§657t Office of Credit Risk Management

Summary

Creates an Office of Credit Risk Management inside the agency to watch over certain small-business lenders. The Office must supervise 7(a) lenders, Lending Partners or Intermediaries in the Office of Capital Access programs, and small business lending companies or other non‑federally regulated lenders. A Director must run the Office and be a career Senior Executive Service official. The Director must review and oversee those lenders on a regular basis. For 7(a) lenders, an Office employee must supervise every review, whether on site or off site. After a review ends, the Administrator must send a written report to the lender within 60 business days or tell the lender why and when the report will be late. If the report asks for a reply, the lender must answer within 45 business days. The Director can take informal enforcement actions, and with the Lender Oversight Committee’s approval can take formal actions, including civil penalties up to $250,000. A lender can appeal to the Office of Hearings and Appeals or to a U.S. district court. The Administrator must issue regulations to implement the enforcement rules no later than 1 year after June 21, 2018. While a 7(a) lender is suspended from making loans, it must keep doing any servicing and liquidation work it was handling unless the Director says otherwise. The Director must do a yearly risk review of all 7(a) loans and send Congress a report every December 1 starting December 1, 2018, with findings about program risk, industry concentration, lenders that make at least 1% of approvals (by dollars and by number), steps taken to reduce risks, loan counts and dollar amounts, losses, purchases, recoveries, enforcement actions recommended/approved/disapproved, and penalty amounts. The Director must also send an annual budget request and justification to the Administrator at about the time of the President’s budget, include salaries and fee charges, and keep the indexed submission public for at least 5 years.