disclosure requirements of this section with respect to the 
loans described in that paragraph for such year.’’. 
(b) MSA MODIFICATIONS.—Section 304(a) of the 
Home Mortgage Disclosure Act (12 U.S.C. 2803(a)) is 
amended—— 
(1) in paragraph (1), by inserting ‘‘or as modi-
fied by the Board under paragraph (3),’’ after ‘‘as 
defined by the Department of Commerce’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(3) MODIFICATION OF MSAS.—The Board may 
modify the description of any primary metropolitan 
statistical area, metropolitan statistical area, and 
consolidated metropolitan statistical area, as defined 
by the Secretary of Commerce, for purposes of this 
subsection.’’. 
(c) REGULAR STREAMLINING.—The Home Mortgage 
Disclosure Act (12 U.S.C. 2801 et seq.) is amended by 
adding the following new section: 
‘‘SEC. 312. REGULAR STREAMLINING. 
‘‘Before the end of the 1-year period beginning on 
the date of the enactment of the Community Banks Serv-
ing Their Communities First Act and before the end of 
each 5-year period thereafter, the Board shall— 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘(1) review the data collection and reporting re-
quirements of this title; 
‘‘(2) streamline, reduce, or eliminate such re-
quirements by regulation to the extent consistent 
with the purposes of this title; 
‘‘(3) revise the data collection and reporting re-
quirements under this title to ensure that they are 
consistent with those imposed under the Equal Cred-
it Opportunity Act; and 
‘‘(4) report to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of 
Representatives such legislative recommendations as 
the Board determines to be necessary to streamline, 
reduce, or eliminate such requirements to the extent 
consistent with the purposes of this title and to en-
sure that they are consistent with those imposed 
under the Equal Credit Opportunity Act.’’. 
SEC. 203. EXCEPTION TO ANNUAL PRIVACY NOTICE RE-
QUIREMENT UNDER THE GRAMM-LEACH-BLI-
LEY ACT. 
Section 503 of the Gramm-Leach-Bliley Act (15 
U.S.C. 6803) is amended by adding the following new sub-
section: 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘(c) EXCEPTION
TO ANNUAL NOTICE REQUIRE-
MENT.—A financial institution that— 
‘‘(1) provides nonpublic personal information 
only in accordance with the provisions of section 
502(b)(2) (relating to the consumer ‘opt out’ excep-
tion) and subsection 502(e) (relating to general ex-
ceptions); and 
‘‘(2) has not changed its policies and practices 
with regard to disclosing nonpublic personal infor-
mation, 
shall be exempt from the annual disclosure requirement 
under subsection (a).’’. 
SEC. 204. STREAMLINING REPORTS OF CONDITION. 
Section 7(a) of the Federal Deposit Insurance Act 
(12 U.S.C. 1817(a)) is amended by inserting after para-
graph (11) (as added by section 102 of this Act) the fol-
lowing new paragraph: 
‘‘(12) STREAMLINING
REPORTS
OF
CONDI-
TION.— 
‘‘(A) REVIEW
OF
INFORMATION
AND 
SCHEDULES.—Before the end of the 1-year pe-
riod beginning on the date of the enactment of 
the Community Banks Serving Their Commu-
nities First Act and before the end of each 5- 
year period thereafter, the Corporation shall, in 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
conjunction with the Board of Governors of the 
Federal Reserve System, the Comptroller of the 
Currency, and the Director of the Office of 
Thrift Supervision, review the information and 
schedules that are required to be filed by any 
insured depository institution with a report of 
condition under paragraph (3). 
‘‘(B) REDUCTION OR ELIMINATION OF FIL-
INGS
WHICH
ARE
MORE
BURDENSOME
THAN 
BENEFICIAL.—Within 9 months of completing 
any review under subparagraph (A), the Cor-
poration, the Board of Governors of the Federal 
Reserve System, the Comptroller of the Cur-
rency, and the Director of the Office of Thrift 
Supervision shall reduce or eliminate any re-
quirement to file information or schedules 
under paragraph (3) if such agencies find that 
the burdens of such filings are not outweighed 
by the benefits to safety and soundness of the 
financial system or the ability of the Corpora-
tion to accurately determine the financial condi-
tion and the results of operations of each in-
sured depository institution. 
‘‘(C) REPORT TO THE CONGRESS.—Before 
the end of the 6-month period beginning on the 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
date of completion of any review under subpara-
graph (A), the Corporation, the Board of Gov-
ernors of the Federal Reserve System, the 
Comptroller of the Currency, and the Director 
of the Office of Thrift Supervision shall submit 
a report to the Committee on Financial Services 
of the House of Representatives and the Com-
mittee on Banking, Housing, and Urban Affairs 
of the Senate containing the findings of the 
agencies with respect to such review and any 
recommendation of such agencies for legislative 
action to implement any such finding.’’. 
SEC. 205. INCREASE IN THE SPECIAL REGULATORY LEND-
ING LIMIT ON LOANS TO EXECUTIVE OFFI-
CERS. 
Section 22(g) of the Federal Reserve Act (12 U.S.C. 
375b(g)) is amended by adding at the end the following 
new paragraph: 
‘‘(11) LIMIT
APPLICABLE
ON
AGGREGATE 
AMOUNT OF CERTAIN LOANS TO EXECUTIVE OFFI-
CERS OF COMMUNITY BANKS.—Notwithstanding any 
regulation prescribed by the Board under paragraph 
(4) and subject to other conditions imposed under 
this subsection and subsection (h), the aggregate 
amount of extensions of credit that a member bank 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
may make to an executive officer of the bank under 
paragraph (4) shall not exceed $250,000.’’. 
TITLE 
III—TAX 
RELIEF 
FOR 
BANK 
DEPOSITORS, 
RURAL 
BANKS, MUNICIPALITIES, AND 
BANKS ORGANIZED AS LIM-
ITED LIABILITY COMPANIES 
SEC. 301. REDUCED RATE AND DEFERRAL OF INCOME REC-
OGNITION ON LONG-TERM CERTIFICATES OF 
DEPOSIT. 
(a) DEFERRAL OF INCOME RECOGNITION.—Section 
451 of the Internal Revenue Code of 1986 (relating to 
general rule for taxable year of inclusion) is amended by 
adding at the end the following new subsection: 
‘‘(j) CERTIFICATES OF DEPOSITS HELD BY CASH 
BASIS INDIVIDUALS.—In the case of an individual on the 
cash receipts and disbursements method of accounting 
who holds a nonnegotiable certificate of deposit, interest 
income which is not made available for withdrawal before 
maturity of the certificate without penalty shall not be in-
cludible in gross income before the certificate is redeemed 
or matures.’’. 
(b) INTEREST INCOME
ON LONG-TERM CERTIFI-
CATES
OF
DEPOSIT.—Subparagraph (A) of section 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
1(h)(11) of such Code is amended by striking ‘‘increased 
by’’ and all that follows and inserting: 
‘‘increased by— 
‘‘(i) qualified dividend income, and 
‘‘(ii) interest income on any nonnego-
tiable certificate of deposit— 
‘‘(I) with a fixed maturity date 
which is 1 year or more from the date 
of issue, and 
‘‘(II) the interest on which is not 
made available for withdrawal before 
maturity without penalty.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 302. EXCLUSION FOR INTEREST ON LOANS SECURED 
BY AGRICULTURAL REAL PROPERTY. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
items specifically excluded from gross income) is amended 
by inserting after section 139A the following new section: 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘SEC. 139B. INTEREST ON LOANS SECURED BY AGRICUL-
TURAL REAL PROPERTY. 
‘‘(a) EXCLUSION.—Gross income shall not include in-
terest received by a qualified lender on any qualified real 
estate loan. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED LENDER.—The term ‘qualified 
lender’ means any bank or savings association the 
deposits of which are insured under the Federal De-
posit Insurance Act (12 U.S.C. 1811 et seq.). 
‘‘(2) QUALIFIED
REAL
ESTATE
LOAN.—The 
term ‘qualified real estate loan’ means any loan se-
cured by agricultural real estate or by a leasehold 
mortgage (with a status as a lien) on agricultural 
real estate. For purposes of the preceding sentence, 
the determination of whether property securing such 
loan is agricultural real estate shall be made as of 
the time the interest income on such loan is accrued. 
‘‘(3) AGRICULTURAL REAL ESTATE.—The term 
‘agricultural real estate’ means— 
‘‘(A) real property used for the production 
of 1 or more agricultural products, and 
‘‘(B) any single family residence— 
‘‘(i) which is the principal residence 
(within the meaning of section 121) of its 
occupant, 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘(ii) which is located in a rural area 
(as determined by the Secretary of Agri-
culture), which is not within a Metropoli-
tan Statistical Area (as defined by the Of-
fice of Management and Budget) and 
which has a population (determined on the 
basis of the most recent decennial census 
for which data are available) of 2,500 or 
less, and 
‘‘(iii) which is purchased or improved 
with the proceeds of the qualified real es-
tate loan. 
‘‘(c) COORDINATION WITH SECTION 265.—Qualified 
real estate loans shall be treated as obligations described 
in section 265(a)(2) the interest on which is wholly exempt 
from the taxes imposed by this subtitle.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such part III is amended by inserting after the item 
relating to section 139A the following new item: 
‘‘Sec. 139B. Interest on loans secured by agricultural real property.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
SEC. 303. INCREASE IN CAP ON QUALIFIED SMALL ISSUE 
BONDS. 
(a) IN GENERAL.—Clause (i) of section 144(a)(4)(A) 
of the Internal Revenue Code of 1986 (relating to general 
rule for $10,000,000 limit in certain cases) is amended 
by striking ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’. 
(b) ADJUSTMENT OF CAP FOR INFLATION.—Sub-
section (a) of section 144 of such Code (relating to quali-
fied small issue bond) is amended by redesignating para-
graph (12) as paragraph (13) and by inserting after para-
graph (11) the following new paragraph: 
‘‘(12) INFLATION ADJUSTMENT.—In the case of 
a calendar year after 2006, the $30,000,000 amount 
contained in paragraph (4)(A)(i) shall be increased 
by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2005’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
Any increase under the preceding sentence which is 
not a multiple of $100,000 shall be rounded to the 
next lowest multiple of $100,000.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
(1) obligations issued after the date of the en-
actment of this Act, and 
(2) capital expenditures made after such date 
with respect to obligations issued on or before such 
date. 
SEC. 304. LIMITED LIABILITY COMPANY TAX TREATMENT 
FOR FDIC-INSURED LIMITED LIABILITY COM-
PANIES. 
(a) IN GENERAL.—Paragraph (2) of section 7701(a) 
of the Internal Revenue Code of 1986 (defining partner-
ship and partner) is amended to read as follows: 
‘‘(2) PARTNER AND PARTNERSHIP.— 
‘‘(A) IN
GENERAL.—The term ‘partner-
ship’ includes a syndicate, group, pool, joint 
venture, or other unincorporated organization, 
through or by means of which any business, fi-
nancial operation, or venture is carried on, and 
which is not, within the meaning of this title, 
a trust or estate or a corporation; and the term 
‘partner’ includes a member in such a syn-
dicate, group, pool, joint venture, or organiza-
tion. 
‘‘(B) ELECTION BY CERTAIN BANKS TO BE 
TAXED AS PARTNERSHIPS.— 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘(i) IN
GENERAL.—An eligible cor-
poration may elect to be treated as a part-
nership for purposes of this title. 
‘‘(ii) TAX TREATMENT.—In the case 
of an eligible corporation making an elec-
tion under clause (i)— 
‘‘(I) no gain or loss shall be rec-
ognized to the corporation or the 
shareholders by reason of an election 
under clause (i), and 
‘‘(II) section 1374 shall apply to 
the entity after such election. 
‘‘(iii) ELIGIBLE
CORPORATION.—The 
term ‘eligible corporation’ means any of 
the following entities which would (but for 
this subparagraph) be treated as a C cor-
poration for purposes of this title: 
‘‘(I) Any bank (as defined in sec-
tion 581). 
‘‘(II) Any bank holding company 
(as defined in section 2(a) of the 
Bank Holding Company Act of 1956 
(12 U.S.C. 1841(a))). 
‘‘(III) Any savings association 
(as defined in section 3(b) of the Fed-
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
eral Deposit Insurance Act (12 U.S.C. 
1813)). 
‘‘(IV) Any savings and loan hold-
ing company (as defined in section 
10(a)(1)(D) of the Home Owners 
Loan Act).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
TITLE IV—TAX RELIEF FOR COM-
MUNITY BANKS AND HOLD-
ING COMPANIES 
SEC. 401. REDUCTION IN TAX. 
(a) C CORPORATIONS.—Section 11 of the Internal 
Revenue Code of 1986 (relating to tax imposed) is amend-
ed by adding at the end the following new subsection: 
‘‘(e) REDUCTION OF TAX ON COMMUNITY BANKS.— 
‘‘(1) IN GENERAL.—In the case of a C corpora-
tion which is a community bank, the aggregate tax 
imposed by this section, section 55, and section 
1201 shall be 80 percent of the aggregate tax which 
would (but for this subsection) be imposed by such 
sections. 
‘‘(2) MAXIMUM REDUCTION.—The reduction in 
tax by reason of this subsection shall not exceed 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
$250,000. Corporations treated as 1 corporation 
under section 1202(d)(3) shall be so treated under 
this subsection, and the limitation under the pre-
ceding sentence shall be allocated among such cor-
porations in such manner as the Secretary shall pre-
scribe. 
‘‘(3) INCREASED BENEFIT FOR BANKS OPER-
ATING IN DISTRESSED AREAS, ETC.— 
‘‘(A) IN GENERAL.—In the case of a bank 
operating in an area referred to in subpara-
graph (B)— 
‘‘(i) paragraph (1) shall be applied by 
substituting ‘50 percent’ for ‘80 percent’, 
and 
‘‘(ii) paragraph (2) shall be applied by 
substituting ‘$500,000’ for ‘$250,000’. 
‘‘(B) AREAS DESCRIBED.—The areas re-
ferred to in this subparagraph are— 
‘‘(i) empowerment zones and enter-
prise communities designated under section 
1391, 
‘‘(ii) renewal communities designated 
under section 1400E, 
‘‘(iii) low-income communities (as de-
fined in section 45D(e)), and 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘(iv) distressed communities (within 
the meaning of section 233 of the Bank 
Enterprise Act of 1991 (12 U.S.C. 
1834a(b)). 
‘‘(4) COMMUNITY BANK.—For purposes of this 
section, the term ‘community bank’ means any of 
the following entities the gross assets of which (de-
termined under the rules of section 1202(d)) are 
$5,000,000,000 or less: 
‘‘(A) Any bank (as defined in section 581). 
‘‘(B) Any bank holding company (as de-
fined in section 2(a) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(a))). 
‘‘(C) Any savings association (as defined in 
section 3(b) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813)). 
‘‘(D) Any savings and loan holding com-
pany (as defined in section 10(a)(1)(D) of the 
Home Owners Loan Act).’’. 
(b) S CORPORATIONS.—Subsection (a) of section 
1366 of such Code is amended by adding at the end the 
following new paragraph: 
‘‘(3) REDUCTION
OF
TAX
ON
COMMUNITY 
BANKS.— 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
‘‘(A) IN GENERAL.—In the case of an S 
corporation which is a community bank (as de-
fined in section 11(e)(4)), the net amount re-
quired to be taken into account by shareholders 
(without regard to this paragraph) shall be re-
duced by the lesser of— 
‘‘(i) 20 percent of such net amount, or 
‘‘(ii) $1,250,000. 
‘‘(B) INCREASED BENEFIT FOR BANKS OP-
ERATING IN DISTRESSED AREAS, ETC.—In the 
case of a bank operating in an area referred to 
in section 11(e)(3)(B)— 
‘‘(i) subparagraph (A)(i) shall be ap-
plied by substituting ‘50 percent’ for ‘20 
percent’, and 
‘‘(ii) subparagraph (A)(ii) shall be ap-
plied by substituting ‘$2,500,000’ for 
‘$1,250,000’.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 402. COMMUNITY BANKS EXEMPT FROM MINIMUM 
TAX. 
(a) IN GENERAL.—Section 55 of the Internal Rev-
enue Code of 1986 (relating to alternative minimum tax 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H2061.IH
H2061
imposed) is amended by adding at the end the following 
new subsection: 
‘‘(f) EXEMPTION FOR COMMUNITY BANKS.— 
‘‘(1) IN GENERAL.—The tentative minimum tax 
of a community bank (as defined in section 11(e)(4)) 
shall be zero. 
‘‘(2) CERTAIN RULES TO APPLY.—Rules similar 
to the rules of paragraphs (2) through (5) of sub-
section (e) shall apply for purposes of this sub-
section.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
VerDate Aug 04 2004 
23:48 May 10, 2005
Jkt 039200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6301
E:\BILLS\H2061.IH
H2061