[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5942 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5942

     To create a charter for Federal Financial Services and Credit 
                               Companies.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2010

Mr. Baca (for himself, Mr. Clay, Ms. Jackson Lee of Texas, Mr. Johnson 
 of Georgia, Mr. Grayson, and Ms. Richardson) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
     To create a charter for Federal Financial Services and Credit 
                               Companies.

    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 ``FFSCC Act of 2010''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) According to the Federal Deposit Insurance Corporation, 
        more than 60 million low- and moderate-income consumers in 
        America remain unbanked, underbanked, or underserved.
            (2) The proportion of United States households that are 
        unbanked varies considerably across racial and ethnic groups 
        with certain racial and ethnic groups being more likely to be 
        unbanked than the population as a whole. Minorities more likely 
        to be unbanked include Blacks (21.7 percent of Black 
        households), Hispanics (19.3 percent), and American Indian/
        Alaskans (15.6 percent). Racial groups less likely to be 
        unbanked are Asians (3.5 percent) and Whites (3.3 percent).
            (3) Certain racial and ethnic minorities are more likely to 
        be underbanked than the population as a whole. Minorities more 
        likely to be underbanked include Blacks (an estimated 31.6 
        percent), American Indian/Alaskans (28.9 percent), and 
        Hispanics (24.0 percent). Asians and Whites are less likely to 
        be underbanked (7.2 percent and 14.9 percent, respectively).
            (4) Households with income under $30,000 account for at 
        least 71 percent of unbanked households. As income increases, 
        the share of households that are unbanked declines 
        considerably. Nationally, nearly 20 percent of lower-income 
        United States households--almost 7 million households earning 
        below $30,000 per year--do not currently have a bank account. 
        In contrast, only 4.2 percent of households with annual income 
        between $30,000 and $50,000 and less than 1 percent of 
        households with yearly income of $75,000 or higher are 
        unbanked.
            (5) Lack of access to affordable banking products and 
        services deters the economic advancement of low- and moderate-
        income consumers and stunts the economic growth of communities 
        in which they live.
    (b) Purpose.--The purpose of this Act is to establish a vibrant, 
safe, and commercially viable market for underbanked and unbanked 
individuals to gain access to financial services and products.

SEC. 3. FEDERAL FINANCIAL SERVICES AND CREDIT COMPANY.

    (a) In General.--The Comptroller of the Currency is authorized, 
under such regulations as the Comptroller of the Currency may 
prescribe, to provide for the organization, incorporation, examination, 
operation, regulation, and chartering of companies to be known as 
Federal Financial Services and Credit Companies (hereinafter in this 
Act referred to as ``FFSCCs'').
    (b) Eligibility.--
            (1) In general.--The Comptroller of the Currency may not 
        issue an FFSCC charter to a company unless the company 
        satisfies the following requirements, as determined by the 
        Comptroller of the Currency:
                    (A) The company has at least 10 years of experience 
                in providing underbanked persons with at least three of 
                the following services:
                            (i) Installment loans extended to consumers 
                        or, in an amount less than $10,000, to small 
                        businesses.
                            (ii) Open-end credit extended to consumers 
                        or, in an amount less than $10,000, to small 
                        businesses.
                            (iii) Non-recourse credit extended to 
                        consumers and secured by personal property.
                            (iv) The issuing of reloadable stored value 
                        cards to consumers or small businesses.
                            (v) Ancillary financial services extended 
                        to consumers or small businesses, including 
                        issuing money orders, sending and receiving 
                        wire transfers, check cashing services, bill 
                        payment services, and tax preparation services.
                            (vi) Such other short-term consumer credit 
                        services as the Comptroller of the Currency 
                        determines appropriate.
                    (B) The company is not a depository institution or 
                a credit union.
                    (C) The company submits a business plan or 
                operating plan that adequately addresses the 
                appropriate statutory and policy considerations. Such 
                plan shall--
                            (i) reflect sound financial principles and 
                        demonstrate realistic assessments of risk in 
                        light of economic and competitive conditions in 
                        the market for serving underbanked and unbanked 
                        populations;
                            (ii) include information sufficient to 
                        permit the Comptroller of the Currency to 
                        evaluate the overall management ability of the 
                        company, especially the ability to provide 
                        financial services to the underbanked and 
                        unbanked population; and
                            (iii) demonstrate that the company is aware 
                        of, and understands, Federal and State banking 
                        laws and sound banking operations and practices 
                        in the context of serving the needs of the 
                        underbanked and unbanked populations.
                    (D) The company has senior management officials who 
                are familiar with applicable Federal and State banking 
                laws and regulations, and the credit and training needs 
                of underbanked and unbanked customers
                    (E) The company has competent management, with 
                ability and experience relevant to the types of 
                services to be provided, especially the ability and 
                experience to design and provide financial services to 
                the underbanked and unbanked consumer population.
            (2) Company defined.--For purposes of this subsection, the 
        term ``company'' shall include--
                    (A) the entity applying for an FFSCC charter;
                    (B) any wholly-owned subsidiary of such entity 
                applying for an FFSCC charter; and
                    (C) any other entity that is part of an affiliated 
                control group with such entity applying for an FFSCC 
                charter.
    (c) Requirements Placed on FFSCCs.--
            (1) Credit disclosures.--
                    (A) Short-term credit.--With respect to an 
                extension of short-term credit by an FFSCC, the FFSCC 
                shall provide the person to whom credit is being 
                extended a clear and prominent statement in the loan 
                agreement that states the true cost of the loan in 
                terms of an actual finance charge per dollar of credit 
                extended to such person instead of the annual 
                percentage rate disclosure required under the Truth in 
                Lending Act.
                    (B) Long-term credit.--With respect to an extension 
                of long-term credit by an FFSCC, the FFSCC shall 
                provide the person to whom credit is being extended a 
                disclosure of the finance charge to be paid by the 
                person, expressed as an ``annual percentage rate'', 
                using that term.
            (2) Account access.--Each FFSCC shall provide continuous 
        account access to the customers of the FFSCC, either through a 
        toll-free telephone number, the Internet, or both.
            (3) Financial literacy programs.--Each FFSCC shall 
        implement a financial literacy program, which shall include--
                    (A) making financial literacy materials available 
                to its customers; and
                    (B) assisting customers in building and improving 
                their credit scores.
            (4) Additional requirements.--Each FFSCC shall comply with 
        the following:
                    (A) Have a primary mission of providing a 
                comprehensive array of financial services to the 
                underbanked, unbanked, and consumers with low credit 
                scores.
                    (B) Serve as a vehicle for providing access to 
                credit products predominately to consumers who are 
                consider unbanked or underbanked.
                    (C) File articles of association, articles of 
                incorporation, or other appropriate organizational 
                documents with the Comptroller of the Currency.
                    (D) Submit to the Comptroller of the Currency for 
                approval a business plan which, among other things, 
                provides in reasonable detail evidence of the 
                knowledge, understanding, and experience of the 
                institution and senior management of the unique 
                challenges that unbanked and underbanked individuals 
                face with respect to access to financial credit.
    (d) FFSCC Powers.--Subject to such regulations as the Comptroller 
of the Currency may issue, in addition to general corporate powers, an 
FFSCC shall have the power to provide the services described under each 
clause of subsection (b)(1)(A).
    (e) Penalty.--Whoever knowingly violates any provision of this 
section, or any regulation issued pursuant to this section, shall be 
fined not more than $20,000 for each day such violation continues or 
imprisoned for not more than 3 years, or both.
    (f) FFSCC Fee.--All FFSCCs shall pay an annual fee to the 
Comptroller of the Currency in an amount that the Comptroller of the 
Currency determines is sufficient, in the aggregate, to offset the cost 
to the Comptroller of the Currency of carrying out the provisions of 
this section.
    (g) Preemption of State Law.--A law of a State or political 
subdivision thereof is preempted if the application of such law would 
have a discriminatory effect on a company because such company is 
chartered as an FFSCC.

SEC. 4. RATES AND TERMS STUDY; DEVELOPMENT OF FINANCIAL PRODUCTS.

    The Comptroller of the Currency shall--
            (1) conduct a study on rates and terms used in the 
        extension of credit; and
            (2) develop a suite of financial products that FFSCCs may 
        offer to underbanked persons, that will--
                    (A) be fair to such persons; and
                    (B) economically viable for FFSCCs to offer.

SEC. 5. DEFINITIONS.

    For purposes of this Act:
            (1) Consumer.--The term ``consumer'' shall have the meaning 
        given such term under section 103(h) of the Truth in Lending 
        Act (15 U.S.C. 1602(h)).
            (2) Depository institution definitions.--The terms 
        ``depository institution'' and ``insured depository 
        institution'' shall have the meaning given such terms under 
        section 3(c) of the Federal Deposit Insurance Act.
            (3) Insured credit union.--The term ``insured credit 
        union'' shall have the meaning given such term under section 
        101(7) of the Federal Credit Union Act.
            (4) Long-term credit.--The term ``long-term credit'' means 
        an extension of credit with an initial term of one year or 
        more.
            (5) Short-term credit.--The term ``short-term credit'' 
        means an extension of credit with an initial term of less than 
        one year.
            (6) Small business.--The term ``small business'' means a 
        company with no more than 500 employees.
            (7) Underbanked.--The term ``underbanked'' means a natural 
        person or a small business that--
                    (A) has a deposit account with an insured 
                depository institution or an insured credit union; and
                    (B) has limited or no ability to access 
                nondepository services from insured depository 
                institutions or insured credit unions.
            (8) Underbanked person.--The term ``underbanked person'' 
        means a natural person or a small business that is underbanked, 
        unbanked, or has a low credit score.
            (9) Other terms.--The Comptroller of the Currency may issue 
        regulations to define such other terms as the Comptroller of 
        the Currency determines necessary to carry out this Act.
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