I 

108TH CONGRESS 

1ST SESSION H. R. 2120

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 

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

2 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. 

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.

3 SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CON4 SERVATORS OR RECEIVERS OF INSURED DE5 POSITORY INSTITUTIONS. 

6 (a) DEFINITION OF QUALIFIED FINANCIAL CON7 TRACT.—

8 (1) FDIC-INSURED DEPOSITORY INSTITU9 TIONS.—Section 11(e)(8)(D) of the Federal Deposit 

10 Insurance Act (12 U.S.C. 1821(e)(8)(D)) is amend11 ed— 

12 (A) by striking ‘‘subsection—’’ and insert13 ing ‘‘subsection, the following definitions shall 

14 apply:’’; and 

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

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

17 Corporation determines by regulation’’. 
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1 (2) INSURED CREDIT UNIONS.—Section 

2 207(c)(8)(D) of the Federal Credit Union Act (12 

3 U.S.C. 1787(c)(8)(D)) is amended—

4 (A) by striking ‘‘subsection—’’ and insert5 ing ‘‘subsection, the following definitions shall 

6 apply:’’; and 

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

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

9 Board determines by regulation’’. 

10 (b) DEFINITION OF SECURITIES CONTRACT.—

11 (1) FDIC-INSURED DEPOSITORY INSTITU12 TIONS.—Section 11(e)(8)(D)(ii) of the Federal De13 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 

14 amended to read as follows: 

15 ‘‘(ii) SECURITIES CONTRACT.—The 

16 term ‘securities contract’—

17 ‘‘(I) means a contract for the 

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

19 certificate of deposit, a mortgage loan, 

20 or any interest in a mortgage loan, a 

21 group or index of securities, certifi22 cates of deposit, or mortgage loans or 

23 interests therein (including any inter24 est therein or based on the value 

25 thereof) or any option on any of the 
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1 foregoing, including any option to 

2 purchase or sell any such security, 

3 certificate of deposit, mortgage loan, 

4 interest, group or index, or option, 

5 and including any repurchase or re6 verse repurchase transaction on any 

7 such security, certificate of deposit, 

8 mortgage loan, interest, group or 

9 index, or option; 

10 ‘‘(II) does not include any pur11 chase, sale, or repurchase obligation 

12 under a participation in a commercial 

13 mortgage loan unless the Corporation 

14 determines by regulation, resolution, 

15 or order to include any such agree16 ment within the meaning of such 

17 term; 

18 ‘‘(III) means any option entered 

19 into on a national securities exchange 

20 relating to foreign currencies; 

21 ‘‘(IV) means the guarantee by or 

22 to any securities clearing agency of 

23 any settlement of cash, securities, cer24 tificates of deposit, mortgage loans or 

25 interests therein, group or index of se-
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1 curities, certificates of deposit, or 

2 mortgage loans or interests therein 

3 (including any interest therein or 

4 based on the value thereof) or option 

5 on any of the foregoing, including any 

6 option to purchase or sell any such se7 curity, certificate of deposit, mortgage 

8 loan, interest, group or index, or op9 tion; 

10 ‘‘(V) means any margin loan; 

11 ‘‘(VI) means any other agree12 ment or transaction that is similar to 

13 any agreement or transaction referred 

14 to in this clause; 

15 ‘‘(VII) means any combination of 

16 the agreements or transactions re17 ferred to in this clause; 

18 ‘‘(VIII) means any option to 

19 enter into any agreement or trans20 action referred to in this clause; 

21 ‘‘(IX) means a master agreement 

22 that provides for an agreement or 

23 transaction referred to in subclause 

24 (I), (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 securities 

5 contract under this clause, except that 

6 the master agreement shall be consid7 ered to be a securities 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), (III), (IV), (V), (VI), 

12 (VII), or (VIII); and 

13 ‘‘(X) means any security agree14 ment or arrangement or other credit 

15 enhancement related to any agree16 ment or transaction referred to in this 

17 clause, including any guarantee or re18 imbursement obligation in connection 

19 with any agreement or transaction re20 ferred to in this clause.’’. 

21 (2) INSURED CREDIT UNIONS.—Section 

22 207(c)(8)(D)(ii) of the Federal Credit Union Act 

23 (12 U.S.C. 1787(c)(8)(D)(ii)) is amended to read as 

24 follows: 
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1 ‘‘(ii) SECURITIES CONTRACT.—The 

2 term ‘securities contract’—

3 ‘‘(I) means a contract for the 

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

5 certificate of deposit, a mortgage loan, 

6 or any interest in a mortgage loan, a 

7 group or index of securities, certifi8 cates of deposit, or mortgage loans or 

9 interests therein (including any inter10 est therein or based on the value 

11 thereof) or any option on any of the 

12 foregoing, including any option to 

13 purchase or sell any such security, 

14 certificate of deposit, mortgage loan, 

15 interest, group or index, or option, 

16 and including any repurchase or re17 verse repurchase transaction on any 

18 such security, certificate of deposit, 

19 mortgage loan, interest, group or 

20 index, or option; 

21 ‘‘(II) does not include any pur22 chase, sale, or repurchase obligation 

23 under a participation in a commercial 

24 mortgage loan unless the Board deter25 mines by regulation, resolution, or 
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1 order to include any such agreement 

2 within the meaning of such term; 

3 ‘‘(III) means any option entered 

4 into on a national securities exchange 

5 relating to foreign currencies; 

6 ‘‘(IV) means the guarantee by or 

7 to any securities clearing agency of 

8 any settlement of cash, securities, cer9 tificates of deposit, mortgage loans or 

10 interests therein, group or index of se11 curities, certificates of deposit, or 

12 mortgage loans or interests therein 

13 (including any interest therein or 

14 based on the value thereof) or option 

15 on any of the foregoing, including any 

16 option to purchase or sell any such se17 curity, certificate of deposit, mortgage 

18 loan, interest, group or index, or op19 tion; 

20 ‘‘(V) means any margin loan; 

21 ‘‘(VI) means any other agree22 ment or transaction that is similar to 

23 any agreement or transaction referred 

24 to in this clause; 
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1 ‘‘(VII) means any combination of 

2 the agreements or transactions re3 ferred to in this clause; 

4 ‘‘(VIII) means any option to 

5 enter into any agreement or trans6 action referred to in this clause; 

7 ‘‘(IX) means a master agreement 

8 that provides for an agreement or 

9 transaction referred to in subclause 

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

11 (VIII), together with all supplements 

12 to any such master agreement, with13 out regard to whether the master 

14 agreement provides for an agreement 

15 or transaction that is not a securities 

16 contract under this clause, except that 

17 the master agreement shall be consid18 ered to be a securities contract under 

19 this clause only with respect to each 

20 agreement or transaction under the 

21 master agreement that is referred to 

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

23 (VII), or (VIII); and 

24 ‘‘(X) means any security agree25 ment or arrangement or other credit 
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1 enhancement related to any agree2 ment or transaction referred to in this 

3 clause, including any guarantee or re4 imbursement obligation in connection 

5 with any agreement or transaction re6 ferred to in this clause.’’. 

7 (c) DEFINITION OF COMMODITY CONTRACT.—

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

11 amended to read as follows: 

12 ‘‘(iii) COMMODITY CONTRACT.—The 

13 term ‘commodity contract’ means—

14 ‘‘(I) with respect to a futures 

15 commission merchant, a contract for 

16 the purchase or sale of a commodity 

17 for future delivery on, or subject to 

18 the rules of, a contract market or 

19 board of trade; 

20 ‘‘(II) with respect to a foreign fu21 tures commission merchant, a foreign 

22 future; 

23 ‘‘(III) with respect to a leverage 

24 transaction merchant, a leverage 

25 transaction; 
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1 ‘‘(IV) with respect to a clearing 

2 organization, a contract for the pur3 chase or sale of a commodity for fu4 ture delivery on, or subject to the 

5 rules of, a contract market or board 

6 of trade that is cleared by such clear7 ing organization, or commodity option 

8 traded on, or subject to the rules of, 

9 a contract market or board of trade 

10 that is cleared by such clearing orga11 nization; 

12 ‘‘(V) with respect to a commodity 

13 options dealer, a commodity option; 

14 ‘‘(VI) any other agreement or 

15 transaction that is similar to any 

16 agreement or transaction referred to 

17 in this clause; 

18 ‘‘(VII) any combination of the 

19 agreements or transactions referred to 

20 in this clause; 

21 ‘‘(VIII) any option to enter into 

22 any agreement or transaction referred 

23 to in this clause; 

24 ‘‘(IX) a master agreement that 

25 provides for an agreement or trans-
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1 action referred to in subclause (I), 

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

3 (VIII), together with all supplements 

4 to any such master agreement, with5 out regard to whether the master 

6 agreement provides for an agreement 

7 or transaction that is not a com8 modity contract under this clause, ex9 cept that the master agreement shall 

10 be considered to be a commodity con11 tract under this clause only with re12 spect to each agreement or trans13 action under the master agreement 

14 that is referred to in subclause (I), 

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

16 (VIII); or 

17 ‘‘(X) any security agreement or 

18 arrangement or other credit enhance19 ment related to any agreement or 

20 transaction referred to in this clause, 

21 including any guarantee or reimburse22 ment obligation in connection with 

23 any agreement or transaction referred 

24 to in this clause.’’.
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1 (2) INSURED CREDIT UNIONS.—Section 

2 207(c)(8)(D)(iii) of the Federal Credit Union Act 

3 (12 U.S.C. 1787(c)(8)(D)(iii)) is amended to read as 

4 follows: 

5 ‘‘(iii) COMMODITY CONTRACT.—The 

6 term ‘commodity contract’ means—

7 ‘‘(I) with respect to a futures 

8 commission merchant, a contract for 

9 the purchase or sale of a commodity 

10 for future delivery on, or subject to 

11 the rules of, a contract market or 

12 board of trade; 

13 ‘‘(II) with respect to a foreign fu14 tures commission merchant, a foreign 

15 future; 

16 ‘‘(III) with respect to a leverage 

17 transaction merchant, a leverage 

18 transaction; 

19 ‘‘(IV) with respect to a clearing 

20 organization, a contract for the pur21 chase or sale of a commodity for fu22 ture delivery on, or subject to the 

23 rules of, a contract market or board 

24 of trade that is cleared by such clear25 ing organization, or commodity option 
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1 traded on, or subject to the rules of, 

2 a contract market or board of trade 

3 that is cleared by such clearing orga4 nization; 

5 ‘‘(V) with respect to a commodity 

6 options dealer, a commodity option; 

7 ‘‘(VI) any other agreement or 

8 transaction that is similar to any 

9 agreement or transaction referred to 

10 in this clause; 

11 ‘‘(VII) any combination of the 

12 agreements or transactions referred to 

13 in this clause; 

14 ‘‘(VIII) any option to enter into 

15 any agreement or transaction referred 

16 to in this clause; 

17 ‘‘(IX) a master agreement that 

18 provides for an agreement or trans19 action referred to in subclause (I), 

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

21 (VIII), together with all supplements 

22 to any such master agreement, with23 out regard to whether the master 

24 agreement provides for an agreement 

25 or transaction that is not a com-
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1 modity contract under this clause, ex2 cept that the master agreement shall 

3 be considered to be a commodity con4 tract under this clause only with re5 spect to each agreement or trans6 action under the master agreement 

7 that is referred to in subclause (I), 

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

9 (VIII); or 

10 ‘‘(X) any security agreement or 

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

13 transaction referred to in this clause, 

14 including any guarantee or reimburse15 ment obligation in connection with 

16 any agreement or transaction referred 

17 to in this clause.’’. 

18 (d) DEFINITION OF FORWARD CONTRACT.—

19 (1) FDIC-INSURED DEPOSITORY INSTITU20 TIONS.—Section 11(e)(8)(D)(iv) of the Federal De21 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is 

22 amended to read as follows: 

23 ‘‘(iv) FORWARD CONTRACT.—The 

24 term ‘forward contract’ means—
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1 ‘‘(I) a contract (other than a 

2 commodity contract) for the purchase, 

3 sale, or transfer of a commodity or 

4 any similar good, article, service, 

5 right, or interest which is presently or 

6 in the future becomes the subject of 

7 dealing in the forward contract trade, 

8 or product or byproduct thereof, with 

9 a maturity date more than 2 days 

10 after the date the contract is entered 

11 into, including, a repurchase trans12 action, reverse repurchase transaction, 

13 consignment, lease, swap, hedge 

14 transaction, deposit, loan, option, allo15 cated transaction, unallocated trans16 action, or any other similar agree17 ment; 

18 ‘‘(II) any combination of agree19 ments or transactions referred to in 

20 subclauses (I) and (III); 

21 ‘‘(III) any option to enter into 

22 any agreement or transaction referred 

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

24 ‘‘(IV) a master agreement that 

25 provides for an agreement or trans-
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1 action referred to in subclauses (I), 

2 (II), or (III), together with all supple3 ments to any such master agreement, 

4 without regard to whether the master 

5 agreement provides for an agreement 

6 or transaction that is not a forward 

7 contract under this clause, except that 

8 the master agreement shall be consid9 ered to be a forward contract under 

10 this clause only with respect to each 

11 agreement or transaction under the 

12 master agreement that is referred to 

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

14 ‘‘(V) any security agreement or 

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

17 transaction referred to in subclause 

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

19 guarantee or reimbursement obliga20 tion in connection with any agreement 

21 or transaction referred to in any such 

22 subclause.’’. 

23 (2) INSURED CREDIT UNIONS.—Section 

24 207(c)(8)(D)(iv) of the Federal Credit Union Act 
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1 (12 U.S.C. 1787(c)(8)(D)(iv)) is amended to read as 

2 follows: 

3 ‘‘(iv) FORWARD CONTRACT.—The 

4 term ‘forward contract’ means—

5 ‘‘(I) a contract (other than a 

6 commodity contract) for the purchase, 

7 sale, or transfer of a commodity or 

8 any similar good, article, service, 

9 right, or interest which is presently or 

10 in the future becomes the subject of 

11 dealing in the forward contract trade, 

12 or product or byproduct thereof, with 

13 a maturity date more than 2 days 

14 after the date the contract is entered 

15 into, including, a repurchase trans16 action, reverse repurchase transaction, 

17 consignment, lease, swap, hedge 

18 transaction, deposit, loan, option, allo19 cated transaction, unallocated trans20 action, or any other similar agree21 ment; 

22 ‘‘(II) any combination of agree23 ments or transactions referred to in 

24 subclauses (I) and (III);
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1 ‘‘(III) any option to enter into 

2 any agreement or transaction referred 

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

4 ‘‘(IV) a master agreement that 

5 provides for an agreement or trans6 action referred to in subclauses (I), 

7 (II), or (III), together with all supple8 ments to any such master agreement, 

9 without regard to whether the master 

10 agreement provides for an agreement 

11 or transaction that is not a forward 

12 contract under this clause, except that 

13 the master agreement shall be consid14 ered to be a forward contract under 

15 this clause only with respect to each 

16 agreement or transaction under the 

17 master agreement that is referred to 

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

19 ‘‘(V) any security agreement or 

20 arrangement or other credit enhance21 ment related to any agreement or 

22 transaction referred to in subclause 

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

24 guarantee or reimbursement obliga25 tion in connection with any agreement 
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1 or transaction referred to in any such 

2 subclause.’’. 

3 (e) DEFINITION OF REPURCHASE AGREEMENT.—

4 (1) FDIC-INSURED DEPOSITORY INSTITU5 TIONS.—Section 11(e)(8)(D)(v) of the Federal De6 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is 

7 amended to read as follows: 

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 Corporation determines by regula18 tion, resolution, or order to include 

19 any such participation within the 

20 meaning of 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 (2) INSURED CREDIT UNIONS.—Section 

14 207(c)(8)(D)(v) of the Federal Credit Union Act (12 

15 U.S.C. 1787(c)(8)(D)(v)) is amended to read as fol16 lows: 

17 ‘‘(v) REPURCHASE AGREEMENT.—The 

18 term ‘repurchase agreement’ (which defini19 tion also applies to a reverse repurchase 

20 agreement)—

21 ‘‘(I) means an agreement, includ22 ing related terms, which provides for 

23 the transfer of one or more certifi24 cates of deposit, mortgage-related se25 curities (as such term is defined in 
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1 the Securities Exchange Act of 1934), 

2 mortgage loans, interests in mortgage3 related securities or mortgage loans, 

4 eligible bankers’ acceptances, qualified 

5 foreign government securities or secu6 rities that are direct obligations of, or 

7 that are fully guaranteed by, the 

8 United States or any agency of the 

9 United States against the transfer of 

10 funds by the transferee of such certifi11 cates of deposit, eligible bankers’ ac12 ceptances, securities, mortgage loans, 

13 or interests with a simultaneous 

14 agreement by such transferee to 

15 transfer to the transferor thereof cer16 tificates of deposit, eligible bankers’ 

17 acceptances, securities, mortgage 

18 loans, or interests as described above, 

19 at a date certain not later than 1 year 

20 after such transfers or on demand, 

21 against the transfer of funds, or any 

22 other similar agreement; 

23 ‘‘(II) does not include any repur24 chase obligation under a participation 

25 in a commercial mortgage loan unless
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1 the Board determines by regulation, 

2 resolution, or order to include any 

3 such participation within the meaning 

4 of such term; 

5 ‘‘(III) means any combination of 

6 agreements or transactions referred to 

7 in subclauses (I) and (IV); 

8 ‘‘(IV) means any option to enter 

9 into any agreement or transaction re10 ferred to in subclause (I) or (III); 

11 ‘‘(V) means a master agreement 

12 that provides for an agreement or 

13 transaction referred to in subclause 

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

15 supplements to any such master 

16 agreement, without regard to whether 

17 the master agreement provides for an 

18 agreement or transaction that is not a 

19 repurchase agreement under this 

20 clause, except that the master agree21 ment shall be considered to be a re22 purchase agreement under this sub23 clause only with respect to each agree24 ment or transaction under the master 
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1 agreement that is referred to in sub2 clause (I), (III), or (IV); and 

3 ‘‘(VI) means any security agree4 ment or arrangement or other credit 

5 enhancement related to any agree6 ment or transaction referred to in 

7 subclause (I), (III), (IV), or (V), in8 cluding any guarantee or reimburse9 ment obligation in connection with 

10 any agreement or transaction referred 

11 to in any such subclause. 

12 For purposes of this clause, the term 

13 ‘qualified foreign government security’ 

14 means a security that is a direct obligation 

15 of, or that is fully guaranteed by, the cen16 tral government of a member of the Orga17 nization for Economic Cooperation and 

18 Development (as determined by regulation 

19 or order adopted by the appropriate Fed20 eral banking authority).’’. 

21 (f) DEFINITION OF SWAP AGREEMENT.—

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

25 amended to read as follows: 
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1 ‘‘(vi) SWAP AGREEMENT.—The term 

2 ‘swap agreement’ means—

3 ‘‘(I) any agreement, including the 

4 terms and conditions incorporated by 

5 reference in any such agreement, 

6 which is an interest rate swap, option, 

7 future, or forward agreement, includ8 ing a rate floor, rate cap, rate collar, 

9 cross-currency rate swap, and basis 

10 swap; a spot, same day-tomorrow, to11 morrow-next, forward, or other for12 eign exchange or precious metals 

13 agreement; a currency swap, option, 

14 future, or forward agreement; an eq15 uity index or equity swap, option, fu16 ture, or forward agreement; a debt 

17 index or debt swap, option, future, or 

18 forward agreement; a total return, 

19 credit spread or credit swap, option, 

20 future, or forward agreement; a com21 modity index or commodity swap, op22 tion, future, or forward agreement; or 

23 a weather swap, weather derivative, or 

24 weather option; 
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1 ‘‘(II) any agreement or trans2 action that is similar to any other 

3 agreement or transaction referred to 

4 in this clause and that is of a type 

5 that has been, is presently, or in the 

6 future becomes, the subject of recur7 rent dealings in the swap markets (in8 cluding terms and conditions incor9 porated by reference in such agree10 ment) and that is a forward, swap, fu11 ture, or option on one or more rates, 

12 currencies, commodities, equity securi13 ties or other equity instruments, debt 

14 securities or other debt instruments, 

15 quantitative measures associated with 

16 an occurrence, extent of an occur17 rence, or contingency associated with 

18 a financial, commercial, or economic 

19 consequence, or economic or financial 

20 indices or measures of economic or fi21 nancial risk or value; 

22 ‘‘(III) any combination of agree23 ments or transactions referred to in 

24 this clause; 
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1 ‘‘(IV) any option to enter into 

2 any agreement or transaction referred 

3 to in this clause; 

4 ‘‘(V) a master agreement that 

5 provides for an agreement or trans6 action referred to in subclause (I), 

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

8 supplements to any such master 

9 agreement, without regard to whether 

10 the master agreement contains an 

11 agreement or transaction that is not a 

12 swap agreement under this clause, ex13 cept that the master agreement shall 

14 be considered to be a swap agreement 

15 under this clause only with respect to 

16 each agreement or transaction under 

17 the master agreement that is referred 

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

19 and 

20 ‘‘(VI) any security agreement or 

21 arrangement or other credit enhance22 ment related to any agreements or 

23 transactions referred to in subclause 

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

25 any guarantee or reimbursement obli-
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1 gation in connection with any agree2 ment or transaction referred to in any 

3 such subclause. 

4 Such term is applicable for purposes of 

5 this subsection only and shall not be con6 strued or applied so as to challenge or af7 fect the characterization, definition, or 

8 treatment of any swap agreement under 

9 any other statute, regulation, or rule, in10 cluding the Securities Act of 1933, the Se11 curities Exchange Act of 1934, the Public 

12 Utility Holding Company Act of 1935, the 

13 Trust Indenture Act of 1939, the Invest14 ment Company Act of 1940, the Invest15 ment Advisers Act of 1940, the Securities 

16 Investor Protection Act of 1970, the Com17 modity Exchange Act, the Gramm-Leach18 Bliley Act, and the Legal Certainty for 

19 Bank Products Act of 2000.’’. 

20 (2) INSURED CREDIT UNIONS.—Section 

21 207(c)(8)(D) of the Federal Credit Union Act (12 

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

23 end the following new clause: 

24 ‘‘(vi) SWAP AGREEMENT.—The term 

25 ‘swap agreement’ means—
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•HR 2120 IH 

1 ‘‘(I) any agreement, including the 

2 terms and conditions incorporated by 

3 reference in any such agreement, 

4 which is an interest rate swap, option, 

5 future, or forward agreement, includ6 ing a rate floor, rate cap, rate collar, 

7 cross-currency rate swap, and basis 

8 swap; a spot, same day-tomorrow, to9 morrow-next, forward, or other for10 eign exchange or precious metals 

11 agreement; a currency swap, option, 

12 future, or forward agreement; an eq13 uity index or equity swap, option, fu14 ture, or forward agreement; a debt 

15 index or debt swap, option, future, or 

16 forward agreement; a total return, 

17 credit spread or credit swap, option, 

18 future, or forward agreement; a com19 modity index or commodity swap, op20 tion, future, or forward agreement; or 

21 a weather swap, weather derivative, or 

22 weather option; 

23 ‘‘(II) any agreement or trans24 action that is similar to any other 

25 agreement or transaction referred to 
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•HR 2120 IH 

1 in this clause and that is of a type 

2 that has been, is presently, or in the 

3 future becomes, the subject of recur4 rent dealings in the swap markets (in5 cluding terms and conditions incor6 porated by reference in such agree7 ment) and that is a forward, swap, fu8 ture, or option on one or more rates, 

9 currencies, commodities, equity securi10 ties or other equity instruments, debt 

11 securities or other debt instruments, 

12 quantitative measures associated with 

13 an occurrence, extent of an occur14 rence, or contingency associated with 

15 a financial, commercial, or economic 

16 consequence, or economic or financial 

17 indices or measures of economic or fi18 nancial risk or value; 

19 ‘‘(III) any combination of agree20 ments or transactions referred to in 

21 this clause; 

22 ‘‘(IV) any option to enter into 

23 any agreement or transaction referred 

24 to in this clause; 
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•HR 2120 IH 

1 ‘‘(V) a master agreement that 

2 provides for an agreement or trans3 action referred to in subclause (I), 

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

5 supplements to any such master 

6 agreement, without regard to whether 

7 the master agreement contains an 

8 agreement or transaction that is not a 

9 swap agreement under this clause, ex10 cept that the master agreement shall 

11 be considered to be a swap agreement 

12 under this clause only with respect to 

13 each agreement or transaction under 

14 the master agreement that is referred 

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

16 and 

17 ‘‘(VI) any security agreement or 

18 arrangement or other credit enhance19 ment related to any agreements or 

20 transactions referred to in subclause 

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

22 any guarantee or reimbursement obli23 gation in connection with any agree24 ment or transaction referred to in any 

25 such subclause. 
34

•HR 2120 IH 

1 Such term is applicable for purposes of 

2 this subsection only and shall not be con3 strued or applied so as to challenge or af4 fect the characterization, definition, or 

5 treatment of any swap agreement under 

6 any other statute, regulation, or rule, in7 cluding the Securities Act of 1933, the Se8 curities Exchange Act of 1934, the Public 

9 Utility Holding Company Act of 1935, the 

10 Trust Indenture Act of 1939, the Invest11 ment Company Act of 1940, the Invest12 ment Advisers Act of 1940, the Securities 

13 Investor Protection Act of 1970, the Com14 modity Exchange Act, the Gramm-Leach15 Bliley Act, and the Legal Certainty for 

16 Bank Products Act of 2000.’’. 

17 (g) DEFINITION OF TRANSFER.—

18 (1) FDIC-INSURED DEPOSITORY INSTITU19 TIONS.—Section 11(e)(8)(D)(viii) of the Federal De20 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) 

21 is amended to read as follows: 

22 ‘‘(viii) TRANSFER.—The term ‘trans23 fer’ means every mode, direct or indirect, 

24 absolute or conditional, voluntary or invol25 untary, of disposing of or parting with 
35

•HR 2120 IH 

1 property or with an interest in property, 

2 including retention of title as a security in3 terest and foreclosure of the depository in4 stitution’s equity of redemption.’’. 

5 (2) INSURED CREDIT UNIONS.—Section 

6 207(c)(8)(D) of the Federal Credit Union Act (12 

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

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

9 the following new clause: 

10 ‘‘(viii) TRANSFER.—The term ‘trans11 fer’ means every mode, direct or indirect, 

12 absolute or conditional, voluntary or invol13 untary, of disposing of or parting with 

14 property or with an interest in property, 

15 including retention of title as a security in16 terest and foreclosure of the depository in17 stitution’s equity of redemption.’’. 

18 (h) TREATMENT OF QUALIFIED FINANCIAL CON19 TRACTS.—

20 (1) FDIC-INSURED DEPOSITORY INSTITU21 TIONS.—Section 11(e)(8) of the Federal Deposit In22 surance Act (12 U.S.C. 1821(e)(8)) is amended—

23 (A) in subparagraph (A)—

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

25 inserting ‘‘paragraphs (9) and (10)’’; 
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•HR 2120 IH 

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

2 the termination or liquidation’’ and insert3 ing ‘‘such person has to cause the termi4 nation, liquidation, or acceleration’’; and 

5 (iii) by striking clause (ii) and insert6 ing the following new clause: 

7 ‘‘(ii) any right under any security 

8 agreement or arrangement or other credit 

9 enhancement related to one or more quali10 fied financial contracts described in clause 

11 (i);’’; and 

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

13 clause (ii) and inserting the following: 

14 ‘‘(ii) any right under any security 

15 agreement or arrangement or other credit 

16 enhancement related to one or more quali17 fied financial contracts described in clause 

18 (i);’’. 

19 (2) INSURED CREDIT UNIONS.—Section 

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

21 U.S.C. 1787(c)(8)) is amended—

22 (A) in subparagraph (A)—

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

24 inserting ‘‘paragraphs (9) and (10)’’;
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•HR 2120 IH 

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

2 the termination or liquidation’’ and insert3 ing ‘‘such person has to cause the termi4 nation, liquidation, or acceleration’’; and 

5 (iii) by striking clause (ii) and insert6 ing the following new clause: 

7 ‘‘(ii) any right under any security 

8 agreement or arrangement or other credit 

9 enhancement related to 1 or more qualified 

10 financial contracts described in clause 

11 (i);’’; and 

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

13 clause (ii) and inserting the following new 

14 clause: 

15 ‘‘(ii) any right under any security 

16 agreement or arrangement or other credit 

17 enhancement related to 1 or more qualified 

18 financial contracts described in clause 

19 (i);’’. 

20 (i) AVOIDANCE OF TRANSFERS.—

21 (1) FDIC-INSURED DEPOSITORY INSTITU22 TIONS.—Section 11(e)(8)(C)(i) of the Federal De23 posit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is 

24 amended by inserting ‘‘section 5242 of the Revised 

25 Statutes of the United States or any other Federal 
38

•HR 2120 IH 

1 or State law relating to the avoidance of preferential 

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

3 (2) INSURED CREDIT UNIONS.—Section 

4 207(c)(8)(C)(i) of the Federal Credit Union Act (12 

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

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

7 States or any other Federal or State law relating to 

8 the avoidance of preferential or fraudulent trans9 fers,’’ before ‘‘the Board’’. 

10 SEC. 3. AUTHORITY OF THE FDIC AND NCUAB WITH RE11 SPECT TO FAILED AND FAILING INSTITU12 TIONS. 

13 (a) FEDERAL DEPOSIT INSURANCE CORPORATION.—

14 (1) IN GENERAL.—Section 11(e)(8) of the Fed15 eral Deposit Insurance Act (12 U.S.C. 1821(e)(8)) 

16 is amended—

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

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

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

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

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

22 subparagraphs: 

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

24 shall be construed as limiting the right or 

25 power of the Corporation, or authorizing any 
39

•HR 2120 IH 

1 court or agency to limit or delay, in any man2 ner, the right or power of the Corporation to 

3 transfer any qualified financial contract in ac4 cordance with paragraphs (9) and (10) of this 

5 subsection or to disaffirm or repudiate any such 

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

7 this section. 

8 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC9 TIVE.—

10 ‘‘(i) IN GENERAL.—Notwithstanding 

11 the provisions of subparagraphs (A) and 

12 (E), and sections 403 and 404 of the Fed13 eral Deposit Insurance Corporation Im14 provement Act of 1991, no walkaway 

15 clause shall be enforceable in a qualified fi16 nancial contract of an insured depository 

17 institution in default. 

18 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

19 For purposes of this subparagraph, the 

20 term ‘walkaway clause’ means a provision 

21 in a qualified financial contract that, after 

22 calculation of a value of a party’s position 

23 or an amount due to or from 1 of the par24 ties in accordance with its terms upon ter25 mination, liquidation, or acceleration of the 
40

•HR 2120 IH 

1 qualified financial contract, either does not 

2 create a payment obligation of a party or 

3 extinguishes a payment obligation of a 

4 party in whole or in part solely because of 

5 such party’s status as a nondefaulting 

6 party.’’. 

7 (2) TECHNICAL AND CONFORMING AMEND8 MENT.—Section 11(e)(12)(A) of the Federal Deposit 

9 Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amend10 ed by inserting ‘‘or the exercise of rights or powers 

11 by’’ after ‘‘the appointment of’’. 

12 (b) NATIONAL CREDIT UNION ADMINISTRATION

13 BOARD.—

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

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

16 amended—

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

18 section 2(h)), by striking ‘‘other than para19 graph (12) of this subsection, subsection 

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

21 (b)(9) and (c)(10)’’; and 

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

23 subparagraphs: 

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

25 shall be construed as limiting the right or 
41

•HR 2120 IH 

1 power of the Board, or authorizing any court or 

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

3 right or power of the Board to transfer any 

4 qualified financial contract in accordance with 

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

6 disaffirm or repudiate any such contract in ac7 cordance with subsection (c)(1) of this section. 

8 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC9 TIVE.—

10 ‘‘(i) IN GENERAL.—Notwithstanding 

11 the provisions of subparagraphs (A) and 

12 (E), and sections 403 and 404 of the Fed13 eral Deposit Insurance Corporation Im14 provement Act of 1991, no walkaway 

15 clause shall be enforceable in a qualified fi16 nancial contract of an insured credit union 

17 in default. 

18 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

19 For purposes of this subparagraph, the 

20 term ‘walkaway clause’ means a provision 

21 in a qualified financial contract that, after 

22 calculation of a value of a party’s position 

23 or an amount due to or from 1 of the par24 ties in accordance with its terms upon ter25 mination, liquidation, or acceleration of the 
42

•HR 2120 IH 

1 qualified financial contract, either does not 

2 create a payment obligation of a party or 

3 extinguishes a payment obligation of a 

4 party in whole or in part solely because of 

5 such party’s status as a nondefaulting 

6 party.’’. 

7 (2) TECHNICAL AND CONFORMING AMEND8 MENT.—Section 207(c)(12)(A) of the Federal Credit 

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

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

11 after ‘‘the appointment of’’. 

12 SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALI13 FIED FINANCIAL CONTRACTS. 

14 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

15 (1) TRANSFERS OF QUALIFIED FINANCIAL

16 CONTRACTS TO FINANCIAL INSTITUTIONS.—Section 

17 11(e)(9) of the Federal Deposit Insurance Act (12 

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

19 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON20 TRACTS.—

21 ‘‘(A) IN GENERAL.—In making any trans22 fer of assets or liabilities of a depository institu23 tion in default which includes any qualified fi24 nancial contract, the conservator or receiver for 

25 such depository institution shall either—
43

•HR 2120 IH 

1 ‘‘(i) transfer to one financial institu2 tion, other than a financial institution for 

3 which a conservator, receiver, trustee in 

4 bankruptcy, or other legal custodian has 

5 been appointed or which is otherwise the 

6 subject of a bankruptcy or insolvency pro7 ceeding—

8 ‘‘(I) all qualified financial con9 tracts between any person or any af10 filiate of such person and the deposi11 tory institution in default; 

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

13 any affiliate of such person against 

14 such depository institution under any 

15 such contract (other than any claim 

16 which, under the terms of any such 

17 contract, is subordinated to the claims 

18 of general unsecured creditors of such 

19 institution); 

20 ‘‘(III) all claims of such deposi21 tory institution against such person or 

22 any affiliate of such person under any 

23 such contract; and 

24 ‘‘(IV) all property securing or 

25 any other credit enhancement for any 
44

•HR 2120 IH 

1 contract described in subclause (I) or 

2 any claim described in subclause (II) 

3 or (III) under any such contract; or 

4 ‘‘(ii) transfer none of the qualified fi5 nancial contracts, claims, property or other 

6 credit enhancement referred to in clause (i) 

7 (with respect to such person and any affil8 iate of such person). 

9 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR10 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

11 AGENCY OF A FOREIGN BANK OR FINANCIAL IN12 STITUTION.—In transferring any qualified fi13 nancial contracts and related claims and prop14 erty under subparagraph (A)(i), the conservator 

15 or receiver for the depository institution shall 

16 not make such transfer to a foreign bank, fi17 nancial institution organized under the laws of 

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

19 foreign bank or financial institution unless, 

20 under the law applicable to such bank, financial 

21 institution, branch or agency, to the qualified 

22 financial contracts, and to any netting contract, 

23 any security agreement or arrangement or other 

24 credit enhancement related to one or more 

25 qualified financial contracts, the contractual 
45

•HR 2120 IH 

1 rights of the parties to such qualified financial 

2 contracts, netting contracts, security agree3 ments or arrangements, or other credit en4 hancements are enforceable substantially to the 

5 same extent as permitted under this section. 

6 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

7 TO THE RULES OF A CLEARING ORGANIZA8 TION.—In the event that a conservator or re9 ceiver transfers any qualified financial contract 

10 and related claims, property, and credit en11 hancements pursuant to subparagraph (A)(i) 

12 and such contract is cleared by or subject to the 

13 rules of a clearing organization, the clearing or14 ganization shall not be required to accept the 

15 transferee as a member by virtue of the trans16 fer. 

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

18 paragraph, the term ‘financial institution’ 

19 means a broker or dealer, a depository institu20 tion, a futures commission merchant, or any 

21 other institution, as determined by the Corpora22 tion by regulation to be a financial institution, 

23 and the term ‘clearing organization’ has the 

24 same meaning as in section 402 of the Federal 
46

•HR 2120 IH 

1 Deposit Insurance Corporation Improvement 

2 Act of 1991.’’. 

3 (2) NOTICE TO QUALIFIED FINANCIAL CON4 TRACT COUNTERPARTIES.—Section 11(e)(10)(A) of 

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

6 1821(e)(10)(A)) is amended in the material imme7 diately following clause (ii) by striking ‘‘the conser8 vator’’ and all that follows through the period and 

9 inserting the following: ‘‘the conservator or receiver 

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

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

12 on the business day following the date of the ap13 pointment of the receiver in the case of a receiver14 ship, or the business day following such transfer in 

15 the case of a conservatorship.’’. 

16 (3) RIGHTS AGAINST RECEIVER AND CONSER17 VATOR AND TREATMENT OF BRIDGE BANKS.—Sec18 tion 11(e)(10) of the Federal Deposit Insurance Act 

19 (12 U.S.C. 1821(e)(10)) is amended—

20 (A) by redesignating subparagraph (B) as 

21 subparagraph (D); and 

22 (B) by inserting after subparagraph (A) 

23 the following new subparagraphs: 

24 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE25 ABLE.—
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•HR 2120 IH 

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

2 a party to a qualified financial contract 

3 with an insured depository institution may 

4 not exercise any right that such person has 

5 to terminate, liquidate, or net such con6 tract under paragraph (8)(A) of this sub7 section or section 403 or 404 of the Fed8 eral Deposit Insurance Corporation Im9 provement Act of 1991, solely by reason of 

10 or incidental to the appointment of a re11 ceiver for the depository institution (or the 

12 insolvency or financial condition of the de13 pository institution for which the receiver 

14 has been appointed)—

15 ‘‘(I) until 5:00 p.m. (eastern 

16 time) on the business day following 

17 the date of the appointment of the re18 ceiver; or 

19 ‘‘(II) after the person has re20 ceived notice that the contract has 

21 been transferred pursuant to para22 graph (9)(A). 

23 ‘‘(ii) CONSERVATORSHIP.—A person 

24 who is a party to a qualified financial con25 tract with an insured depository institution
48

•HR 2120 IH 

1 may not exercise any right that such per2 son has to terminate, liquidate, or net such 

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

4 subsection or section 403 or 404 of the 

5 Federal Deposit Insurance Corporation 

6 Improvement Act of 1991, solely by reason 

7 of or incidental to the appointment of a 

8 conservator for the depository institution 

9 (or the insolvency or financial condition of 

10 the depository institution for which the 

11 conservator has been appointed). 

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

13 paragraph, the Corporation as receiver or 

14 conservator of an insured depository insti15 tution shall be deemed to have notified a 

16 person who is a party to a qualified finan17 cial contract with such depository institu18 tion if the Corporation has taken steps 

19 reasonably calculated to provide notice to 

20 such person by the time specified in sub21 paragraph (A). 

22 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

23 The following institutions shall not be consid24 ered to be a financial institution for which a 

25 conservator, receiver, trustee in bankruptcy, or 
49

•HR 2120 IH 

1 other legal custodian has been appointed or 

2 which is otherwise the subject of a bankruptcy 

3 or insolvency proceeding for purposes of para4 graph (9): 

5 ‘‘(i) A bridge bank. 

6 ‘‘(ii) A depository institution orga7 nized by the Corporation, for which a con8 servator is appointed either—

9 ‘‘(I) immediately upon the orga10 nization of the institution; or 

11 ‘‘(II) at the time of a purchase 

12 and assumption transaction between 

13 the depository institution and the Cor14 poration as receiver for a depository 

15 institution in default.’’. 

16 (b) INSURED CREDIT UNIONS.—

17 (1) TRANSFERS OF QUALIFIED FINANCIAL CON18 TRACTS TO FINANCIAL INSTITUTIONS.—Section 

19 207(c)(9) of the Federal Credit Union Act (12 

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

21 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON22 TRACTS.—

23 ‘‘(A) IN GENERAL.—In making any trans24 fer of assets or liabilities of a credit union in 

25 default which includes any qualified financial 
50

•HR 2120 IH 

1 contract, the conservator or liquidating agent 

2 for such credit union shall either—

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

4 other than a financial institution for which 

5 a conservator, receiver, trustee in bank6 ruptcy, or other legal custodian has been 

7 appointed or which is otherwise the subject 

8 of a bankruptcy or insolvency proceeding—

9 ‘‘(I) all qualified financial con10 tracts between any person or any af11 filiate of such person and the credit 

12 union in default; 

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

14 any affiliate of such person against 

15 such credit union under any such con16 tract (other than any claim which, 

17 under the terms of any such contract, 

18 is subordinated to the claims of gen19 eral unsecured creditors of such credit 

20 union); 

21 ‘‘(III) all claims of such credit 

22 union against such person or any af23 filiate of such person under any such 

24 contract; and 
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•HR 2120 IH 

1 ‘‘(IV) all property securing or 

2 any other credit enhancement for any 

3 contract described in subclause (I) or 

4 any claim described in subclause (II) 

5 or (III) under any such contract; or 

6 ‘‘(ii) transfer none of the qualified fi7 nancial contracts, claims, property or other 

8 credit enhancement referred to in clause (i) 

9 (with respect to such person and any affil10 iate of such person). 

11 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR12 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

13 AGENCY OF A FOREIGN BANK OR FINANCIAL IN14 STITUTION.—In transferring any qualified fi15 nancial contracts and related claims and prop16 erty under subparagraph (A)(i), the conservator 

17 or liquidating agent for the credit union shall 

18 not make such transfer to a foreign bank, fi19 nancial institution organized under the laws of 

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

21 foreign bank or financial institution unless, 

22 under the law applicable to such bank, financial 

23 institution, branch or agency, to the qualified 

24 financial contracts, and to any netting contract, 

25 any security agreement or arrangement or other 
52

•HR 2120 IH 

1 credit enhancement related to 1 or more quali2 fied financial contracts, the contractual rights 

3 of the parties to such qualified financial con4 tracts, netting contracts, security agreements or 

5 arrangements, or other credit enhancements are 

6 enforceable substantially to the same extent as 

7 permitted under this section. 

8 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

9 TO THE RULES OF A CLEARING ORGANIZA10 TION.—In the event that a conservator or liqui11 dating agent transfers any qualified financial 

12 contract and related claims, property, and cred13 it enhancements pursuant to subparagraph 

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

15 to the rules of a clearing organization, the 

16 clearing organization shall not be required to 

17 accept the transferee as a member by virtue of 

18 the transfer. 

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

20 paragraph—

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

22 means a broker or dealer, a depository in23 stitution, a futures commission merchant, 

24 a credit union, or any other institution, as 
53

•HR 2120 IH 

1 determined by the Board by regulation to 

2 be a financial institution; and 

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

4 has the same meaning as in section 402 of 

5 the Federal Deposit Insurance Corporation 

6 Improvement Act of 1991.’’. 

7 (2) NOTICE TO QUALIFIED FINANCIAL CON8 TRACT COUNTERPARTIES.—Section 207(c)(10)(A) of 

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

10 1787(c)(10)(A)) is amended in the material imme11 diately following clause (ii) by striking ‘‘the conser12 vator’’ and all that follows through the period and 

13 inserting the following: ‘‘the conservator or liqui14 dating agent shall notify any person who is a party 

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

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

17 of the appointment of the liquidating agent in the 

18 case of a liquidation, or the business day following 

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

20 (3) RIGHTS AGAINST LIQUIDATING AGENT AND

21 CONSERVATOR AND TREATMENT OF BRIDGE

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

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

24 (A) by redesignating subparagraph (B) as 

25 subparagraph (D); and
54

•HR 2120 IH 

1 (B) by inserting after subparagraph (A) 

2 the following new subparagraphs: 

3 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE4 ABLE.—

5 ‘‘(i) LIQUIDATION.—A person who is 

6 a party to a qualified financial contract 

7 with an insured credit union may not exer8 cise any right that such person has to ter9 minate, liquidate, or net such contract 

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

11 or section 403 or 404 of the Federal De12 posit Insurance Corporation Improvement 

13 Act of 1991, solely by reason of or inci14 dental to the appointment of a liquidating 

15 agent for the credit union institution (or 

16 the insolvency or financial condition of the 

17 credit union for which the liquidating 

18 agent has been appointed)—

19 ‘‘(I) until 5:00 p.m. (eastern 

20 time) on the business day following 

21 the date of the appointment of the liq22 uidating agent; or 

23 ‘‘(II) after the person has re24 ceived notice that the contract has 
55

•HR 2120 IH 

1 been transferred pursuant to para2 graph (9)(A). 

3 ‘‘(ii) CONSERVATORSHIP.—A person 

4 who is a party to a qualified financial con5 tract with an insured credit union may not 

6 exercise any right that such person has to 

7 terminate, liquidate, or net such contract 

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

9 or section 403 or 404 of the Federal De10 posit Insurance Corporation Improvement 

11 Act of 1991, solely by reason of or inci12 dental to the appointment of a conservator 

13 for the credit union or the insolvency or fi14 nancial condition of the credit union for 

15 which the conservator has been appointed). 

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

17 paragraph, the Board as conservator or 

18 liquidating agent of an insured credit 

19 union shall be deemed to have notified a 

20 person who is a party to a qualified finan21 cial contract with such credit union if the 

22 Board has taken steps reasonably cal23 culated to provide notice to such person by 

24 the time specified in subparagraph (A). 
56

•HR 2120 IH 

1 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

2 The following institutions shall not be consid3 ered to be a financial institution for which a 

4 conservator, receiver, trustee in bankruptcy, or 

5 other legal custodian has been appointed or 

6 which is otherwise the subject of a bankruptcy 

7 or insolvency proceeding for purposes of para8 graph (9): 

9 ‘‘(i) A bridge bank. 

10 ‘‘(ii) A credit union organized by the 

11 Board, for which a conservator is ap12 pointed either—

13 ‘‘(I) immediately upon the orga14 nization of the credit union; or 

15 ‘‘(II) at the time of a purchase 

16 and assumption transaction between 

17 the credit union and the Board as re18 ceiver for a credit union in default.’’. 

19 SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR 

20 REPUDIATION OF QUALIFIED FINANCIAL 

21 CONTRACTS. 

22 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

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

24 U.S.C. 1821(e)) is amended—
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1 (1) by redesignating paragraphs (11) through 

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

3 (2) by inserting after paragraph (10) the fol4 lowing new paragraph: 

5 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

6 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

7 the rights of disaffirmance or repudiation of a con8 servator or receiver with respect to any qualified fi9 nancial contract to which an insured depository in10 stitution is a party, the conservator or receiver for 

11 such institution shall either—

12 ‘‘(A) disaffirm or repudiate all qualified fi13 nancial contracts between—

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

15 such person; and 

16 ‘‘(ii) the depository institution in de17 fault; or 

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

19 qualified financial contracts referred to in sub20 paragraph (A) (with respect to such person or 

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

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

23 paragraph: 

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

25 terms used in this subsection are applicable for pur-
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1 poses of this subsection only, and shall not be con2 strued or applied so as to challenge or affect the 

3 characterization, definition, or treatment of any 

4 similar terms under any other statute, regulation, or 

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

6 Legal Certainty for Bank Products Act of 2000, the 

7 securities laws (as that term is defined in section 

8 3(a)(47) of the Securities Exchange Act of 1934), 

9 and the Commodity Exchange Act.’’. 

10 (b) INSURED CREDIT UNIONS.—Section 207(c) of 

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

12 amended—

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

14 (13) as paragraphs (12), (13), and (14), respec15 tively; 

16 (2) by inserting after paragraph (10) the fol17 lowing new paragraph: 

18 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

19 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

20 the rights of disaffirmance or repudiation of a con21 servator or liquidating agent with respect to any 

22 qualified financial contract to which an insured cred23 it union is a party, the conservator or liquidating 

24 agent for such credit union shall either—
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1 ‘‘(A) disaffirm or repudiate all qualified fi2 nancial contracts between—

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

4 such person; and 

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

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

7 qualified financial contracts referred to in sub8 paragraph (A) (with respect to such person or 

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

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

11 paragraph: 

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

13 terms used in this subsection are applicable for pur14 poses of this subsection only, and shall not be con15 strued or applied so as to challenge or affect the 

16 characterization, definition, or treatment of any 

17 similar terms under any other statute, regulation, or 

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

19 Legal Certainty for Bank Products Act of 2000, the 

20 securities laws (as that term is defined in section 

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

22 and the Commodity Exchange Act.’’. 
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1 SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER 

2 AGREEMENTS. 

3 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

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

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

6 follows: 

7 ‘‘(vii) TREATMENT OF MASTER

8 AGREEMENT AS ONE AGREEMENT.—Any 

9 master agreement for any contract or 

10 agreement described in any preceding 

11 clause of this subparagraph (or any master 

12 agreement for such master agreement or 

13 agreements), together with all supplements 

14 to such master agreement, shall be treated 

15 as a single agreement and a single quali16 fied financial contract. If a master agree17 ment contains provisions relating to agree18 ments or transactions that are not them19 selves qualified financial contracts, the 

20 master agreement shall be deemed to be a 

21 qualified financial contract only with re22 spect to those transactions that are them23 selves qualified financial contracts.’’. 

24 (b) INSURED CREDIT UNIONS.—Section 

25 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 
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1 1787(c)(8)(D)) is amended by inserting after clause (vi) 

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

3 ‘‘(vii) TREATMENT OF MASTER

4 AGREEMENT AS ONE AGREEMENT.—Any 

5 master agreement for any contract or 

6 agreement described in any preceding 

7 clause of this subparagraph (or any master 

8 agreement for such master agreement or 

9 agreements), together with all supplements 

10 to such master agreement, shall be treated 

11 as a single agreement and a single quali12 fied financial contract. If a master agree13 ment contains provisions relating to agree14 ments or transactions that are not them15 selves qualified financial contracts, the 

16 master agreement shall be deemed to be a 

17 qualified financial contract only with re18 spect to those transactions that are them19 selves qualified financial contracts.’’.

20 SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IM21 PROVEMENT ACT OF 1991. 

22 (a) DEFINITIONS.—Section 402 of the Federal De23 posit Insurance Corporation Improvement Act of 1991 (12 

24 U.S.C. 4402) is amended—

25 (1) in paragraph (2)—
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1 (A) in subparagraph (A)(ii), by inserting 

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

3 registration by order of the Securities and Ex4 change Commission’’; and 

5 (B) in subparagraph (B), by inserting be6 fore the period ‘‘, that has been granted an ex7 emption under section 4(c)(1) of the Com8 modity Exchange Act, or that is a multilateral 

9 clearing organization (as defined in section 408 

10 of this Act)’’; 

11 (2) in paragraph (6)—

12 (A) by redesignating subparagraphs (B) 

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

14 respectively; 

15 (B) by inserting after subparagraph (A) 

16 the following new subparagraph: 

17 ‘‘(B) an uninsured national bank or an un18 insured State bank that is a member of the 

19 Federal Reserve System, if the national bank or 

20 State member bank is not eligible to make ap21 plication to become an insured bank under sec22 tion 5 of the Federal Deposit Insurance Act;’’; 

23 and 

24 (C) by amending subparagraph (C) (as re25 designated) to read as follows: 
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1 ‘‘(C) a branch or agency of a foreign bank, 

2 a foreign bank and any branch or agency of the 

3 foreign bank, or the foreign bank that estab4 lished the branch or agency, as those terms are 

5 defined in section 1(b) of the International 

6 Banking Act of 1978;’’; 

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

8 period ‘‘and any other clearing organization with 

9 which such clearing organization has a netting con10 tract’’; 

11 (4) by amending paragraph (14)(A)(i) to read 

12 as follows: 

13 ‘‘(i) means a contract or agreement 

14 between 2 or more financial institutions, 

15 clearing organizations, or members that 

16 provides for netting present or future pay17 ment obligations or payment entitlements 

18 (including liquidation or close out values 

19 relating to such obligations or entitle20 ments) among the parties to the agree21 ment; and’’; and 

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

23 paragraph: 

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

25 payment of United States dollars, another currency, 
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1 or a composite currency, and a noncash delivery, in2 cluding a payment or delivery to liquidate an 

3 unmatured obligation.’’. 

4 (b) ENFORCEABILITY OF BILATERAL NETTING CON5 TRACTS.—Section 403 of the Federal Deposit Insurance 

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

7 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 or any order authorized under section 5(b)(2) of the Secu16 rities Investor Protection Act of 1970), the covered con17 tractual payment obligations and the covered contractual 

18 payment entitlements between any 2 financial institutions 

19 shall be netted in accordance with, and subject to the con20 ditions of, the terms of any applicable netting contract (ex21 cept as provided in section 561(b)(2) of title 11, United 

22 States Code).’’; and 

23 (2) by adding at the end the following new sub24 section:
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1 ‘‘(f) 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 financial institu5 tions shall be enforceable in accordance with their terms 

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

7 States Code), and shall not be stayed, avoided, or other8 wise limited by any State or Federal law (other than para9 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the 

10 Federal Deposit Insurance Act, paragraphs (8)(E), 

11 (8)(F), and (10)(B) of section 207(c) of the Federal Cred12 it Union Act, and section 5(b)(2) of the Securities Investor 

13 Protection Act of 1970).’’. 

14 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

15 NETTING CONTRACTS.—Section 404 of the Federal De16 posit Insurance Corporation Improvement Act of 1991 (12 

17 U.S.C. 4404) is amended—

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

19 following: 

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

21 provision of State or Federal law (other than paragraphs 

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

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

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

25 and any order authorized under section 5(b)(2) of the Se-
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•HR 2120 IH 

1 curities Investor Protection Act of 1970), the covered con2 tractual payment obligations and the covered contractual 

3 payment entitlements of a member of a clearing organiza4 tion to and from all other members of a clearing organiza5 tion shall be netted in accordance with and subject to the 

6 conditions of any applicable netting contract (except as 

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

8 Code).’’; and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE12 MENTS.—The provisions of any security agreement or ar13 rangement or other credit enhancement related to one or 

14 more netting contracts between any 2 members of a clear15 ing organization shall be enforceable in accordance with 

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

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

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

19 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec20 tion 11(e) of the Federal Deposit Insurance Act, para21 graphs (8)(E), (8)(F), and (10)(B) of section 207(c) of 

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

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

24 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN25 SURED NATIONAL BANKS, UNINSURED FEDERAL
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1 BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE

2 MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The 

3 Federal Deposit Insurance Corporation Improvement Act 

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

5 (1) by redesignating section 407 as section 

6 407A; and 

7 (2) by inserting after section 406 the following 

8 new section: 

9 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED 

10 NATIONAL BANKS, UNINSURED FEDERAL 

11 BRANCHES AND AGENCIES, CERTAIN UNIN12 SURED STATE MEMBER BANKS, AND EDGE 

13 ACT CORPORATIONS. 

14 ‘‘(a) IN GENERAL.—Notwithstanding any other pro15 vision of law, paragraphs (8), (9), (10), and (11) of section 

16 11(e) of the Federal Deposit Insurance Act shall apply 

17 to an uninsured national bank or uninsured Federal 

18 branch or Federal agency, a corporation chartered under 

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

20 State member bank which operates, or operates as, a mul21 tilateral clearing organization pursuant to section 409 of 

22 this Act, except that for such purpose—

23 ‘‘(1) any reference to the ‘Corporation as re24 ceiver’ or ‘the receiver or the Corporation’ shall refer 

25 to the receiver appointed by the Comptroller of the 
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1 Currency in the case of an uninsured national bank

2 or uninsured Federal branch or agency, or to the 

3 receiver appointed by the Board of Governors of the 

4 Federal Reserve System in the case of a corporation 

5 chartered under section 25A of the Federal Reserve 

6 Act or an uninsured State member bank; 

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

8 than in section 11(e)(8)(D) of such Act), the ‘Cor9 poration, whether acting as such or as conservator 

10 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer 

11 to the receiver or conservator appointed by the 

12 Comptroller of the Currency in the case of an unin13 sured national bank or uninsured Federal branch or 

14 agency, or to the receiver or conservator appointed 

15 by the Board of Governors of the Federal Reserve 

16 System in the case of a corporation chartered under 

17 section 25A of the Federal Reserve Act or an unin18 sured State member bank; and 

19 ‘‘(3) any reference to an ‘insured depository in20 stitution’ or ‘depository institution’ shall refer to an 

21 uninsured national bank, an uninsured Federal 

22 branch or Federal agency, a corporation chartered 

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

24 uninsured State member bank which operates, or op-
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1 erates as, a multilateral clearing organization pursu2 ant to section 409 of this Act. 

3 ‘‘(b) LIABILITY.—The liability of a receiver or conser4 vator of an uninsured national bank, uninsured Federal 

5 branch or agency, a corporation chartered under section 

6 25A of the Federal Reserve Act, or an uninsured State 

7 member bank which operates, or operates as, a multilat8 eral clearing organization pursuant to section 409 of this 

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

10 to the same limitations that apply to receivers and con11 servators of insured depository institutions under section 

12 11(e) of the Federal Deposit Insurance Act. 

13 ‘‘(c) REGULATORY AUTHORITY.—

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

15 Currency in the case of an uninsured national bank 

16 or uninsured Federal branch or agency and the 

17 Board of Governors of the Federal Reserve System 

18 in the case of a corporation chartered under section 

19 25A of the Federal Reserve Act, or an uninsured 

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

21 multilateral clearing organization pursuant to sec22 tion 409 of this Act, in consultation with the Fed23 eral Deposit Insurance Corporation, may each pro24 mulgate regulations solely to implement this section.
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1 ‘‘(2) SPECIFIC REQUIREMENT.—In promul2 gating regulations, limited solely to implementing 

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

4 of the Federal Deposit Insurance Act, the Comp5 troller of the Currency and the Board of Governors 

6 of the Federal Reserve System each shall ensure 

7 that the regulations generally are consistent with the 

8 regulations and policies of the Federal Deposit In9 surance Corporation adopted pursuant to the Fed10 eral Deposit Insurance Act. 

11 ‘‘(d) DEFINITIONS.—For purposes of this section, the 

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

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

14 International Banking Act of 1978.’’. 

15 SEC. 8. BANKRUPTCY CODE AMENDMENTS. 

16 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR17 CHASE AGREEMENT, SECURITIES CLEARING AGENCY, 

18 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU19 RITIES CONTRACT.—Title 11, United States Code, is 

20 amended—

21 (1) in section 101—

22 (A) in paragraph (25)—

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

24 and inserting ‘‘means—

25 ‘‘(A) a contract’’; 
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1 (ii) by striking ‘‘, or any combination 

2 thereof or option thereon;’’ and inserting 

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

4 (iii) by adding at the end the fol5 lowing: 

6 ‘‘(B) any combination of agreements or 

7 transactions referred to in subparagraphs (A) 

8 and (C); 

9 ‘‘(C) any option to enter into an agreement 

10 or transaction referred to in subparagraph (A) 

11 or (B); 

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

13 an agreement or transaction referred to in sub14 paragraph (A), (B), or (C), together with all 

15 supplements to any such master agreement, 

16 without regard to whether such master agree17 ment provides for an agreement or transaction 

18 that is not a forward contract under this para19 graph, except that such master agreement shall 

20 be considered to be a forward contract under 

21 this paragraph only with respect to each agree22 ment or transaction under such master agree23 ment that is referred to in subparagraph (A), 

24 (B), or (C); or 
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1 ‘‘(E) any security agreement or arrange2 ment, or other credit enhancement related to 

3 any agreement or transaction referred to in 

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

5 any guarantee or reimbursement obligation by 

6 or to a forward contract merchant or financial 

7 participant in connection with any agreement or 

8 transaction referred to in any such subpara9 graph, but not to exceed the damages in con10 nection with any such agreement or transaction, 

11 measured in accordance with section 562 of this 

12 title;’’; 

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

14 day during the period beginning 90 days before 

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

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

17 as follows: 

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

19 also applies to a reverse repurchase agreement)—

20 ‘‘(A) means—

21 ‘‘(i) an agreement, including related 

22 terms, which provides for the transfer of 

23 one or more certificates of deposit, mort24 gage related securities (as defined in sec25 tion 3 of the Securities Exchange Act of 
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1 1934), mortgage loans, interests in mort2 gage related securities or mortgage loans, 

3 eligible bankers’ acceptances, qualified for4 eign government securities (defined as a

5 security that is a direct obligation of, or 

6 that is fully guaranteed by, the central 

7 government of a member of the Organiza8 tion for Economic Cooperation and Devel9 opment), or securities that are direct obli10 gations of, or that are fully guaranteed by, 

11 the United States or any agency of the 

12 United States against the transfer of funds 

13 by the transferee of such certificates of de14 posit, eligible bankers’ acceptances, securi15 ties, mortgage loans, or interests, with a 

16 simultaneous agreement by such transferee 

17 to transfer to the transferor thereof certifi18 cates of deposit, eligible bankers’ accept19 ance, securities, mortgage loans, or inter20 ests of the kind described in this clause, 

21 at a date certain not later than 1 year 

22 after such transfer or on demand, against 

23 the transfer of funds; 
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1 ‘‘(ii) any combination of agreements 

2 or transactions referred to in clauses (i) 

3 and (iii); 

4 ‘‘(iii) an option to enter into an agree5 ment or transaction referred to in clause 

6 (i) or (ii); 

7 ‘‘(iv) a master agreement that pro8 vides for an agreement or transaction re9 ferred to in clause (i), (ii), or (iii), together 

10 with all supplements to any such master 

11 agreement, without regard to whether such 

12 master agreement provides for an agree13 ment or transaction that is not a repur14 chase agreement under this paragraph, ex15 cept that such master agreement shall be 

16 considered to be a repurchase agreement 

17 under this paragraph only with respect to 

18 each agreement or transaction under the 

19 master agreement that is referred to in 

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

21 ‘‘(v) any security agreement or ar22 rangement or other credit enhancement re23 lated to any agreement or transaction re24 ferred to in clause (i), (ii), (iii), or (iv), in25 cluding any guarantee or reimbursement
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1 obligation by or to a repo participant or 

2 financial participant in connection with 

3 any agreement or transaction referred to 

4 in any such clause, but not to exceed the 

5 damages in connection with any such 

6 agreement or transaction, measured in ac7 cordance with section 562 of this title; and 

8 ‘‘(B) does not include a repurchase obliga9 tion under a participation in a commercial 

10 mortgage loan;’’; 

11 (D) in paragraph (48), by inserting ‘‘, or 

12 exempt from such registration under such sec13 tion pursuant to an order of the Securities and 

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

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

16 as follows: 

17 ‘‘(53B) ‘swap agreement’—

18 ‘‘(A) means—

19 ‘‘(i) any agreement, including the 

20 terms and conditions incorporated by ref21 erence in such agreement, which is—

22 ‘‘(I) an interest rate swap, op23 tion, future, or forward agreement, in24 cluding a rate floor, rate cap, rate col-
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1 lar, cross-currency rate swap, and 

2 basis swap; 

3 ‘‘(II) a spot, same day-tomorrow, 

4 tomorrow-next, forward, or other for5 eign exchange or precious metals 

6 agreement; 

7 ‘‘(III) a currency swap, option, 

8 future, or forward agreement; 

9 ‘‘(IV) an equity index or equity 

10 swap, option, future, or forward 

11 agreement; 

12 ‘‘(V) a debt index or debt swap, 

13 option, future, or forward agreement; 

14 ‘‘(VI) a total return, credit 

15 spread or credit swap, option, future, 

16 or forward agreement; 

17 ‘‘(VII) a commodity index or a 

18 commodity swap, option, future, or 

19 forward agreement; or 

20 ‘‘(VIII) a weather swap, weather 

21 derivative, or weather option; 

22 ‘‘(ii) any agreement or transaction 

23 that is similar to any other agreement or 

24 transaction referred to in this paragraph 

25 and that—
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1 ‘‘(I) is of a type that has been, is 

2 presently, or in the future becomes, 

3 the subject of recurrent dealings in 

4 the swap markets (including terms 

5 and conditions incorporated by ref6 erence therein); and 

7 ‘‘(II) is a forward, swap, future, 

8 or option on one or more rates, cur9 rencies, commodities, equity securities, 

10 or other equity instruments, debt se11 curities or other debt instruments, 

12 quantitative measures associated with 

13 an occurrence, extent of an occur14 rence, or contingency associated with 

15 a financial, commercial, or economic 

16 consequence, or economic or financial 

17 indices or measures of economic or fi18 nancial risk or value; 

19 ‘‘(iii) any combination of agreements 

20 or transactions referred to in this subpara21 graph; 

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

23 agreement or transaction referred to in 

24 this subparagraph; 
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1 ‘‘(v) a master agreement that provides 

2 for an agreement or transaction referred to 

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

4 with all supplements to any such master 

5 agreement, and without regard to whether 

6 the master agreement contains an agree7 ment or transaction that is not a swap

8 agreement under this paragraph, except 

9 that the master agreement shall be consid10 ered to be a swap agreement under this 

11 paragraph only with respect to each agree12 ment or transaction under the master 

13 agreement that is referred to in clause (i), 

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

15 ‘‘(vi) any security agreement or ar16 rangement or other credit enhancement re17 lated to any agreements or transactions re18 ferred to in clause (i) through (v), includ19 ing any guarantee or reimbursement obli20 gation by or to a swap participant or fi21 nancial participant in connection with any 

22 agreement or transaction referred to in 

23 any such clause, but not to exceed the 

24 damages in connection with any such 
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1 agreement or transaction, measured in ac2 cordance with section 562 of this title; and 

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

4 only, and shall not be construed or applied so 

5 as to challenge or affect the characterization, 

6 definition, or treatment of any swap agreement 

7 under any other statute, regulation, or rule, in8 cluding the Securities Act of 1933, the Securi9 ties Exchange Act of 1934, the Public Utility 

10 Holding Company Act of 1935, the Trust In11 denture Act of 1939, the Investment Company 

12 Act of 1940, the Investment Advisers Act of 

13 1940, the Securities Investor Protection Act of 

14 1970, the Commodity Exchange Act, the 

15 Gramm-Leach-Bliley Act, and the Legal Cer16 tainty for Bank Products Act of 2000;’’; 

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

18 and inserting the following: 

19 ‘‘(7) ‘securities contract’—

20 ‘‘(A) means—

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

22 or loan of a security, a certificate of de23 posit, a mortgage loan or any interest in a 

24 mortgage loan, a group or index of securi25 ties, certificates of deposit, or mortgage 
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1 loans or interests therein (including an in2 terest therein or based on the value there3 of), or option on any of the foregoing, in4 cluding an option to purchase or sell any 

5 such security, certificate of deposit, mort6 gage loan, interest, group or index, or op7 tion, and including any repurchase or re8 verse repurchase transaction on any such 

9 security, certificate of deposit, mortgage 

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

11 ‘‘(ii) any option entered into on a na12 tional securities exchange relating to for13 eign currencies; 

14 ‘‘(iii) the guarantee by or to any secu15 rities clearing agency of a settlement of 

16 cash, securities, certificates of deposit, 

17 mortgage loans or interests therein, group 

18 or index of securities, or mortgage loans or 

19 interests therein (including any interest 

20 therein or based on the value thereof), or 

21 option on any of the foregoing, including 

22 an option to purchase or sell any such se23 curity, certificate of deposit, mortgage 

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

25 ‘‘(iv) any margin loan;
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1 ‘‘(v) any other agreement or trans2 action that is similar to an agreement or 

3 transaction referred to in this subpara4 graph; 

5 ‘‘(vi) any combination of the agree6 ments or transactions referred to in this 

7 subparagraph; 

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

9 agreement or transaction referred to in 

10 this subparagraph; 

11 ‘‘(viii) a master agreement that pro12 vides for an agreement or transaction re13 ferred to in clause (i), (ii), (iii), (iv), (v), 

14 (vi), or (vii), together with all supplements 

15 to any such master agreement, without re16 gard to whether the master agreement pro17 vides for an agreement or transaction that 

18 is not a securities contract under this sub19 paragraph, except that such master agree20 ment shall be considered to be a securities 

21 contract under this subparagraph only with 

22 respect to each agreement or transaction 

23 under such master agreement that is re24 ferred to in clause (i), (ii), (iii), (iv), (v), 

25 (vi), or (vii); or 
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1 ‘‘(ix) any security agreement or ar2 rangement or other credit enhancement re3 lated to any agreement or transaction re4 ferred to in this subparagraph, including 

5 any guarantee or reimbursement obligation 

6 by or to a stockbroker, securities clearing 

7 agency, financial institution, or financial 

8 participant in connection with any agree9 ment or transaction referred to in this sub10 paragraph, but not to exceed the damages 

11 in connection with any such agreement or 

12 transaction, measured in accordance with 

13 section 562 of this title; and 

14 ‘‘(B) does not include any purchase, sale, 

15 or repurchase obligation under a participation 

16 in a commercial mortgage loan;’’; and 

17 (3) in section 761(4)—

18 (A) by striking ‘‘or’’ at the end of subpara19 graph (D); and 

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

21 ‘‘(F) any other agreement or transaction 

22 that is similar to an agreement or transaction 

23 referred to in this paragraph; 

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

25 transactions referred to in this paragraph; 
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1 ‘‘(H) any option to enter into an agree2 ment or transaction referred to in this para3 graph; 

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

5 an agreement or transaction referred to in sub6 paragraph (A), (B), (C), (D), (E), (F), (G), or 

7 (H), together with all supplements to such mas8 ter agreement, without regard to whether the 

9 master agreement provides for an agreement or 

10 transaction that is not a commodity contract 

11 under this paragraph, except that the master 

12 agreement shall be considered to be a com13 modity contract under this paragraph only with 

14 respect to each agreement or transaction under 

15 the master agreement that is referred to in sub16 paragraph (A), (B), (C), (D), (E), (F), (G), or 

17 (H); or 

18 ‘‘(J) any security agreement or arrange19 ment or other credit enhancement related to 

20 any agreement or transaction referred to in this 

21 paragraph, including any guarantee or reim22 bursement obligation by or to a commodity 

23 broker or financial participant in connection 

24 with any agreement or transaction referred to 

25 in this paragraph, but not to exceed the dam-
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1 ages in connection with any such agreement or 

2 transaction, measured in accordance with sec3 tion 562 of this title;’’. 

4 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI5 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER6 CHANT.—Section 101 of title 11, United States Code, is 

7 amended—

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

9 the following: 

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

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

12 (domestic or foreign) that is a commercial or 

13 savings bank, industrial savings bank, savings 

14 and loan association, trust company, federally15 insured credit union, or receiver or conservator 

16 for such entity and, when any such Federal re17 serve bank, receiver, conservator or entity is 

18 acting as agent or custodian for a customer in 

19 connection with a securities contract (as defined 

20 in section 741) such customer; or 

21 ‘‘(B) in connection with a securities con22 tract (as defined in section 741) an investment 

23 company registered under the Investment Com24 pany Act of 1940;’’; 
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1 (2) by inserting after paragraph (22) the fol2 lowing: 

3 ‘‘(22A) ‘financial participant’ means—

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

5 into a securities contract, commodity contract, 

6 swap agreement, repurchase agreement, or for7 ward contract, or at the time of the filing of the 

8 petition, has one or more agreements or trans9 actions described in paragraph (1), (2), (3), (4), 

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

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

12 total gross dollar value of not less than 

13 $1,000,000,000 in notional or actual principal 

14 amount outstanding on any day during the pre15 vious 15-month period, or has gross mark-to16 market positions of not less than $100,000,000 

17 (aggregated across counterparties) in one or 

18 more such agreements or transactions with the 

19 debtor or any other entity (other than an affil20 iate) on any day during the previous 15-month 

21 period; or 

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

23 section 402 of the Federal Deposit Insurance 

24 Corporation Improvement Act of 1991);’’; and 
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1 (3) by striking paragraph (26) and inserting 

2 the following: 

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

4 Federal reserve bank, or an entity the business of 

5 which consists in whole or in part of entering into 

6 forward contracts as or with merchants in a com7 modity (as defined in section 761) or any similar 

8 good, article, service, right, or interest which is pres9 ently or in the future becomes the subject of dealing 

10 in the forward contract trade;’’. 

11 (c) DEFINITION OF MASTER NETTING AGREEMENT

12 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec13 tion 101 of title 11, United States Code, is amended by 

14 inserting after paragraph (38) the following new para15 graphs: 

16 ‘‘(38A) ‘master netting agreement’—

17 ‘‘(A) means an agreement providing for 

18 the exercise of rights, including rights of net19 ting, setoff, liquidation, termination, accelera20 tion, or close out, under or in connection with 

21 one or more contracts that are described in any 

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

23 section 561(a), or any security agreement or ar24 rangement or other credit enhancement related 

25 to one or more of the foregoing, including any
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1 guarantee or reimbursement obligation related 

2 to 1 or more of the foregoing; and 

3 ‘‘(B) if the agreement contains provisions 

4 relating to agreements or transactions that are 

5 not contracts described in paragraphs (1) 

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

7 to be a master netting agreement only with re8 spect to those agreements or transactions that 

9 are described in any one or more of paragraphs 

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

11 ‘‘(38B) ‘master netting agreement participant’ 

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

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

14 netting agreement with the debtor;’’. 

15 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS, 

16 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR17 CHASE AGREEMENTS, AND MASTER NETTING AGREE18 MENTS UNDER THE AUTOMATIC-STAY.—

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

20 United States Code, is amended—

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

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

23 by’’; 
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1 (B) in paragraph (7), by inserting

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

3 by’’; 

4 (C) by striking paragraph (17) and insert5 ing the following: 

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

7 swap participant or financial participant of a mutual 

8 debt and claim under or in connection with one or 

9 more swap agreements that constitutes the setoff of 

10 a claim against the debtor for any payment or other 

11 transfer of property due from the debtor under or in 

12 connection with any swap agreement against any 

13 payment due to the debtor from the swap partici14 pant or financial participant under or in connection 

15 with any swap agreement or against cash, securities, 

16 or other property held by, pledged to, under the con17 trol of, or due from such swap participant or finan18 cial participant to margin, guarantee, secure, or set19 tle any swap agreement;’’; 

20 (D) in paragraph (18) by striking the pe21 riod at the end and inserting ‘‘; or’’; and 

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

23 following new paragraph: 

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

25 master netting agreement participant of a mutual 
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1 debt and claim under or in connection with one or 

2 more master netting agreements or any contract or 

3 agreement subject to such agreements that con4 stitutes the setoff of a claim against the debtor for 

5 any payment or other transfer of property due from 

6 the debtor under or in connection with such agree7 ments or any contract or agreement subject to such 

8 agreements against any payment due to the debtor 

9 from such master netting agreement participant 

10 under or in connection with such agreements or any

11 contract or agreement subject to such agreements or 

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

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

14 master netting agreement participant to margin, 

15 guarantee, secure, or settle such agreements or any 

16 contract or agreement subject to such agreements, 

17 to the extent that such participant is eligible to exer18 cise such offset rights under paragraph (6), (7), or 

19 (17) for each individual contract covered by the mas20 ter netting agreement in issue.’’. 

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

22 United States Code, is amended by adding at the 

23 end the following: 

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

25 arising under subsection (a) pursuant to paragraph (6), 
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1 (7), (17), or (19) of subsection (b) shall not be stayed 

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

3 proceeding under this title.’’. 

4 (e) LIMITATION OF AVOIDANCE POWERS UNDER

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

6 United States Code, is amended—

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

8 of Public Law 101–311)—

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

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

11 agreement’’ and inserting ‘‘under or in connec12 tion with any swap agreement’’; and 

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

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

15 appears; and 

16 (2) by adding at the end the following: 

17 ‘‘(j) Notwithstanding sections 544, 545, 547, 

18 548(a)(1)(B), and 548(b) the trustee may not avoid a 

19 transfer made by or to a master netting agreement partici20 pant under or in connection with any master netting 

21 agreement or any individual contract covered thereby that 

22 is made before the commencement of the case, except 

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

24 the trustee could otherwise avoid such a transfer made 
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1 under an individual contract covered by such master net2 ting agreement.’’. 

3 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

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

5 States Code, is amended—

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

7 the end; 

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

9 and inserting ‘‘; and’’; and 

10 (3) by adding at the end the following new sub11 paragraph: 

12 ‘‘(E) a master netting agreement participant 

13 that receives a transfer in connection with a master 

14 netting agreement or any individual contract covered 

15 thereby takes for value to the extent of such trans16 fer, except that, with respect to a transfer under any 

17 individual contract covered thereby, to the extent 

18 that such master netting agreement participant oth19 erwise did not take (or is otherwise not deemed to 

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

21 (g) TERMINATION OR ACCELERATION OF SECURITIES

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

23 is amended—

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

25 follows:
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1 ‘‘§ 555. Contractual right to liquidate, terminate, or 

2 accelerate a securities contract’’; 

3 and 

4 (2) in the first sentence, by striking ‘‘liquida5 tion’’ and inserting ‘‘liquidation, termination, or ac6 celeration’’. 

7 (h) TERMINATION OR ACCELERATION OF COMMOD8 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11, 

9 United States Code, is amended—

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

11 follows: 

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

13 accelerate a commodities contract or for14 ward contract’’; 

15 (2) in the first sentence, by striking ‘‘liquida16 tion’’ and inserting ‘‘liquidation, termination, or ac17 celeration’’; and 

18 (3) in the second sentence, by striking ‘‘As 

19 used’’ and all that follows through ‘‘right,’’ and in20 serting ‘‘As used in this section, the term ‘contrac21 tual right’ includes a right set forth in a rule or 

22 bylaw of a derivatives clearing organization (as de23 fined in the Commodity Exchange Act), a multilat24 eral clearing organization (as defined in the Federal 

25 Deposit Insurance Corporation Improvement Act of 

26 1991), a national securities exchange, a national se-
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1 curities association, a securities clearing agency, a 

2 contract market designated under the Commodity 

3 Exchange Act, a derivatives transaction execution 

4 facility registered under the Commodity Exchange 

5 Act, or a board of trade (as defined in the Com6 modity Exchange Act) or in a resolution of the gov7 erning board thereof and a right,’’. 

8 (i) TERMINATION OR ACCELERATION OF REPUR9 CHASE AGREEMENTS.—Section 559 of title 11, United 

10 States Code, is amended—

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

12 follows: 

13 ‘‘§ 559. Contractual right to liquidate, terminate, or 

14 accelerate a repurchase agreement’’; 

15 (2) in the first sentence, by striking ‘‘liquida16 tion’’ and inserting ‘‘liquidation, termination, or ac17 celeration’’; and 

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

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

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

21 includes a right set forth in a rule or bylaw of a de22 rivatives clearing organization (as defined in the 

23 Commodity Exchange Act), a multilateral clearing 

24 organization (as defined in the Federal Deposit In25 surance Corporation Improvement Act of 1991), a 
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1 national securities exchange, a national securities as2 sociation, a securities clearing agency, a contract 

3 market designated under the Commodity Exchange 

4 Act, a derivatives transaction execution facility reg5 istered under the Commodity Exchange Act, or a 

6 board of trade (as defined in the Commodity Ex7 change Act) or in a resolution of the governing 

8 board thereof and a right,’’. 

9 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

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

11 States Code, is amended—

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

13 follows: 

14 ‘‘§ 560. Contractual right to liquidate, terminate, or 

15 accelerate a swap agreement’’; 

16 (2) in the first sentence, by striking ‘‘termi17 nation of a swap agreement’’ and inserting ‘‘liquida18 tion, termination, or acceleration of one or more 

19 swap agreements’’; 

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

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

22 termination, liquidation, or acceleration of one or 

23 more swap agreements’’; and 

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

25 used’’ and all that follows through ‘‘right,’’ and in-
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1 serting ‘‘As used in this section, the term ‘contrac2 tual right’ includes a right set forth in a rule or 

3 bylaw of a derivatives clearing organization (as de4 fined in the Commodity Exchange Act), a multilat5 eral clearing organization (as defined in the Federal 

6 Deposit Insurance Corporation Improvement Act of

7 1991), a national securities exchange, a national se8 curities association, a securities clearing agency, a 

9 contract market designated under the Commodity 

10 Exchange Act, a derivatives transaction execution 

11 facility registered under the Commodity Exchange 

12 Act, or a board of trade (as defined in the Com13 modity Exchange Act) or in a resolution of the gov14 erning board thereof and a right,’’. 

15 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

16 OFFSET UNDER A MASTER NETTING AGREEMENT AND

17 ACROSS CONTRACTS.—

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

19 Code, is amended by inserting after section 560 the 

20 following: 
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1 ‘‘§ 561. Contractual right to terminate, liquidate, ac2 celerate, or offset under a master netting 

3 agreement and across contracts; pro4 ceedings under section 304

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

6 contractual right, because of a condition of the kind speci7 fied in section 365(e)(1), to cause the termination, liquida8 tion, or acceleration of or to offset or net termination val9 ues, payment amounts, or other transfer obligations aris10 ing under or in connection with one or more (or the termi11 nation, liquidation, or acceleration of one or more)—

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

13 741(7); 

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

15 761(4); 

16 ‘‘(3) forward contracts; 

17 ‘‘(4) repurchase agreements; 

18 ‘‘(5) swap agreements; or 

19 ‘‘(6) master netting agreements, 

20 shall not be stayed, avoided, or otherwise limited by oper21 ation of any provision of this title or by any order of a 

22 court or administrative agency in any proceeding under 

23 this title. 

24 ‘‘(b)(1) A party may exercise a contractual right de25 scribed in subsection (a) to terminate, liquidate, or accel26 erate only to the extent that such party could exercise such
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1 a right under section 555, 556, 559, or 560 for each indi2 vidual contract covered by the master netting agreement 

3 in issue. 

4 ‘‘(2) If a debtor is a commodity broker subject to sub5 chapter IV of chapter 7—

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

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

8 a commodity contract traded on or subject to the 

9 rules of a contract market designated under the 

10 Commodity Exchange Act or a derivatives trans11 action execution facility registered under the Com12 modity Exchange Act against any claim arising 

13 under, or in connection with, other instruments, con14 tracts, or agreements listed in subsection (a) except 

15 to the extent that the party has positive net equity 

16 in the commodity accounts at the debtor, as cal17 culated under such subchapter; and 

18 ‘‘(B) another commodity broker may not net or 

19 offset an obligation to the debtor arising under, or 

20 in connection with, a commodity contract entered 

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

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

23 market designated under the Commodity Exchange 

24 Act or a derivatives transaction execution facility 

25 registered under the Commodity Exchange Act 
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1 against any claim arising under, or in connection 

2 with, other instruments, contracts, or agreements 

3 listed in subsection (a). 

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

5 paragraph (2) shall prohibit the offset of claims and obli6 gations that arise under—

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

8 arrangement that has been approved by the Com9 modity Futures Trading Commission or submitted 

10 to the Commodity Futures Trading Commission 

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

12 Commodity Exchange Act and has not been abro13 gated or rendered ineffective by the Commodity Fu14 tures Trading Commission; or 

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

16 clearing organization (as defined in section 761) and 

17 another entity that has been approved by the Com18 modity Futures Trading Commission. 

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

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

21 derivatives clearing organization (as defined in the Com22 modity Exchange Act), a multilateral clearing organiza23 tion (as defined in the Federal Deposit Insurance Cor24 poration Improvement Act of 1991), a national securities 

25 exchange, a national securities association, a securities 
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1 clearing agency, a contract market designated under the 

2 Commodity Exchange Act, a derivatives transaction execu3 tion facility registered under the Commodity Exchange 

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

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

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

7 arising under common law, under law merchant, or by rea8 son of normal business practice. 

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

10 contracts, commodity contracts, forward contracts, repur11 chase agreements, swap agreements, or master netting 

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

13 that enforcement of contractual provisions of such con14 tracts and agreements in accordance with their terms will 

15 not be stayed or otherwise limited by operation of any pro16 vision of this title or by order of a court in any case under 

17 this title, and to limit avoidance powers to the same extent 

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

19 enforcement not to be limited based on the presence or 

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

21 (2) CONFORMING AMENDMENT.—The table of 

22 sections for chapter 5 of title 11, United States 

23 Code, is amended by inserting after the item relating 

24 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.’’.
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1 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11, 

2 United States Code, is amended by inserting after section 

3 766 the following:

4 ‘‘§ 767. Commodity broker liquidation and forward 

5 contract merchants, commodity brokers, 

6 stockbrokers, financial institutions, fi7 nancial participants, securities clearing 

8 agencies, swap participants, repo partici9 pants, and master netting agreement par10 ticipants 

11 ‘‘Notwithstanding any other provision of this title, 

12 the exercise of rights by a forward contract merchant, 

13 commodity broker, stockbroker, financial institution, fi14 nancial participant, securities clearing agency, swap par15 ticipant, repo participant, or master netting agreement 

16 participant under this title shall not affect the priority of 

17 any unsecured claim it may have after the exercise of such 

18 rights.’’. 

19 (m) STOCKBROKER LIQUIDATIONS.—Title 11, 

20 United States Code, is amended by inserting after section 

21 752 the following: 
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1 ‘‘§ 753. Stockbroker liquidation and forward contract 

2 merchants, commodity brokers, stock3 brokers, financial institutions, financial 

4 participants, securities clearing agencies, 

5 swap participants, repo participants, and 

6 master netting agreement participants 

7 ‘‘Notwithstanding any other provision of this title, 

8 the exercise of rights by a forward contract merchant, 

9 commodity broker, stockbroker, financial institution, secu10 rities clearing agency, swap participant, repo participant, 

11 financial participant, or master netting agreement partici12 pant under this title shall not affect the priority of any 

13 unsecured claim it may have after the exercise of such 

14 rights.’’. 

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

16 Code, is amended—

17 (1) in subsection (a)(2)(B)(ii), by inserting be18 fore the semicolon the following: ‘‘(except for a 

19 setoff of a kind described in section 362(b)(6), 

20 362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 559, 

21 560, or 561)’’; 

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

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

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

25 362(b)(17), 362(b)(19), 555, 556, 559, 560, or 561 

26 of this title)’’; and
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1 (3) in subsection (b)(1), by striking 

2 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 

3 362(b)(19), 555, 556, 559, 560, 561,’’. 

4 (o) SECURITIES CONTRACTS, COMMODITY CON5 TRACTS, AND FORWARD CONTRACTS.—Title 11, United 

6 States Code, is amended—

7 (1) in section 362(b)(6), by striking ‘‘financial 

8 institutions,’’ each place such term appears and in9 serting ‘‘financial institution, financial participant,’’; 

10 (2) in sections 362(b)(7) and 546(f), by insert11 ing ‘‘or financial participant’’ after ‘‘repo partici12 pant’’ each place such term appears; 

13 (3) in section 546(e), by inserting ‘‘financial 

14 participant,’’ after ‘‘financial institution,’’; 

15 (4) in section 548(d)(2)(B), by inserting ‘‘fi16 nancial participant,’’ after ‘‘financial institution,’’; 

17 (5) in section 548(d)(2)(C), by inserting ‘‘or fi18 nancial participant’’ after ‘‘repo participant’’; 

19 (6) in section 548(d)(2)(D), by inserting ‘‘or fi20 nancial participant’’ after ‘‘swap participant’’; 

21 (7) in section 555—

22 (A) by inserting ‘‘financial participant,’’ 

23 after ‘‘financial institution,’’; and 

24 (B) by striking the second sentence and in25 serting the following: ‘‘As used in this section, 
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1 the term ‘contractual right’ includes a right set 

2 forth in a rule or bylaw of a derivatives clearing 

3 organization (as defined in the Commodity Ex4 change Act), a multilateral clearing organiza5 tion (as defined in the Federal Deposit Insur6 ance Corporation Improvement Act of 1991), a 

7 national securities exchange, a national securi8 ties association, a securities clearing agency, a 

9 contract market designated under the Com10 modity Exchange Act, a derivatives transaction 

11 execution facility registered under the Com12 modity Exchange Act, or a board of trade (as 

13 defined in the Commodity Exchange Act), or in 

14 a resolution of the governing board thereof, and 

15 a right, whether or not in writing, arising under 

16 common law, under law merchant, or by reason 

17 of normal business practice’’; 

18 (8) in section 556, by inserting ‘‘, financial par19 ticipant,’’ after ‘‘commodity broker’’; 

20 (9) in section 559, by inserting ‘‘or financial 

21 participant’’ after ‘‘repo participant’’ each place 

22 such term appears; and 

23 (10) in section 560, by inserting ‘‘or financial 

24 participant’’ after ‘‘swap participant’’. 
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1 (p) CONFORMING AMENDMENTS.—Title 11, United 

2 States Code, is amended—

3 (1) in the table of sections for chapter 5—

4 (A) by amending the items relating to sec5 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.’’;

6 and 

7 (B) by amending the items relating to sec8 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.’’;

9 and 

10 (2) in the table of sections for chapter 7—

11 (A) by inserting after the item relating to 

12 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.’’;

13 and 

14 (B) by inserting after the item relating to 

15 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.’’.
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1 SEC. 9. RECORDKEEPING REQUIREMENTS. 

2 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

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

4 U.S.C. 1821(e)(8)) is amended by adding at the end the 

5 following new subparagraph: 

6 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

7 The Corporation, in consultation with the ap8 propriate Federal banking agencies and the Na9 tional Credit Union Administration Board, may 

10 prescribe regulations requiring more detailed 

11 recordkeeping by any insured depository institu12 tion with respect to qualified financial contracts 

13 (including market valuations) only if such in14 sured depository institution is in a troubled 

15 condition (as such term is defined by the Cor16 poration pursuant to section 32).’’. 

17 (b) INSURED CREDIT UNIONS.—Section 207(c)(8) of 

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

19 amended by adding at the end the following new subpara20 graph: 

21 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

22 The Board, in consultation with the appropriate 

23 Federal banking agencies, may prescribe regula24 tions requiring more detailed recordkeeping by 

25 any insured credit union with respect to quali26 fied financial contracts (including market valu-
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1 ations) only if such insured credit union is in 

2 a troubled condition (as such term is defined by 

3 the Board pursuant to section 212).’’. 

4 SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECU5 TION REQUIREMENT. 

6 Section 13(e)(2) of the Federal Deposit Insurance 

7 Act (12 U.S.C. 1823(e)(2)) is amended to read as follows: 

8 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

9 EXECUTION REQUIREMENT.—An agreement to pro10 vide for the lawful collateralization of—

11 ‘‘(A) deposits of, or other credit extension 

12 by, a Federal, State, or local governmental enti13 ty, or of any depositor referred to in section 

14 11(a)(2), including an agreement to provide col15 lateral in lieu of a surety bond; 

16 ‘‘(B) bankruptcy estate funds pursuant to 

17 section 345(b)(2) of title 11, United States 

18 Code; 

19 ‘‘(C) extensions of credit, including any 

20 overdraft, from a Federal reserve bank or Fed21 eral home loan bank; or 

22 ‘‘(D) one or more qualified financial con23 tracts, as defined in section 11(e)(8)(D),

24 shall not be deemed invalid pursuant to paragraph 

25 (1)(B) solely because such agreement was not exe-
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1 cuted contemporaneously with the acquisition of the 

2 collateral or because of pledges, delivery, or substi3 tution of the collateral made in accordance with such 

4 agreement.’’. 

5 SEC. 11. DAMAGE MEASURE. 

6 (a) IN GENERAL.—Title 11, United States Code, is 

7 amended—

8 (1) by inserting after section 561, as added by 

9 section 8(k) of this Act, the following: 

10 ‘‘§ 562. Timing of damage measurement in connection 

11 with swap agreements, securities con12 tracts, forward contracts, commodity con13 tracts, repurchase agreements, and mas14 ter netting agreements 

15 ‘‘(a) If the trustee rejects a swap agreement, securi16 ties contract (as defined in section 741), forward contract, 

17 commodity contract (as defined in section 761), repur18 chase agreement, or master netting agreement pursuant 

19 to section 365(a), or if a forward contract merchant, 

20 stockbroker, financial institution, securities clearing agen21 cy, repo participant, financial participant, master netting 

22 agreement participant, or swap participant liquidates, ter23 minates, or accelerates such contract or agreement, dam24 ages shall be measured as of the earlier of—

25 ‘‘(1) the date of such rejection; or
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1 ‘‘(2) the date or dates of such liquidation, ter2 mination, or acceleration. 

3 ‘‘(b) If there are not any commercially reasonable de4 terminants of value as of any date referred to in para5 graph (1) or (2) of subsection (a), damages shall be meas6 ured as of the earliest subsequent date or dates on which 

7 there are commercially reasonable determinants of value. 

8 ‘‘(c) For the purposes of subsection (b), if damages 

9 are not measured as of the date or dates of rejection, liq10 uidation, termination, or acceleration, and the forward 

11 contract merchant, stockbroker, financial institution, secu12 rities clearing agency, repo participant, financial partici13 pant, master netting agreement participant, or swap par14 ticipant or the trustee objects to the timing of the meas15 urement of damages—

16 ‘‘(1) the trustee, in the case of an objection by 

17 a forward contract merchant, stockbroker, financial 

18 institution, securities clearing agency, repo partici19 pant, financial participant, master netting agree20 ment participant, or swap participant; or 

21 ‘‘(2) the forward contract merchant, stock22 broker, financial institution, securities clearing agen23 cy, repo participant, financial participant, master 

24 netting agreement participant, or swap participant, 

25 in the case of an objection by the trustee, 
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1 has the burden of proving that there were no commercially 

2 reasonable determinants of value as of such date or 

3 dates.’’; and 

4 (2) in the table of sections for chapter 5, by in5 serting after the item relating to section 561 (as 

6 added by section 8(k)(2) of this Act) the following 

7 new item:

‘‘562. Timing of damage measure in connection with swap agreements, securities 

contracts, forward contracts, commodity contracts, repurchase 

agreements, or master netting agreements.’’.

8 (b) CLAIMS ARISING FROM REJECTION.—Section 

9 502(g) of title 11, United States Code, is amended—

10 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(2) A claim for damages calculated in accordance 

13 with section 562 of this title shall be allowed under sub14 section (a), (b), or (c), or disallowed under subsection (d) 

15 or (e), as if such claim had arisen before the date of the 

16 filing of the petition.’’. 

17 SEC. 12. SIPC STAY. 

18 Section 5(b)(2) of the Securities Investor Protection 

19 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 

20 at the end the following new subparagraph: 

21 ‘‘(C) EXCEPTION FROM STAY.—

22 ‘‘(i) Notwithstanding section 362 of 

23 title 11, United States Code, neither the 

24 filing of an application under subsection 
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1 (a)(3) nor any order or decree obtained by 

2 SIPC from the court shall operate as a 

3 stay of any contractual rights of a creditor 

4 to liquidate, terminate, or accelerate a se5 curities contract, commodity contract, for6 ward contract, repurchase agreement, swap 

7 agreement, or master netting agreement, 

8 as those terms are defined in sections 101, 

9 741, and 761 of title 11, United States 

10 Code, to offset or net termination values, 

11 payment amounts, or other transfer obliga12 tions arising under or in connection with 

13 one or more of such contracts or agree14 ments, or to foreclose on any cash collat15 eral pledged by the debtor, whether or not 

16 with respect to one or more of such con17 tracts or agreements. 

18 ‘‘(ii) Notwithstanding clause (i), such 

19 application, order, or decree may operate 

20 as a stay of the foreclosure on, or disposi21 tion of, securities collateral pledged by the 

22 debtor, whether or not with respect to one 

23 or more of such contracts or agreements, 

24 securities sold by the debtor under a repur-
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1 chase agreement, or securities lent under a 

2 securities lending agreement. 

3 ‘‘(iii) As used in this subparagraph, 

4 the term ‘contractual right’ includes a 

5 right set forth in a rule or bylaw of a na6 tional securities exchange, a national secu7 rities association, or a securities clearing 

8 agency, a right set forth in a bylaw of a 

9 clearing organization or contract market or 

10 in a resolution of the governing board 

11 thereof, and a right, whether or not in 

12 writing, arising under common law, under 

13 law merchant, or by reason of normal busi14 ness practice.’’. 

15 SEC. 13. APPLICABILITY OF OTHER SECTIONS TO

16 CHAPTER 9. 

17 Section 901(a) of title 11, United States Code, is 

18 amended—

19 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and 

20 (2) by inserting ‘‘559, 560, 561, 562’’ after 

21 ‘‘557,’’. 

22 SEC. 14. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

23 (a) EFFECTIVE DATE.—This Act shall take effect on 

24 the date of enactment of this Act. 
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1 (b) APPLICATION OF AMENDMENTS.—The amend2 ments made by this Act shall apply with respect to cases 

3 commenced or appointments made under any Federal or 

4 State law on or after the date of enactment of this Act, 

5 but shall not apply with respect to cases commenced or 

6 appointments made under any Federal or State law before 

7 the date of enactment of this Act. 

8 SEC. 15. SAVINGS CLAUSE. 

9 The meanings of terms used in this Act are applicable 

10 for purposes of this Act only, and shall not be construed 

11 or applied so as to challenge or affect the characterization, 

12 definition, or treatment of any similar terms under any 

13 other statute, regulation, or rule, including the Gramm14 Leach-Bliley Act, the Legal Certainty for Bank Products 

15 Act of 2000, the securities laws (as that term is defined 

16 in section 3(a)(47) of the Securities Exchange Act of 

17 1934), and the Commodity Exchange Act.

Æ