Jobs and Neighborhood Investment Act

II 116TH CONGRESS 2D SESSION S. 4255 To amend the CARES Act to establish community investment programs, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 21, 2020 Mr. WARNER (for himself, Mr. BOOKER, Ms. HARRIS, and Mr. SCHUMER) in- troduced the following bill; which was read twice and referred to the Com- mittee on Banking, Housing, and Urban Affairs A BILL To amend the CARES Act to establish community investment programs, 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 ‘‘Jobs and Neighbor- 4 hood Investment Act’’. 5 SEC. 2. PURPOSE. 6 The purpose of this Act is to— 7 (1) establish programs to revitalize and provide 8 long-term financial products and service availability 9 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 2 •S 4255 IS for, and provide investments in, low- and moderate- 1 income and minority communities; 2 (2) respond to the unprecedented loss of Black- 3 owned businesses and unemployment; and 4 (3) otherwise enhance the stability, safety and 5 soundness of community financial institutions that 6 support low- and moderate-income and minority 7 communities. 8 SEC. 3. CONSIDERATIONS; REQUIREMENTS FOR CREDI- 9 TORS. 10 (a) IN GENERAL.—In exercising the authorities 11 under this Act and the amendments made by this Act, 12 the Secretary of the Treasury shall take into consider- 13 ation— 14 (1) increasing the availability of affordable 15 credit for consumers, small businesses, and nonprofit 16 organizations, including for projects supporting af- 17 fordable housing, community-serving real estate, and 18 other projects, that provide direct benefits to low- 19 and moderate-income communities, low-income and 20 underserved individuals, and minorities; 21 (2) providing funding to minority-owned or mi- 22 nority-led eligible institutions and other eligible insti- 23 tutions that have a strong track record of serving 24 minority small businesses; 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 3 •S 4255 IS (3) protecting and increasing jobs in the United 1 States; 2 (4) increasing the opportunity for small busi- 3 ness, affordable housing and community develop- 4 ment in geographic areas and demographic segments 5 with poverty and high unemployment rates that ex- 6 ceed the average in the United States; 7 (5) ensuring that all low- and moderate-income 8 community financial institutions may apply to par- 9 ticipate in the programs established under this Act 10 and the amendments made by this Act, without dis- 11 crimination based on geography; 12 (6) providing transparency with respect to use 13 of funds provided under this Act and the amend- 14 ments made by this Act; 15 (7) promoting and engaging in financial edu- 16 cation to would-be borrowers; and 17 (8) providing funding to eligible institutions 18 that serve consumers, small businesses, and non- 19 profit organizations to support affordable housing, 20 community-serving real estate, and other projects 21 that provide direct benefits to low- and moderate-in- 22 come communities, low-income individuals, and mi- 23 norities directly affected by the COVID–19 pan- 24 demic. 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 4 •S 4255 IS (b) REQUIREMENT FOR CREDITORS.—Any creditor 1 participating in a program established under this Act or 2 the amendments made by this Act shall fully comply with 3 all applicable statutory and regulatory requirements relat- 4 ing to fair lending. 5 SEC. 4. SENSE OF CONGRESS. 6 It is the sense of Congress that the investments made 7 by the Secretary of the Treasury under this Act and the 8 amendments made by this Act should be designed to maxi- 9 mize the benefit to low- and moderate-income and minor- 10 ity communities and contemplate losses to capital of the 11 Treasury. 12 SEC. 5. NEIGHBORHOOD INVESTMENT PROGRAMS. 13 Title IV of the CARES Act (Public Law 116–136) 14 is amended— 15 (1) in section 4002 (15 U.S.C. 9041)— 16 (A) by redesignating paragraphs (7) 17 through (10) as paragraphs (8) through (11), 18 respectively; and 19 (B) by inserting after paragraph (6) the 20 following: 21 ‘‘(7) LOW- AND MODERATE-INCOME COMMU- 22 NITY FINANCIAL INSTITUTION.—The term ‘low- and 23 moderate-income community financial institution’ 24 means any financial institution that is— 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 5 •S 4255 IS ‘‘(A) a community development financial 1 institution, as defined in section 103 of the Rie- 2 gle Community Development and Regulatory 3 Improvement Act of 1994 (12 U.S.C. 4702); or 4 ‘‘(B) a minority depository institution, as 5 defined in section 308 of the Financial Institu- 6 tions Reform, Recovery, and Enforcement Act 7 of 1989 (12 U.S.C. 1463 note), for which the 8 majority of the community served by the minor- 9 ity depository institution is minority, as defined 10 in such section.’’; 11 (2) in section 4003 (15 U.S.C. 9042), by add- 12 ing at the end the following: 13 ‘‘(i) NEIGHBORHOOD CAPITAL INVESTMENT PRO- 14 GRAM.— 15 ‘‘(1) DEFINITIONS.—In this subsection— 16 ‘‘(A) the term ‘community development fi- 17 nancial institution’ has the meaning given the 18 term in section 103 of the Riegle Community 19 Development and Regulatory Improvement Act 20 of 1994 (12 U.S.C. 4702); 21 ‘‘(B) the term ‘Fund’ means the Commu- 22 nity Development Financial Institutions Fund 23 established under section 104(a) of the Riegle 24 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 6 •S 4255 IS Community Development and Regulatory Im- 1 provement Act of 1994 (12 U.S.C. 4703(a)); 2 ‘‘(C) the term ‘minority’ means any Black 3 American, Native American, Hispanic Amer- 4 ican, or Asian American; and 5 ‘‘(D) the term ‘Program’ means the Neigh- 6 borhood Capital Investment Program estab- 7 lished under paragraph (2). 8 ‘‘(2) ESTABLISHMENT.—The Secretary shall es- 9 tablish a Neighborhood Capital Investment Program 10 to support low- and moderate-income community fi- 11 nancial institutions to provide loans and forbearance 12 to borrowers in low- and moderate-income commu- 13 nities, especially for borrowers who are historically 14 disadvantaged, including minorities, and borrowers 15 in rural and urban low-income and underserved com- 16 munities. 17 ‘‘(3) INVESTMENTS.—Under the Program, the 18 Secretary shall establish a fund to facilitate direct 19 capital investments, including purchases and modi- 20 fications of those purchases, of senior preferred non- 21 voting stock, subordinated debentures, and other fi- 22 nancial instruments (including equity equivalent cap- 23 ital and secondary capital investments described in 24 section 216(o)(2)(C) of the Federal Credit Union 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 7 •S 4255 IS Act (12 U.S.C. 1790d(o)(2)(C)) from low- and mod- 1 erate-income community financial institutions on 2 such terms as are determined by the Secretary in ac- 3 cordance with this subtitle. 4 ‘‘(4) APPLICATION.— 5 ‘‘(A) ACCEPTANCE.—The Secretary shall 6 begin accepting applications for capital invest- 7 ments under the Program not later than the 8 end of the 30-day period beginning on the date 9 of enactment of this subsection, with priority in 10 distribution given to low- and moderate-income 11 community financial institutions that are mi- 12 nority-owned or minority-led lenders. 13 ‘‘(B) REQUIREMENT TO PROVIDE A NEIGH- 14 BORHOOD INVESTMENT LENDING PLAN.— 15 ‘‘(i) IN GENERAL.—At the time that 16 an applicant submits an application to the 17 Secretary for a capital investment under 18 the Program, the applicant shall provide 19 the Secretary, along with the appropriate 20 Federal banking agency, an investment 21 and lending plan that— 22 ‘‘(I) demonstrates that not less 23 than 30 percent of the lending of the 24 applicant over the past 2 fiscal years 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 8 •S 4255 IS was made directly to low- and mod- 1 erate income borrowers, to borrowers 2 that create direct benefits for low- and 3 moderate-income populations, to other 4 targeted populations as defined by the 5 Fund, or any combination thereof, as 6 measured by the total number and 7 dollar amount of loans; 8 ‘‘(II) describes how the business 9 strategy and operating goals of the 10 applicant will address community de- 11 velopment needs, which includes the 12 needs of small businesses, consumers, 13 nonprofit organizations, community 14 development, and other projects pro- 15 viding direct benefits to low- and mod- 16 erate-income communities, low-income 17 individuals, and minorities within the 18 minority, rural, and urban low-income 19 and underserved areas served by the 20 applicant; 21 ‘‘(III) includes a plan to provide 22 linguistically and culturally appro- 23 priate outreach, where appropriate; 24 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 9 •S 4255 IS ‘‘(IV) includes an attestation by 1 the applicant that the applicant does 2 not own, service, or offer any financial 3 products at an annual percentage rate 4 of more than 36 percent interest, as 5 defined in section 987(i)(4) of title 6 10, United States Code, and is com- 7 pliant with State interest rate laws; 8 and 9 ‘‘(V) includes details on how the 10 applicant plans to expand or maintain 11 significant lending or investment ac- 12 tivity in low- or moderate-income mi- 13 nority communities, to historically dis- 14 advantaged borrowers, and to minori- 15 ties that have significant unmet cap- 16 ital or financial services needs. 17 ‘‘(ii) COMMUNITY DEVELOPMENT 18 LOAN FUNDS.—An applicant that is not an 19 insured community development financial 20 institution or otherwise regulated by a 21 Federal financial regulator shall submit 22 the plan described in clause (i) only to the 23 Secretary. 24 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 10 •S 4255 IS ‘‘(iii) DOCUMENTATION.—In the case 1 of an applicant that is certified as a com- 2 munity development financial institution as 3 of the date of enactment of this subsection, 4 for purposes of clause (i)(I), the Secretary 5 may rely on documentation submitted the 6 Fund as part of certification compliance 7 reporting. 8 ‘‘(5) INCENTIVES TO INCREASE LENDING AND 9 PROVIDE AFFORDABLE CREDIT.— 10 ‘‘(A) REQUIREMENTS ON PREFERRED 11 STOCK AND OTHER FINANCIAL INSTRUMENT.— 12 Any financial instrument issued to Treasury by 13 a low- and moderate-income community finan- 14 cial institution under the Program shall provide 15 the following: 16 ‘‘(i) No dividends, interest or other 17 payments shall exceed 2 percent per 18 annum. 19 ‘‘(ii) After the first 24 months from 20 the date of the capital investment under 21 the Program, annual payments may be re- 22 quired, as determined by the Secretary and 23 in accordance with this section, and ad- 24 justed downward based on the amount of 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 11 •S 4255 IS affordable credit provided by the low- and 1 moderate-income community financial in- 2 stitution to borrowers in minority, rural, 3 and urban low-income and underserved 4 communities. 5 ‘‘(iii) During any calendar quarter 6 after the initial 24-month period referred 7 to in clause (ii), the annual payment rate 8 of a low- and moderate-income community 9 financial institution shall be adjusted 10 downward to reflect the following schedule, 11 based on lending by the institution relative 12 to the baseline period: 13 ‘‘(I) If the institution in the most 14 recent annual period prior to the in- 15 vestment provides significant lending 16 or investment activity in low- or mod- 17 erate-income minority communities, 18 historically disadvantaged borrowers, 19 and to minorities that have significant 20 unmet capital or financial services, 21 the annual payment rate shall not ex- 22 ceed 0.5 percent per annum. 23 ‘‘(II) If the amount of lending 24 within minority, rural, and urban low- 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 12 •S 4255 IS income and underserved communities 1 and to low- and moderate-income bor- 2 rowers has increased dollar for dollar 3 based on the amount of the capital in- 4 vestment, the annual payment rate 5 shall not exceed 1 percent per annum. 6 ‘‘(III) If the amount of lending 7 within minority, rural, and urban low- 8 income and underserved communities 9 and to low- and moderate-income bor- 10 rowers has increased by twice the 11 amount of the capital investment, the 12 annual payment rate shall not exceed 13 0.5 percent per annum. 14 ‘‘(B) CONTINGENCY OF PAYMENTS BASED 15 ON CERTAIN FINANCIAL CRITERIA.— 16 ‘‘(i) DEFERRAL.—Any annual pay- 17 ments under this subsection shall be de- 18 ferred in any quarter or payment period if 19 any of the following is true: 20 ‘‘(I) The low- and moderate-in- 21 come community institution fails to 22 meet the Tier 1 capital ratio or simi- 23 lar ratio as determined by the Sec- 24 retary. 25 VerDate Sep 11 2014 21:48 Aug 08, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4255.IS S4255 kjohnson on DSK79L0C42PROD with BILLS 13 •S 4255 IS ‘‘(II) The low- and moderate-in- 1 come community financial institution 2 fails to achieve positive net income for 3 the quarter or payment period. 4 ‘‘(III) The low- and moderate-in- 5 come community financial institution 6 determines that the payment would be 7 detrimental to the financial health of 8 the institution. 9 ‘‘(ii) TESTING DURING NEXT PAY- 10 MENT PERIOD.—Any deferred annual pay- 11 ment under this subsection shall be tested 12 against the metrics described in clause (i) 13 at the beginning of the next [Text truncated for display. 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