[Federal Register Volume 68, Number 23 (Tuesday, February 4, 2003)]
[Rules and Regulations]
[Pages 5717-5726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2336]


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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund

12 CFR Part 1806

RIN 1505-AA91


Bank Enterprise Award Program

AGENCY: Community Development Financial Institutions Fund, Department 
of the Treasury.

ACTION: Revised interim rule with request for comment.

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SUMMARY: The Department of the Treasury is issuing a revised interim 
rule implementing the Bank Enterprise Award (BEA) Program administered 
by the Community Development Financial Institutions Fund (Fund). The 
mission of the CDFI Fund is to increase the capacity of financial 
institutions to provide capital, credit and financial services in 
underserved markets. Its long-term vision is an America in which all 
people have access to affordable credit, capital and financial 
services. The purpose of the BEA Program is to provide an incentive to 
insured depository institutions to increase their activities in the 
form of loans, investments, services, and technical assistance, within 
Distressed Communities and provide financial assistance to Community 
Development Financial Institutions (CDFIs) through grants, stock 
purchases, loans, deposits, and other forms of financial and technical 
assistance. This revised interim rule: improves programmatic operating 
efficiencies; targets program incentives to encourage the provision of 
investment, credit and financial services in Distressed Communities 
that demonstrate the most extreme need, to CDFIs that serve such 
Distressed Communities, and to smaller, less well capitalized CDFIs; 
reduces applicants' documentary and reporting burdens; clarifies and 
redefines the requirements of certain Qualified Activities; redefines 
and adds new categories of Qualified Activities; changes some 
methodologies for calculating BEA Program awards, including the 
application of caps to such awards; and simplifies some reporting and 
documentation requirements.

DATES: Interim rule effective February 4, 2003; comments must be 
received on or before April 7, 2003.

ADDRESSES: You may send hard copy comments concerning this interim rule 
to the Deputy Director for Policy and Programs, Community Development 
Financial Institutions Fund, Department

[[Page 5718]]

of the Treasury, 601 13th Street, NW., Suite 200 South, Washington, DC 
20005. You may also send us comments by e-mail at [email protected]. When sending comments by e-mail, please use 
an ASCII file format and provide your full name and mailing address. 
Comments may be inspected at the above address weekdays between 9:30 
a.m. and 4:30 p.m. Other information regarding the Fund and its 
programs may be obtained through the Fund's Web site at http://www.cdfifund.gov.

FOR FURTHER INFORMATION CONTACT: Margaret Nilson, Depository 
Institutions Manager, the Community Development Financial Institutions 
Fund, at (202) 622-6355. (This is not a toll free number.)

SUPPLEMENTARY INFORMATION:

I. Background

    The Community Development Financial Institutions Fund (Fund) was 
established as a wholly owned government corporation by the Community 
Development Banking and Financial Institutions Act of 1994. Subsequent 
legislation placed the Fund within the Department of the Treasury and 
gave the Secretary of the Treasury all powers and rights of the 
Administrator of the Fund as set forth in the authorizing statute.
    The mission of the Fund is to increase the capacity of financial 
institutions to provide capital, credit and financial services in 
underserved markets. Its long-term vision is an America in which all 
people have access to affordable credit, capital and financial 
services. The Fund's programs are designed to facilitate the flow of 
lending and investment capital to distressed communities and to 
individuals who have been unable to take full advantage of the 
financial services industry. Access to credit, investment capital, and 
financial services are essential ingredients for creating and retaining 
jobs, developing affordable housing, revitalizing neighborhoods, 
unleashing the economic potential of small businesses, and empowering 
people.
    Through the BEA Program, the Fund seeks to: strengthen and expand 
the financial and organizational capacity of CDFIs; provide financial 
incentives to insured depository institutions to increase their lending 
and services in Distressed Communities; and increase the flow of 
private capital into Low- and Moderate-Income areas. Applicants 
participate in the BEA Program through a competitive process, which 
evaluates applications based on the value of their increases in certain 
Qualified Activities. Program participants receive BEA Program award 
proceeds only after successful completion of the specified Qualified 
Activities.
    On December 5, 1997, the Fund published in the Federal Register an 
interim regulation (62 FR 64439) implementing the BEA Program (the 
current rule). The deadline for the submission of comments was April 6, 
1998.

II. Comments on the December 5, 1997 Interim Rule

    By the close of the April 6, 1998 comment period, the Fund received 
no comments on the December 5, 1997 interim rule.

III. Summary of Changes

    (1) Purpose: Section 1806.100 of the current rule contains a 
description of the purpose of the BEA Program. This interim rule 
revises such purpose to more accurately describe the purpose of the BEA 
Program.
    (2) New Definitions: Section 1806.103 of the revised interim rule 
contains a number of new definitions: Community Development Entity 
(Sec.  1806.103(m)) which includes entities certified through the New 
Markets Tax Credit Program; CDFI Partner (Sec.  1806.103(o)) which 
includes CDFIs to which Applicants have provided assistance; and 
Deposit Liabilities (Sec.  1806.103(s)) includes savings and other 
deposit accounts. In addition, the revised interim rule defines 
Electronic Transfer Account (ETA) (Sec.  1806.103(w)), First Account 
(Sec.  1806.103(aa)), and Individual Development Account (IDA) (Sec.  
1806.103(ff)) (such terms were defined in Notices of Funds Availability 
for certain prior BEA Program funding rounds).
    (3) Definitions for New Categories of Qualified Activities: The 
revised interim rule creates Service Activities (Sec.  1806.103(oo)), a 
new category of Qualified Activities (Sec.  1806.103(mm)). The Service 
Activities category includes: Community Services (Sec.  1806.103(r)); 
Deposit Liabilities (Sec.  1806.103(s)); Financial Services (Sec.  
1806.103(z)); Targeted Financial Services (Sec.  1806.103(rr)); and 
Targeted Retail Savings/Investment Products (Sec.  1806.103(ss)). 
Targeted Financial Services is a new category that includes ETAs, First 
Accounts, and IDAs. Targeted Retail Savings/Investment Products is a 
new sub-category that includes savings and other investment products 
targeted to Low- and Moderate-Income Residents of Distressed 
Communities.
    The revised interim rule eliminates Development Activities (Sec.  
1806.201(b)(4) of the current rule), re-designating Development 
Activities as Distressed Community Financing Activities (Sec.  
1806.103(u)). Distressed Community Financing Activities include: 
Affordable Housing Development Loans (Sec.  1806.103(b)); Affordable 
Housing Loans (Sec.  1806.103(c)), Home Improvement Loans (Sec.  
1806.103(dd)); Education Loans (Sec.  1806.103(v)); Commercial Real 
Estate Loans (Sec.  1806.103(l)); and Small Business Loans (Sec.  
1806.103(pp)). Affordable Housing Development Loan activities comprise 
loans related to the development of residential real property that is 
affordable to Low- and Moderate-Income households. Affordable Housing 
Loan means origination of a loan to finance the purchase or improvement 
of the borrower's primary residence, and that is secured by such 
property, where such borrower is a Low- and Moderate-Income individual 
(included in the Single Family Loans category of the current rule). 
Correspondingly, Single Family Loans have been re-designated as Home 
Improvement Loans and mean advances of funds, either unsecured or 
secured by a one-to-four family residential property, the proceeds of 
which are used to improve the borrower's primary residence. Education 
Loan means an advance of funds to a Resident of a Distressed Community 
for the purpose of financing a college or vocational education. Small 
Business Loan has been modified from focusing on the size of the loan 
to the size of the business and means an origination of a loan used for 
commercial or industrial activities (other than an Affordable Housing 
Finance Loan, Affordable Housing Development Loan, Commercial Real 
Estate Loan, Home Improvement Loan) to a business or farm that meets 
the size eligibility standards of the Small Business Administration's 
Development Company or Small Business Investment Company programs (13 
CFR 121.301) or have gross annual revenues of $1 million or less.
    (4) Definitions Related to Certain Qualified Activities: Consistent 
with the Fund's objective of ensuring that BEA Program awards are 
targeted to institutions that provide capital and services to CDFIs and 
other enterprises that have significant impact in their communities, 
the revised interim rule provides that certain types of CDFI Support 
Activities (Sec.  1806.103(q)), Community Services (Sec.  1806.103(r)), 
and Financial Services (Sec.  1806.103(z)), must be, among other 
requirements, provided to CDFIs or other enterprises, as applicable, 
that are Integrally

[[Page 5719]]

Involved in a Distressed Community (Sec.  1806.200). The revised 
interim rule defines Integrally Involved (Sec.  1806.103(gg)) as 
meaning
    (a) for a CDFI Partner, having provided at least five percent of 
financial transactions or dollars transacted (e.g., loans or equity 
investments as defined in 12 CFR 1805.104(s)), or five percent of 
Development Service activities, in the Distressed Community identified 
by the Applicant or the CDFI Partner, as applicable, in each of the 
three calendar years preceding the date of the applicable NOFA, or 
having transacted at least ten percent of financial transactions (e.g., 
loans or equity investments) in said Distressed Community in at least 
one of the three calendar years preceding the date of the applicable 
NOFA, or demonstrating that it has attained at least five percent of 
market share for a particular product in said Distressed Community 
(such as at least five percent of home mortgages originated in said 
Distressed Community) in at least one of the three calendar years 
preceding the date of the applicable NOFA; or
    (b) for a non-CDFI, having directed at least five percent of its 
business activities (e.g., investments, revenues, expenses, or other 
appropriate measures) to serving the Distressed Community identified by 
the Applicant in each of the three calendar years preceding the date of 
the applicable NOFA, or having provided at least ten percent of its 
business activities in said Distressed Community in at least one of the 
three calendar years preceding the date of the applicable NOFA.
    The revised interim rule also provides that the Fund may qualify 
further certain Qualified Activities, for example, through the 
application of dollar amount caps, in the applicable NOFA.
    (5) Measuring and Reporting Qualified Activities: Much of the 
information contained in Sec.  1806.201 of the current rule has been 
consolidated in the revised interim rule to remove repetitive material 
and to improve readability. In addition, sections concerning the 
measurement of Qualified Activities (Sec.  1806.202(a)-(e) of the 
current rule) have been incorporated in Sec.  1806.201 of the revised 
interim rule. The revised interim rule omits the Priority Factors ( see 
Sec.  1806.201(b)(3) of the current rule), and provides in Sec.  
1806.103(kk) that such Priority Factors shall be set forth in the 
applicable NOFA.
    (6) Low-Income Housing Tax Credits; New Markets Tax Credits: 
Sections 1806.201(d)(1) and (2) of the revised interim rule provide 
that activity by an Applicant shall not be considered a Qualified 
Activity if, with respect to such activity, the Applicant has received 
an allocation of Low-Income Housing Tax Credits or New Markets Tax 
Credits.
    (7) Treatment of Renewed/Refinanced Loans: Section 1806.201(e)(1) 
of the revised interim rule clarifies the Fund's treatment of renewed 
and refinanced loans. The Fund will continue to value refinanced loans 
based upon the increase in principal over the original loan. However, 
financial assistance provided by an Applicant shall not constitute a 
Qualified Activity, as defined in this part, for the purposes of 
calculating or receiving an award if, such activity has matured and is 
then renewed. This treatment of renewed and refinanced loans is 
consistent with the Fund's objective of creating incentives for 
providing new capital. The Fund recognizes that while there is value to 
borrowers in having loan maturities extended and other terms 
renegotiated, such activities, strictly speaking, do not create an 
additional flow of funds.
    (8) Estimated award amounts: Section 1806.202 of the revised 
interim rule provides that the estimated award amounts for all 
Qualified Activities (not solely for Development and Service as is the 
case under Sec.  1806.203(c) of the current rule) shall be determined 
by applying the appropriate:
    (a) award percentage (Sec.  1806.202(b)), as such percentages are 
set forth in the applicable NOFA, and
    (b) Priority Factor, where applicable, as set forth in the 
applicable NOFA (Sec.  1806.202(c)).
    (9) Selection Process, actual award amounts: Section 1806.203 of 
the revised interim rule sets forth the statutorily prescribed first 
priority for BEA Program awards for activities that have supported 
CDFIs. However, the revised interim rule omits the rankings of 
particular Qualified Activities within priority categories (Sec.  
1806.204(b) of the current rule). Rather, the revised interim rule 
provides that the Fund will set forth the applicable rankings of 
particular Qualified Activities within a priority category in the 
applicable NOFA. In addition, the interim revised rule incorporates 
most of Sec.  1806.205 of the current rule into Sec.  1806.203, and 
deletes the ``75 percent rule'' (Sec.  1806.205(b) of the current 
rule).
    (10) Applications for Bank Enterprise Awards: Section 1806.204 of 
the revised interim rule is substantially the same as Sec.  1806.206 of 
the current rule. The revised interim rule omits the requirements that 
the Applicant submit: a copy of its certificate of insurance (Sec.  
1806.206(b)(1) of the current rule); a narrative description of its 
Qualified Activities (Sec.  1806.206(b)(3) of the current rule); a 
report of its asset size (Sec.  1806.206(b)(4) of the current rule); 
and a copy of its most recent annual report (Sec.  1806.206(b)(7) of 
the current rule). The Fund believes that this information duplicates 
other information that is available to the Fund via other sources, 
including appropriate banking agencies.
    (11) Award Agreement; Sanctions: Section 1806.300(c) of the revised 
interim rule provides that if a BEA Program award recipient, or its 
Subsidiary or Affiliate, fails to comply with the terms and conditions 
of its BEA Program award agreement, or the terms and conditions of any 
other assistance agreement under the CDFI Program, then the Fund may 
reject such Applicant's application or withhold any disbursement of 
such award funds.
    (12) Clarification on Measuring Certificates of Deposits: Section 
1806.103(q) of the revised interim rule provides that any certificate 
of deposit placed by an Applicant in a CDFI that is a bank, thrift, or 
credit union may be either:
    (i) Uninsured and committed for a term of at least three years; or
    (ii) insured and committed for a term of at least three years, if 
it earns a rate of interest that is determined by the Fund to be 
materially below market, as set forth in the applicable NOFA.

IV. Rulemaking Analysis

(1) Executive Order (E.O.) 12866

    It has been determined that this regulation is not a significant 
regulatory action as defined in Executive Order 12866. Therefore, a 
Regulatory Assessment is not required.

(2) Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for this 
revised interim rule, the provisions of the Regulatory Flexibility Act 
(5 U.S.C. 601 et seq.) do not apply.

(3) Paperwork Reduction Act

    The collections of information contained in this interim rule have 
been previously reviewed and approved by OMB in accordance with the 
Paperwork Reduction Act of 1995 and assigned OMB Control Number 1559-
0005. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB. This document restates the 
collections of information without substantive change.

[[Page 5720]]

    Comments concerning suggestions for reducing the burden of 
collections of information should be directed to the Deputy Director 
for Policy and Programs, Community Development Financial Institutions 
Fund, 601 13th Street, NW., Suite 200 South, Washington, DC 20005, and 
to the Office of Management and Budget, Attention: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, D.C. 20503.

(4) National Environmental Policy Act

    Pursuant to Treasury Directive 75-02 (Department of the Treasury 
Environmental Quality Program), the Department has determined that 
these revised interim regulations are categorically excluded from the 
National Environmental Policy Act and do not require an environmental 
review.

(5) Administrative Procedure Act

    The Fund is promulgating this revised interim rule without 
opportunity for prior public comment pursuant to the Administrative 
Procedure Act (APA), 5 U.S.C. 553, because the BEA Program involves 
grants and is thereby exempt from the procedural requirements of the 
APA pursuant to 5 U.S.C. 553(a)(2). The Fund also believes that an 
immediate effective date is necessary for the convenience of the 
persons affected. Specifically, an immediate effective date will 
minimize the risk of confusion on the affected community by ensuring 
that there will be a single and uniform regulation in effect during the 
Assessment Period that, as stated in the NOFA published elsewhere in 
this issue of the Federal Register, will begin on January 1, 2003.

(6) Comment

    Public comment is solicited on all aspects of this interim 
regulation. The Fund will consider all comments made on the substance 
of this interim regulation, but does not intend to hold hearings.

(7) Catalog of Federal Financial Assistance Number

    Bank Enterprise Award Program--21.021.

(8) List of Subjects in 12 CFR Part 1806

    Banks, banking, Community development, Grant programs--housing and 
community development, Reporting and recordkeeping requirements, 
Savings associations.
    For the reasons set forth in the preamble, 12 CFR Part 1806 is 
revised to read as follows:

PART 1806--BANK ENTERPRISE AWARD PROGRAM

Subpart A--General Provisions
Sec.
1806.100 Purpose.
1806.101 Summary.
1806.102 Relationship to the Community Development Financial 
Institutions Program.
1806.103 Definitions.
1806.104 Waiver authority.
1806.105 OMB control number.
Subpart B--Awards
1806.200 Community eligibility and designation.
1806.201 Measuring and Reporting Qualified Activities.
1806.202 Estimated award amounts.
1806.203 Selection process, actual award amounts.
1806.204 Applications for Bank Enterprise Awards.
Subpart C--Terms and Conditions of Assistance
1806.300 Award Agreement; sanctions.
1806.301 Records, reports and audits of Awardees.
1806.302 Compliance with government requirements.
1806.303 Fraud, waste and abuse.
1806.304 Books of account, records and government access.
1806.305 Retention of records.

    Authority: 12 U.S.C. 1834a, 4703, 4703 note, 4713, 4717; 31 
U.S.C. 321.

Subpart A--General Provisions


Sec.  1806.100  Purpose.

    The purpose of the Bank Enterprise Award Program is to provide an 
incentive for insured depository institutions to increase their 
activities in Distressed Communities, and provide financial assistance 
to Community Development Financial Institutions.


Sec.  1806.101  Summary.

    (a) Under the Bank Enterprise Award Program, the Fund makes awards 
to selected Applicants that:
    (1) Increase their investments in or other support of Community 
Development Financial Institutions;
    (2) Increase lending and investment activities within Distressed 
Communities; or
    (3) Increase the provision of certain services and assistance.
    (b) Distressed Communities must meet minimum poverty and 
unemployment criteria.
    (c) Applicants are selected to participate in the program through a 
competitive application process. Awards are based on increases in 
Qualified Activities that are carried out by the Applicant during an 
Assessment Period. Bank Enterprise Awards are distributed after 
successful completion of projected Qualified Activities. All awards 
shall be made subject to the availability of funding.


Sec.  1806.102  Relationship to the Community Development Financial 
Institutions Program.

    (a) Prohibition against double funding. No CDFI may receive a Bank 
Enterprise Award if it has:
    (1) An application pending for assistance under the Community 
Development Financial Institutions Program (part 1805 of this chapter);
    (2) Directly received assistance from the Fund under the Community 
Development Financial Institutions Program within the 12-month period 
prior to the date the Fund selected the Applicant to receive a Bank 
Enterprise Award; or
    (3) Ever received assistance under the Community Development 
Financial Institutions Program for the same activities for which it is 
seeking a Bank Enterprise Award.
    (b) Matching funds. Equity Investments and CDFI Support Activities 
(except technical assistance) provided to a CDFI under this part can be 
used by the CDFI to meet the matching funds requirements of the 
Community Development Financial Institutions Program.


Sec.  1806.103  Definitions.

    For purposes of this part the following terms shall have the 
following definitions:
    (a) Act means the Community Development Banking and Financial 
Institutions Act of 1994, as amended (12 U.S.C. 4701 et seq.);
    (b) Affordable Housing Development Loan means origination of a loan 
to finance the acquisition, construction, and/or development of single-
or multi-family residential real property, where at least sixty percent 
of the units in such property are affordable, as may be defined in the 
applicable NOFA, to Low- and Moderate-Income individuals.
    (c) Affordable Housing Loan means origination of a loan to finance 
the purchase or improvement of the borrower's primary residence, and 
that is secured by such property, where such borrower is a Low- and 
Moderate-Income individual. Affordable Housing Loan may also refer to 
second (or otherwise subordinated) liens or ``soft second'' mortgages, 
and other similar types of downpayment assistance loans but may not 
necessarily be secured by such property originated for the purpose of 
facilitating the purchase or improvement of the borrower's primary 
residence, where such borrower is a Low- and Moderate-Income 
individual.

[[Page 5721]]

    (d) Applicant means any insured depository institution (as defined 
in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1813)) that is applying for a Bank Enterprise Award;
    (e) Appropriate Federal Banking Agency has the same meaning as in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
    (f) Assessment Period means an annual or semi-annual period 
specified in the applicable Notice of Funds Availability in which an 
Applicant will carry out, or has carried out, Qualified Activities;
    (g) Award Agreement means a formal agreement between the Fund and 
an Awardee pursuant to Sec.  1806.300;
    (h) Awardee means an Applicant selected by the Fund to receive a 
Bank Enterprise Award;
    (i) Bank Enterprise Award (or BEA Program Award) means an award 
made to an Applicant pursuant to this part;
    (j) Bank Enterprise Award (or BEA) Program means the program 
authorized by section 114 of the Act and implemented under this part;
    (k) Baseline Period means an annual or semi-annual period specified 
in the applicable NOFA in which an Applicant has previously carried out 
Qualified Activities;
    (l) Commercial Real Estate Loan means an origination of a loan 
(other than an Affordable Housing Loan) that is secured by real estate 
and used to finance the acquisition or rehabilitation of a building, or 
the acquisition, construction and or development of property, used for 
commercial purposes;
    (m) Community Development Entity (or CDE) means any Qualified 
Community Development Entity that meets the requirements set forth at 
Internal Revenue Code (IRC) Sec.  45D(c) and that has been certified as 
such by the Fund;
    (n) Community Development Financial Institution (or CDFI) means an 
entity whose certification as a CDFI under Sec.  1805.201 of this 
chapter is in effect as of the end of the applicable Assessment Period 
(the Assessment Period in which the Qualified Activity takes place) and 
that meets the requirements of Sec.  1805.200 of this chapter at the 
time of the Qualified Activity, subject to the rest of this paragraph 
(n). If an Applicant is proposing to engage in CDFI Related Activities 
with an uncertified CDFI, the uncertified CDFI may apply for 
certification by submitting the information described in Sec.  
1805.201(b) of this chapter. In order for the Applicant to be eligible 
to receive a Bank Enterprise Award for its CDFI Related Activities, the 
required information with respect to the uncertified CDFI shall be 
submitted to the Fund as specified in the applicable NOFA, and 
certification must be completed by the end of the applicable Assessment 
Period as specified in the applicable NOFA. Notwithstanding anything in 
this paragraph (n) to the contrary, an Applicant may receive an award 
pursuant to this part for assistance provided to an uncertified CDFI 
that, at the time of the Qualified Activity, does not meet the 
requirements of Sec.  1805.200 of this chapter if the uncertified CDFI 
is certified by the end of the applicable Assessment Period.
    (o) CDFI Partner means a CDFI that has been provided assistance in 
the form of CDFI Related Activities by an Applicant;
    (p) CDFI Related Activities means Equity Investments, Equity-Like 
Loans and CDFI Support Activities;
    (q) CDFI Support Activity means assistance provided by an Applicant 
or its Subsidiary to a CDFI that meets criteria set forth by the Fund 
in the applicable NOFA, that is Integrally Involved in a Distressed 
Community, in the form of the origination of a loan, technical 
assistance, or deposits if such deposits are:
    (1) Uninsured and committed for a term of at least three years; or
    (2) Insured, committed for a term of at least three years, and 
provided at an interest rate that is materially (in the determination 
of the Fund) below market rates;
    (r) Community Services means the following forms of assistance 
provided by officers, employees or agents (contractual or otherwise) of 
the Applicant:
    (1) Provision of technical assistance, through consumer education 
programs, to Residents regarding managing their personal finances;
    (2) Provision of technical assistance and consulting services to 
newly formed small businesses located in the Distressed Community;
    (3) Provision of technical assistance to, or servicing the loans 
of, Low- or Moderate-Income homeowners and homeowners located in the 
Distressed Community; and
    (4) Other services provided to Low- and Moderate-Income individuals 
in a Distressed Community or enterprises Integrally Involved in a 
Distressed Community, as deemed appropriate by the Fund;
    (s) Deposit Liabilities means time or savings deposits or demand 
deposits, accepted from Residents at offices of the Applicant, or a 
Subsidiary of the Applicant, located within the Distressed Community. 
Depository Liabilities may only include deposits held by individuals in 
transaction accounts (i.e., demand deposits, NOW accounts, automated 
transfer service accounts and telephone or preauthorized transfer 
accounts) or nontransaction accounts (i.e., money market deposit 
accounts, other savings deposits and all time deposits), as defined by 
the Appropriate Federal Banking Agency;
    (t) Distressed Community means a geographic community which meets 
the minimum area eligibility requirements specified in Sec.  1806.200, 
and such additional criteria as may be set forth in the applicable 
NOFA;
    (u) Distressed Community Financing Activities means Affordable 
Housing Loans, Affordable Housing Development Loans and related Project 
Investments; Education Loans; Commercial Real Estate Loans and related 
Project Investments; Home Improvement Loans; and Small Business Loans 
and related Project Investments;
    (v) Education Loan means an advance of funds to a student, who is a 
Resident of a Distressed Community, for the purpose of financing a 
college or vocational education.
    (w) Electronic Transfer Account (or ETA) means an account meeting 
the requirements, and with respect to which the Applicant has satisfied 
the requirements, set forth in the Federal Register on July 16, 1999 at 
64 FR 38510, as such requirements may be amended from time to time;
    (x) Equity Investment means financial assistance provided by an 
Applicant or its Subsidiary to a CDFI, which CDFI meets such criteria 
as set forth in the applicable NOFA, in the form of a grant, a stock 
purchase, a purchase of a partnership interest, a purchase of a limited 
liability company membership interest, or any other investment deemed 
to be an Equity Investment by the Fund;
    (y) Equity-Like Loan means a loan provided by an Applicant or its 
Subsidiary to a CDFI, and made on such terms that it has 
characteristics of an Equity Investment (consistent with requirements 
of the Appropriate Federal Banking Agency), as such characteristics may 
be specified by the Fund in the applicable NOFA;
    (z) Financial Services means check-cashing, providing money orders 
and certified checks, automated teller machines, safe deposit boxes, 
new branches, and other comparable services as may be specified by the 
Fund in the applicable NOFA, that are provided by the Applicant to Low- 
and Moderate-Income individuals in the Distressed

[[Page 5722]]

Community or enterprises Integrally Involved in the Distressed 
Community;
    (aa) First Account means a low-cost account and such other services 
designed to expand access to financial services for Low- and Moderate-
Income individuals, provided pursuant to grants made under the 
Consolidated Appropriations Act, 2001 (Public Law 106-554, 114 Stat. 
2763, 2763A-126), and the Department of Transportation and Related 
Agencies Appropriations Act, 2001 (Public Law 106-346, 114 Stat. 1356, 
1356A-44);
    (bb) Fund means the Community Development Financial Institutions 
Fund, established under section 104(a) of the Act (12 U.S.C. 4703(a));
    (cc) Geographic Units means counties (or equivalent areas), 
incorporated places, minor civil divisions that are units of local 
government, census tracts, block numbering areas, block groups, and 
American Indian or Alaska Native areas (as each is defined by the U.S. 
Bureau of the Census) or other areas deemed appropriate by the Fund;
    (dd) Home Improvement Loan means an advance of funds, either 
unsecured or secured by a one-to-four family residential property, the 
proceeds of which are used to improve the borrower's primary residence;
    (ee) Indian Reservation means a geographic area that meets the 
requirements of section 4(10) of the Indian Child Welfare Act of 1978 
(25 U.S.C. 1903(10)), and shall include land held by incorporated 
Native groups, regional corporations, and village corporations, as 
defined in and pursuant to the Alaska Native Claims Settlement Act (43 
U.S.C. 1601 et seq.), public domain Indian allotments, and former 
Indian Reservations in the State of Oklahoma;
    (ff) Individual Development Account (or IDA) means an account that 
meets the requirements, and with respect to the provision of which 
Applicant has satisfied the requirements, set forth in the U.S. 
Department of Health and Human Services Program Announcement OCS-2000-
04, published on December 14, 1999 in the Federal Register at 64 FR 
69824, as such requirements may be amended from time to time;
    (gg) Integrally Involved means (i) for a CDFI Partner, having 
provided at least five percent of financial transactions or dollars 
transacted (e.g., loans or equity investments as defined in 12 CFR 
1805.104(s)), or five percent of Development Service activities, in the 
Distressed Community identified by the Applicant or the CDFI Partner, 
as applicable, in each of the three calendar years preceding the date 
of the applicable NOFA, or having transacted at least ten percent of 
financial transactions (e.g., loans or equity investments) in said 
Distressed Community in at least one of the three calendar years 
preceding the date of the applicable NOFA, or demonstrating that it has 
attained at least five percent of market share for a particular product 
in said Distressed Community (such as at least five percent of home 
mortgages originated in said Distressed Community) in at least one of 
the three calendar years preceding the date of the applicable NOFA; or 
(ii) for a non-CDFI, having directed at least five percent of its 
business activities (e.g., investments, revenues, expenses, or other 
appropriate measures) to serving the Distressed Community identified by 
the Applicant in each of the three calendar years preceding the date of 
the applicable NOFA, or having provided at least ten percent of its 
business activities in said Distressed Community in at least one of the 
three calendar years preceding the date of the applicable NOFA.
    (hh) Low- and Moderate-Income means income that does not exceed 80 
percent of the median income of the area involved, as determined by the 
Secretary of Housing and Urban Development, with adjustments for 
smaller and larger families pursuant to section 102(a)(20) of the 
Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(20));
    (ii) Metropolitan Area means an area designated as such (as of the 
date of the application) by the Office of Management and Budget 
pursuant to 44 U.S.C. 3504(d)(3), 31 U.S.C. 1104(d), and Executive 
Order 10253 (3 CFR, 1949-1953 Comp., p. 758), as amended;
    (jj) Notice of Funds Availability (or NOFA) means the public 
notice, published by the Fund in the Federal Register, that announces 
the availability of BEA Program funds for a particular funding round 
and that advises Applicants with respect to obtaining application 
materials, establishes application submission deadlines, and 
establishes other requirements or restrictions applicable for the 
particular funding round including, for example, application contents, 
further qualifications of Qualified Activities, Priority Factors, 
related policy directives, and any restrictions on Bank Enterprise 
Award amounts;
    (kk) Priority Factor means a numeric value assigned to each type of 
activity within each category of Qualified Activity, as may be 
established by the Fund in the applicable NOFA. A priority factor 
represents the Fund's assessment of the degree of difficulty, the 
extent of innovation, and the extent of benefits accruing to the 
Distressed Community for each type of activity;
    (ll) Project Investment means providing financial assistance in the 
form of a purchase of stock, limited partnership interest, other 
ownership instrument, or a grant to an entity that is Integrally 
Involved in a Distressed Community and formed for the sole purpose of 
engaging in a project or activity, approved by the Fund, including 
Affordable Housing Development Loans, Affordable Housing Loans, 
Commercial Real Estate Loans, and Small Business Loans (as defined in 
this part);
    (mm) Qualified Activities means CDFI Related Activities, Distressed 
Community Financing Activities, and Service Activities;
    (nn) Resident means an individual domiciled in a Distressed 
Community;
    (oo) Service Activities means the following activities that are 
carried out by the Applicant: Deposit Liabilities; Financial Services; 
Community Services; Targeted Financial Services; and Targeted Retail 
Savings/Investment Products;
    (pp) Small Business Loan means an origination of a loan used for 
commercial or industrial activities (other than an Affordable Housing 
Loan, Affordable Housing Development Loan, Commercial Real Estate Loan, 
Home Improvement Loan) to a business or farm that meets the size 
eligibility standards of the Small Business Administration's 
Development Company or Small Business Investment Company programs (13 
CFR 121.301) or have gross annual revenues of $1 million or less;
    (qq) Subsidiary has the same meaning as in section 3 of the Federal 
Deposit Insurance Act, except that a CDFI shall not be considered a 
subsidiary of any insured depository institution or any depository 
institution holding company that controls less than 25 percent of any 
class of the voting shares of such corporation and does not otherwise 
control, in any manner, the election of a majority of directors of the 
corporation;
    (rr) Targeted Financial Services means ETAs, First Accounts, IDAs, 
and such other similar banking products as maybe specified by the Fund 
in the applicable NOFA;
    (ss) Targeted Retail Savings/Investment Products means certificates 
of deposit, mutual funds, life insurance and other similar savings or 
investment vehicles targeted to Low- and Moderate-Income Residents, as 
may be specified by the Fund in the applicable NOFA; and

[[Page 5723]]

    (tt) Unit of General Local Government means any city, county town, 
township, parish, village or other general-purpose political 
subdivision of a State or Commonwealth of the United States, or 
general-purpose subdivision thereof, and the District of Columbia.


Sec.  1806.104  Waiver authority.

    The Fund may waive any requirement of this part that is not 
required by law, upon a determination of good cause. Each such waiver 
will be in writing and supported by a statement of the facts and 
grounds forming the basis of the waiver. For a waiver in any individual 
case, the Fund must determine that application of the requirement to be 
waived would adversely affect the achievement of the purposes of the 
Act. For waivers of general applicability, the Fund will publish 
notification of granted waivers in the Federal Register.


Sec.  1806.105  OMB control number.

    The collection of information requirements in this part have been 
approved by the Office of Management and Budget and assigned OMB 
control number 1559-0005.

Subpart B--Awards


Sec.  1806.200  Community eligibility and designation.

    (a) General. If an Applicant proposes to carry out Service 
Activities, or Distressed Community Financing Activities, the Applicant 
shall designate one or more Distressed Communities in which it proposes 
to carry out those activities. If an Applicant proposes to carry out 
CDFI Support Activities, the Applicant shall provide evidence that the 
CDFI it is proposing to support is Integrally Involved in a Distressed 
Community. If an Applicant proposes to carry out CDFI Support 
Activities, Service Activities, or Distressed Community Financing 
Activities, the Applicant may designate different Distressed 
Communities for each category of activity.
    (b) Minimum area eligibility requirements. A Distressed Community 
must meet the following minimum area eligibility requirements:
    (1) Geographic requirements. A Distressed Community must be a 
geographic area:
    (i) That is located within the boundaries of a Unit of General 
Local Government;
    (ii) The boundaries of which are contiguous; and
    (A) The population of which must be at least 4,000 if any portion 
of the area is located within a Metropolitan Area with a population of 
50,000 or greater;
    (B) The population must be at least 1,000 if no portion of the area 
is located within such a Metropolitan Area; or
    (C) The area is located entirely within an Indian Reservation.
    (2) Distress requirements. A Distressed Community must be a 
geographic area where:
    (i) At least 30 percent of the Residents have incomes which are 
less than the national poverty level, as published by the U.S. Bureau 
of the Census in the most recent decennial census for which data is 
available;
    (ii) The unemployment rate is at least 1.5 times greater than the 
national average, as determined by the U.S. Bureau of Labor Statistics' 
most recent data, including estimates of unemployment developed using 
the U.S. Bureau of Labor Statistics' Census Share calculation method; 
and
    (iii) Such additional requirements as may be specified by the Fund 
in the applicable NOFA.
    (c) Area designation. An Applicant shall designate an area as a 
Distressed Community by:
    (1) Selecting Geographic Units which individually meet the minimum 
area eligibility requirements set forth in paragraph (b) of this 
section; or
    (2) Selecting two or more Geographic Units which, in the aggregate, 
meet the minimum area eligibility requirements set forth in paragraph 
(b) of this section, provided that no Geographic Unit selected by the 
Applicant within the area has a poverty rate of less than 20 percent.
    (d) Designation and notification process. The Fund will provide a 
prospective Applicant with data and other information to help it 
identify areas eligible to be designated as a Distressed Community. 
Applicants shall submit designation materials as instructed in the 
applicable NOFA.


Sec.  1806.201  Measuring and Reporting Qualified Activities.

    (a) General. An Applicant may receive a Bank Enterprise Award for 
engaging in any of the following categories of Qualified Activities 
during an Assessment Period: CDFI Related Activities, Distressed 
Community Financing Activities, or Service Activities. The Fund may 
further qualify such Qualified Activities in the applicable NOFA, 
including such additional geographic and transaction size limitations 
as the Fund deems appropriate.
    (b) Reporting Qualified Activities. An Applicant should report only 
its Qualified Activities for the category in which it is seeking a Bank 
Enterprise Award. For example, if an Applicant is seeking a Bank 
Enterprise Award for Distressed Community Financing Activities only, it 
should report only its activities for the Distressed Community 
Financing Activities category.
    (1) If an Applicant elects to apply for an award in a either the 
CDFI Related Activities category or the Distressed Community Financing 
Activities category, it must report on all types of activity within 
that category except if an Applicant can provide a reasonable 
explanation, acceptable to the Fund in its sole discretion, as to why 
it cannot report on such category.
    (2) Exception. An Applicant may elect not to report each type of 
activity within the Service Activities category.
    (c) Area served. Service Activities and Distressed Community 
Financing Activities must serve a Distressed Community. An activity is 
considered to serve a Distressed Community if it is:
    (1) Undertaken in the Distressed Community; or
    (2) Provided to Low- and Moderate-Income Residents or enterprises 
Integrally Involved in the Distressed Community.
    (d) Limitations.
    (1) Low-Income Housing Tax Credits. Financial assistance provided 
by an Applicant for which the Applicant receives benefits through Low-
Income Housing Tax Credits, authorized pursuant to Section 42 of the 
Internal Revenue Code, as amended (26 U.S.C. 42), shall not constitute 
an Equity Investment, Project Investment, or other Qualified Activity, 
for the purposes of calculating or receiving a Bank Enterprise Award.
    (2) New Markets Tax Credits. Financial assistance provided by an 
Applicant for which the Applicant receives benefits as an investor in a 
Community Development Entity that has received an allocation of New 
Markets Tax Credits, authorized pursuant to Section 45D of the Internal 
Revenue Code, as amended (26 U.S.C. 45D), shall not constitute an 
Equity Investment, Project Investment, or other Qualified Activity, for 
the purposes of calculating or receiving a Bank Enterprise Award.
    (3) Loan Renewals. Financial assistance provided by an Applicant 
shall not constitute a Qualified Activity, as defined in this part, for 
the purposes of calculating or receiving an award if, such activity has 
matured and is then renewed.
    (e) Measuring the Value of Qualified Activities. Subject to such 
additional or alternative valuations as the Fund may specify in the 
applicable NOFA, the Fund will assess the value of:

[[Page 5724]]

    (1) Equity Investments, Equity-Like Loans, loans, grants and 
certificates of deposits, at the original amount of such Equity 
Investments, Equity-Like Loans, loans, grants or certificates of 
deposits. Where a certificate of deposit matures and is then rolled 
over during the Baseline Period or the Assessment Period, as 
applicable, the Fund will assess the value of the full amount of the 
rolled over deposit. Where an existing loan is refinanced (a new loan 
is originated to pay off an existing loan, whether or not there is a 
change in the applicable loan terms), the Fund will only assess the 
value of any increase in the principal amount of the refinanced loan;
    (2) Project Investments at the original amount of the purchase of 
stock, limited partnership interest, other ownership interest, or 
grant;
    (3) Deposit Liabilities at the dollar amount deposited as measured 
by comparing (i) the net change in the amount of applicable funds on 
deposit at the Applicant during the Baseline Period with (ii) the net 
change in the amount of applicable funds on deposit at the Applicant 
during the Assessment Period, as described below:
    (i) The Applicant shall calculate the net change in deposits during 
the Baseline Period, by comparing the amount of applicable funds on 
deposit at the close of business the day before the beginning of the 
Baseline Period and at the close of business on the last day of the 
Baseline Period; and
    (ii) The Applicant shall calculate the net change in such deposits 
during the Assessment Period, by comparing the amount of applicable 
funds on deposit at the close of business the day before the beginning 
of the Assessment Period and at the close of business on the last day 
of the Assessment Period;
    (4) Financial Services and Targeted Financial Services based on the 
predetermined amounts as may be set forth by the Fund in the applicable 
NOFA; and
    (5) Financial Services (other than those for which the Fund has 
established a predetermined value), Community Services, and CDFI 
Support Activities consisting of technical assistance based on the 
administrative costs of providing such services.
    (f) Closed Transactions. A transaction shall be considered to have 
been carried out during the Baseline Period or the Assessment Period if 
the documentation evidencing the transaction:
    (1) Is executed on a date within the applicable Baseline Period or 
Assessment Period, respectively; and
    (2) Constitutes a legally binding agreement between the Applicant 
and a borrower or investee which specifies the final terms and 
conditions of the transaction, except that any contingencies included 
in the final agreement must be typical of such transaction and 
acceptable (both in the judgment of the Fund); and
    (3) An initial cash disbursement of loan or investment proceeds has 
occurred in a manner that is consistent with customary business 
practices and is reasonable given the nature of the transaction (as 
determined by the Fund) unless it is normal business practice to make 
no initial disbursement at closing and the Applicant demonstrates that 
the borrower has access to the proceeds, subject to reasonable 
conditions as may be determined by the Fund.
    (g) Reporting Period. An Applicant may only measure the amount of a 
Qualified Activity that it reasonably expects to disburse to an 
investee, borrower, or other recipient within one year of the end of 
the applicable Assessment Period, or such other period as may be set 
forth by the Fund in the applicable NOFA.


Sec.  1806.202  Estimated award amounts.

    (a) General. An Applicant shall calculate an estimated award amount 
that it shall submit to the Fund for consideration for a Bank 
Enterprise Award.
    (b) Award Percentages. The Fund will establish the award percentage 
for each category of Qualified Activities in the applicable NOFA. 
Applicable award percentages for activities undertaken by Applicants 
that are CDFIs will be equal to three times the award percentages for 
activities undertaken by Applicants that are not CDFIs.
    (c) Calculating the estimated award amount. The estimated award 
amount for each category of Qualified Activities will be equal to the 
applicable award percentage of the increase in the weighted value of 
such Qualified Activities between the Baseline Period and Assessment 
Period. The weighted value of the applicable Qualified Activities shall 
be calculated by:
    (1) subtracting the Baseline Period value of such Qualified 
Activity from the Assessment Period value of such Qualified Activity to 
yield a remainder; and
    (2) multiplying the remainder by the applicable Priority Factor (as 
set forth in the applicable NOFA).
    (d) Estimated Award Eligibility Review. The Fund will determine the 
eligibility of each transaction for which an Applicant has applied for 
a Bank Enterprise Award. Based upon this review, the Fund will 
calculate the actual award amount for which such Applicant is eligible.


Sec.  1806.203  Selection Process, actual award amounts.

    (a) Sufficient Funds Available to Cover Estimated Awards. All Bank 
Enterprise Awards are subject to the availability of funds. If the 
amount of funds available during a funding round is sufficient to cover 
all estimated award amounts for which Applicants are eligible, in the 
Fund's determination, and an Applicant meets all of the program 
requirements specified in this part, then such Applicant shall receive 
an actual award amount that is calculated by the Fund in the manner 
specified in Section 1806.202.
    (b) Insufficient Funds Available to Cover Estimated Awards. If the 
amount of funds available during a funding round is insufficient to 
cover all estimated award amounts for which Applicants are eligible, in 
the Fund's determination, then the Fund will select Awardees and 
determine actual award amounts based on the process described in this 
section.
    (c) Priority of Awards. The Fund will rank Applicants in each 
category of Qualified Activity according to the priorities described in 
this paragraph (c). All Applicants in the first priority category will 
be selected for Bank Enterprise Awards before Applicants in the second 
priority category. All Applicants in the first and second priority 
categories will be selected for Bank Enterprise Awards before 
Applicants in the third priority category. Selections within each 
priority category will be based on the Applicants' relative rankings 
within each such category, subject to the availability of funds.
    (1) First priority. If the amount of funds available during a 
funding round is insufficient for all estimated award amounts, first 
priority will be given to Applicants that propose to engage in CDFI 
Related Activities, ranked in the order set forth in the applicable 
NOFA.
    (2) Second priority. If the amount of funds available during a 
funding round is sufficient for all CDFI Related Activities but 
insufficient for all estimated award amounts, second priority will be 
given to Applicants that propose to engage in Distressed Community 
Financing Activities, ranked in the order set forth in the applicable 
NOFA.
    (3) Third Priority. If the amount of funds available during a 
funding round is sufficient for all CDFI Related Activities and all 
Distressed Community Financing Activities, but insufficient for all 
remaining estimated award amounts,

[[Page 5725]]

third priority will be given to Applicants that propose to engage in 
Service Activities, ranked in the order set forth in the applicable 
NOFA.
    (d) Calculating actual award amounts. The Fund will determine 
actual award amounts based upon the availability of funds, increases in 
Qualified Activities from the Baseline to the Assessment Period, and an 
Applicant's priority ranking. If an Applicant receives an award for 
more than one priority category described in this section, the Fund 
will combine the award amounts into a single Bank Enterprise Award.
    (e) Unobligated or deobligated funds. The Fund, in its sole 
discretion, may use any deobligated funds or funds not obligated during 
a funding round:
    (1) To select Applicants not previously selected, using the 
calculation and selection process contained in this part;
    (2) To make additional monies available for a subsequent funding 
round; or
    (3) As otherwise authorized by the Act.
    (f) Limitation. The Fund, in its sole discretion, may deny or limit 
the amount of an award for any reason.


Sec.  1806.204  Applications for Bank Enterprise Awards.

    (a) Notice of Funds Availability; Applications. Applicants shall 
submit applications for Bank Enterprise Awards in accordance with this 
section and the applicable NOFA. After receipt of an application, the 
Fund may request clarifying or technical information related to 
materials submitted as part of such application or to verify that 
Qualified Activities were carried out in the manner prescribed in this 
part.
    (b) Application contents. An application for a Bank Enterprise 
Award shall contain:
    (1) A completed worksheet that reports the increases in Qualified 
Activities actually carried out during the Baseline and Assessment 
Period. If an Applicant has merged with another institution during the 
Assessment Period, it shall submit a separate Baseline Period worksheet 
for each subject institution and one Assessment Period worksheet that 
reports the activities of the merged institutions. If such a merger is 
unexpectedly delayed beyond the Assessment Period, the Fund reserves 
the right to withhold distribution of an award until the merger has 
been completed;
    (2) A report of Qualified Activities that were closed during the 
Assessment Period. Such report shall describe the original amount, 
census tract served, and the dates of execution, initial disbursement, 
and final disbursement of the instrument;
    (3) With respect to:
    (i) All CDFI Related Activities; and
    (ii) Distressed Community Financing Activities where the original 
amount of the value of the activity is $250,000 or greater, 
documentation that meets the conditions described in Sec.  1806.201(f);
    (4) Information necessary for the Fund to complete its 
environmental review requirements pursuant to part 1815 of this 
chapter;
    (5) Certifications that the information provided to the Fund is 
true and accurately reflects the Qualified Activities carried out 
during an Assessment Period; and that the Applicant will comply with 
all relevant provisions of this chapter and all applicable Federal, 
State, and local laws, ordinances, regulations, policies, guidelines, 
and requirements;
    (6) In the case of an Applicant proposing to engage in Service 
Activities, Distressed Community Financing Activities, a completed 
Distressed Community Designation worksheet, and a map and narrative 
description of the Distressed Community;
    (7) Information that indicates that each CDFI to which an Applicant 
has provided CDFI Support Activities is Integrally Involved in a 
Distressed Community, a completed Distressed Community Designation 
worksheet, and a map and narrative description of the Distressed 
Community; and
    (8) Any other information requested by the Fund, or specified by 
the Fund in the applicable NOFA or the Bank Enterprise Award 
application, in order to document or otherwise assess the validity of 
information provided by the Applicant to the Fund.

Subpart C--Terms and Conditions of Assistance


Sec.  1806.300  Award Agreement; Sanctions.

    (a) General. After the Fund selects an Awardee, the Fund and the 
Awardee will enter into an Award Agreement. The Award Agreement shall 
provide that an Awardee shall:
    (1) Carry out its Qualified Activities in accordance with 
applicable law, the approved application, and all other applicable 
requirements;
    (2) Comply with such other terms and conditions (including 
recordkeeping and reporting requirements) that the Fund may establish; 
and
    (3) Not receive any monies until the Fund has determined that the 
Awardee has fulfilled all applicable requirements.
    (b) Sanctions. In the event of any fraud, misrepresentation, or 
noncompliance with the terms of the Award Agreement by the Awardee, the 
Fund may terminate, reduce, or recapture the award, bar the Awardee 
and/or its Affiliates from applying for an award from the Fund for a 
period to be decided by the Fund in its sole discretion, and pursue any 
other available legal remedies.
    (c) Compliance with Other CDFI Fund Awards. In the event that an 
Awardee or its Subsidiary or Affiliate is not in compliance, as 
determined by the Fund, with the terms and conditions of any other 
award under the Bank Enterprise Award Program or any component of the 
Community Development Financial Institutions Program, the Fund may, in 
its sole discretion, reject an application for or withhold disbursement 
(either initial or subsequent) on a Bank Enterprise Award.
    (d) Notice. Prior to imposing any sanctions pursuant to this 
section or an Award Agreement, the Fund will provide the Awardee with 
written notice of the proposed sanction and an opportunity to comment. 
Nothing in this section, however, will provide an Awardee with the 
right to any formal or informal hearing or comparable proceeding not 
otherwise required by law.


Sec.  1806.302  Compliance with government requirements.

    In carrying out its responsibilities pursuant to an Award 
Agreement, the Awardee shall comply with all applicable Federal, State, 
and local laws, regulations and ordinances, OMB Circulars, and 
Executive Orders.


Sec.  1806.303  Fraud, waste and abuse.

    Any person who becomes aware of the existence or apparent existence 
of fraud, waste, or abuse of assistance provided under this part should 
report such incidences to the Office of Inspector General of the U.S. 
Department of the Treasury.


Sec.  1806.304  Books of account, records and government access.

    An Awardee shall submit such financial and activity reports, 
records, statements, and documents at such times, in such forms, and 
accompanied by such supporting data, as required by the Fund and the 
U.S. Department of the Treasury to ensure compliance with the 
requirements of this part. The United States Government, including the 
U.S. Department of the Treasury, the Comptroller General, and its duly 
authorized representatives, shall have full and free access to the 
Awardee's offices and facilities, and all books, documents, records, 
and financial

[[Page 5726]]

statements relevant to the award of the Federal funds and may copy such 
documents as they deem appropriate.


Sec.  1806.305  Retention of records.

    An Awardee shall comply with all record retention requirements as 
set forth in OMB Circular A-110 (as applicable). This circular may be 
obtained from Office of Administration, Publications Office, 725 17th 
Street, NW., Room 2200, New Executive Office Building, Washington, DC 
20503.

    Dated: January 27, 2003.
Tony T. Brown,
Director, Community Development Financial Institutions Fund.
[FR Doc. 03-2336 Filed 2-3-03; 8:45 am]
BILLING CODE 4810-70-P