ESTABLISHMENT OF SBA SECONDARY MARKET LENDING AUTHORITY.

SEC. 509. ESTABLISHMENT OF SBA SECONDARY MARKET LENDING AUTHORITY.(a) Purpose.—The purpose of this section is to provide the Small Business Administration with the authority to establish a Secondary Market Lending Authority within the SBA to make loans to the systemically important SBA secondary market broker-dealers who operate the SBA secondary market.(b) Definitions.—For purposes of this section:(1) The term “Administrator” means the Administrator of the SBA.(2) The term “SBA” means the Small Business Administration.(3) The terms “Secondary Market Lending Authority” and “Authority” mean the office establishedunder subsection (c).(4) The term “SBA secondary market” meansthe market for the purchase and sale of loans originated, underwritten, and closed under the Small Business Act.(5) The term “Systemically Important Secondary Market Broker-Dealers” mean those entities designated under subsection (c)(1) as vital to the continued operation of the SBA secondary market by reason of their purchase and sale of the government guaranteed portion of loans, or pools of loans,originated, underwritten, and closed under the Small Business Act.(c) Responsibilities, Authorities, Organization, and Limitations.—(1) Designation of systemically important SBA secondary market broker-dealers.—The Administrator shall establish a process to designate, in consultation with the Board of Governors of the Federal Reserve and the Secretary of the Treasury, Systemically Important Secondary Market Broker-Dealers.(2) Establishment of SBA secondary market lending authority.—123 STAT. 160(A) Organization.—(i) The Administrator shall establish within the SBA an office to provide loans to Systemically Important Secondary Market Broker-dealers to be used for the purpose of financing the inventory of the government guaranteed portion of loans, originated, underwritten, and closed under the Small Business Act or pools of such loans.(ii) The Administrator shall appoint a Director of the Authority who shall report to the Administrator.(iii) The Administrator is authorized to hire such personnel as are necessary to operate the Authority.(iv) The Administrator may contract such Authority operations as he determines necessary to qualified third-party companies or individuals.(v) The Administrator is authorized to contract with private sector fiduciary and custodial agents as necessary to operate the Authority.(B) Loans.—(i) The Administrator shall establish by rule a process under which Systemically Important SBA Secondary Market Broker-Dealers designated under paragraph (1) may apply to the Administrator for loans under this section.(ii) The rule under clause (i) shall provide a process for the Administrator to consider and make decisions regarding whether or not to extend a loan applied for under this section. Such rule shall include provisions to assure each of the following:(I) That loans made under this section are for the sole purpose of financing the inventory of the govern ment guaranteed portion of loans, originated, underwritten, and closed under the Small Business Act or pools of such loans.(II) That loans made under this section are fully collateralized to the satisfaction of the Administrator.(III) That there is no limit to the frequency in which a borrower may borrow under this section unless the Administrator determines that doing so would create an undue risk of loss to the agency or the United States.(IV) That there is no limit on the size of a loan, subject to the discretion of the Administrator.(iii) Interest on loans under this section shall not exceed the Federal Funds target rate as established by the Federal Reserve Board of Governors plus 25 basis points.(iv) The rule under this section shall provide for such loan documents, legal covenants, collateral requirements and other required documentation as necessary to protect the interests of the agency, the United States, and the taxpayer.(v) The Administrator shall establish custodial accounts to safeguard any collateral pledged to the SBA in connection with a loan under this section.123 STAT. 161(vi) The Administrator shall establish a process to disburse and receive funds to and from borrowers under this section.(C) Limitations on use of Loan Proceeds by Systemically Important Secondary Market Broker-Dealers.—The Administrator shall ensure that borrowers under this section are using funds provided under this section only for the purpose specified in subparagraph (B)(ii)(I). If the Administrator finds that such funds were used for any other purpose, the Administrator shall—(i) require immediate repayment of outstanding loans;(ii) prohibit the borrower, its affiliates, or any future corporate manifestation of the borrower from using the Authority; and(iii) take any other actions the Administrator, in consultation with the Attorney General of the United States, deemsappropriate.(d) Report to Congress .—The Administrator shall submit a report to Congress not later than the third business day of each month containing a statement of each of the following:(1) The aggregate loan amounts extended during the preceding month under this section.(2) The aggregate loan amounts repaid under this section during the proceeding month.(3) The aggregate loan amount outstanding under this section.(4) The aggregate value of assets held as collateral under this section;(5) The amount of any defaults or delinquencies on loans made under this section.(6) The identity of any borrower found by the Administrator to misuse funds made available under this section.(7) Any other information the Administrator deems necessary to fully inform Congress of undue risk of financial loss to the United States in connection with loans made under this section.(e) Duration.—The authority of this section shall remain in effect for a period of 2 years after the date of enactment of this section.(f) F ees.—The Administrator shall charge fees, up front, annual, or both at a specified percentage of the loan amount that is at such a rate that the cost of the program under the Federal Credit Reform Act of 1990 ((title V of the Congressional Budget and Impoundment Control Act of 1974; 2 U.S.C. 661) shall be equal to zero.(h) Budget treatment.—Nothing in this section shall be construed to exempt any activity of the Administrator under this section from the Federal Credit Reform Act of 1990 (title V of the Congressional Budget and Im poundment Control Act of 1974; 2 U.S.C. 661 and following).(i) Emergency Rulemaking Authority.—The Administrator shall promulgate regulations under this section within 30 days after the date of enactment of enactment of this section. In promulgating these regulations,the Administrator the notice requirements of section 553(b) of title 5 of the United States Code shall not apply.123 STAT. 162