[Congressional Record (Bound Edition), Volume 153 (2007), Part 4]
[House]
[Pages 4700-4701]
[From the U.S. Government Publishing Office, www.gpo.gov]




 DEPOSITORY INSTITUTION COMMUNITY DEVELOPMENT INVESTMENTS ENHANCEMENT 
                                  ACT

  Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 1066) to increase community development 
investments by depository institutions, and for other purposes.
  The Clerk read as follows:

                               H.R. 1066

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Depository Institution 
     Community Development Investments Enhancement Act''.

     SEC. 2. TECHNICAL CORRECTIONS.

       (a) National Banks.--The first sentence of the paragraph 
     designated as the ``Eleventh'' of section 5136 of the Revised 
     Statutes of the United States (12 U.S.C. 24) (as amended by 
     section 305(a) of the Financial Services Regulatory Relief 
     Act of 2006) is amended by striking ``promotes the public 
     welfare by benefiting primarily'' and inserting ``is designed 
     primarily to promote the public welfare, including the 
     welfare of''.
       (b) State Member Banks.--The first sentence of the 23rd 
     undesignated paragraph of section 9 of the Federal Reserve 
     Act (12 U.S.C. 338a) (as amended by section 305(b) of the 
     Financial Services Regulatory Relief Act of 2006) is amended 
     by striking ``promotes the public welfare by benefiting 
     primarily'' and inserting ``is designed primarily to promote 
     the public welfare, including the welfare of''.

     SEC. 3. INVESTMENTS BY FEDERAL SAVINGS ASSOCIATIONS 
                   AUTHORIZED TO PROMOTE THE PUBLIC WELFARE.

       (a) In General.--Section 5(c)(3) of the Home Owners' Loan 
     Act (12 U.S.C. 1464(c)) is amended by adding at the end the 
     following new subparagraph:
       ``(D) Direct investments to promote the public welfare.--
       ``(i) In general.--A Federal savings association may make 
     investments, directly or indirectly, each of which is 
     designed primarily to promote the public welfare, including 
     the welfare of low- and moderate-income communities or 
     families through the provision of housing, services, and 
     jobs.
       ``(ii) Direct investments or acquisition of interest in 
     other companies.--Investments under clause (i) may be made 
     directly or by purchasing interests in an entity primarily 
     engaged in making such investments.
       ``(iii) Prohibition on unlimited liability.--No investment 
     may be made under this subparagraph which would subject a 
     Federal savings association to unlimited liability to any 
     person.
       ``(iv) Single investment limitation to be established by 
     director.--Subject to clauses (v) and (vi), the Director 
     shall establish, by order or regulation, limits on--

       ``(I) the amount any savings association may invest in any 
     1 project; and
       ``(II) the aggregate amount of investment of any savings 
     association under this subparagraph.

       ``(v) Flexible aggregate investment limitation.--The 
     aggregate amount of investments of any savings association 
     under this subparagraph may not exceed an amount equal to the 
     sum of 5 percent of the savings association's capital stock 
     actually paid in and unimpaired and 5 percent of the savings 
     association's unimpaired surplus, unless--

       ``(I) the Director determines that the savings association 
     is adequately capitalized; and
       ``(II) the Director determines, by order, that the 
     aggregate amount of investments in a higher amount than the 
     limit under this clause will pose no significant risk to the 
     affected deposit insurance fund.

       ``(vi) Maximum aggregate investment limitation.--
     Notwithstanding clause (v), the aggregate amount of 
     investments of any savings association under this 
     subparagraph may not exceed an amount equal to the sum of 15 
     percent of the savings association's capital stock actually 
     paid in and unimpaired and 15 percent of the savings 
     association's unimpaired surplus.
       ``(vii) Investments not subject to other limitation on 
     quality of investments.--No obligation a Federal savings 
     association acquires or retains under this subparagraph shall 
     be taken into account for purposes of the limitation 
     contained in section 28(d) of the Federal Deposit Insurance 
     Act on the acquisition and retention of any corporate debt 
     security not of investment grade.
       ``(viii) Applicability of standards to each investment.--
     The standards and limitations of this subparagraph shall 
     apply to each investment under this subparagraph made by a 
     savings association directly and by its subsidiaries.''.
       (b) Technical and Conforming Amendments.--Section 
     5(c)(3)(A) of the Home Owners' Loan Act (12 U.S.C. 
     1464(c)(3)(A)) is amended to read as follows:
       ``(A) [Repealed]''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Frank) and the gentlewoman from Illinois (Mrs. 
Biggert) each will control 20 minutes.
  The Chair recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as 
I may consume.
  Mr. Speaker, I rise in support of H.R. 1066.
  It does occur to me on reflection that we should have asked the 
gentleman from Florida and the gentleman from Washington, Mr. Hastings 
and Mr. Hastings, to join in supporting this bill given its number. But 
in their absence, I will note that this is a bill that passed the House 
last year unanimously as part of a larger regulatory relief bill that 
came out of the Committee on Financial Services. It went to the Senate, 
and the Senate passed much of what we sent them but not all of it.

                              {time}  1445

  The Senate deleted some provisions. We, in the interest of getting 
some legislation through, accepted the Senate's proposal, and so much 
of what we sent originally did become law. Some pieces did not.
  This is a piece that provides more flexibility for banks that are 
engaging in what is called, and it is a particular legal term here, 
public welfare investments. Banks are allowed to spend, invest up to 15 
percent of their capital in what are called public welfare investments. 
This would allow that very good policy some more flexibility.
  I would note, that, for instance, the Association of Affordable 
Housing Lenders, people who build subsidized housing, are in favor of 
this change. What it does is it broadens the definition. It doesn't 
change the 15 percent, but it gives more flexibility.
  We have this situation where we do want these investments to be for 
the benefit of low and moderate income people. But it is one thing to 
say that they should generally be for the benefit of low and moderate 
income people, and another to strictly confine them to

[[Page 4701]]

areas that have this direct benefit. What you do is you lose the 
flexibility we would like.
  Mr. Speaker, I will include in the record at this point letters from 
John Reich, the Director of the Office of Thrift Supervision, and John 
Dugan, the Comptroller of the Currency.

                                     Office of Thrift Supervision,


                                   Department of the Treasury,

                                Washington, DC, February 23, 2007.
     Hon. Barney Frank,
     Chairman, Committee on Financial Services,
     House of Representatives, Washington, D.C.
     Hon. Spencer Bachus,
     Ranking Member, Committee on Financial Services, House of 
         Representatives, Washington, D.C.
       Dear Chairman Frank and Ranking Member Bachus: I am writing 
     to provide my support for H.R. 1066, the ``Depository 
     Institution Community Development Investment Enhancements 
     Act,'' legislation that you recently introduced and that I 
     understand will soon be considered by the House. H.R. 1066 
     will enhance the ability of savings associations to support 
     important public welfare initiatives. I encourage Congress to 
     take swift action on this bill.
       Similar to Section 202 of H.R. 3505, the ``Financial 
     Services Regulatory Relief Act of 2005,'' which passed on a 
     bipartisan basis in the full House of Representatives and 
     H.R. 6062, the ``Community Development Investment 
     Enhancements Act of 2006,'' which also passed on a voice vote 
     by the full House, H.R. 1066 will enable savings associations 
     to support important community development programs.
       Specifically, H.R. 1066 will increase the ability of 
     federal savings associations to make investments primarily 
     designed to promote the public welfare of low- and moderate-
     income communities and families through the provision of 
     housing, services, and jobs. Your bill accomplishes this by 
     raising the limits on the ability of federal thrifts to 
     invest in entities primarily engaged in making these public 
     welfare investments.
       Thank you for your leadership in sponsoring this important 
     legislation and your continued interest is this issue. I 
     applaud your efforts to remove barriers to the growth and 
     stability of low- and moderate-income communities and urge 
     immediate consideration of H.R. 1066. If you have any 
     questions, please do not hesitate to contact me or Kevin 
     Petrasic, Managing Director of External Affairs, at 2012-906-
     6452.
           Respectifully yours,

                                                John M. Reich,

     Director.
                                  ____

         Comptroller of the Currency Administrator of National 
           Banks,
                                Washington, DC, February 26, 2007.
     Hon. Barney Frank,
     Chairman, Committee on Financial Services, House of 
         Representatives, Washington, D.C.
       Dear Chairman Frank: Thank you for having introduced H.R. 
     1066, the Depository Institution Community Development 
     Investments Enhancement Act, which would restore the 
     preexisting, longstanding authority of national and state 
     member banks to make investments ``designed primarily to 
     promote the public welfare, including the welfare of low- and 
     moderate-income communities or families.''
       Returning to this standard will restore several major 
     categories of public welfare investments in areas determined 
     by federal, state and local governments to be in need of such 
     investments. These categories of investments, which were 
     eliminated with passage of The Financial Services Regulatory 
     Relief Act of 2006, include investments that:
       Revitalize or stabilize designated disaster areas, 
     including areas devastated by hurricanes.
       Revitalize or stabilize underserved or distressed middle-
     income rural communities.
       Utilize New Markets Tax Credits to promote development in 
     middle-income census tracts with greater than 20 percent 
     poverty rates.
       Finance mixed-income affordable housing in govemment 
     targeted areas for revitalization.
       Since 1992, the preexisting standard has been implemented 
     by the OCC in a transparent manner to generate national bank 
     community development investments in every state of the 
     nation amounting to over $16 billion. Every approved public 
     welfare investment made by a national bank is posted by the 
     OCC on our public website. Further, all public welfare 
     investments made by national banks have been, and will 
     continue to be under the provisions of H.R. 1066, subject to 
     key controls designed to protect against risks to the safety 
     and soundness of the bank and to the deposit insurance fund.
       Restoring the previously qualifying categories of 
     investments, in combination with the recent increase in 
     allowable investments to 15 percent of capital and surplus, 
     can potentially generate as much as $30 billion in national 
     bank investment to help revitalize local ommunities across 
     the nation--without the use of any taxpayer funds. I urge 
     prompt passage of H.R. 1066 to help achieve this significant 
     impact.
           Sincerely,
                                                    John C. Dugan,
                                      Comptroller of the Currency.

  Mr. Speaker, in Mr. Dugan's letter, for example, he says giving this 
flexibility would allow ``finance mixed-income affordable housing in 
government targeted areas for revitalization.'' It maintains the 
purpose of helping low and moderate income people, but it provides the 
flexibility in doing it, which we would all support.
  I know of no opposition to the bill. People might have raised the 
question, well, the groups that are the primary advocates, the low and 
moderate income people, do they think it might hit them? No, the answer 
is they do not. And several groups that try to promote this kind of 
mixed economic benefit development think this would be useful.
  As I said, it is a bill the House passed last year. It is supported 
by banks. We have banks that want to be socially responsible, within 
the context of making a profit and meeting their safety and soundness 
requirements. We should not unduly burden them when they try to do 
that.
  So I hope that the House will once again pass this, and that this 
time, looking at them alone with a little more leisure, the Senate will 
go along.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. BIGGERT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of H.R. 1066, the Depository 
Institution Community Development Investments Enhancement Act, and I 
want to commend Chairman Frank for introducing this legislation.
  The regulatory relief legislation that was signed into law last 
October increased the authority of banks to invest in projects that 
benefit low and moderate income communities. The legislation increases 
the allowable percentage of public welfare investments from 10 to 15 
percent of a thrift's capital and surplus. Banks currently have this 
authority.
  H.R. 1066 would expand this authority in allowing thrifts to invest 
in distressed areas, as well as the low and moderate income 
communities. This enhanced authority is important because the need for 
investment in government-designated disaster areas may not necessarily 
be confined to low to moderate income areas.
  H.R. 1066 also would make it easier for banks to invest in projects 
in devastated and abandoned communities on the gulf coast or to 
revitalize rural areas that are underserved or distressed. This 
legislation allows greater opportunities for banks and thrifts to 
provide housing, community services and jobs to communities throughout 
our Nation. It also helps these institutions meet their obligations 
under the Community Reinvestment Act. Since the law was enacted in 
1992, existing authority has already generated more than $16 billion of 
investments.
  Twice last year legislation similar to H.R. 1066 passed the House 
overwhelmingly. H.R. 6062, the Community Development Investment 
Enhancement Act of 2006 passed the House by voice vote in September. 
The same language also was included in the House passed version of 
regulatory relief legislation, H.R. 3505, which cleared this body last 
March by a vote of 415-2, as Chairman Frank noted.
  Mr. Speaker, I urge my colleagues to support H.R. 1066.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield back the balance of 
my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Massachusetts (Mr. Frank) that the House suspend the 
rules and pass the bill, H.R. 1066.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________