[Congressional Record Volume 146, Number 38 (Thursday, March 30, 2000)]
[Senate]
[Pages S1926-S1941]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   LAUNCHING OUR COMMUNITIES' ACCESS TO LOCAL TELEVISION ACT OF 2000

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
proceed to the consideration of S. 2097, which the clerk will report by 
title.
  The legislative clerk read as follows:

       A bill (S. 2097) to authorize loan guarantees in order to 
     facilitate access to local television broadcast signals in 
     unserved areas, and for other purposes.


[[Page S1927]]


  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 insert in lieu 
thereof the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Launching Our Communities' 
     Access to Local Television Act of 2000''.

     SEC. 2. PURPOSE.

       The purpose of this Act is to facilitate access, on a 
     technologically neutral basis and by December 31, 2006, to 
     signals of local television stations for households located 
     in unserved areas and underserved areas.

     SEC. 3. LOCAL TELEVISION LOAN GUARANTEE BOARD.

       (a) Establishment.--There is established the LOCAL 
     Television Loan Guarantee Board (in this Act referred to as 
     the ``Board'').
       (b) Members.--
       (1) In general.--Subject to paragraph (2), the Board shall 
     consist of the following members:
       (A) The Secretary of the Treasury, or the designee of the 
     Secretary.
       (B) The Chairman of the Board of Governors of the Federal 
     Reserve System, or the designee of the Chairman.
       (C) The Secretary of Agriculture, or the designee of the 
     Secretary.
       (2) Requirement as to designees.--An individual may not be 
     designated a member of the Board under paragraph (1) unless 
     the individual is an officer of the United States pursuant to 
     an appointment by the President, by and with the advice and 
     consent of the Senate.
       (c) Functions of the Board.--
       (1) In general.--The Board shall determine whether or not 
     to approve loan guarantees under this Act. The Board shall 
     make such determinations consistent with the purpose of this 
     Act and in accordance with this subsection and section 4 of 
     this Act.
       (2) Consultation authorized.--
       (A) In general.--In carrying out its functions under this 
     Act, the Board shall consult with such departments and 
     agencies of the Federal Government as the Board considers 
     appropriate, including the Department of Commerce, the 
     Department of Agriculture, the Department of the Treasury, 
     the Department of Justice, the Department of the Interior, 
     the Board of Governors of the Federal Reserve System, the 
     Federal Communications Commission, the Federal Trade 
     Commission, and the National Aeronautics and Space 
     Administration.
       (B) Response.--A department or agency consulted by the 
     Board under subparagraph (A) shall provide the Board such 
     expertise and assistance as the Board requires to carry out 
     its functions under this Act.
       (3) Approval by majority vote.--The determination of the 
     Board to approve a loan guarantee under this Act shall be by 
     a vote of a majority of the Board.

     SEC. 4. APPROVAL OF LOAN GUARANTEES.

       (a) Authority To Approve Loan Guarantees.--Subject to the 
     provisions of this section and consistent with the purpose of 
     this Act, the Board may approve loan guarantees under this 
     Act.
       (b) Regulations.--
       (1) Requirements.--The Administrator (as defined in section 
     5 of this Act), under the direction of and for approval by 
     the Board, shall prescribe regulations to implement the 
     provisions of this Act and shall do so not later than 120 
     days after funds authorized to be appropriated under section 
     10 of this Act have been appropriated in a bill signed into 
     law.
       (2) Elements.--The regulations prescribed under paragraph 
     (1) shall--
       (A) set forth the form of any application to be submitted 
     to the Board under this Act;
       (B) set forth time periods for the review and consideration 
     by the Board of applications to be submitted to the Board 
     under this Act, and for any other action to be taken by the 
     Board with respect to such applications;
       (C) provide appropriate safeguards against the evasion of 
     the provisions of this Act;
       (D) set forth the circumstances in which an applicant, 
     together with any affiliate of an applicant, shall be treated 
     as an applicant for a loan guarantee under this Act;
       (E) include requirements that appropriate parties submit to 
     the Board any documents and assurances that are required for 
     the administration of the provisions of this Act; and
       (F) include such other provisions consistent with the 
     purpose of this Act as the Board considers appropriate.
       (3) Construction.--(A) Nothing in this Act shall be 
     construed to prohibit the Board from requiring, to the extent 
     and under circumstances considered appropriate by the Board, 
     that affiliates of an applicant be subject to certain 
     obligations of the applicant as a condition to the approval 
     or maintenance of a loan guarantee under this Act.
       (B) If any provision of this Act or the application of such 
     provision to any person or entity or circumstance is held to 
     be invalid by a court of competent jurisdiction, the 
     remainder of this Act, or the application of such provision 
     to such person or entity or circumstance other than those as 
     to which it is held invalid, shall not be affected thereby.
       (c) Authority Limited by Appropriations Acts.--The Board 
     may approve loan guarantees under this Act only to the extent 
     provided for in advance in appropriations Acts. The Board may 
     delegate to the Administrator (as defined in section 5 of 
     this Act) the authority to approve loan guarantees of up to 
     $20,000,000. To the extent the Administrator is delegated 
     such authority, the Administrator shall comply with the terms 
     of this Act applicable to the Board.
       (d) Requirements and Criteria Applicable to Approval.--
       (1) In general.--The Board shall utilize the underwriting 
     criteria developed under subsection (g), and any relevant 
     information provided by the departments and agencies with 
     which the Board consults under section 3, to determine which 
     loans may be eligible for a loan guarantee under this Act.
       (2) Prerequisites.--In addition to meeting the underwriting 
     criteria under paragraph (1), a loan may not be guaranteed 
     under this Act unless--
       (A) the loan is made to finance the acquisition, 
     improvement, enhancement, construction, deployment, launch, 
     or rehabilitation of the means by which local television 
     broadcast signals will be delivered to an unserved area or 
     underserved area;
       (B) the proceeds of the loan will not be used for operating 
     expenses;
       (C) the proposed project, as determined by the Board in 
     consultation with the National Telecommunications and 
     Information Administration, is not likely to have a 
     substantial adverse impact on competition that outweighs the 
     benefits of improving access to the signals of a local 
     television station in an unserved area or underserved area;
       (D) the loan is provided by an insured depository 
     institution (as that term is defined in section 3 of the 
     Federal Deposit Insurance Act) that is acceptable to the 
     Board, and has terms, in the judgment of the Board, that are 
     consistent in material respects with the terms of similar 
     obligations in the private capital market;
       (E) repayment of the loan is required to be made within a 
     term of the lesser of--
       (i) 25 years from the date of the execution of the loan; or
       (ii) the economically useful life, as determined by the 
     Board or in consultation with persons or entities deemed 
     appropriate by the Board, of the primary assets to be used in 
     the delivery of the signals concerned; and
       (F) the loan meets any additional criteria developed under 
     subsection (g).
       (3) Protection of united states financial interests.--The 
     Board may not approve the guarantee of a loan under this Act 
     unless--
       (A) the Board has been given documentation, assurances, and 
     access to information, persons, and entities necessary, as 
     determined by the Board, to address issues relevant to the 
     review of the loan by the Board for purposes of this Act; and
       (B) the Board makes a determination in writing that--
       (i) to the best of its knowledge upon due inquiry, the 
     assets, facilities, or equipment covered by the loan will be 
     utilized economically and efficiently;
       (ii) the terms, conditions, security, and schedule and 
     amount of repayments of principal and the payment of interest 
     with respect to the loan protect the financial interests of 
     the United States and are reasonable;
       (iii) to the extent possible, the value of collateral 
     provided by an applicant is at least equal to the unpaid 
     balance of the loan amount covered by the loan guarantee (the 
     ``Amount'' for purposes of this clause); and if the value of 
     collateral provided by an applicant is less than the Amount, 
     the additional required collateral is provided by any 
     affiliate of the applicant; and if the combined value of 
     collateral provided by an applicant and any affiliate is not 
     at least equal to the Amount, the collateral from such 
     affiliate represents all of such affiliate's assets;
       (iv) all necessary and required regulatory and other 
     approvals, spectrum rights, and delivery permissions have 
     been received for the loan, the project under the loan, and 
     the Other Debt, if any, under subsection (f)(2)(B);
       (v) the loan would not be available on reasonable terms and 
     conditions without a loan guarantee under this Act; and
       (vi) repayment of the loan can reasonably be expected.
       (e) Considerations.--
       (1) Type of market.--
       (A) Priority considerations.--To the maximum extent 
     practicable, the Board shall give priority in the approval of 
     loan guarantees under this Act in the following order: First, 
     to projects that will serve the greatest number of households 
     in unserved areas; and second, to projects that will serve 
     the greatest number of households in underserved areas. In 
     each instance, the Board shall consider the project's 
     estimated cost per household to be served.
       (B) Prohibition.--The Board may not approve a loan 
     guarantee under this Act for a project that is designed 
     primarily to serve 1 or more of the 40 most populated 
     designated market areas (as that term is defined in 
     section 122(j) of title 17, United States Code).
       (2) Other considerations.--The Board shall consider other 
     factors, which shall include projects that would--
       (A) offer a separate tier of local broadcast signals, but 
     for applicable Federal, State, or local laws or regulations;
       (B) provide lower projected costs to consumers of such 
     separate tier; and
       (C) enable the delivery of local broadcast signals 
     consistent with the purpose of this Act by a means reasonably 
     compatible with existing systems or devices predominantly in 
     use.
       (f) Guarantee Limits.--
       (1) Limitation on aggregate value of loans.--The aggregate 
     value of all loans for which loan guarantees are issued under 
     this Act (including the unguaranteed portion of loans issued 
     under paragraph (2)(A)) and Other Debt under paragraph (2)(B) 
     may not exceed $1,250,000,000.
       (2) Guarantee level.--A loan guarantee issued under this 
     Act--
       (A) may not exceed an amount equal to 80 percent of a loan 
     meeting in its entirety the requirements of subsection 
     (d)(2)(A). If only a portion of a loan meets the requirements 
     of that subsection, the Board shall determine that percentage 
     of the loan meeting such requirements

[[Page S1928]]

     (the ``applicable portion'') and may issue a loan guarantee 
     in an amount not exceeding 80 percent of the applicable 
     portion; or
       (B) may, as to a loan meeting in its entirety the 
     requirements of subsection (d)(2)(A), cover the amount of 
     such loan only if that loan is for an amount not exceeding 80 
     percent of the total debt financing for the project, and 
     other debt financing (also meeting in its entirety the 
     requirements of subsection (d)(2)(A)) from the same source 
     for a total amount not less than 20 percent of the total debt 
     financing for the project (``Other Debt'') has been approved.
       (g) Underwriting Criteria.--Within the period provided for 
     under subsection (b)(1), the Board shall, in consultation 
     with the Director of the Office of Management and Budget and 
     an independent public accounting firm, develop underwriting 
     criteria relating to the guarantee of loans that are 
     consistent with the purpose of this Act, including 
     appropriate collateral and cash flow levels for loans 
     guaranteed under this Act, and such other matters as the 
     Board considers appropriate.
       (h) Credit Risk Premiums.--
       (1) Establishment and acceptance.--The Board may establish 
     and approve the acceptance of credit risk premiums with 
     respect to a loan guarantee under this Act in order to cover 
     the cost, as determined under section 504(b)(1) of the 
     Federal Credit Reform Act of 1990, of the loan guarantee. To 
     the extent that appropriations of budget authority are 
     insufficient to cover the cost, as so determined, of a loan 
     guarantee under this Act, credit risk premiums shall be 
     accepted from a non-Federal source under this subsection on 
     behalf of the applicant for the loan guarantee.
       (2) Credit risk premium amount.--
       (A) In general.--The Board shall determine the amount of 
     any credit risk premium to be accepted with respect to a loan 
     guarantee under this Act on the basis of--
       (i) the financial and economic circumstances of the 
     applicant for the loan guarantee, including the amount of 
     collateral offered;
       (ii) the proposed schedule of loan disbursements;
       (iii) the business plans of the applicant for providing 
     service;
       (iv) any financial commitment from a broadcast signal 
     provider; and
       (v) the concurrence of the Director of the Office of 
     Management and Budget as to the amount of the credit risk 
     premium.
       (B) Proportionality.--To the extent that appropriations of 
     budget authority are sufficient to cover the cost, as 
     determined under section 504(b)(1) of the Federal Credit 
     Reform Act of 1990, of loan guarantees under this Act, the 
     credit risk premium with respect to each loan guarantee shall 
     be reduced proportionately.
       (C) Payment of premiums.--Credit risk premiums under this 
     subsection shall be paid to an account (the ``Escrow 
     Account'') established in the Treasury which shall accrue 
     interest and such interest shall be retained by the account, 
     subject to subparagraph (D).
       (D) Deductions from escrow account.--If a default occurs 
     with respect to any loan guaranteed under this Act and the 
     default is not cured in accordance with the terms of the 
     underlying loan or loan guarantee agreement, the 
     Administrator, in accordance with subsections (h) and (i) of 
     section 5 of this Act, shall liquidate, or shall cause to be 
     liquidated, all assets collateralizing such loan as to which 
     it has a lien or security interest. Any shortfall between the 
     proceeds of the liquidation net of costs and expenses 
     relating to the liquidation, and the guarantee amount paid 
     pursuant to this Act shall be deducted from funds in the 
     Escrow Account and credited to the Administrator for payment 
     of such shortfall. At such time as determined under 
     subsection (d)(2)(E) when all loans guaranteed under this Act 
     have been repaid or otherwise satisfied in accordance with 
     this Act and the regulations promulgated hereunder, remaining 
     funds in the Escrow Account, if any, shall be refunded, on a 
     pro rata basis, to applicants whose loans guaranteed under 
     this Act were not in default, or where any default was cured 
     in accordance with the terms of the underlying loan or loan 
     guarantee agreement.
       (i) Judicial Review.--The decision of the Board to approve 
     or disapprove the making of a loan guarantee under this Act 
     shall not be subject to judicial review.

     SEC. 5. ADMINISTRATION OF LOAN GUARANTEES.

       (a) In General.--The Administrator of the Rural Utilities 
     Service (in this Act referred to as the ``Administrator'') 
     shall issue and otherwise administer loan guarantees that 
     have been approved by the Board in accordance with sections 3 
     and 4 of this Act.
       (b) Security for Protection of United States Financial 
     Interests.--
       (1) Terms and conditions.--An applicant shall agree to such 
     terms and conditions as are satisfactory, in the judgment of 
     the Board, to ensure that, as long as any principal or 
     interest is due and payable on a loan guaranteed under this 
     Act, the applicant--
       (A) shall maintain assets, equipment, facilities, and 
     operations on a continuing basis;
       (B) shall not make any discretionary dividend payments that 
     impair its ability to repay obligations guaranteed under this 
     Act; and
       (C) shall remain sufficiently capitalized.
       (2) Collateral.--
       (A) Existence of adequate collateral.--An applicant shall 
     provide the Board such documentation as is necessary, in the 
     judgment of the Board, to provide satisfactory evidence that 
     appropriate and adequate collateral secures a loan guaranteed 
     under this Act.
       (B) Form of collateral.--Collateral required by 
     subparagraph (A) shall consist solely of assets of the 
     applicant, any affiliate of the applicant, or both (whichever 
     the Board considers appropriate), including primary assets to 
     be used in the delivery of signals for which the loan is 
     guaranteed.
       (C) Review of valuation.--The value of collateral securing 
     a loan guaranteed under this Act may be reviewed by the 
     Board, and may be adjusted downward by the Board if the Board 
     reasonably believes such adjustment is appropriate.
       (3) Lien on interests in assets.--Upon the Board's approval 
     of a loan guarantee under this Act, the Administrator shall 
     have liens on assets securing the loan, which shall be 
     superior to all other liens on such assets, and the value of 
     the assets (based on a determination satisfactory to the 
     Board) subject to the liens shall be at least equal to the 
     unpaid balance of the loan amount covered by the loan 
     guarantee, or that value approved by the Board under section 
     4(d)(3)(B)(iii) of this Act.
       (4) Perfected security interest.--With respect to a loan 
     guaranteed under this Act, the Administrator and the lender 
     shall have a perfected security interest in assets securing 
     the loan that are fully sufficient to protect the financial 
     interests of the United States and the lender.
       (5) Insurance.--In accordance with practices in the private 
     capital market, as determined by the Board, the applicant for 
     a loan guarantee under this Act shall obtain, at its expense, 
     insurance sufficient to protect the financial interests of 
     the United States, as determined by the Board.
       (c) Assignment of Loan Guarantees.--The holder of a loan 
     guarantee under this Act may assign the loan guaranteed under 
     this Act in whole or in part, subject to such requirements as 
     the Board may prescribe.
       (d) Modification.--The Board may approve the modification 
     of any term or condition of a loan guarantee or a loan 
     guaranteed under this Act, including the rate of interest, 
     time of payment of principal or interest, or security 
     requirements only if--
       (1) the modification is consistent with the financial 
     interests of the United States;
       (2) consent has been obtained from the parties to the loan 
     agreement;
       (3) the modification is consistent with the underwriting 
     criteria developed under section 4(g) of this Act;
       (4) the modification does not adversely affect the interest 
     of the Federal Government in the assets or collateral of the 
     applicant;
       (5) the modification does not adversely affect the ability 
     of the applicant to repay the loan; and
       (6) the National Telecommunications and Information 
     Administration has been consulted by the Board regarding the 
     modification.
       (e) Performance Schedules.--
       (1) Performance schedules.--An applicant for a loan 
     guarantee under this Act for a project covered by section 
     4(e)(1) of this Act shall enter into stipulated performance 
     schedules with the Administrator with respect to the signals 
     to be provided through the project.
       (2) Penalty.--The Administrator may assess against and 
     collect from an applicant described in paragraph (1) a 
     penalty not to exceed 3 times the interest due on the 
     guaranteed loan of the applicant under this Act if the 
     applicant fails to meet its stipulated performance schedule 
     under that paragraph.
       (f) Compliance.--The Administrator, in cooperation with the 
     Board and as the regulations of the Board may provide, shall 
     enforce compliance by an applicant, and any other party to a 
     loan guarantee for whose benefit assistance under this Act is 
     intended, with the provisions of this Act, any regulations 
     under this Act, and the terms and conditions of the loan 
     guarantee, including through the submittal of such reports 
     and documents as the Board may require in regulations 
     prescribed by the Board and through regular periodic 
     inspections and audits.
       (g) Commercial Validity.--A loan guarantee under this Act 
     shall be incontestable--
       (1) in the hands of an applicant on whose behalf the loan 
     guarantee is made, unless the applicant engaged in fraud or 
     misrepresentation in securing the loan guarantee; and
       (2) as to any person or entity (or their respective 
     successor in interest) who makes or contracts to make a loan 
     to the applicant for the loan guarantee in reliance thereon, 
     unless such person or entity (or respective successor in 
     interest) engaged in fraud or misrepresentation in making or 
     contracting to make such loan.
       (h) Defaults.--The Board shall prescribe regulations 
     governing defaults on loans guaranteed under this Act, 
     including the administration of the payment of guaranteed 
     amounts upon default.
       (i) Recovery of Payments.--
       (1) In general.--The Administrator shall be entitled to 
     recover from an applicant for a loan guarantee under this Act 
     the amount of any payment made to the holder of the guarantee 
     with respect to the loan.
       (2) Subrogation.--Upon making a payment described in 
     paragraph (1), the Administrator shall be subrogated to all 
     rights of the party to whom the payment is made with respect 
     to the guarantee which was the basis for the payment.
       (3) Disposition of property.--
       (A) Sale or disposal.--The Administrator shall, in an 
     orderly and efficient manner, sell or otherwise dispose of 
     any property or other interests obtained under this Act in a 
     manner that maximizes taxpayer return and is consistent with 
     the financial interests of the United States.
       (B) Maintenance.--The Administrator shall maintain in a 
     cost-effective and reasonable manner any property or other 
     interests pending sale or disposal of such property or other 
     interests under subparagraph (A).
       (j) Action Against Obligor.--
       (1) Authority to bring civil action.--The Administrator may 
     bring a civil action in an appropriate district court of the 
     United States in the name of the United States or of the 
     holder

[[Page S1929]]

     of the obligation in the event of a default on a loan 
     guaranteed under this Act. The holder of a loan guarantee 
     shall make available to the Administrator all records and 
     evidence necessary to prosecute the civil action.
       (2) Fully satisfying obligations owed the united states.--
     The Administrator may accept property in satisfaction of any 
     sums owed the United States as a result of a default on a 
     loan guaranteed under this Act, but only to the extent that 
     any cash accepted by the Administrator is not sufficient to 
     satisfy fully the sums owed as a result of the default.
       (k) Breach of Conditions.--The Administrator shall commence 
     a civil action in a court of appropriate jurisdiction to 
     enjoin any activity which the Board finds is in violation of 
     this Act, the regulations under this Act, or any conditions 
     which were duly agreed to, and to secure any other 
     appropriate relief, including relief against any affiliate of 
     the applicant.
       (l) Attachment.--No attachment or execution may be issued 
     against the Administrator or any property in the control of 
     the Administrator pursuant to this Act before the entry of a 
     final judgment (as to which all rights of appeal have 
     expired) by a Federal, State, or other court of competent 
     jurisdiction against the Administrator in a proceeding for 
     such action.
       (m) Fees.--
       (1) Application fee.--The Board may charge and collect from 
     an applicant for a loan guarantee under this Act a fee to 
     cover the cost of the Board in making necessary 
     determinations and findings with respect to the loan 
     guarantee application under this Act. The amount of the fee 
     shall be reasonable.
       (2) Loan guarantee origination fee.--The Board may charge, 
     and the Administrator may collect, a loan guarantee 
     origination fee with respect to the issuance of a loan 
     guarantee under this Act.
       (3) Use of fees collected.--Any fee collected under this 
     subsection shall be used to offset administrative costs under 
     this Act, including costs of the Board and of the 
     Administrator.
       (n) Requirements Relating to Affiliates.--
       (1) Indemnification.--The United States shall be 
     indemnified by any affiliate (acceptable to the Board) of an 
     applicant for a loan guarantee under this Act for any losses 
     that the United States incurs as a result of--
       (A) a judgment against the applicant or any of its 
     affiliates;
       (B) any breach by the applicant or any of its affiliates of 
     their obligations under the loan guarantee agreement;
       (C) any violation of the provisions of this Act, and the 
     regulations prescribed under this Act, by the applicant or 
     any of its affiliates;
       (D) any penalties incurred by the applicant or any of its 
     affiliates for any reason, including violation of a 
     stipulated performance schedule under subsection (e); and
       (E) any other circumstances that the Board considers 
     appropriate.
       (2) Limitation on transfer of loan proceeds.--An applicant 
     for a loan guarantee under this Act may not transfer any part 
     of the proceeds of the loan to an affiliate.
       (o) Effect of Bankruptcy.--(1) Notwithstanding any other 
     provision of law, whenever any person or entity is indebted 
     to the United States as a result of any loan guarantee issued 
     under this Act and such person or entity is insolvent or is a 
     debtor in a case under title 11, United States Code, the 
     debts due to the United States shall be satisfied first.
       (2) A discharge in bankruptcy under title 11, United States 
     Code, shall not release a person or entity from an obligation 
     to the United States in connection with a loan guarantee 
     under this Act.

     SEC. 6. ANNUAL AUDIT.

       (a) Requirement.--The Comptroller General of the United 
     States shall conduct on an annual basis an audit of the 
     administration of the provisions of this Act.
       (b) Report.--The Comptroller General shall submit to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Banking and Financial Services of 
     the House of Representatives a report on each audit conducted 
     under subsection (a).

     SEC. 7. SUNSET.

       No loan guarantee may be approved under this Act after 
     December 31, 2006.

     SEC. 8. RETRANSMISSION OF LOCAL TELEVISION BROADCAST 
                   STATIONS.

       An applicant shall be subject to applicable rights, 
     obligations, and limitations of title 17, United States Code. 
     If a local broadcast station requests carriage of its signal 
     and is located in a market not served by a satellite carrier 
     providing service under a statutory license under section 122 
     of title 17, United States Code, the applicant shall carry 
     the signal of that station without charge, and shall be 
     subject to the applicable rights, obligations, and 
     limitations of sections 338, 614, and 615 of the 
     Communications Act of 1934.

     SEC. 9. DEFINITIONS.

       In this Act:
       (1) Affiliate.--The term ``affiliate''--
       (A) means any person or entity that controls, or is 
     controlled by, or is under common control with, another 
     person or entity; and
       (B) may include any individual who is a director or senior 
     management officer of an affiliate, a shareholder controlling 
     more than 25 percent of the voting securities of an 
     affiliate, or more than 25 percent of the ownership interest 
     in an affiliate not organized in stock form.
       (2) Unserved area.--The term ``unserved area'' means any 
     area that--
       (A) is outside the grade B contour (as determined using 
     standards employed by the Federal Communications Commission) 
     of the local television broadcast signals serving a 
     particular designated market area; and
       (B) does not have access to such signals by other widely 
     marketed means.
       (3) Underserved area.--The term ``underserved area'' means 
     any area that--
       (A) is outside the grade A contour (as determined using 
     standards employed by the Federal Communications Commission) 
     of the local television broadcast signals serving a 
     particular designated market area; and
       (B) has access to local television broadcast signals from 
     not more than one commercial, for-profit multichannel video 
     provider.
       (4) Common terms.--Except as provided in paragraphs (1) 
     through (3), any term used in this Act that is defined in the 
     Communications Act of 1934 (47 U.S.C. 151 et seq.) has the 
     meaning given that term in the Communications Act of 1934.

     SEC. 10. AUTHORIZATIONS OF APPROPRIATIONS.

       (a) Cost of Loan Guarantees.--For the cost of the loans 
     guaranteed under this Act, including the cost of modifying 
     the loans, as defined in section 502 of the Congressional 
     Budget Act of 1974 (2 U.S.C. 661(a)), there are authorized to 
     be appropriated for fiscal years 2001 through 2006, such 
     amounts as may be necessary.
       (b) Cost of Administration.--There is hereby authorized to 
     be appropriated such sums as may be necessary to carry out 
     the provisions of this Act, other than to cover costs under 
     subsection (a).
       (c) Availability.--Any amounts appropriated pursuant to the 
     authorizations of appropriations in subsections (a) and (b) 
     shall remain available until expended.

  The PRESIDING OFFICER. There will now be 1 hour for general debate 
equally divided. The Senator from Texas.
  Mr. GRAMM. Mr. President, at the end of the last session of Congress, 
we passed a very important piece of legislation establishing the legal 
framework whereby local television stations and satellites could 
negotiate contracts under which television broadcasts could be carried 
by satellite.
  In the midst of that conference, a sizable majority of the conference 
committee members from the House and the Senate concluded there was a 
problem in rural America that the bill they were considering would not 
address: that there were substantial economic impediments to the 
development of systems that would deliver the local television 
broadcast into remote, isolated, and rural areas of the country.
  In trying to deal with this situation, with all the time constraints 
in the midst of a conference, an effort was made to write a loan 
guarantee into that bill. That loan guarantee program has subsequently 
been offered in the House and is pending before the House committee. 
And when I talk about it again, I will be talking about the bill as 
introduced in the House.
  There was great concern at that time about how the system would work 
and what it would cost. As a result of numerous negotiations and a lot 
of good will, a decision was made to drop that provision at the end of 
the last session with a commitment I made that, by the end of this 
month, we would report a loan guarantee bill from the Banking Committee 
to address this very real concern. I am happy to say that on a 
bipartisan basis we reported such a bill by unanimous vote and we, in 
doing so, fulfilled the commitment we made at the end of the last 
session.
  Rather than go through a fairly complicated bill in detail, I will 
focus in my opening statement on the problems we face--why it is 
difficult--why there are economic perils involved--in guaranteeing 
loans to do something that has never been done before using technology 
that is unproven, why it is so expensive to do this, and then how we 
have tried to deal with each of these problems.
  It is important to remember that when the Congressional Budget Office 
looked at the loan guarantee program pending in the House of 
Representatives, they concluded that of the loan guarantees that would 
be made--and let's be precise, a loan guarantee is where the taxpayers 
are committed to stand in the place of the borrower should the borrower 
default--roughly 45 percent of the $1.25 billion worth of loans made 
under that bill will be defaulted.
  When I say defaulted, I am not saying just that the borrower would be 
unable to pay that face amount. I am saying that if one looks at the 
CBO estimate--which is an estimate of the present value of the losses 
they estimate will arrive, remembering that a loss 20 years from now is 
discounted using the Government's cost of borrowing--what they 
concluded was, as the bill is structured in the House, we were looking 
at the potential of the taxpayers paying 45 percent of the cost of 
these loan guarantees as a result of their being defaulted and 
ultimately not being repaid.

[[Page S1930]]

  The Banking Committee, in looking at this number, concluded that it 
presented an unacceptable risk for the American taxpayer.
  Sometimes people get confused by these estimated CBO costs because 
the cost often looks low because it is the present value of a default 
which would occur 10 years, 20 years, even 25 years from now.
  But basically, the CBO analysis of the House bill is that we are 
looking at a potential default rate of about 45 percent.
  How did we try to deal with that?
  We held a set of hearings where we heard from experts in industry, 
and we worked with the Congressional Budget Office. We decided there 
were two ways we could reduce the probability the taxpayer was going to 
end up paying off these loans.
  One way we could do would be to set up a board that could exercise 
independent judgment as to the quality of the project being proposed 
and the risks that were involved, and that we could put someone who was 
responsible, who had knowledge of financial markets, and who was 
responsible to the taxpayer, in a position to make that judgment.
  We concluded we should have a board made up of the Secretary of the 
Treasury, the Chairman of the Federal Reserve Board, and the Secretary 
of Agriculture, or their designees--but their designees would have to 
be people who were appointed by the President and confirmed by the 
Senate.
  Our first line of defense is the good judgment and prudence of the 
three people on this board. The House would give that basically to a 
Government agency, but we have rejected that.
  Our second and, by far, our more important line of defense is that we 
do not guarantee the entire loan. The loan would have only an 80-
percent guarantee.
  What this means is, when a private lender makes this loan, they are 
going to be liable for 20 percent. The protection we get from that 
requirement is not just that they lose the first 20 percent, and then 
we lose the other 80 percent, if the loan goes bad--that is important; 
and we guarantee that the taxpayer is protected first, unlike the House 
bill--but what we get is far more important because with a private 
lender, if they are liable for 20 percent of the money, they are going 
to perform their due diligence, they are going to scrutinize this loan, 
and they are going to realize that if the loan goes bad, they are going 
to lose 20 percent of the money they have lent.
  As we initially wrote this bill--in fact, the language of the bill as 
reported out of the Banking Committee I will amend in our first 
amendment today in an effort to reach a compromise--the logic was that 
we would have a private lender. The language of the bill requires that 
they be FDIC insured, that they would make the loan, and that they 
would be liable for 20 percent of the cost.
  Why is this so important? We are not talking about making a loan to 
deliver electricity to rural America, where we have a captive customer 
base, where someone cannot buy electricity from anybody else. We are 
not talking about making a loan to deliver telephone service to rural 
America where you either buy from the telephone co-op or you do not 
have a telephone. We are talking about a very risky business where 
there will be no guaranteed ratepayer. Nothing in this bill--nothing in 
law--requires any American living in a rural area to buy these 
services. So there is no captive base. When we get to the discussion of 
the amendment I will offer, we are going to be discussing this in 
detail because this is very important.
  The second important risk is, no one has ever done what we are 
proposing to do. We have one company proposing to use a satellite, 
which has a directed beam so that it would send a signal into a 
geographic area, and they are pretty confident it is going to work. In 
fact, they are going to invest over $1 billion to build such a system 
to basically service these top 40 markets in terms of viewership.

  But the plain truth is, no one has ever used that satellite. So while 
we hope it will work, while we have reason to believe it will work, and 
while the fact that somebody is willing to invest $1 billion in it 
suggests to me it might very well work, we do not know it will work. It 
has never been proven on the scale we are talking about.
  But there is a second and more fundamental risk. It is one that I 
think, in our rush to do something here, we want to look beyond. It is 
not the risk that the technology does not work.
  Let's say we are talking about a satellite--and our bill is neutral 
in terms of technology--but let's say someone comes in and asks for a 
loan of $1.25 billion to build and launch and put into orbit a directed 
beam satellite. Obviously, you have the risk that somehow the system 
does not work, it is not launched into orbit. Maybe they would buy 
insurance. I assume a lender would require that. Maybe it would work; 
maybe it wouldn't work.
  But let's say it does work. The biggest risk you face in dealing with 
new technology is we have no guarantee, that if someone borrowed $1.25 
billion and we guaranteed 80 percent of it --and it worked perfectly--
that 2 years from now some young computer genius, getting a degree in 
computer science at Texas A&M, might not develop a technology that 
would use the Internet to deliver the local TV signal and would do it 
at one one-thousandth of the cost of this satellite.
  I say to my colleagues, if that happened, obviously, it would be a 
godsend for rural America because then everybody would have local 
television, and they would have it inexpensively, but it would not be a 
godsend for the taxpayer because we all know that if that happened, 
which would be the answer to someone's prayer, it would not be the 
answer to the taxpayer's prayer. The company that launched that 
satellite and invested $1.25 billion in it would lose every customer 
they had to someone who could sell for one one-thousandth of their 
cost.
  Let me say, this isn't just theoretical, this is happening every day 
in America.
  The taxpayer would be on the hook for over $800 million of losses.
  This is risky business, which is why the Congressional Budget Office 
estimates that the House bill will have a default rate of roughly 45 
cents out of every $1 that is loaned. That is risky business.
  We have tried to deal with this by establishing a loan board to 
exercise due diligence, requiring a private lender, as it is now 
written, and an FDIC-insured lender, so basically we are talking about 
an institution that is in business to make money, and they are going to 
be making loans. They can make loans to anybody--to REA or to a 
private, for-profit company. They know as the bill is now written, they 
are going to be liable for 20 percent of that loan. If it goes bad, 
they will lose that money.

  It is my understanding that we are going to have a series of 
amendments that assault, in my opinion, these two basic protections of 
this bill. One amendment, which has been discussed, is the amendment to 
let Government lend the money. I totally and absolutely reject that. If 
we let Government lend any of this money, we destroy the whole 
foundation of this bill. Our protection is, if Chase Manhattan is 
lending this money, they are liable for 20 percent of the money. If the 
loan goes bad, they lose that money, and somebody will probably lose 
their job. So they are going to be paying attention to their business.
  On the other hand, if we allow an amendment which says the Government 
can make the loan guaranteed part directly, we are eliminating some of 
the due diligence that is at the very heart of this bill and which CBO 
has scored as lowering the cost of this loan by $100 million.
  The second proposal that is going to be made, a proposal I am going 
to accept but with a very important amendment, relates to the CFC, 
which is the Cooperative Finance Corporation. This is basically a 
captive lender of the REA. It is an entity that is given tax exemption. 
Why is it given tax exemption? It is given tax exemption because it is 
serving a public purpose: it is a lending institution that historically 
has lent money to REAs to provide telephone service and electric power.
  The important difference between a loan to provide telephone service 
or electric power and a loan to launch a satellite or to invest in an 
unproven technology is twofold. One, we have been doing phones a long 
time. We have been generating power for over 100 years. We know how to 
do it. There is no uncertainty about the technology of

[[Page S1931]]

telephones and power generation in a traditional sense.
  Second, in these activities, they have captive customers. Where I am 
an REA customer, I can't buy power from anybody else. So if a mistake 
is made, there is an easy way to cover it up--raise my rates. There 
won't be an easy way to cover up a mistake here because there won't be 
any captive ratepayer whose rate can be raised.
  Let me make it clear, I have the highest opinion of the CFC. I think 
it has done a great job. It was chartered and given a tax subsidy to do 
that job in the public interest, and I think it does that job well. But 
I believe we are taking an unnecessary risk in letting the CFC make 
these loans. I am willing to do that as part of an effort to have a 
bipartisan compromise but only under the following circumstances:
  No. 1, what we are being asked to do is take out of the bill the 
requirement that the lender be FDIC insured. When we do that, we open 
up this whole process to institutions that we may never have 
considered. So we have two sort of boilerplate requirements. One is, if 
it is a traditional financial institution, they have to meet two 
requirements: First, no self-dealing; that is, they can't lend the 
money to themselves, so to speak; and, second, they have to meet the 
normal capital requirement, which is, you can't lend more than 10 or, 
in some cases, 15 percent of your capital to any one borrower.
  Now, for the CFC, we don't impose--in the final compromise I offered 
last night--the 10-percent loan to one borrower restriction. I would 
prefer it, but I know that some of my colleagues are opposed to it 
because CFC is opposed to it.
  What we require is the following: To be sure we are talking about CFC 
and not some other Government or some other nonprofit entity that none 
of us have thought about, we say that to qualify, a nonprofit 
institution must have one of the three highest credit ratings on a 
long-term bond. Some people have gotten confused between a credit 
rating on a long-term bond and a credit rating on any commercial paper. 
Almost any institution can issue a 30-day note that will be AAA rated. 
We are talking about lending for 25 years here, so the fact that 
somebody can get a good rating for short-term borrowing, what we want 
to know is their rating for long-term lending. That is what is 
significant.

  The first requirement is that those nonprofits that can participate 
must have one of the top three ratings and the Cooperative Finance 
Corporation qualifies.
  The second requirement, which I think is of equal importance, is that 
the board must find that by making this loan the Cooperative Finance 
Corporation will not see its credit rating decline, that in making the 
loan they are not jeopardizing the good credit they have.
  Why is that important? We have, as best I can estimate--and we are 
trying to get the final number--25 million Americans who are captive 
ratepayers. They are customers of REA for telephone and for electric 
power--one or the other and, in some cases, both. If the rating of the 
CFC in borrowing money to lend principally to co-ops is diminished by 
making this loan, every ratepayer of every co-op in America will end up 
paying more because this happened. We want to prevent that from 
happening. I am going to argue all day long, if I have to, that we 
should not imperil 25 million Americans who are captive ratepayers by 
allowing CFC to get into a risky business that can push down their 
credit rating.
  What I am proposing and will propose in the first amendment, when the 
general debate is over, is that we let CFC make the loans but that the 
board has to find that, in making the loans, CFC is not going to 
downgrade its creditworthiness, and in the process impose new costs on 
ratepayers.
  Finally, if their creditworthiness does decline, then they would be 
required, in an arm's length transaction, to sell this note on the open 
market. I think these are important requirements.
  Someone may argue that the CFC has engaged in providing television 
services. That is a real stretch because what really happened is the 
co-ops borrowed $100 million to enter into a contract with Direct 
Television where they were the marketing arm of Direct Television. As 
it turns out, over 80 percent of what they were doing, they have 
subsequently sold off to a private company named Pegasus that is a long 
way from launching a satellite and engaging in this business.
  Let me sum up.
  I think we have put together a well-crafted bill. To this point, this 
bill costs $100 million less than the House bill. It is still risky 
business. Let's remember that if this loan is defaulted, rural America 
is probably going to lose its television service.
  I hope my colleagues will look at the amendment I have offered, and I 
hope it can be accepted.
  I thank all members of the Banking Committee, Republicans and 
Democrats, for the bipartisanship we had in committee.
  I thank Senator Conrad Burns. I thank him for his leadership. There 
is no question that we would not be here today were it not for his 
persistence. I also thank him for not only trying to get television 
signals to rural America but trying to do it in the right way. It is 
very easy when you are trying to deal with all the groups that hope to 
benefit from some program such as this to just throw caution to the 
wind and say don't worry about the cost. I thank Senator Burns not only 
for the leadership in seeing that we are writing this bill, but for his 
leadership in seeing that we are doing it right.
  With that, I yield the floor.
  The PRESIDING OFFICER (Mr. Bunning). The Senator from Maryland is 
recognized.
  Mr. SARBANES. Mr. President, I will be very brief because Senator 
Johnson is going to handle the time on this side. He has been very 
intimately involved in shaping this legislation and has done an 
outstanding job and I think made a major contribution.
  The bill that is now before us is a consequence of a unanimous 
consent agreement that was reached last year. Much discussion took 
place within the committee. As a consequence, we were able to move 
considerably closer on many of the issues that divided Members when we 
first addressed S. 2097. In fact, I think it is fair to say, with the 
exception of the issue Senator Johnson will raise on the floor, we have 
a consensus product before us that we can move through in short order.
  We seek a loan guarantee program that will provide comprehensive 
television service for the American people at the best possible price. 
We are particularly concerned about rural Americans who have either no 
access or inadequate access to local television service. We seek to 
obtain that for them at an affordable price and yet, at the same time, 
protect the American taxpayer as we move forward with the loan 
guarantee program. Obviously, you have to strike the right balance 
among these objectives. I think the bill, with the Johnson amendment, 
with the proposal of the very able Senator from South Dakota, would 
accomplish that.
  The chairman has gone over some of the specific provisions of the 
bill. I think it is important to note that the board we are providing, 
which will grant the loan guarantees, is made up from the Federal 
Reserve, the Treasury, and the Department of Agriculture. The day-to-
day administration of the program would be done by the Rural Utilities 
Service, which would also write the regulations, subject to the 
approval of the board. The Rural Utilities Service is the most 
experienced agency in the Federal Government in dealing with this type 
of investment in rural areas. Therefore, we think they have a clear 
understanding of what is involved.
  The guarantee level provided in the legislation is 80 percent. That 
differs, of course, from the House bill. It is designed to provide some 
additional safeguards. We also worked to ensure that the legislation 
would give priority to the projects seeking to provide services to 
areas in this country that are unserved and underserved, as we move 
toward trying to provide a universal service.
  Senator Johnson led the effort on our side. We were markedly assisted 
by Senator Baucus, Senator Harkin, and many others. I know there are a 
number of Senators on the Republican side of the aisle, too, who come 
from rural areas who are very deeply concerned about this issue.
  Let me touch on the one important improvement that I hope will be 
made to this legislation, and that is the

[[Page S1932]]

Johnson initiative. The bill, as it is now before us, requires that the 
lenders involved in this program be FDIC insured. That is the 
requirement in the bill as it now stands. Many believe this is 
unnecessarily restrictive, that there are a number of other lenders 
and, in particular, the National Rural Utilities' Cooperative Finance 
Corporation, the CFC, which would be barred from participating in the 
program as the bill now stands.
  Senator Johnson is intending to address that issue. Actually, the 
lender we are talking about--the Cooperative Finance Corporation--is 
extremely well capitalized. It has over 11 percent shareholders' equity 
capital, which is better than 9 of the 10 largest banks in the country. 
The credit rating agencies rate CFC's debt as high as any of the 
largest federally insured banks and higher than most. So by these 
market standards, they are an extremely strong and well-managed 
financial institution. I see no reason to exclude it from the program. 
I think we can adjust to accommodate this issue.

  I think we can achieve a broad, if not total, consensus on this 
legislation. I think, in fact, including lenders of this nature in the 
program will help to encourage the participation of organizations, such 
as rural cooperatives that have the most experience in doing business 
in rural areas and therefore make it more likely that the program will 
reach its ultimate goal of universal service in rural areas.
  So I am supportive of the legislation with this change that we will 
seek to make. I think it meets all the questions and concerns that have 
been raised in a balanced and straightforward manner. Again, I thank 
Senator Johnson for his leadership on this issue, and I commend all the 
members of the committee, the chairman and all the members on his side, 
and on our side, who worked closely together to try to work out 
agreeable solutions to most of the concerns that have been expressed.
  I think if we can address this one remaining concern on the floor in 
a positive and constructive way, we will have done a good piece of 
legislative work and will be able to move this issue forward.
  Mr. President, I will yield the floor. Senator Johnson will manage 
the remainder of the time of the debate on this side of the aisle.
  The PRESIDING OFFICER. The Senator from South Dakota is recognized.
  Mr. JOHNSON. Mr. President, may I inquire as to the time remaining on 
both sides?
  The PRESIDING OFFICER. The Senator from Texas has 6 minutes. The 
Senator from South Dakota has 22 minutes.
  Mr. JOHNSON. Mr. President, I yield myself 15 minutes.
  Mr. President, I rise today in support of S. 2097, which will help 
provide local broadcast coverage for all Americans. Under legislation 
we passed last year, satellite companies are for the first time free to 
broadcast local network broadcasting into local markets. What we are 
doing today will make that benefit a reality for Americans who live 
outside the largest 40 television markets across America.
  As do many colleagues, I represent a State with rural viewers who 
should not be left out of the information age. South Dakota is one of 
the 16 States that do not have a single city among the top 70 markets. 
Without this loan guarantee, markets such as Sioux Falls and Rapid City 
simply will not get local service, despite the fact there is a great 
need for the reception of that local broadcasting.
  This proposal is about more than just providing sports or 
entertainment programming over local channels. It is a critical way to 
receive important local news, public affairs, storm information, road 
reports, public safety, school closings, and so on. Rural Americans 
need the same opportunity to access their local networks as do our 
urban friends, and this legislation would go a long way toward making 
that a reality.
  I want to thank the chairman of the Banking Committee, Senator Gramm, 
for his hard work on this important issue. He correctly raised several 
issues which have strengthened this bill, adding critical taxpayer 
protections to the program. I want to thank Senator Sarbanes, the 
ranking member of the Banking Committee for his hard work on this 
legislation as well.
  As a sign of the support we have for this package, I have agreed with 
Senators Gramm and Sarbanes to oppose all amendments to the bill with 
one exception. I will be offering shortly an amendment to correct a 
significant flaw in this bill. Other than that one change, I believe we 
have produced a substantive bill that will produce this service to all 
Americans without resorting to risks for the American taxpayers.
  S. 2097 provides an 80 percent guarantee of projects to bring local 
to local to all markets. The remaining 20 percent will be private 
capital provided by qualified lenders. These private capital will bring 
market discipline to the program. No entity will fund a project it has 
not scrutinized, that it does not believe will succeed.
  We have created an oversight board consisting of the Federal Reserve 
Chairman, the Secretary of the Treasury, and the Secretary of 
Agriculture. This board will review loan applicants with a eye toward 
fiscal discipline. The Fed and Treasury are especially tasked with 
ensuring that the taxpayer dollars are protected. They will look 
carefully at the proposals and support projects that will work. The 
USDA brings expertise in rural America to this venture. The experience 
of the Rural Utilities Service, with its $40 billion loan portfolio and 
phenomenally low default rate, will make this a sound venture.
  The combination of these experts plus the market discipline of a 
lender with 20 percent of the project at risk, will screen applicants 
so only the soundest, most viable proposals are funded.
  With this program, we can take a giant step for rural America. All of 
our citizens will be enabled to follow local events. In states like 
South Dakota, wide stretches of area are not served by any form of 
local programming; this bill for the first time makes that possible.
  There is one area where the bill could be improved. The bill in its 
current form requires that lenders be FDIC insured to participate in 
the program. This would effectively eliminate rural electric 
cooperatives and telephone systems from participation in the program.
  This limitation excludes private finance corporations that have years 
of experience lending to rural utilities (including institutions that 
have years of experience in lending guaranteed loans). It would also 
exclude institutions with billions of dollars of assets, that operate 
on a national basis, are highly rated by the rating agencies and file 
with the Securities Exchange Commission.
  The amendment I will be offering is supported by Senators Thomas and 
Grams and others. It is bipartisan in nature. It simply allows 
qualified lenders with experience and expertise in these types of 
programs to participate in the funding subject to board approval, 
keeping in mind always that everything we do must be approved by the 
Federal Reserve, Treasury, and USDA. As an example, Cooperative 
Financing Corporation is AA rated and considered to be ``the best 
investment in the high quality electric utility sector'' by Shearson 
Lehman. These are the types of lenders that should be potentially part 
of this program.
  I encourage my colleagues to support rural America by making S. 2097 
more likely to successfully provide local to local to smaller markets. 
My amendment provides, but does not mandate, alternate financing 
options. The purpose behind the change is to allow participants in the 
program to seek the lowest possible interest rate. Those dollars saved 
on interest make the program more likely to succeed, and improve the 
viability of the program, making it more likely the loans will be 
repaid without recourse to the guarantee.
  This issue has aroused the greatest level of constituent concern in 
quite some time in my State. With this amendment to S. 2097, we will 
provide a fiscally responsible, prudent response to the concerns raised 
by thousands of our constituents. The issue which Senator Gramm has 
ably outlined this morning is in response to a concern Senators Thomas 
and Grams and I also share but to which we take a different approach.
  The view of those of us who will be offering our amendment as a 
second-degree amendment, I believe, to Senator Grams' amendment would 
be to

[[Page S1933]]

recognize that institutions that have years of experience in lending to 
rural electric and telephone cooperatives should not be excluded from 
participation.
  Our amendment simply allows qualified lenders that have experience 
and expertise in these kinds of programs to participate subject to 
board approval. It will also require eligible lenders that have at 
least one issue of outstanding debt that is rated in one of the three 
categories rated by a national statistical rating agency. This will 
ensure that an expanded list of lenders will have subjected themselves 
to rigorous market discipline. The CFC and other private lenders have 
substantial experience providing multiple million-dollar loans in 
cooperative environments and provide important protections in rural 
areas.
  We encourage all of our colleagues to support rural America by 
supporting S. 2097. We are more likely to succeed in doing that by 
providing local-to-local programming to these smaller markets.
  Mr. President, I do not have any additional Members on the floor at 
the moment with opening remarks. I withhold my time but yield the 
floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BURNS. Mr. President, I thank my good friend from Texas, chairman 
of the Banking Committee, and also the ranking member of the Banking 
Committee, my good friend from South Dakota, for his work on this bill.
  We offered in the Satellite Home Viewers Act last year, an amendment 
in conference that would enable us to help people in smaller markets 
around the country. This would help people to receive their local 
television signal on satellite by facilitating the delivery of these 
local stations in the gray areas--the B contour and the C contour where 
reception is poor --in the station's area of dominant influence.
  I chair the Communications Subcommittee of the Commerce Committee. In 
Montana, we have great distances to cover with few people in between. 
Other States share this difficulty and also the geographical challenge 
posed by the mountains. Since the television signal is line of sight, 
mountains can make the problem of providing local coverage for people 
in hard to reach places even harder to solve. So, how do we do that? 
How do we level the playing field and still provide the compulsory 
licensing for cable, and for satellite television users and, of course, 
for those local programmers?
  I think we now have before us a better bill than the one we offered 
last year. This bill is more complete, because it takes into account 
both the agencies that are going to make the loans, and also those who 
will be borrowing the money. It puts some responsibility on each of the 
parties to make sure, No. 1, that it works and, second, that they 
assume some of the risk so taxpayers' money is not in jeopardy.
  I thank the Senate Banking Committee for their commitment in bringing 
this issue to the Senate floor as fast as they possibly could. Their 
word has been good, and by working with the Agriculture Committee and 
also a lot of us individually, the Banking Committee has helped us 
build a better bill than we had last year.
  Providing access to local television signals is crucial to rural 
States. With over-the-air broadcast signals and cable delivery limited 
by geography in my own State, satellite television has been a staple of 
the so-called video marketplace for many years. Montana has the highest 
penetration level of satellite television of any State, at over 35 
percent.
  When I initially proposed the legislation in this area, I was 
concerned that, without it, only the largest television markets in 
America would receive local-to-local service as authorized by the 
Satellite Home Viewer Improvement Act. These are the profitable cities 
such as New York and Los Angeles with millions of television 
households. But it is not so profitable a venture in areas where we 
have quite a lot of dirt between light bulbs.
  The issue we will be debating, of course, will be the amendment 
offered by my good friend from South Dakota and the cosponsors.
  Let's talk about the other 140 TV markets in this country. There are 
16 States, including my own, that do not have a single city in the top 
70 markets. It is time we help those 16 States gain equal footing with 
the ones with more urban populations. Just because they are small 
doesn't mean they should be left out of the mix when we talk about 
local to local, because people enjoy their local sports, they enjoy 
their local weather, they enjoy their local news. It doesn't do any 
good for anybody who lives in rural Kentucky to watch a station that is 
based out of Charlotte, NC.

  We have to find ways of delivering their signal off the satellite. 
The ability to receive local television signals is much more than just 
having access to local sports or entertainment programming. It is a 
critical and an immediate way to receive local news, weather, and 
community information.
  Access to local signals is particularly critical in rural areas, such 
as Montana, when we experience flooding and other weather situations, 
including blizzards.
  This is very important. The LOCAL TV Act reflects the belief that the 
loan guarantee program should not favor one technology, it should be 
technology neutral. It is a win-win for consumers. It is also a win-win 
for the taxpayers, and I urge my colleagues to support this. I don't 
think we have received more mail on any other subject since I have been 
here. Whenever they start turning our networks off the satellite, we 
get immediate responses.
  I look at this the way I looked at REA when I was a lad on a farm in 
northwest Missouri. I have made this speech many times. Had it not been 
for the Rural Electrification Administration, we would be watching 
television by candlelight. That is fact. We were in rural areas. We 
would never have seen the build-out of electricity or power to our 
farms and ranches.
  We have to take the same look at smaller markets in television 
because the only support they get is through advertising. That 
advertising is based on viewership, and the profitability of that 
station is at stake and, with that, the services they provide. I think 
it is pretty important.
  This bill is set up with a three-member board. It offers access. The 
administration is very tight, and it also protects the taxpayer. 
Remember, the taxpayers' dollars are at stake.
  We will move through the debate on different amendments that will 
come up and should be debated. The concept of the bill, if passed right 
now as it is, is darn good. There are a couple of amendments that I 
think will improve this piece of legislation.
  Mr. KERREY. Mr. President, I rise today in strong support of the 
LOCAL TV Act of 2000. Last year, Congress passed a law allowing 
satellite providers to retransmit local signals into local markets, but 
we knew then that the large satellite providers had no plans to provide 
``local into local'' into rural areas, completely ignoring Nebraska and 
14 other states. At the time I strongly supported the inclusion of a 
$1.25 billion loan guarantee program to encourage companies to 
retransmit local signals in rural areas. Unfortunately, political 
wrangling left this important provision behind as we passed the bill.
  I am pleased that the Senate has fulfilled its promise to pass a loan 
guarantee program before April 1, 2000. The LOCAL TV Act of 2000 will 
provide $1.25 billion in loan guarantees to companies to bring local 
stations into currently unserved areas. Local stations are vital to a 
community, broadcasting local news, sports, weather, and emergency 
warnings. A small but significant portion of the U.S. population cannot 
receive local television signals from any means, while as much as half 
of the population must settle for New York or Los Angeles news (so-
called distant network signals) via satellite. Nebraska has over 
270,000 satellite viewers who cannot receive their local stations 
through their satellite dishes. This bill will provide the financial 
backing necessary to support companies to bring local television to all 
areas of America. ``Local into local'' has become another technology 
that urban areas are able to enjoy, while rural communities get left 
behind. The LOCAL TV Act will ensure that does not happen.
  I have great confidence in the Rural Utilities Service (RUS) which is 
charged with administrating this loan guarantee program. Many previous 
programs launched through RUS to help

[[Page S1934]]

close the gap between urban and rural areas have proven successful. The 
public/private partnership between RUS and its borrowers has helped 
develop electric, telecommunications, and safe, clean drinking water in 
rural America. It has also fostered rural economic development across 
the nation. I believe the RUS will administer this program with the 
same expertise it has demonstrated in the past.
  Bridging the so-called ``Digital Divide'' remains one of my top 
priorities. It is absurd that some areas of the country cannot receive 
high speed internet access, local television programming, or other 
technologies, simply because they live too far from a big city. I will 
continue to work hard to bring the newest technologies into all regions 
of Nebraska. The LOCAL TV Act of 2000 is an important step in this 
direction, so I enthusiastically support this legislation.
  Ms. COLLINS. Mr. President, I rise to lend my support for S. 2097, 
the Launching Our Communities' Access to Local Television, legislation 
of which I am proud to be an original cosponsor.
  Mr. President, this legislation is simply about equity. Should 
satellite customers in the rural Maine communities of Lovell and 
Greenville and Fort Fairfield have the right to receive the local 
broadcasts of stations in Portland, Bangor, and Presque Isle, Maine? 
Should they have the ability to receive their local news, emergency 
weather forecasts, information about school closures, and the wrap-up 
of the local school sports via satellite? My answer is yes, of course, 
they should.
  While Congress authorized the ability of local network stations to 
broadcast their local signals via satellite by passing the Satellite 
Home Viewer Improvement Act last November, current satellite capacity 
only allows the top 40 to 50 television markets to receive this unique 
service. Unfortunately, this excludes the Portland, Bangor, and Presque 
Isle, Maine, markets and the satellite customers within those markets 
who want to view local programming.
  This last year has been a particularly difficult and frustrating one 
for satellite customers. We took an important step in addressing many 
of the problems they and local broadcasters have experienced by passing 
the Satellite Home Viewer Improvement Act. We are, however, lacking a 
final component. Providing a rural loan guarantee program that is 
technologically-neutral, fiscally responsible, and focused on 
underserved markets will encourage companies to bring important 
information access to my State's rural communities and lead us to a 
conclusion of this important issue. I urge my colleagues to pass this 
important legislation.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAMM. Mr. President, I think it is now timely for me to offer an 
amendment.
  The PRESIDING OFFICER. The Senator from South Dakota has 15 minutes 
remaining.
  Mr. JOHNSON. Mr. President, I yield back the reminder of my time so 
we can proceed with the substance of this legislation.


                           Amendment No. 2897

            (Purpose: To address certain lending practices)

  Mr. GRAMM. I send an amendment to the desk and ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm] proposes an amendment 
     numbered 2897.

  Mr. GRAMM. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 30, strike line 22 and all that follows through 
     page 31, line 3, and insert the following:
       ``(D)(i) the loan (including Other Debt, as defined in 
     subsection (f)(2)(B))--
       ``(I) is provided by any entity engaged in the business of 
     commercial lending--
       ``(aa) if the loan is made in accordance with loan-to-one-
     borrower and affiliate transaction restrictions to which the 
     entity is subject under applicable law; or
       ``(bb) if subclause (aa) does not apply, the loan is made 
     only to a borrower that is not an affiliate of the entity and 
     only if the amount of the loan and all outstanding loans by 
     that entity to that borrower and any of its affiliates does 
     not exceed 10 percent of the net equity of the entity; or
       ``(II) is provided by a nonprofit corporation engaged 
     primarily in commercial lending, if the Board determines that 
     the nonprofit corporation has one or more issues of 
     outstanding long term debt that is rated within the highest 3 
     rating categories of a nationally recognized statistical 
     rating organization, and that such rating will not decline 
     upon the nonprofit corporation's approval and funding of the 
     loan;
       ``(ii)(I) no loan (including Other Debt as defined in 
     subsection (f)(2)(B)) may be made by a governmental entity or 
     affiliate thereof, or a Government-sponsored enterprise as 
     defined in section 1404(e)(1)(A) of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 1811 note) or any affiliate thereof;
       ``(II) any loan (including Other Debt as defined in 
     subsection (f)(2)(B)) must have terms, in the judgment of the 
     Board, that are consistent in material respects with the 
     terms of similar obligations in the private capital market;
       ``(III) if a nonprofit corporation fails to maintain the 
     debt rating required by subclause (i)(II), the subject loan 
     shall be sold to another entity described in clause (i) 
     through an arm's length transaction, and the Board shall by 
     regulation specify forms of acceptable documentation 
     evidencing the maintenance of such debt rating;
       ``(IV) for purposes of subclause (i)(I)(bb), the term `net 
     equity' means the value of the issued and outstanding voting 
     and nonvoting interests of the entity, less the total 
     liabilities of the entity, as recorded under generally 
     accepted accounting principles for the fiscal quarter ended 
     immediately prior to the date on which the subject loan is 
     approved;''.

  Mr. GRAMM. Mr. President, let me try to explain the amendment and 
what the issue is. I know there are strong feelings on both sides of 
the issue. I believe we have worked out 95 percent of the bill to 
everybody's satisfaction. But we now have come down to an issue. I 
really believe that while there will be extraneous amendments offered, 
this and possibly one other amendment might be the only amendments we 
will be actively debating.
  Let me first explain what the bill now does. Then I would like to 
explain the changes my amendment makes, why I am making them, and then 
I would like to address the overall issue we are about to debate, 
potentially through a second-degree amendment or through another 
freestanding amendment.
  In the bill as it is now written--as it passed unanimously in 
committee, even though I knew an amendment was going to be offered--in 
order to make a loan that the Federal Government guarantees, you have 
to be an insured depository institution. There has been objection 
raised to this because of a desire on the part of the Cooperative 
Finance Corporation. This is a captive lender, for all purposes, for 
America's REAs, with a very proud record and with a great record of 
achievement.
  The question then is, if we take out of the bill that a lender has to 
be FDIC insured--and remember we are having the taxpayer guarantee the 
loan they are making--What kind of protections do we need for that 
guarantee to be extended? I have offered this amendment, really, as an 
effort at a compromise where we take the FDIC lender out but where we 
set specifically three sets of rules to apply to different lenders.
  The first two have to do with commercial for-profit lenders. They are 
the standard kind of constraints you would normally see in any 
financial transaction; that is, they have to meet the capital 
requirement which traditionally, for banks and S&Ls, has been that you 
cannot lend more than 10 percent or 15 percent of your capital to any 
one borrower.
  Second, we eliminate the potential for any for-profit institution to 
lend to an affiliate. What we are trying to do here is ban self-
dealing. I do not believe there is any objection to these two 
provisions, but it is very important that they be in the bill.
  Now we get to the controversy. What do we do about nonprofit lenders? 
Let me remind my colleagues, institutions are not nonprofit for 
nothing. We grant a very special privilege to an institution when we 
make it a nonprofit institution because we dramatically lower its 
costs. And we do it because that institution is serving a public 
purpose.

[[Page S1935]]

  In this case, the institution that is basically going to be discussed 
here is CFC, the Cooperative Finance Corporation. Its public purpose is 
that it provides funding at a very low cost to our REAs that are 
providing telephone and electric power to rural America. It is true 
that it makes some other loans, but the principal purpose for its 
lending is REA power and REA telephone.
  What we are saying is for these nonprofits, since they are carrying 
out a Government function, even though they may be chartered as private 
institutions, they are chartered with tax exemption because they are 
promoting a public purpose. Therefore, we do have some concern about 
them.
  Now, if Citigroup or Bank of America or Chase makes this loan and it 
is defaulted and they lose 20 percent of it, I am not happy about it--
and I am very unhappy about the taxpayer losing 80 percent--but I 
figure they are in this for profit. They know what they are doing and 
what they do to their credit rating and what they do to their 
profitability; that is their business. That is what for-profit private 
enterprise is about.
  I am more concerned about what a nonprofit corporation does because 
it is nonprofit and it is carrying out a public purpose. In the case of 
CFC, that public purpose is to make loans to bring electric power and 
telephone, and to continually modernize both to rural America. More 
important, they are lending money to 25 million captive customers. Why 
do I say captive? Because if you are buying power from the REA, you do 
not have the right to buy it from anybody else. If you are buying 
telephone services through an REA affiliate, you do not have the right 
to buy telephone services from anybody else, on a hard line anyway. So 
in making loans, these nonprofits, and principally CFC, are carrying 
out a public mandate in providing these services for rural America as 
cheaply as possible.

  Why should there be a certain set of rules for nonprofit 
corporations? Because they are nonprofit; because they do have tax 
exemption; because they are supposed to be promoting a public purpose. 
If Citigroup or Bank of America makes a bad loan and it is defaulted, 
people do not have to do business with them. They can borrow money from 
somebody else. But if the CFC makes a bad loan and their credit rating 
goes down, then every REA customer for electric power and telephone, 
all of whom are captive customers, would have to pay higher prices; 
hence, the public interest in seeing that we protect the interests of 
those ratepayers.
  How do we protect the interests of the ratepayers in this amendment? 
I have colleagues on both sides of the aisle who want the CFC to be 
able to make these loans. Frankly, if this were left to me, I would not 
do it that way. The whole logic of this is for-profit lending. But in 
an effort to try to reach a compromise, we would let CFC, this tax-
exempt entity which is providing credit to rural America, make these 
loans. But the board would have to find, in making the loan, that they 
would not lower their credit rating.
  Why is that important? Why should we care what the credit rating of 
CFC is? Because that credit rating affects their ability to borrow 
money, affects the interest they have to pay, and since they are in 
turn lending that money to REA providers who have captive American 
customers--25 million of them--if they do something speculative and 
drive down their bond rating, everybody in rural America is going to 
pay more money for electric power and telephones.
  The restriction we are imposing is hardly overwhelming. All it says 
is, where we are dealing with a nonprofit lender, where the 
Congressional Budget Office has estimated the probability of default is 
such that 45 percent of the loan will be defaulted under the House 
bill, if they want to make this loan, doesn't it sound reasonable on 
behalf of the 25 million ratepayers in rural America that we would 
simply ask that the board--the Secretary of the Treasury, the Federal 
Reserve Board chairman, and the Secretary of Agriculture--that they 
determine that the CFC is not going to see its bond rating go down as a 
result of making this loan?
  Why do we care if it goes down? Because if it goes down, every buyer 
of electricity, every buyer of telephone services in rural America, is 
going to pay more money. That is why we should care. So we say, if the 
board finds that this is not going to lower their credit rating, they 
can do it.
  We have a provision that says, if the CFC's credit rating is 
lowered--and credit rating agencies, when they change somebody's 
credit, say why they have changed it, so that if they change it and the 
reason is this loan--we require the loan to be sold so it can move to 
restore their credit rating.
  I believe this is an eminently reasonable amendment, and while it 
does not bear directly on the loan guarantee, it does bear directly on 
another issue, and that is the well-being of 25 million Americans who 
live in rural America. I represent more of them than any other Senator 
here. I am not indifferent to CFC taking action that will drive up 
interest rates and drive up power rates and telephone rates in my State 
to Texans who choose to live in rural areas. That is what this 
amendment is about.
  This amendment, in responding to a request by Members of the Senate, 
takes out the requirement that you have to have an insured lender. That 
opens it up potentially to anybody.
  We tighten it up in three ways. We say if you are a commercial 
lender--a bank, for example--you have to meet the capital requirements 
and the loan-asset ratio that is currently the law, and you cannot do 
self-dealing. You cannot lend it to your brother-in-law, and you cannot 
lend it to the bank. It has to be an arm's length transaction.
  For those lenders, such as Morgan Stanley, that do not have a capital 
requirement, we say they have to have one. We are not going to 
guarantee a loan that Morgan Stanley makes if that loan is more than 10 
percent of their capital. Why? Because it is risky, and if they lose 
money, it enhances the chances that the taxpayers will lose money.
  Finally, for nonprofits, we do not have a capital requirement, but 
what we say is, since we gave this institution nonprofit status to 
perform a public purpose--in the case of CFC, to make loans to 
electrify and bring telephones to rural America--that if the board 
finds that by making this loan it is going to drive down their bond 
rating and drive up their cost of borrowing and, in turn, drive up 
power rates and phone rates for 25 million Americans, the board will be 
required to not guarantee their loan. I hope my colleagues will look at 
this provision.
  Let me give an example. Under current market conditions, the 1-year 
cost of borrowing for dropping from a AA to a AA- is 5 basis points, or 
$500,000 on a $1 billion loan. Over 10 years, that would be $5 million. 
It is pretty relevant when one is talking about dropping a bond rating. 
If it just dropped by one notch, from AA to AA- on a 10-year loan, that 
5 basis points will cost $5 million. If you drop from AA to BB, then 
the cost will drive by a great multiple of that.
  This is a reasonable issue. It is not an issue directly involved in 
this loan, but it is an issue that, unfortunately, has gotten pulled 
into it. I hope my colleagues on both sides of the aisle will look at 
this very closely.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Dakota.


                Amendment No. 2898 to Amendment No. 2897

            (Purpose: To improve the loan guarantee program)

  Mr. JOHNSON. Mr. President, I send to the desk a second-degree 
amendment.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from South Dakota [Mr. Johnson], for himself, 
     Mr. Thomas, Mr. Grams, Mr. Robb, Mr. Wellstone, Mr. Harkin, 
     and Mr. Baucus, proposes an amendment numbered 2898 to 
     amendment No. 2897.

  Mr. JOHNSON. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       In lieu of the language proposed to be inserted, insert the 
     following:
       ``(D) The loan is provided by an insured depository 
     institution (as defined in section 3 of the F.D.I. Act) that 
     is acceptable to the Board, or any lender that (i) has not 
     fewer than one issue of outstanding debt that is rated within 
     the highest three rating categories of a nationally 
     recognized statistical

[[Page S1936]]

     rating agency; or (ii) has provided financing to entities 
     with outstanding debt from the Rural Utilities Service and 
     which possess, in the judgment of the Board, the expertise, 
     capacity and capital strength to provide financing pursuant 
     to this act and has terms, in the judgment of the Board, that 
     are consistent in material respects with the terms of similar 
     obligations in the private capital market;''.

  Mr. JOHNSON. Mr. President, we have reached concurrence on the core 
of this legislation, and I commend Senator Gramm for his work with us 
on that matter. We have had bipartisan cooperation.
  We have one remaining issue in particular, however, that remains to 
be resolved. Senator Gramm has an amendment which opens up the 
possibility of CFC financing but under very circumscribed conditions, 
which I contend are so severe as to make CFC financing very unlikely. 
The question is: What can we do to lower the cost of financing to make 
this programming available to rural Americans and yet do so in a 
responsible, fiscally prudent manner?
  The amendment offered by Senator Gramm does essentially three things:
  First, it requires that any lender that is a nonprofit, such as a 
CFC, cannot provide financing under this act unless the board 
determines the credit rating of the lender will not decline upon the 
approval and funding of the loan.
  Second, it requires that nonprofit lenders sell any loans guaranteed 
under this act if their credit rating declines.
  Third, it excludes GSE lenders, such as CoBank, from participating in 
this program.
  It is inappropriate, I believe, to require the board to make a 
judgment on the impact on the credit rating of a nonprofit lender, such 
as a CFC, because, one, it places the burden of proof on the lender to 
show why its rating would not decrease. Under the proposed amendment, 
the board would need to predict future actions of credit rating 
agencies, and I do not believe this is a reasonable requirement to 
impose on a governmental board.
  In reaching the bipartisan compromise in this legislation, I went 
along with the creation of a board. This was a good idea on the part of 
Chairman Gramm. It involved the Federal Reserve, the Treasury, as well 
as the Department of Agriculture, to oversee this lending to make sure 
we have that extra element of prudence. But I believe it is simply not 
fair to put a burden of proof on the board to certify in advance what, 
in fact, is going to happen to a rating on the part of a CFC or another 
nonprofit.
  Wall Street credit rating agencies make determinations on credit 
ratings on a continuous basis. This is a real world market discipline 
that is imposed on lenders by the capital markets. A board of three 
people, qualified as they may be, is not an appropriate substitute for 
market discipline. It makes no sense, I believe, to charge this board 
with the requirement to predict that the credit rating of any lender 
will not decline.
  CFC raises funds in the private capital markets through sale of 
bonds, sale of equity hybrid securities, and by equity investments by 
CFC owners. All of these entities have expressed their confidence in 
CFC, and that is a real test of the CFC's strength.
  The CFC has demonstrated over its 30-year life that it understands 
rural energy and telecommunications markets. It has done a fine job of 
evaluating credit risks and has made sound credit decisions. CFC is not 
a new or untested entity in the marketplace.
  It may be argued that all CFC loans are to ``utilities with captive 
customers.'' This is not true. Many rural electric and telephone 
cooperatives do have a monopoly position in their service areas, just 
as other utilities do. However, in the electric area, deregulation is 
being implemented in a number of States, and co-ops and other utilities 
in those States are, in fact, facing a competitive marketplace.
  In the telecommunications area, CFC, through its controlled 
affiliate, the Rural Telephone Finance Cooperative, has made loans to a 
number of projects that include highly competitive services, including 
wireless telephone services, PCS, and CLEC service in rural areas that 
were previously poorly served by incumbent providers.
  The question then is: Why add an additional layer of bureaucratic 
review to one class of lenders--CFC and other nonprofits--when that 
level of review is not imposed on other lenders? This delays 
implementation in this needed program, adds costs, and provides a 
competitive advantage to for-profit finance companies.
  The amendment does not require banks to be within the highest three 
ratings categories, and most are not.
  Why would this provision be applied to nonprofit lenders and not to 
for-profit banks?
  I have a chart here which I think is interesting. The bottom line 
shows the Cooperative Finance Corporation's AA- rating under S&P and 
Aa3 rating under Moody, which compares with the largest banks in 
America. I think it is of interest that even if there were a decline, 
the CFC would still have a rating higher than most of the largest banks 
in the United States.
  A second point has to do with the requirement that a lender sell its 
loan if its credit rating declines. The requirement that a nonprofit 
lender sell a loan guaranteed under this act if its credit rating 
declines is an onerous provision that would cause significant financial 
stress and costs to the lender. If such a decline in a lender's rating 
should occur, a forced sale at that time could result in still further 
financial losses.
  This is basically, I believe, a poisonous provision designed to 
exclude nonprofit lenders, such as the CFC. Even if the credit rating 
of an AA rated company would decline to AA-, it would still have a 
significantly higher credit rating than the vast majority of banks in 
America. No similar requirement is being imposed on banks. I believe 
the idea of requiring a lender to sell loans is not the proper remedy.
  The last point I would make is, I believe the exclusion of lenders 
under the program is an unwise public policy. The exclusion of lenders 
under this program will only increase the cost of funds to borrowers 
and ultimately to rural and other TV viewers.
  The bill already establishes a sound process for the evaluation of 
projects applying for financing. This process includes approval by a 
board that includes the Secretary of Commerce, the Secretary of the 
Treasury, and the Secretary of Agriculture, advice from NTIA, 
evaluation, underwriting and analysis by the Rural Utilities Service, 
and the commitment of private lenders that are on the line to take a 
very substantial risk in the event of default by a project funded under 
this program.
  I believe that much of what we have accomplished in this 
legislation--the creation of a board and an 80-percent guaranteed loan 
rather than the 100 percent which, frankly, was the idea being pushed 
in the House and which I originally thought might be the way to go--we 
have diminished to an 80-percent guarantee; we have set up a board. I 
think we have a responsible approach to this guaranteed loan process.
  But I do believe that Senator Gramm's amendment would go one step 
further to the point of, in effect, making it very difficult, if not 
impossible, for the board and institutions, such as a Cooperative 
Financing Corporation, to participate in the program.
  Keep in mind, our amendment does not require that the CFC be involved 
at all. It simply makes it an alternative financing strategy that would 
be available for the board, with the Secretaries of Commerce, Treasury, 
and USDA to evaluate. I have great confidence in their leadership.
  I think if we were to adopt this second-degree amendment, we would be 
back to what I believe would be a clean bill.
  I look forward to additional debate.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. JOHNSON. Yes, I yield to the Senator from Maryland.
  Mr. SARBANES. It is my understanding that the House-committee-
reported bill provided a 100-percent guarantee. Is that correct?

  Mr. JOHNSON. The Agriculture Committee in the House of 
Representatives reported a 100-percent guaranteed bill. The Commerce 
Committee, it is my understanding, is working on a bill that may 
involve an 80-percent guarantee.
  Mr. SARBANES. I just want to make the point that in our committee, we 
agreed to an 80-percent guarantee, which I think was, in the end, 
accepted by everyone on the committee, although there were differing 
views about that question. I think it does provide an important measure 
of safety in considering this matter.

[[Page S1937]]

  Secondly, is it correct that if these institutions, which amendment 
No. 2898 addresses in terms of qualifying--if this amendment carries, 
the board that is being established under this legislation would still 
have to approve any loan guarantee made by such an institution, is that 
correct?
  Mr. JOHNSON. That is absolutely correct.
  Mr. SARBANES. In other words, the institutions, they are only being 
included in the sense that they are eligible to submit their proposal 
to the board. It does not mean they can then go ahead and do these loan 
guarantees simply on their own. They have to obtain board approval in 
order to do that; that is, this board of the Federal Reserve, the 
Treasury, and the Department of Agriculture. Is that correct?
  Mr. JOHNSON. That is absolutely right.
  Mr. SARBANES. Thirdly, I just make this observation. We are allowing 
FDIC institutions to do this. But, of course, in a sense, that creates 
an extra exposure that one of these institutions would not have because 
the Government, the taxpayer, would be exposed on the loan guarantee. 
But, in addition, if the institution itself were to run into serious 
trouble, there would be taxpayer exposure on the Federal deposit 
insurance for the depositors of that institution. Is that correct?
  Mr. JOHNSON. That is right.
  Mr. SARBANES. Of course, we do not have the latter in the case of 
these institutions. I think we have to exercise caution and prudence, 
but as you have pointed out, certainly for the CFC, they rank very well 
indeed. It seems to me they ought to qualify. I think the limitations 
have a great deal of difficulty connected with them, which the Senator 
has outlined in his statement.
  I thank the Senator.
  Mr. JOHNSON. I thank the Senator from Maryland for his leadership on 
this issue. He has been of great assistance to us. When we ultimately 
pass this legislation, a great share of credit goes to the Senator.
  I also note that the second-degree amendment, which is pending, is a 
bipartisan amendment. I express appreciation particularly to Senators 
Thomas of Wyoming and Grams of Minnesota for their work and their 
staffs' work on this legislation. Those two Senators share a very great 
concern for access to local programming for rural residents. I am 
appreciative of that kind of bipartisan cooperation on this second-
degree amendment.
  Mr. President, I yield back.
  The PRESIDING OFFICER (Mr. Fitzgerald). The Senator from Wyoming.
  Mr. THOMAS. Mr. President, I rise to discuss the pending second-
degree amendment, of which I am a cosponsor.
  First, I thank the Senator from Texas for his good work in getting 
this bill moved forward. We remember that this came up last year when 
we talked about the local-to-local broadcasting, and so on. The 
Senator--properly, I think--suggested it be sent back for more 
consideration by the Banking Committee. Indeed, it was. He promised us 
at that time that this bill would come forward. He has adhered to that 
promise and is out here with it now.
  The other thing on which I agree with the Senator from Texas is that 
he has divided this responsibility and there is an 80-percent 
guarantee. I agree with that. There needs to be someone who has some 
risk and promises that there will be more attention paid to it. I have 
agreed with all those things.
  What we are talking about is being able to include a not-for-profit 
financing organization that has been involved with rural 
telecommunications, that has been involved with rural electric, and, 
indeed, serves the rural area. Very appropriately, that should be 
considered.
  By the way, this is the Cooperative Finance Corporation, not the 
Commodity Finance Corporation that has been mentioned a time or two. It 
is not set up by the Feds. It is a private co-op without Federal 
support.
  CFC is adequately capitalized, so it has actually better ratings than 
most of those banks.
  Furthermore, as we talk about the requirement that might include 
increased costs to rural electrics--rural electrics, by the way, with 
which I am rather familiar, having worked in that area before I came to 
the Senate--they can get their financing other places; they are not 
captive borrowers from the CFC.
  I think this second-degree amendment is one that simply provides more 
opportunity for this unit, this nonprofit unit, owned by rural people, 
to participate in the financing of an effort to provide rural 
television, local-to-local television,  the kinds of coverage we now do 
not have in Wyoming. If you want to see ABC, you have to get your 
program from California or from Chicago. We are saying we can provide 
that locally so you can get local news, local information. We think 
that is very important. Of course, that is what this bill is all about.

  The proposal that is before us and that we seek to second degree 
places the burden of proof to show that the lender's ratings will not 
decrease. Under the proposed amendment, this board would need to 
predict what the financial condition is going to be. That is a pretty 
unreasonable requirement for this governmental board composed of 
Cabinet officers or their designees.
  Secondly, of course, Wall Street rating agencies make these kinds of 
ratings, and they will be making it here. This, after all, is a market 
function. CFC raises its capital in the private capital markets through 
the sale of bonds, through the sale of equity securities, equity 
investments. So these things are all a function of the market and are 
tested by the market. We don't need to set up an artificial 
organizational effort to do that.
  CFC is over 31 years old. I think it has $600 million worth of 
capitalization. They have been in the energy and telecommunications 
markets. They are mature. What we are saying is that we appreciate very 
much the Senator's willingness to allow these kinds of nonprofits to 
participate, but our argument basically is there are restrictions and 
regulations here that are not needed. They are additional bureaucratic 
reviews that are not necessary in order to accomplish the purpose the 
Senator has set forth.
  I won't take longer. I am very much in favor of this bill. I hope we 
will move to pass it quickly. I thank Senator Johnson and Senator Grams 
for joining in this effort to make some changes. I do not think they 
changed the policy direction that the Senator from Texas takes, and I 
urge the support of the second-degree amendment.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I rise in opposition to the amendment.
  I think, as people try to follow this debate, it often looks 
complicated, but if they burrow into the real issue, it boils down to 
this: In trying to accommodate those who want the Cooperative Finance 
Corporation to participate in this program, I have taken from the bill 
in my amendment the requirement that the lender be FDIC insured. I have 
set out some conditions. For banks, I require that they meet a capital 
requirement and that they do not engage in self-dealing. That 
requirement is not in this amendment that would strike my amendment. 
Under this amendment, potentially we could have an 80-percent 
Government guaranteed loan to some institution that is lending the 
money to itself. I am opposed to that. I am adamantly opposed to that. 
I think that is an outrage.
  Under this provision, we could have an institution lend all of its 
capital and the Federal Government is going to guarantee 80 percent of 
it. Under this amendment which strikes my amendment, some institution 
somewhere could lend 100 percent of its capital, and the Federal 
Government is going to guarantee 80 percent of it. I don't think so. 
Under the amendment I have offered, I have said that in such 
institutions, we are not going to guarantee their loan if they are 
lending more than 10 percent of their capital. This is taxpayers' money 
we are talking about. Both of those provisions are dropped.
  This amendment does a curtsy toward fiscal responsibility in that it 
says for a lender to qualify, they have to have one of the top three 
ratings on at least one issue of outstanding debt. You can issue a 30-
day note, and almost anybody can get a  AAA rating for their credit for 
30 days, but the taxpayer is going to be on the hook for 25 years. The 
fact that a borrower could get a good rating for a 30-day note does not 
excite me very much, when the taxpayer is going to be on the hook for

[[Page S1938]]

25 years. And that does not even apply to the CFC. They don't have to 
have any capital requirement at all. Every other nonprofit institution 
does in their amendment, but not CFC.

  Let me explain the issue of the CFC. The Congressional Budget Office 
has estimated that the loan guarantee in the House is going to have 45 
percent of the loan defaulted. The scoring by the Congressional Budget 
Office of the House bill assumes 45 percent of the loan guarantee the 
Federal Government makes will be defaulted and that the taxpayer will 
be left holding the bag. That is what the present value of $350 million 
is when you are discounting on a 25-year bond.
  This is risky business. We are lending money on a technology that has 
never worked anywhere. We are talking about totally new technology. I 
know there are people running around saying: We are going to have a 
directed beam satellite. Where are they? Show me one. Where is one 
working in the world today? They may work.
  The point is, this is new technology. We are talking about somebody 
borrowing the money, launching a satellite, for example, using brand 
new technology, cutting it on, it works. Maybe it works; maybe it 
doesn't work. The Congressional Budget Office believes this is risky 
business. They assume 45 percent of the loan is not going to be repaid.
  I have tried to build in protections, and those protections are 
critical. The most important protection is that a private lender is on 
the hook for 20 percent.
  Our Presiding Officer used to be in the banking business. He did not 
often get an 80-percent Government loan guarantee, but when he was on 
the hook for 20 percent, he paid attention to his business because it 
was his money. The guarantee that we are getting is that people are 
going to be judicious with the part we are not guaranteeing.
  Why do we treat nonprofits differently? What is this issue about 
credit rating of nonprofits? Why should Joe Brown who lives in San 
Geronimo Creek, TX, care about the credit rating of the Cooperative 
Finance Corporation when he is going to guarantee 80 percent of the 
loan they make? What difference does it make to him?
  First of all, why do they have a tax exemption at the Cooperative 
Finance Corporation? Because we gave it to them to promote a public 
purpose. What was the public purpose? The public purpose was to provide 
electricity to rural America and to provide telephone to rural America 
and to keep it moderate. That is why they have a tax exemption--because 
they are providing a public purpose.
  In letting them be involved in an activity where, under the 
conditions set in the House, 45 percent of the loan will be, according 
to the estimate of CBO, defaulted, all I have asked is that this 
nonprofit organization, or any other, since they are performing a 
public purpose by lending money to provide electricity in rural Texas 
and rural America, I want the board to find that their credit rating is 
not going to go down as a result of making this loan.
  Now, our colleague from South Dakota says, what business is it of 
ours whether the credit rating of the Cooperative Finance Corporation 
goes down or not? It is my business. It is my business because I have 
over a million Texans who buy electric power and/or telephone from 
rural co-ops that borrow money from the CFC. That is why it is my 
business. If they make a bad loan and their credit rating goes down, 
the cost of borrowing money to maintain electric power and telephone in 
my State is going to go up, and my ratepayers, who are captive--they 
can't buy electric power from anybody else and they can't buy hard-line 
telephone services from anybody else--are going to end up paying more 
money. That is why I care. That is why it is relevant.
  Now, this is risky business we are engaged in here. All I am trying 
to do is say, if you want the financial institution that has 
historically serviced REA and serviced electric power and telephone--
and let me remind my colleagues you don't lose money lending money to 
an electric co-op to provide telephone or electric power generation. 
Why? Because you have a captive market so that if the loan doesn't work 
out, you raise the rates--you restructure the loan, you raise the rates 
to pay it.
  In this case, if that satellite doesn't go into orbit, whose rates 
are you going to raise? You are going to raise the rates of people in 
Texas who are buying electric power. That is whose rates you are going 
to raise. That satellite doesn't work. You don't have anybody buying 
its services. They have a right not to buy them. You are not going to 
be able to raise their rates. So all I am trying to do is say before we 
let this lending institution, with a proud history, which has done a 
great job--and I don't dispute any of that--this tax-exempt lender that 
we gave tax exemption to electrify America and to provide phone 
services to America, before we have them make a loan that the 
Congressional Budget Office says 45 percent of, under the House 
structure, will be defaulted, before we let them do it--why is it so 
offensive to have, among other people, Alan Greenspan look at their 
loan and their proposal and try to make an estimate as to whether or 
not making this loan is going to drive down their bond rating and drive 
up the cost of electric power and telephone services in rural America? 
Do we not trust Alan Greenspan to make an honest judgment?
  I don't understand this issue. It seems to me what we have is a 
captive lender that somehow desperately wants to get into a business we 
didn't give it tax exemption to do. We have a mission creep here on a 
gigantic scale. Now, I am willing to let them do the mission creep as 
long as it doesn't cost Texas consumers of electric power and telephone 
services in rural Texas money. If it is not going to cost them money, I 
am willing to let them basically dramatically change the business they 
are in. If they make a $1.25 billion loan, that is larger by far--twice 
as big--than any loan they have ever made. Their average loan is less 
than $20 million. I would say that is a pretty dramatic change in 
business. If we are going to let them do that, all I am asking is that 
there be somebody responsible--and I would call Alan Greenspan 
responsible--who is going to look at their application and make a 
determination as to whether this is going to drive down their bond 
rating and cost every REA customer in America a bunch of money.
  The second provision is if, in fact, it does drive down their bond 
rating, I want them to sell it and get out of that business. You might 
say how dare we tell them they can't engage in some of the most 
speculative lending in America. How dare we tell them that. Well, the 
reason we dare tell them that is they are tax exempt. We gave them a 
very special privilege to do a certain kind of work, and that special 
privilege was to bring electricity and telephone service to America. I 
know we have let them get into other kinds of business. We let them 
make a loan so that REAs could go into a partnership with Direct 
Television. But they didn't put up any satellite or develop any new 
technology, and they didn't take any real risk. This is big-time risk.

  So the difference between the two amendments is, first of all, this 
amendment, in my opinion, is not very well crafted in that it strikes 
all of my provisions against self-dealing, all of the provisions in my 
amendment--and you don't have to worry about that when you are dealing 
with FDIC institutions because they have those requirements already. 
But those provisions in my amendment that were struck by this amendment 
are pretty important. If we are going to have the taxpayers on the hook 
for over $800 million, I want to be sure somebody is not lending this 
money to his brother in law, or to an affiliate of the company. I don't 
understand why those provisions were struck by this amendment.
  Secondly, if we have a traditional REA lender in the Cooperative 
Finance Corporation making loans, I am willing to let them into this 
business if they want to get into it; though, to the best of my mental 
ability, I can't see why they want in this business. But they do. They 
are determined to get into it. I am saying, let them in the business, 
but don't let them in if it is going to drive up the cost of electric 
power and telephone service to rural America by driving down their bond 
rating.
  I thought, when we made the concession to treat these nonprofits 
differently by not requiring them to meet a capital requirement for the 
size of their loans, that the compromise was

[[Page S1939]]

going to be accepted. But it seems to me that, basically, what we are 
trying to do is we are trying to go back and undo all the other stuff 
we have done in this bill because the logic of the bill is that we are 
going to have a private lender who is going to be on the hook. Now, 
some people say, won't the Cooperative Finance Corporation be on the 
hook? Who will be on the hook if they lose $800 million? Who really 
loses? Whose money is it? Well, ultimately, who is going to lose is the 
people who are buying electric power in America, in rural areas, and 
people who are buying telephone services, because they are going to 
lose a very cheap source of credit because the Cooperative Finance 
Corporation is going to end up losing its double-A rating.
  So that is what this whole issue is about. Unfortunately, we have a 
series of votes in the Budget Committee, and we don't have proxy 
voting. It is going to require Senator Johnson, Senator Sarbanes, and I 
to be there.
  I ask unanimous consent that we set aside this amendment, that we let 
other amendments be offered in our absence, but that we don't reach a 
final disposition of any amendment until the hour of 1:30.
  The PRESIDING OFFICER. Is there objection?
  Mr. JOHNSON. Reserving the right to object, and I don't intend to 
object, if I might inquire of the Senator so I am clear about this, we 
have a number of Members who would like to speak to the Senator's 
amendment and the second-degree amendment. I assume they will have an 
opportunity in that context.
  Mr. GRAMM. They will. Under the unanimous consent, any Member could 
speak on this amendment and on the bill, and any Member could offer 
another amendment. But there could be no final disposition of an 
amendment until 1:30 when we are back and have an opportunity to 
address it.
  I would prefer, if no one objects, to let people offer amendments 
because we want to finish this bill today. It is not going to hurt my 
feelings if somebody offers an amendment when I am gone. I can read it 
when I get back and discuss it.
  Mr. SARBANES. Reserving the right to object, I suggest to the Senator 
that 2 o'clock might be a better time.
  Mr. GRAMM. Mr. President, I ask unanimous consent to change the 
request to 2 o'clock.
  Mr. SARBANES. And then, for clarification, the time between now and 2 
would be spent either debating what is before us at the moment or 
offering some other amendment and debating that amendment.
  Mr. GRAMM. That is correct.
  Mr. SARBANES. One of those amendments might be involved.
  Mr. GRAMM. That is correct.
  Mr. SARBANES. I have no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. JOHNSON. Mr. President, if I might take 1 minute--I know there 
are a number of others who want to address this legislation, and I have 
to return to the Budget Committee as well for a series of votes--let me 
observe, having listened carefully to the chairman's remarks, that I 
think the differences we have are fairly straightforward, in a sense.
  On the one hand, our amendment says we have already come up with some 
safety provisions with an 80-percent guarantee rather than 100 percent, 
and so on. But what we are suggesting is that guidelines be adopted by 
the board, by Mr. Greenspan, by Treasury, and by USDA. They certainly 
have it within their prerogative to develop whatever guidelines they 
feel appropriate to ensure that the lending practices are secure and 
sound from the perspective of the taxpayers.
  The Senator from Texas, rather than relying on the Fed, the Treasury 
and USDA, is suggesting that he will impose guidelines statutorily. We 
now have, I believe, the consequence of, in effect, shutting out the 
CFC from participating in the program.
  I think we have a solid piece of legislation with the Johnson-Thomas-
Grams amendment. We would then turn to the board as the chief 
instrument for any further fine-tuning of what kind of provisions might 
be helpful to them in seeing to it that these loans are handled in due 
course and in the proper fashion.
  I think that is the difference we have between the underlying Gramm 
amendment and our second-degree amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Mr. President, I rise in support of the amendment offered 
by Senator Gramm, and am also in opposition, then, to the second-degree 
amendment offered by Senator Johnson.
  The Gramm amendment puts all possible lenders on an equal footing. I 
believe we must protect the taxpayers. It is the primary charge for the 
Banking Committee to ensure that this program does not turn into a 
source of free money. The amendment would do that and make the 
requirements for lending institutions equal regardless of the lender.
  I have concerns about allowing lenders that are active in the farm 
credit programs--Government-sponsored enterprises--to get into risky 
business ventures potentially lending to a new satellite TV venture. 
The CFC and farm credit banks focus their lending on electric and 
telephone loans, as well as farm operating and housing loans. They 
don't have experience with launching satellites.
  Where taxpayer money is concerned, we can't just open up the program 
to any lender that has previously participated in the Rural Utilities 
Service program. Too much is at stake.
  The amendment would not only allow FDIC-insured institutions to make 
the loan, but it allows investment banks and commercial lending 
institutions such as GE Capital and TransAmerica to make the loan. 
These institutions have unique knowledge of market risks of investing 
in satellite services.
  The amendment also provides for not-for-profit cooperative lending 
corporations to participate in the program only if the loan can be made 
and not cause the credit rating to fall below an AA rating. A lower 
credit rating could cause rate increases for rural electric and 
telephone customers.
  The Gramm amendment also restricts all lenders to lend only up to 10 
percent of their net equity. This solution ensures that no lender is 
treated differentially.
  The comment was made earlier that the board is going to be required 
to predict the future on the ratings for the CFC. That is what boards 
do. They don't predict the past. They predict the future. And they have 
to determine whether there will be a significant impact on a lending 
institution.
  Earlier we saw a chart. It pointed out that CFC has an AA rating. And 
it showed the other 10 rating agencies.
  One of the things that emphasis was not placed on was the asset size 
of those different institutions. The banks range in size from $716 
billion in assets down to $63 billion in assets. CFC has $15 billion in 
assets--one-fourth of what the smallest of the 10 banks have.
  Why is this important? We are talking about a $1.25 billion loan. 
That is a pretty significant portion of $15 billion. We should pay 
attention to the impact that it can have on that institution. That is 
why we have a board to make those decisions.
  The basis for this legislation is to create incentives for private 
investors to use their own risk capital to bring local television 
service to rural areas. The Congress decided it was in the national 
interest to allow satellite companies to rebroadcast local television 
stations to their home markets. The loan guarantee program is designed 
to make that possible in smaller markets, such as Casper, WY, and 
Glendive, MT. It is not being created to give away the taxpayers' 
money.
  The amendment that Senator Gramm has offered levels the playing field 
for all lenders and addresses the concerns of the Banking Committee. 
One of those concerns is how to bring more lenders into the program and 
ensure that any potential qualified borrower can participate. Rural 
electric cooperatives borrow through the Cooperative Finance 
Corporation. It is a private corporation with an AA credit rating that 
caters to the special needs of rural electric cooperatives. 
Historically, they lend for electricity and telephone projects. A loan 
to launch a satellite and provide local television stations in rural 
areas is a much bigger and much different risk than an electric 
project. There is less guarantee that the service will attract 
customers or that the launch of the satellite will be successful.

[[Page S1940]]

  The rural language that members of the Banking Committee have been 
working on with the distinguished Senator from Texas protects the REA 
members and CFC from taking a bigger risk than necessary but allows 
them to take the risk. It does not give any lender an advantage over 
any other lender to obtain the guarantee.
  I believe Congress should make the playing field as level as possible 
for all participants. I don't think it should give more potential to 
those that have some Federal connection. Senator Gramm's language does 
that. I urge its adoption. I urge a vote against the second-degree 
amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Kentucky.


                           Amendment No. 2896

(Purpose: To require that the entity, if any, that receives the entire 
  amount of the available loan guarantee shall provide in each under-
  served area or unserved area in each State all the local television 
               broadcast signals broadcast in such State)

  Mr. BUNNING. Mr. President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Kentucky (Mr. Bunning) proposes an 
     amendment numbered 2896.

  Mr. BUNNING. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 33, between lines 11 and 12, insert the following:
       (4) Requirement relating to applicant receiving entire 
     guarantee amount.--The entire amount of the guarantee 
     available under subsection (f) may not be provided for the 
     guarantee of a single loan unless the applicant for the loan 
     agrees to provide in each unserved area and underserved area 
     of each State the signals of all local television stations 
     broadcast in such State.

  Mr. BUNNING. Mr. President, this amendment is pretty simple. It says 
that any entity that receives the entire $1.25 billion loan under this 
bill must provide to its subscribers all of the local television 
broadcast signals which are broadcast in that State.
  Since coming to the Senate I have heard from my constituents about 
satellite TV more than any other issue. More than impeachment, Social 
Security, taxes, or anything else.
  That might sound strange, but I constantly hear from Kentuckians who 
are unhappy that they can't get local news and local programming. 
Believe me, when the University of Kentucky is playing basketball, 
that's a big deal.
  Kentucky is rural, and a lot of our communities are isolated and hard 
to reach. Cable isn't an option for them because the cable companies 
won't come--it's too expensive to wire them.
  And they often can't get a clear signal with traditional TV antennae 
because of the geography and landscape of our commonwealth. This has 
led many Kentuckians to try satellite coverage, but then they often 
hear more about New York City, Los Angeles, or Chicago.

  With my amendment, I am trying to make sure Kentuckians and other 
Americans living in rural areas get local news and local programming. 
In Kentucky, this problem is made even worse because much of our State 
is dominated by media markets from surrounding States, making it even 
harder to get local programming.
  I live in northern Kentucky near Cincinnati, OH. It is frustrating to 
constantly hear Ohio news and not be able to find out what is happening 
in Louisville, Lexington, Paducah, or Bowling Green.
  In talking with the industry, the satellite technology soon is going 
to allow for spot beaming to provide local-to-local coverage for 
everyone. I think that is great. I encourage them to keep pushing 
forward. I also want to make sure that if anyone gets the full value of 
this loan, then they have to provide local programming for local areas. 
These loans are going to be guaranteed 80 percent by the Federal 
Government and taxpayers in Kentucky and other rural States deserve to 
be considered.
  I am simply trying to look out for my constituents. I have a feeling 
there are other rural States in the same boat. I bet they are as 
frustrated as we are when they can learn about New York City politics 
or the Chicago Cubs baseball or the latest news in neighboring States 
but they cannot find out what is going on in their own backyards.
  I urge adoption of this amendment. I want to make sure Kentuckians, 
and all others in rural States who do not have local broadcasts in 
their own State, can receive local news from their State, not just news 
from an adjoining State. I urge passage of the amendment.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Roberts). Without objection, it is so 
ordered.
  Mr. HARKIN. Mr. President, I am proud the U.S. is the world leader in 
the advancement of technology, providing businesses and consumers 
faster and better ways to work and to communicate. But even though we 
have made great progress in technology, much of rural and small town 
America has been left behind. In the small town of Cumming, IA, where I 
was born and still have a house I live in when I am not here, we do not 
have access. We do not even have cable yet. So a lot of people are 
putting up satellite dishes as the only way of getting adequate 
information through television.
  I joined a Senate rural telecommunications task force last year to 
address these issues and to work, as a group, to pass legislation to 
help rural communities catch up. Just as cable and telephone companies 
say it does not make good business sense to provide service to a few 
customers in Cumming, IA, for example, we know that without this access 
rural America will suffer and will be left behind in the new digital 
age. You talk about a digital divide. There is a digital divide and 
rural America is on the short end of that divide.
  We are not just talking about high-speed Internet access or reliable 
telephone lines. We are talking about the lack of access to basic local 
TV programming--local weather, local news, local school information for 
rural residents and farm families. You would think it is easy; if you 
live on a farm or in a small town in rural Iowa, you just put an 
antenna on your house and get the local weather and news from a local 
TV station. Once again, it is not that easy for rural and small town 
residents. An antenna just doesn't reach that far. Weather conditions 
interrupt, for example. Cable will not extend lines outside of 
metropolitan areas because of the high cost. As I said, in my hometown, 
we do not have cable yet. We live fairly close to a metropolitan area.
  The satellite dish came along and provided relief and access and they 
sprouted up like mushrooms all over rural Iowa and rural America. But 
the satellite also has its problems. It does not include what is called 
``local-into-local'' programming, into small and rural TV markets. The 
satellite dish companies say they do not have the capacity in their 
existing satellites. That is what they say.
  I happen to have a satellite dish on my house in Virginia, 12 miles 
from here. I can turn that thing on any time and get hundreds of 
channels--many of which are, I think, kind of ridiculous, but they are 
there. So they can provide hundreds of channels to customers in 
metropolitan areas, but they cannot transmit local TV to the 60 million 
customers who live outside the big TV markets, they say, without 
launching more multimillion-dollar satellites.
  Last year, we fought hard to keep in the satellite bill a rural loan 
guarantee program, one that would make it easier for companies or 
nonprofit cooperatives to provide local TV to rural customers. 
Unfortunately, it was taken out at the last minute before the bill was 
passed and signed into law. Senator Gramm, the Chairman of the Banking 
Committee, has drafted a rural loan guarantee bill, similar to the one 
I cosponsored last year, that will go a long way to ensuring that rural 
residents receive the benefit of local television.
  However, I am concerned about the provision in the bill that requires 
all potential lenders in the Loan Guarantee Program to be Federal 
Deposit Insurance Corporation insured. That

[[Page S1941]]

language would exclude several qualified lenders who have previously 
provided financing under the Rural Electrification Act. These 
institutions include the Cooperative Finance Corporation, the CFC, and 
other lenders that have the financial strength, the expertise, and the 
ability to participate in this program for rural citizens. These 
institutions have had years of experience. They have had a strong 
record in lending to rural and electric cooperatives.
  I urge my colleagues to approve the Johnson-Thomas bipartisan 
amendment, of which I am a cosponsor, to allow qualified lenders with 
experience, expertise, and a strong reputation in these types of 
programs, to participate in the funding subject to approval. The 
cooperatives use lenders such as CFC because it means lower interest 
rates, resulting in a more affordable and workable project.
  Again, I don't want to say I am favoring cooperatives or any one over 
another providing local TV in rural areas. I favor any institution and 
any technology that would be willing to provide local service to most 
customers in unserved areas; however, without the Johnson-Thomas 
amendment, we are effectively, legislatively shutting out a potential 
participant interested in extending local TV to rural America. They 
might win, they might not, but why should we shut them out of this 
process.
  I would also like to mention Senator Dorgan's Rural Broadband 
Enhancement Act, introduced yesterday--again of which I am a cosponsor. 
This important legislation would help ensure that rural and small town 
America are not left behind by the revolution taking place in the 
technology industry that I mentioned earlier. The Dorgan bill would 
authorize $3 billion for a revolving loan fund over 5 years to provide 
capital for low-interest loans to finance construction of the needed 
broadband infrastructure. I am an original cosponsor of this bill 
because we cannot sit around waiting for this important technology to 
come to rural and small town America on its own. We know from past 
experience that we need to help make it happen. I believe the Dorgan 
bill will provide the incentives for companies to expand beyond their 
urban markets.
  The Rural Broadband Enhancement Act and the Rural Loan Guarantee--
LOCAL TV bill that is being considered on the floor today, are sorely 
needed in rural America. They both are akin to what happened in the 
1930s with the Rural Electrification Act when we started to electrify 
rural America. I at one time did some research on that. I read the 
Senate debates when the Senate was debating whether or not to pass the 
Rural Electrification Act to provide the long-term, low-interest loans 
through cooperatives to build rural electric lines to families such as 
mine in rural Iowa.
  At that time there was more than one Senator who got up and said this 
is a free market. If private companies do not want to go out there and 
build these electric lines to rural America, that is the marketplace. 
If people living in rural America don't like it there because they 
don't have electricity, they can move to the cities.
  Fortunately, those voices were in the minority. The majority 
recognized that because of the sparse population in rural America, it 
was going to cost a little more for the initial installing of those 
rural electrification lines. What happened after that, of course, was 
because of the electrification of rural America we saw new schools go 
up. We saw new factories and plants go up to buttress the farm economy 
in our rural areas. We saw colleges being built.
  So all of rural America expanded and became financially more sound 
because of the investment we made up front in rural electrification. We 
face that same kind of frontier right now both in broadband access and 
also in access to local television broadcasting.
  That is why I feel so strongly that these are synergistic. The Dorgan 
bill introduced yesterday for broadband access and the Johnson-Thomas 
amendment which is before the body will provide the same kind of long-
term, low-interest loans that could be made available through 
cooperatives and through other institutions to provide for a better 
possibility that we will get direct, local-to-local satellite 
broadcasting in rural America.
  I hope the Senate will review this history. I hope the majority of 
this body will support the Johnson-Thomas bipartisan amendment so that 
rural America can have the same kind of satellite dish reception that 
we get in rural Virginia 12 miles from here. We can get on our 
satellite dish in our home ABC, NBC, CBS, Fox, all local from 
Washington, DC. It costs about four or five bucks a month. I believe 
people all over rural Iowa and rural Kansas would be willing to pay 
four or five bucks a month to get that kind of local television service 
from their local stations' satellite so they can know when tornadoes 
are approaching, bad weather, when schools are closed, and other local 
information they need which they otherwise do not get.
  I urge adoption of the Johnson-Thomas amendment. I yield the floor.
  The PRESIDING OFFICER. The distinguished Senator from Massachusetts 
is recognized.
  Mr. KENNEDY. Mr. President, I ask unanimous consent to go into 
morning business for 3 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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