I
103D CONGRESS
1ST SESSION
H. R. 1699
To provide assistance to community development lending institutions to in-
crease the availability of credit to low-income families and for economic
and community development and other activities in low-income neighbor-
hoods, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 5, 1993
Ms. WATERS (for herself, Mr. RANGEL, Mr. MFUME, Mr. CLAY, Ms. NORTON,
and Mrs. MEEK) introduced the following bill; which was referred to the
Committee on Banking, Finance and Urban Affairs
A BILL
To provide assistance to community development lending in-
stitutions to increase the availability of credit to low-
income families and for economic and community devel-
opment and other activities in low-income neighborhoods,
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 ‘‘Community Banking
and Economic Empowerment Act’’.
scribed in subsection (b), including for-profit
and nonprofit entities, community development
corporations, 
microenterprise 
organizations,
community organizations, and other entities
and persons.
(2) ELIGIBLE ENTITIES ESTABLISHING COMMU-
NITY
DEVELOPMENT
LENDERS.—Any corporation,
partnership, organization, agency, person, or other
entity that is engaged in organizing or establishing
a community development bank or community devel-
opment financial institution.
(b) PURPOSE.—To be eligible to receive assistance
under section 4, a community development lender applying
for such assistance (or to be established by the eligible
entity applying for such assistance) shall have among its
principal purposes making credit and credit-related serv-
ices available to low-income families and in low-income
neighborhoods and promoting the development and revital-
ization of low-income neighborhoods. The community de-
velopment lender shall carry out such purpose by making
loans to individuals, families, businesses, organizations,
and other entities and conducting such other activities and
services relating to making loans (such as loan counseling
and servicing) as the lender considers appropriate. Such
loans may include mortgage loans, loans for housing devel-
opment, rehabilitation, and weatherization, business devel-
opment and assistance loans, personal loans, operating
loans, construction loans, loans for community and
economic development activities, and other repayable
assistance.
(c) GOVERNANCE.—To be eligible to receive assist-
ance under section 4, a community development lender ap-
plying for such assistance (or to be established by the eligi-
ble entity applying for such assistance) shall be governed
by a board of directors that—
(1) is solely responsible for determining policy
for the community development lender with respect
to management and operations, lending activities,
loan standards and implementation, employment,
asset management, and other any other issues; and
(2) includes among its members a significant
number of members who are individuals meeting the
requirements of any of subparagraphs (A) through
(D), who shall include—
(A) individuals who are members of low-in-
come families;
(B) individuals who are residents of the
low-income neighborhood served by the lender;
(C) individuals who are experienced in pro-
viding financial assistance or financial advice to
low-income individuals or residents, businesses,
or organizations in low-income neighborhoods;
and
(D) individuals who have significant expe-
rience in serving the low-income neighborhood
served by the lender, the community in which
such neighborhood is located, or any other low-
income neighborhood.
SEC. 4. CAPITAL AND OPERATING ASSISTANCE FOR COM-
MUNITY DEVELOPMENT LENDERS.
(a) AUTHORITY.—The Secretary may provide assist-
ance under this section to community development lenders
and eligible entities establishing community development
lenders, for the purposes under subsection (b).
(b) PURPOSES.—Assistance under this section may
be used only as provided in the assistance agreement
under section 7 for the community development lender or
eligible entity and only for the following purposes:
(1) FEASIBILITY STUDIES.—To carry out stud-
ies to determine the feasibility of establishing a pro-
gram to make loans for the purposes under section
3(b) within a particular low-income neighborhood.
(2) CAPITAL ASSISTANCE.—To provide capital
for the community development lender—
(A) to establish or supplement amounts
available for loans for the purposes under sec-
tion 3(b);
(B) to provide credit enhancement for
loans for the purposes under section 3(b);
(C) to establish or supplement capital re-
serves of the lender; and
(D) to carry out other activities, as the
Secretary may provide.
(3) OPERATING COSTS.—To provide amounts to
cover operating costs of the community development
lender, including marketing and management activi-
ties, business planning and counseling services, staff
training, planning costs, costs relating to establish-
ing the community development lender or changing
the activities or management of a depository institu-
tion, other financial institution, or other organiza-
tion or entity to include community development
lending activities.
(c) OTHER TERMS.—The Secretary may establish
any terms and conditions of assistance under this section
that the Secretary considers appropriate to carry out the
purposes of this Act, including limitations on the amount
of assistance provided to any community development
lender or eligible entity, limitations on the number of ap-
plications that may be approved for any single community
development lender or eligible entity, and requirements
and limitations for the amounts and timing of the dis-
bursement of assistance. Separate terms and conditions
of assistance may be established for community develop-
ment banks and community development financial institu-
tions.
(d) NON-FEDERAL
FUNDS
REQUIREMENT.—The
Secretary may not provide assistance under this section
to any eligible entity for the establishment of a community
development lender in an amount in excess of 9 times the
amount that the entity certifies, as the Secretary shall re-
quire, that the entity will contribute from non-Federal
sources to the community development lender established
with amounts provided under this section.
SEC. 5. REQUIREMENTS OF ASSISTED COMMUNITY DEVEL-
OPMENT LENDERS.
(a) PROHIBITION OF DIRECT ASSISTANCE.—A com-
munity development lender that receives assistance under
section 4 (or established by an eligible entity that receives
such assistance) may not provide amounts to any person
from assistance received under such section in the form
of a grant or nonrepayable advance or on any other
nonrepayable basis, during the assistance agreement term
established by the assistance agreement for the lender
under section 7.
(b) LOW-INCOME FAMILY REQUIREMENTS.—
(1) REQUIREMENT.—In each calendar year dur-
ing the applicable assistance agreement term, a com-
munity development lender that receives assistance
under section 4 (or established by an eligible entity
that receives such assistance) shall make loans
under section 3(b) benefiting low-income families—
(A) in a number that is not less than 50
percent of the total number of loans made by
the lender during such year; and
(B) in an amount such that the sum of the
principal amounts of such loans is not less than
50 percent of the sum of the principal amounts
of all loans made by the lender during such
year.
(2) DETERMINATION OF BENEFIT.—
(A) DIRECT
BENEFIT.—A loan shall be
considered to benefit a low-income family for
purposes of paragraph (1) if the loan—
(i) is made to such a family;
(ii) is made for an activity that is car-
ried out in a low-income neighborhood and
for providing services for such families;
(iii) is made for providing facilities de-
signed for the use predominantly by such
families; or
(iv) is made for an activity that in-
volves employment of persons, a majority
of whom are members of such families.
(B) ACTIVITIES OF GENERAL BENEFIT.—
In any case in which an activity assisted with
a loan is designed to serve an area generally
and is clearly designed to meet identified needs
of low-income families in such area, such loan
or activity shall be considered to benefit low-in-
come families for purposes of paragraph (1) to
the extent that the area is a low-income neigh-
borhood.
(C) HOUSING.—A loan for the acquisition,
construction, or rehabilitation of property to
provide housing shall be considered to benefit
low-income families for purposes of paragraph
(1) only to the extent that such housing, upon
completion, is occupied by low-income families.
(c) 
LOW-INCOME
NEIGHBORHOOD
REQUIRE-
MENTS.—In each calendar year during the applicable as-
sistance agreement term, a community development lender
that receives assistance under section 4 (or established by
an eligible entity that receives such assistance) shall make
loans under section 3(b) for facilities or activities that
serve the low-income neighborhood served by the lender—
(1) in a number that is not less than 50 percent
of the total number of loans made by the lender dur-
ing such year; and
(2) in an amount such that the sum of the prin-
cipal amounts of such loans is not less than 50 per-
cent of the sum of the principal amounts of all loans
made by the lender during such year.
(d) EMPLOYMENT PLAN.—During the applicable as-
sistance agreement term, a community development lender
that receives assistance under section 4 (or established by
an eligible entity that receives such assistance) shall estab-
lish and comply with a written employment plan under this
subsection. The Secretary shall, by regulation, require that
each employment plan under this subsection set forth a
policy for hiring employees of the community development
lender that—
(1) furthers the purposes of this Act by provid-
ing employment opportunities in the neighborhood
served by the community development lender for
residents of the neighborhood; and
(2) gives preference in hiring to—
(A) individuals who are members of low-in-
come families residing in the neighborhood
served by the community development lender;
and
(B) individuals who were formerly em-
ployed in positions at any office or branch of a
depository institution, credit union, or other fi-
nancial institution that is or was located in the
neighborhood served by the community develop-
ment lender and who are not employed in such
positions because of the closing or reorganiza-
tion of the office, branch, or institution, or be-
cause of the elimination of such positions or
any decrease in compensation paid for such
positions.
(e) RESERVE REQUIREMENTS.—
(1) MAINTENANCE OF RESERVE.—During the
applicable assistance agreement term, a community
development lender that receives assistance under
section 4 (or established by an eligible entity that re-
ceives such assistance) shall maintain, at all times,
a reserve against losses on loans and any other
losses in the amount determined under paragraph
(2).
(2) ESTABLISHMENT OF REQUIREMENTS.—The
Secretary shall, by regulation, establish reserve
amounts to be maintained by community develop-
ment lenders taking into consideration the purposes
of such lenders, the nature of lending engaged in by
such lenders, the size and amount of business of
such lenders, the need for such lending in the com-
munities and low-income neighborhoods served by
such lenders, and any other factors the Secretary
considers appropriate. The regulations may establish
separate reserve requirements for community devel-
opment banks and community development financial
institutions.
(3) REPLENISHMENT.—If at any time during
the applicable assistance agreement term, the
amount reserved by a community development lender
under this subsection is less than the amount re-
quired to be reserved under the regulations issued
pursuant to paragraph (2), the Secretary may take
such actions as the Secretary may, by regulation,
provide that are consistent with the purposes of this
Act, including withholding any assistance amounts
to be provided to the lender under the agreement
under section 7 but not yet disbursed and requiring
the lender to replenish the reserve by regular con-
tributions in the amounts determined by the
Secretary.
(f) STAFF.—During the applicable assistance agree-
ment term, a community development lender that receives
assistance under section 4 (or established by an eligible
entity that receives assistance under such section) shall
maintain personnel qualified and capable of conducting
the activities described under section 3(b) and the other
activities of the lender relating to community development,
as the Secretary may require.
SEC. 6. APPLICATION AND APPROVAL FOR ASSISTANCE.
(a) REQUIREMENT.—The Secretary may provide as-
sistance under section 4 only to community development
lenders and eligible entities establishing community devel-
opment lenders that have submitted applications under
this section to the Secretary that have been approved
under subsection (d).
(b) TIME AND MANNER.—The Secretary shall estab-
lish requirements regarding the submission of applications
under this section, which shall include requirements for
the time and manner of submission.
(c) CONTENTS.—An application under this section
shall contain the following information:
(1) COMMUNITY
DEVELOPMENT
LENDER.—A
description of—
(A) the existing community development
bank or community development financial insti-
tution to be assisted; or
(B) in the case of an eligible entity submit-
ting the application for assistance, the commu-
nity development lender to be established by the
eligible entity, the existing relationship between
the eligible entity and the community develop-
ment lender to be established, and any continu-
ing relationship that will exist between the
eligible entity and the community development
lender.
(2) LOW-INCOME
NEIGHBORHOOD
SERVED.—
Identification and a description of the low-income
neighborhood in which the community development
lender is, or is to be, located and conduct its prin-
cipal operations and a description of the existing
availability of credit and credit-related services in
such neighborhood.
(3) TYPES OF BUSINESS.—A description of the
types of business engaged in, or to be engaged in,
by the community development lender and of the
need for such business in the neighborhood served
by the community development lender.
(4) BOARD OF DIRECTORS AND OPERATION.—
In the case of an application by an existing commu-
nity development lender, a description of the board
of directors of the community development lender
and the structure of the management and operations
of the community development lender.
(5) FINANCIAL EXPERTISE.—In the case of an
application by an existing community development
lender, a description of any lending or financial ex-
pertise or experience of the members of the board of
directors of the community development lender and
the managers or employees of the lender.
(6) FINANCIAL HISTORY.—In the case of an ap-
plication by an existing community development
lender, any financial information regarding the com-
munity development lender that the Secretary con-
siders necessary in determining whether to provide
assistance to the community development lender, in-
cluding information regarding any history of compli-
ance with the requirements of section 5.
(7) REGULATION.—Identification of any Fed-
eral, State, and local laws, ordinances, and regula-
tions under which the financial operations of the
community development lender are, or are to be,
subject to the supervision, approval, regulation, or
(12) OTHER.—Any other information the Sec-
retary considers appropriate to carry out, and en-
sure compliance with, the provisions of this Act.
(d) REVIEW AND APPROVAL.—
(1) REVIEW.—The Secretary shall promptly re-
view each application submitted under this section.
(2) MINIMUM
STANDARDS
FOR
APPROVAL.—
The Secretary may approve an application under
this section for assistance only if the Secretary de-
termines, based on the information contained in an
application, that—
(A) the lender will operate in accordance
with the requirements of this Act and in a fi-
nancially safe and sound manner; and
(B) the assistance is necessary and appro-
priate to facilitate the provision of credit and
credit-related services in the neighborhood
served by the lender to low-income families and
others not adequately served by traditional
lending institutions.
(3) SELECTION CRITERIA.—The Secretary shall
approve applications under this subsection based on
competitive selection criteria, which the Secretary
shall establish by regulation.
(4) 
NOTIFICATION.—The 
Secretary 
shall
promptly notify each applicant of the approval or
disapproval of the applicant’s application. In the
case of any disapproval, such notification shall in-
clude a statement of the reasons for the disapproval
and of the availability of technical assistance under
section 9.
SEC. 7. ASSISTANCE AGREEMENTS.
(a) REQUIREMENT.—The Secretary may not provide
assistance under section 4 for an application for such as-
sistance approved under section 6 unless the community
development lender or eligible entity submitting the appli-
cation enters into a written agreement with the Secretary
under this section.
(b) CONTENTS.—An agreement under this section
shall provide the following:
(1) NEIGHBORHOOD SERVED.—A delineation of
the boundaries of the low-income neighborhood with-
in which the community development lender shall be
located and in which the lender shall conduct its
principal operations.
(2) COMPLIANCE WITH REQUIREMENTS.—That
the community development lender shall comply with
the requirements under section 5.
(3) SAFE AND SOUND OPERATION.—That the
community development lender shall operate in a fi-
nancially safe and sound manner.
(4) BOOKS AND RECORDS.—That the commu-
nity development lender shall operate and maintain
books and records in accordance with the regulations
issued by the Secretary under section 8 and will pro-
vide the Secretary with access to such books and
records for purposes of determining the compliance
of the lender with the requirements of this Act and
the provisions of the agreement under this section.
(5) PERFORMANCE
STANDARDS
AND
SANC-
TIONS.—Standards for the performance and finan-
cial operation of the community development lender
appropriate for the particular lender, including
standards relating to the lending volume, portfolio
performance, personnel development, service to the
neighborhood served by the lender, and sanctions for
failure to comply with such standards.
(6) REPORTS.—That the community develop-
ment lender (or the eligible entity establishing the
community development lender) shall submit reports
to the Secretary including such information, at such
times, and in such manner, as required by the Sec-
retary and provided in the agreement.
(7) ASSISTANCE.—The amount of assistance to
be provided to the community development lender
(or eligible entity establishing the community devel-
opment lender), the purposes under section 4(b) for
which such assistance will be used, and the timing
and terms of the disbursement of such assistance.
(8) OTHER CONDITIONS.—That the community
development lender shall comply with any other writ-
ten conditions (which shall be contained in the
agreement) that the Secretary considers appropriate
to carry out the purposes of this Act.
(9) PERIOD OF COMPLIANCE.—The period dur-
ing which the community development lender shall
comply with the provisions of the agreement under
this section, which shall not be shorter than 12
months in duration.
(c) FEDERAL OR OTHER REGULATION OF LEND-
ER.—An agreement under this section may not be con-
strued to annul, alter, affect, or exempt the community
development lender receiving assistance pursuant to the
agreement (or established by the eligible entity receiving
such assistance) from complying with any Federal, State,
or local laws, ordinances, and regulations applicable to the
financial and other operations of community development
lender or with any orders or rulings of any agency or in-
strumentality of the Federal Government or the State or
local government responsible for the supervision, approval,
regulation, or insuring of the community development
lender.
SEC. 8. BOOKS, RECORDS, AND AUDITS.
(a) BOOKS AND RECORDS.—During the applicable
assistance agreement term, a community development
lender that receives assistance under section 4 (or estab-
lished by an eligible entity that receives such assistance)
shall maintain the books and records of the bank in the
manner that the Secretary shall, by regulation, require.
(b) EXAMINATIONS AND AUDITS.—
(1) RECERTIFICATION.—The Secretary shall,
not less than once each year during the applicable
assistance agreement term, conduct an examination
of the books, records, and financial accounts and
transactions of each community development lender
receiving assistance under section 4 (or established
by an eligible entity receiving assistance under such
section) for the purpose of determining compliance
of the lender with this Act and the provisions of the
agreement.
(2) OTHER.—During the applicable assistance
agreement term, the Secretary may conduct any
other examinations and audits of such a community
development lender and its accounts and trans-
actions that the Secretary considers appropriate to
determine the condition of the lender and compliance
with the provisions of the assistance agreement.
SEC. 9. TECHNICAL ASSISTANCE FOR ORGANIZING AND OP-
ERATING COMMUNITY DEVELOPMENT LEND-
ERS.
(a) ASSISTANCE TO ESTABLISH COMMUNITY DEVEL-
OPMENT LENDERS.—The Secretary shall carry out a pro-
gram under this subsection to provide technical assistance
in establishing community development banks and commu-
nity development financial institutions, which shall in-
clude—
(1) educating organizations, financial institu-
tions, governmental agencies, and other entities and
persons in low-income neighborhoods and elsewhere
regarding the need for, capabilities, functions, and
organization of community development lenders;
(2) educating and training organizations, depos-
itory and other financial institutions, and other enti-
ties and persons in organizing community develop-
ment lenders and applying for assistance under this
Act for establishment of community development
lenders;
SEC. 10. AVAILABILITY OF FEDERAL RESERVE SYSTEM RE-
SOURCES FOR COMMUNITY DEVELOPMENT
BANKS.
(a) IN GENERAL.—The Board of Governors of the
Federal Reserve System shall take such action as may be
necessary to ensure the availability of funds for commu-
nity development banks under the Federal Reserve Act to
the maximum extent practicable.
(b) REPORT.—Before the end of the 6-month period
beginning on the date of the enactment of this Act, the
Board of Governors of the Federal Reserve System shall
submit a report to the Congress containing recommenda-
tions for legislative actions which the Board determines
to be appropriate to increase liquidity lending to commu-
nity development banks by the Federal reserve banks to
carry out the purposes of this Act.
SEC. 11. RELATIONSHIP TO COMMUNITY REINVESTMENT
ACT OF 1977.
Section 807(b) of the Community Reinvestment Act
of 1977 (12 U.S.C. 2906(b)) is amended by adding at the
end the following new paragraph:
‘‘(3) COORDINATION WITH COMMUNITY BANK-
ING AND ECONOMIC EMPOWERMENT ACT.—No regu-
lated financial institution may receive a rating of
‘outstanding record of meeting community credit
needs’ or ‘satisfactory record of meeting community
credit needs’ solely on the basis of loans to or invest-
ments in community development lenders.’’.
SEC. 12. REPORTS TO CONGRESS.
The Secretary shall submit a report to the Congress
not later than July 1 of each year in which the Secretary
provides assistance under section 4 to community develop-
ment lenders or eligible entities, which shall describe—
(1) the assistance provided under such section,
the purposes for which such assistance will be used,
the neighborhoods to be served by the community
development lenders assisted, and the activities of
community development lenders assisted; and
(2) any technical assistance provided under sec-
tion 9 by the Secretary.
SEC. 13. REGULATIONS.
The Secretary of Housing and Urban Development,
jointly with the Secretary of the Treasury, shall issue any
regulations necessary to carry out this Act.
SEC. 14. DEFINITIONS.
For purposes of this Act:
(1) The term ‘‘assistance agreement’’ means an
agreement under section 7 between the Secretary
and a community development lender or eligible en-
tity receiving assistance under section 4.
(2) The term ‘‘assistance agreement term’’
means the period established by an assistance agree-
ment during which the community development lend-
er that receives assistance under section 4 pursuant
to the agreement (or established by the eligible en-
tity that receives such assistance) shall comply with
the provision of the agreement.
(3) The term ‘‘community development bank’’
means a depository institution described in section
3(a)(1)(A) that meets the requirements under sub-
sections (b) and (c) of section 3.
(4) The term ‘‘community development finan-
cial institution’’ means a financial institution de-
scribed in section 3(a)(1)(B) that meets the require-
ments under subsections (b) and (c) of section 3.
(5) The term ‘‘community development lender’’
means a community development bank or a commu-
nity development financial institution that meets the
requirements under subsections (b) and (c) of sec-
tion 3.
(6) The term ‘‘eligible entity’’ means any entity
described in section 3(a)(2).
(7) The term ‘‘low-income family’’ means any
individual or family whose income does not exceed
80 percent of the median income for the area, as de-
termined by the Secretary with adjustments for
smaller and larger families; except that the Sec-
retary may establish income ceilings higher or lower
than 80 percent of the median for the area on the
basis of any findings by the Secretary that such
variations are necessary because of unusually high
or low prevailing incomes.
(8) The term ‘‘low-income neighborhood’’
means any area within a city, county, town, town-
ship, parish, village, or other general purpose sub-
division of a State—
(A) that has a continuous boundary; and
(B) in which not less than 20 percent of
the residents are members of low-income fami-
lies.
(9) The term ‘‘low-income neighborhood served
by a community development lender’’ means the low-
income neighborhood identified in an application
under section 6 and an assistance agreement under
section 7 as the area in which the community devel-
opment lender that receives assistance pursuant to
such application and agreement (or established by
the eligible entity that receives such assistance) will
be located and conduct its principal operations.
(10) The term ‘‘Secretary’’ means the Secretary
of Housing and Urban Development.
SEC. 15. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated for each of
fiscal years 1994 and 1995—
(1) $800,000,000 for assistance under section
4; and
(2) $200,000,000 for providing technical assist-
ance under section 9.
Æ
HR 1699 IH——2
HR 1699 IH——3