In the Senate of the United States,
March 17 (legislative day, February 22), 1994.
Resolved, That the bill from the House of Representa-
tives (H.R. 3474) entitled ‘‘An Act to reduce administrative
requirements for insured depository institutions to the extent
consistent with safe and sound banking practices, to facilitate
the establishment of community development financial insti-
tutions, and for other purposes’’, do pass with the following
AMENDMENT:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Community Development, Credit Enhancement, and Reg-
ulatory 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.
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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. Community development training.
Sec. 110. Encouragement of private entities.
Sec. 111. Clearinghouse function.
Sec. 112. Recordkeeping, reports, and audits.
Sec. 113. Investment of receipts and proceeds.
Sec. 114. Inspector General.
Sec. 115. Capitalization assistance to enhance liquidity.
Sec. 116. Community development revolving loan fund for credit unions.
Sec. 117. Regulations.
Sec. 118. Authorization of appropriations.
Subtitle B—Home Ownership and Equity Protection
Sec. 151. Consumer protections for high cost mortgages.
Sec. 152. Civil liability.
Sec. 153. Reverse mortgage disclosure.
Sec. 154. Regulations; effective date.
TITLE II—SMALL BUSINESS CAPITAL FORMATION
Subtitle A—Small Business Loan Securitization
Sec. 201. Short title.
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. Transactions in small business related securities by employee benefit
plans.
Sec. 210. Sense of the Senate on taxation of small business loan investment con-
duits.
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 Secretary.
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Sec. 258. Reimbursement to the Secretary.
Sec. 259. Regulations.
Sec. 260. Authorization of appropriations.
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.
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. Elimination of stock valuation provision.
Sec. 319. Expedited procedures for forming a bank holding company.
Sec. 320. Exemption of certain holding company formations from registration
under the Securities Act of 1933.
Sec. 321. Reduction of post-approval waiting period for bank holding company
acquisitions.
Sec. 322. Reduction of post-approval waiting period for bank mergers.
Sec. 323. Bankers’ banks.
Sec. 324. Bank Service Corporation Act amendment.
Sec. 325. Merger transaction reports.
Sec. 326. Credit card accounts receivable sales.
Sec. 327. Limiting potential liability on foreign accounts.
Sec. 328. Amendments to outdated dividend provisions.
Sec. 329. Elimination of duplicative disclosures for home equity loans.
Sec. 330. Report on capital standards and their impact on the economy.
Sec. 331. Studies on the impact of the payment of interest on reserves.
Sec. 332. Study and report on streamlined lending process for consumer benefit.
Sec. 333. Repeal of outdated charter requirement for national banks.
Sec. 334. Inclusion of Comptroller of the Currency; clarification of revised stat-
utes.
Sec. 335. Commemoration of 1995 Special Olympic World Games.
Sec. 336. Exemption for business accounts.
Sec. 337. Board discretion regarding check-related fraud.
Sec. 338. Civil liability under truth in savings.
Sec. 339. Insider lending.
Sec. 340. Revisions of standards.
Sec. 341. Alternative rules for radio advertising of consumer leases.
Sec. 342. Deposit broker registration.
Sec. 343. Extension of management interlocks grandfather clause.
Sec. 344. Clarification of provision relating to administrative autonomy.
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Sec. 345. Consumer surveys and report.
Sec. 346. Simplified disclosure for existing depositors.
Sec. 347. Commercial mortgage related securities.
Sec. 348. Offset of costs of certain programs.
TITLE IV—MONEY LAUNDERING
Sec. 401. Short title.
Sec. 402. Reform of CTR exemption requirements to reduce number and size of
reports 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
agencies.
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. Criminal and civil penalty for structuring domestic and international
transactions.
Sec. 410. GAO study of chasiers’ checks.
TITLE V—FAIR TRADE IN FINANCIAL SERVICES
Sec. 501. Short title.
Sec. 502. Effectuating the principle of national treatment for banking organiza-
tions.
Sec. 503. Effectuating the principle of national treatment for securities organiza-
tions.
Sec. 504. Effectuating the principle of national treatment for insurers and rein-
surers.
Sec. 505. Financial interdependence study.
Sec. 506. Federal Reserve report on the Foreign Bank Supervision Enhancement
Act of 1991.
Sec. 507. Conforming amendments.
TITLE VI—NATIONAL FLOOD INSURANCE REFORM
Sec. 601. Short title.
Sec. 602. Congressional findings.
Sec. 603. Definition.
SUBTITLE A—DEFINITIONS
Sec. 611. Flood Disaster Protection Act of 1973.
Sec. 612. National Flood Insurance Act of 1968.
SUBTITLE B—COMPLIANCE AND INCREASED PARTICIPATION
Sec. 621. Expanded flood insurance purchase requirements.
Sec. 622. Excrow of flood insurance payments.
Sec. 623. Notice requirements.
Sec. 624. Placement of flood insurance by regulated lending institution, Federal
agency lender, or servicer.
Sec. 625. Standard flood hazard determination forms.
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Sec. 626. Examination regarding compliance by regulated lending institutions.
Sec. 627. Penalties and corrective actions for failure to require flood insurance,
escrow, or notify.
Sec. 628. Financial institutions examination council.
Sec. 629. Conforming amendment.
SUBTITLE C—RATINGS AND INCENTIVES FOR COMMUNITY FLOODPLAIN
MANAGEMENT PROGRAMS
Sec. 631. Community rating system and incentives for community floodplain
management.
Sec. 632. Funding.
Sec. 633. Reasonable fees.
SUBTITLE D—MITIGATION OF FLOOD AND EROSION RISKS
Sec. 641. Mitigation assistance in Federal insurance administration.
Sec. 642. Authorization of national flood and erosion mitigation funds under sec-
tion 1362.
Sec. 643. State and community mitigation assistance program.
Sec. 644. Repeal of program for purchase of certain insured properties.
Sec. 645. Termination of erosion threatened structures program.
Sec. 646. Congressional findings and declaration of purchase under the National
Flood Insurance Act of 1968.
SUBTITLE E—FLOOD INSURANCE TASK FORCE
Sec. 651. Flood insurance interagency task force.
SUBTITLE F—MISCELLANEOUS PROVISIONS
Sec. 661. Maximum flood insurance coverage amounts.
Sec. 662. Additional coverage for compliance with land use and control measures.
Sec. 663. Flood insurance program arrangements with private insurance entities.
Sec. 664. Updating of flood insurance rate maps.
Sec. 665. Evaluation of erosion hazards.
Sec. 666. Coordination of flood insurance rate map revisions and updates with
coastal zone management programs.
Sec. 667. Technical Mapping Advisory Council.
Sec. 668. Funding for increased administrative and operational responsibilities.
Sec. 669. Separate account for National Flood Insurance Fund.
Sec. 670. Nonwaiver of flood purchase requirement for recipients of Federal disas-
ter assistance.
Sec. 671. Insurance waiting period.
Sec. 672. Agricultural structures.
Sec. 673. Implementation review by the director.
Sec. 674. Regulations.
Sec. 675. Prohibited flood disaster assistance.
TITLE VII—GENERAL PROVISIONS
Sec. 701. Study of effect of the Northern spotted owl on small business concerns.
Sec. 702. Negative information about consumer.
Sec. 703. United Nations resolutions concerning Jerusalem.
Sec. 704. Amendment to the Federal Reserve Act.
Sec. 705. Oversight hearings.
Sec. 706. Insurance transfer agreement.
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TITLE I—COMMUNITY DEVELOP-
MENT AND CONSUMER PRO-
TECTION
Subtitle 
A—Community 
Develop-
ment Banking and Financial In-
stitutions Act
SEC. 101. SHORT TITLE.
This subtitle may be cited as the ‘‘Community Devel-
opment 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 Na-
tive 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 econo-
mies of these communities will require coordinated de-
velopment strategies, intensive supportive services,
and increased access to equity investments and loans
for development activities, including investment in
businesses, housing, commercial real estate, human
development, and other activities that promote the
long-term economic and social viability of the com-
munity; and
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(3) community development financial institu-
tions have proven their ability to identify and re-
spond 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
that will promote economic revitalization and community
development through a program of investment in and as-
sistance to community development financial institutions,
including enhancing the liquidity of community develop-
ment financial institutions.
SEC. 103. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) APPROPRIATE FEDERAL BANKING AGENCY.—
The term ‘‘appropriate Federal banking agency’’ has
the same meaning as in section 3 of the Federal De-
posit Insurance Act, and also includes the National
Credit Union Administration Board with respect to
insured credit unions.
(2) AFFILIATE.—The term ‘‘affiliate’’ has the
same meaning as in section 2(k) of the Bank Holding
Company Act of 1956.
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(3) COMMUNITY DEVELOPMENT FINANCIAL INSTI-
TUTION.—
(A) IN GENERAL.—The term ‘‘community
development financial institution’’ means a per-
son (other than an individual) that—
(i) has a primary mission of promot-
ing community development;
(ii) serves an investment area or tar-
geted population;
(iii) directly, through an affiliate, or
through a community partnership, provides
development services and equity investments
or loans;
(iv) maintains, through representation
on its governing board or otherwise, ac-
countability to residents of its investment
area or targeted population; and
(v) is not an agency or instrumentality
of the United States, or of any State or po-
litical subdivision of a State.
(B) QUALIFICATION
OF
AFFILIATES.—A
subsidiary may only qualify as a community de-
velopment financial institution if its parent
company and the subsidiaries thereof (on a con-
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solidated basis) also qualify as community devel-
opment financial institutions.
(4) COMMUNITY PARTNER.—The term ‘‘commu-
nity partner’’ means a person (other than an individ-
ual) that provides loans, equity investments, or devel-
opment services, including a depository institution
holding company, an insured depository institution,
an insured credit union, a nonprofit organization, a
State or local government agency, a quasi-govern-
mental entity, and an investment company author-
ized to operate pursuant to the Small Business In-
vestment Act of 1958.
(5) COMMUNITY PARTNERSHIP.—The term ‘‘com-
munity partnership’’ means an agreement between a
community development financial institution and a
community partner to provide development services
and loans or equity investments to an investment
area or targeted population.
(6) DEPOSITORY
INSTITUTION
HOLDING
COM-
PANY.—The term ‘‘depository institution holding com-
pany’’ has the same meaning as in section 3 of the
Federal Deposit Insurance Act.
(7) DEVELOPMENT SERVICES.—The term ‘‘devel-
opment services’’ means activities that promote com-
HR 3474 EAS
munity development and are integral to lending or
investment activities, including—
(A) business planning;
(B) financial and credit counseling; and
(C) marketing and management assistance.
(8) INSURED COMMUNITY DEVELOPMENT FINAN-
CIAL
INSTITUTION.—The term ‘‘insured community
development financial institution’’ means any com-
munity development financial institution that is an
insured depository institution or an insured credit
union.
(9) INSURED CREDIT UNION.—The term ‘‘insured
credit union’’ has the same meaning as in section
101(7) of the Federal Credit Union Act.
(10) INSURED
DEPOSITORY
INSTITUTION.—The
term ‘‘insured depository institution’’ has the same
meaning as in section 3 of the Federal Deposit Insur-
ance Act.
(11) INVESTMENT AREA.—The term ‘‘investment
area’’ means a geographic area that—
(A)(i) meets objective criteria of economic
distress developed by the Community Develop-
ment Financial Institutions Fund, which may
include the percentage of low-income families or
the extent of poverty, the rate of unemployment
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or underemployment, lag in population growth,
and extent of blight and disinvestment; and
(ii) has significant unmet needs for loans or
equity investments;
(B) is located in an empowerment zone or
enterprise community designated under section
1391 of the Internal Revenue Code of 1986;
(C) is located on an Indian reservation, as
defined in section 3(d) of the Indian Financing
Act of 1974 or section 4(10) of the Indian Child
Welfare Act of 1978; or
(D) is located in an area which is not a
metropolitan statistical area and which has ex-
perienced a decrease in population of not less
than 10 percent (as determined in the most re-
cent decennial census) between 1980 and 1990.
(12) 
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 in-
come; or
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(ii) 
percent 
of 
the 
statewide
nonmetropolitan area median income.
(13) PARENT COMPANY.—The term ‘‘parent com-
pany’’ means any company that directly or indirectly
controls another company.
(14) SUBSIDIARY.—The term ‘‘subsidiary’’ has
the same meaning as in section 3 of the Federal De-
posit Insurance Act, except that a community devel-
opment financial institution that is a corporation
shall not be considered to be a subsidiary of any in-
sured 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.
(15) TARGETED POPULATION.—The term ‘‘tar-
geted population’’ means low-income persons or per-
sons who otherwise lack adequate access to loans or
equity investments.
SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COM-
MUNITY DEVELOPMENT BANKING.
(a) ESTABLISHMENT.—
(1) IN
GENERAL.—There is established a cor-
poration to be known as the Community Development
Financial Institutions Fund (hereafter in this subtitle
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referred to as the ‘‘Fund’’) that shall have the duties
and responsibilities specified by this subtitle. 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
CORPORA-
TION.—The Fund shall be a wholly owned Govern-
ment corporation in the executive 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 AND DEP-
UTY ADMINISTRATOR.—The management of the Fund
shall be vested in an Administrator, who shall be ap-
pointed by the President, by and with the advice and
consent of the Senate. The Administrator shall not en-
gage in any other business or employment during
service as the Administrator. The President may ap-
point a Deputy Administrator by and with the advice
and consent of the Senate. The Deputy Administrator
shall serve as the acting Administrator of the Fund
during the absence or disability of the Administrator
or in the event of a vacancy in the office of the Ad-
ministrator.
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(2) CHIEF FINANCIAL OFFICER.—The Adminis-
trator shall appoint a chief financial officer who shall
oversee the financial management activities of the
Fund.
(3) OTHER OFFICERS.—The Administrator may
appoint such other officers and employees of the Fund
as the Administrator determines to be necessary or
appropriate.
(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;
(2) shall have the power to adopt, alter, and use
a corporate seal for the Fund, which shall be judi-
cially noticed;
(3) may adopt, amend, and repeal bylaws, rules,
and regulations governing the manner in which busi-
ness of the Fund may be conducted and such rules
and regulations as may be necessary or appropriate
to implement this subtitle;
(4) may enter into, perform, and enforce such
agreements, contracts, and transactions as may be
deemed necessary or appropriate to the conduct of ac-
tivities authorized under this subtitle;
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(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 person-
nel of any agency or instrumentality of the United
States with the consent of the agency or instrumental-
ity concerned on a reimbursable or nonreimbursable
basis; and
(7) may execute all instruments necessary or ap-
propriate in the exercise of any of the functions of the
Fund under this subtitle and may delegate to the offi-
cers of the Fund such of the powers and responsibil-
ities of the Administrator as the Administrator deems
necessary or appropriate for the administration of the
Fund.
(d) ADVISORY BOARD.—
(1) ESTABLISHMENT.—The Administrator shall
establish an advisory board to be known as the Com-
munity Development Advisory Board (hereafter in
this subtitle referred to as the ‘‘Board’’) in accordance
with the provisions of the Federal Advisory Commit-
tee Act.
(2) MEMBERSHIP.—
(A) IN GENERAL.—The Board shall consist
of 5 private citizens who, collectively—
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(i) represent community groups whose
constituencies include targeted populations
or residents of investment areas;
(ii) represent local or regional govern-
ment interests;
(iii) have expertise in the operations
and activities of insured depository institu-
tions; and
(iv) have expertise in community de-
velopment and lending.
(B) REPRESENTATION.—Each of the cat-
egories described in clauses (i) through (iv) of
subparagraph (A) shall be represented by not less
than 1 member of the Board.
(3) BOARD FUNCTION.—It shall be the function
of the Board to advise the Administrator on the poli-
cies of the Fund. The Board shall not advise the Ad-
ministrator on the granting or denial of any particu-
lar application.
(4) TERMS OF MEMBERS.—
(A) IN
GENERAL.—Each member of the
Board 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
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appointed shall be appointed for the remainder
of such term. Members may continue to serve fol-
lowing the expiration of their terms until a suc-
cessor is appointed and qualified.
(5) CHAIRPERSON.—The Administrator shall ap-
point a chairperson from among the members of the
Board.
(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 in-
curred in the performance of their duties, in accord-
ance with the Federal Advisory Committee Act.
(8) COSTS AND EXPENSES.—The Fund shall pro-
vide 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 fol-
lowing new subparagraph:
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‘‘(B) the Community Development Finan-
cial Institutions Fund;’’.
(f) GOVERNMENT CORPORATION CONTROL ACT EX-
EMPTION.—Section 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.
(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—
(1) in section 5314, by adding at the end the fol-
lowing:
‘‘Administrator of the Community Development
Financial Institutions Fund.’’; and
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(2) in section 5315, by adding at the end the fol-
lowing:
‘‘Deputy Administrator of the Community Devel-
opment Financial Institutions Fund.’’.
(j) ASSISTED INSTITUTIONS NOT UNITED STATES IN-
STRUMENTALITIES.—A community development financial
institution or other organization that receives assistance
pursuant to this subtitle shall not be deemed to be an agen-
cy, department, or instrumentality of the United States.
SEC. 105. APPLICATIONS FOR ASSISTANCE.
(a) FORM AND PROCEDURES.—An application for as-
sistance under this subtitle shall be submitted in such form
and in accordance with such procedures as the Fund shall
establish.
(b) MINIMUM REQUIREMENTS.—Except as provided in
sections 106 and 115, the Fund shall require an applica-
tion—
(1) to establish that the applicant is, or will be,
a community 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 managed and will have the ca-
pacity to operate a community development fi-
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nancial institution that will not be dependent
upon assistance from the Fund for continued vi-
ability;
(B) an analysis of the needs of the invest-
ment 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 government assistance pro-
grams, and private sector financial services;
(D) an explanation of how the proposed ac-
tivities of the applicant are consistent with exist-
ing economic, community, and housing develop-
ment plans adopted by or applicable to an in-
vestment area; 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 popu-
lations;
(3) to include a detailed description of the appli-
cant’s plans and likely sources of funds to match the
amount of assistance requested from the Fund;
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(4) in the case of an applicant that has pre-
viously received assistance under this subtitle, to dem-
onstrate that the applicant—
(A) has substantially met its performance
goals and otherwise carried out its responsibil-
ities under this subtitle and the assistance agree-
ment; and
(B) will expand its operations into a new
investment area or to serve a new targeted popu-
lation, offer more services, or increase the volume
of its business;
(5) in the case of an applicant with a prior his-
tory of serving investment areas or targeted popu-
lations, to demonstrate that the applicant—
(A) has a record of success in serving in-
vestment areas or targeted populations;
(B) will expand its operations into a new
investment area or to serve a new targeted popu-
lation, offer more services, or increase the volume
of its current business; and
(6) to include such other information as the
Fund deems appropriate.
(c) EXCEPTION.—
(1) IN
GENERAL.—Notwithstanding subsection
(b)(1), in the case of a State in which there is no ex-
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isting community development financial institution
in operation on the date of enactment of this Act, an
applicant may be an agency or instrumentality of a
State government if—
(A) such an entity has a primary mission
of promoting community development;
(B) any assistance received is used to estab-
lish a community development financial institu-
tion;
(C) there is no nongovernment entity within
the State that possesses the capacity to become a
community development financial institution;
(D) no other agency or instrumentality of
the same State has received assistance; and
(E) assistance received will not reduce the
amount of State funds that otherwise would be
appropriated to such an entity.
(2) MAJORITY OWNERSHIP.—An agency or in-
strumentality eligible to apply pursuant to para-
graph (1) may own a majority of the voting stock of
a community development financial institution if it
demonstrates that there is a lack of nonpublic sources
of capital available to establish a community develop-
ment financial institution.
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(3) AMOUNT OF ASSISTANCE.—No State agency
or instrumentality and a community development fi-
nancial institution, a majority of the shares of which
are owned by such an agency or instrumentality pur-
suant to this subsection, may cumulatively receive as-
sistance exceeding the amount set forth under section
108(d)(1).
(d) PREAPPLICATION
OUTREACH
PROGRAM.—The
Fund may operate an outreach program to identify and
provide information to potential applicants.
SEC. 106. COMMUNITY PARTNERSHIPS.
(a) APPLICATION.—An application for assistance may
be filed jointly by a community development financial in-
stitution and a community partner to carry out a commu-
nity partnership.
(b) APPLICATION REQUIREMENTS.—The Fund shall
require a community partnership application—
(1) to meet the minimum requirements estab-
lished for community development financial institu-
tions 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 partici-
pate in carrying out the community partnership and
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how the partnership will enhance activities serving
the investment area or targeted population; and
(3) to demonstrate that the community partner-
ship activities 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 the selection
criteria set out in section 107.
(d) LIMITATION ON DISTRIBUTION OF ASSISTANCE.—
Assistance provided upon approval of an application under
this section shall be distributed only to the community de-
velopment financial institution coapplicant, and shall not
be used to fund any activities carried out directly by the
community partner or an affiliate thereof.
(e) OTHER REQUIREMENTS AND LIMITATIONS.—All
other requirements 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 estab-
lish additional guidelines and restrictions on the use of Fed-
eral funds to carry out community partnerships.
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(8) whether the applicant is, or will become, an
insured depository institution or an insured credit
union;
(9) whether the applicant is, or will be, lo-
cated—
(A) in an empowerment zone or enterprise
community designated under section 1391 of the
Internal Revenue Code of 1986;
(B) on an Indian reservation, as defined in
section 3(d) of the Indian Financing Act of 1974
or section 4(10) of the Indian Child Welfare Act
of 1978; or
(C) in a community that has experienced a
sudden and significant loss in total employment
since the 1990 census or a major dislocation in
its primary employment base.
(10) the extent to which the applicant will in-
crease its resources through coordination with other
institutions or participation in a secondary market;
(11) in the case of an applicant with a prior his-
tory of serving investment areas or targeted popu-
lations, the extent of success in serving them; and
(12) other factors (such as the extent to which the
applicant has strong ties to the community that it
will serve) deemed to be appropriate by the Fund.
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(b) GEOGRAPHIC DIVERSITY.—The Fund shall assist
a geographically diverse group of applicants, including an
appropriate mix of applicants from urban, rural, and Na-
tive American communities.
SEC. 108. ASSISTANCE PROVIDED BY THE FUND.
(a) FORMS OF ASSISTANCE.—
(1) IN GENERAL.—The Fund may provide—
(A) financial assistance through equity in-
vestments, deposits, credit union shares, loans,
and grants; and
(B) technical assistance—
(i) directly;
(ii) through grants; or
(iii) by contracting with organizations
that possess expertise in community devel-
opment, without regard to whether the orga-
nizations receive or are eligible to receive
assistance under this subtitle.
(2) EQUITY INVESTMENTS.—The Fund shall not
own more than 50 percent of the equity of a commu-
nity development financial institution and may not
control the operations of such institution. The Fund
may hold only transferable, nonvoting equity invest-
ments. Such equity investments may provide for con-
vertibility to voting stock upon transfer by the Fund.
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(3) DEPOSITS.—Deposits made pursuant to this
section in an insured community development finan-
cial institution shall not be subject to any require-
ment for collateral or security.
(4) LIMITATIONS ON OBLIGATIONS.—Direct loan
obligations may be incurred by the Fund only to the
extent that appropriations of budget authority to
cover their costs, as defined in section 502 of the Con-
gressional 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
institutions to serve investment areas or targeted pop-
ulations by developing or supporting—
(A) commercial facilities that promote revi-
talization, 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 prod-
ucts and services to low-income people;
(C) community facilities;
(D) the provision of basic financial services;
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(E) housing that is principally affordable to
low-income people, except that assistance used to
facilitate homeownership opportunities shall only
be used for activities and lending products that
serve low-income people and are not provided by
other lenders in the area; and
(F) other businesses and activities deemed
appropriate by the Fund.
(2) LIMITATIONS.—No assistance made available
under this subtitle may be expended by a community
development financial institution (or an organization
receiving assistance under section 115) to pay any
person to influence or attempt to influence any agen-
cy, elected official, officer, or employee of a State or
local government in connection with the making,
award, extension, continuation, renewal, amendment,
or modification of any State or local government con-
tract, grant, loan, or cooperative agreement (as such
terms are defined in section 1352 of title 31, United
States Code).
(c) USES OF TECHNICAL ASSISTANCE.—Technical as-
sistance may be used for activities that enhance the capac-
ity of a community development financial institution, such
as training of management and other personnel and devel-
opment of programs and investment or loan products.
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(d) AMOUNT OF ASSISTANCE.—
(1) IN GENERAL.—The Fund may provide not
more than $5,000,000 of assistance, in the aggregate,
during any 3-year period to any 1 community devel-
opment financial institution and its affiliates.
(2) EXCEPTION.—Notwithstanding the limita-
tions in paragraph (1), in the case of an existing
community development financial institution that
proposes to serve an investment area or targeted pop-
ulation outside of any State and outside of any met-
ropolitan area presently served by the institution, the
Fund may provide not more than $7,500,000 of as-
sistance to a community development financial insti-
tution and its affiliates, in the aggregate, during any
3-year period, of which not less than $2,500,000 shall
be used to establish affiliates to serve the new invest-
ment area or targeted population.
(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 tech-
nical assistance shall be matched with funds from
sources other than the Federal Government on the
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basis of not less than one dollar for each dollar pro-
vided by the Fund. Such matching funds shall be at
least comparable in form and value to assistance pro-
vided by the Fund. The Fund shall provide no assist-
ance (other than technical assistance) until a commu-
nity development financial institution has secured
firm commitments for the matching funds required.
(2) EXCEPTION.—In the case of an applicant
with severe constraints on available sources of match-
ing funds, the Fund may permit an applicant to
comply with the matching requirements of paragraph
(1) by—
(A) reducing such matching requirement by
50 percent;
(B) permitting such applicant to satisfy not
more than 60 percent of the matching require-
ment through use of assistance made available
pursuant to—
(i) section 106 of the Housing and
Community Development Act of 1974;
(ii) section 623(c)(1) of the Commu-
nity Economic Development Act of 1981; or
(iii) section 310B(c) of the Consoli-
dated Farm and Rural Development Act; or
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(C) 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 areas; and
(iii) is not requesting more than
$25,000 in assistance.
(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 FUNDS’’.—For
purposes of this subsection, notwithstanding section
105(a)(9) of the Housing and Community Develop-
ment Act of 1974, funds provided pursuant to such
Act shall be considered to be Federal funds, except as
provided in paragraph (2)(B).
(f) TERMS AND CONDITIONS.—
(1) SOUNDNESS
OF
UNREGULATED
INSTITU-
TIONS.—The Fund shall—
(A) ensure, to the maximum extent prac-
ticable, that each community development finan-
cial institution (other than an insured commu-
nity development financial institution or deposi-
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tory institution holding company) assisted under
this subtitle is financially and managerially
sound and maintains appropriate internal con-
trols; and
(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 112(a)(4).
(2) CONSULTATION
WITH
THE
APPROPRIATE
BANKING REGULATOR.—Prior to providing assistance
to an insured community development financial insti-
tution, the Fund shall consult with the appropriate
Federal banking agency.
(3) ASSISTANCE AGREEMENT.—
(A) IN GENERAL.—Before providing any as-
sistance under this subtitle, the Fund and each
community development financial institution to
be assisted shall enter into an agreement that re-
quires the institution to comply with perform-
ance goals and abide by other terms and condi-
tions pertinent to assistance received under this
subtitle.
(B) PERFORMANCE
GOALS.—Performance
goals shall be negotiated between the Fund and
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each community development financial institu-
tion 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 devel-
opment financial institutions shall be determined
in consultation with the appropriate Federal
banking agency.
(C) SANCTIONS.—The agreement shall pro-
vide that, in the event of fraud, mismanagement,
noncompliance with this subtitle, or noncompli-
ance with the terms of the agreement, the Fund,
in its discretion, may—
(i) revoke approval of the application;
(ii) terminate or reduce future assist-
ance;
(iii) require repayment of assistance;
(iv) require changes to the performance
goals imposed pursuant to subparagraph
(B);
(v) bar an applicant from reapplying
for assistance from the Fund;
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(vi) require changes to the strategic
plan 
submitted 
pursuant 
to 
section
105(b)(2); and
(vii) take such other actions as the
Fund deems appropriate.
(D) INSURED
COMMUNITY
DEVELOPMENT
FINANCIAL INSTITUTIONS.—In the case of an in-
sured community development financial institu-
tion, the Fund shall notify the appropriate Fed-
eral banking agency not less than 15 days before
imposing sanctions pursuant to this paragraph
and shall not impose such sanctions if the agen-
cy disapproves, with an explanation in writing,
during that 15-day period.
(E) NATIVE AMERICAN INSTITUTIONS.—In
the case of a community development financial
institution which serves an investment area de-
scribed in paragraph (11)(C) of section 103, or
an Indian tribe, as defined in section 4 of the
Indian Self-Determination and Education As-
sistance Act, the Fund shall consult with the ap-
plicable tribal government in evaluating the in-
stitution’s compliance with the performance
goals established pursuant to subparagraph (B).
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(g) AUTHORITY TO SELL EQUITY INVESTMENTS AND
LOANS.—The Fund may, at any time, sell its equity invest-
ments 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 REG-
ULATION.—Nothing in this subtitle shall affect any author-
ity of the appropriate Federal banking agency to supervise
and regulate any institution or company.
SEC. 109. COMMUNITY DEVELOPMENT TRAINING.
(a) IN GENERAL.—The Fund may operate a training
program to increase the capacity and expertise of commu-
nity development financial institutions and other members
of the financial services industry to undertake community
development activities (hereafter in this subtitle referred to
as the ‘‘training program’’).
(b) PROGRAM ACTIVITIES.—The training program
shall provide educational programs to assist community de-
velopment financial institutions and other members of the
financial services industry in developing lending and in-
vestment products, underwriting and servicing loans, man-
aging equity investments, and implementing development
services targeted to areas of economic distress, low-income
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persons, and persons who lack adequate access to loans and
equity investments.
(c) PARTICIPATION.—The training program shall be
made available to community development financial insti-
tutions 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
described in this section directly or through a contract with
other organizations. The Fund may contract to provide the
training with organizations that possess special expertise
in community development, without regard to whether the
organizations receive or are eligible to receive assistance
under this subtitle.
(e) FEES.—The Fund, as it deems appropriate, may
charge fees for participation in training services to offset
the cost of providing the services.
SEC. 110. ENCOURAGEMENT OF PRIVATE ENTITIES.
The Fund may facilitate the organization of corpora-
tions in which the Federal Government has no ownership
interest that will complement the activities of the Fund in
carrying out the purpose of this subtitle. The purpose of
any such entity shall be to assist community development
financial institutions in a manner that is complementary
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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 instrumental-
ity thereof.
SEC. 111. CLEARINGHOUSE FUNCTION.
(a) ESTABLISHMENT.—The Fund may establish and
maintain an information clearinghouse in coordination
with other Federal departments or agencies and community
development financial institutions to—
(1) collect, compile, and analyze information
pertinent to community development financial insti-
tutions that will assist in creating, developing, ex-
panding, and preserving these institutions; and
(2) provide information on financial, technical,
and management assistance, data on the activities of
community development financial institutions, regu-
lations, and other information that may promote the
purposes of this subtitle.
(b) COSTS.—The cost of maintaining the clearinghouse
shall be shared equally by the Fund and each department
or agency involved in maintaining the clearinghouse.
SEC. 112. RECORDKEEPING, REPORTS, AND AUDITS.
(a) RECORDKEEPING.—
(1) IN GENERAL.—A community development fi-
nancial institution receiving assistance from the
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Fund shall keep such records, for such periods as may
be prescribed, as may be necessary to disclose the
manner in which any assistance under this subtitle is
used and to demonstrate compliance with the require-
ments of this subtitle.
(2) USER
PROFILE
INFORMATION.—The Fund
shall require each community development financial
institution receiving assistance under this subtitle to
compile and maintain data on the gender, race, eth-
nicity, national origin, and other pertinent informa-
tion concerning individuals that utilize the services of
the assisted institution to ensure that targeted popu-
lations and low-income residents of investment areas
are adequately served.
(3) ACCESS TO RECORDS.—The Fund shall have
access on demand, for the purpose of determining
compliance with this subtitle, to any records of a
community development financial institution that re-
ceives assistance from the Fund.
(4) 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 performance goals, and
satisfying the terms and conditions of its assistance
agreement.
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(5) REPORTING.—
(A) ANNUAL REPORTS.—The Fund shall re-
quire each community development financial in-
stitution receiving assistance under this subtitle
to submit an annual report to the Fund on its
activities, its financial condition, and its success
in meeting 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.
(B) 
AVAILABILITY
OF
REPORTS.—The
Fund, after deleting or redacting any material,
as appropriate to protect privacy or proprietary
interests, shall make such reports available for
public inspection.
(b) 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 in-
stitutions assisted pursuant to this subtitle, and shall sub-
mit a report of its findings to the President and the Con-
gress not later than 120 days after the end of each fiscal
year of the Fund. The report shall include financial state-
ments audited in accordance with subsection (d).
(c) STUDIES.—
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(1) OPTIONAL STUDIES.—The Fund may con-
duct 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 paragraph
shall be included in the report required by subsection
(b).
(2) NATIVE AMERICAN LENDING STUDY.—
(A) STUDY.—The Fund shall conduct a
study on lending and investment practices on
Indian reservations and other land held in trust
by the United States Government. Such study
shall—
(i) identify barriers to private financ-
ing on such lands; and
(ii) identify the impact of such bar-
riers on access to capital and credit for Na-
tive American populations.
(B) CONSULTATION
WITH
PRIVATE
SEC-
TOR.—In conducting the study under subpara-
graph (A), the Fund shall consult with tribal
governments, private citizens, and organizations
that possess expertise in lending and community
development issues confronted by Native Amer-
ican populations.
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(C) REPORT.—Not later than 18 months
after the date of enactment of this Act, the Fund
shall submit a report to the President and the
Congress that—
(i) contains the findings of the study
conducted under subparagraph (A);
(ii) recommends any necessary statu-
tory and regulatory changes to existing Fed-
eral programs; and
(iii) makes policy recommendations for
community development financial institu-
tions, insured depository institutions, sec-
ondary market institutions, and other pri-
vate sector capital institutions to better
serve such populations.
(3) INVESTMENT, GOVERNANCE, AND
ROLE
OF
FUND.—Thirty months after the appointment and
qualification of the Administrator, the Comptroller
General shall submit to the President and the Con-
gress a study evaluating the structure, governance,
and performance of the Fund.
(d) EXAMINATION AND AUDIT.—The financial state-
ments of the Fund shall be audited in accordance with sec-
tion 9105 of title 31, United States Code, except that audits
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required by section 9105(a) of such title shall be performed
annually.
SEC. 113. INVESTMENT OF RECEIPTS AND PROCEEDS.
(a) ESTABLISHMENT OF ACCOUNT.—Any dividends on
equity investments and proceeds from the disposition of in-
vestments, deposits, or credit union shares that are received
by the Fund as a result of assistance provided pursuant
to section 108, and any fees received pursuant to section
109(e) 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 Adminis-
trator, the Secretary of the Treasury shall invest amounts
deposited in the account in public debt securities with ma-
turities suitable to the needs of the Fund, as determined
by the Administrator, and bearing interest at rates deter-
mined by the Secretary of the Treasury, comparable to cur-
rent market yields on outstanding marketable obligations
of the United States of similar maturities.
(c) AVAILABILITY.—Amounts deposited into the ac-
count and interest earned on such amounts pursuant to this
section shall be available to the Fund until expended.
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SEC. 114. 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 Admin-
istrator of the Community Development Financial In-
stitutions Fund;’’ before ‘‘and the chief’’; and
(2) in paragraph (2), by inserting ‘‘the Commu-
nity Development Financial Institutions Fund,’’ after
‘‘the Agency for International Development,’’.
(b) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated such sums as may be nec-
essary for the operation of the Office of Inspector General
established by the amendments made by subsection (a).
SEC. 115. CAPITALIZATION ASSISTANCE TO ENHANCE LI-
QUIDITY.
(a) ASSISTANCE.—
(1) IN GENERAL.—The Fund may provide assist-
ance for the purpose of providing capital to organiza-
tions that will purchase loans or otherwise enhance
the liquidity of community development financial in-
stitutions if—
(A) the primary purpose of such organiza-
tions is to promote community development; and
(B) any assistance received is matched with
funds—
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(i) from sources other than the Federal
Government;
(ii) on the basis of not less than $1 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 or-
ganization that receives assistance under this section
may not receive other financial or technical assistance
under this subtitle.
(b) SELECTION.—The selection of organizations to re-
ceive assistance 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 orga-
nization under this section during any 3-year period. As-
sistance may be provided in a lump sum or over a period
of time, as determined by the Fund.
(d) AUDIT AND REPORT REQUIREMENTS.—
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(1) IN GENERAL.—Organizations that receive as-
sistance from the Fund in accordance with this sec-
tion shall—
(A) submit to the Fund not less than once
in every 18-month period, financial statements
audited by an independent certified public ac-
countant;
(B) submit an annual report on its activi-
ties; and
(C) keep such records as may be necessary
to disclose the manner in which any assistance
under this section is used.
(2) ACCESS.—The Fund shall have access on de-
mand, for the purposes of determining compliance
with this section, to any records of such organiza-
tions.
(e) LIMITATIONS ON LIABILITY.—
(1) LIABILITY OF FUND.—The liability of the
Fund and the United States Government arising out
of the provision of assistance 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 share-
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holders by any Federal law or the law of any State,
territory, or the District of Columbia.
(2) LIABILITY
OF
GOVERNMENT.—This section
does not oblige the Federal Government, either di-
rectly or indirectly, to provide any funds to any orga-
nization 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 obligations or securities of any such organiza-
tion are backed by the full faith and credit of the
United States.
(f) USE OF PROCEEDS.—Any proceeds from the sale
of loans to an organization assisted under this section shall
be used by the seller for community development purposes.
SEC. 116. 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).
(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:
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‘‘SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN
FUND FOR CREDIT UNIONS.
‘‘(a) IN GENERAL.—The Board may exercise the au-
thority granted to it by the Community Development Credit
Union Revolving Loan Fund Transfer Act, including any
additional appropriation made or earnings accrued, subject
only to this section and to regulations prescribed by the
Board.
‘‘(b) INVESTMENT.—The Board may invest any idle
Fund moneys in United States Treasury securities. Any in-
terest 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 commu-
nity development credit unions, subject to an appropria-
tions Act.
‘‘(e) DEFINITION.—As used in this section, the term
‘Fund’ means the Community Development Credit Union
Revolving Loan Fund.’’.
SEC. 117. REGULATIONS.
Not later than 180 days after the appointment and
qualification of the Administrator, the Fund shall issue
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such regulations as may be necessary to carry out this sub-
title.
SEC. 118. AUTHORIZATION OF APPROPRIATIONS.
(a) IN GENERAL.—To carry out this subtitle, there are
authorized to be appropriated to the Fund, to remain avail-
able until expended—
(1) $60,000,000 for fiscal year 1994;
(2) $104,000,000 for fiscal year 1995;
(3) $107,000,000 for fiscal year 1996; and
(4) $111,000,000 for fiscal year 1997.
(b) ADMINISTRATIVE EXPENSES.—Of amounts author-
ized to be appropriated to the Fund—
(1) not more than $5,500,000 may be used by the
Fund in each fiscal year to pay the administrative
costs and expenses of the Fund; and
(2) not more than $50,000 may be used by the
Fund in each fiscal year to provide for administra-
tive costs and expenses described in section 104(d)(8).
(c) COMMUNITY DEVELOPMENT CREDIT UNION RE-
VOLVING LOAN FUND.—There are authorized to be appro-
priated for the purposes of the Community Development
Credit Union Revolving Loan Fund—
(1) $2,000,000 for fiscal year 1994;
(2) $1,000,000 for fiscal year 1995;
(3) $1,000,000 for fiscal year 1996; and
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(4) $1,000,000 for fiscal year 1997.
(d) CAPITALIZATION ASSISTANCE.—Not more than 5
percent of the amounts authorized to be appropriated under
subsection (a) may be used as provided in section 115.
(e) BUDGETARY TREATMENT.—Amounts authorized to
be appropriated under this section shall be subject to discre-
tionary spending caps, as provided in section 601 of the
Congressional Budget Act of 1974, and therefore shall re-
duce by an equal amount funds made available for other
discretionary spending programs.
Subtitle B—Home Ownership and
Equity Protection
SEC. 151. CONSUMER PROTECTIONS FOR HIGH COST MORT-
GAGES.
(a) DEFINITION.—Section 103 of the Truth in Lending
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 principal 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 consumma-
tion of the transaction will exceed by more than 10
percentage points the rate of interest on Treasury se-
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curities having comparable periods of maturity on the
fifteenth day of the month immediately preceding the
month in which the loan is consummated; 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) The amount specified in paragraph (1)(B)(ii)
shall be adjusted annually on January 1 by the annual per-
centage change in the Consumer Price Index, as reported
on June 1 of the year preceding such adjustment.
‘‘(3) For purposes of paragraph (1)(B), points and fees
shall include—
‘‘(A) all items included in the finance charge ex-
cept interest and 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), un-
less—
‘‘(i) the charge is reasonable;
‘‘(ii) the creditor receives no direct or indi-
rect compensation; and
‘‘(iii) the charge is paid to a third party
unaffiliated with the creditor; and
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‘‘(D) such other charges as the Board determines
to be appropriate.’’.
(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 insert-
ing ‘‘the due dates’’; and
(2) by inserting before the period ‘‘, and the dis-
closures 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 follow-
ing new section:
‘‘SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES.
‘‘(a) DISCLOSURES.—
‘‘(1) SPECIFIC
DISCLOSURES.—In addition to
other disclosures required under this title, for each
mortgage referred to in section 103(aa), the creditor
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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.’
‘‘(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 disclosures required under paragraph (1), the
creditor shall disclose—
‘‘(A) the annual percentage rate of the loan
and the amount of the regular monthly payment;
or
‘‘(B) in the case of a variable rate loan, the
annual percentage rate of the loan, a statement
that the interest rate and monthly payment may
increase, and the amount of the maximum pos-
sible monthly payment.
‘‘(b) TIME OF DISCLOSURES.—
‘‘(1) IN GENERAL.—The disclosures required by
this section shall be given not less than 3 business
days prior to consummation of the transaction.
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‘‘(2) NEW DISCLOSURES REQUIRED.—After pro-
viding the disclosures required by this section, a cred-
itor may not change the terms of the loan if such
changes make the disclosures inaccurate, unless new
disclosures are provided that meet the requirements of
this section.
‘‘(3) MODIFICATIONS.—The Board may, if it
finds that such action is necessary to permit home-
owners to meet bona fide personal financial emer-
gencies, prescribe regulations authorizing the modi-
fication or waiver of rights created under this sub-
section, to the extent and under the circumstances set
forth in those regulations.
‘‘(c) NO PREPAYMENT PENALTY.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (4), 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 of the loan prior to the date on which
such principal is due. If the date of maturity of a
mortgage referred to in section 103(aa) is accelerated
for any reason, and the consumer is entitled to a re-
bate of interest, computation of the rebate amount
shall comply with paragraph (2). No such mortgage
shall provide for a default interest rate that is higher
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than the interest rate provided by the note for the
loan prior to default.
‘‘(2) REBATE
COMPUTATION.—For purposes of
this subsection, any method of computing rebates of
interest that is less favorable to the consumer than the
actuarial method (as defined in section 933 of the
Housing and Community Development Act of 1992)
using simple interest is a prepayment penalty.
‘‘(3) EXCEPTION.—A mortgage referred to in sec-
tion 103(aa) may include terms under which a
consumer is required to pay not more than 1 month’s
interest as a penalty if the consumer prepays the
principal of the loan within 1 year of origination.
‘‘(d) 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 out-
standing principal balance.
‘‘(e) NO NEGATIVE AMORTIZATION.—A mortgage re-
ferred 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.
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‘‘(f) 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 con-
solidated and paid in advance from the loan proceeds pro-
vided to the consumer.
‘‘(g) CONSEQUENCE OF FAILURE TO COMPLY.—Any
mortgage that contains a provision prohibited by this sec-
tion shall be deemed a failure to deliver the material disclo-
sures required under this title, for the purpose of section
125.
‘‘(h) DEFINITION.—For purposes of this section, the
term ‘affiliate’ has the same meaning as in section 2(k) of
the Bank Holding Company Act of 1956.
‘‘(i) DISCRETIONARY REGULATORY AUTHORITY
OF
BOARD.—
‘‘(1) EXEMPTIONS.—The Board may, by regula-
tion or order, exempt specific mortgage products or
categories of mortgages from any or all of the prohibi-
tions specified in subsections (c) through (f), if the
Board finds that the exemption—
‘‘(A) is in the interest of the borrowing pub-
lic; and
‘‘(B) will apply only to products that main-
tain and strengthen home ownership and equity
protection.
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‘‘(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 section; and
‘‘(B) refinancing of mortgage loans that the
Board finds to be associated with abusive lend-
ing practices, or that are otherwise not in the in-
terest of the borrower.’’.
(e) CONFORMING AMENDMENTS.—
(1) TABLE OF SECTIONS.—The table of sections
at the beginning of chapter 2 of the Truth in Lending
Act is amended by striking the item relating to sec-
tion 129 and inserting the following:
‘‘129. Requirements for certain mortgages.’’.
(2) TRUTH IN LENDING ACT.—Section 105(a) of
the Truth in Lending Act (15 U.S.C. 1604(a)) is
amended in the second sentence, by striking ‘‘These’’
and inserting ‘‘Except in the case of a mortgage re-
ferred to in section 103(aa), these’’.
SEC. 152. CIVIL LIABILITY.
(a) DAMAGES.—Section 130(a) of the Truth in Lend-
ing Act (15 U.S.C. 1640(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(2)(B);
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(2) by striking the period at the end of para-
graph (3) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (3) the follow-
ing 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.—Sec-
tion 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 appro-
priate 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 sec-
tion 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—
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‘‘(A) remove the action to the appropriate
United States district court, if it was not origi-
nally 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 MORT-
GAGES.—
‘‘(1) IN GENERAL.—Any person who purchases
or is otherwise assigned a mortgage referred to in sec-
tion 103(aa) shall be subject to all claims and de-
fenses with respect to that mortgage that the consumer
could assert against the creditor of the mortgage, un-
less the purchaser or assignee demonstrates, by a pre-
ponderance of the evidence, that a reasonable person
exercising ordinary due diligence, could not deter-
mine, based on the loan documentation required by
this title, that the mortgage was in fact a mortgage
referred to in section 103(aa). The preceding sentence
does not affect a consumer’s rights under sections 125,
130, or any other provision of this title.
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‘‘(2) LIMITATION ON DAMAGES.—Notwithstand-
ing any other provision of law, relief provided as a
result of any action made permissible by paragraph
(1) may not exceed—
‘‘(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 ac-
tion, the sum of—
‘‘(i) the amount of all remaining in-
debtedness; and
‘‘(ii) the total amount paid by the
consumer in connection with the trans-
action.
‘‘(3) OFFSET.—The amount of damages that
may be awarded under paragraph (2)(B) shall be re-
duced 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 prominent notice of the potential liability
under this subsection as determined by the Board.’’.
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SEC. 153. 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 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 add-
ing at the end the following new section:
‘‘SEC. 138. REVERSE MORTGAGES.
‘‘(a) IN GENERAL.—In addition to the disclosures re-
quired under this title, for each reverse mortgage, the credi-
tor 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
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mortgage to the consumer expressed as a table of annual
interest rates. Each annual interest rate shall be based on
a projected total future loan balance under a projected ap-
preciation rate for the dwelling and a term for the mort-
gage. The disclosure shall include—
‘‘(1) statements of the annual interest rates for
not less than 3 projected appreciation rates and not
less than 3 loan periods, as determined by the Board,
including—
‘‘(A) a short-term reverse mortgage;
‘‘(B) a term equaling the actuarial life ex-
pectancy of the consumer; and
‘‘(C) such longer term as the Board deems
appropriate; and
‘‘(2) a statement that the consumer is not obli-
gated to complete the reverse mortgage transaction
merely because the consumer has received the disclo-
sure required under this section or has signed a loan
application.
‘‘(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 that the lender
will, by contract, be entitled to receive;
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‘‘(2) all costs and charges to the consumer, in-
cluding the costs of any associated annuity that the
consumer elects or is required to purchase as part of
the reverse mortgage transaction;
‘‘(3) all payments to and for the benefit of the
consumer, including, in the case in which an associ-
ated annuity is purchased (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 agree-
ments).’’.
(c) 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. 154. REGULATIONS; EFFECTIVE DATE.
(a) 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.
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(b) EFFECTIVE DATE.—This subtitle, and the amend-
ments 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 151(a) of this Act) consummated on
or after the date which is 60 days after the promulgation
of final regulations under subsection (a).
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 secu-
rity’ means a security that is rated in 1 of the 4 high-
est rating categories by at least 1 nationally recog-
nized statistical rating organization, and either—
‘‘(i) represents an interest in 1 or more
promissory notes or leases of personal property
evidencing the obligation of a small business con-
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cern and originated by an insured depository in-
stitution, insured credit union, insurance com-
pany, 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 rela-
tion to payments, or reasonable projections 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 as-
sure servicing of such notes or leases, or the re-
ceipt or timely receipt of amounts payable under
such notes or leases;
‘‘(ii) the term ‘small business concern’ has
the same meaning as in section 3 of the Small
Business Act;
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‘‘(iii) the term ‘insured depository institu-
tion’ has the same meaning as in section 3 of the
Federal Deposit Insurance Act; and
‘‘(iv) the term ‘insured credit union’ has the
same meaning 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 security’’ 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 in-
serting ‘‘or a small business related security’’ after ‘‘mort-
gage related security’’.
SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COL-
LATERAL.
Clause (ii) of section 11(d)(1) of the Securities Ex-
change 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.
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1464(c)(1)) is amended by adding at the end the following
new subparagraph:
‘‘(S) SMALL
BUSINESS
RELATED
SECURI-
TIES.—Investments in small business related se-
curities (as defined in section 3(a)(53) of the Se-
curities Exchange Act of 1934), subject to such
regulations as the Director may prescribe, in-
cluding regulations concerning the minimum
size of the issue (at the time of the initial dis-
tribution), 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 sub-
paragraph:
‘‘(C) are small business related securities
(as defined in section 3(a)(53) of the Securities
Exchange Act of 1934), subject to such regula-
tions as the Board may prescribe, including reg-
ulations prescribing the minimum size of the
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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 Sev-
enth, 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 securi-
ties’’.
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 sub-
paragraph (D); and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) small business related securities (as de-
fined in section 3(a)(53) of the Securities Ex-
change Act of 1934), or’’.
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(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 sub-
paragraph (D); and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) small business related securities (as de-
fined in section 3(a)(53) of the Securities Ex-
change Act of 1934), or’’.
(c) PREEMPTION OF STATE LAWS.—Section 106(c) of
the Secondary 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 re-
lated securities (as defined in section 3(a)(53) of the
Securities Exchange Act of 1934)’’ before ‘‘shall be ex-
empt’’.
(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 sub-
section:
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and requires registration or qualification of any
small business related securities on terms that differ
from those applicable to any obligation issued by the
United States.’’.
SEC. 208. INSURED DEPOSITORY INSTITUTION CAPITAL RE-
QUIREMENTS FOR TRANSFERS OF SMALL
BUSINESS OBLIGATIONS.
(a) ACCOUNTING PRINCIPLES.—The accounting prin-
ciples applicable to the transfer of a small business loan
or a lease of personal property with recourse contained in
reports or statements required to be filed with Federal bank-
ing agencies by a qualified insured depository institution
shall be consistent with generally accepted accounting prin-
ciples.
(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 gen-
erally accepted accounting principles, each qualified in-
sured depository institution shall—
(1) establish and maintain a reserve equal to an
amount sufficient to meet the reasonable estimated li-
ability of the institution under the recourse arrange-
ment; and
(2) include, for purposes of applicable capital
standards and other capital measures, only the
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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 in-
stitution 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 appropriate Federal banking agency, adequately
capitalized.
(d) AGGREGATE AMOUNT OF RECOURSE.—The total
outstanding amount of recourse retained by a qualified in-
sured 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 in-
stitution; 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 in-
stitution ceases to be a qualified insured depository institu-
tion or exceeds the limits under subsection (d), this section
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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 ex-
ceed 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 criti-
cally undercapitalized under section 38 of the Federal De-
posit Insurance Act.
(g) REGULATIONS REQUIRED.—Not later than 180
days after the date of the enactment of this Act each appro-
priate Federal banking agency shall promulgate final regu-
lations implementing this section.
(h) ALTERNATIVE SYSTEM PERMITTED.—
(1) IN GENERAL.—At the discretion of the appro-
priate Federal banking agency, this section shall not
apply if the regulations 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).
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(2) EXISTING TRANSACTIONS NOT AFFECTED.—
Notwithstanding paragraph (1), this section shall re-
main in effect with respect to transfers of small busi-
ness loans and leases of personal property with re-
course by qualified insured depository institutions oc-
curring 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 De-
posit Insurance Act;
(2) the term ‘‘appropriate Federal banking agen-
cy’’ has the same meaning as in section 3 of the Fed-
eral Deposit Insurance 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 De-
posit Insurance Act;
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(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 prin-
ciples;
(8) the term ‘‘small business’’ means a business
that meets the criteria for a small business concern es-
tablished 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. TRANSACTIONS IN SMALL BUSINESS RELATED
SECURITIES BY EMPLOYEE BENEFIT PLANS.
(a) PROHIBITED
TRANSACTION
EXEMPTION.—The
Secretary of Labor, in consultation with the Secretary of
the Treasury, may exempt transactions involving small
business related securities (as defined in section 3(a)(53)
of the Securities Exchange Act of 1934, as added by section
202 of this Act) pursuant to section 408(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1108(a)) and section 4975(c)(2) of the Internal Revenue
Code of 1986.
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(b) CONSIDERATION OF EXEMPTION REQUESTS.—The
Secretary of Labor shall consider any request for exemption
under subsection (a) within a reasonable period of time
after receipt of such request.
SEC. 210. SENSE OF THE SENATE ON TAXATION OF SMALL
BUSINESS LOAN INVESTMENT CONDUITS.
(a) SENSE OF THE SENATE.—It is the sense of the Sen-
ate that the taxation of a small business loan investment
conduit and the holder of an interest therein should be simi-
lar to the taxation of a real estate mortgage investment con-
duit and the holder of an interest therein under the Internal
Revenue Code of 1986, taking into account, as appro-
priate—
(1) the purpose of facilitating the securitization
of small business loans and leases or personal prop-
erty through the use of small business loan investment
conduits and the development of a secondary market
in small business loans and leases of personal prop-
erty;
(2) differences in the nature of qualifying mort-
gages in a real estate mortgage investment conduit
and small business loans and leases of personal prop-
erty;
(3) differences in the practices of participants in
the securitization of real estate mortgages in a real es-
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tate 
mortgage 
investment 
conduit 
and 
the
securitization of other assets; and
(4) such other tax policies as may be warranted.
(b) SMALL BUSINESS LOAN INVESTMENT CONDUIT
DEFINED.—For purposes of this section, the term ‘‘small
business loan investment conduit’’ means an entity substan-
tially all of the assets of which consist of an interest in
one or more promissory notes as leases of personal property
evidencing obligations—
(1) of a business that meets the criteria of a
small business concern established under section 3(a)
of the Small Business Act; and
(2) that were originated by an insured deposi-
tory institution (as defined in section 3 of the Federal
Deposit Insurance Act), credit union, insurance com-
pany, or similar institution which is supervised and
examined by a Federal or State authority, or a fi-
nance company or leasing company.
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,
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new products, and new services created in the United
States;
(2) adequate access to debt capital is a critical
component for small business development, productiv-
ity, expansion, and success in the United States;
(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 insti-
tutions 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 cap-
ital;
(6) the small business capital access programs
implemented by certain States are a flexible and effi-
cient 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 complement other programs which assist small
business concerns in obtaining access to capital; and
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(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
administratively efficient capital access programs that en-
courage commercial banks and other depository institutions
to provide access to debt capital for a broad portfolio of
small business concerns, and thereby promote a more effi-
cient 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 ‘‘Secretary’’ means the Secretary of
Housing and Urban Development;
(2) the term ‘‘appropriate Federal banking agen-
cy’’—
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(A) has the same meaning as in section 3
of the Federal Deposit Insurance Act; and
(B) includes the National Credit Union Ad-
ministration Board in the case of any credit
union the deposits of which are insured in ac-
cordance 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 particu-
lar 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 en-
rolled by a participating State in accordance with
this subtitle;
(5) the term ‘‘financial institution’’ means any
federally chartered or State-chartered commercial
bank, savings association, savings bank, or credit
union;
(6) the term ‘‘participating financial institu-
tion’’ means any financial institution that has en-
tered into a participation agreement with a partici-
pating State in accordance with section 254;
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(7) the term ‘‘participating State’’ means any
State that has been approved for participation in the
Program in accordance with section 253;
(8) the term ‘‘passive real estate ownership’’
means ownership of real estate for the purpose of de-
riving income from speculation, trade, or rental, ex-
cept that such term shall not include—
(A) the ownership of that portion of real es-
tate being used or intended to be used for the op-
eration of the business of the owner of the real
estate (other than the business of passive owner-
ship of real estate); or
(B) the ownership of real estate for the pur-
pose of construction or renovation, until the com-
pletion of the construction or renovation phase;
(9) the term ‘‘Program’’ means the Small Busi-
ness Capital Enhancement Program established under
this subtitle;
(10) the term ‘‘reserve fund’’ means a fund, es-
tablished by a participating State, earmarked for a
particular participating financial institution, for the
purposes of—
(A) 
depositing 
all 
required 
premium
charges paid by the participating financial in-
stitution and by each borrower receiving a loan
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under the Program from a participating finan-
cial institution;
(B) depositing contributions made by the
participating State; and
(C) covering losses on enrolled loans by dis-
bursing 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 popu-
lation 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 Secretary de-
termines has the capacity to participate in the
program.
SEC. 253. APPROVING STATES FOR PARTICIPATION.
(a) APPLICATION.—Any State may apply to the Sec-
retary for approval to be a participating State under the
Program and to be eligible for reimbursement by the
Secretary pursuant to section 257.
(b) APPROVAL CRITERIA.—The Secretary shall ap-
prove a State to be a participating State, if—
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(1) a specific department or agency of the State
has been designated to implement the Program;
(2) all legal actions necessary to enable such des-
ignated department or agency to implement the Pro-
gram 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 avail-
able 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 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 participa-
tion agreement 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 Secretary have executed a
reimbursement agreement that conforms to the
requirements of this subtitle.
(c) EXISTING STATE PROGRAMS.—
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(1) IN GENERAL.—A State that is not a partici-
pating State, but that has its own capital access pro-
gram providing portfolio insurance for business loans
(based on a separate loss reserve fund for each finan-
cial institution), may apply at any time to the Sec-
retary to be approved to be a participating State. The
Secretary shall approve such State to be a participat-
ing State, and to be eligible for reimbursements by the
Secretary pursuant to section 257, if the State—
(A) satisfies the requirements of subsections
(a) and (b); and
(B) certifies that each affected financial in-
stitution 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 participa-
tion agreement in effect with the participating
State shall immediately be considered a partici-
pating financial institution. Reimbursements
may be made under section 237 in connection
with all contributions made to the reserve fund
by the State in connection with lending that oc-
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curs on or after the date on which the Secretary
approves the State for participation.
(B) EFFECTIVE DATE OF PARTICIPATION.—
If an amended participation agreement that con-
forms with section 255 is required in order to se-
cure participation approval by the Secretary,
contributions subject to reimbursement under
section 257 shall include only those contributions
made to a reserve fund with respect to loans en-
rolled on or after the date that an amended par-
ticipation agreement between the participating
State and the participating financial institution
becomes effective.
(C) 
USE
OF
ACCUMULATED
RESERVE
FUNDS.—A State that is approved for participa-
tion in accordance with this subsection may con-
tinue to implement the program utilizing the re-
serve funds accumulated under the State pro-
gram.
(d) PRIOR
APPROPRIATIONS
REQUIREMENT.—The
Secretary shall not approve a State for participation in
the Program until at least $50,000,000 has been appro-
priated to the Secretary (subject to an appropriations Act),
without fiscal year limitation, for the purpose of making
reimbursements pursuant to section 257.
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(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 Secretary in accordance with
subsection (b)(4). Any such amendment shall become effec-
tive only after it has been approved by the Secretary.
SEC. 254. PARTICIPATION AGREEMENTS.
(a) IN GENERAL.—A participating State may enter
into a participation agreement with any financial institu-
tion determined by the participating State, after consulta-
tion with the appropriate Federal banking agency, to have
sufficient commercial lending experience and financial and
managerial capacity to participate in the Program. The de-
termination by the State shall not be reviewable by the Sec-
retary.
(b) PARTICIPATING FINANCIAL INSTITUTIONS.—Upon
entering into the participation agreement with the partici-
pating State, the financial institution shall become a par-
ticipating financial institution 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
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by this section, and shall not include any provisions incon-
sistent 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 insti-
tution. All funds credited to a reserve fund shall be the ex-
clusive 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 in-
stitution and contributions by the participating
State; and
(2) disbursing funds, either to cover losses sus-
tained 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 ac-
count, such funds shall be invested in a form that the par-
ticipating State determines is safe and liquid.
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(d) EARNED INCOME AND INTEREST.—Interest or in-
come earned on the funds credited to a reserve fund shall
be deemed to be part of the reserve fund, except that a par-
ticipating State may, as further specified in the participa-
tion agreement, provide authority 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 enroll-
ment under the Program may be made with such in-
terest rate, fees, and other terms and conditions as
agreed upon by the participating financial institu-
tion 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 maxi-
mum amount that can be drawn by the borrower
against the line of credit.
(f) ENROLLMENT PROCESS.—
(1) FILING.—
(A) IN GENERAL.—A participating finan-
cial 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.
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(B) FORM.—The form referred to in sub-
paragraph (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 agree-
ment 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 participating State of the filing submitted in ac-
cordance 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 indi-
cates that the participating financial institution has
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not complied with the participation agreement in en-
rolling the loan.
(g) COVERAGE AMOUNT.—In filing a loan for enroll-
ment under the Program, the participating financial insti-
tution 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 in-
stitution, within minimum and maximum limits set
forth in the participation agreement. The participa-
tion 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 allo-
cating premium charges between the borrower and the
participating financial institution. However, if the
participating financial institution is required to pay
any of the premium charges, the participation agree-
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ment shall authorize the participating financial insti-
tution 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 sub-
section, the participating State may not—
(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 institu-
tion of its business.
(j) STATE CONTRIBUTIONS.—In enrolling a loan
under the Program, the participating State shall contribute
to the reserve fund an amount, as provided for in the par-
ticipation agreement, which shall not be less than the sum
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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 insti-
tution charges off all or part of an enrolled loan, such
participating financial institution may file a claim
for reimbursement with the participating State by
submitting a form that—
(A) includes the representation by the par-
ticipating financial institution that it is filing
the claim in accordance with the terms of the ap-
plicable 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 fi-
nancial 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 de-
terminations on business loans that are not enrolled
loans under this subtitle.
(l) ELEMENTS OF CLAIMS.—A claim filed by a partici-
pating financial institution may include the amount of
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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 sub-
section (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 finan-
cial 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 en-
tire 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 en-
rolled 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
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(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 re-
serve fund, the participating State shall, upon
the request of the participating financial institu-
tion, 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 institution shall
promptly pay to the participating State for deposit into
the reserve fund the amount recovered, less any expenses in-
curred by the institution in collection of such amount.
(p) PARTICIPATION AGREEMENT TERMS.—
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(1) IN GENERAL.—In connection with the filing
of a loan for enrollment in the Program, the partici-
pation agreement—
(A) shall require the participating financial
institution to obtain an assurance from each bor-
rower 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 partici-
pating financial institution;
(II) a member of the immediate
family of an executive officer, director,
or principal shareholder of the partici-
pating financial institution; or
(III) a related interest of any
such executive officer, director, prin-
cipal shareholder, or member of the im-
mediate family;
(B) shall require the participating financial
institution to provide assurances to the partici-
pating State that the loan has not been made in
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order to place under the protection of the Pro-
gram prior debt that is not covered under the
Program and that is or was owed by the bor-
rower to the participating financial institution
or to an affiliate of the participating financial
institution;
(C) may provide that if—
(i) a participating financial institu-
tion 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 participat-
ing financial institution;
(ii) such prior loan was not enrolled in
the Program; and
(iii) additional or new financing is ex-
tended by the participating financial insti-
tution as part of the refinancing,
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
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inconsistent with the provisions and purposes of
this subtitle.
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘executive officer’’, ‘‘director’’,
‘‘principal shareholder’’, ‘‘immediate family’’, and
‘‘related interest’’ refer to the same relationship to a
participating financial institution as the relationship
described in part 215 of title 12 of the Code of Fed-
eral Regulations, or any successor to such part.
(q) TERMINATION CLAUSE.—In each participation
agreement, the participating State shall reserve for itself the
ability to terminate 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 en-
rolled loans for a participating financial institution
is continually less than the outstanding balance in
the reserve fund for that participating financial insti-
tution, the participating State, in its discretion, may
withdraw an amount from the reserve fund to bring
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the balance in the reserve fund down to the outstand-
ing balance of all such enrolled loans.
(s) GRANDFATHERED PROVISION.—
(1) 
SPECIAL
TREATMENT
OF
PREMIUM
CHARGES.—Notwithstanding subsection (b) or (d), the
participation agreement, if explicitly authorized by a
statute enacted by the State before the date of enact-
ment 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 at-
tributable to such premium charges, as assets of the
participating financial institution for accounting
purposes, subject to withdrawal by the participating
financial institution only—
(A) for the payment of claims approved by
the participating State in accordance with this
section; and
(B) upon the participating financial insti-
tution’s withdrawal 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 paragraph (1)(B), any future claims
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filed by the participating financial institution on
loans remaining in its capital access program port-
folio 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 with-
drawn 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 AU-
THORITY.—If the Secretary determines that the inclu-
sion in a participation agreement of the provisions
authorized by this subsection is resulting in the en-
rollment of loans under the Program that are likely
to have been made without assistance provided under
this subtitle, the Secretary may notify the participat-
ing State that henceforth, the Secretary will only
make reimbursements to the State under section 257
with respect to a loan if the participation agreement
between the participating State and each participat-
ing financial institution has been amended to con-
form 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
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submit to the Secretary a report of contributions to reserve
funds made by the participating State during the previous
calendar quarter. If the participating State has made con-
tributions to one or more reserve funds during the previous
quarter, the report shall—
(1) indicate the total amount of such contribu-
tions;
(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 limi-
tations contained in section 257 is applicable;
(3) if one of the limitations in section 257 is ap-
plicable, 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 paragraphs (1), (2), and (3) is accurate;
(B) funds in an amount meeting the mini-
mum requirements of section 253(b)(3) continue
to be available and legally committed to con-
tributions by the State to reserve funds, less any
amount that has been contributed by the State to
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reserve funds subsequent to the State being ap-
proved for participation in the Program;
(C) there has been no unapproved amend-
ment to any participation agreement or the form
of participation agreements; and
(D) the participating State is otherwise im-
plementing the Program in accordance with this
subtitle and regulations issued pursuant to
section 259.
(b) ANNUAL DATA.—Not later than March 31 of each
year, each participating State shall submit to the Secretary
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 Sec-
retary may require.
SEC. 257. REIMBURSEMENT BY THE SECRETARY.
(a) REIMBURSEMENTS.—Not later than 30 calendar
days after receiving a report filed in compliance with sec-
tion 256, the Secretary 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 Secretary pursuant
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to section 256 and this section. The Secretary shall reim-
burse participating States, as it receives reports pursuant
to section 256(a), until available funds are expended.
(b) SIZE OF ASSISTED BORROWER.—The Secretary
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 reim-
bursement to be provided by the Secretary to a participat-
ing 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 enter-
prise’’ 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 Secretary
to the participating State shall not exceed the lesser of—
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(1) 75 percent of the sum of the premium charges
paid to the reserve fund by the borrower and the par-
ticipating 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 Program equals or exceeds
$2,000,000, the amount of reimbursement to be provided by
the Secretary 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 enroll-
ment 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 Secretary 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
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(2) by applying subsection (e) to the balance of
the loan.
SEC. 258. REIMBURSEMENT TO THE SECRETARY.
(a) IN GENERAL.—If a participating State withdraws
funds from a reserve fund pursuant to terms of the partici-
pation agreement permitted by subsection (d) or (r) of sec-
tion 255, such participating State shall, not later than 15
calendar days after such withdrawal, submit to the Sec-
retary an amount computed by multiplying the amount
withdrawn by the appropriate factor, as determined under
subsection (b).
(b) FACTOR.—The appropriate factor shall be obtained
by dividing 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 participating State to all reserve funds, including
if applicable, contributions that have been made by
the State prior to becoming a participating State if
the State continued its own capital access program in
accordance with section 253(b).
(c) USE OF REIMBURSEMENTS.—The Secretary may
use funds reimbursed pursuant to this section to make reim-
bursements under section 257.
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SEC. 259. REGULATIONS.
The Secretary shall promulgate appropriate regula-
tions to implement this subtitle.
SEC. 260. AUTHORIZATION OF APPROPRIATIONS.
(a) AMOUNT.—There are authorized to be appro-
priated to the Secretary $50,000,000 to carry out this sub-
title.
(b) BUDGETARY TREATMENT.—The amount author-
ized 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.
TITLE III—PAPERWORK REDUC-
TION AND REGULATORY IM-
PROVEMENT
SEC. 301. INCORPORATED DEFINITIONS.
Unless otherwise specifically provided in this title, for
purposes of this title—
(1) the terms ‘‘appropriate Federal banking
agency’’, ‘‘Federal banking agencies’’, and ‘‘insured
depository institution’’ 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.
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SEC. 302. ADMINISTRATIVE CONSIDERATION OF BURDEN
WITH NEW REGULATIONS.
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 agen-
cy shall consider, consistent with the principles of safety
and soundness and the public interest—
(1) any administrative burdens that such regula-
tions would place on depository institutions, includ-
ing small depository institutions, and customers of
depository institutions; and
(2) the benefits of such regulations.
SEC. 303. STREAMLINING OF REGULATORY REQUIREMENTS.
(a) REVIEW
OF REGULATIONS; REGULATORY UNI-
FORMITY.—During the 2-year period beginning on the date
of enactment of this Act, each Federal banking agency shall,
consistent with principles of safety and soundness and the
public interest—
(1) conduct a review of the regulations and writ-
ten policies of that agency—
(A) to streamline those regulations and
policies in order to improve efficiency, reduce
unnecessary costs, and eliminate unwarranted
constraints on credit availability; and
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(B) to remove inconsistencies and outmoded
and duplicative requirements; and
(2) work jointly with the other Federal banking
agencies to make uniform all regulations and guide-
lines implementing common statutory or supervisory
policies.
(b) REPORT
TO CONGRESS.—The Federal banking
agencies shall submit a joint report to the Congress annu-
ally for 2 years following the date of enactment of this Act
detailing the progress of the agencies in carrying out the
requirements of subsection (a).
SEC. 304. ELIMINATION OF DUPLICATIVE FILINGS.
The Federal banking agencies shall work jointly—
(1) to eliminate, to the extent practicable, dupli-
cative or otherwise unnecessary requests for informa-
tion in connection with applications or notices to the
agencies; and
(2) to harmonize, to the extent practicable, any
inconsistent publication and public notice require-
ments.
SEC. 305. COORDINATED AND UNIFIED EXAMINATIONS.
Section 10(d) of the Federal Deposit Insurance Act (12
U.S.C. 1820(d)) is amended by adding at the end the follow-
ing new paragraph:
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‘‘(6) COORDINATED
EXAMINATIONS.—To mini-
mize the disruptive effects of examinations on the op-
erations of insured depository institutions—
‘‘(A) each appropriate Federal banking
agency shall, to the extent practicable and con-
sistent with safety and soundness principles and
the public interest—
‘‘(i) coordinate examinations to be con-
ducted by that agency at an insured deposi-
tory institution and its affiliates;
‘‘(ii) coordinate with the other appro-
priate Federal banking agencies in the con-
duct of such examinations; and
‘‘(iii) work to coordinate the conduct of
all examinations made pursuant to this
subsection with the appropriate State bank
supervisor; and
‘‘(B) not later than 2 years after the date
of enactment of the Community Development,
Credit Enhancement, and Regulatory Improve-
ment Act of 1993, the Federal banking agencies
shall jointly establish and implement a system
for determining which one of the Federal bank-
ing agencies shall conduct a unified examination
of each insured depository institution and its af-
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filiates, as required by this subsection, on behalf
of all Federal banking agencies.’’.
SEC. 306. EIGHTEEN-MONTH EXAMINATION RULE FOR CER-
TAIN SMALL INSTITUTIONS.
Section 10(d)(4) of the Federal Deposit Insurance 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 inserting ‘‘and its composite condition—
‘‘(i) was found to be outstanding; or
‘‘(ii) in the case of an insured deposi-
tory institution that has total assets of less
than $175,000,000, was found to be out-
standing or good;’’.
(3) by redesignating subparagraph (D) as sub-
paragraph (E); and
(4) by inserting after subparagraph (C) the fol-
lowing new subparagraph:
‘‘(D) the insured institution is not currently
subject to a formal enforcement proceeding or
order by the Corporation or the appropriate Fed-
eral banking agency; and’’.
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SEC. 307. CALL REPORT SIMPLIFICATION.
(a) MODERNIZATION OF CALL REPORT FILING AND
DISCLOSURE SYSTEM.—In order to reduce the administra-
tive requirements pertaining to bank reports of condition,
savings association financial reports, and bank holding
company consolidated and parent-only financial state-
ments, 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 state-
ments electronically; and
(B) the Federal banking agencies may make
such reports and statements available to the pub-
lic electronically; and
(2) not later than 1 year after the date of enact-
ment of this Act, report to the Congress and make rec-
ommendations for legislation that would enhance effi-
ciency for filers and users of such reports and state-
ments.
(b) UNIFORM REPORTS AND SIMPLIFICATION OF IN-
STRUCTIONS.—The Federal banking agencies shall, consist-
ent with the principles of safety and soundness, work joint-
ly—
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(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 Fed-
eral 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 war-
ranted for reasons 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 fifth 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 fourth sen-
tence.
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(A) 
by 
redesignating 
paragraphs 
(1)
through (3) as subparagraphs (A) through (C);
(B) by striking ‘‘A State’’ and inserting the
following:
‘‘(1) IN GENERAL.—A State’’; and
(C) by adding at the end the following new
paragraph:
‘‘(2) FEES FOR TEMPORARY PRACTICE.—A State
appraiser certifying or licensing agency shall not im-
pose excessive fees or burdensome requirements, as de-
termined by the Appraisal Subcommittee, for tem-
porary practice under this subsection.’’.
SEC. 
316. 
ACCELERATION 
OF 
EFFECTIVE 
DATE 
FOR
INTERAFFILIATE TRANSACTIONS.
(a) HOME OWNERS’ LOAN ACT AMENDMENT.—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.—A savings associa-
tion that is well capitalized (as defined in
section 38 of the Federal Deposit Insurance
Act), as determined without including good-
will in calculating core capital, shall be
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treated as a bank for purposes 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 sub-
section, and any affiliated insured bank
that is commonly controlled (as defined in
section 5(e)(9) of the Federal Deposit Insur-
ance Act), shall be subject to subsection (e)
of section 5 of the Federal Deposit Insur-
ance Act as if paragraph (6) of that sub-
section did not apply.’’.
(b) REPEAL PROVISION.—Effective on January 1,
1995, subparagraph (C) of section 11(a)(2) of the Home
Owners’ Loan Act (12 U.S.C. 1468(a)(2)) (as added by sub-
section (a) of this section) is repealed.
SEC. 317. COLLATERALIZATION OF PUBLIC DEPOSITS.
Section 13(e) of the Federal Deposit Insurance Act (12
U.S.C. 1823(e)) is amended—
(1) by redesignating paragraphs (1) through (4)
as subparagraphs (A) through (D), respectively;
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U.S.C. 1842(e)) is amended by striking the second
sentence.
(2) MANAGEMENT
INTERLOCKS
ACT.—Section
202(3)(D) of the Depository Institution Management
Interlocks Act (12 U.S.C. 3201(3)(D)) is amended by
striking ‘‘the voting securities’’ and all that follows
through the end of the subparagraph and inserting
‘‘and is a bankers’ bank, described in Paragraph Sev-
enth of section 5136 of the Revised Statutes; or’’.
(d) LENDING LIMIT FOR LOANS SECURED BY SECURI-
TIES.—Section 11(m) of the Federal Reserve Act (12 U.S.C.
248(m)) is amended by striking ‘‘10 percentum’’ each place
such term appears and inserting ‘‘15 percent’’.
SEC. 324. BANK SERVICE CORPORATION ACT AMENDMENT.
Section 5 of the Bank Service Corporation Act (12
U.S.C. 1865) is amended—
(1) in subsection (a), by striking ‘‘the prior ap-
proval of’’ and inserting ‘‘prior notice, as determined
by’’; and
(2) in subsection (c), by inserting ‘‘or whether to
approve or disapprove any notice’’ after ‘‘approval’’.
SEC. 325. MERGER TRANSACTION REPORTS.
Section 18(c) of the Federal Deposit Insurance Act (12
U.S.C. 1828(c)) is amended—
(1) in paragraph (4)—
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(property disposition); section 8(d)(2)
of such Act (project-based certificates);
section 8(e)(2) of such Act (moderate
rehabilitation); section 23 of such Act
(as in effect before January 1, 1975);
or section 101 of the Housing and
Urban Development Act of 1965 (rent
supplements); or
‘‘(II) section 8 of the United
States Housing Act of 1937, following
conversion from section 101 of the
Housing and Urban Development Act
of 1965; and
‘‘(ii) tenant-based assistance under sec-
tion 8 of the United States Housing Act of
1937 for tenants currently residing in units
that were covered by an assistance contract
under the Loan Management Set-Aside pro-
gram under section 8(b) of the United
States Housing Act of 1937 immediately be-
fore foreclosure or acquisition of the project
by the Secretary.
‘‘(2) ANNUAL
CONTRIBUTION
CONTRACTS.—In
the case of multifamily housing projects that are ac-
quired by a purchaser other than the Secretary at
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within the range of rating categories of each rat-
ing agency, for the last 5 years, if available, or
if not available for 5 years, for such lesser period
as is available, from each nationally recognized
insurance company rating organization that has
rated the insurer, including an explanation of
the meaning of each rating category of each rat-
ing organization;
(ii) if ratings are unavailable for any year
of the 5-year period, a disclosure of this fact; and
(iii) a statement that any or all of the
above insurance company rating organization
reports may be obtained at no cost by writing or
calling an address or phone number listed in the
statement;
(B) a balance sheet as of December 31 for
each of the 3 years immediately preceding the
notice, if available, or for such lesser period as
is available, and as of the date of the most recent
quarterly statement;
(C) a copy of the Management’s Discussion
and Analysis that was filed as a supplement to
the annual statement of the preceding year; and
(D) an explanation of the reason for the
proposed transfer signed by the highest executive