12 U.S.C. § 1834b — Community development organizations

Page 1212 TITLE 12—BANKS AND BANKING § 1834b 1 See References in Text note below. Pub. L. 102–558, § 303(b)(2), which directed technical amendment to reference to section 1834b of this title to correct reference to corresponding section of original act, could not be executed because of prior general amendment by Pub. L. 102–550, § 931(d). See below. Pub. L. 102–550, § 1604(b)(2), which contained an identical amendment, was repealed, effective Oct. 28, 1992, by Pub. L. 102–558, § 305, set out as a Repeal of Duplicative Provisions note under section 1815 of this title. Pub. L. 102–550, § 931(d), amended par. (3) generally. Prior to amendment, par. (3) read as follows: ‘‘The amount of any community enterprise assessment credit available under section 1817(d)(4) of this title for any insured depository institution, or a qualified portion thereof, for any semiannual period shall be the amount which is equal to 5 percent, in the case of an institution which does not meet the community development orga- nization requirements under section 1834b of this title, and 15 percent, in the case of an institution, or a quali- fied portion thereof, which meets such requirements (or any percentage designated under paragraph (5)) of the sum of— ‘‘(A) the amounts of assets described in paragraph (2)(A); and ‘‘(B) the amounts of deposits, loans, and other ex- tensions of credit described in paragraph (2)(B).’’ Subsec. (a)(5). Pub. L. 102–558, § 303(b)(2), made tech- nical amendment to reference to section 1834b of this title to correct reference to corresponding section of original act. Pub. L. 102–550, § 1604(b)(2), which made identical amendment, was repealed, effective Oct. 28, 1992, by Pub. L. 102–558, § 305, set out as a Repeal of Du- plicative Provisions note under section 1815 of this title. Subsec. (b)(4). Pub. L. 102–550, § 931(e), amended par. (4) generally. Prior to amendment, par. (4) read as fol- lows: ‘‘For purposes of this subsection, an area meets the requirements of this paragraph if at least 2 of the following criteria are met: ‘‘(A) INCOME.—At least 70 percent of the families and unrelated individuals residing in the area have incomes of less than 80 percent of the median income of the area. ‘‘(B) POVERTY.—At least 20 percent of the residents residing in the area have incomes which are less than the national poverty level (as determined pursuant to criteria established by the Director of the Office of Management and Budget). ‘‘(C) UNEMPLOYMENT.—The unemployment rate for the area is one and one-half times greater than the na- tional average (as determined by the Bureau of Labor Statistic’s most recent figures).’’ Subsec. (e)(2). Pub. L. 102–558, § 303(b)(9)(C), sub- stituted ‘‘of the semiannual assessment to which such credit is applicable’’ for ‘‘made for purposes of the noti- fication required under section 1817(d)(1)(B) of this title’’. Pub. L. 102–550, § 1605(a)(7)(C), which contained an identical amendment, was repealed, effective Oct. 28, 1992, by Pub. L. 102–558, § 305, set out as a Repeal of Duplicative Provisions note under section 1815 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1992 AMENDMENT Amendment by section 303(b)(2) of Pub. L. 102–558 deemed to have become effective Mar. 1, 1992, see sec- tion 304 of Pub. L. 102–558, set out as a note under sec- tion 4502 of Title 50, War and National Defense. Pub. L. 102–558, title III, § 303(b)(9), Oct. 28, 1992, 106 Stat. 4226, provided that the amendment made by that section is effective on the effective date of the amend- ment made by section 302(e)(4) of Pub. L. 102–242 [see section 302(g) of Pub. L. 102–242, set out as a note under section 1817 of this title]. Pub. L. 102–550, title XVI, § 1605(a)(7), Oct. 28, 1992, 106 Stat. 4086, which provided effective date provisions for the amendment made by that section, was repealed, ef- fective Oct. 28, 1992, by section 305 of Pub. L. 102–558, set out as a Repeal of Duplicative Provisions note under section 1815 of this title. § 1834b. Community development organizations (a) Community development organizations de- scribed For purposes of this subtitle, any insured de- pository institution, or a qualified portion thereof, shall be treated as meeting the commu- nity development organization requirements of this section if— (1) the institution— (A) is a community development bank, or controls any community development bank, which meets the requirements of subsection (b); (B) controls any community development corporation, or maintains any community development unit within the institution, which meets the requirements of subsection (c); (C) invests in accounts in any community development credit union designated as a low-income credit union, subject to restric- tions established for such credit unions by the National Credit Union Administration Board; or (D) invests in a community development organization jointly controlled by two or more institutions; (2) except in the case of an institution which is a community development bank, the amount of the capital invested, in the form of debt or equity, by the institution in the com- munity development organization referred to in paragraph (1) (or, in the case of any commu- nity development unit, the amount which the institution irrevocably makes available to such unit for the purposes described in para- graph (3)) is not less than the greater of— (A) 1⁄2 of 1 percent of the capital, as defined by generally accepted accounting principles, of the institution; or (B) the sum of the amounts invested in such community development organization; and (3) the community development organization provides loans for residential mortgages, home improvement, and community development and other financial services, other than fi- nancing for the purchase of automobiles or ex- tension of credit under any open-end credit plan (as defined in section 1602(i) 1 of title 15), to low- and moderate-income persons, non- profit organizations, and small businesses lo- cated in qualified distressed communities in a manner consistent with the intent of this sub- title. (b) Community development bank requirements A community development bank meets the re- quirements of this subsection if— (1) the community development bank has a 15-member advisory board designated as the ‘‘Community Investment Board’’ and con- sisting entirely of community leaders who— (A) shall be appointed initially by the board of directors of the community devel- Page 1213 TITLE 12—BANKS AND BANKING § 1835 opment bank and thereafter by the Commu- nity Investment Board from nominations re- ceived from the community; and (B) are appointed for a single term of 2 years, except that, of the initial members appointed to the Community Investment Board, 1⁄3 shall be appointed for a term of 8 months, 1⁄3 shall be appointed for a term of 16 months, and 1⁄3 shall be appointed for a term of 24 months, as designated by the board of directors of the community development bank at the time of the appointment; (2) 1⁄3 of the members of the community de- velopment bank’s board of directors are ap- pointed from among individuals nominated by the Community Investment Board; and (3) the bylaws of the community develop- ment bank require that the board of directors of the bank meet with the Community Invest- ment Board at least once every 3 months. (c) Community development corporation require- ments Any community development corporation, or community development unit within any in- sured depository institution meets the require- ments of this subsection if the corporation or unit provides the same or greater, as determined by the appropriate Federal banking agency, community participation in the activities of such corporation or unit as would be provided by a Community Investment Board under sub- section (b) if such corporation or unit were a community development bank. (d) Adequate dispersal requirement The appropriate Federal banking agency may approve the establishment of a community de- velopment organization under this subtitle only upon finding that the distressed community is not adequately served by an existing community development organization. (e) Definitions For purposes of this section— (1) Community development bank The term ‘‘community development bank’’ means any depository institution (as defined in section 1813(c)(1) of this title). (2) Community development organization The term ‘‘community development organi- zation’’ means any community development bank, community development corporation, community development unit within any in- sured depository institution, or community development credit union. (3) Low- and moderate-income persons The term ‘‘low- and moderate-income per- sons’’ has the meaning given such term in sec- tion 5302(a)(20) of title 42. (4) Nonprofit organization; small business The terms ‘‘nonprofit organization’’ and ‘‘small business’’ have the meanings given to such terms by regulations which the appro- priate Federal banking agency shall prescribe for purposes of this section. (5) Qualified distressed community The term ‘‘qualified distressed community’’ has the meaning given to such term in section 1834a(b) of this title. (Pub. L. 102–242, title II, § 234, Dec. 19, 1991, 105 Stat. 2315.) Editorial Notes REFERENCES IN TEXT This subtitle, referred to in subsecs. (a) and (d), is subtitle C (§§ 231–234) of title II of Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2308, known as the Bank Enterprise Act of 1991, which enacted this section and sections 1834 and 1834a of this title, amended section 1817 of this title, and enacted provisions set out as a note under section 1811 of this title. For complete classification of subtitle C to the Code, see section 231 of Pub. L. 102–242, set out as a Short Title of 1991 Amendment note under section 1811 of this title and Tables. Section 1602(i) of title 15, referred to in subsec. (a)(3), was redesignated section 1602(j) of title 15 by Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 Stat. 2107. CODIFICATION Section was enacted as part of the Bank Enterprise Act of 1991, and also as part of the Foreign Bank Super- vision Enhancement Act of 1991 and as part of the Fed- eral Deposit Insurance Corporation Improvement Act of 1991, and not as part of the Federal Deposit Insur- ance Act which comprises this chapter. § 1835. Insured depository institution capital re- quirements for transfers of small business obligations (a) Accounting principles The accounting principles applicable to the transfer of a small business loan or a lease of personal property with recourse contained in re- ports or statements required to be filed with Federal banking agencies by a qualified insured depository institution shall be consistent with generally accepted accounting principles. (b) Capital and reserve requirements With respect to the transfer of a small busi- ness loan or lease of personal property with re- course that is a sale under generally accepted accounting principles, each qualified insured de- pository institution shall— (1) establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and (2) include, for purposes of applicable capital standards and other capital measures, only the amount of the retained recourse in the risk- weighted assets of the institution. (c) Qualified institutions criteria An insured depository institution is a quali- fied insured depository institution for purposes of this section if, without regard to the account- ing principles or capital requirements referred to in subsections (a) and (b), the institution is— (1) well capitalized; or (2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized. (d) Aggregate amount of recourse The total outstanding amount of recourse re- tained by a qualified insured depository institu- tion with respect to transfers of small business loans and leases of personal property under sub- sections (a) and (b) shall not exceed— (1) 15 percent of the risk-based capital of the institution; or