[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 1684 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  1st Session
                                S. 1684

   To strengthen the ability of the Federal Home Loan Bank system to 
provide critical financing to address the economic crisis caused by the 
  COVID-19 pandemic and to meet the short- and long-term housing and 
    community economic development needs of low-income communities, 
         including Tribal communities, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 18, 2021

 Ms. Cortez Masto (for herself, Mr. Leahy, and Mr. Sanders) introduced 
the following bill; which was read twice and referred to the Committee 
                               on Finance

_______________________________________________________________________

                                 A BILL


 
   To strengthen the ability of the Federal Home Loan Bank system to 
provide critical financing to address the economic crisis caused by the 
  COVID-19 pandemic and to meet the short- and long-term housing and 
    community economic development needs of low-income communities, 
         including Tribal communities, and for other purposes.

    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 ``Federal Home Loan Banks' Mission 
Implementation Act''.

SEC. 2. PURPOSE.

    The purpose of this Act is to promote economic recovery in response 
to the COVID-19 pandemic and to meet the short- and long-term housing 
and community economic development needs of low-income communities, 
including Tribal communities, by--
            (1) increasing the ability of the Federal Home Loan Banks 
        to accept, as collateral, small business loans guaranteed by 
        the Small Business Administration;
            (2) authorizing the Federal Home Loan Banks to accept 
        government guaranteed loans as collateral to support COVID-19 
        programs;
            (3) allowing community development financial institutions 
        and credit unions to pledge community financial institution 
        collateral, such as small business, small agriculture, and 
        community development loans, and enable the Federal Housing 
        Finance Agency to raise the threshold for qualification as a 
        community financial institution;
            (4) providing letters of credit to provide liquidity, and 
        support, stabilize and strengthen local, Tribal, State and 
        Federal governmental entities public unit deposits, housing and 
        community development efforts, and vital public financing;
            (5) increasing funding for the Affordable Housing Program 
        established by each Federal Home Loan Bank under section 10(j) 
        of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)) and 
        establishing a 2 percent set aside for Native American Tribes; 
        and
            (6) creating a community economic development investment 
        program within the Federal Home Loan Bank system to generate 
        financial opportunity, create jobs, and stimulate economic 
        development in distressed urban, rural, Tribal, and suburban 
        communities in the United States.

SEC. 3. FHLB ADVANCES SECURED BY SBA LOANS.

    Section 7 of the Small Business Act (15 U.S.C. 636) is amended by 
adding at the end the following:
    ``(o) Federal Home Loan Bank Advances.--
            ``(1) Definition of bank.--In this subsection, the term 
        `Bank' means a Federal Home Loan Bank, as defined in section 2 
        of the Federal Home Loan Bank Act (12 U.S.C. 1422).
            ``(2) Advances.--A Bank that, in the exercise of its 
        authority under section 10 of the Federal Home Loan Bank Act 
        (12 U.S.C. 1430) to make secured advances, accepts as 
        collateral a loan guaranteed by the Administration under this 
        Act or any other provision of law, including loans guaranteed 
        under section 7(a)--
                    ``(A) may exercise all of the rights and remedies 
                contained in any pledge or similar security agreement 
                between the Bank and the lending or participating 
                institution that made or purchased the loan; and
                    ``(B) in the event of default on the loan, shall 
                possess the same rights and remedies as such a lending 
                or participating institution would possess in the same 
                circumstance, including collecting monies due on the 
                guarantee directly from the Administration.
            ``(3) Transfer of guarantee.--With respect to a guaranteed 
        loan that a Bank accepts as collateral under paragraph (2), the 
        guarantee obligation of the Administration on the loan shall 
        transfer to the Bank.''.

SEC. 4. MAKING GOVERNMENT GUARANTEED LOANS IN RESPONSE TO THE COVID-19 
              CRISIS ELIGIBLE COLLATERAL FOR THE FEDERAL HOME LOAN 
              BANKS.

    Section 10(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 
1430(a)(3)) is amended by adding at the end the following:
                    ``(F) Loans guaranteed or insured by the United 
                States Government or any agency thereof and made by any 
                member under programs or facilities established by the 
                Secretary of the Treasury or the Board of Governors of 
                the Federal Reserve System under the CARES Act (Public 
                Law 116-136) or other similar programs or facilities in 
                subsequently enacted Acts to address the impact to the 
                economy from the COVID-19 crisis, including other 
                similar programs or facilities established under 
                section 13(3) of the Federal Reserve Act (12 U.S.C. 
                343(3)).
                    ``(G) Loans guaranteed by the Small Business 
                Administration under the Small Business Act (15 U.S.C. 
                631 et seq.) or any other provision of law.''.

SEC. 5. ADDING CREDIT UNIONS TO THE DEFINITION OF COMMUNITY FINANCIAL 
              INSTITUTIONS AND EXPANDING THE PURPOSES OF ADVANCES AND 
              COLLATERAL AVAILABLE TO CERTAIN COMMUNITY DEVELOPMENT 
              FINANCIAL INSTITUTIONS.

    (a) In General.--Section 10(a) of the Federal Home Loan Bank Act 
(12 U.S.C. 1430(a)) is amended--
            (1) in paragraph (2)(B), by inserting ``or qualifying 
        community development financial institution'' after ``community 
        financial institution''; and
            (2) in paragraph (3)(E), by inserting ``or qualifying 
        community development financial institution'' after ``community 
        financial institution''.
    (b) Definitions.--Section 2 of the Federal Home Loan Bank Act (12 
U.S.C. 1422) is amended--
            (1) in paragraph (10)--
                    (A) by striking ``institution.--'' and all that 
                follows through ``The term'' and inserting 
                ``institution.--The term'';
                    (B) by striking subparagraph (B);
                    (C) by redesignating clauses (i) and (ii) as 
                subparagraphs (A) and (B), respectively, and adjusting 
                the margins accordingly;
                    (D) in subparagraph (A), as so redesignated, by 
                inserting ``(12 U.S.C. 1811 et seq.) or the Federal 
                Credit Union Act (12 U.S.C. 1751 et seq.)'' before the 
                semicolon; and
                    (E) in subparagraph (B), as so redesignated, by 
                striking ``$1,000,000,000'' and inserting ``assets at a 
                level set by the Agency, but not more than 
                $10,000,000,000''; and
            (2) by adding at the end the following:
            ``(13) Qualifying community development financial 
        institution.--The term `qualifying community development 
        financial institution' means an entity that--
                    ``(A) has been certified as a community development 
                financial institution (as such term is defined in 
                section 103 of the Riegle Community Development and 
                Regulatory Improvement Act of 1994 (12 U.S.C. 4702) by 
                the Secretary of the Treasury; and
                    ``(B) satisfies the average total assets threshold 
                requirement for a community financial institution set 
                forth in paragraph (10).''.

SEC. 6. STANDBY LETTERS OF CREDIT.

    The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 
amended--
            (1) in section 2 (12 U.S.C. 1422), as amended by section 5 
        of this Act, is amended by adding at the end the following:
            ``(14) Employee- or community-owned company.--The term 
        `employee- or community-owned company' means--
                    ``(A) an organization described in section 1381 of 
                the Internal Revenue Code of 1986;
                    ``(B) an eligible worker-owned cooperative, as 
                defined in section 1042(c)(2) of the Internal Revenue 
                Code of 1986; and
                    ``(C) an employee stock ownership plan, as defined 
                in section 4975(e)(7) of the Internal Revenue Code of 
                1986, which meets the requirements of section 409 of 
                such Code.'';
            (2) in section 11 (12 U.S.C. 1431), by adding at the end 
        the following:
    ``(m) Standby Letters of Credit.--
            ``(1) In general.--Each Federal Home Loan Bank is 
        authorized to issue and confirm standby letters of credit, 
        secured by collateral eligible to secure advances, to support 
        any activity permitted under law or regulation applicable to 
        the member or non-member mortgagee eligible to receive advances 
        under section 10b, subject to safety and soundness oversight, 
        including the purposes described in paragraph (2).
            ``(2) Purposes.--Each Bank is authorized to issue or 
        confirm on behalf of members or non-member mortgagees standby 
        letters of credit that comply with the requirements of this 
        subsection for any of the following purposes:
                    ``(A) To assist members or non-member mortgagees in 
                facilitating residential housing finance.
                    ``(B) To assist members or non-member mortgagees in 
                facilitating community lending.
                    ``(C) To assist members or non-member mortgagees 
                with asset or liability management.
                    ``(D) To provide members or non-member mortgagees 
                with liquidity or other funding.
                    ``(E) To assist members in facilitating business 
                retention or facilitating business transition to 
                employee- or community-owned companies or assisting 
                those companies.''.

SEC. 7. LETTERS OF CREDIT ON TAX EXEMPT BONDS.

    (a) In General.--Clause (iv) of section 149(b)(3)(A) of the 
Internal Revenue Code of 1986 is amended by striking ``a bond during 
the period beginning on the date of the enactment of this clause and 
ending on December 31, 2010'' and inserting ``a municipal bond (as 
defined in section 75(b)(1)) on or after the date of enactment of the 
Federal Home Loan Banks' Mission Implementation Act''.
    (b) Safety and Soundness Requirements.--Subparagraph (E) of section 
149(b)(3) of the Internal Revenue Code of 1986 is amended by striking 
``which are at least'' and all that follows through the period and 
inserting ``as are established by the Director of the Federal Housing 
Finance Agency from time to time.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to guarantees made after the date of enactment of this Act.
    (d) Sunset.--Effective on the date that is 2 years after the date 
on which the Federal Emergency Management Agency terminates the 
emergency declared on March 13, 2020 by the President under the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 
4121 et seq.) relating to the Coronavirus Disease 2019 (COVID-19) 
pandemic, section 149(b)(3) of the Internal Revenue Code of 1986 is 
amended--
            (1) in subparagraph (A)(iv), by striking ``a municipal bond 
        (as defined in section 75(b)(1)) on or after the date of 
        enactment of the Federal Home Loan Banks' Mission 
        Implementation Act'' and inserting ``a bond during the period 
        beginning on the date of the enactment of this clause and 
        ending on December 31, 2010''; and
            (2) in subparagraph (E), by striking ``as are established 
        by the Director of the Federal Housing Finance Agency from time 
        to time'' and inserting ``which are at least as stringent as 
        such requirements which apply under regulations applicable to 
        such guarantees by Federal home loan banks as in effect on 
        April 9, 2008''.

SEC. 8. AFFORDABLE HOUSING PROGRAM.

    (a) In General.--Section 10 of the Federal Home Loan Bank Act (12 
U.S.C. 1430) is amended--
            (1) in subsection (j)--
                    (A) in paragraph (3)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``such as the following:'' and 
                        inserting ``such as--'';
                            (ii) in subparagraph (A)--
                                    (I) by inserting ``the'' before 
                                ``purchase''; and
                                    (II) by striking the comma at the 
                                end and inserting a semicolon;
                            (iii) in subparagraph (B)--
                                    (I) by inserting ``the'' before 
                                ``purchase''; and
                                    (II) by striking ``and'' at the 
                                end;
                            (iv) in subparagraph (C)--
                                    (I) by inserting ``the'' before 
                                ``purchase''; and
                                    (II) by striking the period at the 
                                end and inserting a semicolon; and
                            (v) by adding at the end the following:
                    ``(D) the purchase or rehabilitation of housing 
                financed by a community land trust; and
                    ``(E) the purchase or rehabilitation of housing in 
                qualified manufactured home communities owned by 
                nonprofit organizations or the residents.''; and
                    (B) in paragraph (5)(C)--
                            (i) by striking ``10'' and inserting 
                        ``20'';
                            (ii) by striking ``100,000,000'' and 
                        inserting ``200,000,000''; and
                            (iii) by adding at the end the following: 
                        ``Of such contribution, an amount equal to not 
                        less than 2 percent of 20 percent of the 
                        preceding year's net income shall be used to 
                        support subsidized grants or advances through 
                        the Affordable Housing Program benefitting 
                        federally recognized Indian Tribes and 
                        communities, which includes awards outside of 
                        the district of a Bank.''.
    (b) Definitions.--Section 2 of the Federal Home Loan Bank Act (12 
U.S.C. 1422), as amended by section 6 of this Act, is amended by adding 
at the end the following:
            ``(16) Manufactured home.--The term `manufactured home' has 
        the meaning given the term in section 603 of the National 
        Manufactured Housing Construction and Safety Standards Act of 
        1974 (42 U.S.C. 5402).
            ``(17) Qualified manufactured home community.--
                    ``(A) In general.--The term `qualified manufactured 
                home community' means--
                            ``(i) a cooperative controlled by residents 
                        or a nonprofit or municipal housing corporation 
                        established pursuant to the laws of the State 
                        in which the property used as a manufactured 
                        home community is located; and
                            ``(ii)(I) in the case of a community owned 
                        by a cooperative corporation or membership 
                        nonprofit, with membership interests that are 
                        sold on a non-appreciating basis, has only 1 
                        class of membership consisting solely of 
                        residents and homeowners that occupy a home in 
                        that manufactured home community; or
                            ``(II) in the case of a community owned by 
                        a nonprofit corporation--
                                    ``(aa) the nonprofit exists for the 
                                purposes of preserving and improving 
                                affordable housing and is primarily for 
                                residential purposes; and
                                    ``(bb) the intent of the nonprofit 
                                in acquiring the community is for the 
                                purposes of preserving and improving 
                                the manufactured home community.
                    ``(B) Governance.--An entity shall not be treated 
                as a qualified manufactured home community unless 
                governance of the entity is carried out by members 
                elected to a board of directors with voting structured 
                equitably among all members.''.
    (c) Technical and Conforming Amendments.--Section 10 of the Federal 
Home Loan Bank Act (12 U.S.C. 1430) is amended--
            (1) in subsection (c), by striking ``Federal home loan 
        bank'' and inserting ``Federal Home Loan Bank'';
            (2) in subsection (h)(2), by striking ``section 10(a) of 
        this Act'' and inserting ``subsection (a)''; and
            (3) in subsection (j)--
                    (A) in paragraph (2), in the matter preceding 
                subparagraph (A), by striking ``Board's regulations'' 
                and inserting ``regulations promulgated by the 
                Director'';
                    (B) in paragraph (6)--
                            (i) in subparagraph (A), by striking ``this 
                        paragraph'' and inserting ``paragraph (5)'';
                            (ii) in subparagraph (C), in the second 
                        sentence, by striking ``Board's decision'' and 
                        inserting ``decision of the Director''; and
                            (iii) in subparagraph (F), by inserting 
                        ``Notification.--'' before ``The Director'';
                    (C) in paragraph (8), in the matter preceding 
                subparagraph (A), by striking ``paragraph'' and 
                inserting ``subsection'';
                    (D) in paragraph (12)--
                            (i) in subparagraph (A), by inserting ``In 
                        general.--'' before ``The Director''; and
                            (ii) in subparagraph (B), by inserting 
                        ``Analyses.--'' before ``The analyses''; and
                    (E) in paragraph (13), in the matter preceding 
                subparagraph (A), by striking ``subsection--'' and 
                inserting ``subsection:''.

SEC. 9. COMMUNITY INVESTMENT CASH ADVANCE AND COMMUNITY ECONOMIC 
              DEVELOPMENT PROGRAM.

    (a) In General.--Section 10 of the Federal Home Loan Bank Act (12 
U.S.C. 1430) is amended by inserting after subsection (e) the 
following:
    ``(f) Community Investment Cash Advance and Community Economic 
Development Program.--
            ``(1) In general.--Pursuant to regulations promulgated by 
        the Director, each Bank--
                    ``(A) may establish community investment cash 
                advance programs to provide financing for members or 
                nonmember mortgagees eligible to receive advances under 
                section 10b to provide projects targeted to certain 
                economic development activities and specific 
                beneficiaries, including certain geographic areas and 
                at certain targeted income levels established by the 
                Bank with the prior approval of Director; and
                    ``(B) shall provide targeted community economic 
                development grants and lending.
            ``(2) Mixed-use projects.--With respect to a project funded 
        under a program established under this subsection involving a 
        combination of housing projects and economic development 
        projects, only the economic development components of the 
        project shall be required to meet the appropriate targeted 
        income level for the program.
            ``(3) Pricing and availability of advances.--A Bank shall 
        price advances to members under this subsection as provided in 
        section 1266.5 of title 12, Code of Federal Regulations, or any 
        successor regulation, and may price such advances at rates 
        below the price of advances of similar amounts, maturities, and 
        terms made pursuant to subsection (a).
            ``(4) Advances to non-member mortgagees eligible to receive 
        advances.--
                    ``(A) In general.--A Bank may offer advances under 
                a program established under this subsection to non-
                member mortgagees eligible to receive advances under 
                subsection (b) at the Bank's option.
                    ``(B) Pricing.--A Bank shall price advances under 
                this paragraph to non-member mortgagees eligible to 
                receive advances under section 10b as provided in 
                section 1266.17 of title 12, Code of Federal 
                Regulations, or any successor regulation, and may price 
                such advances at rates below the price of advances of 
                similar amounts, maturities, and terms made pursuant to 
                section 10b.
            ``(5) Pricing pass-through.--A Bank may require that 
        borrowers receiving advances made under a program established 
        under this subsection pass through the benefit of any price 
        reduction from regular advance pricing to borrowers of the 
        Bank.
            ``(6) Discount fund.--
                    ``(A) In general.--A Bank may establish a discount 
                fund that the Bank may use to reduce the price of 
                advances made under a program established under this 
                subsection below the advance prices provided for by 
                part 1292 of title 12, Code of Federal Regulations, or 
                any successor regulation.
                    ``(B) Fair distribution scheme.--Price reductions 
                made through a discount fund under subparagraph (A) 
                shall be made in accordance with a fair distribution 
                scheme.
            ``(7) Community economic developing grants and lending.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Eligible entity.--The term `eligible 
                        entity' means--
                                    ``(I) a locally-owned nonprofit 
                                organization described in section 
                                501(c)(3) of the Internal Revenue Code 
                                of 1986 and exempt from taxation under 
                                section 501(a) of such Code or a 
                                community development corporation--
                                            ``(aa) that has experience 
                                        in developing and managing 
                                        economic development projects;
                                            ``(bb) that governed by a 
                                        board of directors consisting 
                                        of residents of the community 
                                        and business and civic leaders; 
                                        and
                                            ``(cc) the principal 
                                        purpose of which is to plan, 
                                        develop, or manage low-income 
                                        housing or community 
                                        development projects;
                                    ``(II) a non-depository community 
                                development financial institution, as 
                                defined in section 103 of the Riegle 
                                Community Development and Regulatory 
                                Improvement Act of 1994 (12 U.S.C. 
                                4702), that is certified by the 
                                Community Development Financial 
                                Institutions Fund under section 
                                1805.201 of title 12, Code of Federal 
                                Regulations, or any successor 
                                regulation;
                                    ``(III) a federally recognized 
                                Indian Tribe or community; or
                                    ``(IV) a regional or national 
                                nonprofit community development or 
                                cooperative development intermediary.
                            ``(ii) Low-income community.--The term 
                        `low-income community' has the meaning given 
                        the term in section 45D(e) of the Internal 
                        Revenue Code of 1986.
                            ``(iii) Rural community.--The term `rural 
                        community' means a city, town, or Census 
                        Designated Place with a population of not more 
                        than 20,000, according to the most recent 
                        decennial census conducted by the Bureau of the 
                        Census.
                            ``(iv) Very low-income household.--The term 
                        `very low-income household' means a household 
                        with an income that is not greater than 50 
                        percent of the area median income.
                    ``(B) Requirement.--Each Bank shall establish a 
                program to provide grants or subsidize the interest 
                rate on advances to members engaged in lending to 
                eligible entities for economic development activities 
                that serve low-income or rural communities.
                    ``(C) Use of funds.--The entire amount of a grant 
                or subsidized advance provided under this paragraph--
                            ``(i) shall benefit the communities 
                        assisted by the recipient of the grant or 
                        subsidized advance;
                            ``(ii) shall not be used for the purpose of 
                        financial education or to support a sports 
                        stadium or arena; and
                            ``(iii) shall provide at least 2 percent of 
                        grants or advance funds to benefit federally 
                        recognized Indian Tribes or communities, which 
                        may include a Bank providing grants or advance 
                        funds outside of the district of the Bank.
                    ``(D) Eligible activities.--Economic development 
                activities that are eligible to be carried out under 
                this paragraph include--
                            ``(i) providing grants and equity 
                        investments, including those that capitalize a 
                        revolving loan fund of a Treasury-certified 
                        non-depository community development financial 
                        institution for eligible economic development 
                        activities similar to the authority provided 
                        within the Affordable Housing Program under 
                        subsection (j);
                            ``(ii) providing awards consistent with 
                        awards provided under section 680 of the 
                        Community Block Grant Act (42 U.S.C. 9921);
                            ``(iii) financing business transitions to 
                        worker-owned cooperatives or financing the 
                        sales of business assets to employees or 
                        community stakeholders that preserve jobs in 
                        low- and moderate-income communities;
                            ``(iv) financing capital expenditures, such 
                        as the purchase of equipment or real property 
                        for nonprofit organizations, including child 
                        care or health care facilities in low-income 
                        communities, that provide service to low-income 
                        households;
                            ``(v) financing operating expenses for 
                        nonprofit community development organizations 
                        engaged in community economic development 
                        activities benefitting very low-income 
                        households;
                            ``(vi) water, road, broadband, clean 
                        energy, or municipal infrastructure 
                        investments, including investments to address 
                        climate change, in Native American tribal lands 
                        and economically distressed rural communities;
                            ``(vii) providing community facilities or 
                        infrastructure, including public transit, green 
                        space consisting of parks with trees and 
                        shrubbery, heat-reflecting road and sidewalk 
                        upgrades, tornado shelters, public restrooms, 
                        or environmental cooling locations accessible 
                        to the public in low-income communities; and
                            ``(viii) any other activity established by 
                        the Director in consultation with Congress, the 
                        Federal Home Loan Banks and their housing 
                        advisory councils, and the public.
                    ``(E) Priorities for making grants and advances.--
                In using amounts provided under this paragraph, each 
                Bank member shall give priority to qualified projects 
                such as--
                            ``(i) grants or advances for mixed-use 
                        housing developments that provide economic 
                        activity and affordable housing for low-income 
                        and rural communities;
                            ``(ii) grants or advances for child care 
                        facilities that serve low-income households;
                            ``(iii) grants or advances for programs 
                        that provide economic opportunities for 
                        formerly incarcerated individuals;
                            ``(iv) grants or advances that enable 
                        conversion to employee- or community-owned 
                        companies or financing the sales of business 
                        assets to employees or community stakeholders;
                            ``(v) grants or advances to established 
                        regional and national intermediary 
                        organizations that already receive Federal 
                        funds and have the capacity to deliver economic 
                        development activities to low-income 
                        households; and
                            ``(vi) any other priority established by 
                        the Agency in consultation with the Banks, Bank 
                        members, housing advisory councils of the 
                        Banks, Congress, and the public.
                    ``(F) Requirements for projects in rural 
                communities.--With respect to a project carried out by 
                an eligible entity in a rural community under this 
                paragraph--
                            ``(i) not less than 51 percent of the 
                        population served by the project shall reside 
                        in the rural community;
                            ``(ii) the projects shall primarily serve 
                        and benefit rural residents and communities; 
                        and
                            ``(iii) the rural community shall be within 
                        the jurisdiction of the eligible entity.
                    ``(G) Report.--Each member receiving a grant or 
                advance under this paragraph shall report annually to 
                the Bank making the grant or advance concerning the use 
                by the member of the grant or advance.
                    ``(H) Contribution to program.--Each Bank shall 
                annually contribute 10 percent of the preceding year's 
                net income, or such prorated sums as may be required to 
                ensure that the aggregate contribution of the Banks 
                shall not be less than $100,000,000 for each such year, 
                to support grants and subsidized advances made under 
                this paragraph.''.
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