I
104TH CONGRESS
1ST SESSION
H. R. 288
To enhance the availability of credit to businesses in order to foster economic
growth and stabilization and to create new employment opportunities
in communities facing economic distress, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 4, 1995
Mr. KANJORSKI (for himself and Mr. HINCHEY) introduced the following bill;
which was referred to the Committee on Banking and Financial Services
A BILL
To enhance the availability of credit to businesses in order
to foster economic growth and stabilization and to create
new employment opportunities in communities facing eco-
nomic distress, 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 Growth and
Stabilization Financing Demonstration Act of 1995’’.
SEC. 101. GUARANTEED LOAN DEMONSTRATION PROGRAM.
(a) IN GENERAL.—In order to study the feasibility
and desirability of a program of loan guarantees for eco-
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nomic growth and stabilization in communities facing eco-
nomic distress, the Secretary is authorized to guarantee
loans made to private borrowers by private lending institu-
tions, community development financial institutions, and
other lenders as the Secretary considers appropriate, ex-
cept that the Secretary may guarantee loans less than
$750,000 only if the borrower is not eligible for a loan
guarantee under the Small Business Act.
(b) TERMS AND CONDITIONS.—
(1) IN
GENERAL.—The Secretary may make
such guarantees upon application of the lenders and
upon such terms and conditions as the Secretary
may prescribe.
(2) PRESUMPTION
OF
VALIDITY.—Guarantees
under paragraph (1) shall be conclusive evidence
that the guarantee has been properly obtained, that
the underlying loan qualifies for such guarantee, and
that, but for fraud or material misrepresentation by
the holder, such guarantee will be presumed to be
valid, legal, and enforceable.
(3) LENDER
RESPONSIBILITY.—No guarantee
will be provided unless the lender is responsible and
makes adequate provision for servicing the loan on
reasonable terms and for protecting the financial in-
terest of the United States.
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(c) PREFERRED LENDER PREFERENCE.—To the ex-
tent feasible, the Secretary shall exercise the guarantee
authority established under this section on a preferred
lender basis and authorize lenders, in accordance with
agreements entered into between the Secretary and such
lenders, to take such actions on the Secretary’s behalf as
the Secretary deems appropriate, including, but not lim-
ited to, the determination of eligibility and credit worthi-
ness and loan monitoring, collection and liquidation.
(d) TARGET SUBSIDY RATE.—In exercising the loan
guarantee authority provided under this section, the Sec-
retary shall attempt to administer the program in a man-
ner which results in a subsidy rate not to exceed approxi-
mately 6 percent of the amount of the overall loan guaran-
tees.
(e) AUTHORIZATION OF APPROPRIATIONS.—Of the
funds authorized to be appropriated under section 106,
for purposes of this section there are authorized to be ap-
propriated $50,000,000 per fiscal year to cover the costs
(as defined in section 502(5) of the Federal Credit Reform
Act of 1990 (2 U.S.C. 661a(5))) of loan guarantees issued
pursuant to subsection (b)(3) of such section. Such sums
shall remain available until expended.
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SEC. 102. INTEREST RATE SUBSIDY DEMONSTRATION PRO-
GRAM.
(a) IN GENERAL.—In order to study the feasibility
and desirability of a program of interest rate subsidies for
economic growth and stabilization in communities facing
economic distress, the Secretary is authorized to pay inter-
est rate subsidies to private lending institutions, commu-
nity development financial institutions, and other lenders
as the Secretary considers appropriate, for loans made to
private borrowers.
(b) TERMS AND CONDITIONS.—The Secretary may
pay interest rate subsidies upon application of the lenders
and upon such terms and conditions as the Secretary may
prescribe, except that no interest rate subsidy may be pro-
vided unless the lender is responsible and makes adequate
provision for servicing the loan on reasonable terms and
for protecting the financial interest of the United States.
(c) PREFERRED LENDER PREFERENCE.—To the ex-
tent feasible, the Secretary shall exercise the interest rate
subsidy authority established under this section on a pre-
ferred lender basis and authorize lenders, in accordance
with agreements entered into between the Secretary and
such lenders, to take such actions on the Secretary’s be-
half as the Secretary deems appropriate, including, but
not limited to, the determination of eligibility and credit
worthiness and loan monitoring, collection and liquidation.