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8000 - Miscellaneous Statutes and Regulations
TITLE IV—MISCELLANEOUS PROVISIONS
Subtitle A—Payment System Risk Reduction
CHAPTER 1—BILATERAL AND CLEARING ORGANIZATION
NETTING
SEC. 401. FINDINGS AND PURPOSE.
The Congress finds that--
(1) many financial institutions engage daily in thousands of
transactions with other financial institutions directly and through
clearing organizations;
(2) the efficient processing of such transactions is essential to
a smoothly functioning economy;
(3) such transactions can be processed most efficiently if,
consistent with applicable contractual terms, obligations among
financial institutions are netted;
(4) such netting procedures would reduce the systemic risk within
the banking system and financial markets; and
(5) the effectiveness of such netting procedures can be assured
only if they are recognized as valid and legally binding in the event
of the closing of a financial institution participating in the netting
procedures.
[Codified to 12 U.S.C. 4401]
[Source: Section 401 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2371), effective December 19,
1991]
SEC. 402. DEFINITIONS.
For purposes of this chapter--
(1) BROKER OR DEALER.--The term "broker or dealer"
means--
(A) any company that is registered or licensed under Federal or
State law to engage in the business of brokering, underwriting, or
dealing in securities in the United States; and
(B) to the extent consistent with this title, as determined by
the Board of Governors of the Federal Reserve System, any company that
is an affiliate of a company described in subparagraph (A) and that is
engaged in the business of entering into netting contracts.
(2) CLEARING ORGANIZATION.--The term "clearing
organization" means a clearinghouse, clearing association, clearing
corporation, or similar organization--
(A) that provides clearing, netting, or settlement services for
its members and--
(i) in which all members other than the clearing organization
itself are financial institutions or other clearing organizations; or
(ii) which is registered as a clearing agency under the
Securities Exchange Act of 1934, or is exempt from such registration by
order of the Securities and Exchange Commission; or
(B) that is registered as a derivatives clearing organization
under section 5b of the Commodity Exchange Act, that has been granted
an exemption under section 4(c)(1) of the Commodity Exchange Act, or
that is a multilateral clearing organization (as defined in section 408
of this Act).
(3) COVERED CLEARING OBLIGATION.--The term "covered
clearing obligation" means an obligation of a member of a clearing
organization to make payment to another member of a clearing
organization, subject to a netting contract.
(4) COVERED CONTRACTUAL PAYMENT ENTITLEMENT.--The term
"covered contractual payment entitlement" means--
{{2-28-07 p.8550.25}}
(A) an entitlement of a financial institution to
receive a payment, subject to a netting contract from another financial
institution; and
(B) an entitlement of a member of a clearing
organization to receive payment, subject to a netting contract, from
another member of a clearing organization of a covered clearing
obligation.
(5) COVERED CONTRACTUAL PAYMENT OBLIGATION.--The term
"covered contractual payment obligation" means--
(A) an obligation of a financial institution to make
payment, subject to a netting contract to another financial
institution; and
(B) a covered clearing obligation.
(6) DEPOSITORY INSTITUTION.--The term "depository
institution" means--
(A) a depository institution as defined in
section 19(b)(1)(A) of the
Federal Reserve Act (other than clause (vii));
(B) an uninsured national bank or an uninsured State
bank that is a member of the Federal Reserve System, if the national
bank or State member bank is not eligible to make application to become
an insured bank under section 5 of the Federal Deposit Insurance Act;
(C) a branch or agency of a foreign bank, a foreign
bank and any branch or agency of the foreign bank, or the foreign bank
that established the branch or agency, as those terms are defined in
section 1(b) of the International Banking Act of 1978;
(D) a corporation chartered under section 25(a) of the
Federal Reserve Act; or
(E) a corporation having an agreement or undertaking
with the Board of Governors of the Federal Reserve System under section
25 of the Federal Reserve Act.
(7) FAILED FINANCIAL INSTITUTION.--The term "failed
financial institution" means a financial institution that--
(A) fails to satisfy a covered contractual payment
obligation when due;
(B) has commenced or had commenced against it
insolvency, liquidation, reorganization, receivership (including the
appointment of a receiver), conservatorship, or similar proceedings; or
(C) has generally ceased to meet its obligations when
due.
(8) FAILED MEMBER.--The term "failed member" means
any member that--
(A) fails to satisfy a covered clearing obligation
when due,
(B) has commenced or had commenced against it
insolvency, liquidation, reorganization, receivership (including the
appointment of a receiver), conservatorship, or similar proceedings, or
(C) has generally ceased to meet its obligations when
due.
(9) FINANCIAL INSTITUTION.--The term "financial
institution" means a broker or dealer, a depository institution, a
futures commission merchant, or any other institution as determined by
the Board of Governors of the Federal Reserve System.
(10) FUTURES COMMISSION MERCHANT.--The term
"futures commission merchant" means a company that is registered
or licensed under Federal law to engage in the business of selling
futures and options in commodities.
(11) MEMBER.--The term "member" means a
member of or participant in a clearing organization, and includes the
clearing organization and any other clearing organization with which
such clearing organization has a netting contract.
(12) NET ENTITLEMENT.--The term "net
entitlement" means the amount by which the covered contractual
payment entitlements of a financial institution or member exceed the
covered contractual payment obligations of the institution or member
after netting under a netting contract.
(13) NET OBLIGATION.--The term "net
obligation" means the amount by which the covered contractual
payment obligations of a financial institution or member exceed the
covered contractual payment entitlements of the institution or member
after netting under a netting contract.
(14) NETTING CONTRACT.--
(A) IN GENERAL.--The term "netting
contract"--
(i) means a contract or agreement between 2 or more
financial institutions, clearing organizations, or members that
provides for netting present or future payment obligations or payment
entitlements (including liquidation or close out values relating to
such obligations or entitlements) among the parties to the agreement;
and
{{2-28-07 p.8550.26}}
(I) is governed by the laws of the United States, any State, or
any political subdivision of any State, and
(II) provides for netting present or future payment obligations
or payment entitlements (including liquidation or close-out values
relating to the obligations or entitlements) among the parties to the
agreement; and
(ii) includes the rules of a clearing organization.
(B) INVALID CONTRACTS NOT INCLUDED.--The term
"netting contract" does not include any contract or agreement
that is invalid under or precluded by Federal law.
(15) PAYMENT.--The term "payment" means a payment
of United States dollars, another currency, or a composite currency,
and a noncash delivery, including a payment or delivery to liquidate an
unmatured obligation.
[Codified to 12 U.S.C. 4402]
[Source: Section 402 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2372), effective December 19, 1991; as
amended by section 1606(a) of title XVI of the Act of October 28, 1992
(Pub. L. No. 102--550; 106 Stat. 4087), effective December 12, 1991;
sections 112(a)(1) and 123(b) of title I of the Act of December 21,
2000 (Pub. L. No. 106--554; 114 Stat. 2763A--391 and 411), effective
December 21, 2000; section 906(a) of title IX of the Act of April 20,
2005 (Pub. L. No. 109--8; 119 Stat. 167 and 168), effective April 20,
2005 ]
SEC. 403. BILATERAL NETTING.
(a) GENERAL RULE.--Notwithstanding any other provision of
State or Federal law (other than section 11(e) of the Federal Deposit
Insurance Act, section 207(c) of the Federal Credit Union Act, or any
order authorized under section 5(b)(2) of the Securities Investor
Protection Act of 1970), the covered contractual payment obligations
and the covered contractual payment entitlements between any 2
financial institutions shall be terminated, liquidated, accelerated,
and netted in accordance with, and subject to the conditions of, the
terms of any applicable netting contract (except as provided in section
561(b)(2) of title 11, United States Code).
[Codified to 12 U.S.C. 4403(a)]
[Source: Section 403(a) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991; as amended by section 906(b)(1) of title IX of the Act of April
20, 2005 (Pub. L. No. 109--8; 119 Stat. 168), effective April 20, 2005;
section 4(a) of the Act of December 12, 2006 (Pub. L. No. 109--390; 120
Stat. 2695), effective December 12, 2006]
(b) LIMITATION ON OBLIGATION TO MAKE PAYMENT.--The only
obligation, if any, of a financial institution to make payment with
respect to covered contractual payment obligations to another financial
institution shall be equal to its net obligation to such other
financial institution, and no such obligation shall exist if there is
no net obligation.
[Codified to 12 U.S.C. 4403(b)]
[Source: Section 403(b) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(c) LIMITATION ON RIGHT TO RECEIVE PAYMENT.--The only
right, if any, of a financial institution to receive payments with
respect to covered contractual payment entitlements from another
financial institution shall be equal to its net entitlement with
respect to such other financial institution, and no such right shall
exist if there is no net entitlement.
[Codified to 12 U.S.C. 4403(c)]
[Source: Section 403(c) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(d) Payment of Net Entitlement of Failed Financial
Institutions.--The net entitlement of any failed financial
institution, if any, shall be paid to the failed financial institution
in accordance with, and subject to the conditions of, the applicable
netting contract.
{{2-28-07 p.8550.27}}
[Codified to 12 U.S.C. 4403(d)]
[Source: Section 403(d) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(e) Effectiveness Notwithstanding Status as Financial
Institution.--This section shall be given effect notwithstanding
that a financial institution is a failed financial institution.
[Codified to 12 U.S.C. 4403(e)]
[Source: Section 403(e) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(f) ENFORCEABILITY OF SECURITY AGREEMENTS.--The provisions
of any security agreement or arrangement or other credit enhancement
related to one or more netting contracts between any 2 financial
institutions shall be terminated, liquidated, accelerated, and
enforceable in accordance with their terms (except as provided in
section 561(b)(2) of title 11, United States Code), and shall not be
stayed, avoided, or otherwise limited by any State or Federal law
(other than section 11(e) of the Federal Deposit Insurance Act, section
207(c) of the Federal Credit Union Act, and section 5(b)(2) of the
Securities Investor Protection Act of 1970).
[Codified to 12 U.S.C. 4403(f)]
[Source: Section 906(b)(2) of title IX of the Act of April 20, 2005
(Pub. L. No. 109--8; 119 Stat. 168), effective April 20, 2005; section
4(a) of the Act of December 12, 2006 (Pub. L. No. 109--390; 120 Stat.
2695), effective December 12, 2006]
SEC. 404. CLEARING ORGANIZATION NETTING.
(a) GENERAL RULE.--Notwithstanding any other provisions of
State or Federal law (other than section 1(e) of the Federal Deposit
Insurance Act, section 207(c) of the Federal Credit Union Act, and any
order authorized under section 5(b)(2) of the Securities Investor
Protection Act of 1970), the covered contractual payment obligations
and the covered contractual payment entitlements of a member of a
clearing organization to and from all other members of a clearing
organization shall be terminated, liquidated, accelerated, and netted
in accordance with and subject to the conditions of any applicable
netting contract (except as provided in section 561(b)(2) of title 11,
United States Code).
[Codified to 12 U.S.C. 4404(a)]
[Source: Section 404(a) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991; as amended by section 906(c)(1) of title IX of the Act of April
20, 2005 (Pub. L. No. 109--8; 119 Stat. 168), effective April 20, 2005;
section 4(b) of the Act of December 12, 2006 (Pub. L. No. 109--390; 120
Stat. 2695), effective December 12, 2006]
(b) LIMITATION OF OBLIGATION TO MAKE PAYMENT.--The only
obligation, if any, of a member of a clearing organization to make
payment with respect to covered contractual payment obligations arising
under a single netting contract to any other member of a clearing
organization shall be equal to its net obligation arising under that
netting contract, and no such obligation shall exist if there is no net
obligation.
[Codified to 12 U.S.C. 4404(b)]
[Source: Section 404(b) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(c) LIMITATION ON RIGHT TO RECEIVE PAYMENT.--The only
right, if any, of a member of a clearing organization to receive
payment with respect to a covered contractual payment entitlement
arising under a single netting contract from other members of a
clearing organization shall be equal to its net entitlement arising
under that netting contract, and no such right shall exist if there is
no net entitlement.
[Codified to 12 U.S.C. 4404(c)]
{{2-28-07 p.8550.28}}
[Source: Section 404(c) of title IV of the Act of
December 19, 1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective
December 19, 1991]
(d) ENTITLEMENT OF FAILED MEMBERS.--The net entitlement,
if any, of any failed member of a clearing organization shall be paid
to the failed member in accordance with, and subject to the conditions
of, the applicable netting contract.
[Codified to 12 U.S.C. 4404(d)]
[Source: Section 404(d) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(e) OBLIGATIONS OF FAILED MEMBERS.--The net obligation, if
any, of any failed member of a clearing organization shall be
determined in accordance with, and subject to the conditions of, the
applicable netting contract.
[Codified to 12 U.S.C. 4404(e)]
[Source: Section 404(e) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2374), effective December 19,
1991]
(f) LIMITATION ON CLAIMS FOR ENTITLEMENT.--A failed member
of a clearing organization shall have no recognizable claim against any
member of a clearing organization for any amount based on such covered
contractual payment entitlements other than its net entitlement.
[Codified to 12 U.S.C. 4404(f)]
[Source: Section 404(f) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2375), effective December 19,
1991]
(g) EFFECTIVENESS NOTWITHSTANDING STATUS AS MEMBER.--This
section shall be given effect notwithstanding that a member is a failed
member.
[Codified to 12 U.S.C. 4404(g)]
[Source: Section 404(g) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2375), effective December 19,
1991]
(h) ENFORCEABILITY OF SECURITY AGREEMENTS.--The provisions
of any security agreement or arrangement or other credit enhancement
related to one or more netting contracts between any 2 members of a
clearing organization shall be terminated, liquidated, accelerated, and
enforceable in accordance with their terms (except as provided in
section 561(b)(2) of title 11, United States Code), and shall not be
stayed, avoided, or otherwise limited by any State or Federal law
(other than of section 11(e) of the Federal Depoist Insurance Act,
section 207(c) of the Federal Credit Union Act, and section 5(b)(2) of
the Securities Investor Protection Act of 1970).
[Codified to 12 U.S.C. 4404(h)]
[Source: Section 906(c)(2) of title IX of the Act of April 20, 2005
(Pub. L. No. 109--8; 119 Stat. 168), effective April 20, 2005; section
4(b) of the Act of December 12, 2006 (Pub. L. No. 109--390; 120 Stat.
2695), effective December 12, 2006]
SEC. 405. PREEMPTION.
No stay, injunction, avoidance, moratorium, or similar
proceeding or order, whether issued or granted by a court,
administrative agency, or otherwise, shall limit or delay application
of otherwise enforceable netting contracts in accordance with sections
403 and 404.
[Codified to 12 U.S.C. 4405]
[Source: Section 405 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2375), effective December 19,
1991]
SEC. 406. RELATIONSHIP TO OTHER PAYMENTS SYSTEMS.
This subtitle shall have no effect by implication or
otherwise on the validity or legal enforceability of a netting
arrangement of any payment system which is not subject to this
subtitle.
[Codified to 12 U.S.C. 4406]
{{6-30-05 p.8550.28-A}}
[Source: Section 406 of title IV of the Act of December
19, 1991 (Pub. L. No. 102--242; 105 Stat. 2375), effective December 19,
1991]
SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS,
UNINSURED FEDERAL BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE MEMBER
BANKS, AND EDGE ACT CORPORATIONS.
(a) IN GENERAL.--Notiwthstanding any other provision of
law, paragraphs (8), (9), (10), and (11) of section 11(e) of the
Federal Deposit Insurance Act shall apply to an uninsured national bank
or uninsured Federal branch or Federal agency, a corporation chartered
under section 25A of the Federal Reserve Act, or an uninsured State
member bank which operates, or operates as, a multilateral clearing
organization pursuant to section 409 of this Act, except that for such
purpose--
(1) any reference to the "Corporation as receiver" or
"the receiver or the Corporation" shall refer to the receiver
appointed by the Comptroller of the Currency in the case of an
uninsured national bank or uninsured Federal branch or agency, or to
the receiver appointed by the Board of Governors of the Federal Reserve
System in the case of a corporation chartered under section 25A of the
Federal Reserve Act or an uninsured State member bank;
(2) any reference to the "Corporation" (other than in
section 11(e)(8)(D) of such Act), the "Corporation, whether acting
as such or as conservator or receiver", a "receiver", or a
"conservator" shall refer to the receiver or conservator
appointed by the Comptroller of the Currency in the case of an
uninsured national bank or uninsured Federal branch or agency, or to
the receiver or conservator appointed by the Board of Governors of the
Federal Reserve System in the case of a corporation chartered under
section 25A of the Federal Reserve Act or an uninsured State member
bank; and
(3) any reference to an "insured depository institution" or
"depository institution" shall refer to an uninsured national
bank, an uninsured Federal branch or Federal agency, a corporation
chartered under section 25A of the Federal Reserve Act, or an uninsured
State member bank which operates, or operates as, a multilateral
clearing organization pursuant to section 409 of this Act.
(b) LIABILITY.--The liability of a receiver or conservator
of an uninsured national bank, uninsured Federal branch or agency, a
corporation chartered under section 25A of the Federal Reserve Act, or
an uninsured State member bank which operates, or operates as, a
multilateral clearing organization pursuant to section 409 of this Act,
shall be determined in the same manner and subject to the same
limitations that apply to receivers and conservators of insured
depository institutions under section 11(e) of the Federal Deposit
Insurance Act.
(c) REGULATORY AUTHORITY.--
(1) IN GENERAL.--The Comptroller of the Currency in the
case of an uninsured national bank or uninsured Federal branch or
agency and the Board of Governors of the Federal Reserve System in the
case of a corporation chartered under section 25A of the Federal
Reserve Act, or an uninsured State member bank that operates, or
operates as, a multilateral clearing organization pursuant to section
409 of this Act, in consultation with the Federal Deposit Insurance
Corporation, may each promulgate regulations solely to implement this
section.
(2) SPECIFIC REQUIREMENT.--In promulgating regulations,
limited solely to implementing paragraphs (8), (9), (10), and (11) of
section 11(e) of the Federal Deposit Insurance Act, the Comptroller of
the Currency and the Board of Governors of the Federal Reserve System
each shall ensure that the regulations generally are consistent with
the regulations and policies of the Federal Deposit Insurance
Corporation adopted pursuant to the Federal Deposit Insurance Act.
(d) DEFINITIONS.--For purposes of this section, the terms
"Federal branch", "Federal agency", and "foreign
bank" have the same meanings as in section 1(b) of the International
Banking Act of 1978.
{{6-30-05 p.8550.28-B}}
[Codified to 12 U.S.C. 4406a]
[Section 906(d) of title IX of the Act of April 20, 2005 (Pub. L.
No. 109--8; 119 Stat. 169), effective April 20,
2005]
SEC. 407A. NATIONAL EMERGENCIES.
The provisions of this subtitle may not be construed to limit the
authority of the President under the Trading With the Enemy Act (50
U.S.C. App. 1 et seq.) or the International Emergency Economic Powers
Act (50 U.S.C. 1701 et seq.).
[Codified to 12 U.S.C. 4407]
[Source: Section 407 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2375), effective December 19, 1991;
redesignated by section 906(d)(1) of title IX of the Act of April 20,
2005 (Pub. L. No. 109--8; 119 Stat. 169), effective April 20, 2005] ]
CHAPTER 2—MULTILATERAL CLEARING ORGANIZATIONS
SEC. 408. DEFINITIONS.
For purposes of this chapter, the following definitions shall apply:
(1) MULTILATERAL CLEARING ORGANIZATION.--The term
"multilateral clearing organization" means a system utilized by
more than two participants in which the bilateral credit exposures of
participants arising from the transactions cleared are effectively
eliminated and replaced by a system of guarantees, insurance, or
mutualized risk of loss.
(2) OVER-THE-COUNTER DERIVATIVE INSTRUMENT.--The term
"over-the-counter derivative instrument" includes--
(A) any agreement, contract, or transaction, including the terms
and conditions incorporated by reference in any such agreement,
contract, or transaction, which is an interest rate swap, option, or
forward agreement, including a rate floor, rate cap, rate collar,
cross-currency rate swap, basis swap, and forward rate agreement; a
same day-tomorrow, tomorrow-next, forward, or other foreign exchange or
precious metals agreement; a currency swap, option, or forward
agreement; an equity index or equity swap, option, or forward
agreement; a debt index or debt swap, option, or forward agreement; a
credit spread or credit swap, option, or forward agreement; a commodity
index or commodity swap, or forward agreement; and a weather swap,
weather derivative, or weather option;
(B) any agreement, contract or transaction similar to any other
agreement, contract, or transaction referred to in this clause that is
presently, or in the future becomes, regularly entered into by parties
that participate in swap tranactions (including terms and conditions
incorporated by reference in the agreement) and that is a forward,
swap, or option on one or more occurrences of any event, rates,
currencies, commodities, equity securities or other equity instruments,
debt securities or other debt instruments, economic or other indices or
measures of economic or other risk or value;
(C) any agreement, contract, or transaction excluded from the
Commodity Exchange Act under section 2(c), 2(d), 2(f), or 2(g) of such
Act, or exempted under section 2(h) or 4(c) of such Act; and
(D) any option to enter into any, or any combination of,
agreements, contracts or transactions referred to in this subparagraph.
(3) OTHER DEFINITIONS.--The terms "insured State nonmember
bank", "State member bank", and "affiliate" have the
same meanings as in section 3 of the Federal Deposit Insurance Act.
[Uncodified]
[Source: Section 112(3) of title I of the Act of December 21, 2000
(Pub. L. No. 106--554; 114 Stat. 2763A--391), effective December 21,
2000]
SEC. 409. MULTILATERAL CLEARING ORGANIZATIONS.
(a) IN GENERAL.--Except with respect to clearing organizations
described in subsection (b), no person may operate a multilateral
clearing organization for over-the-counter derivative instruments, or
otherwise engage in activities that constitute such a multilateral
clearing organization unless the person is a national bank, a State
member bank, an insured
{{12-31-07 p.8550.28-C}}State nonmember bank,
an affiliate of a national bank, a State member bank, or an insured
State nonmember bank, or a corporation chartered under section 25A of
the Federal Reserve Act.
[Uncodified]
[Source: Section 112(3) of title I of the Act of December 21, 2000
(Pub. L. No. 106--554; 114 Stat. 2763A--391), effective December 21,
2000]
(b) CLEARING ORGANIZATIONS.--Subsection (a) shall not apply to any
clearing organization that--
(1) is registered as a clearing agency under the Securities
Exchange Act of 1934;
(2) is registered as a derivatives clearing organization under
the Commodity Exchange Act; or
(3) is supervised by a foreign financial regulator that the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the
Securities and Exchange Commission, or the Commodity Futures Trading
Commission, as applicable, has determined satisfies appropriate
standards.
[Uncodified]
[Source: Section 112(3) of title I of the Act of December 21, 2000
(Pub. L. No. 106--554; 114 Stat. 2763A--391), effective December 21,
2000]
* * * * *
Subtitle D--Miscellaneous Committees, Studies, and
Reports
SEC. 421. AMENDMENTS RELATING TO FEDERAL RESERVE BOARD RESERVE
REQUIREMENTS.
(a) Study on Payment of Imputed Earnings on Sterile Reserves
to Insurance Funds.--The Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Comptroller of
the Currency, the Director of the Office of Thrift Supervision, and the
National Credit Union Administration shall jointly--
(1) conduct a study on the feasibility of assessing Federal
Reserve banks an amount equal to the imputed earnings on reserves held
at such banks by insured depository institutions under section 19(b) of
the Federal Reserve Act; and
(2) assess the likely beneficial and adverse effects such an
assessment would have on the Federal reserve banks, the deposit
insurance funds, the insured depository institutions, and the Federal
payment system, including a comparison of the effects on each such
subject of the study.
[Uncodified]
[Source: Section 421(a) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2377), effective December 19,
1991]
(b) REPORT TO CONGRESS.--Before the end of the 6-month
period beginning on the date of the enactment of this Act, the Board of
Governors of the Federal Reserve System,the Federal Deposit Insurance
Corporation, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, and the National Credit Union
Administration shall jointly submit a report to the Congress on the
findings and conclusions made with respect to the study under
subsection (a), together with any recommendation for any legislative or
administrative action which such agencies may determine to be
appropriate.
[Uncodified]
[Source: Section 421(b) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2377), effective December 19,
1991]
(c) REPORT OF DISSENTING VIEWS.--Any agency described in
subsections (a) and (b) which does not concur in the findings,
conclusions, or recommendations referred to in subsection (b) or has
additional findings, conclusions, or recommendations which were not
included in the report may submit a report to the Congress
describing--
{{12-31-07 p.8550.28-D}}
(1) the reasons why the agency does not concur in the findings,
conclusions, or recommendations referred to in subsection (b); and
(2) such additional findings, conclusions, or recommendations.
[Uncodified]
[Source: Section 421(c) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2377), effective December 19,
1991]
* * * * *
Subtitle F--Emergency Assistance for Rhode
Island
SEC. 431. EMERGENCY LOAN GUARANTEE.
(a) IN GENERAL.--
(1) PROVISION FOR GUARANTEE.--Subject to the terms and
conditions established by or under this subsection, the Secretary of
the Treasury shall guarantee the repayment of any amount not to exceed
$180,000,000 borrowed by the State of Rhode Island and Providence
Plantations (hereafter in this section referred to as the "State of
Rhode Island"), or the Depositors Economic Protection Corporation
established by such State, to expedite the repayment of depositors at
State-chartered banks and credit unions in receivership in such State
and to facilitate the resolution of such receiverships.
(2) Loan collateral required as condition for
guarantee.--The Secretary of the Treasury may not guarantee the
repayment of any amount under paragraph (1) unless the amount of any
loan for which the guarantee is sought is fully secured as follows:
(A) A first lien on assets held or controlled by the Depositors
Economic Protection Corporation and the proceeds from the sale of such
assets, are irrevocably pledged to the extent necessary to provide
collateral for the guarantee.
(B) If the liens and assets described in subparagraph (A) are
insufficient to fully secure the guarantee, then a first lien on any
assets held or controlled by the State of Rhode Island or any
instrumentality of the State of Rhode Island and the proceeds from the
sale of such assets, are irrevocably pledged to the extent necessary to
provide collateral for the guarantee.
(C) If the liens and assets described in subparagraphs (A) and
(B) are insufficient to fully secure the guarantee, then any revenue
from the State sales tax which is dedicated to the Depositors Economic
Protection Corporation under the law of the State of Rhode Island in
excess of the amount necessary to pay principal and interest on any
obligation of the State or the Corporation issued before the date of
the loan is irrevocably dedicated to the extent necessary to provide
collateral for the guarantee.
(3) GUARANTEE FEES.--The Secretary may assess and
collect with respect to loans guaranteed under this subsection an
annual guarantee fee computed daily at a rate which may not exceed
one-half of 1 percent of the outstanding principal amount of the
guaranteed loan.
(4) PLEDGE OF CERTAIN INCOME FOR REPAYMENT.--The
Secretary may not guarantee under this section the repayment of any
loan proposed to be made to the Depositors Economic Protection
Corporation unless, for each fiscal year of the Depositors Economic
Protection Corporation, all rents, issues, profits, products, proceeds,
revenues, and other income (including insurance proceeds and
condemnation awards) received by the Corporation from, or attributable
to, the assets pledged to the United States in accordance with this
subsection, in excess of the amount necessary to pay the interest, or
principal and interest on any loan to the Corporation guaranteed under
paragraph (1) that is payable in such fiscal year are irrevocably
pledged to be deposited into a sinking fund or defeasance fund
maintained by the Corporation and are irrevocably pledged and dedicated
to the repayment of the principal of such guaranteed loan in the
inverse order of the maturity of such principal installments.
(5) INVESTMENT GRADE RATING.--The Secretary may not
guarantee under this section the repayment of any loan proposed to be
made to the State of Rhode Island or the Depositors Economic Protection
Corporation unless each such proposed loan has received
a
{{6-30-05 p.8550.29}}rating (for purposes of
which the collateral securing the guarantee is considered to be
securing the loan) of--
(A) the highest investment grade from a nationally recognized
statistical rating organization;
(B) not less than 1 less than the investment grade rating from 2
nationally recognized statistical rating organizations; or
(C) not less than 2 less than the highest investment grade from 2
nationally recognized statistical rating organizations to the extent
that--
(i) a rating of not less than 1 less than the highest investment
grade rating from 2 nationally recognized statistical rating
organization has not been achieved through the use of all of the
collateral listed in subsection (a)(2)(A) and the available collateral
under subparagraph (B) or (C) of subsection (a)(2) at the time of the
State of Rhode Island's request for the loan guarantee; and
(ii) representatives of the State of Rhode Island and the
Secretary are able to agree upon the lesser grade rating based on
changes negotiated to other terms of this subtitle, including the
purchase of bond insurance.
(6) TERMS.--
(A) IN GENERAL.--The guarantee provided for in this
subsection shall be with respect to a loan which--
(i) is made not more than 1 year after the date of enactment of
this Act;
(ii) will mature not later than 8 years after the date of such
loan; and
(iii) is scheduled to be repaid in equal installments of
principal during the last 4 years of the repayment term of such loan.
(B) AUTHORITY TO VARY TIME PERIODS.--The Secretary and
the duly authorized representative of the State of Rhode Island may, by
mutual agreement, modify any durational requirement specified in
subparagraph (A).
(7) ADDITIONAL TERMS AND CONDITIONS.--Except as
otherwise provided in this subsection, the terms and conditions of any
loan guarantee under this section shall be established by mutual
agreement of the Secretary of the Treasury and the duly authorized
representative of the State of Rhode Island.
[Uncodified]
[Source: Section 431(a) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2379), effective December 19,
1991]
(b) APPROPRIATION OF AMOUNTS.--There are hereby
appropriated to the Secretary of the Treasury such sums as may be
necessary for any fiscal year to meet the obligation of the United
States under subsection (a)(1).
[Uncodified]
[Source: Section 431(b) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2380), effective December 19,
1991]
* * * * *
Subtitle I--Bank and Thrift Employee Provisions
SEC. 451. CONTINUATION OF HEALTH PLAN COVERAGE IN CASES OF FAILED
FINANCIAL INSTITUTIONS.
(a) CONTINUATION COVERAGE.--The Federal Deposit Insurance
Corporation--
(1) shall, in its capacity as a successor of a failed depository
institution (whether acting directly or through any bridge bank), have
the same obligation to provide a group health plan meeting the
requirements of section 602 of the Employee Retirement Income Security
Act of 1974 (relating to continuation coverage requirements of group
health plans) with respect to former employees of such institution as
such institution would have had but for its failure, and
(2) shall require that any successor described in subsection
(b)(1)(B)(iii) provide a group health plan with respect to former
employees of such institution in the same manner as the failed
depository institution would have been required to provide but for its
failure.
[Codified to 12 U.S.C. 1821 note]
{{6-30-05 p.8550.30}}
[Source: Section 451(a) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2382), effective December 19,
1991]
(b) DEFINITIONS.--For purposes of this section--
(1) SUCCESSOR.--An entity is a successor of a failed
depository institution during any period if--
(A) such entity holds substantially all of the assets or
liabilities of such institution, and
(B) such entity is--
(i) the Federal Deposit Insurance Corporation,
(ii) any bridge bank, or
(iii) an entity that acquires such assets or liabilities from the
Federal Deposit Insurance Corporation or a bridge bank.
(2) FAILED DEPOSITORY INSTITUTION.--The term "failed
depository institution" means any depository institution (as defined
in section 3(c) of the Federal
Deposit Insurance Act) for which a receiver has been appointed.
(3) BRIDGE BANK.--The term "bridge bank" has the
meaning given such term by section
3(i)(2) of the Federal Deposit Insurance Act.
[Codified to 12 U.S.C. 1821 note]
[Source: Section 451(b) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2382), effective December 19,
1991; as amended by section 1606(g)(1) of title XVI of the Act of
October 28, 1992 (Pub. L. No. 102--550; 106 Stat. 4088), effective
December 19, 1991]
(c) NO PREMIUM COSTS IMPOSED ON FDIC.--Subsection (a)
shall not be construed as requiring the Federal Deposit Insurance
Corporation to incur, by reason of this section, any obligation for any
premium under any group health plan referred to in such subsection.
[Codified to 12 U.S.C. 1821 note]
[Source: Section 451(c) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2383), effective December 19,
1991]
(d) EFFECTIVE DATE.--This section shall apply to plan
years beginning on or after the date of the enactment of this Act,
regardless of whether the qualifying event under section 603 of the
Employee Retirement Income Security Act of 1974 occurred before, on, or
after such date.
[Codified to 12 U.S.C. 1821 note]
[Source: Section 451(d) of title IV of the Act of
December 19, 1991 (Pub. L. No. 102--242; 105 Stat. 2383), effective
December 19, 1991]
Subtitle J--Sense of the Congress Regarding the Credit
Crisis
SEC. 456. CREDIT CRUNCH.
(a) FINDINGS.--The Congress finds that--
(1) during the past year and a half a credit crunch of crisis
proportions has taken hold of the economy and grown increasingly
severe, particularly for real estate;
(2) to date the credit crisis has shown no sign of improvement
with its effects being felt broadly throughout the Nation as business
failures soar, financial institutions weaken, real estate values
decline, and State and local property tax bases further erode;
(3) approximately $200,000,000,000 of the nearly $400,000,000,000
in commercial real estate loans now held by commercial banks are coming
due within the next 2 years;
(4) banks for a variety of reasons, are reluctant to renew these
maturing real estate loans;
(5) both pension funds in the United States, with assets of
nearly $2,000,000,000,000, and a stronger and more active secondary
market for commercial real estate debt and equity could play a more
significant role in providing liquidity and credit to the real estate
and banking sectors of the economy;
{{12-31-07 p.8550.31}}
(6) many regulatory practices encourage banks to reduce their
real estate lending without regard to long-term historical risk; and
(7) the stability of real estate has suffered during the past
decade first from tax rules that in 1981 stimulated excessive
investment in real estate, and then in 1986 when rules were adopted
that discourage capital investment in real estate, artificially eroding
real estate values.
[Uncodified]
[Source: Section 456(a) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2383), effective December 19,
1991]
(b) SENSE OF THE CONGRESS.--It is the sense of the
Congress that--
(1) immediate and carefully-coordinated action should be taken by
the Congress and the President to arrest the credit crisis referred to
in subsection (a) and provide a healthy and efficient marketplace that
works for owners, lenders, and investors; and
(2) that efforts should be undertaken to explore measures that--
(A) modernize and simplify the rules that apply to pension
investment in real estate to remove unnecessary barriers to pension
funds seeking to invest in real estate;
(B) strengthen the secondary market for commercial real estate
debt and equity by removing arbitrary obstacles to private forms of
credit enhancement;
(C) restore balance to the regulatory environment by considering
the impact of risk-based capital standards on commercial, multifamily
and single-family real estate; ending mark-to-market,
liquidation-based, appraisals; encouraging loan renewals; and, fully
communicating the supervisory policy to bank examiners in the field;
and
(D) rationalize the tax system for real estate owners and
operators by modifying the passive loss rules and encouraging loan
restructures.
[Uncodified]
[Source: Section 456(b) of title IV of the Act of December 19,
1991 (Pub. L. No. 102--242; 105 Stat. 2383), effective December
19,1991]
* * * * *
{{12-31-07 p.8550.32}}
Subtitle M--Other Miscellaneous Provisions
* * * * *
SEC. 477. [Repealed]
[Source: Section 477 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2387), effective December 19, 1991; as
repealed by section 2224(a) of title II of the Act of September 30,
1996 (Pub. L. No. 104--208; 110 Stat. 3009--415), effective September
30, 1996]
SEC. 478. SPECIAL INSURED DEPOSITS.
For purposes of the Federal Deposit Insurance Act (12 U.S.C. 1811 et
seq.), the deposits of the Freedom National Bank of New York and the
deposits of Community National Bank and Trust Company of New York
that--
(1) were deposited by a charitable organization as such term is
defined by New York State law, or by a religious organization; and
(2) were deposits of such bank on the date of its closure by the
Office of the Comptroller of the Currency,
shall be fully insured notwithstanding any other provisions of the
Federal Deposit Insurance Act.
[Uncodified]
[Source: Section 478 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2388), effective December 19, 1991]
Subtitle N--Severability
SEC. 481. SEVERABILITY.
If any provision of this Act, or any application of any provision of
this Act to any person or circumstances, is held invalid, the remainder
of the Act, and the application of any remaining provision of the Act
to any other person or circumstance, shall not be affected by such
holding.
[Codified to 12 U.S.C. 1811 note]
[Source: Section 481 of title IV of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2388), effective December 19, 1991]
[The page following this is 8551.]
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