[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 923 Reported in House (RH)]
Union Calendar No. 75
108th CONGRESS
1st Session
H. R. 923
[Report No. 108-153]
To amend the Small Business Investment Act of 1958 to allow certain
premier certified lenders to elect to maintain an alternative loss
reserve.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 26, 2003
Mr. Doolittle introduced the following bill; which was referred to the
Committee on Small Business
June 12, 2003
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on
February 26, 2003]
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to allow certain
premier certified lenders to elect to maintain an alternative loss
reserve.
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 ``Premier Certified Lenders Program
Improvement Act of 2003''.
SEC. 2. LOSS RESERVES OF PREMIER CERTIFIED LENDERS TEMPORARILY
DETERMINED ON THE BASIS OF OUTSTANDING BALANCE OF
DEBENTURES.
Paragraph (6) of section 508(c) of the Small Business Investment
Act of 1958 (15 U.S.C. 697e(c)) is amended--
(1) by striking ``The Administration'' and inserting the
following:
``(A) In general.--The Administration''; and
(2) by adding at the end the following new subparagraph:
``(B) Temporary reduction based on outstanding
balance.--Notwithstanding subparagraph (A), during the
2-year period beginning on the date that is 90 days
after the date of the enactment of this subparagraph,
the Administration shall allow the certified
development company to withdraw from the loss reserve
such amounts as are in excess of 1 percent of the
aggregate outstanding balances of debentures to which
such loss reserve relates. The preceding sentence shall
not apply with respect to any debenture before 100
percent of the contribution described in paragraph (4)
with respect to such debenture has been made.''.
SEC. 3. ALTERNATIVE LOSS RESERVE PILOT PROGRAM FOR CERTAIN PREMIER
CERTIFIED LENDERS.
(a) In General.--Subsection (c) of section 508 of the Small
Business Investment Act of 1958 (15 U.S.C. 697e) is amended by adding
at the end the following new paragraphs:
``(7) Alternative loss reserve.--
``(A) Election.--With respect to any eligible
calendar quarter, any qualified high loss reserve PCL
may elect to have the requirements of this paragraph
apply in lieu of the requirements of paragraphs (2) and
(4) for such quarter.
``(B) Contributions.--
``(i) Ordinary rules inapplicable.--Except
as provided under clause (ii) and paragraph
(5), a qualified high loss reserve PCL that
makes the election described in subparagraph
(A) with respect to a calendar quarter shall
not be required to make contributions to its
loss reserve during such quarter.
``(ii) Based on loss.--A qualified high
loss reserve PCL that makes the election
described in subparagraph (A) with respect to
any calendar quarter shall, before the last day
of such quarter, make such contributions to its
loss reserve as are necessary to ensure that
the amount of the loss reserve of the PCL is--
``(I) not less than $100,000; and
``(II) sufficient, as determined by
a qualified independent auditor, for
the PCL to meet its obligations to
protect the Federal Government from
risk of loss.
``(iii) Certification.--Before the end of
any calendar quarter for which an election is
in effect under subparagraph (A), the head of
the PCL shall submit to the Administrator a
certification that the loss reserve of the PCL
is sufficient to meet such PCL's obligation to
protect the Federal Government from risk of
loss. Such certification shall be in such form
and submitted in such manner as the
Administrator may require and shall be signed
by the head of such PCL and the auditor making
the determination under clause (ii)(II).
``(C) Disbursements.--
``(i) Ordinary rule inapplicable.--
Paragraph (6) shall not apply with respect to
any qualified high loss reserve PCL for any
calendar quarter for which an election is in
effect under subparagraph (A).
``(ii) Excess funds.--At the end of each
calendar quarter for which an election is in
effect under subparagraph (A), the
Administration shall allow the qualified high
loss reserve PCL to withdraw from its loss
reserve the excess of--
``(I) the amount of the loss
reserve, over
``(II) the greater of $100,000 or
the amount which is determined under
subparagraph (B)(ii) to be sufficient
to meet the PCL's obligation to protect
the Federal Government from risk of
loss.
``(D) Recontribution.--If the requirements of this
paragraph apply to a qualified high loss reserve PCL
for any calendar quarter and cease to apply to such PCL
for any subsequent calendar quarter, such PCL shall
make a contribution to its loss reserve in such amount
as the Administrator may determine provided that such
amount does not exceed the amount which would result in
the total amount in the loss reserve being equal to the
amount which would have been in such loss reserve had
this paragraph never applied to such PCL. The
Administrator may require that such payment be made as
a single payment or as a series of payments.
``(E) Risk management.--If a qualified high loss
reserve PCL fails to meet the requirement of
subparagraph (F)(iii) during any period for which an
election is in effect under subparagraph (A) and such
failure continues for 180 days, the requirements of
paragraphs (2), (4), and (6) shall apply to such PCL as
of the end of such 180-day period and such PCL shall
make the contribution to its loss reserve described in
subparagraph (D). The Administrator may waive the
requirements of this subparagraph.
``(F) Qualified high loss reserve pcl.--The term
`qualified high loss reserve PCL' means, with respect
to any calendar year, any premier certified lender
designated by the Administrator as a qualified high loss reserve PCL
for such year. The Administrator shall not designate a company under
the preceding sentence unless the Administrator determines that--
``(i) the amount of the loss reserve of the
company is not less than $100,000;
``(ii) the company has established and is
utilizing an appropriate and effective process
for analyzing the risk of loss associated with
its portfolio of PCLP loans and for grading
each PCLP loan made by the company on the basis
of the risk of loss associated with such loan;
and
``(iii) the company meets or exceeds 4 or
more of the specified risk management
benchmarks as of the most recent assessment by
the Administration or the Administration has
issued a waiver with respect to the requirement
of this clause.
``(G) Specified risk management benchmarks.--For
purposes of this paragraph, the term `specified risk
management benchmarks' means the following rates, as
determined by the Administrator:
``(i) Currency rate.
``(ii) Delinquency rate.
``(iii) Default rate.
``(iv) Liquidation rate.
``(v) Loss rate.
``(H) Qualified independent auditor.--For purpose
of this paragraph, the term `qualified independent
auditor' means any auditor who--
``(i) is compensated by the qualified high
loss reserve PCL;
``(ii) is independent of such PCL; and
``(iii) has been approved by the
Administrator during the preceding year.
``(I) PCLP loan.--For purposes of this paragraph,
the term `PCLP loan' means any loan guaranteed under
this section.
``(J) Eligible calendar quarter.--For purposes of
this paragraph, the term `eligible calendar quarter'
means--
``(i) the first calendar quarter that
begins after the end of the 90-day period
beginning with the date of the enactment of
this paragraph; and
``(ii) the 7 succeeding calendar quarters.
``(K) Calendar quarter.--For purposes of this
paragraph, the term `calendar quarter' means--
``(i) the period which begins on January 1
and ends on March 31 of each year;
``(ii) the period which begins on April 1
and ends on June 30 of each year;
``(iii) the period which begins on July 1
and ends on September 30 of each year; and
``(iv) the period which begins on October 1
and ends on December 31 of each year.
``(L) Regulations.--Not later than 45 days after
the date of the enactment of this paragraph, the
Administrator shall publish in the Federal Register and
transmit to the Congress regulations to carry out this
paragraph. Such regulations shall include provisions
relating to--
``(i) the approval of auditors under
subparagraph (H); and
``(ii) the designation of qualified high
loss reserve PCLs under subparagraph (F),
including the determination of whether a
process for analyzing risk of loss is
appropriate and effective for purposes of
subparagraph (F)(ii).
``(8) Bureau of pclp oversight.--
``(A) Establishment.--There is hereby established
in the Small Business Administration a bureau to be
known as the Bureau of PCLP Oversight.
``(B) Purpose.--The Bureau of PCLP Oversight shall
carry out such functions of the Administration under
this subsection as the Administrator may designate.
``(C) Deadline.--Not later than 90 days after the
date of the enactment of this Act--
``(i) the Administrator shall ensure that
the Bureau of PCLP Oversight is prepared to
carry out any functions designated under
subparagraph (B), and
``(ii) the Office of the Inspector General
of the Administration shall report to the
Congress on the preparedness of the Bureau of
PCLP Oversight to carry out such functions.''.
(b) Increased Reimbursement for Losses Related to Debentures Issued
During Election Period.--Subparagraph (C) of section 508(b)(2) of the
Small Business Investment Act of 1958 (15 U.S.C. 697e(b)(2)) is amended
by inserting ``(15 percent in the case of any such loss attributable to
a debenture issued by the company during any period for which an
election is in effect under subsection (c)(7) for such company)''
before ``; and''.
(c) Conforming Amendments.--
(1) Subparagraph (D) of section 508(b)(2) of the Small
Business Investment Act of 1958 (15 U.S.C. 697e(b)(2)) is
amended by striking ``subsection (c)(2)'' and inserting
``subsection (c)''.
(2) Paragraph (5) of section 508(c) of the Small Business
Investment Act of 1958 (15 U.S.C. 697e(c)) is amended by
striking ``10 percent''.
(d) Study and Report.--
(1) In general.--The Administrator shall enter into a
contract with a Federal agency experienced in community
development lending and financial regulation or with a member
of the Federal Financial Institutions Examinations Council to
study and prepare a report regarding--
(A) the extent to which statutory requirements have
caused overcapitalization in the loss reserves
maintained by certified development companies
participating in the Premier Certified Lenders Program
established under section 508 of the Small Business
Investment Act of 1958 (15 U.S.C. 697e); and
(B) alternatives for establishing and maintaining
loss reserves that are sufficient to protect the
Federal Government from the risk of loss associated
with loans guaranteed under such Program.
(2) Transmission of report.--The report described in
paragraph (1) shall be transmitted to the Committee on Small
Business of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate not later
than 90 days after the date of the enactment of this Act.
(3) Limitation.--The amount of the contract described in
paragraph (1) shall not exceed $75,000.
Union Calendar No. 75
108th CONGRESS
1st Session
H. R. 923
[Report No. 108-153]
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to allow certain
premier certified lenders to elect to maintain an alternative loss
reserve.
_______________________________________________________________________
June 12, 2003
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed