To enhance economic growth and promote the stability of the financial system of the United States, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Economic Growth and Financial 
Stabilization Act of 2008''.

SEC. 2. ZERO PERCENT CAPITAL GAINS RATE FOR INDIVIDUALS AND 
              CORPORATIONS.

    (a) Zero Percent Capital Gains Rate for Individuals.--
            (1) In general.--Paragraph (1) of section 1(h) of the 
        Internal Revenue Code of 1986 is amended by striking 
        subparagraph (C), by redesignating subparagraphs (D) and (E) 
        and subparagraphs (C) and (D), respectively, and by amending 
        subparagraph (B) to read as follows:
                    ``(B) 0 percent of the adjusted net capital gain 
                (or, if less, taxable income);''.
            (2) Alternative minimum tax.--Paragraph (3) of section 
        55(b) of such Code is amended by striking subparagraph (C), by 
        redesignating subparagraph (D) as subparagraph (C), and by 
        amending subparagraph (B) to read as follows:
                    ``(B) 0 percent of the adjusted net capital gain 
                (or, if less, taxable excess), plus''.
            (3) Repeal of sunset of reduction in capital gains rates 
        for individuals.--Section 303 of the Jobs and Growth Tax Relief 
        Reconciliation Act of 2003 shall not apply to section 301 of 
        such Act.
    (b) Zero Percent Capital Gains Rate for Corporations.--
            (1) In general.--Section 1201 of the Internal Revenue Code 
        of 1986 is amended by redesignating subsection (b) as 
        subsection (c), and by striking subsection (a) and inserting 
        the following new subsections:
    ``(a) General Rule.--If for any taxable year a corporation has a 
net capital gain, then, in lieu of the tax imposed by sections 11, 511, 
821(a) or (c), and 831(a), there is hereby imposed a tax (if such tax 
is less than the tax imposed by such sections) which shall consist of 
the sum of--
            ``(1) a tax computed on the taxable income reduced by the 
        amount of the net capital gain, at the rates and in the manner 
        as if this subsection had not been enacted,
            ``(2) 0 percent of the adjusted net capital gain (or, if 
        less, taxable income),
            ``(3) 25 percent of taxable income in excess of the sum of 
        the amounts on which tax is determined under the preceding 
        paragraphs of this subsection.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) In general.--The term `adjusted net capital gain' 
        shall have the meaning given such term in section 1(h).
            ``(2) Dividends taxed at net capital gain.--Except as 
        otherwise provided in this section, the term `net capital gain' 
        has the meaning given such term in section 1(h)(11).''.
            (2) Alternative minimum tax.--Section 55(b) of such Code is 
        amended by adding at the end the following new paragraph:
            ``(4) Maximum rate of tax on net capital gain of 
        corporations.--The amount determined under paragraph (1)(B)(i) 
        shall not exceed the sum of--
                    ``(A) the amount determined under such paragraph 
                computed at the rates and in the same manner as if this 
                paragraph had not been enacted on the taxable excess 
                reduced by the net capital gain, plus
                    ``(B) the amount determined under section 1201.''.
            (3) Technical amendments.--
                    (A) Section 1445(e)(1) of such Code is amended by 
                striking ``35 percent (or, to the extent provided in 
                regulations, 15 percent)'' and inserting ``0 percent''.
                    (B) Section 1445(e)(2) of such Code is amended by 
                striking ``35 percent'' and inserting ``0 percent''.
                    (C) Section 7518(g)(6)(A) of such Code is amended 
                by striking ``15 percent (34 percent in the case of a 
                corporation)'' and inserting ``0 percent''.
                    (D) Section 607(h)(6)(A) of the Merchant Marine 
                Act, 1936 is amended by striking ``15 percent (34 
                percent in the case of a corporation)'' and inserting 
                ``0 percent''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after the date of the enactment of this Act.
            (2) Withholding.--The amendments made by subparagraphs (A) 
        and (B) of subsection (b)(3) shall take apply to dispositions 
        and distributions after the date of the enactment of this Act.

SEC. 3. REDUCTION IN TOP CORPORATE MARGINAL RATE.

    (a) In General.--Paragraph (1) of section 11(b) of the Internal 
Revenue Code of 1986 is amended--
            (1) by adding ``and'' at the end of subparagraph (A),
            (2) by striking `` but does not exceed $75,000,'' in 
        subparagraph (B) and inserting a period,
            (3) by striking subparagraphs (C) and (D), and
            (4) by striking ``$11,750'' and all that follows and 
        inserting ``$5,000.''.
    (b) Conforming Amendments.--
            (1) Section 11(b)(2) of such Code is amended by striking 
        ``35 percent'' and inserting ``28 percent''.
            (2) Section 833(b)(1)(A) of such Code is amended by 
        striking ``25 percent'' and inserting ``20 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 4. DISTRESSED ASSETS LOAN FUND.

    (a) Establishment.--There is established in the Department of the 
Treasury a Distressed Assets Loan Fund (hereafter in this section 
referred to as the ``Fund'') under the control of the Secretary of the 
Treasury for the purpose of making loans available to depository 
institutions with distressed assets at low rates of interest under 
terms prescribed by the Secretary and in a manner provided in the 
regulations prescribed under subsection (b).
    (b) Regulations.--The Secretary shall prescribe regulations to 
define terms used in this section and establish an administration for 
the Fund.

SEC. 5. INCREASE IN MAXIMUM AMOUNT OF DEPOSIT INSURANCE AND SHARE 
              INSURANCE.

    (a) Standard Maximum Deposit Insurance Amount Increased.--Section 
11(a) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is 
amended--
            (1) in subparagraph (E), by striking ``$100,000'' and all 
        that follows through the end of the subparagraph and inserting 
        ``$250,000.''; and
            (2) in subparagraph (F)(i)(I), by striking ``$100,000'' and 
        inserting ``$250,000''.
    (b) Standard Maximum Share Insurance Amount Increased.--Section 
207(k)(5) of the Federal Credit Union Act (12 U.S.C. 1787(k)(5)) is 
amended by striking ``$100,000'' and inserting ``$250,000''.

SEC. 6. GAIN OR LOSS FROM SALE OR EXCHANGE OF CERTAIN PREFERRED STOCK.

    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
gain or loss from the sale or exchange of any applicable preferred 
stock by any applicable financial institution shall be treated as 
ordinary income or loss.
    (b) Applicable Preferred Stock.--For purposes of this section, the 
term ``applicable preferred stock'' means any stock--
            (1) which is preferred stock in--
                    (A) the Federal National Mortgage Association, 
                established pursuant to the Federal National Mortgage 
                Association Charter Act (12 U.S.C. 1716 et seq.), or
                    (B) the Federal Home Loan Mortgage Corporation, 
                established pursuant to the Federal Home Loan Mortgage 
                Corporation Act (12 U.S.C. 1451 et seq.), and
            (2) which--
                    (A) was held by the applicable financial 
                institution on September 6, 2008, or
                    (B) was sold or exchanged by the applicable 
                financial institution on or after January 1, 2008, and 
                before September 7, 2008.
    (c) Applicable Financial Institution.--For purposes of this 
section:
            (1) In general.--Except as provided in paragraph (2), the 
        term ``applicable financial institution'' means--
                    (A) a financial institution referred to in section 
                582(c)(2) of the Internal Revenue Code of 1986, or
                    (B) a depository institution holding company (as 
                defined in section 3(w)(1) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813(w)(1))).
            (2) Special rules for certain sales.--In the case of--
                    (A) a sale or exchange described in subsection 
                (b)(2)(B), an entity shall be treated as an applicable 
                financial institution only if it was an entity 
                described in subparagraph (A) or (B) of paragraph (1) 
                at the time of the sale or exchange, and
                    (B) a sale or exchange after September 6, 2008, of 
                preferred stock described in subsection (b)(2)(A), an 
                entity shall be treated as an applicable financial 
                institution only if it was an entity described in 
                subparagraph (A) or (B) of paragraph (1) at all times 
                during the period beginning on September 6, 2008, and 
                ending on the date of the sale or exchange of the 
                preferred stock.
    (d) Special Rule for Certain Property Not Held on September 6, 
2008.--The Secretary of the Treasury or the Secretary's delegate may 
extend the application of this section to all or a portion of the gain 
or loss from a sale or exchange in any case where--
            (1) an applicable financial institution sells or exchanges 
        applicable preferred stock after September 6, 2008, which the 
        applicable financial institution did not hold on such date, but 
        the basis of which in the hands of the applicable financial 
        institution at the time of the sale or exchange is the same as 
        the basis in the hands of the person which held such stock on 
        such date, or
            (2) the applicable financial institution is a partner in a 
        partnership which--
                    (A) held such stock on September 6, 2008, and later 
                sold or exchanged such stock, or
                    (B) sold or exchanged such stock during the period 
                described in subsection (b)(2)(B).
    (e) Regulatory Authority.--The Secretary of the Treasury or the 
Secretary's delegate may prescribe such guidance, rules, or regulations 
as are necessary to carry out the purposes of this section.
    (f) Effective Date.--This section shall apply to sales or exchanges 
occurring after December 31, 2007, in taxable years ending after such 
date.

Summary: Economic Growth and Financial Stabilization Act - Amends the Internal Revenue Code to prescribe a 0 capital gains rate for individuals. Revises the formula for: (1) the alternative tax for corporations to prescribe a 0 capital gains rate. And (2) the ordinary income tax for corporations by eliminating the two tax rate brackets above 25 and reducing the maximum amount of tax imposed. Establishes in the Department of the Treasury a Distressed Assets Loan Fund under the control of the Secretary of the Treasury to make loans available at low rates of interest to depository institutions with distressed assets. Amends the Federal Deposit Insurance Act and the Federal Credit Union Act to increase from $100,000 to $250,000 the maximum amount of deposit insurance and share insurance, respectively. Treats gain or loss from the sale or exchange of any applicable preferred stock by any applicable financial institution as ordinary income or loss.