[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 950 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 950

 To increase the credit available to small businesses by reducing the 
  regulatory burden on small regulated financial institutions having 
                total assets of less than $400,000,000.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                May 13 (legislative day, April 19), 1993

Mr. Chafee (for himself, Mr. Bumpers, Mr. Lieberman, Mr. Pressler, Mr. 
 Kempthorne, and Mr. Wallop) introduced the following bill; which was 
read twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

_______________________________________________________________________

                                 A BILL


 
 To increase the credit available to small businesses by reducing the 
  regulatory burden on small regulated financial institutions having 
                total assets of less than $400,000,000.

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

SECTION. 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Assistance and Credit Crunch Relief Act of 1993''.
    (b) Table of Contents.--The following is a table of contents for 
this Act:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
Sec. 4. Capital requirement flexibility.
Sec. 5. New Federal banking regulations subject to regulatory impact 
                            analysis.
Sec. 6. Review of statutory and regulatory provisions affecting small 
                            banks.
Sec. 7. Real estate appraisals.
Sec. 8. Truth in Lending Act.
Sec. 9. Community Reinvestment Act.
Sec. 10. Paperwork reduction study.
Sec. 11. Sunset provision.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) credit availability is essential for small businesses 
        to expand, to purchase new equipment, and to hire new workers;
            (2) the Nation's small business sector is expected to 
        create 70 percent of the new jobs in the United States in 1993;
            (3) a severe credit crunch is denying small businesses the 
        capital necessary to hire new workers and to grow; and
            (4) the cumulative burden of unnecessary Federal banking 
        regulations has served as a disincentive for small community 
        banks to lend to small businesses.

SEC. 3. DEFINITIONS.

    For the purposes of this Act, the following definitions shall 
apply:
            (1) Incorporated definitions.--The terms ``appropriate 
        Federal banking agency'', ``bank'', ``insured depository 
        institution'', and ``savings association'' have the same 
        meanings as in section 3 of the Federal Deposit Insurance Act.
            (2) Regulatory impact analysis.--The term ``regulatory 
        impact analysis'' means a review of the potential costs and 
        benefits to society of a proposed regulation, and in 
        particular, the costs to small banks and their customers.
            (3) Small bank.--The term ``small bank'' means a bank or 
        savings association with total assets of less than 
        $400,000,000.

SEC. 4. CAPITAL REQUIREMENT FLEXIBILITY.

    Section 38(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1831o(a)(2)) is amended to read as follows:
            ``(2) Prompt corrective action required; factors to 
        consider.--Each appropriate Federal banking agency and the 
        Corporation (acting in the Corporation's capacity as the 
        insurer of depository institutions under this Act) shall take 
        prompt corrective action to resolve the problems of an insured 
        depository institution after taking into consideration, in 
        addition to the other criteria described in this section--
                    ``(A) the management expertise of the directors, 
                officers, and employees of the insured depository 
                institution;
                    ``(B) any recent earnings history that suggests an 
                improvement in the financial condition of the insured 
                depository institution;
                    ``(C) the quality of the assets held by the insured 
                depository institution; and
                    ``(D) the potential disruption to the local economy 
                if the insured depository institution is closed or 
                otherwise made subject to sanctions by Federal 
                regulators.''.

SEC. 5. NEW FEDERAL BANKING REGULATIONS SUBJECT TO REGULATORY IMPACT 
              ANALYSIS.

    (a) Regulatory Impact Analysis.--
            (1) In general.--Notwithstanding any other provision of 
        law, no new regulation shall be promulgated by an appropriate 
        Federal banking agency until such agency has conducted a 
        regulatory impact analysis and concluded that the benefits of 
        the proposed regulation outweigh the costs of implementing and 
        complying with the regulation, including the particular 
        benefits and costs of compliance with the proposed regulation 
        for small banks.
            (2) Definition.--For purposes of this subsection, a 
        regulation shall be considered to be ``new'' if it is 
        promulgated, modified, amended, or reissued on or after the 
        date of enactment of this Act.
    (b) Costs.--In reviewing the costs of implementing and complying 
with a proposed regulation under subsection (a), the appropriate 
Federal banking agency shall consider the impact of the proposed 
regulation on--
            (1) the national economy (including the potential for job 
        creation);
            (2) consumers;
            (3) small businesses;
            (4) small banks (including administrative and personnel 
        costs);
            (5) other users of financial services; and
            (6) new paperwork and documentation requirements.
    (c) Benefits.--In reviewing the benefits of a proposed regulation 
under subsection (a), the appropriate Federal banking agency shall 
consider the benefits of the proposed regulation to--
            (1) the public;
            (2) taxpayers; and
            (3) the overall safety and soundness of the Nation's 
        banking system.
    (d) Easing Burden on Small Banks.--In conducting the regulatory 
impact analysis under subsection (a), the appropriate Federal banking 
agency shall consider including in the proposed regulation a provision 
that eases the regulatory burden on small banks, including special 
compliance provisions.
    (e) Estimate Required.--The regulatory impact analysis required by 
subsection (a) shall include an estimate of the number of small banks 
and small businesses that will be affected by the regulation.

SEC. 6. REVIEW OF STATUTORY AND REGULATORY PROVISIONS AFFECTING SMALL 
              BANKS.

    (a) In General.--Each appropriate Federal banking agency shall 
conduct a thorough review and evaluation of all--
            (1) statutory provisions affecting small banks; and
            (2) regulatory provisions affecting small banks that have 
        been promulgated by such appropriate Federal banking agency.
    (b) Review.--The review conducted pursuant to subsection (a) shall 
include--
            (1) an analysis of the purposes of the provision;
            (2) the effectiveness of the provision in achieving such 
        purposes;
            (3) whether any other provision provides an alternative or 
        duplicative means of achieving those purposes;
            (4) the cost imposed by compliance with such provisions 
        upon insured depository institutions and consumers; and
            (5) the relationship between such provision, compliance 
        costs, and the availability of credit in the United States.
    (c) Suspension.--If an appropriate Federal banking agency makes a 
determination described in subsection (d), the appropriate Federal 
banking agency shall--
            (1) not later than 90 days after the date of enactment of 
        this Act, submit a written recommendation to the Congress to 
        suspend the applicability of any law that affects small banks 
        (or any portion thereof); and
            (2) not later than 30 days after the date of enactment of 
        this Act, suspend the applicability of any Federal regulation 
        or guideline promulgated by such appropriate Federal banking 
        agency that affects small banks (or any portion thereof).
    (d) Determination.--For the purpose of subsection (c), a 
determination is described in this subsection if it is a determination 
by an appropriate Federal banking agency that--
            (1) the law, regulation, or guideline has already 
        accomplished its goal and is therefore no longer necessary;
            (2) the law, regulation, or guideline is not as effective 
        in achieving its intended purpose as other available 
        alternatives that would impose lesser costs on small banks, 
        their customers, or the economy;
            (3) the cost of compliance with the law, regulation, or 
        guideline outweighs the potential benefits sought to be 
        accomplished by the law, regulation, or guideline; or
            (4) the law, regulation, or guideline has an adverse impact 
        on the availability of credit in the United States which 
        substantially outweighs the benefits sought to be accomplished 
        by the law, regulation, or guideline.
    (e) Publication and Effective Date.--Any suspension of the 
applicability of any Federal regulation or guideline pursuant to 
subsection (c)(2) shall be published in the Federal Register, and shall 
become effective 30 days after the date of such publication, unless the 
appropriate Federal banking agency, for good cause, determines that a 
shorter period is necessary and in the public interest.
    (f) Consultation and Notification.--
            (1) Consultation.--In making a determination under 
        subsection (d), the appropriate Federal banking agency shall 
        consult with the Secretary of the Treasury, the Chairperson of 
        the Federal Deposit Insurance Corporation, the Chairman of the 
        Board of Governors of the Federal Reserve System, the 
        Comptroller of the Currency, and the Director of the Office of 
        Thrift Supervision.
            (2) Notification.--The appropriate Federal banking agency 
        shall notify the Committee on Banking, Housing, and Urban 
        Affairs of the Senate and the Committee on Banking, Finance and 
        Urban Affairs of the House of Representatives prior to 
        suspending the applicability of a regulation or guideline under 
        subsection (c)(2).
    (g) Restriction.--Nothing in this section authorizes an appropriate 
Federal banking agency to recommend the suspension of any law, or to 
suspend any regulation or guideline--
            (1) that is necessary for the safe and sound operation of 
        insured depository institutions; or
            (2) that--
                    (A) prohibits discrimination in the provision of 
                financial services based on race, sex, national origin, 
                marital status, or age;
                    (B) relates directly to the conduct of monetary 
                policy; or
                    (C) pertains to an enforcement proceeding or 
                supervisory action with respect to a particular 
                institution or party.

SEC. 7. REAL ESTATE APPRAISALS.

    Section 1112(b) of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (12 U.S.C. 3341(b)) is amended by inserting ``, 
which shall be not less than $250,000,'' after ``establish a threshold 
level''.

SEC. 8. TRUTH IN LENDING ACT.

    Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended 
by adding at the end the following new paragraph:
            ``(7) Credit transactions involving a bank or savings 
        association with total assets of less than $400,000,000, and a 
        consumer who had individual income of more than $200,000 in 
        each of the 2 most recent years, or who, at the time of the 
        transaction, has an individual net worth of more than 
        $1,000,000.''.

SEC. 9. COMMUNITY REINVESTMENT ACT.

    (a) Paperwork Reduction.--Section 804(a) of the Community 
Reinvestment Act of 1977 (12 U.S.C. 2903(a)) is amended--
            (1) in paragraph (1), by striking ``and'' at the end;
            (2) in paragraph (2), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(3) minimize the regulatory paperwork burden and costs to 
        small banks associated with compliance with this title.''.
    (b) Applications.--Section 804(a) of the Community Reinvestment Act 
of 1977 (12 U.S.C. 2903(a)) is amended by adding at the end the 
following: ``The appropriate Federal financial supervisory agency shall 
not deny an application for a deposit facility by a regulated financial 
institution having total assets of less than $400,000,000 on the basis 
of such institution's compliance with this Act if the institution 
received a rating on its last evaluation under this section of 
`Outstanding' in its record of meeting community credit needs, as 
provided in section 807(b).''.
    (c) Paperwork Reduction for Small Banks.--The Community 
Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is amended by adding 
at the end the following new section:

``SEC. 809. SMALL BANKS.

    ``(a) `Outstanding' Rating.--
            ``(1) Paperwork reduction.--Except as provided in paragraph 
        (2), a regulated financial institution that--
                    ``(A) receives a rating under section 804 of 
                `Outstanding record of meeting community credit needs', 
                as provided in section 807(b); and
                    ``(B) has total assets of less than $400,000,000;
        shall be exempt from any documentation requirements of this 
        title.
            ``(2) New documentation regulations.--Not later than 30 
        days after the date of enactment of this section, the 
        appropriate Federal financial supervisory agency shall 
        promulgate documentation requirements for the regulated 
        financial institutions described in paragraph (1). Such 
        regulations shall substantially reduce or eliminate the 
        paperwork requirements imposed on such regulated financial 
        institutions.
            ``(3) Disclosure of evaluation criteria.--Not later than 30 
        days after the date of enactment of this section, the 
        appropriate Federal financial supervisory agency shall disclose 
        to each regulated financial institution, in detail, the 
        specific criteria an insured financial institution must satisfy 
        in order to secure a rating of `Outstanding' on an evaluation 
        under section 807(b).
    ``(b) `Substantial Noncompliance' Rating.--A regulated financial 
institution that receives a rating under section 804 of `Substantial 
noncompliance in meeting community credit needs', as provided in 
section 807(b), for 2 or more consecutive years, and has total assets 
of less than $400,000,000 shall be--
            ``(1) subject to a civil penalty assessed by the 
        appropriate Federal financial supervisory agency in an amount 
        not to exceed $20,000; and
            ``(2) required to enter into a written agreement with the 
        appropriate Federal financial supervisory agency to improve the 
        institution's ability to ascertain and to help meet the credit 
        needs of its local community.''.

SEC. 10. PAPERWORK REDUCTION STUDY.

    Not later than 18 months after the date of enactment of this Act, 
each appropriate Federal banking agency, in consultation with insured 
depository institutions and other interested parties, shall--
            (1) review the extent to which this Act has--
                    (A) reduced unnecessary internal written policies; 
                and
                    (B) eliminated such policies, where appropriate, 
                while maintaining the applicable safety and soundness 
                requirements; and
            (2) issue a recommendation as to whether the provisions of 
        this Act should be extended beyond the sunset date established 
        in section 11.

SEC. 11. SUNSET PROVISION.

    The provisions of this Act and the amendments made by this Act 
shall remain in effect for a period of 3 years beginning on the date of 
enactment of this Act.

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