[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6775 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 6775
To provide for the Federal charter of certain public banks, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 13, 2023
Ms. Tlaib (for herself, Ms. Ocasio-Cortez, Ms. Pressley, Ms. Lee of
California, Ms. Schakowsky, and Ms. Omar) introduced the following
bill; which was referred to the Committee on Financial Services, and in
addition to the Committees on Oversight and Accountability, Ways and
Means, and Energy and Commerce, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To provide for the Federal charter of certain public banks, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Public Banking Act
of 2023''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--FEDERAL RECOGNITION OF PUBLIC BANKS
Sec. 101. Federal charter of public lending banks and public payment
banks.
Sec. 102. Federal recognition of non-federally chartered banks.
Sec. 103. Federal Reserve System membership.
Sec. 104. Public member bank services.
Sec. 105. Specific requirements relating to covered banks.
Sec. 106. Regulations.
Sec. 107. Technical assistance.
TITLE II--FEDERAL RECOGNITION OF PUBLIC SECURITIES
Sec. 201. Regulation of public lending banks and non-federally
chartered banks.
TITLE III--PUBLIC DEPOSIT INSURANCE
Sec. 301. In general.
TITLE IV--POSTAL BANKING
Sec. 401. Partnerships with covered banks for postal banking services.
TITLE V--PUBLIC BANK DEVELOPMENT PROGRAMS
Sec. 501. Public bank grant program.
Sec. 502. Public bank incubator program.
Sec. 503. Community development grant program.
Sec. 504. Treatment of funding.
TITLE VI--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS
Sec. 601. State and local instrumentalities eligible to be community
development financial institutions.
SEC. 2. DEFINITIONS.
In this Act:
(1) Board of governors.--The term ``Board of Governors''
means the Board of Governors of the Federal Reserve System.
(2) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(3) Copyleft license.--The term ``copyleft license'' means
any copyright license with respect to technology that grants
the licensee the authority to--
(A) use the technology for any purpose;
(B) study how the technology works, and change the
technology as desired;
(C) access any source code related to the
technology; and
(D) redistribute copies of the technology,
including modified or extended copies, to others, for
any purpose, if the authorities described under this
paragraph are also granted to all modified, extended,
or redistributed copies.
(4) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(5) Covered bank.--The term ``covered bank'' means--
(A) a public lending bank (as defined in section
101(b));
(B) a public payment bank (as defined in section
101(c)); and
(C) a non-federally chartered bank (as defined in
section 102(b)) that obtains a certificate of Federal
recognition under section 102.
(6) Environmental justice community.--With respect to a
public lending bank, the term ``environmental justice
community'' means--
(A) a community with significant representation of
communities of color, low-income communities, or Tribal
and Indigenous communities, that experience, or are at
risk of experiencing, higher or more adverse human
health or environmental effects; or
(B) notwithstanding subparagraph (A), a definition
established by the State in which the public lending
bank is located, if--
(i) the definition was established by using
a process established, by rule, jointly by the
Environmental Protection Agency and the Council
on Environmental Quality; and
(ii) the State establishes a corresponding
screening tool to identify which communities
are an environmental justice community under
such definition.
(7) Public member bank.--The term ``public member bank''
means a covered bank that is a member of the Federal Reserve
System.
(8) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(9) State.--The term ``State'' means each of the several
States, the District of Columbia, and any commonwealth,
territory, or possession of the United States.
(10) Tribal and indigenous community.--The term ``Tribal
and indigenous community'' means a population of people who are
members of--
(A) a federally recognized Indian Tribe;
(B) a State-recognized Indian Tribe;
(C) an Alaska Native community or organization;
(D) a Native Hawaiian community or organization; or
(E) any other Indigenous community located in a
State.
(11) Tribal covered bank.--The term ``Tribal covered bank''
means a covered bank that is wholly owned and controlled by--
(A) a Tribal government, including a unit of local
Tribal government, or Tribal government agency;
(B) a Tribally chartered corporation;
(C) a nonprofit instrumentality designated by a
Tribal government as acting in the public interest of a
community within such Tribe, including an
unincorporated community; or
(D) an association of 1 or more entities described
in subparagraphs (A) through (C).
TITLE I--FEDERAL RECOGNITION OF PUBLIC BANKS
SEC. 101. FEDERAL CHARTER OF PUBLIC LENDING BANKS AND PUBLIC PAYMENT
BANKS.
(a) In General.--The Board of Governors shall charter public
lending banks and public payment banks.
(b) Public Lending Bank Defined.--In this Act, the term ``public
lending bank'' means a person that--
(1) is wholly owned and controlled by--
(A) a State or Tribal government, including a unit
of local government, or government agency;
(B) a State or Tribally chartered corporation;
(C) a nonprofit instrumentality designated by a
State or Tribal government as acting in the public
interest of a community within such State or Tribe,
including an unincorporated community; or
(D) an association of 1 or more entities described
in subparagraphs (A) through (C);
(2) that--
(A) is not owned or governed by, operated as a
subsidiary of, or otherwise affiliated with any for-
profit entity;
(B) does not own, govern, or operate a subsidiary
that is any for-profit entity; and
(C) does not compensate any employee, executive, or
board member at a rate to exceed the salary of the
President of the United States for that equivalent
period; and
(3) provides--
(A) fiscal agent services;
(B) money transmitter services;
(C) digital dollar services as a pass-through
intermediary for the Federal Government;
(D) depository services;
(E) banking services in partnership with the United
States Postal Service;
(F) municipal deposit services;
(G) securities-related services; or
(H) any lending product approved by the Board of
Governors, including participation loans and letters of
credit.
(c) Public Payment Bank Defined.--In this Act, the term ``public
payment bank'' means a person that--
(1) is wholly owned and controlled by an entity described
in subsection (b)(1);
(2) provides at least one of the services specified in
subparagraphs (A) through (F) of subsection (b)(3); and
(3) does not provide the services specified in subparagraph
(G) or (H) of subsection (b)(3).
(d) Exception of Certain Public Lending Banks From Consideration as
Bank Holding Company.--A person or entity described in subsection
(b)(1) shall not be considered a bank holding company under the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) or any other law,
solely due to the person or entity's ownership or control of a public
lending bank, public payment bank, or non-federally chartered bank.
SEC. 102. FEDERAL RECOGNITION OF NON-FEDERALLY CHARTERED BANKS.
(a) Certificates of Recognition.--The Board of Governors shall
issue certificates of Federal recognition to non-federally chartered
banks.
(b) Non-Federally Chartered Bank Defined.--In this Act, the term
``non-federally chartered bank'' means a person that is--
(1) wholly owned and controlled by an entity described in
section 101(b)(1); and
(2) either--
(A) chartered as a non-depository institution by an
approved non-Federal financial regulator described in
subsection (c); or
(B) insured as a depository institution by the
Corporation, by an approved non-Federal financial
regulator described in subsection (c), or under an
alternate public deposit insurance scheme approved by
the Corporation.
(c) List of Approved Non-Federal Financial Regulators.--The Board
of Governors shall establish and maintain on a public website of the
Board of Governors a list of approved non-Federal financial regulators
for the purpose of determining eligibility for a certificate of Federal
recognition under this section.
(d) Conversion.--At the request of a non-federally chartered bank,
the Board of Governors may convert such bank into a public payment bank
or a public lending bank.
(e) Services.--A non-federally chartered bank--
(1) may not offer depository services before--
(A) obtaining--
(i) deposit insurance or conditional
deposit insurance from the Corporation; or
(ii) deposit insurance from alternate
public deposit insurance scheme approved by the
Corporation; and
(B) becoming a public member bank or a conditional
public member in accordance with section 103(b); and
(2) may--
(A) invest any funds held on behalf of an entity
described in section 101(b)(1) in a fiscal agent
account;
(B) provide fiscal agent services, including
sending and receiving money and effectuating payments
to and from any entity whose funds are invested in a
fiscal agent account;
(C) invest any funds held on behalf of an entity
not described in section 101(b)(1) in a payments
account or as digital dollar products; and
(D) provide money transmitter and digital dollar
services.
SEC. 103. FEDERAL RESERVE SYSTEM MEMBERSHIP.
(a) Eligibility.--A covered bank shall be eligible for membership
in the Federal reserve system as a public member bank and, except as
provided in subsection (c), shall be treated in the same manner as a
member bank under section 4 of the Federal Reserve Act (12 U.S.C. 308).
(b) Conditional Public Member Bank.--The Board of Governors shall
establish a special category of public member bank, called a
``conditional public member bank'', for persons that are in the process
of applying for becoming a covered bank. Such conditional public member
banks shall be subject to such conditions and restrictions as the Board
of Governors determines to be necessary and appropriate to promote
public welfare, provided that such conditions and restrictions are not
arbitrary, punitive, or unduly burdensome.
(c) Purchasing Stock.--The Board of Governors may not require a
covered bank to purchase stock in a Federal reserve bank or otherwise
maintain paid-in capital in the Federal reserve system.
SEC. 104. PUBLIC MEMBER BANK SERVICES.
(a) Purposes of Services.--The Board of Governors shall offer the
services described in subsection (b) to public member banks in order
to--
(1) promote the safety, soundness, viability, and
resiliency of publicly owned and operated financial
institutions;
(2) facilitate the provision of payments, credit, and other
financial services as a public good; and
(3) support the financial and budgetary health of State and
Tribal governments, local government units, government
agencies, State or tribally chartered corporations, nonprofit
entities designated by a State or Tribal government to be
acting in the public interest of a community within such State
or Tribe, or an association of one or more of such entities.
(b) Services.--The Board of Governors shall offer the following
services to public member banks:
(1) Fiscal agent accounts--
(A) in which public member banks may invest funds
held on behalf of any entity described in section
101(b)(1); and
(B) under which--
(i) the Board of Governors shall pay
interest on all balances held overnight in such
fiscal agent accounts at a rate that is greater
than or equal to the greater of--
(I) the sum of the overnight policy
target rate plus two percent; or
(II) the daily rate on 30-year
marketable Treasury bonds; and
(ii) the interest described in clause (i)
(minus a reasonable administrative fee imposed
by the public member bank) shall be paid to the
entity for which the public member bank
invested such funds.
(2) Payment accounts--
(A) in which public member banks may invest funds
held on behalf of any entity other than an entity
described in section 101(b)(1) for purposes of
providing money transmitter services; and
(B) under which the Board of Governors shall pay
interest (minus a reasonable administrative fee) on all
balances held overnight in such fiscal agent accounts
at a rate that is greater than or equal to the greater
of--
(i) the overnight rate paid on required
reserves; or
(ii) the overnight rate paid on excess
reserves.
(3)(A) Digital dollar services in which public member banks
may operate as pass-through intermediaries for any digital
dollar or other financial services offered by the Federal
Government, including--
(i) digital dollar account wallets administered by
the Board of Governors (commonly known as
``FedAccounts'');
(ii) digital dollar cash wallets administered by
the Secretary (commonly known as ``eCash''); and
(iii) postal banking services provided by the
United States Postal Service.
(B) The Board of Governors may issue regulations as
necessary to ensure effective harmonization and coordination
between covered banks and any entities responsible for
administering digital dollar services on behalf of the Federal
Government.
(4)(A) A facility (to be known as the ``Public Bank Primary
Liquidity Facility'') to provide liquidity to public member
banks by buying or lending (at a reasonable rate of interest
that is not greater than the overnight policy target rate)
against federally recognized public loans (as described in
section 105) and federally-recognized public securities (as
described in section 201(b)), under terms and conditions that
the Board of Governors determines to be necessary and
appropriate to promote public welfare.
(B) The facility under subparagraph (A) shall purchase or
accept loans or securities under such subparagraph at face
value.
(5)(A) A facility (to be known as the ``Public Bank
Supplementary Liquidity Facility'') to provide liquidity to
public member banks by buying or lending (at a reasonable rate
of interest that is not greater than the overnight policy
target rate) against assets not otherwise eligible to be
purchased or accepted as collateral under paragraph (4).
(B) The facility under subparagraph (A) may purchase or
accept assets as collateral under such subparagraph at a
reasonable discount.
(6) A facility (to be known as the ``Public Bank Credit
Facility'') to provide credit to public member banks on an
unsecured basis, in such amounts and such rates of interests as
the Board of Governors determines to be necessary and
appropriate to promote public welfare.
(7) A facility (to be known as the ``Federally Recognized
Public Loan Facility'') to, in consultation with the
Corporation--
(A) develop rules, standards, and criteria for
Federal recognition of loans, mortgages, credit cards,
account overdrafts, and other direct lending products
issued by public member banks; and
(B) provide prepurchase agreements under which the
facility will purchase loans and agree that such loans
will be repurchased by the public member bank at such
time as is agreed upon by such facility and member
bank.
(c) Administrative, Operating, and Maintenance Costs.--The Board of
Governors shall pay all administrative, operating, and maintenance
costs associated with the accounts, services, and facilities described
in subsection (b).
(d) Reimbursement.--The Board of Governors shall reimburse a public
member bank for any expenses reasonably incurred in the process of
operating as a pass-through intermediary described in subsection
(b)(3).
(e) Expenses.--
(1) Member services.--Any expenses incurred by the Board of
Governors under paragraphs (1) through (3) of subsection (b)
and under subsections (c) and (d) shall be recorded--
(A) in an account to be known as the ``Special
Public Member Bank Services Account'' established at
the Federal Reserve Bank of New York; and
(B) as a deferred asset (as described in section
11.96 of the Financial Accounting Manual for Federal
Reserve Banks, as in effect on the date of the
enactment of this Act) and maintained separately from
the balance sheet of the Federal Reserve Bank of New
York and the Federal Reserve System, so as to not
reduce or impact the calculation of total income or
revenue generated by the Federal Reserve System, or
otherwise reduce the total amount of net operating
profits to be made available for remittance to the
Treasury on an ongoing basis.
(2) Facilities.--Any expenses incurred by the Board of
Governors under paragraphs (4) through (7) of subsection (b)
shall be recorded--
(A) in an account to be known as the ``Special
Public Member Bank Liquidity and Credit Account''
established at the Federal Reserve Bank of New York;
and
(B) as a deferred asset (as described in section
11.96 of the Financial Accounting Manual for Federal
Reserve Banks, as in effect on the date of the
enactment of this Act) and maintained separately from
the balance sheet of the Federal Reserve Bank of New
York and the Federal Reserve System, so as to not
reduce or impact the calculation of total income or
revenue generated by the Federal Reserve System, or
otherwise reduce the total amount of net operating
profits to be made available for remittance to the
Treasury on an ongoing basis.
SEC. 105. SPECIFIC REQUIREMENTS RELATING TO COVERED BANKS.
(a) Public Purpose Bank Requirement.--
(1) In general.--A covered bank shall serve the public good
and promote the general welfare.
(2) Definition in governing documents.--A covered bank
shall define the terms ``public good'' and ``promote the
general welfare'' in the governing documents of the covered
bank, after such definitions are approved by either--
(A) the Governing Assembly of the covered bank; or
(B) if the covered bank does not have a Governing
Assembly, the Board of Directors.
(b) Democratic Governance.--
(1) Governance policy.--Before the end of the 2-year period
beginning on the formation of a covered bank, the Board of
Directors of the covered bank or the Governing Assembly of the
covered bank shall establish a formal governance policy for the
covered bank.
(2) Institutionalization of a democratic governance
structure.--A covered bank shall institutionalize a democratic
governance structure through the following:
(A) Board of directors.--The establishment of a
Board of Directors--
(i) charged with ensuring that fiduciary
duties of the covered bank are met;
(ii) charged with ensuring the covered bank
complies with policies and procedures required
by statute, regulation, and principles of
safety and soundness;
(iii) with no less than 5 members, of
which--
(I) at least one-third of the
members shall represent community-
based, nonprofit organizations based
primarily within the geographic area of
(or, with respect to a corporation or
nonprofit instrumentality, the
geographic area served by) the relevant
entity described in section 101(b)(1);
(II) at least one member shall have
demonstrated experience with, and
endorsement from, organizations
representing historically excluded and
marginalized groups based primarily
within the geographic area of (or, with
respect to a corporation or nonprofit
instrumentality, the geographic area
served by) the relevant entity
described in section 101(b)(1);
(III) at least one member shall
have demonstrated experience with, and
endorsement from, environmental justice
or environmental organizations based
primarily within the geographic area of
(or, with respect to a corporation or
nonprofit instrumentality, the
geographic area served by) the relevant
entity described in section 101(b)(1);
(IV) at least one member shall have
demonstrated experience with, and
endorsement from, community development
organizations based primarily within
the geographic area of (or, with
respect to a corporation or nonprofit
instrumentality, the geographic area
served by) the relevant entity
described in section 101(b)(1);
(V) at least one member shall have
demonstrated experience with, and
endorsement from, labor organizations
based primarily within the geographic
area of (or, with respect to a
corporation or nonprofit
instrumentality, the geographic area
served by) the relevant entity
described in section 101(b)(1); and
(VI) with respect to a Tribal
covered bank, include a number of
representatives of Indigenous
communities on the board roughly
proportionate to the percentage of the
population of the geographic area of
the relevant entity described in
section 101(b)(1) who are Indigenous;
(iv) with respect to a covered bank with a
Governing Assembly and a People's Review Board,
that is--
(I) responsible for the basic
operations of the covered bank,
including--
(aa) hiring and firing
senior management;
(bb) monitoring and
assessing the covered bank's
performance, operations, and
investment decisions;
(cc) producing internal
annual reports; and
(dd) interfacing with the
People's Review Board in the
issuance of public-facing
reports; and
(II) responsible for ensuring that
the mandates set by the Governing
Assembly are successfully implemented;
and
(v) with respect to a covered bank without
a Governing Assembly and People's Review Board,
responsible for the basic operations of the
covered bank, including--
(I) those responsibilities
described under item (aa) through (cc)
of clause (iv)(I);
(II) setting the core mandates and
policies which guide the covered bank's
activities; and
(III) issuing public-facing
reports.
(B) Requirement for larger public lending banks.--
With respect to a public lending bank with more than
$500,000,000 in total assets--
(i) the establishment of a Governing
Assembly, which--
(I) shall--
(aa) be responsible for
setting the broad priorities of
the public lending bank's
financing and loan programs
over a multi-year investment
cycle;
(bb) generate the public
lending bank's core mandates;
(cc) make binding decisions
on the policy of the public
lending bank without exercising
control over day-to-day
decision making;
(dd) be composed of members
in a manner that ensures
adequate representation of, or
democratic accountability to,
residents within the geographic
area of (or, with respect to a
corporation or nonprofit
instrumentality, the geographic
area served by) the relevant
entity described in section
101(b)(1); and
(ee) with respect to a
Tribal covered bank, include a
number of representatives of
Indigenous communities on the
Governing Assembly roughly
proportionate to the percentage
of the population of the
geographic area of the relevant
entity described in section
101(b)(1) who are Indigenous;
and
(II) may only have members selected
by sortition if--
(aa) a super-majority of
the members are selected by a
stratified sampling of
residents based primarily
within the geographic area of
(or, with respect to a
corporation or nonprofit
instrumentality, the geographic
area served by) the relevant
entity described in section
101(b)(1);
(bb) the Governing Assembly
is professionally facilitated,
deliberative in nature, and
draw upon outside experts
representing a range of
divergent interests and
viewpoints;
(cc) the members selected
through sortition are required
to receive a comprehensive
orientation and intensive
training on banking regulation
and finance prior to
participating in decision
making, and required to receive
continuing educational
programming throughout their
term; and
(dd) no member serves for
longer than 6 months, absent
extenuating circumstances; and
(ii) the establishment of a People's Review
Board--
(I) which shall act in an advisory
and oversight capacity for the public
lending bank, including--
(aa) monitoring and
assessing the public lending
bank's performance, operations,
and investment decisions to
ensure they are consistent with
the core mandates and policies
established by the Governing
Assembly;
(bb) assessing the
priorities and mandates of the
public lending bank;
(cc) ensuring the
viewpoints of affected groups
are represented in the policy
of the public lending bank; and
(dd) providing information
and recommendations to the
Governing Assembly and Board of
Directors of the public lending
bank;
(II) which shall have access to all
public lending bank information
pertinent to the operations and
performance of the People's Review
Board;
(III) the meetings of which shall
be open to public observation;
(IV) which shall issue an annual
report of the findings and
recommendations of the People's Review
Board, and make such report publicly
available online;
(V) the structure of which shall
ensure adequate representation of, or
democratic accountability to, residents
within the geographic area of (or, with
respect to a corporation or nonprofit
instrumentality, the geographic area
served by) the relevant entity
described in section 101(b)(1);
(VI) the membership of which shall
prioritize community members
representing historically redlined and
marginalized communities; and
(VII) which may only have members
selected by sortition if--
(aa) a super-majority of
the members are selected by a
stratified sampling of
residents based primarily
within the geographic area of
(or, with respect to a
corporation or nonprofit
instrumentality, the geographic
area served by) the relevant
entity described in section
101(b)(1);
(bb) the People's Review
Board is professionally
facilitated, deliberative in
nature, and draw upon outside
experts representing a range of
divergent interests and
viewpoints; and
(cc) the members selected
through sortition are required
to receive a comprehensive
orientation and intensive
training on banking regulation
and finance prior to
participating in decision
making, and required to receive
continuing educational
programming throughout their
term.
(c) Tribal Covered Bank Lending Priorities.--A Tribal covered bank
shall prioritize loans to Indigenous communities.
(d) Environmental Policy.--Before the end of the 2-year period
beginning on the formation of a covered bank, the Board of Directors of
the covered bank or the Governing Assembly of the covered bank shall
establish a formal environmental or environmental justice policy for
the covered bank.
(e) Use and Disclosure of Financial Information and Technology.--
(1) Gramm-Leach-Bliley act.--Title V of the Gramm-Leach-
Bliley Act (15 U.S.C. 6801 et seq.) shall apply to a covered
bank to the same extent such title applies to a financial
institution.
(2) Use of technology.--A covered bank shall--
(A) wherever feasible, prefer, use, and promote
open source technologies;
(B) wherever possible, license under a copyleft
license any software, hardware, or other digital
technologies that are developed, financed, or otherwise
owned by the covered bank;
(C) wherever possible, make any software acquired
or developed by the covered bank available to other
covered banks to study, copy, and use, at zero cost,
upon request; and
(D) generally take all reasonable efforts to
encourage and promote technology sharing and the
development of technological best practices and common
standards.
(3) Expectation of privacy.--A covered bank shall--
(A) maintain an individual or entity's legitimate
expectation of privacy if that individual or entity is
a customer of the covered bank; and
(B) not be presumed to have given up such a
legitimate expectation of privacy on the basis of the
third-party doctrine articulated by the Supreme Court
in United States v. Miller (1976).
(4) Data privacy.--Data obtained by a covered bank--
(A) may not be sold to third parties, except
consumer reporting agencies;
(B) that is shared with a third party by the
covered bank, shall maintain an assumed right of
privacy;
(C) with respect to lending data, may only be
shared with--
(i) Federal, State, or Tribal agencies; or
(ii) a third party that is a consumer
reporting agency under the Fair Credit
Reporting Act and is in compliance with such
Act; and
(D) with respect to account data, may only be
accessed by appropriate warrant or administrative
search subpoena.
(5) Metadata.--A covered bank--
(A) may not share metadata with private or for-
profit third parties; and
(B) shall hold metadata unused in a manner
consistent with rights of privacy and duty of care.
(f) Terms of Lending.--
(1) Establishment of policy on lending practices.--
(A) In general.--Not later than the end of the 1-
year period beginning on the date of the formation of a
public lending bank, the public lending bank shall
establish a policy on lending practices. With respect
to a public lending bank in existence on the date of
enactment of this Act, the policy on lending practices
shall be established before the end of the 1-year
period beginning on the date of enactment of this Act.
(B) Update of policy.--A public lending bank shall
update the policy on lending practices required under
subparagraph (A) at least every 5 years.
(C) Public comment process.--A public lending bank
shall provide for a public comment period of at least
90 days before the establishment of, and any update of,
the policy on lending practices required under this
paragraph.
(2) Lending preferences.--For purposes of determining the
projects with respect to which a public lending bank extends
loans, the public lending bank shall give preference to
projects that--
(A) maximize the creation of high-quality
employment and apprenticeship opportunities for local
workers, consistent with the public interest,
especially workers from environmental justice
communities and labor organizations;
(B) certify, for all contractors and
subcontractors, that the rights of workers to organize
and unionize are recognized;
(C) agree to implement a project labor agreement;
(D) ensure that no less than 40 percent of the
monetary value of such loans provide direct benefits,
including economic and health benefits, to
environmental justice communities; and
(E) meet unmet needs in the local banking market.
(3) Requirements on who may receive loans.--The public
lending bank shall require, for any project for which the
public lending bank extends a loan, that--
(A) the recipient does not oppose or resist
unionization efforts involving projects utilizing
public funds;
(B) if the loan is $500,000 or more, as a condition
of receiving the loan, the recipient shall ensure that
all laborers employed by a nongovernmental entity that
enters into a contract for the performance of
construction, alteration, or repair work that is
facilitated, in whole or in part, by such loan, or a
subcontract thereof, are paid wages at rates not less
than those prevailing on similar construction,
alteration, or repair work in the locality as
determined by the Secretary of Labor in accordance with
subchapter IV of chapter 31 of title 40, United States
Code (commonly referred to as the ``Davis-Bacon Act'')
and with respect to such labor standards, the Secretary
of Labor shall have the authority and functions set
forth in Reorganization Plan Numbered 14 of 1950 (64
Stat. 1267; 5 U.S.C. App.) and section 3145 of title
40, United States Code;
(C) if the project with respect to which the loan
is being extended has a budget of $35,000,000 or more,
all contractors and subcontractors shall implement a
project labor agreement that includes--
(i) goals for hiring local community
members, economically disadvantaged workers, or
workers from other underrepresented
communities;
(ii) an equity plan, including--
(I) the impacts of the proposed
project on underserved communities,
including social and environmental
impacts;
(II) the overall benefits of the
proposed project, if funded, to
underserved communities; and
(III) how diversity, equity, and
inclusion objectives will be
incorporated into the project; and
(iii) strategic recruitment and retention
policies for workers from underserved
communities and people facing systemic barriers
to employment; and
(D) if the project is for the acquisition,
construction, or renovation of, or addition to, a
residential building which includes rental units, the
recipient--
(i) may not discriminate when renting the
units based on an applicant's source of income,
sexual orientation, gender expression or
identity, immigration status, conviction or
arrest history, bankruptcy history, eviction
history, or credit score;
(ii) shall ensure the right of tenants to
organize tenant unions, associations, or
resident councils;
(iii) shall utilize minimum time-bound
affordability requirements of at least 99 years
for affordable housing;
(iv) except with respect to a building
assisted under section 9 of the United States
Housing Act of 1937 (42 U.S.C. 1437g) or a
building that has been issued a certificate of
occupancy within the previous 5 years, may not
increase rent on an annual basis in excess of
the annual percent change in the Consumer Price
Index for All Urban Consumers published by the
Bureau of Labor Statistics of the Department of
Labor for the closest metropolitan core based
statistical area, rounded to one decimal place,
as established the August preceding the
calendar year in question or 3 percent,
whatever is less; and
(v) shall practice avoidance and mitigation
of displacement, including by establishing a
right of return and temporary relocation for
tenants displaced by renovations.
(4) Application of certain laws.--The following Acts shall
apply to a public lending bank to the same extent as such Acts
apply to applicable persons subject to such Acts:
(A) The Truth in Lending Act (15 U.S.C. 1601 et
seq.).
(B) The Fair Credit Reporting Act (15 U.S.C. 1681
et seq.).
(C) The Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.).
(D) The Fair Debt Collection Practices Act (15
U.S.C. 1692 et seq.).
(g) Terms of Retail Account Services.--Any covered bank that holds,
administers, or manages funds on behalf of any unincorporated person in
a payments account, or otherwise accepts funds on deposit or for the
purpose of providing public depository accounts services--
(1) may not--
(A) impose any fees, minimum balances, or maximum
balances on such payments accounts or public depository
accounts; or
(B) include on such payments accounts or public
depository accounts overdraft fees or penalties;
(2) shall--
(A) prominently brand any such payments account or
public depository account as a ``public bank account''
in all account statements, marketing materials, and
other communications of the public bank; and
(B) provide such account holders with reasonable
protection against losses caused by fraud or security
breaches, as determined by the Corporation or the
Director of the Bureau of Consumer Financial
Protection, or both; and
(3) may only close or restrict access to such payments
accounts or public depository accounts on the basis of the
mandate of the covered bank.
(h) Terms of Retail Credit.--
(1) In general.--Notwithstanding any provision of law, the
annual percentage rate applicable to any extension of credit by
a covered bank may not exceed the lesser of--
(A) 15 percent on unpaid balances, inclusive of all
finance charges; or
(B) the maximum rate permitted by the laws of the
State in which the consumer resides.
(2) Other fees.--Any fees that are not considered finance
charges under paragraph (1), including fees for ancillary
products and services, may not--
(A) exceed the total amount of finance charges
assessed; and
(B) be imposed in such a way as to evade or
frustrate the purpose of limiting the total interest
and related costs that may be charged in relation to
any lending product issued by covered banks under this
Act.
(3) Penalties for charging higher rates on retail credit.--
(A) Violation.--The taking, receiving, reserving,
or charging of an annual percentage rate or fee greater
than that permitted by paragraph (1), when knowingly
done, shall be a violation of this subsection, and a
forfeiture of the entire interest which the note, bill,
or other evidence of the obligation carries with it, or
which has been agreed to be paid thereon.
(B) Refund of interest amounts.--
(i) In general.--With respect to a person
charging interest, a finance charge, or a fee
greater than that permitted by paragraph (1),
the person paying such interest, finance
charge, or fee may notify the Bureau of
Consumer Financial Protection, and the Bureau
of Consumer Financial Protection shall take
such enforcement actions as the Director of the
Bureau of Consumer Financial Protection
determines appropriate.
(ii) Lack of bureau action.--If a person
notifies the Bureau of Consumer Financial
Protection under clause (i), and the Bureau of
Consumer Financial Protection takes no action
with respect to such notice during the 60-day
period following such notice, such person may
bring an action in a Federal district court to
recover the entire amount of interest, finance
charges, or fees paid.
(C) Civil liability.--Any creditor who violates
this subsection shall be subject to the provisions of
section 130(a) of the Truth in Lending Act (15 U.S.C.
1640(a)).
(D) Bank secrecy act.--In establishing and
maintaining personal accounts, each covered bank shall
comply with--
(i) section 21 of the Federal Deposit
Insurance Act (12 U.S.C. 1829b);
(ii) section 123 of Public Law 91-508; and
(iii) subchapter II of chapter 53 of title
31, United States Code.
(i) Annual Reporting Requirements.--Each covered bank shall make
publicly available an annual report on the activities of such covered
bank, including recipients of financial services, sources of funding,
financial reporting, and evaluation of the effectiveness of the covered
bank's services in achieving the public purposes for which it was
chartered, as well as any other purposes, goals, and targets under this
Act or other law or regulation, including the percentage of the
monetary value of a public lending bank's loans which provide direct
benefits to environmental justice communities.
(j) Other Excluded Activities.--A covered bank may not provide
loans to, make investments in, or otherwise engage in any activity that
is financial in nature, or incidental to such financial activity,
with--
(1) a company supporting--
(A) weapon or gun manufacturing;
(B) private prisons;
(C) immigration detention facilities; or
(D) the tobacco industry; or
(2) a company that has--
(A) a C.E.O. to median worker pay ratio in excess
of 100:1, as determined by the National Labor Relations
Board;
(B) a history of unfair labor practices, as
determined by the Secretary of Labor;
(C) a history of violations of the Fair Labor
Standards Act of 1938 and the Occupational Safety and
Health Act of 1970, as determined by the Secretary of
Labor; or
(D) a history of offshore tax avoidance, as
determined by the Commissioner of the Internal Revenue
Service.
(k) Clarifying the Eligibility of Public Lending Banks and Public
Payment Banks for Certain Federal Programs.--
(1) Elective payment of applicable credits.--Section
6417(d)(1)(A) of the Internal Revenue Code of 1986 is amended--
(A) in clause (v), by striking ``or'' at the end;
(B) in clause (vi), by striking the period at the
end and inserting ``, or''; and
(C) by adding at the end the following:
``(vii) a public lending bank or a public
payment bank (as such terms are defined,
respectively, under section 101 of the Public
Banking Act of 2023).''.
(2) Incentives for innovative technologies.--Section
1701(7)(B) of the Energy Policy Act of 2005 (42 U.S.C.
16511(7)(B)) is amended by inserting ``and an entity that is a
public lending bank or a public payment bank (as such terms are
defined, respectively, under section 101 of the Public Banking
Act of 2023)'' before the period at the end.
(l) Exception for Existing Public Banks.--
(1) In general.--Subsections (b), (e), (f), (g), and (h)
shall not apply to a covered bank in existence on the date of
enactment of this Act.
(2) Public bank grant program participants.--Paragraph (1)
shall cease to apply to a covered bank described under that
paragraph after the end of the 24-month period beginning on the
date the covered bank receives a public bank grant under
section 501.
SEC. 106. REGULATIONS.
(a) In General.--Not later than 1 year after the date of the
enactment of this Act, the Board of Governors, the Director of the
Bureau of Consumer Financial Protection, and the Corporation shall
jointly--
(1) establish a separate regulatory scheme with respect to
public lending banks, public payment banks, and non-federally
chartered banks that receive or are in the process of receiving
a certificate of Federal recognition under section 102; and
(2) after a notice and comment period during which consumer
advocacy organizations shall be invited to submit feedback and
suggestions, issue such regulations as are necessary and
appropriate to promote public welfare with respect to public
lending banks, public payment banks, and non-federally
chartered banks that receive or are in the process of receiving
a certificate of Federal recognition under section 102.
(b) Regulations With Respect to Excluded and Marginalized Groups.--
(1) In general.--Not later than 1 year after the date of
the enactment of this Act, the Board of Governors shall issue
regulations for public lending banks, public payment banks, and
non-federally chartered banks to ensure that the services
provided by such banks are universal and comprehensively
include historically excluded and marginalized groups.
(2) Limitations.--A regulation issued under this subsection
may not--
(A) supersede or supplant any other stronger
regulations or standards promulgated by other Federal
or applicable State regulatory entities, including any
such regulation issued by the Corporation or the
Director of the Bureau of Consumer Financial
Protection; and
(B) result in less robust or less stringent
protections to consumers than protections that exist on
the date of the enactment of this Act for consumers
served by other existing categories of depository
institutions, including protection under the Community
Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.).
(3) Data reporting.--The Board of Governors and the
Corporation shall jointly, in a manner that respects the
privacy of covered bank customers to the greatest extent
possible, develop an annual assessment for determining if
covered banks have appropriately provided services to all
customers within the jurisdiction of service, based on
demographic information chosen by regulators, including race,
gender, and area median income of such customers.
(c) Ecological Sustainability Considerations and Prohibitions on
Fossil Fuel Investment.--
(1) In general.--The Board of Governors, the Corporation,
and the Commission shall jointly develop and promulgate rules
and regulations to--
(A) ensure that any and all activities undertaken
and services offered by a covered bank, or any person
seeking or in the process of becoming a covered bank,
are consistent with Federal and scientifically
established standards, goals, and targets with respect
to ecological sustainability, climate crisis-
mitigation, and decarbonization; and
(B) require that any covered bank or person seeking
or in the process of becoming a covered bank, may not
facilitate fossil fuel production, processing, or
infrastructure, including by--
(i) providing loans to, making investments
in, or otherwise engaging in any activity that
is financial in nature, or incidental to such
financial activity, with a fossil fuel company;
(ii) providing loans to, making investments
in, or otherwise engaging in any activity that
is financial in nature, or incidental to such
financial activity, for a fossil fuel project;
(iii) taking compensation to arrange or
facilitate a transaction that provides funds
for fossil fuel production or processing from
existing or new sources;
(iv) securitizing assets that provide funds
for fossil fuel production or processing from
existing or new sources;
(v) entering into a derivatives transaction
designed to provide funding for, facilitate, or
hedge risks from fossil fuel production or
processing from existing or new sources; and
(vi) engaging in any activity that is
complementary to a financial activity involving
fossil fuel production or processing from
existing or new sources, including financing
the international trade thereof; or any other
form of activity defined by regulators or
supervisors of the covered bank.
(2) Definitions.--In this subsection:
(A) Existing sources.--The term ``existing
sources'' means--
(i) reserves of fossil fuels proven,
developed, and producing as of the date of
enactment of this section; or
(ii) fossil infrastructure that would
facilitate the production described in clause
(i).
(B) Fossil fuel.--The term ``fossil fuel'' means
coal, petroleum, natural gas, or any derivative of
coal, petroleum, or natural gas that is used for fuel.
(C) Fossil infrastructure.--The term ``fossil
infrastructure'' means fossil fuel-related projects,
including wells, rail infrastructure, pipelines,
terminals, refineries, and power plants.
(D) New sources.--The term ``new sources'' means--
(i) any production in excess of proven
developed producing reserves of fossil fuels as
of the date of enactment of this section; or
(ii) new or expanded fossil infrastructure
that would facilitate the production described
in clause (i).
(E) Processing.--The term ``processing'' means the
preparation of a chemical substance or mixture
(including any chemical transformations of, or physical
separations involving, such substance or mixture) after
its production or extraction, for distribution in
commerce--
(i) in the same form or physical state as,
or in a different form or physical state from,
that in which it was received by the person so
preparing such substance or mixture; or
(ii) as part of an article of commerce
containing the chemical substance or mixture.
(F) Production.--The term ``production'' means
extractive or production activities that result in
fossil fuels being made available for refining or use.
(d) State Law.--Nothing in this section may be construed to preempt
any provision of State law that provides greater protection to
consumers, or establishes more stringent environmental or ecological
regulations, than is provided in this section.
SEC. 107. TECHNICAL ASSISTANCE.
The Board of Governors shall provide technical assistance to public
member banks to develop, use, and share financial and infrastructure
technologies, practices, and operational and business practice data
that promote the public welfare, however such data may not include any
customer data, including transactional and identifying information.
TITLE II--FEDERAL RECOGNITION OF PUBLIC SECURITIES
SEC. 201. REGULATION OF PUBLIC LENDING BANKS AND NON-FEDERALLY
CHARTERED BANKS.
(a) In General.--The Commission shall establish a separate
registration and regulatory scheme for licensing and regulating as
public investment entities all public lending banks and non-federally
chartered banks that engage or seek to engage in securities-related
activities, including origination, investment brokering, dealing, and
trading of federally-recognized public securities.
(b) Federally-Recognized Public Securities.--The Board of Governors
shall, in consultation with the Commission, develop rules, standards,
and criteria for Federal recognition of securities issued by public
member banks (to be known as ``federally-recognized public
securities'') as the Commission determines to be necessary and
appropriate to promote public welfare.
(c) Conditional License.--The Commission shall establish a special
category of public investment entity license for entities that are in
the process of applying for, but have not yet received, any license to
issue federally-recognized public securities, which shall be subject to
such conditions and restrictions as the Commission determines to be
necessary and appropriate to promote public welfare.
TITLE III--PUBLIC DEPOSIT INSURANCE
SEC. 301. IN GENERAL.
(a) Public Deposit Insurance.--Within 6 months of the date of
enactment of this Act, the Corporation shall establish a separate
registration and regulatory scheme for providing deposit insurance (to
be known as ``public deposit insurance'') to covered banks and make
such deposit insurance available to covered banks without regard to the
total deposit amount.
(b) Alternative Public Deposit Insurance.--Within 6 months of the
date of enactment of this Act, the Corporation shall establish publicly
available criteria for alternative public deposit insurance schemes
established and provided by an approved non-Federal financial
regulator, and subsequently approve, within 6 months of such
submission, schemes that meet said criteria.
(c) Conditional Insurance.--Within 6 months of the date of
enactment of this Act, the Corporation shall establish a separate
registration and regulatory scheme for providing deposit insurance (to
be known as ``conditional public deposit insurance'') for entities that
are in the process of applying for, but have not yet received, public
deposit insurance, which shall be subject to such conditions and
restrictions as the Corporation determines to be necessary and
appropriate to promote public welfare.
(d) Alternative Risk Profile.--The Corporation shall--
(1) establish and utilize an alternative risk profile
methodology for covered banks at an advantage, in comparison to
other depository institutions provided deposit insurance, which
accounts for the benefits to the general welfare created by
publicly owned and operated financial institutions; and
(2) within 6 months following the establishment of the
alternative risk profile methodology, the Corporation shall
publish a publicly available report on the alternative risk
profile methodology.
TITLE IV--POSTAL BANKING
SEC. 401. PARTNERSHIPS WITH COVERED BANKS FOR POSTAL BANKING SERVICES.
(a) Partnership With USPS.--Notwithstanding section 404(e)(2) of
title 36, United States Code, the Postmaster General shall, to the
maximum extent practicable, partner with covered banks to make
available retail account and payment services provided by covered banks
at post offices, and via any postal banking platforms established by
the United States Postal Service.
(b) Funding.--The Board of Governors shall provide such funding to
the United States Postal Service as the Postmaster General determines
to be necessary to achieve carry out subsection (a).
(c) Treatment of Expenses.--Any expenses incurred by the Board of
Governors under this section shall be recorded--
(1) in an account to be known as the ``Special Public
Member Bank Services Account'' established at the Federal
Reserve Bank of New York; and
(2) as a deferred asset (as described in section 11.96 of
the Financial Accounting Manual for Federal Reserve Banks, as
in effect on the date of the enactment of this Act) and
maintained separately from the balance sheet of the Federal
Reserve Bank of New York and the Federal Reserve System, so as
to not reduce or impact the calculation of total income or
revenue generated by the Federal Reserve System, or otherwise
reduce the total amount of net operating profits to be made
available for remittance to the Treasury on an ongoing basis.
TITLE V--PUBLIC BANK DEVELOPMENT PROGRAMS
SEC. 501. PUBLIC BANK GRANT PROGRAM.
(a) Program Established.--
(1) In general.--The Board of Governors shall, jointly with
the Secretary, carry out a grant program to make grants to
covered banks, or persons seeking to become or in the process
of becoming covered banks, to carry out the activities
described in subsection (b).
(2) Considerations for eligibility.--
(A) Required considerations.--When determining
eligibility for grants under this section, the Board of
Governors and the Secretary shall consider, among other
factors, the extent to which a grant applicant has
established an appropriate degree of community
involvement and oversight, including dedicated
community representation on the governing board, and
evidence of support or commitment from community
representative organizations.
(B) Prohibited consideration.--When determining
eligibility for grants under this section, the Board of
Governors and the Secretary may not consider the
budgetary or financial health of the entity that wholly
owns or controls a covered bank.
(b) Use of Funds.--An entity that receives a grant under this
section may use the grant funds--
(1) to carry out activities related to bank formation,
chartering, and regulatory compliance;
(2) for capitalization;
(3) to make payments and develop financial market
infrastructure;
(4) to carry out activities related to information and
communications technology;
(5) to support operations;
(6) to cover unexpected losses;
(7) to run sortition processes; and
(8) to carry out such other activities as the Board of
Governors and the Secretary determine appropriate.
(c) Matching Funds.--The Board of Governors and the Secretary may
not require that an entity that receives a grant under this section
provide matching funds with respect to such grant.
SEC. 502. PUBLIC BANK INCUBATOR PROGRAM.
(a) In General.--The Board of Governors shall establish an
incubator program to provide technical and technological assistance to
persons seeking to be chartered by the Board of Governors under section
101 or to obtain a certificate of Federal recognition under section
102.
(b) Application.--The Board of Governors, in coordination with the
Secretary, the Corporation, and the Commission, shall establish a
single application and review process for persons seeking to--
(1) be federally chartered under section 101;
(2) obtain a certificate of Federal recognition under
section 102;
(3) become a public member bank;
(4) obtain a license to issue federally-recognized public
securities under section 201;
(5) obtain public deposit insurance pursuant to section 301
or from a Corporation-approved alternative provider; and
(6) apply for a grant under section 401.
SEC. 503. COMMUNITY DEVELOPMENT GRANT PROGRAM.
(a) Reasonable Efforts To Coordinate.--Covered banks shall, where
and as appropriate, make reasonable efforts to coordinate activities
with community development financial institutions, minority deposit
institutions, and credit unions to promote community development and
ensure community-oriented financial services are universal and
comprehensively include historically excluded and marginalized groups.
(b) Grants for Coordination.--The Board of Governors shall, jointly
with the Secretary, award grants to covered banks, community
development financial institutions, minority deposit institutions, and
credit unions to facilitate coordination of activities under subsection
(a).
(c) Definitions.--In this section:
(1) Community development financial institution.--The term
``community development financial institution'' has the meaning
given the term in section 103(5) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C.
4702(5)).
(2) Credit union.--The term ``credit union'' means a
Federal credit union or a State credit union (as such terms are
defined in section 101 of the Federal Credit Union Act (12
U.S.C. 1752)).
(3) Minority deposit institution.--The term ``minority
deposit institution'' has the meaning given the term in section
308(b)(1) of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 1463(b)(1)).
SEC. 504. TREATMENT OF FUNDING.
Any expenses incurred by the Board of Governors under this title
shall be recorded--
(1) in an account to be known as the ``Special Public Bank
Development Programs'' established at the Federal Reserve Bank
of New York; and
(2) as a deferred asset (as described in section 11.96 of
the Financial Accounting Manual for Federal Reserve Banks, as
in effect on the date of the enactment of this Act) and
maintained separately from the balance sheet of the Federal
Reserve Bank of New York and the Federal Reserve System, so as
to not reduce or impact the calculation of total income or
revenue generated by the Federal Reserve System, or otherwise
reduce the total amount of net operating profits to be made
available for remittance to the Treasury on an ongoing basis.
TITLE VI--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS
SEC. 601. STATE AND LOCAL INSTRUMENTALITIES ELIGIBLE TO BE COMMUNITY
DEVELOPMENT FINANCIAL INSTITUTIONS.
Section 103(5)(A)(v) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (12 U.S.C. 4702(5)(A)(v)) is amended
by striking ``, or of any State or political subdivision of a State''.
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