§657t — Title 15 Commerce and Trade | U.S. Code

Summary

Creates an Office of Credit Risk Management inside the SBA. The Office watches over lenders that make 7(a) loans, Lending Partners or Intermediaries in SBA programs, small business lending companies, and other non‑federally regulated lenders. A Director, who must be a career Senior Executive Service official, runs the Office and does regular checks of those lenders. For reviews of 7(a) lenders, an Office employee must be on site when a contractor does the review and must supervise reviews done off site. The SBA must give a written review report to a 7(a) lender within 60 business days after the review ends or tell the lender if it will be late. If a report asks for a reply, the lender has 45 business days to answer. The Director can use informal enforcement steps for violations and, with approval from the Lender Oversight Committee, can take formal actions including fines up to $250,000. A lender can appeal those actions to the Office of Hearings and Appeals or to a U.S. district court. While a lender is suspended, it must still handle loan servicing and liquidation unless the Director says otherwise. The SBA had to make rules to carry out the enforcement powers by one year after June 21, 2018. The Director must do an annual risk review of the whole 7(a) loan portfolio and send a report to Congress each year on December 1, starting December 1, 2018. The report must cover overall and industry risk, a consolidated look at lenders responsible for at least 1 percent of gross approvals (by dollar amount and loan count), steps taken to reduce risk, counts and dollar amounts of lenders and loans, losses and recoveries, enforcement actions recommended and approved or disapproved, and civil penalties assessed. The Director must also send an annual budget request for the Office to the Administrator at the same time as the President’s budget, include salaries, expenses, and lender oversight fees, and keep that budget publicly available in indexed form for at least 5 years.

Title 15, §657t

Commerce and Trade — Source: USLM XML via OLRC

(a)There is established within the Administration the Office of Credit Risk Management (in this section referred to as the “Office”).

(b)The Office shall be responsible for supervising—

(1)any lender making loans under section 7(a) [15 U.S.C. 636(a)] (in this section referred to as a “7(a) lender”);

(2)any Lending Partner or Intermediary participant of the Administration in a lending program of the Office of Capital Access of the Administration; and

(3)any small business lending company or a non-Federally regulated lender without regard to the requirements of section 650 of this title.

(c)(1)The Office shall be headed by the Director of the Office of Credit Risk Management (in this section referred to as the “Director”), who shall be a career appointee in the Senior Executive Service (as defined in section 3132 of title 5).

(2)The Director shall be responsible for oversight of the lenders and participants described in subsection (b), including by conducting periodic reviews of the compliance and performance of such lenders and participants.

(d)(1)With respect to 7(a) lenders, an employee of the Office shall—

(A)be present for and supervise any such review that is conducted by a contractor of the Office on the premise 11 So in original. Probably should be “premises”. of the 7(a) lender; and

(B)supervise any such review that is not conducted on the premise 1 of the 7(a) lender.

(2)(A)Notwithstanding any other requirements of the Office or the Administrator, the Administrator shall develop and implement a review report timeline which shall—

(i)require the Administrator to—

(I)deliver a written report of the review to the 7(a) lender not later than 60 business days after the date on which the review is concluded; or

(II)if the Administrator expects to submit the report after the end of the 60-day period described in clause (i), notify the 7(a) lender of the expected date of submission of the report and the reason for the delay; and

(ii)if a response by the 7(a) lender is requested in a report submitted under subparagraph (A), require the 7(a) lender to submit responses to the Administrator not later than 45 business days after the date on which the 7(a) lender receives the report.

(B)The Administrator may extend the time frame described in subparagraph (A)(i)(II) with respect to a 7(a) lender as the Administrator determines necessary.

(e)(1)The Director may take an informal enforcement action against a 7(a) lender if the Director finds that the 7(a) lender has violated a statutory or regulatory requirement under section 7(a) [15 U.S.C. 636(a)] or any requirement in a Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access.

(2)(A)With the approval of the Lender Oversight Committee established under section 657u of this title, the Director may take a formal enforcement action against any 7(a) lender if the Director finds that the 7(a) lender has violated—

(i)a statutory or regulatory requirement under section 7(a), including a requirement relating to credit elsewhere; or

(ii)any requirement described in a Standard Operating Procedures Manual or Policy Notice, related to a program or function of the Office of Capital Access.

(B)An enforcement action imposed on a 7(a) lender by the Director under subparagraph (A) shall be based on the severity or frequency of the violation and may include assessing a civil monetary penalty against the 7(a) lender in an amount that is not greater than $250,000.

(3)A 7(a) lender may appeal an enforcement action imposed by the Director described in this subsection to the Office of Hearings and Appeals established under section 634(i) of this title or to an appropriate district court of the United States.

(f)Not later than 1 year after June 21, 2018, the Administrator shall issue regulations, after opportunity for notice and comment, to carry out subsection (e).

(g)During any period during which a 7(a) lender is suspended or otherwise prohibited from making loans under section 7(a) [15 U.S.C. 636(a)], the 7(a) lender shall remain obligated to maintain all servicing and liquidation activities delegated to the lender by the Administrator, unless otherwise specified by the Director.

(h)(1)The Director shall annually conduct a risk analysis of the portfolio of the Administration with respect to all loans guaranteed under section 7(a).

(2)On December 1, 2018, and every December 1 thereafter, the Director shall submit to Congress a report containing the results of each portfolio risk analysis conducted under paragraph (1) during the fiscal year preceding the submission of the report, which shall include—

(A)an analysis of the overall program risk of loans guaranteed under section 7(a);

(B)an analysis of the program risk, set forth separately by industry concentration;

(C)without identifying individual 7(a) lenders by name, a consolidated analysis of the risk created by the individual 7(a) lenders responsible for not less than 1 percent of the gross loan approvals set forth separately for the year covered by the report by—

(i)the dollar value of the loans made by such 7(a) lenders; and

(ii)the number of loans made by such 7(a) lenders;

(D)steps taken by the Administrator to mitigate the risks identified in subparagraphs (A), (B), and (C);

(E)the number of 7(a) lenders, the number of loans made, and the gross and net dollar amount of loans made;

(F)the number and dollar amount of total losses, the number and dollar amount of total purchases, and the percentage and dollar amount of recoveries at the Administration;

(G)the number and type of enforcement actions recommended by the Director;

(H)the number and type of enforcement actions approved by the Lender Oversight Committee established under section 657u of this title;

(I)the number and type of enforcement actions disapproved by the Lender Oversight Committee; and

(J)the number and dollar amount of civil monetary penalties assessed.

(i)The Director shall annually provide, in writing, a fiscal year budget submission for the Office and a justification for such submission to the Administrator. Such submission and justification shall—

(1)include salaries and expenses of the Office and the charge for the lender oversight fees;

(2)be submitted at or about the time of the budget submission by the President under section 1105(a) of title 31; and

(3)be maintained in an indexed form and made available for public review for a period of not less than 5 years beginning on the date of submission and justification.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 2[47] of Pub. L. 85–536 was renumbered section 2[49] and is set out as a note under section 631 of this title.

Amendments

2018—Subsec. (d). Pub. L. 115–189, § 3(b), amended subsec. (d) generally. Prior to amendment, text read as follows: “With respect to 7(a) lenders, an employee of the Office shall— “(1) be present for and supervise any such review that is conducted by a contractor of the Office on the premise of the 7(a) lender; and “(2) supervise any such review that is not conducted on the premise of the 7(a) lender.”

Statutory Notes and Related Subsidiaries

Change of Name

Pub. L. 115–189, § 3(d)(1), June 21, 2018, 132 Stat. 1496, provided that: “Any reference in a law, regulation, guidance, document, paper, or other record of the United States to the Office of Credit Risk Management of the Small Business Administration shall be deemed a reference to the Office of Credit Risk Management, established under section 47 of the Small Business Act [15 U.S.C. 657t], as added by subsection (a).”

Effective Date

of 2018 Amendment Pub. L. 115–189, § 3(b), June 21, 2018, 132 Stat. 1495, provided that the amendment made by section 3(b) is effective Jan. 1, 2019.

Transfer of Functions

Pub. L. 115–189, § 3(c)(1),

June 21, 2018, 132 Stat. 1496, provided that: “All functions of the Office of Credit Risk Management of the Small Business Administration, including the personnel, assets, and obligation of the Office of Credit Risk Management, as in existence on the day before the date of the enactment of this Act [

June 21, 2018], shall be transferred to the Office of Credit Risk Management established under section 47 of the Small Business Act [15 U.S.C. 657t], as added by subsection (a).” Establishing a Process for Waivers Pub. L. 115–189, § 6,

June 21, 2018, 132 Stat. 1498, provided that: “(a) In General.—If the Administrator [of the Small Business Administration] exercises statutory or regulatory authority to waive a regulation or a requirement in the Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access of the [Small Business] Administration, the waiver shall be in writing and be maintained in an indexed form. “(b) No New Waiver Authority.—Nothing in subsection (a) shall be construed as creating new authority for the Administrator to waive

Regulations

of the Administration.” Definitions of Terms Used in Pub. L. 115–189 Pub. L. 115–189, § 2, June 21, 2018, 132 Stat. 1492, provided that: “In this Act [see

Short Title

of 2018 Amendment note set out under section 631 of this title], the terms ‘Administration’ and ‘Administrator’ mean the Small Business Administration and the Administrator thereof, respectively.”

§657t Office of Credit Risk Management