[Congressional Record Volume 166, Number 163 (Monday, September 21, 2020)]
[House]
[Pages H4597-H4602]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1600
ENSURING DIVERSITY IN COMMUNITY BANKING ACT OF 2019
Mr. SHERMAN. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 5322) to establish or modify requirements relating to
minority depository institutions, community development financial
institutions, and impact banks, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5322
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Ensuring
Diversity in Community Banking Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Sense of Congress on funding the loan-loss reserve fund for
small dollar loans.
Sec. 3. Definitions.
Sec. 4. Inclusion of women's banks in the definition of minority
depository institution.
Sec. 5. Establishment of impact bank designation.
Sec. 6. Minority Depositories Advisory Committees.
Sec. 7. Federal deposits in minority depository institutions.
Sec. 8. Minority Bank Deposit Program.
Sec. 9. Diversity report and best practices.
Sec. 10. Investments in minority depository institutions and impact
banks.
Sec. 11. Report on covered mentor-protege programs.
Sec. 12. Custodial deposit program for covered minority depository
institutions and impact banks.
Sec. 13. Streamlined community development financial institution
applications and reporting.
Sec. 14. Task force on lending to small business concerns.
Sec. 15. Discretionary surplus funds.
Sec. 16. Determination of Budgetary Effects.
SEC. 2. SENSE OF CONGRESS ON FUNDING THE LOAN-LOSS RESERVE
FUND FOR SMALL DOLLAR LOANS.
The sense of Congress is the following:
(1) The Community Development Financial Institutions Fund
(the ``CDFI Fund'') is an agency of the Department of the
Treasury, and was established by the Riegle Community
Development and Regulatory Improvement Act of 1994. The
mission of the CDFI Fund is ``to expand economic opportunity
for underserved people and communities by supporting the
growth and capacity of a national network of community
development lenders, investors, and financial service
providers''. A community development financial institution (a
``CDFI'') is a specialized financial institution serving low-
income communities and a Community Development Entity (a
``CDE'') is a domestic corporation or partnership that is an
intermediary vehicle for the provision of loans, investments,
or financial counseling in low-income communities. The CDFI
Fund certifies CDFIs and CDEs. Becoming a certified CDFI or
CDE allows organizations to participate in various CDFI Fund
programs as follows:
(A) The Bank Enterprise Award Program, which provides FDIC-
insured depository institutions awards for a demonstrated
increase in lending and investments in distressed communities
and CDFIs.
(B) The CDFI Program, which provides Financial and
Technical Assistance awards to CDFIs to reinvest in the CDFI,
and to build the capacity of the CDFI, including financing
product development and loan loss reserves.
(C) The Native American CDFI Assistance Program, which
provides CDFIs and sponsoring entities Financial and
Technical Assistance awards to increase lending and grow the
number of CDFIs owned by Native Americans to help build
capacity of such CDFIs.
(D) The New Market Tax Credit Program, which provides tax
credits for making equity investments in CDEs that stimulate
capital investments in low-income communities.
(E) The Capital Magnet Fund, which provides awards to CDFIs
and nonprofit affordable housing organizations to finance
affordable housing solutions and related economic development
activities.
(F) The Bond Guarantee Program, a source of long-term,
patient capital for CDFIs to expand lending and investment
capacity for community and economic development purposes.
(2) The Department of the Treasury is authorized to create
multi-year grant programs designed to encourage low-to-
moderate income individuals to establish accounts at
federally insured banks, and to improve low-to-moderate
income individuals' access to such accounts on reasonable
terms.
(3) Under this authority, grants to participants in CDFI
Fund programs may be used for loan-loss reserves and to
establish small-dollar loan programs by subsidizing related
losses. These grants also allow for the providing recipients
with the financial counseling and education necessary to
conduct transactions and manage their accounts. These loans
provide low-cost alternatives to payday loans and other
nontraditional forms of financing that often impose excessive
interest rates and fees on borrowers, and lead millions of
Americans to fall into debt traps. Small-dollar loans can
only be made pursuant to terms, conditions, and practices
that are reasonable for the individual consumer obtaining the
loan.
(4) Program participation is restricted to eligible
institutions, which are limited to organizations listed in
section 501(c)(3) of the Internal Revenue Code and exempt
from tax under 501(a) of such Code, federally insured
depository institutions, community development financial
institutions and State, local, or Tribal government entities.
(5) Since its founding, the CDFI Fund has awarded over
$3,300,000,000 to CDFIs and CDEs, allocated $54,000,000,000
in tax credits,
[[Page H4598]]
and $1,510,000,000 in bond guarantees. According to the CDFI
Fund, some programs attract as much as $10 in private capital
for every $1 invested by the CDFI Fund. The Administration
and the Congress should prioritize appropriation of funds for
the loan loss reserve fund and technical assistance programs
administered by the Community Development Financial
Institution Fund.
SEC. 3. DEFINITIONS.
In this Act:
(1) Community development financial institution.--The term
``community development financial institution'' has the
meaning given under section 103 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C.
4702).
(2) Minority depository institution.--The term ``minority
depository institution'' has the meaning given under section
308 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 1463 note), as amended by
this Act.
SEC. 4. INCLUSION OF WOMEN'S BANKS IN THE DEFINITION OF
MINORITY DEPOSITORY INSTITUTION.
Section 308(b)(1) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463 note)
is amended--
(1) by redesignating subparagraphs (A), (B), and (C) as
clauses (i), (ii), and (iii), respectively;
(2) by striking ``means any'' and inserting the following:
``means--
``(A) any''; and
(3) in clause (iii) (as so redesignated), by striking the
period at the end and inserting ``; or''; and
(4) by inserting at the end the following new subparagraph:
``(B) any bank described in clause (i), (ii), or (iii) of
section 19(b)(1)(A) of the Federal Reserve Act--
``(i) more than 50 percent of the outstanding shares of
which are held by 1 or more women; and
``(ii) the majority of the directors on the board of
directors of which are women.''.
SEC. 5. ESTABLISHMENT OF IMPACT BANK DESIGNATION.
(a) In General.--Each Federal banking agency shall
establish a program under which a depository institution with
total consolidated assets of less than $10,000,000,000 may
elect to be designated as an impact bank if the total dollar
value of the loans extended by such depository institution to
low-income borrowers is greater than or equal to 50 percent
of the assets of such bank.
(b) Notification of Eligibility.--Based on data obtained
through examinations of depository institutions, the
appropriate Federal banking agency shall notify a depository
institution if the institution is eligible to be designated
as an impact bank.
(c) Application.--Regardless of whether or not it has
received a notice of eligibility under subsection (b), a
depository institution may submit an application to the
appropriate Federal banking agency--
(1) requesting to be designated as an impact bank; and
(2) demonstrating that the depository institution meets the
applicable qualifications.
(d) Limitation on Additional Data Requirements.--The
Federal banking agencies may only impose additional data
collection requirements on a depository institution under
this section if such data is--
(1) necessary to process an application submitted by the
depository institution to be designated an impact bank; or
(2) with respect to a depository institution that is
designated as an impact bank, necessary to ensure the
depository institution's ongoing qualifications to maintain
such designation.
(e) Removal of Designation.--If the appropriate Federal
banking agency determines that a depository institution
designated as an impact bank no longer meets the criteria for
such designation, the appropriate Federal banking agency
shall rescind the designation and notify the depository
institution of such rescission.
(f) Reconsideration of Designation; Appeals.--Under such
procedures as the Federal banking agencies may establish, a
depository institution may--
(1) submit to the appropriate Federal banking agency a
request to reconsider a determination that such depository
institution no longer meets the criteria for the designation;
or
(2) file an appeal of such determination.
(g) Rulemaking.--Not later than 1 year after the date of
the enactment of this Act, the Federal banking agencies shall
jointly issue rules to carry out the requirements of this
section, including by providing a definition of a low-income
borrower.
(h) Reports.--Each Federal banking agency shall submit an
annual report to the Congress containing a description of
actions taken to carry out this section.
(i) Federal Deposit Insurance Act Definitions.--In this
section, the terms ``depository institution'', ``appropriate
Federal banking agency'', and ``Federal banking agency'' have
the meanings given such terms, respectively, in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813).
SEC. 6. MINORITY DEPOSITORIES ADVISORY COMMITTEES.
(a) Establishment.--Each covered regulator shall establish
an advisory committee to be called the ``Minority
Depositories Advisory Committee''.
(b) Duties.--Each Minority Depositories Advisory Committee
shall provide advice to the respective covered regulator on
meeting the goals established by section 308 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1463 note) to preserve the present number of
covered minority institutions, preserve the minority
character of minority-owned institutions in cases involving
mergers or acquisitions, provide technical assistance, and
encourage the creation of new covered minority institutions.
The scope of the work of each such Minority Depositories
Advisory Committee shall include an assessment of the current
condition of covered minority institutions, what regulatory
changes or other steps the respective agencies may be able to
take to fulfill the requirements of such section 308, and
other issues of concern to covered minority institutions.
(c) Membership.--
(1) In general.--Each Minority Depositories Advisory
Committee shall consist of no more than 10 members, who--
(A) shall serve for one two-year term;
(B) shall serve as a representative of a depository
institution or an insured credit union with respect to which
the respective covered regulator is the covered regulator of
such depository institution or insured credit union; and
(C) shall not receive pay by reason of their service on the
advisory committee, but may receive travel or transportation
expenses in accordance with section 5703 of title 5, United
States Code.
(2) Diversity.--To the extent practicable, each covered
regulator shall ensure that the members of the Minority
Depositories Advisory Committee of such agency reflect the
diversity of covered minority institutions.
(d) Meetings.--
(1) In general.--Each Minority Depositories Advisory
Committee shall meet not less frequently than twice each
year.
(2) Notice and invitations.--Each Minority Depositories
Advisory Committee shall--
(A) notify the Committee on Financial Services of the House
of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate in advance of each meeting of the
Minority Depositories Advisory Committee; and
(B) invite the attendance at each meeting of the Minority
Depositories Advisory Committee of--
(i) one member of the majority party and one member of the
minority party of the Committee on Financial Services of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate; and
(ii) one member of the majority party and one member of the
minority party of any relevant subcommittees of such
committees.
(e) No Termination of Advisory Committees.--The termination
requirements under section 14 of the Federal Advisory
Committee Act (5 U.S.C. app.) shall not apply to a Minority
Depositories Advisory Committee established pursuant to this
section.
(f) Definitions.--In this section:
(1) Covered regulator.--The term ``covered regulator''
means the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, the Federal Deposit Insurance
Corporation, and the National Credit Union Administration.
(2) Covered minority institution.--The term ``covered
minority institution'' means a minority depository
institution (as defined in section 308(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1463 note)).
(3) Depository institution.--The term ``depository
institution'' has the meaning given under section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
(4) Insured credit union.--The term ``insured credit
union'' has the meaning given in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(g) Technical Amendment.--Section 308(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1463 note) is amended by adding at the end the
following new paragraph:
``(3) Depository institution.--The term `depository
institution' means an `insured depository institution' (as
defined in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)) and an insured credit union (as defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752)).''.
SEC. 7. FEDERAL DEPOSITS IN MINORITY DEPOSITORY INSTITUTIONS.
(a) In General.--Section 308 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463
note) is amended--
(1) by adding at the end the following new subsection:
``(d) Federal Deposits.--The Secretary of the Treasury
shall ensure that deposits made by Federal agencies in
minority depository institutions and impact banks are
collateralized or insured, as determined by the Secretary.
Such deposits shall include reciprocal deposits as defined in
section 337.6(e)(2)(v) of title 12, Code of Federal
Regulations (as in effect on March 6, 2019).''; and
(2) in subsection (b), as amended by section 6(g), by
adding at the end the following new paragraph:
``(4) Impact bank.--The term `impact bank' means a
depository institution designated by the appropriate Federal
banking agency pursuant to section 5 of the Ensuring
Diversity in Community Banking Act.''.
(b) Technical Amendments.--Section 308 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1463 note) is amended--
(1) in the matter preceding paragraph (1), by striking
``section--'' and inserting ``section:''; and
[[Page H4599]]
(2) in the paragraph heading for paragraph (1), by striking
``financial'' and inserting ``depository''.
SEC. 8. MINORITY BANK DEPOSIT PROGRAM.
(a) In General.--Section 1204 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811
note) is amended to read as follows:
``SEC. 1204. EXPANSION OF USE OF MINORITY DEPOSITORY
INSTITUTIONS.
``(a) Minority Bank Deposit Program.--
``(1) Establishment.--There is established a program to be
known as the `Minority Bank Deposit Program' to expand the
use of minority depository institutions.
``(2) Administration.--The Secretary of the Treasury,
acting through the Fiscal Service, shall--
``(A) on application by a depository institution or credit
union, certify whether such depository institution or credit
union is a minority depository institution;
``(B) maintain and publish a list of all depository
institutions and credit unions that have been certified
pursuant to subparagraph (A); and
``(C) periodically distribute the list described in
subparagraph (B) to--
``(i) all Federal departments and agencies;
``(ii) interested State and local governments; and
``(iii) interested private sector companies.
``(3) Inclusion of certain entities on list.--A depository
institution or credit union that, on the date of the
enactment of this section, has a current certification from
the Secretary of the Treasury stating that such depository
institution or credit union is a minority depository
institution shall be included on the list described under
paragraph (2)(B).
``(b) Expanded Use Among Federal Departments and
Agencies.--
``(1) In general.--Not later than 1 year after the
establishment of the program described in subsection (a), the
head of each Federal department or agency shall develop and
implement standards and procedures to prioritize, to the
maximum extent possible as permitted by law and consistent
with principles of sound financial management, the use of
minority depository institutions to hold the deposits of each
such department or agency.
``(2) Report to congress.--Not later than 2 years after the
establishment of the program described in subsection (a), and
annually thereafter, the head of each Federal department or
agency shall submit to Congress a report on the actions taken
to increase the use of minority depository institutions to
hold the deposits of each such department or agency.
``(c) Definitions.--For purposes of this section:
``(1) Credit union.--The term `credit union' has the
meaning given the term `insured credit union' in section 101
of the Federal Credit Union Act (12 U.S.C. 1752).
``(2) Depository institution.--The term `depository
institution' has the meaning given in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
``(3) Minority depository institution.--The term `minority
depository institution' has the meaning given that term under
section 308 of this Act.''.
(b) Conforming Amendments.--The following provisions are
amended by striking ``1204(c)(3)'' and inserting ``1204(c)'':
(1) Section 808(b)(3) of the Community Reinvestment Act of
1977 (12 U.S.C. 2907(b)(3)).
(2) Section 40(g)(1)(B) of the Federal Deposit Insurance
Act (12 U.S.C. 1831q(g)(1)(B)).
(3) Section 704B(h)(4) of the Equal Credit Opportunity Act
(15 U.S.C. 1691c-2(h)(4)).
SEC. 9. DIVERSITY REPORT AND BEST PRACTICES.
(a) Annual Report.--Each covered regulator shall submit to
Congress an annual report on diversity including the
following:
(1) Data, based on voluntary self-identification, on the
racial, ethnic, and gender composition of the examiners of
each covered regulator, disaggregated by length of time
served as an examiner.
(2) The status of any examiners of covered regulators,
based on voluntary self-identification, as a veteran.
(3) Whether any covered regulator, as of the date on which
the report required under this section is submitted, has
adopted a policy, plan, or strategy to promote racial,
ethnic, and gender diversity among examiners of the covered
regulator.
(4) Whether any special training is developed and provided
for examiners related specifically to working with depository
institutions and credit unions that serve communities that
are predominantly minorities, low income, or rural, and the
key focus of such training.
(b) Best Practices.--Each Office of Minority and Women
Inclusion of a covered regulator shall develop, provide to
the head of the covered regulator, and make publicly
available best practices--
(1) for increasing the diversity of candidates applying for
examiner positions, including through outreach efforts to
recruit diverse candidate to apply for entry-level examiner
positions; and
(2) for retaining and providing fair consideration for
promotions within the examiner staff for purposes of
achieving diversity among examiners.
(c) Covered Regulator Defined.--In this section, the term
``covered regulator'' means the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, and the National
Credit Union Administration.
SEC. 10. INVESTMENTS IN MINORITY DEPOSITORY INSTITUTIONS AND
IMPACT BANKS.
(a) Control for Certain Institutions.--Section 7(j)(8)(B)
of the Federal Deposit Insurance Act (12 U.S.C.
1817(j)(8)(B)) is amended to read as follows:
``(B) `control' means the power, directly or indirectly--
``(i) to direct the management or policies of an insured
depository institution; or
``(ii)(I) with respect to an insured depository
institution, of a person to vote 25 per centum or more of any
class of voting securities of such institution; or
``(II) with respect to an insured depository institution
that is an impact bank (as designated pursuant to section 5
of the Ensuring Diversity in Community Banking Act) or a
minority depository institution (as defined in section 308(b)
of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989), of an individual to vote 30 percent
or more of any class of voting securities of such an impact
bank or a minority depository institution.''.
(b) Rulemaking.--The Federal banking agencies (as defined
in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) shall jointly issue rules for de novo minority
depository institutions and de novo impact banks (as
designated pursuant to section 5) to allow 3 years to meet
the capital requirements otherwise applicable to minority
depository institutions and impact banks.
(c) Report.--Not later than 1 year after the date of the
enactment of this Act, the Federal banking agencies shall
jointly submit to Congress a report on--
(1) the principal causes for the low number of de novo
minority depository institutions during the 10-year period
preceding the date of the report;
(2) the main challenges to the creation of de novo minority
depository institutions and de novo impact banks; and
(3) regulatory and legislative considerations to promote
the establishment of de novo minority depository institutions
and de novo impact banks.
SEC. 11. REPORT ON COVERED MENTOR-PROTEGE PROGRAMS.
(a) Report.--Not later than 6 months after the date of the
enactment of this Act and annually thereafter, the Secretary
of the Treasury shall submit to Congress a report on
participants in a covered mentor-protege program, including--
(1) an analysis of outcomes of such program;
(2) the number of minority depository institutions that are
eligible to participate in such program but do not have large
financial institution mentors; and
(3) recommendations for how to match such minority
depository institutions with large financial institution
mentors.
(b) Definitions.--In this section:
(1) Covered mentor-protege program.--The term ``covered
mentor-protege program'' means a mentor-protege program
established by the Secretary of the Treasury pursuant to
section 45 of the Small Business Act (15 U.S.C. 657r).
(2) Large financial institution.--The term ``large
financial institution'' means any entity--
(A) regulated by the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, or the National Credit Union
Administration; and
(B) that has total consolidated assets greater than or
equal to $50,000,000,000.
SEC. 12. CUSTODIAL DEPOSIT PROGRAM FOR COVERED MINORITY
DEPOSITORY INSTITUTIONS AND IMPACT BANKS.
(a) In General.--Not later than one year after the date of
the enactment of this Act, the Secretary of the Treasury
shall issue rules establishing a custodial deposit program
under which a covered bank may receive deposits from a
qualifying account.
(b) Requirements.--In issuing rules under subsection (a),
the Secretary of the Treasury shall--
(1) consult with the Federal banking agencies;
(2) ensure each covered bank participating in the program
established under this section--
(A) has appropriate policies relating to management of
assets, including measures to ensure the safety and soundness
of each such covered bank; and
(B) is compliant with applicable law; and
(3) ensure, to the extent practicable that the rules do not
conflict with goals described in section 308(a) of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 1463 note).
(c) Limitations.--
(1) Deposits.--With respect to the funds of an individual
qualifying account, an entity may not deposit an amount
greater than the insured amount in a single covered bank.
(2) Total deposits.--The total amount of funds deposited in
a covered bank under the custodial deposit program described
under this section may not exceed the lesser of--
(A) 10 percent of the average amount of deposits held by
such covered bank in the previous quarter; or
(B) $100,000,000 (as adjusted for inflation).
(d) Report.--Each quarter, the Secretary of the Treasury
shall submit to Congress a report on the implementation of
the program established under this section including
information identifying participating covered
[[Page H4600]]
banks and the total amount of deposits received by covered
banks under the program.
(e) Definitions.--In this section:
(1) Covered bank.--The term ``covered bank'' means--
(A) a minority depository institution that is well
capitalized, as defined by the appropriate Federal banking
agency; or
(B) a depository institution designated pursuant to section
5 of the Ensuring Diversity in Community Banking Act that is
well capitalized, as defined by the appropriate Federal
banking agency.
(2) Insured amount.--The term ``insured amount'' means the
amount that is the greater of--
(A) the standard maximum deposit insurance amount (as
defined in section 11(a)(1)(E) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)(E))); or
(B) such higher amount negotiated between the Secretary of
the Treasury and the Federal Deposit Insurance Corporation
under which the Corporation will insure all deposits of such
higher amount.
(3) Federal banking agencies.--The terms ``appropriate
Federal banking agency'' and ``Federal banking agencies''
have the meaning given those terms, respectively, under
section 3 of the Federal Deposit Insurance Act.
(4) Qualifying account.--The term ``qualifying account''
means any account established in the Department of the
Treasury that--
(A) is controlled by the Secretary; and
(B) is expected to maintain a balance greater than
$200,000,000 for the following 24-month period.
SEC. 13. STREAMLINED COMMUNITY DEVELOPMENT FINANCIAL
INSTITUTION APPLICATIONS AND REPORTING.
(a) Application Processes.--Not later than 12 months after
the date of the enactment of this Act and with respect to any
person having assets under $3,000,000,000 that submits an
application for deposit insurance with the Federal Deposit
Insurance Corporation that could also become a community
development financial institution, the Federal Deposit
Insurance Corporation, in consultation with the Administrator
of the Community Development Financial Institutions Fund,
shall--
(1) develop systems and procedures to record necessary
information to allow the Administrator to conduct preliminary
analysis for such person to also become a community
development financial institution; and
(2) develop procedures to streamline the application and
annual certification processes and to reduce costs for such
person to become, and maintain certification as, a community
development financial institution.
(b) Implementation Report.--Not later than 18 months after
the date of the enactment of this Act, the Federal Deposit
Insurance Corporation shall submit to Congress a report
describing the systems and procedures required under
subsection (a).
(c) Annual Report.--
(1) In general.--Section 17(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1827(a)(1)) is amended--
(A) in subparagraph (E), by striking ``and'' at the end;
(B) by redesignating subparagraph (F) as subparagraph (G);
(C) by inserting after subparagraph (E) the following new
subparagraph:
``(F) applicants for deposit insurance that could also
become a community development financial institution (as
defined in section 103 of the Riegle Community Development
and Regulatory Improvement Act of 1994), a minority
depository institution (as defined in section 308 of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989), or an impact bank (as designated pursuant to
section 5 of the Ensuring Diversity in Community Banking
Act); and''.
(2) Application.--The amendment made by this subsection
shall apply with respect to the first report to be submitted
after the date that is 2 years after the date of the
enactment of this Act.
SEC. 14. TASK FORCE ON LENDING TO SMALL BUSINESS CONCERNS.
(a) In General.--Not later than 6 months after the date of
the enactment of this Act, the Administrator of the Small
Business Administration shall establish a task force to
examine methods for improving relationships between the Small
Business Administration and community development financial
institutions, minority depository institutions, and Impact
Banks to increase the volume of loans provided by such
institutions to small business concerns (as defined under
section 3 of the Small Business Act (15 U.S.C. 632)).
(b) Report to Congress.--Not later than 18 months after the
establishment of the task force described in subsection (a),
the Administrator of the Small Business Administration shall
submit to Congress a report on the findings of such task
force.
SEC. 15. DISCRETIONARY SURPLUS FUNDS.
(a) In General.--Subparagraph (A) of section 7(a)(3) of the
Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is amended by
reducing the dollar figure described in such subparagraph by
$1,400,000,000.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on September 30, 2030.
SEC. 16. DETERMINATION OF 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 statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in 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 SPEAKER pro tempore (Mr. Beyer). Pursuant to the rule, the
gentleman from California (Mr. Sherman) and the gentleman from South
Carolina (Mr. Timmons) each will control 20 minutes.
The Chair recognizes the gentleman from California.
General Leave
Mr. SHERMAN. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume.
I rise in strong support of H.R. 5322, the Ensuring Diversity in
Community Banking Act of 2019. I would like to thank Mr. Meeks, the
chairman of the Consumer Protection and Financial Institutions
Subcommittee for his leadership on this important issue.
For over 22 years I have worked and watched Mr. Meeks as he has
devoted prodigious quantities of his time and his considerable talents
to the matters of the Financial Services Committee, and H.R. 5322
reflects that kind of skill and effort.
The Financial Services Committee under the chairmanship of Ms. Waters
and Chairman Meeks of the subcommittee have prioritized examining the
important role of minority depository institutions, MDIs, and the role
they play in our financial system, and we have worked on developing
policies to support their efforts.
Over the course of a series of hearings in this Congress, the
committee has engaged with bank and credit union CEOs, with consumer
groups, with experts and regulators all about how Congress can help or
reverse the decline in our Nation's minority depository institutions,
MDIs, particularly Black-owned banks.
This is important because the data shows that MDIs serve the credit
needs of low-income areas and serve them well and that these areas have
a high percentage of the unbanked and underbanked.
Unfortunately, these institutions have shrunk in numbers in recent
years. The number peaked in 2008 at 215 MDI banks. Now that number is
at just 143 MDI banks as of the second quarter of 2020, representing
less than 3 percent of all FDIC-insured institutions.
In 2008 we had 41 Black-owned banks, and today we have 18. This calls
for congressional action.
Furthermore, during this pandemic, low-income and minority
communities have been hit the hardest. MDIs along with community
development financial institutions, CDFIs, have delivered relief to
these low-income communities during this pandemic. After Chairwoman
Waters and the other members of this committee fought hard to ensure
that MDIs and CDFIs could participate in the Paycheck Protection
Program, MDIs and CDFIs were able to provide some $16 billion of loans
to over 220,000 small businesses and minority-owned businesses across
the country.
But Congress must do more to support these institutions. Toward that
end, H.R. 5322 provides a series of reforms that will preserve, grow,
and encourage the chartering of new MDIs, as well as promote the
effective engagement between MDIs and prudential regulators.
This bill will encourage investments in MDIs, in part by
strengthening a minority bank deposit program so that Treasury deposits
Federal funds, funds which it manages in MDIs, thus providing MDIs with
more funds that they can then lend.
Furthermore, the bill encourages more partnerships between MDIs and
large banks through the Department of Treasury's mentor-protege
program, which should promote information sharing and more investments
in MDIs.
The bill also creates a new category of small banks called ``impact
banks'' that provide most of their lending to
[[Page H4601]]
low-income borrowers and would also benefit from some of the bill's
provisions to ensure that we can do all we can to support low-income
and minority communities.
We also appreciate the collaboration demonstrated by ranking member
of the full committee Mr. McHenry and other committee Republicans, as
this bill was voted out of the committee in December by a unanimous
vote of 52-0.
This bill has broad support, including from the National Bankers
Association, the Independent Community Bankers of America, the American
Bankers Association, the Credit Union National Association, and the
National Association of Federally-Insured Credit Unions.
Mr. Speaker, I urge Members to support H.R. 5322, and I reserve the
balance of my time.
Mr. TIMMONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I thank the gentleman from New York for introducing this
bill. He has worked in good faith with Republican Members over the past
year to reach a bipartisan solution on this important issue.
The Financial Services Committee has held several hearings over the
past year on the state of minority depository institutions, or MDIs,
and community development financial institutions, or CDFIs.
Both MDIs and CDFIs provide critical services and support to their
communities. Unfortunately, the number of these institutions has been
declining at an alarming rate.
Burdensome regulations and a lack of access to capital have caused
many of these MDIs to either consolidate or be forced to shut their
doors for good. It is simply too hard for these smaller institutions to
remain viable in the current environment.
The bill we are considering today promotes policies and establishes
programs to support MDIs and CDFIs and the customers and communities
they serve.
Importantly, the bill seeks to promote engagement in the Department
of the Treasury's mentor-protege program to encourage collaboration
between MDIs and institutions that act as financial agents for the
Federal Government.
The bill also directs each of the Federal banking regulators to
establish MDI advisory councils to ensure MDI voices are heard without
weakening or duplicating current efforts.
The bill also allows banks to be designated as an impact bank. This
allows any bank that serves a majority of low-income borrowers to be
considered as an option to hold government deposits. This program will
bolster the ability of banks to serve their communities.
Finally, the bill streamlines the application reporting requirements
to become and remain a CDFI.
I appreciate the gentleman from New York for his willingness to work
with committee Republicans so that we can bring a strong bipartisan
bill to the floor that supports communities in need.
Mr. Speaker, I urge my colleagues to support this bill, and I reserve
the balance of my time.
Mr. SHERMAN. Mr. Speaker, I yield 3 minutes to the gentleman from New
York (Mr. Meeks), the author of this legislation.
Mr. MEEKS. Mr. Speaker, I thank the gentleman for yielding. Let me
just say how proud I am that the House is taking up my bill today, the
Ensuring Diversity in Community Banking Act.
I am especially grateful for the support from Financial Services
Chairwoman Maxine Waters and for her guidance and for working with me
to make sure that we progress and move this bill.
I am likewise eternally grateful to Ranking Member McHenry, who
worked with us very closely to make sure that this bill had true,
strong bipartisan support. As a result, it passed the House Financial
Services Committee unanimously. Without that partnership, this would
not have happened.
So, I thank both the chair and the ranking member, and all the
members of this committee, for doing this. This bill passed in
committee unanimously and has gained the support of consumer advocacy
groups, civil rights organizations, and the financial services
industry. We tried to bring everybody together on this, and we did come
up with a consensus bill.
Communities of color have borne a disproportionate burden of the
COVID pandemic, as measured by the infection and mortality rates, as
well as jobs lost and wealth destroyed. This pandemic and the economic
crisis it triggered devastated communities that had yet to fully
recover from the financial crisis of 2008.
Minority banks, credit unions, and community development financial
institutions have remained the bright spot during this pandemic, given
their focus of providing financial services to communities of color and
low- and moderate-income communities. However, despite their success
serving these communities, minority depository institutions have been
disappearing at an alarming rate, leading to expanding banking deserts
and a growing share of the population vulnerable to payday lenders and
other predatory financial institutions.
To address this, this bill does the following:
Number one, minority depository institutions are smaller than their
peers, pose no credible systemic risk, and focus overwhelmingly on
underbanked communities of color, investing in homeownership and small
business lending, helping to close the wealth gap. My bill makes it
easier for MDIs that are also community development organizations to
raise capital from private investors and directs the Federal Government
to deposit funds that are fully insured with these institutions which
can on-lend the money in communities that need it.
Number two, the bill calls on regulators to take greater ownership of
their own failings in the area of diversity by auditing the diversity
of the bank examiner corps, publishing the data, and considering how
their own lack of diversity and lack of special training harms their
effectiveness.
Number three, the bill establishes a new impact bank designation for
those institutions that lend primarily to low-income communities and
provides these banks access to the deposits programs established by
this bill.
Number four, the bill also calls on the Congress to continue
supporting the CDFI Fund of the Treasury Department.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. SHERMAN. Mr. Speaker, I yield an additional 1 minute to the
gentleman from New York.
Mr. MEEKS. Mr. Speaker, the CDFI Fund leverages limited government
funding to crowd-in significant private sector capital and foster
innovation, investments, and market-oriented solutions to tackle some
of our Nation's most persistent challenges in poverty alleviation. This
program has earned strong bipartisan support historically and proven
itself immensely valuable during this pandemic.
Let me also say that what this does is it also helps our small
businesses in the communities and helps create wealth in communities
where it is not. With the homeownership aspect, it encourages
individuals to buy, to own the home and to rent the car because the
home becomes an appreciating asset and the car the depreciating asset.
It brings us all together so we can enjoy what has become the American
Dream.
Let me close by once again thanking my colleagues for their
bipartisan support for this important legislation. I thank all of my
colleagues for working together to make this a better place, and I urge
all of my colleagues to vote in support of this bill.
Mr. TIMMONS. Mr. Speaker, I urge my colleagues to support H.R. 5322,
and I yield back the balance of my time.
Mr. SHERMAN. Mr. Speaker, I yield myself the balance of my time.
MDIs face several challenges, including the ability to raise capital
despite overall strong financial performance. They face challenges
experienced as a result of servicing communities that are often first
and hardest hit by economic downcycles. This decline is contributing to
a growing incidence of banking deserts in minority communities.
This bill will help turn this dangerous tide so that individuals in
more ZIP Codes will have access to safe banking.
I again thank Mr. Meeks for authoring this legislation and for all of
his dedication to the Financial Services Committee. I also thank
Chairwoman
[[Page H4602]]
Waters and Ranking Member McHenry and the other members of the
committee.
Mr. Speaker, I urge Members to support H.R. 5322, and I yield back
the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from California (Mr. Sherman) that the House suspend the
rules and pass the bill, H.R. 5322, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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