[Congressional Record Volume 145, Number 22 (Monday, February 8, 1999)]
[Extensions of Remarks]
[Page E153]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E153]]



 INTRODUCTION OF THE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND 
                         AMENDMENTS ACT OF 1999

                                 ______
                                 

                          HON. BRUCE F. VENTO

                              of minnesota

                    in the house of representatives

                        Monday, February 8, 1999

  Mr. VENTO. Mr. Speaker, today I am introducing legislation to 
reauthorize the programs at the Community Development Financial 
Institutions Fund. A section-by-section analysis of the bill follows 
this statement.
  The activities at the CDFI Fund--the CDFI and the Bank Enterprise Act 
(BEA) programs--have received high praise over the years as well as 
intense scrutiny. This legislation, basically a product of our 
Subcommittee's work from last year, with input from the Oversight 
Subcommittee of the Banking Committee, draws upon both praise and 
scrutiny to further the program for the future. The Fund has made 
numerous Administrative improvements already. With the measures 
included in this proposed legislation, many of those would be 
solidified so that problems do not occur in the future and so that 
everyone can focus on the positive impacts the CDFI programs have had 
in our communities.
  As a strong supporter of local efforts of community development 
financial groups and financial institutions that focus on undeserved 
communities, I know that the CDFI programs and related programs that 
promote microenterprise activities and housing activities are critical 
to rebuilding and strengthening neighborhoods and their residents. The 
CDFI intermediaries and institutions that received BEA funds can be the 
foundation and the building blocks of economic opportunity and 
employment. They can serve as instigators of change and partners in 
business, housing and community initiatives.
  Mr. Speaker, I am pleased to introduce this reauthorization 
legislation with the Gentlewoman from New Jersey, Mrs. Roukema, with 
whom I worked to draft this bill over the course of last year. I hope 
that we will be able to move this bill early in this session so that we 
can ultimately enact these improvements into law this year.

  Community Development Financial Institutions Fund Amendments Act of 
                                  1999


               Section 1. Short Title; Table of Contents

   Section 2. Change of Status of the Fund; Miscellaneous Technical 
                              Corrections

       This section changes the purpose section of the Community 
     Development Banking and Financial Institutions Act of 1994 
     (the Act) to add language that clarifies that the purpose of 
     the Act is to promote economic revitalization and community 
     development not only through investment in and assistance to 
     community development financial institutions (CDFIs) but also 
     through enhancing the liquidity of community development 
     financial institutions, and through incentives to insured 
     depository institutions that increase lending and other 
     assistance and investment in both economically distressed 
     communities and CDFIs.
       This section also changes the Act to reflect the intent of 
     appropriations provisions that made the CDFI Fund a wholly-
     owned government corporation within the Treasury Department. 
     Technical amendments to the Act eliminate the concept of a 
     Presidentially appointed Administrator of the Fund, and, as 
     with other Treasury programs, vest all the duties and 
     responsibilities of the CDFI Fund in the Secretary of the 
     Treasury (subject to existing statutory delegation 
     authority). The Secretary may appoint all officers and 
     employees of the CDFI Fund, including a Director.
       This section makes technical changes to clarify that the 
     Inspector General of the Treasury Department is the Inspector 
     General of the CDFI Fund.
       This section also gives the Secretary the authority to 
     prescribe the necessary regulations and procedures.


Section 3. Amendments to Programs Administered by the Fund and the Bank 
                         Enterprise Act of 1991

       This section makes minor changes to the CDFI Awards Program 
     administered by the CDFI Fund. The amendments provide that, 
     for the training and technical assistance programs already 
     authorized by the Act, the Fund may enter into cooperative 
     agreements in addition to the other methods described.
       This section amends the Bank Enterprise Act (BEA) Awards 
     Program for insured depository institutions. The subsection 
     provides technical amendments and clarifies that the Fund may 
     provide assessment credits to insured depository institutions 
     for increases in loans and other assistance provided to 
     CDFIs. The provisions clarify the manner in which the Fund 
     may take account of forms of assistance provided by insured 
     depository institutions. In addition, the provisions permit 
     the Fund to use alternative eligibility requirements to 
     determine the definition of a ``qualified distressed 
     community.'' Current criteria are difficult to interpret and 
     may exclude some insured depository institutions, 
     particularly those serving rural areas, from participation in 
     the BEA Program.


                 Section 4. Extension of Authorization

       This section authorizes appropriations for fiscal years 
     2000, 2001, 2002, and 2003 for $95 million, $100 million, 
     $105 million and $110 million, respectively.


  Section 5. Amendments to Small Business Capital Enhancement Program

       This section removes statutory barriers that currently 
     block the CDFI Fund from administering the SBCE Program. The 
     SBCE program would encourage states to implement small 
     business ``capital access programs'' with the participation 
     of certain depository institutions. These ``capital access 
     programs'' expand access to small business loans by creating 
     a loan loss reserve, funded by the depository institution, 
     the borrower, and the state. This reserve fund allows banks 
     to make more difficult small business loans. The Fund, under 
     the SBCE Program, could reimburse participating states for a 
     portion of funds contributed to these loan loss reserve 
     accounts.
       This section allows CDIFs to participate in the SBCE 
     Program. It removes the requirement that the SBCE Program 
     receive a threshold appropriation before beginning 
     operations. And, this section will allow the CDIF fund (if 
     the SBCE Program is operating) to reimburse participating 
     states according to criteria established by the CDFI Fund in 
     an amount up to 50% of the amount of contributions by the 
     states, until funds made available for this purpose are 
     expended. This permits the Fund to target reimbursements to 
     states that have not yet established these programs or that 
     have insufficient funds for effective programs.


                    Section 6. Additional Safeguards

       This section adds the requirement that the Fund use a 
     scoring system as one of the tools to evaluate the merits of 
     applications. It also requires the use of a multi-person 
     review panel consisting of at least three persons, to apply 
     the scoring system in order to reduce discretion and provide 
     a mix of perspectives in the application review process. At 
     least \1/3\ of the members of the panel shall not be officers 
     or employees of any government.
       This section adds reporting requirements by the Fund to the 
     Congress in their annual report. The CDFI Fund must include 
     in their annual report its use of outside consultants, 
     including the services provided by the consultants and the 
     fees paid for those services. The report must detail the 
     Fund's compliance with the Federal Manager's Financial 
     Integrity Act (FMFIA). The FMFIA requires Federal programs to 
     have controls in place to ensure that assets are safeguarded 
     from waste, fraud, and abuse. The CDFI fund must also report 
     any material internal control weaknesses identified in its 
     most recent external audit along with corrective actions that 
     will be taken to address such weaknesses. This section 
     requires that the Fund report on the implementation of the 
     objective scoring system in its first annual report following 
     enactment of this legislation.
       This section requires the GAO to submit to Congress, within 
     18-months of enactment, a study evaluating the structure, 
     governance and performance of the CDFI Fund.
       This section also requires the CDFI Fund to notify Congress 
     in advance of hiring a contractor under the SBA's Section 
     8(a) contracting program.

     

                          ____________________