12 U.S.C. § 4707 (BANKS AND BANKING)
§ 4707. Assistance provided by Fund
(a) Forms of assistance
(1) In general
The Fund may provide—
(A) financial assistance through equity investments, deposits, credit union shares, loans, and grants; and
(B) technical assistance—
(i) directly;
(ii) through grants; or
(iii) by contracting with organizations that possess expertise in community development finance, without regard to whether the organizations receive or are eligible to receive assistance under this subchapter.
(2) Equity investments
(A) Limitation on equity investments
The Fund shall not own more than 50 percent of the equity of a community development financial institution and may not control the operations of such institution. The Fund may hold only transferable, nonvoting equity investments in the institution. Such equity investments may provide for convertibility to voting stock upon transfer by the Fund.
(B) Fund deemed not to control
Notwithstanding any other provision of law, the Fund shall not be deemed to control a community development financial institution by reason of any assistance provided under this subchapter for the purpose of any other applicable law to the extent that the Fund complies with subparagraph (A). Nothing in this subparagraph shall affect the application of any Federal tax law.
(3) Deposits
Deposits made pursuant to this section in an insured community development financial institution shall not be subject to any requirement for collateral or security.
(4) Limitations on obligations
Direct loan obligations may be incurred by the Fund only to the extent that appropriations of budget authority to cover their cost, as defined in section 661a(5) of title 2, are made in advance.
(b) Uses of financial assistance
(1) In general
Financial assistance made available under this subchapter may be used by assisted community development financial institutions to serve investment areas or targeted populations by developing or supporting—
(A) commercial facilities that promote revitalization, community stability, or job creation or retention;
(B) businesses that—
(i) provide jobs for low-income people or are owned by low-income people; or
(ii) enhance the availability of products and services to low-income people;
(C) community facilities;
(D) the provision of basic financial services;
(E) housing that is principally affordable to low-income people, except that assistance used to facilitate homeownership shall only be used for services and lending products—
(i) that serve low-income people; and
(ii) that—
(I) are not provided by other lenders in the area; or
(II) complement the services and lending products provided by other lenders that serve the investment area or targeted population; and
(F) other businesses and activities deemed appropriate by the Fund.
(2) Limitations
No assistance made available under this subchapter may be expended by a community development financial institution (or an organization receiving assistance under section 4712 of this title) to pay any person to influence or attempt to influence any agency, elected official, officer, or employee of a State or local government in connection with the making, award, extension, continuation, renewal, amendment, or modification of any State or local government contract, grant, loan, or cooperative agreement (as such terms are defined in section 1352 of title 31).
(c) Uses of technical assistance
(1) Types of activities
Technical assistance may be used for activities that enhance the capacity of a community development financial institution, such as training of management and other personnel and development of programs and investment or loan products.
(2) Availability of technical assistance
The Fund may provide technical assistance, regardless of whether or not the recipient also receives financial assistance under this section.
(d) Amount of assistance
(1) In general
Except as provided in paragraph (2), the Fund may provide not more than $5,000,000 of assistance, in the aggregate, during any 3-year period to any 1 community development financial institution and its subsidiaries and affiliates.
(2) Exception
The Fund may provide not more than $3,750,000 of assistance in addition to the amount specified in paragraph (1) during the same 3-year period to an existing community development financial institution that proposes to establish a subsidiary or affiliate for the purpose of serving an investment area or targeted population outside of any State and outside of any metropolitan area presently served by the institution, if—
(A) the subsidiary or affiliate—
(i) would be a community development financial institution; and
(ii) independently—
(I) meets the selection criteria described in section 4704 of this title; and
(II) satisfies the selection criteria of section 4706 of this title; and
(B) no other application for assistance to serve the investment area or targeted population has been submitted to the Administrator within a reasonable period of time preceding the date of receipt of the application at issue.
(3) Timing of assistance
Assistance may be provided as described in paragraphs (1) and (2) in a lump sum or over a period of time, as determined by the Fund.
(e) Matching requirements
(1) In general
Assistance other than technical assistance shall be matched with funds from sources other than the Federal Government on the basis of not less than one dollar for each dollar provided by the Fund. Such matching funds shall be at least comparable in form and value to assistance provided by the Fund. The Fund shall provide no assistance (other than technical assistance) until a community development financial institution has secured firm commitments for the matching funds required.
(2) Exception
In the case of an applicant with severe constraints on available sources of matching funds, the Fund may permit an applicant to comply with the matching requirements of paragraph (1) by—
(A) reducing such matching requirement by 50 percent; or
(B) permitting an applicant to provide matching funds in a form to be determined at the discretion of the Fund, if such applicant—
(i) has total assets of less than $100,000;
(ii) serves nonmetropolitan or rural areas; and
(iii) is not requesting more than $25,000 in assistance.
(3) Limitation
Not more than 25 percent of the total funds disbursed in any fiscal year by the Fund may be matched as authorized under paragraph (2).
(4) Construction of “Federal Government funds”
For purposes of this subsection, notwithstanding section 105(a)(9) of the Housing and Community Development Act of 1974 [42 U.S.C. 5305(a)(9)], funds provided pursuant to such Act shall be considered to be Federal Government funds.
(f) Terms and conditions
(1) Soundness of unregulated institutions
The Fund shall—
(A) ensure, to the maximum extent practicable, that each community development financial institution (other than an insured community development financial institution or depository institution holding company) assisted under this subchapter is financially and managerially sound and maintains appropriate internal controls;
(B) require such institution to submit, not less than once during each 18-month period, a statement of financial condition audited by an independent certified public accountant as part of the report required by section 4714(e)(1) of this title; and
(C) require that all assistance granted under this section is used by the community development financial institution or community development partnership in a manner consistent with the purposes of this subchapter.
(2) Assistance agreement
(A) In general
Before providing any assistance under this subchapter, the Fund and each community development financial institution to be assisted shall enter into an agreement that requires the institution to comply with performance goals and abide by other terms and conditions pertinent to assistance received under this subchapter.
(B) Performance goals
Performance goals shall be negotiated between the Fund and each community development financial institution receiving assistance based upon the strategic plan submitted pursuant to section 4704(b)(2) of this title. Such goals may be modified with the consent of the parties, or as provided in subparagraph (C). Performance goals for insured community development financial institutions shall be determined in consultation with the appropriate Federal banking agency.
(C) Sanctions
The agreement shall provide that, in the event of fraud, mismanagement, noncompliance with this subchapter, or noncompliance with the terms of the agreement, the Fund, in its discretion, may—
(i) require changes to the performance goals imposed pursuant to subparagraph (B);
(ii) require changes to the strategic plan submitted pursuant to section 4704(b)(2) of this title;
(iii) revoke approval of the application;
(iv) reduce or terminate assistance;
(v) require repayment of assistance;
(vi) bar an applicant from reapplying for assistance from the Fund; and
(vii) take such other actions as the Fund deems appropriate.
(D) Consultation with tribal governments
In reviewing the performance of any assisted community development financial institution, the investment area of which includes an Indian reservation, or the targeted population of which includes an Indian tribe, the Fund shall consult with, and seek input from, any appropriate tribal government.
(g) Authority to sell equity investments and loans
The Fund may, at any time, sell its equity investments and loans, but the Fund shall retain the power to enforce limitations on assistance entered into in accordance with the requirements of this subchapter until the performance goals related to the investment or loan have been met.
(h) No authority to limit supervision and regulation
Nothing in this subchapter shall affect any authority of the appropriate Federal banking agency to supervise and regulate any institution or company.
(Pub. L. 103–325, title I, § 108, Sept. 23, 1994, 108 Stat. 2172.)
heading: Editorial Notes
heading: References in Text
text: The Housing and Community Development Act of 1974, referred to in subsec. (e)(4), is Pub. L. 93–383, Aug. 22, 1974, 88 Stat. 633. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of Title 42, The Public Health and Welfare, and Tables.