S.Amdt. 4614

SA 4614. Mr. THUNE submitted an amendment intended to be proposed to
amendment SA 4594 proposed by Mr. Reid (for Mr. Baucus (for himself,
Ms. Landrieu, and Mr. Reid)) to the bill H.R. 5297, to create the Small
Business Lending Fund Program to direct the Secretary of the Treasury
to make capital investments in eligible institutions in order to
increase the availability of credit for small businesses, to amend the
Internal Revenue Code of 1986 to provide tax incentives for small
business job creation, and for other purposes; which was ordered to lie
on the table; as follows:

On page 223, strike line 19 and all that follows through
page 232, line 9, and insert the following:
(4) Ineligible institutions.--
(A) Ineligibility of institutions on fdic problem bank
list.--
(i) In general.--An eligible institution may not receive
any capital investment under the Program, if--

(I) such institution is on the FDIC problem bank list; or
(II) such institution has been removed from the FDIC
problem bank list for less than 90 days.

(ii) FDIC problem bank list defined.--For purposes of this
subparagraph, the term ``FDIC problem bank list'' means the
list of depository institutions having 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.
(B) Ineligibility of non-paying cpp participants.--
(i) In general.--An eligible institution that has missed
more than one dividend payment due under the CPP may not
receive any capital investment under the Program.
(ii) Determination of missed dividend payments.--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.
(C) Construction.--Nothing in subparagraph (A) or (B) 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 and that has not missed more
than one dividend payment due under the CPP.
(5) Incentives to lend.--
(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--
(i) the rate at which dividends or interest are payable
shall be 5 percent per annum initially;
(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--

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

(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--

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

(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.
(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.
(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.
(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.
(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.
(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 purposes of this subparagraph, the
term ``S corporation'' has the same meaning as in section
1361(a) of the Internal Revenue Code of 1986.
(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--
(i) includes, as a term and condition, that the capital
investment will--

(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
(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

(ii) provides that the term and condition described under
clause (i) shall not apply if the application of that term
and condition

[[Page S7048]]

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).
(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.
(6) Additional incentives to repay.--The Secretary may, by
regulation or guidance issued under section 4104(9),
establish repayment incentives in addition to the incentive
in paragraph (5)(E) that will apply to new capital
investments in a manner that the Secretary determines to be
consistent with the purposes of this subtitle.
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