[House Report 118-644]
[From the U.S. Government Publishing Office]


118th Congress }                                             { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                             { 118-644

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



 
                       CDFI FUND TRANSPARENCY ACT

                                _______
                                

August 30, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

         Mr. McHenry, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 3161]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3161) to amend the Riegle Community Development 
and Regulatory Improvement Act of 1994 to require the Director 
of the Community Development Financial Institutions Fund to 
testify on an annual basis before the Financial Services 
Committee of the House of Representatives and the Banking, 
Housing, and Urban Affairs Committee of the Senate, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

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

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``CDFI Fund Transparency Act''.

SEC. 2. REQUIREMENT TO TESTIFY ANNUALLY.

  Section 104(b) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4703(b)) is amended by adding to the 
end the following:
          ``(5) Annual testimony.--The Secretary of the Treasury (or a 
        designee of the Secretary) shall, at the discretion of the 
        Chair of the Financial Services Committee of the House of 
        Representatives and the Chair of the Banking, Housing, and 
        Urban Affairs Committee of the Senate, annually testify before 
        such committees (or a subcommittee of such committees) 
        regarding--
                  ``(A) the operations of the Fund during the previous 
                year;
                  ``(B) steps the Secretary and the Fund are taking to 
                support the work of community development financial 
                institutions participating in the State Small Business 
                Credit Initiative;
                  ``(C) steps the Secretary and the Fund are taking to 
                support community development financial institutions, 
                including those that are minority depository 
                institutions, through the financial agent mentor-
                protege program;
                  ``(D) how community development financial 
                institutions, including minority depository 
                institutions, that received amounts provided in the 
                Coronavirus Response and Relief Supplemental 
                Appropriations Act, 2021 have used and are using such 
                amounts; and
                  ``(E) any steps the Secretary and the Fund are taking 
                to--
                          ``(i) support minority lending institutions, 
                        including minority depository institutions, 
                        through coordination with prudential regulators 
                        to promote and preserve minority depository 
                        institutions pursuant to section 308 of the 
                        Financial Institutions Reform, Recovery, and 
                        Enforcement Act of 1989;
                          ``(ii) address technology challenges facing 
                        community development financial institutions, 
                        including those that are minority depository 
                        institutions;
                          ``(iii) incentivize community development 
                        financial institutions to provide start-up 
                        capital for young entrepreneurs;
                          ``(iv) raise public awareness about community 
                        development financial institutions and minority 
                        depository institutions, including providing a 
                        searchable map with institution locations;
                          ``(v) coordinate with regulators to ensure 
                        certification and reporting requirements are 
                        appropriately streamlined for community 
                        development financial institutions; and
                          ``(vi) explore securitization options that 
                        might help expand the reach of community 
                        development financial institutions.''.

                          Purpose and Summary

    Introduced on May 9, 2023, by Representative John Rose, 
H.R. 3161, the CDFI Fund Transparency Act, would amend the 
Riegle Community Development and Regulatory Improvement Act of 
1994 to require the Director of the Community Development 
Financial Institutions (CDFI) Fund to testify on an annual 
basis before the Financial Services Committee of the House of 
Representatives and the Banking, Housing, and Urban Affairs 
Committee of the Senate.

                  Background and Need for Legislation

    Accountability breeds responsibility. The CDFI fund plays a 
critical role in ensuring that access to credit and capital is 
available to all communities. CDFI certification is designated 
by the CDFI Fund to financial institutions that serve low 
income or economically distressed areas. According to Treasury, 
there are approximately 1,500 CDFIs in all 50 states, the 
District of Columbia, Guam, and Puerto Rico, with total assets 
exceeding $300 billion. The accountability provided by regular 
hearings will allow for congressional oversight and ability to 
respond to emerging issues involving the CDFI Fund.

                            Related Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 3161: The Subcommittee on 
Financial Institutions and Monetary Policy of the Committee on 
Financial Services held a hearing on March 7, 2024, titled 
``Politicized Financial Regulation and its Impact on Consumer 
Credit and Community Development.''

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 16, 2024, and ordered H.R. 3161 as amended to be reported 
favorably to the House by a voice vote, a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Rose by 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 order to report legislation and amendments thereto. H.R. 
3161 as amended was ordered reported favorably to the House by 
voice vote, a quorum being present.
    An amendment offered by Ms. Velazquez, no. 1, was agreed to 
by a voice vote, a quorum being present.
    An amendment offered by Mrs. Beatty, no. 2, was agreed to 
by a voice vote, a quorum being present.
    An amendment offered by Ms. Waters, no. 3, was agreed to by 
a voice vote, a quorum being present.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 3161 is to 
strengthen congressional oversight and accountability, 
including the ability to respond to emerging issues, of the 
CDFI Fund.

                 Congressional Budget Office Estimates

    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:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 3161 would require the Secretary of the Treasury, or 
designee, to testify annually before the Congress about the 
Community Development Financial Institutions Fund, including 
its operations in the previous year and steps the department 
and fund are taking to support financial institutions that aid 
community development.
    Because the Secretary of the Treasury regularly testifies 
before the Congress, CBO estimates that implementing H.R. 3161 
would not have a significant cost. Any related spending would 
be subject to the availability of appropriated funds.
    The CBO staff contact for this estimate is Margot Berman. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Director of Budget Analysis.

                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

   New Budget Authority, Entitlement Authority, and Tax  
                       Expenditures 

    Pursuant to 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 
1973.

                       Federal Mandates Statement

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

                      Advisory Committee Statement

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

                  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

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

Section 2. Requirement to testify

    This section would establish a requirement for the 
Secretary of the Treasury (or a designee of the Secretary) to 
annually testify before such committees (or a subcommittee of 
such committees) regarding the operations of the CDFI Fund 
during the previous year.

         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 (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

              RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY  
                        IMPROVEMENT ACT OF 1994 

           *       *       *       *       *       *       *

                    TITLE I--COMMUNITY DEVELOPMENT  
                       AND CONSUMER PROTECTION 

                  Subtitle A--Community Development 
               Banking and Financial Institutions Act 

           *       *       *       *       *       *       *

SEC. 104. ESTABLISHMENT  OF  NATIONAL  FUND  FOR  COMMUNITY  DE-
            VELOPMENT BANKING.

  (a) Establishment.--
          (1) In general.--There is established a corporation 
        to be known as the Community Development Financial 
        Institutions Fund that shall have the duties and 
        responsibilities specified by this subtitle and 
        subtitle B of title II. The Fund shall have succession 
        until dissolved. The offices of the Fund shall be in 
        Washington, D.C. The Fund shall not be affiliated with 
        or be within any other agency or department of the 
        Federal Government.
          (2) Wholly owned government corporation.--The Fund 
        shall be a wholly owned Government corporation in the 
        executive branch and shall be treated in all respects 
        as an agency of the United States, except as otherwise 
        provided in this subtitle.
  (b) Management of Fund.--
          (1) Appointment of administrator.--The management of 
        the Fund shall be vested in an Administrator, who shall 
        be appointed by the President. The Administrator shall 
        not engage in any other business or employment during 
        service as the Administrator.
          (2) Chief financial officer.--The Administrator shall 
        appoint a chief financial officer, who shall have the 
        authority and functions of an agency Chief Financial 
        Officer under section 902 of title 31, United States 
        Code. In the event of a vacancy in the position of the 
        Administrator or during the absence or disability of 
        the Administrator, the chief financial officer shall 
        perform the duties of the position of Administrator.
          (3) Other officers and employees.--The Administrator 
        may appoint such other officers and employees of the 
        Fund as the Administrator determines to be necessary or 
        appropriate.
          (4) Expedited hiring.--During the 2-year period 
        beginning on the date of enactment of this Act, the 
        Administrator may--
                  (A) appoint and terminate the individuals 
                referred to in paragraphs (2) and (3) without 
                regard to the civil service laws and 
                regulations; and
                  (B) fix the compensation of the individuals 
                referred to in paragraph (3) without regard to 
                the provisions of chapter 51 and subchapter III 
                of chapter 53 of title 5, United States Code, 
                relating to classification of positions and 
                General Schedule pay rates, except that the 
                rate of pay for such individuals may not exceed 
                the rate payable for level V of the Executive 
                Schedule under section 5316 of such title.
          (5) Annual testimony.--The Secretary of the Treasury 
        (or a designee of the Secretary) shall, at the 
        discretion of the Chair of the Financial Services 
        Committee of the House of Representatives and the Chair 
        of the Banking, Housing, and Urban Affairs Committee of 
        the Senate, annually testify before such committees (or 
        a subcommittee of such committees) regarding--
                  (A) the operations of the Fund during the 
                previous year;
                  (B) steps the Secretary and the Fund are 
                taking to support the work of community 
                development financial institutions 
                participating in the State Small Business 
                Credit Initiative;
                  (C) steps the Secretary and the Fund are 
                taking to support community development 
                financial institutions, including those that 
                are minority depository institutions, through 
                the financial agent mentor-protege program;
                  (D) how community development financial 
                institutions, including minority depository 
                institutions, that received amounts provided in 
                the Coronavirus Response and Relief 
                Supplemental Appropriations Act, 2021 have used 
                and are using such amounts; and
                  (E) any steps the Secretary and the Fund are 
                taking to--
                          (i) support minority lending 
                        institutions, including minority 
                        depository institutions, through 
                        coordination with prudential regulators 
                        to promote and preserve minority 
                        depository institutions pursuant to 
                        section 308 of the Financial 
                        Institutions Reform, Recovery, and 
                        Enforcement Act of 1989;
                          (ii) address technology challenges 
                        facing community development financial 
                        institutions, including those that are 
                        minority depository institutions;
                          (iii) incentivize community 
                        development financial institutions to 
                        provide start-up capital for young 
                        entrepreneurs;
                          (iv) raise public awareness about 
                        community development financial 
                        institutions and minority depository 
                        institutions, including providing a 
                        searchable map with institution 
                        locations;
                          (v) coordinate with regulators to 
                        ensure certification and reporting 
                        requirements are appropriately 
                        streamlined for community development 
                        financial institutions; and
                          (vi) explore securitization options 
                        that might help expand the reach of 
                        community development financial 
                        institutions.
  (c) General Powers.--In carrying out the functions of the 
Fund, the Administrator--
          (1) shall have all necessary and proper authority to 
        carry out this subtitle and subtitle B of title II;
          (2) shall have the power to adopt, alter, and use a 
        corporate seal for the Fund, which shall be judicially 
        noticed;
          (3) may adopt, amend, and repeal bylaws, rules, and 
        regulations governing the manner in which business of 
        the Fund may be conducted and such rules and 
        regulations as may be necessary or appropriate to 
        implement this subtitle and subtitle B of title II;
          (4) may enter into, perform, and enforce such 
        agreements, contracts, and transactions as may be 
        deemed necessary or appropriate to the conduct of 
        activities authorized under this subtitle and subtitle 
        B of title II;
          (5) may determine the character of and necessity for 
        expenditures of the Fund and the manner in which they 
        shall be incurred, allowed, and paid;
          (6) may utilize or employ the services of personnel 
        of any agency or instrumentality of the United States 
        with the consent of the agency or instrumentality 
        concerned on a reimbursable or nonreimbursable basis; 
        and
          (7) may execute all instruments necessary or 
        appropriate in the exercise of any of the functions of 
        the Fund under this subtitle and subtitle B of title II 
        and may delegate to the officers of the Fund such of 
        the powers and responsibilities of the Administrator as 
        the Administrator deems necessary or appropriate for 
        the administration of the Fund.
  (d) Advisory Board.--
          (1) Establishment.--There is established an advisory 
        board to the Fund to be known as the Community 
        Development Advisory Board, which shall be operated in 
        accordance with the provisions of chapter 10 of title 
        5, United States Code, except that section 1013 of 
        title 5, United States Code, does not apply to the 
        Board.
          (2) Membership.--The Board shall consist of 15 
        members, including--
                  (A) the Secretary of Agriculture or his or 
                her designee;
                  (B) the Secretary of Commerce or his or her 
                designee;
                  (C) the Secretary of Housing and Urban 
                Development or his or her designee;
                  (D) the Secretary of the Interior or his or 
                her designee;
                  (E) the Secretary of the Treasury or his or 
                her designee;
                  (F) the Administrator of the Small Business 
                Administration or his or her designee; and
                  (G) 9 private citizens, appointed by the 
                President, who shall be selected, to the 
                maximum extent practicable, to provide for 
                national geographic representation and racial, 
                ethnic, and gender diversity, including--
                          (i) 2 individuals who are officers of 
                        existing community development 
                        financial institutions;
                          (ii) 2 individuals who are officers 
                        of insured depository institutions;
                          (iii) 2 individuals who are officers 
                        of national consumer or public interest 
                        organizations;
                          (iv) 2 individuals who have expertise 
                        in community development; and
                          (v) 1 individual who has personal 
                        experience and specialized expertise in 
                        the unique lending and community 
                        development issues confronted by Indian 
                        tribes on Indian reservations.
          (3) Chairperson.--The members of the Board specified 
        in paragraph (2)(G) shall select, by majority vote, a 
        chairperson of the Board, who shall serve for a term of 
        2 years.
          (4) Board function.--It shall be the function of the 
        Board to advise the Administrator on the policies of 
        the Fund regarding activities under this subtitle. The 
        Board shall not advise the Administrator on the 
        granting or denial of any particular application.
          (5) Terms of private members.--
                  (A) In general.--Each member of the Board 
                appointed under paragraph (2)(G) shall serve 
                for a term of 4 years.
                  (B) Vacancies.--Any member appointed to fill 
                a vacancy occurring prior to the expiration of 
                the term for which the previous member was 
                appointed shall be appointed for the remainder 
                of such term. Members may continue to serve 
                following the expiration of their terms until a 
                successor is appointed.
          (6) Meetings.--The Board shall meet at least annually 
        and at such other times as requested by the 
        Administrator or the chairperson. A majority of the 
        members of the Board shall constitute a quorum.
          (7) Reimbursement for expenses.--The members of the 
        Board may receive reimbursement for travel, per diem, 
        and other necessary expenses incurred in the 
        performance of their duties, in accordance with chapter 
        10 of title 5, United States Code.
          (8) Costs and expenses.--The Fund shall provide to 
        the Board all necessary staff and facilities.
  (f) Government Corporation Control Act Exemption.--Section 
9107(b) of title 31, United States Code, shall not apply to 
deposits of the Fund made pursuant to section 108.
  (g) Limitation of Fund and Federal Liability.--The liability 
of the Fund and the United States Government arising out of any 
investment in a community development financial institution in 
accordance with this subtitle shall be limited to the amount of 
the investment. The Fund shall be exempt from any assessments 
and other liabilities that may be imposed on controlling or 
principal shareholders by any Federal law or the law of any 
State, Territory, or the District of Columbia. Nothing in this 
subsection shall affect the application of any Federal tax law.
  (h) Prohibition on Issuance of Securities.--The Fund may not 
issue stock, bonds, debentures, notes, or other securities.
  (j) Assisted Institutions Not United States 
Instrumentalities.--A community development financial 
institution or other organization that receives assistance 
pursuant to this subtitle shall not be deemed to be an agency, 
department, or instrumentality of the United States.
  (k) Transition Period.--
          (1) In general.--During the transition period, the 
        Secretary of the Treasury may--
                  (A) assist in the establishment of the 
                administrative functions of the Fund listed in 
                paragraph (2); and
                  (B) hire not more than 6 individuals to serve 
                as employees of the Fund during the transition 
                period.
          (2) Continued service.--Individuals hired in 
        accordance with paragraph (1)(B) may continue to serve 
        as employees of the Fund after the transition period.
          (3) Administrative functions.--The administrative 
        functions referred to in paragraph (1)(A) shall be 
        limited to--
                  (A) establishing accounting, information, and 
                recordkeeping systems for the Fund; and
                  (B) procuring office space, equipment, and 
                supplies.
          (4) Expedited hiring.--During the transition period, 
        the Secretary of the Treasury may--
                  (A) appoint and terminate the individuals 
                referred to in paragraph (1)(B) without regard 
                to the civil service laws and regulations; and
                  (B) fix the compensation of the individuals 
                referred to in paragraph (1)(B) without regard 
                to the provisions of chapter 51 and subchapter 
                III of chapter 53 of title 5, United States 
                Code, relating to classification of positions 
                and General Schedule pay rates, except that the 
                rate of pay for such individuals may not exceed 
                the rate payable for level V of the Executive 
                Schedule under section 5316 of such title.
          (5) Certain employees.--During the transition period, 
        employees of the Department of the Treasury may only 
        comprise less than one-half of the total number of 
        individuals hired in accordance with paragraph (1)(B).
          (6) Transition expenses.--Amounts previously 
        appropriated to the Department of the Treasury may be 
        used to pay obligations and expenses of the Fund 
        incurred under this section, and such amounts may be 
        reimbursed by the Fund to the Department of the 
        Treasury from amounts appropriated to the Fund for 
        fiscal year 1995.
          (7) Definition.--For purposes of this subsection, the 
        term ``transition period'' means the period beginning 
        on the date of enactment of this Act and ending on the 
        date on which the Administrator is appointed.

           *       *       *       *       *       *       *


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