Promoting and Advancing Communities of Color through Inclusive Lending Act

I 116TH CONGRESS 2D SESSION H. R. 7993 To support the efforts of Community Development Financial Institutions (CDFIs), minority CDFIs, and minority depository institutions to serve consumers, small businesses, and minority-owned businesses, especially in low-income and underserved communities, and for other purposes. IN THE HOUSE OF REPRESENTATIVES AUGUST 7, 2020 Ms. WATERS (for herself, Mr. CLAY, Mr. GREEN of Texas, Mr. GONZALEZ of Texas, Mr. LAWSON of Florida, Ms. PRESSLEY, Ms. TLAIB, Ms. ADAMS, Mr. PHILLIPS, Ms. GARCIA of Texas, Mr. CLEAVER, Mrs. BEATTY, Mr. GARCI´A of Illinois, Mr. DAVID SCOTT of Georgia, Mr. GOTTHEIMER, and Mr. MEEKS) introduced the following bill; which was referred to the Com- mittee on Financial Services, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To support the efforts of Community Development Financial Institutions (CDFIs), minority CDFIs, and minority de- pository institutions to serve consumers, small busi- nesses, and minority-owned businesses, especially in low- income and underserved communities, and for other pur- poses. 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 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 7993 IH SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Promoting and Advancing Communities of Color through 3 Inclusive Lending Act’’. 4 (b) TABLE OF CONTENTS.—The table of contents for 5 this Act is as follows: 6 Sec. 1. Short title; table of contents. Sec. 2. Findings; sense of Congress. Sec. 3. Strengthening minority community development financial institutions. Sec. 4. Community Development Financial Institutions Fund. Sec. 5. Minimum issuance amounts under the CDFI Bond Guarantee Program. Sec. 6. Community Capital Investment Program. Sec. 7. Ensuring Diversity in Community Banking. Sec. 8. Establishment of Financial Agent Mentor-Prote´ge´ Program. Sec. 9. Study and report with respect to impact of programs on low- and mod- erate-income and minority communities. SEC. 2. FINDINGS; SENSE OF CONGRESS. 7 (a) FINDINGS.—The Congress finds the following: 8 (1) The Coronavirus 2019 (COVID–19) pan- 9 demic and the resulting recession have led to more 10 than 4.8 million cases and at least 157,000 deaths 11 in the United States as of August 6, 2020; a 7.6 12 percent increase in the unemployment rate from 13 February to June, or approximately 12 million more 14 persons who have lost their job; and an estimated 36 15 percent of renters and 4.1 million homeowners who 16 are struggling to pay their rent and mortgages. 17 (2) According to the Centers for Disease Con- 18 trol, ‘‘long-standing systemic health and social in- 19 equities have put some members of racial and ethnic 20 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 7993 IH minority groups at increased risk of getting COVID– 1 19 or experiencing severe illness’’. 2 (3) Minority-owned businesses are also facing 3 more difficult economic circumstances than others as 4 a result of the COVID–19 pandemic. In April 2020, 5 the Federal Reserve Bank of New York reported 6 that minority- and women-owned businesses were 7 not only more likely to show signs of limited finan- 8 cial health, but also twice as likely to be classified 9 as ‘‘at risk’’ or ‘‘distressed’’ than their non-minority 10 counterparts. 11 (4) During the Coronavirus 2019 (COVID–19) 12 pandemic, community development financial institu- 13 tions (CDFIs) and minority depository institutions 14 (MDIs) have delivered needed capital and relief to 15 underserved communities, many of which have borne 16 a disproportionate impact of the COVID–19 pan- 17 demic. Through July 31, 2020, CDFIs and MDIs 18 have provided more than $16.2 billion in Paycheck 19 Protection Program (PPP) loans to small businesses 20 with a smaller median loan size of about $75,000 21 compared to the overall program median loan size of 22 $103,000. 23 (5) In addition to establishing relief funds and 24 services for local businesses and individuals experi- 25 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 7993 IH encing loss of income, CDFIs and MDIs have pro- 1 vided mortgage forbearances, loan deferments, and 2 modifications to help address the needs of their bor- 3 rowers. CDFIs and MDIs are reaching underserved 4 communities and minority-owned businesses at a 5 critical time. 6 (6) The Community Development Financial In- 7 stitutions Fund (CDFI Fund) is an agency of the 8 U.S. Department of the Treasury and was estab- 9 lished by the Riegle Community Development and 10 Regulatory Improvement Act of 1994. The mission 11 of the CDFI Fund is ‘‘to expand economic oppor- 12 tunity for underserved people and communities by 13 supporting the growth and capacity of a national 14 network of community development lenders, inves- 15 tors, and financial service providers’’. As of July 13, 16 2020, there were 1,129 certified CDFIs in all 50 17 States, District of Columbia, Guam, and Puerto 18 Rico. 19 (7) Following the 2008 financial crisis and the 20 disproportionate impact the Great Recession had on 21 minority communities, the number of MDI banks fell 22 more than 30 percent over the following decade, to 23 143 as of the first quarter of 2020. Meanwhile, MDI 24 credit unions have seen similar declines, with more 25 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 7993 IH than one-third of such institutions disappearing 1 since 2013. 2 (8) The Committee on Financial Services of the 3 House of Representatives has examined the impor- 4 tance of CDFIs and MDIs through three hearings 5 held during the 116th Congress. At these hearings, 6 the Committee received testimony from 13 witnesses, 7 most of whom were representatives of CDFIs or 8 MDIs, and four of whom were Federal regulators. 9 These hearings include: 10 (A) October 22, 2019, ‘‘An Examination of 11 the Decline of Minority Depository Institutions 12 and the Impact on Underserved Communities’’. 13 (B) November 20, 2019, ‘‘An Examination 14 of Regulators’ Efforts to Preserve and Promote 15 Minority Depository Institutions’’. 16 (C) June 3, 2020, Virtual Hearing—‘‘Pro- 17 moting Inclusive Lending During the Pandemic: 18 Community Development Financial Institutions 19 and Minority Depository Institutions’’. 20 At these hearings, the Committee discussed the op- 21 portunities and challenges facing CDFIs and MDIs. 22 The Committee discussed 9 different pieces of legis- 23 lation to address some of these challenges and fully 24 support the work of MDIs and CDFIs. 25 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 7993 IH (b) SENSE OF CONGRESS.—The following is the sense 1 of the Congress: 2 (1) The Department of the Treasury, Board of 3 Governors of the Federal Reserve System, Small 4 Business Administration (SBA), Office of the Comp- 5 troller of the Currency, Federal Deposit Insurance 6 Corporation, National Credit Union Administration, 7 and other Federal agencies should take steps to sup- 8 port, engage with, and utilize minority depository in- 9 stitutions and community development financial in- 10 stitutions in the near term, especially as they carry 11 out programs to respond to the COVID–19 pan- 12 demic, and the long term. 13 (2) The Department of the Treasury and pru- 14 dential regulators should establish a strategic plan 15 identifying concrete steps that they can take to sup- 16 port existing minority depository institutions, as well 17 as the formation of new minority depository institu- 18 tions consistent with the goals established in the Fi- 19 nancial Institutions Reform, Recovery, and Enforce- 20 ment Act of 1989 (FIRREA) to preserve and pro- 21 mote minority depository institutions. 22 (3) Congress should increase funding and make 23 other enhancements, including those provided by this 24 legislation, to enhance the effectiveness of the CDFI 25 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 7993 IH Fund, especially reforms to support minority-owned 1 and minority led CDFIs in times of crisis and be- 2 yond. 3 (4) Congress should conduct robust and ongo- 4 ing oversight of the Department of the Treasury, 5 CDFI Fund, Federal prudential regulators, SBA, 6 and other Federal agencies to ensure they fulfill 7 their obligations under the law as well as implement 8 this Act and other laws in a manner that supports 9 and fully utilizes minority depository institutions 10 and community development financial intuitions, as 11 appropriate. 12 SEC. 3. STRENGTHENING MINORITY COMMUNITY DEVELOP- 13 MENT FINANCIAL INSTITUTIONS. 14 (a) MINORITY COMMUNITY DEVELOPMENT FINAN- 15 CIAL INSTITUTION SET-ASIDE IN PROVIDING ASSIST- 16 ANCE.— 17 (1) IN GENERAL.—Section 108 of the Commu- 18 nity Development Banking and Financial Institu- 19 tions Act of 1994 (12 U.S.C. 4707) is amended by 20 adding at the end the following: 21 ‘‘(i) MINORITY COMMUNITY DEVELOPMENT FINAN- 22 CIAL INSTITUTION SET-ASIDE IN PROVIDING ASSIST- 23 ANCE.—Notwithstanding any other provision of law, in 24 providing any assistance, the Fund shall reserve 40 per- 25 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 7993 IH cent of such assistance for minority community develop- 1 ment financial institutions.’’. 2 (2) DEFINITIONS.—Section 103 of the Commu- 3 nity Development Banking and Financial Institu- 4 tions Act of 1994 (12 U.S.C. 4702) is amended by 5 adding at the end the following: 6 ‘‘(22) MINORITY COMMUNITY DEVELOPMENT 7 FINANCIAL INSTITUTION DEFINITIONS.— 8 ‘‘(A) MINORITY.—The term ‘minority’ 9 means any Black American, Native American, 10 Hispanic American, or Asian American. 11 ‘‘(B) MINORITY COMMUNITY DEVELOP- 12 MENT FINANCIAL INSTITUTION.—The term ‘mi- 13 nority community development financial institu- 14 tion’ means a community development financial 15 institution that— 16 ‘‘(i) if a privately owned institution, 17 51 percent is owned by one or more so- 18 cially and economically disadvantaged indi- 19 viduals; 20 ‘‘(ii) if publicly owned, 51 percent of 21 the stock is owned by one or more socially 22 and economically disadvantaged individ- 23 uals; 24 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 7993 IH ‘‘(iii) in the case of a mutual institu- 1 tion, where the majority of the Board of 2 Directors, account holders, and the com- 3 munity which the institution services is 4 predominantly minority; and 5 ‘‘(iv) in the case of any other institu- 6 tion, is a minority-owned or minority-led 7 institution, as determined by the Adminis- 8 trator.’’. 9 (b) OFFICE OF MINORITY COMMUNITY DEVELOP- 10 MENT FINANCIAL INSTITUTIONS.—Section 104 of the 11 Community Development Banking and Financial Institu- 12 tions Act of 1994 (12 U.S.C. 4703) is amended by adding 13 at the end the following: 14 ‘‘(l) OFFICE OF MINORITY COMMUNITY DEVELOP- 15 MENT FINANCIAL INSTITUTIONS.— 16 ‘‘(1) ESTABLISHMENT.—There is established 17 within the Fund an Office of Minority Community 18 Development Financial Institutions, which shall 19 oversee assistance provided by the Fund to minority 20 community development financial institutions. 21 ‘‘(2) DEPUTY DIRECTOR.—The head of the Of- 22 fice shall be the Deputy Director of Minority Com- 23 munity Development Financial Institutions, who 24 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 7993 IH shall report directly to the Administrator of the 1 Fund.’’. 2 (c) REPORTING ON MINORITY COMMUNITY DEVEL- 3 OPMENT FINANCIAL INSTITUTIONS.—Section 117 of the 4 Community Development Banking and Financial Institu- 5 tions Act of 1994 (12 U.S.C. 4716) is amended by adding 6 at the end the following: 7 ‘‘(g) REPORTING ON MINORITY COMMUNITY DEVEL- 8 OPMENT FINANCIAL INSTITUTIONS.—Each report re- 9 quired under subsection (a) shall include a description of 10 the extent to which assistance from the Fund are provided 11 to minority community development financial institu- 12 tions.’’. 13 SEC. 4. COMMUNITY DEVELOPMENT FINANCIAL INSTITU- 14 TIONS FUND. 15 (a) IN GENERAL.—Of any unobligated amounts that 16 were appropriated to the fund established under section 17 5302(a)(1) of title 31, United States Code, by section 18 4027 of the CARES Act (15 U.S.C. 9061), 19 $5,000,000,000 shall be transferred to the Community 20 Development Financial Institutions Fund for fiscal years 21 2020 and 2021, for providing financial assistance and 22 technical assistance under subparagraphs (A) and (B) of 23 section 108(a)(1) of the Community Development Bank- 24 ing and Financial Institutions Act of 1994 (12 U.S.C. 25 VerDate Sep 11 2014 02:11 Sep 04, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7993.IH H7993 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 7993 IH 4707(a)(1)), except that subsections (d) and (e) of such 1 section 108 shall not apply to the provision of such assist- 2 ance, for the Bank Enterprise Award program, and for 3 financial assistance, technical assistance, training, and 4 outreach programs designed to benefit Native American, 5 Native Hawaiian, and Alaska Native communities and 6 provided primarily through qualified community develop- 7 ment lender organizations with experience and expertise 8 in community development banking and lending in Indian 9 country, Native American organizations, Tribes and Trib- 10 al organizations, and other suitable providers. Of such 11 amount, not less than $2,000,000,000 shall be for pro- 12 viding financial assistance, technical assistance, awards, 13 training, and outreach programs described above to recipi- 14 ents that are minority lending institutions. 15 (b) DEFINITIONS.—For purposes of this section: 16 (1) MINORITY LENDING INSTITUTION.—The 17 term ‘‘minority lending inst [Text truncated for display. Full text available on Congress.gov.]