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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1835 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1835

  To establish standards for covered bond programs and a covered bond 
         regulatory oversight program, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            November 9, 2011

   Mrs. Hagan (for herself, Mr. Corker, Mr. Schumer, and Mr. Crapo) 
introduced the following bill; which was read twice and referred to the 
            Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
  To establish standards for covered bond programs and a covered bond 
         regulatory oversight program, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``United States Covered Bond Act''.

SEC. 2. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Ancillary asset.--The term ``ancillary asset'' means--
                    (A) any interest rate or currency swap associated 
                with 1 or more eligible assets, substitute assets, or 
                other assets in a cover pool;
                    (B) any credit enhancement or liquidity arrangement 
                associated with 1 or more eligible assets, substitute 
                assets, or other assets in a cover pool;
                    (C) any guarantee, letter-of-credit right, or other 
                secondary obligation that supports any payment or 
                performance of 1 or more eligible assets, substitute 
                assets, or other assets in a cover pool; and
                    (D) any proceeds of, or other property incident to, 
                1 or more eligible assets, substitute assets, or other 
                assets in a cover pool.
            (2) Corporation.--The term ``Corporation'' means the 
        Federal Deposit Insurance Corporation.
            (3) Cover pool.--The term ``cover pool'' means a dynamic 
        pool of assets that is comprised of--
                    (A) in the case of any eligible issuer described in 
                subparagraph (A), (B), (C), (D), or (E) of paragraph 
                (9)--
                            (i) 1 or more eligible assets from a single 
                        eligible asset class; and
                            (ii) 1 or more substitute assets or 
                        ancillary assets; and
                    (B) in the case of any eligible issuer described in 
                paragraph (9)(F)--
                            (i) the covered bonds issued by each 
                        sponsoring eligible issuer; and
                            (ii) 1 or more substitute assets or 
                        ancillary assets.
            (4) Covered bond.--The term ``covered bond'' means any 
        recourse debt obligation of an eligible issuer that--
                    (A) has an original term to maturity of not less 
                than 1 year;
                    (B) is secured by a perfected security interest in 
                or other perfected lien on a cover pool that is owned 
                directly or indirectly by the issuer of the obligation;
                    (C) is issued under a covered bond program that has 
                been approved by the applicable covered bond regulator;
                    (D) is identified in a register of covered bonds 
                that is maintained by the Secretary; and
                    (E) is not a deposit (as defined in section 3(l) of 
                the Federal Deposit Insurance Act (12 U.S.C. 1813(l))).
            (5) Covered bond program.--The term ``covered bond 
        program'' means any program of an eligible issuer under which, 
        on the security of a single cover pool, 1 or more series of 
        covered bonds may be issued.
            (6) Covered bond regulator.--The term ``covered bond 
        regulator'' means--
                    (A) for any eligible issuer that is subject to the 
                jurisdiction of an appropriate Federal banking agency 
                (as defined in section 3(q) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813(q))), the appropriate 
                Federal banking agency;
                    (B) for any eligible issuer that is described in 
                paragraph (9)(F), that is not subject to the 
                jurisdiction of an appropriate Federal banking agency, 
                and that is sponsored by only 1 eligible issuer, the 
                covered bond regulator for the sponsor;
                    (C) for any eligible issuer that is described in 
                paragraph (9)(F), that is not subject to the 
                jurisdiction of an appropriate Federal banking agency, 
                and that is sponsored by more than 1 eligible issuer, 
                the covered bond regulator for the sponsor whose 
                covered bonds constitute the largest share of the cover 
                pool of the issuer; and
                    (D) for any other eligible issuer that is not 
                subject to the jurisdiction of an appropriate Federal 
                banking agency, the Board of Governors of the Federal 
                Reserve System.
            (7) Eligible asset.--The term ``eligible asset'' means--
                    (A) in the case of the residential mortgage asset 
                class--
                            (i) any first-lien mortgage loan that is 
                        secured by 1-to-4 family residential property;
                            (ii) any mortgage loan that is insured 
                        under the National Housing Act (12 U.S.C. 1701 
                        et seq.); and
                            (iii) any loan that is guaranteed, insured, 
                        or made under chapter 37 of title 38, United 
                        States Code;
                    (B) in the case of the commercial mortgage asset 
                class, any commercial mortgage loan (including any 
                multifamily mortgage loan);
                    (C) in the case of the public sector asset class--
                            (i) any security issued by a State, 
                        municipality, or other governmental authority;
                            (ii) any loan made to a State, 
                        municipality, or other governmental authority; 
                        and
                            (iii) any loan, security, or other 
                        obligation that is insured or guaranteed, in 
                        full or substantially in full, by the full 
                        faith and credit of the United States 
                        Government (whether or not such loan, security, 
                        or other obligation is also part of another 
                        eligible asset class);
                    (D) in the case of the auto asset class, any auto 
                loan or lease;
                    (E) in the case of the student loan asset class, 
                any student loan (whether guaranteed or nonguaranteed);
                    (F) in the case of the credit or charge card asset 
                class, any extension of credit to a person under an 
                open-end credit plan;
                    (G) in the case of the small business asset class, 
                any loan that is made or guaranteed under a program of 
                the Small Business Administration; and
                    (H) in the case of any other eligible asset class, 
                any asset designated by the Secretary, by rule and in 
                consultation with the covered bond regulators, as an 
                eligible asset for purposes of such class.
            (8) Eligible asset class.--The term ``eligible asset 
        class'' means--
                    (A) a residential mortgage asset class;
                    (B) a commercial mortgage asset class;
                    (C) a public sector asset class;
                    (D) an auto asset class;
                    (E) a student loan asset class;
                    (F) a credit or charge card asset class;
                    (G) a small business asset class; and
                    (H) any other eligible asset class designated by 
                the Secretary, by rule and in consultation with the 
                covered bond regulators.
            (9) Eligible issuer.--The term ``eligible issuer'' means--
                    (A) any insured depository institution and any 
                subsidiary of such institution;
                    (B) any bank holding company, any savings and loan 
                holding company, and any subsidiary of any of such 
                companies;
                    (C) any broker or dealer that is registered under 
                section 15 of the Securities Exchange Act of 1934 (15 
                U.S.C. 78o) and is a member of the Securities Investor 
                Protection Corporation, and any subsidiary of such 
                broker or dealer;
                    (D) any insurer that is supervised by a State 
                insurance regulator, and any subsidiary of such 
                insurer;
                    (E) any nonbank financial company (as defined in 
                section 102(a)(4) of the Dodd-Frank Wall Street Reform 
                and Consumer Protection Act (12 U.S.C. 5311(a)(4))) 
                that is supervised by the Board of Governors of the 
                Federal Reserve System under section 113 of the Dodd-
                Frank Wall Street Reform and Consumer Protection Act 
                (12 U.S.C. 5323), including any intermediate holding 
                company supervised as a nonbank financial company, and 
                any subsidiary of such a nonbank financial company; and
                    (F) any issuer that is sponsored by 1 or more 
                eligible issuers for the sole purpose of issuing 
                covered bonds on a pooled basis.
            (10) Oversight program.--The term ``oversight program'' 
        means the covered bond regulatory oversight program established 
        under section 3(a).
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of the Department of the Treasury.
            (12) Substitute asset.--The term ``substitute asset'' 
        means--
                    (A) cash;
                    (B) any direct obligation of the United States 
                Government, and any security or other obligation whose 
                full principal and interest are insured or guaranteed 
                by the full faith and credit of the United States 
                Government;
                    (C) any direct obligation of a United States 
                Government corporation or Government-sponsored 
                enterprise of the highest credit quality, and any other 
                security or other obligation of the highest credit 
                quality whose full principal and interest are insured 
                or guaranteed by such corporation or enterprise, except 
                that the outstanding principal amount of these 
                obligations in any cover pool may not exceed an amount 
                equal to 20 percent of the outstanding principal amount 
                of all assets in the cover pool without the approval of 
                the applicable covered bond regulator;
                    (D) any other substitute asset designated by the 
                Secretary, by rule and in consultation with the covered 
                bond regulators; and
                    (E) any deposit account or securities account into 
                which only an asset described in subparagraph (A), (B), 
                (C), or (D) may be deposited or credited.

SEC. 3. REGULATORY OVERSIGHT OF COVERED BOND PROGRAMS ESTABLISHED.

    (a) Establishment.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the Secretary shall, by rule and in 
        consultation with the covered bond regulators, establish a 
        covered bond regulatory oversight program that provides for--
                    (A) covered bond programs to be evaluated according 
                to reasonable and objective standards in order to be 
                approved under paragraph (2), including any additional 
                eligibility standards for eligible assets and any other 
                criteria determined appropriate by the Secretary to 
                further the purposes of this Act;
                    (B) covered bond programs to be maintained in a 
                manner that is consistent with this Act and safe and 
                sound asset-liability management and other financial 
                practices; and
                    (C) any estate created under section 4 to be 
                administered in a manner that is consistent with 
                maximizing the value and the proceeds of the related 
                cover pool in a resolution under this Act.
            (2) Approval of each covered bond program.--
                    (A) In general.--A covered bond shall be subject to 
                this Act only if the covered bond is issued by an 
                eligible issuer under a covered bond program that is 
                approved by the applicable covered bond regulator.
                    (B) Approval process.--Each covered bond regulator 
                shall apply the standards established by the Secretary 
                under the oversight program to evaluate a covered bond 
                program that has been submitted by an eligible issuer 
                for approval. Each covered bond regulator also shall 
                take into account relevant supervisory factors, 
                including safety and soundness considerations, in 
                evaluating a covered bond program that has been 
                submitted for approval. Each covered bond regulator, 
                promptly after approving a covered bond program, shall 
                provide the Secretary with the name of the covered bond 
                program, the name of the eligible issuer, and all other 
                information reasonably requested by the Secretary in 
                order to update the registry under paragraph (3)(A). 
                Each eligible issuer, promptly after issuing a covered 
                bond under an approved covered bond program, shall 
                provide the Secretary with all information reasonably 
                requested by the Secretary in order to update the 
                registry under paragraph (3)(B).
                    (C) Existing covered bond programs.--A covered bond 
                regulator may approve a covered bond program that is in 
                existence on the date of the enactment of this Act. 
                Upon such approval, each covered bond under the covered 
                bond program shall be subject to this Act, regardless 
                of when the covered bond was issued.
                    (D) Multiple covered bond programs permitted.--An 
                eligible issuer may have more than 1 covered bond 
                program.
                    (E) Cease and desist authority.--The applicable 
                covered bond regulator may direct an eligible issuer to 
                cease issuing covered bonds under an approved covered 
                bond program if the covered bond program is not 
                maintained in a manner that is consistent with this Act 
                and the oversight program and if, after notice that is 
                reasonable under the circumstances, the issuer does not 
                remedy all deficiencies identified by the applicable 
                covered bond regulator.
                    (F) Cap on the amount of outstanding covered 
                bonds.--
                            (i) In general.--With respect to each 
                        eligible issuer that submits a covered bond 
                        program for approval, the applicable covered 
                        bond regulator shall set, consistent with 
                        safety and soundness considerations and the 
                        financial condition of the eligible issuer, the 
                        maximum amount, as a percentage of the eligible 
                        issuer's total assets, of outstanding covered 
                        bonds that the eligible issuer may issue.
                            (ii) Review of cap.--The applicable covered 
                        bond regulator may, not more frequently than 
                        quarterly, review the percentage set under 
                        clause (i) and, if safety and soundness 
                        considerations or the financial condition of 
                        the eligible issuer has changed, increase or 
                        decrease such percentage. Any decrease made 
                        pursuant to this clause shall have no effect on 
                        existing covered bonds issued by the eligible 
                        issuer.
            (3) Registry.--Under the oversight program, the Secretary 
        shall maintain a registry that is published on a Web site 
        available to the public and that, for each covered bond program 
        approved by a covered bond regulator, contains--
                    (A) the name of the covered bond program, the name 
                of the eligible issuer, and all other information that 
                the Secretary considers necessary to adequately 
                identify the covered bond program and the eligible 
                issuer; and
                    (B) all information that the Secretary considers 
                necessary to adequately identify all outstanding 
                covered bonds issued under the covered bond program 
                (including the reports described in paragraphs (3) and 
                (4) of subsection (b)).
            (4) Fees.--Each covered bond regulator may levy, on the 
        issuers of covered bonds under the primary supervision of such 
        covered bond regulator, reasonably apportioned fees that such 
        covered bond regulator considers necessary, in the aggregate, 
        to defray the costs of such covered bond regulator carrying out 
        the provisions of this Act. Such funds shall not be construed 
        to be Government funds or appropriated monies and shall not be 
        subject to apportionment for purposes of chapter 15 of title 
        31, United States Code, or any other provision of law.
    (b) Minimum Over-Collateralization Requirements.--
            (1) Requirements established.--The Secretary, by rule and 
        in consultation with the covered bond regulators, shall 
        establish minimum over-collateralization requirements for 
        covered bonds backed by each of the eligible asset classes. The 
        minimum over-collateralization requirements shall be designed 
        to ensure that sufficient eligible assets and substitute assets 
        are maintained in the cover pool to satisfy all principal and 
        interest payments on the covered bonds when due through 
        maturity and shall be based on the credit, collection, and 
        interest rate risks (excluding the liquidity risks) associated 
        with the eligible asset class.
            (2) Asset coverage test.--The eligible assets and the 
        substitute assets in any cover pool shall be required, in the 
        aggregate, to meet at all times the applicable minimum over-
        collateralization requirements.
            (3) Monthly reporting.--On a monthly basis, each issuer of 
        covered bonds shall submit a report on whether the cover pool 
        that secures the covered bonds meets the applicable minimum 
        over-collateralization requirements to--
                    (A) the Secretary;
                    (B) the applicable covered bond regulator;
                    (C) the applicable indenture trustee;
                    (D) the applicable covered bondholders; and
                    (E) the applicable independent asset monitor.
            (4) Independent asset monitor.--
                    (A) Appointment.--Each issuer of covered bonds 
                shall appoint the indenture trustee for the covered 
                bonds, or another unaffiliated entity, as an 
                independent asset monitor for the applicable cover 
                pool.
                    (B) Duties.--An independent asset monitor appointed 
                under subparagraph (A) shall, on an annual or other 
                more frequent periodic basis determined by the 
                Secretary under the oversight program--
                            (i) verify whether the cover pool meets the 
                        applicable minimum over-collateralization 
                        requirements; and
                            (ii) report to the Secretary, the 
                        applicable covered bond regulator, the 
                        applicable indenture trustee, and the 
                        applicable covered bondholders on whether the 
                        cover pool meets the applicable minimum over-
                        collateralization requirements.
                    (C) Removal and replacement.--The independent asset 
                monitor appointed under subparagraph (A) may be removed 
                and replaced--
                            (i) by a covered bond regulator in any case 
                        in which such action is in the best interest of 
                        the covered bond investors; and
                            (ii) by covered bond holders who own a 
                        majority of the outstanding principal amount of 
                        the covered bonds secured by the applicable 
                        cover pool, at any time.
            (5) No loss of status.--Covered bonds shall remain subject 
        to this Act regardless of whether the applicable cover pool 
        ceases to meet the applicable minimum over-collateralization 
        requirements.
            (6) Failure to meet requirements.--
                    (A) In general.--If a cover pool fails to meet the 
                applicable minimum over-collateralization requirements, 
                and if the failure is not cured within the time 
                specified in the related transaction documents, the 
                failure shall be an uncured default for purposes of 
                section 4(a).
                    (B) Notice required.--An issuer of covered bonds 
                shall promptly give the Secretary and the applicable 
                covered bond regulator written notice if the cover pool 
                securing the covered bonds fails to meet the applicable 
                minimum over-collateralization requirements, if the 
                failure is cured within the time specified in the 
                related transaction documents, or if the failure is not 
                so cured.
    (c) Requirements for Eligible Assets.--
            (1) Requirements.--
                    (A) Loans.--A loan shall not qualify as an eligible 
                asset for so long as the loan is delinquent for more 
                than 60 consecutive days.
                    (B) Securities.--A security shall not qualify as an 
                eligible asset for so long as the security does not 
                meet any credit-quality requirement under this Act.
                    (C) Origination.--An asset shall not qualify as an 
                eligible asset if the asset was not originated in 
                compliance with any rule or supervisory guidance of a 
                Federal agency applicable to the asset at the time of 
                origination.
                    (D) No double pledge.--An asset shall not qualify 
                as an eligible asset for so long as the asset is 
                subject to a prior perfected security interest or other 
                prior perfected lien that has been granted in an 
                unrelated transaction. Nothing in this Act shall affect 
                such a prior perfected security interest or other prior 
                perfected lien, and the rights of such lien holders.
            (2) Failure to meet requirements.--Subject to paragraph 
        (1)(D), if an asset in a cover pool does not satisfy any 
        applicable requirement described in paragraph (1) or any other 
        applicable standard or criterion described in this Act, the 
        oversight program, or the related transaction documents, the 
        asset shall not qualify as an eligible asset for purposes of 
        the asset coverage test described in subsection (b)(2). A 
        disqualified asset shall remain in the cover pool unless and 
        until removed by the issuer in compliance with the provisions 
        of this Act, the oversight program, and the related transaction 
        documents. No disqualified asset may be removed from the cover 
        pool after an estate has been created for the related covered 
        bond program under section 4(b)(1) or 4(c)(2), except in 
        connection with the management of the cover pool under section 
        4(d)(1)(E).
    (d) Other Requirements.--
            (1) Books and records of issuer.--Each issuer of covered 
        bonds shall clearly mark its books and records to identify the 
        assets that comprise the cover pool securing the covered bonds.
            (2) Schedule of eligible assets and substitute assets.--
        Each issuer of covered bonds shall deliver to the applicable 
        indenture trustee and the applicable independent asset monitor, 
        on at least a monthly basis, a schedule that identifies all 
        eligible assets and substitute assets in the cover pool 
        securing the covered bonds.
            (3) Single eligible asset class.--No cover pool described 
        in section 2(3)(A) may include eligible assets from more than 1 
        eligible asset class. No cover pool described in section 
        2(3)(B) may include covered bonds backed by more than 1 
        eligible asset class.

SEC. 4. RESOLUTION UPON DEFAULT OR INSOLVENCY.

    (a) Uncured Default Defined.--For purposes of this section, the 
term ``uncured default'' means a default on a covered bond that has not 
been cured within the time, if any, specified in the related 
transaction documents.
    (b) Default on Covered Bonds Prior to Conservatorship, 
Receivership, Liquidation, or Bankruptcy.--
            (1) Creation of separate estate.--If an uncured default 
        occurs on a covered bond before the issuer of the covered bond 
        enters conservatorship, receivership, liquidation, or 
        bankruptcy, an estate shall be immediately and automatically 
        created by operation of law and shall exist and be administered 
        separate and apart from the issuer or any subsequent 
        conservatorship, receivership, liquidating agency, or estate in 
        bankruptcy for the issuer or any other assets of the issuer. A 
        separate estate shall be created for each affected covered bond 
        program.
            (2) Assets and liabilities of estate.--Any estate created 
        under paragraph (1) shall be comprised of the cover pool 
        (including over-collateralization in the cover pool) that 
        secures the covered bond. The cover pool shall be immediately 
        and automatically released to and held by the estate free and 
        clear of any right, title, interest, or claim of the issuer or 
        any conservator, receiver, liquidating agent, or trustee in 
        bankruptcy for the issuer or any other assets of the issuer. 
        The estate shall be fully liable on the covered bond and all 
        other covered bonds and related obligations of the issuer 
        (including obligations under related derivative transactions) 
        that are secured by a perfected security interest in or other 
        perfected lien on the cover pool when the estate is created. 
        The estate shall not be liable on any obligation of the issuer 
        that is not secured by a perfected security interest in or 
        other perfected lien on the cover pool when the estate is 
        created. No conservator, receiver, liquidating agent, or 
        trustee in bankruptcy for the issuer may charge or assess the 
        estate for any claim of the conservator, receiver, liquidating 
        agent, or trustee in bankruptcy or the conservatorship, 
        receivership, liquidating agency, or estate in bankruptcy and 
        may not obtain or perfect a security interest in or other lien 
        on the cover pool to secure such a claim.
            (3) Retention of claims.--Any holder of a covered bond or 
        related obligation for which an estate has become liable under 
        paragraph (2) shall retain a claim against the issuer for any 
        deficiency with respect to the covered bond or related 
        obligation. If the issuer enters conservatorship, receivership, 
        liquidation, or bankruptcy, any contingent claim for such a 
        deficiency shall be allowed as a provable claim in the 
        conservatorship, receivership, liquidating agency, or 
        bankruptcy case. The contingent claim shall be estimated by the 
        conservator, receiver, liquidating agent, or bankruptcy court 
        for purposes of allowing the claim as a provable claim if 
        awaiting the fixing of the contingent claim would unduly delay 
        the resolution of the conservatorship, receivership, 
        liquidating agency, or bankruptcy case.
            (4) Residual interest.--
                    (A) Issuance of residual interest.--Upon the 
                creation of an estate under paragraph (1), a residual 
                interest in the estate shall be immediately and 
                automatically issued by operation of law to the issuer.
                    (B) Nature of residual interest.--The residual 
                interest under subparagraph (A) shall--
                            (i) be an exempted security as described in 
                        section 5;
                            (ii) represent the right to any surplus 
                        from the cover pool after the covered bonds and 
                        all other liabilities of the estate have been 
                        fully and irrevocably paid; and
                            (iii) be evidenced by a certificate 
                        executed by the trustee of the estate.
            (5) Obligations of issuer.--
                    (A) In general.--After the creation of an estate 
                under paragraph (1), the issuer shall--
                            (i) transfer to or at the direction of the 
                        trustee for the estate all property of the 
                        estate that is in the possession or under the 
                        control of the issuer, including all tangible 
                        or electronic books, records, files, and other 
                        documents or materials relating to the assets 
                        and liabilities of the estate; and
                            (ii) at the election of the trustee or a 
                        servicer or administrator for the estate, 
                        continue servicing the applicable cover pool 
                        for 120 days after the creation of the estate 
                        in return for a fair-market-value fee, as 
                        determined by the trustee in consultation with 
                        the applicable covered bond regulator, that 
                        shall be payable from the estate as an 
                        administrative expense.
                    (B) Obligations absolute.--Neither the issuer, 
                whether acting as debtor in possession or in any other 
                capacity, nor any conservator, receiver, liquidating 
                agent, or trustee in bankruptcy for the issuer or any 
                other assets of the issuer may disaffirm, repudiate, or 
                reject the obligation to turn over property or to 
                continue servicing the cover pool as provided in 
                subparagraph (A).
    (c) Default on Covered Bonds Upon Conservatorship, Receivership, 
Liquidation, or Bankruptcy.--
            (1) Corporation conservatorship or receivership.--
                    (A) In general.--If the Corporation is appointed as 
                conservator or receiver for an issuer of covered bonds 
                before an uncured default results in the creation of an 
                estate under subsection (b), the Corporation as 
                conservator or receiver shall have an exclusive right, 
                during the 1-year period beginning on the date of the 
                appointment, to transfer any cover pool owned by the 
                issuer in its entirety, together with all covered bonds 
                and related obligations that are secured by a perfected 
                security interest in or other perfected lien on the 
                cover pool, to another eligible issuer that meets all 
                conditions and requirements specified in the related 
                transaction documents. The Corporation as conservator 
                or receiver may not remove any asset from the cover 
                pool, except to the extent otherwise agreed by a 
                transferee that has assumed the covered bond program 
                pursuant to subparagraph (C).
                    (B) Obligations during 1-year period.--During the 
                1-year period described in subparagraph (A), the 
                Corporation as conservator or receiver shall fully and 
                timely satisfy all monetary and nonmonetary obligations 
                of the issuer under all covered bonds and the related 
                transaction documents and shall fully and timely cure 
                all defaults by the issuer (other than its 
                conservatorship or receivership) under the applicable 
                covered bond program, in each case, until the earlier 
                of--
                            (i) the transfer of the applicable covered 
                        bond program to another eligible issuer as 
                        provided in subparagraph (A); or
                            (ii) the delivery to the Secretary, the 
                        applicable covered bond regulator, the 
                        applicable indenture trustee, and the 
                        applicable covered bondholders of a written 
                        notice from the Corporation as conservator or 
                        receiver electing to cease further performance 
                        under the applicable covered bond program.
                    (C) Assumption by transferee.--If the Corporation 
                as conservator or receiver transfers a covered bond 
                program to another eligible issuer within the 1-year 
                period as provided in subparagraph (A), the transferee 
                shall take ownership of the applicable cover pool and 
                shall become fully liable on all covered bonds and 
                related obligations of the issuer that are secured by a 
                perfected security interest in or other perfected lien 
                on the cover pool.
            (2) Other circumstances.--An estate shall be immediately 
        and automatically created by operation of law and shall exist 
        and be administered separate and apart from an issuer of 
        covered bonds and any conservatorship, receivership, 
        liquidating agency, or estate in bankruptcy for the issuer or 
        any other assets of the issuer, if--
                    (A) a conservator, receiver, liquidating agent, or 
                trustee in bankruptcy, other than the Corporation, is 
                appointed for the issuer before an uncured default 
                results in the creation of an estate under subsection 
                (b); or
                    (B) in the case of the appointment of the 
                Corporation as conservator or receiver as described in 
                paragraph (1)(A), the Corporation as conservator or 
                receiver--
                            (i) does not complete the transfer of the 
                        applicable covered bond program to another 
                        eligible issuer within the 1-year period as 
                        provided in paragraph (1)(A);
                            (ii) delivers to the Secretary, the 
                        applicable covered bond regulator, the 
                        applicable indenture trustee, and the 
                        applicable covered bondholders a written notice 
                        electing to cease further performance under the 
                        applicable covered bond program; or
                            (iii) fails to fully and timely satisfy all 
                        monetary and nonmonetary obligations of the 
                        issuer under the covered bonds and the related 
                        transaction documents or to fully and timely 
                        cure all defaults by the issuer (other than its 
                        conservatorship or receivership) under the 
                        applicable covered bond program.
        A separate estate shall be created for each affected covered 
        bond program.
            (3) Assets and liabilities of estate.--Any estate created 
        under paragraph (2) shall be comprised of the cover pool 
        (including over-collateralization in the cover pool) that 
        secures the covered bonds. The cover pool shall be immediately 
        and automatically released to and held by the estate free and 
        clear of any right, title, interest, or claim of the issuer or 
        any conservator, receiver, liquidating agent, or trustee in 
        bankruptcy for the issuer or any other assets of the issuer. 
        The estate shall be fully liable on the covered bonds and all 
        other covered bonds and related obligations of the issuer 
        (including obligations under related derivative transactions) 
        that are secured by a perfected security interest in or other 
        perfected lien on the cover pool when the estate is created. 
        The estate shall not be liable on any obligation of the issuer 
        that is not secured by a perfected security interest in or 
        other perfected lien on the cover pool when the estate is 
        created. No conservator, receiver, liquidating agent, or 
        trustee in bankruptcy for the issuer may charge or assess the 
        estate for any claim of the conservator, receiver, liquidating 
        agent, or trustee in bankruptcy or the conservatorship, 
        receivership, liquidating agency, or estate in bankruptcy and 
        may not obtain or perfect a security interest in or other lien 
        on the cover pool to secure such a claim.
            (4) Contingent claim.--Any contingent claim against an 
        issuer for a deficiency with respect to a covered bond or 
        related obligation for which an estate has become liable under 
        paragraph (3) shall be allowed as a provable claim in the 
        conservatorship, receivership, liquidating agency, or 
        bankruptcy case for the issuer. The contingent claim shall be 
        estimated by the conservator, receiver, liquidating agent, or 
        bankruptcy court for purposes of allowing the claim as a 
        provable claim if awaiting the fixing of the contingent claim 
        would unduly delay the resolution of the conservatorship, 
        receivership, liquidating agency, or bankruptcy case.
            (5) Residual interest.--
                    (A) Issuance of residual interest.--Upon the 
                creation of an estate under paragraph (2), and 
                regardless of whether any contingent claim described in 
                paragraph (4) becomes fixed or is estimated, a residual 
                interest in the estate shall be immediately and 
                automatically issued by operation of law to the 
                conservator, receiver, liquidating agent, or trustee in 
                bankruptcy for the issuer.
                    (B) Nature of residual interest.--The residual 
                interest under subparagraph (A) shall--
                            (i) be an exempted security as described in 
                        section 5;
                            (ii) represent the right to any surplus 
                        from the cover pool after the covered bonds and 
                        all other liabilities of the estate have been 
                        fully and irrevocably paid; and
                            (iii) be evidenced by a certificate 
                        executed by the trustee of the estate.
            (6) Obligations of issuer.--
                    (A) In general.--After the creation of an estate 
                under paragraph (2), the issuer and its conservator, 
                receiver, liquidating agent, or trustee in bankruptcy 
                shall--
                            (i) transfer to or at the direction of the 
                        trustee for the estate all property of the 
                        estate that is in the possession or under the 
                        control of the issuer or its conservator, 
                        receiver, liquidating agent, or trustee in 
                        bankruptcy, including all tangible or 
                        electronic books, records, files, and other 
                        documents or materials relating to the assets 
                        and liabilities of the estate; and
                            (ii) at the election of the trustee or a 
                        servicer or administrator for the estate, 
                        continue servicing the applicable cover pool 
                        for 120 days after the creation of the estate 
                        in return for a fair-market-value fee, as 
                        determined by the trustee in consultation with 
                        the applicable covered bond regulator, that 
                        shall be payable from the estate as an 
                        administrative expense.
                    (B) Obligations absolute.--Neither the issuer, 
                whether acting as debtor in possession or in any other 
                capacity, nor any conservator, receiver, liquidating 
                agent, or trustee in bankruptcy for the issuer or any 
                other assets of the issuer may disaffirm, repudiate, or 
                reject the obligation to turn over property or to 
                continue servicing the cover pool as provided in 
                subparagraph (A).
    (d) Administration and Resolution of Estates.--
            (1) Trustee, servicer, and administrator.--
                    (A) In general.--Upon the creation of any estate 
                under subsection (b)(1) or (c)(2), the applicable 
                covered bond regulator shall--
                            (i) appoint the trustee for the estate;
                            (ii) appoint 1 or more servicers or 
                        administrators for the cover pool held by the 
                        estate; and
                            (iii) give the Secretary, the applicable 
                        indenture trustee, the applicable covered 
                        bondholders, and the owner of the residual 
                        interest written notice of the creation of the 
                        estate.
                    (B) Terms and conditions of appointment.--All terms 
                and conditions of any appointment under paragraph (1), 
                including the terms and conditions relating to 
                compensation, shall conform to the requirements of this 
                Act and the oversight program and otherwise shall be 
                determined by the applicable covered bond regulator.
                    (C) Qualification.--The applicable covered bond 
                regulator may require the trustee or any servicer or 
                administrator for an estate to post in favor of the 
                United States, for the benefit of the estate, a bond 
                that is conditioned on the faithful performance of the 
                duties of the trustee or the servicer or administrator. 
                The covered bond regulator shall determine the amount 
                of any bond required under this subparagraph and the 
                sufficiency of the surety on the bond. A proceeding on 
                a bond required under this subparagraph may not be 
                commenced after two years after the date on which the 
                trustee or the servicer or administrator was 
                discharged.
                    (D) Powers and duties of trustee.--The trustee for 
                an estate is the representative of the estate and, 
                subject to the provisions of this Act, has capacity to 
                sue and be sued. The trustee shall--
                            (i) administer the estate in compliance 
                        with this Act, the oversight program, and the 
                        related transaction documents;
                            (ii) be accountable for all property of the 
                        estate that is received by the trustee;
                            (iii) make a final report and file a final 
                        account of the administration of the estate 
                        with the applicable covered bond regulator; and
                            (iv) after the estate has been fully 
                        administered, close the estate.
                    (E) Powers and duties of servicer or 
                administrator.--Any servicer or administrator for an 
                estate--
                            (i) shall--
                                    (I) collect, realize on (by 
                                liquidation or other means), and 
                                otherwise manage the cover pool held by 
                                the estate in compliance with this Act, 
                                the oversight program, and the related 
                                transaction documents and in a manner 
                                consistent with maximizing the value 
                                and the proceeds of the cover pool;
                                    (II) deposit or invest all proceeds 
                                and funds received in compliance with 
                                this Act, the oversight program, and 
                                the related transaction documents and 
                                in a manner consistent with maximizing 
                                the net return to the estate, taking 
                                into account the safety of the deposit 
                                or investment; and
                                    (III) apply, or direct the trustee 
                                for the estate to apply, all proceeds 
                                and funds received and the net return 
                                on any deposit or investment to make 
                                distributions in compliance with 
                                paragraphs (3) and (4);
                            (ii) may borrow funds or otherwise obtain 
                        credit, for the benefit of the estate, in 
                        compliance with paragraph (2) on a secured or 
                        unsecured basis and on a priority, pari passu, 
                        or subordinated basis;
                            (iii) shall, at the times and in the manner 
                        required by the applicable covered bond 
                        regulator, submit to the covered bond 
                        regulator, the Secretary, the applicable 
                        indenture trustee, the applicable covered 
                        bondholders, the owner of the residual 
                        interest, and any other person designated by 
                        the covered bond regulator, reports that 
                        describe the activities of the servicer or 
                        administrator on behalf of the estate, the 
                        performance of the cover pool held by the 
                        estate, and distributions made by the estate; 
                        and
                            (iv) shall assist the trustee in preparing 
                        the final report and the final account of the 
                        administration of the estate.
                    (F) Supervision of trustee, servicer, and 
                administrator.--The applicable covered bond regulator 
                shall supervise the trustee and any servicer or 
                administrator for an estate. The covered bond regulator 
                shall require that all reports submitted under 
                subparagraph (E)(iii) do not contain any untrue 
                statement of a material fact and do not omit to state a 
                material fact necessary in order to make the statements 
                made, in light of the circumstances under which they 
                are made, not misleading.
                    (G) Removal and replacement of trustee, servicer, 
                and administrator.--If the covered bond regulator 
                determines that it is in the best interests of an 
                estate, the covered bond regulator may remove or 
                replace the trustee or any servicer or administrator 
                for the estate. The removal of the trustee or any 
                servicer or administrator does not abate any pending 
                action or proceeding involving the estate, and any 
                successor or other trustee, servicer, or administrator 
                shall be substituted as a party in the action or 
                proceeding.
                    (H) Professionals.--The trustee or any servicer or 
                administrator for an estate may employ 1 or more 
                attorneys, accountants, appraisers, auctioneers, or 
                other professional persons to represent or assist the 
                trustee or the servicer or administrator in carrying 
                out its duties. The employment of any professional 
                person and all terms and conditions of employment, 
                including the terms and conditions relating to 
                compensation, shall conform to the requirements of this 
                Act and the oversight program and otherwise shall be 
                subject to the approval of the applicable covered bond 
                regulator.
                    (I) Approved fees and expenses.--Unless otherwise 
                provided in the applicable terms and conditions of 
                appointment or employment, all approved fees and 
                expenses of the trustee, any servicer or administrator, 
                or any professional person employed by the trustee or 
                any servicer or administrator shall be payable from the 
                estate as administrative expenses.
                    (J) Actions by or on behalf of estate.--The trustee 
                or any servicer or administrator for an estate may 
                commence or continue judicial, administrative, or other 
                actions, in the name of the estate or in its own name 
                on behalf of the estate, for the purpose of collecting, 
                realizing on, or otherwise managing the cover pool held 
                by the estate or exercising its other powers or duties 
                on behalf of the estate.
                    (K) Actions against estate.--No court may issue an 
                attachment or execution on any property of an estate. 
                Except at the request of the applicable covered bond 
                regulator or as otherwise provided in this subparagraph 
                or subparagraph (J), no court may take any action to 
                restrain or affect the resolution of an estate under 
                this Act. No person (including the applicable indenture 
                trustee and any applicable covered bondholder) may 
                commence or continue any judicial, administrative, or 
                other action against the estate, the trustee, or any 
                servicer or administrator or take any other act to 
                affect the estate, the trustee, or any servicer or 
                administrator that is not expressly permitted by this 
                Act, the oversight program, and the related transaction 
                documents, except for a judicial or administrative 
                action to compel the release of funds that--
                            (i) are available to the estate;
                            (ii) are permitted to be distributed under 
                        this Act and the oversight program; and
                            (iii) are permitted and required to be 
                        distributed under the related transaction 
                        documents and any contracts executed by or on 
                        behalf of the estate.
                    (L) Sovereign immunity.--Except in connection with 
                a guarantee provided under paragraph (4) or any other 
                contract executed by the applicable covered bond 
                regulator under this section 4, the Secretary and the 
                covered bond regulator shall be entitled to sovereign 
                immunity in carrying out the provisions of this Act.
            (2) Borrowings and credit.--
                    (A) In general.--Any servicer or administrator for 
                an estate created under subsection (b)(1) or (c)(2) may 
                borrow funds or otherwise obtain credit, on behalf of 
                and for the benefit of the estate, from any person in 
                compliance with this paragraph (2) solely for the 
                purpose of providing liquidity in the case of timing 
                mismatches among the assets and the liabilities of the 
                estate. Except with respect to an underwriter, section 
                5 of the Securities Act of 1933, the Trust Indenture 
                Act of 1939, and any State or local law requiring 
                registration for an offer or sale of a security or 
                registration or licensing of an issuer of, underwriter 
                of, or broker or dealer in a security does not apply to 
                the offer or sale under this paragraph (2) of a 
                security that is not an equity security.
                    (B) Conditions.--A servicer or administrator may 
                borrow funds or otherwise obtain credit under 
                subparagraph (A)--
                            (i) on terms affording the lender only 
                        claims or liens that are fully subordinated to 
                        the claims and interests of the applicable 
                        indenture trustee and the applicable covered 
                        bondholders and all other claims against and 
                        interests in the estate, except for the 
                        residual interest, if the servicer or 
                        administrator certifies to the applicable 
                        covered bond regulator that, in the business 
                        judgment of the servicer or administrator, the 
                        borrowing or credit is in the best interests of 
                        the estate and is expected to maximize the 
                        value and the proceeds of the cover pool held 
                        by the estate; or
                            (ii) on terms affording the lender claims 
                        or liens that have priority over or are pari 
                        passu with the claims or interests of the 
                        applicable indenture trustee or the applicable 
                        covered bondholders or other claims against or 
                        interests in the estate, if--
                                    (I) the servicer or administrator 
                                certifies to the applicable covered 
                                bond regulator that, in the business 
                                judgment of the servicer or 
                                administrator, the borrowing or credit 
                                is in the best interests of the estate 
                                and is expected to maximize the value 
                                and the proceeds of the cover pool held 
                                by the estate; and
                                    (II) the applicable covered bond 
                                regulator authorizes the borrowing or 
                                credit.
                    (C) Limited liability.--A servicer or administrator 
                shall not be liable for any error in business judgment 
                when borrowing funds or otherwise obtaining credit 
                under this paragraph (2) unless the servicer or 
                administrator acted in bad faith or in willful 
                disregard of its duties.
                    (D) Study on borrowings and credit.--The 
                Comptroller General of the United States shall conduct 
                a study on whether the Federal reserve banks should be 
                authorized to lend funds or otherwise extend credit to 
                an estate under this paragraph (2) and, if so, what 
                conditions and limits should be established to mitigate 
                any risk that the United States Government could absorb 
                credit losses on the cover pool held by the estate. The 
                Comptroller General shall submit a report to the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives on the results of the study 
                not later than 6 months after the date of enactment of 
                this Act.
            (3) Distributions by estate.--All payments or other 
        distributions by an estate shall be made at the times, in the 
        amounts, and in the manner set forth in the covered bonds, the 
        related transaction documents, and any contracts executed by or 
        on behalf of the estate in compliance with this Act and the 
        oversight program. To the extent that the relative priority of 
        the liabilities of the estate are not specified in or otherwise 
        ascertainable from their terms, distributions shall be made on 
        each distribution date under the covered bonds, the related 
        transaction documents, or any contracts executed by or on 
        behalf of the estate--
                    (A) first, to pay accrued and unpaid superpriority 
                claims under paragraph (2)(B)(ii);
                    (B) second, to pay accrued and unpaid 
                administrative expense claims under paragraph (1)(I), 
                paragraph (2)(B)(ii), section 4(b)(5)(A), or section 
                4(c)(6)(A);
                    (C) third, to pay--
                            (i) accrued and unpaid claims under the 
                        covered bonds and the related transaction 
                        documents according to their terms; and
                            (ii) accrued and unpaid pari passu claims 
                        under paragraph (2)(B)(ii); and
                    (D) fourth, to pay accrued and unpaid subordinated 
                claims under paragraph (2)(B)(i).
            (4) Distributions on residual interest.--After all other 
        claims against and interests in an estate have been fully and 
        irrevocably paid or defeased, the trustee shall or shall cause 
        a servicer or administrator to distribute the remainder of the 
        estate to or at the direction of the owner of the residual 
        interest. No interim distribution on the residual interest may 
        be made before that time, unless the applicable covered bond 
        regulator--
                    (A) approves the distribution after determining 
                that all other claims against and interests in the 
                estate will be fully, timely, and irrevocably paid 
                according to their terms; and
                    (B) provides an indemnity, for the benefit of the 
                estate, assuring that all other claims against and 
                interests in the estate will be fully, timely, and 
                irrevocably paid according to their terms.
            (5) Closing of estate.--After an estate has been fully 
        administered, the trustee shall close the estate and, except as 
        otherwise directed by the applicable covered bond regulator, 
        shall destroy all records of the estate.
            (6) No loss to taxpayers.--Taxpayers shall bear no losses 
        from the resolution of an estate under this Act. To the extent 
        that the Secretary and the Corporation jointly determine that 
        the Deposit Insurance Fund incurred actual losses that are 
        higher because the covered bond program of an insured 
        depository institution was subject to resolution under this Act 
        rather than as part of the receivership of the institution 
        under the Federal Deposit Insurance Act (12 U.S.C. 1811 et 
        seq.), the Corporation may exercise the powers available under 
        section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 
        1817(b)) to recover an amount equal to those losses after 
        consulting with the Secretary.

SEC. 5. SECURITIES LAW PROVISIONS.

    (a) Securities Laws Treatment of Covered Bonds.--
            (1) Treatment of certain banks and other entities.--
                    (A) Securities laws coverage.--A covered bond 
                described in subparagraph (C) is and shall be treated 
                as a security issued or guaranteed by a bank under 
                section 3(a)(2) of the Securities Act of 1933 (15 
                U.S.C. 77c(a)(2)), section 3(c)(3) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-3(c)(3)), and 
                section 304(a)(4)(A) of the Trust Indenture Act of 1939 
                (15 U.S.C. 77ddd(a)(4)(A)), as applicable.
                    (B) Securities exchange act of 1934 exemption.--No 
                covered bond described in subparagraph (C) shall be 
                treated as an asset-backed security, as that term is 
                defined in section 3 of the Securities Exchange Act of 
                1934 (15 U.S.C. 78c), or a structured finance product, 
                as that term is defined in section 939F of the Dodd-
                Frank Wall Street Reform and Consumer Protection Act 
                (15 U.S.C. 78o-9).
                    (C) Applicability.--A covered bond described in 
                this subparagraph is a covered bond that is--
                            (i) issued or guaranteed by a bank; or
                            (ii) issued by an eligible issuer described 
                        in section 2(9)(F) and sponsored solely by 1 or 
                        more banks for the sole purpose of issuing 
                        covered bonds.
                    (D) Regulations.--Each covered bond regulator for 1 
                or more banks shall adopt, as part of the securities 
                regulations of the covered bond regulator, a separate 
                scheme of registration, disclosure, and reporting 
                obligations and exemptions for offers or sales of 
                covered bonds described in subparagraph (C), which 
                regulations shall--
                            (i) provide for uniform and consistent 
                        standards for such covered bond issuers, with 
                        respect to any such covered bonds, to the 
                        extent possible; and
                            (ii) be consistent with existing 
                        regulations governing offers or sales of 
                        nonconvertible debt.
            (2) Treatment of certain associations and cooperative 
        banks.--
                    (A) Securities laws coverage.--A covered bond 
                described in subparagraph (C) is and shall be treated 
                as a security issued by an entity under section 
                3(a)(5)(A) of the Securities Act of 1933 (15 U.S.C. 
                77c(a)(5)(A)), section 3(c)(3) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-3(c)(3)), and 
                section 304(a)(4)(A) of the Trust Indenture Act of 1939 
                (15 U.S.C. 77ddd(a)(4)(A)), as applicable.
                    (B) Securities exchange act of 1934 exemption.--No 
                covered bond described in subparagraph (C) shall be 
                treated as an asset-backed security, as that term is 
                defined in section 3 of the Securities Exchange Act of 
                1934 (15 U.S.C. 78c), or a structured finance product, 
                as that term is defined in section 939F of the Dodd-
                Frank Wall Street Reform and Consumer Protection Act 
                (15 U.S.C. 78o-9).
                    (C) Applicability.--A covered bond described in 
                this subparagraph is a covered bond that is--
                            (i) issued by an entity described in 
                        section 3(a)(5)(A) of the Securities Act of 
                        1933 (15 U.S.C. 77c(a)(5)(A)); or
                            (ii) issued by an eligible issuer described 
                        in section 2(9)(F) and sponsored solely by 1 or 
                        more such entities for the sole purpose of 
                        issuing covered bonds.
                    (D) Regulations.--Each covered bond regulator for 1 
                or more entities described in section 3(a)(5)(A) of the 
                Securities Act of 1933 (15 U.S.C. 77c(a)(5)(A)) shall 
                adopt, as part of the securities regulations of the 
                covered bond regulator, a separate scheme of 
                registration, disclosure, and reporting obligations and 
                exemptions for offers or sales of covered bonds 
                described in subparagraph (C), which regulations 
                shall--
                            (i) provide for uniform and consistent 
                        standards for such covered bond issuers, with 
                        respect to any such covered bonds, to the 
                        extent possible; and
                            (ii) shall be consistent with regulations 
                        governing offers or sales of nonconvertible 
                        debt.
            (3) Construction.--No provision of this Act, including 
        paragraph (1) or (2), may be construed or applied in a manner 
        that impairs or limits any other exemption that is available 
        under applicable securities laws.
    (b) Exemptions for Estates.--Any estate that is or may be created 
under section 4(b)(1) or 4(c)(2) shall be exempt from all State and 
Federal securities laws, except that such estate--
            (1) shall be subject to all anti-fraud provisions of such 
        securities laws;
            (2) shall be subject to the reporting requirements 
        established by the applicable covered bond regulator under 
        section 4(d)(1)(E)(iii); and
            (3) shall succeed to any requirement of the issuer to file 
        such periodic information, documents, and reports in respect of 
        the covered bonds, as specified in section 13(a) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) or rules 
        established by an appropriate Federal banking agency.
    (c) Exemptions for Residual Interests.--Any residual interest in an 
estate that is or may be created under section 4(b)(1) or 4(c)(2) shall 
be exempt from all State and Federal securities laws.

SEC. 6. MISCELLANEOUS PROVISIONS.

    (a) Domestic Securities.--Section 106(a)(1) of the Secondary 
Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1(a)(1)) is 
amended--
            (1) in subparagraph (C), by striking ``or'' at the end;
            (2) in subparagraph (D), by adding ``or'' at the end; and
            (3) by inserting after subparagraph (D) the following:
                    ``(E) covered bonds (as defined in section 2 of the 
                United States Covered Bond Act of 2011),''.
    (b) No Conflict.--The provisions of this Act shall apply, 
notwithstanding any provision of the Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.), title 11, United States Code, title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 
5381 et seq.), or any other provision of Federal law with respect to 
conservatorship, receivership, liquidation, or bankruptcy. No provision 
of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), title 
11, United States Code, title II of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5381 et seq.), or any other 
provision of Federal law with respect to conservatorship, receivership, 
liquidation, or bankruptcy may be construed or applied in a manner that 
defeats or interferes with the purpose or operation of this Act.
    (c) Annual Report to Congress.--The covered bond regulators shall, 
annually--
            (1) submit a joint report to the Congress describing the 
        current state of the covered bond market in the United States; 
        and
            (2) testify on the current state of the covered bond market 
        in the United States before the Committee on Financial Services 
        of the House of Representatives and the Committee on Banking, 
        Housing, and Urban Affairs of the Senate.
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