I 111th CONGRESS 2d Session H. R. 4629 IN THE HOUSE OF REPRESENTATIVES February 22, 2010 Mr. Levin (for himself, Mr. Frank of Massachusetts, Mr. Peters, Mr. Moore of Kansas, Mr. Dingell, Mr. Kanjorski, Mr. Rangel, Ms. Fudge, Mr. Kildee, Mr. Pascrell, Mr. Lipinski, Mr. Doyle, Ms. Schwartz, Mr. Butterfield, Mr. Etheridge, and Mr. Ryan of Ohio) introduced the following bill; which was referred to the Committee on Financial Services A BILL To create a loan program to provide funds to State special purpose vehicles for use in collateral support programs and loan participation programs to benefit qualified manufacturers.
1.
Short title
This Act may be cited as the Manufacturing Modernization and Diversification Act of 2010.
2.
Definitions
For purposes of this Act: (1)
Bank
The term bank means— (A)an insured depository institution, as such term is defined under section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2)); and (B)an insured credit union, as such term is defined under section 101(7) of the Federal Credit Union Act (12 U.S.C. 1752(7)). (2)
Collateral Support Program
The term Collateral Support Program means a program described under section 4. (3)
Loan Participation Program
The term Loan Participation Program means a program described under section 5. (4)
Qualified manufacturer
The term qualified manufacturer means a business that is engaged in manufacturing and— (A)has less than $50,000,000 in annual revenue; and (B)has less than $50,000,000 in assets. (5)
Revolving loan fund
The term revolving loan fund means the revolving loan fund established under section 3(d). (6)
Secretary
The term Secretary means the Secretary of the Treasury. (7)
SPV
The term SPV means a special purpose vehicle created by a State. (8)
Termination date
The term termination date means the date that is the end of the 2-year period beginning on the date the Secretary issues regulations pursuant to section 3(b)(4).
3.
Federal loan program to SPVs
(a)
In general
The Secretary shall certify SPVs to take part in a program to carry out Collateral Support Programs and Loan Participation Programs for the benefit of qualified manufacturers (hereinafter in this section described as the loan program). (b)
Application process
(1)
In general
Each SPV wishing to participate in the loan program shall submit an application to the Secretary, in such form and manner as the Secretary may require, containing— (A)a detailed proposal for the structure of the Collateral Support Program the SPV proposes to carry out, including what criteria the SPV intends to use to determine which qualified manufacturers will be eligible to participate; (B)a detailed proposal for the structure of the Loan Participation Program the SPV proposes to carry out, including what criteria the SPV intends to use to determine which qualified manufacturers will be eligible to participate; and (C)such other information as the Secretary may require. (2)
Additional requirements
(A)
Interest rate
Loans made to SPVs by the Secretary under the loan program shall be made with an interest rate of 0.5 percent. (B)
Treatment of payments from qualified manufacturers
The amount of all fees and interest payments paid by qualified manufacturers to an SPV under Collateral Support Programs and Loan Participation Programs that is more than the amount required by the SPV to repay the principal and interest amounts on loans made to the SPV under the loan program shall be retained by the SPV. (C)
No disqualification by reason of participation
Participation in a Collateral Support Program or a Loan Participation Program by a qualified manufacturer shall not disqualify such manufacturer from receiving assistance related to such loan under other Federal programs as well, including programs carried out by the Small Business Administration and the Department of Agriculture. (D)
Limitations on SPVs
Only 1 SPV per State may be certified to participate in the loan program. (E)
Oversight
The Secretary shall issue regulations to require each SPV participating in the loan program to make periodic reports to the Secretary at any time such SPV has a loan outstanding under the loan program. Such reports shall contain such information as the Secretary determines appropriate to maintain oversight of the funds used in the loan program. (3)
Determination factors
In making the determination of which SPVs should be certified to take part in the loan program, the Secretary shall consider— (A)all information submitted in the application of an SPV under paragraph (1); (B)the number of jobs that will likely be created by programs proposed by the SPV; (C)the amount of economic distress experienced by the State in which the SPV is located, including the unemployment rate of such State; and (D)the likelihood that the SPV will be able to successfully administer the programs proposed by the SPV. (4)
Rulemaking
The Secretary shall issue all regulations necessary for the submission of applications described under paragraph (1) no later than 90 days after the date of the enactment of this Act. (c)
Loan-Making process
(1)
In general
Each time a certified SPV wishes to make a loan under a Collateral Support Program or a Loan Participation Program, the certified SPV shall make a request to the Secretary, who shall loan the requested amount to the SPV from the revolving loan fund, as long as sufficient amounts remain in the fund. (2)
Time period
An SPV may not make any new loans under a Collateral Support Program or a Loan Participation Program after the termination date. (d)
Revolving loan fund
(1)
In general
There is established in the Treasury a revolving loan fund for the loan program. (2)
Initial transfer
(A)
Funding from the TARP
Of funds made available to the Secretary under title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) that remain unobligated, the Secretary shall transfer and credit $20,000,000,000 to the revolving loan fund. (B)
Authorization
The amounts transferred under subparagraph (A) shall be deemed to be for actions authorized under title I of the Emergency Economic Stabilization Act of 2008. (3)
Expenditures
The Secretary shall use the amounts in the revolving loan fund to carry out the loan program. (4)
Deposits
The Secretary shall deposit amounts received as payment and interest on loans provided under the loan program into the revolving loan fund. (e)
Termination of loan program
On and after the termination date— (1)no additional loans may be made by the Secretary under the loan program; (2)all amounts in the revolving loan fund shall be paid into the general fund of the Treasury; and (3)all amounts that would otherwise have been paid into the revolving loan fund shall be paid into the general fund of the Treasury.
4.
Collateral Support Program
(a)
In general
With respect to an SPV, a program is described under this section if, under such program— (1)a qualified manufacturer that wishes to receive a loan from a bank, but would not otherwise have sufficient collateral to qualify for such a loan, may ask the bank to seek collateral support for such loan from the SPV; (2)the bank submits an application to the SPV to participate in the collateral support program, in such form and manner and containing such information as the SPV may require; (3)the SPV, if approving such application, deposits cash with the bank in an interest bearing account under the SPV’s name, and allows such cash to act as collateral support for the qualified manufacturer’s loan; (4)the interest paid on such cash deposit is paid to the SPV; and (5)as the qualified manufacturer repays the loan over time, the SPV draws down the amount deposited with the bank. (b)
Additional requirements
A program described under subsection (a) shall additionally have the following requirements: (1)
Deposit limits
The cash deposit made by the SPV may not represent more than 49.9 percent of the total loan amount and may not be in an amount more than 49.9 percent of the non-equity capital of the qualified manufacturer at the time the loan is made. (2)
Loan amount
The SPV may not provide more than $20,000,000 to any one qualified manufacturer under the collateral support program. (3)
Fees
The SPV shall require a fee or fees to be paid by the qualified manufacturer to the SPV, at loan closing or annually, which shall consist of no more than 3 percent of the value of the cash deposit per fee. The SPV may determine whether such fee should be paid in cash or in options to purchase equity in the qualified manufacturer, but in no case may such options allow for the purchase of equity in the qualified manufacturer that would result in the SPV holding more than 15 percent of the voting rights of the equity of such qualified manufacturer. (4)
Exit fee
In the event that the qualified manufacturer defaults on the loan made under the collateral support program, the bank shall repay to the SPV an amount equal to 5 percent of the initial deposit made by the SPV. (5)
Oversight
The SPV shall require— (A)the bank to make periodic reports to the SPV during the life of the loan; and (B)such other reports from the bank and the qualified manufacturer as the SPV determines appropriate to maintain oversight.
5.
Loan Participation Program
(a)
In general
With respect to an SPV, a program is described under this section if, under such program— (1)a qualified manufacturer that wishes to receive a loan from a bank, but would not otherwise qualify for such a loan, may ask the bank to seek loan participation for such loan from the SPV; (2)the bank submits an application to the SPV to participate in the loan participation program, in such form and manner and containing such information as the SPV may require; (3)the SPV, if approving such application, will agree to purchase between 1 to 49.9 percent of such loan, upon the bank making such loan; (4)the bank shall continue to service the entire loan; and (5)the SPV may, in coordination with the bank, permit the qualified manufacturer to forbear payments of interest or defer payments of principal on the amount of such loan purchased by the SPV for a period of no longer than 3 years from the date such loan is made. (b)
Additional requirements
A program described under subsection (a) shall additionally have the following requirements: (1)
Loan amount
The SPV may not pay more than $20,000,000 for any portion of loans made to any one qualified manufacturer under the loan participation program. (2)
Fee
(A)
One-time fee
The SPV shall require a one-time fee from the qualified manufacturer in exchange for the SPV participating in the loan participation program. (B)
Annual fee
The bank shall require the qualified manufacturer to pay an annual fee to the bank of a minimum of 0.5 percent, and a maximum of 2 percent, of the amount of the portion of the loan purchased by the SPV under the loan participation program. (3)
Oversight
The SPV shall require— (A)the bank to make periodic reports to the SPV during the life of the loan; and (B)such other reports from the bank and the qualified manufacturer as the SPV determines appropriate to maintain oversight.
6.
Report
Not later than the end of the 6-month period beginning on the date of the enactment of this Act, and quarterly thereafter while any loan remains outstanding under the loan program carried out under section 3, the Secretary shall issue a report to the Congress containing— (1)a list of the active participants in Collateral Support Programs and Loan Participation Programs; and (2)an estimate of the impact the loan program has had on— (A)the overall economy; and (B)the creation of new jobs or the preservation of existing jobs.