[House Report 110-465]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-465

======================================================================



 
     PRESERVING AND EXPANDING MINORITY DEPOSITORY INSTITUTIONS ACT

                                _______
                                

December 4, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4043]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4043) to amend the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 to preserve and 
expand minority depository institutions, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Earmark Identification...........................................     6
Section-by-Section Analysis of the Legislation...................     6
Changes in Existing Law Made by the Bill, as Reported............     6

                          Purpose and Summary

    H.R. 4043, the ``Preserving and Expanding Minority 
Depository Institutions Act,'' extends the requirements under 
Section 308 of the Financial Institutions Reform, Recovery, and 
Enforcement Act of (FIRREA) 1989 to the Chairman of the Board 
of Governors of the Federal Reserve System and the Comptroller 
of the Currency (OCC). H.R. 4043 also requires the federal 
banking agencies subject to Section 308 of FIRREA to submit an 
annual report to Congress describing their efforts to implement 
it.

                  Background and Need for Legislation

    Minority-owned financial institutions\1\ comprise about two 
percent of all financial institutions and total industry assets 
in the United States. Under Section 308 of the FIRREA, the 
Secretary of the Treasury is required to consult with the 
Chairperson of the Board of Directors of the Federal Deposit 
Insurance Corporation (FDIC) and the Director of the Office of 
Thrift Supervision (OTS) on the methods to achieve the 
following five goals:
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    \1\For purposes of the GAO Report, ``minority-owned financial 
institutions'' or ``minority banks'' refers to all depository 
institutions, including thrifts, that are considered minority- or 
women-owned by the Department of the Treasury (Treasury) and federal 
banking regulators--the Federal Deposit Insurance Corporation (FDIC), 
the Board of Governors of the Federal Reserve System (Federal Reserve), 
the Office of the Comptroller of Currency (OCC) and the Office of 
Thrift Supervision (OTS). FDIC and OTS are subject to the ``minority 
depository institution'' definition set forth in Section 308 of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(FIRREA).
---------------------------------------------------------------------------
          (1) preserving the present number of minority banks;
          (2) preserving their minority character in cases 
        involving mergers or acquisitions of minority banks;
          (3) providing technical assistance to prevent the 
        insolvency of institutions that are not currently 
        insolvent;
          (4) promoting and encouraging the creation of new 
        minority banks; and
          (5) providing for training, technical assistance and 
        educational programs.
    Only the OTS, under Section 3(g)(2) of the Home Owners' 
Loan Act, is required to submit an annual report to Congress 
describing its actions to carry out Section 308 of FIRREA.
    In November 1993, the U.S. General Accounting Office\2\ 
(GAO) issued a report entitled, ``Minority-Owned Financial 
Institutions: Status of Federal Efforts to Preserve Minority 
Ownership'' at the request of Representative John Conyers, then 
Chairman of the Government Operations Committee, on the 
implementation of Section 308 of FIRREA and Section 403 of the 
Resolution Trust Corporation Refinancing, Restructuring, and 
Improvement Act of 1991. (GAO/GGD-94-1). In this report, GAO 
found that the agencies had taken steps to satisfy the 
statutory requirements under Section 308 of FIRREA but they had 
not assessed whether these steps were effective. 1993 GAO 
Report at 3. GAO also found that minority trade associations 
and the executives of minority-owned financial institutions had 
mixed perceptions of the effectiveness of these agencies' 
programs. Id. at 15. GAO recommended that Treasury consult with 
the FDIC and OTS to systematically assess the effectiveness of 
their approaches. Id. at 19. GAO also noted that a key 
component of the assessment process should be surveys of 
minority-owned financial institutions to glean their views on 
the federal regulators' efforts to preserve these institutions. 
Id.
---------------------------------------------------------------------------
    \2\Effective July 7, 2004, GAO's legal name was changed from the 
U.S. General Accounting Office to the U.S. Government Accountability 
Office.
---------------------------------------------------------------------------
    In October 2005, 29 Financial Services Committee Democratic 
members sent a letter to the GAO requesting a review of all of 
the federal banking agencies' current efforts to promote and 
preserve minority-owned financial institutions and the views of 
the minority financial services industry on the effectiveness 
of these efforts. In October 2006, the GAO issued a report 
entitled, ``Minority Banks: Regulators Need to Better Assess 
Effectiveness of Support Efforts.'' (GAO-07-6). While the scope 
of the 1993 GAO Report was limited to just the agencies that 
are statutorily mandated under Section 308 of FIRREA to try to 
maintain minority ownership of banks, the 2006 GAO Report more 
broadly addressed the efforts of the FDIC, OTS, OCC, and the 
Federal Reserve to promote and preserve minority banks.
    Despite the recommendation contained in the 1993 GAO 
Report, GAO found that none of the banking regulators have 
routinely surveyed institutions within their jurisdiction to 
assess the effectiveness of support efforts to minority banks, 
nor have they established outcome-oriented performance measures 
to gauge results. 2006 GAO Report at 20. As a result, according 
to the GAO, regulators need more information in order to assess 
the results of their efforts, or to identify areas for 
improvement. Id. However, the 2005 report also found while the 
regulators offer training and educational opportunities to 
assist minority banks, these programs are underutilized. The 
GAO also found that the banks that do participate in these 
programs find this assistance very helpful.

                                Hearings

    The Oversight and Investigations Subcommittee of the 
Financial Services Committee held a hearing entitled, 
``Preserving and Expanding Minority Banks,'' on Tuesday, 
October 30, 2007, to examine federal banking regulators' 
efforts to promote and preserve minority-owned financial 
institutions and to review the GAO report entitled, ``Minority 
Banks: Regulators Need to Better Assess Effectiveness of 
Support Efforts,'' that was issued in October 2006. The 
following witnesses testified:
           Mr. George Scott, Director, Education, 
        Workforce & Income Security Issues, Government 
        Accountability Office
           Ms. Sandra L. Thompson, Director, Division 
        of Supervision and Consumer Protection, Federal Deposit 
        Insurance Corporation
           Ms. Montrice Yakimov, Managing Director, 
        Compliance and Consumer Protection, Office of Thrift 
        Supervision
           Ms. Sandra F. Braunstein, Director, Division 
        of Consumer and Community Affairs, Board of Governors 
        of the Federal Reserve System
           Mr. John Walsh, Chief of Staff and Public 
        Affairs, Office of Comptroller of the Currency
           Mr. Bob Cooper, Senior Counsel, One United 
        Bank, on behalf of the National Bankers Association 
        (NBA)
           Ms. Kim Saunders, Chief Executive Officer of 
        Mechanics & Farmers Bank

                        Committee Consideration

    The Committee on Financial Services met in open session on 
November 7, 2007, and ordered H.R. 4043, the ``Preserving and 
Expanding Minority Depository Institutions Act'', favorably 
reported to the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank to 
report the bill to the House with a favorable recommendation 
was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 4043 extends the requirements under Section 308 of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 
(FIRREA) 1989 to the Chairman of the Board of Governors of the 
Federal Reserve System and the Comptroller of the Currency. 
H.R. 4043 also requires the federal banking agencies subject to 
Section 308 of FIRREA to submit an annual report to Congress 
describing their efforts to implement it.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 30, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4043, the 
Preserving and Expanding Minority Depository Institutions Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                          Peter H. Fontaine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 4043--Preserving and Expanding Minority Depository Institutions 
        Act

    Existing law requires officials from two of the federal 
agencies that regulate banks--the Office of Thrift Supervision 
(OTS) and the Federal Deposit Insurance Corporation (FDIC)--to 
consult with the Department of the Treasury on methods to 
preserve and promote minority ownership of depository 
institutions. H.R. 4043 would direct the Chairman of the Board 
of Governors of the Federal Reserve System and the Comptroller 
of the Currency to participate in those activities. In 
addition, the bill would require each of the participating 
agencies to submit an annual report to the Congress on actions 
taken to implement the law.
    Based on information from the Federal Reserve and affected 
agencies, CBO estimates that additional costs under the bill 
incurred by the Office of the Comptroller of the Currency, the 
OTS, and FDIC would affect direct spending, but such 
expenditures would be offset by income from annual fees or 
deposit insurance premiums. The budgetary effects on the 
Federal Reserve would be recorded as changes in revenues, and 
CBO estimates that such changes would reduce revenues by less 
than $500,000 a year. Enacting the bill would have a negligible 
net effect on direct spending.
    H.R. 4043 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Kathleen Gramp. 
This estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 4043 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill as the 
``Preserving and Expanding Minority Depository Institutions 
Act.''

Section 2. Preserving and expanding minority depository institutions

    This section extends the requirements under Section 308 of 
the Financial Institutions Reform, Recovery, and Enforcement 
Act of (FIRREA) 1989 to the Chairman of the Board of the 
Governors of the Federal Reserve System and the Comptroller of 
the Currency. It also requires the federal banking agency 
subject to Section 308 of FIRREA to submit an annual report to 
Congress describing actions taken to carry out the requirements 
of Section 308 of FIRREA. Because the OTS is currently required 
to submit an annual report of its actions to implement Section 
308 of FIRREA under Section 3(g)(2) of the Home Owners' Loan 
Act, the bill makes a technical and conforming change to repeal 
the existing reporting requirement under HOLA.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

  FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989




           *       *       *       *       *       *       *
TITLE III--SAVINGS ASSOCIATIONS

           *       *       *       *       *       *       *


SEC. 308. PRESERVING MINORITY OWNERSHIP OF MINORITY FINANCIAL 
                    INSTITUTIONS.

  (a) Consultation on Methods.--The Secretary of the Treasury 
shall consult with the Chairman of the Board of Governors of 
the Federal Reserve System, the Comptroller of the Currency, 
the Director of the Office of Thrift Supervision, and the 
Chairperson of the Board of Directors of the Federal Deposit 
Insurance Corporation on methods for best achieving the 
following goals:
          (1)  * * *

           *       *       *       *       *       *       *

  (c) Reports.--The Secretary of the Treasury, the Chairman of 
the Board of Governors of the Federal Reserve System, the 
Comptroller of the Currency, the Director of the Office of 
Thrift Supervision, and the Chairperson of the Federal Deposit 
Insurance Corporation shall each submit an annual report to the 
Congress containing a description of actions taken to carry out 
this section.

           *       *       *       *       *       *       *

                              ----------                              


                         HOME OWNERS' LOAN ACT



           *       *       *       *       *       *       *
SEC. 3. DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.

  (a) * * *

           *       *       *       *       *       *       *

  (g) Annual Report Required.--The Director shall make an 
annual report to the Congress. Such report shall include--
          (1) * * *
          [(2) a description of actions taken to carry out 
        section 308 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989.]
          (2) [Repealed].

           *       *       *       *       *       *       *


                                  
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