Federal Home Loan Banks’ Mission Implementation Act

I 117TH CONGRESS 1ST SESSION H. R. 3323 To strengthen the ability of the Federal Home Loan Bank system to provide critical financing to address the economic crisis caused by the COVID– 19 and to meet the short- and long-term housing and community eco- nomic development needs of low-income communities, including Tribal communities, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 18, 2021 Mr. TORRES of New York introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Commit- tees on Ways and Means, and Small Business, for a period to be subse- quently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To strengthen the ability of the Federal Home Loan Bank system to provide critical financing to address the eco- nomic crisis caused by the COVID–19 and to meet the short- and long-term housing and community economic development needs of low-income communities, including Tribal communities, 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 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 3323 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Federal Home Loan 2 Banks’ Mission Implementation Act’’. 3 SEC. 2. PURPOSE. 4 The purpose of this Act is to promote economic recov- 5 ery in response to the COVID–19 pandemic and to meet 6 the short- and long-term housing and community eco- 7 nomic development needs of low-income communities, in- 8 cluding Tribal communities, by— 9 (1) increasing the ability of the Federal Home 10 Loan Banks to accept, as collateral, small business 11 loans guaranteed by the Small Business Administra- 12 tion; 13 (2) authorizing the Federal Home Loan Banks 14 to accept government guaranteed loans as collateral 15 to support COVID–19 programs; 16 (3) allowing community development financial 17 institutions and credit unions to pledge community 18 financial institution collateral, such as small busi- 19 ness, small agriculture, and community development 20 loans, and enable the Federal Housing Finance 21 Agency to raise the threshold for qualification as a 22 community financial institution; 23 (4) providing letters of credit to provide liquid- 24 ity, and support, stabilize and strengthen local, Trib- 25 al, State and Federal governmental entities public 26 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 3323 IH unit deposits, housing and community development 1 efforts, and vital public financing; 2 (5) increasing funding for the Affordable Hous- 3 ing Program established by each Federal Home 4 Loan Bank under section 10(j) of the Federal Home 5 Loan Bank Act (12 U.S.C. 1430(j)) and establishing 6 a 2-percent set aside for Native American Tribes; 7 and 8 (6) creating a community economic development 9 investment program within the Federal Home Loan 10 Bank system to generate financial opportunity, cre- 11 ate jobs, and stimulate economic development in dis- 12 tressed urban, rural, Tribal, and suburban commu- 13 nities in the United States. 14 SEC. 3. FHLB ADVANCES SECURED BY SBA LOANS. 15 Section 7 of the Small Business Act (15 U.S.C. 636) 16 is amended by adding at the end the following: 17 ‘‘(o) FEDERAL HOME LOAN BANK ADVANCES.— 18 ‘‘(1) DEFINITION OF BANK.—In this sub- 19 section, the term ‘Bank’ means a Federal Home 20 Loan Bank, as defined in section 2 of the Federal 21 Home Loan Bank Act (12 U.S.C. 1422). 22 ‘‘(2) ADVANCES.—A Bank that, in the exercise 23 of its authority under section 10 of the Federal 24 Home Loan Bank Act (12 U.S.C. 1430) to make se- 25 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 3323 IH cured advances, accepts as collateral a loan guaran- 1 teed by the Administration under this Act or any 2 other provision of law, including loans guaranteed 3 under section 7(a)— 4 ‘‘(A) may exercise all of the rights and 5 remedies contained in any pledge or similar se- 6 curity agreement between the Bank and the 7 lending or participating institution that made 8 or purchased the loan; and 9 ‘‘(B) in the event of default on the loan, 10 shall possess the same rights and remedies as 11 such a lending or participating institution 12 would possess in the same circumstance, includ- 13 ing collecting monies due on the guarantee di- 14 rectly from the Administration. 15 ‘‘(3) TRANSFER OF GUARANTEE.—With respect 16 to a guaranteed loan that a Bank accepts as collat- 17 eral under paragraph (2), the guarantee obligation 18 of the Administration on the loan shall transfer to 19 the Bank.’’. 20 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 3323 IH SEC. 4. MAKING GOVERNMENT GUARANTEED LOANS IN RE- 1 SPONSE TO THE COVID–19 CRISIS ELIGIBLE 2 COLLATERAL FOR THE FEDERAL HOME LOAN 3 BANKS. 4 Section 10(a)(3) of the Federal Home Loan Bank 5 Act (12 U.S.C. 1430(a)(3)) is amended by adding at the 6 end the following: 7 ‘‘(F) Loans guaranteed or insured by the 8 United States Government or any agency there- 9 of and made by any member under programs or 10 facilities established by the Secretary of the 11 Treasury or the Board of Governors of the Fed- 12 eral Reserve System under the CARES Act 13 (Public Law 116–136) or other similar pro- 14 grams or facilities in subsequently enacted Acts 15 to address the impact to the economy from the 16 COVID–19 crisis, including other similar pro- 17 grams or facilities established under section 18 13(3) of the Federal Reserve Act (12 U.S.C. 19 343(3)). 20 ‘‘(G) Loans guaranteed by the Small Busi- 21 ness Administration under the Small Business 22 Act (15 U.S.C. 631 et seq.) or any other provi- 23 sion of law.’’. 24 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 3323 IH SEC. 5. ADDING CREDIT UNIONS TO THE DEFINITION OF 1 COMMUNITY FINANCIAL INSTITUTIONS AND 2 EXPANDING THE PURPOSES OF ADVANCES 3 AND COLLATERAL AVAILABLE TO CERTAIN 4 COMMUNITY DEVELOPMENT FINANCIAL IN- 5 STITUTIONS. 6 (a) IN GENERAL.—Section 10(a) of the Federal 7 Home Loan Bank Act (12 U.S.C. 1430(a)) is amended— 8 (1) in paragraph (2)(B), by inserting ‘‘or quali- 9 fying community development financial institution’’ 10 after ‘‘community financial institution’’; and 11 (2) in paragraph (3)(E), by inserting ‘‘or quali- 12 fying community development financial institution’’ 13 after ‘‘community financial institution’’. 14 (b) DEFINITIONS.—Section 2 of the Federal Home 15 Loan Bank Act (12 U.S.C. 1422) is amended— 16 (1) in paragraph (10)— 17 (A) by striking ‘‘INSTITUTION.—’’ and all 18 that follows through ‘‘The term’’ and inserting 19 ‘‘INSTITUTION.—The term’’; 20 (B) by striking subparagraph (B); 21 (C) by redesignating clauses (i) and (ii) as 22 subparagraphs (A) and (B), respectively, and 23 adjusting the margins accordingly; 24 (D) in subparagraph (A), as so redesig- 25 nated, by inserting ‘‘(12 U.S.C. 1811 et seq.) 26 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 3323 IH or the Federal Credit Union Act (12 U.S.C. 1 1751 et seq.)’’ before the semicolon; and 2 (E) in subparagraph (B), as so redesig- 3 nated, by striking ‘‘$1,000,000,000’’ and insert- 4 ing ‘‘assets at a level set by the Agency, but not 5 more than $10,000,000,000’’; and 6 (2) by adding at the end the following: 7 ‘‘(13) QUALIFYING COMMUNITY DEVELOPMENT 8 FINANCIAL INSTITUTION.—The term ‘qualifying 9 community development financial institution’ means 10 an entity that— 11 ‘‘(A) has been certified as a community de- 12 velopment financial institution (as such term is 13 defined in section 103 of the Riegle Community 14 Development and Regulatory Improvement Act 15 of 1994 (12 U.S.C. 4702) by the Secretary of 16 the Treasury; and 17 ‘‘(B) satisfies the average total assets 18 threshold requirement for a community finan- 19 cial institution set forth in paragraph (10).’’. 20 SEC. 6. STANDBY LETTERS OF CREDIT. 21 The Federal Home Loan Bank Act (12 U.S.C. 1421 22 et seq.) is amended— 23 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 3323 IH (1) in section 2 (12 U.S.C. 1422), as amended 1 by section 5 of this Act, is amended by adding at 2 the end the following: 3 ‘‘(14) EMPLOYEE- OR COMMUNITY-OWNED COM- 4 PANY.—The term ‘employee- or community-owned 5 company’ means— 6 ‘‘(A) an organization described in section 7 1381 of the Internal Revenue Code of 1986; 8 ‘‘(B) an eligible worker-owned cooperative, 9 as defined in section 1042(c)(2) of the Internal 10 Revenue Code of 1986; and 11 ‘‘(C) an employee stock ownership plan, as 12 defined in section 4975(e)(7) of the Internal 13 Revenue Code of 1986, which meets the re- 14 quirements of section 409 of such Code.’’; and 15 (2) in section 11 (12 U.S.C. 1431), by adding 16 at the end the following: 17 ‘‘(m) STANDBY LETTERS OF CREDIT.— 18 ‘‘(1) IN GENERAL.—Each Federal Home Loan 19 Bank is authorized to issue and confirm standby let- 20 ters of credit, secured by collateral eligible to secure 21 advances, to support any activity permitted under 22 law or regulation applicable to the member or non- 23 member mortgagee eligible to receive advances under 24 section 10b, subject to safety and soundness over- 25 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 3323 IH sight, including the purposes described in paragraph 1 (2). 2 ‘‘(2) PURPOSES.—Each Bank is authorized to 3 issue or confirm on behalf of members or non-mem- 4 ber mortgagees standby letters of credit that comply 5 with the requirements of this subsection for any of 6 the following purposes: 7 ‘‘(A) To assist members or non-member 8 mortgagees in facilitating residential housing fi- 9 nance. 10 ‘‘(B) To assist members or non-member 11 mortgagees in facilitating community lending. 12 ‘‘(C) To assist members or non-member 13 mortgagees with asset or liability management. 14 ‘‘(D) To provide members or non-member 15 mortgagees with liquidity or other funding. 16 ‘‘(E) To assist members in facilitating 17 business retention or facilitating business tran- 18 sition to employee- or community-owned compa- 19 nies or assisting those companies.’’. 20 SEC. 7. LETTERS OF CREDIT ON TAX EXEMPT BONDS. 21 (a) IN GENERAL.—Clause (iv) of section 22 149(b)(3)(A) of the Internal Revenue Code of 1986 is 23 amended by striking ‘‘a bond during the period beginning 24 on the date of the enactment of this clause and ending 25 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 3323 IH on December 31, 2010’’ and inserting ‘‘a municipal bond 1 (as defined in section 75(b)(1)) on or after the date of 2 enactment of the Federal Home Loan Banks’ Mission Im- 3 plementation Act’’. 4 (b) SAFETY AND SOUNDNESS REQUIREMENTS.— 5 Subparagraph (E) of section 149(b)(3) of the Internal 6 Revenue Code of 1986 is amended by striking ‘‘which are 7 at least’’ and all that follows through the period and in- 8 serting ‘‘as are established by the Director of the Federal 9 Housing Finance Agency from time to time.’’. 10 (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to guarantees made after the date 12 of enactment of this Act. 13 (d) SUNSET.—Effective on the date that is 2 years 14 after the date on which the Federal Emergency Manage- 15 ment Agency terminates the emergency declared on March 16 13, 2020 by the President under the Robert T. Stafford 17 Disaster Relief and Emergency Assistance Act (42 U.S.C. 18 4121 et seq.) relating to the Coronavirus Disease 2019 19 (COVID–19) pandemic, section 149(b)(3) of the Internal 20 Revenue Code of 1986 is amended— 21 (1) in subparagraph (A)(iv), by striking ‘‘a mu- 22 nicipal bond (as defined in section 75(b)(1)) on or 23 after the date of enactment of the Federal Home 24 Loan Banks’ Mission Implementation Act’’ and in- 25 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 3323 IH serting ‘‘a bond during the period beginning on the 1 date of the enactment of this clause and ending on 2 December 31, 2010’’; and 3 (2) in subparagraph (E), by striking ‘‘as are es- 4 tablished by the Director of the Federal Housing Fi- 5 nance Agency from time to time’’ and inserting 6 ‘‘which are at least as stringent as such require- 7 ments which apply under regulations applicable to 8 such guarantees by Federal home loan banks as in 9 effect on April 9, 2008’’. 10 SEC. 8. AFFORDABLE HOUSING PROGRAM. 11 (a) IN GENERAL.—Section 10 of the Federal Home 12 Loan Bank Act (12 U.S.C. 1430) is amended— 13 (1) in subsection (j)— 14 (A) in paragraph (3)— 15 (i) in the matter preceding subpara- 16 graph (A), by striking ‘‘such as the fol- 17 lowing:’’ and inserting ‘‘such as—’’; 18 (ii) in subparagraph (A)— 19 (I) by inserting ‘‘the’’ before 20 ‘‘purchase’’; and 21 (II) by striking the comma at the 22 end and inserting a semicolon; 23 (iii) in subparagraph (B)— 24 VerDate Sep 11 2014 06:09 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3323.IH H3323 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 3323 IH (I) by inserting ‘‘the’’ before 1 ‘‘purchase’’; and 2 (II) by striking ‘‘and’’ at the end; 3 (iv) in subparagraph (C)— 4 (I) by inserting ‘‘the’’ before 5 ‘‘purchase’’; and 6 (II) by striking the period at the 7 end and inserting a semicolon; and 8 (v) by adding at the end the following: 9 ‘‘(D) the purchase or rehabilitation of 10 housing financed by a community land trust; 11 and 12 ‘‘(E) the purchase or rehabilitation of 13 housing in qualified manufactured home com- 14 munities owned by nonprofit organizations or 15 the residents.’’; and 16 (B) in paragraph (5)(C)— 17 (i) by striking ‘‘10’’ and inserting 18 ‘‘20’’; 19 (ii) by striking ‘‘100,000,000’’ and in- 20 serting ‘‘200,000,000’’; and 21 (iii) by adding at the end the fol- 22 lowing: ‘‘Of such contribution, an amount [Text truncated for display. 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