Sec. 207. Minority depository institution

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The sense of Congress is the following: The Community Development Financial Institutions Fund (the CDFI Fund ) is an agency of the Department of the Treasury, and was established by the Riegle Community Development and Regulatory Improvement Act of 1994. The mission of the CDFI Fund is to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors, and financial service providers .

A community development financial institution (a CDFI ) is a specialized financial institution serving low-income communities and a Community Development Entity (a CDE ) is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in low-income communities. The CDFI Fund certifies CDFIs and CDEs. Becoming a certified CDFI or CDE allows organizations to participate in various CDFI Fund programs as follows:

The Bank Enterprise Award Program, which provides FDIC-insured depository institutions awards for a demonstrated increase in lending and investments in distressed communities and CDFIs. The CDFI Program, which provides Financial and Technical Assistance awards to CDFIs to reinvest in the CDFI, and to build the capacity of the CDFI, including financing product development and loan loss reserves. The Native American CDFI Assistance Program, which provides CDFIs and sponsoring entities Financial and Technical Assistance awards to increase lending and grow the number of CDFIs owned by Native Americans to help build capacity of such CDFIs.

The New Market Tax Credit Program, which provides tax credits for making equity investments in CDEs that stimulate capital investments in low-income communities. The Capital Magnet Fund, which provides awards to CDFIs and non-profit affordable housing organizations to finance affordable housing solutions and related economic development activities. The Bond Guarantee Program, a source of long-term, patient capital for CDFIs to expand lending and investment capacity for community and economic development purposes.

The Department of the Treasury is authorized to create multi-year grant programs designed to encourage low-to-moderate income individuals to establish accounts at federally insured banks, and to improve low-to-moderate income individuals’ access to such accounts on reasonable terms. Under this authority, grants to participants in CDFI Fund programs may be used for loan-loss reserves and to establish small-dollar loan programs by subsidizing related losses. These grants also allow for the providing recipients with the financial counseling and education necessary to conduct transactions and manage their accounts.

These loans provide low-cost alternatives to payday loans and other nontraditional forms of financing that often impose excessive interest rates and fees on borrowers, and lead millions of Americans to fall into debt traps. Small-dollar loans can only be made pursuant to terms, conditions, and practices that are reasonable for the individual consumer obtaining the loan. Program participation is restricted to eligible institutions, which are limited to organizations listed in section 501(c)(3) of the Internal Revenue Code and exempt from tax under 501(a) of such Code, federally insured depository institutions, community development financial institutions and State, local, or Tribal government entities.

Since its founding, the CDFI Fund has awarded over $3,300,000,000 to CDFIs and CDEs, allocated $54,000,000,000 in tax credits, and $1,510,000,000 in bond guarantees. According to the CDFI Fund, some programs attract as much as $10 in private capital for every $1 invested by the CDFI Fund. The Administration and the Congress should prioritize appropriation of funds for the loan loss reserve fund and technical assistance programs administered by the Community Development Financial Institution Fund, as included in the version of the Financial Services and General Government Appropriations Act, 2020 (H.R. 3351) that passed the House of Representatives on June 26, 2019.

In this section: The term community development financial institution has the meaning given under section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4702 ). The term minority depository institution has the meaning given under section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note), as amended by this Act. Section 308(b)(1) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note) is amended— by redesignating subparagraphs (A), (B), and

(C)as clauses (i), (ii), and (iii), respectively; by striking means any and inserting the following: means— any ; in clause

(iii)(as so redesignated), by striking the period at the end and inserting ; or ; and by inserting at the end the following new subparagraph: any bank described in clause (i), (ii), or

(iii)of section 19(b)(1)(A) of the Federal Reserve Act— more than 50 percent of the outstanding shares of which are held by 1 or more women; and the majority of the directors on the board of directors of which are women. . Each appropriate Federal banking agency shall establish a program under which a depository institution with total consolidated assets of less than $10,000,000,000 may elect to be designated as an impact bank if 50 percent or more of the loans extended by such covered bank are extended to low-income borrowers. Based on data obtained through examinations, an appropriate Federal banking agency shall submit a notification to a depository institution stating that the depository institution qualifies for designation as an impact bank. A depository institution that does not receive a notification described in paragraph

(2)may submit an application to the appropriate Federal banking agency demonstrating that the depository institution qualifies for designation as an impact bank. A depository institution is not required to submit additional data to an appropriate Federal banking agency or be subject to additional oversight from such an agency if such data or oversight is related specifically and solely for consideration for a designation as an impact bank. If an appropriate Federal banking agency determines that a depository institution designated as an impact bank no longer meets the criteria for such designation, the appropriate Federal banking agency shall rescind the designation and notify the depository institution of such rescission. A depository institution may— submit to the appropriate Federal banking agency a request to reconsider a determination that such depository institution no longer meets the criteria for the designation; or file an appeal in accordance with procedures established by the appropriate Federal banking agency. Not later than 1 year after the date of the enactment of this Act, the appropriate Federal banking agencies shall jointly issue rules to carry out the requirements of this subsection, including by providing a definition of a low-income borrower. In this subsection, the terms depository institution and appropriate Federal banking agency have the meanings given such terms, respectively, in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 ). Each covered regulator shall establish an advisory committee to be called the Minority Depository Institutions Advisory Committee . Each Minority Depository Institutions Advisory Committee shall provide advice to the respective covered regulator on meeting the goals established by section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note) to preserve the present number of covered minority institutions, preserve the minority character of minority-owned institutions in cases involving mergers or acquisitions, provide technical assistance, and encourage the creation of new covered minority institutions. The scope of the work of each such Minority Depository Institutions Advisory Committee shall include an assessment of the current condition of covered minority institutions, what regulatory changes or other steps the respective agencies may be able to take to fulfill the requirements of such section 308, and other issues of concern to minority depository institutions. Each Minority Depository Institutions Advisory Committee shall consist of no more than 10 members, who— shall serve for one two-year term; shall serve as a representative of a depository institution or an insured credit union with respect to which the respective covered regulator is the covered regulator of such depository institution or insured credit union; and shall not receive pay by reason of their service on the advisory committee, but may receive travel or transportation expenses in accordance with section 5703 of title 5, United States Code. To the extent practicable, each covered regulator shall ensure that the members of Minority Depository Institutions Advisory Committee of such agency reflect the diversity of depository institutions. Each Minority Depository Institutions Advisory Committee shall meet not less frequently than twice each year. Each Minority Depository Institutions Advisory Committee shall invite the attendance at each meeting of the Minority Depository Institutions Advisory Committee of— one member of the majority party and one member of the minority party of the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; and one member of the majority party and one member of the minority party of any relevant subcommittees of such committees. The termination requirements under section 14 of the Federal Advisory Committee Act (5 U.S.C. app.) shall not apply to a Minority Depository Institutions Advisory Committee established pursuant to this subsection. In this subsection: The term covered regulator means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration. The term covered minority institution means a minority depository institution (as defined in section 308(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note)) or a minority credit union (as defined in section 1204(c) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended by this Act). The term depository institution has the meaning given under section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 ). The term insured credit union has the meaning given in section 101 of the Federal Credit Union Act ( 12 U.S.C. 1752 ). Section 308(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note) is amended by adding at the end the following new paragraph: The term depository institution means an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 )) and an insured credit union (as defined in section 101 of the Federal Credit Union Act ( 12 U.S.C. 1752 )). . Section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note) is amended— by adding at the end the following new subsection: The Secretary of the Treasury shall ensure that deposits made by Federal agencies in minority depository institutions and impact banks are fully collateralized or fully insured, as determined by the Secretary. Such deposits shall include reciprocal deposits as defined in section 337.6(e)(2)(v) of title 12, Code of Federal Regulations (as in effect on March 6, 2019). ; and in subsection (b), as amended by section 6(g), by adding at the end the following new paragraph: The term impact bank means a depository institution designated by an appropriate Federal banking agency pursuant to section 5 of the Ensuring Diversity in Community Banking Act of 2020. . Section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note) is amended— in the matter preceding paragraph (1), by striking section— and inserting section: ; and in the paragraph heading for paragraph (1), by striking and inserting financial . depository Section 1204 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1811 note) is amended to read as follows: There is established a program to be known as the Minority Bank Deposit Program to expand the use of minority banks and minority credit unions. The Secretary of the Treasury, acting through the Fiscal Service, shall— on application by a depository institution or credit union, certify whether such depository institution or credit union is a minority bank or minority credit union; maintain and publish a list of all depository institutions and credit unions that have been certified pursuant to subparagraph (A); and periodically distribute the list described in subparagraph

(B)to— all Federal departments and agencies; interested State and local governments; and interested private sector companies. A depository institution or credit union that, on the date of the enactment of this section, has a current certification from the Secretary of the Treasury stating that such depository institution or credit union is a minority bank or minority credit union shall be included on the list described under paragraph (2)(B). Not later than 1 year after the establishment of the program described in subsection (a), the head of each Federal department or agency shall develop and implement standards and procedures to ensure, to the maximum extent possible as permitted by law, the use of minority banks and minority credit unions to serve the financial needs of each such department or agency. Not later than 2 years after the establishment of the program described in subsection (a), and annually thereafter, the head of each Federal department or agency shall submit to Congress a report on the actions taken to increase the use of minority banks and minority credit unions to serve the financial needs of each such department or agency. For purposes of this section: The term credit union has the meaning given the term insured credit union in section 101 of the Federal Credit Union Act ( 12 U.S.C. 1752 ). The term depository institution has the meaning given the term insured depository institution in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 ). The term minority means any Black American, Native American, Hispanic American, or Asian American. The term minority bank means a minority depository institution as defined in section 308 of this Act. The term minority credit union means any credit union for which more than 50 percent of the membership (including board members) of such credit union are minority individuals, as determined by the National Credit Union Administration pursuant to section 308 of this Act. . The following provisions are amended by striking 1204(c)(3) and inserting 1204(c) : Section 808(b)(3) of the Community Reinvestment Act of 1977 ( 12 U.S.C. 2907(b)(3) ). Section 40(g)(1)(B) of the Federal Deposit Insurance Act ( 12 U.S.C. 1831q(g)(1)(B) ). Section 704B(h)(4) of the Equal Credit Opportunity Act ( 15 U.S.C. 1691c–2(h)(4) ). Each covered regulator shall submit to Congress an annual report on diversity including the following: Data, based on voluntary self-identification, on the racial, ethnic, and gender composition of the examiners of each covered regulator, disaggregated by length of time served as an examiner. The status of any examiners of covered regulators, based on voluntary self-identification, as a veteran. Whether any covered regulator, as of the date on which the report required under this subsection is submitted, has adopted a policy, plan, or strategy to promote racial, ethnic, and gender diversity among examiners of the covered regulator. Whether any special training is developed and provided for examiners related specifically to working with banks that serve communities that are predominantly minorities, low income, or rural, and the key focus of such training. Each Office of Minority and Women Inclusion of a covered regulator shall develop, provide to the head of the covered regulator, and make publicly available best practices— for increasing the diversity of candidates applying for examiner positions, including through outreach efforts to recruit diverse candidate to apply for entry-level examiner positions; and for retaining and providing fair consideration for promotions within the examiner staff for purposes of achieving diversity among examiners. In this subsection, the term covered regulator means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration. Section 7(j)(8)(B) of the Federal Deposit Insurance Act ( 12 U.S.C. 1817(j)(8)(B) ) is amended to read as follows: control means the power, directly or indirectly— to direct the management or policies of an insured depository institution; or with respect to an insured depository institution, of a person to vote 25 per centum or more of any class of voting securities of such institution; or with respect to an insured depository institution that is an impact bank (as designated pursuant to section 5 of the Ensuring Diversity in Community Banking Act of 2020) or a minority depository institution (as defined in section 308(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989), of an individual to vote 30 percent of more of any class of voting securities of such an impact bank or a minority depository institution. . The appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 )) shall jointly issue rules for de novo minority depository institutions and de novo impact banks (as designated pursuant to section 5) to allow 3 years to meet the capital requirements otherwise applicable to minority depository institutions and impact banks. Not later than 1 year after the date of the enactment of this Act, the appropriate Federal banking agencies shall jointly submit to Congress a report on— the principal causes for the low number of de novo minority depository institutions during the 10-year period preceding the date of the report; the main challenges to the creation of de novo minority depository institutions and de novo impact banks; and regulatory and legislative considerations to promote the establishment of de novo minority depository institutions and de novo impact banks. Before a large financial institution may be employed as a financial agent of the Department of the Treasury or perform any reasonable duties as depositary of public moneys of the Department of the Treasury, the large financial institution shall demonstrate participation as a mentor in a covered mentor-protege program to a protege firm that is a minority depository institution or a community development financial institution. Not later than 6 months after the date of the enactment of this Act and annually thereafter, the Secretary of the Treasury shall submit to Congress a report on participants in a covered mentor-protege program, including an analysis of outcomes of such program. The Secretary of the Treasury shall publish procedures for compliance with the requirements of this subsection for large financial institutions. In this subsection: The term covered mentor-protege program means a mentor-protege program established by the Secretary of the Treasury pursuant to section 45 of the Small Business Act ( 15 U.S.C. 657r ). The term large financial institution means any entity— regulated by the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the National Credit Union Administration; and that has total consolidated assets greater than or equal to $50,000,000,000. The Secretary of the Treasury shall establish a custodial deposit program (in this subsection referred to as the Program ) under which a covered bank shall receive monthly deposits from a qualifying account. A covered bank shall submit to the Secretary an application to participate in the Program at such time, in such manner, and containing such information as the Secretary may determine. The Secretary shall designate eligible custodial entities to make monthly deposits with covered banks selected for participation in the Program on behalf of a qualifying account. The Secretary shall establish a custodial deposit account for each qualifying account with the eligible custodial entity designated to make deposits with covered banks for each such qualifying account. The Secretary shall deposit a total amount not greater than 5 percent of a qualifying account into any custodial deposit accounts established under subparagraph (A). Each month, each eligible custodial entity designated by the Secretary shall deposit an amount not greater than the insured amount, in the aggregate, from each custodial deposit account, in a single covered bank. With respect to the funds of an individual qualifying account, the eligible custodial entity may not deposit an amount greater than the insured amount in a single covered bank. In this clause, the term insured amount means the amount that is the greater of— the standard maximum deposit insurance amount (as defined in section 11(a)(1)(E) of the Federal Deposit Insurance Act ( 12 U.S.C. 1821(a)(1)(E) )); or such higher amount negotiated between the Secretary and the Corporation under which the Corporation will insure all deposits of such higher amount. The total amount of funds deposited under the Program in a covered bank may not exceed the lesser of— 10 percent of the average amount of deposits held by such covered bank in the previous quarter; or $100,000,000. Each eligible custodial entity designated by the Secretary shall— collect interest from each covered bank in which such custodial entity deposits funds pursuant to subparagraph (B); and disburse such interest to the Secretary each month. The rate of any interest collected under this subparagraph may not exceed 50 percent of the discount window primary credit interest rate most recently published on the Federal Reserve Statistical Release on selected interest rates (daily or weekly), commonly referred to as the H.15 release (commonly known as the Federal funds rate ). Each eligible custodial entity designated by the Secretary shall submit to the Secretary monthly statements that include the total amount of funds deposited with, and interest rate received from, each covered bank by the eligible custodial entity on behalf of qualifying entities. The Secretary shall issue a quarterly report to Congress and make publicly available a record identifying all covered banks participating in the Program and amounts deposited under the Program in covered banks. Deposits made with covered banks under this subsection may not— be considered by the Corporation to be funds obtained, directly or indirectly, by or through any deposit broker for deposit into 1 or more deposit accounts (as described under section 29 of the Federal Deposit Insurance Act ( 12 U.S.C. 1831f )); or be subject to insurance fees from the Corporation that are greater than insurance fees for typical demand deposits not obtained, directly or indirectly, by or through any deposit broker (commonly known as core deposits ). The Secretary shall provide a 3-month period for public notice and comment before making any material change to the operation of the Program. The requirements of subparagraph

(A)shall not apply if the Secretary makes a material change to the Program to comply with safety and soundness standards or other law. A covered bank selected for participation in the Program pursuant to paragraph

(3)may terminate participation in the Program by providing the Secretary a notification 60 days prior to termination. The Secretary may terminate the participation of a covered bank in the Program if the Secretary determines the covered bank— violated any terms of participation in the Program; failed to comply with Federal bank secrecy laws, as documented in writing by the primary regulator of the covered bank; failed to remain well capitalized; or failed comply with safety and soundness standards, as documented in writing by the primary regulator of the covered bank. In this subsection: The term Corporation means the Federal Deposit Insurance Corporation. The term covered bank means— a minority depository institution that is regulated by the Corporation or the National Credit Union Administration that is well capitalized (as defined in section 38(b) of the Federal Deposit Insurance Act ( 12 U.S.C. 1831o(b) )); or a depository institution designated pursuant to section 5 of the Ensuring Diversity in Community Banking Act of 2020 that is well capitalized (as defined in section 38(b) of the Federal Deposit Insurance Act ( 12 U.S.C. 1831o(b) )). The term eligible custodial entity means— an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 )); an insured credit union (as defined in section 101 of the Federal Credit Union Act ( 12 U.S.C. 1752 )); or or a well capitalized State-chartered trust company, designated by the Secretary under subsection (k)(3)(A). The term Federal bank secrecy laws means— section 21 of the Federal Deposit Insurance Act ( 12 U.S.C. 1829b ); section 123 of Public Law 91–508 ; and subchapter II of chapter 53 of title 31, United States Code. The term qualifying account means any account established in the Department of the Treasury that— is controlled by the Secretary; and is expected to maintain a balance greater than $200,000,000 for the following calendar month. The term Secretary means the Secretary of the Treasury. The term well capitalized has the meaning given in section 38 of the Federal Deposit Insurance Act ( 12 U.S.C. 1831o ). Not later than 12 months after the date of the enactment of this Act and with respect to any person having assets under $3,000,000,000 that submits an application for deposit insurance with the Federal Deposit Insurance Corporation that could also become a community development financial institution, the Federal Deposit Insurance Corporation, in consultation with the Administrator of the Community Development Financial Institutions Fund, shall— develop systems and procedures to record necessary information to allow the Administrator to conduct preliminary analysis for such person to also become a community development financial institution; and develop procedures to streamline the application and annual certification processes and to reduce costs for such person to become, and maintain certification as, a community development financial institution that serves low- and moderate-income neighborhoods (as defined under the Community Reinvestment Act of 1977 ( 12 U.S.C. 2901 et seq.)). Not later than 18 months after the date of the enactment of this Act, the Federal Deposit Insurance Corporation shall submit to Congress a report describing the systems and procedures required under paragraph (1). Section 17(a)(1) of the Federal Deposit Insurance Act ( 12 U.S.C. 1827(a)(1) ) is amended— in subparagraph (E), by striking and at the end; by redesignating subparagraph

(F)as subparagraph (G); and by inserting after subparagraph

(E)the following new subparagraph: applicants for deposit insurance that could also become a community development financial institution (as defined in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994), a minority depository institution (as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989), or an impact bank (as designated pursuant to section 5 of the Ensuring Diversity in Community Banking Act of 2020); and . The amendment made by this paragraph shall apply with respect to the first report to be submitted after the date that is 2 years after the date of the enactment of this Act. Not later than 6 months after the date of the enactment of this Act, the Administrator of the Small Business Administration shall establish a task force to examine methods for improving relationships between the Small Business Administration and community development financial institutions, minority depository institutions, and impact bank (as designated pursuant to section 5 of the Ensuring Diversity in Community Banking Act of 2020) to increase the volume of loans provided by such institutions to small business concerns (as defined under section 3 of the Small Business Act ( 15 U.S.C. 632 )). Not later than 18 months after the establishment of the task force described in paragraph (1), the Administrator of the Small Business Administration shall submit to Congress a report on the findings of such task force. The Secretary of the Treasury shall establish a program to provide assistance to a minority depository institution or an impact bank (as designated pursuant to section 5 of the Ensuring Diversity in Community Banking Act of 2020) to support growth and development of such minority depository institutions and impact banks, including by providing assistance with obtaining or converting a charter, bylaw amendments, field-of-membership expansion requests, and online training and resources.

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