[Congressional Record Volume 147, Number 159 (Friday, November 16, 2001)]
[House]
[Pages H8316-H8320]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS INVESTMENT COMPANY AMENDMENTS ACT OF 2001
Mr. MANZULLO. Mr. Speaker, I ask unanimous consent to take from the
Speaker's table the Senate bill (S. 1196) to amend the Small Business
Investment Act of 1958, and for other purposes, and ask for its
immediate consideration in the House.
The Clerk read the title of the Senate bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Illinois?
Ms. VELAZQUEZ. Mr. Speaker, reserving the right to object, and I do
not intend to object, I ask the gentleman from Illinois (Mr. Manzullo)
to explain his request.
Mr. MANZULLO. Mr. Speaker, will the gentlewoman yield?
Ms. VELAZQUEZ. I yield to the gentleman from Illinois.
Mr. MANZULLO. Mr. Speaker, the purpose is so that the 7(a) program
and the 504 program, it will reduce fees in both those programs
effective on October of next year; but the overall bill is important
because it continues the SBIC programs going.
Small Business Administration,
Washington, DC, November 14, 2001.
Hon. Donald A. Manzullo,
Chairman, Committee on Small Business, House of
Representatives, Rayburn House Office Building,
Washington, DC.
Dear Mr. Chairman: Congress will soon pass H.R. 2500,
Departments of Commerce, Justice, and State, the Judiciary
and Related Agencies Appropriations Act, 2002. As you know,
under the terms of the Continuing Resolution, upon enactment
of H.R. 2500 its provisions will immediately take effect.
That enactment will have a significant impact upon the Small
Business Investment Company (SBIC) participating securities
program.
Under H.R. 2500, there is no subsidy budget authority
available for the participating securities program. The
Committee on Appropriations removed that funding in
anticipation of legislation from the Committee on Small
Business to enhance the fee structure of the participating
securities program. Those legislative changes would result in
a zero subsidy rate for the participating securities program.
This legislation was part of the Administration's budget
submission to the Congress and is supported by the SBIC
industry. Unfortunately, the authorizing language has not yet
passed the Congress.
Absent the authorizing language the Small Business
Administration will be unable to make future commitments for
participating securities leverage until the authorizing
language is passed. I fear that such disruption will have a
chilling effect upon private sector participation in the SBIC
program. There are currently 30 participating securities
license applicants awaiting approval backed by approximately
$600 million dollars in capital. This capital, enhanced by
SBA's leverage, represents a significant potential investment
in America's small businesses, an investment that could be
negatively affected by the uncertainty of a suspension.
Mr. Chairman, the SBIC participating securities program has
invested billions of dollars in small businesses and created
thousands of jobs, and has the potential to create so many
more. I urge you and your colleagues to work quickly to pass
the requisite legislation to raise the fee structure in the
participating securities program by 37.6 basis points and
prevent the suspension of the program. The SBA stands ready
to work with you on this legislation and help keep this
program working for small business.
Sincerely,
Hector V. Barreto,
Administrator.
Ms. VELAZQUEZ. Mr. Speaker, further reserving the right to object, I
rise in support of the amendment. Earlier this week, the Commerce,
Justice and State bill sent to the President failed to provide any
funding for the Small Business Investment Company program, which will
force its complete shutdown.
The SBIC program has been a real partner in helping America's small
businesses grow both in times of economic prosperity and in times of
economic slowdown. SBICs have assisted small business owners by
investing over $15 billion in long-term debt and equity capital to more
than 90,000 small businesses and by investing more than $600 million to
businesses in low- and moderate-income areas. The SBICs have given such
Fortune 500 companies as Intel, Federal Express, AOL, and Staples the
tools they need to succeed and to become today's industry leaders.
In an effort to keep the program operating, S. 1196 will increase the
fees to make up for the lack of appropriated funds, but an increase in
program fees will rule out the SBIC as an option for many small
businesses across this country.
A way to ensure lending options for this Nation's small businesses is
to adopt the amendment under consideration. The amendment will reduce
the costs of the 7(a) program which will allow for greater access to
capital that small businesses, especially start-ups and those in low-
income areas, need to continue serving as the engine of this economy.
I urge its adoption.
Mr. MANZULLO. Mr. Speaker, I rise in support of S. 1196, the Small
Business Investment Company Amendments Act of 2001. This is a fairly
straightforward bill--it will keep venture capital flowing to small
businesses during this critical time in our nation's economic recovery.
Right now, there are 30 participating securities license applicants
awaiting approval of this bill, with $600 million private equity
capital at stake.
In 1958, Congress created the SBIC program to assist small business
owners in locating investment capital. The problems are still the same
as they were 40 years ago, which are magnified by the collapse of many
``dot.coms,'' the general economic slowdown, and the tragic events of
September 11th. However, with other sources of private venture capital
drying up, the SBIC program is becoming more and more critically
important.
Last year, SBIC financed 4,600 venture capital deals, investing $5.6
billion in fast-growing small businesses. Since 1996, investing by
SBIC-licensed firms accounted for about half of all venture capital
deals made in the United States. Since its inception, the SBIC program
has also returned $700 million directly to the
[[Page H8317]]
U.S. Treasury. Indirectly, the SBIC program has generated millions of
dollars in corporate tax revenue from companies as diverse as Federal
Express, Apple Computer, Intel Corporation, America Online, Callaway
Golf, and the Outback Steakhouse. They all had their start with an
infusion of venture capital from SBIC-licensed firms.
The main purpose of S. 1196 is to adjust the fees charged to
Participating Security SBICs from 1.0 percent to 1.38 percent. This
change is necessary because both the President and Congress have agreed
to eliminate funding for this program. The FY '02 Commerce/Justice/
State Appropriations bill (H.R. 2500), which passed both bodies earlier
this week, contained no funding for the Participating Securities SBIC
program. The Debentures SBIC program already operates at zero cost to
the taxpayer. If the President signs H.R. 2500 without any funding or
and S. 1196, with a fee increase, does not reach his desk, then the
SBIC Participating Securities program terminates. According to a letter
I received from the SBA Administrator, Hector Barreto, which I include
for the record, there are currently 30 participating securities license
applicants awaiting approval backed by approximately $600 million
dollars in capital. If S. 1196 does not pass, these and all future
small business investment opportunities through the SBIC program would
vanish.
H.R. 2500 also contains increased program levels for the SBIC
program. S. 1196 is needed to accommodate the anticipated increased
demand for venture capital financing as the private sector has
withdrawn from the marketplace. The SBIC program serves best as a
counter cyclical program--it is particularly needed during a downturn
in our economy.
The other provisions in S. 1196 affecting the SBIC program strengthen
the oversight and authority of the SBA to take action against bad
actors within the program, promoting the integrity of the program, and
streamline its operation.
The House amendments to S. 1196 modestly lower the fees in the other
main access to capital programs of the SBA--the 7(a) General Business
loan program and the 504 Certified Development Company (CDC) program.
In 1995, Congress increased the fees in the programs to lower the cost
to the taxpayer. Since then, the Office of Management and Budget (OMB),
the Congressional Budget Office (CBO), and the General Accounting
Office (GAO) have all agreed that small business borrowers and lenders
have paid in far too much fees to keep the program operating at no cost
to the taxpayer. In fact, CBO estimates that participants in the 7(a)
program alone have overpaid the U.S. Treasury in terms of higher fees
to the tune of $1.258 billion over the past nine years.
These amendments are a small beginning to rectify this problem. The
fee changes include lowering the fees on 7(a) loans from between
$150,000 to $250,000 to two percent. For all loans above $250,000, the
fees would be three percent. This amendment eliminates the 3.5 percent
fee on loans above $700,000. The annual fee would drop in half from
0.25 percent to 0.50 percent. In addition, 504 fees would be reduced in
terms of both the upfront and on-going fee for the entire life of the
loan.
It should be made clear that fee reductions contained in the House
amendments to S. 1196 are applicable only after October 1, 2002--at the
beginning of the next fiscal year. Thus, there should be no
interruption in the level of service offered small business borrowers
and lenders during this fiscal year. Also, these changes are subject to
appropriations, which I am optimistic will be addressed when OMB makes
its promised changes to the subsidy rate calculation model.
Mr. Speaker, I rise in support of S. 1196 as amended, and I urge my
colleagues to support these needed changes to these programs.
Ms. Velazquez. Mr. Speaker, I withdraw my reservation of objection.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Illinois?
There was no objection.
The Clerk read the Senate bill, as follows:
S. 1196
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Investment
Company Amendments Act of 2001''.
SEC. 2. SUBSIDY FEES.
(a) In General.--Section 303 of the Small Business
Investment Act of 1958 (15 U.S.C. 683) is amended--
(1) in subsection (b)--
(A) by striking ``of not more than 1 percent per year'';
(B) by inserting ``which amount may not exceed 1.38 percent
per year, and'' before ``which shall be paid''; and
(C) by striking ``September 30, 2000'' and inserting
``September 30, 2001''; and
(2) in subsection (g)(2)--
(A) by striking ``of not more than 1 percent per year'';
(B) by inserting ``which amount may not exceed 1.38 percent
per year, and'' before ``which shall be paid''; and
(C) by striking ``September 30, 2000'' and inserting
``September 30, 2001''.
(b) Effective Date.--The amendments made by this section
shall become effective on October 1, 2001.
SEC. 3. CONFLICTS OF INTEREST.
Section 312 of the Small Business Investment Act of 1958
(15 U.S.C. 687d) is amended by striking ``(including
disclosure in the locality most directly affected by the
transaction)''.
SEC. 4. PENALTIES FOR FALSE STATEMENTS.
(a) Criminal Penalties.--Section 1014 of title 18, United
States Code, is amended by inserting ``, as defined in
section 103 of the Small Business Investment Act of 1958 (15
U.S.C. 662), or the Small Business Administration in
connection with any provision of that Act'' after ``small
business investment company''.
(b) Civil Penalties.--Section 951 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1833a) is amended--
(1) by redesignating subsections (d) through (g) as
subsections (e) through (h), respectively; and
(2) in subsection (c)--
(A) in paragraph (1), by striking ``or'' at the end;
(B) in paragraph (2)--
(i) by striking ``1341;'' and inserting ``1341''; and
(ii) by striking ``institution.'' and inserting
``institution; or'';
(C) by inserting immediately after paragraph (2) the
following:
``(3) section 16(a) of the Small Business Act (15 U.S.C.
645(a)).''; and
(D) by striking ``This section shall'' and inserting the
following:
``(d) Effective Date.--This section shall''.
SEC. 5. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.
Section 313 of the Small Business Investment Act of 1958
(15 U.S.C. 687e) is amended to read as follows:
``SEC. 313. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.
``(a) Definition of `Management Official'.--In this
section, the term `management official' means an officer,
director, general partner, manager, employee, agent, or other
participant in the management or conduct of the affairs of a
licensee.
``(b) Removal of Management Officials.--
``(1) Notice of removal.--The Administrator may serve upon
any management official a written notice of its intention to
remove that management official whenever, in the opinion of
the Administrator--
``(A) such management official--
``(i) has willfully and knowingly committed any substantial
violation of--
``(I) this Act;
``(II) any regulation issued under this Act; or
``(III) a cease-and-desist order which has become final; or
``(ii) has willfully and knowingly committed or engaged in
any act, omission, or practice which constitutes a
substantial breach of a fiduciary duty of that person as a
management official; and
``(B) the violation or breach of fiduciary duty is one
involving personal dishonesty on the part of such management
official.
``(2) Contents of notice.--A notice of intention to remove
a management official, as provided in paragraph (1), shall
contain a statement of the facts constituting grounds
therefor, and shall fix a time and place at which a hearing
will be held thereon.
``(3) Hearings.--
``(A) Timing.--A hearing described in paragraph (2) shall
be fixed for a date not earlier than 30 days nor later than
60 days after the date of service of notice of the hearing,
unless an earlier or a later date is set by the Administrator
at the request of--
``(i) the management official, and for good cause shown; or
``(ii) the Attorney General of the United States.
``(B) Consent.--Unless the management official shall appear
at a hearing described in this paragraph in person or by a
duly authorized representative, that management official
shall be deemed to have consented to the issuance of an order
of removal under paragraph (1).
``(4) Issuance of order of removal.--
``(A) In general.--In the event of consent under paragraph
(3)(B), or if upon the record made at a hearing described in
this subsection, the Administrator finds that any of the
grounds specified in the notice of removal has been
established, the Administrator may issue such orders of
removal from office as the Administrator deems appropriate.
``(B) Effectiveness.--An order under subparagraph (A)
shall--
``(i) become effective at the expiration of 30 days after
the date of service upon the subject licensee and the
management official concerned (except in the case of an order
issued upon consent as described in paragraph (3)(B), which
shall become effective at the time specified in such order);
and
``(ii) remain effective and enforceable, except to such
extent as it is stayed, modified, terminated, or set aside by
action of the Administrator or a reviewing court in
accordance with this section.
[[Page H8318]]
``(c) Authority to Suspend or Prohibit Participation.--
``(1) In general.--The Administrator may, if the
Administrator deems it necessary for the protection of the
licensee or the interests of the Administration, suspend from
office or prohibit from further participation in any manner
in the management or conduct of the affairs of the licensee,
or both, any management official referred to in subsection
(b)(1), by written notice to such effect served upon the
management official.
``(2) Effectiveness.--A suspension or prohibition under
paragraph (1)--
``(A) shall become effective upon service of notice under
paragraph (1); and
``(B) unless stayed by a court in proceedings authorized by
paragraph (3), shall remain in effect--
``(i) pending the completion of the administrative
proceedings pursuant to a notice of intention to remove
served under subsection (b); and
``(ii) until such time as the Administrator shall dismiss
the charges specified in the notice, or, if an order of
removal or prohibition is issued against the management
official, until the effective date of any such order.
``(3) Judicial review.--Not later than 10 days after any
management official has been suspended from office or
prohibited from participation in the management or conduct of
the affairs of a licensee, or both, under paragraph (1), that
management official may apply to the United States district
court for the judicial district in which the home office of
the licensee is located, or the United States District Court
for the District of Columbia, for a stay of the suspension or
prohibition pending the completion of the administrative
proceedings pursuant to a notice of intent to remove served
upon the management official under subsection (b), and such
court shall have jurisdiction to stay such action.
``(d) Authority To Suspend on Criminal Charges.--
``(1) In general.--Whenever a management official is
charged in any information, indictment, or complaint
authorized by a United States attorney, with the commission
of or participation in a felony involving dishonesty or
breach of trust, the Administrator may, by written notice
served upon that management official, suspend that management
official from office or prohibit that management official
from further participation in any manner in the management or
conduct of the affairs of the licensee, or both.
``(2) Effectiveness.--A suspension or prohibition under
paragraph (1) shall remain in effect until the subject
information, indictment, or complaint is finally disposed of,
or until terminated by the Administrator.
``(3) Authority upon conviction.--If a judgment of
conviction with respect to an offense described in paragraph
(1) is entered against a management official, then at such
time as the judgment is not subject to further appellate
review, the Administrator may issue and serve upon the
management official an order removing that management
official, which removal shall become effective upon service
of a copy of the order upon the licensee.
``(4) Authority upon dismissal or other disposition.--A
finding of not guilty or other disposition of charges
described in paragraph (1) shall not preclude the
Administrator from thereafter instituting proceedings to
suspend or remove the management official from office, or to
prohibit the management official from participation in the
management or conduct of the affairs of the licensee, or
both, pursuant to subsection (b) or (c).
``(e) Notification to Licensees.--Copies of each notice
required to be served on a management official under this
section shall also be served upon the interested licensee.
``(f) Procedural Provisions; Judicial Review.--
``(1) Hearing venue.--Any hearing provided for in this
section shall be--
``(A) held in the Federal judicial district or in the
territory in which the principal office of the licensee is
located, unless the party afforded the hearing consents to
another place; and
``(B) conducted in accordance with the provisions of
chapter 5 of title 5, United States Code.
``(2) Issuance of orders.--After a hearing provided for in
this section, and not later than 90 days after the
Administrator has notified the parties that the case has been
submitted for final decision, the Administrator shall render
a decision in the matter (which shall include findings of
fact upon which its decision is predicated), and shall issue
and cause to be served upon each party to the proceeding an
order or orders consistent with the provisions of this
section.
``(3) Authority to modify orders.--The Administrator may
modify, terminate, or set aside any order issued under this
section--
``(A) at any time, upon such notice, and in such manner as
the Administrator deems proper, unless a petition for review
is timely filed in a court of appeals of the United States,
as provided in paragraph (4)(B), and thereafter until the
record in the proceeding has been filed in accordance with
paragraph (4)(C); and
``(B) upon such filing of the record, with permission of
the court.
``(4) Judicial review.--
``(A) In general.--Judicial review of an order issued under
this section shall be exclusively as provided in this
subsection.
``(B) Petition for review.--Any party to a hearing provided
for in this section may obtain a review of any order issued
pursuant to paragraph (2) (other than an order issued with
the consent of the management official concerned, or an order
issued under subsection (d)), by filing in the court of
appeals of the United States for the circuit in which the
principal office of the licensee is located, or in the United
States Court of Appeals for the District of Columbia Circuit,
not later than 30 days after the date of service of such
order, a written petition praying that the order of the
Administrator be modified, terminated, or set aside.
``(C) Notification to administration.--A copy of a petition
filed under subparagraph (B) shall be forthwith transmitted
by the clerk of the court to the Administrator, and thereupon
the Administrator shall file in the court the record in the
proceeding, as provided in section 2112 of title 28, United
States Code.
``(D) Court jurisdiction.--Upon the filing of a petition
under subparagraph (A)--
``(i) the court shall have jurisdiction, which, upon the
filing of the record under subparagraph (C), shall be
exclusive, to affirm, modify, terminate, or set aside, in
whole or in part, the order of the Administrator, except as
provided in the last sentence of paragraph (3)(B);
``(ii) review of such proceedings shall be had as provided
in chapter 7 of title 5, United States Code; and
``(iii) the judgment and decree of the court shall be
final, except that the judgment and decree shall be subject
to review by the Supreme Court of the United States upon
certiorari, as provided in section 1254 of title 28, United
States Code.
``(E) Judicial review not a stay.--The commencement of
proceedings for judicial review under this paragraph shall
not, unless specifically ordered by the court, operate as a
stay of any order issued by the Administrator under this
section.''.
SEC. 6. REDUCTION OF FEES.
(a) Two-Year Reduction of Section 7(a) Fees.--
(1) Guarantee fees.--Section 7(a)(18) of the Small Business
Act (15 U.S.C. 636(a)(18)) is amended by adding at the end
the following:
``(C) Two-year reduction in fees.--With respect to loans
approved during the 2-year period beginning on October 1,
2002, the guarantee fee under subparagraph (A) shall be as
follows:
``(i) A guarantee fee equal to 2 percent of the deferred
participation share of a total loan amount that is not more
than $250,000.
``(ii) A guarantee fee equal to 3 percent of the deferred
participation share of a total loan amount that is more than
$250,000.''.
(2) Annual fees.--Section 7(a)(23)(A) of the Small Business
Act (15 U.S.C. 636(a)(23)(A)) is amended by adding at the end
the following: ``With respect to loans approved during the 2-
year period beginning on October 1, 2002, the annual fee
assessed and collected under the preceding sentence shall be
in an amount equal to 0.25 percent of the outstanding balance
of the deferred participation share of the loan.''.
(b) Reduction of Section 504 Fees.--Section 503 of the
Small Business Investment Act of 1958 (15 U.S.C. 697) is
amended--
(1) in subsection (b)(7)(A)--
(A) by redesignating clauses (i) and (ii) as subclauses (I)
and (II), respectively, and moving the margins 2 ems to the
right;
(B) by striking ``not exceed the lesser'' and inserting
``not exceed--
``(i) the lesser''; and
(C) by adding at the end the following:
``(ii) 50 percent of the amount established under clause
(i) in the case of a loan made during the 2-year period
beginning on October 1, 2002, for the life of the loan;
and''; and
(2) by adding at the end the following:
``(i) Two-Year Waiver of Fees.--The Administration may not
assess or collect any up front guarantee fee with respect to
loans made under this title during the 2-year period
beginning on October 1, 2002.''.
(c) Budgetary Treatment of Loans and Financings.--
Assistance made available under any loan made or approved by
the Small Business Administration under section 7(a) of the
Small Business Act (15 U.S.C. 636(a)) or financings made
under title III or V of the Small Business Investment Act of
1958 (15 U.S.C. 697a), during the 2-year period beginning on
October 1, 2002, shall be treated as separate programs of the
Small Business Administration for purposes of the Federal
Credit Reform Act of 1990 only.
(d) Use of Funds.--The amendments made by this section
shall be effective only to the extent that funds are made
available under appropriations Acts, which funds shall be
utilized by the Administrator to offset the cost (as such
term is defined in section 502 of the Federal Credit Reform
Act of 1990) of such amendments.
(e) Effective Date.--The amendments made by this section
shall become effective on October 1, 2002.
Amendment in the Nature of a Substitute Offered by Mr. Manzullo
Mr. MANZULLO. Mr. Speaker, I offer an amendment in the nature of a
substitute.
The Clerk read as follows:
Amendment in the nature of a substitute offered by Mr.
Manzullo:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Investment
Company Amendments Act of 2001''.
[[Page H8319]]
SEC. 2. SUBSIDY FEES.
(a) In General.--Section 303 of the Small Business
Investment Act of 1958 (15 U.S.C. 683) is amended--
(1) in subsection (b)--
(A) by striking ``of not more than 1 percent per year'';
(B) by inserting ``which amount may not exceed 1.38 percent
per year, and'' before ``which shall be paid''; and
(C) by striking ``September 30, 2000'' and inserting
``September 30, 2001''; and
(2) in subsection (g)(2)--
(A) by striking ``of not more than 1 percent per year'';
(B) by inserting ``which amount may not exceed 1.38 percent
per year, and'' before ``which shall be paid''; and
(C) by striking ``September 30, 2000'' and inserting
``September 30, 2001''.
(b) Effective Date.--The amendments made by this section
shall become effective on October 1, 2001.
SEC. 3. CONFLICTS OF INTEREST.
Section 312 of the Small Business Investment Act of 1958
(15 U.S.C. 687d) is amended by striking ``(including
disclosure in the locality most directly affected by the
transaction)''.
SEC. 4. PENALTIES FOR FALSE STATEMENTS.
(a) Criminal Penalties.--Section 1014 of title 18, United
States Code, is amended by inserting ``, as defined in
section 103 of the Small Business Investment Act of 1958 (15
U.S.C. 662), or the Small Business Administration in
connection with any provision of that Act'' after ``small
business investment company''.
(b) Civil Penalties.--Section 951 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1833a) is amended--
(1) by redesignating subsections (d) through (g) as
subsections (e) through (h), respectively; and
(2) in subsection (c)--
(A) in paragraph (1), by striking ``or'' at the end;
(B) in paragraph (2)--
(i) by striking ``1341;'' and inserting ``1341''; and
(ii) by striking ``institution.'' and inserting
``institution; or'';
(C) by inserting immediately after paragraph (2) the
following:
``(3) section 16(a) of the Small Business Act (15 U.S.C.
645(a)).''; and
(D) by striking ``This section shall'' and inserting the
following:
``(d) Effective Date.--This section shall''.
SEC. 5. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.
Section 313 of the Small Business Investment Act of 1958
(15 U.S.C. 687e) is amended to read as follows:
``SEC. 313. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.
``(a) Definition of `Management Official'.--In this
section, the term `management official' means an officer,
director, general partner, manager, employee, agent, or other
participant in the management or conduct of the affairs of a
licensee.
``(b) Removal of Management Officials.--
``(1) Notice of removal.--The Administrator may serve upon
any management official a written notice of its intention to
remove that management official whenever, in the opinion of
the Administrator--
``(A) such management official--
``(i) has willfully and knowingly committed any substantial
violation of--
``(I) this Act;
``(II) any regulation issued under this Act; or
``(III) a cease-and-desist order which has become final; or
``(ii) has willfully and knowingly committed or engaged in
any act, omission, or practice which constitutes a
substantial breach of a fiduciary duty of that person as a
management official; and
``(B) the violation or breach of fiduciary duty is one
involving personal dishonesty on the part of such management
official.
``(2) Contents of notice.--A notice of intention to remove
a management official, as provided in paragraph (1), shall
contain a statement of the facts constituting grounds
therefor, and shall fix a time and place at which a hearing
will be held thereon.
``(3) Hearings.--
``(A) Timing.--A hearing described in paragraph (2) shall
be fixed for a date not earlier than 30 days nor later than
60 days after the date of service of notice of the hearing,
unless an earlier or a later date is set by the Administrator
at the request of--
``(i) the management official, and for good cause shown; or
``(ii) the Attorney General of the United States.
``(B) Consent.--Unless the management official shall appear
at a hearing described in this paragraph in person or by a
duly authorized representative, that management official
shall be deemed to have consented to the issuance of an order
of removal under paragraph (1).
``(4) Issuance of order of removal.--
``(A) In general.--In the event of consent under paragraph
(3)(B), or if upon the record made at a hearing described in
this subsection, the Administrator finds that any of the
grounds specified in the notice of removal has been
established, the Administrator may issue such orders of
removal from office as the Administrator deems appropriate.
``(B) Effectiveness.--An order under subparagraph (A)
shall--
``(i) become effective at the expiration of 30 days after
the date of service upon the subject licensee and the
management official concerned (except in the case of an order
issued upon consent as described in paragraph (3)(B), which
shall become effective at the time specified in such order);
and
``(ii) remain effective and enforceable, except to such
extent as it is stayed, modified, terminated, or set aside by
action of the Administrator or a reviewing court in
accordance with this section.
``(c) Authority to Suspend or Prohibit Participation.--
``(1) In general.--The Administrator may, if the
Administrator deems it necessary for the protection of the
licensee or the interests of the Administration, suspend from
office or prohibit from further participation in any manner
in the management or conduct of the affairs of the licensee,
or both, any management official referred to in subsection
(b)(1), by written notice to such effect served upon the
management official.
``(2) Effectiveness.--A suspension or prohibition under
paragraph (1)--
``(A) shall become effective upon service of notice under
paragraph (1); and
``(B) unless stayed by a court in proceedings authorized by
paragraph (3), shall remain in effect--
``(i) pending the completion of the administrative
proceedings pursuant to a notice of intention to remove
served under subsection (b); and
``(ii) until such time as the Administrator shall dismiss
the charges specified in the notice, or, if an order of
removal or prohibition is issued against the management
official, until the effective date of any such order.
``(3) Judicial review.--Not later than 10 days after any
management official has been suspended from office or
prohibited from participation in the management or conduct of
the affairs of a licensee, or both, under paragraph (1), that
management official may apply to the United States district
court for the judicial district in which the home office of
the licensee is located, or the United States District Court
for the District of Columbia, for a stay of the suspension or
prohibition pending the completion of the administrative
proceedings pursuant to a notice of intent to remove served
upon the management official under subsection (b), and such
court shall have jurisdiction to stay such action.
``(d) Authority To Suspend on Criminal Charges.--
``(1) In general.--Whenever a management official is
charged in any information, indictment, or complaint
authorized by a United States attorney, with the commission
of or participation in a felony involving dishonesty or
breach of trust, the Administrator may, by written notice
served upon that management official, suspend that management
official from office or prohibit that management official
from further participation in any manner in the management or
conduct of the affairs of the licensee, or both.
``(2) Effectiveness.--A suspension or prohibition under
paragraph (1) shall remain in effect until the subject
information, indictment, or complaint is finally disposed of,
or until terminated by the Administrator.
``(3) Authority upon conviction.--If a judgment of
conviction with respect to an offense described in paragraph
(1) is entered against a management official, then at such
time as the judgment is not subject to further appellate
review, the Administrator may issue and serve upon the
management official an order removing that management
official, which removal shall become effective upon service
of a copy of the order upon the licensee.
``(4) Authority upon dismissal or other disposition.--A
finding of not guilty or other disposition of charges
described in paragraph (1) shall not preclude the
Administrator from thereafter instituting proceedings to
suspend or remove the management official from office, or to
prohibit the management official from participation in the
management or conduct of the affairs of the licensee, or
both, pursuant to subsection (b) or (c).
``(e) Notification to Licensees.--Copies of each notice
required to be served on a management official under this
section shall also be served upon the interested licensee.
``(f) Procedural Provisions; Judicial Review.--
``(1) Hearing venue.--Any hearing provided for in this
section shall be--
``(A) held in the Federal judicial district or in the
territory in which the principal office of the licensee is
located, unless the party afforded the hearing consents to
another place; and
``(B) conducted in accordance with the provisions of
chapter 5 of title 5, United States Code.
``(2) Issuance of orders.--After a hearing provided for in
this section, and not later than 90 days after the
Administrator has notified the parties that the case has been
submitted for final decision, the Administrator shall render
a decision in the matter (which shall include findings of
fact upon which its decision is predicated), and shall issue
and cause to be served upon each party to the proceeding an
order or orders consistent with the provisions of this
section.
``(3) Authority to modify orders.--The Administrator may
modify, terminate, or set aside any order issued under this
section--
``(A) at any time, upon such notice, and in such manner as
the Administrator deems proper, unless a petition for review
is timely filed in a court of appeals of the United States,
as provided in paragraph (4)(B), and thereafter until the
record in the proceeding has been filed in accordance with
paragraph (4)(C); and
``(B) upon such filing of the record, with permission of
the court.
``(4) Judicial review.--
``(A) In general.--Judicial review of an order issued under
this section shall be exclusively as provided in this
subsection.
``(B) Petition for review.--Any party to a hearing provided
for in this section may obtain a review of any order issued
pursuant to paragraph (2) (other than an order issued with
the
[[Page H8320]]
consent of the management official concerned, or an order
issued under subsection (d)), by filing in the court of
appeals of the United States for the circuit in which the
principal office of the licensee is located, or in the United
States Court of Appeals for the District of Columbia Circuit,
not later than 30 days after the date of service of such
order, a written petition praying that the order of the
Administrator be modified, terminated, or set aside.
``(C) Notification to administration.--A copy of a petition
filed under subparagraph (B) shall be forthwith transmitted
by the clerk of the court to the Administrator, and thereupon
the Administrator shall file in the court the record in the
proceeding, as provided in section 2112 of title 28, United
States Code.
``(D) Court jurisdiction.--Upon the filing of a petition
under subparagraph (A)--
``(i) the court shall have jurisdiction, which, upon the
filing of the record under subparagraph (C), shall be
exclusive, to affirm, modify, terminate, or set aside, in
whole or in part, the order of the Administrator, except as
provided in the last sentence of paragraph (3)(B);
``(ii) review of such proceedings shall be had as provided
in chapter 7 of title 5, United States Code; and
``(iii) the judgment and decree of the court shall be
final, except that the judgment and decree shall be subject
to review by the Supreme Court of the United States upon
certiorari, as provided in section 1254 of title 28, United
States Code.
``(E) Judicial review not a stay.--The commencement of
proceedings for judicial review under this paragraph shall
not, unless specifically ordered by the court, operate as a
stay of any order issued by the Administrator under this
section.''.
SEC. 6. REDUCTION OF FEES.
(a) Two-Year Reduction of Section 7(a) Fees.--
(1) Guarantee fees.--Section 7(a)(18) of the Small Business
Act (15 U.S.C. 636(a)(18)) is amended by adding at the end
the following:
``(C) Two-year reduction in fees.--With respect to loans
approved during the 2-year period beginning on October 1,
2002, the guarantee fee under subparagraph (A) shall be as
follows:
``(i) A guarantee fee equal to 2 percent of the deferred
participation share of a total loan amount that is not more
than $250,000.
``(ii) A guarantee fee equal to 3 percent of the deferred
participation share of a total loan amount that is more than
$250,000.''.
(2) Annual fees.--Section 7(a)(23)(A) of the Small Business
Act (15 U.S.C. 636(a)(23)(A)) is amended by adding at the end
the following: ``With respect to loans approved during the 2-
year period beginning on October 1, 2002, the annual fee
assessed and collected under the preceding sentence shall be
in an amount equal to 0.25 percent of the outstanding balance
of the deferred participation share of the loan.''.
(b) Reduction of Section 504 Fees.--Section 503 of the
Small Business Investment Act of 1958 (15 U.S.C. 697) is
amended--
(1) in subsection (b)(7)(A)--
(A) by redesignating clauses (i) and (ii) as subclauses (I)
and (II), respectively, and moving the margins 2 ems to the
right;
(B) by striking ``not exceed the lesser'' and inserting
``not exceed--
``(i) the lesser''; and
(C) by adding at the end the following:
``(ii) 50 percent of the amount established under clause
(i) in the case of a loan made during the 2-year period
beginning on October 1, 2002, for the life of the loan;
and''; and
(2) by adding at the end the following:
``(i) Two-Year Waiver of Fees.--The Administration may not
assess or collect any up front guarantee fee with respect to
loans made under this title during the 2-year period
beginning on October 1, 2002.''.
(c) Budgetary Treatment of Loans and Financings.--
Assistance made available under any loan made or approved by
the Small Business Administration under section 7(a) of the
Small Business Act (15 U.S.C. 636(a)) or financings made
under title III or V of the Small Business Investment Act of
1958 (15 U.S.C. 697a), during the 2-year period beginning on
October 1, 2002, shall be treated as separate programs of the
Small Business Administration for purposes of the Federal
Credit Reform Act of 1990 only.
(d) Use of Funds.--The amendments made by this section
shall be effective only to the extent that funds are made
available under appropriations Acts, which funds shall be
utilized by the Administrator to offset the cost (as such
term is defined in section 502 of the Federal Credit Reform
Act of 1990) of such amendments.
(e) Effective Date.--The amendments made by this section
shall become effective on October 1, 2002.
Mr. MANZULLO (during the reading). Mr. Speaker, I ask unanimous
consent that the amendment be considered as read and printed in the
Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Illinois?
There was no objection.
The SPEAKER pro tempore. The gentleman from Illinois (Mr. Manzullo)
is recognized for 1 hour.
Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume.
As I stated, the purpose of the amendment is to decrease the fees of
the 7(a) program and the 504 program effective October 1 of the year
2002.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the amendment in the
nature of a substitute offered by the gentleman from Illinois (Mr.
Manzullo).
The amendment in the nature of a substitute was agreed to.
The Senate bill was ordered to be read a third time, was read the
third time, and passed, and a motion to reconsider was laid on the
table.
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