I
106TH CONGRESS
2D SESSION
H. R. 4822
To amend the Housing and Community Development Act of 1974 and the
Federal Home Loan Bank Act to increase capital available to commu-
nities for community and economic development projects, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 11, 2000
Mr. FATTAH introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To amend the Housing and Community Development Act
of 1974 and the Federal Home Loan Bank Act to in-
crease capital available to communities for community
and economic development projects, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘American Communities
Investment Act of 1999’’.
section shall, in complying with any community par-
ticipation requirements (including the requirements
under section 104(a)) applicable to the development
of activities to be funded with the proceeds of such
notes or obligations guaranteed under this section,
include participation of major stakeholders in the
community in which such activities will be carried
out.
‘‘(2) DEFINITION.—For purposes of this sub-
section, the term ‘stakeholder’ means a public or pri-
vate organizational entity whose future well-being
depends upon the applicant’s continued social and
economic viability, and includes the representatives
of the following community interests:
‘‘(A) Business.
‘‘(B) Banking.
‘‘(C) Education.
‘‘(D) Public health and safety.
‘‘(E) Labor.
‘‘(F) Community-based development orga-
nizations.
‘‘(G) Arts, cultural, religious, philan-
thropic, professional, and civic organizations.’’.
SEC. 3. COLLATERAL FOR FHLB ADVANCES.
Section 10(a)(4) of the Federal Home Loan Bank
Act (12 U.S.C. 1430(a)(4)) is amended by striking the
second sentence.
SEC. 4. AUTHORITY TO MAKE ADVANCES TO NONMEMBER
MORTGAGEES.
Section 10b of the Federal Home Loan Bank Act (12
U.S.C. 1430b) is amended to read as follows:
‘‘SEC. 10B. ADVANCES TO NONMEMBER MORTGAGEES.
‘‘(a) AUTHORITY.—Each Federal home loan bank
may make advances to a nonmember mortgagee, except
that such advances may be used only for community lend-
ing (as such term is defined in section 10(k)).
‘‘(b) NONMEMBER MORTGAGEE DEFINED.—For pur-
poses of subsection (a), the term ‘nonmember mortgagee’
means any entity—
‘‘(1) that is—
‘‘(A) a State or local housing finance agen-
cy or Indian housing authority (including any
subsidiary of such agency or authority) ap-
proved under title II of the National Housing
Act, which—
‘‘(i) is a chartered institution having
succession; and
‘‘(ii) is subject to the inspection and
supervision of a governmental agency;
‘‘(B) a community development financial
institution that—
‘‘(i) is not an insured depository insti-
tution or a subsidiary of an insured deposi-
tory institution; and
‘‘(ii) at the time an advance under
this section is made, is certified as a com-
munity development financial institution
under the Community Development Bank-
ing and Financial Institutions Act of 1994;
and
‘‘(iii) is a chartered institution having
succession; or
‘‘(C) a State or local economic development
agency that—
‘‘(i) is chartered under State law; and
‘‘(ii) is an institution having succes-
sion; and
‘‘(2) whose principal activity in the mortgage
field consists of lending the institution’s own funds.
‘‘(c) SECURITY.—Advances under subsection (a) shall
be secured in accordance with the requirements of section
10.
‘‘(d) TERMS
AND
CONDITIONS.—Advances made
under this section shall be made at the same rates of inter-
est and upon the same terms and conditions as are com-
parable extensions of credit to member institutions.’’.
SEC. 5. COMMUNITY LENDING FUND.
Section 10 of the Federal Home Loan Bank Act (12
U.S.C. 1430) is amended by adding at the end the fol-
lowing new subsection:
‘‘(k) COMMUNITY LENDING FUND.—
‘‘(1) IN GENERAL.—Subject to regulations pre-
scribed by the Board to carry out this subsection,
each Federal home loan bank shall establish a Com-
munity Lending Fund, which the bank shall use to
facilitate community lending by its members and
nonmember mortgagees.
‘‘(2) USE OF ASSETS OF COMMUNITY LENDING
FUNDS.—A bank may use amounts in its Commu-
nity Lending Fund only to provide grants, subsidies,
and subsidized advances to its members and non-
member mortgagees for use for community lending
activities.
‘‘(3) 
LOW- 
AND
MODERATE-INCOME
TAR-
GETING.—Not less than 70 percent of the aggregate
amount of assistance provided by a bank from a
Community Lending Fund shall be used for the sup-
port of community lending activities that benefit
low- and moderate-income persons.
‘‘(4) LOCAL PRIORITIES.—Each bank—
‘‘(A) shall give priority for assistance from
the Community Lending Fund of the bank for
projects located in empowerment zones and en-
terprise communities designated under part I of
subchapter U of chapter 1 of the Internal Rev-
enue Code of 1986 (26 U.S.C. 1391 et seq.);
and
‘‘(B) may establish such other priorities
for the types of projects to receive assistance
from the Community Lending Fund of the bank
as the bank considers appropriate, and to which
the Board shall defer, if such priorities are con-
sistent with the safety and soundness of the
bank and the provisions of this subsection. .
‘‘(5) 
COORDINATION
OF
ACTIVITIES.—The
Board shall require the banks, to the extent prac-
ticable, to coordinate their activities pursuant to this
subsection with any other State or Federal programs
intended to facilitate community lending.
‘‘(6) REPORT.—Each member and nonmember
mortgagee receiving advances or assistance from a
Community Lending Fund established by a bank
shall report annually to the bank regarding the use
of such advances or assistance.
‘‘(7) CONTRIBUTION
TO
FUND.—Each bank
shall annually contribute 10 percent of the net earn-
ings of that bank (after deducting expenses related
to section 10(j) and operating expenses) to its Com-
munity Lending Fund. Each bank may contribute
additional moneys to the Fund, and may accept for
deposit into the Fund moneys from other parties.
‘‘(8) SUSPENSION OF CONTRIBUTIONS.—
‘‘(A) IN GENERAL.— If a bank finds that
the payments required under paragraph (7) are
contributing to the financial instability of such
bank, it may apply to the Board for a tem-
porary suspension of such payments. The Board
shall make a determination of whether the bank
is financially unstable and whether such pay-
ments are contributing to such instability, and
[may/shall] suspend such bank’s payments to
its Community Lending Fund if finds in the af-
firmative with respect to both such questions.
‘‘(B) FACTORS
TO
BE
CONSIDERED.—In
determining the financial stability of a bank for
purposes of this paragraph, the Board shall
consider such factors as—
‘‘(i) whether the bank’s earnings are
severely depressed;
‘‘(ii) whether there has been a sub-
stantial decline in membership capital; and
‘‘(iii) whether there has been a sub-
stantial reduction in advances outstanding.
‘‘(C) REVIEW
OF
APPLICATIONS.—The
Board shall review any application under this
paragraph and any supporting financial data
and issue a written decision approving or dis-
approving such application. The Board’s deci-
sion shall be accompanied by specific findings
and reasons for its action.
‘‘(D) DESIGNATION
OF
SUSPENSION
PE-
RIOD.—If the Board grants a suspension, it
shall specify the period of time that such sus-
pension shall remain in effect and shall con-
tinue to monitor the bank’s financial condition
during such suspension.
‘‘(E) SUSPENSIONS
PROHIBITED
UNDER
CERTAIN
CIRCUMSTANCES.—The Board shall
not suspend payment to the Community Lend-
ing Fund of a bank if the bank’s reduction in
earnings is a result of—
‘‘(i) a change in the terms for ad-
vances to members which is not justified
by market conditions;
‘‘(ii) inordinate operating and admin-
istrative expenses; or
‘‘(iii) mismanagement.
‘‘(9) REGULATIONS.—
‘‘(A) IN GENERAL.—Not later than 1 year
after the date of the enactment of this Act, the
Board shall prescribe regulations to implement
this subsection.
‘‘(B) LIMITATIONS, RESTRICTIONS, AND
OTHER
REQUIREMENTS.—Subject to the re-
quirements 
of 
this 
subsection, 
such
regulations—
‘‘(i) may specify activities, restric-
tions, and limitations for the use by the
banks of amounts from Community Lend-
ing Funds;
‘‘(ii) may specify priorities for the use
of such advances;
‘‘(iii) shall ensure that assistance pro-
vided from a Community Lending Fund
will be used only for community lending to
assist projects for which adequate long-
term monitoring is available to guarantee
requirements established pursuant to this
subsection are satisfied;
‘‘(iv) shall ensure that any subsidies
provided under this subsection by Banks to
member institutions and nonmember mort-
gagees are passed on to the ultimate bor-
rower;
‘‘(v) shall specify standards for deter-
mining benefit for low- and moderate-in-
come persons, for purposes of paragraph
(3); and
‘‘(vi) shall establish uniform standards
for assistance from Community Lending
Funds and community lending by member
institutions and nonmember mortgagees
supported by such assistance.
‘‘(10) ADVISORY
COUNCIL.—Each bank shall
appoint an Advisory Council of 7 to 15 persons
drawn from stakeholders (as such term is defined in
section 108(s) of the Housing and Community De-
velopment Act of 1974 (42 U.S.C. 5308(s)) in its
district. The Advisory Council shall meet with rep-
resentatives of the board of directors of the Bank
quarterly to advise the Bank on community lending
needs in the district and on the utilization of the
Community Lending Fund of the bank for meeting
such needs. Each Advisory Council established under
this paragraph shall submit to the Board at least
annually its analysis of the community lending ac-
tivities carried out with amounts from the Commu-
nity Lending Fund of the bank by which the Com-
mittee is appointed.
‘‘(11) REPORTS TO CONGRESS.—
‘‘(A) The Board shall monitor and annu-
ally submit a report to the Congress and the
Advisory Council for each bank the support of
community lending by the banks and the utili-
zation of amounts from Community Lending
Funds.
‘‘(B) The analyses submitted by the Advi-
sory Councils to the Board under paragraph
(10) shall be included as part of the reports re-
quired by this paragraph.
‘‘(C) The Comptroller General of the
United States shall audit and evaluate the pro-
gram under this subsection after such program
has been operating for 2 years. The Comp-
troller General shall submit a report to the
Congress on the conclusions of the audit and
recommend improvements or modifications to
the program.
‘‘(12) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) COMMUNITY
LENDING.—The term
‘community lending’ means providing financing
for activities that meet the requirements for eli-
gibility, under section 105 of the Housing and
Community Development Act of 1974 (42
U.S.C. 5305), for assistance with amounts for
grants under title I of such Act.
‘‘(B) LOW- AND MODERATE-INCOME PER-
SONS.—The term ‘low- and moderate-income
persons has the meaning given such term in
section 102 of the Housing and Community De-
velopment Act of 1974 (42 U.S.C. 5302).
‘‘(C) NONMEMBER MORTGAGE.—The term
‘nonmember mortgagee’ has the meaning given
such term in section 10B(b) of this Act.’’.
(b) FUNDING FOR COMMUNITY LENDING FUNDS.—
Section 21B(f)(2)(C) of the Federal Home Loan Bank Act
(12 U.S.C. 1441b(f)(2)(C)) is amended to read as follows:
‘‘(C) PAYMENTS BY FEDERAL HOME LOAN
BANKS.—
‘‘(i) REFCORP FUNDING.—To the ex-
tent that the amounts available pursuant
to subparagraphs (A) and (B) are insuffi-
cient to cover the amount of interest pay-
ments, each Federal home loan bank shall
pay to the Funding Corporation in each
calendar year, 10 percent of the net earn-
ings of that bank (after deducting expenses
relating to section 10(j) and operating ex-
penses).
‘‘(ii) ANNUITY
VALUE.—The Board
shall annually determine the extent to
which the value of the aggregate amounts
paid by the banks exceeds or falls short of
the value of an annuity of $300,000,000
per year that commences on the issuance
date and ends on the final scheduled matu-
rity date of the obligations, and shall select
appropriate present value factors for mak-
ing such determinations.
‘‘(iii) ADJUSTMENT
OF
PERIOD
OF
BANKS’ OBLIGATIONS.—The Board shall
extend or shorten the term of the banks’
payment obligations under this subpara-
graph, as necessary to ensure that the
value of all payments made by the banks
under this paragraph is equivalent to the
value of such an annuity.
‘‘(iv) EXTENSION OF PERIOD BEYOND
MATURITY DATES OF UNDERLYING OBLI-
GATIONS.—If the Board extends the term
of payments beyond the final scheduled
maturity date for the obligations, each
bank shall continue to pay 10 percent of
its net earnings (after deducting expenses
relating to section 10(j) and operating ex-
penses) to the general fund of the Treas-
ury until the value of all such payments by
the banks is equivalent to the value of such
an annuity.
‘‘(v) FINAL
YEAR
ADJUSTMENT.—In
the final year in which the banks are re-
quired to make any payment to the general
fund of the Treasury under clause (iv), if
the dollar amount represented by 10 per-
cent of the net earnings of the banks ex-
ceeds the remaining obligation of the
banks to the Treasury, the Finance Board
shall reduce the percentage pro rata to a
level sufficient to pay the remaining obliga-
tion.’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall become effective on January
1, 2000.
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