To require the Secretary of the Treasury to establish a market for municipal securities, to require cooperation between the Secretary and the Chairman of the Board of Governors of the Federal Reserve System in addressing the municipal securities market situation including through the establishment of municipal securities funding facilities, and for other purposes.

Summary: Federal Municipal Bond Marketing Support and Securitization Act of 2009 - Requires the Secretary of the Treasury and the Board of Governors of the Federal Reserve System to consult with each other for the purpose of: (1) finding solutions for the grave effects of the current financial crisis on the markets for municipal securities; and (2) cooperating in authorized activities to alleviate such effects on those markets.

Directs the Secretary to establish a program to: (1) purchase municipal securities; (2) issue securities backed by pools of municipal securities; and (3) provide credit enhancement or guarantees for municipal securities.

Authorizes the Federal Financing Bank to: (1) make commitments to purchase and sell any municipal security issued under a specified plan approved by the Secretary; (2) guarantee repayment of principal and interest on any municipal security issued under a plan approved by the Secretary; and (3) issue and sell instruments representing interests in a pool of municipal securities purchased by the Bank.

Prohibits the purchase or guarantee of a municipal security under this Act unless the Secretary has approved, prior to its issuance, the method, source, and timing of financing, as well as all terms and conditions.

States that municipal securities sold by the Secretary or the Bank under this Act, and instruments issued by the Secretary or the Bank that represent pools of municipal securities, may be insured as to the payment of principal or interest by the Secretary or the Bank, respectively.

Authorizes the Board to establish a credit facility to provide financial resources for the purchase of municipal securities by federal reserve banks or member banks or other persons.

SECTION 1. SHORT TITLE; DEFINITIONS.

    (a) Short Title.--This Act may be cited as the ``Federal Municipal 
Bond Marketing Support and Securitization Act of 2009''.
    (b) Definitions.--For purposes of this Act the following 
definitions shall apply:
            (1) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
            (2) Guarantee.--The term ``guarantee'' has the same meaning 
        as in section 3 of the Federal Financing Bank Act of 1978.
            (3) Municipal security defined.--The term ``municipal 
        security'' has the same meaning as in section 3(a)(30) of the 
        Securities Exchange Act of 1934 and includes pooled investment 
        funds under trusts established by State or local governmental 
        entities and higher education savings plan trusts established 
        by States to the extent any such trust is not excluded by the 
        Secretary and does not consist of funds invested by persons 
        other than States or municipalities the investment of which is 
        subject to the direction of such person.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 2. COOPERATION TO ADDRESS LIMITATIONS ON ACCESS TO MARKETS FOR 
              MUNICIPAL SECURITIES.

    Upon the enactment of this Act, the Secretary of the Treasury and 
the Board of Governors of the Federal Reserve System shall consult with 
each other extensively for the purpose of--
            (1) finding solutions for the grave effects of the current 
        financial crisis on the markets for municipal securities; and
            (2) cooperating in the activities authorized under this Act 
        to alleviate to the extent practicable such effects on the 
        municipal securities markets.

SEC. 3. PURCHASE, SALE, GUARANTEE, AND SECURITIZATION OF MUNICIPAL 
              SECURITIES BY SECRETARY AND FEDERAL FINANCING BANK 
              AUTHORIZED.

    (a) In General.--The Secretary of the Treasury shall establish a 
program, directly or through the Federal Financing Bank, to--
            (1) purchase municipal securities;
            (2) issue securities backed by pools of such municipal 
        securities; and
            (3) provide credit enhancement or guarantees for municipal 
        securities.
    (b) Specific Authority.--In addition to the authority conferred 
under section 6 of the Federal Financing Bank Act of 1973 and subject 
to subsections (b) and (c) of such section, the Federal Financing Bank 
may--
            (1) make commitments to purchase and sell, and to purchase 
        and sell on terms and conditions determined by the Bank, any 
        municipal security issued under a plan approved by the 
        Secretary under subsection (c);
            (2) may guarantee the repayment of principal and interest 
        on any municipal security issued under a plan approved by the 
        Secretary under subsection (c); and
            (3) may issue and sell instruments representing interests 
        in a pool consisting of municipal securities purchased by the 
        Federal Financing Bank under this section.
    (c) Authority of Secretary Over Method, Source, Timing, Terms, and 
Conditions of Municipal Securities Issued for Purchase Under This 
Section.--To insure the orderly and coordinated marketing of municipal 
securities for purchase or guarantee as to principal and interest under 
this section, and to ensure that appropriate financing planning has 
been made with respect to such municipal securities, no municipal 
security may be purchased or guaranteed under this section unless the 
Secretary has approved, prior to the issuance of any such security --
            (1) the method of financing;
            (2) the source of financing;
            (3) the timing of financing in relation to market 
        conditions and financing by Federal agencies; and
            (4) the financing terms and conditions, including rates of 
        interest and maturities, of the municipal securities.
    (d) Status of Insurance and Instruments.--Municipal securities sold 
by the Secretary, or by the Federal Financing Bank under subsection 
(b)(1), and instruments issued by the Secretary, or by the Bank under 
subsection (b)(3), that represent pools consisting of municipal 
securities--
            (1) may be insured by the Secretary or the Bank, 
        respectively, as to the payment of principal or interest by the 
        issuer of the municipal security; and
            (2) shall not, other than in connection with a guarantee 
        referred to in paragraph (1), be treated for any purpose as an 
        instrument which has the full faith and credit of the United 
        States.

SEC. 4. FEDERAL RESERVE BOARD CREDIT FACILITY.

    (a) Establishment Authorized.--The Board of Governors of the 
Federal Reserve System may establish a credit facility, using resources 
and authority available under the Federal Reserve Act, including 
section 10B and the third undesignated paragraph of section 13 of such 
Act, to provide financial resources for the purchase of municipal 
securities by Federal reserve banks or member banks or other persons.
    (b) Funding for Secretary and Federal Financing Bank.--Subject to 
the conditions described in the third undesignated paragraph of section 
13, the Board may establish a credit facility, or use any credit 
facility established under subsection (a), to provide funds to the 
Secretary or the Federal Financing Bank to carry out any authority 
under section 3.

SEC. 5. BUDGET AUTHORITY.

    Any authority of the Secretary or the Federal Financing Bank under 
this Act to purchase or guarantee municipal securities shall be 
effective for any fiscal year only to the extent or in amounts provided 
in advance in appropriation Acts.