II 

109TH CONGRESS 

1ST SESSION S. 2141 

To make improvements to the Federal Deposit Insurance Act 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 17, 2005 

Mr. BENNETT (for himself and Mr. SCHUMER) introduced the following bill; 

which was read twice, considered, read the third time, and passed 

A BILL 

To make improvements to the Federal Deposit Insurance 

Act. 

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

3 SECTION. 1. TREATMENT OF CERTAIN AGREEMENTS BY 

4 CONSERVATORS OR RECEIVERS OF DEPOSI5 TORY INSTITUTIONS. 

6 (a) DEFINITION OF SECURITIES CONTRACT.— 

7 (1) FDIC-INSURED DEPOSITORY INSTITU8 TIONS.—Section 11(e)(8)(D)(ii) of the Federal De9 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 

10 amended— 

11 (A) in subclause (I)— 
2 

•S 2141 CPS 

1 (i) by striking ‘‘mortgage loan, or’’ 

2 and inserting ‘‘mortgage loan,’’; and 

3 (ii) by inserting before the semicolon 

4 ‘‘(whether or not such repurchase or re5 verse repurchase transaction is a ‘repur6 chase agreement’, as defined in clause 

7 (v))’’; 

8 (B) in subclause (IV)— 

9 (i) by inserting ‘‘(including by nova10 tion)’’ after ‘‘the guarantee’’; and 

11 (ii) by inserting before the semicolon 

12 ‘‘(whether or not such settlement is in con13 nection with any agreement or transaction 

14 referred to in subclauses (I) through (XII) 

15 (other than subclause (II))’’; 

16 (C) in subclause (IX), by striking ‘‘or 

17 (VIII)’’ each place that term appears and in18 serting ‘‘(VIII), (IX), or (X)’’; 

19 (D) by redesignating subclauses (VI) 

20 through (X) as subclauses (VIII) through 

21 (XII), respectively; and 

22 (E) by inserting after subclause (V) the 

23 following: 
3 

•S 2141 CPS 

1 ‘‘(VI) means any extension of 

2 credit for the clearance or settlement 

3 of securities transactions; 

4 ‘‘(VII) means any loan trans5 action coupled with a securities collar 

6 transaction, any prepaid securities 

7 forward transaction, or any total re8 turn swap transaction coupled with a 

9 securities sale transaction;’’. 

10 (2) INSURED CREDIT UNIONS.—Section 

11 207(c)(8)(D)(ii) of the Federal Credit Union Act 

12 (12 U.S.C. 1787(c)(8)(D)(ii)) is amended— 

13 (A) in subclause (I)— 

14 (i) by striking ‘‘mortgage loan, or’’ 

15 and inserting ‘‘mortgage loan,’’; and 

16 (ii) by inserting before the semicolon 

17 ‘‘(whether or not such repurchase or re18 verse repurchase transaction is a ‘repur19 chase agreement’, as defined in clause 

20 (v))’’; 

21 (B) in subclause (IV)— 

22 (i) by inserting ‘‘(including by nova23 tion)’’ after ‘‘the guarantee’’; and 

24 (ii) by inserting before the semicolon 

25 ‘‘(whether or not such settlement is in con-
4 

•S 2141 CPS 

1 nection with any agreement or transaction 

2 referred to in subclauses (I) through (XII) 

3 (other than subclause (II))’’; 

4 (C) in subclause (IX), by striking ‘‘or 

5 (VIII)’’ each place that term appears and in6 serting ‘‘(VIII), (IX), or (X)’’; 

7 (D) by redesignating subclauses (VI) 

8 through (X) as subclauses (VIII) through 

9 (XII), respectively; and 

10 (E) by inserting after subclause (V) the 

11 following: 

12 ‘‘(VI) means any extension of 

13 credit for the clearance or settlement 

14 of securities transactions; 

15 ‘‘(VII) means any loan trans16 action coupled with a securities collar 

17 transaction, any prepaid securities 

18 forward transaction, or any total re19 turn swap transaction coupled with a 

20 securities sale transaction;’’. 

21 (b) DEFINITION OF FORWARD CONTRACT.—Section 

22 11(e)(8)(D)(iv)(I) of the Federal Deposit Insurance Act 

23 (12 U.S.C. 1821(e)(8)(D)(iv)(I)) is amended by striking 

24 ‘‘transaction, reverse repurchase transaction’’ and insert25 ing ‘‘or reverse repurchase transaction (whether or not 
5 

•S 2141 CPS 

1 such repurchase or reverse repurchase transaction is a ‘re2 purchase agreement’, as defined in clause (v))’’. 

3 (c) DEFINITION OF SWAP AGREEMENT.— 

4 (1) FDIC-INSURED DEPOSITORY INSTITU5 TIONS.—Section 11(e)(8)(D)(vi) of the Federal De6 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is 

7 amended— 

8 (A) in subclause (I)— 

9 (i) by striking ‘‘or precious metals’’ 

10 and inserting ‘‘, precious metals, or other 

11 commodity’’; and 

12 (ii) by striking ‘‘or a weather swap, 

13 weather derivative, or weather option’’ and 

14 inserting ‘‘weather swap, option, future, or 

15 forward agreement; an emissions swap, op16 tion, future, or forward agreement; or an 

17 inflation swap, option, future, or forward 

18 agreement’’; 

19 (B) in subclause (II)— 

20 (i) by inserting ‘‘or other derivatives’’ 

21 after ‘‘dealings in the swap’’; and 

22 (ii) by striking ‘‘future, or option’’ 

23 and inserting ‘‘future, option, or spot 

24 transaction’’; and 
6 

•S 2141 CPS 

1 (C) by striking ‘‘the Securities Act of 

2 1933, the Securities Exchange Act of 1934, the 

3 Public Utility Holding Company Act of 1935, 

4 the Trust Indenture Act of 1939, the Invest5 ment Company Act of 1940, the Investment 

6 Advisers Act of 1940, the Securities Investor 

7 Protection Act of 1970, the Commodity Ex8 change Act, the Gramm-Leach-Bliley Act, and 

9 the Legal Certainty for Bank Products Act of 

10 2000’’ and inserting ‘‘the Gramm-Leach-Bliley 

11 Act, the Legal Certainty for Bank Products Act 

12 of 2000, the securities laws (as that term is de13 fined in section 3(a)(47) of the Securities Ex14 change Act of 1934) and the Commodity Ex15 change Act’’. 

16 (2) INSURED CREDIT UNIONS.—Section 

17 207(c)(8)(D)(vi) of the Federal Credit Union Act 

18 (12 U.S.C. 1787(c)(8)(D)(vi)) is amended— 

19 (A) in subclause (I)— 

20 (i) by striking ‘‘or precious metals’’ 

21 and inserting ‘‘, precious metals, or other 

22 commodity’’; and 

23 (ii) by striking ‘‘or a weather swap, 

24 weather derivative, or weather option’’ and 

25 inserting ‘‘weather swap, option, future, or 
7 

•S 2141 CPS 

1 forward agreement; an emissions swap, op2 tion, future, or forward agreement; or an 

3 inflation swap, option, future, or forward 

4 agreement’’; 

5 (B) in subclause (II)— 

6 (i) by inserting ‘‘or other derivatives’’ 

7 after ‘‘dealings in the swap’’; and 

8 (ii) by striking ‘‘future, or option’’ 

9 and inserting ‘‘future, option, or spot 

10 transaction’’; and 

11 (C) by striking ‘‘the Securities Act of 

12 1933, the Securities Exchange Act of 1934, the 

13 Public Utility Holding Company Act of 1935, 

14 the Trust Indenture Act of 1939, the Invest15 ment Company Act of 1940, the Investment 

16 Advisers Act of 1940, the Securities Investor 

17 Protection Act of 1970, the Commodity Ex18 change Act, the Gramm-Leach-Bliley Act, and 

19 the Legal Certainty for Bank Products Act of 

20 2000’’ and inserting ‘‘the Gramm-Leach-Bliley 

21 Act, the Legal Certainty for Bank Products Act 

22 of 2000, the securities laws (as that term is de23 fined in section 3(a)(47) of the Securities Ex24 change Act of 1934) and the Commodity Ex25 change Act’’. 
8 

•S 2141 CPS 

1 SEC. 2. CLARIFYING AMENDMENTS RELATING TO DEFINI2 TION OF PERSON. 

3 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS

4 DEFINITION OF PERSON.—Section 11(e)(8)(D) of the 

5 Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)) 

6 is amended by adding at the end the following: 

7 ‘‘(ix) PERSON.—The term ‘person’ includes 

8 any governmental entity and any entity in9 cluded in the definition of the term ‘person’ in 

10 section 1 of title 1, United States Code.’’. 

11 (b) INSURED CREDIT UNIONS DEFINITION OF PER12 SON.—Section 207(c)(8)(D) of the Federal Credit Union 

13 Act (12 U.S.C. 1787(c)(8)(D)) is amended by adding at 

14 the end the following: 

15 ‘‘(vii) PERSON.—The term ‘person’ in16 cludes any governmental entity and any 

17 entity included in the definition of the 

18 term ‘person’ in section 1 of title 1, United 

19 States Code.’’. 

20 SEC. 3. FEDERAL DEPOSIT INSURANCE CORPORATION IM21 PROVEMENT ACT OF 1991. 

22 (a) ENFORCEABILITY OF BILATERAL NETTING CON23 TRACTS.—Section 403 of the Federal Deposit Insurance 

24 Corporation Improvement Act of 1991 (12 U.S.C. 4403) 

25 is amended— 
9 

•S 2141 CPS 

1 (1) in each of subsections (a) and (f), by strik2 ing ‘‘paragraphs (8)(E), (8)(F), and (10)(B) of’’ 

3 each place that term appears; and 

4 (2) in subsection (a), by inserting ‘‘terminated, 

5 liquidated, accelerated, and’’ after ‘‘institutions shall 

6 be’’. 

7 (b) ENFORCEABILITY OF CLEARING ORGANIZATION

8 NETTING CONTRACTS.—Section 404 of the Federal De9 posit Insurance Corporation Improvement Act of 1991 (12 

10 U.S.C. 4404) is amended— 

11 (1) in each of subsections (a) and (h), by strik12 ing ‘‘paragraphs (8)(E), (8)(F), and (10)(B) of’’ 

13 each place that term appears; and 

14 (2) in subsection (a), by inserting ‘‘terminated, 

15 liquidated, accelerated, and’’ after ‘‘organization 

16 shall be’’. 

17 SEC. 4. CONFORMING AMENDMENTS. 

18 (a) CLARIFYING DEFINITIONS.—Title 11, United 

19 States Code, is amended— 

20 (1) in section 101— 

21 (A) in paragraph (22)(A)— 

22 (i) by striking ‘‘(domestic or foreign)’’ 

23 after ‘‘an entity’’; and 
10 

•S 2141 CPS 

1 (ii) by inserting ‘‘(whether or not a 

2 ‘customer’, as defined in section 741)’’ 

3 after ‘‘custodian for a customer’’; 

4 (B) in paragraph (22A)— 

5 (i) by striking ‘‘on any day during the 

6 previous 15-month period’’ each place it 

7 appears and inserting ‘‘at such time or on 

8 any day during the 15-month period pre9 ceding the date of the filing of the peti10 tion’’; and 

11 (ii) by inserting ‘‘(aggregated across 

12 counterparties)’’ after ‘‘principal amount 

13 outstanding’’; 

14 (C) in paragraph (25)(A)— 

15 (i) by inserting ‘‘, as defined in sec16 tion 761’’ after ‘‘commodity contract’’; and 

17 (ii) by striking ‘‘repurchase trans18 action, reverse repurchase transaction,’’ 

19 and inserting ‘‘repurchase or reverse re20 purchase transaction (whether or not such 

21 repurchase or reverse repurchase trans22 action is a ‘repurchase agreement’, as de23 fined in this section)’’; 

24 (D) in paragraph (53B)(A)— 

25 (i) in clause (i)— 
11 

•S 2141 CPS 

1 (I) in subclause (II), by striking 

2 ‘‘or precious metals’’ and inserting ‘‘, 

3 precious metals, or other commodity 

4 agreement’’; 

5 (II) in subclause (VII), by strik6 ing ‘‘or’’ at the end; 

7 (III) in subclause (VIII), by 

8 striking ‘‘weather derivative, or weath9 er option’’ and inserting ‘‘option, fu10 ture, or forward agreement’’; and 

11 (IV) by adding at the end the fol12 lowing: 

13 ‘‘(IX) an emissions swap, option, 

14 future, or forward agreement; or 

15 ‘‘(X) an inflation swap, option, 

16 future, or forward agreement;’’; and 

17 (ii) in clause (ii)— 

18 (I) in subclause (I), by inserting 

19 ‘‘or other derivatives’’ after ‘‘dealings 

20 in the swap’’; and 

21 (II) in subclause (II), by striking 

22 ‘‘future, or option’’ and inserting ‘‘fu23 ture, option, or spot transaction’’; and 

24 (E) in paragraph (53B)(B), by striking 

25 ‘‘the Securities Act of 1933, the Securities Ex-
12 

•S 2141 CPS 

1 change Act of 1934, the Public Utility Holding 

2 Company Act of 1935, the Trust Indenture Act 

3 of 1939, the Investment Company Act of 1940, 

4 the Investment Advisers Act of 1940, the Secu5 rities Investor Protection Act of 1970, the Com6 modity Exchange Act, the Gramm-Leach-Bliley 

7 Act, and the Legal Certainty for Bank Products 

8 Act of 2000’’ and inserting ‘‘the Gramm-Leach9 Bliley Act, the Legal Certainty for Bank Prod10 ucts Act of 2000, the securities laws (as that 

11 term is defined in section 3(a)(47) of the Secu12 rities Exchange Act of 1934) and the Com13 modity Exchange Act’’; 

14 (2) in section 362(b)— 

15 (A) by striking paragraphs (6) and (7) and 

16 inserting the following: 

17 ‘‘(6) under subsection (a) of this section, of the 

18 exercise by a commodity broker, forward contract 

19 merchant, stockbroker, financial institution, finan20 cial participant, or securities clearing agency of any 

21 contractual right (as defined in section 555 or 556) 

22 under any security agreement or arrangement or 

23 other credit enhancement forming a part of or re24 lated to any commodity contract, forward contract 

25 or securities contract, or of any contractual right (as 
13 

•S 2141 CPS 

1 defined in section 555 or 556) to offset or net out 

2 any termination value, payment amount, or other 

3 transfer obligation arising under or in connection 

4 with 1 or more such contracts, including any master 

5 agreement for such contracts; 

6 ‘‘(7) under subsection (a) of this section, of the 

7 exercise by a repo participant or financial partici8 pant of any contractual right (as defined in section 

9 559) under any security agreement or arrangement 

10 or other credit enhancement forming a part of or re11 lated to any repurchase agreement, or of any con12 tractual right (as defined in section 559) to offset or 

13 net out any termination value, payment amount, or 

14 other transfer obligation arising under or in connec15 tion with 1 or more such agreements, including any 

16 master agreement for such agreements;’’; 

17 (B) by striking paragraph (17) and insert18 ing the following: 

19 ‘‘(17) under subsection (a) of this section, of 

20 the exercise by a swap participant or financial par21 ticipant of any contractual right (as defined in sec22 tion 560) under any security agreement or arrange23 ment or other credit enhancement forming a part of 

24 or related to any swap agreement, or of any contrac25 tual right (as defined in section 560) to offset or net 
14 

•S 2141 CPS 

1 out any termination value, payment amount, or 

2 other transfer obligation arising under or in connec3 tion with 1 or more such agreements, including any 

4 master agreement for such agreements;’’; and 

5 (C) by striking paragraph (27) and insert6 ing the following: 

7 ‘‘(27) under subsection (a) of this section, of 

8 the exercise by a master netting agreement partici9 pant of any contractual right (as defined in section 

10 555, 556, 559, or 560) under any security agree11 ment or arrangement or other credit enhancement 

12 forming a part of or related to any master netting 

13 agreement, or of any contractual right (as defined in 

14 section 555, 556, 559, or 560) to offset or net out 

15 any termination value, payment amount, or other 

16 transfer obligation arising under or in connection 

17 with 1 or more such master netting agreements to 

18 the extent that such participant is eligible to exercise 

19 such rights under paragraph (6), (7), or (17) for 

20 each individual contract covered by the master net21 ting agreement in issue; and’’; and 

22 (3) in section 741(7)(A)— 

23 (A) in clause (i)— 

24 (i) by striking ‘‘mortgage loan or’’ 

25 and inserting ‘‘mortgage loan,’’; and 
15 

•S 2141 CPS 

1 (ii) by inserting before the semicolon 

2 ‘‘(whether or not such repurchase or re3 verse repurchase transaction is a ‘repur4 chase agreement’, as defined in section 

5 101)’’; 

6 (B) in clause (iii)— 

7 (i) by inserting ‘‘(including by nova8 tion)’’ after ‘‘the guarantee’’; and 

9 (ii) by inserting before the semicolon 

10 ‘‘(whether or not such settlement is in con11 nection with any agreement or transaction 

12 referred to in clauses (i) through (xi))’’; 

13 (C) in clause (viii), by striking ‘‘or (vii)’’ 

14 each place it appears and inserting ‘‘(vii), (viii), 

15 or (ix)’’; 

16 (D) by redesignating clauses (v) through 

17 (ix) as clauses (vii) through (xi), respectively; 

18 and 

19 (E) by inserting after clause (iv) the fol20 lowing: 

21 ‘‘(v) any extension of credit for 

22 the clearance or settlement of securi23 ties transactions; 

24 ‘‘(vi) any loan transaction cou25 pled with a securities collar trans-
16 

•S 2141 CPS 

1 action, any prepaid forward securities 

2 transaction, or any total return swap 

3 transaction coupled with a securities 

4 sale transaction;’’. 

5 (b) LIMITATION OF AVOIDANCE POWERS UNDER

6 MASTER NETTING AGREEMENT.—Section 546 of title 11, 

7 United States Code, is amended— 

8 (1) in subsection (e)— 

9 (A) by inserting ‘‘(or for the benefit of)’’ 

10 before ‘‘a commodity broker’’; and 

11 (B) by inserting ‘‘or that is a transfer 

12 made by or to (or for the benefit of) a com13 modity broker, forward contract merchant, 

14 stockbroker, financial institution, financial par15 ticipant, or securities clearing agency, in con16 nection with a securities contract, as defined in 

17 section 741(7), commodity contract, as defined 

18 in section 761(4), or forward contract,’’ after 

19 ‘‘securities clearing agency,’’; 

20 (2) in subsection (f)— 

21 (A) by striking ‘‘that is a margin payment, 

22 as defined in section 741 or 761 of this title, 

23 or settlement payment, as defined in section 

24 741 of this title,’’; and 
17 

•S 2141 CPS 

1 (B) by inserting ‘‘(or for the benefit of)’’ 

2 before ‘‘a repo participant’’; 

3 (3) in subsection (g), by inserting ‘‘(or for the 

4 benefit of)’’ before ‘‘a swap participant’’; and 

5 (4) in subsection (j), by inserting ‘‘(or for the 

6 benefit of)’’ after ‘‘made by or to’’. 

7 (c) SIPC STAY.—Section 5(b)(2)(C)(iii) of the Secu8 rities Investor Protection Act of 1970 (15 U.S.C. 

9 78eee(b)(2)(C)(iii)) is amended— 

10 (1) by inserting ‘‘a derivatives clearing organi11 zation (as defined in the Commodity Exchange Act), 

12 a multilateral clearing organization (as defined in 

13 the Federal Deposit Insurance Corporation Improve14 ment Act of 1991),’’ after ‘‘rule or bylaw of’’; and 

15 (2) by striking ‘‘or a securities clearance agen16 cy, a right set forth in a bylaw of a clearing organi17 zation or contract market’’ and inserting ‘‘a securi18 ties clearing agency, a contract market designated 

19 under the Commodity Exchange Act, a derivatives 

20 transaction execution facility registered under the 

21 Commodity Exchange Act, or a board of trade (as 

22 defined in the Commodity Exchange Act),’’. 

23 (d) SAVINGS CLAUSE.—Title IX of the Bankruptcy 

24 Abuse Prevention and Consumer Protection Act of 2005 
18 

•S 2141 CPS 

1 (Public Law 109–8, 119 Stat. 146) is amended by adding 

2 at the end the following: 

3 ‘‘SEC. 912. SAVINGS CLAUSE. 

4 ‘‘The meanings of terms used in this title are applica5 ble for the purposes of this title only, and shall not be 

6 construed or applied so as to challenge or affect the char7 acterization, definition, or treatment of any similar terms 

8 under any other statute, regulation, or rule, including the 

9 Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

10 Products Act of 2000, the securities laws (as that term 

11 is defined in section 3(a)(47) of the Securities Exchange 

12 Act of 1934), and the Commodity Exchange Act.’’. 

13 SEC. 5. WALKAWAY CLAUSES. 

14 Section 11(e)(8)(G)) of the Federal Deposit Insur15 ance Act (12 U.S.C. 1821(e)(8)(G)) is amended to read 

16 as follows: 

17 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC18 TIVE.— 

19 ‘‘(i) IN GENERAL.—Notwithstanding 

20 the provisions of subparagraphs (A) and 

21 (E), and sections 403 and 404 of the Fed22 eral Deposit Insurance Corporation Im23 provement Act of 1991, no walkaway 

24 clause shall be enforceable in a qualified fi25 nancial contract of an insured depository 
19 

•S 2141 CPS 

1 institution in default, provided that any 

2 payment or delivery obligations otherwise 

3 due from a party pursuant to the qualified 

4 financial contract shall be suspended from 

5 the time that the receiver is appointed 

6 until the earlier of— 

7 ‘‘(I) the time that such party re8 ceives notice that such contract has 

9 been transferred pursuant to subpara10 graph (A); or 

11 ‘‘(II) 5:00 p.m. (eastern time) on 

12 the business day following the date of 

13 the appointment of the receiver. 

14 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

15 For purposes of this subparagraph, the 

16 term ‘walkaway clause’ means any provi17 sion in a qualified financial contract that 

18 suspends, conditions, or extinguishes a 

19 payment obligation of a party in whole or 

20 in part or does not create a payment obli21 gation of a party that would otherwise 

22 exist solely because of such party’s status 

23 as a nondefaulting party in connection 

24 with the insured depository institution’s in25 solvency or the appointment of or the exer-
20 

•S 2141 CPS 

1 cise of rights or powers by a conservator or 

2 receiver, and not as a result of a party’s 

3 exercise of any right to offset, setoff, or 

4 net obligations that exist under the con5 tract, any other contract between those 

6 parties, or applicable law.’’. 

7 SEC. 6. EFFECTIVE DATE. 

8 (a) EFFECTIVE DATE.—This Act and the amend9 ments made by this Act shall take effect on the date of 

10 enactment of this Act. 

11 (b) NO RETROACTIVE APPLICATION OF AMEND12 MENTS.—The amendments made by this Act shall not 

13 apply to any cases commenced under title 11, United 

14 States Code, or appointments made under any Federal or 

15 State law, before the effective date of this Act. 

Æ