IB 

Union Calendar No. 297 

108TH CONGRESS 

2D SESSION H. R. 2120 

[Report No. 108–277, Part I] 

To revise the banking and bankruptcy insolvency laws with respect to the 

termination and netting of financial contracts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 15, 2003 

Mr. TOOMEY (for himself, Mr. OXLEY, Mr. KANJORSKI, Mr. LEACH, Mr. 

BAKER, Mr. BACHUS, Mr. SHERMAN, Mrs. MALONEY, Mr. SHAYS, Mrs. 

BIGGERT, Ms. HART, Mrs. KELLY, Mr. NEY, Mr. ACKERMAN, Mr. CROWLEY, Mr. MURPHY, Mr. SESSIONS, Mr. FOSSELLA, Mr. EMANUEL, and 

Mr. ISRAEL) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the 

Judiciary, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

SEPTEMBER 17, 2003 

Reported from the Committee on Financial Services 

SEPTEMBER 18, 2003 

Referral to the Committee on the Judiciary extended for a period ending not 

later than October 3, 2003 

OCTOBER 3, 2003 

Referral to the Committee on the Judiciary extended for a period ending not 

later than October 31, 2003 

OCTOBER 31, 2003 

Referral to the Committee on the Judiciary extended for a period ending not 

later than November 7, 2003 

NOVEMBER 7, 2003 

Referral to the Committee on the Judiciary extended for a period ending not 

later than November 21, 2003 
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NOVEMBER 21, 2003 

Referral to the Committee on the Judiciary extended for a period ending not 

later than January 31, 2004 

JANUARY 31, 2004 

Referral to the Committee on the Judiciary extended for a period ending not 

later than March 2, 2004 

FEBRUARY 26, 2004 

Referral to the Committee on the Judiciary extended for a period ending not 

later than June 1, 2004 

JUNE 1, 2004 

Additional sponsors: Mr. HINOJOSA, Mr. WATT, Mr. BOUCHER, and Mr. 

DREIER

JUNE 1, 2004 

The Committee on the Judiciary discharged; committed to the Committee of 

the Whole House on the State of the Union and ordered to be printed 

A BILL 

To revise the banking and bankruptcy insolvency laws with 

respect to the termination and netting of financial contracts, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Financial Contracts Bankruptcy Reform Act of 2003’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Treatment of certain agreements by conservators or receivers of insured 

depository institutions. 

Sec. 3. Authority of the corporation with respect to failed and failing institutions. 

Sec. 4. Amendments relating to transfers of qualified financial contracts. 
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Sec. 5. Amendments relating to disaffirmance or repudiation of qualified financial contracts. 

Sec. 6. Clarifying amendment relating to master agreements. 

Sec. 7. Federal Deposit Insurance Corporation Improvement Act of 1991. 

Sec. 8. Bankruptcy code amendments. 

Sec. 9. Recordkeeping requirements. 

Sec. 10. Exemptions from contemporaneous execution requirement. 

Sec. 11. Damage measure. 

Sec. 12. SIPC stay. 

Sec. 13. Applicability of other sections to chapter 9. 

Sec. 14. Effective date; application of amendments. 

Sec. 15. Savings clause. 

1 SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CON2 SERVATORS OR RECEIVERS OF INSURED DE3 POSITORY INSTITUTIONS. 

4 (a) DEFINITION OF QUALIFIED FINANCIAL CON5 TRACT.— 

6 (1) FDIC-INSURED DEPOSITORY INSTITU7 TIONS.—Section 11(e)(8)(D) of the Federal Deposit 

8 Insurance Act (12 U.S.C. 1821(e)(8)(D)) is amend9 ed— 

10 (A) by striking ‘‘subsection—’’ and insert11 ing ‘‘subsection, the following definitions shall 

12 apply:’’; and 

13 (B) in clause (i), by inserting ‘‘, resolution, 

14 or order’’ after ‘‘any similar agreement that the 

15 Corporation determines by regulation’’. 

16 (2) INSURED CREDIT UNIONS.—Section 

17 207(c)(8)(D) of the Federal Credit Union Act (12 

18 U.S.C. 1787(c)(8)(D)) is amended— 
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1 (A) by striking ‘‘subsection—’’ and insert2 ing ‘‘subsection, the following definitions shall 

3 apply:’’; and 

4 (B) in clause (i), by inserting ‘‘, resolution, 

5 or order’’ after ‘‘any similar agreement that the 

6 Board determines by regulation’’. 

7 (b) DEFINITION OF SECURITIES CONTRACT.— 

8 (1) FDIC-INSURED DEPOSITORY INSTITU9 TIONS.—Section 11(e)(8)(D)(ii) of the Federal De10 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 

11 amended to read as follows: 

12 ‘‘(ii) SECURITIES CONTRACT.—The 

13 term ‘securities contract’— 

14 ‘‘(I) means a contract for the 

15 purchase, sale, or loan of a security, a 

16 certificate of deposit, a mortgage loan, 

17 or any interest in a mortgage loan, a 

18 group or index of securities, certifi19 cates of deposit, or mortgage loans or 

20 interests therein (including any inter21 est therein or based on the value 

22 thereof) or any option on any of the 

23 foregoing, including any option to 

24 purchase or sell any such security, 

25 certificate of deposit, mortgage loan, 
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1 interest, group or index, or option, 

2 and including any repurchase or re3 verse repurchase transaction on any 

4 such security, certificate of deposit, 

5 mortgage loan, interest, group or 

6 index, or option; 

7 ‘‘(II) does not include any pur8 chase, sale, or repurchase obligation 

9 under a participation in a commercial 

10 mortgage loan unless the Corporation 

11 determines by regulation, resolution, 

12 or order to include any such agree13 ment within the meaning of such 

14 term; 

15 ‘‘(III) means any option entered 

16 into on a national securities exchange 

17 relating to foreign currencies; 

18 ‘‘(IV) means the guarantee by or 

19 to any securities clearing agency of 

20 any settlement of cash, securities, cer21 tificates of deposit, mortgage loans or 

22 interests therein, group or index of se23 curities, certificates of deposit, or 

24 mortgage loans or interests therein 

25 (including any interest therein or 
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1 based on the value thereof) or option 

2 on any of the foregoing, including any 

3 option to purchase or sell any such se4 curity, certificate of deposit, mortgage 

5 loan, interest, group or index, or op6 tion; 

7 ‘‘(V) means any margin loan; 

8 ‘‘(VI) means any other agree9 ment or transaction that is similar to 

10 any agreement or transaction referred 

11 to in this clause; 

12 ‘‘(VII) means any combination of 

13 the agreements or transactions re14 ferred to in this clause; 

15 ‘‘(VIII) means any option to 

16 enter into any agreement or trans17 action referred to in this clause; 

18 ‘‘(IX) means a master agreement 

19 that provides for an agreement or 

20 transaction referred to in subclause 

21 (I), (III), (IV), (V), (VI), (VII), or 

22 (VIII), together with all supplements 

23 to any such master agreement, with24 out regard to whether the master 

25 agreement provides for an agreement 
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1 or transaction that is not a securities 

2 contract under this clause, except that 

3 the master agreement shall be consid4 ered to be a securities contract under 

5 this clause only with respect to each 

6 agreement or transaction under the 

7 master agreement that is referred to 

8 in subclause (I), (III), (IV), (V), (VI), 

9 (VII), or (VIII); and 

10 ‘‘(X) means any security agree11 ment or arrangement or other credit 

12 enhancement related to any agree13 ment or transaction referred to in this 

14 clause, including any guarantee or re15 imbursement obligation in connection 

16 with any agreement or transaction re17 ferred to in this clause.’’. 

18 (2) INSURED CREDIT UNIONS.—Section 

19 207(c)(8)(D)(ii) of the Federal Credit Union Act 

20 (12 U.S.C. 1787(c)(8)(D)(ii)) is amended to read as 

21 follows: 

22 ‘‘(ii) SECURITIES CONTRACT.—The 

23 term ‘securities contract’— 

24 ‘‘(I) means a contract for the 

25 purchase, sale, or loan of a security, a 
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1 certificate of deposit, a mortgage loan, 

2 or any interest in a mortgage loan, a 

3 group or index of securities, certifi4 cates of deposit, or mortgage loans or 

5 interests therein (including any inter6 est therein or based on the value 

7 thereof) or any option on any of the 

8 foregoing, including any option to 

9 purchase or sell any such security, 

10 certificate of deposit, mortgage loan, 

11 interest, group or index, or option, 

12 and including any repurchase or re13 verse repurchase transaction on any 

14 such security, certificate of deposit, 

15 mortgage loan, interest, group or 

16 index, or option; 

17 ‘‘(II) does not include any pur18 chase, sale, or repurchase obligation 

19 under a participation in a commercial 

20 mortgage loan unless the Board deter21 mines by regulation, resolution, or 

22 order to include any such agreement 

23 within the meaning of such term; 
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1 ‘‘(III) means any option entered 

2 into on a national securities exchange 

3 relating to foreign currencies; 

4 ‘‘(IV) means the guarantee by or 

5 to any securities clearing agency of 

6 any settlement of cash, securities, cer7 tificates of deposit, mortgage loans or 

8 interests therein, group or index of se9 curities, certificates of deposit, or 

10 mortgage loans or interests therein 

11 (including any interest therein or 

12 based on the value thereof) or option 

13 on any of the foregoing, including any 

14 option to purchase or sell any such se15 curity, certificate of deposit, mortgage 

16 loan, interest, group or index, or op17 tion; 

18 ‘‘(V) means any margin loan; 

19 ‘‘(VI) means any other agree20 ment or transaction that is similar to 

21 any agreement or transaction referred 

22 to in this clause; 

23 ‘‘(VII) means any combination of 

24 the agreements or transactions re25 ferred to in this clause; 
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1 ‘‘(VIII) means any option to 

2 enter into any agreement or trans3 action referred to in this clause; 

4 ‘‘(IX) means a master agreement 

5 that provides for an agreement or 

6 transaction referred to in subclause 

7 (I), (III), (IV), (V), (VI), (VII), or 

8 (VIII), together with all supplements 

9 to any such master agreement, with10 out regard to whether the master 

11 agreement provides for an agreement 

12 or transaction that is not a securities 

13 contract under this clause, except that 

14 the master agreement shall be consid15 ered to be a securities contract under 

16 this clause only with respect to each 

17 agreement or transaction under the 

18 master agreement that is referred to 

19 in subclause (I), (III), (IV), (V), (VI), 

20 (VII), or (VIII); and 

21 ‘‘(X) means any security agree22 ment or arrangement or other credit 

23 enhancement related to any agree24 ment or transaction referred to in this 

25 clause, including any guarantee or re-
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1 imbursement obligation in connection 

2 with any agreement or transaction re3 ferred to in this clause.’’. 

4 (c) DEFINITION OF COMMODITY CONTRACT.— 

5 (1) FDIC-INSURED DEPOSITORY INSTITU6 TIONS.—Section 11(e)(8)(D)(iii) of the Federal De7 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is 

8 amended to read as follows: 

9 ‘‘(iii) COMMODITY CONTRACT.—The 

10 term ‘commodity contract’ means— 

11 ‘‘(I) with respect to a futures 

12 commission merchant, a contract for 

13 the purchase or sale of a commodity 

14 for future delivery on, or subject to 

15 the rules of, a contract market or 

16 board of trade; 

17 ‘‘(II) with respect to a foreign fu18 tures commission merchant, a foreign 

19 future; 

20 ‘‘(III) with respect to a leverage 

21 transaction merchant, a leverage 

22 transaction; 

23 ‘‘(IV) with respect to a clearing 

24 organization, a contract for the pur25 chase or sale of a commodity for fu-
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1 ture delivery on, or subject to the 

2 rules of, a contract market or board 

3 of trade that is cleared by such clear4 ing organization, or commodity option 

5 traded on, or subject to the rules of, 

6 a contract market or board of trade 

7 that is cleared by such clearing orga8 nization; 

9 ‘‘(V) with respect to a commodity 

10 options dealer, a commodity option; 

11 ‘‘(VI) any other agreement or 

12 transaction that is similar to any 

13 agreement or transaction referred to 

14 in this clause; 

15 ‘‘(VII) any combination of the 

16 agreements or transactions referred to 

17 in this clause; 

18 ‘‘(VIII) any option to enter into 

19 any agreement or transaction referred 

20 to in this clause; 

21 ‘‘(IX) a master agreement that 

22 provides for an agreement or trans23 action referred to in subclause (I), 

24 (II), (III), (IV), (V), (VI), (VII), or 

25 (VIII), together with all supplements 
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1 to any such master agreement, with2 out regard to whether the master 

3 agreement provides for an agreement 

4 or transaction that is not a com5 modity contract under this clause, ex6 cept that the master agreement shall 

7 be considered to be a commodity con8 tract under this clause only with re9 spect to each agreement or trans10 action under the master agreement 

11 that is referred to in subclause (I), 

12 (II), (III), (IV), (V), (VI), (VII), or 

13 (VIII); or 

14 ‘‘(X) any security agreement or 

15 arrangement or other credit enhance16 ment related to any agreement or 

17 transaction referred to in this clause, 

18 including any guarantee or reimburse19 ment obligation in connection with 

20 any agreement or transaction referred 

21 to in this clause.’’. 

22 (2) INSURED CREDIT UNIONS.—Section 

23 207(c)(8)(D)(iii) of the Federal Credit Union Act 

24 (12 U.S.C. 1787(c)(8)(D)(iii)) is amended to read as 

25 follows: 
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1 ‘‘(iii) COMMODITY CONTRACT.—The 

2 term ‘commodity contract’ means— 

3 ‘‘(I) with respect to a futures 

4 commission merchant, a contract for 

5 the purchase or sale of a commodity 

6 for future delivery on, or subject to 

7 the rules of, a contract market or 

8 board of trade; 

9 ‘‘(II) with respect to a foreign fu10 tures commission merchant, a foreign 

11 future; 

12 ‘‘(III) with respect to a leverage 

13 transaction merchant, a leverage 

14 transaction; 

15 ‘‘(IV) with respect to a clearing 

16 organization, a contract for the pur17 chase or sale of a commodity for fu18 ture delivery on, or subject to the 

19 rules of, a contract market or board 

20 of trade that is cleared by such clear21 ing organization, or commodity option 

22 traded on, or subject to the rules of, 

23 a contract market or board of trade 

24 that is cleared by such clearing orga25 nization; 
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1 ‘‘(V) with respect to a commodity 

2 options dealer, a commodity option; 

3 ‘‘(VI) any other agreement or 

4 transaction that is similar to any 

5 agreement or transaction referred to 

6 in this clause; 

7 ‘‘(VII) any combination of the 

8 agreements or transactions referred to 

9 in this clause; 

10 ‘‘(VIII) any option to enter into 

11 any agreement or transaction referred 

12 to in this clause; 

13 ‘‘(IX) a master agreement that 

14 provides for an agreement or trans15 action referred to in subclause (I), 

16 (II), (III), (IV), (V), (VI), (VII), or 

17 (VIII), together with all supplements 

18 to any such master agreement, with19 out regard to whether the master 

20 agreement provides for an agreement 

21 or transaction that is not a com22 modity contract under this clause, ex23 cept that the master agreement shall 

24 be considered to be a commodity con25 tract under this clause only with re-
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1 spect to each agreement or trans2 action under the master agreement 

3 that is referred to in subclause (I), 

4 (II), (III), (IV), (V), (VI), (VII), or 

5 (VIII); or 

6 ‘‘(X) any security agreement or 

7 arrangement or other credit enhance8 ment related to any agreement or 

9 transaction referred to in this clause, 

10 including any guarantee or reimburse11 ment obligation in connection with 

12 any agreement or transaction referred 

13 to in this clause.’’. 

14 (d) DEFINITION OF FORWARD CONTRACT.— 

15 (1) FDIC-INSURED DEPOSITORY INSTITU16 TIONS.—Section 11(e)(8)(D)(iv) of the Federal De17 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is 

18 amended to read as follows: 

19 ‘‘(iv) FORWARD CONTRACT.—The 

20 term ‘forward contract’ means— 

21 ‘‘(I) a contract (other than a 

22 commodity contract) for the purchase, 

23 sale, or transfer of a commodity or 

24 any similar good, article, service, 

25 right, or interest which is presently or 
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1 in the future becomes the subject of 

2 dealing in the forward contract trade, 

3 or product or byproduct thereof, with 

4 a maturity date more than 2 days 

5 after the date the contract is entered 

6 into, including, a repurchase trans7 action, reverse repurchase transaction, 

8 consignment, lease, swap, hedge 

9 transaction, deposit, loan, option, allo10 cated transaction, unallocated trans11 action, or any other similar agree12 ment; 

13 ‘‘(II) any combination of agree14 ments or transactions referred to in 

15 subclauses (I) and (III); 

16 ‘‘(III) any option to enter into 

17 any agreement or transaction referred 

18 to in subclause (I) or (II); 

19 ‘‘(IV) a master agreement that 

20 provides for an agreement or trans21 action referred to in subclauses (I), 

22 (II), or (III), together with all supple23 ments to any such master agreement, 

24 without regard to whether the master 

25 agreement provides for an agreement 
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1 or transaction that is not a forward 

2 contract under this clause, except that 

3 the master agreement shall be consid4 ered to be a forward contract under 

5 this clause only with respect to each 

6 agreement or transaction under the 

7 master agreement that is referred to 

8 in subclause (I), (II), or (III); or 

9 ‘‘(V) any security agreement or 

10 arrangement or other credit enhance11 ment related to any agreement or 

12 transaction referred to in subclause 

13 (I), (II), (III), or (IV), including any 

14 guarantee or reimbursement obliga15 tion in connection with any agreement 

16 or transaction referred to in any such 

17 subclause.’’. 

18 (2) INSURED CREDIT UNIONS.—Section 

19 207(c)(8)(D)(iv) of the Federal Credit Union Act 

20 (12 U.S.C. 1787(c)(8)(D)(iv)) is amended to read as 

21 follows: 

22 ‘‘(iv) FORWARD CONTRACT.—The 

23 term ‘forward contract’ means— 

24 ‘‘(I) a contract (other than a 

25 commodity contract) for the purchase, 
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1 sale, or transfer of a commodity or 

2 any similar good, article, service, 

3 right, or interest which is presently or 

4 in the future becomes the subject of 

5 dealing in the forward contract trade, 

6 or product or byproduct thereof, with 

7 a maturity date more than 2 days 

8 after the date the contract is entered 

9 into, including, a repurchase trans10 action, reverse repurchase transaction, 

11 consignment, lease, swap, hedge 

12 transaction, deposit, loan, option, allo13 cated transaction, unallocated trans14 action, or any other similar agree15 ment; 

16 ‘‘(II) any combination of agree17 ments or transactions referred to in 

18 subclauses (I) and (III); 

19 ‘‘(III) any option to enter into 

20 any agreement or transaction referred 

21 to in subclause (I) or (II); 

22 ‘‘(IV) a master agreement that 

23 provides for an agreement or trans24 action referred to in subclauses (I), 

25 (II), or (III), together with all supple-
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1 ments to any such master agreement, 

2 without regard to whether the master 

3 agreement provides for an agreement 

4 or transaction that is not a forward 

5 contract under this clause, except that 

6 the master agreement shall be consid7 ered to be a forward contract under 

8 this clause only with respect to each 

9 agreement or transaction under the 

10 master agreement that is referred to 

11 in subclause (I), (II), or (III); or 

12 ‘‘(V) any security agreement or 

13 arrangement or other credit enhance14 ment related to any agreement or 

15 transaction referred to in subclause 

16 (I), (II), (III), or (IV), including any 

17 guarantee or reimbursement obliga18 tion in connection with any agreement 

19 or transaction referred to in any such 

20 subclause.’’. 

21 (e) DEFINITION OF REPURCHASE AGREEMENT.— 

22 (1) FDIC-INSURED DEPOSITORY INSTITU23 TIONS.—Section 11(e)(8)(D)(v) of the Federal De24 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is 

25 amended to read as follows: 
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1 ‘‘(v) REPURCHASE AGREEMENT.—The 

2 term ‘repurchase agreement’ (which defini3 tion also applies to a reverse repurchase 

4 agreement)— 

5 ‘‘(I) means an agreement, includ6 ing related terms, which provides for 

7 the transfer of one or more certifi8 cates of deposit, mortgage-related se9 curities (as such term is defined in 

10 the Securities Exchange Act of 1934), 

11 mortgage loans, interests in mortgage12 related securities or mortgage loans, 

13 eligible bankers’ acceptances, qualified 

14 foreign government securities or secu15 rities that are direct obligations of, or 

16 that are fully guaranteed by, the 

17 United States or any agency of the 

18 United States against the transfer of 

19 funds by the transferee of such certifi20 cates of deposit, eligible bankers’ ac21 ceptances, securities, mortgage loans, 

22 or interests with a simultaneous 

23 agreement by such transferee to 

24 transfer to the transferor thereof cer25 tificates of deposit, eligible bankers’ 
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1 acceptances, securities, mortgage 

2 loans, or interests as described above, 

3 at a date certain not later than 1 year 

4 after such transfers or on demand, 

5 against the transfer of funds, or any 

6 other similar agreement; 

7 ‘‘(II) does not include any repur8 chase obligation under a participation 

9 in a commercial mortgage loan unless 

10 the Corporation determines by regula11 tion, resolution, or order to include 

12 any such participation within the 

13 meaning of such term; 

14 ‘‘(III) means any combination of 

15 agreements or transactions referred to 

16 in subclauses (I) and (IV); 

17 ‘‘(IV) means any option to enter 

18 into any agreement or transaction re19 ferred to in subclause (I) or (III); 

20 ‘‘(V) means a master agreement 

21 that provides for an agreement or 

22 transaction referred to in subclause 

23 (I), (III), or (IV), together with all 

24 supplements to any such master 

25 agreement, without regard to whether 
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1 the master agreement provides for an 

2 agreement or transaction that is not a 

3 repurchase agreement under this 

4 clause, except that the master agree5 ment shall be considered to be a re6 purchase agreement under this sub7 clause only with respect to each agree8 ment or transaction under the master 

9 agreement that is referred to in sub10 clause (I), (III), or (IV); and 

11 ‘‘(VI) means any security agree12 ment or arrangement or other credit 

13 enhancement related to any agreement 

14 or transaction referred to in subclause 

15 (I), (III), (IV), or (V), including any 

16 guarantee or reimbursement obligation 

17 in connection with any agreement or 

18 transaction referred to in any such 

19 subclause. 

20 For purposes of this clause, the term 

21 ‘qualified foreign government security’ 

22 means a security that is a direct obligation 

23 of, or that is fully guaranteed by, the cen24 tral government of a member of the Orga25 nization for Economic Cooperation and 
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1 Development (as determined by regulation 

2 or order adopted by the appropriate Fed3 eral banking authority).’’. 

4 (2) INSURED CREDIT UNIONS.—Section 

5 207(c)(8)(D)(v) of the Federal Credit Union Act (12 

6 U.S.C. 1787(c)(8)(D)(v)) is amended to read as fol7 lows: 

8 ‘‘(v) REPURCHASE AGREEMENT.—The 

9 term ‘repurchase agreement’ (which defini10 tion also applies to a reverse repurchase 

11 agreement)— 

12 ‘‘(I) means an agreement, includ13 ing related terms, which provides for 

14 the transfer of one or more certifi15 cates of deposit, mortgage-related se16 curities (as such term is defined in 

17 the Securities Exchange Act of 1934), 

18 mortgage loans, interests in mortgage19 related securities or mortgage loans, 

20 eligible bankers’ acceptances, qualified 

21 foreign government securities or secu22 rities that are direct obligations of, or 

23 that are fully guaranteed by, the 

24 United States or any agency of the 

25 United States against the transfer of 
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1 funds by the transferee of such certifi2 cates of deposit, eligible bankers’ ac3 ceptances, securities, mortgage loans, 

4 or interests with a simultaneous 

5 agreement by such transferee to 

6 transfer to the transferor thereof cer7 tificates of deposit, eligible bankers’ 

8 acceptances, securities, mortgage 

9 loans, or interests as described above, 

10 at a date certain not later than 1 year 

11 after such transfers or on demand, 

12 against the transfer of funds, or any 

13 other similar agreement; 

14 ‘‘(II) does not include any repur15 chase obligation under a participation 

16 in a commercial mortgage loan unless 

17 the Board determines by regulation, 

18 resolution, or order to include any such 

19 participation within the meaning of 

20 such term; 

21 ‘‘(III) means any combination of 

22 agreements or transactions referred to 

23 in subclauses (I) and (IV); 
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1 ‘‘(IV) means any option to enter 

2 into any agreement or transaction re3 ferred to in subclause (I) or (III); 

4 ‘‘(V) means a master agreement 

5 that provides for an agreement or 

6 transaction referred to in subclause 

7 (I), (III), or (IV), together with all 

8 supplements to any such master 

9 agreement, without regard to whether 

10 the master agreement provides for an 

11 agreement or transaction that is not a 

12 repurchase agreement under this 

13 clause, except that the master agree14 ment shall be considered to be a re15 purchase agreement under this sub16 clause only with respect to each agree17 ment or transaction under the master 

18 agreement that is referred to in sub19 clause (I), (III), or (IV); and 

20 ‘‘(VI) means any security agree21 ment or arrangement or other credit 

22 enhancement related to any agree23 ment or transaction referred to in 

24 subclause (I), (III), (IV), or (V), in25 cluding any guarantee or reimburse-
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1 ment obligation in connection with 

2 any agreement or transaction referred 

3 to in any such subclause. 

4 For purposes of this clause, the term 

5 ‘qualified foreign government security’ 

6 means a security that is a direct obligation 

7 of, or that is fully guaranteed by, the cen8 tral government of a member of the Orga9 nization for Economic Cooperation and 

10 Development (as determined by regulation 

11 or order adopted by the appropriate Fed12 eral banking authority).’’. 

13 (f) DEFINITION OF SWAP AGREEMENT.— 

14 (1) FDIC-INSURED DEPOSITORY INSTITU15 TIONS.—Section 11(e)(8)(D)(vi) of the Federal De16 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is 

17 amended to read as follows: 

18 ‘‘(vi) SWAP AGREEMENT.—The term 

19 ‘swap agreement’ means— 

20 ‘‘(I) any agreement, including the 

21 terms and conditions incorporated by 

22 reference in any such agreement, 

23 which is an interest rate swap, option, 

24 future, or forward agreement, includ25 ing a rate floor, rate cap, rate collar, 
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1 cross-currency rate swap, and basis 

2 swap; a spot, same day-tomorrow, to3 morrow-next, forward, or other for4 eign exchange or precious metals 

5 agreement; a currency swap, option, 

6 future, or forward agreement; an eq7 uity index or equity swap, option, fu8 ture, or forward agreement; a debt 

9 index or debt swap, option, future, or 

10 forward agreement; a total return, 

11 credit spread or credit swap, option, 

12 future, or forward agreement; a com13 modity index or commodity swap, op14 tion, future, or forward agreement; or 

15 a weather swap, weather derivative, or 

16 weather option; 

17 ‘‘(II) any agreement or trans18 action that is similar to any other 

19 agreement or transaction referred to 

20 in this clause and that is of a type 

21 that has been, is presently, or in the 

22 future becomes, the subject of recur23 rent dealings in the swap markets (in24 cluding terms and conditions incor25 porated by reference in such agree-
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1 ment) and that is a forward, swap, fu2 ture, or option on one or more rates, 

3 currencies, commodities, equity securi4 ties or other equity instruments, debt 

5 securities or other debt instruments, 

6 quantitative measures associated with 

7 an occurrence, extent of an occur8 rence, or contingency associated with 

9 a financial, commercial, or economic 

10 consequence, or economic or financial 

11 indices or measures of economic or fi12 nancial risk or value; 

13 ‘‘(III) any combination of agree14 ments or transactions referred to in 

15 this clause; 

16 ‘‘(IV) any option to enter into 

17 any agreement or transaction referred 

18 to in this clause; 

19 ‘‘(V) a master agreement that 

20 provides for an agreement or trans21 action referred to in subclause (I), 

22 (II), (III), or (IV), together with all 

23 supplements to any such master 

24 agreement, without regard to whether 

25 the master agreement contains an 
30 

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1 agreement or transaction that is not a 

2 swap agreement under this clause, ex3 cept that the master agreement shall 

4 be considered to be a swap agreement 

5 under this clause only with respect to 

6 each agreement or transaction under 

7 the master agreement that is referred 

8 to in subclause (I), (II), (III), or (IV); 

9 and 

10 ‘‘(VI) any security agreement or 

11 arrangement or other credit enhance12 ment related to any agreements or 

13 transactions referred to in subclause 

14 (I), (II), (III), (IV), or (V), including 

15 any guarantee or reimbursement obli16 gation in connection with any agree17 ment or transaction referred to in any 

18 such subclause. 

19 Such term is applicable for purposes of 

20 this subsection only and shall not be con21 strued or applied so as to challenge or af22 fect the characterization, definition, or 

23 treatment of any swap agreement under 

24 any other statute, regulation, or rule, in25 cluding the Securities Act of 1933, the Se-
31 

•HR 2120 RH 

1 curities Exchange Act of 1934, the Public 

2 Utility Holding Company Act of 1935, the 

3 Trust Indenture Act of 1939, the Invest4 ment Company Act of 1940, the Invest5 ment Advisers Act of 1940, the Securities 

6 Investor Protection Act of 1970, the Com7 modity Exchange Act, the Gramm-Leach8 Bliley Act, and the Legal Certainty for 

9 Bank Products Act of 2000.’’. 

10 (2) INSURED CREDIT UNIONS.—Section 

11 207(c)(8)(D) of the Federal Credit Union Act (12 

12 U.S.C. 1787(c)(8)(D)) is amended by adding at the 

13 end the following new clause: 

14 ‘‘(vi) SWAP AGREEMENT.—The term 

15 ‘swap agreement’ means— 

16 ‘‘(I) any agreement, including the 

17 terms and conditions incorporated by 

18 reference in any such agreement, 

19 which is an interest rate swap, option, 

20 future, or forward agreement, includ21 ing a rate floor, rate cap, rate collar, 

22 cross-currency rate swap, and basis 

23 swap; a spot, same day-tomorrow, to24 morrow-next, forward, or other for25 eign exchange or precious metals 
32 

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1 agreement; a currency swap, option, 

2 future, or forward agreement; an eq3 uity index or equity swap, option, fu4 ture, or forward agreement; a debt 

5 index or debt swap, option, future, or 

6 forward agreement; a total return, 

7 credit spread or credit swap, option, 

8 future, or forward agreement; a com9 modity index or commodity swap, op10 tion, future, or forward agreement; or 

11 a weather swap, weather derivative, or 

12 weather option; 

13 ‘‘(II) any agreement or trans14 action that is similar to any other 

15 agreement or transaction referred to 

16 in this clause and that is of a type 

17 that has been, is presently, or in the 

18 future becomes, the subject of recur19 rent dealings in the swap markets (in20 cluding terms and conditions incor21 porated by reference in such agree22 ment) and that is a forward, swap, fu23 ture, or option on one or more rates, 

24 currencies, commodities, equity securi25 ties or other equity instruments, debt 
33 

•HR 2120 RH 

1 securities or other debt instruments, 

2 quantitative measures associated with 

3 an occurrence, extent of an occur4 rence, or contingency associated with 

5 a financial, commercial, or economic 

6 consequence, or economic or financial 

7 indices or measures of economic or fi8 nancial risk or value; 

9 ‘‘(III) any combination of agree10 ments or transactions referred to in 

11 this clause; 

12 ‘‘(IV) any option to enter into 

13 any agreement or transaction referred 

14 to in this clause; 

15 ‘‘(V) a master agreement that 

16 provides for an agreement or trans17 action referred to in subclause (I), 

18 (II), (III), or (IV), together with all 

19 supplements to any such master 

20 agreement, without regard to whether 

21 the master agreement contains an 

22 agreement or transaction that is not a 

23 swap agreement under this clause, ex24 cept that the master agreement shall 

25 be considered to be a swap agreement 
34 

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1 under this clause only with respect to 

2 each agreement or transaction under 

3 the master agreement that is referred 

4 to in subclause (I), (II), (III), or (IV); 

5 and 

6 ‘‘(VI) any security agreement or 

7 arrangement or other credit enhance8 ment related to any agreements or 

9 transactions referred to in subclause 

10 (I), (II), (III), (IV), or (V), including 

11 any guarantee or reimbursement obli12 gation in connection with any agree13 ment or transaction referred to in any 

14 such subclause. 

15 Such term is applicable for purposes of 

16 this subsection only and shall not be con17 strued or applied so as to challenge or af18 fect the characterization, definition, or 

19 treatment of any swap agreement under 

20 any other statute, regulation, or rule, in21 cluding the Securities Act of 1933, the Se22 curities Exchange Act of 1934, the Public 

23 Utility Holding Company Act of 1935, the 

24 Trust Indenture Act of 1939, the Invest25 ment Company Act of 1940, the Invest-
35 

•HR 2120 RH 

1 ment Advisers Act of 1940, the Securities 

2 Investor Protection Act of 1970, the Com3 modity Exchange Act, the Gramm-Leach4 Bliley Act, and the Legal Certainty for 

5 Bank Products Act of 2000.’’. 

6 (g) DEFINITION OF TRANSFER.— 

7 (1) FDIC-INSURED DEPOSITORY INSTITU8 TIONS.—Section 11(e)(8)(D)(viii) of the Federal De9 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) 

10 is amended to read as follows: 

11 ‘‘(viii) TRANSFER.—The term ‘trans12 fer’ means every mode, direct or indirect, 

13 absolute or conditional, voluntary or invol14 untary, of disposing of or parting with 

15 property or with an interest in property, 

16 including retention of title as a security in17 terest and foreclosure of the depository in18 stitution’s equity of redemption.’’. 

19 (2) INSURED CREDIT UNIONS.—Section 

20 207(c)(8)(D) of the Federal Credit Union Act (12 

21 U.S.C. 1787(c)(8)(D)) (as amended by subsection 

22 (f) of this section) is amended by adding at the end 

23 the following new clause: 

24 ‘‘(viii) TRANSFER.—The term ‘trans25 fer’ means every mode, direct or indirect, 
36 

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1 absolute or conditional, voluntary or invol2 untary, of disposing of or parting with 

3 property or with an interest in property, 

4 including retention of title as a security in5 terest and foreclosure of the depository in6 stitution’s equity of redemption.’’. 

7 (h) TREATMENT OF QUALIFIED FINANCIAL CON8 TRACTS.— 

9 (1) FDIC-INSURED DEPOSITORY INSTITU10 TIONS.—Section 11(e)(8) of the Federal Deposit In11 surance Act (12 U.S.C. 1821(e)(8)) is amended— 

12 (A) in subparagraph (A)— 

13 (i) by striking ‘‘paragraph (10)’’ and 

14 inserting ‘‘paragraphs (9) and (10)’’; 

15 (ii) in clause (i), by striking ‘‘to cause 

16 the termination or liquidation’’ and insert17 ing ‘‘such person has to cause the termi18 nation, liquidation, or acceleration’’; and 

19 (iii) by striking clause (ii) and insert20 ing the following new clause: 

21 ‘‘(ii) any right under any security 

22 agreement or arrangement or other credit 

23 enhancement related to one or more quali24 fied financial contracts described in clause 

25 (i);’’; and 
37 

•HR 2120 RH 

1 (B) in subparagraph (E), by striking 

2 clause (ii) and inserting the following: 

3 ‘‘(ii) any right under any security 

4 agreement or arrangement or other credit 

5 enhancement related to one or more quali6 fied financial contracts described in clause 

7 (i);’’. 

8 (2) INSURED CREDIT UNIONS.—Section 

9 207(c)(8) of the Federal Credit Union Act (12 

10 U.S.C. 1787(c)(8)) is amended— 

11 (A) in subparagraph (A)— 

12 (i) by striking ‘‘paragraph (12)’’ and 

13 inserting ‘‘paragraphs (9) and (10)’’; 

14 (ii) in clause (i), by striking ‘‘to cause 

15 the termination or liquidation’’ and insert16 ing ‘‘such person has to cause the termi17 nation, liquidation, or acceleration’’; and 

18 (iii) by striking clause (ii) and insert19 ing the following new clause: 

20 ‘‘(ii) any right under any security 

21 agreement or arrangement or other credit 

22 enhancement related to 1 or more qualified 

23 financial contracts described in clause 

24 (i);’’; and 
38 

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1 (B) in subparagraph (E), by striking 

2 clause (ii) and inserting the following new 

3 clause: 

4 ‘‘(ii) any right under any security 

5 agreement or arrangement or other credit 

6 enhancement related to 1 or more qualified 

7 financial contracts described in clause 

8 (i);’’. 

9 (i) AVOIDANCE OF TRANSFERS.— 

10 (1) FDIC-INSURED DEPOSITORY INSTITU11 TIONS.—Section 11(e)(8)(C)(i) of the Federal De12 posit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is 

13 amended by inserting ‘‘section 5242 of the Revised 

14 Statutes of the United States or any other Federal 

15 or State law relating to the avoidance of preferential 

16 or fraudulent transfers,’’ before ‘‘the Corporation’’. 

17 (2) INSURED CREDIT UNIONS.—Section 

18 207(c)(8)(C)(i) of the Federal Credit Union Act (12 

19 U.S.C. 1787(c)(8)(C)(i)) is amended by inserting 

20 ‘‘section 5242 of the Revised Statutes of the United 

21 States or any other Federal or State law relating to 

22 the avoidance of preferential or fraudulent trans23 fers,’’ before ‘‘the Board’’. 
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1 SEC. 3. AUTHORITY OF THE FDIC AND NCUAB WITH RE2 SPECT TO FAILED AND FAILING INSTITU3 TIONS. 

4 (a) FEDERAL DEPOSIT INSURANCE CORPORATION.— 

5 (1) IN GENERAL.—Section 11(e)(8) of the Fed6 eral Deposit Insurance Act (12 U.S.C. 1821(e)(8)) 

7 is amended— 

8 (A) in subparagraph (E), by striking 

9 ‘‘other than paragraph (12) of this subsection, 

10 subsection (d)(9)’’ and inserting ‘‘other than 

11 subsections (d)(9) and (e)(10)’’; and 

12 (B) by adding at the end the following new 

13 subparagraphs: 

14 ‘‘(F) CLARIFICATION.—No provision of law 

15 shall be construed as limiting the right or 

16 power of the Corporation, or authorizing any 

17 court or agency to limit or delay, in any man18 ner, the right or power of the Corporation to 

19 transfer any qualified financial contract in ac20 cordance with paragraphs (9) and (10) of this 

21 subsection or to disaffirm or repudiate any such 

22 contract in accordance with subsection (e)(1) of 

23 this section. 

24 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC25 TIVE.— 
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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 the provisions of subparagraphs (A) and 

3 (E), and sections 403 and 404 of the Fed4 eral Deposit Insurance Corporation Im5 provement Act of 1991, no walkaway 

6 clause shall be enforceable in a qualified fi7 nancial contract of an insured depository 

8 institution in default. 

9 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

10 For purposes of this subparagraph, the 

11 term ‘walkaway clause’ means a provision 

12 in a qualified financial contract that, after 

13 calculation of a value of a party’s position 

14 or an amount due to or from 1 of the par15 ties in accordance with its terms upon ter16 mination, liquidation, or acceleration of the 

17 qualified financial contract, either does not 

18 create a payment obligation of a party or 

19 extinguishes a payment obligation of a 

20 party in whole or in part solely because of 

21 such party’s status as a nondefaulting 

22 party.’’. 

23 (2) TECHNICAL AND CONFORMING AMEND24 MENT.—Section 11(e)(12)(A) of the Federal Deposit 

25 Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amend-
41 

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1 ed by inserting ‘‘or the exercise of rights or powers 

2 by’’ after ‘‘the appointment of’’. 

3 (b) NATIONAL CREDIT UNION ADMINISTRATION

4 BOARD.— 

5 (1) IN GENERAL.—Section 207(c)(8) of the 

6 Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is 

7 amended— 

8 (A) in subparagraph (E) (as amended by 

9 section 2(h)), by striking ‘‘other than para10 graph (12) of this subsection, subsection 

11 (b)(9)’’ and inserting ‘‘other than subsections 

12 (b)(9) and (c)(10)’’; and 

13 (B) by adding at the end the following new 

14 subparagraphs: 

15 ‘‘(F) CLARIFICATION.—No provision of law 

16 shall be construed as limiting the right or 

17 power of the Board, or authorizing any court or 

18 agency to limit or delay, in any manner, the 

19 right or power of the Board to transfer any 

20 qualified financial contract in accordance with 

21 paragraphs (9) and (10) of this subsection or to 

22 disaffirm or repudiate any such contract in ac23 cordance with subsection (c)(1) of this section. 

24 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC25 TIVE.— 
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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 the provisions of subparagraphs (A) and 

3 (E), and sections 403 and 404 of the Fed4 eral Deposit Insurance Corporation Im5 provement Act of 1991, no walkaway 

6 clause shall be enforceable in a qualified fi7 nancial contract of an insured credit union 

8 in default. 

9 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

10 For purposes of this subparagraph, the 

11 term ‘walkaway clause’ means a provision 

12 in a qualified financial contract that, after 

13 calculation of a value of a party’s position 

14 or an amount due to or from 1 of the par15 ties in accordance with its terms upon ter16 mination, liquidation, or acceleration of the 

17 qualified financial contract, either does not 

18 create a payment obligation of a party or 

19 extinguishes a payment obligation of a 

20 party in whole or in part solely because of 

21 such party’s status as a nondefaulting 

22 party.’’. 

23 (2) TECHNICAL AND CONFORMING AMEND24 MENT.—Section 207(c)(12)(A) of the Federal Credit 

25 Union Act (12 U.S.C. 1787(c)(12)(A)) is amended 
43 

•HR 2120 RH 

1 by inserting ‘‘or the exercise of rights or powers by’’ 

2 after ‘‘the appointment of’’. 

3 SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALI4 FIED FINANCIAL CONTRACTS. 

5 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

6 (1) TRANSFERS OF QUALIFIED FINANCIAL

7 CONTRACTS TO FINANCIAL INSTITUTIONS.—Section 

8 11(e)(9) of the Federal Deposit Insurance Act (12 

9 U.S.C. 1821(e)(9)) is amended to read as follows: 

10 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON11 TRACTS.— 

12 ‘‘(A) IN GENERAL.—In making any trans13 fer of assets or liabilities of a depository institu14 tion in default which includes any qualified fi15 nancial contract, the conservator or receiver for 

16 such depository institution shall either— 

17 ‘‘(i) transfer to one financial institu18 tion, other than a financial institution for 

19 which a conservator, receiver, trustee in 

20 bankruptcy, or other legal custodian has 

21 been appointed or which is otherwise the 

22 subject of a bankruptcy or insolvency pro23 ceeding— 

24 ‘‘(I) all qualified financial con25 tracts between any person or any af-
44 

•HR 2120 RH 

1 filiate of such person and the deposi2 tory institution in default; 

3 ‘‘(II) all claims of such person or 

4 any affiliate of such person against 

5 such depository institution under any 

6 such contract (other than any claim 

7 which, under the terms of any such 

8 contract, is subordinated to the claims 

9 of general unsecured creditors of such 

10 institution); 

11 ‘‘(III) all claims of such deposi12 tory institution against such person or 

13 any affiliate of such person under any 

14 such contract; and 

15 ‘‘(IV) all property securing or 

16 any other credit enhancement for any 

17 contract described in subclause (I) or 

18 any claim described in subclause (II) 

19 or (III) under any such contract; or 

20 ‘‘(ii) transfer none of the qualified fi21 nancial contracts, claims, property or other 

22 credit enhancement referred to in clause (i) 

23 (with respect to such person and any affil24 iate of such person). 
45 

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1 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR2 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

3 AGENCY OF A FOREIGN BANK OR FINANCIAL IN4 STITUTION.—In transferring any qualified fi5 nancial contracts and related claims and prop6 erty under subparagraph (A)(i), the conservator 

7 or receiver for the depository institution shall 

8 not make such transfer to a foreign bank, fi9 nancial institution organized under the laws of 

10 a foreign country, or a branch or agency of a 

11 foreign bank or financial institution unless, 

12 under the law applicable to such bank, financial 

13 institution, branch or agency, to the qualified 

14 financial contracts, and to any netting contract, 

15 any security agreement or arrangement or other 

16 credit enhancement related to one or more 

17 qualified financial contracts, the contractual 

18 rights of the parties to such qualified financial 

19 contracts, netting contracts, security agree20 ments or arrangements, or other credit en21 hancements are enforceable substantially to the 

22 same extent as permitted under this section. 

23 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

24 TO THE RULES OF A CLEARING ORGANIZA25 TION.—In the event that a conservator or re-
46 

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1 ceiver transfers any qualified financial contract 

2 and related claims, property, and credit en3 hancements pursuant to subparagraph (A)(i) 

4 and such contract is cleared by or subject to the 

5 rules of a clearing organization, the clearing or6 ganization shall not be required to accept the 

7 transferee as a member by virtue of the trans8 fer. 

9 ‘‘(D) DEFINITIONS.—For purposes of this 

10 paragraph, the term ‘financial institution’ 

11 means a broker or dealer, a depository institu12 tion, a futures commission merchant, or any 

13 other institution, as determined by the Corpora14 tion by regulation to be a financial institution, 

15 and the term ‘clearing organization’ has the 

16 same meaning as in section 402 of the Federal 

17 Deposit Insurance Corporation Improvement 

18 Act of 1991.’’. 

19 (2) NOTICE TO QUALIFIED FINANCIAL CON20 TRACT COUNTERPARTIES.—Section 11(e)(10)(A) of 

21 the Federal Deposit Insurance Act (12 U.S.C. 

22 1821(e)(10)(A)) is amended in the material imme23 diately following clause (ii) by striking ‘‘the conser24 vator’’ and all that follows through the period and 

25 inserting the following: ‘‘the conservator or receiver 
47 

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1 shall notify any person who is a party to any such 

2 contract of such transfer by 5:00 p.m. (eastern time) 

3 on the business day following the date of the ap4 pointment of the receiver in the case of a receiver5 ship, or the business day following such transfer in 

6 the case of a conservatorship.’’. 

7 (3) RIGHTS AGAINST RECEIVER AND CONSER8 VATOR AND TREATMENT OF BRIDGE BANKS.—Sec9 tion 11(e)(10) of the Federal Deposit Insurance Act 

10 (12 U.S.C. 1821(e)(10)) is amended— 

11 (A) by redesignating subparagraph (B) as 

12 subparagraph (D); and 

13 (B) by inserting after subparagraph (A) 

14 the following new subparagraphs: 

15 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE16 ABLE.— 

17 ‘‘(i) RECEIVERSHIP.—A person who is 

18 a party to a qualified financial contract 

19 with an insured depository institution may 

20 not exercise any right that such person has 

21 to terminate, liquidate, or net such con22 tract under paragraph (8)(A) of this sub23 section or section 403 or 404 of the Fed24 eral Deposit Insurance Corporation Im25 provement Act of 1991, solely by reason of 
48 

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1 or incidental to the appointment of a re2 ceiver for the depository institution (or the 

3 insolvency or financial condition of the de4 pository institution for which the receiver 

5 has been appointed)— 

6 ‘‘(I) until 5:00 p.m. (eastern 

7 time) on the business day following 

8 the date of the appointment of the re9 ceiver; or 

10 ‘‘(II) after the person has re11 ceived notice that the contract has 

12 been transferred pursuant to para13 graph (9)(A). 

14 ‘‘(ii) CONSERVATORSHIP.—A person 

15 who is a party to a qualified financial con16 tract with an insured depository institution 

17 may not exercise any right that such per18 son has to terminate, liquidate, or net such 

19 contract under paragraph (8)(E) of this 

20 subsection or section 403 or 404 of the 

21 Federal Deposit Insurance Corporation 

22 Improvement Act of 1991, solely by reason 

23 of or incidental to the appointment of a 

24 conservator for the depository institution 

25 (or the insolvency or financial condition of 
49 

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1 the depository institution for which the 

2 conservator has been appointed). 

3 ‘‘(iii) NOTICE.—For purposes of this 

4 paragraph, the Corporation as receiver or 

5 conservator of an insured depository insti6 tution shall be deemed to have notified a 

7 person who is a party to a qualified finan8 cial contract with such depository institu9 tion if the Corporation has taken steps 

10 reasonably calculated to provide notice to 

11 such person by the time specified in sub12 paragraph (A). 

13 ‘‘(C) TREATMENT OF BRIDGE BANKS.— 

14 The following institutions shall not be consid15 ered to be a financial institution for which a 

16 conservator, receiver, trustee in bankruptcy, or 

17 other legal custodian has been appointed or 

18 which is otherwise the subject of a bankruptcy 

19 or insolvency proceeding for purposes of para20 graph (9): 

21 ‘‘(i) A bridge bank. 

22 ‘‘(ii) A depository institution orga23 nized by the Corporation, for which a con24 servator is appointed either— 
50 

•HR 2120 RH 

1 ‘‘(I) immediately upon the orga2 nization of the institution; or 

3 ‘‘(II) at the time of a purchase 

4 and assumption transaction between 

5 the depository institution and the Cor6 poration as receiver for a depository 

7 institution in default.’’. 

8 (b) INSURED CREDIT UNIONS.— 

9 (1) TRANSFERS OF QUALIFIED FINANCIAL CON10 TRACTS TO FINANCIAL INSTITUTIONS.—Section 

11 207(c)(9) of the Federal Credit Union Act (12 

12 U.S.C. 1787(c)(9)) is amended to read as follows: 

13 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON14 TRACTS.— 

15 ‘‘(A) IN GENERAL.—In making any trans16 fer of assets or liabilities of a credit union in 

17 default which includes any qualified financial 

18 contract, the conservator or liquidating agent 

19 for such credit union shall either— 

20 ‘‘(i) transfer to 1 financial institution, 

21 other than a financial institution for which 

22 a conservator, receiver, trustee in bank23 ruptcy, or other legal custodian has been 

24 appointed or which is otherwise the subject 

25 of a bankruptcy or insolvency proceeding— 
51 

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1 ‘‘(I) all qualified financial con2 tracts between any person or any af3 filiate of such person and the credit 

4 union in default; 

5 ‘‘(II) all claims of such person or 

6 any affiliate of such person against 

7 such credit union under any such con8 tract (other than any claim which, 

9 under the terms of any such contract, 

10 is subordinated to the claims of gen11 eral unsecured creditors of such credit 

12 union); 

13 ‘‘(III) all claims of such credit 

14 union against such person or any af15 filiate of such person under any such 

16 contract; and 

17 ‘‘(IV) all property securing or 

18 any other credit enhancement for any 

19 contract described in subclause (I) or 

20 any claim described in subclause (II) 

21 or (III) under any such contract; or 

22 ‘‘(ii) transfer none of the qualified fi23 nancial contracts, claims, property or other 

24 credit enhancement referred to in clause (i) 
52 

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1 (with respect to such person and any affil2 iate of such person). 

3 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR4 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

5 AGENCY OF A FOREIGN BANK OR FINANCIAL IN6 STITUTION.—In transferring any qualified fi7 nancial contracts and related claims and prop8 erty under subparagraph (A)(i), the conservator 

9 or liquidating agent for the credit union shall 

10 not make such transfer to a foreign bank, fi11 nancial institution organized under the laws of 

12 a foreign country, or a branch or agency of a 

13 foreign bank or financial institution unless, 

14 under the law applicable to such bank, financial 

15 institution, branch or agency, to the qualified 

16 financial contracts, and to any netting contract, 

17 any security agreement or arrangement or other 

18 credit enhancement related to 1 or more quali19 fied financial contracts, the contractual rights 

20 of the parties to such qualified financial con21 tracts, netting contracts, security agreements or 

22 arrangements, or other credit enhancements are 

23 enforceable substantially to the same extent as 

24 permitted under this section. 
53 

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1 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

2 TO THE RULES OF A CLEARING ORGANIZA3 TION.—In the event that a conservator or liqui4 dating agent transfers any qualified financial 

5 contract and related claims, property, and cred6 it enhancements pursuant to subparagraph 

7 (A)(i) and such contract is cleared by or subject 

8 to the rules of a clearing organization, the clear9 ing organization shall not be required to accept 

10 the transferee as a member by virtue of the 

11 transfer. 

12 ‘‘(D) DEFINITIONS.—For purposes of this 

13 paragraph— 

14 ‘‘(i) the term ‘financial institution’ 

15 means a broker or dealer, a depository in16 stitution, a futures commission merchant, 

17 a credit union, or any other institution, as 

18 determined by the Board by regulation to 

19 be a financial institution; and 

20 ‘‘(ii) the term ‘clearing organization’ 

21 has the same meaning as in section 402 of 

22 the Federal Deposit Insurance Corporation 

23 Improvement Act of 1991.’’. 

24 (2) NOTICE TO QUALIFIED FINANCIAL CON25 TRACT COUNTERPARTIES.—Section 207(c)(10)(A) of 
54 

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1 the Federal Credit Union Act (12 U.S.C. 

2 1787(c)(10)(A)) is amended in the material imme3 diately following clause (ii) by striking ‘‘the conser4 vator’’ and all that follows through the period and 

5 inserting the following: ‘‘the conservator or liqui6 dating agent shall notify any person who is a party 

7 to any such contract of such transfer by 5:00 p.m. 

8 (eastern time) on the business day following the date 

9 of the appointment of the liquidating agent in the 

10 case of a liquidation, or the business day following 

11 such transfer in the case of a conservatorship.’’. 

12 (3) RIGHTS AGAINST LIQUIDATING AGENT AND

13 CONSERVATOR AND TREATMENT OF BRIDGE

14 BANKS.—Section 207(c)(10) of the Federal Credit 

15 Union Act (12 U.S.C. 1787(c)(10)) is amended— 

16 (A) by redesignating subparagraph (B) as 

17 subparagraph (D); and 

18 (B) by inserting after subparagraph (A) 

19 the following new subparagraphs: 

20 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE21 ABLE.— 

22 ‘‘(i) LIQUIDATION.—A person who is 

23 a party to a qualified financial contract 

24 with an insured credit union may not exer25 cise any right that such person has to ter-
55 

•HR 2120 RH 

1 minate, liquidate, or net such contract 

2 under paragraph (8)(A) of this subsection 

3 or section 403 or 404 of the Federal De4 posit Insurance Corporation Improvement 

5 Act of 1991, solely by reason of or inci6 dental to the appointment of a liquidating 

7 agent for the credit union institution (or 

8 the insolvency or financial condition of the 

9 credit union for which the liquidating 

10 agent has been appointed)— 

11 ‘‘(I) until 5:00 p.m. (eastern 

12 time) on the business day following 

13 the date of the appointment of the liq14 uidating agent; or 

15 ‘‘(II) after the person has re16 ceived notice that the contract has 

17 been transferred pursuant to para18 graph (9)(A). 

19 ‘‘(ii) CONSERVATORSHIP.—A person 

20 who is a party to a qualified financial con21 tract with an insured credit union may not 

22 exercise any right that such person has to 

23 terminate, liquidate, or net such contract 

24 under paragraph (8)(E) of this subsection 

25 or section 403 or 404 of the Federal De-
56 

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1 posit Insurance Corporation Improvement 

2 Act of 1991, solely by reason of or inci3 dental to the appointment of a conservator 

4 for the credit union or the insolvency or fi5 nancial condition of the credit union for 

6 which the conservator has been appointed). 

7 ‘‘(iii) NOTICE.—For purposes of this 

8 paragraph, the Board as conservator or 

9 liquidating agent of an insured credit 

10 union shall be deemed to have notified a 

11 person who is a party to a qualified finan12 cial contract with such credit union if the 

13 Board has taken steps reasonably cal14 culated to provide notice to such person by 

15 the time specified in subparagraph (A). 

16 ‘‘(C) TREATMENT OF BRIDGE BANKS.— 

17 The following institutions shall not be consid18 ered to be a financial institution for which a 

19 conservator, receiver, trustee in bankruptcy, or 

20 other legal custodian has been appointed or 

21 which is otherwise the subject of a bankruptcy 

22 or insolvency proceeding for purposes of para23 graph (9): 

24 ‘‘(i) A bridge bank. 
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1 ‘‘(ii) A credit union organized by the 

2 Board, for which a conservator is ap3 pointed either— 

4 ‘‘(I) immediately upon the orga5 nization of the credit union; or 

6 ‘‘(II) at the time of a purchase 

7 and assumption transaction between 

8 the credit union and the Board as re9 ceiver for a credit union in default.’’. 

10 SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR 

11 REPUDIATION OF QUALIFIED FINANCIAL 

12 CONTRACTS. 

13 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

14 Section 11(e) of the Federal Deposit Insurance Act (12 

15 U.S.C. 1821(e)) is amended— 

16 (1) by redesignating paragraphs (11) through 

17 (15) as paragraphs (12) through (16), respectively; 

18 (2) by inserting after paragraph (10) the fol19 lowing new paragraph: 

20 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

21 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

22 the rights of disaffirmance or repudiation of a con23 servator or receiver with respect to any qualified fi24 nancial contract to which an insured depository in-
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1 stitution is a party, the conservator or receiver for 

2 such institution shall either— 

3 ‘‘(A) disaffirm or repudiate all qualified fi4 nancial contracts between— 

5 ‘‘(i) any person or any affiliate of 

6 such person; and 

7 ‘‘(ii) the depository institution in de8 fault; or 

9 ‘‘(B) disaffirm or repudiate none of the 

10 qualified financial contracts referred to in sub11 paragraph (A) (with respect to such person or 

12 any affiliate of such person).’’; and 

13 (3) by adding at the end the following new 

14 paragraph: 

15 ‘‘(17) SAVINGS CLAUSE.—The meanings of 

16 terms used in this subsection are applicable for pur17 poses of this subsection only, and shall not be con18 strued or applied so as to challenge or affect the 

19 characterization, definition, or treatment of any 

20 similar terms under any other statute, regulation, or 

21 rule, including the Gramm-Leach-Bliley Act, the 

22 Legal Certainty for Bank Products Act of 2000, the 

23 securities laws (as that term is defined in section 

24 3(a)(47) of the Securities Exchange Act of 1934), 

25 and the Commodity Exchange Act.’’. 
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1 (b) INSURED CREDIT UNIONS.—Section 207(c) of 

2 the Federal Credit Union Act (12 U.S.C. 1787(c)) is 

3 amended— 

4 (1) by redesignating paragraphs (11), (12), and 

5 (13) as paragraphs (12), (13), and (14), respec6 tively; 

7 (2) by inserting after paragraph (10) the fol8 lowing new paragraph: 

9 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

10 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

11 the rights of disaffirmance or repudiation of a con12 servator or liquidating agent with respect to any 

13 qualified financial contract to which an insured cred14 it union is a party, the conservator or liquidating 

15 agent for such credit union shall either— 

16 ‘‘(A) disaffirm or repudiate all qualified fi17 nancial contracts between— 

18 ‘‘(i) any person or any affiliate of 

19 such person; and 

20 ‘‘(ii) the credit union in default; or 

21 ‘‘(B) disaffirm or repudiate none of the 

22 qualified financial contracts referred to in sub23 paragraph (A) (with respect to such person or 

24 any affiliate of such person).’’; and 
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1 (3) by adding at the end the following new 

2 paragraph: 

3 ‘‘(15) SAVINGS CLAUSE.—The meanings of 

4 terms used in this subsection are applicable for pur5 poses of this subsection only, and shall not be con6 strued or applied so as to challenge or affect the 

7 characterization, definition, or treatment of any 

8 similar terms under any other statute, regulation, or 

9 rule, including the Gramm-Leach-Bliley Act, the 

10 Legal Certainty for Bank Products Act of 2000, the 

11 securities laws (as that term is defined in section 

12 (a)(47) of the Securities Exchange Act of 1934), 

13 and the Commodity Exchange Act.’’. 

14 SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER 

15 AGREEMENTS. 

16 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

17 Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance 

18 Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as 

19 follows: 

20 ‘‘(vii) TREATMENT OF MASTER

21 AGREEMENT AS ONE AGREEMENT.—Any 

22 master agreement for any contract or 

23 agreement described in any preceding 

24 clause of this subparagraph (or any master 

25 agreement for such master agreement or 
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1 agreements), together with all supplements 

2 to such master agreement, shall be treated 

3 as a single agreement and a single quali4 fied financial contract. If a master agree5 ment contains provisions relating to agree6 ments or transactions that are not them7 selves qualified financial contracts, the 

8 master agreement shall be deemed to be a 

9 qualified financial contract only with re10 spect to those transactions that are them11 selves qualified financial contracts.’’. 

12 (b) INSURED CREDIT UNIONS.—Section 

13 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 

14 1787(c)(8)(D)) is amended by inserting after clause (vi) 

15 (as added by section 2(f)) the following new clause: 

16 ‘‘(vii) TREATMENT OF MASTER

17 AGREEMENT AS ONE AGREEMENT.—Any 

18 master agreement for any contract or 

19 agreement described in any preceding 

20 clause of this subparagraph (or any master 

21 agreement for such master agreement or 

22 agreements), together with all supplements 

23 to such master agreement, shall be treated 

24 as a single agreement and a single quali25 fied financial contract. If a master agree-
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1 ment contains provisions relating to agree2 ments or transactions that are not them3 selves qualified financial contracts, the 

4 master agreement shall be deemed to be a 

5 qualified financial contract only with re6 spect to those transactions that are them7 selves qualified financial contracts.’’. 

8 SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IM9 PROVEMENT ACT OF 1991. 

10 (a) DEFINITIONS.—Section 402 of the Federal De11 posit Insurance Corporation Improvement Act of 1991 (12 

12 U.S.C. 4402) is amended— 

13 (1) in paragraph (2)— 

14 (A) in subparagraph (A)(ii), by inserting 

15 before the semicolon ‘‘, or is exempt from such 

16 registration by order of the Securities and Ex17 change Commission’’; and 

18 (B) in subparagraph (B), by inserting be19 fore the period ‘‘, that has been granted an ex20 emption under section 4(c)(1) of the Com21 modity Exchange Act, or that is a multilateral 

22 clearing organization (as defined in section 408 

23 of this Act)’’; 

24 (2) in paragraph (6)— 
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1 (A) by redesignating subparagraphs (B) 

2 through (D) as subparagraphs (C) through (E), 

3 respectively; 

4 (B) by inserting after subparagraph (A) 

5 the following new subparagraph: 

6 ‘‘(B) an uninsured national bank or an un7 insured State bank that is a member of the 

8 Federal Reserve System, if the national bank or 

9 State member bank is not eligible to make ap10 plication to become an insured bank under sec11 tion 5 of the Federal Deposit Insurance Act;’’; 

12 and 

13 (C) by amending subparagraph (C) (as re14 designated) to read as follows: 

15 ‘‘(C) a branch or agency of a foreign bank, 

16 a foreign bank and any branch or agency of the 

17 foreign bank, or the foreign bank that estab18 lished the branch or agency, as those terms are 

19 defined in section 1(b) of the International 

20 Banking Act of 1978;’’; 

21 (3) in paragraph (11), by inserting before the 

22 period ‘‘and any other clearing organization with 

23 which such clearing organization has a netting con24 tract’’; 
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1 (4) by amending paragraph (14)(A)(i) to read 

2 as follows: 

3 ‘‘(i) means a contract or agreement 

4 between 2 or more financial institutions, 

5 clearing organizations, or members that 

6 provides for netting present or future pay7 ment obligations or payment entitlements 

8 (including liquidation or close out values 

9 relating to such obligations or entitle10 ments) among the parties to the agree11 ment; and’’; and 

12 (5) by adding at the end the following new 

13 paragraph: 

14 ‘‘(15) PAYMENT.—The term ‘payment’ means a 

15 payment of United States dollars, another currency, 

16 or a composite currency, and a noncash delivery, in17 cluding a payment or delivery to liquidate an 

18 unmatured obligation.’’. 

19 (b) ENFORCEABILITY OF BILATERAL NETTING CON20 TRACTS.—Section 403 of the Federal Deposit Insurance 

21 Corporation Improvement Act of 1991 (12 U.S.C. 4403) 

22 is amended— 

23 (1) by striking subsection (a) and inserting the 

24 following: 
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1 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

2 provision of State or Federal law (other than paragraphs 

3 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 

4 Deposit Insurance Act, paragraphs (8)(E), (8)(F), and 

5 (10)(B) of section 207(c) of the Federal Credit Union Act, 

6 or any order authorized under section 5(b)(2) of the Secu7 rities Investor Protection Act of 1970), the covered con8 tractual payment obligations and the covered contractual 

9 payment entitlements between any 2 financial institutions 

10 shall be netted in accordance with, and subject to the con11 ditions of, the terms of any applicable netting contract (ex12 cept as provided in section 561(b)(2) of title 11, United 

13 States Code).’’; and 

14 (2) by adding at the end the following new sub15 section: 

16 ‘‘(f) ENFORCEABILITY OF SECURITY AGREE17 MENTS.—The provisions of any security agreement or ar18 rangement or other credit enhancement related to one or 

19 more netting contracts between any 2 financial institu20 tions shall be enforceable in accordance with their terms 

21 (except as provided in section 561(b)(2) of title 11, United 

22 States Code), and shall not be stayed, avoided, or other23 wise limited by any State or Federal law (other than para24 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the 

25 Federal Deposit Insurance Act, paragraphs (8)(E), 
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1 (8)(F), and (10)(B) of section 207(c) of the Federal Cred2 it Union Act, and section 5(b)(2) of the Securities Investor 

3 Protection Act of 1970).’’. 

4 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

5 NETTING CONTRACTS.—Section 404 of the Federal De6 posit Insurance Corporation Improvement Act of 1991 (12 

7 U.S.C. 4404) is amended— 

8 (1) by striking subsection (a) and inserting the 

9 following: 

10 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

11 provision of State or Federal law (other than paragraphs 

12 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 

13 Deposit Insurance Act, paragraphs (8)(E), (8)(F), and 

14 (10)(B) of section 207(c) of the Federal Credit Union Act, 

15 and any order authorized under section 5(b)(2) of the Se16 curities Investor Protection Act of 1970), the covered con17 tractual payment obligations and the covered contractual 

18 payment entitlements of a member of a clearing organiza19 tion to and from all other members of a clearing organiza20 tion shall be netted in accordance with and subject to the 

21 conditions of any applicable netting contract (except as 

22 provided in section 561(b)(2) of title 11, United States 

23 Code).’’; and 

24 (2) by adding at the end the following new sub25 section: 
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1 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE2 MENTS.—The provisions of any security agreement or ar3 rangement or other credit enhancement related to one or 

4 more netting contracts between any 2 members of a clear5 ing organization shall be enforceable in accordance with 

6 their terms (except as provided in section 561(b)(2) of 

7 title 11, United States Code), and shall not be stayed, 

8 avoided, or otherwise limited by any State or Federal law 

9 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec10 tion 11(e) of the Federal Deposit Insurance Act, para11 graphs (8)(E), (8)(F), and (10)(B) of section 207(c) of 

12 the Federal Credit Union Act, and section 5(b)(2) of the 

13 Securities Investor Protection Act of 1970).’’. 

14 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN15 SURED NATIONAL BANKS, UNINSURED FEDERAL

16 BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE

17 MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The 

18 Federal Deposit Insurance Corporation Improvement Act 

19 of 1991 (12 U.S.C. 4401 et seq.) is amended— 

20 (1) by redesignating section 407 as section 

21 407A; and 

22 (2) by inserting after section 406 the following 

23 new section: 
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1 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED 

2 NATIONAL BANKS, UNINSURED FEDERAL 

3 BRANCHES AND AGENCIES, CERTAIN UNIN4 SURED STATE MEMBER BANKS, AND EDGE 

5 ACT CORPORATIONS. 

6 ‘‘(a) IN GENERAL.—Notwithstanding any other pro7 vision of law, paragraphs (8), (9), (10), and (11) of section 

8 11(e) of the Federal Deposit Insurance Act shall apply 

9 to an uninsured national bank or uninsured Federal 

10 branch or Federal agency, a corporation chartered under 

11 section 25A of the Federal Reserve Act, or an uninsured 

12 State member bank which operates, or operates as, a mul13 tilateral clearing organization pursuant to section 409 of 

14 this Act, except that for such purpose— 

15 ‘‘(1) any reference to the ‘Corporation as re16 ceiver’ or ‘the receiver or the Corporation’ shall refer 

17 to the receiver appointed by the Comptroller of the 

18 Currency in the case of an uninsured national bank 

19 or uninsured Federal branch or agency, or to the re20 ceiver appointed by the Board of Governors of the 

21 Federal Reserve System in the case of a corporation 

22 chartered under section 25A of the Federal Reserve 

23 Act or an uninsured State member bank; 

24 ‘‘(2) any reference to the ‘Corporation’ (other 

25 than in section 11(e)(8)(D) of such Act), the ‘Cor26 poration, whether acting as such or as conservator 
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1 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer 

2 to the receiver or conservator appointed by the 

3 Comptroller of the Currency in the case of an unin4 sured national bank or uninsured Federal branch or 

5 agency, or to the receiver or conservator appointed 

6 by the Board of Governors of the Federal Reserve 

7 System in the case of a corporation chartered under 

8 section 25A of the Federal Reserve Act or an unin9 sured State member bank; and 

10 ‘‘(3) any reference to an ‘insured depository in11 stitution’ or ‘depository institution’ shall refer to an 

12 uninsured national bank, an uninsured Federal 

13 branch or Federal agency, a corporation chartered 

14 under section 25A of the Federal Reserve Act, or an 

15 uninsured State member bank which operates, or op16 erates as, a multilateral clearing organization pursu17 ant to section 409 of this Act. 

18 ‘‘(b) LIABILITY.—The liability of a receiver or conser19 vator of an uninsured national bank, uninsured Federal 

20 branch or agency, a corporation chartered under section 

21 25A of the Federal Reserve Act, or an uninsured State 

22 member bank which operates, or operates as, a multilat23 eral clearing organization pursuant to section 409 of this 

24 Act, shall be determined in the same manner and subject 

25 to the same limitations that apply to receivers and con-
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1 servators of insured depository institutions under section 

2 11(e) of the Federal Deposit Insurance Act. 

3 ‘‘(c) REGULATORY AUTHORITY.— 

4 ‘‘(1) IN GENERAL.—The Comptroller of the 

5 Currency in the case of an uninsured national bank 

6 or uninsured Federal branch or agency and the 

7 Board of Governors of the Federal Reserve System 

8 in the case of a corporation chartered under section 

9 25A of the Federal Reserve Act, or an uninsured 

10 State member bank that operates, or operates as, a 

11 multilateral clearing organization pursuant to sec12 tion 409 of this Act, in consultation with the Fed13 eral Deposit Insurance Corporation, may each pro14 mulgate regulations solely to implement this section. 

15 ‘‘(2) SPECIFIC REQUIREMENT.—In promul16 gating regulations, limited solely to implementing 

17 paragraphs (8), (9), (10), and (11) of section 11(e) 

18 of the Federal Deposit Insurance Act, the Comp19 troller of the Currency and the Board of Governors 

20 of the Federal Reserve System each shall ensure 

21 that the regulations generally are consistent with the 

22 regulations and policies of the Federal Deposit In23 surance Corporation adopted pursuant to the Fed24 eral Deposit Insurance Act. 
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1 ‘‘(d) DEFINITIONS.—For purposes of this section, the 

2 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign 

3 bank’ have the same meanings as in section 1(b) of the 

4 International Banking Act of 1978.’’. 

5 SEC. 8. BANKRUPTCY CODE AMENDMENTS. 

6 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR7 CHASE AGREEMENT, SECURITIES CLEARING AGENCY, 

8 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU9 RITIES CONTRACT.—Title 11, United States Code, is 

10 amended— 

11 (1) in section 101— 

12 (A) in paragraph (25)— 

13 (i) by striking ‘‘means a contract’’ 

14 and inserting ‘‘means— 

15 ‘‘(A) a contract’’; 

16 (ii) by striking ‘‘, or any combination 

17 thereof or option thereon;’’ and inserting 

18 ‘‘, or any other similar agreement;’’; and 

19 (iii) by adding at the end the fol20 lowing: 

21 ‘‘(B) any combination of agreements or 

22 transactions referred to in subparagraphs (A) 

23 and (C); 
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1 ‘‘(C) any option to enter into an agreement 

2 or transaction referred to in subparagraph (A) 

3 or (B); 

4 ‘‘(D) a master agreement that provides for 

5 an agreement or transaction referred to in sub6 paragraph (A), (B), or (C), together with all 

7 supplements to any such master agreement, 

8 without regard to whether such master agree9 ment provides for an agreement or transaction 

10 that is not a forward contract under this para11 graph, except that such master agreement shall 

12 be considered to be a forward contract under 

13 this paragraph only with respect to each agree14 ment or transaction under such master agree15 ment that is referred to in subparagraph (A), 

16 (B), or (C); or 

17 ‘‘(E) any security agreement or arrange18 ment, or other credit enhancement related to 

19 any agreement or transaction referred to in 

20 subparagraph (A), (B), (C), or (D), including 

21 any guarantee or reimbursement obligation by 

22 or to a forward contract merchant or financial 

23 participant in connection with any agreement or 

24 transaction referred to in any such subpara25 graph, but not to exceed the damages in con-
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1 nection with any such agreement or transaction, 

2 measured in accordance with section 562 of this 

3 title;’’; 

4 (B) in paragraph (46), by striking ‘‘on any 

5 day during the period beginning 90 days before 

6 the date of’’ and inserting ‘‘at any time before’’; 

7 (C) by amending paragraph (47) to read 

8 as follows: 

9 ‘‘(47) ‘repurchase agreement’ (which definition 

10 also applies to a reverse repurchase agreement)— 

11 ‘‘(A) means— 

12 ‘‘(i) an agreement, including related 

13 terms, which provides for the transfer of 

14 one or more certificates of deposit, mort15 gage related securities (as defined in sec16 tion 3 of the Securities Exchange Act of 

17 1934), mortgage loans, interests in mort18 gage related securities or mortgage loans, 

19 eligible bankers’ acceptances, qualified for20 eign government securities (defined as a 

21 security that is a direct obligation of, or 

22 that is fully guaranteed by, the central 

23 government of a member of the Organiza24 tion for Economic Cooperation and Devel25 opment), or securities that are direct obli-
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1 gations of, or that are fully guaranteed by, 

2 the United States or any agency of the 

3 United States against the transfer of funds 

4 by the transferee of such certificates of de5 posit, eligible bankers’ acceptances, securi6 ties, mortgage loans, or interests, with a 

7 simultaneous agreement by such transferee 

8 to transfer to the transferor thereof certifi9 cates of deposit, eligible bankers’ accept10 ance, securities, mortgage loans, or inter11 ests of the kind described in this clause, at 

12 a date certain not later than 1 year after 

13 such transfer or on demand, against the 

14 transfer of funds; 

15 ‘‘(ii) any combination of agreements 

16 or transactions referred to in clauses (i) 

17 and (iii); 

18 ‘‘(iii) an option to enter into an agree19 ment or transaction referred to in clause 

20 (i) or (ii); 

21 ‘‘(iv) a master agreement that pro22 vides for an agreement or transaction re23 ferred to in clause (i), (ii), or (iii), together 

24 with all supplements to any such master 

25 agreement, without regard to whether such 
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1 master agreement provides for an agree2 ment or transaction that is not a repur3 chase agreement under this paragraph, ex4 cept that such master agreement shall be 

5 considered to be a repurchase agreement 

6 under this paragraph only with respect to 

7 each agreement or transaction under the 

8 master agreement that is referred to in 

9 clause (i), (ii), or (iii); or 

10 ‘‘(v) any security agreement or ar11 rangement or other credit enhancement re12 lated to any agreement or transaction re13 ferred to in clause (i), (ii), (iii), or (iv), in14 cluding any guarantee or reimbursement 

15 obligation by or to a repo participant or fi16 nancial participant in connection with any 

17 agreement or transaction referred to in 

18 any such clause, but not to exceed the 

19 damages in connection with any such 

20 agreement or transaction, measured in ac21 cordance with section 562 of this title; and 

22 ‘‘(B) does not include a repurchase obliga23 tion under a participation in a commercial 

24 mortgage loan;’’; 
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1 (D) in paragraph (48), by inserting ‘‘, or 

2 exempt from such registration under such sec3 tion pursuant to an order of the Securities and 

4 Exchange Commission,’’ after ‘‘1934’’; and 

5 (E) by amending paragraph (53B) to read 

6 as follows: 

7 ‘‘(53B) ‘swap agreement’— 

8 ‘‘(A) means— 

9 ‘‘(i) any agreement, including the 

10 terms and conditions incorporated by ref11 erence in such agreement, which is— 

12 ‘‘(I) an interest rate swap, op13 tion, future, or forward agreement, in14 cluding a rate floor, rate cap, rate col15 lar, cross-currency rate swap, and 

16 basis swap; 

17 ‘‘(II) a spot, same day-tomorrow, 

18 tomorrow-next, forward, or other for19 eign exchange or precious metals 

20 agreement; 

21 ‘‘(III) a currency swap, option, 

22 future, or forward agreement; 

23 ‘‘(IV) an equity index or equity 

24 swap, option, future, or forward 

25 agreement; 
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1 ‘‘(V) a debt index or debt swap, 

2 option, future, or forward agreement; 

3 ‘‘(VI) a total return, credit 

4 spread or credit swap, option, future, 

5 or forward agreement; 

6 ‘‘(VII) a commodity index or a 

7 commodity swap, option, future, or 

8 forward agreement; or 

9 ‘‘(VIII) a weather swap, weather 

10 derivative, or weather option; 

11 ‘‘(ii) any agreement or transaction 

12 that is similar to any other agreement or 

13 transaction referred to in this paragraph 

14 and that— 

15 ‘‘(I) is of a type that has been, is 

16 presently, or in the future becomes, 

17 the subject of recurrent dealings in 

18 the swap markets (including terms 

19 and conditions incorporated by ref20 erence therein); and 

21 ‘‘(II) is a forward, swap, future, 

22 or option on one or more rates, cur23 rencies, commodities, equity securities, 

24 or other equity instruments, debt se25 curities or other debt instruments, 
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1 quantitative measures associated with 

2 an occurrence, extent of an occur3 rence, or contingency associated with 

4 a financial, commercial, or economic 

5 consequence, or economic or financial 

6 indices or measures of economic or fi7 nancial risk or value; 

8 ‘‘(iii) any combination of agreements 

9 or transactions referred to in this subpara10 graph; 

11 ‘‘(iv) any option to enter into an 

12 agreement or transaction referred to in 

13 this subparagraph; 

14 ‘‘(v) a master agreement that provides 

15 for an agreement or transaction referred to 

16 in clause (i), (ii), (iii), or (iv), together 

17 with all supplements to any such master 

18 agreement, and without regard to whether 

19 the master agreement contains an agree20 ment or transaction that is not a swap 

21 agreement under this paragraph, except 

22 that the master agreement shall be consid23 ered to be a swap agreement under this 

24 paragraph only with respect to each agree25 ment or transaction under the master 
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1 agreement that is referred to in clause (i), 

2 (ii), (iii), or (iv); or 

3 ‘‘(vi) any security agreement or ar4 rangement or other credit enhancement re5 lated to any agreements or transactions re6 ferred to in clause (i) through (v), includ7 ing any guarantee or reimbursement obli8 gation by or to a swap participant or fi9 nancial participant in connection with any 

10 agreement or transaction referred to in 

11 any such clause, but not to exceed the 

12 damages in connection with any such 

13 agreement or transaction, measured in ac14 cordance with section 562 of this title; and 

15 ‘‘(B) is applicable for purposes of this title 

16 only, and shall not be construed or applied so 

17 as to challenge or affect the characterization, 

18 definition, or treatment of any swap agreement 

19 under any other statute, regulation, or rule, in20 cluding the Securities Act of 1933, the Securi21 ties Exchange Act of 1934, the Public Utility 

22 Holding Company Act of 1935, the Trust In23 denture Act of 1939, the Investment Company 

24 Act of 1940, the Investment Advisers Act of 

25 1940, the Securities Investor Protection Act of 
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1 1970, the Commodity Exchange Act, the 

2 Gramm-Leach-Bliley Act, and the Legal Cer3 tainty for Bank Products Act of 2000;’’; 

4 (2) in section 741(7), by striking paragraph (7) 

5 and inserting the following: 

6 ‘‘(7) ‘securities contract’— 

7 ‘‘(A) means— 

8 ‘‘(i) a contract for the purchase, sale, 

9 or loan of a security, a certificate of de10 posit, a mortgage loan or any interest in a 

11 mortgage loan, a group or index of securi12 ties, certificates of deposit, or mortgage 

13 loans or interests therein (including an in14 terest therein or based on the value there15 of), or option on any of the foregoing, in16 cluding an option to purchase or sell any 

17 such security, certificate of deposit, mort18 gage loan, interest, group or index, or op19 tion, and including any repurchase or re20 verse repurchase transaction on any such 

21 security, certificate of deposit, mortgage 

22 loan, interest, group or index, or option; 

23 ‘‘(ii) any option entered into on a na24 tional securities exchange relating to for25 eign currencies; 
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1 ‘‘(iii) the guarantee by or to any secu2 rities clearing agency of a settlement of 

3 cash, securities, certificates of deposit, 

4 mortgage loans or interests therein, group 

5 or index of securities, or mortgage loans or 

6 interests therein (including any interest 

7 therein or based on the value thereof), or 

8 option on any of the foregoing, including 

9 an option to purchase or sell any such se10 curity, certificate of deposit, mortgage 

11 loan, interest, group or index, or option; 

12 ‘‘(iv) any margin loan; 

13 ‘‘(v) any other agreement or trans14 action that is similar to an agreement or 

15 transaction referred to in this subpara16 graph; 

17 ‘‘(vi) any combination of the agree18 ments or transactions referred to in this 

19 subparagraph; 

20 ‘‘(vii) any option to enter into any 

21 agreement or transaction referred to in 

22 this subparagraph; 

23 ‘‘(viii) a master agreement that pro24 vides for an agreement or transaction re25 ferred to in clause (i), (ii), (iii), (iv), (v), 
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1 (vi), or (vii), together with all supplements 

2 to any such master agreement, without re3 gard to whether the master agreement pro4 vides for an agreement or transaction that 

5 is not a securities contract under this sub6 paragraph, except that such master agree7 ment shall be considered to be a securities 

8 contract under this subparagraph only with 

9 respect to each agreement or transaction 

10 under such master agreement that is re11 ferred to in clause (i), (ii), (iii), (iv), (v), 

12 (vi), or (vii); or 

13 ‘‘(ix) any security agreement or ar14 rangement or other credit enhancement re15 lated to any agreement or transaction re16 ferred to in this subparagraph, including 

17 any guarantee or reimbursement obligation 

18 by or to a stockbroker, securities clearing 

19 agency, financial institution, or financial 

20 participant in connection with any agree21 ment or transaction referred to in this sub22 paragraph, but not to exceed the damages 

23 in connection with any such agreement or 

24 transaction, measured in accordance with 

25 section 562 of this title; and 
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1 ‘‘(B) does not include any purchase, sale, 

2 or repurchase obligation under a participation 

3 in a commercial mortgage loan;’’; and 

4 (3) in section 761(4)— 

5 (A) by striking ‘‘or’’ at the end of subpara6 graph (D); and 

7 (B) by adding at the end the following: 

8 ‘‘(F) any other agreement or transaction 

9 that is similar to an agreement or transaction 

10 referred to in this paragraph; 

11 ‘‘(G) any combination of the agreements or 

12 transactions referred to in this paragraph; 

13 ‘‘(H) any option to enter into an agree14 ment or transaction referred to in this para15 graph; 

16 ‘‘(I) a master agreement that provides for 

17 an agreement or transaction referred to in sub18 paragraph (A), (B), (C), (D), (E), (F), (G), or 

19 (H), together with all supplements to such mas20 ter agreement, without regard to whether the 

21 master agreement provides for an agreement or 

22 transaction that is not a commodity contract 

23 under this paragraph, except that the master 

24 agreement shall be considered to be a com25 modity contract under this paragraph only with 
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1 respect to each agreement or transaction under 

2 the master agreement that is referred to in sub3 paragraph (A), (B), (C), (D), (E), (F), (G), or 

4 (H); or 

5 ‘‘(J) any security agreement or arrange6 ment or other credit enhancement related to 

7 any agreement or transaction referred to in this 

8 paragraph, including any guarantee or reim9 bursement obligation by or to a commodity 

10 broker or financial participant in connection 

11 with any agreement or transaction referred to 

12 in this paragraph, but not to exceed the dam13 ages in connection with any such agreement or 

14 transaction, measured in accordance with sec15 tion 562 of this title;’’. 

16 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI17 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER18 CHANT.—Section 101 of title 11, United States Code, is 

19 amended— 

20 (1) by striking paragraph (22) and inserting 

21 the following: 

22 ‘‘(22) ‘financial institution’ means— 

23 ‘‘(A) a Federal reserve bank, or an entity 

24 (domestic or foreign) that is a commercial or 

25 savings bank, industrial savings bank, savings 
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1 and loan association, trust company, federally2 insured credit union, or receiver or conservator 

3 for such entity and, when any such Federal re4 serve bank, receiver, conservator or entity is 

5 acting as agent or custodian for a customer in 

6 connection with a securities contract (as defined 

7 in section 741) such customer; or 

8 ‘‘(B) in connection with a securities con9 tract (as defined in section 741) an investment 

10 company registered under the Investment Com11 pany Act of 1940;’’; 

12 (2) by inserting after paragraph (22) the fol13 lowing: 

14 ‘‘(22A) ‘financial participant’ means— 

15 ‘‘(A) an entity that, at the time it enters 

16 into a securities contract, commodity contract, 

17 swap agreement, repurchase agreement, or for18 ward contract, or at the time of the filing of the 

19 petition, has one or more agreements or trans20 actions described in paragraph (1), (2), (3), (4), 

21 (5), or (6) of section 561(a) with the debtor or 

22 any other entity (other than an affiliate) of a 

23 total gross dollar value of not less than 

24 $1,000,000,000 in notional or actual principal 

25 amount outstanding on any day during the pre-
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1 vious 15-month period, or has gross mark-to2 market positions of not less than $100,000,000 

3 (aggregated across counterparties) in one or 

4 more such agreements or transactions with the 

5 debtor or any other entity (other than an affil6 iate) on any day during the previous 15-month 

7 period; or 

8 ‘‘(B) a clearing organization (as defined in 

9 section 402 of the Federal Deposit Insurance 

10 Corporation Improvement Act of 1991);’’; and 

11 (3) by striking paragraph (26) and inserting 

12 the following: 

13 ‘‘(26) ‘forward contract merchant’ means a 

14 Federal reserve bank, or an entity the business of 

15 which consists in whole or in part of entering into 

16 forward contracts as or with merchants in a com17 modity (as defined in section 761) or any similar 

18 good, article, service, right, or interest which is pres19 ently or in the future becomes the subject of dealing 

20 in the forward contract trade;’’. 

21 (c) DEFINITION OF MASTER NETTING AGREEMENT

22 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec23 tion 101 of title 11, United States Code, is amended by 

24 inserting after paragraph (38) the following new para25 graphs: 
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1 ‘‘(38A) ‘master netting agreement’— 

2 ‘‘(A) means an agreement providing for 

3 the exercise of rights, including rights of net4 ting, setoff, liquidation, termination, accelera5 tion, or close out, under or in connection with 

6 one or more contracts that are described in any 

7 one or more of paragraphs (1) through (5) of 

8 section 561(a), or any security agreement or ar9 rangement or other credit enhancement related 

10 to one or more of the foregoing, including any 

11 guarantee or reimbursement obligation related 

12 to 1 or more of the foregoing; and 

13 ‘‘(B) if the agreement contains provisions 

14 relating to agreements or transactions that are 

15 not contracts described in paragraphs (1) 

16 through (5) of section 561(a), shall be deemed 

17 to be a master netting agreement only with re18 spect to those agreements or transactions that 

19 are described in any one or more of paragraphs 

20 (1) through (5) of section 561(a); 

21 ‘‘(38B) ‘master netting agreement participant’ 

22 means an entity that, at any time before the filing 

23 of the petition, is a party to an outstanding master 

24 netting agreement with the debtor;’’. 
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1 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS, 

2 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR3 CHASE AGREEMENTS, AND MASTER NETTING AGREE4 MENTS UNDER THE AUTOMATIC-STAY.— 

5 (1) IN GENERAL.—Section 362(b) of title 11, 

6 United States Code, is amended— 

7 (A) in paragraph (6), by inserting 

8 ‘‘, pledged to, under the control of,’’ after ‘‘held 

9 by’’; 

10 (B) in paragraph (7), by inserting 

11 ‘‘, pledged to, under the control of,’’ after ‘‘held 

12 by’’; 

13 (C) by striking paragraph (17) and insert14 ing the following: 

15 ‘‘(17) under subsection (a), of the setoff by a 

16 swap participant or financial participant of a mutual 

17 debt and claim under or in connection with one or 

18 more swap agreements that constitutes the setoff of 

19 a claim against the debtor for any payment or other 

20 transfer of property due from the debtor under or in 

21 connection with any swap agreement against any 

22 payment due to the debtor from the swap partici23 pant or financial participant under or in connection 

24 with any swap agreement or against cash, securities, 

25 or other property held by, pledged to, under the con-
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1 trol of, or due from such swap participant or finan2 cial participant to margin, guarantee, secure, or set3 tle any swap agreement;’’; 

4 (D) in paragraph (18) by striking the pe5 riod at the end and inserting ‘‘; or’’; and 

6 (E) by inserting after paragraph (18) the 

7 following new paragraph: 

8 ‘‘(19) under subsection (a), of the setoff by a 

9 master netting agreement participant of a mutual 

10 debt and claim under or in connection with one or 

11 more master netting agreements or any contract or 

12 agreement subject to such agreements that con13 stitutes the setoff of a claim against the debtor for 

14 any payment or other transfer of property due from 

15 the debtor under or in connection with such agree16 ments or any contract or agreement subject to such 

17 agreements against any payment due to the debtor 

18 from such master netting agreement participant 

19 under or in connection with such agreements or any 

20 contract or agreement subject to such agreements or 

21 against cash, securities, or other property held by, 

22 pledged to, under the control of, or due from such 

23 master netting agreement participant to margin, 

24 guarantee, secure, or settle such agreements or any 

25 contract or agreement subject to such agreements, 
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1 to the extent that such participant is eligible to exer2 cise such offset rights under paragraph (6), (7), or 

3 (17) for each individual contract covered by the mas4 ter netting agreement in issue.’’. 

5 (2) LIMITATION.—Section 362 of title 11, 

6 United States Code, is amended by adding at the 

7 end the following: 

8 ‘‘(i) The exercise of rights not subject to the stay 

9 arising under subsection (a) pursuant to paragraph (6), 

10 (7), (17), or (19) of subsection (b) shall not be stayed 

11 by any order of a court or administrative agency in any 

12 proceeding under this title.’’. 

13 (e) LIMITATION OF AVOIDANCE POWERS UNDER

14 MASTER NETTING AGREEMENT.—Section 546 of title 11, 

15 United States Code, is amended— 

16 (1) in subsection (g) (as added by section 103 

17 of Public Law 101–311)— 

18 (A) by striking ‘‘under a swap agreement’’; 

19 (B) by striking ‘‘in connection with a swap 

20 agreement’’ and inserting ‘‘under or in connec21 tion with any swap agreement’’; and 

22 (C) by inserting ‘‘or financial participant’’ 

23 after ‘‘swap participant’’ each place such term 

24 appears; and 

25 (2) by adding at the end the following: 
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1 ‘‘(j) Notwithstanding sections 544, 545, 547, 

2 548(a)(1)(B), and 548(b) the trustee may not avoid a 

3 transfer made by or to a master netting agreement partici4 pant under or in connection with any master netting 

5 agreement or any individual contract covered thereby that 

6 is made before the commencement of the case, except 

7 under section 548(a)(1)(A) and except to the extent that 

8 the trustee could otherwise avoid such a transfer made 

9 under an individual contract covered by such master net10 ting agreement.’’. 

11 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

12 AGREEMENTS.—Section 548(d)(2) of title 11, United 

13 States Code, is amended— 

14 (1) in subparagraph (C), by striking ‘‘and’’ at 

15 the end; 

16 (2) in subparagraph (D), by striking the period 

17 and inserting ‘‘; and’’; and 

18 (3) by adding at the end the following new sub19 paragraph: 

20 ‘‘(E) a master netting agreement participant 

21 that receives a transfer in connection with a master 

22 netting agreement or any individual contract covered 

23 thereby takes for value to the extent of such trans24 fer, except that, with respect to a transfer under any 

25 individual contract covered thereby, to the extent 
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1 that such master netting agreement participant oth2 erwise did not take (or is otherwise not deemed to 

3 have taken) such transfer for value.’’. 

4 (g) TERMINATION OR ACCELERATION OF SECURITIES

5 CONTRACTS.—Section 555 of title 11, United States Code, 

6 is amended— 

7 (1) by amending the section heading to read as 

8 follows: 

9 ‘‘§ 555. Contractual right to liquidate, terminate, or 

10 accelerate a securities contract’’; 

11 and 

12 (2) in the first sentence, by striking ‘‘liquida13 tion’’ and inserting ‘‘liquidation, termination, or ac14 celeration’’. 

15 (h) TERMINATION OR ACCELERATION OF COMMOD16 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11, 

17 United States Code, is amended— 

18 (1) by amending the section heading to read as 

19 follows: 

20 ‘‘§ 556. Contractual right to liquidate, terminate, or 

21 accelerate a commodities contract or for22 ward contract’’; 

23 (2) in the first sentence, by striking ‘‘liquida24 tion’’ and inserting ‘‘liquidation, termination, or ac25 celeration’’; and 
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1 (3) in the second sentence, by striking ‘‘As 

2 used’’ and all that follows through ‘‘right,’’ and in3 serting ‘‘As used in this section, the term ‘contrac4 tual right’ includes a right set forth in a rule or 

5 bylaw of a derivatives clearing organization (as de6 fined in the Commodity Exchange Act), a multilat7 eral clearing organization (as defined in the Federal 

8 Deposit Insurance Corporation Improvement Act of 

9 1991), a national securities exchange, a national se10 curities association, a securities clearing agency, a 

11 contract market designated under the Commodity 

12 Exchange Act, a derivatives transaction execution 

13 facility registered under the Commodity Exchange 

14 Act, or a board of trade (as defined in the Com15 modity Exchange Act) or in a resolution of the gov16 erning board thereof and a right,’’. 

17 (i) TERMINATION OR ACCELERATION OF REPUR18 CHASE AGREEMENTS.—Section 559 of title 11, United 

19 States Code, is amended— 

20 (1) by amending the section heading to read as 

21 follows: 
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1 ‘‘§ 559. Contractual right to liquidate, terminate, or 

2 accelerate a repurchase agreement’’; 

3 (2) in the first sentence, by striking ‘‘liquida4 tion’’ and inserting ‘‘liquidation, termination, or ac5 celeration’’; and 

6 (3) in the third sentence, by striking ‘‘As used’’ 

7 and all that follows through ‘‘right,’’ and inserting 

8 ‘‘As used in this section, the term ‘contractual right’ 

9 includes a right set forth in a rule or bylaw of a de10 rivatives clearing organization (as defined in the 

11 Commodity Exchange Act), a multilateral clearing 

12 organization (as defined in the Federal Deposit In13 surance Corporation Improvement Act of 1991), a 

14 national securities exchange, a national securities as15 sociation, a securities clearing agency, a contract 

16 market designated under the Commodity Exchange 

17 Act, a derivatives transaction execution facility reg18 istered under the Commodity Exchange Act, or a 

19 board of trade (as defined in the Commodity Ex20 change Act) or in a resolution of the governing 

21 board thereof and a right,’’. 

22 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

23 OF SWAP AGREEMENTS.—Section 560 of title 11, United 

24 States Code, is amended— 

25 (1) by amending the section heading to read as 

26 follows: 
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1 ‘‘§ 560. Contractual right to liquidate, terminate, or 

2 accelerate a swap agreement’’; 

3 (2) in the first sentence, by striking ‘‘termi4 nation of a swap agreement’’ and inserting ‘‘liquida5 tion, termination, or acceleration of one or more 

6 swap agreements’’; 

7 (3) by striking ‘‘in connection with any swap 

8 agreement’’ and inserting ‘‘in connection with the 

9 termination, liquidation, or acceleration of one or 

10 more swap agreements’’; and 

11 (4) in the second sentence, by striking ‘‘As 

12 used’’ and all that follows through ‘‘right,’’ and in13 serting ‘‘As used in this section, the term ‘contrac14 tual right’ includes a right set forth in a rule or 

15 bylaw of a derivatives clearing organization (as de16 fined in the Commodity Exchange Act), a multilat17 eral clearing organization (as defined in the Federal 

18 Deposit Insurance Corporation Improvement Act of 

19 1991), a national securities exchange, a national se20 curities association, a securities clearing agency, a 

21 contract market designated under the Commodity 

22 Exchange Act, a derivatives transaction execution fa23 cility registered under the Commodity Exchange Act, 

24 or a board of trade (as defined in the Commodity Ex25 change Act) or in a resolution of the governing board 

26 thereof and a right,’’. 
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1 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

2 OFFSET UNDER A MASTER NETTING AGREEMENT AND

3 ACROSS CONTRACTS.— 

4 (1) IN GENERAL.—Title 11, United States 

5 Code, is amended by inserting after section 560 the 

6 following: 

7 ‘‘§ 561. Contractual right to terminate, liquidate, ac8 celerate, or offset under a master netting 

9 agreement and across contracts; pro10 ceedings under section 304 

11 ‘‘(a) Subject to subsection (b), the exercise of any 

12 contractual right, because of a condition of the kind speci13 fied in section 365(e)(1), to cause the termination, liquida14 tion, or acceleration of or to offset or net termination val15 ues, payment amounts, or other transfer obligations aris16 ing under or in connection with one or more (or the termi17 nation, liquidation, or acceleration of one or more)— 

18 ‘‘(1) securities contracts, as defined in section 

19 741(7); 

20 ‘‘(2) commodity contracts, as defined in section 

21 761(4); 

22 ‘‘(3) forward contracts; 

23 ‘‘(4) repurchase agreements; 

24 ‘‘(5) swap agreements; or 

25 ‘‘(6) master netting agreements, 
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1 shall not be stayed, avoided, or otherwise limited by oper2 ation of any provision of this title or by any order of a 

3 court or administrative agency in any proceeding under 

4 this title. 

5 ‘‘(b)(1) A party may exercise a contractual right de6 scribed in subsection (a) to terminate, liquidate, or accel7 erate only to the extent that such party could exercise such 

8 a right under section 555, 556, 559, or 560 for each indi9 vidual contract covered by the master netting agreement 

10 in issue. 

11 ‘‘(2) If a debtor is a commodity broker subject to sub12 chapter IV of chapter 7— 

13 ‘‘(A) a party may not net or offset an obligation 

14 to the debtor arising under, or in connection with, 

15 a commodity contract traded on or subject to the 

16 rules of a contract market designated under the 

17 Commodity Exchange Act or a derivatives trans18 action execution facility registered under the Com19 modity Exchange Act against any claim arising 

20 under, or in connection with, other instruments, con21 tracts, or agreements listed in subsection (a) except 

22 to the extent that the party has positive net equity 

23 in the commodity accounts at the debtor, as cal24 culated under such subchapter; and 
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1 ‘‘(B) another commodity broker may not net or 

2 offset an obligation to the debtor arising under, or 

3 in connection with, a commodity contract entered 

4 into or held on behalf of a customer of the debtor 

5 and traded on or subject to the rules of a contract 

6 market designated under the Commodity Exchange 

7 Act or a derivatives transaction execution facility 

8 registered under the Commodity Exchange Act 

9 against any claim arising under, or in connection 

10 with, other instruments, contracts, or agreements 

11 listed in subsection (a). 

12 ‘‘(3) No provision of subparagraph (A) or (B) of 

13 paragraph (2) shall prohibit the offset of claims and obli14 gations that arise under— 

15 ‘‘(A) a cross-margining agreement or similar 

16 arrangement that has been approved by the Com17 modity Futures Trading Commission or submitted 

18 to the Commodity Futures Trading Commission 

19 under paragraph (1) or (2) of section 5c(c) of the 

20 Commodity Exchange Act and has not been abro21 gated or rendered ineffective by the Commodity Fu22 tures Trading Commission; or 

23 ‘‘(B) any other netting agreement between a 

24 clearing organization (as defined in section 761) and 
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1 another entity that has been approved by the Com2 modity Futures Trading Commission. 

3 ‘‘(c) As used in this section, the term ‘contractual 

4 right’ includes a right set forth in a rule or bylaw of a 

5 derivatives clearing organization (as defined in the Com6 modity Exchange Act), a multilateral clearing organiza7 tion (as defined in the Federal Deposit Insurance Cor8 poration Improvement Act of 1991), a national securities 

9 exchange, a national securities association, a securities 

10 clearing agency, a contract market designated under the 

11 Commodity Exchange Act, a derivatives transaction execu12 tion facility registered under the Commodity Exchange 

13 Act, or a board of trade (as defined in the Commodity 

14 Exchange Act) or in a resolution of the governing board 

15 thereof, and a right, whether or not evidenced in writing, 

16 arising under common law, under law merchant, or by rea17 son of normal business practice. 

18 ‘‘(d) Any provisions of this title relating to securities 

19 contracts, commodity contracts, forward contracts, repur20 chase agreements, swap agreements, or master netting 

21 agreements shall apply in a case under section 304, so 

22 that enforcement of contractual provisions of such con23 tracts and agreements in accordance with their terms will 

24 not be stayed or otherwise limited by operation of any pro25 vision of this title or by order of a court in any case under 
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1 this title, and to limit avoidance powers to the same extent 

2 as in a proceeding under chapter 7 or 11 of this title (such 

3 enforcement not to be limited based on the presence or 

4 absence of assets of the debtor in the United States).’’. 

5 (2) CONFORMING AMENDMENT.—The table of 

6 sections for chapter 5 of title 11, United States 

7 Code, is amended by inserting after the item relating 

8 to section 560 the following: 

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a 

master netting agreement and across contracts; proceedings 

under section 304.’’. 

9 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11, 

10 United States Code, is amended by inserting after section 

11 766 the following: 

12 ‘‘§ 767. Commodity broker liquidation and forward 

13 contract merchants, commodity brokers, 

14 stockbrokers, financial institutions, fi15 nancial participants, securities clearing 

16 agencies, swap participants, repo partici17 pants, and master netting agreement par18 ticipants 

19 ‘‘Notwithstanding any other provision of this title, 

20 the exercise of rights by a forward contract merchant, 

21 commodity broker, stockbroker, financial institution, fi22 nancial participant, securities clearing agency, swap par23 ticipant, repo participant, or master netting agreement 

24 participant under this title shall not affect the priority of 
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1 any unsecured claim it may have after the exercise of such 

2 rights.’’. 

3 (m) STOCKBROKER LIQUIDATIONS.—Title 11, 

4 United States Code, is amended by inserting after section 

5 752 the following: 

6 ‘‘§ 753. Stockbroker liquidation and forward contract 

7 merchants, commodity brokers, stock8 brokers, financial institutions, financial 

9 participants, securities clearing agencies, 

10 swap participants, repo participants, and 

11 master netting agreement participants 

12 ‘‘Notwithstanding any other provision of this title, 

13 the exercise of rights by a forward contract merchant, 

14 commodity broker, stockbroker, financial institution, secu15 rities clearing agency, swap participant, repo participant, 

16 financial participant, or master netting agreement partici17 pant under this title shall not affect the priority of any 

18 unsecured claim it may have after the exercise of such 

19 rights.’’. 

20 (n) SETOFF.—Section 553 of title 11, United States 

21 Code, is amended— 

22 (1) in subsection (a)(2)(B)(ii), by inserting be23 fore the semicolon the following: ‘‘(except for a 

24 setoff of a kind described in section 362(b)(6), 
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1 362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 559, 

2 560, or 561)’’; 

3 (2) in subsection (a)(3)(C), by inserting before 

4 the period the following: ‘‘(except for a setoff of a 

5 kind described in section 362(b)(6), 362(b)(7), 

6 362(b)(17), 362(b)(19), 555, 556, 559, 560, or 561 

7 of this title)’’; and 

8 (3) in subsection (b)(1), by striking 

9 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 

10 362(b)(19), 555, 556, 559, 560, 561,’’. 

11 (o) SECURITIES CONTRACTS, COMMODITY CON12 TRACTS, AND FORWARD CONTRACTS.—Title 11, United 

13 States Code, is amended— 

14 (1) in section 362(b)(6), by striking ‘‘financial 

15 institutions,’’ each place such term appears and in16 serting ‘‘financial institution, financial participant,’’; 

17 (2) in sections 362(b)(7) and 546(f), by insert18 ing ‘‘or financial participant’’ after ‘‘repo partici19 pant’’ each place such term appears; 

20 (3) in section 546(e), by inserting ‘‘financial 

21 participant,’’ after ‘‘financial institution,’’; 

22 (4) in section 548(d)(2)(B), by inserting ‘‘fi23 nancial participant,’’ after ‘‘financial institution,’’; 

24 (5) in section 548(d)(2)(C), by inserting ‘‘or fi25 nancial participant’’ after ‘‘repo participant’’; 
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1 (6) in section 548(d)(2)(D), by inserting ‘‘or fi2 nancial participant’’ after ‘‘swap participant’’; 

3 (7) in section 555— 

4 (A) by inserting ‘‘financial participant,’’ 

5 after ‘‘financial institution,’’; and 

6 (B) by striking the second sentence and in7 serting the following: ‘‘As used in this section, 

8 the term ‘contractual right’ includes a right set 

9 forth in a rule or bylaw of a derivatives clearing 

10 organization (as defined in the Commodity Ex11 change Act), a multilateral clearing organiza12 tion (as defined in the Federal Deposit Insur13 ance Corporation Improvement Act of 1991), a 

14 national securities exchange, a national securi15 ties association, a securities clearing agency, a 

16 contract market designated under the Com17 modity Exchange Act, a derivatives transaction 

18 execution facility registered under the Com19 modity Exchange Act, or a board of trade (as 

20 defined in the Commodity Exchange Act), or in 

21 a resolution of the governing board thereof, and 

22 a right, whether or not in writing, arising under 

23 common law, under law merchant, or by reason 

24 of normal business practice’’; 
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1 (8) in section 556, by inserting ‘‘, financial par2 ticipant,’’ after ‘‘commodity broker’’; 

3 (9) in section 559, by inserting ‘‘or financial 

4 participant’’ after ‘‘repo participant’’ each place 

5 such term appears; and 

6 (10) in section 560, by inserting ‘‘or financial 

7 participant’’ after ‘‘swap participant’’. 

8 (p) CONFORMING AMENDMENTS.—Title 11, United 

9 States Code, is amended— 

10 (1) in the table of sections for chapter 5— 

11 (A) by amending the items relating to sec12 tions 555 and 556 to read as follows: 

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract. 

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’; 

13 and 

14 (B) by amending the items relating to sec15 tions 559 and 560 to read as follows: 

‘‘559. Contractual right to liquidate, terminate, or accelerate a repurchase 

agreement. 

‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.’’; 

16 and 

17 (2) in the table of sections for chapter 7— 

18 (A) by inserting after the item relating to 

19 section 766 the following: 

‘‘767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial 

participants, securities clearing agencies, swap participants, 

repo participants, and master netting agreement participants.’’; 
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1 and 

2 (B) by inserting after the item relating to 

3 section 752 the following: 

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, 

securities clearing agencies, swap participants, repo participants, and master netting agreement participants.’’. 

4 SEC. 9. RECORDKEEPING REQUIREMENTS. 

5 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

6 Section 11(e)(8) of the Federal Deposit Insurance Act (12 

7 U.S.C. 1821(e)(8)) is amended by adding at the end the 

8 following new subparagraph: 

9 ‘‘(H) RECORDKEEPING REQUIREMENTS.— 

10 The Corporation, in consultation with the ap11 propriate Federal banking agencies and the Na12 tional Credit Union Administration Board, may 

13 prescribe regulations requiring more detailed 

14 recordkeeping by any insured depository institu15 tion with respect to qualified financial contracts 

16 (including market valuations) only if such in17 sured depository institution is in a troubled 

18 condition (as such term is defined by the Cor19 poration pursuant to section 32).’’. 

20 (b) INSURED CREDIT UNIONS.—Section 207(c)(8) of 

21 the Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is 

22 amended by adding at the end the following new subpara23 graph: 
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1 ‘‘(H) RECORDKEEPING REQUIREMENTS.— 

2 The Board, in consultation with the appropriate 

3 Federal banking agencies, may prescribe regula4 tions requiring more detailed recordkeeping by 

5 any insured credit union with respect to quali6 fied financial contracts (including market valu7 ations) only if such insured credit union is in 

8 a troubled condition (as such term is defined by 

9 the Board pursuant to section 212).’’. 

10 SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECU11 TION REQUIREMENT. 

12 Section 13(e)(2) of the Federal Deposit Insurance 

13 Act (12 U.S.C. 1823(e)(2)) is amended to read as follows: 

14 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

15 EXECUTION REQUIREMENT.—An agreement to pro16 vide for the lawful collateralization of— 

17 ‘‘(A) deposits of, or other credit extension 

18 by, a Federal, State, or local governmental enti19 ty, or of any depositor referred to in section 

20 11(a)(2), including an agreement to provide col21 lateral in lieu of a surety bond; 

22 ‘‘(B) bankruptcy estate funds pursuant to 

23 section 345(b)(2) of title 11, United States 

24 Code; 
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1 ‘‘(C) extensions of credit, including any 

2 overdraft, from a Federal reserve bank or Fed3 eral home loan bank; or 

4 ‘‘(D) one or more qualified financial con5 tracts, as defined in section 11(e)(8)(D), 

6 shall not be deemed invalid pursuant to paragraph 

7 (1)(B) solely because such agreement was not exe8 cuted contemporaneously with the acquisition of the 

9 collateral or because of pledges, delivery, or substi10 tution of the collateral made in accordance with such 

11 agreement.’’. 

12 SEC. 11. DAMAGE MEASURE. 

13 (a) IN GENERAL.—Title 11, United States Code, is 

14 amended— 

15 (1) by inserting after section 561, as added by 

16 section 8(k) of this Act, the following: 

17 ‘‘§ 562. Timing of damage measurement in connection 

18 with swap agreements, securities con19 tracts, forward contracts, commodity con20 tracts, repurchase agreements, and mas21 ter netting agreements 

22 ‘‘(a) If the trustee rejects a swap agreement, securi23 ties contract (as defined in section 741), forward contract, 

24 commodity contract (as defined in section 761), repur25 chase agreement, or master netting agreement pursuant 
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1 to section 365(a), or if a forward contract merchant, 

2 stockbroker, financial institution, securities clearing agen3 cy, repo participant, financial participant, master netting 

4 agreement participant, or swap participant liquidates, ter5 minates, or accelerates such contract or agreement, dam6 ages shall be measured as of the earlier of— 

7 ‘‘(1) the date of such rejection; or 

8 ‘‘(2) the date or dates of such liquidation, ter9 mination, or acceleration. 

10 ‘‘(b) If there are not any commercially reasonable de11 terminants of value as of any date referred to in para12 graph (1) or (2) of subsection (a), damages shall be meas13 ured as of the earliest subsequent date or dates on which 

14 there are commercially reasonable determinants of value. 

15 ‘‘(c) For the purposes of subsection (b), if damages 

16 are not measured as of the date or dates of rejection, liq17 uidation, termination, or acceleration, and the forward 

18 contract merchant, stockbroker, financial institution, secu19 rities clearing agency, repo participant, financial partici20 pant, master netting agreement participant, or swap par21 ticipant or the trustee objects to the timing of the meas22 urement of damages— 

23 ‘‘(1) the trustee, in the case of an objection by 

24 a forward contract merchant, stockbroker, financial 

25 institution, securities clearing agency, repo partici-
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1 pant, financial participant, master netting agree2 ment participant, or swap participant; or 

3 ‘‘(2) the forward contract merchant, stock4 broker, financial institution, securities clearing agen5 cy, repo participant, financial participant, master 

6 netting agreement participant, or swap participant, 

7 in the case of an objection by the trustee, 

8 has the burden of proving that there were no commercially 

9 reasonable determinants of value as of such date or 

10 dates.’’; and 

11 (2) in the table of sections for chapter 5, by in12 serting after the item relating to section 561 (as 

13 added by section 8(k)(2) of this Act) the following 

14 new item: 

‘‘562. Timing of damage measure in connection with swap agreements, securities 

contracts, forward contracts, commodity contracts, repurchase 

agreements, or master netting agreements.’’. 

15 (b) CLAIMS ARISING FROM REJECTION.—Section 

16 502(g) of title 11, United States Code, is amended— 

17 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 

18 (2) by adding at the end the following: 

19 ‘‘(2) A claim for damages calculated in accordance 

20 with section 562 of this title shall be allowed under sub21 section (a), (b), or (c), or disallowed under subsection (d) 

22 or (e), as if such claim had arisen before the date of the 

23 filing of the petition.’’. 
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1 SEC. 12. SIPC STAY. 

2 Section 5(b)(2) of the Securities Investor Protection 

3 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 

4 at the end the following new subparagraph: 

5 ‘‘(C) EXCEPTION FROM STAY.— 

6 ‘‘(i) Notwithstanding section 362 of 

7 title 11, United States Code, neither the 

8 filing of an application under subsection 

9 (a)(3) nor any order or decree obtained by 

10 SIPC from the court shall operate as a 

11 stay of any contractual rights of a creditor 

12 to liquidate, terminate, or accelerate a se13 curities contract, commodity contract, for14 ward contract, repurchase agreement, swap 

15 agreement, or master netting agreement, 

16 as those terms are defined in sections 101, 

17 741, and 761 of title 11, United States 

18 Code, to offset or net termination values, 

19 payment amounts, or other transfer obliga20 tions arising under or in connection with 

21 one or more of such contracts or agree22 ments, or to foreclose on any cash collat23 eral pledged by the debtor, whether or not 

24 with respect to one or more of such con25 tracts or agreements. 
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1 ‘‘(ii) Notwithstanding clause (i), such 

2 application, order, or decree may operate 

3 as a stay of the foreclosure on, or disposi4 tion of, securities collateral pledged by the 

5 debtor, whether or not with respect to one 

6 or more of such contracts or agreements, 

7 securities sold by the debtor under a repur8 chase agreement, or securities lent under a 

9 securities lending agreement. 

10 ‘‘(iii) As used in this subparagraph, 

11 the term ‘contractual right’ includes a 

12 right set forth in a rule or bylaw of a na13 tional securities exchange, a national secu14 rities association, or a securities clearing 

15 agency, a right set forth in a bylaw of a 

16 clearing organization or contract market or 

17 in a resolution of the governing board 

18 thereof, and a right, whether or not in 

19 writing, arising under common law, under 

20 law merchant, or by reason of normal busi21 ness practice.’’. 

22 SEC. 13. APPLICABILITY OF OTHER SECTIONS TO 

23 CHAPTER 9. 

24 Section 901(a) of title 11, United States Code, is 

25 amended— 
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1 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and 

2 (2) by inserting ‘‘559, 560, 561, 562’’ after 

3 ‘‘557,’’. 

4 SEC. 14. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

5 (a) EFFECTIVE DATE.—This Act shall take effect on 

6 the date of enactment of this Act. 

7 (b) APPLICATION OF AMENDMENTS.—The amend8 ments made by this Act shall apply with respect to cases 

9 commenced or appointments made under any Federal or 

10 State law on or after the date of enactment of this Act, 

11 but shall not apply with respect to cases commenced or 

12 appointments made under any Federal or State law before 

13 the date of enactment of this Act. 

14 SEC. 15. SAVINGS CLAUSE. 

15 The meanings of terms used in this Act are applicable 

16 for purposes of this Act only, and shall not be construed 

17 or applied so as to challenge or affect the characterization, 

18 definition, or treatment of any similar terms under any 

19 other statute, regulation, or rule, including the Gramm20 Leach-Bliley Act, the Legal Certainty for Bank Products 

21 Act of 2000, the securities laws (as that term is defined 

22 in section 3(a)(47) of the Securities Exchange Act of 

23 1934), and the Commodity Exchange Act. 

Union Calendar No. 297 

108TH CONGRESS 

2D SESSION H. R. 2120 

[Report No. 108–277, Part I] 

A BILL 

To revise the banking and bankruptcy insolvency 

of financial contracts, and for other purposes. laws with respect to the termination and netting 

JUNE 1, 2004 

The Committee on the Judiciary discharged; committed 

the Union and ordered to be printed to the Committee of the Whole House on the State of