[Congressional Record Volume 156, Number 90 (Wednesday, June 16, 2010)]
[House]
[Pages H4513-H4542]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS JOBS AND CREDIT ACT OF 2010
The SPEAKER pro tempore. Pursuant to House Resolution 1436 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the state of the Union for the consideration of the bill, H.R. 5297.
{time} 1035
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the consideration of the bill
(H.R. 5297) to create the Small Business Lending Fund Program to direct
the Secretary of the Treasury to make capital investments in eligible
institutions in order to increase the availability of credit for small
businesses, and for other purposes, with Mr. Pastor of Arizona in the
chair.
The Clerk read the title of the bill.
The CHAIR. Pursuant to the rule, the bill is considered read the
first time.
General debate shall not exceed 1 hour, with 30 minutes equally
divided and controlled by the chair and ranking minority member of the
Committee on Financial Services and 30 minutes equally divided and
controlled by the chair and ranking minority member of the Committee on
Small Business.
The gentlewoman from Illinois (Ms. Bean) and the gentleman from Texas
(Mr. Neugebauer) and the gentlewoman from New York (Ms. Velazquez) and
the gentleman from Missouri (Mr. Graves) each will control 15 minutes.
The Chair recognizes the gentlewoman from Illinois.
Ms. BEAN. Mr. Chairman, I yield myself 5 minutes.
[[Page H4514]]
Mr. Chairman, our Nation's economic rebirth relies upon the ability
of our community businesses to innovate, develop, and market solutions
that deliver measurable value to their customers. Their success drives
the majority of new jobs in our Nation. They are the engine of
innovation, and their resiliency to reinvent their business models and
adapt to emerging growth markets is critical. It's their creativity
that drives 13 times more patents per employee than larger firms. They
are the cornerstones of our economy and our communities. Beyond the
goods and services and the jobs they provide, they invest in the bricks
and mortar/real estate in our communities. They have supply chains that
depend on their business. They do charitable giving, and they mentor
young people in their communities.
Congress has done much to address the challenges small businesses
face. Among the $288 billion in tax breaks in the Recovery Act were
crucial small business tax provisions, such as accelerated bonus
depreciation and an expansion of the net operating loss carryback that
has already rebated $2.8 billion to businesses across our Nation.
U.S. manufacturing is growing, we're adding new jobs every month in
2010, and GPD is now trending positively, moving from a negative 6 to
positive 6 in the year following the Recovery Act and it's now holding
at 3 percent. But as I talk with small businesses in my district and
across the Nation, the issue that has continued to be an obstacle to
business expansion and diversification is access to credit.
The financial crisis of 2008 severely tightened small business access
to credit and affordable terms. When businesses can't access financing,
they're prevented from entering into new contracts, buying new
equipment, hiring new employees, and other expansions. In the worst
cases, business owners must cut payrolls, go into bankruptcy, or close
their doors for good. Congress has taken steps to alleviate that
problem. The Recovery Act included valuable changes to the SBA loan
programs, reducing fees for lenders and borrowers on the 7(a) and 504
loan programs and increasing government guarantees to attract more
capital. As a result, weekly SBA loan approval volumes have increased
by over 90 percent.
The improvements to SBA loan programs and other measures we've taken
have helped, but much more needs to be done. Earlier this year,
commercial and industrial loans declined for the seventh straight
quarter, down more than 17 percent from 2009, and banks are receiving
mixed messages. On the one hand, Congress and the administration are
urging them to lend more; on the other, bank regulators are telling
them to hold back on lending. In fact, our colleague, Mr. Price, has an
amendment expressing a sense of Congress on that point.
In addition, banks have greater risk aversion due to their exposure
on their balance sheets--stemming especially from the instability of
the commercial real estate sector. That brings us to this important
bill on the floor today. The Financial Services Committee has held
several hearings on the restriction of credit for small business. The
bill before us today builds on those hearings and was considered in the
open process the committee is known for.
During markup of the bill, the committee adopted 15 amendments,
including seven Republican amendments, and today we will consider 17
additional amendments, the vast majority of which are to the Financial
Services portion of the bill.
The Small Business Lending Fund Act is a significant step to boost
small business lending through our community banks. This legislation
builds on the effective financial stabilization measures Congress has
previously taken by establishing a new $30 billion small business loan
fund to provide additional capital to community banks that increase
lending to small businesses. This $30 billion investment on which the
government will be collecting dividends and earning a profit per the
CBO estimates can be leveraged by banks into over $300 billion in new
small business loans. This is an important investment by the Federal
Government in our small business that brings tremendous returns.
The terms of the capital provided to banks are performance based; the
more a bank increases its small business lending, the lower the
dividend rate is for the SBLF capital. If a bank decreases its small
business lending, it will be penalized with higher dividend rates.
This legislation includes strong safeguards to ensure that banks
adequately utilize available funds to increase lending to small
businesses, not for other lending or to improve their balance sheet.
There will be oversight consistently throughout the program, plus it
requires that the capital be invested only in strong financial
institutions at little risk of default and the best positioned to
increase small business lending.
It's important for Americans to understand that although this fund
has a maximum value of $30 billion, it is estimated to make a profit
for taxpayers in the long run. And the money will ultimately go not to
banks, but to the small businesses and their communities that they lend
to. As our financial system stabilizes and our community banks
recapitalize, these funds will be repaid to Treasury with full
repayment required over the next 10 years.
Also included in the Financial Services portion of this bill is the
State Small Business Credit Initiative championed by our colleague, Mr.
Peters. The underlying bill provides $2 billion in funding for new or
existing State lending programs.
The CHAIR. The time of the gentlewoman has expired.
Ms. BEAN. I yield myself 1 additional minute.
This program provides funding for States to expand or create lending
programs that use small amounts of public resources to generate private
bank financing and are designed to address critical reasons why banks
are having trouble making increased investments now--lack of adequate
capital reserves on the part of lenders and collateral shortfalls on
the part of borrowers.
The State Small Business Credit Initiative is required to leverage
$10 of private funding for every $1 of government funding. Many of the
existing capital access programs leverage 30 private dollars for every
1 government dollar. By supporting existing programs and using an easy-
to-replicate model, this program will be quickly ramped up to increase
small business lending which will retain and create jobs.
Small businesses are the job creators of our Nation. Supporting their
ability to grow and innovate is key to a robust and stable economic
recovery. I commend the leadership of Chairman Frank and Chairwoman
Velazquez in bringing this package to the floor, which will provide
critical support to the half of all American workers who either own or
work for a small business.
Mr. Chairman, I reserve the balance of my time.
Mr. NEUGEBAUER. Mr. Chairman, I yield myself such time as I may
consume.
I rise today in opposition to H.R. 5297. My opposition is not a
question of whether or not I support small businesses, it's a question
of whether or not this bill will actually help small businesses.
Unfortunately, my conclusion is that this bill will not help them, but
will cost the taxpayers another $33 billion--by the way, $33 billion
that we don't have.
{time} 1045
As a former small business owner, as well as a former lender, I
understand firsthand the need for small business to have access to
credit. Access to credit has tightened, but demand for credit from
worthy borrowers has also declined.
What small businesses really need more than anything in the current
economic environment is more certainty so they can invest and can plan
for the future. What they have gotten from Congress is more and more
uncertainty.
Small businesses will face a costly tax penalty if they can't comply
with the added cost of the new health care law. One business owner in
my district told me he had plans to expand and to create jobs, but he
has put those on hold now because his business would not grow over 51
employees and then be subject to the new law.
Small businesses are worried about how much their energy costs will
go up under the proposals of cap-and-tax
[[Page H4515]]
bills. Finally, they have no idea how much their taxes will be next
year. Not only are they worried about new taxes to pay for more
government spending, but they know that taxes will also go up
automatically if Congress does not do anything to address the expiring
tax provisions.
No wonder small businesses are in a holding pattern and are not
creating new jobs, and this bill does nothing to provide any certainty
for small businesses. Rather than doing something that creates more
certainty for small businesses to grow and to add jobs in this economy,
the majority is repeating the same failed initiatives that have helped
our national debt grow to $13 trillion in the past 2 years. This bill
follows the model of the TARP program, minus the stronger oversight,
and it puts another $30 billion into banks in the hopes that lending to
small businesses will increase.
In the words of Neil Barofsky, the Special Inspector General who
oversees the TARP, ``In terms of its basic design,'' he says, ``its
participants, its application process, from an oversight perspective,
the Small Business Lending Fund would essentially be an extension of
the TARP's Capital Purchase Program.''
From the Congressional Oversight Panel for TARP, chaired by Elizabeth
Warren, she says, ``The SBLF's prospects are far from certain. The SBLF
also raises questions about whether, in light of the Capital Purchase
Program's poor performance in improving credit access, any capital
infusion program can successfully jump-start small business lending.''
This bill allows for another $33 million in spending that will be
added to the government's credit card. The CBO tells us that the bank
lending portion will ultimately cost taxpayers $3.4 billion when market
risk is taken into account.
We have had record bank failures, including the failures of four
banks that were TARP recipients. When those TARP recipient banks
failed, the taxpayers' investments of $2.6 billion were essentially
wiped out. More than 100 banks that have received TARP funds so far
have missed their dividend payments. These missed dividend payments
have cost the taxpayers almost $200 million. It turns out that many of
these banks that received TARP funds were far from healthy.
Do we really think there will be no more bank failures or missed
dividend payments among banks that receive funds out of this new TARP
program? We know there will be, and the CBO says there will be, which
will lead to more losses for the taxpayers.
This fund is just like the TARP's Capital Purchase Program, except
for the stronger oversight. I am extremely disappointed that the Rules
Committee blocked a sensible amendment that would have improved the
oversight of this new lending fund by bringing it under the oversight
of the Special Inspector General for TARP. SIGTARP has developed
significant experience in looking out for the taxpayers when it comes
to the TARP program. SIGTARP's expertise should be used for this fund
to protect the taxpayers.
H.R. 5297 will lead to more losses for taxpayers and to no more
improvement in credit for small businesses. A lack of credit is not
even the largest problem facing these small businesses. According to
the National Federation of Independent Business, the top problem facing
small businesses is the lack of sales and demand. If businesses are not
confident they will have customers, they are not going to borrow; they
are not going to expand, and they are not going to add jobs.
This $33 billion bill is not going to help increase demand from small
business customers. Instead, we need the government to step back and to
stop prolonging the uncertainty that is crowding out economic growth in
our country. The sad thing is that there are things that Congress could
actually be doing to help small businesses. Instead, the majority has
chosen to bring up bills that will cost the taxpayers billions and that
will do nothing to help the small businesses. They have denied our side
the ability to offer substantial amendments.
I think it was appalling, quite honestly, Mr. Chairman, that the
majority awarded themselves 66 amendments to this bill and that they
awarded the Republicans one. Now, if that is the bipartisanship that
this leadership is talking about, I don't think the American people are
buying that that is bipartisan, because many of the amendments that we
offered, Mr. Chairman, were to add additional protections for the
taxpayers. Obviously, the majority is not interested in protecting the
taxpayers' investments with this $33 billion. By the way, this is $33
billion that we don't have.
I am hoping that the majority is going to tell us this morning where
the proposal of the $33 billion is going to come from. Well, I can tell
you where it is going to come from. We are going to charge it to our
children and to our grandchildren. You know what? I think we've just
about reached the limit on the amount of money we should charge to our
children and to our grandchildren.
So, Mr. Chairman, I am going to urge my colleagues to insist that we
do better for small businesses. We must do something for small
businesses, but this is not the answer, and I am going to encourage my
colleagues to vote ``no.''
I reserve the balance of my time.
Ms. BEAN. I yield 1 minute to the gentleman from Connecticut (Mr.
Larson).
Mr. LARSON of Connecticut. I rise in support of the bill for the
purpose of engaging in a colloquy with Congresswoman Bean.
I want to bring attention to the important role that banks at the $25
billion asset cap play in this economy, particularly in lending to
small businesses.
The State of Connecticut has three such banks within the $10 to $25
billion range in terms of asset caps. These banks are on the ground,
lending to small businesses in my district. They are the biggest SBA
lenders and are the biggest lenders to minority businesses. They also
fulfill a niche opportunity for so many manufacturers in my State as
well.
While I understand that the asset cap could not be raised to include
these banks in this bill, I would ask that Congresswoman Bean and
Chairman Frank work with me, with the Treasury, and with the other body
to ensure that these banks can be included in this program as this
legislation goes forward.
Ms. BEAN. I thank the congressman for his concerns, and I have
similar concerns.
In my home State of Illinois, we also have institutions that would
like to participate but would be unable to because of the asset cap. I
know Chairman Frank agrees on this point.
I reserve the balance of my time.
Mr. NEUGEBAUER. Mr. Chairman, one of the things that is interesting
is that this program is designed to put more capital into the banking
system.
According to the Federal Reserve's April survey of senior loan
officers, three factors that exerted the greatest influence on banks'
business lending practices over the past 3 months were competitive
pressures, the economic outlook, and the tolerance for risk in the
business loan market. Lack of capital was not mentioned as one of the
driving forces for lending decisions that are being made.
So, basically, Mr. Chairman, what this bill tries to do is to solve a
problem that, according to the Federal Reserve, doesn't exist. There is
plenty of capital, but there is this competitive pressure, this
economic outlook, and this tolerance for risk.
Going back to my earlier point, when I traveled around the 19th
Congressional District, I talked to a number of lenders. At the same
time, I visited businesses in their communities. What I learned during
that process is that many of the small businesses just said,
Congressman, things are just too uncertain right now. We don't know
what Congress is going to do with taxes. We don't know what they're
going to do with this energy bill. We don't know exactly. We are trying
to figure out how this new health care bill is going to impact our
businesses, how it is going to impact our bottom lines.
Then I went over and talked to the lenders. Many of the lenders are
sitting on record amounts of cash and capital in their banks. They are
looking as hard as they can for good lending opportunities. What they
said is, Unfortunately, some of our customers are not creditworthy. The
economy has hurt their sales, and so it wouldn't be
[[Page H4516]]
prudent to loan those businesses more money. Others said, Our good
customers, customers who are creditworthy, are not coming to us and
borrowing any money because, again, of this uncertainty.
So, again, our opposition to this bill is that it is not really
addressing the real issue in our economy, which is needing to bring
some certainty and to leave the capital in the companies, to leave the
capital in the economy, instead of the Federal Government's continuing
to create uncertainty and taking money out of the economy.
I reserve the balance of my time.
Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may
consume.
Small businesses, which represent 99.7 percent of firms, are key to
the recovery of the U.S. economy. Through innovation and hard work,
they are able to not only create jobs but to also build the foundation
for future growth. We saw this after the recession of the early 1990s.
As we emerge from the latest downturn, small firms will again lead the
way.
This downturn has affected every facet of the global economy. Most of
the focus has been on repairing the residential housing market and
homeowners in particular. It is important to note that this has greatly
impacted small businesses as well. Through the Recovery Act, we were
able to help them, providing more than $28 billion in assistance
through the SBA. H.R. 5297 builds on this by establishing additional
lending initiatives that will give small businesses even greater
financing options.
This legislation, Mr. Chairman, also recognizes that capital markets
are changing dramatically. Credit standards are stricter, and small
businesses are now looking not only to loans and to credit cards to
finance their operations, but they are also looking to equity
investment to turn their ideas into reality. This has become even more
pronounced as asset values have declined, leaving entrepreneurs with
less collateral to borrow against.
Unfortunately, small firms' access to venture capital and to equity
investment has declined. Last year, such investments plummeted from $28
billion in 2008 to only $17 billion last year. This is due, in part, to
the previous administration's decision to terminate the SBA's largest
pure equity financing program--the Small Business Investment Company
Participating Securities program. This has left many entrepreneurs who
need equity investment to fulfill their business plans without a source
of such financing.
As a result, it has become more difficult to start a new business and
to create the jobs that come with such activity. This is seen in data
from the Bureau of Labor Statistics, which show that self-employment
declined by 7.5 percent between 2007 and 2009. Less entrepreneurship is
never a good thing, but during a recession, it is particularly
problematic as small firms generate two-thirds of net new jobs.
In order to address this, title III creates a $2 billion investment
fund at the SBA. Under this program, the agency will provide matching
funds to qualified privately managed investment companies, which will,
in turn, invest in small companies. To ensure that the public and
private sectors' interests are aligned, the SBA's funding would be
provided at a 1-to-1 ratio of private investment capital.
Funds from the program will only be given to investment companies
that have a proven record of returning a profit to its investors. These
managers must have experience in investing in small, early-stage
companies. They must have the ability to provide leadership as these
entrepreneurial endeavors grow. In selecting investment firms to
participate in the program, the SBA will give a special preference to
Small Business Investment Companies, which already have substantial
experience in financing small firms. In exchange for receiving funds,
participating investment funds must convey an equity interest to the
SBA, similar to that of which individual investors will receive.
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The equity interest shall entitle the SBA to a repayment of its
investment and a proportion of any profits made by the investment
company. As a result, the government is on a level playing field with
private-sector investors, and the taxpayer stands to benefit from the
growth and success of these small companies.
By giving entrepreneurs access to $2 billion in equity investment, we
will provide them the resources to grow and create the types of long-
term employment gains we need. It goes without saying that the
groundbreaking, innovative firms that rely on such investment tend to
be some of our most prolific job creators. Between 2006 and 2008, these
companies created eight times more jobs than other businesses. That is
exactly the kind of job growth Americans need right now.
Mr. Chairman, I support this legislation.
I reserve the balance of my time.
Mr. GRAVES of Missouri. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, today, I rise in opposition to H.R. 5297, the Small
Business Lending Fund Act. Although my colleagues on the other side of
the aisle claim that this bill would improve small business access to
much-needed capital, I am not convinced. In fact, there is virtually no
guarantee that small businesses will benefit whatsoever from the
funding in this bill.
Nothing in Title 1 of the bill assures that banks will lend the
capital, much less to small businesses. Title 2 authorizes lending by
State programs to businesses that the Small Business Administration
would consider large. And only Title 3 of this bill is targeted to
assist small businesses. Nevertheless, the overall bill is badly
flawed, and I can't support it, nor can I support the excessive small
business assistance spending in Title 3.
Now more than ever, our Nation is relying on small businesses to
create jobs and to lead us in our economic recovery. But without
sufficient access to credit or capital, small businesses can't expand
operations or hire new employees. There's little doubt that efforts to
bail out banks and other major financial institutions has not led to
improved access to capital by small businesses.
Last session, I strongly supported H.R. 3854. It was a comprehensive,
bipartisan revision to the capital access programs overseen by the
Small Business Administration. That bill, unlike the one before us
today, would have improved access to needed capital by small
businesses.
Incorporated into that bill was H.R. 3738, which provided a
streamlined process to enable qualified venture capitalists to
bootstrap their investment with additional Federal moneys to provide
needed early-stage equity capital to small businesses. Successful
operators would pay back the Federal Government before they took their
own profits. Although the legislation came with a relatively modest
price tag of $200 million, its benefits were sure to far outweigh the
cost. Moreover, if the program did not succeed, the cost of failure was
going to be very modest.
That certainly isn't the case today with the bill we have before us.
The cost has increased by 500 percent without any previous testing of
its potential to succeed. This will pile unnecessary risk or costs onto
taxpayers at a time when we're dealing with record debt and
unsustainable deficit spending. Even if Title 3 of this bill--the small
business portion--even if Title 3 stood alone, given the dramatic
increase in costs, I couldn't support it. But yet here it is. It
remains attached to a bill that has even greater costs--and costs that
are fully not paid for in the short term.
So let's lay this out. We still do not have a budget for fiscal year
2011. Our national debt has reached a new record high of $13 trillion.
And the administration and the majority in the House continue to rely
on unsustainable borrowing and spending to keep things running. When
you consider the complete chaos our fiscal house is in, the idea of
more spending seems foolish. Completely foolish. But that's what's
being proposed by this legislation today, and I refuse to support it.
If my colleagues want to get serious about supporting small
businesses and encouraging their growth, there are lots of ways to do
so, and I'm very happy to help. But H.R. 5297 is yet another ill-
conceived effort that, at the end of the day, will only further punish
American entrepreneurs.
With that, Mr. Chairman, I reserve the balance of my time.
[[Page H4517]]
Ms. BEAN. Mr. Chairman, I yield 2 minutes to the gentleman from Texas
(Mr. Hinojosa).
Mr. HINOJOSA. Mr. Chairman, I rise in strong support of H.R. 5297,
the Small Business Lending Fund Act of 2010. This legislation will help
small businesses survive and thrive in the current economic climate by
providing the Secretary of the Treasury temporary authority to make
capital investments up to $30 billion to banks and savings associations
with assets of less than $10 billion and to their parent holding
companies, provided they also have assets of less than $10 billion.
Mr. Chairman, H.R. 5297 increases the availability of credit for
small businesses. It provides funding to eligible institutions that
serve small businesses that are minority- and women-owned and that also
serve low-and moderate-income, minority, and other underserved or rural
communities. This legislation ensures that all eligible institutions
may apply to participate in the program established under this title,
without discrimination based on geography, which is very important to
the great State of Texas.
H.R. 5297 requires eligible institutions receiving capital
investments under the program to provide outreach in languages other
than English describing the availability and application process to
receiving loans from eligible institutions through the use of print,
radio, television, or electronic media outlets which target
organizations, trade associations, and individuals that represent or
work within or are members of minority communities.
The Small Business Lending Fund Act of 2010 contains provisions
promoting financial education and literacy and would-be borrowers.
The CHAIR. The time of the gentleman has expired.
Ms. BEAN. Mr. Chairman, I yield 30 additional seconds to the
gentleman from Texas.
Mr. HINOJOSA. Most importantly, this legislation protects and
increases American jobs.
Mr. Chairman, H.R. 5297 will help small businesses, community banks,
the low- and moderate-income, minorities, and other underserved or
rural communities, and all of our constituents. It will help our great
country move further down the road towards economic recovery and
expansion. I strongly urge my colleagues to support this important and
timely piece of legislation.
National Association
of REALTORS',
Washington, DC, June 15, 2010.
U.S. House of Representatives,
Washington, DC.
Dear Representative: On behalf of the 1.1 million members
of National Association of REALTORS', and their
affiliates, I ask for your support of H.R. 5297, the ``Small
Business Lending Fund Act of 2010,'' introduced by
Representative Frank (D-MA). This bill will create the Small
Business Lending Fund Program (SBLFP) that would increase the
availability of credit to our nation's commercial real estate
and small business sectors.
Nearly $1.4 trillion of commercial real estate loans will
mature over the next several years, with a very limited
capacity to refinance. If not addressed, the swelling wave of
maturities could place further stress on already fragile
financial markets and slow our nation's economic recovery. In
addition to addressing the issues facing the commercial real
estate industry, improving access to capital for small
businesses--widely acknowledged as a critical part of growing
the American economy--is also greatly needed. In fact, the
percentage of small business owners holding a business loan
or credit line fell almost 20 percent last year.
Unappreciated is the fact that a significant portion of
commercial real estate is owned, leased, and operated by
small businesses.
Unlike the Troubled Asset Relief Program (TARP), the SBLFP
contains lending provisions that help ensure community banks
have both the incentive and greater capacity to increase
total loans to small businesses by decreasing the dividend
cost on the capital investment as lending grows.
Additionally, we support Amendment #4 (Minnick, D-ID),
which would allow commercial real estate loans for properties
for lease to be eligible in the SBLFP. As H.R. 5297 is
currently written, only owner-occupied commercial real estate
loans qualify for this program, which excludes commercial
real estate loans on properties for lease--a significant
portion of small businesses that need refinancing assistance.
In order to help spur small business hiring and growth, NAR
urges you to pass this important legislation.
Sincerely,
Vicki Cox Golder, CRB,
2010 President, National Association
of REALTORS'
____
Independent Community Bankers
of America,
Washington, DC, June 15, 2010.
To: Members of the U.S. House of Representatives
memorandum
Subject: House vote on the Small Business Lending Fund Act
(H.R. 5297)
On behalf of the nearly 5,000 members of the Independent
Community Bankers of America (ICBA), we express strong
support for the Small Business Lending Fund Act of 2010 (H.R.
5297) and urge House passage.
The Act will boost the flow of credit to small businesses
by leveraging the role of our nation's community banks.
Community banks are prolific lenders to small business with
the experience, expertise and grassroots relationships
necessary to quickly deploy the funds to creditworthy
borrowers. Notably, the Small Business Lending Fund's (the
Fund's) $30 billion in capital can be leveraged by community
banks to support $300 billion in additional small business
lending, creating new jobs and sustaining the economic
recovery.
As the Act goes to the House floor, we take this
opportunity to share our views on amendments that would
improve it and those that would undermine its goal of
increased small business lending by discouraging community
bank and small business participation.
Amendments Supporting Greater Small Business Lending
ICBA supports amendments that will further the goal of
greater small business lending including:
Amendment No. 4 (offered by Reps. Minnick, Simpson, Kosmas,
Quigley and Marchant): ICBA supports this amendment because
it would broaden eligibility for the program by including
non-owner occupied commercial real estate and provide greater
credit options to small business.
Amendment No. 5 (offered by Reps. Perlmutter, Gutierrez,
Klein and Kagen): ICBA supports this amendment because it
would further incentivize community banks to participate in
the Fund and create greater lending capacity and flexibility
to better serve struggling borrowers by allowing them to
amortize their loan losses over 10 years.
Amendment No. 6 (offered by Rep. Tom Price): ICBA supports
this amendment because it highlights the mixed messages that
community banks get from their regulators: Community banks
are encouraged to increase lending but at the same time
punished with aggressive write-downs of performing loans.
Amendment No. 10 (offered by Reps. Miller and Baca): ICBA
supports this amendment because it broadens the definition of
small business loans to include construction, land
development, and other land loans in domestic offices. These
loans will help expand economic activity and employment.
Amendment No. 12 (offered by Reps. Jackson Lee and Cao):
ICBA supports this amendment because it would support hard
hit community banks and the small businesses they serve in
the Gulf Coast states impacted by the oil spill disaster.
Amendment No. 15 (offered by Rep. Braley): ICBA supports
this amendment because the documents used to obtain a benefit
or service under the program should be clear and user-
friendly so interested parties can make best use of the
program.
Amendment No. 16 (offered by Rep. Loebsack): ICBA supports
this amendment because it further highlights the importance
of agricultural operations, farms, and rural communities in
our national economy.
Amendment Raising Serious Concern
The SBLF is a voluntary program for interested community
banks. ICBA wants to ensure that it is workable for community
banks and small business borrowers alike. ICBA opposes
amendments that would make the program too costly or create a
difficult compliance burden. Amendments in this category
include:
Amendment No. 3 (offered by Rep. Nye): ICBA opposes this
amendment because it would increase the compliance burden on
lenders through the addition of unnecessary complexity and
unworkable provisions thereby discouraging participation and
small business credit.
Amendments No. 7 (offered by Rep. Green) and No. 8 (offered
by Reps. Driehaus, Connolly, and Moore): ICBA opposes these
amendments because they would increase reporting requirements
and other compliance costs and burdens. These added layers of
regulation will discourage participation and reduce available
small business loans.
Amendment No. 11 (offered by Rep. Michaud): ICBA believes
that the program should remain focused on community banks and
traditional debt financing as the most established and
effective source of small business lending.
The outcome of these amendments is critical to the success
of the Fund. As you cast your votes, please consider which
amendments will further the fundamental goal of the program--
increased access to credit for small businesses, which can
only be achieved through broad, voluntary participation of
community banks--and which will undermine this goal.
Thank you for your consideration.
James D. MacPhee,
Chairman.
Salvatore Marranca,
Chairman-Elect.
Jeffrey L. Gerhart,
Vice Chairman.
Jack A. Hartings,
Treasurer.
Wayne A. Cottle,
Secretary.
R. Michael Menzies, Sr.,
Immediate Past Chairman.
Camden R. Fine,
President and CEO.
[[Page H4518]]
____
Washington, DC, May 14, 2010.
Conference of State Bank Supervisors
State Regulators Support Administration's Small Business Lending
Proposals
(By Neil Milner)
The Conference of State Bank Supervisors (CSBS) supports
the Obama Administration's small business lending proposals
to stimulate small business stability and growth.
The proposals--the Small Business Lending Fund and the
State Small Business Credit Initiative--will provide much-
needed access to capital to support small business lending,
the lifeblood of our national economy.
The Administration's proposals will provide capital
injections to fund new small business loans to financial
institutions with assets less than $10 billion. In the past
few years, the government has gone to extraordinary lengths
to prop up our capital markets by providing assistance to the
nation's largest institutions. CSBS is pleased the
Administration is taking the next steps to promote a full
economic recovery by assisting those institutions which
largely did not contribute to the economic crisis and have
played such a pivotal role in our recovery to date.
Further, CSBS is pleased the proposals are independent
initiatives separate from the TARP program. By separating the
small business proposals from TARP, we believe the programs
will enjoy wider participation and greater success.
We encourage Congress to coordinate with the Department of
the Treasury to rapidly implement these much needed
initiatives to assist community banks as they continue to
support small businesses around the country.
Mr. NEUGEBAUER. Mr. Chairman, I continue to reserve the balance of my
time.
Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may
consume.
I want to use this time to respond to those who are making the
assessment that this money, that there are not safeguards into this
legislation to make sure that the money goes to small businesses.
First, banks must apply to the Treasury to receive funds, with a
detailed plan on how to increase small business lending at their
institution. This language was included at my insistence that we need
to make sure that small businesses will get the benefit of this
legislation.
Second, this capital, repayment of the government loans will be at a
dividend rate starting at 5 percent per year. This rate will be lowered
by 1 percent for every 2.5 percent increase in small business lending
over 2009 levels. It can go as low as a total dividend rate of just 1
percent if the bank increases its business lending by 10 percent or
more, incentivizing banks to do the right thing. To ensure that banks
actually use the funding they receive, the rate will increase--and
there are penalties--to 7 percent if the bank fails to increase its
small business lending at their institution within 2 years. To ensure
that all federal funds are paid back within 5 years, the dividend rate
will increase to 9 percent for all banks, irrespective of their small
business lending, after 4\1/2\ years.
Let me just make it clear: What the CBO estimates through what they
provided to the Congress and telling us, CBO estimates that this
provision will save taxpayers $1 billion over 10 years, as banks are
expected to pay back this loan over 10 years, with interest.
I reserve the balance of my time.
Mr. GRAVES of Missouri. Mr. Chairman, I don't have any other speakers
on this.
I just might comment on this bill. One of the frustrating things
about our economic recovery right now, and we continue to hear over and
over and over again, that small businesses are uncertain about what the
future is. They don't know what's going to happen with cap-and-trade
and what's going to happen with the energy tax, particularly those
businesses that are using a lot of energy to produce whatever it is.
They're uncertain about what's going to happen with this health care
bill and all the mandates that are coming out. They're uncertain about
what's going to happen with their taxes. They're uncertain about what's
going to happen with the amassing debt that's taking place, because
somebody is going to have to pay for it. And this administration
continues to look at small businesses to be able to provide that.
So here we come along with a bill that supposedly is supposed to help
small businesses, which the way it is right now, there's no guarantee
whatsoever that that money is going to be loaned to small businesses.
As the bill stands right now, a commercial loan could qualify, any
commercial loan could qualify if it's a loan less than a million
dollars.
The fact of the matter is, Mr. Chairman, there's no guarantee.
There's no guarantee.
Small businesses are the ones that need help. And the fact of the
matter is, too, that if the government would just get out of the way,
then small businesses would lead us back into this economic recovery.
They provide 7 out of every 10 jobs in this country, and they are the
ones that are going to lead us. But nobody is going to expand and
nobody is going to add any new productivity, any new hires, until they
know what's going to go on and what's going to be around the corner.
With this administration, they don't know what's going to happen to
them.
I reserve the balance of my time.
Ms. BEAN. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from
Michigan (Mr. Peters).
Mr. PETERS. I rise today in support of H.R. 5297. Small businesses
create two in every three new jobs in this country. Creating an
environment that allows small businesses to innovate and grow is the
single most important objective necessary to reduce unemployment and
lead our Nation to full economic recovery.
I have held a field hearing and roundtables with small business
owners and have traveled door-to-door in downtowns in my district, and
the one thing that I hear over and over again is many entrepreneurs are
ready to invest and create jobs again, but they cannot secure the
capital necessary to start or grow their business. Some, like Karen
Teegarden, owner of a small advertising firm in Oakland County, told me
that because she could not get a simple line of credit to meet some
short-term payroll needs, she was forced to lay off workers.
It is no secret why small businesses are struggling. Wall Street
banks have admitted that they have reduced their investments in
Michigan as well as other States. And small local lenders don't have
enough capital to lend. I have been fighting for the past year for
action to help solve this problem, and the bill before us today will
create a $30 billion fund to promote small business lending. Small
local lenders can leverage this funding into $300 billion in loans for
small businesses. But because local lenders will pay the investment
back with interest, the nonpartisan CBO says the taxpayers will earn a
projected $1 billion.
It's not often that a single action can create a multitude of jobs
across this country and reduce the deficit at the same time. Enacting
this bill will do just that. In Michigan, our manufacturers are
struggling particularly hard to get access to credit. As their assets
decline in value, they have less collateral to post, and this makes
banks less likely to lend to them, even if they can show that they are
thriving.
The Michigan Collateral Support Program helps lenders, small
manufacturers and the State pool default risk to help these companies
secure the capital they need to create new jobs. Thirty States have
similar programs, and a provision of this bill that I wrote would allow
States to strengthen their existing programs and allow other States to
create them.
Washington's top priority must be to help create an environment that
allows our small businesses to succeed and to create jobs. This
legislation helps one of the primary obstacles facing our small
businesses, and passing this bill is critical.
Mr. NEUGEBAUER. I reserve the balance of my time.
{time} 1115
Ms. BEAN. I yield 1 minute to the majority leader.
Mr. HOYER. I appreciate the gentlelady from Illinois (Ms. Bean) for
yielding.
I want to first thank the chair of the Small Business Committee,
Congresswoman Velazquez, for the work that she has done on this bill
and for others who have worked on this bill.
As I'm sure has been said many times on this floor but bears
repeating, small businesses are the job-creating engine of our economy.
They employ more than half of all employees in the private sector, and
they've created 64 percent of net new jobs over the past 15 years. So
ensuring that small businesses have the resources they need to
[[Page H4519]]
keep innovating, growing and creating jobs is essential if we're going
to sustain the economic recovery. And small businesses have been at the
heart of Democrats' recovery strategy ever since this Congress convened
in the midst of the greatest economic crisis since the Great
Depression, indeed, the deepest recession we've seen in three-quarters
of a century.
The Recovery Act, which cut taxes for 98 percent of Americans and is
responsible for some 2 million jobs, gave small businesses tax credits
for hiring many unemployed workers and helped them make the capital
investments that are essential to their growth. Since the Recovery Act,
we've expanded Small Business Administration lending, created further
tax credits for hiring unemployed workers, and offered immediate and
long-term tax credits to help small businesses afford employee health
care. And yesterday, the House passed the Small Business Jobs Tax
Relief Act, which will exempt 100 percent of small business capital
gains from taxation and increase the amount of startup expenses small
business owners can deduct from their taxes, all designed to allow
small businesses to grow and expand. That means more investment in
small businesses, and more entrepreneurs willing and able to start
businesses of their own and hire workers to staff it.
Today, ladies and gentlemen of the House, we can take another step to
help small businesses and workers, establishing a $30 billion fund to
expand lending to small businesses looking to make new investments in
growth at no cost to the taxpayer. Ladies and gentlemen, I know that
those of you who have been not only in your own districts but in your
States and throughout the country know that every small businessman and
-woman in America who wants to expand has a singular complaint, and
that is that they cannot access capital. That's what this bill is
about. This bill, the Small Business Lending Fund Act, invests capital
in community and small banks that were not the problem that caused this
financial meltdown, investing in those community and small banks under
terms that become more favorable to those banks as they make more loans
to small businesses. In other words, carrots for giving money to small
business.
The CBO tells us that all of the money in the Small Business Lending
Fund will be repaid with interest and that taxpayers will actually make
$1 billion profit over the next decade. Now, that's not too hard to
believe, I think, when you understand that in terms of the dollars that
the Bush administration asked us to put on the table to stabilize the
economy back in 2008, that to the extent that the money has now been
paid back--not all of it yet--but to the extent that we have gotten
repayment, we have made some 12 percent on that money. Unfortunately,
45 percent of small businesses seeking loans to expand or even just
stay afloat were turned down last year, and you can imagine how those
denials led directly to unemployment.
This bill, ladies and gentlemen of the House, can go a long way
towards opening up the flow of credit that helps create jobs. That's
what this is about, allowing small businesses to expand, grow their
businesses, hire more people, pay good salaries and benefits, and get
our economy moving. I urge my colleagues to support this bill and to
help our small businesses create jobs. I want to congratulate once
again the chair of the Small Business Committee, Nydia Velazquez, for
her leadership. I thank Ms. Bean from Illinois for her leadership on
these issues, and I thank our Republican friends, who I hope will join
us in supporting this effort to make sure that small businesses have
the capital they need to grow our economy.
Mr. GRAVES of Missouri. Mr. Chairman, I yield back the balance of my
time.
Ms. VELAZQUEZ. Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, the face of American small business is changing--and
rapidly. Twenty years ago, entrepreneurs were likely to rely on loans
and credit cards to start up or expand their businesses. This met the
needs of most entrepreneurs, but today's startup costs have grown
dramatically. This has caused many small companies to turn to equity
investment, particularly those in high-growth, technology-based sectors
which show the greatest promise to create new jobs. For these firms,
their assets are not buildings or machinery; they are people, ideas and
skills. For this new generation, the old method of securing capital,
through debt, is no longer sufficient by itself.
In a world where revolutionary new products are conceived in dorm
rooms, and companies are launched in garages, new ways of meeting
businesses' capital needs are needed. Through the Small Business Early
Stage Investment program, this bill recognizes this fundamental shift
and takes steps to meet the capital needs of our new businesses. Our
Nation's entrepreneurs have led us out of every previous recession, and
they can do so again, but only if we give them the right tools. This
legislation will make loans more affordable for existing businesses so
they can grow and add to their payrolls. And for the enterprises just
getting off the ground, it will reinvigorate investment in cutting-edge
startups.
A vote for this bill is a vote in favor of the American traditions of
innovation and entrepreneurship. I urge my colleagues to vote with the
small businesses in their district; vote ``yes.''
I yield back the balance of my time.
Mr. NEUGEBAUER. Mr. Chairman, I yield myself such time as I may
consume.
I appreciate the majority leader coming and telling us that this
won't cost the taxpayers any money. We have asked the majority for an
updated CBO score on this bill with the revisions, and we have not seen
that yet. So we don't actually know that for certain. But what we do
know is that from the TARP program, there were losses incurred in the
TARP program. And this program has been identified by people who are
very familiar with the TARP program as another TARP program, except
some people want to call this TARP II, TARP Jr. But by and large, this
is another TARP program.
You know, there is no question today that all of us realize that
small businesses are the number one job creator in our country. Mr.
Chairman, in fact, I am a small businessman. I came to Congress not
from being a lifelong politician, but from creating jobs in this
country, of making payrolls. I have made a payroll. I have borrowed
money. I have actually been a lender. And if you really want to get the
economy going back in America, as the majority has tried throwing money
at the problem--and I would have thought that they would have learned
by now that all this money, the trillions of dollars that they have
thrown at the economy hasn't created any jobs. We still have almost 10
percent of the American people who are unemployed in this country
today. The numbers show that 17 percent of the American people are
either unemployed or underemployed, so throwing money at the problem
isn't the answer.
If you want to create jobs in America, I will tell you how you create
jobs in America. Number one, you bring some certainty in America. Right
now the American people are questioning what the future of their
country is. They are seeing record deficits by this administration.
This year alone, if we had a budget--we don't know what the deficit is
going to be this year because, one, we haven't passed any appropriation
bills in this Congress.
And, secondly, the leadership of the majority hasn't brought a budget
to the floor, and maybe they are not going to because they don't want
their Members to have to take a vote on a budget that's going to say:
for every dollar we're going to spend, we are going to have to borrow
42 cents. I am sure they would be embarrassed. And it would be more
embarrassing if you voted for a budget like that.
But the way you bring certainty to the country is, one, we are going
to have to start cutting back our spending and reducing these deficits.
Leaving money in the economy. As a small businessman, when I had the
capital in my business, and the government wasn't taxing away my
capital, I was able to take that capital and leverage it, and go to my
lender, be a responsible borrower, and it would be prudent to lend to
me, and we could expand our business that way.
The other thing is, yesterday this body had an opportunity to do
something for small business, and that was to repeal the mandate for
health care
[[Page H4520]]
that was in the Democrats' health care bill. Unfortunately, there was
not enough votes, but some of our Democratic colleagues understand the
same thing we do: if you want to bring certainty, create jobs in
America, you take that off the backs of small businesses.
So, really, I wish that this bill would do something for small
businesses in this country because small businesses are the lifeblood
and the engine for our country. Unfortunately, this bill will not do
anything for small businesses; but it will put the taxpayers, again, at
risk to underwrite and to invest in banks.
You know, I figured this: it's simple back there in Lubbock, Texas,
that, you know, if somebody wants to invest their dollars in a bank,
let them invest their dollars in a bank. Don't take the money away from
the taxpayers and invest it because the government thinks that they
know what is a better program. So, again, I urge my colleagues to vote
for small business, but not this bill. This bill doesn't help small
business.
And with that, I yield back the balance of my time.
Ms. BEAN. I yield myself the balance of time.
Well, first I would like to address some of the points our colleague
from Missouri suggested, that all we need to do for business is less
Federal action and less regulation. And on that point, I would have to
agree, the minority has delivered--less action and less regulation, a
culture of deregulation that led to the financial crisis and the recent
oil spill in the gulf. But this bill isn't about regulation. It's about
credit.
And I would then like to move to the point of my colleague from Texas
who suggested that this bill adds $33 billion to the national debt.
That's disingenuous, as the gentleman knows. This is not a $30 billion
cost, according to the nonpartisan CBO. The legislation, in fact, will
reduce the deficit. Now, these funds are an investment, and there are
clear safeguards that ensure that taxpayers are repaid with interest.
Also, his concern for small businesses fearing higher taxes is
unwarranted, as taxes are, in fact, at historic lows; and in the
Recovery Act, of the $288 billion in tax cuts, many of those went to
our community businesses.
He also cited the NFIB to claim that access to credit is not a
serious problem, yet the NFIB's own data shows that only 40 percent of
small business owners attempting to borrow last year had all of their
credit needs met, and nearly one-quarter of would-be borrowers, 25
percent, had none of their credit needs met. Now, he did suggest that
some businesses--or he suggested all businesses--are just in a holding
pattern, when the reality is, some of them are, and that's not who this
legislation is directed to. There are many others who have started to
see their pipeline build and their forecasts develop and are seeking to
expand their operations and hire people, and they need that access to
capital.
This Small Business Lending Fund Act is for those who are going to
grow us out of this recession. I urge my colleagues to support this
important investment in those community businesses that are the
cornerstone of our economy.
I yield back the balance of my time.
The CHAIR. All time for general debate has expired.
In lieu of the amendment in the nature of a substitute recommended by
the Committee on Financial Services printed in the bill, it shall be in
order to consider as an original bill for the purpose of amendment
under the 5-minute rule the amendment in the nature of a substitute
printed in part A of House Report 111-506, modified by the amendment
printed in part B of that report and the order of the House of today.
The amendment in the nature of a substitute shall be considered as
read.
The text of the amendment in the nature of a substitute is as
follows:
Strike all after the enacting clause and insert the
following:
TITLE I--SMALL BUSINESS LENDING FUND
SECTION 1. SHORT TITLE.
This title may be cited as the ``Small Business Jobs and
Credit Act of 2010''.
SEC. 2. PURPOSE.
The purpose of this title is to address the ongoing effects
of the financial crisis on small businesses by providing
temporary authority to the Secretary of the Treasury to make
capital investments in eligible institutions in order to
increase the availability of credit for small businesses.
SEC. 3. DEFINITIONS.
For purposes of this title:
(1) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(A) the Committee on Small Business and Entrepreneurship,
the Committee on Agriculture, Nutrition, and Forestry, the
Committee on Banking, Housing, and Urban Affairs, the
Committee on Finance, the Committee on the Budget, and the
Committee on Appropriations of the Senate; and
(B) the Committee on Small Business, the Committee on
Agriculture, the Committee on Financial Services, the
Committee on Ways and Means, the Committee on the Budget, and
the Committee on Appropriations of the House of
Representatives.
(2) Appropriate federal banking agency.--The term
``appropriate Federal banking agency'' has the meaning given
such term under section 3(q) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)).
(3) Bank holding company.--The term ``bank holding
company'' has the meaning given such term under section
2(a)(1) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(2)(a)(1)).
(4) Call report.--The term ``call report'' means--
(A) reports of Condition and Income submitted to the Office
of the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, and the Federal Deposit Insurance
Corporation;
(B) the Office of Thrift Supervision Thrift Financial
Report;
(C) any report that is designated by the Office of the
Comptroller of the Currency, the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance
Corporation, or the Office of Thrift Supervision, as
applicable, as a successor to any report referred to in
subparagraph (A) or (B); and
(D) standard reports of Condition and Income submitted by
Community Development Financial Institution loan funds to the
Community Development Financial Institutions Fund.
(5) CDCI.--The term ``CDCI'' means the Community
Development Capital Initiative created by the Secretary under
the Troubled Asset Relief Program established by the
Emergency Economic Stabilization Act of 2008.
(6) CDCI investment.--The term ``CDCI investment'' means,
with respect to any eligible institution, the principal
amount of any investment made by the Secretary in such
eligible institution under the CDCI that has not been repaid.
(7) CPP.--The term ``CPP'' means the Capital Purchase
Program created by the Secretary under the Troubled Asset
Relief Program established by the Emergency Economic
Stabilization Act of 2008.
(8) CPP investment.--The term ``CPP investment'' means,
with respect to any eligible institution, the principal
amount of any investment made by the Secretary in such
eligible institution under the CPP that has not been repaid.
(9) Eligible institution.--The term ``eligible
institution'' means--
(A) any insured depository institution, which--
(i) is not controlled by a bank holding company or savings
and loan holding company that is also an eligible
institution;
(ii) has total assets of equal to or less than
$10,000,000,000, as reported in the call report as of the end
of the fourth quarter of calendar year 2009; and
(iii) is not directly or indirectly controlled by any
company or other entity that has total consolidated assets of
more than $10,000,000,000, as so reported;
(B) any bank holding company which has total consolidated
assets of equal to or less than $10,000,000,000;
(C) any savings and loan holding company which has total
consolidated assets of equal to or less than $10,000,000,000;
and
(D) any community development financial institution loan
fund which has total assets of equal to or less than
$10,000,000,000.
(10) Fund.--The term ``Fund'' means the Small Business
Lending Fund established by section 4(a)(1) of this title.
(11) Insured depository institution.--The term ``insured
depository institution'' has the meaning given such term
under section 3(c)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(c)(2)).
(12) Program.--The term ``Program'' means the Small
Business Lending Fund Program authorized by section 4(a)(2)
of this title.
(13) Savings and loan holding company.--The term ``savings
and loan holding company'' has the meaning given such term
under section 10(a)(1)(D) of the Home Owners' Loan Act (12
U.S.C. 1467a(a)(1)(D)).
(14) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(15) Small business lending.--
(A) In general.--The term ``small business lending'' means
small business lending, as
[[Page H4521]]
defined by and reported in an eligible institution's
quarterly call report, of the following types:
(i) Commercial and industrial loans.
(ii) Owner-occupied nonfarm, nonresidential real estate
loans.
(iii) Loans to finance agricultural production and other
loans to farmers.
(iv) Loans secured by farmland.
(B) Treatment of holding companies.--In the case of
eligible institutions that are bank holding companies or
savings and loan holding companies having one or more insured
depository institution subsidiaries, small business lending
shall be measured based on the combined small business
lending reported in the call report of the insured depository
institution subsidiaries.
(16) Minority-owned and women-owned business.--The terms
``minority-owned business'' and ``women-owned business''
shall have the meaning given the terms ``minority-owned
business'' and ``women's business'', respectively, under
section 21A(r)(4) of the Federal Home Loan Bank Act (12
U.S.C. 1441A(r)(4)).
(17) CDFI; community development financial institution.--
The terms ``CDFI'' and ``community development financial
institution'' have the meaning given the term ``community
development financial institution'' under the Riegle
Community Development and Regulatory Improvement Act of 1994.
(18) CDLF; community development loan fund.--The terms
``CDLF'' and ``community development loan fund'' mean any
entity that--
(A) is certified by the Department of the Treasury as a
community development financial institution loan fund;
(B) is exempt from taxation under the Internal Revenue Code
of 1986; and
(C) has assets under $10,000,000,000 as of the fourth
quarter of calendar year 2009.
SEC. 4. SMALL BUSINESS LENDING FUND.
(a) Fund and Program.--
(1) Fund established.--There is established in the Treasury
of the United States a fund to be known as the ``Small
Business Lending Fund'', which shall be administered by the
Secretary.
(2) Programs authorized.--The Secretary is authorized to
establish the Small Business Lending Fund Program for using
the Fund consistent with this title.
(b) Use of Fund.--
(1) In general.--Subject to paragraph (2), the Fund shall
be available to the Secretary, without further appropriation
or fiscal year limitation, for the costs of purchases
(including commitments to purchase), and modifications of
such purchases, of preferred stock and other financial
instruments from eligible institutions on such terms and
conditions as are determined by the Secretary in accordance
with this title.
``For purposes of this paragraph and with respect to an
eligible institution, the term `other financial instruments'
shall include only debt instruments for which such eligible
institution is fully liable or equity equivalent capital of
the eligible institution. Such debt instruments may be
subordinated to the claims of other creditors of the eligible
institution''.
(2) Maximum purchase limit.--The aggregate amount of
purchases (and commitments to purchase) made pursuant to
paragraph (1) may not exceed $30,000,000,000.
(3) Proceeds used to pay down public debt.--All funds
received by the Secretary in connection with purchases made
pursuant to paragraph (1), including interest payments,
dividend payments, and proceeds from the sale of any
financial instrument, shall be paid into the general fund of
the Treasury for reduction of the public debt.
(4) Limitation on purchases from cdlfs.--
(A) In general.--Not more than 1 percent of the value of
purchases made by the Secretary in carrying out the Program
may be used to make purchases from community development loan
funds.
(B) Eligibility standard.--The Secretary, in consultation
with the Community Development Financial Institutions Fund,
shall develop eligibility criteria to determine the financial
ability of a CDLF to participate in the Program and repay the
investment. Such criteria may include net asset ratio to
total assets, ratio of loan loss reserves to loans and leases
90 days or more delinquent (including loans sold with full
recourse), positive net income measured on a 3-year rolling
average, operating liquidity ratio, ratio of loans and leases
90 days or more delinquent (including loans sold with full
recourse) to total equity plus loan loss reserves or any
other measures deemed appropriate. In addition, CDLFs
participating in the Program shall submit audited financial
statements to the Secretary, have a clean audit opinion, and
have at least three years of operating experience.
(c) Credits to the Fund.--There shall be credited to the
Fund amounts made available pursuant to section 9, to the
extent provided by appropriations Acts.
(d) Terms.--
(1) Application.--
(A) Institutions with assets of $1,000,000,000 or less.--
Eligible institutions having total assets equal to or less
than $1,000,000,000, as reported in a call report as of the
end of the fourth quarter of calendar year 2009, may apply to
receive a capital investment from the Fund in an amount not
exceeding 5 percent of risk-weighted assets, as reported in
the call report immediately preceding the date of
application, less the amount of any CDCI investment and any
CPP investment.
(B) Institutions with assets of more than $1,000,000,000
and less than $10,000,000,000.--Eligible institutions having
total assets of more than $1,000,000,000 but less than
$10,000,000,000, as of the end of the fourth quarter of
calendar year 2009, may apply to receive a capital investment
from the Fund in an amount not exceeding 3 percent of risk-
weighted assets, as reported in the call report immediately
preceding the date of application, less the amount of any
CDCI investment and any CPP investment.
(C) Treatment of holding companies.--In the case of an
eligible institution that is a bank holding company or a
savings and loan holding company having one or more insured
depository institution subsidiaries, total assets shall be
measured based on the combined total assets reported in the
call report of the insured depository institution
subsidiaries as of the end of the fourth quarter of calendar
year 2009 and risk-weighted assets shall be measured based on
the combined risk-weighted assets of the insured depository
institution subsidiaries as reported in the call report
immediately preceding the date of application.
(D) Treatment of applicants that are institutions
controlled by holding companies.--If an eligible institution
that applies to receive a capital investment under the
Program is under the control of a bank holding company or a
savings and loan holding company, then the Secretary may use
the Fund to purchase preferred stock or other financial
instruments from the top-tier bank holding company or savings
and loan holding company of such eligible institution, as
applicable. For purposes of this paragraph, the term
``control'' with respect to a bank holding company shall have
the same meaning as in section 2(a)(2) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(2)(a)(2)). For purposes
of this paragraph, the term ``control'' with respect to a
savings and loan holding company shall have the same meaning
as in 10(a)(2) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(2)).
(E) Requirement to provide a small business lending plan.--
At the time that an applicant submits an application to the
Secretary for a capital investment under the Program, the
applicant shall deliver to the appropriate Federal banking
agency and, for applicant's that are State-chartered banks,
to the appropriate State banking regulator, a small business
lending plan describing how the applicant's business strategy
and operating goals will allow it to address the needs of
small businesses in the areas it serves. This plan shall be
confidential supervisory information.
(F) Treatment of applicants that are community development
loan funds.--Eligible institutions that are community
development loan funds may apply to receive a capital
investment from the Fund in an amount not exceeding 10
percent of total assets, as reported in the call report
immediately preceding the date of application.
(2) Consultation with regulators.--For each eligible
institution that applies to receive a capital investment
under the Program, the Secretary shall--
(A) consult with the appropriate Federal banking agency or,
in the case of an eligible institution that is a non-
depository community development financial institution, the
Community Development Financial Institution Fund, for the
eligible institution to determine whether the eligible
institution may receive such capital investment;
(B) in the case of an eligible institution that is a State-
chartered bank, consider any views received from the State
banking regulator of the State of the eligible institution
regarding the financial condition of the eligible
institution; and
(C) in the case of a community development financial
institution loan fund, consult with the Community Development
Financial Institution Fund.
(3) Ineligibility of institutions on fdic problem bank
list.--
(A) In general.--An eligible institution may not receive
any capital investment under the Program if--
(i) such institution is on the FDIC problem bank list; or
(ii) such institution has been removed from the FDIC
problem bank list for less than 90 days.
(B) Construction.--Nothing in subparagraph (A) shall be
construed as limiting the discretion of the Secretary to deny
the application of an eligible institution that is not on the
FDIC problem bank list.
(C) FDIC problem bank list defined.--For purposes of this
subparagraph, the term ``FDIC problem bank list'' means the
list of institutions with a current rating of 4 or 5 under
the Uniform Financial Institutions Rating System, or such
other list designated by the Federal Deposit Insurance
Corporation.
(4) Incentives to lend.--
(A) Requirements on preferred stock and other financial
instruments.--Any preferred stock or other financial
instrument issued to Treasury by an eligible institution
receiving a capital investment under the Program shall
provide that--
(i) the rate at which dividends or interest are payable
shall be 5 percent per annum initially;
(ii) within the first 2 years after the date of the capital
investment under the Program, the rate may be adjusted based
on the amount of an eligible institution's small business
lending. Changes in the amount of small business lending
shall be measured against the amount of small business
lending
[[Page H4522]]
reported by the eligible institution in its call report for
the last quarter in calendar year 2009 or the average amount
of small business lending reported by the eligible
institution in all call reports for calendar year 2009,
whichever is lower, minus adjustments from each quarterly
balance in respect of--
(I) net loan charge offs with respect to small business
lending; and
(II) gains realized by the eligible institution resulting
from mergers, acquisitions or purchases of loans after
origination and syndication; which adjustments shall be
determined in accordance with guidance promulgated by the
Secretary; and
(iii) during any calendar quarter during the initial 2-year
period referred to in clause (ii), an institution's rate
shall be adjusted to reflect the following schedule, based on
that institution's change in the amount of small business
lending relative to the baseline--
(I) if the amount of small business lending has increased
by less than 2.5 percent, the dividend or interest rate shall
be 5 percent;
(II) if the amount of small business lending has increased
by 2.5 percent or greater, but by less than 5.0 percent, the
dividend or interest rate shall be 4 percent;
(III) if the amount of small business lending has increased
by 5.0 percent or greater, but by less than 7.5 percent, the
dividend or interest rate shall be 3 percent;
(IV) if the amount of small business lending has increased
by 7.5 percent or greater, and but by less than 10.0 percent,
the dividend or interest rate shall be 2 percent; or
(V) if the amount of small business lending has increased
by 10 percent or greater, the dividend or interest rate shall
be 1 percent.
(B) Basis of initial rate.--The initial dividend or
interest rate shall be based on call report data published in
the quarter immediately preceding the date of the capital
investment under the Program.
(C) Timing of rate adjustments.--Any rate adjustment shall
occur in the calendar quarter following the publication of
call report data, such that the rate based on call report
data from any one calendar quarter, which is published in the
first following calendar quarter, shall be adjusted in that
first following calendar quarter and payable in the second
following quarter.
(D) Rate following initial 2-year period.--Generally, the
rate based on call report data from the eighth calendar
quarter after the date of the capital investment under the
Program shall be payable until the expiration of the 4\1/2\-
year period that begins on the date of the investment. In the
case where the amount of small business lending has remained
the same or decreased relative to the institution's baseline
in the eighth quarter after the date of the capital
investment under the Program, the rate shall be 7 percent
until the expiration of the 4\1/2\-year period that begins on
the date of the investment.
(E) Rate following initial 4\1/2\-year period.--The
dividend or interest rate paid on any preferred stock or
other financial instrument issued by an eligible institution
that receives a capital investment under the Program shall
increase to 9 percent at the end of the 4\1/2\-year period
that begins on the date of the capital investment under
the Program.
(F) Limitation on rate reductions with respect to certain
amount.--The reduction in the dividend or interest rate
payable to Treasury by any eligible institution shall be
limited such that the rate reduction shall not apply to a
dollar amount of the investment made by Treasury that is
greater than the dollar amount increase in the amount of
small business lending realized under this program. The
Secretary may issue guidelines that will apply to new capital
investments limiting the amount of capital available to
eligible institutions consistent with this limitation.
(G) Rate adjustments for s corporation.--Before making a
capital investment in an eligible institution that is an S
corporation or a corporation organized on a mutual basis, the
Secretary may adjust the dividend or interest rate on the
financial instrument to be issued to the Secretary, from the
dividend or interest rate that would apply under
subparagraphs (A) through (F), to take into account any
differential tax treatment of securities issued by such
eligible institution. For purpose of this subparagraph, the
term ``S corporation'' has the same meaning as in section
1361(a) of the Internal Revenue Code of 1986.
(H) Repayment deadline.--The capital investment received by
an eligible institution under the Program shall be evidenced
by preferred stock or other financial instrument that--
(i) includes, as a term and condition, that the capital
investment will--
(I) be repaid not later than the end of the 10-year period
beginning on the date of the capital investment under the
Program; or
(II) at the end of such 10-year period, be subject to such
additional terms as the Secretary shall prescribe, which
shall include a requirement that the stock or instrument
shall carry the highest dividend or interest rate payable;
and
(ii) provides that the term and condition described under
clause (i) shall not apply if the application of that term
and condition would adversely affect the capital treatment of
the stock or financial instrument under current or successor
applicable capital provisions compared to a capital
instrument with identical terms other than the term and
condition described under clause (i).
(I) Requirements on financial instruments issued by a
community development financial institution loan fund.--Any
equity equivalent capital issued to the Treasury by a
Community Development Financial Institution loan fund
receiving a capital investment under the Program shall
provide that the rate at which interest is payable shall be 2
percent per annum for 8 years. After 8 years, the rate at
which interest is payable shall be 9 percent.
(5) Additional incentives to repay.--The Secretary may, by
regulation or guidance issued under section 5(9), establish
repayment incentives in addition to the incentive in
paragraph (4)(E) that will apply to new capital investments
in a manner that the Secretary determines to be consistent
with the purposes of this title.
(6) Capital purchase program refinance.--
(A) In general.--The Secretary shall, in a manner that the
Secretary determines to be consistent with the purposes of
this title, issue regulations and other guidance to permit
eligible institutions to refinance securities issued to
Treasury under the CDCI and the CPP for securities to be
issued under the Program.
(B) Prohibition on participation by non-paying cpp
participants.--Subparagraph (A) shall not apply to any
eligible institution that has missed more than one dividend
payment due under the CPP. For purposes of this subparagraph,
a CPP dividend payment that is submitted within 60 days of
the due date of such payment shall not be considered a missed
divident payment.
(7) Minority outreach.--The Secretary shall require
eligible institutions receiving capital investments under the
Program to provide outreach and advertising in the
appropriate language of the applicant pool describing the
availability and application process of receiving loans from
the eligible institution that are made possible by the
Program through the use of print, radio, television or
electronic media outlets which target organizations, trade
associations, and individuals that represent or work within
or are members of minority communities.
(8) Additional terms.--The Secretary may, by regulation or
guidance issued under section 5(9), make modifications that
will apply to new capital investments in order to manage
risks associated with the administration of the Fund in a
manner consistent with the purposes of this title.
(9) Minimum underwriting standards.--The appropriate
Federal banking agency for an eligible institution that
receives funds under the Program shall within 60 days issue
guidance regarding prudent underwriting standards that must
be used for loans made by the eligible institution using such
funds.
``In the case of a community development financial
institution loan fund, the Community Development Financial
Institutions Fund shall within 60 days issue regulations
defining minimum underwriting standards that must be used for
loans made by the eligible institution using such funds''.
(10) Reporting.--Each eligible institution receiving a
capital investment under the Program shall issue a quarterly
report to the Secretary detailing the percentage of new loans
to small businesses the institution makes that are--
(A) guaranteed by the Small Business Administration;
(B) made to Small Business Investment Companies;
(C) other loans made to small business concerns (as defined
under the Small Business Act), if the internal reporting of
the concern distinguishes the size of businesses to which
loans are made; and
(D) other loans made to entities that the internal
reporting of the concern classifies as a small business.
SEC. 5. ADDITIONAL AUTHORITIES OF THE SECRETARY.
The Secretary may take such actions as the Secretary deems
necessary to carry out the authorities in this title,
including, without limitation, the following:
(1) The Secretary may use the services of any agency or
instrumentality of the United States or component thereof on
a reimbursable basis, and any such agency or instrumentality
or component thereof is authorized to provide services as
requested by the Secretary using all authorities vested in or
delegated to that agency, instrumentality, or component.
(2) The Secretary may designate any bank, savings
association, trust company, security broker or dealer, asset
manager, or investment adviser as a financial agent of the
Federal Government and such institution shall perform all
such reasonable duties related to this title as financial
agent of the Federal Government as may be required. The
Secretary shall have authority to amend existing agreements
with financial agents, entered into during the 2-year period
before the date of enactment of this title, to perform
reasonable duties related to this title.
(3) The Secretary may exercise any rights received in
connection with any preferred stock or other financial
instruments or assets purchased or acquired pursuant to the
authorities granted under this title.
(4) Subject to section 4(b)(3), the Secretary may manage
any assets purchased under this title, including revenues and
portfolio risks therefrom.
(5) The Secretary may sell, dispose of, transfer, exchange
or enter into securities loans, repurchase transactions, or
other financial transactions in regard to, any preferred
stock or other financial instrument or asset purchased or
acquired under this title,
[[Page H4523]]
upon terms and conditions and at a price determined by the
Secretary.
(6) The Secretary may manage or prohibit conflicts of
interest that may arise in connection with the administration
and execution of the authorities provided under this title.
(7) The Secretary may establish and use vehicles, subject
to supervision by the Secretary, to purchase, hold, and sell
preferred stock or other financial instruments and issue
obligations.
(8) The Secretary may, in consultation with the
Administrator of the Small Business Administration, issue
such regulations and other guidance as may be necessary or
appropriate to define terms or carry out the authorities or
purposes of this title.
SEC. 6. CONSIDERATIONS.
In exercising the authorities granted in this title, the
Secretary shall take into consideration--
(1) increasing the availability of credit for small
businesses;
(2) providing funding to eligible institutions that serve
small businesses that are minority- and women-owned and that
also serve low- and moderate-income, minority, and other
underserved or rural communities;
(3) protecting and increasing American jobs;
(4) ensuring that all eligible institutions may apply to
participate in the program established under this title,
without discrimination based on geography;
(5) providing transparency with respect to use of funds
provided under this title;
(6) minimizing the cost to taxpayers of exercising the
authorities; and
(7) promoting and engaging in financial education to would-
be borrowers.
SEC. 7. REPORTS.
The Secretary shall provide to the appropriate committees
of Congress--
(1) within 7 days of the end of each month commencing with
the first month in which transactions are made under the
Program, a written report describing all of the transactions
made during the reporting period pursuant to the authorities
granted under this title;
(2) after the end of March and the end of September,
commencing September 30, 2010, a written report on all
projected costs and liabilities, all operating expenses,
including compensation for financial agents, and all
transactions made by the Fund, which shall include
participating institutions and amounts each institution has
received under the Program; and
(3) within 7 days of the end of each month commencing with
the first month in which transactions are made under the
Program, a written report detailing how eligible institutions
participating in the Program have used the funds such
institutions received under the Program.
SEC. 8. OVERSIGHT AND AUDITS.
(a) Inspector General Oversight.--The Inspector General of
the Department of the Treasury shall conduct, supervise, and
coordinate audits and investigations of the purchase (and
commitments to purchase) of preferred stock and other
financial instruments under the Program.
(b) GAO Audit.--The Comptroller General of the United
States shall perform an annual audit of the Program and issue
a report to the appropriate committees of Congress containing
the results of such audit.
(c) Required Certifications.--
(1) Eligible institution certification.--Each eligible
institution that participate in the Program must certify that
such institution is in compliance with the requirements of
section 103.121 of title 31, Code of Federal Regulations, a
regulation that, at a minumum, requires financial
institutions, as that term is defined in 31 U.S.C. 5312(a)(2)
and (c)(1)(A), to implement reasonable procedures to verify
the identity of any person seeking to open an account, to the
extent reasonable and practicable, maintain records of the
information used to verify the person's identity, and
determine whether the person appears on any lists of known or
suspected terrorists or terrorist organizations provided to
the financial institution by any government agency.
(2) Loan recipients.--With respect to funds received by an
eligible institution under the Program, any business
receiving a loan from the eligible institution using such
funds after the date of the enactment of this title shall
certify to such eligible institution that the principals of
such business have not been convicted of a sex offense
against a minor (as such terms are defined in section 111 of
the Sex Offender Registration and Notification Act (42 U.S.C.
16911)).
(d) Prohibition on Pornography.--None of the funds made
available under this title may be used to pay the salary of
any individual engaged in activities related to the Program
who has been officially disciplined for violations of subpart
G of the Standards of Ethical Conduct for Employees of the
Executive Branch for viewing, downloading, or exchanging
pornography, including chld pornography, on a Federal
Government computer or while performing official Federal
Government duties.
SEC. 9. CREDIT REFORM; FUNDING.
(a) Credit Reform.--The cost of purchases of preferred
stock and other financial instruments made as capital
investments under this title shall be determined as provided
under the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et
seq.).
(b) Funds Made Available.--There are hereby appropriated,
out of funds in the Treasury not otherwise appropriated, such
sums as may be necessary to pay the costs of $30,000,000,000
of capital investments in eligible institutions, including
the costs of modifying such investments, and reasonable costs
of administering the program of making, holding, managing,
and selling the capital investments.
SEC. 10. TERMINATION AND CONTINUATION OF AUTHORITIES.
(a) Termination of Investment Authority.--The authority to
make capital investments in eligible institutions, including
commitments to purchase preferred stock or other instruments,
provided under this title shall terminate 1 year after the
date of enactment of this title.
(b) Continuation of Other Authorities.--The authorities of
the Secretary in section 5 shall not be limited by the
termination date in subsection (a).
SEC. 11. PRESERVATION OF AUTHORITY.
Nothing in this title may be construed to limit the
authority of the Secretary under any other provision of law.
SEC. 12. ASSURANCES.
(a) Small Business Lending Fund Separate From TARP.--The
Small Business Lending Fund Program is established as
separate and distinct from the Troubled Asset Relief Program
established by the Emergency Economic Stabilization Act of
2008. An institution shall not, by virtue of a capital
investment under the Small Business Lending Fund Program, be
considered a recipient of the Troubled Asset Relief Program.
(b) Change in Law.--If, after a capital investment has been
made in an eligible institution under the Program, there is a
change in law that modifies the terms of the investment or
program in a materially adverse respect for the eligible
institution, the eligible institution may, after consultation
with the appropriate Federal banking agency for the eligible
institution, repay the investment without impediment.
SEC. 13. STUDY AND REPORT WITH RESPECT TO WOMEN-OWNED AND
MINORITY-OWNED BUSINESSES.
(a) Study.--The Secretary shall conduct a study to
determine the number of women-owned businesses and minority-
owned businesses that receive assistance as a result of the
Program, including--
(1) efforts, including technical assistance and outreach
that institutions have employed under the Program to provide
loans to minority- and women-owned small businesses;
(2) loan applications received;
(3) loan applications approved; and
(4) and any other relevant data related to such
transactions to promote the purposes of the Program as the
Secretary may require.
(b) Report.--Not later than one year after the date of
enactment of this Act, the Secretary shall submit to Congress
a report on the results of the study conducted pursuant to
subsection (a).
(c) Information Provided to the Secretary.--Eligible
institutions that participate in the Program shall provide
the Secretary with such information as the Secretary may
require to carry out the study required by this section.
TITLE II--STATE SMALL BUSINESS CREDIT INITIATIVE
SEC. 201. SHORT TITLE.
This title may be cited as the ``State Small Business
Credit Initiative Act of 2010''.
SEC. 202. DEFINITIONS.
For purposes of this title, the following definitions shall
apply:
(1) Appropriate federal banking agency.--The term
``appropriate Federal banking agency''--
(A) has the same meaning as in section 3 of the Federal
Deposit Insurance Act; and
(B) includes the National Credit Union Administration Board
in the case of any credit union the deposits of which are
insured in accordance with the Federal Credit Union Act.
(2) Enrolled loan.--The term ``enrolled loan'' means a loan
made by a financial institution lender that is enrolled by a
participating State in an approved State capital access
program in accordance with this title.
(3) Federal contribution.--The term ``Federal
contribution'' means the portion of the contribution made by
a participating State to, or for the account of, an approved
State program that is made with Federal funds allocated to
the State by the Secretary under section 203.
(4) Financial institution.--The term ``financial
institution'' means any insured depository institution,
insured credit union, or community development financial
institution, as those terms are each defined in section 103
of the Riegle Community Development and Regulatory
Improvement Act of 1994.
(5) Participating state.--The term ``participating State''
means any State that has been approved for participation in
the Program under section 204.
(6) Program.--The term ``Program'' means the State Small
Business Credit Initiative established under this title.
(7) Qualifying loan or swap funding facility.--The term
``qualifying loan or swap funding facility'' means a
contractual arrangement between a participating State and a
private financial entity under which--
(A) the participating State delivers funds to the entity as
collateral;
(B) the entity provides funding from the arrangement back
to the participating State; and
[[Page H4524]]
(C) the full amount of resulting funding from the
arrangement, less any fees and other costs of the
arrangement, is contributed to, or for the account of, an
approved State program.
(8) Reserve fund.--The term ``reserve fund'' means a fund,
established by a participating State, dedicated to a
particular financial institution lender, for the purposes
of--
(A) depositing all required premium charges paid by the
financial institution lender and by each borrower receiving a
loan under an approved State program from that financial
institution lender;
(B) depositing contributions made by the participating
State, including State contributions made with Federal
contributions; and
(C) covering losses on enrolled loans by disbursing
accumulated funds.
(9) State.--The term ``State'' means--
(A) a State of the United States;
(B) the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of Northern Mariana Islands, Guam,
American Samoa, and the United States Virgin Islands;
(C) when designated by a State of the United States, a
political subdivision of that State that the Secretary
determines has the capacity to participate in the Program;
and
(D) under the circumstances described in section 204(d), a
municipality of a State of the United States to which the
Secretary has given a special permission under section
204(d).
(10) State capital access program.--The term ``State
capital access program'' means a program of a State that--
(A) uses public resources to promote private access to
credit; and
(B) meets the eligibility criteria in section 205(c).
(11) State other credit support program.--The term ``State
other credit support program''--
(A) means a program of a State that--
(i) uses public resources to promote private access to
credit;
(ii) is not a State capital access program; and
(iii) meets the eligibility criteria in section 206(c); and
(B) includes, collateral support programs, loan
participation programs, and credit guarantee programs.
(12) State program.--The term ``State program'' means a
State capital access program or a State other credit support
program.
(13) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
SEC. 203. FEDERAL FUNDS ALLOCATED TO STATES.
(a) Program Established; Purpose.--There is established the
State Small Business Credit Initiative (hereinafter in this
title referred to as the ``Program''), to be administered by
the Secretary. Under the Program, the Secretary shall
allocate Federal funds to participating States and make the
allocated funds available to the participating States as
provided in this section for the uses described in this
section.
(b) Allocation Formula.--
(1) In general.--Not later than 30 days after the date of
enactment of this title, the Secretary shall allocate Federal
funds to participating States so that each State is eligible
to receive an amount equal to the average of the respective
amounts that the State--
(A) would receive under the 2009 allocation, as determined
under paragraph (2); and
(B) would receive under the 2010 allocation, as determined
under paragraph (3).
(2) 2009 allocation formula.--
(A) In general.--The Secretary shall determine the 2009
allocation by allocating Federal funds among the States in
the proportion that each such State's 2008 State employment
decline bears to the aggregate of the 2008 State employment
declines for all States.
(B) Minimum allocation.--The Secretary shall adjust the
allocations under subparagraph (A) for each State to the
extent necessary to ensure that no State receives less than
0.9 percent of the Federal funds.
(C) 2008 state employment decline defined.--For purposes of
this paragraph and with respect to a State, the term ``2008
State employment decline'' means the excess (if any) of--
(i) the number of individuals employed in such State
determined for December 2007; over
(ii) the number of individuals employed in such State
determined for December 2008.
(3) 2010 allocation formula.--
(A) In general.--The Secretary shall determine the 2010
allocation by allocating Federal funds among the States in
the proportion that each such State's 2009 unemployment
number bears to the aggregate of the 2009 unemployment
numbers for all of the States.
(B) Minimum allocation.--The Secretary shall adjust the
allocations under subparagraph (A) for each State to the
extent necessary to ensure that no State receives less than
0.9 percent of the Federal funds.
(C) 2009 unemployment number defined.--For purposes of this
paragraph and with respect to a State, the term ``2009
unemployment number'' means the number of individuals within
such State who were determined to be unemployed by the Bureau
of Labor Statistics for December 2009.
(c) Availability of Allocated Amount.--The amount allocated
by the Secretary to each participating State under subsection
(b) shall be made available to the State as follows:
(1) Allocated amount generally to be available to state in
one-thirds.--
(A) In general.--The Secretary shall--
(i) apportion the participating State's allocated amount
into one-thirds;
(ii) transfer to the participating State the first one-
third when the Secretary approves the State for participation
under section 204; and
(iii) transfer to the participating State each successive
one-third when the State has certified to the Secretary that
it has expended, transferred, or obligated 80 percent of the
last transferred one-third for Federal contributions to, or
for the account of, State programs.
(B) Authority to withhold pending audit.--The Secretary may
withhold the transfer of any successive one-third pending
results of a financial audit.
(C) Transfers contingent on inspector general audits.--
(i) In general.--Before a transfer to a participating State
of the second one-third or the last one-third, the Inspector
General of the Department of the Treasury shall carry out an
audit of the participating State's use of amounts already
received.
(ii) Penalty for misstatement.--Any participating State
that is found to have intentionally misstated any report
issued to the Secretary under the Program shall be ineligible
to receive any additional funds under the Program. Funds that
had been allocated or that would otherwise have been
allocated to such participating State shall be paid into the
general fund of the Treasury for reduction of the public
debt.
(iii) Municipalities.--For purposes of this subparagraph,
the term ``participating State'' shall include a municipality
given special permission to participate in the Program,
pursuant to section 204(d).
(D) Exception.--
(i) In general.--The Secretary may, in the Secretary's
discretion, transfer the full amount of the participating
State's allocated amount to the State in a single transfer if
the participating State applies to the Secretary for approval
to use the full amount of the allocation as collateral for a
qualifying loan or swap funding facility.
(ii) Recoupment triggered by intentional misstatement.--If,
in any audit of a report issued by a participating State that
receives a single transfer pursuant to clause (i), the
Secretary or the Inspector General of the Department of the
Treasury determines that such State intentionally misstated
information in such report, the participating State shall be
required to fully repay all amounts received by the State
under the Program, and such amounts shall be paid into the
general fund of the Treasury for reduction of the public
debt.
(2) Transferred amounts.--Each amount transferred to a
participating State under this section shall remain available
to the State until used by the State as permitted under
paragraph (3).
(3) Use of transferred funds.--Each participating State may
use funds transferred to it under this section only--
(A) for making Federal contributions to, or for the account
of, an approved State program;
(B) as collateral for a qualifying loan or swap funding
facility;
(C) in the case of the first one-third transferred, for
paying administrative costs incurred by the State in
implementing an approved State program in an amount not to
exceed 5 percent of that first one-third; or
(D) in the case of each successive one-third transferred,
for paying administrative costs incurred by the State in
implementing an approved State program in an amount not to
exceed 3 percent of that successive one-third.
(4) Termination of availability of amounts not transferred
within 2 years of participation.--Any portion of a
participating State's allocated amount that has not been
transferred to the State under this section by the end of the
2-year period beginning on the date that the Secretary
approves the State for participation may be deemed by the
Secretary to be no longer allocated to the State and no
longer available to the State and shall be returned to the
General Fund of the Treasury.
(5) Transferred amounts not assistance.--The amounts
transferred to a participating State under this section shall
not be considered ``assistance'' for purposes of subtitle V
of title 31, United States Code.
(6) Definitions.--For purposes of this section--
(A) the term ``allocated amount'' means the total amount of
Federal funds allocated by the Secretary under subsection (b)
to the participating State; and
(B) the term ``one-third'' means--
(i) in the case of the first and second one-thirds, an
amount equal to 33 percent of a participating State's
allocated amount; and
(ii) in the case of the last one-third, an amount equal to
34 percent of a participating State's allocated amount.
SEC. 204. APPROVING STATES FOR PARTICIPATION.
(a) Application.--Any State may apply to the Secretary for
approval to be a participating State under the Program and to
be eligible for an allocation of Federal funds under the
Program.
(b) General Approval Criteria.--The Secretary shall approve
a State to be a participating State, if--
[[Page H4525]]
(1) a specific department, agency, or political subdivision
of the State has been designated to implement a State program
and participate in the Program;
(2) all legal actions necessary to enable such designated
department, agency, or political subdivision to implement a
State program and participate in the Program have been
accomplished;
(3) the State has filed an application with the Secretary
for approval of a State capital access program under section
205 or approval as a State other credit support program under
section 206, in each case within the time period provided in
the respective section; and
(4) the State and the Secretary have executed an allocation
agreement that--
(A) conforms to the requirements of this title;
(B) ensures that the State program complies with such
national standards as are established by the Secretary under
section 209(a)(2);
(C) sets forth internal control, compliance, and reporting
requirements as established by the Secretary, and such other
terms and conditions necessary to carry out the purposes of
this title, including an agreement by the State to allow the
Secretary to audit State programs;
(D) requires that the State program be fully positioned,
within 90 days of the State's execution of the allocation
agreement with the Secretary, to act on providing the kind of
credit support that the State program was established to
provide; and
(E) includes an agreement by the State to deliver to the
Secretary, and update annually, a schedule describing how the
State intends to apportion among its State programs the
Federal funds allocated to the State.
(c) Contractual Arrangements for Implementation of State
Programs.--A State may be approved to be a participating
State, and be eligible for an allocation of Federal funds
under the Program, if the State has contractual arrangements
for the implementation and administration of its State
program with--
(1) an existing, approved State program administered by
another State; or
(2) an authorized agent of, or entity supervised by, the
State, including for-profit and not-for-profit entities.
(d) Special Permission.--
(1) Circumstances when a municipality may apply directly.--
If a State does not, within 60 days after the date of
enactment of this title, file with the Secretary a notice of
its intent to apply for approval by the Secretary of a State
program or within 9 months after the date of enactment of
this title, file with the Secretary a complete application
for approval of a State program, the Secretary may grant to
municipalities of that State a special permission that will
allow them to apply directly to the Secretary without the
State for approval to be participating municipalities.
(2) Timing requirements applicable to municipalities
applying directly.--To qualify for the special permission, a
municipality of a State must, within 12 months after the date
of enactment of this title, file with the Secretary a
complete application for approval by the Secretary of a State
program.
(3) Notices of intent and applications from more than 1
municipality.--A municipality of a State may combine with 1
or more other municipalities of that State to file a joint
notice of intent to file and a joint application.
(4) Approval criteria.--The general approval criteria in
paragraphs (2) and (4) shall apply.
(5) Allocation to municipalities.--
(A) If more than 3.--If more than 3 municipalities, or
combination of municipalities as provided in paragraph (3),
of a State apply for approval by the Secretary to be
participating municipalities under this subsection, and the
applications meet the approval criteria in paragraph (4), the
Secretary shall allocate Federal funds to the 3
municipalities with the largest populations.
(B) If 3 or fewer.--If 3 or fewer municipalities, or
combination of municipalities as provided in paragraph (3),
of a State apply for approval by the Secretary to be
participating municipalities under this subsection, and the
applications meet the approval criteria in paragraph (4), the
Secretary shall allocate Federal funds to each applicant
municipality or combination of municipalities.
(6) Apportionment of allocated amount among participating
municipalities.--If the Secretary approves municipalities to
be participating municipalities under this subsection, the
Secretary shall apportion the full amount of the Federal
funds that are allocated to that State to municipalities that
are approved under this subsection in amounts proportionate
to the population of those municipalities, based on the most
recent available decennial census.
(7) Approving state programs for municipalities.--If the
Secretary approves municipalities to be participating
municipalities under this subsection, the Secretary shall
take into account the additional considerations in section
206(d) in making the determination under section 205 or 206
that the State program or programs to be implemented by the
participating municipalities, including a State capital
access program, is eligible for Federal contributions to, or
for the account of, the State program.
SEC. 205. APPROVING STATE CAPITAL ACCESS PROGRAMS.
(a) Application.--A participating State that establishes a
new, or has an existing, State capital access program that
meets the eligibility criteria in subsection (c) may apply to
Secretary to have the State capital access program approved
as eligible for Federal contributions to the reserve fund.
(b) Approval.--The Secretary shall approve such State
capital access program as eligible for Federal contributions
to the reserve fund if--
(1) within 60 days after the date of enactment of this
title, the State has filed with the Secretary a notice of
intent to apply for approval by the Secretary of a State
capital access program;
(2) within 9 months after the date of enactment of this
title, the State has filed with the Secretary a complete
application for approval by the Secretary of a capital access
program;
(3) the State satisfies the requirements of subsections (a)
and (b) of section 204; and
(4) the State capital access program meets the eligibility
criteria in subsection (c).
(c) Eligibility Criteria for State Capital Access
Programs.--For a State capital access program to be approved
under this section, it must be a program of the State that--
(1) provides portfolio insurance for business loans based
on a separate loan-loss reserve fund for each financial
institution;
(2) requires insurance premiums to be paid by the financial
institution lenders and by the business borrowers to the
reserve fund to have their loans enrolled in the reserve
fund;
(3) provides for contributions to be made by the State to
the reserve fund in amounts at least equal to the sum of the
amount of the insurance premium charges paid by the borrower
and the financial institution to the reserve fund for any
newly enrolled loan; and
(4) provides its portfolio insurance solely for loans that
meet both the following requirements:
(A) The borrower has 500 employees or less at the time that
the loan is enrolled in the Program.
(B) The loan amount does not exceed $5,000,000.
(d) Federal Contributions to Approved State Capital Access
Programs.--A State capital access program approved under this
section will be eligible for receiving Federal contributions
to the reserve fund in an amount equal to the sum of the
amount of the insurance premium charges paid by the borrowers
and by the financial institution to the reserve fund for
loans that meet the requirements in subsection (c)(4). A
participating State may use the Federal contribution to make
its contribution to the reserve fund of an approved State
capital access program.
(e) Minimum Program Requirements for State Capital Access
Programs.--The Secretary shall, by regulation or other
guidance, prescribe Program requirements that meet the
following minimum requirements:
(1) Experience and capacity.--The participating State shall
determine for each financial institution that participates in
the State capital access program, after consultation with the
appropriate Federal banking agency or, in the case of a
financial institution that is a non depository community
development financial institution, the Community Development
Financial Institution Fund, that the financial institution
has sufficient commercial lending experience and financial
and managerial capacity to participate in the approved State
capital access program. The determination by the State shall
not be reviewable by the Secretary.
(2) Investment authority.--Subject to applicable State law,
the participating State may invest, or cause to be invested,
funds held in a reserve fund by establishing a deposit
account at the financial institution lender in the name of
the participating State. In the event that funds in the
reserve fund are not deposited in such an account, such funds
shall be invested in a form that the participating State
determines is safe and liquid.
(3) Loan terms and conditions to be determined by
agreement.--A loan to be filed for enrollment in an approved
State capital access program may be made with such interest
rate, fees, and other terms and conditions, and the loan may
be enrolled in the approved State capital access program and
claims may be filed and paid, as agreed upon by the financial
institution lender and the borrower, consistent with
applicable law.
(4) Lender capital at-risk.--A loan to be filed for
enrollment in the State capital access program must require
the financial institution lender to have a meaningful amount
of its own capital resources at risk in the loan.
(5) Premium charges minimum and maximum amounts.--The
insurance premium charges payable to the reserve fund by the
borrower and the financial institution lender shall be
prescribed by the financial institution lender, within
minimum and maximum limits that require that the sum of the
insurance premium charges paid in connection with a loan by
the borrower and the financial institution lender may not be
less than 2 percent nor more than 7 percent of the amount of
the loan enrolled in the approved State capital access
program.
(6) State contributions.--In enrolling a loan in an
approved State capital access program, the participating
State may make a contribution to the reserve fund to
supplement Federal contributions made under this Program.
[[Page H4526]]
(7) Loan purpose.--
(A) Particular loan purpose requirements and
prohibitions.--In connection with the filing of a loan for
enrollment in an approved State capital access program, the
financial institution lender--
(i) shall obtain an assurance from each borrower that--
(I) the proceeds of the loan will be used for a business
purpose;
(II) the loan will not be used to finance such business
activities as the Secretary, by regulation, may proscribe as
prohibited loan purposes for enrollment in an approved State
capital access program; and
(III) the borrower is not--
(aa) an executive officer, director, or principal
shareholder of the financial institution lender;
(bb) a member of the immediate family of an executive
officer, director, or principal shareholder of the financial
institution lender; or
(cc) a related interest of any such executive officer,
director, principal shareholder, or member of the immediate
family;
(ii) shall provide assurances to the participating State
that the loan has not been made in order to place under the
protection of the approved State capital access program prior
debt that is not covered under the approved State capital
access program and that is or was owed by the borrower to the
financial institution lender or to an affiliate of the
financial institution lender;
(iii) shall not allow the enrollment of a loan to a
borrower that is a refinancing of a loan previously made to
that borrower by the financial institution lender or an
affiliate of the financial institution lender; and
(iv) may include additional restrictions on the eligibility
of loans or borrowers that are not inconsistent with the
provisions and purposes of this title, including compliance
with all applicable Federal and State laws, regulations,
ordinances, and Executive orders.
(B) Definitions.--For purposes of this subsection, the
terms ``executive officer'', ``director'', ``principal
shareholder'', ``immediate family'', and ``related interest''
refer to the same relationship to a financial institution
lender as the relationship described in part 215 of title 12
of the Code of Federal Regulations, or any successor to such
part.
(8) Capital access for small businesses in underserved
communities.--At the time that a State applies to the
Secretary to have the State capital axccess program approved
as eligible for Federal contributions, the State shall
deliver to the Secretary a report stating how the State plans
to use the Federal contributions to the reserve fund to
provide access to capital for small businesses in low- and
moderate-income, minority, and other underserved communities,
including women- and minority-owned small businesses.
SEC. 206. APPROVING COLLATERAL SUPPORT AND OTHER INNOVATIVE
CREDIT ACCESS AND GUARANTEE INITIATIVES FOR
SMALL BUSINESSES AND MANUFACTURERS.
(a) Application.--A participating State that establishes a
new, or has an existing, credit support program that meets
the eligibility criteria in subsection (c) may apply to the
Secretary to have the State other credit support program
approved as eligible for Federal contributions to, or for the
account of, the State program.
(b) Approval.--The Secretary shall approve such State other
credit support program as eligible for Federal contributions
to, or for the account of, the program if--
(1) the Secretary determines that the State satisfies the
requirements of paragraphs (1) through (3) of section 205(b);
(2) the Secretary determines that the State other credit
support program meets the eligibility criteria in subsection
(c);
(3) the Secretary determines the State other credit support
program to be eligible based on the additional considerations
in subsection (d); and
(4) within 9 months after the date of enactment of this
title, the State has filed with Treasury a complete
application for Treasury approval.
(c) Eligibility Criteria for State Other Credit Support
Programs.--For a State other credit support program to be
approved under this section, it must be a program of the
State that--
(1) can demonstrate that, at a minimum, 1 dollar of public
investment by the State program will cause and result in 1
dollar of new private credit;
(2) can demonstrate a reasonable expectation that, when
considered with all other State programs of the State, such
State programs together have the ability to use amounts of
new Federal contributions to, or for the account of, all such
programs in the State to cause and result in amounts of new
small business lending at least 10 times the new Federal
contribution amount;
(3) for those State other credit support programs that
provide their credit support through 1 or more financial
institution lenders, requires the financial institution
lenders to have a meaningful amount of their own capital
resources at risk in their small business lending; and
(4) extends credit support that--
(A) targets an average borrower size of 500 employees or
less;
(B) does not extend credit support to borrowers that have
more than 750 employees;
(C) targets support towards loans with an average principal
amount of $5,000,000 or less; and
(D) does not extend credit support to loans that exceed a
principal amount of $20,000,000.
(d) Additional Considerations.--In making a determination
that a State other credit support program is eligible for
Federal contributions to, or for the account of, the State
program, the Secretary shall take into account the following
additional considerations:
(1) The anticipated benefits to the State, its businesses,
and its residents to be derived from the Federal
contributions to, or for the account of, the approved State
other credit support program, including the extent to which
resulting small business lending will expand economic
opportunities.
(2) The operational capacity, skills, and experience of the
management team of the State other credit support program.
(3) The capacity of the State other credit support program
to manage increases in the volume of its small business
lending.
(4) The internal accounting and administrative controls
systems of the State other credit support program, and the
extent to which they can provide reasonable assurance that
funds of the State program are safeguarded against waste,
loss, unauthorized use, or misappropriation.
(5) The soundness of the program design and implementation
plan of the State other credit support program.
(e) Federal Contributions to Approved State Other Credit
Support Programs.--A State other credit support program
approved under this section will be eligible for receiving
Federal contributions to, or for the account of, the State
program in an amount consistent with the schedule describing
the apportionment of allocated Federal funds among State
programs delivered by the State to the Secretary under the
allocation agreement.
(f) Minimum Program Requirements for State Other Credit
Support Programs.--
(1) Fund to prescribe.--The Secretary shall, by regulation
or other guidance, prescribe Program requirements for
approved State other credit support programs.
(2) Considerations for fund.--In prescribing minimum
Program requirements for approved State other credit support
programs, the Secretary shall take into consideration, to the
extent the Secretary determines applicable and appropriate,
the minimum Program requirements for approved State capital
access programs in section 205(e).
SEC. 207. REPORTS.
(a) Quarterly Use-of-funds Report.--
(1) In general.--Not later than 30 days after the beginning
of each calendar quarter, beginning after the first full
calendar quarter to occur after the date the Secretary
approves a State for participation, the participating State
shall submit to the Secretary a report on the use of Federal
funding by the participating State during the previous
calendar quarter.
(2) Report contents.--The report shall--
(A) indicate the total amount of Federal funding used by
the participating State;
(B) include a certification by the participating State
that--
(i) the information provided in accordance with
subparagraph (A) is accurate;
(ii) funds continue to be available and legally committed
to contributions by the State to, or for the account of,
approved State programs, less any amount that has been
contributed by the State to, or for the account of, approved
State programs subsequent to the State being approved for
participation in the Program; and
(iii) the participating State is implementing its approved
State program or programs in accordance with this title and
regulations issued pursuant to section 210.
(b) Annual Report.--Not later than March 31 of each year,
beginning March 31, 2011, each participating State shall
submit to the Secretary an annual report that shall include
the following information:
(1) The number of borrowers that received new loans
originated under the approved State program or programs after
the State program was approved as eligible for Federal
contributions.
(2) The total amount of such new loans.
(3) Breakdowns by industry type, loan size, annual sales,
and number of employees of the borrowers that received such
new loans.
(4) The zip code of each borrower that received such a new
loan.
(5) Such other data as the Secretary, in the Secretary's
sole discretion, may require to carry out the purposes of the
Program.
(c) Form.--The reports and data filed pursuant to
subsections (a) and (b) shall be in such form as the
Secretary, in the Secretary's sole discretion, may require.
(d) Termination of Reporting Requirements.--The requirement
to submit reports under subsections (a) and (b) shall
terminate for a participating State with the submission of
the completed reports due on the first March 31 to occur
after 5 complete 12-month periods after the State is approved
by the Secretary to be a participating State.
SEC. 208. REMEDIES FOR STATE PROGRAM TERMINATION OR FAILURES.
(a) Remedies.--
(1) In general.--If any of the events listed in paragraph
(2) occur, the Secretary, in the Secretary's discretion,
may--
(A) reduce the amount of Federal funds allocated to the
State under the Program; or
(B) terminate any further transfers of allocated amounts
that have not yet been transferred to the State.
[[Page H4527]]
(2) Causal events.--The events referred to in paragraph (1)
are--
(A) termination by a participating State of its
participation in the Program;
(B) failure on the part of a participating State to submit
complete reports under section 207 on a timely basis; or
(C) noncompliance by the State with the terms of the
allocation agreement between the Secretary and the State.
(b) Deallocated Amounts to Be Reallocated.--If, after 13
months, any portion of the amount of Federal funds allocated
to a participating State is deemed by the Secretary to be no
longer allocated to the State after actions taken by the
Secretary under subsection (a)(1), the Secretary shall
reallocate that portion among the participating States,
excluding the State whose allocated funds were deemed to be
no longer allocated, as provided in section 203(b).
SEC. 209. IMPLEMENTATION AND ADMINISTRATION.
(a) General Authorities and Duties.--The Secretary shall--
(1) consult with the Administrator of the Small Business
Administration and the appropriate Federal banking agencies
on the administration of the Program;
(2) establish minimum national standards for approved State
programs;
(3) provide technical assistance to States for starting
State programs and generally disseminate best practices;
(4) manage, administer, and perform necessary program
integrity functions for the Program; and
(5) ensure adequate oversight of the approved State
programs, including oversight of the cash flows, performance,
and compliance of each approved State program.
(b) Appropriations.--There is hereby appropriated to the
Secretary, out of funds in the Treasury not otherwise
appropriated, $2,000,000,000 to carry out the Program,
including to pay reasonable costs of administering the
Program.
(c) Termination of Secretary's Program Administration
Functions.--The authorities and duties of the Secretary to
implement and administer the Program shall terminate at the
end of the 7-year period beginning on the date of enactment
of this title.
SEC. 210. REGULATIONS.
The Secretary, in consultation with the Administrator of
the Small Business Administration, shall issue such
regulations and other guidance as the Secretary determines
necessary or appropriate to implement this title including,
but not limited to, to define terms, to establish compliance
and reporting requirements, and such other terms and
conditions necessary to carry out the purposes of this title.
SEC. 211. OVERSIGHT AND AUDITS.
(a) Inspector General Oversight.--The Inspector General of
the Department of the Treasury shall conduct, supervise, and
coordinate audits and investigations of the use of funds made
available under the Program.
(b) GAO Audit.--The Comptroller General of the United
States shall perform an annual audit of the Program and issue
a report to the appropriate committees of Congress, as such
term is defined under section 3(1), containing the results of
such audit.
(c) Required Certification.--
(1) Financial institutions certification.--With respect to
funds received by a participating State under the Program,
any financial institution that receives a loan, a loan
guarantee, or other financial assistance using such funds
after the date of the enactment of this title must certify
that such institution is in compliance with the requirements
of section 103.121 of title 31, Code of Federal Regulations,
a regulation that, at a minimum, requires financial
institutions, as that term is defined in 31 U.S.C. 5312(a)(2)
and (c)(1)(A), to implement reasonable procedures to verify
the identity of any person seeking to open an account, to the
extent reasonable and practicable, maintain records of the
information used to verify the person's identity, and
determine whether the person appears on any lists of known or
suspected terrorists or terrorist organizations provided to
the financial institution by any government agency.
(2) Sex offense certification.--With respect to funds
received by a participating State under the Program, any
private entity that receives a loan, a loan guarantee, or
other financial assistance using such funds after the date of
the enactment of this title shall certify to the
participating State that the principals of such entity have
not been convicted of a sex offense against a minor (as such
terms are defined in section 111 of the Sex Offender
Registration and Notification Act (42 U.S.C. 16911)).
(d) Prohibition on Pornography.--None of the funds made
available under this title may be used to pay the salary of
any individual engaged in activities related to the Program
who has been officially disciplined for violations of subpart
G of the Standards of Ethical Conduct for Employees of the
Executive Branch for viewing, downloading, or exchanging
pornography, including child pornography, on a Federal
Government computer or while performing official Federal
Government duties.
TITLE III--SMALL BUSINESS EARLY-STAGE INVESTMENT PROGRAM
SEC. 301. SHORT TITLE.
This title may be cited as the ``Small Business Early-Stage
Investment Program Act of 2010''.
SEC. 302. SMALL BUSINESS EARLY-STAGE INVESTMENT PROGRAM.
Title III of the Small Business Investment Act of 1958 (15
U.S.C. 681 et seq.) is amended by adding at the end the
following:
``PART D--SMALL BUSINESS EARLY-STAGE INVESTMENT PROGRAM
``SEC. 399A. ESTABLISHMENT OF PROGRAM.
``The Administrator shall establish and carry out an early-
stage investment program (hereinafter referred to in this
part as the `program') to provide equity investment financing
to support early-stage small businesses in accordance with
this part.
``SEC. 399B. ADMINISTRATION OF PROGRAM.
``The program shall be administered by the Administrator
acting through the Associate Administrator described under
section 201.
``SEC. 399C. APPLICATIONS.
``(a) In General.--Any existing or newly formed
incorporated body, limited liability company, or limited
partnership organized and chartered or otherwise existing
under Federal or State law for the purpose of performing the
functions and conducting the activities contemplated under
the program and any manager of any small business investment
company may submit to the Administrator an application to
participate in the program.
``(b) Requirements for Application.--An application to
participate in the program shall include the following:
``(1) A business plan describing how the applicant intends
to make successful venture capital investments in early-stage
small businesses and direct capital to small business
concerns in targeted industries or other business sectors.
``(2) Information regarding the relevant venture capital
investment qualifications and backgrounds of the individuals
responsible for the management of the applicant.
``(3) A description of the extent to which the applicant
meets the selection criteria under section 399D.
``(c) Applications From Managers of Small Business
Investment Companies.--The Administrator shall establish an
abbreviated application process for applicants that are
managers of small business investment companies that are
licensed under section 301 and that are applying to
participate in the program. Such abbreviated process shall
incorporate a presumption that such managers satisfactorily
meet the selection criteria under paragraphs (3) and (5) of
section 399D(b).
``SEC. 399D. SELECTION OF PARTICIPATING INVESTMENT COMPANIES.
``(a) In General.--Not later than 90 days after the date on
which the Administrator receives an application from an
applicant under section 399C, the Administrator shall make a
determination to conditionally approve or disapprove such
applicant to participate in the program and shall transmit
such determination to the applicant in writing. A
determination to conditionally approve an applicant shall
identify all conditions necessary for a final approval and
shall provide a period of not less than one year for
satisfying such conditions.
``(b) Selection Criteria.--In making a determination under
subsection (a), the Administrator shall consider each of the
following:
``(1) The likelihood that the applicant will meet the goals
specified in the business plan of the applicant.
``(2) The likelihood that the investments of the applicant
will create or preserve jobs, both directly and indirectly.
``(3) The character and fitness of the management of the
applicant.
``(4) The experience and background of the management of
the applicant.
``(5) The extent to which the applicant will concentrate
investment activities on early-stage small businesses.
``(6) The likelihood that the applicant will achieve
profitability.
``(7) The experience of the management of the applicant
with respect to establishing a profitable investment track
record.
``(c) Final Approval.--For each applicant provided a
conditional approval under subsection (a), the Administrator
shall provide final approval to participate in the program
not later than 90 days after the date the applicant satisfies
the conditions specified by the Administrator under such
subsection or, in the case of applicants whose partnership or
management agreements conform to models approved by the
Administrator, the Administrator shall provide final approval
to participate in the program not later than 30 days after
the date the applicant satisfies the conditions specified
under such subsection. If an applicant provided conditional
approval under subsection (a) fails to satisfy the conditions
specified by the Administrator in the time period designated
under such subsection, the Administrator shall revoke the
conditional approval.
``SEC. 399E. EQUITY FINANCINGS.
``(a) In General.--The Administrator may make one or more
equity financings to a participating investment company.
``(b) Equity Financing Amounts.--
``(1) Non-federal capital.--An equity financing made to a
participating investment company under the program may not be
in an amount that exceeds the amount of the capital of such
company that is not from a Federal source and that is
available for investment on or before the date on which an
equity financing is drawn upon. Such capital may include
legally binding commitments with respect to capital for
investment.
``(2) Limitation on aggregate amount.--The aggregate amount
of all equity financings made to a participating investment
company under the program may not exceed $100,000,000.
[[Page H4528]]
``(c) Equity Financing Process.--In making an equity
financing under the program, the Administrator shall commit
an equity financing amount to a participating investment
company and the amount of each such commitment shall remain
available to be drawn upon by such company--
``(1) for new-named investments during the 5-year period
beginning on the date on which each such commitment is first
drawn upon; and
``(2) for follow-on investments and management fees during
the 10-year period beginning on the date on which each such
commitment is first drawn upon, with not more than 2
additional 1-year periods available at the discretion of the
Administrator.
``(d) Commitment of Funds.--The Administrator shall make
commitments for equity financings not later than 2 years
after the date funds are appropriated for the program.
``SEC. 399F. INVESTMENTS IN EARLY-STAGE SMALL BUSINESSES.
``(a) In General.--As a condition of receiving an equity
financing under the program, a participating investment
company shall make all of the investments of such company in
small business concerns, of which at least 50 percent shall
be early-stage small businesses.
``(b) Evaluation of Compliance.--With respect to an equity
financing amount committed to a participating investment
company under section 399E, the Administrator shall evaluate
the compliance of such company with the requirements under
this section if such company has drawn upon 50 percent of
such commitment.
``SEC. 399G. PRO RATA INVESTMENT SHARES.
``Each investment made by a participating investment
company under the program shall be treated as comprised of
capital from equity financings under the program according to
the ratio that capital from equity financings under the
program bears to all capital available to such company for
investment.
``SEC. 399H. EQUITY FINANCING INTEREST.
``(a) Equity Financing Interest.--
``(1) In general.--As a condition of receiving an equity
financing under the program, a participating investment
company shall convey an equity financing interest to the
Administrator in accordance with paragraph (2).
``(2) Effect of conveyance.--The equity financing interest
conveyed under paragraph (1) shall have all the rights and
attributes of other investors attributable to their interests
in the participating investment company, but shall not denote
control or voting rights to the Administrator. The equity
financing interest shall entitle the Administrator to a pro
rata portion of any distributions made by the participating
investment company equal to the percentage of capital in the
participating investment company that the equity financing
comprises. The Administrator shall receive distributions from
the participating investment company at the same times and in
the same amounts as any other investor in the company with a
similar interest. The investment company shall make
allocations of income, gain, loss, deduction, and credit to
the Administrator with respect to the equity financing
interest as if the Administrator were an investor.
``(b) Manager Profits.--As a condition of receiving an
equity financing under the program, the manager profits
interest payable to the managers of a participating
investment company under the program shall not exceed 20
percent of profits, exclusive of any profits that may accrue
as a result of the capital contributions of any such managers
with respect to such company. Any excess of this amount, less
taxes payable thereon, shall be returned by the managers and
paid to the investors and the Administrator in proportion to
the capital contributions and equity financings paid in. No
manager profits interest (other than a tax distribution)
shall be paid prior to the repayment to the investors and the
Administrator of all contributed capital and equity
financings made.
``(c) Distribution Requirements.--As a condition of
receiving an equity financing under the program, a
participating investment company shall make all distributions
to all investors in cash and shall make distributions within
a reasonable time after exiting investments, including
following a public offering or market sale of underlying
investments.
``SEC. 399I. FUND.
``There is hereby created within the Treasury a separate
fund for equity financings which shall be available to the
Administrator subject to annual appropriations as a revolving
fund to be used for the purposes of the program. All amounts
received by the Administrator, including any moneys,
property, or assets derived by the Administrator from
operations in connection with the program, shall be deposited
in the fund. All expenses and payments, excluding
administrative expenses, pursuant to the operations of the
Administrator under the program shall be paid from the fund.
``SEC. 399J. APPLICATION OF OTHER SECTIONS.
``To the extent not inconsistent with requirements under
this part, the Administrator may apply sections 309, 311,
312, 313, and 314 to activities under this part and an
officer, director, employee, agent, or other participant in a
participating investment company shall be subject to the
requirements under such sections.
``SEC. 399K. ANNUAL REPORTING.
``The Administrator shall report on the performance of the
program in the annual performance report of the
Administration.
``SEC. 399L. DEFINITIONS.
``In this part, the following definitions apply:
``(1) Early-stage small business.--The term `early-stage
small business' means a small business concern that--
``(A) is domiciled in a State; and
``(B) has not generated gross annual sales revenues
exceeding $15,000,000 in any of the previous 3 years.
``(2) Participating investment company.--The term
`participating investment company' means an applicant
approved under section 399D to participate in the program.
``(3) Targeted industries.--The term `targeted industries'
means any of the following business sectors:
``(A) Agricultural technology.
``(B) Energy technology.
``(C) Environmental technology.
``(D) Life science.
``(E) Information technology.
``(F) Digital media.
``(G) Clean technology.
``(H) Defense technology.
``(I) Photonics technology.
``SEC. 399M. APPROPRIATION.
``From funds not otherwise appropriated, there is hereby
appropriated $1,000,000,000 to carry out the program.
``SEC. 399N. CERTIFICATION.
``(a) Immigration Certification.--
``(1) Participating investment companies.--Each
participating investment company that receives an equity
financing under this part after the date of the enactment of
this part must, if applicable, certify that such company is
in compliance with the requirements of section 103.121 of
title 31, Code of Federal Regulations, a regulation that, at
a minimum, requires financial institutions, as that term is
defined in 31 U.S.C. 5312(a)(2) and (c)(1)(A), to implement
reasonable procedures to verify the identity of any person
seeking to open an account, to the extent reasonable and
practicable, maintain records of the information used to
verify the person's identity, and determine whether the
person appears on any lists of known or suspected terrorists
or terrorist organizations provided to the financial
institution by any government agency.
``(2) Early-stage small businesses.--Each early-stage small
business that receives funds from a participating investment
company that receives an equity financing under this part
after the date of the enactment of this part must, if
applicable, certify that such company is in compliance with
the requiremetns of section 103.121 of title 31, Code of
Federal Regulations, a regulation that, at a minimum,
requires financial institutions, as that term is defined in
31 U.S.C. 5312(a)(2) and (c)(1)(A), to implement reasonable
procedures to verify the identity of any person seeking to
open an account, to the extent reasonable and practicable,
maintain records of the information used to verify the
person's identity, and determine whether the person appears
on any lists of known or suspected terrorists or terrorist
organizations provided to the financial institution by any
government agency.
``(b) Sex Offender Certification.--
``(1) Participating investment companies.--Each
participating investment company that receives an equity
financing under this part after the date of the enactment of
this part shall certify to the Administrator that the
principals of such company have not been convicted of a sex
offense against a minor (as such terms are defined in section
111 of the Sex Offender Registration and Notification Act (42
U.S.C. 16911)).
``(2) Early-stage small businesses.--Each early-stage small
business that receives funds from a participating investment
company that receives an equity financing under this part
after the date of the enactment of this part shall certify to
the Administrator that the principals of such business have
not been convicted of a sex offense against a minor (as such
terms are defined in section 111 of the Sex Offender
Registration and Notification Act (42 U.S.C. 16911)).
``(c) Pornography Certification.--None of the funds made
available under this part may be used to pay the salary of
any individual engaged in activities related to the
provisions of this part who has been officially disciplined
for violations of supbart G of the Standards of Ethical
Conduct for Employees of the Executive Branch for viewing,
downloading, or exchanging pornography, including child
pornography, on a Federal Government computer or while
performing official Federal Government duties.''.
SEC. 303. REGULATIONS.
Not later than 180 days after the date of enactment of this
Act, the Administrator shall issue regulations to carry out
this title and the amendments made by this title.
SEC. 304. PROHIBITIONS ON EARMARKS.
None of the funds appropriated for the program established
under part D of title III of the Small Business Investment
Act of 1958, as added by this Act, may be used for a
Congressional earmark as defined in clause 9(e) of rule XXI
of the Rules of the House of Representatives.
TITLE _--MISCELLANEOUS
SEC. _. BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go Act of 2010, shall
be determined by reference to the latest statment titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in
[[Page H4529]]
the Congressional Record by the Chairman of the House Budget
Committee, provided that such statement has been submitted
prior to the vote on passage.
The CHAIR. No amendment to that amendment in the nature of a
substitute is in order except those printed in part C of the report.
Each amendment may be offered only in the order printed in the report,
by a Member designated in the report, shall be considered read, shall
be debatable for the time specified in the report, equally divided and
controlled by the proponent and an opponent, shall not be subject to
amendment, and shall not be subject to a demand for division of the
question.
{time} 1130
Amendment No. 1 Offered by Mr. Israel
The CHAIR. It is now in order to consider amendment No. 1 printed in
part C of House Report 111-506.
Mr. ISRAEL. Mr. Chairman, I have an amendment at the desk made in
order under the rule.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 1 offered by Mr. Israel:
Page 6, insert after line 25 the following:
(17) Veteran-owned business.--
(A) The term ``veteran-owned business'' means a business--
(i) more than 50 percent of the ownership or control of
which is held by 1 or more veterans;
(ii) more than 50 percent of the net profit or loss of
which accrues to 1 or more veterans; and
(iii) a significant percentage of senior management
positions of which are held by veterans.
(B) For purposes of this paragraph, the term ``veteran''
has the meaning given such term in section 101(2) of title
38, United States Code.
Page 18, line 6, strike ``minority outreach'' and insert
the following: ``outreach to minorities, women, and
veterans''.
Page 18, strike lines 15-16 and insert the following:
tions, and individuals that--
(A) represent or work within or are members of minority
communities;
(B) represent or work with or are women; and
(C) represent or work with or are veterans.
Page 21, line 14, insert after ``minority-'' the following:
``, veteran-,''.
Page 25, line 10, insert after ``WOMEN-OWNED'' the
following: ``, VETERAN-OWNED,''.
Page 25, line 12, insert after ``women-owned businesses''
the following: ``, veteran-owned businesses,''.
Page 25, line 14, insert after ``Program'' the following:
``(including determining the percentage of the total number
of all businesses that receive assistance that such number
represents)''.
Page 25, line 17, insert after ``minority-'' the following:
``, veteran-,''.
The CHAIR. Pursuant to House Resolution 1436, the gentleman from New
York (Mr. Israel) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from New York.
Mr. ISRAEL. Mr. Chairman, I yield myself 2 minutes.
I rise in support of the Israel-Barrow amendment. In particular, I
would like to thank the gentleman from Georgia (Mr. Barrow) for his
leadership and his partnership on behalf of veterans.
This amendment is rather direct. The underlying bill creates a new
community bank lending fund for small businesses. It is essential that
as we continue our recovery, we expand the amount of credit to
America's small businesses so they can buy products and hire people.
Our amendment does three things. One, it ensures that community banks
participating in the lending fund prioritize veteran-owned businesses.
Two, it requires aggressive outreach in advertising to veteran-owned
small businesses. And, third, it requires the Secretary of Treasury,
when designating lending institutions in the fund, to focus on veteran-
owned businesses.
Mr. Chairman, last year there were 3.6 million veteran-owned
businesses in the United States of America; 250,000 were owned by
service-disabled veterans. They fought our battles, we should fight for
their businesses, and that is precisely what our amendment does.
I again want to thank the gentleman from Georgia (Mr. Barrow) for
working with me on this amendment. It is the Israel-Barrow amendment,
but it might as well be called the Barrow-Israel amendment as a result
of the partnership that we brought to this task on behalf of small
businesses and veterans.
Mr. Chairman, I reserve the balance of my time.
Mr. NEUGEBAUER. Mr. Chairman, I rise to claim the time in opposition,
although I am not opposed to the amendment.
The CHAIR. Without objection, the gentleman from Texas is recognized
for 5 minutes.
There was no objection.
Mr. NEUGEBAUER. The bill currently includes language regarding women
and minority-owned business, and adding the veteran-owned businesses
makes sense. And so with that, we support this amendment and we thank
the gentleman for bringing it forward.
I yield back the balance of my time.
Mr. ISRAEL. Mr. Chairman, I yield such time as he may consume to the
gentleman from Georgia (Mr. Barrow).
Mr. BARROW. Mr. Chairman, I thank the gentleman for yielding. I have
spent a lot of time meeting with small business owners across my
district because small businesses are the backbone of our economy and
they hold the key to our recovery. In the last decade, 70 percent of
all new jobs are created by small businesses. But many are now facing a
credit squeeze which makes it hard to cover everyday expenses,
including hiring and remaining workers. It is in the best interest of
our country that our small businesses thrive. That is why the Small
Business Lending Fund Act deserves our support.
I am pleased to offer an amendment with Congressman Israel that I
think makes this good bill just a little bit better. Our amendment
simply asks banks receiving funds under this act to reach out to women,
minority and veteran-owned businesses to make them aware of the
availability of these funds. These businesses are a valuable but often
disadvantaged part of our economy, and I think they deserve our special
attention.
I want to thank Congressman Israel for his collaboration on this
amendment and his leadership, I want to thank the chairman for his
support.
Mr. ISRAEL. Mr. Chairman, we have proven today to the American people
that both sides of this aisle can agree on at least one thing, and that
is supporting veterans and supporting small businesses. I am grateful
for the bipartisan cooperation that we have received on this.
I have no further requests for time, and I yield back the balance of
my time.
The CHAIR. The question is on the amendment offered by the gentleman
from New York (Mr. Israel).
The question was taken; and the Chair announced that the ayes
appeared to have it.
Mr. ISRAEL. Mr. Chair, I demand a recorded vote.
The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on
the amendment offered by the gentleman from New York will be postponed.
Amendment No. 3 Offered by Mr. Nye
The CHAIR. The Chair understands that amendment No. 2 will not be
offered.
It is now in order to consider amendment No. 3 printed in part C of
House Report 111-506.
Mr. NYE. Mr. Chairman, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 3 offered by Mr. Nye:
Page 3, line 5, strike ``and''.
Page 3, line 12, strike the period and insert ``; and''.
Page 3, after line 12, insert the following new
subparagraph:
(D) with respect to an eligible institution for which no
report exists that is described under subparagraph (A), (B),
or (C), such other report or set of information as the
Secretary, in consultation with the Administrator of the
Small Business Administration, may prescribe.
Page 4, line 25, strike ``and''.
Page 5, line 3, strike the period and insert ``; and''.
Page 5, after line 3, insert the following new
subparagraph:
(D) any small business lending company that has total
assets of equal to or less than $10,000,000,000.
Page 6, line 1, after ``report,'' insert the following:
``where each loan comprising such lending is made to a small
business and is one''.
Page 6, after line 25 insert the following new paragraphs:
(1) Small business.--The term ``small business'' has the
meaning given the term
[[Page H4530]]
``small business concern'' under section 3 of the Small
Business Act (15 U.S.C. 632).
(2) Small business lending company.--The term ``small
business lending company'' has the meaning given such term
under section 3(r)(1) of the Small Business Act (15 U.S.C.
632(r)(1)).
Page 12, beginning on line 19, strike ``the amount of small
business lending reported by the eligible institution in its
call report for the last quarter in calendar year 2009 or the
average amount of small business lending reported by the
eligible institution in all call reports for calendar year
2009, whichever is lower'' and insert ``the average amount of
small business lending reported by the eligible institution
in its call reports for the 4 full quarters immediately
preceding the enactment of this title''.
Page 17, after line 9, insert the following new
subparagraph:
(I) Incentives contingent on an increase in the number of
loans made.--For any quarter during the first 4\1/2\-year
period following the date on which an eligible institution
receives a capital investment under the Program, other than
the first such quarter, in which the institution's change in
the amount of small business lending relative to the baseline
is positive, if the number of loans made by the institution
does not increase by 2.5 percent for each 2.5 percent
increase of small business lending, then the rate at which
dividends and interest shall be payable during the following
quarter on preferred stock or other financial instruments
issued to the Treasury by the eligible institution shall be--
(i) 5 percent, if such quarter is within the 2-year period
following the date on which the eligible institution receives
the capital investment under the Program; or
(ii) 7 percent, if such quarter is after such 2-year
period.
(J) Alternative computation.--An eligible institution may
choose to compute their small business lending amount by
computing the amount of small business lending, as if the
definition of such term did not require that the loans
comprising such lending be made to small business. Any
eligible institution choosing to compute their small business
lending in this manner shall certify that all lending
included by the institution for purposes of computing the
increase in lending under this paragraph was made to small
businesses.
The CHAIR. Pursuant to House Resolution 1436, the gentleman from
Virginia (Mr. Nye) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Virginia.
Mr. NYE. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, recent reports on U.S. economic growth are promising
and suggest that recovery is taking hold. However, I continue to hear
from small business owners in my district who are still having a tough
time obtaining the business loans that they need today. They have
weathered the worst of the storm and are ready to lead our economy to a
strong recovery. However, in order to do this, they need capital;
capital from loans that banks are unwilling to lend.
As chairman of the Small Business Subcommittee on Contracting and
Technology, my subcommittee examines every day how the Federal
Government can incentivize business innovation.
For example, last year, with my fellow Virginian Mark Warner, I
proposed the Small Business Administration take action on the ARC loan
program, a vital loan program that had been delayed months until
Congress authorized it. Because of our efforts, soon after the ARC loan
program was implemented, and it is expected to create or retain 24,000
jobs and assist 4,900 businesses this year alone.
We must continue to implement these types of small business programs
that will unfreeze the small business credit markets. However, as we
create this program to increase lending capacity to small banks, we
must ensure that it is not another bank bailout.
The amendment I offer today puts controls in place to guarantee the
funds in this bill are in fact going to small businesses. First and
foremost, we must define what a small business is. If the Small
Business Lending Fund is created with the intention to spur small
business lending, we must ensure that the funds are in fact lent to
businesses that are properly defined as small business. In order to do
this, we should use the definition already being used by Federal
agencies to determine a business's size.
Second, we want to increase lending volume and open up the credit
markets to every qualified small business. To do this effectively, we
need to link lending incentives to volume, or in other words, to the
number of loans that a bank makes and not just the amount of money
lent. If we measure the lending of a bank merely by the amount of money
lent, then a bank could make a few large loans and call it a day.
Working capital for most small businesses requires small loans, and
many times it takes more than one. Thus, to effectively measure if this
program is truly supporting working capital efforts, we must certify
that the volume of these small loans increases.
Third, in the same vein, a hardened baseline with real meaning must
be set when measuring a bank's lending record. Currently, the bill only
requires a bank to increase its lending according to its 2009 fourth
quarter record. The fourth quarter of 2009 saw a historically low
lending rate. Small financial institutions decreased their small
business lending by an average of 12.8 percent, and small business
lending by large banks dropped by more than 20 percent. To gather a
more accurate measure of small business lending, this amendment
requires a full year's worth of data to measure a bank's lending
report.
Finally, small business lending companies exist only to lend to small
businesses. It would be nearsighted not to make these institutions that
already have a strong infrastructure and proven ability to lend to
small businesses eligible in this bill. My amendment includes small
business lending companies with less than $10 billion in assets as
qualified financial institutions, alongside community banks and small
credit unions.
If our economic recovery is going to translate into economic
expansion, we must open up the credit markets to our small businesses
who are proven job creators and we must ensure that programs created to
provide capital to small businesses take the necessary measures to
promote small business lending and not big business bailouts.
I urge my colleagues to support this amendment for our small
businesses and for our economic future.
I reserve the balance of my time.
Mr. NEUGEBAUER. Mr. Chairman, I rise to claim the time in opposition.
The CHAIR. The gentleman from Texas is recognized for 5 minutes.
Mr. NEUGEBAUER. Mr. Chairman, I am opposed to this amendment because
it removes some of the safeguards to ensure the banks use the money in
the way that they are supposed to and not simply just building up their
capital buffers. Allowing recipients to self-certify that they have
increased small business lending guts all of the other protections in
this bill.
If we are going to allow recipients to pay dividends as low as 1
percent, we need to make sure that the money is used the way the
legislation is intended. We already have less oversight of this money
than we did in the TARP program, and even though it is the same
program, cutting back even further is the wrong approach.
Already under this bill, banks are getting a good deal on the cost of
capital, thanks to the taxpayers. Community banks that issue preferred
equity paid dividends of 9 percent or more in the private market, here
we have the government giving them the capital for 5 percent, or as low
as 1 percent.
This amendment changes the incentives in the wrong way, and we need
more safeguards for the taxpayers, not fewer.
Mr. Chairman, I reserve the balance of my time.
Mr. NYE. Mr. Chairman, I yield the balance of my time to
Congresswoman Velazquez, the chairwoman of the Small Business
Committee.
Ms. VELAZQUEZ. I thank the gentleman for yielding.
Mr. Chairman, since the financial crisis struck in 2007, much has
already been done to help banks and financial institutions stay
solvent. Those steps were necessary. I firmly believe that without
them, the financial crisis would deepened, unemployment would have been
higher, more Americans would have suffered, and our economic recovery
may have been delayed for many years.
Despite these efforts, our entrepreneurs are still struggling to tap
into the credit they need. As we revisit this problem once more, it is
vital that we ensure that the benefits of this bill reach small
businesses. That is the intent of this legislation. But without the
right safeguards, this will be another attempt that fails to address
the underlying problem of small business access to capital.
[[Page H4531]]
If this measure is not crafted properly, loans which go to large
businesses could qualify under the program. Mr. Chairman, I support
this amendment.
Mr. NEUGEBAUER. Mr. Chairman, I just want to repeat that when we are
going to give a dividend, a lesser dividend rate for the more
performance that these banks have, letting themselves certify is not a
good check and balance. Certainly we want them to increase their
lending, but we need third-party validation to make sure that if they
are going to get as low as a 1 percent capital dividend rate, that some
third-party validation validates that because obviously that has impact
on this program.
I reserve the balance of my time.
Mr. NYE. I ask unanimous consent that each side be allocated an
additional 2 minutes.
The CHAIR. Is there objection to the request of the gentleman from
Virginia?
There was no objection.
Mr. NYE. Mr. Chairman, I yield 2 minutes to the distinguished ranking
member of the committee, Congressman Graves.
Mr. GRAVES of Missouri. Mr. Chairman, I rise in support of the
amendment offered by the gentleman from Virginia.
Under the program, the way it was reported out of the Financial
Services Committee, the bill bases its lending on the size of loans,
and assumes that loans of under $250,000 and $1 million will be made to
small businesses. However, there is no such assurance in the bill, and
loans of those sizes could be made to large businesses, but count as
small business lending. If this is a small business lending program,
then it should use the definition of small business used throughout the
government, and that is the one in the Small Business Act. The approach
offered by the gentleman from Virginia (Mr. Nye) does just that. It
makes that sensible change.
The other change that the gentleman's amendment does is to include
small business lending companies. These institutions are not overseen
by the Federal financial regulators, but are authorized by the Small
Business Administration to make guaranteed loans. If the idea of the
program is to increase lending to small businesses, small business
lending companies should not be excluded from this program.
For these reasons, I definitely support the gentleman's amendment,
and I appreciate his offering it.
Mr. NEUGEBAUER. Mr. Chairman, I yield back the balance of my time.
Mr. NYE. Mr. Chairman, I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Virginia (Mr. Nye).
The amendment was agreed to.
Amendment No. 4 Offered by Mr. Minnick, as Modified
The CHAIR. It is now in order to consider amendment No. 4 printed in
part C of House Report 111-506.
Mr. MINNICK. Mr. Chair, I have an amendment at the desk designated
under the rule.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 4 offered by Mr. Minnick:
Page 11, after line 3, insert the following new
subparagraph:
(F) Election to include other nonfarm, nonresidential real
estate loans in amount of small business lending.--At the
time that an applicant submits an application to the
Secretary for a capital investment under the Program, the
applicant may notify the Secretary that it elects to have
included in the determination of the amount of its small
business lending, for purposes of the computations made under
paragraph (4), the amount of lending reported as other
nonfarm, nonresidential real estate loans in its quarterly
call report, but for purposes of this subparagraph, other
nonfarm, nonresidential real estate loans shall not include a
loan having an original amount greater than $10,000,000. If
an applicant makes the election under this subparagraph, the
amount of lending reported as other nonfarm, nonresidential
real estate loans shall be included in the determination of
the amount of its small business lending for purposes of the
computations made under paragraph (4).
The CHAIR. Pursuant to House Resolution 1436, the gentleman from
Idaho (Mr. Minnick) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Idaho.
{time} 1145
Mr. MINNICK. Mr. Chairman, I ask unanimous consent to modify my
amendment.
The CHAIR. The Clerk will report the modification.
The Clerk read as follows:
Amendment No. 4 offered by Mr. Minnick, as modified:
Page 6, after line 9, insert the following:
(v) Nonowner-occupied commercial real estate loans.
The CHAIR. Is there objection to the request of the gentleman from
Idaho?
Without objection, the amendment is modified.
There was no objection.
Mr. MINNICK. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this amendment, while short in length, is extremely
important to the commercial banking industry and to small business in
my State and all of the United States. What it does is adds commercial
real estate to the category of assets that can be covered by small
business loan guarantees and increases the amount of those assets up to
$10 million.
This allows a category of assets that is now being held by small
business men throughout the country, a category that is very large that
needs to be refinanced because commercial real estate loans are short
term and banks simply do not have the capacity in the current market to
finance and process all of the commercial loans that need to be
reprocessed over the next 3 to 5 years. By making these smaller loans
that our community banks have made to strip shopping centers, to
restaurants, to small business, making them more liquid by applying a
Federal guarantee, they will be able to sell these loans in the market.
The bank will get cash and be able to make another commercial loan.
So this is a very important piece of legislation, an important
component of the Small Business Lending Act that will do more, I think,
than any other single thing in terms of getting our banking system
functioning again and providing credit to the entrepreneurs and small
businesses across this country who will fuel the economic recovery and
create the jobs that will bring us out of this recession.
I urge my colleagues to accept this amendment, and I reserve the
balance of my time.
Mr. NEUGEBAUER. Mr. Chairman, I seek time in opposition, although I
am not opposed to the amendment.
The CHAIR. Without objection, the gentleman from Texas is recognized
for 5 minutes.
There was no objection.
Mr. NEUGEBAUER. I appreciate the gentleman's point here of trying to
create a new source of capital in commercial real estate at a time when
there is a significant amount of stress on our community banks.
Financing for commercial real estate, particularly the smaller loan
market that serves small businesses, has been limited. The commercial
mortgage-backed securities market, the CMBS market, which accounted for
nearly 50 percent of the commercial real estate lending in 2007,
remains dormant.
So while I continue to believe the $30 billion lending fund will not
improve lending for small businesses, I do not oppose the gentleman's
amendment.
I yield back the balance of my time.
Mr. MINNICK. I thank the gentleman.
I would urge my colleagues to endorse this amendment and ask that it
be added to the bill.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from Idaho (Mr. Minnick), as modified.
The amendment was agreed to.
Amendment No. 5 Offered by Mr. Perlmutter
The CHAIR. It is now in order to consider amendment No. 5 printed in
part C of House Report 111-506.
Mr. PERLMUTTER. Mr. Chairman, I have an amendment at the desk made in
order under the rule.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 5 offered by Mr. Perlmutter:
Add at the end of title I the following new section:
SEC. 14. TEMPORARY AMORTIZATION AUTHORITY.
(a) Purpose.--The purpose this section is to address the
ongoing effects of the financial crisis on small businesses
by providing temporary authority to amortize losses or
[[Page H4532]]
write-downs in order to increase the availability of credit
for small businesses.
(b) In General.--For purposes of capital calculation under
the Financial Institutions Examination Council's Consolidated
Reports of Condition, an eligible institution may choose to
amortize any loss or write-down, on a quarterly straight line
basis over a period determined under subsection (c),
beginning with the month in which such loss or write-down
occurs, resulting from the application of FASB Statement 114
or 144 to--
(1) other real estate owned (as defined under section 34.81
of title 12, Code of Federal Regulation), or
(2) an impared loan secured by real estate,
provided that the institution discloses the difference in the
amount of the institution's capital, when calculated taking
into account the temporary amortization, from the amount of
the institution's capital when calculated without taking into
account the temporary amortization on the Financial
Institutions Examination Council's Consolidated Reports of
Condition.
(c) Amortization Requirements.--During the initial 2-year
period referred to in section 4(d)(4), an eligible
institution's amortization period shall be adjusted to
reflect the following schedule based on the institution's
change in the amount of small business lending relative to
the baseline:
(1) If the amount of small business lending has increased
by less than 2.5 percent, the amortization period shall be 6
years.
(2) If the amount of small business lending has increased
by 2.5 percent or greater, but by less than 5.0 percent, the
amortization period shall be 7 years.
(3) If the amount of small business lending has increased
by 5.0 percent or greater, but by less than 7.5 percent, the
amortization period shall be 8 years.
(4) If the amount of small business lending has increased
by 7.5 percent or greater, but by less than 10.0 percent, the
amortization period shall be 9 years.
(5) If the amount of small business lending has increased
by 10 percent or greater, the amortization period shall be 10
years.
(d) Minimum Underwriting Standards.--The appropriate
Federal banking agency for an eligible institution that
chooses to amortize any loss or write-down as permitted under
subsection (b) shall, within 60 days of the date of the
enactment of this title, issue regulations defining minimum
underwriting standards that must be used for loans made by
the eligible institution.
(e) Effective Date.--The provisions of this section shall
apply to loan origination that occurred on or after January
1, 2003, and before January 1, 2008.
The CHAIR. Pursuant to House Resolution 1436, the gentleman from
Colorado (Mr. Perlmutter) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Colorado.
Mr. PERLMUTTER. Mr. Chairman, I yield myself such time as I might
consume.
Mr. Chairman, the amendment I offer with my colleagues today would
increase the availability of capital for small businesses. It
temporarily allows banks to amortize real estate losses over 6 years.
In addition, smaller community banks would be incentivized to increase
small business lending through an extended amortization period of up to
10 years.
The impact of this amendment deals with regional and small banks. It
will be immediate and is a necessary step in providing greater
availability of credit, which will lead to job creation and economic
growth.
We had an earthquake on Wall Street about a year-and-a-half ago.
Those aftershocks are still being felt by small businesses and small
banks all across the country. It is for that reason these banks, in an
effort to help small businesses regain their footing, deserve this kind
of amortization and flexibility with respect to their loan portfolios.
They did not cause the trouble that they now find themselves in, and we
believe that amortization is appropriate.
Mr. Chair, I reserve the balance of my time.
Mr. NEUGEBAUER. Mr. Chair, I am opposed to the amendment.
The CHAIR. The gentleman from Texas is recognized for 5 minutes.
Mr. NEUGEBAUER. Certainly I am sympathetic to the many community
banks coping with real estate assets on their books that have lost
their value; however, I am not sure this amendment is the best
solution.
This amendment would essentially allow certain banks to hide losses
for up to 10 years. The practice of legislative forbearance is a
dangerous one and could result in problems that only get worse because
they are not properly addressed. Accounting rules function to provide a
clear record of the health of the institution. This amendment does just
the opposite by hiding the losses.
The amortization provided by this amendment does not take effect for
2 years, when the increase in small business lending is measured; thus,
it doesn't really address the current credit problems that this bill
attempts to solve. This amendment creates the wrong incentive of
allowing banks to hide losses for longer periods of time based on
making even more loans. Instead of continuing to distort the market,
the government should instead create an expansionary environment where
we are lowering taxes and providing regulatory certainty and not hiding
accounting losses.
I urge opposition to this amendment.
I yield back the balance of my time.
Mr. PERLMUTTER. Mr. Chairman, I would say the amendment provides that
if there is a $250,000 loss, it is booked and it is open, but then is
spread out for 6 up to 10 years. It's easily transparent and open.
I yield 1 minute to my friend from Florida (Mr. Klein).
Mr. KLEIN of Florida. I thank the gentleman from Colorado. All of us
share a common goal: We are committed to an economic recovery. We also
agree that small business lending is critical to achieving that
recovery.
Small businesses in my district in south Florida and around the
country are struggling to get access to credit so they can grow their
businesses and create jobs. Even though bank regulators at the top are
telling banks to lend, I have heard over and over again directly from
dozens of businesses in my community and the banks locally that
examiners on the ground are giving the exact opposite message.
It is essential that we do everything we can to increase small
business lending. This amendment provides incentives for small business
and real estate lending, exactly what south Florida and other
communities need to continue on the road to recovery. The amendment
provides a solution to a critical problem, and I am proud to have
worked with community banks, our Realtors and real estate community on
this issue.
I urge my colleagues to support this amendment.
Mr. PERLMUTTER. At this point, I would also say to my friend from
Texas, the amendment takes place immediately, not after 2 years.
I yield 1 minute to my colleague from Colorado (Mr. Coffman).
Mr. COFFMAN of Colorado. I thank the gentleman from Colorado for
yielding.
Mr. Chair, I rise today in strong support of this amendment to House
Resolution 5297, the Small Business Lending Fund Act of 2010. The
amendment offered by my friend from Colorado, Representative
Perlmutter, would do a great deal to increase the availability of loans
to our Nation's small businesses. Small businesses are the engine that
drives our economy.
This amendment will allow Colorado banks to amortize, or write down,
commercial real estate loan losses over a period of time to ensure an
adequate amount of capital for continued lending. The amendment
encourages continued lending to small businesses by establishing a
graduated scale with a maximum 10-year period of amortization for
increased small business lending of 10 percent or more.
Enacting commonsense measures such as this will do a great deal to
help small businesses, while also protecting many community banks from
the volatility that currently surrounds their commercial real estate
portfolio.
I have run a small business, and access to capital was always a
pressing concern. I am glad that Congress is addressing this important
issue.
I urge my colleagues to vote in favor of this amendment.
Mr. PERLMUTTER. I yield 1 minute to my friend from Wisconsin (Mr.
Kagen).
Mr. KAGEN. I rise in strong support of the Perlmutter, Gutierrez,
Klein, and Kagen amendment. Why? It's exactly the medicine we need in
our economy right now. Small businesses in Wisconsin, small businesses
in Colorado and across the country are looking for access to credit at
a price they can afford to pay. And right now our community banks are
unable to lend, not because of their own activity, but because of the
bad judgment of big banks on Wall Street.
Main Street community banks and Main Street small businesses should
[[Page H4533]]
not have to continue to pay for the mistakes of Wall Street. The
Perlmutter amendment would allow community banks under $10 billion of
assets to amortize potential losses over 6 years and up to 10 years if
they increase their lending to small businesses.
We get it. We understand that small businesses are the economic
engines of this country. It's time to give small businesses the
opportunity to grow our economy and the jobs we need to work our way
back into prosperity.
I would urge a strong ``yes'' vote on this amendment.
Mr. PERLMUTTER. Mr. Chairman, how much time do I have left?
The CHAIR. The gentleman has 1 minute remaining.
Mr. PERLMUTTER. Thank you.
The point here is smaller banks, regional banks, unlike banks on Wall
Street, did not create the credit and lending mess that exists today.
Small businesses didn't create the mess that we see. And it is small
business that employs so many people, and we have got to get folks back
to work.
So the amendment allows for a bank to take a loss and then spread it
over a period of time so that they can weather this storm until we get
back to a good financial footing in this country. It is something that
is necessary. It will assist with the availability of credit today and
doesn't cost the taxpayer any money.
Something like this was used in the 1980s to assist the agricultural
banks, and it worked at that time. It will work today.
I urge an ``aye'' vote on amendment No. 5, and I yield back the
balance of my time.
The Acting CHAIR (Ms. Norton). The question is on the amendment
offered by the gentleman from Colorado (Mr. Perlmutter).
The amendment was agreed to.
Amendment No. 6 Offered by Mr. Price of Georgia
The Acting CHAIR. It is now in order to consider amendment No. 6
printed in part C of House Report 111-506.
Mr. PRICE of Georgia. Madam Chair, I have an amendment at the desk
made in order under the rule.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 6 offered by Mr. Price of Georgia:
Page 26, after line 7, insert the following new section:
SEC. 14. SENSE OF CONGRESS.
It is the sense of Congress that the Federal Deposit
Insurance Corporation and other bank regulators are sending
mixed messages to banks regarding regulatory capital
requirements and lending standards, which is a contributing
cause of decreased small business lending and increased
regulatory uncertainty at community banks.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Georgia (Mr. Price) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Georgia.
Mr. PRICE of Georgia. Madam Chair, I want to thank the chairman of
the committee and the ranking member for working with me on this
amendment. And although, as they know, I am opposed to the underlying
bill, this amendment is extremely important to highlight the serious
problem of mixed messages that financial regulators are sending to our
community banks. And I appreciate the support of the chairman on this
amendment.
Banks in Georgia employ almost 50,000 people and hold $276 billion in
assets. Most of these banks are community institutions, which were mere
bystanders to the financial and liquidity crisis of the last 2 years.
{time} 1200
Late last week, the Treasury Department reported that TARP will cost
less than they originally estimated. In fact, Treasury expects to spend
less than the $550 billion of the $700 billion authorized. Regrettably,
this figure does not factor in the bailouts for Fannie Mae, Freddie
Mac, and AIG.
But even so, this is a revolving taxpayer bailout fund, meaning that
there is $550 billion that the administration and leadership could put
towards small business lending. However, the administration chose not
to do this and, instead, wants Congress to appropriate another $33
billion of taxpayer money. That's right, another $33 billion.
Certainly, small business lending is a priority for banks and
businesses. However, this bill doesn't address the underlying causes of
contraction in lending but invests much more in a failed regulatory
agency.
Unfortunately, the mixed messages being sent by failed bank
regulators will not be fixed. Instead of making the FDIC and the other
regulators send a clear, consistent message to our Nation's banks, this
Congress feels that throwing more money at the problem will fix it.
In February, bank regulators, both State and Federal, issued a joint
statement providing guidance to banks and to credit unions, encouraging
them to make loans to credit-worthy small business borrowers. The
regulators described the guidance as intended to ``emphasize that
financial institutions engaging in prudent small business lending after
performing a comprehensive review of a borrower's financial condition
will not be subject to supervisory criticism for small business loans
made on that basis.''
However, reports from the field show a much different picture. I hear
from bankers in my district and across our State that there is capital
to lend. However, I also hear from those same banks that they're
nervous and anxious about the unpredictable regulators' response and
scrutiny of their regulatory capital ratios and loan requirements. For
many banks, it's easier and better just to ride out the storm by
hoarding their cash than to justify every penny that they lend to the
regulators, possibly risking their capitalized standing.
Banks cannot hold capital for regulatory compliance and comply with
regulators' instructions to lend at the same time. They're mutually
exclusive. My amendment states that these mixed messages sent by the
regulators are a very serious problem and a cause of the contraction in
small business lending and are destructive to communities.
In order to highlight this, I urge adoption of the amendment.
I reserve the balance of my time.
Ms. BEAN. I claim time in opposition, even though I'm not opposed.
The Acting CHAIR. Without objection, the gentlewoman from Illinois is
recognized for 5 minutes.
There was no objection.
Ms. BEAN. I yield myself such time as I may consume.
I want to acknowledge Congressman Price's amendment and its
recognition of the challenges facing not only community businesses
seeking loans but the community bankers that are trying to provide
them. His amendment recognizes mixed messages between legislators
urging more lending while regulators and examiners are often urging
less, particularly in the area of commercial real estate. That's why I
have a bill that addresses both priorities by expanding the SBA 504
program to allow banks to lend to small businesses for owner-occupied
properties, while easing the exposure on their bank's balance sheet
with investments from the CDCs.
I also want to acknowledge that this amendment recognizes the credit
crisis that's challenging our country and our small businesses
particularly, which is the point of this underlying bill. And I hope my
colleague will support the underlying bill as it addresses those credit
challenges.
I yield back the balance of my time.
Mr. PRICE of Georgia. I thank the gentlelady for her support of the
amendment and would just point out, once again, the mixed messages that
are being received by our community banks.
I would also like to point out that the amount of money left
available in TARP right now could easily cover the intent of this bill.
However, this bill has in it an extra $33 billion, $33 billion, Madam
Chair, that, frankly, we do not have as a Nation. We put it on backs of
our kids and grandkids and borrow it from some other nation when we
could be utilizing money that has already been appropriated for the
same positive purpose.
I urge adoption of the amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Georgia (Mr. Price).
The amendment was agreed to.
Amendment No. 7 Offered by Mr. Al Green of Texas
The Acting CHAIR. It is now in order to consider amendment No. 7
printed in part C of House Report 111-506.
[[Page H4534]]
Mr. AL GREEN of Texas. Madam Chair, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 7 offered by Mr. Al Green of Texas:
Page 19, after line 4, insert the following new subsection:
(e) Notification to Customers.--Any eligible institution
receiving funds under the Program shall--
(1) disclose on every applicable loan transaction that the
loan is being made possible by the Program; and
(2) if such institution has an established internet
website, such institution shall make available on its
internet website--
(A) the written reports made by the Secretary pursuant to
paragraphs (1) and (2) of section 7; and
(B) a statement that the institution, as a participant in
the Program, is seeking to make small business loans to
qualified borrowers and may not discriminate on the basis of
any factor prohibited under the Equal Credit Opportunity Act,
including the race, color, religion, national origin, sex,
marital status, or age.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Texas (Mr. Al Green) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Texas.
Mr. AL GREEN of Texas. I yield myself 3 minutes at this time.
Madam Chair, this is an important amendment. This amendment will not
be a perfect amendment with references to what it seeks to do, but it
is a perfecting amendment. This amendment seeks to provide disclosure
and enhance accountability, and I'd like to make it known that this
amendment received a lot of help and input from the Office of
Congressman Hensarling, and I thank him for what he has done.
This amendment would provide that an institution engaged in the
lending process with the funds from the program, that this institution
will on applicable loan documents indicate that the funds being loaned
are funds that are coming from the fund. This is important because the
public desires to know where the money is going, how it is being
utilized.
This amendment would also require, if the institution has a Web site,
it will require that that Web site contain the written reports of the
Treasury Secretary. These reports would indicate, to the extent that
loans have been made, how the money has been utilized, and this, again,
would provide additional transparency which will lead to
accountability.
Finally, the amendment will require lending institutions to make
known to the capable, competent, and qualified borrowers that they will
have the opportunity to participate in the program by way of receiving
loans and that these loans must be based upon the law as it is written
and not allow any type of discrimination, invidious discrimination to
infiltrate the program.
I think this is an amendment that goes a long way toward helping us
improve our transparency and accountability. It is not a perfect
amendment, but it is a perfecting amendment.
I reserve the balance of my time.
Mr. NEUGEBAUER. Madam Chair, I claim time in opposition, although I
don't think I'm going to oppose the amendment.
The Acting CHAIR. Without objection, the gentleman from Texas is
recognized for 5 minutes.
There was no objection.
Mr. NEUGEBAUER. I just wanted to clarify something that the gentleman
said.
I understand that the bank will disclose to the borrower that they
are loaning them funds because they are participating under this
program, and then the gentleman went on to say that the Treasury would
then post a report on their Web site. Now, would that list the names of
the borrowers? Will the Treasury report list on their Web site the
names of each borrower that borrowed money under this program?
Mr. AL GREEN of Texas. If the gentleman would yield to me?
Mr. NEUGEBAUER. I yield.
Mr. AL GREEN of Texas. It will indicate what transactions took place,
and it will indicate who the banks, the lending institutions, that
engaged in the transaction. The borrower's name would not be a part of
the information.
Mr. NEUGEBAUER. I thank the gentleman because I was concerned about
the privacy of those business owners, you know, letting the world know
how much money they're borrowing. So I'm not opposed to the gentleman's
amendment. I think disclosure is a good thing.
I just want to make a point that there have been several discussions
up here today that this is not going to cost the taxpayers any money,
and only in Washington, D.C., can you go spend $33 billion and say it's
not going to cost anything. The problem is, if this program is
participated up to $33 billion, we don't have $33 billion, and so we're
going to go have to borrow $33 billion from the Chinese to loan banks
to loan to small businesses in this country.
And a lot of folks I think understand that kind of how we got here
was that the whole world, small businesses, individuals, and
governments, have been on this borrowing and spending binge, borrow and
spend, borrow and spend, and quite honestly, that's how we wove this
web where we've got our financial markets in somewhat of a wrinkle
right now.
So, while I applaud the gentleman's amendment, I still go back to the
fundamental point here that, one, this bill will not help small
businesses have any additional capital, but more importantly, we are
going to go spend $33 billion that we don't have, and I don't think
that's the right prescription for our country.
With that, I reserve the balance of my time.
Mr. AL GREEN of Texas. Let me simply say in response that the bill
anticipates that loans will be repaid. It's not a circumstance where
persons are going to receive or businesses will receive loans that are
not going to be paid. And the bill causes banks or lending institutions
to make the loans because they will receive a better interest rate upon
making loans such that they are incentivized to make these loans.
So, while the bill will not cure all of the ails of society, all of
the ills that we have, it certainly will go a long way towards
stimulating small business lending, which is important to the economic
recovery.
I believe in this bill. I believe that this amendment will help with
transparency and accountability. And I also believe that it is time for
us to do all that we can to help the small businesses in this country.
I believe that this is something we can do, and I believe that it is
the something that will make a difference.
I reserve the balance of my time.
Mr. NEUGEBAUER. I appreciate the gentleman.
I still go back to the point, and I think that's where we get kind of
in a, we're living in Wally World here in Washington, D.C., where you
still have to have $33 billion. If you're going to go invest in the
preferred shares of these banks, you've still got to find the $33
billion. And the truth of the matter is for every dollar we're going to
appropriate or allocate in this country this year, we're going to have
to borrow 42 cents of it.
So I guess the question is, should we go out and hock another $33
billion for a program that many people think that there's adequate
capital and liquidity already in the banking industry? Some people have
been quoted as saying, well, 42 percent of the small businesses have
been turned down for loans in this country. Well, you know, I was in
the loan business, and everybody that came in to my borrow money from
me when I was a loan officer wasn't credit-worthy or it wasn't in their
best interest to leverage their business further.
So I'm afraid that we're out here trying to encourage behavior that
the marketplace may be already taking care of.
My good friend from Georgia did make a point that the regulatory
folks are sending mixed messages. I think that's a bad policy. I think
the regulators need to be more consistent with their policy, again
bringing that certainty because what we've heard time and time again,
whether it's from the business community or from the lending community,
all of this uncertainty about what Congress is doing and the regulatory
reforms that are going on, all of this is creating a huge amount of
uncertainty. And so what happens when we have uncertainty in the
marketplace, people just sit on the sidelines.
[[Page H4535]]
If you want to get businesses going again, if you want to get the
economy going again, we've got to get the government out of the banking
business. We've got to get the government out of all these huge
regulations. We've got to bring economic certainty by not imposing more
restrictions on companies on their health care; cap-and-trade affecting
what they're potentially going to pay for energy in the future;
uncertainty with our tax code, where we don't know what provisions are
going to expire, what provisions aren't.
And you know, wouldn't it be nice for the American people to get to
see a budget of how Congress is planning to spend their money, instead
of going through a daily, monthly, weekly exercise of spending money
without a budget? The American people don't do their business that way.
They're a little bit concerned that the United States Congress just
keeps on spending money but without a budget.
So, with that, I yield back the balance of my time.
Mr. AL GREEN of Texas. I yield myself such time as I may consume.
While I appreciate the gentleman from Texas' desire to make sure that
budgets are balanced and to make sure that we have accountability and
transparency, I do have to remind the gentleman that the desire and the
need to balance the budget did not start this year, nor did it start
last year. We should have had a balanced budget for the 8 years of the
prior administration.
{time} 1215
I think that you find this administration burdened with the problems
that were created by the past administration. I believe that in an
effort to correct these problems, we will have to take some necessary
steps toward helping small business.
I hear my colleagues on the other side quite regularly contending
that small businesses need help. This is help, and my trust and my hope
and my belief is that the small business help will be supported by not
only this side of the aisle, but by both sides of the aisle.
Madam Chair, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Texas (Mr. Al Green).
The amendment was agreed to.
Amendment No. 8 Offered by Mr. Driehaus
The Acting CHAIR. It is now in order to consider amendment No. 8
printed in part C of House Report 111-506.
Mr. DRIEHAUS. Madam Chair, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 8 offered by Mr. Driehaus:
Page 23, strike lines 7 through 9 and insert the following:
``of the Program through the Office of Small Business Lending
Fund Program Oversight established under subsection (b)''.
Page 23, after line 9, insert the following new subsection:
(b) Office of Small Business Lending Fund Program
Oversight.--
(1) Establishment.--There is hereby established within the
Office of the Inspector General of the Department of the
Treasury a new office to be named the ``Office of Small
Business Lending Fund Program Oversight'' to provide
oversight of the Program.
(2) Leadership.--The Inspector General shall appoint a
Special Deputy Inspector General for SBLF Program Oversight
to lead the Office, with commensurate staff, who shall report
directly to the Inspector General and who shall be
responsible for the performance of all auditing and
investigative activities relating to the Program.
(3) Reporting.--
(A) In general.--The Inspector General shall issue a report
no less than two times a year to the Congress and the
Secretary devoted to the oversight provided by the Office,
including any recommendations for improvements to the
Program.
(B) Recommendations.--With respect to any deficiencies
identified in a report under subparagraph (A), the Secretary
shall either--
(i) take actions to address such deficiencies; or
(ii) certify to the appropriate committees of Congress that
no action is necessary or appropriate.
(4) Coordination.--The Inspector General, in maximizing the
effectiveness of the Office, shall work with other Offices of
Inspector General, as appropriate, to minimize duplication of
effort and ensure comprehensive oversight of the Program.
(5) Termination.--The Office shall terminate at the end of
the 6-month period beginning on the date on which all capital
investments are repaid under the Program or the date on which
the Secretary determines that any remaining capital
investments will not be repaid.
(6) Definitions.--For purposes of this subsection:
(A) Office.--The term ``Office'' means the Office of Small
Business Lending Fund Program Oversight established under
paragraph (1).
(B) Inspector general.--The term ``Inspector General''
means the Inspector General of the Department of the
Treasury.
Page 23, line 10, strike ``(b)'' and insert ``(c)''.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Ohio (Mr. Driehaus) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Ohio.
Mr. DRIEHAUS. Madam Chair, I yield myself such time as I may consume.
Madam Chair, we know that small businesses account for the majority
of new jobs created in this country, and we know that making it easier
for small businesses to borrow is essential to our continued economic
recovery. This legislation will help small businesses access the credit
they need to create the jobs that will move our economy forward, but we
need to provide strong oversight to ensure that these loans are being
put to use where they are most effective and put to use in a way that
is responsible to the American taxpayer.
The amendment I have offered with my colleagues from Virginia and
Kansas will establish the Office of Small Business Lending Fund
Oversight under the authority of the Treasury Inspector General. The
Special Deputy Inspector General of the oversight office will be
required to monitor the Small Business Loan Fund and to report to
Congress at least twice a year with recommendations for improving the
program.
This amendment is about good government. It places no additional
burdens on banks or small businesses. Instead, it makes a good bill
better by ensuring accountability and transparency to the American
people.
We've seen what happens when government fails to provide adequate
protections when special interests are put ahead of the public good.
Now we're taking steps to make up for the years of lax oversight and
neglected responsibility.
Make no mistake, this bill is about creating jobs. Small business
owners tell me constantly that they could begin hiring again if only
they had access to credit and capital. This legislation will encourage
banks to lend to small businesses, and my amendment will help protect
taxpayers in the process.
This bill will strengthen our economic recovery without adding a dime
to the deficit. I encourage my colleagues to support this amendment as
well as the underlying legislation.
Madam Chair, I reserve the balance of my time.
Mr. NEUGEBAUER. Madam Chair, I rise to claim time in opposition to
the bill.
The Acting CHAIR. The gentleman from Texas is recognized for 5
minutes.
Mr. NEUGEBAUER. This new capital injection program is designed to
operate exactly like the TARP program but without any of the taxpayer
protection or oversight bodies. Now, this amendment is intended to
substitute for putting the experience of the Inspector General for this
type of program in charge of this new fund.
Republicans had an amendment that put the Special Inspector General
for TARP, or SIGTARP, in charge of the oversight of this new fund, but
the Rules Committee blocked it. Really, this creates a new regulator
where we had an existing regulator in place for TARP-like programs,
which this is, and we think that that was a better alternative. And now
we want to put someone that doesn't have as much experience with this
type of program in charge of oversight, and we just don't think that's
in the best interest of the taxpayers.
Republicans, as I want to remind the chairman, offered a number of
amendments that would have given the taxpayers much more protection
even than this amendment would. Unfortunately, again--and I don't want
to be redundant here, but the Rules Committee, which is controlled by
the majority, only allowed one Republican amendment to be heard while
we've
[[Page H4536]]
had 16 amendments from the majority. Again, we wondered why Republican
amendments to provide better protection and better oversight were
blocked by the majority when I think the American people think that any
kind of amendment that would have provided them more opportunity, more
protection, and more oversight would have been in their best interest.
We don't think that this amendment does the job that it needs to do,
and therefore we're opposed to it.
Madam Chair, I reserve the balance of my time.
Mr. DRIEHAUS. Madam Chair, I would just comment on the gentleman's
comments.
Yes, those amendments were offered, but as you know, not a dime of
TARP money is being used in this bill, so it's not appropriate for
SIGTARP to have the oversight. In fact, Mr. Thorson, who will have the
oversight, has incredible experience overseeing small business
programs. Before becoming the Inspector General of the Treasury
Department, Mr. Thorson served as the Inspector General for the Small
Business Administration from 2006 to 2008. In that short time, his
office uncovered what is believed to be the largest government-backed
loan fraud scheme in history, roughly $75 million. As a result of that
investigation, they arrested 15 people in one day. That's oversight.
And so while the gentleman is asking for SIGTARP to have oversight,
despite the fact that not a dime of TARP is being spent on this bill,
we have oversight that is adequate, that is strong, that is contained
in Treasury, that should have the oversight within this bill.
Madam Chair, I yield 30 seconds to my colleague from Illinois (Ms.
Bean).
Ms. BEAN. I just want to applaud Congressmen Driehaus, Connolly, and
Moore's efforts to improve the oversight of the SBLF program. This
amendment importantly expands oversight to ensure taxpayer dollars are
protected. I urge my colleagues to adopt the amendment.
I would further rebut our colleague from Texas' inaccurate assertion
that the program is not paid for. The gentleman knows full well that it
is fully paid for and that, according to the CBO, the government will
earn a profit.
Mr. NEUGEBAUER. I concede to the gentleman that none of this money is
coming from the TARP program; it probably should have because it's a
TARP program. I want to just remind the gentleman that Neil Barofsky,
the Special Inspector General who oversees TARP, said, In terms of its
basic design, its participants, its application process, from an
oversight perspective the Small Business Lending Fund would essentially
be an extension of TARP's capital purchase program.
From Elizabeth Warren, the SBLF's prospects are far from certain. The
SBLF also raises the question whether, in light of the capital purchase
program's poor performance in improving credit access, any capital
infusion for the program can essentially jump-start small business
lending. So everybody but the Democrats understands that this is a TARP
program.
Now, why did we want SIGTARP to have oversight? Because this is a
TARP-like program. And just today it was released that SIGTARP helped
bring a new lawsuit today for $1.9 billion in fraud collection with the
failure of Colonial Bank. Colonial Bank received $553 million in TARP
funds. To say that you're going to go out and put $33 billion into the
marketplace and not suffer any losses at a time when we have over 100
banks that have already missed one dividend payment--we've had one bank
that has missed six dividend payments--and that several billion dollars
have already been lost from some of these banks that were defaulted and
were closed after the taxpayers had put money in there.
And I go back to you saying, well, it doesn't cost the taxpayers any
money. I keep asking the majority, where is the $33 billion for this
program coming from?
I yield to the gentleman.
Mr. DRIEHAUS. Well, I appreciate your yielding because I would like
to rebut your first point about the TARP.
Mr. NEUGEBAUER. No. I would like the gentleman to answer the
question----
Mr. DRIEHAUS. There is not a dime of TARP money going into this bill.
You are undermining the authority--or attempting to undermine the
authority of the Inspector General of Treasury.
Mr. NEUGEBAUER. I will reclaim my time if the gentleman is not going
to answer my question. The question to the gentleman was, Where is the
$33 billion coming from? If the gentleman wants to answer that
question, I would love to yield him time. If he's not prepared to tell
me where the $33 billion is coming from, then I would not yield the
gentleman time.
Mr. DRIEHAUS. As the gentleman knows, we disposed of that issue
yesterday and we paid for it.
Mr. NEUGEBAUER. No. The pay-for was to cover any potential losses,
supposedly. But where is the $33 billion that you're going to invest in
these banks coming from?
Mr. DRIEHAUS. With all due respect to the gentleman, I know that this
doesn't fit into the political framework of the Republicans to suggest
that this is not TARP, this is not another bailout, this is about
helping small businesses.
Mr. NEUGEBAUER. I will reclaim my time because the gentleman
obviously doesn't know where the $33 billion is coming from, which is
part of the problem up here. People just think this money appears when
you start saying I'm going to put $33 billion here or $100 billion
here, $250 billion here; and nobody knows where the money is coming
from. But the bottom line is we know where the money is coming from.
We're going out and borrowing that money because the Treasury doesn't
have $33 billion.
Mr. DRIEHAUS. Madam Chair, the political framework of the Republicans
is that they want to call everything a bailout. And when it's not a
bailout, they want to act like it is. They want to call this TARP even
when it's not. So this doesn't fit into the definition that they want
to use out there on Fox News and elsewhere, but the fact of the matter
is it's coming out of Treasury. Treasury deserves the oversight.
Madam Chair, I yield 1\1/2\ minutes to the gentleman from Virginia
(Mr. Connolly).
Mr. CONNOLLY of Virginia. I thank my colleague from Ohio for his
leadership and my friend from Illinois for her kind words.
The Small Business Lending Fund Act will expand opportunities for
small businesses to access critically needed capital today. Our
amendment ensures that the program works as intended, that America's
small businesses receive access to that capital and that taxpayers'
loans are repaid.
The lending facility encourages small business loans to credit-worthy
companies, with the repaid funds and interest payments all going to
reduce the deficit that our friends on the other side say they're
concerned about.
Small businesses will lead private sector job growth if they can
obtain the necessary capital. The Office of Small Business Lending Fund
Program Oversight established by our amendment will provide
accountability and enhance the effectiveness of the lending fund,
helping to spur a more robust small business sector.
The current Treasury IG has a reputation for safeguarding taxpayer
funds, as my friend from Ohio said. A review of the Office of Thrift
Supervision uncovered six cases where it improperly allowed private
thrifts to backdate capital deposits, allowing institutions like failed
IndyMac to appear more solvent than they were. This amendment will
correct that problem moving forward in the future. I urge its adoption.
The Acting CHAIR. The gentleman from Ohio has 15 seconds remaining.
Mr. DRIEHAUS. Madam Chair, I just want to remind the Members this
amendment is about oversight; it's about doing our job to make
government work properly. And while I realize it doesn't always fit
into the political rhetoric of the other side, it is about good
government. This isn't TARP; this isn't a bailout. This is about
helping small businesses, moving the economy forward, and good
government.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Ohio (Mr. Driehaus).
The amendment was agreed to.
Amendment No. 11 Offered by Mr. Michaud
The Acting CHAIR. The Chair understands that amendment Nos. 9 and 10
will not be offered.
[[Page H4537]]
It is now in order to consider amendment No. 11 printed in part C of
House Report 111-506.
Mr. MICHAUD. Madam Chair, I have an amendment at the desk made in
order under the rule.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 11 offered by Mr. Michaud:
Page 30, line 14, after ``programs,'' insert the following:
``State-run venture capital fund programs,''.
Page 51, line 3, strike ``extends credit support that'' and
insert ``uses Federal funds allocated under this title to
extend credit support that''.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Maine (Mr. Michaud) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Maine.
{time} 1230
Mr. MICHAUD. I yield myself such time as I may consume.
Madam Chair, I rise today in support of my amendment to the Small
Business Lending Fund Act.
The amendment I offer today does two things to improve the underlying
bill's State Small Business Credit Initiative program.
First, it ensures that State-run venture capital programs are
eligible to participate in the program. Second, it clarifies that State
financing programs will be eligible for the program as long as their
use of the new funds meets the business-sized requirements in the bill.
The programs created in the Small Business Lending Fund Act build on
the proven potential of existing State lending programs. In Maine,
these programs have been enormously effective at getting small
businesses the access to capital and to the technical support they
need.
My amendment ensures that States are able to maintain their existing
initiatives while taking advantage of the new programs created in this
bill.
I urge my colleagues to support this amendment and the underlying
bill.
I reserve the balance of my time.
Mr. NEUGEBAUER. Madam Chair, we do not object to this amendment.
Mr. MICHAUD. Madam Chair, I would encourage my colleagues to adopt
this amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Maine (Mr. Michaud).
The amendment was agreed to.
Amendment No. 12 Offered by Mr. Cao
The Acting CHAIR. It is now in order to consider amendment No. 12
printed in part C of House Report 111-506.
Mr. CAO. As the designee of the gentlewoman from Texas, I have an
amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 12 offered by Mr. Cao:
In section 6(6) of the bill, strike ``and'' at the end.
In section 6(7) of the bill, strike the period at the end
and insert ``; and''.
In section 6 of the bill, add at the end the following:
(8) providing funding to eligible institutions that serve
small businesses directly affected by the discharge of oil
arising from the explosion on and sinking of the mobile
offshore drilling unit Deepwater Horizon and small businesses
in communities that have suffered negative economic effects
as a result of that discharge with particular consideration
to States along the coast of the Gulf of Mexico.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Louisiana (Mr. Cao) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Louisiana.
Mr. CAO. I yield myself such time as I may consume.
Madam Chair, I rise today in support of amendment No. 12 to H.R.
5297, the Small Business Lending Fund Act of 2010, and I urge my
colleagues to support this amendment.
This amendment requires the Secretary of the Treasury to provide
consideration, in the allocation of funds, to gulf region States in the
areas where businesses and the economy have been adversely affected by
the Deepwater Horizon oil spill.
I thank the gentlewoman from Texas for her partnership in drafting
this amendment and for her consideration for gulf coast communities
during our time of crisis.
I would also like to thank the gentleman from Alabama, the ranking
member of the Financial Services Committee, for his ongoing assistance
and support.
The district that I represent includes Louisiana's Orleans and
Jefferson Parishes. In my district and all across the gulf coast, we
were still recovering from the devastating storms of 2005 when we were
hit with the latest disaster.
The oil spill in the Gulf of Mexico in April presents us with
economic, environmental, and health challenges of unprecedented
proportions. The shutters have gone down on businesses throughout the
gulf region because they simply do not have the short-term or long-term
resources to operate. Industries such as fishing and seafood
processing, recreational fishing, restaurants, and tourism are all
suffering disproportionately.
I have spoken with hundreds of fishermen and oystermen from my
district who are no longer able to fish the waters they and their
families have fished for generations. Many have spoken of desperation
in not knowing how they will provide for their families. Tens of
thousands of claims have been filed through BP, and the SBA has made
disaster loans available to businesses adversely affected by the oil
spill, and they will defer loan payments for 1 year.
These provide only temporary relief, however, and a long-term
solution for economic assistance to the gulf region is what is needed
now because the last thing we need is more unemployment. Without
immediate economic assistance, the very businesses that in 2005
returned to the Orleans and Jefferson Parishes, committed to our
recovery, will be forced to leave.
This amendment is a strong step in the right direction to providing
desperately needed economic assistance, because it will see that small
businesses along the gulf coast receive the credit necessary to keep
our businesses alive. At the same time, it will spur new business which
will be able to absorb any unavoidable and unfortunate job losses
caused by the oil spill.
Again, I urge my colleagues to pass this amendment, and I yield back
the balance of my time.
Ms. JACKSON LEE of Texas. I rise to claim time in opposition, but I
will not oppose the amendment.
The Acting CHAIR. Without objection, the gentlewoman from Texas is
recognized for 5 minutes.
There was no objection.
Ms. JACKSON LEE of Texas. Madam Chair, I am delighted to have Mr. Cao
join me in my amendment that I offered in the Rules Committee, and I am
delighted that he was able to rise to claim the time for this
amendment. This is an amendment that I have written, and I have asked
Mr. Cao to join me, as he had a similar amendment. I appreciate very
much the support that he has given, and I recognize the concerns that
he has expressed.
I want to support the underlying bill as well and to make note of the
fact that small businesses are now facing the most difficult time in
the worst recession in our history.
According to a February 2010 report of the Federal Deposit Insurance
Corporation, total bank loans and leases declined for the sixth
straight quarter, with total loans to commercial and industrial
borrowers declining by 4.3 percent and real estate construction
development loans declining by 8.4 percent.
What that means is that small businesses are taking the strongest
hit. This bill will focus, in particular, on the question of providing
a lending scheme, a lending structure, which is paid for to provide the
start-up credit for our small businesses.
Well, here we find ourselves addressing an enormous crisis that has
occurred in the gulf. During the Memorial Day recess, I did a flyover
of the gulf and of the Deepwater Horizon, and I saw the magnitude and
the growth of this disaster. Somewhere between millions--or at least a
million gallons--but somewhere between 20,000 and 40,000 barrels per
day are gushing into the gulf. We don't know where this is going to
stop.
Many small businesses are impacted in the Gulf States. That would
include Florida. That would include Texas.
[[Page H4538]]
That would include Alabama, Mississippi, and Louisiana. This amendment,
for which I am delighted to be joined by Mr. Cao, will, in fact, cause
lending institutions to focus resources on the small business
community.
Even Linda Smith, who owns the Alligator Cafe in Houston, Texas, is
shut down because she cannot get product. When I visited New Orleans,
there were restaurants that seemed to close early because they couldn't
get product. What about the oystermen and shrimpers and fishermen who
can't seem to get a lump sum payment from BP for which we've advocated?
In speaking just a few minutes ago to an oysterman in Pointe a la
Hache, he indicated he had not gotten his money. So, therefore, I am
asking my colleagues to support this amendment.
I reserve the balance of my time.
Mr. CAO. Madam Chair, again, I just want to express my gratitude and
appreciation to the gentlewoman from Texas. She has been a very strong
voice and has been very committed to the gulf coast region and has been
committed to helping the many people who are in desperate need. Again,
I would like to convey to her my thanks.
I yield back the balance of my time.
Ms. JACKSON LEE of Texas. I thank the gentleman from Louisiana and
New Orleans, especially for his leadership. I look forward to working
with him as we go forward on legislation that addresses some of the
concerns I have heard him express so as we may establish a real
national energy policy.
I would ask my colleagues to support this amendment. As I have
indicated, I have obtained the time in opposition, but I will not
oppose the amendment that we have both offered on the floor of the
House. I will argue vigorously that this is an excellent opportunity to
protect small businesses which are yet noted, which are yet listed,
which are going to be impacted across that gulf from tourism in
Florida, Alabama, Mississippi, on to the shrimpers, fishermen,
oystermen, and to the restaurants that are now in conditions where they
are shutting down and where they are letting go of their employees.
They are pleading for assistance.
This is a good amendment, and it is a good amendment to this
legislation. It focuses on our small businesses, so I would ask my
colleagues to support this amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Louisiana (Mr. Cao).
The question was taken; and the Acting Chair announced that the ayes
appeared to have it.
Ms. JACKSON LEE of Texas. Madam Chair, I demand a recorded vote.
The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentleman from Louisiana
will be postponed.
Amendment No. 13 Offered by Ms. Loretta Sanchez of California
The Acting CHAIR. It is now in order to consider amendment No. 13
printed in part C of House Report 111-506.
Ms. LORETTA SANCHEZ of California. Madam Chairwoman, I have an
amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 13 offered by Ms. Loretta Sanchez of
California:
Page 62, after line 15, insert the following:
``(8) The extent to which the applicant will concentrate
investment activities on small business concerns in targeted
industries.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentlewoman
from California (Ms. Loretta Sanchez) and a Member opposed each will
control 5 minutes.
The Chair recognizes the gentlewoman from California.
Ms. LORETTA SANCHEZ of California. I yield myself such time as I may
consume.
Madam Chairwoman, I rise today in support of H.R. 5297, the Small
Business Lending Fund Act.
It is crucial in today's world that we further expand the potential
of small businesses and of key industries that have proven to create
jobs and to increase our manufacturing base here in the United States.
As a former investor and financial analyst, I was particularly
impressed with title III of this bill, the Small Business Early Stage
Investment program. In recent years, we have seen a shift from the
entrepreneur and small business start-up community, from the
traditional loans and from leverage such as mortgaging our own homes,
to using intellectual capital and innovation as our leverage.
As a Californian, I understand the importance of start-up businesses
and the economy as California makes up a large percentage of start-ups
and venture capital funders. Creating a public-private partnership
designed to channel investment capital to them is increasingly
important in order to get our economy on track, which is why I
submitted an amendment that would include additional criteria during
the selection process of these investment companies.
My amendment would ensure that, as part of the selection criteria,
the small business administrator would examine the extent the
investment company would concentrate its investment capital on our
targeted industries. Such targeted industries have been historical in
job and economic growth, such as the information technologies, life
sciences, defense technologies, clean technology, and digital media.
The small business start-ups are the backbone of our economy, and
they will contribute to all of the sectors so that we can get our
economy going again.
I urge my colleagues to support this amendment and the underlying
legislation.
I reserve the balance of my time.
{time} 1245
Ms. VELAZQUEZ. Madam Chair, while I am not opposed to the amendment,
I rise to claim the time in opposition.
The Acting CHAIR. Without objection, the gentlewoman from New York is
recognized for 5 minutes.
There was no objection.
Ms. VELAZQUEZ. America's small businesses have always pioneered new
economic fields and sectors. Today, small businesses continue to be
some of our most creative innovators. As our Nation shifts away from
the fossil fuels and seeks clean sources of energy, entrepreneurs are
leading the way. Today, small businesses represent 90 percent of those
companies operating in the renewable and energy efficiency industries.
Small firms are also making important contributions in the realm of
life sciences and biomedicine, uncovering groundbreaking therapies and
medicines. Technologies used in our national defense have also been
advanced by small businesses. Components of the Predator drone, for
instance, were developed by small firms. And small businesses are
helping develop new information technology and digital media services
that better connect our world.
The United States must continue to lead in all these areas if our
economy is to remain strong in the long term. This type of innovation
creates good-paying, highly skilled jobs. However, before these
businesses can develop the next game-changing defense technology,
unearth the next medical breakthrough, or discover a new source of
clean energy, they need capital. The amendment before us simply ensures
that the Small Business Early-Stage Investment program is targeted to
fields like these, where there will be the biggest payoff for economic
growth and job creation.
Madam Chair, this is a good amendment. It will ensure the industries
of tomorrow and future companies can secure financing to get off the
ground. I urge my colleagues to vote ``yes.''
I yield the balance of my time to the gentleman from Missouri (Mr.
Graves).
Mr. GRAVES of Missouri. Thank you, Madam Chair.
Madam Chair, I rise in support of the amendment from the gentlewoman
from California. If we're going to enact a program that's designed to
target investment in certain industries, then selection of the
applicants should be based on the likelihood that a venture capital
company will make those amendments. As a result, I believe it provides
a very important technical clarification to the bill, and I support it.
Ms. LORETTA SANCHEZ of California. Madam Chair, first, I would like
to thank our great chairwoman of the Small Business Committee. I know
that she's a little under the weather
[[Page H4539]]
today, so we really appreciate that she would come down and speak on
our amendment.
As a Californian, I continue to go back every week to my district,
and our small businesses are ailing. They're asking for help. They're
holding on. A lot of them have not been able to make it through. Those
who are still holding on are waiting for us to help them to do
something.
About a month ago, I had Chairman Bernanke before us in the Joint
Economic Committee. And we talked about the fact that we need--really--
we need to help small business. Small business is really where the
hiring of America happens. So if they're ailing, then there will be
unemployment. So I really believe in this bill. I thank those who have
worked on it. I urge a ``yes'' vote on the underlying bill and on this
amendment.
I have no further requests for time, and I yield back the balance of
my time.
The Acting CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Loretta Sanchez).
The amendment was agreed to.
Amendment No. 14 offered by Mr. Cuellar
The Acting CHAIR. It is now in order to consider amendment No. 14
printed in part C of House Report 111-506.
Mr. CUELLAR. Madam Chair, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 14 offered by Mr. Cuellar:
Page 21, after line 18, insert the following new paragraph
(and redesignate succeeding paragraphs accordingly):
(4) increasing the opportunity for small business
development in areas with high unemployment rates that exceed
the national average;
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Texas (Mr. Cuellar) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Texas.
Mr. CUELLAR. Madam Chair, I yield myself such time as I may consume.
I rise today in support of my amendment to H.R. 5297, the Small
Business Lending Act of 2010. The concept of this bill is simple:
Create a lending fund to help small businesses get important capital.
This bill will help stabilize our economy and create jobs. And
certainly I want to thank the chairwoman from New York and the
gentlewoman from Illinois also for the work that they all have been
working on.
My particular commonsense amendment is straightforward. My amendment
requires that the Secretary take into consideration those areas with
high unemployment rates that exceed the national average. This
consideration will increase opportunities for small business
development in places where it's needed the most. The national
unemployment rate is about 9.7, as of last month. There are certain
communities suffering at rates severely above the State and national
average for unemployment.
Like many counties across the Nation, counties in my congressional
district are particularly higher than the national rate. One of my
counties, Starr County in south Texas, has a high of 17.3 unemployment
rate. Hidalgo County is another one, at an 11.1 unemployment rate.
Again, this is not a partisan matter. Areas throughout the country have
unemployment rates that exceed the national average.
This is a matter of importance to every worker and family and
businessperson. And that's why this bill is good for the backbone of
American small businesses, in many ways, the Nation's economic engine.
I urge all of my colleagues to support this bill.
At this time I will yield 1\1/2\ minutes to the gentleman from North
Carolina (Mr. Etheridge).
Mr. ETHERIDGE. Madam Chair, I thank Mr. Cuellar for offering this
amendment to make sure that creating jobs where they are needed most is
the focus of this piece of legislation.
As a former small businessman myself, I call on the House to pass
this important piece of legislation. Small businesses form the backbone
of our economy and create jobs that we need to continue our recovery.
But far too many are having difficulty getting the credit they need to
grow and expand.
Today we have the opportunity to do more than just praise small
businesses and lament the credit crunch. We have a bill that frees up
$30 billion directly for small businesses across our communities that
are responsible for job growth in our country. Business leaders in
Smithfield, community bankers in Dunn, and folks across my district in
North Carolina have said that what they need most is to expand credit,
and have shared their support of this initiative with me.
Today, we have an opportunity to provide real help for our Main
Street businesses. Let us avoid partisan bickering, end the delay, and
pass this piece of legislation now.
Mr. NEUGEBAUER. Madam Chair, I rise to claim time in opposition,
although I am not opposed to the bill.
The Acting CHAIR. Without objection, the gentleman from Texas is
recognized for 5 minutes.
There was no objection.
Mr. NEUGEBAUER. I thank my friend from Texas.
I think this is a commonsense amendment. I think if you're going to
do this program--certainly, I don't support the underlying program, but
if we are going to do it, we are going to put this capital into some of
these banks for lending, it certainly ought to be in areas where they
have the highest unemployment. That makes sense.
I still think we can do better for small businesses by providing an
environment where there's less uncertainty; more certainty on what the
tax situation is going to be, and less uncertainty about what the
regulatory environment is going to be. But I think the gentleman's
amendment makes the underlying bill better. So we would not object to
it.
I yield back the balance of my time.
Mr. CUELLAR. Madam Chair, I thank my colleague from Texas, and thank
him for the kind words. And I appreciate it. I thank him for the work
that he's been doing.
At this time, Madam Chair, I'd certainly just want to ask my
colleagues to support this. I'm also a former small businessperson, and
I understand how hard capital can be to get to the small businesses. So
I would ask Members to support my amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Texas (Mr. Cuellar).
The amendment was agreed to.
Amendment No. 15 Offered by Mr. Braley of Iowa
The Acting CHAIR. It is now in order to consider amendment No. 15
printed in part C of House Report 111-506.
Mr. BRALEY of Iowa. Madam Chair, I have an amendment at the desk made
in order under the rule.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 15 offered by Mr. Braley of Iowa:
Add at the end the following new title:
TITLE IV--PLAIN WRITING ACT
SECTION 401. SHORT TITLE.
This title may be cited as the ``Plain Writing Act of
2010''.
SEC. 402. PURPOSE.
The purpose of this title is to improve the effectiveness
and accountability of Federal agencies to the public by
promoting clear Government communication that the public can
understand and use.
SEC. 403. DEFINITIONS.
In this title:
(1) Agency.--The term ``agency'' means the Department of
the Treasury and the Small Business Administration.
(2) Covered document.--The term ``covered document''--
(A) means any document that--
(i) is relevant to obtaining any Federal Government benefit
or service provided under title I, II, or III;
(ii) provides information about any Federal Government
benefit or service provided under title I, II, or III; or
(iii) explains to the public how to comply with a
requirement the Federal Government administers or enforces
under title I, II, or III;
(B) includes (whether in paper or electronic form) a
letter, publication, form, notice, or instruction; and
(C) does not include a regulation.
(3) Plain writing.--The term ``plain writing'' means
writing that the intended audience can readily understand and
use because that writing is clear, concise, well-organized,
and follows other best practices of plain writing.
SEC. 404. RESPONSIBILITIES OF FEDERAL AGENCIES.
(a) Preparation for Implementation of Plain Writing
Requirements.--
[[Page H4540]]
(1) In general.--Not later than 9 months after the date of
enactment of this title, the head of each agency shall--
(A) designate 1 or more senior officials within the agency
to oversee the agency implementation of this title;
(B) communicate the requirements of this title to the
employees of the agency;
(C) train employees of the agency in plain writing;
(D) establish a process for overseeing the ongoing
compliance of the agency with the requirements of this title;
(E) create and maintain a plain writing section of the
agency's website that is accessible from the homepage of the
agency's website; and
(F) designate 1 or more agency points-of-contact to receive
and respond to public input on--
(i) agency implementation of this title; and
(ii) the agency reports required under section 405.
(2) Website.--The plain writing section described under
paragraph (1)(E) shall--
(A) inform the public of agency compliance with the
requirements of this title; and
(B) provide a mechanism for the agency to receive and
respond to public input on--
(i) agency implementation of this title; and
(ii) the agency reports required under section 405.
(b) Requirement To Use Plain Writing in New Documents.--
Beginning not later than 1 year after the date of enactment
of this title, each agency shall use plain writing in every
covered document of the agency that the agency issues or
substantially revises.
(c) Guidance.--In carrying out the provisions of this
title, agencies may follow the guidance of--
(1) the writing guidelines developed by the Plain Language
Action and Information Network; or
(2) guidance provided by the head of the agency.
SEC. 405. REPORTS TO CONGRESS.
(a) Initial Report.--Not later than 9 months after the date
of enactment of this title, the head of each agency shall
publish on the plain writing section of the agency's website
a report that describes the agency plan for compliance with
the requirements of this title.
(b) Annual Compliance Report.--Not later than 18 months
after the date of enactment of this title, and annually
thereafter, the head of each agency shall publish on the
plain writing section of the agency's website a report on
agency compliance with the requirements of this title.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Iowa (Mr. Braley) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Iowa.
Mr. BRALEY of Iowa. Madam Chair, I yield myself such time as I may
consume.
My amendment to H.R. 5297 is a commonsense bill that is consistent
with what we've already passed in the 111th Congress by a vote of 386-
33 on March 17. It was my Plain Language in Government Communications
Act.
Madam Chairwoman, when I go back and I talk to small business owners
in my district, one of their biggest complaints is a Federal
bureaucracy with too much red tape, written in language they can't
understand, which forces them to go hire lawyers and accountants so
that they can understand the requirements that we impose upon them.
My amendment would require plain language to be used for documents
that go to the public related to this lending fund. It will improve the
effectiveness and accountability of the Department of the Treasury and
the Small Business Administration by promoting clear government
communication that the public can understand and use.
Plain language is writing that the intended audience can clearly
understand because it is concise, well-organized, and follows other
practices of plain writing. The Department of the Treasury and Small
Business Administration will be required to implement plain writing
requirements by designating a senior official to oversee the
implementation of the provision; communicate the requirements to
employees; train employees in plain writing; establish a process to
oversee compliance; create a plain language requirement on their
agency's Web site; and designate one or more agency points of contact
to receive and respond to public feedback.
Writing government documents in plain language will increase
government accountability and save taxpayers, community banks, and
small business owners time and money. Plain, straightforward language
makes it easier to understand these loan documents. And my amendment
will make it easier for small businesses and community banks to work
with and understand the government. That is why it is so important that
we move forward to implement plain writing requirements across the
board, but particularly in these two agencies, as it relates to the
loan programs that are under consideration.
I reserve the balance of my time.
Mr. NEUGEBAUER. Madam Chair, I claim opposition to the amendment, but
I am not opposed to it.
The Acting CHAIR. Without objection, the gentleman is recognized for
5 minutes.
There was no objection.
Mr. NEUGEBAUER. Well, I thank the gentleman for this commonsense
amendment. It's unfortunate that we have to bring an amendment to the
floor of the House of Representatives to tell government agencies to
write out the instructions in plain English. But I appreciate the
gentleman's amendment. I think it makes the bill better.
I yield back the balance of my time.
Mr. BRALEY of Iowa. Madam Chair, I would yield 1 minute to the
gentlewoman from Illinois (Ms. Bean).
Ms. BEAN. Madam Chairwoman, I just want to acknowledge Congressman
Braley's efforts recognizing the challenges Americans have reading many
government documents, particularly lending disclosures, which are very
difficult to understand. This amendment is a commonsense approach to
making the program more accessible. And I commend his leadership to
expand plain language to all government documents.
Mr. BRALEY of Iowa. Madam Chairwoman, I think that the comments that
you've heard are indicative of what's wrong with the way the government
agencies write their documents. I think it is deplorable that we have
to take this action.
But the sad truth is, anybody who's looked at these loan documents
knows how serious this problem is. I think this is a small step in the
right direction. I call this ``the little engine that could.'' I think
if we implement this across the board in federal agencies, American
taxpayers and consumers of Federal information will be much better off.
And I urge my colleagues to vote in support of the amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Iowa (Mr. Braley).
The amendment was agreed to.
Amendment No. 16 Offered by Mr. Loebsack
The Acting CHAIR. It is now in order to consider amendment No. 16
printed in part C of House Report 111-506.
Mr. LOEBSACK. Madam Chair, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 16 offered by Mr. Loebsack:
Add at the end the following new title:
TITLE IV--SENSE OF CONGRESS ON AGRICULTURE AND FARMING SMALL BUSINESS
LOANS
SEC. 401. SENSE OF CONGRESS.
It is the sense of the Congress that--
(1) agriculture operations, farms, and rural communities
should receive equal consideration through lending activities
for small businesses in this Act, particularly small- and
mid-size farms and agriculture operations; and
(2) attention should be given to ensuring there is adequate
small business credit and financing availability under this
Act in the agriculture and farming sectors.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Iowa (Mr. Loebsack) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Iowa.
Mr. LOEBSACK. Madam Chair, I yield myself such time as I may consume.
My amendment is simple. It states that farmers and rural communities
should receive equal consideration through lending activities for small
businesses, particularly our Nation's small- and mid-sized farms and
agriculture operations, which make up the majority of our agriculture
community.
It also states that we should give attention to ensuring that there
is adequate credit and financing available in the agriculture and
farming sectors.
While the amendment itself is simple, the issue is not. Throughout
this
[[Page H4541]]
economic downtown, our rural communities and farmers have been
struggling, just as our major metro areas have been. Many areas in my
district in Iowa have unemployment rates above the national average. I
have also seen examples of agriculture operations having a difficult
time finding financing, and I have worked to try to assist such
operations.
{time} 1300
Unfortunately, our farmers and rural communities are often not
discussed in the broader debate on how to encourage economic recovery.
The persistence of rural poverty and hunger and the lack of rural
development often go underreported as well. On a positive note, I was
pleased to recently hold a series of rural development roundtables in
my district with the under Secretary for Rural Development, Dallas
Tonsager. I hope we can continue to build momentum nationally and
ensure our farmers in rural communities can contribute to continued
economic recovery.
Agriculture and our Nation's farmers are consistently strong
contributors to the economy and are certainly vital for the survival of
our rural communities and vice versa. Many of our rural areas were
struggling even before the downturn, and we continue to see a decline
in the number of farmers and rural businesses. Often the loss of one
rural business can have a domino effect throughout the community and
surrounding areas. I think we need to be vigilant in bringing rural and
farming issues to the forefront of the debates we have on economic
development and, additionally, look at policies to promote access to
and the development of new food market and supply chain improvements
and related rural businesses.
I hope my colleagues will agree on the need to bring attention to
expanding the opportunities for agriculture and farming to contribute
to the national and local economic recovery.
I reserve the balance of my time.
Mr. NEUGEBAUER. I rise to claim the time in opposition, although I am
not opposed to the amendment.
The Acting CHAIR. Without objection, the gentleman from Texas is
recognized for 5 minutes.
There was no objection.
Mr. NEUGEBAUER. As the provisions in the bill say, loans to farmers
in rural areas count as small business lending under the provisions of
this bill. But just like the sponsor of the bill, I represent an
agricultural district and understand how important access to credit is
for farmers. I think this sense of Congress emphasizes that farming and
ranching and agriculture is an integral part of our economy. It is an
integral part of our small business community, and I think it
highlights that. So I appreciate the gentleman from Iowa bringing that
forward. I support the amendment.
I yield back the balance of my time.
Mr. LOEBSACK. Madam Speaker, I want to thank my colleagues for their
consideration of this amendment, and I want to urge its passage, and I
yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Iowa (Mr. Loebsack).
The amendment was agreed to.
Amendment No. 17 Offered by Mr. Al Green of Texas
The Acting CHAIR. It is now in order to consider amendment No. 17
printed in part C of House Report 111-506.
Mr. AL GREEN of Texas. Madam Chair, as the designee of the
gentlewoman from California, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 17 offered by Mr. Al Green of Texas:
Page 11, line 2, before the period insert the following:
``, as well as a plan to provide linguistically and
culturally appropriate outreach, where appropriate''.
Page 18, line 8, after ``provide'' insert the following:
``linguistically and culturally appropriate''.
Page 18, line 9, strike ``appropriate language of the''.
Page 21, line 13, after ``funding to'' insert the
following: ``minority-owned eligible institutions and
other''.
Page 26, line 2, insert after the period the following:
``To the extent possible, the Secretary shall disaggregate
the results of such study by ethnic group and gender.''.
The Acting CHAIR. Pursuant to House Resolution 1436, the gentleman
from Texas and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Texas.
Mr. AL GREEN of Texas. Madam Chair, this amendment is one that will
add additional language to the requirement that there be minority
outreach in this program. It's important for me to state that I have a
district that I represent that is currently about 36 percent African
American, 31 percent Latino, 21 percent Anglo, and 12 percent Asian.
It's important to note that in my district the ballot is printed in
three languages. It's printed in English, Spanish and Vietnamese.
This amendment furthers the notion that persons who speak languages
other than English will have an opportunity to have materials that are
linguistically and culturally sensitive. This amendment would require
that appropriate materials, when published, be in languages that are
culturally and linguistically sensitive. It also requires that
advertising receive the same sort of consideration, given that we are
trying to reach markets wherein we do have persons who can better
understand what is being conveyed if they have the opportunity to do so
in a language that they are comfortable with.
By the way, I would add that many people who speak English have
difficulty with financial documents, as was indicated by a previous
amendment. Imagine, if you will, speaking English, but it is not a
language that you are as comfortable with as perhaps another language.
This would assist persons with the understanding that they should have,
so as to participate in the program.
The amendment also would have data disaggregated. We find that the
information that we collect too often does not disaggregate as it
relates to the Asian American community, and we would have this
information disaggregated so that we might ascertain whether or not we
have persons who are not only of wealth in the community but also find
out about persons who may not be as wealthy as many others.
With this said, I will reserve the balance of my time.
Mr. NEUGEBAUER. I rise to claim the time in opposition, although I am
not opposed to the bill.
The Acting CHAIR. Without objection, the gentleman from Texas is
recognized for 5 minutes.
There was no objection.
Mr. NEUGEBAUER. I thank the gentleman for that. Basically, the
amendment would require an applicant for the Small Business Lending
Fund to plan for logistically and culturally appropriate outreach and
require that such outreach is performed after receiving the funds. I
think that could be appropriate there. And as I understand it, the
requirements of this fall to the eligible institutions; and there's no
additional money appropriated for that; but they would do that out of
their own operating expenses. Is that correct?
Mr. AL GREEN of Texas. If the gentleman yields, I would add that your
assumption is correct.
Mr. NEUGEBAUER. Thank you. I appreciate it.
I yield back the balance of my time.
Mr. AL GREEN of Texas. Madam Chair, at this time I yield as much time
as she may consume to the gentlewoman from California (Ms. Chu).
Ms. CHU. Madam Chair, the Small Business Lending Fund Act is critical
to helping small businesses across the country and is, therefore,
critical to helping people because small businesses create more jobs
than anyone else. Small businesses sustain their communities.
Our amendment ensures that we don't leave minority business owners
behind. Minority businesses need every opportunity to grow, create
jobs, and contribute to their community. But there are barriers. Our
amendment makes sure that bank lending plans, outreach, and advertising
are culturally and linguistically appropriate for diverse sets of
businesses. This provision is essential for the Asian American and
Pacific Islander communities because government programs can miss
important details when they don't account for cultural and linguistic
differences.
Take the Census Bureau, for instance, which provides so many funds
[[Page H4542]]
for our communities. Earlier this year, they mistranslated parts of the
Vietnamese census forms. The forms used a phrase connected to the
previous governmental regime which meant ``government investigation''
in place of the word ``census.'' Clearly this was no minor gaffe. The
language in this amendment ensures that future outreach doesn't repeat
these mistakes, that is, excluding deserving businesses from great
opportunities.
But it's not just minority businesses that need access to this
program. Minority-owned banks also deserve the right to compete. That's
why our amendment makes sure such institutions receive consideration
during the program's implementation. Minority-owned banks play a vital
role in the Asian Pacific Islander and minority business development
endeavor; and together they enhance the country's economic recovery and
long-term growth. Minority firms currently provide nearly 5 million
steady jobs but could potentially create over 11 million more. Our
amendment helps them do so.
I ask my colleagues to support this amendment because it eliminates
obstacles in the way of our Nation's minority businesses and
facilitates their growth during these very tough economic times.
Mr. AL GREEN of Texas. I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Texas (Mr. Al Green).
The amendment was agreed to.
Ms. BEAN. Madam Chair, I move that the Committee do now rise.
The motion was agreed to.
Accordingly, the Committee rose; and the Speaker pro tempore (Ms.
Chu) having assumed the chair, Ms. Norton, Acting Chair of the
Committee of the Whole House on the State of the Union, reported that
that Committee, having had under consideration the bill (H.R. 5297) to
create the Small Business Lending Fund Program to direct the Secretary
of the Treasury to make capital investments in eligible institutions in
order to increase the availability of credit for small businesses, and
for other purposes, had come to no resolution thereon.
____________________