[DOCID: f:hr465.110]
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110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-465
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PRESERVING AND EXPANDING MINORITY DEPOSITORY INSTITUTIONS ACT
_______
December 4, 2007.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 4043]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 4043) to amend the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 to preserve and
expand minority depository institutions, and for other
purposes, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 3
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
Performance Goals and Objectives................................. 4
New Budget Authority, Entitlement Authority, and Tax Expenditures 4
Committee Cost Estimate.......................................... 4
Congressional Budget Office Estimate............................. 4
Federal Mandates Statement....................................... 5
Advisory Committee Statement..................................... 5
Constitutional Authority Statement............................... 6
Applicability to Legislative Branch.............................. 6
Earmark Identification........................................... 6
Section-by-Section Analysis of the Legislation................... 6
Changes in Existing Law Made by the Bill, as Reported............ 6
Purpose and Summary
H.R. 4043, the ``Preserving and Expanding Minority
Depository Institutions Act,'' extends the requirements under
Section 308 of the Financial Institutions Reform, Recovery, and
Enforcement Act of (FIRREA) 1989 to the Chairman of the Board
of Governors of the Federal Reserve System and the Comptroller
of the Currency (OCC). H.R. 4043 also requires the federal
banking agencies subject to Section 308 of FIRREA to submit an
annual report to Congress describing their efforts to implement
it.
Background and Need for Legislation
Minority-owned financial institutions\1\ comprise about two
percent of all financial institutions and total industry assets
in the United States. Under Section 308 of the FIRREA, the
Secretary of the Treasury is required to consult with the
Chairperson of the Board of Directors of the Federal Deposit
Insurance Corporation (FDIC) and the Director of the Office of
Thrift Supervision (OTS) on the methods to achieve the
following five goals:
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\1\For purposes of the GAO Report, ``minority-owned financial
institutions'' or ``minority banks'' refers to all depository
institutions, including thrifts, that are considered minority- or
women-owned by the Department of the Treasury (Treasury) and federal
banking regulators--the Federal Deposit Insurance Corporation (FDIC),
the Board of Governors of the Federal Reserve System (Federal Reserve),
the Office of the Comptroller of Currency (OCC) and the Office of
Thrift Supervision (OTS). FDIC and OTS are subject to the ``minority
depository institution'' definition set forth in Section 308 of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA).
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(1) preserving the present number of minority banks;
(2) preserving their minority character in cases
involving mergers or acquisitions of minority banks;
(3) providing technical assistance to prevent the
insolvency of institutions that are not currently
insolvent;
(4) promoting and encouraging the creation of new
minority banks; and
(5) providing for training, technical assistance and
educational programs.
Only the OTS, under Section 3(g)(2) of the Home Owners'
Loan Act, is required to submit an annual report to Congress
describing its actions to carry out Section 308 of FIRREA.
In November 1993, the U.S. General Accounting Office\2\
(GAO) issued a report entitled, ``Minority-Owned Financial
Institutions: Status of Federal Efforts to Preserve Minority
Ownership'' at the request of Representative John Conyers, then
Chairman of the Government Operations Committee, on the
implementation of Section 308 of FIRREA and Section 403 of the
Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991. (GAO/GGD-94-1). In this report, GAO
found that the agencies had taken steps to satisfy the
statutory requirements under Section 308 of FIRREA but they had
not assessed whether these steps were effective. 1993 GAO
Report at 3. GAO also found that minority trade associations
and the executives of minority-owned financial institutions had
mixed perceptions of the effectiveness of these agencies'
programs. Id. at 15. GAO recommended that Treasury consult with
the FDIC and OTS to systematically assess the effectiveness of
their approaches. Id. at 19. GAO also noted that a key
component of the assessment process should be surveys of
minority-owned financial institutions to glean their views on
the federal regulators' efforts to preserve these institutions.
Id.
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\2\Effective July 7, 2004, GAO's legal name was changed from the
U.S. General Accounting Office to the U.S. Government Accountability
Office.
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In October 2005, 29 Financial Services Committee Democratic
members sent a letter to the GAO requesting a review of all of
the federal banking agencies' current efforts to promote and
preserve minority-owned financial institutions and the views of
the minority financial services industry on the effectiveness
of these efforts. In October 2006, the GAO issued a report
entitled, ``Minority Banks: Regulators Need to Better Assess
Effectiveness of Support Efforts.'' (GAO-07-6). While the scope
of the 1993 GAO Report was limited to just the agencies that
are statutorily mandated under Section 308 of FIRREA to try to
maintain minority ownership of banks, the 2006 GAO Report more
broadly addressed the efforts of the FDIC, OTS, OCC, and the
Federal Reserve to promote and preserve minority banks.
Despite the recommendation contained in the 1993 GAO
Report, GAO found that none of the banking regulators have
routinely surveyed institutions within their jurisdiction to
assess the effectiveness of support efforts to minority banks,
nor have they established outcome-oriented performance measures
to gauge results. 2006 GAO Report at 20. As a result, according
to the GAO, regulators need more information in order to assess
the results of their efforts, or to identify areas for
improvement. Id. However, the 2005 report also found while the
regulators offer training and educational opportunities to
assist minority banks, these programs are underutilized. The
GAO also found that the banks that do participate in these
programs find this assistance very helpful.
Hearings
The Oversight and Investigations Subcommittee of the
Financial Services Committee held a hearing entitled,
``Preserving and Expanding Minority Banks,'' on Tuesday,
October 30, 2007, to examine federal banking regulators'
efforts to promote and preserve minority-owned financial
institutions and to review the GAO report entitled, ``Minority
Banks: Regulators Need to Better Assess Effectiveness of
Support Efforts,'' that was issued in October 2006. The
following witnesses testified:
<bullet> Mr. George Scott, Director, Education,
Workforce & Income Security Issues, Government
Accountability Office
<bullet> Ms. Sandra L. Thompson, Director, Division
of Supervision and Consumer Protection, Federal Deposit
Insurance Corporation
<bullet> Ms. Montrice Yakimov, Managing Director,
Compliance and Consumer Protection, Office of Thrift
Supervision
<bullet> Ms. Sandra F. Braunstein, Director, Division
of Consumer and Community Affairs, Board of Governors
of the Federal Reserve System
<bullet> Mr. John Walsh, Chief of Staff and Public
Affairs, Office of Comptroller of the Currency
<bullet> Mr. Bob Cooper, Senior Counsel, One United
Bank, on behalf of the National Bankers Association
(NBA)
<bullet> Ms. Kim Saunders, Chief Executive Officer of
Mechanics & Farmers Bank
Committee Consideration
The Committee on Financial Services met in open session on
November 7, 2007, and ordered H.R. 4043, the ``Preserving and
Expanding Minority Depository Institutions Act'', favorably
reported to the House by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken with in conjunction with the
consideration of this legislation. A motion by Mr. Frank to
report the bill to the House with a favorable recommendation
was agreed to by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 4043 extends the requirements under Section 308 of the
Financial Institutions Reform, Recovery, and Enforcement Act of
(FIRREA) 1989 to the Chairman of the Board of Governors of the
Federal Reserve System and the Comptroller of the Currency.
H.R. 4043 also requires the federal banking agencies subject to
Section 308 of FIRREA to submit an annual report to Congress
describing their efforts to implement it.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 30, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4043, the
Preserving and Expanding Minority Depository Institutions Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
Gramp.
Sincerely,
Peter H. Fontaine
(For Peter R. Orszag, Director).
Enclosure.
H.R. 4043--Preserving and Expanding Minority Depository Institutions
Act
Existing law requires officials from two of the federal
agencies that regulate banks--the Office of Thrift Supervision
(OTS) and the Federal Deposit Insurance Corporation (FDIC)--to
consult with the Department of the Treasury on methods to
preserve and promote minority ownership of depository
institutions. H.R. 4043 would direct the Chairman of the Board
of Governors of the Federal Reserve System and the Comptroller
of the Currency to participate in those activities. In
addition, the bill would require each of the participating
agencies to submit an annual report to the Congress on actions
taken to implement the law.
Based on information from the Federal Reserve and affected
agencies, CBO estimates that additional costs under the bill
incurred by the Office of the Comptroller of the Currency, the
OTS, and FDIC would affect direct spending, but such
expenditures would be offset by income from annual fees or
deposit insurance premiums. The budgetary effects on the
Federal Reserve would be recorded as changes in revenues, and
CBO estimates that such changes would reduce revenues by less
than $500,000 a year. Enacting the bill would have a negligible
net effect on direct spending.
H.R. 4043 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Kathleen Gramp.
This estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 4043 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section establishes the short title of the bill as the
``Preserving and Expanding Minority Depository Institutions
Act.''
Section 2. Preserving and expanding minority depository institutions
This section extends the requirements under Section 308 of
the Financial Institutions Reform, Recovery, and Enforcement
Act of (FIRREA) 1989 to the Chairman of the Board of the
Governors of the Federal Reserve System and the Comptroller of
the Currency. It also requires the federal banking agency
subject to Section 308 of FIRREA to submit an annual report to
Congress describing actions taken to carry out the requirements
of Section 308 of FIRREA. Because the OTS is currently required
to submit an annual report of its actions to implement Section
308 of FIRREA under Section 3(g)(2) of the Home Owners' Loan
Act, the bill makes a technical and conforming change to repeal
the existing reporting requirement under HOLA.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989
* * * * * * *
TITLE III--SAVINGS ASSOCIATIONS
* * * * * * *
SEC. 308. PRESERVING MINORITY OWNERSHIP OF MINORITY FINANCIAL
INSTITUTIONS.
(a) Consultation on Methods.--The Secretary of the Treasury
shall consult with the Chairman of the Board of Governors of
the Federal Reserve System, the Comptroller of the Currency,
the Director of the Office of Thrift Supervision, and the
Chairperson of the Board of Directors of the Federal Deposit
Insurance Corporation on methods for best achieving the
following goals:
(1) * * *
* * * * * * *
(c) Reports.--The Secretary of the Treasury, the Chairman of
the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Director of the Office of
Thrift Supervision, and the Chairperson of the Federal Deposit
Insurance Corporation shall each submit an annual report to the
Congress containing a description of actions taken to carry out
this section.
* * * * * * *
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HOME OWNERS' LOAN ACT
* * * * * * *
SEC. 3. DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.
(a) * * *
* * * * * * *
(g) Annual Report Required.--The Director shall make an
annual report to the Congress. Such report shall include--
(1) * * *
[(2) a description of actions taken to carry out
section 308 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.]
(2) [Repealed].
* * * * * * *
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