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[House Report 106-834]
[From the U.S. Government Publishing Office]

106th Congress                                            Rept. 106-834
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================

 
           FINANCIAL CONTRACT NETTING IMPROVEMENT ACT OF 2000

                                _______
                                

 September 7, 2000.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1161]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Banking and Financial Services, to whom was 
referred the bill (H.R. 1161) to revise the banking and 
bankruptcy insolvency laws with respect to the termination and 
netting of financial contracts, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Financial Contract Netting Improvement 
Act of 2000''.

SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR RECEIVERS OF 
                    INSURED DEPOSITORY INSTITUTIONS.

  (a) Definition of Qualified Financial Contract.--Section 
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)(D)(i)) is amended by inserting ``, resolution or order'' 
after ``any similar agreement that the Corporation determines by 
regulation''.
  (b) Definition of Securities Contract.--Section 11(e)(8)(D)(ii) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 
amended to read as follows:
                          ``(ii) Securities contract.--The term 
                        `securities contract'--
                                  ``(I) means a contract for the 
                                purchase, sale, or loan of a security, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                the foregoing, including any option to 
                                purchase or sell any such security, 
                                certificate of deposit, loan, interest, 
                                group or index, or option;
                                  ``(II) does not include any purchase, 
                                sale, or repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such agreement within the 
                                meaning of such term;
                                  ``(III) means any option entered into 
                                on a national securities exchange 
                                relating to foreign currencies;
                                  ``(IV) means the guarantee by or to 
                                any securities clearing agency of any 
                                settlement of cash, securities, 
                                certificates of deposit, mortgage loans 
                                or interests therein, group or index of 
                                securities, certificates of deposit, or 
                                mortgage loans or interests therein 
                                (including any interest therein or 
                                based on the value thereof) or option 
                                on any of the foregoing, including any 
                                option to purchase or sell any such 
                                security, certificate of deposit, loan, 
                                interest, group or index, or option;
                                  ``(V) means any margin loan;
                                  ``(VI) means any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) means any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                  ``(IX) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a securities 
                                contract under this clause, except that 
                                the master agreement shall be 
                                considered to be a securities contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                  ``(X) means any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
  (c) Definition of Commodity Contract.--Section 11(e)(8)(D)(iii) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is 
amended to read as follows:
                          ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                  ``(I) with respect to a futures 
                                commission merchant, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade;
                                  ``(II) with respect to a foreign 
                                futures commission merchant, a foreign 
                                future;
                                  ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                  ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                  ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                  ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                commodity contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a commodity 
                                contract under this clause only with 
                                respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (II), (III), (IV), (V), (VI), (VII), or 
                                (VIII); or
                                  ``(X) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
  (d) Definition of Forward Contract.--Section 11(e)(8)(D)(iv) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is amended 
to read as follows:
                          ``(iv) Forward contract.--The term `forward 
                        contract' means--
                                  ``(I) a contract (other than a 
                                commodity contract) for the purchase, 
                                sale, or transfer of a commodity or any 
                                similar good, article, service, right, 
                                or interest which is presently or in 
                                the future becomes the subject of 
                                dealing in the forward contract trade, 
                                or product or byproduct thereof, with a 
                                maturity date more than 2 days after 
                                the date the contract is entered into, 
                                including a repurchase transaction, 
                                reverse repurchase transaction, 
                                consignment, lease, swap, hedge 
                                transaction, deposit, loan, option, 
                                allocated transaction, unallocated 
                                transaction, or any other similar 
                                agreement;
                                  ``(II) any combination of agreements 
                                or transactions referred to in 
                                subclauses (I) and (III);
                                  ``(III) any option to enter into any 
                                agreement or transaction referred to in 
                                subclause (I) or (II);
                                  ``(IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                forward contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a forward contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                  ``(V) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV).''.
  (e) Definition of Repurchase Agreement.--Section 11(e)(8)(D)(v) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is 
amended to read as follows:
                          ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which definition also 
                        applies to the term `reverse repurchase 
                        agreement')--
                                  ``(I) means an agreement, including 
                                related terms, which provides for the 
                                transfer of 1 or more certificates of 
                                deposit, mortgage-related securities 
                                (as such term is defined in the 
                                Securities Exchange Act of 1934), 
                                mortgage loans, interests in mortgage-
                                related securities or mortgage loans, 
                                eligible bankers' acceptances, 
                                qualified foreign government securities 
                                or securities that are direct 
                                obligations of, or that are fully 
                                guaranteed by, the United States or any 
                                agency of the United States against the 
                                transfer of funds by the transferee of 
                                such certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests with a simultaneous 
                                agreement by such transferee to 
                                transfer to the transferor thereof 
                                certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests as described above, 
                                at a date certain not later than 1 year 
                                after such transfers or on demand, 
                                against the transfer of funds, or any 
                                other similar agreement;
                                  ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such participation within 
                                the meaning of such term;
                                  ``(III) means any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (IV);
                                  ``(IV) means any option to enter into 
                                any agreement or transaction referred 
                                to in subclause (I) or (III);
                                  ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a repurchase 
                                agreement under this subclause only 
                                with respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (III), or (IV); and
                                  ``(VI) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), or (V).
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security that is a direct obligation of, or 
                        that is fully guaranteed by, the central 
                        government of a member of the Organization for 
                        Economic Cooperation and Development (as 
                        determined by regulation or order adopted by 
                        the appropriate Federal banking authority).''.
  (f) Definition of Swap Agreement.--Section 11(e)(8)(D)(vi) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is amended 
to read as follows:
                          ``(vi) Swap agreement.--The term `swap 
                        agreement' means--
                                  ``(I) any agreement, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement; a currency swap, option, 
                                future, or forward agreement; an equity 
                                index or equity swap, option, future, 
                                or forward agreement; a debt index or 
                                debt swap, option, future, or forward 
                                agreement; a credit spread or credit 
                                swap, option, future, or forward 
                                agreement; a commodity index or 
                                commodity swap, option, future, or 
                                forward agreement; or a weather swap, 
                                weather derivative, or a weather 
                                option;
                                  ``(II) any agreement or transaction 
                                similar to any other agreement or 
                                transaction referred to in this clause 
                                that is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference in 
                                such agreement) and that is a forward, 
                                swap, future, or option on 1 or more 
                                rates, currencies, commodities, equity 
                                securities or other equity instruments, 
                                debt securities or other debt 
                                instruments, or economic indices or 
                                measures of economic risk or value;
                                  ``(III) any combination of agreements 
                                or transactions referred to in this 
                                clause;
                                  ``(IV) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV); 
                                and
                                  ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in 
                                subparagraph (I), (II), (III), (IV), or 
                                (V).
                        Such term is applicable for purposes of this 
                        title only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other statute, 
                        regulation, or rule, including the Securities 
                        Act of 1933, the Securities Exchange Act of 
                        1934, the Public Utility Holding Company Act of 
                        1935, the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the Investment 
                        Advisers Act of 1940, the Securities Investor 
                        Protection Act of 1970, the Commodity Exchange 
                        Act, and the regulations promulgated by the 
                        Securities and Exchange Commission or the 
                        Commodity Futures Trading Commission.''.
  (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) is amended to 
read as follows:
                          ``(viii) Transfer.--The term `transfer' means 
                        every mode, direct or indirect, absolute or 
                        conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the depository institutions's equity of 
                        redemption.''.
  (h) Treatment of Qualified Financial Contracts.--Section 11(e)(8) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
          (1) in subparagraph (A), by striking ``paragraph (10)'' and 
        inserting ``paragraphs (9) and (10)'';
          (2) in subparagraph (A)(i), by striking ``to cause the 
        termination or liquidation'' and inserting ``such person has to 
        cause the termination, liquidation, or acceleration'';
          (3) by amending subparagraph (A)(ii) to read as follows:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''; and
          (4) by amending subparagraph (E)(ii) to read as follows:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''.
  (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is amended by 
inserting ``section 5242 of the Revised Statutes of the United States 
(12 U.S.C. 91) or any other Federal or State law relating to the 
avoidance of preferential or fraudulent transfers,'' before ``the 
Corporation''.

SEC. 3. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED AND FAILING 
                    INSTITUTIONS.

  (a) In General.--Section 11(e)(8) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(e)(8)) is amended--
          (1) in subparagraph (E), by striking ``other than paragraph 
        (12) of this subsection, subsection (d)(9)'' and inserting 
        ``other than subsections (d)(9) and (e)(10)''; and
          (2) by adding at the end the following new subparagraphs:
                  ``(F) Clarification.--No provision of law shall be 
                construed as limiting the right or power of the 
                Corporation, or authorizing any court or agency to 
                limit or delay, in any manner, the right or power of 
                the Corporation to transfer any qualified financial 
                contract in accordance with paragraphs (9) and (10) of 
                this subsection or to disaffirm or repudiate any such 
                contract in accordance with paragraph (1).
                  ``(G) Walkaway clauses not effective.--
                          ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        depository institution in default.
                          ``(ii) Walkaway clause defined.--For purposes 
                        of this subparagraph, the term `walkaway 
                        clause' means a provision in a qualified 
                        financial contract that, after calculation of a 
                        value of a party's position or an amount due to 
                        or from 1 of the parties in accordance with its 
                        terms upon termination, liquidation, or 
                        acceleration of the qualified financial 
                        contract, either does not create a payment 
                        obligation of a party or extinguishes a payment 
                        obligation of a party in whole or in part 
                        solely because of such party's status as a 
                        nondefaulting party.''.
  (b) Technical and Conforming Amendment.--Section 11(e)(12)(A) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amended by 
inserting ``or the exercise of rights or powers'' after ``the 
appointment''.

SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL 
                    CONTRACTS.

  (a) Transfers of Qualified Financial Contracts to Financial 
Institutions.--Section 11(e)(9) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(e)(9)) is amended to read as follows:
          ``(9) Transfer of qualified financial contracts.--
                  ``(A) In general.--In making any transfer of assets 
                or liabilities of a depository institution in default 
                which includes any qualified financial contract, the 
                conservator or receiver for such depository institution 
                shall either--
                          ``(i) transfer to 1 financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
                        which is otherwise the subject of a bankruptcy 
                        or insolvency proceeding--
                                  ``(I) all qualified financial 
                                contracts between any person or any 
                                affiliate of such person and the 
                                depository institution in default;
                                  ``(II) all claims of such person or 
                                any affiliate of such person against 
                                such depository institution under any 
                                such contract (other than any claim 
                                which, under the terms of any such 
                                contract, is subordinated to the claims 
                                of general unsecured creditors of such 
                                institution);
                                  ``(III) all claims of such depository 
                                institution against such person or any 
                                affiliate of such person under any such 
                                contract; and
                                  ``(IV) all property securing or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                          ``(ii) transfer none of the qualified 
                        financial contracts, claims, property or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                  ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contracts and related claims and property 
                pursuant to subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall not make 
                such transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to 1 or more qualified 
                financial contracts, the contractual rights of the 
                parties to such qualified financial contracts, netting 
                contracts, security agreements or arrangements, or 
                other credit enhancements are enforceable substantially 
                to the same extent as permitted under this section.
                  ``(C) Transfer of contracts subject to the rules of a 
                clearing organization.--In the event that a conservator 
                or receiver transfers any qualified financial contract 
                and related claims, property and credit enhancements 
                pursuant to subparagraph (A)(i) and such contract is 
                subject to the rules of a clearing organization, the 
                clearing organization shall not be required to accept 
                the transferee as a member by virtue of the transfer.
                  ``(D) Definition.--For purposes of this section, the 
                term `financial institution' means a broker or dealer, 
                a depository institution, a futures commission 
                merchant, or any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.''.
  (b) Notice to Qualified Financial Contract Counterparties.--Section 
11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(10)(A)) is amended by amending the flush material following 
clause (ii) to read as follows: ``the conservator or receiver shall 
notify any person who is a party to any such contract of such transfer 
by 5:00 p.m. (eastern time) on the business day following the date of 
the appointment of the receiver, in the case of a receivership, or the 
business day following such transfer, in the case of a 
conservatorship.''.
  (c) Rights Against Receiver and Treatment of Bridge Banks.--Section 
11(e)(10) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(10)) 
is further amended--
          (1) by redesignating subparagraph (B) as subparagraph (D); 
        and
          (2) by inserting after subparagraph (A) the following new 
        subparagraphs:
                  ``(B) Certain rights not enforceable.--
                          ``(i) Receivership.--A person who is a party 
                        to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(A) or section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991 solely by reason of or incidental to 
                        the appointment of a receiver for the 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the receiver has been 
                        appointed)--
                                  ``(I) until 5:00 p.m. (eastern time) 
                                on the business day following the date 
                                of the appointment of the receiver; or
                                  ``(II) after the person has received 
                                notice that the contract has been 
                                transferred pursuant to paragraph 
                                (9)(A).
                          ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) or section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991, solely by reason of or incidental to 
                        the appointment of a conservator for the 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the conservator has been 
                        appointed).
                          ``(iii) Notice.--For purposes of this 
                        subsection, the Corporation as receiver or 
                        conservator of an insured depository 
                        institution shall be deemed to have notified a 
                        person who is a party to a qualified financial 
                        contract with such depository institution if 
                        the Corporation has taken steps reasonably 
                        calculated to provide notice to such person by 
                        the time specified in subparagraph (A) of this 
                        subsection.
                  ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                paragraph (9)--
                          ``(i) a bridge bank; or
                          ``(ii) a depository institution organized by 
                        the Corporation, for which a conservator is 
                        appointed either--
                                  ``(I) immediately upon the 
                                organization of the institution; or
                                  ``(II) at the time of a purchase and 
                                assumption transaction between such 
                                institution and the Corporation as 
                                receiver for a depository institution 
                                in default.''.

SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF 
                    QUALIFIED FINANCIAL CONTRACTS.

  (a) In General.--Section 11(e) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(e)) is further amended--
          (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively; and
          (2) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or receiver with respect to any 
        qualified financial contract to which an insured depository 
        institution is a party, the conservator or receiver for such 
        institution shall either--
                  ``(A) disaffirm or repudiate all qualified financial 
                contracts between--
                          ``(i) any person or any affiliate of such 
                        person; and
                          ``(ii) the depository institution in default; 
                        or
                  ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''.
  (b) Technical and Conforming Amendments.--Section 11(e)(8) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)), as amended by 
section 2(i), is further amended in subparagraph (C)(i), by striking 
``(11)'' and inserting ``(12)''.

SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

  Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(e)(8)(D)(vii)) is amended to read as follows:
                          ``(vii) Treatment of master agreement as 1 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract. If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.

SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991.

  (a) Definitions.--Section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4402) is amended--
          (1) in paragraph (2)--
                  (A) by inserting ``or exempt from such registration 
                pursuant to an order of the Securities and Exchange 
                Commission'' before the semicolon at the end of 
                subparagraph (A)(ii); and
                  (B) by inserting ``or that has been granted an 
                exemption pursuant to section 4(c)(1) of such Act'' 
                before the period at the end of subparagraph (B);
          (2) in paragraph (6)--
                  (A) by redesignating subparagraphs (B) through (D) as 
                subparagraphs (C) through (E), respectively;
                  (B) by inserting after subparagraph (A) the following 
                new subparagraph:
                  ``(B) an uninsured national bank or an uninsured 
                State bank that is a member of the Federal Reserve 
                System if the national bank or State member bank is not 
                eligible to make application to become an insured bank 
                under section 5 of the Federal Deposit Insurance 
                Act;''; and
                  (C) by amending subparagraph (C) (as redesignated) to 
                read as follows:
                  ``(C) a branch or agency of a foreign bank, a foreign 
                bank and any branch or agency of the foreign bank, or 
                the foreign bank that established the branch or agency, 
                as those terms are defined in section 1(b) of the 
                International Banking Act of 1978;'';
          (3) in paragraph (11), by adding before the period ``and any 
        other clearing organization with which such clearing 
        organization has a netting contract'';
          (4) by amending paragraph (14)(A)(i) to read as follows:
                          ``(i) means a contract or agreement between 
                        two or more financial institutions, clearing 
                        organizations, or members that provides for 
                        netting present or future payment obligations 
                        or payment entitlements (including liquidation 
                        or closeout values relating to such obligations 
                        or entitlements) among the parties to the 
                        agreement; and''; and
          (5) by adding at the end the following new paragraph:
          ``(15) Payment.--The term `payment' means a payment of United 
        States dollars, another currency, or a composite currency, and 
        a noncash delivery, including a payment or delivery to 
        liquidate an unmatured obligation.''.
  (b) Enforceability of Bilateral Netting Contracts.--Section 403 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 
U.S.C. 4403) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act or any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970), the covered contractual payment obligations and the 
covered contractual payment entitlements between any two financial 
institutions shall be netted in accordance with, and subject to the 
conditions of, the terms of any applicable netting contract (except as 
provided in section 561(b)(2) of title 11, United States Code).''; and
          (2) by adding at the end the following new subsection:
  ``(f) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any two financial institutions 
shall be enforceable in accordance with their terms (except as provided 
in section 561(b)(2) of title 11, United States Code) and shall not be 
stayed, avoided, or otherwise limited by any State or Federal law 
(other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of 
the Federal Deposit Insurance Act and section 5(b)(2) of the Securities 
Investor Protection Act of 1970).''.
  (c) Enforceability of Clearing Organization Netting Contracts.--
Section 404 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C. 4404) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970), the covered contractual payment obligations and the 
covered contractual payment entitlements of a member of a clearing 
organization to and from all other members of a clearing organization 
shall be netted in accordance with and subject to the conditions of any 
applicable netting contract (except as provided in section 561(b)(2) of 
title 11, United States Code).''; and
          (2) by adding at the end the following new subsection:
  ``(h) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any two members of a clearing 
organization shall be enforceable in accordance with their terms 
(except as provided in section 561(b)(2) of title 11, United States 
Code) and shall not be stayed, avoided, or otherwise limited by any 
State or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) 
of section 11(e) of the Federal Deposit Insurance Act and section 
5(b)(2) of the Securities Investor Protection Act of 1970).''.
  (d) Enforceability of Contracts With Uninsured National Banks and 
Uninsured Federal Branches and Agencies.--The Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.) is 
amended--
          (1) by redesignating section 407 as section 407A; and
          (2) by adding after section 406 the following new section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND 
                    UNINSURED FEDERAL BRANCHES AND AGENCIES.

  ``(a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal 
Deposit Insurance Act shall apply to an uninsured national bank or 
uninsured Federal branch or Federal agency except--
          ``(1) any reference to the `Corporation as receiver' or `the 
        receiver or the Corporation' shall refer to the receiver of an 
        uninsured national bank or uninsured Federal branch or Federal 
        agency appointed by the Comptroller of the Currency;
          ``(2) any reference to the `Corporation' (other than in 
        section 11(e)(8)(D) of such Act), the `Corporation, whether 
        acting as such or as conservator or receiver', a `receiver', or 
        a `conservator' shall refer to the receiver or conservator of 
        an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency; 
        and
          ``(3) any reference to an `insured depository institution' or 
        `depository institution' shall refer to an uninsured national 
        bank or an uninsured Federal branch or Federal agency.
  ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank or uninsured Federal branch or agency shall be 
determined in the same manner and subject to the same limitations that 
apply to receivers and conservators of insured depository institutions 
under section 11(e) of the Federal Deposit Insurance Act.
  ``(c) Regulatory Authority.--
          ``(1) In general.--The Comptroller of the Currency, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may promulgate regulations to implement this section.
          ``(2) Specific requirement.--In promulgating regulations to 
        implement this section, the Comptroller of the Currency shall 
        ensure that the regulations generally are consistent with the 
        regulations and policies of the Federal Deposit Insurance 
        Corporation adopted pursuant to the Federal Deposit Insurance 
        Act.
  ``(d) Definitions.--For purposes of this section, the terms `Federal 
branch', `Federal agency', and `foreign bank' have the same meaning as 
in section 1(b) of the International Banking Act.''.

SEC. 8. BANKRUPTCY CODE AMENDMENTS.

  (a) Definitions of Forward Contract, Repurchase Agreement, Securities 
Clearing Agency, Swap Agreement, Commodity Contract, and Securities 
Contract.--Title 11, United States Code, is amended--
          (1) in section 101--
                  (A) in paragraph (25)--
                          (i) by striking ``means a contract'' and 
                        inserting ``means--
                  ``(A) a contract'';
                          (ii) by striking ``, or any combination 
                        thereof or option thereon;'' and inserting ``, 
                        or any other similar agreement;''; and
                          (iii) by adding at the end the following:
                  ``(B) any combination of agreements or transactions 
                referred to in subparagraphs (A) and (C);
                  ``(C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or (B);
                  ``(D) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), or (C), together with all supplements to any 
                such master agreement, without regard to whether such 
                master agreement provides for an agreement or 
                transaction that is not a forward contract under this 
                paragraph, except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement or 
                transaction under such master agreement that is 
                referred to in subparagraph (A), (B) or (C); or
                  ``(E) any security agreement or arrangement, or other 
                credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C), 
                or (D), but not to exceed the actual value of such 
                contract on the date of the filing of the petition;'';
                  (B) in paragraph (46), by striking ``on any day 
                during the period beginning 90 days before the date 
                of'' and inserting ``at any time before'';
                  (C) by amending paragraph (47) to read as follows:
          ``(47) `repurchase agreement' (which definition also applies 
        to a `reverse repurchase agreement')--
                  ``(A) means--
                          ``(i) an agreement, including related terms, 
                        which provides for the transfer of 1 or more 
                        certificates of deposit, mortgage-related 
                        securities (as defined in the Securities 
                        Exchange Act of 1934), mortgage loans, 
                        interests in mortgage-related securities or 
                        mortgage loans, eligible bankers' acceptances, 
                        qualified foreign government securities, or 
                        securities that are direct obligations of, or 
                        that are fully guaranteed by, the United States 
                        or any agency of the United States against the 
                        transfer of funds by the transferee of such 
                        certificates of deposit, eligible bankers' 
                        acceptances, securities, loans, or interests, 
                        with a simultaneous agreement by such 
                        transferee to transfer to the transferor 
                        thereof certificates of deposit, eligible 
                        bankers' acceptance, securities, loans, or 
                        interests of the kind described above, at a 
                        date certain not later than 1 year after such 
                        transfer or on demand, against the transfer of 
                        funds;
                          ``(ii) any combination of agreements or 
                        transactions referred to in clauses (i) and 
                        (iii);
                          ``(iii) an option to enter into an agreement 
                        or transaction referred to in clause (i) or 
                        (ii);
                          ``(iv) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), or (iii), together with all 
                        supplements to any such master agreement, 
                        without regard to whether such master agreement 
                        provides for an agreement or transaction that 
                        is not a repurchase agreement under this 
                        paragraph, except that such master agreement 
                        shall be considered to be a repurchase 
                        agreement under this paragraph only with 
                        respect to each agreement or transaction under 
                        the master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                          ``(v) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), but not to exceed 
                        the actual value of such contract on the date 
                        of the filing of the petition; and
                  ``(B) does not include a repurchase obligation under 
                a participation in a commercial mortgage loan,
        and, for purposes of this paragraph, the term `qualified 
        foreign government security' means a security that is a direct 
        obligation of, or that is fully guaranteed by, the central 
        government of a member of the Organization for Economic 
        Cooperation and Development;'';
                  (D) in paragraph (48) by inserting ``or exempt from 
                such registration under such section pursuant to an 
                order of the Securities and Exchange Commission'' after 
                ``1934''; and
                  (E) by amending paragraph (53B) to read as follows:
          ``(53B) `swap agreement'--
                  ``(A) means--
                          ``(i) any agreement, including the terms and 
                        conditions incorporated by reference in such 
                        agreement, which is an interest rate swap, 
                        option, future, or forward agreement, including 
                        a rate floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a spot, 
                        same day-tomorrow, tomorrow-next, forward, or 
                        other foreign exchange or precious metals 
                        agreement; a currency swap, option, future, or 
                        forward agreement; an equity index or an equity 
                        swap, option, future, or forward agreement; a 
                        debt index or a debt swap, option, future, or 
                        forward agreement; a credit spread or a credit 
                        swap, option, future, or forward agreement; a 
                        commodity index or a commodity swap, option, 
                        future, or forward agreement; or a weather 
                        swap, weather derivative, or weather option;
                          ``(ii) any agreement or transaction similar 
                        to any other agreement or transaction referred 
                        to in this paragraph that--
                                  ``(I) is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference 
                                therein); and
                                  ``(II) is a forward, swap, future, or 
                                option on 1 or more rates, currencies, 
                                commodities, equity securities, or 
                                other equity instruments, debt 
                                securities or other debt instruments, 
                                or economic indices or measures of 
                                economic risk or value;
                          ``(iii) any combination of agreements or 
                        transactions referred to in this paragraph;
                          ``(iv) any option to enter into an agreement 
                        or transaction referred to in this paragraph;
                          ``(v) a master agreement that provides for an 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), together with all 
                        supplements to any such master agreement, and 
                        without regard to whether the master agreement 
                        contains an agreement or transaction that is 
                        not a swap agreement under this paragraph, 
                        except that the master agreement shall be 
                        considered to be a swap agreement under this 
                        paragraph only with respect to each agreement 
                        or transaction under the master agreement that 
                        is referred to in clause (i), (ii), (iii), or 
                        (iv); or
                  ``(B) any security agreement or arrangement or other 
                credit enhancement related to any agreements or 
                transactions referred to in subparagraph (A), but not 
                to exceed the actual value of such contract on the date 
                of the filing of the petition; and
                  ``(C) is applicable for purposes of this title only 
                and shall not be construed or applied so as to 
                challenge or affect the characterization, definition, 
                or treatment of any swap agreement under any other 
                statute, regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 1934, the 
                Public Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company Act of 
                1940, the Investment Advisers Act of 1940, the 
                Securities Investor Protection Act of 1970, the 
                Commodity Exchange Act, and the regulations prescribed 
                by the Securities and Exchange Commission or the 
                Commodity Futures Trading Commission.'';
          (2) by amending section 741(7) to read as follows:
          ``(7) `securities contract'--
                  ``(A) means--
                          ``(i) a contract for the purchase, sale, or 
                        loan of a security, a certificate of deposit, a 
                        mortgage loan or any interest in a mortgage 
                        loan, a group or index of securities, 
                        certificates of deposit or mortgage loans or 
                        interests therein (including an interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security, 
                        certificate of deposit, loan, interest, group 
                        or index, or option;
                          ``(ii) any option entered into on a national 
                        securities exchange relating to foreign 
                        currencies;
                          ``(iii) the guarantee by or to any securities 
                        clearing agency of a settlement of cash, 
                        securities, certificates of deposit, mortgage 
                        loans or interests therein, group or index of 
                        securities, or mortgage loans or interests 
                        therein (including any interest therein or 
                        based on the value thereof), or option on any 
                        of the foregoing, including an option to 
                        purchase or sell any such security, certificate 
                        of deposit, loan, interest, group or index, or 
                        option;
                          ``(iv) any margin loan;
                          ``(v) any other agreement or transaction that 
                        is similar to an agreement or transaction 
                        referred to in this paragraph;
                          ``(vi) any combination of the agreements or 
                        transactions referred to in this paragraph;
                          ``(vii) any option to enter into any 
                        agreement or transaction referred to in this 
                        paragraph;
                          ``(viii) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), (iii), (iv), (v), (vi), or 
                        (vii), together with all supplements to any 
                        such master agreement, without regard to 
                        whether the master agreement provides for an 
                        agreement or transaction that is not a 
                        securities contract under this paragraph, 
                        except that such master agreement shall be 
                        considered to be a securities contract under 
                        this paragraph only with respect to each 
                        agreement or transaction under such master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); or
                          ``(ix) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in this 
                        paragraph, but not to exceed the actual value 
                        of such contract on the date of the filing of 
                        the petition; and
                  ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in a 
                commercial mortgage loan.''; and
          (3) in section 761(4)--
                  (A) by striking ``or'' at the end of subparagraph 
                (D); and
                  (B) by adding at the end the following:
                  ``(F) any other agreement or transaction that is 
                similar to an agreement or transaction referred to in 
                this paragraph;
                  ``(G) any combination of the agreements or 
                transactions referred to in this paragraph;
                  ``(H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                  ``(I) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), (C), (D), (E), (F), (G), or (H), together 
                with all supplements to such master agreement, without 
                regard to whether the master agreement provides for an 
                agreement or transaction that is not a commodity 
                contract under this paragraph, except that the master 
                agreement shall be considered to be a commodity 
                contract under this paragraph only with respect to each 
                agreement or transaction under the master agreement 
                that is referred to in subparagraph (A), (B), (C), (D), 
                (E), (F), (G), or (H); or
                  ``(J) any security agreement or arrangement or other 
                credit enhancement related to any agreement or 
                transaction referred to in this paragraph, but not to 
                exceed the actual value of such contract on the date of 
                the filing of the petition;''.
  (b) Definitions of Financial Institution, Financial Participant, and 
Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
          (1) by striking paragraph (22) and inserting the following 
        new paragraph:
          ``(22) the term `financial institution'--
                  ``(A) means a Federal reserve bank or an entity 
                (domestic or foreign) that is a commercial or savings 
                bank, industrial savings bank, savings and loan 
                association, trust company, a bank or a corporation 
                organized under section 25A of the Federal Reserve Act 
                and, when any such bank or entity is acting as agent or 
                custodian for a customer in connection with a 
                securities contract, as defined in section 741, such 
                customer; and
                  ``(B) includes any person described in subparagraph 
                (A) which operates, or operates as, a multilateral 
                clearing organization pursuant to section 409 of the 
                Federal Deposit Insurance Corporation Improvement Act 
                of 1991;'';
          (2) by inserting after paragraph (22) the following:
          ``(22A) `financial participant' means an entity that, at the 
        time it enters into a securities contract, commodity contract 
        or forward contract, or at the time of the filing of the 
        petition, has 1 or more agreements or transactions described in 
        paragraph (1), (2), (3), (4), (5), or (6) of section 561(a) 
        with the debtor or any other entity (other than an affiliate) 
        of a total gross dollar value of at least $1,000,000,000 in 
        notional or actual principal amount outstanding on any day 
        during the previous 15-month period, or has gross mark-to-
        market positions of at least $100,000,000 (aggregated across 
        counterparties) in 1 or more such agreement or transaction with 
        the debtor or any other entity (other than an affiliate) on any 
        day during the previous 15-month period;''; and
          (3) by amending paragraph (26) to read as follows:
          ``(26) `forward contract merchant' means a Federal reserve 
        bank, or an entity whose business consists in whole or in part 
        of entering into forward contracts as or with merchants or in a 
        commodity, as defined or in section 761, or any similar good, 
        article, service, right, or interest which is presently or in 
        the future becomes the subject of dealing or in the forward 
        contract trade;''.
  (c) Definition of Master Netting Agreement and Master Netting 
Agreement Participant.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (38) the following new paragraphs:
          ``(38A) `master netting agreement' means an agreement 
        providing for the exercise of rights, including rights of 
        netting, setoff, liquidation, termination, acceleration, or 
        closeout, under or in connection with 1 or more contracts that 
        are described in any 1 or more of paragraphs (1) through (5) of 
        section 561(a), or any security agreement or arrangement or 
        other credit enhancement related to 1 or more of the foregoing. 
        If a master netting agreement contains provisions relating to 
        agreements or transactions that are not contracts described in 
        paragraphs (1) through (5) of section 561(a), the master 
        netting agreement shall bedeemed to be a master netting 
agreement only with respect to those agreements or transactions that 
are described in any 1 or more of the paragraphs (1) through (5) of 
section 561(a);
          ``(38B) `master netting agreement participant' means an 
        entity that, at any time before the filing of the petition, is 
        a party to an outstanding master netting agreement with the 
        debtor;''.
  (d) Swap Agreements, Securities Contracts, Commodity Contracts, 
Forward Contracts, Repurchase Agreements, and Master Netting Agreements 
Under the Automatic-Stay.--
          (1) In general.--Section 362(b) of title 11, United States 
        Code, is amended--
                  (A) in paragraph (6), by inserting ``, pledged to and 
                under the control of,'' after ``held by'';
                  (B) in paragraph (7), by inserting ``, pledged to and 
                under the control of,'' after ``held by'';
                  (C) by amending paragraph (17) to read as follows:
          ``(17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in connection 
        with 1 or more swap agreements that constitutes the setoff of a 
        claim against the debtor for any payment or other transfer of 
        property due from the debtor under or in connection with any 
        swap agreement against any payment due to the debtor from the 
        swap participant under or in connection with any swap agreement 
        or against cash, securities, or other property held by, pledged 
        to and under the control of, or due from such swap participant 
        to margin, guarantee, secure, or settle any swap agreement;'';
                  (D) in paragraph (18) by striking the period at the 
                end and inserting ``; or''; and
                  (E) by inserting after paragraph (18) the following 
                new paragraph:
          ``(19) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and claim under 
        or in connection with 1 or more master netting agreements or 
        any contract or agreement subject to such agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements against any payment due to 
        the debtor from such master netting agreement participant under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements or against cash, 
        securities, or other property held by, pledged to and under the 
        control of, or due from such master netting agreement 
        participant to margin, guarantee, secure, or settle such 
        agreements or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible to 
        exercise such offset rights under paragraph (6), (7), or (17) 
        for each individual contract covered by the master netting 
        agreement in issue.''.
          (2) Limitation.--Section 362 of title 11, United States Code, 
        is amended by adding at the end the following:
  ``(i) Limitation.--The exercise of rights not subject to the stay 
arising under subsection (a) pursuant to paragraph (6), (7), or (17), 
or (32) of subsection (b) shall not be stayed by any order of a court 
or administrative agency in any proceeding under this title.''.
  (e) Limitation of Avoidance Powers Under Master Netting Agreement.--
Section 546 of title 11, United States Code, is amended--
          (1) in subsection (g) (as added by section 103 of Public Law 
        101-311)--
                  (A) by striking ``under a swap agreement''; and
                  (B) by striking ``in connection with a swap 
                agreement'' and inserting ``under or in connection with 
                any swap agreement''; and
          (2) by adding at the end the following:
  ``(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b), the trustee may not avoid a transfer made by or to a master 
netting agreement participant under or in connection with any master 
netting agreement or any individual contract covered thereby that is 
made before the commencement of the case, except under section 
548(a)(1)(A), and except to the extent the trustee could otherwise 
avoid such a transfer made under an individual contract covered by such 
master netting agreement.''.
  (f) Fraudulent Transfers of Master Netting Agreements.--Section 
548(d)(2) of title 11, United States Code, is amended--
          (1) in subparagraph (C), by striking ``and'';
          (2) in subparagraph (D), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following new subparagraph:
          ``(E) a master netting agreement participant that receives a 
        transfer in connection with a master netting agreement or any 
        individual contract covered thereby takes for value to the 
        extent of such transfer, except, with respect to a transfer 
        under any individual contract covered thereby, to the extent 
        such master netting agreement participant otherwise did not 
        take (or is otherwise not deemed to have taken) such transfer 
        for value.''.
  (g) Termination or Acceleration of Securities Contracts.--Section 555 
of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract'';

        and
          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (h) Termination or Acceleration of Commodities or Forward 
Contracts.--Section 556 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract'';

        and
          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (i) Termination or Acceleration of Repurchase Agreements.--Section 
559 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement'';

        and
          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (j) Liquidation, Termination, or Acceleration of Swap Agreements.--
Section 560 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement'';

          (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of 1 or more swap agreements''; and
          (3) by striking ``in connection with any swap agreement'' and 
        inserting ``in connection with the termination, liquidation, or 
        acceleration of 1 or more swap agreements''.
  (k) Liquidation, Termination, Acceleration, or Offset Under a Master 
Netting Agreement and Across Contracts.--(1) Title 11, United States 
Code, is amended by inserting after section 560 the following:

``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts

  ``(a) In General.--Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified in 
section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset or net termination values, payment amounts 
or other transfer obligations arising under or in connection with 1 or 
more (or the termination, liquidation, or acceleration of 1 or more)--
          ``(1) securities contracts, as defined in section 741(7);
          ``(2) commodity contracts, as defined in section 761(4);
          ``(3) forward contracts;
          ``(4) repurchase agreements;
          ``(5) swap agreements; or
          ``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by any order of a court or administrative 
agency in any proceeding under this title.
  ``(b) Exception.--
          ``(1) A party may exercise a contractual right described in 
        subsection (a) to terminate, liquidate, or accelerate only to 
        the extent that such party could exercise such a right under 
        section 555, 556, 559, or 560 for each individual contract 
        covered by the master netting agreement in issue.
          ``(2) If a debtor is a commodity broker subject to subchapter 
        IV of chapter 7--
                  ``(A) a party may not net or offset an obligation to 
                the debtor arising under, or in connection with, a 
                commodity contract against any claim arising under, or 
                in connection with, other instruments, contracts, or 
                agreements listed in subsection (a), except to the 
                extent the party has positive net equity in the 
                commodity accounts at the debtor, as calculated under 
                such subchapter; and
                  ``(B) another commodity broker may not net or offset 
                an obligation to the debtor arising under, or in 
                connection with, a commodity contract entered into or 
                held on behalf of a customer of the debtor against any 
                claim arising under, or in connection with, other 
                instruments, contracts, or agreements listed in 
                subsection (a).
  ``(c) Rule of Application.--Subparagraphs (A) and (B) of subsection 
(b)(2) shall not be construed as prohibiting the offset of claims and 
obligations arising pursuant to--
          ``(1) a cross-margining arrangement that has been approved by 
        the Commodity Futures Trading Commission or that has been 
        submitted to such Commission pursuant to section 5a(a)(12) of 
        the Commodity Exchange Act and has been permitted to go into 
        effect; or
          ``(2) another netting arrangement, between a clearing 
        organization (as defined in section 761) and another entity, 
        that has been approved by the Commodity Futures Trading 
        Commission.
  ``(d) Definition.--As used in this section, the term `contractual 
right' includes a right set forth in a rule or bylaw of a national 
securities exchange, a national securities association, or a securities 
clearing agency, a right set forth in a bylaw of a clearing 
organization or contract market or in a resolution of the governing 
board thereof, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by reason of normal 
business practice.''.
  (2) Conforming amendment.--The table of sections of chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
under a master netting agreement and across contracts.''.

  (l) Municipal Bankruptcies.--Section 901(a) of title 11, United 
States Code, is amended--
          (1) by inserting ``555, 556,'' after ``553,''; and
          (2) by inserting ``559, 560, 561, 562,'' after ``557,''.
  (m) Ancillary Proceedings.--Section 304 of title 11, United States 
Code, is amended by adding at the end the following new subsection:
  ``(d) Any provisions of this title relating to securities contracts, 
commodity contracts, forward contracts, repurchase agreements, swap 
agreements, or master netting agreements shall apply in a case 
ancillary to a foreign proceeding under this section or any other 
section of this title so that enforcement of contractual provisions of 
such contracts and agreements in accordance with their terms will not 
be stayed or otherwise limited by operation of any provision of this 
title or by order of a court in any proceeding under this title, and to 
limit avoidance powers to the same extent as in a proceeding under 
chapter 7 or 11 (such enforcement not to be limited based on the 
presence or absence of assets of the debtor in the United States).''.
  (n) Commodity Broker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 766 the following:

``Sec. 767. Commodity broker liquidation and forward contract 
                    merchants, commodity brokers, stockbrokers, 
                    financial institutions, financial participants, 
                    securities clearing agencies, swap participants, 
                    repo participants, and master netting agreement 
                    participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, financial participant, securities clearing 
agency, swap participant, repo participant, or master netting agreement 
participant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such rights.''.
  (o) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following:

``Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, financial participants, securities 
                    clearing agencies, swap participants, repo 
                    participants, and master netting agreement 
                    participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, securities clearing agency, swap participant, 
repo participant, financial participant, or master netting agreement 
participant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such rights.''.
  (p) Setoff.--Section 553 of title 11, United States Code, is 
amended--
          (1) in subsection (a)(3)(C), by inserting ``(except for a 
        setoff of a kind described in section 362(b)(6), 362(b)(7), 
        362(b)(17), 362(b)(32), 555, 556, 559, 560 or 561)'' before the 
        period; and
          (2) in subsection (b)(1), by striking ``362(b)(14)'' and 
        inserting ``362(b)(17), 362(b)(32), 555, 556, 559, 560, 561''.
  (q) Securities Contracts, Commodity Contracts, and Forward 
Contracts.--Title 11, United States Code, is amended--
          (1) in section 362(b)(6), by striking ``financial 
        institutions,'' each place such term appears and inserting 
        ``financial institution, financial participant'';
          (2) in section 546(e), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (3) in section 548(d)(2)(B), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (4) in section 555--
                  (A) by inserting ``financial participant,'' after 
                ``financial institution,''; and
                  (B) by inserting before the period at the end ``, a 
                right set forth in a bylaw of a clearing organization 
                or contract market or in a resolution of the governing 
                board thereof, and a right, whether or not in writing, 
                arising under common law, under law merchant, or by 
                reason of normal business practice''; and
          (5) in section 556, by inserting ``, financial participant'' 
        after ``commodity broker''.
  (r) Conforming Amendments.--Title 11, United States Code, is 
amended--
          (1) in the table of sections of chapter 5--
                  (A) by amending the items relating to sections 555 
                and 556 to read as follows:

``555. Contractual right to liquidate, terminate, or accelerate a 
securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a 
commodities contract or forward contract.'';

                and
                  (B) by amending the items relating to sections 559 
                and 560 to read as follows:

``559. Contractual right to liquidate, terminate, or accelerate a 
repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap 
agreement.'';

                and
          (2) in the table of sections of chapter 7--
                  (A) by inserting after the item relating to section 
                766 the following:

``767. Commodity broker liquidation and forward contract merchants, 
commodity brokers, stockbrokers, financial institutions, financial 
participants, securities clearing agencies, swap participants, repo 
participants, and master netting agreement participants.'';

                and
                  (B) by inserting after the item relating to section 
                752 the following:

``753. Stockbroker liquidation and forward contract merchants, 
commodity brokers, stockbrokers, financial institutions, financial 
participants, securities clearing agencies, swap participants, repo 
participants, and master netting agreement participants.''.

SEC. 9. RECORDKEEPING REQUIREMENTS.

  Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)) is amended by adding at the end the following new 
subparagraph:
                  ``(H) Recordkeeping requirements.--The Corporation, 
                in consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring more 
                detailed recordkeeping with respect to qualified 
                financial contracts (including market valuations) by 
                insured depository institutions.''.

SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.

  Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(e)(2)) is amended to read as follows:
          ``(2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                  ``(A) deposits of, or other credit extension by, a 
                Federal, State, or local governmental entity, or of any 
                depositor referred to in section 11(a)(2), including an 
                agreement to provide collateral in lieu of a surety 
                bond;
                  ``(B) bankruptcy estate funds pursuant to section 
                345(b)(2) of title 11, United States Code;
                  ``(C) extensions of credit, including any overdraft, 
                from a Federal reserve bank or Federal home loan bank; 
                or
                  ``(D) 1 or more qualified financial contracts, as 
                defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph (1)(B) solely 
        because such agreement was not executed contemporaneously with 
        the acquisition of the collateral or because of pledges, 
        delivery, or substitution of the collateral made in accordance 
        with such agreement.''.

SEC. 11. DAMAGE MEASURE.

  (a) In General.--Title 11, United States Code, is amended--
          (1) by inserting after section 561 the following:

``Sec. 562. Damage measure in connection with swap agreements, 
                    securities contracts, forward contracts, commodity 
                    contracts, repurchase agreements, or master netting 
                    agreements

  ``If the trustee rejects a swap agreement, securities contract as 
defined in section 741, forward contract, commodity contract (as 
defined in section 761) repurchase agreement, or master netting 
agreement pursuant to section 365(a), or if a forward contract 
merchant, stockbroker, financial institution, securities clearing 
agency, repo participant, financial participant, master netting 
agreement participant, or swap participant liquidates, terminates, or 
accelerates such contract or agreement, damages shall be measured as of 
the earlier of--
          ``(1) the date of such rejection; or
          ``(2) the date of such liquidation, termination, or 
        acceleration.''; and
          (2) in the table of sections of chapter 5 by inserting after 
        the item relating to section 561 the following:

``562. Damage measure in connection with swap agreements, securities 
contracts, forward contracts, commodity contracts, repurchase 
agreements, or master netting agreements.''.
  (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
          (1) by designating the existing text as paragraph (1); and
          (2) by adding at the end the following:
  ``(2) A claim for damages calculated in accordance with section 562 
shall be allowed under subsection (a), (b), or (c), or disallowed under 
subsection (d) or (e), as if such claim had arisen before the date of 
the filing of the petition.''.

SEC. 12. SIPC STAY.

  Section 5(b)(2) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78eee(b)(2)) is amended by adding after subparagraph (B) the 
following new subparagraph:
                  ``(C) Exception from stay.--
                          ``(i) Notwithstanding section 362 of title 
                        11, United States Code, neither the filing of 
                        an application under subsection (a)(3) nor any 
                        order or decree obtained by the Securities 
                        Investor Protection Corporation from the court 
                        shall operate as a stay of any contractual 
                        rights of a creditor to liquidate, terminate, 
                        or accelerate a securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master netting 
                        agreement, each as defined in title 11 United 
                        States Code, to offset or net termination 
                        values, payment amounts, or other transfer 
                        obligations arising under or in connection with 
                        1 or more of such contracts or agreements, or 
                        to foreclose on any cash collateral pledged by 
                        the debtor whether or not with respect to 1 or 
                        more of such contracts or agreements.
                          ``(ii) Notwithstanding clause (i), such 
                        application, order, or decree may operate as a 
                        stay of the foreclosure on or disposition of 
                        securities collateral pledged by the debtor, 
                        whether or not with respect to 1 or more of 
                        such contracts or agreements, securities sold 
                        by the debtor under a repurchase agreement or 
                        securities lent under a securities lending 
                        agreement.
                          ``(iii) As used in this section, the term 
                        `contractual right' includes a right set forth 
                        in a rule or bylaw of a national securities 
                        exchange, a national securities association, or 
                        a securities clearing agency, a right set forth 
                        in a bylaw of a clearing organization or 
                        contract market or in a resolution of the 
                        governing board thereof, and a right, whether 
                        or not in writing, arising under common law, 
                        under law merchant, or by reason of normal 
                        business practice.''.

SEC. 13. ASSET-BACKED SECURITIZATIONS.

  Section 541 of title 11, United States Code, is amended--
          (1) in subsection (b)--
                  (A) by striking ``or'' at the end of paragraph 
                (4)(B)(ii);
                  (B) by redesignating paragraph (5) as paragraph (6); 
                and
                  (C) by inserting after paragraph (4) the following 
                new paragraph:
          ``(5) any eligible asset (or proceeds thereof), to the extent 
        that such eligible asset was transferred by the debtor before 
        the date of commencement of the case, to an eligible entity in 
        connection with an asset-backed securitization, except to the 
        extent such asset (or proceeds or value thereof) may be 
        recovered by the trustee under section 550 by virtue of 
        avoidance under section 548(a)(1); or''; and
          (2) by adding at the end the following new subsection:
  ``(e) For purposes of this section, the following definitions shall 
apply:
          ``(1) the term `asset-backed securitization' means a 
        transaction in which eligible assets transferred to an eligible 
        entity are used as the source of payment on securities, 
        including all securities issued by governmental units, at least 
        1 class or tranche of which is rated investment grade by 1 or 
        more nationally recognized securities rating organizations, 
        when the securities are initially issued by an issuer;
          ``(2) the term `eligible asset' means--
                  ``(A) financial assets (including interests therein 
                and proceeds thereof), either fixed or revolving, 
                whether or not such assets are in existence as of the 
                date of the transfer, including residential and 
                commercial mortgage loans, consumer receivables, trade 
                receivables, assets of governmental units (including 
                payment obligations relating to taxes, receipts, fines, 
                tickets, and other sources of revenue), and lease 
                receivables, that, by their terms, convert into cash 
                within a finite time period, plus any residual interest 
                in property subject to receivables included in such 
                financial assets plus any rights or other assets 
                designed to assure the servicing or timely distribution 
                of proceeds to security holders;
                  ``(B) cash; and
                  ``(C) securities, including all securities issued by 
                governmental units.
          ``(3) the term `eligible entity' means--
                  ``(A) an issuer; or
                  ``(B) a trust, corporation, partnership, governmental 
                unit, limited liability company (including a single 
                member limited liability company), or other entity 
                engaged exclusively in the business of acquiring and 
                transferring eligible assets directly or indirectly to 
                an issuer and taking actions ancillary thereto;
          ``(4) the term `issuer' means a trust, corporation, 
        partnership, governmental unit, limited liability company 
        (including a single member limited liability company), or other 
        entity engaged exclusively in the business of acquiring and 
        holding eligible assets, issuing securities backed by eligible 
        assets, and taking actions ancillary thereto; and
          ``(5) the term `transferred' means the debtor, pursuant to a 
        written agreement, represented and warranted that eligible 
        assets were sold, contributed, or otherwise conveyed with the 
        intention of removing them from the estate of the debtor 
        pursuant to subsection (b)(5) (whether or not reference is made 
        to this title or any section of this title), irrespective, 
        without limitation, of--
                  ``(A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or in any 
                securities issued by the issuer;
                  ``(B) whether the debtor had an obligation to 
                repurchase or to service or supervise the servicing of 
                all or any portion of such eligible assets; or
                  ``(C) the characterization of such sale, 
                contribution, or other conveyance for tax, accounting, 
                regulatory reporting, or other purposes.''.

SEC. 14. APPLICATION OF AMENDMENTS.

  The amendments made by this Act shall apply with respect to cases 
commenced or appointments made under any Federal or State law after the 
date of the enactment of this Act, but shall not apply with respect to 
cases commenced or appointments made under any Federal or State law 
before the date of the enactment of this Act.

                          Purpose and Summary

    H.R. 1161, the Financial Contract Netting Improvement Act 
of 2000 (Act), is based on legislative proposals forwarded to 
Congress by the nation's financial regulators in order to guard 
against systemic risk to the nation's financial system. The 
major provisions of this Act come from recommendations made by 
the President's Working Group on Financial Markets following a 
review of current statutory provisions governing the treatment 
of qualified financial contracts and similar financial 
contracts upon the insolvency of a counter party. The Working 
Group for these recommendations consisted of the Securities and 
Exchange Commission; the Commodity Futures Trading Commission; 
the Federal Deposit Insurance Corporation; the Department of 
the Treasury, including the Office of the Comptroller of the 
Currency; the Board of Governors of the Federal Reserve System; 
and the Federal Reserve Bank of New York. The recommendations 
of the Working Group were transmitted to Congress on March 16, 
1998.
    The provisions forwarded by the Working Group amend the 
U.S. Bankruptcy Code; the Federal Deposit Insurance Act (FDIA), 
as amended by the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (FIRREA); the payment system risk 
reduction and netting provisions of the Federal Deposit 
Insurance Corporation Improvement Act of 1991 (FDICIA); and the 
Securities Investor Protection Act of 1971 (SIPA). These 
amendments address the treatment of certain financial 
transactions following the insolvency of a party to such 
transactions. The amendments are designed to clarify and 
improve consistency between the applicable statutes and to 
minimize risk of a disruption within or between financial 
markets upon the insolvency of a market participant. In 
addition, the Bankruptcy Code is amended to provide that 
certain assets transferred to an eligible entity in connection 
with an asset-backed securitization generally will be 
considered as valid transfers and not be included within the 
bankruptcy estate of the debtor.

                  Background and Need for Legislation

    Since its adoption in 1978, the Bankruptcy Code has been 
amended several times to afford different treatment for certain 
financial transactions upon the bankruptcy of a debtor, as 
compared with the treatment of other commercial contracts and 
transactions. These amendments were designed to further the 
policy goal of minimizing the systemic risk potentially arising 
from certain interrelated financial activities and markets. 
Similar amendments have been made to the FDIA and FDICIA, and 
both the Federal Deposit Insurance Corporation (FDIC) and the 
Securities Investor Protection Corporation (SIPC) have issued 
policy statements and letters clarifying general issues in this 
regard.
    Systemic risk is the risk that the failure of a firm or 
disruption of a market or settlement system will cause 
widespread difficulties at other firms, in other market 
segments or in the financial system as a whole. If participants 
in certain financial activities are unable to enforce their 
rights to terminate financial contracts with an insolvent 
entity in a timely manner, or to offset or net their various 
contractual obligations, the resulting uncertainty and 
potential lack of liquidity could increase the risk of an 
inter-market disruption.
    The Committee and Congress have taken steps in the past to 
ensure that the risk of such systemic events is minimized. For 
example, both the Bankruptcy Code and the FDIA contain 
provisions that protect the rights of financial participants to 
terminate swap agreements, forward contracts, securities 
contracts, commodity contracts and repurchase agreements 
following the bankruptcy or insolvency of a counter party to 
such contracts or agreements. Furthermore, other provisions 
prevent transfers made under such circumstances from being 
avoided as preferences or fraudulent conveyances (except when 
made with actual intent to defraud). Protections also are 
afforded to ensure that the netting, set off and collateral 
foreclosure provisions of such transactions and master 
agreements for such transactions are enforceable.
    In addition, FDICIA was enacted in 1991 to protect the 
enforceability of close-out netting provisions in ``netting 
contracts'' between ``financial institutions.'' FDICIA states 
that the goal of enforcing netting arrangements is to reduce 
systemic risk within the banking system and financial markets. 
In simple terms, netting occurs when money payments, 
entitlements, or obligations arising under one or more 
contracts or a clearing arrangement are all offset against each 
other leaving one net amount.
    The orderly resolution of insolvencies involving counter 
parties to such contracts also is an important element in the 
reduction of systemic risk. The FDIA allows the receiver of an 
insolvent insured depository institution the opportunity to 
review the status of certain contracts to determine whether to 
terminate or transfer the contracts to new counter parties. 
These provisions provide the receiver with flexibility in 
determining the most appropriate resolution for the failed 
institution and facilitate the reduction of systemic risk by 
permitting the transfer, rather than termination, of such 
contracts.
    Not only does this Act update legislation initiated by the 
Committee in 1989 and 1991 but it also builds on 
recommendations first contained in a comprehensive report (Part 
3 of Committee hearing record 103-88) on derivatives issued on 
October 28, 1993, by the minority staff of the Committee under 
the direction of then Ranking Minority Member, Representative 
Leach. During preparation of the report, the staff submitted a 
series of questions to Federal financial regulatory bodies 
concerning the adequacy and consistency of the netting 
provisions contained in the Bankruptcy Code, FIRREA, and 
FDICIA. In sum, all agencies stated that the netting provisions 
should be amended and conformed to provide greater certainty to 
the market. The agencies stated that the differences in 
coverage provided by the various acts have created legal 
uncertainty, emanating mainly from the definitional sections of 
FIRREA and the Bankruptcy Code which limit netting to specific 
types of contracts expressly enumerated.
    In summary, the insolvency provisions of the Act are 
designed to clarify the treatment of certain financial 
contracts upon the insolvency of a counter party and to promote 
the reduction of systemic risk. These provisions further the 
goals of prior amendments to the Bankruptcy Code and the FDIA 
on the treatment of those financial contracts and of the 
payment system risk reduction provisions in FDICIA. The 
insolvency provisions of the Act have four principal purposes:
          To strengthen the provisions of the Bankruptcy Code 
        and the FDIA that protect the enforceability of 
        termination and close-out netting and related 
        provisions of certain financial agreements and 
        transactions.
          To harmonize the treatment of these financial 
        agreements and transactions under the Bankruptcy Code 
        and the FDIA.
          To amend the FDIA and FDICIA to clarify that certain 
        rights of the FDIC acting as conservator or receiver 
        for a failed insured depository institution (and in 
        some situations, rights of SIPC and receivers of 
        certain uninsured institutions) cannot be defeated by 
        operation of the terms of FDICIA.
          To make other substantive and technical amendments to 
        clarify the enforceability of financial agreements and 
        transactions in bankruptcy or insolvency.
    All these changes are designed to further minimize systemic 
risk to the banking system and the financial markets.

                                Hearings

    On March 17, 1999, Representatives Leach, LaFalce, and 
Roukema introduced H.R. 1161. On April 11, 2000, the Committee 
held a hearing on the Working Group legislative recommendations 
concerning over-the-counter derivatives, hedge funds, and 
netting proposals as contained in H.R. 1161. Appearing before 
the Committee were: The Honorable Richard H. Baker, Chairman, 
Subcommittee on Capital Markets, Securities, and Government-
Sponsored Enterprises; Lewis A. Sachs, Assistant Secretary for 
Financial Markets, Department of the Treasury; Patrick M. 
Parkinson, Associate Director, Division of Research and 
Statistics, Board of Governors of the Federal Reserve System; 
Annette L. Nazareth, Director, Division of Market Regulation, 
U.S. Securities and Exchange Commission; C. Robert Paul, 
General Counsel, Commodity Futures Trading Commission; Daniel 
P. Cunningham, Partner, Cravath, Swaine & Moore, on behalf of 
The International Swaps and Derivatives Association, Inc.; Mr. 
ShawnDorsch, President, Chief Operating Officer, and Co-
Founder, DNI Holdings, Inc. (Blackbird); Mark D. Young, Partner, 
Kirland & Ellis, on behalf of The Chicago Board of Trade; Terrence A. 
Duffy, Vice Chairman, The Chicago Mercantile Exchange; Mark C. 
Brickell, Managing Director, J.P. Morgan & Co., Inc.; Michael A. 
Watkins, Deputy General Counsel, First Union Corporation, on behalf of 
The ABA Securities Association; Garrett Glass, Chief Market Risk 
Officer, Bank One Corporation, on behalf of The Financial Services 
Roundtable; George Crapple, Chairman, The Managed Funds Association; 
and William P. Miller II, Chairman of the Executive Committee, The End 
Users of Derivatives Council of the Association for Financial 
Professionals.

                   Committee Consideration and Votes

    On July 27, 2000, the full Committee met in open session to 
consider H.R. 1161, the Financial Contract Netting Improvement 
Act of 2000. A quorum being present, the Committee by voice 
vote passed H.R. 1161 with an amendment and ordered it to be 
favorably reported with an amendment to the full House of 
Representatives for consideration. Also, the Committee adopted, 
by voice vote, a motion to authorize the Chairman to offer such 
motions as may be necessary in the House of Representatives to 
go to conference with the Senate on a similar bill.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    As provided for in clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, no oversight findings have 
been submitted to the Committee by the Committee on Government 
Reform.

                        Constitutional Authority

    In compliance with clause 3(d)(1) of rule XIII of the Rules 
of the House of Representatives, the Constitutional Authority 
of Congress to enact this legislation is derived from Article 
I, section 8, clause 1 (relating to the general welfare of the 
United States): Article I, section 8, clause 3 (relating to 
Congressional power to regulate commerce); Article 1, section 
8, clause 5 (relating to the power ``to coin money'' and 
``regulate the value thereof''); and Article I, section 8, 
clause 18 (relating to making all laws necessary and proper for 
carrying into execution powers vested by the Constitution in 
the government of the United States).

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the 
Congressional Accountability Act (P.L. 104-1) is inapplicable 
because this legislation does not relate to terms and 
conditions of employment or access to public services or 
accommodations.

    Congressional Budget Office Cost Estimate and Unfunded Mandates 
                                Analysis

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 7, 2000.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1161, the 
Financial Contract Netting Improvement Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark Hadley.
            Sincerely,
                                  Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1161--Financial Contract Netting Improvement Act of 2000

    Summary: H.R. 1161 would amend banking and bankruptcy laws 
to provide consistent treatment of certain financial contracts 
and to encourage the settlement by a single payment, on a net 
basis, of all the contracted-but-not-yet-due claims and 
liabilities of an insolvent institution. The purpose of netting 
is to reduce the risks, especially the systemic risk associated 
with activities in derivatives markets, that the failure of one 
entity will disrupt and endanger financial markets. H.R. 1161 
would affect direct spending, but CBO estimates that any such 
changes would be less than $500,000 annually.
    H.R. 1161 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments. H.R. 1161 would 
impose a new private-sector mandate as defined in UMRA, but CBO 
estimates that the direct costs of the mandate would be below 
the annual threshold established by UMRA for private-sector 
mandates ($109 million in 2000, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: H.R. 1161 would 
require the Office of the Comptroller of the Currency (OCC) and 
the Federal Deposit Insurance Corporation (FDIC) to issue 
regulations to implement the provisions of the legislation. The 
OCC charges fees to cover all its administrative costs; 
therefore, additional spending by the OCC would have no net 
budgetary effect over time. That is not the case with the FDIC, 
however, which uses deposit insurance premiums paid by all 
banks to cover the expenses it incurs to supervise state-
chartered banks. Because the balances in the deposit insurance 
funds exceed the levels required under current law, very few 
banks or savings and loans pay premiums for deposit insurance 
at this time. Therefore,CBO expects that the FDIC would recover 
from premium income very little, if any, of the administrative costs 
associated with implementing H.R. 1161. However, we do not expect these 
costs to be significant.
    The bill would give the FDIC, acting as receiver for 
insolvent financial institutions, additional flexibility to 
determine the most appropriate method for resolving a failing 
bank or savings and loan. As a result, we expect that enacting 
H.R. 1161 could help reduce the losses associated with closing 
insured institutions. Although it is difficult to assess the 
amount of savings, if any, associated with the bill's 
clarification of the treatment of certain financial 
transactions affecting failing banks and savings and loans, CBO 
estimates that the net effect on FDIC outlays would probably be 
negligible.
    Although enacting this bill could eliminate certain 
bankruptcy proceedings, CBO estimates that any reduction in 
workload would not have a significant impact on the budgets of 
the Executive Office for United States Trustees or the federal 
court system.
    Pay-as-You-Go Considerations: Under the Balanced Budget and 
Emergency Deficit Control Act, provisions providing funding 
necessary to meet the government's deposit insurance commitment 
are excluded from pay-as-you-go procedures. CBO believes that 
the administrative costs associated with the FDIC issuing 
regulations under H.R. 1161 are related to safety and soundness 
of deposit insurance, and thus, would be excluded. In any case, 
we estimate that those changes would be less than $500,000 
annually.
    Estimated Impact on State, Local, and Tribal Governments: 
H.R. 1161 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    Estimated Impact on the Private Sector: By requiring 
insured depository institutions to keep more detailed records 
for certain financial contracts, H.R. 1161 would impose a new 
private-sector mandate as defined by UMRA. CBO estimates that 
the cost of that mandate would not exceed the statutory 
threshold ($109 million in 2000, adjusted annually for 
inflation). Section 9 would authorize the Federal Deposit 
Insurance Corporation to prescribe additional recordkeeping 
requirements for certain qualified financial contracts (QFCs) 
held by depository institutions.
    Under the Federal Deposit Insurance Act (FDIA), QFCs are 
defined for five types of financial contracts: securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, and swap agreements. FDIA provides special rules 
for the treatment of QFCs held by an insured depository 
institution in default for which the FDIC is appointed 
conservator or receiver. Upon appointment of the FDIC as 
receiver for an institution, parties to QFCs receive certain 
benefits and rights which are not available to parties to other 
types of contracts.
    According to the FDIC, the principal purpose of a new 
recordkeeping rule under the bill would be to make certain 
information on QFCs readily available in the event that the 
FDIC is appointed as conservator or receiver of an insolvent 
institution. Under the bill (and in current practice), the FDIC 
would have the authority to transfer qualified financial 
contracts of an insolvent institution to another financial 
institution within 24 hours of being appointed as receiver. 
Other parties to the QFCs of the insolvent institution would 
not be able to terminate and net those contracts until the end 
of the 24-hour grace period. The FDIC does not expect that a 
recordkeeping rule under the bill would require institutions to 
collect new information. Rather, the FDIC anticipates that 
institutions would have to ensure that certain data that they 
already collect (and record) on QFCs are organized in a manner 
that would be accessible to the FDIC. Consequently, CBO expects 
that the direct costs of the mandate would not exceed the 
threshold established in UMBRA.
    Estimate prepared by: Federal Costs: Mark Hadley; Impact on 
State, Local, and Tribal Governments: Susan Sieg Tompkins; and 
Impact on the Private Sector: Jim Vandenberg.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                          House of Representatives,
               Committee on Banking and Financial Services,
                                 Washington, DC, September 7, 2000.
Hon. Tom Bliley,
Chairman, Committee on Commerce,Washington, DC.
    Dear Tom: I have received your letter concerning H.R. 1161, 
which the Committee on Banking and Financial Services on July 
27, 2000, voted to favorably report to the House. In your 
letter you indicate that the Committee on Commerce would agree 
not to seek further consideration of H.R. 1161. I appreciate 
your cooperation in this matter and understand that the 
Commerce Committee's jurisdictional interest in this 
legislation is not prejudiced by such cooperation. Pursuant to 
your request I will include a copy of your letter and my 
response in the report to accompany H.R. 1161.
    Thanks again for your assistance.
            Sincerely,
                                          James A. Leach, Chairman.
                                ------                                

                          House of Representatives,
                                     Committee on Commerce,
                                 Washington, DC, September 6, 2000.
Hon. Jim Leach,
Chairman, Committee on Banking and Financial Services, Washington, DC.
    Dear Jim: I am writing with regard to your committee's 
recent action on H.R. 1161, the Financial Contract Netting 
Improvement Act of 1999. As you know, the Committee on Commerce 
was named as an additional committee of jurisdiction upon the 
bill's introduction based upon its jurisdiction over securities 
and exchanges pursuant to Rule X of the Rules of the House of 
Representatives.
    Because of the importance of this legislation, I recognize 
your desire to bring it before the House in an expeditious 
manner, and I will not exercise the Committee's right to 
further consideration of this legislation. By agreeing to waive 
its consideration of the bill, however, the Committee on 
Commerce does not waive its jurisdiction of H.R. 1161. In 
addition, the Committee on Commerce reserves its authority to 
seek conferees on any provisions of the bill that are within 
its jurisdiction during any House-Senate conference that may be 
convened on this or similar legislation. I appreciate your 
commitment to support any request by the Commerce Committee for 
conferees on H.R. 1161 or similar legislation.
    I request that you include a copy of this letter and your 
response in your committee report on the bill and as part of 
the Record during consideration of the legislation on the House 
floor.
    Thank you for your attention to these matters.
            Sincerely,
                                              Tom Bliley, Chairman.

                      Section-by-Section Analysis

Section 1. Short title

    Section 1 cites the Act as the ``Financial Contract Netting 
Improvement Act of 2000''.

Section 2. Treatment of certain agreements by conservators or receivers 
        of insured depository institutions

    Subsections (a) through (f) amend the FDIA definitions of 
``qualified financial contract,'' ``securities contract,'' 
``commodity contract,'' ``forward contract,'' ``repurchase 
agreement'' and ``swap agreement'' to make them consistent with 
the definitions in the Bankruptcy Code.
    Subsection (b) amends the definition of ``securities 
contract'' to encompass options on securities and margin loans. 
The inclusion of ``margin loans'' in the definition is intended 
to encompass only those loans commonly known in the securities 
industry as ``margin loans'' and does not include other loans 
utilizing securities as collateral, however documented.
    Subsection (b) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract'', the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (e) amends the definition of ``repurchase 
agreement'' to codify the substance of the FDIC's 1995 
regulation defining repurchase agreement to include those on 
qualified foreign government securities. See 12 C.F.R. 
Sec. 360.5. The term ``qualified foreign government 
securities'' is defined to include those that are direct 
obligations of, or fully guaranteed by, central governments of 
members of the Organization for Economic Cooperation and 
Development (OECD). Subsection (e) reflects developments in the 
repurchase agreement markets, which increasingly use foreign 
government securities as the underlying asset. Any risk 
presented by this modification is addressed by limiting it to 
those issued or guaranteed by OECD member states.
    Subsection (e), like subsection (b) for ``securities 
contracts'', specifies that repurchase obligations under a 
participation in a commercial mortgage loan do not make the 
participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' However, a repurchase agreement 
involving the transfer of participations in commercial mortgage 
loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain one year or less 
after such transfer would constitute a ``repurchase 
agreement.''
    Subsection (f) amends the definition of ``swap agreement'' 
to include an ``interest rate swap, option, future, or forward 
agreement, including a rate floor, rate cap, rate collar, 
cross-currency rate swap, and basis swap; a spot, same day-
tomorrow, tomorrow-next, forward or other foreign exchange or 
precious metals agreement; a currency swap, option, future, or 
forward agreement; an equity index or equity swap, option, 
spread, future, or forward agreement; a debt index or debt 
swap, option, future, or forward agreement; a credit swap, 
option, future, or forward agreement; a commodity index or 
commodity swap, option, future, or forward agreement; or a 
weather swap, weather derivative, or a weather option.'' This 
amendment would achieve contractual netting across economically 
similar over-the-counter products that can be terminated and 
closed out on a mark-to-market basis.
    Subsection (g) amends the FDIA by adding a definition for 
``transfer,'' which is a key term used in the FDIA, to ensure 
that it is broadly construed to encompass dispositions of 
property or interests in property. The definition tracks that 
in section 101 of the Bankruptcy Code.
    Subsection (h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
FDIA. This subsection (h) also clarifies that the FDIA 
expressly protects rights under security agreements, 
arrangements or other credit enhancement related to one or more 
qualified financial contracts (QFCs). An example of a security 
arrangement is a right of set off, and examples of other credit 
enhancements are letters of credit, guarantees, reimbursement 
obligations and other similar agreements.
    Subsection (i) clarifies that no provision of Federal or 
state law relating to the avoidance of preferential or 
fraudulent transfers (including the anti-preference provision 
of the National Bank Act) can be invoked to avoid a transfer 
made in connection with any QFC of an insured depository 
institution in conservatorship or receivership, absent actual 
fraudulent intent on the part of the transferee.

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

    Section 3 provides that no provision of law, including 
FDICIA, shall be construed to limit the power of the FDIC to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA. As discussed below, there has been some 
uncertainty regarding whether or not FDICIA limits the 
authority of the FDIC to transfer or to repudiate QFCs of an 
insolvent financial institution. Section 3--as well as other 
provisions in the Act--clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFCs.
    Section 3 denies enforcement to ``walkaway'' clauses in 
QFCs. A walkaway clause is defined as a provision that, after 
calculation of a value of a party's position or an amount due 
to or from one of the parties upon termination, liquidation or 
acceleration of the QFC, either does not create a payment 
obligation of a party or extinguishes a payment obligation of a 
party in whole or in part solely because of such party's status 
as a non-defaulting party.

Section 4. Amendments relating to transfers of qualified financial 
        contracts

    Subsection (a) amends the FDIA to expand the transfer 
authority of the FDIC to permit transfers of QFCs to 
``financial institutions'' as defined in FDICIA or in 
regulations. This provision will allow the FDIC to transfer 
QFCs to a non-depository financial institution, provided the 
institution is not subject to bankruptcy or insolvency 
proceedings.
    The new FDIA provision specifies that when the FDIC 
transfers QFCs that are subject to the rules of a particular 
clearing organization, the transfer will not require the 
clearing organization to accept the transferee as a member of 
the organization. This provision gives the FDIC flexibility in 
resolving QFCs subject to the rules of a clearing organization, 
while preserving the ability of such organizations to enforce 
appropriate risk reducing membership requirements.
    The new FDIA provision also permits transfers to an 
eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person if, following the 
transfer, the contractual rights of the parties would be 
enforceable substantially to the same extent as under the FDIA.
    Subsection (b) amends the notification requirements 
following a transfer of the QFCs of a failed depository 
institution to require the FDIC to notify any party to a 
transferred QFC of such transfer by 5:00 p.m. (Eastern Time) on 
the business day following the date of the appointment of the 
FDIC acting as receiver or following the date of such transfer 
by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Subsection (c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counter parties to terminate or 
liquidate a QFC before the expiration of the time period 
provided by the FDIA during which the FDIC may repudiate or 
transfer a QFC in a conservatorship or receivership. Subsection 
(c) provides that a party may not terminate a QFC based solely 
on the appointment of the FDIC as receiver until 5:00 p.m. 
(Eastern Time) on the business day following the appointment of 
the receiver or after the person has received notice of a 
transfer under FDIA section 11(d)(9), or based solely on the 
appointment of the FDIC as conservator, notwithstanding the 
provisions of FDICIA. This provides the FDIC with an 
opportunity to undertake an orderly resolution of the insured 
depository institution.
    The amendment also prohibits the enforcement of rights of 
termination or liquidation that are based solely on the 
``financial condition'' of the depository institution in 
receivership or conservatorship. For example, termination based 
on a cross-default provision in a QFC that is triggered upon a 
default under another contract could be stayed if such other 
default was caused by an acceleration of amounts due under that 
other contract, and such acceleration was based solely on the 
appointment of a conservator or receiver for that depository 
institution. Similarly, a provision in a QFC permitting 
termination of the QFC based solely on a downgraded credit 
rating of a party will not be enforceable in an FDIC 
receivership or conservatorship because the provision is based 
solely on the financial condition of the depository institution 
in default. However, any payment, delivery or other 
performance-based default, or breach of a representation or 
covenant putting in question the enforceability of the 
agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not 
intended to prevent counter parties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver.
    The amendment allows the FDIC to meet its obligation to 
provide notice to parties to transferred QFCs by taking steps 
reasonably calculated to provide notice to such parties by the 
required time. This is consistent with the existing policy 
statement on QFCs issued by the FDIC on December 12, 1989.
    Finally, the amendment permits the FDIC to transfer QFCs of 
a failed depository institution to a bridge bank or a 
depository institution organized by the FDIC for which a 
conservator is appointed either (i) immediately upon the 
organization of such institution or (ii) at the time of a 
purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions 
are not to be considered financial institutions that are 
ineligible to receive such transfers under FDIA section 
11(e)(9). This is consistent with the existing policy statement 
on QFCs issued by the FDIC on December 12, 1989.

Section 5. Amendments relating to disaffirmance or repudiation of 
        qualified financial contracts

    Section 5 limits the disaffirmance and repudiation 
authority of the FDIC with respect to QFCs so that such 
authority is consistent with the FDIC's transfer authority 
under FDIA section 11(e)(9). This ensures that no 
disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat 
independently all the QFCs between a depository institution in 
default and a person or any affiliate of such person. The FDIC 
has announced that its policy is not to repudiate or disaffirm 
QFCs selectively. This unified treatment is fundamental to the 
reduction of systemic risk.

Section 6. Clarifying amendment relating to master agreements

    Section 6 states that a master agreement for one or more 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements or swap agreements will be treated as a 
single QFC under the FDIA. This provision ensures that cross-
product netting pursuant to a master agreement will be 
enforceable under the FDIA. Cross-product netting permits a 
wide variety of financial transactions between two parties to 
be netted, thereby maximizing the present and potential future 
risk-reducing benefits of the netting arrangement between the 
parties. Express recognition of the enforceability of such 
cross-product master agreements furthers the policy of 
increasing legal certainty and reducing systemic risks in the 
case of an insolvency of a large financial participant. Similar 
Bankruptcy Code clarifications to recognize cross-product 
netting both under a master agreement and in the absence of a 
master agreement are described below.

Section 7. Federal Deposit Insurance Corporation Improvement Act of 
        1991

    Subsection (a)(1) amends the definition of ``clearing 
organization'' to include clearinghouses that are subject to 
exemptions pursuant to orders of the SEC or the CFTC.
    Subsection (a)(2). FDICIA provides that a netting 
arrangement will be enforced pursuant to its terms, 
notwithstanding the failure of a party to the agreement. 
However, the current netting provisions of FDICIA limit this 
protection to ``financial institutions,'' which include 
depository institutions. Subsection (a)(2) amends the FDICIA 
definition of covered institutions to include (i) uninsured 
national and State member banks, irrespective of their 
eligibility for deposit insurance and (ii) foreign banks 
(including the foreign bank and its branches or agencies as a 
combined group, or only the foreign bank parent of a branch or 
agency). The Federal Reserve Board already has by regulation 
included certain foreign banks in the definition of a 
``financial institution'' for purposes of FDICIA and the latter 
change will statutorily extend the protections of FDICIA to 
ensure that U.S. financial organizations participating in 
netting agreements with foreign banks are covered by the Act, 
thereby enhancing the safety and soundness of these 
arrangements.
    Subsection (a)(3) amends FDICIA to provide that, for 
purposes of FDICIA, two or more clearing organizations that 
enter into a netting contract are considered ``members'' of 
each other. This assures the enforceability of netting 
arrangements involving two or more clearing organizations and a 
member common to all such organizations, thus reducing systemic 
risk in the event of the failure of such a member. Under the 
current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that 
clearing organizations could be regarded as members of each 
other for purposes of FDICIA.
    Subsection (a)(4) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the nettingagreement 
must be governed by the law of the United States or a State to receive 
the protections of FDICIA. However, many of these agreements, 
particularly netting arrangements covering positions taken in foreign 
exchange dealings, are governed by the laws of a foreign country. This 
subsection broadens the definition of ``netting contract'' to include 
those agreements governed by foreign law, and preserves the FDICIA 
requirement that a netting contract is not invalid under, or precluded 
by, Federal law.
    Subsection (a)(5) adds a definition of ``payment'' to 
FDICIA.
    Subsections (b) and (c) establish two exceptions to 
FDICIA's protection of the enforceability of the provisions of 
netting contracts between financial institutions and among 
clearing organization members.
    First, the termination provisions of netting contracts will 
not be enforceable based solely on (i) the appointment of a 
conservator for an insolvent depository institution under the 
FDIA or (ii) the appointment of a receiver for such institution 
under the FDIA, if such receiver transfers or repudiates QFCs 
in accordance with the FDIA and gives notice of a transfer by 
5:00 p.m. on the business day following the appointment of a 
receiver. This change is made to confirm the FDIC's flexibility 
to transfer or repudiate the QFCs of an insolvent depository 
institution in accordance with the terms of the FDIA. This 
modification also provides important legal certainty regarding 
the treatment of QFCs under the FDIA, because the current 
relationship between the FDIA and FDICIA is unclear.
    The second exception provides that FDICIA does not override 
a stay order under SIPA with respect to foreclosure on 
securities (but not cash) collateral of a debtor (section 12 
makes a conforming change to SIPA). There is also an exception 
relating to insolvent commodity brokers.
    Subsections (b) and (c) also clarify that a security 
agreement or other credit enhancement related to a netting 
contract is enforceable to the same extent as the underlying 
netting contract.
    Subsection (d) adds a new section 407 to FDICIA. This new 
section provides that, notwithstanding any other law, QFCs with 
uninsured national banks or uninsured Federal branches or 
agencies that are placed in receivership or conservatorship 
will be treated in the same manner as if the contract were with 
an insured national bank or insured Federal branch for which a 
receiver or conservator was appointed. This provision will 
ensure that parties to QFCs with uninsured national banks or 
uninsured Federal branches or agencies will have the same 
rights and obligations as parties entering into the same 
agreements with insured depository institutions. The new 
section also specifically limits the powers of a receiver or 
conservator for an uninsured national bank or uninsured Federal 
branch or agency to those contained in 12 U.S.C. 
Sec. Sec. 1821(e)(8), (9), (10), and (11), which address QFCs.
    While the amendment would apply the same rules to uninsured 
national banks and Federal branches and agencies that apply to 
insured institutions, the provision would not change the rules 
that apply to insured institutions. Nothing in this section 
would amend the International Banking Act, the Federal Deposit 
Insurance Act, the National Bank Act, or other statutory 
provisions with respect to receiverships of insured national 
banks or Federal branches.

Section 8. Bankruptcy Code amendments

    Subsection (a)(1) amends the Bankruptcy Code definitions of 
``repurchase agreement'' and ``swap agreement'' to conform with 
the amendments to the FDIA contained in sections 2(e) and 2(f) 
of the Act.
    In connection with the definition of ``repurchase 
agreement,'' the term ``qualified foreign government 
securities'' is defined to include securities that are direct 
obligations of, or fully guaranteed by, central governments of 
members of the Organization for Economic Cooperation and 
Development (OECD). This language reflects developments in the 
repurchase agreement markets, which increasingly use foreign 
government securities as the underlying asset. Any risk 
presented by this modification is addressed by limiting it to 
those obligating or guaranteed by OECD member states.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in an commercial mortgage loan do not 
make the participation agreement a ``repurchase agreement.'' 
Such repurchase obligations embedded in participations in 
commercial loans (such as recourse obligations) do not 
constitute a ``repurchase agreement.'' However, a repurchase 
agreement involving the transfer of participations in 
commercial mortgage loans with a simultaneous agreement to 
repurchase the participation on demand or at a date certain one 
year or less after such transfer would constitute a 
``repurchase agreement.''
    The amendments to the definition of ``repurchase 
agreement'' are not intended to affect the interpretation of 
the definition of ``securities contract.''
    The definition of ``swap agreement,'' in conjunction with 
the addition of ``spot foreign exchange transactions'' that was 
added to the definition in 1994, will achieve contractual 
netting across economically similar over-the-counter products 
that can be terminated and closed out on a mark-to-market 
basis.
    The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. For that reason, the phrase ``or any 
other similar agreement'' was included in the definition. To 
clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
similar to any other agreement or transaction referred to in 
[subsection (a)(1)] that is presently, or in the future 
becomes, regularly entered into in the swap market [. . .] and 
is a forward, swap, future, or option on one or more rates, 
currencies, commodities, equity securities or other equity 
instruments, debt securities or other debt instruments, or 
economic indices or measures of economic risk or value.'' 
Subsection (a)(1) specifies that this definition of swap 
agreement applies only for purposes of the Bankruptcy Code and 
is inapplicable to the other statutes, rules and regulations 
enumerated in that section.
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement. This ensures that any such agreement, arrangement or 
enhancement is itself deemed to be a swap agreement, and 
therefore eligible for treatment as such for purposes of 
termination, liquidation, acceleration, offset and netting 
under the Bankruptcy Code and the FDIA. Similar changes are 
made in the definitions of ``forward contract,'' ``commodity 
contract'' and ``repurchase agreement.'' An example of a 
security arrangement is a right of setoff; examples of other 
credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``commodity 
contract,'' respectively, to conform them to the definitions in 
the FDIA, and also to include any security agreements or 
arrangements or other credit enhancements related to one or 
more such contracts. Subsection (a)(2), like the amendments to 
the FDIA, amends the definition of ``securities contract'' to 
encompass options on securities and margin loans. The inclusion 
of ``margin loans'' in the definition is intended to encompass 
only those loans commonly known in the securities industry as 
``margin loans'' and does not include other loans utilizing 
securities as collateral, however documented.
    Subsection (a)(2) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract'', the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (b) amends the Bankruptcy Code definitions of 
``financial institution'' and ``forward contract merchant.'' 
The definition for ``financial institution'' includes Federal 
Reserve Banks and the receivers or conservators of insolvent 
depository institutions.
    Subsection (b) also adds a new definition of ``financial 
participant'' to limit the potential impact of insolvencies 
upon other major market participants. This definition will 
allow such marketparticipants to close-out and net agreements 
with insolvent entities under sections 362(b)(6), 546, 548, 555, and 
556 even if the creditor could not qualify as, for example, a commodity 
broker. The new subsection preserves the limitations of the right to 
close-out and net such contracts, in most cases, to entities who 
qualify under the Bankruptcy Code's counter party limitations. However, 
where the counter party has transactions with a total gross dollar 
value of at least $1 billion in notional principal amount outstanding 
on any day during the previous 15-month period, or has gross mark-to-
market positions of at least $100 million (aggregated across counter 
parties) in one or more agreements or transactions on any day during 
the previous 15-month period, the new subsection and corresponding 
amendments would permit it to exercise netting rights irrespective of 
its inability otherwise to satisfy those counter party limitations. 
This change will help prevent systemic impacts upon the markets from a 
single failure.
    Subsection (c) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.'' The definition of ``master netting 
agreement'' is designed to protect the termination and close-
out netting provisions of cross-product master agreements 
between parties. Such an agreement may be used (i) to document 
a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements or 
(ii) as an umbrella agreement for separate master agreements 
between the same parties, each of which is used to document a 
discrete type of transaction. The definition includes security 
agreements or arrangements or other credit enhancements related 
to one or more such agreements and clarifies that a master 
netting agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions).
    A ``master netting agreement participant'' is any entity 
that is a party to an outstanding master netting agreement with 
a debtor before the filing of a bankruptcy petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the reference to ``setoff'' in this 
provisions, as well as in section 362(b)(6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against, obligations to return 
collateral securing swap agreements, master netting 
arrangements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be 
pledged to cover the cost of replacing the defaulted 
transactions in the relevant market, as well as other costs and 
expenses incurred or estimated to be incurred for the purpose 
of hedging or reducing the risks arising out of such 
termination. Enforcement of these agreements and arrangements 
is consistent with the policy goal of minimizing systemic risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor that is under the control of the creditor but that 
cannot technically be ``held by'' the creditor, such as 
receivables and book-entry securities, and to collateral that 
has been repledged by the creditor.
    Subsection (e) amends section 546 of the Bankruptcy Code to 
provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This section of the Act also clarifies the 
limitations on a trustee's power to avoid transfers made under 
swap agreements.
    Subsection (f) amends section 548(d) of the Bankruptcy Code 
to provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This amendment provides the same protections for 
transfers made under, or in connection with, master netting 
agreements as currently is provided for margin payments and 
settlement payments received by commodity brokers, forward 
contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap 
participants under sections 546 and 548(d).
    Subsections (g), (h), (i) and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. Such rights include rights arising (i) from 
the rules of a securities exchange or clearing organization, 
(ii) under common law, law merchant or (iii) by reason of 
normal business practice. This is consistent with the current 
treatment of rights under swap agreements under section 560 of 
the Bankruptcy Code.
    For the purposes of Bankruptcy Code sections 555, 556, 559, 
560 and 561, it is intended that the normal business practice 
in the event of a default of a party based on bankruptcy or 
insolvency is to terminate, liquidate or accelerate securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements with 
the bankrupt or insolvent party.
    The protection of netting and offset rights in sections 560 
and 561 is in addition to the protections afforded in sections 
362(b)(6), (b)(7), (b)(17) and (b)(32). For example, cross-
product netting will be protected from the automatic stay under 
section 561 even in the absence of a master netting agreement.
    Sections 561(b)(2) and (3) limit the exercise of 
contractual rights to net or to offset obligations where one 
leg of the obligations sought to be netted relates to commodity 
contracts. Under subsection (b)(2), netting or offset is not 
permitted if the obligations are not mutual. This means, for 
example, that proprietary obligations cannot be netted or 
offset against obligations held for, or on behalf of, some 
other party. Even if the obligations are mutual, under 
subsection (b)(3) netting or offset is not permitted in a 
commodity broker bankruptcy if the party seeking to net or to 
offset has no positive net equity in the commodity account at 
the debtor. Subsections (b)(2) and (b)(3) limit the depletion 
of assets available for distribution to customers of commodity 
brokers. This is consistent with the principle of Subchapter IV 
of Chapter 7 of the Bankruptcy Code, which gives priority to 
customer claims in the bankruptcy of a commodity broker.
    Under the Act, the termination, liquidation or acceleration 
rights of a master netting agreement participant are subject to 
limitations contained in other provisions of the Bankruptcy 
Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the SEC. In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counter party of netting or set off 
rights in connection with QFCs would be enforceable under the 
FDIA.
    Subsection (l) clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all proceedings under title 11) will apply in a Chapter 9 
proceeding for a municipality. Although sections 555. 556, 559 
and 560 provide that they apply in any proceeding under the 
Bankruptcy Code, this subsection makes a technical amendment in 
Chapter 9 to clarify the applicability of these provisions.
    Subsection (m) clarifies that the provisions of the 
Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements apply in a section 304 
proceeding ancillary to a foreign insolvency proceeding.
    Subsections (n) and (o) amend those provisions in the 
Bankruptcy Code concerning the liquidation of commodity brokers 
and stockbrokers. Subchapter III of Chapter 7 of the Bankruptcy 
Code details specific rules for the liquidation of 
stockbrokers. Subchapter IV of Chapter 7 of the Bankruptcy Code 
and regulations of the CFTC detail specific rules for the 
liquidation of commodity brokers. These authorities are 
designed to protect customers and customer property of an 
insolvent stockbroker or commodity broker.
    Subsections (n) and (o) clarify the rights of parties to 
commodity contracts, securities contracts, forward contracts, 
swap agreements, repurchase agreements and master netting 
agreements with an insolvent commodity broker or stockbroker. 
They ensure that non-customers will not defeat the priority 
scheme of Subchapter III or IV priority by gaining access to 
assets held in segregated customer accounts. The subsections 
also clarify that the exercise of termination and netting 
rights will not otherwise affect customer property or 
distributions by the trustee of the insolvent commodity broker 
or stockbroker after the exercise of such rights.
    Subsection (p) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of setoff rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements cannot be avoided as a 
preference.
    This subsection also adds setoff of the kinds described in 
sections 555, 556, 559, 560, and 561 of the Bankruptcy Code to 
the types of set off excepted from section 553(b).

Section 9. Recordkeeping requirements

    Section 9 amends section 11(e)(8) of the Federal Deposit 
Insurance Act to explicitly authorize the FDIC, in consultation 
with appropriate Federal banking agencies, to prescribe 
regulations on recordkeeping with respect to QFCs. Adequate 
recordkeeping for such transactions is essential to effective 
risk management and to the reduction of systemic risk permitted 
by the orderly resolution of depository institutions utilizing 
QFCs.

Section 10. Exemptions from contemporaneous execution requirement

    Section 10 amends FDIA section 13(e)(2) to provide that an 
agreement for the collateralization of governmental deposits, 
bankruptcy estate funds, Federal Reserve Bank or Federal Home 
Loan Bank extensions of credit or one or more QFCs shall not be 
deemed invalid solely because such agreement was not entered 
into contemporaneously with the acquisition of the collateral 
or because of pledges, delivery or substitution of the 
collateral made in accordance with such agreement.
    The amendment codifies portions of policy statements issued 
by the FDIC regarding the application of section 13(e), which 
codifies the ``D'Oench Duhme'' doctrine. With respect to QFCs, 
this codification recognizes that QFCs often are subject to 
collateral and other security arrangements that may require 
posting and return of collateral on an ongoing basis based on 
the mark-to-market values of the collateralized transactions. 
The codification of only portions of the existing FDIC policy 
statements on these and related issues should not give rise to 
any negative implication regarding the continued validity of 
these policy statements.

Section 11. Damage measure

    Section 11 adds a new section 562 to the Bankruptcy Code 
providing that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement will be calculated as of 
the earlier of (i) the date of rejection of such agreement by a 
trustee or (ii) the date of liquidation, termination or 
acceleration of such contract or agreement.
    New section 562 provides important legal certainty and 
makes the Bankruptcy Code consistent with the current 
provisions related to the timing of the calculation of damages 
under QFCs in the FDIA.

Section 12. SIPC stay

    Section 12 amends SIPA to provide that an order or decree 
issued pursuant to SIPA shall not operate as a stay of any 
right of liquidation, termination, acceleration, offset or 
netting under one or more securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements or master netting agreements (as defined in the 
Bankruptcy Code and including rights of foreclosure on 
collateral), except that such order or decree may stay any 
right to foreclose on securities (but not cash) collateral 
pledged by the debtor or sold by the debtor under a repurchase 
agreement (a corresponding amendment to FDICIA is made by 
section 7). A creditor that was stayed in exercising rights 
against securities collateral would be entitled to post-
insolvency interest to the extent of the collateral.

Section13. Asset-backed securitizations

    Section 13 amends section 541 of the Bankruptcy Code to 
provide that certain assets transferred to an eligible entity 
in connection with an asset-backed securitization generally 
will not be included within the bankruptcy estate of the 
debtor. This provision recognizes that a valid transfer of such 
assets to an ``eligible entity'', generally eliminates the 
debtor's legal or equitable interests in those assets. 
Accordingly, subject to the avoidance powers in section 548(a), 
the transfer will be treated as a sale of those assets not 
subject to avoidance.

Section 14. Application of amendments

    Section 14 provides that the amendments made by the Act 
shall not apply with respect to cases commenced, or to 
conservator/receiver appointments made, before the date of 
enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

FEDERAL DEPOSIT INSURANCE ACT

           *       *       *       *       *       *       *

  Sec. 11. (a)  * * *

           *       *       *       *       *       *       *

  (e) Provisions Relating to Contracts Entered Into Before 
Appointment of Conservator or Receiver.--
          (1)  * * *

           *       *       *       *       *       *       *

          (8) Certain qualified financial contracts.--
                  (A) Rights of parties to contracts.--Subject 
                to [paragraph (10)] paragraphs (9) and (10) of 
                this subsection and notwithstanding any other 
                provision of this Act (other than subsection 
                (d)(9) of this section and section 13(e)), any 
                other Federal law, or the law of any State, no 
                person shall be stayed or prohibited from 
                exercising--
                          (i) any right [to cause the 
                        termination or liquidation] such person 
                        has to cause the termination, 
                        liquidation, or acceleration of any 
                        qualified financial contract with an 
                        insured depository institution which 
                        arises upon the appointment of the 
                        Corporation as receiver for such 
                        institution at any time after such 
                        appointment;
                          [(ii) any right under any security 
                        arrangement relating to any contract or 
                        agreement described in clause (i); or]
                          (ii) any right under any security 
                        agreement or arrangement or other 
                        credit enhancement related to 1 or more 
                        qualified financial contracts described 
                        in clause (i);

           *       *       *       *       *       *       *

                  (C) Certain transfers not avoidable.--
                          (i) In general.--Notwithstanding 
                        paragraph [(11)] (12), section 5242 of 
                        the Revised Statutes of the United 
                        States (12 U.S.C. 91) or any other 
                        Federal or State law relating to the 
                        avoidance of preferential or fraudulent 
                        transfers, the Corporation, whether 
                        acting as such or as conservator or 
                        receiver of an insured depository 
                        institution, may not avoid any transfer 
                        of money or other property in 
                        connection with any qualified financial 
                        contract with an insured depository 
                        institution.

           *       *       *       *       *       *       *

                  (D) Certain contracts and agreements 
                defined.--For purposes of this subsection--
                          (i) Qualified financial contract.--
                        The term ``qualified financial 
                        contract'' means any securities 
                        contract, commodity contract, forward 
                        contract, repurchase agreement, swap 
                        agreement, and any similar agreement 
                        that the Corporation determines by 
                        regulation, resolution or order to be a 
                        qualified financial contract for 
                        purposes of this paragraph.
                          [(ii) Securities contract.--The term 
                        ``securities contract''--
                                  [(I) has the meaning given to 
                                such term in section 741 of 
                                title 11, United States Code, 
                                except that the term 
                                ``security'' (as used in such 
                                section) shall be deemed to 
                                include any mortgage loan, any 
                                mortgage-related security (as 
                                defined in section 3(a)(41) of 
                                the Securities Exchange Act of 
                                1934), and any interest in any 
                                mortgage loan or mortgage-
                                related security; and
                                  [(II) does not include any 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                participation within the 
                                meaning of such term.
                          [(iii) Commodity contract.--The term 
                        ``commodity contract'' has the meaning 
                        given to such term in section 761 of 
                        title 11, United States Code.
                          [(iv) Forward contract.--The term 
                        ``forward contract'' has the meaning 
                        given to such term in section 101 of 
                        title 11, United States Code.
                          [(v) Repurchase agreement.--The term 
                        ``repurchase agreement''--
                                  [(I) has the meaning given to 
                                such term in section 101 of 
                                title 11, the United States 
                                Code, except that the items (as 
                                described in such section) 
                                which may be subject to any 
                                such agreement shall be deemed 
                                to include mortgage-related 
                                securities (as such term is 
                                defined in section 3(a)(41) of 
                                the Securities Exchange Act of 
                                1934), any mortgage loan, and 
                                any interest in any mortgage 
                                loan; and
                                  [(II) does not include any 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                participation within the 
                                meaning of such term.
                          [(vi) Swap agreement.--The term 
                        ``swap agreement''--
                                  [(I) means any agreement, 
                                including the terms and 
                                conditions incorporated by 
                                reference in any such 
                                agreement, which is a rate swap 
                                agreement, basis swap, 
                                commodity swap, forward rate 
                                agreement, interest rate 
                                future, interest rate option 
                                purchased, forward foreign 
                                exchange agreement, rate cap 
                                agreement, rate floor 
                                agreement, rate collar 
                                agreement, currency swap 
                                agreement, cross-currency rate 
                                swap agreement, currency 
                                future, or currency option 
                                purchased or any other similar 
                                agreement, and
                                  [(II) includes any 
                                combination of such agreements 
                                and any option to enter into 
                                any such agreement.
                          [(vii) Treatment of master agreement 
                        as 1 swap agreement.--Any master 
                        agreement for any agreements described 
                        in clause (vi)(I) together with all 
                        supplements to such master agreement 
                        shall be treated as 1 swap agreement.
                          [(viii) Transfer.--The term 
                        ``transfer'' has the meaning given to 
                        such term in section 101 of title 11, 
                        United States Code.]
                          (ii) Securities contract.--The term 
                        ``securities contract''--
                                  (I) means a contract for the 
                                purchase, sale, or loan of a 
                                security, a certificate of 
                                deposit, a mortgage loan, or 
                                any interest in a mortgage 
                                loan, a group or index of 
                                securities, certificates of 
                                deposit, or mortgage loans or 
                                interests therein (including 
                                any interest therein or based 
                                on the value thereof) or any 
                                option on any of the foregoing, 
                                including any option to 
                                purchase or sell any such 
                                security, certificate of 
                                deposit, loan, interest, group 
                                or index, or option;
                                  (II) does not include any 
                                purchase, sale, or repurchase 
                                obligation under a 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                agreement within the meaning of 
                                such term;
                                  (III) means any option 
                                entered into on a national 
                                securities exchange relating to 
                                foreign currencies;
                                  (IV) means the guarantee by 
                                or to any securities clearing 
                                agency of any settlement of 
                                cash, securities, certificates 
                                of deposit, mortgage loans or 
                                interests therein, group or 
                                index of securities, 
                                certificates of deposit, or 
                                mortgage loans or interests 
                                therein (including any interest 
                                therein or based on the value 
                                thereof) or option on any of 
                                the foregoing, including any 
                                option to purchase or sell any 
                                such security, certificate of 
                                deposit, loan, interest, group 
                                or index, or option;
                                  (V) means any margin loan;
                                  (VI) means any other 
                                agreement or transaction that 
                                is similar to any agreement or 
                                transaction referred to in this 
                                clause;
                                  (VII) means any combination 
                                of the agreements or 
                                transactions referred to in 
                                this clause;
                                  (VIII) means any option to 
                                enter into any agreement or 
                                transaction referred to in this 
                                clause;
                                  (IX) means a master agreement 
                                that provides for an agreement 
                                or transaction referred to in 
                                subclause (I), (III), (IV), 
                                (V), (VI), (VII), or (VIII), 
                                together with all supplements 
                                to any such master agreement, 
                                without regard to whether the 
                                master agreement provides for 
                                an agreement or transaction 
                                that is not a securities 
                                contract under this clause, 
                                except that the master 
                                agreement shall be considered 
                                to be a securities contract 
                                under this clause only with 
                                respect to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (III), (IV), 
                                (V), (VI), (VII), or (VIII); 
                                and
                                  (X) means any security 
                                agreement or arrangement or 
                                other credit enhancement 
                                related to any agreement or 
                                transaction referred to in this 
                                clause.
                          (iii) Commodity contract.--The term 
                        ``commodity contract'' means--
                                  (I) with respect to a futures 
                                commission merchant, a contract 
                                for the purchase or sale of a 
                                commodity for future delivery 
                                on, or subject to the rules of, 
                                a contract market or board of 
                                trade;
                                  (II) with respect to a 
                                foreign futures commission 
                                merchant, a foreign future;
                                  (III) with respect to a 
                                leverage transaction merchant, 
                                a leverage transaction;
                                  (IV) with respect to a 
                                clearing organization, a 
                                contract for the purchase or 
                                sale of a commodity for future 
                                delivery on, or subject to the 
                                rules of, a contract market or 
                                board of trade that is cleared 
                                by such clearing organization, 
                                or commodity option traded on, 
                                or subject to the rules of, a 
                                contract market or board of 
                                trade that is cleared by such 
                                clearing organization;
                                  (V) with respect to a 
                                commodity options dealer, a 
                                commodity option;
                                  (VI) any other agreement or 
                                transaction that is similar to 
                                any agreement or transaction 
                                referred to in this clause;
                                  (VII) any combination of the 
                                agreements or transactions 
                                referred to in this clause;
                                  (VIII) any option to enter 
                                into any agreement or 
                                transaction referred to in this 
                                clause;
                                  (IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in 
                                subclause (I), (II), (III), 
                                (IV), (V), (VI), (VII), or 
                                (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to 
                                whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a 
                                commodity contract under this 
                                clause, except that the master 
                                agreement shall be considered 
                                to be a commodity contract 
                                under this clause only with 
                                respect to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (II), (III), 
                                (IV), (V), (VI), (VII), or 
                                (VIII); or
                                  (X) any security agreement or 
                                arrangement or other credit 
                                enhancement related to any 
                                agreement or transaction 
                                referred to in this clause.
                          (iv) Forward contract.--The term 
                        ``forward contract'' means--
                                  (I) a contract (other than a 
                                commodity contract) for the 
                                purchase, sale, or transfer of 
                                a commodity or any similar 
                                good, article, service, right, 
                                or interest which is presently 
                                or in the future becomes the 
                                subject of dealing in the 
                                forward contract trade, or 
                                product or byproduct thereof, 
                                with a maturity date more than 
                                2 days after the date the 
                                contract is entered into, 
                                including a repurchase 
                                transaction, reverse repurchase 
                                transaction, consignment, 
                                lease, swap, hedge transaction, 
                                deposit, loan, option, 
                                allocated transaction, 
                                unallocated transaction, or any 
                                other similar agreement;
                                  (II) any combination of 
                                agreements or transactions 
                                referred to in subclauses (I) 
                                and (III);
                                  (III) any option to enter 
                                into any agreement or 
                                transaction referred to in 
                                subclause (I) or (II);
                                  (IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in 
                                subclause (I), (II), or (III), 
                                together with all supplements 
                                to any such master agreement, 
                                without regard to whether the 
                                master agreement provides for 
                                an agreement or transaction 
                                that is not a forward contract 
                                under this clause, except that 
                                the master agreement shall be 
                                considered to be a forward 
                                contract under this clause only 
                                with respect to each agreement 
                                or transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (II), or 
                                (III); or
                                  (V) any security agreement or 
                                arrangement or other credit 
                                enhancement related to any 
                                agreement or transaction 
                                referred to in subclause (I), 
                                (II), (III), or (IV).
                          (v) Repurchase agreement.--The term 
                        ``repurchase agreement'' (which 
                        definition also applies to the term 
                        ``reverse repurchase agreement'')--
                                  (I) means an agreement, 
                                including related terms, which 
                                provides for the transfer of 1 
                                or more certificates of 
                                deposit, mortgage-related 
                                securities (as such term is 
                                defined in the Securities 
                                Exchange Act of 1934), mortgage 
                                loans, interests in mortgage-
                                related securities or mortgage 
                                loans, eligible bankers' 
                                acceptances, qualified foreign 
                                government securities or 
                                securities that are direct 
                                obligations of, or that are 
                                fully guaranteed by, the United 
                                States or any agency of the 
                                United States against the 
                                transfer of funds by the 
                                transferee of such certificates 
                                of deposit, eligible bankers' 
                                acceptances, securities, loans, 
                                or interests with a 
                                simultaneous agreement by such 
                                transferee to transfer to the 
                                transferor thereof certificates 
                                of deposit, eligible bankers' 
                                acceptances, securities, loans, 
                                or interests as described 
                                above, at a date certain not 
                                later than 1 year after such 
                                transfers or on demand, against 
                                the transfer of funds, or any 
                                other similar agreement;
                                  (II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                participation within the 
                                meaning of such term;
                                  (III) means any combination 
                                of agreements or transactions 
                                referred to in subclauses (I) 
                                and (IV);
                                  (IV) means any option to 
                                enter into any agreement or 
                                transaction referred to in 
                                subclause (I) or (III);
                                  (V) means a master agreement 
                                that provides for an agreement 
                                or transaction referred to in 
                                subclause (I), (III), or (IV), 
                                together with all supplements 
                                to any such master agreement, 
                                without regard to whether the 
                                master agreement provides for 
                                an agreement or transaction 
                                that is not a repurchase 
                                agreement under this clause, 
                                except that the master 
                                agreement shall be considered 
                                to be a repurchase agreement 
                                under this subclause only with 
                                respect to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (III), or 
                                (IV); and
                                  (VI) means any security 
                                agreement or arrangement or 
                                other credit enhancement 
                                related to any agreement or 
                                transaction referred to in 
                                subclause (I), (III), (IV), or 
                                (V).
                        For purposes of this clause, the term 
                        ``qualified foreign government 
                        security'' means a security that is a 
                        direct obligation of, or that is fully 
                        guaranteed by, the central government 
                        of a member of the Organization for 
                        Economic Cooperation and Development 
                        (as determined by regulation or order 
                        adopted by the appropriate Federal 
                        banking authority).
                          (vi) Swap agreement.--The term ``swap 
                        agreement'' means--
                                  (I) any agreement, including 
                                the terms and conditions 
                                incorporated by reference in 
                                any such agreement, which is an 
                                interest rate swap, option, 
                                future, or forward agreement, 
                                including a rate floor, rate 
                                cap, rate collar, cross-
                                currency rate swap, and basis 
                                swap; a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange or precious metals 
                                agreement; a currency swap, 
                                option, future, or forward 
                                agreement; an equity index or 
                                equity swap, option, future, or 
                                forward agreement; a debt index 
                                or debt swap, option, future, 
                                or forward agreement; a credit 
                                spread or credit swap, option, 
                                future, or forward agreement; a 
                                commodity index or commodity 
                                swap, option, future, or 
                                forward agreement; or a weather 
                                swap, weather derivative, or a 
                                weather option;
                                  (II) any agreement or 
                                transaction similar to any 
                                other agreement or transaction 
                                referred to in this clause that 
                                is presently, or in the future 
                                becomes, regularly entered into 
                                in the swap market (including 
                                terms and conditions 
                                incorporated by reference in 
                                such agreement) and that is a 
                                forward, swap, future, or 
                                option on 1 or more rates, 
                                currencies, commodities, equity 
                                securities or other equity 
                                instruments, debt securities or 
                                other debt instruments, or 
                                economic indices or measures of 
                                economic risk or value;
                                  (III) any combination of 
                                agreements or transactions 
                                referred to in this clause;
                                  (IV) any option to enter into 
                                any agreement or transaction 
                                referred to in this clause;
                                  (V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in 
                                subclause (I), (II), (III), or 
                                (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to 
                                whether the master agreement 
                                contains an agreement or 
                                transaction that is not a swap 
                                agreement under this clause, 
                                except that the master 
                                agreement shall be considered 
                                to be a swap agreement under 
                                this clause only with respect 
                                to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (II), (III), 
                                or (IV); and
                                  (VI) any security agreement 
                                or arrangement or other credit 
                                enhancement related to any 
                                agreements or transactions 
                                referred to in subparagraph 
                                (I), (II), (III), (IV), or (V).
                        Such term is applicable for purposes of 
                        this title only and shall not be 
                        construed or applied so as to challenge 
                        or affect the characterization, 
                        definition, or treatment of any swap 
                        agreement under any other statute, 
                        regulation, or rule, including the 
                        Securities Act of 1933, the Securities 
                        Exchange Act of 1934, the Public 
                        Utility Holding Company Act of 1935, 
                        the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the 
                        Investment Advisers Act of 1940, the 
                        Securities Investor Protection Act of 
                        1970, the Commodity Exchange Act, and 
                        the regulations promulgated by the 
                        Securities and Exchange Commission or 
                        the Commodity Futures Trading 
                        Commission.
                          (vii) Treatment of master agreement 
                        as 1 agreement.--Any master agreement 
                        for any contract or agreement described 
                        in any preceding clause of this 
                        subparagraph (or any master agreement 
                        for such master agreement or 
                        agreements), together with all 
                        supplements to such master agreement, 
                        shall be treated as a single agreement 
                        and a single qualified financial 
                        contract. If a master agreement 
                        contains provisions relating to 
                        agreements or transactions that are not 
                        themselves qualified financial 
                        contracts, the master agreement shall 
                        be deemed to be a qualified financial 
                        contract only with respect to those 
                        transactions that are themselves 
                        qualified financial contracts.
                          (viii) Transfer.--The term 
                        ``transfer'' means every mode, direct 
                        or indirect, absolute or conditional, 
                        voluntary or involuntary, of disposing 
                        of or parting with property or with an 
                        interest in property, including 
                        retention of title as a security 
                        interest and foreclosure of the 
                        depository institutions's equity of 
                        redemption.
                  (E) Certain protections in event of 
                appointment of conservator.--Notwithstanding 
                any other provision of this Act ([other than 
                paragraph (12) of this subsection, subsection 
                (d)(9)] other than subsections (d)(9) and 
                (e)(10) of this section, and section 13(e) of 
                this Act), any other Federal law, or the law of 
                any State, no person shall be stayed or 
                prohibited from exercising--
                          (i) any right such person has to 
                        cause the termination, liquidation, or 
                        acceleration of any qualified financial 
                        contract with a depository institution 
                        in a conservatorship based upon a 
                        default under such financial contract 
                        which is enforceable under applicable 
                        noninsolvency law;
                          [(ii) any right under any security 
                        arrangement relating to such qualified 
                        financial contracts; or]
                          (ii) any right under any security 
                        agreement or arrangement or other 
                        credit enhancement related to 1 or more 
                        qualified financial contracts described 
                        in clause (i);

           *       *       *       *       *       *       *

                  (F) Clarification.--No provision of law shall 
                be construed as limiting the right or power of 
                the Corporation, or authorizing any court or 
                agency to limit or delay, in any manner, the 
                right or power of the Corporation to transfer 
                any qualified financial contract in accordance 
                with paragraphs (9) and (10) of this subsection 
                or to disaffirm or repudiate any such contract 
                in accordance with paragraph (1).
                  (G) Walkaway clauses not effective.--
                          (i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and 
                        (E), and sections 403 and 404 of the 
                        Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, no walkaway 
                        clause shall be enforceable in a 
                        qualified financial contract of an 
                        insured depository institution in 
                        default.
                          (ii) Walkaway clause defined.--For 
                        purposes of this subparagraph, the term 
                        ``walkaway clause'' means a provision 
                        in a qualified financial contract that, 
                        after calculation of a value of a 
                        party's position or an amount due to or 
                        from 1 of the parties in accordance 
                        with its terms upon termination, 
                        liquidation, or acceleration of the 
                        qualified financial contract, either 
                        does not create a payment obligation of 
                        a party or extinguishes a payment 
                        obligation of a party in whole or in 
                        part solely because of such party's 
                        status as a nondefaulting party.
                  (H) Recordkeeping requirements.--The 
                Corporation, in consultation with the 
                appropriate Federal banking agencies, may 
                prescribe regulations requiring more detailed 
                recordkeeping with respect to qualified 
                financial contracts (including market 
                valuations) by insured depository institutions.
          [(9) Transfer of qualified financial contracts.--In 
        making any transfer of assets or liabilities of a 
        depository institution in default which includes any 
        qualified financial contract, the conservator or 
        receiver for such depository institution shall either--
                  [(A) transfer to 1 depository institution 
                (other than a depository institution in 
                default)--
                          [(i) all qualified financial 
                        contracts between--
                                  [(I) any person or any 
                                affiliate of such person; and
                                  [(II) the depository 
                                institution in default;
                          [(ii) all claims of such person or 
                        any affiliate of such person against 
                        such depository institution under any 
                        such contract (other than any claim 
                        which, under the terms of any such 
                        contract, is subordinated to the claims 
                        of general unsecured creditors of such 
                        institution);
                          [(iii) all claims of such depository 
                        institution against such person or any 
                        affiliate of such person under any such 
                        contract; and
                          [(iv) all property securing any claim 
                        described in clause (ii) or (iii) under 
                        any such contract; or
                  [(B) transfer none of the financial 
                contracts, claims, or property referred to in 
                subparagraph (A) (with respect to such person 
                and any affiliate of such person).]
          (9) Transfer of qualified financial contracts.--
                  (A) In general.--In making any transfer of 
                assets or liabilities of a depository 
                institution in default which includes any 
                qualified financial contract, the conservator 
                or receiver for such depository institution 
                shall either--
                          (i) transfer to 1 financial 
                        institution, other than a financial 
                        institution for which a conservator, 
                        receiver, trustee in bankruptcy, or 
                        other legal custodian has been 
                        appointed or which is otherwise the 
                        subject of a bankruptcy or insolvency 
                        proceeding--
                                  (I) all qualified financial 
                                contracts between any person or 
                                any affiliate of such person 
                                and the depository institution 
                                in default;
                                  (II) all claims of such 
                                person or any affiliate of such 
                                person against such depository 
                                institution under any such 
                                contract (other than any claim 
                                which, under the terms of any 
                                such contract, is subordinated 
                                to the claims of general 
                                unsecured creditors of such 
                                institution);
                                  (III) all claims of such 
                                depository institution against 
                                such person or any affiliate of 
                                such person under any such 
                                contract; and
                                  (IV) all property securing or 
                                any other credit enhancement 
                                for any contract described in 
                                subclause (I) or any claim 
                                described in subclause (II) or 
                                (III) under any such contract; 
                                or
                          (ii) transfer none of the qualified 
                        financial contracts, claims, property 
                        or other credit enhancement referred to 
                        in clause (i) (with respect to such 
                        person and any affiliate of such 
                        person).
                  (B) Transfer to foreign bank, foreign 
                financial institution, or branch or agency of a 
                foreign bank or financial institution.--In 
                transferring any qualified financial contracts 
                and related claims and property pursuant to 
                subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall 
                not make such transfer to a foreign bank, 
                financial institution organized under the laws 
                of a foreign country, or a branch or agency of 
                a foreign bank or financial institution unless, 
                under the law applicable to such bank, 
                financial institution, branch or agency, to the 
                qualified financial contracts, and to any 
                netting contract, any security agreement or 
                arrangement or other credit enhancement related 
                to 1 or more qualified financial contracts, the 
                contractual rights of the parties to such 
                qualified financial contracts, netting 
                contracts, security agreements or arrangements, 
                or other credit enhancements are enforceable 
                substantially to the same extent as permitted 
                under this section.
                  (C) Transfer of contracts subject to the 
                rules of a clearing organization.--In the event 
                that a conservator or receiver transfers any 
                qualified financial contract and related 
                claims, property and credit enhancements 
                pursuant to subparagraph (A)(i) and such 
                contract is subject to the rules of a clearing 
                organization, the clearing organization shall 
                not be required to accept the transferee as a 
                member by virtue of the transfer.
                  (D) Definition.--For purposes of this 
                section, the term ``financial institution'' 
                means a broker or dealer, a depository 
                institution, a futures commission merchant, or 
                any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.
          (10) Notification of transfer.--
                  (A) In general.--If--
                          (i) the conservator or receiver for 
                        an insured depository institution in 
                        default makes any transfer of the 
                        assets and liabilities of such 
                        institution; and
                          (ii) the transfer includes any 
                        qualified financial contract,
                [the conservator or receiver shall use such 
                conservator's or receiver's best efforts to 
                notify any person who is a party to any such 
                contract of such transfer by 12:00, noon (local 
                time) on the business day following such 
                transfer] the conservator or receiver shall 
                notify any person who is a party to any such 
                contract of such transfer by 5:00 p.m. (eastern 
                time) on the business day following the date of 
                the appointment of the receiver, in the case of 
                a receivership, or the business day following 
                such transfer, in the case of a 
                conservatorship.
                  (B) Certain rights not enforceable.--
                          (i) Receivership.--A person who is a 
                        party to a qualified financial contract 
                        with an insured depository institution 
                        may not exercise any right such person 
                        has to terminate, liquidate, or net 
                        such contract under paragraph (8)(A) or 
                        section 403 or 404 of the Federal 
                        Deposit Insurance Corporation 
                        Improvement Act of 1991 solely by 
                        reason of or incidental to the 
                        appointment of a receiver for the 
                        depository institution (or the 
                        insolvency or financial condition of 
                        the depository institution for which 
                        the receiver has been appointed)--
                                  (I) until 5:00 p.m. (eastern 
                                time) on the business day 
                                following the date of the 
                                appointment of the receiver; or
                                  (II) after the person has 
                                received notice that the 
                                contract has been transferred 
                                pursuant to paragraph (9)(A).
                          (ii) Conservatorship.--A person who 
                        is a party to a qualified financial 
                        contract with an insured depository 
                        institution may not exercise any right 
                        such person has to terminate, 
                        liquidate, or net such contract under 
                        paragraph (8)(E) or section 403 or 404 
                        of the Federal Deposit Insurance 
                        Corporation Improvement Act of 1991, 
                        solely by reason of or incidental to 
                        the appointment of a conservator for 
                        the depository institution (or the 
                        insolvency or financial condition of 
                        the depository institution for which 
                        the conservator has been appointed).
                          (iii) Notice.--For purposes of this 
                        subsection, the Corporation as receiver 
                        or conservator of an insured depository 
                        institution shall be deemed to have 
                        notified a person who is a party to a 
                        qualified financial contract with such 
                        depository institution if the 
                        Corporation has taken steps reasonably 
                        calculated to provide notice to such 
                        person by the time specified in 
                        subparagraph (A) of this subsection.
                  (C) Treatment of bridge banks.--The following 
                institutions shall not be considered a 
                financial institution for which a conservator, 
                receiver, trustee in bankruptcy, or other legal 
                custodian has been appointed or which is 
                otherwise the subject of a bankruptcy or 
                insolvency proceeding for purposes of paragraph 
                (9)--
                          (i) a bridge bank; or
                          (ii) a depository institution 
                        organized by the Corporation, for which 
                        a conservator is appointed either--
                                  (I) immediately upon the 
                                organization of the 
                                institution; or
                                  (II) at the time of a 
                                purchase and assumption 
                                transaction between such 
                                institution and the Corporation 
                                as receiver for a depository 
                                institution in default.
                  [(B)] (D) Business day defined.--For purposes 
                of this paragraph, the term ``business day'' 
                means any day other than any Saturday, Sunday, 
                or any day on which either the New York Stock 
                Exchange or the Federal Reserve Bank of New 
                York is closed.
          (11) Disaffirmance or repudiation of qualified 
        financial contracts.--In exercising the rights of 
        disaffirmance or repudiation of a conservator or 
        receiver with respect to any qualified financial 
        contract to which an insured depository institution is 
        a party, the conservator or receiver for such 
        institution shall either--
                  (A) disaffirm or repudiate all qualified 
                financial contracts between--
                          (i) any person or any affiliate of 
                        such person; and
                          (ii) the depository institution in 
                        default; or
                  (B) disaffirm or repudiate none of the 
                qualified financial contracts referred to in 
                subparagraph (A) (with respect to such person 
                or any affiliate of such person).
          [(11)] (12) Certain security interests not 
        avoidable.--No provision of this subsection shall be 
        construed as permitting the avoidance of any legally 
        enforceable or perfected security interest in any of 
        the assets of any depository institution except where 
        such an interest is taken in contemplation of the 
        institution's insolvency or with the intent to hinder, 
        delay, or defraud the institution or the creditors of 
        such institution.
          [(12)] (13) Authority to enforce contracts.--
                  (A) In general.--The conservator or receiver 
                may enforce any contract, other than a 
                director's or officer's liability insurance 
                contract or a depository institution bond, 
                entered into by the depository institution 
                notwithstanding any provision of the contract 
                providing for termination, default, 
                acceleration, or exercise of rights upon, or 
                solely by reason of, insolvency or the 
                appointment or the excercise of rights or 
                powers of a conservator or receiver.

           *       *       *       *       *       *       *

          [(13)] (14) Exception for federal reserve and federal 
        home loan banks.--No provision of this subsection shall 
        apply with respect to--
                  (A) any extension of credit from any Federal 
                home loan bank or Federal Reserve bank to any 
                insured depository institution; or

           *       *       *       *       *       *       *

          [(14)] (15) Selling credit card accounts 
        receivable.--
                  (A) Notification required.--An 
                undercapitalized insured depository institution 
                (as defined in section 38) shall notify the 
                Corporation in writing before entering into an 
                agreement to sell credit card accounts 
                receivable.

           *       *       *       *       *       *       *

          [(15)] (16) Certain credit card customer lists 
        protected.--
                  (A) In general.--If any insured depository 
                institution sells credit card accounts 
                receivable under an agreement negotiated at 
                arm's length that provides for the sale of the 
                institution's credit card customer list, the 
                Corporation shall prohibit any party to a 
                transaction with respect to the institution 
                under this section or section 13 from using the 
                list, except as permitted under the agreement.

           *       *       *       *       *       *       *

  Sec. 13. (a)  * * *

           *       *       *       *       *       *       *

  (e) Agreements Against Interests of Corporation.--
          (1)  * * *

           *       *       *       *       *       *       *

          [(2) Public deposits.--An agreement to provide for 
        the lawful collateralization of deposits of a Federal, 
        State, or local governmental entity or of any depositor 
        referred to in section 11(a)(2) shall not be deemed to 
        be invalid pursuant to paragraph (1)(B) solely because 
        such agreement was not executed contemporaneously with 
        the acquisition of the collateral or with any changes 
        in the collateral made in accordance with such 
        agreement.]
          (2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                  (A) deposits of, or other credit extension 
                by, a Federal, State, or local governmental 
                entity, or of any depositor referred to in 
                section 11(a)(2), including an agreement to 
                provide collateral in lieu of a surety bond;
                  (B) bankruptcy estate funds pursuant to 
                section 345(b)(2) of title 11, United States 
                Code;
                  (C) extensions of credit, including any 
                overdraft, from a Federal reserve bank or 
                Federal home loan bank; or
                  (D) 1 or more qualified financial contracts, 
                as defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph 
        (1)(B) solely because such agreement was not executed 
        contemporaneously with the acquisition of the 
        collateral or because of pledges, delivery, or 
        substitution of the collateral made in accordance with 
        such agreement.

           *       *       *       *       *       *       *

                              ----------                              

FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991

           *       *       *       *       *       *       *

                   TITLE IV--MISCELLANEOUS PROVISIONS

               Subtitle A--Payment System Risk Reduction

CHAPTER 1--BILATERAL AND CLEARING ORGANIZATION NETTING

           *       *       *       *       *       *       *

SEC. 402. DEFINITIONS.

  For purposes of this [subtitle] chapter--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Clearing organization.--The term ``clearing 
        organization'' means a clearinghouse, clearing 
        association, clearing corporation, or similar 
        organization--
                  (A) that provides clearing, netting, or 
                settlement services for its members and--
                          (i) in which all members other than 
                        the clearing organization itself are 
                        financial institutions or other 
                        clearing organizations; or
                          (ii) which is registered as a 
                        clearing agency under the Securities 
                        Exchange Act of 1934 or exempt from 
                        such registration pursuant to an order 
                        of the Securities and Exchange 
                        Commission; or
                  (B) that performs clearing functions for a 
                contract market designated pursuant to the 
                Commodity Exchange Act  or that has been 
                granted an exemption pursuant to section 
                4(c)(1) of such Act.

           *       *       *       *       *       *       *

          (6) Depository institution.--The term ``depository 
        institution'' means--
                  (A) a depository institution as defined in 
                section 19(b)(1)(A) of the Federal Reserve Act 
                (other than clause (vii));
                  [(B) a branch or agency as defined in section 
                1(b) of the International Banking Act of 1978;]
                  (B) an uninsured national bank or an 
                uninsured State bank that is a member of the 
                Federal Reserve System if the national bank or 
                State member bank is not eligible to 
makeapplication to become an insured bank under section 5 of the 
Federal Deposit Insurance Act;
                  (C) a branch or agency of a foreign bank, a 
                foreign bank and any branch or agency of the 
                foreign bank, or the foreign bank that 
                established the branch or agency, as those 
                terms are defined in section 1(b) of the 
                International Banking Act of 1978;
                  [(C)] (D) a corporation chartered under 
                section 25(a) of the Federal Reserve Act; or
                  [(D)] (E) a corporation having an agreement 
                or undertaking with the Board of Governors of 
                the Federal Reserve System under section 25 of 
                the Federal Reserve Act.

           *       *       *       *       *       *       *

          (11) Member.--The term ``member'' means a member of 
        or participant in a clearing organization, and includes 
        the clearing organization and any other clearing 
        organization with which such clearing organization has 
        a netting contract.

           *       *       *       *       *       *       *

          (14) Netting contract.--
                  (A) In general.--The term ``netting 
                contract''--
                          [(i) means a contract or agreement 
                        between 2 or more financial 
                        institutions or members, that--
                                  [(I) is governed by the laws 
                                of the United States, any 
                                State, or any political 
                                subdivision of any State, and
                                  [(II) provides for netting 
                                present or future payment 
                                obligations or payment 
                                entitlements (including 
                                liquidation or close-out values 
                                relating to the obligations or 
                                entitlements) among the parties 
                                to the agreement; and]
                          (i) means a contract or agreement 
                        between two or more financial 
                        institutions, clearing organizations, 
                        or members that provides for netting 
                        present or future payment obligations 
                        or payment entitlements (including 
                        liquidation or closeout values relating 
                        to such obligations or entitlements) 
                        among the parties to the agreement; and

           *       *       *       *       *       *       *

          (15) Payment.--The term ``payment'' means a payment 
        of United States dollars, another currency, or a 
        composite currency, and a noncash delivery, including a 
        payment or delivery to liquidate an unmatured 
        obligation.

           *       *       *       *       *       *       *

SEC. 403. BILATERAL NETTING.

  [(a) General Rule.--Notwithstanding any other provision of 
law, the covered contractual payment obligations and the 
covered contractual payment entitlements between any 2 
financial institutions shall be netted in accordance with, and 
subject to the conditions of, the terms of any applicable 
netting contract.]
  (a) General Rule.--Notwithstanding any other provision of 
State or Federal law (other than paragraphs (8)(E), (8)(F), and 
(10)(B) of section 11(e) of the Federal Deposit Insurance Act 
or any order authorized under section 5(b)(2) of the Securities 
Investor Protection Act of 1970), the covered contractual 
payment obligations and the covered contractual payment 
entitlements between any two financial institutions shall be 
netted in accordance with, and subject to the conditions of, 
the terms of any applicable netting contract (except as 
provided in section 561(b)(2) of title 11, United States Code).

           *       *       *       *       *       *       *

  (f) Enforceability of Security Agreements.--The provisions of 
any security agreement or arrangement or other credit 
enhancement related to 1 or more netting contracts between any 
two financial institutions shall be enforceable in accordance 
with their terms (except as provided in section 561(b)(2) of 
title 11, United States Code) and shall not be stayed, avoided, 
or otherwise limited by any State or Federal law (other than 
paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the 
Federal Deposit Insurance Act and section 5(b)(2) of the 
Securities Investor Protection Act of 1970).

SEC. 404. CLEARING ORGANIZATION NETTING.

  [(a) General Netting Rule.--Notwithstanding any other 
provision of law, the covered contractual payment obligations 
and covered contractual payment entitlements of a member of a 
clearing organization to and from all other members of a 
clearing organization shall be netted in accordance with and 
subject to the conditions of any applicable netting contract.]
  (a) General Rule.--Notwithstanding any other provision of 
State or Federal law (other than paragraphs (8)(E), (8)(F), and 
(10)(B) of section 11(e) of the Federal Deposit Insurance Act 
and any order authorized under section 5(b)(2) of the 
Securities Investor Protection Act of 1970), the covered 
contractual payment obligations and the covered contractual 
payment entitlements of a member of a clearing organization to 
and from all other members of a clearing organization shall be 
netted in accordance with and subject to the conditions of any 
applicable netting contract (except as provided in section 
561(b)(2) of title 11, United States Code).

           *       *       *       *       *       *       *

  (h) Enforceability of Security Agreements.--The provisions of 
any security agreement or arrangement or other credit 
enhancement related to 1 or more netting contracts between any 
two members of a clearing organization shall be enforceable in 
accordance with their terms (except as provided in section 
561(b)(2) of title 11, United States Code) and shall not be 
stayed, avoided, or otherwise limited by any State or Federal 
law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and section 
5(b)(2) of the Securities Investor Protection Act of 1970).

           *       *       *       *       *       *       *

SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND 
                    UNINSURED FEDERAL BRANCHES AND AGENCIES.

  (a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), (10), and (11) of section 11(e) of the 
Federal Deposit Insurance Act shall apply to an uninsured 
national bank or uninsured Federal branch or Federal agency 
except--
          (1) any reference to the ``Corporation as receiver'' 
        or ``the receiver or the Corporation'' shall refer to 
        the receiver of an uninsured national bank or uninsured 
        Federal branch or Federal agency appointed by the 
        Comptroller of the Currency;
          (2) any reference to the ``Corporation'' (other than 
        in section 11(e)(8)(D) of such Act), the ``Corporation, 
        whether acting as such or as conservator or receiver'', 
        a ``receiver'', or a ``conservator'' shall refer to the 
        receiver or conservator of an uninsured national bank 
        or uninsured Federal branch or Federal agency appointed 
        by the Comptroller of the Currency; and
          (3) any reference to an ``insured depository 
        institution'' or ``depository institution'' shall refer 
        to an uninsured national bank or an uninsured Federal 
        branch or Federal agency.
  (b) Liability.--The liability of a receiver or conservator of 
an uninsured national bank or uninsured Federal branch or 
agency shall be determined in the same manner and subject to 
the same limitations that apply to receivers and conservators 
of insured depository institutions under section 11(e) of the 
Federal Deposit Insurance Act.
  (c) Regulatory Authority.--
          (1) In general.--The Comptroller of the Currency, in 
        consultation with the Federal Deposit Insurance 
        Corporation, may promulgate regulations to implement 
        this section.
          (2) Specific requirement.--In promulgating 
        regulations to implement this section, the Comptroller 
        of the Currency shall ensure that the regulations 
        generally are consistent with the regulations and 
        policies of the Federal Deposit Insurance Corporation 
        adopted pursuant to the Federal Deposit Insurance Act.
  (d) Definitions.--For purposes of this section, the terms 
``Federal branch'', ``Federal agency'', and ``foreign bank'' 
have the same meaning as in section 1(b) of the International 
Banking Act.

SEC. [407.] 407A. NATIONAL EMERGENCIES.

  The provisions of this subtitle may not be construed to limit 
the authority of the President under the Trading With the Enemy 
Act (50 U.S.C. App. 1 et seq.) or the International Emergency 
Economic Powers Act (50 U.S.C. 1701 et seq.).

           *       *       *       *       *       *       *

TITLE 11, UNITED STATES CODE

           *       *       *       *       *       *       *

CHAPTER 1--GENERAL PROVISIONS

           *       *       *       *       *       *       *

Sec. 101. Definitions

  In this title--
          (1)  * * *

           *       *       *       *       *       *       *

          [(22) ``financial institution'' means a person that 
        is a commercial or savings bank, industrial savings 
        bank, savings and loan association, or trust company 
        and, when any such person is acting as agent or 
        custodian for a customer in connection with a 
        securities contract, as defined in section 741 of this 
        title, such customer;]
          (22) the term ``financial institution''--
                  (A) means a Federal reserve bank or an entity 
                (domestic or foreign) that is a commercial or 
                savings bank, industrial savings bank, savings 
                and loan association, trust company, a bank or 
                a corporation organized under section 25A of 
                the Federal Reserve Act and, when any such bank 
                or entity is acting as agent or custodian for a 
                customer in connection with a securities 
                contract, as defined in section 741, such 
                customer; and
                  (B) includes any person described in 
                subparagraph (A) which operates, or operates 
                as, a multilateral clearing organization 
                pursuant to section 409 of the Federal Deposit 
                Insurance Corporation Improvement Act of 1991;
          (22A) ``financial participant'' means an entity that, 
        at the time it enters into a securities contract, 
        commodity contract or forward contract, or at the time 
        of the filing of the petition, has 1 or more agreements 
        or transactions described in paragraph (1), (2), (3), 
        (4), (5), or (6) of section 561(a) with the debtor or 
        any other entity (other than an affiliate) of a total 
        gross dollar value of at least $1,000,000,000 in 
        notional or actual principal amount outstanding on any 
        day during the previous 15-month period, or has gross 
        mark-to-market positions of at least $100,000,000 
        (aggregated across counterparties) in 1 or more such 
        agreement or transaction with the debtor or any other 
        entity (other than an affiliate) on any day during the 
        previous 15-month period;

           *       *       *       *       *       *       *

          (25) ``forward contract'' [means a contract] means--
                  (A) a contract (other than a commodity 
                contract) for the purchase, sale, or transfer 
                of a commodity, as defined in section 761(8) of 
                this title, or any similar good, article, 
                service, right, or interest which is presently 
                or in the future becomes the subject of dealing 
                in the forward contract trade, or product or 
                byproduct thereof, with a maturity date more 
                than two days after the date the contract is 
                entered into, including, but not limited to, a 
                repurchase transaction, reverse repurchase 
                transaction, consignment, lease, swap, hedge 
                transaction, deposit, loan, option, allocated 
                transaction, unallocated transaction[, or any 
                combination thereof or option thereon;], or any 
                other similar agreement;
                  (B) any combination of agreements or 
                transactions referred to in subparagraphs (A) 
                and (C);
                  (C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or 
                (B);
                  (D) a master agreement that provides for an 
                agreement or transaction referred to in 
                subparagraph (A), (B), or (C), together with 
                all supplements to any such master agreement, 
                without regard to whether such master agreement 
                provides for an agreement or transaction that 
                is not a forward contract under this paragraph, 
                except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement 
                or transaction under such master agreement that 
                is referred to in subparagraph (A), (B) or (C); 
                or
                  (E) any security agreement or arrangement, or 
                other credit enhancement related to any 
                agreement or transaction referred to in 
                subparagraph (A), (B), (C), or (D), but not to 
                exceed the actual value of such contract on the 
                date of the filing of the petition;
          [(26) ``forward contract merchant'' means a person 
        whose business consists in whole or in part of entering 
        into forward contracts as or with merchants in a 
        commodity, as defined in section 761(8) of this title, 
        or any similar good, article, service, right, or 
        interest which is presently or in the future becomes 
        the subject of dealing in the forward contract trade;]
          (26) ``forward contract merchant'' means a Federal 
        reserve bank, or an entity whose business consists in 
        whole or in part of entering into forward contracts as 
        or with merchants or in a commodity, as defined or in 
        section 761, or any similar good, article, service, 
        right, or interest which is presently or in the future 
        becomes the subject of dealing or in the forward 
        contract trade;

           *       *       *       *       *       *       *

          (38A) ``master netting agreement'' means an agreement 
        providing for the exercise of rights, including rights 
        of netting, setoff, liquidation, termination, 
        acceleration, or closeout, under or in connection with 
        1 or more contracts that are described in any 1 or more 
        of paragraphs (1) through (5) of section 561(a), or any 
        security agreement or arrangement or other credit 
        enhancement related to 1 or more of the foregoing. If a 
        master netting agreement contains provisions relating 
        to agreements or transactions that are not contracts 
        described in paragraphs (1) through (5) of section 
        561(a), the master netting agreement shall be deemed to 
        be a master netting agreement only with respect to 
        those agreements or transactions that are described in 
        any 1 or more of the paragraphs (1) through (5) of 
        section 561(a);
          (38B) ``master netting agreement participant'' means 
        an entity that, at any time before the filing of the 
        petition, is a party to an outstanding master netting 
        agreement with the debtor;

           *       *       *       *       *       *       *

          (46) ``repo participant'' means an entity that, [on 
        any day during the period beginning 90 days before the 
        date of] at any time before the filing of the petition, 
        has an outstanding repurchase agreement with the 
        debtor;
          [(47) ``repurchase agreement'' (which definition also 
        applies to a reverse repurchase agreement) means an 
        agreement, including related terms, which provides for 
        the transfer of certificates of deposit, eligible 
        bankers' acceptances, or securities that are direct 
        obligations of, or that are fully guaranteed as to 
        principal and interest by, the United States or any 
        agency of the United States against the transfer of 
        funds by the transferee of such certificates of 
        deposit, eligible bankers' acceptances, or securities 
        with a simultaneous agreement by such transferee to 
        transfer to the transferor thereof certificates of 
        deposit, eligible bankers' acceptances, or securities 
        as described above, at a date certain not later than 
        one year after such transfers or on demand, against the 
        transfer of funds;]
          (47) ``repurchase agreement'' (which definition also 
        applies to a ``reverse repurchase agreement'')--
                  (A) means--
                          (i) an agreement, including related 
                        terms, which provides for the transfer 
                        of 1 or more certificates of deposit, 
                        mortgage-related securities (as defined 
                        in the Securities Exchange Act of 
                        1934), mortgage loans, interests in 
                        mortgage-related securities or mortgage 
                        loans, eligible bankers' acceptances, 
                        qualified foreign government 
                        securities, or securities that are 
                        direct obligations of, or that are 
                        fully guaranteed by, the United States 
                        or any agency of the United States 
                        against the transfer of funds by the 
                        transferee of such certificates of 
                        deposit, eligible bankers' acceptances, 
                        securities, loans, or interests, with a 
                        simultaneous agreement by such 
                        transferee to transfer to the 
                        transferor thereof certificates of 
                        deposit, eligible bankers' acceptance, 
                        securities, loans, or interests of the 
                        kind described above, at a date certain 
                        not later than 1 year after such 
                        transfer or on demand, against the 
                        transfer of funds;
                          (ii) any combination of agreements or 
                        transactions referred to in clauses (i) 
                        and (iii);
                          (iii) an option to enter into an 
                        agreement or transaction referred to in 
                        clause (i) or (ii);
                          (iv) a master agreement that provides 
                        for an agreement or transaction 
                        referred to in clause (i), (ii), or 
                        (iii), together with all supplements to 
                        any such master agreement, without 
                        regard to whether such master agreement 
                        provides for an agreement or 
                        transaction that is not a repurchase 
                        agreement under this paragraph, except 
                        that such master agreement shall be 
                        considered to be a repurchase agreement 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        the master agreement that is referred 
                        to in clause (i), (ii), or (iii); or
                          (v) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), but not to exceed the actual 
                        value of such contract on the date of 
                        the filing of the petition; and
                  (B) does not include a repurchase obligation 
                under a participation in a commercial mortgage 
                loan,
        and, for purposes of this paragraph, the term 
        ``qualified foreign government security'' means a 
        security that is a direct obligation of, or that is 
        fully guaranteed by, the central government of a member 
        of the Organization for Economic Cooperation and 
        Development;
          (48) ``securities clearing agency'' means person that 
        is registered as a clearing agency under section 17A of 
        the Securities Exchange Act of 1934 or exempt from such 
        registration under such section pursuant to an order of 
        the Securities and Exchange Commission or whose 
        business is confined to the performance of functions of 
        a clearing agency with respect to exempted securities, 
        as defined in section 3(a)(12) of such Act for the 
        purposes of such section 17A;

           *       *       *       *       *       *       *

          [(53B) ``swap agreement'' means--
                  [(A) an agreement (including terms and 
                conditions incorporated by reference therein) 
                which is a rate swap agreement, basis swap, 
                forward rate agreement, commodity swap, 
                interest rate option, forward foreign exchange 
                agreement, spot foreign exchange agreement, 
                rate cap agreement, rate floor agreement, rate 
                collar agreement, currency swap agreement, 
                cross-currency rate swap agreement, currency 
                option, any other similar agreement (including 
                any option to enter into any of the foregoing);
                  [(B) any combination of the foregoing; or
                  [(C) a master agreement for any of the 
                foregoing together with all supplements;]
          (53B) ``swap agreement''--
                  (A) means--
                          (i) any agreement, including the 
                        terms and conditions incorporated by 
                        reference in such agreement, which is 
                        an interest rate swap, option, future, 
                        or forward agreement, including a rate 
                        floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a 
                        spot, same day-tomorrow, tomorrow-next, 
                        forward, or other foreign exchange or 
                        precious metals agreement; a currency 
                        swap, option, future, or forward 
                        agreement; an equity index or an equity 
                        swap, option, future, or forward 
                        agreement; a debt index or a debt swap, 
                        option, future, or forward agreement; a 
                        credit spread or a credit swap, option, 
                        future, or forward agreement; a 
                        commodity index or a commodity swap, 
                        option, future, or forward agreement; 
                        or a weather swap, weather derivative, 
                        or weather option;
                          (ii) any agreement or transaction 
                        similar to any other agreement or 
                        transaction referred to in this 
                        paragraph that--
                                  (I) is presently, or in the 
                                future becomes, regularly 
                                entered into in the swap market 
                                (including terms and conditions 
                                incorporated by reference 
                                therein); and
                                  (II) is a forward, swap, 
                                future, or option on 1 or more 
                                rates, currencies, commodities, 
                                equity securities, or other 
                                equity instruments, debt 
                                securities or other debt 
                                instruments, or economic 
                                indices or measures of economic 
                                risk or value;
                          (iii) any combination of agreements 
                        or transactions referred to in this 
                        paragraph;
                          (iv) any option to enter into an 
                        agreement or transaction referred to in 
                        this paragraph;
                          (v) a master agreement that provides 
                        for an agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), together with all supplements 
                        to any such master agreement, and 
                        without regard to whether the master 
                        agreement contains an agreement or 
                        transaction that is not a swap 
                        agreement under this paragraph, except 
                        that the master agreement shall be 
                        considered to be a swap agreement under 
                        this paragraph only with respect to 
                        each agreement or transaction under the 
                        master agreement that is referred to in 
                        clause (i), (ii), (iii), or (iv); or
                  (B) any security agreement or arrangement or 
                other credit enhancement related to any 
                agreements or transactions referred to in 
                subparagraph (A), but not to exceed the actual 
                value of such contract on the date of the 
                filing of the petition; and
                  (C) is applicable for purposes of this title 
                only and shall not be construed or applied so 
                as to challenge or affect the characterization, 
                definition, or treatment of any swap agreement 
                under any other statute, regulation, or rule, 
                including the Securities Act of 1933, the 
                Securities Exchange Act of 1934, the Public 
                Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company 
                Act of 1940, the Investment Advisers Act of 
                1940, the Securities Investor Protection Act of 
                1970, the Commodity Exchange Act, and the 
                regulations prescribed by the Securities and 
                Exchange Commission or the Commodity Futures 
                Trading Commission.

           *       *       *       *       *       *       *

CHAPTER 3--CASE ADMINISTRATION

           *       *       *       *       *       *       *

SUBCHAPTER I--COMMENCEMENT OF A CASE

           *       *       *       *       *       *       *

Sec. 304. Cases ancillary to foreign proceedings

  (a) * * *

           *       *       *       *       *       *       *

  (d) Any provisions of this title relating to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, or master netting agreements shall 
apply in a case ancillary to a foreign proceeding under this 
section or any other section of this title so that enforcement 
of contractual provisions of such contracts and agreements in 
accordance with their terms will not be stayed or otherwise 
limited by operation of any provision of this title or by order 
of a court in any proceeding under this title, and to limit 
avoidance powers to the same extent as in a proceeding under 
chapter 7 or 11 (such enforcement not to be limited based on 
the presence or absence of assets of the debtor in the United 
States).

SUBCHAPTER IV--ADMINISTRATIVE POWERS

           *       *       *       *       *       *       *

Sec. 362. Automatic stay

  (a)  * * *

           *       *       *       *       *       *       *

  (b) The filing of a petition under section 301, 302, or 303 
of this title, or of an application under section 5(a)(3) of 
the Securities Investor Protection Act of 1970, does not 
operate as a stay--
          (1)  * * *

           *       *       *       *       *       *       *

          (6) under subsection (a) of this section, of the 
        setoff by a commodity broker, forward contract 
        merchant, stockbroker, [financial institutions,] 
        financial institution, financial participant or 
        securities clearing agency of any mutual debt and claim 
        under or in connection with commodity contracts, as 
        defined in section 761 of this title, forward 
        contracts, or securities contracts, as defined in 
        section 741 of this title, that constitutes the setoff 
        of a claim against the debtor for a margin payment, as 
        defined in section 101, 741, or 761 of this title, or 
        settlement payment, as defined in section 101 or 741 of 
        this title, arising out of commodity contracts, forward 
        contracts, or securities contracts against cash, 
        securities, or other property held by, pledged to and 
        under the control of, or due from such commodity 
        broker, forward contract merchant, stockbroker, 
        [financial institutions,] financial institution, 
        financial participant or securities clearing agency to 
        margin, guarantee, secure, or settle commodity 
        contracts, forward contracts, or securities contracts;
          (7) under subsection (a) of this section, of the 
        setoff by a repo participant, of any mutual debt and 
        claim under or in connection with repurchase agreements 
        that constitutes the setoff of a claim against the 
        debtor for a margin payment, as defined in section 741 
        or 761 of this title, or settlement payment, as defined 
        in section 741 of this title, arising out of repurchase 
        agreements against cash, securities, or other property 
        held by, pledged to and under the control of, or due 
        from such repo participant to margin, guarantee, secure 
        or settle repurchase agreements;

           *       *       *       *       *       *       *

          [(17) under subsection (a) of this section, of the 
        setoff by a swap participant, of any mutual debt and 
        claim under or in connection with any swap agreement 
        that constitutes the setoff of a claim against the 
        debtor for any payment due from the debtor under or in 
        connection with any swap agreement against any payment 
        due to the debtor from the swap participant under or in 
        connection with any swap agreement or against cash, 
        securities, or other property of the debtor held by or 
        due from such swap participant to guarantee, secure or 
        settle any swap agreement; or]
          (17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in 
        connection with 1 or more swap agreements that 
        constitutes the setoff of a claim against the debtor 
        for any payment or other transfer of property due from 
        the debtor under or in connection with any swap 
        agreement against any payment due to the debtor from 
        the swap participant under or in connection with any 
        swap agreement or against cash, securities, or other 
        property held by, pledged to and under the control of, 
        or due from such swap participant to margin, guarantee, 
        secure, or settle any swap agreement;
          (18) under subsection (a) of the creation or 
        perfection of a statutory lien for an ad valorem 
        property tax imposed by the District of Columbia, or a 
        political subdivision of a State, if such tax comes due 
        after the filing of the petition[.]; or
          (19) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and 
        claim under or in connection with 1 or more master 
        netting agreements or any contract or agreement subject 
        to such agreements that constitutes the setoff of a 
        claim against the debtor for any payment or other 
        transfer of property due from the debtor under or in 
        connection with such agreements or any contract or 
        agreement subject to such agreements against any 
        payment due to the debtor from such master netting 
        agreement participant under or in connection with such 
        agreements or any contract or agreement subject to such 
        agreements or against cash, securities, or other 
        property held by, pledged to and under the control of, 
        or due from such master netting agreement participant 
        to margin, guarantee, secure, or settle such agreements 
        or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible 
        to exercise such offset rights under paragraph (6), 
        (7), or (17) for each individual contract covered by 
        the master netting agreement in issue.

           *       *       *       *       *       *       *

  (i) Limitation.--The exercise of rights not subject to the 
stay arising under subsection (a) pursuant to paragraph (6), 
(7), or (17), or (32) of subsection (b) shall not be stayed by 
any order of a court or administrative agency in any proceeding 
under this title.

           *       *       *       *       *       *       *

CHAPTER 5--CREDITORS, THE DEBTOR, AND THE ESTATE

           *       *       *       *       *       *       *

                       SUBCHAPTER III--THE ESTATE

541.  Property of the estate.
     * * * * * * *
[555.  Contractual right to liquidate a securities contract.
[556.  Contractual right to liquidate a commodity contract or forward 
          contract.]
555.  Contractual right to liquidate, terminate, or accelerate a 
          securities contract.
556.  Contractual right to liquidate, terminate, or accelerate a 
          commodities contract or forward contract.
     * * * * * * *
[559.  Contractual right to liquidate a repurchase agreement.
[560.  Contractual right to terminate a swap agreement.]
559.  Contractual right to liquidate, terminate, or accelerate a 
          repurchase agreement.
560.  Contractual right to liquidate, terminate, or accelerate a swap 
          agreement.
561.  Contractual right to terminate, liquidate, accelerate, or offset 
          under a master netting agreement and across contracts.
562.  Damage measure in connection with swap agreements, securities 
          contracts, forward contracts, commodity contracts, repurchase 
          agreements, or master netting agreements.

           *       *       *       *       *       *       *

SUBCHAPTER I--CREDITORS AND CLAIMS

           *       *       *       *       *       *       *

Sec. 502. Allowance of claims or interests

  (a)  * * *

           *       *       *       *       *       *       *

  (g)(1) A claim arising from the rejection, under section 365 
of this title or under a plan under chapter 9, 11, 12, or 13 of 
this title, of an executory contract or unexpired lease of the 
debtor that has not been assumed shall be determined, and shall 
be allowed under subsection (a), (b), or (c) of this section or 
disallowed under subsection (d) or (e) of this section, the 
same as if such claim had arisen before the date of the filing 
of the petition.
  (2) A claim for damages calculated in accordance with section 
562 shall be allowed under subsection (a), (b), or (c), or 
disallowed under subsection (d) or (e), as if such claim had 
arisen before the date of the filing of the petition.

           *       *       *       *       *       *       *

                       SUBCHAPTER III--THE ESTATE

Sec. 541. Property of the estate

  (a)  * * *

           *       *       *       *       *       *       *

  (b) Property of the estate does not include--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) any interest of the debtor in liquid or gaseous 
        hydrocarbons to the extent that--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (B)(i)  * * *
                  (ii) but for the operation of this paragraph, 
                the estate could include the interest referred 
                to in clause (i) only by virtue of section 542 
                of this title; [or]
          (5) any eligible asset (or proceeds thereof), to the 
        extent that such eligible asset was transferred by the 
        debtor before the date of commencement of the case, to 
        an eligible entity in connectionwith an asset-backed 
securitization, except to the extent such asset (or proceeds or value 
thereof) may be recovered by the trustee under section 550 by virtue of 
avoidance under section 548(a)(1); or
          [(5)] (6) any interest in cash or cash equivalents 
        that constitute proceeds of a sale by the debtor of a 
        money order that is made--
                  (A)  * * *

           *       *       *       *       *       *       *

  (e) For purposes of this section, the following definitions 
shall apply:
          (1) the term ``asset-backed securitization'' means a 
        transaction in which eligible assets transferred to an 
        eligible entity are used as the source of payment on 
        securities, including all securities issued by 
        governmental units, at least 1 class or tranche of 
        which is rated investment grade by 1 or more nationally 
        recognized securities rating organizations, when the 
        securities are initially issued by an issuer;
          (2) the term ``eligible asset'' means--
                  (A) financial assets (including interests 
                therein and proceeds thereof), either fixed or 
                revolving, whether or not such assets are in 
                existence as of the date of the transfer, 
                including residential and commercial mortgage 
                loans, consumer receivables, trade receivables, 
                assets of governmental units (including payment 
                obligations relating to taxes, receipts, fines, 
                tickets, and other sources of revenue), and 
                lease receivables, that, by their terms, 
                convert into cash within a finite time period, 
                plus any residual interest in property subject 
                to receivables included in such financial 
                assets plus any rights or other assets designed 
                to assure the servicing or timely distribution 
                of proceeds to security holders;
                  (B) cash; and
                  (C) securities, including all securities 
                issued by governmental units.
          (3) the term ``eligible entity'' means--
                  (A) an issuer; or
                  (B) a trust, corporation, partnership, 
                governmental unit, limited liability company 
                (including a single member limited liability 
                company), or other entity engaged exclusively 
                in the business of acquiring and transferring 
                eligible assets directly or indirectly to an 
                issuer and taking actions ancillary thereto;
          (4) the term ``issuer'' means a trust, corporation, 
        partnership, governmental unit, limited liability 
        company (including a single member limited liability 
        company), or other entity engaged exclusively in the 
        business of acquiring and holding eligible assets, 
        issuing securities backed by eligible assets, and 
        taking actions ancillary thereto; and
          (5) the term ``transferred'' means the debtor, 
        pursuant to a written agreement, represented and 
        warranted that eligible assets were sold, contributed, 
        or otherwise conveyed with the intention of removing 
        them from the estate of the debtor pursuant to 
        subsection (b)(5) (whether or not reference is made to 
        this title or any section of this title), irrespective, 
        without limitation, of--
                  (A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or 
                in any securities issued by the issuer;
                  (B) whether the debtor had an obligation to 
                repurchase or to service or supervise the 
                servicing of all or any portion of such 
                eligible assets; or
                  (C) the characterization of such sale, 
                contribution, or other conveyance for tax, 
                accounting, regulatory reporting, or other 
                purposes.

           *       *       *       *       *       *       *

Sec. 546. Limitations on avoiding powers

  (a)  * * *

           *       *       *       *       *       *       *

  (e) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b) of this title, the trustee may not avoid a transfer that 
is a margin payment, as defined in section 101, 741, or 761 of 
this title, or settlement payment, as defined in section 101 or 
741 of this title, made by or to a commodity broker, forward 
contract merchant, stockbroker, financial institution, 
financial participant, or securities clearing agency, that is 
made before the commencement of the case, except under section 
548(a)(1)(A) of this title.

           *       *       *       *       *       *       *

  (g) Notwithstanding sections 544, 545, 547, 548(a)(1)(B) and 
548(b) of this title, the trustee may not avoid a transfer 
[under a swap agreement], made by or to a swap participant, [in 
connection with a swap agreement] under or in connection with 
any swap agreement and that is made before the commencement of 
the case, except under section 548(a)(1)(A) of this title.

           *       *       *       *       *       *       *

  (j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b), the trustee may not avoid a transfer made by or to a 
master netting agreement participant under or in connection 
with any master netting agreement or any individual contract 
covered thereby that is made before the commencement of the 
case, except under section 548(a)(1)(A), and except to the 
extent the trustee could otherwise avoid such a transfer made 
under an individual contract covered by such master netting 
agreement.

           *       *       *       *       *       *       *

Sec. 548. Fraudulent transfers and obligations

  (a)  * * *

           *       *       *       *       *       *       *

  (d)(1)  * * *
  (2) In this section--
          (A)  * * *
          (B) a commodity broker, forward contract merchant, 
        stockbroker, financial institution, financial 
        participant, or securities clearing agency that 
        receives a margin payment, as defined in section 101, 
        741, or 761 of this title, or settlement payment, as 
        defined in section 101 or 741 of this title, takes for 
        value to the extent of such payment;
          (C) a repo participant that receives a margin 
        payment, as defined in section 741 or 761 of this 
        title, or settlement payment, as defined in section 741 
        of this title, in connection with a repurchase 
        agreement, takes for value to the extent of such 
        payment; [and]
          (D) a swap participant that receives a transfer in 
        connection with a swap agreement takes for value to the 
        extent of such transfer[.]; and
          (E) a master netting agreement participant that 
        receives a transfer in connection with a master netting 
        agreement or any individual contract covered thereby 
        takes for value to the extent of such transfer, except, 
        with respect to a transfer under any individual 
        contract covered thereby, to the extent such master 
        netting agreement participant otherwise did not take 
        (or is otherwise not deemed to have taken) such 
        transfer for value.

           *       *       *       *       *       *       *

Sec. 553. Setoff

  (a) Except as otherwise provided in this section and in 
sections 362 and 363 of this title, this title does not affect 
any right of a creditor to offset a mutual debt owing by such 
creditor to the debtor that arose before the commencement of 
the case under this title against a claim of such creditor 
against the debtor that arose before the commencement of the 
case, except to the extent that--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) the debt owed to the debtor by such creditor was 
        incurred by such creditor--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) for the purpose of obtaining a right of 
                setoff against the debtor (except for a setoff 
                of a kind described in section 362(b)(6), 
                362(b)(7), 362(b)(17), 362(b)(32), 555, 556, 
                559, 560 or 561).
  (b)(1) Except with respect to a setoff of a kind described in 
section 362(b)(6), 362(b)(7), [362(b)(14)] 362(b)(17), 
362(b)(32), 555, 556, 559, 560, 561, 365(h), 546(h), or 
365(i)(2) of this title, if a creditor offsets a mutual debt 
owing to the debtor against a claim against the debtor on or 
within 90 days before the date of the filing of the petition, 
then the trustee may recover from such creditor the amount so 
offset to the extent that any insufficiency on the date of such 
setoff is less than the insufficiency on the later of--
          (A)  * * *

           *       *       *       *       *       *       *

[Sec. 555. Contractual right to liquidate a securities contract]

Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract

  The exercise of a contractual right of a stockbroker, 
financial institution, financial participant, or securities 
clearing agency to cause the [liquidation] liquidation, 
termination, or acceleration of a securities contract, as 
defined in section 741 of this title, because of a condition of 
the kind specified in section 365(e)(1) of this title shall not 
be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by order of a court or 
administrative agency in any proceeding under this title unless 
such order is authorized under the provisions of the Securities 
Investor Protection Act of 1970 or any statute administered by 
the Securities and Exchange Commission. As used in this 
section, the term ``contractual right'' includes a right set 
forth in a rule or bylaw of a national securities exchange, a 
national securities association, or a securities clearing 
agency, a right set forth in a bylaw of a clearing organization 
or contract market or in a resolution of the governing board 
thereof, and a right, whether or not in writing, arising under 
common law, under law merchant, or by reason of normal business 
practice.

[Sec. 556. Contractual right to liquidate a commodities contract or 
                    forward contract]

Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract

  The contractual right of a commodity broker, financial 
participant or forward contract merchant to cause the 
[liquidation] liquidation, termination, or acceleration of a 
commodity contract, as defined in section 761 of this title, or 
forward contract because of a condition of the kind specified 
in section 365(e)(1) of this title, and the right to a 
variation or maintenance margin payment received from a trustee 
with respect to open commodity contracts or forward contracts, 
shall not be stayed, avoided, or otherwise limited by operation 
of any provision of this title or by the order of a court in 
any proceeding under this title. As used in this section, the 
term ``contractual right'' includes a right set forth in a rule 
or bylaw of a clearing organization or contract market or in a 
resolution of the governing board thereof and a right, whether 
or not evidenced in writing, arising under common law, under 
law merchant or by reason of normal business practice.

           *       *       *       *       *       *       *

[Sec. 559. Contractual right to liquidate a repurchase agreement]

Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement

  The exercise of a contractual right of a repo participant to 
cause the [liquidation] liquidation, termination, or 
acceleration of a repurchase agreement because of a condition 
of the kind specified in section 365(e)(1) of this title shall 
not be stayed, avoided, or otherwise limited by operation of 
any provision of this title or by order of a court or 
administrative agency in any proceeding under this title, 
unless, where the debtor is a stockbroker or securities 
clearing agency, such order is authorized under the provisions 
of the Securities Investor Protection Act of 1970 or any 
statute administered by the Securities and Exchange Commission. 
In the event that a repo participant liquidates one or more 
repurchase agreements with a debtor and under the terms of one 
or more such agreements has agreed to deliver assets subject to 
repurchase agreements to the debtor, any excess of the market 
prices received on liquidation of such assets (or if any such 
assets are not disposed of on the date of liquidation of such 
repurchase agreements, at the prices available at the time of 
liquidation of such repurchase agreements from a generally 
recognized source or the most recent closing bid quotation from 
such a source) over the sum of the stated repurchase prices and 
all expenses in connection with the liquidation of such 
repurchase agreements shall be deemed property of the estate, 
subject to the available rights of setoff. As used in this 
section, the term ``contractual right'' includes a right set 
forth in a rule or bylaw, applicable to each party to the 
repurchase agreement, of a national securities exchange, a 
national securities association, or a securities clearing 
agency, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant or by reason of 
normal business practice.

[Sec. 560. Contractual right to terminate a swap agreement]

Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement

  The exercise of any contractual right of any swap participant 
to cause the [termination of a swap agreement] liquidation, 
termination, or acceleration of 1 or more swap agreements 
because of a condition of the kind specified in section 
365(e)(1) of this title or to offset or net out any termination 
values or payment amounts arising under or [in connection with 
any swap agreement] in connection with the termination, 
liquidation, or acceleration of 1 or more swap agreements shall 
not be stayed, avoided, or otherwise limited by operation of 
any provision of this title or by order of a court or 
administrative agency in any proceeding under this title. As 
used in this section, the term ``contractual right'' includes a 
right, whether or not evidenced in writing, arising under 
common law, under law merchant, or by reason of normal business 
practice.

Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts

  (a) In General.--Subject to subsection (b), the exercise of 
any contractual right, because of a condition of the kind 
specified in section 365(e)(1), to cause the termination, 
liquidation, or acceleration of or to offset or net termination 
values, payment amounts or other transfer obligations arising 
under or in connection with 1 or more (or the termination, 
liquidation, or acceleration of 1 or more)--
          (1) securities contracts, as defined in section 
        741(7);
          (2) commodity contracts, as defined in section 
        761(4);
          (3) forward contracts;
          (4) repurchase agreements;
          (5) swap agreements; or
          (6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation 
of any provision of this title or by any order of a court or 
administrative agency in any proceeding under this title.
  (b) Exception.--
          (1) A party may exercise a contractual right 
        described in subsection (a) to terminate, liquidate, or 
        accelerate only to the extent that such party could 
        exercise such a right under section 555, 556, 559, or 
        560 for each individual contract covered by the master 
        netting agreement in issue.
          (2) If a debtor is a commodity broker subject to 
        subchapter IV of chapter 7--
                  (A) a party may not net or offset an 
                obligation to the debtor arising under, or in 
                connection with, a commodity contract against 
                any claim arising under, or in connection with, 
                other instruments, contracts, or agreements 
                listed in subsection (a), except to the extent 
                the party has positive net equity in the 
                commodity accounts at the debtor, as calculated 
                under such subchapter; and
                  (B) another commodity broker may not net or 
                offset an obligation to the debtor arising 
                under, or in connection with, a commodity 
                contract entered into or held on behalf of a 
                customer of the debtor against any claim 
                arising under, or in connection with, other 
                instruments, contracts, or agreements listed in 
                subsection (a).
  (c) Rule of Application.--Subparagraphs (A) and (B) of 
subsection (b)(2) shall not be construed as prohibiting the 
offset of claims and obligations arising pursuant to--
          (1) a cross-margining arrangement that has been 
        approved by the Commodity Futures Trading Commission or 
        that has been submitted to such Commission pursuant to 
        section 5a(a)(12) of the Commodity Exchange Act and has 
        been permitted to go into effect; or
          (2) another netting arrangement, between a clearing 
        organization (as defined in section 761) and another 
        entity, that has been approved by the Commodity Futures 
        Trading Commission.
  (d) Definition.--As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a national securities exchange, a national securities 
association, or a securities clearing agency, a right set forth 
in a bylaw of a clearing organization or contract market or in 
a resolution of the governing board thereof, and a right, 
whether or not evidenced in writing, arising under common law, 
under law merchant, or by reason of normal business practice.

Sec. 562. Damage measure in connection with swap agreements, securities 
                    contracts, forward contracts, commodity contracts, 
                    repurchase agreements, or master netting agreements

  If the trustee rejects a swap agreement, securities contract 
as defined in section 741, forward contract, commodity contract 
(as defined in section 761) repurchase agreement, or master 
netting agreement pursuant to section 365(a), or if a forward 
contract merchant, stockbroker, financial institution, 
securities clearing agency, repo participant, financial 
participant, master netting agreement participant, or swap 
participant liquidates, terminates, or accelerates such 
contract or agreement, damages shall be measured as of the 
earlier of--
          (1) the date of such rejection; or
          (2) the date of such liquidation, termination, or 
        acceleration.

           *       *       *       *       *       *       *

CHAPTER 7--LIQUIDATION

           *       *       *       *       *       *       *

                 SUBCHAPTER III--STOCKBROKER LIQUIDATION

741.  Definitions for this subchapter.
     * * * * * * *
753.  Stockbroker liquidation and forward contract merchants, commodity 
          brokers, stockbrokers, financial institutions, financial 
          participants, securities clearing agencies, swap participants, 
          repo participants, and master netting agreement participants.

               SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

     * * * * * * *
767.  Commodity broker liquidation and forward contract merchants, 
          commodity brokers, stockbrokers, financial institutions, 
          financial participants, securities clearing agencies, swap 
          participants, repo participants, and master netting agreement 
          participants.

           *       *       *       *       *       *       *

                SUBCHAPTER III--STOCKBROKER LIQUIDATION

Sec. 741. Definitions for this subchapter

  In this subchapter--
          (1)  * * *

           *       *       *       *       *       *       *

          [(7) ``securities contract'' means contract for the 
        purchase, sale, or loan of a security, including an 
        option for the purchase or sale of a security, 
        certificate of deposit, or group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any option entered into on a national 
        securities exchange relating to foreign currencies, or 
        the guarantee of any settlement of cash or securities 
        by or to a securities clearing agency;]
          (7) ``securities contract''--
                  (A) means--
                          (i) a contract for the purchase, 
                        sale, or loan of a security, a 
                        certificate of deposit, a mortgage loan 
                        or any interest in a mortgage loan, a 
                        group or index of securities, 
                        certificates of deposit or mortgage 
                        loans or interests therein (including 
                        an interest therein or based on the 
                        value thereof), or option on any of the 
                        foregoing, including an option to 
                        purchase or sell any such security, 
                        certificate of deposit, loan, interest, 
                        group or index, or option;
                          (ii) any option entered into on a 
                        national securities exchange relating 
                        to foreign currencies;
                          (iii) the guarantee by or to any 
                        securities clearing agency of a 
                        settlement of cash, securities, 
                        certificates of deposit, mortgage loans 
                        or interests therein, group or index of 
                        securities, or mortgage loans or 
                        interests therein (including any 
                        interest therein or based on the value 
                        thereof), or option on any of the 
                        foregoing, including an option to 
                        purchase or sell any such security, 
                        certificate of deposit, loan, interest, 
                        group or index, or option;
                          (iv) any margin loan;
                          (v) any other agreement or 
                        transaction that is similar to an 
                        agreement or transaction referred to in 
                        this paragraph;
                          (vi) any combination of the 
                        agreements or transactions referred to 
                        in this paragraph;
                          (vii) any option to enter into any 
                        agreement or transaction referred to in 
                        this paragraph;
                          (viii) a master agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii), 
                        together with all supplements to any 
                        such master agreement, without regard 
                        to whether the master agreement 
                        provides for an agreement or 
                        transaction that is not a securities 
                        contract under this paragraph, except 
                        that such master agreement shall be 
                        considered to be a securities contract 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        such master agreement that is referred 
                        to in clause (i), (ii), (iii), (iv), 
                        (v), (vi), or (vii); or
                          (ix) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreement or transaction 
                        referred to in this paragraph, but not 
                        to exceed the actual value of such 
                        contract on the date of the filing of 
                        the petition; and
                  (B) does not include any purchase, sale, or 
                repurchase obligation under a participation in 
                a commercial mortgage loan.

           *       *       *       *       *       *       *

Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, financial participants, securities 
                    clearing agencies, swap participants, repo 
                    participants, and master netting agreement 
                    participants

  Notwithstanding any other provision of this title, the 
exercise of rights by a forward contract merchant, commodity 
broker, stockbroker, financial institution, securities clearing 
agency, swap participant, repo participant, financial 
participant, or master netting agreement participant under this 
title shall not affect the priority of any unsecured claim it 
may have after the exercise of such rights.

              SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

Sec. 761. Definitions for this subchapter

  In this subchapter--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) ``commodity contract'' means--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (D) with respect to a clearing organization, 
                contract for the purchase or sale of a 
                commodity for future delivery on, or subject to 
                the rules of, a contract market or board of 
                trade that is cleared by such clearing 
                organization, or commodity option traded on, or 
                subject to the rules of, a contract market or 
                board of trade that is cleared by such clearing 
                organization; [or]

           *       *       *       *       *       *       *

                  (F) any other agreement or transaction that 
                is similar to an agreement or transaction 
                referred to in this paragraph;
                  (G) any combination of the agreements or 
                transactions referred to in this paragraph;
                  (H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                  (I) a master agreement that provides for an 
                agreement or transaction referred to in 
                subparagraph (A), (B), (C), (D), (E), (F), (G), 
                or (H), together with all supplements to such 
                master agreement, without regard to whether the 
                master agreement provides for an agreement or 
                transaction that is not a commodity contract 
                under this paragraph, except that the master 
                agreement shall be considered to be a commodity 
                contract under this paragraph only with respect 
                to each agreement or transaction under the 
                master agreement that is referred to in 
                subparagraph (A), (B), (C), (D), (E), (F), (G), 
                or (H); or
                  (J) any security agreement or arrangement or 
                other credit enhancement related to any 
                agreement or transaction referred to in this 
                paragraph, but not to exceed the actual value 
                of such contract on the date of the filing of 
                the petition;

           *       *       *       *       *       *       *

Sec. 767. Commodity broker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, financial participants, securities 
                    clearing agencies, swap participants, repo 
                    participants, and master netting agreement 
                    participants

  Notwithstanding any other provision of this title, the 
exercise of rights by a forward contract merchant, commodity 
broker, stockbroker, financial institution, financial 
participant, securities clearing agency, swap participant, repo 
participant, or master netting agreement participant under this 
title shall not affect the priority of any unsecured claim it 
may have after the exercise of such rights.

           *       *       *       *       *       *       *

CHAPTER 9--ADJUSTMENT OF DEBTS OF A MUNICIPALITY

           *       *       *       *       *       *       *

Sec. 901. Applicability of other sections of this title

  (a) Sections 301, 344, 347(b), 349, 350(b), 361, 362, 364(c), 
364(d), 364(e), 364(f), 365, 366, 501, 502, 503, 504, 506, 
507(a)(1), 509, 510, 524(a)(1), 524(a)(2), 544, 545, 546, 547, 
548, 549(a), 549(c), 549(d), 550, 551, 552, 553, 555, 556, 557, 
559, 560, 561, 562, 1102, 1103, 1109, 1111(b), 1122, 
1123(a)(1), 1123(a)(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 
1123(b), 1124, 1125, 1126(a), 1126(b), 1126(c), 1126(e), 
1126(f), 1126(g), 1127(d), 1128, 1129(a)(2), 1129(a)(3), 
1129(a)(6), 1129(a)(8), 1129(a)(10), 1129(b)(1), 1129(b)(2)(A), 
1129(b)(2)(B), 1142(b), 1143, 1144, and 1145 of this title 
apply in a case under this chapter.

           *       *       *       *       *       *       *

                              ----------                              

      SECTION 5 OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970

SEC. 5. PROTECTION OF CUSTOMERS.

  (a)  * * *

           *       *       *       *       *       *       *

  (b) Court Action.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Jurisdiction and powers of court.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) Exception from stay.--
                          (i) Notwithstanding section 362 of 
                        title 11, United States Code, neither 
                        the filing of an application under 
                        subsection (a)(3) nor any order or 
                        decree obtained by the Securities 
                        Investor Protection Corporation from 
                        the court shall operate as a stay of 
                        any contractual rights of a creditor to 
                        liquidate, terminate, or accelerate a 
                        securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master 
                        netting agreement, each as defined in 
                        title 11, United States Code, to offset 
                        or net termination values, payment 
                        amounts, or other transfer obligations 
                        arising under or in connection with 1 
                        or more of such contracts or 
                        agreements, or to foreclose on any cash 
                        collateral pledged by the debtor 
                        whether or not with respect to 1 or 
                        more of such contracts or agreements.
                          (ii) Notwithstanding clause (i), such 
                        application, order, or decree may 
                        operate as a stay of the foreclosure on 
                        or disposition of securities collateral 
                        pledged by the debtor, whether or not 
                        with respect to 1 or more of such 
                        contracts or agreements, securities 
                        sold by the debtor under a repurchase 
                        agreement or securities lent under a 
                        securities lending agreement.
                          (iii) As used in this section, the 
                        term ``contractual right'' includes a 
                        right set forth in a rule or bylaw of a 
                        national securities exchange, a 
                        national securities association, or a 
                        securities clearing agency, a right set 
                        forth in a bylaw of a clearing 
                        organization or contract market or in a 
                        resolution of the governing board 
                        thereof, and a right, whether or not in 
                        writing, arising under common law, 
                        under law merchant, or by reason of 
                        normal business practice.

           *       *       *       *       *       *       *

                                
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