S.Amdt. 4453

1. Strikes title III

   Strikes

   In S.Amdt. 4402 as proposed

   Struck: TITLE III--SMALL BUSINESS LENDING

   Struck: Subtitle A--Small Business Lending Fund SEC. 3101. PURPOSE.

   Struck: The purpose of this subtitle is to address the ongoing effects of the financial crisis on small businesses by providing temporary authority to the Secretary of the Treasury to make capital investments in eligible institutions in order to increase the availability of credit for small businesses.

   Struck: SEC. 3102. DEFINITIONS.

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   Struck: For purposes of this subtitle:

   Struck: (1) Appropriate committees of congress.--The term "appropriate committees of Congress" means--

   Struck: (A) the Committee on Small Business and Entrepreneurship, the Committee on Agriculture, Nutrition, and Forestry, the Committee on Banking, Housing, and Urban Affairs, the Committee on Finance, the Committee on the Budget, and the Committee on Appropriations of the Senate; and

   Struck: (B) the Committee on Small Business, the Committee on Agriculture, the Committee on Financial Services, the Committee on Ways and Means, the Committee on the Budget, and the Committee on Appropriations of the House of Representatives.

   Struck: (2) Appropriate federal banking agency.--The term "appropriate Federal banking agency" has the meaning given such term under section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).

   Struck: (3) Bank holding company.--The term "bank holding company" has the meaning given such term under section 2(a)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(2)(a)(1)).

   Struck: (4) Call report.--The term "call report" means--

   Struck: (A) reports of Condition and Income submitted to the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation;

   Struck: (B) the Office of Thrift Supervision Thrift Financial Report;

   Struck: (C) any report that is designated by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision, as applicable, as a successor to any report referred to in subparagraph (A) or (B);

   Struck: (D) reports of Condition and Income as designated through guidance developed by the Secretary, in consultation with the Director of the Community Development Financial Institutions Fund; and

   Struck: (E) with respect to an eligible institution for which no report exists that is described under subparagraph (A), (B), (C), or (D), such other report or set of information as the Secretary, in consultation with the Administrator of the Small Business Administration, may prescribe.

   Struck: (5) CDCI.--The term "CDCI" means the Community Development Capital Initiative created by the Secretary under the Troubled Asset Relief Program established by the Emergency Economic Stabilization Act of 2008.

   Struck: (6) CDCI investment.--The term "CDCI investment" means, with respect to any eligible institution, the principal amount of any investment made by the Secretary in such eligible institution under the CDCI that has not been repaid.

   Struck: (7) CDFI; community development financial institution.--The terms "CDFI" and "community development financial institution" have the meaning given the term "community development financial institution" under the Riegle Community Development and Regulatory Improvement Act of 1994.

   Struck: (8) CDLF; community development loan fund.--The terms "CDLF" and "community development loan fund" mean any entity that--

   Struck: (A) is certified by the Department of the Treasury as a community development financial institution loan fund;

   Struck: (B) is exempt from taxation under the Internal Revenue Code of 1986; and

   Struck: (C) had assets less than or equal to $10,000,000,000 as of the end of the fourth quarter of calendar year 2009.

   Struck: (9) CPP.--The term "CPP" means the Capital Purchase Program created by the Secretary under the Troubled Asset Relief Program established by the Emergency Economic Stabilization Act of 2008.

   Struck: (10) CPP investment.--The term "CPP investment" means, with respect to any eligible institution, the principal amount of any investment made by the Secretary in such eligible institution under the CPP that has not been repaid.

   Struck: (11) Eligible institution.--The term "eligible institution" means--

   Struck: (A) any insured depository institution, which--

   Struck: (i) is not controlled by a bank holding company or savings and loan holding company that is also an eligible institution;

   Struck: (ii) has total assets of equal to or less than $10,000,000,000, as reported in the call report of the insured depository institution as of the end of the fourth quarter of calendar year 2009; and

   Struck: (iii) is not directly or indirectly controlled by any company or other entity that has total consolidated assets of more than $10,000,000,000, as so reported;

   Struck: (B) any bank holding company which has total consolidated assets of equal to or less than $10,000,000,000, as reported in the call report of the bank holding company as of the end of the fourth quarter of calendar year 2009;

   Struck: (C) any savings and loan holding company which has total consolidated assets of equal to or less than $10,000,000,000, as reported in the call report of the savings and loan holding company as of the end of the fourth quarter of calendar year 2009; and

   Struck: (D) any community development financial institution loan fund which has total assets of equal to or less than $10,000,000,000, as reported in audited financial statements for the fiscal year of the community development financial institution loan fund that ends in calendar year 2009.

   Struck: (12) Fund.--The term "Fund" means the Small Business Lending Fund established under section 3103(a)(1).

   Struck: (13) Insured depository institution.--The term "insured depository institution" has the meaning given such term under section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2)).

   Struck: (14) Minority-owned and women-owned business.--The terms "minority-owned business" and "women-owned business" shall have the meaning given the terms "minority-owned business" and "women's business", respectively, under section 21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 1441A(r)(4)).

   Struck: (15) Program.--The term "Program" means the Small Business Lending Fund Program authorized under section 3103(a)(2).

   Struck: (16) Savings and loan holding company.--The term "savings and loan holding company" has the meaning given such term under section 10(a)(1)(D) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)(1)(D)).

   Struck: (17) Secretary.--The term "Secretary" means the Secretary of the Treasury.

   Struck: (18) Small business lending.--

   Struck: (A) In general.--The term "small business lending" means lending, as defined by and reported in an eligible institutions' quarterly call report, where each loan comprising such lending is one of the following types:

   Struck: (i) Commercial and industrial loans.

   Struck: (ii) Owner-occupied nonfarm, nonresidential real estate loans.

   Struck: (iii) Loans to finance agricultural production and other loans to farmers.

   Struck: (iv) Loans secured by farmland.

   Struck: (B) Exclusion.--No loan that has an original amount greater than $10,000,000 or that goes to a business with more than $50,000,000 in revenues shall be included in the measure.

   Struck: (C) Treatment of holding companies.--In the case of eligible institutions that are bank holding companies or savings and loan holding companies having one or more insured depository institution subsidiaries, small business lending shall be measured based on the combined small business lending reported in the call report of the insured depository institution subsidiaries.

   Struck: (19) Veteran-owned business.--

   Struck: (A) The term "veteran-owned business" means a business--

   Struck: (i) more than 50 percent of the ownership or control of which is held by 1 or more veterans;

   Struck: (ii) more than 50 percent of the net profit or loss of which accrues to 1 or more veterans; and

   Struck: (iii) a significant percentage of senior management positions of which are held by veterans.

   Struck: (B) For purposes of this paragraph, the term "veteran" has the meaning given such term in section 101(2) of title 38, United States Code.

   Struck: SEC. 3103. SMALL BUSINESS LENDING FUND.

   Struck: (a) Fund and Program.--

   Struck: (1) Fund established.--There is established in the Treasury of the United States a fund to be known as the "Small Business Lending Fund", which shall be administered by the Secretary.

   Struck: (2) Programs authorized.--The Secretary is authorized to establish the Small Business Lending Fund Program for using the Fund consistent with this subtitle.

   Struck: (b) Use of Fund.--

   Struck: (1) In general.--Subject to paragraph (2), the Fund shall be available to the Secretary, without further appropriation or fiscal year limitation, for the costs of purchases (including commitments to purchase), and modifications of such purchases, of preferred stock and other financial instruments from eligible institutions on such terms and conditions as are determined by the Secretary in accordance with this subtitle. For purposes of this paragraph and with respect to an eligible institution, the term "other financial instruments" shall include only debt instruments for which such eligible institution is fully liable or equity equivalent capital of the eligible institution. Such debt instruments may be subordinated to the claims of other creditors of the eligible institution.

   Struck: (2) Maximum purchase limit.--The aggregate amount of purchases (and commitments to purchase) made pursuant to paragraph (1) may not exceed $30,000,000,000.

   Struck: (3) Proceeds used to pay down public debt.--All funds received by the Secretary in connection with purchases made pursuant to paragraph (1), including interest payments, dividend payments, and proceeds from the sale of any financial instrument, shall be paid into the general fund of the Treasury for reduction of the public debt.

   Struck: (4) Limitation on purchases from cdlfs.--

   Struck: (A) In general.--Not more than 1 percent of the maximum purchase limit of the Program, pursuant to paragraph (2), may be used to make purchases from community development loan funds.

   Struck: (B) Eligibility standards.--The Secretary, in consultation with the Community Development Financial Institutions Fund, shall develop eligibility criteria to determine the financial ability of a CDLF to participate in the Program and repay the investment. Such criteria shall include the following:

   Struck: (i) Ratio of net assets to total assets is at least 20 percent.

   Struck: (ii) Ratio of loan loss reserves to loans and leases 90 days or more delinquent (including loans sold with full recourse) is at least 30 percent.

   Struck: (iii) Positive net income measured on a 3-year rolling average.

   Struck: (iv) Operating liquidity ratio of at least 1.0 for the 4 most recent quarters and for one or both of the two preceding years.

   Struck: (v) Ratio of loans and leases 90 days or more delinquent (including loans sold with full recourse) to total equity plus loan loss reserves is less than 40 percent.

   Struck: (C) Requirement to submit audited financial statements.--CDLFs participating in the Program shall submit audited financial statements to the Secretary, have a clean audit opinion, and have at least 3 years of operating experience.

   Struck: (c) Credits to the Fund.--There shall be credited to the Fund amounts made available pursuant to section 3108, to the extent provided by appropriations Acts.

   Struck: (d) Terms.--

   Struck: (1) Application.--

   Struck: (A) Institutions with assets of $1,000,000,000 or less.--Eligible institutions having total assets equal to or less than $1,000,000,000, as reported in a call report as of the end of the fourth quarter of calendar year 2009, may apply to receive a capital investment from the Fund in an amount not exceeding 5 percent of risk-weighted assets, as reported in the call report immediately preceding the date of application, less the amount of any CDCI investment and any CPP investment.

   Struck: (B) Institutions with assets of more than $1,000,000,000 and less than or equal to $10,000,000,000.--Eligible institutions having total assets of more than $1,000,000,000 but less than $10,000,000,000, as of the end of the fourth quarter of calendar year 2009, may apply to receive a capital investment from the Fund in an amount not exceeding 3 percent of risk-weighted assets, as reported in the call report immediately preceding the date of application, less the amount of any CDCI investment and any CPP investment.

   Struck: (C) Treatment of holding companies.--In the case of an eligible institution that is a bank holding company or a savings and loan holding company having one or more insured depository institution subsidiaries, total assets shall be measured based on the combined total assets reported in the call report of the insured depository institution subsidiaries as of the end of the fourth quarter of calendar year 2009 and risk-weighted assets shall be measured based on the combined risk-weighted assets of the insured depository institution subsidiaries as reported in the call report immediately preceding the date of application.

   Struck: (D) Treatment of applicants that are institutions controlled by holding companies.--If an eligible institution that applies to receive a capital investment under the Program is under the control of a bank holding company or a savings and loan holding company, then the Secretary may use the Fund to purchase preferred stock or other financial instruments from the top-tier bank holding company or savings and loan holding company of such eligible institution, as applicable. For purposes of this subparagraph, the term "control" with respect to a bank holding company shall have the same meaning as in section 2(a)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(2)(a)(2)). For purposes of this subparagraph, the term "control" with respect to a savings and loan holding company shall have the same meaning as in 10(a)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)(2)).

   Struck: (E) Requirement to provide a small business lending plan.--At the time that an applicant submits an application to the Secretary for a capital investment under the Program, the applicant shall deliver to the appropriate Federal banking agency, and, for applicants that are State-chartered banks, to the appropriate State banking regulator, a small business lending plan describing how the applicant's business strategy and operating goals will allow it to address the needs of small businesses in the areas it serves, as well as a plan to provide linguistically and culturally appropriate outreach, where appropriate. In the case of eligible institutions that are community development loan funds, this plan shall be submitted to the Secretary. This plan shall be confidential supervisory information.

   Struck: (F) Treatment of applicants that are community development loan funds.--Eligible institutions that are community development loan funds may apply to receive a capital investment from the Fund in an amount not exceeding 5 percent of total assets, as reported in the audited financial statements for the fiscal year of the eligible institution that ends in calendar year 2009.

   Struck: (2) Consultation with regulators.--For each eligible institution that applies to receive a capital investment under the Program, the Secretary shall--

   Struck: (A) consult with the appropriate Federal banking agency or, in the case of an eligible institution that is a non-depository community development financial institution, the Community Development Financial Institution Fund, for the eligible institution to determine whether the eligible institution may receive such capital investment;

   Struck: (B) in the case of an eligible institution that is a State-chartered bank, consider any views received from the State banking regulator of the State of the eligible institution regarding the financial condition of the eligible institution; and

   Struck: (C) in the case of a community development financial institution loan fund, consult with the Community Development Financial Institution Fund.

   Struck: (3) Ineligibility of institutions on fdic problem bank list.--

   Struck: (A) In general.--An eligible institution may not receive any capital investment under the Program if--

   Struck: (i) such institution is on the FDIC problem bank list; or

   Struck: (ii) such institution has been removed from the FDIC problem bank list for less than 90 days.

   Struck: (B) Construction.--Nothing in subparagraph (A) shall be construed as limiting the discretion of the Secretary to deny the application of an eligible institution that is not on the FDIC problem bank list.

   Struck: (C) Fdic problem bank list defined.--For purposes of this subparagraph, the term "FDIC problem bank list" means the list of institutions with a current rating of 4 or 5 under the Uniform Financial Institutions Rating System, or such other list designated by the Federal Deposit Insurance Corporation.

   Struck: (4) Incentives to lend.--

   Struck: (A) Requirements on preferred stock and other financial instruments.--Any preferred stock or other financial instrument issued to Treasury by an eligible institution receiving a capital investment under the Program shall provide that--

   Struck: (i) the rate at which dividends or interest are payable shall be 5 percent per annum initially;

   Struck: (ii) within the first 2 years after the date of the capital investment under the Program, the rate may be adjusted based on the amount of an eligible institution's small business lending. Changes in the amount of small business lending shall be measured against the average amount of small business lending reported by the eligible institution in its call reports for the 4 full quarters immediately preceding the date of enactment of this Act, minus adjustments from each quarterly balance in respect of--

   Struck: (I) net loan charge offs with respect to small business lending; and

   Struck: (II) gains realized by the eligible institution resulting from mergers, acquisitions or purchases of loans after origination and syndication; which adjustments shall be determined in accordance with guidance promulgated by the Secretary; and

   Struck: (iii) during any calendar quarter during the initial 2-year period referred to in clause (ii), an institution's rate shall be adjusted to reflect the following schedule, based on that institution's change in the amount of small business lending relative to the baseline--

   Struck: (I) if the amount of small business lending has increased by less than 2.5 percent, the dividend or interest rate shall be 5 percent;

   Struck: (II) if the amount of small business lending has increased by 2.5 percent or greater, but by less than 5.0 percent, the dividend or interest rate shall be 4 percent;

   Struck: (III) if the amount of small business lending has increased by 5.0 percent or greater, but by less than 7.5 percent, the dividend or interest rate shall be 3 percent;

   Struck: (IV) if the amount of small business lending has increased by 7.5 percent or greater, and but by less than 10.0 percent, the dividend or interest rate shall be 2 percent; or

   Struck: (V) if the amount of small business lending has increased by 10 percent or greater, the dividend or interest rate shall be 1 percent.

   Struck: (B) Basis of initial rate.--The initial dividend or interest rate shall be based on call report data published in the quarter immediately preceding the date of the capital investment under the Program.

   Struck: (C) Timing of rate adjustments.--Any rate adjustment shall occur in the calendar quarter following the publication of call report data, such that the rate based on call report data from any one calendar quarter, which is published in the first following calendar quarter, shall be adjusted in that first following calendar quarter and payable in the second following quarter.

   Struck: (D) Rate following initial 2-year period.--Generally, the rate based on call report data from the eighth calendar quarter after the date of the capital investment under the Program shall be payable until the expiration of the 4\1/2\-year period that begins on the date of the investment. In the case where the amount of small business lending has remained the same or decreased relative to the institution's baseline in the eighth quarter after the date of the capital investment under the Program, the rate shall be 7 percent until the expiration of the 4\1/2\-year period that begins on the date of the investment.

   Struck: (E) Rate following initial 4\1/2\ -year period.--The dividend or interest rate paid on any preferred stock or other financial instrument issued by an eligible institution that receives a capital investment under the Program shall increase to 9 percent at the end of the 4\1/2\-year period that begins on the date of the capital investment under the Program.

   Struck: (F) Limitation on rate reductions with respect to certain amount.--The reduction in the dividend or interest rate payable to Treasury by any eligible institution shall be limited such that the rate reduction shall not apply to a dollar amount of the investment made by Treasury that is greater than the dollar amount increase in the amount of small business lending realized under this program. The Secretary may issue guidelines that will apply to new capital investments limiting the amount of capital available to eligible institutions consistent with this limitation.

   Struck: (G) Rate adjustments for s corporation.--Before making a capital investment in an eligible institution that is an S corporation or a corporation organized on a mutual basis, the Secretary may adjust the dividend or interest rate on the financial instrument to be issued to the Secretary, from the dividend or interest rate that would apply under subparagraphs (A) through (F), to take into account any differential tax treatment of securities issued by such eligible institution. For purpose of this subparagraph, the term "S corporation" has the same meaning as in section 1361(a) of the Internal Revenue Code of 1986.

   Struck: (H) Repayment deadline.--The capital investment received by an eligible institution under the Program shall be evidenced by preferred stock or other financial instrument that--

   Struck: (i) includes, as a term and condition, that the capital investment will--

   Struck: (I) be repaid not later than the end of the 10-year period beginning on the date of the capital investment under the Program; or

   Struck: (II) at the end of such 10-year period, be subject to such additional terms as the Secretary shall prescribe, which shall include a requirement that the stock or instrument shall carry the highest dividend or interest rate payable; and

   Struck: (ii) provides that the term and condition described under clause (i) shall not apply if the application of that term and condition would adversely affect the capital treatment of the stock or financial instrument under current or successor applicable capital provisions compared to a capital instrument with identical terms other than the term and condition described under clause (i).

   Struck: (I) Requirements on financial instruments issued by a community development financial institution loan fund.--Any equity equivalent capital issued to the Treasury by a community development loan fund receiving a capital investment under the Program shall provide that the rate at which interest is payable shall be 2 percent per annum for 8 years. After 8 years, the rate at which interest is payable shall be 9 percent.

   Struck: (5) Additional incentives to repay.--The Secretary may, by regulation or guidance issued under section 3104(9), establish repayment incentives in addition to the incentive in paragraph (4)(E) that will apply to new capital investments in a manner that the Secretary determines to be consistent with the purposes of this subtitle.

   Struck: (6) Capital purchase program refinance.--

   Struck: (A) In general.--The Secretary shall, in a manner that the Secretary determines to be consistent with the purposes of this subtitle, issue regulations and other guidance to permit eligible institutions to refinance securities issued to Treasury under the CDCI and the CPP for securities to be issued under the Program.

   Struck: (B) Prohibition on participation by non-paying cpp participants.--Subparagraph (A) shall not apply to any eligible institution that has missed more than one dividend payment due under the CPP. For purposes of this subparagraph, a CPP dividend payment that is submitted within 60 days of the due date of such payment shall not be considered a missed dividend payment.

   Struck: (7) Outreach to minorities, women, and veterans.--The Secretary shall require eligible institutions receiving capital investments under the Program to provide linguistically and culturally appropriate outreach and advertising in the applicant pool describing the availability and application process of receiving loans from the eligible institution that are made possible by the Program through the use of print, radio, television or electronic media outlets which target organizations, trade associations, and individuals that--

   Struck: (A) represent or work within or are members of minority communities;

   Struck: (B) represent or work with or are women; and

   Struck: (C) represent or work with or are veterans.

   Struck: (8) Additional terms.--The Secretary may, by regulation or guidance issued under section 3104(9), make modifications that will apply to new capital investments in order to manage risks associated with the administration of the Fund in a manner consistent with the purposes of this subtitle.

   Struck: (9) Minimum underwriting standards.--The appropriate Federal banking agency for an eligible institution that receives funds under the Program shall within 60 days issue guidance regarding prudent underwriting standards that must be used for loans made by the eligible institution using such funds..

   Struck: SEC. 3104. ADDITIONAL AUTHORITIES OF THE SECRETARY.

   Struck: The Secretary may take such actions as the Secretary deems necessary to carry out the authorities in this subtitle, including, without limitation, the following:

   Struck: (1) The Secretary may use the services of any agency or instrumentality of the United States or component thereof on a reimbursable basis, and any such agency or instrumentality or component thereof is authorized to provide services as requested by the Secretary using all authorities vested in or delegated to that agency, instrumentality, or component.

   Struck: (2) The Secretary may enter into contracts, including contracts for services authorized by section 3109 of title 5, United States Code.

   Struck: (3) The Secretary may designate any bank, savings association, trust company, security broker or dealer, asset manager, or investment adviser as a financial agent of the Federal Government and such institution shall perform all such reasonable duties related to this subtitle as financial agent of the Federal Government as may be required. The Secretary shall have authority to amend existing agreements with financial agents, entered into during the 2-year period before the date of enactment of this Act, to perform reasonable duties related to this subtitle.

   Struck: (4) The Secretary may exercise any rights received in connection with any preferred stock or other financial instruments or assets purchased or acquired pursuant to the authorities granted under this subtitle.

   Struck: (5) Subject to section 3103(b)(3), the Secretary may manage any assets purchased under this subtitle, including revenues and portfolio risks therefrom.

   Struck: (6) The Secretary may sell, dispose of, transfer, exchange or enter into securities loans, repurchase transactions, or other financial transactions in regard to, any preferred stock or other financial instrument or asset purchased or acquired under this subtitle, upon terms and conditions and at a price determined by the Secretary.

   Struck: (7) The Secretary may manage or prohibit conflicts of interest that may arise in connection with the administration and execution of the authorities provided under this subtitle.

   Struck: (8) The Secretary may establish and use vehicles, subject to supervision by the Secretary, to purchase, hold, and sell preferred stock or other financial instruments and issue obligations.

   Struck: (9) The Secretary may, in consultation with the Administrator of the Small Business Administration, issue such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities or purposes of this subtitle.

   Struck: SEC. 3105. CONSIDERATIONS.

   Struck: In exercising the authorities granted in this subtitle, the Secretary shall take into consideration--

   Struck: (1) increasing the availability of credit for small businesses;

   Struck: (2) providing funding to minority-owned eligible institutions and other eligible institutions that serve small businesses that are minority-, veteran-, and women-owned and that also serve low- and moderate-income, minority, and other underserved or rural communities;

   Struck: (3) protecting and increasing American jobs;

   Struck: (4) increasing the opportunity for small business development in areas with high unemployment rates that exceed the national average;

   Struck: (5) ensuring that all eligible institutions may apply to participate in the program established under this subtitle, without discrimination based on geography;

   Struck: (6) providing transparency with respect to use of funds provided under this subtitle;

   Struck: (7) minimizing the cost to taxpayers of exercising the authorities;

   Struck: (8) promoting and engaging in financial education to would-be borrowers; and

   Struck: (9) providing funding to eligible institutions that serve small businesses directly affected by the discharge of oil arising from the explosion on and sinking of the mobile offshore drilling unit Deepwater Horizon and small businesses in communities that have suffered negative economic effects as a result of that discharge with particular consideration to States along the coast of the Gulf of Mexico.

   Struck: SEC. 3106. REPORTS.

   Struck: The Secretary shall provide to the appropriate committees of Congress--

   Struck: (1) within 7 days of the end of each month commencing with the first month in which transactions are made under the Program, a written report describing all of the transactions made during the reporting period pursuant to the authorities granted under this subtitle;

   Struck: (2) after the end of March and the end of September, commencing September 30, 2010, a written report on all projected costs and liabilities, all operating expenses, including compensation for financial agents, and all transactions made by the Fund, which shall include participating institutions and amounts each institution has received under the Program; and

   Struck: (3) within 7 days of the end of each calendar quarter commencing with the first calendar quarter in which transactions are made under the Program, a written report detailing how eligible institutions participating in the Program have used the funds such institutions received under the Program.

   Struck: SEC. 3107. OVERSIGHT AND AUDITS.

   Struck: (a) Inspector General Oversight.--The Inspector General of the Department of the Treasury shall conduct, supervise, and coordinate audits and investigations of the Program through the Office of Small Business Lending Fund Program Oversight established under subsection (b).

   Struck: (b) Office of Small Business Lending Fund Program Oversight.--

   Struck: (1) Establishment.--There is hereby established within the Office of the Inspector General of the Department of the Treasury a new office to be named the "Office of Small Business Lending Fund Program Oversight" to provide oversight of the Program.

   Struck: (2) Leadership.--The Inspector General shall appoint a Special Deputy Inspector General for SBLF Program Oversight to lead the Office, with commensurate staff, who shall report directly to the Inspector General and who shall be responsible for the performance of all auditing and investigative activities relating to the Program.

   Struck: (3) Reporting.--

   Struck: (A) In general.--The Inspector General shall issue a report no less than two times a year to the Congress and the Secretary devoted to the oversight provided by the Office, including any recommendations for improvements to the Program.

   Struck: (B) Recommendations.--With respect to any deficiencies identified in a report under subparagraph (A), the Secretary shall either--

   Struck: (i) take actions to address such deficiencies; or

   Struck: (ii) certify to the appropriate committees of Congress that no action is necessary or appropriate.

   Struck: (4) Coordination.--The Inspector General, in maximizing the effectiveness of the Office, shall work with other Offices of Inspector General, as appropriate, to minimize duplication of effort and ensure comprehensive oversight of the Program.

   Struck: (5) Termination.--The Office shall terminate at the end of the 6-month period beginning on the date on which all capital investments are repaid under the Program or the date on which the Secretary determines that any remaining capital investments will not be repaid.

   Struck: (6) Definitions.--For purposes of this subsection:

   Struck: (A) Office.--The term "Office" means the Office of Small Business Lending Fund Program Oversight established under paragraph (1).

   Struck: (B) Inspector general.--The term "Inspector General" means the Inspector General of the Department of the Treasury.

   Struck: (c) GAO Audit.--The Comptroller General of the United States shall perform an annual audit of the Program and issue a report to the appropriate committees of Congress containing the results of such audit.

   Struck: (d) Required Certifications.--

   Struck: (1) Eligible institution certification.--Each eligible institution that participates in the Program must certify that such institution is in compliance with the requirements of section 103.121 of title 31, Code of Federal Regulations, a regulation that, at a minimum, requires financial institutions, as that term is defined in 31 U.S.C. 5312(a)(2) and (c)(1)(A), to implement reasonable procedures to verify the identity of any person seeking to open an account, to the extent reasonable and practicable, maintain records of the information used to verify the person's identity, and determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency.

   Struck: (2) Loan recipients.--With respect to funds received by an eligible institution under the Program, any business receiving a loan from the eligible institution using such funds after the date of the enactment of this Act shall certify to such eligible institution that the principals of such business have not been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)).

   Struck: (e) Prohibition on Pornography.--None of the funds made available under this subtitle may be used to pay the salary of any individual engaged in activities related to the Program who has been officially disciplined for violations of subpart G of the Standards of Ethical Conduct for Employees of the Executive Branch for viewing, downloading, or exchanging pornography, including child pornography, on a Federal Government computer or while performing official Federal Government duties.

   Struck: SEC. 3108. CREDIT REFORM; FUNDING.

   Struck: (a) Credit Reform.--The cost of purchases of preferred stock and other financial instruments made as capital investments under this subtitle shall be determined as provided under the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).

   Struck: (b) Funds Made Available.--There are hereby appropriated, out of funds in the Treasury not otherwise appropriated, such sums as may be necessary to pay the costs of $30,000,000,000 of capital investments in eligible institutions, including the costs of modifying such investments, and reasonable costs of administering the program of making, holding, managing, and selling the capital investments.

   Struck: SEC. 3109. TERMINATION AND CONTINUATION OF AUTHORITIES.

   Struck: (a) Termination of Investment Authority.--The authority to make capital investments in eligible institutions, including commitments to purchase preferred stock or other instruments, provided under this subtitle shall terminate 1 year after the date of enactment of this Act.

   Struck: (b) Continuation of Other Authorities.--The authorities of the Secretary under section 3104 shall not be limited by the termination date in subsection (a).

   Struck: SEC. 3110. PRESERVATION OF AUTHORITY.

   Struck: Nothing in this subtitle may be construed to limit the authority of the Secretary under any other provision of law.

   Struck: SEC. 3111. ASSURANCES.

   Struck: (a) Small Business Lending Fund Separate From TARP.--The Small Business Lending Fund Program is established as separate and distinct from the Troubled Asset Relief Program established by the Emergency Economic Stabilization Act of 2008. An institution shall not, by virtue of a capital investment under the Small Business Lending Fund Program, be considered a recipient of the Troubled Asset Relief Program.

   Struck: (b) Change in Law.--If, after a capital investment has been made in an eligible institution under the Program, there is a change in law that modifies the terms of the investment or program in a materially adverse respect for the eligible institution, the eligible institution may, after consultation with the appropriate Federal banking agency for the eligible institution, repay the investment without impediment.

   Struck: SEC. 3112. STUDY AND REPORT WITH RESPECT TO WOMEN-OWNED, VETERAN-OWNED, AND MINORITY-OWNED BUSINESSES.

   Struck: (a) Study.--The Secretary shall conduct a study of the impact of the Program on women-owned businesses, veteran-owned businesses, and minority-owned businesses.

   Struck: (b) Report.--Not later than one year after the date of enactment of this Act, the Secretary shall submit to Congress a report on the results of the study conducted pursuant to subsection (a). To the extent possible, the Secretary shall disaggregate the results of such study by ethnic group and gender.

   Struck: (c) Information Provided to the Secretary.--Eligible institutions that participate in the Program shall provide the Secretary with such information as the Secretary may require to carry out the study required by this section.

   Struck: SEC. 3113. SENSE OF CONGRESS.

   Struck: It is the sense of Congress that the Federal Deposit Insurance Corporation and other bank regulators are sending mixed messages to banks regarding regulatory capital requirements and lending standards, which is a contributing cause of decreased small business lending and increased regulatory uncertainty at community banks.

   Struck: Subtitle B--State Small Business Credit Initiative SEC. 3201. SHORT TITLE.

   Struck: This subtitle may be cited as the "State Small Business Credit Initiative Act of 2010".

   Struck: SEC. 3202. DEFINITIONS.

   Struck: In this subtitle, the following definitions shall apply:

   Struck: (1) Appropriate committees of congress.--The term "appropriate committees of Congress" means--

   Struck: (A) the Committee on Small Business and Entrepreneurship, the Committee on Agriculture, Nutrition, and Forestry, the Committee on Banking, Housing, and Urban Affairs, the Committee on Finance, the Committee on the Budget, and the Committee on Appropriations of the Senate; and

   Struck: (B) the Committee on Small Business, the Committee on Agriculture, the Committee on Financial Services, the Committee on Ways and Means, the Committee on the Budget, and the Committee on Appropriations of the House of Representatives.

   Struck: (2) Appropriate federal banking agency.--The term "appropriate Federal banking agency"--

   Struck: (A) has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)); and

   Struck: (B) includes the National Credit Union Administration Board in the case of any credit union the deposits of which are insured in accordance with the Federal Credit Union Act.

   Struck: (3) Enrolled loan.--The term "enrolled loan" means a loan made by a financial institution lender that is enrolled by a participating State in an approved State capital access program in accordance with this subtitle.

   Struck: (4) Federal contribution.--The term "Federal contribution" means the portion of the contribution made by a participating State to, or for the account of, an approved State program that is made with Federal funds allocated to the State by the Secretary under section 3203.

   Struck: (5) Financial institution.--The term "financial institution" means any insured depository institution, insured credit union, or community development financial institution, as those terms are each defined in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702)

   Struck: (6) Participating state.--The term "participating State" means any State that has been approved for participation in the Program under section 3204.

   Struck: (7) Program.--The term "Program" means the State Small Business Credit Initiative established under this subtitle.

   Struck: (8) Qualifying loan or swap funding facility.--The term "qualifying loan or swap funding facility" means a contractual arrangement between a participating State and a private financial entity under which--

   Struck: (A) the participating State delivers funds to the entity as collateral;

   Struck: (B) the entity provides funding from the arrangement back to the participating State; and

   Struck: (C) the full amount of resulting funding from the arrangement, less any fees and other costs of the arrangement, is contributed to, or for the account of, an approved State program.

   Struck: (9) Reserve fund.--The term "reserve fund" means a fund, established by a participating State, dedicated to a particular financial institution lender, for the purposes of--

   Struck: (A) depositing all required premium charges paid by the financial institution lender and by each borrower receiving a loan under an approved State program from that financial institution lender;

   Struck: (B) depositing contributions made by the participating State, including State contributions made with Federal contributions; and

   Struck: (C) covering losses on enrolled loans by disbursing accumulated funds.

   Struck: (10) State.--The term "State" means--

   Struck: (A) a State of the United States;

   Struck: (B) the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of Northern Mariana Islands, Guam, American Samoa, and the United States Virgin Islands;

   Struck: (C) when designated by a State of the United States, a political subdivision of that State that the Secretary determines has the capacity to participate in the Program; and

   Struck: (D) under the circumstances described in section 3204(d), a municipality of a State of the United States to which the Secretary has given a special permission under section 3204(d).

   Struck: (11) State capital access program.--The term "State capital access program" means a program of a State that--

   Struck: (A) uses public resources to promote private access to credit; and

   Struck: (B) meets the eligibility criteria in section 3205(c).

   Struck: (12) State other credit support program.--The term "State other credit support program"--

   Struck: (A) means a program of a State that--

   Struck: (i) uses public resources to promote private access to credit;

   Struck: (ii) is not a State capital access program; and

   Struck: (iii) meets the eligibility criteria in section 3206(c); and

   Struck: (B) includes, collateral support programs, loan participation programs, State-run venture capital fund programs, and credit guarantee programs.

   Struck: (13) State program.--The term "State program" means a State capital access program or a State other credit support program.

   Struck: (14) Secretary.--The term "Secretary" means the Secretary of the Treasury.

   Struck: SEC. 3203. FEDERAL FUNDS ALLOCATED TO STATES.

   Struck: (a) Program Established; Purpose.--There is established the State Small Business Credit Initiative, to be administered by the Secretary. Under the Program, the Secretary shall allocate Federal funds to participating States and make the allocated funds available to the participating States as provided in this section for the uses described in this section.

   Struck: (b) Allocation Formula.--

   Struck: (1) In general.--Not later than 30 days after the date of enactment of this Act, the Secretary shall allocate Federal funds to participating States so that each State is eligible to receive an amount equal to the average of the respective amounts that the State--

   Struck: (A) would receive under the 2009 allocation, as determined under paragraph (2); and

   Struck: (B) would receive under the 2010 allocation, as determined under paragraph (3).

   Struck: (2) 2009 allocation formula.--

   Struck: (A) In general.--The Secretary shall determine the 2009 allocation by allocating Federal funds among the States in the proportion that each such State's 2008 State employment decline bears to the aggregate of the 2008 State employment declines for all States.

   Struck: (B) Minimum allocation.--The Secretary shall adjust the allocations under subparagraph (A) for each State to the extent necessary to ensure that no State receives less than 0.9 percent of the Federal funds.

   Struck: (C) 2008 state employment decline defined.--In this paragraph and with respect to a State, the term "2008 State employment decline" means the excess (if any) of--

   Struck: (i) the number of individuals employed in such State determined for December 2007; over

   Struck: (ii) the number of individuals employed in such State determined for December 2008.

   Struck: (3) 2010 allocation formula.--

   Struck: (A) In general.--The Secretary shall determine the 2010 allocation by allocating Federal funds among the States in the proportion that each such State's 2009 unemployment number bears to the aggregate of the 2009 unemployment numbers for all of the States.

   Struck: (B) Minimum allocation.--The Secretary shall adjust the allocations under subparagraph (A) for each State to the extent necessary to ensure that no State receives less than 0.9 percent of the Federal funds.

   Struck: (C) 2009 unemployment number defined.--In this paragraph and with respect to a State, the term "2009 unemployment number" means the number of individuals within such State who were determined to be unemployed by the Bureau of Labor Statistics for December 2009.

   Struck: (c) Availability of Allocated Amount.--The amount allocated by the Secretary to each participating State under subsection (b) shall be made available to the State as follows:

   Struck: (1) Allocated amount generally to be available to state in one-thirds.--

   Struck: (A) In general.--The Secretary shall--

   Struck: (i) apportion the participating State's allocated amount into thirds;

   Struck: (ii) transfer to the participating State the first \1/3\ when the Secretary approves the State for participation under section 3204; and

   Struck: (iii) transfer to the participating State each successive \1/3\ when the State has certified to the Secretary that it has expended, transferred, or obligated 80 percent of the last transferred \1/3\ for Federal contributions to, or for the account of, State programs.

   Struck: (B) Authority to withhold pending audit.--The Secretary may withhold the transfer of any successive \1/3\ pending results of a financial audit.

   Struck: (C) Inspector general audits.--

   Struck: (i) In general.--The Inspector General of the Department of the Treasury shall carry out an audit of the participating State's use of allocated Federal funds transferred to the State.

   Struck: (ii) Recoupment of misused transferred funds required.--The allocation agreement between the Secretary and the participating State shall provide that the Secretary shall recoup any allocated Federal funds transferred to the participating State if the results of the an audit include a finding that there was an intentional or reckless misuse of transferred funds by the State.

   Struck: (iii) Penalty for misstatement.--Any participating State that is found to have intentionally misstated any report issued to the Secretary under the Program shall be ineligible to receive any additional funds under the Program. Funds that had been allocated or that would otherwise have been allocated to such participating State shall be paid into the general fund of the Treasury for reduction of the public debt.

   Struck: (iv) Municipalities.--In this subparagraph, the term "participating State" shall include a municipality given special permission to participate in the Program, under section 3204(d).

   Struck: (D) Exception.--The Secretary may, in the Secretary's discretion, transfer the full amount of the participating State's allocated amount to the State in a single transfer if the participating State applies to the Secretary for approval to use the full amount of the allocation as collateral for a qualifying loan or swap funding facility.

   Struck: (2) Transferred amounts.--Each amount transferred to a participating State under this section shall remain available to the State until used by the State as permitted under paragraph (3).

   Struck: (3) Use of transferred funds.--Each participating State may use funds transferred to it under this section only--

   Struck: (A) for making Federal contributions to, or for the account of, an approved State program;

   Struck: (B) as collateral for a qualifying loan or swap funding facility;

   Struck: (C) in the case of the first \1/3\ transferred, for paying administrative costs incurred by the State in implementing an approved State program in an amount not to exceed 5 percent of that first \1/3\; or

   Struck: (D) in the case of each successive \1/3\ transferred, for paying administrative costs incurred by the State in implementing an approved State program in an amount not to exceed 3 percent of that successive \1/3\.

   Struck: (4) Termination of availability of amounts not transferred within 2 years of participation.--Any portion of a participating State's allocated amount that has not been transferred to the State under this section by the end of the 2-year period beginning on the date that the Secretary approves the State for participation may be deemed by the Secretary to be no longer allocated to the State and no longer available to the State and shall be returned to the General Fund of the Treasury.

   Struck: (5) Transferred amounts not assistance.--The amounts transferred to a participating State under this section shall not be considered assistance for purposes of subtitle V of title 31, United States Code.

   Struck: (6) Definitions.--In this section--

   Struck: (A) the term "allocated amount" means the total amount of Federal funds allocated by the Secretary under subsection (b) to the participating State; and

   Struck: (B) the term "\1/3\" means--

   Struck: (i) in the case of the first \1/3\ and second \1/3\, an amount equal to 33 percent of a participating State's allocated amount; and

   Struck: (ii) in the case of the last \1/3\, an amount equal to 34 percent of a participating State's allocated amount.

   Struck: SEC. 3204. APPROVING STATES FOR PARTICIPATION.

   Struck: (a) Application.--Any State may apply to the Secretary for approval to be a participating State under the Program and to be eligible for an allocation of Federal funds under the Program.

   Struck: (b) General Approval Criteria.--The Secretary shall approve a State to be a participating State, if--

   Struck: (1) a specific department, agency, or political subdivision of the State has been designated to implement a State program and participate in the Program;

   Struck: (2) all legal actions necessary to enable such designated department, agency, or political subdivision to implement a State program and participate in the Program have been accomplished;

   Struck: (3) the State has filed an application with the Secretary for approval of a State capital access program under section 3205 or approval as a State other credit support program under section 3206, in each case within the time period provided in the respective section; and

   Struck: (4) the State and the Secretary have executed an allocation agreement that--

   Struck: (A) conforms to the requirements of this subtitle;

   Struck: (B) ensures that the State program complies with such national standards as are established by the Secretary under section 3209(a)(2);

   Struck: (C) sets forth internal control, compliance, and reporting requirements as established by the Secretary, and such other terms and conditions necessary to carry out the purposes of this subtitle, including an agreement by the State to allow the Secretary to audit State programs;

   Struck: (D) requires that the State program be fully positioned, within 90 days of the State's execution of the allocation agreement with the Secretary, to act on providing the kind of credit support that the State program was established to provide; and

   Struck: (E) includes an agreement by the State to deliver to the Secretary, and update annually, a schedule describing how the State intends to apportion among its State programs the Federal funds allocated to the State.

   Struck: (c) Contractual Arrangements for Implementation of State Programs.--A State may be approved to be a participating State, and be eligible for an allocation of Federal funds under the Program, if the State has contractual arrangements for the implementation and administration of its State program with--

   Struck: (1) an existing, approved State program administered by another State; or

   Struck: (2) an authorized agent of, or entity supervised by, the State, including for-profit and not-for-profit entities.

   Struck: (d) Special Permission.--

   Struck: (1) Circumstances when a municipality may apply directly.--If a State does not, within 60 days after the date of enactment of this Act, file with the Secretary a notice of its intent to apply for approval by the Secretary of a State program or within 9 months after the date of enactment of this Act, file with the Secretary a complete application for approval of a State program, the Secretary may grant to municipalities of that State a special permission that will allow them to apply directly to the Secretary without the State for approval to be participating municipalities.

   Struck: (2) Timing requirements applicable to municipalities applying directly.--To qualify for the special permission, a municipality of a State shall be required, within 12 months after the date of enactment of this Act, to file with the Secretary a complete application for approval by the Secretary of a State program.

   Struck: (3) Notices of intent and applications from more than 1 municipality.--A municipality of a State may combine with 1 or more other municipalities of that State to file a joint notice of intent to file and a joint application.

   Struck: (4) Approval criteria.--The general approval criteria in paragraphs (2) and (4) shall apply.

   Struck: (5) Allocation to municipalities.--

   Struck: (A) If more than 3.--If more than 3 municipalities, or combination of municipalities as provided in paragraph (3), of a State apply for approval by the Secretary to be participating municipalities under this subsection, and the applications meet the approval criteria in paragraph (4), the Secretary shall allocate Federal funds to the 3 municipalities with the largest populations.

   Struck: (B) If 3 or fewer.--If 3 or fewer municipalities, or combination of municipalities as provided in paragraph (3), of a State apply for approval by the Secretary to be participating municipalities under this subsection, and the applications meet the approval criteria in paragraph (4), the Secretary shall allocate Federal funds to each applicant municipality or combination of municipalities.

   Struck: (6) Apportionment of allocated amount among participating municipalities.--If the Secretary approves municipalities to be participating municipalities under this subsection, the Secretary shall apportion the full amount of the Federal funds that are allocated to that State to municipalities that are approved under this subsection in amounts proportionate to the population of those municipalities, based on the most recent available decennial census.

   Struck: (7) Approving state programs for municipalities.--If the Secretary approves municipalities to be participating municipalities under this subsection, the Secretary shall take into account the additional considerations in section 3206(d) in making the determination under section 3205 or 3206 that the State program or programs to be implemented by the participating municipalities, including a State capital access program, is eligible for Federal contributions to, or for the account of, the State program.

   Struck: SEC. 3205. APPROVING STATE CAPITAL ACCESS PROGRAMS.

   Struck: (a) Application.--A participating State that establishes a new, or has an existing, State capital access program that meets the eligibility criteria in subsection (c) may apply to Secretary to have the State capital access program approved as eligible for Federal contributions to the reserve fund.

   Struck: (b) Approval.--The Secretary shall approve such State capital access program as eligible for Federal contributions to the reserve fund if--

   Struck: (1) within 60 days after the date of enactment of this Act, the State has filed with the Secretary a notice of intent to apply for approval by the Secretary of a State capital access program;

   Struck: (2) within 9 months after the date of enactment of this Act, the State has filed with the Secretary a complete application for approval by the Secretary of a capital access program;

   Struck: (3) the State satisfies the requirements of subsections (a) and (b) of section 3204; and

   Struck: (4) the State capital access program meets the eligibility criteria in subsection (c).

   Struck: (c) Eligibility Criteria for State Capital Access Programs.--For a State capital access program to be approved under this section, that program shall be required to be a program of the State that--

   Struck: (1) provides portfolio insurance for business loans based on a separate loan-loss reserve fund for each financial institution;

   Struck: (2) requires insurance premiums to be paid by the financial institution lenders and by the business borrowers to the reserve fund to have their loans enrolled in the reserve fund;

   Struck: (3) provides for contributions to be made by the State to the reserve fund in amounts at least equal to the sum of the amount of the insurance premium charges paid by the borrower and the financial institution to the reserve fund for any newly enrolled loan; and

   Struck: (4) provides its portfolio insurance solely for loans that meet both the following requirements:

   Struck: (A) The borrower has 500 employees or less at the time that the loan is enrolled in the Program.

   Struck: (B) The loan amount does not exceed $5,000,000.

   Struck: (d) Federal Contributions to Approved State Capital Access Programs.--A State capital access program approved under this section will be eligible for receiving Federal contributions to the reserve fund in an amount equal to the sum of the amount of the insurance premium charges paid by the borrowers and by the financial institution to the reserve fund for loans that meet the requirements in subsection (c)(4). A participating State may use the Federal contribution to make its contribution to the reserve fund of an approved State capital access program.

   Struck: (e) Minimum Program Requirements for State Capital Access Programs.--The Secretary shall, by regulation or other guidance, prescribe Program requirements that meet the following minimum requirements:

   Struck: (1) Experience and capacity.--The participating State shall determine for each financial institution that participates in the State capital access program, after consultation with the appropriate Federal banking agency or, in the case of a financial institution that is a nondepository community development financial institution, the Community Development Financial Institution Fund, that the financial institution has sufficient commercial lending experience and financial and managerial capacity to participate in the approved State capital access program. The determination by the State shall not be reviewable by the Secretary.

   Struck: (2) Investment authority.--Subject to applicable State law, the participating State may invest, or cause to be invested, funds held in a reserve fund by establishing a deposit account at the financial institution lender in the name of the participating State. In the event that funds in the reserve fund are not deposited in such an account, such funds shall be invested in a form that the participating State determines is safe and liquid.

   Struck: (3) Loan terms and conditions to be determined by agreement.--A loan to be filed for enrollment in an approved State capital access program may be made with such interest rate, fees, and other terms and conditions, and the loan may be enrolled in the approved State capital access program and claims may be filed and paid, as agreed upon by the financial institution lender and the borrower, consistent with applicable law.

   Struck: (4) Lender capital at-risk.--A loan to be filed for enrollment in the State capital access program shall require the financial institution lender to have a meaningful amount of its own capital resources at risk in the loan.

   Struck: (5) Premium charges minimum and maximum amounts.--The insurance premium charges payable to the reserve fund by the borrower and the financial institution lender shall be prescribed by the financial institution lender, within minimum and maximum limits that require that the sum of the insurance premium charges paid in connection with a loan by the borrower and the financial institution lender may not be less than 2 percent nor more than 7 percent of the amount of the loan enrolled in the approved State capital access program.

   Struck: (6) State contributions.--In enrolling a loan in an approved State capital access program, the participating State may make a contribution to the reserve fund to supplement Federal contributions made under this Program.

   Struck: (7) Loan purpose.--

   Struck: (A) Particular loan purpose requirements and prohibitions.--In connection with the filing of a loan for enrollment in an approved State capital access program, the financial institution lender--

   Struck: (i) shall obtain an assurance from each borrower that--

   Struck: (I) the proceeds of the loan will be used for a business purpose;

   Struck: (II) the loan will not be used to finance such business activities as the Secretary, by regulation, may proscribe as prohibited loan purposes for enrollment in an approved State capital access program; and

   Struck: (III) the borrower is not--

   Struck: (aa) an executive officer, director, or principal shareholder of the financial institution lender;

   Struck: (bb) a member of the immediate family of an executive officer, director, or principal shareholder of the financial institution lender; or

   Struck: (cc) a related interest of any such executive officer, director, principal shareholder, or member of the immediate family;

   Struck: (ii) shall provide assurances to the participating State that the loan has not been made in order to place under the protection of the approved State capital access program prior debt that is not covered under the approved State capital access program and that is or was owed by the borrower to the financial institution lender or to an affiliate of the financial institution lender;

   Struck: (iii) shall not allow the enrollment of a loan to a borrower that is a refinancing of a loan previously made to that borrower by the financial institution lender or an affiliate of the financial institution lender; and

   Struck: (iv) may include additional restrictions on the eligibility of loans or borrowers that are not inconsistent with the provisions and purposes of this subtitle, including compliance with all applicable Federal and State laws, regulations, ordinances, and Executive orders.

   Struck: (B) Definitions.--In this paragraph, the terms "executive officer", "director", "principal shareholder", "immediate family", and "related interest" refer to the same relationship to a financial institution lender as the relationship described in part 215 of title 12 of the Code of Federal Regulations, or any successor to such part.

   Struck: (8) Capital access for small businesses in underserved communities.--At the time that a State applies to the Secretary to have the State capital access program approved as eligible for Federal contributions, the State shall deliver to the Secretary a report stating how the State plans to use the Federal contributions to the reserve fund to provide access to capital for small businesses in low- and moderate-income, minority, and other underserved communities, including women- and minority-owned small businesses.

   Struck: SEC. 3206. APPROVING COLLATERAL SUPPORT AND OTHER INNOVATIVE CREDIT ACCESS AND GUARANTEE INITIATIVES FOR SMALL BUSINESSES AND MANUFACTURERS.

   Struck: (a) Application.--A participating State that establishes a new, or has an existing, credit support program that meets the eligibility criteria in subsection (c) may apply to the Secretary to have the State other credit support program approved as eligible for Federal contributions to, or for the account of, the State program.

   Struck: (b) Approval.--The Secretary shall approve such State other credit support program as eligible for Federal contributions to, or for the account of, the program if--

   Struck: (1) the Secretary determines that the State satisfies the requirements of paragraphs (1) through (3) of section 3205(b);

   Struck: (2) the Secretary determines that the State other credit support program meets the eligibility criteria in subsection (c);

   Struck: (3) the Secretary determines the State other credit support program to be eligible based on the additional considerations in subsection (d); and

   Struck: (4) within 9 months after the date of enactment of this Act, the State has filed with Treasury a complete application for Treasury approval.

   Struck: (c) Eligibility Criteria for State Other Credit Support Programs.--For a State other credit support program to be approved under this section, that program shall be required to be a program of the State that--

   Struck: (1) can demonstrate that, at a minimum, $1 of public investment by the State program will cause and result in $1 of new private credit;

   Struck: (2) can demonstrate a reasonable expectation that, when considered with all other State programs of the State, such State programs together have the ability to use amounts of new Federal contributions to, or for the account of, all such programs in the State to cause and result in amounts of new small business lending at least 10 times the new Federal contribution amount;

   Struck: (3) for those State other credit support programs that provide their credit support through 1 or more financial institution lenders, requires the financial institution lenders to have a meaningful amount of their own capital resources at risk in their small business lending; and

   Struck: (4) uses Federal funds allocated under this subtitle to extend credit support that--

   Struck: (A) targets an average borrower size of 500 employees or less;

   Struck: (B) does not extend credit support to borrowers that have more than 750 employees;

   Struck: (C) targets support towards loans with an average principal amount of $5,000,000 or less; and

   Struck: (D) does not extend credit support to loans that exceed a principal amount of $20,000,000.

   Struck: (d) Additional Considerations.--In making a determination that a State other credit support program is eligible for Federal contributions to, or for the account of, the State program, the Secretary shall take into account the following additional considerations:

   Struck: (1) The anticipated benefits to the State, its businesses, and its residents to be derived from the Federal contributions to, or for the account of, the approved State other credit support program, including the extent to which resulting small business lending will expand economic opportunities.

   Struck: (2) The operational capacity, skills, and experience of the management team of the State other credit support program.

   Struck: (3) The capacity of the State other credit support program to manage increases in the volume of its small business lending.

   Struck: (4) The internal accounting and administrative controls systems of the State other credit support program, and the extent to which they can provide reasonable assurance that funds of the State program are safeguarded against waste, loss, unauthorized use, or misappropriation.

   Struck: (5) The soundness of the program design and implementation plan of the State other credit support program.

   Struck: (e) Federal Contributions to Approved State Other Credit Support Programs.--A State other credit support program approved under this section will be eligible for receiving Federal contributions to, or for the account of, the State program in an amount consistent with the schedule describing the apportionment of allocated Federal funds among State programs delivered by the State to the Secretary under the allocation agreement.

   Struck: (f) Minimum Program Requirements for State Other Credit Support Programs.--

   Struck: (1) Fund to prescribe.--The Secretary shall, by regulation or other guidance, prescribe Program requirements for approved State other credit support programs.

   Struck: (2) Considerations for fund.--In prescribing minimum Program requirements for approved State other credit support programs, the Secretary shall take into consideration, to the extent the Secretary determines applicable and appropriate, the minimum Program requirements for approved State capital access programs in section 3205(e).

   Struck: SEC. 3207. REPORTS.

   Struck: (a) Quarterly Use-of-funds Report.--

   Struck: (1) In general.--Not later than 30 days after the beginning of each calendar quarter, beginning after the first full calendar quarter to occur after the date the Secretary approves a State for participation, the participating State shall submit to the Secretary a report on the use of Federal funding by the participating State during the previous calendar quarter.

   Struck: (2) Report contents.--Each report under this subsection shall--

   Struck: (A) indicate the total amount of Federal funding used by the participating State; and

   Struck: (B) include a certification by the participating State that--

   Struck: (i) the information provided in accordance with subparagraph (A) is accurate;

   Struck: (ii) funds continue to be available and legally committed to contributions by the State to, or for the account of, approved State programs, less any amount that has been contributed by the State to, or for the account of, approved State programs subsequent to the State being approved for participation in the Program; and

   Struck: (iii) the participating State is implementing its approved State program or programs in accordance with this subtitle and regulations issued under section 3210.

   Struck: (b) Annual Report.--Not later than March 31 of each year, beginning March 31, 2011, each participating State shall submit to the Secretary an annual report that shall include the following information:

   Struck: (1) The number of borrowers that received new loans originated under the approved State program or programs after the State program was approved as eligible for Federal contributions.

   Struck: (2) The total amount of such new loans.

   Struck: (3) Breakdowns by industry type, loan size, annual sales, and number of employees of the borrowers that received such new loans.

   Struck: (4) The zip code of each borrower that received such a new loan.

   Struck: (5) Such other data as the Secretary, in the Secretary's sole discretion, may require to carry out the purposes of the Program.

   Struck: (c) Form.--The reports and data filed under subsections (a) and (b) shall be in such form as the Secretary, in the Secretary's sole discretion, may require.

   Struck: (d) Termination of Reporting Requirements.--The requirement to submit reports under subsections (a) and (b) shall terminate for a participating State with the submission of the completed reports due on the first March 31 to occur after 5 complete 12-month periods after the State is approved by the Secretary to be a participating State.

   Struck: SEC. 3208. REMEDIES FOR STATE PROGRAM TERMINATION OR FAILURES.

   Struck: (a) Remedies.--

   Struck: (1) In general.--If any of the events listed in paragraph (2) occur, the Secretary, in the Secretary's discretion, may--

   Struck: (A) reduce the amount of Federal funds allocated to the State under the Program; or

   Struck: (B) terminate any further transfers of allocated amounts that have not yet been transferred to the State.

   Struck: (2) Causal events.--The events referred to in paragraph (1) are--

   Struck: (A) termination by a participating State of its participation in the Program;

   Struck: (B) failure on the part of a participating State to submit complete reports under section 3207 on a timely basis; or

   Struck: (C) noncompliance by the State with the terms of the allocation agreement between the Secretary and the State.

   Struck: (b) Deallocated Amounts To Be Reallocated.--If, after 13 months, any portion of the amount of Federal funds allocated to a participating State is deemed by the Secretary to be no longer allocated to the State after actions taken by the Secretary under subsection (a)(1), the Secretary shall reallocate that portion among the participating States, excluding the State whose allocated funds were deemed to be no longer allocated, as provided in section 3203(b).

   Struck: SEC. 3209. IMPLEMENTATION AND ADMINISTRATION.

   Struck: (a) General Authorities and Duties.--The Secretary shall--

   Struck: (1) consult with the Administrator of the Small Business Administration and the appropriate Federal banking agencies on the administration of the Program;

   Struck: (2) establish minimum national standards for approved State programs;

   Struck: (3) provide technical assistance to States for starting State programs and generally disseminate best practices;

   Struck: (4) manage, administer, and perform necessary program integrity functions for the Program; and

   Struck: (5) ensure adequate oversight of the approved State programs, including oversight of the cash flows, performance, and compliance of each approved State program.

   Struck: (b) Appropriations.--There is hereby appropriated to the Secretary, out of funds in the Treasury not otherwise appropriated, $900,000,000 to carry out the Program, including to pay reasonable costs of administering the Program.

   Struck: (c) Termination of Secretary's Program Administration Functions.--The authorities and duties of the Secretary to implement and administer the Program shall terminate at the end of the 7-year period beginning on the date of enactment of this Act.

   Struck: (d) Expedited Contracting.--During the 1-year period beginning on the date of enactment of this Act, the Secretary may enter into contracts without regard to any other provision of law regarding public contracts, for purposes of carrying out this subtitle.

   Struck: SEC. 3210. REGULATIONS.

   Struck: The Secretary, in consultation with the Administrator of the Small Business Administration, shall issue such regulations and other guidance as the Secretary determines necessary or appropriate to implement this subtitle including to define terms, to establish compliance and reporting requirements, and such other terms and conditions necessary to carry out the purposes of this subtitle.

   Struck: SEC. 3211. OVERSIGHT AND AUDITS.

   Struck: (a) Inspector General Oversight.--The Inspector General of the Department of the Treasury shall conduct, supervise, and coordinate audits and investigations of the use of funds made available under the Program.

   Struck: (b) GAO Audit.--The Comptroller General of the United States shall perform an annual audit of the Program and issue a report to the appropriate committees of Congress containing the results of such audit.

   Struck: (c) Required Certification.--

   Struck: (1) Financial institutions certification.--With respect to funds received by a participating State under the Program, any financial institution that receives a loan, a loan guarantee, or other financial assistance using such funds after the date of the enactment of this Act shall certify that such institution is in compliance with the requirements of section 103.121 of title 31, Code of Federal Regulations, a regulation that, at a minimum, requires financial institutions, as that term is defined in section 5312 (a)(2) and (c)(1)(A) of title 31, United States Code, to implement reasonable procedures to verify the identity of any person seeking to open an account, to the extent reasonable and practicable, maintain records of the information used to verify the person's identity, and determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency.

   Struck: (2) Sex offense certification.--With respect to funds received by a participating State under the Program, any private entity that receives a loan, a loan guarantee, or other financial assistance using such funds after the date of the enactment of this Act shall certify to the participating State that the principals of such entity have not been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)).

   Struck: (d) Prohibition on Pornography.--None of the funds made available under this subtitle may be used to pay the salary of any individual engaged in activities related to the Program who has been officially disciplined for violations of subpart G of the Standards of Ethical Conduct for Employees of the Executive Branch for viewing, downloading, or exchanging pornography, including child pornography, on a Federal Government computer or while performing official Federal Government duties.

   Original wording

   Strike title III.

Read automatically from the Congressional Record. Check the original before relying on it.

As printed