I
103D CONGRESS
2D SESSION
H. R. 3853
To stimulate private investment, economic development, and the creation
of jobs in the private sector by authorizing the Secretary of the Treasury
to participate in loans, and guarantee a portion of loans, made by
banks and other qualified lenders for businesses with potential for expan-
sion and growth and for other viable economic development projects,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 10, 1994
Mr. KLEIN (for himself, Mr. FRANK of Massachusetts, Mr. SCHUMER, and
Mr. DEUTSCH) introduced the following bill; which was referred to the
Committee on Banking, Finance and Urban Affairs
A BILL
To stimulate private investment, economic development, and
the creation of jobs in the private sector by authorizing
the Secretary of the Treasury to participate in loans,
and guarantee a portion of loans, made by banks and
other qualified lenders for businesses with potential for
expansion and growth and for other viable economic de-
velopment projects, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Economic Revitaliza-
tion Act of 1994’’.
SEC. 2. PARTICIPATION AND COOPERATION BETWEEN PUB-
LIC AND PRIVATE SECTORS TO STIMULATE
ECONOMIC DEVELOPMENT.
(a) IN GENERAL.—Title 31, United States Code, is
amended by redesignating subtitle VI as subtitle IX and
by inserting after subtitle V the following new subtitle:
‘‘Subtitle VI—Cooperation Between
Public and Private Sectors
‘‘CHAPTER
Sec.
‘‘75. Cooperative Economic Growth and Development Financing ...........
7501
‘‘CHAPTER 75—COOPERATIVE ECONOMIC
GROWTH AND DEVELOPMENT FINANCING
‘‘Sec.
‘‘7501. Definitions.
‘‘7502. Financial participation.
‘‘7503. Financing.
‘‘7504. Participating financial institutions.
‘‘§ 7501. Definitions
‘‘For purposes of this chapter—
‘‘(1) 
PARTICIPATING
FINANCIAL
INSTITU-
TION.—The term ‘participating financial institution’
means any depository institution (as defined in sec-
tion 19(b)(1)(A) of the Federal Reserve Act) or
other lending institution—
‘‘(A) which meets such criteria as the Sec-
retary may establish for participating in any co-
operative economic growth and development fi-
nancing project established by the Secretary
under this chapter; and
‘‘(B) whose application to participate as a
lender in any such project, subject to such con-
ditions as the Secretary may prescribe, is ap-
proved by the Secretary.
‘‘(2) QUALIFIED
LOAN.—The term ‘qualified
loan’ means a loan which—
‘‘(A) is made to a business which—
‘‘(i) is in good financial condition;
‘‘(ii) has a strong potential for expan-
sion and growth; and
‘‘(iii) is experiencing difficulty in ob-
taining sufficient amounts of credit on
terms which are economically viable for
such business due to prevailing economic
conditions or other circumstances unre-
lated to the financial condition of the busi-
ness;
‘‘(B) is made for purposes which the Sec-
retary determines will—
‘‘(i) produce a significant net increase
in the number of jobs relative to the total
amount of the loan; and
‘‘(ii) stimulate economic growth in a
region or community in which such busi-
ness is located; and
‘‘(C) meets such underwriting standards
and other criteria as the Secretary determines
to be appropriate.
‘‘(3) SECRETARY.—The term ‘Secretary’ means
the Secretary of the Treasury.
‘‘§ 7502. Financial participation
‘‘(a) LOAN PARTICIPATIONS AND GUARANTEES.—
‘‘(1) IN GENERAL.—Subject to subsections (b)
and (d), the Secretary may—
‘‘(A) purchase a participation in any quali-
fied loan made by a participating financial in-
stitution; and
‘‘(B) guarantee the payment of interest on,
and the repayment of principal of, a portion of
any qualified loan made by a participating fi-
nancial institution.
‘‘(2) TERMS AND CONDITIONS.—The Secretary
may establish such terms and conditions for a loan
participation or loan guarantee under paragraph (1)
as the Secretary determines to be appropriate, in-
cluding—
‘‘(A) minimum and maximum limitations
on the amount of any qualified loan which is el-
igible for any such participation or guarantee;
and
‘‘(B) in the case of a loan guarantee with
respect to any qualified loan, a requirement
that the participating financial institution which
originated the loan maintain a prescribed
amount of reserves with respect to the loan or
retain a subordinated participating interest in
the loan.
‘‘(3) FEES.—The Secretary may impose a fee
in such amount as the Secretary determines to be
appropriate for any loan participation or loan guar-
antee made by the Secretary under this section to
cover the costs incurred by the Secretary in carrying
out this subsection.
‘‘(b) MAXIMUM AMOUNT LIMITATIONS ON PARTICI-
PATIONS AND GUARANTEES.—
‘‘(1) LOAN PARTICIPATIONS.—Except with re-
spect to the purchase of loans in connection with the
securitization of qualified loans in accordance with
subsection (c), the amount of any loan participation
or other interest in any qualified loan acquired by
the Secretary under this chapter may not exceed the
amount which is equal to 70 percent of the total
amount of the loan.
‘‘(2) LOAN GUARANTEES.—The amount of any
guarantee made by the Secretary under subsection
(a)(2) with respect to any qualified loan may not ex-
ceed 50 percent of the amount which is equal to—
‘‘(A) the total principal of the loan; minus
‘‘(B) the amount of any participation in
such loan which the Secretary has acquired.
‘‘(c) SECURITIZATION OF QUALIFIED LOANS.—
‘‘(1) IN GENERAL.—The Secretary may issue
securities backed by a pool of qualified loans ac-
quired by the Secretary for such purpose.
‘‘(2) SECURITIES NOT BACKED BY FULL FAITH
AND CREDIT OF THE UNITED STATES.—
‘‘(A) IN GENERAL.—A security issued by
the Secretary under paragraph (1) shall not be
an obligation of the United States, or guaran-
teed in any respect by, the United States.
‘‘(B) COORDINATION WITH LOAN GUARAN-
TEES.—A loan guarantee provided by the Sec-
retary with respect to any portion of a qualified
loan shall cease to be effective at the time the
loan is acquired by the Secretary for inclusion
in a pool of qualified loans under paragraph
(1).
‘‘(3) STANDARDS.—The Secretary shall estab-
lish standards governing the composition of a pool of
qualified loans under paragraph (1), including
standards requiring—
‘‘(A) a broad geographical distribution of
the businesses which received the loans which
are in the pool;
‘‘(B) a diversity in the types of businesses
which received the loans and in the purposes for
which the loans were made;
‘‘(C) a wide variety in the amounts of prin-
cipal of the qualified loans included in the pool;
and
‘‘(D) a large number of loans in the pool.
‘‘(4) MAXIMUM SIZE OF LOAN INCLUDIBLE IN
POOL.—In order to be included in a pool under
paragraph (1), the total amount of principal of a
qualified loan may not exceed an amount equal to 10
percent of the total amount of all loans in such pool.
‘‘(5) AUTHORITY
TO
PURCHASE
QUALIFIED
LOANS FOR INCLUSION IN POOL.—Subject to sub-
section (d), the Secretary may purchase qualified
loans for inclusion in a pool under paragraph (1).
‘‘(d) ANNUAL LIMITATION ON AGGREGATE AMOUNT
OF LOANS AND GUARANTEES.—
‘‘(1) LOAN
PARTICIPATIONS.—The aggregate
amount of qualified loan participations acquired by
the Secretary and the amount of qualified loans pur-
chased by the Secretary for inclusion in a pool under
subsection (c) shall not exceed $100,000 in any fis-
cal year.
‘‘(2) 
LOAN
GUARANTEES.—The 
aggregate
amount of guarantees issued by the Secretary with
respect to qualified loans shall not exceed $200,000
in any fiscal year.
‘‘§ 7503. Financing
‘‘(a) BOND AUTHORITY.—
‘‘(1) IN GENERAL.—In order to obtain addi-
tional resources to carry out section 7503 at no ex-
pense to the Federal Government or the taxpayer,
the Secretary may issue bonds in accordance with
this section to obtain additional resources to carry
out section 7503.
‘‘(2) PRIVATE
GUARANTEE.—The Secretary
may not issue a bond under paragraph (1) unless
(a) the issuance is fully guaranteed by a financial in-
stitution which has the highest credit rating of any
financial institution in the United States by at least
1 unaffiliated, nationally recognized statistical rating
organization or (b) the loan obligation is insured or
underwritten by a letter of credit or credit insurance
issued by a financial institution which has the high-
est credit rating of any financial institution in the
United States by at least 1 unaffiliated, nationally
statistical rating organization.
‘‘(3) TERMS AND CONDITIONS IMPOSED BY UN-
DERWRITER.—Except to the extent otherwise pro-
vided in this chapter, the Secretary shall comply
with any term or condition imposed by an under-
writer in connection with the issuance of any bond
under paragraph (1).
‘‘(4) SECURITIES NOT BACKED BY FULL FAITH
AND CREDIT OF THE UNITED STATES.—A bond is-
sued by the Secretary under paragraph (1) shall not
be an obligation of the United States, or guaranteed
in any respect by, the United States.
‘‘§ 7504. Participating financial institutions
‘‘(a) STANDARDS AND APPLICATION PROCESS.—The
Secretary shall establish standards and application proce-
dures for the designation of participating financial institu-
tions for purposes of this chapter.
‘‘(b) ADVERTISING AND PUBLIC NOTICE.—The Sec-
retary shall provide advertising and public notices, and
take such other actions as the Secretary determines to be
appropriate, to publicize—
‘‘(1) the existence of the cooperative financial
participation projects established under this chapter;
and
‘‘(2) the names and addresses of the participat-
ing financial institutions involved in such cooperative
projects.’’.
(b) CLERICAL AMENDMENT.—The table of subtitles
for title 31, United States Code, is amended by redesignat-
ing the item relating to subtitle VI as subtitle IX and by
inserting after the item relating to subtitle V the following
new item:
‘‘VI. Cooperation Between Public and Private Sectors ...... 7501’’.
Æ