘parent’
means, with respect to an institution—
‘‘(I) any company which has con-
trol of such institution, and
‘‘(II) any company which has
control of a company described in sub-
clause (I).
‘‘(ii) COMPANY AND CONTROL.—The
terms ‘company’ and ‘control’ have the re-
spective meanings given such terms by sec-
tion 2 of the Bank Holding Company Act
of 1956.
‘‘(C) RELATED PERSON.—Persons shall be
treated as related to each other if the relation-
ship between such persons is described in sec-
tion 267(b) or 707(b).
‘‘(4) INFLATION ADJUSTMENT.—In the case of
a taxable year beginning in a calendar year after
1997, the $250,000 amount contained in paragraph
(1)(B) shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment under
section 1(f)(3) for the calendar year in which
the taxable year begins, determined by sub-
stituting ‘calendar year 1996’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If any amount as adjusted under the preceding sen-
tence is not a multiple of $500, such amount shall
be rounded to the nearest multiple of $500.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
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