[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 941 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 941

      To provide for the termination of the status of the College 
  Construction Loan Insurance Association (``the Corporation'') as a 
Government Sponsored Enterprise, to require the Secretary of Education 
 to divest himself of the Corporation's stock, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                June 16 (legislative day, June 5), 1995

 Mr. Dodd (for himself and Mr. Kennedy) introduced the following bill; 
 which was read twice and referred to the Committee on Labor and Human 
                               Resources

_______________________________________________________________________

                                 A BILL


 
      To provide for the termination of the status of the College 
  Construction Loan Insurance Association (``the Corporation'') as a 
Government Sponsored Enterprise, to require the Secretary of Education 
 to divest himself of the Corporation's stock, and for other purposes.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That this Act may be 
cited as the ``College Construction Loan Insurance Association 
Privatization Act of 1995''.

                         findings and purposes

    Sec. 2. (a) Findings.--The Congress finds that--
            (1) the College Construction Loan Insurance Association 
        (hereinafter referred to as ``the Corporation'') was 
        established by the Higher Education Amendments of 1986 (Public 
        Law 99-498) in order to assist in financing the construction, 
        reconstruction, renovation, acquisition, or purchase of 
        postsecondary education facilities;
            (2) in order to attract initial investors and establish the 
        Corporation as a viable corporate entity, the Secretary of 
        Education was required by statute to purchase a minority equity 
        interest in the Corporation;
            (3) it was the intent of Congress, in establishing the 
        Corporation, that the Federal Government's ownership interest 
        in the Corporation would eventually terminate through the sale 
        of the stock of the Corporation owned by the Secretary of 
        Education;
            (4) current statutory restrictions on the Corporation's 
        business activities and organization impede the Corporation's 
        efforts to operate effectively and to provide the services 
        needed by educational institutions; and
            (5) eliminating all statutory restrictions on the 
        Corporation's business activities, as well as other links 
        between the Federal Government and the Corporation, would--
                    (A) eliminate a Federal presence where the 
                operation of market forces would be more suitable and 
                contribute toward reducing the scope of Government;
                    (B) improve the ability of the Corporation to 
                provide assistance in the financing of education 
                facilities; and
                    (C) return funds to the United States Treasury.
    (b) Purposes.--The purposes of this Act are to--
            (1) terminate, in an orderly manner, the Corporation's 
        financial and other connections to the United States 
        Government; and
            (2) enable the Corporation to engage in any business or 
        other activities for which corporations may be organized under 
        the laws of any State of the United States or the District of 
        Columbia.

    status of the corporation and corporate powers; obligations not 
                          federally guaranteed

    Sec. 3. (a) Status of the Corporation.--The Corporation shall not 
be an agency, instrumentality, or establishment of the United States 
Government and shall not be a ``Government corporation'' nor a 
``Government controlled corporation'' as defined in section 103 of 
title 5, United States Code. No action under section 1491 of title 28, 
United States Code (commonly known as the Tucker Act) shall be 
allowable against the United States based on the actions of the 
Corporation.
    (b) Corporate Powers.--The Corporation shall be subject to the 
provisions of this Act, and, to the extent not inconsistent with this 
Act, to the District of Columbia Business Corporation Act (or the 
comparable law of another State, if applicable). The Corporation shall 
have the powers conferred upon a corporation by the District of 
Columbia Business Corporation Act (or such other applicable State law) 
as from time to time in effect in order to conduct its affairs as a 
private, for-profit corporation and to carry out its purposes and 
activities incidental thereto. The Corporation shall have the power to 
enter into contracts, to execute instruments, to incur liabilities, to 
provide products and services, and to do all things as are necessary or 
incidental to the proper management of its affairs and the efficient 
operation of a private, for-profit business.
    (c) No Federal Guarantee.--
            (1) Obligations insured by the corporation.--
                    (A) No obligation that is insured, guaranteed, or 
                otherwise backed by the Corporation shall be deemed to 
                be an obligation that is guaranteed by the full faith 
                and credit of the United States.
                    (B) No obligation that is insured, guaranteed, or 
                otherwise backed by the Corporation shall be deemed to 
                be an obligation that is guaranteed by the Student Loan 
                Marketing Association.
                    (C) This paragraph shall not affect the 
                determination of whether such obligation is guaranteed 
                for purposes of Federal income taxes.
            (2) Securities offered by the corporation.--No debt or 
        equity securities of the Corporation shall be deemed to be 
        guaranteed by the full faith and credit of the United States.
    (d) Definition.--The term ``Corporation'' as used in this Act shall 
refer to the College Construction Loan Insurance Association as in 
existence as of the day before enactment of this Act, and to any 
successor corporation.

                   related privatization requirements

    Sec. 4. (a) Notice Requirements.--
            (1) During the six-year period following the date of 
        enactment of this Act, the Corporation shall include, in each 
        of the Corporation's contracts for the insurance, guarantee, or 
        reinsurance of obligations, and in each document offering debt 
        or equity securities of the Corporation a prominent statement 
        providing notice that--
                    (A) such obligations or such securities, as the 
                case may be, are not obligations of the United States, 
                nor are they guaranteed in any way by the full faith 
                and credit of the United States; and
                    (B) the Corporation is not an instrumentality of 
                the United States.
            (2) During the five-year period following the sale of stock 
        pursuant to section 5(a), in addition to the notice 
        requirements in paragraph (1), the Corporation shall include, 
        in each of the contracts and documents referred to in such 
        paragraph, a prominent statement providing notice that the 
        United States is not an investor in the Corporation.
    (b) Corporate Charter.--The Corporation's charter shall be amended 
as necessary and without delay to conform to the requirements of this 
Act.
    (c) Corporate Name.--The name of the Corporation, or of any direct 
or indirect subsidiary thereof, may not contain the term ``College 
Construction Loan Insurance Association'', or any substantially similar 
variation thereof.
    (d) Transitional Requirements.--
            (1) Requirements until stock sale.--Notwithstanding section 
        6, the requirements of sections 754 and 760 of the Higher 
        Education Act of 1965 (20 U.S.C. 1001 et seq., hereinafter 
        referred to as ``the Act''), as in existence as of the day 
        before enactment of this Act, shall continue to be effective 
        until the day immediately following the date of closing of the 
        purchase of the Secretary's stock (or the date of closing of 
        the final purchase, in the case of multiple transactions) 
        pursuant to section 5(a) of this Act.
            (2) Reports after stock sale.--The Corporation shall, not 
        later than March 30 of the first full calendar year immediately 
        following the sale pursuant to section 5(a), and each of the 
        two succeeding years, submit to the Secretary of Education a 
        report describing the Corporation's efforts to assist in the 
        financing of education facilities projects, including projects
         for elementary, secondary, and postsecondary educational 
institution infrastructure, and detailing, on a project-by-project 
basis, the Corporation's business dealings with educational 
institutions that are rated by a nationally recognized statistical 
rating organization at or below the organization's third highest 
rating.

                     sale of federally-owned stock

    Sec. 5. (a) Sale of Stock Required.--The Secretary of the Treasury 
shall, upon the request of the Secretary of Education, make every 
appropriate effort to sell, pursuant to section 324 of title 31 of the 
United States Code, the voting common stock of the Corporation owned by 
the Secretary of Education not later than one year after the date of 
enactment of this Act.
    (b) Purchase by the Corporation.--In the event that the Secretary 
of the Treasury is unable to sell the voting common stock, or any 
portion thereof, at a price acceptable to the Secretary of Education 
and the Secretary of the Treasury within the period specified in 
subsection (a), the Corporation shall purchase such stock at a price 
determined by the Secretary of the Treasury, in consultation with the 
Secretary of Education, based on the independent appraisal of one or 
more nationally recognized financial firms. Such firm or firms shall be 
selected by the Secretary of the Treasury in consultation with the 
Secretary of Education and the Corporation.
    (c) Reimbursement of Costs of Sale.--The Secretary of the Treasury 
shall be reimbursed from the proceeds of the sale of the stock under 
this section for all reasonable costs related to such sale, including 
all reasonable expenses relating to one or more independent appraisals 
under this section.
    (d) Assistance by the Corporation.--The Corporation shall provide 
such assistance as the Secretary of the Treasury and the Secretary of 
Education may require to facilitate the sale of the stock under this 
section.

        repeal of statutory restrictions and related provisions

    Sec. 6. Part D of Title VII of the Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.) is repealed.
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