I 

111TH CONGRESS 

1ST SESSION H. R. 1669 

To require the Secretary of the Treasury to establish a market for municipal 

securities, to require cooperation between the Secretary and the Chairman of the Board of Governors of the Federal Reserve System in addressing the municipal securities market situation including through the 

establishment of municipal securities funding facilities, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 23, 2009 

Mr. CONNOLLY of Virginia introduced the following bill; which was referred 

to the Committee on Financial Services 

A BILL 

To require the Secretary of the Treasury to establish a 

market for municipal securities, to require cooperation 

between the Secretary and the Chairman of the Board 

of Governors of the Federal Reserve System in addressing the municipal securities market situation including 

through the establishment of municipal securities funding 

facilities, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE; DEFINITIONS. 

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

3 ‘‘Federal Municipal Bond Marketing Support and 

4 Securitization Act of 2009’’. 

5 (b) DEFINITIONS.—For purposes of this Act the fol6 lowing definitions shall apply: 

7 (1) BOARD.—The term ‘‘Board’’ means the 

8 Board of Governors of the Federal Reserve System. 

9 (2) GUARANTEE.—The term ‘‘guarantee’’ has 

10 the same meaning as in section 3 of the Federal Fi11 nancing Bank Act of 1978. 

12 (3) MUNICIPAL SECURITY DEFINED.—The term 

13 ‘‘municipal security’’ has the same meaning as in 

14 section 3(a)(30) of the Securities Exchange Act of 

15 1934 and includes pooled investment funds under 

16 trusts established by State or local governmental en17 tities and higher education savings plan trusts estab18 lished by States to the extent any such trust is not 

19 excluded by the Secretary and does not consist of 

20 funds invested by persons other than States or mu21 nicipalities the investment of which is subject to the 

22 direction of such person. 

23 (4) SECRETARY.—The term ‘‘Secretary’’ means 

24 the Secretary of the Treasury. 


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1 SEC. 2. COOPERATION TO ADDRESS LIMITATIONS ON AC2 CESS TO MARKETS FOR MUNICIPAL SECURI3 TIES. 

4 Upon the enactment of this Act, the Secretary of the 

5 Treasury and the Board of Governors of the Federal Re6 serve System shall consult with each other extensively for 

7 the purpose of— 

8 (1) finding solutions for the grave effects of the 

9 current financial crisis on the markets for municipal 

10 securities; and 

11 (2) cooperating in the activities authorized 

12 under this Act to alleviate to the extent practicable 

13 such effects on the municipal securities markets. 

14 SEC. 3. PURCHASE, SALE, GUARANTEE, AND 

15 SECURITIZATION OF MUNICIPAL SECURITIES 

16 BY SECRETARY AND FEDERAL FINANCING 

17 BANK AUTHORIZED. 

18 (a) IN GENERAL.—The Secretary of the Treasury 

19 shall establish a program, directly or through the Federal 

20 Financing Bank, to— 

21 (1) purchase municipal securities; 

22 (2) issue securities backed by pools of such mu23 nicipal securities; and 

24 (3) provide credit enhancement or guarantees 

25 for municipal securities. 


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1 (b) SPECIFIC AUTHORITY.—In addition to the au2 thority conferred under section 6 of the Federal Financing 

3 Bank Act of 1973 and subject to subsections (b) and (c) 

4 of such section, the Federal Financing Bank may— 

5 (1) make commitments to purchase and sell, 

6 and to purchase and sell on terms and conditions de7 termined by the Bank, any municipal security issued 

8 under a plan approved by the Secretary under sub9 section (c); 

10 (2) may guarantee the repayment of principal 

11 and interest on any municipal security issued under 

12 a plan approved by the Secretary under subsection 

13 (c); and 

14 (3) may issue and sell instruments representing 

15 interests in a pool consisting of municipal securities 

16 purchased by the Federal Financing Bank under 

17 this section. 

18 (c) AUTHORITY OF SECRETARY OVER METHOD, 

19 SOURCE, TIMING, TERMS, AND CONDITIONS OF MUNIC20 IPAL SECURITIES ISSUED FOR PURCHASE UNDER THIS

21 SECTION.—To insure the orderly and coordinated mar22 keting of municipal securities for purchase or guarantee 

23 as to principal and interest under this section, and to en24 sure that appropriate financing planning has been made 

25 with respect to such municipal securities, no municipal seVerDate Nov 24 2008 04:51 Mar 24, 2009 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1669.IH H1669

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1 curity may be purchased or guaranteed under this section 

2 unless the Secretary has approved, prior to the issuance 

3 of any such security — 

4 (1) the method of financing; 

5 (2) the source of financing; 

6 (3) the timing of financing in relation to mar7 ket conditions and financing by Federal agencies; 

8 and 

9 (4) the financing terms and conditions, includ10 ing rates of interest and maturities, of the municipal 

11 securities. 

12 (d) STATUS OF INSURANCE AND INSTRUMENTS.— 

13 Municipal securities sold by the Secretary, or by the Fed14 eral Financing Bank under subsection (b)(1), and instru15 ments issued by the Secretary, or by the Bank under sub16 section (b)(3), that represent pools consisting of municipal 

17 securities— 

18 (1) may be insured by the Secretary or the 

19 Bank, respectively, as to the payment of principal or 

20 interest by the issuer of the municipal security; and 

21 (2) shall not, other than in connection with a 

22 guarantee referred to in paragraph (1), be treated 

23 for any purpose as an instrument which has the full 

24 faith and credit of the United States. 


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1 SEC. 4. FEDERAL RESERVE BOARD CREDIT FACILITY. 

2 (a) ESTABLISHMENT AUTHORIZED.—The Board of 

3 Governors of the Federal Reserve System may establish 

4 a credit facility, using resources and authority available 

5 under the Federal Reserve Act, including section 10B and 

6 the third undesignated paragraph of section 13 of such 

7 Act, to provide financial resources for the purchase of mu8 nicipal securities by Federal reserve banks or member 

9 banks or other persons. 

10 (b) FUNDING FOR SECRETARY AND FEDERAL FI11 NANCING BANK.—Subject to the conditions described in 

12 the third undesignated paragraph of section 13, the Board 

13 may establish a credit facility, or use any credit facility 

14 established under subsection (a), to provide funds to the 

15 Secretary or the Federal Financing Bank to carry out any 

16 authority under section 3. 

17 SEC. 5. BUDGET AUTHORITY. 

18 Any authority of the Secretary or the Federal Fi19 nancing Bank under this Act to purchase or guarantee 

20 municipal securities shall be effective for any fiscal year 

21 only to the extent or in amounts provided in advance in 

22 appropriation Acts. 

Æ 


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