H.R. 2061House109th Congress (2005-2007)In Committee

Communities First Act

Sponsored by Jim RyunRep. Jim Ryun (R-KS)
Introduced May 3, 2005

Legislative Activity

Stay on top of the latest movement without scrolling through every action

1 earlier action
HouseIntro Referral Latest Action

Referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

May 3, 2005

View full timeline
HouseIntro Referral

Introduced in House

May 3, 2005

HouseIntro Referral

Referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

May 3, 2005

Floor Debate

24 members

What members said about H.R. 2061 on the floor

12 Republicans12 Democrats
Tom Lantos
Rep. Tom LantosD-CA-12 · Jul 19, 2005

Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise in strong support of H.R. 2601, the Foreign Relations Authorization Bill for Fiscal Years 2006 and 2007 as it was…

Sheila Jackson Lee
Rep. Sheila Jackson LeeD-TX-18 · Jul 19, 2005

Madam Chairman, I rise to address H.R. 2601, the Foreign Relations Authorization Act for Fiscal Years 2006 and 2007. This legislation is far reaching and will have a broad impact on the direction of…

Mark E. Souder
Rep. Mark E. SouderR-IN-3 · Jul 19, 2005

Mr. Chairman, I want to thank the gentleman from Minnesota (Mr. Kennedy), the gentlewoman from Oregon (Ms. Hooley), the gentleman from Nebraska (Mr. Osborne), and the others who have been working on…

Christopher H. Smith
Rep. Christopher H. SmithR-NJ-4 · Jul 19, 2005

Mr. Chairman, I thank the very distinguished chairman for yielding me this time. I would echo the statements of the gentleman from California (Mr. Lantos) in applauding Chairman Hyde for his…

Henry J. Hyde
Rep. Henry J. HydeR-IL-6 · Jul 19, 2005

Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, today we will be considering H.R. 2601, the Foreign Relations Authorization Act for Fiscal Years 2006 and 2007 or as it is…

Show 8 more
Donald A. Manzullo
Rep. Donald A. ManzulloR-IL-16 · Jul 19, 2005

Madam Chairman, last week, I rose in opposition to bringing up the East Asia Security Act of 2005 (H.R. 3100) on the suspension calendar because it contained some provisions that created unintended…

Joseph Crowley
Rep. Joseph CrowleyD-NY-7 · Jul 19, 2005

Madam Chairman, I rise today in strong support of the Foreign Relations Authorization Act. Chairman Hyde along with Ranking Member Lantos crafted a bipartisan bill that was strongly supported by the…

David Dreier
Rep. David DreierR-CA-26 · Jul 19, 2005

Madam Chairman, I offer an amendment. Madam Chairman, I yield myself such time as I may consume. Let me begin by extending my hearty congratulations to the distinguished chairman of the committee,…

Darlene Hooley
Rep. Darlene HooleyD-OR-5 · Jul 19, 2005

Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I thank the gentleman from California (Mr. Lantos) and my friend, the gentleman from Minnesota (Mr. Kennedy), for putting this…

Mark R. Kennedy
Rep. Mark R. KennedyR-MN-6 · Jul 19, 2005

Mr. Chairman, I offer an amendment. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, if we understand the meth problem, we understand that it has brought a trail of destruction…

Ted Poe
Rep. Ted PoeR-TX-2 · Jul 19, 2005

Madam Chairman, I offer an amendment. Madam Chairman, I yield myself such time as I may consume. First of all, I want to say as one of the new Members of Congress and serving on the International…

Lee Terry
Rep. Lee TerryR-NE-2 · Jul 19, 2005

Mr. Chairman, I rise in support of the Kennedy-Hooley Amendment to H.R. 2601. The U.S. Department of Justice estimates that 90 percent of the meth available in Nebraska is trafficked from superlabs…

Earl Blumenauer
Rep. Earl BlumenauerD-OR-3 · Jul 19, 2005

Mr. Chairman, I appreciate the gentleman yielding me this time, his leadership and his partnership with our chairman, the gentleman from Illinois (Mr. Hyde). There is no more important forum for…

Show 11 more
Gary G. Miller
Rep. Gary G. MillerR-CA-42 · Jul 19, 2005

Mr. Chairman, I rise in strong support of the provisions in this bill that address the unwillingness of Mexico to extradite violent criminals back to the United States for prosecution. I want to be…

Dan Burton
Rep. Dan BurtonR-IN-5 · Jul 19, 2005

Madam Chairman, I offer an amendment. Madam Chairman, I yield myself such time as I may consume. I want to thank Chairman Hyde and Ranking Member Lantos for their exceptional work on this bill. I…

James P. McGovern
Rep. James P. McGovernD-MA-3 · Jul 19, 2005

Mr. Chairman, how much time is remaining? Mr. Chairman, I rise in opposition to the Burton amendment because I simply do not believe we have enough accountability for current U.S. funding, training…

Frank R. Wolf
Rep. Frank R. WolfR-VA-10 · Jul 19, 2005

Mr. Chairman, I rise to commend the gentleman from Illinois (Mr. Hyde) and the gentleman from California (Mr. Lantos) and the gentleman from New Jersey (Mr. Smith) and the members of the Committee on…

Adam B. Schiff
Rep. Adam B. SchiffD-CA-29 · Jul 19, 2005

Mr. Chairman, at the outset I want to recognize the superb work of the gentleman from Illinois (Chairman Hyde), and say that I think the gentleman is going to have to endure a number of valedictory…

Barbara Lee
Rep. Barbara LeeD-CA-9 · Jul 19, 2005

Madam Chairman, let me first thank our ranking member for yielding me this time, and I also thank him and the gentleman from Illinois (Chairman Hyde) for their continuing bipartisan efforts reflected…

Robert Menendez
Sen. Robert MenendezD-NJ · Jul 19, 2005

Mr. Chairman, I thank the gentleman from California (Mr. Lantos) for his gracious comments. I rise to support H.R. 2601 in its present form and to comment on some of the positive elements of this…

Benjamin L. Cardin
Rep. Benjamin L. CardinD-MD-3 · Jul 19, 2005

Madam Chairman, I thank the gentleman from California (Mr. Lantos) for yielding me this time. I want to congratulate the gentleman from Illinois (Mr. Hyde) for his many years of service to this…

Sam Farr
Rep. Sam FarrD-CA-17 · Jul 19, 2005

Madam Chairman, I thank the gentleman for yielding me this time. I too rise, Madam Chairman, in strong support of the Dreier amendment. I, as many of my colleagues know, was a Peace Corps volunteer…

Tom Osborne
Rep. Tom OsborneR-NE-3 · Jul 19, 2005

Mr. Chairman, methamphetamine abuse has become the Nation's leading drug problem, according to a survey of 500 sheriff's departments in 45 States. Meth is cheap to buy, it is easy to make, it is…

Brian Baird
Rep. Brian BairdD-WA-3 · Jul 19, 2005

Mr. Chairman, I thank my dear friend from Oregon for yielding me this time, and commend her for her leadership on this, along with the gentleman from Indiana (Mr. Souder) and the gentleman from…

Bill Text

Latest available legislative text

Reading Mode
Latest
Introduced in HouseIssued May 3, 2005

I

109th CONGRESS

1st Session

H. R. 2061

IN THE HOUSE OF REPRESENTATIVES

May 3, 2005

Mr. Ryun of Kansas (for himself and Mr. Cannon) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To enhance the ability of community banks to foster economic growth and serve their communities, and for other purposes.

1.

Short title

This Act may be cited as the Community Banks Serving Their Communities First Act or the Communities First Act.

I

Targeted Regulatory Relief for Community Banks

101.

Increase exemption levels under the Home Mortgage Disclosure Act of 1975

(a)

Depository institution and mortgage lender disclosure exemptions

Section 304(i) of the Home Mortgage Disclosure Act (12 U.S.C. 2803(i)) is amended by striking $30,000,000 and inserting $250,000,000.

(b)

Depository institution exemptions from act

Section 309 of the Home Mortgage Disclosure Act (12 U.S.C. 2808(a)) is amended—

(1)

in subsection (a), by striking $10,000,000 and inserting $250,000,000; and

(2)

in subsection (b), by adding at the end the following new paragraph:

(4)

Indexing of depository institution disclosure exemption amount

By December 31 of each year beginning after the date of the enactment of the Community Banks Serving Their Communities First Act, the amount applicable under section 304(i) with respect to institutions described in section 303(2) shall be adjusted in accordance with the procedure described in paragraphs (1) and (3) and the adjusted amount shall apply during the subsequent year.

.

102.

Short form reports of condition for certain community banks

Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)) is amended by adding at the end the following new paragraph:

(11)

Short form reports of condition for community banks

An insured depository institution described in subparagraphs (A), (B), (C), and (D) of section 10(d)(4) may submit a short form report of condition under paragraph (3) in 2 nonsequential quarters of any calendar year.

.

103.

Community bank exemption from annual management assessment of internal controls requirement of the Sarbanes-Oxley Act of 2002

Section 404 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262) is amended by adding the following new subsection:

(c)

Community bank exemption

(1)

In general

This section shall not apply in any year to any insured depository institution which, as of the close of the preceding year, had total assets, as determined on a consolidated basis, of $1,000,000,000 or less.

(2)

Adjustment of amount

The Commission shall annually adjust the dollar amount in paragraph (1) by an amount equal to the percentage increase, for the most recent year, in total assets held by all depository institutions, as reported by the Federal Deposit Insurance Corporation.

.

104.

Changes required to small bank holding company policy statement on assessment of financial and managerial factors

(a)

Small bank holding company policy statement on assessment of financial and managerial factors

(1)

In general

Before the end of the 6-month period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall publish in the Federal Register proposed revisions to the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (12 C.F.R. part 225—appendix C) that provide that the policy shall apply to a bank holding company which has pro forma consolidated assets of less than $1,000,000,000 and that—

(A)

is not engaged in any nonbanking activities involving significant leverage; and

(B)

does not have a significant amount of outstanding debt that is held by the general public.

(2)

Adjustment of amount

The Board of Governors of the Federal Reserve System shall annually adjust the dollar amount referred to in paragraph (1) in the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors by an amount equal to the percentage increase, for the most recent year, in total assets held by all bank holding companies, on a consolidated basis, as determined by the Board.

(b)

Increase in debt-to-equity ratio of small bank holding company

Before the end of the 6-month period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall publish in the Federal Register proposed revisions to the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (12 C.F.R. part 225—appendix C) such that the debt-to-equity ratio allowable for a small bank holding company in order to remain eligible to pay a corporate dividend and to remain eligible for expedited processing procedures under Regulation Y of the Board of Governors of the Federal Reserve System would increase from 1:1 to 3:1.

105.

Increase in size of a small depository institution exception under the Depository Institution Management Interlocks Act

Section 203(1) of the Depository Institution Management Interlocks Act (12 U.S.C. 3202(1)) is amended by striking $20,000,000 and inserting $500,000,000.

106.

Community bank protection under the Securities Investor Protection Act of 1970

Section 9 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–3) is amended by adding the following new subsection:

(d)

Community bank protection

(1)

In general

The prohibition on advances in subsection (a)(5) of this section shall not apply to a bank with total assets, on a consolidated basis, of less than $1,000,000,000.

(2)

Adjustment of amount

The Commission shall annually adjust the dollar amount in paragraph (1) by an amount equal to the percentage increase, for the most recent year, in total assets held by all depository institutions, as reported by the Federal Deposit Insurance Corporation.

.

107.

Flexible examination schedule for community banks

(a)

In general

Paragraph (4) of section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended—

(1)

by striking the matter preceding subparagraph (A) and inserting In lieu of the 12-month period referred to in paragraphs (1), (2), and (3), the examination required under paragraph (1) of an insured depository institution may be conducted at such intervals as the appropriate Federal banking agency may determine to be appropriate, on the basis of factors the Financial Institutions Examination Council shall establish, if—; and

(2)

in subparagraph (A), by striking $250,000,000 and inserting $1,000,000,000.

(b)

Clerical amendment

The heading for paragraph (4) of section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by striking 18-month rule and inserting Flexible on-site examination schedule.

108.

Increase in amount of small bank exception for cap on aggregate loans to executive officers

Subparagraph (C) of section 22(h)(5) of the Federal Reserve Act (12 U.S.C. 375b(5)(C)) is amended—

(1)

by striking $100,000,000 of deposits and inserting $1,000,000,000 of total assets (on a consolidated basis); and

(2)

by adding at the end the following new sentence: The Board shall annually adjust the dollar amount in the 1st sentence of this subparagraph by an amount equal to the percentage increase, for the most recent year, in total assets held by all depository institutions, as reported by the Federal Deposit Insurance Corporation..

109.

Consideration of community bank impact

Before establishing or making any revision in any regulation, requirement, or guideline applicable to insured depository institutions (as defined in section 3 of the Federal Deposit Insurance Act), the appropriate Federal banking agency (as defined in such section) shall take into account the effect of the establishment of the regulation, requirement, or guideline on community banks and savings associations.

110.

Increase in CRA exam intervals for community banks

Section 809(a) of the Community Reinvestment Act of 1977 (12 U.S.C. 2908(a)) is amended by striking $250,000,000 and inserting $1,000,000,000.

II

Additional Regulatory Relief for Community Banks and their Customers

201.

Provisions relating to 3-day right of rescission under the Truth in Lending Act

(a)

Optional consumer waivers of right of rescission

Section 125(d) of the Truth in Lending Act (15 U.S.C. 1635(d)) is amended—

(1)

by striking The Board may and inserting

Waivers of rescission rights.—

(1)

Personal financial emergencies

The board may

; and

(2)

by adding at the end the following new paragraph:

(2)

Waivers when creditor is insured depository institution

The Board shall prescribe regulations authorizing a consumer to waive the rights provided under this section when the creditor is an insured depository institution (as that term is defined in section 3(c)(2) of the Federal Deposit Insurance Act) in such manner and after such notice as the Board may prescribe.

.

(b)

Exemption in case of refinancing with no new money regardless of creditor

Section 125(e)(2) of the Truth in Lending Act (15 U.S.C. 1635(e)(2)) is amended by striking by the same creditor.

(c)

Exempt home equity lines of credit

Section 125(e)(4) of the Truth in Lending Act (15 U.S.C. 1635(e)(4)) is amended to read as follows:

(4)

advances under an open end consumer credit plan which provides for any extension of credit which is secured by the consumer’s principal dwelling.

.

202.

Additional exemptions under Home Mortgage Disclosure Act of 1975; streamlining reporting

(a)

Small reporter exemption

Section 304 of the Home Mortgage Disclosure Act (12 U.S.C. 2803) is amended by adding the following new subsection:

(n)

Small reporter exemption

If, in any year, a depository institution makes fewer than 100 reportable loans described in any paragraph of subsection (b), the depository institution shall be exempt from the disclosure requirements of this section with respect to the loans described in that paragraph for such year.

.

(b)

MSA modifications

Section 304(a) of the Home Mortgage Disclosure Act (12 U.S.C. 2803(a)) is amended——

(1)

in paragraph (1), by inserting or as modified by the Board under paragraph (3), after as defined by the Department of Commerce; and

(2)

by adding at the end the following new paragraph:

(3)

Modification of MSAs

The Board may modify the description of any primary metropolitan statistical area, metropolitan statistical area, and consolidated metropolitan statistical area, as defined by the Secretary of Commerce, for purposes of this subsection.

.

(c)

Regular streamlining

The Home Mortgage Disclosure Act (12 U.S.C. 2801 et seq.) is amended by adding the following new section:

312.

Regular streamlining

Before the end of the 1-year period beginning on the date of the enactment of the Community Banks Serving Their Communities First Act and before the end of each 5-year period thereafter, the Board shall—

(1)

review the data collection and reporting requirements of this title;

(2)

streamline, reduce, or eliminate such requirements by regulation to the extent consistent with the purposes of this title;

(3)

revise the data collection and reporting requirements under this title to ensure that they are consistent with those imposed under the Equal Credit Opportunity Act; and

(4)

report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives such legislative recommendations as the Board determines to be necessary to streamline, reduce, or eliminate such requirements to the extent consistent with the purposes of this title and to ensure that they are consistent with those imposed under the Equal Credit Opportunity Act.

.

203.

Exception to annual privacy notice requirement under the Gramm-Leach-Bliley Act

Section 503 of the Gramm-Leach-Bliley Act (15 U.S.C. 6803) is amended by adding the following new subsection:

(c)

Exception to Annual Notice Requirement

A financial institution that—

(1)

provides nonpublic personal information only in accordance with the provisions of section 502(b)(2) (relating to the consumer opt out exception) and subsection 502(e) (relating to general exceptions); and

(2)

has not changed its policies and practices with regard to disclosing nonpublic personal information,

shall be exempt from the annual disclosure requirement under subsection (a).

.

204.

Streamlining reports of condition

Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)) is amended by inserting after paragraph (11) (as added by section 102 of this Act) the following new paragraph:

(12)

Streamlining Reports of Condition

(A)

Review of information and schedules

Before the end of the 1-year period beginning on the date of the enactment of the Community Banks Serving Their Communities First Act and before the end of each 5-year period thereafter, the Corporation shall, in conjunction with the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Director of the Office of Thrift Supervision, review the information and schedules that are required to be filed by any insured depository institution with a report of condition under paragraph (3).

(B)

Reduction or elimination of filings which are more burdensome than beneficial

Within 9 months of completing any review under subparagraph (A), the Corporation, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Director of the Office of Thrift Supervision shall reduce or eliminate any requirement to file information or schedules under paragraph (3) if such agencies find that the burdens of such filings are not outweighed by the benefits to safety and soundness of the financial system or the ability of the Corporation to accurately determine the financial condition and the results of operations of each insured depository institution.

(C)

Report to the congress

Before the end of the 6-month period beginning on the date of completion of any review under subparagraph (A), the Corporation, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Director of the Office of Thrift Supervision shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing the findings of the agencies with respect to such review and any recommendation of such agencies for legislative action to implement any such finding.

.

205.

Increase in the special regulatory lending limit on loans to executive officers

Section 22(g) of the Federal Reserve Act (12 U.S.C. 375b(g)) is amended by adding at the end the following new paragraph:

(11)

Limit applicable on aggregate amount of certain loans to executive officers of community banks

Notwithstanding any regulation prescribed by the Board under paragraph (4) and subject to other conditions imposed under this subsection and subsection (h), the aggregate amount of extensions of credit that a member bank may make to an executive officer of the bank under paragraph (4) shall not exceed $250,000.

.

III

Tax Relief for Bank Depositors, Rural Banks, Municipalities, and Banks Organized as Limited Liability Companies

301.

Reduced rate and deferral of income recognition on long-term certificates of deposit

(a)

Deferral of income recognition

Section 451 of the Internal Revenue Code of 1986 (relating to general rule for taxable year of inclusion) is amended by adding at the end the following new subsection:

(j)

Certificates of deposits held by cash basis individuals

In the case of an individual on the cash receipts and disbursements method of accounting who holds a nonnegotiable certificate of deposit, interest income which is not made available for withdrawal before maturity of the certificate without penalty shall not be includible in gross income before the certificate is redeemed or matures.

.

(b)

Interest income on long-term certificates of deposit

Subparagraph (A) of section 1(h)(11) of such Code is amended by striking increased by and all that follows and inserting:

increased by—

(i)

qualified dividend income, and

(ii)

interest income on any nonnegotiable certificate of deposit—

(I)

with a fixed maturity date which is 1 year or more from the date of issue, and

(II)

the interest on which is not made available for withdrawal before maturity without penalty.

.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

302.

Exclusion for interest on loans secured by agricultural real property

(a)

In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by inserting after section 139A the following new section:

139B.

Interest on loans secured by agricultural real property

(a)

Exclusion

Gross income shall not include interest received by a qualified lender on any qualified real estate loan.

(b)

Definitions

For purposes of this section—

(1)

Qualified lender

The term qualified lender means any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.).

(2)

Qualified real estate loan

The term qualified real estate loan means any loan secured by agricultural real estate or by a leasehold mortgage (with a status as a lien) on agricultural real estate. For purposes of the preceding sentence, the determination of whether property securing such loan is agricultural real estate shall be made as of the time the interest income on such loan is accrued.

(3)

Agricultural real estate

The term agricultural real estate means—

(A)

real property used for the production of 1 or more agricultural products, and

(B)

any single family residence—

(i)

which is the principal residence (within the meaning of section 121) of its occupant,

(ii)

which is located in a rural area (as determined by the Secretary of Agriculture), which is not within a Metropolitan Statistical Area (as defined by the Office of Management and Budget) and which has a population (determined on the basis of the most recent decennial census for which data are available) of 2,500 or less, and

(iii)

which is purchased or improved with the proceeds of the qualified real estate loan.

(c)

Coordination with section 265

Qualified real estate loans shall be treated as obligations described in section 265(a)(2) the interest on which is wholly exempt from the taxes imposed by this subtitle.

.

(b)

Clerical amendment

The table of sections for such part III is amended by inserting after the item relating to section 139A the following new item:

Sec. 139B. Interest on loans secured by agricultural real property.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

303.

Increase in cap on qualified small issue bonds

(a)

In general

Clause (i) of section 144(a)(4)(A) of the Internal Revenue Code of 1986 (relating to general rule for $10,000,000 limit in certain cases) is amended by striking $10,000,000 and inserting $30,000,000.

(b)

Adjustment of cap for inflation

Subsection (a) of section 144 of such Code (relating to qualified small issue bond) is amended by redesignating paragraph (12) as paragraph (13) and by inserting after paragraph (11) the following new paragraph:

(12)

Inflation adjustment

In the case of a calendar year after 2006, the $30,000,000 amount contained in paragraph (4)(A)(i) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting calendar year 2005 for calendar year 1992 in subparagraph (B) thereof.

Any increase under the preceding sentence which is not a multiple of $100,000 shall be rounded to the next lowest multiple of $100,000.

.

(c)

Effective date

The amendments made by this section shall apply to—

(1)

obligations issued after the date of the enactment of this Act, and

(2)

capital expenditures made after such date with respect to obligations issued on or before such date.

304.

Limited liability company tax treatment for FDIC-Insured limited liability companies

(a)

In general

Paragraph (2) of section 7701(a) of the Internal Revenue Code of 1986 (defining partnership and partner) is amended to read as follows:

(2)

Partner and partnership

(A)

In general

The term partnership includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a trust or estate or a corporation; and the term `partner' includes a member in such a syndicate, group, pool, joint venture, or organization.

(B)

Election by certain banks to be taxed as partnerships

(i)

In general

An eligible corporation may elect to be treated as a partnership for purposes of this title.

(ii)

Tax treatment

In the case of an eligible corporation making an election under clause (i)—

(I)

no gain or loss shall be recognized to the corporation or the shareholders by reason of an election under clause (i), and

(II)

section 1374 shall apply to the entity after such election.

(iii)

Eligible corporation

The term eligible corporation means any of the following entities which would (but for this subparagraph) be treated as a C corporation for purposes of this title:

(I)

Any bank (as defined in section 581).

(II)

Any bank holding company (as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a))).

(III)

Any savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813)).

(IV)

Any savings and loan holding company (as defined in section 10(a)(1)(D) of the Home Owners Loan Act).

.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

IV

Tax Relief for Community Banks and Holding Companies

401.

Reduction in tax

(a)

C corporations

Section 11 of the Internal Revenue Code of 1986 (relating to tax imposed) is amended by adding at the end the following new subsection:

(e)

Reduction of tax on community banks

(1)

In general

In the case of a C corporation which is a community bank, the aggregate tax imposed by this section, section 55, and section 1201 shall be 80 percent of the aggregate tax which would (but for this subsection) be imposed by such sections.

(2)

Maximum reduction

The reduction in tax by reason of this subsection shall not exceed $250,000. Corporations treated as 1 corporation under section 1202(d)(3) shall be so treated under this subsection, and the limitation under the preceding sentence shall be allocated among such corporations in such manner as the Secretary shall prescribe.

(3)

Increased benefit for banks operating in distressed areas, etc

(A)

In general

In the case of a bank operating in an area referred to in subparagraph (B)—

(i)

paragraph (1) shall be applied by substituting 50 percent for 80 percent, and

(ii)

paragraph (2) shall be applied by substituting $500,000 for $250,000.

(B)

Areas described

The areas referred to in this subparagraph are—

(i)

empowerment zones and enterprise communities designated under section 1391,

(ii)

renewal communities designated under section 1400E,

(iii)

low-income communities (as defined in section 45D(e)), and

(iv)

distressed communities (within the meaning of section 233 of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a(b)).

(4)

Community bank

For purposes of this section, the term community bank means any of the following entities the gross assets of which (determined under the rules of section 1202(d)) are $5,000,000,000 or less:

(A)

Any bank (as defined in section 581).

(B)

Any bank holding company (as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a))).

(C)

Any savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813)).

(D)

Any savings and loan holding company (as defined in section 10(a)(1)(D) of the Home Owners Loan Act).

.

(b)

S corporations

Subsection (a) of section 1366 of such Code is amended by adding at the end the following new paragraph:

(3)

Reduction of tax on community banks

(A)

In general

In the case of an S corporation which is a community bank (as defined in section 11(e)(4)), the net amount required to be taken into account by shareholders (without regard to this paragraph) shall be reduced by the lesser of—

(i)

20 percent of such net amount, or

(ii)

$1,250,000.

(B)

Increased benefit for banks operating in distressed areas, etc

In the case of a bank operating in an area referred to in section 11(e)(3)(B)—

(i)

subparagraph (A)(i) shall be applied by substituting 50 percent for 20 percent, and

(ii)

subparagraph (A)(ii) shall be applied by substituting $2,500,000 for $1,250,000.

.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

402.

Community banks exempt from minimum tax

(a)

In general

Section 55 of the Internal Revenue Code of 1986 (relating to alternative minimum tax imposed) is amended by adding at the end the following new subsection:

(f)

Exemption for community banks

(1)

In general

The tentative minimum tax of a community bank (as defined in section 11(e)(4)) shall be zero.

(2)

Certain rules to apply

Rules similar to the rules of paragraphs (2) through (5) of subsection (e) shall apply for purposes of this subsection.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.