Sec. 705. Neighborhood Capital Investment Program

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Title IV of the CARES Act ( Public Law 116–136 ) is amended— in section 4002 ( 15 U.S.C. 9041 )— by redesignating paragraphs

(7)through

(10)as paragraphs

(9)through (12), respectively; and by inserting after paragraph

(6)the following: The term low- and moderate-income community financial institution means any financial institution that is— a community development financial institution, as defined in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4702 ); or a minority depository institution. The term minority depository institution — has the meaning given that term under section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note); means an entity considered to be a minority depository institution by— the appropriate Federal banking agency (as such term is defined under section 3 of the Federal Deposit Insurance Act); or the National Credit Union Administration, in the case of an insured credit union; and means an entity listed in the Federal Deposit Insurance Corporation’s Minority Depository Institutions List published for the Second Quarter 2020. ; in section 4003 ( 15 U.S.C. 9042 ), by adding at the end the following: In this subsection— the term community development financial institution has the meaning given the term in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4702 ); the term Fund means the Community Development Financial Institutions Fund established under section 104(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4703(a) ); the term minority means any Black American, Native American, Hispanic American, or Asian American; the term Program means the Neighborhood Capital Investment Program established under paragraph (2); and the Secretary means the Secretary of the Treasury. The Secretary of the Treasury shall establish a Neighborhood Capital Investment Program (the Program ) to support the efforts of low- and moderate-income community financial institutions to, among other things, provide loans and forbearance for small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities, by providing direct capital investments in low- and moderate-income community financial institutions. The Secretary shall begin accepting applications for capital investments under the Program not later than the end of the 30-day period beginning on the date of enactment of this subsection, with priority in distribution given to low- and moderate-income community financial institutions that are minority lending institutions, as defined under section 103 of the Community Development Banking and Financial Institutions Act of 1994 ( 12 U.S.C. 4702 ). At the time that an applicant submits an application to the Secretary for a capital investment under the Program, the applicant shall provide the Secretary, along with the appropriate Federal banking agency, an investment and lending plan that— demonstrates that not less than 30 percent of the lending of the applicant over the past 2 fiscal years was made directly to low- and moderate income borrowers, to borrowers that create direct benefits for low- and moderate-income populations, to other targeted populations as defined by the Fund, or any combination thereof, as measured by the total number and dollar amount of loans; describes how the business strategy and operating goals of the applicant will address community development needs, which includes the needs of small businesses, consumers, nonprofit organizations, community development, and other projects providing direct benefits to low- and moderate-income communities, low-income individuals, and minorities within the minority, rural, and urban low-income and underserved areas served by the applicant; includes a plan to provide linguistically and culturally appropriate outreach, where appropriate; includes an attestation by the applicant that the applicant does not own, service, or offer any financial products at an annual percentage rate of more than 36 percent interest, as defined in section 987(i)(4) of title 10, United States Code, and is compliant with State interest rate laws; and includes details on how the applicant plans to expand or maintain significant lending or investment activity in low- or moderate-income minority communities, to historically disadvantaged borrowers, and to minorities that have significant unmet capital or financial services needs. An applicant that is not an insured community development financial institution or otherwise regulated by a Federal financial regulator shall submit the plan described in clause

(i)only to the Secretary. In the case of an applicant that is certified as a community development financial institution as of the date of enactment of this subsection, for purposes of clause (i)(I), the Secretary may rely on documentation submitted the Fund as part of certification compliance reporting. Any financial instrument issued to Treasury by a low- and moderate-income community financial institution under the Program shall provide the following: No dividends, interest or other payments shall exceed 2 percent per annum. After the first 24 months from the date of the capital investment under the Program, annual payments may be required, as determined by the Secretary and in accordance with this section, and adjusted downward based on the amount of affordable credit provided by the low- and moderate-income community financial institution to borrowers in minority, rural, and urban low-income and underserved communities. During any calendar quarter after the initial 24-month period referred to in clause (ii), the annual payment rate of a low- and moderate-income community financial institution shall be adjusted downward to reflect the following schedule, based on lending by the institution relative to the baseline period: If the institution in the most recent annual period prior to the investment provides significant lending or investment activity in low- or moderate-income minority communities, historically disadvantaged borrowers, and to minorities that have significant unmet capital or financial services, the annual payment rate shall not exceed 0.5 percent per annum. If the amount of lending within minority, rural, and urban low-income and underserved communities and to low- and moderate-income borrowers has increased dollar for dollar based on the amount of the capital investment, the annual payment rate shall not exceed 1 percent per annum. If the amount of lending within minority, rural, and urban low-income and underserved communities and to low- and moderate-income borrowers has increased by twice the amount of the capital investment, the annual payment rate shall not exceed 0.5 percent per annum. Any annual payments under this subsection shall be deferred in any quarter or payment period if any of the following is true: The low- and moderate-income community institution fails to meet the Tier 1 capital ratio or similar ratio as determined by the Secretary. The low- and moderate-income community financial institution fails to achieve positive net income for the quarter or payment period. The low- and moderate-income community financial institution determines that the payment would be detrimental to the financial health of the institution. Any deferred annual payment under this subsection shall be tested against the metrics described in clause

(i)at the beginning of the next payment period, and such payments shall continue to be deferred until the metrics described in that clause are no longer applicable. Each low- and moderate-income community financial institution may only issue financial instruments or senior preferred stock under this subsection with an aggregate principal amount that is— not more than 15 percent of risk-weighted assets for an institution with assets of more than $2,000,000,000; not more than 25 percent of risk-weighted assets for an institution with assets of not less than $500,000,000 and not more than $2,000,000,000; and not more than 30 percent of risk-weighted assets for an institution with assets of less than $500,000,000. Holding any instrument of a low- and moderate-income community financial institution described in subparagraph

(A)shall not give the Treasury or any successor that owns the instrument any rights over the management of the institution. With respect to a capital investment made into a low- and moderate-income community financial institution under this subsection, the Secretary— except as provided in clause (iv), during the 10-year period following the investment, may not sell the interest of the Secretary in the capital investment to a third party; shall provide the low- and moderate-income community financial institution a right of first refusal to buy back the investment under terms that do not exceed a value as determined by an independent third party; and shall not sell more than a 5 percent ownership interest in the capital investment to a single third party; and with the permission of the institution, may gift or sell the interest of the Secretary in the capital investment for a de minimus amount to a mission aligned nonprofit affiliate of an applicant that is an insured community development financial institution, as defined in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4702 ). The calculation and determination of ownership thresholds for a depository institution to qualify as a minority depository institution described in section 4002(7)(B) shall exclude any dilutive effect of equity investments by the Federal Government, including under the Program or through the Fund. In carrying out the Program, the Secretary shall use not more than $13,000,000,000, from amounts appropriated under section 4027, and shall use not less than $7,000,000,000 of such amount for direct capital investments under the Program. In making any capital investment under the Program, the Secretary shall ensure that the terms of the investment are designed to ensure the investment receives Tier 1 capital treatment. The Secretary shall require low- and moderate-income community financial institutions receiving capital investments under the Program to provide linguistically and culturally appropriate outreach and advertising describing the availability and application process of receiving loans made possible by the Program through organizations, trade associations, and individuals that represent or work within or are members of minority communities. Not later than the end of the 30-day period beginning on the date of enactment of this subsection, the Secretary of the Treasury shall issue rules setting restrictions on executive compensation, share buybacks, and dividend payments for recipients of capital investments under the Program. The provisions of section 4019 apply to investments made under the Program. The authority to make capital investments in low- and moderate-income community financial institutions, including commitments to purchase preferred stock or other instruments, provided under the Program shall terminate on the date that is 36 months after the date of enactment of this subsection. Notwithstanding the Equal Credit Opportunity Act ( 15 U.S.C. 1691 et seq.)— any low- and moderate-income community financial institution may collect data described in section 701(a)(1) of that Act ( 15 U.S.C. 1691(a)(1) ) from borrowers and applicants for credit for the purpose of monitoring compliance under the plan required under paragraph (4)(B); and a low- and moderate-income community financial institution that collects the data described in subparagraph

(A)shall not be subject to adverse action related to that collection by the Bureau of Consumer Financial Protection or any other Federal agency. All funds received by the Secretary in connection with purchases made pursuant this subsection, including interest payments, dividend payments, and proceeds from the sale of any financial instrument, shall be deposited into the Fund and used to provide financial and technical assistance pursuant to section 108 of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4707 ), except that subsection

(e)of that section shall be waived. The Secretary shall establish an Equity Equivalent Investment Option, under which, with respect to a specific investment in a low- and moderate-income community financial institution— 80 percent of such investment is made by the Secretary under the Program; and 20 percent of such investment if made by a banking institution. The terms and conditions applicable to investments made by the Secretary under the Program shall apply to any investment made by a banking institution under this paragraph. The amount of a specific investment described under subparagraph

(A)may not exceed $10,000,000, but the receipt of an investment under subparagraph

(A)shall not preclude the recipient from being eligible for other assistance under the Program. In this paragraph, the term banking institution means any entity with respect to which there is an appropriate Federal banking agency under section 3 of the Federal Deposit Insurance Act. No low- and moderate-income community financial institution that receives an equity investment under subsection

(i)shall, for so long as the investment or participation continues, make any loan at an annualized percentage rate above 36 percent, as determined in accordance with section 987(b) of title 10, United States Code (commonly known as the Military Lending Act) . The exemption authority of the Bureau under section 105(f) of the Truth in Lending Act ( 15 U.S.C. 1604(f) ) shall not apply with respect to this subsection. .

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