text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Economic Growth and Stabilization 
  Financing Demonstration Act 1994''.
  
  SEC. 101. GUARANTEED LOAN DEMONSTRATION PROGRAM.
  
      (a) In General.--In order to study the feasibility and desirability 
  of a program of loan guarantees for economic growth and stabilization 
  in communities facing economic distress, the Secretary is authorized to 
  guarantee loans made to private borrowers by private lending 
  institutions, community development financial institutions, and other 
  lenders as the Secretary considers appropriate, except that the 
  Secretary may guarantee loans less than $750,000 only if the borrower 
  is not eligible for a loan guarantee under the Small Business Act.
      (b) Terms and Conditions.--
              (1) In general.--The Secretary may make such guarantees 
          upon application of the lenders and upon such terms and 
          conditions as the Secretary may prescribe.
              (2) Presumption of validity.--Guarantees under paragraph 
          (1) shall be conclusive evidence that the guarantee has been 
          properly obtained, that the underlying loan qualifies for such 
          guarantee, and that, but for fraud or material 
          misrepresentation by the holder, such guarantee will be 
          presumed to be valid, legal, and enforceable.
              (3) Lender responsibility.--No guarantee will be provided 
          unless the lender is responsible and makes adequate provision 
          for servicing the loan on reasonable terms and for protecting 
          the financial interest of the United States.
      (c) Preferred Lender Preference.--To the extent feasible, the 
  Secretary shall exercise the guarantee authority established under this 
  section on a preferred lender basis and authorize lenders, in 
  accordance with agreements entered into between the Secretary and such 
  lenders, to take such actions on the Secretary's behalf as the 
  Secretary deems appropriate, including, but not limited to, the 
  determination of eligibility and credit worthiness and loan monitoring, 
  collection and liquidation.
      (d) Target Subsidy Rate.--In exercising the loan guarantee 
  authority provided under this section, the Secretary shall attempt to 
  administer the program in a manner which results in a subsidy rate not 
  to exceed approximately 6 percent of the amount of the overall loan 
  guarantees.
      (e) Authorization of Appropriations.--Of the funds authorized to be 
  appropriated under section 106, for purposes of this section there are 
  authorized to be appropriated $50,000,000 per fiscal year to cover the 
  costs (as defined in section 502(5) of the Federal Credit Reform Act of 
  1990 (2 U.S.C. 661a(5))) of loan guarantees issued pursuant to 
  subsection (b)(3) of such section. Such sums shall remain available 
  until expended.
  
  SEC. 102. INTEREST RATE SUBSIDY DEMONSTRATION PROGRAM.
  
      (a) In General.--In order to study the feasibility and desirability 
  of a program of interest rate subsidies for economic growth and 
  stabilization in communities facing economic distress, the Secretary is 
  authorized to pay interest rate subsidies to private lending 
  institutions, community development financial institutions, and other 
  lenders as the Secretary considers appropriate, for loans made to 
  private borrowers.
      (b) Terms and Conditions.--The Secretary may pay interest rate 
  subsidies upon application of the lenders and upon such terms and 
  conditions as the Secretary may prescribe, except that no interest rate 
  subsidy may be provided unless the lender is responsible and makes 
  adequate provision for servicing the loan on reasonable terms and for 
  protecting the financial interest of the United States.
      (c) Preferred Lender Preference.--To the extent feasible, the 
  Secretary shall exercise the interest rate subsidy authority 
  established under this section on a preferred lender basis and 
  authorize lenders, in accordance with agreements entered into between 
  the Secretary and such lenders, to take such actions on the Secretary's 
  behalf as the Secretary deems appropriate, including, but not limited 
  to, the determination of eligibility and credit worthiness and loan 
  monitoring, collection and liquidation.
  
  SEC. 103. EQUITY FINANCE DEMONSTRATION PROGRAM.
  
      (a) In General.--In order to study the feasibility and desirability 
  of a program of equity financing for economic growth and stabilization 
  in communities facing economic distress, the Secretary is authorized to 
  establish a demonstration program under which the Secretary may 
  directly, or indirectly through grants to eligible intermediaries, 
  purchase or commit to purchase warrants, subordinated debt, or 
  nonvoting preferred securities of private United States businesses or 
  nonprofit organizations and associations.
      (b) Establishment of Fund.--For purposes of conducting the program 
  provided under subsection (a), the Secretary shall establish an Equity 
  Investment Revolving Fund.
      (c) Disposal of Equity Instruments.--The Secretary shall endeavor 
  to dispose of any financial instruments purchased or guaranteed under 
  this section within a period of 10 years after their date acquisition 
  of such interest.
      (d) Use of Payments.--
              (1) Use of payments to the secretary.--Amounts received by 
          the Secretary from the payment of dividends and the redemption 
          of financial instruments acquired under this section shall be 
          deposited in the Equity Investment Revolving Fund and shall, 
          subject to appropriations, be available to make or guarantee 
          additional investments consistent with this section.
              (2) Use of payments to eligible intermediaries.--Of the 
          amounts received by eligible recipient intermediaries from the 
          payment of dividends and the redemption of financial 
          instruments acquired under this section--
                      (A) up to 50 percent may be retained by such 
                  eligible intermediaries to make or guarantee additional 
                  investments consistent with this section, and
                      (B) no less than 50 percent shall be returned to 
                  the Secretary to be deposited into the Fund established 
                  under subsection (b) to make or guarantee additional 
                  investments consistent with this section.
      (e) Investment of Excess Funds.--If the Secretary determines that 
  the amount of money in the Fund exceeds the current requirements of the 
  Fund, the Secretary may direct the Secretary of the Treasury to invest 
  such amounts in obligations of the United States, in obligations 
  guaranteed by the United States Government, or in such other 
  obligations or securities of the United States as the Secretary of the 
  Treasury deems appropriate. Provided, however, that any subsequent use 
  of monies so invested shall be subject to appropriations.
  
  SEC. 104. SECONDARY MARKET CREDIT ENHANCEMENT DEMONSTRATION PROGRAM.
  
      In order to study the feasibility and desirability of a program of 
  providing credit enhancements to pools of financial instruments related 
  to economic growth and stabilization activities in communities facing 
  economic distress, the Secretary is authorized to establish a 
  demonstration program under which the Secretary may provide credit 
  enhancements to pools of financial instruments related to economic 
  growth and stabilization activities in such areas.
  
  SEC. 105. PERFORMANCE EVALUATIONS; REPORT TO CONGRESS.
  
      (a) Performance Evaluations.--The Secretary shall conduct 
  performance evaluations of each of the demonstration projects 
  established under this Act to assess their effectiveness in promoting 
  economic growth and stabilization in communities facing economic 
  distress.
      (b) Annual Report.--Based on the evaluations conducted under 
  subsection (a), the Secretary shall prepare and submit annually a 
  report to the Congress containing a full and detailed account of 
  operations under this Act. Such a report shall include--
              (1) performance measures established under subsection (a);
              (2) an audit setting forth the amount, type, recipient, and 
          source of disbursements, receipts, and losses sustained as a 
          result of operations under this Act during the preceding fiscal 
          year and since inception of the demonstration programs; and
              (3) recommendations with respect to program changes, 
          statutory changes, and other matters to improve and facilitate 
          the operations of the demonstration programs and to encourage 
          the use of these programs by qualified concerns.
  
  SEC. 106. AUTHORIZATION OF APPROPRIATIONS.
  
      For purposes of this Act, there are authorized to be appropriated 
  $90,000,000 per fiscal year. Such sums shall remain available until 
  expended.
  
  SEC. 107. SEPARABILITY.
  
      If any provision of this Act, or any application of such provision 
  to any person or circumstance, shall be held invalid, the remainder of 
  this Act, or the application of such provision to person or 
  circumstance other than those as to which it is held invalid, shall not 
  be affected thereby.
target: Economic Growth and Stabilization Financing Demonstration Act 1994 - Prescribes guidelines under which the Secretary of Commerce may conduct demonstration programs in economically distressed communities to:  (1) guarantee loans made by lending institutions to private parties; (2) pay interest rate subsidies; (3) implement an equity financing program; and (4) provide secondary market credit enhancements to pools of financial instruments related to economic growth and stabilization in such communities. 
  Directs the Secretary to conduct performance evaluations and submit an annual status report to the Congress. 
  Authorizes appropriations.
feat_title: Economic Growth and Stabilization Financing Demonstration Act 1994