[Congressional Record Volume 146, Number 98 (Tuesday, July 25, 2000)]
[Senate]
[Pages S7574-S7575]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     CERTIFIED DEVELOPMENT COMPANY PROGRAM IMPROVEMENTS ACT OF 2000

  Mr. NICKLES. Mr. President, I ask unanimous consent that the Chair 
lay before the Senate a message from the House to accompany H.R. 2614.
  There being no objection, the Presiding Officer laid before the 
Senate the following message from the House of Representatives:

         Resolved, That the House agree to the amendment of the 
     Senate to the bill (H.R. 2614) entitled ``An Act to amend the 
     Small Business Investment Act to make improvements to the 
     certified development company program, and for other 
     purposes'', with the following amendment:
       In lieu of the matter proposed to be inserted by the 
     amendment of the Senate, insert the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Certified Development 
     Company Program Improvements Act of 2000''.

     SEC. 2. WOMEN-OWNED BUSINESSES.

       Section 501(d)(3)(C) of the Small Business Investment Act 
     of 1958 (15 U.S.C. 695(d)(3)(C)) is amended by inserting 
     before the comma ``or women-owned business development''.

     SEC. 3. MAXIMUM DEBENTURE SIZE.

       Section 502(2) of the Small Business Investment Act of 1958 
     (15 U.S.C. 696(2)) is amended to read as follows:
       ``(2) Loan limits.--Loans made by the Administration under 
     this section shall be limited to $1,000,000 for each such 
     identifiable small business concern, other than loans meeting 
     the criteria specified in section 501(d)(3), which shall be 
     limited to $1,300,000 for each such identifiable small 
     business concern.''.

     SEC. 4. FEES.

       Section 503(f) of the Small Business Investment Act of 1958 
     (15 U.S.C. 697(f)) is amended to read as follows:
       ``(f) Effective Date.--The fees authorized by subsections 
     (b) and (d) shall apply to any financing approved by the 
     Administration during the period beginning on October 1, 1996 
     and ending on September 30, 2003.''.

     SEC. 5. PREMIER CERTIFIED LENDERS PROGRAM.

       Section 217(b) of the Small Business Administration 
     Reauthorization and Amendments Act of 1994 (15 U.S.C. 697e 
     note) is repealed.

     SEC. 6. SALE OF CERTAIN DEFAULTED LOANS.

       Section 508 of the Small Business Investment Act of 1958 
     (15 U.S.C. 697e) is amended--
       (1) in subsection (a), by striking ``On a pilot program 
     basis, the'' and inserting ``The'';
       (2) by redesignating subsections (d) through (i) as 
     subsections (e) through (j), respectively;
       (3) in subsection (f) (as redesignated by paragraph (2)), 
     by striking ``subsection (f)'' and inserting ``subsection 
     (g)'';
       (4) in subsection (h) (as redesignated by paragraph (2)), 
     by striking ``subsection (f)'' and inserting ``subsection 
     (g)''; and
       (5) by inserting after subsection (c) the following:
       ``(d) Sale of Certain Defaulted Loans.--
       ``(1) Notice.--
       ``(A) In general.--If, upon default in repayment, the 
     Administration acquires a loan guaranteed under this section 
     and identifies such loan for inclusion in a bulk asset sale 
     of defaulted or repurchased loans or other financings, the 
     Administration shall give prior notice thereof to any 
     certified development company that has a contingent liability 
     under this section.
       ``(B) Timing.--The notice required by subparagraph (A) 
     shall be given to the certified development company as soon 
     as possible after the financing is identified, but not later 
     than 90 days before the date on which the Administration 
     first makes any record on such financing available for 
     examination by prospective purchasers prior to its offering 
     in a package of loans for bulk sale.
       ``(2) Limitations.--The Administration may not offer any 
     loan described in paragraph (1)(A) as part of a bulk sale, 
     unless the Administration--
       ``(A) provides prospective purchasers with the opportunity 
     to examine the records of the Administration with respect to 
     such loan; and
       ``(B) provides the notice required by paragraph (1).''.

     SEC. 7. LOAN LIQUIDATION.

       (a) Liquidation and Foreclosure.--Title V of the Small 
     Business Investment Act of 1958 (15 U.S.C. 695 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.

       ``(a) Delegation of Authority.--In accordance with this 
     section, the Administration shall delegate to any qualified 
     State or local development company (as defined in section 
     503(e)) that meets the eligibility requirements of subsection 
     (b)(1) of this section the authority to foreclose and 
     liquidate, or to otherwise treat in accordance with this 
     section, defaulted loans in its portfolio that are funded 
     with the proceeds of debentures guaranteed by the 
     Administration under section 503.
       ``(b) Eligibility for Delegation.--
       ``(1) Requirements.--A qualified State or local development 
     company shall be eligible for a delegation of authority under 
     subsection (a) if--
       ``(A) the company--
       ``(i) has participated in the loan liquidation pilot 
     program established by the Small Business Programs 
     Improvement Act of 1996 (15 U.S.C. 695 note), as in effect on 
     the day before the date of issuance of final regulations by 
     the Administration implementing this section;
       ``(ii) is participating in the Premier Certified Lenders 
     Program under section 508; or
       ``(iii) during the 3 fiscal years immediately prior to 
     seeking such a delegation, has made an average of not fewer 
     than 10 loans per year that are funded with the proceeds of 
     debentures guaranteed under section 503; and
       ``(B) the company--
       ``(i) has one or more employees--

       ``(I) with not less than 2 years of substantive, decision-
     making experience in administering the liquidation and 
     workout of problem loans secured in a manner substantially 
     similar to loans funded with the proceeds of debentures 
     guaranteed under section 503; and
       ``(II) who have completed a training program on loan 
     liquidation developed by the Administration in conjunction 
     with qualified State and local development companies that 
     meet the requirements of this paragraph; or

       ``(ii) submits to the Administration documentation 
     demonstrating that the company has contracted with a 
     qualified third-party to perform any liquidation activities 
     and secures the approval of the contract by the 
     Administration with respect to the qualifications of the 
     contractor and the terms and conditions of liquidation 
     activities.
       ``(2) Confirmation.--On request, the Administration shall 
     examine the qualifications of any company described in 
     subsection (a) to determine if such company is eligible for 
     the delegation of authority under this section. If the 
     Administration determines that a company is not eligible, the 
     Administration shall provide the company with the reasons for 
     such ineligibility.
       ``(c) Scope of Delegated Authority.--
       ``(1) In general.--Each qualified State or local 
     development company to which the Administration delegates 
     authority under subsection (a) may, with respect to any loan 
     described in subsection (a)--
       ``(A) perform all liquidation and foreclosure functions, 
     including the purchase in accordance with this subsection of 
     any other indebtedness secured by the property securing the 
     loan, in a reasonable and sound manner, according to 
     commercially accepted practices, pursuant to a liquidation 
     plan approved in advance by the Administration under 
     paragraph (2)(A);
       ``(B) litigate any matter relating to the performance of 
     the functions described in subparagraph (A), except that the 
     Administration may--
       ``(i) defend or bring any claim if--

       ``(I) the outcome of the litigation may adversely affect 
     management by the Administration of the loan program 
     established under section 502; or
       ``(II) the Administration is entitled to legal remedies not 
     available to a qualified State or local development company, 
     and such remedies will benefit either the Administration or 
     the qualified State or local development company; or

       ``(ii) oversee the conduct of any such litigation; and
       ``(C) take other appropriate actions to mitigate loan 
     losses in lieu of total liquidation or foreclosure, including 
     the restructuring of a loan in accordance with prudent loan 
     servicing practices and pursuant to a workout plan approved 
     in advance by the Administration under paragraph (2)(C).

[[Page S7575]]

       ``(2) Administration approval.--
       ``(A) Liquidation plan.--
       ``(i) In general.--Before carrying out functions described 
     in paragraph (1)(A), a qualified State or local development 
     company shall submit to the Administration a proposed 
     liquidation plan.
       ``(ii) Administration action on plan.--

       ``(I) Timing.--Not later than 15 business days after a 
     liquidation plan is received by the Administration under 
     clause (i), the Administration shall approve or reject the 
     plan.
       ``(II) Notice of no decision.--With respect to any 
     liquidation plan that cannot be approved or denied within the 
     15-day period required by subclause (I), the Administration 
     shall, during such period, provide notice in accordance with 
     subparagraph (E) to the company that submitted the plan.

       ``(iii) Routine actions.--In carrying out functions 
     described in paragraph (1)(A), a qualified State or local 
     development company may undertake any routine action not 
     addressed in a liquidation plan without obtaining additional 
     approval from the Administration.
       ``(B) Purchase of indebtedness.--
       ``(i) In general.--In carrying out functions described in 
     paragraph (1)(A), a qualified State or local development 
     company shall submit to the Administration a request for 
     written approval before committing the Administration to the 
     purchase of any other indebtedness secured by the property 
     securing a defaulted loan.
       ``(ii) Administration action on request.--

       ``(I) Timing.--Not later than 15 business days after 
     receiving a request under clause (i), the Administration 
     shall approve or deny the request.
       ``(II) Notice of no decision.--With respect to any request 
     that cannot be approved or denied within the 15-day period 
     required by subclause (I), the Administration shall, during 
     such period, provide notice in accordance with subparagraph 
     (E) to the company that submitted the request.

       ``(C) Workout plan.--
       ``(i) In general.--In carrying out functions described in 
     paragraph (1)(C), a qualified State or local development 
     company shall submit to the Administration a proposed workout 
     plan.
       ``(ii) Administration action on plan.--

       ``(I) Timing.--Not later than 15 business days after a 
     workout plan is received by the Administration under clause 
     (i), the Administration shall approve or reject the plan.
       ``(II) Notice of no decision.--With respect to any workout 
     plan that cannot be approved or denied within the 15-day 
     period required by subclause (I), the Administration shall, 
     during such period, provide notice in accordance with 
     subparagraph (E) to the company that submitted the plan.

       ``(D) Compromise of indebtedness.--In carrying out 
     functions described in paragraph (1)(A), a qualified State or 
     local development company may--
       ``(i) consider an offer made by an obligor to compromise 
     the debt for less than the full amount owing; and
       ``(ii) pursuant to such an offer, release any obligor or 
     other party contingently liable, if the company secures the 
     written approval of the Administration.
       ``(E) Contents of notice of no decision.--Any notice 
     provided by the Administration under subparagraph 
     (A)(ii)(II), (B)(ii)(II), or (C)(ii)(II)--
       ``(i) shall be in writing;
       ``(ii) shall state the specific reason for the inability of 
     the Administration to act on the subject plan or request;
       ``(iii) shall include an estimate of the additional time 
     required by the Administration to act on the plan or request; 
     and
       ``(iv) if the Administration cannot act because 
     insufficient information or documentation was provided by the 
     company submitting the plan or request, shall specify the 
     nature of such additional information or documentation.
       ``(3) Conflict of interest.--In carrying out functions 
     described in paragraph (1), a qualified State or local 
     development company shall take no action that would result in 
     an actual or apparent conflict of interest between the 
     company (or any employee of the company) and any third party 
     lender (or any associate of a third party lender) or any 
     other person participating in a liquidation, foreclosure, or 
     loss mitigation action.
       ``(d) Suspension or Revocation of Authority.--The 
     Administration may revoke or suspend a delegation of 
     authority under this section to any qualified State or local 
     development company, if the Administration determines that 
     the company--
       ``(1) does not meet the requirements of subsection (b)(1);
       ``(2) has violated any applicable rule or regulation of the 
     Administration or any other applicable provision of law; or
       ``(3) has failed to comply with any reporting requirement 
     that may be established by the Administration relating to 
     carrying out functions described in subsection (c)(1).
       ``(e) Report.--
       ``(1) In general.--Based on information provided by 
     qualified State and local development companies and the 
     Administration, the Administration shall annually submit to 
     the Committees on Small Business of the House of 
     Representatives and the Senate a report on the results of 
     delegation of authority under this section.
       ``(2) Contents.--Each report submitted under paragraph (1) 
     shall include--
       ``(A) with respect to each loan foreclosed or liquidated by 
     a qualified State or local development company under this 
     section, or for which losses were otherwise mitigated by the 
     company pursuant to a workout plan under this section--
       ``(i) the total cost of the project financed with the loan;
       ``(ii) the total original dollar amount guaranteed by the 
     Administration;
       ``(iii) the total dollar amount of the loan at the time of 
     liquidation, foreclosure, or mitigation of loss;
       ``(iv) the total dollar losses resulting from the 
     liquidation, foreclosure, or mitigation of loss; and
       ``(v) the total recoveries resulting from the liquidation, 
     foreclosure, or mitigation of loss, both as a percentage of 
     the amount guaranteed and the total cost of the project 
     financed;
       ``(B) with respect to each qualified State or local 
     development company to which authority is delegated under 
     this section, the totals of each of the amounts described in 
     clauses (i) through (v) of subparagraph (A);
       ``(C) with respect to all loans subject to foreclosure, 
     liquidation, or mitigation under this section, the totals of 
     each of the amounts described in clauses (i) through (v) of 
     subparagraph (A);
       ``(D) a comparison between--
       ``(i) the information provided under subparagraph (C) with 
     respect to the 12-month period preceding the date on which 
     the report is submitted; and
       ``(ii) the same information with respect to loans 
     foreclosed and liquidated, or otherwise treated, by the 
     Administration during the same period; and
       ``(E) the number of times that the Administration has 
     failed to approve or reject a liquidation plan in accordance 
     with subsection (c)(2)(A) or a workout plan in accordance 
     with subsection (c)(2)(C), or to approve or deny a request 
     for purchase of indebtedness under subsection (c)(2)(B), 
     including specific information regarding the reasons for the 
     failure of the Administration and any delay that resulted.''.
       (b) Regulations.--
       (1) In general.--Not later than 150 days after the date of 
     enactment of this Act, the Administrator shall issue such 
     regulations as may be necessary to carry out section 510 of 
     the Small Business Investment Act of 1958, as added by 
     subsection (a) of this section.
       (2) Termination of pilot program.--Effective on the date on 
     which final regulations are issued under paragraph (1), 
     section 204 of the Small Business Programs Improvement Act of 
     1996 (15 U.S.C. 695 note) shall cease to have legal effect.

     SEC. 8. FUNDING LEVELS FOR CERTAIN FINANCINGS UNDER THE SMALL 
                   BUSINESS INVESTMENT ACT OF 1958.

       Section 20 of the Small Business Act (15 U.S.C. 631 note) 
     is amended by adding at the end the following:
       ``(g) Program Levels for Certain Small Business Investment 
     Act of 1958 Financings.--The following program levels are 
     authorized for financings under section 504 of the Small 
     Business Investment Act of 1958:
       ``(1) $4,000,000,000 for fiscal year 2001.
       ``(2) $5,000,000,000 for fiscal year 2002.
       ``(3) $6,000,000,000 for fiscal year 2003.''.

  Mr. NICKLES. Mr. President, I ask unanimous consent that the Senate 
disagree with the amendment of the House, the Senate request a 
conference with the House, and the Chair be authorized to appoint 
conferees on the part of the Senate.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Presiding Officer (Mr. Inhofe) appointed Mr. Bond, Mr. Burns, and 
Mr. Kerry conferees on the part of the Senate.

                          ____________________