§ 4707. — Assistance provided by Fund.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC4707]
TITLE 12--BANKS AND BANKING
CHAPTER 47--COMMUNITY DEVELOPMENT BANKING
SUBCHAPTER I--COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS
Sec. 4707. Assistance provided by Fund
(a) Forms of assistance
(1) In general
The Fund may provide--
(A) financial assistance through equity investments,
deposits, credit union shares, loans, and grants; and
(B) technical assistance--
(i) directly;
(ii) through grants; or
(iii) by contracting with organizations that possess
expertise in community development finance, without regard
to whether the organizations receive or are eligible to
receive assistance under this subchapter.
(2) Equity investments
(A) Limitation on equity investments
The Fund shall not own more than 50 percent of the equity of
a community development financial institution and may not
control the operations of such institution. The Fund may hold
only transferable, nonvoting equity investments in the
institution. Such equity investments may provide for
convertibility to voting stock upon transfer by the Fund.
(B) Fund deemed not to control
Notwithstanding any other provision of law, the Fund shall
not be deemed to control a community development financial
institution by reason of any assistance provided under this
subchapter for the purpose of any other applicable law to the
extent that the Fund complies with subparagraph (A). Nothing in
this subparagraph shall affect the application of any Federal
tax law.
(3) Deposits
Deposits made pursuant to this section in an insured community
development financial institution shall not be subject to any
requirement for collateral or security.
(4) Limitations on obligations
Direct loan obligations may be incurred by the Fund only to the
extent that appropriations of budget authority to cover their cost,
as defined in section 661a(5) of title 2, are made in advance.
(b) Uses of financial assistance
(1) In general
Financial assistance made available under this subchapter may be
used by assisted community development financial institutions to
serve investment areas or targeted populations by developing or
supporting--
(A) commercial facilities that promote revitalization,
community stability, or job creation or retention;
(B) businesses that--
(i) provide jobs for low-income people or are owned by
low-income people; or
(ii) enhance the availability of products and services
to low-income people;
(C) community facilities;
(D) the provision of basic financial services;
(E) housing that is principally affordable to low-income
people, except that assistance used to facilitate homeownership
shall only be used for services and lending products--
(i) that serve low-income people; and
(ii) that--
(I) are not provided by other lenders in the area;
or
(II) complement the services and lending products
provided by other lenders that serve the investment area
or targeted population; and
(F) other businesses and activities deemed appropriate by
the Fund.
(2) Limitations
No assistance made available under this subchapter may be
expended by a community development financial institution (or an
organization receiving assistance under section 4712 of this title)
to pay any person to influence or attempt to influence any agency,
elected official, officer, or employee of a State or local
government in connection with the making, award, extension,
continuation, renewal, amendment, or modification of any State or
local government contract, grant, loan, or cooperative agreement (as
such terms are defined in section 1352 of title 31).
(c) Uses of technical assistance
(1) Types of activities
Technical assistance may be used for activities that enhance the
capacity of a community development financial institution, such as
training of management and other personnel and development of
programs and investment or loan products.
(2) Availability of technical assistance
The Fund may provide technical assistance, regardless of whether
or not the recipient also receives financial assistance under this
section.
(d) Amount of assistance
(1) In general
Except as provided in paragraph (2), the Fund may provide not
more than $5,000,000 of assistance, in the aggregate, during any 3-
year period to any 1 community development financial institution and
its subsidiaries and affiliates.
(2) Exception
The Fund may provide not more than $3,750,000 of assistance in
addition to the amount specified in paragraph (1) during the same 3-
year period to an existing community development financial
institution that proposes to establish a subsidiary or affiliate for
the purpose of serving an investment area or targeted population
outside of any State and outside of any metropolitan area presently
served by the institution, if--
(A) the subsidiary or affiliate--
(i) would be a community development financial
institution; and
(ii) independently--
(I) meets the selection criteria described in
section 4704 of this title; and
(II) satisfies the selection criteria of section
4706 of this title; and
(B) no other application for assistance to serve the
investment area or targeted population has been submitted to the
Administrator within a reasonable period of time preceding the
date of receipt of the application at issue.
(3) Timing of assistance
Assistance may be provided as described in paragraphs (1) and
(2) in a lump sum or over a period of time, as determined by the
Fund.
(e) Matching requirements
(1) In general
Assistance other than technical assistance shall be matched with
funds from sources other than the Federal Government on the basis of
not less than one dollar for each dollar provided by the Fund. Such
matching funds shall be at least comparable in form and value to
assistance provided by the Fund. The Fund shall provide no
assistance (other than technical assistance) until a community
development financial institution has secured firm commitments for
the matching funds required.
(2) Exception
In the case of an applicant with severe constraints on available
sources of matching funds, the Fund may permit an applicant to
comply with the matching requirements of paragraph (1) by--
(A) reducing such matching requirement by 50 percent; or
(B) permitting an applicant to provide matching funds in a
form to be determined at the discretion of the Fund, if such
applicant--
(i) has total assets of less than $100,000;
(ii) serves nonmetropolitan or rural areas; and
(iii) is not requesting more than $25,000 in assistance.
(3) Limitation
Not more than 25 percent of the total funds disbursed in any
fiscal year by the Fund may be matched as authorized under paragraph
(2).
(4) Construction of ``Federal Government funds''
For purposes of this subsection, notwithstanding section
105(a)(9) of the Housing and Community Development Act of 1974 [42
U.S.C. 5305(a)(9)], funds provided pursuant to such Act shall be
considered to be Federal Government funds.
(f) Terms and conditions
(1) Soundness of unregulated institutions
The Fund shall--
(A) ensure, to the maximum extent practicable, that each
community development financial institution (other than an
insured community development financial institution or
depository institution holding company) assisted under this
subchapter is financially and managerially sound and maintains
appropriate internal controls;
(B) require such institution to submit, not less than once
during each 18-month period, a statement of financial condition
audited by an independent certified public accountant as part of
the report required by section 4714(e)(1) of this title; and
(C) require that all assistance granted under this section
is used by the community development financial institution or
community development partnership in a manner consistent with
the purposes of this subchapter.
(2) Assistance agreement
(A) In general
Before providing any assistance under this subchapter, the
Fund and each community development financial institution to be
assisted shall enter into an agreement that requires the
institution to comply with performance goals and abide by other
terms and conditions pertinent to assistance received under this
subchapter.
(B) Performance goals
Performance goals shall be negotiated between the Fund and
each community development financial institution receiving
assistance based upon the strategic plan submitted pursuant to
section 4704(b)(2) of this title. Such goals may be modified
with the consent of the parties, or as provided in subparagraph
(C). Performance goals for insured community development
financial institutions shall be determined in consultation with
the appropriate Federal banking agency.
(C) Sanctions
The agreement shall provide that, in the event of fraud,
mismanagement, noncompliance with this subchapter, or
noncompliance with the terms of the agreement, the Fund, in its
discretion, may--
(i) require changes to the performance goals imposed
pursuant to subparagraph (B);
(ii) require changes to the strategic plan submitted
pursuant to section 4704(b)(2) of this title;
(iii) revoke approval of the application;
(iv) reduce or terminate assistance;
(v) require repayment of assistance;
(vi) bar an applicant from reapplying for assistance
from the Fund; and
(vii) take such other actions as the Fund deems
appropriate.
(D) Consultation with tribal governments
In reviewing the performance of any assisted community
development financial institution, the investment area of which
includes an Indian reservation, or the targeted population of
which includes an Indian tribe, the Fund shall consult with, and
seek input from, any appropriate tribal government.
(g) Authority to sell equity investments and loans
The Fund may, at any time, sell its equity investments and loans,
but the Fund shall retain the power to enforce limitations on assistance
entered into in accordance with the requirements of this subchapter
until the performance goals related to the investment or loan have been
met.
(h) No authority to limit supervision and regulation
Nothing in this subchapter shall affect any authority of the
appropriate Federal banking agency to supervise and regulate any
institution or company.
(Pub. L. 103-325, title I, Sec. 108, Sept. 23, 1994, 108 Stat. 2172.)
References in Text
Federal tax law, referred to in subsec. (a)(2)(B), is classified
generally to Title 26, Internal Revenue Code.
The Housing and Community Development Act of 1974, referred to in
subsec. (e)(4), is Pub. L. 93-383, Aug. 22, 1974, 88 Stat. 633, as
amended. For complete classification of this Act to the Code, see Short
Title note set out under section 5301 of Title 42, The Public Health and
Welfare, and Tables.
Section Referred to in Other Sections
This section is referred to in sections 1834a, 4703, 4711, 4715,
4718 of this title.
