15 U.S.C. § 657t — Office of Credit Risk Management

Page 1079 TITLE 15—COMMERCE AND TRADE § 657t 1 So in original. Probably should be ‘‘premises’’. Editorial Notes AMENDMENTS 2015—Subsec. (a)(4). Pub. L. 114–92 substituted ‘‘which is principally for supplies from a regular dealer in such supplies, and which is not a contract principally for services or construction’’ for ‘‘for supplies from a reg- ular dealer in such supplies’’ in introductory provi- sions. Statutory Notes and Related Subsidiaries INAPPLICABILITY OF REQUIREMENT TO REVIEW AND JUSTIFY CERTAIN CONTRACTS Pub. L. 113–66, div. A, title XVI, § 1615, Dec. 26, 2013, 127 Stat. 950, provided that: ‘‘In the case of a contract to which the provisions of section 46 of the Small Busi- ness Act (15 U.S.C. 657s) apply, the requirements under section 802 of the National Defense Authorization Act for Fiscal Year 2013 (Public Law 112–239; 126 Stat. 1824; 10 U.S.C. 2304 note [now 10 U.S.C. note prec.]) do not apply.’’ § 657t. Office of Credit Risk Management (a) Establishment There is established within the Administra- tion the Office of Credit Risk Management (in this section referred to as the ‘‘Office’’). (b) Duties The Office shall be responsible for super- vising— (1) any lender making loans under section 7(a) [15 U.S.C. 636(a)] (in this section referred to as a ‘‘7(a) lender’’); (2) any Lending Partner or Intermediary participant of the Administration in a lending program of the Office of Capital Access of the Administration; and (3) any small business lending company or a non-Federally regulated lender without regard to the requirements of section 650 of this title. (c) Director (1) In general The Office shall be 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 the Senior Exec- utive Service (as defined in section 3132 of title 5). (2) Duties The Director shall be responsible for over- sight of the lenders and participants described in subsection (b), including by conducting periodic reviews of the compliance and per- formance of such lenders and participants. (d) Supervision duties for 7(a) lenders (1) Reviews With respect to 7(a) lenders, an employee of the Office shall— (A) be present for and supervise any such review that is conducted by a contractor of the Office on the premise 1 of the 7(a) lender; and (B) supervise any such review that is not conducted on the premise 1 of the 7(a) lender. (2) Review report timeline (A) In general Notwithstanding any other requirements of the Office or the Administrator, the Ad- ministrator shall develop and implement a review report timeline which shall— (i) require the Administrator to— (I) deliver a written report of the re- view to the 7(a) lender not later than 60 business days after the date on which the review is concluded; or (II) if the Administrator expects to submit the report after the end of the 60- day period described in clause (i), notify the 7(a) lender of the expected date of submission of the report and the reason for the delay; and (ii) if a response by the 7(a) lender is re- quested in a report submitted under sub- paragraph (A), require the 7(a) lender to submit responses to the Administrator not later than 45 business days after the date on which the 7(a) lender receives the re- port. (B) Extension The Administrator may extend the time frame described in subparagraph (A)(i)(II) with respect to a 7(a) lender as the Adminis- trator determines necessary. (e) Enforcement authority against 7(a) lenders (1) Informal enforcement authority The Director may take an informal enforce- ment action against a 7(a) lender if the Direc- tor finds that the 7(a) lender has violated a statutory or regulatory requirement under section 7(a) [15 U.S.C. 636(a)] or any require- ment in a Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access. (2) Formal enforcement authority (A) In general With the approval of the Lender Oversight Committee established under section 657u of this title, the Director may take a formal enforcement action against any 7(a) lender if the Director finds that the 7(a) lender has violated— (i) a statutory or regulatory requirement under section 7(a), including a requirement relating to credit elsewhere; or (ii) any requirement described in a Standard Operating Procedures Manual or Policy Notice, related to a program or function of the Office of Capital Access. (B) Enforcement actions An enforcement action imposed on a 7(a) lender by the Director under subparagraph (A) shall be based on the severity or fre- quency of the violation and may include as- sessing a civil monetary penalty against the 7(a) lender in an amount that is not greater than $250,000. (3) Appeal by lender A 7(a) lender may appeal an enforcement ac- tion imposed by the Director described in this subsection to the Office of Hearings and Ap- peals established under section 634(i) of this title or to an appropriate district court of the United States. (f) Regulations Not later than 1 year after June 21, 2018, the Administrator shall issue regulations, after op- Page 1080 TITLE 15—COMMERCE AND TRADE § 657t portunity for notice and comment, to carry out subsection (e). (g) Servicing and liquidation responsibilities During any period during which a 7(a) lender is suspended or otherwise prohibited from making loans under section 7(a) [15 U.S.C. 636(a)], the 7(a) lender shall remain obligated to maintain all servicing and liquidation activities delegated to the lender by the Administrator, unless oth- erwise specified by the Director. (h) Portfolio risk analysis of 7(a) loans (1) In general The Director shall annually conduct a risk analysis of the portfolio of the Administration with respect to all loans guaranteed under sec- tion 7(a). (2) Report to Congress On December 1, 2018, and every December 1 thereafter, the Director shall submit to Con- gress a report containing the results of each portfolio risk analysis conducted under para- graph (1) during the fiscal year preceding the submission of the report, which shall include— (A) an analysis of the overall program risk of loans guaranteed under section 7(a); (B) an analysis of the program risk, set forth separately by industry concentration; (C) without identifying individual 7(a) lenders by name, a consolidated analysis of the risk created by the individual 7(a) lend- ers responsible for not less than 1 percent of the gross loan approvals set forth separately for the year covered by the report by— (i) the dollar value of the loans made by such 7(a) lenders; and (ii) the number of loans made by such 7(a) lenders; (D) steps taken by the Administrator to mitigate the risks identified in subpara- graphs (A), (B), and (C); (E) the number of 7(a) lenders, the number of loans made, and the gross and net dollar amount of loans made; (F) the number and dollar amount of total losses, the number and dollar amount of total purchases, and the percentage and dol- lar amount of recoveries at the Administra- tion; (G) the number and type of enforcement actions recommended by the Director; (H) the number and type of enforcement actions approved by the Lender Oversight Committee established under section 657u of this title; (I) the number and type of enforcement ac- tions disapproved by the Lender Oversight Committee; and (J) the number and dollar amount of civil monetary penalties assessed. (i) Budget submission and justification The Director shall annually provide, in writ- ing, a fiscal year budget submission for the Of- fice and a justification for such submission to the Administrator. Such submission and jus- tification shall— (1) include salaries and expenses of the Office and the charge for the lender oversight fees; (2) be submitted at or about the time of the budget submission by the President under sec- tion 1105(a) of title 31; and (3) 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 and justification. (Pub. L. 85–536, § 2[47], as added and amended Pub. L. 115–189, § 3(a)(2), (b), June 21, 2018, 132 Stat. 1492, 1495.) Editorial Notes PRIOR PROVISIONS A prior section 2[47] of Pub. L. 85–536 was renumbered section 2[49] and is set out as a note under section 631 of this title. AMENDMENTS 2018—Subsec. (d). Pub. L. 115–189, § 3(b), amended sub- sec. (d) generally. Prior to amendment, text read as fol- lows: ‘‘With respect to 7(a) lenders, an employee of the Office shall— ‘‘(1) be present for and supervise any such review that is conducted by a contractor of the Office on the premise of the 7(a) lender; and ‘‘(2) supervise any such review that is not con- ducted on the premise of the 7(a) lender.’’ Statutory Notes and Related Subsidiaries CHANGE OF NAME Pub. L. 115–189, § 3(d)(1), June 21, 2018, 132 Stat. 1496, provided that: ‘‘Any reference in a law, regulation, guidance, document, paper, or other record of the United States to the Office of Credit Risk Management of the Small Business Administration shall be deemed a reference to the Office of Credit Risk Management, established under section 47 of the Small Business Act [15 U.S.C. 657t], as added by subsection (a).’’ EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115–189, § 3(b), June 21, 2018, 132 Stat. 1495, pro- vided that the amendment made by section 3(b) is effec- tive Jan. 1, 2019. TRANSFER OF FUNCTIONS Pub. L. 115–189, § 3(c)(1), June 21, 2018, 132 Stat. 1496, provided that: ‘‘All functions of the Office of Credit Risk Management of the Small Business Administra- tion, including the personnel, assets, and obligation of the Office of Credit Risk Management, as in existence on the day before the date of the enactment of this Act [June 21, 2018], shall be transferred to the Office of Credit Risk Management established under section 47 of the Small Business Act [15 U.S.C. 657t], as added by subsection (a).’’ ESTABLISHING A PROCESS FOR WAIVERS Pub. L. 115–189, § 6, June 21, 2018, 132 Stat. 1498, pro- vided that: ‘‘(a) IN GENERAL.—If the Administrator [of the Small Business Administration] exercises statutory or regu- latory authority to waive a regulation or a require- ment in the Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access of the [Small Business] Admin- istration, the waiver shall be in writing and be main- tained in an indexed form. ‘‘(b) NO NEW WAIVER AUTHORITY.—Nothing in sub- section (a) shall be construed as creating new authority for the Administrator to waive regulations of the Ad- ministration.’’ DEFINITIONS OF TERMS USED IN PUB. L. 115–189 Pub. L. 115–189, § 2, June 21, 2018, 132 Stat. 1492, pro- vided that: ‘‘In this Act [see Short Title of 2018 Amend- ment note set out under section 631 of this title], the terms ‘Administration’ and ‘Administrator’ mean the Page 1081 TITLE 15—COMMERCE AND TRADE § 657u Small Business Administration and the Administrator thereof, respectively.’’ § 657u. Lender Oversight Committee (a) Establishment There is established within the Administra- tion the Lender Oversight Committee (in this section referred to as the ‘‘Committee’’). (b) Membership The Committee shall consist of at least 8 members selected by the Administrator, of which— (1) 3 members shall be voting members, 2 of whom shall be career appointees in the Senior Executive Service (as defined in section 3132 of title 5); and (2) the remaining members shall be non- voting members who shall serve in an advisory capacity on the Committee. (c) Duties The Committee shall— (1) review reports on lender oversight activi- ties; (2) review formal enforcement action rec- ommendations of the Director of the Office of Credit Risk Management with respect to any lender making loans under section 636(a) of this title and any Lending Partner or Inter- mediary participant of the Administration in a lending program of the Office of Capital Ac- cess of the Administration; (3) in carrying out paragraph (2) with respect to formal enforcement actions taken under subsection (d) or (e) of section 650 of this title, vote to recommend or not recommend action to the Administrator or a designee of the Ad- ministrator; (4) in carrying out paragraph (2) with respect to any formal enforcement action not speci- fied under subsection (d) or (e) of section 650 of this title, vote to approve, disapprove, or mod- ify the action; (5) review, in an advisory capacity, any lend- er oversight, portfolio risk management, or program integrity matters brought by the Di- rector; and (6) take such other actions and perform such other functions as may be delegated to the Committee by the Administrator. (d) Meetings (1) In general The Committee shall meet as necessary, but not less frequently than on a quarterly basis. (2) Reports The Committee shall submit to the Adminis- trator a report detailing each meeting of the Committee, including if the Committee does or does not vote to approve a formal enforce- ment action of the Director of the Office of Credit Risk Management with respect to a lender. (Pub. L. 85–536, § 2[48], as added Pub. L. 115–189, § 3(a)(2), June 21, 2018, 132 Stat. 1494.) Statutory Notes and Related Subsidiaries CHANGE OF NAME Pub. L. 115–189, § 3(d)(2), June 21, 2018, 132 Stat. 1496, provided that: ‘‘Any reference in a law, regulation, guidance, document, paper, or other record of the United States to the Lender Oversight Committee of the Small Business Administration shall be deemed a reference to the Lender Oversight Committee, estab- lished under section 48 of the Small Business Act [15 U.S.C. 657u], as added by subsection (a).’’ TRANSFER OF FUNCTIONS Pub. L. 115–189, § 3(c)(2), June 21, 2018, 132 Stat. 1496, provided that: ‘‘All functions of the Lender Oversight Committee of the Small Business Administration, in- cluding the personnel, assets, and obligations of the Lender Oversight Committee, as in existence on the day before the date of the enactment of this Act [June 21, 2018], shall be transferred to the Lender Oversight Committee established under section 48 of the Small Business Act [15 U.S.C. 657u], as added by subsection (a).’’ CHAPTER 14B—SMALL BUSINESS INVESTMENT PROGRAM SUBCHAPTER I—GENERAL PROVISIONS Sec. 661. Congressional declaration of policy. 662. Definitions. SUBCHAPTER II—SMALL BUSINESS INVESTMENT DIVISION OF SMALL BUSINESS ADMINISTRATION 671. Establishment; Associate Administrator; ap- pointment and compensation. 672. Repealed. SUBCHAPTER III—INVESTMENT DIVISION PROGRAMS PART A—SMALL BUSINESS INVESTMENT COMPANIES 681. Organization. 682. Capital requirements. 683. Borrowing operations. 684. Equity capital for small-business concerns. 685. Long-term loans to small-business concerns. 686. Aggregate limitations on amount of assist- ance to any single enterprise. 687. Operation and regulation of companies. 687a. Revocation and suspension of licenses; cease and desist orders. 687b. Investigations and examinations; power to subpena and take oaths and affirmations; aid of courts; examiners; reports. 687c. Injunctions and other orders. 687d. Conflicts of interest. 687e. Removal or suspension of management offi- cials. 687f. Unlawful acts and omissions by officers, di- rectors, employees, or agents. 687g. Penalties and forfeitures. 687h. Jurisdiction and service of process. 687i, 687j. Repealed. 687k. Guaranteed obligations not eligible for pur- chase by Federal Financing Bank. 687l. Issuance and guarantee of trust certificates. 687m. Periodic issuance of guarantees and trust cer- tificates. 688. Repealed. PART B—NEW MARKETS VENTURE CAPITAL PROGRAM 689. Definitions. 689a. Purposes. 689b. Establishment. 689c. Selection of New Markets Venture Capital companies. 689d. Debentures. 689e. Issuance and guarantee of trust certificates. 689f. Fees. 689g. Operational assistance grants. 689h. Bank participation. 689i. Federal Financing Bank. 689j. Reporting requirement.