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H.R. 3474 (103rd): Riegle Community Development and Regulatory Improvement Act of 1994

The text of the bill below is as of Mar 17, 1994 (Passed the Senate with an Amendment).


HR 3474 EAS

In the Senate of the United States,

March 17 (legislative day, February 22), 1994.

Resolved, That the bill from the House of Representatives (H.R. 3474) entitled ‘An Act to reduce administrative requirements for insured depository institutions to the extent consistent with safe and sound banking practices, to facilitate the establishment of community development financial institutions, and for other purposes’, do pass with the following

AMENDMENT:

Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Community Development, Credit Enhancement, and Regulatory Improvement Act of 1994’.

    (b) TABLE OF CONTENTS- The table of contents for this Act is as follows:

      Sec. 1. Short title; table of contents.

TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

Subtitle A--Community Development Banking and Financial Institutions Act

      Sec. 101. Short title.

      Sec. 102. Findings and purposes.

      Sec. 103. Definitions.

      Sec. 104. Establishment of national fund for community development banking.

      Sec. 105. Applications for assistance.

      Sec. 106. Community partnerships.

      Sec. 107. Selection of institutions.

      Sec. 108. Assistance provided by the Fund.

      Sec. 109. Community development training.

      Sec. 110. Encouragement of private entities.

      Sec. 111. Clearinghouse function.

      Sec. 112. Recordkeeping, reports, and audits.

      Sec. 113. Investment of receipts and proceeds.

      Sec. 114. Inspector General.

      Sec. 115. Capitalization assistance to enhance liquidity.

      Sec. 116. Community development revolving loan fund for credit unions.

      Sec. 117. Regulations.

      Sec. 118. Authorization of appropriations.

Subtitle B--Home Ownership and Equity Protection

      Sec. 151. Consumer protections for high cost mortgages.

      Sec. 152. Civil liability.

      Sec. 153. Reverse mortgage disclosure.

      Sec. 154. Regulations; effective date.

TITLE II--SMALL BUSINESS CAPITAL FORMATION

Subtitle A--Small Business Loan Securitization

      Sec. 201. Short title.

      Sec. 202. Small business related security.

      Sec. 203. Applicability of margin requirements.

      Sec. 204. Borrowing in the course of business.

      Sec. 205. Small business related securities as collateral.

      Sec. 206. Investment by depository institutions.

      Sec. 207. Preemption of State law.

      Sec. 208. Insured depository institution capital requirements for transfers of small business obligations.

      Sec. 209. Transactions in small business related securities by employee benefit plans.

      Sec. 210. Sense of the Senate on taxation of small business loan investment conduits.

Subtitle B--Small Business Capital Enhancement

      Sec. 251. Findings and purposes.

      Sec. 252. Definitions.

      Sec. 253. Approving States for participation.

      Sec. 254. Participation agreements.

      Sec. 255. Terms of participation agreements.

      Sec. 256. Reports.

      Sec. 257. Reimbursement by the Secretary.

      Sec. 258. Reimbursement to the Secretary.

      Sec. 259. Regulations.

      Sec. 260. Authorization of appropriations.

TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

      Sec. 301. Incorporated definitions.

      Sec. 302. Administrative consideration of burden with new regulations.

      Sec. 303. Streamlining of regulatory requirements.

      Sec. 304. Elimination of duplicative filings.

      Sec. 305. Coordinated and unified examinations.

      Sec. 306. Eighteen-month examination rule for certain small institutions.

      Sec. 307. Call report simplification.

      Sec. 308. Repeal of publication requirements.

      Sec. 309. Regulatory appeals process.

      Sec. 310. Electronic filing of currency transaction reports.

      Sec. 311. Bank Secrecy Act publication requirements.

      Sec. 312. Exemption of business loans from Real Estate Settlement Procedures Act requirements.

      Sec. 313. Flexibility in choosing boards of directors.

      Sec. 314. Holding company audit requirements.

      Sec. 315. State regulation of real estate appraisals.

      Sec. 316. Acceleration of effective date for interaffiliate transactions.

      Sec. 317. Collateralization of public deposits.

      Sec. 318. Elimination of stock valuation provision.

      Sec. 319. Expedited procedures for forming a bank holding company.

      Sec. 320. Exemption of certain holding company formations from registration under the Securities Act of 1933.

      Sec. 321. Reduction of post-approval waiting period for bank holding company acquisitions.

      Sec. 322. Reduction of post-approval waiting period for bank mergers.

      Sec. 323. Bankers’ banks.

      Sec. 324. Bank Service Corporation Act amendment.

      Sec. 325. Merger transaction reports.

      Sec. 326. Credit card accounts receivable sales.

      Sec. 327. Limiting potential liability on foreign accounts.

      Sec. 328. Amendments to outdated dividend provisions.

      Sec. 329. Elimination of duplicative disclosures for home equity loans.

      Sec. 330. Report on capital standards and their impact on the economy.

      Sec. 331. Studies on the impact of the payment of interest on reserves.

      Sec. 332. Study and report on streamlined lending process for consumer benefit.

      Sec. 333. Repeal of outdated charter requirement for national banks.

      Sec. 334. Inclusion of Comptroller of the Currency; clarification of revised statutes.

      Sec. 335. Commemoration of 1995 Special Olympic World Games.

      Sec. 336. Exemption for business accounts.

      Sec. 337. Board discretion regarding check-related fraud.

      Sec. 338. Civil liability under truth in savings.

      Sec. 339. Insider lending.

      Sec. 340. Revisions of standards.

      Sec. 341. Alternative rules for radio advertising of consumer leases.

      Sec. 342. Deposit broker registration.

      Sec. 343. Extension of management interlocks grandfather clause.

      Sec. 344. Clarification of provision relating to administrative autonomy.

      Sec. 345. Consumer surveys and report.

      Sec. 346. Simplified disclosure for existing depositors.

      Sec. 347. Commercial mortgage related securities.

      Sec. 348. Offset of costs of certain programs.

TITLE IV--MONEY LAUNDERING

      Sec. 401. Short title.

      Sec. 402. Reform of CTR exemption requirements to reduce number and size of reports consistent with effective law enforcement.

      Sec. 403. Single designee for reporting of suspicious transactions.

      Sec. 404. Improvement of identification of money laundering schemes.

      Sec. 405. Negotiable instruments drawn on foreign banks subject to recordkeeping and reporting requirements.

      Sec. 406. Imposition of civil money penalties by appropriate Federal banking agencies.

      Sec. 407. Uniform State licensing and regulation of check cashing, currency exchange, and money transmitting businesses.

      Sec. 408. Registration of money transmitting businesses to promote effective law enforcement.

      Sec. 409. Criminal and civil penalty for structuring domestic and international transactions.

      Sec. 410. GAO study of chasiers’ checks.

TITLE V--FAIR TRADE IN FINANCIAL SERVICES

      Sec. 501. Short title.

      Sec. 502. Effectuating the principle of national treatment for banking organizations.

      Sec. 503. Effectuating the principle of national treatment for securities organizations.

      Sec. 504. Effectuating the principle of national treatment for insurers and reinsurers.

      Sec. 505. Financial interdependence study.

      Sec. 506. Federal Reserve report on the Foreign Bank Supervision Enhancement Act of 1991.

      Sec. 507. Conforming amendments.

TITLE VI--NATIONAL FLOOD INSURANCE REFORM

      Sec. 601. Short title.

      Sec. 602. Congressional findings.

      Sec. 603. Definition.

Subtitle A--Definitions

      Sec. 611. Flood Disaster Protection Act of 1973.

      Sec. 612. National Flood Insurance Act of 1968.

Subtitle B--Compliance and Increased Participation

      Sec. 621. Expanded flood insurance purchase requirements.

      Sec. 622. Excrow of flood insurance payments.

      Sec. 623. Notice requirements.

      Sec. 624. Placement of flood insurance by regulated lending institution, Federal agency lender, or servicer.

      Sec. 625. Standard flood hazard determination forms.

      Sec. 626. Examination regarding compliance by regulated lending institutions.

      Sec. 627. Penalties and corrective actions for failure to require flood insurance, escrow, or notify.

      Sec. 628. Financial institutions examination council.

      Sec. 629. Conforming amendment.

Subtitle C--Ratings and Incentives for Community Floodplain Management Programs

      Sec. 631. Community rating system and incentives for community floodplain management.

      Sec. 632. Funding.

      Sec. 633. Reasonable fees.

Subtitle D--Mitigation of Flood and Erosion Risks

      Sec. 641. Mitigation assistance in Federal insurance administration.

      Sec. 642. Authorization of national flood and erosion mitigation funds under section 1362.

      Sec. 643. State and community mitigation assistance program.

      Sec. 644. Repeal of program for purchase of certain insured properties.

      Sec. 645. Termination of erosion threatened structures program.

      Sec. 646. Congressional findings and declaration of purchase under the National Flood Insurance Act of 1968.

Subtitle E--Flood Insurance Task Force

      Sec. 651. Flood insurance interagency task force.

Subtitle F--Miscellaneous Provisions

      Sec. 661. Maximum flood insurance coverage amounts.

      Sec. 662. Additional coverage for compliance with land use and control measures.

      Sec. 663. Flood insurance program arrangements with private insurance entities.

      Sec. 664. Updating of flood insurance rate maps.

      Sec. 665. Evaluation of erosion hazards.

      Sec. 666. Coordination of flood insurance rate map revisions and updates with coastal zone management programs.

      Sec. 667. Technical Mapping Advisory Council.

      Sec. 668. Funding for increased administrative and operational responsibilities.

      Sec. 669. Separate account for National Flood Insurance Fund.

      Sec. 670. Nonwaiver of flood purchase requirement for recipients of Federal disaster assistance.

      Sec. 671. Insurance waiting period.

      Sec. 672. Agricultural structures.

      Sec. 673. Implementation review by the director.

      Sec. 674. Regulations.

      Sec. 675. Prohibited flood disaster assistance.

TITLE VII--GENERAL PROVISIONS

      Sec. 701. Study of effect of the Northern spotted owl on small business concerns.

      Sec. 702. Negative information about consumer.

      Sec. 703. United Nations resolutions concerning Jerusalem.

      Sec. 704. Amendment to the Federal Reserve Act.

      Sec. 705. Oversight hearings.

      Sec. 706. Insurance transfer agreement.

TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

Subtitle A--Community Development Banking and Financial Institutions Act

SEC. 101. SHORT TITLE.

    This subtitle may be cited as the ‘Community Development Banking and Financial Institutions Act of 1994’.

SEC. 102. FINDINGS AND PURPOSES.

    (a) FINDINGS- The Congress finds that--

      (1) many of the Nation’s urban, rural, and Native American communities face critical social and economic problems arising in part from the lack of economic growth, people living in poverty, and the lack of employment and other opportunities;

      (2) the restoration and maintenance of the economies of these communities will require coordinated development strategies, intensive supportive services, and increased access to equity investments and loans for development activities, including investment in businesses, housing, commercial real estate, human development, and other activities that promote the long-term economic and social viability of the community; and

      (3) community development financial institutions have proven their ability to identify and respond to community needs for equity investments, loans, and development services.

    (b) PURPOSE- The purpose of this subtitle is to create a Community Development Financial Institutions Fund that will promote economic revitalization and community development through a program of investment in and assistance to community development financial institutions, including enhancing the liquidity of community development financial institutions.

SEC. 103. DEFINITIONS.

    For purposes of this subtitle, the following definitions shall apply:

      (1) APPROPRIATE FEDERAL BANKING AGENCY- The term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act, and also includes the National Credit Union Administration Board with respect to insured credit unions.

      (2) AFFILIATE- The term ‘affiliate’ has the same meaning as in section 2(k) of the Bank Holding Company Act of 1956.

      (3) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION-

        (A) IN GENERAL- The term ‘community development financial institution’ means a person (other than an individual) that--

          (i) has a primary mission of promoting community development;

          (ii) serves an investment area or targeted population;

          (iii) directly, through an affiliate, or through a community partnership, provides development services and equity investments or loans;

          (iv) maintains, through representation on its governing board or otherwise, accountability to residents of its investment area or targeted population; and

          (v) is not an agency or instrumentality of the United States, or of any State or political subdivision of a State.

        (B) QUALIFICATION OF AFFILIATES- A subsidiary may only qualify as a community development financial institution if its parent company and the subsidiaries thereof (on a consolidated basis) also qualify as community development financial institutions.

      (4) COMMUNITY PARTNER- The term ‘community partner’ means a person (other than an individual) that provides loans, equity investments, or development services, including a depository institution holding company, an insured depository institution, an insured credit union, a nonprofit organization, a State or local government agency, a quasi-governmental entity, and an investment company authorized to operate pursuant to the Small Business Investment Act of 1958.

      (5) COMMUNITY PARTNERSHIP- The term ‘community partnership’ means an agreement between a community development financial institution and a community partner to provide development services and loans or equity investments to an investment area or targeted population.

      (6) DEPOSITORY INSTITUTION HOLDING COMPANY- The term ‘depository institution holding company’ has the same meaning as in section 3 of the Federal Deposit Insurance Act.

      (7) DEVELOPMENT SERVICES- The term ‘development services’ means activities that promote community development and are integral to lending or investment activities, including--

        (A) business planning;

        (B) financial and credit counseling; and

        (C) marketing and management assistance.

      (8) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION- The term ‘insured community development financial institution’ means any community development financial institution that is an insured depository institution or an insured credit union.

      (9) INSURED CREDIT UNION- The term ‘insured credit union’ has the same meaning as in section 101(7) of the Federal Credit Union Act.

      (10) INSURED DEPOSITORY INSTITUTION- The term ‘insured depository institution’ has the same meaning as in section 3 of the Federal Deposit Insurance Act.

      (11) INVESTMENT AREA- The term ‘investment area’ means a geographic area that--

        (A)(i) meets objective criteria of economic distress developed by the Community Development Financial Institutions Fund, which may include the percentage of low-income families or the extent of poverty, the rate of unemployment or underemployment, lag in population growth, and extent of blight and disinvestment; and

        (ii) has significant unmet needs for loans or equity investments;

        (B) is located in an empowerment zone or enterprise community designated under section 1391 of the Internal Revenue Code of 1986;

        (C) is located on an Indian reservation, as defined in section 3(d) of the Indian Financing Act of 1974 or section 4(10) of the Indian Child Welfare Act of 1978; or

        (D) is located in an area which is not a metropolitan statistical area and which has experienced a decrease in population of not less than 10 percent (as determined in the most recent decennial census) between 1980 and 1990.

      (12) LOW-INCOME- The term ‘low-income’ means having an income, adjusted for family size, of not more than--

        (A) for metropolitan areas, 80 percent of the area median income; and

        (B) for nonmetropolitan areas, the greater of--

          (i) 80 percent of the area median income; or

          (ii) 80 percent of the statewide nonmetropolitan area median income.

      (13) PARENT COMPANY- The term ‘parent company’ means any company that directly or indirectly controls another company.

      (14) SUBSIDIARY- The term ‘subsidiary’ has the same meaning as in section 3 of the Federal Deposit Insurance Act, except that a community development financial institution that is a corporation shall not be considered to be a subsidiary of any insured depository institution or 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 the directors of the corporation.

      (15) TARGETED POPULATION- The term ‘targeted population’ means low-income persons or persons who otherwise lack adequate access to loans or equity investments.

SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY DEVELOPMENT BANKING.

    (a) ESTABLISHMENT-

      (1) IN GENERAL- There is established a corporation to be known as the Community Development Financial Institutions Fund (hereafter in this subtitle referred to as the ‘Fund’) that shall have the duties and responsibilities specified by this subtitle. 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 AND DEPUTY ADMINISTRATOR- The management of the Fund shall be vested in an Administrator, who shall be appointed by the President, by and with the advice and consent of the Senate. The Administrator shall not engage in any other business or employment during service as the Administrator. The President may appoint a Deputy Administrator by and with the advice and consent of the Senate. The Deputy Administrator shall serve as the acting Administrator of the Fund during the absence or disability of the Administrator or in the event of a vacancy in the office of the Administrator.

      (2) CHIEF FINANCIAL OFFICER- The Administrator shall appoint a chief financial officer who shall oversee the financial management activities of the Fund.

      (3) OTHER OFFICERS- The Administrator may appoint such other officers and employees of the Fund as the Administrator determines to be necessary or appropriate.

    (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;

      (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;

      (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;

      (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 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- The Administrator shall establish an advisory board to be known as the Community Development Advisory Board (hereafter in this subtitle referred to as the ‘Board’) in accordance with the provisions of the Federal Advisory Committee Act.

      (2) MEMBERSHIP-

        (A) IN GENERAL- The Board shall consist of 5 private citizens who, collectively--

          (i) represent community groups whose constituencies include targeted populations or residents of investment areas;

          (ii) represent local or regional government interests;

          (iii) have expertise in the operations and activities of insured depository institutions; and

          (iv) have expertise in community development and lending.

        (B) REPRESENTATION- Each of the categories described in clauses (i) through (iv) of subparagraph (A) shall be represented by not less than 1 member of the Board.

      (3) BOARD FUNCTION- It shall be the function of the Board to advise the Administrator on the policies of the Fund. The Board shall not advise the Administrator on the granting or denial of any particular application.

      (4) TERMS OF MEMBERS-

        (A) IN GENERAL- Each member of the Board 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 and qualified.

      (5) CHAIRPERSON- The Administrator shall appoint a chairperson from among the members of the Board.

      (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 the Federal Advisory Committee Act.

      (8) COSTS AND EXPENSES- The Fund shall provide to the Board all necessary staff and facilities.

    (e) CONFORMING AMENDMENTS- Section 9101(3) of title 31, United States Code, is amended--

      (1) by redesignating subparagraphs (B) through (M) as subparagraphs (C) through (N), respectively; and

      (2) by inserting after subparagraph (A) the following new subparagraph:

        ‘(B) the Community Development Financial Institutions Fund;’.

    (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.

    (h) PROHIBITION ON ISSUANCE OF SECURITIES- The Fund may not issue stock, bonds, debentures, notes, or other securities.

    (i) COMPENSATION- Title 5, United States Code, is amended--

      (1) in section 5314, by adding at the end the following:

      ‘Administrator of the Community Development Financial Institutions Fund.’; and

      (2) in section 5315, by adding at the end the following:

      ‘Deputy Administrator of the Community Development Financial Institutions Fund.’.

    (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.

SEC. 105. APPLICATIONS FOR ASSISTANCE.

    (a) FORM AND PROCEDURES- An application for assistance under this subtitle shall be submitted in such form and in accordance with such procedures as the Fund shall establish.

    (b) MINIMUM REQUIREMENTS- Except as provided in sections 106 and 115, the Fund shall require an application--

      (1) to establish that the applicant is, or will be, a community development financial institution;

      (2) to include a comprehensive strategic plan for the organization that contains--

        (A) a business plan of not less than 5 years in duration that demonstrates that the applicant will be properly managed and will have the capacity to operate a community development financial institution that will not be dependent upon assistance from the Fund for continued viability;

        (B) an analysis of the needs of the investment area or targeted population and a strategy for how the applicant will attempt to meet those needs;

        (C) a plan to coordinate use of assistance from the Fund with existing Federal, State, local, and tribal government assistance programs, and private sector financial services;

        (D) an explanation of how the proposed activities of the applicant are consistent with existing economic, community, and housing development plans adopted by or applicable to an investment area; and

        (E) a description of how the applicant will coordinate with community organizations and financial institutions which will provide equity investments, loans, secondary markets, or other services to investment areas or targeted populations;

      (3) to include a detailed description of the applicant’s plans and likely sources of funds to match the amount of assistance requested from the Fund;

      (4) in the case of an applicant that has previously received assistance under this subtitle, to demonstrate that the applicant--

        (A) has substantially met its performance goals and otherwise carried out its responsibilities under this subtitle and the assistance agreement; and

        (B) will expand its operations into a new investment area or to serve a new targeted population, offer more services, or increase the volume of its business;

      (5) in the case of an applicant with a prior history of serving investment areas or targeted populations, to demonstrate that the applicant--

        (A) has a record of success in serving investment areas or targeted populations;

        (B) will expand its operations into a new investment area or to serve a new targeted population, offer more services, or increase the volume of its current business; and

      (6) to include such other information as the Fund deems appropriate.

    (c) EXCEPTION-

      (1) IN GENERAL- Notwithstanding subsection (b)(1), in the case of a State in which there is no existing community development financial institution in operation on the date of enactment of this Act, an applicant may be an agency or instrumentality of a State government if--

        (A) such an entity has a primary mission of promoting community development;

        (B) any assistance received is used to establish a community development financial institution;

        (C) there is no nongovernment entity within the State that possesses the capacity to become a community development financial institution;

        (D) no other agency or instrumentality of the same State has received assistance; and

        (E) assistance received will not reduce the amount of State funds that otherwise would be appropriated to such an entity.

      (2) MAJORITY OWNERSHIP- An agency or instrumentality eligible to apply pursuant to paragraph (1) may own a majority of the voting stock of a community development financial institution if it demonstrates that there is a lack of nonpublic sources of capital available to establish a community development financial institution.

      (3) AMOUNT OF ASSISTANCE- No State agency or instrumentality and a community development financial institution, a majority of the shares of which are owned by such an agency or instrumentality pursuant to this subsection, may cumulatively receive assistance exceeding the amount set forth under section 108(d)(1).

    (d) PREAPPLICATION OUTREACH PROGRAM- The Fund may operate an outreach program to identify and provide information to potential applicants.

SEC. 106. COMMUNITY PARTNERSHIPS.

    (a) APPLICATION- An application for assistance may be filed jointly by a community development financial institution and a community partner to carry out a community partnership.

    (b) APPLICATION REQUIREMENTS- The Fund shall require a community partnership application--

      (1) to meet the minimum requirements established for community development financial institutions under section 105(b), except that the criteria specified in paragraphs (1) and (2)(A) of section 105(b) shall not apply to the community partner;

      (2) to describe how each coapplicant will participate in carrying out the community partnership and how the partnership will enhance activities serving the investment area or targeted population; and

      (3) to demonstrate that the community partnership activities are consistent with the strategic plan submitted by the community development financial institution coapplicant.

    (c) SELECTION CRITERIA- The Fund shall consider a community partnership application based on the selection criteria set out in section 107.

    (d) LIMITATION ON DISTRIBUTION OF ASSISTANCE- Assistance provided upon approval of an application under this section shall be distributed only to the community development financial institution coapplicant, and shall not be used to fund any activities carried out directly by the community partner or an affiliate thereof.

    (e) OTHER REQUIREMENTS AND LIMITATIONS- All other requirements and limitations imposed by this subtitle on a community development financial institution assisted under this subtitle shall apply (in the manner that the Fund determines to be appropriate) to assistance provided to carry out community partnerships. The Fund may establish additional guidelines and restrictions on the use of Federal funds to carry out community partnerships.

SEC. 107. SELECTION OF INSTITUTIONS.

    (a) SELECTION CRITERIA- Except as provided in section 115, the Fund shall, in its sole discretion, select applicants for assistance based on--

      (1) the likelihood of success of the applicant in meeting the goals of its comprehensive strategic plan;

      (2) the experience and background of the proposed management team;

      (3) the extent of need for equity investments, loans, and development services within the investment areas or targeted populations;

      (4) the extent of economic distress within the investment areas or the extent of need within the targeted populations, as those factors are measured by objective criteria;

      (5) the extent to which the applicant will concentrate its activities on serving its investment areas or targeted populations;

      (6) the amount of firm commitments to meet or exceed the matching requirements and the likely success of the plan for raising the balance of the match;

      (7) the extent to which the proposed activities will expand economic opportunities within the investment areas or the targeted populations;

      (8) whether the applicant is, or will become, an insured depository institution or an insured credit union;

      (9) whether the applicant is, or will be, located--

        (A) in an empowerment zone or enterprise community designated under section 1391 of the Internal Revenue Code of 1986;

        (B) on an Indian reservation, as defined in section 3(d) of the Indian Financing Act of 1974 or section 4(10) of the Indian Child Welfare Act of 1978; or

        (C) in a community that has experienced a sudden and significant loss in total employment since the 1990 census or a major dislocation in its primary employment base.

      (10) the extent to which the applicant will increase its resources through coordination with other institutions or participation in a secondary market;

      (11) in the case of an applicant with a prior history of serving investment areas or targeted populations, the extent of success in serving them; and

      (12) other factors (such as the extent to which the applicant has strong ties to the community that it will serve) deemed to be appropriate by the Fund.

    (b) GEOGRAPHIC DIVERSITY- The Fund shall assist a geographically diverse group of applicants, including an appropriate mix of applicants from urban, rural, and Native American communities.

SEC. 108. ASSISTANCE PROVIDED BY THE FUND.

    (a) FORMS OF ASSISTANCE-

      (1) IN GENERAL- The Fund may provide--

        (A) financial assistance through equity investments, deposits, credit union shares, loans, and grants; and

        (B) technical assistance--

          (i) directly;

          (ii) through grants; or

          (iii) by contracting with organizations that possess expertise in community development, without regard to whether the organizations receive or are eligible to receive assistance under this subtitle.

      (2) EQUITY INVESTMENTS- The Fund shall not own more than 50 percent of the equity of a community development financial institution and may not control the operations of such institution. The Fund may hold only transferable, nonvoting equity investments. Such equity investments may provide for convertibility to voting stock upon transfer by the Fund.

      (3) DEPOSITS- Deposits made pursuant to this section in an insured community development financial institution shall not be subject to any requirement for collateral or security.

      (4) LIMITATIONS ON OBLIGATIONS- Direct loan obligations may be incurred by the Fund only to the extent that appropriations of budget authority to cover their costs, as defined in section 502 of the Congressional Budget Act of 1974, are made in advance.

    (b) USES OF FINANCIAL ASSISTANCE-

      (1) IN GENERAL- Financial assistance made available under this subtitle may be used by assisted institutions to serve investment areas or targeted populations by developing or supporting--

        (A) commercial facilities that promote revitalization, community stability, or job creation or retention;

        (B) businesses that--

          (i) provide jobs for low-income people or are owned by low-income people; or

          (ii) enhance the availability of products and services to low-income people;

        (C) community facilities;

        (D) the provision of basic financial services;

        (E) housing that is principally affordable to low-income people, except that assistance used to facilitate homeownership opportunities shall only be used for activities and lending products that serve low-income people and are not provided by other lenders in the area; and

        (F) other businesses and activities deemed appropriate by the Fund.

      (2) LIMITATIONS- No assistance made available under this subtitle may be expended by a community development financial institution (or an organization receiving assistance under section 115) to pay any person to influence or attempt to influence any agency, elected official, officer, or employee of a State or local government in connection with the making, award, extension, continuation, renewal, amendment, or modification of any State or local government contract, grant, loan, or cooperative agreement (as such terms are defined in section 1352 of title 31, United States Code).

    (c) USES OF TECHNICAL ASSISTANCE- Technical assistance may be used for activities that enhance the capacity of a community development financial institution, such as training of management and other personnel and development of programs and investment or loan products.

    (d) AMOUNT OF ASSISTANCE-

      (1) IN GENERAL- The Fund may provide not more than $5,000,000 of assistance, in the aggregate, during any 3-year period to any 1 community development financial institution and its affiliates.

      (2) EXCEPTION- Notwithstanding the limitations in paragraph (1), in the case of an existing community development financial institution that proposes to serve an investment area or targeted population outside of any State and outside of any metropolitan area presently served by the institution, the Fund may provide not more than $7,500,000 of assistance to a community development financial institution and its affiliates, in the aggregate, during any 3-year period, of which not less than $2,500,000 shall be used to establish affiliates to serve the new investment area or targeted population.

      (3) TIMING OF ASSISTANCE- Assistance may be provided as described in paragraphs (1) and (2) in a lump sum or over a period of time, as determined by the Fund.

    (e) MATCHING REQUIREMENTS-

      (1) IN GENERAL- Assistance other than technical assistance shall be matched with funds from sources other than the Federal Government on the basis of not less than one dollar for each dollar provided by the Fund. Such matching funds shall be at least comparable in form and value to assistance provided by the Fund. The Fund shall provide no assistance (other than technical assistance) until a community development financial institution has secured firm commitments for the matching funds required.

      (2) EXCEPTION- In the case of an applicant with severe constraints on available sources of matching funds, the Fund may permit an applicant to comply with the matching requirements of paragraph (1) by--

        (A) reducing such matching requirement by 50 percent;

        (B) permitting such applicant to satisfy not more than 60 percent of the matching requirement through use of assistance made available pursuant to--

          (i) section 106 of the Housing and Community Development Act of 1974;

          (ii) section 623(c)(1) of the Community Economic Development Act of 1981; or

          (iii) section 310B(c) of the Consolidated Farm and Rural Development Act; or

        (C) permitting an applicant to provide matching funds in a form to be determined at the discretion of the Fund if such applicant--

          (i) has total assets of less than $100,000;

          (ii) serves nonmetropolitan areas; and

          (iii) is not requesting more than $25,000 in assistance.

      (3) LIMITATION- Not more than 25 percent of the total funds disbursed in any fiscal year by the Fund may be matched as authorized under paragraph (2).

      (4) CONSTRUCTION OF ‘FEDERAL FUNDS’- For purposes of this subsection, notwithstanding section 105(a)(9) of the Housing and Community Development Act of 1974, funds provided pursuant to such Act shall be considered to be Federal funds, except as provided in paragraph (2)(B).

    (f) TERMS AND CONDITIONS-

      (1) SOUNDNESS OF UNREGULATED INSTITUTIONS- The Fund shall--

        (A) ensure, to the maximum extent practicable, that each community development financial institution (other than an insured community development financial institution or depository institution holding company) assisted under this subtitle is financially and managerially sound and maintains appropriate internal controls; and

        (B) require such institution to submit, not less than once during each 18-month period, a statement of financial condition audited by an independent certified public accountant as part of the report required by section 112(a)(4).

      (2) CONSULTATION WITH THE APPROPRIATE BANKING REGULATOR- Prior to providing assistance to an insured community development financial institution, the Fund shall consult with the appropriate Federal banking agency.

      (3) ASSISTANCE AGREEMENT-

        (A) IN GENERAL- Before providing any assistance under this subtitle, the Fund and each community development financial institution to be assisted shall enter into an agreement that requires the institution to comply with performance goals and abide by other terms and conditions pertinent to assistance received under this subtitle.

        (B) PERFORMANCE GOALS- Performance goals shall be negotiated between the Fund and each community development financial institution receiving assistance based upon the strategic plan submitted pursuant to section 105(b)(2). Such goals may be modified with the consent of the parties, or as provided in subparagraph (C). Performance goals for insured community development financial institutions shall be determined in consultation with the appropriate Federal banking agency.

        (C) SANCTIONS- The agreement shall provide that, in the event of fraud, mismanagement, noncompliance with this subtitle, or noncompliance with the terms of the agreement, the Fund, in its discretion, may--

          (i) revoke approval of the application;

          (ii) terminate or reduce future assistance;

          (iii) require repayment of assistance;

          (iv) require changes to the performance goals imposed pursuant to subparagraph (B);

          (v) bar an applicant from reapplying for assistance from the Fund;

          (vi) require changes to the strategic plan submitted pursuant to section 105(b)(2); and

          (vii) take such other actions as the Fund deems appropriate.

        (D) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS- In the case of an insured community development financial institution, the Fund shall notify the appropriate Federal banking agency not less than 15 days before imposing sanctions pursuant to this paragraph and shall not impose such sanctions if the agency disapproves, with an explanation in writing, during that 15-day period.

        (E) NATIVE AMERICAN INSTITUTIONS- In the case of a community development financial institution which serves an investment area described in paragraph (11)(C) of section 103, or an Indian tribe, as defined in section 4 of the Indian Self-Determination and Education Assistance Act, the Fund shall consult with the applicable tribal government in evaluating the institution’s compliance with the performance goals established pursuant to subparagraph (B).

    (g) AUTHORITY TO SELL EQUITY INVESTMENTS AND LOANS- The Fund may, at any time, sell its equity investments and loans, but the Fund shall retain the power to enforce limitations on assistance entered into in accordance with the requirements of this subtitle until the performance goals related to the investment or loan have been met.

    (h) NO AUTHORITY TO LIMIT SUPERVISION AND REGULATION- Nothing in this subtitle shall affect any authority of the appropriate Federal banking agency to supervise and regulate any institution or company.

SEC. 109. COMMUNITY DEVELOPMENT TRAINING.

    (a) IN GENERAL- The Fund may operate a training program to increase the capacity and expertise of community development financial institutions and other members of the financial services industry to undertake community development activities (hereafter in this subtitle referred to as the ‘training program’).

    (b) PROGRAM ACTIVITIES- The training program shall provide educational programs to assist community development financial institutions and other members of the financial services industry in developing lending and investment products, underwriting and servicing loans, managing equity investments, and implementing development services targeted to areas of economic distress, low-income persons, and persons who lack adequate access to loans and equity investments.

    (c) PARTICIPATION- The training program shall be made available to community development financial institutions and other members of the financial services industry that serve or seek to serve areas of economic distress, low-income persons, and persons who lack adequate access to loans and equity investments.

    (d) CONTRACTING- The Fund may offer the training described in this section directly or through a contract with other organizations. The Fund may contract to provide the training with organizations that possess special expertise in community development, without regard to whether the organizations receive or are eligible to receive assistance under this subtitle.

    (e) FEES- The Fund, as it deems appropriate, may charge fees for participation in training services to offset the cost of providing the services.

SEC. 110. ENCOURAGEMENT OF PRIVATE ENTITIES.

    The Fund may facilitate the organization of corporations in which the Federal Government has no ownership interest that will complement the activities of the Fund in carrying out the purpose of this subtitle. The purpose of any such entity shall be to assist community development financial institutions in a manner that is complementary to the activities of the Fund under this subtitle. Any such entity shall be managed exclusively by persons not employed by the Federal Government or any agency or instrumentality thereof.

SEC. 111. CLEARINGHOUSE FUNCTION.

    (a) ESTABLISHMENT- The Fund may establish and maintain an information clearinghouse in coordination with other Federal departments or agencies and community development financial institutions to--

      (1) collect, compile, and analyze information pertinent to community development financial institutions that will assist in creating, developing, expanding, and preserving these institutions; and

      (2) provide information on financial, technical, and management assistance, data on the activities of community development financial institutions, regulations, and other information that may promote the purposes of this subtitle.

    (b) COSTS- The cost of maintaining the clearinghouse shall be shared equally by the Fund and each department or agency involved in maintaining the clearinghouse.

SEC. 112. RECORDKEEPING, REPORTS, AND AUDITS.

    (a) RECORDKEEPING-

      (1) IN GENERAL- A community development financial institution receiving assistance from the Fund shall keep such records, for such periods as may be prescribed, as may be necessary to disclose the manner in which any assistance under this subtitle is used and to demonstrate compliance with the requirements of this subtitle.

      (2) USER PROFILE INFORMATION- The Fund shall require each community development financial institution receiving assistance under this subtitle to compile and maintain data on the gender, race, ethnicity, national origin, and other pertinent information concerning individuals that utilize the services of the assisted institution to ensure that targeted populations and low-income residents of investment areas are adequately served.

      (3) ACCESS TO RECORDS- The Fund shall have access on demand, for the purpose of determining compliance with this subtitle, to any records of a community development financial institution that receives assistance from the Fund.

      (4) REVIEW- Not less than annually, the Fund shall review the progress of each assisted community development financial institution in carrying out its strategic plan, meeting its performance goals, and satisfying the terms and conditions of its assistance agreement.

      (5) REPORTING-

        (A) ANNUAL REPORTS- The Fund shall require each community development financial institution receiving assistance under this subtitle to submit an annual report to the Fund on its activities, its financial condition, and its success in meeting performance goals, in satisfying the terms and conditions of its assistance agreement, and in complying with other requirements of this subtitle in such form and manner as the Fund shall specify.

        (B) AVAILABILITY OF REPORTS- The Fund, after deleting or redacting any material, as appropriate to protect privacy or proprietary interests, shall make such reports available for public inspection.

    (b) ANNUAL REPORT BY THE FUND- The Fund shall conduct an annual evaluation of the activities carried out by the Fund and the community development financial institutions assisted pursuant to this subtitle, and shall submit a report of its findings to the President and the Congress not later than 120 days after the end of each fiscal year of the Fund. The report shall include financial statements audited in accordance with subsection (d).

    (c) STUDIES-

      (1) OPTIONAL STUDIES- The Fund may conduct such studies as the Fund determines necessary to further the purpose of this subtitle and to facilitate investment in distressed communities. The findings of any studies conducted pursuant to this paragraph shall be included in the report required by subsection (b).

      (2) NATIVE AMERICAN LENDING STUDY-

        (A) STUDY- The Fund shall conduct a study on lending and investment practices on Indian reservations and other land held in trust by the United States Government. Such study shall--

          (i) identify barriers to private financing on such lands; and

          (ii) identify the impact of such barriers on access to capital and credit for Native American populations.

        (B) CONSULTATION WITH PRIVATE SECTOR- In conducting the study under subparagraph (A), the Fund shall consult with tribal governments, private citizens, and organizations that possess expertise in lending and community development issues confronted by Native American populations.

        (C) REPORT- Not later than 18 months after the date of enactment of this Act, the Fund shall submit a report to the President and the Congress that--

          (i) contains the findings of the study conducted under subparagraph (A);

          (ii) recommends any necessary statutory and regulatory changes to existing Federal programs; and

          (iii) makes policy recommendations for community development financial institutions, insured depository institutions, secondary market institutions, and other private sector capital institutions to better serve such populations.

      (3) INVESTMENT, GOVERNANCE, AND ROLE OF FUND- Thirty months after the appointment and qualification of the Administrator, the Comptroller General shall submit to the President and the Congress a study evaluating the structure, governance, and performance of the Fund.

    (d) EXAMINATION AND AUDIT- The financial statements of the Fund shall be audited in accordance with section 9105 of title 31, United States Code, except that audits required by section 9105(a) of such title shall be performed annually.

SEC. 113. INVESTMENT OF RECEIPTS AND PROCEEDS.

    (a) ESTABLISHMENT OF ACCOUNT- Any dividends on equity investments and proceeds from the disposition of investments, deposits, or credit union shares that are received by the Fund as a result of assistance provided pursuant to section 108, and any fees received pursuant to section 109(e) shall be deposited and accredited to an account of the Fund in the United States Treasury (hereafter in this section referred to as ‘the account’) established to carry out the purpose of this subtitle.

    (b) INVESTMENTS- Upon request of the Administrator, the Secretary of the Treasury shall invest amounts deposited in the account in public debt securities with maturities suitable to the needs of the Fund, as determined by the Administrator, and bearing interest at rates determined by the Secretary of the Treasury, comparable to current market yields on outstanding marketable obligations of the United States of similar maturities.

    (c) AVAILABILITY- Amounts deposited into the account and interest earned on such amounts pursuant to this section shall be available to the Fund until expended.

SEC. 114. INSPECTOR GENERAL.

    (a) ESTABLISHMENT- Section 11 of the Inspector General Act of 1978 (5 U.S.C. App. 11) is amended--

      (1) in paragraph (1), by inserting ‘; the Administrator of the Community Development Financial Institutions Fund;’ before ‘and the chief’; and

      (2) in paragraph (2), by inserting ‘the Community Development Financial Institutions Fund,’ after ‘the Agency for International Development,’.

    (b) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated such sums as may be necessary for the operation of the Office of Inspector General established by the amendments made by subsection (a).

SEC. 115. CAPITALIZATION ASSISTANCE TO ENHANCE LIQUIDITY.

    (a) ASSISTANCE-

      (1) IN GENERAL- The Fund may provide assistance for the purpose of providing capital to organizations that will purchase loans or otherwise enhance the liquidity of community development financial institutions if--

        (A) the primary purpose of such organizations is to promote community development; and

        (B) any assistance received is matched with funds--

          (i) from sources other than the Federal Government;

          (ii) on the basis of not less than $1 for each dollar provided by the Fund; and

          (iii) that are comparable in form and value to the assistance provided by the Fund.

      (2) LIMITATION ON OTHER ASSISTANCE- An organization that receives assistance under this section may not receive other financial or technical assistance under this subtitle.

    (b) SELECTION- The selection of organizations to receive assistance under this section shall be at the discretion of the Fund and in accordance with criteria established by the Fund. In establishing such criteria, the Fund shall take into account the criteria contained in sections 105(b) and 107, as appropriate.

    (c) AMOUNT OF ASSISTANCE- The Fund may provide a total of not more than $5,000,000 of assistance to an organization under this section during any 3-year period. Assistance may be provided in a lump sum or over a period of time, as determined by the Fund.

    (d) AUDIT AND REPORT REQUIREMENTS-

      (1) IN GENERAL- Organizations that receive assistance from the Fund in accordance with this section shall--

        (A) submit to the Fund not less than once in every 18-month period, financial statements audited by an independent certified public accountant;

        (B) submit an annual report on its activities; and

        (C) keep such records as may be necessary to disclose the manner in which any assistance under this section is used.

      (2) ACCESS- The Fund shall have access on demand, for the purposes of determining compliance with this section, to any records of such organizations.

    (e) LIMITATIONS ON LIABILITY-

      (1) LIABILITY OF FUND- The liability of the Fund and the United States Government arising out of the provision of assistance to any organization in accordance with this section shall be limited to the amount of such assistance. The Fund shall be exempt from any assessments and any 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.

      (2) LIABILITY OF GOVERNMENT- This section does not oblige the Federal Government, either directly or indirectly, to provide any funds to any organization assisted pursuant to this section, or to honor, reimburse, or otherwise guarantee any obligation or liability of such an organization. This section shall not be construed to imply that any such organization or any obligations or securities of any such organization are backed by the full faith and credit of the United States.

    (f) USE OF PROCEEDS- Any proceeds from the sale of loans to an organization assisted under this section shall be used by the seller for community development purposes.

SEC. 116. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR CREDIT UNIONS.

    (a) REPEAL- Section 120 of the Federal Credit Union Act (12 U.S.C. 1766) is amended by striking subsection (k).

    (b) REVOLVING LOAN FUND- The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is amended by inserting after section 129 the following new section:

‘SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR CREDIT UNIONS.

    ‘(a) IN GENERAL- The Board may exercise the authority granted to it by the Community Development Credit Union Revolving Loan Fund Transfer Act, including any additional appropriation made or earnings accrued, subject only to this section and to regulations prescribed by the Board.

    ‘(b) INVESTMENT- The Board may invest any idle Fund moneys in United States Treasury securities. Any interest accrued on such securities shall become a part of the Fund.

    ‘(c) LOANS- The Board may require that any loans made from the Fund be matched by increased shares in the borrower credit union.

    ‘(d) INTEREST- Interest earned by the Fund may be allocated by the Board for technical assistance to community development credit unions, subject to an appropriations Act.

    ‘(e) DEFINITION- As used in this section, the term ‘Fund’ means the Community Development Credit Union Revolving Loan Fund.’.

SEC. 117. REGULATIONS.

    Not later than 180 days after the appointment and qualification of the Administrator, the Fund shall issue such regulations as may be necessary to carry out this subtitle.

SEC. 118. AUTHORIZATION OF APPROPRIATIONS.

    (a) IN GENERAL- To carry out this subtitle, there are authorized to be appropriated to the Fund, to remain available until expended--

      (1) $60,000,000 for fiscal year 1994;

      (2) $104,000,000 for fiscal year 1995;

      (3) $107,000,000 for fiscal year 1996; and

      (4) $111,000,000 for fiscal year 1997.

    (b) ADMINISTRATIVE EXPENSES- Of amounts authorized to be appropriated to the Fund--

      (1) not more than $5,500,000 may be used by the Fund in each fiscal year to pay the administrative costs and expenses of the Fund; and

      (2) not more than $50,000 may be used by the Fund in each fiscal year to provide for administrative costs and expenses described in section 104(d)(8).

    (c) COMMUNITY DEVELOPMENT CREDIT UNION REVOLVING LOAN FUND- There are authorized to be appropriated for the purposes of the Community Development Credit Union Revolving Loan Fund--

      (1) $2,000,000 for fiscal year 1994;

      (2) $1,000,000 for fiscal year 1995;

      (3) $1,000,000 for fiscal year 1996; and

      (4) $1,000,000 for fiscal year 1997.

    (d) CAPITALIZATION ASSISTANCE- Not more than 5 percent of the amounts authorized to be appropriated under subsection (a) may be used as provided in section 115.

    (e) BUDGETARY TREATMENT- Amounts authorized to be appropriated under this section shall be subject to discretionary spending caps, as provided in section 601 of the Congressional Budget Act of 1974, and therefore shall reduce by an equal amount funds made available for other discretionary spending programs.

Subtitle B--Home Ownership and Equity Protection

SEC. 151. CONSUMER PROTECTIONS FOR HIGH COST MORTGAGES.

    (a) DEFINITION- Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following new subsection:

    ‘(aa)(1) A mortgage referred to in this subsection means a consumer credit transaction that is secured by the consumer’s principal dwelling, other than a residential mortgage transaction, a reverse mortgage transaction, or a transaction under an open end credit plan, if--

      ‘(A) the annual percentage rate at consummation of the transaction will exceed by more than 10 percentage points the rate of interest on Treasury securities having comparable periods of maturity on the fifteenth day of the month immediately preceding the month in which the loan is consummated; or

      ‘(B) the total points and fees payable by the consumer at or before closing will exceed the greater of--

        ‘(i) 8 percent of the total loan amount; or

        ‘(ii) $400.

    ‘(2) The amount specified in paragraph (1)(B)(ii) shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index, as reported on June 1 of the year preceding such adjustment.

    ‘(3) For purposes of paragraph (1)(B), points and fees shall include--

      ‘(A) all items included in the finance charge except interest and the time-price differential;

      ‘(B) all compensation paid to mortgage brokers;

      ‘(C) each of the charges listed in section 106(e) (except an escrow for future payment of taxes), unless--

        ‘(i) the charge is reasonable;

        ‘(ii) the creditor receives no direct or indirect compensation; and

        ‘(iii) the charge is paid to a third party unaffiliated with the creditor; and

      ‘(D) such other charges as the Board determines to be appropriate.’.

    (b) MATERIAL DISCLOSURES- Section 103(u) of the Truth in Lending Act (15 U.S.C. 1602(u)) is amended--

      (1) by striking ‘and the due dates’ and inserting ‘the due dates’; and

      (2) by inserting before the period ‘, and the disclosures required by section 129(a)’.

    (c) DEFINITION OF CREDITOR CLARIFIED- Section 103(f) of the Truth in Lending Act (15 U.S.C. 1602(f)) is amended by adding at the end the following: ‘Any person who originates 2 or more mortgages referred to in subsection (aa) in any 12-month period or any person who originates 1 or more such mortgages through a mortgage broker shall be considered to be a creditor for purposes of this title.’.

    (d) DISCLOSURES REQUIRED AND CERTAIN TERMS PROHIBITED- The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended by inserting after section 128 the following new section:

‘SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES.

    ‘(a) DISCLOSURES-

      ‘(1) SPECIFIC DISCLOSURES- In addition to other disclosures required under this title, for each mortgage referred to in section 103(aa), the creditor shall provide the following disclosures in conspicuous type size:

        ‘(A) ‘You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application.’

        ‘(B) ‘If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.’.

      ‘(2) ANNUAL PERCENTAGE RATE- In addition to the disclosures required under paragraph (1), the creditor shall disclose--

        ‘(A) the annual percentage rate of the loan and the amount of the regular monthly payment; or

        ‘(B) in the case of a variable rate loan, the annual percentage rate of the loan, a statement that the interest rate and monthly payment may increase, and the amount of the maximum possible monthly payment.

    ‘(b) TIME OF DISCLOSURES-

      ‘(1) IN GENERAL- The disclosures required by this section shall be given not less than 3 business days prior to consummation of the transaction.

      ‘(2) NEW DISCLOSURES REQUIRED- After providing the disclosures required by this section, a creditor may not change the terms of the loan if such changes make the disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section.

      ‘(3) MODIFICATIONS- The Board may, if it finds that such action is necessary to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this subsection, to the extent and under the circumstances set forth in those regulations.

    ‘(c) NO PREPAYMENT PENALTY-

      ‘(1) IN GENERAL- Except as provided in paragraph (4), a mortgage referred to in section 103(aa) may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal of the loan prior to the date on which such principal is due. If the date of maturity of a mortgage referred to in section 103(aa) is accelerated for any reason, and the consumer is entitled to a rebate of interest, computation of the rebate amount shall comply with paragraph (2). No such mortgage shall provide for a default interest rate that is higher than the interest rate provided by the note for the loan prior to default.

      ‘(2) REBATE COMPUTATION- For purposes of this subsection, any method of computing rebates of interest that is less favorable to the consumer than the actuarial method (as defined in section 933 of the Housing and Community Development Act of 1992) using simple interest is a prepayment penalty.

      ‘(3) EXCEPTION- A mortgage referred to in section 103(aa) may include terms under which a consumer is required to pay not more than 1 month’s interest as a penalty if the consumer prepays the principal of the loan within 1 year of origination.

    ‘(d) NO BALLOON PAYMENTS- A mortgage referred to in section 103(aa) having a term of less than 5 years may not include terms under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding principal balance.

    ‘(e) NO NEGATIVE AMORTIZATION- A mortgage referred to in section 103(aa) may not include terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of interest due.

    ‘(f) NO PREPAID PAYMENTS- A mortgage referred to in section 103(aa) may not include terms under which more than 2 periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the consumer.

    ‘(g) CONSEQUENCE OF FAILURE TO COMPLY- Any mortgage that contains a provision prohibited by this section shall be deemed a failure to deliver the material disclosures required under this title, for the purpose of section 125.

    ‘(h) DEFINITION- For purposes of this section, the term ‘affiliate’ has the same meaning as in section 2(k) of the Bank Holding Company Act of 1956.

    ‘(i) DISCRETIONARY REGULATORY AUTHORITY OF BOARD-

      ‘(1) EXEMPTIONS- The Board may, by regulation or order, exempt specific mortgage products or categories of mortgages from any or all of the prohibitions specified in subsections (c) through (f), if the Board finds that the exemption--

        ‘(A) is in the interest of the borrowing public; and

        ‘(B) will apply only to products that maintain and strengthen home ownership and equity protection.

      ‘(2) PROHIBITIONS- The Board, by regulation or order, shall prohibit acts or practices in connection with--

        ‘(A) mortgage loans that the Board finds to be unfair, deceptive, or designed to evade the provisions of this section; and

        ‘(B) refinancing of mortgage loans that the Board finds to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower.’.

    (e) CONFORMING AMENDMENTS-

      (1) TABLE OF SECTIONS- The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended by striking the item relating to section 129 and inserting the following:

      ‘129. Requirements for certain mortgages.’.

      (2) TRUTH IN LENDING ACT- Section 105(a) of the Truth in Lending Act (15 U.S.C. 1604(a)) is amended in the second sentence, by striking ‘These’ and inserting ‘Except in the case of a mortgage referred to in section 103(aa), these’.

SEC. 152. CIVIL LIABILITY.

    (a) DAMAGES- Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended--

      (1) by striking ‘and’ at the end of paragraph (2)(B);

      (2) by striking the period at the end of paragraph (3) and inserting ‘; and’; and

      (3) by inserting after paragraph (3) the following new paragraph:

      ‘(4) in the case of a failure to comply with any requirement under section 129, an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material.’.

    (b) STATE ATTORNEY GENERAL ENFORCEMENT- Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by adding at the end the following: ‘An action to enforce a violation of section 129 may also be brought by the appropriate State attorney general in any appropriate United States district court, or any other court of competent jurisdiction, not later than 3 years after the date on which the violation occurs. The State attorney general shall provide prior written notice of any such civil action to the Federal agency responsible for enforcement under section 108 and shall provide the agency with a copy of the complaint. If prior notice is not feasible, the State attorney general shall provide notice to such agency immediately upon instituting the action. The Federal agency may--

      ‘(1) intervene in the action;

      ‘(2) upon intervening--

        ‘(A) remove the action to the appropriate United States district court, if it was not originally brought there; and

        ‘(B) be heard on all matters arising in the action; and

      ‘(3) file a petition for appeal.’.

    (c) ASSIGNEE LIABILITY- Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by adding at the end the following new subsection:

    ‘(d) RIGHTS UPON ASSIGNMENT OF CERTAIN MORTGAGES-

      ‘(1) IN GENERAL- Any person who purchases or is otherwise assigned a mortgage referred to in section 103(aa) shall be subject to all claims and defenses with respect to that mortgage that the consumer could assert against the creditor of the mortgage, unless the purchaser or assignee demonstrates, by a preponderance of the evidence, that a reasonable person exercising ordinary due diligence, could not determine, based on the loan documentation required by this title, that the mortgage was in fact a mortgage referred to in section 103(aa). The preceding sentence does not affect a consumer’s rights under sections 125, 130, or any other provision of this title.

      ‘(2) LIMITATION ON DAMAGES- Notwithstanding any other provision of law, relief provided as a result of any action made permissible by paragraph (1) may not exceed--

        ‘(A) with respect to actions based upon a violation of this title, the amount specified in section 130; and

        ‘(B) with respect to all other causes of action, the sum of--

          ‘(i) the amount of all remaining indebtedness; and

          ‘(ii) the total amount paid by the consumer in connection with the transaction.

      ‘(3) OFFSET- The amount of damages that may be awarded under paragraph (2)(B) shall be reduced by the amount of any damages awarded under paragraph (2)(A).

      ‘(4) NOTICE- Any person who sells or otherwise assigns a mortgage referred to in section 103(aa) shall include a prominent notice of the potential liability under this subsection as determined by the Board.’.

SEC. 153. REVERSE MORTGAGE DISCLOSURE.

    (a) DEFINITION OF REVERSE MORTGAGE- Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following new subsection:

    ‘(bb) The term ‘reverse mortgage transaction’ means a nonrecourse transaction in which a mortgage, deed of trust, or equivalent consensual security interest is created against the consumer’s principal dwelling--

      ‘(1) securing one or more advances; and

      ‘(2) with respect to which the payment of any principal, interest, and shared appreciation is due and payable (other than in the case of default) only after--

        ‘(A) the transfer of the dwelling;

        ‘(B) the consumer ceases to occupy the dwelling as a principal dwelling; or

        ‘(C) the death of the consumer.’.

    (b) DISCLOSURE- Chapter 2 of title I of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at the end the following new section:

‘SEC. 138. REVERSE MORTGAGES.

    ‘(a) IN GENERAL- In addition to the disclosures required under this title, for each reverse mortgage, the creditor shall, not less than 3 days prior to consummation of the transaction, disclose to the consumer in conspicuous type a good faith estimate of the projected total cost of the mortgage to the consumer expressed as a table of annual interest rates. Each annual interest rate shall be based on a projected total future loan balance under a projected appreciation rate for the dwelling and a term for the mortgage. The disclosure shall include--

      ‘(1) statements of the annual interest rates for not less than 3 projected appreciation rates and not less than 3 loan periods, as determined by the Board, including--

        ‘(A) a short-term reverse mortgage;

        ‘(B) a term equaling the actuarial life expectancy of the consumer; and

        ‘(C) such longer term as the Board deems appropriate; and

      ‘(2) a statement that the consumer is not obligated to complete the reverse mortgage transaction merely because the consumer has received the disclosure required under this section or has signed a loan application.

    ‘(b) PROJECTED TOTAL COST- In determining the projected total cost of the mortgage to be disclosed to the consumer under subsection (a), the creditor shall take into account--

      ‘(1) any shared appreciation that the lender will, by contract, be entitled to receive;

      ‘(2) all costs and charges to the consumer, including the costs of any associated annuity that the consumer elects or is required to purchase as part of the reverse mortgage transaction;

      ‘(3) all payments to and for the benefit of the consumer, including, in the case in which an associated annuity is purchased (whether or not required by the lender as a condition of making the reverse mortgage), the annuity payments received by the consumer and financed from the proceeds of the loan, instead of the proceeds used to finance the annuity; and

      ‘(4) any limitation on the liability of the consumer under reverse mortgage transactions (such as nonrecourse limits and equity conservation agreements).’.

    (c) TABLE OF SECTIONS- The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended by inserting after the item relating to section 137 the following:

      ‘138. Reverse mortgages.’.

SEC. 154. REGULATIONS; EFFECTIVE DATE.

    (a) REGULATIONS- Not later than 180 days after the date of enactment of this Act, the Board of Governors of the Federal Reserve System shall issue such regulations as may be necessary to carry out this subtitle.

    (b) EFFECTIVE DATE- This subtitle, and the amendments made by this subtitle, shall apply to every mortgage referred to in section 103(aa) of the Truth in Lending Act (as added by section 151(a) of this Act) consummated on or after the date which is 60 days after the promulgation of final regulations under subsection (a).

TITLE II--SMALL BUSINESS CAPITAL FORMATION

Subtitle A--Small Business Loan Securitization

SEC. 201. SHORT TITLE.

    This subtitle may be cited as the ‘Small Business Loan Securitization and Secondary Market Enhancement Act of 1994’.

SEC. 202. SMALL BUSINESS RELATED SECURITY.

    Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding at the end the following new paragraph:

      ‘(53)(A) The term ‘small business related security’ means a security that is rated in 1 of the 4 highest rating categories by at least 1 nationally recognized statistical rating organization, and either--

        ‘(i) represents an interest in 1 or more promissory notes or leases of personal property evidencing the obligation of a small business concern and originated by an insured depository institution, insured credit union, insurance company, or similar institution which is supervised and examined by a Federal or State authority, or a finance company or leasing company; or

        ‘(ii) is secured by an interest in 1 or more promissory notes or leases of personal property (with or without recourse to the issuer or lessee) and provides for payments of principal in relation to payments, or reasonable projections of payments, on notes or leases described in clause (i).

      ‘(B) For purposes of this paragraph--

        ‘(i) an ‘interest in a promissory note or a lease of personal property’ includes ownership rights, certificates of interest or participation in such notes or leases, and rights designed to assure servicing of such notes or leases, or the receipt or timely receipt of amounts payable under such notes or leases;

        ‘(ii) the term ‘small business concern’ has the same meaning as in section 3 of the Small Business Act;

        ‘(iii) the term ‘insured depository institution’ has the same meaning as in section 3 of the Federal Deposit Insurance Act; and

        ‘(iv) the term ‘insured credit union’ has the same meaning as in section 101 of the Federal Credit Union Act.’.

SEC. 203. APPLICABILITY OF MARGIN REQUIREMENTS.

    Section 7(g) of the Securities Exchange Act of 1934 (15 U.S.C. 78g(g)) is amended by inserting ‘or a small business related security’ after ‘mortgage related security’.

SEC. 204. BORROWING IN THE COURSE OF BUSINESS.

    Section 8(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78h(a)) is amended in the last sentence by inserting ‘or a small business related security’ after ‘mortgage related security’.

SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COLLATERAL.

    Clause (ii) of section 11(d)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78k(d)(1)) is amended by inserting ‘or any small business related security’ after ‘mortgage related security’.

SEC. 206. INVESTMENT BY DEPOSITORY INSTITUTIONS.

    (a) HOME OWNERS’ LOAN ACT AMENDMENT- Section 5(c)(1) of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)) is amended by adding at the end the following new subparagraph:

        ‘(S) SMALL BUSINESS RELATED SECURITIES- Investments in small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934), subject to such regulations as the Director may prescribe, including regulations concerning the minimum size of the issue (at the time of the initial distribution), the minimum aggregate sales price, or both.’.

    (b) CREDIT UNIONS- Section 107(15) of the Federal Credit Union Act (12 U.S.C. 1757(15)) is amended--

      (1) in subparagraph (A), by striking ‘or’ at the end;

      (2) in subparagraph (B), by inserting ‘or’ at the end; and

      (3) by adding at the end the following new subparagraph:

        ‘(C) are small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934), subject to such regulations as the Board may prescribe, including regulations prescribing the minimum size of the issue (at the time of the initial distribution), the minimum aggregate sales price, or both;’.

    (c) NATIONAL BANKING ASSOCIATIONS- Section 5136 of the Revised Statutes (12 U.S.C. 24) is amended in the last sentence in the first full paragraph of paragraph Seventh, by striking ‘or (B) are mortgage related securities’ and inserting the following: ‘(B) are small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934); or (C) are mortgage related securities’.

SEC. 207. PREEMPTION OF STATE LAW.

    (a) IN GENERAL- Section 106(a)(1) of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1(a)(1)) is amended--

      (1) by striking ‘or’ at the end of subparagraph (B);

      (2) by redesignating subparagraph (C) as subparagraph (D); and

      (3) by inserting after subparagraph (B) the following new subparagraph:

        ‘(C) small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934), or’.

    (b) OBLIGATIONS OF THE UNITED STATES- Section 106(a)(2) of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1(a)(2)) is amended--

      (1) by striking ‘or’ at the end of subparagraph (B);

      (2) by redesignating subparagraph (C) as subparagraph (D); and

      (3) by inserting after subparagraph (B) the following new subparagraph:

        ‘(C) small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934), or’.

    (c) PREEMPTION OF STATE LAWS- Section 106(c) of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1(c)) is amended--

      (1) in the first sentence, by striking ‘or that’ and inserting ‘, that’; and

      (2) by inserting ‘, or that are small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934)’ before ‘shall be exempt’.

    (d) IMPLEMENTATION- Section 106 of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1) is amended by adding at the end the following new subsection:

    ‘(d) IMPLEMENTATION-

      ‘(1) LIMITATION- The provisions of subsections (a) and (b) concerning small business related securities shall not apply with respect to a particular person, trust, corporation, partnership, association, business trust, or business entity or class thereof in any State that, prior to the expiration of 7 years after the date of enactment of this subsection, enacts a statute that specifically refers to this section and either prohibits or provides for a more limited authority to purchase, hold, or invest in such small business related securities by any person, trust, corporation, partnership, association, business trust, or business entity or class thereof than is provided in this section. The enactment by any State of any statute of the type described in the preceding sentence shall not affect the validity of any contractual commitment to purchase, hold, or invest that was made prior to such enactment, and shall not require the sale or other disposition of any small business related securities acquired prior to the date of such enactment.

      ‘(2) STATE REGISTRATION OR QUALIFICATION REQUIREMENTS- Any State may, not later than 7 years after the date of enactment of this subsection, enact a statute that specifically refers to this section and requires registration or qualification of any small business related securities on terms that differ from those applicable to any obligation issued by the United States.’.

SEC. 208. INSURED DEPOSITORY INSTITUTION CAPITAL REQUIREMENTS FOR TRANSFERS OF SMALL BUSINESS OBLIGATIONS.

    (a) ACCOUNTING PRINCIPLES- The accounting principles applicable to the transfer of a small business loan or a lease of personal property with recourse contained in reports or statements required to be filed with Federal banking agencies by a qualified insured depository institution shall be consistent with generally accepted accounting principles.

    (b) CAPITAL AND RESERVE REQUIREMENTS- With respect to the transfer of a small business loan or lease of personal property with recourse that is a sale under generally accepted accounting principles, each qualified insured depository institution shall--

      (1) establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and

      (2) include, for purposes of applicable capital standards and other capital measures, only the amount of the retained recourse in the risk-weighted assets of the institution.

    (c) QUALIFIED INSTITUTIONS CRITERIA- An insured depository institution is a qualified insured depository institution for purposes of this section if, without regard to the accounting principles or capital requirements referred to in subsections (a) and (b), the institution is--

      (1) well capitalized; or

      (2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.

    (d) AGGREGATE AMOUNT OF RECOURSE- The total outstanding amount of recourse retained by a qualified insured depository institution with respect to transfers of small business loans and leases of personal property under subsections (a) and (b) shall not exceed--

      (1) 15 percent of the risk-based capital of the institution; or

      (2) such greater amount, as established by the appropriate Federal banking agency by regulation or order.

    (e) INSTITUTIONS THAT CEASE TO BE QUALIFIED OR EXCEED AGGREGATE LIMITS- If an insured depository institution ceases to be a qualified insured depository institution or exceeds the limits under subsection (d), this section shall remain applicable to any transfers of small business loans or leases of personal property that occurred during the time that the institution was qualified and did not exceed such limit.

    (f) PROMPT CORRECTIVE ACTION NOT AFFECTED- The capital of an insured depository institution shall be computed without regard to this section in determining whether the institution is adequately capitalized, undercapitalized, significantly undercapitalized, or critically undercapitalized under section 38 of the Federal Deposit Insurance Act.

    (g) REGULATIONS REQUIRED- Not later than 180 days after the date of the enactment of this Act each appropriate Federal banking agency shall promulgate final regulations implementing this section.

    (h) ALTERNATIVE SYSTEM PERMITTED-

      (1) IN GENERAL- At the discretion of the appropriate Federal banking agency, this section shall not apply if the regulations of the agency provide that the aggregate amount of capital and reserves required with respect to the transfer of small business loans and leases of personal property with recourse does not exceed the aggregate amount of capital and reserves that would be required under subsection (b).

      (2) EXISTING TRANSACTIONS NOT AFFECTED- Notwithstanding paragraph (1), this section shall remain in effect with respect to transfers of small business loans and leases of personal property with recourse by qualified insured depository institutions occurring before the effective date of regulations referred to in paragraph (1).

    (i) DEFINITIONS- For purposes of this section--

      (1) the term ‘adequately capitalized’ has the same meaning as in section 38(b) of the Federal Deposit Insurance Act;

      (2) the term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act;

      (3) the term ‘capital standards’ has the same meaning as in section 38(c) of the Federal Deposit Insurance Act;

      (4) the term ‘Federal banking agencies’ has the same meaning as in section 3 of the Federal Deposit Insurance Act;

      (5) the term ‘insured depository institution’ has the same meaning as in section 3 of the Federal Deposit Insurance Act;

      (6) the term ‘other capital measures’ has the meaning as in section 38(c) of the Federal Deposit Insurance Act;

      (7) the term ‘recourse’ has the meaning given to such term under generally accepted accounting principles;

      (8) the term ‘small business’ means a business that meets the criteria for a small business concern established by the Small Business Administration under section 3(a) of the Small Business Act; and

      (9) the term ‘well capitalized’ has the same meaning as in section 38(b) of the Federal Deposit Insurance Act.

SEC. 209. TRANSACTIONS IN SMALL BUSINESS RELATED SECURITIES BY EMPLOYEE BENEFIT PLANS.

    (a) PROHIBITED TRANSACTION EXEMPTION- The Secretary of Labor, in consultation with the Secretary of the Treasury, may exempt transactions involving small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934, as added by section 202 of this Act) pursuant to section 408(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108(a)) and section 4975(c)(2) of the Internal Revenue Code of 1986.

    (b) CONSIDERATION OF EXEMPTION REQUESTS- The Secretary of Labor shall consider any request for exemption under subsection (a) within a reasonable period of time after receipt of such request.

SEC. 210. SENSE OF THE SENATE ON TAXATION OF SMALL BUSINESS LOAN INVESTMENT CONDUITS.

    (a) SENSE OF THE SENATE- It is the sense of the Senate that the taxation of a small business loan investment conduit and the holder of an interest therein should be similar to the taxation of a real estate mortgage investment conduit and the holder of an interest therein under the Internal Revenue Code of 1986, taking into account, as appropriate--

      (1) the purpose of facilitating the securitization of small business loans and leases or personal property through the use of small business loan investment conduits and the development of a secondary market in small business loans and leases of personal property;

      (2) differences in the nature of qualifying mortgages in a real estate mortgage investment conduit and small business loans and leases of personal property;

      (3) differences in the practices of participants in the securitization of real estate mortgages in a real estate mortgage investment conduit and the securitization of other assets; and

      (4) such other tax policies as may be warranted.

    (b) SMALL BUSINESS LOAN INVESTMENT CONDUIT DEFINED- For purposes of this section, the term ‘small business loan investment conduit’ means an entity substantially all of the assets of which consist of an interest in one or more promissory notes as leases of personal property evidencing obligations--

      (1) of a business that meets the criteria of a small business concern established under section 3(a) of the Small Business Act; and

      (2) that were originated by an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), credit union, insurance company, or similar institution which is supervised and examined by a Federal or State authority, or a finance company or leasing company.

Subtitle B--Small Business Capital Enhancement

SEC. 251. FINDINGS AND PURPOSES.

    (a) FINDINGS- The Congress finds that--

      (1) small business concerns are a vital part of the economy, accounting for the majority of new jobs, new products, and new services created in the United States;

      (2) adequate access to debt capital is a critical component for small business development, productivity, expansion, and success in the United States;

      (3) commercial banks are the most important suppliers of debt capital to small business concerns in the United States;

      (4) commercial banks and other depository institutions have various incentives to minimize their risk in financing small business concerns;

      (5) as a result of such incentives, many small business concerns with economically sound financing needs are unable to obtain access to needed debt capital;

      (6) the small business capital access programs implemented by certain States are a flexible and efficient tool to assist financial institutions in providing access to needed debt capital for many small business concerns in a manner consistent with safety and soundness regulations;

      (7) a small business capital access program would complement other programs which assist small business concerns in obtaining access to capital; and

      (8) Federal policy can stimulate and accelerate efforts by States to implement small business capital access programs by providing an incentive to States, while leaving the administration of such programs to each participating State.

    (b) PURPOSES- By encouraging States to implement administratively efficient capital access programs that encourage commercial banks and other depository institutions to provide access to debt capital for a broad portfolio of small business concerns, and thereby promote a more efficient and effective debt market, the purposes of this subtitle are--

      (1) to promote economic opportunity and growth;

      (2) to create jobs;

      (3) to promote economic efficiency;

      (4) to enhance productivity; and

      (5) to spur innovation.

SEC. 252. DEFINITIONS.

    For purposes of this subtitle--

      (1) the term ‘Secretary’ means the Secretary of Housing and Urban Development;

      (2) the term ‘appropriate Federal banking agency’--

        (A) has the same meaning as in section 3 of the Federal Deposit Insurance Act; and

        (B) includes the National Credit Union Administration Board in the case of any credit union the deposits of which are insured in accordance with the Federal Credit Union Act;

      (3) the term ‘early loan’ means a loan enrolled at a time when the aggregate covered amount of loans previously enrolled under the Program by a particular participating financial institution is less than $5,000,000;

      (4) the term ‘enrolled loan’ means a loan made by a participating financial institution that is enrolled by a participating State in accordance with this subtitle;

      (5) the term ‘financial institution’ means any federally chartered or State-chartered commercial bank, savings association, savings bank, or credit union;

      (6) the term ‘participating financial institution’ means any financial institution that has entered into a participation agreement with a participating State in accordance with section 254;

      (7) the term ‘participating State’ means any State that has been approved for participation in the Program in accordance with section 253;

      (8) the term ‘passive real estate ownership’ means ownership of real estate for the purpose of deriving income from speculation, trade, or rental, except that such term shall not include--

        (A) the ownership of that portion of real estate being used or intended to be used for the operation of the business of the owner of the real estate (other than the business of passive ownership of real estate); or

        (B) the ownership of real estate for the purpose of construction or renovation, until the completion of the construction or renovation phase;

      (9) the term ‘Program’ means the Small Business Capital Enhancement Program established under this subtitle;

      (10) the term ‘reserve fund’ means a fund, established by a participating State, earmarked for a particular participating financial institution, for the purposes of--

        (A) depositing all required premium charges paid by the participating financial institution and by each borrower receiving a loan under the Program from a participating financial institution;

        (B) depositing contributions made by the participating State; and

        (C) covering losses on enrolled loans by disbursing accumulated funds; and

      (11) the term ‘State’ means--

        (A) a State of the United States;

        (B) the District of Columbia;

        (C) any political subdivision of a State of the United States, which subdivision has a population in excess of the population of the least populated State of the United States; and

        (D) any other political subdivision of a State of the United States that the Secretary determines has the capacity to participate in the program.

SEC. 253. APPROVING STATES FOR PARTICIPATION.

    (a) APPLICATION- Any State may apply to the Secretary for approval to be a participating State under the Program and to be eligible for reimbursement by the Secretary pursuant to section 257.

    (b) APPROVAL CRITERIA- The Secretary shall approve a State to be a participating State, if--

      (1) a specific department or agency of the State has been designated to implement the Program;

      (2) all legal actions necessary to enable such designated department or agency to implement the Program have been accomplished;

      (3) funds in the amount of at least $1 for every 2 people residing in the State (as of the last decennial census for which data have been released) are available and have been legally committed to contributions by the State to reserve funds, with such funds being available without time limit and without requiring additional legal action, except that such requirements shall not be construed to limit the authority of the State to take action at a later time that results in the termination of its obligation to enroll loans and make contributions to reserve funds;

      (4) the State has prescribed a form of participation agreement to be entered into between it and each participating financial institution that is consistent with the requirements and purposes of this subtitle; and

      (5) the State and the Secretary have executed a reimbursement agreement that conforms to the requirements of this subtitle.

    (c) EXISTING STATE PROGRAMS-

      (1) IN GENERAL- A State that is not a participating State, but that has its own capital access program providing portfolio insurance for business loans (based on a separate loss reserve fund for each financial institution), may apply at any time to the Secretary to be approved to be a participating State. The Secretary shall approve such State to be a participating State, and to be eligible for reimbursements by the Secretary pursuant to section 257, if the State--

        (A) satisfies the requirements of subsections (a) and (b); and

        (B) certifies that each affected financial institution has satisfied the requirements of section 254.

      (2) APPLICABLE TERMS OF PARTICIPATION-

        (A) STATUS OF INSTITUTIONS- If a State is approved for participation under paragraph (1), each financial institution with a participation agreement in effect with the participating State shall immediately be considered a participating financial institution. Reimbursements may be made under section 237 in connection with all contributions made to the reserve fund by the State in connection with lending that occurs on or after the date on which the Secretary approves the State for participation.

        (B) EFFECTIVE DATE OF PARTICIPATION- If an amended participation agreement that conforms with section 255 is required in order to secure participation approval by the Secretary, contributions subject to reimbursement under section 257 shall include only those contributions made to a reserve fund with respect to loans enrolled on or after the date that an amended participation agreement between the participating State and the participating financial institution becomes effective.

        (C) USE OF ACCUMULATED RESERVE FUNDS- A State that is approved for participation in accordance with this subsection may continue to implement the program utilizing the reserve funds accumulated under the State program.

    (d) PRIOR APPROPRIATIONS REQUIREMENT- The Secretary shall not approve a State for participation in the Program until at least $50,000,000 has been appropriated to the Secretary (subject to an appropriations Act), without fiscal year limitation, for the purpose of making reimbursements pursuant to section 257.

    (e) AMENDMENTS TO AGREEMENTS- If a State that has been approved to be a participating State wishes to amend its form of participation agreement and continue to be a participating State, such State shall submit such amendment for review by the Secretary in accordance with subsection (b)(4). Any such amendment shall become effective only after it has been approved by the Secretary.

SEC. 254. PARTICIPATION AGREEMENTS.

    (a) IN GENERAL- A participating State may enter into a participation agreement with any financial institution determined by the participating State, after consultation with the appropriate Federal banking agency, to have sufficient commercial lending experience and financial and managerial capacity to participate in the Program. The determination by the State shall not be reviewable by the Secretary.

    (b) PARTICIPATING FINANCIAL INSTITUTIONS- Upon entering into the participation agreement with the participating State, the financial institution shall become a participating financial institution eligible to enroll loans under the Program.

SEC. 255. TERMS OF PARTICIPATION AGREEMENTS.

    (a) IN GENERAL- The participation agreement to be entered into by a participating State and a participating financial institution shall include all provisions required by this section, and shall not include any provisions inconsistent with the provisions of this section.

    (b) ESTABLISHMENT OF SEPARATE RESERVE FUNDS- A separate reserve fund shall be established by the participating State for each participating financial institution. All funds credited to a reserve fund shall be the exclusive property of the participating State. Each reserve fund shall be an administrative account for the purposes of--

      (1) receiving all required premium charges to be paid by the borrower and participating financial institution and contributions by the participating State; and

      (2) disbursing funds, either to cover losses sustained by the participating financial institution in connection with loans made under the Program, or as contemplated by subsections (d) and (r).

    (c) INVESTMENT AUTHORITY- Subject to applicable State law, the participating State may invest, or cause to be invested, funds held in a reserve fund by establishing a deposit account at the participating financial institution in the name of the participating State. In the event that funds in the reserve fund are not deposited in such an account, such funds shall be invested in a form that the participating State determines is safe and liquid.

    (d) EARNED INCOME AND INTEREST- Interest or income earned on the funds credited to a reserve fund shall be deemed to be part of the reserve fund, except that a participating State may, as further specified in the participation agreement, provide authority for the participating State to withdraw some or all of such interest or income earned.

    (e) LOAN TERMS AND CONDITIONS-

      (1) IN GENERAL- A loan to be filed for enrollment under the Program may be made with such interest rate, fees, and other terms and conditions as agreed upon by the participating financial institution and the borrower, consistent with applicable law.

      (2) LINES OF CREDIT- If a loan to be filed for enrollment is in the form of a line of credit, the amount of the loan shall be considered to be the maximum amount that can be drawn by the borrower against the line of credit.

    (f) ENROLLMENT PROCESS-

      (1) FILING-

        (A) IN GENERAL- A participating financial institution shall file each loan made under the Program for enrollment by completing and submitting to the participating State a form prescribed by the participating State.

        (B) FORM- The form referred to in subparagraph (A) shall include a representation by the participating financial institution that it has complied with the participation agreement in enrolling the loan with the State.

        (C) PREMIUM CHARGES- Accompanying the completed form shall be the nonrefundable premium charges paid by the borrower and the participating financial institution, or evidence that such premium charges have been deposited into the deposit account containing the reserve fund, if applicable.

        (D) SUBMISSION- The participation agreement shall require that the items required by this subsection shall be submitted to the participating State by the participating financial institutions not later than 10 calendar days after a loan is made.

      (2) ENROLLMENT BY STATE- Upon receipt by the participating State of the filing submitted in accordance with paragraph (1), the participating State shall promptly enroll the loan and make a matching contribution to the reserve fund in accordance with subsection (j), unless the information submitted indicates that the participating financial institution has not complied with the participation agreement in enrolling the loan.

    (g) COVERAGE AMOUNT- In filing a loan for enrollment under the Program, the participating financial institution may specify an amount to be covered under the Program that is less than the full amount of the loan.

    (h) PREMIUM CHARGES-

      (1) MINIMUM AND MAXIMUM AMOUNTS- The premium charges payable to the reserve fund by the borrower and the participating financial institution shall be prescribed by the participating financial institution, within minimum and maximum limits set forth in the participation agreement. The participation agreement shall establish minimum and maximum limits whereby the sum of the premium charges paid in connection with a loan by the borrower and the participating financial institution is not less than 3 percent nor more than 7 percent of the amount of the loan covered under the Program.

      (2) ALLOCATION OF PREMIUM CHARGES- The participation agreement shall specify terms for allocating premium charges between the borrower and the participating financial institution. However, if the participating financial institution is required to pay any of the premium charges, the participation agreement shall authorize the participating financial institution to recover from the borrower the cost of the payment of the participating financial institution, in any manner on which the participating financial institution and the borrower agree.

    (i) RESTRICTIONS-

      (1) ACTIONS PROHIBITED- Except as provided in subsection (h) and paragraph (2) of this subsection, the participating State may not--

        (A) impose any restrictions or requirements, relating to the interest rate, fees, collateral, or other business terms and conditions of the loan; or

        (B) condition enrollment of a loan in the Program on the review by the State of the risk or creditworthiness of a loan.

      (2) EFFECT ON OTHER LAW- Nothing in this subtitle shall affect the applicability of any other law to the conduct by a participating financial institution of its business.

    (j) STATE CONTRIBUTIONS- In enrolling a loan under the Program, the participating State shall contribute to the reserve fund an amount, as provided for in the participation agreement, which shall not be less than the sum of the amount of premium charges paid by the borrower and the participating financial institution.

    (k) ELEMENTS OF CLAIMS-

      (1) FILING- If a participating financial institution charges off all or part of an enrolled loan, such participating financial institution may file a claim for reimbursement with the participating State by submitting a form that--

        (A) includes the representation by the participating financial institution that it is filing the claim in accordance with the terms of the applicable participation agreement; and

        (B) contains such other information as may be required by the participating State.

      (2) TIMING- Any claim filed under paragraph (1) shall be filed contemporaneously with the action of the participating financial institution to charge off all or part of an enrolled loan. The participating financial institution shall determine when and how much to charge off on an enrolled loan, in a manner consistent with its usual method for making such determinations on business loans that are not enrolled loans under this subtitle.

    (l) ELEMENTS OF CLAIMS- A claim filed by a participating financial institution may include the amount of principal charged off, not to exceed the covered amount of the loan. Such claim may also include accrued interest and out-of-pocket expenses, if and to the extent provided for under the participation agreement.

    (m) PAYMENT OF CLAIMS-

      (1) IN GENERAL- Except as provided in subsection (n) and paragraph (2) of this subsection, upon receipt of a claim filed in accordance with this section and the participation agreement, the participating State shall promptly pay to the participating financial institution, from funds in the reserve fund, the full amount of the claim as submitted.

      (2) INSUFFICIENT RESERVE FUNDS- If there are insufficient funds in the reserve fund to cover the entire amount of a claim of a participating financial institution, the participating State shall pay to the participating financial institution an amount equal to the current balance in the reserve fund. If the enrolled loan for which the claim has been filed--

        (A) is not an early loan, such payment shall be deemed fully to satisfy the claim, and the participating financial institution shall have no other or further right to receive any amount from the reserve fund with respect to such claim; or

        (B) is an early loan, such payment shall not be deemed fully to satisfy the claim of the participating financial institution, and at such time as the remaining balance of the claim does not exceed 75 percent of the balance in the reserve fund, the participating State shall, upon the request of the participating financial institution, pay any remaining amount of the claim.

    (n) DENIAL OF CLAIMS- A participating State may deny a claim if a representation or warranty made by the participating financial institution to the participating State at the time that the loan was filed for enrollment or at the time that the claim was submitted was known by the participating financial institution to be false.

    (o) SUBSEQUENT RECOVERY OF CLAIM AMOUNT- If, subsequent to payment of a claim by the participating State, a participating financial institution recovers from a borrower any amount for which payment of the claim was made, the participating financial institution shall promptly pay to the participating State for deposit into the reserve fund the amount recovered, less any expenses incurred by the institution in collection of such amount.

    (p) PARTICIPATION AGREEMENT TERMS-

      (1) IN GENERAL- In connection with the filing of a loan for enrollment in the Program, the participation agreement--

        (A) shall require the participating financial institution to obtain an assurance from each borrower that--

          (i) the proceeds of the loan will be used for a business purpose;

          (ii) the loan will not be used to finance passive real estate ownership; and

          (iii) the borrower is not--

            (I) an executive officer, director, or principal shareholder of the participating financial institution;

            (II) a member of the immediate family of an executive officer, director, or principal shareholder of the participating financial institution; or

            (III) a related interest of any such executive officer, director, principal shareholder, or member of the immediate family;

        (B) shall require the participating financial institution to provide assurances to the participating State that the loan has not been made in order to place under the protection of the Program prior debt that is not covered under the Program and that is or was owed by the borrower to the participating financial institution or to an affiliate of the participating financial institution;

        (C) may provide that if--

          (i) a participating financial institution makes a loan to a borrower that is a refinancing of a loan previously made to the borrower by the participating financial institution or an affiliate of the participating financial institution;

          (ii) such prior loan was not enrolled in the Program; and

          (iii) additional or new financing is extended by the participating financial institution as part of the refinancing,

        the participating financial institution may file the loan for enrollment, with the amount to be covered under the Program not to exceed the amount of any additional or new financing; and

        (D) may include additional restrictions on the eligibility of loans or borrowers that are not inconsistent with the provisions and purposes of this subtitle.

      (2) DEFINITIONS- For purposes of this subsection, the terms ‘executive officer’, ‘director’, ‘principal shareholder’, ‘immediate family’, and ‘related interest’ refer to the same relationship to a participating financial institution as the relationship described in part 215 of title 12 of the Code of Federal Regulations, or any successor to such part.

    (q) TERMINATION CLAUSE- In each participation agreement, the participating State shall reserve for itself the ability to terminate its obligation to enroll loans under the Program. Any such termination shall be prospective only, and shall not apply to amounts of loans enrolled under the Program prior to such termination.

    (r) ALLOWABLE WITHDRAWALS FROM FUND-

      The participation agreement may provide that, if, for any consecutive period of not less than 24 months, the aggregate outstanding balance of all enrolled loans for a participating financial institution is continually less than the outstanding balance in the reserve fund for that participating financial institution, the participating State, in its discretion, may withdraw an amount from the reserve fund to bring the balance in the reserve fund down to the outstanding balance of all such enrolled loans.

    (s) GRANDFATHERED PROVISION-

      (1) SPECIAL TREATMENT OF PREMIUM CHARGES- Notwithstanding subsection (b) or (d), the participation agreement, if explicitly authorized by a statute enacted by the State before the date of enactment of this Act, may allow a participating financial institution to treat the premium charges paid by the participating financial institution and the borrower into the reserve fund, and interest or income earned on funds in the reserve fund that are deemed to be attributable to such premium charges, as assets of the participating financial institution for accounting purposes, subject to withdrawal by the participating financial institution only--

        (A) for the payment of claims approved by the participating State in accordance with this section; and

        (B) upon the participating financial institution’s withdrawal from authority to make new loans under the Program.

      (2) PAYMENT OF POST-WITHDRAWAL CLAIMS- After any withdrawal of assets from the reserve fund pursuant to paragraph (1)(B), any future claims filed by the participating financial institution on loans remaining in its capital access program portfolio shall only be paid from funds remaining in the reserve fund to the extent that, in the aggregate, such claims exceed the sum of the amount of such withdrawn assets, and interest on that amount, imputed at the same rate as income would have accrued had the amount not been withdrawn.

      (3) CONDITIONS FOR TERMINATING SPECIAL AUTHORITY- If the Secretary determines that the inclusion in a participation agreement of the provisions authorized by this subsection is resulting in the enrollment of loans under the Program that are likely to have been made without assistance provided under this subtitle, the Secretary may notify the participating State that henceforth, the Secretary will only make reimbursements to the State under section 257 with respect to a loan if the participation agreement between the participating State and each participating financial institution has been amended to conform with this section, without exercise of the special authority granted by this subsection.

SEC. 256. REPORTS.

    (a) RESERVE FUNDS REPORT- On or before the last day of each calendar quarter, a participating State shall submit to the Secretary a report of contributions to reserve funds made by the participating State during the previous calendar quarter. If the participating State has made contributions to one or more reserve funds during the previous quarter, the report shall--

      (1) indicate the total amount of such contributions;

      (2) indicate the amount of contributions which is subject to reimbursement, which shall be equal to the total amount of contributions, unless one of the limitations contained in section 257 is applicable;

      (3) if one of the limitations in section 257 is applicable, provide documentation of the applicability of such limitation for each loan for which the limitation applies; and

      (4) include a certification by the participating State that--

        (A) the information provided in accordance with paragraphs (1), (2), and (3) is accurate;

        (B) funds in an amount meeting the minimum requirements of section 253(b)(3) continue to be available and legally committed to contributions by the State to reserve funds, less any amount that has been contributed by the State to reserve funds subsequent to the State being approved for participation in the Program;

        (C) there has been no unapproved amendment to any participation agreement or the form of participation agreements; and

        (D) the participating State is otherwise implementing the Program in accordance with this subtitle and regulations issued pursuant to section 259.

    (b) ANNUAL DATA- Not later than March 31 of each year, each participating State shall submit to the Secretary annual data indicating the number of borrowers financed under the Program, the total amount of covered loans, and breakdowns by industry type, loan size, annual sales, and number of employees of the borrowers financed.

    (c) FORM- The reports and data filed pursuant to subsections (a) and (b) shall be in such form as the Secretary may require.

SEC. 257. REIMBURSEMENT BY THE SECRETARY.

    (a) REIMBURSEMENTS- Not later than 30 calendar days after receiving a report filed in compliance with section 256, the Secretary shall reimburse the participating State in an amount equal to 50 percent of the amount of contributions by the participating State to the reserve funds that are subject to reimbursement by the Secretary pursuant to section 256 and this section. The Secretary shall reimburse participating States, as it receives reports pursuant to section 256(a), until available funds are expended.

    (b) SIZE OF ASSISTED BORROWER- The Secretary shall not provide any reimbursement to a participating State with respect to an enrolled loan made to a borrower that has 500 or more employees at the time that the loan is enrolled in the Program.

    (c) THREE-YEAR MAXIMUM- The amount of reimbursement to be provided by the Secretary to a participating State over any 3-year period in connection with loans made to any single borrower or any group of borrowers among which a common enterprise exists shall not exceed $75,000. For purposes of this subsection, ‘common enterprise’ shall have the same meaning as in part 32 of title 12 of the Code of Federal Regulations, or any successor to that part.

    (d) LOANS TOTALING LESS THAN $2,000,000- In connection with a loan in which the covered amount of the loan plus the covered amount of all previous loans enrolled by a participating financial institution does not exceed $2,000,000, the amount of reimbursement by the Secretary to the participating State shall not exceed the lesser of--

      (1) 75 percent of the sum of the premium charges paid to the reserve fund by the borrower and the participating financial institution; or

      (2) 5.25 percent of the covered amount of the loan.

    (e) LOANS TOTALING MORE THAN $2,000,000- In connection with a loan in which the sum of the covered amounts of all previous loans enrolled by the participating financial institution in the Program equals or exceeds $2,000,000, the amount of reimbursement to be provided by the Secretary to the participating State shall not exceed the lesser of--

      (1) 50 percent of the sum of the premium charges paid by the borrower and the participating financial institution; or

      (2) 3.5 percent of the covered amount of the loan.

    (f) OTHER AMOUNTS- In connection with the enrollment of a loan that will cause the aggregate covered amount of all enrolled loans to exceed $2,000,000, the amount of reimbursement by the Secretary to the participating State shall be determined--

      (1) by applying subsection (d) to the portion of the loan, which when added to the aggregate covered amount of all previously enrolled loans equals $2,000,000; and

      (2) by applying subsection (e) to the balance of the loan.

SEC. 258. REIMBURSEMENT TO THE SECRETARY.

    (a) IN GENERAL- If a participating State withdraws funds from a reserve fund pursuant to terms of the participation agreement permitted by subsection (d) or (r) of section 255, such participating State shall, not later than 15 calendar days after such withdrawal, submit to the Secretary an amount computed by multiplying the amount withdrawn by the appropriate factor, as determined under subsection (b).

    (b) FACTOR- The appropriate factor shall be obtained by dividing the total amount of contributions that have been made by the participating State to all reserve funds which were subject to reimbursement--

      (1) by 2; and

      (2) by the total amount of contributions made by the participating State to all reserve funds, including if applicable, contributions that have been made by the State prior to becoming a participating State if the State continued its own capital access program in accordance with section 253(b).

    (c) USE OF REIMBURSEMENTS- The Secretary may use funds reimbursed pursuant to this section to make reimbursements under section 257.

SEC. 259. REGULATIONS.

    The Secretary shall promulgate appropriate regulations to implement this subtitle.

SEC. 260. AUTHORIZATION OF APPROPRIATIONS.

    (a) AMOUNT- There are authorized to be appropriated to the Secretary $50,000,000 to carry out this subtitle.

    (b) BUDGETARY TREATMENT- The amount authorized to be appropriated under subsection (a) shall be subject to discretionary spending caps, as provided in section 601 of the Congressional Budget Act of 1974, and therefore shall reduce by an equal amount funds made available for other discretionary spending programs.

TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

SEC. 301. INCORPORATED DEFINITIONS.

    Unless otherwise specifically provided in this title, for purposes of this title--

      (1) the terms ‘appropriate Federal banking agency’, ‘Federal banking agencies’, and ‘insured depository institution’ have the same meanings as in section 3 of the Federal Deposit Insurance Act; and

      (2) the term ‘insured credit union’ has the same meaning as in section 101 of the Federal Credit Union Act.

SEC. 302. ADMINISTRATIVE CONSIDERATION OF BURDEN WITH NEW REGULATIONS.

    In determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, each Federal banking agency shall consider, consistent with the principles of safety and soundness and the public interest--

      (1) any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions; and

      (2) the benefits of such regulations.

SEC. 303. STREAMLINING OF REGULATORY REQUIREMENTS.

    (a) REVIEW OF REGULATIONS; REGULATORY UNIFORMITY- During the 2-year period beginning on the date of enactment of this Act, each Federal banking agency shall, consistent with principles of safety and soundness and the public interest--

      (1) conduct a review of the regulations and written policies of that agency--

        (A) to streamline those regulations and policies in order to improve efficiency, reduce unnecessary costs, and eliminate unwarranted constraints on credit availability; and

        (B) to remove inconsistencies and outmoded and duplicative requirements; and

      (2) work jointly with the other Federal banking agencies to make uniform all regulations and guidelines implementing common statutory or supervisory policies.

    (b) REPORT TO CONGRESS- The Federal banking agencies shall submit a joint report to the Congress annually for 2 years following the date of enactment of this Act detailing the progress of the agencies in carrying out the requirements of subsection (a).

SEC. 304. ELIMINATION OF DUPLICATIVE FILINGS.

    The Federal banking agencies shall work jointly--

      (1) to eliminate, to the extent practicable, duplicative or otherwise unnecessary requests for information in connection with applications or notices to the agencies; and

      (2) to harmonize, to the extent practicable, any inconsistent publication and public notice requirements.

SEC. 305. COORDINATED AND UNIFIED EXAMINATIONS.

    Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by adding at the end the following new paragraph:

      ‘(6) COORDINATED EXAMINATIONS- To minimize the disruptive effects of examinations on the operations of insured depository institutions--

        ‘(A) each appropriate Federal banking agency shall, to the extent practicable and consistent with safety and soundness principles and the public interest--

          ‘(i) coordinate examinations to be conducted by that agency at an insured depository institution and its affiliates;

          ‘(ii) coordinate with the other appropriate Federal banking agencies in the conduct of such examinations; and

          ‘(iii) work to coordinate the conduct of all examinations made pursuant to this subsection with the appropriate State bank supervisor; and

        ‘(B) not later than 2 years after the date of enactment of the Community Development, Credit Enhancement, and Regulatory Improvement Act of 1993, the Federal banking agencies shall jointly establish and implement a system for determining which one of the Federal banking agencies shall conduct a unified examination of each insured depository institution and its affiliates, as required by this subsection, on behalf of all Federal banking agencies.’.

SEC. 306. EIGHTEEN-MONTH EXAMINATION RULE FOR CERTAIN SMALL INSTITUTIONS.

    Section 10(d)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)(4)) is amended--

      (1) in subparagraph (A), by striking ‘$100,000,000’ and inserting ‘$250,000,000’;

      (2) in subparagraph (C), by striking ‘and its composite condition was found to be outstanding;’ and inserting ‘and its composite condition--

          ‘(i) was found to be outstanding; or

          ‘(ii) in the case of an insured depository institution that has total assets of less than $175,000,000, was found to be outstanding or good;’.

      (3) by redesignating subparagraph (D) as subparagraph (E); and

      (4) by inserting after subparagraph (C) the following new subparagraph:

        ‘(D) the insured institution is not currently subject to a formal enforcement proceeding or order by the Corporation or the appropriate Federal banking agency; and’.

SEC. 307. CALL REPORT SIMPLIFICATION.

    (a) MODERNIZATION OF CALL REPORT FILING AND DISCLOSURE SYSTEM- In order to reduce the administrative requirements pertaining to bank reports of condition, savings association financial reports, and bank holding company consolidated and parent-only financial statements, and to improve the timeliness of such reports and statements, the Federal banking agencies shall--

      (1) work jointly to develop a system under which--

        (A) insured depository institutions and their affiliates may file such reports and statements electronically; and

        (B) the Federal banking agencies may make such reports and statements available to the public electronically; and

      (2) not later than 1 year after the date of enactment of this Act, report to the Congress and make recommendations for legislation that would enhance efficiency for filers and users of such reports and statements.

    (b) UNIFORM REPORTS AND SIMPLIFICATION OF INSTRUCTIONS- The Federal banking agencies shall, consistent with the principles of safety and soundness, work jointly--

      (1) to adopt a single form for the filing of core information required to be submitted under Federal law to all such agencies in the reports and statements referred to in subsection (a); and

      (2) to simplify instructions accompanying such reports and statements and to provide an index to the instructions that is adequate to meet the needs of both filers and users.

    (c) REVIEW OF CALL REPORT SCHEDULE- Each Federal banking agency shall--

      (1) review the information required by schedules supplementing the core information referred to in subsection (b); and

      (2) eliminate requirements that are not warranted for reasons of safety and soundness or other public purposes.

SEC. 308. REPEAL OF PUBLICATION REQUIREMENTS.

    (a) REVISED STATUTES- Section 5211 of the Revised Statutes (12 U.S.C. 161) is amended--

      (1) in the fifth sentence of subsection (a), by striking ‘; and the statement of resources’ and all that follows through ‘as may be required by the Comptroller’; and

      (2) in subsection (c), by striking the fourth sentence.

    (b) FDIA- Section 7(a)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)(1)) is amended by striking the fourth sentence.

    (c) FEDERAL RESERVE ACT- Section 9 of the Federal Reserve Act (12 U.S.C. 324) is amended in the last sentence of the sixth undesignated paragraph, by striking ‘and shall be published’ and all that follows through the end of the sentence and inserting a period.

SEC. 309. REGULATORY APPEALS PROCESS.

    (a) IN GENERAL- Not later than 180 days after the date of enactment of this Act, each appropriate Federal banking agency and the National Credit Union Administration Board shall establish an independent intra-agency appellate process. The process shall be available to review material supervisory determinations made at insured depository institutions or at insured credit unions that the agency supervises.

    (b) REVIEW PROCESS- In establishing the independent appellate process under subsection (a), each agency shall ensure--

      (1) that any appeal of a material supervisory determination by an insured depository institution or credit union is heard and decided expeditiously; and

      (2) that appropriate safeguards exist for protecting the appellant from retaliation by agency examiners.

    (c) COMMENT PERIOD- Not later than 90 days after the date of enactment of this Act, each appropriate Federal banking agency and the National Credit Union Administration shall provide public notice and opportunity for comment on proposed guidelines for the establishment of an appellate process under this section.

    (d) DEFINITIONS- For purposes of this section--

      (1) the term ‘material supervisory determinations’ includes determinations relating to--

        (A) examination ratings;

        (B) the adequacy of loan loss reserve provisions; and

        (C) loan classifications on loans that are significant to the institution; and

      (2) the term ‘independent appellate process’ means a review by an agency official who does not directly or indirectly report to the agency official who made the material supervisory determination under review.

    (e) EFFECT ON OTHER AUTHORITY- Nothing in this section shall affect the authority of an appropriate Federal banking agency or the National Credit Union Association Board to take enforcement or supervisory action against an institution.

SEC. 310. ELECTRONIC FILING OF CURRENCY TRANSACTION REPORTS.

    Section 123 of the Bank Secrecy Act (12 U.S.C. 1953) is amended by adding at the end the following new subsection:

    ‘(c) ACCEPTANCE OF AUTOMATED RECORDS- The Secretary shall permit an uninsured bank or financial institution to retain or maintain records referred to in subsection (a) in electronic or automated form, subject to terms and conditions established by the Secretary.’.

SEC. 311. BANK SECRECY ACT PUBLICATION REQUIREMENTS.

    Chapter 53 of title 31, United States Code, is amended by adding at the end the following new section:

‘SEC. 5329. STAFF COMMENTARIES.

    ‘The Secretary shall--

      ‘(1) publish all written rulings interpreting this chapter; and

      ‘(2) annually issue a staff commentary on the regulations issued under this chapter.’.

SEC. 312. EXEMPTION OF BUSINESS LOANS FROM REAL ESTATE SETTLEMENT PROCEDURES ACT REQUIREMENTS.

    The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) is amended by inserting after section 6 the following new section:

‘SEC. 7. EXEMPTED TRANSACTIONS.

    ‘This Act does not apply to credit transactions involving extensions of credit--

      ‘(1) primarily for business, commercial, or agricultural purposes; or

      ‘(2) to government or governmental agencies or instrumentalities.’.

SEC. 313. FLEXIBILITY IN CHOOSING BOARDS OF DIRECTORS.

    Section 5146 of the Revised Statutes (12 U.S.C. 72) is amended in the first sentence, by striking ‘two thirds’ and inserting ‘a majority’.

SEC. 314. HOLDING COMPANY AUDIT REQUIREMENTS.

    Section 36(i) of the Federal Deposit Insurance Act (12 U.S.C. 1831m(i)) is amended by striking paragraph (2) and inserting the following:

      ‘(2) the institution--

        ‘(A) has total assets, as of the beginning of such fiscal year, of less than $5,000,000,000;

        ‘(B) has--

          ‘(i) total assets, as of the beginning of such fiscal year, of more than $5,000,000,000 and less than $9,000,000,000; and

          ‘(ii) a CAMEL composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the most recent examination of such institution by the Corporation or the appropriate Federal banking agency; or

        ‘(C)(i) has total assets, as of the beginning of such fiscal year, of more than $9,000,000,000; and

        ‘(ii) has a CAMEL composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the most recent examination of such institution by the Corporation or the appropriate Federal banking agency.

    Notwithstanding paragraph (2)(C), in the case of an insured depository institution that the Corporation determines to be a large institution, the audit committee of the holding company of such an institution shall not include any large customers of the institution.

      ‘(3) The appropriate Federal banking agency may require an institution with total assets in excess of $9,000,000,000 to comply with this section, notwithstanding the exception provided by this subsection, if it determines that such exemption will create a significant risk to the affected deposit insurance fund if applied to that institution.’.

SEC. 315. STATE REGULATION OF REAL ESTATE APPRAISALS.

    Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is amended--

      (1) by redesignating subsections (b) through (e) as subsections (c) through (f), respectively;

      (2) by inserting after subsection (a) the following new subsection:

    ‘(b) RECIPROCITY- The Appraisal Subcommittee shall encourage the States to develop reciprocity agreements that readily authorize appraisers who are licensed or certified in one State (and who are in good standing with their State appraiser certifying or licensing agency) to perform appraisals in other States.’; and

      (3) in subsection (a)--

        (A) by redesignating paragraphs (1) through (3) as subparagraphs (A) through (C);

        (B) by striking ‘A State’ and inserting the following:

      ‘(1) IN GENERAL- A State’; and

        (C) by adding at the end the following new paragraph:

      ‘(2) FEES FOR TEMPORARY PRACTICE- A State appraiser certifying or licensing agency shall not impose excessive fees or burdensome requirements, as determined by the Appraisal Subcommittee, for temporary practice under this subsection.’.

SEC. 316. ACCELERATION OF EFFECTIVE DATE FOR INTERAFFILIATE TRANSACTIONS.

    (a) HOME OWNERS’ LOAN ACT AMENDMENT- Section 11(a)(2) of the Home Owners’ Loan Act (12 U.S.C. 1468(a)(2)) is amended by adding at the end the following new subparagraph:

        ‘(C) TRANSITION RULE FOR WELL CAPITALIZED SAVINGS ASSOCIATIONS-

          ‘(i) IN GENERAL- A savings association that is well capitalized (as defined in section 38 of the Federal Deposit Insurance Act), as determined without including goodwill in calculating core capital, shall be treated as a bank for purposes of section 23A(d)(1) and section 23B of the Federal Reserve Act.

          ‘(ii) LIABILITY OF COMMONLY CONTROLLED DEPOSITORY INSTITUTIONS- Any savings association that engages under clause (i) in a transaction that would not otherwise be permissible under this subsection, and any affiliated insured bank that is commonly controlled (as defined in section 5(e)(9) of the Federal Deposit Insurance Act), shall be subject to subsection (e) of section 5 of the Federal Deposit Insurance Act as if paragraph (6) of that subsection did not apply.’.

    (b) REPEAL PROVISION- Effective on January 1, 1995, subparagraph (C) of section 11(a)(2) of the Home Owners’ Loan Act (12 U.S.C. 1468(a)(2)) (as added by subsection (a) of this section) is repealed.

SEC. 317. COLLATERALIZATION OF PUBLIC DEPOSITS.

    Section 13(e) of the Federal Deposit Insurance Act (12 U.S.C. 1823(e)) is amended--

      (1) by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively;

      (2) by striking ‘No agreement’ and inserting the following:

      ‘(1) IN GENERAL- No agreement’; and

      (3) by adding at the end the following new paragraph:

      ‘(2) PUBLIC DEPOSITS- An agreement to provide for the lawful collateralization of deposits of a Federal, State, or local governmental entity or of any depositor referred to in section 11(a)(2) shall not be deemed to be invalid pursuant to paragraph (1)(B) solely because such agreement was not executed contemporaneously with the acquisition of the collateral or with any changes in the collateral made in accordance with such agreement.’.

SEC. 318. ELIMINATION OF STOCK VALUATION PROVISION.

    (a) IN GENERAL- Section 39(b) of the Federal Deposit Insurance Act (12 U.S.C. 1831p-1(b)), as added by section 132(a) of the Federal Deposit Insurance Corporation Improvements Act of 1991) is amended to read as follows:

    ‘(b) ASSET QUALITY, EARNINGS, AND STOCK VALUATION STANDARDS- Each appropriate Federal banking agency shall, for all insured depository institutions and depository institution holding companies, prescribe standards relating to asset quality, earnings, and stock valuation that the agency determines to be appropriate.’.

    (b) ESTABLISHING STANDARDS IN GUIDELINES- Section 39(d) of the Federal Deposit Insurance Act (12 U.S.C. 1831p-1(d)) is amended--

      (1) in the subsection heading, by striking ‘BY REGULATION’; and

      (2) in paragraph (1)--

        (A) in the first sentence, by inserting ‘or guideline’ before the period; and

        (B) in the second sentence, by inserting ‘or guidelines’ after ‘Such regulations’.

    (c) EFFECTIVE DATE- The amendments made by subsections (a) and (b) shall be construed to have the same effective date as section 39 of the Federal Deposit Insurance Act, as provided in section 132(c) of the Federal Deposit Insurance Corporation Improvements Act of 1991.

SEC. 319. EXPEDITED PROCEDURES FOR FORMING A BANK HOLDING COMPANY.

    Section 3(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(a)) is amended--

      (1) in the second sentence, by striking ‘or (B)’ and inserting ‘(B)’; and

      (2) in the second sentence, by inserting before the period the following: ‘; or (C) with 30 days prior notification to the Board, the acquisition by a company of control of a bank in a reorganization in which a person or group of persons exchanges its shares of the bank for shares of a newly formed bank holding company and receives, after the reorganization, substantially the same proportional share interest in the holding company as it held in the bank (except for changes in shareholders’ interests resulting from the exercise of dissenting shareholders’ rights under State or Federal law) if, immediately following the acquisition, (i) the bank holding company meets the capital and other financial standards prescribed by the Board by regulation for such a bank holding company; (ii) the bank is adequately capitalized (as defined in section 38 of the Federal Deposit Insurance Act); and (iii) the holding company does not engage in any activities other than those of banking or managing and controlling banks’.

SEC. 320. EXEMPTION OF CERTAIN HOLDING COMPANY FORMATIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933.

    Section 4 of the Securities Act of 1933 (15 U.S.C. 77d) is amended by adding at the end the following new paragraph:

      ‘(7) transactions involving offers or sales of equity securities, in connection with the acquisition of a bank by a company under section 3(a) of the Bank Holding Company Act of 1956, if--

        ‘(A) the acquisition occurs solely as part of a reorganization in which a person or group of persons exchanges its shares of a bank for shares of a newly formed bank holding company with no significant assets other than securities of the bank and the existing subsidiaries of the bank;

        ‘(B) the shareholders receive, after that reorganization, substantially the same proportional share interests in the bank holding company as they held in the bank, except for changes in shareholders’ interests resulting from lawful elimination of fractional interests and the exercise of dissenting shareholders’ rights under State or Federal law;

        ‘(C) the rights and interests of security holders in the bank holding company are substantially the same as those in the bank prior to the transaction, other than as may be required by law; and

        ‘(D) the bank holding company has substantially the same assets and liabilities as the bank had prior to the transaction.’.

SEC. 321. REDUCTION OF POST-APPROVAL WAITING PERIOD FOR BANK HOLDING COMPANY ACQUISITIONS.

    Section 11(b)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1849(b)(1)) is amended by inserting before the period at the end of the fourth sentence the following: ‘or, if the Board has not received any adverse comment from the Attorney General of the United States relating to competitive factors, such shorter period of time as may be prescribed by the Board with the concurrence of the Attorney General, but in no event less than 15 calendar days after the date of approval’.

SEC. 322. REDUCTION OF POST-APPROVAL WAITING PERIOD FOR BANK MERGERS.

    Section 18(c)(6) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(6)) is amended by inserting before the period at the end of the last sentence the following: ‘or, if the agency has not received any adverse comment from the Attorney General of the United States relating to competitive factors, such shorter period of time as may be prescribed by the agency with the concurrence of the Attorney General, but in no event less than 15 calendar days after the date of approval’.

SEC. 323. BANKERS’ BANKS.

    (a) OWNERSHIP BY BANKERS’ BANKS-

      (1) Paragraph Seventh of section 5136 of the Revised Statutes (12 U.S.C. 24) is amended in the eleventh sentence--

        (A) by inserting ‘or depository institution holding companies (as defined in section 3 of the Federal Deposit Insurance Act)’ after ‘(except to the extent directors’ qualifying shares are required by law) by depository institutions’; and

        (B) by striking ‘services for other depository institutions and their officers, directors and employees’ and inserting the following: ‘services to or for other depository institutions and the officers, directors, and employees of such institutions, and in providing correspondent banking services at the request of other depository institutions (also referred to as a ‘banker’s bank’)’.

      (2) Section 5169(b)(1) of the Revised Statutes (12 U.S.C. 27(b)(1)) is amended--

        (A) by inserting ‘or depository institution holding companies’ after ‘(except to the extent directors’ qualifying shares are required by law) by other depository institutions’; and

        (B) by striking ‘services for other depository institutions and their officers, directors and employees’ and inserting the following: ‘services to or for other depository institutions and the officers, directors, and employees of such institutions, and in providing correspondent banking services at the request of other depository institutions (also referred to as a ‘banker’s bank’)’.

    (b) OWNERSHIP BY SAVINGS ASSOCIATIONS- Section 5(c)(4) of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(4)) is amended by adding at the end the following new subparagraph:

        ‘(E) BANKERS’ BANKS- A Federal savings association may purchase for its own account shares of stock of a bankers’ bank, described in Paragraph Seventh of section 5136 of the Revised Statutes or in section 5169(b) of the Revised Statutes, on the same terms and conditions as a national bank may purchase such shares.’.

    (c) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) BANK HOLDING COMPANY ACT- Section 3(e) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(e)) is amended by striking the second sentence.

      (2) MANAGEMENT INTERLOCKS ACT- Section 202(3)(D) of the Depository Institution Management Interlocks Act (12 U.S.C. 3201(3)(D)) is amended by striking ‘the voting securities’ and all that follows through the end of the subparagraph and inserting ‘and is a bankers’ bank, described in Paragraph Seventh of section 5136 of the Revised Statutes; or’.

    (d) LENDING LIMIT FOR LOANS SECURED BY SECURITIES- Section 11(m) of the Federal Reserve Act (12 U.S.C. 248(m)) is amended by striking ‘10 percentum’ each place such term appears and inserting ‘15 percent’.

SEC. 324. BANK SERVICE CORPORATION ACT AMENDMENT.

    Section 5 of the Bank Service Corporation Act (12 U.S.C. 1865) is amended--

      (1) in subsection (a), by striking ‘the prior approval of’ and inserting ‘prior notice, as determined by’; and

      (2) in subsection (c), by inserting ‘or whether to approve or disapprove any notice’ after ‘approval’.

SEC. 325. MERGER TRANSACTION REPORTS.

    Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)) is amended--

      (1) in paragraph (4)--

        (A) in the first sentence--

          (i) by striking ‘General and the other two’ and inserting ‘General, who shall promptly notify the other’; and

          (ii) by inserting before the period ‘of any such proposed transaction that raises a significant competitiveness issue’; and

        (B) in the second sentence, by striking ‘and the other two banking agencies’; and

      (2) in paragraph (6), by striking ‘and the other two banking agencies’.

SEC. 326. CREDIT CARD ACCOUNTS RECEIVABLE SALES.

    Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) is amended by adding at the end the following new paragraphs:

      ‘(14) SELLING CREDIT CARD ACCOUNTS RECEIVABLE-

        ‘(A) NOTIFICATION REQUIRED- An undercapitalized insured depository institution (as defined in section 38) shall notify the Corporation in writing before entering into an agreement to sell credit card accounts receivable.

        ‘(B) WAIVER BY CORPORATION- The Corporation may at any time, in its sole discretion and upon such terms as it may prescribe, waive its right to repudiate an agreement to sell credit card accounts receivable if the Corporation--

          ‘(i) determines that the waiver is in the best interests of the deposit insurance fund; and

          ‘(ii) provides a written waiver to the selling institution.

        ‘(C) EFFECT OF WAIVER ON SUCCESSORS-

          ‘(i) IN GENERAL- If, under subparagraph (B), the Corporation has waived its right to repudiate an agreement to sell credit card accounts receivable--

            ‘(I) any provision of the agreement that restricts solicitation of a credit card customer of the selling institution, or the use of a credit card customer list of the institution, shall bind any receiver or conservator of the institution; and

            ‘(II) the Corporation shall require any acquirer of the selling institution, or of substantially all of the selling institution’s assets or liabilities, to agree to be bound by a provision described in subclause (I) as if the acquirer were the selling institution.

          ‘(ii) EXCEPTION- Clause (i)(II) does not--

            ‘(I) restrict the acquirer’s authority to offer any product or service to any person identified without using a list of the selling institution’s customers in violation of the agreement;

            ‘(II) require the acquirer to restrict any preexisting relationship between the acquirer and a customer; or

            ‘(III) apply to any transaction in which the acquirer acquires only insured deposits.

        ‘(D) WAIVER NOT ACTIONABLE- The Corporation shall not, in any capacity, be liable to any person for damages resulting from the waiver of or failure to waive the Corporation’s right under this section to repudiate any contract or lease, including an agreement to sell credit card accounts receivable. No court shall issue any order affecting any such waiver or failure to waive.

        ‘(E) OTHER AUTHORITY NOT AFFECTED- This paragraph does not limit any other authority of the Corporation to waive the Corporation’s right to repudiate an agreement or lease under this section.

      ‘(15) Certain credit card customer lists protected-

        ‘(A) IN GENERAL- If any insured depository institution sells credit card accounts receivable under an agreement negotiated at arm’s length that provides for the sale of the institution’s credit card customer list, the Corporation shall prohibit any party to a transaction with respect to the institution under this section or section 13 from using the list except as permitted under the agreement.

        ‘(B) FRAUDULENT TRANSACTIONS EXCLUDED- Subparagraph (A) does not limit the Corporation’s authority to repudiate any agreement entered into with the intent to hinder, delay, or defraud the institution, the institution’s creditors, or the Corporation.’.

SEC. 327. LIMITING POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.

    (a) AMENDMENT TO THE FEDERAL RESERVE ACT- The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended by inserting after section 25B the following new section:

‘SEC. 25C. POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.

    ‘A member bank shall not be required to repay any deposit made at a foreign branch of the bank if the branch cannot repay the deposit due to--

      ‘(1) an act of war, insurrection or civil strife; or

      ‘(2) an action by a foreign government or instrumentality (whether de jure or de facto) in the country in which the branch is located,

    unless the member bank has expressly agreed in writing to repay the deposit under those circumstances. The Board and the Comptroller of the Currency may jointly prescribe such regulations as they deem necessary to implement this section.’.

    (b) Conforming Amendments to the Federal Deposit Insurance Act-

      (1) IN GENERAL- Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end the following new subsection:

    ‘(q) SOVEREIGN RISK- Section 25C of the Federal Reserve Act shall apply to every nonmember insured bank in the same manner and to the same extent as if the nonmember insured bank were a member bank.’.

      (2) CONFORMING AMENDMENT- Subparagraph (A) of section 3(l)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)(5)) is amended to read as follows:

        ‘(A) any obligation of a depository institution which is carried on the books and records of an office of such bank or savings association located outside of any State, unless--

          ‘(i) such obligation would be a deposit if it were carried on the books and records of the depository institution, and would be payable at, an office located in any State; and

          ‘(ii) the contract evidencing the obligation provides by express terms, and not by implication, for payment at an office of the depository institution located in any State; and’.

    (c) EXISTING CLAIMS NOT AFFECTED--Section 25C of the Federal Reserve Act (as added by subsection (a)) shall not be applied retroactively and shall not be construed to affect or apply to any claim or cause of action addressed by that section arising from events or circumstances that occurred before the date of enactment of this Act.

SEC. 328. AMENDMENTS TO OUTDATED DIVIDEND PROVISIONS.

    (a) WITHDRAWAL OF CAPITAL- Section 5204 of the Revised Statutes (12 U.S.C. 56) is amended--

      (1) in the second sentence, by striking ‘net profits then on hand, deducting therefrom its losses and bad debts’ and inserting ‘undivided profits, subject to other applicable provisions of law’; and

      (2) by striking the third sentence.

    (b) DECLARATION OF DIVIDENDS- Section 5199 of the Revised Statutes (12 U.S.C. 60) is amended--

      (1) in the first sentence, by striking ‘net profits of the association’ and inserting ‘undivided profits of the association, subject to the limitations in subsection (b),’;

      (2) by striking ‘net profits’ each subsequent place such term appears and inserting ‘net income’; and

      (3) by striking subsection (c).

SEC. 329. ELIMINATION OF DUPLICATIVE DISCLOSURES FOR HOME EQUITY LOANS.

    Section 4(a) of the Real Estate Settlement Procedures Act (12 U.S.C. 2603(a)) is amended by adding at the end the following: ‘In the case of a federally related mortgage loan secured by a subordinate lien on residential property, disclosures made under section 127A(a) of the Truth in Lending Act may be used in lieu of the disclosures required under this section if--

      ‘(1) the disclosures made pursuant to such section 127A(a) contain all of the information that is required under this section; and

      ‘(2) the information is disclosed in a manner that is no less conspicuous than is required under this section.’.

SEC. 330. REPORT ON CAPITAL STANDARDS AND THEIR IMPACT ON THE ECONOMY.

    (a) IN GENERAL- Not later than 1 year after the date of enactment of this Act, the Secretary of the Treasury, after consultation with the Federal banking agencies, shall report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Banking, Finance and Urban Affairs of the House of Representatives on the effect of the implementation of risk-based capital standards on--

      (1) the safety and soundness of insured depository institutions; and

      (2) the availability of credit, particularly to consumers and small business concerns.

    (b) RECOMMENDATIONS- The report required by subsection (a) shall contain any recommendations that the Secretary of the Treasury considers relevant.

SEC. 331. STUDIES ON THE IMPACT OF THE PAYMENT OF INTEREST ON RESERVES.

    (a) FEDERAL RESERVE STUDY- Not later than 180 days after the date of enactment of this Act, the Board of Governors of the Federal Reserve System, in consultation with the Federal Deposit Insurance Corporation, shall conduct a study and report to Congress on--

      (1) the necessity, for monetary policy purposes, of continuing to require insured depository institutions to maintain sterile reserves;

      (2) the appropriateness of paying a market rate of interest to insured depository institutions on sterile reserves or, in the alternative, providing for payment of such interest into the appropriate deposit insurance fund;

      (3) the monetary impact that the failure to pay interest on sterile reserves has had on insured depository institutions, including an estimate of the total dollar amount of interest and the potential income lost by insured depository institutions; and

      (4) the impact that the failure to pay interest on sterile reserves has had on the ability of the banking industry to compete with nonbanking providers of financial services and with foreign banks.

    (b) BUDGETARY IMPACT STUDY- Not later than 180 days after the date of enactment of this Act, the Director of the Office of Management and Budget and the Director of the Congressional Budget Office, in consultation with the Committees on the Budget of the Senate and the House of Representatives, shall jointly conduct a study and report to the Congress on the budgetary impact of--

      (1) paying a market rate of interest to insured depository institutions on sterile reserves; and

      (2) paying such interest into the respective deposit insurance funds.

SEC. 332. STUDY AND REPORT ON STREAMLINED LENDING PROCESS FOR CONSUMER BENEFIT.

    (a) STUDY- During the 12-month period beginning on the date of enactment of this Act, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Secretary of Housing and Urban Development shall conduct a study of ways to improve the home mortgage, small business, and consumer lending processes, consistent with the principles of safety and soundness, so as to--

      (1) reduce consumer burdens, inconvenience, cost, and delay; and

      (2) minimize cost and burdens on insured depository institutions, credit unions, and other lenders.

    (b) COMMENTS- In conducting the study under subsection (a), comments shall be solicited from consumer groups, insured depository institutions, other lenders, and any other interested parties.

    (c) REPORT- Not later than 12 months after the date of enactment of this Act, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Secretary of Housing and Urban Development shall submit a joint report to the Congress indicating any legislative changes necessary to improve the home mortgage, small business, and consumer lending processes and including a summary of comments received pursuant to subsection (b).

SEC. 333. REPEAL OF OUTDATED CHARTER REQUIREMENT FOR NATIONAL BANKS.

    Section 5170 of the Revised Statutes (12 U.S.C. 28) is repealed.

SEC. 334. INCLUSION OF COMPTROLLER OF THE CURRENCY; CLARIFICATION OF REVISED STATUTES.

    (a) PUBLIC LAW 93-425- Section 111 of Public Law 93-495 (12 U.S.C. 250) is amended by inserting ‘the Comptroller of the Currency,’ after ‘Federal Deposit Insurance Corporation,’.

    (b) REVISED STATUTES-

      (1) SECTION 5240- The third paragraph of section 5240 of the Revised Statutes (12 U.S.C. 482) is amended by inserting ‘or section 301(f)(1) of title 31, United States Code,’ after ‘provisions of this section’.

      (2) SECTION 324- Section 324 of the Revised Statutes (12 U.S.C. 1) is amended by adding at the end the following: ‘The Comptroller of the Currency shall have the same authority over matters within the jurisdiction of the Comptroller as the Director of the Office of Thrift Supervision has over matters within the Director’s jurisdiction under section 3(b)(3) of the Home Owners’ Loan Act.’.

      (3) SECTION 5239- Section 5239 of the Revised Statutes (12 U.S.C. 93) is amended by inserting at the end the following new subsection:

    ‘(d) AUTHORITY- The Comptroller of the Currency may act in the Comptroller’s own name and through the Comptroller’s own attorneys in enforcing any provision of this title, regulations thereunder, or any other law or regulation, or in any action, suit, or proceeding to which the Comptroller of the Currency is a party.’.

SEC. 335. COMMEMORATION OF 1995 SPECIAL OLYMPIC WORLD GAMES.

    (a) COIN SPECIFICATIONS-

      (1) ONE DOLLAR SILVER COINS-

        (A) ISSUANCE- The Secretary of the Treasury (hereafter in this section referred to as the ‘Secretary’) shall issue not more than 800,000 $1 coins, which shall weigh 26.73 grams, have a diameter of 1.500 inches, and shall contain 90 percent silver and 10 percent copper.

        (B) DESIGN- The design of the coins issued under this section shall be emblematic of the 1995 Special Olympics World Games. On each such coin there shall be a designation of the value of the coin, an inscription of the year ‘1995’, and inscriptions of the words ‘Liberty’, ‘In God We Trust’, ‘United States of America’, and ‘E Pluribus Unum’.

      (2) LEGAL TENDER- The coins issued under this section shall be legal tender as provided in section 5103 of title 31, United States Code.

      (3) NUMISMATIC ITEMS- For purposes of section 5132(a)(1) of title 31, United States Code, all coins minted under this section shall be considered to be numismatic items.

    (b) SOURCES OF BULLION- The Secretary shall obtain silver for the coins minted under this section only from stockpiles established under the Strategic and Critical Materials Stock Piling Act.

    (c) SELECTION OF DESIGN- The design for the coins authorized by this section shall be selected by the Secretary after consultation with the 1995 Special Olympics World Games Organizing Committee, Inc. and the Commission of Fine Arts. As required by section 5135 of title 31, United States Code, the design shall also be reviewed by the Citizens Commemorative Coin Advisory Committee.

    (d) ISSUANCE OF THE COINS-

      (1) QUALITY OF COINS- The coins authorized under this section may be issued in uncirculated and proof qualities.

      (2) MINT FACILITY- Not more than 1 facility of the United States Mint may be used to strike any particular quality of the coins minted under this section.

      (3) PERIOD FOR ISSUANCE- The Secretary shall issue coins minted under this Act during the period beginning on January 15, 1995, and ending on December 31, 1995.

    (e) SALE OF THE COINS-

      (1) SALE PRICE- The coins issued under this section shall be sold by the Secretary at a price equal to the sum of the face value of the coins, the surcharge provided in paragraph (4) with respect to such coins, and the cost of designing and issuing such coins (including labor, materials, dies, use of machinery, overhead expenses, marketing, and shipping).

      (2) BULK SALES- The Secretary shall make bulk sales at a reasonable discount.

      (3) PREPAID ORDERS- The Secretary shall accept prepaid orders for the coins authorized under this section prior to the issuance of such coins. Sales under this subsection shall be at a reasonable discount.

      (4) SURCHARGE REQUIRED- All sales shall include a surcharge of $10 per coin.

    (f) GENERAL WAIVER OF PROCUREMENT REGULATIONS- No provision of law governing procurement or public contracts shall be applicable to the procurement of goods or services necessary for carrying out the provisions of this section. Nothing in this subsection shall relieve any person entering into a contract under the authority of this section from complying with any law relating to equal employment opportunity.

    (g) DISTRIBUTION OF SURCHARGES- The total surcharges collected by the Secretary from the sale of the coins issued under this section shall be promptly paid by the Secretary to the 1995 Special Olympics World Games Organizing Committee, Inc. Such amounts shall be used to--

      (1) provide a world class sporting event for athletes with mental retardation;

      (2) demonstrate to a global audience the extraordinary talents, dedication, and courage of persons with mental retardation; and

      (3) underwrite the cost of staging and promoting the 1995 Special Olympics World Games.

    (h) AUDITS- The Comptroller General of the United States shall have the right to examine such books, records, documents, and other data of the 1995 Special Olympics World Games Organizing Committee, Inc. as may be related to the expenditure of amounts paid under subsection (g).

    (i) FINANCIAL ASSURANCES-

      (1) NO NET COST TO THE GOVERNMENT- The Secretary shall take all actions necessary to ensure that the issuance of the coins authorized by this section shall result in no net cost to the United States Government.

      (2) ADEQUATE SECURITY FOR PAYMENT REQUIRED- No coin shall be issued under this section unless the Secretary has received--

        (A) full payment therefore;

        (B) security satisfactory to the Secretary to indemnify the United States for full payment; or

        (C) a guarantee of full payment satisfactory to the Secretary from a depository institution whose deposits are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration Board.

SEC. 336. EXEMPTION FOR BUSINESS ACCOUNTS.

    Section 274(1) of the Truth in Savings Act (12 U.S.C. 4313(1)) is amended to read as follows:

      ‘(1) ACCOUNT- The term ‘account’ means any account intended for use by and generally used by consumers primarily for personal, family, or household purposes that is offered by a depository institution into which a consumer deposits funds, including demand accounts, time accounts, negotiable order of withdrawal accounts, and share draft accounts.’.

SEC. 337. BOARD DISCRETION REGARDING CHECK-RELATED FRAUD.

    Section 604(e) of the Expedited Funds Availability Act (12 U.S.C. 4003(e)) is amended by adding at the end the following new paragraph:

      ‘(4) PREVENTION OF CHECK-RELATED LOSSES-

        ‘(A) IN GENERAL- The Board may, by regulation or order, extend the 1-business-day period specified in section 603(b)(1), regarding availability of funds deposited by local checks, to 2 business days if the Board determines that--

          ‘(i) there is a pattern of significant increases in check-related losses at depository institutions attributable to the provisions of this title; and

          ‘(ii) such action is necessary to diminish the volume of such check-related losses.

        ‘(B) LIMITATION ON OTHER AUTHORITY- The authority of the Board under paragraph (1) shall not apply to the applicability of section 603(b)(1) or the time period specified therein.’.

SEC. 338. CIVIL LIABILITY UNDER TRUTH IN SAVINGS.

    Section 271(a)(2)(A) of the Truth in Savings Act (12 U.S.C. 4310(a)(2)(A)) is amended by inserting ‘(other than an action based on a violation of section 263)’ after ‘individual action’.

SEC. 339. INSIDER LENDING.

    (a) LOANS TO EXECUTIVE OFFICERS BY MEMBER BANKS- Section 22(g)(2) of the Federal Reserve Act (12 U.S.C. 375a(g)(2)) is amended by striking ‘With the specific prior approval of its board of directors, a member’ and inserting ‘A member’.

    (b) EXTENSIONS OF CREDIT TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS OF MEMBER BANKS- Section 22(h)(8) of the Federal Reserve Act (12 U.S.C. 375b(h)(8)) is amended--

      (1) by striking ‘MEMBER BANK- FOR’ and inserting the following: ‘Member Bank-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), for’; and

      (2) by adding at the end the following:

        ‘(B) EXCEPTION- The Board shall have the authority by regulation to suspend the applicability of any or all of this subsection, except for the provisions of paragraph (2), with respect to any individual who is a director or an executive officer of a subsidiary of the company that controls the member bank, if the Board finds that such individual does not actually participate in major policymaking functions of the member bank.’.

SEC. 340. REVISIONS OF STANDARDS.

    Section 305(b)(1) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 1828 note) is amended--

      (1) in subparagraph (A), by striking ‘and’ at the end;

      (2) in subparagraph (B), by striking the period at the end and inserting ‘; and’; and

      (3) by adding at the end the following new subparagraph:

        ‘(C) take into account the size and activities of the institutions and do not cause undue reporting burdens.’.

SEC. 341. ALTERNATIVE RULES FOR RADIO ADVERTISING OF CONSUMER LEASES.

    Section 184 of the Truth in Lending Act (15 U.S.C. 1667c) is amended--

      (1) by redesignating subsection (b) as subsection (c); and

      (2) by inserting after subsection (a) the following new subsection:

    ‘(b) RADIO ADVERTISEMENTS-

      ‘(1) IN GENERAL- An advertisement by radio broadcast to aid, promote, or assist, directly or indirectly, any consumer lease shall be deemed to be in compliance with the requirements of subsection (a) if such advertisement clearly and conspicuously--

        ‘(A) states the information required by paragraphs (1) and (2) of subsection (a);

        ‘(B) states the number, amounts, due dates, or periods of scheduled payments, and the total of such payments under the lease; and

        ‘(C) includes--

          ‘(i) a referral to--

            ‘(I) a toll-free telephone number established in accordance with paragraph (2) that may be used by consumers to obtain the information required under subsection (a); or

            ‘(II) a written advertisement that--

‘(aa) appears in a publication in general circulation in the community served by the radio station on which such advertisement is broadcast during the period beginning 3 days before any such broadcast and ending 10 days after such broadcast; and

‘(bb) includes the information required to be disclosed under subsection (a); and

          ‘(ii) the name and dates of any publication referred to in clause (i)(II); and

        ‘(D) includes any other information which the Board determines necessary to carry out this chapter.

      ‘(2) ESTABLISHMENT OF TOLL-FREE NUMBER-

        ‘(A) IN GENERAL- In the case of a radio broadcast advertisement described in paragraph (1) that includes a referral to a toll-free telephone number, the lessor who offers the consumer lease shall--

          ‘(i) establish such a toll-free telephone number not later than the date on which the advertisement including the referral is broadcast;

          ‘(ii) maintain such telephone number for not less than 10 days, beginning on the date of any such broadcast; and

          ‘(iii) provide the information required under subsection (a) with respect to the lease to any person who calls such number.

        ‘(B) FORM OF INFORMATION- The information required to be provided under subparagraph (A)(iii) shall be provided orally or, if requested by the consumer, in written form.

      ‘(3) NO EFFECT ON OTHER LAW- Nothing in this subsection shall affect the requirements of Federal law as such requirements apply to advertisement by any other medium.’.

SEC. 342. DEPOSIT BROKER REGISTRATION.

    Section 29(g)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1831f(g)(3)) is amended--

      (1) by inserting ‘that is not well capitalized’ after ‘includes any insured depository institution’;

      (2) by striking ‘of any insured depository’ and inserting ‘of such’;

      (3) by striking ‘(with respect to such deposits)’; and

      (4) by striking ‘having the same type of charter’.

SEC. 343. EXTENSION OF MANAGEMENT INTERLOCKS GRANDFATHER CLAUSE.

    Subsections (a) and (b) of section 206 of the Depository Institution Management Interlocks Act (12 U.S.C. 3205) are each amended by striking ‘15 years’ and inserting ‘20 years’.

SEC. 344. CLARIFICATION OF PROVISION RELATING TO ADMINISTRATIVE AUTONOMY.

    Section 3(b)(3) of the Home Owners’ Loan Act (12 U.S.C. 1462a) is amended by striking everything after ‘Director’ and inserting in lieu thereof ‘(including agency rulemaking proceedings and enforcement actions) unless otherwise specifically provided by law.’.

SEC. 345. CONSUMER SURVEYS AND REPORT.

    (a) SURVEYS- Not later than 6 months after the date of enactment of this Act, the Federal banking agencies (as defined in section 3 of the Federal Deposit Insurance Act) and the Secretary of Housing and Urban Development shall jointly conduct an objective and statistically valid survey of financial services consumers to determine the general public awareness of, perceived benefits to consumers of, and effectiveness of the Federal banking laws under which the Federal banking agencies and the Department of Housing and Urban Development operate that are intended for the protection of such consumers, including--

      (1) the Expedited Funds Availability Act;

      (2) the Truth in Lending Act;

      (3) the Truth in Savings Act;

      (4) the Real Estate Settlement Procedures Act of 1974;

      (5) the Home Mortgage Disclosure Act of 1975;

      (6) the Equal Credit Opportunity Act;

      (7) the Community Reinvestment Act of 1977;

      (8) the Home Equity Loan Consumer Protection Act;

      (9) the Fair Credit and Charge Card Disclosure Act; and

      (10) the rules and regulations promulgated under those banking laws.

    (b) CONSULTATION- In developing such a survey, the Federal banking agencies and the Secretary of Housing and Urban Development shall consult with consumer groups, insured depository institutions, other lenders, and any other interested parties.

    (c) INFORMATION FOR SURVEYED CONSUMERS- The survey shall provide for distribution to participating consumers a summary explanation of the Federal banking law being surveyed and how each is currently being implemented.

    (d) REPORT- Not later than 60 days after completion of its survey under subsection (a), the Federal banking agencies and the Secretary of Housing and Urban Development shall jointly submit a report of the results of their survey to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Banking, Finance and Urban Affairs of the House of Representatives.

SEC. 346. SIMPLIFIED DISCLOSURE FOR EXISTING DEPOSITORS.

    (a) IN GENERAL- Section 43(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1831t(b)(3)) is amended to read as follows:

      ‘(3) ACKNOWLEDGEMENT OF DISCLOSURE-

        ‘(A) NEW DEPOSITORS- With respect to any depositor who was not a depositor at the depository institution before June 19, 1994, receive any deposit for the account of such depositor only if the depositor has signed a written acknowledgement that--

          ‘(i) the institution is not federally insured; and

          ‘(ii) if the institution fails, the Federal Government does not guarantee that the depositor will get back the depositor’s money.

        ‘(B) CURRENT DEPOSITORS- Receive any deposit after the effective date of this paragraph for the account of any depositor who was a depositor before June 19, 1994, only if--

          ‘(i) the depositor has signed a written acknowledgement described in subparagraph (A); or

          ‘(ii) the institution has complied with the provisions of subparagraph (C) which are applicable as of the date of the deposit.

        ‘(C) ALTERNATIVE PROVISION OF NOTICE TO CURRENT DEPOSITORS-

          ‘(i) IN GENERAL- Transmit to each depositor who was a depositor before June 19, 1994, and has not signed a written acknowledgement described in subparagraph (A)--

            ‘(I) a card containing the information described in clauses (i) and (ii) of subparagraph (A), and a line for the signature of the depositor; and

            ‘(II) accompanying materials requesting the depositor to sign the card, and return the signed card to the institution.

          ‘(ii) MANNER AND TIMING OF NOTICE-

            ‘(I) FIRST NOTICE- Make the transmission described in clause (i) via first class mail within 90 days after June 19, 1994.

            ‘(II) SECOND NOTICE- Make a 2d transmission described in clause (i) via first class mail not less than 30 days and not more than 45 days after a transmission to the depositor in accordance with subclause (I), if the institution has not, by the date of such mailing, received from the depositor a card referred to in clause (i)(I) which has been signed by the depositor.

            ‘(III) THIRD NOTICE- Make a 3d transmission described in clause (i) via first class mail not less than 30 days and not more than 45 days after a transmission to the depositor in accordance with subclause (II), if the institution has not, by the date of such mailing, received from the depositor a card referred to in clause (i)(I) which has been signed by the depositor.’.

    (b) EFFECTIVE DATE- Section 43(b)(3) of the Federal Deposit Insurance Act, as amended by subsection (a), shall take effect in accordance with section 151(a)(2)(D) of the Federal Deposit Insurance Corporation Improvement Act of 1991.

SEC. 347. COMMERCIAL MORTGAGE RELATED SECURITIES.

    (a) IN GENERAL- Section 3(a)(41)(A)(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(41)(A)(i)) is amended --

      (1) by striking ‘or on a residential’ and inserting ‘on a residential’; and

      (2) by inserting before the semicolon ‘, or on one or more parcels of real estate upon which is located one or more commercial structures’.

    (b) AMENDMENT TO THE REVISED STATUTES- Paragraph Seventh of section 5136 of the Revised Statutes (12 U.S.C. 24) is amended in the twelfth sentence, by striking ‘(15 U.S.C. 78c(a)(41))), subject to such regulations’ and inserting ‘(15 U.S.C. 78c(a)(41)). The exception provided for the securities described in subparagraphs (A), (B), and (C) shall be subject to such regulations’.

    (c) REGULATIONS- Not later than 1 year after the date of enactment of this Act, the Comptroller of the Currency shall promulgate final regulations, in accordance with the thirteenth sentence of Paragraph Seventh of section 5136 of the Revised Statutes (as amended by subsection (b)), to carry out the amendments made by this section.

    (d) EFFECTIVE DATE- The amendments made by this section shall become effective upon the date of promulgation of final regulations under subsection (c).

    (e) STATE OPT OUT- Notwithstanding the amendments made by this section, a note that is directly secured by a first lien on one or more parcels of real estate upon which is located one or more commercial structures shall not be considered to be a mortgage related security under section 3(a)(41) of the Securities Exchange Act of 1934 in any State that, prior to the expiration of 7 years after the date of enactment of this Act, enacts a statute that specifically refers to this section and either prohibits or provides for a more limited authority to purchase, hold, or invest in such securities by any person, trust, corporation, partnership, association, business trust, or business entity or class thereof than is provided by the amendments made by this subsection. The enactment by any State of any statute of the type described in the preceding sentence shall not affect the validity of any contractual commitment to purchase, hold, or invest that was made prior thereto, and shall not require the sale or other disposition of any securities acquired prior thereto.

SEC. 348. OFFSET OF COSTS OF CERTAIN PROGRAMS.

    (a) HUD MULTIFAMILY HOUSING DISPOSITION PROCESS-

      (1) FINDINGS- The Congress finds that--

        (A) the portfolio of multifamily housing project mortgages insured by the FHA is severely troubled and at risk of default, requiring the Secretary to increase loss reserves from $5,500,000,000 in 1991 to $11,900,000,000 in 1992 to cover estimated future losses;

        (B) the inventory of multifamily housing projects owned by the Secretary has more than tripled since 1989, and, by the end of 1993, may exceed 75,000 units;

        (C) the cost to the Federal Government of owning and maintaining multifamily housing projects escalated to approximately $250,000,000 in fiscal year 1992;

        (D) the inventory of multifamily housing projects subject to mortgages held by the Secretary has increased dramatically, to more than 2,400 mortgages, and approximately half of these mortgages, with over 230,000 units, are delinquent;

        (E) the inventory of insured and formerly insured multifamily housing projects is rapidly deteriorating, endangering tenants and neighborhoods;

        (F) over 5 million families today have a critical need for housing that is affordable and habitable; and

        (G) the current statutory framework governing the disposition of multifamily housing projects effectively impedes the Government’s ability to dispose of properties, protect tenants, and ensure that projects are maintained over time.

      (2) MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING PROJECTS- Section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z-11) is amended to read as follows:

‘SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING PROJECTS.

    ‘(a) GOALS- The Secretary of Housing and Urban Development (in this section referred to as the ‘Secretary’) shall manage or dispose of multifamily housing projects that are owned by the Secretary or that are subject to a mortgage held by the Secretary in a manner that--

      ‘(1) is consistent with the National Housing Act and this section;

      ‘(2) will protect the financial interests of the Federal Government; and

      ‘(3) will, in the least costly fashion among reasonable available alternatives, further the goals of--

        ‘(A) preserving housing so that it can remain available to and affordable by low-income persons;

        ‘(B) preserving and revitalizing residential neighborhoods;

        ‘(C) maintaining existing housing stock in a decent, safe, and sanitary condition;

        ‘(D) minimizing the involuntary displacement of tenants;

        ‘(E) maintaining housing for the purpose of providing rental housing, cooperative housing, and homeownership opportunities for low-income persons; and

        ‘(F) minimizing the need to demolish multifamily housing projects.

    The Secretary, in determining the manner in which a project is to be managed or disposed of, may balance competing goals relating to individual projects in a manner that will further the purposes of this section.

    ‘(b) DEFINITIONS- For purposes of this section, the following definitions shall apply:

      ‘(1) MULTIFAMILY HOUSING PROJECT- The term ‘multifamily housing project’ means any multifamily rental housing project which is, or prior to acquisition by the Secretary was, assisted or insured under the National Housing Act, or was subject to a loan under section 202 of the Housing Act of 1959.

      ‘(2) SUBSIDIZED PROJECT- The term ‘subsidized project’ means a multifamily housing project receiving any of the following types of assistance immediately prior to the assignment of the mortgage on such project to, or the acquisition of such mortgage by, the Secretary:

        ‘(A) Below market interest rate mortgage insurance under the proviso of section 221(d)(5) of the National Housing Act.

        ‘(B) Interest reduction payments made in connection with mortgages insured under section 236 of the National Housing Act.

        ‘(C) Direct loans made under section 202 of the Housing Act of 1959.

        ‘(D) Assistance in the form of--

          ‘(i) rent supplement payments under section 101 of the Housing and Urban Development Act of 1965;

          ‘(ii) housing assistance payments made under section 23 of the United States Housing Act of 1937 (as in effect before January 1, 1975); or

          ‘(iii) housing assistance payments made under section 8 of the United States Housing Act of 1937 (excluding payments made for tenant-based assistance under section 8),

        if (except for purposes of section 183(c) of the Housing and Community Development Act of 1987) such assistance payments are made to more than 50 percent of the units in the project.

      ‘(3) FORMERLY SUBSIDIZED PROJECT- The term ‘formerly subsidized project’ means a multifamily housing project owned by the Secretary that was a subsidized project immediately prior to its acquisition by the Secretary.

      ‘(4) UNSUBSIDIZED PROJECT- The term ‘unsubsidized project’ means a multifamily housing project owned by the Secretary that is not a subsidized project or a formerly subsidized project.

    ‘(c) Management or Disposition of Property-

      ‘(1) DISPOSITION TO PURCHASERS- The Secretary is authorized, in carrying out this section, to dispose of a multifamily housing project owned by the Secretary on a negotiated, competitive bid, or other basis, on such terms as the Secretary deems appropriate considering the low-income character of the project and the requirements of subsection (a), to a purchaser determined by the Secretary to be capable of--

        ‘(A) satisfying the conditions of the disposition;

        ‘(B) implementing a sound financial and physical management program that is designed to enable the project to meet anticipated operating and repair expenses to ensure that the project will remain in decent, safe, and sanitary condition;

        ‘(C) responding to the needs of the tenants and working cooperatively with tenant organizations;

        ‘(D) providing adequate organizational staff and financial resources to the project; and

        ‘(E) meeting such other requirements as the Secretary may determine.

      ‘(2) CONTRACTING FOR MANAGEMENT SERVICES- The Secretary is authorized, in carrying out this section--

        ‘(A) to contract for management services for a multifamily housing project that is owned by the Secretary (or for which the Secretary is mortgagee in possession), on a negotiated, competitive bid, or other basis at a price determined by the Secretary to be reasonable, with a manager the Secretary has determined is capable of--

          ‘(i) implementing a sound financial and physical management program that is designed to enable the project to meet anticipated operating and maintenance expenses to ensure that the project will remain in decent, safe, and sanitary condition;

          ‘(ii) responding to the needs of the tenants and working cooperatively with tenant organizations;

          ‘(iii) providing adequate organizational, staff, and other resources to implement a management program determined by the Secretary; and

          ‘(iv) meeting such other requirements as the Secretary may determine; and

        ‘(B) to require the owner of a multifamily housing project that is subject to a mortgage held by the Secretary to contract for management services for the project in the manner described in subparagraph (A).

    ‘(d) MAINTENANCE OF HOUSING PROJECTS-

      ‘(1) HOUSING PROJECTS OWNED BY THE SECRETARY- In the case of multifamily housing projects that are owned by the Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall--

        ‘(A) to the greatest extent possible, maintain all such occupied projects in a decent, safe, and sanitary condition;

        ‘(B) to the greatest extent possible, maintain full occupancy in all such projects; and

        ‘(C) maintain all such projects for purposes of providing rental or cooperative housing.

      ‘(2) HOUSING PROJECTS SUBJECT TO A MORTGAGE HELD BY THE SECRETARY- In the case of any multifamily housing project that is subject to a mortgage held by the Secretary, the Secretary shall require the owner of the project to carry out the requirements of paragraph (1).

    ‘(e) REQUIRED ASSISTANCE- In carrying out the goal specified in subsection (a)(3)(A), the Secretary shall take not less than one of the following actions:

      ‘(1) CONTRACT WITH OWNER- Enter into contracts under section 8 of the United States Housing Act of 1937, to the extent budget authority is available, with owners of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary.

        ‘(A) SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS RECEIVING CERTAIN ASSISTANCE- In the case of a subsidized or formerly subsidized project referred to in subparagraphs (A) through (C) of subsection (b)(2)--

          ‘(i) the contract shall be sufficient to assist at least all units covered by an assistance contract under any of the authorities referred to in subsection (b)(2)(D) before acquisition, unless the Secretary acts pursuant to the provisions of subparagraph (C);

          ‘(ii) in the case of units requiring project-based rental assistance pursuant to this paragraph that are occupied by families who are not eligible for assistance under section 8, a contract under this subparagraph shall also provide that when a vacancy occurs, the owner shall lease the available unit to a family eligible for assistance under section 8; and

          ‘(iii) the Secretary shall take actions to ensure the availability and affordability, as defined in paragraph (3)(B), for the remaining useful life of the project, as defined by the Secretary, of any unit located in any project referred to in subparagraphs (A) through (C) of subsection (b)(2) that does not otherwise receive project-based assistance under this subparagraph. To carry out this clause, the Secretary may require purchasers to establish use or rent restrictions maintaining affordability, as defined in paragraph (3)(B).

        ‘(B) SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS RECEIVING OTHER ASSISTANCE- In the case of a subsidized or formerly subsidized project referred to in subsection (b)(2)(D)--

          ‘(i) the contract shall be sufficient to assist at least all units in the project that are covered, or were covered immediately before foreclosure on or acquisition of the project by the Secretary, by an assistance contract under any of the authorities referred to in such subsection, unless the Secretary acts pursuant to provisions of subparagraph (C); and

          ‘(ii) in the case of units requiring project-based rental assistance pursuant to this paragraph that are occupied by families who are not eligible for assistance under section 8, a contract under this paragraph shall also provide that when a vacancy occurs, the owner shall lease the available unit to a family eligible for assistance under section 8.

        ‘(C) EXCEPTIONS TO SUBPARAGRAPHS (A) AND (B)- In lieu of providing project-based assistance under subparagraph (A) or (B), the Secretary may require certain units in unsubsidized projects to contain use restrictions providing that such units will be available to and affordable by very low-income families for the remaining useful life of the project, as defined by the Secretary, if--

          ‘(i) the Secretary matches any reduction in units otherwise required to be assisted with project-based assistance under subparagraph (A) or (B) with at least an equivalent increase in units made affordable to very low-income persons within unsubsidized projects;

          ‘(ii) low-income tenants residing in units otherwise requiring project-based assistance under subparagraph (A) or (B) upon disposition receive section 8 tenant-based assistance; and

          ‘(iii) the units described in clause (i) are located within the same market area.

        ‘(D) CONTRACT REQUIREMENTS FOR UNSUBSIDIZED PROJECTS- Notwithstanding actions taken pursuant to subparagraph (C), in unsubsidized projects, the contract shall at least be sufficient to provide--

          ‘(i) project-based rental assistance for all units that are covered or were covered immediately before foreclosure or acquisition by an assistance contract under--

            ‘(I) section 8(b)(2) of the United States Housing Act of 1937 (as such section existed before October 1, 1983) (new construction and substantial rehabilitation); section 8(b) of such Act (property disposition); section 8(d)(2) of such Act (project-based certificates); section 8(e)(2) of such Act (moderate rehabilitation); section 23 of such Act (as in effect before January 1, 1975); or section 101 of the Housing and Urban Development Act of 1965 (rent supplements); or

            ‘(II) section 8 of the United States Housing Act of 1937, following conversion from section 101 of the Housing and Urban Development Act of 1965; and

          ‘(ii) tenant-based assistance under section 8 of the United States Housing Act of 1937 for tenants currently residing in units that were covered by an assistance contract under the Loan Management Set-Aside program under section 8(b) of the United States Housing Act of 1937 immediately before foreclosure or acquisition of the project by the Secretary.

      ‘(2) ANNUAL CONTRIBUTION CONTRACTS- In the case of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, enter into annual contribution contracts with public housing agencies to provide tenant-based assistance under section 8 of the United States Housing Act of 1937 to all low-income families who are eligible for such assistance on the date that the project is acquired by the purchaser. The Secretary shall take action under this paragraph only after making a determination that there is available in the area an adequate supply of habitable affordable housing for low-income families. Actions taken pursuant to this paragraph may be taken in connection with not more than 10 percent of the aggregate number of units in subsidized or formerly subsidized projects disposed of by the Secretary annually.

      ‘(3) OTHER ASSISTANCE-

        ‘(A) IN GENERAL- In accordance with the authority provided under the National Housing Act, reduce the selling price, apply use or rent restrictions on certain units, or provide other financial assistance to the owners of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure, or after sale by the Secretary, on terms which will ensure that--

          ‘(i) at least those units otherwise required to receive project-based section 8 assistance pursuant to subparagraphs (A), (B), or (D) of paragraph (1) are available to and affordable by low-income persons; and

          ‘(ii) for the remaining useful life of the project, as defined by the Secretary, there shall be in force such use or rent restrictions as the Secretary may prescribe.

        ‘(B) DEFINITION- A unit shall be considered affordable under this paragraph if--

          ‘(i) for very low-income tenants, the rent for such unit does not exceed 30 percent of 50 percent of the area median income, as determined by the Secretary, with adjustments for family size; and

          ‘(ii) for low-income tenants other than very low-income tenants, the rent for such unit does not exceed 30 percent of 80 percent of the area median income, as determined by the Secretary, with adjustments for family size.

        ‘(C) VERY LOW-INCOME TENANTS- The Secretary shall provide assistance under section 8 of the United States Housing Act of 1937 to any very low-income tenant currently residing in a unit otherwise required to receive project-based assistance under section 8, pursuant to subparagraph (A), (B), or (D) of paragraph (1), if the rents charged such tenants as a result of actions taken pursuant to this paragraph exceed the amount payable as rent under section 3(a) of the United States Housing Act of 1937.

      ‘(4) TRANSFER FOR USE UNDER OTHER PROGRAMS OF THE SECRETARY-

        ‘(A) IN GENERAL- Enter into an agreement providing for the transfer of a multifamily housing project--

          ‘(i) to a public housing agency for use of the project as public housing; or

          ‘(ii) to an owner or another appropriate entity for use of the project under section 202 of the Housing Act of 1959 or under section 811 of the Cranston-Gonzalez National Affordable Housing Act.

        ‘(B) REQUIREMENTS FOR AGREEMENT- The agreement described in subparagraph (A) shall--

          ‘(i) contain such terms, conditions, and limitations as the Secretary determines appropriate, including requirements to assure use of the project under the public housing, section 202, and section 811 programs; and

          ‘(ii) ensure that no current tenant will be displaced as a result of actions taken under this paragraph.

    ‘(f) OTHER ASSISTANCE- In addition to the actions authorized by subsection (e), the Secretary may take any of the following actions:

      ‘(1) SHORT-TERM LOANS- Provide short-term loans to facilitate the sale of multifamily housing projects to nonprofit organizations or to public agencies if--

        ‘(A) authority for such loans is provided in advance in an appropriations Act;

        ‘(B) such loans are for a term of not more than 5 years;

        ‘(C) the Secretary is presented with satisfactory documentation, evidencing a commitment of permanent financing to replace such short-term loan, from a lender who meets standards set forth by the Secretary; and

        ‘(D) the terms of such loans are consistent with prevailing practices in the marketplace or the provision of such loans results in no cost to the Government, as defined in section 502 of the Congressional Budget Act.

      ‘(2) TENANT-BASED ASSISTANCE- In connection with projects referred to in subsection (e), make available tenant-based assistance under section 8 of the United States Housing Act of 1937 to very low-income families (as defined in section 3(b)(2) of the United States Housing Act of 1937) that do not otherwise qualify for project-based assistance.

      ‘(3) Alternative uses-

        ‘(A) IN GENERAL- Notwithstanding any other provision of law, and subject to notice to and comment from existing tenants, allow not more than--

          ‘(i) 5 percent of the total number of units in multifamily housing projects that are disposed of by the Secretary during any 1-year period to be made available for uses other than rental or cooperative uses, including low-income homeownership opportunities, or in any particular project, community space, office space for tenant or housing-related service providers or security programs, or small business uses, if such uses benefit the tenants of the project; and

          ‘(ii) 5 percent of the total number of units in multifamily housing projects that are disposed of by the Secretary during any 1-year period to be used in any manner, if the Secretary and the unit of general local government or area-wide governing body determine that such use will further fair housing, community development, or neighborhood revitalization goals.

        ‘(B) DISPLACEMENT PROTECTION- The Secretary shall make available tenant-based rental assistance under section 8 of the United States Housing Act of 1937 to any tenant displaced as a result of actions taken by the Secretary pursuant to subparagraph (A), and the Secretary shall take such actions as the Secretary determines necessary to ensure the successful use of any tenant-based assistance.

    ‘(g) AUTHORIZATION OF USE OR RENT RESTRICTIONS IN UNSUBSIDIZED PROJECTS- In carrying out the goals specified in subsection (a), the Secretary may require certain units in unsubsidized projects to contain use or rent restrictions providing that such units will be available to and affordable by very low-income persons for the remaining useful life of the property, as defined by the Secretary.

    ‘(h) Contract Requirements-

      ‘(1) Contract term-

        ‘(A) IN GENERAL- Contracts for project-based rental assistance under section 8 of the United States Housing Act of 1937 provided pursuant to this section shall be for a term of not more than 15 years; and

        ‘(B) CONTRACT TERM OF LESS THAN 15 YEARS- Notwithstanding subparagraph (A), to the extent that units receive project-based assistance for a contract term of less than 15 years, the Secretary shall require that rents charged to tenants for such units not exceed the amount payable for rent under section 3(a) of the United States Housing Act of 1937 for a period of at least 15 years.

      ‘(2) Contract rent-

        ‘(A) IN GENERAL- The Secretary shall set contract rents for section 8 project-based rental contracts issued under this section at levels that, in conjunction with other resources available to the purchaser, provide for the necessary costs of rehabilitation of such project and do not exceed the percentage of the existing housing fair market rents for the area (as determined by the Secretary under section 8(c) of the United States Housing Act of 1937) as the Secretary may prescribe.

        ‘(B) UP-FRONT GRANTS AND LOANS- If such an approach is determined to be more cost-effective, the Secretary may utilize the budget authority provided for project-based section 8 contracts issued under this section to--

          ‘(i) provide project-based section 8 rental assistance; and

          ‘(ii)(I) provide up-front grants for the necessary cost of rehabilitation; or

          ‘(II) pay for any cost to the Government, as defined in section 502 of the Congressional Budget Act, for loans made pursuant to subsection (f)(1).

    ‘(i) Disposition Plan-

      ‘(1) IN GENERAL- Prior to the sale of a multifamily housing project that is owned by the Secretary, the Secretary shall develop a disposition plan for the project that specifies the minimum terms and conditions of the Secretary for disposition of the project, the initial sales price that is acceptable to the Secretary, and the assistance that the Secretary plans to make available to a prospective purchaser in accordance with this section. The initial sales price shall reflect the intended use of the property after sale.

      ‘(2) Community and tenant input into disposition plans and sales-

        ‘(A) IN GENERAL- In carrying out this section, the Secretary shall develop procedures to obtain appropriate and timely input into disposition plans from officials of the unit of general local government affected, the community in which the project is situated, and the tenants of the project.

        ‘(B) TENANT ORGANIZATIONS- The Secretary shall develop procedures to facilitate, where feasible and appropriate, the sale of multifamily housing projects to existing tenant organizations with demonstrated capacity or to public or nonprofit entities which represent or are affiliated with existing tenant organizations.

        ‘(C) TECHNICAL ASSISTANCE-

          ‘(i) USE OF FUNDS- To carry out the procedures developed under subparagraphs (A) and (B), the Secretary is authorized to provide technical assistance, directly or indirectly, and to use amounts appropriated for technical assistance under the Emergency Low Income Housing Preservation Act of 1987, the Low-Income Housing Preservation and Resident Homeownership Act of 1990, subtitle B of title IV of the Cranston-Gonzalez National Affordable Housing Act, or under this section for the provision of technical assistance under this section.

          ‘(ii) SOURCE OF FUNDS- Recipients of technical assistance funding under the Emergency Low Income Housing Preservation Act of 1987, the Low-Income Housing Preservation and Resident Homeownership Act of 1990, subtitle B of title IV of the Cranston-Gonzalez National Affordable Housing Act, or under this section shall be permitted to provide technical assistance to the extent of such funding under any of such programs or under this section, notwithstanding the source of funding.

    ‘(j) RIGHT OF FIRST REFUSAL-

      ‘(1) PROCEDURE-

        ‘(A) NOTIFICATION BY SECRETARY OF THE ACQUISITION OF TITLE- Not later than 30 days after acquiring title to a project, the Secretary shall notify the unit of general local government and the State agency or agencies designated by the Governor of the acquisition of such title.

        ‘(B) EXPRESSION OF INTEREST- Not later than 45 days after receiving notification from the Secretary under subparagraph (A), the unit of general local government or designated State agency may submit to the Secretary a preliminary expression of interest in the project. The Secretary may take such actions as may be necessary to require the unit of general local government or designated State agency to substantiate such interest.

        ‘(C) TIMELY EXPRESSION OF INTEREST- If the unit of general local government or designated State agency has expressed interest in the project before the expiration of the 45-day period referred to in subparagraph (B), and has substantiated such interest if requested, the Secretary, upon approval of a disposition plan for a project, shall notify the unit of general local government and designated State agency of the terms and conditions of the disposition plan and give the unit of general local government or designated State agency not more than 90 days after the date of such notification to make an offer to purchase the project.

        ‘(D) NO TIMELY EXPRESSION OF INTEREST- If the unit of general local government or designated State agency does not express interest before the expiration of the 45-day period referred to in subparagraph (B), or does not substantiate an expressed interest if requested, the Secretary, upon approval of a disposition plan, may offer the project for sale to any interested person or entity.

      ‘(2) ACCEPTANCE OF OFFERS- Where the Secretary has given the unit of general local government or designated State agency 90 days to make an offer to purchase the project, the Secretary shall accept an offer that complies with the terms and conditions of the disposition plan. The Secretary may accept an offer that does not comply with the terms and conditions of the disposition plan if the Secretary determines that the offer will further the goals specified in subsection (a) by actions that include extension of the duration of low-income affordability restrictions or otherwise restructuring the transaction in a manner that enhances the long-term affordability for low-income persons. The Secretary shall, in particular, have discretion to reduce the initial sales price in exchange for the extension of low-income affordability restrictions beyond the period of assistance contemplated by the attachment of assistance pursuant to subsection (e). If the Secretary and the unit of general local government or designated State agency cannot reach agreement within 90 days, the Secretary may offer the project for sale to the general public.

      ‘(3) PURCHASE BY UNIT OF GENERAL LOCAL GOVERNMENT OR DESIGNATED STATE AGENCY- Notwithstanding any other provision of law, a unit of general local government (including a public housing agency) or designated State agency may purchase a subsidized or formerly subsidized project in accordance with this subsection.

      ‘(4) APPLICABILITY- This subsection shall apply to projects that are acquired on or after the effective date of this subsection. With respect to projects acquired before such effective date, the Secretary may apply--

        ‘(A) the requirements of paragraphs (2) and (3) of section 203(e) as such paragraphs existed immediately before the effective date of this subsection; or

        ‘(B) the requirements of paragraphs (1) and (2) of this subsection, if the Secretary gives the unit of general local government or designated State agency--

          ‘(i) 45 days to express interest in the project; and

          ‘(ii) if the unit of general local government or designated State agency expresses interest in the project before the expiration of the 45-day period, and substantiates such interest if requested, 90 days from the date of notification of the terms and conditions of the disposition plan to make an offer to purchase the project.

    ‘(k) DISPLACEMENT OF TENANTS AND RELOCATION ASSISTANCE-

      ‘(1) IN GENERAL- Whenever tenants will be displaced as a result of the disposition of, or repairs to, a multifamily housing project that is owned by the Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall identify tenants who will be displaced, and shall notify all such tenants of their pending displacement and of any relocation assistance which may be available. In the case of a multifamily housing project that is not owned by the Secretary (and for which the Secretary is not mortgagee in possession), the Secretary shall require the owner of the project to carry out the requirements of this paragraph.

      ‘(2) RIGHTS OF DISPLACED TENANTS- The Secretary shall assure for any such tenant (who continues to meet applicable qualification standards) the right--

        ‘(A) to return, whenever possible, to a repaired unit;

        ‘(B) to occupy a unit in another multifamily housing project owned by the Secretary;

        ‘(C) to obtain housing assistance under the United States Housing Act of 1937; or

        ‘(D) to receive any other available relocation assistance as the Secretary determines to be appropriate.

    ‘(l) MORTGAGE AND PROJECT SALES-

      ‘(1) IN GENERAL- The Secretary may not approve the sale of any loan or mortgage held by the Secretary (including any loan or mortgage owned by the Government National Mortgage Association) on any subsidized project or formerly subsidized project, unless such sale is made as part of a transaction that will ensure that such project will continue to operate at least until the maturity date of such loan or mortgage, in a manner that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured prior to the assignment of the loan or mortgage on such project to the Secretary.

      ‘(2) SALE OF CERTAIN PROJECTS- The Secretary may not approve the sale of any subsidized project--

        ‘(A) that is subject to a mortgage held by the Secretary; or

        ‘(B) if the sale transaction involves the provision of any additional subsidy funds by the Secretary or a recasting of the mortgage, unless such sale is made as part of a transaction that will ensure that such project will continue to operate at least until the maturity date of the loan or mortgage, in a manner that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured prior to the proposed sale of the project.

      ‘(3) MORTGAGE SALES TO STATE AND LOCAL GOVERNMENTS- Notwithstanding any provision of law that may require competitive sales or bidding, the Secretary may carry out negotiated sales of subsidized or formerly subsidized mortgages held by the Secretary, without the competitive selection of purchasers or intermediaries, to units of general local government or State agencies, or groups of investors that include at least one such unit of general local government or State agency, if the negotiations are conducted with such agencies, except that--

        ‘(A) the terms of any such sale shall include the agreement of the purchasing agency or unit of local government or State agency to act as mortgagee or owner of a beneficial interest in such mortgages, in a manner consistent with maintaining the projects that are subject to such mortgages for occupancy by the general tenant group intended to be served by the applicable mortgage insurance program, including, to the extent the Secretary determines appropriate, authorizing such unit of local government or State agency to enforce the provisions of any regulatory agreement or other program requirements applicable to the related projects; and

        ‘(B) the sales prices for such mortgages shall be, in the determination of the Secretary, the best prices that may be obtained for such mortgages from a unit of general local government or State agency, consistent with the expectation and intention that the projects financed will be retained for use under the applicable mortgage insurance program for the life of the initial mortgage insurance contract.

      ‘(4) SALE OF MORTGAGES COVERING UNSUBSIDIZED PROJECTS- Notwithstanding any other provision of law, the Secretary may sell mortgages held on unsubsidized projects on such terms and conditions as the Secretary may prescribe.

    ‘(m) REPORT TO CONGRESS- Not later than June 1 of each year, the Secretary shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Banking, Finance and Urban Affairs of the House of Representatives, a report describing the status of multifamily housing projects owned by or subject to mortgages held by the Secretary, which report shall include--

      ‘(1) the name, address, and size of each project;

      ‘(2) the nature and date of assignment;

      ‘(3) the status of the mortgage;

      ‘(4) the physical condition of the project;

      ‘(5) an occupancy profile of the project, including the income, family size, and race of current residents as well as the rents paid by such residents;

      ‘(6) the proportion of units in a project that are vacant;

      ‘(7) the date on which the Secretary became mortgagee in possession;

      ‘(8) the date and conditions of any foreclosure sale;

      ‘(9) the date of acquisition by the Secretary;

      ‘(10) the date and conditions of any property disposition sale;

      ‘(11) a description of actions undertaken pursuant to this section, including--

        ‘(A) a comparison of results between actions taken after enactment of the Housing and Community Development Act of 1993 and actions taken in years prior to such enactment;

        ‘(B) a description of any impediments to the disposition or management of multifamily housing projects, together with a recommendation of proposed legislative or regulatory changes designed to ameliorate such impediments;

        ‘(C) a description of actions taken to restructure or commence foreclosure on delinquent multifamily mortgages held by the Department; and

        ‘(D) a description of actions taken to monitor and prevent the default of multifamily housing mortgages held by the Federal Housing Administration;

      ‘(12) a description of any of the functions performed in connection with this section that are contracted out to public or private entities or to States, including--

        ‘(A) the costs associated with such delegation;

        ‘(B) the implications of contracting out or delegating such functions for current Department field or regional personnel, including anticipated personnel or work load reductions;

        ‘(C) necessary oversight required by Department personnel, including anticipated personnel hours devoted to such oversight;

        ‘(D) a description of any authority granted to such public or private entities or States in conjunction with the functions that have been delegated or contracted out or that are not otherwise available for use by Department personnel; and

        ‘(E) the extent to which such public or private entities or States include tenants of multifamily housing projects in the disposition planning for such projects;

      ‘(13) a description of the activities carried out under subsection (j) during the preceding year; and

      ‘(14) a description and assessment of the rules, guidelines, and practices governing the Department’s management of multifamily housing projects that are owned by the Secretary (or for which the Secretary is mortgagee in possession) as well as the steps that the Secretary has taken or plans to take to improve the management performance of the Department.’.

      (3) EFFECTIVE DATE- The Secretary shall, by notice published in the Federal Register, which shall take effect upon publication, establish such requirements as may be necessary to implement the amendments made by this subsection. The notice shall invite public comments, and the Secretary shall issue final regulations based on the initial notice, taking into account any public comments received.

    (b) REPEAL OF THE NATIONAL SMALL BUSINESS TREE PLANTING PROGRAM- Section 24 of the Small Business Act (15 U.S.C. 651) is repealed.

TITLE IV--MONEY LAUNDERING

SEC. 401. SHORT TITLE.

    This title may be cited as the ‘Money Laundering Suppression Act of 1994’.

SEC. 402. REFORM OF CTR EXEMPTION REQUIREMENTS TO REDUCE NUMBER AND SIZE OF REPORTS CONSISTENT WITH EFFECTIVE LAW ENFORCEMENT.

    (a) IN GENERAL- Section 5313 of title 31, United States Code, is amended by adding at the end the following new subsections:

    ‘(d) MANDATORY EXEMPTIONS FROM REPORTING REQUIREMENTS-

      ‘(1) IN GENERAL- The Secretary of the Treasury shall exempt, pursuant to section 5318(a)(5), a depository institution from the reporting requirements of subsection (a) (and regulations prescribed under such subsection) with respect to transactions between the depository institution and the following categories of entities:

        ‘(A) Another depository institution.

        ‘(B) A department or agency of the United States, any State, or any political subdivision of any State, including any entity established under the laws of the United States, any State, or any political subdivision of any State, or under an interstate compact between 2 or more States, which exercises governmental authority on behalf of the United States, the State, or the political subdivision.

        ‘(C) Any business or category of business the reports on which have little or no value for law enforcement purposes.

      ‘(2) NOTICE OF EXEMPTION- The Secretary of the Treasury shall publish in the Federal Register at such times as the Secretary determines to be appropriate (but not less frequently than once during each year) a list of all the entities whose transactions with a depository institution are exempt under this subsection from the reporting requirements of subsection (a) (and regulations prescribed under such subsection).

    ‘(e) DISCRETIONARY EXEMPTIONS FROM REPORTING REQUIREMENTS-

      ‘(1) IN GENERAL- The Secretary of the Treasury may exempt, pursuant to section 5318(a)(5), a depository institution from the reporting requirements of subsection (a) (and regulations prescribed under such subsection) with respect to transactions between the depository institution and a qualified business customer of the institution on the basis of information submitted to the Secretary by the institution in accordance with procedures which the Secretary shall establish.

      ‘(2) QUALIFIED BUSINESS CUSTOMER DEFINED- For purposes of this subsection, the term ‘qualified business customer’ means a business which--

        ‘(A) maintains a transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act) at the depository institution;

        ‘(B) frequently engages in transactions with the depository institution which are subject to the reporting requirements of subsection (a) (and regulations prescribed under such subsection); and

        ‘(C) meets criteria which the Secretary determines are sufficient to ensure that the purposes of this subchapter are carried out without requiring a report with respect to such transactions.

      ‘(3) CRITERIA FOR EXEMPTION- The Secretary of the Treasury shall establish, by regulation, the criteria for granting and maintaining an exemption under paragraph (1).

      ‘(4) GUIDELINES-

        ‘(A) IN GENERAL- The Secretary of the Treasury shall establish guidelines for depository institutions to follow in selecting customers for an exemption under this subsection.

        ‘(B) CONTENTS- The guidelines may include a description of the types of businesses or an itemization of specific businesses for which no exemption will be granted under this subsection to any depository institution.

      ‘(5) ANNUAL REVIEW- The Secretary of the Treasury shall prescribe regulations requiring each depository institution to--

        ‘(A) review, at least once during each year, the qualified business customers of such institution with respect to whom an exemption has been granted under this subsection; and

        ‘(B) upon the completion of such review, resubmit information about such customers, with such modifications as the institution determines to be appropriate, to the Secretary for the Secretary’s approval.

      ‘(6) 2-YEAR PHASE-IN PROVISION- During the 2-year period beginning on the date of enactment of the Money Laundering Suppression Act of 1994, this subsection shall be applied by the Secretary on the basis of such criteria as the Secretary determines to be appropriate to achieve an orderly implementation of the requirements of this subsection.

    ‘(f) PROVISIONS APPLICABLE TO MANDATORY AND DISCRETIONARY EXEMPTIONS-

      ‘(1) LIMITATION ON LIABILITY OF DEPOSITORY INSTITUTIONS- No depository institution shall be subject to any penalty which may be imposed under this subchapter for the failure of the institution to file a report with respect to a transaction with a customer for whom an exemption has been granted under subsection (d) or (e), unless the institution--

        ‘(A) knowingly files false or incomplete information to the Secretary with respect to the transaction or the customer engaging in the transaction; or

        ‘(B) has reason to believe at the time the exemption is granted or the transaction is entered into that the customer or the transaction does not meet the criteria established for granting such exemption.

      ‘(2) COORDINATION WITH OTHER PROVISIONS- Any exemption granted by the Secretary of the Treasury under section 5318(a) in accordance with this section, and any transaction which is subject to such exemption, shall be subject to any other provision of law applicable to such exemption, including--

        ‘(A) the authority of the Secretary, under section 5318(a)(5), to revoke such exemption at any time; and

        ‘(B) any requirement to report, or any authority to require a report on, any possible violation of any law or regulation or any suspected criminal activity.

    ‘(g) DEPOSITORY INSTITUTION DEFINED- For purposes of this section, the term ‘depository institution’ has the meaning given to such term in section 19(b)(1)(A) of the Federal Reserve Act.’.

    (b) REPORT REDUCTION GOAL; REPORTS-

      (1) IN GENERAL- In implementing the amendment made by subsection (a), the Secretary of the Treasury shall seek to reduce, within a reasonable period of time, the number of reports required to be filed in the aggregate by depository institutions pursuant to section 5313(a) of title 31, United States Code, by not less than 30 percent of the number filed during the year preceding the date of enactment of this Act.

      (2) INTERIM REPORT- The Secretary of the Treasury shall submit a report to the Congress not later than the end of the 180-day period beginning on the date of enactment of this Act on the progress made by the Secretary in implementing the amendment made by subsection (a).

      (3) ANNUAL REPORT- The Secretary of the Treasury shall submit an annual report to the Congress after the end of each of the first 5 calendar years which begin after the date of enactment of this Act on the extent to which the Secretary has reduced the overall number of currency transaction reports required to be filed with the Secretary pursuant to section 5313(a) of title 31, United States Code, consistently with the purposes of such section and effective law enforcement.

    (c) STREAMLINED CURRENCY TRANSACTION REPORTS- The Secretary of the Treasury shall take such action as may be appropriate to redesign the format of reports required to be filed by any financial institution (as defined in section 5312(a)(2) of title 31, United States Code) under section 5313(a) of title 31, United States Code, to eliminate the need to report information which has little or no value for law enforcement purposes and reduce the time and effort required to prepare such report for filing by any such financial institution under such section.

SEC. 403. SINGLE DESIGNEE FOR REPORTING OF SUSPICIOUS TRANSACTIONS.

    (a) IN GENERAL- Section 5318(g) of title 31, United States Code, is amended by adding at the end the following new paragraph:

      ‘(4) SINGLE DESIGNEE FOR REPORTING SUSPICIOUS TRANSACTIONS-

        ‘(A) IN GENERAL- In requiring reports under paragraph (1) of suspicious transactions, the Secretary of the Treasury shall designate, to the extent practicable and appropriate, a single officer or agency of the United States to whom such reports shall be made.

        ‘(B) DUTY OF DESIGNEE- The officer or agency of the United States designated by the Secretary of the Treasury pursuant to subparagraph (A) shall refer any report of a suspicious transaction to the appropriate law enforcement or supervisory agency.

        ‘(C) COORDINATION WITH OTHER REPORTING REQUIREMENTS- Subparagraph (A) shall not be construed as precluding any supervisory agency for any financial institution from requiring the financial institution to submit any information or report to the agency or another agency pursuant to any provision of law other than this subsection.

        ‘(D) REPORTS-

          ‘(i) REPORTS REQUIRED- The Secretary of the Treasury shall submit an annual report to the Congress at the times required under clause (ii) on the number of suspicious transactions reported to the officer or agency designated under subparagraph (A) during the period covered by the report and the disposition of such reports.

          ‘(ii) TIME FOR SUBMITTING REPORTS- The first report required under clause (i) shall be filed before the end of the 1-year period beginning on the date of enactment of the Money Laundering Suppression Act of 1994, and each subsequent report shall be filed, not later than 90 days after the end of each of the 5 calendar years which begin after such date of enactment.’.

    (b) DESIGNATION REQUIRED TO BE MADE EXPEDITIOUSLY- The initial designation of an officer or agency of the United States pursuant to the amendment made by subsection (a) shall be made before the end of the 180-day period beginning on the date of enactment of this Act.

SEC. 404. IMPROVEMENT OF IDENTIFICATION OF MONEY LAUNDERING SCHEMES.

    (a) ENHANCED TRAINING, EXAMINATIONS, AND REFERRALS BY BANKING AGENCIES- Before the end of the 6-month period beginning on the date of enactment of this Act, each appropriate Federal banking agency shall, in consultation with the Secretary of the Treasury and other appropriate law enforcement agencies--

      (1) review and enhance training and examination procedures to improve the identification of money laundering schemes involving depository institutions; and

      (2) review and enhance procedures for referring cases to any other appropriate law enforcement agency.

    (b) IMPROVED REPORTING OF CRIMINAL SCHEMES BY LAW ENFORCEMENT AGENCIES- The Secretary of the Treasury and each appropriate law enforcement agency shall, on a regular basis, provide information regarding money laundering schemes and activities involving depository institutions to each appropriate Federal banking agency to enhance the agency’s ability to examine for and identify money laundering.

    (c) REPORT TO CONGRESS- Not later than 1 year after the date of enactment of this Act, the Federal banking agencies shall jointly submit a report to the Congress on the progress made in carrying out subsection (a) and the usefulness of information received pursuant to subsection (b).

    (d) DEFINITIONS- The terms ‘appropriate Federal banking agency’ and ‘Federal banking agencies’ have the same meanings as in section 3 of the Federal Deposit Insurance Act.

SEC. 405. NEGOTIABLE INSTRUMENTS DRAWN ON FOREIGN BANKS SUBJECT TO RECORDKEEPING AND REPORTING REQUIREMENTS.

    Section 5312(a)(3) of title 31, United States Code, is amended--

      (1) by striking ‘and’ at the end of subparagraph (A);

      (2) by striking the period at the end of subparagraph (B) and inserting ‘; and’; and

      (3) by adding at the end the following new subparagraph:

        ‘(C) as the Secretary of the Treasury shall provide by regulation for purposes of section 5316, checks, drafts, notes, money orders, and other similar instruments which are drawn on or by a foreign financial institution and are not in bearer form.’.

SEC. 406. IMPOSITION OF CIVIL MONEY PENALTIES BY APPROPRIATE FEDERAL BANKING AGENCIES.

    Section 5321 of title 31, United States Code, is amended by adding at the end the following new subsection:

    ‘(e) DELEGATION OF ASSESSMENT AUTHORITY TO BANKING AGENCIES-

      ‘(1) IN GENERAL- The Secretary of the Treasury shall delegate, in accordance with section 5318(a)(1), and subject to such terms and conditions as the Secretary may impose in accordance with paragraph (3), any authority of the Secretary to assess a civil money penalty under this section on depository institutions to the appropriate Federal banking agencies.

      ‘(2) AUTHORITY OF AGENCIES- Subject to any term or condition imposed by the Secretary of the Treasury under paragraph (3), the provisions of this section shall apply to an appropriate Federal banking agency to which is delegated any authority of the Secretary under this section in the same manner such provisions apply to the Secretary.

      ‘(3) TERMS AND CONDITIONS-

        ‘(A) IN GENERAL- The Secretary of the Treasury shall prescribe by regulation the terms and conditions which shall apply to any delegation under paragraph (1).

        ‘(B) MAXIMUM DOLLAR AMOUNT- The terms and conditions authorized under subparagraph (A) may include, in the Secretary’s sole discretion, a limitation on the amount of any civil penalty which may be assessed by an appropriate Federal banking agency pursuant to a delegation under paragraph (1).

      ‘(4) DEFINITIONS- For purposes of this subsection, the terms ‘depository institution’ and ‘Federal banking agencies’ have the same meanings as in section 3 of the Federal Deposit Insurance Act.’.

SEC. 407. UNIFORM STATE LICENSING AND REGULATION OF CHECK CASHING, CURRENCY EXCHANGE, AND MONEY TRANSMITTING BUSINESSES.

    (a) UNIFORM LAWS AND ENFORCEMENT- For purposes of preventing money laundering and protecting the payment system from fraud and abuse, it is the sense of the Congress that the several States should--

      (1) establish uniform laws for licensing and regulating businesses which--

        (A) provide check cashing, currency exchange, or money transmitting or remittance services, or issue or redeem money orders, travelers’ checks, and other similar instruments; and

        (B) are not depository institutions (as defined in section 19(b)(1)(A) of the Federal Reserve Act); and

      (2) provide sufficient resources to the appropriate State agency to enforce such laws and regulations prescribed pursuant to such laws.

    (b) MODEL STATUTE- It is the sense of the Congress that the several States should develop, through the auspices of the National Conference of Commissioners on Uniform State Laws, the American Law Institute, or such other forum as the States may determine to be appropriate, a model statute to carry out the goals described in subsection (a) which would include the following:

      (1) LICENSING REQUIREMENTS- A requirement that any business described in subsection (a)(1) be licensed and regulated by an appropriate State agency in order to engage in any such activity within the State.

      (2) LICENSING STANDARDS- A requirement that--

        (A) in order for any business described in subsection (a)(1) to be licensed in the State, the appropriate State agency shall review and approve--

          (i) the business record and the capital adequacy of the business seeking the license; and

          (ii) the competence, experience, integrity, and financial ability of any individual who--

            (I) is a director, officer, or supervisory employee of such business; or

            (II) owns or controls such business; and

        (B) any record, on the part of any business seeking the license or any person referred to in subparagraph (A)(ii), of--

          (i) any criminal activity;

          (ii) any fraud or other act of personal dishonesty;

          (iii) any act, omission, or practice which constitutes a breach of a fiduciary duty; or

          (iv) any suspension or removal, by any agency or department of the United States or any State, from participation in the conduct of any federally or State licensed or regulated business;

        may be grounds for the denial of any such license by the appropriate State agency.

      (3) PROCEDURES TO ENSURE COMPLIANCE WITH FEDERAL CASH TRANSACTION REPORTING REQUIREMENTS- A civil or criminal penalty for operating any business referred to in paragraph (1) without establishing and complying with appropriate procedures to ensure compliance with subchapter II of chapter 53 of title 31, United States Code (relating to records and reports on monetary instruments transactions).

      (4) CRIMINAL PENALTIES FOR OPERATION OF BUSINESS WITHOUT A LICENSE- A criminal penalty for operating any business referred to in paragraph (1) without a license within the State after the end of an appropriate transition period beginning on the date of enactment of such model statute by the State.

    (c) STUDY REQUIRED- The Secretary of the Treasury shall conduct a study of--

      (1) the progress made by the several States in developing and enacting a model statute which--

        (A) meets the requirements of subsection (b); and

        (B) furthers the goals of--

          (i) preventing money laundering by businesses which are required to be licensed under any such model statute; and

          (ii) protecting the payment system, including the receipt, payment, collection, and clearing of checks, from fraud and abuse by such businesses; and

      (2) the adequacy of--

        (A) the activity of the several States in enforcing the requirements of such statute; and

        (B) the resources made available to the appropriate State agencies for such enforcement activity.

    (d) REPORT REQUIRED- Before the end of the 3-year period beginning on the date of enactment of this Act and by the end of each of the first two 1-year periods beginning after the end of such 3-year period, the Secretary of the Treasury shall submit a report to the Congress containing the findings and recommendations of the Secretary in connection with the study under subsection (c), together with such recommendations for legislative and administrative action as the Secretary may determine to be appropriate.

    (e) RECOMMENDATIONS IN CASES OF INADEQUATE REGULATION AND ENFORCEMENT BY STATES- If the Secretary of the Treasury determines that any State has been unable--

      (1) to enact a statute which meets the requirements described in subsection (b);

      (2) to undertake adequate activity to enforce such statute; or

      (3) to make adequate resources available to the appropriate State agency for such enforcement activity;

    the report submitted pursuant to subsection (d) shall contain recommendations designed to facilitate enactment and enforcement of such a statute.

    (f) FEDERAL FUNDING STUDY-

      (1) STUDY REQUIRED- The Secretary of the Treasury shall conduct a study to identify possible available sources of Federal funding to cover costs to the States to implement this section.

      (2) REPORT- The Secretary of the Treasury shall submit a report to the Congress on the study conducted pursuant to paragraph (1) before the end of the 18-month period beginning on the date of enactment of this Act.

SEC. 408. REGISTRATION OF MONEY TRANSMITTING BUSINESSES TO PROMOTE EFFECTIVE LAW ENFORCEMENT.

    (a) FINDINGS AND PURPOSES-

      (1) FINDINGS- The Congress finds the following:

        (A) Money transmitting businesses are subject to the recordkeeping and reporting requirements of subchapter II of chapter 53 of title 31, United States Code.

        (B) Money transmitting businesses are largely unregulated businesses and are frequently used in sophisticated schemes to--

          (i) transfer large amounts of money which are the proceeds of unlawful enterprises; and

          (ii) evade the requirements of subchapter II of chapter 53 of title 31, United States Code, the Internal Revenue Code of 1986, and other laws of the United States.

        (C) Information on the identity of money transmitting businesses and the names of the persons who own or control, or are officers or employees of, a money transmitting business would have a high degree of usefulness in criminal, tax, or regulatory investigations and proceedings.

      (2) PURPOSE- It is the purpose of this section to establish a registration requirement for businesses engaged in providing check cashing, currency exchange, or money transmitting or remittance services, or issuing or redeeming money orders, travelers’ checks, and other similar instruments to assist the Secretary of the Treasury, the Attorney General, and other supervisory and law enforcement agencies to effectively enforce the criminal, tax, and regulatory laws and prevent such money transmitting businesses from engaging in illegal activities.

    (b) IN GENERAL- Subchapter II of chapter 53 of title 31, United States Code, is amended by adding at the end the following new section:

‘Sec. 5329. Registration of money transmitting businesses

    ‘(a) REGISTRATION WITH SECRETARY OF THE TREASURY REQUIRED-

      ‘(1) IN GENERAL- Any person who owns or controls a money transmitting business which is not a depository institution (as defined in section 19(b)(1)(A) of the Federal Reserve Act) shall register the business (whether or not the business is licensed as a money transmitting business in any State) with the Secretary of the Treasury before the end of the 180-day period beginning on the later of--

        ‘(A) the date of enactment of this section; or

        ‘(B) the date the business is established.

      ‘(2) FORM AND MANNER OF REGISTRATION- Subject to the requirements of subsection (b), the Secretary of the Treasury shall prescribe, in regulations, the form and manner for registering a money transmitting business pursuant to paragraph (1).

      ‘(3) BUSINESSES REMAIN SUBJECT TO STATE LAW- This section shall not be construed as superseding any requirement of State law relating to money transmitting businesses operating in such State.

      ‘(4) FALSE AND INCOMPLETE INFORMATION- The filing of false or materially incomplete information in connection with the registration of a money transmitting business shall be considered as a failure to comply with the requirements of this subsection.

    ‘(b) CONTENTS OF REGISTRATION- The registration of a money transmitting business under subsection (a) shall include the following information:

      ‘(1) The name and location of the business.

      ‘(2) The name and address of each person who--

        ‘(A) owns or controls the business;

        ‘(B) is a director or officer of the business; or

        ‘(C) otherwise participates in the conduct of the affairs of the business.

      ‘(3) The name and address of any depository institution at which the business maintains a transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act).

      ‘(4) An estimate of the volume of business to be reported annually.

      ‘(5) Such other information as the Secretary of the Treasury may require.

    ‘(c) AGENTS OF MONEY TRANSMITTING BUSINESSES-

      ‘(1) MAINTENANCE OF LISTS OF AGENTS OF MONEY TRANSMITTING BUSINESSES- Pursuant to regulations which the Secretary of the Treasury shall prescribe, each money transmitting business shall--

        ‘(A) maintain a list containing the names and addresses of all persons authorized to act as an agent for such business in connection with activities described in subsection (d)(1)(A) and such other information about such agents as the Secretary may require; and

        ‘(B) make the list and other information available on request to any appropriate law enforcement agency.

      ‘(2) TREATMENT OF AGENT AS MONEY TRANSMITTING BUSINESS- The Secretary of the Treasury shall prescribe regulations establishing, on the basis of such criteria as the Secretary determines to be appropriate, a threshold point for treating an agent of a money transmitting business as a money transmitting business for purposes of this section.

    ‘(d) DEFINITIONS- For purposes of this section--

      ‘(1) MONEY TRANSMITTING BUSINESS- The term ‘money transmitting business’ means any business other than the United States Postal Service which--

        ‘(A) provides check cashing, currency exchange, or money transmitting or remittance services, or issues or redeems money orders, travelers’ checks, and other similar instruments;

        ‘(B) is required to file reports under section 5313; and

        ‘(C) is not a depository institution (as defined in section 19(b)(1)(A) of the Federal Reserve Act).

      ‘(2) MONEY TRANSMITTING SERVICE- The term ‘money transmitting service’ includes accepting currency or funds denominated in the currency of any country and transmitting the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal reserve bank or other facility of the Board of Governors of the Federal Reserve System, or an electronic funds transfer network.

    ‘(e) CIVIL PENALTY FOR FAILURE TO COMPLY WITH REGISTRATION REQUIREMENTS-

      ‘(1) IN GENERAL- Any person who fails to comply with the money transmitting business registration requirements under subsection (a) or regulations prescribed under such subsection shall be liable to the United States for a civil penalty of $5,000 for each such violation.

      ‘(2) CONTINUING VIOLATION- Each day a violation described in paragraph (1) continues shall constitute a separate violation for purposes of such paragraph.

      ‘(3) ASSESSMENTS- Any penalty imposed under this subsection shall be assessed and collected by the Secretary of the Treasury in the manner provided in section 5321 and any such assessment shall be subject to the provisions of such section.’.

    (c) CRIMINAL PENALTY FOR FAILURE TO COMPLY WITH REGISTRATION REQUIREMENTS- Section 1960(b)(1) of title 18, United States Code, is amended to read as follows:

      ‘(1) the term ‘illegal money transmitting business’ means a money transmitting business which affects interstate or foreign commerce in any manner or degree and--

        ‘(A) is intentionally operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law; or

        ‘(B) fails to comply with the money transmitting business registration requirements under section 5329 of title 31, United States Code, or regulations prescribed under such section;’.

    (d) CIVIL FORFEITURE- Section 981(a)(1)(A) of title 18, United States Code, is amended by striking ‘or of section 1956 or 1957 of this title,’ and inserting ‘, of section 1956, 1957, or 1960 of this title,’.

    (e) CLERICAL AMENDMENT- The table of sections for chapter 53 of title 31, United States Code, is amended by inserting after the item relating to section 5328 the following new item:

      ‘5329. Registration of money transmitting businesses.’.

SEC. 409. CRIMINAL AND CIVIL PENALTY FOR STRUCTURING DOMESTIC AND INTERNATIONAL TRANSACTIONS.

    (a) CRIMINAL PENALTY- Section 5324 of title 31, United States Code, is amended by adding at the end the following new subsection:

    ‘(c) CRIMINAL PENALTY-

      ‘(1) IN GENERAL- Whoever violates this section shall be fined in accordance with title 18, United States Code, imprisoned for not more than 5 years, or both.

      ‘(2) ENHANCED PENALTY FOR AGGRAVATED CASES- Whoever violates this section while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) (as the case may be) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both.’.

    (b) AMENDMENT RELATING TO CIVIL PENALTY- Section 5321(a)(4)(A) of title 31, United States Code, is amended by striking ‘willfully’.

    (c) TECHNICAL AND CONFORMING AMENDMENT- Subsections (a) and (b) of section 5322 of title 31, United States Code, are amended by inserting ‘or 5324’ after ‘section 5315’ each place such term appears.

SEC. 410. GAO STUDY OF CASHIERS’ CHECKS.

    (a) STUDY REQUIRED- The Comptroller General of the United States shall conduct a study to determine--

      (1) the extent to which the practice of issuing of cashiers’ checks by financial institutions is vulnerable to money laundering schemes;

      (2) the extent to which additional recordkeeping requirements should be imposed on financial institutions which issue cashiers’ checks; and

      (3) such other factors relating to the use and regulation of cashiers’ checks as the Comptroller General determines to be appropriate.

    (b) REPORT REQUIRED- Before the end of the 180-day period beginning on the date of enactment of this Act, the Comptroller General shall submit a report to the Congress containing--

      (1) the findings and conclusions in connection with the study conducted pursuant to subsection (a); and

      (2) such recommendations for legislative and administrative action as the Comptroller General may determine to be appropriate.

TITLE V--FAIR TRADE IN FINANCIAL SERVICES

SEC. 501. SHORT TITLE.

    This title may be cited as the ‘Fair Trade in Financial Services Act of 1994’.

SEC. 502. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR BANKING ORGANIZATIONS.

    The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is amended by adding at the end the following new section:

‘SEC. 18. NATIONAL TREATMENT.

    ‘(a) PURPOSE- The purpose of this section is to encourage foreign countries to accord national treatment to United States banking organizations that operate or seek to operate in those countries.

    ‘(b) IDENTIFYING COUNTRIES THAT DENY NATIONAL TREATMENT TO UNITED STATES BANKS OR BANK HOLDING COMPANIES- The Secretary shall identify the extent to which foreign countries deny national treatment to United States banking organizations--

      ‘(1) according to the most recent report under section 3602 of the Omnibus Trade and Competitiveness Act of 1988 (or update thereof); or

      ‘(2) based on more recent information that the Secretary deems appropriate.

    ‘(c) DETERMINING WHETHER DENIAL OF NATIONAL TREATMENT HAS SIGNIFICANT ADVERSE EFFECT-

      ‘(1) IN GENERAL- The Secretary shall determine whether the denial of national treatment to United States banking organizations by a foreign country identified under subsection (b) has a significant adverse effect on such organizations.

      ‘(2) FACTORS TO BE CONSIDERED- In determining whether and to what extent a foreign country denies national treatment to United States banking organizations, and in determining the effect of any such denial on such banking organizations, the Secretary shall consider appropriate factors, including--

        ‘(A) the size of the foreign country’s markets for the financial services involved, and the extent to which United States banking organizations operate or seek to operate in those markets;

        ‘(B) the extent to which United States banking organizations may participate in developing regulations, guidelines, or other policies regarding new products, services, and markets in the foreign country;

        ‘(C) the extent to which the foreign country issues written regulations, guidelines, or other policies applicable to United States banking organizations operating or seeking to operate in the foreign country that are--

          ‘(i) prescribed after adequate notice and opportunity for comment;

          ‘(ii) readily available to the public; and

          ‘(iii) prescribed in accordance with objective standards that effectively prevent arbitrary and capricious determinations;

        ‘(D) the extent to which United States banking organizations may offer foreign exchange services in the foreign country; and

        ‘(E) the effects of the regulatory policies of the foreign country on--

          ‘(i) the lending policies of the central bank of that country;

          ‘(ii) capital requirements applicable in that country;

          ‘(iii) the regulation of deposit interest rates by that country;

          ‘(iv) restrictions on the operation and establishment of branches in that country; and

          ‘(v) restrictions on access to automated teller machine networks in that country.

    ‘(d) PUBLICATION OF DETERMINATION-

      ‘(1) IN GENERAL- If the Secretary determines under subsection (c) that the denial of national treatment to United States banking organizations by a foreign country has a significant adverse effect on such organizations, the Secretary--

        ‘(A) may, after initiating negotiations in accordance with subsection (g), and after consultation in accordance with subsection (i), publish that determination in the Federal Register;

        ‘(B) shall, not less frequently than annually, in consultation with any department or agency that the Secretary deems appropriate, review each such determination to determine whether it should be rescinded; and

        ‘(C) shall inform State bank supervisors of the publication of that determination.

      ‘(2) EXCEPTION FOR COUNTRIES THAT ARE PARTIES TO CERTAIN AGREEMENTS GOVERNING FINANCIAL SERVICES- Paragraph (1) shall not apply to a foreign country to the extent that any authority under that paragraph would permit action to be taken that would be inconsistent with a bilateral or multilateral agreement (including any dispute resolution procedures contained in such agreement) that governs financial services that--

        (A) the President entered into with that country; and

        (B) the Senate and House of Representatives approved;

      before the date of enactment of this section.

    ‘(e) SANCTIONS-

      ‘(1) ACTION BY SECRETARY OF TREASURY-

        ‘(A) IN GENERAL- The Secretary may, after consultation in accordance with subsection (i), recommend to the appropriate Federal banking agency that such agency deny or suspend consideration of a request for authorization filed after the date of publication of a determination under subsection (d)(1) by a person of a foreign country listed in such publication if the Secretary determines that--

          ‘(i) such action would assist the United States in negotiations to eliminate discrimination against United States banking organizations;

          ‘(ii) negotiations undertaken pursuant to subsection (g) are not likely to result in an agreement that eliminates the denial of national treatment; or

          ‘(iii) the country has not adequately adhered to an agreement reached as a result of negotiations undertaken pursuant to subsection (g).

        ‘(B) EXERCISE OF AUTHORITY- The authority of subparagraph (A) shall be exercised according to the specific direction (if any) of the President.

        ‘(C) COMPLIANCE EXCEPTIONS- The appropriate Federal banking agency shall comply with the recommendation of the Secretary made under subparagraph (A), unless the agency determines, in writing, and transmits such determination to the Secretary and to the Congress, that such recommendation--

          ‘(i) would likely result in a serious impairment to the safe and sound operation of the United States banking system; or

          ‘(ii) would compromise the ability of a Federal banking agency to resolve a failing or failed financial institution because a foreign banking institution otherwise barred by an action under subparagraph (A) represents the only bona fide reasonable offer available to the Federal banking agency.

      ‘(2) NO AFFECT ON CERTAIN AGREEMENTS- The exercise of authority under this subsection does not affect any obligation of the United States to pursue dispute resolution procedures pursuant to any international agreement governing financial services, approved by the House of Representatives and the Senate, with respect to a dispute arising out of any obligation under that agreement.

    ‘(f) EXEMPTIONS FROM SANCTIONS-

      ‘(1) IN GENERAL- Subsection (e) does not apply to the subsidiaries in the United States of a person of a foreign country if the Secretary determines that the banking laws and regulations of the foreign country, as actually applied, meet or exceed--

        ‘(A) the standards for treatment of subsidiaries of United States banking organizations contained in the Second Banking Directive, and in any amendment to the Second Banking Directive, if the Secretary determines that such amendment--

          ‘(i) does not restrict any operation, activity, or authority to expand any operation or activity, permitted under those standards, of any subsidiary in the foreign country of any such bank or bank holding company; or

          ‘(ii) is in accordance with national treatment of subsidiaries of such banking organizations; or

        ‘(B) any set of standards that, taken as a whole, is no less favorable to United States banking organizations than the standards referred to in subparagraph (A).

      ‘(2) STANDARDS FOR EXERCISE OF DISCRETION- In exercising any discretion under this subsection, the Secretary shall consider, with respect to a bank, foreign bank, branch, agency, commercial lending company, or other affiliated entity that is a person of a foreign country and that is operating in the United States--

        ‘(A) the extent to which the foreign country is progressing toward according national treatment to United States banking organizations; and

        ‘(B) whether the foreign country permits United States banking organizations to expand their activities in that country, even if that country determined that the United States did not accord national treatment to the banking organizations of that country.

    ‘(g) NEGOTIATIONS-

      ‘(1) IN GENERAL- The Secretary--

        ‘(A) shall initiate negotiations with any foreign country with respect to which a determination made under subsection (c)(1) is in effect; and

        ‘(B) may initiate negotiations with any foreign country which denies national treatment to United States banking organizations to ensure that the foreign country accords national treatment to such organizations.

      ‘(2) EXCEPTIONS- Paragraph (1) does not require the Secretary to initiate negotiations with a foreign country if the Secretary--

        ‘(A) determines that the negotiations--

          ‘(i) would be so unlikely to result in progress toward according national treatment to United States banking organizations as to be a waste of effort; or

          ‘(ii) would impair the economic interests of the United States; and

        ‘(B) gives written notice of that determination to the chairperson and the ranking minority member of the Committee on Banking, Housing, and Urban Affairs of the Senate and of the Committee on Banking, Finance and Urban Affairs of the House of Representatives.

    ‘(h) REPORT-

      ‘(1) CONTENTS OF REPORT- Not later than December 1, 1994, and biennially thereafter, the Secretary shall submit to the Congress a report that--

        ‘(A) specifies the foreign countries identified under subsection (b);

        ‘(B) if a determination is published under subsection (d)(1) with respect to the foreign country, provides the reasons therefor;

        ‘(C) if the Secretary has not made or has rescinded such a determination with respect to the foreign country, provides the reasons therefor;

        ‘(D) describes the results of any negotiations conducted under subsection (g)(1) with the foreign country; and

        ‘(E) discusses the effectiveness of this section in achieving the purpose of this section.

      ‘(2) SUBMISSION OF REPORT- The report required by paragraph (1) may be submitted as part of a report or update submitted under section 3602 of the Omnibus Trade and Competitiveness Act of 1988.

    ‘(i) CONSULTATION- Consultation in accordance with this subsection means consultation with the Secretary of State, the Secretary of Commerce, the United States Trade Representative, and the appropriate Federal banking agency.

    ‘(j) DEFINITIONS- For purposes of this section, the following definitions shall apply:

      ‘(1) APPROPRIATE FEDERAL BANKING AGENCY- The term ‘appropriate Federal banking agency’--

        ‘(A) in the case of a noninsured State bank or branch and a representative office of a foreign bank, means the Board of Governors of the Federal Reserve System; and

        ‘(B) in any other case, has the same meaning as in section 3 of the Federal Deposit Insurance Act.

      ‘(2) BANKING ORGANIZATION- The term ‘banking organization’ means--

        ‘(A) a depository institution, as defined in section 3 of the Federal Deposit Insurance Act, including a branch or subsidiary thereof;

        ‘(B) a bank holding company, as defined in section 2 of the Bank Holding Company Act of 1956;

        ‘(C) any company required to file information pursuant to section 4(f)(6) of the Bank Holding Company Act of 1956;

        ‘(D) a savings and loan holding company, as defined in section 10(a)(1)(D) of the Home Owners’ Loan Act; and

        ‘(E) any nonbank financial entity, the primary purpose of which is to provide credit or financing, regardless of whether such entity accepts deposits.

      ‘(3) NATIONAL TREATMENT- A foreign country accords ‘national treatment’ to United States banking organizations if it offers them the same competitive opportunities (including effective market access) as are available to its domestic banking organizations in like circumstances.

      ‘(4) PERSON OF A FOREIGN COUNTRY- The term ‘person of a foreign country’ means--

        ‘(A) a person organized under the laws of the foreign country;

        ‘(B) a person that has its principal place of business in the foreign country;

        ‘(C) an individual who is--

          ‘(i) a citizen of the foreign country, or

          ‘(ii) domiciled in the foreign country; and

        ‘(D) a person that is directly or indirectly controlled by a person or persons described in subparagraph (A) or (B), or by an individual or individuals described in subparagraph (C).

      ‘(5) REQUEST FOR AUTHORIZATION- The term ‘request for authorization’--

        ‘(A) means an application, registration, notice, or other request to commence a financial service or establish a financial services office that is required under title LXII of the Revised Statutes, the International Banking Act of 1978, the Federal Reserve Act, the Home Owners’ Loan Act, or the Bank Holding Company Act of 1956; and

        ‘(B) does not include any such request by a company described in section 2(h)(2) of the Bank Holding Company Act of 1956.

      ‘(6) SECOND BANKING DIRECTIVE- The term ‘Second Banking Directive’ means the Second Council Directive of December 15, 1989, on the Coordination of Laws, Regulations, and Administrative Provisions Relating to the Taking Up and Pursuit of the Business of Credit Institutions and Amending Directive 77/780/EEC (89/646/EEC).

      ‘(7) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.’.

SEC. 503. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR SECURITIES ORGANIZATIONS.

    (a) PURPOSE- The purpose of this section is to encourage foreign countries to accord national treatment to United States securities organizations that operate or seek to operate in those countries.

    (b) IDENTIFYING COUNTRIES THAT DENY NATIONAL TREATMENT TO UNITED STATES SECURITIES ORGANIZATIONS- The Secretary shall identify whether and to what extent foreign countries deny national treatment to United States securities organizations--

      (1) according to the most recent report under section 3602 of the Omnibus Trade and Competitiveness Act of 1988 (or update thereof); or

      (2) based upon more recent information that the Secretary deems appropriate.

    (c) DETERMINING WHETHER DENIAL OF NATIONAL TREATMENT HAS SIGNIFICANT ADVERSE EFFECT- The Secretary shall determine whether the denial of national treatment to United States securities organizations by a foreign country identified under subsection (b) has a significant adverse effect on such organizations.

    (d) PUBLICATION OF DETERMINATION-

      (1) IN GENERAL- If the Secretary determines under subsection (c) that the denial of national treatment to United States securities organizations by a foreign country has a significant adverse effect on such organizations, the Secretary--

        (A) may, after initiating negotiations in accordance with subsection (f), and after consultation in accordance with subsection (h), publish that determination in the Federal Register; and

        (B) shall, not less frequently than annually, in consultation with any department or agency that the Secretary deems appropriate, review each such determination to determine whether it should be rescinded.

      (2) EXCEPTION FOR COUNTRIES THAT ARE PARTIES TO CERTAIN AGREEMENTS GOVERNING FINANCIAL SERVICES- Paragraph (1) shall not apply to a foreign country to the extent that any authority under that paragraph would permit action to be taken that would be inconsistent with a bilateral or multilateral agreement (including any dispute resolution procedures contained in such agreement) that governs financial services that--

      (A) the President entered into with that country; and

      (B) the Senate and House of Representatives approved;

    before the date of enactment of this section.

    (e) SANCTIONS-

      (1) ACTION BY SECRETARY OF TREASURY-

        (A) IN GENERAL- The Secretary may, after consultation in accordance with subsection (h), recommend to the Commission that the Commission deny or suspend consideration of a request for authorization filed after the date of publication of a determination under subsection (d)(1) by a person of a foreign country listed in such publication if the Secretary determines that--

          (i) such action would assist the United States in negotiations to eliminate discrimination against United States securities organizations;

          (ii) negotiations undertaken pursuant to subsection (f) are not likely to result in an agreement that eliminates the denial of national treatment; or

          (iii) the country has not adequately adhered to an agreement reached as a result of negotiations undertaken pursuant to subsection (f).

        (B) EXERCISE OF AUTHORITY- The authority of subparagraph (A) shall be exercised according to the specific direction (if any) of the President.

        (C) COMMISSION ACTION- The Commission shall deny or suspend consideration of a request for authorization in accordance with the recommendation of the Secretary made under subparagraph (A), unless such recommendation would likely result in a serious adverse impact on--

          (i) the maintenance of fair and orderly securities markets; or

          (ii) the protection of investors.

        (D) AUTHORITY UPON DENIAL OF AUTHORIZATION-

          (i) IN GENERAL- In connection with the denial of a request for authorization under subparagraph (A), the Commission may order--

            (I) disposition of any controlling interest referred to in subsection (i)(9)(B)(i);

            (II) closure of any office referred to in subsection (i)(9)(B)(ii); or

            (III) termination of any advisory relationship referred to in subparagraphs (C) and (D) of subsection (i)(9).

          (ii) PENALTY FOR NONCOMPLIANCE- The Commission may revoke the underlying registration under Federal securities laws of any person who fails to comply with an order issued under clause (i).

      (2) NOTICE REQUIRED TO FILE REQUESTS FOR AUTHORIZATION-

        (A) IN GENERAL- If a determination is published under subsection (d)(1) with respect to a foreign country, no person of that foreign country may file a request for authorization unless such person files notice of such request simultaneously with the Commission and the Secretary, not less than 90 days in advance of the action that is the subject of the request, in such form and containing such information as the Commission may prescribe by rule.

        (B) NOTIFYING SECRETARY- The Commission shall promptly notify the Secretary of any notice received under subparagraph (A).

        (C) EXTENDING 90-DAY PERIOD- The Commission may, by order, extend for an additional 180 days the period during which the Commission may consider a notice received under subparagraph (A).

      (3) STANDARDS FOR EXERCISE OF DISCRETION- In exercising any discretion under this subsection, the Secretary shall consider, with respect to a securities organization that is controlled, directly or indirectly, by a person of a foreign country--

        (A) the extent to which the foreign country is progressing toward according national treatment to United States securities organizations; and

        (B) whether the foreign country permits United States securities organizations to expand their activities in that country, even if that country determined that the United States did not accord national treatment to securities organizations of that country.

    (f) NEGOTIATIONS-

      (1) IN GENERAL- The Secretary--

        (A) shall initiate negotiations with any foreign country with respect to which a determination under subsection (c)(1) is in effect; and

        (B) may initiate negotiations with any foreign country which denies national treatment to United States securities organizations to ensure that the foreign country accords national treatment to such organizations.

      (2) EXCEPTIONS- Paragraph (1) does not require the Secretary to initiate negotiations with a foreign country if the Secretary--

        (A) determines that the negotiations--

          (i) would be so unlikely to result in progress toward according national treatment to United States securities organizations as to be a waste of effort; or

          (ii) would impair the economic interests of the United States; and

        (B) gives written notice of that determination to the chairperson and the ranking minority member of the Committee on Banking, Housing, and Urban Affairs of the Senate and of the Committee of Energy and Commerce of the House of Representatives.

    (g) REPORT-

      (1) CONTENTS OF REPORT- Not later than December 1, 1994, and biennially thereafter, the Secretary shall submit to the Congress a report that--

        (A) specifies the foreign countries identified under subsection (b);

        (B) if a determination is published under subsection (d)(1) with respect to the foreign country, provides the reasons therefor;

        (C) if the Secretary has not made, or has rescinded, a determination under subsection (d)(1) with respect to the foreign country, provides the reasons therefor;

        (D) describes the results of any negotiations conducted under subsection (f)(1) with the foreign country; and

        (E) discusses the effectiveness of this section in achieving the purpose of this section.

      (2) SUBMISSION OF REPORT- The report required by paragraph (1) may be submitted as part of a report or update submitted under section 3602 of the Omnibus Trade and Competitiveness Act of 1988.

    (h) CONSULTATION- Consultation in accordance with this subsection means consultation with the Secretary of State, the Secretary of Commerce, the United States Trade Representative, and the Commission.

    (i) DEFINITIONS- For purposes of this section, the following definitions shall apply:

      (1) BROKER- The term ‘broker’ has the same meaning as in section 3(a)(4) of the Securities Exchange Act of 1934.

      (2) COMMISSION- The term ‘Commission’ means the Securities and Exchange Commission.

      (3) CONTROL- The terms ‘directly or indirectly controlled by’ and ‘controlled, directly or indirectly’ shall have the meanings given to such terms in rules or regulations issued by the Secretary of the Treasury, not later than 6 months after the date of enactment of this Act, after consultation with the Commission.

      (4) DEALER- The term ‘dealer’ has the same meaning as in section 3(a)(5) of the Securities Exchange Act of 1934.

      (5) INVESTMENT ADVISER- The term ‘investment adviser’ has the same meaning as in section 202(a)(11) of the Investment Advisers Act of 1940.

      (6) INVESTMENT COMPANY- The term ‘investment company’ has the same meaning as in section 3 of the Investment Company Act of 1940.

      (7) NATIONAL TREATMENT- A foreign country accords ‘national treatment’ to United States securities organizations if it offers them the same competitive opportunities (including effective market access) as are available to its domestic securities organizations in like circumstances.

      (8) PERSON OF A FOREIGN COUNTRY- The term ‘person of a foreign country’ means--

        (A) a person organized under the laws of the foreign country;

        (B) a person that has its principal place of business in the foreign country;

        (C) an individual who is--

          (i) a citizen of the foreign country; or

          (ii) domiciled in the foreign country;

        (D) a person that is directly or indirectly controlled by one or more persons described in subparagraph (A), (B), or (C); and

        (E) an investment company, an investment adviser of which is a person described in any of subparagraphs (A) through (D).

      (9) REQUEST FOR AUTHORIZATION- The term ‘request for authorization’ means--

        (A) an application to register under section 15(b), 15B, or 15C of the Securities Exchange Act of 1934, or section 203(c) of the Investment Advisers Act of 1940, including an application to succeed to the business of a registered entity;

        (B) an amendment to a registration statement referred to in subparagraph (A) that reflects--

          (i) the acquisition of control of the registered entity; or

          (ii) the addition of a United States office by the registered entity;

        (C) a registration statement filed by an investment company under section 8(b) of the Investment Company Act of 1940, if a person of a foreign country will serve as an investment adviser to the investment company; and

        (D) an amendment to an investment company registration statement filed under section 8(b) of the Investment Company Act of 1940 that reflects the retention of a person of a foreign country as an investment adviser.

      (10) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.

      (11) SECURITIES ORGANIZATION- The term ‘securities organization’ means a broker, a dealer, an investment company, or an investment adviser.

SEC. 504. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR INSURERS AND REINSURERS.

    (a) PURPOSE- The purpose of this section is to encourage foreign countries to accord national treatment to United States insurers and reinsurers that operate or seek to operate in those countries.

    (b) IDENTIFYING COUNTRIES THAT DENY NATIONAL TREATMENT TO UNITED STATES INSURERS OR REINSURERS- The President or the President’s designee shall identify whether and to what extent foreign countries deny national treatment to United States insurers or reinsurers--

      (1) according to the most recent report under section 3602 of the Omnibus Trade and Competitiveness Act of 1988 (or update thereof); or

      (2) based on more recent information that the President deems appropriate.

    (c) DETERMINING WHETHER DENIAL OF NATIONAL TREATMENT HAS SIGNIFICANT ADVERSE EFFECT-

      (1) IN GENERAL- The President shall determine whether the denial of national treatment to United States insurers or reinsurers by a foreign country identified under subsection (b) has a significant adverse effect on such organizations.

      (2) FACTORS TO BE CONSIDERED- In determining whether and to what extent a foreign country denies national treatment to United States insurers or reinsurers, and in determining the effect of any such denial on such insurers or reinsurers, the President shall consider appropriate factors, including--

        (A) the size of the foreign country’s markets for the financial services involved, and the extent to which United States insurers or reinsurers operate or seek to operate in those markets;

        (B) the extent to which United States insurers or reinsurers may participate in developing regulations, guidelines, or other policies regarding new products, services, and markets in the foreign country;

        (C) the extent to which the foreign country issues written regulations, guidelines, or other policies applicable to United States insurers or reinsurers operating or seeking to operate in the foreign country that are--

          (i) prescribed after adequate notice and opportunity for comment;

          (ii) readily available to the public; and

          (iii) prescribed in accordance with objective standards that effectively prevent arbitrary and capricious determinations;

        (D) the effects of the regulatory policies of the foreign country on--

          (i) the licensing policies of the insurance regulator of that country;

          (ii) capital requirements applicable in that country;

          (iii) restrictions on acquisitions or joint ventures and operations thereof by insurers or reinsurers in that country; and

          (iv) restrictions on the operation and establishment of branches in that country.

    (d) PUBLICATION OF DETERMINATION-

      (1) IN GENERAL- If the President determines under subsection (c) that the denial of national treatment to United States insurers or reinsurers by a foreign country has a significant adverse effect on such organizations, the President--

        (A) may, after initiating negotiations in accordance with subsection (f) publish that determination in the Federal Register;

        (B) shall, not less frequently than annually, in consultation with any department or agency that the President deems appropriate, review each such determination to determine whether it should be rescinded; and

        (C) shall inform State insurance commissioners of the publication of that determination.

      (2) EXCEPTION FOR COUNTRIES THAT ARE PARTIES TO CERTAIN AGREEMENTS GOVERNING FINANCIAL SERVICES- Paragraph (1) shall not apply to a foreign country to the extent that any authority under that paragraph would permit action to be taken that would be inconsistent with a bilateral or multilateral agreement including any dispute resolution procedures contained in such agreement that governs financial services, including insurance, that--

        (A) the President entered into with that country; and

        (B) the Senate and the House of Representatives approved;

      before the date of enactment of this section.

    (e) SANCTIONS-

      (1) ACTIONS BY THE PRESIDENT-

        (A) IN GENERAL- The President may recommend to the State insurance commissioners that they deny a foreign insurer’s or reinsurer’s request for authorization which is filed after the date of publication of a determination under subsection (d)(1) by a person of a foreign country listed in such publication if the President determines that--

          (i) such action would assist the United States in negotiations to eliminate discrimination against United States insurers or reinsurers;

          (ii) negotiations undertaken pursuant to subsection (f) are not likely to result in an agreement that eliminates the denial of national treatment; or

          (iii) the country has not adequately adhered to an agreement reached as a result of negotiations undertaken pursuant to subsection (f).

        (B) EXERCISE OF AUTHORITY- If the President delegates his authority under section 504(b), the designee’s authority under subparagraph (A) shall be exercised according to the specific direction (if any) of the President.

        (C) COMPLIANCE EXCEPTIONS- If the State insurance commissioners do not act within 90 days on the President’s recommendations in subsection (A), or if the President determines that the procedure outlined in subsection (A) is either inappropriate or impractical to achieve the purpose of this section, the President may take such action as he or she considers necessary and appropriate to encourage foreign countries to accord national treatment to United States insurers and reinsurers that operate or seek to operate in those countries.

      (2) STANDARDS FOR EXERCISE OF DISCRETION- In exercising any discretion under subsection (e), the President shall consider, with respect to an insurer or reinsurer, branch, or other affiliated entity that is a person of a foreign country and is operating in the United States--

        (A) the extent to which the foreign country is progressing toward according national treatment to United States insurers or reinsurers; and

        (B) whether the foreign country permits United States insurers or reinsurers to expand their activities in that country, even if that country determined that the United States did not accord national treatment to the insurers or reinsurers of that country.

    (f) NEGOTIATIONS-

      (1) IN GENERAL- The President--

        (A) shall initiate negotiations with any foreign country with respect to which a determination made under subsection (c)(1) is in effect; and

        (B) may initiate negotiations with any foreign country which denies national treatment to United States insurers or reinsurers to ensure that the foreign country accords national treatment to such insurers or reinsurers.

      (2) EXCEPTIONS- Paragraph (1) does not require the President to initiate negotiations with a foreign country if the President--

        (A) determines that the negotiations--

          (i) would be so unlikely to result in progress toward according national treatment to United States insurers or reinsurers as to be a waste of effort; or

          (ii) would impair the economic interests of the United States; and

        (B) gives written notice of that determination to the chairperson and the ranking minority member of the appropriate Senate and House committees.

    (g) Report-

      (1) CONTENTS OF REPORT- Not later than December 1, 1994, and biennially thereafter, the President shall submit to the Congress a report that--

        (A) specifies the foreign countries identified under subsection (b);

        (B) if a determination is published under subsection (d)(1) with respect to the foreign country, provides the reasons therefor;

        (C) if the President has not made or has rescinded such a determination with respect to the foreign country, provides the reasons therefor;

        (D) describes the results of any negotiations conducted under subsection (g)(1) with the foreign country; and

        (E) discusses the effectiveness of this section in achieving the purpose of this section.

      (2) SUBMISSION OF REPORT- The report required by paragraph (1) may be submitted as part of a report or update submitted under section 3602 of the Omnibus Trade and Competitiveness Act of 1988.

    (h) DEFINITIONS- For purposes of this section, the following definitions shall apply:

      (1) INSURER- The term ‘insurer’ means a party to a contract of insurance who assumes the risk and undertakes to indemnify the insured, or pay a certain sum on the happening of a specified contingency.

      (2) NATIONAL TREATMENT- A foreign country accords ‘national treatment’ to United States insurers and reinsurers if it offers them the same competitive opportunities (including effective market access) as are available to its domestic insurers or reinsurers.

      (3) PERSON OF A FOREIGN COUNTRY- The term ‘person of a foreign country’ means--

        (A) a person organized under the laws of the foreign country;

        (B) a person that has its principal place of business in the foreign country;

        (C) an individual who is--

          (i) a citizen of the foreign country, or

          (ii) domiciled in the foreign country; and

        (D) a person that is directly or indirectly controlled by a person or persons described in subparagraph (A) or (B), or by an individual or individuals described in subparagraph (C).

      (4) PRESIDENT- The term ‘President’ means the President of the United States or the President’s designee.

      (5) REINSURER- The term ‘reinsurer’ means an insurer which contracts to indemnify a ceding insurer for all or part of a risk originally undertaken by the ceding insurer.

      (6) REQUEST FOR AUTHORIZATION- The term ‘request for authorization’ means--

        (A) an application, registration, notice, or other request to commence engaging in the business of insurance in a State; or

        (B) an application, registration, notice, or other request for renewal of authorization to engage in the business of insurance in a State.

SEC. 505. FINANCIAL INTERDEPENDENCE STUDY.

    Subtitle G of title III of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5351 et seq.) is amended by adding at the end the following new section:

‘SEC. 3605. FINANCIAL INTERDEPENDENCE STUDY.

    ‘(a) INVESTIGATION REQUIRED- The Secretary, in consultation and coordination with the Securities and Exchange Commission, the Federal banking agencies, and any other appropriate Federal department or agency designated by the Secretary, shall conduct an investigation to determine--

      ‘(1) the extent of the interdependence of the financial services sectors of the United States and foreign countries--

        ‘(A) whose financial services institutions provide financial services in the United States; or

        ‘(B) whose persons have substantial ownership interests in United States financial services institutions; and

      ‘(2) the economic, strategic, and other consequences of that interdependence for the United States.

    ‘(b) REPORT-

      ‘(1) REPORT REQUIRED- Not later than 3 years after the date of enactment of this section, the Secretary shall submit a report on the results of the investigation under subsection (a) to the President, the Congress, the Securities and Exchange Commission, the Federal banking agencies, and any other appropriate Federal agency or department, as designated by the Secretary.

      ‘(2) CONTENTS OF REPORT- The report required under paragraph (1) shall--

        ‘(A) describe the activities and estimate the scope of financial services activities conducted by United States financial services institutions in foreign markets (differentiated according to major foreign markets);

        ‘(B) describe the activities and estimate the scope of financial services activities conducted by foreign financial services institutions in the United States (differentiated according to the most significant home countries or groups of home countries);

        ‘(C) estimate the number of jobs created in the United States by financial services activities conducted by foreign financial services institutions and the number of jobs created in foreign countries by financial service activities conducted by United States financial services institutions;

        ‘(D) estimate the additional jobs and revenues (both foreign and domestic) that would be created by the activities of United States financial services institutions in foreign countries if those countries offered such institutions the same competitive opportunities (including effective market access) as are available to the domestic financial services institutions of those countries;

        ‘(E) describe the extent to which foreign financial services institutions discriminate against United States persons in procurement, employment, the provision of credit or other financial services, or otherwise;

        ‘(F) describe the extent to which foreign financial services institutions and other persons from foreign countries purchase or otherwise facilitate the marketing from the United States of government and private debt instruments and private equity instruments;

        ‘(G) describe how the interdependence of the financial services sectors of the United States and foreign countries affects the autonomy and effectiveness of United States monetary policy;

        ‘(H) describe the extent to which United States companies rely on financing by or through foreign financial services institutions and the consequences of such reliance (including disclosure of proprietary information) for the industrial competitiveness and national security of the United States;

        ‘(I) describe the extent to which foreign financial services institutions, in purchasing high technology products such as computers and telecommunications equipment, favor manufacturers from their home countries over United States manufacturers; and

        ‘(J) contain other appropriate information relating to the results of the investigation required by subsection (a).

    ‘(c) DEFINITIONS- For purposes of this section the following definitions shall apply:

      ‘(1) DEPOSITORY INSTITUTION AND DEPOSITORY INSTITUTION HOLDING COMPANY- The terms ‘depository institution’ and ‘depository institution holding company’ have the same meanings as in section 3 of the Federal Deposit Insurance Act.

      ‘(2) FEDERAL BANKING AGENCIES- The term ‘Federal banking agencies’ has the same meaning as in section 3 of the Federal Deposit Insurance Act.

      ‘(3) FINANCIAL SERVICES INSTITUTION- The term ‘financial services institution’ means--

        ‘(A) a broker, dealer, underwriter, clearing agency, transfer agent, or information processor with respect to securities, including government and municipal securities;

        ‘(B) an investment company, investment manager, investment adviser, indenture trustee, or any depository institution, insurance company, or other organization operating as a fiduciary, trustee, underwriter, or other financial services provider;

        ‘(C) any depository institution or depository institution holding company; and

        ‘(D) any other entity providing financial services.

      ‘(4) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.’.

SEC. 506. FEDERAL RESERVE REPORT ON THE FOREIGN BANK SUPERVISION ENHANCEMENT ACT OF 1991.

    The Federal Reserve shall submit to the House and Senate Banking Committees within 60 days of enactment of this legislation a report on the Foreign Bank Supervision Enhancement Act of 1991 including:

      (a) the number of applicants received and from what countries;

      (b) the number of applications approved and from what countries;

      (c) the amount of time taken on each application between receipt and approval or rejection of the application;

      (d) other agencies involved in the approval process, how much time is taken by those agencies, and any problems encountered with these agencies;

      (e) coordination of processing applications and length of time for processing between the regional bank’s and the Federal Reserve Board’s staffs;

      (f) efforts to define consolidated home country supervision on an international basis, and

      (g) suggestions for streamlining the process.

SEC. 507. CONFORMING AMENDMENTS.

    (a) REPORTS ON FOREIGN TREATMENT OF UNITED STATES FINANCIAL INSTITUTIONS- Section 3602 of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5352) is amended--

      (1) in the first sentence, by inserting ‘with updates on significant developments every 2 years following submission of the 1994 report,’ before ‘the Secretary of the Treasury’; and

      (2) by adding at the end the following: ‘For purposes of this section, a foreign country denies national treatment to United States entities unless the foreign country offers such entities the same competitive opportunities (including effective market access) as are available to the domestic entities of the foreign country.’.

    (b) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FINANCIAL SERVICES- Section 3603(a)(1) of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5353(a)(1)) is amended by inserting ‘effective’ before ‘access’.

    (c) PRIMARY DEALERS IN GOVERNMENT DEBT INSTRUMENTS- Section 3502(b)(1) of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5342(b)(1)) is amended--

      (1) by striking ‘does not accord to’ and inserting ‘does not offer’; and

      (2) by striking ‘as such country accords to’ and inserting ‘(including effective market access) as are available to’.

    (d) CONFORMING AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934-

      (1) SECTION 15- Section 15(b)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(1)) is amended by adding at the end the following: ‘The Commission may suspend consideration, deny registration, issue an order, or revoke registration, as provided in section 403(e)(1) of the Fair Trade in Financial Services Act of 1994.’.

      (2) SECTION 15B- Section 15B(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(a)(2)) is amended by adding at the end the following: ‘The Commission may suspend consideration, deny registration, issue an order, or revoke registration, as provided in section 403(e)(1) of the Fair Trade in Financial Services Act of 1994.’.

      (3) SECTION 15C- Section 15C(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(a)(2)) is amended by adding at the end the following: ‘The Commission may suspend consideration, deny registration, issue an order, or revoke registration, as provided in section 403(e)(1) of the Fair Trade in Financial Services Act of 1994.’.

    (e) CONFORMING AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940- Section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8) is amended by adding at the end the following new subsection:

    ‘(g) The Commission may suspend consideration, deny registration, issue an order, or revoke registration, as provided in section 403(e)(1) of the Fair Trade in Financial Services Act of 1994.’.

    (f) CONFORMING AMENDMENT TO THE INVESTMENT ADVISERS ACT OF 1940- Section 203(c)(2) of the Investment Advisers Act of 1940 (15 U.S.C. (c)(2)) is amended by adding at the end the following: ‘The Commission may suspend consideration, deny registration, issue an order, or revoke registration, as provided in section 403(e)(1) of the Fair Trade in Financial Services Act of 1994.’.

TITLE VI--NATIONAL FLOOD INSURANCE REFORM

SEC. 601. SHORT TITLE.

    This title may be cited as the ‘National Flood Insurance Reform Act of 1994’.

SEC. 602. CONGRESSIONAL FINDINGS.

    The Congress finds that--

      (1) the 4 principal objectives of the National Flood Insurance Program are to limit increasing flood control and disaster relief expenditures, to provide a prefunded mechanism to more fully indemnify victims of flood-related disasters, to limit unwise development in floodplains, and to provide affordable Federal flood insurance for structures located in areas of special flood hazards;

      (2) since 1968, the National Flood Insurance Program has reduced the need for taxpayer funded disaster assistance and has been a factor in motivating local government mitigation efforts.

      (3) repetitively damaged properties represent a substantial problem for the National Flood Insurance Program, with over 40 percent of all flood insurance claims made on properties that have been damaged more than once;

      (4) the problem of erosion warrants greater analysis;

      (5) reforms in the National Flood Insurance Program are essential to increase participation in the Program, make the Program more actuarially sound, decrease the risk of losses to the United States Treasury, and address the problem of properties repetitively damaged by floods;

      (6) a Federal flood insurance program that combines predisaster mitigation efforts together with an insurance and compliance program will reduce the physical and economic effects of flood-related damage on the Federal Government, State and local governments, and individuals;

      (7) requiring regulated lending institutions, government agencies, and government-sponsored enterprises to make sure that flood insurance coverage is purchased on all properties in areas of special flood hazards in participating communities will increase compliance with the program, and increase the pool of funds, thereby decreasing the impact on the National Flood Insurance Fund of individual flood events;

      (8) incentives in the form of reduced premium rates for flood insurance under the National Flood Insurance Program should be provided in communities that have adopted and enforced exemplary or particularly effective measures for comprehensive floodplain management; and

      (9) these community-based, individual mitigation, and loss prevention methods and incentives should be incorporated into the National Flood Insurance Program.

SEC. 603. DEFINITION.

    As used in this title, the term ‘Director’ means the Director of the Federal Emergency Management Agency.

Subtitle A--Definitions

SEC. 611. FLOOD DISASTER PROTECTION ACT OF 1973.

    (a) IN GENERAL- Section 3(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4003(a)) is amended--

      (1) by striking paragraph (5) and inserting the following new paragraph:

      ‘(5) ‘Federal entity for lending regulation’ means the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration Board, and the Farm Credit Administration, and with respect to a particular regulated lending institution means the entity primarily responsible for the supervision of the institution;’;

      (2) in paragraph (6), by striking the period at the end and inserting a semicolon; and

      (3) by inserting after paragraph (6) the following new paragraphs:

      ‘(7) ‘regulated lending institution’ means a bank, savings association, credit union, farm credit bank, Federal land bank association, production credit association, or similar institution subject to the supervision of a Federal entity for lending regulation;

      ‘(8) ‘Federal agency lender’ means the Federal Housing Administration, the Farmers Home Administration, the Small Business Administration, and the Veterans’ Administration, when such agency makes loans secured by improved real estate or a manufactured home; and

      ‘(9) ‘servicer’ means a person who receives any scheduled periodic payments from a borrower pursuant to the terms of any loan secured by a lien on real property, and who makes the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required.’.

    (b) CONFORMING AMENDMENTS-

      (1) REQUIREMENTS TO PURCHASE FLOOD INSURANCE- Section 102(b) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(b)) is amended by striking ‘(b) Each Federal instrumentality responsible for the supervision, approval, regulation, or insuring of banks, savings and loan associations, or similar institutions shall by regulation direct such institutions’ and inserting the following:

    ‘(b) FLOOD INSURANCE PURCHASE REQUIREMENTS- Each Federal entity for lending regulation shall by regulation direct regulated lending institutions’.

      (2) EFFECT OF NONPARTICIPATION IN FLOOD INSURANCE PROGRAM- Section 202(b) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106(b)) is amended by striking ‘Federal instrumentality described in such section shall by regulation require the institutions’ and inserting ‘Federal entity for lending regulation (with respect to regulated lending institutions)’.

SEC. 612. NATIONAL FLOOD INSURANCE ACT OF 1968.

    (a) IN GENERAL- Section 1370(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is amended--

      (1) in paragraph (5), by striking ‘and’ at the end;

      (2) in paragraph (6), by striking the period at the end and inserting a semicolon; and

      (3) by adding at the end the following new paragraphs:

      ‘(7) the term ‘Federal entity for lending regulation’ means the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration Board, and with respect to a particular regulated lending institution, means the entity primarily responsible for the supervision of the institution;

      ‘(8) the term ‘regulated lending institution’ means a bank, savings association, credit union, farm credit bank, Federal land bank association, production credit association, or similar institution subject to the supervision of a Federal entity for lending regulation;

      ‘(9) the term ‘Federal agency lender’ means the Federal Housing Administration, the Farmers Home Administration, the Small Business Administration, and the Veterans’ Administration, when such agency makes loans secured by improved real estate or a manufactured home;

      ‘(10) the term ‘natural and beneficial floodplain functions’ means--

        ‘(A) the functions associated with the natural or relatively undisturbed floodplain that moderate flooding, retain flood waters, reduce erosion and sedimentation, mitigate the effects of waves and storm surge from storms; and

        ‘(B) ancillary beneficial functions, including maintenance of water quality, and recharge of ground water

      that reduce flood related damage;

      ‘(11) the term ‘erosion control measures’ means a community’s efforts to control erosion through nonstructural and structural projects;

      ‘(12) the term ‘repetitive loss structure’ means an insured property that has incurred flood-related damage on 2 occasions during a 10-year period ending on the date of the event for which a second claim is made, in which the cost of repair, on the average, equaled or exceeded 25 percent of the value of the structure at the time of each flood event;

      ‘(13) the term ‘cost of compliance with land use and control measures’ means--

        ‘(A) the cost of elevating or floodproofing a structure so that the structure is in compliance with the minimum performance standards adopted by the State or community pursuant to section 1315 of the National Flood Insurance Act of 1968, or

        ‘(B) the cost of relocation or demolition of the structure if the Director demonstrates that the structure will collapse or subside as a result of erosion within 30 years based on State erosion data;

      ‘(14) the term ‘servicer’ means any person who receives any scheduled periodic payments from a borrower pursuant to the terms of any loan secured by a lien on real property, and who makes the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required.’.

    (b) CONFORMING AMENDMENT- Section 1322(d) of the National Flood Insurance Act of 1968 (42 U.S.C. 4029(d)) is amended by striking ‘federally supervised, approved, regulated or insured financial institution’ and inserting ‘regulated lending institution’.

Subtitle B--Compliance and Increased Participation

SEC. 621. EXPANDED FLOOD INSURANCE PURCHASE REQUIREMENTS.

    (a) IN GENERAL- Section 102(b) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(b)), as amended by section 611(b)(1), is amended--

      (1) by striking ‘Each Federal entity’ and inserting the following:

      ‘(1) IN GENERAL- Each Federal entity’;

      (2) by inserting before ‘shall by regulation’ the following: ‘(after consultation and coordination with the Federal Financial Institutions Examination Council established under the Federal Financial Institutions Examination Council Act of 1974)’; and

      (3) by adding at the end the following new paragraphs:

      ‘(2) PROCEDURES IMPLEMENTED BY FNMA, FHLMC, AND FAMC- The Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Agricultural Mortgage Corporation shall implement procedures reasonably designed to assure that each loan that is--

        ‘(A) secured by improved real estate or a manufactured home located in an area that has been identified at the time of the origination of the loan by the Director as an area of special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968; and

        ‘(B) purchased by any such entity;

      is covered for the term of the loan by flood insurance in the amount provided in paragraph (1).

      ‘(3) PROCEDURES IMPLEMENTED BY FEDERAL AGENCY LENDERS- Each Federal agency lender shall implement procedures reasonably designed to assure that all property--

        ‘(A) that secures loans that the Federal agency lender makes, increases, extends, or renews; and

        ‘(B) that is improved by real estate or a manufactured home located in an area that has been identified at the time of the origination of the loan by the Director as an area of special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968;

      is covered for the term of the loan by flood insurance in the amount provided in paragraph (1).

      ‘(4) DEFINITION- For purposes of this section property improved by real estate means insurable improvements on that property.’.

    (b) EFFECTIVE DATE- The provisions of this section shall apply to all transactions occurring after the expiration of the 1-year period beginning on the date of enactment of this title.

SEC. 622. ESCROW OF FLOOD INSURANCE PAYMENTS.

    (a) IN GENERAL- Section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) is amended by adding at the end the following new subsection:

    ‘(d) ESCROW OF FLOOD INSURANCE PAYMENTS-

      ‘(1) BY REGULATED LENDING INSTITUTIONS- Each Federal entity for lending regulation, after consultation and coordination with the Federal Financial Institutions Examination Council, shall by regulation require that, if a regulated lending institution requires the escrowing of taxes, insurance premiums, fees, or any other charges for a loan secured by residential real estate or manufactured homes, all charges for flood insurance under this title for the property shall be paid by the borrower to the institution for the duration of the period during which the regulated lending institution maintains an escrow account. Upon receipt of a notice from the Director or the provider of the insurance that insurance premiums, fees, or other charges are due, the institution shall pay from the escrow account to the provider of the insurance the amount of insurance premiums, fees, or other charges owed.

      ‘(2) BY FEDERAL AGENCY LENDERS- If a Federal agency lender requires the escrowing of taxes, insurance premiums, fees, or any other charges, then any charges for flood insurance under this title for the residential real estate or the manufactured home shall be paid by the borrower to the Federal agency lender for the duration of the period during which the Federal agency lender maintains an escrow account. Upon receipt of a notice from the Director or the provider of the insurance that insurance premiums, fees, or other charges are due, the Federal agency lender shall pay from the escrow account to the provider of the insurance the amount of insurance premiums, fees or other charges owed.

      ‘(3) APPLICABILITY OF REAL ESTATE SETTLEMENT PROCEDURES ACT- Escrow accounts used to collect flood insurance premiums, fees, or other charges under this subsection shall be subject to the provisions of section 10 of the Real Estate Settlement Procedures Act of 1974.’.

    (b) APPLICABILITY- Section 102(d) of the Flood Disaster Protection Act of 1973, as added by subsection (a), shall apply with respect to any loan made, increased, extended, or renewed after the expiration of the 1-year period beginning on the date of enactment of this title.

SEC. 623. NOTICE REQUIREMENTS.

    Section 1364 of the National Flood Insurance Act of 1968 (42 U.S.C. 4104a) is amended to read as follows:

‘SEC. 1364. NOTICE REQUIREMENTS.

    ‘(a) LENDING INSTITUTIONS- Each Federal entity for lending regulation, after consultation and coordination with the Federal Financial Institutions Examination Council, shall by regulation require that before a regulated lending institution makes, increases, extends, or renews a loan secured by improved real estate or a manufactured home located in an area that has been identified by the Director as an area of special flood hazards, the institution shall notify the borrower of the special flood hazards and of the need to purchase and maintain flood insurance.

    ‘(b) FEDERAL AGENCY LENDERS- Before a Federal agency lender makes, increases, extends, or renews a loan secured by improved real estate or a manufactured home located in an area that has been identified by the Director as an area of special flood hazards, the Federal agency lender shall notify the borrower of the special flood hazards and of the need to purchase and maintain flood insurance.

    ‘(c) PARTICIPATING COMMUNITIES- The Director shall by regulation require each participating community, upon receiving the semiannual list prepared by the Director of all revisions to and updates of flood insurance rate maps made during the preceding 6 months, to determine whether any properties in their community have been affected, and to provide annual notice by mail, notice by publication, notice on tax assessments, or notice by other reasonable method, to regulated lending institutions that are known to lend in the community, and to the owners of all properties newly determined to be, or no longer to be, in an area of special flood hazards, of the flood insurance purchase requirements under section 102(b).

    ‘(d) CONTENTS OF NOTICE- Notification required by this section shall include a warning, in a form to be established by the Director, stating that the real estate or manufactured home securing the loan is located in an area of special flood hazards, a description of the flood insurance purchase requirements under section 102(b), a statement that flood insurance coverage may be purchased under the National Flood Insurance Program and may also be available from private insurers, and any other information that the Director considers necessary to carry out the purposes of the National Flood Insurance Program.’.

SEC. 624. PLACEMENT OF FLOOD INSURANCE BY REGULATED LENDING INSTITUTION, FEDERAL AGENCY LENDER, OR SERVICER.

    (a) REQUIRED ACTIONS BY LENDER- Section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a), as amended by section 622(a), is amended by adding at the end the following new subsection:

    ‘(e) REQUIRED ACTIONS BY LENDER-

      ‘(1) NOTIFICATION TO BORROWER OF LACK OF COVERAGE- If, at the time of origination or at any other time during the term of a loan secured by improved real estate or by a manufactured home located in an area that has been identified by the Director as an area of special flood hazards and in which flood insurance is available under this title, a regulated lending institution, Federal agency lender, or servicer determines that the building or manufactured home and any personal property securing the loan held or serviced by the regulated lending institution, Federal agency lender, or servicer is not covered by flood insurance, in an amount not less than the amount required by subsection (b)(1), the regulated lending institution, Federal agency lender, or servicer shall notify the borrower, in a form to be established by the Director, that the borrower should obtain, at the borrower’s expense, an amount of flood insurance that is not less than the amount required by subsection (b)(1), for the term of the loan. If, not later than 45 days after receiving such notification, the borrower fails to purchase such flood insurance, the regulated lending institution, Federal agency lender, or servicer shall purchase the insurance on behalf of the borrower and may charge the borrower for the cost of premiums and fees incurred by the regulated lending institution, Federal agency lender, or servicer in purchasing the insurance.

      ‘(2) REVIEW-

        ‘(A) BY THE DIRECTOR- A borrower may request, based upon the submission of supporting technical data, that the Director review a determination that the improved real estate or manufactured home securing the loan is located in an area of special flood hazards. Not later than 45 days after the Director receives the request, the Director shall review the determination and provide the borrower with a letter stating whether or not the property is in an area of special flood hazards. The determination of the Director shall be final. If the Director fails to respond to a request within 45 days, the property shall be deemed not to be located in an area having special flood hazards.

        ‘(B) INSURANCE NOT REQUIRED- If a person is provided by the borrower with a letter issued by the Director pursuant to subparagraph (A) during the preceding 1-year period, stating that the property is not in an area of special flood hazards, such person shall have no obligation under this title to require the purchase of flood insurance on the property.’.

    (b) APPLICABILITY-

      (1) IN GENERAL- Except as provided in paragraph (2), section 102(e) of the Flood Disaster Protection Act of 1973, as added by subsection (a), shall apply to all loans outstanding on or after the date of enactment of this title.

      (2) LOANS REGULATED BY THE FARM CREDIT ADMINISTRATION- With respect to loans held by institutions regulated by the Farm Credit Administration, section 102(e) of the Flood Disaster Protection Act of 1973, as added by subsection (a), shall apply only to loans originating on or after the date of enactment of this title.

SEC. 625. STANDARD FLOOD HAZARD DETERMINATION FORMS.

    (a) IN GENERAL- Chapter III of the National Flood Insurance Act of 1968 (42 U.S.C. 4101 et seq.) is amended by adding at the end the following new section:

‘SEC. 1365. STANDARD FLOOD HAZARD DETERMINATION FORMS.

    ‘(a) DEVELOPMENT- The Director, in consultation with the Federal entities for lending regulation, and after notice and comment, shall develop a standard flood hazard determination form (hereafter in this section referred to as the ‘determination form’) for use in connection with loans secured by improved real estate or a manufactured home located in an area of special flood hazards and in which flood insurance is available under this title. The determination form may be maintained in a printed, computerized, or electronic manner.

    ‘(b) DESIGN AND CONTENTS- The determination form shall state whether the property is in an area of special flood hazards, the risk premium rate classification established for the special flood hazard area in which the property is located, the complete map and panel numbers for the property, and the date of the map used for the determination. If the complete map and panel numbers for the property are not available because the property is not located in a community that is participating in the National Flood Insurance Program or because no map exists for the relevant area, the determination form shall so state.

    ‘(c) REQUIRED USE- Each Federal entity for lending regulation shall by regulation require the use of the determination form by regulated lending institutions. Each Federal agency lender shall by regulation provide for the use of the determination form. The Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Agricultural Mortgage Corporation shall require use of the determination form by any person from whom they purchase loans.

    ‘(d) GUARANTEES REGARDING INFORMATION- In recording information on a determination form, a person may rely on information provided by a third party to the extent that the third party guarantees the accuracy of the information.

    ‘(e) RELIANCE ON PREVIOUS DETERMINATION- A person or institution increasing, extending, renewing, or purchasing a loan may rely on a previous determination as to whether property is in a special flood hazard area, if the previous determination was made not more than 5 years before the date of the transaction, and the basis for the previous determination has been set forth on a determination form.’.

    (b) APPLICABILITY- Section 1365 of the National Flood Insurance Act of 1968, as added by subsection (a), shall apply to all loans originated on or after the expiration of the 6-month period beginning on the date the standard flood hazard determination form is finalized by the Director.

SEC. 626. EXAMINATIONS REGARDING COMPLIANCE BY REGULATED LENDING INSTITUTIONS.

    (a) AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT- Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is amended by adding at the end the following new subsection:

    ‘(h) FLOOD HAZARD INSURANCE COMPLIANCE BY INSURED DEPOSITORY INSTITUTIONS REQUIRED-

      ‘(1) EXAMINATIONS- The appropriate Federal banking agency shall, during each scheduled on-site examination required by this section, determine whether the insured depository institution is complying with the requirements of the National Flood Insurance Program.

      ‘(2) REPORT- Not later than 1 year after the date of enactment of the National Flood Insurance Reform Act of 1994, and biannually thereafter for the next 4 years, each appropriate Federal banking agency shall submit a report to Congress on compliance by insured depository institutions with the requirements of the National Flood Insurance Program. The report shall include a description of the methods used to determine compliance, the number of institutions examined during the reporting year, a listing and total number of institutions found to be in noncompliance, actions taken to correct incidents of noncompliance, and an analysis of compliance, including a discussion of any trends, patterns, and problems, and recommendations regarding reasonable actions to improve the efficiency of the examinations processes.’.

    (b) AMENDMENT TO THE FEDERAL CREDIT UNION ACT- Section 204 of the Federal Credit Union Act (12 U.S.C. 1784) is amended by adding at the end the following new subsection:

    ‘(e) FLOOD HAZARD INSURANCE COMPLIANCE BY INSURED CREDIT UNIONS REQUIRED-

      ‘(1) EXAMINATION- The Board shall, during each examination conducted under this section, determine whether the insured credit union is complying with the requirements of the National Flood Insurance Program.

      ‘(2) REPORT- Not later than 1 year after the date of enactment of the National Flood Insurance Reform Act of 1994, and biannually thereafter for the next 4 years, the Board shall submit a report to Congress on compliance by insured credit unions with the requirements of the National Flood Insurance Program. The report shall include a description of the methods used to determine compliance, the number of insured credit unions examined during the reporting year, a listing and total number of insured credit unions found to be in noncompliance, actions taken to correct incidents of noncompliance, and an analysis of compliance, including a discussion of any trends, patterns, and problems, and recommendations regarding reasonable actions to improve the efficiency of the examinations processes.’.

SEC. 627. PENALTIES AND CORRECTIVE ACTIONS FOR FAILURE TO REQUIRE FLOOD INSURANCE, ESCROW, OR NOTIFY.

    Section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a), as amended by sections 622 and 624, is amended by adding at the end the following new subsections:

    ‘(f) CIVIL PENALTIES-

      ‘(1) IN GENERAL- A regulated lending institution that is found to have a pattern or practice of violating this section may be assessed a civil penalty by the appropriate Federal entity for lending regulation of not more than $350 for each such violation. A penalty under this subsection may be issued only after notice and an opportunity for a hearing on the record.

      ‘(2) TOTAL AMOUNT- The total amount of penalties assessed under this subsection against a single regulated lending institution for any calendar year may not exceed $100,000.

      ‘(3) SALES OR TRANSFERS- The subsequent sale or other transfer of a loan by a regulated lending institution that has committed a violation of this section shall not affect the liability of the transferring institution with respect to any penalty under this subsection. An institution shall not be liable for a violation relating to a loan committed by another institution that previously held the loan.

      ‘(4) 3-YEAR LIMIT- No penalty may be imposed under this subsection after the expiration of the 3-year period beginning on the date of the occurrence of the violation.

    ‘(g) ADDITIONAL ACTIONS- If a Federal entity for lending regulation determines--

      ‘(1) that a regulated lending institution has demonstrated a pattern and practice of noncompliance in violation of the regulations issued pursuant to subsection (b) or subsection (d) or the notice requirements under section 1364 of the National Flood Insurance Act of 1968; and

      ‘(2) that the regulated lending institution has not demonstrated measurable improvement in compliance despite the issuance of penalties under subsection (f);

    the agency may require the regulated lending institution to take such remedial actions as are necessary to ensure that the regulated lending institution is in satisfactory compliance with the requirements of the National Flood Insurance Program.’.

SEC. 628. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL.

    Section 1006 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3305) is amended by adding at the end the following new subsection:

    ‘(g) FLOOD INSURANCE- The Council shall consult with and assist the Federal entities for lending regulation, as such term is defined in section 1370(a)(7) of the National Flood Insurance Act of 1968, in developing and coordinating uniform standards and requirements for use by regulated lending institutions under the National Flood Insurance Program.’.

SEC. 629. CONFORMING AMENDMENT.

    The section heading for section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) is amended to read as follows:

‘FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND ESCROW ACCOUNTS’.

Subtitle C--Ratings and Incentives for Community Floodplain Management Programs

SEC. 631. COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMUNITY FLOODPLAIN MANAGEMENT.

    (a) REQUIREMENT FOR PARTICIPATION IN FLOOD INSURANCE PROGRAM- Section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C. 4022) is amended--

      (1) by striking the section heading and inserting the following:

‘SEC. 1315. STATE AND LOCAL LAND USE CONTROLS.’;

      (2) by striking ‘After December’ and inserting the following:

    ‘(a) REQUIREMENT FOR PARTICIPATION IN FLOOD INSURANCE PROGRAM- After December’; and

      (3) by adding at the end the following new subsection:

    ‘(b) COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMUNITY FLOODPLAIN MANAGEMENT-

      ‘(1) AUTHORITY AND GOALS- The Director shall carry out a community rating system program to evaluate the measures adopted by communities voluntarily participating in the community rating system, to provide incentives for measures to reduce the risk of flood or erosion damage that exceed the criteria set forth in section 1361, to encourage adoption of more effective measures to protect natural and beneficial floodplain functions, floodplain and erosion management, and to promote the reduction of Federal flood insurance losses.

      ‘(2) INCENTIVES- The program shall provide incentives in the form of credits on premium rates for flood insurance coverage in communities that the Director determines have adopted and enforced measures to reduce the risk of flood and erosion damage that exceed the criteria set forth in section 1361. In providing incentives under this paragraph, the Director may provide for credits to flood insurance premium rates in communities that the Director determines have--

        ‘(A) implemented measures to protect natural and beneficial floodplain functions; and

        ‘(B) adopted erosion control measures.

      ‘(3) CREDITS- The credits on premium rates for flood insurance coverage shall be based on the estimated reduction in flood and erosion damage risks resulting from the measures adopted by the community under this program. If a community has received mitigation assistance under section 1366, the credits shall be phased-in as determined by the Director.’.

    (b) REPORTS- Two years after the date of enactment of this title and biannually thereafter, the Director shall submit a report to the Congress regarding the program under section 1315(a) of the National Flood Insurance Act of 1968. Each report shall include an analysis of the cost-effectiveness and other accomplishments and shortcomings of the program and any recommendations of the Director for legislation regarding the program.

SEC. 632. FUNDING.

    Section 1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended--

      (1) in paragraph (4), by striking ‘and’ at the end;

      (2) in paragraph (5), by striking the period at the end and inserting a semicolon; and

      (3) by adding after paragraph (5) the following new paragraph:

      ‘(6) for carrying out the program under section 1315(b);’.

SEC. 633. REASONABLE FEES.

    A lender may charge a borrower a reasonable fee for making a flood insurance determination.

Subtitle D--Mitigation of Flood and Erosion Risks

SEC. 641. MITIGATION ASSISTANCE IN FEDERAL INSURANCE ADMINISTRATION.

    Section 1105(a) of the Housing and Urban Development Act of 1968 (42 U.S.C. 4129) is amended--

      (1) by striking ‘(a) There is hereby’ and inserting the following:

    ‘(a) ESTABLISHMENT- There is hereby’; and

      (2) by striking subsection (b) and inserting the following:

    ‘(b) COORDINATION OF MITIGATION ACTIVITIES- The Director shall coordinate all mitigation activities, including the administration of the program for mitigation assistance under section 1367. These activities shall include the development and implementation of various mitigation activities and techniques, the provision of advice and assistance regarding mitigation to States, communities, and individuals, including planning assistance under section 1367(d), coordination with other Federal flood and erosion mitigation efforts, and coordination with State and local governments and public and private agencies and organizations for collection and dissemination of information regarding erosion.’.

SEC. 642. AUTHORIZATION OF NATIONAL FLOOD AND EROSION MITIGATION FUNDS UNDER SECTION 1362.

    Chapter III of the National Flood Insurance Act of 1968 (42 U.S.C. 4101 et seq.), as amended by section 625, is amended by adding at the end the following new section:

‘SEC. 1366. NATIONAL FLOOD AND EROSION MITIGATION PROGRAM.

    ‘(a) EXPENDITURES- For flood and erosion mitigation activities authorized under section 1367, the Director may expend from the National Flood Insurance Fund--

      ‘(1) up to $10,000,000 in the fiscal year ending September 30, 1994;

      ‘(2) up to $15,000,000 in the fiscal year ending September 30, 1995;

      ‘(3) up to $20,000,000 in the fiscal year ending September 30, 1996;

      ‘(4) up to $20,000,000 in each fiscal year thereafter; and

      ‘(5) any amounts recaptured under section 1367(i).

    ‘(b) REPORT- Not later than 1 year after the date of enactment of the National Flood Insurance Reform Act of 1994 and biannually thereafter, the Director shall submit a report to the Congress describing the status of flood and erosion mitigation activities carried out with funds authorized under this section.’.

SEC. 643. STATE AND COMMUNITY MITIGATION ASSISTANCE PROGRAM.

    (a) IN GENERAL- Chapter III of the National Flood Insurance Act of 1968 (42 U.S.C. 4101 et seq.), as amended by sections 625 and 642, is amended by adding at the end the following new section:

‘SEC. 1367. STATE AND COMMUNITY MITIGATION ASSISTANCE.

    ‘(a) AUTHORITY- The Director shall develop and implement a financial assistance program with amounts made available under section 1366 to States and communities for planning and activities designed to reduce the risk of flood and erosion damage to insured structures and to protect natural and beneficial floodplain functions.

    ‘(b) MITIGATION PLAN REQUIREMENT- To be eligible to receive financial mitigation assistance, a State or community shall develop, and have approved by the Director, a flood and erosion risk mitigation plan (hereafter in this section referred to as a ‘mitigation plan’), that is consistent with the criteria established by the Director under section 1361. The mitigation plan shall include a comprehensive strategy for mitigation activities adopted by the State or community following a public hearing.

    ‘(c) NOTIFICATION OF APPROVAL- Not later than 120 days after the submission of a mitigation plan, the Director shall notify the State or community submitting the plan of the Director’s approval or disapproval of the plan. If the Director does not approve a plan, the Director shall notify the State or community in writing of the reasons for such disapproval.

    ‘(d) PLANNING ASSISTANCE-

      ‘(1) IN GENERAL- The Director shall make planning assistance available to States and communities for developing mitigation plans.

      ‘(2) FUNDING- From any amounts made available for use under section 1366 of the National Flood Insurance Act of 1968 in any fiscal year, the Director may use not more than $1,500,000 to provide planning assistance grants to States or communities to develop mitigation plans under this subsection.

      ‘(3) LIMITATIONS-

        ‘(A) TIMING- A grant for planning assistance may be awarded to a State or community once every 5 years and each grant may cover a period of 1 to 3 years.

        ‘(B) AMOUNT- A grant for planning assistance may not exceed--

          ‘(i) $150,000, to any State; or

          ‘(ii) $50,000, to any community.

        ‘(C) GEOGRAPHIC- Not more than $300,000 may be awarded to any 1 State and all communities located in that State for planning assistance in each fiscal year.

    ‘(e) ELIGIBLE MITIGATION ACTIVITIES- The Director shall determine eligibility for assistance under this section for mitigation activities that shall be technically feasible and cost-effective. These activities may include--

      ‘(1) elevation, relocation, demolition, or floodproofing of structures;

      ‘(2) the construction, repair, or restoration of levees, seawalls, and other structures that reduce the risk of flood damage;

      ‘(3) erosion control measures including beach nourishment;

      ‘(4) acquisition by States and communities of property substantially damaged by flood for public use as the Director determines is consistent with sound land management and use in such area; and

      ‘(5) the provision of technical assistance by States to communities and individuals to conduct eligible mitigation activities.

    ‘(f) LIMITATIONS ON MITIGATION ASSISTANCE-

      ‘(1) AMOUNT- The amount of mitigation assistance provided under subsection (e) may not exceed in any 5-year period--

        ‘(A) $10,000,000, to any State; or

        ‘(B) $3,300,000, to any community.

      ‘(2) GEOGRAPHIC- Not more than $20,000,000 may be awarded to any 1 State and all communities located in that State for mitigation assistance in any 5-year period.

    ‘(g) MATCHING REQUIREMENT- The Director may provide mitigation assistance to a State or community in an amount not to exceed 3 times the amount that the State or community certifies, as the Director shall require, that the State or community will contribute from other funds to carry out mitigation planning under subsection (d) and eligible activities under subsection (e).

    ‘(h) OVERSIGHT OF MITIGATION PLANS- The Director shall conduct oversight of recipients of mitigation assistance to ensure that the mitigation assistance is used in compliance with approved plans.

    ‘(i) RECAPTURE- If the Director determines that a State or community that has received mitigation assistance has not carried out the mitigation activities as set forth in the mitigation plan, the Director shall recapture any unexpended amounts and deposit the amounts in the Fund.

    ‘(j) DEFINITION OF COMMUNITY- For purposes of this section, the term ‘community’ means a political subdivision that has zoning and building code jurisdiction over a particular area of special flood hazards, and that is participating in the National Flood Insurance Program.

    ‘(k) PREFERENCES FOR MITIGATION GRANTS TO COMMUNITIES-

      ‘(1) COST-BENEFIFICIAL PLANS- In providing mitigation grants to communities under this section, the Director shall give preference to communities with mitigation plans that are the most cost-beneficial to the Flood Insurance Fund.

      ‘(2) ADDITIONAL CRITERIA- Subject to paragraph (1), the Director will also give preference to communities that--

        ‘(A) have the highest rates of participation by property owners in the Federal flood insurance program;

        ‘(B) have qualified for credits on premium rates under section 1315(b); and

        ‘(C) have experienced repetitive losses that have been most costly to the Fund.’.

    (b) REGULATIONS- Not later than 6 months after date of enactment of this title, the Director shall issue regulations implementing section 1367 of the National Flood Insurance Act of 1968, as added by subsection (a).

SEC. 644. REPEAL OF PROGRAM FOR PURCHASE OF CERTAIN INSURED PROPERTIES.

    (a) REPEAL- Section 1362 of the National Flood Insurance Act of 1968 (42 U.S.C. 4103) is repealed.

    (b) TRANSITION- Notwithstanding the repeal under subsection (a), the Director may continue to purchase property under subsections (a) and (b) of section 1362 of the National Flood Insurance Act of 1968, as such section existed immediately before the date of enactment of this title, for a period of 1 year beginning on the date of enactment of this title.

SEC. 645. TERMINATION OF EROSION THREATENED STRUCTURES PROGRAM.

    (a) IN GENERAL- Section 1306 of the National Flood Insurance Act of 1968 (42 U.S.C. 4013) is amended by striking subsection (c).

    (b) TRANSITION- The Director may pay amounts under flood insurance contracts for demolition or relocation of structures as provided in section 1306(c) of the National Flood Insurance Act of 1968 (as in effect immediately before the date of enactment of this title) only during the 1-year period beginning on the date of enactment of this title.

SEC. 646. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSE UNDER THE NATIONAL FLOOD INSURANCE ACT OF 1968.

    Section 1302 of the National Flood Insurance Act of 1968 (42 U.S.C. 4001) is amended by striking subsection (g).

Subtitle E--Flood Insurance Task Force

SEC. 651. FLOOD INSURANCE INTERAGENCY TASK FORCE.

    (a) ESTABLISHMENT- There is established an interagency task force to be known as the Flood Insurance Task Force (hereafter in this title referred to as the ‘Task Force’).

    (b) MEMBERSHIP-

      (1) IN GENERAL- The Task Force shall consist of 13 members, who shall be the designees of--

        (A) the Director;

        (B) the Federal Housing Commissioner;

        (C) the Secretary of Veterans Affairs;

        (D) the Administrator of the Farmers Home Administration;

        (E) the Administrator of the Small Business Administration;

        (F) each member of the Federal Financial Institutions Examination Council;

        (G) the chairman of the Board of Directors of the Federal Home Loan Mortgage Corporation;

        (H) the chairman of the Board of Directors of the Federal National Mortgage Association; and

        (I) the chairman of the Federal Agricultural Mortgage Corporation.

      (2) QUALIFICATIONS- Members of the Task Force shall be designated for membership on the Task Force by reason of demonstrated knowledge and competence regarding the National Flood Insurance Program.

    (c) DUTIES- The Task Force shall--

      (1) make recommendations to the head of each Federal agency and corporation referred to under subsection (b)(1) regarding the establishment or adoption of standardized enforcement procedures among such agencies and corporations responsible for enforcing compliance with the requirements under the National Flood Insurance Program to ensure the fullest possible compliance with such requirements;

      (2) study the extent to which Federal agencies and the secondary mortgage market can provide assistance in ensuring compliance with the requirements under the National Flood Insurance Program;

      (3) study the extent to which existing programs of Federal agencies and corporations for compliance with the requirements under the National Flood Insurance Program can serve as a model for other Federal agencies responsible for enforcing compliance, and submit to the Congress a report describing the study and any conclusions;

      (4) study--

        (A) the extent to which the flood insurance premium rate structure could be revised to--

          (i) minimize existing premium rate subsidies;

          (ii) reduce or eliminate disaster assistance payments in high-risk erosion areas;

          (iii) incorporate premium rate adjustments for erosion hazards; and

          (iv) account for catastrophic loss events; and

        (B) how changes in the premium rate structure could potentially impact other Federal disaster assistance programs;

      (5) propose strategies to establish an actuarial-based premium structure to account for all insurable risks identified under the National Flood Insurance Act of 1968, as amended by this title; and

      (6) develop guidelines regarding enforcement and compliance procedures, based on the studies and findings of the Task Force and publishing the guidelines in a usable format.

    (d) REPORTS- Not later than 2 years after the date of enactment of this title, the Task Force shall transmit to the Congress a report describing its studies and any conclusions.

    (e) COMPENSATION- Members of the Task Force shall receive no additional compensation by reason of their service on the Task Force.

    (f) CHAIRPERSON- The Director shall select 1 member to serve as the chairperson of the Task Force (hereafter in this section referred to as the ‘Chairperson’).

    (g) MEETINGS AND ACTION- The Task Force shall meet at the call of the Chairperson or a majority of the members of the Task Force and may take action by a vote of the majority of the members. The Federal Insurance Administrator shall coordinate and call the initial meeting of the Task Force.

    (h) OFFICERS- The Chairperson may appoint officers to carry out the duties of the Task Force under subsection (c).

    (i) STAFF OF FEDERAL AGENCIES- Upon the request of the Chairperson, the head of any of the Federal agencies and corporations referred to in subsection (b)(1) may detail, on a nonreimbursable basis, any of the personnel of the agency to the Task Force to assist the Task Force in carrying out its duties under this title.

    (j) POWERS- In carrying out this section, the Task Force may hold hearings, sit and act at times and places, take testimony, receive evidence and assistance, provide information, and conduct research as the Task Force considers appropriate.

    (k) TERMINATION- The Task Force shall terminate 2 years after the date on which all members of the Task Force have been designated under subsection (b)(1).

Subtitle F--Miscellaneous Provisions

SEC. 661. MAXIMUM FLOOD INSURANCE COVERAGE AMOUNTS.

    (a) IN GENERAL- Section 1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is amended--

      (1) in paragraph (1)(A)--

        (A) by inserting ‘and’ at the end of clause (i); and

        (B) by striking clause (iii);

      (2) by striking subparagraph (B) of paragraph (1) and inserting the following new subparagraph:

        ‘(B) in the case of any nonresidential property, including churches--

          ‘(i) $100,000 aggregate liability for each structure; and

          ‘(ii) $100,000 aggregate liability for any contents related to each structure;’;

      (3) by striking subparagraph (C) of paragraph (1);

      (4) in paragraph (2), by striking ‘so as to enable’ and all that follows through the end of the paragraph and inserting ‘up to an amount, including the limits specified in clause (i) of paragraph (1)(A), of $250,000 multiplied by the number of dwelling units in the building;’;

      (5) in paragraph (3), by striking ‘so as to enable’ and all that follows through the end of the paragraph and inserting ‘up to an amount of $90,000 for any single-family dwelling and $240,000 for any residential structure containing more than one dwelling unit;’; and

      (6) by striking paragraph (4) and inserting the following new paragraph:

      ‘(4) in the case of any nonresidential property, including churches, additional flood insurance in excess of the limits specified in clauses (i) and (ii) of paragraph (1)(B) shall be made available to every insured upon renewal and every applicant for insurance up to an amount of $2,400,000 for each structure and $2,400,000 for any contents related to each structure; and’.

    (b) ACTUARIAL RISK PREMIUMS ON REPETITIVE LOSS STRUCTURES- Section 1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is amended--

      (1) in paragraph (5), by striking ‘and’ at the end; and

      (2) by striking paragraph (6) and inserting the following new paragraph:

      ‘(6) upon determining that a property is a repetitive loss structure, and after making a payment to the insured under section 1304(e), the Director shall charge the applicable risk premium rate for flood insurance based on consideration of the risk involved and accepted actuarial principles under section 1307(a)(1), except that the Director may not increase the premium rate above the level authorized in paragraph (7); and’.

    (c) ANNUAL 10-PERCENT PREMIUM RATE INCREASE CAP- Section 1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is amended by adding at the end the following:

      ‘(7) the Director may not increase the premium rate applied to a structure in any 12-month period by more than 10 percent over the rate previously applied to that structure during the preceding 12-month period.’.

    (d) CONFORMING AMENDMENTS- Section 1306(b)(5) of the National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)(5)) is amended--

      (1) by striking ‘(A), (B), or (C)’ and inserting ‘(A) or (B)’; and

      (2) by striking ‘(1)(C),’.

SEC. 662. ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE AND CONTROL MEASURES.-

    (a) IN GENERAL- Section 1304 of the National Flood Insurance Act of 1968 (42 U.S.C. 4011) is amended--

      (1) by redesignating subsection (b) as subsection (c); and

      (2) by inserting after subsection (a) the following new subsection:

    ‘(b) The national flood insurance program established pursuant to subsection (a) shall enable the purchase of insurance to cover the cost of compliance with land use and control measures for--

      ‘(1) properties that are repetitive loss structures;

      ‘(2) properties that have flood damage in which the cost of repairs equals or exceeds 50 percent of the value of the structure at the time of the flood event; and

      ‘(3) properties that have sustained flood damage on multiple occasions, if the Director determines that it is cost-effective and in the best interests of the National Flood Insurance Fund to require compliance with the land use and control measures.

    The Director shall impose a surcharge on each insured of not more than $50 per policy to provide cost of compliance coverage in accordance with the provisions of this subsection.’.

    (b) APPLICABILITY- The provisions of subsection (a) shall apply only to structures that sustain flood-related damage after the date of enactment of this title.

SEC. 663. FLOOD INSURANCE PROGRAM ARRANGEMENTS WITH PRIVATE INSURANCE ENTITIES.

    Section 1345(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4081(b)) is amended by striking the period at the end and inserting the following: ‘and without regard to the provisions of the Federal Advisory Committee Act.’.

SEC. 664. UPDATING OF FLOOD INSURANCE RATE MAPS.

    Section 1360 of the National Flood Insurance Act of 1968 (42 U.S.C. 4101) is amended by adding at the end the following new subsections:

    ‘(e) ASSESSMENT OF NEED TO UPDATE AREAS-

      ‘(1) PERIODIC ASSESSMENTS- Not less than once during each 5-year period (the first such period beginning on the date of enactment of the National Flood Insurance Reform Act of 1994), or more often as the Director determines necessary, the Director shall assess the need to revise and update each flood insurance rate map, based on an analysis of all natural hazards affecting flood risks.

      ‘(2) UPON REQUEST- Upon the request of a State or community stating that a flood insurance rate map needs revision or updating, the Director shall review and update the flood insurance rate map for the State or community. The Director may require the State or community to pay a portion of the cost of updating the map.

    ‘(f) AVAILABILITY- To promote compliance with the requirements of this title, the Director shall make flood insurance rate maps and related information available free of charge to Federal agencies and to State agencies directly responsible for coordinating the National Flood Insurance Program and to appropriate representatives of communities participating in the National Flood Insurance Program, and at a reasonable cost to all other persons pursuant to section 1310.

    ‘(g) NOTIFICATION- The Director shall publish in the Federal Register or by other comparable method, notice of each revision to or update of a flood insurance rate map, issued in the form of a Letter of Map Amendment or Letter of Map Revision. Each map revision or update shall become effective upon publication. Such comparable methods shall include all pertinent information, provide for regular and frequent distribution, and be at least as accessible to map users as the Federal Register. Notices published in the Federal Register, or otherwise, shall also include information on how to obtain copies of the revisions or updates.

    ‘(h) AVAILABILITY- On March 1 and October 1 of each year, the Director shall publish separately and make available in their entirety within a compendium, all revisions to and updates of flood insurance rate maps and all Letters of Map Amendment and Letters of Map Revision that were published in the Federal Register or distributed through other comparable methods during the preceding 6 months, free of charge, to Federal agencies, States, and communities participating in the National Flood Insurance Program pursuant to section 1310 and at cost to all other persons.’.

SEC. 665. EVALUATION OF EROSION HAZARDS.

    (a) IN GENERAL- As soon as practicable and not later than 2 years after the date of enactment of this Act, the Director shall submit to Congress a report--

      (1) listing all communities that are likely to be identified as having an erosion hazard areas;

      (2) estimating the amount of flood insurance claims attributable to erosion;

      (3) assessing the full economic impact of erosion on the National Flood Insurance Fund;

      (4) measuring the costs and benefits of expenditures necessary from the National Flood Insurance Fund to complete mapping of erosion hazard areas.

    (b) AUTHORIZATION TO MAP EROSION HAZARD AREAS- In developing an estimate of the amount of flood insurance claims attributable to erosion pursuant to subsection (a), the Director is authorized to map a statistically valid and representative number of communities with erosion hazard areas throughout the United States, including coastal, Great Lakes and riverine areas.

    (c) ECONOMIC IMPACT STUDY- The report required under subsection (a)--

      (1) shall assess the economic impact of--

        (A) erosion on communities likely to be identified as having erosion hazard areas; and

        (B) the denial of flood insurance and the establishment of actuarial rates in communities likely to be identified as having erosion hazard areas;

      (2) shall be prepared by an independent private sector firm;

      (3) provide for consultation with a statistically valid and representative number of communities likely to be identified as having erosion hazard areas; and

      (4) address all significant economic factors, including the impact on--

        (A) the value of residential and commercial properties in communities with erosion hazards;

        (B) community tax revenues due to potential changes in property values or commercial activity;

        (C) employment, including the potential loss or gain of existing and new jobs in the community;

        (D) existing businesses and future economic development; and

        (E) the estimated cost of Federal and State disaster assistance to flood victims.

    (d) COST AND BENEFITS OF MAPPING- The report required under subsection (a), shall--

      (1) measure the costs and benefits of mapping erosion hazard areas based upon the Director’s estimate of the actual and prospective amount of flood insurance claims attributable to erosion. If the Director determines that the savings to the National Flood Insurance Fund will exceed the cost of mapping erosion hazard areas, the Director shall assess whether the expenditures to map erosion hazard areas is the most cost-beneficial use of flood insurance premiums in light of alternative uses of those funds, including--

        (A) funding the mitigation assistance program under section 1367 of the National Flood Insurance Act of 1968 (as added by section 643 of this Act);

        (B) funding additional coverage for compliance with land use and control measures under section 1304(b) of the National Flood Insurance Act of 1968 (as added by section 662 of this Act); and

        (C) revising and updating flood insurance rate maps under section 1360(e) of the National Flood Insurance Act of 1968 (as added by section 664 of this Act).

      (2) measure the costs and benefits of mapping erosion, other than those directly related to the financial condition of the National Flood Insurance Program, and the cost of not mapping erosion.

    (e) DEFINITION- For purposes of this section the term ‘erosion hazard area’ means, based on erosion rate information and other historical data available, an area where erosion or avulsion is likely to result in damage to or loss of buildings and infrasturcture within a 60-year period.

    (f) AUTHORIZATION OF APPROPRIATION- There are authorized to be appropriated to the Director $5,000,000 to carry out this section.

SEC. 666. COORDINATION OF FLOOD INSURANCE RATE MAP REVISIONS AND UPDATES WITH COASTAL ZONE MANAGEMENT PROGRAMS.

    IN GENERAL- In the implementation of revisions to and updates of flood insurance rate maps, the Director shall consult and share information with the Under Secretary of Commerce for Oceans and Atmosphere and representatives from State coastal zone management programs.

SEC. 667. TECHNICAL MAPPING ADVISORY COUNCIL.

    (a) ESTABLISHMENT- There is established a council to be known as the Technical Mapping Advisory Council (hereafter in this section referred to as the ‘Council’).

    (b) MEMBERSHIP-

      (1) IN GENERAL- The Council shall consist of the Director, or the Director’s designee, and 12 additional members to be appointed by the Director or his designee, and shall include--

        (A) the Under Secretary of Commerce for Oceans and Atmosphere (or his or her designee);

        (B) a member of recognized surveying and mapping professional associations and organizations;

        (C) a member of recognized professional engineering associations and organizations;

        (D) a member of recognized professional associations or organizations representing flood hazard determination firms;

        (E) a representative of the United States Geologic Survey;

        (F) a representative of State geologic survey programs;

        (G) a representative of State national flood insurance coordination offices;

        (H) a representative of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation; and

        (I) a representative of a regulated lending institution.

      (2) QUALIFICATIONS- Members of the Council shall be appointed based on their demonstrated knowledge and competence regarding surveying, cartography, remote sensing, geographic information systems, or the technical aspects of preparing and using flood insurance rate maps.

    (c) DUTIES- The Council shall--

      (1) make recommendations to the Director on how to improve in a cost-effective manner the accuracy, general quality, ease of use, and distribution and dissemination of flood insurance rate maps;

      (2) recommend to the Director mapping standards and guidelines for flood insurance rate maps; and

      (3) transmit an annual report to the Director describing--

        (A) the activities of the Council;

        (B) an evaluation of the status and performance of flood insurance rate maps and mapping activities to revise and update flood insurance rate maps, as established by the amendments made under section 664; and

        (C) a summary of recommendations made by the Council to the Director.

    (d) CHAIRPERSON- The members of the Council shall elect 1 member to serve as the chairperson of the Council (hereafter in this section referred to as the ‘Chairperson’).

    (e) COORDINATION- To ensure that the Council’s recommendations are consistent to the maximum extent practicable with national digital spatial data collection and management standards, the Chairperson shall consult with the Chairperson of the Federal Geographic Data Committee (established pursuant to OMB Circular A-16).

    (f) COMPENSATION- Members of the Council shall receive no additional compensation by reason of their service on the Council.

    (g) MEETINGS AND ACTIONS-

      (1) IN GENERAL- The Council shall meet not less than twice each year at the request of the Chairperson or a majority of its members and may take action by a vote of the majority of the members.

      (2) INITIAL MEETING- The Director, or a person designated by the Director, shall request and coordinate the initial meeting of the Council.

    (h) OFFICERS- The Chairperson may appoint officers to assist in carrying out the duties of the Council under subsection (c).

    (i) STAFF OF THE FEDERAL EMERGENCY MANAGEMENT AGENCY- Upon the request of the Chairperson, the Director may detail, on a nonreimbursable basis, personnel of the Federal Emergency Management Agency to assist the Council in carrying out its duties.

    (j) POWERS- In carrying out this section, the Council may hold hearings, receive evidence and assistance, provide information, and conduct research as it considers appropriate.

    (k) TERMINATION- The Council shall terminate 5 years after the date on which all members of the Council have been appointed under subsection (b)(1).

SEC. 668. FUNDING FOR INCREASED ADMINISTRATIVE AND OPERATIONAL RESPONSIBILITIES.

    (a) AVAILABILITY OF FUND- Section 1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)), as amended by section 632, is amended in the matter preceding paragraph (1), by inserting ‘(except as otherwise provided)’ after ‘without fiscal year limitation’.

    (b) CREDITS OF FUND- Section 1310(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(b)) is amended--

      (1) in paragraph (5), by striking ‘and’ at the end;

      (2) by redesignating paragraph (6) as paragraph (7); and

      (3) by inserting after paragraph (5) the following new paragraph:

      ‘(6) any penalties collected under section 102(f) of the Flood Disaster Protection Act of 1973; and’.

SEC. 669. SEPARATE ACCOUNT FOR NATIONAL FLOOD INSURANCE FUND.

    Section 1310(a) of the National Flood Insurance Act (42 U.S.C. 4017(a)) is amended by inserting before ‘which shall be available’ the following: ‘which shall be maintained in the Treasury as an account separate from any other funds available to the Director, and’.

SEC. 670. NONWAIVER OF FLOOD PURCHASE REQUIREMENT FOR RECIPIENTS OF FEDERAL DISASTER ASSISTANCE.

    Section 311(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5154(b)) is amended by adding at the end the following: ‘The requirements of this subsection may not be waived under section 301.’.

SEC. 671. INSURANCE WAITING PERIOD.

    Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 4014) is amended by adding at the end the following new subsection:

    ‘(e)(1) The Director shall establish a waiting period of not less than 10 days from the presentment of payment of a premium for the initial purchase of flood insurance under this title. Flood insurance coverage shall not be available with respect to any claim for damage incurred during such waiting period.

    ‘(2) This subsection shall not apply to the initial purchase of flood insurance under this title when the purchase of insurance is in connection with the making, increasing, extension, or renewal of a loan.’.

SEC. 672. AGRICULTURAL STRUCTURES.

    Section 1361 of the National Flood Insurance Act of 1968 (42 U.S.C. 4102) is amended by adding at the end the following new subsection:

    ‘(d) AGRICULTURAL STRUCTURES-

      ‘(1) EXEMPTION FROM FLOODWAY ACTIVITY RESTRICTIONS- Notwithstanding any other provision of law, the adequate land use and control measures adopted in an area (or subdivision thereof) pursuant to section 1315(a) may provide, at the discretion of the appropriate State or local authority, for the repair and restoration to pre-damaged conditions of an agricultural structure that--

        ‘(A) is a repetitive loss structure; or

        ‘(B) has incurred flood-related damage to the extent that the cost of restoring the structure to its pre-damaged condition would equal or exceed 50 percent of the market value of the structure before the damage occurred.

      ‘(2) DEFINITIONS- For purposes of this subsection--

        ‘(A) the term ‘agricultural structure’ means any structure used exclusively in connection with the production, harvesting, storage, raising, or drying of agricultural commodities; and

        ‘(B) the term ‘agricultural commodities’ means agricultural commodities and livestock.’.

SEC. 673. IMPLEMENTATION REVIEW BY THE DIRECTOR.

    Section 1320 of the National Flood Insurance Act of 1968 (42 U.S.C. 4027) is amended--

      (1) by striking ‘The Director’ and inserting ‘(a) IN GENERAL- The Director’; and

      (2) by adding at the end the following new subsection:

    ‘(b) EFFECTS OF FLOOD INSURANCE PROGRAM- The Director shall include, as part of the biennial report submitted under subsection (a), a chapter reporting on the effects on the flood insurance program observed through implementation of requirements under the National Flood Insurance Reform Act of 1994.’.

SEC. 674. REGULATIONS.

    The Director and the head of any appropriate Federal agency may each issue any regulations necessary to carry out the applicable provisions of this title and the applicable amendments made by this title.

SEC. 675. PROHIBITED FLOOD DISASTER ASSISTANCE.

    (a) GENERAL PROHIBITION- Notwithstanding any other provision of law, no Federal disaster relief assistance made available in a flood disaster area may be used to make a payment (including any loan assistance payment) to a person for repair, replacement, or restoration for damage to any personal, residential, or commercial property if that person at any time has received flood disaster assistance that was conditional on the person first having obtained flood insurance under applicable Federal law and subsequently having failed to obtain and maintain flood insurance as required under applicable Federal law on such property.

    (b) AMENDMENT TO THE FLOOD DISASTER PROTECTION ACT OF 1973- Section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(a)) is amended--

      (1) by striking ‘, during the anticipated economic or useful life of the project,’; and

      (2) by adding at the end the following: ‘The requirement of maintaining flood insurance shall apply during the life of the property, regardless of transfer of ownership of such property.’.

    (c) DEFINITION- For purposes of this section, the term ‘flood disaster area’ means an area with respect to which--

      (1) the Secretary of Agriculture finds, or has found, to have been substantially affected by a natural disaster in the United States pursuant to section 321(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961(a)); or

      (2) the President declares, or has declared, the existence of a major disaster or emergency pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), as a result of flood conditions existing in or affecting that area.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to disasters declared after the date of enactment of the National Flood Insurance Reform Act of 1994.

TITLE VII--GENERAL PROVISIONS

SEC. 701. STUDY OF EFFECT OF THE NORTHERN SPOTTED OWL ON SMALL BUSINESS CONCERNS.

    (a) DEFINITIONS- For purposes of this section--

      (1) the term ‘Administrator’ means the Administrator of the Small Business Administration; and

      (2) the term ‘small business concerns’ has the same meaning as in section 3 of the Small Business Act.

    (b) BUSINESS STUDY- The Administrator in consultation with the Secretary of the Interior shall conduct a study that analyzes--

      (1) the nature and extent of economic losses to small business concerns in the forest products industry that have occurred as a result of the designation of the Northern spotted owl as a threatened species pursuant to section 4 of the Endangered Species Act of 1973, or that are reasonably likely to occur in the future;

      (2) the ability of small business concerns to recoup the fair market value of equipment and other property employed in the harvest and processing of timber prior to the listing of the Northern spotted owl as a threatened species; and

      (3) the ability of small business concerns in the affected area to offer alternative products or services for which there is a ready or likely suitable market.

    (c) REPORT-

      (1) IN GENERAL- Not later than 6 months after the date of enactment of this section, the Administrator and the Secretary of the Interior shall submit a report of the results of the study conducted under subsection (c) to the President and to the relevant committees of the Senate and the House of Representatives.

      (2) OPTIONS- The report shall include options for Congress and the President for compensating small business concerns for economic losses and for promoting business transition and diversification.

      (3) CONSULTATION- In preparing the report, the Administrator and the Secretary of the Interior shall consult with small business concerns in the forest products industry, and shall solicit comments from the public.

SEC. 702. NEGATIVE INFORMATION ABOUT CONSUMER.

    Section 609(a) of the Fair Credit Reporting Act (15 U.S.C. 1681g(a)) is amended by adding after paragraph (3) the following:

      ‘(4) The dates, original payees, and amounts of any checks upon which is based any negative information about the consumer included in the file at the time of the disclosure.’.

SEC. 703. UNITED NATIONS RESOLUTIONS CONCERNING JERUSALEM.

    (a) FINDINGS- The Congress finds that--

      (1) for three thousand years Jerusalem has been the focal point of jewish religious devotion;

      (2) Jerusalem is also considered a holy city by the members of other religious faiths;

      (3) the once thriving Jewish community of the historic Old City of Jerusalem was driven out by force during the 1948 Arab-Israeli War;

      (4) from 1948 to 1967, Jerusalem was a divided city and Israeli citizens of all faiths as well as Jewish citizens of all states were denied access to holy sites in the area controlled by Jordan;

      (5) in 1967, Jerusalem was reunited during the conflict known as the Six Day War;

      (6) since 1967, Jerusalem has been a united city administered by Israel and persons of all religious faiths have been guaranteed full access to holy sites within the city;

      (7) in 1990, the United States Senate and House of Representatives overwhelmingly adopted Senate Concurrent Resolution 106 and House Concurrent Resolution 290 declaring that Jerusalem, the capital of Israel, ‘must remain an undivided city’;

      (8) the Vice President has stated the Administration’s intention not to ‘forget the meaning of Jerusalem’;

      (9) the Secretary of State recently reiterated United States opposition to attempts in the United Nations to refer to Jerusalem as ‘occupied territory’;

      (10) it is reported that the United Nations Security Council may consider a resolution condemning the Hebron massacre but which also refers to Jerusalem as ‘occupied’ territory.

    (b) SENSE OF CONGRESS- Therefore, it is the sense of the Congress that--

      (1) the Administration should be commended for its efforts not to ‘forget the meaning of Jerusalem’ and to oppose attempts in the United Nations to refer to Jerusalem as ‘occupied’ territory;

      (2) sacrificing core principles for short term objectives will ultimately retard, not advance, the peace process;

      (3) the United States should exercise its veto in the United Nations Security Council on any Security Council resolution that states or implies that Jerusalem is ‘occupied’ territory.

SEC. 704. AMENDMENT TO THE FEDERAL RESERVE ACT.

    SECTION 11- Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by inserting at the end thereof the following new subsection:

    ‘(p) AUTHORITY- The Board of Governors of the Federal Reserve System and the Federal Open Market Committee may each act in the Board’s or the Committee’s own name and through the Board’s or the Committee’s own attorneys in enforcing any provision of this title, regulations thereunder, or any other law or regulation, or in any action, suit, or proceeding to which the Board of Governors of the Federal Reserve System or the Federal Open Market Committee is a party.’.

SEC. 705. OVERSIGHT HEARINGS.

    It is the sense of the Senate that--

      (a) Congress has a constitutional obligation to conduct oversight of matters relating to the operations of the Government, including matters related to any governmental investigations which may, from time to time, be undertaken.

      (b) the Majority Leader and the Republican Leader should meet and determine the appropriate timetable, procedures, and forum for appropriate Congressional oversight, including hearings on all matters related to ‘Madison Guaranty Savings and Loan Association (‘MGS&L’), Whitewater Development Corporation and Capital Management Services Inc. (‘CMS’).’.

      (c) no witness called to testify at these hearings shall be granted immunity under sections 6002 and 6005 of title 18, United States Code, over the objection of Special Counsel Robert B. Fiske, Jr.

      (d) the hearings should be structured and sequenced in such a manner that in the judgment of the Leaders they would not interfere with the ongoing investigation of Special Counsel Robert B. Fiske, Jr.

SEC. 706. INSURANCE TRANSFER AGREEMENT.

    (a) SENSE OF SENATE- It is the sense of the Senate that no insurer shall enter into a transfer agreement or transfer a contract of insurance pursuant to a transfer agreement unless the transferring insurer has first provided or caused to be provided to each policyholder of the insurer affected by the agreement a notice of the intent of the insurer to transfer the contract of insurance held by such policyholder.

    (b) FORM OF NOTICE- The notice shall be sent by first-class mail, addressed to the last known address of the policyholder or to the address to which premium notices or other policy documents are sent or, with respect to home service business, by personal delivery with acknowledged receipt. A notice of intent to transfer shall also be sent to the transferring insurer’s agent or broker of record on the affected policy.

    (c) CONTENT OF NOTICE- The notice required by subsection (a) shall state or provide--

      (1) the date the intended transfer and novation of the contract of insurance of the policyholder is proposed to take place and become effective;

      (2) the name, address, and telephone number of the transferring insurer and the assuming insurer under the proposed transfer agreement;

      (3) that the transfer and novation of the insurance contract of the policyholder cannot take effect without the written consent of the policyholder, except as provided in section 5 of this Act;

      (4) the procedures and any time limitation for consenting to the transfer and novation;

      (5) a summary informing the policyholder regarding any adverse effect that the policyholder might experience as a result of consenting to the transfer and novation;

      (6) a statement that, without the written consent of the policyholder, the transferring insurer will remain as the insurance company of the policyholder or beneficiary, except as provided in section 5 of this Act;

      (7) a statement that the assuming insurer is licensed to write the type of business being transferred in the State where the policyholder resides, or is otherwise authorized, under applicable law, to assume such business;

      (8) the name, address, and telephone number of the person designated by the transferring insurer as the person for receiving the written consent of the policyholder affected by the proposed transfer and novation;

      (9) the address and telephone number of the chief insurance regulatory official of the State in which the policyholder resides;

      (10) financial data for the transferring insurer and the assuming insurer involved in the proposed transfer agreement, including--

        (A)(i) the ratings, together with enough information to understand where the ratings fall within the range of rating categories of each rating agency, for the last 5 years, if available, or if not available for 5 years, for such lesser period as is available, from each nationally recognized insurance company rating organization that has rated the insurer, including an explanation of the meaning of each rating category of each rating organization;

        (ii) if ratings are unavailable for any year of the 5-year period, a disclosure of this fact; and

        (iii) a statement that any or all of the above insurance company rating organization reports may be obtained at no cost by writing or calling an address or phone number listed in the statement;

        (B) a balance sheet as of December 31 for each of the 3 years immediately preceding the notice, if available, or for such lesser period as is available, and as of the date of the most recent quarterly statement;

        (C) a copy of the Management’s Discussion and Analysis that was filed as a supplement to the annual statement of the preceding year; and

        (D) an explanation of the reason for the proposed transfer signed by the highest executive official of the transferring insurer and the assuming insurer;

      (11) a statement setting forth the financial condition of the transferring insurer and of the assuming insurer under the proposed transfer agreement, and the effect the transaction will have on the financial condition of each such insurer;

      (12) an opinion by a disinterested third-party expert, such as an actuary, finding that the transfer is fair and in the best interests of the policyholders affected by the transfer, and a statement that the report on which the opinion is based is available at no cost by writing or calling an address and phone number listed in the statement.

Attest:

Secretary.

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