[Congressional Record Volume 148, Number 29 (Thursday, March 14, 2002)]
[Senate]
[Pages S1938-S1940]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI.
  S. 2016. A bill to authorize the exchange of lands between an Alaska 
Native Village Corporation and the Department of the Interior, and for 
other purposes; to the Committee on Energy and Natural Resources.
  Mr. MURKOWSKI. Mr. President, I rise today to introduce legislation 
to address a critical concern for one of Alaska's rural villages.
  The village of Newtok, in far western Alaska, is facing the loss of 
its homes and facilities to ever-encroaching erosion by the Ninglick 
River. The village is presently located on the north bank of the river, 
just downstream of a sweeping bend, which is reclaiming the bank at a 
rate of several feet per year.
  By at least 2008, some homes will no longer be habitable and the 
village airport will begin to suffer irreparable damage. It is critical 
for the future of Newtok's residents that Congress act this year to 
make provision for the relocation of the village.
  Newtok is located within the boundaries of the Yukon Delta National 
Wildlife Refuge. Under the Alaska Native Claims Settlement Act of 1971, 
Newtok had land selection rights within the Refuge. Most of the lands 
selected by and conveyed to the village by the United States lie on the 
north side of the Ninglick River, although a portion of the village 
land holdings are on Nelson Island, to the south.
  The village has identified 5,580 acres on Nelson Island that will be 
more suitable for a permanent village location. The land on Nelson 
Island is higher in elevation and is underlain with rock and gravel. 
Furthermore, it is situated such that hydraulic forces of the river are 
unlikely to pose any future threat to the well-being of the village.
  The proposed legislation authorizes an equal value exchange of lands 
between the Fish and Wildlife Service and the Newtok Native 
Corporation, the ANCSA corporation organized by the village which owns 
the Newtok Village lands. The proposed exchange is the first important 
step in allowing the Newtok villagers to relocate their village to safe 
ground.
  The exchange is proposed primarily for health and safety reasons, to 
protect the lives and property of Alaska Native villagers. However, 
there is a direct benefit to the broader interest of the United States. 
The land Newtok proposes to relinquish contains habitat of higher value 
for geese, brant, and Spectacled Eider than the land on Nelson Island 
that has been selected for the new village location. Thus the Yukon 
Delta National Wildlife Refuge, while receiving lands of equal economic 
value in the exchange, will actually be receiving lands of greater 
value for waterfowl habitat.
  We should not underestimate the importance of congressional action 
this year on this matter. It will take several years to actually 
relocate the village. Facilities must be constructed and homes must be 
built. Before any of that can begin, the land must be exchanged. I 
therefore urge my colleagues to support this important legislation.
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      By Mr. CAMPBELL (for himself and Mr. Inouye):
  S. 2017. A bill to amend the Indian Financing Act of 1974 to improve 
the effectiveness of the Indian loan guarantee and insurance program; 
to the Committee on Indian Affairs.
  Mr. CAMPBELL. Mr. President, it is my pleasure to introduce the 
Indian Financing Act Amendments of 2002 to improve the effectiveness of 
an economic development program essential to our Native American 
community. As one of the legislative flowerings of President Nixon's 
``Special Message to Congress on Indian Affairs,'' the Indian Financing 
Act joins the Indian Self Determination and Education Assistance Act as 
pillars of Federal Indian policy. Since Congress enacted the Indian 
Financing Act of 1974 and established the

[[Page S1939]]

Indian Revolving Loan Fund program, the Secretary of the Interior has 
had the ability to insure and guaranty the repayment by qualified 
Native American borrowers of small business loans issued by private 
banks and lenders. The focus of the loan program is commercial lending 
to Native American-owned businesses who cannot otherwise obtain 
financing in conventional credit markets.
  The Indian Revolving Fund Program has grown over the past 28 years to 
reach $60 million in annual lending to Native Americans, though the 
need for capital in Indian economies far outstrips this amount. The 
``Mortgage Finance News'' reports that for housing finance alone, there 
is $2.7 billion in pent-up demand in the Indian community. In addition, 
the ``Native American Lending Study'' released by the Community 
Development Financial Institutions shows, there are great needs in 
Native communities for more capital and liquidity. These unmet needs 
are holding back the growth of Indian economies.
  The purpose of a Federal loan guaranty is to stimulate the private 
lending community into being more active with clients and customers 
they should be serving. Under the current Indian guaranteed loan 
program, the lender shares in the cost of any loan default, and is not 
100 percent guaranteed by the government.
  Lenders across the country have told the Committee on Indian Affairs 
that a major problem restraining their participation in this program is 
the lack of liquidity once the loan is made. These small business loans 
tend to stay on the books for a long time. They are paid down but not 
as rapidly refinanced as conventional loans. Therefore, a bank has its 
capital tied up in these loans, and cannot easily turn around and use 
that capital again.
  The financial community long ago came up with a system to respond to 
this general need, and that is to allow investors to buy loans on the 
secondary market. This is the cornerstone for our private mortgage 
market and the essential job of Fannie Mae and Freddie Mac. But it is 
also an important part of commercial lending. The Small Business 
Administration, which makes loan guaranties available through over 
1,000 lenders nationwide, 17 years ago recognized the importance of 
secondary market for its SBA loan guaranties. At its request, Congress 
enacted legislation which allows for the orderly transfer and sales of 
the guaranteed portion of the SBA loans through a secondary market 
fiscal transfer agent. This system operates largely at no cost to the 
government, as the fees for the transfer are paid by the buyers and 
sellers of the loans, and not passed back to the borrowers.

  The SBA loan program is highly successful. It assists smaller lenders 
who may not regularly participate in these government programs by 
giving them a standardized and simple process for transfer of the loan. 
The use of the fiscal transfer agent ensures that loan repayments made 
to the original lender are properly flowed through any investors. Most 
importantly, the ability of the SBA to regulate or otherwise discipline 
originating lenders is unimpeded by the secondary market.
  The ``Indian Financing Act Amendments of 2002'' directs the Secretary 
of the Interior to take similar steps to the SBA program by allowing 
the efficient functioning of a secondary market for Native American 
loans or loan guaranties made by the Interior Department.
  It is my hope that the Indian Financing Act Amendments of 2002 will 
profoundly effect Native American small business owners throughout the 
United States, and that the support of the Department, and the Native 
American and financial communities, we can effect positive change not 
just for Native American small business owners, and for Indian 
communities generally.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2017

       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 ``Indian Financing Act 
     Amendments of 2002.''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) the Indian Financing Act of 1974 (25 U.S.C. 1451 et 
     seq.) was intended to provide Native American borrowers with 
     access to commercial capital sources that, but for that Act, 
     would not be available through loans guaranteed by the 
     Secretary of the Interior;
       (2) although the Secretary of the Interior has made loan 
     guarantees available, acceptance of loan guarantees by 
     lenders to benefit Native American business borrowers has 
     been limited;
       (3) 27 years after enactment of the Act, the promotion and 
     development of Native American-owned business remains an 
     essential foundation for growth of economic and social 
     stability of Native Americans;
       (4) acceptance by lenders of the loan guarantees may be 
     limited by liquidity and other capital market-driven 
     concerns; and
       (5) it is in the best interest of the guaranteed loan 
     program to--
       (A) encourage the orderly development and expansion of a 
     secondary market for loans guaranteed by the Secretary; and
       (B) expand the number of lenders originating loans under 
     that Act.
       (b) Purposes.--The purposes of this Act are--
       (1) to stimulate the use by lenders of secondary market 
     investors for loans guaranteed by the Secretary of the 
     Interior;
       (2) to preserve the authority of the Secretary to 
     administer the program and regulate lenders;
       (3) to clarify that a good faith investor in loans 
     guaranteed by the Secretary will receive appropriate 
     payments;
       (4) to provide for the appointment by the Secretary of a 
     qualified fiscal transfer agent to administer a system for 
     the orderly transfer of the loans;
       (5) to authorize the Secretary to--
       (A) promulgate regulations to encourage and expand a 
     secondary market program for loans guaranteed by the 
     Secretary; and
       (B) allow the pooling of the loans as the secondary market 
     develops; and
       (6) to authorize the Secretary to establish a schedule for 
     assessing lenders and investors for the necessary costs of 
     the fiscal transfer agent and system.

     SEC. 3. LOAN GUARANTEES.

       Section 205 of the Indian Financing Act of 1974 (25 U.S.C. 
     1485) is amended--
       (1) by inserting ``(a) In General.--'' before ``Any loan''; 
     and
       (2) by adding at the end the following:
       ``(b) Transfer of Loans and Unguaranteed Portions of 
     Loans.--
       ``(1) Transfer.--
       ``(A) In general.--The lender of a loan guaranteed under 
     this title may transfer to any person--
       ``(i) all of the rights and obligations of the lender under 
     the loan, or in an unguaranteed portion of the loan; and
       ``(ii) the security given for the loan or unguaranteed 
     portion.
       ``(B) Regulations.--A transfer under subparagraph (A) shall 
     be consistent with such regulations as the Secretary shall 
     promulgate under subsection (g).
       ``(C) Notice.--A lender that completes a transfer under 
     subparagraph (A) shall give notice of the transfer to the 
     Secretary (or a designee of the Secretary).
       ``(2) Effect of transfer.--On any transfer under this 
     subsection, the transferee shall--
       ``(A) be considered to be the lender under this title;
       ``(B) become the secured party of record; and
       ``(C) be responsible for--
       ``(i) performing the duties of the lender; and
       ``(ii) servicing the loan or portion of the loan, as 
     appropriate, in accordance with the terms of guarantee of the 
     Secretary of the loan or portion of the loan.
       ``(c) Transfer of Guaranteed Portions of Loans.--
       ``(1) Transfer.--
       ``(A) In general.--The lender of a loan guaranteed under 
     this title, and any subsequent transferee of all or part of 
     the guaranteed portion of the loan, may transfer to any 
     person--
       ``(i) all or part of the guaranteed portion of the loan; 
     and
       ``(ii) the security given for the guaranteed portion 
     transferred.
       ``(B) Regulations.--A transfer under subparagraph (A) shall 
     be consistent with such regulations as the Secretary shall 
     promulgate under subsection (g).
       ``(C) Notice.--A lender that completes a transfer under 
     subparagraph (A) shall give notice of the transfer to the 
     Secretary (or a designee of the Secretary).
       ``(D) Acknowledgement.--On receipt of notice of a transfer 
     under subparagraph (C), the Secretary (or a designee of the 
     Secretary) shall issue to the transferee the acknowledgement 
     of the Secretary of--
       ``(i) the transfer; and
       ``(ii) the interest of the transferee in the guaranteed 
     portion of a loan that was transferred.
       ``(2) Effect.--Notwithstanding any other provision of law, 
     with respect to any transfer under this subsection, the 
     lender shall--
       ``(A) remain obligated under the guarantee agreement 
     between the lender and the Secretary;
       ``(B) continue to be responsible for servicing the loan in 
     a manner consistent with the guarantee agreement; and
       ``(C) remain the secured creditor of record.
       ``(d) Full Faith and Credit.--

[[Page S1940]]

       ``(1) In general.--The full faith and credit of the United 
     States is pledged to the payment of all loan guarantees made 
     under this title.
       ``(2) Validity.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the validity of a guarantee of a loan under this title shall 
     be incontestable if the guarantee is held by a transferee of 
     a guaranteed obligation whose interest in a guaranteed loan 
     has been acknowledged by the Secretary (or a designee of the 
     Secretary) under subsection (c)(1)(D).
       ``(B) Fraud or misrepresentation.--Subparagraph (A) shall 
     not apply in a case in which the Secretary determines that a 
     transferee of a loan or portion of a loan transferred under 
     this section has actual knowledge of fraud or 
     misrepresentation, or participates in or condones fraud or 
     misrepresentation, in connection with the loan.
       ``(e) Damages.--The Secretary may recover from a lender any 
     damages suffered by the Secretary as a result of a material 
     breach of an obligation of the lender under the guarantee of 
     the loan.
       ``(f) Fee.--The Secretary may collect a fee for any loan or 
     guaranteed portion of a loan transferred in accordance with 
     subsection (b) or (c).
       ``(g) Regulations.--Not later than 180 days after the date 
     of enactment of this subsection, the Secretary shall 
     promulgate such regulations as are necessary to facilitate, 
     administer, and promote the transfer of loans and guaranteed 
     portions of loans under this section.
       ``(h) Central Registration.--On promulgation of final 
     regulations under subsection (g), the Secretary shall--
       ``(1) provide for the central registration of all loans and 
     portions of loans transferred under this section; and
       ``(2) contract with a fiscal transfer agent--
       ``(A) to act as a designee of the Secretary; and
       ``(B) on behalf of the Secretary--
       ``(i) to carry out the central registration and paying 
     agent functions; and
       ``(ii) to issue acknowledgements of the Secretary under 
     subsection (c)(1)(D).
       ``(i) Pooling.--
       ``(1) In general.--Nothing in this title prohibits the 
     pooling of whole loans, or portions of loans, transferred 
     under this section.
       ``(2) Regulations.--The Secretary may promulgate 
     regulations to effect orderly and efficient pooling 
     procedures under this title.''.
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