[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2600 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 2600
To promote economic growth and credit formation by facilitating the
development of a secondary market for business, commercial, and
community development debt and equity investments, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 1, 1993
Mr. Kanjorski (for himself, Mrs. Roukema, Mr. Neal of North Carolina,
Mr. Orton, Mr. Klein, Mr. Moran, and Ms. Kaptur) introduced the
following bill; which was referred to the Committee on Banking, Finance
and Urban Affairs
_______________________________________________________________________
A BILL
To promote economic growth and credit formation by facilitating the
development of a secondary market for business, commercial, and
community development debt and equity investments, 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 ``Business, Commercial, and Community
Development Secondary Market Development Act''.
SEC. 2. FINDINGS; PURPOSES; DEFINITIONS.
(a) Findings.--The Congress makes the following findings:
(1) The availability of financing for the Nation's small-
and medium-sized businesses is a key factor in promoting
economic growth, full employment, and competitive innovation
essential for long-term gains in the emerging global economy.
(2) The creation of a secondary market for business,
commercial, and community development debt and equity
investments can stimulate an increased flow of funds through
capital markets, and increase the liquidity of our lending
institutions.
(3) The sale of portions of bank portfolios, without
recourse, in a secondary market for business, commercial, and
community development debt and equity investments would
encourage lending institutions to utilize their increased
liquidity to make additional debt and equity investments in the
Nation's economy.
(4) Increased access to funds will play a crucial role in
the revitalization of the economy of the United States,
significantly increase the availability of credit at reasonable
interest rates for business, commercial, and community
development investments, and create new opportunities for
growth and employment.
(5) The creation of a secondary market for business,
commercial, and community development debt and equity
investments can greatly increase the likelihood that businesses
seeking to develop emerging technologies or processes will be
able to obtain the funding necessary to permit them to become
growth industries to enhance the economic future of the Nation.
(6) The development of a secondary market for business,
commercial, and community development debt and equity
investments can facilitate the spreading of risk associated
with new business, commercial, and community development
lending and allow more venture capital investments to be made.
(7) The development of a secondary market for business,
commercial, and community development debt and equity
investments would facilitate investments by pension and
insurance funds in business, commercial, and community
development enterprises.
(8) The development of a secondary market for business,
commercial, and community development debt and equity
investments, should significantly increase the availability of
credit for new and expanding minority- and women-owned
businesses and for efforts to revitalize the economies of
disadvantaged communities.
(9) A secondary market for business, commercial, and
community development debt and equity investments can help
stabilize and absorb cyclical downturns in business and real
estate cycles.
(10) A secondary market for business, commercial, and
community development debt and equity investments would be a
highly effective tool to multiply Federal and State government
funds dedicated to community and economic development debt and
equity investments.
(11) The development of a secondary market for business,
commercial, and community development debt and equity
investments can play a critical role in securing the amount of
capital necessary for community development financial
institutions to realize their full potential.
(12) The development of a secondary market for business,
commercial, and community development debt and equity
investments can play an important role in stabilizing
commercial real estate markets and enhance the value of real
estate-backed collateral frequently used by businesses to
secure necessary credit from financial institutions.
(13) Active and efficient secondary markets currently exist
for nearly all types of investments except for business,
commercial, and community development debt and equity
investments. This puts business, commercial, and community
development borrowers at a competitive disadvantage in securing
necessary funds.
(b) Purposes.--The purposes of this Act are as follows:
(1) To facilitate the development of an efficient secondary
market for business, commercial, and community development debt
and equity investments in the private sector of the economy.
(2) To further develop the loan-originating and loan-
servicing capabilities of, and enhance the amount of credit
available through, the banking system.
(3) To afford financial institutions in the United States
greater liquidity to enhance the long-term stability of the
financial system and facilitate the potential inherent in the
origination and servicing of business, commercial, and
community development debt and equity investments for
additional fee income.
(4) To provide additional sources of credit to business,
commercial, and community development enterprises to revitalize
the Nation's economy and foster additional employment
opportunities.
(5) To provide additional sources of capital to Federal and
State governments for reinvestment in business, commercial, and
community development enterprises.
(c) Definitions.--For purposes of this Act--
(1) Secondary market facilitating organization.--The term
``secondary market facilitating organization'' means any person
or governmental unit which is authorized by the Secretary to
engage in secondary market operations with respect to business,
commercial, and community development debt and equity
investments in accordance with this Act.
(2) Secondary market operations.--The term ``secondary
market operations'' means any of the following activities:
(A) Underwriting, dealing in, or acting as a
principal in the placement of securities that are
backed by or represent interests in debt or equity.
(B) Guaranteeing the timely payment of the
principal of or interest on any security described in
subparagraph (A).
(C) Selling or purchasing business, commercial, and
community development debt and equity assets or
participations in such assets.
(3) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
SEC. 3. CERTIFICATION OF SECONDARY MARKET FACILITATING ORGANIZATIONS TO
ENGAGE IN SECONDARY MARKET OPERATIONS FOR BUSINESS,
COMMERCIAL, AND COMMUNITY DEVELOPMENT DEBT AND EQUITY
INVESTMENTS.
(a) In General.--The Secretary of the Treasury may certify any
person or government unit which meets the requirements established by
the Secretary under this section as a secondary market facilitating
organization for business, commercial, and community development debt
and equity investments.
(b) Eligibility Standards.--
(1) Establishment required.--The Secretary shall establish,
by regulation, standards for the certification of any secondary
market facilitating organization for business, commercial, or
community development debt and equity investments, including
eligibility standards in accordance with paragraph (2).
(2) Minimum requirements.--To be eligible to be certified
under the standards referred to in paragraph (1), a secondary
market facilitating organization shall--
(A) meet or exceed minimum capital standards
established by the Secretary;
(B) meet or exceed minimum reserves for losses
requirements established by the Secretary;
(C) meet or exceed the business, commercial, and
community development debt and equity investment
portfolio requirements established by the Secretary
under subsection (c);
(D) demonstrate that directors, officers, and
employees of the organization and persons who control
the organization meet the standards for competence,
experience, integrity, and financial ability
established by the Secretary, including managerial
ability with respect to--
(i) business, commercial, and community
development debt and equity investment
underwriting, servicing, and marketing; and
(ii) secondary market operations for
business, commercial, and community development
debt and equity investments;
(E) adopt appropriate business, commercial, or
community development debt and equity investment
underwriting, appraisal, and servicing standards and
procedures that meet or exceed minimum standards
required by the Secretary;
(F) for purposes of enabling the Secretary to
examine the organization, agree to allow the Secretary
to have access to all books, accounts, financial
records, reports, and all property of, or used by, the
organization that are necessary to facilitate
examinations by the Secretary, or the agency designated
by the Secretary, under section 5;
(G) adopt appropriate minimum standards and
procedures relating to loan administration and
disclosures to business, commercial, and community
development debt and equity borrowers that meet or
exceed uniform standards established by the Secretary;
(H) comply with the uniform reporting standards
established under section 8; and
(I) comply with all regulations prescribed by the
Secretary under this Act.
(c) Portfolio and Bulk Sale Standards.--
(1) In general.--The Secretary shall establish such
requirements relating to the manner in which business,
commercial, and community development debt and equity
investments are held or sold by certified secondary market
facilitating organizations in connection with secondary market
operations, including portfolio standards and requirements for
diversity of the assets which are subject to a multiasset sales
initiative, as the Secretary determines to be appropriate for
the achievement of essential economic objectives in the public
interest, such as employment enhancement, community
development, investments in low- and moderate-income areas,
investment diversity, and equal opportunity in accordance with
paragraph (2).
(2) Goals.--In establishing the requirements referred to in
paragraph (1), the Secretary, in consultation with certified
secondary market facilitating organizations and other
interested parties, shall establish goals for the
intermediation of debt and equity investments by secondary
market facilitating organizations which--
(A) enhance employment opportunities;
(B) promote community development;
(C) are directed to business and commercial
enterprises in low- and moderate-income areas;
(D) promote investment diversity; and
(E) promote equal opportunity.
(3) Factors to be considered.--In establishing the goals
referred to in paragraph (2), the Secretary shall consider--
(A) the need to maintain the sound financial
condition of, and a reasonable economic return to, the
secondary market facilitating organizations;
(B) economic conditions;
(C) the past performance and efforts of secondary
market facilitating organizations to meet or exceed the
goals referred to in paragraph (2);
(D) the availability of debt and equity investments
necessary to meet or exceed the goals referred to in
paragraph (2); and
(E) such other factors as the Secretary determines
to be appropriate in meeting the requirements of this
section.
(4) Adjustment of goals.--The Secretary may adjust any goal
for the intermediation of debt and equity investments by
secondary market facilitating organizations established under
paragraph (2).
(5) Nondiscrimination.--The Secretary shall, by regulation,
prohibit each secondary market facilitating organization from
discriminating in any manner in the purchase of any debt or
equity investment because of race, color, religion, sex,
handicap, familial status, age, or national origin, including
any consideration of the neighborhood or census tract in which
the business, commercial, or community development debt and
equity investment is located in a manner that has a
discriminatory effect.
(d) Revocation.--After notice and opportunity for hearing, the
Secretary may revoke the certification of a secondary market
facilitating organization if the Secretary determines that the
organization fails to meet any eligibility requirement under subsection
(b) or (c).
(e) Public Disclosure.--
(1) In general.--The Secretary shall, by regulation,
provide for periodic public disclosure of the standards
established under this subsection and the performance of
secondary market facilitating organizations in the fulfillment
of the goals established under subsection (c).
(2) Nondisclosure of proprietary information.--Paragraph
(1) shall not be construed as authorizing the Secretary to
publicly disclose any proprietary information of a secondary
market facilitating organization.
SEC. 4. WAIVERS TO MEET ESSENTIAL ECONOMIC OBJECTIVES IN THE PUBLIC
INTEREST.
(a) Waivers Authorized.--
(1) In general.--For purposes of this Act, the Secretary
may, by regulation, waive the application of any provision of
Federal or State law, including any provision of any regulation
prescribed under any Federal or State law, to a certified
secondary market facilitating organization, or the activities
or products of a certified secondary market facilitating
organization, which meets the minimum portfolio requirements
established under section 3(c) and is in full compliance with
all other standards applicable for certification under this Act
if the Secretary determines that such waiver is appropriate in
order to meet the essential economic objectives in the public
interest described in this Act.
(2) Specificity of waiver.--Any waiver granted by the
Secretary under paragraph (1) shall specify in detail each
provision of law or regulation which is the subject of the
waiver.
(b) Exceptions.--
(1) In general.--No waiver may be granted under this
section of any law or regulation respecting public or
individual health or safety, civil rights and
nondiscrimination, environmental protection, labor relations,
labor standards, occupational health or safety, pensions, or
any other law or regulation that the Attorney General
determines, by regulation, to be inappropriate.
(2) Safety and soundness.--No waiver of a law or regulation
may be granted under this section with respect to a secondary
market facilitating organization if the appropriate Federal
regulatory agency of the organization notifies the Secretary
that the agency has determined that there is a reasonable basis
to believe that the waiver of such law or regulation would have
an adverse effect on the safety and soundness of the
organization.
(3) Exception to prevent increase in direct spending.--No
waiver may be granted under this section that would have the
effect of increasing direct Federal spending above levels that
would have occurred in the absence of the waivers.
(c) Consultation.--Before granting any waiver under subsection (a),
the Secretary shall consult with the head of the agency or department
of the Federal or State government responsible for carrying out and
enforcing the provision of law or regulation which would be affected by
the waiver.
(d) Suspension, Revocation, Modification, or Limitation.--
(1) In general.--The Secretary may suspend, revoke, modify,
or limit the scope of any waiver granted under subsection
(a)(1) with respect to a secondary market facilitating
organization if the Secretary determines that--
(A) the organization fails to meet any eligibility
standard under subsection (b) or (c) of section 3 or
any regulation prescribed by the Secretary under this
Act; or
(B) the waiver is no longer appropriate in order to
meet essential economic objectives in the public
interest.
(2) Effective upon notice.--The suspension, revocation,
modification, or limitation of any waiver in accordance with
paragraph (1) shall take effect upon receipt of notice by the
secondary market facilitating organization of such revocation.
(3) Hearing after notice.--Any person adversely affected by
a suspension, revocation, modification, or limitation of a
waiver in accordance with paragraph (1) shall be afforded a
hearing in accordance with chapter 5 of title 5, United States
Code.
(4) Scope of application.--The suspension, revocation,
modification, or limitation of any waiver in accordance with
paragraph (1) with respect to a secondary market facilitating
organization shall--
(A) apply with respect to activities engaged in and
products produced by the organization on or after the
effective date of the waiver; and
(B) not apply with respect to activities engaged in
and products produced by the organization before such
date.
SEC. 5. EXAMINATION AND OVERSIGHT OF CERTIFIED SECONDARY MARKET
FACILITATING ORGANIZATIONS.
(a) Provision for Examiners.--
(1) Appointment of examiners.--The Secretary may appoint
examiners to carry out this section.
(2) Delegation of examination authority.--With respect to a
certified secondary market facilitating organization which is
subject to complete examination by another Federal regulatory
agency, the Secretary may delegate, on a reimbursable basis and
subject to such standards and guidelines as the Secretary may
establish, the authority to conduct an examination under this
section of such organization to such other agency.
(b) Examinations Required.--
(1) In general.--The Secretary shall require the
examination of a certified secondary market facilitating
organization whenever the Secretary determines an examination
is necessary for purposes of this Act.
(2) Required components of examination.--In conducting any
examination under this section of any certified secondary
market facilitating organization, the following factors shall
be examined:
(A) The secondary market operations of the
organization.
(B) The operations of the organization relating to
underwriting, appraising, servicing, and marketing
business, commercial, and community development debt
and equity investments.
(C) The compliance of the secondary market
facilitating organization with the eligibility and
portfolio standards of subsections (b) and (c) of
section 3.
(D) The financial condition of the organization,
including the financial condition of the operations of
the organization which are described in subparagraphs
(A), (B), and (C).
(3) Examination of applicants.--No secondary market
facilitating organization may be certified by the Secretary
under this Act until the Secretary completes an examination of
such organization to determine that the organization meets the
eligibility requirements under section 3(b).
(c) Reports.--
(1) In general.--Each certified secondary market
facilitating organization shall submit such reports to the
Secretary as the Secretary may require, by regulation or order.
(2) Minimum requirement.--The Secretary shall, by
regulation, require each secondary market facilitating
organization to submit annual reports concerning the
composition and performance of all secondary market operations
of the organization.
(3) Time and manner.--Reports required under this
subsection shall be made at such time and in such manner as the
Secretary may require.
(d) Assessments and Fees.--
(1) Examination costs.--The cost of conducting examinations
of certified secondary market facilitating organizations and
persons or governmental units applying for certification as
secondary market facilitating organizations shall be assessed
by the Secretary against each such organization, person, or
unit as the Secretary determines to be necessary to recover the
costs incurred by the Secretary in conducting the examination.
(2) Fees for other administrative costs.--The
administrative costs incurred by the Secretary in carrying out
the requirements of this Act shall be recovered by the
Secretary through fees imposed on certified secondary market
facilitating organizations and persons or governmental units
applying for certification as secondary market facilitating
organizations.
(3) Assessments.--
(A) Written notice.--Any assessment or fee
authorized under this subsection may be assessed and
collected by the Secretary upon written notice.
(B) Finality of assessment.--If, with respect to
any assessment under subparagraph (A), a hearing is not
requested in accordance with subparagraph (C), the
assessment shall constitute a final and unappealable
order.
(C) Hearings.--The certified secondary market
facilitating organization, person, or governmental unit
against whom any assessment is made under subparagraph
(A) shall be afforded an agency hearing if such
organization, person, or governmental unit submits a
request for such hearing within 20 days of the issuance
of the written notice under such subparagraph.
(D) Collection.--If any certified secondary market
facilitating organization, person, or governmental unit
fails to pay an assessment under this paragraph after
the assessment has become final, the Secretary shall
recover the amount of the assessment by action in the
appropriate United States district court.
(e) Regulations.--The Secretary shall prescribe such regulations as
the Secretary determines to be necessary to carry out the provisions of
this Act.
SEC. 6. NO FULL FAITH AND CREDIT OF THE UNITED STATES FOR OBLIGATIONS
OF CERTIFIED SECONDARY MARKET FACILITATING ORGANIZATIONS.
(a) In General.--The activities of a certified secondary market
facilitating organization and any debt or equity security or other
obligation issued or guaranteed by any such organization shall not be
obligations of, or guaranteed in any respect by, the United States.
(b) Notice to Customers.--The Secretary shall require, by
regulation, each certified secondary market facilitating organization
to provide adequate notice to customers of the organization and
purchasers of obligations issued or guaranteed by the organization of
the applicability of the rule contained in subsection (a) to
obligations of such organization.
SEC. 7. AUTHORITY OF REGULATORY AGENCIES NOT AFFECTED.
No provision of this Act shall be construed as affecting the
authority of any Federal regulatory agency to supervise or regulate any
person or government unit which is certified by the Secretary as a
secondary market facilitating organization.
SEC. 8. UNIFORM REPORTING STANDARDS.
In order to improve the procedures for rating business, commercial,
and community development debt and equity investments involved in
secondary market operations, the Financial Institutions Examination
Council shall establish, before the end of the 6-month period beginning
on the date of enactment of this Act, uniform reporting standards with
respect to such debt and equity investments for bank examination
purposes.
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HR 2600 IH----2
HR 2600 IH----3