S.Amdt. 4064

SA 4064. Mr. MENENDEZ (for himself, Ms. Snowe, Mr. Schumer, Mr.
Leahy, and Mr. Johnson) submitted an amendment intended to be proposed
to amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd (for himself
and Mrs. Lincoln)) to the bill S. 3217, to promote the financial
stability of the United States by improving accountability and
transparency in the financial system, to end ``too big to fail'', to
protect the American taxpayer by ending bailouts, to protect consumers
from abusive financial services practices, and for other purposes;
which was ordered to lie on the table; as follows:

On page 372, between lines 2 and 3, insert the following:

SEC. 343. GUARANTEES FOR BONDS AND NOTES ISSUED FOR COMMUNITY
OR ECONOMIC DEVELOPMENT PURPOSES.

The Riegle Community Development and Regulatory Improvement
Act of 1994 (12 U.S.C. 4701 et seq.) is amended by inserting
after section 114 (12 U.S.C. 4713) the following:

``SEC. 114A. GUARANTEES FOR BONDS AND NOTES ISSUED FOR
COMMUNITY OR ECONOMIC DEVELOPMENT PURPOSES.

``(a) Definitions.--In this section, the following
definitions shall apply:
``(1) Eligible community development financial
institution.--The term `eligible community development
financial institution' means a community development
financial institution (as described in section 1805.201 of
title 12, Code of Federal Regulations, or any successor
thereto) certified by the Secretary that has applied to a
qualified issuer for, or been granted by a qualified issuer,
a loan under the Program.
``(2) Eligible community or economic development purpose.--
The term `eligible community or economic development
purpose'--
``(A) means any purpose described in section 108(b); and
``(B) includes the provision of community or economic
development in low-income or underserved rural areas.
``(3) Guarantee.--The term `guarantee' means a written
agreement between the Secretary and a qualified issuer (or
trustee), pursuant to which the Secretary ensures repayment
of the verifiable losses of principal, interest, and call
premium, if any, on notes or bonds issued by a qualified
issuer to finance or refinance loans to eligible community
development financial institutions.
``(4) Loan.--The term `loan' means any credit instrument
that is extended under the Program for any eligible community
or economic development purpose.
``(5) Master servicer.--
``(A) In general.--The term `master servicer' means any
entity approved by the Secretary in accordance with
subparagraph (B) to oversee the activities of servicers, as
provided in subsection (f)(4).
``(B) Approval criteria for master servicers.--The
Secretary shall approve or deny any application to become a
master servicer under the Program not later than 90 days
after the date on which all required information is submitted
to the Secretary, based on the capacity and experience of the
applicant in--
``(i) loan administration, servicing, and loan monitoring;
``(ii) managing regional or national loan intake,
processing, or servicing operational systems and
infrastructure;
``(iii) managing regional or national originator
communication systems and infrastructure;
``(iv) developing and implementing training and other risk
management strategies on a regional or national basis; and
``(v) compliance monitoring, investor relations, and
reporting.
``(6) Program.--The term `Program' means the guarantee
Program for bonds and notes issued for eligible community or
economic development purposes established under this section.
``(7) Program administrator.--The term `Program
administrator' means an entity designated by the issuer to
perform administrative duties, as provided in subsection
(f)(2).
``(8) Qualified issuer.--
``(A) In general.--The term `qualified issuer' means a
community development financial institution (or any entity
designated to issue notes or bonds on behalf of such
community development financial institution) that meets the
qualification requirements of this paragraph.
``(B) Approval criteria for qualified issuers.--
``(i) In general.--The Secretary shall approve a qualified
issuer for a guarantee under the Program in accordance with
the requirements of this paragraph, and such additional
requirements as the Secretary may establish, by regulation.
``(ii) Terms and qualifications.--A qualified issuer
shall--

``(I) have appropriate expertise, capacity, and experience,
or otherwise be qualified to make loans for eligible
community or economic development purposes;
``(II) provide to the Secretary--

``(aa) an acceptable statement of the proposed sources and
uses of the funds; and
``(bb) a capital distribution plan that meets the
requirements of subsection (c)(1); and

``(III) certify to the Secretary that the bonds or notes to
be guaranteed are to be used for eligible community or
economic development purposes.

``(C) Department opinion; timing.--
``(i) Department opinion.--Not later than 30 days after the
date of a request by a qualified issuer for approval of a
guarantee under the Program, the Secretary shall provide an
opinion regarding compliance by the issuer with the
requirements of the Program under this section.
``(ii) Timing.--The Secretary shall approve or deny a
guarantee under this section after consideration of the
opinion provided to the Secretary under clause (i), and in no
case later than 90 days after receipt of all required
information by the Secretary with respect to a request for
such guarantee.
``(9) Secretary.--The term `Secretary' means the Secretary
of the Treasury.
``(10) Servicer.--The term `servicer' means an entity
designated by the issuer to perform various servicing duties,
as provided in subsection (f)(3).
``(b) Guarantees Authorized.--The Secretary shall guarantee
payments on bonds or notes issued by any qualified issuer, if
the proceeds of the bonds or notes are used in accordance
with this section to make loans to eligible community
development financial institutions--
``(1) for eligible community or economic development
purposes; or
``(2) to refinance loans or notes issued for such purposes.
``(c) General Program Requirements.--
``(1) In general.--A capital distribution plan meets the
requirements of this subsection, if not less than 90 percent
of the principal amount of guaranteed bonds or notes (other
than costs of issuance fees) are used to make loans for any
eligible community or economic development purpose, measured
annually, beginning at the end of the 1-year period beginning
on the issuance date of such guaranteed bonds or notes.
``(2) Relending account.--Not more than 10 percent of the
principal amount of guaranteed bonds or notes, multiplied by
an amount equal to the outstanding principal balance of
issued notes or bonds, minus the risk-share pool amount under
subsection (d), may be held in a relending account and may be
made available for new eligible community or economic
development purposes.
``(3) Limitations on unpaid principal balances.--The
proceeds of guaranteed bonds or

[[Page S3913]]

notes under the Program may not be used to pay fees (other
than costs of issuance fees), and shall be held in--
``(A) community or economic development loans;
``(B) a relending account, to the extent authorized under
paragraph (2); or
``(C) a risk-share pool established under subsection (d).
``(4) Repayment.--If a qualified issuer fails to meet the
requirements of paragraph (1) by the end of the 90-day period
beginning at the end of the annual measurement period,
repayment shall be made on that portion of bonds or notes
necessary to bring the bonds or notes that remain outstanding
after such repayment into compliance with the 90 percent
requirement of paragraph (1).
``(5) Prohibited uses.--The Secretary shall, by
regulation--
``(A) prohibit, as appropriate, certain uses of amounts
from the guarantee of a bond or note under the Program,
including the use of such funds for political activities,
lobbying, outreach, counseling services, or travel expenses;
and
``(B) provide that the guarantee of a bond or note under
the Program may not be used for salaries or other
administrative costs of--
``(i) the qualified issuer; or
``(ii) any recipient of amounts from the guarantee of a
bond or note.
``(d) Risk-Share Pool.--Each qualified issuer shall, during
the term of a guarantee provided under the Program, establish
a risk-share pool, capitalized by contributions from eligible
community development financial institution participants an
amount equal to 3 percent of the guaranteed amount
outstanding on the subject notes and bonds.
``(e) Guarantees.--
``(1) In general.--A guarantee issued under the Program
shall--
``(A) be for the full amount of a bond or note, including
the amount of principal, interest, and call premiums;
``(B) be fully assignable and transferable to the capital
market, on terms and conditions that are consistent with
comparable Government-guaranteed bonds, and satisfactory to
the Secretary;
``(C) represent the full faith and credit of the United
States; and
``(D) not exceed 30 years.
``(2) Limitations.--
``(A) Annual number of guarantees.--The Secretary shall
issue not more than 10 guarantees in any calendar year under
the Program.
``(B) Guarantee amount.--The Secretary may not guarantee
any amount under the Program equal to less than $100,000,000,
but the total of all such guarantees in any fiscal year may
not exceed $1,000,000,000.
``(f) Servicing of Transactions.--
``(1) In general.--To maximize efficiencies and minimize
cost and interest rates, loans made under this section may be
serviced by qualified Program administrators, bond servicers,
and a master servicer.
``(2) Duties of program administrator.--The duties of a
Program administrator shall include--
``(A) approving and qualifying eligible community
development financial institution applications for
participation in the Program;
``(B) compliance monitoring;
``(C) bond packaging in connection with the Program; and
``(D) all other duties and related services that are
customarily expected of a Program administrator.
``(3) Duties of servicer.--The duties of a servicer shall
include--
``(A) billing and collecting loan payments;
``(B) initiating collection activities on past-due loans;
``(C) transferring loan payments to the master servicing
accounts;
``(D) loan administration and servicing;
``(E) systematic and timely reporting of loan performance
through remittance and servicing reports;
``(F) proper measurement of annual outstanding loan
requirements; and
``(G) all other duties and related services that are
customarily expected of servicers.
``(4) Duties of master servicer.--The duties of a master
servicer shall include--
``(A) tracking the movement of funds between the accounts
of the master servicer and any other servicer;
``(B) ensuring orderly receipt of the monthly remittance
and servicing reports of the servicer;
``(C) monitoring the collection comments and foreclosure
actions;
``(D) aggregating the reporting and distribution of funds
to trustees and investors;
``(E) removing and replacing a servicer, as necessary;
``(F) loan administration and servicing;
``(G) systematic and timely reporting of loan performance
compiled from all bond servicers' reports;
``(H) proper distribution of funds to investors; and
``(I) all other duties and related services that are
customarily expected of a master servicer.
``(g) Fees.--
``(1) In general.--A qualified issuer that receives a
guarantee issued under this section on a bond or note shall
pay a fee to the Secretary, in an amount equal to 10 basis
points of the amount of the unpaid principal of the bond or
note guaranteed.
``(2) Payment.--A qualified issuer shall pay the fee
required under this subsection on an annual basis.
``(3) Use of fees.--Fees collected by the Secretary under
this subsection shall be used to reimburse the Department of
the Treasury for any administrative costs incurred by the
Department in implementing the Program established under this
section.
``(h) Authorization of Appropriations.--
``(1) In general.--There are authorized to be appropriated
to the Secretary, such sums as are necessary to carry out
this section.
``(2) Use of fees.--To the extent that the amount of funds
appropriated for a fiscal year under paragraph (1) are not
sufficient to carry out this section, the Secretary may use
the fees collected under subsection (g) for the cost of
providing guarantees of bonds and notes under this section.
``(i) Investment in Guaranteed Bonds Ineligible for
Community Reinvestment Act Purposes.--Notwithstanding any
other provision of law, any investment by a financial
institution in bonds or notes guaranteed under the Program
shall not be taken into account in assessing the record of
such institution for purposes of the Community Reinvestment
Act of 1977 (12 U.S.C. 2901).
``(j) Administration.--
``(1) Regulations.--Not later than 1 year after the date of
enactment of this section, the Secretary shall promulgate
regulations to carry out this section.
``(2) Implementation.--Not later than 2 years after the
date of enactment of this section, the Secretary shall
implement this section.
``(k) Termination.--This section is repealed, and the
authority provided under this section shall terminate, on
September 30, 2014.''.

SEC. 344. TAX EXEMPT STATUS OF CERTAIN BONDS.

(a) No Federal Guarantee.--Subparagraph (A) of section
149(b)(3) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``or'' at the end of clause (iii);
(2) by striking the period at the end of clause (iv) and
inserting ``, or''; and
(3) by adding at the end the following new clause:
``(v) any guarantee of a qualified community development
financial institution bond provided by the Department of the
Treasury.''.
(b) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of enactment of
this Act.
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