ness related securities acquired prior to the date of
such enactment.
‘‘(2) ENACTMENT OF STATE PROVISIONS.—Any
State may, not later than 7 years after the date of
enactment of this Act, enact a statute that specifi-
cally refers to this section and requires registration
or qualification of any small business related securi-
ties on terms that differ from those applicable to
any obligation issued by the United States.’’.
SEC. 8. INSURED DEPOSITORY INSTITUTION CAPITAL RE-
QUIREMENTS FOR TRANSFERS OF SMALL
BUSINESS 
LOANS 
AND 
INVESTMENTS 
IN
SMALL BUSINESS RELATED SECURITIES.
(a) ACCOUNTING PRINCIPLES.—The accounting prin-
ciples applicable to the transfer of a small business loan
with recourse contained in reports or statements required
to be filed with the appropriate Federal banking agencies
by all insured depository institutions shall be uniform and
consistent with generally accepted accounting principles.
(b) CAPITAL REQUIREMENTS.—The amount of cap-
ital required to be maintained by an insured depository
institution under applicable capital standards and other
capital measures with respect to the sale of a small busi-
ness loan with recourse, as reported under subsection (a),
shall not exceed an amount sufficient to meet the institu-
tion’s reasonable estimated liability under the recourse ar-
rangement.
(c) INVESTMENTS IN SMALL BUSINESS RELATED SE-
CURITIES.—A small business related security shall be
treated as a similarly rated mortgage-backed security
under the risk-based capital requirement applicable to in-
sured depository institutions.
(d) REGULATIONS REQUIRED.—Not later than 180
days after the date of enactment of this Act, each appro-
priate Federal banking agency shall promulgate final reg-
ulations implementing this section not later than 180 days
after the date of enactment of this Act.
(e) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘appropriate Federal banking
agency’’ has the same meaning as in section 3 of the
Federal Deposit Insurance Act;
(2) the term ‘‘capital standards’’ has the same
meaning as in section 38(c) of the Federal Deposit
Insurance Act;
(3) the term ‘‘insured depository institution’’
has the same meaning as in section 3 of the Federal
Deposit Insurance Act;
(4) the term ‘‘other capital measures’’ has the
same meaning as in section 38(c) of the Federal De-
posit Insurance Act;
(5) the term ‘‘recourse’’ shall have the meaning
given such term under generally accepted accounting
principles;
(6) the term ‘‘small business’’ means a business
that meets the criteria for a small business concern
established under section 3(a) of the Small Business
Act; and
(7) the term ‘‘small business related security’’
has the same meaning as in section 3(a)(53) of the
Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(53).
SEC. 9. 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, shall exempt transactions involving small
business related securities (as defined in section 3(a)(53)
of the Securities Exchange Act of 1934 (as added by sec-
tion 2 of this Act)), either unconditionally or on stated
terms and conditions, from the restrictions of sections 406
and 407 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1106, 1107) and the taxes imposed
under section 4975 of the Internal Revenue Code of 1986
(26 U.S.C. 4975).
(b) CONDITIONS.—In providing for the exemption re-
quired under subsection (a) the Secretary of Labor shall
consider—
(1) the importance of facilitating transactions
in small business related securities; and
(2) the necessity of imposing any term or condi-
tion to protect the rights and interests of partici-
pants and beneficiaries of such plan.
(c) REGULATIONS.—Not later than 180 days after
the date of enactment of this Act, the Secretary of Labor
shall promulgate final regulations to carry out subsection
(a).
SEC. 10. TAXATION OF SMALL BUSINESS LOAN INVEST-
MENT CONDUITS.
(a) TAXATION SIMILAR TO REMIC.—The Secretary
of the Treasury shall promulgate regulations providing for
the taxation of a small business loan investment conduit
and the holder of an interest therein similar to the tax-
ation of a real estate mortgage investment conduit and
the holder of interests therein under the Internal Revenue
Code of 1986.
(b) ADJUSTMENT TO REMIC PROVISIONS.—In pro-
mulgating regulations under subsection (a), the Secretary
shall make any necessary adjustments to the real estate
mortgage investment conduit provisions to take into con-
sideration—
(1) the purpose of facilitating the securitization
of small business loans through the use of small
business loan investment conduits and the develop-
ment of a secondary market in small business loans;
(2) differences in the nature of qualifying mort-
gages in a real estate mortgage investment conduit
and small business loans and obligations; and
(3) differences in the practices of participants
in the securitization of real estate mortgages in a
real estate mortgage investment conduit and the
securitization of other assets.
(c) SMALL BUSINESS LOAN INVESTMENT CONDUIT
DEFINED.—For purposes of this section, the term ‘‘small
business loan investment conduit’’ means—
(1) any entity substantially all of the assets of
which consist of any obligation (including any par-
ticipation or certificate of beneficial ownership there-
in) of a business that meets the criteria for a small
business concern established under section 3(a) of
the Small Business Act; and
(2) if such obligation was originated by an in-
sured depository institution (as defined in section 3
of the Federal Deposit Insurance Act), credit union,
insurance company, or similar institution which is
supervised and examined by an appropriate Federal
or State authority.
Æ