< Back to H.R. 3853 (103rd Congress, 1993–1994)

Text of the Economic Revitalization Act of 1994

This bill was introduced on February 10, 1994, in a previous session of Congress, but was not enacted. The text of the bill below is as of Feb 10, 1994 (Introduced).

Source: GPO

HR 3853 IH

103d CONGRESS

2d Session

H. R. 3853

To stimulate private investment, economic development, and the creation of jobs in the private sector by authorizing the Secretary of the Treasury to participate in loans, and guarantee a portion of loans, made by banks and other qualified lenders for businesses with potential for expansion and growth and for other viable economic development projects, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 10, 1994

Mr. KLEIN (for himself, Mr. FRANK of Massachusetts, Mr. SCHUMER, and Mr. DEUTSCH) introduced the following bill; which was referred to the Committee on Banking, Finance and Urban Affairs


A BILL

To stimulate private investment, economic development, and the creation of jobs in the private sector by authorizing the Secretary of the Treasury to participate in loans, and guarantee a portion of loans, made by banks and other qualified lenders for businesses with potential for expansion and growth and for other viable economic development projects, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Economic Revitalization Act of 1994’.

SEC. 2. PARTICIPATION AND COOPERATION BETWEEN PUBLIC AND PRIVATE SECTORS TO STIMULATE ECONOMIC DEVELOPMENT.

    (a) IN GENERAL- Title 31, United States Code, is amended by redesignating subtitle VI as subtitle IX and by inserting after subtitle V the following new subtitle:

‘Subtitle VI--Cooperation Between Public and Private Sectors

‘Chapter

--Sec.

7501

‘CHAPTER 75--COOPERATIVE ECONOMIC GROWTH AND DEVELOPMENT FINANCING

‘Sec.

      ‘7501. Definitions.

      ‘7502. Financial participation.

      ‘7503. Financing.

      ‘7504. Participating financial institutions.

‘Sec. 7501. Definitions

    ‘For purposes of this chapter--

      ‘(1) PARTICIPATING FINANCIAL INSTITUTION- The term ‘participating financial institution’ means any depository institution (as defined in section 19(b)(1)(A) of the Federal Reserve Act) or other lending institution--

        ‘(A) which meets such criteria as the Secretary may establish for participating in any cooperative economic growth and development financing project established by the Secretary under this chapter; and

        ‘(B) whose application to participate as a lender in any such project, subject to such conditions as the Secretary may prescribe, is approved by the Secretary.

      ‘(2) QUALIFIED LOAN- The term ‘qualified loan’ means a loan which--

        ‘(A) is made to a business which--

          ‘(i) is in good financial condition;

          ‘(ii) has a strong potential for expansion and growth; and

          ‘(iii) is experiencing difficulty in obtaining sufficient amounts of credit on terms which are economically viable for such business due to prevailing economic conditions or other circumstances unrelated to the financial condition of the business;

        ‘(B) is made for purposes which the Secretary determines will--

          ‘(i) produce a significant net increase in the number of jobs relative to the total amount of the loan; and

          ‘(ii) stimulate economic growth in a region or community in which such business is located; and

        ‘(C) meets such underwriting standards and other criteria as the Secretary determines to be appropriate.

      ‘(3) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.

‘Sec. 7502. Financial participation

    ‘(a) LOAN PARTICIPATIONS AND GUARANTEES-

      ‘(1) IN GENERAL- Subject to subsections (b) and (d), the Secretary may--

        ‘(A) purchase a participation in any qualified loan made by a participating financial institution; and

        ‘(B) guarantee the payment of interest on, and the repayment of principal of, a portion of any qualified loan made by a participating financial institution.

      ‘(2) TERMS AND CONDITIONS- The Secretary may establish such terms and conditions for a loan participation or loan guarantee under paragraph (1) as the Secretary determines to be appropriate, including--

        ‘(A) minimum and maximum limitations on the amount of any qualified loan which is eligible for any such participation or guarantee; and

        ‘(B) in the case of a loan guarantee with respect to any qualified loan, a requirement that the participating financial institution which originated the loan maintain a prescribed amount of reserves with respect to the loan or retain a subordinated participating interest in the loan.

      ‘(3) FEES- The Secretary may impose a fee in such amount as the Secretary determines to be appropriate for any loan participation or loan guarantee made by the Secretary under this section to cover the costs incurred by the Secretary in carrying out this subsection.

    ‘(b) MAXIMUM AMOUNT LIMITATIONS ON PARTICIPATIONS AND GUARANTEES-

      ‘(1) LOAN PARTICIPATIONS- Except with respect to the purchase of loans in connection with the securitization of qualified loans in accordance with subsection (c), the amount of any loan participation or other interest in any qualified loan acquired by the Secretary under this chapter may not exceed the amount which is equal to 70 percent of the total amount of the loan.

      ‘(2) LOAN GUARANTEES- The amount of any guarantee made by the Secretary under subsection (a)(2) with respect to any qualified loan may not exceed 50 percent of the amount which is equal to--

        ‘(A) the total principal of the loan; minus

        ‘(B) the amount of any participation in such loan which the Secretary has acquired.

    ‘(c) SECURITIZATION OF QUALIFIED LOANS-

      ‘(1) IN GENERAL- The Secretary may issue securities backed by a pool of qualified loans acquired by the Secretary for such purpose.

      ‘(2) SECURITIES NOT BACKED BY FULL FAITH AND CREDIT OF THE UNITED STATES-

        ‘(A) IN GENERAL- A security issued by the Secretary under paragraph (1) shall not be an obligation of the United States, or guaranteed in any respect by, the United States.

        ‘(B) COORDINATION WITH LOAN GUARANTEES- A loan guarantee provided by the Secretary with respect to any portion of a qualified loan shall cease to be effective at the time the loan is acquired by the Secretary for inclusion in a pool of qualified loans under paragraph (1).

      ‘(3) STANDARDS- The Secretary shall establish standards governing the composition of a pool of qualified loans under paragraph (1), including standards requiring--

        ‘(A) a broad geographical distribution of the businesses which received the loans which are in the pool;

        ‘(B) a diversity in the types of businesses which received the loans and in the purposes for which the loans were made;

        ‘(C) a wide variety in the amounts of principal of the qualified loans included in the pool; and

        ‘(D) a large number of loans in the pool.

      ‘(4) MAXIMUM SIZE OF LOAN INCLUDIBLE IN POOL- In order to be included in a pool under paragraph (1), the total amount of principal of a qualified loan may not exceed an amount equal to 10 percent of the total amount of all loans in such pool.

      ‘(5) AUTHORITY TO PURCHASE QUALIFIED LOANS FOR INCLUSION IN POOL- Subject to subsection (d), the Secretary may purchase qualified loans for inclusion in a pool under paragraph (1).

    ‘(d) ANNUAL LIMITATION ON AGGREGATE AMOUNT OF LOANS AND GUARANTEES-

      ‘(1) LOAN PARTICIPATIONS- The aggregate amount of qualified loan participations acquired by the Secretary and the amount of qualified loans purchased by the Secretary for inclusion in a pool under subsection (c) shall not exceed $100,000 in any fiscal year.

      ‘(2) LOAN GUARANTEES- The aggregate amount of guarantees issued by the Secretary with respect to qualified loans shall not exceed $200,000 in any fiscal year.

‘Sec. 7503. Financing

    ‘(a) BOND AUTHORITY-

      ‘(1) IN GENERAL- In order to obtain additional resources to carry out section 7503 at no expense to the Federal Government or the taxpayer, the Secretary may issue bonds in accordance with this section to obtain additional resources to carry out section 7503.

      ‘(2) PRIVATE GUARANTEE- The Secretary may not issue a bond under paragraph (1) unless (a) the issuance is fully guaranteed by a financial institution which has the highest credit rating of any financial institution in the United States by at least 1 unaffiliated, nationally recognized statistical rating organization or (b) the loan obligation is insured or underwritten by a letter of credit or credit insurance issued by a financial institution which has the highest credit rating of any financial institution in the United States by at least 1 unaffiliated, nationally statistical rating organization.

      ‘(3) TERMS AND CONDITIONS IMPOSED BY UNDERWRITER- Except to the extent otherwise provided in this chapter, the Secretary shall comply with any term or condition imposed by an underwriter in connection with the issuance of any bond under paragraph (1).

      ‘(4) SECURITIES NOT BACKED BY FULL FAITH AND CREDIT OF THE UNITED STATES- A bond issued by the Secretary under paragraph (1) shall not be an obligation of the United States, or guaranteed in any respect by, the United States.

‘Sec. 7504. Participating financial institutions

    ‘(a) STANDARDS AND APPLICATION PROCESS- The Secretary shall establish standards and application procedures for the designation of participating financial institutions for purposes of this chapter.

    ‘(b) ADVERTISING AND PUBLIC NOTICE- The Secretary shall provide advertising and public notices, and take such other actions as the Secretary determines to be appropriate, to publicize--

      ‘(1) the existence of the cooperative financial participation projects established under this chapter; and

      ‘(2) the names and addresses of the participating financial institutions involved in such cooperative projects.’.

    (b) CLERICAL AMENDMENT- The table of subtitles for title 31, United States Code, is amended by redesignating the item relating to subtitle VI as subtitle IX and by inserting after the item relating to subtitle V the following new item:

7501’.