[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 AND BANKING FINANCIAL INSTITUTIONS ACT OF 1993

  The Senate continued with the consideration of the bill.
  Mr. RIEGLE. Mr. President, in a moment, after I have completed giving 
a summary of it, a managers' amendment will be coming, in my behalf and 
on behalf of Senator D'Amato, representing both sides of the committee. 
This managers' amendment contains a number of improvements and 
refinements and additions to the bill as it has been laid down. All of 
these provisions have been agreed to by Senator D'Amato and by me.
  I want to briefly describe the most important of those changes. 
Before I do, I ask unanimous consent that a longer summary of the 
managers' amendment be printed in the Record now along with the text of 
the amendment.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

                     Summary of Managers' Amendment


  Amendments to Title i--Community Development and Consumer Protection

       Subtitle A: Community Development Banking and Financial 
     Institutions Act--
       Permits a State agency to apply for assistance if there are 
     no existing community development financial institutions in 
     the State or other entities that have the capacity.
       Requires an assisted organization to keep records on 
     gender, race, etc. of persons served by the organization.
       Allows CDFIs to use Federal funds to meet matching 
     requirements in limited circumstances. The Administrator of 
     the Fund could reduce the match by 50 percent, or permit 
     funds provided under certain Federal grant programs to be 
     used to meet part of the match requirement, in certain 
     hardship cases. Further, rural institutions with less than 
     $100,000 in assets may receive up to $25,000 without a non-
     Federal match. No more than 25 percent of the total funds 
     awarded by the Fund may be matched under these discretionary 
     standards.
       Requires the Fund to consult with tribal governments when 
     evaluating a CDFI serving an Indian reservation, requires a 
     CDFI serving a reservation to coordinate community 
     development efforts with tribal governments, and mandates a 
     study on barriers to private lending on Indian reservations.
       Makes several technical corrections to S. 1275 as reported 
     by the Banking Committee.
       Subtitle B: Home Ownership and Equity Protection (Consumer 
     Protection for High Cost Mortgages)--
       Exempts ``reverse mortgages'' from Subtitle B and provides 
     more appropriate disclosures for such mortgages. ``Reverse 
     Mortgages'' are mortgages where funds are advanced but the 
     principal and interest are not payable until the premises are 
     sold, the consumer moves, or the consumer dies.


               Title II--Small Business Capital Formation

       Subtitle A: Small Business Loan Securitization--
       Changes tax language to ``sense of the Senate'' that small 
     business loan investment conduits should be taxed like real 
     estate conduits.
       Allows equipment leases by small businesses, as well as 
     loans to small businesses, to be securitized.
       Subtitle B: Small Business Capital Enhancement
       Permits a political subdivision of a State, as well as a 
     State, to establish an eligible Capital Access Program, if it 
     has a population in excess of the population of the least 
     populated State, or if the Secretary of HUD determines has 
     the capacity to participate in the program.
       Grandfathers eligibility of certain State Capital Access 
     Programs. Provides that if a State statute, enacted prior to 
     the date of enactment of this title, authorized a 
     participating financial institution to count contributions 
     and interest earned thereon as assets of the institution, the 
     institution may continue to do so.


       Title III--Paperwork Reduction and Regulatory Improvement

       Modifies the audit requirement in section 36(i) of the FDI 
     Act so that well-capitalized, well-managed institutions with 
     CAMEL ratings of 1 or 2 and assets over $9 billion may meet 
     audit committee requirements if comparable functions are 
     provided at the holding company level and, at the same time, 
     no large bank customers sit on the holding company audit 
     committee.
       Clarifies joint regulatory authority to implement any 
     regulations on limited bank liability for foreign branch 
     deposits.
       Streamlines broadcast disclosures for radio advertising of 
     consumer leasing.
       Repeals duplicative lending limit for loans collateralized 
     by securities.
       Extends for 5 years interlocks that were grandfathered 
     under the Depository Institution Management Interlocks Act.
       Clarifies that well-capitalized institutions need not 
     register as deposit brokers.
       Requires the regulatory authorities to take into account 
     the size and activities of financial institutions and not to 
     cause undue reporting burdens in connection with revisions of 
     the risk-based capital standards.
       Eliminates the statutory provision requiring specific board 
     of directors approval before a mortgage or home equity line 
     of credit is made by a financial institution to an officer of 
     that institution. The overall borrowing caps contained in the 
     insider lending statutory provisions and regulations would 
     still apply to these extensions of credit.
       Modifies the civil liability provisions of the Truth in 
     Savings law to eliminate statutory damages but not to 
     eliminate actual damages for advertising mistakes.
       Amends the Truth in Savings law to expand its scope to 
     include business accounts for unincorporated nonbusinesses.
       Modifies the Expedited Funds Availability Act to give the 
     Federal Reserve Board greater flexibility to extend the check 
     hold period for local checks if there are ``significantly 
     increased check losses'' due to the funds availability 
     requirement under the permanent schedule now in law.
       Modifies the requirements of Section 132 of FDICIA to give 
     regulatory agencies more discretion on asset quality, 
     earnings and market valuation standards and to allow the 
     agencies to issue guidelines instead of regulations.
       Modifies the contemporaneous recordkeeping of Section 13 of 
     the Federal Deposit Insurance Act of deposits by public 
     entities at failed banks.
       Clarifies that bankers' banks can provide correspondent 
     banking services to their members.

  Mr. RIEGLE. Mr. President, I will do this quickly, and I want 
everybody to be on notice as to these modifications.
  First, the managers' amendment makes a few changes to the community 
development bank provisions of title I. Under the managers' amendment, 
a State agency may apply for assistance as a community development 
financial institution if there is no existing community development 
financial institution in the State, and no entity within the State that 
has the capacity to become a community development financial 
institution.
  As a general rule, the bill requires institutions receiving 
assistance to match those funds with private capital. The managers' 
amendment allows institutions to use other forms of Federal assistance 
to meet the matching requirements in limited circumstances.
  The managers' amendment also requires an institution receiving 
assistance to keep data on the individuals utilizing the services of 
the assisted institution. This will ensure that low-income residents of 
the investment areas are adequately served. The amendment requires the 
new fund to consult with native American tribal governments when 
evaluating a CDFI serving an Indian reservation, requires a CDFI 
serving a reservation to coordinate community development efforts with 
tribal governments, and mandates a study of barriers to lending on 
Indian reservations.
  In subtitle B of title I, the provision strengthening consumer 
protections for high cost mortgages, the Managers' Amendment exempts 
so-called reverse mortgages from the bill's definition. Reverse 
mortgages are arrangements whereby homeowners receive payments over 
time, with a balloon repayment due at the end. These are sometimes used 
by elderly homeowners, who make ends meet in their later years by 
tapping into the equity they have built up in their homes. Recognizing 
that these transactions serve a legitimate purpose for older Americans, 
the managers' amendment provides more appropriate, special disclosures 
for reverse mortgages.
  Title II of S. 1275 contains two provisions designed to make it 
easier for small businesses to raise and borrow capital. The first, 
small business loan securitization, includes a section providing that 
entities that pool and securitize small business loans be taxed in the 
same way as conduits that securitize residential mortgages. To comply 
with constitutional requirements on the origin of tax bills, the 
managers' amendment changes the bill's language to sense-of-the-Senate 
language. The managers' amendment also permits equipment leases to be 
included in pools with small business loans.
  Subtitle B of title II provides Federal assistance to State small 
business lending programs. The managers' amendment allows a political 
subdivision of a State, as well as a State, to establish an eligible 
capital access program. This will allow New York City, Akron, OH, and 
Milwaukee, WI, all of which have capital access programs, to apply for 
Federal matching funds. The managers' amendment also grandfathers 
certain existing State capital access programs that do not exactly 
conform to the requirements of the bill, such that they remain eligible 
to participate.
  Finally, title III of the bill contains more than 20 provisions 
designed to reduce the paperwork required of banks and thrifts and to 
improve the regulation of those institutions. The managers' amendment 
contains more than a dozen additional provisions in this area. These 
include: Requiring bank regulators to consider the size and activities 
of financial institutions, and to tailor reporting burdens accordingly; 
repealing a duplicative, inconsistent lending limit for loans 
collateralized by securities; clarifying that well-capitalized 
institutions need not register with the FDIC as deposit brokers; 
allowing well-capitalized, well-managed institutions with assets of 
over $9 billion to meet statutory audit committee requirements at the 
holding company level in certain circumstances; streamlining disclosure 
requirements for radio advertising of consumer leasing; and eliminating 
statutory damages from the civil liability provisions of the Truth in 
Savings Act related to advertisements.
  As I say, the provisions of this managers' amendment, which are 
supported both by me and by Senator D'Amato, will improve each title of 
the bill.
  I do not know if my colleague has any comment he wants to make on 
that at this point.
  Mr. D'AMATO. I have none.


                           Amendment No. 1523

     (Purpose: To make a series of technical and other amendments)

  Mr. RIEGLE. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The amendment will be stated.
  The legislative clerk read as follows:

       The Senator from Michigan [Mr. Riegle], for himself and Mr. 
     D'Amato, proposes an amendment numbered 1523.

  Mr. RIEGLE. I ask that further reading of the amendment be dispensed 
with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. RIEGLE. I ask unanimous consent, then, that the managers' 
amendment be adopted at this point.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  So the amendment (No. 1523) was agreed to.
  The PRESIDING OFFICER. Who seeks recognition?
  The Chair recognizes the Senator from Alaska.
  Mr. MURKOWSKI. Mr. President, I ask unanimous consent that I may be 
allowed to speak as if in morning business for about 10 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Alaska is recognized for 10 minutes as if in morning 
business.
  Mr. MURKOWSKI. Mr. President, I thank the Chair and my colleagues.

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