American Community Investment Reform Act of 2010 - Revises the Community Reinvestment Act of 1977 with regard to assessments of regulated financial institutions.
Revises the list of appropriate federal financial supervisory agencies to include: (1) the Bureau of Consumer Financial Protection (established by the Dodd-Frank Wall Street Reform and Consumer Protection Act); and (2) the Securities and Exchange Commission (SEC) with regard to any U.S. nonbank financial company for which the SEC acts as the primary financial regulatory agency, and any broker or dealer that is a member of the Securities Investor Protection Corporation. Specifies the Board of Governors of the Federal Reserve System as the appropriate federal financial supervisory agency for securities holding companies, and, in consultation with its primary financial regulatory agency, any regulated financial institution not otherwise indicated.
Specifies the community development and other related activities of a regulated financial institution or a U.S. nonbank financial company, including lending and investment in low- and moderate-income and other traditionally underserved neighborhoods, which the appropriate federal financial supervisory agency is required to assess.
Requires the examination of a regulated financial institution to: (1) take into consideration public comments on its record of meeting the credit or other financial needs of its entire community; and (2) require an improvement plan for an institution that receives certain low ratings. Prescribes requirements for an improvement plan, including availability for public comment.
Revises requirements for assessment of the record of a regulated financial institution that is a nonminority-owned, nonwomen-owned institution and that is not a certified community development financial institution.
Requires the appropriate federal financial supervisory agency, in assessing the record of a regulated financial institution, to consider the complexity, innovativeness, effectiveness of its efforts in meeting particularly difficult community needs, or any significant effort extended in specific loans, investments, or services.
Requires the evaluation of a depository institution holding company to incorporate evaluations of its subsidiary regulated financial institutions.
Requires the public section of the written evaluation of a regulated financial institution to disclose whether it provided, or offered to provide, a consumer financial product that the Bureau of Consumer Financial Protection has determined is unfair, deceptive, or abusive.
Replaces the top rank "outstanding record of meeting community credit needs" rating for an institution with the current second rank rating of "satisfactory record." Makes the second rank rating now "sufficient record of meeting community credit or other financial needs." Requires the appropriate federal financial supervisory agencies to develop and implement a process to permit a regulated financial institution to apply for a rating of "outstanding record of meeting community credit or other financial needs." Reserves an "outstanding" rating to an applicant that significantly exceeds the requirements for receiving a "satisfactory" rating and meets other specified criteria. Allows the supervisory agency to consider community development activities and investments made outside the institution's service area if the financial institution has adequately met the needs of its local assessment area.
Requires the recipient of an "outstanding rating" to be given preference over lower-rated regulated financial institutions in connection with the award of government contracts. Specifies the effect of a "satisfactory" rating.
Prohibits the award of government contracts to, and certain other actions by, any regulated financial institution that receives a rating of: (1) "needs to improve record of meeting community credit or other financial needs" or lower on its two most recent performance evaluations; or (2) "substantial noncompliance in meeting community credit or other financial needs" on its most recent performance evaluations.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6334 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 6334
To amend the Community Reinvestment Act of 1977 to improve the
assessments of regulated financial institutions, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 29, 2010
Mr. Gutierrez (for himself, Ms. Waters, Mr. Al Green of Texas, and Ms.
Eddie Bernice Johnson of Texas) introduced the following bill; which
was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Community Reinvestment Act of 1977 to improve the
assessments of regulated financial institutions, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Community Investment Reform
Act of 2010''.
SEC. 2. COMMUNITY REINVESTMENT ACT AMENDMENTS.
(a) Findings and Purpose.--Section 802 of the Community
Reinvestment Act of 1977 (12 U.S.C. 2901) is amended to read as
follows:
``SEC. 802. FINDINGS AND PURPOSE.
``(a) Findings.--The Congress finds that--
``(1) regulated financial institutions are required by law
to demonstrate that they serve the convenience and needs of the
communities in which they are chartered or do business;
``(2) the convenience and needs of communities include the
need for credit services, deposit services, transaction
services, and community development loans and investments; and
``(3) regulated financial institutions have a continuing
and affirmative obligation to help meet the credit or other
financial needs of the local communities in which they are
chartered or do business.
``(b) Purpose.--It is the purpose of this title to require each
appropriate Federal financial supervisory agency to use its authority
when examining regulated financial institutions, to encourage such
institutions to help meet the credit or other financial needs of the
local communities in which they are chartered or do business consistent
with the safe and sound operation of such institutions.''.
(b) Definitions.--Section 803 of such Act (12 U.S.C. 2902) is
amended to read as follows:
``SEC. 803. DEFINITIONS.
``For purposes of this title:
``(1) Appropriate federal financial supervisory agency.--
The term `appropriate Federal financial supervisory agency'
means--
``(A) the appropriate Federal banking agency with
respect to depository institutions and depository
institution holding companies, as those terms are
defined under section 3 of the Federal Deposit
Insurance Act;
``(B) the Securities and Exchange Commission with
regard to--
``(i) any U.S. nonbank financial company
for which the Securities and Exchange
Commission acts as the primary financial
regulatory agency pursuant to section 2 of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act; and
``(ii) any broker or dealer that is a
member of the Securities Investor Protection
Corporation;
``(C) the Bureau of Consumer Financial Protection
with respect to any covered person supervised by the
Bureau pursuant to section 1024 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act; and
``(D) the Board of Governors of the Federal Reserve
System with respect to--
``(i) securities holding companies, as
defined under section 618 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act;
and
``(ii) in consultation with the primary
financial regulatory agency (as such term is
defined under section 2 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act), any
regulated financial institution not described
in subparagraph (A), (B), or (C) or clause (i).
``(2) Capital distribution.--The term `capital
distribution' means--
``(A) a distribution of cash or other property by
any regulated financial institution to its owners made
on account of that ownership;
``(B) a payment by a regulated financial
institution to repurchase, redeem, retire, or otherwise
acquire any of its shares or other ownership interests,
including any extension of credit to finance an
affiliated company's acquisition of those shares or
interests; and
``(C) a transaction that the appropriate Federal
financial supervisory agency determines, by order or
regulation, to be in substance a distribution of
capital to the owners of the regulated financial
institution.
``(3) Community development.--The term `community
development' means--
``(A) affordable housing for low- (including
extremely low-income) or moderate-income individuals
(including multifamily rental housing and properties
awarded low-income housing tax credits under section
42(h) of the Internal Revenue Code of 1986);
``(B) community and financial services targeted to
low- or moderate-income individuals, including
appropriate electronic payments, basic account
activities, and successful mortgage or loan
modifications;
``(C) activities that promote economic development
by financing businesses or farms that--
``(i) meet the size eligibility
requirements of the Small Business
Administration's Development Company or the
Small Business Investment Company programs
under section 121.301 of title 13, Code of
Federal Regulations; or
``(ii) have gross annual revenues of
$1,000,000 or less; or
``(D) activities that revitalize or stabilize--
``(i) low- or moderate-income geographies;
``(ii) designated disaster areas;
``(iii) distressed or underserved
nonmetropolitan middle-income geographies
designated by the Board of Governors of the
Federal Reserve System, the Federal Deposit
Insurance Corporation, and the Office of the
Comptroller of the Currency, based on--
``(I) rates of poverty,
unemployment, and population loss; or
``(II) population size, density,
and dispersion, if such activities help
to meet essential community needs,
including needs of low- and moderate-
income individuals; or;
``(iv) activities conducted by certified
community development financial institutions
(as such term is defined under section 103(5)
of the Community Development Banking and
Financial Institutions Act of 1994).
``(4) Regulated financial institution.--
``(A) In general.--The term `regulated financial
institution' means an insured depository institution
(as defined under section 3 of the Federal Deposit
Insurance Act), a depository institution holding
company (as defined under section 3 of the Federal
Deposit Insurance Act), and a U.S. nonbank financial
company.
``(B) Rule of construction.--The term `regulated
financial institution' does not include a credit union.
``(5) Application for a deposit facility.--The term
`application for a deposit facility' means an application to
the appropriate Federal financial supervisory agency otherwise
required under Federal law or regulations thereunder for--
``(A) a charter for a national bank or Federal
savings and loan association;
``(B) deposit insurance in connection with a newly
chartered State bank, savings bank, savings and loan
association or similar institution;
``(C) the establishment of a domestic branch or
other facility with the ability to accept deposits of a
regulated financial institution;
``(D) the relocation of the home office or a branch
office of a regulated financial institution;
``(E) the merger or consolidation with, or the
acquisition of the assets, or the assumption of the
liabilities of a regulated financial institution
requiring approval under section 18(c) of the Federal
Deposit Insurance Act or under regulations issued under
the authority of title IV of the National Housing Act;
or
``(F) the acquisition of shares in, or the assets
of, a regulated financial institution requiring
approval under section 3 of the Bank Holding Company
Act of 1956 or section 408(e) of the National Housing
Act.
``(6) U.S. nonbank financial company.--The term `U.S.
nonbank financial company' has the meaning given such term
under section 102 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.
``(7) Geography.--The term `geography' means a census tract
delineated by the United States Bureau of the Census in the
most recent decennial census.
``(8) Entire community.--With respect to a financial
institution whose business predominately consists of serving
the needs of military personnel who are not located within a
defined geographic area, such institution may define its
`entire community' to include its entire deposit customer base
without regard to geographic proximity.''.
(c) Evaluations.--Section 804 of such Act (12 U.S.C. 2903) is
amended--
(1) by redesignating subsections (c) and (d) as subsections
(e) and (f), respectively;
(2) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Depository Institutions and Depository Institution Holding
Companies.--In connection with its examination of a regulated financial
institution other than a U.S. nonbank financial company, the
appropriate Federal financial supervisory agency shall do the
following:
``(1) Assess the institution's record of meeting the credit
or other financial needs of its entire community, including
low-income, moderate-income, and other traditionally
underserved neighborhoods, consistent with the safe and sound
operation of such institution.
``(2) Assess, with at least an equal weight to any other
factor or test identified in the regulations prescribed by the
appropriate Federal financial supervisory agency to implement
this Act, the community development activities and those
activities' effectiveness in meeting the financial needs of an
institution's entire community, including low- and moderate-
income neighborhoods, consistent with the safe and sound
operation of such institution.
``(3) Assess the following activities and those activities'
effectiveness in meeting the credit or other financial needs of
an institution's entire community, including low- and moderate-
income neighborhoods, consistent with the safe and sound
operation of such institution, unless the appropriate Federal
financial supervisory agency determines that such assessment is
not appropriate for a given regulated financial institution or
class of regulated financial institutions because it engages in
limited activities or is of a limited size:
``(A) Lending activities other than loans
considered under paragraph (1).
``(B) Investment activities other than investments
considered under paragraph (1).
``(C) Retail financial services other than
community development services considered under
paragraph (1).
``(4) Take such record into account in its evaluation of an
application for a deposit facility by such institution.
``(b) U.S. Nonbank Financial Companies.--The appropriate Federal
financial supervisory agency shall assess the community development
activities, including investments and loans where appropriate that
benefit the community of the company, and those activities'
effectiveness in meeting the credit or other financial needs of its
entire community, including low-income, moderate-income, and other
traditionally underserved neighborhoods, as appropriate for the given
regulated financial institution consistent with the safe and sound
operation of such company.
``(c) Requirements.--
``(1) In general.--In connection with its examination of a
regulated financial institution under subsection (a) or (b),
the appropriate Federal financial supervisory agency shall--
``(A) take into consideration public comment
received by the appropriate Federal financial
supervisory agency regarding the institution's record
of meeting the credit or other financial needs of its
entire community, including low-income, moderate-
income, and other traditionally underserved
neighborhoods; and
``(B) require an improvement plan for an
institution that receives a `Needs to improve record of
meeting community credit or other financial needs' or a
`Substantial noncompliance in meeting community credit
or other financial needs' rating on the institution's
written evaluation, or such a rating in any individual
assessment area, and require such improvement plan to
result in the reasonable likelihood that the
institution will obtain a rating of at least
`Satisfactory record of meeting community credit or
other financial needs' in the relevant measure within 2
exam cycles.
``(2) Improvement plan.--
``(A) In general.--A regulated financial
institution required to submit an improvement plan
required under paragraph (1)(B) shall submit such plan
in writing to the appropriate Federal financial
supervisory agency no later than 60 days after
receiving the notice that such plan will be required.
``(B) Public comment.--Upon receipt of an
improvement plan required under paragraph (1)(B), the
appropriate Federal financial supervisory agency
shall--
``(i) make the plan available to the public
for review and comment for a period of no less
than 30 days; and
``(ii) require the regulated financial
institution to revise, as appropriate, the
improvement plan in response to the public
comments received under the public review and
comment period described under clause (i) and
submit such plan to the appropriate Federal
financial supervisory agency no later than 30
days after the end of such period.
``(3) Limitation.--Public comment received pursuant to
paragraph (2)(B) shall be limited to comments that directly
address the regulated financial institution's record of meeting
the credit or other financial needs of the entire community,
including low-income, moderate-income, and other traditionally
underserved neighborhoods.
``(d) Nonminority Owned and Non-CDFI Institution Investments.--In
assessing and taking into account, under subsections (a), (b), and (c),
the record of a regulated financial institution that is a nonminority-
owned, nonwomen-owned institution and that is not a certified community
development financial institution, the appropriate Federal financial
supervisory agency may consider as a factor capital investment, loan
participation, and other ventures undertaken by the regulated financial
institution in cooperation with certified community development
financial institutions, minority- and women-owned financial
institutions, and low-income credit unions, provided that these
activities help meet the credit or other financial needs of local
communities in which such institutions and credit unions operate,
including communities other than where such institutions and credit
unions operate, if the regulated financial institution has adequately
met the needs of its local assessment area.'';
(3) by adding at the end the following new subsections:
``(g) Complex and Innovative Efforts.--In assessing and taking into
account, under subsection (a), the record of a regulated financial
institution, the appropriate Federal financial supervisory agency shall
consider, as a factor, the complexity, innovativeness, effectiveness in
meeting particularly difficult community needs, or significant effort
extended in specific loans, investments, or services.
``(h) Rule of Construction.--An evaluation of a depository
institution holding company shall incorporate evaluations of subsidiary
regulated financial institutions made by each subsidiary's appropriate
Federal financial supervisory agency, if applicable.''.
(d) Written Evaluations.--Section 807 of such Act (12 U.S.C. 2906)
is amended--
(1) in subsection (a)--
(A) by striking ``an insured depository
institution'' and inserting ``a regulated financial
institution''; and
(B) by inserting ``or financial'' after ``credit'';
(2) in subsection (b)--
(A) in paragraph (1)--
(i) in subparagraph (A)--
(I) in clause (ii), by striking
``and'' at the end;
(II) by redesignating clause (iii)
as clause (v); and
(III) by inserting after clause
(ii) the following new clauses:
``(iii) disclose whether the institution
provided, or offered to provide, a consumer
financial product that the Bureau of Consumer
Financial Protection has determined is unfair,
deceptive, or abusive;
``(iv) include specific responses to public
comments received by the Federal financial
supervisory agency regarding the institution;
and''; and
(ii) by adding at the end the following new
subparagraph:
``(C) Treatment with respect to unfair, deceptive,
or abusive consumer financial products.--If the
regulated financial institution provided, or offered to
provide, one or more consumer financial products that
the Bureau of Consumer Financial Protection has
determined is unfair, deceptive, or abusive, the
written evaluation shall be negatively influenced in a
manner commensurate with the extent to which such
product or products were offered or provided.'';
(B) in paragraph (2)--
(i) by striking ``paragraph (1)(C)'' and
inserting ``paragraph (1)(A)(v)''; and
(ii) by striking subparagraphs (A), (B),
(C), and (D) and inserting the following:
``(A) `Satisfactory record of meeting community
credit or other financial needs'.
``(B) `Sufficient record of meeting community
credit or other financial needs'.
``(C) `Needs to improve record of meeting community
credit or other financial needs'.
``(D) `Substantial noncompliance in meeting
community credit or other financial needs'.''; and
(C) by inserting after paragraph (2) the following
new paragraph:
``(3) Application for outstanding rating.--
``(A) In general.--The appropriate Federal
financial supervisory agencies shall develop and
implement a process to permit a regulated financial
institution to submit an application at the time the
examination process is initiated for a rating of
`Outstanding record of meeting community credit or
other financial needs'.
``(B) Availability of rating.--
``(i) In general.--The rating described
under subparagraph (A) shall only be awarded to
a regulated financial institution that--
``(I) applies for such rating
pursuant to subparagraph (A);
``(II) significantly exceeds the
requirements to receive the rating
described under paragraph (2)(A);
``(III) with respect to a regulated
financial institution for which ratings
are available for the three most recent
examination cycles, received no less
than a `Satisfactory record of meeting
community credit or other financial
needs' or, for evaluations prior to the
date of the enactment of the American
Community Investment Reform Act of
2010, `Satisfactory record of meeting
community credit needs', for the three
most recent examination cycles; and
``(IV) with respect to a depository
institution holding company or a
regulated financial institution that
controls one or more other regulated
financial institutions, does not have a
subsidiary regulated financial
institution that received a rating of
`Needs to improve record of meeting
community credit or other financial
needs' or less, or, for evaluations
prior to the date of enactment of the
American Community Investment Reform
Act of 2010, a rating of `Needs to
improve record of meeting community
credit needs' or lower for the most
recent examination cycle.
``(ii) Rule of construction.--For purposes
of clause (i)(IV), a rating given to a
regulated financial institution prior to the
control of such regulated financial institution
by the relevant depository institution holding
company or parent regulated financial
institution as a subsidiary shall not bar the
company from being granted a rating of
`Outstanding record of meeting community credit
or other financial needs'.
``(C) Expanded assessment area.--For purposes of
determining whether to award a rating described under
subparagraph (A), the appropriate Federal financial
supervisory agency may consider community development
activities, including investments made outside the
institution's service area if the regulated financial
institution has adequately met the needs of its local
assessment area.'';
(3) by redesignating subsections (d) and (e) as subsections
(f) and (g), respectively; and
(4) by inserting after subsection (c) the following new
subsections:
``(d) Preliminary Report Required.--
``(1) In general.--The appropriate Federal financial
supervisory agency shall--
``(A) prepare a preliminary report of the public
section of the evaluation required under paragraph
(a)(1); and
``(B) provide the preliminary report to the
regulated financial institution and to the public not
less than 60 days before the date on which the
corresponding written evaluation is issued.
``(2) Limitation.--The preliminary report required under
paragraph (1) shall not include any assigned rating or
discussion of an assigned rating.
``(e) Public Comment on Preliminary Report.--The appropriate
Federal financial supervisory agency shall--
``(1) develop and implement a process to seek and receive
public comment on any preliminary report for a period of 30
days following the release of the report; and
``(2) incorporate into a revised written evaluation any
public comment received during such comment period, as
appropriate.''.
(e) Effects of Assigned Ratings.--Such Act is amended by adding at
the end the following new section:
``SEC. 810. EFFECTS OF ASSIGNED RATINGS.
``(a) Outstanding Rating.--A regulated financial institution that
receives a rating of `outstanding record of meeting community credit or
other financial needs' on its most recent performance evaluation
shall--
``(1) be presumed to have satisfied consideration of such
regulated financial institution's record of meeting the credit
or other financial needs of its entire community in an
application for a deposit facility; and
``(2) be given preference over other regulated financial
institutions with lower ratings in connection with the award of
Government contracts.
``(b) Satisfactory Rating.--There shall be a rebuttable presumption
that a regulated financial institution that receives a rating of
`satisfactory record of meeting community credit or other financial
needs' on its two most recent performance evaluations will have
satisfied consideration of such regulated financial institution's
record of meeting the credit or other financial needs of its entire
community in an application for a deposit facility.
``(c) Needs To Improve Rating.--A regulated financial institution
that receives a rating of `needs to improve record of meeting community
credit or other financial needs' or lower on its two most recent
performance evaluations shall be prohibited from--
``(1) being awarded a Government contract in an amount
greater than $500,000, unless such Federal department or agency
proposing to enter into such contract determines that
compliance with such prohibition imposes an undue burden or is
unable to meet its needs with another institution; and
``(2) making any capital distributions in the aggregate
during any calendar quarter that exceed 50 percent of its net
earnings during the previous quarter without the prior approval
of its appropriate Federal financial supervisory agency.
``(d) Substantial Noncompliance.--A regulated financial institution
that receives a `substantial noncompliance in meeting community credit
or other financial needs' rating on its most recent performance
evaluations--
``(1) may be ordered to restrict executive compensation by
its appropriate Federal financial supervisory agency;
``(2) shall be prohibited from being awarded a Government
contract, unless such Federal department or agency proposing to
enter into such contract determines that compliance with such
prohibition imposes an undue burden or is unable to meet its
needs with another institution; and
``(3) shall be prohibited from making any capital
distributions without the prior approval of its appropriate
Federal financial supervisory agency.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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