Sec. 3. Codification of the Office of Credit Risk Management and the Lender Oversight Committee
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The Small Business Act ( 15 U.S.C. 631 et seq.) is amended— by redesignating section 47 as section 49; and by inserting after section 46 the following: There is established within the Administration the Office of Credit Risk Management (in this section referred to as the Office ). The Office shall be responsible for supervising— any lender making loans under section 7(a) (in this section referred to as a 7(a) lender ); any participant in a lending program of the Office of Capital Access of the Administration; and any small business lending company or a non-Federally regulated lender without regard to the requirements of section 23.
The Office is headed by the Director of the Office of Credit Risk Management (in this section referred to as the Director ), who shall— be a career appointee in a Senior Executive Service position (as defined in section 3132 of title 5, United States Code); and be responsible for oversight of the lenders and participants described in subsection (b), including by conducting periodic reviews of the compliance and performance of those lenders and participants. 7(a) lenders With respect to 7(a) lenders, an employee of the Office shall— be present for and supervise any review of a 7(a) lender that is conducted by a contractor of the Office on the premises of the 7(a) lender; and supervise any review of a 7(a) lender that is not conducted on the premises of the 7(a) lender.
Notwithstanding any other requirements of the Office or the Administrator, the Administrator shall develop and implement a review report timeline which shall— require the Administrator to— deliver a written report of the review to the 7(a) lender not later than 60 business days after the date on which the review is conducted; or if the Administrator expects to submit the report after the end of the 60-business-day period described in clause (i), notify the 7(a) lender in writing of the expected submission day of the report and the reason for the delay; and if a response by the 7(a) lender is requested in a report submitted under subparagraph (A), require the 7(a) lender to submit a response to the Administrator not later than 45 business days after the date on which the 7(a) lender receives the report. 7(a) lenders The Director may take an informal enforcement action against a 7(a) lender if the Director finds that the 7(a) lender has violated a requirement under section 7(a) or any requirement in a Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access.
With the approval of the Lender Oversight Committee established under section 48, the Director may take a formal enforcement action against any 7(a) lender if the Director finds that the 7(a) lender has violated— a requirement under section 7(a), including a requirement relating to credit elsewhere, or any regulation implementing such section; or any requirement described in a Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access.
Any enforcement action taken with respect to a 7(a) lender by the Director under subparagraph (A)— shall be based on the severity or frequency of the violation; and may include assessing a civil monetary penalty against the 7(a) lender in an amount that is not greater than $250,000. A 7(a) lender may appeal an enforcement action imposed by the Director described in paragraph
(2)to the Office of Hearings and Appeals established under section 5(i) or to an appropriate district court of the United States. Not later than 1 year after the date of enactment of the Small Business 7(a) Lending Oversight Reform Act of 2018 , the Administrator shall issue regulations, after opportunity for notice and comment under section 553 of title 5, United States Code, to carry out subsection (e). During any period during which a 7(a) lender is suspended from participating under section 7(a), or if a 7(a) lender is prohibited from making loans under section 7(a), the 7(a) lender shall remain obligated to maintain all servicing and liquidation activities delegated to the lender by the Administrator, unless otherwise specified by the Director. 7(a) loans The Director shall annually conduct a risk analysis of the portfolio of the Administration with respect to all loans guaranteed under section 7(a). On December 1, 2018, and every December 1 thereafter, the Director shall submit to Congress an annual report containing the results of each portfolio risk analysis conducted under paragraph
(1)during the fiscal year preceding the submission of the report, which shall include— an analysis of the overall program risk of loans guaranteed under section 7(a); an analysis of program risk, set forth separately by industry concentration; without identifying individual 7(a) lenders by name, a consolidated analysis of the risk created by the individual 7(a) lenders responsible for not less than 1 percent of the gross loan approvals by dollar and amount of loans for the year covered by the report; steps taken by the Administrator to mitigate the risks identified in subparagraphs (A), (B), and (C); the number of 7(a) lenders, the gross and net number of loans made, and the gross and net dollar amount of loans made; the number and dollar amount of total defaults and total repurchases, and the percentage and total amount of recoveries; the number and type of enforcement actions recommended by the Director; the number and type of enforcement actions approved by the Lender Oversight Committee established under section 48; the number and type of enforcement actions disapproved by the Lender Oversight Committee; and the number and dollar amount of civil monetary penalties assessed. Effective for the first fiscal year occurring after the date of enactment of the Small Business 7(a) Lending Oversight Reform Act of 2018 , and each fiscal year thereafter, the Director shall provide, in writing a budget submission and justification for the submission to the Administrator, which shall— include the salaries and expenses of the Office and lender oversight fees; be submitted at or about the time of the budget submission by the President under section 1105(a) of title 31, United States Code; and be maintained in an indexed form and made available for public review for a period of not less than 5 years beginning on the date of submission. There is established within the Administration the Lender Oversight Committee (in this section referred to as the Committee ). The Committee shall consist of 11 members appointed by the Administrator, of whom— 3 members shall be voting members, of whom 2 shall be career appointees serving in a Senior Executive Service position (as defined in section 3132 of title 5, United States Code); and 8 members shall be nonvoting members who shall serve in an advisory capacity on the Committee. The Committee shall— review reports on lender oversight activities; review formal enforcement action recommendations of the Director of the Office of Credit Risk Management with respect to any lender making loans under section 7(a) and any participant in a lending program of the Office of Capital Access of the Administration; in carrying out paragraph
(2)with respect to a formal enforcement action taken under subsection
(d)or
(e)of section 23, vote to recommend the action or vote to not recommend the action to the Administrator or a designee of the Administrator; in carrying out paragraph
(2)with respect to any other formal enforcement action not otherwise specified in subsection
(d)or
(e)of section 23, vote to approve, disapprove, or modify the action; review in an advisory capacity any lender oversight, portfolio risk management, or program integrity matters brought by the Director of the Office of Credit Risk Management; and take such other actions and perform such other functions as may be delegated to the Committee by the Administrator. The Committee shall meet as necessary, but not less frequently than on a quarterly basis. The Committee shall submit to the Administrator a report detailing each meeting of the Committee, including if the Committee does or does not vote to recommend a formal enforcement action of the Director of the Office of Credit Risk Management with respect to a lender. . All functions of the Office of Credit Risk Management of the Administration, including the personnel, assets, and obligations of the Office of Credit Risk Management, as in existence on the day before the date of enactment of this Act, shall be transferred to the Office of Credit Risk Management established under section 47 of the Small Business Act, as added by subsection (a). All functions of the Lender Oversight Committee of the Administration, including the personnel, assets, and obligations of the Lender Oversight Committee, as in existence on the day before the date of enactment of this Act, shall be transferred to the Lender Oversight Committee established under section 48 of the Small Business Act, as added by subsection (a). Any reference in a law, regulation, document, paper, or other record of the United States to the Office of Credit Risk Management of the Administration shall be deemed a reference to the Office of Credit Risk Management of the Administration established under section 47 of the Small Business Act, as added by subsection (a). Any reference in a law, regulation, document, paper, or other record of the United States to the Lender Oversight Committee of the Administration shall be deemed a reference to the Lender Oversight Committee of the Administration established under section 48 of the Small Business Act, as added by subsection (a). The Small Business Act ( 15 U.S.C. 631 et seq.) is amended— in section 3(r)(2) ( 15 U.S.C. 632(r)(2) )— in this paragraph heading, by striking ; and SBA in the matter preceding subparagraph (A), by striking SBA ; and in section 18 ( 15 U.S.C. 647 ), by striking subsection
(b)and inserting the following: As used in this Act, the term agricultural enterprises means those small business concerns engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries. .
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Sec. 3
Codification of the Office of Credit Risk Management and the Lender Oversight Committee
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