Title: Climate Protection and Sustainable Communities Act
Policy area: Finance and Financial Sector

Summary:
Climate Protection and Sustainable Communities Act
This bill requires a financial regulator to assess and rate the record of a financial institution in meeting the environmentally sustainable investment needs of its community.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9059 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 9059

    To require Federal financial supervisory agencies to evaluate a 
  financial institution's record of meeting community environmentally 
  sustainable investment needs as part of examinations, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 31, 2020

 Mr. Kennedy (for himself and Mr. Cicilline) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
    To require Federal financial supervisory agencies to evaluate a 
  financial institution's record of meeting community environmentally 
  sustainable investment needs as part of examinations, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Climate Protection and Sustainable 
Communities Act''.

SEC. 2. CONGRESSIONAL FINDINGS AND STATEMENT OF PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) Financial institutions that are federally regulated and 
        supervised have an obligation to serve the convenience and 
        needs of the entire community, consistent with safe and sound 
        operations. These institutions include, but are not limited to, 
        insured depository institutions (and their holding companies, 
        if any), investment advisers, broker dealers, insurers, non-
        bank lenders, credit unions, investment companies, and other 
        financial institutions of significant size and operations.
            (2) The convenience and needs of communities include the 
        need for environmentally sustainable investment because--
                    (A) these financial institutions have, as a result 
                of their investment, lending, and other activities, 
                contributed to climate change and its effects, and 
                therefore have a responsibility to act to mitigate 
                climate change; and
                    (B) these financial institutions receive Federal 
                benefits not available to other types of businesses, 
                including--
                            (i) support for United States Treasury bond 
                        markets, including extraordinary commitments to 
                        purchase such bonds since the onset of the 
                        COVID-19 health crisis;
                            (ii) access to the Federal Reserve Discount 
                        Window and other special lending facilities 
                        established by the Board of Governors of the 
                        Federal Reserve System and supported by the 
                        Treasury department;
                            (iii) measures to maintain efficient, 
                        transparent, and competitive markets;
                            (iv) regulatory relief during times of 
                        stress in the financial system, such as the 
                        ongoing COVID-19 health crisis; and
                            (v) other actions to ensure financial 
                        stability and mitigate risk to the financial 
                        system as a whole.
            (3) Regulated financial institutions have continuing and 
        affirmative obligation to help meet the environmentally 
        sustainable investment needs of the local communities in which 
        they are chartered.
            (4) Regulated financial institutions should reflect the 
        communities which they serve, which includes people of color 
        and women.
    (b) Purpose.--It is the purpose of this Act to require covered 
financial institutions that are regulated and supervised by one or more 
appropriate financial regulators to meet the environmentally 
sustainable investment needs of the entire community, consistent with 
the safe and sound operation of such institutions.

SEC. 3. DEFINITIONS.

    (a) In General.--In this Act:
            (1) Application for a deposit facility.--The term 
        ``application for a deposit facility'' means an application to 
        the appropriate financial regulator otherwise required under 
        Federal law or regulations thereunder for--
                    (A) a charter for a national bank or Federal 
                savings and loan association;
                    (B) deposit insurance in connection with a newly 
                chartered State bank, savings bank, savings and loan 
                association or similar institution;
                    (C) the establishment of a domestic branch or other 
                facility with the ability to accept deposits of a 
                regulated financial institution;
                    (D) the relocation of the home office or a branch 
                office of an insured depository institution (as defined 
                in section 3 of the Federal Deposit Insurance Act);
                    (E) the merger or consolidation with, or the 
                acquisition of the assets, or the assumption of the 
                liabilities of an insured depository institution 
                requiring approval under section 18(c) of the Federal 
                Deposit Insurance Act or under regulations issued under 
                the authority of title IV of the National Housing Act; 
                or
                    (F) the acquisition of shares in, or the assets of, 
                an insured depository institution requiring approval 
                under section 3 of the Bank Holding Company Act of 1956 
                or section 408(e) of the National Housing Act.
            (2) Appropriate financial regulator.--The term 
        ``appropriate financial regulator'' has the meaning given in 
        section 803 of the Payment, Clearing, and Settlement 
        Supervision Act of 2010 (12 U.S.C. 5462).
            (3) Covered financial institution.--The term ``covered 
        financial institution'' means--
                    (A) an insured depository institution (as defined 
                in section 3 of the Federal Deposit Insurance Act (12 
                U.S.C. 1813));
                    (B) a depository institution holding company (as 
                defined in such section);
                    (C) an investment adviser or investment company (as 
                defined in section 202 of the Investment Advisers Act 
                of 1940 (15 U.S.C. 80b-2));
                    (D) a covered broker or dealer (as defined in 
                section 201(a)(7) of the Dodd-Frank Wall Street Reform 
                and Consumer Protection Act (12 U.S.C. 5381(a)(7)));
                    (E) admitted insurers;
                    (F) an insured credit union (as defined in section 
                101 of the Federal Credit Union Act (12 U.S.C. 1752));
                    (G) a non-bank lender; and
                    (H) any entity that has been identified as 
                systemically important by the Financial Stability 
                Oversight Council.
            (4) Environmentally sustainable investment.--The term 
        ``environmentally sustainable investment'' means investments, 
        loans, and other financial products or services that support 
        climate mitigation and adaptation efforts, enterprises, and 
        projects whose impacts have been evaluated to equitably and 
        sustainably advance social and environmental welfare.
    (b) Application of Entire Community.--For purposes of this Act, 
with respect to a covered financial institution whose business 
predominately consists of serving the needs of military personnel who 
are not located within a defined geographic area, such covered 
financial institution may define the term ``entire community'' to 
include the entire deposit customer base without regard to geographic 
proximity to the covered financial institution.

SEC. 4. ASSESSMENT OF COVERED FINANCIAL INSTITUTIONS.

    (a) In General.--Except as provided in section 6, not less than 
once every 24 months an appropriate financial regulator shall assess 
the record of a covered financial institution of meeting the 
environmentally sustainable investment needs of the entire community of 
such institution, including low- and moderate-income neighborhoods, 
consistent with the safe and sound operation of such institution.
    (b) Requirements for Covered Financial Institutions.--
            (1) Rating.--
                    (A) In general.--A covered financial institution 
                that received a rating described in subparagraph (C), 
                (D), or (E) of section 5(b)(2) shall, within the 12-
                month period beginning on the date of receipt of such 
                rating, take such action as may be necessary in order 
                for such institution to achieve a rating of 
                ``satisfactory record of meeting community 
                environmentally sustainable investment needs''.
                    (B) Penalty.--A covered financial institution that 
                fails to meet the requirements of subparagraph (A) 
                shall be subject to such penalties as determined 
                appropriate by the appropriate financial regulator of 
                such institution.
            (2) Approval of requests.--With respect to any request 
        submitted by a covered financial institution to the appropriate 
        financial regulator to take an action that requires the 
        approval of the regulator, the appropriate financial regulator 
        may only approve such request if the covered financial 
        institution received a rating of ``satisfactory record of 
        meeting community environmentally sustainable investment 
        needs'' or better during the most recent examination of the 
        covered financial institution under this section.
    (c) Majority-Owned Institutions.--In assessing and taking into 
account, under subsection (a), the record of a nonminority-owned and 
nonwomen-owned covered financial institution, the appropriate financial 
regulator may consider as a factor capital investment, loan 
participation, and other ventures undertaken by such covered financial 
institution in cooperation with minority- and women-owned financial 
institutions and low-income credit unions, if such activities help meet 
the environmentally sustainable investment needs of the local 
communities in which such covered financial institution is chartered.
    (d) Financial Holding Company Requirement.--
            (1) In general.--An election by a bank holding company to 
        become a financial holding company under section 4 of the Bank 
        Holding Company Act of 1956 shall not be effective if--
                    (A) the Board finds that, as of the date the 
                declaration of such election and the certification is 
                filed by such holding company under section 4(l)(1)(C) 
                of the Bank Holding Company Act of 1956, not all of the 
                subsidiary insured depository institutions of the bank 
                holding company had achieved a rating of ``satisfactory 
                record of meeting community environmentally sustainable 
                investment needs'', or better, at the most recent 
                examination of each such institution; and
                    (B) the Board notifies the company of such finding 
                before the end of the 30-day period beginning on such 
                date.
            (2) Limited exclusions for newly acquired insured 
        depository institutions.--Any insured depository institution 
        acquired by a bank holding company during the 12-month period 
        preceding the date of the submission to the Board of the 
        declaration and certification under section 4(l)(1)(C) of the 
        Bank Holding Company Act of 1956 may be excluded for purposes 
        of paragraph (1) during the 12-month period beginning on the 
        date of such acquisition if--
                    (A) the bank holding company has submitted an 
                affirmative plan to the appropriate financial regulator 
                to take such action as may be necessary in order for 
                such institution to achieve a rating of ``satisfactory 
                record of meeting community environmentally sustainable 
                investment needs'', or better, at the next examination 
                of the institution; and
                    (B) the plan has been accepted by such agency.
            (3) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    (A) Bank holding company; financial holding 
                company.--The terms ``bank holding company'' and 
                ``financial holding company'' have the meanings given 
                those terms in section 2 of the Bank Holding Company 
                Act of 1956.
                    (B) Board.--The term ``Board'' means the Board of 
                Governors of the Federal Reserve System.
                    (C) Insured depository institution.--The term 
                ``insured depository institution'' has the meaning 
                given the term in section 3(c) of the Federal Deposit 
                Insurance Act.

SEC. 5. WRITTEN EVALUATIONS.

    (a) Required.--
            (1) In general.--Upon the conclusion of each examination of 
        a covered financial institution under section 4, the 
        appropriate financial regulator shall prepare a written 
        evaluation of the institution's record of meeting the 
        environmentally sustainable investment needs of its entire 
        community, including low- and moderate-income neighborhoods.
            (2) Public and confidential sections.--Each written 
        evaluation required under paragraph (1) shall have a public 
        section and a confidential section.
    (b) Public Section of Report.--
            (1) Findings and conclusions.--
                    (A) Contents of written evaluation.--The public 
                section of the written evaluation shall--
                            (i) state the appropriate financial 
                        regulator's conclusions for each assessment 
                        factor identified in the regulations prescribed 
                        by such appropriate financial regulator to 
                        implement this Act;
                            (ii) discuss the facts and data supporting 
                        such conclusions; and
                            (iii) contain the rating of the covered 
                        financial institution and a statement 
                        describing the basis for the rating.
                    (B) Metropolitan area distinctions.--The 
                information required by clauses (i) and (ii) of 
                subparagraph (A) shall be presented separately for each 
                metropolitan area in which a covered financial 
                institution maintains one or more domestic branch 
                offices.
            (2) Assigned rating.--The rating of a covered financial 
        institution referred to in paragraph (1)(A)(iii) shall be one 
        of the following:
                    (A) ``Outstanding record of meeting community 
                environmentally sustainable investment needs''.
                    (B) ``Satisfactory record of meeting community 
                environmentally sustainable investment needs''.
                    (C) ``Sufficient record of meeting community 
                environmentally sustainable investment needs''.
                    (D) ``Needs to improve record of meeting community 
                environmentally sustainable investment needs''.
                    (E) ``Substantial noncompliance in meeting 
                community environmentally sustainable investment 
                needs''.
    (c) Confidential Section of Report.--
            (1) Privacy of named individuals.--The confidential section 
        of the written evaluation shall contain--
                    (A) all references that identify any customer of 
                the covered financial institution, any employee or 
                officer of such institution, or any person or 
                organization that has provided information in 
                confidence to a Federal or State financial supervisory 
                agency; and
                    (B) any statements obtained or made by the 
                appropriate financial regulator in the course of an 
                examination which, in the judgment of the regulator, 
                are too sensitive or speculative in nature to disclose 
                to the covered financial institution or the public.
            (2) Disclosure to depository institution.--The confidential 
        section may be disclosed, in whole or part, to the covered 
        financial institution, if the appropriate financial regulator 
        determines that such disclosure will promote the objectives of 
        this Act. However, disclosure under this paragraph shall not 
        identify a person or organization that has provided information 
        in confidence to a Federal or State financial supervisory 
        agency.
    (d) Institutions With Interstate Branches.--
            (1) State-by-state evaluation.--In the case of a covered 
        financial institution that maintains domestic branches in 2 or 
        more States, the appropriate financial regulator shall 
        prepare--
                    (A) a written evaluation of the entire 
                institution's record of performance under this title, 
                as required by subsections (a), (b), and (c); and
                    (B) for each State in which the institution 
                maintains 1 or more domestic branches, a separate 
                written evaluation of the institution's record of 
                performance within such State under this title, as 
                required by subsections (a), (b), and (c).
            (2) Multistate metropolitan areas.--In the case of a 
        covered financial institution that maintains domestic branches 
        in 2 or more States within a multistate metropolitan area, the 
        appropriate financial regulator shall prepare a separate 
        written evaluation of the institution's record of performance 
        within such metropolitan area under this title, as required by 
        subsections (a), (b), and (c). If the appropriate financial 
        regulator prepares a written evaluation pursuant to this 
        paragraph, the scope of the written evaluation required under 
        paragraph (1)(B) shall be adjusted accordingly.
            (3) Content of state-level evaluation.--A written 
        evaluation prepared pursuant to paragraph (1)(B) shall--
                    (A) present the information required by 
                subparagraphs (A) and (B) of subsection (b)(1) 
                separately for each metropolitan area in which the 
                covered financial institution maintains 1 or more 
                domestic branch offices and separately for the 
                remainder of the nonmetropolitan area of the State if 
                the covered financial institution maintains 1 or more 
                domestic branch offices in such nonmetropolitan area; 
                and
                    (B) describe how the appropriate financial 
                regulator has performed the examination of the covered 
                financial institution, including a list of the 
                individual branches examined.
    (e) Definitions.--For purposes of this section the following 
definitions shall apply:
            (1) Domestic branch.--The term ``domestic branch'' means 
        any branch office or other facility of a covered financial 
        institution that accepts deposits, located in any State.
            (2) Metropolitan area.--The term ``metropolitan area'' 
        means any primary metropolitan statistical area, metropolitan 
        statistical area, or consolidated metropolitan statistical 
        area, as defined by the Director of the Office of Management 
        and Budget, with a population of 250,000 or more, and any other 
        area designated as such by the appropriate financial regulator.
            (3) State.--The term ``State'' has the same meaning as in 
        section 3 of the Federal Deposit Insurance Act.

SEC. 6. SMALL COVERED FINANCIAL INSTITUTION REGULATORY RELIEF.

    (a) In General.--Except as provided in subsections (b) and (c), any 
covered financial institution with aggregate assets of not more than 
$250,000,000 shall be subject to routine examination under this Act--
            (1) not more than once every 60 months for an institution 
        that has achieved a rating of ``outstanding record of meeting 
        community environmentally sustainable investment needs'' at its 
        most recent examination under section 4;
            (2) not more than once every 48 months for an institution 
        that has received a rating of ``satisfactory record of meeting 
        community environmentally sustainable investment needs'' at its 
        most recent examination under section 4; and
            (3) at least once every 24 months for an institution that 
        has received a rating of less than ``satisfactory record of 
        meeting community environmentally sustainable investment 
        needs'' at its most recent examination under section 4.
    (b) No Exception From Examinations in Connection With Applications 
for Deposit Facilities.--A covered financial institution described in 
subsection (a) shall remain subject to examination under this title in 
connection with an application for a deposit facility.
    (c) Discretion.--A covered financial institution described in 
subsection (a) may be subject to more frequent or less frequent 
examinations for reasonable cause under such circumstances as may be 
determined by the appropriate financial regulator.

SEC. 7. APPLICABILITY.

    The requirements of this Act shall not supplant the requirements of 
the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.).

SEC. 8. REPORT TO CONGRESS.

    Each appropriate financial regulator shall include in its annual 
report to the Congress a section outlining the actions it has taken to 
carry out its responsibilities under this Act.

SEC. 9. REGULATIONS.

    Not later than 180 days after the date of enactment of this Act, 
each appropriate financial regulator shall consult with each other 
appropriate financial regulator to issue rules to carry out this Act. 
To the extent practicable, the appropriate financial regulator shall 
issue substantially similar rules.

SEC. 10. EFFECTIVE DATE.

    Except as otherwise provided, the requirements of this Act shall 
take effect one year after the date of the enactment of this Act.
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