[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1909 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 1909

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 13, 2011

    Mr. Baca (for himself, Mr. Meeks, Mr. Sires, and Mrs. Schmidt) 
 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 Charter Act of 2011''.

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 shall--
            (1) under such regulations as the Comptroller of the 
        Currency may prescribe, 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''); and
            (2) have the responsibility to ensure that credit 
        alternatives are available to the underbanked.
    (b) Eligibility.--The Comptroller of the Currency may not issue an 
FFSCC charter to a company unless the company satisfies the following 
requirements, as reasonably determined by the Comptroller of the 
Currency:
            (1) The company has a demonstrated history of experience in 
        providing underbanked persons with a financial product from 
        within the following services:
                    (A) Credit extended to consumers or, in an amount 
                less than $10,000, to small businesses.
                    (B) The issuing of reloadable stored value cards to 
                consumers or small businesses.
                    (C) 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.
                    (D) Such other short-term consumer credit services 
                as the Comptroller of the Currency determines 
                appropriate.
            (2)(A) No person who is a director, officer, partner, 
        agent, sole proprietor, owner, or controlling person of the 
        company--
                    (i) has been convicted of a felony within ten years 
                of the charter application date; or
                    (ii) is associated with any person who has been 
                convicted of a felony within ten years of the charter 
                application date.
            (B) For purposes of subparagraph (A)--
                    (i) the term ``controlling person'' means a person 
                owning or controlling 10 percent or more of the total 
                outstanding ownership of the company; and
                    (ii) with respect to two people, the term 
                ``associated with'' means one person--
                            (I) is a partner, officer, or director (or 
                        any person occupying a similar status or 
                        performing similar functions) of the other 
                        person; or
                            (II) directly or indirectly controls, is 
                        controlled by, or is under common control with 
                        the other person.
            (3) The company submits a business plan or operating plan 
        that adequately addresses the appropriate statutory and policy 
        considerations. Such plan shall--
                    (A) 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;
                    (B) 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
                    (C) demonstrate that the company is aware of, and 
                understands, Federal and State consumer credit laws and 
                sound consumer credit operations and practices in the 
                context of serving the needs of the underbanked and 
                unbanked populations.
            (4) The company has senior management officials who are 
        familiar with applicable Federal and State consumer credit laws 
        and regulations, and the credit needs of underbanked and 
        unbanked consumers.
            (5) 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.
    (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) Financial products offered.--Each FFSCC shall provide 
        to underbanked persons at least three financial products from 
        within the services listed under the subparagraphs of 
        subsection (b)(1).
            (5) 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 unbanked or 
                underbanked consumers.
                    (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 authority to provide any financial products 
authorized by the Comptroller of the Currency under section 4(2).
    (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. The Comptroller of the 
Currency may authorize any State attorney general to enforce violations 
of this Act, or regulations issued pursuant to this Act.
    (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 shall be preempted if the application of such law 
would have a discriminatory effect on a company because such company is 
chartered as an FFSCC.
    (h) Model Forms.--The Comptroller of the Currency shall draft 
approved, model product and disclosure forms that may be utilized by 
FFSCCs with any approved credit products or services offered by 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) contain transparent and full disclosure of all 
                fees and terms related to such products; and
                    (B) be economically viable for FFSCCs to offer to 
                consumers.

SEC. 5. DEFINITIONS.

    For purposes of this Act:
            (1) 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.
            (2) 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)).
            (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) Insured depository institution.--The term ``insured 
        depository institution'' shall have the meaning given such term 
        under section 3(c) of the Federal Deposit Insurance Act.
            (5) Long-term credit.--The term ``long-term credit'' means 
        an extension of credit with an initial term of one year or 
        more.
            (6) Short-term credit.--The term ``short-term credit'' 
        means an extension of credit with an initial term of less than 
        one year.
            (7) Small business.--The term ``small business'' means a 
        company with no more than 500 employees.
            (8) 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 non-
                depository services from insured depository 
                institutions or insured credit unions, as reasonably 
                determined by the Comptroller of the Currency.
            (9) Underbanked person.--The term ``underbanked person'' 
        means a natural person or a small business that is underbanked, 
        unbanked, or has a low credit score.
            (10) 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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