RESCUE Act for Black and Community Banks

I 117TH CONGRESS 1ST SESSION H. R. 154 To provide regulatory relief for Black and community banks, to codify the Minority Bank Deposit Program, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 4, 2021 Mr. RUSH (for himself, Mr. CARSON, Ms. CLARKE of New York, Mr. COOPER, Mr. KHANNA, and Mr. WELCH) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently deter- mined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide regulatory relief for Black and community banks, to codify the Minority Bank Deposit Program, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Reenergized Economic 4 Sustainability for Community and Urban Entities Act for 5 Black and Community Banks’’ or the ‘‘RESCUE Act for 6 Black and Community Banks’’. 7 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 154 IH SEC. 2. REGULATION OF BLACK AND COMMUNITY BANKS. 1 (a) OFFICE OF BLACK AND COMMUNITY BANKS.— 2 (1) ESTABLISHMENT.—There is established 3 within the Office of the Comptroller of the Currency 4 an office to be known as the ‘‘Office of Black and 5 Community Banks’’. 6 (2) SUPERVISION AND EXAMINATION OF BLACK 7 BANKS AND COMMUNITY BANKS.—The Comptroller 8 of the Currency, acting through the Office of Black 9 and Community Banks, shall supervise and examine 10 Black banks and community banks. 11 (3) REGULATORY RELIEF.— 12 (A) IN GENERAL.—The Comptroller shall 13 issue regulations to partially or completely ex- 14 empt Black banks and community banks from 15 Federal banking statutes and regulations, to 16 the extent the Comptroller determines it appro- 17 priate without endangering the safety and 18 soundness of such banks. 19 (B) TREATMENT OF MANUAL UNDER- 20 WRITING.—For purposes of risk-based capital 21 requirements for Black banks and community 22 banks, the Comptroller shall issue regulations 23 to assign a lower level of risk to loans that are 24 issued by such banks using manual under- 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 154 IH writing, in recognition of the individualized 1 scrutiny provided by manual underwriting. 2 (C) ENCOURAGING SMALL-DOLLAR LEND- 3 ING.—The Comptroller shall issue regulations 4 to encourage affordable small-dollar lending by 5 Black banks and community banks by providing 6 regulatory flexibility with respect to such lend- 7 ing. 8 (b) REGULATORY RELIEF UNDER THE SECURITIES 9 LAWS.— 10 (1) INVESTMENT PRODUCTS.—With respect to 11 investment products sold by a Black bank or a com- 12 munity bank (or an affiliate of such bank) to indi- 13 viduals in the community in which such bank is lo- 14 cated, the Securities and Exchange Commission 15 shall issue regulations to partially or completely ex- 16 empt the bank from the securities laws and regula- 17 tions issued under the securities laws, to the extent 18 the Commission determines it appropriate without 19 endangering the protection of investors. 20 (2) SECURITIES.— 21 (A) IN GENERAL.—The Securities and Ex- 22 change Commission shall issue regulations to 23 reduce the regulatory burden applicable to 24 Black banks and community banks— 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 154 IH (i) under the amendments made by 1 the Jumpstart Our Business Startups Act; 2 (ii) issuing mortgage-backed securi- 3 ties; and 4 (iii) issuing securities backed by loans 5 guaranteed by the Small Business Act. 6 (B) CROWDFUNDING EXEMPTION.—Sec- 7 tion 4A of the Securities Act of 1933 (15 8 U.S.C. 77d–1) shall not apply to Black banks 9 or community banks. 10 (c) CONFORMING CHANGE TO DEFINITION OF AP- 11 PROPRIATE FEDERAL BANKING AGENCY.—Section 12 3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C. 13 1813(q)(1)) is amended— 14 (1) in subparagraph (B), by striking ‘‘and’’ at 15 the end; 16 (2) in subparagraph (C), by adding ‘‘and’’ at 17 the end; and 18 (3) by adding at the end the following: 19 ‘‘(D) notwithstanding paragraphs (2) and 20 (3), any Black bank or community bank (as 21 such terms are defined under section 5 of the 22 RESCUE Act for Black and Community 23 Banks);’’. 24 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 154 IH SEC. 3. CODIFICATION OF THE MINORITY BANK DEPOSIT 1 PROGRAM. 2 (a) IN GENERAL.— 3 (1) IN GENERAL.—Section 1204 of the Finan- 4 cial Institutions Reform, Recovery, and Enforcement 5 Act of 1989 (12 U.S.C. 1811 note) is amended to 6 read as follows: 7 ‘‘SEC. 1204. EXPANSION OF USE OF MINORITY BANKS, WOM- 8 EN’S BANKS, AND LOW-INCOME CREDIT 9 UNIONS. 10 ‘‘(a) MINORITY BANK DEPOSIT PROGRAM.— 11 ‘‘(1) ESTABLISHMENT.—There is established a 12 program to be known as the ‘Minority Bank Deposit 13 Program’ to expand the use of minority banks, wom- 14 en’s banks, and low-income credit unions. 15 ‘‘(2) ADMINISTRATION.—The Secretary of the 16 Treasury, acting through the Fiscal Service, shall— 17 ‘‘(A) on application by a depository institu- 18 tion or credit union, certify whether such depos- 19 itory institution or credit union is a minority 20 bank, women’s bank, or low-income credit 21 union; 22 ‘‘(B) maintain and publish a list of all de- 23 pository institutions and credit unions that have 24 been certified pursuant to subparagraph (A); 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 154 IH ‘‘(C) periodically distribute the list de- 1 scribed in subparagraph (B) to— 2 ‘‘(i) all Federal departments and 3 agencies; 4 ‘‘(ii) interested State and local govern- 5 ments; and 6 ‘‘(iii) interested private sector compa- 7 nies; and 8 ‘‘(D) support the creation of ratings, on- 9 line Black bank resources, and database prod- 10 ucts, including online lending and investment 11 facilities. 12 ‘‘(3) INCLUSION OF CERTAIN ENTITIES ON 13 LIST.—A depository institution or credit union that, 14 on the date of the enactment of this section, has a 15 current certification from the Secretary of the 16 Treasury stating that such depository institution or 17 credit union is a minority bank, women’s bank, or 18 low-income credit union shall be included on the list 19 described under paragraph (2)(B). 20 ‘‘(b) EXPANDED USE AMONG FEDERAL DEPART- 21 MENTS AND AGENCIES.— 22 ‘‘(1) IN GENERAL.—Not later than 1 year after 23 the establishment of the program described in sub- 24 section (a), the head of each Federal department or 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 154 IH agency shall develop and implement standards and 1 procedures to ensure, to the maximum extent pos- 2 sible as permitted by law, the use of minority banks, 3 women’s banks, and low-income credit unions to 4 serve the financial needs of each such department or 5 agency. 6 ‘‘(2) MINIMUM REQUIREMENT.—Notwith- 7 standing paragraph (1), the head of each Federal 8 department or agency shall ensure that at least 10 9 percent of the financial needs of each such depart- 10 ment or agency are met by the use of minority 11 banks, women’s banks, and low-income credit 12 unions. 13 ‘‘(3) REPORT TO CONGRESS.—Not later than 2 14 years after the establishment of the program de- 15 scribed in subsection (a), and annually thereafter, 16 the head of each Federal department or agency shall 17 submit to Congress a report on the actions taken to 18 increase the use of minority banks, women’s banks, 19 and low-income credit unions to serve the financial 20 needs of each such department or agency. 21 ‘‘(c) DEFINITIONS.—For purposes of this section: 22 ‘‘(1) CREDIT UNION.—The term ‘credit union’ 23 has the meaning given the term ‘insured credit 24 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 154 IH union’ in section 101 of the Federal Credit Union 1 Act (12 U.S.C. 1752). 2 ‘‘(2) DEPOSITORY INSTITUTION.—The term ‘de- 3 pository institution’ has the meaning given the term 4 ‘insured depository institution’ in section 3 of the 5 Federal Deposit Insurance Act (12 U.S.C. 1813). 6 ‘‘(3) LOW-INCOME CREDIT UNION.—The term 7 ‘low-income credit union’ means any entity described 8 in section 19(b)(1)(A)(iv) of the Federal Reserve 9 Act. 10 ‘‘(4) MINORITY.—The term ‘minority’ means 11 any Black American, Native American, Hispanic 12 American, or Asian American. 13 ‘‘(5) MINORITY BANK.—The term ‘minority 14 bank’ means any bank described in clause (i), (ii), 15 or (iii) of section 19(b)(1)(A) of the Federal Reserve 16 Act for which— 17 ‘‘(A) more than 50 percent of the out- 18 standing shares of which are held by 1 or more 19 minority individuals; 20 ‘‘(B) the majority of the directors on the 21 board of directors of which are minority individ- 22 uals; and 23 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 154 IH ‘‘(C) a significant percentage of senior 1 management positions of which are held by mi- 2 nority individuals. 3 ‘‘(6) WOMEN’S BANK.—The term ‘women’s 4 bank’ means any bank described in clause (i), (ii), 5 or (iii) of section 19(b)(1)(A) of the Federal Reserve 6 Act for which— 7 ‘‘(A) more than 50 percent of the out- 8 standing shares of which are held by 1 or more 9 women; 10 ‘‘(B) the majority of the directors on the 11 board of directors of which are women; and 12 ‘‘(C) a significant percentage of senior 13 management positions of which are held by 14 women.’’. 15 (2) CONFORMING AMENDMENTS.—The fol- 16 lowing provisions are amended by striking 17 ‘‘1204(c)(3)’’ and inserting ‘‘1204(c)’’: 18 (A) Section 808(b)(3) of the Community 19 Reinvestment Act of 1977 (12 U.S.C. 20 2907(b)(3)). 21 (B) Section 40(g)(1)(B) of the Federal De- 22 posit Insurance Act (12 U.S.C. 23 1831q(g)(1)(B)). 24 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 154 IH (C) Section 704B(h)(4) of the Equal Cred- 1 it Opportunity Act (15 U.S.C. 1691c–2(h)(4)). 2 (b) AMENDMENTS TO THE COMMUNITY REINVEST- 3 MENT ACT.—Section 804(b) of the Community Reinvest- 4 ment Act of 1977 (12 U.S.C. 2903(b)) is amended to read 5 as follows: 6 ‘‘(b) COOPERATION WITH MINORITY BANKS, 7 WOMEN’S BANKS, AND LOW-INCOME CREDIT UNIONS 8 CONSIDERED.— 9 ‘‘(1) IN GENERAL.—In assessing and taking 10 into account, under subsection (a), the record of a 11 financial institution, the appropriate Federal finan- 12 cial supervisory agency shall consider as a factor 13 capital investment, loan participation, and other ven- 14 tures undertaken by the institution in cooperation 15 with minority banks, women’s banks, community de- 16 velopment financial institutions, and low-income 17 credit unions provided that these activities help meet 18 the credit needs of local communities in which such 19 institutions and credit unions are chartered. 20 ‘‘(2) DEFINITIONS.— 21 ‘‘(A) FIRREA DEFINITIONS.—The terms 22 ‘low-income credit union’, ‘minority bank’, and 23 ‘women’s bank’ have the meanings given such 24 terms, respectively, in section 1204(c) of the Fi- 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 154 IH nancial Institutions Reform, Recovery, and En- 1 forcement Act of 1989 (12 U.S.C. 1811 note). 2 ‘‘(B) COMMUNITY DEVELOPMENT FINAN- 3 CIAL INSTITUTION.—The term ‘community de- 4 velopment financial institution’ has the meaning 5 given in section 103(5) of the Riegle Commu- 6 nity Development and Regulatory Improvement 7 Act of 1994 (12 U.S.C. 4702(5)).’’. 8 (c) CONSIDERATIONS WHEN ASSESSING FINANCIAL 9 INCLUSION FOR FEDERALLY CHARTERED FINANCIAL IN- 10 STITUTIONS.— 11 (1) IN GENERAL.—In assessing and taking into 12 account the record of a federally chartered financial 13 institution under any financial inclusion assessment 14 process created by the Comptroller of the Currency 15 in any rule relating to the chartering of a financial 16 institution, the Comptroller shall consider as a fac- 17 tor capital investment, loan participation, and other 18 ventures undertaken by the bank in cooperation with 19 Black banks, women’s banks, community develop- 20 ment financial institutions, and low-income credit 21 unions, provided that these activities help meet the 22 financial needs of local communities in which the 23 federally chartered financial institution provides fi- 24 nancial products or services. 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 154 IH (2) DEFINITIONS.—For purposes of this sec- 1 tion: 2 (A) COMMUNITY DEVELOPMENT FINAN- 3 CIAL INSTITUTION.—The term ‘‘community de- 4 velopment financial institution’’ has the mean- 5 ing given in section 103(5) of the Riegle Com- 6 munity Development and Regulatory Improve- 7 ment Act of 1994 (12 U.S.C. 4702(5)). 8 (B) FINANCIAL INCLUSION ASSESSMENT 9 PROCESS.—The term ‘‘financial inclusion as- 10 sessment process’’ means any process relating 11 to the chartering of a financial institution 12 whereby the Comptroller of the Currency as- 13 sesses and takes into account the financial in- 14 stitution’s record of meeting the financial needs 15 of the bank’s entire community, including low- 16 and moderate-income neighborhoods, consistent 17 with the safe and sound operation of such bank. 18 (C) FINANCIAL PRODUCT OR SERVICE.— 19 The term ‘‘financial product or service’’ has the 20 meaning given such term in section 1002 of the 21 Dodd-Frank Wall Street Reform and Consumer 22 Protection Act (12 U.S.C. 5481). 23 (D) FIRREA DEFINITIONS.—The terms 24 ‘‘low-income credit union’’ and ‘‘women’s bank’’ 25 VerDate Sep 11 2014 23:50 Jan 28, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H154.IH H154 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR [Text truncated for display. 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