I
103D CONGRESS
1ST SESSION
H. R. 2955
To stimulate the economy by encouraging bank and thrift institution lending
to small- and medium-sized businesses and to consumers by reducing
and standardizing the leverage limit capital standard for safe and sound
depository institutions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 6, 1993
Mr. KENNEDY introduced the following bill; which was referred to the
Committee on Banking, Finance and Urban Affairs
A BILL
To stimulate the economy by encouraging bank and thrift
institution lending to small- and medium-sized businesses
and to consumers by reducing and standardizing the
leverage limit capital standard for safe and sound deposi-
tory institutions, and for other purposes.
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 ‘‘Business and
Consumer Lending Stimulus Act’’.
SEC. 2. REDUCTION AND STANDARDIZATION OF LEVERAGE
LIMIT CAPITAL STANDARD APPLICABLE TO
QUALIFIED DEPOSITORY INSTITUTIONS.
(a) IN GENERAL.—In the case of any adequately cap-
italized insured depository institution, the appropriate
Federal banking agency may not impose or enforce, during
the 18-month period beginning on the date of the enact-
ment of this Act, any leverage limit with respect to such
depository institution which requires a ratio of tangible
equity to total assets greater than 3 percent.
(b) EXCEPTION.—Subsection (a) shall not apply with
respect to an insured depository institution which the ap-
propriate Federal banking agency determines—
(1) lacks sufficient loan loss reserves; or
(2) is operating in an unsafe or unsound man-
ner.
(c) DEFINITIONS.—For purposes of this section—
(1) ADEQUATELY
CAPITALIZED.—Subject to
subsection (d), the term ‘‘adequately capitalized’’
has the meaning given to such term in section
38(b)(1)(B) of the Federal Deposit Insurance Act,
as implemented by each appropriate Federal banking
agency by regulation.
(2) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘‘appropriate Federal banking agen-
cy’’ has the meaning given to such term in section
3(q) of the Federal Deposit Insurance Act.
(3) INSURED DEPOSITORY INSTITUTION.—The
term ‘‘insured depository institution’’ has the mean-
ing given such term in section 3(c)(2) of the Federal
Deposit Insurance Act.
(4) LEVERAGE
LIMIT.—The term ‘‘leverage
limit’’ means the capital standard relating to the
minimum ratio of tangible capital to total assets es-
tablished by the appropriate Federal banking agency
pursuant to section 38(c)(1)(A)(i) of the Federal
Deposit Insurance Act.
(d) DETERMINATION OF ADEQUACY OF CAPITAL.—
Any determination by any appropriate Federal banking
agency with regard to the capital adequacy of any insured
depository institution for purposes of this Act shall be
made without regard to any requirement in section 38 of
the Federal Deposit Insurance Act, or any regulation pre-
scribed under such section, relating to a leverage limit.
SEC. 3. REGULATION OF REAL ESTATE LENDING.
Subsection (o) of section 18 of the Federal Deposit
Insurance Act (12 U.S.C. 1828(o)) (as added by section
304 of the Federal Insurance Corporation Improvement
Act of 1991) is amended—
(1) by redesignating paragraph (4) as para-
graph (5); and
(2) by inserting new paragraph (4) as follows:
‘‘(4) CONSIDERATION
OF
IMPACT
OF
STAND-
ARDS.—In prescribing standards under paragraph
(1), the appropriate Federal banking agencies shall,
consistent with safety and soundness,—
‘‘(A) consider the impact that such stand-
ards have on the availability of credit for small
business, residential, and agricultural purposes,
and on low- and moderate-income communities;
and
‘‘(B) minimize the negative impact that
these standards have on the availability of cred-
it for such purposes and in such areas.’’.
SEC. 4. REAL ESTATE APPRAISAL AMENDMENT.
Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351)
is amended—
(1) by redesignating subsections (b), (c), (d),
and (e) as subsections (c), (d), (e), and (f), respec-
tively;
(2) by adding the following new subsection (b):
‘‘(b) RECIPROCITY.—The Appraisal Subcommittee
shall encourage the States to develop reciprocity agree-
(A) the safety and soundness of insured
depository institutions;
(B) the availability of credit, particularly
to individuals and small businesses; and
(C) economic growth.
(2) RECOMMENDATIONS.—The report shall con-
tain any recommendations with respect to capital
standards that the Secretary of the Treasury may
determine to be appropriate.
(b) DEFINITIONS.—For purposes of this section, the
terms ‘‘Federal banking agency’’ and ‘‘insured depository
institution’’ have the same meanings as in section 3 of
the Federal Deposit Insurance Act.
SEC. 6. REGULATORY APPEALS PROCESS.
(a) IN GENERAL.—Before the end of the 180-day pe-
riod beginning on the date of the enactment of this Act,
each appropriate Federal banking agency and the Na-
tional Credit Union Administration shall establish an inde-
pendent appellate process within the agency which shall
be responsible for reviewing material supervisory deter-
minations made at insured depository institutions or credit
unions supervised by the agency.
(b) REVIEW PROCESS.—In establishing the independ-
ent appellate process required under subsection (a), each
agency referred to in such subsection shall take such ac-
tion as may be appropriate to ensure that—
(1) any appeal of a supervisory determination
from any insured depository institution or credit
union, or any officer, director, employee or other
representative of any insured depository institution
or credit union, be heard and decided expeditiously;
(2) appropriate safeguards exist for protecting
the appellant from retaliation by agency examiners;
and
(3) the ruling agency officer have the authority,
where appropriate and as justice so requires, to stay
the supervisory determination pending completion of
the appellate process.
(c) APPEALS BY BORROWERS.—
(1) IN GENERAL.—The appeals process estab-
lished pursuant to subsection (a) shall provide for an
appeal of the cancellation of a loan, a reduction in
or the cancellation of a line of credit, or a change
in any terms or condition of a loan or other exten-
sion of credit which is substantially adverse to the
borrower or recipient by any borrower or recipient of
credit from an insured depository institution who
was in full compliance with the terms of the loan or
extension of credit at the time of such action.
(2) AGENCY REQUEST TO LENDER OR CREDI-
TOR.—In reviewing any appeal, the appropriate Fed-
eral banking agency may only request a lender or
other creditor to state the reasons for, or a reconsid-
eration of, the decision to take any action described
in paragraph (1).
(d) COMMENT PERIOD.—Each agency referred to in
subsection (a) shall provide public notice and opportunity
for comment on proposed guidelines for an appellate proc-
ess not later than 90 days after enactment of this Act.
(e) DEFINITIONS.—For purposes of this section—
(1) AGENCY.—The term ‘‘agency’’ means the
appropriate Federal banking agency and the Na-
tional Credit Union Administration.
(2) INSURED
DEPOSITORY
INSTITUTION; AP-
PROPRIATE FEDERAL BANKING AGENCY.—The terms
‘‘insured depository institution’’ and ‘‘appropriate
Federal banking agency’’ have the meanings given to
such terms in section 3 of the Federal Deposit In-
surance Act.
(3) 
MATERIAL
SUPERVISORY
DETERMINA-
TION.—The term ‘‘material supervisory determina-
tion’’ includes determinations relating to ratings on
examinations of insured depository institutions, the
adequacy of loan loss reserve provisions by such in-
stitutions, and loan classifications on loans signifi-
cant to the institution.
(4) SMALL BUSINESS.—The term ‘‘small busi-
ness’’ has the meaning given to such term by the
Administrator of the Small Business Administration.
SEC. 7. STERILE RESERVES STUDIES.
(a) FEDERAL RESERVE STUDY.—Before the end of
the 90-day period beginning on the date of the enactment
of this Act, the Board of Governors of the Federal Reserve
System, in consultation with the Federal Deposit Insur-
ance Corporation, shall study and report to Congress on—
(1) the necessity, for monetary policy purposes,
of continuing to require insured depository institu-
tions to maintain sterile reserves;
(2) the appropriateness of paying insured de-
pository institutions with a market rate of interest
on sterile reserves, or in the alternative, providing
payment of this interest into the appropriate deposit
insurance fund;
(3) the monetary impact that the failure to pay
interest on sterile reserves has had on insured depos-
itory institutions, including an estimate of the total
dollar amount of interest and potential income lost
by insured depository institutions;
(4) the degree to which the failure to pay inter-
est on sterile reserves has impacted upon economic
growth; and
(5) the impact that failure to pay interest on
sterile reserves has had on the ability of the banking
industry to compete with nonbanking providers of fi-
nancial services and with foreign banks.
(b) BUDGETARY IMPACT STUDY.—No later than 90
days after enactment of this Act, the Office of Manage-
ment and Budget and the Congressional Budget Office,
in consultation with the Senate and House Committees on
the Budget, shall jointly study and report to Congress on
the budgetary impact of—
(1) paying insured depository institutions a
market rate of interest on sterile reserves; and
(2) paying such interest into the respective de-
posit insurance funds.
(c) DEFINITION.—For purposes of this section, the
term ‘‘insured depository institution’’ has the same mean-
ing as in section 3 of the Federal Deposit Insurance Act.
SEC. 8. CREDIT CARD ACCOUNTS RECEIVABLE SALES.
Section 11(e) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(e)) is amended by adding at the end the
following new paragraphs:
‘‘(14) SELLING
CREDIT
CARD
ACCOUNTS
RE-
CEIVABLE.—
‘‘(A) 
NOTIFICATION
REQUIRED.—An
undercapitalized insured depository institution
(as defined in section 38) shall notify the Cor-
poration in writing before entering into an
agreement to sell credit card accounts receiv-
able.
‘‘(B) WAIVER
BY
CORPORATION.—The
Corporation may at any time, in the Corpora-
tion’s sole discretion and upon such terms as
the Corporation may prescribe, waive the Cor-
poration’s right to repudiate an agreement to
sell credit card accounts receivable if the Cor-
poration—
‘‘(i) determines that the waiver is in
the best interests of the affected deposit
insurance fund; and
‘‘(ii) provides a written waiver to the
selling institution.
‘‘(C) EFFECT
OF
WAIVER
ON
SUCCES-
SORS.—
‘‘(i) IN GENERAL.—If, under subpara-
graph (B), the Corporation has waived its
right to repudiate an agreement to sell
credit card accounts receivable—
‘‘(I) any provision of the agree-
ment that restricts solicitation of a
credit card customer of the selling in-
stitution, or the use of a credit card
customer list of the institution, shall
bind any receiver or conservator of the
institution; and
‘‘(II) the Corporation shall re-
quire any acquirer of the selling insti-
tution, or of substantially all of the
selling institution’s assets or liabil-
ities, to agree to be bound by a provi-
sion described in subclause (I) as if
the acquirer were the selling institu-
tion.
‘‘(ii) EXCEPTION.—Clause (i)(II) shall
not be applied so as to—
‘‘(I) restrict the acquirer’s au-
thority to offer any product or service
to any person identified without using
a list of the selling institution’s cus-
tomers in violation of the agreement;
‘‘(II) require the acquirer to re-
strict any preexisting relationship be-
tween the acquirer and a customer; or
‘‘(III) apply to any transaction in
which the acquirer acquires only in-
sured deposits.
‘‘(D) WAIVER
NOT
ACTIONABLE.—The
Corporation shall not be liable, in any capacity,
to any person for damages resulting from
waiving or failing to waive the Corporation’s
right under this section to repudiate any con-
tract or lease, including an agreement to sell
credit card accounts receivable. No court may
issue an order affecting any such waiver or fail-
ure to waive.
‘‘(E) 
OTHER
AUTHORITY
NOT
AF-
FECTED.—This paragraph shall not be con-
strued as limiting any other authority of the
Corporation to waive the Corporation’s right
under this section to repudiate an agreement or
lease.
‘‘(15) CERTAIN CREDIT CARD CUSTOMER LISTS
PROTECTED.—
‘‘(A) IN GENERAL.—If any insured deposi-
tory institution sells credit card accounts receiv-
able under an agreement negotiated at arm’s
length that provides for the sale of the institu-
tion’s credit card customer list, the Corporation
shall prohibit any party to a transaction with
respect to the institution under this section or
section 13 from using the list except as per-
mitted under the agreement.
‘‘(B) FRAUDULENT
TRANSACTIONS
EX-
CLUDED.—Subparagraph (A) shall not be con-
strued as limiting the Corporation’s authority
to repudiate any agreement entered into with
the intent to hinder, delay, or defraud the insti-
tution, the institution’s creditors, or the Cor-
poration.’’.
SEC. 9. COORDINATED EXAMINATIONS.
Section 10(d) of the Federal Deposit Insurance Act
(12 U.S.C. 1820(d)) (as amended by section 301 of this
Act) is amended by adding at the end the following new
paragraph:
‘‘(7) COORDINATED EXAMINATIONS.—Each ap-
propriate Federal banking agency shall, to the ex-
tent practicable—
‘‘(A) coordinate all examinations to be con-
ducted by that agency at an insured depository
institution; and
‘‘(B) work with other appropriate Federal
banking agencies and appropriate State bank
supervisors to coordinate examinations to be
conducted at an insured depository institution,
so as to minimize the disruptive effects of such ex-
aminations on the operations of the institution.’’.
SEC. 10. STREAMLINED LENDING PROCESS FOR CONSUMER
BENEFIT.
(a) FEDERAL RESERVE STUDY.—Before the end of
the 1-year period beginning on the date of the enactment
of this Act, the Board of Governors of the Federal Reserve
System and the Secretary of Housing and Urban Develop-
ment shall jointly conduct a study and report to Congress
on ways to streamline the credit-granting process.
(b) FOCUS.—In carrying out subsection (a), the
Board of Governors of the Federal Reserve System and
the Secretary of Housing and Urban Development shall—
(1) identify ways to streamline the home mort-
gage, small business and consumer lending processes
so as to—
(A) reduce consumer inconvenience, cost
and time delays; and
(B) minimize cost and burdens on insured
depository institutions and credit unions with-
out compromising the effectiveness of any provi-
sion of law relating to consumer protection;
(2) take such regulatory action, as appropriate,
to meet the objectives of paragraph (1); and
(3) provide Congress with legislative rec-
ommendations on changes necessary to carry out the
purposes of this section.
(c) COMMENT.—In carrying out the objectives of this
section, the Board shall solicit comments from other Fed-
eral banking agencies, consumer groups, insured deposi-
tory institutions, credit unions, and other interested par-
ties.
(d) DEFINITION.—For purposes of this section, the
term ‘‘insured depository institution’’ has the meaning
given to such term in section 3 of the Federal Deposit
Insurance Act.
SEC. 11. REPORTING ON LOANS TO SMALL BUSINESSES, MI-
NORITY-OWNED BUSINESSES, AND START-UP
ENTERPRISES.
Section 122 of the Federal Deposit Insurance Cor-
poration Improvement Act of 1991 (12 U.S.C. 1817 nt.)
is amended by adding at the end the following new sub-
section:
‘‘(d) REPORTS ON LOANS TO SMALL BUSINESSES,
MINORITY-OWNED BUSINESSES, AND START-UP BUSI-
NESSES.—The information required to be submitted by in-
sured depository institutions under subsection (a) shall in-
clude the following for the period covered by the report:
‘‘(1) The total number of loans the principal on
which does not exceed $1,000,000.
‘‘(2) The total number of loans to small busi-
nesses (as defined in regulations prescribed by the
Administrator of the Small Business Administra-
tion).
‘‘(3) The total number of loans to minority-
owned businesses (as defined in section 21A(r)(4)(A)
of the Federal Home Loan Bank Act).
‘‘(4) The total number of loans to businesses
which have been incorporated, or otherwise been in
existence, for less than 2 years.’’.
SEC. 12. ACCELERATING THE EFFECTIVE DATE OF THE SIS-
TER THRIFT EXEMPTION FOR WELL CAPITAL-
IZED INSTITUTIONS.
Section 11(a)(2) of the Home Owners’ Loan Act (12
U.S.C. 1468(a)(2)) is amended by adding at the end the
following new subparagraph:
‘‘(C) TRANSITION RULE FOR WELL CAPITAL-
IZED SAVINGS ASSOCIATIONS.—
‘‘(i) IN GENERAL.—Effective on and after
the date of enactment of this bill, every savings
association that is well capitalized (as defined
in section 38 of the Federal Deposit Insurance
Act) without including goodwill in calculating
core capital shall be treated as a bank for pur-
poses of section 23A(d)(1) and section 23B of
the Federal Reserve Act.
‘‘(ii) 
LIABILITY
OF
COMMONLY
CON-
TROLLED
DEPOSITORY
INSTITUTIONS.—Any
savings association that engages under clause
(i) in a transaction that would not otherwise be
permissible under this subsection, and any af-
filiated insured bank that is commonly con-
trolled (as defined in section 5(e)(9) of the Fed-
eral Deposit Insurance Act), shall be subject to
subsection (e) of section 5 of the Federal De-
posit Insurance Act as if paragraph (6) of that
subsection did not apply.’’.
Æ
HR 2955 IH——2