[Congressional Record Volume 140, Number 29 (Wednesday, March 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
  COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS ACT OF 1993

  The PRESIDING OFFICER. Under the previous order the clerk will now 
report Calendar No. 259.
  The legislative clerk read as follows:

       A bill (S. 1275) to facilitate the establishment of 
     community development financial institutions.

  The Senate proceeded to consider the bill which had been reported 
from the Committee on Banking, Housing, and Urban Affairs, with an 
amendment to strike all after the enacting clause and inserting in lieu 
thereof the following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Community 
     Development, Credit Enhancement, and Regulatory Improvement 
     Act of 1993''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

         TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

 Subtitle A--Community Development Banking and Financial Institutions 
                                  Act

Sec. 101. Short title.
Sec. 102. Findings and purposes.
Sec. 103. Definitions.
Sec. 104. Establishment of national fund for community development 
              banking.
Sec. 105. Applications for assistance.
Sec. 106. Community partnerships.
Sec. 107. Selection of institutions.
Sec. 108. Assistance provided by the Fund.
Sec. 109. Community development training.
Sec. 110. Encouragement of private entities.
Sec. 111. Clearinghouse function.
Sec. 112. Recordkeeping, reports, and audits.
Sec. 113. Investment of receipts and proceeds.
Sec. 114. Inspector General.
Sec. 115. Capitalization assistance to enhance liquidity.
Sec. 116. Community development revolving loan fund for credit unions.
Sec. 117. Study of community development credit unions.
Sec. 118. Regulations.
Sec. 119. Authorization of appropriations.

            Subtitle B--Home Ownership and Equity Protection

Sec. 151. Consumer protections for high cost mortgages.
Sec. 152. Civil liability.
Sec. 153. Regulations; effective date.

               TITLE II--SMALL BUSINESS CAPITAL FORMATION

             Subtitle A--Small Business Loan Securitization

Sec. 201. Short title.
Sec. 202. Small business related security.
Sec. 203. Applicability of margin requirements.
Sec. 204. Borrowing in the course of business.
Sec. 205. Small business related securities as collateral.
Sec. 206. Investment by depository institutions.
Sec. 207. Preemption of State law.
Sec. 208. Insured depository institution capital requirements for 
              transfers of small business loans.
Sec. 209. Transactions in small business related securities by employee 
              benefit plans.
Sec. 210. Taxation of small business loan investment conduits.

             Subtitle B--Small Business Capital Enhancement

Sec. 251. Findings and purposes.
Sec. 252. Definitions.
Sec. 253. Approving States for participation.
Sec. 254. Participation agreements.
Sec. 255. Terms of participation agreements.
Sec. 256. Reports.
Sec. 257. Reimbursement by the Secretary.
Sec. 258. Reimbursement to the Secretary.
Sec. 259. Regulations.
Sec. 260. Authorization of appropriations.

       TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

Sec. 301. Incorporated definitions.
Sec. 302. Administrative consideration of burden with new regulations.
Sec. 303. Streamlining of regulatory requirements.
Sec. 304. Elimination of duplicative filings.
Sec. 305. Coordinated and unified examinations.
Sec. 306. Eighteen-month examination rule for certain small 
              institutions.
Sec. 307. Call report simplification.
Sec. 308. Repeal of publication requirements.
Sec. 309. Regulatory appeals process.
Sec. 310. Electronic filing of currency transaction reports.
Sec. 311. Bank Secrecy Act publication requirements.
Sec. 312. Exemption of business loans from Real Estate Settlement 
              Procedures Act requirements.
Sec. 313. Flexibility in choosing boards of directors.
Sec. 314. Holding company audit requirements.
Sec. 315. State regulation of real estate appraisals.
Sec. 316. Acceleration of effective date for interaffiliate 
              transactions.
Sec. 317. Collateralization of public deposits.
Sec. 318. Elimination of stock valuation provision.
Sec. 319. Expedited procedures for forming a bank holding company.
Sec. 320. Exemption of certain holding company formations from 
              registration under the Securities Act of 1933.
Sec. 321. Reduction of post-approval waiting period for bank holding 
              company acquisitions.
Sec. 322. Reduction of post-approval waiting period for bank mergers.
Sec. 323. Bankers' banks.
Sec. 324. Bank Service Corporation Act amendment.
Sec. 325. Merger transaction reports.
Sec. 326. Credit card accounts receivable sales.
Sec. 327. Limiting potential liability on foreign accounts.
Sec. 328. Amendments to outdated dividend provisions.
Sec. 329. Elimination of duplicative disclosures for home equity loans.
Sec. 330. Report on capital standards and their impact on the economy.
Sec. 331. Studies on the impact of the payment of interest on reserves.
Sec. 332. Study and report on streamlined lending process for consumer 
              benefit.
Sec. 333. Repeal of outdated charter requirement for national banks.
         TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION
 Subtitle A--Community Development Banking and Financial Institutions 
                                  Act

     SEC. 101. SHORT TITLE.

       This subtitle may be cited as the ``Community Development 
     Banking and Financial Institutions Act of 1993''.

     SEC. 102. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) many of the Nation's urban, rural, and Native American 
     communities face critical social and economic problems 
     arising in part from the lack of economic growth, people 
     living in poverty, and the lack of employment and other 
     opportunities;
       (2) the restoration and maintenance of the economies of 
     these communities will require coordinated development 
     strategies, intensive supportive services, and increased 
     access to equity investments and loans for development 
     activities, including investment in businesses, housing, 
     commercial real estate, human development, and other 
     activities that promote the long-term economic and social 
     viability of the community; and
       (3) community development financial institutions have 
     proven their ability to identify and respond to community 
     needs for equity investments, loans, and development 
     services.
       (b) Purpose.--The purpose of this subtitle is to create a 
     Community Development Financial Institutions Fund that will 
     promote economic revitalization and community development 
     through a program of investment in and assistance to 
     community development financial institutions, including 
     enhancing the liquidity of community development financial 
     institutions.

     SEC. 103. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     shall apply:
       (1) Appropriate federal banking agency.--The term 
     ``appropriate Federal banking agency'' has the same meaning 
     as in section 3 of the Federal Deposit Insurance Act, and 
     also includes the National Credit Union Administration Board 
     with respect to insured credit unions.
       (2) Affiliate.--The term ``affiliate'' has the same meaning 
     as in section 2(k) of the Bank Holding Company Act of 1956.
       (3) Community development financial institution.--
       (A) In general.--The term ``community development financial 
     institution'' means a person (other than an individual) 
     that--
       (i) has a primary mission of promoting community 
     development;
       (ii) serves an investment area or targeted population;
       (iii) directly, through an affiliate, or through a 
     community partnership, provides development services and 
     equity investments or loans;
       (iv) maintains, through representation on its governing 
     board or otherwise, accountability to residents of its 
     investment area or targeted population; and
       (v) is not an agency or instrumentality of the United 
     States, or of any State or political subdivision of a State.
       (B) Qualification of affiliates.--A subsidiary may only 
     qualify as a community development financial institution if 
     its parent company and the subsidiaries thereof (on a 
     consolidated basis) also qualify as community development 
     financial institutions.
       (4) Community partner.--The term ``community partner'' 
     means a person (other than an individual) that provides 
     loans, equity investments, or development services, including 
     a depository institution holding company, an insured 
     depository institution, an insured credit union, a nonprofit 
     organization, a State or local government agency, and an 
     investment company authorized to operate pursuant to the 
     Small Business Investment Act of 1958.
       (5) Community partnership.--The term ``community 
     partnership'' means an agreement between a community 
     development financial institution and a community partner to 
     provide development services and loans or equity investments 
     to an investment area or targeted population.
       (6) Depository institution holding company.--The term 
     ``depository institution holding company'' has the same 
     meaning as in section 3 of the Federal Deposit Insurance Act.
       (7) Development services.--The term ``development 
     services'' means activities that promote community 
     development and are integral to lending or investment 
     activities, including--
       (A) business planning;
       (B) financial and credit counseling; and
       (C) marketing and management assistance.
       (8) Insured community development financial institution.--
     The term ``insured community development financial 
     institution'' means any community development financial 
     institution that is an insured depository institution or an 
     insured credit union.
       (9) Insured credit union.--The term ``insured credit 
     union'' has the same meaning as in section 101(7) of the 
     Federal Credit Union Act.
       (10) Insured depository institution.--The term ``insured 
     depository institution'' has the same meaning as in section 3 
     of the Federal Deposit Insurance Act.
       (11) Investment area.--The term ``investment area'' means a 
     geographic area that--
       (A)(i) meets objective criteria of economic distress 
     developed by the Community Development Financial Institutions 
     Fund, which may include the percentage of low-income families 
     or the extent of poverty, the rate of unemployment or 
     underemployment, lag in population growth, and extent of 
     blight and disinvestment; and
       (ii) has significant unmet needs for loans or equity 
     investments;
       (B) is located in an empowerment zone or enterprise 
     community designated under section 1391 of the Internal 
     Revenue Code of 1986; or
       (C) is located on an Indian reservation, as defined in 
     section 3(d) of the Indian Financing Act of 1974 or section 
     4(10) of the Indian Child Welfare Act of 1978.
       (12) Low-income.--The term ``low-income'' means having an 
     income, adjusted for family size, of not more than--
       (A) for metropolitan areas, 80 percent of the area median 
     income; and
       (B) for nonmetropolitan areas, the greater of--
       (i) 80 percent of the area median income; and
       (ii) 80 percent of the statewide nonmetropolitan area 
     median income.
       (13) Parent company.--The term ``parent company'' means any 
     company that directly or indirectly controls another company.
       (14) Subsidiary.--The term ``subsidiary'' has the same 
     meaning as in section 3 of the Federal Deposit Insurance Act, 
     except that a community development financial institution 
     that is a corporation shall not be considered to be a 
     subsidiary of any insured depository institution or 
     depository institution holding company that controls less 
     than 25 percent of the voting shares of the corporation.
       (15) Targeted population.--The term ``targeted population'' 
     means low-income persons or persons who otherwise lack 
     adequate access to loans or equity investments.

     SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY 
                   DEVELOPMENT BANKING.

       (a) Establishment.--
       (1) In general.--There is established a corporation to be 
     known as the Community Development Financial Institutions 
     Fund (hereafter in this subtitle referred to as the ``Fund'') 
     that shall have the duties and responsibilities specified by 
     this subtitle. The Fund shall have succession until 
     dissolved. The offices of the Fund shall be in Washington, 
     D.C. The Fund shall not be affiliated with or be within any 
     other agency or department of the Federal Government.
       (2) Wholly owned government corporation.--The Fund shall be 
     a wholly owned Government corporation in the executive branch 
     and shall be treated in all respects as an agency of the 
     United States, except as otherwise provided in this subtitle.
       (b) Management of Fund.--
       (1) Appointment of administrator and deputy 
     administrator.--The management of the Fund shall be vested in 
     an Administrator, who shall be appointed by the President, by 
     and with the advice and consent of the Senate. The 
     Administrator shall not engage in any other business or 
     employment during service as the Administrator. The President 
     may appoint a Deputy Administrator by and with the advice and 
     consent of the Senate. The Deputy Administrator shall serve 
     as the acting Administrator of the Fund during the absence or 
     disability of the Administrator or in the event of a vacancy 
     in the office of the Administrator.
       (2) Chief financial officer.--The Administrator shall 
     appoint a chief financial officer who shall oversee the 
     financial management activities of the Fund.
       (3) Other officers.--The Administrator may appoint such 
     other officers and employees of the Fund as the Administrator 
     determines to be necessary or appropriate.
       (c) General Powers.--In carrying out the functions of the 
     Fund, the Administrator--
       (1) shall have all necessary and proper authority to carry 
     out this subtitle;
       (2) shall have the power to adopt, alter, and use a 
     corporate seal for the Fund, which shall be judicially 
     noticed;
       (3) may adopt, amend, and repeal bylaws, rules, and 
     regulations governing the manner in which business of the 
     Fund may be conducted and such rules and regulations as may 
     be necessary or appropriate to implement this subtitle;
       (4) may enter into, perform, and enforce such agreements, 
     contracts, and transactions as may be deemed necessary or 
     appropriate to the conduct of activities authorized under 
     this subtitle;
       (5) may determine the character of and necessity for 
     expenditures of the Fund and the manner in which they shall 
     be incurred, allowed, and paid;
       (6) may utilize or employ the services of personnel of any 
     agency or instrumentality of the United States with the 
     consent of the agency or instrumentality concerned on a 
     reimbursable or nonreimbursable basis; and
       (7) may execute all instruments necessary or appropriate in 
     the exercise of any of the functions of the Fund under this 
     subtitle and may delegate to the officers of the Fund such of 
     the powers and responsibilities of the Administrator as the 
     Administrator deems necessary or appropriate for the 
     administration of the Fund.
       (d) Advisory Board.--
       (1) Establishment.--The Administrator shall establish an 
     advisory board to be known as the Community Development 
     Advisory Board (hereafter in this subtitle referred to as the 
     ``Board'') in accordance with the provisions of the Federal 
     Advisory Committee Act.
       (2) Membership.--
       (A) In general.--The Board shall consist of 5 private 
     citizens who, collectively--
       (i) represent community groups whose constituencies include 
     targeted populations or residents of investment areas;
       (ii) represent local or regional government interests;
       (iii) have expertise in the operations and activities of 
     insured depository institutions; and
       (iv) have expertise in community development and lending.
       (B) Representation.--Each of the categories described in 
     clauses (i) through (iv) of subparagraph (A) shall be 
     represented by not less than 1 member of the Board.
       (3) Board function.--It shall be the function of the Board 
     to advise the Administrator on the policies of the Fund. The 
     Board shall not advise the Administrator on the granting or 
     denial of any particular application.
       (4) Terms of members.--
       (A) In general.--Each member of the Board shall serve for a 
     term of 4 years.
       (B) Vacancies.--Any member appointed to fill a vacancy 
     occurring prior to the expiration of the term for which the 
     previous member was appointed shall be appointed for the 
     remainder of such term. Members may continue to serve 
     following the expiration of their terms until a successor is 
     appointed and qualified.
       (5) Chairperson.--The Administrator shall appoint a 
     chairperson from among the members of the Board.
       (6) Meetings.--The Board shall meet at least annually and 
     at such other times as requested by the Administrator or the 
     chairperson. A majority of the members of the Board shall 
     constitute a quorum.
       (7) Reimbursement for expenses.--The members of the Board 
     may receive reimbursement for travel, per diem, and other 
     necessary expenses incurred in the performance of their 
     duties, in accordance with the Federal Advisory Committee 
     Act.
       (8) Costs and expenses.--The Fund shall provide to the 
     Board all necessary staff and facilities.
       (e) Conforming Amendments.--Section 9101(3) of title 31, 
     United States Code, is amended--
       (1) by redesignating subparagraphs (B) through (M) as 
     subparagraphs (C) through (N), respectively; and
       (2) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) the Community Development Financial Institutions 
     Fund;''.
       (f) Government Corporation Control Act Exemption.--Section 
     9107(b) of title 31, United States Code, shall not apply to 
     deposits of the Fund made pursuant to section 108.
       (g) Limitation of Fund and Federal Liability.--The 
     liability of the Fund and the United States Government 
     arising out of any investment in a community development 
     financial institution in accordance with this subtitle shall 
     be limited to the amount of the investment. The Fund shall be 
     exempt from any assessments and other liabilities that may be 
     imposed on controlling or principal shareholders by any 
     Federal law or the law of any State, Territory, or the 
     District of Columbia.
       (h) Prohibition on Issuance of Securities.--The Fund may 
     not issue stock, bonds, debentures, notes, or other 
     securities.
       (i) Compensation.--Title 5, United States Code, is 
     amended--
       (1) in section 5314, by adding at the end the following:
       ``Administrator of the Community Development Financial 
     Institutions Fund.''; and
       (2) in section 5315, by adding at the end the following:
       ``Deputy Administrator of the Community Development 
     Financial Institutions Fund.''.
       (j) Assisted Institutions Not United States 
     Instrumentalities.--A community development financial 
     institution or other organization that receives assistance 
     pursuant to this subtitle shall not be deemed to be an 
     agency, department, or instrumentality of the United States.

     SEC. 105. APPLICATIONS FOR ASSISTANCE.

       (a) Form and Procedures.--An application for assistance 
     under this subtitle shall be submitted in such form and in 
     accordance with such procedures as the Fund shall establish.
       (b) Minimum Requirements.--Except as provided in sections 
     106 and 115, the Fund shall require an application--
       (1) to establish that the applicant is, or will be, a 
     community development financial institution;
       (2) to include a comprehensive strategic plan for the 
     organization that contains--
       (A) a business plan of not less than 5 years in duration 
     that demonstrates that the applicant will be properly managed 
     and will have the capacity to operate a community development 
     financial institution that will not be dependent upon 
     assistance from the Fund for continued viability;
       (B) an analysis of the needs of the investment area or 
     targeted population and a strategy for how the applicant will 
     attempt to meet those needs;
       (C) a plan to coordinate use of assistance from the Fund 
     with existing Federal, State, and local assistance programs, 
     and private sector financial services;
       (D) an explanation of how the proposed activities of the 
     applicant are consistent with existing economic, community, 
     and housing development plans adopted by or applicable to an 
     investment area; and
       (E) a description of how the applicant will coordinate with 
     community organizations and financial institutions which will 
     provide equity investments, loans, secondary markets, or 
     other services to investment areas or targeted populations;
       (3) to include a detailed description of the applicant's 
     plans and likely sources of funds to match the amount of 
     assistance requested from the Fund;
       (4) in the case of an applicant that has previously 
     received assistance under this subtitle, to demonstrate that 
     the applicant--
       (A) has substantially met its performance goals and 
     otherwise carried out its responsibilities under this 
     subtitle and the assistance agreement; and
       (B) will expand its operations into a new investment area 
     or to serve a new targeted population, offer more services, 
     or increase the volume of its business;
       (5) in the case of an applicant with a prior history of 
     serving investment areas or targeted populations, to 
     demonstrate that the applicant--
       (A) has a record of success in serving investment areas or 
     targeted populations;
       (B) will expand its operations into a new investment area 
     or to serve a new targeted population, offer more services, 
     or increase the volume of its current business; and
       (6) to include such other information as the Fund deems 
     appropriate.
       (c) Preapplication Outreach Program.--The Fund may operate 
     an outreach program to identify and provide information to 
     potential applicants.

     SEC. 106. COMMUNITY PARTNERSHIPS.

       (a) Application.--An application for assistance may be 
     filed jointly by a community development financial 
     institution and a community partner to carry out a community 
     partnership.
       (b) Application Requirements.--The Fund shall require a 
     community partnership application--
       (1) to meet the minimum requirements established for 
     community development financial institutions under section 
     105(b), except that the criteria specified in paragraphs (1) 
     and (2)(A) of section 105(b) shall not apply to the community 
     partner;
       (2) to describe how each coapplicant will participate in 
     carrying out the community partnership and how the 
     partnership will enhance activities serving the investment 
     area or targeted population; and
       (3) to demonstrate that the community partnership 
     activities are consistent with the strategic plan submitted 
     by the community development financial institution 
     coapplicant.
       (c) Selection Criteria.--The Fund shall consider a 
     community partnership application based on the selection 
     criteria set out in section 107.
       (d) Limitation on Distribution of Assistance.--Assistance 
     provided upon approval of an application under this section 
     shall be distributed only to the community development 
     financial institution coapplicant, and shall not be used to 
     fund any activities carried out directly by the community 
     partner or an affiliate thereof.
       (e) Other Requirements and Limitations.--All other 
     requirements and limitations imposed by this subtitle on a 
     community development financial institution assisted under 
     this subtitle shall apply (in the manner that the Fund 
     determines to be appropriate) to assistance provided to carry 
     out community partnerships. The Fund may establish additional 
     guidelines and restrictions on the use of Federal funds to 
     carry out community partnerships.

     SEC. 107. SELECTION OF INSTITUTIONS.

       (a) Selection Criteria.--Except as provided in section 115, 
     the Fund shall, in its sole discretion, select applicants for 
     assistance based on--
       (1) the likelihood of success of the applicant in meeting 
     the goals of its comprehensive strategic plan;
       (2) the experience and background of the proposed 
     management team;
       (3) the extent of need for equity investments, loans, and 
     development services within the investment areas or targeted 
     populations;
       (4) the extent of economic distress within the investment 
     areas or the extent of need within the targeted populations, 
     as those factors are measured by objective criteria;
       (5) the extent to which the applicant will concentrate its 
     activities on serving its investment areas or targeted 
     populations;
       (6) the amount of firm commitments to meet or exceed the 
     matching requirements and the likely success of the plan for 
     raising the balance of the match;
       (7) the extent to which the proposed activities will expand 
     economic opportunities within the investment areas or the 
     targeted populations;
       (8) whether the applicant is, or will become, an insured 
     depository institution or an insured credit union;
       (9) whether the applicant is, or will be, located--
       (A) in an empowerment zone or enterprise community 
     designated under section 1391 of the Internal Revenue Code of 
     1986; or
       (B) on an Indian reservation, as defined in section 3(d) of 
     the Indian Financing Act of 1974 or section 4(10) of the 
     Indian Child Welfare Act of 1978;
       (10) the extent to which the applicant will increase its 
     resources through coordination with other institutions or 
     participation in a secondary market;
       (11) in the case of an applicant with a prior history of 
     serving investment areas or targeted populations, the extent 
     of success in serving them; and
       (12) other factors (such as the extent to which the 
     applicant has strong ties to the community that it will 
     serve) deemed to be appropriate by the Fund.
       (b) Geographic Diversity.--The Fund shall assist a 
     geographically diverse group of applicants, including an 
     appropriate mix of applicants from urban, rural, and Native 
     American communities.

     SEC. 108. ASSISTANCE PROVIDED BY THE FUND.

       (a) Forms of Assistance.--
       (1) In general.--The Fund may provide--
       (A) financial assistance through equity investments, 
     deposits, credit union shares, loans, and grants; and
       (B) technical assistance--
       (i) directly;
       (ii) through grants; or
       (iii) by contracting with organizations that possess 
     expertise in community development, without regard to whether 
     the organizations receive or are eligible to receive 
     assistance under this subtitle.
       (2) Equity investments.--The Fund shall not own more than 
     50 percent of the equity of a community development financial 
     institution and may not control the operations of such 
     institution. The Fund may hold only transferable, nonvoting 
     equity investments. Such equity investments may provide for 
     convertibility to voting stock upon transfer by the Fund.
       (3) Deposits.--Deposits made pursuant to this section in an 
     insured community development financial institution shall not 
     be subject to any requirement for collateral or security.
       (4) Limitations on obligations.--Direct loan obligations 
     may be incurred by the Fund only to the extent that 
     appropriations of budget authority to cover their costs, as 
     defined in section 502 of the Congressional Budget Act of 
     1974, are made in advance.
       (b) Uses of Financial Assistance.--
       (1) In general.--Financial assistance made available under 
     this subtitle may be used by assisted institutions to serve 
     investment areas or targeted populations by developing or 
     supporting--
       (A) commercial facilities that promote revitalization, 
     community stability, or job creation or retention;
       (B) businesses that--
       (i) provide jobs for low-income people or are owned by low-
     income people; or
       (ii) enhance the availability of products and services to 
     low-income people;
       (C) community facilities;
       (D) the provision of basic financial services;
       (E) housing that is principally affordable to low-income 
     people, except that assistance used to facilitate 
     homeownership opportunities shall only be used for activities 
     and lending products that serve low-income people and are not 
     offered by other lenders in the area; and
       (F) other businesses and activities deemed appropriate by 
     the Fund.
       (2) Limitations.--No assistance made available under this 
     subtitle may be expended by a community development financial 
     institution (or an organization receiving assistance under 
     section 115) to pay any person to influence or attempt to 
     influence any agency, elected official, officer, or employee 
     of a State or local government in connection with the making, 
     award, extension, continuation, renewal, amendment, or 
     modification of any State or local government contract, 
     grant, loan, or cooperative agreement (as such terms are 
     defined in section 1352 of title 31, United States Code).
       (c) Uses of Technical Assistance.--Technical assistance may 
     be used for activities that enhance the capacity of a 
     community development financial institution, such as training 
     of management and other personnel and development of programs 
     and investment or loan products.
       (d) Amount of Assistance.--
       (1) In general.--The Fund may provide not more than 
     $5,000,000 of assistance, in the aggregate, during any 3-year 
     period to any 1 community development financial institution 
     and its affiliates.
       (2) Exception.--Notwithstanding the limitations in 
     paragraph (1), in the case of an existing community 
     development financial institution that proposes to serve an 
     investment area or targeted population outside of any State 
     and outside of any metropolitan area presently served by the 
     institution, the Fund may provide not more than $7,500,000 of 
     assistance to a community development financial institution, 
     in the aggregate, during any 3-year period, of which not less 
     than $2,500,000 shall be used to establish affiliates to 
     serve the new investment area or targeted population.
       (3) Timing of assistance.--Assistance may be provided as 
     described in paragraphs (1) and (2) in a lump sum or over a 
     period of time, as determined by the Fund.
       (e) Matching Requirements.--Assistance other than technical 
     assistance shall be matched with funds from sources other 
     than the Federal Government on the basis of not less than 1 
     dollar for each dollar provided by the Fund. Such matching 
     funds shall be at least comparable in form and value to the 
     assistance provided by the Fund. The Fund may reduce by up to 
     50 percent the matching requirements for applicants with 
     severe constraints on available sources of matching funds, 
     except that in any fiscal year, not more than 25 percent of 
     funds disbursed by the Fund may have a reduced match. The 
     Fund shall provide no assistance (other than technical 
     assistance) until a community development financial 
     institution has secured firm commitments for the matching 
     funds required.
       (f) Terms and Conditions.--
       (1) Soundness of unregulated institutions.--The Fund 
     shall--
       (A) ensure, to the maximum extent practicable, that each 
     community development financial institution (other than an 
     insured community development financial institution or 
     depository institution holding company) assisted under this 
     subtitle is financially and managerially sound and maintains 
     appropriate internal controls; and
       (B) require such institution to submit, not less than once 
     during each 18-month period, a statement of financial 
     condition audited by an independent certified public 
     accountant as part of the report required by section 
     112(a)(4).
       (2) Consultation with the appropriate banking regulator.--
     Prior to providing assistance to an insured community 
     development financial institution, the Fund shall consult 
     with the appropriate Federal banking agency.
       (3) Assistance agreement.--
       (A) In general.--Before providing any assistance under this 
     subtitle, the Fund and each community development financial 
     institution to be assisted shall enter into an agreement that 
     requires the institution to comply with performance goals and 
     abide by other terms and conditions pertinent to assistance 
     received under this subtitle.
       (B) Performance goals.--Performance goals shall be 
     negotiated between the Fund and each community development 
     financial institution receiving assistance based upon the 
     strategic plan submitted pursuant to section 105(b)(2). Such 
     goals may be modified with the consent of the parties, or as 
     provided in subparagraph (C). Performance goals for insured 
     community development financial institutions shall be 
     determined in consultation with the appropriate Federal 
     banking agency.
       (C) Sanctions.--The agreement shall provide that, in the 
     event of fraud, mismanagement, noncompliance with this 
     subtitle, or noncompliance with the terms of the agreement, 
     the Fund, in its discretion, may--
       (i) revoke approval of the application;
       (ii) terminate or reduce future assistance;
       (iii) require repayment of assistance;
       (iv) require changes to the performance goals imposed 
     pursuant to subparagraph (B);
       (v) bar an applicant from reapplying for assistance from 
     the Fund;
       (vi) require changes to the strategic plan submitted 
     pursuant to section 105(b)(2); and
       (vii) take such other actions as the Fund deems 
     appropriate.
       (D) Insured community development financial institutions.--
     In the case of an insured community development financial 
     institution, the Fund shall notify the appropriate Federal 
     banking agency not less than 15 days before imposing 
     sanctions pursuant to this paragraph and shall not impose 
     such sanctions if the agency disapproves, with an explanation 
     in writing, during that 15-day period.
       (g) Authority To Sell Equity Investments and Loans.--The 
     Fund may, at any time, sell its equity investments and loans, 
     but the Fund shall retain the power to enforce limitations on 
     assistance entered into in accordance with the requirements 
     of this subtitle until the performance goals related to the 
     investment or loan have been met.
       (h) No Authority To Limit Supervision and Regulation.--
     Nothing in this subtitle shall affect any authority of the 
     appropriate Federal banking agency to supervise and regulate 
     any institution or company.

     SEC. 109. COMMUNITY DEVELOPMENT TRAINING.

       (a) In General.--The Fund may operate a training program to 
     increase the capacity and expertise of community development 
     financial institutions and other members of the financial 
     services industry to undertake community development 
     activities (hereafter in this subtitle referred to as the 
     ``training program'').
       (b) Program Activities.--The training program shall provide 
     educational programs to assist community development 
     financial institutions and other members of the financial 
     services industry in developing lending and investment 
     products, underwriting and servicing loans, managing equity 
     investments, and implementing development services targeted 
     to areas of economic distress, low-income persons, and 
     persons who lack adequate access to loans and equity 
     investments.
       (c) Participation.--The training program shall be made 
     available to community development financial institutions and 
     other members of the financial services industry that serve 
     or seek to serve areas of economic distress, low-income 
     persons, and persons who lack adequate access to loans and 
     equity investments.
       (d) Contracting.--The Fund may offer the training described 
     in this section directly or through a contract with other 
     organizations. The Fund may contract to provide the training 
     with organizations that possess special expertise in 
     community development, without regard to whether the 
     organizations receive or are eligible to receive assistance 
     under this subtitle.
       (e) Fees.--The Fund, as it deems appropriate, may charge 
     fees for participation in training services to offset the 
     cost of providing the services.

     SEC. 110. ENCOURAGEMENT OF PRIVATE ENTITIES.

       The Fund may facilitate the organization of corporations in 
     which the Federal Government has no ownership interest that 
     will complement the activities of the Fund in carrying out 
     the purpose of this subtitle. The purpose of any such entity 
     shall be to assist community development financial 
     institutions in a manner that is complementary to the 
     activities of the Fund under this subtitle. Any such entity 
     shall be managed exclusively by persons not employed by the 
     Federal Government or any agency or instrumentality thereof.

     SEC. 111. CLEARINGHOUSE FUNCTION.

       (a) Establishment.--The Fund may establish and maintain an 
     information clearinghouse in coordination with other Federal 
     departments or agencies and community development financial 
     institutions to--
       (1) collect, compile, and analyze information pertinent to 
     community development financial institutions that will assist 
     in creating, developing, expanding, and preserving these 
     institutions; and
       (2) provide information on financial, technical, and 
     management assistance, data on the activities of community 
     development financial institutions, regulations, and other 
     information that may promote the purposes of this subtitle.
       (b) Costs.--The cost of maintaining the clearinghouse shall 
     be shared equally by the Fund and each department or agency 
     involved in maintaining the clearinghouse.

     SEC. 112. RECORDKEEPING, REPORTS, AND AUDITS.

       (a) Recordkeeping.--
       (1) In general.--A community development financial 
     institution receiving assistance from the Fund shall keep 
     such records, for such periods as may be prescribed, as may 
     be necessary to disclose the manner in which any assistance 
     under this subtitle is used and to demonstrate compliance 
     with the requirements of this subtitle.
       (2) Access to records.--The Fund shall have access on 
     demand, for the purpose of determining compliance with this 
     subtitle, to any records of a community development financial 
     institution that receives assistance from the Fund.
       (3) Review.--Not less than annually, the Fund shall review 
     the progress of each assisted community development financial 
     institution in carrying out its strategic plan, meeting its 
     performance goals, and satisfying the terms and conditions of 
     its assistance agreement.
       (4) Reporting.--
       (A) Annual reports.--The Fund shall require each community 
     development financial institution receiving assistance under 
     this subtitle to submit an annual report to the Fund on its 
     activities, its financial condition, and its success in 
     meeting performance goals, in satisfying the terms and 
     conditions of its assistance agreement, and in complying with 
     other requirements of this subtitle in such form and manner 
     as the Fund shall specify.
       (B) Availability of reports.--The Fund, after deleting or 
     redacting any material, as appropriate to protect privacy or 
     proprietary interests, shall make such reports available for 
     public inspection.
       (b) Annual Report by the Fund.--The Fund shall conduct an 
     annual evaluation of the activities carried out by the Fund 
     and the community development financial institutions assisted 
     pursuant to this subtitle, and shall submit a report of its 
     findings to the President and the Congress not later than 120 
     days after the end of each fiscal year of the Fund. The 
     report shall include financial statements audited in 
     accordance with subsection (d).
       (c) Studies.--
       (1) Optional studies.--The Fund may conduct such studies as 
     the Fund determines necessary to further the purpose of this 
     subtitle and to facilitate investment in distressed 
     communities. The findings of any studies conducted pursuant 
     to this paragraph shall be included in the report required by 
     subsection (b).
       (2) Investment, governance, and role of fund.--Thirty 
     months after the appointment and qualification of the 
     Administrator, the Comptroller General shall submit to the 
     President and the Congress a study evaluating the structure, 
     governance, and performance of the Fund.
       (d) Examination and Audit.--The financial statements of the 
     Fund shall be audited in accordance with section 9105 of 
     title 31, United States Code, except that audits required by 
     section 9105(a) of such title shall be performed annually.

     SEC. 113. INVESTMENT OF RECEIPTS AND PROCEEDS.

       (a) Establishment of Account.--Any dividends on equity 
     investments and proceeds from the disposition of investments, 
     deposits, or credit union shares that are received by the 
     Fund as a result of assistance provided pursuant to section 
     108, and any fees received pursuant to section 109(e) shall 
     be deposited and accredited to an account of the Fund in the 
     United States Treasury (hereafter in this section referred to 
     as ``the account'') established to carry out the purpose of 
     this subtitle.
       (b) Investments.--Upon request of the Administrator, the 
     Secretary of the Treasury shall invest amounts deposited in 
     the account in public debt securities with maturities 
     suitable to the needs of the Fund, as determined by the 
     Administrator, and bearing interest at rates determined by 
     the Secretary of the Treasury, comparable to current market 
     yields on outstanding marketable obligations of the United 
     States of similar maturities.
       (c) Availability.--Amounts deposited into the account and 
     interest earned on such amounts pursuant to this section 
     shall be available to the Fund until expended.

     SEC. 114. INSPECTOR GENERAL.

       (a) Establishment.--Section 11 of the Inspector General Act 
     of 1978 (5 U.S.C. App. 11) is amended--
       (1) in paragraph (1), by inserting ``; the Administrator of 
     the Community Development Financial Institutions Fund;'' 
     before ``and the chief''; and
       (2) in paragraph (2), by inserting ``the Community 
     Development Financial Institutions Fund,'' after ``the Agency 
     for International Development,''.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary for the 
     operation of the Office of Inspector General established by 
     the amendments made by subsection (a).

     SEC. 115. CAPITALIZATION ASSISTANCE TO ENHANCE LIQUIDITY.

       (a) Assistance.--
       (1) In general.--The Fund may provide assistance for the 
     purpose of providing capital to organizations that will 
     purchase loans or otherwise enhance the liquidity of 
     community development financial institutions if--
       (A) the primary purpose of such organizations is to promote 
     community development; and
       (B) any assistance received is matched with funds--
       (i) from sources other than the Federal Government;
       (ii) on the basis of not less than $1 for each dollar 
     provided by the Fund; and
       (iii) that are comparable in form and value to the 
     assistance provided by the Fund.
       (2) Limitation on other assistance.--An organization that 
     receives assistance under this section may not receive other 
     financial or technical assistance under this subtitle.
       (b) Selection.--The selection of organizations to receive 
     assistance under this section shall be at the discretion of 
     the Fund and in accordance with criteria established by the 
     Fund. In establishing such criteria, the Fund shall take into 
     account the criteria contained in sections 105(b) and 107, as 
     appropriate.
       (c) Amount of Assistance.--The Fund may provide a total of 
     not more than $5,000,000 of assistance to an organization 
     under this section during any 3-year period. Assistance may 
     be provided in a lump sum or over a period of time, as 
     determined by the Fund.
       (d) Audit and Report Requirements.--
       (1) In general.--Organizations that receive assistance from 
     the Fund in accordance with this section shall--
       (A) submit to the Fund not less than once in every 18-month 
     period, financial statements audited by an independent 
     certified public accountant;
       (B) submit an annual report on its activities; and
       (C) keep such records as may be necessary to disclose the 
     manner in which any assistance under this section is used.
       (2) Access.--The Fund shall have access on demand, for the 
     purposes of determining compliance with this section, to any 
     records of such organizations.
       (e) Limitations on Liability.--
       (1) Liability of fund.--The liability of the Fund and the 
     United States Government arising out of the provision of 
     assistance to any organization in accordance with this 
     section shall be limited to the amount of such assistance. 
     The Fund shall be exempt from any assessments and any other 
     liabilities that may be imposed on controlling or principal 
     shareholders by any Federal law or the law of any State, 
     territory, or the District of Columbia.
       (2) Liability of government.--This section does not oblige 
     the Federal Government, either directly or indirectly, to 
     provide any funds to any organization assisted pursuant to 
     this section, or to honor, reimburse, or otherwise guarantee 
     any obligation or liability of such an organization. This 
     section shall not be construed to imply that any such 
     organization or any obligations or securities of any such 
     organization are backed by the full faith and credit of the 
     United States.
       (f) Use of Proceeds.--Any proceeds from the sale of loans 
     to an organization assisted under this section shall be used 
     by the seller for community development purposes.

     SEC. 116. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR 
                   CREDIT UNIONS.

       (a) Repeal.--Section 120 of the Federal Credit Union Act 
     (12 U.S.C. 1766) is amended by striking subsection (k).
       (b) Revolving Loan Fund.--The Federal Credit Union Act (12 
     U.S.C. 1751 et seq.) is amended by inserting after section 
     129 the following new section:

     ``SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR 
                   CREDIT UNIONS.

       ``(a) In General.--The Board may exercise the authority 
     granted to it by the Community Development Credit Union 
     Revolving Loan Fund Transfer Act, including any additional 
     appropriation made or earnings accrued, subject only to this 
     section and to regulations prescribed by the Board.
       ``(b) Investment.--The Board may invest any idle Fund 
     moneys in United States Treasury securities. Any interest 
     accrued on such securities shall become a part of the Fund.
       ``(c) Loans.--The Board may require that any loans made 
     from the Fund be matched by increased shares in the borrower 
     credit union.
       ``(d) Interest.--Interest earned by the Fund may be 
     allocated by the Board for technical assistance to community 
     development credit unions, subject to an appropriations Act.
       ``(e) Definition.--As used in this section, the term `Fund' 
     means the Community Development Credit Union Revolving Loan 
     Fund.''.

     SEC. 117. STUDY OF COMMUNITY DEVELOPMENT CREDIT UNIONS.

       (a) In General.--The National Credit Union Administration 
     Board, in consultation with representatives of the credit 
     union industry, shall conduct a study of community 
     development credit activities by credit unions. In conducting 
     the study, the Board shall consider--
       (1) the role of such institutions in providing credit and 
     related financial services to inner city and rural areas;
       (2) the failure rate of such institutions in the past;
       (3) the desirability of establishing a special examination 
     force for community development credit unions and mentor 
     programs;
       (4) the desirability of establishing a clearinghouse for 
     the recirculation of startup equipment and furniture for 
     community development credit unions; and
       (5) appropriate startup and permanent financing programs 
     for such credit unions.
       (b) Report.--Not later than October 1, 1994, the National 
     Credit Union Administration Board shall issue a report to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Banking, Finance and Urban 
     Affairs of the House of Representatives on the study 
     conducted under subsection (a) and the regulatory and 
     legislative changes that may be necessary to ensure that 
     community development activity by credit unions becomes and 
     remains viable and productive.

     SEC. 118. REGULATIONS.

       Not later than 180 days after the appointment and 
     qualification of the Administrator, the Fund shall issue such 
     regulations as may be necessary to carry out this subtitle.

     SEC. 119. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--To carry out this subtitle, there are 
     authorized to be appropriated to the Fund, to remain 
     available until expended--
       (1) $60,000,000 for fiscal year 1994;
       (2) $104,000,000 for fiscal year 1995;
       (3) $107,000,000 for fiscal year 1996; and
       (4) $111,000,000 for fiscal year 1997.
       (b) Administrative Expenses.--Of amounts authorized to be 
     appropriated to the Fund--
       (1) not more than $5,500,000 may be used by the Fund in 
     each fiscal year to pay the administrative costs and expenses 
     of the Fund; and
       (2) not more than $50,000 may be used by the Fund in each 
     fiscal year to provide for administrative costs and expenses 
     described in section 104(d)(8).
       (c) Community Development Credit Union Revolving Loan 
     Fund.--There are authorized to be appropriated for the 
     purposes of the Community Development Credit Union Revolving 
     Loan Fund--
       (1) $2,000,000 for fiscal year 1994;
       (2) $1,000,000 for fiscal year 1995;
       (3) $1,000,000 for fiscal year 1996; and
       (4) $1,000,000 for fiscal year 1997.
       (d) Capitalization Assistance.--Not more than 5 percent of 
     the amounts authorized to be appropriated under subsection 
     (a) may be used as provided in section 115.
       (e) Budgetary Treatment.--Amounts authorized to be 
     appropriated under this section shall be subject to 
     discretionary spending caps, as provided in section 601 of 
     the Congressional Budget Act of 1974, and therefore shall 
     reduce by an equal amount funds made available for other 
     discretionary spending programs.
            Subtitle B--Home Ownership and Equity Protection

     SEC. 151. CONSUMER PROTECTIONS FOR HIGH COST MORTGAGES.

       (a) Definition.--Section 103 of the Truth in Lending Act 
     (15 U.S.C. 1602) is amended by adding at the end the 
     following new subsection:
       ``(aa)(1) The term `high cost mortgage' means a consumer 
     credit transaction, other than a residential mortgage 
     transaction or a transaction under an open end credit plan, 
     that is secured by a consumer's principal dwelling, if--
       ``(A) the annual percentage rate at consummation of the 
     transaction will exceed by more than 10 percentage points the 
     rate of interest on Treasury securities having comparable 
     periods of maturity on the fifteenth day of the month 
     immediately preceding the month in which the loan is 
     consummated; or
       ``(B) the total points and fees payable by the consumer at 
     or before closing will exceed the greater of--
       ``(i) 8 percent of the total loan amount; or
       ``(ii) $400.
       ``(2) The amount specified in paragraph (1)(B)(ii) shall be 
     adjusted annually on January 1 by the annual percentage 
     change in the Consumer Price Index, as reported on June 1 of 
     the year preceding such adjustment.
       ``(3) For purposes of paragraph (1)(B), points and fees 
     shall include--
       ``(A) all items included in the finance charge except 
     interest and the time-price differential;
       ``(B) all compensation paid to mortgage brokers;
       ``(C) all direct and indirect compensation received by the 
     creditor in connection with credit insurance; and
       ``(D) each of the charges listed in section 106(e) (except 
     an escrow for future payment of taxes), unless--
       ``(i) the charge is reasonable;
       ``(ii) the creditor receives no direct or indirect 
     compensation; and
       ``(iii) the charge is paid to a third party unaffiliated 
     with the creditor.''.
       (b) Material Disclosures.--Section 103(u) of the Truth in 
     Lending Act (15 U.S.C. 1602(u)) is amended--
       (1) by striking ``and the due dates'' and inserting ``, the 
     due dates''; and
       (2) by inserting before the period ``, and the disclosures 
     for high cost mortgages required by section 129(a)''.
       (c) Definition of Creditor Clarified.--Section 103(f) of 
     the Truth in Lending Act (15 U.S.C. 1602(f)) is amended by 
     adding at the end the following: ``Any person who originates 
     2 or more high cost mortgages in any 12-month period or any 
     person who originates 1 or more high cost mortgages through a 
     mortgage broker shall be considered to be a creditor for 
     purposes of this title.''.
       (d) Disclosures Required and Certain Terms Prohibited.--The 
     Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended by 
     inserting after section 128 the following new section:

     ``SEC. 129. REQUIREMENTS FOR HIGH COST MORTGAGES.

       ``(a) Disclosures.--
       ``(1) Specific disclosures.--In addition to other 
     disclosures required under this title, for each high cost 
     mortgage, the creditor shall provide the following 
     disclosures in conspicuous type size:
       ``(A) `You are not required to complete this agreement 
     merely because you have received these disclosures or have 
     signed a loan application.'
       ``(B) `If you obtain this loan, the lender will have a 
     mortgage on your home. You could lose your home, and any 
     money you have put into it, if you do not meet your 
     obligations under the loan.'.
       ``(2) Annual percentage rate.--In addition to the 
     disclosures required under paragraph (1), the creditor shall 
     disclose--
       ``(A) the annual percentage rate of the loan and the amount 
     of the regular monthly payment; or
       ``(B) in the case of a variable rate loan, the annual 
     percentage rate of the loan, a statement that the interest 
     rate and monthly payment may increase, and the amount of the 
     maximum possible monthly payment.
       ``(b) Time of Disclosures.--
       ``(1) In general.--The disclosures required by this section 
     shall be given not less than 3 business days prior to 
     consummation of the transaction.
       ``(2) New disclosures required.--After providing the 
     disclosures required by this section, a creditor may not 
     change the terms of the loan if such changes make the 
     disclosures inaccurate, unless new disclosures are provided 
     that meet the requirements of this section.
       ``(3) Modifications.--The Board may, if it finds that such 
     action is necessary to permit homeowners to meet bona fide 
     personal financial emergencies, prescribe regulations 
     authorizing the modification or waiver of rights created 
     under this subsection, to the extent and under the 
     circumstances set forth in those regulations.
       ``(c) No Prepayment Penalty.--
       ``(1) In general.--Except as provided in paragraph (4), a 
     high cost mortgage may not contain terms under which a 
     consumer must pay a prepayment penalty for paying all or part 
     of the principal of the loan prior to the date on which such 
     principal is due. If the date of maturity of the high cost 
     mortgage is accelerated for any reason, and the consumer is 
     entitled to a rebate of interest, computation of the rebate 
     amount shall comply with paragraph (2). No high cost mortgage 
     shall provide for a default interest rate that is higher than 
     the interest rate provided by the note for the loan prior to 
     default.
       ``(2) Rebate computation.--For purposes of this subsection, 
     any method of computing rebates of interest that is less 
     favorable to the consumer than the actuarial method (as 
     defined in section 933 of the Housing and Community 
     Development Act of 1992) using simple interest is a 
     prepayment penalty.
       ``(3) Certain other fees prohibited.--An agreement to 
     refinance a high cost mortgage by the same creditor or an 
     affiliate of the creditor may not require the consumer to pay 
     points, discount fees, or prepaid finance charges on the 
     portion of the loan refinanced.
       ``(4) Exception.--A high cost mortgage may include terms 
     under which a consumer is required to pay not more than 1 
     month's interest as a penalty if the consumer prepays the 
     principal of the loan within 90 days of origination.
       ``(d) No Balloon Payments.--A high cost mortgage may not 
     include terms under which the aggregate amount of the regular 
     periodic payments would not fully amortize the outstanding 
     principal balance.
       ``(e) No Negative Amortization.--A high cost mortgage may 
     not include terms under which the outstanding principal 
     balance will increase at any time over the course of the loan 
     because the regular periodic payments do not cover the full 
     amount of interest due.
       ``(f) No Prepaid Payments.--A high cost mortgage may not 
     include terms under which more than 2 periodic payments 
     required under the loan are consolidated and paid in advance 
     from the loan proceeds provided to the consumer.
       ``(g) Consequence of Failure To Comply.--Any high cost 
     mortgage loan that contains a provision prohibited by this 
     section shall be deemed a failure to deliver the material 
     disclosures required under this title, for the purpose of 
     section 125.
       ``(h) Definition.--For purposes of this section, the term 
     `affiliate' has the same meaning as in section 2(k) of the 
     Bank Holding Company Act of 1956.
       ``(i) Discretionary Regulatory Authority of Board.--
       ``(1) Exemptions.--The Board may, by regulation or order, 
     exempt specific mortgage products or categories of mortgages 
     from any or all of the prohibitions specified in subsections 
     (c) through (f), if the Board finds that the exemption--
       ``(A) is in the interest of the borrowing public; and
       ``(B) will apply only to products that maintain and 
     strengthen home ownership and equity protection.
       ``(2) Prohibitions.--The Board, by regulation or order, 
     shall prohibit any specific acts or practices in connection 
     with high cost mortgages that the Board finds to be unfair, 
     deceptive, or designed to evade the provisions of this 
     section.''.
       (e) Conforming Amendments.--
       (1) Table of sections.--The table of sections at the 
     beginning of chapter 2 of the Truth in Lending Act is amended 
     by striking the item relating to section 129 and inserting 
     the following:

``129. Requirements for high cost mortgages.''.

       (2) Truth in lending act.--Section 105(a) of the Truth in 
     Lending Act (15 U.S.C. 1604(a)) is amended in the second 
     sentence, by striking ``These'' and inserting ``Except in the 
     case of a high cost mortgage, as defined in section 103(aa), 
     these''.

     SEC. 152. CIVIL LIABILITY.

       (a) Damages.--Section 130(a) of the Truth in Lending Act 
     (15 U.S.C. 1640(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (2)(B);
       (2) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) in the case of a failure to comply with any 
     requirement under section 129, an amount equal to the sum of 
     all finance charges and fees paid by the consumer, unless the 
     creditor demonstrates that the failure to comply is not 
     material.''.
       (b) State Attorney General Enforcement.--Section 130(e) of 
     the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by 
     adding at the end the following: ``An action to enforce a 
     violation of section 129 may also be brought by the 
     appropriate State attorney general in any appropriate United 
     States district court, or any other court of competent 
     jurisdiction, not later than 3 years after the date on which 
     the violation occurs. The State attorney general shall 
     provide prior written notice of any such civil action to the 
     Federal agency responsible for enforcement under section 108 
     and shall provide the agency with a copy of the complaint. If 
     prior notice is not feasible, the State attorney general 
     shall provide notice to such agency immediately upon 
     instituting the action. The Federal agency may--
       ``(1) intervene in the action;
       ``(2) upon intervening--
       ``(A) remove the action to the appropriate United States 
     district court, if it was not originally brought there; and
       ``(B) be heard on all matters arising in the action; and
       ``(3) file a petition for appeal.''.
       (c) Assignee Liability.--Section 131 of the Truth in 
     Lending Act (15 U.S.C. 1641) is amended by adding at the end 
     the following new subsection:
       ``(d) High Cost Mortgages.--
       ``(1) In general.--In addition to any other liability 
     imposed under this title, any person who purchases or is 
     otherwise assigned a high cost mortgage shall be subject to 
     all claims and defenses with respect to the mortgage that the 
     consumer could assert against the creditor of the mortgage.
       ``(2) Damages.--Relief provided as a result of liability 
     imposed under paragraph (1) shall be limited to the sum of--
       ``(A) the amount of all remaining indebtedness; and
       ``(B) the total amount paid by the consumer in connection 
     with the transaction.
       ``(3) Notice.--Any person who sells or otherwise assigns a 
     high cost mortgage shall include a prominent notice of the 
     potential liability under this subsection as determined by 
     the Board.''.

     SEC. 153. REGULATIONS; EFFECTIVE DATE.

       (a) Regulations.--Not later than 180 days after the date of 
     enactment of this Act, the Board of Governors of the Federal 
     Reserve System shall issue such regulations as may be 
     necessary to carry out this subtitle.
       (b) Effective Date.--This subtitle, and the amendments made 
     by this subtitle, shall apply to every high cost mortgage (as 
     defined in section 103(aa) of the Truth in Lending Act, as 
     added by section 151(a) of this Act) consummated on or after 
     the date which is 60 days after the promulgation of final 
     regulations under subsection (a).
               TITLE II--SMALL BUSINESS CAPITAL FORMATION
             Subtitle A--Small Business Loan Securitization

     SEC. 201. SHORT TITLE.

       This subtitle may be cited as the ``Small Business Loan 
     Securitization and Secondary Market Enhancement Act of 
     1993''.

     SEC. 202. SMALL BUSINESS RELATED SECURITY.

       (a) Definition.--Section 3(a) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78c(a)) is amended by adding at the 
     end the following new paragraph:
       ``(53)(A) The term `small business related security' means 
     a security that is rated in 1 of the 4 highest rating 
     categories by at least 1 nationally recognized statistical 
     rating organization, and either--
       ``(i) represents an interest in 1 or more promissory notes 
     evidencing the indebtedness of a small business concern and 
     originated by an insured depository institution, insured 
     credit union, insurance company, or similar institution which 
     is supervised and examined by a Federal or State authority, 
     or a finance company; or
       ``(ii) is secured by an interest in 1 or more promissory 
     notes (with or without recourse to the issuer) and provides 
     for payments of principal in relation to payments, or 
     reasonable projections of payments, on notes described in 
     clause (i).
       ``(B) For purposes of this paragraph--
       ``(i) an `interest in a promissory note' includes ownership 
     rights, certificates of interest or participation in such 
     notes, and rights designed to assure servicing of such notes, 
     or the receipt or timely receipt of amounts payable under 
     such notes;
       ``(ii) the term `small business concern' has the same 
     meaning as in section 3 of the Small Business Act;
       ``(iii) the term `insured depository institution' has the 
     same meaning as in section 3 of the Federal Deposit Insurance 
     Act; and
       ``(iv) the term `insured credit union' has the same meaning 
     as in section 101 of the Federal Credit Union Act.''.
       (b) Technical Amendment.--Section 3(a) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by 
     redesignating paragraph (51) defining the term ``foreign 
     financial regulatory authority'' as paragraph (52) and 
     inserting such paragraph after paragraph (51), defining the 
     term ``penny stocks''.

     SEC. 203. APPLICABILITY OF MARGIN REQUIREMENTS.

       Section 7(g) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78g(g)) is amended by inserting ``or a small business 
     related security'' after ``mortgage related security''.

     SEC. 204. BORROWING IN THE COURSE OF BUSINESS.

       Section 8(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78h(a)) is amended in the last sentence by inserting 
     ``or a small business related security'' after ``mortgage 
     related security''.

     SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COLLATERAL.

       Clause (ii) of section 11(d)(1) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78k(d)(1)) is amended by inserting 
     ``or any small business related security'' after ``mortgage 
     related security''.

     SEC. 206. INVESTMENT BY DEPOSITORY INSTITUTIONS.

       (a) Home Owners' Loan Act Amendment.--Section 5(c)(1) of 
     the Home Owners' Loan Act (12 U.S.C. 1464(c)(1)) is amended 
     by adding at the end the following new subparagraph:
       ``(S) Small business related securities.--Investments in 
     small business related securities (as defined in section 
     3(a)(53) of the Securities Exchange Act of 1934), subject to 
     such regulations as the Director may prescribe, including 
     regulations concerning the minimum size of the issue (at the 
     time of the initial distribution), the minimum aggregate 
     sales price, or both.''.
       (b) Credit Unions.--Section 107(15) of the Federal Credit 
     Union Act (12 U.S.C. 1757(15)) is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B), by inserting ``or'' at the end; 
     and
       (3) by adding at the end the following new subparagraph:
       ``(C) are small business related securities (as defined in 
     section 3(a)(53) of the Securities Exchange Act of 1934), 
     subject to such regulations as the Board may prescribe, 
     including regulations prescribing the minimum size of the 
     issue (at the time of the initial distribution), the minimum 
     aggregate sales price, or both;''.
       (c) National Banking Associations.--Section 5136 of the 
     Revised Statutes (12 U.S.C. 24) is amended in the last 
     sentence in the first full paragraph of paragraph Seventh, by 
     striking ``or (B) are mortgage related securities'' and 
     inserting the following: ``(B) are small business related 
     securities (as defined in section 3(a)(53) of the Securities 
     Exchange Act of 1934); or (C) are mortgage related 
     securities''.

     SEC. 207. PREEMPTION OF STATE LAW.

       (a) In General.--Section 106(a)(1) of the Secondary 
     Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-
     1(a)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (B);
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) small business related securities (as defined in 
     section 3(a)(53) of the Securities Exchange Act of 1934), 
     or''.
       (b) Obligations of the United States.--Section 106(a)(2) of 
     the Secondary Mortgage Market Enhancement Act of 1984 (15 
     U.S.C. 77r-1(a)(2)) is amended--
       (1) by striking ``or'' at the end of subparagraph (B);
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) small business related securities (as defined in 
     section 3(a)(53) of the Securities Exchange Act of 1934), 
     or''.
       (c) Preemption of State Laws.--Section 106(c) of the 
     Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 
     77r-1(c)) is amended--
       (1) in the first sentence, by striking ``or that'' and 
     inserting ``, that''; and
       (2) by inserting ``, or that are small business related 
     securities (as defined in section 3(a)(53) of the Securities 
     Exchange Act of 1934)'' before ``shall be exempt''.
       (d) Implementation.--Section 106 of the Secondary Mortgage 
     Market Enhancement Act of 1984 (15 U.S.C. 77r-1) is amended 
     by adding at the end the following new subsection:
       ``(d) Implementation.--
       ``(1) Limitation.--The provisions of subsections (a) and 
     (b) concerning small business related securities shall not 
     apply with respect to a particular person, trust, 
     corporation, partnership, association, business trust, or 
     business entity or class thereof in any State that, prior to 
     the expiration of 7 years after the date of enactment of this 
     subsection, enacts a statute that specifically refers to this 
     section and either prohibits or provides for a more limited 
     authority to purchase, hold, or invest in such small business 
     related securities by any person, trust, corporation, 
     partnership, association, business trust, or business entity 
     or class thereof than is provided in this section. The 
     enactment by any State of any statute of the type described 
     in the preceding sentence shall not affect the validity of 
     any contractual commitment to purchase, hold, or invest that 
     was made prior to such enactment, and shall not require the 
     sale or other disposition of any small business related 
     securities acquired prior to the date of such enactment.
       ``(2) State registration or qualification requirements.--
     Any State may, not later than 7 years after the date of 
     enactment of this subsection, enact a statute that 
     specifically refers to this section and requires registration 
     or qualification of any small business related securities on 
     terms that differ from those applicable to any obligation 
     issued by the United States.''.

     SEC. 208. INSURED DEPOSITORY INSTITUTION CAPITAL REQUIREMENTS 
                   FOR TRANSFERS OF SMALL BUSINESS LOANS.

       (a) Accounting Principles.--The accounting principles 
     applicable to the transfer of a small business loan with 
     recourse contained in reports or statements required to be 
     filed with Federal banking agencies by a qualified insured 
     depository institution shall be consistent with generally 
     accepted accounting principles.
       (b) Capital and Reserve Requirements.--With respect to the 
     transfer of a small business loan with recourse that is a 
     sale under generally accepted accounting principles, each 
     qualified insured depository institution shall--
       (1) establish and maintain a reserve equal to an amount 
     sufficient to meet the reasonable estimated liability of the 
     institution under the recourse arrangement; and
       (2) include, for purposes of applicable capital standards 
     and other capital measures, only the amount of the retained 
     recourse in the risk-weighted assets of the institution.
       (c) Qualified Institutions Criteria.--An insured depository 
     institution is a qualified insured depository institution for 
     purposes of this section if, without regard to the accounting 
     principles or capital requirements referred to in subsections 
     (a) and (b), the institution is--
       (1) well capitalized; or
       (2) with the approval, by regulation or order, of the 
     appropriate Federal banking agency, adequately capitalized.
       (d) Aggregate Amount of Recourse.--The total outstanding 
     amount of recourse retained by a qualified insured depository 
     institution with respect to transfers of small business loans 
     under subsections (a) and (b) shall not exceed--
       (1) 15 percent of the risk-based capital of the 
     institution; or
       (2) such greater amount, as established by the appropriate 
     Federal banking agency by regulation or order.
       (e) Institutions That Cease To Be Qualified or Exceed 
     Aggregate Limits.--If an insured depository institution 
     ceases to be a qualified insured depository institution or 
     exceeds the limits under subsection (d), this section shall 
     remain applicable to any transfers of small business loans 
     that occurred during the time that the institution was 
     qualified and did not exceed such limit.
       (f) Prompt Corrective Action Not Affected.--The capital of 
     an insured depository institution shall be computed without 
     regard to this section in determining whether the institution 
     is adequately capitalized, under capitalized, 
     significantly undercapitalized, or critically 
     undercapitalized under section 38 of the Federal Deposit 
     Insurance Act.
       (g) Regulations Required.--Not later than 180 days after 
     the date of the enactment of this Act each appropriate 
     Federal banking agency shall promulgate final regulations 
     implementing this section.
       (h) Alternative System Permitted.--
       (1) In general.--At the discretion of the appropriate 
     Federal banking agency, this section shall not apply if the 
     regulations of the agency provide that the aggregate amount 
     of capital and reserves required with respect to the transfer 
     of small business loans with recourse does not exceed the 
     aggregate amount of capital and reserves that would be 
     required under subsection (b).
       (2) Existing transactions not affected.--Notwithstanding 
     paragraph (1), this section shall remain in effect with 
     respect to transfers of small business loans with recourse by 
     qualified insured depository institutions occurring before 
     the effective date of regulations referred to in paragraph 
     (1).
       (i) Definitions.--For purposes of this section--
       (1) the term ``adequately capitalized'' has the same 
     meaning as in section 38(b) of the Federal Deposit Insurance 
     Act;
       (2) the term ``appropriate Federal banking agency'' has the 
     same meaning as in section 3 of the Federal Deposit Insurance 
     Act;
       (3) the term ``capital standards'' has the same meaning as 
     in section 38(c) of the Federal Deposit Insurance Act;
       (4) the term ``Federal banking agencies'' has the same 
     meaning as in section 3 of the Federal Deposit Insurance Act;
       (5) the term ``insured depository institution'' has the 
     same meaning as in section 3 of the Federal Deposit Insurance 
     Act;
       (6) the term ``other capital measures'' has the meaning as 
     in section 38(c) of the Federal Deposit Insurance Act;
       (7) the term ``recourse'' has the meaning given to such 
     term under generally accepted accounting principles;
       (8) the term ``small business'' means a business that meets 
     the criteria for a small business concern established by the 
     Small Business Administration under section 3(a) of the Small 
     Business Act; and
       (9) the term ``well capitalized'' has the same meaning as 
     in section 38(b) of the Federal Deposit Insurance Act.

     SEC. 209. TRANSACTIONS IN SMALL BUSINESS RELATED SECURITIES 
                   BY EMPLOYEE BENEFIT PLANS.

       (a) Prohibited Transaction Exemption.--The Secretary of 
     Labor, in consultation with the Secretary of the Treasury, 
     shall exempt transactions involving small business related 
     securities (as defined in section 3(a)(53) of the Securities 
     Exchange Act of 1934 (as added by section 202 of this Act)), 
     either unconditionally or on stated terms and conditions, 
     from the restrictions of sections 406 and 407 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1106, 1107) 
     and the taxes imposed under section 4975 of the Internal 
     Revenue Code of 1986 (26 U.S.C. 4975).
       (b) Conditions.--In providing for the exemption required 
     under subsection (a), the Secretary of Labor shall consider--
       (1) the importance of facilitating transactions in small 
     business related securities; and
       (2) the necessity of imposing any term or condition to 
     protect the rights and interests of participants and 
     beneficiaries of employee benefit plans affected by the 
     exemption.
       (c) Regulations.--Not later than 180 days after the date of 
     enactment of this Act, the Secretary of Labor shall 
     promulgate final regulations to carry out subsection (a).

     SEC. 210. TAXATION OF SMALL BUSINESS LOAN INVESTMENT 
                   CONDUITS.

       (a) Taxation Similar to REMIC.--The Secretary of the 
     Treasury shall promulgate regulations providing for the 
     taxation of a small business loan investment conduit and the 
     holder of an interest therein similar to the taxation of a 
     real estate mortgage investment conduit and the holder of 
     interests therein under the Internal Revenue Code of 1986.
       (b) Adjustment to REMIC Provisions.--In promulgating 
     regulations under subsection (a), the Secretary of the 
     Treasury shall make any necessary adjustments to the real 
     estate mortgage investment conduit provisions to take into 
     consideration--
       (1) the purpose of facilitating the securitization of small 
     business loans through the use of small business loan 
     investment conduits and the development of a secondary market 
     in small business loans;
       (2) differences in the nature of qualifying mortgages in a 
     real estate mortgage investment conduit and small business 
     loans and obligations; and
       (3) differences in the practices of participants in the 
     securitization of real estate mortgages in a real estate 
     mortgage investment conduit and the securitization of other 
     assets.
       (c) Small Business Loan Investment Conduit Defined.--For 
     purposes of this section, the term ``small business loan 
     investment conduit'' means any entity substantially all of 
     the assets of which consist of any obligation (including any 
     participation or certificate of beneficial ownership 
     therein)--
       (1) of a business that meets the criteria for a small 
     business concern established under section 3(a) of the Small 
     Business Act; and
       (2) that was originated by an insured depository 
     institution (as defined in section 3 of the Federal Deposit 
     Insurance Act), credit union, insurance company, or similar 
     institution or a finance company which is supervised and 
     examined by an appropriate Federal or State authority.
             Subtitle B--Small Business Capital Enhancement

     SEC. 251. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) small business concerns are a vital part of the 
     economy, accounting for the majority of new jobs, new 
     products, and new services created in the United States;
       (2) adequate access to debt capital is a critical component 
     for small business development, productivity, expansion, and 
     success in the United States;
       (3) commercial banks are the most important suppliers of 
     debt capital to small business concerns in the United States;
       (4) commercial banks and other depository institutions have 
     various incentives to minimize their risk in financing small 
     business concerns;
       (5) as a result of such incentives, many small business 
     concerns with economically sound financing needs are unable 
     to obtain access to needed debt capital;
       (6) the small business capital access programs implemented 
     by certain States are a flexible and efficient tool to assist 
     financial institutions in providing access to needed debt 
     capital for many small business concerns in a manner 
     consistent with safety and soundness regulations;
       (7) a small business capital access program would 
     complement other programs which assist small business 
     concerns in obtaining access to capital; and
       (8) Federal policy can stimulate and accelerate efforts by 
     States to implement small business capital access programs by 
     providing an incentive to States, while leaving the 
     administration of such programs to each participating State.
       (b) Purposes.--By encouraging States to implement 
     administratively efficient capital access programs that 
     encourage commercial banks and other depository institutions 
     to provide access to debt capital for a broad portfolio of 
     small business concerns, and thereby promote a more efficient 
     and effective debt market, the purposes of this subtitle 
     are--
       (1) to promote economic opportunity and growth;
       (2) to create jobs;
       (3) to promote economic efficiency;
       (4) to enhance productivity; and
       (5) to spur innovation.

     SEC. 252. DEFINITIONS.

       For purposes of this subtitle--
       (1) the term ``Secretary'' means the Secretary of Housing 
     and Urban Development;
       (2) the term ``appropriate Federal banking agency''--
       (A) has the same meaning as in section 3 of the Federal 
     Deposit Insurance Act; and
       (B) includes the National Credit Union Administration Board 
     in the case of any credit union the deposits of which are 
     insured in accordance with the Federal Credit Union Act;
       (3) the term ``early loan'' means a loan enrolled at a time 
     when the aggregate covered amount of loans previously 
     enrolled under the Program by a particular participating 
     financial institution is less than $5,000,000;
       (4) the term ``enrolled loan'' means a loan made by a 
     participating financial institution that is enrolled by a 
     participating State in accordance with this subtitle;
       (5) the term ``financial institution'' means any federally 
     chartered or State-chartered commercial bank, savings 
     association, savings bank, or credit union;
       (6) the term ``participating financial institution'' means 
     any financial institution that has entered into a 
     participation agreement with a participating State in 
     accordance with section 254;
       (7) the term ``participating State'' means any State that 
     has been approved for participation in the Program in 
     accordance with section 253;
       (8) the term ``passive real estate ownership'' means 
     ownership of real estate for the purpose of deriving income 
     from speculation, trade, or rental, except that such term 
     shall not include--
       (A) the ownership of that portion of real estate being used 
     or intended to be used for the operation of the business of 
     the owner of the real estate (other than the business of 
     passive ownership of real estate); or
       (B) the ownership of real estate for the purpose of 
     construction or renovation, until the completion of the 
     construction or renovation phase;
       (9) the term ``Program'' means the Small Business Capital 
     Enhancement Program established under this subtitle;
       (10) the term ``reserve fund'' means a fund, established by 
     a participating State, earmarked for a particular 
     participating financial institution, for the purposes of--
       (A) depositing all required premium charges paid by the 
     participating financial institution and by each borrower 
     receiving a loan under the Program from a participating 
     financial institution;
       (B) depositing contributions made by the participating 
     State; and
       (C) covering losses on enrolled loans by disbursing 
     accumulated funds; and
       (11) the term ``State'' means the States of the United 
     States and the District of Columbia.

     SEC. 253. APPROVING STATES FOR PARTICIPATION.

       (a) Application.--Any State may apply to the Secretary for 
     approval to be a participating State under the Program and to 
     be eligible for reimbursement by the Secretary pursuant to 
     section 257.
       (b) Approval Criteria.--The Secretary shall approve a State 
     to be a participating State, if--
       (1) a specific department or agency of the State has been 
     designated to implement the Program;
       (2) all legal actions necessary to enable such designated 
     department or agency to implement the Program have been 
     accomplished;
       (3) funds in the amount of at least $1 for every 2 people 
     residing in the State (as of the last decennial census for 
     which data have been released) are available and have been 
     legally committed to contributions by the State to reserve 
     funds, with such funds being available without time limit and 
     without requiring additional legal action, except that such 
     requirements shall not be construed to limit the authority of 
     the State to take action at a later time that results in the 
     termination of its obligation to enroll loans and make 
     contributions to reserve funds;
       (4) the State has prescribed a form of participation 
     agreement to be entered into between it and each 
     participating financial institution that is consistent with 
     the requirements and purposes of this subtitle; and
       (5) the State and the Secretary have executed a 
     reimbursement agreement that conforms to the requirements of 
     this subtitle.
       (c) Existing State Programs.--
       (1) In general.--A State that is not a participating State, 
     but that has its own capital access program providing 
     portfolio insurance for business loans (based on a separate 
     loss reserve fund for each financial institution), may apply 
     at any time to the Secretary to be approved to be a 
     participating State. The Secretary shall approve such State 
     to be a participating State, and to be eligible for 
     reimbursements by the Secretary pursuant to section 257, if 
     the State--
       (A) satisfies the requirements of subsections (a) and (b); 
     and
       (B) certifies that each affected financial institution has 
     satisfied the requirements of section 254.
       (2) Applicable terms of participation.--
       (A) Status of institutions.--If a State is approved for 
     participation under paragraph (1), each financial institution 
     with a participation agreement in effect with the 
     participating State shall immediately be considered a 
     participating financial institution. Reimbursements may be 
     made under section 237 in connection with all contributions 
     made to the reserve fund by the State in connection with 
     lending that occurs on or after the date on which the 
     Secretary approves the State for participation.
       (B) Effective date of participation.--If an amended 
     participation agreement that conforms with section 255 is 
     required in order to secure participation approval by the 
     Secretary, contributions subject to reimbursement under 
     section 257 shall include only those contributions made to a 
     reserve fund with respect to loans enrolled on or after the 
     date that an amended participation agreement between the 
     participating State and the participating financial 
     institution becomes effective.
       (C) Use of accumulated reserve funds.--A State that is 
     approved for participation in accordance with this subsection 
     may continue to implement the program utilizing the reserve 
     funds accumulated under the State program.
       (d) Prior Appropriations Requirement.--The Secretary shall 
     not approve a State for participation in the Program until at 
     least $50,000,000 has been appropriated to the Secretary 
     (subject to an appropriations Act), without fiscal year 
     limitation, for the purpose of making reimbursements pursuant 
     to section 257.
       (e) Amendments to Agreements.--If a State that has been 
     approved to be a participating State wishes to amend its form 
     of participation agreement and continue to be a participating 
     State, such State shall submit such amendment for review by 
     the Secretary in accordance with subsection (b)(4). Any such 
     amendment shall become effective only after it has been 
     approved by the Secretary.

     SEC. 254. PARTICIPATION AGREEMENTS.

       (a) In General.--A participating State may enter into a 
     participation agreement with any financial institution 
     determined by the participating State, after consultation 
     with the appropriate Federal banking agency, to have 
     sufficient commercial lending experience and financial and 
     managerial capacity to participate in the Program. The 
     determination by the State shall not be reviewable by the 
     Secretary.
       (b) Participating Financial Institutions.--Upon entering 
     into the participation agreement with the participating 
     State, the financial institution shall become a participating 
     financial institution eligible to enroll loans under the 
     Program.

     SEC. 255. TERMS OF PARTICIPATION AGREEMENTS.

       (a) In General.--The participation agreement to be entered 
     into by a participating State and a participating financial 
     institution shall include all provisions required by this 
     section, and shall not include any provisions inconsistent 
     with the provisions of this section.
       (b) Establishment of Separate Reserve Funds.--A separate 
     reserve fund shall be established by the participating State 
     for each participating financial institution. All funds 
     credited to a reserve fund shall be subject to the control of 
     the participating State. Notwithstanding the preceding 
     sentence, the participating State may allow a participating 
     financial institution to treat the premium charges paid by 
     the institution and the borrower into the reserve fund, and 
     interest earned thereon, as assets of the institution for 
     accounting purposes. Each reserve fund shall be an 
     administrative account for the purposes of--
       (1) receiving all required premium charges to be paid by 
     the borrower and participating financial institution and 
     contributions by the participating State; and
       (2) disbursing funds, either to cover losses sustained by 
     the participating financial institution in connection with 
     loans made under the Program, or as contemplated by 
     subsections (d) and (r).
       (c) Investment Authority.--Subject to applicable State law, 
     the participating State may invest, or cause to be invested, 
     funds held in a reserve fund by establishing a deposit 
     account at the participating financial institution in the 
     name of the participating State. In the event that funds in 
     the reserve fund are not deposited in such an account, such 
     funds shall be invested in a form that the participating 
     State determines is safe and liquid.
       (d) Earned Income and Interest.--Interest or income earned 
     on the funds credited to a reserve fund shall be deemed to be 
     part of the reserve fund, except that a participating State 
     may, as further specified in the participation agreement--
       (1) provide authority for the participating State to 
     withdraw some or all of such interest or income earned; and
       (2) allow the participating financial institution, upon its 
     withdrawal from the Program, to withdraw interest or income 
     earned that is deemed to be attributable to the premium 
     charges paid by the institution and the borrower and that 
     remains in the reserve fund, if such withdrawal does not 
     expose the participating State to any greater risk of loss 
     than the risk of loss in the absence of such withdrawal.
       (e) Loan Terms and Conditions.--
       (1) In general.--A loan to be filed for enrollment under 
     the Program may be made with such interest rate, fees, and 
     other terms and conditions as agreed upon by the 
     participating financial institution and the borrower, 
     consistent with applicable law.
       (2) Lines of credit.--If a loan to be filed for enrollment 
     is in the form of a line of credit, the amount of the loan 
     shall be considered to be the maximum amount that can be 
     drawn by the borrower against the line of credit.
       (f) Enrollment Process.--
       (1) Filing.--
       (A) In general.--A participating financial institution 
     shall file each loan made under the Program for enrollment by 
     completing and submitting to the participating State a form 
     prescribed by the participating State.
       (B) Form.--The form referred to in subparagraph (A) shall 
     include a representation by the participating financial 
     institution that it has complied with the participation 
     agreement in enrolling the loan with the State.
       (C) Premium charges.--Accompanying the completed form shall 
     be the nonrefundable premium charges paid by the borrower and 
     the participating financial institution, or evidence that 
     such premium charges have been deposited into the deposit 
     account containing the reserve fund, if applicable.
       (D) Submission.--The participation agreement shall require 
     that the items required by this subsection shall be submitted 
     to the participating State by the participating financial 
     institutions not later than 10 calendar days after a loan is 
     made.
       (2) Enrollment by state.--Upon receipt by the participating 
     State of the filing submitted in accordance with paragraph 
     (1), the participating State shall promptly enroll the loan 
     and make a matching contribution to the reserve fund in 
     accordance with subsection (j), unless the information 
     submitted indicates that the participating financial 
     institution has not complied with the participation agreement 
     in enrolling the loan.
       (g) Coverage Amount.--In filing a loan for enrollment under 
     the Program, the participating financial institution may 
     specify an amount to be covered under the Program that is 
     less than the full amount of the loan.
       (h) Premium Charges.--
       (1) Minimum and maximum amounts.--The premium charges 
     payable to the reserve fund by the borrower and the 
     participating financial institution shall be prescribed by 
     the participating financial institution, within minimum and 
     maximum limits set forth in the participation agreement. The 
     participation agreement shall establish minimum and maximum 
     limits whereby the sum of the premium charges paid in 
     connection with a loan by the borrower and the participating 
     financial institution is not less than 3 percent nor more 
     than 7 percent of the amount of the loan covered under the 
     Program.
       (2) Allocation of premium charges.--The participation 
     agreement shall specify terms for allocating premium charges 
     between the borrower and the participating financial 
     institution. However, if the participating financial 
     institution is required to pay any of the premium charges, 
     the participation agreement shall authorize the participating 
     financial institution to recover from the borrower the cost 
     of the payment of the participating financial institution, in 
     any manner on which the participating financial institution 
     and the borrower agree.
       (i) Restrictions.--
       (1) Actions prohibited.--Except as provided in subsection 
     (h) and paragraph (2) of this subsection, the participating 
     State may not--
       (A) impose any restrictions or requirements, relating to 
     the interest rate, fees, collateral, or other business terms 
     and conditions of the loan; or
       (B) condition enrollment of a loan in the Program on the 
     review by the State of the risk or creditworthiness of a 
     loan.
       (2) Effect on other law.--Nothing in this subtitle shall 
     affect the applicability of any other law to the conduct by a 
     participating financial institution of its business.
       (j) State Contributions.--In enrolling a loan under the 
     Program, the participating State shall contribute to the 
     reserve fund an amount, as provided for in the participation 
     agreement, which shall not be less than the sum of the amount 
     of premium charges paid by the borrower and the participating 
     financial institution.
       (k) Elements of Claims.--
       (1) Filing.--If a participating financial institution 
     charges off all or part of an enrolled loan, such 
     participating financial institution may file a claim for 
     reimbursement with the participating State by submitting a 
     form that--
       (A) includes the representation by the participating 
     financial institution that it is filing the claim in 
     accordance with the terms of the applicable participation 
     agreement; and
       (B) contains such other information as may be required by 
     the participating State.
       (2) Timing.--Any claim filed under paragraph (1) shall be 
     filed contemporaneously with the action of the participating 
     financial institution to charge off all or part of an 
     enrolled loan. The participating financial institution shall 
     determine when and how much to charge off on an enrolled 
     loan, in a manner consistent with its usual method for making 
     such determinations on business loans that are not enrolled 
     loans under this subtitle.
       (l) Elements of Claims.--A claim filed by a participating 
     financial institution may include the amount of principal 
     charged off, not to exceed the covered amount of the loan. 
     Such claim may also include accrued interest and out-of-
     pocket expenses, if and to the extent provided for under the 
     participation agreement.
       (m) Payment of Claims.--
       (1) In general.--Except as provided in subsection (n) and 
     paragraph (2) of this subsection, upon receipt of a claim 
     filed in accordance with this section and the participation 
     agreement, the participating State shall promptly pay to the 
     participating financial institution, from funds in the 
     reserve fund, the full amount of the claim as submitted.
       (2) Insufficient reserve funds.--If there are insufficient 
     funds in the reserve fund to cover the entire amount of a 
     claim of a participating financial institution, the 
     participating State shall pay to the participating financial 
     institution an amount equal to the current balance in the 
     reserve fund. If the enrolled loan for which the claim has 
     been filed--
       (A) is not an early loan, such payment shall be deemed 
     fully to satisfy the claim, and the participating financial 
     institution shall have no other or further right to receive 
     any amount from the reserve fund with respect to such claim; 
     or
       (B) is an early loan, such payment shall not be deemed 
     fully to satisfy the claim of the participating financial 
     institution, and at such time as the remaining balance of the 
     claim does not exceed 75 percent of the balance in the 
     reserve fund, the participating State shall, upon the request 
     of the participating financial institution, pay any remaining 
     amount of the claim.
       (n) Denial of Claims.--A participating State may deny a 
     claim if a representation or warranty made by the 
     participating financial institution to the participating 
     State at the time that the loan was filed for enrollment or 
     at the time that the claim was submitted was known by the 
     participating financial institution to be false.
       (o) Subsequent Recovery of Claim Amount.--If, subsequent to 
     payment of a claim by the participating State, a 
     participating financial institution recovers from a borrower 
     any amount for which payment of the claim was made, the 
     participating financial institution shall promptly pay to the 
     participating State for deposit into the reserve fund the 
     amount recovered, less any expenses incurred by the 
     institution in collection of such amount.
       (p) Participation Agreement Terms.--
       (1) In general.--In connection with the filing of a loan 
     for enrollment in the Program, the participation agreement--
       (A) shall require the participating financial institution 
     to obtain an assurance from each borrower that--
       (i) the proceeds of the loan will be used for a business 
     purpose;
       (ii) the loan will not be used to finance passive real 
     estate ownership; and
       (iii) the borrower is not--

       (I) an executive officer, director, or principal 
     shareholder of the participating financial institution;
       (II) a member of the immediate family of an executive 
     officer, director, or principal shareholder of the 
     participating financial institution; or
       (III) a related interest of any such executive officer, 
     director, principal shareholder, or member of the immediate 
     family;

       (B) shall require the participating financial institution 
     to provide assurances to the participating State that the 
     loan has not been made in order to place under the protection 
     of the Program prior debt that is not covered under the 
     Program and that is or was owed by the borrower to the 
     participating financial institution or to an affiliate of the 
     participating financial institution;
       (C) may provide that if--
       (i) a participating financial institution makes a loan to a 
     borrower that is a refinancing of a loan previously made to 
     the borrower by the participating financial institution or an 
     affiliate of the participating financial institution;
       (ii) such prior loan was not enrolled in the Program; and
       (iii) additional or new financing is extended by the 
     participating financial institution as part of the 
     refinancing,

     the participating financial institution may file the loan for 
     enrollment, with the amount to be covered under the Program 
     not to exceed the amount of any additional or new financing; 
     and
       (D) may include additional restrictions on the eligibility 
     of loans or borrowers that are not inconsistent with the 
     provisions and purposes of this subtitle.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``executive officer'', ``director'', ``principal 
     shareholder'', ``immediate family'', and ``related interest'' 
     refer to the same relationship to a participating financial 
     institution as the relationship described in part 215 of 
     title 12 of the Code of Federal Regulations, or any successor 
     to such part.
       (q) Termination Clause.--In each participation agreement, 
     the participating State shall reserve for itself the ability 
     to terminate its obligation to enroll loans under the 
     Program. Any such termination shall be prospective only, and 
     shall not apply to amounts of loans enrolled under the 
     Program prior to such termination.
       (r) Allowable Withdrawals From Fund.--
       (1) Withdrawals based on outstanding balance.--The 
     participation agreement may provide that, if, for any 
     consecutive period of not less than 24 months, the aggregate 
     outstanding balance of all enrolled loans for a participating 
     financial institution is continually less than the 
     outstanding balance in the reserve fund for that 
     participating financial institution, the participating State, 
     in its discretion, may withdraw an amount from the reserve 
     fund to bring the balance in the reserve fund down to the 
     outstanding balance of all such enrolled loans.
       (2) Withdrawals based on premium charges remaining in 
     fund.--Upon its withdrawal from the Program, a participating 
     financial institution may withdraw from the reserve fund an 
     amount that is equivalent to the premium charges paid into 
     the fund by the institution and the borrower that remain in 
     the reserve fund, if such withdrawal would not expose the 
     participating State to a greater risk of loss than the risk 
     of loss in the absence of such withdrawal.

     SEC. 256. REPORTS.

       (a) Reserve Funds Report.--On or before the last day of 
     each calendar quarter, a participating State shall submit to 
     the Secretary a report of contributions to reserve funds made 
     by the participating State during the previous calendar 
     quarter. If the participating State has made contributions to 
     one or more reserve funds during the previous quarter, the 
     report shall--
       (1) indicate the total amount of such contributions;
       (2) indicate the amount of contributions which is subject 
     to reimbursement, which shall be equal to the total amount of 
     contributions, unless one of the limitations contained in 
     section 257 is applicable;
       (3) if one of the limitations in section 257 is applicable, 
     provide documentation of the applicability of such limitation 
     for each loan for which the limitation applies; and
       (4) include a certification by the participating State 
     that--
       (A) the information provided in accordance with paragraphs 
     (1), (2), and (3) is accurate;
       (B) funds in an amount meeting the minimum requirements of 
     section 253(b)(3) continue to be available and legally 
     committed to contributions by the State to reserve funds, 
     less any amount that has been contributed by the State to 
     reserve funds subsequent to the State being approved for 
     participation in the Program;
       (C) there has been no unapproved amendment to any 
     participation agreement or the form of participation 
     agreements; and
       (D) the participating State is otherwise implementing the 
     Program in accordance with this subtitle and regulations 
     issued pursuant to section 259.
       (b) Annual Data.--Not later than March 31 of each year, 
     each participating State shall submit to the Secretary annual 
     data indicating the number of borrowers financed under the 
     Program, the total amount of covered loans, and breakdowns by 
     industry type, loan size, annual sales, and number of 
     employees of the borrowers financed.
       (c) Form.--The reports and data filed pursuant to 
     subsections (a) and (b) shall be in such form as the 
     Secretary may require.

     SEC. 257. REIMBURSEMENT BY THE SECRETARY.

       (a) Reimbursements.--Not later than 30 calendar days after 
     receiving a report filed in compliance with section 256, the 
     Secretary shall reimburse the participating State in an 
     amount equal to 50 percent of the amount of contributions by 
     the participating State to the reserve funds that are subject 
     to reimbursement by the Secretary pursuant to section 256 and 
     this section. The Secretary shall reimburse participating 
     States, as it receives reports pursuant to section 256(a), 
     until available funds are expended.
       (b) Size of Assisted Borrower.--The Secretary shall not 
     provide any reimbursement to a participating State with 
     respect to an enrolled loan made to a borrower that has 500 
     or more employees at the time that the loan is enrolled in 
     the Program.
       (c) Three-Year Maximum.--The amount of reimbursement to be 
     provided by the Secretary to a participating State over any 
     3-year period in connection with loans made to any single 
     borrower or any group of borrowers among which a common 
     enterprise exists shall not exceed $75,000. For purposes of 
     this subsection, ``common enterprise'' shall have the same 
     meaning as in part 32 of title 12 of the Code of Federal 
     Regulations, or any successor to that part.
       (d) Loans Totaling Less Than $2,000,000.--In connection 
     with a loan in which the covered amount of the loan plus the 
     covered amount of all previous loans enrolled by a 
     participating financial institution does not exceed 
     $2,000,000, the amount of reimbursement by the Secretary to 
     the participating State shall not exceed the lesser of--
       (1) 75 percent of the sum of the premium charges paid to 
     the reserve fund by the borrower and the participating 
     financial institution; or
       (2) 5.25 percent of the covered amount of the loan.
       (e) Loans Totaling More Than $2,000,000.--In connection 
     with a loan in which the sum of the covered amounts of all 
     previous loans enrolled by the participating financial 
     institution in the Program equals or exceeds $2,000,000, the 
     amount of reimbursement to be provided by the Secretary to 
     the participating State shall not exceed the lesser of--
       (1) 50 percent of the sum of the premium charges paid by 
     the borrower and the participating financial institution; or
       (2) 3.5 percent of the covered amount of the loan.
       (f) Other Amounts.--In connection with the enrollment of a 
     loan that will cause the aggregate covered amount of all 
     enrolled loans to exceed $2,000,000, the amount of 
     reimbursement by the Secretary to the participating State 
     shall be determined--
       (1) by applying subsection (d) to the portion of the loan, 
     which when added to the aggregate covered amount of all 
     previously enrolled loans equals $2,000,000; and
       (2) by applying subsection (e) to the balance of the loan.

     SEC. 258. REIMBURSEMENT TO THE SECRETARY.

       (a) In General.--If a participating State withdraws funds 
     from a reserve fund pursuant to terms of the participation 
     agreement permitted by subsection (d) or (r) of section 255, 
     such participating State shall, not later than 15 calendar 
     days after such withdrawal, submit to the Secretary an amount 
     computed by multiplying the amount withdrawn by the 
     appropriate factor, as determined under subsection (b).
       (b) Factor.--The appropriate factor shall be obtained by 
     dividing the total amount of contributions that have been 
     made by the participating State to all reserve funds which 
     were subject to reimbursement--
       (1) by 2; and
       (2) by the total amount of contributions made by the 
     participating State to all reserve funds, including if 
     applicable, contributions that have been made by the State 
     prior to becoming a participating State if the State 
     continued its own capital access program in accordance with 
     section 253(b).
       (c) Use of Reimbursements.--The Secretary may use funds 
     reimbursed pursuant to this section to make reimbursements 
     under section 257.

     SEC. 259. REGULATIONS.

       The Secretary shall promulgate appropriate regulations to 
     implement this subtitle.

     SEC. 260. AUTHORIZATION OF APPROPRIATIONS.

       (a) Amount.--There are authorized to be appropriated to the 
     Secretary $50,000,000 to carry out this subtitle.
       (b) Budgetary Treatment.--The amount authorized to be 
     appropriated under subsection (a) shall be subject to 
     discretionary spending caps, as provided in section 601 of 
     the Congressional Budget Act of 1974, and therefore shall 
     reduce by an equal amount funds made available for other 
     discretionary spending programs.
       TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

     SEC. 301. INCORPORATED DEFINITIONS.

       Unless otherwise specifically provided in this title, for 
     purposes of this title--
       (1) the terms ``appropriate Federal banking agency'', 
     ``Federal banking agencies'', and ``insured depository 
     institution'' have the same meanings as in section 3 of the 
     Federal Deposit Insurance Act; and
       (2) the term ``insured credit union'' has the same meaning 
     as in section 101 of the Federal Credit Union Act.

     SEC. 302. ADMINISTRATIVE CONSIDERATION OF BURDEN WITH NEW 
                   REGULATIONS.

       In determining the effective date and administrative 
     compliance requirements for new regulations that impose 
     additional reporting, disclosure, or other requirements on 
     insured depository institutions, each Federal banking agency 
     shall consider, consistent with the principles of safety and 
     soundness and the public interest--
       (1) any administrative burdens that such regulations would 
     place on depository institutions, including small depository 
     institutions, and customers of depository institutions; and
       (2) the benefits of such regulations.

     SEC. 303. STREAMLINING OF REGULATORY REQUIREMENTS.

       (a) Review of Regulations; Regulatory Uniformity.--During 
     the 2-year period beginning on the date of enactment of this 
     Act, each Federal banking agency shall, consistent with 
     principles of safety and soundness and the public interest--
       (1) conduct a review of the regulations and written 
     policies of that agency--
       (A) to streamline those regulations and policies in order 
     to improve efficiency, reduce unnecessary costs, and 
     eliminate unwarranted constraints on credit availability; and
       (B) to remove inconsistencies and outmoded and duplicative 
     requirements; and
       (2) work jointly with the other Federal banking agencies to 
     make uniform all regulations and guidelines implementing 
     common statutory or supervisory policies.
       (b) Report to Congress.--The Federal banking agencies shall 
     submit a joint report to the Congress annually for 2 years 
     following the date of enactment of this Act detailing the 
     progress of the agencies in carrying out the requirements of 
     subsection (a).

     SEC. 304. ELIMINATION OF DUPLICATIVE FILINGS.

       The Federal banking agencies shall work jointly--
       (1) to eliminate, to the extent practicable, duplicative or 
     otherwise unnecessary requests for information in connection 
     with applications or notices to the agencies; and
       (2) to harmonize, to the extent practicable, any 
     inconsistent publication and public notice requirements.

     SEC. 305. COORDINATED AND UNIFIED EXAMINATIONS.

       Section 10(d) of the Federal Deposit Insurance Act (12 
     U.S.C. 1820(d)) is amended by adding at the end the following 
     new paragraph:
       ``(6) Coordinated examinations.--To minimize the disruptive 
     effects of examinations on the operations of insured 
     depository institutions--
       ``(A) each appropriate Federal banking agency shall, to the 
     extent practicable and consistent with safety and soundness 
     principles and the public interest--
       ``(i) coordinate examinations to be conducted by that 
     agency at an insured depository institution and its 
     affiliates;
       ``(ii) coordinate with the other appropriate Federal 
     banking agencies in the conduct of such examinations; and
       ``(iii) work to coordinate the conduct of all examinations 
     made pursuant to this subsection with the appropriate State 
     bank supervisor; and
       ``(B) not later than 2 years after the date of enactment of 
     the Community Development, Credit Enhancement, and Regulatory 
     Improvement Act of 1993, the Federal banking agencies shall 
     jointly establish and implement a system for determining 
     which one of the Federal banking agencies shall conduct a 
     unified examination of each insured depository institution 
     and its affiliates, as required by this subsection, on behalf 
     of all Federal banking agencies.''.

     SEC. 306. EIGHTEEN-MONTH EXAMINATION RULE FOR CERTAIN SMALL 
                   INSTITUTIONS.

       Section 10(d)(4) of the Federal Deposit Insurance Act (12 
     U.S.C. 1820(d)(4)) is amended--
       (1) in subparagraph (A), by striking ``$100,000,000'' and 
     inserting ``$250,000,000'';
       (2) in subparagraph (C), by striking ``and'' at the end;
       (3) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (4) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) the insured institution is not currently subject to a 
     formal enforcement proceeding or order by the Corporation or 
     the appropriate Federal banking agency; and''.

     SEC. 307. CALL REPORT SIMPLIFICATION.

       (a) Modernization of Call Report Filing and Disclosure 
     System.--In order to reduce the administrative requirements 
     pertaining to bank reports of condition, savings association 
     financial reports, and bank holding company consolidated and 
     parent-only financial statements, and to improve the 
     timeliness of such reports and statements, the Federal 
     banking agencies shall--
       (1) work jointly to develop a system under which--
       (A) insured depository institutions and their affiliates 
     may file such reports and statements electronically; and
       (B) the Federal banking agencies may make such reports and 
     statements available to the public electronically; and
       (2) not later than 1 year after the date of enactment of 
     this Act, report to the Congress and make recommendations for 
     legislation that would enhance efficiency for filers and 
     users of such reports and statements.
       (b) Uniform Reports and Simplification of Instructions.--
     The Federal banking agencies shall, consistent with the 
     principles of safety and soundness, work jointly--
       (1) to adopt a single form for the filing of core 
     information required to be submitted under Federal law to all 
     such agencies in the reports and statements referred to in 
     subsection (a); and
       (2) to simplify instructions accompanying such reports and 
     statements and to provide an index to the instructions that 
     is adequate to meet the needs of both filers and users.
       (c) Review of Call Report Schedule.--Each Federal banking 
     agency shall--
       (1) review the information required by schedules 
     supplementing the core information referred to in subsection 
     (b); and
       (2) eliminate requirements that are not warranted for 
     reasons of safety and soundness or other public purposes.

     SEC. 308. REPEAL OF PUBLICATION REQUIREMENTS.

       (a) Revised Statutes.--Section 5211 of the Revised Statutes 
     (12 U.S.C. 161) is amended--
       (1) in the fifth sentence of subsection (a), by striking 
     ``; and the statement of resources'' and all that follows 
     through ``as may be required by the Comptroller''; and
       (2) in subsection (c), by striking the fourth sentence.
       (b) FDIA.--Section 7(a)(1) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1817(a)(1)) is amended by striking the fourth 
     sentence.
       (c) Federal Reserve Act.--Section 9 of the Federal Reserve 
     Act (12 U.S.C. 324) is amended in the last sentence of the 
     sixth undesignated paragraph, by striking ``and shall be 
     published'' and all that follows through the end of the 
     sentence and inserting a period.

     SEC. 309. REGULATORY APPEALS PROCESS.

       (a) In General.--Not later than 180 days after the date of 
     enactment of this Act, each appropriate Federal banking 
     agency and the National Credit Union Administration Board 
     shall establish an independent intra-agency appellate 
     process. The process shall be available to review material 
     supervisory determinations made at insured depository 
     institutions or at insured credit unions that the agency 
     supervises.
       (b) Review Process.--In establishing the independent 
     appellate process under subsection (a), each agency shall 
     ensure--
       (1) that any appeal of a material supervisory determination 
     by an insured depository institution or credit union is heard 
     and decided expeditiously; and
       (2) that appropriate safeguards exist for protecting the 
     appellant from retaliation by agency examiners.
       (c) Comment Period.--Not later than 90 days after the date 
     of enactment of this Act, each appropriate Federal banking 
     agency and the National Credit Union Administration shall 
     provide public notice and opportunity for comment on proposed 
     guidelines for the establishment of an appellate process 
     under this section.
       (d) Definitions.--For purposes of this section--
       (1) the term ``material supervisory determinations'' 
     includes determinations relating to--
       (A) examination ratings;
       (B) the adequacy of loan loss reserve provisions; and
       (C) loan classifications on loans that are significant to 
     the institution; and
       (2) the term ``independent appellate process'' means a 
     review by an agency official who does not directly or 
     indirectly report to the agency official who made the 
     material supervisory determination under review.
       (e) Effect on Other Authority.--Nothing in this section 
     shall affect the authority of an appropriate Federal banking 
     agency or the National Credit Union Association Board to take 
     enforcement or supervisory action against an institution.

     SEC. 310. ELECTRONIC FILING OF CURRENCY TRANSACTION REPORTS.

       Section 123 of the Bank Secrecy Act (12 U.S.C. 1953) is 
     amended by adding at the end the following new subsection:
       ``(c) Acceptance of Automated Records.--The Secretary shall 
     permit an uninsured bank or financial institution to retain 
     or maintain records referred to in subsection (a) in 
     electronic or automated form, subject to terms and conditions 
     established by the Secretary.''.

     SEC. 311. BANK SECRECY ACT PUBLICATION REQUIREMENTS.

       Chapter 53 of title 31, United States Code, is amended by 
     adding at the end the following new section:

     ``SEC. 5329. STAFF COMMENTARIES.

       ``The Secretary shall--
       ``(1) publish all written rulings interpreting this 
     chapter; and
       ``(2) annually issue a staff commentary on the regulations 
     issued under this chapter.''.

     SEC. 312. EXEMPTION OF BUSINESS LOANS FROM REAL ESTATE 
                   SETTLEMENT PROCEDURES ACT REQUIREMENTS.

       The Real Estate Settlement Procedures Act of 1974 (12 
     U.S.C. 2601 et seq.) is amended by inserting after section 6 
     the following new section:

     ``SEC. 7. EXEMPTED TRANSACTIONS.

       ``This Act does not apply to credit transactions involving 
     extensions of credit--
       ``(1) primarily for business, commercial, or agricultural 
     purposes; or
       ``(2) to government or governmental agencies or 
     instrumentalities.''.

     SEC. 313. FLEXIBILITY IN CHOOSING BOARDS OF DIRECTORS.

       Section 5146 of the Revised Statutes (12 U.S.C. 72) is 
     amended in the first sentence, by striking ``two thirds'' and 
     inserting ``a majority''.

     SEC. 314. HOLDING COMPANY AUDIT REQUIREMENTS.

       Section 36(i) of the Federal Deposit Insurance Act (12 
     U.S.C. 1831m(i)) is amended by striking paragraph (2) and 
     inserting the following:
       ``(2) the institution--
       ``(A) has total assets, as of the beginning of such fiscal 
     year, of less than $5,000,000,000;
       ``(B) has--
       ``(i) total assets, as of the beginning of such fiscal 
     year, of more than $5,000,000,000 and less than 
     $9,000,000,000; and
       ``(ii) a CAMEL composite rating of 1 or 2 under the Uniform 
     Financial Institutions Rating System (or an equivalent rating 
     by any such agency under a comparable rating system) as of 
     the most recent examination of such institution by the 
     Corporation or the appropriate Federal banking agency; or
       ``(C) has--
       ``(i) total assets, as of the beginning of such fiscal 
     year, of more than $9,000,000,000; and
       ``(ii) a CAMEL composite rating of 1 under the Uniform 
     Financial Institutions Rating System (or an equivalent rating 
     by any such agency under a comparable rating system) as of 
     the most recent examination of such institution by the 
     Corporation or the appropriate Federal banking agency.

     Notwithstanding paragraph (2)(C), in the case of an insured 
     depository institution that the Corporation determines to be 
     a large institution, the audit committee of the holding 
     company of such an institution shall not include any large 
     customers of the institution.''.

     SEC. 315. STATE REGULATION OF REAL ESTATE APPRAISALS.

       Section 1122 of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is 
     amended--
       (1) by redesignating subsections (b) through (e) as 
     subsections (c) through (f), respectively;
       (2) by inserting after subsection (a) the following new 
     subsection:
       ``(b) Reciprocity.--The Appraisal Subcommittee shall 
     encourage the States to develop reciprocity agreements that 
     readily authorize appraisers who are licensed or certified in 
     one State (and who are in good standing with their State 
     appraiser certifying or licensing agency) to perform 
     appraisals in other States.''; and
       (3) in subsection (a)--
       (A) by redesignating paragraphs (1) through (3) as 
     subparagraphs (A) through (C);
       (B) by striking ``A State'' and inserting the following:
       ``(1) In general.--A State''; and
       (C) by adding at the end the following new paragraph:
       ``(2) Fees for temporary practice.--A State appraiser 
     certifying or licensing agency shall not impose excessive 
     fees or burdensome requirements, as determined by the 
     Appraisal Subcommittee, for temporary practice under this 
     subsection.''.

     SEC. 316. ACCELERATION OF EFFECTIVE DATE FOR INTERAFFILIATE 
                   TRANSACTIONS.

       (a) Home Owners' Loan Act Amendment.--Section 11(a)(2) of 
     the Home Owners' Loan Act (12 U.S.C. 1468(a)(2)) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Transition rule for well capitalized savings 
     associations.--
       ``(i) In general.--A savings association that is well 
     capitalized (as defined in section 38 of the Federal Deposit 
     Insurance Act), as determined without including goodwill in 
     calculating core capital, shall be treated as a bank for 
     purposes of section 23A(d)(1) and section 23B of the Federal 
     Reserve Act.
       ``(ii) Liability of commonly controlled depository 
     institutions.--Any savings association that engages under 
     clause (i) in a transaction that would not otherwise be 
     permissible under this subsection, and any affiliated insured 
     bank that is commonly controlled (as defined in section 
     5(e)(9) of the Federal Deposit Insurance Act), shall be 
     subject to subsection (e) of section 5 of the Federal Deposit 
     Insurance Act as if paragraph (6) of that subsection did not 
     apply.''.
       (b) Repeal Provision.--Effective on January 1, 1995, 
     subparagraph (C) of section 11(a)(2) of the Home Owners' Loan 
     Act (12 U.S.C. 1468(a)(2)) (as added by subsection (a) of 
     this section) is repealed.

     SEC. 317. COLLATERALIZATION OF PUBLIC DEPOSITS.

       Section 13(e) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(e)) is amended--
       (1) by redesignating paragraphs (1) through (4) as 
     subparagraphs (A) through (D), respectively;
       (2) by striking ``No agreement'' and inserting the 
     following:
       ``(1) In general.--No agreement''; and
       (3) by adding at the end the following new paragraph:
       ``(2) Public deposits.--An agreement to provide for the 
     lawful collateralization of deposits of a Federal, State, or 
     local governmental entity or of any depositor referred to in 
     section 11(a)(2) shall not be deemed to be invalid pursuant 
     to paragraph (1)(B) solely because of changes in the 
     collateral made in accordance with such agreement.''.

     SEC. 318. ELIMINATION OF STOCK VALUATION PROVISION.

       (a) In General.--Section 39(b)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1831p-1(b)(1), as added by section 
     132(a) of the Federal Deposit Insurance Corporation 
     Improvements Act of 1991) is amended--
       (1) in subparagraph (A), by adding ``and'' at the end; and
       (2) by striking subparagraph (C).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall be construed to have the same effective date as section 
     39 of the Federal Deposit Insurance Act, as provided in 
     section 132(c) of the Federal Deposit Insurance Corporation 
     Improvements Act of 1991.

     SEC. 319. EXPEDITED PROCEDURES FOR FORMING A BANK HOLDING 
                   COMPANY.

       Section 3(a) of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1842(a)) is amended--
       (1) in the second sentence, by striking ``or (B)'' and 
     inserting ``(B)''; and
       (2) in the second sentence, by inserting before the period 
     the following: ``; or (C) with 30 days prior notification to 
     the Board, the acquisition by a company of control of a bank 
     in a reorganization in which a person or group of persons 
     exchanges its shares of the bank for shares of a newly formed 
     bank holding company and receives, after the reorganization, 
     substantially the same proportional share interest in the 
     holding company as it held in the bank (except for changes in 
     shareholders' interests resulting from the exercise of 
     dissenting shareholders' rights under State or Federal law) 
     if, immediately following the acquisition, (i) the bank 
     holding company meets the capital and other financial 
     standards prescribed by the Board by regulation for such a 
     bank holding company; (ii) the bank is adequately capitalized 
     (as defined in section 38 of the Federal Deposit Insurance 
     Act); and (iii) the holding company does not engage in any 
     activities other than those of banking or managing and 
     controlling banks''.

     SEC. 320. EXEMPTION OF CERTAIN HOLDING COMPANY FORMATIONS 
                   FROM REGISTRATION UNDER THE SECURITIES ACT OF 
                   1933.

       Section 4 of the Securities Act of 1933 (15 U.S.C. 77d) is 
     amended by adding at the end the following new paragraph:
       ``(7) transactions involving offers or sales of equity 
     securities, in connection with the acquisition of a bank by a 
     company under section 3(a) of the Bank Holding Company Act of 
     1956, if--
       ``(A) the acquisition occurs solely as part of a 
     reorganization in which a person or group of persons 
     exchanges its shares of a bank for shares of a newly formed 
     bank holding company with no significant assets other than 
     securities of the bank and the existing subsidiaries of the 
     bank;
       ``(B) the shareholders receive, after that reorganization, 
     substantially the same proportional share interests in the 
     bank holding company as they held in the bank, except for 
     changes in shareholders' interests resulting from lawful 
     elimination of fractional interests and the exercise of 
     dissenting shareholders' rights under State or Federal law;
       ``(C) the rights and interests of security holders in the 
     bank holding company are substantially the same as those in 
     the bank prior to the transaction, other than as may be 
     required by law; and
       ``(D) the bank holding company has substantially the same 
     assets and liabilities as the bank had prior to the 
     transaction.''.

     SEC. 321. REDUCTION OF POST-APPROVAL WAITING PERIOD FOR BANK 
                   HOLDING COMPANY ACQUISITIONS.

       Section 11(b)(1) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1849(b)(1)) is amended by inserting before the 
     period at the end of the fourth sentence the following: ``or, 
     if the Board has not received any adverse comment from the 
     Attorney General of the United States relating to competitive 
     factors, such shorter period of time as may be prescribed by 
     the Board with the concurrence of the Attorney General, but 
     in no event less than 15 calendar days after the date of 
     approval''.

     SEC. 322. REDUCTION OF POST-APPROVAL WAITING PERIOD FOR BANK 
                   MERGERS.

       Section 18(c)(6) of the Federal Deposit Insurance Act (12 
     U.S.C. 1828(c)(6)) is amended by inserting before the period 
     at the end of the last sentence the following: ``or, if the 
     agency has not received any adverse comment from the Attorney 
     General of the United States relating to competitive factors, 
     such shorter period of time as may be prescribed by the 
     agency with the concurrence of the Attorney General, but in 
     no event less than 15 calendar days after the date of 
     approval''.

     SEC. 323. BANKERS' BANKS.

       (a) Ownership by Bankers' Banks.--
       (1) Paragraph Seventh of section 5136 of the Revised 
     Statutes (12 U.S.C. 24) is amended in the eleventh sentence--
       (A) by inserting ``or depository institution holding 
     companies (as defined in section 3 of the Federal Deposit 
     Insurance Act)'' after ``(except to the extent directors' 
     qualifying shares are required by law) by depository 
     institutions''; and
       (B) by striking ``employees'' and inserting ``employees 
     (also referred to as a `bankers' bank')''.
       (2) Section 5169(b)(1) of the Revised Statutes (12 U.S.C. 
     27(b)(1)) is amended--
       (A) by inserting ``or depository institution holding 
     companies'' after ``(except to the extent directors' 
     qualifying shares are required by law) by other depository 
     institutions''; and
       (B) by striking ``employees'' and inserting ``employees 
     (also referred to as a `bankers' bank')''.
       (b) Ownership by Savings Associations.--Section 5(c)(4) of 
     the Home Owners' Loan Act (12 U.S.C. 1464(c)(4)) is amended 
     by adding at the end the following new subparagraph:
       ``(E) Bankers' Banks.--A Federal savings association may 
     purchase for its own account shares of stock of a bankers' 
     bank, described in Paragraph Seventh of section 5136 of the 
     Revised Statutes or in section 5169(b) of the Revised 
     Statutes, on the same terms and conditions as a national bank 
     may purchase such shares.''.
       (c) Technical and Conforming Amendments.--
       (1) Bank holding company act.--Section 3(e) of the Bank 
     Holding Company Act of 1956 (12 U.S.C. 1842(e)) is amended by 
     striking the second sentence.
       (2) Management interlocks act.--Section 202(3)(D) of the 
     Depository Institution Management Interlocks Act (12 U.S.C. 
     3201(3)(D)) is amended by striking ``the voting securities'' 
     and all that follows through the end of the subparagraph and 
     inserting ``and is a bankers' bank, described in Paragraph 
     Seventh of section 5136 of the Revised Statutes; or''.

     SEC. 324. BANK SERVICE CORPORATION ACT AMENDMENT.

       Section 5 of the Bank Service Corporation Act (12 U.S.C. 
     1865) is amended--
       (1) in subsection (a), by striking ``the prior approval 
     of'' and inserting ``prior notice, as determined by''; and
       (2) in subsection (c), by inserting ``or whether to approve 
     or disapprove any notice'' after ``approval''.

     SEC. 325. MERGER TRANSACTION REPORTS.

       Section 18(c) of the Federal Deposit Insurance Act (12 
     U.S.C. 1828(c)) is amended--
       (1) in paragraph (4)--
       (A) in the first sentence--
       (i) by striking ``General and the other two'' and inserting 
     ``General, who shall promptly notify the other''; and
       (ii) by inserting before the period ``of any such proposed 
     transaction that raises a significant competitiveness 
     issue''; and
       (B) in the second sentence, by striking ``and the other two 
     banking agencies''; and
       (2) in paragraph (6), by striking ``and the other two 
     banking agencies''.

     SEC. 326. CREDIT CARD ACCOUNTS RECEIVABLE SALES.

       Section 11(e) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)) is amended by adding at the end the following 
     new paragraphs:
       ``(14) Selling credit card accounts receivable.--
       ``(A) Notification required.--An undercapitalized insured 
     depository institution (as defined in section 38) shall 
     notify the Corporation in writing before entering into an 
     agreement to sell credit card accounts receivable.
       ``(B) Waiver by corporation.--The Corporation may at any 
     time, in its sole discretion and upon such terms as it may 
     prescribe, waive its right to repudiate an agreement to sell 
     credit card accounts receivable if the Corporation--
       ``(i) determines that the waiver is in the best interests 
     of the deposit insurance fund; and
       ``(ii) provides a written waiver to the selling 
     institution.
       ``(C) Effect of waiver on successors.--
       ``(i) In general.--If, under subparagraph (B), the 
     Corporation has waived its right to repudiate an agreement to 
     sell credit card accounts receivable--

       ``(I) any provision of the agreement that restricts 
     solicitation of a credit card customer of the selling 
     institution, or the use of a credit card customer list of the 
     institution, shall bind any receiver or conservator of the 
     institution; and
       ``(II) the Corporation shall require any acquirer of the 
     selling institution, or of substantially all of the selling 
     institution's assets or liabilities, to agree to be bound by 
     a provision described in subclause (I) as if the acquirer 
     were the selling institution.

       ``(ii) Exception.--Clause (i)(II) does not--

       ``(I) restrict the acquirer's authority to offer any 
     product or service to any person identified without using a 
     list of the selling institution's customers in violation of 
     the agreement;
       ``(II) require the acquirer to restrict any preexisting 
     relationship between the acquirer and a customer; or
       ``(III) apply to any transaction in which the acquirer 
     acquires only insured deposits.

       ``(D) Waiver not actionable.--The Corporation shall not, in 
     any capacity, be liable to any person for damages resulting 
     from the waiver of or failure to waive the Corporation's 
     right under this section to repudiate any contract or lease, 
     including an agreement to sell credit card accounts 
     receivable. No court shall issue any order affecting any such 
     waiver or failure to waive.
       ``(E) Other authority not affected.--This paragraph does 
     not limit any other authority of the Corporation to waive the 
     Corporation's right to repudiate an agreement or lease under 
     this section.
       ``(15) Certain credit card customer lists protected.--
       ``(A) In general.--If any insured depository institution 
     sells credit card accounts receivable under an agreement 
     negotiated at arm's length that provides for the sale of the 
     institution's credit card customer list, the Corporation 
     shall prohibit any party to a transaction with respect to the 
     institution under this section or section 13 from using the 
     list except as permitted under the agreement.
       ``(B) Fraudulent transactions excluded.--Subparagraph (A) 
     does not limit the Corporation's authority to repudiate any 
     agreement entered into with the intent to hinder, delay, or 
     defraud the institution, the institution's creditors, or the 
     Corporation.''.

     SEC. 327. LIMITING POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.

       (a) Amendment to the Federal Reserve Act.--The Federal 
     Reserve Act (12 U.S.C. 221 et seq.) is amended by inserting 
     after section 25B the following new section:

     ``SEC. 25C. POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.

       ``A member bank shall not be required to repay any deposit 
     made at a foreign branch of the bank if the branch cannot 
     repay the deposit due to--
       ``(1) an act of war, insurrection or civil strife; or
       ``(2) an action by a foreign government or instrumentality 
     (whether de jure or de facto) in the country in which the 
     branch is located,

     unless the member bank has expressly agreed in writing to 
     repay the deposit under those circumstances. The Board may 
     prescribe such regulations as it deems necessary to implement 
     this section.''.
       (b) Conforming Amendments to the Federal Deposit Insurance 
     Act.--
       (1) In general.--Section 18 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1828) is amended by adding at the 
     end the following new subsection:
       ``(q) Sovereign Risk.--Section 25C of the Federal Reserve 
     Act shall apply to every nonmember insured bank in the same 
     manner and to the same extent as if the nonmember insured 
     bank were a member bank.''.
       (2) Conforming amendment.--Subparagraph (A) of section 
     3(l)(5) of the Federal Deposit Insurance Act (12 U.S.C. 
     1813(l)(5)) is amended to read as follows:
       ``(A) any obligation of a depository institution which is 
     carried on the books and records of an office of such bank or 
     savings association located outside of any State, unless--
       ``(i) such obligation would be a deposit if it were carried 
     on the books and records of the depository institution, and 
     would be payable at, an office located in any State; and
       ``(ii) the contract evidencing the obligation provides by 
     express terms, and not by implication, for payment at an 
     office of the depository institution located in any State; 
     and''.
       (c) Existing Claims Not Affected--Section 25C of the 
     Federal Reserve Act (as added by subsection (a)) shall not be 
     applied retroactively and shall not be construed to affect or 
     apply to any claim or cause of action addressed by that 
     section arising from events or circumstances that occurred 
     before the date of enactment of this Act.

     SEC. 328. AMENDMENTS TO OUTDATED DIVIDEND PROVISIONS.

       (a) Withdrawal of Capital.--Section 5204 of the Revised 
     Statutes (12 U.S.C. 56) is amended--
       (1) in the second sentence, by striking ``net profits then 
     on hand, deducting therefrom its losses and bad debts'' and 
     inserting ``undivided profits, subject to other applicable 
     provisions of law''; and
       (2) by striking the third sentence.
       (b) Declaration of Dividends.--Section 5199 of the Revised 
     Statutes (12 U.S.C. 60) is amended--
       (1) in the first sentence, by striking ``net profits of the 
     association'' and inserting ``undivided profits of the 
     association, subject to the limitations in subsection (b),'';
       (2) by striking ``net profits'' each subsequent place such 
     term appears and inserting ``net income''; and
       (3) by striking subsection (c).

     SEC. 329. ELIMINATION OF DUPLICATIVE DISCLOSURES FOR HOME 
                   EQUITY LOANS.

       Section 4(a) of the Real Estate Settlement Procedures Act 
     (12 U.S.C. 2603(a)) is amended by adding at the end the 
     following: ``In the case of a federally related mortgage loan 
     secured by a subordinate lien on residential property, 
     disclosures made under section 127A(a) of the Truth in 
     Lending Act may be used in lieu of the disclosures required 
     under this section if--
       ``(1) the disclosures made pursuant to such section 127A(a) 
     contain all of the information that is required under this 
     section; and
       ``(2) the information is disclosed in a manner that is no 
     less conspicuous than is required under this section.''.

     SEC. 330. REPORT ON CAPITAL STANDARDS AND THEIR IMPACT ON THE 
                   ECONOMY.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of the Treasury, after 
     consultation with the Federal banking agencies, shall report 
     to the Committee on Banking, Housing, and Urban Affairs of 
     the Senate and the Committee on Banking, Finance and Urban 
     Affairs of the House of Representatives on the effect of the 
     implementation of risk-based capital standards on--
       (1) the safety and soundness of insured depository 
     institutions; and
       (2) the availability of credit, particularly to consumers 
     and small business concerns.
       (b) Recommendations.--The report required by subsection (a) 
     shall contain any recommendations that the Secretary of the 
     Treasury considers relevant.

     SEC. 331. STUDIES ON THE IMPACT OF THE PAYMENT OF INTEREST ON 
                   RESERVES.

       (a) Federal Reserve Study.--Not later than 180 days after 
     the date of enactment of this Act, the Board of Governors of 
     the Federal Reserve System, in consultation with the Federal 
     Deposit Insurance Corporation, shall conduct a study and 
     report to Congress on--
       (1) the necessity, for monetary policy purposes, of 
     continuing to require insured depository institutions to 
     maintain sterile reserves;
       (2) the appropriateness of paying a market rate of interest 
     to insured depository institutions on sterile reserves or, in 
     the alternative, providing for payment of such interest into 
     the appropriate deposit insurance fund;
       (3) the monetary impact that the failure to pay interest on 
     sterile reserves has had on insured depository institutions, 
     including an estimate of the total dollar amount of interest 
     and the potential income lost by insured depository 
     institutions; and
       (4) the impact that the failure to pay interest on sterile 
     reserves has had on the ability of the banking industry to 
     compete with nonbanking providers of financial services and 
     with foreign banks.
       (b) Budgetary Impact Study.--Not later than 180 days after 
     the date of enactment of this Act, the Director of the Office 
     of Management and Budget and the Director of the 
     Congressional Budget Office, in consultation with the 
     Committees on the Budget of the Senate and the House of 
     Representatives, shall jointly conduct a study and report to 
     the Congress on the budgetary impact of--
       (1) paying a market rate of interest to insured depository 
     institutions on sterile reserves; and
       (2) paying such interest into the respective deposit 
     insurance funds.

     SEC. 332. STUDY AND REPORT ON STREAMLINED LENDING PROCESS FOR 
                   CONSUMER BENEFIT.

       (a) Study.--During the 12-month period beginning on the 
     date of enactment of this Act, the Board of Governors of the 
     Federal Reserve System, the Comptroller of the Currency, and 
     the Secretary of Housing and Urban Development shall conduct 
     a study of ways to improve the home mortgage, small business, 
     and consumer lending processes, consistent with the 
     principles of safety and soundness, so as to--
       (1) reduce consumer burdens, inconvenience, cost, and 
     delay; and
       (2) minimize cost and burdens on insured depository 
     institutions, credit unions, and other lenders.
       (b) Comments.--In conducting the study under subsection 
     (a), comments shall be solicited from consumer groups, 
     insured depository institutions, other lenders, and any other 
     interested parties.
       (c) Report.--Not later than 12 months after the date of 
     enactment of this Act, the Board of Governors of the Federal 
     Reserve System, the Comptroller of the Currency, and the 
     Secretary of Housing and Urban Development shall submit a 
     joint report to the Congress indicating any legislative 
     changes necessary to improve the home mortgage, small 
     business, and consumer lending processes and including a 
     summary of comments received pursuant to subsection (b).

     SEC. 333. REPEAL OF OUTDATED CHARTER REQUIREMENT FOR NATIONAL 
                   BANKS.

       Section 5170 of the Revised Statutes (12 U.S.C. 28) is 
     repealed.
       Amend the title so as read: ``A bill to facilitate the 
     establishment of community development financial 
     institutions, to provide consumer protections for high cost 
     mortgages, to encourage investment in and lending to small 
     businesses, to improve the regulation of depository 
     institutions, and for other purposes.''.

  The PRESIDING OFFICER. Who seeks recognition?
  The Chair recognizes the Senator from Michigan [Mr. Riegle].
  Mr. RIEGLE. Mr. President, under the standing order we are now moving 
to S. 1275, the Community Development, Credit Enhancement, and 
Regulatory Improvement Act of 1995.
  I will shortly begin a description of that bill. At the end of my 
remarks I will ask unanimous consent to have a letter from Treasury 
Secretary Bentsen and other supplementary materials printed in the 
Record.
  This is an important day for the country, that we have a chance to 
bring this bill to the Senate floor. I thank the majority leader for 
allowing us this spot in the schedule, to be able to present it to the 
Senate and move it through, I hope, quite expeditiously so we can get 
into conference and get this into law before this year is over.
  The bill we have before the Senate now incorporates a number of 
provisions that are designed to foster community development, such as 
we have just heard; to also, importantly, encourage lending to small 
business, because we know that is such an important engine of growth in 
this country, and of job creation. And also to target and eliminate 
unnecessary paperwork and redundancy within our financial system. Also 
in order to deal with some specific problems, to put in place some 
consumer protections that are also needed to prevent some abuses we 
have uncovered that we think need to be dealt with directly.
  As I have said, the committee worked together in a bipartisan fashion 
to craft this bill. We have also worked closely with the Clinton 
administration, and I thank them for their cooperation. I think this 
teamwork effort is reflected in the overwhelming bipartisan support 
that this bill received in the Banking, Housing, and Urban Affairs 
Committee. We reported this bill out favorably by a vote of 18 to 1. I 
repeat that, by a vote of 18 to 1. I am very proud of the strength of 
the bipartisan support it achieved.
  I particularly commend Senator D'Amato, the ranking Republican, for 
his leadership and input in developing this legislation. We have worked 
together on a vast number of issues in the committee. That is the 
approach we take. We have done that here. We have crafted a bill we 
both strongly support and I thank him for his leadership, and his staff 
as well.
  Let me now briefly describe the provisions of the bill. Let me start 
with community development.
  The first title of the bill addresses the issue of community 
development and consumer protection. It is aimed at revitalizing 
distressed communities by helping to enlarge and strengthen the 
capacity of local community development institutions and to improve the 
access of capital into these institutions. It will create the community 
development financial institutions fund. That fund will promote 
revitalization of our distressed communities by providing financial and 
technical assistance to new and to existing community development 
financial institutions.
  The fund will be directed by an administrator appointed by the 
President and confirmed by the Senate. A 5-member advisory board will 
consist of representatives of community groups, local and regional 
governments, community development organizations, and the banking 
industry itself.
  The bill authorizes $382 million over 4 years to carry out this 
program. The money can be used for small business, commercial, and 
community facilities, basic financial services where they do now not 
exist or are very expensive and out of the reach of many people, and 
also low-income housing, if that is not provided by other area housing 
lenders.
  Banks and other financial institutions and Government entities will 
be able to play a very important role in this initiative. Together with 
community development financial institutions, existing commercial banks 
and others will be able to submit joint applications for assistance 
called community partnerships. Federal funds, however, may only go to 
the community development financial institution itself.
  A community development subsidiary owned by banks or by thrifts or 
both may qualify, provided that no one company owns more than 25 
percent of its voting shares.
  So we facilitate a partnership arrangement with the existing 
financial system, to the extent they want to participate in this way, 
but it reaches out to those community entities like the one that 
brought into being the South Shore Bank in Chicago and others, to 
enable an additional level of infusion of financial activity and 
capital down to the grassroots where it is so badly needed.
  I might just say, I believe strongly in the free enterprise system. I 
have seen it work any number of times. But in order for it to work you 
have to be able to take a good idea and a good team of people and to be 
able to get access to capital so you can actually put your idea to 
work.
  If the credit facilities are such that you are strangled before you 
ever start because you cannot establish a normal financial 
relationship, particularly with a startup entity, very often, 
particularly in depressed areas, inner-city urban areas, and even rural 
areas, you have ideas that could take hold and create new economic 
activity and job creation, but they never happen because of the absence 
of credit facilities and the absence of financing.
  We want to change that. We want to take and infuse more capital into 
areas where capital has been missing.
  Another part of this bill that I will describe in a minute has to do 
with the securitization of small business loans. That is aimed at 
exactly the same problem because we feel--and Senator D'Amato has led 
this particular effort--but if we can find a way to take and make more 
small business loans, securitize those loans, and sell them off in a 
secondary market, we can hook up a source of investment capital and 
bring that in to underserved areas and to give the free enterprise and 
the capitalistic system a chance to work because people will be able to 
have the money they need to actually put good ideas to work. So this is 
something that is very important. It goes right to the center of 
validating our entire economic system.
  Title I, as I mentioned, also includes a provision amending the Truth 
in Lending Act to provide new consumer protections for certain second 
mortgages that have carried with them exceptionally high fees or 
interest rates. The bill defines these second mortgages that fall into 
that category as ``high-cost mortgages.''
  On February 17 of this year, we had a hearing in the Banking 
Committee, and witnesses then testified that homeowners in low-income 
minority communities have been deliberately targeted for abusive 
lending practices. Our legislation requires lenders to make a separate 
disclosure when they are offering high-cost mortgages that contain 
annual interest rates, monthly payments and a warning that the borrower 
could lose his or her home.
  What this deals with is what is called reverse redlining where some 
unscrupulous lenders were going into areas, offering second mortgages 
at rates as high as 17 percent, or higher, knowing full well that the 
person taking that loan could never pay it back and, in due course, 
would have to default on the loan and enable them, the lender, to take 
that property in foreclosure and make a huge profit.
  We do not want the system operating that way. So this is an effort to 
try to, in a balanced fashion, deal with that abuse with respect to 
high-cost second mortgages.
  So the disclosure would have to be provided at least 3 days before 
the settlement, creating an additional cooling-off period so that 
consumers have an opportunity to see what is involved here and not get 
swept up in a high-pressure sales pitch and, the next thing they know, 
be locked into a financial arrangement that will devastate them and 
literally take their home right out from under them.
  The bill generally prevents lenders from including certain terms that 
have caused problems, such as prepayment penalties, in these high-cost 
mortgages. The Federal Reserve has given authority to exempt loans from 
these provisions, however, if, in their view, it is in the interest of 
the borrowing public.
  Finally, the bill transfers liability in connection with high-cost 
mortgages from the originator to any subsequent purchaser of the loan. 
This provision is essential to make the market police itself.
  Next, let me move to the small business section which is contained in 
title II. The small business capital formation section contains two 
provisions designed to ensure that small businesses will have access to 
the credit that they need to come into existence, grow, and create 
jobs.
  First, title II includes S. 384. That is a bill introduced by Senator 
D'Amato to facilitate the securitization of small business loans. Back 
in 1984, Congress enacted legislation to promote the securitization of 
home mortgages. Most observers now believe that securitization of 
residential mortgages has served over the intervening years to increase 
the supply of capital to home buyers, ensuring a continuous supply of 
that capital and also bringing down the cost. It is a more efficient 
market and is a way for capital to get to that kind of investment form. 
And so people wanting to have home mortgages have greatly benefited in 
the process.
  Senator D'Amato, and other Senators, introduced a bill intended to 
develop a secondary market for small business loans similar to that for 
these residential mortgages. This provision, with modifications, is now 
incorporated in the bill.
  Under this legislation, financial institutions can originate loans to 
small businesses and then sell them to an entity that would issue 
securities to investors. The bill makes changes to Federal securities 
laws that parallel the 1984 statute. These would allow issuers 
sufficient time to pool and sell securities and to file a single 
registration statement with the SEC.
  The bill also changes bank capital requirements for small business 
loans to ``without recourse.'' That is, where the bank remains liable 
for a portion of any losses on the loan.
  The committee worked with the Federal bank regulators and the 
Treasury Department to develop an approach that will facilitate 
securitization of small business loans while maintaining bank safety 
and soundness.
  In fashioning this legislation, the committee was mindful that banks 
are losing market share in the area of small business lending, and that 
is not helping anyone. A Government-sponsored enterprise to securitize 
small business loans could lead to a standardization of product and 
that could further move business out of the banking industry.
  The legislation approved by the Banking Committee does not create 
such a Government-sponsored enterprise. Instead, it removes a number of 
regulatory impediments to the development of a secondary market by the 
private sector. While standards may converge as the market develops, 
the committee has not sanctioned--I emphasize, has not sanctioned--any 
Government-sponsored uniformity in small business lending. We realize 
how crucial bank financing is to small and startup businesses, and we 
want commercial banks to continue to be players in this market. This is 
designed to help them do exactly that.
  Title II also includes S. 478. That is a measure providing Federal 
assistance for State capital access programs. Fourteen States have 
adopted capital access programs. These programs encourage banks to make 
loans to small- and medium-size businesses that they might not 
otherwise make. Lenders may choose to participate in a program. For 
each loan enrolled in a program, the bank and the borrower contribute 
to a loan reserve fund. The State then matches the contribution of the 
bank and the borrower. The loan loss reserve fund protects the lender 
against loss on the loan. Participating lenders assume the risk of loss 
on their loans if the losses exceed the total contribution to the 
reserve funds.
  Unlike a guarantee program, the Government is not exposed to the risk 
of the entire loan. The bill authorizes $50 million in Federal funds to 
match State contributions to capital access programs. This will help 
States that already have such programs and encourage other States to 
adopt such programs. The Federal role would be limited to certifying 
State programs for participation, receiving reports and matching State 
contributions.
  Finally, title III of this bill contains a number of directives to 
the bank regulatory agencies to require them to improve the way they 
carry out their functions. Our goal is to harmonize and to simplify the 
regulatory mandates that are now imposed by multiple bank regulatory 
agencies.
  Under this bill, for example, within 2 years, examinations will be 
coordinated and each institution and its affiliates will receive a 
unified exam conducted by just one regulator.
  Now we have a situation where as many as four regulators are in the 
act. I have been told stories of individual institutions where you have 
three different regulators all on site at the same time, all doing 
different kinds of examinations according to different standards. It is 
costly, it is time consuming, it is confusing, it is burdensome and it 
is time to change it, and we change it in this respect in this bill.
  We think that that is going to eliminate the cost to banks of these 
duplicative exams. Each agency has to establish a regulatory appeals 
process. Also within 2 years, the Federal banking agencies must conduct 
a top-to-bottom review of regulations, removing inconsistent, outmoded 
and duplicative mandates. New regulations will not be issued without 
the scrutiny of the administrative burden that they may create, and 
this is particularly a problem for smaller institutions who just do not 
have the margins to carry a lot of burdensome regulatory requirements 
that, in the end, are not needed.
  The current system of four different agencies adopting four different 
guidelines on the same subject will come to an end. I happen to think 
we also ought to consolidate those agencies into a single entity. We 
are doing that on a separate track, coming down that track with a 
proposal within the committee. That would be a major institutional 
advance with respect to consolidation. But until we achieve that goal, 
and even with whatever final form we get there, it is very important 
this administrative simplification and streamlining take place.

  The bill also contains numerous amendments to existing laws that will 
reduce the paperwork and unnecessary regulatory burden with which banks 
must now cope. For example, institutions with assets of less than $100 
million are currently exempt from the requirement of annual inspection 
and instead may be examined on an 18-month cycle. Title III raises that 
threshold from $100 million to $250 million. Call reports no longer 
need to be published in local newspapers. Loans that are made for 
commercial, agriculture, and governmental purposes are exempted from 
the forms required under the Real Estate Settlement Practices Act.
  In addition, title III calls for study of risk-based capital 
standards, sterile reserves, and burden in the consumer loan process. A 
number of these provisions are drawn from Senate bills 265 and 1124 
introduced by Senators Shelby, Mack, D'Amato, Dole, Bryan, Sasser, and 
others.
  It is fair to say that virtually all the members of the committee 
have had input into these provisions. The package has, as I said 
earlier, the full support of the Clinton administration. Secretary of 
the Treasury Bentsen applauded the regulatory reform provisions of the 
bill as a very reasonable and sensible approach and one that does not 
go overboard. As he noted, the aim of these provisions is to remove 
outmoded and outdated and sometimes excessive restrictions on our 
financial system.
  The measures in the bill reflect a thorough review and balancing to 
eliminate unnecessary restrictions while at the same time maintaining 
effective supervision--most importantly, the safety and soundness of 
the banking system, protection of the bank insurance fund, and 
appropriate consumer protections.
  Any actions that hinder effective bank regulation or undermine bank 
safety and soundness may save the banks some money today but at the 
risk of causing potentially severe losses to the insurance fund 
tomorrow, and we draw that line very clearly, and we do not want to 
cross that line.
  This bill is a major step toward eliminating the duplicative and 
inconsistent regulation that increases costs for consumers and 
undermines support for essential regulation in this area.
  Again, I wish to thank all the members of the committee for their 
cooperation, particularly my ranking member, Senator D'Amato, for their 
very solid bipartisan cooperation in drafting and reporting out this 
legislation.
  I will shortly yield to my colleague from New York. After he has 
spoken, I will seek recognition for the purpose of describing and 
moving the adoption of a managers' amendment. The managers' amendment 
contains a number of improvements to the bill agreed to by Senator 
D'Amato and myself as well as other Senators.
  Mr. President, I yield the floor at this point.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. D'AMATO addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from New York 
[Mr. D'Amato].
  Mr. D'AMATO. Mr. President, I am going to open with a short statement 
as it relates to this bill, and then I am going to speak to another 
subject that literally has come to my attention just this morning but 
obviously concerns banking, banking institutions, regulatory 
authorities, and the appropriateness of the conduct of the Treasury 
Department and maybe others as it relates to the responsibility of 
these independent agencies.
  Mr. President, I rise today in support of S. 1275, the Community 
Development, Credit Enhancement, and Regulatory Improvement Act.
  Throughout our country there are communities in decline because of a 
lack of capital and credit. In hearings before the Banking Committee 
last year, we heard testimony that community development banks can 
provide a powerful tool to reestablish neighborhoods and turn decay 
into prosperity by providing a combination of loans, seed capital, and 
technical assistance.
  Rural farm communities can also benefit from community development 
financial institutions through the provisions of farm loans and 
development capital.
  Title I of this legislation is designed to assist in the 
establishment and funding of community development financial 
institutions. It establishes a community development financial 
institutions fund that will make grants, loans, and technical 
assistance to local financial institutions. These local institutions 
can be insured banks, savings and loans, low-income credit unions, or 
other community lending organizations. However, in all cases, the 
institution must have, as its primary mission, the promotion of 
community development.
  Assistance given by the fund, other than technical assistance, must 
be matched by non-Federal dollars. Generally, except for certain 
hardship instances, the matching requirement will require $1 of non-
Federal funds for each $1 of Federal assistance.
  This matching requirement is an extremely important safeguard. It 
ensures that the private sector or local Government agency is willing 
to risk its own resources on the viability of the institution selected 
for Federal funding. The matching requirement provides a second opinion 
as to the need for and likely success of the institution's planned use 
of the Federal assistance. The matching requirement should go a long 
way toward eliminating some of the waste associated with prior efforts 
to revitalize our distressed communities.
  Under the bill as reported, a traditional bank or savings association 
may become a partner with a community development financial 
institution, or it may hold up to a 25 percent interest in such an 
institution. However, a traditional bank or savings association may not 
apply directly or have a wholly owned subsidiary that qualifies for 
this program. However, a traditional bank or thrift association may 
control up to 25 percent of the voting shares of a community 
development financial institution that qualifies for assistance under 
this act.
  Title I of the bill also contains provisions relating to mortgage 
lending practices that in certain circumstances have lead to consumer 
abuses. The Banking Committee held hearings on the reverse redlining 
problem--unscrupulous lenders who were targeting the poorest consumers 
for high interest rate home equity loans. We heard from witnesses who 
were tricked into taking high interest rate loans, often with large up 
front fees. Many of these consumers were elderly people who were facing 
the loss of their homes due to these high cost mortgages.
  Last year, Senator Riegle and I introduced the Home Ownership and 
Equity Protection Act of 1993, to deal with this problem. That bill has 
largely been incorporated into this legislation as subtitle B of title 
I.
  Subtitle B provides additional consumer protection for nonpurchase 
money mortgage loans that either has an interest rate of 10 points or 
more above comparable Treasury rates, or that involves the payment of 
up front fees of 8 percent or more.
  Before the consumer goes to settlement on a mortgage that meets 
either of these tests, the lender must make certain disclosures, 
including the fact that the borrower may lose his or her home. These 
disclosures must come at least 3 days before settlement.
  One important feature of the bill provides that if a loan is sold, 
the consumer may raise the same legal defenses against the buyer of the 
loan that he or she could have raised against the original lender. 
Hopefully, this will force the secondary market to refuse to deal with 
unscrupulous lenders who engage in fraudulent practices, or who do not 
make the required disclosures.
  Subtitle B also provides the Federal Reserve Board with some 
flexibility to make exceptions from the prohibitions in the bill. 
However, exceptions may only be made if the Fed finds that it is in the 
interest of the borrowing public and will only apply to products that 
strengthen home ownership and equity protection.
  The Federal Reserve Board is required to prohibit any act or practice 
in connection with these mortgages that the Board finds to be unfair, 
deceptive, or designed to evade the act. I expect that the Board will 
use this authority to restrict or prohibit lending practices associated 
with these loans that have led to abuses in the marketplace.
  Subtitle A of title II of this legislation contains the Small 
Business Loan Securitization and Secondary Market Enhancement Act of 
1994. I introduced this bill (S. 384) last year with strong bipartisan 
support from my colleagues who recognize the importance of facilitating 
the flow of credit to our Nation's small businesses.
  Over the past several months, Chairman Riegle and I have worked 
together along with the administration and the bank regulators to 
improve this legislation. As a result, the small business loan 
securitization bill has the support of the administration, the bank 
regulators, and the banking and securities industries.
  While small businesses have been starved for credit, there is no 
credit crunch for home buyers. This is because we have a strong 
secondary market in residential mortgages that facilitates the flow of 
credit from the capital markets to those who want to finance a home.
  In 1984, Congress removed regulatory impediments to selling 
securities backed by pools of residential mortgages by enacting the 
Secondary Mortgage Market Enhancement Act [SMMEA].
  The Small Business Loan Securitization and Secondary Market 
Enhancement Act of 1994 extends the 1984 law to small business loans 
and encourages capital market investment in securities backed by small 
business loans. Title II simply removes unnecessary legal barriers in 
the securities, banking, pension and tax laws to facilitate the sale of 
securities backed by small business loans.
  The development of a secondary market in small business loans will 
help bankers, small business borrowers, and investors alike.
  Banks will be able to originate more small business loans without 
having to raise additional capital because the loans will be sold to 
investors rather than kept on the bank's books.
  Small businesses will gain access to the capital markets--making more 
credit available at lower prices.
  Institutional and individual investors will be able to fund small 
businesses by purchasing investment grade securities backed by small 
business loans.
  I want to stress that this legislation does not create a new Federal 
agency to guarantee these securities and does not put the taxpayers on 
the hook for potential losses on these securities. Instead, these 
securities will be sold by the private sector and will be backed by the 
pools of small business loans and other credit enhancements provided by 
the issuer of the securities.
  Subtitle B of title II also encourages small business lending by 
providing for Federal funds to be devoted to State capital access 
programs. These capital access programs give banks flexibility to make 
riskier--but prudent--loans to small businesses. The program provides 
for a reserve fund, consisting of payments made by the borrower, the 
lender and the State, to protect the bank against losses on the loan. 
To help States that already have capital enhancement programs in place 
and to encourage other States to develop these programs, the bill 
provides that States will be reimbursed for 50 percent of their 
payment.
  I am particularly pleased to have been able to ensure that a highly 
successful program in New York City, the Small Business Reserve Fund, 
will also be entitled to participate in this program. It is my 
understanding that the Small Business Reserve Fund has helped disburse 
at least 56 loans for a total of $2.9 million since its inception in 
January 1993. I expect that S. 1275 will go a long way toward enabling 
the Small Business Reserve Fund, and other similar programs, to greatly 
increase their loan disbursements.
  Title III of this legislation incorporates provisions from a number 
of bills that had been introduced concerning the regulatory burden 
currently placed on our insured financial institutions, as well as 
recommendations made by the Federal banking agencies and the Federal 
financial institutions examination committee's study on regulatory 
burden. These changes should significantly lower the costs of doing 
business for financial institutions while maintaining the safety and 
soundness of our regulatory system. The costs saved by this title 
should result in increased lending by our insured institutions, 
especially for the consumer and small business sectors of our economy.
  Mr. President, in summary, this bill contains many important 
provisions that will provide meaningful assistance to disadvantaged 
urban and rural communities, small businesses, and consumers. The other 
body has already acted on a companion bill, and I hope that we can pass 
this measure out of the Senate and proceed to a conference as soon as 
possible. This legislation is important to our country and to our 
economy. It should not be delayed.
  Mr. President, I think this is a good bill. There may be certain 
aspects of the bill that Members may not be entirely pleased with, but 
I say to those of my colleagues on the Republican side who are 
concerned that this is more Federal spending, that they will lose these 
dollars, that they will not be administered well as it relates to 
community development facilities, there has been an attempt to deal 
with that by requiring a local match, dollar for dollar, so that there 
will be accountability and, hopefully, with proper supervision we can 
create opportunity for growth in communities that do not ordinarily get 
an opportunity for capital when it is so badly needed, capital that is 
the engine of economic growth in this country, capital that should be 
made available to minority communities and the small business community 
that is often difficult, if not impossible, to get.
  Second, I think probably that area of the bill which gives deep 
concern to me is the fact that we do not have adequate markets for 
capital to the small business community and, therefore, by the 
securitization of small business loans, we will make available capital 
to small businesses throughout America that heretofore has not been 
made available. Without spending one penny of taxpayers' dollars, we 
really have the opportunity to leverage the amount of money that banks 
are putting out now to small businesses by six to seven times, at no 
risk to the Federal Treasury, by permitting securitization. We did that 
back in 1984 with home mortgages, and to date people can get mortgages 
because of the securitization.
  We are doing the same thing here. We will provide an opportunity for 
the marketplace to work and to create dollars that otherwise would not 
flow.
  If anyone goes in, and, yes, if it is empirical or anecdotal 
information, you will find that small business loans are difficult, if 
not impossible, to get today. If you want to get jobs and the creation 
of jobs for people, I would suggest to you let us give the fuel to the 
engine of economic growth, and that fuel is capital that is now being 
denied and not available because banks are just simply not going to do 
it because of the cost and time, et cetera. Let them be able to 
securitize that, pool these loans, sell them on the secondary market, 
and I think you will see a tremendous increase in jobs in this country 
next year, absolutely, just through this technique. So I commend it to 
my colleagues.
  Let me say I wish to thank Senator Riegle in using his position to 
craft together a bill that I think really makes a lot of sense, and 
this was a bipartisan effort. I commend the Senator for helping us to 
achieve this, and also Senators Shelby, Mack, and others who have 
encouraged important paperwork reduction to get the monkey off the 
backs of business, in this case the banks, that are being impeded by 
unnecessary regulations.
  Mr. BRADLEY. Mr. President, barely a year has passed since I rose on 
this floor to introduce my urban community-building initiative, eight 
bills designed to give creative people in communities at the heart of 
the turmoil the tools to rebuild strong, supportive communities. We 
sought to give children a safe and nurturing environment, to help 
communities repair themselves, to help individuals find and get to 
jobs, to help poor people develop assets for the future, and to restore 
strong financial institutions that help communities save their own 
money, invest, borrow, and grow.
  A year later, we are beginning to see communities pull together 
around their applications to become empowerment zones and enterprise 
communities, through which we will invest $1 billion for six of the 
innovative programs I proposed. One of the programs to give children a 
better chance in life, Community Schools, passed the Senate in the 
crime bill and is progressing through the House. And today we are 
finally passing legislation to bring basic financial institutions back 
to impoverished cities and rural areas, along the lines of the 
Community Capital Partnership Act that I introduced a year ago.
  Most of us take basic financial institutions for granted. We have 
savings and checking accounts, our bank lends our money to businesses 
in our communities, and we borrow ourselves when it comes time to buy a 
home or we have an inspiration to start a new business. But in most 
American cities, the only financial institution they know is the check-
cashing cubicle, which charges up to 5 percent just to cash a 
government check, and takes the money back out of the community. People 
who want to save have nowhere to go and businesses have no access to 
capital. Within the 165 squares miles that make up the areas most 
affected by the disorders in Los Angeles in 1992, there are 19 bank 
branches, as compared to 135 check cashing establishments.
  People who want to borrow have even fewer opportunities. They can buy 
a car or furniture on time, or on a rent-to-own plan, but if they want 
to borrow to get ahead by starting a small service business or a store, 
they are out of luck.
  The McNeil-Lehrer Newshour recently interviewed some ambitious 
entrepreneurs in rural Arkansas, one of them a woman named Jesse Pearl 
Jackson, who owns a beauty salon. She needed a loan for new equipment, 
and when she went to a bank, she says the loan officer--

     laughed me clean out the door. She said, ``You want money for 
     what?'' She said, ``You don't walk in here and ask me for an 
     application for a loan. That's not the way you do it.'' I 
     said, ``Well, if you'll tell me what to do, then I'll come 
     back, and I'll do it right the next time.'' She was laughing 
     so hard and making fun of me so bad I never went back.

  There is money to be made here, for any bank willing to take 
entrepreneurs like Ms. Jackson seriously, but large financial 
institutions without roots in the community are unlikely to see those 
opportunities.
  But there are islands of hope for people who want to save and invest 
in troubled communities. Last year, I visited La Casa de Don Pedro, 
which operates a credit union in a very poor section of Newark. La Casa 
is a multipurpose community organization that just happens to have a 
credit union. While I was there, a stream of members poured into the 
small building which houses the credit union, day care center, and 
other programs, depositing $20, $50, and $100 at a time. I did not see 
any banks in the vicinity of La Casa. If it were not for the credit 
union, many of the community's residents would have no place to deposit 
their money, secure small loans, or take advantage of other services we 
often take for granted.
  Community credit unions and banks may start small, but they don't 
have to stay small. Over the last 20 years, Shorebank of Chicago has 
shown the world that a financial institution that is committed to 
community development can lead a community back from the brink of 
economic and social decline. Since 1973, it has made $340 million in 
development financing, mainly for the purchase or rehabilitation of 
housing units in Chicago's South Shore neighborhood. Through its 
various subsidiaries and affiliates, it has been an active force in the 
revitalization of the South Shore. Shorebank has used a subsidiary, 
City Lands Corp., to make high-risk loans for housing development. It 
has used a nonprofit affiliate, the Neighborhood Institute, to help 
disadvantaged residents achieve their GED's, start up small businesses, 
and train for jobs available in the community. It has used its 
depository institution, South Shore Bank, to make loans to people 
seeking to renovate apartment buildings and establish small businesses 
that generate jobs in the community.
  Full-fledged banks like Shorebank are the best-known of the community 
development financial institutions, but we cannot expect that every 
community will grow an institution as large and well-capitalized as 
Shorebank and do so over night. At my urging, this legislation not only 
addresses banks, but also community development credit unions, 
revolving loan funds, micro-loan funds, and community development 
corporations. All these emerging institutions would be eligible for 
assistance under this bill, and I am pleased and I salute the chairman, 
Senator Riegle, for his agreement to increase funding for a revolving 
loan fund for Community Development Credit Unions, giving them 
immediate access to capital so they can grow.
  One of the best examples of a community-building institution that is 
not a bank, but has nonetheless responded to the need for capital and 
savings, is New Community Corp. in Newark, NJ. New Community Corp. was 
formed in the wake of the Newark riots of 1967. Over the last 25 years, 
it and its subsidiaries have developed over 2,500 housing units, 25,000 
square feet of office space, and an $11 million extended care facility. 
New Community has also built a $15 million shopping center, which 
contains Central Newark's only major grocery store built since 1967.

  New Community's founder, Msgr. William Linder, testified last year 
before Congress:

       I have seen bank branch after bank branch close because the 
     bank did not find serving our community profitable. There was 
     always the same trend. Managers were frequently changed, 
     service became poor, the facility was always dirty. Frankly, 
     no one in authority cared about our community.

  But instead of giving up hope, Monsignor Linder and others started a 
credit union. He now presides over a credit union with about $1.7 
million in assets that provides basic banking services to community 
residents. Last year, New Community's credit union made 165 loans, 
mainly to poor residents of Newark's Central Ward. Basic banking 
services like check cashing, consumer loans, and savings accounts are 
taken for granted by a lot of people, but in places like the central 
ward of Newark they have become scarce and prized resources. Like 
Shorebank, New Community, in its own way, has recreated opportunities 
for its community.
  This bill does not, and should not, seek to create organizations that 
will be perpetually dependent on government for support. Instead, it 
seeks to reach in at a point of leverage in capital-starved communities 
and get them started. It does not set development strategies for either 
the institutions or the communities they serve. Instead, it lets those 
involved in the struggle for economic recovery find their own path.
  I am pleased that there has been such widespread support for the idea 
of expanding community financial institutions, even though it is a 
relatively new idea to many people. I still hear some wariness, though, 
about this investment from people who argue that poor people do not 
save and that distressed communities do not have the resources to 
support economic development.
  The evidence contradicts this cynical view. In Paterson, NJ, last 
year, I visited one of the few banks that had not left that city. I 
struck up a conversation with a customer, who volunteered that she was 
depositing $100. Surprised, I asked her how much she generally saved in 
a week. She told me that she and her husband had five children and 
earned $20,000 last year, below the poverty line. But even on this 
income, they saved $3,000 that year, for health emergencies, for 
college, or to give their children a chance at a better life. Their 
experience tells me that saving for the future is a fundamental value 
of our country, not limited to the middle class, and that if we all had 
access to the institutions that make capitalism work, we could all be a 
part of vital, self-sufficient communities.
  Mr. RIEGLE. Mr. President, I appreciate the statement of the Senator 
from New Jersey, [Mr. Bradley] for his interest and leadership in this 
area. We have made very good progress, but with the help of a number of 
Senators on a bipartisan basis, and particularly my ranking minority 
member, Senator D'Amato. I will have more to say about that shortly.
  I acknowledge and thank Senator Bradley for his important 
contribution in this area.


                    privilege of the floor--s. 1275

  Mr. BRADLEY. Mr. President, I ask unanimous consent that privilege of 
the floor be granted to the following member of the chairman of the 
Banking Committee's staff: Kay Bondehagen, during the pendency of S. 
1275.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________