IN THE SENATE OF THE UNITED STATES
May 23 (legislative day, May 22), 2019
Mr. Sanders (for himself, Mrs. Gillibrand, Ms. Hassan, Mrs. Shaheen, and Mr. Leahy) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To provide for the establishment of the United States Employee Ownership Bank, and for other purposes.
This Act may be cited as the
United States Employee Ownership Bank Act.
Congress finds that—
between January 2000 and January 2019, the manufacturing sector lost 4,458,000 jobs;
as of January 2019, only 12,826,000 workers in the United States were employed in the manufacturing sector, a lower number than in December 1941;
at the end of 2018, the United States had a trade deficit of $621,000,000,000, including a record $419,162,000,000 trade deficit with China;
preserving and increasing decent paying jobs must be a top priority of Congress;
providing loan guarantees, direct loans, and technical assistance to employees to buy their own companies will preserve and increase employment in the United States; and
the time has come to establish the United States Employee Ownership Bank to preserve and expand jobs in the United States through Employee Stock Ownership Plans and worker-owned cooperatives.
In this Act—
the term Bank means the United States Employee Ownership Bank established under section 4;
the term eligible worker-owned cooperative has the meaning given the term in section 1042(c)(2) of the Internal Revenue Code of 1986;
the term employee stock ownership plan has the meaning given the term in section 4975(e)(7) of the Internal Revenue Code of 1986; and
the term Secretary means the Secretary of the Treasury.
Establishment of United States Employee Ownership Bank within the Department of the Treasury
Establishment of Bank
Not later than 90 days after the date of enactment of this Act, the Secretary shall establish the United States Employee Ownership Bank to foster increased employee ownership of United States companies and greater employee participation in company decisionmaking throughout the United States.
Organization of the Bank
The Secretary shall appoint a Director to serve as the head of the Bank, who shall serve at the pleasure of the Secretary.
The Director appointed under subparagraph (A) may select, appoint, employ, and fix the compensation of such employees as are necessary to carry out the functions of the Bank.
Duties of Bank
The Bank shall provide direct loans and loan guarantees, which may be subordinated to the interests of all other creditors—
to purchase a company through an employee stock ownership plan or an eligible worker-owned cooperative, which shall be not less than 51 percent employee-owned, or will become not less than 51 percent employee-owned as a result of financial assistance from the Bank;
to allow a company that is less than 51 percent employee-owned to become not less than 51 percent employee-owned;
to allow a company that is already not less than 51 percent employee-owned to increase the level of employee ownership at the company; and
to allow a company that is already not less than 51 percent employee-owned to expand operations and increase or preserve employment.
Before the Bank makes any subordinated loan or guarantees a loan under subsection (b)(1), the company to which the loan or loan guarantee would be provided shall submit to the Bank a business plan that—
not less than 51 percent of all interests in the company is or will be owned or controlled by an employee stock ownership plan or an eligible worker-owned cooperative;
the board of directors of the company is or will be elected by shareholders on a 1 share to 1 vote basis, or by members of the eligible worker-owned cooperative on a 1 member to 1 vote basis, except that shares held by the employee stock ownership plan will be voted according to section 409(e) of the Internal Revenue Code of 1986, with participants providing voting instructions to the trustee of the employee stock ownership plan in accordance with the terms of the employee stock ownership plan and the requirements of that section 409(e); and
all employees of the company shall receive basic information about company progress and have the opportunity to participate in day-to-day operations; and
includes a feasibility study from an objective third party with a positive determination that the employee stock ownership plan or eligible worker-owned cooperative will generate enough of a margin to pay back any loan, subordinated loan, or loan guarantee that was made possible through the Bank.
Terms and conditions for loans and loan guarantees
Notwithstanding any other provision of law, a loan that is provided or guaranteed under this section shall—
bear interest at an annual rate, as determined by the Secretary—
in the case of a direct loan under this section—
that is sufficient to cover the cost of borrowing to the Department of the Treasury for obligations of comparable maturity; or
of 4 percent; and
in the case of a loan guaranteed under this section, in an amount that is equal to the current applicable market rate for a loan of comparable maturity; and
have a term of not longer than 12 years.
Employee right of first refusal before plant or facility closing
Section 3 of the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2102) is amended—
in the section heading, by inserting
; employee stock ownership plans or eligible worker-owned cooperatives after
by adding at the end the following:
Employee stock ownership plans and eligible worker-Owned cooperatives
Opportunity to purchase
Except as provided in paragraph (2), if an employer orders a plant or facility closing in connection with the termination of the operations of the employer at that plant or facility, the employer shall offer the employees of the employer an opportunity to purchase that plant or facility through an employee stock ownership plan (as that term is defined in section 4975(e)(7) of the Internal Revenue Code of 1986) or an eligible worker-owned cooperative (as that term is defined in section 1042(c)(2) of the Internal Revenue Code of 1986) that is not less than 51 percent employee-owned.
Determination of value
The value of the company that is to be the subject of a plan or cooperative described in subparagraph (A) shall be the fair market value of the plant or facility, as determined by an appraisal—
conducted by an independent third party jointly selected by an employer described in that subparagraph and the employees of that employer; and
the cost of which may be shared evenly between the employer and the employees.
Paragraph (1) shall not apply—
if an employer orders a plant closing, but will retain the assets of that plant to continue or begin a business within the United States; or
if an employer orders a plant closing and that employer intends to continue the business conducted at that plant at another plant within the United States.
Regulations on safety and soundness and preventing competition with commercial institutions
Not later than 90 days after the date of enactment of this Act, the Secretary shall prescribe such regulations as are necessary to implement this Act and the amendments made by this Act, including regulations to ensure—
the safety and soundness of the Bank; and
that the Bank will not compete with commercial financial institutions.
Community reinvestment credit
Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by adding at the end the following:
Establishment of employee stock ownership plans and eligible worker-Owned cooperatives
In assessing and taking into account, under subsection (a), the record of a financial institution, the appropriate Federal financial supervisory agency may consider as a factor capital investments, loans, loan participation, technical assistance, financial advice, grants, and other ventures undertaken by the institution to support or enable employees to establish employee stock ownership plans or eligible worker-owned cooperatives (as those terms are defined in sections 4975(e)(7) and 1042(c)(2) of the Internal Revenue Code of 1986, respectively), that are not less than 51 percent employee-owned plans or cooperatives.
Authorization of appropriations
There are authorized to be appropriated to the Secretary to carry out this Act, $500,000,000 for fiscal year 2020, and such sums as may be necessary for each fiscal year thereafter.