Sec. 5. Neighborhood Investment Programs

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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

(8)through (11), 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, as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1463 note), for which the majority of the community served by the minority depository institution is minority, as defined in such section. ; 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; and the term Program means the Neighborhood Capital Investment Program established under paragraph (2). The Secretary shall establish a Neighborhood Capital Investment Program to support low- and moderate-income community financial institutions to provide loans and forbearance to borrowers in low- and moderate-income communities, especially for borrowers who are historically disadvantaged, including minorities, and borrowers in rural and urban low-income and underserved communities. Under the Program, the Secretary shall establish a fund to facilitate direct capital investments, including purchases and modifications of those purchases, of senior preferred non-voting stock, subordinated debentures, and other financial instruments (including equity equivalent capital and secondary capital investments described in section 216(o)(2)(C) of the Federal Credit Union Act ( 12 U.S.C. 1790d(o)(2)(C) ) from low- and moderate-income community financial institutions on such terms as are determined by the Secretary in accordance with this subtitle. 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-owned or minority-led lenders. 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 ); or 1 or more mission-aligned nonprofit organizations selected by the institution that are not affiliated with the institution. 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 such sums as may be necessary, but not less than $7,000,000,000, from amounts made available under subsection (b), notwithstanding the limitations on the use of such funds under paragraphs

(1)through

(4)of such subsection (b). Any capital investment under the Program shall receive Tier 1 capital treatment, as defined by the Federal Financial Institutions Examination Council, or shall be treated as a secondary capital investment described in section 216(o)(2)(C) of the Federal Credit Union Act ( 12 U.S.C. 1790d(o)(2)(C) ). 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. The restrictions and limitations described in subparagraphs

(E)and

(F)of paragraph

(2)and paragraph (3)(A)(ii) of subsection

(c)of section 4003 and in section 4004 shall not apply to 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 Opportunity Credit 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. . In this subsection— the term financial institution means any entity regulated by the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation; the term intermediary means any entity engaged in aggregating loans originated by low- and moderate-income community financial institutions; and the term Program means the Neighborhood Loan Program established under paragraph (2). The Secretary, in conjunction with the Board of Governors of the Federal Reserve System, shall establish a Neighborhood Loan Program to create facilities under section 13(3) of the Federal Reserve Act ( 12 U.S.C. 343(3) ) to provide liquidity and encourage equity equivalent capital investments for low- and moderate-income community financial institutions serving low- and moderate-income and minority communities. Any guidance, regulations, frequently asked question, or other written or verbal communications provided by the Secretary or the Board of Governors of the Federal Reserve System in connection with the Program shall be designed to minimize any burden to the relevant low- and moderate-income community financial institution and to ensure that the Program is actively utilized by the low- and moderate-income community financial institution for which the Program is being created. The facilities created under paragraph

(2)shall purchase 90 percent of the balance of eligible small business loans described in subparagraph (B), either directly from low- and moderate-income community financial institutions, or from intermediaries, to increase access to credit and build wealth in low- and moderate-income and minority communities. An eligible small business loan described in this subparagraph shall have— a maximum loan balance of $250,000; reasonable loan origination and service fees; and other terms as prescribed by the Secretary. To be eligible under subparagraph (A), a low- and moderate-income community financial institution shall hold not less than 10 percent of each eligible small business loan described in subparagraph (B), or 10 percent of the loans as represented in a loan pool described in subparagraph (D). Each loan pool described in subparagraph (A)— shall be composed of not less than 50 loans that amount to not less than $1,000,000; shall be originated by a low- and moderate-income community financial institution for a commercially reasonable fee charged by the facility created under the Program; shall be serviced by a low- and moderate-income community financial institution for a commercially reasonable fee charged by a facility created under the Program; and shall be representative of the risk in the total loan portfolio of the low- and moderate-income community financial institution. Low- and moderate-income community financial institutions shall prioritize the purchase of eligible small business loans described in subparagraph

(B)that are made to minority-owned small businesses. The facilities created under paragraph

(2)shall purchase 90 percent participations in loans made by financial institutions to low- and moderate-income community financial institutions that meet the eligibility requirements in this paragraph. To be eligible under subparagraph (A), a financial institution shall retain not less than 10 percent of each loan described in subparagraph (C). A loan described in this subparagraph shall be— for not more than $10,000,000; originated after March 15, 2020; serviced by a financial institution; and treated as an equity equivalent investment, as defined by the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation. The Secretary shall begin accepting applications under the Program not later than the end of the 30-day period beginning on the date of enactment of this subsection. The restrictions and limitations described in subparagraphs

(E)and

(F)of paragraph

(2)and paragraph (3)(A)(ii) of subsection

(b)of section 4003 and in section 4004 shall not apply to the Program. In carrying out the Program, the Secretary shall use such sums as may be necessary, but not less than $8,000,000,000, from amounts made available under paragraph

(4)of subsection (b), notwithstanding the limitations on the use of such funds under that paragraph. The Program shall terminate on the date that is 48 months after the date of enactment of this subsection. No low- and moderate-income community financial institution that receives an equity investment under subsection

(i)or sells a loan participation under subsection

(j)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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