II 111th CONGRESS 1st Session S. 1822 IN THE SENATE OF THE UNITED STATES October 21, 2009 Mr. Merkley (for himself and Mrs. Boxer) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Emergency Economic Stabilization Act of 2008, with respect to considerations of the Secretary of the Treasury in providing assistance under that Act, and for other purposes.

1.

Short title

This Act may be cited as the Bank On Our Communities Act of 2009.

2.

Community credit renewal program

Section 103 of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5213) is amended— (1)by striking In exercising the authorities granted and inserting the following: (a)

In general

In exercising the authorities granted ; (2)in paragraph (5), by inserting before the semicolon the following: , except that the needs of certain small financial institutions may be taken into account, as set forth in paragraph (6), and the viability of certain small financial institutions may be established, as set forth in subsection (b)(3); and (3)by adding at the end the following: (b)

Community credit renewal program

(1)

In general

There is established within the Treasury the Community Credit Renewal Fund, which shall be used by the Secretary to provide assistance to community banking institutions in an amount not to exceed $15,000,000,000. (2)

Transfer of funds

Of amounts made available to carry out this title, the Secretary shall transfer $15,000,000,000 to Community Credit Renewal Fund for purposes of this subsection. (3)

Determination of viability

Notwithstanding any other provision of this title, the Secretary shall provide assistance under this subsection to any community banking institution, and a community banking institution may establish its long-term viability for purposes of subsection (a)(4), by demonstrating its receipt of capital from investors other than the Secretary, if— (A)the amount of capital to be received from investors other than the Secretary is equal to or greater than the amount of capital to be received from the Secretary; (B)the aggregate amount of capital to be received from the Secretary and from investors other than the Secretary is determined, on the basis of a forward-looking assessment by the institution by its management (in consultation with the appropriate Federal banking agency), to enable the community banking institution to remain well-capitalized (as determined by the appropriate Federal banking agency) even under a reasonably adverse economic scenario during the 2-year period following the date of receipt of such capital, and to increase the outstanding loans of the community banking institution, by December 31, 2010, such that the total amount of commercial and industrial loans is at least 5 percent greater than the smallest amount of such loans held by the community banking institution, as of any quarter-end in calendar year 2009; (C)not later than— (i)20 business days prior to the proposed date of the investment by the Secretary, the community banking institution notifies the Secretary, or the designee selected by the Secretary to receive such notice, of the amount of capital that the community banking institution proposes to solicit from investors other than the Secretary, on the condition that such capital will be matched or supplemented by an investment by the Secretary, and of the amount of capital that the community banking institution proposes be invested by the Secretary; and (ii)the close of business on the 5th business day after the date of the receipt of notice under clause (i) (or such longer period as the Secretary may reasonably establish, up to an additional 10 business days), the Secretary does not notify the community banking institution of the refusal of the Secretary to make the matching or supplementary investment and the grounds for such refusal, including the determination of the Secretary, in consultation with the appropriate Federal banking agency, that the aggregate amount of capital to be raised would not be enough to meet the requirements of this subsection, provided, however, that the Secretary may not refuse to make a matching or supplementary investment to an institution solely on the grounds that the institution holds a CAMEL composite rating of 3 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system); (D)the capital is received from investors other than the Secretary on the same day as the date of receipt of capital from the Secretary, and such date is prior to the earlier of— (i)9 months after the date of enactment of this subsection; or (ii)September 30, 2010; and (E)the aggregate amount of funds invested by the Secretary under this subsection does not exceed $15,000,000,000. (4)

Lending incentives and penalties

(A)

Penalties

(i)

In general

The interest rate or dividend to be paid on the Federal capital provided under this subsection by a community banking institution shall be increased to a penalty rate established by the Secretary, which shall be not less than 5 percentage points higher than the initial dividend or interest rate set for all community banking institutions assisted under this subsection if, by December 31, 2010, the community banking institution has failed— (I)to increase its total amount of commercial, industrial, and consumer loans by a dollar amount that is equal to the amount of capital received from the Secretary; or (II)to increase its total amount of commercial and industrial loans by a dollar amount that is at least 5 percent greater than the smallest amount of such loans held by the community banking institution as of any quarter end of the first three quarters in calendar year 2009. (ii)

Exemption authority

The Secretary may provide for exceptions to the provisions of this paragraph in the case of exigent circumstances, as determined by the Secretary. (B)

Incentives for commercial and industrial loans

Notwithstanding any other provision of this title— (i)for each dollar that a community banking institution that has received assistance under this subsection does in commercial and industrial loans above the amounts described in subparagraph (A)(i)(II)— (I)the community banking institution may redeem or repurchase one dollar of securities or stock held by the Secretary at a discount level established by the Secretary, except that such level shall be a minimum of 20 percent below par; or (II)the Secretary may, by rule, allow for a reduction in the interest or dividend paid on the securities; and (ii)if the dollar increase in lending by a community banking institution that has received assistance under this subsection exceeds the total Federal assistance under this subsection, the Secretary may establish rules for additional discounts on redemption of stock or securities held by the Secretary. (5)

Definitions

As used in this subsection— (A)the term community banking institution means a insured depository institution, or a holding company thereof, having total assets of less than $5,000,000,000; and (B)the terms insured depository institution and appropriate Federal banking agency have the same meanings as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). .