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[House Report 108-277]
[From the U.S. Government Publishing Office]

108th Congress                                            Rept. 108-277
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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

 
           FINANCIAL CONTRACTS BANKRUPTCY REFORM ACT OF 2003

                                _______
                                

               September 18, 2003.--Ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2120]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 2120) to revise the banking and bankruptcy 
insolvency laws with respect to the termination and netting of 
financial contracts, and for other purposes, having considered 
the same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Cost Estimate........................     4
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Section-by-Section Analysis......................................     6
Changes in Existing Law Made by the Bill, as Reported............    22

                          Purpose and Summary

    H.R. 2120, the Financial Contracts Bankruptcy Reform Act of 
2003, will revise the banking and bankruptcy insolvency laws 
with respect to the netting of financial contracts.
    Specifically, the bill amends 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 1970 (SIPA). These amendments address the 
treatment of certain financial transactions following the 
insolvency of a party to those transactions. The amendments are 
designed to clarify and improve the consistency between the 
applicable statutes and to minimize the risk of a disruption 
within or between financial markets upon the insolvency of a 
market participant.

                  Background and Need for Legislation

    Financial institutions often utilize several different but 
related financial transactions to obtain and provide liquidity 
to the marketplace, while mitigating risk. For example, a 
financial institution may enter into a transaction which may 
entail exposure, but enter into an offsetting transaction which 
hedges that exposure. In these important market activities, 
which can involve huge sums and concentrated exposures, the 
inability of one party to exercise its contractual ``self-
help'' rights in the event of the insolvency of the other party 
could cause ripple effects, given the interconnected nature of 
the financial markets, undermining the financial condition of 
the non-bankrupt party (and its counterparties) and the markets 
more generally.
    Recognizing the important role of these transactions in 
capital formation and market liquidity and the potential for a 
chain reaction of insolvencies should non-bankrupt parties' 
contractual self-help rights be impaired, Congress has included 
provisions in the Bankruptcy Code and the bank insolvency laws 
that expressly protect the exercise of these rights in the 
event of bankruptcy or insolvency. However, it has been more 
than ten years since the last legislative update to the safe-
harbor provisions. The financial markets have evolved during 
that time in ways that leave various transactions and parties 
subject to legal uncertainty. As a greater variety of market 
participants engage in a broader range of transactions, 
statutory inconsistencies have surfaced that make it difficult 
to conclude that Congress's goal of minimizing systemic risk 
has been fully achieved through the existing market safe 
harbors. H.R. 2120 contains important technical corrections 
that are needed to minimize systemic risk in light of market 
developments.
    H.R. 2120 furthers the goals of prior amendments to the 
Bankruptcy Code and the FDIA regarding the treatment of those 
financial contracts and of the payment system risk reduction 
provisions in FDICIA. H.R. 2120 has four principal purposes:
    (1) To strengthen the provisions of the Bankruptcy Code and 
the FDIA that protect the enforceability of acceleration, 
termination, liquidation, close-out netting, collateral 
foreclosure and related provisions of certain financial 
agreements and transactions;
    (2) To harmonize the treatment of these financial 
agreements and transactions under the Bankruptcy Code and the 
FDIA;
    (3) 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; and,
    (4) 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.
    H.R. 2120, the Financial Contracts Bankruptcy Reform Act of 
2003, is based on the work of the President's Working Group on 
Financial Markets\1\ following a review of current statutory 
provisions governing the treatment of qualified financial 
contracts and similar financial contracts upon the insolvency 
of a counterparty. The provisions of this bill--which have 
historically been included in comprehensive bankruptcy reform 
legislation--have passed the House and Senate on numerous 
occasions without opposition. Both the Federal Reserve Board 
and the Administration support these provisions. Additionally, 
the provisions contained in H.R. 2120 have passed the House and 
Senate on numerous occasions with broad bipartisan support.
---------------------------------------------------------------------------
    \1\ The Working Group consists of the Secretary of the Treasury, 
and the chairmen of the Federal Reseve Board of Governors, the 
Securities Exchange Commission, and the Commodities Futures Trading 
Commission, with the participation of the heads of the Federal Deposit 
Insurance Corporation, the Office of the Comptroller of the Currency, 
the Office of Thrift Supervision, and the New York Federal Reserve 
Bank.
---------------------------------------------------------------------------
    H.R. 2120 would substantially improve the statutory regime 
that governs financial transactions when a party fails to meet 
its payment obligations. The legislation would harmonize the 
Bankruptcy Code and bank insolvency laws governing swaps, 
repurchase agreements, securities contacts, forward contracts, 
and commodity contracts.

                                Hearings

    No hearings were held on this legislation in the 108th 
Congress.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 21, 2003 and ordered H.R. 2120 reported to the House with a 
favorable recommendation by a voice vote, without amendment.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Oxley to report the bill 
to the House with a favorable recommendation was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    This legislation will clarify and improve the consistency 
between the applicable statutes and to minimize the risk of a 
disruption within or between financial markets upon the 
insolvency of a market participant.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority, entitlement authority, or 
tax expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 5, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2120, the 
Financial Contracts Bankruptcy Reform Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 2120--Financial Contracts Bankruptcy Reform Act of 2003

    H.R. 2120 would address the treatment of certain financial 
transactions when a party to such transactions can no longer 
meet its financial obligations. CBO estimates that implementing 
H.R. 2120 would have no significant impact on the federal 
budget. By potentially increasing the costs of the Federal 
Deposit Insurance Corporation (FDIC) and the Federal Reserve, 
the bill could affect direct spending and revenues, but CBO 
estimates that any such impact would be negligible.
    Financial institutions often use various types of complex 
financial transactions, such as swaps and derivative contracts, 
to obtain and provide liquidity to the marketplace. Such 
transactions entail risk, while others can be used to hedge 
against such risk. Because of the interconnected nature of the 
financial markets, a default by one party could adversely 
affect another party and cause disruptions within financial 
markets.
    Under U.S. law, several statutes govern the insolvencies of 
participants in financial markets, but as financial 
transactions have become more complex and sophisticated, many 
statutory inconsistencies between these laws have emerged. 
Enacting H.R. 2120 would make technical changes to the U.S. 
Bankruptcy Code, the Federal Deposit Insurance Act, the Federal 
Deposit Insurance Corporation Improvement Act of 1991, and the 
Securities Investor Protection Act of 1970 to improve 
consistency between these statutes. Such amendments include 
clarifying and expanding the definitions of various types of 
financial transactions, such as ``repurchase agreement'' and 
``swap agreement.'' Other changes would address issues such as 
how to calculate damages when certain financial obligations are 
not met.
    Certain provisions of H.R. 2120, specifically in section 2 
and 7, would explicitly preempt state laws that may relate to 
these types of financial transactions. Such preemptions are 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act (UMRA), but CBO estimates any costs to states would 
be insignificant and would not exceed the threshold established 
in UMRA ($59 million in 2003 adjusted annually for inflation). 
The bill contains no new private-sector mandates as defined in 
UMRA.
    According to the FDIC this bill would essentially ratify 
current practices involving the settlement of complex financial 
transactions during insolvencies or bankruptcy proceedings. 
Thus, CBO estimates that enacting H.R. 2120 would not result in 
any significant cost to the federal government. In addition, 
CBO estimates that any cost associated with the FDIC's 
requirement to develop regulations for recordkeeping by insured 
depository institutions, as well as the Federal Reserve, under 
section 9 of this legislation would be negligible.
    The CBO staff contact for this estimate is Susanne S. 
Mehlman. This estimate was approved by Peter H. Fontaine, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

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

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
defense and general welfare of the United States), and clause 3 
(relating to the power to regulate foreign and interstate 
commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1. Short Title; Table of Contents

    This section provides the short title of the bill, the 
``Financial Contracts Bankruptcy Reform Act of 2002,'' and a 
table of contents.

Section 2. Treatment of Certain Agreements by Conservatiors or 
        Receivers of Insured Depository Institutions

    Subsections (a) through (f) of section 2 of the bill amend 
the Federal Deposit Insurance Act's (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 and to reflect the 
enactment of the Commodity Futures Modernization Act of 2000 
(CFMA). It is intended that the legislative history and case 
law surrounding those terms, to the date of this amendment, be 
incorporated into the legislative history of the FDIA.
    Subsection (b) amends the definition of ``securities 
contract'' expressly to encompass margin loans, to clarify the 
coverage of securities options and to clarify the coverage of 
repurchase and reverse repurchase transactions. The inclusion 
of ``margin loans'' in the definition is intended to encompass 
only those loans commonly known in the securities industry as 
``margin loans,'' such as arrangements where a securities 
broker or dealer extends credit to a customer in connection 
with the purchase, sale, or trading of securities, and does not 
include lonas that are not commonly referred to as ``margin 
loans.'' The reference in subsection (b) to a ``guarantee by or 
to any securities clearing agency'' is intended to cover other 
arrangements, such as novation, that have an effect similar to 
a guarantee. The reference to a ``loan'' of a security in the 
definition is intended to apply to loans of securities, whether 
or not for a ``permitted purpose'' under margin regulations. 
The reference to ``repurchase and reverse repurchase 
transactions'' is intended to eliminate any inquiry under the 
qualified financial contract provisions of the FDIA as to 
whether a repurchase or reverse repurchase transaction is a 
purchase and sale transaction or a secured financing. 
Repurchase and reverse repurchase transactions meeting certain 
criteria are already covered under the definition of 
``repurchase agreement'' in the FDIA (and a regulation of the 
Federal Deposit Insurance Corporation (FDIC)). Repurchase and 
reverse repurchase transactions on all securities (including, 
for example, equity securities, asset-backed securities, 
corporate bonds and commercial paper) are included under the 
definition of ``securities contract.'' 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, 
sale or repurchase of 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.''
    A number of terms used in the qualified financial contract 
provisions, but not defined therein, are intended to have the 
meanings set forth in the analogous provisions of the 
Bankruptcy Code or Federal Deposit Insurance Corporation 
Improvement Act, such as, for example, ``securities clearing 
agency''. The term ``person,'' however, is intended to have the 
meaning set forth in section 1 of title 1 of the United States 
Code.
    Section 2(c) amends the definition of ``commodity 
contract'' in section 11(e)(8)(D)(iii) of the Federal Deposit 
Insurance Act. Section 2(d) amends section 11(e)(8)(D)(iv) of 
the Federal Deposit Insurance Act with respect to its 
definition of a ``forward 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. 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), as determined by rule, of 
the appropriate Federal banking agency. Subsection (e) reflects 
developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the 
underlying asset. The securities are limited to those issued by 
or guaranteed by full members of the OECD, as well as countries 
that have concluded special lending arrangements with the 
International Monetary Fund associated with the Fund's General 
Arrangements to Borrow. (See 12 C.F.R. 360.5.)
    Subsection (e) also amends the definition of ``repurchase 
agreement'' to include those on mortgage-related securities, 
mortgage loans and interests therein, and to include principal 
and interest-only U.S. government and agency securities as 
securities that can be the subject of a ``repurchase 
agreement.'' The reference in the definition to United States 
government- and agency-issued or fully guaranteed securities is 
intended to include obligations issued or guaranteed by Fannie 
Mae and the Federal Home Loan Mortgage Corporation (Freddie 
Mac) as well as all obligations eligible for purchase by 
Federal Reserve banks under the similar language of section 
14(b) of the Federal Reserve Act. This amendment is not 
intended to affect the status of repos involving securities or 
commodities as securities contracts, commodity contracts, or 
forward contracts, and their consequent eligibility for similar 
treatment under the qualified financial contract provisions. In 
particular, an agreement for the sale and repurchase of a 
security would continue to be a securities contract as defined 
in the FDIA, even if not a ``repurchase agreement'' as defined 
in the FDIA. Similarly, an agreement for the sale and 
repurchase of a commodity, even though not a ``repurchase 
agreement'' as defined in the FDIA, would continue to be a 
forward contract for purposes of the FDIA.
    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.'' 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 1 year or less after such transfer, 
however, would constitute a ``repurchase agreement'' as well as 
a ``securities contract''.
    Section 2(f) of the bill 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, 
future, or forward agreement; a debt index or debt swap, 
option, future, or forward agreement; a total return, 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 weather 
option.'' As amended, the definition of ``swap agreement'' will 
update the statutory definition and achieve contractual netting 
across economically similar transactions that are the subject 
of recurring dealings in the swap agreements.
    The definition of ``swap agreement'' was originally 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. (The phrase 
``or any similar agreement'' has been added to the definitions 
of ``forward contract,'' ``commodity contract,'' ``repurchase 
agreement'' and ``securities contract'' for the same reason.) 
To clarify this, subsection (f) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
that is similar to any other agreement or transaction referred 
to in [section 11(e)(8)(D)(vi) of the FDIA] and is of a type 
that has been, is presently, or in the future becomes, the 
subject of recurrent dealings in the swap markets * * * and 
that 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, 
quantitative measures associated with an occurrence, extent of 
an occurrence, or contingency associated with a financial, 
commercial, or economic consequence, or economic or financial 
indices or measures of economic or financial risk or value.''
    The definition of ``swap agreement,'' however, should not 
be interpreted to permit parties to document non-swaps as swap 
transactions. Traditional commercial arrangements, such as 
supply agreements, or other non-financial market transactions, 
such as commercial, residential or consumer loans, cannot be 
treated as ``swaps'' under either the FDIA or the Bankruptcy 
Code simply because the parties purport to document or label 
the transactions as ``swap agreements.'' In addition, these 
definitions apply only for purposes of the FDIA and the 
Bankruptcy Code. These definitions, and the characterization of 
a certain transaction as a ``swap agreement,'' are not intended 
to affect the characterization, definition, or treatment of any 
instruments under any other statute, regulation, or rule 
including, but not limited to, the statutes, regulations or 
rules enumerated in subsection (f). Similarly, section 17 and a 
new paragraph of section 11(e) of the FDIA provide that the 
definitions of ``securities contract,'' ``repurchase 
agreement,'' ``forward contract,'' and ``commodity contract,'' 
and the characterization of certain transactions as such a 
contract or agreement, are not intended to affect the 
characterization, definition, or treatment of any instruments 
under any other statute, regulation, or rule including, but not 
limited to, the statutes, regulations or rules enumerated in 
subsection (f).
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement, including any guarantee or reimbursement obligation 
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 FDIA and the Bankruptcy Code. Similar 
changes are made in the definitions of ``forward contract,'' 
``commodity contract,'' ``repurchase agreement'' and 
``securities contract.''
    The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that 
fall within the definition of ``forward contract.'' Instead, a 
``forward'' transaction could be a ``swap agreement'' even if 
not a ``forward contract.''
    Section 2(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.
    Section 2(h) makes clarifying technical changes to conform 
the receivership and conservatorship provisions of the FDIA. It 
also clarifies that the FDIA expressly protects rights under 
security agreements, arrangements or other credit enhancements 
related to one or more qualified financial contracts (QFCs). An 
example of a security arrangement is a right of setoff, and 
examples of other credit enhancements are letters of credit, 
guarantees, reimbursement obligations and other similar 
agreements.
    Section 2(i) of the bill 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 FDIC and NCUAB with Respect to Failed and 
        Failing Institutions

    Section 3 of the bill 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

    Section 4 of the bill 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 cleared on or 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 cleared on or subject to the rules of a 
clearing organization, while preserving the ability of such 
organizations to enforce appropriate risk reducing membership 
requirements. The amendment does not require the clearing 
organization to accept for clearing any QFCs from the 
transferee, except on the terms and conditions applicable to 
other parties permitted to clear through that clearing 
organization. ``Clearing organization'' is defined to mean a 
``clearing organization'' within the meaning of FDICIA (as 
amended both by the CFMA and by section 7 of the bill).
    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 or a U.S. financial 
institution that is not an FDIC-insured institution if, 
following the transfer, the contractual rights of the parties 
would be enforceable substantially to the same extent as under 
the FDIA. It is expected that the FDIC would not transfer QFCs 
to such a financial institution if there were an impending 
change of law that would impair the enforceability of the 
parties' contractual rights.
    Section 4(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 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.
    Section 4(c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counterparties 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 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.
    Section 4(c) also prohibits the enforcement of rights of 
termination or liquidation that arise solely because of the 
insolvency of the institution or are based 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 rendered ineffective 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 counterparties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver, or from 
taking actions based upon a receivership or other financial 
condition-triggered default in the absence of a transfer (as 
contemplated in Section 11(e)(10) of the FDIA). 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 of the bill 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 of the bill specifies 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 (but only with respect 
to underlying agreements that are themselves QFCs). This 
provision ensures that cross-product netting pursuant to a 
master agreement, or pursuant to an umbrella agreement for 
separate master agreements between the same parties, each of 
which is used to document one or more qualified financial 
contracts, 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.

Section 7. Federal Deposit Insurance Corporation Improvement Act of 
        1991

    Section 7(a)(1) of the Act amends the definition of 
``clearing organization'' to include clearinghouses that are 
subject to exemptions pursuant to orders of the Securities and 
Exchange Commission or the Commodity Futures Trading Commission 
and to include multilateral clearing organizations (the 
definition of which was added to FDICIA by the CFMA).
    FDICIA provides that a netting arrangement will be enforced 
pursuant to its terms, notwithstanding the failure of a party 
to the agreement. The current netting provisions of FDICIA, 
however, limit this protection to ``financial institutions,'' 
which include depository institutions. Section 7(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 latter change will extend the protections of 
FDICIA to ensure that U.S. financial organizations 
participating in netting agreements with foreign banks are 
covered by the bill, thereby enhancing the safety and soundness 
of these arrangements. It is intended that a non-defaulting 
foreign bank and its branches and agencies be considered to be 
a single financial institution for purposes of the bilateral 
netting provisions of FDICIA (except to the extent that the 
non-defaulting foreign bank and its branches and agencies on 
the one hand, and the defaulting financial institution, on the 
other, have entered into agreements that clearly evidence an 
intention that the non-defaulting foreign bank and its branches 
and agencies be treated as separate financial institutions for 
purposes of the bilateral netting provisions of FDICIA).
    Subsection (a)(3) amends the 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.
    Section 7(a)(4) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the netting 
agreement must be governed by the law of the United States or a 
State to receive the protections of FDICIA. Many of these 
agreements, however, 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 not be invalid under, or precluded by, 
Federal law.
    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 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 of 
the bill 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.
    Section 7(d) of the bill adds a new section 407 to FDICIA. 
This new section provides that, notwithstanding any other law, 
QFCs with uninsured national banks, an uninsured Federal branch 
or agency or Edge Act corporation, or an uninsured State member 
bank that operates, or operates as, a multilateral clearing 
organization 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 these 
institutions 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 such an 
institution to those contained in 12 U.S.C. 1821(e)(8), (9), 
(10), and (11), which address QFCs.
    While the amendment would apply the same rules as 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 Law Amendments

    Section 8 of the bill makes a series of amendments to the 
Bankruptcy Code. 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).
    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. The securities 
are limited to those issued by or guaranteed by full members of 
the OECD, as well as countries that have concluded special 
lending arrangements with the International Monetary Fund 
associated with the Fund's General Arrangements to Borrow.
    Subsection (a)(1) also amends the definition of 
``repurchase agreement'' to include those on mortgage-related 
securities, mortgage loans and interests therein, and to 
include principal and interest-only U.S. Government and agency 
securities as securities that can be the subject of a 
``repurchase agreement.'' The reference in the definition to 
United States government- and agency-issued or fully guaranteed 
securities is intended to include obligations issued or 
guaranteed by Fannie Mae and the Federal Home Loan Mortgage 
Corporation (Freddie Mac) as well as all obligations eligible 
for purchase by Federal Reserve banks under the similar 
language of section 14(b) of the Federal Reserve Act.
    This amendment is not intended to affect the status of 
repos involving securities or commodities as securities 
contracts, commodity contracts, or forward contracts, and their 
consequent eligibility for similar treatment under other 
provisions of the Bankruptcy Code. In particular, an agreement 
for the sale and repurchase of a security would continue to be 
a securities contract as defined in the Bankruptcy Code and 
thus also would be subject to the Bankruptcy Code provisions 
pertaining to securities contracts, even if not a ``repurchase 
agreement'' as defined in the Bankruptcy Code. Similarly, an 
agreement for the sale and repurchase of a commodity, even 
though not a ``repurchase agreement'' as defined in the 
Bankruptcy Code, would continue to be a forward contract for 
purposes of the Bankruptcy Code and would be subject to the 
Bankruptcy Code provisions pertaining to forward contracts.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' These 
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 1 year or less 
after such transfer would constitute a ``repurchase agreement'' 
(as well as a ``securities contract'').
    The definition of ``swap agreement'' is amended 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, future, or 
forward agreement; a debt index or debt swap, option, future, 
or forward agreement; a total return, 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 weather option.'' As 
amended, the definition of ``swap agreement'' will update the 
statutory definition and achieve contractual netting across 
economically similar transactions.
    The definition of ``swap agreement'' was originally 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. (The phrase 
``or any similar agreement'' has been added to the definitions 
of ``forward contract,'' ``commodity contract,'' ``repurchase 
agreement,'' and ``securities contract'' for the same reason.) 
To clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
that is similar to any other agreement or transaction referred 
to in [section 101(53B) of the Bankruptcy Code] and that is of 
a type that has been, is presently, or in the future becomes, 
the subject of recurrent dealings in the swap markets'' and 
[that] 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, 
quantitative measures associated with an occurrence, extent of 
an occurrence, or contingency associated with a financial, 
commercial, or economic consequence, or economic or financial 
indices or measures of economic or financial risk or value.''
    The definition of ``swap agreement'' in this subsection 
should not be interpreted to permit parties to document non-
swaps as swap transactions. Traditional commercial 
arrangements, such as supply agreements, or other non-financial 
market transactions, such as commercial, residential or 
consumer loans, cannot be treated as ``swaps'' under either the 
FDIA or the Bankruptcy Code because the parties purport to 
document or label the transactions as ``swap agreements.'' 
These definitions, and the characterization of a certain 
transaction as a ``swap agreement,'' are not intended to affect 
the characterization, definition, or treatment of any 
instruments under any other statute, regulation, or rule 
including, but not limited to, the statutes, regulations or 
rules enumerated in subsection (a)(1)(C). Similarly, the 
definitions of ``securities contract'', ``repurchase 
agreement'', and ``commodity contract'' and the 
characterization of certain transactions as such a contract or 
agreement, are not intended to affect the characterization, 
definition, or treatment of any instrument under any other 
statute regulation, or rule including, but not limited to, the 
statutes, regulations, or rules enumerated in subsection (f).
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement, including any guarantee or reimbursement obligation 
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,'' ``repurchase agreement,'' and 
``securities contract.'' An example of a security arrangement 
is a right of setoff; examples of other credit enhancements are 
letters of credit and other similar agreements. A security 
agreement or arrangement or guarantee or reimbursement 
obligation related to a ``swap agreement,'' ``forward 
contract,'' ``commodity contract,'' ``repurchase agreement'' or 
``securities contract'' will be such an agreement or contract 
only to the extent of the damages in connection with such 
agreement measured in accordance with Section 562 of the 
Bankruptcy Code (added by the bill). This limitation does not 
affect, however, the other provisions of the Bankruptcy Code 
(including section 362(b)) relating to security arrangements in 
connection with agreements or contracts that otherwise qualify 
as ``swap agreements,'' ``forward contracts,'' ``commodity 
contracts,'' ``repurchase agreements'' or ``securities 
contracts.''
    The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that 
fall within the definition of ``forward contract.'' Instead, a 
``forward'' transaction could be a ``swap agreement'' even if 
not a ``forward contract.''
    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.
    Subsection (a)(2), like the amendments to the FDIA, amends 
the definition of ``securities contract'' expressly to 
encompass margin loans, to clarify the coverage of securities 
options and to clarify the coverage of repurchase and reverse 
repurchase transactions. The inclusion of ``margin loans'' in 
the definition is intended to encompass only those loans 
commonly kinown in the securities industry as ``margin loans'', 
such as arrangements where a securities broker or dealer 
extends credit to a customer in connection with the purchase, 
sale, or trading of securities, and does not include loans that 
are not commonly referred to as ``margin loans.'' The reference 
in subsection (b) to a ``guarantee'' by or to a ``securities 
clearing agency'' is intended to cover other arrangements, such 
as novation, that have an effect similar to a guarantee. The 
reference to a ``loan'' of a security in the definition is 
intended to apply to loans of securities, whether or not for a 
``permitted purpose'' under margin regulations. The reference 
to ``repurchase and reverse repurchase transactions'' is 
intended to eliminate any inquiry under section 555 and related 
provisions as to whether a repurchase or reverse repurchase 
transaction is a purchase and sale transaction or a secured 
financing. Repurchase and reverse repurchase transactions 
meeting certain criteria are already covered under the 
definition of ``repurchase agreement'' in the Bankruptcy Code. 
Repurchase and reverse repurchase transactions on all 
securities (including, for example, equity securities, asset-
backed securities, corporate bonds and commercial paper) are 
included under the definition of ``securities contract''. A 
repurchase or reverse repurchase transaction which is a 
``securities contract'' but not a ``repurchase agreement'' 
would thus be subject to the ``counterparty limitations'' 
contained in section 555 of the Bankruptcy Code (i.e., only 
stockbrokers, financial institutions, securities clearing 
agencies and financial participants can avail themselves of 
section 555 and related provisions).
    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, sale or repurchase of 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.'' Section 8(a) clarifies the reference 
to guarantee or reimbursement obligation.
    Section 8(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. With respect to securities contracts, 
the definition of ``financial institution'' expressly includes 
investment companies registered under the Investment Company 
Act of 1940.
    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 market participants to close-out and net agreements 
with insolvent entities under sections 362(b)(6), 555, and 556 
even if the creditor could not qualify as, for example, a 
commodity broker. Sections 362(b)(6), 555 and 556 preserve the 
limitations of the right to close-out and net such contracts, 
in most cases, to entities who qualify under the Bankruptcy 
Code's counterparty limitations. However, where the 
counterparty has transactions with a total gross dollar value 
of at least $1 billion 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 million 
(aggregated across counterparties) in one or more agreements or 
transactions on any day during the previous 15-month period, 
sections 362(b)(6), 555 and 556 and corresponding amendments 
would permit it to exercise netting and related rights 
irrespective of its inability otherwise to satisfy those 
counterparty limitations. This change will help prevent 
systemic impact upon the markets from a single failure, and is 
derived from threshold tests contained in Regulation EE 
promulgated by the Federal Reserve Board in implementing the 
netting provisions of the Federal Deposit Insurance Corporation 
Improvement Act. It is intended that the 15-month period be 
measured with reference to the 15 months preceding the filing 
of a petition by or against the debtor.
    ``Financial participant'' is also defined to include 
``clearing organizations'' within the meaning of FDICIA (as 
amended by the CFMA and section 7 of the bill). This amendment, 
together with the inclusion of ``financial participants'' as 
eligible counterparties in connection with ``commodity 
contracts,'' ``forward contracts'' and ``securities contracts'' 
and the amendments made in other sections of the bill to 
include ``financial participants'' as counterparties eligible 
for the protections in respect of ``swap agreements'' and 
``repurchase agreements'', take into account the CFMA and will 
allow clearing organizations to benefit from the protections of 
all of the provisions of the Bankruptcy Code relating to these 
contracts and agreements. This will further the goal of 
promoting the clearing of derivatives and other transactions as 
a way to reduce systemic risk. The definition of ``financial 
participant'' (as with the other provisions of the Bankruptcy 
Code relating to ``securities contracts,'' ``forward 
contracts,'' ``commodity contracts,'' ``repurchase agreements'' 
and ``swap agreements'') is not mutually exclusive, i.e., an 
entity that qualifies as a ``financial participant'' could also 
be a ``swap participant,'' ``repo participant,'' ``forward 
contract merchant,'' ``commodity broker,'' ``stockbroker,'' 
``securities clearing agency'' and/or ``financial 
institution.''
    Section 8(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 references to ``setoff'' in these 
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 agreements, 
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 free from the automatic 
stay 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 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 and 
securities re-sold pursuant to repurchase agreements.
    Subsections (e) and (f) amend sections 546 and 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 and not taken in good faith. 
This amendment provides the same protections for a transfer 
made under, or in connection with, a master netting agreement 
as currently is provided for margin payments, settlement 
payments and other transfers received by commodity brokers, 
forward contract merchants, stockbrokers, financial 
institutions, securities clearing agencies, repo participants, 
and swap participants under sections 546 and 548(d), except to 
the extent the trustee could otherwise avoid such a transfer 
made under an individual contract covered by such master 
netting agreement.
    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.
    Section 8(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. These rights include rights arising (i) from the 
rules of a derivatives clearing organization, multilateral 
clearing organization, securities clearing agency, securities 
exchange, securities association, contract market, derivatives 
transaction execution facility or board of trade, (ii) under 
common law, law merchant or (iii) by reason of normal business 
practice. This reflects the enactment of the CFMA and the 
current treatment of rights under swap agreements under section 
560 of the Bankruptcy Code. Similar changes to reflect the 
enactment of the CFMA have been made to the definition of 
``contractual right'' for purposes of sections 555, 556, 559 
and 560 of the Bankruptcy Code.
    Subsections (b)(2)(A) and (b)(2)(B) of new section 561 
limit the exercise of contractual rights to net or to offset 
obligations where the debtor is a commodity broker and one leg 
of the obligations sought to be netted relates to commodity 
contracts traded on or subject to the rules of a contract 
market designated under the Commodity Exchange Act or a 
derivatives transaction execution facility registered under the 
Commodity Exchange Act. Under subsection (b)(2)(A) netting or 
offsetting is not permitted in these circumstances if the party 
seeking to net or to offset has no positive net equity in the 
commodity accounts at the debtor. Subsection (b)(2)(B) applies 
only if the debtor is a commodity broker, acting on behalf of 
its own customer, and is in turn a customer of another 
commodity broker. In that case, the latter commodity broker may 
not net or offset obligations under such commodity contracts 
with other claims against its customer, the debtor. Subsections 
(b)(2)(A) and (b)(2)(B) limit the depletion of assets available 
for distribution to customers of commodity brokers. Subsection 
(b)(2)(C) provides an exception to subsections (b)(2)(A) and 
(b)(2)(B) for cross-margining and other similar arrangements 
approved by, or submitted to and not rendered ineffective by, 
the Commodity Futures Trading Commission, as well as certain 
other netting arrangements.
    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)(28) of the Bankruptcy Code.
    Under this bill, 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 counterparty of netting or set off rights 
in connection with QFCs would be enforceable under the FDIA.
    New section 561 of the Bankruptcy Code 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 proceeding ancillary to a foreign insolvency proceeding 
under section 304 of the Bankruptcy Code.
    Subsections (l) and (m) clarify that the exercise of 
termination and netting rights will not otherwise affect the 
priority of the creditor's claim after the exercise of netting, 
foreclosure and related rights.
    Subsection (n) 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 setoff excepted from section 
553(b).
    Section 8(o), as well as other subsections of the bill, 
adds references to ``financial participant'' in all the 
provisions of the Bankruptcy Code relating to securities, 
forward and commodity contracts and repurchase and swap 
agreements.

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 by any insured depository 
institution with respect to QFCs only if the insured financial 
institution is in a troubled condition (as such term is defined 
in the FDIA).

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 or dates of liquidation, termination 
or acceleration of such contract or agreement.
    Section 562 provides an exception to the rules in (i) and 
(ii) if there are no commercially reasonable determinants of 
value as of such date or dates, in which case damages are to be 
measured as of the earliest subsequent date or dates on which 
there are commercially reasonable determinants of value. 
Although it is expected that in most circumstances damages 
would be measured as of the date or dates of either rejection 
or liquidation, termination or acceleration, in certain unusual 
circumstances, such as dysfunctional markets or liquidation of 
very large portfolios, there may be no commercially reasonable 
determinants of value for liquidating any such agreements or 
contracts or for liquidating all such agreements and contracts 
in a large portfolio on a single day. It is expected that 
measuring damages as of a date or dates before the date of 
liquidation, termination, or acceleration, will occur only in 
very unusual circumstances.
    The party determining damages is given limited discretion 
to determine the dates as of which damages are to be measured. 
Its actions are circumscribed unless there are no 
``commercially reasonable'' determinants of value for it to 
measure damages on the date or dates of either rejection or 
liquidation, termination or acceleration. The references to 
``commercially reasonable'' are intended to reflect existing 
state law standards relating to a creditor's actions in 
determining damages. New section 562 provides that if damages 
are not measured as of either the date of rejection or the date 
or dates of liquidation, termination or acceleration and the 
trustee challenges the timing of the measurement of damages by 
the non-defaulting party determining the damages, the non-
defaulting party, rather than the trustee, has the burden of 
proving the absence of any commercially reasonable determinants 
of value.
    New section 562 is not intended to have any impact on the 
determination under the Bankruptcy Code of the timing of 
damages for contracts and agreements other than those specified 
in section 562. Also, section 562 does not apply to proceedings 
under the FDIA, and it is not intended that Section 562 have 
any impact on the interpretation of the provisions of the FDIA 
relating to timing of damages in respect of QFCs or other 
contracts.

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 or dispose of securities (but not cash) 
collateral pledged by the debtor or sold by the debtor under a 
repurchase agreement or lent by the debtor under a securities 
lending agreement. A corresponding amendment to FDICIA is made 
by section 7. A creditor that was stayed in exercising rights 
against such securities would be entitled to post-insolvency 
interest to the extent of the value of such securities.

         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 one or 
                        more qualified financial contracts 
                        described in clause (i);

           *       *       *       *       *       *       *

                  (C) Certain transfers not avoidable.--
                          (i) In general.--Notwithstanding 
                        paragraph (11), section 5242 of the 
                        Revised Statutes of the United States 
                        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--] 
                subsection, the following definitions shall 
                apply:
                          (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, mortgage loan, 
                                interest, group or index, or 
                                option, and including any 
                                repurchase or reverse 
                                repurchase transaction on any 
                                such security, certificate of 
                                deposit, mortgage 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, mortgage 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, including any guarantee 
                                or reimbursement obligation in 
                                connection with 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, 
                                including any guarantee or 
                                reimbursement obligation in 
                                connection with 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 
                                subclauses (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), including 
                                any guarantee or reimbursement 
                                obligation in connection with 
                                any agreement or transaction 
                                referred to in any such 
                                subclause.
                          (v) Repurchase agreement.--The term 
                        ``repurchase agreement'' (which 
                        definition also applies to a reverse 
                        repurchase agreement)--
                                  (I) means an agreement, 
                                including related terms, which 
                                provides for the transfer of 
                                one 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, 
                                mortgage loans, or interests 
                                with a simultaneous agreement 
                                by such transferee to transfer 
                                to the transferor thereof 
                                certificates of deposit, 
                                eligible bankers' acceptances, 
                                securities, mortgage 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), including any guarantee or 
                                reimbursement obligation in 
                                connection with any agreement 
                                or transaction referred to in 
                                any such subclause.
                        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 total 
                                return, 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 weather 
                                option;
                                  (II) any agreement or 
                                transaction that is similar to 
                                any other agreement or 
                                transaction referred to in this 
                                clause and that is of a type 
                                that has been, is presently, or 
                                in the future becomes, the 
                                subject of recurrent dealings 
                                in the swap markets (including 
                                terms and conditions 
                                incorporated by reference in 
                                such agreement) and that 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, 
                                quantitative measures 
                                associated with an occurrence, 
                                extent of an occurrence, or 
                                contingency associated with a 
                                financial, commercial, or 
                                economic consequence, or 
                                economic or financial indices 
                                or measures of economic or 
                                financial 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 subclause (I), 
                                (II), (III), (IV), or (V), 
                                including any guarantee or 
                                reimbursement obligation in 
                                connection with any agreement 
                                or transaction referred to in 
                                any such subclause.
                        Such term is applicable for purposes of 
                        this subsection 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, the 
                        Gramm-Leach-Bliley Act, and the Legal 
                        Certainty for Bank Products Act of 
                        2000.
                          (vii) Treatment of master agreement 
                        as one 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 institution'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) * * *
                          [(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 one 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 subsection (e)(1) of this 
                section.
                  (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 and the 
                National Credit Union Administration Board, may 
                prescribe regulations requiring more detailed 
                recordkeeping by any insured depository 
                institution with respect to qualified financial 
                contracts (including market valuations) only if 
                such insured depository institution is in a 
                troubled condition (as such term is defined by 
                the Corporation pursuant to section 32).
          [(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 one 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 under 
                subparagraph (A)(i), the conservator or 
                receiver for the 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 one 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 cleared by or 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) Definitions.--For purposes of this 
                paragraph, 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, and the term ``clearing 
                organization'' has the same meaning as in 
                section 402 of the Federal Deposit Insurance 
                Corporation Improvement Act of 1991.
          (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 that such 
                        person has to terminate, liquidate, or 
                        net such contract under paragraph 
                        (8)(A) of this subsection 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 
                        that such person has to terminate, 
                        liquidate, or net such contract under 
                        paragraph (8)(E) of this subsection 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 
                        paragraph, 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).
                  (C) Treatment of bridge banks.--The following 
                institutions shall not be considered to be 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.
                          (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 the 
                                depository 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 of or the exercise of rights or 
                powers by 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) * * *

           *       *       *       *       *       *       *

          [(14)] (15) Selling credit card accounts 
        receivable.--
                  (A) * * *

           *       *       *       *       *       *       *

          [(15)] (16) Certain credit card customer lists 
        protected.--
                  (A) * * *

           *       *       *       *       *       *       *

          (17) Savings clause.--The meanings of terms used in 
        this subsection are applicable for purposes of this 
        subsection only, and shall not be construed or applied 
        so as to challenge or affect the characterization, 
        definition, or treatment of any similar terms under any 
        other statute, regulation, or rule, including the 
        Gramm-Leach-Bliley Act, the Legal Certainty for Bank 
        Products Act of 2000, the securities laws (as that term 
        is defined in section 3(a)(47) of the Securities 
        Exchange Act of 1934), and the Commodity Exchange Act.

           *       *       *       *       *       *       *

  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) one 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 CREDIT UNION ACT

TITLE II--SHARE INSURANCE

           *       *       *       *       *       *       *

                          payment of insurance

  Sec. 207. (a) * * *

           *       *       *       *       *       *       *

  (c) Provisions Relating to Contracts Entered Into Before 
Appointment of Conservator or Liquidating Agent.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) Certain qualified financial contracts.--
                  (A) Rights of parties to contracts.--Subject 
                to [paragraph (12)] paragraphs (9) and (10) of 
                this subsection and notwithstanding any other 
                provision of this Act (other than subsection 
                (b)(9) of this section and section 208(a)(3)), 
                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 credit union which arises upon 
                        the appointment of the Board as 
                        liquidating agent for such credit union 
                        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), section 5242 of the 
                        Revised Statutes of the United States 
                        or any other Federal or State law 
                        relating to the avoidance of 
                        preferential or fraudulent transfers, 
                        the Board, whether acting as such or as 
                        conservator or liquidating agent of an 
                        insured credit union, may not avoid any 
                        transfer of money or other property in 
                        connection with any qualified financial 
                        contract with an insured credit union.

           *       *       *       *       *       *       *

                  (D) Certain contracts and agreements 
                defined.--For purposes of this [subsection--] 
                subsection, the following definitions shall 
                apply:
                          (i) Qualified financial contract.--
                        The term ``qualified financial 
                        contract'' means any securities 
                        contract, forward contract, repurchase 
                        agreement, and any similar agreement 
                        that the Board 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 Board 
                                determines by regulation, 
                                resolution, or order to include 
                                any such participation within 
                                the meaning of such term.
                          [(iii) Forward contract.--The term 
                        ``forward contract'' has the meaning 
                        given to such term in section 101 of 
                        title 11, United States Code.
                          [(iv) 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 Board 
                                determines by regulation, 
                                resolution, or order to include 
                                any such participation within 
                                the meaning of such term.
                          [(v) 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, mortgage loan, 
                                interest, group or index, or 
                                option, and including any 
                                repurchase or reverse 
                                repurchase transaction on any 
                                such security, certificate of 
                                deposit, mortgage 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 Board 
                                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, mortgage 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, including any guarantee 
                                or reimbursement obligation in 
                                connection with 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, 
                                including any guarantee or 
                                reimbursement obligation in 
                                connection with 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 
                                subclauses (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), including 
                                any guarantee or reimbursement 
                                obligation in connection with 
                                any agreement or transaction 
                                referred to in any such 
                                subclause.
                          (v) Repurchase agreement.--The term 
                        ``repurchase agreement'' (which 
                        definition also applies to a reverse 
                        repurchase agreement)--
                                  (I) means an agreement, 
                                including related terms, which 
                                provides for the transfer of 
                                one 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, 
                                mortgage loans, or interests 
                                with a simultaneous agreement 
                                by such transferee to transfer 
                                to the transferor thereof 
                                certificates of deposit, 
                                eligible bankers' acceptances, 
                                securities, mortgage 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 Board 
                                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), including any guarantee or 
                                reimbursement obligation in 
                                connection with any agreement 
                                or transaction referred to in 
                                any such subclause.
                        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 total 
                                return, 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 weather 
                                option;
                                  (II) any agreement or 
                                transaction that is similar to 
                                any other agreement or 
                                transaction referred to in this 
                                clause and that is of a type 
                                that has been, is presently, or 
                                in the future becomes, the 
                                subject of recurrent dealings 
                                in the swap markets (including 
                                terms and conditions 
                                incorporated by reference in 
                                such agreement) and that 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, 
                                quantitative measures 
                                associated with an occurrence, 
                                extent of an occurrence, or 
                                contingency associated with a 
                                financial, commercial, or 
                                economic consequence, or 
                                economic or financial indices 
                                or measures of economic or 
                                financial 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 subclause (I), 
                                (II), (III), (IV), or (V), 
                                including any guarantee or 
                                reimbursement obligation in 
                                connection with any agreement 
                                or transaction referred to in 
                                any such subclause.
                        Such term is applicable for purposes of 
                        this subsection 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, the 
                        Gramm-Leach-Bliley Act, and the Legal 
                        Certainty for Bank Products Act of 
                        2000.
                          (vii) Treatment of master agreement 
                        as one 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 institution'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 
                (b)(9)] other than subsections (b)(9) and 
                (c)(10) of this section, and section 208(a)(3) 
                of this Act), any other Federal law, or the law 
                of any State, no person shall be stayed or 
                prohibited from exercising--
                          (i) * * *
                          [(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 Board, or authorizing any court or agency 
                to limit or delay, in any manner, the right or 
                power of the Board 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 subsection (c)(1) of this 
                section.
                  (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 credit union 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 Board, 
                in consultation with the appropriate Federal 
                banking agencies, may prescribe regulations 
                requiring more detailed recordkeeping by any 
                insured credit union with respect to qualified 
                financial contracts (including market 
                valuations) only if such insured credit union 
                is in a troubled condition (as such term is 
                defined by the Board pursuant to section 212).
          [(9) Transfer of qualified financial contracts.--In 
        making any transfer of assets or liabilities of a 
        credit union in default which includes any qualified 
        financial contract, the conservator or liquidating 
        agent for such credit union shall either--
                  [(A) transfer to 1 credit union (other than a 
                credit union in default)--
                          [(i) all qualified financial 
                        contracts between--
                                  [(I) any person or any 
                                affiliate of such person; and
                                  [(II) the credit union in 
                                default;
                          [(ii) all claims of such person or 
                        any affiliate of such person against 
                        such credit union 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 
                        credit union);
                          [(iii) all claims of such credit 
                        union 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 credit union in 
                default which includes any qualified financial 
                contract, the conservator or liquidating agent 
                for such credit union 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 credit union in 
                                default;
                                  (II) all claims of such 
                                person or any affiliate of such 
                                person against such credit 
                                union 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 credit 
                                union);
                                  (III) all claims of such 
                                credit union 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 under 
                subparagraph (A)(i), the conservator or 
                liquidating agent for the credit union 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 liquidating agent 
                transfers any qualified financial contract and 
                related claims, property, and credit 
                enhancements pursuant to subparagraph (A)(i) 
                and such contract is cleared by or 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) Definitions.--For purposes of this 
                paragraph--
                          (i) the term ``financial 
                        institution'' means a broker or dealer, 
                        a depository institution, a futures 
                        commission merchant, a credit union, or 
                        any other institution, as determined by 
                        the Board by regulation to be a 
                        financial institution; and
                          (ii) the term ``clearing 
                        organization'' has the same meaning as 
                        in section 402 of the Federal Deposit 
                        Insurance Corporation Improvement Act 
                        of 1991.
          (10) Notification of transfer.--
                  (A) In general.--If--
                          (i) * * *
                          (ii) the transfer includes any 
                        qualified financial contract,
                [the conservator or liquidating agent shall use 
                such conservator's or liquidating agent'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 
                liquidating agent 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 liquidating agent in the 
                case of a liquidation, or the business day 
                following such transfer in the case of a 
                conservatorship.
                  (B) Certain rights not enforceable.--
                          (i) Liquidation.--A person who is a 
                        party to a qualified financial contract 
                        with an insured credit union may not 
                        exercise any right that such person has 
                        to terminate, liquidate, or net such 
                        contract under paragraph (8)(A) of this 
                        subsection 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 liquidating agent for 
                        the credit union institution (or the 
                        insolvency or financial condition of 
                        the credit union for which the 
                        liquidating agent has been appointed)--
                                  (I) until 5:00 p.m. (eastern 
                                time) on the business day 
                                following the date of the 
                                appointment of the liquidating 
                                agent; 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 credit union 
                        may not exercise any right that such 
                        person has to terminate, liquidate, or 
                        net such contract under paragraph 
                        (8)(E) of this subsection 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 credit union or the 
                        insolvency or financial condition of 
                        the credit union for which the 
                        conservator has been appointed).
                          (iii) Notice.--For purposes of this 
                        paragraph, the Board as conservator or 
                        liquidating agent of an insured credit 
                        union shall be deemed to have notified 
                        a person who is a party to a qualified 
                        financial contract with such credit 
                        union if the Board has taken steps 
                        reasonably calculated to provide notice 
                        to such person by the time specified in 
                        subparagraph (A).
                  (C) Treatment of bridge banks.--The following 
                institutions shall not be considered to be 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.
                          (ii) A credit union organized by the 
                        Board, for which a conservator is 
                        appointed either--
                                  (I) immediately upon the 
                                organization of the credit 
                                union; or
                                  (II) at the time of a 
                                purchase and assumption 
                                transaction between the credit 
                                union and the Board as receiver 
                                for a credit union 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 
        liquidating agent with respect to any qualified 
        financial contract to which an insured credit union is 
        a party, the conservator or liquidating agent for such 
        credit union shall either--
                  (A) disaffirm or repudiate all qualified 
                financial contracts between--
                          (i) any person or any affiliate of 
                        such person; and
                          (ii) the credit union 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 credit union except where such an 
        interest is taken in contemplation of the credit 
        union's insolvency or with the intent to hinder, delay, 
        or defraud the credit union or the creditors of such 
        credit union.
          [(12)] (13) Authority to enforce contracts.--
                  (A) In general.--The conservator or 
                liquidating agent may enforce any contract, 
                other than a director's or officer's liability 
                insurance contract or a credit union bond, 
                entered into by the credit union 
                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 of or the exercise of rights or 
                powers by a conservator or liquidating agent.

           *       *       *       *       *       *       *

          [(13)] (14) Exception for federal reserve and federal 
        home loan banks.--No provision of this subsection shall 
        apply with respect to--
                  (A) * * *

           *       *       *       *       *       *       *

          (15) Savings clause.--The meanings of terms used in 
        this subsection are applicable for purposes of this 
        subsection only, and shall not be construed or applied 
        so as to challenge or affect the characterization, 
        definition, or treatment of any similar terms under any 
        other statute, regulation, or rule, including the 
        Gramm-Leach-Bliley Act, the Legal Certainty for Bank 
        Products Act of 2000, the securities laws (as that term 
        is defined in section (a)(47) of the Securities 
        Exchange Act of 1934), and the Commodity Exchange Act.

           *       *       *       *       *       *       *

                              ----------                              

     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 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) * * *
                          (ii) which is registered as a 
                        clearing agency under the Securities 
                        Exchange Act of 1934, or is exempt from 
                        such registration by order of the 
                        Securities and Exchange Commission; or
                  (B) that is registered as a derivatives 
                clearing organization under section 5b of the 
                Commodity Exchange Act, that has been granted 
                an exemption under section 4(c)(1) of the 
                Commodity Exchange Act, or that is a 
                multilateral clearing organization (as defined 
                in section 408 of this Act).

           *       *       *       *       *       *       *

          (6) Depository institution.--The term ``depository 
        institution'' means--
                  (A) * * *
                  (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;
                  [(B) a branch or agency as defined in section 
                1(b) of the International Banking Act of 1978;]
                  (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 2 or more financial 
                        institutions, clearing organizations, 
                        or members that provides for netting 
                        present or future payment obligations 
                        or payment entitlements (including 
                        liquidation or close out 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, 
paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the 
Federal Credit Union 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 2 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 one or more netting contracts between 
any 2 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, paragraphs (8)(E), 
(8)(F), and (10)(B) of section 207(c) of the Federal Credit 
Union 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, 
paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the 
Federal Credit Union 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 one or more netting contracts between 
any 2 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, paragraphs 
(8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal 
Credit Union Act, and section 5(b)(2) of the Securities 
Investor Protection Act of 1970).

           *       *       *       *       *       *       *

SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS, 
                    UNINSURED FEDERAL BRANCHES AND AGENCIES, CERTAIN 
                    UNINSURED STATE MEMBER BANKS, AND EDGE ACT 
                    CORPORATIONS.

  (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, a 
corporation chartered under section 25A of the Federal Reserve 
Act, or an uninsured State member bank which operates, or 
operates as, a multilateral clearing organization pursuant to 
section 409 of this Act, except that for such purpose--
          (1) any reference to the ``Corporation as receiver'' 
        or ``the receiver or the Corporation'' shall refer to 
        the receiver appointed by the Comptroller of the 
        Currency in the case of an uninsured national bank or 
        uninsured Federal branch or agency, or to the receiver 
        appointed by the Board of Governors of the Federal 
        Reserve System in the case of a corporation chartered 
        under section 25A of the Federal Reserve Act or an 
        uninsured State member bank;
          (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 appointed by the Comptroller of 
        the Currency in the case of an uninsured national bank 
        or uninsured Federal branch or agency, or to the 
        receiver or conservator appointed by the Board of 
        Governors of the Federal Reserve System in the case of 
        a corporation chartered under section 25A of the 
        Federal Reserve Act or an uninsured State member bank; 
        and
          (3) any reference to an ``insured depository 
        institution'' or ``depository institution'' shall refer 
        to an uninsured national bank, an uninsured Federal 
        branch or Federal agency, a corporation chartered under 
        section 25A of the Federal Reserve Act, or an uninsured 
        State member bank which operates, or operates as, a 
        multilateral clearing organization pursuant to section 
        409 of this Act.
  (b) Liability.--The liability of a receiver or conservator of 
an uninsured national bank, uninsured Federal branch or agency, 
a corporation chartered under section 25A of the Federal 
Reserve Act, or an uninsured State member bank which operates, 
or operates as, a multilateral clearing organization pursuant 
to section 409 of this Act, 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 
        the case of an uninsured national bank or uninsured 
        Federal branch or agency and the Board of Governors of 
        the Federal Reserve System in the case of a corporation 
        chartered under section 25A of the Federal Reserve Act, 
        or an uninsured State member bank that operates, or 
        operates as, a multilateral clearing organization 
        pursuant to section 409 of this Act, in consultation 
        with the Federal Deposit Insurance Corporation, may 
        each promulgate regulations solely to implement this 
        section.
          (2) Specific requirement.--In promulgating 
        regulations, limited solely to implementing paragraphs 
        (8), (9), (10), and (11) of section 11(e) of the 
        Federal Deposit Insurance Act, the Comptroller of the 
        Currency and the Board of Governors of the Federal 
        Reserve System each 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 meanings as in section 1(b) of the International 
Banking Act of 1978.

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) the term ``financial institution''--
                  [(A) means--
                          [(i) 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, or receiver 
                        or conservator for such entity and, 
                        when any such Federal reserve bank, 
                        receiver, conservator, or entity is 
                        acting as agent or custodian for a 
                        customer in connection with a 
                        securities contract, as defined in 
                        section 741 of this title, the 
                        customer; or
                          [(ii) in connection with a securities 
                        contract, as defined in section 741 of 
                        this title, an investment company 
                        registered under the Investment Company 
                        Act of 1940; 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;]
          (22) ``financial institution'' means--
                  (A) 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, federally-
                insured credit union, or receiver or 
                conservator for such entity and, when any such 
                Federal reserve bank, receiver, conservator or 
                entity is acting as agent or custodian for a 
                customer in connection with a securities 
                contract (as defined in section 741) such 
                customer; or
                  (B) in connection with a securities contract 
                (as defined in section 741) an investment 
                company registered under the Investment Company 
                Act of 1940;
          (22A) ``financial participant'' means--
                  (A) an entity that, at the time it enters 
                into a securities contract, commodity contract, 
                swap agreement, repurchase agreement, or 
                forward contract, or at the time of the filing 
                of the petition, has one 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 not 
                less than $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 not less than 
                $100,000,000 (aggregated across counterparties) 
                in one or more such agreements or transactions 
                with the debtor or any other entity (other than 
                an affiliate) on any day during the previous 
                15-month period; or
                  (B) a clearing organization (as defined in 
                section 402 of the Federal Deposit Insurance 
                Corporation Improvement Act of 1991);

           *       *       *       *       *       *       *

          (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), including 
                any guarantee or reimbursement obligation by or 
                to a forward contract merchant or financial 
                participant in connection with any agreement or 
                transaction referred to in any such 
                subparagraph, but not to exceed the damages in 
                connection with any such agreement or 
                transaction, measured in accordance with 
                section 562 of this title;
          [(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 the business of which 
        consists in whole or in part of entering into forward 
        contracts as or with merchants in a commodity (as 
        defined in section 761) 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;

           *       *       *       *       *       *       *

          (38A) ``master netting agreement''--
                  (A) means an agreement providing for the 
                exercise of rights, including rights of 
                netting, setoff, liquidation, termination, 
                acceleration, or close out, under or in 
                connection with one or more contracts that are 
                described in any one or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit 
                enhancement related to one or more of the 
                foregoing, including any guarantee or 
                reimbursement obligation related to 1 or more 
                of the foregoing; and
                  (B) if the agreement contains provisions 
                relating to agreements or transactions that are 
                not contracts described in paragraphs (1) 
                through (5) of section 561(a), shall be deemed 
                to be a master netting agreement only with 
                respect to those agreements or transactions 
                that are described in any one or more of 
                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 one or more certificates of deposit, 
                        mortgage related securities (as defined 
                        in section 3 of the Securities Exchange 
                        Act of 1934), mortgage loans, interests 
                        in mortgage related securities or 
                        mortgage loans, eligible bankers' 
                        acceptances, qualified foreign 
                        government securities (defined as 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), 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, mortgage loans, or 
                        interests, with a simultaneous 
                        agreement by such transferee to 
                        transfer to the transferor thereof 
                        certificates of deposit, eligible 
                        bankers' acceptance, securities, 
                        mortgage loans, or interests of the 
                        kind described in this clause, 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), including any guarantee or 
                        reimbursement obligation by or to a 
                        repo participant or financial 
                        participant in connection with any 
                        agreement or transaction referred to in 
                        any such clause, but not to exceed the 
                        damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this 
                        title; and
                  (B) does not include a repurchase obligation 
                under a participation in a commercial mortgage 
                loan;
          (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--
                                  (I) an interest rate swap, 
                                option, future, or forward 
                                agreement, including a rate 
                                floor, rate cap, rate collar, 
                                cross-currency rate swap, and 
                                basis swap;
                                  (II) a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange or precious metals 
                                agreement;
                                  (III) a currency swap, 
                                option, future, or forward 
                                agreement;
                                  (IV) an equity index or 
                                equity swap, option, future, or 
                                forward agreement;
                                  (V) a debt index or debt 
                                swap, option, future, or 
                                forward agreement;
                                  (VI) a total return, credit 
                                spread or credit swap, option, 
                                future, or forward agreement;
                                  (VII) a commodity index or a 
                                commodity swap, option, future, 
                                or forward agreement; or
                                  (VIII) a weather swap, 
                                weather derivative, or weather 
                                option;
                          (ii) any agreement or transaction 
                        that is similar to any other agreement 
                        or transaction referred to in this 
                        paragraph and that--
                                  (I) is of a type that has 
                                been, is presently, or in the 
                                future becomes, the subject of 
                                recurrent dealings in the swap 
                                markets (including terms and 
                                conditions incorporated by 
                                reference therein); and
                                  (II) 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, quantitative 
                                measures associated with an 
                                occurrence, extent of an 
                                occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic 
                                consequence, or economic or 
                                financial indices or measures 
                                of economic or financial risk 
                                or value;
                          (iii) any combination of agreements 
                        or transactions referred to in this 
                        subparagraph;
                          (iv) any option to enter into an 
                        agreement or transaction referred to in 
                        this subparagraph;
                          (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
                          (vi) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreements or 
                        transactions referred to in clause (i) 
                        through (v), including any guarantee or 
                        reimbursement obligation by or to a 
                        swap participant or financial 
                        participant in connection with any 
                        agreement or transaction referred to in 
                        any such clause, but not to exceed the 
                        damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this 
                        title; and
                  (B) 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, the Gramm-
                Leach-Bliley Act, and the Legal Certainty for 
                Bank Products Act of 2000;

           *       *       *       *       *       *       *

CHAPTER 3--CASE ADMINISTRATION

           *       *       *       *       *       *       *

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, 
        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 or financial 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, under the control of, or due from such repo 
        participant or financial 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 or financial participant of a mutual debt 
        and claim under or in connection with one 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 or financial 
        participant under or in connection with any swap 
        agreement or against cash, securities, or other 
        property held by, pledged to, under the control of, or 
        due from such swap participant or financial 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 one 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, 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 that 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.
The provisions of paragraphs (12) and (13) of this subsection 
shall apply with respect to any such petition filed on or 
before December 31, 1989.

           *       *       *       *       *       *       *

  (i) The exercise of rights not subject to the stay arising 
under subsection (a) pursuant to paragraph (6), (7), (17), or 
(19) 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 I--CREDITORS AND CLAIMS

Sec.
501.  Filing of proofs of claims or interests.
     * * * * * * *

                       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; 
          proceedings under section 304.
562.  Timing of 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 of this title 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. 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.
  (f) 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 741 or 761 of this 
title, or settlement payment, as defined in section 741 of this 
title, made by or to a repo participant or financial 
participant, in connection with a repurchase agreement and 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 or 
financial 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 that 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 or financial 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 or financial 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 
        that, with respect to a transfer under any individual 
        contract covered thereby, to the extent that 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) * * *
          (2) such claim was transferred, by an entity other 
        than the debtor, to such creditor--
                  (A) * * *
                  (B)(i) * * *
                  (ii) while the debtor was insolvent (except 
                for a setoff of a kind described in section 
                362(b)(6), 362(b)(7), 362(b)(17), 362(b)(19), 
                555, 556, 559, 560, or 561); or
          (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)(19), 555, 556, 
                559, 560, or 561 of this title).
  (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)(19), 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.] As used in this section, the term ``contractual 
right'' includes a right set forth in a rule or bylaw of a 
derivatives clearing organization (as defined in the Commodity 
Exchange Act), a multilateral clearing organization (as defined 
in the Federal Deposit Insurance Corporation Improvement Act of 
1991), a national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act), 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 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,] As used 
in this section, the term ``contractual right'' includes a 
right set forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Exchange Act), a 
multilateral clearing organization (as defined in the Federal 
Deposit Insurance Corporation Improvement Act of 1991), a 
national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act) 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 or 
financial 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 or financial 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,] As 
used in this section, the term `contractual right' includes a 
right set forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Exchange Act), a 
multilateral clearing organization (as defined in the Federal 
Deposit Insurance Corporation Improvement Act of 1991), a 
national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act) 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. 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 
or financial participant to cause the [termination of a swap 
agreement] liquidation, termination, or acceleration of one 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 one 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,] As used in this section, the term 
`contractual right' includes a right set forth in a rule or 
bylaw of a derivatives clearing organization (as defined in the 
Commodity Exchange Act), a multilateral clearing organization 
(as defined in the Federal Deposit Insurance Corporation 
Improvement Act of 1991), a national securities exchange, a 
national securities association, a securities clearing agency, 
a contract market designated under the Commodity Exchange Act, 
a derivatives transaction execution facility registered under 
the Commodity Exchange Act, or a board of trade (as defined in 
the Commodity Exchange Act) 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. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts; proceedings under section 304

  (a) 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 one or more (or the termination, liquidation, 
or acceleration of one 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)(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 traded on or subject to the rules of 
        a contract market designated under the Commodity 
        Exchange Act or a derivatives transaction execution 
        facility registered under the Commodity Exchange Act 
        against any claim arising under, or in connection with, 
        other instruments, contracts, or agreements listed in 
        subsection (a) except to the extent that 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 and traded 
        on or subject to the rules of a contract market 
        designated under the Commodity Exchange Act or a 
        derivatives transaction execution facility registered 
        under the Commodity Exchange Act against any claim 
        arising under, or in connection with, other 
        instruments, contracts, or agreements listed in 
        subsection (a).
  (3) No provision of subparagraph (A) or (B) of paragraph (2) 
shall prohibit the offset of claims and obligations that arise 
under--
          (A) a cross-margining agreement or similar 
        arrangement that has been approved by the Commodity 
        Futures Trading Commission or submitted to the 
        Commodity Futures Trading Commission under paragraph 
        (1) or (2) of section 5c(c) of the Commodity Exchange 
        Act and has not been abrogated or rendered ineffective 
        by the Commodity Futures Trading Commission; or
          (B) any other netting agreement between a clearing 
        organization (as defined in section 761) and another 
        entity that has been approved by the Commodity Futures 
        Trading Commission.
  (c) As used in this section, the term ``contractual right'' 
includes a right set forth in a rule or bylaw of a derivatives 
clearing organization (as defined in the Commodity Exchange 
Act), a multilateral clearing organization (as defined in the 
Federal Deposit Insurance Corporation Improvement Act of 1991), 
a national securities exchange, a national securities 
association, a securities clearing agency, a contract market 
designated under the Commodity Exchange Act, a derivatives 
transaction execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the Commodity 
Exchange Act) 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.
  (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 under section 304, 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 case under this title, and to limit avoidance 
powers to the same extent as in a proceeding under chapter 7 or 
11 of this title (such enforcement not to be limited based on 
the presence or absence of assets of the debtor in the United 
States).

Sec. 562. Timing of damage measurement in connection with swap 
                    agreements, securities contracts, forward 
                    contracts, commodity contracts, repurchase 
                    agreements, and master netting agreements

  (a) 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 or dates of such liquidation, 
        termination, or acceleration.
  (b) If there are not any commercially reasonable determinants 
of value as of any date referred to in paragraph (1) or (2) of 
subsection (a), damages shall be measured as of the earliest 
subsequent date or dates on which there are commercially 
reasonable determinants of value.
  (c) For the purposes of subsection (b), if damages are not 
measured as of the date or dates of rejection, liquidation, 
termination, or acceleration, and the forward contract 
merchant, stockbroker, financial institution, securities 
clearing agency, repo participant, financial participant, 
master netting agreement participant, or swap participant or 
the trustee objects to the timing of the measurement of 
damages--
          (1) the trustee, in the case of an objection by a 
        forward contract merchant, stockbroker, financial 
        institution, securities clearing agency, repo 
        participant, financial participant, master netting 
        agreement participant, or swap participant; or
          (2) the forward contract merchant, stockbroker, 
        financial institution, securities clearing agency, repo 
        participant, financial participant, master netting 
        agreement participant, or swap participant, in the case 
        of an objection by the trustee,
has the burden of proving that there were no commercially 
reasonable determinants of value as of such date or dates.

                         CHAPTER 7--LIQUIDATION

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

Sec.
701.  Interim trustee.
     * * * * * * *

                 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

761.  Definitions for this subchapter.
     * * * * * * *
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, mortgage loan, 
                        interest, group or index, or option, 
                        and including any repurchase or reverse 
                        repurchase transaction on any such 
                        security, certificate of deposit, 
                        mortgage 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, mortgage 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 subparagraph;
                          (vi) any combination of the 
                        agreements or transactions referred to 
                        in this subparagraph;
                          (vii) any option to enter into any 
                        agreement or transaction referred to in 
                        this subparagraph;
                          (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 subparagraph, 
                        except that such master agreement shall 
                        be considered to be a securities 
                        contract under this subparagraph 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 subparagraph, 
                        including any guarantee or 
                        reimbursement obligation by or to a 
                        stockbroker, securities clearing 
                        agency, financial institution, or 
                        financial participant in connection 
                        with any agreement or transaction 
                        referred to in this subparagraph, but 
                        not to exceed the damages in connection 
                        with any such agreement or transaction, 
                        measured in accordance with section 562 
                        of this title; 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, including any guarantee or 
                reimbursement obligation by or to a commodity 
                broker or financial participant in connection 
                with any agreement or transaction referred to 
                in this paragraph, but not to exceed the 
                damages in connection with any such agreement 
                or transaction, measured in accordance with 
                section 562 of this title;

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

                    SUBCHAPTER I--GENERAL PROVISIONS

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 SIPC 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, as those terms are 
                        defined in sections 101, 741, and 761 
                        of title 11, United States Code, to 
                        offset or net termination values, 
                        payment amounts, or other transfer 
                        obligations arising under or in 
                        connection with one or more of such 
                        contracts or agreements, or to 
                        foreclose on any cash collateral 
                        pledged by the debtor, whether or not 
                        with respect to one 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 one 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 subparagraph, 
                        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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