I

103D CONGRESS

2D SESSION H. R. 5227

To provide for a system of guaranteeing the deposits and certain other

liabilities of depository institutions through a self-regulating system of

cross-guarantees, to protect taxpayers against deposit insurance losses,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 6, 1994

Mr. PETRI (for himself, Mr. COX, Mr. ARMEY, and Mr. LEVY) introduced the

following bill; which was referred jointly to the Committees on Banking,

Finance and Urban Affairs and the Judiciary

A BILL

To provide for a system of guaranteeing the deposits and

certain other liabilities of depository institutions through

a self-regulating system of cross-guarantees, to protect

taxpayers against deposit insurance losses, 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 ‘‘Deposit Insurance Reform, Regulatory Modernization,

6 and Taxpayer Protection Act of 1994’’.

7 (b) TABLE OF CONTENTS.—
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Sec. 1. Short title; table of contents.

TITLE I—100 PERCENT CROSS-GUARANTEES

Subtitle A—Definitions

Sec. 101. Definitions.

Sec. 102. Rules of construction.

Subtitle B—Cross-Guarantee Process

Sec. 111. Depository institutions prohibited from operating without a crossguarantee contract.

Sec. 112. Parties to cross-guarantee and stop-loss contracts.

Sec. 113. Requirements common to cross-guarantee and stop-loss contracts.

Sec. 114. Requirements applicable only to cross-guarantee contracts.

Sec. 115. Requirements applicable only to stop-loss contracts.

Sec. 116. Eligibility and requirements for direct guarantors.

Sec. 117. Provisions relating to cross-guarantee and stop-loss syndicates.

Sec. 118. Assumption of control of a guaranteed company by a cross-guarantee

syndicate.

Sec. 119. Judicial review of contracts and related actions.

Subtitle C—Powers and Duties of the CGRC

CHAPTER 1—CROSS-GUARANTEE PROCESS

Sec. 121. The Cross-Guarantee Regulation Corporation.

Sec. 122. Regulation of the cross-guarantee process.

Sec. 123. Approval process for cross-guarantee, stop-loss, and group cross-guarantee contracts.

Sec. 124. Central electronic repository.

Sec. 125. Restriction on closed loops.

Sec. 126. Treasury oversight of the Cross-Guarantee Regulation Corporation.

CHAPTER 2—PROTECTION OF INSURED DEPOSITS

Sec. 128. Backup insurance on deposits at guaranteed depository institutions.

Subtitle D—Miscellaneous Provisions

Sec. 131. Institutions offering uninsured deposits.

Sec. 132. Federal Reserve lending.

Sec. 133. Advertising by guaranteed financial groups.

Sec. 134. Guaranteed depository institutions remain federally insured depositories for purposes of State law.

Subtitle E—Transition to 100 Percent Cross-Guarantee Process

Sec. 141. Effective date of system based on minimum number of guaranteed

depository institutions and amount of total assets.

Sec. 142. Mandatory phase-in of cross-guarantees after effective date of system.

Sec. 143. Appointment of receiver for institutions which fail to comply with

transition requirements.

Sec. 144. Funding the cross-guarantee backup fund.

Sec. 145. Severance pay and related benefits for former Federal and State

banking agency employees.

Sec. 146. Abolition of Federal Financial Institutions Examination Council.
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Sec. 147. Abolition of the Federal Deposit Insurance Corporation.

Sec. 148. Continuation of orders, resolutions, and determinations.

TITLE II—AMENDMENTS TO OTHER BANKING LAWS

Sec. 201. Amendments relating to national banks.

Sec. 202. Amendments relating to member banks.

Sec. 203. Amendments relating to savings associations.

Sec. 204. Amendments relating to savings and loan holding companies.

Sec. 205. Amendments relating to the Federal Deposit Insurance Corporation.

Sec. 206. Amendments to other banking laws.

TITLE III—AMENDMENTS TO TITLE 11, UNITED STATES CODE

Subtitle A—Amendments to Chapter 1 of Title 11

Sec. 301. Definitions.

Sec. 302. Applicability of chapters.

Sec. 303. Public access to papers.

Sec. 304. Who may be a debtor.

Subtitle B—Amendments to Chapter 3 of Title 11

Sec. 311. Party in interest.

Sec. 312. Qualification of trustee.

Sec. 313. Notice.

Sec. 314. Money of estates.

Sec. 315. Automatic stay.

Sec. 316. Executory contracts and unexpired leases.

Subtitle C—Amendments to Chapter 5 of Title 11

Sec. 321. Obligations of direct guarantors.

Sec. 322. Debtor’s duties.

Sec. 323. Exceptions to discharge.

Sec. 324. Limitation on avoiding powers.

Sec. 325. Preferences.

Sec. 326. Fraudulent transfers and obligations.

Sec. 327. Post-petition transactions.

Sec. 328. Contractual right to liquidate a securities contract.

Sec. 329. Contractual right to liquidate a commodities contract or forward contract.

Sec. 330. Contractual right to liquidate a repurchase agreement.

Sec. 331. Contractual right to terminate a swap agreement.

Subtitle D—Amendments to Chapter 11 of Title 11

CHAPTER 1—AMENDMENTS TO EXISTING LAW

Sec. 341. Creditors’ and equity security holders’ committees.

Sec. 342. Who may file a plan.

Sec. 343. Impairment of claims or interests.

Sec. 344. Acceptance of plan.

Sec. 345. Confirmation hearing.

Sec. 346. Confirmation of plan.

Sec. 347. Effect of confirmation.

CHAPTER 2—ENACTMENT OF SUBCHAPTER V
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Sec. 351. Guaranteed company reorganization.

Sec. 352. Inapplicability of other sections.

Sec. 353. Effective date of filing.

Sec. 354. Appointment of trustee.

Sec. 355. Liability of direct guarantors for transfers to guaranteed creditors.

Sec. 356. Replacement or modification of cross-guarantee contract.

Sec. 357. Effect of Federal, State, and local legislation and regulations.

Sec. 358. Liquidation.

TITLE IV—AMENDMENT TO TITLE 28, UNITED STATES CODE

Sec. 401. Venue.

1 TITLE I—100 PERCENT CROSS2 GUARANTEES

3 Subtitle A—Definitions

4 SEC. 101. DEFINITIONS.

5 In this title:

6 (1) AFFILIATE.—The term ‘‘affiliate’’ means,

7 with respect to any company, any other company

8 that controls, is controlled by, or is under common

9 control with such company.

10 (2) AGENCY.—The term ‘‘agency’’, when used

11 in connection with a reference to a foreign bank, has

12 the same meaning given to such term in section 1(b)

13 of the International Banking Act of 1978.

14 (3) BRANCH.—The term ‘‘branch’’, when used

15 in connection with a reference to a foreign bank, has

16 the same meaning given to such term in section 1(b)

17 of the International Banking Act of 1978.

18 (4) BUSINESS DAY.—The term ‘‘business day’’

19 means any day other than a Saturday, Sunday, or

20 legal holiday for the Federal Government.
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1 (5) CENTRAL ELECTRONIC REPOSITORY.—The

2 term ‘‘central electronic repository’’ means the re3 pository established under section 124(a)(1).

4 (6) CLOSED LOOP.—The term ‘‘closed loop’’

5 means a set of cross-guarantee and stop-loss con6 tracts in which each direct guarantor under the set

7 of contracts also is a guaranteed party under one

8 contract within the set of contracts.

9 (7) COMPANY.—The term ‘‘company’’—

10 (A) means any corporation, partnership,

11 business trust, association, or similar organiza12 tion; and

13 (B) does not include a branch or agency,

14 or a group of branches and agencies, of a for15 eign bank.

16 (8) CONTROL.—

17 (A) IN GENERAL.—The term ‘‘control’’

18 means, with respect to one company’s relation19 ship to another company, one company’s owner20 ship or power to, directly or indirectly, vote an

21 aggregate of 5 percent or more of any class or

22 classes of the securities which separately or to23 gether, taking into account the relative voting

24 weight of different shares, have the power to
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1 elect a majority of the members of such other

2 company’s board of directors.

3 (B) REGULATION.—The Corporation may

4 prescribe regulations to implement the intent of

5 this paragraph.

6 (9) CORPORATION.—The term ‘‘Corporation’’

7 means the Cross-Guarantee Regulation Corporation.

8 (10) CROSS-GUARANTEE ACTIVATION DATE.—

9 The term ‘‘cross-guarantee activation date’’ means

10 the date on which the first cross-guarantee contracts

11 become effective under section 141(a).

12 (11) CROSS-GUARANTEE BACKUP FUND.—The

13 term ‘‘cross-guarantee backup fund’’ means the fund

14 established pursuant to section 128(a).

15 (12) CROSS-GUARANTEE CONTRACT.—The term

16 ‘‘cross-guarantee contract’’ means a contract

17 which—

18 (A) is entered into between—

19 (i) one or more companies, at least

20 one of which is a depository institution;

21 and

22 (ii) a cross-guarantee syndicate;

23 (B) is approved by the Corporation under

24 section 123;
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1 (C) has become effective in accordance

2 with the contract’s terms; and

3 (D) is not enjoined under section

4 123(e)(2)(B).

5 (13) CROSS-GUARANTEE OBLIGATION.—The

6 term ‘‘cross-guarantee obligation’’ means an obliga7 tion of a direct guarantor arising out of a cross8 guarantee or stop-loss contract, and includes the ob9 ligations of such guarantor under section 125(c)(2)

10 of this title and sections 321 and 355 of title III.

11 (14) CROSS-GUARANTEE SYNDICATE.—The

12 term ‘‘cross-guarantee syndicate’’ means any group

13 of direct guarantors which has entered into a cross14 guarantee contract with a guaranteed financial

15 group.

16 (15) DEPOSIT.—

17 (A) IN GENERAL.—The term ‘‘deposit’’

18 means—

19 (i) any obligation within the meaning

20 given the term in paragraphs (1) through

21 (4) of section 3(l) of the Federal Deposit

22 Insurance Act; and

23 (ii) any other obligation that the Cor24 poration determines is a deposit-like obli25 gation by general usage.
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1 (B) DEPOSITS INCLUDE OBLIGATIONS PAY2 ABLE OUTSIDE THE UNITED STATES.—The

3 term ‘‘deposit’’ includes any obligation de4 scribed in subparagraph (A) without regard to

5 whether the obligation is payable within or

6 without the United States.

7 (C) EXCLUSION FOR CHECKABLE SUBOR8 DINATED DEBT.—The term ‘‘deposit’’ shall not

9 include any obligation which, under section

10 114(a)(2), may not be a guaranteed obligation.

11 (16) DEPOSITORY INSTITUTION.—The term

12 ‘‘depository institution’’ has the meaning given to

13 such term in section 3(c) of the Federal Deposit In14 surance Act.

15 (17) DIRECT GUARANTOR.—The term ‘‘direct

16 guarantor’’ means a member of a cross-guarantee or

17 stop-loss syndicate which has entered into a cross18 guarantee or stop-loss contract with a guaranteed fi19 nancial group or nondepository guarantor.

20 (18) EQUITY CAPITAL.—The term ‘‘equity cap21 ital’’ means, with respect to any guaranteed finan22 cial group, the amount, as valued pursuant to sec23 tion 114(c), which is equal to—

24 (A) the consolidated assets of the guaran25 teed financial group; minus
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1 (B) the consolidated liabilities, including

2 the estimated liquidation value of contingent li3 abilities, of the guaranteed financial group.

4 (19) FAILED DEPOSITORY INSTITUTION.—The

5 term ‘‘failed depository institution’’ means any de6 pository institution for which a conservator or re7 ceiver has been appointed by the Federal Deposit In8 surance Corporation.

9 (20) FOREIGN BANK.—The term ‘‘foreign

10 bank’’ has the same meaning given to such term in

11 section 1(b) of the International Banking Act of

12 1978, except that such term shall not include any

13 bank organized under the laws of Puerto Rico,

14 Guam, American Samoa, the Virgin Islands, or any

15 territory of the United States.

16 (21) GROUP CROSS-GUARANTEE CONTRACT.—

17 The term ‘‘group cross-guarantee contract’’ means a

18 contract which—

19 (A) is entered into between two or more

20 guaranteed financial groups and a cross-guar21 antee syndicate;

22 (B) is approved by the Corporation under

23 section 123;

24 (C) has become effective in accordance

25 with the contract’s terms; and
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1 (D) is not enjoined under section

2 123(e)(2)(B).

3 (22) GUARANTEED BANKING OFFICE.—The

4 term ‘‘guaranteed banking office’’ means any branch

5 or agency of a foreign bank where the foreign bank

6 has entered into a cross-guarantee contract with a

7 cross-guarantee syndicate.

8 (23) GUARANTEED COMPANY.—

9 (A) IN GENERAL.—The term ‘‘guaranteed

10 company’’ means any company which has en11 tered into a cross-guarantee contract with a

12 cross-guarantee syndicate.

13 (B) FOREIGN BANKS.—

14 (i) IN GENERAL.—Notwithstanding

15 subparagraph (A), a foreign bank shall not

16 be a guaranteed company solely because a

17 branch or agency of such bank is a guar18 anteed banking office under a cross-guar19 antee contract.

20 (ii) EXCEPTION FOR FOREIGN BANKS

21 WHICH ARE SUBSIDIARIES.—Notwithstand22 ing clause (i), a foreign bank may be a

23 guaranteed company, if such bank is guar24 anteed under a cross-guarantee contract

25 under section 112(e)(1).
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1 (24) GUARANTEED DEPOSITORY INSTITU2 TION.—The term ‘‘guaranteed depository institu3 tion’’ means a depository institution which is a guar4 anteed company.

5 (25) GUARANTEED FINANCIAL GROUP.—The

6 term ‘‘guaranteed financial group’’ means—

7 (A) a depository institution which is the

8 sole guaranteed company under a cross-guaran9 tee contract;

10 (B) two or more companies, at least one of

11 which is a depository institution and all of

12 which are guaranteed companies under the

13 same cross-guarantee contract;

14 (C) any guaranteed banking office which—

15 (i) is a branch; and

16 (ii) is the sole guaranteed banking of17 fice under a cross-guarantee contract; or

18 (D) any two or more branches and agen19 cies, at least one of which is a branch and all

20 of which are guaranteed banking offices under

21 the same cross-guarantee contract.

22 (26) GUARANTEED OBLIGATION.—

23 (A) IN GENERAL.—The term ‘‘guaranteed

24 obligation’’ means an obligation of a guaranteed

25 party the performance of which has been guar-
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1 anteed by a cross-guarantee or stop-loss syn2 dicate.

3 (B) RULE OF CONSTRUCTION.—The term

4 ‘‘performance’’ under subparagraph (A) in5 cludes timely payment of any deposit or other

6 obligation, including interest, if failure to pay in

7 a timely manner would constitute a breach of

8 contract.

9 (27) GUARANTEED PARTY.—The term ‘‘guaran10 teed party’’ means any guaranteed company, guar11 anteed banking office, or nondepository guarantor.

12 (28) INSURED DEPOSIT.—The term ‘‘insured

13 deposit’’ means any deposit of a guaranteed deposi14 tory institution which is insured against loss by the

15 cross-guarantee backup fund under section 128.

16 (29) NET WORTH.—The term ‘‘net worth’’—

17 (A) means, with respect to a nondepository

18 guarantor, the amount which is equal to the

19 stockholders’ equity, the partnership equity, the

20 net worth, or the fund balance of the guarantor,

21 as the case may be, as determined in accord22 ance with generally accepted accounting prin23 ciples;

24 (B) does not include any equitable interest

25 or liability which the Corporation determines
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1 should not be treated as net worth for purposes

2 of this title; and

3 (C) in the case of any nondepository guar4 antor which controls another nondepository

5 guarantor or a guaranteed financial group, does

6 not include the net worth or equity capital of

7 the subsidiary guarantor or group.

8 (30) NONDEPOSITORY GUARANTOR.—The term

9 ‘‘nondepository guarantor’’ means any person which

10 has entered into a stop-loss contract with a stop-loss

11 syndicate.

12 (31) PREMIUM INCOME.—The term ‘‘premium

13 income’’ means any income accrued by a direct guar14 antor under any cross-guarantee or stop-loss con15 tract.

16 (32) PROJECTED ANNUAL PREMIUM.—The

17 term ‘‘projected annual premium’’ means the

18 amount calculated under section 116(d)(2).

19 (33) PROJECTED ANNUAL PREMIUM CAPAC20 ITY.—The term ‘‘projected annual premium capac21 ity’’ means the amount which is equal to—

22 (A) in the case of a guaranteed company,

23 3 percent of the equity capital of the guaran24 teed financial group which is the party guaran25 teed under the same cross-guarantee contract
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1 under which such company is a guaranteed

2 company; or

3 (B) in the case of a nondepository guaran4 tor, 3 percent of the net worth of the

5 nondepository guarantor.

6 (34) PROJECTED ANNUAL PREMIUM LIMIT.—

7 The term ‘‘projected annual premium limit’’ means

8 the amount which is equal to 3 percent of projected

9 annual premium capacity.

10 (35) SECOND-TIER GUARANTOR.—The term

11 ‘‘second-tier guarantor’’ means a direct guarantor of

12 a direct guarantor.

13 (36) STATE DEPOSITORY INSTITUTION.—The

14 term ‘‘State depository institution’’ has the meaning

15 given to such term in section 3(c)(5) of the Federal

16 Deposit Insurance Act.

17 (37) STOP-LOSS CONTRACT.—The term ‘‘stop18 loss contract’’ means a contract which—

19 (A) is entered into between a person and

20 a stop-loss syndicate;

21 (B) is approved by the Corporation under

22 section 123;

23 (C) has become effective in accordance

24 with the contract’s terms; and
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1 (D) is not enjoined under section

2 123(e)(2)(B).

3 (38) STOP-LOSS SYNDICATE.—The term ‘‘stop4 loss syndicate’’ means any group of direct guaran5 tors which has entered into a stop-loss contract with

6 a nondepository guarantor.

7 (39) SUBORDINATED DEBT.—

8 (A) IN GENERAL.—The term ‘‘subordi9 nated debt’’ means an obligation assumed by a

10 guaranteed company or guaranteed banking of11 fice which is subordinate in right of payment to

12 any general creditor of the company or office.

13 (B) GENERAL CREDITOR.—For purposes

14 of this paragraph, the term ‘‘general creditor’’

15 means—

16 (i) any creditor to which a guaranteed

17 company or guaranteed banking office has

18 an obligation which is a guaranteed obliga19 tion under the cross-guarantee contract for

20 such company of office, unless that credi21 tor is otherwise specifically secured by one

22 or more assets of the company or office;

23 and
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1 (ii) any creditor of the guaranteed

2 company or guaranteed banking office

3 which is—

4 (I) not protected under the con5 tract; and

6 (II) not subordinated to the

7 claims of other creditors or treated as

8 a preference in a bankruptcy proceed9 ing.

10 (40) SUBSIDIARY.—The term ‘‘subsidiary’’

11 means, with reference to a company, any company

12 which such company controls.

13 (41) SYNDICATE AGENT.—The term ‘‘syndicate

14 agent’’ means any person which acts as the agent

15 for the direct guarantors under any cross-guarantee

16 or stop-loss contract.

17 SEC. 102. RULES OF CONSTRUCTION.

18 (a) GENERAL RULES OF CONSTRUCTION.—

19 (1) IN GENERAL.—This title shall be liberally

20 construed and applied to promote its underlying pur21 poses and policies.

22 (2) PURPOSES OF THIS TITLE.—The purposes

23 of this title are—
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1 (A) to create a competitive and essentially

2 self-regulating private deposit insurance mar3 ketplace;

4 (B) to require each bank and savings asso5 ciation which accepts deposits to protect the full

6 amount of such deposits, along with most other

7 nondeposit liabilities, by obtaining cross-guar8 antee contracts from syndicates of guarantors;

9 (C) to induce depository institutions to

10 lend and invest wisely by authorizing guaran11 tors which issue cross-guarantee contracts to—

12 (i) charge risk-sensitive premiums for

13 the guarantees provided; and

14 (ii) negotiate with the banks and sav15 ings associations which enter into such

16 contracts all other terms and conditions, to

17 the extent such terms and conditions are

18 not inconsistent with this Act or other pro19 visions of law;

20 (D) to make the cross-guarantee process as

21 self-regulating as possible by establishing nu22 merous constructive tensions among the partici23 pants in the system;

24 (E) to establish a closed system of guaran25 tors with tier after tier of guarantors to stand
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1 behind a guarantee and a ‘‘stop-loss’’ mecha2 nism to spread large losses as widely as possible

3 to ensure that no guaranteed obligation will

4 ever go unpaid; and

5 (F) to regulate the cross-guarantee mar6 ketplace only to the extent necessary to main7 tain the safety, soundness, and viability of the

8 entire cross-guarantee process and not the sol9 vency of any individual bank or savings associa10 tion regardless of its size.

11 (b) SPECIFIC RULES OF CONSTRUCTION.—In this

12 title—

13 (1) the terms ‘‘guaranteed company,’’ ‘‘guaran14 teed depository institution,’’ ‘‘guaranteed financial

15 group,’’ ‘‘guaranteed party,’’ and ‘‘nondepository

16 guarantor’’ refer to those parties in their capacity as

17 parties guaranteed under a cross-guarantee or stop18 loss contract;

19 (2) the term ‘‘direct guarantor’’ refers to a

20 party in such party’s capacity as a guarantor under

21 a cross-guarantee or stop-loss contract;

22 (3) the term ‘‘control’’ in such phrases as ‘‘as23 sumption of control’’ or ‘‘assumes control’’ shall not

24 have the meaning given the term under section

25 101(8);
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1 (4) ‘‘including’’ shall not be construed more re2 strictively than the ordinary usage of such term so

3 as to exclude any other thing not referred to or de4 scribed; and

5 (5) the phrases ‘‘has entered into a cross-guar6 antee contract’’ and ‘‘has entered into a stop-loss

7 contract,’’ as used in sections 101(22), 101(23), and

8 101(30), shall not be construed to refer to a con9 tract which is no longer in effect;

10 Subtitle B—Cross Guarantee Process

11 SEC. 111. DEPOSITORY INSTITUTIONS PROHIBITED FROM

12 OPERATING WITHOUT A CROSS-GUARANTEE

13 CONTRACT.

14 After the applicable effective date under section 142,

15 a depository institution shall be a guaranteed depository

16 institution or guaranteed banking office unless the deposi17 tory institution—

18 (a) is a Federal branch that is not an insured

19 branch (as the terms ‘‘Federal branch’’ and ‘‘in20 sured branch’’ are defined in sections 3(r) and 3(s)

21 of the Federal Deposit Insurance Act); or

22 (b) is a failed depository institution.

23 SEC. 112. PARTIES TO CROSS-GUARANTEE AND STOP-LOSS

24 CONTRACTS.

25 (a) CROSS-GUARANTEE CONTRACTS.—
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1 (1) IN GENERAL.—Each cross-guarantee con2 tract shall have at least the following parties:

3 (A) A guaranteed financial group as the

4 party guaranteed under the contract.

5 (B) The direct guarantors of the guaran6 teed financial group.

7 (C) A syndicate agent acting on behalf of

8 the direct guarantors.

9 (2) AFFILIATE GUARANTEE.—Any affiliate of a

10 depository institution may guarantee the perform11 ance of such institution’s guaranteed obligations

12 under a cross-guarantee contract.

13 (b) STOP-LOSS CONTRACTS.—

14 (1) IN GENERAL.—Each stop-loss contract shall

15 have at least the following parties:

16 (A) A nondepository guarantor as the

17 party guaranteed under the contract.

18 (B) The direct guarantors of the

19 nondepository guarantor.

20 (C) A syndicate agent acting on behalf of

21 the direct guarantors.

22 (2) AFFILIATE GUARANTEE.—Any affiliate of a

23 nondepository guarantor may guarantee the per24 formance of the guaranteed obligations of such

25 nondepository guarantor.
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1 (c) GROUP CROSS-GUARANTEE CONTRACTS.—

2 (1) IN GENERAL.—

3 (A) POOLING OF RISK.—Subject to the

4 provisions of this subsection, the cross-guaran5 tee contracts of two or more guaranteed finan6 cial groups may be pooled for syndication.

7 (B) SEPARATE CONTRACT FOR A SYN8 DICATE OF POOLED CONTRACTS.—The direct

9 guarantors comprising the cross-guarantee syn10 dicate for a group of cross-guarantee contracts

11 may enter into a separate contract (hereinafter

12 ‘‘group cross-guarantee contract’’) under which

13 the cross-guaranteed contracts pooled under

14 such contract shall be incorporated by ref15 erence.

16 (C) PROPORTIONAL RISK.—Each direct

17 guarantor under a group cross-guarantee con18 tract shall have the same proportional rights,

19 privileges, duties, and obligations in each cross20 guarantee contract incorporated by reference in

21 the syndicate contract as such guarantor has in

22 the syndicate contract.

23 (2) APPROVAL OF GROUP CROSS-GUARANTEE

24 CONTRACT AND ITS POOL OF CROSS-GUARANTEE

25 CONTRACTS.—The Corporation shall approve or re-
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1 ject, as a group, a proposed group cross-guarantee

2 contract and the cross-guarantee contracts pooled

3 under that contract.

4 (3) AGGREGATION OF ASSETS FOR PURPOSES

5 OF RISK DIVERSIFICATION.—The assets of all guar6 anteed parties pooled under a group cross-guarantee

7 contract shall be aggregated for purposes of apply8 ing the risk diversification requirement established

9 in section 114(b).

10 (4) NO CROSS LIABILITY OF GUARANTEED PAR11 TIES.—No guaranteed party under any cross-guar12 antee contract shall be liable for any portion of the

13 guaranteed obligations of a guaranteed party under

14 any other cross-guarantee contract which is pooled

15 under the same group cross-guarantee contract.

16 (5) INDIVIDUAL TERMS AND RATES.—The

17 terms, conditions, and premium rates of a cross18 guarantee contract pooled under a group cross-guar19 antee contract may differ from the terms, condi20 tions, and premium rates under any other cross21 guarantee contract pooled under the syndicate con22 tract.

23 (6) PARTIES TO INDIVIDUAL CROSS-GUARANTEE

24 CONTRACTS RETAIN SAME RIGHTS AND DUTIES.—No

25 right, privilege, duty, or obligation that applies
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1 under this title to any party to a cross-guarantee

2 contract shall be affected by the pooling of the cross3 guarantee contract with other contracts covered by

4 a group cross-guarantee contract.

5 (7) ADDITIONAL GUARANTEED PARTIES UNDER

6 A GROUP CROSS-GUARANTEE CONTRACT.—A group

7 cross-guarantee contract may be amended under sec8 tion 123 to add a guaranteed financial group or a

9 depository institution with a proposed cross-guaran10 tee contract to the existing syndicate contract if—

11 (A) the syndicate contract remains in com12 pliance with all of the provisions of this title

13 after the addition of the institution to the syn14 dicate contract; and

15 (B) the term of the syndicate contract is

16 not extended beyond the original term of any

17 cross-guarantee contract already pooled under

18 the syndicate contract by the addition of the

19 institution.

20 (8) TERM OF A GROUP CROSS-GUARANTEE CON21 TRACT.—A group cross-guarantee contract shall con22 tinue in force until each guaranteed party which is

23 guaranteed under the syndicate contract has ceased

24 to be a guaranteed party under a cross-guarantee

25 contract pooled under the syndicate contract.
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1 (9) LENGTH OF CROSS-GUARANTEE CONTRACT

2 POOLED UNDER A SYNDICATE CONTRACT.—No

3 cross-guarantee contract pooled under a group cross4 guarantee contract shall have a term longer than the

5 remaining term of the syndicate contract.

6 (10) RULE OF CONSTRUCTION.—Nothing in

7 this subsection shall be construed as preventing a

8 cross-guarantee or stop-loss syndicate from becom9 ing a syndicate under two or more cross-guarantee

10 or stop-loss contracts without including such con11 tracts under a group cross-guarantee contract.

12 (d) AFFILIATES AND OTHER PARTIES RELATED TO

13 A DEPOSITORY INSTITUTION WHICH SHALL BE GUARAN14 TEED UNDER ONE CONTRACT.—

15 (1) IN GENERAL.—Subject to paragraph (4), a

16 guaranteed depository institution shall be guaran17 teed under the same cross-guarantee contract with

18 all other affiliated guaranteed depository institu19 tions.

20 (2) CHAIN BANKS.—Subject to paragraph (4),

21 if more than two-thirds of the shares of any deposi22 tory institution are directly or indirectly under com23 mon ownership with more than two-thirds of the

24 shares of any other depository institution, such de25 pository institutions shall be guaranteed depository
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1 institutions under the same cross-guarantee con2 tract.

3 (3) DOMESTIC BRANCHES AND AGENCIES OF

4 FOREIGN BANKS.—If any branch of a foreign bank

5 enters into a cross-guarantee contract with a cross6 guarantee syndicate, all branches and agencies of

7 such foreign bank shall be guaranteed banking of8 fices under the same cross-guarantee contract.

9 (4) REGULATIONS.—The Corporation shall pre10 scribe regulations for determining which cross-guar11 antee contract shall guarantee the obligations of a

12 depository institution to which paragraph (1) or (2)

13 applies.

14 (e) SUBSIDIARIES WHICH MAY BE GUARANTEED

15 UNDER ONE CROSS-GUARANTEE CONTRACT.—

16 (1) IN GENERAL.—A company controlled by a

17 guaranteed depository institution may be a guaran18 teed company under the same cross-guarantee con19 tract under which the guaranteed depository institu20 tion is guaranteed.

21 (2) DEFINITION OF CONTROL.—

22 (A) IN GENERAL.—For purposes of this

23 subsection, the term ‘‘control’’ means, with re24 spect to one company’s relationship to another

25 company, one company’s ownership or power to,
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1 directly or indirectly, vote an aggregate of 50

2 percent or more of any class or classes of the

3 securities which separately or together, taking

4 into account the relative voting weight of dif5 ferent shares, have the power to elect a major6 ity of the members of such other company’s

7 board of directors.

8 (B) REGULATIONS.—The Corporation may

9 prescribe regulations to implement the intent of

10 this paragraph.

11 (f) PROVISIONS RELATING TO SYNDICATE

12 AGENTS.—

13 (1) ANTI-AFFILIATION RULES.—A syndicate

14 agent may not—

15 (A) be an affiliate of any guaranteed party

16 under any cross-guarantee or stop-loss contract;

17 or

18 (B) acquire or retain any ownership inter19 est in any guaranteed party under any cross20 guarantee or stop-loss contract.

21 (2) NO DEPOSITORY INSTITUTION, FOREIGN

22 BANK OR NON-DEPOSITORY GUARANTOR MAY BE A

23 SYNDICATE AGENT.—No depository institution, for24 eign bank, or nondepository guarantor may be a
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1 syndicate agent under any cross-guarantee or stop2 loss contract.

3 (3) PROHIBITIONS ON INTERLOCKS.—

4 (A) IN GENERAL.—No owner, director, of5 ficer, employee, or partner of a syndicate agent

6 may be an owner, director, officer, employee, or

7 partner of any guaranteed party or other syn8 dicate agent under any cross-guarantee or stop9 loss contract.

10 (B) SUBCONTRACTORS.—

11 (i) IN GENERAL.—A subcontractor of

12 a syndicate agent may be a subcontractor

13 to any guaranteed party or other syndicate

14 agent under any cross-guarantee or stop15 loss contract.

16 (ii) PERSONNEL OVERLAPS.—

17 (I) IN GENERAL.—Subject to

18 subclause (II), an owner, director, of19 ficer, employee, or partner of a sub20 contractor of a syndicate agent may

21 be an owner, director, officer, em22 ployee, or partner of any guaranteed

23 party or other syndicate agent under

24 any cross-guarantee or stop-loss con25 tract.
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1 (II) EXCEPTION FOR GUARAN2 TEED PARTY UNDER THE SAME CON3 TRACT.—An owner, director, officer,

4 employee, or partner of a subcontrac5 tor of a syndicate agent performing

6 monitoring work on a guaranteed

7 party under a cross-guarantee or stop8 loss contract may not be an owner, di9 rector, officer, employee, or partner of

10 the guaranteed party under the con11 tract.

12 (C) DEFINITION OF OWNER.—For pur13 poses of this paragraph, the term ‘‘owner’’

14 means, with respect to any company, a person

15 which controls the company.

16 SEC. 113. REQUIREMENTS COMMON TO CROSS-GUARANTEE

17 AND STOP-LOSS CONTRACTS.

18 (a) STOP-LOSS LIMIT FOR LOSSES OF A GUARAN19 TEED PARTY AS A DIRECT GUARANTOR OF OTHER GUAR20 ANTEED PARTIES.—

21 (1) DEFINITIONS.—For purposes of this sub22 section:

23 (A) LEVEL 1 PARTY.—The term ‘‘Level 1

24 party’’ means a guaranteed party under any

25 cross-guarantee or stop-loss contract.
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1 (B) LEVEL 2 PARTY.—The term ‘‘Level 2

2 party’’ means a direct guarantor of a Level 1

3 party.

4 (C) LEVEL 3 PARTY.—The term ‘‘Level 3

5 party’’ means a direct guarantor of a Level 2

6 party.

7 (D) LOSS.—The term ‘‘loss’’ means the

8 present value, as of the date of a loss event, of

9 the cash outlays, including administrative ex10 penses, required to fulfill a Level 2 party’s

11 cross-guarantee obligations to a Level 1 party

12 due to the occurrence of such loss event, using

13 as a discount rate the sum of—

14 (i) 2 percent; and

15 (ii) the average annual percentage

16 yield on three-month bills issued by the

17 Secretary of the Treasury under section

18 3104(a) of title 31, United States Code, as

19 determined by the Corporation as of the

20 most recent issue date preceding the date

21 of the loss event.

22 (E) LOSS EVENT.—The term ‘‘loss event’’

23 means an event described in paragraph (3).

24 (F) STOP-LOSS LIABILITY.—The term

25 ‘‘stop-loss liability’’ means an obligation ac-
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1 crued by a Level 3 party to a Level 2 party

2 under paragraph (2).

3 (G) STOP-LOSS RECOVERY.—The term

4 ‘‘stop-loss recovery’’ means the amount accrued

5 by a Level 2 party due to the obligation of a

6 Level 3 party under paragraph (2).

7 (2) STOP-LOSS OBLIGATION OF DIRECT GUAR8 ANTORS.—

9 (A) STOP-LOSS RECOVERY.—for any

10 twelve-calendar month period in which a cross11 guarantee or stop-loss contract exists between

12 Level 3 parties and a Level 2 party as of the

13 first day of the first-calendar month of such pe14 riod, the Level 3 parties shall be obligated to

15 pay to the Level 2 party an amount equal to

16 the total amount of losses accrued by the Level

17 2 party in such party’s capacity as a direct

18 guarantor of Level 1 parties during such

19 twelve-calendar month period, minus the sum

20 of—

21 (i) the greater of—

22 (I) the amount equal to five

23 times the total amount of cross-guar24 antee and stop-loss premium income

25 accruing to the Level 2 party in such
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1 party’s capacity as a direct guarantor

2 of Level 1 parties during such twelve3 calendar month period;

4 (II) the amount equal to five

5 times the total amount of cross-guar6 antee and stop-loss premium income

7 accruing to the Level 2 party in such

8 party’s capacity as a direct guarantor

9 of Level 1 parties during the twelve10 calendar month period preceding such

11 twelve-calendar month period;

12 (III) in the case of a twelve-cal13 endar month period ending in a

14 month which is among the first eleven

15 calendar months that the Level 2

16 party has ever been a party guaran17 teed under a cross-guarantee or stop18 loss contract, the amount equal to the

19 average monthly cross-guarantee and

20 stop-loss premium income accruing to

21 the Level 2 party in such party’s ca22 pacity as a direct guarantor of Level

23 1 parties since first becoming a party

24 guaranteed under a cross-guarantee
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1 or stop-loss contract, multiplied by

2 sixty; or

3 (IV) in the case of a twelve-cal4 endar month period ending in a

5 month which is among the first twen6 ty-three calendar months that the

7 Level 2 party has ever been a party

8 guaranteed under a cross-guarantee

9 or stop-loss contract, the amount

10 equal to five times the total amount of

11 cross-guarantee and stop-loss pre12 mium income accruing to the Level 2

13 party in such party’s capacity as a di14 rect guarantor of Level 1 parties,

15 without taking into account any re16 duction in premium income due to the

17 transfer, under section 113(m), of the

18 Level 2 party’s interest in any cross19 guarantee or stop-loss syndicate; and

20 (ii) recoveries accrued under this

21 paragraph by the Level 2 party for each

22 twelve-calendar month period ending at the

23 end of each of the first eleven calendar

24 months in such twelve-calendar month pe25 riod.
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1 (B) CARRYOVER FROM PREVIOUS CON2 TRACTS.—The amounts calculated in subpara3 graph (A) shall include all losses, premium in4 come, and stop-loss recoveries of the Level 2

5 party under any cross-guarantee or stop-loss

6 contracts under which the Level 2 party was a

7 party guaranteed during such twelve-calendar

8 month period.

9 (C) MERGER OF TWO OR MORE GUARAN10 TEED PARTIES.—In the case of any Level 2

11 party which merged with any other party which

12 was a Level 2 party guaranteed under another

13 cross-guarantee or stop-loss contract, the

14 amounts calculated in subparagraph (A) shall

15 include all losses, premium income, and stop16 loss recoveries of both of the parties prior to

17 the merger.

18 (D) OTHER GUARANTEED PARTIES UNDER

19 THE CONTRACT WHICH WERE PREVIOUSLY DI20 RECT GUARANTORS.—The amounts calculated

21 in subparagraph (A) for the Level 2 party shall

22 include all losses, premium income, and stop23 loss recoveries of any other party guaranteed

24 under the same cross-guarantee contract as the

25 Level 2 party, which occurred while such other
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1 party was a Level 2 party while guaranteed

2 under the same or another cross-guarantee or

3 stop-loss contract.

4 (E) TIMING OF STOP-LOSS RECOVERY.—A

5 stop-loss recovery shall accrue as of the last day

6 of the last calendar month of the twelve-cal7 endar month period under which the stop-loss

8 recovery was calculated.

9 (F) ADJUSTMENT FOR CATASTROPHIC

10 LOSSES.—

11 (i) IN GENERAL.—If, for any calendar

12 month, a closed loop exists in which every

13 direct guarantor under the contracts in the

14 closed loop accrues a stop-loss recovery for

15 such month, then the calculation of stop16 loss recovery for the twelve-calendar month

17 period ending in such month for all the

18 contracts in the closed loop shall be ad19 justed as required under clauses (ii) and

20 (iii).

21 (ii) ADJUSTMENT.—If, for any cal22 endar month, a closed loop meets the con23 ditions of clause (i), the amounts cal24 culated in subparagraph (A) shall, for the

25 twelve-calendar month period in which
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1 such calendar month is the last month, be

2 adjusted by increasing from five to six,

3 under clauses (i)(I) and (i)(II) of subpara4 graph (A), the amount multiplied by the

5 premium income accruing to a Level 2

6 party and by increasing from sixty to sev7 enty-two, under clause (i)(III) of subpara8 graph (A), the amount multiplied by the

9 average monthly premium accruing to the

10 Level 2 party.

11 (iii) FURTHER ADJUSTMENT.—If,

12 after making the adjustments to the cal13 culation of stop-loss recovery under clause

14 (ii), every contract in the closed loop under

15 clause (i) still accrues a stop-loss recovery,

16 the amounts under clauses (i)(I) and

17 (i)(II) of subparagraph (A) shall be in18 creased by one and the amount under

19 clause (i)(III) of subparagraph (A) shall be

20 increased by twelve, until at least one di21 rect guarantor under a contract in such

22 closed loop is not accruing a stop-loss re23 covery for the calendar month in clause (i).
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1 (3) DETERMINATION OF TIME OF LOSS.—A

2 Level 2 party shall accrue a loss as the direct guar3 antor of a Level 1 party as of—

4 (A) the last day of the calendar month in

5 which the Level 1 party accrues a stop-loss re6 covery; or

7 (B) the day on which, with respect to a

8 Level 1 party which is a guaranteed company,

9 the earliest of the following occurs:

10 (i) Notice is filed with the Corporation

11 under section 118(d)(2)(D) by the cross12 guarantee syndicate of which the Level 2

13 party is a member that the syndicate has

14 assumed control of the Level 1 party.

15 (ii) A transaction is completed which

16 the Corporation, upon request by the syn17 dicate agent under the contract and pursu18 ant to paragraph (9), determines—

19 (I) involves the acquisition of the

20 Level 1 party or a significant portion

21 of the party’s assets, the merger of

22 the Level 1 party with any other

23 party, the liquidation of the Level 1

24 party, or any other similar transaction

25 involving the Level 1 party; and
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1 (II) results proximately in a loss

2 for the Level 2 parties in their capac3 ity as guarantors under the cross4 guarantee contract.

5 (iii) The Level 1 party becomes a

6 debtor in a case under title 11, United

7 States Code.

8 (4) PREPARATION OF ORIGINAL LOSS ESTIMATE

9 BY SYNDICATE AGENT.—The syndicate agent for the

10 cross-guarantee contract under which a Level 2

11 party is a direct guarantor shall, whenever a loss

12 event under subparagraph (3)(B) occurs under such

13 contract—

14 (A) estimate the loss for such loss event;

15 and

16 (B) by the fifteenth day of the calendar

17 month following the calendar month in which

18 such loss event occurs, notify the central elec19 tronic repository of the estimate of the loss

20 under subparagraph (A).

21 (5) REVISION OF LOSS ESTIMATE BY SYN22 DICATE AGENT.—The syndicate agent for the cross23 guarantee contract under which a Level 2 party is

24 a direct guarantor shall, whenever a loss event under

25 subparagraph (3)(B) occurs under such contract—
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1 (A) revise the original estimate of the loss

2 for such loss event and notify the central elec3 tronic repository of such revised estimate at

4 least as often as the fifteenth day of—

5 (i) the third calendar month following

6 the calendar month in which the loss event

7 took place;

8 (ii) the twelfth calendar month follow9 ing the calendar month in which the loss

10 event took place; and

11 (iii) every twelfth month after the cal12 endar month in clause (ii); and

13 (B) for each estimate of the loss described

14 in clauses (A)(ii) and (A)(iii), obtain from a

15 third party a confirmation of the reasonableness

16 of the revised estimate of the loss.

17 (6) COMPLETION OF CASH OUTLAYS BECOMES

18 FINAL AMOUNT.—Notwithstanding paragraph (5),

19 once a Level 2 party has made the final cash dis20 bursement to fulfill such party’s cross-guarantee ob21 ligations due to any loss event under subparagraph

22 (3)(B)—

23 (A) the syndicate agent for the cross-guar24 antee contract under which the Level 2 party is

25 a direct guarantor shall calculate the loss from
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1 such loss event (subject to the third party con2 firmation in subparagraph (5)(B)) and notify

3 the central electronic repository of this calcula4 tion; and

5 (B) no further revisions of the loss from

6 such loss event need take place.

7 (7) CALCULATION AND CLEARINGHOUSE DU8 TIES OF CENTRAL ELECTRONIC REPOSITORY.—

9 (A) CALCULATION OF STOP-LOSS LIABIL10 ITY.—After notification under paragraphs (4),

11 (5), and (6), the central electronic repository

12 shall calculate the stop-loss recovery for every

13 Level 2 party for every twelve-month calendar

14 period affected by the initial estimate, revised

15 estimates, and final loss amounts.

16 (B) ADJUSTMENT FOR INTEREST.—Upon

17 completing the calculations under subparagraph

18 (A), the central electronic repository shall then

19 adjust the amounts owed between Level 2 and

20 Level 3 parties as specified in paragraph (8).

21 (C) NETTING CALCULATION.—Upon com22 pleting the calculations under subparagraph

23 (B), the central electronic repository shall, for

24 each person that is a direct guarantor or guar25 anteed party, net the amounts owed by such
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1 person in its capacity as a Level 3 party with

2 the amount such person is entitled to receive in

3 its capacity as a Level 2 party to determine the

4 overall liability or right to payment for such

5 person.

6 (D) NOTIFICATION OF PARTIES.—Within

7 five business days after receiving notification

8 under paragraphs (4), (5), and (6), the central

9 electronic repository shall notify any Level 2

10 party or Level 3 party of the results of the cal11 culations under subparagraphs (A), (B), and

12 (C).

13 (E) SETTLEMENT.—

14 (i) PAYMENTS TO BE MADE.—Within

15 three business days after receiving notifica16 tion under subparagraph (D), each party

17 which, given the calculations under sub18 paragraph (C), has a net liability shall pay

19 the amount of such liability to the central

20 electronic repository.

21 (ii) DISBURSAL OF PAYMENTS.—Upon

22 receiving all payments under clause (i), the

23 central electronic repository shall promptly

24 disburse to each party which has a right to

25 payment, given the calculations under sub-
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1 paragraph (C), the amount owed such

2 party.

3 (iii) PENALTIES FOR LATE PAY4 MENT.—If an obligation under clause (i) is

5 not paid in a timely manner, any party

6 which fails to perform its obligation under

7 this title to pay the balance owed under

8 clause (i), including the guarantors of the

9 specific party most directly liable under

10 clause (i), shall be liable to the Corporation

11 for damages of 10 percent of the unpaid

12 amount for which the party is obliged, plus

13 interest at the rate specified under sub14 paragraph (C) of paragraph (8).

15 (F) REGULATIONS.—The Corporation may

16 prescribe such regulations as may be necessary

17 to implement this paragraph.

18 (8) CALCULATION OF STOP-LOSS PAYMENTS

19 PLUS INTEREST.—

20 (A) ORIGINAL ESTIMATE.—If a determina21 tion under subparagraph (7)(A) is based on the

22 original estimate of loss under paragraph (4)

23 and results in a stop-loss recovery for a Level

24 2 party, each Level 3 party shall owe to the

25 Level 2 party the amount of the stop-loss liabil-
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1 ity for such Level 3 party plus interest on the

2 amount of such liability from the last day of the

3 month in which the loss occurred to the date of

4 payment under this subparagraph.

5 (B) REVISION OF ESTIMATES.—If a deter6 mination under subparagraph (7)(A) results

7 in—

8 (i) an increase from the previous esti9 mate of the stop-loss recovery for a par10 ticular month, then each Level 3 party

11 shall owe to the Level 2 party the amount

12 of the increase in the Level 3 party’s stop13 loss liability plus interest on the amount of

14 the increase in such liability from the last

15 day of such month until payment is made

16 under this clause; or

17 (ii) a decrease from the previous esti18 mate of the stop-loss recovery for a par19 ticular month, then the Level 2 party shall

20 owe each Level 3 party the amount of the

21 decrease in such Level 3 party’s stop-loss

22 liability plus interest on the amount of the

23 decrease in such liability from the last day

24 of such month until payment is made

25 under this clause.
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1 (C) INTEREST RATE.—The parties to any

2 cross-guarantee or stop-loss contract shall agree

3 to the interest rate to be used for the calcula4 tion of interest under subparagraphs (A) and

5 (B).

6 (9) CGRC ADJUDICATION OF TIMING OF LOSS

7 EVENTS.—

8 (A) INFORMAL CGRC ADJUDICATION.—The

9 Corporation shall establish procedures to adju10 dicate the timing of loss events under para11 graph (3)(B)(ii).

12 (B) JUDICIAL REVIEW.—Any guaranteed

13 party may seek judicial review of any deter14 mination under subparagraph (A).

15 (b) DIRECT GUARANTOR’S CROSS-GUARANTEE OBLI16 GATIONS UNDER THE CONTRACT ARE INDEPENDENT

17 FROM OTHER PARTIES’ OBLIGATIONS.—The cross-guar18 antee obligations of a direct guarantor under any cross19 guarantee or stop-loss contract shall be independent of

20 any obligation of any other party under the contract.

21 (c) GUARANTEED PARTY CANNOT BE A DIRECT

22 GUARANTOR UNDER THE SAME CONTRACT.—No guaran23 teed party may be a direct guarantor under the cross24 guarantee or stop-loss contract under which such party is

25 a guaranteed party.
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1 (d) DIRECT GUARANTORS PROHIBITED FROM OB2 TAINING COLLATERAL FOR CROSS-GUARANTEE OBLIGA3 TIONS.—No direct guarantor under any cross-guarantee

4 or stop-loss contract may obtain or retain a lien or security

5 interest in a guaranteed party under the contract, or in

6 any assets of the guaranteed party, in connection with

7 such guarantor’s cross-guarantee obligations under the

8 contract, unless the guaranteed party is a guaranteed

9 banking office.

10 (e) PROVISIONS OF CONTRACT REGARDING DIVISION

11 OF LIABILITY.—

12 (1) SEVERAL LIABILITY.—No direct guarantor

13 under any cross-guarantee or stop-loss contract shall

14 be jointly liable for the cross-guarantee obligations

15 of any other direct guarantor under the contract.

16 (2) DIVISION OF LIABILITY.—

17 (A) DETERMINED BY CONTRACT.—Subject

18 to section 116(d), the terms of a cross-guaran19 tee or stop-loss contract shall establish the divi20 sion of liability among the direct guarantors

21 under the contract.

22 (B) ADJUSTMENT IN CASE OF ERROR.—If

23 the division of liability under a cross-guarantee

24 or stop-loss contract does not equal 100 per25 cent, each direct guarantor’s assigned liability
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1 under the contract shall be adjusted proportion2 ately so that the division of liability equals 100

3 percent.

4 (3) LIABILITY OF DIRECT GUARANTOR PROPOR5 TIONATE TO INTEREST IN SYNDICATE.—The rights,

6 privileges, duties, and obligations of a direct guaran7 tor under a cross-guarantee or stop-loss contract

8 shall be proportionate to such guarantor’s interest in

9 the syndicate.

10 (4) SYNDICATES NOT PARTNERSHIPS OR JOINT

11 VENTURES.—Notwithstanding any State law, a

12 cross-guarantee or stop-loss syndicate is not a part13 nership or joint venture, except for purposes of sec14 tion 117(c)(1).

15 (f) PREMIUM REQUIREMENTS.—Each cross-guaran16 tee and stop-loss contract shall describe the method for

17 calculating, and the timing of payment, for any premium

18 payable to the direct guarantors under the contract.

19 (g) MAXIMUM TERM OF CONTRACTS.—

20 (1) TERM OF CONTRACT.—A cross-guarantee or

21 stop-loss contract may not have a term of more than

22 five years.

23 (2) AMENDMENTS.—The parties to any cross24 guarantee or stop-loss contract may agree to extend

25 the length of the contract as long as the contract as
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1 amended still expires within five years after the

2 original effective date of the contract.

3 (3) RENEWAL OF CONTRACT MUST BE AP4 PROVED BY THE CORPORATION.—No cross-guaran5 tee or stop-loss contract may be renewed by the par6 ties to the contract, and no successor contract may

7 become effective, without the approval of the Cor8 poration under section 123.

9 (4) PENALTIES FOR CONTINUING A CROSS10 GUARANTEE CONTRACT AFTER EXPIRATION DATE.—

11 For every day after the thirtieth day following the

12 expiration of a cross-guarantee contract in which—

13 (A) the direct guarantors have not as14 sumed control under section 118(a) of all the

15 guaranteed companies guaranteed under the

16 contract;

17 (B) a guaranteed party under such con18 tract has not become a guaranteed party under

19 another cross-guarantee contract;

20 (C) a successor contract is not being con21 sidered for approval under section 123 or the

22 Corporation has already rejected two successor

23 contracts;

24 (D) the guaranteed party is not appealing

25 the rejection by the Corporation, under section
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1 123, of a successor contract or final judgment

2 has been reached on such an appeal; or

3 (E) the guaranteed party is not a debtor

4 under any proceeding under title 11 of the

5 United States Code,

6 the Corporation may penalize each direct guarantor

7 under such contract up to $100,000.

8 (h) CANCELLATION OF CONTRACTS BY SYN9 DICATES.—

10 (1) RIGHT TO CANCEL.—

11 (A) DEFAULT RULE.—Unless otherwise

12 agreed in a cross-guarantee or stop-loss con13 tract, a cross-guarantee or stop-loss syndicate

14 may cancel such contract at any time without

15 cause provided that the syndicate agent under

16 such contract provides notice of such cancella17 tion to the Corporation and the guaranteed

18 party or parties under the contract at least

19 ninety days prior to the effective date of can20 cellation.

21 (B) MINIMUM NOTICE PERIOD STILL RE22 QUIRED FOR ANY CONTRARY AGREEMENT.—If

23 the parties to a cross-guarantee or stop-loss

24 contract agree to cancellation rules different

25 than those provided under subparagraph (A),
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1 the contract shall still require the syndicate

2 agent under the contract to give notice of can3 cellation to the Corporation and to the guaran4 teed party or parties under the contract at least

5 ninety days prior to the effective date of the

6 cancellation.

7 (C) WITHDRAWAL OF CANCELLATION NO8 TICE.—A cross-guarantee syndicate may, prior

9 to the cancellation becoming effective, withdraw

10 the cancellation notice issued under this para11 graph.

12 (2) CANCELLATION OF ONE GUARANTEED FI13 NANCIAL GROUP UNDER A GROUP CONTRACT.—A

14 cross-guarantee syndicate may cancel a cross-guar15 antee contract with one guaranteed financial group

16 under a group cross-guarantee contract without af17 fecting the rights, privileges, duties, and obligations

18 arising out of the syndicate contract with regard to

19 the other guaranteed financial groups under the syn20 dicate contract.

21 (3) LIMITATIONS ON GUARANTEED PARTY.—A

22 guaranteed party under any cross-guarantee or stop23 loss contract may not become a direct guarantor

24 under any other cross-guarantee or stop-loss con25 tract during any of the following periods:
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1 (A) The period beginning on the date such

2 party receives a notice of cancellation under

3 paragraph (1) or (2) with respect to such con4 tract and ending on the date the party becomes

5 a guaranteed party under a successor contract

6 or the cancellation notice is withdrawn under

7 paragraph (1)(C).

8 (B) The period beginning on the date the

9 contract expires and ending on the date the

10 party becomes a guaranteed party under a suc11 cessor contract.

12 (4) CONTINUED EFFECTIVENESS OF CROSS13 GUARANTEE CONTRACTS UNTIL OTHER COVERAGE IS

14 OBTAINED.—

15 (A) IN GENERAL.—The obligations of any

16 party under a cross-guarantee or stop-loss con17 tract shall remain in effect after the effective

18 date of the cancellation of the contract by the

19 direct guarantors or after the expiration of such

20 contract, as the case may be, until—

21 (i) the guaranteed party becomes a

22 guaranteed party under another cross23 guarantee or stop-loss contract; or

24 (ii) in the case of a guaranteed party

25 which ceases to exist as a legal entity, the
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1 guaranteed obligations of the institution

2 are satisfied or become guaranteed obliga3 tions covered under another cross-guaran4 tee or stop-loss contract.

5 (B) CANCELLATION WHEN NONDEPOSI6 TORY GUARANTOR IS NOT A DIRECT GUARAN7 TOR.—Notwithstanding subparagraph (A), a

8 cancellation of a stop-loss contract by a stop9 loss syndicate shall take effect immediately if

10 the party guaranteed under the contract—

11 (i) is not at the time of cancellation a

12 direct guarantor under any cross-guarantee

13 or stop-loss contract; and

14 (ii) has transferred any remaining

15 risk under any cross-guarantee or stop-loss

16 contract under which such guarantor was

17 formerly a direct guarantor to another di18 rect guarantor.

19 (i) CANCELLATION OF CONTRACTS BY GUARANTEED

20 PARTY.—

21 (1) IN GENERAL.—The guaranteed financial

22 group or nondepository guarantor which is the party

23 guaranteed under a cross-guarantee or stop-loss con24 tract may notify the syndicate agent for the direct
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1 guarantors under the contract at any time of such

2 party’s intention to cancel the contract.

3 (2) CANCELLATION NOT EFFECTIVE UNTIL

4 SUBSTITUTE COVERAGE IS OBTAINED.—The can5 cellation of any cross-guarantee or stop-loss contract

6 under paragraph (1) shall not take effect until the

7 canceling party becomes a guaranteed financial

8 group or a nondepository guarantor under another

9 cross-guarantee or stop-loss contract.

10 (3) ALLOWING NONDEPOSITORY GUARANTORS

11 TO EXIT THE BUSINESS.—Notwithstanding para12 graph (2), a cancellation of a stop-loss contract by

13 a nondepository guarantor shall take effect imme14 diately if the nondepository guarantor—

15 (A) is not at the time of cancellation a di16 rect guarantor under any cross-guarantee or

17 stop-loss contract; and

18 (B) has transferred any remaining risk

19 under any cross-guarantee or stop-loss contract

20 under which such guarantor was formerly a di21 rect guarantor to another direct guarantor.

22 (4) CANCELLATION FEE.—The cross-guarantee

23 or stop-loss syndicate under a cross-guarantee or

24 stop-loss contract which is canceled pursuant to

25 paragraph (1) may impose a cancellation fee in an
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1 amount determined in accordance with the terms of

2 the contract.

3 (j) CONTINUED EFFECTIVENESS OF CONTRACTS

4 AFTER CONVERSION OF CHARTER OF DEPOSITORY INSTI5 TUTION.—If—

6 (1) any State depository institution becomes a

7 Federal depository institution;

8 (2) any Federal depository institution becomes

9 a State depository institution;

10 (3) any bank becomes a savings association;

11 (4) any savings association becomes a bank; or

12 (5) any depository institution in any other way

13 modifies its legal status,

14 through a conversion of the charter of the depository insti15 tution, any cross-guarantee contract under which the insti16 tution is a guaranteed depository institution and which is

17 in effect immediately before such conversion shall remain

18 in effect after the conversion.

19 (k) CONTINUING APPLICABILITY OF OBLIGATIONS

20 UNDER THE CONTRACTS.—

21 (1) NO VOIDING OR RESCINDING OF CON22 TRACTS.—No party to a cross-guarantee or stop-loss

23 contract may void or rescind the contract, regardless

24 of any defense to the existence or enforceability of
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1 the contract that might exist under Federal or State

2 law.

3 (2) NO EXCUSES TO PERFORMANCE.—Notwith4 standing any provision of Federal or State law, no

5 excuse for the failure to perform any obligation

6 under a cross-guarantee or stop-loss contract shall

7 be effective.

8 (3) NONCOMPLIANCE DOES NOT AFFECT OBLI9 GATIONS.—A party to a cross-guarantee or stop-loss

10 contract shall remain obliged under the contract re11 gardless of whether—

12 (A) the contract ceases to comply with any

13 requirement under this title; or

14 (B) one or more parties to the contract fail

15 to comply with this title.

16 (l) DISTRIBUTION OF LOSSES BETWEEN PRIOR AND

17 SUCCESSOR SYNDICATES.—

18 (1) CLAIMS-MADE GUARANTEE.—Subject to

19 paragraph (2), as between two or more cross-guar20 antee or stop-loss syndicates which have over time

21 guaranteed a particular guaranteed party, a cross22 guarantee obligation shall lie with the syndicate

23 which was the cross-guarantee or stop-loss syndicate

24 at the time a cause of action described under section
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1 117(f)(1)(A)(i) was filed with respect to the obliga2 tion.

3 (2) EXCEPTION FOR STOP-LOSS OBLIGA4 TIONS.—The obligation of direct guarantors under

5 section 113(a) shall lie with the cross-guarantee syn6 dicate described under paragraph (2)(A) of such

7 subsection.

8 (m) SUBSTITUTION OF DIRECT GUARANTORS.—

9 (1) AUTHORIZATION OF TRANSFERS SUBJECT

10 TO CGRC APPROVAL.—

11 (A) IN GENERAL.—Any direct guarantor’s

12 rights, privileges, duties and obligations under a

13 cross-guarantee or stop-loss contract, and any

14 portion of any such rights, privileges, duties,

15 and obligations, may be transferred to a succes16 sor direct guarantor, subject to the approval of

17 the Corporation (pursuant to section 123 of

18 this title).

19 (B) TRANSFER OF LONG-TAIL OBLIGA20 TIONS.—A person which was formerly a direct

21 guarantor under a cross-guarantee or stop-loss

22 contract which was formerly, but no longer is,

23 in effect may transfer to any person which is a

24 designated direct guarantor under section

25 116(b) any residual rights, privileges, duties
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1 and obligations under the contract, subject to

2 the approval of the Corporation (pursuant to

3 section 123 of this title).

4 (2) TRANSFEROR NO LONGER OBLIGED ON

5 CONTRACT.—Notwithstanding any Federal or State

6 law, a transferor of an interest under paragraph (1)

7 shall not be obliged to perform the transferee’s obli8 gations under the contract should the transferee fail

9 to perform.

10 (3) PARTIES AUTHORIZED TO RESTRICT SUB11 STITUTION OF GUARANTORS IN A CONTRACT.—A

12 guaranteed party or a cross-guarantee or stop-loss

13 syndicate under a cross-guarantee or stop-loss con14 tract may provide in such contract that any transfer

15 under paragraph (1) of any interest of any direct

16 guarantor in such contract shall be subject to the

17 approval of such party or syndicate.

18 (4) ALLOCATION OF INCOME AND LOSSES BE19 TWEEN THE TRANSFEROR AND TRANSFEREE.—

20 (A) IN GENERAL.—Subject to subpara21 graph (B), a transferor’s accrued (but unpaid)

22 premium income and losses as of the date of

23 transfer under paragraph (1) may be allocated

24 between the transferor and transferee in any

25 manner provided for in the transfer agreement.
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1 (B) LOSSES ON CROSS-GUARANTEE OBLI2 GATIONS.—The transferor shall be liable for

3 any losses due to a loss event (as defined in sec4 tion 113(a)) occurring prior to a transfer under

5 paragraph (1) and the transferee shall be liable

6 for any losses due to a loss event after the

7 transfer.

8 (n) SYNDICATE VOTING RULES.—

9 (1) PROPORTIONAL VOTING.—Each cross-guar10 antee and stop-loss contract shall provide that a di11 rect guarantor’s voting rights in the cross-guarantee

12 or stop-loss syndicate shall be proportional to such

13 guarantor’s interest in the syndicate.

14 (2) VARIATIONS PERMITTED IN VOTING RE15 QUIREMENTS.—A cross-guarantee or stop-loss con16 tract may provide that the number of votes needed

17 to approve an action by a cross-guarantee or stop18 loss syndicate under the contract may differ depend19 ing upon the action on which a vote is taken.

20 (o) GUARANTEED PARTY CAN BE COVERED ONLY

21 UNDER ONE CONTRACT.—No guaranteed party under

22 any cross-guarantee or stop-loss contract may be a guar23 anteed party under another cross-guarantee or stop-loss

24 contract.
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1 (p) AUTHORITY OF THE CGRC TO DIRECT TRANS2 FER.—

3 (1) IN GENERAL.—If any merger, acquisition,

4 or other combination of two or more direct guaran5 tors within any cross-guarantee or stop-loss syn6 dicate occurs which causes the contract to materially

7 exceed the limitations set forth in section 114(b)(1)

8 or paragraph (1) or (2) of section 115(b), the Cor9 poration may issue an order directing the merged

10 guarantor to obtain a successor for that part of the

11 guarantor’s interest that exceeds the statutory limit.

12 (2) EXTENT OF GUARANTEED PARTY’S ABILITY

13 TO BLOCK TRANSFER.—In the case of any transfer

14 under paragraph (1), a guaranteed party may bar

15 the transfer under the authority of subsection

16 (m)(3) if such party demonstrates that that transfer

17 of the interest to a particular guarantor would raise

18 reasonable competitive concerns.

19 (q) MERGER OF TWO OR MORE GUARANTEED PAR20 TIES.—After any merger, acquisition, or other combina21 tion of two or more guaranteed parties, the successor par22 ty’s cross-guarantee or stop-loss contract shall meet the

23 same requirements under section 114(b)(1) or paragraph

24 (1) or (2) of section 115(b), that the successor would have
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1 to meet if the successor sought to become a guaranteed

2 party under a new cross-guarantee or stop-loss contract.

3 (r) MODIFICATION OF CONTRACTS.—An agreement

4 amending a cross-guarantee or stop-loss contract needs no

5 consideration to be binding.

6 (s) BAR ON REINSURANCE.—Subject to sections

7 112(a)(2) and 112(b)(2), a direct guarantor may not rein8 sure such guarantor’s interest in a cross-guarantee or

9 stop-loss contract.

10 (t) RULE OF CONSTRUCTION RELATING TO CON11 TRACT TERMS.—No provision of this title shall be con12 strued as prohibiting any cross-guarantee or stop-loss con13 tract from containing any term or condition other than

14 terms or conditions expressly prohibited by this title.

15 SEC. 114. REQUIREMENTS APPLICABLE ONLY TO CROSS16 GUARANTEE CONTRACTS.

17 (a) OBLIGATIONS GUARANTEED UNDER A CROSS18 GUARANTEE CONTRACT.—

19 (1) OBLIGATIONS REQUIRED TO BE GUARAN20 TEED OBLIGATIONS.—The following obligations of

21 any guaranteed company or guaranteed banking of22 fice shall be guaranteed obligations under a cross23 guarantee contract:

24 (A) DEPOSITS.—
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1 (i) BANKS AND SAVINGS ASSOCIA2 TIONS.—In the case of a guaranteed de3 pository institution, all deposits.

4 (ii) BRANCHES OF FOREIGN DEPOSI5 TORY INSTITUTIONS.—In the case of a

6 guaranteed banking office, all deposits of

7 such office payable at a location within the

8 United States.

9 (B) LOANS AND ADVANCES FROM A DI10 RECT GUARANTOR, FEDERAL RESERVE BANK,

11 OR FEDERAL HOME LOAN BANK.—All loans and

12 advances from a direct guarantor, a Federal

13 Reserve Bank, or a Federal home loan bank.

14 (C) INTEREST-BEARING OBLIGATIONS

15 OTHER THAN SUBORDINATED DEBT.—All inter16 est-bearing obligations other than subordinated

17 debt.

18 (D) BALANCES DUE CLEARINGHOUSES,

19 THE FEDERAL RESERVE, AND IN SETTLEMENT

20 OF OTHER TRANSACTIONS.—All obligations

21 owed to clearinghouses, to the Federal Reserve

22 for funds transfers, and to other funds and se23 curities clearance and settlement systems.

24 (E) CROSS-GUARANTEE OBLIGATIONS.—

25 Cross-guarantee obligations for which the guar-
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1 anteed company is liable as a direct guarantor

2 under any other cross-guarantee or stop-loss

3 contract.

4 (F) CERTAIN OTHER OBLIGATIONS.—All

5 direct and contingent liabilities under any con6 tract or commitment under—

7 (i) any letter of credit or bankers’ ac8 ceptance; and

9 (ii) any securities contract, commodity

10 contract, forward contract, repurchase

11 agreement, or swap agreement (as such

12 terms are defined in section 11(e)(8)(D) of

13 the Federal Deposit Insurance Act).

14 (G) LIABILITY UNDER RECOURSE AGREE15 MENTS.—Any liability under recourse agree16 ments that arises when a guaranteed company

17 or guaranteed banking office sells loans or

18 other assets.

19 (H) CERTAIN LINES OF CREDIT.—Any

20 binding commitment to lend funds.

21 (I) ACCRUED INTEREST.—Any accrued in22 terest on an underlying obligation which is a

23 guaranteed obligation.

24 (J) FRAUD RELATED TO SUBORDINATED

25 DEBT.—The liability of any guaranteed party
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1 for damages due to fraudulent actions of such

2 party related to marketing subordinated debt.

3 (K) RESIDUAL OBLIGATIONS WHICH THE

4 CGRC DEEMS MUST BE GUARANTEED.—Subject

5 to paragraph (3)(C), any other obligation which

6 the Corporation determines, by regulation con7 sistent with the purposes of this title, should be

8 guaranteed under each cross-guarantee con9 tract.

10 (2) OBLIGATIONS WHICH MAY NOT BE GUARAN11 TEED.—The following obligations of any guaranteed

12 company or guaranteed banking office may not be

13 guaranteed obligations under a cross-guarantee con14 tract:

15 (A) SUBORDINATED DEBT.—

16 (i) IN GENERAL.—Subordinated debt

17 issued by the guaranteed company or guar18 anteed banking office.

19 (ii) INCLUDES DEBT WHICH MAY BE

20 REDEEMED BY THE DEBTHOLDER BY

21 CHECK OR OTHER MEANS.—For purposes

22 of this subparagraph, the term ‘‘subordi23 nated debt’’ includes subordinated debt

24 which may be withdrawn by or credited to
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1 the debtholder by a check, wire transfer, or

2 other order of the debtholder.

3 (B) EQUITY INTERESTS.—Any equity in4 terest in the guaranteed company or guaranteed

5 banking office.

6 (3) OBLIGATIONS WHICH MAY BE INCLUDED

7 UNDER A CROSS-GUARANTEE CONTRACT.—

8 (A) IN GENERAL.—Any obligation of any

9 guaranteed company or guaranteed banking of10 fice which is not required to be, or not prohib11 ited from being, a guaranteed obligation under

12 paragraphs (1) and (2) may be a guaranteed

13 obligation under a cross-guarantee contract to

14 the extent the contract so expressly provides.

15 (B) RULES UPON SWITCH TO A SUCCESSOR

16 CONTRACT.—Any obligation that was a guaran17 teed obligation under the previous cross-guaran18 tee contract shall be a guaranteed obligation

19 under the successor contract, if such obligation

20 accrues prior to the obligee receiving notice

21 from the syndicate agent under the successor

22 contract that obligations of the same type as

23 were guaranteed under the previous contract

24 shall not be guaranteed under the successor

25 contract.
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1 (C) JUDGMENTS AND SETTLEMENTS.—

2 Unless the cross-guarantee contract expressly

3 provides to the contrary, no judgment or settle4 ment from any action arising from any alleged

5 tortious conduct, breach of contract, or viola6 tion of statutory obligation by the guaranteed

7 company shall be a guaranteed obligation.

8 (b) RISK DIVERSIFICATION.—

9 (1) MINIMUM NUMBER OF DIRECT AND SEC10 OND-TIER GUARANTORS.—Each cross-guarantee con11 tract shall comply with the requirements relating to

12 the maximum percentage of all guaranteed obliga13 tions under the contract which may be guaranteed

14 by any one direct guarantor and the minimum num15 ber of second-tier guarantors which the guaranteed

16 party or parties shall have in the aggregate, as de17 termined under the following table (as adjusted pur18 suant to paragraph (2)) on the basis of the total as19 sets of all the guaranteed parties under the contract:

Aggregate amount of assets of all guaranteed parties under the

contract

Maximum

percentage of

cross-guarantee liability

assumable by

any 1 direct

guarantor

Minimum

number of

second-tier

guarantors

$100,000,000 or less .................................................. 5.0 100

Greater than $100,000,000 but less than or equal to

$500,000,000 ......................................................... 4.0 125

Greater than $500,000,000 but less than or equal to

$1,000,000,000 ...................................................... 2.5 150
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Aggregate amount of assets of all guaranteed parties under the

contract

Maximum

percentage of

cross-guarantee liability

assumable by

any 1 direct

guarantor

Minimum

number of

second-tier

guarantors

Greater than $1,000,000,000 but less than or equal

to $10,000,000,000 ................................................ 1.5 200

More than $10,000,000,000 ...................................... 1.0 250

1 (2) ADJUSTMENT OF DOLLAR AMOUNTS FOR

2 INFLATION.—The amounts contained in the table in

3 paragraph (1) relating to the aggregate assets of

4 guaranteed parties under any cross-guarantee con5 tract shall be adjusted annually by the Corporation,

6 after the end of the one-year period beginning on the

7 date of the enactment of this Act, based on the

8 change in the deflator for the gross domestic prod9 uct.

10 (c) BASIS FOR CALCULATING EQUITY CAPITAL.—

11 Each cross-guarantee contract shall describe the manner

12 in which the equity capital of the guaranteed financial

13 group shall be calculated for purposes of the contract.

14 (d) EMERGENCY LIQUIDITY.—Notwithstanding sec15 tion 113(e)(3), the parties to a cross-guarantee contract

16 may include terms relating to the provision of emergency

17 liquidity to a guaranteed party by any direct guarantor

18 without regard to the relative interest in the contract held

19 by any guarantor providing the liquidity.

20 (e) INTERNAL GUARANTEES.—A guaranteed com21 pany under any cross-guarantee contract shall be jointly
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1 and severally liable to the direct guarantors under such

2 contract for any loss incurred by the guarantors in connec3 tion with the cross-guarantee obligations of the guarantors

4 to any other guaranteed company under such contract.

5 (f) DELEGATION OF PERFORMANCE OF GUARAN6 TEED OBLIGATIONS.—

7 (1) IN GENERAL.—No guaranteed company or

8 guaranteed banking office may delegate or assign

9 the performance of a guaranteed obligation unless

10 the person to which the performance is delegated or

11 assigned is a guaranteed company or guaranteed

12 banking office.

13 (2) TRANSFERRING PARTY AND SYNDICATE NO

14 LONGER OBLIGED ON OBLIGATION.—Notwithstand15 ing any Federal or State law, a guaranteed company

16 or guaranteed banking office that was the transferor

17 of the guaranteed obligation, and the cross-guaran18 tee syndicate for such a company or office, shall not

19 be obliged to perform on a guaranteed obligation

20 transferred in compliance with paragraph (1).

21 SEC. 115. REQUIREMENTS APPLICABLE ONLY TO STOP22 LOSS CONTRACTS.

23 (a) OBLIGATIONS GUARANTEED UNDER A STOP24 LOSS CONTRACT.—
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1 (1) OBLIGATIONS REQUIRED TO BE GUARAN2 TEED OBLIGATIONS.—A nondepository guarantor’s

3 cross-guarantee obligations shall be guaranteed obli4 gations under a stop-loss contract.

5 (2) NO OTHER GUARANTEED OBLIGATIONS.—

6 Except for the obligations described in paragraph

7 (1), no obligation of a nondepository guarantor may

8 be a guaranteed obligation.

9 (b) RISK DIVERSIFICATION.—

10 (1) MINIMUM NUMBERS OF DIRECT GUARAN11 TORS.—A direct guarantor under a stop-loss con12 tract may not guarantee more than 2 percent of the

13 guaranteed obligations under such contract.

14 (2) SECOND-TIER GUARANTORS.—The direct

15 guarantors under any stop-loss contract shall have,

16 in the aggregate, no fewer than one hundred and

17 fifty direct guarantors.

18 SEC. 116. ELIGIBILITY AND REQUIREMENTS FOR DIRECT

19 GUARANTORS.

20 (a) ELIGIBILITY.—

21 (1) IN GENERAL.—No person may become a di22 rect guarantor unless such person is a guaranteed

23 company or a nondepository guarantor.

24 (2) NONDEPOSITORY GUARANTOR.—
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1 (A) IN GENERAL.—Subject to subpara2 graphs (B) and (C) of this paragraph and sub3 section (c) of this section, any person may be

4 a nondepository guarantor.

5 (B) INELIGIBILITY OF DEPOSITORY INSTI6 TUTIONS.—

7 (i) IN GENERAL.—No depository insti8 tution, or subsidiary of a depository insti9 tution, may be a nondepository guarantor.

10 (ii) RULE OF CONSTRUCTION FOR

11 FOREIGN BANKS.—Clause (i) shall not be

12 construed as prohibiting a foreign bank

13 which has a branch in the United States

14 from being a nondepository guarantor.

15 (C) INELIGIBILITY OF GOVERNMENT ENTI16 TIES.—

17 (i) IN GENERAL.—No entity which—

18 (I) has direct or indirect taxing

19 authority;

20 (II) is a government sponsored

21 enterprise; or

22 (III) may issue securities in

23 which the holders of the securities are

24 exempt from taxation under State or

25 Federal law,
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1 may be a nondepository guarantor.

2 (ii) RULE OF CONSTRUCTION FOR

3 GOVERNMENT PENSION FUNDS.—Clause

4 (i) shall not be construed as to prohibit

5 any pension fund operated for the benefit

6 of government employees from being a

7 nondepository guarantor.

8 (3) GUARANTEED DEPOSITORY INSTITUTIONS

9 AUTHORIZED TO BE DIRECT GUARANTORS.—Not10 withstanding any other Federal or State law restrict11 ing the powers of depository institutions, a guaran12 teed depository institution may be a direct guarantor

13 under any cross-guarantee or stop-loss contract.

14 (b) DESIGNATED DIRECT GUARANTOR.—

15 (1) ONLY ONE GUARANTEED COMPANY WITHIN

16 A GUARANTEED FINANCIAL GROUP MAY BE A DI17 RECT GUARANTOR.—No guaranteed company shall

18 be a direct guarantor if another guaranteed com19 pany under the same cross-guarantee contract al20 ready is a direct guarantor under any cross-guaran21 tee or stop-loss contract.

22 (2) DESIGNATION OF DIRECT GUARANTOR IN

23 CROSS-GUARANTEE CONTRACT.—In the case of a

24 cross-guarantee contract in which two or more com25 panies are guaranteed under the contract, the con-
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1 tract shall designate which guaranteed company

2 may, in accordance with paragraph (1), be a direct

3 guarantor.

4 (c) FINANCIAL RESOURCE REQUIREMENTS FOR

5 NONDEPOSITORY GUARANTORS.—

6 (1) NET WORTH.—No person may become a

7 nondepository guarantor unless such person has a

8 net worth of at least $100,000,000 at the time such

9 person would, but for this paragraph, become a di10 rect guarantor under a cross-guarantee or stop-loss

11 contract.

12 (2) ASSET REQUIREMENTS.—Only assets main13 tained within the United States and subject to the

14 jurisdiction of a United States court may be taken

15 into account for the purpose of meeting the require16 ments of paragraph (1).

17 (d) RISK DIVERSIFICATION REQUIREMENTS FOR DI18 RECT GUARANTORS.—

19 (1) PROJECTED ANNUAL PREMIUM CAPACITY

20 AND PROJECTED ANNUAL PREMIUM LIMIT.—A per21 son may not become a direct guarantor under a

22 cross-guarantee or stop-loss contract if, upon the

23 contract (but for this paragraph) taking effect—

24 (A) the sum of the estimated annual pre25 mium which the person would receive as a di-
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1 rect guarantor under the contract and the per2 son’s projected annual premium income would

3 exceed such person’s projected annual premium

4 capacity as of—

5 (i) in the case of a contract which

6 would take effect on or before the fifteenth

7 day of any calendar month, the second cal8 endar month preceding such calendar

9 month; or

10 (ii) in the case of a contract which

11 would take effect after the fifteenth day of

12 any calendar month, the end of the cal13 endar month preceding such calendar

14 month; or

15 (B) the estimated annual premium which

16 the person would receive as a direct guarantor

17 under the contract would exceed such person’s

18 projected annual premium limit as of—

19 (i) in the case of a contract which

20 would take effect on or before the fifteenth

21 day of any calendar month, the second cal22 endar month preceding such calendar

23 month; or

24 (ii) in the case of a contract which

25 would take effect after the fifteenth day of
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1 any calendar month, the end of the cal2 endar month preceding such calendar

3 month.

4 (2) CALCULATION OF PROJECTED ANNUAL PRE5 MIUM.—

6 (A) IN GENERAL.—The syndicate agent

7 under any cross-guarantee or stop-loss contract

8 shall determine the projected annual premium

9 earned by any direct guarantor for any calendar

10 month by calculating the amount of such guar11 antor’s share of the premium accrued under the

12 contract during such month and then

13 annualizing such amount.

14 (B) FIRST TWO MONTHS.—During the

15 first two calendar months in which any cross16 guarantee or stop-loss contract is in effect, the

17 syndicate agent shall determine the projected

18 annual premium under the contract for each of

19 these two calendar months by annualizing the

20 premium rate in effect on the date the contract

21 becomes effective.

22 (3) CALCULATION OF THE ESTIMATED ANNUAL

23 PREMIUM FOR THE APPROVED CONTRACT.—

24 (A) IN GENERAL.—For purposes of para25 graph (1), the term ‘‘estimated annual pre-
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1 mium’’ means the annualized premium rate

2 likely to be in effect on the date the contract

3 becomes effective.

4 (B) SYNDICATE AGENT ESTIMATE.—The

5 proposed syndicate agent for the contract shall

6 make a reasonable estimate of the amount in

7 paragraph (1) within five days prior to the date

8 on which the contract is to become effective.

9 (4) CALCULATION OF PROJECTED ANNUAL PRE10 MIUM INCOME.—For purposes of making any deter11 mination under paragraph (1)(A) with respect to a

12 direct guarantor, the term ‘‘projected annual pre13 mium income’’ means the total projected annual pre14 miums from all cross-guarantee and stop-loss con15 tracts under which such guarantor is a direct guar16 antor, other than the contract for which such deter17 mination is being made, as of—

18 (A) in the case of contract which would be19 come effective on or before the fifteenth day of

20 any calendar month, the second calendar month

21 preceding such calendar month; and

22 (B) in the case of a contract which would

23 become effective after the fifteenth day of any

24 calendar month, the calendar month preceding

25 such calendar month.
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1 (5) ADJUSTMENT OF PROJECTED ANNUAL PRE2 MIUM CAPACITY FOR CHANGED CIRCUMSTANCES.—

3 (A) AUTHORIZATION.—The Corporation

4 may issue rules adjusting the projected annual

5 premium capacity below 3 percent if the Cor6 poration determines that the percentage is too

7 high to ensure an adequate capital base for the

8 cross-guarantee system.

9 (B) LIMITS ON ADJUSTMENT.—The Cor10 poration may adjust the projected annual pre11 mium capacity upward if the Corporation has

12 previously adjusted the capacity percentage

13 downward under subparagraph (A), except that

14 the Corporation may not establish a projected

15 annual premium capacity in excess of 3 percent.

16 (e) LIABILITY OF ACQUIRER OF ANY DIRECT GUAR17 ANTOR.—Any person which acquires (as defined in section

18 13(f)(8)(B) of the Federal Deposit Insurance Act) any di19 rect guarantor shall be obligated for all of the cross-guar20 antee obligations of such guarantor under any cross-guar21 antee or stop-loss contract to which such guarantor is a

22 direct guarantor.

23 SEC. 117. PROVISIONS RELATING TO CROSS-GUARANTEE

24 AND STOP-LOSS SYNDICATES.

25 (a) POWERS AND DUTIES OF SYNDICATE AGENTS.—
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1 (1) SYNDICATE AGENT IS AGENT OF DIRECT

2 GUARANTORS.—

3 (A) IN GENERAL.—The syndicate agent

4 under any cross-guarantee or stop-loss contract

5 shall act as an agent of the direct guarantors

6 under such contract.

7 (B) EXCEPTIONS.—Notwithstanding sub8 paragraph (A), the syndicate agent also shall

9 have—

10 (i) a duty to protect the confidential11 ity of any aspect of a guaranteed party’s

12 affairs which the contract specifies shall be

13 protected; and

14 (ii) duties to the Corporation as speci15 fied in this title.

16 (2) POWERS OF SYNDICATE AGENT.—No per17 son under a cross-guarantee or stop-loss contract

18 other than the syndicate agent shall have the follow19 ing powers:

20 (A) MONITOR PERFORMANCE.—Monitor

21 the performance, or contract with a third party

22 to monitor the performance, of any party guar23 anteed under such contract.
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1 (B) COLLECT PREMIUMS.—Collect the pre2 miums due to the direct guarantors under such

3 contract.

4 (3) SYNDICATE AGENT REPORTS SUBMITTED TO

5 THE CENTRAL ELECTRONIC REPOSITORY.—The syn6 dicate agent under any cross-guarantee or stop-loss

7 contract shall submit in electronic form to the

8 central electronic repository by the fifteenth of each

9 calendar month a report—

10 (A) of the equity capital or the net worth,

11 as the case may be, of the guaranteed financial

12 group or nondepository guarantor under the

13 contract as of the end of the prior calendar

14 month; and

15 (B) of the projected annual premium due

16 each direct guarantor, as of the end of the prior

17 calendar month.

18 (4) CONFIRMATION OF GUARANTEE OF SPE19 CIFIC OBLIGATIONS.—

20 (A) IN GENERAL.—The syndicate agent

21 under any cross-guarantee contract shall—

22 (i) determine, at the request of any

23 current or prospective creditor of a guar24 anteed company or guaranteed banking of25 fice under such contract, whether, assum-
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1 ing that the company or office has or will

2 have an obligation to the creditor, such ob3 ligation would be a guaranteed obligation

4 under the contract; and

5 (ii) promptly notify the current or

6 prospective creditor of the agent’s deter7 mination.

8 (B) DETERMINATION BINDING ON SYN9 DICATE.—Any notification of determination

10 under subparagraph (A) shall be binding on the

11 cross-guarantee syndicate.

12 (C) FEE.—A syndicate agent may charge

13 a creditor a fee for making the determination

14 and notifying the creditor under subparagraph

15 (A).

16 (5) AGREEMENT GOVERNING THE RELATION17 SHIP BETWEEN THE SYNDICATE AND SYNDICATE

18 AGENT.—

19 (A) IN GENERAL.—Any agreement between

20 the direct guarantors and the syndicate agent

21 governing the relationship between such parties

22 must be included in the cross-guarantee or

23 stop-loss contract.

24 (B) LIMITS ON SIDE CONTRACTS.—No di25 rect guarantor or group of director guarantors
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1 under a cross-guarantee or stop-loss contract

2 may enter into any other contract or binding

3 agreement pertaining to the contract with the

4 syndicate agent under such cross-guarantee or

5 stop-loss contract.

6 (6) AUTHORIZATION OF INFORMATION SHARING

7 AMONG SYNDICATE AGENTS.—The Corporation may

8 prescribe regulations allowing syndicate agents to

9 share information if the Corporation finds that the

10 benefits of such information sharing outweigh the

11 anticompetitive risks of such sharing.

12 (b) EXEMPTION FROM SECURITIES LAWS.—

13 (1) IN GENERAL.—Notwithstanding Federal or

14 State law, interests in any cross-guarantee or stop15 loss syndicate are not securities for any purpose.

16 (2) ORGANIZING SYNDICATES.—Any person or

17 group of persons may organize and market the risk

18 of loss represented by the participation of any per19 son as a direct guarantor under any cross-guarantee

20 or stop-loss contract.

21 (c) TAXATION OF SYNDICATES.—

22 (1) TREATED AS PARTNERSHIP.—Any cross23 guarantee or stop-loss syndicate shall be treated as

24 a partnership for purposes of the Internal Revenue

25 Code of 1986.
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1 (2) CONSOLIDATED RETURNS BY SYNDICATE

2 AGENT.—A syndicate agent may file an annual in3 formation return with respect to all syndicates for

4 which such agent is an agent, and all distributions

5 with respect to such syndicates, on a consolidated

6 basis.

7 (3) TAX EXEMPT STATUS.—Any syndicate

8 under any cross-guarantee or stop-loss contract any

9 income or gross receipts (including premiums), and

10 any activity of the syndicate shall be exempt from all

11 taxation imposed by any State, county, municipality,

12 or local taxing authority.

13 (d) REPLACEMENT OF SYNDICATE AGENTS.—

14 (1) IN GENERAL.—The cross-guarantee or stop15 loss syndicate under any cross-guarantee or stop-loss

16 contract may at any time and without cause replace

17 the syndicate agent under such contract, subject to

18 the guaranteed financial group or nondepository

19 guarantor’s approval of the new syndicate agent, by

20 amending the contract and obtaining the Corpora21 tion’s approval of the new syndicate agent under sec22 tion 123.

23 (2) NO EFFECT ON CONTRACT.—The replace24 ment of a syndicate agent by the direct guarantors
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1 in accordance with paragraph (1) shall not affect the

2 continuing existence or enforceability of the contract.

3 (3) WITHDRAWAL OF SYNDICATE AGENT.—

4 (A) IMMEDIATE SUBMISSION OF AMENDED

5 CONTRACT WITH NEW SYNDICATE AGENT.—If a

6 syndicate agent should resign or otherwise cease

7 providing required services under a cross-guar8 antee or stop-loss contract, whether wrongfully,

9 as allowed under such contract, or for any other

10 reason, the cross-guarantee or stop-loss syn11 dicate shall immediately submit an amendment

12 to the contract, with a successor syndicate

13 agent named in the amendment, to the Cor14 poration for approval.

15 (B) INTERIM CGRC APPOINTMENT.—The

16 Corporation may appoint a successor syndicate

17 agent to serve until a cross-guarantee or stop18 loss syndicate has complied with the require19 ments under subparagraph (A).

20 (e) CAUSE OF ACTION BY THE SYNDICATE AGAINST

21 THE SYNDICATE AGENT.—

22 (1) STANDARD OF LIABILITY.—Unless other23 wise agreed, a cross-guarantee or stop-loss syndicate

24 shall have a cause of action against the syndicate

25 agent for losses accrued by members of the syn-
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1 dicate under a cross-guarantee or stop-loss contract

2 only if the syndicate agent consciously disregarded

3 substantial and unjustifiable risks being taken by

4 the guaranteed party under the contract.

5 (2) CAUSE OF ACTION BELONGS TO THE SYN6 DICATE.—An action against a syndicate agent under

7 paragraph (1) may be brought solely by the syn8 dicate as a whole and no individual member of the

9 syndicate shall have a cause of action against the

10 syndicate agent.

11 (f) CAUSES OF ACTION AGAINST A SYNDICATE OR

12 SYNDICATE AGENT.—

13 (1) PROCEDURAL RULES GOVERNING CAUSES

14 OF ACTION AGAINST A SYNDICATE.—

15 (A) IN GENERAL.—A cross-guarantee or

16 stop-loss syndicate shall be sued as an entity in

17 any cause of action based on—

18 (i) the syndicate’s breach of a cross19 guarantee or stop-loss contract;

20 (ii) the syndicate’s vicarious liability

21 for the acts or omissions of the syndicate

22 agent under the contract; or

23 (iii) an action taken by a cross-guar24 antee or stop-loss syndicate after voting

25 approval under section 113(n).
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1 (B) SEVERAL LIABILITY.—In the case of

2 any cause of action under subparagraph (A),

3 the liability of any direct guarantor shall be

4 several and proportionate to such guarantor’s

5 interest in the cross-guarantee or stop-loss syn6 dicate.

7 (C) SERVICE OF PROCESS.—For purposes

8 of any action described under subparagraph

9 (A)—

10 (i) the syndicate agent shall be the

11 agent for all direct guarantors for service

12 of process for actions brought against the

13 syndicate; and

14 (ii) service of process upon a syn15 dicate agent shall serve as the exclusive

16 manner of service of process upon any di17 rect guarantor under the contract.

18 (2) LIMITS ON LIABILITY.—A cross-guarantee

19 syndicate, stop-loss syndicate, direct guarantor, or

20 syndicate agent shall not be liable under any Federal

21 or State law to any person on a claim which is based

22 on—

23 (A) any change or inaccuracy in the pre24 mium rate under a cross-guarantee or stop-loss

25 contract;
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1 (B) the inadequacy of a syndicate agent’s

2 monitoring of a guaranteed party; or

3 (C) the enforcement or nonenforcement of

4 any provision under a cross-guarantee or stop5 loss contract.

6 (3) LIABILITY FOR ACTS OF GUARANTEED

7 PARTY.—A cross-guarantee syndicate, stop-loss syn8 dicate, direct guarantor, or syndicate agent shall not

9 be liable for an alleged tortious conduct, breach of

10 contract, or violation of statutory obligation by an

11 guaranteed party under the contract.

12 (4) BAR ON PUNITIVE DAMAGES.—No punitive

13 damages shall be allowed in any action against a

14 cross-guarantee syndicate, stop-loss syndicate, direct

15 guarantor, or syndicate agent in the syndicate’s,

16 guarantor’s, or agent’s capacity as such under a

17 cross-guarantee or stop-loss contract.

18 (g) BAR ON CERTAIN CAUSES OF ACTION BY SYN19 DICATES AND SYNDICATE AGENTS.—A cross-guarantee

20 syndicate, stop-loss syndicate, or syndicate agent under a

21 cross-guarantee or stop-loss contract shall have no cause

22 of action against any accountant, attorney, auditor, ap23 praiser, or other person based on any such person’s activi24 ties relating to the guaranteed party under the contract
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1 unless the person knowingly and materially misled the

2 syndicate or syndicate agent.

3 (h) RELATIONSHIP AMONG SYNDICATE MEMBERS.—

4 (1) SYNDICATE MEMBERS NOT AGENTS FOR

5 EACH OTHER.—Subject to paragraph (2), no direct

6 guarantor in a cross-guarantee or stop-loss syndicate

7 shall be liable under agency law for the actions of

8 any other direct guarantor in the syndicate.

9 (2) SYNDICATE MAY VOTE TO APPOINT A MEM10 BER AS AGENT FOR THE SYNDICATE.—A cross-guar11 antee or stop-loss syndicate may, consistent with

12 section 113(n), vote to appoint one or more direct

13 guarantors under the contract as an agent for the

14 syndicate.

15 (i) REGISTRATION OF SYNDICATES.—

16 (1) IN GENERAL.—The Corporation shall pre17 scribe regulations providing for the registering of

18 cross-guarantee and stop-loss syndicates for the pur19 pose solely of allowing persons a reference by which

20 to identify individual syndicates.

21 (2) REGISTRATION UPON SUBMISSION OF THE

22 CONTROL FOR APPROVAL.—The regulations under

23 paragraph (1) shall provide for the automatic reg24 istration of a cross-guarantee or stop-loss syndicate
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1 upon submission for approval of a cross-guarantee

2 or stop-loss contract under section 123.

3 (3) DISTINGUISHING AMONG SYNDICATES.—

4 The regulations under paragraph (1) shall reference

5 a cross-guarantee or a stop-loss syndicate as a

6 unique syndicate with permanent identification.

7 SEC. 118. ASSUMPTION OF CONTROL OF A GUARANTEED

8 COMPANY BY A CROSS-GUARANTEE SYN9 DICATE.

10 (a) RIGHT OF CROSS-GUARANTEE SYNDICATE TO

11 ASSUME CONTROL.—A cross-guarantee syndicate under

12 any cross-guarantee contract shall have the right to as13 sume control of a guaranteed company under the contract

14 under the following circumstances:

15 (1) CANCELLATION.—Immediately after a can16 cellation of the contract by the syndicate or the

17 guaranteed financial group has become effective un18 less a successor cross-guarantee contract has taken

19 effect.

20 (2) EXPIRATION.—Immediately after the expi21 ration of the cross-guarantee contract unless a suc22 cessor cross-guarantee contract has taken effect.

23 (b) RIGHT OF GUARANTEED PARTY TO SEEK TO

24 STAY ASSUMPTION OF CONTROL.—
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1 (1) IN GENERAL.—A guaranteed company may

2 file an action requesting a stay of any assumption

3 of control by a cross-guarantee syndicate.

4 (2) TIME LIMIT FOR OBJECTING TO ASSUMP5 TION OF CONTROL.—

6 (A) IN GENERAL.—Any action under para7 graph (1) shall be filed either within thirty days

8 after the notice of cancellation under section

9 113(h)(1) is given or more than sixty days prior

10 to the expiration of the contract, whichever the

11 case may be.

12 (B) EXCEPTION IF SUCCESSOR CONTRACT

13 IS OBTAINED.—Subparagraph (A) shall not

14 apply to a guaranteed company which has, sub15 sequent to the notice of cancellation or the date

16 sixty days prior to expiration, become guaran17 teed under a successor cross-guarantee con18 tract.

19 (3) EXPEDITED REVIEW.—The United States

20 district court with jurisdiction over the cross-guaran21 tee contract shall provide expedited review of any ac22 tion under paragraph (1).

23 (4) BASIS OF DETERMINATION.—In any action

24 under paragraph (1), the court shall stay the as25 sumption of control by a cross-guarantee syndicate
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1 only if the conditions for assuming control under

2 subsection (a) have not been met.

3 (c) RIGHTS OF CROSS-GUARANTEE SYNDICATE TO

4 ENJOIN VIOLATIONS OF THE CONTRACT UNTIL ASSUM5 ING CONTROL.—

6 (1) INJUNCTIVE REMEDIES.—Upon giving no7 tice of cancellation of the cross-guarantee contract

8 under section 113(h)(1) or the expiration of the con9 tract, the cross-guarantee syndicate shall be granted

10 injunctive relief to enforce any restrictions imposed

11 under the contract.

12 (2) APPOINTMENT OF A CONSERVATOR.—

13 (A) IN GENERAL.—Upon giving notice of

14 cancellation of the cross-guarantee contract

15 under section 113(h)(1) or the expiration of the

16 contract, the cross-guarantee syndicate may

17 seek the appointment of a conservator to serve

18 until the syndicate can assume control under

19 subsection (a) and a court may appoint such a

20 conservator, but the court may appoint a con21 servator only if the remedies under paragraph

22 (1) are not adequate to protect the interests of

23 the cross-guarantee syndicate.

24 (B) COURT SHALL APPOINT A CONSERVA25 TOR FROM A LIST SUBMITTED BY CGRC.—The
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1 court shall appoint a conservator under sub2 paragraph (A) only from a list supplied by the

3 Corporation to the court of five disinterested

4 persons who are qualified and willing to serve

5 as the conservator in the case, and no such per6 son may be a regulatory agency or an employee

7 of the regulatory agency.

8 (C) GUARANTEED COMPANY CAN STILL

9 OBTAIN A SUCCESSOR CONTRACT.—

10 (i) IN GENERAL.—The appointment of

11 a conservator under this paragraph shall

12 not prevent a guaranteed company from

13 obtaining a successor cross-guarantee con14 tract.

15 (ii) DISCHARGE OF CONSERVATOR.—

16 If a guaranteed company obtains a succes17 sor cross-guarantee contract, the conserva18 tor appointed under this contract shall be

19 discharged when the successor contract has

20 become effective according to the successor

21 contract’s terms.

22 (3) EXPEDITED RELIEF.—The United States

23 district court with jurisdiction over the cross-guaran24 tee contract shall provide the relief under para25 graphs (1) and (2) on an expedited basis.
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1 (d) POWERS AND DUTIES OF A CROSS-GUARANTEE

2 SYNDICATE AFTER ASSUMPTION OF CONTROL.—

3 (1) GENERAL POWERS.—

4 (A) OPERATE THE COMPANY.—A cross5 guarantee syndicate which assumes control of a

6 guaranteed company under subsection (a) shall

7 have and may exercise all the powers of the

8 members or shareholders, the directors, and the

9 officers of the company and shall be entitled

10 to—

11 (i) conduct all business of the guaran12 teed company;

13 (ii) take over the books, records, and

14 assets of the guaranteed company;

15 (iii) collect all obligations and money

16 due the company;

17 (iv) perform in the name of the com18 pany all functions of the company consist19 ent with the appointment of the syndicate

20 as the successor to the managers and di21 rectors of the company and the duties of

22 the syndicate with respect to the company;

23 and

24 (v) preserve and conserve the assets

25 and property of such company.
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1 (B) DISPOSITION OF COMPANY.—The

2 cross-guarantee syndicate which assumes con3 trol of a guaranteed company under subsection

4 (a) may—

5 (i) merge the guaranteed company

6 with another guaranteed company;

7 (ii) sell or otherwise dispose of the

8 company; or

9 (iii) place the company in liquidation

10 and proceed to realize upon the assets of

11 the company.

12 (2) DUTIES.—

13 (A) PAYMENT OF OBLIGATIONS.—

14 (i) IN GENERAL.—If a cross-guaran15 tee syndicate assumes control of a guaran16 teed company, the guaranteed company re17 mains liable for all of the company’s obli18 gations without regard to such assumption

19 of control.

20 (ii) ASSUMPTION OF CONTROL DOES

21 NOT MAKE SYNDICATE LIABLE FOR

22 UNGUARANTEED OBLIGATIONS.—Nothing

23 in this subparagraph shall be construed to

24 the effect that the act of assuming control

25 of a guaranteed company makes members
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1 of the cross-guarantee syndicate liable for

2 the obligations of the guaranteed company

3 which are not guaranteed obligations.

4 (B) DISTRIBUTION OF ASSETS.—In any

5 case in which funds remain from the liquida6 tion, sale, or other disposition of the assets of

7 any guaranteed company after all depositors,

8 creditors, other claimants, and administrative

9 expenses of the syndicate have been paid or oth10 erwise resolved, the syndicate shall promptly

11 distribute such funds to the company’s share12 holders or members, as the case may be.

13 (C) FIDUCIARY DUTY.—A cross-guarantee

14 syndicate which assumes control of a guaran15 teed company in accordance with subsection (a)

16 shall succeed to the same fiduciary responsibil17 ity as the directors of such company had under

18 applicable law.

19 (D) NOTICE TO CGRC.—If a cross-guaran20 tee syndicate assumes control of a guaranteed

21 company under subsection (a), the syndicate

22 shall on the same day notify the Corporation

23 that it has assumed control.

24 (3) SPECIAL FDIC POWERS DO NOT APPLY.—

25 The rights and obligations of a guaranteed company
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1 that a cross-guarantee syndicate has assumed con2 trol of under this section shall not be limited by any

3 statutory law or common law which grants, or may

4 be construed as granting, special rights to the Fed5 eral Deposit Insurance Corporation to repudiate con6 tracts of an insured depository institution for which

7 the Federal Deposit Insurance Corporation has been

8 appointed a conservator or receiver.

9 (e) NO AUTHORITY FOR CGRC, ANY FEDERAL

10 BANKING AGENCY, OR STATE BANK SUPERVISOR TO

11 STAY ASSUMPTION OF CONTROL.—Neither the Corpora12 tion nor any Federal banking agency, State bank super13 visor, or any other Federal or State agency may take any

14 action to prevent the assumption of control of a guaran15 teed company under subsection (a).

16 (f) ASSUMPTION OF CONTROL NOT AN EVENT OF

17 DEFAULT OR GROUNDS FOR ACCELERATION OF OBLIGA18 TIONS.—The assumption of control of a guaranteed com19 pany under subsection (a) shall not be an event of default

20 by the guaranteed company or grounds for acceleration

21 of any guaranteed obligation under any agreement to

22 which the guaranteed company is a party.

23 (g) SECOND-TIER GUARANTORS CANNOT DISPUTE

24 LOSSES.—A direct guarantor of any direct guarantor

25 which is a member of a cross-guarantee syndicate which
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1 assumes control of a guaranteed party under subsection

2 (a) may not bring a cause of action against the cross-guar3 antee syndicate based on damage arising out of the syn4 dicate’s decision to assume control or failure to minimize

5 losses under the cross-guarantee contract.

6 SEC. 119. JUDICIAL REVIEW OF CONTRACTS AND RELATED

7 ACTIONS.

8 (a) JURISDICTION OF FEDERAL COURTS.—

9 (1) IN GENERAL.—For purposes of section

10 1331 of title 28, United States Code, any action

11 arising under any cross-guarantee or stop-loss con12 tract shall be deemed to arise under Federal law.

13 (2) REMOVAL.—Any action arising under any

14 cross-guarantee or stop-loss contract which is

15 brought in a State court may be removed by the de16 fendant or the defendants to a district court of the

17 United States.

18 (3) DESIGNATION OF COURT IN CONTRACT.—

19 Each cross-guarantee and stop-loss contract shall

20 designate the district court of the United States

21 which shall have original jurisdiction over any action

22 described under section 117(f)(A)(i).

23 (b) THIRD-PARTY BENEFICIARY ACTIONS.—

24 (1) RESTRICTIONS ON THIRD-PARTY BENE25 FICIARY ACTIONS.—Notwithstanding any State law,
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1 no creditor of any guaranteed party under any cross2 guarantee contract may bring an action against the

3 cross-guarantee syndicate under such contract for

4 failure to perform any cross-guarantee obligation

5 under the contract without first having obtained a

6 judgment against the guaranteed party for failure to

7 perform such obligation, unless the direct guarantors

8 have assumed control of the guaranteed party under

9 section 118(a).

10 (2) INTERVENTION BY SYNDICATE.—

11 (A) IN GENERAL.—A cross-guarantee or

12 stop-loss syndicate under any cross-guarantee

13 or stop-loss contract may intervene in any ac14 tion brought by one or more creditors against

15 a guaranteed party under the contract if any

16 judgment against the guaranteed party in such

17 action could affect the potential liabilities of the

18 direct guarantors under the contract.

19 (B) RIGHT OF INTERVENTION BELONGS

20 TO THE SYNDICATE AS A WHOLE.—Any inter21 vention under subparagraph (A) shall be exer22 cised by a cross-guarantee or stop-loss syn23 dicate as a whole and no individual member of

24 a cross-guarantee or stop-loss syndicate shall
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1 have a right to intervene in any action de2 scribed in subparagraph (A).

3 (c) APPLICABLE STATE LAW.—

4 (1) STATE CONTRACT LAW AS INTERSTITIAL

5 LAW.—Unless otherwise indicated in this title, appli6 cable State law shall apply under this title to any

7 cross-guarantee or stop-loss contract.

8 (2) PARTIES’ CHOICE OF STATE LAW.—Each

9 cross-guarantee and stop-loss contract shall des10 ignate the State law that shall be applicable under

11 paragraph (1).

12 Subtitle C—Powers and Duties of the CGRC

13 CHAPTER 1—CROSS-GUARANTEE PROCESS

14 SEC. 121. THE CROSS-GUARANTEE REGULATION CORPORA15 TION.

16 (a) CREATION.—

17 (1) IN GENERAL.—There is hereby established

18 as a body corporate the ‘‘Cross Guarantee Regula19 tion Corporation’’ which shall have succession until

20 dissolved by Act of Congress.

21 (2) CORPORATION NOT AN AGENCY.—The Cor22 poration shall not be an agency or establishment of

23 the United States Government.
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1 (3) HEADQUARTERED IN THE DISTRICT OF CO2 LUMBIA.—The Corporation shall maintain its prin3 cipal office in the District of Columbia.

4 (b) POWERS.—In addition to any powers granted to

5 the Corporation elsewhere in this title, the Corporation

6 shall have, consistent with this title, the power—

7 (1) to sue and be sued, complain and defend, in

8 its corporate name and through its own counsel, in

9 any State, Federal, or other court;

10 (2) to adopt, alter, and use a corporate seal,

11 which shall be judicially noticed;

12 (3) to adopt, amend, and repeal, by its board

13 of directors, such bylaws as may be necessary or ap14 propriate to carry out the purposes of this title, in15 cluding bylaws relating to—

16 (A) the conduct of its business; and

17 (B) the indemnity of its directors, officers,

18 and employees for liabilities and expenses actu19 ally and reasonably incurred by any such person

20 in connection with the defense or settlement of

21 an action or suit if such person acted in good

22 faith and in a manner reasonably believed to be

23 consistent with the purposes of this chapter.
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1 (4) to adopt, amend, and repeal, by its board

2 of directors, such rules as authorized under sub3 section (e)(2) of this section;

4 (5) to conduct business (including the carrying

5 on and maintenance of offices) and to exercise all

6 other rights and powers granted to it by this chapter

7 in any State or other jurisdiction without regard to

8 any qualification, licensing, or other statute in such

9 State or other jurisdiction;

10 (6) to lease, purchase, accept gifts or donations

11 of or otherwise acquire, to own, hold, improve, use,

12 or otherwise deal in or with, and to sell, convey,

13 mortgage, pledge, lease, exchange or otherwise dis14 pose of, any property, real, personal or mixed, or

15 any interest therein, wherever situated;

16 (7) subject to subsection (c), to hire such offi17 cers, attorneys, employees, and agents as may be re18 quired, to determine their qualifications, to define

19 their duties, to fix their salaries, require bonds for

20 them and fix the penalty thereof; and

21 (8) to enter into contracts, to execute instru22 ments, to incur liabilities, and to do any and all

23 other acts and things as may be necessary or inci24 dental to the conduct of its business and the exercise
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1 of all other rights and powers granted to the Cor2 poration under this title.

3 (c) BOARD OF DIRECTORS.—

4 (1) FUNCTIONS.—The Corporation shall have a

5 board of directors which, subject to the provisions of

6 this title, shall determine the policies which shall

7 govern the operations of the Corporation.

8 (2) NUMBER AND APPOINTMENT.—The board

9 of directors shall consist of seven persons as follows:

10 (A) One director shall be appointed by the

11 Secretary of the Treasury from among the offi12 cers of the Department of Treasury and shall

13 be removable by the Secretary without cause at

14 any time.

15 (B) Six directors shall be appointed by the

16 President, by and with the advice and consent

17 of the Senate, as follows—

18 (i) three such directors shall be se19 lected from among senior officers of com20 panies that are or are likely to be guaran21 teed depository institutions: Provided, That

22 the directors are not from the same geo23 graphical area and represent different as24 pects of the industry;
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1 (ii) one such director shall be selected

2 from among senior officers of companies

3 that are likely to be syndicate agents; and

4 (iii) two such directors shall be se5 lected from the general public from among

6 persons who are not either regulatory offi7 cials nor associated with a guaranteed de8 pository institution, syndicate agent, or

9 nondepository guarantor and have not been

10 such an official or had any such associa11 tion for the five years preceding appoint12 ment.

13 (3) CHAIRMAN AND VICE CHAIRMAN.—The

14 President shall designate a chairman and vice chair15 man from among those directors appointed under

16 paragraph (2)(B)(iii) of this subsection.

17 (4) TERMS.—

18 (A) FOUR-YEAR TERMS.—Except as pro19 vided under subparagraphs (B) and (C), each

20 director shall be appointed for a term of four

21 years.

22 (B) TRANSITION RULES.—

23 (i) STAGGERED TERMS.—Of the direc24 tors first appointed under paragraph

25 (2)(B)—
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1 (I) one shall hold office for a

2 term expiring on December 31 of the

3 first full calendar year after passage

4 of this Act;

5 (II) two shall hold office for a

6 term expiring on December 31 of the

7 second full calendar year after pas8 sage of this Act;

9 (III) one shall hold office for a

10 term expiring on December 31 of the

11 third full calendar year after passage

12 of this Act; and

13 (IV) two shall hold office for a

14 term expiring on December 31 of the

15 fourth full calendar year after passage

16 of this Act.

17 (ii) TIMING OF PARTICULAR DIREC18 TOR’S TERM.—

19 (I) INDUSTRY APPOINTEES’

20 TERMS WILL END IN DIFFERENT

21 YEARS.—One of the directors ap22 pointed under each of the clauses

23 (i)(I), (II), (III), (IV) shall consist of

24 the four directors appointed under

25 paragraphs (2)(B) (i) and (ii).
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1 (II) APPOINTEES FROM THE

2 GENERAL PUBLIC.—One director ap3 pointed under both clause (i) (II) and

4 (IV) shall consist of one of the two di5 rectors appointed under paragraph

6 (2)(B)(iii).

7 (iii) TREASURY DIRECTOR MUST BE

8 APPOINTED SOON AFTER ENACTMENT.—

9 The Secretary of the Treasury shall ap10 point the director designated under para11 graph (2)(A) within thirty days after en12 actment of this Act.

13 (C) VACANCIES.—

14 (i) APPOINTMENT IN SAME MAN15 NER.—A vacancy on the board of directors

16 shall be filled in the same manner as the

17 original appointment was made.

18 (ii) APPOINTMENT ONLY FOR THE RE19 MAINDER OF THE TERM.—Any director ap20 pointed under clause (i) shall be appointed

21 only for the remainder of the term of his

22 predecessor.

23 (D) REMAINING A DIRECTOR UNTIL A SUC24 CESSOR HAS TAKEN OFFICE.—A director may
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1 serve after the expiration of his term until his

2 successor has taken office.

3 (5) COMPENSATION.—

4 (A) CHAIRMAN AND VICE CHAIRMAN.—The

5 compensation of the chairman and vice chair6 man shall be as provided in the bylaws of the

7 Corporation.

8 (B) OTHER DIRECTORS.—The remaining

9 five directors shall serve without compensation

10 except that they are entitled to receive reim11 bursement for expenses incurred in connection

12 with official business of the Corporation.

13 (6) OFFICERS AND EMPLOYEES AS MEMBERS

14 OF THE BOARD OF DIRECTORS.—No officer, attor15 ney, employee, or agent of the Corporation shall be

16 a member of the board of directors.

17 (7) BOARD OF DIRECTORS TO DETERMINE OF18 FICERS.—The officers of the Corporation shall be

19 employed at the will of the board of directors.

20 (8) DEFINITION OF OFFICER.—For purposes of

21 this subsection, the term ‘‘officer’’ includes any chief

22 executive officer, president, senior executive, or other

23 official with managerial or executive authority within

24 the Corporation.

25 (d) MEETINGS OF THE BOARD OF DIRECTORS.—
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1 (1) TIMING OF MEETINGS.—The board of direc2 tors shall meet at the call of its Chairman, or as

3 otherwise provided by the bylaws of the Corporation,

4 except that the director appointed under subsection

5 (c)(2)(A) may call a meeting until at least three

6 other directors have taken office.

7 (2) QUORUM TRANSITION RULE.—The bylaws

8 shall determine how many members constitute a

9 quorum when the board of directors meet, except

10 that the director appointed under subsection

11 (c)(2)(A) shall alone constitute a quorum until at

12 least three other directors have taken office.

13 (e) BYLAWS AND RULEMAKING.—

14 (1) BYLAWS.—

15 (A) PROCEDURE.—The board of directors

16 shall file with the Secretary of the Treasury a

17 copy of the proposed initial bylaws of the Cor18 poration and any proposed bylaw changes ac19 companied by a concise general statement of

20 the basis and purpose for such changes.

21 (B) CHANGES BECOME EFFECTIVE UNLESS

22 THE TREASURY DEPARTMENT OBJECTS.—Any

23 bylaws submissions under subparagraph (A)

24 shall become effective thirty days after the fil-
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1 ing of such changes with the Secretary of the

2 Treasury, unless—

3 (i) the Secretary of the Treasury, by

4 notice to the Corporation setting forth the

5 reasons therefor, disapproves of such pro6 posed bylaw changes as being contrary to

7 the purposes of this title; or

8 (ii) the Secretary of Treasury decides,

9 at its own discretion, that public comment

10 shall be obtained, in which case it may,

11 after notifying the Corporation in writing

12 of such finding, require that the proce13 dures set forth in paragraph (2) be fol14 lowed with respect to such a bylaw change.

15 (2) RULEMAKING.—

16 (A) RULEMAKING AUTHORITY.—The Cor17 poration shall have the power to issue a rule

18 only if—

19 (i) the power to issue the rule is ex20 plicitly provided for in this title; or

21 (ii) the Corporation demonstrates

22 that)

23 (I) the rule implements statutory

24 language in this title; and
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1 (II) improves the efficiency of the

2 cross-guarantee system.

3 (B) SUBSTANTIVE BASIS FOR RULES.—

4 Any proposed rule or proposed rule change shall

5 be approved only if there is substantial evidence

6 supporting the findings on which the proposed

7 rule is based.

8 (C) RULEMAKING PROCEDURES.—

9 (i) IN GENERAL.—The Corporation

10 shall use the informal rulemaking proce11 dures under the Administrative Procedures

12 Act (5 U.S.C. 553) in prescribing rules

13 under this paragraph.

14 (ii) RIGHT TO A HEARING.—In addi15 tion to the procedures under clause (i), any

16 person may during the comment period re17 quest a hearing and such hearing, if re18 quested, shall take place within thirty days

19 after the end of the comment period.

20 (iii) SUBMITTING RULES TO TREAS21 URY.—After having completed the proce22 dures under clauses (i) and (ii), the Cor23 poration shall file with the Secretary of the

24 Treasury a copy of the proposed rules.
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1 (iv) TREASURY AUTHORITY TO RE2 JECT RULES.—Any proposed rules or rule

3 changes submitted under clause (iii) shall

4 become effective thirty days after the filing

5 of such proposed rules or rule changes with

6 the Secretary of the Treasury, unless the

7 Secretary of the Treasury, by notice to the

8 Corporation setting forth the reasons

9 therefor, disapproves of such proposed

10 rules or rule changes as being contrary to

11 the purposes of this title.

12 (D) JUDICIAL REVIEW.—

13 (i) Standing.—Any person suffering a

14 legal wrong, or adversely affected or ag15 grieved within the meaning of this title, by

16 the rules issued under this paragraph is

17 entitled to judicial review thereof.

18 (ii) JURISDICTION.—The United

19 States Court of Appeals for the District of

20 Columbia shall have exclusive original ju21 risdiction over any action under clause (i).

22 (iii) FINALITY.—A rule must be final

23 to be reviewable under this subparagraph.

24 (E) INITIAL DEADLINE.—For any rule cov25 ered by subparagraph (A)(i), the Corporation
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1 shall issue a final rule within one year after

2 passage of this Act.

3 (f) FUNDING.—

4 (1) INITIAL BORROWING.—

5 (A) BIF FINANCING.—The Corporation

6 shall have the power to borrow up to

7 $20,000,000 from the Bank Insurance Fund.

8 (B) USE OF SUCH FINANCING.—The Cor9 poration shall use any amount borrowed under

10 subparagraph (A) to establish the central elec11 tronic repository, pay initial salaries and other

12 operating expenses, buy equipment, develop

13 computer software, and otherwise begin oper14 ations.

15 (C) REPAYMENT.—The Corporation shall

16 repay any borrowing under subparagraph (A)

17 within five years after the cross-guarantee acti18 vation date from income obtained under para19 graph (2).

20 (D) INTEREST ON LOAN.—

21 (i) TIMING OF PAYMENTS.—No prin22 cipal or interest payments on the loan de23 scribed in subparagraph (A) shall be due

24 prior to one year after the cross-guarantee

25 activation date.
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1 (ii) INTEREST RATE.—The interest

2 rate on the borrowing under this para3 graph shall be equal to .25 percent plus

4 the average annual percentage yield on

5 three-month bills issued by the Secretary

6 of the Treasury under section 3104(a) of

7 title 31, United States Code.

8 (2) FINANCING FROM OPERATIONS.—

9 (A) SELF-SUPPORTING.—The Corporation

10 shall repay the loan under paragraph (1) and

11 pay for its ongoing operating expenses by as12 sessing fees as authorized under subparagraph

13 (B) and collecting penalties as authorized under

14 this title and shall not, subject to paragraph

15 (1), receive any financing or operating subsidies

16 from the United States Treasury.

17 (B) FEES.—The Corporation may assess a

18 reasonable fee upon any party which—

19 (i) submits a cross-guarantee, stop20 loss, or group cross-guarantee contract, or

21 amendment thereto, for approval;

22 (ii) requests use of any service pro23 vided by the central electronic repository;

24 or
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1 (iii) requests a certification under sec2 tion 124(b).

3 (g) MISCELLANEOUS PROVISIONS.—

4 (1) INSPECTION OF REPORTS.—

5 (A) IN GENERAL.—Any notice, report, or

6 other document filed with the Corporation pur7 suant to this title, other than financial state8 ments filed by nondepository guarantors pursu9 ant to section 117(a)(3)(A), shall be available

10 for public inspection unless the Corporation or

11 the Secretary of Treasury determines that dis12 closure thereof is not in the public interest.

13 (B) CONGRESSIONAL ACCESS.—Nothing

14 under subparagraph (A) shall act to deny docu15 ments or information to the Congress of the

16 United States or to the committees of either

17 House having jurisdiction over depository insti18 tutions and related matters under the rules of

19 each body.

20 (C) TREASURY ACCESS TO THE CORPORA21 TION’S DOCUMENTS.—The Corporation shall

22 provide the Secretary of the Treasury with any

23 document or information which the Secretary in

24 his or her discretion requests.
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1 (2) SUITS AGAINST THE CORPORATION AND ITS

2 OFFICERS.—

3 (A) WAIVER OF SOVEREIGN IMMUNITY.—

4 The Corporation waives sovereign immunity to

5 the same extent provided for under the Admin6 istrative Procedures Act (5 U.S.C. 702).

7 (B) SUITS FOR MONEY DAMAGES.—Nei8 ther the Corporation nor any of the Corpora9 tion’s directors, officers, attorneys, agents, or

10 employees shall have any liability to any person

11 for any action taken or not taken under or in

12 connection with any matter contemplated by

13 this title, if the act was taken or not taken in

14 good faith or there were reasonable grounds for

15 taking or not taking the action.

16 (3) EXEMPTION FROM TAXATION.—The Cor17 poration, its property, its franchise, capital, reserves,

18 surplus, and its income, shall be exempt from all

19 taxation now or hereafter imposed by the United

20 States or by any State or local taxing authority, ex21 cept that any real property or tangible personal

22 property (other than cash and securities) of the Cor23 poration shall be subject to State and local taxation

24 to the same extent according to its value as other

25 real and tangible personal property is taxed.
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1 (4) FISCAL YEAR.—The fiscal year of the Cor2 poration shall be the calendar year.

3 SEC. 122. REGULATION OF THE CROSS-GUARANTEE PROC4 ESS.

5 (a) CROSS-GUARANTEE REGULATION CORPORATION

6 ENFORCEMENT AUTHORITY.—

7 (1) IN GENERAL.—Subject to section 126, the

8 Corporation shall have exclusive authority to enforce

9 compliance with provisions of this title.

10 (2) ENFORCEMENT.—The Corporation shall

11 have the powers provided in subsections (b), (c), (d),

12 (h), (l), and (n) of section 8 of the Federal Deposit

13 Insurance Act and paragraph (1) and each subpara14 graph, other than subparagraphs (B) and (C), of

15 paragraph (2) of subsection (i) of such section in en16 forcing this title with respect to any syndicate agent

17 and to any direct guarantor, but only with respect

18 to any violation of any requirements under this title.

19 (b) LIMITATION ON STATE JURISDICTION.—

20 (1) IN GENERAL.—Notwithstanding any provi21 sion of State law, no State may exercise authority

22 over any party to any cross-guarantee or stop-loss

23 contract with respect to—

24 (A) whether such party may be a party to

25 a cross-guarantee or stop-loss contract; and
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1 (B) the rights, duties, privileges, or obliga2 tions of such party under the contract or pursu3 ant to this title.

4 (2) RULE OF CONSTRUCTION.—Paragraph (1)

5 shall not be construed as affecting the authority of

6 any State to determine the powers and regulate the

7 activities of State depository institutions.

8 SEC. 123. APPROVAL PROCESS FOR CROSS-GUARANTEE,

9 STOP-LOSS, AND GROUP CROSS-GUARANTEE

10 CONTRACTS.

11 (a) EXPEDITED APPROVAL OF CONTRACTS AND CON12 TRACT AMENDMENTS.—

13 (1) NOTICE AND REVIEW AND REQUIRE14 MENT.—Except as provided in paragraph (3), no

15 cross-guarantee, stop-loss, or group cross-guarantee

16 contract, and no amendment to any such contract,

17 shall be deemed approved unless—

18 (A) the Corporation has been given fifteen

19 business days to review the contract or amend20 ment; and

21 (B) before the end of the fifteen-day period

22 described in subparagraph (A), the Corporation

23 has not issued an order—

24 (i) disapproving the contract or

25 amendment; or
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1 (ii) extending the period within which

2 the Corporation may disapprove the con3 tract or amendment in accordance with

4 paragraph (6).

5 (2) SUBMISSION OF CONTRACT OR AMENDMENT

6 IN ELECTRONIC FORM.—The Corporation shall pre7 scribe regulations requiring that any cross-guaran8 tee, stop-loss, or group cross-guarantee contract, and

9 any amendment to such contract, being submitted

10 for review under this subsection shall be submitted

11 in electronic form to the central electronic reposi12 tory.

13 (3) NOTICE OF APPROVAL BEFORE END OF DIS14 APPROVAL PERIOD.—A cross-guarantee, stop-loss, or

15 group cross-guarantee contract, and any amendment

16 to any such contract, shall be deemed approved be17 fore the expiration of the period described in para18 graph (1)(A) (or extended in accordance with para19 graph (6)) for disapproving such contract if the Cor20 poration notifies the parties that the Corporation

21 does not intend to disapprove the contract.

22 (4) SUBMISSION OF INFORMATION AND CER23 TIFICATIONS.—

24 (A) IN GENERAL.—The syndicate agent

25 under any proposed cross-guarantee, stop-loss,
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1 or group cross-guarantee contract, or any

2 amendment to any such contract, submitted to

3 the Corporation for review under paragraph

4 (1), shall also submit to the Corporation with

5 such proposed contract such information and

6 attestations or certifications as the Corporation

7 may require by regulation.

8 (B) LIMITATION ON SCOPE OF INFORMA9 TION REQUIRED.—The regulations prescribed

10 by the Corporation under subparagraph (A)

11 may not require the submission of any informa12 tion other than information directly necessary

13 for the Corporation to determine whether any

14 proposed cross-guarantee, stop-loss, or group

15 cross-guarantee contract, or amendment there16 to, submitted to the Corporation for approval is

17 in compliance with the requirements of this

18 title.

19 (5) ADDITIONAL INFORMATION.—

20 (A) IN GENERAL.—The Corporation may,

21 by specific request in connection with a particu22 lar proposed cross-guarantee, stop-loss, or

23 group cross-guarantee contract, or amendment

24 to any contract, submitted to the Corporation,

25 require, on one occasion only, that additional
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1 information be submitted with respect to such

2 contract or amendment, except that the Cor3 poration may require only such information as

4 may be relevant to—

5 (i) a determination of the extent to

6 which the proposed contract is in compli7 ance with the requirements of this title;

8 and

9 (ii) the Corporation’s evaluation of the

10 contract in accordance with this section.

11 (B) NOTICE OF EXPLANATION.—For any

12 request for additional information under sub13 paragraph (A), the Corporation shall provide a

14 detailed explanation of the specific reasons why

15 such additional information is needed.

16 (6) EXTENSION OF DISAPPROVAL PERIOD.—If,

17 in connection with a particular proposed cross-guar18 antee, stop-loss, or group cross-guarantee contract,

19 or any amendment to any such contract, which is

20 submitted to the Corporation, the Corporation re21 quests additional information under paragraph (5),

22 the Corporation may by order provide that the Cor23 poration shall have any additional period (not to ex24 ceed five business days beginning on the date on
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1 which the Corporation receives such information)

2 within which to disapprove the proposed contract.

3 (7) REVOCATION OF APPROVAL.—The Corpora4 tion may revoke its approval of a contract under this

5 subsection if a court has enjoined the operation of

6 the contract under subsection (e)(2)(B).

7 (b) LIMITED GROUNDS FOR DISAPPROVAL OF PRO8 POSED CONTRACT OR AMENDMENT.—The Corporation

9 may disapprove any proposed cross-guarantee, stop-loss or

10 group cross-guarantee contract, or any amendment to any

11 such contract, if and only if—

12 (1) the contract, including any party under the

13 contract, fails to meet the requirements of this title;

14 or

15 (2) the information submitted under subsection

16 (a) was insufficient to determine whether the con17 tract and the parties to the contract are in compli18 ance with this title.

19 (c) NOTICE OF DISAPPROVAL.—

20 (1) IN GENERAL.—If the Corporation dis21 approves any cross-guarantee, stop-loss, or group

22 cross-guarantee contract, or any amendment thereto,

23 the Corporation shall immediately notify the parties

24 to such contract of the disapproval.
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1 (2) STATEMENT OF REASON FOR DIS2 APPROVAL.—The notice under paragraph (1) shall

3 contain a detailed explanation of the specific reasons

4 for the disapproval under this section.

5 (d) CONDITIONAL APPROVALS.—

6 (1) IN GENERAL.—The Corporation shall pre7 scribe regulations which would allow a cross-guaran8 tee, stop-loss, or group cross-guarantee contract to

9 be conditionally approved, in a manner otherwise in

10 accordance with this section, if, at the time such

11 conditional approval is granted, all the information

12 required by the Corporation to make a final deter13 mination of whether the contract meets the require14 ments of this title cannot be known or ascertained.

15 (2) RECONFIRMATION.—The regulations pre16 scribed under paragraph (1) shall allow the Corpora17 tion, upon receipt of all the information the Cor18 poration needs to determine whether the contract

19 meets the requirements of this title, three business

20 days to give the contract a final approval.

21 (3) REPLACEMENT OF GUARANTORS.—The reg22 ulations prescribed under paragraph (1) shall allow,

23 without restriction, the replacement of a direct guar24 antor with another direct guarantor during the pe-
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1 riod between the date of conditional approval and

2 final approval.

3 (e) JUDICIAL REVIEW.—

4 (1) CONTRACTS DISAPPROVED.—

5 (A) IN GENERAL.—Any party to a contract

6 disapproved under this section may seek judicial

7 review of the disapproval of a contract under

8 this section.

9 (B) LIMITATION ON STANDING.—Only a

10 party to a contract disapproved under this sec11 tion may bring an action under this paragraph.

12 (2) CONTRACTS APPROVED.—

13 (A) IN GENERAL.—Any guaranteed party

14 may seek judicial review of the approval of a

15 contract under this section.

16 (B) INJUNCTIVE RELIEF IF THE CON17 TRACT HAS NOT YET TAKEN EFFECT.—If a

18 guaranteed party brings an action under sub19 paragraph (A) and the contract approved under

20 this section has not yet become effective accord21 ing to the contract’s terms, a court may enjoin

22 the operation of the contract if it violates any

23 requirement under this title.

24 (C) LIMITATION ON REVIEW IF THE CON25 TRACT HAS BECOME EFFECTIVE.—
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1 (i) IN GENERAL.—A cross-guarantee

2 or stop-loss contract may be reviewed only

3 with respect to whether the contract vio4 lates section 116(a) or section 125.

5 (ii) REMEDIES.—

6 (I) IN GENERAL.—Any court

7 which holds that a cross-guarantee or

8 stop-loss contract violates section

9 116(a) or section 125 shall order the

10 Corporation to use the remedies avail11 able under section 125 to eliminate

12 the violation.

13 (II) INJUNCTIONS DIS14 ALLOWED.—No court may enjoin the

15 operation of a cross-guarantee or

16 stop-loss contract.

17 (3) JURISDICTION.—No court other than a dis18 trict court of the United States shall have original

19 jurisdiction of any action under this subsection.

20 (f) REGULATIONS TO AVOID FRAUDULENT SIGNATO21 RIES TO CONTRACTS.—

22 (1) IN GENERAL.—The Corporation shall issue

23 regulations which will provide a means, within the

24 time frame of subsection (a), by which, prior to ap25 proval of a cross-guarantee, stop-loss, or group
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1 cross-guarantee contract, the Corporation can ensure

2 that every party listed as a party to the contract

3 agreed to become a party to the contract.

4 (2) AVOIDING DUPLICATION.—In issuing the

5 regulations under paragraph (1), the Corporation

6 may rely on mechanisms established by the parties

7 to cross-guarantee, stop-loss, or group cross-guaran8 tee contracts to ensure that all signatories to the

9 contract agreed to the contract’s terms and shall,

10 whenever possible, avoid duplicating such efforts.

11 (g) ACCELERATED REVIEW FOR SECONDARY TRANS12 FERS OF SYNDICATE INTERESTS.—In the case of a con13 tract amendment which consists solely of a transfer of in14 terest under section 113(m), the provisions of this section

15 shall apply except—

16 (1) the applicable period for approval under

17 subsection (a)(1) shall be three business days in18 stead of fifteen business days;

19 (2) the Corporation may not extend the dis20 approval period as provided for under subsection

21 (a)(6); and

22 (3) the Corporation may disapprove the con23 tract amendment under subsection (b) only if the

24 amended contract would violate section 113(m), sec25 tion 116, or section 125.
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1 SEC. 124. CENTRAL ELECTRONIC REPOSITORY.

2 (a) ESTABLISHMENT.—

3 (1) CGRC ESTABLISHES CENTRAL ELECTRONIC

4 REPOSITORY.—Before the end of the six-month pe5 riod beginning on the date of the enactment of this

6 Act, the Corporation shall establish and maintain a

7 central electronic repository for cross-guarantee,

8 stop-loss, and group cross-guarantee contracts.

9 (2) MAINTENANCE OF ALL PAST, CURRENT,

10 DISAPPROVED, AND PROPOSED CONTRACTS.—The

11 central electronic repository shall maintain files, in

12 electronic form, of all cross-guarantee, stop-loss, and

13 group cross-guarantee contracts, including expired,

14 cancelled, and disapproved contracts, all amend15 ments to any such contract, and all proposed con16 tracts and contract amendments which have been

17 filed with the Corporation, but not yet acted upon.

18 (3) DIRECT ACCESS FOR ALL GUARANTORS,

19 GUARANTEED PARTIES, AND SYNDICATE AGENTS.—

20 The files in the central electronic repository estab21 lished under this section shall be directly and imme22 diately accessible by electronic means to any direct

23 guarantor, guaranteed party, and syndicate agent,

24 and any other person who qualifies for access under

25 procedures established by the Corporation.
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1 (4) CENTRAL ELECTRONIC REPOSITORY VER2 SION OF THE CONTRACT AS A COMPLETELY INTE3 GRATED AGREEMENT.—

4 (A) LEGAL EVIDENCE OF THE CON5 TRACT.—The provisions of any cross-guarantee,

6 stop-loss, or group cross-guarantee contract, in7 cluding any amendment to any such contract,

8 on file in the central electronic repository shall

9 be—

10 (i) irrebuttable evidence of the con11 tract; and

12 (ii) superior evidence to all other

13 forms or versions of the contract.

14 (B) PROHIBITION ON ADDITIONAL

15 TERMS.—The contract on file in the central

16 electronic repository shall be a complete and ex17 clusive statement of the terms of any cross18 guarantee, stop-loss, or group cross-guarantee

19 contract and no evidence of additional terms is

20 admissible to supplement the contract on file in

21 the repository.

22 (b) AVAILABILITY OF CERTIFIED COPIES.—

23 (1) IN GENERAL.—The central electronic repos24 itory shall provide upon request a copy of any con25 tract maintained under subsection (a)(2) to any per-
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1 son, any government officer, agency, or department,

2 or any court.

3 (2) CERTIFICATION OF COPIES.—

4 (A) IN GENERAL.—Each copy of a cross5 guarantee or stop-loss contract provided in ac6 cordance with paragraph (1) shall contain a

7 certification by the central electronic repository

8 that such copy is true and correct.

9 (B) PRIMA FACIE EVIDENCE.—A copy of a

10 cross-guarantee or stop-loss contract which is

11 certified in accordance with subparagraph (A)

12 shall establish prima facie the contract.

13 (c) MAINTENANCE OF DATA BASE OF ACTIVE GUAR14 ANTORS.—The central electronic repository shall maintain

15 in electronic form a data base containing the names of

16 the direct guarantors under each cross-guarantee or stop17 loss contract which has not expired or been canceled and

18 such other information with regard to such contracts that

19 will enable any person to determine whether or not any

20 such contract, proposed contract, or proposed amendment

21 to any contract, is in compliance with this title and regula22 tions prescribed under this title.

23 (d) STANDARD CONTRACT LANGUAGE.—The Cor24 poration is authorized to maintain in the central electronic

25 repository and update as needed standard language for
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1 various provisions of cross-guarantee, stop-loss, and group

2 cross-guarantee contracts that parties to these contracts

3 may, at their sole discretion, incorporate by reference in

4 contracts and contract amendments they submit to the

5 Corporation for approval.

6 (e) REGISTRY OF INDIVIDUALS WITH A QUESTION7 ABLE RECORD.—The Corporation is authorized to main8 tain in the central electronic repository a list of individuals

9 who have been indicted or convicted of a crime related to

10 a financial institution or had a judgment entered against

11 them in a civil case related to financial institutions.

12 SEC. 125. RESTRICTION ON CLOSED LOOPS.

13 (a) PROHIBITION OF MORE THAN ONE UNRELATED

14 CLOSED LOOP.—At no time shall two or more closed loops

15 exist unless at least one cross-guarantee or stop-loss con16 tract is a contract in each closed loop that exists in the

17 system.

18 (b) CGRC CALL-BACK.—If, at any time, the require19 ments of subsection (a) are violated—

20 (1) the Corporation shall immediately notify

21 each guaranteed party under each cross-guarantee

22 and stop-loss contract which is part of the closed

23 loop which has the fewest number of contracts that

24 it must obtain a successor cross-guarantee or stop25 loss contract; and
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1 (2) each guaranteed party under paragraph (1)

2 shall have ten business days upon notification to

3 submit a successor contract to the Corporation for

4 approval.

5 (c) CGRC FILING OF A BANKRUPTCY PETITION.—

6 (1) FILING OF A BANKRUPTCY PETITION BY

7 THE CGRC.—

8 (A) APPOINTMENT OF CGRC AS RE9 CEIVER.—The Corporation shall appoint itself

10 as receiver for a guaranteed company only if

11 the company has not met the deadline to sub12 mit a contract for approval under subsection

13 (b).

14 (B) CGRC IMMEDIATELY FILES A BANK15 RUPTCY PETITION.—Immediately upon appoint16 ing itself as receiver under paragraph (1), the

17 Corporation shall file a voluntary petition under

18 section 301 of title 11, United States Code, on

19 behalf of the guaranteed company for which the

20 Corporation appointed itself receiver.

21 (2) RECOVERY FROM ALL GUARANTEED PAR22 TIES FOR LOSSES DUE TO CLOSED LOOPS.—

23 (A) IN GENERAL.—In the case of any

24 guaranteed company for which the Corporation

25 files a bankruptcy petition under paragraph
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1 (1)(B), all guaranteed parties shall be liable to

2 cover any loss to the bankruptcy estate arising

3 out of the bankruptcy trustee’s duty to perform

4 on all guaranteed obligations of the guaranteed

5 company.

6 (B) LIABILITY PROPORTIONAL TO A PAR7 TY’S SHARE OF OVERALL GUARANTEED OBLIGA8 TIONS.—A guaranteed party shall be liable

9 under subparagraph (A) in proportion to such

10 party’s share of the guaranteed obligations of

11 all guaranteed parties at the time of the filing

12 of the bankruptcy petition by the Corporation.

13 (C) CGRC AUTHORIZATION.—The Cor14 poration is authorized to, and shall, assess

15 guaranteed parties for any amounts owed under

16 this paragraph.

17 (d) STANDING.—Any person can bring an action in

18 a district court of the United States to force the Corpora19 tion to take action under this section.

20 SEC. 126. TREASURY OVERSIGHT OF THE CROSS-GUARAN21 TEE REGULATION CORPORATION.

22 (a) ENFORCEMENT OF THE ACT.—In the event that

23 the Corporation should fail to fulfill any of its duties under

24 this title, the Secretary of the Treasury may apply to the

25 Federal District Court for the District of Columbia for
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1 an order requiring the Corporation to discharge its obliga2 tions under this title and for such other relief as the court

3 may deem necessary to carry out the purposes of this title.

4 (b) EXAMINATIONS AND REPORTS.—

5 (1) EXAMINATIONS.—The Secretary of the

6 Treasury may make such examinations and inspec7 tions of the Corporation and require the Corporation

8 to furnish it with such reports and records or copies

9 thereof as the Secretary may consider necessary to

10 implement the purposes of this title.

11 (2) REPORTS.—

12 (A) ANNUAL REPORT.—Within ninety days

13 after the close of each fiscal year of the Cor14 poration, the Corporation shall submit to the

15 Treasury Department a written report relative

16 to the conduct of its business, and the exercise

17 of the other rights and powers granted by this

18 title, during such fiscal year.

19 (B) INFORMATION TO BE INCLUDED IN

20 REPORT.—The report under subparagraph (A)

21 shall include financial statements setting forth

22 the financial position of the Corporation at the

23 end of such fiscal year and the results of its op24 erations (including the source and application

25 of its funds) for such fiscal year.
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1 (C) REQUIRED AUDIT.—The financial

2 statements required under subparagraph (B)

3 shall be examined by an independent public ac4 countant or firm of independent public account5 ants, selected by the Corporation and satisfac6 tory to the Treasury Department, and shall be

7 accompanied by the report thereon of such ac8 countant or firm.

9 (D) SUBMISSION TO THE PRESIDENT AND

10 CONGRESS.—The Secretary of the Treasury

11 shall submit the report under subparagraph (A)

12 to the President and Congress with such com13 ment thereon as the Secretary deems appro14 priate.

15 CHAPTER 2—PROTECTION OF INSURED

16 DEPOSITS

17 SEC. 128. BACKUP INSURANCE FOR DEPOSITS AT GUAR18 ANTEED DEPOSITORY INSTITUTIONS.

19 (a) ESTABLISHMENT OF CROSS-GUARANTEE

20 BACKUP FUND.—

21 (1) IN GENERAL.—There is hereby established

22 the cross-guarantee backup fund consisting of

23 amounts deposited pursuant to section 144 and sub24 section (c).
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1 (2) ADMINISTRATION OF FUND.—The cross2 guarantee backup fund shall be administered by the

3 Corporation.

4 (b) BACKUP DEPOSIT INSURANCE.—

5 (1) FUND LIABILITY.—Deposits in any guaran6 teed depository institution shall be insured against

7 loss, to the same extent as deposits are insured

8 against loss under section 11(a) of the Federal De9 posit Insurance Act (as in effect on the day before

10 the enactment of this Act), in the event that no ad11 justment under section 113(a)(2)(F)(iii) will be suf12 ficient to protect all guaranteed obligations of all

13 guaranteed companies against loss.

14 (2) SUBORDINATED DEBT NOT TREATED AS

15 DEPOSIT.—No subordinated debt of any guaranteed

16 depository institution or any guaranteed banking of17 fice may be treated as a deposit for purposes of

18 paragraph (1).

19 (c) USE AND DISPOSITION OF FUND.—

20 (1) IN GENERAL.—Amounts in the cross-guar21 antee backup fund may be used only to meet obliga22 tions incurred under subsection (b)(1).

23 (2) INVESTMENTS.—Amounts on deposit in the

24 cross-guarantee backup fund shall be invested in di-
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1 rect obligations of the United States and interest

2 thereon shall accumulate in the fund.

3 Subtitle D—Miscellaneous Provisions

4 SEC. 131. INSTITUTIONS OFFERING UNINSURED DEPOS5 ITS.

6 The Corporation shall ensure that any company,

7 other than—

8 (a) a depository institution;

9 (b) a branch which is not an insured branch (as

10 the term ‘‘insured branch’’ is defined in section 3(s)

11 of the Federal Deposit Insurance Act);

12 (c) an insured credit union or noninsured credit

13 union (as such terms are defined in section 101(7)

14 of the Federal Credit Union Act);

15 (d) a broker or dealer registered under the Se16 curities and Exchange Act of 1934; or

17 (e) an investment company registered under the

18 Investment Company Act of 1940,

19 which accepts deposits or assumes obligations which would

20 be deposits if the institution were a bank or savings asso21 ciation (as defined in section 3 of the Federal Deposit In22 surance Act) is accepting such deposits and assuming such

23 obligations in accordance with all applicable Federal and

24 State laws which relate to the licensing and regulation of
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1 institutions which accept deposits or assume such obliga2 tions.

3 SEC. 132. FEDERAL RESERVE LENDING.

4 Before February 1 of each calendar year beginning

5 after the cross-guarantee activation date, the Board of

6 Governors of the Federal Reserve System shall submit a

7 report to the Committee on Banking, Finance and Urban

8 Affairs of the House of Representatives and the Commit9 tee on Banking, Housing, and Urban Affairs of the Senate

10 containing—

11 (a) a certification that—

12 (1) no loss was incurred by such Board or

13 any Federal Reserve Bank during the preceding

14 calendar year on any loan or other advance to

15 any guaranteed company during such year; and

16 (2) no loss is anticipated on any such loan

17 or advance which remains outstanding at the

18 end of such year; or

19 (b) the amount of any such loss or anticipated

20 loss.

21 SEC. 133. ADVERTISING BY GUARANTEED FINANCIAL

22 GROUPS.

23 (a) ADVERTISING DEPOSIT GUARANTEES.—

24 (1) IN GENERAL.—A guaranteed company or

25 guaranteed banking office may advertise that depos-
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1 its and certain other liabilities are fully guaranteed

2 against any loss under a cross-guarantee contract

3 approved by the Corporation.

4 (2) CROSS-GUARANTEE LOGO.—Before the end

5 of the one year period beginning on the date of the

6 enactment of this Act, the Corporation—

7 (A) shall design, after consultation with

8 depository institutions, a logotype for use by a

9 guaranteed company or guaranteed banking of10 fice, which shall include language which states

11 ‘‘This institution is operating under a cross12 guarantee contract approved by the Cross13 Guarantee Regulation Corporation’’; and

14 (B) authorize guaranteed companies and

15 guaranteed banking offices to use such logo16 type.

17 (3) REGULATIONS GOVERNING MANNER OF AD18 VERTISING.—The Corporation shall prescribe regula19 tions governing the manner in which a guaranteed

20 company or guaranteed banking office may display

21 any logotype permitted under this subsection.

22 (b) ADVERTISING BACKUP INSURANCE.—A deposi23 tory institution which is guaranteed under a cross-guaran24 teed contract—
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1 (1) shall display at each place of business of the

2 institution any sign described in section 18(a) of the

3 Federal Deposit Insurance Act; and

4 (2) may advertise that deposits at the institu5 tion are insured by the Federal Government to

6 $100,000.

7 SEC. 134. GUARANTEED DEPOSITORY INSTITUTIONS RE8 MAIN FEDERALLY INSURED DEPOSITORIES

9 FOR PURPOSES OF STATE LAW.

10 Unless a State or party to a contract otherwise pro11 vides subsequent to the passage of this Act, a guaranteed

12 depository institution shall be deemed to be a federally in13 sured depository institution within the meaning of section

14 3(c)(2) of the Federal Deposit Insurance Act for purposes

15 of any State or Federal law or private agreement which

16 determines the legally acceptable institutions in which to

17 deposit funds.

18 Subtitle E—Transition to 100 Percent Cross19 Guarantee Process

20 SEC. 141. EFFECTIVE DATE OF SYSTEM BASED ON MINI21 MUM NUMBER OF GUARANTEED DEPOSITORY

22 INSTITUTIONS AND AMOUNT OF TOTAL AS23 SETS.

24 (a) IN GENERAL.—No cross-guarantee or stop-loss

25 contract shall take effect before the later of—
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1 (1) the end of the eighteen-month period begin2 ning on the date of the enactment of this Act; or

3 (2) Forty business days after the date on which

4 the Corporation has approved, under subsection (b),

5 a minimum of two hundred and fifty cross-guarantee

6 contracts under which depository institutions which,

7 in the aggregate, have total assets of not less than

8 $500,000,000,000 are guaranteed companies or

9 guaranteed banking offices.

10 (b) CONTINGENT EFFECT OF CONTRACTS UNTIL EF11 FECTIVE DATE.—

12 (1) IN GENERAL.—The Corporation may condi13 tionally approve a cross-guarantee or stop-loss con14 tract to become effective on the date to be deter15 mined under subsection (a) even though not all di16 rect guarantors under the contract meet the require17 ments under section 116(a)(1).

18 (2) MINIMUM REQUIREMENTS.—No cross-guar19 antee or stop-loss contract conditionally approved

20 under paragraph (1) shall receive final approval

21 from the Corporation for purposes of subsection

22 (a)(2) unless—

23 (A) the cross-guarantee or stop-loss con24 tract is one of a set of contracts in which each

25 contract—
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1 (i) is a contract in the same closed

2 loop; and

3 (ii) becomes effective at the same time

4 every other contract within the set of con5 tracts takes effect; and

6 (B) at the time such contract becomes ef7 fective, the requirements of section 125(a) are

8 met.

9 (c) PUBLICATION OF CROSS-GUARANTEE ACTIVA10 TION DATE.—The Corporation shall immediately publish

11 in the Federal Register the date of the cross-guarantee

12 activation date as soon as such date is ascertained.

13 (d) ONE-TIME CONVERSION TO GUARANTEED

14 PARTY STATUS.—Notwithstanding any provision of sec15 tion 142, section 111 shall apply with respect to any de16 pository institution as of the date—

17 (1) on which such institution first becomes a

18 guaranteed depository institution or guaranteed

19 banking office;

20 (2) on which any depository institution which is

21 affiliated with such depository institution becomes a

22 guaranteed depository institution; or

23 (3) on which any depository institution which is

24 under common ownership with such depository insti-
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1 tution under section 112(d)(2) becomes a guaran2 teed depository institution.

3 SEC. 142. MANDATORY PHASE-IN OF CROSS-GUARANTEES

4 AFTER EFFECTIVE DATE OF SYSTEM.

5 (a) DEPOSITORY INSTITUTIONS WITH ASSETS OF

6 $1,000,000,000 OR MORE.—Section 111 shall apply as of

7 the end of the two-year period beginning on the cross8 guarantee activation date with respect to any depository

9 institution which has consolidated assets at book value

10 which are equal to or greater than $1,000,000,000 as of

11 the end of such two-year period.

12 (b) DEPOSITORY INSTITUTIONS WITH ASSETS OF

13 $500,000,000 OR MORE.—Section 111 shall apply as of

14 the end of the three-year period beginning on the cross15 guarantee activation date with respect to any depository

16 institution which has consolidated assets at book value

17 which are equal to or greater than $500,000,000 as of

18 the end of such three-year period.

19 (c) DEPOSITORY INSTITUTIONS WITH ASSETS OF

20 $250,000,000 OR MORE.—Section 111 shall apply as of

21 the end of the four-year period beginning on the cross22 guarantee activation date with respect to any depository

23 institution which has consolidated assets at book value

24 which are equal or to greater than $250,000,000 as of

25 the end of such four-year period.
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1 (d) DEPOSITORY INSTITUTIONS WITH ASSETS OF

2 $100,000,000 OR MORE.—Section 111 shall apply as of

3 the end of the five-year period beginning on the cross4 guarantee activation date with respect to any depository

5 institution which has consolidated assets at book value

6 which are equal to or greater than $100,000,000 as of

7 the end of such five-year period.

8 (e) DEPOSITORY INSTITUTIONS WITH ASSETS OF

9 $50,000,000 OR MORE.—Section 111 shall apply as of the

10 end of the six-year period beginning on the cross-guaran11 tee activation date with respect to any depository institu12 tion which has consolidated assets at book value which are

13 equal to or greater than $50,000,000 as of the end of such

14 six-year period.

15 (f) DEPOSITORY INSTITUTIONS WITH ASSETS OF

16 $25,000,000 OR MORE.—Section 111 shall apply as of the

17 end of the seven-year period beginning on the cross-guar18 antee activation date with respect to any depository insti19 tution which has consolidated assets at book value which

20 are equal to or greater than $25,000,000 as of the end

21 of such seven-year period.

22 (g) ALL OTHER DEPOSITORY INSTITUTIONS.—Sec23 tion 111 shall apply as of the end of the eight-year period

24 beginning on the cross-guarantee activation date with re-
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1 spect to any depository institution which is not described

2 in subsection (a), (b), (c), (d), (e), or (f).

3 (h) CONSOLIDATED ASSETS AT BOOK VALUE DE4 FINED.—The term ‘‘consolidated assets at book value’’

5 means the total value as determined on a consolidated

6 basis and in accordance with generally accepted account7 ing principles, of all tangible and intangible property of

8 any depository institution, all subsidiaries of such institu9 tion, all affiliates of such institution which are depository

10 institutions, and all subsidiaries of such affiliates.

11 SEC. 143. APPOINTMENT OF RECEIVER FOR INSTITUTIONS

12 WHICH FAIL TO COMPLY WITH TRANSITION

13 REQUIREMENTS.

14 The Federal Deposit Insurance Corporation shall im15 mediately appoint a receiver for any depository institution

16 which is not a guaranteed depository institution or guar17 anteed banking office under any cross-guarantee contract

18 as of the date by which such information is required to

19 be guaranteed depository institution or guaranteed bank20 ing office under section 142.

21 SEC. 144. FUNDING THE CROSS-GUARANTEE BACKUP FUND.

22 (a) SEQUENCE OF ACTIONS TO BE TAKEN ON THE

23 CROSS-GUARANTEE ACTIVATION DATE.—On the cross24 guarantee activation date, the Federal Deposit Insurance

25 Corporation shall:
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1 (1) MERGE EXISTING DEPOSIT INSURANCE

2 FUNDS.—Merge the Savings Association Insurance

3 Fund (established under section 11(a)(6)(A) of the

4 Federal Deposit Insurance Act) into the Bank In5 surance Fund (established under section 11(a)(5)(A)

6 of the Federal Deposit Insurance Act) with the

7 Bank Insurance Fund assuming all of the assets and

8 liabilities of the Savings Association Insurance

9 Fund.

10 (2) ADJUST BALANCE IN THE BANK INSURANCE

11 FUND.—

12 (A) ADJUST LOSS RESERVE.—Subsequent

13 to the merger under paragraph (1), adjust the

14 Bank Insurance Fund’s reserve for losses to re15 flect the present value of the fund’s expected

16 losses due to depository institutions that did

17 not become guaranteed depository institutions

18 on the cross-guarantee activation date.

19 (B) CREATE SEVERANCE BENEFITS RE20 SERVE.—Transfer to a severance benefits re21 serve from the unobligated balance in the Bank

22 Insurance Fund the estimated cost of the sever23 ance pay and related benefits to be disbursed

24 under section 145.
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1 (3) TRANSFER FUNDS TO FICO.—Transfer from

2 the Bank Insurance Fund to the Financing Corpora3 tion (established under section 21(a) of the Federal

4 Home Loan Bank Act) such sums as shall be suffi5 cient to carry out the purposes of subsection (c).

6 (4) ADJUST DESIGNATED RESERVE RATIO FOR

7 THE BANK INSURANCE FUND.—After carrying out

8 the provisions of paragraphs (1) through (3), cal9 culate a designated reserve ratio for the Bank Insur10 ance Fund that shall be used after the cross-guaran11 tee activation date for the purpose of determining

12 deposit insurance assessments in lieu of the des13 ignated reserve ratio specified under section

14 7(b)(2)(A)(iv)(I) of the Federal Deposit Insurance

15 Act.

16 (b) ACTIONS SUBSEQUENT TO THE CROSS-GUARAN17 TEE ACTIVISION DATE.—Within thirty days after carrying

18 out the provisions of subsection (a), the Federal Deposit

19 Insurance Corporation shall transfer to the cross-guaran20 tee backup fund an amount equal to the product of—

21 (1) the estimated insured deposits held by de22 pository institutions becoming guaranteed depository

23 institutions on the cross-guarantee activation date;

24 and

25 (2) the ratio calculated under subsection (a)(4).
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1 (c) DEFEASE REMAINING INTEREST PAYABLE ON

2 FICO BONDS.—

3 (1) PURCHASE ZERO COUPON INSTRUMENTS.—

4 The directors of the Financing Corporation (estab5 lished under section 21(a) of the Federal Home

6 Loan Bank Act) shall use the funds transferred to

7 the Financing Corporation under subsection (a)(3)

8 to purchase noninterest bearing direct obligations of

9 the United States with face amounts (the amount of

10 principal payable at maturity) and maturities ap11 proximately equal to the remaining interest due and

12 payable on obligations issued by the Financing Cor13 poration under section 21(e) of the Federal Home

14 Loan Bank Act.

15 (2) TERMINATE FICO ASSESSMENT AUTHOR16 ITY.—Upon purchasing the securities described in

17 paragraph (1), the Financing Corporation shall

18 cease making assessments authorized under section

19 21(f) of the Federal Home Loan Bank Act.

20 (d) ACTIONS TO BE TAKEN ON EVERY JUNE 30 AND

21 DECEMBER 31 AFTER THE CROSS-GUARANTEE ACTIVA22 TION DATE.—

23 (1) ADJUST RESERVES FOR LOSSES AND SEV24 ERANCE BENEFITS.—On every June 30 and Decem25 ber 31 after the cross-guarantee activation date, the
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1 Federal Deposit Insurance Corporation shall adjust

2 the reserve for losses and severance benefits in the

3 Bank Insurance Fund to reflect contemporaneous

4 estimates of the present value of future losses and

5 benefits to be paid from the fund.

6 (2) TRANSFER ADDITIONAL FUNDS TO BACKUP

7 FUND.—Upon making the adjustments described in

8 paragraph (1), the Federal Deposit Insurance Cor9 poration shall transfer to the cross-guarantee

10 backup fund an amount equal to the product of—

11 (A) the estimated insured deposits, as of

12 the beginning of the six month period ending on

13 June 30 or December 31, for all depository in14 stitutions that became guaranteed depository

15 institutions during such a six-month period;

16 and

17 (B) the ratio calculated under subsection

18 (a)(4).

19 (e) ACTIONS TO BE TAKEN AFTER THE TRANSITION

20 PERIOD.—

21 (1) SEQUENCE OF ACTIONS TO BE TAKEN AT

22 THE END OF THE TRANSITION PERIOD.—Imme23 diately upon the appointment of all receivers under

24 section 143, the Federal Deposit Insurance Corpora25 tion shall—
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1 (A) adjust the Bank Insurance Fund’s re2 serves for losses and severance benefits to re3 flect the expenses of winding up each Federal

4 Deposit Insurance Corporation receivership still

5 open after all receivers have been appointed

6 under section 143; and

7 (B) after making the adjustment described

8 in subparagraph (A), transfer all funds remain9 ing in the Bank Insurance Fund to the cross10 guarantee backup fund.

11 (2) ACTIONS TO BE TAKEN AS FDIC RECEIVER12 SHIPS ARE CLOSED OUT.—Upon liquidating all as13 sets and paying all remaining claims and direct and

14 indirect expenses of a receivership administered by

15 the Federal Deposit Insurance Corporation, except

16 the claim of the Federal Deposit Insurance Corpora17 tion, the Federal Deposit Insurance Corporation

18 shall transfer to the cross-guarantee backup fund all

19 of the funds remaining in the receivership.

20 (3) FINAL TRANSFER TO THE CROSS-GUARAN21 TEE BACKUP FUND.—After closing out the last

22 Bank Insurance Fund receivership, the Federal De23 posit Insurance Corporation shall liquidate all of its

24 remaining assets and then transfer all of its remain25 ing funds to the cross-guarantee backup fund.
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1 SEC. 145. SEVERANCE PAY AND RELATED BENEFITS FOR

2 FORMER FEDERAL AND STATE BANKING

3 AGENCY EMPLOYEES.

4 (a) DEFINITIONS.—For purposes of this section—

5 (1) ELIGIBLE EMPLOYEE.—The term ‘‘eligible

6 employee’’ means any individual—

7 (A) who is employed by a Federal banking

8 agency, a State bank supervisor, or the Federal

9 Financial Institutions Examination Council

10 (FFIEC) as of the date of the enactment of

11 this Act, including employees of the Federal

12 Deposit Insurance Corporation on detail to the

13 Resolution Trust Corporation; and

14 (B) whose employment is terminated by

15 the agency or supervisor after such date other

16 than for cause.

17 (2) FEDERAL BANKING AGENCY.—The term

18 ‘‘Federal banking agency’’ has the meaning given to

19 such term in section 3(q) of the Federal Deposit In20 surance Act.

21 (3) STATE BANK SUPERVISOR.—The term

22 ‘‘State bank supervisor’’ has the meaning given to

23 such term in section 3(r) of the Federal Deposit In24 surance Act.

25 (b) SEVERANCE PAY.—
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1 (1) IN GENERAL.—Subject to paragraph (3),

2 any eligible employee shall be entitled to receive in

3 a lump sum, from the Bank Insurance Fund at the

4 time such employee’s employment by a Federal

5 banking agency, State bank supervisor, or the

6 FFIEC, is terminated, severance pay in the amount

7 which is equal to the sum of—

8 (A) the amount equal to two months of

9 compensation at the employee’s average annual

10 rate of base pay for the last twelve calendar

11 months of the employee’s employment by any

12 Federal banking agency, State bank supervisor,

13 or the FFIEC; plus

14 (B) the product of—

15 (i) the amount equal to three weeks of

16 compensation at the employee’s annual

17 rate of base pay (as determined under sub18 paragraph (A)); and

19 (ii) the number of years (including

20 any fraction of a year) of full-time service

21 of such employee with any Federal banking

22 agency, State bank supervisor, or the

23 FFIEC, or any predecessor of any such

24 agency or supervisor, where such number

25 of years can include employment for more
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1 than one such agency or supervisor and

2 need not be continuous employment.

3 (2) EXCEPTION FOR EMPLOYEES REEMPLOYED

4 BY ANOTHER FEDERAL OR STATE AGENCY.—Para5 graph (1) shall not apply with respect to any eligible

6 employee who—

7 (A) in the case of an individual who is an

8 eligible employee by virtue of being separated

9 from service with any Federal agency, transfers

10 to or becomes employed by another Federal de11 partment, agency, or government corporation;

12 or

13 (B) in the case of an individual who is an

14 eligible employee by virtue of being separated

15 from service with a State bank supervisor,

16 transfers to or becomes employed by another

17 department, agency, or instrumentality of such

18 State.

19 (3) PROHIBITION ON CERTAIN GOVERNMENT

20 SERVICE AFTER ACCEPTING SEVERANCE PAY.—

21 (A) FEDERAL EMPLOYEE.—No individual

22 who receives severance pay under this sub23 section by virtue of being separated from serv24 ice with a Federal agency or State bank super25 visor may be employed by any Federal officer,
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1 department, agency, or government corporation

2 during the five-year period beginning on the

3 date such severance pay is received by such in4 dividual.

5 (B) STATE EMPLOYEE.—No individual

6 who is, but for this subparagraph, entitled to

7 receive severance pay under this subsection by

8 virtue of being separated from service with a

9 State bank supervisor may receive such pay un10 less such individual has entered into a contract

11 with the Federal Deposit Insurance Corporation

12 under which such individual, in consideration of

13 the payment of such severance pay, is obligated

14 to return such amount in full, plus interest, to

15 the Federal Deposit Insurance Corporation if

16 such employee is employed by an officer, de17 partment, or agency of that State during the

18 five-year period beginning on the date such sev19 erance pay is received by such individual.

20 (4) PURCHASE OF ADDITIONAL RETIREMENT

21 BENEFITS.—An eligible employee may use any por22 tion of the severance pay to which the employee is

23 entitled under this subsection to purchase additional

24 benefits or make additional investments in any Fed25 eral retirement plan in which the employee is or was
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1 entitled to participate as an employee before becom2 ing an eligible employee.

3 (c) RELOCATION EXPENSES AND HEALTH BENE4 FITS.—

5 (1) RELOCATION EXPENSES.—An eligible em6 ployee who obtains employment away from the place

7 such employee was employed by an appropriate Fed8 eral banking agency, State banking supervisor, or

9 the FFIEC shall be entitled to receive travel, reloca10 tion, and moving expenses from the Bank Insurance

11 Fund to the same extent Federal employees who are

12 transferred or reemployed are authorized to receive

13 such expenses under subchapter II of chapter 57 of

14 title 5, United States Code.

15 (2) HEALTH BENEFITS.—

16 (A) IN GENERAL.—An eligible employee

17 shall be entitled to receive the same health ben18 efits as such employee received as of the date

19 of termination for a time period which shall

20 consist of the shorter of—

21 (i) eighteen months following the date

22 of termination of employment; or

23 (ii) until such employee obtains alter24 native full-time employment.
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1 (B) ADMINISTRATION OF THE PROVISION

2 OF HEALTH BENEFITS.—The agency which ter3 minated the employment of the eligible em4 ployee shall be responsible for administering the

5 provision of health benefits authorized under

6 subparagraph (A), unless such agency has been

7 abolished in which case the Federal or State

8 government (whichever case is appropriate)

9 shall provide for another agency or government

10 entity to perform this function.

11 (C) SEVERANCE FUND COMPENSATION.—

12 The Bank Insurance Fund shall reimburse any

13 agency or government entity for the costs of

14 providing the benefits authorized under sub15 paragraph (A).

16 (d) FUNDING BENEFITS FOR ELIGIBLE EMPLOY17 EES.—Expenses incurred by the Federal Deposit Insur18 ance Corporation in administering the provisions of this

19 section shall be paid from the Bank Insurance Fund.

20 SEC. 146. ABOLITION OF FEDERAL FINANCIAL INSTITU21 TIONS EXAMINATION COUNCIL.

22 The Federal Financial Institutions Examination

23 Council is hereby abolished, effective on the date on which

24 section 142(g) shall become effective.
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1 SEC. 147. ABOLITION OF THE FEDERAL DEPOSIT INSUR2 ANCE CORPORATION.

3 (a) IN GENERAL.—The Federal Deposit Insurance

4 Corporation is hereby abolished, effective on the date on

5 which the last receivership or conservatorship resulting

6 from the appointment of a receiver or conservator by the

7 Federal Deposit Insurance Corporation has been liq8 uidated, disposed of, or otherwise resolved.

9 (b) SAVINGS PROVISIONS RELATED TO THE FDIC.—

10 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA11 TIONS NOT AFFECTED.—Subsection (a) shall not af12 fect the validity of any right, duty, or obligation of

13 the United States, the Federal Deposit Insurance

14 Corporation, or any other person, which existed on

15 the day before the date of the enactment of this Act.

16 (2) CONTINUATION OF SUITS.—No action or

17 other proceeding commenced by or against the Fed18 eral Deposit Insurance Corporation shall abate by

19 the reason of the enactment of this Act, except that

20 the Secretary of Treasury shall be substituted for

21 the Federal Deposit Insurance Corporation as a

22 party to any such action or proceeding.

23 SEC. 148. CONTINUATION OF ORDERS, RESOLUTIONS, AND

24 DETERMINATIONS.

25 All orders, resolutions, determinations, and regula26 tions which have been issued, made, prescribed, or allowed
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1 prior to a depository institution becoming a guaranteed

2 depository institution shall continue in effect according to

3 the terms of such orders, resolutions, and determinations

4 until modified, terminated, set aside, or superseded in ac5 cordance with applicable law by the agency which issued

6 the order, resolution, determination, or regulation, by any

7 court of competent jurisdiction, by operation of this Act,

8 or by operation of law.

9 TITLE II—AMENDMENTS TO OTHER

10 BANKING LAWS

11 SEC. 201. AMENDMENTS RELATING TO NATIONAL BANKS.

12 (a) EXEMPTIONS FROM MINIMUM CAPITAL, STOCK,

13 AND OTHER REQUIREMENTS COVERED BY CROSS-GUAR14 ANTEE CONTRACTS.—

15 (1) CAPITAL OF NATIONAL BANKS.—Section

16 5138 of the Revised Statutes of the United States

17 (12 U.S.C. 51) is amended by adding at the end the

18 following new sentence: ‘‘This section shall not apply

19 with respect to any national bank which is a guaran20 teed depository institution (as defined in section

21 101(a)(7) of the Deposit Insurance Reform, Regu22 latory Modernization, and Taxpayer Protection Act

23 of 1993).’’.

24 (2) PREFERRED STOCK IN MEMBER BANKS.—

25 Section 345 of the Banking Act of 1935 (12 U.S.C.
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1 51B–1) is amended by adding at the end the follow2 ing new sentence: ‘‘This section shall not apply with

3 respect to any bank which is a guaranteed deposi4 tory institution (as defined in section 101(a)(7) of

5 the Deposit Insurance Reform, Regulatory Mod6 ernization, and Taxpayer Protection Act of 1993).’’.

7 (3) DEFICIENT CAPITAL PROVISION FOR NA8 TIONAL BANKS.—Section 5205 of the Revised Stat9 utes of the United States (12 U.S.C. 55) is amended

10 by adding at the end the following new sentence:

11 ‘‘This section shall not apply with respect to any na12 tional bank which is a guaranteed depository institu13 tion (as defined in section 101(a)(7) of the Deposit

14 Insurance Reform, Regulatory Modernization, and

15 Taxpayer Protection Act of 1993).’’.

16 (4) WITHDRAWAL OF CAPITAL PROVISION FOR

17 NATIONAL BANKS.—Section 5204 of the Revised

18 Statutes of the United States (12 U.S.C. 56) is

19 amended by adding at the end the following new

20 sentence: ‘‘This section shall not apply with respect

21 to any national bank which is a guaranteed deposi22 tory institution (as defined in section 101(a)(7) of

23 the Depositor Insurance Reform, Regulatory Mod24 ernization, and Taxpayer Protection Act of 1993).’’.
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1 (5) INCREASE IN CAPITAL PROVISION FOR NA2 TIONAL BANKS.—Section 5142 of the Revised Stat3 utes of the United States (12 U.S.C. 57) is amended

4 by adding at the end the following new sentence:

5 ‘‘This section shall not apply with respect to any na6 tional bank which is a guaranteed depository institu7 tion (as defined in section 101(a)(7) of the Deposit

8 Insurance Reform, Regulatory Modernization, and

9 Taxpayer Protection Act of 1993).’’.

10 (6) DECREASE AND DISTRIBUTION OF CAPITAL

11 PROVISION FOR NATIONAL BANKS.—Section 5143 of

12 the Revised Statutes of the United States (12

13 U.S.C. 59) is amended by adding at the end the fol14 lowing new sentence: ‘‘Notwithstanding the preced15 ing sentence, the approval of the Comptroller of the

16 Currency shall not be required for any reduction of

17 capital stock, or any distribution to shareholders by

18 reason of any such reduction, under such sentence

19 by any national bank which is a guaranteed deposi20 tory institution (as defined in section 101(a)(7) of

21 the Deposit Insurance Reform, Regulatory Mod22 ernization, and Taxpayer Protection Act of 1993).’’.

23 (7) DIVIDEND PROVISIONS.—
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1 (A) IN GENERAL.—Section 5199(a) of the

2 Revised Statutes of the United States (12

3 U.S.C. 60(a)) is amended—

4 (i) by striking ‘‘(a) The directors’’

5 and inserting ‘‘(a) DECLARATION OF DIVI6 DEND.—

7 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

8 the directors’’;

9 (ii) by striking ‘‘expedient; except that

10 until the surplus fund of such association’’

11 and inserting ‘‘expedient’’.

12 ‘‘(2) EXCEPTION FOR CERTAIN

13 UNDERCAPITALIZED ASSOCIATIONS.—Until the sur14 plus fund of a national bank’’; and

15 (iii) by adding at the end of para16 graph (2) (as so redesignated by clause (ii)

17 of this subparagraph) the following: ‘‘This

18 paragraph shall not apply with respect to

19 any national bank which is a guaranteed

20 depository institution (as defined in section

21 101(a)(7) of the Deposit Insurance Re22 form, Regulatory Modernization, and Tax23 payer Protection Act of 1993).’’.

24 (B) TECHNICAL AND CONFORMING AMEND25 MENT.—Section 5199(b) of the Revised Stat-
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1 utes of the United States (12 U.S.C. 60(b)) is

2 amended—

3 (i) by striking ‘‘(b) The approval of

4 the Comptroller’’ and inserting ‘‘(b) AP5 PROVAL OF THE COMPTROLLER.—Except

6 in the case of a national bank which is a

7 guaranteed depository institution (as de8 fined in section 101(a)(7) of the Deposit

9 Insurance Reform, Regulatory Moderniza10 tion and Taxpayer Protection Act of

11 1993), the approval of the Comptroller’’;

12 and

13 (ii) by striking ‘‘such association’’ and

14 inserting ‘‘a national bank’’.

15 (b) EXEMPTIONS FROM REQUIREMENTS RELATING

16 TO DIRECTORS OF BANKS.—

17 (1) QUALIFICATIONS OF NATIONAL BANK DI18 RECTORS.—Section 5146 of the Revised Statutes of

19 the United States (12 U.S.C. 72) is amended by

20 adding at the end the following new sentence: ‘‘This

21 section shall not apply with respect to any national

22 bank which is a guaranteed depository institution

23 (as defined in section 101(a)(7) of the Deposit In24 surance Reform, Regulatory Modernization, and

25 Taxpayer Protection Act of 1993.’’.
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1 (2) SERVICE OF PRESIDENT OF NATIONAL

2 BANK AS CHAIRMAN OF THE BANK’S BOARD OF DI3 RECTORS.—Section 5150 of the Revised Statues of

4 the United States (12 U.S.C. 76) is amended by

5 adding at the end the following new sentence: ‘‘This

6 section shall not apply with respect to any national

7 bank which is a guaranteed depository institution

8 (as defined in section 101(a)(7) of the Deposit In9 surance Reform, Regulatory Modernization, and

10 Taxpayer Protection Act of 1993).’’.

11 (3) MEMBER BANK DIRECTOR INTERLOCKS

12 WITH SECURITIES FIRMS.—Section 32 of the Bank13 ing Act of 1933 (12 U.S.C. 78) is amended by add14 ing at the end the following new sentence: ‘‘This sec15 tion shall not apply with respect to any member

16 bank which is a guaranteed depository institution

17 (as defined in section 101(a)(7) of the Deposit In18 surance Reform, Regulatory Modernization, and

19 Taxpayer Protection Act of 1993).’’.

20 (4) LOANS ON OR PURCHASE OF NATIONAL

21 BANK’S OWN STOCK.—Section 5201 of the Revised

22 Statutes of the United States (12 U.S.C. 83) is

23 amended by adding at the end the following new

24 sentence: ‘‘This section shall not apply with respect

25 to any national bank which is a guaranteed deposi-
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1 tory institution (as defined in section 101(a)(7) of

2 the Deposit Insurance Reform, Regulatory Mod3 ernization, and Taxpayer Protection Act of 1993).’’.

4 (c) EXEMPTION FROM REQUIREMENT RELATING TO

5 LOANS TO ONE BORROWER.—Section 5200 of the Revised

6 Statues of the United States (12 U.S.C. 84) is amended

7 by adding at the end the following new subsection:

8 ‘‘(e) EXEMPTION OF GUARANTEED COMPANIES.—

9 This section shall not apply with respect to any national

10 bank which is a guaranteed depository institution (as de11 fined in section 101(a)(7) of the Deposit Insurance Re12 form, Regulatory Modernization, and Taxpayer Protection

13 Act of 1993).’’.

14 (d) EXEMPTION FROM REQUIREMENTS RELATING

15 TO SECURITY FOR DEPOSITS OF GOVERNMENT AGENCIES

16 AT NATIONAL BANKS.—Section 5153 of the Revised Stat17 utes of the United States (12 U.S.C. 90) is amended—

18 (1) in the first undesignated paragraph by

19 striking ‘‘All national banking associations’’ and in20 serting ‘‘(a) IN GENERAL.—All national banks’’;

21 (2) in the second undesignated paragraph, by

22 striking ‘‘Any national banking association’’ and in23 serting ‘‘(b) DEPOSITORY FOR STATE AND LOCAL

24 GOVERNMENTS.—Any national bank’’;
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1 (3) in the third undesignated paragraph, by

2 striking ‘‘Any national banking association’’ and in3 serting ‘‘(c) DEPOSITORY FOR INDIAN TRIBES.—

4 Any national bank’’; and

5 (4) by adding at the end the following new sub6 section:

7 ‘‘(d) EXEMPTION FROM SECURITY AND COLLATERAL

8 REQUIREMENTS.—A national bank which is a guaranteed

9 depository institution (as defined in section 101(a)(7) of

10 the Deposit Insurance Reform, Regulatory Modernization,

11 and Taxpayer Protection Act of 1993) shall not be re12 quired to give any security which is otherwise required

13 under subsection (a), (b), or (c) for deposits with the bank

14 under this section or for the performance of the bank as

15 financial agent.’’.

16 (e) EXEMPTION FROM PROVISION RELATING TO

17 TRANSFERS BY NATIONAL BANKS IN CONTEMPLATION OF

18 INSOLVENCY.—Section 5242 of the Revised Statutes of

19 the United States (12 U.S.C. 91) is amended by adding

20 at the end the following new sentence: ‘‘This section shall

21 not apply with respect to any national bank which is a

22 guaranteed depository institution (as defined in section

23 101(a)(7) of the Deposit Insurance Reform, Regulatory

24 Modernization, and Taxpayer Protection Act of 1993.’’.
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1 (f) EXEMPTION FROM REQUIREMENTS RELATING TO

2 REPORTS OF CONDITION.—Section 5211 of the Revised

3 Statutes of the United States (12 U.S.C. 161) is amended

4 by adding at the end the following new subsection:

5 ‘‘(d) EXEMPTION OF GUARANTEED COMPANIES.—

6 This section shall not apply with respect to any national

7 bank which is a guaranteed depository institution (as de8 fined in section 101(a)(7) of the Deposit Insurance Re9 form, Regulatory Modernization, and Taxpayer Protection

10 Act of 1993.’’.

11 (g) CONSENT OF GUARANTORS REQUIRED FOR VOL12 UNTARY DISSOLUTION.—

13 (1) IN GENERAL.—Section 5220 of the Revised

14 Statues of the United States (12 U.S.C. 181) is

15 amended—

16 (A) in the first undesignated paragraph, by

17 striking ‘‘Any association’’ and inserting ‘‘(a)

18 IN GENERAL.—Any national bank’’;

19 (B) in the second undesignated paragraph,

20 by striking ‘‘The Shareholders shall designate’’

21 and inserting ‘‘(b) LIQUDIATING AGENT OR

22 COMMITTEE.—The shareholders shall des23 ignate’’; and

24 (C) by adding at the end the following new

25 subsection:
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1 ‘‘(c) CONSENT OF GUARANTORS REQUIRED FOR

2 GUARANTEED COMPANIES.—Int he case of any national

3 bank which is a guaranteed depository institution (as de4 fined in section 101(a)(7) of the Deposit Insurance Re5 form, Regulatory Modernization, and Taxpayer Protection

6 Act of 1993), the national bank may go into liquidation

7 and be closed in accordance with subsection (a) only with

8 the consent of the direct guarantors of such bank.’’.

9 (2) NOTICE TO SYNDICATE AGENT.—Section

10 5221 of the Revised Statutes of the United States

11 (12 U.S.C. 182 is amended by inserting ‘‘and, in

12 the case of a national bank which is a guaranteed

13 depository institution (as defined in section

14 101(a)(7) of the Deposit Insurance Reform, Regu15 latory Modernization, and Taxpayer Protection Act

16 of 1993), to the syndicate agent of such bank’’ after

17 ‘‘Comptroller of the currency’’.

18 (h) COMPTROLLER OF THE CURRENCY NOT AU19 THORIZED TO APPOINT RECEIVER.—

20 (1) IN GENERAL.—The Act entitled ‘‘An Act

21 authorizing the appointment of receivers of national

22 banking associations, and for other purposes.’’ and

23 approved June 30, 1876, is amended by inserting

24 after the first section (12 U.S.C. 191) the following

25 new section:
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1 ‘‘SEC. 2. EXEMPTION OF GUARANTEED NATIONAL BANKS.

2 ‘‘This Act shall not apply with respect to any national

3 bank which is a guaranteed depository institution (as de4 fined in section 101(a)(7) of the Deposit Insurance Re5 form, Regulatory Modernization, and Taxpayer Protection

6 Act of 1993).’’.

7 (2) EXEMPTION FROM ADDITIONAL GROUND

8 FOR THE APPOINTMENT OF RECEIVERS.—Section

9 5234 of the Revised Statutes (12 U.S.C. 192) is

10 amended by adding at the end the following new

11 sentence: ‘‘This sentence shall not apply with respect

12 to any national bank which is a guaranteed deposi13 tory institution (as defined in section 101(a)(7) of

14 the Deposit Insurance Reform, Regulatory Mod15 ernization, and Taxpayer Protection Act of 1993).’’.

16 (i) COMPTROLLER OF THE CURRENCY NOT AUTHOR17 IZED TO APPOINT CONSERVATOR.—The Bank Conserva18 tion Act is amended by inserting after section 206 the fol19 lowing new section:

20 ‘‘SEC. 207. EXEMPTION OF GUARANTEED NATIONAL BANKS.

21 ‘‘This subchapter shall not apply with respect to any

22 national bank which is a guaranteed depository institution

23 (as defined in section 101(a)(7) of the Deposit Insurance

24 Reform, Regulatory Modernization, and Taxpayer Protec25 tion Act of 1993).’’.
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1 (j) COMPTROLLER OF THE CURRENCY NOT AUTHOR2 IZED TO EXAMINE GUARANTEED BANKS.—Section 5240

3 of the Revised Statutes of the United States (12 U.S.C.

4 481–485) is amended by adding at the end of the first

5 paragraph of such section the following new sentence:

6 ‘‘Notwithstanding any other provision of this section, the

7 authority of the Comptroller of the Currency to examine

8 any national bank or any affiliate of a national bank shall

9 not apply with respect to any national bank which is a

10 guaranteed depository institution (as defined in section

11 101(a)(7) of the Deposit Insurance Reform, Regulatory

12 Modernization, and Taxpayer Protection Act of 1993) or

13 any affiliate of such bank.’’.

14 (k) EXEMPTION FROM LIMITATION OR CONDITIONS

15 ON REAL ESTATE LENDING AUTHORITY.—Section 24(a)

16 of the Federal Reserve Act (12 U.S.C. 371(a)) is amended

17 by adding at the end the following new sentence: ‘‘Not18 withstanding the preceding sentence, a national bank

19 which is a guaranteed depository institution (as defined

20 in section 101(a)(7) of the Deposit Insurance Reform,

21 Regulatory Modernization, and Taxpayer Protection Act

22 of 1993) shall not be subject to section 18(o) of the Fed23 eral Deposit Insurance Act or any restriction or require24 ment prescribed by the Comptroller of the Currency under

25 the preceding sentence.’’.
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1 SEC. 202. AMENDMENTS RELATING TO MEMBER BANKS.

2 (a) FEDERAL RESERVE BOARD AND FEDERAL RE3 SERVE BANKS NOT AUTHORIZED TO EXAMINE GUARAN4 TEED MEMBER BANKS.—

5 (1) IN GENERAL.—Section 11(a)(1) of the Fed6 eral Reserve Act (12 U.S.C. 248(a)(1)) is amended

7 by adding at the end the following new sentence:

8 ‘‘Notwithstanding any other provision of this section,

9 the authority of the Board or any Federal reserve

10 bank to examine any member bank shall not apply

11 with respect to any member bank which is a guaran12 teed depository institution (as defined in section

13 101(a)(7) of the Deposit Insurance Reform, Regu14 latory Modernization, and Taxpayer Protection Act

15 of 1993).’’.

16 (2) SPECIAL EXAMINATIONS.—The first sen17 tence of the fifth undesignated paragraph of section

18 5240 of the Revised Statutes of the United States

19 (12 U.S.C. 483) is amended by inserting ‘‘which are

20 not guaranteed depository institutions (as defined in

21 section 101(a)(7) of the Deposit Insurance Reform,

22 Regulatory Modernization, and Taxpayer Protection

23 Act of 1993)’’ after ‘‘member banks within its dis24 trict’’.

25 (3) FOREIGN OPERATION OF STATE MEMBER

26 BANKS.—The last sentence of the sixth undesignated
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1 paragraph of section 5240 of the Revised Statutes of

2 the United States (12 U.S.C. 481) is amended by

3 inserting ‘‘and are not guaranteed depository institu4 tions (as defined in section 101(a)(7) of the Deposit

5 Insurance Reform, Regulatory Modernization, and

6 Taxpayer Protection Act of 1993)’’ before the pe7 riod.

8 (4) EXAMINATIONS IN CONNECTION WITH AD9 VANCES OR DISCOUNTS.—Section 11(n) of the Fed10 eral Reserve Act (12 U.S.C. 248(n)) is amended by

11 striking ‘‘depository institution,’’ and inserting ‘‘de12 pository institution (other than a guaranteed deposi13 tory institution (as defined in section 101(a)(7) of

14 the Deposit Insurance Reform, Regulatory Mod15 ernization, and Taxpayer Protection Act of 1993)),’’.

16 (b) EXEMPTION FROM MEMBER BANK LOAN LIMI17 TATIONS.—Section 11(m) of the Federal Reserve Act (12

18 U.S.C. 248(m)) is amended by adding at the end the fol19 lowing new sentence: ‘‘This paragraph shall not apply with

20 respect to any member bank which is a guaranteed deposi21 tory institution (as defined in section 101(a)(7) of the De22 posit Insurance Reform, Regulatory Modernization, and

23 Taxpayer Protection Act of 1993).’’.

24 (c) EXEMPTION FROM LIMITATION ON ACCESS TO

25 FED WIRE.—Section 11 of the Federal Reserve Act (12
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1 U.S.C. 248) is amended by inserting after paragraph (n)

2 the following new paragraph:

3 ‘‘(o) PROHIBITION ON LIMITS ON ACCESS TO PAY4 MENT AND CLEARING SYSTEMS BY GUARANTEED MEM5 BER BANKS.—Notwithstanding any other provision of law,

6 the Board may not limit or deny access by any member

7 bank which is a guaranteed depository institution (as de8 fined in section 101(a)(7) of the Deposit Insurance Re9 form, Regulatory Modernization, and Taxpayer Protection

10 Act of 1993) to the payment system or any system in ef11 fect for clearing transactions in securities for the purpose

12 of protecting any such system from any risk.’’.

13 (d) FEDERAL RESERVE BOARD NOT AUTHORIZED

14 TO APPOINT CONSERVATOR OR RECEIVER.—Section

15 11(p) of the Federal Reserve Act (12 U.S.C. 248(p)) (as

16 added by section 133(f) of the Federal Deposit Insurance

17 Corporation Act of 1991) is amended to read as follows:

18 ‘‘(p) AUTHORITY TO APPOINT CONSERVATOR OR RE19 CEIVER.—

20 ‘‘(A) IN GENERAL.—Except as provided in sub21 paragraph (B), the Board may appoint the Federal

22 Deposit Insurance Corporation as conservator or re23 ceiver for a State member bank under section

24 11(c)(8) of the Federal Deposit Insurance Act.
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1 ‘‘(B) EXCEPTION FOR GUARANTEED DEPOSI2 TORY INSTITUTIONS.—This paragraph shall not

3 apply with respect to any member bank which is a

4 guaranteed depository institution (as defined in sec5 tion 101(a)(7) of the Deposit Insurance Reform,

6 Regulatory Modernization, and Taxpayer Protection

7 Act of 1993).’’.

8 (e) QUALIFICATION OF GUARANTEED STATE BANKS

9 FOR MEMBER BANK STATUS WITHOUT APPLICATION.—

10 (1) IN GENERAL.—The first undesignated para11 graph of section 9 of the Federal Reserve Act (12

12 U.S.C. 321) is amended by adding at the end the

13 following new sentence: ‘‘Notwithstanding the appli14 cation requirement contained in the first sentence of

15 this paragraph, any State bank which is a guaran16 teed depository institution (as defined in section

17 101(a)(7) of the Deposit Insurance Reform, Regu18 latory Modernization, and Taxpayer Protection Act

19 of 1993) may become a member of the Federal Re20 serve System without application by agreeing to be

21 subject to all applicable provisions of this Act and by

22 subscribing to stock in the same manner and

23 amount as a national bank under section 2.’’.

24 (2) EXEMPTION FROM CAPITAL, RESERVE, AND

25 REPORTING REQUIREMENTS.—The first sentence of
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1 the sixth undesignated paragraph of section 9 of the

2 Federal Reserve Act (12 U.S.C. 324) is amended by

3 inserting ‘‘, other than a bank which is a guaranteed

4 depository institution (as defined in section

5 101(a)(7) of the Deposit Insurance Reform, Regu6 latory Modernization, and Taxpayer Protection Act

7 of 1993),’’ after ‘‘banks admitted to membership

8 under authority of this section’’.

9 (3) EXEMPTION FROM EXAMINATION.—The

10 seventh undesignated paragraph of section 9 of the

11 Federal Reserve Act (12 U.S.C. 325) is amended by

12 striking ‘‘such banks’’ and inserting ‘‘, any bank ad13 mitted to membership under this section, other than

14 a bank which is a guaranteed depository institution

15 (as defined in section 101(a)(7) of the Deposit In16 surance Reform, Regulatory Modernization, and

17 Taxpayer Protection Act of 1993),’’.

18 (4) EXEMPTION FROM SPECIAL EXAMINA19 TIONS.—The eighth undesignated paragraph of sec20 tion 9 of the Federal Reserve Act (12 U.S.C. 326)

21 is amended by adding at the end the following new

22 sentence: ‘‘Notwithstanding any other provision of

23 this paragraph, the authority of the Board to exam24 ine any member bank shall not apply with respect to

25 any member bank which is a guaranteed depository
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1 institution (as defined in section 101(a)(7) of the

2 Deposit Insurance Reform, Regulatory Moderniza3 tion, and Taxpayer Protection Act of 1993).’’.

4 (5) EXEMPTION FROM CERTAIN FORFEITURE

5 PROVISION.—The ninth undesignated paragraph of

6 section 9 of the Federal Reserve Act (12 U.S.C.

7 327) is amended by inserting ‘‘, other than a bank

8 which is a guaranteed depository institution (as de9 fined in section 101(a)(7) of the Deposit Insurance

10 Reform, Regulatory Modernization, and Taxpayer

11 Protection Act of 1993),’’ after ‘‘a member bank’’.

12 (6) EXEMPTION FROM ADDITIONAL CAPITAL

13 REQUIREMENT.—The eleventh undesignated para14 graph of section 9 of the Federal Reserve Act (12

15 U.S.C. 329) is amended by adding at the end the

16 following new sentence: ‘‘This paragraph shall not

17 apply with respect to any member bank which is a

18 guaranteed depository institution (as defined in sec19 tion 101(a)(7) of the Deposit Insurance Reform,

20 Regulatory Modernization, and Taxpayer Protection

21 Act of 1993).’’.

22 (7) EXEMPTION FROM SECURITY AND COLLAT23 ERAL REQUIREMENT.—The last sentence of the fif24 teenth undesignated paragraph of section 9 of the

25 Federal Reserve Act (12 U.S.C. 332) is amended by
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1 inserting ‘‘, other than a bank which a guaranteed

2 depository institution (as defined in section

3 101(a)(7) of the Deposit Insurance Reform, Regu4 latory Modernization, and Taxpayer Protection Act

5 of 1993),’’ after ‘‘the banks and trust companies

6 thus designated’’.

7 (8) MEMBERSHIP QUALIFICATION IN THE CASE

8 OF STATE MUTUAL SAVINGS BANKS.—The sixteenth

9 undesignated paragraph of section 9 of the Federal

10 Reserve Act (12 U.S.C. 333) is amended by insert11 ing after the first sentence the following new sen12 tence: ‘‘Notwithstanding the application requirement

13 contained in the preceding sentence, any State mu14 tual savings bank which is a guaranteed depository

15 institution (as defined in section 101(a)(7) of the

16 Deposit Insurance Reform, Regulatory Moderniza17 tion, and Taxpayer Protection Act of 1993) may be18 come a member of the Federal Reserve System with19 out application by agreeing to be subject to all appli20 cable provisions of this Act and by subscribing to

21 stock in the same manner and amount as provided

22 in this paragraph for State mutual savings banks

23 applying for membership.’’

24 (9) EXEMPTION FROM AFFILIATE REPORTING

25 REQUIREMENTS—
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1 (A) IN GENERAL.—The first sentence of

2 the seventeenth undesignated paragraph of sec3 tion 9 of the Federal Reserve Act (12 U.S.C.

4 334) is amended by inserting ‘‘, other than a

5 bank which is a guaranteed depository institu6 tion (as defined in section 101(a)(7) of the De7 posit Insurance Reform, Regulatory Moderniza8 tion, and Taxpayer Protection Act of 1993),’’

9 after ‘‘bank admitted to membership under this

10 section’’.

11 (B) EXEMPTION FROM ADDITIONAL AFFIL12 IATE REPORTING REQUIREMENTS.—The eight13 eenth undesignated paragraph of section 9 of

14 the Federal Reserve Act (12 U.S.C. 334) is

15 amended by inserting ‘‘, other than a bank

16 which is a guaranteed depository institution (as

17 defined in section 101(a)(7) of the Deposit In18 surance Reform, Regulatory Modernization, and

19 Taxpayer Protection Act of 1993),’’ after ‘‘af20 filiated member bank’’.

21 (10) EXEMPTION FROM EXAMINATION RE22 QUIREMENTS.—The twenty-second undesignated

23 paragraph of section 9 of the Federal Reserve Act

24 (12 U.S.C. 338) is amended by inserting ‘‘, other

25 than a bank which is a guaranteed depository insti-
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1 tution (as defined in section 101(a)(7) of the De2 posit Insurance Reform, Regulatory Modernization,

3 and Taxpayer Protection Act of 1993),’’ after ‘‘State

4 member banks’’ the first place such term appears.

5 (f) EXEMPTION FROM INTEREST REQUIREMENTS.—

6 Section 19(i) of the Federal Reserve Act (12 U.S.C. 371a)

7 is amended by adding at the end the following new sen8 tence: ‘‘No provision of this subsection shall apply with

9 respect to a member bank which is a guaranteed deposi10 tory institution (as defined in section 101(a)(7) of the De11 posit Insurance Reform, Regulatory Modernization, and

12 Taxpayer Protection Act of 1993).’’.

13 (g) EXEMPTION FROM REQUIREMENTS RELATING

14 TO INTERBANK LIABILITIES AND TRANSACTIONS WITH

15 AFFILIATES.—

16 (1) INTERBANK LIABILITIES.—Section 23 of

17 the Federal Reserve Act (12 U.S.C. 371(b–2)) is

18 amended by adding at the end the following new

19 subsection:

20 ‘‘(f) EXEMPTION FOR GUARANTEED DEPOSITORY IN21 STITUTIONS.—A guaranteed depository institution (as de22 fined in section 101(a)(7) of the Deposit Insurance Re23 form, Regulatory Modernization, and Taxpayer Protection

24 Act of 1993) shall not be subject to any regulation or

25 order issued under this section.’’.
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1 (2) EXEMPTION FROM RESTRICTIONS ON

2 TRANSACTIONS WITH AFFILIATES.—Sections 23A

3 and 23B of the Federal Reserve Act (12 U.S.C.

4 371c, 371c–1) are each amended by adding at the

5 end of each such section the following new sub6 section:

7 ‘‘(f) EXEMPTION FOR GUARANTEED DEPOSITORY IN8 STITUTIONS.—This section shall not apply to any guaran9 teed depository institution (as defined in section 101(a)(7)

10 of the Deposit Insurance Reform, Regulatory Moderniza11 tion, and Taxpayer Protection Act of 1993) or any affili12 ate of any such institution that is a guaranteed company

13 (as defined in section 101(a)(6) of the Deposit Insurance

14 Reform, Regulatory Modernization, and Taxpayer Protec15 tion Act of 1993).’’.

16 (h) EXEMPTION FROM LIMITATION ON INVEST17 MENTS IN, OR LOANS ON, BANK PREMISES.—Section 24A

18 of the Federal Reserve Act (12 U.S.C. 371d) is amended

19 by adding at the end the following new sentence: ‘‘This

20 section shall not apply to any guaranteed depository insti21 tution (as defined in section 101(a)(7) of the Deposit In22 surance Reform, Regulatory Modernization, and Taxpayer

23 Protection Act of 1993).’’.

24 (i) EXEMPTION FROM LIMITATIONS ON BANKERS’

25 ACCEPTANCES.—Section 13(7) of the Federal Reserve Act
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1 (12 U.S.C. 372) is amended by adding at the end the fol2 lowing new subparagraph:

3 ‘‘(I) EXEMPTION FROM LIMITA4 TIONS FOR GUARANTEED DEPOSITORY

5 INSTITUTIONS.—Subparagraphs (B),

6 (C), (D), (E), (F), and (H) shall not

7 apply to any guaranteed depository in8 stitution (as defined in section

9 101(a)(7) of the Deposit Insurance

10 Reform, Regulatory Modernization,

11 and Taxpayer Protection Act of

12 1993).’’.

13 (j) EXEMPTION FROM PURCHASING AND LENDING

14 LIMITS RELATING TO DIRECTORS AND OFFICERS.—Sec15 tion 22 of the Federal Reserve Act (12 U.S.C. 375, 376,

16 503, 375a, and 375b) is amended by inserting before sub17 section (d) the following new subsection:

18 ‘‘(c) EXEMPTION FOR GUARANTEED DEPOSITORY IN19 STITUTIONS.—Subsections (d), (e), (g), and (h) shall not

20 apply to any guaranteed depository institution (as defined

21 in section 101(a)(7) of the Deposit Insurance Reform,

22 Regulatory Modernization, and Taxpayer Protection Act

23 of 1993) or any affiliate of any such institution.’’.
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1 SEC. 203. AMENDMENTS RELATING TO SAVINGS ASSOCIA2 TIONS.

3 (a) GUARANTEED SAVINGS ASSOCIATION DE4 FINED.—Section 2 of the Home Owners’ Loan Act (12

5 U.S.C. 1462) is amended by adding at the end the follow6 ing new paragraphs:

7 ‘‘(10) GUARANTEED SAVINGS ASSOCIATION.—

8 The term ‘guaranteed savings association’ means a

9 savings association which is a guaranteed depository

10 institution (as defined in section 101(a)(7) of the

11 Deposit Insurance Reform, Regulatory Moderniza12 tion, and Taxpayer Protection Act of 1993).

13 ‘‘(11) GUARANTEED FEDERAL SAVINGS ASSO14 CIATION.—The term ‘guaranteed Federal savings as15 sociation’ means a Federal savings association which

16 is a guaranteed depository institution (as defined in

17 section 101(a)(7) of the Deposit Insurance Reform,

18 Regulatory Modernization, and Taxpayer Protection

19 Act of 1993).’’.

20 (b) EXEMPTION FROM EXAMINATION AND REGULA21 TION BY DIRECTOR OF THE OFFICE OF THRIFT SUPER22 VISION.—

23 (1) IN GENERAL.—Section 4(a) of the Home

24 Owners’ Loan Act (12 U.S.C. 1463(a)) is amended

25 by adding at the end the following new paragraph:
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1 ‘‘(4) EXEMPTION FOR GUARANTEED SAVINGS

2 ASSOCIATIONS.—The authority of the Director under

3 this subsection or subsection (b) or (c) to examine

4 any savings association or prescribe regulations ap5 plicable to savings associations shall not apply with

6 respect to any guaranteed savings association.’’.

7 (2) FEDERAL SAVINGS ASSOCIATIONS.—Section

8 5(a) of the Home Owners’ Loan Act (12 U.S.C.

9 1464(a)) is amended by adding at the end the fol10 lowing new sentence: ‘‘The authority of the Director

11 under the preceding sentence to prescribe regula12 tions to provide for the examination and regulation

13 of Federal savings associations shall not apply with

14 respect to the examination or regulation of any

15 guaranteed Federal savings association.’’.

16 (3) EXEMPTION FROM EXAMINATION FEE PRO17 VISIONS.—Section 9 of the Home Owners’ Loan Act

18 (12 U.S.C. 1467) is amended by adding at the end

19 the following new subsection:

20 ‘‘(n) EXEMPTION FOR GUARANTEED SAVINGS ASSO21 CIATIONS.—This section and the authority of the Director

22 under this section shall not apply with respect to any guar23 anteed savings association.’’.

24 (c) EXCEPTIONS TO LIMITATIONS ON DEPOSIT AND

25 RELATED POWERS.—Section 5(b)(1) of the Home Own-
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1 ers’ Loan Act (12 U.S.C. 1464(b)(1)) is amended by add2 ing at the end the following new subparagraph:

3 ‘‘(G) SPECIAL RULES APPLICABLE TO

4 GUARANTEED SAVINGS ASSOCIATIONS.—

5 ‘‘(i) STATUTORY AUTHORITY.—A

6 guaranteed Federal savings association

7 shall have the powers described in subpara8 graphs (C), (E), and (F) without regard to

9 the condition or limitation contained in

10 each such subparagraph relating to regula11 tions of the Director.

12 ‘‘(ii) LIMITATION ON REGULATORY

13 AUTHORITY.—The exercise by a guaran14 teed Federal savings association of powers

15 established under subparagraph (A) or (D)

16 or the last sentence of subparagraph (B)

17 shall not be subject to any regulations pre18 scribed by the Director under such provi19 sion.

20 ‘‘(iii) EXEMPTION.—A guaranteed

21 Federal savings association shall not be

22 subject to the first sentence of subpara23 graph (B).’’.

24 (d) EXCEPTIONS TO LIMITATIONS ON LOAN AND IN25 VESTMENT POWERS.—Section 5(c) of the Home Owners’
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1 Loan Act (12 U.S.C. 1464(c)) is amended by adding at

2 the end the following new paragraph:

3 ‘‘(7) EXCEPTIONS FOR GUARANTEED SAVINGS

4 ASSOCIATIONS.—

5 ‘‘(A) LIMITATION ON REGULATORY AU6 THORITY.—The exercise by a guaranteed Fed7 eral savings association of powers established

8 under any provision of this subsection shall not

9 be subject to any regulations prescribed by the

10 Director under this subsection.

11 ‘‘(B) EXEMPTION FROM MAXIMUM

12 AMOUNT LIMITATIONS.—A guaranteed Federal

13 savings association shall not be subject to any

14 limitation in this subsection on the outstanding

15 amount of loans or investments by the associa16 tion under any provision of this subsection,

17 without regard to whether such maximum

18 amount is expressed as a fixed dollar amount or

19 as a percentage of such association’s assets or

20 capital.’’.

21 (e) EXEMPTION FROM ENFORCEMENT AND

22 CONSERVATORSHIP AND RECEIVERSHIP PROVISIONS.—

23 Section 5(d) of the Home Owners’ Loan Act (12 U.S.C.

24 1464(d)) is amended by adding at the end the following

25 new paragraph:
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1 ‘‘(7) EXEMPTION FOR GUARANTEED SAVINGS

2 ASSOCIATIONS.—This subsection and the authority

3 of the Director under this subsection shall not apply

4 with respect to any guaranteed savings association.’’.

5 (f) EXEMPTION FROM FITNESS STANDARDS.—Sec6 tion 5(e) of the Home Owners’ Loan Act (12 U.S.C.

7 1464(e)) is amended by adding at the end the following

8 new sentence: ‘‘The preceding sentence shall not apply

9 with respect to any savings association which, at the time

10 the charter is granted, is a guaranteed depository institu11 tion (as defined in section 101(a)(7) of the Deposit Insur12 ance Reform, Regulatory Modernization, and Taxpayer

13 Protection Act of 1993) or is required to be a guaranteed

14 depository institution before such association accepts any

15 deposit.’’.

16 (g) EXEMPTION FROM REQUIREMENTS RELATING

17 TO SECURITY FOR DEPOSITS OF GOVERNMENT AGEN18 CIES.—Section 5(k) of the Home Owners’ Loan Act (12

19 U.S.C. 1464(k)) is amended by adding at the end the fol20 lowing new sentence: ‘‘A guaranteed savings association

21 shall not be required to give any security for deposits with

22 the savings association under this section or for the per23 formance of the association as fiscal agent.’’.

24 (h) EXEMPTION FROM MINIMUM CAPITAL REQUIRE25 MENTS.—Section 5(s) of the Home Owners’ Loan Act (12
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1 U.S.C. 1464(s)) is amended by adding at the end the fol2 lowing new paragraph:

3 ‘‘(6) EXEMPTION FOR GUARANTEED SAVINGS

4 ASSOCIATIONS.—This subsection and the authority

5 of the Director under this subsection shall not apply

6 with respect to any guaranteed savings association.’’.

7 (i) EXEMPTION FROM CAPITAL STANDARDS.—Sec8 tion 5(t)(1) of the Home Owners’ Loan Act (12 U.S.C.

9 1464(t)(1)) is amended by adding at the end the following

10 new subparagraph:

11 ‘‘(E) EXEMPTION FOR GUARANTEED SAVINGS

12 ASSOCIATIONS.—This subsection and the authority

13 of the Director under this subsection shall not apply

14 with respect to any guaranteed savings association.’’.

15 (j) EXEMPTION FROM REQUIREMENT RELATING TO

16 LOANS TO ONE BORROWER.—Section 5(u) of the Home

17 Owners’ Loan Act (12 U.S.C. 1464(u)) is amended by

18 adding at the end the following new paragraph:

19 ‘‘(4) EXEMPTION FOR GUARANTEED SAVINGS

20 ASSOCIATIONS.—This subsection shall not apply with

21 respect to any guaranteed savings association.’’.

22 (k) EXEMPTION FROM REQUIREMENT RELATING TO

23 REPORTS OF CONDITION.—Section 5(v) of the Home

24 Owners’ Loan Act (12 U.S.C. 1464(v)) is amended by

25 adding at the end the following new paragraph:
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1 ‘‘(9) EXEMPTION FOR GUARANTEED SAVINGS

2 ASSOCIATIONS.—This subsection shall not apply with

3 respect to any guaranteed savings association.’’.

4 (l) EXEMPTION FROM REQUIREMENT RELATING TO

5 LIQUID ASSETS.—Section 6 of the Home Owner’s Loan

6 Act (12 U.S.C. 1465) is amended by adding at the end

7 the following new subsection:

8 ‘‘(g) EXEMPTION FOR GUARANTEED SAVINGS ASSO9 CIATIONS.—This section shall not apply with respect to

10 any guaranteed savings associations.’’.

11 (m) EXEMPTION FROM AFFILIATE TRANSACTION

12 AND LENDING LIMITS RELATING TO DIRECTORS AND OF13 FICERS.—Section 11 of the Home Owners’ Loan Act (12

14 U.S.C. 1468) is amended by adding at the end the follow15 ing new subsection:

16 ‘‘(d) EXEMPTION FOR GUARANTEED SAVINGS ASSO17 CIATIONS.—This section shall not apply with respect to

18 any guaranteed savings association’’.

19 SEC. 204 AMENDMENTS RELATING TO SAVINGS AND LOAN

20 HOLDING COMPANIES.

21 (a) GUARANTEED SAVINGS ASSOCIATION DE22 FINED.—Section 10(a)(1) of the Home Owners’ Loan Act

23 (12 U.S.C. 1467a(a)(1)) is amended by adding at the end

24 the following new subparagraph:
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1 ‘‘(K) GUARANTEED SAVINGS ASSOCIA2 TION.—The term ‘guaranteed savings associa3 tion’ includes any savings association referred

4 to in subparagraph (A) which is a guaranteed

5 depository institution (as defined in section

6 101(a)(7) of the Deposit Insurance Reform,

7 Regulatory Modernization, and Taxpayer Pro8 tection Act of 1993).’’.

9 (b) EXEMPTION FROM EXAMINATION AND REPORT10 ING REQUIREMENT.—Section 10(b) of the Home Owners’

11 Loan Act (12 U.S.C. 1467a(b)) is amended by adding at

12 the end the following new paragraph:

13 ‘‘(7) EXEMPTION FOR S&L HOLDING COMPANY

14 WHICH CONTROLS A GUARANTEED SAVINGS ASSOCIA15 TION.—Paragraphs (2), (3), and (4) and the author16 ity of the Director under any such paragraph shall

17 not apply with respect to any savings and loan hold18 ing company which controls a guaranteed savings as19 sociation and any subsidiary of such company.’’.

20 (c) COORDINATION WITH SECTION 11.—Section

21 10(d) of the Home Owners’ Loan Act (12 U.S.C.

22 1467a(d)) is amended by striking ‘‘Transaction’’ and in23 serting ‘‘Subject to section 11(d), transactions’’.

24 (d) EXEMPTION FROM REQUIREMENTS RELATING

25 TO DECLARATION OF DIVIDEND.—Section 10(f) of the
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1 Home Owners’ Loan Act (12 U.S.C. 1467a(f)) is amended

2 by adding at the end the following new sentence: ‘‘This

3 subsection shall not apply with respect to any savings and

4 loan company which controls a guaranteed savings asso5 ciation.’’.

6 (e) EXEMPTION FROM RESTRICTIONS ON HIGH-RISK

7 ACTIVITIES.—Section 10(p) of the Home Owners’ Loan

8 Act (12 U.S.C. 1467a(p)) is amended by adding at the

9 end the following new paragraph:

10 ‘‘(3) EXEMPTION FOR PARENT OF GUARAN11 TEED SAVINGS ASSOCIATION.—This subsection shall

12 not apply with respect to any savings and loan com13 pany which controls a guaranteed savings associa14 tion.’’.

15 (f) NONAPPLICABILITY OF QUALIFIED STOCK ISSU16 ANCE PROVISIONS.—Section 10(q)(1)(A) of the Home

17 Owners’ Loan Act (12 U.S.C. 1467a(q)(1)(A)) is

18 amended—

19 (1) in clause (i), by inserting ‘‘which is not a

20 guaranteed savings association’’ after ‘‘under21 capitalized savings association’’; and

22 (2) in clause (ii), by inserting ‘‘and does not

23 control a guaranteed savings association’’ after

24 ‘‘controls an undercapitalized savings association’’.
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1 SEC. 205. AMENDMENTS RELATING TO THE FEDERAL DE2 POSIT INSURANCE CORPORATION.

3 (a) AMENDMENTS TO DEFINITIONS.—

4 (1) DEFINITIONS RELATING TO DEPOSITORY

5 INSTITUTIONS.—Section 3(c) of the Federal Deposit

6 Insurance Act (12 U.S.C. 1813(c)) is amended by

7 adding at the end the following new paragraphs:

8 ‘‘(6) GUARANTEED DEPOSITORY INSTITUTION

9 NOT INCLUDED.—Except as otherwise specifically

10 provided in any provision of this Act, the terms ‘de11 pository institution’ and ‘insured depository institu12 tion’ do not include any guaranteed depository insti13 tution.

14 ‘‘(7) GUARANTEED DEPOSITORY INSTITU15 TION.—The term ‘guaranteed depository institution’

16 has the meaning given to such term in section

17 101(a)(7) of the Deposit Insurance Reform, Regu18 latory Modernization, and Taxpayer Protection Act

19 of 1993.’’.

20 (2) DEFINITION RELATING TO BANKS.—Section

21 3(a) of the Federal Deposit Insurance Act (12

22 U.S.C. 1813(a)) is amended by adding at the end

23 the following new paragraph:

24 ‘‘(5) GUARANTEED DEPOSITORY INSTITUTIONS

25 NOT INCLUDED.—Except as otherwise specifically

26 provided in any provision of this Act, the terms
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1 ‘bank’, ‘national bank’, ‘State bank’, ‘District bank’,

2 ‘branch’, and ‘Federal branch’, whether or not any

3 such term appears in conjunction with the term ‘in4 sured’, ‘member’, or ‘nonmember’, do not include

5 any guaranteed depository institution.’’.

6 (3) DEFINITION RELATING TO SAVINGS ASSO7 CIATIONS.—Section 3(b) of the Federal Deposit In8 surance Act (12 U.S.C. 1813(b)) is amended by

9 adding at the end of the following new paragraph:

10 ‘‘(4) GUARANTEE DEPOSITORY INSTITUTIONS

11 NOT INCLUDED.—Except as otherwise specifically

12 provided in any provision of this Act, the terms ‘sav13 ings association’, ‘Federal savings association’, and

14 ‘State savings association’, whether or not any such

15 term appears in conjunction with the term ‘insured’,

16 do not include any guaranteed depository institu17 tion.’’.

18 (4) DEFINITION RELATING TO APPROPRIATE

19 FEDERAL BANKING AGENCY.—Section 3(q) of the

20 Federal Deposit Insurance Act (12 U.S.C. 1813(q))

21 is amended by adding before the last sentence the

22 following new paragraph:

23 ‘‘(5) The Cross-Guarantee Regulation Corpora24 tion in the case of a guaranteed depository institu25 tion.’’.
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1 (b) PROHIBITION ON NEW INSURED DEPOSITORY IN2 STITUTIONS, BY CHARTER OR CONVERSION, AFTER EF3 FECTIVE DATE OF CROSS-GUARANTEE SYSTEM.—

4 (1) NO CONTINUATION OF INSURANCE IN CON5 NECTION WITH CONVERSIONS.—Section 4 of the

6 Federal Deposit Insurance Act (12 U.S.C. 1814) is

7 amended by adding at the end the following new

8 subsection:

9 ‘‘(e) INAPPLICABILITY OF SUBSECTIONS (b), (c), AND

10 (d) AFTER EFFECTIVE DATE OF CROSS-GUARANTEE SYS11 TEM.—Subsections (b), (c), and (d) shall not apply as of

12 the effective date of the cross-guarantee system under sub13 section (a) of section 141 of the Deposit Insurance Re14 form, Regulatory Modernization, and Taxpayer Protection

15 Act of 1993, as published by the Cross-Guarantee Regula16 tion Corporation in the Federal Register pursuant to sub17 section (c) of such section.’’.

18 (2) NO NEW INSURANCE UNDER THE FEDERAL

19 DEPOSIT INSURANCE ACT.—Section 5 of the Federal

20 Deposit Insurance Act (12 U.S.C. 1815) is amended

21 by adding at the end the following new subsection:

22 ‘‘(f) PROHIBITION ON APPROVAL OF INSURANCE

23 AFTER EFFECTIVE DATE OF CROSS-GUARANTEE SYS24 TEM.—No application for insurance under this section

25 may be approved by the Corporation on or after the date
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1 by which the Cross-Guarantee Regulation Corporation has

2 approved, under subsection (a) of section 141 of the De3 posit Insurance Reform, Regulatory Modernization, and

4 Taxpayer Protection Act of 1993, two hundred and fifty

5 cross-guarantee contracts described in subsection (a)(2) of

6 such section.’’.

7 (c) TERMINATION OF DEPOSIT INSURANCE OF GUAR8 ANTEED DEPOSITORY INSTITUTION.—Section 8(a) of the

9 Federal Deposit Insurance Act (12 U.S.C. 1818(a)) is

10 amended—

11 (1) by redesignating paragraph (10) as para12 graph (11); and

13 (2) by inserting after paragraph (9), the follow14 ing new paragraph:

15 ‘‘(10) TERMINATION OF INSURANCE OF GUAR16 ANTEED DEPOSITORY INSTITUTION.—The status of

17 any insured depository institution as an insured de18 pository institution shall cease as of the date the in19 stitution becomes a guaranteed depository institu20 tion.’’.

21 (d) INELIGIBILITY OF GUARANTEED DEPOSITORY

22 INSTITUTION FOR DEPOSIT INSURANCE UNDER THE

23 FEDERAL DEPOSIT INSURANCE ACT.—Section 5(a)(1) of

24 the Federal Deposit Insurance Act (12 U.S.C. 1815(a)(1))

25 is amended by striking ‘‘trust funds (as defined in section
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1 3(p)),’’ and inserting ‘‘trust funds (as defined in section

2 3(p)) and is not a guaranteed depository institution,’’.

3 (e) APPLICABILITY OF INSURANCE LOGO PROVI4 SIONS.—Section 18(a) of the Federal Deposit Insurance

5 Act (12 U.S.C. 1828(a)) is amended by adding at the end

6 the following new paragraph:

7 ‘‘(4) APPLICABILITY TO GUARANTEED INSTITU8 TIONS.—For purposes of this subsection, the terms

9 ‘insured bank’ and ‘insured savings association’ shall

10 be deemed to include any bank (as defined in section

11 3(a) without regard to paragraph (5) of such sec12 tion) and any savings association (as defined in sec13 tion 3(b) without regard to paragraph (4) of such

14 section) which is a guaranteed depository institu15 tion.’’.

16 (f) GUARANTEED DEPOSITORY INSTITUTIONS NOT

17 EXEMPT FROM LIMITATION ON INSURANCE UNDERWRIT18 ING.—Section 24(b) of the Federal Deposit Insurance Act

19 (12 U.S.C. 1831a(b)) is amended by adding at the end

20 the following new paragraph:

21 ‘‘(3) APPLICABILITY TO GUARANTEED DEPOSI22 TORY INSTITUTIONS.—Notwithstanding section

23 3(a)(5), the term ‘insured State bank’ includes, for

24 purposes of this subsection, a State bank which is a

25 guaranteed depository institution.’’.
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1 SEC. 206. AMENDMENTS TO OTHER BANKING LAWS.

2 (a) EXEMPTION FROM DEPOSITORY INSTITUTION

3 MANAGEMENT INTERLOCKS ACT.—Section 205 of the De4 pository Institution Management Interlocks Act (12

5 U.S.C. 3204) is amended by adding at the end the follow6 ing new paragraph:

7 ‘‘(10) GUARANTEED DEPOSITORY INSTITU8 TION.—Any guaranteed depository institution and

9 any affiliate of such institution.’’.

10 (b) EXEMPTION FROM REAL ESTATE APPRAISAL

11 REQUIREMENTS.—Section 1121(4) of the Financial Insti12 tutions Reform, Recovery, and Enforcement Act of 1989

13 (12 U.S.C. 3350(4)) is amended to read as follows:

14 ‘‘(4) FEDERALLY RELATED TRANSACTION.—

15 The term ‘Federally related transaction’—

16 ‘‘(A) means any real estate-related finan17 cial transaction which—

18 ‘‘(i) a Federal financial institutions

19 regulatory agency or the Resolution Trust

20 Corporation engages in, contracts for, or

21 regulates;

22 ‘‘(ii) requires the services of an ap23 praiser; and

24 ‘‘(B) does not include any real estate-relat25 ed financial transaction which is regulated by a

26 Federal financial institutions regulatory agency
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1 solely by reason of the involvement of a guaran2 teed depository institution (as defined in section

3 101(a)(7) of the Deposit Insurance Reform,

4 Regulatory Modernization, and Taxpayer Pro5 tection Act of 1993) in such transaction.’’.

6 (c) EXEMPTION FROM PAYMENT SYSTEM REQUIRE7 MENTS.—Subtitle A of title IV of the Federal Deposit In8 surance Corporation Improvement Act of 1991 (12 U.S.C.

9 4401 et seq.) is amended by adding at the end the follow10 ing new section:

11 ‘‘SEC. 408. EXEMPTION FOR GUARANTEED DEPOSITORY IN12 STITUTIONS.

13 ‘‘This subtitle shall not apply with respect to a depos14 itory institution which is a guaranteed depository institu15 tion (as defined in section 101(a)(7) of the Deposit Insur16 ance Reform, Regulatory Modernization, and Taxpayer

17 Protection Act of 1993).’’.

18 (d) EXEMPTION FROM THE INTERNATIONAL LEND19 ING SUPERVISION ACT OF 1983.—The last sentence of

20 section 903(2) of the International Lending Supervision

21 Act of 1983 (12 U.S.C. 3902(2)) is amended by inserting

22 ‘‘or a guaranteed depository institution (as defined in sec23 tion 101(a)(7) of the Deposit Insurance Reform, Regu24 latory Modernization, and Taxpayer Protection Act of

25 1993)’’ before the period.
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1 TITLE III—AMENDMENTS TO TITLE 11,

2 UNITED STATES CODE

3 Subtitle A—Amendments to Chapter 1 of

4 Title 11

5 SEC. 301. DEFINITIONS.

6 Section 101 of title 11, United States Code, is

7 amended—

8 (a) by redesignating subsection (3) as sub9 section (29);

10 (b) by redesignating subsections (4)–(7) as sub11 sections (3)–(6);

12 (c) by adding new subsection (7)—

13 ‘‘(7) ‘company’ means any corporation, partner14 ship, business trust, association, or similar organiza15 tion, but does not include a governmental unit;’’;

16 (d) by adding new subsection (11)—

17 ‘‘(11) ‘cross-guarantee contract’ means a con18 tract which—

19 ‘‘(A) is entered into between—

20 ‘‘(i) one or more companies, at least

21 one of which is a depository institution;

22 and

23 ‘‘(ii) a cross-guarantee syndicate;

24 ‘‘(B) is approved by the regulation cor25 poration under section 123 of title I of this Act;
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1 ‘‘(C) has become effective in accordance

2 with the contract’s terms; and

3 ‘‘(D) is not enjoined under section

4 123(e)(2)(B) of title I of this Act;’’;

5 (e) by adding new subsection (12)—

6 ‘‘(12) ‘cross-guarantee obligation’ means an ob7 ligation of a direct guarantor arising out of a cross8 guarantee or stop-loss contract, and includes the ob9 ligations of such guarantor under section 125(c)(2)

10 of title I of this Act and sections 321 and 355 of

11 this title;’’;

12 (f) by adding new subsection (13)—

13 ‘‘(13) ‘cross-guarantee premium payment’

14 means the payment a guaranteed company periodi15 cally makes to the guaranteed company’s direct

16 guarantors under the terms of a cross-guarantee

17 contract;’’;

18 (g) by adding new subsection (14)—

19 ‘‘(14) ‘cross-guarantee syndicate’ means any

20 group of direct guarantors which has entered into a

21 cross-guarantee contract with one or more guaran22 teed companies;’’;

23 (h) by redesignating subsections (11), (12), and

24 (13) as subsections (15), (16), and (17);

25 (i) by adding new subsection (18)—
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1 ‘‘(18) ‘depository institution’ has the meaning

2 given to such term in section 3(c)(1) of the Federal

3 Deposit Insurance Act (12 U.S.C. 1813(c)(1)), how4 ever, for the purposes of this title, depository institu5 tion shall not mean a Federal branch or an insured

6 branch as those terms are defined in sections (3)(r)

7 and (3)(s) of the Federal Deposit Insurance Act (12

8 U.S.C. 1813 (r) and (s));’’;

9 (j) by adding new subsection (19)—

10 ‘‘(19) ‘direct guarantor’ means a member of a

11 cross-guarantee or stop-loss syndicate which has en12 tered into a cross-guarantee or stop-loss contract

13 with a guaranteed party;’’;

14 (k) by redesignating subsections (14)–(21A) as

15 subsections (20)–(28) and by redesignating sub16 sections (22)–(27) as subsections (30)–(35);

17 (l) by adding new subsection (36)—

18 ‘‘(36) ‘guaranteed company’ means any com19 pany which has entered into a cross-guarantee con20 tract with a cross-guarantee syndicate and has guar21 anteed obligations outstanding as of the date of the

22 filing of the petition;’’;

23 (m) by adding new subsection (37)—
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1 ‘‘(37) ‘guaranteed creditor’ means any entity

2 who owns or is the beneficiary of a guaranteed obli3 gation;’’;

4 (n) by adding new subsection (38)—

5 ‘‘(38) ‘guaranteed obligation’ means an obliga6 tion of a guaranteed party of which a cross-guaran7 tee or stop-loss syndicate has guaranteed perform8 ance, including the timely payment of principal and

9 interest, if a failure to perform in a timely manner

10 constitutes a breach of contract;’’;

11 (o) by adding new subsection (39)—

12 ‘‘(39) ‘guaranteed party’ means any guaranteed

13 company or nondepository guarantor;’’;

14 (p) by redesignating subsections (28)–(35) as

15 subsections (40)–(47) and subsections (36)–(38) as

16 subsections (49)–(51);

17 (q) by adding new subsection (53)—

18 ‘‘(53) ‘monitoring fee payment’ means the peri19 odic payment made by a guaranteed party to a syn20 dicate agent under the terms of the guaranteed par21 ty’s cross-guarantee or stop-loss contract;’’;

22 (r) by adding new subsection (55)—

23 ‘‘(55) ‘nondepository guarantor’ means any per24 son or company which has entered into a stop-loss

25 contract with a stop-loss syndicate;’’;
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1 (s) by redesignating subsection (39) as sub2 section (68);

3 (t) by redesignating subsection (40) as sub4 section (54);

5 (u) by redesignating subsections (41)–(44) as

6 subsections (56)–(59);

7 (v) by adding new subsection (60)—

8 ‘‘(60) ‘regulation corporation’ means the Cross9 Guarantee Regulation Corporation;’’;

10 (w) by redesignating subsections (45)–(51) as

11 subsections (61)–(67);

12 (x) by redesignating subsections (52) and (53)

13 as subsections (69) and (70), subsection (54) as

subsection (79) and subsection (54) 1 14 as subsection

15 ‘‘(71)’’;

16 (y) by adding new subsection (72)—

17 ‘‘(72) ‘stop-loss contract’ means a contract

18 which—

19 ‘‘(A) is entered into between a person or a

20 company and a stop-loss syndicate;

21 ‘‘(B) is approved by the regulation cor22 poration under section 123 of title I of this Act;

23 ‘‘(C) has become effective in accordance

24 with the contract’s terms; and
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1 ‘‘(D) is not enjoined under section

2 123(e)(2)(B) of title I of this Act;’’;

3 (z) by adding new subsection (73)—

4 ‘‘(73) ‘stop-loss premium payment’ means the

5 payment a nondepository guarantor periodically

6 makes to direct guarantors under the nondepository

7 guarantor’s stop-loss contract;’’;

8 (aa) by adding new subsection (74)—

9 ‘‘(74) ‘stop-loss syndicate’ means any group of

10 direct guarantors which has entered into a stop-loss

11 contract with a nondepository guarantor;’’;

12 (bb) by adding new subsection (77)—

13 ‘‘(77) ‘syndicate agent’ means any person or

14 company who acts as the agent for the direct guar15 antors under any cross-guarantee or stop-loss con16 tract;’’ ; and

17 (cc) by redesignating subsection (55) as subsection (80), subsection (55) 1 18 as subsection (75),

subsection (56) as subsection (48), subsection (56) 19 1

20 as subsection (76), subsection (57) as subsection

(52), and subsection (57) 1 21 as subsection (78).

22 SEC. 302. APPLICABILITY OF CHAPTERS.

23 Section 103 of title 11, United States Code, is

24 amended—
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1 (a) in subsection (a) by striking ‘‘section 1161’’

2 and adding ‘‘sections 1161 and 1181’’;

3 (b) by adding new subsection (h)—

4 ‘‘(h) Subchapter V of chapter 11 of this title applies

5 only in a case under such chapter in which a guaranteed

6 company is the debtor’’; and

7 (c) by redesignating subsections (h) and (i) as

8 (i) and (j).

9 SEC. 303. PUBLIC ACCESS TO PAPERS.

10 Section 107 of title 11, United States Code, is

11 amended—

12 (a) in subsection (a) by striking ‘‘subsection

13 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

14 (b) by adding new subsection (c)—

15 ‘‘(c) Notwithstanding subsection (a) of this section,

16 the identity of a guaranteed creditor and the amount of

17 a guaranteed creditor’s claim in a case under subchapter

18 V of chapter 11 is not a matter of public record and shall

19 be kept confidential.’’.

20 SEC. 304. WHO MAY BE A DEBTOR.

21 Section 109 of title 11, United States Code, is

22 amended—

23 (a) in subsection (b)(2) by striking ‘‘or’’ from

24 the end of the subsection;
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1 (b) in subsection (b)(3) by striking ‘‘.’’ and

2 adding ‘‘; or’’ at the end of the subsection;

3 (c) by adding new paragraph (b)(4)—

4 ‘‘(4) a guaranteed company.’’;

5 (d) in subsection (d) by striking ‘‘and a rail6 road’’ and inserting ‘‘a railroad, and a guaranteed

7 company’’;

8 (e) by adding new subsection (h)—

9 ‘‘(h) A company must be a debtor under subchapter

10 V of chapter 11 if—

11 ‘‘(1) the company is a guaranteed company; or

12 ‘‘(2) the company would be a guaranteed com13 pany but for the requirement that the company has

14 guaranteed obligations outstanding as of the date of

15 the filing of the petition and after the date of the

16 filing of the petition, the company incurs guaranteed

17 obligations’’; and

18 (f) by adding new subsection (i)—

19 ‘‘(i) Once a guaranteed company has become a debtor

20 under subchapter V of chapter 11, it is not eligible for

21 relief under any other subchapter of chapter 11 or under

22 any other chapter in this title.’’
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1 Subtitle B—Amendments to Chapter 3 of

2 Title 11

3 SEC. 311. PARTY IN INTEREST.

4 Title 11, United States Code, is amended by adding

5 new section 308—

6 ‘‘§ 308. Party in Interest

7 ‘‘(a) The regulation corporation shall be a party in

8 interest in any action seeking to impair or limit the obliga9 tions or duties of the debtor or of a direct guarantor under

10 a cross-guarantee or stop-loss contract.

11 ‘‘(b) A cross-guarantee or stop-loss syndicate shall be

12 a party in interest for the purpose of filing objections to

13 the allowance of a claim or interest as provided under sec14 tion 502(a) of this title.

15 ‘‘(c) A cross-guarantee or stop-loss syndicate shall be

16 a party in interest in any determination of whether a claim

17 is a guaranteed obligation under a cross-guarantee or

18 stop-loss contract in a case under subchapter V of chapter

19 11 of this title.’’.

20 SEC. 312. QUALIFICATION OF TRUSTEE.

21 Section 322 of title 11, United States Code, is

22 amended—

23 (a) in subsection (a) by inserting ‘‘1183,’’ after

24 ‘‘1163,’’; and

25 (b) by adding new paragraph (b)(3)—
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1 ‘‘(3) In a case under subchapter V of chapter

2 11, the United States trustee shall consult with the

3 syndicate agent monitoring the debtor as of the date

4 of the filing of the petition and shall consider any

5 existing bonds covering the guaranteed company

6 when determining the amount of the bond required

7 to be filed under subsection (a) of this section.’’.

8 SEC. 313. NOTICE.

9 Section 342 of title 11, United States Code, is

10 amended by adding new subsection (c)—

11 ‘‘(c) Notwithstanding subsection (a) of this section,

12 notice of the entry of an order for relief in a case under

13 subchapter V of chapter 11 shall be given by publication

14 and shall be given in writing to the syndicate agent and

15 to all creditors having claims that are not guaranteed obli16 gations. Notice to the syndicate agent shall constitute no17 tice to all guaranteed creditors in the case.’’.

18 SEC. 314. MONEY OF ESTATES.

19 Section 345 of title 11, United States Code, is

20 amended in subsection (b) by inserting after the third

21 usage of ‘‘United States’’ ‘‘or is guaranteed under a cross22 guarantee contract.’’.

23 SEC. 315. AUTOMATIC STAY.

24 Section 362 of title 11, United States Code, is

25 amended by adding new paragraph (b)(17)—
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1 ‘‘(17) under subsection (a) of this section, of

2 the exercise of any right of a guaranteed creditor

3 under applicable nonbankruptcy law to collect, en4 force or recover a guaranteed obligation from the

5 debtor.’’.

6 SEC. 316. EXECUTORY CONTRACTS AND UNEXPIRED

7 LEASES.

8 Section 365 of title 11, United States Code, is

9 amended—

10 (a) in subsection (a) by striking ‘‘and (d)’’ and

11 inserting ‘‘(d), and (q)’’;

12 (b) in paragraph (e)(1), by inserting ‘‘guaran13 teed obligation,’’ after the first usage of ‘‘contract’’;

14 by inserting ’’, guaranteed obligation,’’ after the sec15 ond usage of ‘‘contract’’; by striking ‘‘or’’ after the

16 first usage of ‘‘terminated’’; by inserting ‘‘;’’ after

17 the first usage of ‘‘terminated’’; by inserting ‘‘or any

18 liability thereunder accelerated,’’ after the first

19 usage of ‘‘modified,’’; by striking ‘‘or’’ after ‘‘right’’;

20 by inserting ‘‘;’’ after ‘‘right’’; by inserting ‘‘, or li21 ability’’ after ‘‘obligation’’; by inserting ‘‘, guaran22 teed obligation,’’ after the third usage of ‘‘contract’’;

23 by striking ‘‘or’’ after the second usage of ‘‘termi24 nated’’; by inserting ‘‘;’’ after the second usage of

25 ‘‘terminated’’; by inserting ‘‘or accelerated’’ after the
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1 second usage of ‘‘modified,’’; and by inserting ‘‘,

2 guaranteed obligation,’’ after the fourth usage of

3 ‘‘contract’’;

4 (c) in subparagraph (e)(2)(B), by striking

5 ‘‘such contract is a’’ and inserting ‘‘such contract is

6 not a guaranteed obligation but is some other’’;

7 (d) by adding a new subsection (q)—

8 ‘‘(q) Notwithstanding subsection (c)(2) of this sec9 tion, the trustee shall be deemed to have assumed as of

10 the date of filing of the petition all cross-guarantee and

11 stop-loss contracts to which the debtor is a party. The

12 trustee shall immediately pay all cross-guarantee premium

13 payments, stop-loss premium payments, and monitoring

14 fee payments due under any cross-guarantee or stop-loss

15 contract so assumed. Any claim for a subsequent breach

16 of the obligations under such contracts shall be entitled

17 to priority under section 507(a)(1). The trustee shall not

18 reject any cross-guarantee or stop-loss contract.’’; and

19 (e) in paragraph (f)(1) by inserting after ‘‘Ex20 cept as provided in subsection (c) of this section’’

21 the following to complete the clause, ‘‘and excluding

22 those executory contracts described in subsection

23 (q)’’.
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1 Subtitle C—Amendments to Chapter 5 of

2 Title 11

3 SEC. 321. OBLIGATIONS OF DIRECT GUARANTORS.

4 Title 11, United States Code, is amended by adding

5 a new section 511—

6 § 511. Obligations of Direct Guarantors

7 ‘‘The direct guarantors of a debtor shall pay to the

8 trustee the amount by which losses accrued by the estate

9 as a direct guarantor since the date the petition was filed

10 exceed the cross-guarantee and stop-loss premiums the es11 tate has accrued since that date. Such payment shall be

12 received by the trustee on the effective date of a plan con13 firmed under section 1129 of this title or, in the case of

14 a liquidation under section 1187 of this title, at the time

15 of the transfer to an unrelated party or the termination

16 of all of the estate’s guaranteed obligations. The claim re17 sulting from the amount paid by the direct guarantors in

18 accordance with this subsection shall be subordinated to

19 all other claims in the case for the purpose of distribution

20 under this title.’’.

21 SEC. 322. DEBTOR’S DUTIES.

22 Section 521 of title 11, United States Code, is

23 amended—

24 (a) in paragraph (1) by inserting ‘‘(a)’’ at the

25 beginning of the paragraph; and
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1 (b) by adding new subparagraph (1)(b)—

2 ‘‘(b) in a case under subchapter V of chapter 11 and

3 subject to the requirement of subsection 107(c) of this

4 title, file under seal the list of guaranteed creditors and

5 the amount of the claims of the guaranteed creditors.’’.

6 SEC. 323. EXCEPTIONS TO DISCHARGE.

7 Section 523 of title 11, United States Code, is

8 amended by adding new paragraph (a)(13)—

9 ‘‘(13) which arises as a result of the debtor’s

10 cross-guarantee obligations.’’.

11 SEC. 324. LIMITATION ON AVOIDING POWERS.

12 Section 546 of title 11, United States Code, is

13 amended by adding new subsection (h)—

14 ‘‘(h) Notwithstanding sections 544, 545, 547 and

15 548(a)(2) of this title, the trustee may not avoid a transfer

16 that is a cross-guarantee premium payment, a stop-loss

17 premium payment, or a monitoring fee payment made be18 fore the commencement of the case, except under section

19 548(a)(1) of this title.’’.

20 SEC. 325. PREFERENCES.

21 Section 547 of title 11, United States Code, is

22 amended by adding new subsection (h)—

23 ‘‘(h) For the purposes of this section, a payment of

24 a guaranteed obligation is deemed to be a payment of a
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1 debt incurred by the debtor in the ordinary course of busi2 ness or financial affairs of the debtor and the transferee.’’.

3 SEC. 326. FRAUDULENT TRANSFERS AND OBLIGATIONS.

4 Section 548 of title 11, United States Code, is

5 amended in paragraph (d)(2) by adding new subparagraph

6 (E)—

7 ‘‘(E) A cross-guarantee syndicate or a syndicate

8 agent that receives a cross-guarantee premium

9 payment, a stop-loss premium payment, or a

10 monitoring fee payment takes for value to the

11 extent of such payment.’’.

12 SEC. 327. POST-PETITION TRANSACTIONS.

13 Section 549 of title 11, United States Code, is

14 amended—

15 (a) in subsection (a) by striking ‘‘subsections

16 (b) or (c)’’ and by inserting ‘‘subsections (b), (c), or

17 (d)’’;

18 (b) by adding new subsection (d)—

19 ‘‘(d) The trustee may not avoid under subsection (a)

20 of this section a transfer of property to a transferee whose

21 claim, in the absence of such transfer, would be guaran22 teed under a cross-guarantee or stop-loss contract.’’; and

23 (c) by redesignating subsection (d) as sub24 section (e).
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1 SEC. 328. CONTRACTUAL RIGHT TO LIQUIDATE A SECURI2 TIES CONTRACT.

3 Section 555 of title 11, United States Code, is

4 amended—

5 (a) by inserting ‘‘(a)’’ at the beginning of the

6 section; and

7 (b) by adding new subsection (b)—

8 ‘‘(b) Subsection (a) of this section shall not apply in

9 any case under subchapter V of chapter 11.’’.

10 SEC. 329. CONTRACTUAL RIGHT TO LIQUIDATE A COMMOD11 ITIES CONTRACT OR FORWARD CONTRACT.

12 Section 556 of title 11, United States Code, is

13 amended—

14 (a) by inserting ‘‘(a)’’ at the beginning of the

15 section; and

16 (b) by adding new subsection (b)—

17 ‘‘(b) Subsection (a) of this section shall not apply in

18 any case under subchapter V of chapter 11.’’.

19 SEC. 330. CONTRACTUAL RIGHT TO LIQUIDATE A REPUR20 CHASE AGREEMENT.

21 Section 559 of title 11, United States Code, is

22 amended—

23 (a) by inserting ‘‘(a)’’ at the beginning of the

24 section; and

25 (b) by adding new subsection (b)—
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1 ‘‘(b) Subsection (a) of this section shall not apply in

2 any case under subchapter V of chapter 11.’’.

3 SEC. 331. CONTRACTUAL RIGHT TO TERMINATE A SWAP

4 AGREEMENT.

5 Section 560 of title 11, United States Code, is

6 amended—

7 (a) by inserting ‘‘(a)’’ at the beginning of the

8 section; and

9 (b) by adding new subsection (b)—

10 ‘‘(b) Subsection (a) of this section shall not apply in

11 any case under subchapter V of chapter 11.’’.

12 Subtitle D—Amendments to Chapter 11 of

13 Title 11

14 CHAPTER 1—AMENDMENTS TO EXISTING LAW

15 SEC. 341. CREDITORS’ AND EQUITY SECURITY HOLDERS’

16 COMMITTEES.

17 Section 1102 of title 11, United States Code, is

18 amended in paragraph (a)(1) by inserting at the end ‘‘,

19 provided, however, that only creditors holding claims that

20 are not guaranteed obligations under a cross-guarantee or

21 stop-loss contract and are not direct guarantors may be

22 appointed to such committee in a case under subchapter

23 V of chapter 11’’.
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1 SEC. 342. WHO MAY FILE A PLAN.

2 Section 1121 of title 11, United States Code, is

3 amended—

4 (a) by adding new subsection (d)—

5 ‘‘(d) Notwithstanding subsection (c) of this section,

6 a guaranteed creditor may not file a plan in a case under

7 subchapter V of chapter 11’’; and

8 (b) by redesignating subsection (d) as sub9 section (e).

10 SEC. 343. IMPAIRMENT OF CLAIMS OR INTERESTS.

11 Section 1124 of title 11, United States Code, is

12 amended—

13 (a) by inserting ‘‘(a)’’ at the beginning of the

14 section; and

15 (b) by adding new subsection (b)—

16 ‘‘(b) Notwithstanding subsection (a) of this section,

17 the claim of a guaranteed creditor is deemed to be

18 unimpaired in a case under subchapter V of chapter 11.’’.

19 SEC. 344. ACCEPTANCE OF PLAN.

20 Section 1126 of title 11, United States Code, is

21 amended in subsection (a) by inserting at the end of the

22 first sentence ‘‘, provided, however, that a guaranteed

23 creditor is not entitled to accept or reject a plan in a case

24 under subchapter V of chapter 11’’.
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1 SEC. 345. CONFIRMATION HEARING.

2 Section 1128 of title 11, United States Code, is

3 amended in subsection (b) by inserting after ‘‘A party in

4 interest’’ ‘‘, other than a guaranteed creditor in a case

5 under subchapter V of chapter 11,’’.

6 SEC. 346. CONFIRMATION OF PLAN.

7 Section 1129 of title 11, United States Code, is

8 amended—

9 (a) in paragraph (a)(4), by inserting at the end

10 ‘‘, provided, however, that no such approval of any

11 payment by a cross-guarantee or stop-loss syndicate

12 is required when the cross-guarantee or stop-loss

13 syndicate is the proponent of the plan and the pay14 ment is made pursuant to a cross-guarantee or stop15 loss contract’’; and

16 (b) by adding new subsection (e)—

17 ‘‘(e) Notwithstanding subsections (a) and (b) of this

18 section, the court may confirm a plan that otherwise meets

19 the requirements of subsection (a) and (b) of this section

20 even though, in a case under subchapter V of chapter 11,

21 a guaranteed creditor receives or retains no property

22 under the plan.’’.

23 SEC. 347. EFFECT OF CONFIRMATION.

24 Section 1141 of title 11, United States Code, is

25 amended—
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1 (a) in subsection (a) by striking ‘‘(d)(2) and

2 (d)(3)’’ and by inserting ‘‘(d)(2), (d)(3), (d)(4), and

3 (d)(5)’’;

4 (b) by inserting new paragraph (d)(4)—

5 ‘‘(4) Except as provided in subsection 365(k) of

6 this title, the confirmation of a plan does not dis7 charge a guaranteed company that is a debtor under

8 subchapter V of chapter 11 of this title from any

9 debt arising out of a guaranteed obligation’’;

10 (c) by inserting new paragraph (d)(5)—

11 ‘‘(5) Except as provided in section 365(k) of

12 this title, the confirmation of a plan does not dis13 charge a debtor of its obligations and liabilities as

14 a direct guarantor under a cross-guarantee or stop15 loss contract’’; and

16 (d) by redesignating paragraph (d)(4) as (d)(6).

17 CHAPTER 2—ENACTMENT OF SUBCHAPTER V

18 SEC. 351. GUARANTEED COMPANY REORGANIZATION.

19 Title 11, United States Code, is amended by adding

20 a new subchapter V—

21 ‘‘Subchapter V—Guaranteed Company

22 Reorganization’’.

23 SEC. 352. INAPPLICABILITY OF OTHER SECTIONS.

24 Title 11, United States Code, is amended by adding

25 new section 1181—
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1 ‘‘§ 1181. Inapplicability of other sections

2 ‘‘Sections 341, 343, 1104, 1105, and 1107 do not

3 apply in a case under subchapter V of Chapter 11.’’.

4 SEC. 353. EFFECTIVE DATE OF FILING.

5 Title 11, United States Code, is amended by adding

6 new section 1182—

7 § 1182. Effective date of filing

8 ‘‘The effective date and time of the filing of a petition

9 under this subchapter shall be the close of business on

10 the business day preceding the date on which the petition

11 is actually filed.’’.

12 SEC. 354. APPOINTMENT OF TRUSTEE.

13 Title 11, United States Code, is amended by adding

14 new section 1183—

15 ‘‘§ 1183. Appointment of trustee

16 ‘‘As soon as practicable after the entry of an order

17 for relief, the regulation corporation shall submit to the

18 United States Trustee a list of five disinterested persons

19 who are qualified and willing to serve as the trustee in

20 the case. The United States Trustee shall appoint one

21 such person to serve as the trustee in the case. Neither

22 the syndicate agent monitoring the debtor as of the date

23 of the filing of the petition nor a governmental unit or

24 the employee of a governmental unit shall be eligible to

25 serve as the trustee.’’.
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1 SEC. 355. LIABILITY OF DIRECT GUARANTORS FOR TRANS2 FERS TO GUARANTEED CREDITORS.

3 Title 11, United States Code, is amended by adding

4 new section 1184—

5 ‘‘§ 1184. Liability of direct guarantors for transfers to

6 guaranteed creditors

7 ‘‘The trustee may recover for the benefit of all guar8 anteed creditors from the direct guarantors of the debtor

9 the amount of any transfers of property of the estate to

10 or for the benefit of guaranteed creditors that enable such

11 creditors to receive more than such creditors would receive

12 if the trustee was engaged in a liquidation pursuant to

13 section 1187 of this chapter and such transfers had not

14 been made.’’.

15 SEC. 356. REPLACEMENT OR MODIFICATION OF CROSS16 GUARANTEE CONTRACT.

17 Title 11, United States Code, is amended by adding

18 new section 1185—

19 ‘‘§ 1185. Replacement or modification of cross-guaran20 tee contract

21 ‘‘Prior to the debtor filing any application with the

22 resolution corporation for approval of any replacement

23 cross-guarantee contract or for the approval of any modi24 fication of the debtor’s existing cross-guarantee contract,

25 the debtor must obtain the approval of the court to enter
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1 into such replacement contract or to modify such existing

2 contract.’’.

3 SEC. 357. EFFECT OF FEDERAL, STATE, AND LOCAL LEGIS4 LATION AND REGULATIONS.

5 Title 11, United States Code, is amended by adding

6 new section 1186—

7 ‘‘§ 1186. Effect of Federal, State, and local legislation

8 and regulations

9 ‘‘(a) Except with respect to merger, modification of

10 the financial structure of the debtor, or the issuance or

11 sale of securities under a plan, the trustee and the debtor

12 are subject to all Federal, State, and local legislation, reg13 ulations and orders to the same extent as the debtor would

14 be if a petition commencing the case under this chapter

15 had not been filed.

16 ‘‘(b) Notwithstanding subsection (a) of this section,

17 neither Federal receivership law, State receivership law,

18 nor any laws prohibiting the enforcement of an agreement

19 that is not contained in the records of a debtor under this

20 subchapter, including sections 212(a) and 217(4) of the

21 Financial Institutions Reform, Recovery, and Enforce22 ment Act of 1989 (12 U.S.C. 1821(d)(9)(A) and 1823(e)),

23 shall be applicable.

24 ‘‘(c) Notwithstanding any State or Federal law, de25 positors in a guaranteed company that is a debtor under
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1 this subsection shall not receive any preference in distribu2 tion under this title over other creditors.’’.

3 SEC. 358. LIQUIDATION.

4 Title 11, United States Code, is amended by adding

5 new section 1187—

6 ‘‘§ 1187. Liquidation

7 ‘‘On request of a party in interest and after notice

8 and a hearing, the court may order the trustee to cease

9 the debtor’s operation and to collect and reduce to money

10 all of the property of the estate in the same manner as

11 if the case were a case under chapter 7 of this title if

12 such liquidation is in the best interest of creditors’’.

13 TITLE IV—AMENDMENTS TO TITLE 28,

14 UNITED STATES CODE

15 SEC. 401. VENUE.

16 Title 28, United States Code, is amended by adding

17 new subsection 1409(f)—

18 ‘‘(f) A proceeding arising in or related to a case under

19 subchapter V of chapter 11 of title 11 regarding the debt20 or’s satisfaction of a guaranteed obligation, whether aris21 ing before or after the commencement of the case, may

22 be commenced in the district court for the district where

23 the State or Federal court sits in which the party com24 mencing such proceeding may, under applicable non-bank25 ruptcy venue provisions, have brought an action on such
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1 claim, or in the district court in which such case is pend2 ing. The cross-guarantee syndicate which has entered into

3 a cross-guarantee contract in such a case shall be a party

4 in interest in any proceeding commenced under this sub5 section.’’.

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