Overview
Title
To provide for the Federal charter of certain public banks, and for other purposes.
ELI5 AI
H.R. 6775 is a plan to help create special banks called public banks that focus on helping people and taking care of the planet. These banks can also team up with the post office to make banking easier and fairer for everyone, especially people who need extra help.
Summary AI
H.R. 6775, known as the “Public Banking Act of 2023,” aims to establish a federal framework for chartering and recognizing public banks in the United States. The bill outlines regulations for these banks, emphasizing community involvement, democratic governance, and environmental responsibility. It also promotes partnerships with the United States Postal Service for banking services and supports the development of these public banks through grants and technical assistance. Additionally, the bill sets standards for financial practices to ensure fairness and prioritizes benefits for marginalized communities.
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AnalysisAI
The Public Banking Act of 2023 introduced in the United States Congress aims to establish a framework for the federal chartering and recognition of public banks, as well as a series of related financial and community development initiatives. This bill is a substantial legislative effort aiming to create a new category of public financial institutions owned by state, tribal, or nonprofit entities. If enacted, the legislation would also establish postal banking partnerships, develop public deposit insurance schemes, and fund programs to support the development of public banks.
General Summary of the Bill
The Public Banking Act of 2023 proposes the creation of public banks that are chartered at the federal level, allowing them to provide a range of financial services often associated with private sector banks. It includes provisions for public lending and payment banks, aiming to serve the community's financial needs while also promoting general welfare and environmentally sustainable practices. The bill also mandates partnerships with the United States Postal Service to provide banking services, implements a new system for public deposit insurance, and develops grant programs intended to support the establishment and operation of these banks. It places an emphasis on democratic governance, community involvement, and transparency.
Significant Issues
The bill raises several significant issues. One of the main concerns is the broad discretion it grants to certain roles, especially in postal banking partnerships, without clear oversight mechanisms, which might lead to inefficient use of resources. The absence of clear definitions for key terms, such as "covered banks" and "conditional public deposit insurance," could result in legal ambiguities and disputes over eligibility. The bill also allows for potentially inconsistent definitions of critical terms like "environmental justice community" across states, which might lead to uneven application and enforcement of environmental standards.
Furthermore, the tight timelines for execution of initiatives within six months might stress relevant authorities, risking compromised quality in implementation. The expansive scope of regulations prohibiting investments in fossil fuels is another area that could attract legal challenges from affected industries. Additionally, the subjective criteria for grant eligibility could lead to inconsistent or biased decision-making.
Potential Impacts on the Public
If passed, the bill could fundamentally change the public's interaction with banks, especially those in underserved communities. Public banks could offer services that better reflect community needs and priorities, promoting financial inclusion and economic development. The enhanced focus on environmental sustainability and the potential for lower cost or better financial services might benefit individuals who otherwise face barriers in traditional banking systems. However, due to complex governance structures and regulatory requirements, there may be initial doubts about the banks' stability and efficiency.
Impacts on Specific Stakeholders
Local Governments and Communities: Communities, especially those in areas designated as environmental justice communities, might benefit significantly from prioritized lending and banking services. Local governments could leverage public banks for fiscal support, enhancing local projects and infrastructure development.
Private Banking Sector: These proposed public banks could introduce a level of competition in the financial sector, potentially disrupting traditional banks by offering more community-focused services. Private institutions may need to innovate or adjust services to continue to attract customers.
Environmental and Community Advocates: These stakeholders may view the bill positively, as it aligns with efforts to promote environmental sustainability and social equity.
Industries Dependent on Fossil Fuels: The bill's prohibitions on support for fossil fuel-related projects could negatively impact these industries. They might face increased scrutiny or challenges in securing financial services, which could impact their operations or profitability.
Regulatory Bodies and Governments: The bill calls for significant regulatory input and oversight, leading to potential increased workload and budgetary requirements to ensure compliance and effectiveness in the public banking system.
In conclusion, while the Public Banking Act of 2023 proposes potentially transformative changes to how banking services are delivered at the community level, it also presents several complex issues and challenges that must be carefully considered. Its impact will largely depend on how its provisions are executed and the balance it strikes between innovation, regulation, and community benefit.
Financial Assessment
Summary of Financial References
The Public Banking Act of 2023 contains various financial references that outline how funds may be allocated and utilized concerning public banking initiatives. These financial aspects of the bill are designed to support the development and operation of public banks, facilitate partnerships with the United States Postal Service, and ensure equitable lending practices.
Financial Allocations and Grant Programs
The bill establishes several grant programs aimed at supporting public banks:
Public Bank Grant Program: This initiative involves the allocation of funds to support the formation, chartering, and operational activities of covered banks and those in the process of becoming covered banks. The funds may also be used for bank capitalization, infrastructure development, and absorbing unexpected losses. However, the subjective criteria for eligibility, such as the "appropriate degree of community involvement" in Section 501, may lead to inconsistencies or biases in the awarding process.
Public Bank Incubator Program: This program provides technical and technological assistance to prospective banks. However, the bill does not explicitly state a monetary allocation, leading to potential ambiguities in resource distribution.
Interest Payment and Account Management
The bill outlines specific terms for financial operations:
Public member banks are provided with fiscal agent accounts where they may earn interest on overnight balances. The interest rate will be the greater of either the overnight policy target rate plus two percent or the daily rate on 30-year Treasury bonds. This structured payment system ensures financial benefits for entities investing funds held in fiscal agent accounts.
Payment accounts also earn interest on balances held overnight, following a similar structure to fiscal agent accounts. However, there is no direct appropriation or allocation specified in the bill for supporting these account operations, which might create challenges for ensuring consistent payment.
Operational and Administrative Costs
The bill proposes recording all administrative, operating, and maintenance costs associated with public bank programs and facilities in the Special Public Member Bank Services Account and Special Public Bank Development Programs at the Federal Reserve Bank of New York. These allocations are set as deferred assets, meaning they're intended not to impact the overall budget or revenues available for remittance to the U.S. Treasury. This approach helps maintain financial transparency and accountability, ensuring that public bank activities do not detract from federal financial resources.
Concerns and Challenges
One of the concerns highlighted in the issues section is the broad discretion granted to the Postmaster General in managing postal banking partnerships. Without specific oversight, there is a risk of inefficient or wasteful use of resources. Additionally, the expansive regulatory constraints related to fossil fuel investments could lead to legal challenges, potentially affecting how resources are allocated towards compliance and enforcement. Moreover, the bill outlines a rapid timeline for establishing some programs—within six months of the bill's enactment—which may strain authorities and lead to resource mismanagement.
Overall, the Public Banking Act of 2023 includes detailed financial frameworks designed to ensure effective funding and support for public banking initiatives. However, it also presents possible risks regarding the equitable and effective management of financial resources due to subjective criteria for grant eligibility and expedited program timelines.
Issues
The broad discretion granted to the Postmaster General for postal banking partnerships, without specified oversight or accountability measures, may result in inefficient or wasteful spending, as noted in Section 401.
The absence of clear definitions for key terms like 'covered banks' and 'conditional public deposit insurance' in Sections 101 and 301 could lead to ambiguity and legal disputes over eligibility and scope of the bill.
The possibility of inconsistent definitions of 'environmental justice community' across states, as allowed in Section 2, could result in uneven application of environmental standards and potential legal challenges.
The requirement for several initiatives to be executed within 6 months post-enactment in Section 301 may place undue operational stress on relevant authorities, potentially compromising the quality of implementation.
The regulations prohibiting investment in fossil fuels, as detailed in Section 106, are expansive and could lead to legal challenges from affected industries due to their breadth and specificity.
The subjective criteria for eligibility in the Public Bank Grant Program, like 'appropriate degree of community involvement' in Section 501, may result in inconsistent or biased grant awarding processes.
The complex administrative requirements for establishing governance in covered banks, described in Section 105, may hinder operational flexibility and raise concerns about practicality and effectiveness.
The lack of specified oversight or accountability for technical assistance provided to public member banks in Section 107 may lead to inefficient use of resources.
The intricate financial relationships and operations outlined for public member banks in Section 104 might be difficult for stakeholders without specialized knowledge to fully comprehend, leading to transparency and governance challenges.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title; table of contents Read Opens in new tab
Summary AI
The Public Banking Act of 2023 outlines the structure of the law, including the short title and a detailed table of contents which lists various sections focusing on federal recognition and regulation of public banks, postal banking partnerships, public deposit insurance, public bank development programs, and community development financial institutions.
2. Definitions Read Opens in new tab
Summary AI
The section defines terms used in the Act, including the "Board of Governors" as the Federal Reserve's board, the "Commission" as the Securities and Exchange Commission, and "copyleft license" as a type of technology license allowing wide use and modification. It also describes what "Corporation," "covered bank," "environmental justice community," "public member bank," "Secretary," "State," "Tribal and Indigenous community," and "Tribal covered bank" mean in this context.
101. Federal charter of public lending banks and public payment banks Read Opens in new tab
Summary AI
The section outlines the creation of public lending and payment banks, which are financial institutions owned and controlled by State, Tribal, or nonprofit entities and are not affiliated with for-profit organizations. Public lending banks can offer various services, including fiscal and depository services, while public payment banks can only provide certain services and are exempt from some banking regulations.
Money References
- (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.
102. Federal recognition of non-federally chartered banks Read Opens in new tab
Summary AI
The section explains that the Board of Governors will give certificates of Federal recognition to banks that are not federally chartered, defining these banks and specifying their requirements and options, such as offering services after obtaining insurance and converting into public banks. It also outlines what services these banks can provide, including handling investments, sending money, and offering digital dollar services.
Money References
- (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. ---
103. Federal Reserve System membership Read Opens in new tab
Summary AI
A covered bank can join the Federal Reserve System as a public member bank and will be treated like other member banks, except they are not required to buy stock or maintain capital in the system. Additionally, there is a special category called "conditional public member bank" for those applying to become a covered bank, subject to certain conditions that ensure public welfare without being overly harsh.
104. Public member bank services Read Opens in new tab
Summary AI
The section outlines various services offered by the Board of Governors to public member banks, such as providing accounts that earn interest, digital dollar services, and facilities for liquidity and credit. These services aim to support financial institutions and government entities in effectively managing and utilizing their funds while ensuring that any related expenses are recorded and reimbursed appropriately.
Money References
- (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.
105. Specific requirements relating to covered banks Read Opens in new tab
Summary AI
The section outlines requirements for "covered banks" to serve the public interest, including defining their purpose and promoting general welfare. It mandates democratic governance, prioritizes support for Indigenous and marginalized communities, and enforces environmental policies. These banks are also required to use open-source technology, ensure data privacy, and establish fair lending practices, such as limits on interest rates and prohibitions on funding certain industries. Additionally, they must provide annual reports and follow specific operational guidelines, with some exceptions for existing public banks.
Money References
- (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.
- 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.
106. Regulations Read Opens in new tab
Summary AI
The section outlines that various regulatory bodies have one year to create rules for public and non-federally chartered banks that ensure their services reach excluded groups, support ecological goals, and prohibit fossil fuel investments. It clarifies that these new rules should not weaken existing consumer protections or state laws offering greater protection.
107. Technical assistance Read Opens in new tab
Summary AI
The Board of Governors is responsible for giving technical help to public member banks to help them create, use, and share technology and practices that benefit the community. However, the shared information must not include any customer information like personal details or transactions.
201. Regulation of public lending banks and non-federally chartered banks Read Opens in new tab
Summary AI
The bill requires the Commission to create a separate system for registering and regulating public lending banks and non-federally chartered banks involved in securities activities, such as trading and brokering. It also mandates that the Board of Governors, alongside the Commission, establish guidelines for recognizing securities from these banks and introduce a conditional license for entities that are seeking but have not yet obtained approval to issue federally-recognized public securities.
301. In general Read Opens in new tab
Summary AI
The section outlines that the Corporation must, within six months of the law's enactment, set up separate systems for providing three types of deposit insurance: public deposit insurance for banks regardless of their total deposits, alternative public deposit insurance approved by a non-Federal regulator, and conditional insurance for banks applying for public deposit insurance. Additionally, the Corporation must create an alternative risk profile methodology to benefit publicly owned financial institutions and publish a report on this methodology.
401. Partnerships with covered banks for postal banking services Read Opens in new tab
Summary AI
The bill section proposes that the Postmaster General should collaborate with certain banks to offer banking services at post offices through the United States Postal Service, supported financially by the Board of Governors. Costs related to this initiative will be managed separately to ensure they don't affect the Federal Reserve System's financial reports or reduce funds remitted to the Treasury.
501. Public bank grant program Read Opens in new tab
Summary AI
The section establishes a grant program run by the Board of Governors and the Secretary to provide funds to banks or individuals forming banks. The recipients can use the grants for various activities like setting up the bank, complying with regulations, and supporting operations without needing to match the funds received.
502. Public bank incubator program Read Opens in new tab
Summary AI
The Public Bank Incubator Program is established by the Board of Governors to help people seeking to start a public bank or be recognized by federal authorities. It includes creating a unified application process with other federal bodies for people to get bank charters, recognition, licenses to issue securities, deposit insurance, or grants.
503. Community development grant program Read Opens in new tab
Summary AI
Covered banks are encouraged to collaborate with community development financial institutions, minority deposit institutions, and credit unions to support community growth and ensure financial services are accessible to underserved groups. The government will provide grants to these organizations to help them work together effectively.
504. Treatment of funding Read Opens in new tab
Summary AI
Any expenses that the Board of Governors incurs under this law will be recorded in a special account called the "Special Public Bank Development Programs" at the Federal Reserve Bank of New York. These expenses will also be listed as a deferred asset, which means they are kept separate from the main financial statements of the Federal Reserve, so they don't affect its income, revenue, or profits sent to the Treasury.
601. State and local instrumentalities eligible to be community development financial institutions Read Opens in new tab
Summary AI
The update to the law allows state and local entities to be recognized as community development financial institutions by removing the previous restriction that excluded offices of states or their political subdivisions.